ASSET PURCHASE AGREEMENT

Exhibit 2.1

ASSET PURCHASE AGREEMENT

among

POPE & TALBOT, INC.,

POPE & TALBOT LTD.,

POPE & TALBOT LUMBER SALES, INC.,

P&T FACTORING LIMITED PARTNERSHIP

and

FOX LUMBER SALES INC.

Dated as of February 5, 2008

TABLE OF CONTENTS

RECITALS

ARTICLE I

DEFINITIONS

ARTICLE II

PURCHASE AND SALE

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF THE SELLERS

i

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

OF THE PURCHASER

ARTICLE V

ADDITIONAL AGREEMENTS

ARTICLE VI

CONDITIONS TO CLOSING

ii

ARTICLE VIII

NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES

ARTICLE IX

GENERAL PROVISIONS

iii

EXHIBITS

iv

ASSET PURCHASE AGREEMENT (this “ Agreement ”), dated as of this fifth day of February, 2008, among Pope & Talbot, Inc. (“ PTI ”), a corporation organized under the laws of the State of Delaware, Pope & Talbot Ltd. (“ PTL ”), a corporation organized under the federal laws of Canada, and Pope & Talbot Lumber Sales, Inc. (“ PTLS ”), a corporation organized under the laws of the State of Delaware, P&T Factoring Limited Partnership , a partnership under the laws of British Columbia (“ PTFLP ”) (collectively, the “ Sellers ”), and Fox Lumber Sales, Inc. , (“ FLS ”) a Montana corporation (the “ Purchaser ”).

RECITALS

WHEREAS, the Sellers are (or have been) collectively engaged in the business of timber forestry operations and the manufacture at the Mill and sale of dimension lumber and boards, wood pellets, sawdust, chips and other related products (the “ Business ”);

WHEREAS, on October 29, 2007, certain of the Sellers commenced proceedings (the “ Canadian Proceedings ”) in the Ontario Superior Court of Justice (Commercial List) (the “ Ontario Court ”) pursuant to the Companies’ Creditors Arrangement Act (Canada) (the “ CCAA ”) and the Initial Order of the Ontario Court, dated October 29, 2007, and, on November 19, 2007 (the “Petition Date”), the Sellers and certain of their Affiliates filed voluntary cases (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) pursuant to chapter 11 of title 11, United States Code (the “Bankruptcy Code”);

WHEREAS, on November 21, 2007, the Supreme Court of British Columbia (the “Canadian Court ”) made an order recognizing and accepting the request of the Ontario Court to transfer the Canadian Proceedings from the Ontario Court, and assuming primary jurisdiction of the Canadian Proceedings and continuing same in the Canadian Court;

WHEREAS, the Bidding Procedures were approved by the order of the Bankruptcy Court entered on December 7, 2007 and by order of the Canadian Court dated December 6, 2007 (collectively, the “ Bidding Procedures Orders ”); and

WHEREAS, the Sellers wish to sell, assign and transfer to the Purchaser, and the Purchaser wishes to purchase and acquire from the Sellers, the Purchased Assets and, in connection therewith, the Purchaser is willing to assume certain Assumed Liabilities, all upon the terms and subject to the conditions set forth herein.

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NOW, THEREFORE, in consideration of the promises and the mutual agreements and covenants hereinafter set forth, and intending to be legally bound, the Sellers and the Purchaser hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01 Definitions . For purposes of this Agreement:

“ Action ” means any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority.

“ Affiliate ” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

“ Agreement ” has the meaning given to it in the Preamble.

“ Allocation ” has the meaning given to it in Section 2.04.

“ Ancillary Agreements ” means the Bill of Sale, the Deeds, the Omnibus Assignment of Lease, the Deposit Escrow Agreement and such other documents or instruments of transfer and conveyance as the Sellers and Purchaser may deem necessary, each in form and substance reasonably acceptable to the Purchaser and the Sellers, the terms of which shall be fully consistent with this Agreement.

“ Assigned Contract ” means any Material Contract that is scheduled on Section 3.10(a) of the Disclosure Schedule and is not deemed an Excluded Asset by operation of Section 2.01(b)(xi).

“ Assumed Liabilities ” has the meaning given to it in Section 2.02(a).

“ Assumption Agreement ” means the Assumption Agreement to be executed by the Purchaser and Sellers at the Closing, substantially in the form of Exhibit 1.01(c).

“ Auction ” has the meaning given to it in the Bidding Procedures.

“ Bankruptcy Code ” has the meaning given to it in the Recitals.

“ Bankruptcy Court ” has the meaning given to it in the Recitals.

“ Bidding Procedures ” means the bidding procedures as such procedures were approved by the Bankruptcy Court and Canadian Court in the Bidding Procedures Orders.

“ Bidding Procedures Orders ” has the meaning given to it in the Recitals.

“ Bill of Sale ” means the Bill of Sale and Instrument of Assignment of Assets and Assumption of Liabilities to be executed by the Sellers at the Closing, substantially in the form of Exhibit 1.01(c).

“ Business ” has the meaning given to it in the Recitals.

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“ Business Day ” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in The City of New York.

“ Canadian Court ” has the meaning given to it in the Recitals.

“ Canadian Proceedings ” has the meaning given to it in the Recitals.

“ Canadian Transaction Approval and Vesting Order ” has the meaning given to it in Section 2.09.

“ CCAA ” has the meaning given to it in the Recitals.

“ Chapter 11 Cases ” has the meaning given to it in the Recitals.

“ Closing ” has the meaning given to it in Section 2.06.

“ Closing Date ” has the meaning given to it in Section 2.06.

“ Competition Act ” means the Competition Act (Canada).

“ Confidentiality Agreement ” has the meaning given to it in Section 5.03.

“ Contracts ” means any arrangement, note, bond, commitment, franchise, guarantee, indemnity, indenture, instrument, lease, license or other agreement, understanding, instrument or obligation, whether written or oral, all amendments, supplements and modifications of or for any of the foregoing and all rights and interests arising thereunder or in connection therewith.

“ Control ” (including the terms “ controlled by ” and “ under common control with ”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly or as trustee, personal representative or executor, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee, personal representative or executor, by contract, credit arrangement or otherwise.

“ Conveyance Taxes ” means all sales, use, value added, transfer, stamp, stock transfer, real property transfer or gains and similar Taxes, including PST and GST.

“ Deposit Escrow Agreement ” means the Deposit Escrow Agreement to be entered into among the Sellers, Purchaser and Escrow Agent, attached hereto as Exhibit 2.04.

“ Disclosure Schedule ” means the Disclosure Schedule attached hereto, dated as of the date hereof delivered by the Sellers to the Purchaser in connection with this Agreement. Notwithstanding anything to the contrary contained in the Disclosure Schedule or in this Agreement, the information and disclosures contained in any section of the Disclosure Schedule shall be deemed to be disclosed and incorporated by reference in any other section of the Disclosure Schedule as though fully set forth in such other section for which the applicability of such information and disclosure is reasonably apparent on the face of such information or disclosure.

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“ Environmental Law ” means any federal, provincial, state, local or foreign statute, law, ordinance, regulation, rule, code, order, consent decree or judgment, in each case in effect as of the date hereof, relating to pollution or protection of the environment.

“ Environmental Liability ” means any claim, demand, order, suit, obligation, liability, cost (including the cost of any investigation, testing, compliance or remedial action), consequential damages, loss or expense (including reasonable and incurred attorney’s and consultant’s fees and expenses) arising out of, relating to or resulting from any Environmental Law or environmental, health or safety matter or condition, including natural resources, and related in any way to the Purchased Assets or to this Agreement or its subject matter, in each case whether arising or incurred before, at or after the Closing, including any and all Liabilities (whether arising under Environmental Laws in effect at Closing or thereafter, Environmental Permits, common law, Contracts or otherwise in any manner whatsoever, whether known or unknown on the Closing Date) arising out of, relating to or resulting from:

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“ Environmental Permits ” means any permit, approval, identification number, license and other authorization required under or issued pursuant to any applicable Environmental Law or otherwise required by any applicable Governmental Authority.

“ Escrow Agent ” has the meaning given to it in the Deposit Escrow Agreement.

“ Escrowed Closing Funds ” has the meaning given to it in Section 2.09.

“ Excluded Assets ” has the meaning given to it in Section 2.01(b).

“ Excluded Business ” means any business conducted by the Sellers other than the Business, including, for certainty, (a) timber forestry operations and the manufacture and sale of dimension lumber and boards, wood pellets, sawdust, chips and other related products therefrom subject to purchase and sale pursuant to the Interfor Asset Purchase Agreement, (b) the manufacture and sale of kraft pulp and related products, and (c) each of the former mill, wood treatment and landfill sites situated at or about Port Gamble, Washington, St. Helens, Oregon and Oakridge, Oregon, USA.

“ Excluded Liabilities ” has the meaning given to it in Section 2.02(b).

“ Excluded Taxes ” means all Taxes relating to the Purchased Assets or the Business for any Pre-Closing Period, other than Taxes the liability for which would constitute a Permitted Encumbrance. For purposes of this Agreement, in the case of any Straddle Period, (a) Property Taxes relating to the Purchased Assets allocable to the Pre-Closing Period shall be equal to the amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that fall within the Pre-Closing Period and the denominator of which is the number of days in the entire Straddle Period, and (b) Taxes (other than Property Taxes) relating to the Purchased Assets for the Pre-Closing Period shall be computed as if such taxable period ended as of the close of business on the Closing Date.

“ Financial Advisor ” means Rothschild Inc.

“ GAAP ” means United States generally accepted accounting principles and practices in effect from time to time applied consistently throughout the periods involved.

“ Governmental Authority ” means any federal, national, supranational, state, provincial, local or other government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.

“ Governmental Order ” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

“ GST ” means goods and services taxes payable under Part IX of the Excise Tax Act (Canada) and any reference to a specific provision of Part IX of the Excise Tax Act (Canada) shall include any successor to that provision having the same or similar effect.

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“ Hazardous Material ” means (a) any petroleum, petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials or polychlorinated biphenyls or (b) any chemical, material or substance defined or regulated as toxic or hazardous or as a pollutant, contaminant or waste under any Environmental Law.

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

“ ICA ” means the Investment Canada Act.

“ IRS ” means the Internal Revenue Service of the United States.

“ Land Title Office ” means the Kamloops land title office located in Kamloops, British Columbia.

“ Law ” means any federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, order, requirement or rule of law (including common law).

“ Leased Real Property ” means the real property listed on Section 2.01(a)(i)(B) of the Disclosure Schedule, together with, to the extent leased by such Seller primarily in connection with the operations of the Business, all buildings and other structures, facilities or improvements currently or hereafter located thereon, all fixtures, systems and items of personal property of such Seller used primarily in the Business attached or appurtenant thereto and all easements, licenses, rights and appurtenances relating to the foregoing.

“ LFPLLP ” means Lignum Forest Products LLP.

“ Liens ” means any mortgage, deed of trust, pledge, assignment, security interest, encumbrance, lien, charge, hypothecation, or claim of any kind or nature whatsoever in respect of any property, other than any license of Intellectual Property, including any of the foregoing created by, arising under, or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, any financing lease having substantially the same economic effect as any of the foregoing, or the filing of a financing statement naming the owner of the property as to which such lien relates as the debtor under the Uniform Commercial Code, Personal Property Security Act (British Columbia) or any comparable Law.

“ Liabilities ” means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, including those arising under any Law, Action or Governmental Order and those arising under any contract, agreement, arrangement, commitment or undertaking.

“ Material Adverse Effect ” means any circumstance, change in or effect on the Business that is materially adverse to the results of operations or the financial condition of the Business, taken as a whole; provided , however , that none of the following, either alone or in combination, shall be considered in determining whether there has been a breach of a representation, warranty, covenant or agreement that is qualified by the term “Material Adverse Effect”: (a) events, circumstances, changes or effects that generally, or in the regions in which

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the Business operates, affect the industries in which the Business operates (including legal and regulatory changes); (b) general economic or political conditions or events, circumstances, changes or effects affecting the financial or securities markets generally; (c) events, circumstances, changes or effects relating to foreign currency exchange rate fluctuations; (d) changes arising from the consummation of the Transactions, or the announcement of the execution of, this Agreement, including (i) any actions of competitors, (ii) any actions taken by or losses of employees or (iii) any delays or cancellations of orders for products or services; (e) any reduction in the price of services or products offered by the Business in response to the reduction in price of comparable services or products offered by a competitor; (f) any circumstance, change or effect that results from any action taken pursuant to or in accordance with this Agreement or at the request of the Purchaser; (g) any action taken by any of the Sellers or any of their Affiliates within the Chapter 11 Cases, or by any of the Sellers, any of their Affiliates, or any court-appointed officer within the Canadian Proceedings in respect of the assets and business not included in the Business, and any event, circumstance, change or effect arising by reason only of the mere filing of the Chapter 11 Cases or commencement of the Canadian Proceedings; and (h) changes caused by acts of war, armed hostilities or terrorism or any escalation or worsening of current conditions caused by such acts of war, armed hostilities or terrorism (whether or not declared) occurring after the date hereof.

“ Material Contracts ” has the meaning given to it in Section 3.10(a).

“ Mill ” means the manufacturing facilities owned by PTL situated on lands at or about Midway, British Columbia, which lands are included among the Owned Real Property (and any Leased Real Property).

“ Offering Memorandum ” has the meaning given to it in Section 3.12.

“ Omnibus Assignment of Lease ” means the Omnibus Assignment of Lease to be executed by the Sellers at the Closing with respect to all parcels of Leased Real Property, substantially in the form of Exhibit 1.01(a).

“ Ontario Court ” has the meaning given to it in the Recitals.

“ Owned Real Property ” means the real property listed on Section 2.01(a)(i)(A) of the Disclosure Schedule and all buildings and other structures, facilities or improvements currently or hereafter located thereon, all fixtures, systems, and items of personal property of PTL, as applicable, attached or appurtenant thereto and all easements, licenses, rights and appurtenances relating to the foregoing.

“ Permits and Licenses ” has the meaning given to it in Section 2.01(a)(v).

“ Permitted Encumbrances ” means: (a) statutory Liens for current Taxes not yet due or delinquent (or which may be paid without interest or penalties) or the validity or amount of which is being contested in good faith by appropriate proceedings; (b) mechanics’, carriers’, workers’, repairers’ and other similar Liens arising or incurred in the ordinary course of business relating to obligations as to which there is no default on the part of the Sellers or the validity or amount of which is being contested in good faith by appropriate proceedings; (c) zoning, landmarking, entitlement, conservation restriction and other land use and environmental

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regulations by Governmental Authorities which do not materially interfere with the present use of the Purchased Assets; (d) all covenants, conditions, restrictions, easements, rights-of-way, licenses, other Liens and other similar matters of record set forth in any state, local or municipal franchise under which the Business is conducted which do not materially interfere with the present use of the Purchased Assets; (e) standard title exceptions; (f) matters which would be disclosed by an accurate survey or inspection of the Real Property which do not materially impair the occupancy or current use of such Real Property which they encumber; (g) minor irregularities or imperfections in title; and (h) all other Liens that would not have a Material Adverse Effect.

“ Person ” means any individual, partnership, firm, corporation, limited liability company, association, trust, Governmental Authority, first nation, aboriginal or native group or band, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

“ Personal Information ” means any personal information protected by any applicable Laws governing privacy matters and the protection of personal information.

“ Petition Date ” has the meaning given to it in the Recitals.

“ Portland Premises ” means the leased office premises located at 1500 S.W. First Avenue, Portland, Oregon.

“ Post-Closing Period ” means any taxable period (or portion thereof) beginning after the Closing Date.

“ Pre-Closing Period ” means any taxable period (or portion thereof) ending on or prior to the Closing Date.

“ Product Liabilities ” means, with respect to any products designed, manufactured, tested, marketed, distributed or sold by the Sellers to the extent relating to the Business, all Liabilities resulting from actual or alleged harm, injury, damage or death to persons, property or business, irrespective of the legal theory asserted.

“ Property Taxes ” means real and personal ad valorem property Taxes and any other Taxes imposed on a periodic basis and measured by the level of any item.

“ PST ” means the social services tax under the Social Services Tax Act (British Columbia).

“ PTFLP ” has the meaning given to it in the Preamble.

“ PTI ” has the meaning given to it in the Preamble.

“ PTL ” has the meaning given to it in the Preamble.

“ PTLS ” has the meaning given to it in the Preamble.

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“ Purchase Price ” has the meaning given to it in Section 2.03(a).

“ Purchase Price Bank Account ” means a bank account in the United States to be designated by PTI in a written notice to the Purchaser at least five Business Days before the Closing.

“ Purchased Assets ” has the meaning given to it in Section 2.01(a).

“ Purchaser ” has the meaning given to it in the Preamble.

“ Purchaser’s Counsel ” means Quintin Apedaile.

“ Purchaser’s Deposit ” has the meaning given to it in Section 2.05(a).

“ Qualified Bid ” has the meaning given to it in the Bidding Procedures.

“ Regulations ” means the Treasury Regulations (including Temporary Regulations) promulgated by the United States Department of Treasury with respect to the Code or other federal tax statutes.

“ Release ” has the meaning prescribed in any applicable Environmental Law, and includes any release, spill, leak, pumping, pouring, emission, emptying, discharge, injection, escape, leaching, disposal, dumping, deposit, spraying, burial, abandonment, incineration, seepage and placement.

“ Representatives ” means, with respect to a particular Person, any director or officer or other designated representative of such Person, including such Person’s attorneys and advisors, including financial advisors.

“ Retained Names and Marks ” means the names “Pope & Talbot” and “P&T”, together with all variations and acronyms thereof and all trademarks, service marks, domain names, trade names, trade dress, corporate names and other identifiers of source or goodwill containing, incorporating or associated with any of the foregoing.

“ SEC Reports ” has the meaning given to it in Section 3.04(a).

“ Securities Act ” has the meaning given to it in Section 3.04(a).

“ Sellers ” has the meaning given to it in the Preamble.

“ Sellers’ Canadian Counsel ” means Borden Ladner Gervais LLP, Vancouver, British Columbia.

“ Sellers’ Knowledge ”, “ Knowledge of the Sellers ” or similar terms used in this Agreement mean the actual (but not constructive or imputed) knowledge of the Persons listed in Exhibit 1.01(e) as of the date of this Agreement (or, with respect to a certificate delivered pursuant to this Agreement, as of the date of delivery of such certificate) without any implication of verification or investigation concerning such knowledge.

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“ Sellers’ Counsel ” means Shearman & Sterling LLP, New York, New York.

“ Straddle Period ” means any taxable period beginning on or prior to and ending after the Closing Date.

“ Tax ” or “ Taxes ” means any and all taxes of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any government or taxing authority.

“ Tax Code ” means the Internal Revenue Code of 1986, as amended through the date hereof.

“ Tax Documents ” has the meaning given to it in Section 5.06.

“ Tax Returns ” means any and all returns, reports and forms (including, elections, declarations, amendments, schedules, information returns or attachments thereto) required to be filed with a Governmental Authority with respect to Taxes.

“ Termination Date ” has the meaning given to it herein.

“ Timber Tenures ” means the rights of the Sellers or any Affiliate to harvest timber from lands owned by the Province of British Columbia.

“ Transaction Approval Orders ” means, collectively, the orders entered by each of the Bankruptcy Court and the Canadian Court, authorizing the Sellers to enter into this Agreement and to consummate the transactions and, on Closing, vesting in the Purchaser all of the Sellers’ right, title and interest in and to the Purchased Assets, free and clear of all Liens, save and except for Permitted Encumbrances, both of which orders shall be in form and substance reasonably acceptable to the Purchaser and the Sellers.

“ Transactions ” means the transactions contemplated by this Agreement and the Ancillary Agreements.

SECTION 1.02 Interpretation and Rules of Construction . In this Agreement, except to the extent otherwise provided or that the context otherwise requires:

(a) when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated;

(b) the table of contents and headings for this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement;

(c) whenever the words “include,” “includes” or “including” are used in this Agreement, they are deemed to be followed by the words “without limitation”;

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(d) the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement;

(e) all terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein;

(f) the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms;

(g) references to a Person are also to the Person’s heirs, executors, administrators, personal representatives, successors and permitted assigns, as applicable; and

(h) the use of “or” is not intended to be exclusive unless expressly indicated otherwise.

ARTICLE II

PURCHASE AND SALE

SECTION 2.01 Purchase and Sale of Assets . (a) Upon the terms and subject to the conditions of this Agreement, at the Closing, the Sellers shall sell, assign, transfer, convey and deliver, or cause to be sold, assigned, transferred, conveyed and delivered, to the Purchaser, and the Purchaser shall purchase from the Sellers, the following assets (the “ Purchased Assets ”), free and clear of all Liens, other than Permitted Encumbrances:

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(b) Notwithstanding anything in Section 2.01(a) to the contrary, the Sellers shall not sell, convey, assign, transfer or deliver, nor cause to be sold, conveyed, assigned, transferred or delivered, to the Purchaser, and the Purchaser shall not purchase, and the Purchased Assets shall not include, the Sellers’ right, title and interest in and to any assets of the Sellers not expressly included in the Purchased Assets (the “ Excluded Assets ”), including:

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SECTION 2.02 Assumption and Exclusion of Liabilities . (a) Upon the terms and subject to the conditions set forth in this Agreement, and except as provided Section 2.02(b) below hereof, the Purchaser shall, by executing and delivering, at the Closing, the Bill of Sale, assume, and agree to pay, perform and discharge when due, the following Liabilities (the “ Assumed Liabilities ”):

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(b) The Sellers shall retain, and shall be responsible for paying, performing and discharging when due, and the Purchaser shall not assume or have any responsibility for, the following Liabilities (the “ Excluded Liabilities ”):

SECTION 2.03 Purchase Price . (a) The purchase price for the Purchased Assets shall be $750,000 (the “ Purchase Price ”).

SECTION 2.04 Allocation of the Purchase Price . The Purchase Price shall be allocated among the Purchased Assets as of the Closing Date in accordance with a schedule to be agreed upon by Sellers and Purchaser prior to the Closing Date (the “ Allocation ”). If the Sellers and the Purchaser are unable to agree upon the Allocation by the Closing Date, the disputed items shall be resolved by an independent appraisal firm selected by the Sellers and the Purchaser. For the purposes of the Allocation, (i) there shall be allocated to working capital assets (including, without limitation, inventory, spare parts and prepaid assets) an amount equal to such assets’ book value and (ii) the balance of the Purchase Price shall be allocated to the following categories of assets (but not to the components of such categories): land, plant and equipment. Any subsequent adjustments to the Purchase Price shall be reflected in the Allocation in a manner consistent with Section 1060 of the Tax Code and the Regulations thereunder. Subject to the foregoing provisions of this Section 2.04, for all Tax purposes, the Purchaser and the Sellers agree that the Transactions shall be reported in a manner consistent with the terms of this Agreement, including the Allocation, and that neither of them will take any position inconsistent therewith in any Tax Return, in any refund claim, in any litigation, or otherwise. The Sellers and the Purchaser agree to cooperate with each other in preparing IRS Form 8594, and to furnish the other with a copy of such form prepared in draft form within a reasonable period before its filing due date.

SECTION 2.05 Purchaser’s Deposit . (a) The Sellers hereby acknowledge receipt of a good faith deposit in the amount of $75,000 representing 10% of the Purchase Price (the “ Purchaser’s Deposit ”) by wire transfer of immediately available good funds. The Purchaser’s Deposit shall be held in escrow by the Escrow Agent in accordance with the terms of the Deposit Escrow Agreement.

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(b) Without limiting the rights of the parties hereunder, and subject to terms of the Deposit Escrow Agreement: (i) if this Agreement is terminated by the Sellers or the Purchaser for any of the reasons set forth in Section 7.01(a), (b), (d) or (e) hereof, then the Purchaser’s Deposit, plus any accrued interest thereon, shall be returned to the Purchaser; (ii) if this Agreement is terminated by the Sellers for the reason set forth in Section 7.01(c), then the Sellers shall be entitled to retain the Purchaser’s Deposit, plus any accrued interest thereon; and (iii) at the Closing, the Purchaser shall cause the Escrow Agent to transfer to the Purchase Price Bank Account the Purchaser’s Deposit, plus any accrued interest thereon.

SECTION 2.06 Closing . Subject to the terms and conditions of this Agreement, the sale and purchase of the Purchased Assets and the assumption of the Assumed Liabilities contemplated by this Agreement shall take place at a closing (the “Closing”) to be held at such time and date as the Sellers and the Purchaser may mutually agree upon in writing (the “ Closing Date ”).

SECTION 2.07 Closing Deliveries by the Sellers . At the Closing, the Seller shall deliver or cause to be delivered to the Purchaser:

(a) a true copy of each of the Transaction Approval Orders, as entered by the Bankruptcy Court and the Canadian Court, respectively;

(b) the Bill of Sale, and such other instruments, in form and substance reasonably satisfactory to the Purchaser, as may be reasonably requested by the Purchaser to effect the transfer of the Purchased Assets to the Purchaser, or to register or evidence such transfer on the public records, in each case duly executed by the applicable Seller;

(c) executed counterparts of each Ancillary Agreement to which any of the Sellers is a party (other than the Ancillary Agreements delivered pursuant to Section 2.07(b));

(d) a receipt for the Purchase Price;

(e) [intentionally omitted];

(f) executed counterparts of the GST election referred to in Section 5.07(b); and

(g) a certificate of a duly authorized officer of each of the Sellers certifying as to the matters set forth in Section 6.02(a).

SECTION 2.08 Closing Deliveries by the Purchaser . At the Closing, the Purchaser shall deliver, or cause to be delivered, to the Sellers:

(a) (i) the Purchase Price, less the Purchaser’s Deposit, by wire transfer in immediately available funds; and (ii) in accordance with Section 2.05(b)(iii), the Purchaser’s Deposit, plus any accrued interest thereon, in each case, to the Purchase Price Bank Account;

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(b) executed counterparts of the Bill of Sale, the Omnibus Assignment of Lease, and such other instruments, in form and substance satisfactory to the Sellers, as may be requested by the Sellers, to effect the assumption by the Purchaser of the Assumed Liabilities and to evidence such assumption on the public records;

(c) executed counterparts of each Ancillary Agreement (other than the Ancillary Agreements delivered pursuant to Section 2.08(b)) to which the Purchaser is a party;

(d) a certificate of a duly authorized officer of the Purchaser certifying as to the matters set forth in Section 6.01(a); and

(e) executed counterparts of the GST election referred to in Section 5.07(b).

SECTION 2.09 Registration of Transfers of Real Property . All closing documents shall be executed and placed into escrow at the offices of the Sellers’ Counsel at 12:00 p.m. New York time on the Business Day before the Closing Date, except an original court certified copy of the Transaction Approval Order issued by the Canadian Court (the “ Canadian Transaction Approval and Vesting Order ”), which will be placed into escrow at the offices of the Sellers’ Canadian Counsel by 12:00 p.m. New York time on the Business Day before the Closing Date, and except a Land Title Act (British Columbia) form 17 application, property transfer tax forms and sufficient funds to pay the property transfer tax for the Owned Real Property located in Canada that is to be transferred to the Purchaser by the registration of the Canadian Transaction Approval and Vesting Order in the Land Title Office, which will be executed and placed into escrow at the offices of the Purchaser’s Counsel (with copies of the form 17 and the property transfer tax forms provided to the Sellers’ Canadian Counsel) by 12:00 p.m. New York time on the Business Day before the Closing Date. The Purchaser shall provide the monies referred to in Section 2.08(a) (the “ Escrowed Closing Funds ”) to the Purchaser’s Counsel in trust by the same deadline. The closing documents and Escrowed Closing Funds shall then be held in escrow until released as provided below:

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SECTION 2.10 Post-Closing Notification . Upon completion of the Closing, the Purchaser and Sellers may, if they determine it to be necessary, confirm the completion in writing to the Minister of Forests of British Columbia within seven (7) days after the completion as required by section 54.2 of the Forest Act (British Columbia).

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF THE SELLERS

Except as set forth in the SEC Reports, the Sellers hereby represent and warrant to the Purchaser, as of the date hereof or, if a representation or warranty is made as of a specified date, as of such date, as follows:

SECTION 3.01 Organization, Authority and Qualification of the Sellers . Except as a result of the commencement of the Chapter 11 Cases and the Canadian Proceedings, each of the Sellers is a corporation or partnership, as the case may be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, and, subject to obtaining the approval of the Bankruptcy Court and Canadian Court, has all necessary power and authority to enter into this Agreement and the Ancillary Agreements, to carry out its obligations hereunder and thereunder, and to consummate the Transactions. Each of the Sellers is duly licensed or qualified to do business and is in good standing in each jurisdiction which the properties owned or leased by it or the operation of its respective business makes such licensing or qualification necessary, except to the extent that the failure to be so licensed, qualified or in good standing: (a) has resulted from the commencement or continuance of the Chapter 11 Cases or the Canadian Proceedings; or (b) would not: (i) adversely affect the ability of such Seller to carry out its obligations under this Agreement and the Ancillary Agreements, and to consummate the Transactions; or (ii) otherwise have a Material Adverse Effect. Subject to obtaining the Transaction Approval Orders from the Bankruptcy Court and Canadian Court, the execution and delivery of this Agreement and the Ancillary Agreements by each Seller, the performance by each Seller of its obligations hereunder and thereunder, and the consummation by each Seller of the Transactions have been duly authorized by all requisite action on the part of such Seller and its stockholders or partners, as the case may be. This Agreement has been, and upon their execution, the Ancillary Agreements shall have been, duly executed and delivered by each Seller, and (assuming due authorization, execution and delivery by the Purchaser), subject to the approval of the Bankruptcy Court and Canadian Court, this Agreement constitutes, and, upon their execution, the Ancillary Agreements shall,

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constitute, legal, valid and binding obligations of such Seller, enforceable against such Seller in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium or similar Laws now or hereafter in effect relating to creditors’ rights generally and subject to general principles of equity.

SECTION 3.02 No Conflict . Subject to the approval of the Bankruptcy Court and the Canadian Court, and assuming that all consents, approvals, authorizations and other actions described in Section 3.03 have been obtained, all filings and notifications listed in Section 3.03 of the Disclosure Schedule have been made, and any applicable waiting period has expired or been terminated, and except as may result from any facts or circumstances relating solely to the Purchaser, the execution, delivery and performance of this Agreement and the Ancillary Agreements by the Sellers do not and will not, except as set forth in Section 3.02 of the Disclosure Schedule: (a) violate, conflict with or result in the breach of the certificate of incorporation, articles or bylaws (or similar organizational documents) of any of the Sellers; (b) conflict with or violate any Law or Governmental Order applicable to any of the Sellers; or (c) conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, acceleration or cancellation of, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which any of the Sellers is a party, except to the extent that any such rights of termination, acceleration or cancellation are not enforceable due to operation of the Bankruptcy Code or CCAA, and except, in the case of clauses (b) and (c), as would not: (i) materially and adversely affect the ability of any of the Sellers to carry out its obligations under this Agreement and the Ancillary Agreements, and to consummate the Transactions; or (ii) otherwise have a Material Adverse Effect.

SECTION 3.03 Governmental Consents and Approvals . The execution, delivery and performance of this Agreement and each Ancillary Agreement by the Sellers do not and will not require any consent, approval, authorization or other order of, action by, filing with or notification to, any Governmental Authority, except: (a) the approval of the Bankruptcy Court and the Canadian Court, (b) any applicable requirements under the ICA, (c) compliance with and filing under the pre merger notification and waiting period requirements of the Competition Act, or (d) where failure to obtain such consent, approval, authorization or action, or to make such filing or notification, would not prevent or materially delay the consummation by the Sellers of the Transactions, and would not have a Material Adverse Effect.

SECTION 3.04 SEC Filings; Financial Statements; Undisclosed Liabilities . (a) PTI has filed all forms, reports, statements, schedules and other documents required to be filed by it with the SEC since January 1, 2005 (collectively, the “ SEC Reports ”). The SEC Reports (i) were prepared in accordance with the applicable requirements of the Securities Act of 1933, as amended (the “ Securities Act ”), the Exchange Act, and, in each case, the rules and regulations promulgated thereunder, and (ii) did not, at the time they were filed, or, if amended, as of the date of such amendment, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. None of the Sellers, other than PTI, is required to file any form, report or other document with the SEC.

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(b) Each of the consolidated financial statements (including, in each case, any notes thereto) contained in the SEC Reports was prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) and each fairly presents, in all material respects, the consolidated financial position, results of operations and cash flows of PTI and its consolidated subsidiaries, as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments).

SECTION 3.05 Litigation . Except for the Chapter 11 Cases and Canadian Proceedings, and any and all Actions arising therefrom or related thereto, and as set forth in Section 3.05 of the Disclosure Schedule, as of the date hereof there is no Action by or against any of the Sellers and relating to the Business, pending before any Governmental Authority, that would: (a) adversely affect the ability of any of the Sellers to carry out its obligations under this Agreement and the Ancillary Agreements, and to consummate the Transactions; or (b) otherwise have a Material Adverse Effect.

SECTION 3.06 Compliance with Laws . Except as set forth in Section 3.06 of the Disclosure Schedule and as would not: (a) adversely affect the ability of any the Sellers to carry out its obligations under this Agreement and the Ancillary Agreements, and to consummate the Transactions; or (b) otherwise have a Material Adverse Effect, the Sellers have conducted and continue to conduct the Business in accordance with all Laws and Governmental Orders applicable to the Business, and the Sellers are not in violation of any such Law or Governmental Order.

SECTION 3.07 Environmental Matters . (a) Except as disclosed in Section 3.07 of the Disclosure Schedule or as would not have a Material Adverse Effect, to the Sellers’ Knowledge: (i) the Sellers, to the extent related solely to the Business, are in compliance with all applicable Environmental Laws and have obtained, and are in compliance with, all Environmental Permits; (ii) there are no written claims pursuant to any Environmental Law pending or threatened against the Sellers to the extent relating solely to the Business; and (iii) the Sellers have provided the Purchaser with copies of any and all third party environmental site assessments or environmental audits prepared within the last two years and in the Sellers’ possession that relate to the Purchased Assets.

(b) The Purchaser acknowledges that: (i) the representations and warranties contained in this Section 3.07 are the only representations and warranties being made with respect to compliance with or liability under Environmental Laws, or with respect to any environmental, health or safety matter, including natural resources, related in any way to the Business, including the Purchased Assets, or to this Agreement or its subject matter; and (ii) no other representation contained in this Agreement shall apply to any such matters and no other representation or warranty, express or implied, is being made with respect thereto.

SECTION 3.08 Real Property Interests . (a) Section 2.01(a)(i)(A) of the Disclosure Schedule lists the street address, and the current owner, of each parcel of real property in which PTI or PTL have fee title (or equivalent) interest, to the extent used in the conduct of the Business, other than any real property set forth in Section 2.01(b)(i) of the

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Disclosure Schedule. Except as would not have a Material Adverse Effect or except as described in the Section 3.08(a) of the Disclosure Schedule: (i) to the Sellers’ Knowledge, each Seller listed on Section 2.01(a)(i)(A) of the Disclosure Schedule as owner of a parcel of Owned Real Property has title in fee simple to such parcel free and clear of all Liens, except Permitted Encumbrances; (ii) to the extent as are in the Sellers’ possession, the Sellers have made available to the Purchaser copies of each deed for each parcel of Owned Real Property.

(b) Section 2.01(a)(i)(B) of the Disclosure Schedule lists the street address of each parcel of real property leased or subleased by any Seller as tenant or subtenant, as the case may be, to the extent used in the conduct of the Business, and the identity of the lessee of each such parcel of Leased Real Property, other than any real property set forth in Section 2.01(b)(i) of the Disclosure Schedule or any real property leased or subleased pursuant to a lease set forth in Section 2.01(b)(i) of the Disclosure Schedule. The Sellers have delivered to the Purchaser, copies of the leases in effect at the date hereof relating to the Leased Real Property, other than as would not have a Material Adverse Effect, and, except as set forth on Section 2.01(a)(i)(B) of the Disclosure Schedule, there has not been any sublease or assignment entered into by any of the Sellers in respect of the leases relating to the Leased Real Property.

SECTION 3.09 Taxes . Except as set forth in Section 3.09 of the Disclosure Schedule, and except for matters that would not have a Material Adverse Effect, to the Sellers’ Knowledge, (a) all Tax Returns in respect of Taxes required to have been filed with respect to the Business or the Purchased Assets have been timely filed (taking into account any extension of time to file granted or obtained), (b) all Taxes shown to be payable on such Tax Returns have been paid or will be timely paid, (c) none of the Sellers have received from any Governmental Authority any written notice of proposed adjustment, deficiency or underpayment of any Taxes relating to the Business or the Purchased Assets, other than a proposed adjustment, deficiency or adjustment that has been satisfied by payment or settlement, or withdrawn, and (d) there are no Tax liens on any of the Purchased Assets (other than Permitted Encumbrances).

SECTION 3.10 Material Contracts . (a) Section 3.10(a) of the Disclosure Schedule lists the material Contracts of the Sellers as of the date of this Agreement which Purchaser has expressed an interest in having assigned to it, but only to the extent such Contracts relate primarily to the Business and, except for being deemed an Excluded Asset by operation of Section 2.01(b)(xi), would be transferred to the Purchaser hereunder (such Contracts, including any additional Contracts identified by Sellers after the date of this Agreement, being “Material Contracts”).

(b) Except as disclosed in Section 3.10(b) of the Disclosure Schedule, each Material Contract: (i) is valid and binding on the applicable Seller and, to the Knowledge of the Sellers, the counterparties thereto, and is in full force and effect; and (ii) upon consummation of the Transactions, except to the extent that any consents set forth in Section 3.02 of the Disclosure Schedule are not obtained, shall continue in full force and effect without penalty or other adverse consequence. Except as disclosed in Section 3.10(b) of the Disclosure Schedule, the Sellers are not in breach of, or default under, any Material Contract to which any of them is a party, except for such breaches or defaults that would not have a Material Adverse Effect.

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SECTION 3.11 Brokers . Except for the Financial Advisor, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Seller. The Sellers are solely responsible for the fees and expenses of the Financial Advisor.

SECTION 3.12 Disclaimer of the Sellers . (A) THE PURCHASED ASSETS, ARE BEING SOLD ON AN “AS IS”, “WHERE IS” BASIS AS OF THE CLOSING AND IN ITS CONDITION AS OF CLOSING WITH “ALL FAULTS” AND, EXCEPT AS SET FORTH IN THIS ARTICLE III AND EXCEPT FOR ANY WARRANTIES OF TITLE CONTAINED IN ANY DEED TO ANY OWNED REAL PROPERTY DELIVERED AT THE CLOSING, NONE OF THE SELLERS, THEIR AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR OTHER REPRESENTATIVES MAKE OR HAVE MADE ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF THE BUSINESS OR ANY OF THE PURCHASED ASSETS, INCLUDING WITH RESPECT TO (I) MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, (II) THE OPERATION OF THE BUSINESS BY THE PURCHASER AFTER THE CLOSING IN ANY MANNER OTHER THAN AS USED AND OPERATED BY THE SELLERS OR (III) THE PROBABLE SUCCESS