ASSET PURCHASE AGREEMENT

Exhibit 2.2

ASSET PURCHASE AGREEMENT

Between

POPE & TALBOT, INC.

POPE & TALBOT LTD.

And

PT PINDO DELI PULP and PAPER MILLS

Dated as of February 5, 2008

TABLE OF CONTENTS

EXHIBITS

ASSET PURCHASE AGREEMENT (this “ Agreement ”), dated as of February 5, 2008, between Pope & Talbot, Inc. a corporation organized under the laws of the state of Delaware, to the extent that it is a counter-party to any of the Assigned Contracts, and Pope & Talbot Ltd. a corporation organized under the federal laws of Canada (collectively, the “ Seller ”), and PT Pindo Deli Pulp and Paper Mills , an Indonesian corporation (the “ Purchaser ”).

RECITALS

WHEREAS:

NOW, THEREFORE, in consideration of the promises and the mutual agreements and covenants hereinafter set forth, and intending to be legally bound, the Seller 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 Omnibus Assignment of Lease, the Deposit Escrow Agreement and such other documents or instruments of transfer and conveyance as the Seller or Purchaser may deem necessary, including without limitation one or more assignments of Assigned Contracts, Permits and Licenses and Timber Tenures, each in form and substance reasonably acceptable to the Purchaser and the Seller, the terms of which shall be fully consistent with this Agreement.

“ Assigned Contract ” means any Material Contract that is not deemed an Excluded Asset by operation of Section 2.01(b)(xi) or excluded pursuant to Section 5.01(b).

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

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

“ Bankruptcy Court ” 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 Seller at the Closing, substantially in the form of Exhibit 1.01(a).

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

“ 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 Vancouver, British Columbia.

“ Canadian Court ” 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.

“ 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.

“ Collective Bargaining Agreement ” means the collective bargaining agreement listed in Section 6.03 of the Disclosure Schedule.

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

“ Confidentiality Agreement ” has the meaning given to it in Section 5.04.

“ 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.

“ Cure Costs ” has the meaning given to it in Section 5.01(c).

“ Deposit Escrow Agreement ” means the Deposit Escrow Agreement to be entered into among the Seller, 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 Seller 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.

“ Employee Liabilities ” has the meaning set out in Section 2.02(a)(v).

“ Employee Plans ” has the meaning given to it in Section 3.10(a) and includes any multi-employer pension plans referred to in any of the Collective Bargaining Agreement.

“ Employees ” mean employees of the Seller who provide services primarily related to the Business, including any Union Employees.

“ 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:

(i) the presence in, on, at or under, or the Release to, at or from any of the Owned Real Property, any of the Leased Real Property or any area used pursuant to the Permits and Licenses (including the Timber Tenures), including all soil, sediments, water, groundwater, buildings, structures, fixtures, improvements and equipment thereon or thereunder and Releases therefrom into the air, of any Hazardous Materials, whether before or after the Closing;

(ii) the presence of any Hazardous Materials in, on, at or under any land, sediments, water, groundwater or any other location whatsoever where such Hazardous Materials originated whether before or after the Closing from any of the Owned Real Property, any of the Leased Real Property or any area used pursuant to the Permits and Licenses (including the Timber Tenures), including all soil, sediments, water, groundwater, buildings, structures, fixtures, improvements and equipment thereon or thereunder; and

(iii) any other circumstance, condition, matter, occurrence, issue, event or requirement relating to the environment (which includes any building, structure, fixture, improvement or equipment on or forming part of any of the Purchased Assets), health or safety that exists in, on, at or under any of the Owned Real Property, any of the Leased Real Property or any area used pursuant to the Permits and Licenses (including the Timber Tenures), including all soil, sediments, water, groundwater, buildings, structures, fixtures, improvements and equipment thereon or thereunder that is or was caused (directly or indirectly) by, or arises from or relates to, the operation of the Business or the Purchased Assets, whether before or after the Closing.

“ 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 Seller other than the Business.

“ 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, including without limitation Taxes payable on the income of the Seller, 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.

“ Forestry Liabilities ” means all silviculture, reforestation, road deactivation and road reclamation Liabilities and other post-harvest obligations associated with the Timber Tenures that relate to attaining the applicable reforestation or road deactivation standards for any harvested tracts or roads, including conducting surveys of harvested blocks, re-surveying blocks that meet conditionally satisfactory reforested levels, deactivation and site reclamation of road rights of way and re-treating harvested blocks that had been deemed not to meet the reforestation standards.

“ 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.

“ 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.

“ ICA ” means the Investment Canada Act .

“ Intellectual Property ” means (a) patents and patent applications, (b) trademarks, service marks, trade names, trade dress and Internet domain names, together with the goodwill associated exclusively therewith, (c) copyrights, including copyrights in computer software, (d) confidential and proprietary information, including trade secrets and know-how, and (e) registrations and applications for registration of the foregoing.

“ Inventories ” means all inventory, merchandise, spare parts, finished goods, work in progress, raw materials and other personal property primarily related to the Business and maintained, held or stored by or for any of the Seller in connection with the Business, as of the Closing Date, and any prepaid deposits for any of the same, including VMI/Reloads.

“ Land Title Office ” means the lower mainland land title office located in New Westminster, 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 the 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 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 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 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 the Seller or any Affiliates within the Chapter 11 Cases, or by the Seller, any 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 3.12(a).

“ Mechanics Liens ” means 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 pledges, deposits or other liens securing the performance of bids, trade contracts, leases or statutory obligations (including workers’ compensation, unemployment insurance or other social security legislation).

“ Mill ” means the manufacturing facilities operated by the Seller situated on lands at or about Fort St. James, British Columbia, which lands are included among the Owned Real Property and Leased Real Property.

“ Offering Memorandum ” has the meaning given to it in Section 3.16.

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

“ 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 the Seller, 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)(viii).

“ Permitted and Licensed Crown Lands ” means lands owned by Her Majesty the Queen in Right of the Province of British Columbia in respect of which Seller has Permits and Licenses.

“ Permitted Encumbrances ” means: (a) statutory Liens for current Property Taxes not yet due or delinquent (or which may be paid without interest or penalties) and that are subject to pro-ration pursuant to Section 5.14; (b) Mechanics’ Liens; (c) zoning, landmarking, entitlement, conservation restriction and other land use and environmental regulations by Governmental Authorities which do not materially interfere with the occupancy or present use of the Purchased Assets; (d) all covenants, conditions, restrictions, easements, rights-of-way,

licenses and other similar interests in land (excluding, for greater certainty, as of the Closing, any mortgages, assignment of rents or any other financial charges) that were registered against title to the applicable real property prior to February 1, 2008 (Vancouver time); (e) the exceptions to title set out in subsection 23(2) of the Land Title Act (British Columbia); (f) matters which would be disclosed by an accurate survey or inspection of the real property which do not materially impair the current use, occupancy or value of such real property.

“ 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.

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

“ 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 Seller 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).

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

“ 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 and Escrow Agent at least two Business Days before the Closing.

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

“ Purchaser’s Counsel ” means McCarthy Tétrault LLP.

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

“ Registered ” means, solely with respect to Intellectual Property, issued by, registered or filed with, renewed by or the subject of a pending application before any Governmental Authority or Internet domain name registrar.

“ 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 ” means any forms, reports, statements, schedules and other documents required to be filed by the Seller with the SEC since January 1, 2005.

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

“ Seller’s Knowledge ”, “ Knowledge of the Seller ” or similar terms used in this Agreement mean the actual (but not constructive or imputed) knowledge of the Persons listed in Exhibit 1.01(c) 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.

“ Seller’s 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, including without limitation, GST, PST, all employee source deductions required by law and remittances owing pursuant to the Workers Compensation Act (British Columbia) (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 Documents ” has the meaning given to it in Section 5.08.

“ 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 in Section 5.05(b).

“ Timber Tenures ” means the rights of the Seller to harvest timber from lands owned by the Province of British Columbia, including without limitation Forest License A77955.

“ Timber Tenure Cure Costs ” means, in respect of any Timber Tenure, any money that: (a) is required to be paid to the applicable Governmental Authority under the circumstances set out in section 130(1.1) of the Forest Act ; (b) is due and payable to such Governmental Authority; and (c) has not been paid to such Governmental Authority.

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

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

“ Transferred Employee ” has the meaning given to it in Section 6.01.

“ Union Employees ” means employees of a Seller who are subject to a Collective Bargaining Agreement and who ordinarily report to work at any of the Mill.

“ VMI/Reloads ” means all Inventories that are vendor-managed inventories, which are maintained, held or stored by the Seller’s customers or third party warehouses on behalf of the Seller.

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”;

(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 and in any case where a reference is made to a Seller such reference shall apply to both Pope & Talbot, Inc. and Pope & Talbot Ltd., unless the context demands otherwise;

(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 Seller 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 Seller, all assets and rights of the Seller that are used in or held for use in the Business as a going concern (the “ Purchased Assets ”), free and clear of all Liens, except Permitted Encumbrances other than Mechanic’s Liens, including:

(i) the Owned Real Property and all of the Seller’s right, title and interest in and to the Leased Real Property;

(ii) the Timber Tenures;

(iii) all tangible personal property owned by the Seller and used primarily in the conduct of the Business, including equipment, machinery, trucks, cars, other vehicles, rolling stock and marine vessels;

(iv) the Inventories;

(v) the books of account, general, financial, Tax (other than income tax) and personnel records, invoices, shipping records, supplier lists, correspondence and other documents, records and files and any rights thereto owned, solely associated with or solely employed by the Seller in the conduct of the Business;

(vi) the goodwill of the Seller to the extent relating to the Business;

(vii) all of the Seller’s right, title and interest in and to the Assigned Contracts (to the extent that such Contracts are transferable);

(viii) all of the Seller’s right, title and interest in and to the municipal, provincial and federal franchises, permits, licenses, agreements, waivers and authorizations, including Environmental Permits, held or used by the Seller solely in connection with the Business (collectively, the “ Permits and Licenses ”);

(ix) the sales and promotional literature, customer lists and other sales-related materials of the Seller related to the Business; and

(x) subject to the provisions of Section 2.01(b), all of the Seller’s right, title and interest in and to (A) all other real and personal property (tangible and intangible) that is used primarily in connection with the Business, (B) to the extent transferable and only to the extent related to the Purchased Assets, the full benefit of all representations, warranties, guarantees, indemnities, undertakings, certificates, covenants, agreements and all security therefor received by the Seller on the purchase or other acquisition of the Purchased Assets, and (C) any rights, demands, claims, credits, allowances, rebates, causes of action, known or unknown, or rights of setoff, other than against Seller or any Affiliates, arising out of or relating to any of the Purchased Assets.

(b) Notwithstanding anything in Section 2.01(a) to the contrary, the Seller 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 Seller’s right, title and interest in and to any of the following assets (the “ Excluded Assets ”):

(i) any right, property or asset that is listed or described in Section 2.01(b)(i) of the Disclosure Schedule;

(ii) the Purchase Price Bank Account;

(iii) all cash and cash equivalents, securities, and negotiable instruments of the Seller on hand, in lock boxes, in financial institutions or elsewhere, including all cash residing in any collateral cash account securing any obligation or contingent obligation of the Seller or any Affiliates;

(iv) any rights to Tax refunds, credits or similar benefits attributable to Excluded Taxes;

(v) the company seal, minute books, charter documents, stock or equity record books and such other books and records as pertain to the organization, existence or capitalization of the Seller, as well as any other records or materials relating to the Seller generally, and not involving or directly related to the Purchased Assets or the operations of the Business;

(vi) all of the Seller’s right, title and interest in and to the Retained Names and Marks;

(vii) all rights of the Seller under this Agreement and the Ancillary Agreements;

(viii) Tax Returns of the Seller, other than those relating solely to the Purchased Assets or the Business, except that income tax returns and documents and records related to such income tax returns (whether or not relating solely to the Purchased Assets or the Business) shall be Excluded Assets;

(ix) all current and prior insurance policies of the Seller and all rights of any nature with respect thereto, including all insurance recoveries thereunder and rights to assert claims with respect to any such insurance recoveries;

(x) any rights, demands, claims, actions, including, without limitation, causes of action constituting avoidance actions or other claims of Sellers’ estates under chapter 5 of the Bankruptcy Code;

(xi) any Material Contract and rights thereunder which the Bankruptcy Court or Canadian Court has determined shall not be assigned to the Purchaser;

(xii) any assets relating to the Employee Plans;

(xiii) any assets primarily used by the Seller or any Affiliates in the conduct of any Excluded Business;

(xiv) all personal property (tangible and intangible) located at the Portland Premises that is used primarily in the conduct of any Excluded Business; and

(xv) the Seller’s interest in LFPLLP, including any Contracts with LFPLLP and rights thereunder.

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 ”):

(i) all Liabilities set forth in Section 2.02(a)(i) of the Disclosure Schedule;

(ii) all Cure Costs in accordance with Section 5.01;

(iii) all Liabilities in respect of Permits and Licenses, including all Forestry Liabilities;

(iv) all Liabilities for product warranty service claims relating to products of the Business and all Product Liabilities;

(v) all Liabilities in respect of the Transferred Employees, including those arising in connection with these Transactions (including Liabilities under the Employee Plans that are incurred as a result of a separation from employment from the Seller), and all Liabilities in respect of accrued vacation (banked and supplemental, including vacation pay on vacation pay), overtime entitlement, sick leave, severance in lieu of notice, workers’ compensation claims and insurance claims (“Employee Liabilities”);

(vi) all Liabilities of the Seller under the Permitted Encumbrances except for Mechanics Liens;

(vii) all Environmental Liabilities related to the Business, the Purchased Assets, the Seller (to the extent related to the Business), the Owned Real Property and the Leased Real Property, and any other real property the Seller uses, or has the right to use, in connection with the Business where such real property or such right to use such real property is a Purchased Asset, including any area used pursuant to the Permits and Licenses (including the Timber Tenures);

(viii) all Taxes relating to the Purchased Assets or the Business other than Excluded Taxes; and

(ix) all other Liabilities arising in connection with the ownership, operation, and use of the Purchased Assets from and after the Closing Date.

(b) With the exception only of Assumed Liabilities, the Seller shall retain, and shall be responsible for paying, performing and discharging when due, and the Purchaser shall not assume or have any responsibility for, any Liabilities (the “ Excluded Liabilities ”), including any of the following Liabilities:

(i) all Excluded Taxes;

(ii) all Liabilities relating to or arising out of the Excluded Assets; and

(iii) the Seller’s obligations under this Agreement;

SECTION 2.03 Purchase Price . (a) The aggregate purchase price for the Purchased Assets shall be $6,000,000, as adjusted pursuant to section Section 2.03(b) plus the aggregate amount of the Employee Liabilities (to a maximum amount of $1,500,000) and the Forestry Liabilities, the Timber Tenure Cure Costs and the Cure Costs (to a maximum amount of $8,000,000) which shall be paid in cash (the “Purchase Price”).

(b) If the value of the Inventory on hand as of the Closing Date (valued at the lesser of value or cost) is less than $3,900,000, the Purchase Price will be reduced by the amount of such shortfall.

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 Seller and Purchaser prior to the Closing Date (the “Allocation”). If the Seller 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 Seller and the Purchaser. Subject to the foregoing provisions of this Section 2.04, for all Tax purposes, the Purchaser and the Seller 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.

SECTION 2.05 Purchaser’s Deposit . (a) The Seller hereby acknowledges receipt of a good faith deposit in the amount of $600,000 representing 10% of the cash portion of the Purchase Price (the “Purchaser’s Deposit”) by electronic 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.

(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 Seller or the Purchaser for any of the reasons set forth in Section 8.01(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 Seller for the reason set forth in Section 8.01(c), then the Seller shall be entitled to retain the Purchaser’s Deposit as liquidated damages, 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 the offices of the Seller’s Canadian Counsel, 1200 200 Burrard Street, Vancouver, British Columbia at 10:00 a.m. Vancouver time on the third Business Day following the satisfaction or waiver of the conditions to the obligations of the parties hereto set forth in Section 7.01 and Section 7.02, or at such other place or at such other time or on such other date as the Seller and the Purchaser may mutually agree upon in writing (the “Closing Date”).

SECTION 2.07 Closing Deliveries by the Seller . 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, the Omnibus Assignment of Lease, 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 Seller;

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

(d) a receipt for the cash portion of the Purchase Price;

(e) a certificate of residency of the Seller for the purposes of the Income Tax Act (Canada);

(f) executed counterparts of the GST election referred to in Section 5.09(b); and

(g) a certificate of a duly authorized officer of the Seller certifying as to the matters set forth in Section 7.02(a).

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

(a)(i) the cash portion of the Purchase Price, less the Purchaser’s Deposit, by electronic 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;

(b) executed counterparts of the Bill of Sale, the Omnibus Assignment of Lease and such other instruments, in form and substance satisfactory to the Seller, as may be requested by the Seller, 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 7.01(a); and

(e) executed counterparts of the GST election referred to in Section 5.09(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 Seller’s Canadian Counsel at 9:00 a.m. Vancouver 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 Seller’s Canadian Counsel by 9:00 a.m. Vancouver 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 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 Seller’s Canadian Counsel) by 9:00 a.m. Vancouver 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:

(a) Upon all closing documents being escrowed and receipt by the Seller’s Counsel and the Seller’s Canadian Counsel of written confirmation from the Purchaser’s Counsel that it holds the Escrowed Closing Funds in trust, the Canadian Transaction Approval and Vesting Order shall be released to the Purchaser’s Counsel on trust conditions and undertakings of the Purchaser’s Counsel approved by the Seller’s Canadian Counsel and the Purchaser’s Counsel, both acting reasonably, and failing such agreement as arbitrated by an independent real estate solicitor qualified and actively practicing real estate law in Vancouver, British Columbia agreed to by the Seller’s Canadian Counsel and the Purchaser’s Counsel or, failing such agreement, appointed by the Canadian Court upon application of either the Purchaser or the Seller.

(b) Forthwith upon receipt by the Purchaser’s Counsel of the Canadian Transaction Approval and Vesting Order, and provided at that time none of the conditions to Closing contained in Article VII that have not been waived remain unfulfilled, the Purchaser shall cause the Purchaser’s Counsel to submit the Canadian Transaction Approval and Vesting Order with the form 17, the property transfer tax forms and payment of the property transfer tax for registration in the Land Title Office on the Closing Date. The undertakings of the Purchaser’s Counsel referred to in Section 2.09(a) shall include an undertaking from the Purchaser’s Counsel to the Seller and the Seller’s Canadian Counsel that if the Escrowed Closing Funds are not paid to the Seller on the Closing Date in accordance with Section 2.08(a), the Purchaser’s Counsel will, upon the written request of the Seller or the Seller’s Canadian Counsel, forthwith request that the registration of the Canadian Transaction Approval and Vesting Order be withdrawn and cancelled.

(c) Forthwith upon submitting the Canadian Transaction Approval and Vesting Order for registration in the Land Title Office on the Closing Date, the Purchaser will instruct the Purchaser’s Counsel to conduct post-filing land title searches of the Owned Real Property for which the Canadian Transaction Approval and Vesting Order has been deposited for registration, and if the post-filing land title searches of such Owned Real Property show pending numbers assigned to the Canadian Transaction Approval and Vesting Order free and clear of all Liens (other than Permitted Encumbrances except Mechanics Liens), the Purchaser shall instruct the Purchaser’s Counsel to provide written notification of same to the Seller’s Counsel and the Seller’s Canadian Counsel and provided at that time none of the conditions to Closing contained in Article VII that have not been waived remain unfulfilled the Purchaser shall cause the Purchaser’s Counsel to deliver to the Seller at the Closing the Escrowed Closing Funds in accordance with Section 2.08(a), and the closing documents held in escrow pursuant to this Section 2.09 shall be delivered at the Closing to the appropriate party.

(d) If the post-filing land title searches referred to in Section 2.09(c) are not received by the Closing Date or if such post-filing land title searches do not show pending numbers assigned to the Canadian Transaction Approval and Vesting Order free and clear of all Liens (other than Permitted Encumbrances except Mechanics Liens), or if at that time any of the conditions to Closing contained in Article VII that have not been waived are unfulfilled, then the Purchaser shall, upon the written request of the Seller’s Counsel or the Seller’s Canadian Counsel, forthwith cause the Purchaser’s Counsel to apply to the Land Title Office for withdrawal of the Canadian Transaction Approval and Vesting Order and execute and deliver to the Seller all instruments required to reconvey the Owned Real Property for which the Canadian Transaction Approval and Vesting Order was deposited for registration to the Seller, all without prejudice to any rights or remedies of the parties under this Agreement, and upon receipt by the Purchaser’s Counsel of the withdrawn Canadian Transaction Approval and Vesting Order and delivery of the Canadian Transaction Approval and Vesting Order to the Seller, the Purchaser’s Counsel shall be entitled to release the Escrowed Closing Funds to the

Purchaser, together with any and all interest earned thereon, and the remaining documents held by the solicitors shall be redelivered to the relevant maker or makers thereof for cancellation, without in any way impairing the rights and obligations of the parties to one another under this Agreement.

SECTION 2.10 Post-Closing Notification . Upon completion of the Closing, the Purchaser and Seller will 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 SELLER

Except as set forth in the SEC Reports, the Seller hereby represents and warrants 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 Seller . Except as a result of the commencement of the Chapter 11 Cases and the Canadian Proceedings, the Seller is a corporation 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. The Seller 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 the Seller, the performance by the Seller of its obligations hereunder and thereunder, and the consummation by the Seller of the Transactions have been duly authorized by all requisite action on the part of the Seller and its stockholders, as the case may be. This Agreement has been, and upon their execution, the Ancillary Agreements shall have been, duly executed and delivered by the 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, constitute, legal, valid and binding obligations of the Seller, enforceable against the 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 Seller 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 the Seller; (b) conflict with or violate any Law or Governmental Order applicable to any of the Seller; 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 the Seller 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 the 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.

SECTION 3.03 Governmental Consents and Approvals . The execution, delivery and performance of this Agreement and each Ancillary Agreement by the Seller 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) as described in Section 3.03 of the Disclosure Schedule, (c) compliance with and filing under the pre-merger notification and waiting period requirements of the Competition Act , and any compliance with, filings under or approval required under, the antitrust laws of any other relevant jurisdiction; (d) any applicable requirements under the ICA; (e) any notices to proceed and other consents required under the Forest Act (British Columbia), including the notice to proceed under section 54.1 of the Forest Act (British Columbia); (f) 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 Seller of the Transactions, and would not have a Material Adverse Effect; or (f) as may be necessary as a result of any facts or circumstances relating solely to the Purchaser or any of its Affiliates.

SECTION 3.04 INTENTIONALLY DELETED

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 the Seller and relating to the Business, pending before any Governmental Authority, that would: (a) adversely affect the ability of the Seller 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 the Seller 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 Seller has conducted and continue to conduct the Business in accordance with all Laws and Governmental Orders applicable to the Business, and the Seller is 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 Seller’s Knowledge: (i) the Seller, 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 Seller to the extent relating solely to the Business; and (iii) the Seller has 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 Seller’s 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 Intellectual Property . Except as would otherwise have a Material Adverse Effect, Section 3.08 of the Disclosure Schedule sets forth a true and complete list of all material Registered Intellectual Property.

SECTION 3.09 Real Property Interests . (a) Section 2.01(a)(i)(A) of the Disclosure Schedule lists the street address of each parcel of real property in which the Seller has 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 Disclosure Schedule. Except as would not have a Material Adverse Effect or except as described in Section 3.09(a) of the Disclosure Schedule, to the Seller’s Knowledge the Seller has title in fee simple to such parcel free and clear of all Liens, except Permitted Encumbrances.

(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 the 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 Seller has 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 Seller in respect of the leases relating to the Leased Real Property.

SECTION 3.10 Employee Benefit Matters .

(a) Employee Plans and Material Documents . Section 3.10(a) of the Disclosure Schedule lists: (i) all employee benefit plans and all bonus, stock option, stock purchase, restricted stock, incentive, deferred compensation, retiree medical or life insurance, pension (qualified, non-qualified, and registered), severance or other benefit plans, programs or arrangements, and all employment, termination, severance or other contracts or agreements, to which the Seller is a party, with respect to which the Seller has any obligation or which are maintained, contributed to or sponsored by the Seller for the benefit of any Employee other than those provided generally by any Governmental Authority (such as Canada Pension Plan and Employment Insurance); and (ii) any material Contracts between the Seller or any Affiliates, and any Transferred Employee (collectively, the “Employee Plans”). Each Employee Plan is in writing, and the Seller has made available to the Purchaser a true and complete copy of each Employee Plan.

(b) Compliance . To the Seller’s Knowledge, each Employee Plan, other than any multi-employer pension plans, has been operated in all material respects in accordance with its terms and the requirements of all applicable Laws. The Seller has performed all material obligations required to be performed by it under, is not in any material respect in default under or in material violation of, and the Seller has no Knowledge of any material default or violation by any party to, any Employee Plan. To the Knowledge of the Seller, no action is pending or threatened with respect to any Employee Plan (other than claims for benefits in the ordinary course) and, to the Knowledge of the Seller, no fact or event exists that could give rise to any such Action.

(c) INTENTIONALLY DELETED.

SECTION 3.11 Taxes . Except as set forth in Section 3.11 of the Disclosure Schedule, and except for matters that would not have a Material Adverse Effect, to the Seller’s 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) the Seller has not 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 3.12 Material Contracts . (a) Section 3.12(a) of the Disclosure Schedule lists the material Contracts of the Seller as of the date of this Agreement, 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) or excluded pursuant to Section 5.01(b), would be transferred to the Purchaser hereunder (such Contracts, including any additional Contracts identified by Seller after the date of this Agreement, being “Material Contracts”).

(b) Except as disclosed in 3.12(b) of the Disclosure Schedule, each Material Contract: (i) is valid and binding on the applicable Seller and, to the Knowledge of the Seller, 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 3.12(b) of the Disclosure Schedule, the Seller is 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.

SECTION 3.13 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 Seller is solely responsible for the fees and expenses of the Financial Advisor.

SECTION 3.14 Sufficiency of Assets .

The Purchased Assets, together with all “Purchased Assets” as defined under the Asset Purchase Agreement among Pope & Talbot, Inc., Pope & Talbot Ltd., Pope & Talbot Pulp Sales U.S., Inc., Mackenzie Pulp Land Ltd., P&T Power Company and PT Pindo Deli Pulp and Paper Mills dated as of January 8, 2008 (as may be amended from time to time), include substantially all of the assets, rights, interests and properties of every nature and kind whatsoever: (a) used or held for use in the conduct of the Business; or (b) necessary for the Purchaser to conduct and operate the Business immediately after the Closing in all material respects as conducted and operated by the Seller immediately prior to the Closing.

SECTION 3.15 Timber Rights .

As of the date hereof and as of the Closing Date:

(a) PTL is the sole and exclusive licensee under the Timber Tenures, and true and complete copies thereof will be provided to the Purchaser by February 20, 2008, and PTL is listed in the records of Ministry of Forests as the holder thereof; each of the Timber Tenures is validly subsisting and in good standing, no notice of suspension or cancellation of any of the Timber Tenures is outstanding, and no rights of any of the Sellers under any of the Timber Tenures are under suspension, in whole or in part, under Section 76 or 78 of the Forest Act and, to the Knowledge of the Seller, no fact or event that has occurred and could reasonably be expected to result in any such suspension or cancellation;

(b) PTL has not received any notice or advice from any Governmental Authority indicating that the annual allowable cut of any Timber Tenure may be reduced, and, to the Knowledge of the Seller, there is no reason to believe that such a reduction may be forthcoming; and

(c) there are no contracts or agreements that commit the use or disposition of timber or logs harvested under any Timber Tenure.

SECTION 3.16 Disclaimer of the Seller

(A) THE BUSINESS, INCLUDING THE PURCHASED ASSETS, IS 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 SELLER, ITS 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 SELLER OR (III) THE PROBABLE SUCCESS OR PROFITABILITY OF THE BUSINESS AFTER THE CLOSING, AND (B) NONE OF THE SELLER, ITS AFFILIATES, OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES WILL HAVE OR BE SUBJECT TO ANY LIABILITY OR INDEMNIFICATION OBLIGATION TO THE PURCHASER OR TO ANY OTHER PERSON RESULTING FROM THE DISTRIBUTION TO THE PURCHASER, ITS AFFILIATES OR REPRESENTATIVES OF, OR THE PURCHASER’S USE OF, ANY INFORMATION RELATING TO THE BUSINESS, INCLUDING THE CONFIDENTIAL INFORMATION MEMORANDUM DATED AUGUST 2007 (THE “ OFFERING MEMORANDUM ”), AND ANY INFORMATION, DOCUMENTS OR MATERIAL MADE AVAILABLE TO THE PURCHASER, WHETHER ORALLY OR IN WRITING, IN CERTAIN “DATA ROOMS,” MANAGEMENT PRESENTATIONS, FUNCTIONAL “BREAK-OUT” DISCUSSIONS, RESPONSES TO QUESTIONS SUBMITTED ON BEHALF OF THE PURCHASER OR IN ANY OTHER FORM IN EXPECTATION OF THE TRANSACTIONS. ANY SUCH OTHER REPRESENTATION OR WARRANTY IS HEREBY EXPRESSLY DISCLAIMED.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

OF THE PURCHASER

The Purchaser hereby represents and warrants to the Seller as follows:

SECTION 4.01 Organization and Authority of the Purchaser . The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all necessary corporate power and authority to enter into this Agreement and the Ancillary Agreements to which it is a party, to carry out its obligations hereunder and thereunder and to consummate the Transactions. The Purchaser 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 business makes such licensing or qualification necessary, except to the extent that the failure to be so licensed, qualified or in good standing would not adversely affect the ability of Purchaser to carry out its obligations under this Agreement and the Ancillary Agreements, and to consummate the Transactions. The execution and delivery by the Purchaser of this Agreement and the Ancillary Agreements to which it is a party, the performance by the Purchaser of its obligations hereunder and thereunder and the

consummation by the Purchaser of the Transactions have been duly authorized by all requisite corporate action on the part of the Purchaser. This Agreement has been, and upon their execution the Ancillary Agreements to which the Purchaser is a party shall have been, duly executed and delivered by the Purchaser, and (assuming due authorization, execution and delivery by the Seller) this Agreement constitutes, and upon their execution the Ancillary Agreements to which the Purchaser is a party shall constitute, legal, valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with their respective terms.

SECTION 4.02 No Conflict . Assuming compliance with the pre-merger notification and waiting period requirements of the Competition Act and the making and obtaining of all filings, notifications, consents, approvals, authorizations and other actions referred to in Section 4.03, the execution, delivery and performance by the Purchaser of this Agreement and the Ancillary Agreements to which it is a party do not and will not: (a) violate, conflict with or result in the breach of any provision of the certificate of incorporation, articles or bylaws (or similar organizational documents) of the Purchaser; (b) conflict with or violate any Law or Governmental Order applicable to the Purchaser or its respective assets, properties or businesses; 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, amendment, acceleration, suspension, revocation or cancellation of, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Purchaser is a party, except, in the case of clauses (b) and (c), as would not materially and adversely affect the ability of the Purchaser to carry out its obligations under this Agreement and the Ancillary Agreements, and to consummate the Transactions.

SECTION 4.03 Governmental Consents and Approvals . The execution, delivery and performance by the Purchaser of this Agreement and each Ancillary Agreement to which the Purchaser is a party 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) compliance with and filing under the pre-merger notification and waiting period requirements of the Competition Act , and any compliance with, filings under or approval required under, the antitrust laws of any other relevant jurisdiction; (b) any applicable requirements under the ICA; or (c) 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 Purchaser of the Transactions.

SECTION 4.04 Financing . The Purchaser has sufficient immediately available funds to pay, in cash, the Purchase Price and all other amounts payable pursuant to this Agreement and the Ancillary Agreements or otherwise necessary to consummate all the Transactions. Upon the consummation of such Transactions, (a) the Purchaser will not be insolvent, (b) the Purchaser will not be left with unreasonably small capital, (c) the Purchaser will not have incurred debts beyond its ability to pay such debts as they mature and (d) the capital of the Purchaser will not be impaired.

SECTION 4.05 Litigation . As of the date hereof, no Action by or against the Purchaser is pending or, to the best knowledge of the Purchaser, threatened, which could affect the legality, validity or enforceability of this Agreement, any Ancillary Agreement or the consummation of the Transactions.

SECTION 4.06 Brokers . 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 Purchaser.

SECTION 4.07 Independent Investigation; Seller’s Representations . The Purchaser has conducted its own independent investigation, review and analysis of the business, operations, assets, liabilities, results of operations, financial condition, software, technology and prospects of the Business, which investigation, review and analysis was done by the Purchaser and its Affiliates and representatives. The Purchaser acknowledges that it and its representatives have been provided adequate access to the personnel, properties, premises and records of the Business for such purpose. In entering into this Agreement, the Purchaser acknowledges that it has relied solely upon the aforementioned investigation, review and analysis and not on any factual representations or opinions of the Seller or its representatives (except the specific representations and warranties of the Seller set forth in Article III and the schedules hereto). The Purchaser hereby agrees and acknowledges that (a) other than the representations and warranties made in Article III and the schedules hereto, none of the Seller, its Affiliates, or any of their respective officers, directors, employees or representatives make or have made any representation or warranty, express or implied, at law or in equity, with respect to the Purchased Assets or the Business including as to: (i) merchantabil