Exhibit 4.2
September 30, 2005
Pope & Talbot, Inc.
Attn: Richard K. Atkinson, Chief Financial
Officer
1500 SW First Avenue, Suite 200
Portland, OR 97201
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Re:
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Halsey Lease
- Request for Waiver of Financial Covenant
Compliance
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Dear Mr. Atkinson:
You have asked Wells Fargo Bank Northwest,
National Association, as Indenture Trustee 1 and Mill Indenture Trustee (in such
capacities, the “Indenture Trustee”), and each of the
Note Purchasers and the Mill Note Purchasers, to waive compliance
by Pope & Talbot, Inc. (“Pope &
Talbot”) with the financial covenants contained in Sections
6.3(a) and (c) of the Participation Agreement and Sections
6.3(a) and (c) of the Mill Lease (collectively, the
“Covenants”) for the quarter and period ended
September 30, 2005. In consideration of the understandings and
agreements of Pope & Talbot in this letter, the waiver is
granted on the terms and subject to the conditions and agreements
set forth herein. This waiver shall apply only to compliance with
the specified covenants for Pope & Talbot’s fiscal
quarter and period ending September 30, 2005; shall not waive
any other noncompliance with or breach or default under the
Participation Agreement, the Mill Lease or any other Operative
Agreement or Mill Operative Agreement; shall not constitute an
amendment of any terms or conditions of the Participation
Agreement, the Mill Lease or any other Operative Agreement or Mill
Operative Agreement; and shall not create course of dealing, course
of performance or right in favor of Pope & Talbot with
respect to future requests for amendments to or waivers under the
Participation Agreement or the Mill Lease nor considered an
indication that the parties would be willing to grant a waiver in
the future.
In consideration of the foregoing waiver,
Pope & Talbot (a) agrees that it shall not create,
incur, assume or permit to exist any lien, security inertest or
other monetary encumbrance (“Liens”) on its sawmill
facility in Spearfish, South Dakota (the “Spearfish
Facility”), other than Liens which (i) in the aggregate
do not exceed $70,000, (ii) are not reasonably foreseeable to
lead to foreclosure or sale of the Spearfish Facility, and
(iii) arise in the ordinary course of business and do not
materially interfere with Pope & Talbot’s business
or operation of the Spearfish Facility or
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1
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Capitalized terms used but not
defined in this letter shall have the meanings given in Annex I to
the Participation Agreement dated as of December 27, 2001
among Halsey CLO 2 Limited Partnership, as Lessee,
Pope & Talbot Inc., Selco Service Corporation, as Owner
Participant, th
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