FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER

Exhibit 10.2

PANOLAM INDUSTRIES INTERNATIONAL, INC.

FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER

This FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER (this “ Amendment ”) is dated as of February 27, 2006 and entered into by and among Panolam Industries International, Inc., a Delaware corporation, as successor by merger to PIH Acquisition Co. (“ Company ”), Panolam Holdings II Co., a Delaware corporation (“ Holdings ”), the financial institutions listed on the signature pages hereof (“ Lenders ”), Credit Suisse, Cayman Islands Branch, as administrative agent for Lenders (“ Administrative Agent ”), and, solely for purposes of Section 5 hereof, the Credit Support Parties (as defined in Section 5 hereof) listed on the signature pages hereof, and is made with reference to that certain Credit Agreement dated as of September 30, 2005 (the “ Credit Agreement ”), by and among Company, Holdings, Lenders, Jefferies & Company, Inc., as syndication agent for Lenders (“ Syndication Agent ”) and Administrative Agent.  Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement.

RECITALS

WHEREAS, Company and Lenders desire to (A) amend the Credit Agreement to (i) increase the amount by which the aggregate principal amount of the Term Loans may be increased at Company’s option under subsection 2.1A(iv) by $5,000,000, (ii) increase the aggregate amount of the Revolving Loan Commitments by $10,000,000, (iii) amend subsection 1.2B regarding pro forma adjustments in connection with Permitted Acquisitions, (iv) increase the maximum Consolidated Leverage Ratio for Fiscal Year 2006 and the first two Fiscal Quarters of Fiscal Year 2007, and (v) make certain other amendments as set forth below and (B) waive Company’s non-compliance with the Consolidated Capital Expenditures covenant for the period ending December 31, 2005;

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

Section 1.               AMENDMENTS TO THE CREDIT AGREEMENT

1.1                                Amendments to Section 1.2: Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement

A.  Pro Forma Adjustments .  Section 1.2B of the Credit Agreement is hereby amended by adding the following parenthetical immediately before the period at the end thereof:

“(or, in the case of pro forma adjustments arising out of annual operating expense reductions attributable to a Permitted Acquisition, such longer period as is acceptable to the Administrative Agent)”

1.2           Amendments to Section 2: Amounts and Terms of Commitments and Loans

A.  Revolving Loans .  Subsection 2.1A(ii) of the Credit Agreement is hereby amended by deleting the reference to “$20,000,000” contained therein and substituting “$30,000,000” therefor.

B.  Increases of Term Loan Commitments .    Subsection 2.1A(iv) of the Credit Agreement is hereby amended by deleting the reference to “$75,000,000” appearing therein and substituting “$80,000,000” therefor.

1.3           Amendments to Section 7: Negative Covenants

A.  Maximum Leverage Ratio.   Subsection 7.6B of the Credit Agreement is hereby amended by deleting the table set forth therein in its entirety and substituting the following therefor:

Section 2.               WAIVER

The undersigned Lenders, constituting Requisite Lenders under the Credit Agreement, hereby waive compliance with the provisions of subsection 7.8 of the Credit Agreement to the extent, and only to the extent, that Consolidated Capital Expenditures made during Fiscal Year 2005 exceeded the Maximum Consolidated Capital Expenditures Amount for such Fiscal Year set forth in subsection 7.8 of the Credit Agreement; provided that the aggregate amount of Consolidated Capital Expenditures made by Company and its Subsidiaries during Fiscal Year 2005 shall not have exceeded $9,500,000.

Without limiting the generality of the provisions of subsection 10.6 of the Credit Agreement, the waiver set forth herein shall be limited precisely as written and relates solely to the noncompliance by Company with the provisions of subsection 7.8 of the Credit Agreement with respect to Fiscal Year 2005 in the manner and to the extent described above, and nothing in this Section 2 shall be deemed to (a) constitute a waiver of compliance by Company with respect to (i) any such subsection of the Credit Agreement in any other instance or (ii) any other term, provision or condition of the Credit Agreement or any other instrument or agreement referred to therein or (b) prejudice any right or remedy that Administrative Agent or any Lender may now have (except to the extent such right or remedy was based upon existing defaults that will not exist after giving effect to this Amendment) or may have in the future under or in connection with the Credit Agreement or any other instrument or agreement referred to therein.  Except as expressly set forth in this Amendment, the terms, provisions and conditions of the Credit Agreement and the other Loan Documents shall remain in full force and effect and in all other respects are hereby ratified and confirmed.

Section 3.               CONDITIONS TO EFFECTIVENESS

3.1           Conditions to Effectiveness of Sections 1 and 2 .

Section 1 (other than Section 1.2A) and Section 2 of this Amendment shall become effective only upon the satisfaction of all of the following conditions precedent (the date of satisfaction of such conditions being referred to herein as the “ First Amendment Effective Date ”):

A.  On or before the First Amendment Effective Date, Company shall deliver to Administrative Agent copies of this Amendment, executed by Company and each Credit Support Party.

B.  On or before the First Amendment Effective Date, Administrative Agent and Requisite Lenders shall have executed copies of this Amendment.

3.2           Conditions to Effectiveness of Section 1.2A - Revolving Loans .

Section 1.2A of this Amendment shall become effective only upon the satisfaction of all of the following conditions precedent (the date of satisfaction of such conditions being referred to herein as the “ Revolving Loan Increase Effective Date ”):

A.  On or before the Revolving Loan Increase Effective Date, Company shall deliver to Administrative Agent copies of this Amendment, executed by Company and each Credit Support Party.

B.  On or before the Revolving Loan Increase Effective Date, Administrative Agent and Requisite Lenders shall have executed copies of this Amendment.

C.  On or before the Revolving Loan Increase Effective Date, new or existing Revolving Lenders shall have made, and Administrative Agent and Company shall have accepted, additional Revolving Loan Commitments in an aggregate amount of $10,000,000.

3.3           Deemed Assignments; Adjustment of Pro Rata Shares.

A.  On the Revolving Loan Increase Effective Date, the Revolving Loan Commitments, Pro Rata Shares and outstanding