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THIS FIFTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER (this Agreement), dated as of September 9, 2002, is made by and among POTLATCH CORPORATION, a Delaware corporation (the Borrower), the Subsidiary Guarantors party hereto, the several financial institutions party hereto, and BANK OF AMERICA, N.A., as administrative agent for the Lenders (in such capacity, the Agent). Terms used but not otherwise defined herein shall have the meanings provided in the Credit Agreement described below.

A. The Borrower, the Subsidiary Guarantors party thereto, the several financial institutions from time to time party thereto (each a Lender and, collectively, the Lenders) and the Agent are parties to a Credit Agreement dated as of June 29, 2001 (as amended by that certain First Amendment to Credit Agreement dated as of August 27, 2001, that certain Second Amendment to Credit Agreement dated as of December 19, 2001, that certain Third Amendment to Credit Agreement and Waiver dated January 24, 2002, that certain consent letter dated March 19, 2002 (the Cloquet Consent), that certain Consent and Modification dated June 12, 2002 relating to the Cloquet Consent, and that certain Fourth Amendment to Credit Agreement and Waiver dated as of July 16, 2002, and as further amended, modified, restated and supplemented from time to time, the Credit Agreement).

SECTION 1. Waiver. Subject to the provisions hereof, the Required Lenders hereby waive, effective as of June 30, 2002, the provision of Section 7.1(k) of the Credit Agreement which requires that the Borrower deliver a Timber Report for the fiscal quarter ended June 30, 2002 within 45 days of the end of such fiscal quarter. The foregoing waiver is a limited one-time waiver and does not (i) allow the Credit Parties to be in violation of Section 7.1(k) of the Credit Agreement with respect to any other period or any other matter or (ii) constitute a waiver of any other provisions of the Credit Agreement.

Borrowing Base means, as of any day, the sum of (a) 80% of Eligible Receivables, (b) 50% of Eligible Inventory, and (c) the amount of cash, if any, pledged to the Agent, for the benefit of the Lenders, as cash collateral for the obligations of the Credit Parties outstanding hereunder pursuant to documentation reasonably satisfactory to the Agent, in the case of clauses (a) and (b) as set forth in the most recent Borrowing Base Certificate delivered to the Agent and the Lenders in accordance with the terms of Section 7.1(k) and in the case of clause (c) as of the date of such determination.

Eligible Inventory means, as of any date of determination and without duplication, the lower of the aggregate book value (based on the Borrowers past practices, consistently applied) or fair market value of all raw materials, work in process, supplies and finished goods inventory owned by the Borrower or any of its Subsidiaries less reserves required in accordance with GAAP but excluding in any event (a) inventory which is (i) not subject to a perfected, first priority Lien in favor of the Agent to secure the obligations of the Credit Parties hereunder or (ii) subject to any other Lien that is not a Permitted Lien, (b) inventory which is not in good condition or fails to meet standards for sale or use imposed by governmental agencies, departments or divisions having regulatory authority over such goods and in effect as of such date of determination, (c) inventory which is not useable or salable at prices approximating their cost in the ordinary course of the Borrowers business, (d) inventory located outside of the United States, (e) inventory which is leased or on consignment, (f) inventory not at a location of the Borrower or a Subsidiary of the Borrower which has been disclosed to the Agent pursuant to this Agreement and (g) inventory which fails to meet such other specifications and requirements as the parties hereto may from time to time agree in accordance with Section 11.6.

Eligible Receivables means, as of any date of determination and without duplication, the aggregate book value of all accounts receivable, receivables, and obligations for payment created or arising from the sale of inventory or the rendering of services in the ordinary course of business (collectively, the Receivables), owned by or owing to the Borrower or any of its Subsidiaries, net of allowances and reserves for doubtful or uncollectible accounts and sales adjustments consistent with such Persons internal policies and in any event in accordance with GAAP, but excluding in any event (a) any Receivable which is (i) not subject to a perfected, first priority Lien in favor of the Agent to secure the obligations of the Credit Parties hereunder or (ii) subject to any other Lien that is not a Permitted Lien, (b) Receivables which are more than 60 days past due, (c) Receivables evidenced by notes, chattel paper or other instruments, unless such notes, chattel paper or instruments have been delivered to and are in the possession of the Agent, (d) Receivables owing by an account debtor which is subject to any bankruptcy or insolvency proceeding of any kind, (e) Receivables owing by an account debtor located outside of the United States (unless payment for the goods shipped is secured by an irrevocable letter of credit in a form reasonably acceptable to the Agent and from an institution reasonably acceptable to the Agent), (f) Receivables which are contingent or subject to offset, deduction, counterclaim, dispute or other defense to payment, in each case to the extent of such offset, deduction, counterclaim, dispute or other defense, (g) Receivables for which any direct or indirect Subsidiary or any Affiliate is the account debtor, (h) Receivables representing a sale to the government of the United States or any agency or instrumentality thereof unless the Federal Assignment of Claims Act has been complied with to the reasonable satisfaction of the Agent with respect to the granting of a security interest in such Receivable, and (i) Receivables which fail to meet such other specifications and requirements as the parties hereto may from time to time agree in accordance with Section 11.6.