Document:

Amendment No.2 to Securities Purchase Agreement

 Exhibit 10.8

	    	           AMENDMENT NO. 2 AND WAIVER (this "Amendment"), dated as of August
14, 2001, by and among PW EAGLE, INC., a Minnesota corporation (the "Company") and the investors party to the Purchase Agreement referred to below on the date hereof (the "Investors").  All capitalized
terms used herein and not otherwise defined herein shall have the respective meanings provided such terms in the Purchase Agreement referred to below.

               WHEREAS, the Company and the Investors are parties to a Securities Purchase
Agreement, dated as of September 20, 1999 (as amended, supplemented or otherwise modified through the date hereof, including pursuant to an Amendment dated as of March 27, 2001 ("Amendment No. 1"), the "Purchase
Agreement") pursuant to which the Investors purchased $32,500,000 principal amount of the Company's senior subordinated notes; and
               WHEREAS, the Company has requested, and the Investors party hereto
are willing (subject to the terms and conditions hereof), to amend the Purchase Agreement as provided herein;
               NOW, THEREFORE, the parties hereto agree as
follows:
               1.   Defined Terms  
                             (a)  Capitalized terms used and not otherwise defined in this
Amendment shall have the meanings given to them in the Purchase Agreement.  
                             (b)  The definition of "EBITDA" in Section 1.1 of
the Purchase Agreement shall be amended by deleting the word "and" before the letter "(d)" and inserting the following clause at the end of such definition:  "and (e) the restructuring charge taken in the fiscal quarter
ending September 30, 2001, in an amount not exceeding $2,500,000".
               2.   Amendment to Leverage Ratio Covenant.  Section 8.9(a) of the Purchase Agreement is hereby amended by
deleting the last three lines of the table contained in such Section (as set forth in Section 1 of Amendment No. 1) and substituting in lieu thereof the following:
  
	 Trailing 3-month period ending on September 30, 
 2001 (with the amount of EBITDA in the 
 calculation of the Leverage Ratio equaling 4 times 
 the actual amount of EBITDA
for such period) 
 	   	 10.35 to 1.00
 
	    	 	 
	 Trailing 6-month period ending on December 31, 
 2001 (with the amount of EBITDA in the
 calculation of the Leverage Ratio equaling 2 times 
 the actual
amount of EBITDA for such period)
 	 	 8.25  to 1.00
 
	  	 	 
	  Trailing 9-month period ending on March 31, 2002 
 (with the amount of EBITDA in the calculation of 
 the Leverage Ratio equaling four thirds (4/3) times 
 the actual
amount of EBITDA for such period)
 
 		  7.00 to 1.00
 

 

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	 Trailing 12-month period ending on June 30, 2002 
 	 	 5.25 to 1.00
 
	  		
	  Trailing 12-month period ending on September 30, 
 2002
 
 	 	 4.75 to 1.00
 
	 Trailing 12-month periods ending on each 
 December 31, March 31, June 30 and September 30, 
 thereafter
 	 	 4.40 to 1.00
 

 
               3.   Amendment to Interest Coverage Ratio Covenant.  Section 8.9(b) of the Purchase Agreement is hereby amended by deleting the last two lines of the table contained in such Section (as set forth in Section 2 of
Amendment No. 1) and substituting in lieu thereof the following: 
 
 

	 Trailing 3-month period ending on September 30, 
 2001 
 
 	 1.00 to 1.00
 
	 Trailing 6-month period ending on December 31, 2001 
 	 1.20 to 1.00
 
	  	
	 Trailing 9-month period ending on March 31, 2002 
 	 1.30 to 1.00
 
	  	
	 Trailing 12-month period ending on June 30, 2002
 	 1.70 to 1.00
 
	   	
	 Trailing 12-month periods ending on each 
 September 30, December 31, March 31 and June 30
 thereafter
 	 2.10 to 1.00
 

               4.   Amendment to Capital Expenditure
Covenant.  Section 8.9(c) of the Purchase Agreement is hereby amended by deleting the numbers "$6,000,000" and "5,000,000" in the right hand column of the table contained in such Section and
substituting in their places in each case the number "$5,500,000".
               5.   Waiver of June Financial Covenant
Defaults.  In reliance upon and subject to the accuracy of the representations set forth in this Amendment, upon the Effective Date but with effect as of June 30, 2001, the Investors hereby waive any Event of Default
that exists because of the failure by the Company to comply as of June 30, 2001, with Sections 8.9(a) and 8.9(b) of the Purchase Agreement.
               6.   Representations and Warranties.  In order to induce the Investors to enter into this Amendment, the Company hereby represents and warrants that (x) no Default or Event of Default exists on the Effective Date,
after giving effect to this Amendment, (y) no Default or Event of Default (each case as defined in the Senior Credit Agreement) exists on the Effective Date, after giving effect to the amendment to the Senior Credit Agreement referred to in Section
7 hereof and (z) all of the representations and warranties contained in the Note Documents shall be true and correct in all respects on the Effective Date, after giving effect to this Amendment, with the same effect as though such representations
and warranties had been made on and as of the Effective Date (it being understood that any representation or warranty made as of a specified date shall be true and correct in all material respects as of such specific date), in each case except as
previously disclosed in writing to the Investors.
               7.   Effectiveness of this Amendment. This Amendment shall become effective on the date (the "Effective Date") when (i) the Company and the Required Investors shall have signed a counterpart hereof (whether the same or different
counterparts), (ii) the Required Investors shall have 
  

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 received a copy of a duly executed amendment of the Senior Credit Agreement (as defined in the Purchase Agreement), in form and substance satisfactory to the Required
Investors, (iii) each Investor shall have received, by wire transfer to an account designated by such Investor an amendment fee in an amount for such Investor equal to 0.50% of the outstanding principal amount of the Notes held by such Investor and
(iv) the Company shall have paid all fees and expenses of O'Sullivan LLP incurred by the Purchasers in connection with or relating to the preparation, execution or delivery of this Amendment and all other unpaid fees and expenses of O'Sullivan LLP
incurred by the Purchasers in connection with the Securities Purchase Agreement to the extent the amount thereof has been provided to the Company prior to the execution and delivery of this Amendment; provided, however, that nothing in this
Amendment shall limit the generality of Section 12.4 of the Securities Purchase Agreement. The amendment fee referred to in clause (iii) above shall be fully earned and nonrefundable on the Effective Date. 
               8. Miscellaneous. 
               (a) This Amendment is limited as specified and shall not constitute an amendment, modification or waiver
of any other provision of the Purchase Agreement or any other Note Document.
               (b) This Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts when executed and
delivered shall be an original, but all of which shall together constitute one and the same instrument.
               (c) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.of the Purchase Agreement or any other Note
Document.
               (d) The parties hereby agree that this Amendment shall be a Note Document for all purposes under the Purchase
Agreement.  From and after the Effective Date, all references in the Purchase Agreement and each of the other Note Documents to the Purchase Agreement shall be deemed to be references to the Purchase Agreement as amended hereby.

              (e) All notices, demands and requests of any kind to be delivered to any party hereto in connection with this Amendment shall be delivered
in accordance with the notice provisions contained in the Purchase Agreement.
               (f) The headings used herein are for convenience of reference only and shall not affect the construction of, nor shall they be taken into consideration in interpreting, this Amendment.
 

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 IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this AMENDMENT to be duly executed and delivered as of the date first above written.

	 
 	PW EAGLE, INC.
	   	 	 
	  	 	 
	 	 By:
 	  /s/ Dobson West              
 
	 	 	 Name:  Dobson West
 
	 	 	 Title:    Chief Administrative Officer
 
	  	 	 
	 	J.P. MORGAN PARTNERS (23A SBIC), LLC    
	 	By: 	J.P. MORGAN PARTNERS (23A SBIC MANAGER), INC.
	  	 	 
	 	By:	 /s/ Richard D. Waters              
	 	 	Name:  Richard D. Waters
	 	 	Title:    Partner
	  	 	 
	 	MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
	    	 	 
	 	By:   	 David L. Babson & Company Inc. as Investment Advisor
	  	  	 
	  	By:	/s/ Thomas P. Shea              
	 	 	Name: Thomas P. Shea
	 	 	Title: Managing Director
	   	 	 
	 	MASSMUTUAL CORPORATE INVESTORS
	  	 	 
	 	By:	 /s/ Thomas P. Shea          
	 	 	Name:  Thomas P. Shea
	 	 	Title:    Managing Director
	 	 	 
	 	The foregoing is executed on behalf of MassMutual Corporate Investors, organized under a Declaration of Trust, dated September 13, 1985, as amended from time to time.  The
obligations of such Trust are not personally binding upon, nor shall resort to be had to the property of, any of the Trustees, shareholders, officers, employees or agents of such Trust, but the Trust's property only shall be bound.

 

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	 	  MASSMUTUAL PARTICIPATION INVESTORS
 
	 	 	 
	 	By:	 /s/ Robert E. Joyal              
	 	 	Name:  Robert E. Joyal
	 	 	Title:  President
	  	 	 
	 	The foregoing is executed on behalf of MassMutual Participation Investors, organized under a Declaration of Trust, dated April 7, 1988, as amended from time to time.  The
obligations of such Trust are not binding upon, nor shall resort be had to the property of, any of the Trustees, shareholders, officers, employees or agents of such Trust individually, but the Trust's assets and property only shall be
bound.
	  	 	 
	 	MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED
	  	 
	  	 
	 	By:	David L. Babson & Company Inc. under delegated authority from Massachusetts Mutual Life Insurance Company, as Investment Manager
	  	 	 
	 	By:	 /s/ Thomas P. Shea              
	 	Name:  Thomas P. Shea
	 	Title:  Managing Director
	 	 	 

 

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[RETURN TO TABLE OF CONTENTS]Ninth Amendment to Loan and Security Agreement

 Exhibit 10.9
 NINTH AMENDMENT TO

SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
           This NINTH AMENDMENT (“Ninth Amendment”), dated
as of August 21, 2001, is made to the Second Amended and Restated Loan and Security Agreement, dated as of September 20, 1999, among PW Eagle, Inc. (f/k/a/ Eagle Pacific Industries, Inc. and herein “Borrower”), the lenders named
therein (“Lenders”), and Fleet Capital Corporation (“FCC”) as agent for said Lenders (“FCC, in such capacity, “Agent”).  Said Second Restated Loan and Security Agreement, as amended by an Amendment to Loan and
Security Agreement dated as of September 22, 1999, an Amendment to Loan and Security Agreement dated as of September 24, 1999, a Third Amendment to Second Amended and Restated Loan and Security Agreement dated as of October 8, 1999, a
Fourth Amendment to Second Amended and Restated Loan and Security Agreement dated as of March 10, 2000, a Fifth Amendment to Second Amended and Restated Loan and Security Agreement dated as of July 28, 2000, a Sixth Amendment to Second
Amended and Restated Security Agreement dated as of March 1, 2001, a Seventh Amendment to Second Amended and Restated Loan and Security Agreement dated as of March 30, 2001, an Eighth Amendment to Second Amended and Restated Loan and
Security Agreement dated as of May 14, 2001, and as it may be further amended, is hereinafter referred to as the “Loan Agreement.”  The terms used herein and not otherwise defined shall have the meanings attributed to them in the Loan
Agreement.
           WHEREAS, Lenders, Agent and Borrower desire to make certain amendments and modifications to the Loan
Agreement.
           NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained and contained in the
Loan Agreement, the parties hereto hereby agree as follows:
 Amended Definition.  The definition of
“Applicable Margin” is hereby deleted from Appendix A to the Loan Agreement and the following is inserted in its stead effective August 1, 2001:
           “Applicable Margin – the percentages set forth below with respect to the Base Rate Revolving Credit Portion, the Base Rate Term A Portion, the Base Rate Term B
Portion, the LIBOR Revolving Credit Portion, the LIBOR Term A Portion, the LIBOR Term B Portion and unused line fees:
 Applicable Margin

	 LIBOR
 Revolving
 Credit
Portion
 	 LIBOR
 Term A
 Portion 
 	 LIBOR
 Term B
 Portion
 	 Base Rate
 Revolving
 Credit
Portion
 	 Base Rate
 Term A
 Portion

	 Base Rate
 Term B
 Portion

	 Unused
 Line Fee
 
	 
 
	 2.50%
 	 2.75%
 	 3.25%
 	 0.50%
 	 0.75%
 	 1.25%
 	 0.50%
 

          
Notwithstanding the foregoing, if Borrower’s Fixed Charge Coverage Ratio, for any twelve-month period ending on or after September 30, 2001 as evidenced by the financial statements delivered to Agent pursuant to Section 8.1.3(ii) is greater
than or equal to 1.20 for such twelve-month period, and provided no Default or Event of Default shall have occurred and be continuing at such time, the Applicable Margin shall be reduced for the subsequent twelve-month period at the percentages set
forth below with respect to the Base Rate Revolving Credit Portion, the Base Rate Term A Portion, the Base Rate Term B Portion, the LIBOR Revolving Credit Portion, the LIBOR Term A Portion, the LIBOR Term B Portion, and unused line fees.

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 Applicable Margin

	 LIBOR
 Revolving
 Credit
Portion
 	 LIBOR
 Term A
 Portion 
 	 LIBOR
 Term B
 Portion
 	 Base Rate
 Revolving
 Credit
Portion
 	 Base Rate
 Term A
 Portion

	 Base Rate
 Term B
 Portion

	 Unused
 Line Fee
 
	 
 
	 2.25%
 	 2.50%
 	 3.00%
 	 0.25%
 	 0.50%
 	 1.00%
 	 0.375%
 

           Any
change in Applicable Martin shall be effective prospectively as of the first day of the fiscal month of Borrower next following the fiscal month during which the applicable Consolidated financial statements of Borrower for the trailing twelve-month
period referred to above are delivered to Agent pursuant to Section 8.3.1(ii).”
 Unused Line Fee.  Section 2.4 of the Loan Agreement is hereby deleted and the following is inserted in its stead:
           “2.4    Unused Line Fee.  Borrower shall pay to Agent for the ratable benefit of Lenders a fee equal to the Applicable Margin per annum of the
average daily amount by which the Maximum Revolving Loan Amount (minus the amount of minimum availability set forth in Exhibit Q) exceeds the sum of the outstanding principal balance of  Revolving Credit Loans (exclusive of Swingline Loans)
plus the LC Amount.  The unused line fee shall be payable monthly in arrears on the first day of each calendar month hereafter.”
 Additional Real Estate
Collateral.  The following Section 8.1.7 shall be added to the Loan Agreement:
           “8.1.7 Additional Real Estate Collateral.  On or before September 28, 2001, Borrower shall grant in favor of Agent for its benefit and the ratable benefit of
the Lenders a first Lien in certain property owned by Borrower located in Salt Lake City, Utah (“ Utah Mortgage”), free and clear of all Liens, except for Permitted Liens.   Borrower shall execute such mortgages, deeds of trusts,
such other instruments, documents and opinions as Agent may request, and otherwise comply with Section 5.4 of this Agreement in order to grant and perfect such security interests.  The term “New Mortgage” (as defined in Section 5.4 of
this Agreement) shall mean and include the Utah Mortgage.”
 Capital Expenditures.  Section 8.2.8 of
the Loan Agreement is hereby deleted and the following is inserted in its stead:
 
            “8.2.8    Capital Expenditures.  Make Capital Expenditures (including, without limitation, by way of capitalized leases) which, in the
aggregate, as to Borrower and its Subsidiaries during any fiscal year of Borrower exceeds the amount set forth opposite such fiscal year in the following schedule:

	 Fiscal Year Ending
 	    	  Permitted Capital Expenditure  
	 December 31, 1999
 	 	 $  2,750,000
 
	 December 31, 2000
 	 	 $12,500,000
 plus the Carryover Amount
 
	 December 31, 2001
 	 	 $  5,000,000
 
	 December 31, 2002
 and each subsequent fiscal year
 	 	 $  5,000,000
 

 For any fiscal year, Carryover Amount shall
be the lesser of $1,000,000 or the amount of permitted Capital Expenditures for the previous fiscal year without giving effect to any Carryover Amount minus the actual amount of Capital Expenditures made within such fiscal year.”

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 Financial Covenants.  Upon the Ninth Amendment Effective Date, Agent and Lenders shall
be deemed to have waived any Event of Default resulting from the failure of Borrower to comply with the financial covenants contained in Exhibit Q (Interest Coverage Ratio, Fixed Charge Coverage Ratio, Net Worth and Funded Debt to EBITDA
Ratio) for the fiscal period ended June 30, 2001.  The waiver contained in this Section 3 shall only apply to the fiscal period ended June 30, 2001 and shall not apply to any other section of the Loan Agreement or any other fiscal
period.  Upon the Ninth Amendment Effective Date, Exhibit Q to the Loan Agreement is hereby deleted and Exhibit Q attached hereto and incorporated herein is inserted in its stead.
 Reaffirmation of Representations and Warranties.  Borrower hereby reaffirms each of the warranties and
representations contained in the Loan Agreement and the Loan Documents as if each such representation and warranty were made on the date hereof.  Further Borrower represents and warrants to Agent and Lenders that as of the date hereof there are
no existing and continuing Defaults or Events of Default after giving effect to this Ninth Amendment.
 Amendment Fee.  In order to induce Agent and Lenders to enter into this Ninth Amendment, Borrower agrees to pay to Agent for the ratable benefit of Lenders an amendment fee equal to Four Hundred
Twelve Thousand Five Hundred Dollars ($412,500).  Said amendment fee shall be fully earned and non-refundable on the Ninth Amendment Effective Date.
 Conditions Precedent.  This Ninth Amendment shall become effective upon satisfaction of each of the following conditions
precedent:
 Borrower, Agent and Lenders shall have executed and delivered to each other this Ninth Amendment;
 Borrower shall have paid to Agent the amendment fee pursuant to Section 9 above; and
 Borrower and the holders of the Subordinated Notes shall have amended the
Subordinated Note Documents in a manner acceptable to Agent and Required Lenders.
           The date on which all of the foregoing
conditions precedent are satisfied shall be called the “Ninth Amendment Effective Date.”
 Counterparts. 
This Ninth Amendment may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement.
 Continuing Effect.  Except as otherwise specifically set out herein, the provisions of the Loan Agreement shall remain in full force and effect.
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    IN WITNESS WHEREOF, this
Ninth Amendment has been duly executed as of the date first written above.

	 PW EAGLE, INC.
 	 FLEET CAPITAL CORPORATION,
 As Agent and Lender
 
	  	 
	By:     /s/ Dobson
West                           	By:     /s/ Brian
Conole                                     
 
	          Name:   Dobson West

          Title:    Chief Operating Officer	             Name:   Brian Conole

             Title:     Senior Vice President
	  	 
	 	HARRIS TRUST AND SAVINGS BANK
	  	 
	 	By:    /s/ Daniel
Konopacki                               
	 	            Name:       Daniel Konopacki

            Title:         Vice  President   
	  	 
	 	THE CIT GROUP/BUSINESS CREDIT, INC.
	  	 
	 	By:                                     
                                      
	 	             Name: 

             Title:
	  	 
	 	U.S. BANK NATIONAL ASSOCIATION
	  	 
	 	By:    /s/ Scott
Singer                                      
  
	 	             Name:   Scott Singer

             Title:     Relationship Manager

 

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 EXHIBIT Q
 
 FINANCIAL COVENANTS
           Consolidated Net
Income means, with respect to Borrower and its Subsidiaries for any fiscal period, the net income (or loss) of Borrower and its Subsidiaries for such period taken as a whole (determined in accordance with
GAAP on a consolidated basis), but excluding in any event:  (a) any gains or losses on the sale or other disposition of Investments or fixed or capital assets or from any transaction classified as extraordinary under GAAP, any taxes on
such excluded gains and any tax deductions or credits on account of any such excluded losses; (b) the proceeds of any life insurance policy; (c) net earnings and losses of any business entity, substantially all the assets of which have
been acquired in any manner by Borrower, realized by such business entity prior to the date of such acquisition; (d) net earnings and losses of any business entity which shall have merged into Borrower earned or incurred prior to the date of
such merger; (e) net earnings of any business entity (other than a Consolidated Subsidiary) in which Borrower has an ownership interest unless such net earnings shall have been received by Borrower in the form of cash distributions;
(f) earnings resulting from a reappraisal, revaluation or write-up of assets; (g) any charge to net earnings resulting from the amortization of the value of stock options given to employees to the extent required by FASB 25; (h) any
increase or decrease of net income arising from a change in Borrower’s accounting methods; (i) any gains resulting from the forgiveness of Funded Debt or the retirement of Funded Debt at a discount; (j) any gain arising from the
acquisition of any Securities of Borrower; and (k) any reversal of any contingency reserve, except that provision for such contingency reserve shall have been made from income arising during such period.
           EBITDA With respect to any fiscal period, the sum of Borrower’s Consolidated Net Income plus amounts deducted in determining Consolidated Net Income in respect of:  (a) any provision for (or less any benefit from)
income taxes whether current or deferred; (b) amortization and depreciation expense; (c) Interest Expense for such period; (d) prior to December 31, 1999, that portion of cost of goods sold resulting from the write-up of
Inventory in connection with the Acquisition pursuant to APB 16; provided that the aggregate amount added to EBITDA pursuant to this clause (d) shall not exceed $3,000,000; and (e) the restructuring charge taken in the third fiscal
quarter of fiscal year 2001 in the amount of Two Million Five Hundred Thousand Dollars ($2,500,000.00). 
           Fixed Charge Coverage Ratio - With respect to any period of
determination, the ratio of (i) EBITDA of Borrower for such period minus income taxes paid in cash and non-financed Capital Expenditures during such period to (ii) Fixed Charges.
           Fixed Charges - For any period of determination, the sum of (a) scheduled principal payments of Funded Debt (including the principal portion of scheduled payments of Capital Lease Obligations), (b) Interest Expense paid in cash included
in the determination of Consolidated Net Income, and (c) dividends paid on Borrower’s capital stock.
           Funded Debt - means:  (i) Indebtedness arising from
the lending of money by any Person to Borrower, including, without limitation, the Obligations; (ii) Indebtedness, whether or not in any such case arising from the lending by any Person of money to Borrower (A) which is represented by
notes payable or drafts accepted that evidence extensions of credit, (B) which constitutes obligations evidenced by bonds, debentures, notes or similar instruments, or (C) upon which interest charges are customarily paid (other than
accounts payable) or that was issued or assumed as full or partial payment for Property; (iii) Indebtedness that constitutes a Capitalized Lease Obligation; (iv) reimbursement obligations with respect to letters of credit or guaranties of
letters of credit and (v) Indebtedness of Borrower under any guaranty of obligations that would constitute Funded Debt under clauses (i) through (iv) hereof if owed directly by Borrower or any guaranty having the economic effect of guaranteeing
any of the obligations of any other Person.  In computing the amount of Funded Debt, the Subordinated Notes will be valued at full face value (less any payments thereon) without giving effect to any original issue discount.

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           Funded Debt to EBITDA Ratio - With respect to any date, the ratio of (i) total funded Funded Debt as of such date to (ii) EBITDA.  For purposes of the Funded Debt to EBITDA
Ratio, (i) for the period from 10/1/99 through 12/31/99 and the period from 7/1/01 through 9/30/01, EBITDA for such periods shall be actual EBITDA for such period multiplied by four (4); (ii) for the period from 10/1/99 through
3/31/2000 and the period from 7/1/01 through 12/31/01, EBITDA for such period shall be actual EBITDA for such periods multiplied by two (2); and (iii) for the period from 10/1/99 through 6/30/00 and the period from 7/1/01 through 3/31/02,
EBITDA for such period shall be actual EBITDA for such period multiplied by four-thirds (4/3).
           Interest Coverage Ratio - With respect to any period of
determination, the ratio of (i) EBITDA for such period to (ii) Interest Expense paid in cash for such period, all as determined in accordance with GAAP.
           Interest Expense - With
respect to any fiscal period, the interest expense incurred for such period excluding interest income as determined in accordance with GAAP.
           Investment - All investments in the property or assets of any
person, in cash or property, whether by way of advance, loan, extension of credit by Borrower or any of its Subsidiaries (by way of guaranty or otherwise) or capital contribution, or purchase of stock, bonds, notes, debentures or other securities or
any assets constituting the purchase of a business or line of business.
          
Net Worth - Book net worth of the Borrower as determined in accordance with GAAP.  For purposes of this
Exhibit Q, Net Worth shall include any unamortized value assigned to the Warrants issued in connection with the Subordinated Notes which value was calculated in accordance with GAAP and is contained in Borrower’s Consolidated
Financial Statements.
           Interest Coverage Ratio - Borrower shall not permit the Interest Coverage Ratio as of the last date of the period set forth below to be less than the ratio set forth opposite such
period below:

	           Period
 	 Ratio
 
	 From 10/1/99 to December 31, 1999
 	 2.65 to 1
 
	 For 6 months ending 3/31/2000
 	 3.25 to 1
 
	 For 9 months ending 6/30/2000
 	 3.25 to 1
 
	 For 12 months ending 9/30/2000
 	 3.25 to 1
 
	 For 12 months ending 12/31/2000
 	 3.50 to 1
 
	 Trailing 12 month period ending 3/31/2001
 	 3.00 to 1
 
	 Trailing 12 month period ending 6/30/2001
 	 N/A
 
	 For 3 months ending 9/30/2001
 	 1.20 to 1
 
	 For 6 months ending 12/31/2001
 	 1.40 to 1
 
	 For 9 months ending 3/31/2002
 	 1.50 to 1
 

 

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	 Trailing 12 month period ending 6/30/2002
 	 1.90 to 1
 
	 Trailing 12 month period ending each September 30, 
 arch 31, December 31 and June 30 thereafter
 	 2.50 to 1
 

           Fixed Charge Coverage Ratio - Borrower shall not permit the
Fixed Charge Coverage Ratio as of the last date of the period set forth below to be less than the ratio set forth opposite such period below:

	           Period
 	 Ratio
 
	 From 10/1/99 to December 31, 1999
 	 1.10 to 1
 
	 For 6 months ending 3/31/2000
 	 1.20 to 1
 
	 For 9 months ending 6/30/2000
 	 1.20 to 1
 
	 For 12 months ending 9/30/2000
 	 1.20 to 1
 
	 For 12 months ending 12/31/2000
 	 1.20 to 1
 
	 Trailing 12 month period ending 3/31/2001
 	 .70 to 1
 
	 Trailing 12 month period ending 6/30/2001
 	 N/A
 
	 For 3 months ending 9/30/01
 	 .35 to 1
 
	 For 6 months ending 12/31/01
 	 .50 to 1
 
	 For 9 months ending 3/31/02
 	 .50 to 1
 
	 Trailing 12 month period ending 6/30/2002
 	 .75 to 1
 
	 Trailing 12 month period ending 9/30/2002
 	 1.00 to 1
 
	 Trailing 12 month period ending each December 31, March 31, June 30 and September 30 thereafter
 	 1.20 to 1
 

           Net Worth - Borrower shall achieve Net Worth as of the last
day of each period set forth below of not less than the amount set forth opposite such period below:

	           Period
 	 Ratio
 
	 At the Closing Date7
 	 $15,000,000
 
	 For Quarter ending 12/31/99
 	   18,000,000
 
	 For Quarter ending 3/31/2000
 	   19,800,000
 
	 For Quarter ending 6/60/2000
 	   22,500,000
 
	 For Quarter ending 9/30/2000
 	   25,200,000
 

 

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	 For Quarter ending 12/31/2000
 	 27,000,000
 
	 For Quarter ending 3/31/2001
 	 28,500,000
 
	 For Quarter ending 6/30/2001
 	 N/A
 
	 For Quarter ending 9/30/2001
 	 31,000,000
 
	 For Quarter ending 12/31/2001
 	 30,500,000
 
	 For Quarter ending 3/31/2002
 	 29,500,000
 
	 For Quarter ending 6/30/2002
 	 31,500,000
 
	 For Quarter ending 9/30/2002
 	 32,500,000
 
	 For Quarter ending 12/31/2002
 	 32,500,000
 
	 For Quarter ending 3/31/2003
 	 31,500,000
 
	 For Quarter ending 6/30/2003
 	 34,000,000
 
	 For Quarter ending 9/30/2003
 	 36,000,000
 
	 For Quarter ending 12/31/2003
 	 35,000,000
 
	 For Quarter ending 3/31/2004
 	 34,000,000
 
	 For Quarter ending 6/30/2004 and each Quarter thereafter
 	 36,500,000
 

          
Funded Debt to EBITDA Ratio - Borrower shall not permit the Funded Debt to EBITDA Ratio for any period set forth below to be
greater than the ratio set forth opposite such period below:

	           Period
 	 Ratio
 
	 Quarter Ended 12/31/99
 	 3.85 to 1
 
	 6 months ending 3/31/2000
 	 3.25 to 1
 
	 9 months ending 6/30/2000
 	 4.95 to 1
 
	 For 12 months ending 9/30/2000
 	 4.80 to 1
 
	 For 12 months ending 12/31/2000
 	 3.00 to 1
 
	 Trailing 12 month period ending 3/31/2001
 	 3.00 to 1
 
	 Trailing 12 month period ending 6/30/2001
 	 N/A
 
	 3 months ending 9/30/2001
 	 8.80 to 1
 
	 6 months ending 12/31/2001
 	 7.00 to 1
 

 

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	 9 months ending 3/31/2002
 	 6.00 to 1
 
	 Trailing 12 month period ending 6/30/2002
 	 4.50 to 1
 
	 Trailing 12 month period ending 9/30/2002
 	 4.00 to 1
 
	 Trailing 12 month periods ending each December 31, 
 arch 31, June 30 and September 30 thereafter
 	 3.75 to 1
 

           Minimum Availability - Have at times from and after
March 1, 2001, Availability of Eight Million Dollars ($8,000,000) or more.

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