Common use of Mandatory and Optional Prepayments Clause in Contracts

Mandatory and Optional Prepayments. 3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of Collateral. Except for dispositions of assets permitted by subsection 8.2.9(ii) and dispositions in accordance with this Agreement of assets that are subject to a Lien permitted by subsection 8.2.5(iv) (in each case, the proceeds of which shall, at any time when a Dominion Period is in effect, be applied to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments), if any Borrower or any of its Subsidiaries sells any of the Collateral or if any of the Collateral is lost, damaged or destroyed or taken by condemnation (in each case excluding, at any time when a Dominion Period is not in effect, Accounts, Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher or Dalton - Ashland), the applicable Borrower shall, xxxxxs otxxxxxxe agreed by Majority Lenders, pay to Agent for the ratable benefit of Lenders as and when received by such Borrower or such Subsidiary and as a mandatory prepayment of the Loans, as herein provided, a sum equal to the proceeds (including insurance payments but net of costs and taxes incurred in connection with such sale or event) received by such Borrower or such Subsidiary from such sale, loss, damage, destruction or condemnation. To the extent that such Collateral sold, lost, damaged, destroyed or condemned consists of Equipment, real Property, or other Property other than Accounts, Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher and Dalton - Ashland, the applicable prepayment shaxx xx xppliex xxxxt, to Agent's costs and expenses relating to the relevant transaction, second, to the installments of principal due under the Term Notes ratably, to be applied to future installment payments on a ratable basis (exclusive of the final installment payment that is due on October 8, 2008) until such future installment payments are paid in full, third, to the final installment of principal due under the Term Notes on October 8, 2008 ratably until paid in full, and fourth, to repay outstanding principal of Revolving Credit Loans, but not as a permanent reduction of the Revolving Loan Commitments. 4.1 the applicable prepayment shall be applied to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments (it being understood that prepayments required to be made pursuant to subsection 3.3.3 shall also be applied as set forth in this sentence). In addition, if the Collateral subject to such sale, loss, damage, destruction or condemnation consists of Eligible Accounts or Eligible Inventory and a Dominion Period is in effect, such prepayment shall be specifically applied against the portion of the Borrowing Base predicated on such Collateral. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest of (I) Borrowers' decision not to repair or replace the damaged Property, (2) the expiration of one hundred eighty days (180) days from the receipt of such amount, if the applicable Borrower or Subsidiary has not yet committed to acquire replacement Collateral or (3) the expiration of three hundred sixty (360) days from the receipt of such amount (with such amount being applied to the Obligations in the manner specified in the second sentence of this subsection 3.3.1 until payment thereof in full in the event that the foregoing period ends pursuant to clause (1) or clause (2)), or (iii) are equal to or greater than $5,000,000, and Borrowers have requested that Agent and Majority Lenders agree to permit the applicable Borrower or Subsidiary to repair or replace the damaged Property, subject to the third sentence of subsection 3. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest of (1) Agent's and Majority Lenders' decision with respect thereto, (2) the expiration of one hundred eighty (180) days from the date of such request, unless the applicable Borrower or Subsidiary has committed to replace or rebuild the damaged Property, or (3) the expiration of three hundred sixty (360) days from such request. If Borrowers decide and commit to repair or replace the applicable Property as provided in clause (ii) above or if Agent and Majority Lenders agree, in their reasonable judgment, to permit any such repair or replacement under clause (iii) above, the applicable amount shall, unless an Event of Default is in existence, be released from the Rebuild Reserve (with the amount of the Rebuild Reserve being reduced on a dollar-for-dollar basis for each dollar that is so released) to the applicable Borrower or Subsidiary as needed for use in replacing or repairing the damaged Property during such three hundred sixty (360) day period, with any remaining amount at the end of such three hundred sixty (360) day period applied to the Obligations in the manner specified in the second sentence of this subsection 3. 3.1 until payment thereof in full. It is acknowledged and agreed that any of the one hundred eighty (180) day or three hundred sixty (360) day periods set forth in this subsection 3.3.1 may be extended with the approval of Majority Lenders. Nothing in this subsection 3.3.1 shall be construed to constitute Agent's or any Lender's consent to the consummation of any disposition or other transaction that is not otherwise permitted by another provision of this Agreement (including, without limitation, subsection 8.2.9 hereof) or another Loan Document. 3.3.2 Proceeds from Issuance of Additional Indebtedness or Equity. If Ultimate Parent, Parent or any Borrower issues any additional Indebtedness or issues any additional equity for cash (other than equity (including stock options) issued to officers and employees in connection with incentive plans, equity resulting in proceeds used to make Capital Expenditures and equity resulting in proceeds used to consummate a Permitted Acquisition, in each case to the extent that the proceeds of such equity are promptly used as consideration for all or a portion of the purchase price for such Capital Expenditure or Permitted Acquisition) in a manner permitted under this Agreement, Borrowers shall pay to Agent for the ratable benefit of Lenders, when and as received by Ultimate Parent, Parent or any Borrower and as a mandatory prepayment of the Obligations, a sum equal to 50% of the net proceeds to Ultimate Parent, Parent or such Borrower of the issuance of such Indebtedness or equity; provided, that the foregoing shall not apply in connection with an issuance of Indebtedness or equity to a Person that is a Related Person of a Borrower. Any such prepayment shall be applied to the Loans in the manner specified in the second sentence of subsection 3.3.1 until payment thereof in full.

Mandatory and Optional Prepayments. 3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of Collateral. Except for dispositions of assets permitted by subsection 8.2.9(ii) as provided in subsections 6.4.2 and dispositions in accordance with this Agreement of assets that are subject to a Lien permitted by subsection 8.2.5(iv) (in each case, the proceeds of which shall, at any time when a Dominion Period is in effect, be applied to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments)8.2.9, if any Borrower or any of its Subsidiaries sells any of the Collateral Equipment or real Property, or if any of the Collateral is lost, damaged lost or destroyed or taken by condemnation (in each case excludingcondemnation, at any time when a Dominion Period is not in effect, Accounts, Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher or Dalton - Ashland), the applicable Borrower Borrowers shall, xxxxxs otxxxxxxe unless otherwise agreed by Majority Lenders, pay to Agent for the ratable benefit of Lenders as and when received by such Borrower Borrowers or such Subsidiary and as a mandatory prepayment of the Loans, as herein provided, a sum equal to the proceeds (including insurance payments but net of costs and taxes incurred in connection with such sale or event) received by such Borrower or such Subsidiary from such sale, loss, damage, destruction or condemnation. To the extent that such Collateral sold, lost, damaged, destroyed or condemned consists of Equipment, real Property, or other Property other than Accounts, Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher and Dalton - Ashland, the applicable prepayment shaxx xx xppliex xxxxt, to Agent's costs and expenses relating to the relevant transaction, second, to the installments of principal due under the Term Notes ratably, to be applied to future installment payments on a ratable basis (exclusive of the final installment payment that is due on October 8, 2008) until such future installment payments are paid in full, third, to the final installment of principal due under the Term Notes on October 8, 2008 ratably until paid in full, and fourth, to repay outstanding principal of Revolving Credit Loans, but not as a permanent reduction of the Revolving Loan Commitments. 4.1 the The applicable prepayment shall be applied to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments (it being understood that prepayments required to be made pursuant to subsection 3.3.3 shall also be applied as set forth in this sentence)Commitments. In additionNotwithstanding the foregoing, if the proceeds of insurance (net of costs and taxes incurred) with respect to any loss or destruction of Equipment, Inventory or real Property (i) are less than $500,000, unless an Event of Default is then in existence, Agent shall remit such proceeds to Borrowers for use in replacing or repairing the damaged Collateral subject or (ii) are equal to such saleor greater than $500,000 and Borrowers have requested that Agent agree to permit Borrowers or the applicable Subsidiary to repair or replace the damaged Collateral, loss, damage, destruction or condemnation consists of Eligible Accounts or Eligible Inventory and a Dominion Period is in effect, such prepayment shall be specifically applied against the portion of the Borrowing Base predicated on such Collateral. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest earlier of (I) Borrowers' Agent's decision not to repair with respect thereto or replace the damaged Property, (2) the expiration of one hundred eighty days (180) 90 days from the receipt of such amountrequest. If Agent agrees, if the applicable Borrower in its reasonable judgment, to permit such repair or Subsidiary has not yet committed to acquire replacement Collateral or under such clause (3) the expiration of three hundred sixty (360) days from the receipt of ii), such amount (with shall, unless an Event of Default is in existence, be remitted to Borrowers for use in replacing or repairing the damaged Collateral; if Agent declines to permit such repair or replacement or does not respond to Borrowers within such 90 day period, such amount being shall be applied to the Obligations Loans in the manner specified in the second sentence of this subsection 3.3.1 until payment thereof in full in the event that the foregoing period ends pursuant to clause (1) or clause (2)), or (iii) are equal to or greater than $5,000,000, and Borrowers have requested that Agent and Majority Lenders agree to permit the applicable Borrower or Subsidiary to repair or replace the damaged Property, subject to the third sentence of subsection 3. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest of (1) Agent's and Majority Lenders' decision with respect thereto, (2) the expiration of one hundred eighty (180) days from the date of such request, unless the applicable Borrower or Subsidiary has committed to replace or rebuild the damaged Property, or (3) the expiration of three hundred sixty (360) days from such request. If Borrowers decide and commit to repair or replace the applicable Property as provided in clause (ii) above or if Agent and Majority Lenders agree, in their reasonable judgment, to permit any such repair or replacement under clause (iii) above, the applicable amount shall, unless an Event of Default is in existence, be released from the Rebuild Reserve (with the amount of the Rebuild Reserve being reduced on a dollar-for-dollar basis for each dollar that is so released) to the applicable Borrower or Subsidiary as needed for use in replacing or repairing the damaged Property during such three hundred sixty (360) day period, with any remaining amount at the end of such three hundred sixty (360) day period applied to the Obligations in the manner specified in the second sentence of this subsection 3. 3.1 until payment thereof in full. It is acknowledged and agreed that any of the one hundred eighty (180) day or three hundred sixty (360) day periods set forth in this subsection 3.3.1 may be extended with the approval of Majority Lenders. Nothing in this subsection 3.3.1 shall be construed to constitute Agent's or any Lender's consent to the consummation of any disposition or other transaction that is not otherwise permitted by another provision of this Agreement (including, without limitation, subsection 8.2.9 hereof) or another Loan Document. 3.3.2 Proceeds from Issuance of Additional Indebtedness or Equity. If Ultimate Parent, Parent or any Borrower issues any additional Indebtedness or issues any additional equity for cash (other than equity (including stock options) issued to officers and employees in connection with incentive plans, equity resulting in proceeds used to make Capital Expenditures and equity resulting in proceeds used to consummate a Permitted Acquisition, in each case to the extent that the proceeds of such equity are promptly used as consideration for all or a portion of the purchase price for such Capital Expenditure or Permitted Acquisition) in a manner permitted under this Agreement, Borrowers shall pay to Agent for the ratable benefit of Lenders, when and as received by Ultimate Parent, Parent or any Borrower and as a mandatory prepayment of the Obligations, a sum equal to 50% of the net proceeds to Ultimate Parent, Parent or such Borrower of the issuance of such Indebtedness or equity; provided, that the foregoing shall not apply in connection with an issuance of Indebtedness or equity to a Person that is a Related Person of a Borrower. Any such prepayment shall be applied to the Loans in the manner specified in the second sentence of subsection 3.3.1 until payment thereof in full.

Mandatory and Optional Prepayments. 3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of Collateral. Except for dispositions of assets permitted by subsection 8.2.9(ii(a) and dispositions in accordance with this Agreement of assets that are subject to a Lien permitted by subsection 8.2.5(iv) (in each case, the proceeds of which shall, The Borrower may at any time when a Dominion Period is in effect, be applied and from time to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments), if any Borrower or any of its Subsidiaries sells any of the Collateral or if any of the Collateral is lost, damaged or destroyed or taken by condemnation (in each case excluding, at any time when a Dominion Period is not in effect, Accounts, Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher or Dalton - Ashland), the applicable Borrower shall, xxxxxs otxxxxxxe agreed by Majority Lenders, pay to Agent for the ratable benefit of Lenders as and when received by such Borrower or such Subsidiary and as a mandatory prepayment of prepay the Loans, as herein in whole or in part, on any Settlement Date, without premium or penalty, upon at least 30 days' irrevocable prior written notice to the Lender in the case of a prepayment in whole or at least three (3) Business Days' irrevocable prior written notice to the Lender in the case of a partial prepayment; provided, a sum equal that each partial prepayment shall be in the amount of at least $10,000,000 or an integral multiple thereof; provided, further, that the Borrower shall (i) simultaneously pay to the proceeds (including insurance payments but net of Lender, and indemnify the Lender and hold the Lender harmless from, all costs and taxes expenses incurred by the Lender in connection with such sale prepayment, and (ii) indemnify the Lender and hold the Lender harmless from any funding loss (in an amount equal to the amount of interest the Lender would have received but for such prepayment less the interest earned on investing such funds) and expense which the Lender may sustain or eventincur as a consequence of such prepayment. Any such prepayment of the Loans shall be accompanied by, without duplication of the preceding sentence, a payment of all accrued but unpaid interest on the Loans through the date of prepayment, plus all accrued but unpaid fees, expenses and other amounts due to the Lender arising under or in connection with this Loan Agreement and the Note through the date of prepayment. (b) received If, on the Determination Date relating to any Settlement Date, after giving effect to transfers of Receivables made during the Settlement Period immediately preceding such Settlement Date by such the Originator to the Borrower or such Subsidiary from such sale, loss, damage, destruction or condemnation. To under the extent that such Collateral sold, lost, damaged, destroyed or condemned consists of Equipment, real Property, or other Property other than Accounts, InventorySales and Servicing Agreement, the Non-Core Fixed Assets described Outstanding Principal Amount shall exceed the Borrowing Base, the Borrower shall on such Settlement Date make a prepayment in clauses (iii) through (v) respect of the definition thereof and Non-Core Fixed Assets consisting principal of the equity Loans in an amount at least equal to such excess, accompanied by a payment of Belcher and Dalton - Ashlandall accrued but unpaid interest on such amount through the date of prepayment. (c) If, the applicable prepayment shaxx xx xppliex xxxxt, after giving effect to Agent's costs and expenses relating to the relevant transaction, second, to the installments of principal due under the Term Notes ratably, to be applied to future installment payments on a ratable basis (exclusive of the final installment payment that is due on October 8, 2008) until such future installment payments are paid in full, third, to the final installment of principal due under the Term Notes on October 8, 2008 ratably until paid in full, and fourth, to repay outstanding principal of Revolving Credit Loans, but not as a permanent any reduction of the Revolving Loan Commitments. 4.1 the applicable prepayment shall be applied to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments (it being understood that prepayments required to be made Commitment pursuant to subsection 3.3.3 Section 2.4(b) above, the Outstanding Principal Amount shall also be applied as set forth in this sentence). In additionexceed the Commitment, if the Collateral subject to such saleBorrower shall, loss, damage, destruction or condemnation consists of Eligible Accounts or Eligible Inventory and a Dominion Period is in effect, such prepayment shall be specifically applied against the portion of the Borrowing Base predicated on such Collateral. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest of (I) Borrowers' decision not to repair or replace the damaged Property, (2) the expiration of one hundred eighty days (180) days from the receipt of such amount, if the applicable Borrower or Subsidiary has not yet committed to acquire replacement Collateral or within three (3) the expiration Business Days of three hundred sixty (360) days from the its receipt of written notice of the reduction of the Commitment, make a prepayment in respect of the principal of the Loans in an amount equal to the excess of the Outstanding Principal Amount over the Commitment as so reduced, accompanied by a payment of all accrued but unpaid interest on such amount (with such amount being applied to the Obligations in the manner specified in the second sentence of this subsection 3.3.1 until payment thereof in full in the event that the foregoing period ends pursuant to clause (1) or clause (2)), or (iii) are equal to or greater than $5,000,000, and Borrowers have requested that Agent and Majority Lenders agree to permit the applicable Borrower or Subsidiary to repair or replace the damaged Property, subject to the third sentence of subsection 3. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest of (1) Agent's and Majority Lenders' decision with respect thereto, (2) the expiration of one hundred eighty (180) days from through the date of such request, unless the applicable Borrower or Subsidiary has committed to replace or rebuild the damaged Property, or (3) the expiration of three hundred sixty (360) days from such request. If Borrowers decide and commit to repair or replace the applicable Property as provided in clause (ii) above or if Agent and Majority Lenders agree, in their reasonable judgment, to permit any such repair or replacement under clause (iii) above, the applicable amount shall, unless an Event of Default is in existence, be released from the Rebuild Reserve (with the amount of the Rebuild Reserve being reduced on a dollar-for-dollar basis for each dollar that is so released) to the applicable Borrower or Subsidiary as needed for use in replacing or repairing the damaged Property during such three hundred sixty (360) day period, with any remaining amount at the end of such three hundred sixty (360) day period applied to the Obligations in the manner specified in the second sentence of this subsection 3prepayment. 3.1 until payment thereof in full. It is acknowledged and agreed that any of the one hundred eighty (180) day or three hundred sixty (360) day periods set forth in this subsection 3.3.1 may be extended with the approval of Majority Lenders. Nothing in this subsection 3.3.1 shall be construed to constitute Agent's or any Lender's consent to the consummation of any disposition or other transaction that is not otherwise permitted by another provision of this Agreement (including, without limitation, subsection 8.2.9 hereof) or another Loan Document. 3.3.2 Proceeds from Issuance of Additional Indebtedness or Equity. If Ultimate Parent, Parent or any Borrower issues any additional Indebtedness or issues any additional equity for cash (other than equity (including stock options) issued to officers and employees in connection with incentive plans, equity resulting in proceeds used to make Capital Expenditures and equity resulting in proceeds used to consummate a Permitted Acquisition, in each case to the extent that the proceeds of such equity are promptly used as consideration for all or a portion of the purchase price for such Capital Expenditure or Permitted Acquisition) in a manner permitted under this Agreement, Borrowers shall pay to Agent for the ratable benefit of Lenders, when and as received by Ultimate Parent, Parent or any Borrower and as a mandatory prepayment of the Obligations, a sum equal to 50% of the net proceeds to Ultimate Parent, Parent or such Borrower of the issuance of such Indebtedness or equity; provided, that the foregoing shall not apply in connection with an issuance of Indebtedness or equity to a Person that is a Related Person of a Borrower. Any such prepayment shall be applied to the Loans in the manner specified in the second sentence of subsection 3.3.1 until payment thereof in full.

Mandatory and Optional Prepayments. 3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of Collateral. Except for dispositions of assets permitted by subsection 8.2.9(ii) and dispositions in accordance with this Agreement of assets that are subject to If after a Lien permitted by subsection 8.2.5(iv) (in each case, the proceeds of which shall, at any time when a Dominion Period is in effect, be applied to reduce the outstanding principal balance reduction of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments), if any Borrower Commitment as provided in Section 2.02 or any of its Subsidiaries sells any of the Collateral or if any of the Collateral is lost, damaged or destroyed or taken by condemnation (in each case excluding, at any time when a Dominion Period is not in effect, Accounts, Inventoryother time, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher or Dalton - Ashland), the applicable Borrower shall, xxxxxs otxxxxxxe agreed by Majority Lenders, pay to Agent for the ratable benefit of Lenders as and when received by such Borrower or such Subsidiary and as a mandatory prepayment of the Loans, as herein provided, a sum equal to the proceeds (including insurance payments but net of costs and taxes incurred in connection with such sale or event) received by such Borrower or such Subsidiary from such sale, loss, damage, destruction or condemnation. To the extent that such Collateral sold, lost, damaged, destroyed or condemned consists of Equipment, real Property, or other Property other than Accounts, Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher and Dalton - Ashland, the applicable prepayment shaxx xx xppliex xxxxt, to Agent's costs and expenses relating to the relevant transaction, second, to the installments of principal due under the Term Notes ratably, to be applied to future installment payments on a ratable basis (exclusive of the final installment payment that is due on October 8, 2008) until such future installment payments are paid in full, third, to the final installment of principal due under the Term Notes on October 8, 2008 ratably until paid in full, and fourth, to repay outstanding principal of Revolving Credit Loans, but not as a permanent reduction of the Revolving Loan Commitments. 4.1 the applicable prepayment shall be applied to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments (it being understood that prepayments required to be made pursuant to subsection 3.3.3 shall also be applied as set forth in this sentence). In addition, if the Collateral subject to such sale, loss, damage, destruction or condemnation consists of Eligible Accounts or Eligible Inventory and a Dominion Period is in effect, such prepayment shall be specifically applied against the portion of the Borrowing Base predicated on such Collateral. 4.1 such amounts shall be provisionally applied to reduce the outstanding aggregate unpaid principal balance of the Revolving Credit Loans and a Rebuild Reserve exceeds the Revolving Credit Commitment, the Borrower shall be created immediately prepay Revolving Credit Loans in the an amount of sufficient to reduce such proceeds, until the earliest of (I) Borrowers' decision aggregate unpaid principal balance to an amount that is not to repair or replace the damaged Property, (2) the expiration of one hundred eighty days (180) days from the receipt of such amount, if the applicable Borrower or Subsidiary has not yet committed to acquire replacement Collateral or (3) the expiration of three hundred sixty (360) days from the receipt of such amount (with such amount being applied to the Obligations in the manner specified in the second sentence of this subsection 3.3.1 until payment thereof in full in the event that the foregoing period ends pursuant to clause (1) or clause (2)), or (iii) are equal to or greater than $5,000,000the Revolving Credit Commitment. If after a reduction of the Term Loan Commitment as provided in Section 2.02 or at any other time, and Borrowers have requested that Agent and Majority Lenders agree to permit the applicable Borrower or Subsidiary to repair or replace the damaged Property, subject to the third sentence of subsection 3. 4.1 such amounts shall be provisionally applied to reduce the outstanding aggregate unpaid principal balance of the Revolving Credit Loans and a Rebuild Reserve Term Loan exceeds the Term Loan Commitment, the Borrower shall be created immediately prepay the Term Loan in an amount sufficient to reduce such aggregate unpaid principal balance to an amount that is not greater than the amount of such proceedsTerm Loan Commitment. The Borrower may at its option, until the earliest of upon at least one (1) Business Day’s notice to the Agent's and Majority Lenders' decision with respect thereto, in the case of Base Rate Loan at least two (2) Business Days’ notice to Agent in the expiration case of one hundred eighty each LIBOR Rate Loan (180provided that once three (3) days from or more Banks are parties to this Agreement then the Borrower shall give the Agent three (3) Business Days notice in the case of each LIBOR Rate Loan), prepay without premium or penalty any Loan in whole or in part with accrued interest to the date of such requestprepayment on the amount prepaid, unless provided that (1) each partial prepayment shall be in a principal amount of not less than Five Hundred Thousand Dollars ($500,000.00); and (2) LIBOR Rate Loans may be prepaid only on the applicable Borrower or Subsidiary has committed to replace or rebuild last day of the damaged Property, or Interest Period for such LIBOR Rate Loan; and (3) the expiration of three hundred sixty (360) days from such request. If Borrowers decide and commit to repair or replace the applicable Property as provided in clause (ii) above or if Agent and Majority Lenders agree, in their reasonable judgment, to permit any such repair or replacement under clause (iii) above, the applicable amount shall, unless an Event of Default is in existence, be released from the Rebuild Reserve (with the amount of the Rebuild Reserve being reduced on a dollar-for-dollar basis for each dollar that is so released) regard to the applicable Borrower or Subsidiary as needed for use in replacing or repairing the damaged Property during such three hundred sixty (360) day periodTerm Loan, with any remaining amount at the end of such three hundred sixty (360) day period applied to the Obligations in the manner specified in the second sentence of this subsection 3. 3.1 until payment thereof in full. It is acknowledged and agreed that any of the one hundred eighty (180) day or three hundred sixty (360) day periods set forth in this subsection 3.3.1 may be extended with the approval of Majority Lenders. Nothing in this subsection 3.3.1 shall be construed to constitute Agent's or any Lender's consent to the consummation of any disposition or other transaction that is not otherwise permitted by another provision of this Agreement (including, without limitation, subsection 8.2.9 hereof) or another Loan Document. 3.3.2 Proceeds from Issuance of Additional Indebtedness or Equity. If Ultimate Parent, Parent or any Borrower issues any additional Indebtedness or issues any additional equity for cash (other than equity (including stock options) issued to officers and employees in connection with incentive plans, equity resulting in proceeds used to make Capital Expenditures and equity resulting in proceeds used to consummate a Permitted Acquisition, in each case to the extent that the proceeds of such equity are promptly used as consideration for all or a portion of the purchase price for such Capital Expenditure or Permitted Acquisition) in a manner permitted under this Agreement, Borrowers shall pay to Agent for the ratable benefit of Lenders, when and as received by Ultimate Parent, Parent or any Borrower and as a mandatory prepayment of the Obligations, a sum equal to 50% of the net proceeds to Ultimate Parent, Parent or such Borrower of the issuance of such Indebtedness or equity; provided, that the foregoing shall not apply in connection with an issuance of Indebtedness or equity to a Person that is a Related Person of a Borrower. Any such prepayment prepayments shall be applied to the Loans principal installments of the Term Note in the manner specified inverse order of their maturities. Any prepayment not made in accordance herewith shall be accompanied by such additional amounts deemed necessary by the Banks to compensate the Banks for any losses, costs or expenses which the Banks may be deemed to incur as a result of such prepayments. No prepayment will affect the Borrower’s obligation to continue to make payments under any Swap Agreements which will remain in full force and effect notwithstanding that prepayment. Upon receipt of any such prepayments, the Agent will promptly thereafter cause to be distributed such prepayment to each Bank for the account of its applicable Lending Office in the second sentence proportion that each such Bank’s Loan to which the prepayment applies bears to the total amount of subsection 3.3.1 until payment thereof in fullall the Banks’ Loans to which the prepayment applies.

Mandatory and Optional Prepayments. 3.3.1 Proceeds (a) In the event of Sale, Loss, Destruction or Condemnation of Collateral. Except for dispositions of assets any Asset Sale permitted by subsection 8.2.9(ii) and dispositions in accordance with this Agreement of assets that are subject pursuant to a Lien permitted by subsection 8.2.5(iv) (in each caseSection 7.04, the proceeds Company shall apply within one Business Day of which shallthe closing of such Asset Sale the Net Proceeds therefrom to pay the Revolving Credit Loans then outstanding; provided, at however, in the event that the Net Proceeds or any time when a Dominion Period is in effectportion thereof constitute Excluded Proceeds, be then the Company shall apply such Excluded Proceeds to pay the Revolving Credit Loans within 361 days of the closing of such Asset Sale to the extent such Excluded Proceeds have not been applied to an Excluded Proceeds Permitted Use. If such Net Proceeds arise from a Non-Equity Asset Sale such payment shall permanently reduce the Total Revolving Credit Commitment by an amount equal to the aggregate principal amount of Revolving Credit Loans repaid. In the event the amount of such Net Proceeds from a Non-Equity Asset Sale exceeds the outstanding principal balance amount of the Revolving Credit LoansLoans outstanding on the date of any mandatory repayment required hereunder, but then the Total Revolving Credit Commitment shall not permanently reduce the Revolving Loan Commitments), if any Borrower or any be reduced by an amount equal to such excess Net Proceeds. If after making a mandatory prepayment pursuant to this Section 3.03(a) as a result of its Subsidiaries sells any of the Collateral or if any of the Collateral is lost, damaged or destroyed or taken by condemnation (in each case excluding, at any time when a Dominion Period is not in effect, Accounts, InventoryNon- Equity Asset Sale, the Non-Core Fixed Assets described in clauses (iii) through (v) Aggregate Letters of Credit Outstanding exceeds the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher or Dalton - Ashland)Total Revolving Credit Commitment, the applicable Borrower Company shall, xxxxxs otxxxxxxe agreed by Majority Lenderson the closing date of such sale, pay provide to the Agent Cash Collateral for the ratable benefit of Lenders as the Issuing Lender in an amount equal to such excess. (b) The Company may at any time and when received by such Borrower or such Subsidiary and as a mandatory prepayment of from time to time prepay the then outstanding Loans, in whole or in part, without premium or penalty, except as herein providedprovided in Section 3.08, a sum equal upon written notice to the proceeds Agent (including insurance payments but net or telephonic notice promptly confirmed in writing) not later than 11:00 a.m. New York, New York time, three Business Days before the date of costs and taxes incurred in connection prepayment with such sale or event) received by such Borrower or such Subsidiary from such sale, loss, damage, destruction or condemnation. To the extent that such Collateral sold, lost, damaged, destroyed or condemned consists respect to prepayments of Equipment, real PropertyAdjusted Libor Loans, or other Property other than Accounts11:00 a.m. New York, Inventory, New York time one Business Day before the Non-Core Fixed Assets described in clauses (iii) through (v) date of prepayment with respect to Prime Rate Loans. Each notice shall be irrevocable and shall specify the definition thereof date and Non-Core Fixed Assets consisting amount of the equity prepayment and whether such prepayment is of Belcher and Dalton - Ashland, the applicable prepayment shaxx xx xppliex xxxxt, to Agent's costs and expenses relating to the relevant transaction, second, to the installments of principal due under the Term Notes ratably, to be applied to future installment payments on Adjusted Libor Loans or Prime Rate Loans or a ratable basis (exclusive of the final installment payment that is due on October 8, 2008) until such future installment payments are paid in full, third, to the final installment of principal due under the Term Notes on October 8, 2008 ratably until paid in fullcombination thereof, and fourthif a combination thereof, to repay outstanding principal of Revolving Credit Loans, but not as a permanent reduction of the Revolving Loan Commitments. 4.1 the applicable prepayment shall be applied to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments (it being understood that prepayments required to be made pursuant to subsection 3.3.3 shall also be applied as set forth in this sentence). In addition, if the Collateral subject to such sale, loss, damage, destruction or condemnation consists of Eligible Accounts or Eligible Inventory and a Dominion Period is in effect, such prepayment shall be specifically applied against the portion of the Borrowing Base predicated on such Collateral. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest of (I) Borrowers' decision not prepayment allocable to repair or replace the damaged Property, (2) the expiration of one hundred eighty days (180) days from the each. Upon receipt of such amountnotice, if the applicable Borrower or Subsidiary has not yet committed to acquire replacement Collateral or (3) Agent shall promptly notify each Lender thereof. If such notice is given, the expiration of three hundred sixty (360) days from Company shall make such prepayment, and the receipt of such amount (with such amount being applied to the Obligations in the manner specified in such notice shall be due and payable, on the second sentence of this subsection 3.3.1 until payment thereof in full in date specified therein together with accrued interest to (but excluding) such date on the event that the foregoing period ends amount repaid. Each partial prepayment pursuant to clause this Section 3.03 shall be in a principal amount of (1x) $400,000 or whole multiples of $100,000 in excess thereof with respect to Prime Rate Loans and (y) $1,000,000 (or $500,000 if there is only a single Lender) or clause (2)), or (iii) are equal to or greater than whole multiples of $5,000,000, and Borrowers have requested that Agent and Majority Lenders agree to permit the applicable Borrower or Subsidiary to repair or replace the damaged Property, subject to the third sentence of subsection 3. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created 500,000 in the amount of such proceeds, until the earliest of (1) Agent's and Majority Lenders' decision excess thereof with respect thereto, (2) the expiration of one hundred eighty (180) days from the date of such request, unless the applicable Borrower or Subsidiary has committed to replace or rebuild the damaged Property, or (3) the expiration of three hundred sixty (360) days from such request. If Borrowers decide and commit to repair or replace the applicable Property as provided in clause (ii) above or if Agent and Majority Lenders agree, in their reasonable judgment, to permit any such repair or replacement under clause (iii) above, the applicable amount shall, unless an Event of Default is in existence, be released from the Rebuild Reserve (with the amount of the Rebuild Reserve being reduced on a dollar-for-dollar basis for each dollar that is so released) to the applicable Borrower or Subsidiary as needed for use in replacing or repairing the damaged Property during such three hundred sixty (360) day period, with any remaining amount at the end of such three hundred sixty (360) day period applied to the Obligations in the manner specified in the second sentence of this subsection 3Adjusted Libor Loans. 3.1 until payment thereof in full. It is acknowledged and agreed that any of the one hundred eighty (180) day or three hundred sixty (360) day periods set forth in this subsection 3.3.1 may be extended with the approval of Majority Lenders. Nothing in this subsection 3.3.1 shall be construed to constitute Agent's or any Lender's consent to the consummation of any disposition or other transaction that is not otherwise permitted by another provision of this Agreement (including, without limitation, subsection 8.2.9 hereof) or another Loan Document. 3.3.2 Proceeds from Issuance of Additional Indebtedness or Equity. If Ultimate Parent, Parent or any Borrower issues any additional Indebtedness or issues any additional equity for cash (other than equity (including stock options) issued to officers and employees in connection with incentive plans, equity resulting in proceeds used to make Capital Expenditures and equity resulting in proceeds used to consummate a Permitted Acquisition, in each case to the extent that the proceeds of such equity are promptly used as consideration for all or a portion of the purchase price for such Capital Expenditure or Permitted Acquisition) in a manner permitted under this Agreement, Borrowers shall pay to Agent for the ratable benefit of Lenders, when and as received by Ultimate Parent, Parent or any Borrower and as a mandatory prepayment of the Obligations, a sum equal to 50% of the net proceeds to Ultimate Parent, Parent or such Borrower of the issuance of such Indebtedness or equity; provided, that the foregoing shall not apply in connection with an issuance of Indebtedness or equity to a Person that is a Related Person of a Borrower. Any such prepayment shall be applied to the Loans in the manner specified in the second sentence of subsection 3.3.1 until payment thereof in full.

Mandatory and Optional Prepayments. 3.3.1 Proceeds of SalePROCEEDS OF SALE, LossLOSS, Destruction or Condemnation of CollateralDESTRUCTION OR CONDEMNATION OF COLLATERAL. Except for dispositions of assets permitted by subsection 8.2.9(ii) as provided in SUBSECTIONS 6.4.2 and dispositions in accordance with this Agreement of assets that are subject to a Lien permitted by subsection 8.2.5(iv) (in each case, the proceeds of which shall, at any time when a Dominion Period is in effect, be applied to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments)8.2.9, if any Borrower or any of its Subsidiaries sells any of the Collateral or if any of the Collateral is lost, damaged lost or destroyed or taken by condemnation (in each case excluding, at any time when a Dominion Period is not in effect, Accounts, Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher or Dalton - Ashland)condemnation, the applicable Borrower shall, xxxxxs otxxxxxxe unless otherwise agreed by Majority Lenders, pay to the Agent for the ratable benefit of the applicable Lenders in accordance with SUBSECTION 3.4.2, as and when received by such Borrower or such Subsidiary and as a mandatory prepayment of the applicable Loans, as herein provided, a sum an amount equal to the lesser of (i) the aggregate amount of the outstanding Loans and (ii) the proceeds (including insurance payments but net of costs and taxes incurred in connection with such sale or event) received by such Borrower or such Subsidiary from such sale, loss, damage, destruction or condemnation. To ; PROVIDED THAT, Borrowers may elect not to prepay the Loans to the extent that of up to $500,000 of asset sale proceeds received by one or more Borrowers in each Fiscal Year; PROVIDED FURTHER, THAT, if as of 28 the date of receipt of such Collateral sold, lost, damaged, destroyed or condemned consists of Equipment, real Property, or other Property other than Accounts, Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher and Dalton - Ashlandproceeds, the applicable prepayment shaxx xx xppliex xxxxt, Borrower is not subject to Agent's costs and expenses relating a blocked account arrangement that then requires daily transfers of funds received therein to the relevant transactionapplicable Agent, secondat Borrower Representative's option, such proceeds may be released to the installments of principal due under the Term Notes ratably, to be applied to future installment payments on a ratable basis (exclusive of the final installment payment that is due on October 8, 2008) until such future installment payments are paid in full, third, applicable Borrower for any use or investment not otherwise prohibited hereunder. Notwithstanding anything herein to the final installment contrary, in the case of principal due under U.K. Borrower and if U.S. Borrowers and/or Canadian Borrowers are subject to a blocked account that then requires daily transfers of funds received therein to the Term Notes on October 8applicable Agent, 2008 ratably until paid in fullany U.S. Borrower or any Canadian Borrower, any and fourth, all proceeds from such asset sales or Collateral lost or destroyed or taken by condemnation shall be used to repay outstanding principal of Revolving Credit Loans, but not as a permanent reduction of prepay the Revolving Loan Commitments. 4.1 the Loans without regard to any exceptions otherwise contained herein. The applicable prepayment shall be applied to reduce the outstanding principal balance of the applicable Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments (it being understood that prepayments required to be made pursuant to subsection 3.3.3 shall also be applied as set forth in this sentence). In addition, if or the Collateral subject to such sale, loss, damage, destruction or condemnation consists of Eligible Accounts or Eligible Inventory and a Dominion Period is in effect, such prepayment shall be specifically applied against the portion of the Borrowing Base predicated on such Collateral. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest of (I) Borrowers' decision not to repair or replace the damaged Property, (2) the expiration of one hundred eighty days (180) days from the receipt of such amount, if the applicable Borrower or Subsidiary has not yet committed to acquire replacement Collateral or (3) the expiration of three hundred sixty (360) days from the receipt of such amount (with such amount being applied to the Obligations in the manner specified in the second sentence of this subsection 3.3.1 until payment thereof in full in the event that the foregoing period ends pursuant to clause (1) or clause (2)), or (iii) are equal to or greater than $5,000,000, and Borrowers have requested that Agent and Majority Lenders agree to permit the applicable Borrower or Subsidiary to repair or replace the damaged Property, subject to the third sentence of subsection 3. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest of (1) Agent's and Majority Lenders' decision with respect thereto, (2) the expiration of one hundred eighty (180) days from the date of such request, unless the applicable Borrower or Subsidiary has committed to replace or rebuild the damaged Property, or (3) the expiration of three hundred sixty (360) days from such request. If Borrowers decide and commit to repair or replace the applicable Property as provided in clause (ii) above or if Agent and Majority Lenders agree, in their reasonable judgment, to permit any such repair or replacement under clause (iii) above, the applicable amount shall, unless an Event of Default is in existence, be released from the Rebuild Reserve (with the maximum amount of the Rebuild Reserve being reduced on a dollar-for-dollar basis for each dollar that is so released) to Canadian Sublimit or the applicable Borrower or Subsidiary as needed for use in replacing or repairing the damaged Property during such three hundred sixty (360) day period, with any remaining amount at the end of such three hundred sixty (360) day period applied to the Obligations in the manner specified in the second sentence of this subsection 3U.K. Sublimit. 3.1 until payment thereof in full. It is acknowledged and agreed that any of the one hundred eighty (180) day or three hundred sixty (360) day periods set forth in this subsection 3.3.1 may be extended with the approval of Majority Lenders. Nothing in this subsection 3.3.1 shall be construed to constitute Agent's or any Lender's consent to the consummation of any disposition or other transaction that is not otherwise permitted by another provision of this Agreement (including, without limitation, subsection 8.2.9 hereof) or another Loan Document. 3.3.2 Proceeds from Issuance of Additional Indebtedness or Equity. If Ultimate Parent, Parent or any Borrower issues any additional Indebtedness or issues any additional equity for cash (other than equity (including stock options) issued to officers and employees in connection with incentive plans, equity resulting in proceeds used to make Capital Expenditures and equity resulting in proceeds used to consummate a Permitted Acquisition, in each case to the extent that the proceeds of such equity are promptly used as consideration for all or a portion of the purchase price for such Capital Expenditure or Permitted Acquisition) in a manner permitted under this Agreement, Borrowers shall pay to Agent for the ratable benefit of Lenders, when and as received by Ultimate Parent, Parent or any Borrower and as a mandatory prepayment of the Obligations, a sum equal to 50% of the net proceeds to Ultimate Parent, Parent or such Borrower of the issuance of such Indebtedness or equity; provided, that the foregoing shall not apply in connection with an issuance of Indebtedness or equity to a Person that is a Related Person of a Borrower. Any such prepayment shall be applied to the Loans in the manner specified in the second sentence of subsection 3.3.1 until payment thereof in full.

Mandatory and Optional Prepayments. 3.3.1 3.3.1. Proceeds of Sale, Loss, Destruction or Condemnation --------------------------------------------------- of Collateral. Except for dispositions of assets permitted by subsection subsections ------------- 8.2.9(ii) and dispositions 8.2.9(iii) and except as provided in accordance with this Agreement of assets that are subject to a Lien permitted by subsection 8.2.5(iv) (in each case, the proceeds of which shall, at any time when a Dominion Period is in effect, be applied to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments8.2.9(v), if any Borrower or any of its Domestic Subsidiaries sells any of the Collateral its Property or if any of the Collateral its Property is lost, damaged lost or destroyed or taken by condemnation (in each case excluding, at any time when a Dominion Period is not in effect, Accounts, Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher or Dalton - Ashland)condemnation, the applicable Borrower or Domestic Subsidiary shall, xxxxxs otxxxxxxe unless otherwise agreed by Majority Lenders, pay to Agent for the ratable benefit of Lenders as and when received by such Borrower or such Domestic Subsidiary and as a mandatory prepayment of the Loans, as herein providedprovided and subject to the Intercreditor Agreement, a sum equal to the proceeds (including insurance payments but net of costs and taxes incurred in connection with such sale or event) received by such Borrower or such Domestic Subsidiary from such sale, loss, damage, destruction or condemnation. To the extent that such Collateral the Property sold, lost, damaged, destroyed or condemned consists of Equipment, real Property, or other Property other than Accounts, Accounts or Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher and Dalton - Ashland, the applicable prepayment shaxx xx xppliex xxxxtshall be applied, subject to Section 3.11 and the Intercreditor Agreement, first, ----- to Agent's costs and expenses relating to the relevant transaction, second, ------ to the installments of principal due under the Term Notes ratably, to be applied to future installment payments on a ratable basis (exclusive of the final installment payment that is due on October 8, 2008) until such future installment payments are paid in fullNotes, third, to repay outstanding ----- principal of Revolving Credit Loans (but without permanently reducing the final installment Revolving Loan Commitments) and with a corresponding imposition of principal due under a Special Reserve against the Term Notes on October 8Borrowing Base, 2008 ratably until paid in fullunless otherwise agreed by the Majority Lenders, and fourth, to repay any other Obligations then due and payable and ------ to cash collateralize any LC Obligations (in the amount of 105% of the LC Amount); provided, that notwithstanding the foregoing, if Availability -------- immediately after making any such prepayment would be less than $10,000,000, unless the Majority Lenders otherwise agree, such prepayment shall be applied to the Obligations, first, to Agent's costs and expenses relating to ----- the relevant transaction, second, to reduce the outstanding principal ------ balance of the Revolving Credit LoansLoans (with a corresponding imposition of a Special Reserve against the Borrowing Base, unless otherwise agreed by the Majority Lenders) until Availability is not less than $10,000,000, third, to ----- the principal of the Term Notes, fourth, to reduce any remaining outstanding ------ principal balance of the Revolving Credit Loans (but not as a permanent reduction of to permanently reduce the Revolving Loan Commitments. 4.1 ) and fifth, to repay other Obligations ----- then due and payable and to cash collateralize any LC Obligations (in the amount of 105% of the LC Amount). To the extent that the Property sold, lost, destroyed or condemned consists of Accounts or Inventory, the applicable prepayment shall be applied applied, subject to Section 3.11, to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments Commitments. Notwithstanding the foregoing and subject in each case to the Intercreditor Agreement: (it being understood that prepayments required a) If the proceeds of insurance (net of costs and taxes incurred) with respect to be made pursuant any loss or destruction of Equipment or real Property of any Borrower or any Domestic Subsidiary (i) are less than $250,000, unless an Event of Default is then in existence, Agent shall apply such amounts to subsection 3.3.3 shall also be applied as set forth in this sentence). In addition, if reduce the Collateral subject to such sale, loss, damage, destruction or condemnation consists of Eligible Accounts or Eligible Inventory and a Dominion Period is in effect, such prepayment shall be specifically applied against the portion outstanding principal balance of the Borrowing Base predicated on Revolving Credit Loans (without permanently reducing the Revolving Loan Commitments), (ii) are greater than or equal to $250,000 and less than 3.1 until payment thereof in full) or (2) the expiration of one hundred eighty (180) days from the receipt of such Collateral. 4.1 amount, or (iii) are equal to or greater than $1,000,000, and upon Borrowers request, Agent and the Majority Lenders agree to permit the applicable Borrower or such Domestic Subsidiary to repair or replace the damaged Property, such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans (and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest of (I) Borrowers' decision not to repair or replace the damaged Property, (2) the expiration of one hundred eighty days (180) days from the receipt of such amount, if the applicable Borrower or Subsidiary has not yet committed to acquire replacement Collateral or (3) the expiration of three hundred sixty (360) days from the receipt of such amount (with such amount being applied to the Obligations in the manner specified in the second sentence of this subsection 3.3.1 until payment thereof in full in the event that the foregoing period ends pursuant to clause (1) or clause (2)), or (iii) are equal to or greater than $5,000,000, and Borrowers have requested that Agent and Majority Lenders agree to permit the applicable Borrower or Subsidiary to repair or replace the damaged Property, subject to the third sentence of subsection 3. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest of (1) Agent's and the Majority Lenders' decision with respect thereto, (2) the expiration of one hundred eighty twenty (180120) days from the date of such request, unless the applicable Borrower or Domestic Subsidiary has committed commenced action to replace or rebuild the damaged Property, or (3) the expiration of three one hundred sixty eighty (360180) days from such request. If Borrowers decide and commit to repair or replace the applicable Property as provided in under clause (ii) above or if Agent and the Majority Lenders agree, in their reasonable judgment, to permit any such repair or replacement under clause (iii) above, the applicable amount shall, unless an Event of Default is in existence, be released from the Rebuild Reserve (with the amount of the Rebuild Reserve being reduced on a dollar-for-dollar basis for each dollar that is so released) to the applicable Borrower or Domestic Subsidiary as needed for use in replacing or repairing the damaged Property during such three one hundred sixty eighty (360180) day period, with any remaining amount at the end of such three one hundred sixty eighty (360180) day period applied to the Obligations in the manner specified in the second sentence of this subsection 3. 3.1 until payment thereof in full. It is acknowledged ; and agreed that in the case of clause (iii) above, if Agent declines to permit any of the such repair or replacement or fails to respond to Borrowers within such one hundred eighty (180) day or three hundred sixty (360) day periods set forth in this subsection 3.3.1 may be extended with the approval of Majority Lenders. Nothing in this subsection 3.3.1 period, such amount shall be construed to constitute Agent's or any Lender's consent to released from the consummation of any disposition or other transaction that is not otherwise permitted by another provision of this Agreement (including, without limitation, subsection 8.2.9 hereof) or another Loan Document. 3.3.2 Proceeds from Issuance of Additional Indebtedness or Equity. If Ultimate Parent, Parent or any Borrower issues any additional Indebtedness or issues any additional equity for cash (other than equity (including stock options) issued to officers Rebuild Reserve and employees in connection with incentive plans, equity resulting in proceeds used to make Capital Expenditures and equity resulting in proceeds used to consummate a Permitted Acquisition, in each case to the extent that the proceeds of such equity are promptly used as consideration for all or a portion of the purchase price for such Capital Expenditure or Permitted Acquisition) in a manner permitted under this Agreement, Borrowers shall pay to Agent for the ratable benefit of Lenders, when and as received by Ultimate Parent, Parent or any Borrower and as a mandatory prepayment of the Obligations, a sum equal to 50% of the net proceeds to Ultimate Parent, Parent or such Borrower of the issuance of such Indebtedness or equity; provided, that the foregoing shall not apply in connection with an issuance of Indebtedness or equity to a Person that is a Related Person of a Borrower. Any such prepayment shall be applied to the Loans obligations in the manner specified in the second sentence of this subsection 3.3.1 until payment thereof in full. (b) If any proceeds of insurance with respect to any loss or destruction of Equipment or real Property of any Foreign Subsidiary are repatriated to the United States, such amounts (net of any costs or taxes incurred with respect thereto) shall be applied to the Obligations as set forth in the second sentence of subsection 3. 3.1. If the proceeds of any sale or other disposition of Property of any Foreign Subsidiary are repatriated to the United States, such amounts (net any costs or taxes incurred with respect thereto) shall be applied to the Obligations in the manner set forth for Property of such type in the second or third sentence of this subsection 3.3.1, as applicable. (c) If any sale of Collateral involves both Fixed Assets and Other Assets or if such sale involves a sale of all or substantially all of the capital stock or Properties of any Borrower or any Subsidiary, or of any business line of such Borrower or such Subsidiary, then the proceeds thereof will be allocated as follows 1. Subject to Section 3.11, amounts so allocated to Equipment and real Property shall be applied to the obligations as set forth in the second sentence of subsection 3. 3.1. Subject to Section 3.11, amounts so allocated to goodwill shall be applied to the Obligations as set forth in the second sentence of subsection 3.3.1.

Mandatory and Optional Prepayments. 3.3.1 3.3.1. Proceeds of Sale, Loss, Destruction or Condemnation of ------------------------------------------------------ Collateral. Except for dispositions If any Equipment, real Property or other Property of assets permitted by subsection 8.2.9(ii) and dispositions in accordance with this Agreement Borrower ---------- or any Subsidiary of assets that are Borrower is subject to a Lien permitted by subsection 8.2.5(iv) (in each casesale or other Asset Disposition, the proceeds of which shall, at any time when a Dominion Period is in effect, be applied to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments), if any Borrower or any of its Subsidiaries sells any of the Collateral or if any of the Collateral is lost, damaged or destroyed or taken by condemnation (in each case excludingcondemnation, at any time when a Dominion Period is not in effect, Accounts, Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher or Dalton - Ashland), the applicable Borrower shall, xxxxxs otxxxxxxe agreed by Majority Lenders, shall pay to Agent for the ratable benefit of Lenders as and when received by such Borrower or such Subsidiary and as a mandatory prepayment of the Loans, as herein provided, a sum equal to the proceeds (including insurance payments but net of costs and taxes incurred in connection with such sale or eventpayments) received by such Borrower or such Subsidiary from such salesale or other Asset Disposition, loss, damage, destruction or condemnation. To the extent that such Collateral sold, lost, damaged, destroyed or condemned consists of Equipment, real Property, or other Property other than Accounts, Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher and Dalton - AshlandIn each case, the applicable prepayment shaxx xx xppliex xxxxt, to Agent's costs and expenses relating to the relevant transaction, second, to the installments of principal due under the Term Notes ratably, to be applied to future installment payments on a ratable basis (exclusive of the final installment payment that is due on October 8, 2008) until such future installment payments are paid in full, third, to the final installment of principal due under the Term Notes on October 8, 2008 ratably until paid in full, and fourth, to repay outstanding principal of Revolving Credit Loans, but not as a permanent reduction of the Revolving Loan Commitments. 4.1 the applicable prepayment prepayments shall be applied to reduce the outstanding principal balance of the Revolving Credit LoansLoans (without effecting a permanent reduction thereof), but shall not permanently reduce the Revolving Loan Commitments (it being understood that prepayments required to be made pursuant to subsection 3.3.3 shall also be applied as set forth in this sentence). In additionand, if the Collateral subject to such salea sale or other Asset Disposition or that was lost, lossdamaged, damage, destruction destroyed or condemnation condemned consists of Eligible Accounts Accounts, Eligible Inventory, Eligible Equipment or Eligible Inventory and a Dominion Period is in effectReal Property, such prepayment shall be specifically applied against the portion of the Borrowing Base predicated on such Collateral. 4.1 such amounts . Notwithstanding the foregoing, (i) at all times after the Asset Disposition Threshold has been satisfied, the Fixed Asset Sublimit of the Borrowing Base shall be provisionally applied permanently reduced by an amount equal to reduce the outstanding principal balance greater of the Revolving Credit Loans and a Rebuild Reserve shall be created in (a) the amount of such proceeds, until the earliest Net Available Cash from each subsequent Asset Disposition of Eligible Equipment or Eligible Real Property and (I) Borrowers' decision not to repair or replace the damaged Property, (2b) the expiration loanable value under the Borrowing Base of the Eligible Equipment or the Eligible Real Property that was the subject of such Asset Disposition and (ii) if the Net Available Cash from any Asset Disposition in excess of the Asset Disposition Threshold is not used within one hundred eighty days (180) days from year of the later of the date of such Asset Disposition or the receipt of such amount, if the applicable Net Available Cash by Borrower or Subsidiary has not yet committed its Subsidiaries, to acquire replacement Collateral (a) purchase Property (other than Indebtedness or Securities) in a business related, ancillary or complementary to the businesses conducted by Borrower and its Subsidiaries as of July 28, 1999 or (3b) Securities of a Person constituting "Additional Assets" under the Senior Notes Indenture, as evidenced by a written certificate of the principal financial officer of Borrower to that effect received by Agent prior to the expiration of three hundred sixty (360) days from the receipt of such amount (with such amount being applied to the Obligations in the manner specified in the second sentence of this subsection 3.3.1 until payment thereof in full in the event that the foregoing period ends pursuant to clause (1) or clause (2))one year period, or (iii) are equal to or greater than $5,000,000, and Borrowers have requested that Agent and Majority Lenders agree to permit the applicable Borrower or Subsidiary to repair or replace the damaged Property, subject to the third sentence of subsection 3. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of then the Revolving Credit Loans Maximum Amount and a Rebuild Reserve the Total Credit Facility shall each be created in reduced by the amount of such proceeds, until the earliest of (1) Agent's and Majority Lenders' decision with respect thereto, (2) the expiration of one hundred eighty (180) days from the date of such request, unless the applicable Borrower or Subsidiary has committed to replace or rebuild the damaged Property, or (3) the expiration of three hundred sixty (360) days Net Available Cash from such request. If Borrowers decide Asset Disposition (and commit to repair or replace the applicable Property as provided Revolving Loan Commitments shall be reduced in clause (ii) above or if Agent and Majority Lenders agreea corresponding amount, in their reasonable judgment, to permit any such repair or replacement under clause (iii) above, the applicable amount shall, unless an Event of Default is in existence, be released from the Rebuild Reserve (accordance with the amount of the Rebuild Reserve being reduced on a dollar-for-dollar basis for each dollar that is so released) to the applicable Borrower or Subsidiary as needed for use in replacing or repairing the damaged Property during such three hundred sixty (360) day period, with any remaining amount at the end of such three hundred sixty (360) day period applied to the Obligations in the manner specified in the second sentence of this subsection 3. 3.1 until payment thereof in full. It is acknowledged and agreed that any of the one hundred eighty (180) day or three hundred sixty (360) day periods set forth in this subsection 3.3.1 may be extended with the approval of Majority Lenders. Nothing in this subsection 3.3.1 shall be construed to constitute Agent's or any Lender's consent to the consummation of any disposition or other transaction that is not otherwise permitted by another provision of this Agreement (including, without limitation, subsection 8.2.9 hereof) or another Revolving Loan DocumentPercentage). 3.3.2 Proceeds from Issuance of Additional Indebtedness or Equity. If Ultimate Parent, Parent or any Borrower issues any additional Indebtedness or issues any additional equity for cash (other than equity (including stock options) issued to officers and employees in connection with incentive plans, equity resulting in proceeds used to make Capital Expenditures and equity resulting in proceeds used to consummate a Permitted Acquisition, in each case to the extent that the proceeds of such equity are promptly used as consideration for all or a portion of the purchase price for such Capital Expenditure or Permitted Acquisition) in a manner permitted under this Agreement, Borrowers shall pay to Agent for the ratable benefit of Lenders, when and as received by Ultimate Parent, Parent or any Borrower and as a mandatory prepayment of the Obligations, a sum equal to 50% of the net proceeds to Ultimate Parent, Parent or such Borrower of the issuance of such Indebtedness or equity; provided, that the foregoing shall not apply in connection with an issuance of Indebtedness or equity to a Person that is a Related Person of a Borrower. Any such prepayment shall be applied to the Loans in the manner specified in the second sentence of subsection 3.3.1 until payment thereof in full.

Mandatory and Optional Prepayments. 3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of Collateral. Except for dispositions of assets permitted by subsection 8.2.9(ii) and dispositions as provided in accordance with this Agreement of assets that are subject to a Lien permitted by subsection 8.2.5(iv) (in each case, the proceeds of which shall, at any time when a Dominion Period is in effect, be applied to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan CommitmentsSubsection 7.2.5(i), if any Borrower or any of its Subsidiaries sells or otherwise disposes of any of the Equipment or real Property or other Collateral or assets, or if a Casualty Loss occurs with respect to any of the Collateral is lostCollateral, damaged or destroyed or taken by condemnation (in each case excluding, at any time when a Dominion Period is not in effect, Accounts, Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher or Dalton - Ashland), the applicable Borrower shall, xxxxxs otxxxxxxe unless otherwise agreed by Majority Lenders, pay to Agent for the ratable benefit of Lenders as and when received by such Borrower or such Subsidiary and as a mandatory prepayment of the Loans, as herein provided, a sum equal to the proceeds (including insurance payments and condemnation awards but net of costs and taxes incurred in connection with such sale or event) ("Sale Proceeds") received by such Borrower or such Subsidiary from such sale, loss, damage, destruction sale or condemnationCasualty Loss. To the extent that such Collateral sold, lost, damaged, destroyed or condemned consists of Equipment, real Property, or other Property other than Accounts, Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher and Dalton - Ashland, the applicable prepayment shaxx xx xppliex xxxxt, to Agent's costs and expenses relating to the relevant transaction, second, to the installments of principal due under the Term Notes ratably, to be applied to future installment payments on a ratable basis (exclusive of the final installment payment that is due on October 8, 2008) until such future installment payments are paid in full, third, to the final installment of principal due under the Term Notes on October 8, 2008 ratably until paid in full, and fourth, to repay outstanding principal of Revolving Credit Loans, but not as a permanent reduction of the Revolving Loan Commitments. 4.1 the The applicable prepayment shall be applied to reduce the outstanding principal balance of the Revolving Credit Loans, but but, except as provided below, shall not permanently reduce the Revolving Loan Commitments (it being understood Commitments; provided that prepayments required any sale or Casualty Loss of Inventory, Equipment or Specified Real Property shall reduce the US Borrowing Base to the extent of the value of the applicable Property. Such reduction shall be made pursuant to subsection 3.3.3 shall also be applied as set forth in this sentence). In addition, effective on the date of consummation of the sale or receipt of proceeds of a Casualty Loss if the Collateral subject to such sale, loss, damage, destruction or condemnation consists of Eligible Accounts or Eligible Inventory and a Dominion Period is in effect, such prepayment shall be specifically applied against the portion of the Borrowing Base predicated on such Collateral. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest of (I) Borrowers' decision not to repair or replace the damaged Property, (2) the expiration of one hundred eighty days (180) days from the receipt of such amount, if the applicable Borrower or Subsidiary has not yet committed to acquire replacement Collateral or (3) the expiration of three hundred sixty (360) days from the receipt of such amount (with such amount being applied to the Obligations in the manner specified in the second sentence of this subsection 3.3.1 until payment thereof in full in the event that the foregoing period ends pursuant to clause (1) or clause (2)), or (iii) Sale Proceeds are equal to or greater than $5,000,000five percent (5%) of Availability on such date (without giving effect to the application of the Sale Proceeds) and otherwise as of the date on which Borrower delivers its new Borrowing Base Certificate pursuant to Subsection 7.1.4. If Borrower and its Subsidiaries do not reinvest the proceeds of any sales or other dispositions of assets within 364 days after receipt of such proceeds in assets used in their business and would be required to make a "Net Proceeds Offer" (as defined in the Senior Note Indenture), then the Revolving Loan Commitments shall be automatically permanently reduced by an amount equal to the uninvested portion of such proceeds on the 364th day after receipt of such proceeds. Notwithstanding the foregoing, Sale Proceeds received by a UK Borrower shall be applied to its Revolving Credit Loans to the extent outstanding, and Borrowers have requested that Agent and Majority Lenders agree not to permit the applicable Borrower or Subsidiary to repair or replace the damaged Property, subject to the third sentence of subsection 3. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest of (1) Agent's and Majority Lenders' decision with respect thereto, (2) the expiration of one hundred eighty (180) days from the date of such request, unless the applicable Borrower or Subsidiary has committed to replace or rebuild the damaged Property, or (3) the expiration of three hundred sixty (360) days from such request. If Borrowers decide and commit to repair or replace the applicable Property as provided in clause (ii) above or if Agent and Majority Lenders agree, in their reasonable judgment, to permit any such repair or replacement under clause (iii) above, the applicable amount shall, unless an Event of Default is in existence, be released from the Rebuild Reserve (with the amount of the Rebuild Reserve being reduced on a dollar-for-dollar basis for each dollar that is so released) to the applicable Borrower or Subsidiary as needed for use in replacing or repairing the damaged Property during such three hundred sixty (360) day period, with any remaining amount at the end of such three hundred sixty (360) day period applied to the Obligations in the manner specified in the second sentence of this subsection 3Borrower. 3.1 until payment thereof in full. It is acknowledged and agreed that any of the one hundred eighty (180) day or three hundred sixty (360) day periods set forth in this subsection 3.3.1 may be extended with the approval of Majority Lenders. Nothing in this subsection 3.3.1 shall be construed to constitute Agent's or any Lender's consent to the consummation of any disposition or other transaction that is not otherwise permitted by another provision of this Agreement (including, without limitation, subsection 8.2.9 hereof) or another Loan Document. 3.3.2 Proceeds from Issuance of Additional Indebtedness or Equity. If Ultimate Parent, Parent or any Borrower issues any additional Indebtedness or issues any additional equity for cash (other than equity (including stock options) issued to officers and employees in connection with incentive plans, equity resulting in proceeds used to make Capital Expenditures and equity resulting in proceeds used to consummate a Permitted Acquisition, in each case to the extent that the proceeds of such equity are promptly used as consideration for all or a portion of the purchase price for such Capital Expenditure or Permitted Acquisition) in a manner permitted under this Agreement, Borrowers shall pay to Agent for the ratable benefit of Lenders, when and as received by Ultimate Parent, Parent or any Borrower and as a mandatory prepayment of the Obligations, a sum equal to 50% of the net proceeds to Ultimate Parent, Parent or such Borrower of the issuance of such Indebtedness or equity; provided, that the foregoing shall not apply in connection with an issuance of Indebtedness or equity to a Person that is a Related Person of a Borrower. Any such prepayment shall be applied to the Loans in the manner specified in the second sentence of subsection 3.3.1 until payment thereof in full.

Mandatory and Optional Prepayments. 3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of Collateral. Except for dispositions of assets permitted by subsection 8.2.9(ii) as provided in subsections 6.4.2 and dispositions in accordance with this Agreement of assets that are subject to a Lien permitted by subsection 8.2.5(iv) (in each case, the proceeds of which shall, at any time when a Dominion Period is in effect, be applied to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments)8.2.9, if any Borrower or any of its Subsidiaries sells any of the Collateral or if any of the Collateral is lost, damaged lost or destroyed or taken by condemnation (in each case excludingcondemnation, at any time when a Dominion Period is not in effect, Accounts, Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher or Dalton - Ashland), the applicable Borrower Borrowers shall, xxxxxs otxxxxxxe unless otherwise agreed by Majority Lenders, pay to Agent for the ratable benefit of Lenders as and when received by such Borrower or such Subsidiary and as a mandatory prepayment of the Loans, as herein provided, a sum equal to the proceeds (including insurance payments but net of costs and taxes incurred in connection with such sale or event) received by such Borrower or such Subsidiary from such sale, loss, damage, destruction or condemnation. To the extent that such the Collateral sold, lost, damaged, destroyed or condemned consists of EquipmentEquipment (other than Equipment that was financed with the proceeds of Equipment Loans), real Property, or other Property other than Accounts, Accounts or Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher and Dalton - Ashland, the applicable prepayment shaxx xx xppliex xxxxt, to Agent's costs and expenses relating to the relevant transaction, second, shall be applied first to the installments of principal due under the Term Notes ratably, to be applied to future installment payments on a ratable basis (exclusive in inverse order of the final installment payment that is due on October 8, 2008) maturity until such future installment payments are paid in full, third, second to the final installment installments of principal due under the Term Equipment Loan Notes on October 8ratably, 2008 ratably to be applied to future installment payments in inverse order of maturity until paid in full, and fourth, third to repay outstanding principal of Revolving Credit Loans, but not as on a permanent reduction pro rata basis. To the extent that Collateral sold, lost, destroyed or condemned consists of Equipment that was financed with the proceeds of Equipment Loans, the applicable prepayment shall be applied first to the installments of principal due under the applicable Equipment Loan Notes, ratably, to be applied to future installment payments in inverse order of maturity until paid in full, second to installments of principal due under the other Equipment Loan Notes, ratably, to be applied to future installment payments in inverse order of maturity, third to installments of principal due under the Term Notes, ratably, to be applied to future installment payments in inverse order of maturity, and fourth to repay outstanding principal of Revolving Loan Commitments. 4.1 Credit Loans, on a pro rata basis. To the extent that the Collateral sold, lost, destroyed or condemned consists of Accounts or Inventory, the applicable prepayment shall be applied to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments (it being understood that prepayments required to be made pursuant to subsection 3.3.3 shall also be applied as set forth in this sentence)Commitments. In addition, if Notwithstanding the Collateral subject to such sale, loss, damage, destruction or condemnation consists of Eligible Accounts or Eligible Inventory and a Dominion Period is in effect, such prepayment shall be specifically applied against the portion of the Borrowing Base predicated on such Collateral. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest of (I) Borrowers' decision not to repair or replace the damaged Property, (2) the expiration of one hundred eighty days (180) days from the receipt of such amount, if the applicable Borrower or Subsidiary has not yet committed to acquire replacement Collateral or (3) the expiration of three hundred sixty (360) days from the receipt of such amount (with such amount being applied to the Obligations in the manner specified in the second sentence of this subsection 3.3.1 until payment thereof in full in the event that the foregoing period ends pursuant to clause (1) or clause (2)), or (iii) are equal to or greater than $5,000,000, and Borrowers have requested that Agent and Majority Lenders agree to permit the applicable Borrower or Subsidiary to repair or replace the damaged Property, subject to the third sentence of subsection 3. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest of (1) Agent's and Majority Lenders' decision with respect thereto, (2) the expiration of one hundred eighty (180) days from the date of such request, unless the applicable Borrower or Subsidiary has committed to replace or rebuild the damaged Property, or (3) the expiration of three hundred sixty (360) days from such request. If Borrowers decide and commit to repair or replace the applicable Property as provided in clause (ii) above or if Agent and Majority Lenders agree, in their reasonable judgment, to permit any such repair or replacement under clause (iii) above, the applicable amount shall, unless an Event of Default is in existence, be released from the Rebuild Reserve (with the amount of the Rebuild Reserve being reduced on a dollar-for-dollar basis for each dollar that is so released) to the applicable Borrower or Subsidiary as needed for use in replacing or repairing the damaged Property during such three hundred sixty (360) day period, with any remaining amount at the end of such three hundred sixty (360) day period applied to the Obligations in the manner specified in the second sentence of this subsection 3. 3.1 until payment thereof in full. It is acknowledged and agreed that any of the one hundred eighty (180) day or three hundred sixty (360) day periods set forth in this subsection 3.3.1 may be extended with the approval of Majority Lenders. Nothing in this subsection 3.3.1 shall be construed to constitute Agent's or any Lender's consent to the consummation of any disposition or other transaction that is not otherwise permitted by another provision of this Agreement (including, without limitation, subsection 8.2.9 hereof) or another Loan Document. 3.3.2 Proceeds from Issuance of Additional Indebtedness or Equity. If Ultimate Parent, Parent or any Borrower issues any additional Indebtedness or issues any additional equity for cash (other than equity (including stock options) issued to officers and employees in connection with incentive plans, equity resulting in proceeds used to make Capital Expenditures and equity resulting in proceeds used to consummate a Permitted Acquisition, in each case to the extent that the proceeds of such equity are promptly used as consideration for all or a portion of the purchase price for such Capital Expenditure or Permitted Acquisition) in a manner permitted under this Agreement, Borrowers shall pay to Agent for the ratable benefit of Lenders, when and as received by Ultimate Parent, Parent or any Borrower and as a mandatory prepayment of the Obligations, a sum equal to 50% of the net proceeds to Ultimate Parent, Parent or such Borrower of the issuance of such Indebtedness or equity; provided, that the foregoing shall not apply in connection with an issuance of Indebtedness or equity to a Person that is a Related Person of a Borrower. Any such prepayment shall be applied to the Loans in the manner specified in the second sentence of subsection 3.3.1 until payment thereof in full.foregoing:

Mandatory and Optional Prepayments. 3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of Collateral. Except for dispositions of assets permitted by subsection 8.2.9(ii(a) and dispositions in accordance with this Agreement of assets that are subject to The Borrower may on a Lien permitted by subsection 8.2.5(iv) (in each case, the proceeds of which shall, at any time when a Dominion Period is in effect, be applied to reduce the outstanding principal balance of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments), if any Borrower or any of its Subsidiaries sells any of the Collateral or if any of the Collateral is lost, damaged or destroyed or taken by condemnation (in each case excluding, at any time when a Dominion Period is not in effect, Accounts, Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher or Dalton - Ashland), the applicable Borrower shall, xxxxxs otxxxxxxe agreed by Majority Lenders, pay to Agent for the ratable benefit of Lenders as and when received by such Borrower or such Subsidiary and as a mandatory prepayment of Settlement Date prepay the Loans, as herein in whole or in part, without premium or penalty, upon at least 30 days' irrevocable prior written notice to the Lender in the case of a prepayment in whole or at least three (3) Business Days' irrevocable prior written notice to the Lender in the case of a partial prepayment; provided, a sum equal that each partial prepayment shall be in the amount of at least $10,000,000 or an integral multiple thereof; provided, further, that the Borrower shall (i) simultaneously pay to the proceeds (including insurance payments but net of Lender, and indemnify the Lender and hold the Lender harmless from, all costs and taxes expenses incurred by the Lender in connection with such sale or eventprepayment, and (ii) indemnify the Lender and hold the Lender harmless from any funding loss (in an amount equal to the amount of interest the Lender would have received by such Borrower or such Subsidiary from such sale, loss, damage, destruction or condemnation. To the extent that such Collateral sold, lost, damaged, destroyed or condemned consists of Equipment, real Property, or other Property other than Accounts, Inventory, the Non-Core Fixed Assets described in clauses (iii) through (v) of the definition thereof and Non-Core Fixed Assets consisting of the equity of Belcher and Dalton - Ashland, calculated with respect to the applicable prepayment shaxx xx xppliex xxxxtfixed interest, to Agent's costs and expenses relating discount or carrying cost period with respect to the relevant transactionCost of Funds) but for such prepayment less the interest earned on investing such funds) and expense which the Lender may sustain or incur as a consequence of such prepayment. Any such prepayment of the Loans shall be accompanied by, secondwithout duplication of the preceding sentence, a payment of all accrued but unpaid interest on the Loans through the date of prepayment, plus all accrued but unpaid fees, expenses and other amounts due to the installments Lender arising under or in connection with this Agreement and the Note through the date of principal due under the Term Notes ratablyprepayment. (b) If, after giving effect to be applied to future installment payments on a ratable basis (exclusive of the final installment payment that is due on October 8, 2008) until such future installment payments are paid in full, third, to the final installment of principal due under the Term Notes on October 8, 2008 ratably until paid in full, and fourth, to repay outstanding principal of Revolving Credit Loans, but not as a permanent any reduction of the Revolving Loan Commitments. 4.1 Commitment pursuant to Section 2.04(b) above, the applicable prepayment Outstanding Principal Amount shall be applied to reduce exceed the outstanding principal balance Commitment, the Borrower shall, within one Business Day of its receipt of written notice of the Revolving Credit Loans, but shall not permanently reduce the Revolving Loan Commitments (it being understood that prepayments required to be made pursuant to subsection 3.3.3 shall also be applied as set forth in this sentence). In addition, if the Collateral subject to such sale, loss, damage, destruction or condemnation consists of Eligible Accounts or Eligible Inventory and a Dominion Period is in effect, such prepayment shall be specifically applied against the portion reduction of the Borrowing Base predicated Commitment, make a prepayment in respect of the principal of the Loans in an amount equal to the excess of the Outstanding Principal Amount over the Commitment as so reduced, accompanied by a payment of all accrued but unpaid interest on such Collateral. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest of (I) Borrowers' decision not to repair or replace the damaged Property, (2) the expiration of one hundred eighty days (180) days from the receipt of such amount, if the applicable Borrower or Subsidiary has not yet committed to acquire replacement Collateral or (3) the expiration of three hundred sixty (360) days from the receipt of such amount (with such amount being applied to the Obligations in the manner specified in the second sentence of this subsection 3.3.1 until payment thereof in full in the event that the foregoing period ends pursuant to clause (1) or clause (2)), or (iii) are equal to or greater than $5,000,000, and Borrowers have requested that Agent and Majority Lenders agree to permit the applicable Borrower or Subsidiary to repair or replace the damaged Property, subject to the third sentence of subsection 3. 4.1 such amounts shall be provisionally applied to reduce the outstanding principal balance of the Revolving Credit Loans and a Rebuild Reserve shall be created in the amount of such proceeds, until the earliest of (1) Agent's and Majority Lenders' decision with respect thereto, (2) the expiration of one hundred eighty (180) days from through the date of such request, unless prepayment. (c) If at any time the applicable Borrower or Subsidiary has committed to replace or rebuild Pledged Securities Available Amount is less than the damaged Property, or (3) the expiration of three hundred sixty (360) days from such request. If Borrowers decide and commit to repair or replace the applicable Property as provided in clause (ii) above or if Agent and Majority Lenders agree, in their reasonable judgment, to permit any such repair or replacement under clause (iii) aboveOutstanding Principal Amount, the applicable amount Borrower shall, unless an Event within one Business Day of Default is its receipt of written notice thereof, make a prepayment in existence, be released from the Rebuild Reserve (with the amount respect of the Rebuild Reserve being reduced on a dollar-for-dollar basis for each dollar that is so released) to the applicable Borrower or Subsidiary as needed for use in replacing or repairing the damaged Property during such three hundred sixty (360) day period, with any remaining amount at the end principal of such three hundred sixty (360) day period applied to the Obligations in the manner specified in the second sentence of this subsection 3. 3.1 until payment thereof in full. It is acknowledged and agreed that any of the one hundred eighty (180) day or three hundred sixty (360) day periods set forth in this subsection 3.3.1 may be extended with the approval of Majority Lenders. Nothing in this subsection 3.3.1 shall be construed to constitute Agent's or any Lender's consent to the consummation of any disposition or other transaction that is not otherwise permitted by another provision of this Agreement (including, without limitation, subsection 8.2.9 hereof) or another Loan Document. 3.3.2 Proceeds from Issuance of Additional Indebtedness or Equity. If Ultimate Parent, Parent or any Borrower issues any additional Indebtedness or issues any additional equity for cash (other than equity (including stock options) issued to officers and employees in connection with incentive plans, equity resulting in proceeds used to make Capital Expenditures and equity resulting in proceeds used to consummate a Permitted Acquisition, in each case to the extent that the proceeds of such equity are promptly used as consideration for all or a portion of the purchase price for such Capital Expenditure or Permitted Acquisition) in a manner permitted under this Agreement, Borrowers shall pay to Agent for the ratable benefit of Lenders, when and as received by Ultimate Parent, Parent or any Borrower and as a mandatory prepayment of the Obligations, a sum equal to 50% of the net proceeds to Ultimate Parent, Parent or such Borrower of the issuance of such Indebtedness or equity; provided, that the foregoing shall not apply in connection with an issuance of Indebtedness or equity to a Person that is a Related Person of a Borrower. Any such prepayment shall be applied to the Loans in an amount equal to the manner specified in excess of the second sentence Outstanding Principal Amount over the Pledged Securities Available Amount accompanied by a payment of subsection 3.3.1 until payment thereof in fullall accrued but unpaid interest on such amount through the date of such prepayment.