Common use of Mandatory Prepayments/Reductions Clause in Contracts

Mandatory Prepayments/Reductions. (a) No later than the third Business Day following the date of receipt by Company or any of its Subsidiaries of any Net Asset Sale Proceeds, Borrower shall prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to such Net Asset Sale Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries, to invest such Net Asset Sale Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries; provided further, pending any such investment all such Net Asset Sale Proceeds shall be applied to prepay outstanding Loans (without a reduction in Commitments). (b) No later than the third Business Day following the date of receipt by Company or any of its Subsidiaries, or Administrative Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Borrower shall prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries to invest such Net Insurance/Condemnation Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries, which investment may include the repair, restoration or replacement of the applicable assets of Company or its Subsidiaries; 37 44 provided, further, pending any such investment all such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay outstanding Loans (without a reduction in Commitments). (c) In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year 2003), Borrower shall, no later than ninety (90) days after the end of such Fiscal Year, prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to 75% of such Consolidated Excess Cash Flow. (d) Borrower shall from time to time prepay the Loans to the extent necessary so that the Total Utilization of Commitments shall not at any time exceed the lesser of the (i) Commitments then in effect and (ii) Loan Availability. (e) If at any time after the Initial Certified Conditions have been previously satisfied but are no longer satisfied, Loan Availability shall be immediately reduced to zero and all outstanding Loans shall be immediately repaid, and if at any time after the Incremental Certified Conditions have been previously satisfied but are no longer satisfied, outstanding Loans shall be immediately repaid to the extent necessary such that Total Utilization of Commitments shall not exceed Loan Availability. (f) On the date of receipt by Company or any of its Subsidiaries of any Cash proceeds from the incurrence of Subordinated Indebtedness (other than with respect to any such Indebtedness permitted to be incurred pursuant to Section 6.1(c)(i)), the Commitments shall be permanently reduced in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses. (g) Concurrently with any prepayment of the Loans and/or reduction of the Commitments pursuant to Sections 2.11(a) through 2.11(f), Borrower shall deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable net proceeds or Consolidated Excess Cash Flow, as the case may be. In the event that Borrower shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Borrower shall promptly make an additional prepayment of the Loans and/or the Commitments shall be permanently reduced) in an amount equal to such excess, and Borrower shall concurrently therewith deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the derivation such excess.

Mandatory Prepayments/Reductions. (ai) No later than the third Business Day following the date of Immediately upon any Loan Party's receipt by Company or any of its Subsidiaries of any Net Cash Proceeds on account of an Asset Sale Proceeds, Borrower shall prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to such Net Asset Sale Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries, to invest such Net Asset Sale Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries; provided further, pending any such investment all such Net Asset Sale Proceeds shall be applied to prepay outstanding Loans (without a reduction in Commitments). (b) No later than the third Business Day following the date of receipt by Company or any of its Subsidiaries, or Administrative Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Borrower shall prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries to invest such Net Insurance/Condemnation Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries, which investment may include the repair, restoration or replacement of the applicable assets of Company or its Subsidiaries; 37 44 provided, further, pending any such investment all such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay outstanding Loans (without a reduction in Commitments). (c) In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year 2003), Borrower shall, no later than ninety (90) days after the end of such Fiscal Year, prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to 75% of such Consolidated Excess Cash Flow. (d) Borrower shall from time to time prepay the Loans to the extent necessary so that the Total Utilization of Commitments shall not at any time exceed the lesser of the (i) Commitments then in effect and (ii) Loan Availability. (e) If at any time after the Initial Certified Conditions have been previously satisfied but are no longer satisfied, Loan Availability shall be immediately reduced to zero and all outstanding Loans shall be immediately repaid, and if at any time after the Incremental Certified Conditions have been previously satisfied but are no longer satisfied, outstanding Loans shall be immediately repaid to the extent necessary such that Total Utilization of Commitments shall not exceed Loan Availability. (f) On the date of receipt by Company or any of its Subsidiaries of any Cash proceeds from the incurrence of Subordinated Indebtedness (other than with respect to any Excluded Proceeds), such Indebtedness permitted Loan Party shall make or cause to be incurred pursuant to Section 6.1(c)(i)), made a mandatory prepayment of the Commitments shall be permanently reduced Term Loans in an aggregate amount equal to 100% of such proceeds, net Net Cash Proceeds. Each such prepayment of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expensesTerm Loans shall be applied pro rata to the remaining principal installments of the Term Loans. (gii) Concurrently Immediately upon any Loan Party's receipt of any Net Cash Proceeds from the issuance of any Securities (other than Excluded Securities) by such Loan Party (other than such Net Cash Proceeds that are used by such Loan Party to consummate a Permitted Acquisition within one year from the date such Net Cash Proceeds are received, provided that such Net Cash Proceeds are deposited into the Cash Collateral Account upon receipt of such Net Cash Proceeds by such Loan Party until the earlier of (A) the date such Loan Party consummates a Permitted Acquisition in accordance with any the provisions hereof or (B) the date which is the first annual anniversary of the date of deposit thereof), such Loan Party shall make or cause to be made a mandatory prepayment of the Term Loans and/or reduction in an amount equal to 100% of such Net Cash Proceeds. Each such prepayment of Term Loans shall be applied pro rata to the remaining principal installments of the Commitments pursuant Term Loans. (iii) On the 90th day following the last day of each Fiscal Year, the Borrowers shall make or cause to Sections 2.11(a) through 2.11(f), Borrower shall deliver to Administrative Agent be made a certificate of an Authorized Officer demonstrating the calculation mandatory prepayment of the Term Loans in an amount equal to the lesser of 50% of the Excess Cash Flow for such Fiscal Year or the aggregate principal amount of the applicable net proceeds Term Loans outstanding as of the last day of such Fiscal Year; provided, however, that no mandatory prepayment shall be required hereunder if the Leverage Ratio of Stellex and its Subsidiaries on a consolidated basis for such Fiscal Year is less than 3.25 to 1.00. Each such prepayment of Term Loans shall be applied pro rata to the remaining principal installments of the Term Loans. (iv) Immediately upon the Revolving Credit Obligations exceeding the Maximum Revolving Credit Amount, the Borrowers shall make or Consolidated Excess Cash Flow, as the case may be. In the event that Borrower shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Borrower shall promptly make an additional cause to be made a mandatory prepayment of the Loans and/or the Commitments shall be permanently reduced) Revolving Credit Obligations in an amount equal to such excess, and Borrower such amount to be applied in accordance with the provisions of Section 3.02(b). (v) Nothing in this Section 3.01(b) shall concurrently therewith deliver be construed to Administrative Agent a certificate of an Authorized Officer demonstrating constitute the derivation such excessLenders' consent to any transaction which is not expressly permitted by Article IX.

Mandatory Prepayments/Reductions. (ai) No later than the third Business Day following the date of Immediately upon any Loan Party's receipt by Company or any of its Subsidiaries of any Net Asset Sale Proceeds, Borrower shall prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to such Net Asset Sale Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries, to invest such Net Asset Sale Cash Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries; provided further, pending any such investment all such Net Asset Sale Proceeds shall be applied to prepay outstanding Loans (without a reduction in Commitments). (b) No later than the third Business Day following the date of receipt by Company or any of its Subsidiaries, or Administrative Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Borrower shall prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries to invest such Net Insurance/Condemnation Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries, which investment may include the repair, restoration or replacement of the applicable assets of Company or its Subsidiaries; 37 44 provided, further, pending any such investment all such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay outstanding Loans (without a reduction in Commitments). (c) In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year 2003), Borrower shall, no later than ninety (90) days after the end of such Fiscal Year, prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to 75% of such Consolidated Excess Cash Flow. (d) Borrower shall from time to time prepay the Loans to the extent necessary so that the Total Utilization of Commitments shall not at any time exceed the lesser of the (i) Commitments then in effect and (ii) Loan Availability. (e) If at any time after the Initial Certified Conditions have been previously satisfied but are no longer satisfied, Loan Availability shall be immediately reduced to zero and all outstanding Loans shall be immediately repaid, and if at any time after the Incremental Certified Conditions have been previously satisfied but are no longer satisfied, outstanding Loans shall be immediately repaid to the extent necessary such that Total Utilization of Commitments shall not exceed Loan Availability. (f) On the date of receipt by Company or any of its Subsidiaries of any Cash proceeds from the incurrence of Subordinated Indebtedness (other than with respect to any Excluded Sale Proceeds) on account of an Asset Sale, such Indebtedness permitted Loan Party shall make or cause to be incurred pursuant to Section 6.1(c)(i)), made a mandatory prepayment of the Commitments shall be permanently reduced Term Loans in an aggregate amount equal to 100% of such proceedsNet Cash Proceeds. Subject to Section 3.01(b)(iv), net each such prepayment of underwriting discounts Term Loans shall be applied pro rata to the Term A Loans and commissions the Term B Loans and other reasonable costs the amounts applied to Term A Loans and expenses associated therewith, including reasonable legal fees and expensesTerm B Loans shall be applied pro rata to the remaining principal installments of such Term Loans. (gii) Concurrently with Immediately upon any Loan Party's receipt of any Net Cash Proceeds from the issuance of any Securities (other than Excluded Securities) by such Loan Party, such Loan Party shall make or cause to be made a mandatory prepayment of the Term Loans and/or reduction of the Commitments pursuant to Sections 2.11(a) through 2.11(f), Borrower shall deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable net proceeds or Consolidated Excess Cash Flow, as the case may be. In the event that Borrower shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Borrower shall promptly make an additional prepayment of the Loans and/or the Commitments shall be permanently reduced) in an amount equal to 100% of such excessNet Cash Proceeds. Notwithstanding the foregoing, a mandatory prepayment will not be required under this Section 3.01(b)(ii) with respect to Net Cash Proceeds that are used by a Loan Party within one year from the receipt of such Net Cash Proceeds by such Loan Party to consummate a Permitted Acquisition or a Permitted Foreign Acquisition or make a Permitted Investment, provided that such Net Cash Proceeds are deposited into the Cash Collateral Account upon receipt of such Net Cash Proceeds by such Loan Party until the earlier of (a) such time as such Loan Party consummates such Permitted Acquisition or such Permitted Foreign Acquisition or makes such Permitted Investment or (b) the first annual anniversary of the date such Net Cash Proceeds were deposited into the Cash Collateral Account (on such first annual anniversary and at all times thereafter, such Net Cash Proceeds shall cease to be proceeds from the issuance of Excluded Securities). Subject to Section 3.01(b)(iv), each prepayment of Term Loans required to be made under this Section 3.01(b)(ii) shall be applied pro rata to the Term A Loans and the Term B Loans and the amounts applied to Term A Loans and Term B Loans shall be applied pro rata to the remaining principal installments of such Term Loans. (iii) On the earlier of (A) the date the financial statements of the Borrower and its Subsidiaries are delivered to the Administrative Agent pursuant to Section 7.01(b) and (B) the 90th day following the last day of each Fiscal Year, the Borrower shall make or cause to be made a mandatory prepayment of the Term Loans in an amount equal to the lesser of 75% of the Excess Cash Flow for such Fiscal Year or the aggregate principal amount of the Term Loans outstanding as of the date of payment; provided, however, that a mandatory prepayment of the Term Loans in an amount equal to the lesser of 50% of the Excess Cash Flow for such Fiscal Year or the aggregate principal amount of the Term Loans outstanding as of the date of payment shall be required hereunder if the Leverage Ratio of the Borrower and its Subsidiaries on a consolidated basis for the twelve month period ending on the last day of such Fiscal Year is less than 3.50 to 1.00, and no mandatory prepayment shall be required hereunder if the Leverage Ratio of the Borrower and its Subsidiaries on a consolidated basis for the twelve month period ending on the last of such Fiscal Year is less than 2.00 to 1.00. Subject to Section 3.01(b)(iv), each such prepayment of Term Loans shall concurrently therewith deliver be applied pro rata to the Term A Loans and the Term B Loans and the amounts applied to Term A Loans and Term B Loans shall be applied pro rata to the remaining principal installments of such Term Loans. (iv) In the event that a mandatory prepayment is required to be made on the Term Loans under Section 3.01(b)(i), (ii) or (iii) and Term A Loans are outstanding (an "Option Event"), the portion of the mandatory prepayment that is required to be applied to the Term B Loans (the "B Portion") shall be deposited into the Cash Collateral Account and each Term B Lender shall have the option not to have its Term B Loans prepaid. If an Option Event occurs, the Administrative Agent shall give each Term B Lender notice (the "Option Notice") that an Option Event has occurred and specify the prepayment amount such Term B Lender will receive if its Term B Loans are prepaid. A Term B Lender may elect not to receive such prepayment amount by giving the Administrative Agent notice of such election within five Business Days following such Term B Lender's receipt of the Option Notice (the "Election Period"). Any prepayment amount that a certificate Term B Lender elects not to receive shall be applied pro rata to the remaining principal installments of an Authorized Officer demonstrating the derivation Term A Loans. Promptly following the Election Period, the Administrative Agent shall withdraw the B Portion from the Cash Collateral Account and apply that amount of the B Portion to the remaining principal installments of the Term B Loans held by Term B Lenders that have not made the foregoing election and that amount of the B Portion, if any, pro rata to the remaining principal installments of the Term A Loans with respect to amounts that would have otherwise been applied to Term B Loans held by Term B Lenders that have made such excesselection. (v) Nothing in this Section 3.01(b) shall be construed to constitute the Lenders' consent to any transaction which is not expressly permitted by Article IX.

Mandatory Prepayments/Reductions. (a) No later than the third first Business Day following the date of receipt by Company or any of its Subsidiaries of any Net Asset Sale Proceeds, Borrower Company shall prepay the Loans and and/or the Facility Commitments shall be permanently reduced as set forth in Section 2.14(b) in an aggregate amount equal to such Net Asset Sale Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, at any time the Reduced Leverage/Improved Ratings Status is in effect, Company shall have the option, directly or through one or more of its Subsidiaries, to invest such Net Asset Sale Proceeds (or, at any time the Reduced Leverage/Improved Ratings Status is not in effect, up to $25,000,000 in each Fiscal Year, plus 50% of such Net Asset Sale Proceeds in excess of $25,000,000) within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries; provided further, pending any such investment all such Net Asset Sale Proceeds shall be applied to prepay outstanding Facility Loans (without a reduction in Facility Commitments). (b) No later than the third first Business Day following the date of receipt by Company or any of its Subsidiaries, or Administrative Global Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Borrower Company shall prepay the Loans and and/or the Facility Commitments shall be permanently reduced as set forth in Section 2.14(b) in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided, (i) so long as no Default or Event of Default shall have occurred and be continuing, and (ii) to the extent no Material Adverse Effect shall have occurred as of the date of, and after giving effect to, the receipt of such Net Insurance/Condemnation Proceeds, Company shall have the option, directly or through one or more of its Subsidiaries to invest such Net InsuranceInsur ance/Condemnation Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries, which investment may include the repair, restoration or replacement of the applicable assets of Company or its Subsidiaries; 37 44 provided, provided further, pending any such investment all such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay outstanding Facility Loans (without a reduction in Facility Commitments). (c) In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year 2003), Borrower shall, no later than ninety (90) days after the end of such Fiscal Year, prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to 75% of such Consolidated Excess Cash Flow. (d) Borrower shall from time to time prepay the Loans to the extent necessary so that the Total Utilization of Commitments shall not at any time exceed the lesser of the (i) Commitments then in effect and (ii) Loan Availability. (e) If at any time after the Initial Certified Conditions have been previously satisfied but are no longer satisfied, Loan Availability shall be immediately reduced to zero and all outstanding Loans shall be immediately repaid, and if at any time after the Incremental Certified Conditions have been previously satisfied but are no longer satisfied, outstanding Loans shall be immediately repaid to the extent necessary such that Total Utilization of Commitments shall not exceed Loan Availability. (f) On the date of receipt by Company or any of its Subsidiaries of any Cash proceeds from a capital contribution to, or the incurrence issuance of Subordinated Indebtedness any equity Securities of, Company or any of its Subsidiaries (other than except (i) to Company or any Wholly-Owned Subsidiary, (ii) with respect to any Cash proceeds that are used as consideration for any Permitted Acquisition within one hundred twenty (120) days of the receipt thereof and (iii) with respect to the exercise of any option granted to employees or directors of Company pursuant to any compensation plan of Company), Company shall prepay the Loans and/or the Facility Commitments shall be permanently reduced as set forth in Section 2.14(b) in an aggregate amount equal to 50% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses; provided, during any period in which the Reduced Leverage/Improved Ratings Status is in effect, Company shall not be required to make the prepayment and/or reduction otherwise required hereby. (d) On the date of receipt by Company or any of its Subsidiaries of any Cash proceeds from incurrence of any Indebtedness of Company or any of its Subsidiaries (except to Company or any Wholly-Owned Subsidiary and except with respect any Indebtedness permitted to be incurred pursuant to Section 6.1(c)(i)6.1), Company shall prepay the Loans and/or the Facility Commitments shall be permanently reduced as set forth in Section 2.14(b) in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses. (e) Within thirty days of receipt by Company or any of its Subsidiaries of any Cash proceeds from any Permitted Securitization Transaction, Company shall prepay the Loans and/or the Facility Commitments shall be permanently reduced as set forth in Section 2.14(b) in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses; provided that no such prepayment or reduction of Facility Commitments shall be required pursuant to this Section 2.13(e) so long as and to the extent that (x) such Cash proceeds from a Permitted Securitization Transaction are received by Company or any of its Subsidiaries prior to December 31, 1999, (y) the aggregate amount of such Cash proceeds does not exceed $150,000,000 and (z) such Cash proceeds are applied within thirty days of receipt thereof to the extent necessary to repay outstanding US Facility Loans to the extent any US Facility Loans are outstanding on the date of receipt of such Cash proceeds. (f) In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year 1999), Company shall, no later than ninety (90) days after the end of such Fiscal Year, prepay the Loans and/or the Facility Commitments shall be permanently reduced as set forth in Section 2.14(b) in an aggregate amount equal to 50% of such Consolidated Excess Cash Flow; provided, during any period in which the Reduced Leverage/Improved Ratings Status shall be in effect, Company shall not be required to make the prepayment and/or reduction otherwise required hereby. (g) Company shall from time to time prepay first, the US Swing Line Loans, and second, the US Facility Loans to the extent necessary so that the Total Utilization of US Facility Commitments shall not at any time exceed the US Facility Commitments then in effect. (h) Company shall from time to time prepay first, the Multicurrency Swing Line Loans, and second, the Multicurrency Facility Loans to the extent necessary so that the Total Utilization of Multicurrency Facility Commitments shall not at any time exceed Multicurrency Facility Commitments then in effect. Notwithstanding the foregoing, in the event that any adjustment by Multicurrency Facility Agent of the Dollar Equivalent of the outstanding Multicurrency Loans pursuant to Section 2.6(c) would cause the Total Utilization of Multicurrency Facility Commitments to exceed 103% of the Multicurrency Facility Commitments then in effect, Company shall, immediately on the effective date of such adjustment, repay the portion of such continued Loan (applying the new Spot Rate of Exchange) necessary to ensure that thereafter the Total Utilization of Multicurrency Facility Commitments does not exceed the Multicurrency Facility Commitments then in effect. (i) Concurrently with any prepayment of the Loans and/or reduction of the Facility Commitments pursuant to Sections 2.11(a2.13(a) through 2.11(f2.13(f), Borrower Company shall deliver to Administrative Global Agent and each Facility Agent a certificate of an its Authorized Officer Officers demonstrating the calculation of the amount of the applicable net proceeds or Consolidated Excess Cash Flow, as the case may be, that gave rise to such prepayment and/or reduction. In the event that Borrower Company shall subsequently determine that the actual net proceeds amount received exceeded was greater than the amount set forth in such certificate, Borrower Company shall promptly make an additional prepayment of the Loans and/or the 77 Commitments shall be permanently reduced) reduced in an amount equal to the amount of such excess, and Borrower Company shall concurrently therewith deliver to Administrative Global Agent and each Facility Agent a certificate of an its Authorized Officer Officers demonstrating the derivation of such excess.

Mandatory Prepayments/Reductions. (ai) No later than the third Within one Business Day following the date Revolving Credit Obligations exceeding the Revolving Loan Commitment, the Borrower shall make or cause to be made a mandatory prepayment of the Revolving Credit Obligations in an amount equal to such excess. (ii) Within one Business Day following the receipt of Net Cash Proceeds by Company any Loan Party or any of its Subsidiaries Affiliates from a Disposition (other than a Disposition (y) as a result of a Casualty or Condemnation and (z) in connection with a sale of Capital Stock of TreeCon owned by the Borrower) by the Borrower or any Net Asset Sale Proceedsof its Subsidiaries, the Borrower shall prepay the outstanding principal amount of the Term Loans and the Revolving Loans in an amount equal to one hundred percent (100%) of the Net Cash Proceeds from such Disposition. Such prepayment shall be applied FIRST to the repayment of the Revolving Loans, PROVIDED that the aggregate Revolving Loan Commitments shall be permanently reduced by the amount of such prepayment, SECOND to the repayment of the Tranche A Term Loans in inverse order of maturity until all Tranche A Term Loans have been paid in full, and THIRD to the repayment of the Tranche B Term Loans. (iii) Within one Business Day following the receipt of Net Cash Proceeds by any Loan Party or any of its Affiliates from the Casualty or Condemnation of any Collateral, the Borrower shall prepay the outstanding principal amount of the Term Loans and the Revolving Loans in an amount equal to one hundred percent (100%) of the Net Cash Proceeds so received, PROVIDED, HOWEVER, that the Borrower shall have the option not to make the prepayment under this subsection (iii) with respect to any Net Cash Proceeds and instead may apply such Net Cash Proceeds to the costs of repairs, replacement or restoration of the property of the Borrower, which is the subject of the Casualty or Condemnation or to acquire other property or assets used or useful in the business of the Borrower, up to an aggregate amount equal to such Net Asset Sale Proceeds; providedduring any period of twelve consecutive months not in excess of $1,500,000, so long as (A) no Default or Event of Default shall have occurred and be continuing, Company (B) the Borrower shall have given the option, directly or through one or more Administrative Agent and the Collateral Agent prior written notice of its Subsidiaries, the intention to invest apply such Net Asset Sale Cash Proceeds to the costs of repairs, replacement or restoration as permitted in this clause (iii), (C) the Net Cash Proceeds are immediately deposited into the General Account, and (D) the Borrower commences the permitting process or the construction (if applicable) with respect to such repairs, replacement or restoration within two hundred seventy (270) 180 days of receipt thereof after receiving such Net Cash Proceeds and completes such repairs, replacements or restoration at the same location that the loss, destruction or taking occurred within 12 months after receiving such Net Cash Proceeds all in long term productive assets of the general type used accordance with any applicable lease obligations. Any Net Cash Proceeds on deposit in the business General Account relating to the costs of Company and its Subsidiaries; provided furtherrepairs, pending any such investment all such Net Asset Sale Proceeds replacement or restoration shall be used to repay Term Loans in accordance with this SECTION 3.01(B)(III) if the Borrower is not in compliance with the immediately preceding sentence. Any prepayment shall be applied FIRST to prepay outstanding the repayment of the Revolving Loans, PROVIDED that the aggregate Revolving Loan Commitments shall be reduced by the amount of such prepayment, SECOND to the repayment of the Tranche A Term Loans (without a reduction in Commitments)inverse order of maturity until all Tranche A Term Loans have been paid in full, and THIRD to the repayment of the Tranche B Term Loans. (biv) No later than If the third Borrower has any Excess Cash Flow as determined as of the last day of each Fiscal Year, the Borrower shall, within one Business Day following the date of receipt by Company or any of its Subsidiariesday the annual financial statements are required to be delivered pursuant to SECTION 7.01(C), or Administrative Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Borrower shall (A) prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries to invest such Net Insurance/Condemnation Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries, which investment may include the repair, restoration or replacement of the applicable assets of Company or its Subsidiaries; 37 44 provided, further, pending any such investment all such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay outstanding Loans (without a reduction in Commitments). (c) In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year 2003), Borrower shall, no later than ninety (90) days after the end of such Fiscal Year, prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to 75% of such Consolidated Excess Cash Flow. (d) Borrower shall from time to time prepay the Loans to the extent necessary so that the Total Utilization of Commitments shall not at any time exceed the lesser of the (i) Commitments then in effect and (ii) Loan Availability. (e) If at any time after the Initial Certified Conditions have been previously satisfied but are no longer satisfied, Loan Availability shall be immediately reduced to zero and all outstanding Loans shall be immediately repaid, and if at any time after the Incremental Certified Conditions have been previously satisfied but are no longer satisfied, outstanding Loans shall be immediately repaid to the extent necessary such that Total Utilization of Commitments shall not exceed Loan Availability. (f) On the date of receipt by Company or any of its Subsidiaries of any Cash proceeds from the incurrence of Subordinated Indebtedness (other than with respect to any such Indebtedness permitted to be incurred pursuant to Section 6.1(c)(i)), the Commitments shall be permanently reduced in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses. (g) Concurrently with any prepayment of the Loans and/or reduction of the Commitments pursuant to Sections 2.11(a) through 2.11(f), Borrower shall deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the principal amount of the applicable net proceeds or Consolidated Excess Cash Flow, as the case may be. In the event that Borrower shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Borrower shall promptly make an additional prepayment of the Tranche A Term Loans and/or the Commitments shall be permanently reduced) in an amount equal to fifty percent (50%) of the Excess Cash Flow for each such excessFiscal Year and (B) once the Tranche A Term Loans have been paid in full, and the Borrower shall concurrently therewith deliver offer to Administrative Agent a certificate the Tranche B Lenders to prepay and, if requested by the Tranche B Term Lenders, shall prepay, the outstanding principal amount of the Tranche B Term Loans in an Authorized Officer demonstrating amount equal to fifty percent (50%) of the derivation Excess Cash Flow for each such excessFiscal Year. Such prepayment shall be applied PRO RATA to the repayment of the Tranche A Term Loans in inverse order of maturity until the Tranche A Term Loans shall have been paid in full and thereafter PRO RATA to the repayment of the Tranche B Term LOANS. (v) Nothing in this SECTION 3.01(B) shall be construed to constitute the Lenders' consent to any transaction which is not expressly permitted by ARTICLE IX.

Mandatory Prepayments/Reductions. (a) No later than the third first Business Day following the date of receipt by Company or any of its Subsidiaries of any Net Asset Sale Proceeds, Borrower Company shall prepay the Loans and and/or the Facility Commitments shall be permanently reduced as set forth in Section 2.14(b) in an aggregate amount equal to such Net Asset Sale Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, at any time the Reduced Leverage/Improved Ratings Status is in effect, Company shall have the option, directly or through one or more of its Subsidiaries, to invest such Net Asset Sale Proceeds (or, at any time the Reduced Leverage/Improved Ratings Status is not in effect, up to $25,000,000 in each Fiscal Year, plus 50% of such Net Asset Sale Proceeds in excess of $25,000,000) within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries; provided further, pending any such investment all such Net Asset Sale Proceeds shall be applied to prepay outstanding Facility Loans (without a reduction in Facility Commitments). (b) No later than the third first Business Day following the date of receipt by Company or any of its Subsidiaries, or Administrative Global Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Borrower Company shall prepay the Loans and and/or the Facility Commitments shall be permanently reduced as set forth in Section 2.14(b) in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided, (i) so long as no Default or Event of Default shall have occurred and be continuing, and (ii) to the extent no Material Adverse Effect shall have occurred as of the date of, and after giving effect to, the receipt of such Net Insurance/Condemnation Proceeds, Company shall have the option, directly or through one or more of its Subsidiaries to invest such Net Insurance/Condemnation Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries, which investment may include the repair, restoration or replacement of the applicable assets of Company or its Subsidiaries; 37 44 provided, provided further, pending any such investment all such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay outstanding Facility Loans (without a reduction in Facility Commitments). (c) In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year 2003), Borrower shall, no later than ninety (90) days after the end of such Fiscal Year, prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to 75% of such Consolidated Excess Cash Flow. (d) Borrower shall from time to time prepay the Loans to the extent necessary so that the Total Utilization of Commitments shall not at any time exceed the lesser of the (i) Commitments then in effect and (ii) Loan Availability. (e) If at any time after the Initial Certified Conditions have been previously satisfied but are no longer satisfied, Loan Availability shall be immediately reduced to zero and all outstanding Loans shall be immediately repaid, and if at any time after the Incremental Certified Conditions have been previously satisfied but are no longer satisfied, outstanding Loans shall be immediately repaid to the extent necessary such that Total Utilization of Commitments shall not exceed Loan Availability. (f) On the date of receipt by Company or any of its Subsidiaries of any Cash proceeds from a capital contribution to, or the incurrence issuance of Subordinated Indebtedness any equity Securities of, Company or any of its Subsidiaries (other than except (i) to Company or any Wholly-Owned Subsidiary, (ii) with respect to any Cash proceeds that are used as consideration for any Permitted Acquisition within one hundred twenty (120) days of the receipt thereof and (iii) with respect to the exercise of any option granted to employees or directors of Company pursuant to any compensation plan of Company), Company shall prepay the Loans and/or the Facility Commitments shall be permanently reduced as set forth in Section 2.14(b) in an aggregate amount equal to 50% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses; provided, during any period in which the Reduced Leverage/Improved Ratings Status is in effect, Company shall not be required to make the prepayment and/or reduction otherwise required hereby. (d) On the date of receipt by Company or any of its Subsidiaries of any Cash proceeds from incurrence of any Indebtedness of Company or any of its Subsidiaries (except to Company or any Wholly-Owned Subsidiary and except with respect any Indebtedness permitted to be incurred pursuant to Section 6.1(c)(i)6.1), Company shall prepay the Loans and/or the Facility Commitments shall be permanently reduced as set forth in Section 2.14(b) in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses. (e) Within three Business Days of receipt by Company or any of its Subsidiaries of any Cash proceeds from any Permitted Securitization Transaction, Company shall prepay the Loans and/or the Facility Commitments shall be permanently reduced as set forth in Section 2.14(b) in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses. (f) In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year 1999), Company shall, no later than ninety (90) days after the end of such Fiscal Year, prepay the Loans and/or the Facility Commitments shall be permanently reduced as set forth in Section 2.14(b) in an aggregate amount equal to 50% of such Consolidated Excess Cash Flow; provided, during any period in which the Reduced Leverage/Improved Ratings Status shall be in effect, Company shall not be required to make the prepayment and/or reduction otherwise required hereby. (g) Company shall from time to time prepay first, the US Swing Line Loans, and second, the US Facility Loans to the extent necessary so that the Total Utilization of US Facility Commitments shall not at any time exceed the US Facility Commitments then in effect. (h) Company shall from time to time prepay first, the Multicurrency Swing Line Loans, and second, the Multicurrency Facility Loans to the extent necessary so that the Total Utilization of Multicurrency Facility Commitments shall not at any time exceed Multicurrency Facility Commitments then in effect. Notwithstanding the foregoing, in the event that any adjustment by Multicurrency Facility Agent of the Dollar Equivalent of the outstanding Multicurrency Loans pursuant to Section 2.6(c) would cause the Total Utilization of Multicurrency Facility Commitments to exceed 103% of the Multicurrency Facility Commitments then in effect, Company shall, immediately on the effective date of such adjustment, repay the portion of such continued Loan (applying the new Spot Rate of Exchange) necessary to ensure that thereafter the Total Utilization of Multicurrency Facility Commitments does not exceed the Multicurrency Facility Commitments then in effect. (i) Concurrently with any prepayment of the Loans and/or reduction of the Facility Commitments pursuant to Sections 2.11(a2.13(a) through 2.11(f2.13(f), Borrower Company shall deliver to Administrative Global Agent and each Facility Agent a certificate of an its Authorized Officer Officers demonstrating the calculation of the amount of the applicable net proceeds or Consolidated Excess Cash Flow, as the case may be, that gave rise to such prepayment and/or reduction. In the event that Borrower Company shall subsequently determine that the actual net proceeds amount received exceeded was greater than the amount set forth in such certificate, Borrower Company shall promptly make an additional prepayment of the Loans and/or the Commitments shall be permanently reduced) reduced in an amount equal to the amount of such excess, and Borrower Company shall concurrently therewith deliver to Administrative Global Agent and each Facility Agent a certificate of an its Authorized Officer Officers demonstrating the derivation of such excess.

Mandatory Prepayments/Reductions. (ai) No later than the third Business Day following the date of Immediately upon any Loan Party's receipt by Company or any of its Subsidiaries of any Net Cash Proceeds on account of an Asset Sale Proceeds, Borrower shall prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to such Net Asset Sale Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries, to invest such Net Asset Sale Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries; provided further, pending any such investment all such Net Asset Sale Proceeds shall be applied to prepay outstanding Loans (without a reduction in Commitments). (b) No later than the third Business Day following the date of receipt by Company or any of its Subsidiaries, or Administrative Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Borrower shall prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries to invest such Net Insurance/Condemnation Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries, which investment may include the repair, restoration or replacement of the applicable assets of Company or its Subsidiaries; 37 44 provided, further, pending any such investment all such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay outstanding Loans (without a reduction in Commitments). (c) In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year 2003), Borrower shall, no later than ninety (90) days after the end of such Fiscal Year, prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to 75% of such Consolidated Excess Cash Flow. (d) Borrower shall from time to time prepay the Loans to the extent necessary so that the Total Utilization of Commitments shall not at any time exceed the lesser of the (i) Commitments then in effect and (ii) Loan Availability. (e) If at any time after the Initial Certified Conditions have been previously satisfied but are no longer satisfied, Loan Availability shall be immediately reduced to zero and all outstanding Loans shall be immediately repaid, and if at any time after the Incremental Certified Conditions have been previously satisfied but are no longer satisfied, outstanding Loans shall be immediately repaid to the extent necessary such that Total Utilization of Commitments shall not exceed Loan Availability. (f) On the date of receipt by Company or any of its Subsidiaries of any Cash proceeds from the incurrence of Subordinated Indebtedness (other than with respect to any Excluded Proceeds), such Indebtedness permitted Loan Party shall make or cause to be incurred pursuant to Section 6.1(c)(i)), made a mandatory prepayment of the Commitments shall be permanently reduced Term Loans in an aggregate amount equal to 100% of such proceedsNet Cash Proceeds. Each such prepayment of Term Loans shall be applied pro rata to the Term A Loans, net the Term B Loans and the Acquisition Term Loans and the amounts applied to Term A Loans, Term B Loans and the Acquisition Term Loans shall be applied pro rata to the remaining principal installments of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expensessuch Term Loans. (gii) Concurrently Immediately upon any Loan Party's receipt of any Net Cash Proceeds from the issuance of any Securities (other than Excluded Securities) by such Loan Party (other than such Net Cash Proceeds that are used by such Loan Party to consummate a Permitted Acquisition within one year from the date such Net Cash Proceeds are received, provided that such Net Cash Proceeds are deposited into the Cash Collateral Account upon receipt of such Net Cash Proceeds by such Loan Party until the earlier of (A) the date such Loan Party consummates a Permitted Acquisition in accordance with any the provisions hereof or (B) the date which is the first annual anniversary of the date of deposit thereof), such Loan Party shall make or cause to be made a mandatory prepayment of the Term Loans and/or reduction in an amount equal to 100% of such Net Cash Proceeds. Each such prepayment of Term Loans shall be applied pro rata to the Term A Loans, the Term B Loans and the Acquisition Term Loans and the amounts applied to Term A Loans, Term B Loans and Acquisition Term Loans shall be applied pro rata to the remaining principal installments of such Term Loans. (iii) On the 90th day following the last day of each Fiscal Year, the Borrower shall make or cause to be made a mandatory prepayment of the Commitments pursuant Term Loans in an amount equal to Sections 2.11(a) through 2.11(f), Borrower shall deliver to Administrative Agent a certificate the lesser of an Authorized Officer demonstrating the calculation 50% of the Excess Cash Flow for such Fiscal Year or the aggregate principal amount of the applicable net proceeds or Consolidated Excess Cash FlowTerm Loans outstanding as of the date of payment; provided, as however, that no mandatory prepayment shall be required hereunder if the case may beLeverage Ratio of the Borrower and its Subsidiaries on a consolidated basis for such Fiscal Year is less than 3.25 to 1.00. In Each such prepayment of Term Loans shall be applied pro rata to the event that Term A Loans, the Term B Loans and the Acquisition Term Loans and the amounts applied to Term A Loans, Term B Loans and Acquisition Term Loans shall be applied pro rata to the remaining principal installments of such Term Loans. (iv) Immediately upon the Revolving Credit Obligations exceeding the Maximum Revolving Credit Amount, the Borrower shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Borrower shall promptly make an additional or cause to be made a mandatory prepayment of the Loans and/or the Commitments shall be permanently reduced) Revolving Credit Obligations in an amount equal to such excess, and Borrower such amount to be applied in accordance with the provisions of Section 3.02(b). (v) Nothing in this Section 3.01(b) shall concurrently therewith deliver be con strued to Administrative Agent a certificate of an Authorized Officer demonstrating constitute the derivation such excessLenders' consent to any transaction which is not expressly permitted by Article IX.

Mandatory Prepayments/Reductions. (ai) No later than Within two (2) Business Days after the third Business Day following the date of receipt by Company or any of its Subsidiaries of any Net Asset Sale Proceeds, Borrower shall prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to such Net Asset Sale Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries, to invest such Net Asset Sale Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries; provided further, pending any such investment all such Net Asset Sale Proceeds shall be applied to prepay outstanding Loans (without a reduction in Commitments). (b) No later than the third Business Day following the date of receipt by Company Borrower's or any of its Subsidiaries, or Administrative Agent as loss payee, ' receipt of any Net Insurance/Condemnation ProceedsCash Proceeds of Sale, the Borrower shall prepay make or cause to be made a mandatory prepayment of the Loans and the Commitments shall be permanently reduced Obligations in an aggregate amount equal to one hundred percent (100%) of such Net Insurance/Condemnation ProceedsCash Proceeds of Sale; providedPROVIDED, so long as no Default HOWEVER, that, with respect to any such proceeds received by or Event on behalf of Default RCL, Recoil Holdings or Recoil Australia Holdings, such proceeds shall have occurred and be continuing, Company shall have payable to the option, directly or through one or more of its Subsidiaries to invest such Net Insurance/Condemnation Proceeds within two hundred seventy (270) days of receipt thereof Lender hereunder only after payment in long term productive assets full of the general type used in "Obligations" under (and as defined in) the business of Company and its Subsidiaries, which investment may include the repair, restoration or replacement of the applicable assets of Company or its Subsidiaries; 37 44 provided, further, pending any such investment all such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay outstanding Loans (without a reduction in Commitments)RCL Loan Agreement. (cii) In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year 2003), Borrower shall, no later than Within ninety (90) days after the end of such each Fiscal Year, prepay the Loans Borrower shall calculate Excess Cash Flow for such Fiscal Year and the Commitments shall be permanently reduced make a mandatory prepayment in an aggregate amount equal to seventy-five percent (75%) of such Excess Cash Flow. The Borrower shall make an additional mandatory prepayment on the date on which annual reports are required to be delivered by SECTION 6.01(c) to the extent 75% of such Consolidated Excess Cash Flow determined in accordance with the annual reports exceeds 75% of the Borrower's preliminary calculation of Excess Cash Flow. (diii) Borrower shall from time to time prepay the Loans to the extent necessary so that the Total Utilization of Commitments shall not at any time exceed the lesser of the Within two (i2) Commitments then in effect and (ii) Loan Availability. (e) If at any time Business Days after the Initial Certified Conditions have been previously satisfied but are no longer satisfied, Loan Availability shall be immediately reduced to zero and all outstanding Loans shall be immediately repaid, and if at any time after the Incremental Certified Conditions have been previously satisfied but are no longer satisfied, outstanding Loans shall be immediately repaid to the extent necessary such that Total Utilization of Commitments shall not exceed Loan Availability. (f) On the date of receipt by Company Borrower's or any of its Subsidiaries Subsidiaries' receipt of any Cash proceeds from Excess Proceeds of Issuance of Stock or Indebtedness, the incurrence Borrower shall make or cause to be made a mandatory prepayment in an amount equal to one hundred percent (100%) of Subordinated Indebtedness (other than such Excess Proceeds of Issuance of Stock or Indebtedness; PROVIDED, HOWEVER, that, with respect to any such Indebtedness permitted to be incurred pursuant to Section 6.1(c)(i))proceeds received by or on behalf of RCL, the Commitments Recoil Holdings or Recoil Australia Holdings, such proceeds shall be permanently reduced payable to the Lender hereunder only after payment in an aggregate amount equal to 100% full of such proceeds, net of underwriting discounts the "Obligations" under (and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expensesas defined in) the RCL Loan Agreement. (giv) Concurrently with Nothing in this SECTION 3.01(b) shall be construed to constitute the Lender's consent to any transaction referred to in CLAUSES (i) or (iii) above which is not expressly permitted by ARTICLE VIII. (v) Each mandatory prepayment required by CLAUSES (i), (ii) and (iii) of this SECTION 3.01(b) shall be referred to herein as a "Designated Prepayment". The Borrower shall give the Lender not less than one (1) Business Day's prior written notice or telephonic notice promptly confirmed in writing, of the Loans and/or reduction date on which each such Designated Prepayment will be made (which date of prepayment shall be no later than the Commitments date on which such Designated Payment becomes due and payable pursuant to Sections 2.11(a) through 2.11(fthis SECTION 3.01(b), Borrower shall deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable net proceeds or Consolidated Excess Cash Flow, as the case may be. In the event that Borrower shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Borrower shall promptly make an additional prepayment of the Loans and/or the Commitments shall be permanently reduced) in an amount equal to such excess, and Borrower shall concurrently therewith deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the derivation such excess).

Mandatory Prepayments/Reductions. (ai) No later than Within two (2) Business Days after the third Business Day following the date of receipt by Company Borrower's or any of its Subsidiaries Parent's receipt of any Net Asset Sale ProceedsCash Proceeds of Sale, the Borrower shall prepay make or cause to be made a mandatory prepayment of the Loans and the Commitments shall be permanently reduced Obligations in an aggregate amount equal to one hundred percent (100%) of such Net Asset Sale Proceeds; provided, so long as no Default or Event Cash Proceeds of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries, to invest such Net Asset Sale Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries; provided further, pending any such investment all such Net Asset Sale Proceeds shall be applied to prepay outstanding Loans (without a reduction in Commitments)Sale. (bii) No later than After the third Business Day following the date of receipt by Company or any of its Subsidiaries, or Administrative Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Borrower shall prepay the Loans and the Commitments shall be permanently reduced payment in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries to invest such Net Insurance/Condemnation Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets full of the general type used in "Obligations" under (and as defined in) the business of Company and its SubsidiariesKTI Credit Agreement, which investment may include the repair, restoration or replacement of the applicable assets of Company or its Subsidiaries; 37 44 provided, further, pending any such investment all such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay outstanding Loans (without a reduction in Commitments). (c) In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year 2003), Borrower shall, no later than within ninety (90) days after the end of such each Fiscal Year, prepay the Loans Borrower shall calculate Excess Cash Flow for such Fiscal Year and the Commitments shall be permanently reduced make a mandatory prepayment in an aggregate amount equal to seventy-five percent (75%) of such Excess Cash Flow. The Borrower shall make an additional mandatory prepayment on the date on which annual reports are required to be delivered by SECTION 6.01(c) to the extent 75% of such Consolidated Excess Cash Flow determined in accordance with the annual reports exceeds 75% of the Borrower's preliminary calculation of Excess Cash Flow. (diii) Within two (2) Business Days after the Borrower's or any Parent's receipt of any Excess Proceeds of Issuance of Stock or Indebtedness, the Borrower shall from time to time prepay the Loans to the extent necessary so that the Total Utilization of Commitments shall not at any time exceed the lesser of the (i) Commitments then in effect and (ii) Loan Availability. (e) If at any time after the Initial Certified Conditions have been previously satisfied but are no longer satisfied, Loan Availability shall be immediately reduced to zero and all outstanding Loans shall be immediately repaid, and if at any time after the Incremental Certified Conditions have been previously satisfied but are no longer satisfied, outstanding Loans shall be immediately repaid to the extent necessary such that Total Utilization of Commitments shall not exceed Loan Availability. (f) On the date of receipt by Company make or any of its Subsidiaries of any Cash proceeds from the incurrence of Subordinated Indebtedness (other than with respect to any such Indebtedness permitted cause to be incurred pursuant to Section 6.1(c)(i)), the Commitments shall be permanently reduced in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses. (g) Concurrently with any made a mandatory prepayment of the Loans and/or reduction of the Commitments pursuant to Sections 2.11(a) through 2.11(f), Borrower shall deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable net proceeds or Consolidated Excess Cash Flow, as the case may be. In the event that Borrower shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Borrower shall promptly make an additional prepayment of the Loans and/or the Commitments shall be permanently reduced) in an amount equal to one hundred percent (100%) of such excessExcess Proceeds of Issuance of Stock or Indebtedness. (iv) Nothing in this SECTION 3.01(b) shall be construed to constitute the Lender's consent to any transaction referred to in CLAUSES (i) or (iii) above which is not expressly permitted by ARTICLE VIII. (v) Each mandatory prepayment required by CLAUSES (i), (ii) and (iii) of this SECTION 3.01(b) shall be referred to herein as a "Designated Prepayment". The Borrower shall concurrently therewith deliver give the Lender not less than one (1) Business Day's prior written notice or telephonic notice promptly confirmed in writing, of the date on which each such Designated Prepayment will be made (which date of prepayment shall be no later than the date on which such Designated Payment becomes due and payable pursuant to Administrative Agent a certificate of an Authorized Officer demonstrating the derivation such excessthis SECTION 3.01(b)).

Mandatory Prepayments/Reductions. (ai) No later than Subject to Section 3.05, on a daily basis from funds on deposit in the third Domestic Concentration Account, the Administrative Agent shall transfer available funds therein and thereby cause the Borrowers to make a mandatory repayment of the Obligations denominated in Dollars owing by the Borrowers on such Business Day following Day; provided, however, that if (A) all Floating Rate Loans have been repaid, (B) only Fixed Rate Loans remain outstanding and (C) no Event of Default exists, then funds may be deposited in the date Cash Collateral Account and applied to repay Fixed Rate Loans on the last day of receipt by Company the earliest terminating Interest Periods until all such funds have been applied to repay Fixed Loans. (ii) Immediately after any Borrower's or any of its Subsidiaries Guarantor's receipt of any Net Cash Proceeds from an Asset Sale ProceedsSale, each Borrower shall prepay and each Guarantor receiving such Net Cash Proceeds agrees to make or cause to be made a mandatory prepayment of the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to one hundred percent (100%) of such Net Cash Proceeds. If the Net Cash Proceeds from any Asset Sale Proceeds; provided, so long as no Default (in one transaction or Event a series of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more related transactions) are in excess of its Subsidiaries, to invest such Net $15,000,000 (a "Material Asset Sale Proceeds within two hundred seventy (270Sale") days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries; provided further, pending any such investment all such Net Asset Sale Proceeds shall be applied to prepay outstanding Loans (without a reduction in Commitments). (b) No later than the third Business Day following the date of receipt by Company or any of its Subsidiaries, or Administrative Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Borrower shall prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries to invest such Net Insurance/Condemnation Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries, which investment may include the repair, restoration or replacement of the applicable assets of Company or its Subsidiaries; 37 44 provided, further, pending any such investment all such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay outstanding Loans (without a reduction in Commitments). (c) In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year 2003), Borrower shall, no later than ninety (90) days after the end of such Fiscal Year, prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to 75% of such Consolidated Excess Cash Flow. (d) Borrower shall from time to time prepay the Loans to the extent necessary so that the Total Utilization of Commitments shall not at any time exceed the lesser of the (i) Commitments then in effect and (ii) Loan Availability. (e) If at any time after the Initial Certified Conditions have been previously satisfied but are no longer satisfied, Loan Availability shall be immediately reduced to zero and all outstanding Loans shall be immediately repaid, and if at any time after the Incremental Certified Conditions have been previously satisfied but are no longer satisfied, outstanding Loans shall be immediately repaid to the extent necessary such that Total Utilization of Commitments shall not exceed Loan Availability. (f) On the date of receipt by Company or any of its Subsidiaries of any Cash proceeds from the incurrence of Subordinated Indebtedness (other than with respect the Net Cash Proceeds from the sale of the beauty division, the sale of the rights to any such Indebtedness permitted to be incurred pursuant to Section 6.1(c)(i)DKNY Jeans and DKNY Active and the sale of the equity interest in Xxxxx Karan Japan K.K. and the transactions related thereto), the Commitments shall be permanently reduced by the amount of such Net Cash Proceeds; provided, however, if such Asset Sale is permitted pursuant to Section 9.02 and the Borrowers deliver to the Administrative Agent the Clean-Down Forecast, the Commitments shall not be reduced. If the Net Cash Proceeds from all Asset Sales (other than Material Asset Sales and the sale of the beauty division, the sale of the rights to DKNY Jeans and DKNY Active and the sale of the equity interest in Xxxxx Karan Japan K.K. and the transactions related thereto) are in excess of $15,000,000 in the aggregate for any twelve month period, the Commitments shall be permanently reduced by the amount of such Net Cash Proceeds that exceeds $15,000,000; provided, however, if such Asset Sales are permitted pursuant to Section 9.02 and the Borrowers deliver to the Administrative Agent the Clean-Down Forecast, the Commitments shall not be reduced. If the Borrowers deliver a Clean-Down Forecast pursuant to this Section 3.01(b)(ii), the Clean-Down Amount for all Clean-Down Periods following the delivery of such Clean-Down Forecast shall be reduced by the aggregate amount of such Net Cash Proceeds from Material Asset Sales and Non-Material Asset Sales (but shall in no event be less than $0). (iii) Immediately upon Xxxxx Karan International's receipt of any Net Cash Proceeds from the issuance of Common Stock (other than the issuance of Common Stock pursuant to, or upon the exercise of options or benefits granted under, an employee or director benefit or incentive plan), the Borrowers shall cause to be made a mandatory prepayment of the Loans in an aggregate amount equal to 100% of such proceedsNet Cash Proceeds. If the Net Cash Proceeds from any issuance of Common Stock are in excess of $15,000,000, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses. (g) Concurrently with any prepayment of the Loans and/or reduction of the Commitments pursuant to Sections 2.11(a) through 2.11(f), Borrower shall deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable net proceeds or Consolidated Excess Cash Flow, as the case may be. In the event that Borrower shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Borrower shall promptly make an additional prepayment of the Loans and/or the Commitments shall be permanently reduced by the amount of such Net Cash Proceeds; provided, however, if the Borrowers deliver to the Administrative Agent a Clean-Down Forecast and an Officer's Certificate with calculations showing that the Fixed Charge Coverage Ratio of Xxxxx Karan International and its Subsidiaries on a consolidated basis as of the date of such issuance is not less than 4.0 to 1.0, the Commitments shall not be reduced. If the Borrowers deliver the Clean-Down Forecast pursuant to the preceding sentence, the Clean-Down Amount for all Clean-Down Periods following the delivery of such Clean-Down Forecast shall be reduced by the amount of such Net Cash Proceeds (but in no event less than $0). (iv) If the Borrowers deliver a Clean-Down Forecast pursuant to Section 3.01(b)(ii), Section 3.01(b)(iii) or Section 9.06(vi), the Borrowers shall make or cause to be made a mandatory prepayment of all outstanding Loans, and shall not borrow any other Loans, in excess of the Clean-Down Amount for a period of forty-five (45) consecutive days during each Clean-Down Period following the delivery of such Clean-Down Forecast. (v) Immediately when the sum of (A) the Revolving Credit Obligations plus (B) the amount of the Foreign Exchange Exposure at such time plus (C) the amount of the Obligations at such time attributable to corporate credit cards or cash management functions, including Automated Clearing House (ACH) functions, performed by Citibank exceeds the Maximum Revolving Credit Amount, the Borrowers shall make or cause to be made a mandatory prepayment of the Revolving Credit Obligations in an amount equal to such excess, and Borrower such amount to be applied in accordance with the provisions of Section 3.02(b). (vi) The Borrowers shall, within one Business Day after their receipt of a notice of termination of the Acceptance Commitment of any Issuing Bank pursuant to Section 2.04(l), prepay the Acceptance Obligations with respect to each Acceptance then outstanding by paying to such Issuing Bank the face amount of such Acceptances created by such Issuing Bank less such Issuing Bank's Prepayment Discount with respect to such Acceptance in effect for such prepayment. (vii) Nothing in this Section 3.01(b) shall concurrently therewith deliver be construed to Administrative Agent a certificate of an Authorized Officer demonstrating constitute the derivation such excessLenders' consent to any transaction which is not expressly permitted by Article IX.

Mandatory Prepayments/Reductions. (ai) No later than the third Promptly and in any event within five Business Day following the date Days of receipt by Company or any Loan Party of its Subsidiaries Net Cash Proceeds (other than Excluded Sales Proceeds) on account of any Net Asset Sale Proceeds, Borrower shall prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to such Net Asset Sale Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its SubsidiariesAsset Sales, to invest such Net Asset Sale Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries; provided further, pending any such investment all such Net Asset Sale Proceeds Loan Party shall be applied to prepay outstanding Loans (without a reduction in Commitments). (b) No later than the third Business Day following the date of receipt by Company make or any of its Subsidiaries, or Administrative Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Borrower shall prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries to invest such Net Insurance/Condemnation Proceeds within two hundred seventy (270) days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries, which investment may include the repair, restoration or replacement of the applicable assets of Company or its Subsidiaries; 37 44 provided, further, pending any such investment all such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay outstanding Loans (without a reduction in Commitments). (c) In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year 2003), Borrower shall, no later than ninety (90) days after the end of such Fiscal Year, prepay the Loans and the Commitments shall be permanently reduced in an aggregate amount equal to 75% of such Consolidated Excess Cash Flow. (d) Borrower shall from time to time prepay the Loans to the extent necessary so that the Total Utilization of Commitments shall not at any time exceed the lesser of the (i) Commitments then in effect and (ii) Loan Availability. (e) If at any time after the Initial Certified Conditions have been previously satisfied but are no longer satisfied, Loan Availability shall be immediately reduced to zero and all outstanding Loans shall be immediately repaid, and if at any time after the Incremental Certified Conditions have been previously satisfied but are no longer satisfied, outstanding Loans shall be immediately repaid to the extent necessary such that Total Utilization of Commitments shall not exceed Loan Availability. (f) On the date of receipt by Company or any of its Subsidiaries of any Cash proceeds from the incurrence of Subordinated Indebtedness (other than with respect to any such Indebtedness permitted cause to be incurred pursuant to Section 6.1(c)(i)), the Commitments shall be permanently reduced in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses. (g) Concurrently with any made a mandatory prepayment of the Term Loans and/or reduction of the Commitments pursuant to Sections 2.11(a) through 2.11(f), Borrower shall deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable net proceeds or Consolidated Excess Cash Flow, as the case may be. In the event that Borrower shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Borrower shall promptly make an additional prepayment of the Loans and/or the Commitments shall be permanently reduced) in an amount equal to 50% of such excessNet Cash Proceeds. Subject to Section 3.01(b)(v), each such prepayment shall be applied pro rata to the remaining principal installments of the Term Loans. (ii) Promptly and in any event within five Business Days of receipt by any Loan Party of any Net Cash Proceeds (other than Excluded Securities Proceeds) from the issuance of any Securities evidencing debt obligations by such Loan Party, such Loan Party shall make or cause to be made a mandatory prepayment of the Term Loans in an amount equal to 50% of such Net Cash Proceeds. Subject to Section 3.01(b)(v), each such prepayment shall be applied pro rata to the remaining principal installments of the Term Loans. (iii) Promptly and in any event within five Business Days of receipt by any Loan Party of any Net Cash Proceeds from the issuance of any Securities evidencing equity interests by such Loan Party, such Loan Party shall make or cause to be made a mandatory prepayment of the Term Loans in an amount equal to 25% of such Net Cash Proceeds. Subject to Section 3.01(b)(v), each such prepayment shall be applied pro rata to the remaining principal installments of the Term Loans. (iv) On the earlier of (A) the date the financial statements of the Borrower and its Subsidiaries are delivered to the Administrative Agent pursuant to Section 7.01(b) and (B) the 90th day following the last day of each Fiscal Year, the Borrower shall make or cause to be made a mandatory prepayment of the Term Loans in an amount equal to the lesser of 50% (if the Leverage Ratio of the Borrower and its Subsidiaries on a consolidated basis for the twelve fiscal month period ending on the last day of such Fiscal Year is greater than 2.25 to 1.00) of the Excess Cash Flow for such Fiscal Year or the aggregate principal amount of the Term Loans outstanding as of the date of payment; provided, however, that a mandatory prepayment of the Term Loans in an amount equal to the lesser of 25% of the Excess Cash Flow for such Fiscal Year or the aggregate principal amount of the Term Loans outstanding as of the date of payment shall be required hereunder if the Leverage Ratio of the Borrower and its Subsidiaries on a consolidated basis for the twelve fiscal month period ending on the last day of such Fiscal Year is less than 2.25 to 1.00 but greater than 1.50 to 1.00, and no mandatory prepayment shall be required hereunder if the Leverage Ratio of the Borrower and its Subsidiaries on a consolidated basis for the twelve fiscal month period ending on the last of such Fiscal Year is less than 1.50 to 1.00. Subject to Section 3.01(b)(v), each such prepayment shall concurrently therewith deliver be applied pro rata to Administrative Agent a certificate the remaining principal installments of an Authorized Officer demonstrating the derivation such excessTerm Loans. (v) Nothing in this Section 3.01(b) shall be construed to constitute the Lenders' consent to any transaction which is not expressly permitted by Article IX.