BORROWER PURSUANT TO THE FINANCING ORDERS, THE LOAN
AGREEMENT OR OTHERWISE, SHALL BE USED BY BORROWER FOR GENERAL OPERATING AND
WORKING CAPITAL PURPOSES IN THE ORDINARY COURSE OF BUSINESS OF BORROWER.
UNLESS
AUTHORIZED BY THE BANKRUPTCY COURT AND APPROVED BY LENDER IN WRITING, NO PORTION
OF ANY ADMINISTRATIVE EXPENSE CLAIM OR OTHER CLAIM RELATING TO THE CHAPTER 11
CASES SHALL BE PAID WITH THE PROCEEDS OF SUCH LOANS AND LETTER OF
9
CREDIT ACCOMMODATIONS PROVIDED BY LENDER TO BORROWER, OTHER THAN THOSE
ADMINISTRATIVE EXPENSE CLAIMS AND OTHER CLAIMS RELATING TO THE CHAPTER 11 CASES
DIRECTLY ATTRIBUTABLE TO THE OPERATION OF THE BUSINESS OF BORROWER OR ANY
GUARANTOR IN THE ORDINARY COURSE OF SUCH BUSINESS IN ACCORDANCE WITH THE
FINANCING AGREEMENTS.
5.3
RATIFICATION OF BLOCKED ACCOUNT AGREEMENT.
TO THE EXTENT LENDER
DEEMS IT NECESSARY IN ITS DISCRETION AND UPON LENDER'S REQUEST, BORROWER AND
GUARANTORS SHALL PROMPTLY PROVIDE LENDER WITH EVIDENCE, IN FORM AND SUBSTANCE
SATISFACTORY TO LENDER, THAT THE BLOCKED ACCOUNT AGREEMENT (AS DEFINED IN THE
FINANCING ORDER) AND OTHER DEPOSIT ACCOUNT ARRANGEMENTS PROVIDED FOR UNDER
SECTION 6.3 OF THE LOAN AGREEMENT HAVE BEEN RATIFIED AND AMENDED BY THE PARTIES
THERETO, OR THEIR RESPECTIVE SUCCESSORS IN INTEREST, IN FORM AND SUBSTANCE
SATISFACTORY TO LENDER, TO REFLECT THE COMMENCEMENT OF THE CHAPTER 11 CASES,
THAT BORROWER AND EACH GUARANTOR, EACH AS DEBTOR AND DEBTOR-IN-POSSESSION, IS
THE SUCCESSOR IN INTEREST TO SUCH BORROWER OR GUARANTOR, THAT THE OBLIGATIONS
INCLUDE BOTH THE PRE-PETITION OBLIGATIONS AND THE POST-PETITION OBLIGATIONS,
THAT THE COLLATERAL INCLUDES BOTH THE PRE-PETITION COLLATERAL AND THE
POST-PETITION COLLATERAL AS PROVIDED FOR HEREIN AND THE OTHER TERMS AND
CONDITIONS OF THIS RATIFICATION AGREEMENT.
5.4
ERISA.
BORROWER AND GUARANTORS HEREBY REPRESENT AND WARRANT
WITH, TO AND IN FAVOR OF LENDER THAT (A) THERE ARE NO LIENS, SECURITY INTERESTS
OR ENCUMBRANCES UPON, IN OR AGAINST ANY ASSETS OR PROPERTIES OF BORROWER OR ANY
GUARANTOR ARISING UNDER ERISA, WHETHER HELD BY THE PENSION BENEFIT GUARANTY
CORPORATION (THE "PBGC") OR THE CONTRIBUTING SPONSOR OF, OR A MEMBER OF THE
CONTROLLED GROUP THEREOF, ANY PENSION BENEFIT PLAN OF BORROWER OR ANY GUARANTOR
AND (B) NO NOTICE OF LIEN HAS BEEN FILED BY THE PBGC (OR ANY OTHER PERSON)
PURSUANT TO ERISA AGAINST ANY ASSETS OR PROPERTIES OF BORROWER OR ANY GUARANTOR.
5.5
REAL PROPERTY.
BORROWER AND GUARANTORS HEREBY REPRESENT AND
WARRANT WITH, TO AND IN FAVOR OF LENDER THAT EXCEPT WITH RESPECT TO THE REAL
PROPERTY OF BORROWER LOCATED AT P.O. BOX 367, 850 WARREN WILSON COLLEGE ROAD,
SWANNANOA, NORTH CAROLINA, 28778, ALL OF THE REAL PROPERTY OF BORROWER
IDENTIFIED ON SCHEDULE 1.40 AND SCHEDULE 9.70 OF THE LOAN AGREEMENT (AS IN
EFFECT IMMEDIATELY PRIOR TO THE DATE HEREOF) HAS BEEN SOLD PRIOR TO THE DATE
HEREOF AND IS NO LONGER OWNED BY BORROWER.
6.
DIP FACILITY FEE.
Borrower shall pay Lender a closing fee in respect of the financing provided by
Lender to Borrower in the Chapter 11 Cases in the amount of $200,000, which
shall be fully earned and payable on the date hereof.
7.