UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended October 3, 2009
OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
Commission file number: 1-32383
BlueLinx Holdings Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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77-0627356
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(State of Incorporation)
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(I.R.S. Employer Identification No.)
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4300 Wildwood Parkway, Atlanta, Georgia
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30339
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(Address of principal executive offices)
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(Zip Code)
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(770) 953-7000
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
þ
No
o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes
o
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer, and small reporting company in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
þ
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes
o
No
þ
As of November 5, 2009 there were 32,251,849 shares of BlueLinx Holdings Inc. common stock, par
value $0.01, outstanding.
BLUELINX HOLDINGS INC.
Form 10-Q
For the Quarterly Period Ended October 3, 2009
INDEX
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
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Third Quarter
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Period from
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Period from
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July 5, 2009
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June 29, 2008
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to
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to
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October 3, 2009
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September 27, 2008
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Net sales
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$
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449,363
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$
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726,756
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Cost of sales
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394,058
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643,507
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Gross profit
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55,305
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83,249
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Operating expenses:
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Selling, general, and administrative
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55,024
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73,793
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Depreciation and amortization
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3,882
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4,940
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Total operating expenses
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58,906
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78,733
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Operating (loss) income
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(3,601
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)
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4,516
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Non-operating expenses:
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Interest expense
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7,987
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8,791
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Charges associated with ineffective interest rate swap, net
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1,431
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Other expense, net
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324
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65
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Loss before provision for (benefit from) income taxes
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(13,343
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)
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(4,340
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)
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Provision for (benefit from) income taxes
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120
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(1,746
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)
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Net loss
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$
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(13,463
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)
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$
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(2,594
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Basic weighted average number of common shares outstanding
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30,948
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31,150
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Basic net loss per share applicable to common stock
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$
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(0.44
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$
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(0.08
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)
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Diluted weighted average number of common shares outstanding
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30,948
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31,150
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Diluted net loss per share applicable to common stock
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$
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(0.44
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)
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$
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(0.08
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See accompanying notes.
3
BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
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Nine Months Ended
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Period from
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Period from
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January 4, 2009
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December 30, 2007
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to
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to
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October 3, 2009
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September 27, 2008
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Net sales
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$
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1,280,000
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$
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2,278,185
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Cost of sales
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1,132,119
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2,009,698
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Gross profit
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147,881
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268,487
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Operating expenses:
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Selling, general, and administrative
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163,744
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235,655
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Net gain from terminating the Georgia-Pacific supply agreement
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(17,554
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)
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Depreciation and amortization
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13,153
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15,011
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Total operating expenses
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159,343
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250,666
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Operating (loss) income
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(11,462
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17,821
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Non-operating expenses:
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Interest expense
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24,610
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27,530
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Charges associated with ineffective interest rate swap, net
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7,341
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Write-off of debt issuance costs
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1,407
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Other expense, net
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482
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385
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Loss before provision for (benefit from) income taxes
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(45,302
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(10,094
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Provision for (benefit from) income taxes
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28,186
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(3,508
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)
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Net loss
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$
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(73,488
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$
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(6,586
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Basic weighted average number of common shares outstanding
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31,019
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31,053
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Basic net loss per share applicable to common stock
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$
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(2.37
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$
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(0.21
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Diluted weighted average number of common shares outstanding
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31,019
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31,053
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Diluted net loss per share applicable to common stock
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$
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(2.37
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$
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(0.21
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See accompanying notes.
4
BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
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October 3, 2009
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January 3, 2009
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(unaudited)
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Assets:
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Current assets:
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Cash and cash equivalents
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$
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25,498
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$
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150,353
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Receivables, net
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168,656
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130,653
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Inventories, net
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173,123
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189,482
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Deferred income tax assets
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578
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11,868
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Other current assets
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34,356
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37,351
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Total current assets
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402,211
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519,707
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Property, plant, and equipment:
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Land and land improvements
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52,719
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53,426
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Buildings
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95,968
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96,159
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Machinery and equipment
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68,906
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70,491
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Construction in progress
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1,150
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2,035
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Property, plant, and equipment, at cost
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218,743
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222,111
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Accumulated depreciation
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(78,866
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(69,336
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)
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Property, plant, and equipment, net
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139,877
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152,775
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Non-current deferred income tax assets
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17,468
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Other non-current assets
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42,437
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42,457
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Total assets
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$
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584,525
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$
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732,407
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Liabilities:
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Current liabilities:
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Accounts payable
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$
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108,537
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$
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78,367
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Bank overdrafts
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20,016
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24,715
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Accrued compensation
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5,245
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11,552
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Current maturities of long-term debt
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60,000
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Other current liabilities
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26,696
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24,546
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Total current liabilities
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160,494
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199,180
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Non-current liabilities:
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Long-term debt
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341,669
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384,870
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Non-current deferred income tax liabilities
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578
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Other non-current liabilities
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42,755
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45,505
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Total liabilities
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545,496
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629,555
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Shareholders Equity:
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Common Stock, $0.01 par value,
100,000,000 shares authorized; 32,964,201
and 32,362,330 shares issued at October
3, 2009 and January 3, 2009,
respectively; and 32,252,349 and
32,362,330 outstanding at October 3, 2009
and January 3, 2009, respectively
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323
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323
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Additional paid-in capital
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144,462
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144,148
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Accumulated other comprehensive loss
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(7,569
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)
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(16,920
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)
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Accumulated deficit
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(98,187
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)
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(24,699
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)
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Total shareholders equity
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39,029
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102,852
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Total liabilities and shareholders equity
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$
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584,525
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$
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732,407
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See accompanying notes.
5
BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
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Nine Months Ended
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Period
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Period
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from January 4,
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from December 29,
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2009 to
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2007 to
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October 3, 2009
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September 27, 2008
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Cash flows from operating activities:
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Net loss
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$
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(73,488
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)
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$
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(6,586
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)
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Adjustments to reconcile net loss to cash (used in) provided by operations:
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Depreciation and amortization
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13,153
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15,011
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Amortization of debt issuance costs
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1,843
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1,823
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Net gain from terminating the Georgia-Pacific supply agreement
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(17,554
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)
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Payments from terminating the Georgia-Pacific supply agreement
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9,412
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Gain from sale of properties
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(4,406
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)
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Prepayment fees associated with sale of facility
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616
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Charges associated with ineffective interest rate swap
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7,341
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Write-off of debt issue costs
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1,407
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Vacant property charges, net
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457
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1,640
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Deferred income tax provision (benefit)
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27,228
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(3,506
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)
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Share-based compensation expense
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2,170
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2,163
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Excess tax benefits from share-based compensation arrangements
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(76
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)
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Decrease in restricted cash
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3,380
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5,970
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Changes in assets and liabilities:
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Receivables
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(38,003
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)
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18,698
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Inventories
|
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16,359
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|
|
|
74,910
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Accounts payable
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30,170
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|
|
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(35,875
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)
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Changes in other working capital
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6,611
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|
|
|
28,895
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Other
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(192),
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1,968
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|
|
|
|
|
|
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Net cash (used in) provided by operating activities
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|
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(13,496
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)
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105,035
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Cash flows from investing activities:
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|
|
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Property, plant and equipment investments
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(952
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)
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|
|
(2,614
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)
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Proceeds from disposition of assets
|
|
|
8,454
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|
|
|
848
|
|
|
|
|
|
|
|
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Net cash provided by (used in) investing activities
|
|
|
7,502
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|
|
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(1,766
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)
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|
|
|
|
|
|
|
Cash flows from financing activities:
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|
|
|
|
|
|
|
|
Repurchase of common stock
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|
(1,862
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)
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|
|
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Proceeds from stock options exercised
|
|
|
|
|
|
|
434
|
|
Excess tax benefits from share-based compensation arrangements
|
|
|
|
|
|
|
76
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|
Decrease in revolving credit facility
|
|
|
(100,000
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)
|
|
|
(27,535
|
)
|
Payment of principal on mortgage
|
|
|
(3,201
|
)
|
|
|
|
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Prepayment fees associated with sale of facility
|
|
|
(616
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)
|
|
|
|
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Decrease in bank overdrafts
|
|
|
(4,699
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)
|
|
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(15,450
|
)
|
Increase in restricted cash related to the mortgage
|
|
|
(8,442
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)
|
|
|
(5,461
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)
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Other
|
|
|
(41
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)
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|
|
6
|
|
|
|
|
|
|
|
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Net cash used in financing activities
|
|
|
(118,861
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)
|
|
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(47,930
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)
|
|
|
|
|
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(Decrease) increase in cash
|
|
|
(124,855
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)
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|
|
55,339
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|
Balance, beginning of period
|
|
|
150,353
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|
|
|
15,759
|
|
|
|
|
|
|
|
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Balance, end of period
|
|
$
|
25,498
|
|
|
$
|
71,098
|
|
|
|
|
|
|
|
|
See accompanying notes.
6
BLUELINX HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 3, 2009
1. Basis of Presentation and Background
Basis of Presentation
BlueLinx Holdings Inc. has prepared the accompanying Unaudited Condensed Consolidated
Financial Statements, including its accounts and the accounts of its wholly-owned subsidiaries, in
accordance with the instructions to Form 10-Q and therefore they do not include all of the
information and notes required by United States generally accepted accounting principles (GAAP).
These interim financial statements should be read in conjunction with the financial statements and
accompanying notes included in our Annual Report on Form 10-K for the year ended January 3, 2009,
as filed with the Securities and Exchange Commission (SEC). Our fiscal year is a 52- or 53-week
period ending on the Saturday closest to the end of the calendar year. Fiscal year 2009 and fiscal
year 2008 contain 52 weeks and 53 weeks, respectively. BlueLinx Corporation is the wholly-owned
operating subsidiary of BlueLinx Holdings Inc. and is referred to herein as the operating
subsidiary when necessary. Certain amounts in the first nine months of fiscal 2008 have been
reclassified to conform with the presentation for the first nine months of fiscal 2009.
We believe the accompanying Unaudited Condensed Consolidated Financial Statements reflect all
adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of
our financial position, results of operations and cash flows for the periods presented. The
preparation of the Unaudited Condensed Consolidated Financial Statements in conformity with GAAP
requires us to make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those estimates and such
differences could be material. In addition, the operating results for interim periods may not be
indicative of the results of operations for a full year. We are exposed to fluctuations in
quarterly sales volumes and expenses due to seasonal factors, with the second and third quarters
typically accounting for the highest sales volumes. These seasonal factors are common in the
building products distribution industry.
We are a leading distributor of building products in North America with approximately 2,000
employees. We offer approximately 10,000 products from over 750 suppliers to service more than
11,500 customers nationwide, including dealers, industrial manufacturers, manufactured housing
producers and home improvement retailers. We operate our distribution business from sales centers
in Atlanta and Denver, and our network of more than 70 warehouses and third-party operated
warehouses.
2. Summary of Significant Accounting Policies
Revenue Recognition
We recognize revenue when the following criteria are met: persuasive evidence of an agreement
exists, delivery has occurred or services have been rendered, our price to the buyer is fixed and
determinable and collectibility is reasonably assured. Delivery is not considered to have occurred
until the customer takes title and assumes the risks and rewards of ownership. The timing of
revenue recognition is largely dependent on shipping terms. Revenue is recorded at the time of
shipment for terms designated as FOB (free on board) shipping point. For sales transactions
designated FOB destination, revenue is recorded when the product is delivered to the customers
delivery site.
All revenues are recorded at gross in accordance with the Accounting Standards Codification
(ASC) 605-45, Principal Agent Considerations (ASC 605-45), and in accordance with standard
industry practice. The key indicators used to determine when and how revenue is recorded are as
follows:
|
|
|
We are the primary obligor responsible for fulfillment and all other aspects of
the customer relationship.
|
|
|
|
|
Title passes to BlueLinx, and we carry all risk of loss related to warehouse,
reload and inventory shipped directly from vendors to our customers.
|
|
|
|
|
We are responsible for all product returns.
|
|
|
|
|
We control the selling price for all channels.
|
|
|
|
|
We select the supplier.
|
|
|
|
|
We bear all credit risk.
|
7
In addition, we provide inventory to certain customers through pre-arranged agreements on a
consignment basis. Customer consigned inventory is maintained and stored by certain customers;
however, ownership and risk of loss remains with us. When the inventory is sold by the customer,
we recognize revenue. We record revenue on a gross basis in accordance with the guidance outlined
above relative to ASC 605-45.
All revenues recognized are net of trade allowances, cash discounts and sales returns. Cash
discounts and sales returns are estimated using historical experience. Trade allowances are based
on the estimated obligations and historical experience. Adjustments to earnings resulting from
revisions to estimates on discounts and returns have been insignificant for each of the reported
periods.
Cash and Cash Equivalents
Cash and cash equivalents include all highly-liquid investments with maturity dates of less
than three months when purchased.
Restricted Cash
We had restricted cash of $30.9 million and $25.5 million at October 3, 2009 and January 3,
2009 respectively. Restricted cash primarily includes amounts held in escrow related to our
interest rate swap, mortgage, and insurance for workers compensation, auto liability, and general
liability. Restricted cash is included in Other current assets and Other non-current assets on
the accompanying Condensed Consolidated Balance Sheets.
The table below provides the balances of each individual component in restricted cash as of
October 3, 2009 and January 3, 2009 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
At October 3,
|
|
|
At January 3,
|
|
|
|
2009
|
|
|
2009
|
|
Cash in escrow:
|
|
|
|
|
|
|
|
|
Mortgage
|
|
|
17,560
|
|
|
|
9,118
|
|
Other (1)
|
|
|
13,381
|
|
|
|
16,401
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
30,941
|
|
|
$
|
25,519
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Other includes restricted cash related to our interest rate swap, insurance, and
other items.
|
During the third quarter of fiscal 2009, we determined it to be appropriate to recognize
changes in restricted cash required under our mortgage in the financing section of our Condensed
Consolidated Statement of Cash Flows. In order to conform historical presentation to the current
and future presentations, we reclassified $5.7 million of cash used in operating activities for the
period from January 4, 2009 to July 4, 2009 to net cash used in financing activities for the nine
months ended October 3, 2009. We also reclassified $5.5 million from net cash provided by
operating activities to net cash used in financing activities for the nine months ended September
27, 2008 in our Condensed Consolidated Statement of Cash Flows.
Allowance for Doubtful Accounts and Related Reserves
We evaluate the collectibility of accounts receivable based on numerous factors, including
past transaction history with customers and their creditworthiness. We maintain an allowance for
doubtful accounts for each aging category on our aged trial balance based on our historical loss
experience. This estimate is periodically adjusted when we become aware of specific customers
inability to meet their financial obligations (e.g., bankruptcy filing or other evidence of
liquidity problems). As we determine that specific balances will ultimately be uncollectible, we
remove them from our aged trial balance. Additionally, we maintain reserves for cash discounts that
we expect customers to earn as well as expected returns. At October 3, 2009 and January 3, 2009,
these reserves totaled $9.7 million and $10.1 million, respectively. Adjustments to earnings
resulting from revisions to estimates on discounts and uncollectible accounts have been
insignificant.
Inventory Valuation
Inventories are carried at the lower of cost or market. The cost of all inventories is
determined by the moving average cost method. We evaluate our inventory value at the end of each
quarter to ensure that first quality, actively moving inventory, when
8
viewed by category, is carried at the lower of cost or market. At October 3, 2009, the market
value of our inventory exceeded its cost. At January 3, 2009, the lower of cost or market reserve
totaled $3.4 million. Adjustments to earnings resulting from revisions to lower of cost or market
estimates have been insignificant.
Additionally, we maintain a reserve for the estimated value impairment associated with
damaged, excess and obsolete inventory. The damaged, excess and obsolete reserve generally includes
discontinued items or inventory that has turn days in excess of 270 days, excluding new items
during their product launch. At October 3, 2009 and January 3, 2009, our damaged, excess and
obsolete inventory reserves totaled $3.3 million and $4.0 million, respectively. Adjustments to
earnings resulting from revisions to damaged, excess and obsolete estimates have been
insignificant.
We have included all material charges directly or indirectly incurred in bringing inventory to
its existing condition and location.
Consignment Inventory
From time to time, we enter into consignment inventory agreements with our vendors. This
vendor consignment inventory relationship allows us to obtain and store vendor inventory at our
warehouses and third-party (reload) facilities; however, ownership and risk of loss remains with
the vendor. When the inventory is sold, we are required to the pay the vendor and we
simultaneously take and transfer ownership from the vendor to the customer.
Consideration Received from Vendors and Paid to Customers
Each year, we enter into agreements with many of our vendors providing for inventory purchase
rebates, generally based on achievement of specified volume purchasing levels and various marketing
allowances that are common industry practice. We accrue for the receipt of vendor rebates based on
purchases, and also reduce inventory value to reflect the net acquisition cost (purchase price less
expected purchase rebates). At October 3, 2009 and January 3, 2009, the vendor rebate receivable
totaled $5.8 million and $6.3 million, respectively. Adjustments to earnings resulting from
revisions to rebate estimates have been insignificant.
In addition, we enter into agreements with many of our customers to offer customer rebates,
generally based on achievement of specified volume sales levels and various marketing allowances
that are common industry practice. We accrue for the payment of customer rebates based on sales to
the customer, and also reduce sales value to reflect the net sales (sales price less expected
customer rebates). At October 3, 2009 and January 3, 2009, the customer rebate payable totaled $5.3
million and $7.3 million, respectively. Adjustments to earnings resulting from revisions to rebate
estimates have been insignificant.
Earnings per Common Share
Effective January 4, 2009, we adopted ASC 260-10, Earnings Per Share Overall (ASC
260-10). Per ASC 260-10, unvested share-based payment awards that contain nonforfeitable rights
to dividends or dividend equivalents (whether paid or unpaid) are considered participating
securities and shall be included in the computation of earnings per share pursuant to the two-class
method. The two-class method is an earnings allocation formula that treats a participating security
as having rights to earnings that would otherwise have been available to common shareholders.
Restricted stock granted by us to certain management level employees participate in dividends on
the same basis as common shares and are nonforfeitable by the holder. As a result, these
share-based awards meet the definition of a participating security and are included in the weighted
average number of common shares outstanding for the periods that present net income. Given that
the restricted shareholders do not have a contractual obligation to participate in the losses, we
have not included these amounts in our weighted average number of common shares outstanding for
periods in which we report a net loss. In addition, because the inclusion of such unvested
restricted shares in our basic and dilutive per share calculations would be antidilutive, we have
not included 1,553,128 and 1,218,844 of unvested restricted shares that had the right to
participate in dividends in our basic and dilutive calculations for the first nine months of fiscal
2009 and for the first nine months of fiscal 2008, respectively, because both periods reflected net
losses. As we experienced losses in both periods, basic and diluted loss per share are computed by
dividing net loss by the weighted average number of common shares outstanding for the period. The
provisions of ASC 260-10 are retroactive; therefore, prior periods have been adjusted when
necessary.
Except when the effect would be anti-dilutive, the diluted earnings per share calculation
includes the dilutive effect of the assumed exercise of stock options and performance shares using
the treasury stock method. During fiscal 2008, we granted 440,733 performance shares under our
2006 Long-Term Incentive Plan in which shares are issuable upon satisfaction of certain performance
criteria. As of October 3, 2009, we assumed that a total of 189,715 performance shares will
eventually vest based on our assumption
9
that certain performance criteria will be met and that certain shares will be forfeited over the
vesting term. The 189,715 performance shares we assume will vest were not included in the
computation of diluted earnings per share due to the net loss for the period. We will continue to
evaluate the effect of the performance conditions on our diluted earnings per share calculation in
accordance with ASC 260-10 and will change our assumptions when
necessary. Our restricted stock units are settled in cash upon
vesting and are considered liability awards. Therefore, these restricted stock units are not
included in the computation of the basic and diluted earnings per share.
For the third quarter of fiscal 2009 and for the first nine months of fiscal 2009, we excluded
2,671,157 unvested share-based awards from the diluted earnings per share calculation because they
were anti-dilutive. For the third quarter of fiscal 2008 and for the first nine months of fiscal
2008, we excluded 2,755,105 unvested share-based awards from the diluted earnings per share
calculation because they were anti-dilutive.
Stock-Based Compensation
We have two stock-based compensation plans covering officers, directors and certain employees
and consultants; the 2004 Long Term Equity Incentive Plan (the 2004 Plan) and the 2006 Long Term
Equity Incentive Plan (the 2006 Plan). The plans are designed to motivate and retain individuals
who are responsible for the attainment of our primary long-term performance goals. The plans
provide a means whereby our employees and directors develop a sense of proprietorship and personal
involvement in our development and financial success and encourage them to devote their best
efforts to our business. Although we do not have a formal policy on the matter, we issue new shares
of our common stock to participants, upon the exercise of options, out of the total amount of
common shares authorized for issuance under the 2004 Plan and the 2006 Plan.
The 2004 Plan provides for the grant of nonqualified stock options, incentive stock options
and restricted shares of our common stock to participants of the plan selected by our Board of
Directors or a committee of the Board who administer the 2004 Plan. We reserved 2,222,222 shares of
our common stock for issuance under the 2004 Plan. The terms and conditions of awards under the
2004 Plan are determined by the administrator for each grant.
The 2006 Plan permits the grant of nonqualified stock options, incentive stock options, stock
appreciation rights, restricted stock, restricted stock units, performance shares, performance
units, cash-based awards, and other stock-based awards. We reserved 3,200,000 shares of our common
stock for issuance under the 2006 Plan. The terms and conditions of awards under the 2006 Plan are
determined by the administrator for each grant. Awards issued under the 2006 Plan are subject to
accelerated vesting in the event of a change in control as such event is defined in the 2006 Plan.
On January 13, 2009, the Compensation Committee granted 651,150 restricted shares of our common
stock to certain of our officers.
We recognize compensation expense equal to the grant-date fair value for all share-based
payment awards that are expected to vest. This expense is recorded on a straight-line basis over
the requisite service period of the entire award, unless the awards are subject to market or
performance conditions, in which case we recognize compensation expense over the requisite service
period of each separate vesting tranche. All compensation expense related to our share-based
payment awards is recorded in Selling, general and administrative expense in the Condensed
Consolidated Statement of Operations.
As of October 3, 2009, there was $1.0 million, $3.5 million, $0.3 million and $0.1 million of
total unrecognized compensation expense related to stock options, restricted stock, performance
shares and restricted stock units, respectively. The unrecognized compensation expense for these
awards is expected to be recognized over a period of 1.4 years, 1.7 years, 1.2 years, and 0.2
years, respectively. As of September 27, 2008, there was $1.9 million, $4.4 million, $1.0 million
and $0.2 million of total unrecognized compensation expense related to stock options, restricted
stock, performance shares and restricted stock units, respectively. The unrecognized compensation
expense for these awards was expected to be recognized over a period of 2.5 years, 2.2 years, 2.3
years, and 1.0 years, respectively. For the third quarter of fiscal 2009 and for the first nine
months of fiscal 2009, our total stock-based compensation expense was $0.8 million and $2.3
million, respectively. For the third quarter of fiscal 2008 and for the first nine months of
fiscal 2008, our total stock-based compensation expense was $1.3 million and $2.5 million
respectively. We also recognized related income tax benefits of $0.5 million and $1.0 million for
the third quarter of fiscal 2008 and for the first nine months of
fiscal 2008, respectively. There were no tax benefits recognized in
fiscal 2009. There
were no options exercised during the third quarter of fiscal 2009, first nine months of fiscal
2009, and the third quarter of fiscal 2008. During the first nine months of fiscal 2008, total
stock options exercised were 115,758.
10
Income Taxes
Our financial statements contain certain deferred tax assets which have arisen
primarily as a result of tax benefits associated with the loss before income taxes incurred during
fiscal 2008 and the first nine months of fiscal 2009, as well as deferred income tax assets
resulting from other temporary differences related to certain reserves, pension obligations and
differences between book and tax depreciation and amortization. In evaluating our ability to
recover our deferred income tax assets, we considered available positive and negative evidence.
During the year ended January 3, 2009, we reported a net loss. This reported loss along with
losses reported in prior periods was considered negative evidence which carried substantial weight.
Therefore, we considered evidence related to the four sources of taxable income, to determine
whether such positive evidence outweighed the negative evidence associated with the losses
incurred. The positive evidence considered included:
|
|
|
taxable income in prior carryback years, if carryback is permitted under the tax law;
|
|
|
|
|
future reversals of existing taxable temporary differences (i.e., offset gross deferred
tax
|
|
|
|
|
assets against gross deferred tax liabilities);
|
|
|
|
|
tax planning strategies; and
|
|
|
|
|
future taxable income exclusive of reversing temporary differences and carryforwards.
|
As of January 3, 2009, there was no taxable income in carryback years to offset the net losses
recorded as deferred tax assets. We considered the future reversal of
temporary differences prior to projecting future taxable income. Net deferred tax assets that
would not be offset by future reversal of deferred tax liabilities totaled $29.4 million at January
3, 2009.
As of January 3, 2009, we projected a cumulative pretax profit for the three year period ended
2010. The cumulative profit was substantially driven by projected positive results from operations
in 2010, which was developed using the housing start forecasts available at that time and operating
expense reductions of 15% in 2009 and 6% in 2010. Our business is closely tied to housing starts
and third party estimates of housing starts are considered when estimating revenue. We develop
housing starts assumptions using internal data, which is validated using external housing start
forecasts published by third party sources. At the end of fiscal 2008 and through early March
2009, housing starts were projected to be 716,000 for 2009 and 950,000 for 2010.
Additionally, expected gains from the disposal of appreciated real estate in 2009 and 2010
impacted our projections of cumulative pretax income for the three year period ended 2010. The
fair value of our real estate assets substantially exceed the carrying value, which resulted in us
being in a unique position with the ability to forecast and consider such gains in our projection
of future income.
Based on the weight of the available positive and negative evidence at the end of fiscal 2008
and through early March 2009, we concluded that the evidence relative to potential future income
generated from operations and the sale of appreciated real estate carried enough weight to overcome
the weight of the negative evidence of losses. Therefore, management determined that the existing
federal deferred tax assets would be realized in conjunction with closing and reporting fiscal year
2008 and did not record any valuation allowance related to federal deferred tax assets.
With regard to our state deferred tax assets, we considered the positive evidence associated
with tax planning strategies that would be implemented to avoid the loss of these assets.
Considering the weight of this evidence, we believed the positive evidence outweighed the negative
evidence of the fiscal year 2008 loss and previously reported losses in the states where the tax
planning strategy was executable. Therefore, we recorded a valuation allowance of $1.1 million for
those states where we would not be able to execute the strategy as of the end of fiscal 2008 and
$0.3 million related to non-deductible excess compensation.
During the first quarter of fiscal 2009, our net deferred tax assets increased to $40.2
million, net of a $1.1 million valuation allowance. The increase in deferred tax assets was
primarily attributable to a pretax loss of approximately $33 million for the first quarter of 2009.
We evaluated the weight of available positive and negative evidence during the first quarter
2009 closing and reporting process. In late March and April, subsequent to the filing of the 10-K,
there was a substantial drop in revenue compared to expectations. In addition, due to a
combination of tighter lending standards and deteriorating conditions in residential construction,
negotiations stalled or were terminated for several of our planned sales of real estate.
11
Due to the changes in the environment and our plans noted above, we updated our projection of
future taxable income. As previously discussed, we utilize third-party forecasts in developing our
annual projections, specifically related to housing starts. During the first quarter, such
external estimates for fiscal 2009 housing starts dropped from 716,000 to 616,000. We considered
the new information in relation to our expectations in March and April.
The changes in our internal assumptions and revised external expectations of 2009 housing
starts resulted in a change in our projections from cumulative pretax income to cumulative pretax
loss for the three year period ended 2010.
The downward revisions in forecasted housing starts at the end of the first quarter of fiscal
2009, the lack of signs of recovery in the overall economy and the lack of ability to close real
estate transactions in late March and April caused us to conclude that, as of April 4, 2009, the
weight of the positive evidence was no longer sufficient to overcome the weight of the negative
evidence of a three year cumulative loss and that a full valuation allowance of $40.2 million for
all deferred income tax assets was necessary as of April 4, 2009.
Impairment of Long-Lived Assets
Long-lived assets, including property and equipment and intangible assets with definite useful
lives, are reviewed for possible impairment whenever events or circumstances indicate that the
carrying amount of an asset may not be recoverable.
We evaluate our long-lived assets each quarter for indicators of potential
impairment. Indicators of impairment include current period losses combined with a history of
losses, managements decision to exit a facility, reductions in the fair market value of real
properties and changes in other circumstances that indicate the carrying amount of an asset may not
be recoverable.
Our evaluation of long-lived assets is performed at the lowest level of identifiable cash
flows, which is generally the individual distribution facility. In the event of indicators of
impairment, the assets of the distribution facility are evaluated by comparing the facilitys
undiscounted cash flows over the estimated useful life of the asset, which ranges between 5-20
years, to its carrying value. If the carrying value is greater than the undiscounted cash flows,
an impairment loss is recognized for the difference between the carrying value of the asset and the
estimated fair market value. Impairment losses are recorded as a component of Selling, general and
administrative in the Condensed Consolidated Statements of Operations.
Our estimate of undiscounted cash flows is subject to assumptions that affect estimated
operating income at a distribution facility level. These assumptions are related to future sales,
margin growth rates, economic conditions, market competition and inflation. Our estimates of fair
market value are generally based on market appraisals and our experience with related market
transactions. We use a historical average of income, with no growth factor assumption, to estimate
undiscounted cash flows. The assumptions used to determine impairment are considered to be level 3
measurements in the fair value hierarchy as defined in Note 10 in our Annual Report on Form 10-K
for the year ended January 3, 2009.
During the first nine months of fiscal 2008, we recorded a non-cash impairment charge of $0.4
million to reduce the carrying value of certain long-lived assets to fair value as a result of
unfavorable market conditions associated with our custom milling operations in California. This
impairment charge was included in Selling, general and administrative expense in our Condensed
Consolidated Statement of Operations for the first nine months of fiscal 2008.
Currently, we are experiencing a reduction in operating income at the distribution facility
level due to the ongoing downturn in the housing market. To the extent that reductions in volume
and operating income have resulted in impairment indicators, in most cases our carrying values
continue to be less than our projected undiscounted cash flows. As of January 3, 2009, we had
$152.8 million in net book value of fixed assets. The undiscounted cash flows were less than the
carrying values for approximately $24.0 million of these assets. The fair value of these assets,
primarily real estate, exceeded the carrying value by approximately $23.8 million. For the first
nine months of fiscal 2009, we have not identified significant known trends impacting the fair
value of long-lived assets to an extent that would indicate impairment.
12
Self-Insurance
It is our policy to self-insure, up to certain limits, traditional risks including
workers compensation, comprehensive general liability, and auto liability. Our self-insured
deductible for each claim involving workers compensation, comprehensive general liability
(including product liability claims), and auto liability is limited to $0.8 million, $1.0 million,
and $2.0 million, respectively. We are also self-insured up to certain limits for certain other
insurable risks, primarily physical loss to property ($0.1 million per occurrence) and the majority
of our medical benefit plans ($0.3 million per occurrence). Insurance coverage is maintained for
catastrophic property and casualty exposures as well as those risks required to be insured by law
or contract. A provision for claims under this self-insured program, based on our estimate of the
aggregate liability for claims incurred, is revised and recorded annually. The estimate is derived
from both internal and external sources including but not limited to actuarial estimates. The
actuarial estimates are subject to uncertainty from various sources, including, among others,
changes in claim reporting patterns, claim settlement patterns, judicial decisions, legislation,
and economic conditions. Although, we believe that the actuarial estimates are reasonable,
significant differences related to the items noted above could materially affect our self-insurance
obligations, future expense and cash flow. At October 3, 2009 and January 3, 2009, the
self-insurance reserves totaled $9.4 million and $8.9 million, respectively.
3. Restructuring Charges
We account for exit and disposal costs in accordance with ASC 420-10, Exit or Disposal Cost
Obligations- Overall, which requires that a liability be recognized for a cost associated with an
exit or disposal activity at fair value in the period in which it is incurred or when the entity
ceases using the right conveyed by a contract (i.e. the right to use a leased property). Our
restructuring charges included accruals for estimated losses on facility costs based on our
contractual obligations net of estimated sublease income based on current comparable market rates
for leases. We will reassess this liability periodically based on market conditions. Revisions to
our estimates of this liability could materially impact our operating results and financial
position in future periods if anticipated events and key assumptions, such as the timing and
amounts of sublease rental income, either do not materialize or change. These costs are included in
Selling, general, and administrative expenses in the Condensed Consolidated Statements of
Operations and Other current liabilities and Other non-current liabilities on the Condensed
Consolidated Balance Sheets at October 3, 2009 and January 3, 2009.
We account for severance and outplacement costs in accordance with ASC 712-10, Nonretirement
Post-Employment Benefits- Overall. These costs were included in Selling, general, and
administrative expenses in the Condensed Consolidated Statements of Operations and in Accrued
Compensation on the Condensed Consolidated Balance Sheets at October 3, 2009 and January 3, 2009.
2007 Facility Consolidation and Severance Costs
During fiscal 2007, we announced a plan to adjust our cost structure in order to manage our
costs more effectively. The plan included the consolidation of our corporate headquarters and
sales center to one building from two buildings and reduction in force initiatives which resulted
in charges of $17.1 million during the fourth quarter of fiscal 2007. Since the inception of this
plan, we recorded an additional charge of $2.4 million related to an assumption change related to
an increase to the anticipated time required to sublease the vacated headquarters building during
the fourth quarter of fiscal 2008. As of October 3, 2009 and January 3, 2009, there was no
remaining accrued severance related to reduction in force initiatives completed in fiscal 2007.
The table below summarizes the balance of accrued facility consolidation reserve and the
changes in the accrual for the third quarter ended October 3, 2009 (in thousands):
|
|
|
|
|
Balance at July 5, 2009
|
|
$
|
11,656
|
|
Charges
|
|
|
|
|
Payments
|
|
|
(535
|
)
|
Accretion of discount used to calculate liability
|
|
|
187
|
|
|
|
|
|
Balance at October 3, 2009
|
|
$
|
11,308
|
|
|
|
|
|
13
The table below summarizes the balance of accrued facility consolidation reserve and the
changes in the accrual for the nine months ended October 3, 2009 (in thousands):
|
|
|
|
|
Balance at January 3, 2009
|
|
$
|
12,340
|
|
Charges
|
|
|
|
|
Payments
|
|
|
(1,601
|
)
|
Accretion of discount used to calculate liability
|
|
|
569
|
|
|
|
|
|
Balance at October 3, 2009
|
|
$
|
11,308
|
|
|
|
|
|
2008 Facility Consolidation and Severance Costs
During fiscal 2008, our board of directors approved a plan to exit our custom milling
operations in California primarily due to the impact of unfavorable market conditions on that
business. The closure of the custom milling facilities resulted in facility consolidation charges
of $2.0 million during fiscal 2008. In addition, we recorded severance and outplacement costs of
$1.0 million in connection with involuntary terminations at our
custom milling facilities. We also recorded $4.2
million related to other reduction in force initiatives. At October 3, 2009 and January 3, 2009, our
severance reserve totaled $0.03 million and $0.5 million. During the first nine months of fiscal
2009, we modified certain assumptions related to sublease income and rental payments that resulted
in a reduction to the reserve of approximately $0.2 million.
The table below summarizes the balance of the accrued facility consolidation and severance
reserves and the changes in the accruals as of and for the third quarter ended October 3, 2009 (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facility
|
|
|
Severance
|
|
|
|
|
|
|
Consolidation
|
|
|
Costs
|
|
|
Total
|
|
Balance at July 5, 2009
|
|
$
|
1,030
|
|
|
$
|
77
|
|
|
$
|
1,107
|
|
Assumption changes
|
|
|
67
|
|
|
|
|
|
|
|
67
|
|
Payments
|
|
|
(259
|
)
|
|
|
(46
|
)
|
|
|
(305
|
)
|
Accretion of liability
|
|
|
22
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
Balance at October 3, 2009
|
|
$
|
860
|
|
|
$
|
31
|
|
|
$
|
891
|
|
|
|
|
|
|
|
|
|
|
|
The table below summarizes the balances of the accrued facility consolidation and severance
reserves and the changes in the accruals as of and for the nine months ended October 3, 2009 (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facility
|
|
|
Severance
|
|
|
|
|
|
|
Consolidation
|
|
|
Costs
|
|
|
Total
|
|
Balance at January 3, 2009
|
|
$
|
1,792
|
|
|
$
|
512
|
|
|
$
|
2,304
|
|
Assumption changes
|
|
|
(187
|
)
|
|
|
|
|
|
|
(187
|
)
|
Payments
|
|
|
(826
|
)
|
|
|
(481
|
)
|
|
|
(1,307
|
)
|
Accretion of liability
|
|
|
81
|
|
|
|
|
|
|
|
81
|
|
|
|
|
|
|
|
|
|
|
|
Balance at October 3, 2009
|
|
$
|
860
|
|
|
$
|
31
|
|
|
$
|
891
|
|
|
|
|
|
|
|
|
|
|
|
2009 Facility Consolidations and Severance
During the second quarter of fiscal 2009, we exited our BlueLinx Hardwoods facility in Austin
Texas to improve overall effectiveness and efficiency by transferring operations to our San Antonio
and Houston branches. Our exit of the Austin facility resulted in charges of $0.7 million. In
addition, we recorded severance charges related to reduction in force initiatives of $1.4 million.
During the third quarter of fiscal 2009, we modified certain assumptions related to sublease income
that resulted in a reduction to the reserve of approximately $0.1 million.
14
The table below summarizes the balances of the accrued facility consolidation and severance
reserves and the changes in the accrual for the third quarter ended October 3, 2009 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facility
|
|
|
Severance
|
|
|
|
|
|
|
Consolidation
|
|
|
Costs
|
|
|
Total
|
|
Balance at July 5, 2009
|
|
$
|
731
|
|
|
$
|
80
|
|
|
$
|
811
|
|
Charges
|
|
|
|
|
|
|
193
|
|
|
|
193
|
|
Assumption changes
|
|
|
(88
|
)
|
|
|
|
|
|
|
(88
|
)
|
Payments
|
|
|
(50
|
)
|
|
|
(252
|
)
|
|
|
(302
|
)
|
Accretion of liability
|
|
|
14
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
Balance at October 3, 2009
|
|
$
|
607
|
|
|
$
|
21
|
|
|
$
|
628
|
|
|
|
|
|
|
|
|
|
|
|
The table below summarizes the balances of the accrued facility consolidation and severance
reserves and the changes in the accrual for the nine months ended October 3, 2009 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facility
|
|
|
Severance
|
|
|
|
|
|
|
Consolidation
|
|
|
Costs
|
|
|
Total
|
|
Balance at January 3, 2009
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Charges
|
|
|
731
|
|
|
|
1,422
|
|
|
|
2,153
|
|
Assumption changes
|
|
|
(88
|
)
|
|
|
|
|
|
|
(88
|
)
|
Payments
|
|
|
(50
|
)
|
|
|
(1,401
|
)
|
|
|
(1,451
|
)
|
Accretion of liability
|
|
|
14
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
Balance at October 3, 2009
|
|
$
|
607
|
|
|
$
|
21
|
|
|
$
|
628
|
|
|
|
|
|
|
|
|
|
|
|
4. Assets Held for Sale and Net Gain on Disposition
As part of our restructuring efforts to improve our cost structure and cash flow, we closed
certain facilities and designated them as assets held for sale during fiscal 2009 and fiscal 2008.
At the time of designation, we ceased recognizing depreciation expense on these assets. As of
October 3, 2009 and January 3, 2009, total assets held for sale were $1.8 million and $3.0 million,
respectively, and were included in Other current assets in our Condensed Consolidated Balance
Sheets. These assets are not material for separate presentation on our Condensed Consolidated Balance Sheets. During the first nine months of fiscal 2009, we sold certain real
properties that resulted in a $4.4 million gain recorded in Selling, general, and administrative
expenses in the Condensed Consolidated Statements of Operations.
5. Comprehensive Loss
The calculation of comprehensive loss is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
|
Period from
|
|
|
Period from
|
|
|
|
July 5, 2009
|
|
|
June 29, 2008
|
|
|
|
to
|
|
|
to
|
|
|
|
October 3, 2009
|
|
|
September 27, 2008
|
|
Net loss
|
|
$
|
(13,463
|
)
|
|
$
|
(2,594
|
)
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Foreign currency translation, net of taxes
|
|
|
844
|
|
|
|
(242
|
)
|
Unrealized
loss from cash flow hedge, net of taxes
|
|
|
|
|
|
|
(145
|
)
|
Interest expense recognized related to ineffective interest rate swap
|
|
|
2,438
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
$
|
(10,181
|
)
|
|
$
|
(2,981
|
)
|
|
|
|
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
Period from
|
|
|
Period from
|
|
|
|
January 4, 2009
|
|
|
December 29, 2007
|
|
|
|
to
|
|
|
to
|
|
|
|
October 3, 2009
|
|
|
September 27, 2008
|
|
Net loss
|
|
$
|
(73,488
|
)
|
|
$
|
(6,586
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Foreign currency translation, net of taxes
|
|
|
1,438
|
|
|
|
(639
|
)
|
Unrealized gain from cash flow hedge, net of taxes
|
|
|
|
|
|
|
34
|
|
Interest expense recognized related to ineffective interest rate swap
|
|
|
7,913
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
$
|
(64,137
|
)
|
|
$
|
(7,191
|
)
|
|
|
|
|
|
|
|
For the third quarter of fiscal 2009, the income tax effects related to foreign currency
translation was $0.5 million. Due to our interest rate swap becoming ineffective, as well as our
decision to record a full valuation allowance against our deferred tax assets, we will recognize
the income tax effect associated with unrealized losses, initially recorded in other comprehensive
income when the interest rate swap terminates. For the third
quarter of fiscal 2008, the income tax effects related to foreign currency translation and our
interest rate swap were $(0.2) million and $(0.1) million, respectively.
For the first nine months of fiscal 2009, the income tax effects related to foreign currency
translation and our interest rate swap were $0.9 million and $2.7 million, respectively. For the
first nine months fiscal 2008, the income tax effects related to foreign currency translation and
our interest rate swap were $(0.4) million and $0.02 million, respectively.
6. Employee Benefits
Defined Benefit Pension Plans
Most of our hourly employees participate in noncontributory defined benefit pension plans,
which include a plan that is administered solely by us (the hourly pension plan) and
union-administered multiemployer plans. Our funding policy for the hourly pension plan is based on
actuarial calculations and the applicable requirements of federal law. We have met our required
contribution to the hourly pension plan in fiscal 2009. Benefits under the majority of plans for
hourly employees (including multiemployer plans) are primarily related to years of service.
Net periodic pension cost for our pension plans included the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
|
Period from July 5,
|
|
|
Period from June 29, 2008,
|
|
|
|
2009 to October 3, 2009
|
|
|
2008 to September 27, 2008
|
|
Service cost
|
|
$
|
452
|
|
|
$
|
561
|
|
Interest cost on projected benefit obligation
|
|
|
1,125
|
|
|
|
1,109
|
|
Expected return on plan assets
|
|
|
(1,132
|
)
|
|
|
(1,501
|
)
|
Amortization of unrecognized loss (gain)
|
|
|
180
|
|
|
|
(91
|
)
|
|
|
|
|
|
|
|
Net periodic pension cost
|
|
$
|
625
|
|
|
$
|
78
|
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
Period from January 4,
|
|
|
Period from December 29,
|
|
|
|
2009 to October 3, 2009
|
|
|
2007 to September 27, 2008
|
|
Service cost
|
|
$
|
1,356
|
|
|
$
|
1,684
|
|
Interest cost on projected benefit obligation
|
|
|
3,375
|
|
|
|
3,326
|
|
Expected return on plan assets
|
|
|
(3,396
|
)
|
|
|
(4,501
|
)
|
Amortization of unrecognized loss (gain)
|
|
|
540
|
|
|
|
(274
|
)
|
Amortization of unrecognized prior service cost
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
Net periodic pension cost
|
|
$
|
1,875
|
|
|
$
|
236
|
|
|
|
|
|
|
|
|
7. Revolving Credit Facility
As of October 3, 2009, we had outstanding borrowings of $56.0 million and excess availability
of $190.6 million under the terms of our revolving credit
facility. We classify the lowest projected balance of the credit facility over the next twelve
months of $56.0 million as long-term debt. As of October 3, 2009 and January 3, 2009, we had
outstanding letters of credit totaling $13.5 million and $12.9 million, respectively, primarily for
the purposes of securing collateral requirements under the interest rate swap, insurance
programs and for guaranteeing payment of international purchases based on the fulfillment of
certain conditions. Our revolving credit facility contains customary negative covenants and
restrictions for asset based loans. The most significant restriction is a requirement that we
maintain a fixed charge ratio of 1.1 to 1.0 in the event our excess availability falls below $40.0
million. The fixed charge ratio is calculated as EBITDA over the sum of cash payments for income
taxes, interest expense, cash dividends, principal payments on debt, and capital expenditures.
EBITDA is defined as BlueLinx Corporations net income before interest and tax expense,
depreciation and amortization expense, and other non-cash charges. The fixed charge ratio
requirement only applies to us when excess availability under our revolving credit facility is less
than $40.0 million for three consecutive business days. As of October 3, 2009, we were in
compliance with all covenants.
Under our revolving credit facility agreement, we are required to maintain a springing
lock-box arrangement where customer remittances go directly to a lock-box maintained by our lenders
and then are forwarded to our general bank accounts. Our outstanding borrowings are not reduced by
these payments unless our excess availability is less than $40.0 million for three consecutive
business days or in the event of default. Our revolving credit facility does not contain a
subjective acceleration clause which would allow our lenders to accelerate the scheduled maturities
of our debt or to cancel our agreement.
Effective March 30, 2009, we elected to permanently reduce our revolving loan threshold limit
from $800.0 million to $500.0 million. This reduction does not impact our available borrowing
capacity under our revolving credit facility as our current eligible accounts receivable and
inventory (our borrowing base) do not support up to $800.0 million in borrowings. We do not
anticipate our borrowing base will support borrowings in excess of $500.0 million at any point
during the remaining life of the credit facility. This cost-saving initiative will allow us to
reduce our interest expense by $0.8 million annually by lowering our unused line fees. As a result
of this action, we recorded expense of $1.4 million for the write-off of deferred financing costs
that had been capitalized associated with the borrowing capacity that was reduced during the first
quarter of fiscal 2009.
8. Derivatives
We are exposed to risks such as changes in interest rates, commodity prices and foreign
currency exchange rates. We employ a variety of practices to manage these risks, including
operating and financing activities and, where deemed appropriate, the use of derivative
instruments. Derivative instruments are used only for risk management purposes and not for
speculation or trading, and are not used to address risks related to foreign currency rates. In
accordance with ASC 815, Derivatives and Hedging, we record derivative instruments as assets or
liabilities on the balance sheet at fair value.
On June 12, 2006, we entered into an interest rate swap agreement with Goldman Sachs Capital
Markets, to hedge against interest rate risks related to our variable rate revolving credit
facility. The interest rate swap has a notional amount of $150.0 million and the terms call for us
to receive interest monthly at a variable rate equal to the 30-day LIBOR and to pay interest
monthly at a fixed rate of 5.4%. This interest rate swap was designated as a cash flow hedge.
Through January 3, 2009, the hedge was highly effective in offsetting changes in expected cash
flows. Fluctuations in the fair value of the ineffective portion, if any, of the cash flow hedge
were reflected in earnings.
On January 9, 2009, we reduced our borrowings under the revolving credit facility by $60.0
million, which reduced outstanding debt below the interest rate swaps notional amount of $150.0
million, at which point the hedge became ineffective in offsetting future
17
changes in expected cash
flows during the remaining term of the interest rate swap. We used cash on hand to pay down this
portion of
our revolving credit debt during the first quarter of fiscal 2009. As a result, any prospective
changes in fair value of the instrument will be recorded through earnings. Charges associated with
the ineffective interest rate swap recognized in the Condensed Consolidated Statement of Operations
for the first quarter of fiscal 2009 were approximately $4.8 million and are comprised of a $5.9
million non-cash charge on the date we reduced our borrowings outstanding under the revolving
credit facility below the interest rate swaps notional amount, $1.0 million of amortization of
accumulated other comprehensive loss, and $2.1 million of income related to fair value changes since
the date of the reduction.
During the second quarter of fiscal 2009, we further reduced our borrowings under the
revolving credit by $15.0 million. Charges associated with the ineffective interest rate swap
during the second quarter of fiscal 2009 were $1.3 million on the date we reduced our borrowings
outstanding by $15.0 million, $0.9 million of amortization of accumulated other comprehensive loss,
and $1.1 million of income related to fair value changes since the date of reduction.
During the third quarter of fiscal 2009, we used cash on hand to reduce our borrowings under
the revolving credit facility by an additional $25.0 million. This payment resulted in a third
quarter non-cash charge of approximately $1.9 million recorded in interest expense on the payment
date. In addition, there was $0.5 million of amortization of accumulated other comprehensive loss,
and $1.0 million of income related to fair value changes since the date of reduction. The
remaining $3.2 million of accumulated other comprehensive loss will be amortized over the remaining
19 month term of the interest rate swap and recorded as interest expense. Approximately $2.1
million will be amortized over the next 12 months and recorded as interest expense. Any further
reductions in borrowings under our revolving credit facility will result in a pro-rata reduction in
accumulated other comprehensive loss at the payment date with a corresponding charge recorded to
interest expense. Due to our interest rate swap becoming ineffective, as well as our decision to
record a full valuation allowance against deferred tax assets, we will recognize the income tax
effect associated with unrealized losses initially recorded in other comprehensive income when the interest rate swap terminates.
The following table presents a reconciliation of the unrealized losses related to our interest
rate swap measured at fair value in accumulated other comprehensive loss as of October 3, 2009 (in
thousands):
|
|
|
|
|
Balance at January 3, 2009
|
|
$
|
13,229
|
|
Unrealized losses in accumulated other comprehensive loss
|
|
|
1,533
|
|
Charges associated with ineffective interest rate swap recorded to interest expense
|
|
|
(11,556
|
)
|
|
|
|
|
Balance at October 3, 2009
|
|
$
|
3,206
|
|
|
|
|
|
9. Mortgage
On June 9, 2006, certain special purpose entities that are wholly-owned subsidiaries of us
entered into a $295.0 million mortgage loan with the German American Capital Corporation. The
mortgage has a term of ten years and is secured by 55 distribution facilities and 1 office building
owned by the special purpose entities. The stated interest rate on the mortgage is fixed at 6.35%.
During the first nine months of fiscal 2009, we sold certain real properties that ceased
operations. As a result of the sale of one of these properties during the second quarter of fiscal
2009, we reduced our mortgage loan by $3.2 million and incurred a mortgage prepayment penalty of
$0.6 million recorded in Interest expense on the Condensed Consolidated Statements of Operations.
The mortgage loan requires interest-only payments through June 2011. The balance of
the loan outstanding at the end of ten years will then become due and payable. The principal will
be paid in the following increments (in thousands):
|
|
|
|
|
2011
|
|
$
|
1,817
|
|
2012
|
|
|
3,813
|
|
2013
|
|
|
4,119
|
|
2014
|
|
|
4,392
|
|
2015
|
|
|
4,683
|
|
Thereafter
|
|
|
266,845
|
|
18
10. Fair Value Measurements
We apply ASC 820, Fair Value Measurements and Disclosures, which defines fair value,
establishes a framework for measuring fair value under GAAP, and expands disclosures about fair
value measurements to all applicable financial and non-financial assets. ASC 820 defines fair value
as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (exit price). ASC 820 classifies
inputs used to measure fair value into the following hierarchy:
|
|
|
Level 1
|
|
Unadjusted quoted prices in active markets for identical assets or liabilities.
|
|
|
|
Level 2
|
|
Unadjusted quoted prices in active markets for similar assets or liabilities, or
Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or
Inputs other than quoted prices that are observable for the asset or liability.
|
|
|
|
Level 3
|
|
Unobservable inputs for the asset or liability.
|
We are exposed to market risks from changes in interest rates, which may affect our operating
results and financial position. When deemed appropriate, we minimize our risks from interest rate fluctuations through the use of
an interest rate swap. This derivative financial instrument is used to manage risk and is not used
for trading or speculative purposes. The swap is valued using a valuation model that has inputs
other than quoted market prices that are both observable and unobservable.
We endeavor to utilize the best available information in measuring the fair value of the
interest rate swap. The interest rate swap is classified in its entirety based on the lowest level
of input that is significant to the fair value measurement. To determine fair value of the interest
rate swap we used the discounted estimated future cash flows methodology. Assumptions critical to
our fair value in the period were: (i.) the present value factors used in determining fair value
(ii.) projected LIBOR, and (iii.) the risk of non-performance. These and other assumptions are
impacted by economic conditions and expectations of management. We have determined that the fair
value of our interest rate swap is a level 3 measurement in the fair value hierarchy. The level 3
measurement is the risk of non-performance on the interest rate swap liability that is not secured
by cash collateral. The risk of counterparty non-performance did not affect the fair value at
October 3, 2009 and at January 3, 2009 due to the fact the risk of counterparty non-performance was
nominal. The fair value of the interest rate swap was a liability of $10.5 million and $13.2
million at October 3, 2009 and January 3, 2009, respectively. These balances are included in Other
current liabilities and Other non-current liabilities on the Condensed Consolidated Balance
Sheets.
The following table presents a reconciliation of the level 3 interest rate swap measured at
fair value on a recurring basis as of October 3, 2009 (in thousands):
|
|
|
|
|
Fair value at January 3, 2009
|
|
$
|
(13,229
|
)
|
Unrealized gains included in earnings, net
|
|
|
4,216
|
|
Unrealized losses in accumulated other comprehensive loss
|
|
|
(1,533
|
)
|
|
|
|
|
Fair value at October 3, 2009
|
|
$
|
(10,546
|
)
|
|
|
|
|
The $4.2 million unrealized gain was included in Interest expense in the Condensed
Consolidated Statements of Operations.
Carrying amounts for our financial instruments are not significantly different from their fair
value, with the exception of our mortgage. At October 3, 2009, the carrying value and fair value of
our mortgage was $285.7 million and $291.0 million,
respectively. To determine the fair value of our mortgage, we used a
discounted cash flow model. Assumptions critical to our fair value in
the period were present value factors used in determining fair value
and an interest rate.
11. Termination and Modification Agreement with G-P
On April 27, 2009, we entered into a Termination and Modification Agreement (Modification
Agreement) related to our Supply Agreement with Georgia Pacific (G-P). The Modification
Agreement effectively terminates the existing Supply Agreement with
19
respect to our distribution of
G-P plywood, oriented strand board and lumber. As of January 3,
2009, our minimum purchases requirement totaled $31.9 million.
As a result of terminating this agreement, we are no longer
contractually obligated to make minimum purchases of products from
G-P. We will continue to distribute a variety of G-P
building
products, including engineered lumber, which is covered under a three-year purchase agreement dated
February 12, 2009.
G-P agreed to pay us $18.8 million in exchange for our agreement to terminate the Supply
Agreement one-year earlier than the originally agreed upon May 7, 2010 termination date. Under the
terms of the Modification Agreement, we will receive four quarterly cash payments of $4.7 million,
which began on May 1, 2009 and will end on February 1, 2010. As a result of the termination, we
recognized a net gain of $17.6 million in the first nine months of fiscal 2009 as a reduction to
operating expense. The gain was net of a discount of $0.2 million and a $1.0 million write-off of
an intangible asset associated with the Supply Agreement. We believe the early termination of the
Supply Agreement contributed to the decline in our structural panel sales volume during the second
and third quarters of fiscal 2009. However, since the majority of these sales go through the
direct sales channel, the lower structural panel sales volume had an insignificant impact on our
gross profit during these periods. To the extent we are unable to replace these volumes with
structural product from G-P or other suppliers, the early termination of the Supply Agreement may
continue to negatively impact our sales of structural products which would impact our net sales and
our costs, which in turn could impact our gross profit, net income, and cash flows. For more
information on structural unit volume changes, refer to the tables under Selected Factors
Affecting Our Operating Results in our Management, Discussion Analysis. For further discussion of
the risks associated with the termination of the Master Supply Agreement, please also refer to our
risk factors disclosed in our Annual Report on Form 10-K for the year ended January 3, 2009, as
further supplemented in our Quarterly Report on Form 10-Q for the period ended April 4, 2009, as
filed with the SEC.
12. Related Party Transactions
Cerberus Capital Management, L.P., our equity sponsor, retains consultants that specialize in
operations management and support and who provide Cerberus with consulting advice concerning
portfolio companies in which funds and accounts managed by Cerberus or its affiliates have
invested. From time to time, Cerberus makes the services of these consultants available to
Cerberus portfolio companies. We believe that the terms of these consulting arrangements are
favorable to us, or, alternatively, are materially consistent with those terms that would have been
obtained by us in an arrangement with an unaffiliated third party. From time to time, we have
normal service, purchase and sales arrangements with other entities that are owned or controlled by
Cerberus. We believe that these transactions are at arms length terms and are not material to our
results of operations or financial position.
13. Commitments and Contingencies
Environmental and Legal Matters
From time to time, we are involved in various proceedings incidental to our businesses and we
are subject to a variety of environmental and pollution control laws and regulations in all
jurisdictions in which we operate. Although the ultimate outcome of these proceedings cannot be
determined with certainty, based on presently available information management believes that
adequate reserves have been established for probable losses with respect thereto. Management
further believes that the ultimate outcome of these matters could be material to operating results
in any given quarter but will not have a materially adverse effect on our long-term financial
condition, our results of operations, or our cash flows.
Collective Bargaining Agreements
As of October 3, 2009, approximately 31% of our total work force is covered by collective
bargaining agreements. Collective bargaining agreements representing approximately 3% of our work
force will expire within one year.
14. Subsequent Events
We evaluated subsequent events through the time of the filing of our Quarterly Report on Form
10-Q. We are not aware of any other significant events that occurred subsequent to the balance
sheet date but prior to the filing of this report that would have a material impact on our
Condensed Consolidated Financial Statements.
20
15. Recently Issued Accounting Pronouncements
Effective July 5, 2009, we adopted the Financial Accounting Standards Board (FASB) ASC 105-10,
Generally Accepted Accounting Principles Overall (ASC 105-10). ASC 105-10 establishes the FASB
Accounting Standards Codification (the Codification) as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in the preparation of
financial statements in conformity with U.S. GAAP. The Codification does not change current U.S.
GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the
authoritative literature related to a particular topic in one place. This Form 10-Q for the quarter
ending October 3, 2009 and all subsequent public filings will reference the Codification as the
sole source of authoritative literature.
In May 2009, the FASB issued ASC 855, Subsequent Events (ASC 855). ASC 855 establishes
authoritative accounting and disclosure guidance for recognized and non-recognized subsequent
events that occur after the balance sheet date but before financial statements are issued. ASC 855
also requires disclosure of the date through which an entity has evaluated subsequent events and
the basis for that date. ASC 855 was effective for us beginning with our Quarterly Report on Form
10-Q for the second quarter and first six months of fiscal 2009, and will be applied prospectively.
In April 2009, the FASB issued ASC 825-10, Financial Instruments Overall (ASC 825-10),
which will require that the fair value disclosures required for all financial instruments be
included in interim financial statements. ASC 825-10 also requires entities to disclose the method
and significant assumptions used to estimate the fair value of financial instruments on an interim
and annual basis and to highlight any changes from prior periods. ASC 820-10 was effective for us
during the third quarter of fiscal 2009. The adoption of ASC 825-10 did not have a material impact
on our Condensed Consolidated Financial Statements.
In December 2008, the FASB issued ASC 715, Compensation Retirement Benefits (ASC 715).
ASC 715 requires enhanced disclosures about the plan assets of our defined benefit pension and
other postretirement plans. The enhanced disclosures required by ASC 715 are intended to provide
users of financial statements with a greater understanding of: (1) how investment allocation
decisions are made, including the factors that are pertinent to an understanding of investment
policies and strategies; (2) the major categories of plan assets; (3) the inputs and valuation
techniques used to measure the fair value of plan assets; (4) the effect of fair value measurements
using significant unobservable inputs (Level 3) on changes in plan assets for the period; and (5)
significant concentrations of risk within plan assets. ASC 715 is effective for us for the year
ending January 2, 2010.
In June 2008, the FASB issued ASC 260-10, Earnings Per Share Overall (ASC 260-10). Per
ASC 260-10 unvested share-based payment awards that contain non-forfeitable rights to dividends or
dividend equivalents (whether paid or unpaid) are participating securities and are to be included
in the computation of earnings per share under the two-class method described in ASC 260-10. ASC
260-10 was effective for us on January 4, 2009 and requires all presented prior-period earnings per
share data to be adjusted retrospectively. For additional information, refer to Note 2 of the Notes
to Condensed Consolidated Financial Statements.
In April 2008, the FASB issued ASC 350-30, General Intangibles Other than Goodwill (ASC
350-30). ASC 350-30 amends the factors to be considered in developing renewal or extension
assumptions used to determine the useful life of intangible assets under ASC 350, Intangibles
Goodwill and Other. Its intent is to improve the consistency between the useful life of an
intangible asset and the period of expected cash flows used to measure its fair value. ASC 350-30
was effective for us on January 4, 2009 and did not have a material impact on our Condensed
Consolidated Financial Statements; however, it could have an impact in the future if acquisitions
are made.
In March 2008, the FASB issued ASC 815-10-65, Derivatives and Hedging Overall
Transition and Open Effective Date Information (ASC 815-10-65). ASC 815-10-65 seeks to improve
financial reporting for derivative instruments and hedging activities by requiring enhanced
disclosures regarding the impact on financial position, financial performance, and cash flows. To
achieve this increased transparency, ASC 815-10-65 requires (1) the disclosure of the fair value of
derivative instruments and gains and losses in a tabular format; (2) the disclosure of derivative
features that are credit risk-related; and (3) cross-referencing within the footnotes. ASC
815-10-65 was effective for us, on a prospective basis, on January 4, 2009. The adoption of ASC
815-10-65 did not have a material impact on our Condensed Consolidated Financial Statements. For
additional information, refer to Note 8 of the Notes to Condensed Consolidated Financial
Statements.
21
In December 2007, the FASB issued ASC 805-10 Business Combinations Overall (ASC 805-10).
ASC 805-10 establishes principles and requirements for how the acquirer of a business recognizes
and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree. ASC
805-10 also provides guidance for recognizing and measuring the goodwill acquired in the business
combination and determines what information to disclose to enable users of the financial statements
to evaluate the nature and financial effects of the business combination. ASC 805-10 was effective
for us, on a prospective basis, on January 4, 2009. We expect ASC 805-10 will have an impact on our
accounting for business combinations, but the effect is dependent upon the acquisitions that are
made in the future.
16. Unaudited Supplemental Condensed Consolidating Financial Statements
The unaudited condensed consolidating financial information as of October 3, 2009 and January
3, 2009 and for the periods from July 5, 2009 to October 3, 2009 and June 29, 2008 to September 27,
2008 is provided due to restrictions in our revolving credit facility that limit distributions by
BlueLinx Corporation, our wholly-owned operating subsidiary, to us, which, in turn, may limit our
ability to pay dividends to holders of our common stock (see our Annual Report on Form 10-K for the
year ended January 3, 2009
,
for a more detailed discussion of these restrictions and the terms of
the facility). Also included in the supplemental Condensed Consolidated financial statements are
sixty-three single member limited liability companies, which are wholly owned by us (the LLC
subsidiaries). The LLC subsidiaries own certain warehouse properties that are occupied by BlueLinx
Corporation, each under the terms of a master lease agreement. Certain of the warehouse properties
collateralize a mortgage loan and none of the properties are available to satisfy the debts and
other obligations of either BlueLinx Corporation or us.
The condensed consolidating statement of operations for BlueLinx Holdings Inc. for the period
from July 5, 2009 to October 3, 2009 follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holdings
|
|
|
BlueLinx
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Inc.
|
|
|
Corporation
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
Net sales
|
|
$
|
|
|
|
$
|
449,363
|
|
|
$
|
7,457
|
|
|
$
|
(7,457
|
)
|
|
$
|
449,363
|
|
Cost of sales
|
|
|
|
|
|
|
394,058
|
|
|
|
|
|
|
|
|
|
|
|
394,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
55,305
|
|
|
|
7,457
|
|
|
|
(7,457
|
)
|
|
|
55,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
1,399
|
|
|
|
61,035
|
|
|
|
47
|
|
|
|
(7,457
|
)
|
|
|
55,024
|
|
Depreciation and amortization
|
|
|
|
|
|
|
2,922
|
|
|
|
960
|
|
|
|
|
|
|
|
3,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
1,399
|
|
|
|
63,957
|
|
|
|
1,007
|
|
|
|
(7,457
|
)
|
|
|
58,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(1,399
|
)
|
|
|
(8,652
|
)
|
|
|
6,450
|
|
|
|
|
|
|
|
(3,601
|
)
|
Non-operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
|
|
3,364
|
|
|
|
4,623
|
|
|
|
|
|
|
|
7,987
|
|
Charges associated with ineffective interest rate swap
|
|
|
|
|
|
|
1,431
|
|
|
|
|
|
|
|
|
|
|
|
1,431
|
|
Other expense (income), net
|
|
|
|
|
|
|
386
|
|
|
|
(62
|
)
|
|
|
|
|
|
|
324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before (benefit from) provision for income
taxes
|
|
|
(1,399
|
)
|
|
|
(13,833
|
)
|
|
|
1,889
|
|
|
|
|
|
|
|
(13,343
|
)
|
(Benefit from) provision for income taxes
|
|
|
(720
|
)
|
|
|
104
|
|
|
|
736
|
|
|
|
|
|
|
|
120
|
|
Equity in (loss) income of subsidiaries
|
|
|
(12,784
|
)
|
|
|
|
|
|
|
|
|
|
|
12,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(13,463
|
)
|
|
$
|
(13,937
|
)
|
|
$
|
1,153
|
|
|
$
|
12,784
|
|
|
$
|
(13,463
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The condensed consolidating statement of operations for BlueLinx Holdings Inc. for the period
from June 29, 2008 to September 27, 2008 follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holdings
|
|
|
BlueLinx
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Inc.
|
|
|
Corporation
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
Net sales
|
|
$
|
|
|
|
$
|
726,756
|
|
|
$
|
7,617
|
|
|
$
|
(7,617
|
)
|
|
$
|
726,756
|
|
Cost of sales
|
|
|
|
|
|
|
643,507
|
|
|
|
|
|
|
|
|
|
|
|
643,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
83,249
|
|
|
|
7,617
|
|
|
|
(7,617
|
)
|
|
|
83,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
2,189
|
|
|
|
79,016
|
|
|
|
205
|
|
|
|
(7,617
|
)
|
|
|
73,793
|
|
Depreciation and amortization
|
|
|
|
|
|
|
3,869
|
|
|
|
1,071
|
|
|
|
|
|
|
|
4,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
2,189
|
|
|
|
82,885
|
|
|
|
1,276
|
|
|
|
(7,617
|
)
|
|
|
78,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holdings
|
|
|
BlueLinx
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Inc.
|
|
|
Corporation
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
Operating (loss) income
|
|
|
(2,189
|
)
|
|
|
364
|
|
|
|
6,341
|
|
|
|
|
|
|
|
4,516
|
|
Non-operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
|
|
3,899
|
|
|
|
4,892
|
|
|
|
|
|
|
|
8,791
|
|
Other expense (income), net
|
|
|
|
|
|
|
80
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before (benefit from)
provision for income taxes
|
|
|
(2,189
|
)
|
|
|
(3,615
|
)
|
|
|
1,464
|
|
|
|
|
|
|
|
(4,340
|
)
|
(Benefit from) provision for income taxes
|
|
|
(854
|
)
|
|
|
(1,463
|
)
|
|
|
571
|
|
|
|
|
|
|
|
(1,746
|
)
|
Equity in (loss) income of subsidiaries
|
|
|
(1,259
|
)
|
|
|
|
|
|
|
|
|
|
|
1,259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(2,594
|
)
|
|
$
|
(2,152
|
)
|
|
$
|
893
|
|
|
$
|
1,259
|
|
|
$
|
(2,594
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The condensed consolidating statement of operations for BlueLinx Holdings Inc. for the period
from January 4, 2009 to October 3, 2009 follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holdings
|
|
|
BlueLinx
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Inc.
|
|
|
Corporation
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
Net sales
|
|
$
|
|
|
|
$
|
1,280,000
|
|
|
$
|
22,460
|
|
|
$
|
(22,460
|
)
|
|
$
|
1,280,000
|
|
Cost of sales
|
|
|
|
|
|
|
1,132,119
|
|
|
|
|
|
|
|
|
|
|
|
1,132,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
147,881
|
|
|
|
22,460
|
|
|
|
(22,460
|
)
|
|
|
147,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
4,466
|
|
|
|
185,851
|
|
|
|
(4,113
|
)
|
|
|
(22,460
|
)
|
|
|
163,744
|
|
Net gain from terminating the Georgia-Pacific supply
agreement
|
|
|
|
|
|
|
(17,554
|
)
|
|
|
|
|
|
|
|
|
|
|
(17,554
|
)
|
Depreciation and amortization
|
|
|
|
|
|
|
10,189
|
|
|
|
2,964
|
|
|
|
|
|
|
|
13,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses (income)
|
|
|
4,466
|
|
|
|
178,486
|
|
|
|
(1,149
|
)
|
|
|
(22,460
|
)
|
|
|
159,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(4,466
|
)
|
|
|
(30,605
|
)
|
|
|
23,609
|
|
|
|
|
|
|
|
(11,462
|
)
|
Non-operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
|
|
10,042
|
|
|
|
14,568
|
|
|
|
|
|
|
|
24,610
|
|
Charges associated with ineffective interest rate swap
|
|
|
|
|
|
|
7,341
|
|
|
|
|
|
|
|
|
|
|
|
7,341
|
|
Write-off of debt issuance costs
|
|
|
|
|
|
|
1,407
|
|
|
|
|
|
|
|
|
|
|
|
1,407
|
|
Other expense (income), net
|
|
|
|
|
|
|
616
|
|
|
|
(134
|
)
|
|
|
|
|
|
|
482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before (benefit from) provision for
income taxes
|
|
|
(4,466
|
)
|
|
|
(50,011
|
)
|
|
|
9,175
|
|
|
|
|
|
|
|
(45,302
|
)
|
(Benefit from) provision for income taxes
|
|
|
(3,679
|
)
|
|
|
28,287
|
|
|
|
3,578
|
|
|
|
|
|
|
|
28,186
|
|
Equity in (loss) income of subsidiaries
|
|
|
(72,701
|
)
|
|
|
|
|
|
|
|
|
|
|
72,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(73,488
|
)
|
|
$
|
(78,298
|
)
|
|
$
|
5,597
|
|
|
$
|
72,701
|
|
|
$
|
(73,488
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The condensed consolidating statement of operations for BlueLinx Holdings Inc. for the period
from December 29, 2007 to September 27, 2008 follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holdings
|
|
|
BlueLinx
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Inc.
|
|
|
Corporation
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
Net sales
|
|
$
|
|
|
|
$
|
2,278,185
|
|
|
$
|
22,852
|
|
|
$
|
(22,852
|
)
|
|
$
|
2,278,185
|
|
Cost of sales
|
|
|
|
|
|
|
2,009,698
|
|
|
|
|
|
|
|
|
|
|
|
2,009,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
268,487
|
|
|
|
22,852
|
|
|
|
(22,852
|
)
|
|
|
268,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
2,835
|
|
|
|
255,227
|
|
|
|
445
|
|
|
|
(22,852
|
)
|
|
|
235,655
|
|
Depreciation and amortization
|
|
|
|
|
|
|
11,800
|
|
|
|
3,211
|
|
|
|
|
|
|
|
15,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
2,835
|
|
|
|
267,027
|
|
|
|
3,656
|
|
|
|
(22,852
|
)
|
|
|
250,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(2,835
|
)
|
|
|
1,460
|
|
|
|
19,196
|
|
|
|
|
|
|
|
17,821
|
|
Non-operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
|
|
12,854
|
|
|
|
14,676
|
|
|
|
|
|
|
|
27,530
|
|
Other expense (income), net
|
|
|
|
|
|
|
413
|
|
|
|
(28
|
)
|
|
|
|
|
|
|
385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before (benefit from)
provision for income taxes
|
|
|
(2,835
|
)
|
|
|
(11,807
|
)
|
|
|
4,548
|
|
|
|
|
|
|
|
(10,094
|
)
|
(Benefit from) provision for income taxes
|
|
|
(1,106
|
)
|
|
|
(4,176
|
)
|
|
|
1,774
|
|
|
|
|
|
|
|
(3,508
|
)
|
Equity in (loss) income of subsidiaries
|
|
|
(4,857
|
)
|
|
|
|
|
|
|
|
|
|
|
4,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(6,586
|
)
|
|
$
|
(7,631
|
)
|
|
$
|
2,774
|
|
|
$
|
4,857
|
|
|
$
|
(6,586
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
The condensed consolidating balance sheet for BlueLinx Holdings Inc. as of October 3, 2009
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
Holdings
|
|
|
and
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Inc.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
32
|
|
|
$
|
25,008
|
|
|
$
|
458
|
|
|
$
|
|
|
|
$
|
25,498
|
|
Receivables
|
|
|
|
|
|
|
168,656
|
|
|
|
|
|
|
|
|
|
|
|
168,656
|
|
Inventories
|
|
|
|
|
|
|
173,123
|
|
|
|
|
|
|
|
|
|
|
|
173,123
|
|
Deferred income tax assets
|
|
|
602
|
|
|
|
275
|
|
|
|
|
|
|
|
(299
|
)
|
|
|
578
|
|
Other current assets
|
|
|
1,060
|
|
|
|
31,393
|
|
|
|
1,903
|
|
|
|
|
|
|
|
34,356
|
|
Intercompany receivable
|
|
|
65,523
|
|
|
|
7,809
|
|
|
|
|
|
|
|
(73,332
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
67,217
|
|
|
|
406,264
|
|
|
|
2,361
|
|
|
|
(73,631
|
)
|
|
|
402,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land and land improvements
|
|
|
|
|
|
|
3,144
|
|
|
|
49,575
|
|
|
|
|
|
|
|
52,719
|
|
Buildings
|
|
|
|
|
|
|
7,317
|
|
|
|
88,651
|
|
|
|
|
|
|
|
95,968
|
|
Machinery and equipment
|
|
|
|
|
|
|
68,906
|
|
|
|
|
|
|
|
|
|
|
|
68,906
|
|
Construction in progress
|
|
|
|
|
|
|
1,150
|
|
|
|
|
|
|
|
|
|
|
|
1,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, at cost
|
|
|
|
|
|
|
80,517
|
|
|
|
138,226
|
|
|
|
|
|
|
|
218,743
|
|
Accumulated depreciation
|
|
|
|
|
|
|
(56,715
|
)
|
|
|
(22,151
|
)
|
|
|
|
|
|
|
(78,866
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
|
|
|
23,802
|
|
|
|
116,075
|
|
|
|
|
|
|
|
139,877
|
|
Investment in subsidiaries
|
|
|
(19,918
|
)
|
|
|
|
|
|
|
|
|
|
|
19,918
|
|
|
|
|
|
Other non-current assets
|
|
|
|
|
|
|
14,141
|
|
|
|
28,296
|
|
|
|
|
|
|
|
42,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
47,299
|
|
|
$
|
444,207
|
|
|
$
|
146,732
|
|
|
$
|
(53,713
|
)
|
|
$
|
584,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
113
|
|
|
$
|
108,424
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
108,537
|
|
Bank overdrafts
|
|
|
|
|
|
|
20,016
|
|
|
|
|
|
|
|
|
|
|
|
20,016
|
|
Accrued compensation
|
|
|
49
|
|
|
|
5,196
|
|
|
|
|
|
|
|
|
|
|
|
5,245
|
|
Deferred income tax liabilities
|
|
|
299
|
|
|
|
|
|
|
|
|
|
|
|
(299
|
)
|
|
|
|
|
Other current liabilities
|
|
|
|
|
|
|
23,256
|
|
|
|
3,440
|
|
|
|
|
|
|
|
26,696
|
|
Intercompany payable
|
|
|
7,809
|
|
|
|
61,844
|
|
|
|
3,679
|
|
|
|
(73,332
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
8,270
|
|
|
|
218,736
|
|
|
|
7,119
|
|
|
|
(73,631
|
)
|
|
|
160,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
|
56,000
|
|
|
|
285,669
|
|
|
|
|
|
|
|
341,669
|
|
Non-current deferred income tax liabilities
|
|
|
|
|
|
|
149
|
|
|
|
429
|
|
|
|
|
|
|
|
578
|
|
Other non-current liabilities
|
|
|
|
|
|
|
36,455
|
|
|
|
6,300
|
|
|
|
|
|
|
|
42,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
8,270
|
|
|
|
311,340
|
|
|
|
299,517
|
|
|
|
(73,631
|
)
|
|
|
545,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity/Parents Investment
|
|
|
39,029
|
|
|
|
132,867
|
|
|
|
(152,785
|
)
|
|
|
19,918
|
|
|
|
39,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
47,299
|
|
|
$
|
444,207
|
|
|
$
|
146,732
|
|
|
$
|
(53,713
|
)
|
|
$
|
584,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
The condensed consolidating balance sheet for BlueLinx Holdings Inc. as of January 3,
2009 follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
Corporation
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Holdings Inc.
|
|
|
and Subsidiaries
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
32
|
|
|
$
|
150,259
|
|
|
$
|
62
|
|
|
$
|
|
|
|
$
|
150,353
|
|
Receivables
|
|
|
|
|
|
|
130,653
|
|
|
|
|
|
|
|
|
|
|
|
130,653
|
|
Inventories
|
|
|
|
|
|
|
189,482
|
|
|
|
|
|
|
|
|
|
|
|
189,482
|
|
Deferred income tax assets
|
|
|
290
|
|
|
|
11,578
|
|
|
|
|
|
|
|
|
|
|
|
11,868
|
|
Other current assets
|
|
|
371
|
|
|
|
33,678
|
|
|
|
3,302
|
|
|
|
|
|
|
|
37,351
|
|
Intercompany receivable
|
|
|
40,146
|
|
|
|
6,041
|
|
|
|
|
|
|
|
(46,187
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
40,839
|
|
|
|
521,691
|
|
|
|
3,364
|
|
|
|
(46,187
|
)
|
|
|
519,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land and land improvements
|
|
|
|
|
|
|
3,103
|
|
|
|
50,323
|
|
|
|
|
|
|
|
53,426
|
|
Buildings
|
|
|
|
|
|
|
7,497
|
|
|
|
88,662
|
|
|
|
|
|
|
|
96,159
|
|
Machinery and equipment
|
|
|
|
|
|
|
70,491
|
|
|
|
|
|
|
|
|
|
|
|
70,491
|
|
Construction in progress
|
|
|
|
|
|
|
2,035
|
|
|
|
|
|
|
|
|
|
|
|
2,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, at cost
|
|
|
|
|
|
|
83,126
|
|
|
|
138,985
|
|
|
|
|
|
|
|
222,111
|
|
Accumulated depreciation
|
|
|
|
|
|
|
(50,150
|
)
|
|
|
(19,186
|
)
|
|
|
|
|
|
|
(69,336
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
|
|
|
32,976
|
|
|
|
119,799
|
|
|
|
|
|
|
|
152,775
|
|
Investment in subsidiaries
|
|
|
68,858
|
|
|
|
|
|
|
|
|
|
|
|
(68,858
|
)
|
|
|
|
|
Non-current deferred income tax assets
|
|
|
|
|
|
|
18,045
|
|
|
|
|
|
|
|
(577
|
)
|
|
|
17,468
|
|
Other non-current assets
|
|
|
|
|
|
|
22,168
|
|
|
|
20,289
|
|
|
|
|
|
|
|
42,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
109,697
|
|
|
$
|
594,880
|
|
|
$
|
143,452
|
|
|
$
|
(115,622
|
)
|
|
$
|
732,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
117
|
|
|
$
|
78,250
|
|
|
$
|
|
|
|
$
|
|
|
|
|
78,367
|
|
Bank overdrafts
|
|
|
|
|
|
|
24,715
|
|
|
|
|
|
|
|
|
|
|
|
24,715
|
|
Accrued compensation
|
|
|
687
|
|
|
|
10,865
|
|
|
|
|
|
|
|
|
|
|
|
11,552
|
|
Current maturities of long-term debt
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
Other current liabilities
|
|
|
|
|
|
|
20,934
|
|
|
|
3,612
|
|
|
|
|
|
|
|
24,546
|
|
Intercompany payable
|
|
|
6,041
|
|
|
|
38,924
|
|
|
|
1,222
|
|
|
|
(46,187
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
6,845
|
|
|
|
233,688
|
|
|
|
4,834
|
|
|
|
(46,187
|
)
|
|
|
199,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
|
96,000
|
|
|
|
288,870
|
|
|
|
|
|
|
|
384,870
|
|
Non-current deferred income tax liabilities
|
|
|
|
|
|
|
|
|
|
|
577
|
|
|
|
(577
|
)
|
|
|
|
|
Other non-current liabilities
|
|
|
|
|
|
|
39,205
|
|
|
|
6,300
|
|
|
|
|
|
|
|
45,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
6,845
|
|
|
|
368,893
|
|
|
|
300,581
|
|
|
|
(46,764
|
)
|
|
|
629,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders Equity/Parents Investment
|
|
|
102,852
|
|
|
|
225,987
|
|
|
|
(157,129
|
)
|
|
|
(68,858
|
)
|
|
|
102,852
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
109,697
|
|
|
$
|
594,880
|
|
|
$
|
143,452
|
|
|
$
|
(115,622
|
)
|
|
$
|
732,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
The condensed consolidating statement of cash flows for BlueLinx Holdings Inc. for the
period from January 4, 2009 to October 3, 2009 follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holdings
|
|
|
BlueLinx
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Inc.
|
|
|
Corporation
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(73,488
|
)
|
|
$
|
(78,298
|
)
|
|
$
|
5,597
|
|
|
$
|
72,701
|
|
|
$
|
(73,488
|
)
|
Adjustments to reconcile net (loss) income to cash (used
in) provided by operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
10,189
|
|
|
|
2,964
|
|
|
|
|
|
|
|
13,153
|
|
Amortization of debt issue costs
|
|
|
|
|
|
|
1,354
|
|
|
|
489
|
|
|
|
|
|
|
|
1,843
|
|
Net gain from terminating the Georgia-Pacific supply
agreement
|
|
|
|
|
|
|
(17,554
|
)
|
|
|
|
|
|
|
|
|
|
|
(17,554
|
)
|
Payments from terminating the Georgia-Pacific supply
agreement
|
|
|
|
|
|
|
9,412
|
|
|
|
|
|
|
|
|
|
|
|
9,412
|
|
Gain from sale properties
|
|
|
|
|
|
|
(169
|
)
|
|
|
(4,237
|
)
|
|
|
|
|
|
|
(4,406
|
)
|
Prepayment penalty associated with sale of facility
|
|
|
|
|
|
|
|
|
|
|
616
|
|
|
|
|
|
|
|
616
|
|
Charges associated with ineffective interest rate swap
|
|
|
|
|
|
|
7,341
|
|
|
|
|
|
|
|
|
|
|
|
7,341
|
|
Write-off of debt issuance costs
|
|
|
|
|
|
|
1,407
|
|
|
|
|
|
|
|
|
|
|
|
1,407
|
|
Vacant property charges, net
|
|
|
|
|
|
|
457
|
|
|
|
|
|
|
|
|
|
|
|
457
|
|
Deferred income tax (benefit) provision
|
|
|
(13
|
)
|
|
|
27,389
|
|
|
|
(148
|
)
|
|
|
|
|
|
|
27,228
|
|
Share-based compensation expense
|
|
|
1,344
|
|
|
|
826
|
|
|
|
|
|
|
|
|
|
|
|
2,170
|
|
Decrease in restricted cash
|
|
|
|
|
|
|
3,380
|
|
|
|
|
|
|
|
|
|
|
|
3,380
|
|
Equity in earnings of subsidiaries
|
|
|
72,701
|
|
|
|
|
|
|
|
|
|
|
|
(72,701
|
)
|
|
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
|
|
|
|
(38,003
|
)
|
|
|
|
|
|
|
|
|
|
|
(38,003
|
)
|
Inventories
|
|
|
|
|
|
|
16,359
|
|
|
|
|
|
|
|
|
|
|
|
16,359
|
|
Accounts payable
|
|
|
(4
|
)
|
|
|
30,174
|
|
|
|
|
|
|
|
|
|
|
|
30,170
|
|
Changes in other working capital
|
|
|
(1,327
|
)
|
|
|
8,173
|
|
|
|
(235
|
)
|
|
|
|
|
|
|
6,611
|
|
Intercompany receivable
|
|
|
(1,758
|
)
|
|
|
(1,768
|
)
|
|
|
|
|
|
|
3,526
|
|
|
|
|
|
Intercompany payable
|
|
|
1,768
|
|
|
|
(699
|
)
|
|
|
2,457
|
|
|
|
(3,526
|
)
|
|
|
|
|
Other
|
|
|
1
|
|
|
|
(210
|
)
|
|
|
17
|
|
|
|
|
|
|
|
(192
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
|
|
(776
|
)
|
|
|
( (20,240
|
)
|
|
|
7,520
|
|
|
|
|
|
|
|
(13,496
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries
|
|
|
26,251
|
|
|
|
|
|
|
|
|
|
|
|
(26,251
|
)
|
|
|
|
|
Property, plant and equipment investments
|
|
|
|
|
|
|
(952
|
)
|
|
|
|
|
|
|
|
|
|
|
(952
|
)
|
Proceeds from sale of assets
|
|
|
|
|
|
|
2,019
|
|
|
|
6,435
|
|
|
|
|
|
|
|
8,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
26,251
|
|
|
|
1,067
|
|
|
|
6,435
|
|
|
|
(26,251
|
)
|
|
|
7,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net transactions with Parent
|
|
|
|
|
|
|
(24,998
|
)
|
|
|
(1,253
|
)
|
|
|
26,251
|
|
|
|
|
|
Repurchase of common stock
|
|
|
(1,862
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,862
|
)
|
Net decrease in revolving credit facility
|
|
|
|
|
|
|
(100,000
|
)
|
|
|
|
|
|
|
|
|
|
|
(100,000
|
)
|
Payment of principal on mortgage
|
|
|
|
|
|
|
|
|
|
|
(3,201
|
)
|
|
|
|
|
|
|
(3,201
|
)
|
Prepayment fees associated with sale of facility
|
|
|
|
|
|
|
|
|
|
|
(616
|
)
|
|
|
|
|
|
|
(616
|
)
|
Decrease in bank overdrafts
|
|
|
|
|
|
|
(4,699
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,699
|
)
|
Increase in restricted cash related to the mortgage
|
|
|
|
|
|
|
|
|
|
|
(8,442
|
)
|
|
|
|
|
|
|
(8,442
|
)
|
Intercompany receivable
|
|
|
(23,619
|
)
|
|
|
|
|
|
|
|
|
|
|
23,619
|
|
|
|
|
|
Intercompany payable
|
|
|
|
|
|
|
23,619
|
|
|
|
|
|
|
|
(23,619
|
)
|
|
|
|
|
Other
|
|
|
6
|
|
|
|
|
|
|
|
(47
|
)
|
|
|
|
|
|
|
(41
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(25,475
|
)
|
|
|
(106,078
|
)
|
|
|
(13,559
|
)
|
|
|
26,251
|
|
|
|
(118,861
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in cash
|
|
|
|
|
|
|
(125,251
|
)
|
|
|
396
|
|
|
|
|
|
|
|
(124,855
|
)
|
Balance, beginning of period
|
|
|
32
|
|
|
|
150,259
|
|
|
|
62
|
|
|
|
|
|
|
|
150,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
32
|
|
|
$
|
25,008
|
|
|
$
|
458
|
|
|
$
|
|
|
|
$
|
25,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
The condensed consolidating statement of cash flows for BlueLinx Holdings Inc. for the period
from from December 29, 2007 to September 27, 2008 follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlueLinx
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holdings
|
|
|
BlueLinx
|
|
|
LLC
|
|
|
|
|
|
|
|
|
|
Inc.
|
|
|
Corporation
|
|
|
Subsidiaries
|
|
|
Eliminations
|
|
|
Consolidated
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(6,586
|
)
|
|
$
|
(7,631
|
)
|
|
$
|
2,774
|
|
|
$
|
4,857
|
|
|
$
|
(6,586
|
)
|
Adjustments to reconcile net (loss) income to cash
(used in) provided by operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
11,801
|
|
|
|
3,210
|
|
|
|
|
|
|
|
15,011
|
|
Amortization of debt issue costs
|
|
|
|
|
|
|
1,353
|
|
|
|
470
|
|
|
|
|
|
|
|
1,823
|
|
Vacant property charges
|
|
|
|
|
|
|
1,640
|
|
|
|
|
|
|
|
|
|
|
|
1,640
|
|
Deferred income tax benefit
|
|
|
(75
|
)
|
|
|
(3,007
|
)
|
|
|
(424
|
)
|
|
|
|
|
|
|
(3,506
|
)
|
Share-based compensation expense
|
|
|
|
|
|
|
2,163
|
|
|
|
|
|
|
|
|
|
|
|
2,163
|
|
Excess tax benefits from share-based
compensation arrangements
|
|
|
|
|
|
|
(76
|
)
|
|
|
|
|
|
|
|
|
|
|
(76
|
)
|
Decrease in restricted cash
|
|
|
|
|
|
|
5,970
|
|
|
|
|
|
|
|
|
|
|
|
5,970
|
|
Equity in earnings of subsidiaries
|
|
|
4,857
|
|
|
|
|
|
|
|
|
|
|
|
(4,857
|
)
|
|
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
|
|
|
|
18,698
|
|
|
|
|
|
|
|
|
|
|
|
18,698
|
|
Inventories
|
|
|
|
|
|
|
74,910
|
|
|
|
|
|
|
|
|
|
|
|
74,910
|
|
Accounts payable
|
|
|
64
|
|
|
|
(35,939
|
)
|
|
|
|
|
|
|
|
|
|
|
(35,875
|
)
|
Changes in other working capital
|
|
|
382
|
|
|
|
33,370
|
|
|
|
(4,857
|
)
|
|
|
|
|
|
|
28,895
|
|
Intercompany receivable
|
|
|
(635
|
)
|
|
|
337
|
|
|
|
|
|
|
|
298
|
|
|
|
|
|
Intercompany payable
|
|
|
(337
|
)
|
|
|
|
|
|
|
635
|
|
|
|
(298
|
)
|
|
|
|
|
Other
|
|
|
|
|
|
|
(3,745
|
)
|
|
|
5,713
|
|
|
|
|
|
|
|
1,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
|
|
(2,330
|
)
|
|
|
99,844
|
|
|
|
7,521
|
|
|
|
|
|
|
|
105,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries
|
|
|
(15,684
|
)
|
|
|
|
|
|
|
|
|
|
|
15,684
|
|
|
|
|
|
Property, plant and equipment investments
|
|
|
|
|
|
|
(2,614
|
)
|
|
|
|
|
|
|
|
|
|
|
(2,614
|
)
|
Proceeds from sale of assets
|
|
|
|
|
|
|
848
|
|
|
|
|
|
|
|
|
|
|
|
848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(15,684
|
)
|
|
|
(1,766
|
)
|
|
|
|
|
|
|
15,684
|
|
|
|
(1,766
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net transactions with Parent
|
|
|
|
|
|
|
238
|
|
|
|
15,446
|
|
|
|
(15,684
|
)
|
|
|
|
|
Proceeds from stock options exercised
|
|
|
434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
434
|
|
Excess tax benefits from share-based compensation
arrangements
|
|
|
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76
|
|
Net decrease in revolving credit facility
|
|
|
|
|
|
|
(27,535
|
)
|
|
|
|
|
|
|
|
|
|
|
(27,535
|
)
|
Decrease in bank overdrafts
|
|
|
|
|
|
|
(15,450
|
)
|
|
|
|
|
|
|
|
|
|
|
(15,450
|
)
|
Increase in restricted cash related to the mortgage
|
|
|
|
|
|
|
|
|
|
|
(5,461
|
)
|
|
|
|
|
|
|
(5,461
|
)
|
Intercompany receivable
|
|
|
17,499
|
|
|
|
|
|
|
|
|
|
|
|
(17,499
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany payable
|
|
|
|
|
|
|
(17,499
|
)
|
|
|
|
|
|
|
17,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
18,015
|
|
|
|
(60,246
|
)
|
|
|
9,985
|
|
|
|
(15,684
|
)
|
|
|
(47,930
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash
|
|
|
1
|
|
|
|
37,832
|
|
|
|
17,506
|
|
|
|
|
|
|
|
55,339
|
|
Balance, beginning of period
|
|
|
3
|
|
|
|
15,699
|
|
|
|
57
|
|
|
|
|
|
|
|
15,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
4
|
|
|
$
|
53,531
|
|
|
$
|
17,563
|
|
|
$
|
|
|
|
$
|
71,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained in this Managements Discussion and Analysis of Financial Condition
and Results of Operations (MD&A) has been derived from our historical financial statements and is
intended to provide information to assist you in better understanding and evaluating our financial
condition and results of operations. We recommend that you read this MD&A section in conjunction
with our Unaudited Condensed Consolidated Financial Statements and notes to those statements
included in Item 1 of this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K
for the year ended January 3, 2009 as filed with the U.S. Securities and Exchange Commission (the
SEC). This MD&A section is not a comprehensive discussion and analysis of our financial condition
and results of operations, but rather updates disclosures made in the aforementioned filing. The
discussion below contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements include, without limitation, any statement that may
predict, forecast, indicate or imply future results, performance or achievements, and may contain
the words believe, anticipate, expect, estimate, intend, project, plan, will be,
will likely continue, will likely result or words or phrases of similar meaning. All of these
forward-looking statements are based on estimates and assumptions made by our management that,
although believed by us to be reasonable, are inherently uncertain. Forward-looking statements
involve risks and uncertainties, including, but not limited to, economic, competitive, governmental
and technological factors outside of our control, that may cause our business, strategy or actual
results to differ materially from the forward-looking statements. These risks and uncertainties may
include those discussed under the heading Factors Affecting Future Results in our Annual Report
on Form 10-K for the year ended January 3, 2009 as filed with the SEC and other factors, some of
which may not be known to us. We operate in a changing environment in which new risks can emerge
from time to time. It is not possible for management to predict all of these risks, nor can it
assess the extent to which any factor, or a combination of factors, may cause our business,
strategy or actual results to differ materially from those contained in forward-looking statements.
Factors you should consider that could cause these differences include, among other things:
|
|
|
changes in the prices, supply and/or demand for products which we distribute, especially
as a result of conditions in the residential housing market;
|
|
|
|
|
inventory levels of new and existing homes for sale;
|
|
|
|
|
general economic and business conditions in the United States;
|
|
|
|
|
the financial condition and credit worthiness of our customers;
|
|
|
|
|
the activities of competitors;
|
|
|
|
|
changes in significant operating expenses;
|
|
|
|
|
fuel costs;
|
|
|
|
|
risk of losses associated with accidents;
|
|
|
|
|
exposure to product liability claims;
|
|
|
|
|
changes in the availability of capital and interest rates;
|
|
|
|
|
immigration patterns and job and household formation;
|
|
|
|
|
our ability to identify acquisition opportunities and effectively and cost-efficiently
integrate acquisitions;
|
|
|
|
|
adverse weather patterns or conditions;
|
|
|
|
|
acts of war or terrorist activities;
|
|
|
|
|
variations in the performance of the financial markets, including the credit markets; and
|
28
|
|
|
the other factors described herein under Factors Affecting Future Results in our Annual
Report on Form 10-K for the year ended January 3, 2009 as filed with the SEC.
|
Given these risks and uncertainties, we caution you not to place undue reliance on
forward-looking statements. We undertake no obligation to publicly update or revise any
forward-looking statement as a result of new information, future events or otherwise, except as
required by law.
Overview
Background
We are a leading distributor of building products in the United States. We distribute
approximately 10,000 products to more than 11,500 customers through our network of more than 70
warehouses and third-party operated warehouses which serve all major metropolitan markets in the
United States. We distribute products in two principal categories: structural products and
specialty products. Structural products include plywood, oriented strand board (OSB), rebar and
remesh, lumber and other wood products primarily used for structural support, walls and flooring in
construction projects. Structural products represented approximately 44% of our third quarter of
fiscal 2009 gross sales. Specialty products include roofing, insulation, moulding, engineered wood,
vinyl products (used primarily in siding) and metal products (excluding rebar and remesh).
Specialty products accounted for approximately 56% of our third quarter of fiscal 2009 gross sales.
Industry Conditions
As noted above, we operate in a changing environment in which new risks can emerge from time
to time. A number of factors cause our results of operations to fluctuate from period to period.
Many of these factors are seasonal or cyclical in nature. Conditions in the United States housing
market are at historically low levels. Our operating results have declined during the past two
years as they are closely tied to U.S. housing starts. Additionally, the mortgage markets have
experienced substantial disruption due to a rising number of defaults in the subprime market.
This disruption and the related defaults increased the inventory of homes for sale and also caused
lenders to tighten mortgage qualification criteria which further reduced demand for new homes.
Forecasters continue to have a bearish outlook for the housing market and we expect the downturn in
new housing activity will continue to negatively impact our operating results for the foreseeable
future. We continue to prudently manage our inventories, receivables and spending in this
environment. However, along with many forecasters, we believe U.S. housing demand will improve in
the long term based on population demographics and a variety of other factors.
Supply Agreement with G-P
On April 27, 2009, we entered into a Termination and Modification Agreement (Modification
Agreement) related to our Supply Agreement with Georgia Pacific (G-P). The Modification
Agreement effectively terminates the existing Supply Agreement with respect to the distribution of
G-P plywood, oriented strand board and lumber by us. We will continue to distribute a variety of
G-P building products, including engineered lumber, which is covered under a three-year purchase
agreement dated February 12, 2009. As a result of terminating this agreement, we are no longer
contractually obligated to make minimum purchases of products from G-P. As of January 3, 2009, our
minimum purchases requirement had totaled $31.9 million.
G-P agreed to pay us $18.8 million in exchange for our agreement to terminate the Supply
Agreement one-year earlier than the originally agreed upon May 7, 2010 termination date. Under the
terms of the Modification Agreement, we will receive four quarterly cash payments of $4.7 million,
which began on May 1, 2009 and will end on February 1, 2010. As a result of the termination, we
recognized a net gain of $17.6 million in the first nine months of fiscal 2009 as a reduction to
operating expense. The gain was net of a discount of $0.2 million and a $1.0 million write-off of
an intangible asset associated with the Supply Agreement. We believe the early termination of the
Supply Agreement contributed to the decline in our structural panel sales volume during the second
and third quarters of fiscal 2009. However, since the majority of these sales go through the
direct sales channel, the lower structural panel sales volume had an insignificant impact on our
gross profit during for these periods. To the extent we are unable to replace these volumes with
structural product from G-P or other suppliers, the early termination of the Supply Agreement may
continue to negatively impact our sales of structural products which would impact our net sales and
our costs, which in turn could impact our gross profit, net income, and cash flows. For more
information on structural unit volume changes, refer to the tables under Selected Factors
Affecting Our Operating Results in our Management, Discussion Analysis. For further discussion of
the risks associated with the termination of the Master Supply Agreement, please also refer to our
risk factors disclosed in our Annual Report on Form 10-K for the year ended
29
January 3, 2009, as further supplemented in our Quarterly Report on Form 10-Q for the period ended
April 4, 2009, as filed with the SEC.
Selected Factors Affecting Our Operating Results
Our operating results are affected by housing starts, mobile home production, industrial
production, repair and remodeling spending and non-residential construction. Our operating results
are also impacted by changes in product prices. Structural product prices can vary significantly
based on short-term and long-term changes in supply and demand. The prices of specialty products
can also vary from time to time, although they are generally significantly less variable than
structural products.
The following table sets forth changes in net sales by product category, sales variances due
to changes in unit volume and dollar and percentage changes in unit volume and price versus
comparable prior periods, in each case for the third quarter of fiscal 2009, the third quarter of
fiscal 2008, the first nine months of fiscal 2009, the first nine months of fiscal 2008, fiscal
2008 and fiscal 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
|
Q3 2009
|
|
|
Q3 2008
|
|
|
2009 YTD
|
|
|
2008 YTD
|
|
|
2008
|
|
|
2007
|
|
|
|
(Dollars in millions)
|
|
Sales by Category
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural Products
|
|
$
|
202
|
|
|
$
|
366
|
|
|
$
|
567
|
|
|
$
|
1,181
|
|
|
$
|
1,422
|
|
|
$
|
2,098
|
|
Specialty Products
|
|
|
258
|
|
|
|
376
|
|
|
|
742
|
|
|
|
1,133
|
|
|
|
1,412
|
|
|
|
1,802
|
|
Other(1)
|
|
|
(11
|
)
|
|
|
(15
|
)
|
|
|
(29
|
)
|
|
|
(36
|
)
|
|
|
(54
|
)
|
|
|
(66
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Sales
|
|
$
|
449
|
|
|
$
|
727
|
|
|
$
|
1,280
|
|
|
$
|
2,278
|
|
|
$
|
2,780
|
|
|
$
|
3,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales Variances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit Volume $ Change
|
|
$
|
(235
|
)
|
|
$
|
(337
|
)
|
|
$
|
(917
|
)
|
|
$
|
(868
|
)
|
|
$
|
(1,161
|
)
|
|
$
|
(896
|
)
|
Price/Other(1)
|
|
|
(43
|
)
|
|
|
48
|
|
|
|
(81
|
)
|
|
|
91
|
|
|
|
107
|
|
|
|
(169
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total $ Change
|
|
$
|
(278
|
)
|
|
$
|
(289
|
)
|
|
$
|
(998
|
)
|
|
$
|
(777
|
)
|
|
$
|
(1,054
|
)
|
|
$
|
(1,065
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit Volume % Change
|
|
|
(31.7
|
)%
|
|
|
(32.6
|
)%
|
|
|
(39.6
|
)%
|
|
|
(27.9
|
)%
|
|
|
(29.7
|
)%
|
|
|
(18.0
|
)%
|
Price/Other(1)
|
|
|
(6.5
|
)%
|
|
|
4.1
|
%
|
|
|
(3.8
|
)%
|
|
|
2.5
|
%
|
|
|
2.2
|
%
|
|
|
(3.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total % Change
|
|
|
(38.2
|
)%
|
|
|
(28.5
|
)%
|
|
|
(43.8
|
)%
|
|
|
(25.4
|
)%
|
|
|
(27.5
|
)%
|
|
|
(21.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Other includes unallocated allowances and discounts.
|
The following table sets forth changes in gross margin dollars and percentages by product
category, and percentage changes in unit volume growth by product, in each case for the third
quarter of fiscal 2009, the third quarter of fiscal 2008, the first nine months of fiscal 2009, the
first nine months of fiscal 2008, fiscal 2008 and fiscal 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
|
Q3 2009
|
|
|
Q3 2008
|
|
|
2009 YTD
|
|
|
2008 YTD
|
|
|
2008
|
|
|
2007
|
|
|
|
(Dollars in millions)
|
|
Gross Margin $s by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Category
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural Products
|
|
$
|
21
|
|
|
$
|
36
|
|
|
$
|
58
|
|
|
$
|
121
|
|
|
$
|
134
|
|
|
$
|
173
|
|
Specialty Products
|
|
|
39
|
|
|
|
54
|
|
|
|
102
|
|
|
|
162
|
|
|
|
200
|
|
|
|
238
|
|
Other (1)
|
|
|
(5
|
)
|
|
|
(7
|
)
|
|
|
(12
|
)
|
|
|
(15
|
)
|
|
|
(19
|
)
|
|
|
(19
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gross Margin $s
|
|
$
|
55
|
|
|
$
|
83
|
|
|
$
|
148
|
|
|
$
|
268
|
|
|
$
|
315
|
|
|
$
|
392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin %s by Category
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural Products
|
|
|
10.4
|
%
|
|
|
9.9
|
%
|
|
|
10.2
|
%
|
|
|
10.2
|
%
|
|
|
9.4
|
%
|
|
|
8.2
|
%
|
Specialty Products
|
|
|
15.1
|
%
|
|
|
14.3
|
%
|
|
|
13.7
|
%
|
|
|
14.2
|
%
|
|
|
14.2
|
%
|
|
|
13.2
|
%
|
Total Gross Margin %s
|
|
|
12.3
|
%
|
|
|
11.5
|
%
|
|
|
11.6
|
%
|
|
|
11.8
|
%
|
|
|
11.3
|
%
|
|
|
10.2
|
%
|
Unit Volume Change by Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural Products
|
|
|
(33.7
|
)%
|
|
|
(40.3
|
)%
|
|
|
(43.9
|
)%
|
|
|
(32.9
|
)%
|
|
|
(34.6
|
)%
|
|
|
(19.2
|
)%
|
Specialty Products
|
|
|
(29.8
|
)%
|
|
|
(23.1
|
)%
|
|
|
(35.2
|
)%
|
|
|
(22.0
|
)%
|
|
|
(24.0
|
)%
|
|
|
(16.4
|
)%
|
Total Change in Unit Volume %s
|
|
|
(31.7
|
)%
|
|
|
(32.6
|
)%
|
|
|
(39.6
|
)%
|
|
|
(27.9
|
)%
|
|
|
(29.7
|
)%
|
|
|
(18.0
|
)%
|
|
|
|
(1)
|
|
Other includes unallocated allowances and discounts.
|
30
The following table sets forth changes in net sales and gross margin by channel and percentage
changes in gross margin by channel, in each case for the third quarter of fiscal 2009, the third
quarter of fiscal 2008, the first nine months of fiscal 2009, the first nine months of fiscal 2008,
fiscal 2008 and fiscal 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
|
Q3 2009
|
|
|
Q3 2008
|
|
|
2009 YTD
|
|
|
2008 YTD
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
Sales by Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehouse/Reload
|
|
$
|
345
|
|
|
$
|
540
|
|
|
$
|
959
|
|
|
$
|
1,673
|
|
|
$
|
2,044
|
|
|
$
|
2,763
|
|
Direct
|
|
|
115
|
|
|
|
202
|
|
|
|
350
|
|
|
|
641
|
|
|
|
790
|
|
|
|
1,137
|
|
Other(1)
|
|
|
(11
|
)
|
|
|
(15
|
)
|
|
|
(29
|
)
|
|
|
(36
|
)
|
|
|
(54
|
)
|
|
|
(66
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
449
|
|
|
$
|
727
|
|
|
$
|
1,280
|
|
|
$
|
2,278
|
|
|
$
|
2,780
|
|
|
$
|
3,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin by Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehouse/Reload
|
|
$
|
53
|
|
|
$
|
77
|
|
|
$
|
137
|
|
|
$
|
243
|
|
|
$
|
284
|
|
|
$
|
344
|
|
Direct
|
|
|
7
|
|
|
|
13
|
|
|
|
23
|
|
|
|
40
|
|
|
|
50
|
|
|
|
67
|
|
Other(1)
|
|
|
(5
|
)
|
|
|
(7
|
)
|
|
|
(12
|
)
|
|
|
(15
|
)
|
|
|
(19
|
)
|
|
|
(19
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
55
|
|
|
$
|
83
|
|
|
$
|
148
|
|
|
$
|
268
|
|
|
$
|
315
|
|
|
$
|
392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
Fiscal
|
|
Fiscal
|
|
Fiscal
|
|
Fiscal
|
|
Fiscal
|
|
|
Q3 2009
|
|
Q3 2008
|
|
2009 YTD
|
|
2008 YTD
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions)
|
|
|
|
|
|
|
|
|
Gross Margin % by Channel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehouse/Reload
|
|
|
15.4
|
%
|
|
|
14.3
|
%
|
|
|
14.3
|
%
|
|
|
14.5
|
%
|
|
|
13.9
|
%
|
|
|
12.5
|
%
|
Direct
|
|
|
6.1
|
%
|
|
|
6.4
|
%
|
|
|
6.6
|
%
|
|
|
6.2
|
%
|
|
|
6.3
|
%
|
|
|
5.9
|
%
|
Total
|
|
|
12.3
|
%
|
|
|
11.5
|
%
|
|
|
11.6
|
%
|
|
|
11.8
|
%
|
|
|
11.3
|
%
|
|
|
10.2
|
%
|
|
|
|
(1)
|
|
Other includes unallocated allowances and adjustments.
|
Fiscal Year
Our fiscal year is a 52- or 53-week period ending on the Saturday closest to the end of the
calendar year. Fiscal year 2009 and fiscal year 2008 contain 52 weeks and 53 weeks, respectively.
Results of Operations
Third Quarter of Fiscal 2009 Compared to Third Quarter of Fiscal 2008
The following table sets forth our results of operations for the third quarter of fiscal 2009
and third quarter of fiscal 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
|
|
|
|
|
Period
|
|
|
|
|
|
|
from
|
|
|
|
|
|
|
from
|
|
|
|
|
|
|
July 5, 2009
|
|
|
% of
|
|
|
June 29, 2008
|
|
|
% of
|
|
|
|
to
|
|
|
Net
|
|
|
to
|
|
|
Net
|
|
|
|
October 3, 2009
|
|
|
Sales
|
|
|
September 27, 2008
|
|
|
Sales
|
|
|
|
(Dollars in thousands)
|
|
Net sales
|
|
$
|
449,363
|
|
|
|
100.0
|
%
|
|
$
|
726,756
|
|
|
|
100.0
|
%
|
Gross profit
|
|
|
55,305
|
|
|
|
12.3
|
%
|
|
|
83,249
|
|
|
|
11.5
|
%
|
Selling, general & administrative
|
|
|
55,024
|
|
|
|
12.2
|
%
|
|
|
73,793
|
|
|
|
10.2
|
%
|
Depreciation and amortization
|
|
|
3,882
|
|
|
|
0.9
|
%
|
|
|
4,940
|
|
|
|
0.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(3,601
|
)
|
|
|
(0.8
|
)%
|
|
|
4,516
|
|
|
|
0.6
|
%
|
Interest expense
|
|
|
7,987
|
|
|
|
1.8
|
%
|
|
|
8,791
|
|
|
|
1.2
|
%
|
Charges associated with ineffective interest rate swap
|
|
|
1,431
|
|
|
|
0.3
|
%
|
|
|
|
|
|
|
0.0
|
%
|
Other expense, net
|
|
|
324
|
|
|
|
0.1
|
%
|
|
|
65
|
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for (benefit from) income taxes
|
|
|
(13,343
|
)
|
|
|
(3.0
|
)%
|
|
|
(4,340
|
)
|
|
|
(0.6
|
)%
|
Provision for (benefit from) income taxes
|
|
|
120
|
|
|
|
0.0
|
%
|
|
|
(1,746
|
)
|
|
|
(0.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
(13,463
|
)
|
|
|
(3.0
|
)%
|
|
$
|
(2,594
|
)
|
|
|
(0.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
Net Sales.
For the third quarter of fiscal 2009, net sales decreased by 38.2%, or $277.4
million, to $449.4 million compared to $726.8 million in the prior year period. Sales during the
quarter were negatively impacted by a 31.2% decline in housing starts. New home construction has a
significant impact on our sales. Specialty sales, primarily consisting of roofing, specialty
panels, insulation, moulding, engineered wood products, vinyl siding, composite decking and metal
products (excluding rebar and remesh) decreased by $118.0 million or 31.4% compared to the third
quarter of fiscal 2008, reflecting a 29.8% decline in unit volume. Structural sales, including
plywood, OSB, lumber and metal rebar, decreased by $163.7 million, or 44.8% from a year ago, also
primarily as a result of a 33.7% decrease in unit volume and 21.4% decrease in average structural
product prices.
Gross Profit.
Gross profit for the third quarter of fiscal 2009 was $55.3 million, or 12.3%
of sales, compared to $83.2 million, or 11.5% of sales, in the prior year period. The decrease in
gross profit dollars compared to the third quarter of fiscal 2008 was driven primarily by a
decrease in specialty and structural product volumes of 29.8% and 33.7%, respectively, due to the
continued decline in the housing market. Gross margin percentage increased by 0.8% to 12.3%
primarily due an increase in higher margin specialty sales as a percentage of total sales and the
impact of a lower of cost or market reserve charge of $2.6 million recorded during the third
quarter of fiscal 2008.
Selling, General, and Administrative Expenses.
Selling, general and administrative expenses
for the third quarter of fiscal 2009 were $55.0 million, or 12.2% of net sales, compared to $73.8
million, or 10.2% of net sales, during the third quarter of fiscal 2008. The decline in selling,
general and administrative expenses included a $11.2 million decrease in payroll and payroll
related costs from a decline in headcount; a $2.2 million decrease in fuel expense due to a decline
in business volume and fuel prices; a $1.5 million decrease in facility consolidation charges due
to a $1.3 million charge recorded in the prior year period related to exiting our custom milling
operations in California; and a $3.9 million decrease in other operating expense due to our cost
reduction initiatives.
Depreciation and Amortization.
Depreciation and amortization expense totaled $3.9 million for
the third quarter of fiscal 2009, compared with $4.9 million for the third quarter of fiscal 2008.
The $1.0 million decrease in depreciation and amortization is primarily due to a portion of our
property and equipment becoming fully depreciated.
Operating (Loss) Income.
Operating loss for the third quarter of fiscal 2009 was $(3.6)
million, or (0.8)% of sales, versus operating income of $4.5 million, or 0.6% of sales, in the
third quarter of fiscal 2008, reflecting a $27.9 million decrease in gross profit that was
partially offset by a $19.8 million decrease in operating expenses.
Interest Expense, net.
Interest expense for the third quarter of fiscal 2009 totaled $8.0
million, down $0.8 million from the prior year because of the $110 million decrease in debt.
Interest expense related to our revolving credit facility and mortgage was $2.8 million and $4.6
million, respectively, during this period. Interest expense totaled $8.8 million for the third
quarter of fiscal 2008. Interest expense related to our revolving credit facility and mortgage was
$3.5 million and $4.7 million, respectively, during this period. In the third quarter of fiscal
2009 and the third quarter of fiscal 2008, interest expense included $0.6 million of debt issue
cost amortization.
Charges associated with ineffective interest rate swap
. Charges associated with the
ineffective interest rate swap for the third quarter of fiscal 2009 were $1.4 million and are
comprised of a $1.9 million charged on the date we reduced our borrowings outstanding by $25.0
million; $0.5 million of amortization of the unrealized losses remaining in accumulated other
comprehensive loss; and $1.0 million of income related to fair value changes since the date of
reduction. Due to our interest rate swap becoming ineffective, as well as our decision to record a
full valuation allowance against our deferred tax assets, we will recognize the income tax effect
associated with unrealized losses initially recorded in other comprehensive income as a charge to
earnings when the interest rate swap terminates.
Provision for (Benefit from) Income Taxes.
The effective tax rate was (0.9)% and 40.2% for the
third quarter of fiscal 2009 and the third quarter of fiscal 2008, respectively. The change in our
effective tax rate for the third quarter of fiscal 2009 is due to a $5.1 million valuation
allowance.
Net Loss.
Net loss for the third quarter of fiscal 2009 was $(13.5) million compared to
$(2.6) million for the third quarter of fiscal 2008 as a result of the above factors.
On a per-share basis, basic and diluted loss applicable to common shareholders for the third
quarter of fiscal 2009 and the third quarter of fiscal 2008 were $(0.44) and $(0.08), respectively.
32
Year-to-Date Fiscal 2009 Compared to Year-to-Date Fiscal 2008
The following table sets forth our results of operations for the first nine months of fiscal
2009 and the first nine months of fiscal 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
|
|
|
|
|
Period
|
|
|
|
|
|
|
from
|
|
|
|
|
|
|
from
|
|
|
|
|
|
|
January 4, 2009
|
|
|
% of
|
|
|
December 29, 2007
|
|
|
% of
|
|
|
|
to
|
|
|
Net
|
|
|
to
|
|
|
Net
|
|
|
|
October 3, 2009
|
|
|
Sales
|
|
|
September 27, 2008
|
|
|
Sales
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
Net sales
|
|
$
|
1,280,000
|
|
|
|
100.0
|
%
|
|
$
|
2,278,185
|
|
|
|
100.0
|
%
|
Gross profit
|
|
|
147,881
|
|
|
|
11.6
|
%
|
|
|
268,487
|
|
|
|
11.8
|
%
|
Selling, general & administrative
|
|
|
163,744
|
|
|
|
12.8
|
%
|
|
|
235,655
|
|
|
|
10.3
|
%
|
Net gain from terminating the Georgia-Pacific supply agreement
|
|
|
(17,554
|
)
|
|
|
(1.4
|
)%
|
|
|
|
|
|
|
0.0
|
%
|
Depreciation and amortization
|
|
|
13,153
|
|
|
|
1.0
|
%
|
|
|
15,011
|
|
|
|
0.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(11,462
|
)
|
|
|
(0.9
|
)%
|
|
|
17,821
|
|
|
|
0.8
|
%
|
Interest expense
|
|
|
24,610
|
|
|
|
1.9
|
%
|
|
|
27,530
|
|
|
|
1.2
|
%
|
Charges associated with ineffective interest rate swap
|
|
|
7,341
|
|
|
|
0.6
|
%
|
|
|
|
|
|
|
0.0
|
%
|
Write-off of debt issuance costs
|
|
|
1,407
|
|
|
|
0.1
|
%
|
|
|
|
|
|
|
0.0
|
%
|
Other expense, net
|
|
|
482
|
|
|
|
0.0
|
%
|
|
|
385
|
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for (benefit from) income taxes
|
|
|
(45,302
|
)
|
|
|
(3.5
|
)%
|
|
|
(10,094
|
)
|
|
|
(0.4
|
)%
|
Provision for (benefit from) income taxes
|
|
|
28,186
|
|
|
|
2.2
|
%
|
|
|
(3,508
|
)
|
|
|
(0.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(73,488
|
)
|
|
|
(5.7
|
)%
|
|
$
|
(6,586
|
)
|
|
|
(0.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales.
For the first nine months of fiscal 2009, net sales decreased by 43.8%, or $998.2
million, to $1.3 billion compared to $2.3 billion in the prior year period. Sales during this
period were negatively impacted by a 42.7% decline in housing starts. New home construction has a
significant impact on our sales. Specialty sales, primarily consisting of roofing, specialty
panels, insulation, moulding, engineered wood products, vinyl siding, composite decking and metal
products (excluding rebar and remesh) decreased by $390.9 million or 34.5% compared to the first
nine months of fiscal 2008, reflecting a 35.2% decline in unit volume. Structural sales, including
plywood, OSB, lumber and metal rebar, decreased by $613.6 million, or 52.0% from a year ago, also
primarily as a result of a 43.9% decrease in unit volume and 20.4% decrease in average structural
product prices.
Gross Profit.
Gross profit for the first nine months of fiscal 2009 was $147.9 million, or
11.6% of sales, compared to $268.5 million, or 11.8% of sales, in the prior year period. The
decrease in gross profit dollars compared to the first nine months of fiscal 2008 was driven
primarily by a decrease in specialty and structural product volumes of 35.2% and 43.9%,
respectively, due to the ongoing slowdown in the housing market. Gross margin percentage decreased
by 0.2% to 11.6% primarily due to decreases in structural metal and plywood product prices of 10.6%
and 14.0%, respectively. These decreases were offset by an increase in specialty roofing product
prices of 10.9%.
Selling, General, and Administrative Expenses.
Selling, general and administrative expenses
for the first nine months of fiscal 2009 were $163.5 million, or 12.8% of net sales, compared to
$235.7 million, or 10.3% of net sales, during the first nine months of fiscal 2008. The decline in
selling, general, and administrative expenses included a $41.9 million decrease in payroll and
payroll related cost due to a decrease in headcount; a $8.7 million decrease in fuel expense due to
a decline in business volume and fuel prices; a $4.4 million gain associated with the sale of
certain real properties; a $1.7 million charge recorded in the prior year period related to exiting
our custom milling operations in California; and a $17.0 million decrease in other operating
expenses as a result of our cost reduction initiatives.
Net Gain From Terminating the Georgia-Pacific Supply Agreement.
During the first nine months
of fiscal 2009, G-P agreed to pay us $18.8 million in exchange for our agreement to enter into the
Modification Agreement one-year earlier than the originally agreed upon May 7, 2010 termination
date of the Supply Agreement. As a result of the termination, we recognized a net gain of $17.6
million during the first nine months of fiscal 2009 as a reduction to operating expense. The gain
was net of a discount of $0.2 million and a $1.0 million write-off of an intangible asset
associated with the Supply Agreement.
Depreciation and Amortization.
Depreciation and amortization expense totaled $13.2 million for
the first nine months of fiscal 2009, compared with $15.0 million for the first nine months of
fiscal 2008. The $1.8 million decrease in depreciation and amortization is primarily related to a
portion of our property and equipment becoming fully depreciated.
33
Operating (Loss) Income.
Operating loss for the first nine months of fiscal 2009 was $(11.5)
million, or (0.9)% of sales, versus operating income of $17.8 million, or 0.8% of sales, in the
first nine months of fiscal 2008, reflecting the $120.6 million decline in gross profit that was
partially offset by a $91.3 million decrease in operating expenses.
Interest Expense, net.
Interest expense for the first nine months of fiscal 2009 totaled $24.6
million, down $2.9 million from the prior year because of the $110.0 million decrease in debt.
Interest expense related to our revolving credit facility and mortgage was $8.3 million and $14.5
million (includes the $0.6 million prepayment penalty), respectively, during this period. Interest
expense totaled $27.5 million for the first nine months of fiscal 2008. Interest expense related
to our revolving credit facility and mortgage was $11.5 million and $14.2 million, respectively,
during this period. In addition, interest expense included $1.8 million of debt issue cost
amortization for the first nine months of fiscal 2009 and for the first nine months of fiscal 2008,
respectively.
Charges associated with ineffective interest rate swap
. Charges associated with the
ineffective interest rate swap recognized for the first nine months of fiscal 2009 were $7.3
million and are comprised of a $9.0 million charge related to the reduction of our borrowings
outstanding under the revolving credit facility below the interest rate swaps notional amount;
$2.4 million of amortization of accumulated other comprehensive loss; and a $4.1 million of income
related to fair value changes since the date of the reduction.
Write-off debt issue costs
. During the first nine months of fiscal 2009, we elected to
permanently reduce our revolving loan threshold limit from $800.0 million to $500.0 million
effective March 30, 2009. As a result of this action, we recorded expense of $1.4 million for the
write-off of deferred financing costs that had been capitalized associated with the portion of the
revolver that was reduced in the first quarter of fiscal 2009.
Provision for Income Taxes.
The effective tax rate was (62.2)% and 34.8% for the first nine
months of fiscal 2009 and the first nine months of fiscal 2008, respectively. The change in our
effective tax rate for the first nine months of fiscal 2009 is due to a $45.7 million valuation
allowance.
Net loss
. Net loss for the first nine months of fiscal 2009 was $(73.5) million compared to
$(6.6) million for the first nine months of fiscal 2008. Net loss for the first nine months of
fiscal 2009 was negatively impacted by a tax valuation allowance of $40.2 million recorded in the
first quarter as a result of the above factors.
On a per-share basis, basic and diluted loss applicable to common shareholders for the first
nine months of fiscal 2009 were each $(2.37). Basic and diluted loss per share for the first nine
months of fiscal 2008 were each $(0.21).
Seasonality
We are exposed to fluctuations in quarterly sales volumes and expenses due to seasonal
factors. These seasonal factors are common in the building products distribution industry. The
first and fourth quarters are typically our slowest quarters due primarily to the impact of poor
weather on the construction market. Our second and third quarters are typically our strongest
quarters, reflecting a substantial increase in construction due to more favorable weather
conditions. Our working capital and accounts receivable and payable generally peak in the third
quarter, while inventory generally peaks in the second quarter in anticipation of the summer
building season. Although we generally expect these trends to continue for the foreseeable future,
inventory levels reached a low point in the second quarter of fiscal 2009 due to our efforts to
manage to the current demand environment in the housing market. However, in the third quarter we
have increased inventory in certain items as part of our effort to gain market share.
Liquidity and Capital Resources
We depend on cash flow from operations and funds available under our revolving credit facility
to finance working capital needs, capital expenditures, and acquisitions. We believe that the
amounts available from this and other sources will be sufficient to fund our routine operations and
capital requirements for the foreseeable future.
The credit markets have recently experienced adverse conditions, which may adversely affect
our lenders ability to fulfill their commitment under our revolving credit facility. Based on
information available to us as of the filing date of this Quarterly Report on Form 10-Q, we have no
indications that the financial institutions included in our revolving credit facility would be
unable to fulfill their commitments.
34
We may elect to selectively pursue acquisitions. Accordingly, depending on the nature of the
acquisition, we may use cash or stock, or a combination of both, as acquisition currency. Our cash
requirements may significantly increase and incremental cash expenditures will be required in
connection with the integration of the acquired companys business and to pay fees and expenses in
connection with any acquisitions. To the extent that significant amounts of cash are expended in
connection with acquisitions, our liquidity position may be adversely impacted. In addition, there
can be no assurance that we will be successful in completing acquisitions in the future. For a
discussion of the risks associated with acquisitions, see the risk factor Integrating acquisitions
may be time-consuming and create costs that could reduce our net income and cash flows set forth
under Item 1A Risk Factors in our Annual Report on Form 10-K for the year ended January 3, 2009
as filed with the SEC.
The following tables indicate our working capital and cash flows for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
October 3, 2009
|
|
January 3, 2009
|
|
|
(Dollars in thousands)
|
|
|
(Unaudited)
|
Working capital
|
|
$
|
241,717
|
|
|
$
|
320,527
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
|
Period from
|
|
|
January 4,
|
|
December 29,
|
|
|
2009 to
|
|
2007 to
|
|
|
October 3, 2009
|
|
September 27, 2008
|
|
|
(Dollars in thousands)
|
|
|
(Unaudited)
|
Cash flows (used in) provided by operating activities
|
|
$
|
(13,496
|
)
|
|
$
|
105,035
|
|
Cash flows provided by (used in) investing activities
|
|
|
7,502
|
|
|
|
(1,766
|
)
|
Cash flows used in financing activities
|
|
|
(118,861
|
)
|
|
|
(47,930
|
)
|
Working Capital
Working capital decreased by $78.8 million to $241.7 million at October 3, 2009 from $320.5
million at January 3, 2009. The reduction in working capital primarily reflects a $16.4 million
reduction in inventory offset by $103.2 million of debt reductions. We have reduced inventory
levels to meet existing demand and have used excess cash to reduce debt.
Operating Activities
During the first nine months of fiscal 2009, cash flows used in operating activities totaled
$13.5 million. The primary driver of cash flow used in operations was a $38.0 million increase in
receivables due to cyclical payment patterns related to the seasonality of the building products
market. These cash outflows were offset by an increase in cash flow from operations related to
reductions in inventory of $16.4 million to meet existing demand and an increase in accounts
payable of $30.2 million due to the seasonality of our business. In addition, we had $22.1 million
increase in cash flows used in operating activities due to our net loss of $73.5 million partially
offset by $51.4 million of changes in other balance sheet accounts.
During the first nine months of fiscal 2008, cash flows provided by operating activities
totaled $105.0 million. The primary driver of cash flow from operations was an increase in cash
flow from operations related to decreases in inventories of $74.9 million to meet existing demand
and a decrease in receivables of $18.7 million due to decline in the building products market. In
addition, we had $11.4 million increase in cash flows provided by operating activities due to our
net loss of $6.6 million offset by $18.0 million of changes in other balance sheet accounts.
Investing Activities
During the first nine months of fiscal 2009 and fiscal 2008, cash flows provided by (used in)
investing activities totaled $7.5 million and $(1.8) million, respectively.
During the first nine months of fiscal 2009 and fiscal 2008, our expenditures for property and
equipment were $1.0 million and $2.6 million, respectively. Our capital expenditures for fiscal
2009 are anticipated to be paid from cash on hand. Proceeds from the disposition of property
totaled $8.5 million and $0.8 million for the first nine months of fiscal 2009 and fiscal 2008,
respectively. The
35
proceeds of $8.5 million during the first nine months of fiscal 2009 included $7.7 million of
proceeds related to the sale of certain real properties.
Financing Activities
Net cash used in financing activities was $118.9 million during the first nine months of
fiscal 2009 compared to $47.9 million during the first nine months of fiscal 2008. The net cash
used in financing activities in the first nine months of fiscal 2009 reflected payments on our
revolving credit facility of $100.0 million, principal payments on our mortgage of $3.2 million, an
increase in restricted cash related to our mortgage of $8.4 million, and a decrease in bank
overdrafts of $4.6 million. The net cash used in financing activities for the first nine months of
fiscal 2008 primarily reflected payments of $27.5 million on our revolving credit facility and a
decrease in bank overdrafts of $15.5 million.
Debt and Credit Sources
As of October 3, 2009, we had outstanding borrowings of $56.0 million and excess availability
of $190.6 million under the terms of our revolving credit
facility. We classify the lowest projected balance of the credit facility over the next twelve
months of $56.0 million as long-term debt. As of October 3, 2009 and January 3, 2009, we had
outstanding letters of credit totaling $13.5 million and $12.9 million, respectively, primarily for
the purposes of securing collateral requirements under our interest rate swap, insurance
programs and for guaranteeing payment of international purchases based on the fulfillment of
certain conditions. Our revolving credit facility contains customary negative covenants and
restrictions for asset based loans. The most significant restriction is a requirement that we
maintain a fixed charge ratio of 1.1 to 1.0 in the event our excess availability falls below $40.0
million. The fixed charge ratio is calculated as EBITDA over the sum of cash payments for income
taxes, interest expense, cash dividends, principal payments on debt, and capital expenditures.
EBITDA is defined in our credit agreement as BlueLinx Corporations net income before interest and
tax expense, depreciation and amortization expense, and other non-cash charges. The fixed charge
ratio requirement only applies to us when excess availability under our revolving credit facility
is less than $40.0 million for three consecutive business days. As of October 3, 2009, we were in
compliance with all covenants
Under our revolving credit facility agreement, we are required to maintain a springing
lock-box arrangement where customer remittances go directly to a lock-box maintained by our lenders
and then are forwarded to our general bank accounts. Our outstanding borrowings are not reduced by
these payments unless our excess availability is less than $40.0 million for three consecutive
business days or in the event of default. Due to this objective criteria established in our
agreement, our revolving credit facility does not contain a subjective acceleration clause which
would allow our lenders to accelerate the scheduled maturities of our debt or to cancel our
agreement.
Effective March 30, 2009, we elected to permanently reduce our revolving loan threshold limit
from $800 million to $500 million. This reduction does not impact our available borrowing capacity
under our revolving credit facility as our current eligible accounts receivable and inventory (our
borrowing base) do not support up to $800.0 million in borrowings. We do not anticipate our
borrowing base will support borrowings in excess of $500.0 million at any point during the
remaining life of the credit facility. This cost-saving initiative will allow us to reduce our
interest expense by $0.8 million annually by lowering our unused line fees. As a result of this
action, we recorded expense of $1.4 million for the write-off of deferred financing costs that had
been capitalized associated with the reduced borrowing capacity that was reduced during the first
quarter of fiscal 2009.
On June 12, 2006, we entered into an interest rate swap agreement with Goldman Sachs Capital
Markets, to hedge against interest rate risks related to our variable rate revolving credit
facility. The interest rate swap has a notional amount of $150.0 million and the terms call for us
to receive interest monthly at a variable rate equal to the 30-day LIBOR and to pay interest
monthly at a fixed rate of 5.4%. This interest rate swap was designated as a cash flow hedge.
Through January 3, 2009, the hedge was highly effective in offsetting changes in expected cash
flows. Fluctuations in the fair value of the ineffective portion, if any, of the cash flow hedge
were reflected in earnings. For the first quarter of fiscal 2008, we recognized immaterial amounts
of expense related to the ineffective portion of the hedge.
On January 9, 2009, we reduced our borrowings under the revolving credit facility by $60.0
million, which reduced outstanding debt below the interest rate swaps notional amount of $150.0
million, at which point the hedge became ineffective in offsetting future changes in expected cash
flows during the remaining term of the interest rate swap. We used cash on hand to pay down this
portion of our revolving credit debt during the first quarter of fiscal 2009. As a result, any
prospective changes in fair value of the instrument will be recorded through earnings. Charges
associated with the ineffective interest rate swap recognized in the Condensed
36
Consolidated Statement of Operations for the first quarter of fiscal 2009 were approximately $4.8
million and are comprised of a $5.9 million non-cash charge on the date we reduced our borrowings
outstanding under the revolving credit facility below the interest rate swaps notional amount,
$1.0 million of amortization of accumulated other comprehensive loss and $2.1 million of income
related to fair value changes since the date of the reduction.
During the second quarter of fiscal 2009, we further reduced our borrowings under the
revolving credit by $15.0 million. Charges associated with the ineffective interest rate swap
during the second quarter of fiscal 2009 were $1.3 million on the date we reduced our borrowings
outstanding by $15.0 million, $0.9 million of amortization of accumulated other comprehensive loss,
and $1.1 million of income related to fair value changes since the date of reduction.
During the third quarter of fiscal 2009, we used cash on hand to reduce our borrowings under
the revolving credit facility by an additional $25.0 million. This payment resulted in a third
quarter non-cash charge of approximately $1.9 million recorded in interest expense on the payment
date. In addition, there was $0.5 million of amortization of accumulated other comprehensive loss,
and $1.0 million of income related to fair value changes since the date of reduction. The
remaining $3.2 million of accumulated other comprehensive loss will be amortized over the remaining
19 month term of the interest rate swap and recorded as interest expense. Approximately $2.1
million will be amortized over the next 12 months and recorded as interest expense. Any further
reductions in borrowings under our revolving credit facility will result in a pro-rata reduction in
accumulated other comprehensive loss at the payment date with a corresponding charge recorded to
interest expense. Due to our interest rate swap becoming ineffective, as well as our decision to
record a full valuation allowance against deferred tax assets, we will recognize the income tax
effect associated with unrealized losses initially recorded in other comprehensive income when the interest rate swap terminates.
The following table presents a reconciliation of the unrealized losses related to our interest
rate swap measured at fair value in accumulated other comprehensive loss as of October 3, 2009 (in
thousands):
|
|
|
|
|
Balance at January 3, 2009
|
|
$
|
13,229
|
|
Unrealized losses in accumulated other comprehensive loss
|
|
|
1,533
|
|
Charges associated with ineffective interest rate swap recorded to interest expense
|
|
|
(11,556
|
)
|
|
|
|
|
Balance at October 3, 2009
|
|
$
|
3,206
|
|
On June 9, 2006, certain special purpose entities that are wholly-owned subsidiaries of ours
entered into a $295 million mortgage loan. During the first nine months of fiscal 2009 and the
fourth of fiscal 2008, we made principal payments on our mortgage loan of $3.2 million and $6.1
million, respectively. The mortgage has a term of ten years and is now secured by 55 distribution
facilities and 1 office building owned by the special purpose entities. The stated interest rate on
the mortgage is fixed at 6.35%. The mortgage loan requires interest-only payments for the first
five years followed by level monthly payments of principal and interest based on an amortization
period of thirty years. The balance of the loan outstanding at the end of ten years will then
become due and payable.
Contractual Obligations
On April 27, 2009, we executed an agreement with G-P to terminate our Supply Agreement with
respect to the distribution of Georgia-Pacific plywood, OSB, and lumber by us. As of January 3,
2009, our minimum purchases requirement, related to the terminated agreement, had totaled $31.9
million. As a result of terminating this agreement, we are no longer contractually obligated to
make minimum purchases of products from Georgia-Pacific. There have been no other changes to our
contractual obligations since the filing of our 2008 Form 10-K.
Critical Accounting Policies
The preparation of our consolidated financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States requires our management to make
judgments and estimates that affect the amounts reported in our consolidated financial statements
and accompanying notes. Our management believes that we consistently apply these judgments and
estimates and the consolidated financial statements and accompanying notes fairly represent all
periods presented. However, any differences between these judgments and estimates and actual
results could have a material impact on our consolidated statements of operations and financial
position. Critical accounting estimates, as defined by the Securities and Exchange Commission
(SEC), are
37
those that are most important to the portrayal of our financial condition and results of operations
and require our managements most difficult and subjective judgments and estimates of matters that
are inherently uncertain. Our critical accounting estimates include those regarding (1) revenue
recognition; (2) allowance for doubtful accounts and related reserves; (3) inventory valuation; (4)
stock-based compensation; (5) consideration received from vendors and paid to customers; (6) fair
value measurements; (7) impairment of long-lived assets; (8) income taxes; (9) restructuring
charges; and (10) self-insurance.
Revenue Recognition
We recognize revenue when the following criteria are met: persuasive evidence of an agreement
exists, delivery has occurred or services have been rendered, our price to the buyer is fixed and
determinable and collectibility is reasonably assured. Delivery is not considered to have occurred
until the customer takes title and assumes the risks and rewards of ownership. The timing of
revenue recognition is largely dependent on shipping terms. Revenue is recorded at the time of
shipment for terms designated as FOB (free on board) shipping point. For sales transactions
designated FOB destination, revenue is recorded when the product is delivered to the customers
delivery site.
All revenues are recorded at gross in accordance with the guidance outlined by Accounting
Standards Codification (ASC) 605-45, Principal Agent Considerations (ASC 605-45), and in
accordance with standard industry practice. The key indicators used to determine when and how
revenue are as follows:
|
|
|
We are the primary obligor responsible for fulfillment and all other aspects of
the customer relationship.
|
|
|
|
|
Title passes to BlueLinx, and we carry all risk of loss related to warehouse,
reload and inventory shipped directly from vendors to our customers.
|
|
|
|
|
We are responsible for all product returns.
|
|
|
|
|
We control the selling price for all channels.
|
|
|
|
|
We select the supplier.
|
|
|
|
|
We bear all credit risk.
|
In addition, we provide inventory to certain customers through pre-arranged agreements on a
consignment basis. Customer consigned inventory is maintained and stored by certain customers;
however, ownership and risk of loss remains with us. When the inventory is sold by the customer,
we recognize revenue. We record revenue on a gross basis due to the guidance outlined above
relative to ASC 605-45.
All revenues recognized are net of trade allowances, cash discounts and sales returns. Cash
discounts and sales returns are estimated using historical experience. Trade allowances are based
on the estimated obligations and historical experience. Adjustments to earnings resulting from
revisions to estimates on discounts and returns have been insignificant for each of the reported
periods.
Allowance for Doubtful Accounts and Related Reserves
We evaluate the collectibility of accounts receivable based on numerous factors, including
past transaction history with customers and their creditworthiness. We maintain an allowance for
doubtful accounts for each aging category on our aged trial balance based on our historical loss
experience. This estimate is periodically adjusted when we become aware of specific customers
inability to meet their financial obligations (e.g., bankruptcy filing or other evidence of
liquidity problems). As we determine that specific balances will ultimately be uncollectible, we
remove them from our aged trial balance. Additionally, we maintain reserves for cash discounts that
we expect customers to earn as well as expected returns.
Inventory Valuation
Inventories are carried at the lower of cost or market. The cost of all inventories is
determined by the moving average cost method. We evaluate our inventory value at the end of each
quarter to ensure that first quality, actively moving inventory, when viewed by category, is
carried at the lower of cost or market.
Additionally, we maintain a reserve for the estimated value impairment associated with
damaged, excess and obsolete inventory. The damaged, excess and obsolete reserve generally includes
discontinued items or inventory that has turn days in excess of 270 days, excluding new items
during their product launch.
38
We have included all charges directly or indirectly incurred in inventory to its existing
condition and location.
Stock-Based Compensation
We recognize compensation expense equal to the grant-date fair value for all share-based
payment awards that are expected to vest. This expense is recorded on a straight-line basis over
the requisite service period of the entire award, unless the awards are subject to market or
performance conditions, in which case we recognize compensation expense over the requisite service
period of each separate vesting tranche. All compensation expense related to our share-based
payment awards is recorded in Selling, general and administrative expense in the Condensed
Consolidated Statements of Operations.
Consideration Received from Vendors and Paid to Customers
Each year, we enter into agreements with many of our vendors providing for inventory purchase
rebates, generally based on achievement of specified volume purchasing levels and various marketing
allowances that are common industry practice. We accrue for the receipt of vendor rebates based on
purchases, and also reduce inventory value to reflect the net acquisition cost (purchase price less
expected purchase rebates).
In addition, we enter into agreements with many of our customers to offer customer rebates,
generally based on achievement of specified volume sales levels and various marketing allowances
that are common industry practice. We accrue for the payment of customer rebates based on sales to
the customer, and also reduce sales value to reflect the net sales (sales price less expected
customer rebates).
Fair Value Measurements
We are exposed to market risks from changes in interest rates, which may affect our operating
results and financial position. When deemed appropriate, we minimize our risks from interest rate
fluctuations through the use of an interest rate swap. This derivative financial instrument is used
to manage risk and is not used for trading or speculative purposes. The swap is valued using a
valuation model that has inputs other than quoted market prices that are both observable and
unobservable.
We endeavor to utilize the best available information in measuring the fair value of the
interest rate swap. The interest rate swap is classified in its entirety based on the lowest level
of input that is significant to the fair value measurement. To determine fair value of the interest
rate swap we used the discounted estimated future cash flows methodology. Assumptions critical to
our fair value in the period were: (i.) the present value factors used in determining fair value
(ii.) projected LIBOR, and (iii.) the risk of counterparty non-performance risk. These and other
assumptions are impacted by economic conditions and expectations of management. We have determined
that the fair value of our interest rate swap is a level 3 measurement in the fair value hierarchy.
The level 3 measurement is the risk of counterparty non-performance on the interest rate swap
liability that is not secured by cash collateral.
To
determine the fair value of our mortgage, we used a discounted cash
flow model. Assumptions critical to our fair value in the period were
present value factors used in determining fair value and an interest
rate.
Impairment of Long-Lived Assets
Long-lived assets, including property and equipment and intangible assets with definite useful
lives, are reviewed for possible impairment whenever events or circumstances indicate that the
carrying amount of an asset may not be recoverable.
We evaluate our long-lived assets each quarter for indicators of potential
impairment. Indicators of impairment include current period losses combined with a history of
losses, managements decision to exit a facility, reductions in the fair market value of real
properties and changes in other circumstances that indicate the carrying amount of an asset may not
be recoverable.
Our evaluation of long-lived assets is performed at the lowest level of identifiable cash
flows, which is generally the individual distribution facility. In the event of indicators of
impairment, the assets of the distribution facility are evaluated by the facilitys undiscounted
cash flows over the estimated useful life of the asset, which ranges between 5-20 years, to its
carrying value. If the carrying value is greater than the undiscounted cash flows, an impairment
loss is recognized for the difference between the carrying
39
value of the asset and the estimated fair market value. Impairment losses are recorded as a
component of Selling, general and administrative in the Condensed Consolidated Statements of
Operations.
Our estimate of undiscounted cash flows is subject to assumptions that affect estimated
operating income at a distribution facility level. These assumptions are related to future sales,
margin growth rates, economic conditions, market competition and inflation. Our estimates of fair
market value are generally based on market appraisals and our experience with related market
transactions. We use a historical average of income, with no growth factor assumption, to estimate
undiscounted cash flows. These assumptions used to determine impairment are considered to be level
3 measurements in the fair value hierarchy as defined in Note 10 in our Annual Report on Form 10-K
for the year ended January 3, 2009.
Currently, we are experiencing a reduction in operating income at the distribution facility
level due to the ongoing downturn in the housing market. To the extent that reductions in volume
and operating income have resulted in impairment indicators, in most cases our carrying values
continue to be less than our projected undiscounted cash flows. As of January 3, 2009, we had
$152.8 million in net book value of fixed assets. The undiscounted cash flows were less than the
carrying values for approximately $24.0 million of these assets. The fair value of these assets,
primarily real estate, exceeded the carrying value by approximately $23.8 million. As such, we
have not identified significant known trends impacting the fair value of long-lived assets to an
extent that would indicate impairment.
Income Taxes
Our financial statements contain certain deferred tax assets which have arisen primarily as a
result of tax benefits associated with the loss before income taxes incurred during fiscal 2008 and
fiscal 2009, as well as deferred income tax assets resulting from temporary differences. We
considered a valuation allowance to reflect the likelihood that deferred tax assets would be
realized. Significant management judgment is required in determining any valuation allowance
recorded against net deferred tax assets. In evaluating our ability to recover our deferred income
tax assets, we considered available positive and negative evidence, including our past operating
results, our ability to carryback losses against prior taxable income, the existence of cumulative
losses in the most recent years, our forecast of future taxable income and an excess of appreciated
assets over the tax basis of our net assets. In estimating future taxable income, we developed
assumptions including the amount of future state and federal pretax operating and non-operating
income, the reversal of temporary differences and the implementation of feasible and prudent tax
planning strategies. These assumptions required significant judgment about the forecasts of future
taxable income, including, but not limited to, projected cost savings, changes in housing starts as
well as projected gains on the sale of real estate.
If the realization of deferred tax assets in the future is considered more likely than not, a
reduction to the valuation allowance related to the deferred tax assets would increase net income
in the period such determination is made. Such a determination would be based on the
consideration of all available evidence and the weight of such evidence.
Restructuring Charges
During fiscal 2008 and fiscal 2007, we vacated leased office space. We accounted for
these exit activities in accordance with ASC 420-10, Exit or Disposal Cost Obligations- Overall,
which requires that a liability be recognized for a cost associated with an exit or disposal
activity at fair value in the period in which it is incurred or when the entity ceases using the
right conveyed by a contract (i.e. the right to use a leased property). Our restructuring charges
included accruals for estimated losses on facility costs based on our contractual obligations net
of estimated sublease income based on current comparable market rates for leases. We will reassess
this liability periodically based on market conditions. Revisions to our estimates of this
liability could materially impact our operating results and financial position in future periods if
anticipated events and key assumptions, such as the timing and amounts of sublease rental income,
either do not materialize or change.
Self-Insurance
It is our policy to self-insure, up to certain limits, traditional risks including
workers compensation, comprehensive general liability, and auto liability. Insurance coverage is
maintained for catastrophic property and casualty exposures as well as those risks required to be
insured by law or contract. A provision for claims under this self-insured program, based on our
estimate of the aggregate liability for claims incurred, is revised and recorded annually. The
estimate is derived from both internal and external sources including but not limited to actuarial
estimates. The actuarial estimates are subject to uncertainty from various sources, including,
among others, changes in claim reporting patterns, claim settlement patterns, judicial decisions,
legislation, and economic
40
conditions. Although, we believe that the actuarial estimates are reasonable, significant
differences related to the items noted above could materially affect our self-insurance
obligations, future expense and cash flow.
Recently Issued Accounting Pronouncements
Effective July 5, 2009, we adopted the Financial Accounting Standards Board (FASB) ASC 105-10,
Generally Accepted Accounting Principles Overall (ASC 105-10). ASC 105-10 establishes the FASB
Accounting Standards Codification (the Codification) as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in the preparation of
financial statements in conformity with U.S. GAAP. The Codification does not change current U.S.
GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the
authoritative literature related to a particular topic in one place. This Form 10-Q for the quarter
ending October 3, 2009 and all subsequent public filings will reference the Codification as the
sole source of authoritative literature.
In May 2009, the FASB issued ASC 855, Subsequent Events (ASC 855). ASC 855 establishes
authoritative accounting and disclosure guidance for recognized and non-recognized subsequent
events that occur after the balance sheet date but before financial statements are issued. ASC 855
also requires disclosure of the date through which an entity has evaluated subsequent events and
the basis for that date. ASC 855 was effective for us beginning with our Quarterly Report on Form
10-Q for the second quarter and first six months of fiscal 2009, and will be applied prospectively.
The adoption of ASC 855 had no impact on our Condensed Consolidated Financial Statements.
In April 2009, the FASB issued ASC 825-10, Financial Instruments Overall (ASC 825-10),
which will require that the fair value disclosures required for all financial instruments be
included in interim financial statements. ASC 825-10 also requires entities to disclose the method
and significant assumptions used to estimate the fair value of financial instruments on an interim
and annual basis and to highlight any changes from prior periods. ASC 825-10 was effective for us
during the third quarter of fiscal 2009.
In December 2008, the FASB issued ASC 715, Compensation Retirement Benefits (ASC 715).
ASC 715 requires enhanced disclosures about the plan assets of our defined benefit pension and
other postretirement plans. The enhanced disclosures required by ASC 715 are intended to provide
users of financial statements with a greater understanding of: (1) how investment allocation
decisions are made, including the factors that are pertinent to an understanding of investment
policies and strategies; (2) the major categories of plan assets; (3) the inputs and valuation
techniques used to measure the fair value of plan assets; (4) the effect of fair value measurements
using significant unobservable inputs (Level 3) on changes in plan assets for the period; and (5)
significant concentrations of risk within plan assets. ASC 715 is effective for us for the year
ending January 2, 2010.
In June 2008, the FASB issued ASC 260-10, Earnings Per Share Overall (ASC 260-10). Per
ASC 260-10 unvested share-based payment awards that contain non-forfeitable rights to dividends or
dividend equivalents (whether paid or unpaid) are participating securities and are to be included
in the computation of earnings per share under the two-class method described in ASC 260-10. ASC
260-10 was effective for us on January 4, 2009 and requires all presented prior-period earnings per
share data to be adjusted retrospectively. For additional information, refer to Note 2 of the Notes
to Condensed Consolidated Financial Statements.
In April 2008, the FASB issued ASC 350-30, General Intangibles Other than Goodwill (ASC
350-30). ASC 350-30 amends the factors to be considered in developing renewal or extension
assumptions used to determine the useful life of intangible assets under ASC 350, Intangibles
Goodwill and Other. Its intent is to improve the consistency between the useful life of an
intangible asset and the period of expected cash flows used to measure its fair value. ASC 350-30
was effective for us on January 4, 2009. We do not expect ASC 350-30 to have a material impact on
our Condensed Consolidated Financial Statements; however, it could have an impact in the future if
acquisitions are made.
In March 2008, the FASB issued ASC 815-10-65, Derivatives and Hedging Overall
Transition and Open Effective Date Information (ASC 815-10-65). ASC 815-10-65 seeks to improve
financial reporting for derivative instruments and hedging activities by requiring enhanced
disclosures regarding the impact on financial position, financial performance, and cash flows. To
achieve this increased transparency, ASC 815-10-65 requires (1) the disclosure of the fair value of
derivative instruments and gains and losses in a tabular format; (2) the disclosure of derivative
features that are credit risk-related; and (3) cross-referencing within the footnotes. ASC
815-10-65 was effective for us, on a prospective basis, on January 4, 2009. The adoption of ASC
815-10-65 did not have a material impact on our Condensed Consolidated Financial Statements. For
additional information, refer to Note 8 of the Notes to Condensed Consolidated Financial
Statements.
41
In December 2007, the FASB issued ASC 805-10 Business Combinations Overall (ASC 805-10).
ASC 805-10 establishes principles and requirements for how the acquirer of a business recognizes
and measures in its financial statements the identifiable assets acquired, the liabilities assumed,
and any non-controlling interest in the acquiree. ASC 805-10 also provides guidance for recognizing
and measuring the goodwill acquired in the business combination and determines what information to
disclose to enable users of the financial statements to evaluate the nature and financial effects
of the business combination. ASC 805-10 was effective for us, on a prospective basis, on January 4,
2009. We expect ASC 805-10 will have an impact on our accounting for business combinations, but the
effect is dependent upon the acquisitions that are made in the future.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in market risk from the information provided in Part II,
Item 7A Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form
10-K for the fiscal year ended January 3, 2009, other than those discussed below.
Our revolving credit facility accrues interest based on a floating benchmark rate (the prime
rate or LIBOR rate), plus an applicable margin. A change in interest rates under the revolving
credit facility would have an impact on our results of operations. A change of 100 basis points in
the market rate of interest would have an immaterial impact based on borrowings outstanding at
October 3, 2009. Additionally, to the extent changes in interest rates impact the housing market,
demand for our products would be impacted by such changes.
ITEM 4. CONTROLS AND PROCEDURES
Our management performed an evaluation, as of the end of the period covered by this Quarterly
Report on Form 10-Q, under the supervision of our chief executive officer and chief financial
officer of the effectiveness of the design and operation of our disclosure controls and procedures
(as defined in rule 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended
(the Exchange Act)). Based on that evaluation, our chief executive officer and chief financial
officer have concluded that our disclosure controls and procedures are effective to ensure that
information required to be disclosed by us in reports that we file or submit under the Exchange Act
is recorded, processed, summarized and reported within the time periods specified in the SECs
rules and forms, and is accumulated and communicated to our management including our chief
executive officer and chief financial officer, to allow timely decisions regarding required
disclosure.
There were no changes in our internal control over financial reporting during the period
covered by this report that have materially affected, or are reasonably likely to materially affect
our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
During the third quarter of fiscal 2009, there were no material changes to our previously
disclosed legal proceedings. Additionally, we are, and from time to time may be, a party to routine
legal proceedings incidental to the operation of our business. The outcome of any pending or
threatened proceedings is not expected to have a material adverse effect on our financial
condition, operating results or cash flows, based on our current understanding of the relevant
facts. Legal expenses incurred related to these contingencies are generally expensed as incurred.
ITEM 1A. RISK FACTORS
There have been no material changes in our risk factors from those disclosed in our Annual
Report on Form 10-K for the year ended January 3, 2009, as further supplemented in our Quarterly
Report on Form 10-Q for the period ended April 4, 2009, as filed with the SEC.
42
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On December 22, 2008, our Board of Directors (the Board) approved a stock repurchase program
to acquire up to $10,000,000 of our outstanding common stock through December 22, 2010. The share
repurchases will be made from time to time at our discretion in the open market or privately
negotiated transactions as permitted by securities laws and other legal requirements, and subject
to market conditions and other factors. The Board may modify, suspend, extend or terminate the
program at any time.
The table below sets forth repurchases made pursuant to the program for the periods indicated
during the third quarter of fiscal 2009.
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Total Number of
|
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Approximate
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Shares Purchased
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Dollar Value of
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Total
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Average
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as Part of Publicly
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Shares that May
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Number of
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Price Paid
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Announced
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Yet Be Purchased
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Period
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Shares
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Per Share
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Program
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Under the Program
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July 5 August 3
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75,547
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$
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3.16
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711,852
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$
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8,136,649
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August 4 September 2
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711,852
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$
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8,136,649
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September 3 October 3
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711,852
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$
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8,136,649
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Total
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75,547
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$
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3.16
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711,852
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$
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8,136,649
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ITEM 6. EXHIBITS
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Exhibit
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Number
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Description
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10.1*
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Loan and Security Agreement, dated as of June 9, 2006, between the entities set forth therein
collectively as borrower and German American Capital Corporation as Lender
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10.2*
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Amended and Restated Loan and Security Agreement, dated August 4, 2006, by and between, BlueLinx
Corporation, Wachovia, and other signatories listed therein
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31.1
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Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2
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Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1
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Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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32.2
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Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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*
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Portions of this document are omitted and filed separately with the SEC pursuant to a request for
confidential treatment in accordance with Rule 24b-2 of the Exchange Act.
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43
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly
caused this report to be signed on their behalf by the undersigned hereunto duly authorized.
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BlueLinx Holdings Inc.
(Registrant)
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Date: November 6, 2009
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/s/ H. Douglas Goforth
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H. Douglas Goforth
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Chief Financial Officer and Treasurer
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44
EXHIBIT INDEX
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|
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Exhibit
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Number
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Description
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10.1*
|
|
Loan and Security Agreement, dated as of June 9, 2006, between the entities set forth therein
collectively as borrower and German American Capital Corporation as Lender
|
|
|
|
10.2*
|
|
Amended and Restated Loan and Security Agreement, dated August 4, 2006, by and between, BlueLinx
Corporation, Wachovia, and other signatories listed therein
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
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31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
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32.1
|
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
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32.2
|
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
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*
|
|
Portions of this document are omitted and filed separately with the SEC pursuant to a request for
confidential treatment in accordance with Rule 24b-2 of the Exchange Act.
|
45
***
Portions hereof have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for
confidential treatment in accordance with Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
Dated as of June 9, 2006
between
The Borrowers Signatory Hereto,
as Borrower,
ABP MD (BALTIMORE) LLC,
as Maryland Loan Guarantor
and
GERMAN AMERICAN CAPITAL CORPORATION,
on behalf of the holders of the Notes,
as Lender
TABLE OF CONTENTS
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Page
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I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
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1
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1.1 Definitions
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1
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1.2 Principles of Construction
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26
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II. GENERAL TERMS
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26
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2.1 Loan; Disbursement to Borrower
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26
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2.1.1 The Loan
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26
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2.1.2 Disbursement to Borrower
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26
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2.1.3 The Notes, Security Instrument and Loan Documents
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27
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2.1.4 Use of Proceeds
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27
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2.2 Interest; Loan Payments; Late Payment Charge
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27
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2.2.1 Payment of Principal and Interest
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27
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2.2.2 Method and Place of Payment
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27
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2.2.3 Late Payment Charge
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28
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2.2.4 Usury Savings
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28
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2.3 Prepayments
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28
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2.3.1 Prepayments
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28
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2.3.2 Prepayments After Event of Default; Application of Amounts Paid
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28
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2.3.3 Release of Property upon Repayment or Defeasance of Loan in Full
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29
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2.3.4 Release of Individual Properties
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29
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2.3.5 Defeasance
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30
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2.3.6 Substitution of Properties
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34
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2.3.7 Release of Outparcels
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39
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2.3.8 Excess Account Collateral
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39
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2.3.9 Reserve Requirements
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40
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2.4 Regulatory Change; Taxes
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40
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2.4.1 Increased Costs
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40
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2.4.2 Special Taxes
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40
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2.4.3 Other Taxes
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41
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2.4.4 Indemnity
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41
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2.4.5 Change of Office
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41
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2.4.6 Survival
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41
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i
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Page
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2.5 Conditions Precedent to Closing
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41
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2.5.1 Representations and Warranties; Compliance with Conditions
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41
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2.5.2 Delivery of Loan Documents; Title Policy; Reports; Leases
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41
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2.5.3 Related Documents
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43
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2.5.4 Delivery of Organizational Documents
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43
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2.5.5 Counsel Opinions
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43
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2.5.6 Annual Budget
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43
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2.5.7 Completion of Proceedings
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44
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2.5.8 Payments
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44
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2.5.9 Account Agreement
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44
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2.5.10 Master Lease SNDA
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44
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2.5.11 Reserved
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44
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2.5.12 Reserved
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44
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2.5.13 Independent Manager/Member Certificate
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44
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2.5.14 Transaction Costs
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44
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2.5.15 Material Adverse Effect
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44
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2.5.16 Insolvency
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44
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2.5.17 Leases
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44
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2.5.18 Master Lease; Master Lease SNDA
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44
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2.5.19 Tax Lot
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44
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2.5.20 Physical Conditions Reports
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45
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2.5.21 Appraisals
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45
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2.5.22 Financial Statements
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45
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2.5.23 Flood Certifications
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45
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2.5.24 Intercreditor Agreement
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45
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III. CASH MANAGEMENT
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45
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3.1 Cash Management
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45
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3.1.1 Establishment of Accounts
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45
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3.1.2 Pledge of Account Collateral
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46
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3.1.3 Maintenance of Collateral Accounts
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47
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3.1.4 Eligible Accounts
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47
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3.1.5 Deposits into Sub-Accounts
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48
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3.1.6 Monthly Funding of Sub-Accounts; Master Lease Rent
Shortfalls; Master Lease Variable Additional Rent Reserve;
Sub-Account Shortfalls
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48
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3.1.7 Required Payments from Sub-Accounts
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50
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3.1.8 Cash Management Bank
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50
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3.1.9 Borrowers and Maryland Loan Guarantors Account
Representations, Warranties and Covenants
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51
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3.1.10 Account Collateral and Remedies
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51
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3.1.11 Transfers and Other Liens
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52
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3.1.12 Reasonable Care
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52
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3.1.13 Lenders Liability
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52
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3.1.14 Continuing Security Interest
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53
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ii
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Page
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IV. REPRESENTATIONS AND WARRANTIES
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53
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4.1 Borrower Representations
|
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53
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4.1.1 Organization
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53
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4.1.2 Proceedings
|
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54
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4.1.3 No Conflicts
|
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54
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4.1.4 Litigation
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54
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4.1.5 Agreements
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55
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4.1.6 Title
|
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55
|
|
4.1.7 No Bankruptcy Filing
|
|
|
55
|
|
4.1.8 Full and Accurate Disclosure
|
|
|
56
|
|
4.1.9 All Property
|
|
|
56
|
|
4.1.10 No Plan Assets
|
|
|
56
|
|
4.1.11 Compliance
|
|
|
57
|
|
4.1.12 Financial Information
|
|
|
57
|
|
4.1.13 Condemnation
|
|
|
57
|
|
4.1.14 Federal Reserve Regulations
|
|
|
57
|
|
4.1.15 Utilities and Public Access
|
|
|
57
|
|
4.1.16 Not a Foreign Person
|
|
|
58
|
|
4.1.17 Separate Lots
|
|
|
58
|
|
4.1.18 Subdivision
|
|
|
58
|
|
4.1.19 Enforceability
|
|
|
58
|
|
4.1.20 Assessments
|
|
|
58
|
|
4.1.21 Insurance
|
|
|
58
|
|
4.1.22 Use of Property
|
|
|
58
|
|
4.1.23 Certificate of Occupancy; Licenses
|
|
|
58
|
|
4.1.24 Flood Zone
|
|
|
59
|
|
4.1.25 Physical Condition
|
|
|
59
|
|
4.1.26 Boundaries
|
|
|
59
|
|
4.1.27 Leases and Subleases
|
|
|
59
|
|
4.1.28 Filing and Recording Taxes
|
|
|
60
|
|
4.1.29 Single Purpose Entity/Separateness
|
|
|
60
|
|
4.1.30 Illegal Activity
|
|
|
60
|
|
4.1.31 No Change in Facts or Circumstances; Disclosure
|
|
|
60
|
|
4.1.32 Tax Filings
|
|
|
61
|
|
4.1.33 Solvency/Fraudulent Conveyance
|
|
|
61
|
|
4.1.34 Investment Company Act
|
|
|
61
|
|
4.1.35 Labor
|
|
|
61
|
|
4.1.36 Brokers
|
|
|
62
|
|
4.1.37 No Other Debt
|
|
|
62
|
|
4.1.38 Taxpayer Identification Number
|
|
|
62
|
|
4.1.39 Compliance with Anti-Terrorism, Embargo and Anti-Money Laundering
Laws
|
|
|
62
|
|
4.1.40 Rights of First Refusal or First Offer to Lease or Purchase
|
|
|
62
|
|
iii
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
4.2 Survival of Representations
|
|
|
63
|
|
|
|
|
|
|
4.3 Borrowers or Maryland Loan Guarantors Knowledge
|
|
|
63
|
|
|
|
|
|
|
V. BORROWER AND MARYLAND LOAN GUARANTOR COVENANTS
|
|
|
63
|
|
|
|
|
|
|
5.1 Affirmative Covenants
|
|
|
63
|
|
5.1.1 Performance by Borrower and Maryland Loan Guarantor
|
|
|
63
|
|
5.1.2 Existence; Compliance with Legal Requirements; Insurance
|
|
|
64
|
|
5.1.3 Litigation
|
|
|
64
|
|
5.1.4 Single Purpose Entity
|
|
|
64
|
|
5.1.5 Consents
|
|
|
65
|
|
5.1.6 Access to Property
|
|
|
66
|
|
5.1.7 Notice of Default
|
|
|
66
|
|
5.1.8 Cooperate in Legal Proceedings
|
|
|
66
|
|
5.1.9 Insurance
|
|
|
66
|
|
5.1.10 Further Assurances; Severance of Notes and Mezzanine Loan
|
|
|
66
|
|
5.1.11 Mortgage Taxes
|
|
|
68
|
|
5.1.12 Business and Operations
|
|
|
68
|
|
5.1.13 Title to the Property
|
|
|
68
|
|
5.1.14 Costs of Enforcement
|
|
|
69
|
|
5.1.15 Estoppel Statements
|
|
|
69
|
|
5.1.16 Loan Proceeds
|
|
|
69
|
|
5.1.17 No Joint Assessment
|
|
|
69
|
|
5.1.18 No Further Encumbrances
|
|
|
70
|
|
5.1.19 Leases and Material Subleases
|
|
|
70
|
|
5.1.20 Management
|
|
|
70
|
|
5.1.21 Master Lease
|
|
|
70
|
|
|
|
|
|
|
5.2 Negative Covenants
|
|
|
72
|
|
5.2.1 Incur Debt
|
|
|
72
|
|
5.2.2 Encumbrances
|
|
|
72
|
|
5.2.3 Engage in Different Business
|
|
|
72
|
|
5.2.4 Make Advances
|
|
|
72
|
|
5.2.5 Partition
|
|
|
72
|
|
5.2.6 Commingle
|
|
|
72
|
|
5.2.7 Guarantee Obligations
|
|
|
73
|
|
5.2.8 Transfer Assets
|
|
|
73
|
|
5.2.9 Amend Organizational Documents
|
|
|
73
|
|
5.2.10 Dissolve
|
|
|
73
|
|
5.2.11 Bankruptcy
|
|
|
73
|
|
5.2.12 ERISA
|
|
|
73
|
|
5.2.13 Distributions
|
|
|
73
|
|
5.2.14 Management
|
|
|
73
|
|
5.2.15 Reserved
|
|
|
74
|
|
5.2.16 Modify Account Agreement
|
|
|
74
|
|
5.2.17 Zoning Reclassification
|
|
|
74
|
|
5.2.18 Change of Principal Place of Business
|
|
|
74
|
|
5.2.19 Debt Cancellation
|
|
|
74
|
|
5.2.20 Misapplication of Funds
|
|
|
74
|
|
5.2.21 Single Purpose Entity
|
|
|
75
|
|
iv
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
VI. INSURANCE; CASUALTY; CONDEMNATION; RESTORATION
|
|
|
75
|
|
|
|
|
|
|
6.1 Insurance Coverage Requirements
|
|
|
75
|
|
6.1.1 Property Insurance
|
|
|
75
|
|
6.1.2 Liability Insurance
|
|
|
75
|
|
6.1.3 Workers Compensation Insurance
|
|
|
75
|
|
6.1.4 Business Interruption Insurance
|
|
|
76
|
|
6.1.5 Builders All-Risk Insurance
|
|
|
76
|
|
6.1.6 Boiler and Machinery Insurance
|
|
|
76
|
|
6.1.7 Flood Insurance and Earthquake Insurance
|
|
|
76
|
|
6.1.8 Terrorism Insurance
|
|
|
77
|
|
6.1.9 Storage Tank System Third Party Liability and Cleanup Insurance
|
|
|
78
|
|
6.1.10 Other Insurance
|
|
|
78
|
|
6.1.11 Ratings of Insurers
|
|
|
78
|
|
6.1.12 Form of Insurance Policies; Endorsements
|
|
|
78
|
|
6.1.13 Evidence of Insurance
|
|
|
79
|
|
6.1.14 Separate Insurance
|
|
|
79
|
|
6.1.15 Blanket Policies
|
|
|
79
|
|
|
|
|
|
|
6.2 Condemnation and Insurance Proceeds
|
|
|
79
|
|
6.2.1 Notification
|
|
|
79
|
|
6.2.2 Proceeds
|
|
|
80
|
|
6.2.3 Lender to Take Proceeds
|
|
|
81
|
|
6.2.4 Borrower to Restore
|
|
|
82
|
|
6.2.5 Disbursement of Proceeds
|
|
|
83
|
|
|
|
|
|
|
VII. IMPOSITIONS, OTHER CHARGES, LIENS AND OTHER ITEMS
|
|
|
84
|
|
|
|
|
|
|
7.1 Borrower or Maryland Loan Guarantor to Pay Impositions and Other Charges
|
|
|
84
|
|
|
|
|
|
|
7.2 No Liens
|
|
|
84
|
|
|
|
|
|
|
7.3 Contest
|
|
|
85
|
|
|
|
|
|
|
VIII. TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS
|
|
|
85
|
|
|
|
|
|
|
8.1 General Restriction on Transfers and Debt
|
|
|
85
|
|
|
|
|
|
|
8.2 Sale of Building Equipment
|
|
|
86
|
|
|
|
|
|
|
8.3 Immaterial Transfers and Easements, etc.
|
|
|
86
|
|
|
|
|
|
|
8.4 Permitted Equity Transfers
|
|
|
87
|
|
v
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
8.5 Deliveries to Lender
|
|
|
88
|
|
|
|
|
|
|
8.6 Loan Assumption
|
|
|
88
|
|
|
|
|
|
|
8.7 Leases and Subleases
|
|
|
89
|
|
8.7.1 Leasing Conditions
|
|
|
89
|
|
8.7.2 Delivery of New Sublease or Sublease Modification
|
|
|
89
|
|
8.7.3 Security Deposits
|
|
|
89
|
|
8.7.4 No Default Under Subleases
|
|
|
89
|
|
8.7.5 Subordination
|
|
|
89
|
|
8.7.6 Attornment
|
|
|
90
|
|
8.7.7 Non-Disturbance Agreements
|
|
|
90
|
|
|
|
|
|
|
IX. RESERVED
|
|
|
90
|
|
|
|
|
|
|
X. MAINTENANCE OF PROPERTY; ALTERATIONS
|
|
|
90
|
|
10.1 Maintenance of Property
|
|
|
90
|
|
10.2 Conditions to Alteration
|
|
|
91
|
|
10.3 Costs of Alteration
|
|
|
91
|
|
|
|
|
|
|
XI. BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION
|
|
|
93
|
|
|
|
|
|
|
11.1 Books and Records
|
|
|
93
|
|
11.2 Financial Statements
|
|
|
93
|
|
11.2.1 Quarterly Reports
|
|
|
93
|
|
11.2.2 Annual Reports
|
|
|
94
|
|
11.2.3 Capital Expenditures Summaries
|
|
|
94
|
|
11.2.4 Master Lease
|
|
|
94
|
|
11.2.5 Annual Budget
|
|
|
94
|
|
11.2.6 Other Information
|
|
|
94
|
|
|
|
|
|
|
XII. ENVIRONMENTAL MATTERS
|
|
|
95
|
|
|
|
|
|
|
12.1 Representations
|
|
|
95
|
|
12.2 Covenants
|
|
|
95
|
|
12.2.1 Compliance with Environmental Laws
|
|
|
95
|
|
12.3 Environmental Reports
|
|
|
96
|
|
12.4 Environmental Indemnification
|
|
|
96
|
|
12.5 Recourse Nature of Certain Indemnifications
|
|
|
97
|
|
vi
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
XIII. RESERVED
|
|
|
97
|
|
|
|
|
|
|
XIV. SECURITIZATION
|
|
|
97
|
|
|
|
|
|
|
14.1 Sale of Notes and Securitization
|
|
|
97
|
|
14.2 Securitization Financial Statements
|
|
|
98
|
|
14.3 Securitization Indemnification
|
|
|
98
|
|
14.3.1 Disclosure Documents
|
|
|
98
|
|
14.3.2 Indemnification Certificate
|
|
|
99
|
|
|
|
|
|
|
XV. ASSIGNMENTS AND PARTICIPATIONS
|
|
|
101
|
|
15.1 Assignment and Acceptance
|
|
|
101
|
|
15.2 Effect of Assignment and Acceptance
|
|
|
101
|
|
15.3 Content
|
|
|
101
|
|
15.4 Register
|
|
|
102
|
|
15.5 Substitute Notes
|
|
|
102
|
|
15.6 Participations
|
|
|
103
|
|
15.7 Disclosure of Information
|
|
|
103
|
|
15.8 Security Interest in Favor of Federal Reserve Bank
|
|
|
103
|
|
|
|
|
|
|
XVI. RESERVE ACCOUNTS
|
|
|
103
|
|
|
|
|
|
|
16.1 Tax Reserve Account
|
|
|
103
|
|
16.2 Insurance Reserve Account
|
|
|
104
|
|
16.3 Structural Repair Reserve Account
|
|
|
105
|
|
16.4 Immediate Repair and Remediation Reserve Account
|
|
|
106
|
|
16.5 Master Lease Variable Additional Rent Reserve Account and LCR
Deterioration Reserve Account
|
|
|
107
|
|
|
|
|
|
|
XVII. DEFAULTS
|
|
|
108
|
|
|
|
|
|
|
17.1 Event of Default
|
|
|
108
|
|
17.2 Remedies
|
|
|
111
|
|
17.3 Remedies Cumulative; Waivers
|
|
|
112
|
|
17.4 Costs of Collection
|
|
|
113
|
|
|
|
|
|
|
XVIII. SPECIAL PROVISIONS
|
|
|
113
|
|
|
|
|
|
|
18.1 Exculpation
|
|
|
113
|
|
18.1.1 Exculpated Parties
|
|
|
113
|
|
18.1.2 Carveouts From Non-Recourse Limitations
|
|
|
114
|
|
vii
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
XIX. MISCELLANEOUS
|
|
|
116
|
|
|
|
|
|
|
19.1 Survival
|
|
|
116
|
|
19.2 Lenders Discretion
|
|
|
116
|
|
19.3 Governing Law
|
|
|
116
|
|
19.4 Modification, Waiver in Writing
|
|
|
117
|
|
19.5 Delay Not a Waiver
|
|
|
117
|
|
19.6 Notices
|
|
|
118
|
|
19.7 TRIAL BY JURY
|
|
|
119
|
|
19.8 Headings
|
|
|
119
|
|
19.9 Severability
|
|
|
119
|
|
19.10 Preferences
|
|
|
119
|
|
19.11 Waiver of Notice
|
|
|
120
|
|
19.12 Expenses; Indemnity
|
|
|
120
|
|
19.13 Exhibits and Schedules Incorporated
|
|
|
122
|
|
19.14 Offsets, Counterclaims and Defenses
|
|
|
122
|
|
19.15 Liability of Assignees of Lender
|
|
|
122
|
|
19.16 No Joint Venture or Partnership; No Third Party Beneficiaries
|
|
|
122
|
|
19.17 Publicity
|
|
|
123
|
|
19.18 Waiver of Marshalling of Assets
|
|
|
123
|
|
19.19 Waiver of Counterclaim and other Actions
|
|
|
123
|
|
19.20 Conflict; Construction of Documents; Reliance
|
|
|
123
|
|
19.21 Prior Agreements
|
|
|
124
|
|
19.22 Counterparts
|
|
|
124
|
|
viii
EXHIBITS AND SCHEDULES
|
|
|
EXHIBIT A
|
|
TITLE INSURANCE REQUIREMENTS, ENDORSEMENTS
AND AFFIRMATIVE COVERAGES
|
EXHIBIT B
|
|
SURVEY REQUIREMENTS
|
EXHIBIT C
|
|
SINGLE PURPOSE ENTITY PROVISIONS
|
EXHIBIT D
|
|
ENFORCEABILITY OPINION REQUIREMENTS
|
EXHIBIT E
|
|
INTENTIONALLY DELETED
|
EXHIBIT F
|
|
INTENTIONALLY DELETED
|
EXHIBIT G
|
|
INTENTIONALLY DELETED
|
EXHIBIT H
|
|
INTENTIONALLY DELETED
|
EXHIBIT I
|
|
INTENTIONALLY DELETED
|
EXHIBIT J
|
|
INTENTIONALLY DELETED
|
EXHIBIT K
|
|
BORROWER ORGANIZATIONAL STRUCTURE
|
EXHIBIT L
|
|
INTENTIONALLY DELETED
|
EXHIBIT M
|
|
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
|
EXHIBIT N
|
|
FORM OF SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT
|
EXHIBIT O
|
|
INTENTIONALLY DELETED
|
EXHIBIT P
|
|
FORM OF MASTER LEASE RENT PAYMENT DIRECTION
LETTER
|
EXHIBIT Q
|
|
INTENTIONALLY DELETED
|
EXHIBIT R
|
|
INTENTIONALLY DELETED
|
EXHIBIT S
|
|
INTENTIONALLY DELETED
|
EXHIBIT T
|
|
FORM OF INDEPENDENT MANAGER/MEMBER
CERTIFICATE
|
|
|
|
SCHEDULE I
|
|
ALLOCATED LOAN AMOUNTS
|
SCHEDULE II
|
|
GEOGRAPHIC QUADRANTS
|
SCHEDULE III
|
|
IMMEDIATE REPAIRS AND REMEDIATION
|
SCHEDULE IV
|
|
LEASES
|
SCHEDULE V
|
|
INTENTIONALLY DELETED
|
SCHEDULE VI
|
|
LITIGATION SCHEDULE
|
SCHEDULE VII
|
|
OUTPARCEL LEGAL DESCRIPTIONS
|
SCHEDULE VIII
|
|
BORROWER TAXPAYER IDENTIFICATION NUMBERS
|
ix
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT, dated as of June 9, 2006 (as amended, restated, replaced,
supplemented or otherwise modified from time to time, this
Agreement
), by and among ABP
MD (BALTIMORE) LLC, a Delaware limited liability company (
Maryland Loan Guarantor
), the
borrowers signatory hereto (each an
Individual Borrower
and collectively,
Borrower
) having an office c/o BlueLinx Holdings Inc., 4300 Wildwood Parkway, Atlanta,
Georgia 30339, and GERMAN AMERICAN CAPITAL CORPORATION, a Maryland corporation, on behalf of the
holders of the Notes, having an address at 60 Wall Street, New York, New York 10005 (together with
its successors and assigns,
Lender
).
RECITALS:
WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined) from Lender;
WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in accordance with the
terms of this Agreement and the other Loan Documents (as hereinafter defined).
NOW, THEREFORE, in consideration of the making of the Loan by Lender and the covenants,
agreements, representations and warranties set forth in this Agreement, the parties hereto hereby
covenant, agree, represent and warrant as follows:
I.
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
1.1
Definitions
. For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
Account Agreement
shall mean the Account and Control Agreement, dated the date
hereof, among Lender, Borrower (other than Maryland Borrower), Maryland Loan Guarantor and Cash
Management Bank.
Account Collateral
shall have the meaning set forth in
Section 3.1.2
.
Additional Non-Consolidation Opinion
shall have the meaning set forth in
Section
4.1.29(b)
.
Affiliate
shall mean, with respect to any specified Person, any other Person that
(i) directly or indirectly Controls, is Controlled by or under direct or indirect Common Control
with such specified Person, (ii) is a general partner or managing member of such specified Person,
or (iii) is an officer or director of such specified Person.
Aggregate Appraised Value
shall mean the sum of (a) the aggregate Appraised Values
(as indicated in the Appraisals delivered by Borrower pursuant to
Section 2.5.21
) of all
Individual Properties which were subject to the Lien of the Security Instrument on the Closing
Date and remain subject to the Lien of the Security Instrument on the date such determination is
made and (b) the aggregate Appraised Value of the Substitute Properties, as reflected in the
Appraisals delivered in accordance with
Section 2.3.6(c)
.
Agreement
shall mean this Agreement, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
Allocated Loan Amount
shall mean with respect to each Individual Property, the
designated allocated portion of the Loan applicable to such Individual Property that is set forth
on
Schedule I
attached hereto. For the avoidance of doubt, no portion of the Loan shall be
allocated to any of the Outparcels.
ALTA
shall mean American Land Title Association, or any successor thereto.
Alteration
shall have the meaning set forth in
Section 10.2
.
Annual Budget
shall mean the operating budget for the Property prepared by or on
behalf of Borrower for the applicable Fiscal Year or other period setting forth, in reasonable
detail, Borrowers or Guarantors good faith estimates of the anticipated results of operation of
the Property, including, but not limited to, revenue from all sources, Master Lease Variable
Additional Rent, Master Lease Recurrent Additional Rent and Capital Expenditures.
Appraisals
shall mean FIRREA appraisals conducted by CB Richard Ellis (or another
Independent appraiser reasonably acceptable to Lender) which establish the Appraised Value of each
Individual Property (or, as applicable, each Substitute Property).
Appraised Value
shall mean, for an Individual Property or, as applicable, a
Substitute Property, the value of such Individual Property or Substitute Property as determined by
the Appraisal for such Individual Property or Substitute Property.
Approved Bank
shall have the meaning provided in the Account Agreement.
Architect
shall mean an architect, engineer or construction consultant selected by
Borrower, licensed to practice in the relevant State, having at least five (5) years of
architectural experience and which is selected by an Individual Borrower and reasonably acceptable
to Lender.
Assignment and Acceptance
shall mean an assignment and acceptance entered into by
Lender and an assignee, and accepted by Lender in accordance with
Article XV
and in
substantially the form of
Exhibit M
or such other form customarily used by Lender in
connection with the participation or syndication of mortgage loans at the time of such assignment.
Assignment of Leases
shall mean, with respect to each Individual Property, that
certain first priority Assignment of Master Lease, Leases, Rents and Security Deposits, dated as of
the date hereof, from each Individual Borrower (or in the case of the Maryland Property, the
Maryland Loan Guarantor), as assignor, to Lender, as assignee, assigning to Lender all of such
Individual Borrowers (or Maryland Loan Guarantors) interest in and to the Master Lease, the
Leases and the Rents of such Individual Property, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
2
Bankruptcy Code
shall mean Title 11, U.S.C.A., as amended from time to time and any
successor statute thereto.
Blanket Policy
shall have the meaning provided in
Section 6.1.14
.
Borrower
shall have the meaning set forth in the first paragraph of this Agreement.
Borrowers Account
shall mean an account or accounts maintained by Borrower for its
own account at such bank and with such account number as may be designated in writing by Borrower
to Lender and Cash Management Bank from time to time.
Broker
shall mean CB Richard Ellis/L.J. Melody.
Building Equipment
shall have the meaning set forth in the Security Instrument.
Business Day
shall mean any day other than a Saturday, Sunday or any other day on
which national banks in New York are not open for business.
Capital Expenditures
shall mean, for any period, the amount expended for items
capitalized under GAAP, including expenditures for building improvements or major repairs, leasing
commissions and tenant improvements.
Cash
shall mean the legal tender of the United States of America.
Cash and Cash Equivalents
shall mean any one or a combination of the following: (i)
Cash, and (ii) U.S. Government Obligations.
Cash Management Bank
shall mean Wachovia Bank, National Association or any successor
Approved Bank acting as Cash Management Bank under the Account Agreement or other financial
institution approved by the Lender and, if a Securitization has occurred, the Rating Agencies.
Casualty Amount
shall mean ten percent (10%) of the Allocated Loan Amount of the
affected Individual Property.
Casualty/Condemnation Property Release
shall mean any Property Release obtained in
connection with a Proceeds Prepayment or other principal prepayment made pursuant to
Section
6.2.3
or Section 4(b) of the Note.
Close Affiliate
shall mean, with respect to any Person (the
First Person
),
any other Person (each, a
Second Person
) which is an Affiliate of the First Person and in
respect of which any of the following are true: (a) the Second Person owns, directly or
indirectly, at least seventy-five percent (75%) of all of the legal, beneficial and/or equitable
interest in such First Person, (b) the First Person owns, directly or indirectly, at least
seventy-five percent (75%) of
all of the legal, beneficial and/or equitable interest in such Second Person, or (c) a third
(3
rd
) Person owns, directly or indirectly, at least seventy-five percent (75%) of all of
the legal, beneficial and/or equitable interest in both the First Person and the Second Person.
3
Closing Date
shall mean the date of this Agreement set forth in the first paragraph
hereof.
Closing Date LCR Ratio
shall mean 5.18x.
Closing Date LTV Ratio
shall mean 79.22%.
Code
shall mean the Internal Revenue Code of 1986, as amended, as it may be further
amended from time to time, and any successor statutes thereto, and applicable U.S. Department of
Treasury regulations issued pursuant thereto in temporary or final form.
Collateral Accounts
shall have the meaning set forth in
Section 3.1.1
.
Completion
shall have the meaning set forth in
Section 16.4
.
Control
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise, and the terms
Controlled
,
Controlling
and
Common Control
shall have correlative meanings.
Cut-Off Date
shall have the meaning set forth in
Section 6.2.3(a)
.
DBS
shall have the meaning set forth in
Section 14.3.2(b)
.
Debt
shall mean, with respect to any Person at any time, (a) indebtedness or
liability of such Person for borrowed money whether or not evidenced by bonds, debentures, notes or
other instruments, or for the deferred purchase price of property or services; (b) obligations of
such Person as lessee under leases which should have been or should be, in accordance with GAAP,
recorded as capital leases; (c) obligations issued for, or liabilities incurred on the account of,
such Person; (d) obligations or liabilities of such Person arising under letters of credit, credit
facilities or other acceptance facilities; (e) obligations of such Person under any guarantees or
other agreement to become secondarily liable for any obligation of any other Person, endorsements
(other than for collection or deposit in the ordinary course of business) and other contingent
obligations to provide funds for payment, to supply funds to invest in any Person or otherwise to
assure a creditor against loss; (f) subject to
Section 7.3
, obligations of such Person
secured by any Lien on any property of such Person; or (g) obligations of such Person under any
interest rate or currency exchange agreement.
Debt Service
shall mean, with respect to any particular period of time, scheduled
interest and/or principal payments under the Notes.
Debt Service Reserve Account
shall have the meaning set forth in
Section
3.1.1
.
4
Default
shall mean the occurrence of any event hereunder or under any other Loan
Document which, but for the giving of notice or passage of time, or both, would be an Event of
Default.
Default Rate
shall have the meaning set forth in the Note.
Defeasance Collateral
shall mean obligations or securities that (a) are not subject
to prepayment, call or early redemption, (b) provide for interest at a fixed rate, (c) have a
principal amount due at maturity that cannot vary or change, (d) are rated AAA or better by S&P
and Aaa or better by Moodys (or, if not rated by S&P, are eligible under S&Ps published criteria
in paragraphs 1, 2 or 3 of its Eligible Investment Criteria for AAA Rated Structured
Transactions), and (e) constitute government securities as defined in Section 2(a)(16) of the
Investment Company Act of 1940 as amended (15 U.S.C. 80a-1).
Defeasance Date
shall have the meaning set forth in
Section 2.3.5(a)
.
Defeasance Deposit
shall mean an amount equal to the Release Price for the
applicable Individual Property or Individual Properties subject to the Defeasance Event plus any
costs and expenses incurred or to be incurred in the purchase of Defeasance Collateral necessary to
meet the Scheduled Defeasance Payments.
Defeasance Event
shall have the meaning set forth in
Section 2.3.5(a)
.
Defeasance Lockout Period
shall have the meaning set forth in the Note.
Deficiency
shall have the meaning set forth in
Section 6.2.4(b)
.
Disclosure Documents
shall have the meaning set forth in
Section 14.3.1
.
Disqualified Transferee
shall mean any proposed transferee that, (i) has (within the
past ten (10) years) defaulted, or is now in default, beyond any applicable cure period, of its
material obligations, under any written agreement with Lender, any affiliate of Lender or any
financial institution; (ii) has a principal that has been convicted in a criminal proceeding for a
felony or a crime involving moral turpitude or that is an organized crime figure or is reputed (as
determined by Lender in its sole discretion) to have substantial business or other affiliations
with an organized crime figure; (iii) has at any time filed a voluntary petition under the
Bankruptcy Code or any other federal or state bankruptcy or insolvency law; (iv) as to which an
involuntary petition has at any time been filed under the Bankruptcy Code or any other federal or
state bankruptcy or insolvency law; (v) has at any time filed an answer consenting to or
acquiescing in any involuntary petition filed against it by any other person under the Bankruptcy
Code or any other federal or state bankruptcy or insolvency law; (vi) has at any time consented to
or acquiesced in or joined in an application for the appointment of a custodian, receiver, trustee
or examiner for itself or any of its property; (vii) has at any time made an assignment for the
benefit of creditors, or has at any time admitted its insolvency or inability to pay its debts as
they become due; or (viii) has been found by a court of competent jurisdiction or other
governmental authority in a comparable proceeding to have violated any federal or state securities
laws or regulations promulgated thereunder.
5
EBITDAR
shall mean earnings from operations before interest expense/income, federal,
state and local income taxes, depreciation and amortization, any rental expense on real property,
restructuring costs, unusual severance costs, debt issuance or stock offering costs, legal loss
reserve, casualty losses and/or related reserves, stock option expense and merger and acquisition
related expenses.
Eligible Account
shall mean (i) a segregated trust account or accounts maintained
with the corporate trust department of a federal depository institution or state-chartered
depository institution subject to regulations regarding fiduciary funds on deposit such as or
similar to Title 12 of the Code of Federal Regulations Section 9.10(b) which, in either case, has
corporate trust powers, acting in its fiduciary capacity or (ii) a segregated account maintained at
an Approved Bank. An Eligible Account will not be evidenced by a certificate of deposit, passbook
or other instrument.
Environmental Certificate
shall have the meaning set forth in
Section
12.2.1
.
Environmental Claim
shall mean any claim, action, cause of action, investigation or
written notice by any Person alleging potential liability (including potential liability for
investigatory costs, cleanup costs, natural resource damages, property damages, personal injuries
or penalties) arising out of, based upon or resulting from (a) the presence or release into the
environment of any Hazardous Materials from or at the Property, or (b) the violation, or alleged
violation, of any Environmental Law relating to the Property.
Environmental Event
shall have the meaning set forth in
Section 12.2.1
.
Environmental Indemnity
shall mean the Environmental Indemnity, dated the date
hereof, made by Guarantor in favor of Lender.
Environmental Insurance Policy
shall mean any environmental insurance policy
maintained by or for the benefit of Borrower with respect to the Property on the date hereof and
any environmental insurance policy hereafter obtained and maintained with respect to the Property
and acceptable to Lender.
Environmental Law
shall have the meaning provided in the Environmental Indemnity.
Environmental Reports
shall have the meaning set forth in
Section 12.1
.
ERISA
shall mean the United States Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and the rulings issued thereunder.
Event of Default
shall have the meaning set forth in
Section 17.1(a)
.
Excess Account Collateral
shall have the meaning set forth in
Section 2.3.8
.
Excess Cash Flow
shall have the meaning set forth in
Section 3.1.6
.
6
Exchange Act
shall have the meaning set forth in
Section 14.3.1
.
Excluded Personal Property
shall mean all personal property of the Master Lessee or
any other Tenants under Leases;
provided
,
however
, that Excluded Personal Property
shall not include walls or ceilings or any items that constitute fixtures (specifically including,
but not limited to plumbing and electrical fixtures, heating, ventilation and air conditioning,
wall and floor coverings, elevators and escalators). Excluded Personal Property shall include,
without limitation, any equipment attached to or installed at an Individual Property which is
unique to and used to further the business of Master Lessee or such Tenants at such Individual
Property, including, but not limited to, steel racking, dust collection systems, generators, order
pickers and other similar items. For purposes of this definition, the terms equipment and
fixtures shall have the meaning set forth in the Uniform Commercial Code in effect in the State
of New York.
Exculpated Parties
shall have the meaning set forth in
Section 18.1.1
.
Excusable Delay
shall mean a delay solely due to acts of God, governmental
restrictions, regulations or controls, stays, judgments, orders, decrees, enemy or hostile
governmental actions, terrorist acts, civil commotion, fire, casualty, strikes, work stoppages,
shortages of labor or materials or other causes beyond the reasonable control of Borrower, but
Borrowers lack of funds in and of itself shall not be deemed a cause beyond the control of
Borrower.
Fiscal Year
shall mean the fifty-two (52) or fifty-three (53) week period ending on
the Saturday immediately preceding the last day of each calendar year of the term of the Loan or
the portion of any such period falling within the term of the Loan in the event that such a period
occurs partially before or after, or partially during, the term of the Loan.
Fiscal Quarter
shall mean each quarter within a Fiscal Year in accordance with GAAP.
Fitch
shall mean Fitch Ratings Inc.
GAAP
shall mean the generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature and authority within the
accounting profession), or in such other statements by such entity as may be in general use by
significant segments of the U.S. accounting profession, to the extent such principles are
applicable to the facts and circumstances on the date of determination.
General Release Conditions
shall have the meaning set forth in
Section
2.3.4
.
Geographic Quadrant
shall mean any geographic quadrant identified on
Schedule
II
attached hereto.
Governmental Authority
shall mean any court, board, agency, commission, office or
other authority of any nature whatsoever for any governmental unit (federal, state, county,
district, municipal, city or otherwise) whether now or hereafter in existence.
7
Guarantor
shall mean BlueLinx Holdings Inc., a Delaware corporation.
Hazardous Materials
shall have the meaning provided in the Environmental Indemnity.
Holding Account
shall have the meaning set forth in
Section 3.1.1
.
Immediate Repairs and Remediation Completion Deadline
shall have the meaning set
forth in
Section 16.4
.
Immediate Repair and Remediation Reserve Account
shall have the meaning set forth in
Section 3.1.1
.
Immediate Repairs and Remediation
shall mean, collectively, the immediate repairs
and environmental remediation required to be made to the Property (other than immediate repairs
required to be made to the portion of the Improvements that constitutes shed space) described in
Schedule III
attached hereto.
Impositions
shall mean all taxes (including all ad valorem, sales (including those
imposed on lease rentals), use, single business, gross receipts, value added, intangible
transaction, privilege or license or similar taxes), governmental assessments (including all
assessments for public improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not commenced or completed within the term of this Agreement), water,
sewer or other rents and charges, excises, levies, fees (including license, permit, inspection,
authorization and similar fees), and all other governmental charges, in each case whether general
or special, ordinary or extraordinary, or foreseen or unforeseen, of every character in respect of
the Property and/or any Rents (including all interest and penalties thereon), which at any time
prior to, during or in respect of the term hereof may be assessed or imposed on or in respect of or
be a Lien upon (a) Borrower or Maryland Loan Guarantor (including all franchise or other taxes
imposed on Borrower or Maryland Loan Guarantor for the privilege of doing business in the
jurisdiction in which the Property is located), (b) the Property, or any other collateral delivered
or pledged to Lender in connection with the Loan, or any part thereof, or any Rents therefrom or
any estate, right, title or interest therein, or (c) any occupancy, operation, use or possession
of, or sales from, or activity conducted on, or in connection with the Property or the leasing or
use of all or any part thereof by Borrower or Maryland Loan Guarantor. Nothing contained in this
Agreement shall be construed to require Borrower or Maryland Loan Guarantor to pay any tax,
assessment, levy or charge imposed on (i) any Tenant occupying any portion of the Property or (ii)
Lender in the nature of a capital levy, estate, inheritance, succession, income or net revenue tax.
Improvements
shall have the meaning set forth in the Security Instrument.
Increased Costs
shall have the meaning set forth in
Section 2.4.1
.
Indebtedness
shall mean, at any given time, the Principal Amount, together with all
accrued and unpaid interest thereon and all other obligations and liabilities due or to become due
to Lender pursuant hereto, under the Notes or in accordance with the other Loan Documents
and all other amounts, sums and expenses paid by or payable to Lender hereunder or pursuant to
the Notes or the other Loan Documents.
8
Indemnified Parties
shall have the meaning set forth in
Section 19.12(b)
.
Independent
shall mean, when used with respect to any Person, a Person who: (i)
does not have any direct financial interest or any material indirect financial interest in any
Borrower or in any Affiliate of any Borrower, (ii) is not connected with any Borrower or any
Affiliate of any Borrower as an officer, employee, promoter, underwriter, trustee, partner, member,
manager, creditor, director, supplier, customer or person performing similar functions and (iii) is
not a member of the immediate family of a Person defined in clause (i) or (ii) above.
Independent Accountant
shall mean a firm of nationally recognized, certified public
accountants which is Independent and which is selected by Borrower and reasonably acceptable to
Lender. Lender acknowledges that Ernst & Young LLP constitutes an approved Independent Accountant.
Independent Architect
shall mean an architect, engineer or construction consultant
selected by Borrower which is Independent, licensed to practice in the State (if an architect), has
at least five (5) years of applicable experience and which is reasonably acceptable to Lender.
Lender acknowledges that, for purposes of the Physical Condition Reports, ATC Associates, Inc. and
Land America Assessment Corp. are each an approved Independent Architect.
Independent Director
,
Independent Manager
, or
Independent Member
shall mean a Person who is not and will not be while serving and has never been (i) a member (other
than an Independent Member), manager (other than an Independent Manager), director, (other than an
Independent Director), employee, attorney, or counsel of Borrower or its Affiliates, (ii) a
customer, supplier or other Person who derives more than one percent (1%) of its purchases or
revenues from its activities with Borrower or its Affiliates, (iii) a direct or indirect legal or
beneficial owner in any entity referred to in clause (i) or (ii) above or any of its Affiliates,
(iv) a member of the immediate family of any member, manager, employee, attorney, customer,
supplier or other Person referred to in clause (i), (ii) or (iii) above, or (v) a person
Controlling or under the common Control of anyone listed in clauses (i) through (iv) above. A
Person that otherwise satisfies the foregoing shall not be disqualified from serving as an
Independent Director or Independent Manager or Independent Member if such individual is at the time
of initial appointment, or at any time while serving as such, is an Independent Director or
Independent Manager or Independent Member, as applicable, of a Single Purpose Entity affiliated
with Borrower.
Individual Parcel
shall have the meaning set forth in the Security Instrument.
Individual Borrower
shall have the meaning set forth in the first paragraph of this
Agreement.
Individual Property
shall have the meaning set forth in the Security Instrument.
9
Insurance Requirements
shall mean, collectively, (i) all material terms of any
insurance policy required pursuant to this Agreement and (ii) all material regulations and
then-current standards applicable to or affecting the Property or any part thereof or any use or
condition thereof.
Insurance Reserve Account
shall have the meaning set forth in
Section 3.1.1
.
Insurance Reserve Amount
shall have the meaning set forth in
Section 16.2
.
Intangible
shall have the meaning set forth in the Security Instrument.
Intercreditor Agreement
shall mean that certain Mortgagee Agreement between
Wachovia, as agent for the lenders under the Revolving Loan, and Lender and Wachovia, as holders of
the Notes.
Interest Period
shall have the meaning set forth in the Notes.
Interest Rate
shall have the meaning set forth in the Notes.
Key Properties
shall mean, collectively, (i) any Individual Property which contains
greater than 200,000 square feet of main distribution building space and (ii) the Individual
Property located in Englewood, Colorado and containing 68,721 square feet of space, which
Individual Property is used by the Borrower for office purposes.
Land
shall have the meaning set forth in the Security Instrument.
Late Payment Charge
shall have the meaning set forth in
Section 2.2.3
.
Lease
shall mean any lease (including the Master Lease), sublease or subsublease,
letting, license, concession or other agreement (whether written or oral and whether now or
hereafter in effect), pursuant to which any Person is granted a possessory interest in, or right to
use or occupy all or any portion of any space in any Individual Property, and every modification,
amendment or other agreement relating to such lease, sublease, subsublease, or other agreement
entered into in connection with such lease, sublease, subsublease, or other agreement and every
guarantee of the performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto. Notwithstanding the foregoing, the term Lease
shall exclude all of the Subleases at all times prior to a termination of the Master Lease.
LCR
shall mean a ratio, as determined by Lender, in which: (i) the numerator is
Master Lessees EBITDAR, applied consistently, as stated on Master Lessees four (4) most recent
quarterly financial statements delivered to Lender by Borrower or Master Lessee pursuant to
Section 11.2.1
, for the trailing twelve (12) month period immediately prior to the
applicable calculation date; and (ii) the denominator is Master Lease Base Rent for the trailing
twelve (12) month period immediately prior to the applicable calculation date (and, in the event
that the calculation date occurs prior to the first anniversary of the date of the Master Lease,
Master Lease Base Rent applicable to any month prior to the date of the Master Lease shall be
deemed to be equal to one-twelfth (1/12) of the Master Lease Base Rent payable during the first year
of the term of the Master Lease).
10
LCR Deterioration Reserve Account
shall have the meaning set forth in
Section
3.1.1
.
LCR Test
shall mean the test performed by Lender on a trailing four (4) Fiscal
Quarter basis pursuant to the terms of
Section 16.5
hereof following the end of each Fiscal
Quarter after the Closing Date to determine whether a Low LCR Cash Sweep Period has occurred and is
continuing.
Legal Requirements
shall mean all present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, injunctions, rules, regulations and requirements, and
irrespective of the nature of the work to be done, of every Governmental Authority including,
without limitation, Environmental Laws and all covenants, restrictions and conditions now or
hereafter of record which may be applicable to Borrower, Maryland Loan Guarantor or to the Property
and the Improvements and the Building Equipment thereon, or to the use, manner of use, occupancy,
possession, operation, maintenance, alteration, repair or reconstruction of the Property and the
Improvements and the Building Equipment thereon, including, without limitation, building and zoning
codes and ordinances and laws relating to handicapped accessibility.
Lender
shall have the meaning set forth in the first paragraph of this Agreement.
Lenders Consultant
shall mean an environmental and engineering consulting firm
selected by Lender and reasonably acceptable to Borrower having experience (i) conducting
environmental and engineering assessments for properties similar to the Property and (ii) preparing
and supervising remediation plans for properties similar to the Property.
Lender Group
shall have the meaning set forth in
Section 14.3.2(b)
.
Letter of Credit
shall mean an irrevocable, unconditional, transferable, clean sight
draft letter of credit (either an evergreen letter of credit or one which does not expire until at
least sixty (60) days after the Maturity Date (the
LC Expiration Date
)), in favor of
Lender and entitling Lender to draw thereon in New York, New York, based solely on delivery or a
sight draft containing a statement executed by an officer or authorized signatory of Lender and
issued by an Approved Bank. If at any time (a) the institution issuing any such Letter of Credit
shall cease to be an Approved Bank or (b) the Letter of Credit is due to expire prior to the LC
Expiration Date, Lender shall have the right immediately to draw down the same in full and hold the
proceeds thereof in accordance with the provisions of this Agreement, unless Borrower shall deliver
a replacement Letter of Credit from an Approved Bank within (i) as to (a) above, thirty (30) days
after Lender delivers written notice to Borrower that the institution issuing the Letter of Credit
has ceased to be an Approved Bank or (ii) as to (b) above, at least ten (10) Business Days prior to
the expiration date of said Letter of Credit.
Liabilities
shall have the meaning set forth in
Section 14.3.2(b)
.
License
shall have the meaning set forth in
Section 4.1.23
.
11
Lien
shall mean any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance or charge on or affecting Borrower,
Maryland Loan Guarantor, the Property, any portion thereof or any interest therein, including,
without limitation, any conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, the filing of any financing
statement, and the filing of mechanics, materialmens and other similar liens and encumbrances,
excluding any such items solely affecting the Excluded Personal Property.
Loan
shall mean the loan in the amount of the Loan Amount made by Lender to Borrower
pursuant to this Agreement.
Loan Amount
shall mean the original principal amount of the Loan equal to
$295,000,000.
Loan Documents
shall mean, collectively, this Agreement, the Notes, the Security
Instrument, the Assignment of Leases, the Environmental Indemnity, the Master Lease, the Master
Lease SNDA, the Account Agreement, the Recourse Guaranty, the Maryland Loan Guaranty and all other
documents executed and/or delivered by Borrower, Maryland Loan Guarantor, Master Lessee or
Guarantor, as applicable, to Lender in connection with the Loan or in connection with any
Substitution, including any opinion certificates or other certifications or representations
delivered by or on behalf of Borrower or any Affiliate of Borrower to Lender.
Low LCR Cash Sweep Period
shall mean any period (a) commencing on the Payment Date
following the conclusion of any two (2) consecutive Fiscal Quarters for which the LCR is less than
2.50:1.00, as determined by an LCR Test in accordance with
Section 16.5
hereof, and (ii)
ending on the day immediately preceding the Payment Date following the conclusion of any two (2)
consecutive Fiscal Quarters for which the LCR equals or exceeds 2.50:1.00, as determined by an LCR
Test in accordance with
Section 16.5
hereof.
LTV Ratio
shall mean the ratio, expressed as a percentage, of the Principal Amount,
as of the date of determination, to the Aggregate Appraised Value, as of the date of determination.
Maryland Borrower
shall mean ABP MD (Baltimore) Subsidiary LLC, a Delaware limited
liability company and a wholly owned subsidiary of the Maryland Loan Guarantor.
Maryland Loan Guarantor
shall have the meaning provided in the first paragraph
hereof.
Maryland Loan Guaranty
shall mean that certain guaranty delivered by Maryland Loan
Guarantor in favor of Lender.
Maryland Property
shall mean the Individual Property located in Maryland.
Master Lease
shall mean that certain Amended and Restated Master Lease Agreement for
the Individual Properties by and between each Individual Borrower (or in the case
of the Maryland Property, the Maryland Loan Guarantor), as lessor, and Master Lessee, as
lessee, dated as of the date hereof, as more particularly described in
Section 5.1.23
.
12
Master Lease Base Rent
shall mean monthly payments under the Master Lease of
scheduled base rent.
Master Lease Recurrent Additional Rent
shall mean monthly payments under the Master
Lease of additional rent for scheduled pass-through expenses, including, without limitation, taxes
and insurance.
Master Lease Rent
shall mean, collectively, the Master Lease Scheduled Rent and the
Master Lease Variable Additional Rent.
Master Lease Rent Payment Direction Letter
shall mean a letter in the form of
Exhibit P pursuant to which Borrower (or in the case of the Maryland Property, the Maryland Loan
Guarantor) instructs Master Lessee to make payments of Master Lease Scheduled Rent and, during the
continuance of an Event of Default and during a Low LCR Cash Sweep Period, Master Lease Variable
Additional Rent directly to the Holding Account as more particularly set forth in
Section
3.1.9(a)
.
Master Lease Rent Shortfall
shall mean a shortfall in the Holding Account with
respect to all or any portion of the Master Lease Rent required to be deposited therein by Master
Lessee pursuant to the Master Lease Rent Payment Direction Letter.
Master Lease Scheduled Rent
shall mean, collectively, the Master Lease Base Rent and
the Master Lease Recurrent Additional Rent.
Master Lease SNDA
shall mean that certain Subordination, Non-Disturbance and
Attornment agreement among Borrower (or in the case of the Maryland Property, the Maryland Loan
Guarantor), Master Lessee and Lender dated of even date herewith.
Master Lease Variable Additional Rent
shall mean with respect to any month, payments
payable by the Master Lessee under the Master Lease of variable operating and occupancy expenses in
such month, including, without limitation, common area maintenance expenses, but excluding Master
Lease Recurrent Additional Rent.
Master Lessee
shall mean BlueLinx Corporation, a Georgia corporation.
Master Lessee Officers Certificate
shall mean a certificate executed by an
authorized signatory of Master Lessee that is familiar with the financial condition of Master
Lessee and the operation of the Property.
Material Adverse Effect
shall mean any event or condition that has a material
adverse effect on (i) the Property taken as a whole, (ii) the use, operation, or value of any Key
Property or the use, operation or value of the Property taken as a whole, (iii) the business,
profits, operations or financial condition of Borrower or the Maryland Loan Guarantor, (iv) the
ability of Maryland Loan Guarantor to satisfy any of Maryland Loan Guarantors obligations under
the Loan Documents or (v) the ability of Borrower to repay the principal and/or interest of the
Loan as it becomes due or to satisfy any of Borrowers obligations under the Loan Documents.
13
Material Alteration
shall mean any Alteration which, when aggregated with all
related Alterations (other than decorative work such as painting, wall papering and carpeting and
the replacement of fixtures, furnishings and equipment to the extent being of a routine and
recurring nature and performed in the ordinary course of business) constituting a single project,
is estimated to cost in excess of forty percent (40%) of the Allocated Loan Amount for the
Individual Property to which such Alteration is to be made;
provided
,
however
, that
the term
Material Alteration
shall not include Alterations being undertaken at the sole
cost and expense of (a) the Master Lessee pursuant to the Master Lease so long as any security
required for any such material alteration under the Master Lease is deposited with Lender (or any
related guaranty permitted hereunder in lieu of such deposit runs to the benefit of Lender and is
delivered to Lender) or (b) a Tenant pursuant to a Lease.
Material Sublease
shall mean, during any Low LCR Cash Sweep Period, any Sublease to
a single Tenant covering more than 50,000 rentable square feet at any Individual Property.
Maturity Date
shall have the meaning set forth in the Notes.
Maturity Date Payment
shall have the meaning set forth in the Notes.
Maximum Legal Rate
shall mean the maximum non-usurious interest rate, if any, that
at any time or from time to time may be contracted for, taken, reserved, charged or received on the
indebtedness evidenced by the Notes and as provided for herein or the other Loan Documents, under
the laws of such state or states whose laws are held by any court of competent jurisdiction to
govern the interest rate provisions of the Loan.
Mezzanine Borrower
shall have the meaning set forth in
Section 5.1.11
.
Mezzanine Loan
shall have the meaning set forth in
Section 5.1.11
.
Mezzanine Loan Documents
shall have the meaning set forth in
Section 5.1.11
.
Monetary Default
shall mean a Default (i) that can be cured with the payment of
money or (ii) arising pursuant to
Section 17.1(a)(vi)
or
(vii)
.
Monthly Debt Service Payment Amount
shall have the meaning set forth in the Notes.
Monthly Insurance Reserve Amount
shall have the meaning set forth in
Section
16.2
.
Monthly Structural Repair Reserve Amount
shall mean an amount determined by Lender
equal to one-twelfth (1/12) of the product of (i) $0.05 and (ii) the aggregate square footage of
the portion of the Improvements that constitutes distribution center space that is subject to a
Sublease;
provided
,
however
, that in the event that, at the time of determination,
less than ten percent (10%) the aggregate net rentable square footage of the Improvements is
subject to Subleases, the Monthly Structural Repair Reserve Amount shall be $0.00.
14
Monthly Tax Reserve Amount
shall have the meaning set forth in
Section 16.1
.
Moodys
shall mean Moodys Investors Service, Inc.
Mortgage Tax States
shall mean, collectively, Alabama, Florida, Kansas, Georgia,
Minnesota, New York, Oklahoma, Tennessee, Virginia and any other State in which an Individual
Property or any Substitute Property may be located which imposes a mortgage recording or other
mortgage tax.
New Sublease
shall have the meaning set forth in
Section 8.7.1
.
Non-Consolidation Opinion
shall have the meaning provided in
Section 2.5.5
.
Non-Disqualification Opinion
shall mean an opinion of outside tax counsel reasonably
acceptable to the Lender or the Rating Agencies to whom such opinion is addressed that a
contemplated action will neither cause any trust formed as a REMIC pursuant to a Securitization to
fail to qualify as a real estate mortgage investment conduit within the meaning of Section 860D
of the Code at any time that any regular interests in the REMIC are outstanding nor cause a
prohibited transaction tax (within the meaning of Section 860F(a)(2) of the Code) or prohibited
contribution tax (within the meaning of Section 860G(d) of the Code) to be imposed on any such
REMIC.
Non-Disturbance Agreement
shall have the meaning set forth in
Section 8.7.7
.
Notes
shall mean, collectively, (a) that certain Amended, Restated and Consolidated
Note A-1, dated the date hereof, made by Borrower, as maker, in favor of Lender, as payee, in the
principal amount of $147,500,000 and (b) that certain Amended, Restated and Consolidated Note A-2,
dated the date hereof, made by Borrower, as maker, in favor of Lender, as payee, in the principal
amount of $147,500,000, as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
Obligations
shall have meaning set forth in the recitals of the Security Instrument.
OFAC
List means the list of specially designated nationals and blocked persons
subject to financial sanctions that is maintained by the U.S. Treasury Department, Office of
Foreign Assets Control and accessible through the internet website www.treas.gov/ofac/t11sdn.pdf.
Officers Certificate
shall mean a certificate executed by an authorized signatory
of Borrower that is familiar with the financial condition of Borrower and the operation of the
Property,
provided
that the Officers Certificate required under
Article XI
shall
be executed by the Chief Financial Officer of Borrower.
15
Opinion of Counsel
shall mean an opinion of counsel of a law firm selected by
Borrower and reasonably acceptable to Lender.
Other Charges
shall mean, collectively, (i) all sums, charges, fees, costs,
expenses, common area maintenance charges and other charges or assessments reserved in or payable
under any reciprocal easement agreements, if any, and (ii) maintenance charges, impositions other
than Impositions, and any other charges, including, without limitation, vault charges and license
fees for the use of vaults, chutes and similar areas adjoining the Property, now or hereafter
levied or assessed or imposed against the Property or any part thereof by any Governmental
Authority, other than those required to be paid by Master Lessee or any other Tenant pursuant to
its Lease.
Other Taxes
shall have the meaning set forth in
Section 2.4.3
.
Outparcel
shall mean each parcel of Land legally described in
Schedule VII
attached hereto.
Outparcel Release Instruments
shall have the meaning set forth in
Section
2.3.7
.
Payment Date
shall have the meaning set forth in the Notes.
Permitted Debt
shall mean collectively, (a) the Notes and the other obligations,
indebtedness and liabilities specifically provided for in any Loan Document and secured by this
Agreement, the Security Instrument and the other Loan Documents and (b) trade payables incurred in
the ordinary course of Borrowers (or in the case of the Maryland Property, Maryland Loan
Guarantors) business, not secured by Liens on the Property (other than Permitted Encumbrances and
other than liens being properly contested in accordance with the provisions of this Agreement or
the Security Instrument), not to exceed two percent (2%) of the aggregate Principal Amount for the
Property at any one time outstanding, payable by or on behalf of Borrower (or Maryland Loan
Guarantor, as applicable) for or in respect of the operation of the Property in the ordinary course
of operating Borrowers (or Maryland Loan Guarantor, as applicable) business,
provided
that
(but subject to the remaining terms of this definition) each such amount shall be paid within sixty
(60) days following the date on which each such amount is incurred. Nothing contained herein shall
be deemed to require Borrower or Maryland Loan Guarantor to pay any amount, so long as Borrower (or
Maryland Loan Guarantor, as applicable) is in good faith, and by proper legal proceedings,
diligently contesting the validity, amount or application thereof,
provided
that in each
case, at the time of the commencement of any such action or proceeding, and during the pendency of
such action or proceeding (i) no Event of Default shall exist and be continuing hereunder, (ii)
adequate reserves with respect thereto are maintained on the books of Borrower (or Maryland Loan
Guarantor, as applicable) in accordance with GAAP (as determined by Borrower (or Maryland Loan
Guarantor, as applicable) or, at its option, an Independent Accountant), and (iii) such contest
operates to suspend collection or enforcement, as the case may be, of the contested amount and such
contest is maintained and prosecuted continuously and with diligence. Notwithstanding anything set
forth herein, in no event shall Borrower or Maryland Loan Guarantor be permitted under this
provision to enter into a note (other than the Notes and the other Loan Documents) or other
instrument for borrowed money.
16
Permitted Encumbrances
shall mean collectively, (a) the Liens and security interests
created or permitted by the Loan Documents, (b) all Liens, encumbrances and other matters disclosed
in the Title Policy or the Survey relating to such Individual Property or any part thereof, (c)
Liens, if any, for Impositions imposed by any Governmental Authority not yet due or delinquent (d)
Liens arising after the date hereof which are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted in accordance with
Section 7.3
hereof, (e) easements and encumbrances permitted pursuant to
Section 8.3(ii)
and (f) such
other Liens as Lender may approve in writing in Lenders sole discretion.
Permitted Fund Manager
means any Person that on the date of determination is (i) a
nationally-recognized manager of investment funds investing in debt or equity interests (including
debt and equity interests relating to commercial real estate) and (ii) not subject to a bankruptcy
proceeding.
Permitted Investments
shall have the meaning set forth in the Account Agreement.
Person
shall mean any individual, corporation, partnership, joint venture, limited
liability company, estate, trust, unincorporated association, any federal, state, county or
municipal government or any bureau, department or agency thereof and any fiduciary acting in such
capacity on behalf of any of the foregoing.
Personal Property
shall have the meaning set forth in the Security Instrument.
Physical Conditions Reports
shall mean the structural engineering reports with
respect to the Individual Properties (i) prepared by an Independent Architect, (ii) addressed to
Lender, (iii) prepared based on a scope of work determined by Lender in Lenders reasonable
discretion, and (iv) in form and content acceptable to Lender, in Lenders reasonable discretion,
together with any amendments or supplements thereto. The Physical Conditions Reports may consist
of updates to the existing structural engineering reports,
provided
that (A) such updated
reports are in form and content acceptable to Lender in Lenders reasonable discretion and (B) the
Independent Architect preparing such updated reports shall provide to Lender a reliance letter
satisfactory to Lender.
Plan
shall have the meaning set forth in
Section 4.1.10
.
Principal Amount
shall mean, collectively, the aggregate Principal Amount under
each of the Notes, as such term is defined in each of the Notes.
Prohibited Person
means any Person identified on the OFAC List or any other Person
with whom a U.S. Person may not conduct business or transactions by prohibition of Federal law or
Executive Order of the President of the United States or America.
Proceeds
shall have the meaning set forth in
Section 6.2.2
.
Proceeds Prepayments
shall mean Proceeds applied by Lender as a prepayment of
principal in accordance with
Section 6.2.3 hereof
.
17
Proceeds Reserve Account
shall have the meaning set forth in
Section 3.1.1
.
Project
shall have the meaning set forth in
Section 16.3
.
Property
shall have the meaning set forth in the Security Instrument.
Property Release
shall have the meaning set forth in
Section 2.3.4
.
Property Release Notice
shall have the meaning set forth in
Section 2.3.4
.
Provided Information
shall have the meaning set forth in
Section 14.1
.
PZR
shall mean The Planning Zoning Resource Corporation.
Qualified Transferee
shall mean any entity (a) that together with its Close
Affiliates (i) has a net worth of at least $250,000,000 (calculated exclusive of the Property) as
of a date no more than six (6) months prior to the date of the transfer and (ii) manages or owns at
the time of the transfer assets of at least $600,000,000 (calculated exclusive of the Property);
provided
,
however
, that if such transferee has experience in operating warehouse or
distribution facilities, properties (excluding the Property) containing not fewer than 4,000,000
rentable square feet of warehouse space in the aggregate, then such transferee shall meet the
requirements of this clause (a) if it, together with its Close Affiliates (1) has a net worth of at
least $150,000,000 (calculated exclusive of the Property) as of a date no more than six (6) months
prior to the date of the transfer and (2) manages or owns at the time of the transfer assets of at
least $400,000,000 (calculated exclusive of the Property), and (b) that is not a Disqualified
Transferee.
Rating Agencies
shall mean (a) prior to a Securitization, each of S&P, Moodys and
Fitch and any other nationally-recognized statistical rating agency which has been approved by
Lender and (b) after a Securitization has occurred, each such Rating Agency which has rated the
Securities in the Securitization.
Rating Agency Confirmation
shall mean, collectively, a written affirmation from each
of the Rating Agencies that the credit rating of the Securities given by such Rating Agency
immediately prior to the occurrence of the event with respect to which such Rating Agency
Confirmation is sought will not be qualified, downgraded or withdrawn as a result of the occurrence
of such event, which affirmation may be granted or withheld in such Rating Agencys sole and
absolute discretion. In the event that, at any given time, no such Securities shall have been
issued and are then outstanding, then the term Rating Agency Confirmation shall be deemed instead
to require the written approval of Lender based on its good faith determination of whether the
Rating Agencies would issue a Rating Agency Confirmation if any such Securities were outstanding.
Recourse Guaranty
shall mean that certain Guaranty of Recourse Obligations of
Borrower, dated as of the date hereof, by Guarantor in favor of Lender, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
Register
shall have the meaning set forth in
Section 15.4
.
18
Regulatory Change
shall mean any change after the date of this Agreement in federal,
state or foreign laws or regulations or the adoption or the making, after such date, of any
interpretations, directives or requests applying to Lender, or any Person Controlling Lender or to
a class of banks or companies Controlling banks of or under any federal, state or foreign laws or
regulations (whether or not having the force of law) by any court or Governmental Authority or
monetary authority charged with the interpretation or administration thereof.
Related Remaining Property
shall have the meaning set forth in
Section
2.3.7
.
Release Date
shall have the meaning provided in
Section 2.3.4(a)
.
Release Instruments
shall have the meaning provided in
Section 2.3.4(c)
.
Release Price
shall mean the product of (a) the Allocated Loan Amount for the
Release Property and (b) either (1) with respect to any Release Property that is a Key Property,
one hundred twenty-five percent (125%) or (2) with respect to any Release Property that is not a
Key Property, the applicable Release Price Percentage. The amount of any Proceeds Prepayments
with respect to an Individual Property shall (after calculating such Release Price based upon the
original Allocated Loan Amount for such Property without deduction, for purposes of such
calculation, for any such prepayments) be deducted from the Release Price for such Property.
Release Price Percentage
shall mean, as of any Release Date, (i) if the Principal
Amount that would be outstanding immediately following the release of the applicable Release
Property is from $295,000,000 to and including $265,500,000, one hundred percent (100%) or (ii) if
the Principal Amount that would be outstanding immediately following the release of the applicable
Release Property is less than $265,500,000, one hundred ten percent (110%),
provided
that,
in the case of each of clause (i) and clause (ii), any prior reductions in the Principal Amount
outstanding as a result of payments of Release Prices in respect of Key Properties and any
mandatory prepayment made pursuant to the provisions of
Section 6.2.3
and Section 4(b) of
the Note shall be disregarded in determining the Principal Amount that would be outstanding
immediately following the release of the applicable Release Property.
Release Property
shall have the meaning provided in
Section 2.3.4
.
Rents
shall mean all rents, rent equivalents, moneys payable as damages or in lieu
of rent or rent equivalents, royalties (including, without limitation, all oil and gas or other
mineral royalties and bonuses), income, receivables, receipts, revenues, deposits (including,
without limitation, security, utility and other deposits), accounts, cash, issues, profits, charges
for services rendered, and other consideration of whatever form or nature received by or paid to or
for the account of or benefit of Borrower or Maryland Loan Guarantor from any and all sources
arising from or attributable to the Property, including, but not limited to the Master Lease and
the Leases, and Proceeds, if any, from business interruption or other loss of income insurance.
Notwithstanding the foregoing, Rents shall not include any sums payable under (i) the Oil, Gas and
Mineral Lease, dated as of June 17, 2003, between Georgia-Pacific Corporation, as landlord, and
Eagle Oil & Gas Co., as tenant, as amended by that certain Amendment to Oil, Gas and Mineral Lease,
dated as of May 31, 2005, by and between ABP TX (FORT WORTH) LLC, as
landlord, and Antero Resources I, LP and Eagle Oil & Gas Co., as tenant and (ii) the Oil and
Gas Lease, dated November 7, 1988, between Georgia-Pacific Corporation, as landlord, and GonzOil,
Inc., successor by assignment to Weinsz Oil & Gas, as successor by assignment to Spenser Petroleum
Corporation.
19
Replaced Property
shall have the meaning provided in
Section 2.3.6
.
Revolving Loan
shall mean the loan made by Wachovia pursuant to the Revolving Loan
Agreement (as such term is defined in the Intercreditor Agreement).
S&P
shall mean Standard & Poors Ratings Services, a division of The McGraw-Hill.
Scheduled Defeasance Payments
shall have the meaning provided in
Section
2.3.5(b)
.
Securities
shall have the meaning set forth in
Section 14.1
.
Securities Act
shall have the meaning set forth in
Section 14.3.1
.
Securitization
shall have the meaning set forth in
Section 14.1
.
Security Agreement
shall have the meaning set forth in
Section 2.3.5(a)
.
Security Deposits
shall have the meaning provided in the Assignment of Leases.
Security Instrument
shall mean that, collectively, those certain Amended, Restated
and Consolidated Mortgages, Security Agreements, Financing Statements, Fixture Filings and
Assignments of Master Lease, Leases, Rents and Security Deposits or similarly entitled instruments,
dated the date hereof, executed and delivered by the applicable Borrower (or in the case of the
Maryland Property, the Maryland Loan Guarantor) to Lender (or to a trustee for the benefit of
lender, as applicable) and encumbering, in each case, its Individual Property, as any of the
foregoing may be amended, restated, replaced, supplemented or otherwise modified from time to time.
Servicer
shall mean such Person designated in writing with an address for such
Person by Lender, in its sole discretion, to act as Lenders agent hereunder with such powers as
are specifically delegated to the Servicer by Lender, whether pursuant to the terms of this
Agreement, the Account Agreement or otherwise, together with such other powers as are reasonably
incidental thereto.
Single Purpose Entity
shall mean a Person, other than an individual, which
(i) is formed or organized solely for the purpose of (1) owning, holding, developing, using,
operating and financing an ownership interest in the Property or its Individual Property, entering
into this Agreement with the Lender, refinancing its Individual Property in connection with a
permitted repayment of the Loan or portion thereof, and transacting lawful business that is
incident, necessary and appropriate to accomplish the foregoing, or (2) acting as
a general partner of a limited partnership that owns the Property or an Individual Property or
the sole or managing member of a limited liability company that owns the Property or an Individual
Property, as applicable;
20
(ii) does not engage in any business unrelated to (1) the Property or its Individual Property
and the ownership, development, use, operation and financing thereof, or (2) acting as general
partner of a limited partnership that owns the Property or an Individual Property or the sole or
managing member of a limited liability company that owns the Property or an Individual Property, as
applicable;
(iii) has not and will not have (1) any material assets other than the Property or its
Individual Property and personal property necessary or incidental to its interest in the Property
or its Individual Property, or the operation, management and financing thereof, or its partnership
interest in a limited partnership, or the member interest in a limited liability company that owns
the Property or an Individual Property, or acts as the general partner or managing member thereof
(or, in the case of Maryland Borrower, acts as the Subsidiary of Maryland Loan Guarantor), as
applicable; or (2) any indebtedness other than the Permitted Debt;
(iv) maintains its own separate books and records and its own accounts, in each case which are
separate and apart from the books and records and accounts of any other Person;
(v) holds itself out as being a Person, separate and apart from any other Person;
(vi) does not and will not commingle its funds or assets with those of any other Person;
(vii) conducts its own business in its own name;
(viii) maintains separate financial statements and will not permit its assets to be listed as
assets on the financial statement of any other Person;
provided
,
however
, that any
such consolidated financial statement shall contain a note indicating that its separate assets and
liabilities are neither available to pay the debts of the consolidated entity nor constitute
obligations of the consolidated entity;
(ix) pays its own liabilities out of its own funds;
(x) observes in all material respects all partnership, corporate or limited liability company
formalities, as applicable;
(xi) pays the salaries of its own employees, if any, and maintains a sufficient number of
employees, if any, in light of its contemplated business operations;
(xii) except pursuant to the Loan Documents, does not guarantee or otherwise obligate itself
with respect to the debts of any other Person or hold out its credit as being available to satisfy
the obligations of any other Person;
21
(xiii) does not acquire obligations or securities of its partners, members or shareholders;
(xiv) allocates fairly and reasonably shared expenses, including, without limitation, any
overhead for shared office space, if any;
(xv) uses separate stationary, invoices, and checks;
(xvi) maintains an arms-length relationship with its Affiliates;
(xvii) except pursuant to the Loan Documents, does not and will not pledge its assets for the
benefit of any other Person or make any loans or advances to any other Person;
(xviii) does and will continue to use commercially reasonable efforts to correct any known
misunderstanding regarding its separate identity;
(xix) maintains adequate capital in light of its contemplated business operations; and
(xx) has not and will not engage in, seek, or consent to the dissolution, winding up,
liquidation, consolidation or merger and except as otherwise permitted in this Agreement, has not
and will not engage in, seek or consent to any asset sale, transfer of its partnership, membership
or shareholder interests (if such entity is a general partner in a limited partnership or the
managing member in a limited liability company), or amendments of its partnership or operating
agreement, certificate of incorporation, articles of organization or other organizational document.
In addition, if such Person is a partnership, (1) all general partners of such Person shall be
Single Purpose Entities; and (2) if such Person has more than one general partner, then the
organizational documents shall provide that such Person shall continue (and not dissolve) for so
long as a solvent general partner exists. In addition, if such Person is a corporation, then, at
all times: (a) such Person shall have at least two (2) Independent Directors and (b) the board of
directors of such Person may not take any action requiring the unanimous affirmative vote of one
hundred percent (100%) of the members of the board of directors unless all of the directors,
including the Independent Directors, shall have participated in such vote. In addition, if such
Person is a limited liability company, (a) with only one (1) member, then, such Person shall be
organized in the State of Delaware, have as its only member a non-managing member, and be managed
by a board of managers, (b) shall have at least two (2) Independent Managers or Independent
Members, (c) if such Person is managed by a board of managers, the board of managers of such Person
may not take any action requiring the unanimous affirmative vote of one hundred percent (100%) of
the members of the board of managers unless all of the managers, including the Independent
Managers, shall have participated in such vote, (c) if such Person is not managed by a board of
managers, the members of such Person may not take any action requiring the affirmative vote of one
hundred percent (100%) of the members of such Person unless all of the members, including the
Independent Members, shall have participated in such vote, (d) with more than one member, each
managing member shall be a Single Purpose Entity, and (e) its articles of organization, certificate
of formation and/or operating agreement, as applicable, shall provide that until all of the
Indebtedness and Obligations are paid in full such entity will not dissolve. In addition, the
organizational documents of such Person shall
22
provide that such Person (1) without the unanimous consent of all of the partners, directors or
members, as applicable, shall not with respect to itself or to any other Person in which it has a
direct or indirect legal or beneficial interest (a) seek or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator, custodian or other similar official for the
benefit of the creditors of such Person or all or any portion of such Persons properties, or (b)
take any action that might cause such Person to become insolvent, petition or otherwise institute
insolvency proceedings or otherwise seek any relief under any laws relating to the relief from
debts or the protection of debtors generally, (2) has and will maintain its books, records,
resolutions and agreements as official records, (3) has held and will hold its assets in its own
name, (4) has and will maintain its financial statements, accounting records and other
organizational documents, books and records separate and apart from any other Person, and will not
permit its assets to be listed as assets on the financial statement of any other Person;
provided
,
however
, that any such consolidated financial statement shall contain a
note indicating that its separate assets and liabilities are neither available to pay the debts of
the consolidated entity nor constitute obligations of the consolidated entity, (5) will file its
own tax returns to the extent required by applicable law, (6) has not and will not identify its
partners, members or shareholders, or any affiliates of any of them as a division or part of it,
(7) has and will maintain an arms-length relationship with its Affiliates, and (8) has not and will
not enter into or be a party to any transaction with its partners, members, shareholders, or its
Affiliates except in the ordinary course of business and on terms which are intrinsically fair and
are no less favorable to it than would be obtained in a comparable arms-length transaction with a
third party.
Special Taxes
shall mean any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, or any liabilities with respect thereto, including those
arising after the date hereof as result of the adoption of or any change in law, treaty, rule,
regulation, guideline or determination of a Governmental Authority or any change in the
interpretation or application thereof by a Governmental Authority but excluding, in the case of
Lender, such taxes (including income taxes, franchise taxes and branch profit taxes) as are imposed
on or measured by Lenders net income by the United States of America or any Governmental Authority
of the jurisdiction under the laws under which Lender is organized or maintains a lending office.
SPE Entity
shall mean Borrower, Maryland Loan Guarantor and any other Person which
is required by this Agreement to be, as long as the Loan is outstanding, a Single Purpose Entity.
State
shall mean, with respect to each Individual Property, the State in which such
Individual Property or any part thereof is located.
Structural Repair Reserve Account
shall have the meaning set forth in
Section
3.1.1
.
Structural Repairs
shall mean structural repairs and replacements with respect to
the Improvements approved by Lender or for which disbursement is otherwise permitted in accordance
with
Section 16.3
.
Sub-Account(s)
shall have the meaning set forth in
Section 3.1.1
.
23
Sublease
shall mean any lease (other than the Master Lease), sublease or
subsublease, letting, license, concession or other agreement (whether written or oral and whether
now or hereafter in effect), pursuant to which any Person is granted by Master Lessee a possessory
interest in, or right to use or occupy all or any portion of any space in any Individual Property,
and every modification, amendment or other agreement relating to such lease, sublease, subsublease,
or other agreement entered into in connection with such lease, sublease, subsublease, or other
agreement and every guarantee of the performance and observance of the covenants, conditions and
agreements to be performed and observed by the other party thereto.
Sublease Modification
shall have the meaning set forth in
Section 8.7.1
.
Substitute Property
shall have the meaning provided in
Section 2.3.6(a)
.
Substitute Property Mortgage Spreader Agreement
shall have the meaning provided in
Section 2.3.6(a)
.
Substitution
shall have the meaning provided in
Section 2.3.6(a)
.
Substitution Date
shall have the meaning provided in
Section 2.3.6(c)
.
Substitution Due Diligence Package
shall have the meaning provided in
Section
2.3.6(c)
.
Substitution Notice
shall have the meaning provided in
Section 2.3.6(c)
.
Successor Borrower
shall have the meaning set forth in
Section 2.3.5(d)
.
Survey
shall mean a survey of each parcel of each Individual Property prepared by a
surveyor licensed in the State selected by Borrower and reasonably satisfactory to Lender and the
Title Company, and containing a certification of such surveyor satisfactory to Lender.
Taking
shall mean a temporary or permanent taking by any Governmental Authority as
the result or in lieu or in anticipation of the exercise of the right of condemnation or eminent
domain, of all or any part of the Property, or any interest therein or right accruing thereto,
including any right of access thereto or any change of grade affecting the Property or any part
thereof.
Tax Reserve Account
shall have the meaning set forth in
Section 3.1.1
.
Tax Reserve Amount
shall have the meaning set forth in
Section 16.1
.
Tenant
shall mean any Person other than the Master Lessee leasing, subleasing or
otherwise occupying any portion of any Individual Property, and its permitted successors and
assigns.
Terrorism Insurance
shall have the meaning set forth in
Section 6.1.8
.
Threshold Amount
shall mean two percent (2%) of the Loan Amount.
24
Title Company
shall mean, collectively, Fidelity National Title Insurance Company
(as to fifty-five percent (55%) of coverage) and Lawyers Title Insurance Corporation (as to
forty-five percent (45%) of coverage), or, with respect to Substitutions from and after the date
hereof, any one of the foregoing subject to delivery of co-insurance endorsements from the other
Title Companies and, in states where available, tie-in endorsements from all of the Title Companies
with respect to such coverage.
Title Policy
shall mean an ALTA mortgagee title insurance policy or policies in a
form acceptable to Lender (or, if an Individual Property is in a State which does not permit the
issuance of such ALTA policy, such form as shall be permitted in such State and acceptable to
Lender) issued by the Title Company with respect to the Property and insuring the Lien of the
Security Instrument.
Total Loss
shall mean, with respect to each Individual Property, (i) a casualty,
damage or destruction of an Individual Property which, in the reasonable judgment of Lender, (A)
involves an actual or constructive loss of more than fifty percent (50%) (or, in the case of a Key
Property, twenty-five percent (25%)) of the Allocated Loan Amount for such Individual Property, or
(B) results in the cancellation of the Master Lease or of Leases comprising more than forty percent
(40%) of the rentable area of such Individual Property, and in either case with respect to which
the Master Lease and the Leases do not require Proceeds to be applied to the restoration of such
Individual Property or (ii) a permanent Taking which, in the reasonable judgment of Lender, (A)
involves an actual or constructive loss of more than thirty-five percent (35%) (or, in the case of
a Key Property, fifteen percent (15%)) of the Allocated Loan Amount for an Individual Property, or
(B) renders untenantable either more than thirty-five percent (35%) (or, in the case of a Key
Property, fifteen percent (15%)) of the rentable area of such Individual Property, or (iii) a
casualty, damage, destruction or Taking that affects so much of an Individual Property such that it
would be impracticable, in Lenders reasonable discretion, even after restoration, to operate such
Individual Property as an economically viable whole. Notwithstanding the foregoing, in no event
shall a Total Loss with respect to a particular Individual Property exist pursuant to clauses (i)
or (ii) above unless the aggregate Allocated Loan Amounts of Individual Properties then currently
impacted by a casualty, damage, destruction or Taking is greater than 10% of the Principal Amount.
Transfer
shall mean to, directly or indirectly, sell, assign, convey, mortgage,
transfer, pledge, hypothecate, encumber, grant a security interest in, exchange or otherwise
dispose of any beneficial interest or grant any option or warrant with respect to, or where used as
a noun, a direct or indirect sale, assignment, conveyance, transfer, pledge or other disposition of
any beneficial interest by any means whatsoever whether voluntary, involuntary, by operation of law
or otherwise.
UCC
or
Uniform Commercial Code
shall mean the Uniform Commercial Code as
in effect in the State.
Underwriter Group
shall have the meaning set forth in
Section 14.3.2(b)
.
25
U.S. Government Obligations
shall mean any direct obligations of, or obligations
guaranteed as to principal and interest by, the United States Government or any
agency or instrumentality thereof,
provided
that such obligations are backed by the
full faith and credit of the United States. Any such obligation must be limited to instruments
that have a predetermined fixed dollar amount of principal due at maturity that cannot vary or
change. If any such obligation is rated by S&P, it shall not have an r highlighter affixed to
its rating. Interest must be fixed or tied to a single interest rate index plus a single fixed
spread (if any), and move proportionately with said index. U.S. Government Obligations include,
but are not limited to: U.S. Treasury direct or fully guaranteed obligations, Farmers Home
Administration certificates of beneficial ownership, General Services Administration participation
certificates, U.S. Maritime Administration guaranteed Title XI financing, Small Business
Administration guaranteed participation certificates or guaranteed pool certificates, U.S.
Department of Housing and Urban Development local authority bonds, and Washington Metropolitan Area
Transit Authority guaranteed transit bonds. In no event shall any such obligation have a maturity
in excess of 365 days.
Wachovia
shall have the meaning set forth in
Section 14.3.2(b)
.
Work
shall have the meaning provided in
Section 6.2.4(a)
.
Yield Maintenance Premium
shall have the meaning set forth in the Notes.
Yield Maintenance Premium Release Date
shall have the meaning set forth in the
Notes.
1.2
Principles of Construction
. All references to sections and schedules are to sections
and schedules in or to this Agreement unless otherwise specified. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. When used herein, the term
financial statements shall include the notes and schedules thereto. Unless otherwise specified
herein or therein, all terms defined in this Agreement shall have the definitions given them in
this Agreement when used in any other Loan Document or in any certificate or other document made or
delivered pursuant thereto. All uses of the word including shall mean including, without
limitation unless the context shall indicate otherwise. Unless otherwise specified, the words
hereof, herein and hereunder and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise
specified, all meanings attributed to defined terms herein shall be equally applicable to both the
singular and plural forms of the terms so defined.
II.
GENERAL TERMS
2.1
Loan; Disbursement to Borrower
.
2.1.1
The Loan
. Subject to and upon the terms and conditions set forth herein, Lender
hereby agrees to make and Borrower hereby agrees to accept the Loan on the Closing Date.
2.1.2
Disbursement to Borrower
. Borrower may request and receive only one borrowing
hereunder in respect of the Loan and any amount borrowed and repaid hereunder in respect of the
Loan may not be reborrowed. Borrower acknowledges and agrees that the full proceeds of the Loan
have been disbursed by Lender to Borrower on the Closing Date.
26
2.1.3
The Notes, Security Instrument and Loan Documents
. The Loan shall be evidenced by
the Notes and secured by the Security Instrument, the Assignment of Leases, this Agreement and the
other Loan Documents.
2.1.4
Use of Proceeds
. Borrower shall use the proceeds of the Loan (a) to (i) repay and
discharge any existing mortgage loans secured by the Property, (ii) make initial deposits into the
Sub-Accounts as required hereunder, and (iii) pay costs and expenses incurred in connection with
the closing of the Loan, and (b) as otherwise set forth on the closing statement executed by Lender
and Borrower in connection with the closing of the Loan.
2.2
Interest; Loan Payments; Late Payment Charge
.
2.2.1
Payment of Principal and Interest
.
(i) Except as set forth in
Section 2.2.1(ii)
, interest shall accrue on the Principal
Amount as set forth in the Notes.
(ii) Upon the occurrence and during the continuance of an Event of Default, and from and after
the Maturity Date if the entire Principal Amount is not repaid on the Maturity Date, interest on
the outstanding principal balance of the Loan and, to the extent permitted by law, overdue interest
and other amounts due in respect of the Loan shall accrue at the Default Rate calculated from the
date such payment was due without regard to any grace or cure periods contained herein. Interest
at the Default Rate shall be computed from the occurrence of the Event of Default until the actual
receipt and collection of the Indebtedness (or that portion thereof that is then due). This
paragraph shall not be construed as an agreement or privilege to extend the date of the payment of
the Indebtedness, nor as a waiver of any other right or remedy accruing to Lender by reason of the
occurrence of any Event of Default, and Lender retains its rights under the Notes to accelerate and
to continue to demand payment of the Indebtedness upon the happening of any Event of Default in
accordance with the terms hereof.
2.2.2
Method and Place of Payment
.
(a) On each Payment Date, Borrower shall pay to Lender interest accruing pursuant to the Notes
for the entire Interest Period preceding such Payment Date.
(b) All amounts advanced by Lender pursuant to the applicable provisions of the Loan
Documents, other than the Principal Amount, together with any interest at the Default Rate or other
charges as provided therein, shall be due and payable hereunder as provided in the Loan Documents.
In the event any such advance or charge is not so repaid by Borrower, Lender may, at its option,
first apply any payments received under the Notes to repay such advances, together with any
interest thereon, or other charges as provided in the Loan Documents, and the balance, if any,
shall be applied in payment of any installment of interest or principal then due and payable.
27
(c) The Maturity Date Payment shall be due and payable in full on the Maturity Date.
2.2.3
Late Payment Charge
. If any principal, interest or any other sums due under the Loan
Documents (other than the outstanding Principal Amount due and payable on the
Maturity Date) is not paid by Borrower on or prior to the date which is five (5) days after the
date on which it is due (or if such fifth (5
th
) day is not a Business Day, then the
Business Day immediately preceding such fifth (5
th
) day), Borrower shall pay to Lender
upon demand an amount equal to the lesser of five percent (5%) of such unpaid sum or the Maximum
Legal Rate (the
Late Payment Charge
) in order to defray the expense incurred by Lender in
handling and processing such delinquent payment and to compensate Lender for the loss of the use of
such delinquent payment. Any such amount shall be secured by this Agreement, the Security
Instrument and the other Loan Documents to the extent permitted by applicable law.
2.2.4
Usury Savings
. This Agreement and the Notes are subject to the express condition
that at no time shall Borrower be obligated or required to pay interest on the principal balance of
the Loan at a rate which could subject Lender to either civil or criminal liability as a result of
being in excess of the Maximum Legal Rate. If, by the terms of this Agreement or the other Loan
Documents, Borrower is at any time required or obligated to pay interest on the principal balance
due under the Notes at a rate in excess of the Maximum Legal Rate, then the Interest Rate or the
Default Rate, as the case may be, shall be deemed to be immediately reduced to the Maximum Legal
Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to have been
payments in reduction of principal and not on account of the interest due under the Notes. All
sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the sums due
under the Loan, shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum Legal Rate of
interest from time to time in effect and applicable to the Loan for so long as the Loan is
outstanding.
2.3
Prepayments
.
2.3.1
Prepayments
. No prepayments of the Indebtedness shall be permitted except as set
forth in Section 4 of the Notes and as set forth herein.
2.3.2
Prepayments After Event of Default; Application of Amounts Paid
. If after the
occurrence and during the continuance of an Event of Default, Borrower tenders payment of all or
any part of the Indebtedness, or if all or any portion of the Indebtedness is recovered by Lender
after such Event of Default (including through application of any reserves held by Lender pursuant
to the terms hereof), (a) on any date other than a Payment Date, then such payment shall include
interest that would have accrued on such amounts through the end of the Interest Period during
which such payment is made, and such amounts shall be held by Lender as collateral security for the
Loan in an interest bearing account at an Eligible Institution, with interest accruing on such
amounts to the benefit of Borrower, and applied to the Loan on the next occurring Payment Date, (b)
such payment shall be deemed a voluntary prepayment by Borrower, and (c) Borrower shall pay, in
addition to the Indebtedness, an amount equal to the Yield Maintenance Premium and all other fees
and sums payable hereunder or under the Loan Documents, including without limitation, interest that
has accrued at the Default Rate and any Late Payment Charges.
28
2.3.3
Release of Property upon Repayment or Defeasance of Loan in Full
. Lender shall, upon
the written request and at the expense of Borrower, upon (a) payment in full of the
Principal Amount and interest on the Loan and all other amounts due and payable under the Loan
Documents in accordance with the terms and provisions of the Notes and this Agreement or (b) a
Defeasance Event with respect to the Loan in whole, release the Lien of (i) this Agreement upon the
Account Collateral and (ii) the Security Instrument and Assignment of Leases on the Property (or,
at Borrowers request, assign it (together with the Notes), in whole or in part, to a new lender
without representation, warranty or recourse). In such event, Borrower shall submit to Lender, not
less than ten (10) Business Days prior to the date of such release or assignment, a release of lien
or assignment of lien, as applicable, for such property for execution by Lender. Such release or
assignment, as applicable, shall be in a form appropriate in each jurisdiction in which the
Property is located and satisfactory to Lender in its reasonable discretion. In addition, Borrower
shall provide all other documentation Lender reasonably requires to be delivered by Borrower in
connection with such release or assignment, as applicable.
2.3.4
Release of Individual Properties
. Subject to satisfaction of each of the conditions
set forth below (collectively, the
General Release Conditions
) with respect to any
Individual Property or Individual Properties (other than the portion of any Individual Property
that that is an Outparcel, the release of which Outparcels is governed by
Section 2.3.7
below), Lender shall (i) release such Individual Property or Individual Properties (each a
Release Property
) from the Lien of the Security Instrument and related Loan Documents (or
a deed of partial reconveyance, as the case may be) and the release of Borrowers (and in the case
of the Maryland Property, the Maryland Loan Guarantors) obligations under the Loan Documents with
respect to the Released Property, other than those expressly stated herein or in such other Loan
Documents to survive (or to the extent so requested by Borrower, assign the Lien of the Security
Instrument to a new lender without representation, warranty or recourse) (each release under this
Section 2.3.4
or
Section 2.3.6
or in connection with a partial defeasance of the
Loan pursuant to
Section 2.3.5
, a
Property Release
), (ii) instruct the Cash
Management Bank to return to Borrower any Excess Account Collateral subject to and in accordance
with
Section 2.3.8
except to the extent otherwise provided in such
Section 2.3.8
,
(iii) comply with
Section 2.3.9
with regard to adjusting the ongoing reserve requirements
hereunder and (iv) adjust the Monthly Debt Service Payment Amount in accordance with
Section
4(b)(ii)
of the Notes:
(a) Borrower delivers a written notice (a
Property Release Notice
) to Lender of its
desire to effect such Property Release, no later than fifteen (15) Business Days prior to the date
of such desired Property Release, and setting forth the Business Day (the
Release Date
)
on which Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) desires that
Lender release its interest in such Release Property.
(b) Borrower shall have paid to Lender (i) the Release Price, (ii) the applicable Yield
Maintenance Premium, if any, and (iii) all other sums due under the Notes in connection with such
prepayment. If the Release Date is not a Payment Date, then the Release Price shall include
interest that would have accrued on the Allocated Loan Amount for the Release Property through the
end of the Interest Period during which such payment is made, and the Release Price, and the
applicable Yield Maintenance Premium, if any, shall be held by Lender as collateral security for
the Loan in an interest bearing account at an Eligible Institution, with interest accruing on such
amounts to the benefit of Borrower, and applied to the Loan on the next occurring Payment Date.
29
(c) Borrower shall submit to Lender not less than ten (10) Business Days prior to the Release
Date (which must be on a Business Day), a release of Liens (and related Loan Documents) for each
applicable Release Property (for execution by Lender) in a form appropriate in the applicable State
and otherwise satisfactory to Lender, in its reasonable discretion, and all other documentation
Lender reasonably requires to be delivered by Borrower in connection with such Property Release
(collectively,
Release Instruments
), together with an Officers Certificate certifying
that the requirement described in paragraph (d) below is satisfied in connection with such Property
Release (together with calculations and supporting documentation demonstrating the same in
reasonable detail) and, simultaneously with the Release, Guarantor withdraws and is replaced as the
managing member of the applicable Borrower (or Maryland Loan Guarantor, as applicable) that is the
owner of the Release Property or such Borrower (or Maryland Loan Guarantor) is dissolved in
connection with the release.
(d) With respect to any Property Release, after giving effect to such Property Release, the
LCR as of the Release Date (calculated with reference to all of the Individual Properties then
remaining subject to the Liens of the Security Instrument) shall not be less than the greater of
(A) ninety percent (90%) of the Closing Date LCR and (B) seventy-five percent (75%) of the LCR for
all of the Individual Properties subject to the Lien of the Security Instrument immediately prior
to the Release Date.
(e) No Event of Default shall have occurred and then be continuing on the Release Date.
(f) The Release Property is simultaneously transferred to a party other than Borrower or
Maryland Loan Guarantor or any SPE Entity.
(g) Each of Borrower and Maryland Loan Guarantor executes and delivers such other instruments,
certificates, opinions of counsel and documentation as Lender and, if the Release Date occurs
following a Securitization, the Rating Agencies shall reasonably request in order to preserve,
confirm or secure the Liens and security granted to Lender by the Loan Documents, including any
amendments, modifications or supplements to any of the Loan Documents and partial release
endorsements to the existing Title Policy.
(h) Borrower shall pay for any and all out-of-pocket costs and expenses incurred by Lender in
connection with any proposed Property Release, including Lenders reasonable attorneys fees and
disbursements and all title insurance premiums for any customary endorsements to any existing Title
Policies required by Lender in connection with such proposed release.
Notwithstanding the foregoing, clauses (b)(ii) and (d) above shall not apply to
Casualty/Condemnation Property Releases.
2.3.5
Defeasance
.
(a)
Generally
. Borrower shall have the right, at any time following the expiration of
the Defeasance Lockout Period but prior to the Yield Maintenance Premium Release Date to
voluntarily defease the Loan in whole and obtain the release of the Property, or solely in
connection with a Property Release, in part, and obtain the release of the applicable Individual
Property or Individual Properties, by and upon satisfaction of the following conditions (such
event being a
Defeasance Event
):
30
(i) Borrower shall provide not less than thirty (30) days prior written notice to Lender
specifying the date (the
Defeasance Date
) on which the Defeasance Event shall occur;
provided
that Borrower shall have the right to revoke such notice upon written notice given
to Lender not Less than three (3 Business Days prior to the then scheduled Defeasance Date
provided
Borrower reimburses Lender for any actual out-of-pocket costs incurred by Lender
in connection with such revocation;
(ii) Borrower shall pay to Lender all accrued and unpaid interest on the portion of the
outstanding Principal Amount of the Loan then being defeased to and including the Defeasance Date;
(iii) Borrower shall pay to Lender all other sums, not including scheduled interest or
principal payments, then due and payable under the Note, this Agreement, the Security Instrument
and the other Loan Documents;
(iv) No Event of Default shall have occurred and then be continuing on the Defeasance Date;
(v) If the Loan is defeased in whole, Borrower shall comply with the conditions set forth in
Section 2.3.3
, and if the Loan is defeased only in part, Borrower shall also comply with
the conditions set forth in
Section 2.3.4(c)
with respect to the release of the applicable
Individual Property or Individual Properties;
(vi) Borrower shall deliver to Lender, at Borrowers option, either (A) the Defeasance Deposit
or (B) the Defeasance Collateral (such Defeasance Collateral to be in an amount equal to or greater
than that which could otherwise be purchased with the Defeasance Deposit had the required
Defeasance Deposit been delivered by Borrower);
(vii) Borrower (and/or, if requested by Lender in the case of the Maryland Property, the
Maryland Loan Guarantor) shall execute and deliver a pledge and security agreement, in form and
substance that would be reasonably satisfactory to a prudent lender, creating a first priority lien
on the Defeasance Collateral, in accordance with the provisions of this
Section 2.3.5
(the
Security Agreement
);
(viii) Borrower shall (A) deliver an Opinion of Counsel for Borrower that is standard in
commercial lending transactions and subject only to customary qualifications, assumptions and
exceptions opining, among other things, that (1) Lender has a perfected first priority security
interest in the Defeasance Collateral delivered by Borrower or the Maryland Loan Guarantor, as
applicable and (2), if applicable, Borrower (and/or Maryland Loan Guarantor, as applicable, in the
case of the Maryland Property), has duly and validly transferred and assigned to the Successor
Borrower the Defeasance Collateral and all obligations, rights and duties under and to the Notes
(or each Undefeased Note, as hereinafter defined) that are attributable to the Property, and (B) if
the Defeasance Event occurs after a Securitization, pay all reasonable costs of Lender obtaining a
Non-Disqualification Opinion with respect to such Defeasance Event;
31
(ix) With respect to any Defeasance Event occurring after a Securitization, Borrower shall
obtain a Rating Agency Confirmation to the effect that the Defeasance Collateral to be purchased
qualifies and is sufficient so that the substitution of such Defeasance Collateral for the Property
or the Individual Property or Individual Properties being released, as applicable, will not result
in a downgrade, withdrawal or qualification of the respective ratings in effect immediately prior
to such Defeasance Event for the Securities issued in connection with the Securitization which are
then outstanding. If required by the applicable Rating Agencies, Borrower shall also deliver or
cause to be delivered a Non-Consolidation Opinion with respect to any Successor Borrower in form
and substance (i) reasonably satisfactory to a prudent lender and (ii) satisfactory to the
applicable Rating Agencies;
(x) Borrower shall deliver a certificate (in form reasonably acceptable to Lender) of an
Independent Accountant engaged by Borrower certifying that the Defeasance Collateral shall generate
monthly amounts equal to or greater than the Scheduled Defeasance Payments;
(xi) In the case of a defeasance of the Loan in part, Borrower shall execute and deliver all
documents required by the Lender to amend and restate each of the Notes with two (2) substitute
Notes, (A) one Note having a principal balance equal to all sums required to be paid hereunder with
respect to such Release and Defeasance Event (the
Defeased Note
), and (B) one Note having
a principal balance equal to the outstanding principal balance of the Note immediately prior to the
Defeasance Event minus the all sums required to be paid hereunder with respect to such Release and
Defeasance Event (the
Undefeased Note
). Each Undefeased Note may be the subject of one
or more further Defeasance Events in accordance with the provisions of this
Section 2.3.5
.
From and after the Defeasance of the Loan in part, all references to the Note in this Agreement and
the other Loan Documents shall be deemed to refer to the Undefeased Note; and
(xii) Borrower shall pay all costs and expenses of Lender incurred in connection with the
Defeasance Event, including (A) any out-of-pocket costs and expenses associated with a release (in
full or in part, as applicable) of the Lien of the Security Instrument as provided in
Section
2.3.3
or
Section 2.3.4
, as applicable (including, in the case of a release of an
Individual Property or Individual Properties, all title insurance premiums for any endorsements to
any existing Title Policies reasonably required by Lender in connection with such proposed
release), (B) reasonable attorneys fees and expenses incurred in connection with the Defeasance
Event, (C) the costs and expenses of the Rating Agencies, if the Defeasance Event occurs after a
Securitization, and (D) any revenue, documentary stamp or intangible taxes or any other tax or
charge due in connection with the transfer of the Notes, or otherwise required to accomplish the
defeasance.
32
(b)
Scheduled Defeasance Payments
. In connection with any Defeasance Event, Borrower
shall purchase Defeasance Collateral (or Lender shall use the Defeasance Deposit to purchase such
Defeasance Collateral) which provide payments on or prior to, but as close as possible to, all
successive scheduled Payment Dates after the Defeasance Date but prior to the Yield Maintenance
Premium Release Date, in amounts equal to the scheduled payments of principal, interest, and any
other amounts due on each such Payment Date under the Loan Documents (or, in the case, of a partial
defeasance, the portions of such scheduled payments due
on each such Payment Date under this Agreement and the Defeased Note) but assuming, for
purposes hereof, that the Maturity Date Payment shall be paid on the Yield Maintenance Premium
Release Date (the aforedescribed payments, the
Scheduled Defeasance Payments
). Borrower
(and/or Maryland Loan Guarantor, as applicable, in the case of the Maryland Property) pursuant to
the Security Agreement or other appropriate document, shall authorize and direct that the payments
received from the Defeasance Collateral may be made directly to the Holding Account (unless
otherwise directed by Lender) and applied to satisfy the obligations of Borrower (and/or Maryland
Loan Guarantor, as applicable in the case of the Maryland Property) or Successor Borrower, if
applicable, under this Agreement and the Notes (or each Defeased Note, in the case of the
defeasance of the Loan in part). Any portion of the Defeasance Deposit in excess of the amount
necessary to purchase the Defeasance Collateral required by this
Section 2.3.5
and to
satisfy Borrowers other obligations hereunder shall be remitted to Borrower. Following the
payment in full of the Notes (and each Defeased Note in the case of a defeasance of the Loan in
part) and all other Obligations on the Maturity Date, any amounts remaining in the Defeasance
Deposit, if any, shall be remitted to Borrower.
(c)
Defeasance Collateral
. The Defeasance Collateral shall be duly endorsed by the
holder thereof as directed by Lender or accompanied by a written instrument of transfer in form and
substance that would be reasonably satisfactory to a prudent lender and that does not require
Borrower or Maryland Loan Guarantor, as applicable, to incur any additional obligations or
liabilities, (including, without limitation, such instruments as may be reasonably required by the
depository institution holding such securities or by the issuer thereof, as the case may be, to
effectuate book-entry transfers and pledges through the book-entry facilities of such institution)
in order to perfect, upon the delivery of the Defeasance Collateral, a first priority security
interest therein in favor of the Lender in conformity with all applicable state and federal laws
governing the granting of such security interests.
(d)
Successor Borrower
. If the Defeasance Event occurs after a Securitization,
Borrower (and/or Maryland Loan Guarantor, as applicable, in the case of the Maryland Property)
may, at its option, or if so required by the applicable Rating Agencies, shall, establish or
designate a successor entity (the
Successor Borrower
) which shall be a single purpose
bankruptcy remote entity approved by the Rating Agencies with one (1) Independent Director, and
Borrower (and/or Maryland Loan Guarantor, as applicable, in the case of the Maryland Property)
shall transfer and assign all obligations, rights and duties under and to the Notes (or each
Defeased Note in the case of a defeasance of the Loan in part), together with the pledged
Defeasance Collateral to such Successor Borrower. Such Successor Borrower shall assume the
obligations under the Notes (or each Defeased Note in the case of a defeasance of the Loan in part)
and the Security Agreement and Borrower (and/or Maryland Loan Guarantor, as applicable, in the case
of the Maryland Property) shall be relieved of its obligations under such documents. Borrower
shall pay $1,000 to any such Successor Borrower as consideration for assuming the obligations under
the Notes and the Security Agreement. Notwithstanding anything in this Agreement to the contrary,
no other assumption fee shall be payable upon a transfer of the Note in accordance with this
Section 2.3.5(d)
, but Borrower shall pay all costs and expenses incurred by Lenders,
including Lenders reasonable attorneys fees and expenses and, if the Defeasance Event occurs
after a Securitization, any fees and expenses of any Rating Agencies, incurred in connection
therewith. Any Successor Borrower may be an Affiliate of Borrower or a defeasance consultant or
similar service provider.
33
(e)
Release of Defeased Property
. If Borrower has elected to defease the Loan or any
allocated portion thereof, and the requirements set forth in this
Section 2.3.5
have been
satisfied, the Property or the applicable Individual Property or Individual Properties shall be
released from the Lien of the Security Instrument and the Defeasance Collateral pledged pursuant to
the Security Agreement shall be the substitute sole source of collateral securing such amounts due
under the Notes (or a substitute source of collateral securing such amounts under each Defeased
Note in the case of a defeasance of the Loan in part). Further, the pledge of the related Account
Collateral and other property pledged under this Agreement and the other Loan Documents and all
other obligations of Borrower (and Maryland Loan Guarantor in the case of the Maryland Property)
created hereunder in respect of such Property, Individual Property or Individual Properties, as
applicable, shall be discharged, other than those expressly stated to survive.
2.3.6
Substitution of Properties
.
(a)
Generally
. An Individual Borrower may, subject to the conditions in this
Section 2.3.6
, substitute one or more warehouse or distribution facility properties (each a
Substitute Property
) for an existing Individual Property (each a
Replaced
Property
) and obtain the release of the Replaced Property from the Lien of the Security
Instrument and related Loan Documents (or a deed of partial reconveyance, as the case may be) and
the release of Borrowers (and, in the case of the Maryland Property, Maryland Loan Guarantors)
obligations under the Loan Documents with respect to the Replaced Property, other than those
expressly stated to survive (each such release and substitution, a
Substitution
);
provided
,
however
, such right of Substitution shall be limited to Individual
Properties whose aggregate Allocated Loan Amounts represent not greater than thirty percent (30%)
of the Loan Amount. From and after the Substitution of a Substitute Property in accordance
herewith, such Substitute Property shall thereafter be deemed a Property, and shall have the
Allocated Loan Amount applicable to the Replaced Property. Concurrently with the completion of all
steps necessary to effect a Substitution as provided in this
Section 2.3.6
, Lender shall
release such Replaced Property from the Lien of the Security Instrument and related Loan Documents.
In the event of a Substitution, the Notes shall remain in full force and effect, and the Lien of
the Security Instrument shall be spread to encumber the Substitute Property (each a
Substitute
Property Mortgage Spreader Agreement
).
(b)
Certain Requirements
. All Substitute Properties shall comply with this
Section 2.3.6
. To qualify as a Substitute Property, a property must, as of the
Substitution Date (in addition to the other criteria set forth in this
Section 2.3.6
):
(i) be subject to the Master Lease;
(ii) be a property as to which the applicable Individual Borrower (or, in the case of the
Maryland Property, Maryland Loan Guarantor) will hold insurable fee title free and clear of any
Lien or other encumbrance except for exceptions not materially impairing the value of such
property, and have an Appraised Value at least equal to the Appraised Value of the Replaced
Property;
(iii) be (A) free and clear, as evidenced by the environmental report referred to in paragraph
(c) below, of Hazardous Substances requiring remediation or other action under any
Environmental Law and/or the presence of which violates Environmental Laws and (B) in material
compliance with all Environmental Laws;
34
(iv) be in good repair and condition, as evidenced by the engineering report referred to in
clause (c) below; and
(v) be in compliance, in all material respects, with Legal Requirements and Insurance
Requirements, as evidenced by diligence items required to be provided in paragraph (c) below.
(c)
Diligence Process
. The Borrower shall submit to the Lender written notice (a
Substitution Notice
) setting forth the Business Day no earlier than forty-five (45) days
after the date of such Substitution Notice on which Borrower desires to effect such Substitution
(the
Substitution Date
), together with the following materials (the
Substitution Due
Diligence Package
) relating to the proposed Substitute Property: (i) a description of the
proposed Substitute Property sufficient to obtain the Title Policy, (ii) two (2) years of
historical cash flow operating statements, if available, (iii) true, complete and correct copies of
any Leases affecting the proposed Substitute Property, (iv) a map and site plan, including an
existing Survey of the property dated not more than six (6) months prior to such submission, (v) a
copy of the proposed amendment to the Master Lease and Master Lease SNDA to include the Substitute
Property, (vi) copies of all permits, licenses and approvals required with respect to operation of
the Substitute Property, (vii) an environmental report issued by a recognized environmental
consultant, (viii) copies of all reciprocal easement agreements, if any, affecting the Substitute
Property, (ix) an engineers inspection report, (x) estoppel certificates from parties to any
reciprocal easement agreements and tenants under any Material Subleases, in each case in form
reasonably acceptable to Lender, together with any governmental consents required in order to
subject the Substitute Property to the Lien of the Security Instrument, (xi) a commitment from the
Title Company with respect to the issuance of a Title Policy, together with copies of all
exceptions referenced therein, (xii) upon the reasonable request of the Lender, a Probable Maximum
Loss study, (xiii) an Appraisal, (xiv) if such Substitute Property is not then owned by Borrower
(or in the case of property located in Maryland, Maryland Guarantor) or its Affiliate, a duly
executed copy of the purchase and sale agreement for such Substitute Property and copies of all
proposed documentation transferring title to the Substitute Property to Borrower (or, in the case
of property located in Maryland, the Maryland Guarantor), including any interim transfers to its
Affiliates, (xv) a copy of the flood certification, (xvi) either (A) a letter or other evidence
with respect to the proposed Substitute Property from the appropriate Governmental Authorities
concerning compliance with applicable zoning and building laws, (B) an ALTA 3.1 zoning endorsement
for the Title Policy or (C) a zoning report prepared by PZR or other similar company indicating
that the Substitute Property is in material compliance with applicable zoning and building laws,
(xvii) a copy of the valid permanent certificate of occupancy (if required by applicable law),
(xviii) calculations of the LTV Ratio and the LCR both before and after the proposed Substitution
and (xix) pro formas of the insurance certificates required under
Article VI
with respect
to such Substitute Property, and not revealing any Liens other than Permitted Encumbrances. In
addition, subject to the consent of the owner of the Substitute Property, Lender shall be permitted
to make an inspection of such Substitute Property as a condition to such substitution.
35
(d)
Additional Conditions Precedent
. In addition to the conditions in paragraphs (a),
(b) and (c) above, each Substitution shall be subject to the satisfaction of the following
conditions precedent:
(i)
Rating Agency Confirmation; Rating Agency Requirements
. For any Substitution made
after a Securitization, Lenders receipt of a Rating Agency Confirmation and Borrowers
satisfaction of such other conditions as may be required by the Rating Agencies;
(ii)
Release Conditions
. Borrowers compliance with the conditions set forth in
Section 2.3.4(c)
,
(f)
and
(g)
with respect to the release of the Replaced
Property;
(iii)
Financial and Other Tests
.
(1)
LCR
. After giving effect to such Substitution, the LCR as of the Substitution
Date (calculated with reference to all of the Individual Properties then remaining subject to the
Liens of the Security Instrument; i.e., including the Substitute Property and excluding the
Replaced Property) shall not be less than the greater of (A) ninety percent (90%) of the Closing
Date LCR and (B) seventy-five percent (75%) of the LCR for all of the Individual Properties subject
to the Lien of the Security Instrument immediately prior to the Substitution Date.
(2)
LTV Ratio
. After giving effect to such Substitution, as of the Substitution Date,
the LTV Ratio (as calculated by including the Substitute Property, but excluding the Replaced
Property), shall not be less than the Closing Date LTV Ratio.
(3)
Geographic Diversity
. The proposed Substitution does not cause the aggregate
Allocated Loan Amounts with respect to Individual Properties located in any single Geographic
Quadrant to exceed fifty percent (50%) of the Principal Amount.
(iv)
Lenders Costs and Expenses
. Borrower shall pay for any and all costs and
expenses of Lender incurred in connection with any proposed Substitution, including Lenders
reasonable attorneys fees and disbursements, all title insurance premiums for any endorsements to
any existing Title Policies reasonably required by Lender in connection with such proposed
Substitution, title premiums, mortgage recording taxes, transfer taxes and recording fees.
(v) Intentionally Omitted.
(vi)
Opinions of Counsel
. Borrower shall deliver to Lender the following favorable
original Opinions of Counsel or updates thereto in connection with the Substitute Property similar
in form and substance to the opinions which were delivered on the Closing Date in connection with
the Replaced Property, reasonably satisfactory to Lender (and satisfactory to the Rating Agencies,
if applicable) and addressed to the Lender on behalf of the holders of the Notes: (a) if requested
by the Rating Agencies following or in connection with a Securitization, a non-consolidation
opinion, (b) a local counsel enforceability opinion, (c) an enforceability opinion under New York
law, (d) an opinion to the effect that each of Borrower, Maryland Loan Guarantor, Master Lessee and
Guarantor is duly organized and validly existing under the laws of the state of its formation and
is qualified or licensed to do business in each jurisdiction where the
nature of its business in which it is engaged makes such qualification or licensing necessary
and (e) an opinion to the effect that the Loan Documents or amendments thereto have been duly
authorized, executed and delivered by Borrower, Maryland Loan Guarantor, Master Lessee and
Guarantor and are the valid and binding obligations and agreements of such party, enforceable in
accordance with their terms, in each case with the same exceptions as made on Closing Date;
36
(vii)
No Event of Default
. No Event of Default shall have occurred and then be
continuing on the Substitution Date;
(viii)
Accuracy of Representations and Warranties
. The representations and warranties
set forth in the Loan Documents shall be true and correct as to the Substitute Property on the
Substitution Date in all material respects;
(ix)
Officers Certificate
. Delivery to Lender of an Officers Certificate certifying
to the truth and accuracy of the statements in clause (viii);
(x)
Non-Disqualification Opinion
. If the Substitution Date occurs after a
Securitization, delivery of a Non-Disqualification Opinion;
(xi)
Organizational Documents
. Delivery to Lender of (A) if required by the Rating
Agencies, copies of organizational documents of Borrower, Maryland Loan Guarantor, Master Lessee
and Guarantor, including, but not limited to a current certificate of good standing, (B) if the
Substitute Property is located in a state not previously covered by the Security Instrument,
evidence of Borrowers (or, in the case of property located in Maryland, the Maryland Loan
Guarantors) qualification to do business in the state where the Substitute Property is located if
and to the extent such qualification is required in the applicable jurisdiction and (C) appropriate
evidence of the authorization of the Borrower, Maryland Loan Guarantor, Master Lessee and Guarantor
approving the execution, delivery and performance of the Loan Documents or amendments thereto being
executed and delivered in connection with the Substitution, duly adopted by the Borrower, Maryland
Loan Guarantor, Master Lessee and Guarantor, as applicable, and accompanied by an Officers
Certificate stating that such authorizations have not been altered or repealed and are in full
force and effect, and certifying as to the names of the Persons authorized to sign on behalf of
such parties, together with the true signatures of each such Person;
(xii)
Insurance Certificates
. Delivery of the insurance certificates with respect to
the Substitute Property required under
Article VI
; and
(xiii)
Loan Documents
. Delivery to Lender of originals of the following Loan
Documents or amendments thereto:
(1) a Substitute Property Mortgage Spreader Agreement, duly executed and acknowledged by
Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor);
(2) a first priority Assignment of Master Lease, Leases, Rents and Security Deposits, from
Borrower (or in the case of property located in Maryland, Maryland Loan Guarantor), as assignor, to
Lender, as assignee, assigning to Lender all of Borrowers (or
Maryland Loan Guarantors, as applicable) interest in and to the Master Lease, the Leases,
Rents and Security Deposits as security for the Loan with respect to the Substitute Property, or a
counterpart original of the Assignment of Leases, modified as necessary, duly executed and
acknowledged by Borrower or Maryland Loan Guarantor, as applicable;
37
(3) UCC financing statements (Form UCC-1) (or other forms required in any jurisdiction),
covering all fixtures and Building Equipment and other Personal Property (other than the Excluded
Personal Property), and all proceeds thereof, naming Borrower (or in the case of property located
in Maryland, Maryland Loan Guarantor) as debtor and Lender as secured party;
(4) the Title Policy or endorsements to the Title Policy, as applicable, issued by the Title
Company in an amount equal to the amount of coverage that had been provided for the Replaced
Property (or, if such Substitute Property is located in a Mortgage Tax State and the Replaced
Property is not, an amount equal to 125% of the amount of coverage that had been provided for the
Replaced Property), reflecting the addition of such Substitute Property and containing such
affirmative coverage similar in form and substance to the affirmative coverage provided in
connection with the Replaced Property, insuring that the Substitute Property Mortgage Spreader
Agreement creates a valid first lien on Borrowers (or in the case of property located in Maryland,
Maryland Loan Guarantors) fee title in the Substitute Property, subject to the Permitted
Encumbrances, and insuring the perfected first priority interest of Lender pursuant to the
Substitute Property Mortgage Spreader Agreement, together with any title insurance premiums, fees
or charges due in connection therewith, and the Borrower shall cooperate with the Lender and
execute such further instruments and documents and perform such further acts as the Lender or the
Title Company shall reasonably request to carry out the creation and perfection of the liens and
security interests contemplated by the documents described in clauses (i), (ii) and (iii) and the
release, discharge and removal of any encumbrances required for the issuance of the Title Policy;
(5) an amendment to the Master Lease and to the Master Lease SNDA incorporating the Substitute
Property and eliminating the Replaced Property;
(6) updates to any Exhibits and Schedules to the Loan Documents, as applicable, without
disclosing matters inconsistent with the requirements of this
Section 2.3.6
; and
(7) a Confirmation of Guaranty and Indemnity in customary form duly executed and delivered by
Guarantor, adding the Substitute Property to, and affirming its obligations under, the Recourse
Guaranty and the Environmental Indemnity.
(e)
Additional Deliveries
. Lender shall have received such other deliveries
reasonably requested by Lender,
provided
such requests are customary and are consistent
with the deliveries required with respect to the Property on the Closing Date.
38
2.3.7
Release of Outparcels
. Provided no Event of Default has occurred and is continuing,
Borrower may request that Lender release an Outparcel from the Lien of the Security Instrument in
accordance with the terms of this
Section 2.3.7
. Lender shall have no obligation to
release any Outparcel from the Lien of the Security Instrument until Borrower shall have satisfied
the following conditions, as reasonably determined by Lender: (1) the Outparcel to be released
shall constitute a separate conveyable legal parcel in accordance with the subdivision map act or
the equivalent thereof in the jurisdiction of such Outparcel or other relevant granted government
approvals in such jurisdiction; (2) to the extent any easements or restrictive covenants benefiting
or burdening such Outparcel are necessary or appropriate for the use or operation of or
preservation of value with respect to any remaining Individual Property that is in the vicinity of,
or otherwise related to, the Outparcel (a
Related Remaining Property
), such easements
shall have been granted or reserved prior to or at the time of the release or reconveyance of such
Outparcel and shall have been approved by Lender, which approval shall not be unreasonably withheld
or delayed; (3) each Related Remaining Property shall remain a legal parcel (or parcels) in
compliance in all material respects with all Legal Requirements, zoning, subdivision, land use and
other applicable laws and regulations; (4) at the time of, but not prior to, any such release or
reconveyance, such Outparcel shall be transferred to a person or entity that does not result in a
breach of Borrowers or Maryland Loan Guarantors obligation to be a Single Purpose Entity; (5)
Lender shall have received satisfactory evidence that any tax, bond or assessment that constitutes
a lien against such Outparcel has (i) prior to such release, been properly allocated between the
Outparcel and any Related Remaining Property and (ii) after such release, will be properly assessed
against the Outparcel and such Related Remaining Property separately; (6) Lender shall have
received such endorsements to the Title Policy (or substantially equivalent assurance) as Lender
may reasonably require confirming continuing title insurance and that (A) the Security Instrument
constitutes a first priority lien on any Related Remaining Property after the release of the
Outparcel, (B) such Related Remaining Property constitutes a separate tax lot or tax lots and (C)
such release shall not result in such Related Remaining Property ceasing to comply in all material
respects with all applicable Legal Requirements, zoning, land use and subdivision laws; (7)
Borrower (and in the case of Outparcels located in Maryland, Maryland Loan Guarantor) shall have
executed and delivered such documents (including amendments to the Loan Documents) as Lender may
reasonably require to reflect such release; (8) Borrower shall pay to Lender all costs and expenses
incurred by Lender (including, without limitation, reasonable attorneys fees and any applicable
costs and expenses of the Rating Agencies) in connection with each such release; (9) Borrower shall
have provided Lender at least fifteen (15) Business Days prior written notice of such requested
release; and (10) Borrower shall submit to Lender, not less than fifteen (15) days prior to the
date of such proposed release (which must be on a Business Day), a release of Liens (and related
Loan Documents) for such Outparcel, in a form appropriate in the applicable State and otherwise
satisfactory to Lender in its reasonable discretion, and all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such release (collectively,
Outparcel
Release Instruments
).
2.3.8
Excess Account Collateral
. Upon the occurrence of any Property Release,
provided
no Low LCR Cash Sweep Period exists and no Event of Default has occurred and is
continuing, Lender shall promptly perform an analysis of the Account Collateral in order to
reasonably determine the amount of the Account Collateral (including, but not limited to, Proceeds)
attributable to the Release Property (the
Excess Account Collateral
), and shall promptly
instruct Cash Management Bank to return to Borrower the Excess Account Collateral, if any, except
to the extent that Lender reasonably determines that a shortfall exists in such Sub-Account with
respect to the Property other than the Release Property.
39
2.3.9
Reserve Requirements
. Upon the occurrence of a Property Release,
provided
no
Low LCR Cash Flow Sweep Period exists and no Event of Default has occurred and is continuing,
Lender shall promptly prepare a revised estimate of Impositions and Other Charges and insurance
premiums with respect to the remaining Individual Properties in accordance with
Sections
16.1
and
16.2
, as applicable, and shall promptly provide Borrower and Cash Management
Bank with notice of the revised Monthly Tax Reserve Amount and Monthly Insurance Reserve Amount.
2.4
Regulatory Change; Taxes
.
2.4.1
Increased Costs
. If as a result of any Regulatory Change or compliance of Lender
therewith, the basis of taxation of payments to Lender or any company Controlling Lender of the
principal of or interest on the Loan is changed or Lender or the company Controlling Lender shall
be subject to (i) any tax, duty, charge or withholding of any kind with respect to this Agreement
(excluding federal taxation of the overall net income of Lender or the company Controlling Lender);
or (ii) any reserve, special deposit or similar requirements relating to any extensions of credit
or other assets of, or any deposits with or other liabilities, of Lender or any company Controlling
Lender is imposed, modified or deemed applicable; or (iii) any other condition affecting loans to
borrowers subject to fixed interest rates is imposed on Lender or any company Controlling Lender
and Lender determines that, by reason thereof, the cost to Lender or any company Controlling Lender
of making, maintaining or extending the Loan to Borrower is increased, or any amount receivable by
Lender or any company Controlling Lender hereunder in respect of any portion of the Loan to
Borrower is reduced, in each case by an amount deemed by Lender in good faith to be material (such
increases in cost and reductions in amounts receivable being herein called
Increased
Costs
), then Lender shall provide notice thereof to Borrower and Borrower agrees that it will
pay to Lender upon Lenders written request such additional amount or amounts as will compensate
Lender or any company Controlling Lender for such Increased Costs to the extent Lender reasonably
determines that such Increased Costs are allocable to the Loan. If Lender requests compensation
under this
Section 2.4.1
, Borrower may, by notice to Lender, require that Lender furnish to
Borrower a statement setting forth the basis for requesting such compensation and the method for
determining the amount thereof.
2.4.2
Special Taxes
. Borrower shall make all payments hereunder free and clear of and
without deduction for Special Taxes. If Borrower shall be required by law to deduct any Special
Taxes from or in respect of any sum payable hereunder or under any other Loan Document to Lender,
(i) the sum payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under this
Section
2.4.2
) Lender receives an amount equal to the sum it would have received had no such deductions
been made, (ii) Borrower shall make such deductions, and (iii) Borrower shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable law. Notwithstanding
anything to the contrary contained in this
Section 2.4.2
, Borrower shall not be liable for
any amounts as a result of withholding for Special Taxes or additional costs incurred as a result
of the assignment of all or any portion of the Loan by Lender to any Person that is subject to
Special Taxes and which is organized under or has its principal place of business outside of the
United States of America or any political subdivision thereof.
40
2.4.3
Other Taxes
. In addition, Borrower agrees to pay any present or future stamp or
documentary taxes or other excise or property taxes, charges, or similar levies which arise from
any payment made hereunder, or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement, the other Loan Documents or the Loan (hereinafter referred to as
Other Taxes
).
2.4.4
Indemnity
. Borrower shall indemnify Lender for the full amount of Special Taxes and
Other Taxes (including any Special Taxes or Other Taxes imposed by any Governmental Authority on
amounts payable under this
Section 2.4.4
) paid by Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification
shall be made within thirty (30) days after the date Lender makes written demand therefor.
2.4.5
Change of Office
. To the extent that changing the jurisdiction of Lenders
applicable office would have the effect of minimizing Special Taxes, Other Taxes or Increased
Costs, Lender shall use reasonable efforts to make such a change.
2.4.6
Survival
. Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower contained in this
Section 2.4
shall
survive the payment in full of principal and interest hereunder, and the termination of this
Agreement.
2.5
Conditions Precedent to Closing
. The obligation of Lender to make the Loan hereunder
is subject to the fulfillment by, or on behalf of, Borrower or waiver by Lender of the following
conditions precedent no later than the Closing Date;
provided
,
however
, that unless
a condition precedent shall expressly survive the Closing Date pursuant to a separate agreement, by
funding the Loan, Lender shall be deemed to have waived any such conditions not theretofore
fulfilled or satisfied.
2.5.1
Representations and Warranties; Compliance with Conditions
. The representations and
warranties of Borrower and Maryland Loan Guarantor contained in this Agreement and the other Loan
Documents shall be true and correct in all material respects on and as of the Closing Date with the
same effect as if made on and as of such date, and no Default or Event of Default shall have
occurred and be continuing; and Borrower and Maryland Loan Guarantor shall be in compliance in all
material respects with all terms and conditions set forth in this Agreement and in each other Loan
Document on its part to be observed or performed.
2.5.2
Delivery of Loan Documents; Title Policy; Reports; Leases
.
(a)
Loan Documents
. Lender shall have received an original copy of this Agreement,
the Notes and all of the other Loan Documents, in each case, duly executed (and to the extent
required, acknowledged) and delivered on behalf of Borrower and any other parties thereto.
(b)
Security Instrument, Assignment of Leases
. Lender shall have received evidence
that original counterparts of the Security Instrument and Assignment of Leases, in proper form for
recordation, have been delivered to the Title Company for recording, so as effectively to create,
in the reasonable judgment of Lender, upon such recording valid and enforceable first priority
Liens upon the Property, in favor of Lender (or such other trustee as may be required or
desired under local law), subject only to the Permitted Encumbrances and such other Liens as
are permitted pursuant to the Loan Documents.
41
(c)
UCC Financing Statements
. Lender shall have received evidence that the UCC
financing statements relating to the Security Instrument and this Agreement have been delivered to
the Title Company for filing in the applicable jurisdictions.
(d)
Title Insurance
. Lender shall have received a Title Policy issued by the Title
Company and dated as of the Closing Date. Such Title Policy shall (i) provide coverage in an
amount equal to one hundred percent (100%) of the Loan (or in the case of the Individual Properties
in the Mortgage Tax States, one hundred twenty-five percent (125%) of the Allocated Loan Amount),
(ii) insure Lender that the Security Instrument creates a valid, first priority Lien on the
Property, free and clear of all exceptions from coverage other than Permitted Encumbrances and
standard exceptions and exclusions from coverage (as modified by the terms of any endorsements),
(iii) contain the endorsements and affirmative coverages set forth on
Exhibit A
and such
additional endorsements and affirmative coverages as Lender may reasonably request to the extent
available in the applicable State, and (iv) name Lender as the insured. Lender also shall have
received evidence that all premiums in respect of such Title Policy have been paid and that all
appropriate releases or discharges of encumbrances necessary for the delivery of the Title Policy
have been delivered for recording.
(e)
Surveys
. With respect to each of the Individual Properties, Lender shall have
received (i) a current Survey containing the survey certification substantially in the form
attached hereto as
Exhibit B
or (ii) copies of existing Surveys prepared in connection with
the financing being repaid with proceeds of the Loan, together with so called no change
affidavits executed by Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantor), each in form sufficient to enable the Title Company to omit the standard survey
exception to title coverage and to issue the endorsements to the Title Policy required by Lender
(to the extent available in the applicable State), including, but not limited to, contiguity,
comprehensive, subdivision, land same as survey and access endorsements. Each such Survey shall
reflect the same legal description contained in the Title Policy referred to in paragraph (d) above
and shall include, among other things, a metes and bounds description (or such other description as
is required by Title Company) of the applicable Individual Property, any such description to be
reasonably satisfactory to Lender. The surveyors seal shall be affixed to each Survey.
(f)
Insurance
. Lender shall have received valid certificates of insurance for the
policies of insurance required hereunder, satisfactory to Lender in its sole discretion, and
evidence of the payment of all insurance premiums currently due and payable for the existing policy
period.
(g)
Environmental Reports
. Lender shall have received the Environmental Reports in
respect of the Individual Properties satisfactory to Lender (and Lender agrees and acknowledges
that the Environmental Reports may consist of updates to the existing environmental reports,
provided
that (A) such updated reports are in form and content acceptable to Lender in
Lenders reasonable discretion and (B) the environmental consultant preparing such updated reports
shall provide to Lender a reliance letter satisfactory to Lender).
42
(h)
Zoning
. Lender shall have received with respect to each Individual Property one
of the following: (i) letters or other evidence with respect to the Property from the appropriate
municipal authorities (or other Persons) concerning compliance with applicable zoning and building
laws acceptable to Lender, (ii) an ALTA 3.1 zoning endorsement for the Title Policy or (iii) a
zoning report reasonably acceptable to Lender prepared by PZR or another nationally recognized
zoning due diligence firm acceptable to Lender.
(i)
Certificate of Occupancy
. Lender shall have received a copy of the valid
permanent certificate of occupancy for each Individual Property located in a jurisdiction that
requires certificates of occupancy under applicable law, in each case acceptable to Lender.
(j)
Encumbrances
. Borrower shall have taken or caused to be taken such actions in
such a manner so that Lender has a valid and perfected first Lien as of the Closing Date on the
Property, subject only to Permitted Encumbrances and such other Liens as are permitted pursuant to
the Loan Documents, and Lender shall have received satisfactory evidence thereof.
2.5.3
Related Documents
. Each additional document not specifically referenced herein, but
relating to the transactions contemplated herein, shall have been duly authorized, executed and
delivered by all parties thereto and Lender shall have received and approved certified copies
thereof.
2.5.4
Delivery of Organizational Documents
. On or before the Closing Date, Borrower shall
deliver, or cause to be delivered, to Lender copies, certified by an Officers Certificate, of all
organizational documentation related to Borrower, Maryland Loan Guarantor, Master Lessee, any other
SPE Entity and Guarantor as have been requested by Lender and/or the formation, structure,
existence, good standing and/or qualification to do business of Borrower, Maryland Loan Guarantor,
any other SPE Entity and Guarantor as Lender may request in its sole discretion, including, without
limitation, good standing certificates, qualifications to do business in the appropriate
jurisdictions, resolutions authorizing the entering into of the Loan and incumbency certificates as
may be requested by Lender. Each of the organizational documents of any SPE Entity shall contain
single purpose entity provisions having a substantive effect materially similar to that of the
language set forth in
Exhibit C
.
2.5.5
Counsel Opinions
.
(a) Lender shall have received a Non-Consolidation Opinion in a form approved by Lender (the
Non-Consolidation Opinion
).
(b) Lender shall have received the Opinion of Counsel substantially in compliance with the
requirements set forth in
Exhibit D
(and including a non-contravention opinion with respect
to the Revolving Loan) or in such other form approved by the Lender (
provided
that Lender
shall not unreasonably withhold its approval of the general form of any Opinion of Counsel that was
used by the applicable counsel in connection with the financing being repaid with proceeds of the
Loan).
2.5.6
Annual Budget
. Borrower shall have delivered the Annual Budget for the current
Fiscal Year, which Annual Budget shall be acceptable to Lender and shall be certified by an
Officers Certificate.
43
2.5.7
Completion of Proceedings
. All corporate and other proceedings taken or to be taken
in connection with the transactions contemplated by this Agreement and other Loan Documents and all
documents incidental thereto shall be satisfactory in form and substance to Lender, and Lender
shall have received all such counterpart originals or certified copies of such documents as Lender
may reasonably request.
2.5.8
Payments
. All payments, deposits or escrows, if any, required to be made or
established by Borrower under this Agreement, the Notes and the other Loan Documents on or before
the Closing Date shall have been paid.
2.5.9
Account Agreement
. Lender shall have received the original of the Account Agreement
executed by each of Cash Management Bank, Borrower (other than Maryland Borrower) and Maryland Loan
Guarantor.
2.5.10
Master Lease SNDA
. Borrower shall have, prior to Closing, delivered to Lender the
Master Lease SNDA executed by Master Lessee with respect to the Master Lease.
2.5.11
Reserved
.
2.5.12
Reserved
.
2.5.13
Independent Manager/Member Certificate
. Lender shall have received an executed
Independent Manager/Member certificate substantially in the form attached as
Exhibit T
.
2.5.14
Transaction Costs
. Borrower shall have paid or reimbursed Lender for all title
insurance premiums, recording and filing fees, costs of Environmental Reports, Physical Condition
Reports, seismic reports, zoning reports, searches, flood certifications, appraisals and other
reports, the reasonable fees and costs of Lenders counsel and all other third party out-of-pocket
expenses incurred in connection with the origination of the Loan.
2.5.15
Material Adverse Effect
. No change, circumstance, event or effect shall have
occurred since the date of Borrowers most recent financial statements delivered to Lender which
has, or could reasonably be expected to, have a Material Adverse Effect.
2.5.16
Insolvency
. None of Borrower, Master Lease Guarantor or Guarantor shall be the
subject of any bankruptcy, reorganization, or insolvency proceeding.
2.5.17
Leases
. Lender shall have received copies of all Leases.
2.5.18
Master Lease; Master Lease SNDA
. Lender shall have received a certified copy of the
Master Lease and shall have received the duly executed Master Lease SNDA in form and substance
reasonably acceptable to Lender.
2.5.19
Tax Lot
. Lender shall have received a tax lot endorsement to the Title Policy or
other evidence that each Individual Property constitutes one (1) or more separate tax lots, which
endorsement or other evidence shall be reasonably satisfactory in form and substance to Lender.
44
2.5.20
Physical Conditions Reports
. Lender shall have received the Physical Conditions
Reports with respect to the Individual Properties, which shall be satisfactory in form and
substance to Lender.
2.5.21
Appraisals
. Lender shall have received an Appraisal of each Individual Property,
which shall be satisfactory in form and substance to Lender.
2.5.22
Financial Statements
. Lender shall have confirmed the accuracy of all financial
statements and other financial information with respect to the Property delivered by Borrower to
Lender.
2.5.23
Flood Certifications
. Lender shall have received a flood zone certification with
respect to each Individual Property.
2.5.24
Intercreditor Agreement
. Lender shall have received the Intercreditor Agreement as
well as certified copies of the loan documents evidencing the Revolving Loan (including any
amendments thereto).
III.
CASH MANAGEMENT
3.1
Cash Management
.
3.1.1
Establishment of Accounts
. Borrower hereby confirms that, simultaneously with the
execution of this Agreement and pursuant to the Account Agreement, Borrower (or in the case of the
Maryland Property, Maryland Loan Guarantor) has established with Cash Management Bank, in the name
of Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) for the benefit of
Lender, as secured party, the holding account (the
Holding Account
), which has been
established as a securities account. The Holding Account and each sub-account of such account and
the funds deposited therein and securities and other assets credited thereto shall serve as
additional security for the Loan. Pursuant to the Account Agreement, Borrower (or in the case of
the Maryland Property, Maryland Loan Guarantor) shall irrevocably instruct and authorize Cash
Management Bank to disregard any and all orders for withdrawal from the Collateral Accounts made
by, or at the direction of, Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantor). Borrower agrees that, prior to the payment in full of the Indebtedness, the terms and
conditions of the Account Agreement shall not be amended or modified without the prior written
consent of Lender (which consent Lender may grant or withhold in its sole discretion), and if a
Securitization has occurred, the delivery by Borrower of a Rating Agency Confirmation. In
recognition of Lenders security interest in the funds deposited into the Collateral Accounts, the
Holding Account shall be named as follows: BlueLinx Portfolio Holding Account f/b/o German
American Capital Corporation, as secured party, (Account Number 5000000140431). Borrower confirms
that it has established with Cash Management Bank the following sub-accounts of the Holding Account
(each, a
Sub-Account
and, collectively, the
Sub-Accounts
and together with the
Holding Account, the
Collateral Accounts
), which (i) may be ledger or book entry
sub-accounts and need not be actual sub-accounts, (ii) shall each be linked to the Holding Account,
(iii) shall each be a
Securities Account
pursuant to Article 8 of the UCC and (iv) shall
each be an Eligible Account to which
certain funds shall be allocated and from which disbursements shall be made pursuant to the terms
of this Agreement:
45
(a) a sub-account for the retention of Account Collateral in respect of Impositions and Other
Charges for the Property (the
Tax Reserve Account
);
(b) a sub-account for the retention of Account Collateral in respect of insurance premiums for
the Property (the
Insurance Reserve Account
);
(c) a sub-account for the retention of Account Collateral in respect of Debt Service on the
Loan (the
Debt Service Reserve Account
);
(d) a sub-account for the retention of Account Collateral in respect of reserves relating to
Master Lease Variable Additional Rent (the
Master Lease Variable Additional Rent Reserve
Account
);
(e) a sub-account for the retention of Account Collateral in respect of reserves for the
Immediate Repair Conditions and the Environmental Remediation Conditions (the
Immediate Repair
and Remediation Reserve Account
);
(f) a sub-account for the retention of Account Collateral in respect of reserves for
Structural Maintenance Items (the
Structural Repair Reserve Account
);
(g) a sub-account for the retention of Account Collateral in respect of certain Proceeds, as
more fully set forth in
Section 6.2
(the
Proceeds Reserve Account
); and
(h) a sub-account for the retention of Account Collateral in respect of reserves of Excess
Cash Flow required during a Low LCR Cash Sweep Period pursuant to
Section 16.5(c)
(the
LCR Deterioration Reserve Account
).
3.1.2
Pledge of Account Collateral
. To secure the full and punctual payment and
performance of the Obligations, Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantor) hereby collaterally assigns, grants a security interest in and pledges to Lender, to the
extent not prohibited by applicable law, a first priority continuing security interest in and to
the following property of Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantor), whether now owned or existing or hereafter acquired or arising and regardless of where
located (all of the same, collectively, the
Account Collateral
):
(a) the Collateral Accounts and all cash, checks, drafts, securities entitlements,
certificates, instruments and other property, including, without limitation, all deposits and/or
wire transfers from time to time deposited or held in, credited to or made to Collateral Accounts;
(b) any and all amounts invested in Permitted Investments;
(c) subject to the provisions of
Section 3.1.4
, all interest, dividends, cash,
instruments, securities entitlements and other property from time to time received, receivable or
otherwise payable in respect of, or in exchange for, any or all of the foregoing or purchased with
funds from the Collateral Accounts; and
46
(d) to the extent not covered by clauses (a), (b) or (c) above, all proceeds (as defined under
the UCC) of any or all of the foregoing.
In addition to the rights and remedies herein set forth, Lender shall have all of the rights
and remedies with respect to the Account Collateral available to a secured party at law or in
equity, including, without limitation, the rights of a secured party under the UCC, as if such
rights and remedies were fully set forth herein.
This Agreement shall constitute a security agreement for purposes of the Uniform Commercial
Code and other applicable law.
3.1.3
Maintenance of Collateral Accounts
. Borrower (or in the case of the Maryland
Property, Maryland Loan Guarantor) agrees that each of the Collateral Accounts is and shall be
maintained (i) as a securities account (as such term is defined in Section 8-501(a) of the UCC),
(ii) in such a manner that Lender shall have control (within the meaning of Section 8-106(d)(2) of
the UCC) over the Collateral Accounts, (iii) such that no Person other than Lender shall have any
right of withdrawal from the Collateral Accounts and, except as provided herein, no Account
Collateral shall be released to the Borrower or any Affiliate of Borrower from the Collateral
Accounts, (iv) in such a manner that the Cash Management Bank shall agree to treat all property
credited to the Collateral Accounts as financial assets and (v) such that all securities or other
property underlying any financial assets credited to the Collateral Accounts shall be registered in
the name of Cash Management Bank, indorsed to Cash Management Bank or in blank or credited to
another securities account maintained in the name of Cash Management Bank and in no case will any
financial asset credited to any of the Collateral Accounts be registered in the name of Borrower,
payable to the order of Borrower or specially indorsed to Borrower, except to the extent the
foregoing have been specially indorsed to Cash Management Bank or in blank. Without limiting
Borrowers obligations under the immediately preceding sentence, Borrower shall only establish and
maintain the Collateral Accounts with a financial institution that has executed an agreement
substantially in the form of the Account Agreement or in such other form acceptable to Lender in
its sole discretion.
3.1.4
Eligible Accounts
. The Collateral Accounts shall be Eligible Accounts. The
Collateral Accounts shall be subject to such applicable laws, and such applicable regulations of
the Board of Governors of the Federal Reserve System and of any other banking or governmental
authority, as may now or hereafter be in effect. Income and interest accruing on the Collateral
Accounts or any investments held in such accounts for the benefit of Borrower (or in the case of
the Maryland Property, Maryland Loan Guarantor) shall be added to the principal amount of such
account on a daily basis (or with such frequency as the Cash Management Bank can accommodate) and
shall be held, disbursed and applied in accordance with the provisions of this Agreement and the
Account Agreement. Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor)
shall be the beneficial owner of the Collateral Accounts for federal income tax purposes and shall
report all income on the Collateral Accounts.
47
3.1.5
Deposits into Sub-Accounts
. On the date hereof, Borrower has deposited the following
amounts into the Sub-Accounts:
|
(i)
|
|
$1,252,579.76 into the Tax Reserve Account;
|
|
|
(ii)
|
|
$1,193,316.37 into the Insurance Reserve Account;
|
|
|
(iii)
|
|
$0.00 into the Debt Service Reserve Account;
|
|
|
(iv)
|
|
$0.00 into the Master Lease Variable Additional Rent Reserve Account;
|
|
|
(v)
|
|
$0.00 into the Structural Repair Reserve Account;
|
|
|
(vi)
|
|
$404,310 into the Immediate Repair and Remediation Reserve Account; and
|
|
|
(vii)
|
|
$0.00 into the Proceeds Reserve Account; and
|
|
|
(viii)
|
|
$0.00 into the LCR Deterioration Reserve Account.
|
3.1.6
Monthly Funding of Sub-Accounts; Master Lease Rent Shortfalls; Master Lease Variable
Additional Rent Reserve; Sub-Account Shortfalls
.
(a)
Monthly Funding of Sub-Accounts
. Borrower (or in the case of the Maryland
Property, Maryland Loan Guarantor) hereby irrevocably authorizes Lender to transfer (and, pursuant
to the Account Agreement shall irrevocably authorize Cash Management Bank to execute any
corresponding instructions of Lender), and Lender shall transfer, from the Holding Account by 11:00
a.m. New York time on the date on which each payment of Master Lease Rent under the Master Lease is
made to the Holding Account, or as soon thereafter as sufficient funds are in the Holding Account
to make the applicable transfers, commencing on the date of the first payment of Master Lease Rent
under the Master Lease following the date of this Agreement, funds in the following amounts and in
the following order of priority:
(i) funds in an amount equal to the Monthly Tax Reserve Amount and any other amounts required
pursuant to
Section 16.1
for the month in which the transfer from the Holding Account is
made to the Tax Reserve Account;
(ii) funds in an amount equal to the Monthly Insurance Reserve Amount and any other amounts
required pursuant to
Section 16.2
for the month in which the transfer from the Holding
Account is made to the Insurance Reserve Account;
(iii) funds in an amount equal to the amount of Debt Service due on the Payment Date
immediately following the date the transfer from the Holding Account is made to the Debt Service
Reserve Account;
(iv) funds in an amount equal to the Monthly Structural Repair Reserve Amount for the month in
which the transfer from the Holding Account is made to the Structural Repair Reserve Account;
(v) during the continuance of an Event of Default and during any Low LCR Cash Sweep Period,
funds in an amount equal to the Master Lease Variable Additional Rent payable under the Master
Lease for the month following the month in which the transfer from the Holding Account is made to
the Master Lease Variable Additional Rent Reserve Account;
48
(vi) during the continuance of an Event of Default or a Low LCR Cash Sweep Period, funds in an
amount equal to the balance (if any) remaining or deposited in the Holding Account after the
foregoing transfers (such remainder being hereinafter referred to as
Excess Cash Flow
) to
the LCR Deterioration Reserve Account; and
(vii)
provided
no Low LCR Cash Sweep Period or Event of Default is then continuing,
the Excess Cash Flow to the Borrowers Account.
(b)
Master Lease Rent Shortfalls
. If there is a Master Lease Rent Shortfall, subject
to the provisions of
Section 3.1.6(c)
below, Lender shall have the right, at its election,
to direct the Cash Management Bank to transfer (but shall not be obligated to so direct the Cash
Management Bank to transfer) from the LCR Deterioration Reserve Account to the Holding Account,
without notice to Borrower, an amount equal to such Master Lease Rent Shortfall.
(c)
Master Lease Variable Additional Rent Reserve
. In the event that no Low LCR Cash
Sweep Period or Event of Default is then continuing, Lender shall direct the Cash Management Bank
to transfer the funds in the Master Lease Variable Additional Rent Reserve Account to Borrower (or,
if directed by Borrower, to Master Lessee). During the continuance of any Low LCR Cash Sweep
Period or Event of Default, Lender shall pay or direct the Cash Management Bank to pay from the
Master Lease Variable Additional Rent Reserve Account, monthly payments of Master Lease Variable
Additional Rent directly to the Person having the right to receive such funds on the respective due
dates therefor and shall promptly notify Borrower and Master Lessee of any such payment.
(d)
Sub-Account Shortfalls
. If Lender shall reasonably determine that there will be
insufficient amounts in the Holding Account to make any of the transfers required pursuant to this
Section 3.1.6
, Lender shall provide notice to Borrower of such insufficiency (it being
understood that in no event shall Lender be required to notify Borrower of any deficiency in the
Debt Service Reserve Account, such deficiency on the fifth (5
th
) day of any month (or,
if such fifth (5
th
) day is not a Business Day then the immediately preceding Business
Day) being an Event of Default) and, within five (5) days after receipt of said notice and prior to
the expiration of any grace period applicable to such payment, Borrower shall deposit into the
Holding Account an amount equal to the shortfall of available funds in the Holding Account taking
into account any funds which accumulate in the Holding Account during such five (5) day period.
Notwithstanding anything to the contrary contained in this Agreement or in the other Loan
Documents, Borrower shall not be deemed to be in default hereunder or thereunder in the event funds
sufficient for a required transfer are held in an appropriate Sub-Account and Lender or Cash
Management Bank fails to timely make any transfer from such Sub-Account, as contemplated by this
Agreement, unless due to the negligence or willful misconduct of Borrower.
(e) Notwithstanding anything to the contrary contained herein or in the Security Instrument,
Lender shall have the right, upon five (5) Business Days prior written notice thereof to Borrower,
to withdraw from the Holding Account an amount equal to any mortgage recording tax, costs, expenses
or other amounts pursuant to
Section 19.12
of this Agreement then due and owing and pay
such amounts to the Person(s) entitled thereto.
49
3.1.7
Required Payments from Sub-Accounts
. Borrower irrevocably authorizes Lender to make
and,
provided
no Event of Default shall have occurred and be continuing, Lender hereby
agrees to make or to direct the Cash Management Bank to make, the following payments from the
Sub-Accounts to the extent of the monies on deposit therefor:
(i) funds from the Tax Reserve Account to Lender sufficient to permit Lender to pay (A)
Impositions and (B) Other Charges, on the respective due dates therefor, and Lender shall so pay
such funds to the Governmental Authority having the right to receive such funds;
(ii) funds from the Insurance Reserve Account to Lender sufficient to permit Lender to pay
insurance premiums for the insurance required to be maintained pursuant to the terms of this
Agreement and the Security Instrument, on the respective due dates therefor, and Lender shall so
pay such funds to the insurance company having the right to receive such funds;
(iii) funds from the Debt Service Reserve Account to Lender sufficient to pay Debt Service on
each Payment Date, and Lender, on each Payment Date, shall apply such funds to the payment of the
Debt Service payable on such Payment Date;
(iv) as provided in
Section 16.3
, funds from the Structural Repair Reserve Account to
the Borrowers Account to pay for Structural Repairs;
(v) as provided in
Section 16.4
, funds from the Immediate Repair and Remediation
Reserve Account to the Borrowers Account to reimburse Borrower for, or to pay, the cost of the
Immediate Repairs and Remediation;
(vi) as applicable, funds from the Master Lease Variable Additional Rent Reserve Account in
accordance with
Section 3.1.6(c)
and
Section 16.5(b)
, and Lender shall so pay such
funds to the Person having the right to receive such funds; and
(vii) as applicable, funds from the LCR Deterioration Reserve Account in accordance with
Section 16.5(c)
.
3.1.8
Cash Management Bank
.
(a) Lender shall have the right at Borrowers sole cost and expense to replace the Cash
Management Bank with a financial institution reasonably satisfactory to Borrower in the event that
(i) the Cash Management Bank fails, in any material respect, to comply with the Account Agreement,
(ii) the Cash Management Bank named herein is no longer the Cash Management Bank or (iii) the Cash
Management Bank is no longer an Approved Bank. Upon the occurrence and during the continuance of
an Event of Default, Lender shall have the right at Borrowers sole cost and expense to replace
Cash Management Bank at any time, upon prior written notice to Borrower. Borrower shall cooperate
with Lender in connection with the appointment of any replacement Cash Management Bank and the
execution by the Cash Management Bank and the Borrower of an Account Agreement and delivery of same
to Lender.
(b) So long as no Event of Default shall have occurred and be continuing, Borrower shall have
the right at its sole cost and expense to replace the Cash Management Bank with a financial
institution that is an Approved Bank
provided
that such financial institution and
Borrower shall execute and deliver to Lender an Account Agreement substantially similar to the
Account Agreement executed as of the Closing Date, or in such other form reasonably required by
Lender or required by the Rating Agencies, with such changes therein as shall be reasonably
acceptable to Lender.
50
3.1.9
Borrowers and Maryland Loan Guarantors Account Representations, Warranties and
Covenants
.
(a) Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) represents,
warrants and covenants that as of the date hereof, Borrower (or in the case of the Maryland
Property, Maryland Loan Guarantor) has irrevocably directed the Master Lessee, pursuant to a letter
substantially in the form of the Master Lease Rent Payment Direction Letter, to (i) make all
payments of Master Lease Scheduled Rent directly to the Holding Account at all times during the
term of the Loan and (ii) make all payment of Master Lease Variable Additional Rent directly to the
Holding Account at all times during the continuance of a Low LCR Cash Sweep Period or an Event of
Default.
(b) Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) further
represents, warrants and covenants that (i) it shall cause Master Lessee to deposit all amounts
payable to it pursuant to the Master Lease directly into the Holding Account, (ii) it shall pay or
cause to be paid all Rents, Cash and Cash Equivalents or other items of operating income not
covered by the preceding subsection (a) within one Business Day after receipt thereof by Borrower
or its Affiliates directly into the Holding Account and, until so deposited, any such amounts held
by Borrower or its Affiliates shall be deemed to be Account Collateral and shall be held in trust
by it for the benefit, and as the property, of Lender and shall not be commingled with any other
funds or property of Borrower or its Affiliates, (iii) there are no accounts other than the
Collateral Accounts maintained by Borrower or any other Person with respect to the Property or the
collection of Rents and (vii) so long as the Loan shall be outstanding, neither Borrower nor any
other Person shall open any other operating accounts with respect to the Property or the collection
of Rents, except for the Collateral Accounts;
provided
that Borrower (or in the case of the
Maryland Property, Maryland Loan Guarantor) shall not be prohibited from utilizing one or more
separate accounts for the disbursement or retention of funds that have been transferred to the
Borrowers Account pursuant to
Section 3.1.6
.
3.1.10
Account Collateral and Remedies
.
(a) Upon the occurrence and during the continuance of an Event of Default, without additional
notice from Lender to Borrower, (i) Lender may, in addition to and not in limitation of Lenders
other rights, make any and all withdrawals from, and transfers between and among, the Collateral
Accounts as Lender shall determine in its sole and absolute discretion to pay any Obligations,
operating expenses and/or Capital Expenditures for the Property, (ii) all Excess Cash Flow shall be
retained in the Holding Account or applicable Sub-Accounts and (iii) Lender may liquidate and
transfer any amounts then invested in Permitted Investments to the Collateral Accounts to which
they relate or reinvest such amounts in other Permitted Investments as Lender may reasonably
determine is necessary to perfect or protect any security interest granted or purported to be
granted hereby or to enable Lender to exercise and enforce Lenders rights and
remedies hereunder with respect to any Account Collateral or to preserve the value of the
Account Collateral.
51
(b) Borrower (and in the case of the Maryland Property, Maryland Loan Guarantor) hereby
expressly waives, to the fullest extent permitted by law, presentment, demand, protest or any
notice of any kind in connection with this Agreement or the Account Collateral. Borrower (and in
the case of the Maryland Property, Maryland Loan Guarantor) acknowledges and agrees that twenty
(20) days prior written notice of the time and place of any public sale of the Account Collateral
or any other intended disposition thereof shall be reasonable and sufficient notice within the
meaning of the UCC.
3.1.11
Transfers and Other Liens
. Borrower (or in the case of the Maryland Property,
Maryland Loan Guarantor) agrees that it will not (i) sell or otherwise dispose of any of the
Account Collateral or (ii) create or permit to exist any Lien upon or with respect to all or any of
the Account Collateral, except for the Lien granted to Lender under this Agreement.
3.1.12
Reasonable Care
. Beyond the exercise of reasonable care in the custody thereof,
Lender shall have no duty as to any Account Collateral in its possession or control as agent
therefor or bailee thereof or any income thereon or the preservation of rights against any person
or otherwise with respect thereto. Lender shall be deemed to have exercised reasonable care in the
custody and preservation of the Account Collateral in its possession if the Account Collateral is
accorded treatment substantially equal to that which Lender accords its own property, it being
understood that Lender shall not be liable or responsible for any loss or damage to any of the
Account Collateral, or for any diminution in value thereof, by reason of the act or omission of
Lender, its Affiliates, agents, employees or bailees, except to the extent that such loss or damage
results from Lenders gross negligence or willful misconduct. In no event shall Lender be liable
either directly or indirectly for losses or delays resulting from any event which may be the basis
of an Excusable Delay, computer malfunctions, interruption of communication facilities, labor
difficulties or other causes beyond Lenders reasonable control or for indirect, special or
consequential damages except to the extent of Lenders gross negligence or willful misconduct.
Notwithstanding the foregoing, Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantor) acknowledges and agrees that (i) Lender does not have custody of the Account Collateral,
(ii) Cash Management Bank has custody of the Account Collateral, (iii) the initial Cash Management
Bank was chosen by Borrower and (iv) Lender has no obligation or duty to supervise Cash Management
Bank or to see to the safe custody of the Account Collateral.
3.1.13
Lenders Liability
.
(a) Lender shall be responsible for the performance only of such duties with respect to the
Account Collateral as are specifically set forth in this
Section 3.1
or elsewhere in the
Loan Documents, and no other duty shall be implied from any provision hereof. Lender shall not be
under any obligation or duty to perform any act with respect to the Account Collateral which would
cause it to incur any expense or liability or to institute or defend any suit in respect hereof, or
to advance any of its own monies. Borrower (and in the case of the Maryland Property, Maryland
Loan Guarantor) shall indemnify and hold harmless Lender, its employees and officers, from and
against any loss, cost or damage (including, without limitation, reasonable attorneys
fees and disbursements) incurred by Lender in connection with the transactions contemplated
hereby with respect to the Account Collateral except as such may be caused by the gross negligence
or willful misconduct of Lender, its employees, officers or agents.
52
(b) Lender shall be protected in acting upon any notice, resolution, request, consent, order,
certificate, report, opinion, bond or other paper, document or signature believed by it in good
faith to be genuine, and, in so acting, it may be assumed that any person purporting to give any of
the foregoing in connection with the provisions hereof has been duly authorized to do so. Lender
may consult with counsel, and the opinion of such counsel shall be full and complete authorization
and protection in respect of any action taken or suffered by it hereunder and in good faith in
accordance therewith.
3.1.14
Continuing Security Interest
. This Agreement shall create a continuing security
interest in the Account Collateral and shall remain in full force and effect until payment in full
of the Indebtedness. Upon payment in full of the Indebtedness, this security interest shall
automatically terminate without further notice from any party and Borrower shall be entitled to the
return of such of the Account Collateral as shall not have been sold or otherwise applied pursuant
to the terms hereof, and Lender shall execute such instruments and documents as may be reasonably
requested by Borrower to evidence such termination and the release and return of the Account
Collateral to Borrower.
IV.
REPRESENTATIONS AND WARRANTIES
4.1
Borrower Representations
. Borrower (and in the case of the Maryland Property, Maryland
Loan Guarantor) represents and warrants as of the Closing Date that:
4.1.1
Organization
. Each Borrower and Maryland Loan Guarantor is a limited liability
company and has been duly organized and is validly existing and in good standing pursuant to the
laws of the State of Delaware with requisite power and authority to own its properties and to
transact the businesses in which it is now engaged. Guarantor is a corporation and has been duly
organized and is validly existing and in good standing pursuant to the laws of the State of
Delaware with requisite power and authority to own its properties and to transact the businesses in
which it is now engaged. Master Lessee is a corporation and has been duly organized and is validly
existing and in good standing pursuant to the laws of the State of Georgia with requisite power and
authority to own its properties and to transact the businesses in which it is now engaged. Each
Borrower, Maryland Loan Guarantor, Guarantor and Master Lessee has duly qualified to do business
and is in good standing in each jurisdiction where it is required to be so qualified in connection
with its properties, businesses and operations. Each of Borrower, Maryland Loan Guarantor and
Guarantor possesses all material rights, licenses, permits and authorizations, governmental or
otherwise, necessary to entitle it to own its properties and to transact the businesses in which it
is now engaged, and the sole business of Borrower (or in the case of the Maryland Property,
Maryland Loan Guarantor) is the ownership of the Property. The organizational structure of
Borrower is accurately depicted by the schematic diagram attached hereto as
Exhibit K
.
Neither Borrower nor Maryland Loan Guarantor shall not change its name, identity, corporate form or
structure or jurisdiction of organization unless it shall have given Lender thirty (30) days prior
written notice of any such
change and shall have taken all steps reasonably requested by Lender to grant, perfect, protect
and/or preserve the liens and security interest granted to Lender under the Loan Documents.
53
4.1.2
Proceedings
. Each of Borrower, Maryland Loan Guarantor, Guarantor and Master Lessee
has full power, and has taken all necessary action, to authorize the execution, delivery and
performance of the Loan Documents to which it is a party. The Loan Documents to which such Person
is a party have been duly executed and delivered by, or on behalf of, Borrower, Maryland Loan
Guarantor, Guarantor and Master Lessee, as applicable, and constitute legal, valid and binding
obligations of such Persons, as applicable, enforceable against such Persons, as applicable, in
accordance with their respective terms, subject only to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at
law).
4.1.3
No Conflicts
. The execution, delivery and performance of this Agreement and the
other Loan Documents by Borrower, Maryland Loan Guarantor, Guarantor and Master Lessee, as
applicable, will not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property or assets of any
such Person pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement,
partnership agreement or other agreement or instrument to which any such Person is a party or by
which any of such Persons property or assets is subject (unless consents from all applicable
parties thereto have been obtained), nor will such action result in any violation of the provisions
of any statute or any order, rule or regulation of any Governmental Authority, and any material
consent, approval, authorization, order, registration or qualification of or with any Governmental
Authority required for the execution, delivery and performance by Borrower, Maryland Loan Guarantor
and Guarantor of this Agreement, except for any violation that would not individually or in the
aggregate reasonably be expected to result in a Material Adverse Effect, or any other Loan
Documents has been obtained and is in full force and effect.
4.1.4
Litigation
. Except as set forth on
Schedule VI
attached hereto, there are no
arbitration proceedings, governmental investigations, actions, suits or proceedings at law or in
equity by or before any Governmental Authority now pending or, to Borrowers knowledge, threatened
against or affecting Borrower, Maryland Loan Guarantor, Guarantor, Master Lessee or any Individual
Property (other than (a) claims for nonpayment brought by Borrower, Maryland Loan Guarantor,
Guarantor or Master Lessee as plaintiff, and (b) claims (i) which are being covered by insurance,
(ii) which are being defended by the relevant insurance company and (iii) as to which Borrower (or
in the case of the Maryland Property, Maryland Loan Guarantor) has not received a notice from such
insurance company that the claim exceeds the total amount of insurance coverage with respect to
such claim, provided that none of such unscheduled claims could reasonably be expected to
individually or in the aggregate to have a Material Adverse Effect if adversely determined). The
actions, suits or proceedings identified on
Schedule VI
, if determined against Borrower,
Maryland Loan Guarantor, Guarantor, Master Lessee or the applicable Individual Property or
Individual Properties, would not materially and adversely affect the condition (financial or
otherwise) or business of any such Person or the condition or operation of any Individual Property.
54
4.1.5
Agreements
. The Master Lease and the Subleases constitute all of the agreements to
which Borrower or any of its Affiliates are party or are bound which are material to the ownership
and operation of any Individual Property other than the Master Lease. Neither Borrower nor
Maryland Loan Guarantor is a party to any agreement or instrument or subject to any restriction
which is reasonably likely to materially and adversely affect it or its business, properties or
assets, operations or condition, financial or otherwise. Neither Borrower nor Maryland Loan
Guarantor is in default in any material respect in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement or instrument to which
it is a party or by which Borrower, Maryland Loan Guarantor or the Property is bound. Neither
Borrower nor Maryland Loan Guarantor has any material financial obligation (contingent or
otherwise) under any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it or the Property is otherwise bound, other than (a)
obligations constituting Permitted Debt which are incurred in the ordinary course of the ownership
and operation of the Property and (b) obligations under the Loan Documents and the Master Lease.
There are no prior sales, transfers or assignments of the Master Lease or any portion of the Rents
due and payable or to become due and payable which are presently outstanding following the funding
of the Loan, other than those being terminated or assigned to Lender concurrently herewith.
4.1.6
Title
. Borrower (or in the case of the Maryland Property, the Maryland Loan
Guarantor) has good, marketable and insurable fee simple title to the Land and the Improvements,
free and clear of all Liens whatsoever except the Permitted Encumbrances, such other Liens as are
permitted pursuant to the Loan Documents and the Liens created by the Loan Documents. Borrower (or
in the case of the Maryland Property, the Maryland Loan Guarantor) has good and marketable title to
the remainder of the Property, free and clear of all Liens whatsoever except the Permitted
Encumbrances. The Security Instrument, when properly recorded in the appropriate records, together
with any Uniform Commercial Code financing statements required to be filed in connection therewith,
will create (i) a valid, perfected first mortgage lien on the Land and the Improvements, subject
only to Permitted Encumbrances and (ii) perfected security interests in and to, and perfected
collateral assignments of, all Personal Property (including the Leases) and any leases of equipment
from third parties, all in accordance with the terms thereof, in each case subject only to any
applicable Permitted Encumbrances. To Borrowers knowledge, there are no claims for payment for
work, labor or materials affecting the Property which are or may become a lien prior to, or of
equal priority with, the Liens created by the Loan Documents other than the Permitted Encumbrances.
Borrower and Maryland Loan Guarantor represent and warrant that none of the Permitted Encumbrances
would individually or in the aggregate reasonably be expected to result in a Material Adverse
Effect as of the Closing Date and thereafter. Borrower (or in the case of the Maryland Property,
the Maryland Loan Guarantor) shall preserve its right, title and interest in and to the Property
for so long as the Notes remains outstanding and will warrant and defend same and the validity and
priority of the Lien hereof from and against any and all claims whatsoever other than the Permitted
Encumbrances.
4.1.7
No Bankruptcy Filing
. None of Borrower, Maryland Loan Guarantor, Guarantor or Master
Lessee is contemplating either the filing of a petition by it under any state or federal bankruptcy
or insolvency laws or the liquidation of all or a major portion of such entitys assets or
property, to Borrowers knowledge, no Person is contemplating the filing of any such
petition against it or against Borrower, Maryland Loan Guarantor, Guarantor or Master Lessee, as
applicable.
55
4.1.8
Full and Accurate Disclosure
. No statement of material fact made by Borrower or
Maryland Loan Guarantor in this Agreement or in any of the other Loan Documents contains any untrue
statement of a material fact or omits to state any material fact necessary to make statements
contained herein or therein not misleading. There is no fact presently known to Borrower or
Maryland Loan Guarantor which has not been disclosed which could reasonably be expected to have a
Material Adverse Effect.
4.1.9
All Property
. The Property constitutes all of the real property, personal property,
equipment and fixtures currently (i) owned or leased by Borrower (or in the case of the Maryland
Property, the Maryland Loan Guarantor) and (ii) used in the operation of the business located on
the Property, other than the Excluded Personal Property.
4.1.10
No Plan Assets
.
(a) Neither Borrower nor Maryland Loan Guarantor maintains an employee benefit plan as defined
by Section 3(3) of ERISA, which is subject to Title IV of ERISA, and (i) to Borrowers knowledge,
neither Borrower nor Maryland Loan Guarantor has incurred or expect to incur any material liability
which is or remains unsatisfied for any taxes or penalties with respect to any employee benefit
plan, within the meaning of Section 3(3) of ERISA, or any plan, within the meaning of Section
4975(e)(1) of the Internal Revenue Code or any other benefit plan (other than a multiemployer plan)
maintained, contributed to, or required to be contributed to by Borrower (or in the case of the
Maryland Property, the Maryland Loan Guarantor) or by any entity that is under common control with
Borrower or Maryland Loan Guarantor within the meaning of ERISA Section 4001(a)(14) (a
Plan
) or any plan that would be a Plan but for the fact that it is a multiemployer plan
within the meaning of ERISA Section 3(37); and (ii) Borrower (or in the case of the Maryland
Property, the Maryland Loan Guarantor) has made and shall continue to make when due all required
contributions to all such Plans, if any. Each such Plan has been and will be administered in
compliance with its terms and the applicable provisions of ERISA, the Internal Revenue Code, and
any other applicable federal or state law; and no action shall be taken or fail to be taken that
would result in the disqualification or loss of tax-exempt status of any such Plan intended to be
qualified and/or tax exempt; and
(b) Neither Borrower nor Maryland Loan Guarantor is an employee benefit plan, as defined in
Section 3(3) of ERISA, subject to Title I of ERISA, none of the assets of Borrower or Maryland Loan
Guarantor constitutes or will constitute plan assets of one or more such plans within the meaning
of 29 C.F.R. Section 2510.3-101 and neither Borrower nor Maryland Loan Guarantor is a governmental
plan within the meaning of Section 3(32) of ERISA and transactions by or with Borrower and Maryland
Loan Guarantor are not subject to state statutes regulating investment of, and fiduciary
obligations with respect to, governmental plans similar to the provisions of Section 406 of ERISA
or Section 4975 of the Code currently in effect, which prohibit or otherwise restrict the
transactions contemplated by this Agreement.
56
4.1.11
Compliance
. To Borrowers knowledge, Borrower, Maryland Loan Guarantor and the
Property and the use thereof comply in all material respects with all applicable Legal
Requirements, including, without limitation, building and zoning ordinances and codes. To
Borrowers knowledge, neither Borrower nor Maryland Loan Guarantor is in default or in violation of
any order, writ, injunction, decree or demand of any Governmental Authority. To Borrowers
knowledge, there has not been committed by Borrower or Maryland Loan Guarantor any act or omission
affording the federal government or any other Governmental Authority the right of forfeiture as
against the Property or any part thereof or any monies paid in performance of Borrowers or
Maryland Loan Guarantors obligations under any of the Loan Documents.
4.1.12
Financial Information
. To Borrowers knowledge, all financial data including,
without limitation, the statements of cash flow and income and operating expense, that have been
delivered by or on behalf of Borrower to Lender in respect of the Property (i) are true, complete
and correct in all material respects, (ii) fairly represent the financial condition of the Property
as of the date of such reports and (iii) to the extent prepared or audited by an independent
certified public accounting firm, have been prepared in accordance with GAAP throughout the periods
covered, except as disclosed therein. To Borrowers knowledge, neither Borrower nor Maryland Loan
Guarantor has any contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments that are known to
Borrower and could reasonably be expected to have a Material Adverse Effect. Since the date of
such financial statements, there has been no material adverse change in the financial condition,
operations or business of Borrower or Maryland Loan Guarantor from that set forth in said financial
statements.
4.1.13
Condemnation
. No Taking is pending or, to Borrowers knowledge, is contemplated
with respect to all or any portion of the Property. No Taking is pending or, to Borrowers
knowledge, is contemplated for the relocation of roadways providing access to the Property.
4.1.14
Federal Reserve Regulations
. None of the proceeds of the Loan will be used for the
purpose of purchasing or carrying any margin stock as defined in Regulation U, Regulation X or
Regulation T or for the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry margin stock or for any other purpose which might constitute this
transaction a purpose credit within the meaning of Regulation U or Regulation X. As of the
Closing Date, neither Borrower nor Maryland Loan Guarantor owns any margin stock.
4.1.15
Utilities and Public Access
. Each Individual Property has rights of access to one
or more public ways, either directly or through a recorded easement set forth in, and insured
under, the Title Policy. Each Individual Property is served by water, sewer, sanitary sewer and
storm drain facilities adequate to service the Property for its intended uses. To Borrowers
knowledge, all utilities necessary to the existing use of the Property are located either in the
public right-of-way abutting the Property (which are connected so as to serve the Property without
passing over other property) or in recorded easements serving the Property and such easements are
set forth in and insured by the Title Policy. All roads necessary for the use of the each
Individual Property for its current purposes have been completed and, if necessary, dedicated to
public use.
57
4.1.16
Not a Foreign Person
. Neither Borrower nor Maryland Loan Guarantor is a foreign
person within the meaning of §1445(f)(3) of the Code.
4.1.17
Separate Lots
. Each Individual Property is comprised of one (1) or more contiguous
parcels which constitute a separate tax lot or lots and does not constitute or include a portion of
any other tax lot not a part of such Individual Property.
4.1.18
Subdivision
. The Individual Properties comply in all material respects with all
applicable subdivision laws, ordinances and regulations.
4.1.19
Enforceability
. The Loan Documents are not subject to any existing right of
rescission, set-off, counterclaim or defense by Borrower or Maryland Loan Guarantor, including the
defense of usury, nor would the operation of any of the terms of the Loan Documents, or the
exercise of any right thereunder, render the Loan Documents unenforceable (subject to applicable
bankruptcy, insolvency and similar laws affecting rights of creditors generally, and subject as to
enforceability, to general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law)), and neither Borrower nor Maryland Loan Guarantor has asserted any
right of rescission, set-off, counterclaim or defense with respect thereto.
4.1.20
Assessments
. To Borrowers knowledge, there are no pending or proposed special or
other assessments for public improvements or otherwise affecting the Property, nor are there any
contemplated improvements to the Property that may result in such special or other assessments.
4.1.21
Insurance
. Borrower has obtained and, to the extent requested by Lender, has
delivered to Lender evidence of all insurance policies required under this Agreement, reflecting
the insurance coverages, amounts and other requirements set forth in this Agreement. Borrower has
not, and to Borrowers knowledge no Person has, done by act or omission anything which would impair
the coverage of any such policy.
4.1.22
Use of Property
. Each Individual Property is used primarily as a distribution
facility, other than the Individual Property located in Englewood, Colorado, which Individual
Property is used by the Borrower for office purposes.
4.1.23
Certificate of Occupancy; Licenses
. To Borrowers knowledge, all certifications,
permits, licenses and approvals, including without limitation, certificates of completion and
occupancy permits required of Borrower (or in the case of the Maryland Property, the Maryland Loan
Guarantor) for the legal use, occupancy and operation of each Individual Property for its current
use as a distribution facility (or, in the case of the Individual Property located in Englewood,
Colorado, an office building) (collectively, the
Licenses
), have been obtained and are in
full force and effect. Borrower (or in the case of the Maryland Property, the Maryland Loan
Guarantor) shall keep and maintain all Licenses necessary for the operation of each Individual
Property in accordance with its current use as aforesaid. To Borrowers knowledge, the use being
made of each Individual Property is in conformity with the certificate of occupancy issued for such
Individual Property.
58
4.1.24
Flood Zone
. None of the Improvements on the Property are located in an area as
identified by the Federal Emergency Management Agency as an area having special flood
hazards, except as identified on the flood certifications delivered to Lender prior to the date
hereof, and Borrower has obtained the insurance required under
Article VI
with respect to
any Improvements located in any such special flood hazards.
4.1.25
Physical Condition
. To Borrowers knowledge and except as expressly disclosed in
the Physical Conditions Reports, the Property, including, without limitation, all buildings,
Improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC
systems, fire protection systems, electrical systems, equipment, elevators, exterior sidings and
doors, landscaping, irrigation systems and all structural components, are in good condition, order
and repair in all material respects; to Borrowers knowledge and except as expressly disclosed in
the Physical Conditions Reports, there exists no structural or other material defects or damages in
or to the Property, whether latent or otherwise, and neither Borrower nor Maryland Loan Guarantor
has received any written notice from any insurance company or bonding company of any defects or
inadequacies in the Property, or any part thereof, which would adversely affect the insurability of
the same or cause the imposition of extraordinary premiums or charges thereon or of any termination
or threatened termination of any policy of insurance or bond.
4.1.26
Boundaries
. Except as set forth in and insured pursuant to the Title Policy, to
Borrowers knowledge and in reliance on the Surveys, (a) all of the Improvements lie wholly within
the boundaries and building restriction lines of the Land relating to the applicable Individual
Property, (b) no improvements on adjoining properties encroach upon the Land, and (c) no easements
or other encumbrances upon the Land encroach upon any of the Improvements.
4.1.27
Leases and Subleases
. The Property is not subject to any Leases other than the
Master Lease. To Borrowers knowledge, the Property is not subject to any Subleases other than the
Subleases set forth on
Schedule IV
attached hereto. No Person has any possessory interest
in the Property or right to occupy the same except under and pursuant to the provisions of the
Master Lease and the Subleases. The Master Lease and, to Borrowers knowledge, the current
Subleases are in full force and effect and to Borrowers knowledge, there are no material defaults
thereunder by either party (other than as expressly disclosed on
Schedule IV
or in the
estoppel certificates, if any, delivered to Lender in connection with the closing of the Loan) and
there are no conditions that, with the passage of time or the giving of notice, or both, would
constitute material defaults thereunder. No Master Lease Rent has been paid more than one (1)
month in advance of its due date, except as disclosed in the Master Lease SNDA delivered to Lender
in connection with the closing of the Loan. There has been no prior sale, transfer or assignment,
hypothecation or pledge by Borrower (or in the case of the Maryland Property, the Maryland Loan
Guarantor) or Master Lessee of the Master Lease or of the Master Lease Rents received therein,
which will be outstanding following the funding of the Loan, other than those being assigned to
Lender concurrently herewith. To Borrowers knowledge, no Tenant under any Sublease has a right or
option pursuant to such Sublease or otherwise to purchase all or any part of the Property of which
the leased premises are a part. Master Lessee does not have a right or option pursuant to the
Master Lease or otherwise to purchase all or any part of the Property of which the leased premises
are a part.
59
4.1.28
Filing and Recording Taxes
. To Borrowers knowledge, all transfer taxes, deed
stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid
by any Person under applicable Legal Requirements currently in effect in connection with the
transfer of the Property to Borrower (or in the case of the Maryland Property, the Maryland Loan
Guarantor) have been paid and the granting and recording of the Security Instrument and the UCC
financing statements required to be filed in connection with the Loan. To Borrowers knowledge,
all mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid by any
Person under applicable Legal Requirements currently in effect in connection with the execution,
delivery, recordation, filing, registration, perfection or enforcement of any of the Loan
Documents, including, without limitation, the Security Instrument, have been paid, and, under
current Legal Requirements, the Security Instrument is enforceable against Borrower (or in the case
of the Maryland Property, the Maryland Loan Guarantor) in accordance with its terms by Lender (or
any subsequent holder thereof) subject only to applicable bankruptcy, insolvency and similar laws
affecting rights of creditors generally, and subject as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or at law.
4.1.29
Single Purpose Entity/Separateness
.
(a) Until the Indebtedness has been paid in full, Borrower and Maryland Loan Guarantor hereby
represent, warrant and covenant that Borrower, Maryland Loan Guarantor and each other SPE Entity
is, shall be, and shall continue to be, a Single Purpose Entity.
(b) To Borrowers knowledge, all of the assumptions made in the Non-Consolidation Opinion,
including, but not limited to, any exhibits attached thereto, are true and correct in all respects
and any assumptions made in any subsequent non-consolidation opinion delivered in connection with
the Loan Documents (an
Additional Non-Consolidation Opinion
), including, but not limited
to, any exhibits attached thereto, will have been and shall be true and correct in all respects.
Each of Borrower Maryland Loan Guarantor has complied and will comply with all of the assumptions
made with respect to it in the Non-Consolidation Opinion. Each of Borrower and Maryland Loan
Guarantor will have complied and will comply with all of the assumptions made with respect to it in
any Additional Non-Consolidation Opinion. Each entity other than Borrower and Maryland Loan
Guarantor with respect to which an assumption shall be made in any Additional Non-Consolidation
Opinion will have complied and will comply with all of the assumptions made with respect to it in
any Additional Non-Consolidation Opinion.
4.1.30
Illegal Activity
. No portion of the Property has been or will be purchased with
proceeds of any illegal activity.
4.1.31
No Change in Facts or Circumstances; Disclosure
. To Borrowers knowledge , all
financial statements submitted by Borrower in connection with the Loan are accurate, complete and
correct in all material respects. All other material written information, reports, certificates
and other documents submitted by Borrower to Lender in connection with the Loan are, to Borrowers
knowledge, accurate, complete and correct in all material respects except as would not have a
Material Adverse Effect. Except with respect to such representations and warranties contained in
this Agreement or in any other Loan Document which are qualified as being made to Borrowers
knowledge, all representations and warranties made by Borrower or Maryland Loan Guarantor in this
Agreement or in any other Loan Document, are accurate, complete and correct in all material
respects except as would not have a Material Adverse Effect.
There has been no material adverse change known to Borrower in any condition, fact, circumstance or
event that would make any such information inaccurate, incomplete or otherwise misleading in any
material respect or that otherwise materially and adversely affects the Property or the business
operations or the financial condition of Borrower or Maryland Loan Guarantor.
60
4.1.32
Tax Filings
. To the extent required by applicable law, each of Borrower and
Maryland Loan Guarantor has filed (or has obtained effective extensions for filing) all federal,
state and local tax returns required to be filed and has paid or made adequate provision for the
payment of all federal, state and local taxes, charges and assessments payable by Borrower and
Maryland Loan Guarantor.
4.1.33
Solvency/Fraudulent Conveyance
. Neither Borrower nor Maryland Loan Guarantor (a)
has entered into the transaction contemplated by this Agreement or any Loan Document with the
actual intent to hinder, delay, or defraud any creditor and (b) has received reasonably equivalent
value in exchange for its obligations under the Loan Documents. After giving effect to the Loan,
the fair saleable value of Borrowers and Maryland Loan Guarantors assets exceeds and will,
immediately following the making of the Loan, exceed Borrowers and Maryland Loan Guarantors total
liabilities, including, without limitation, subordinated, unliquidated, disputed and contingent
liabilities. The fair saleable value of Borrowers and Maryland Loan Guarantors assets is and
will, immediately following the making of the Loan, be greater than Borrowers and Maryland Loan
Guarantors probable liabilities, including the maximum amount of its contingent liabilities on its
Debts as such Debts become absolute and matured. Borrowers and Maryland Loan Guarantors assets
do not and, immediately following the making of the Loan will not, constitute unreasonably small
capital to carry out its business as conducted or as proposed to be conducted. Neither Borrower
nor Maryland Loan Guarantor intends to, and does not believe that it will, incur Debt and
liabilities (including contingent liabilities and other commitments) beyond its ability to pay such
Debt and liabilities as they mature (taking into account the timing and amounts of cash to be
received by it and the amounts to be payable on or in respect of its obligations).
4.1.34
Investment Company Act
. Neither Borrower nor Maryland Loan Guarantor is (a) an
investment company or a company Controlled by an investment company, within the meaning of the
Investment Company Act of 1940, as amended, (b) a holding company or a subsidiary company of a
holding company or an affiliate of either a holding company or a subsidiary company within the mean
of the Public Utility Holding Company Act of 1935, as amended or (c) subject to any other federal
or state law or regulation which purports to restrict or regulate its ability to borrow money.
4.1.35
Labor
. No organized work stoppage or labor strike is pending or, to Borrowers
knowledge, threatened by employees and other laborers at the Property. Neither Borrower nor
Maryland Loan Guarantor (i) is involved in or, to Borrowers knowledge, threatened with, any labor
dispute, grievance or litigation relating to labor matters involving any employees and other
laborers at the Property, including, without limitation, violation of any federal, state or local
labor, safety or employment laws (domestic or foreign) and/or charges of unfair labor practices or
discrimination complaints which, if adversely determined, would have a Material Adverse Effect,
(ii) has not engaged in any unfair labor practices within the meaning of the National Labor
Relations Act or the Railway Labor Act or (iii) is not a party to, or bound by,
any collective bargaining agreement or union contract with respect to employees and other laborers
at the Property and no such agreement or contract is currently being negotiated by Borrower or
Maryland Loan Guarantor.
61
4.1.36
Brokers
. Except for Broker, neither Borrower (or Maryland Loan Guarantor) nor
Lender has dealt with any broker or finder with respect to the transactions contemplated by the
Loan Documents, and neither party has done any acts, had any negotiations or conversations, or made
any agreements or promises which will in any way create or give rise to any obligation or liability
for the payment by either party of any brokerage fee, charge, commission or other compensation to
any Person with respect to the transactions contemplated by the Loan Documents. Each of Borrower
and Maryland Loan Guarantor covenants and agrees that it shall pay as and when due any and all
brokerage fees, charges, commissions or other compensation or reimbursement due to Broker with
respect to the transactions contemplated by the Loan Documents. Borrower, Maryland Loan Guarantor
and Lender shall each indemnify and hold harmless the other from and against any loss, liability,
cost or expense, including any judgments, attorneys fees, or costs of appeal, incurred by the
other party and arising out of or relating to any breach or default by the indemnifying party of
its representations, warranties and/or agreements set forth in this
Section 4.1.36
. The
provisions of this
Section 4.1.36
shall survive the expiration and termination of this
Agreement and the payment of the Indebtedness.
4.1.37
No Other Debt
. Neither Borrower nor Maryland Loan Guarantor has borrowed or
received debt financing that has not been heretofore repaid in full, other than the Permitted Debt.
4.1.38
Taxpayer Identification Number
. Borrowers and Maryland Loan Guarantors Federal
taxpayer identification number is as set forth on
Schedule VIII
.
4.1.39
Compliance with Anti-Terrorism, Embargo and Anti-Money Laundering Laws
. (i) None of
the Borrower, Master Lessee, Maryland Loan Guarantor or any Guarantor or any Person who owns any
equity interest in or Controls any of such listed Persons currently is identified on the OFAC List
or otherwise qualifies as a Prohibited Person, and (ii) none of Borrower, Maryland Loan Guarantor
or Guarantor is in violation of any Legal Requirements relating to anti-money laundering or
anti-terrorism, including, without limitation, Legal Requirements related to transacting business
with Prohibited Persons or the requirements of the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, U.S. Public Law 107-56,
and the related regulations issued thereunder, including temporary regulations, all as amended from
time to time. To Borrowers knowledge, no Tenant currently is identified on the OFAC List or
otherwise qualifies as a Prohibited Person, and no Tenant is owned or Controlled by a Prohibited
Person.
4.1.40
Rights of First Refusal or First Offer to Lease or Purchase
. No Person, whether
pursuant to a Lease or a Sublease or otherwise has a right of first refusal, right of first offer
or other right or option pursuant to such Lease or Sublease or otherwise to lease or purchase or to
restrict or impose requirements upon the lease or purchase of all or any part of any Individual
Property.
62
4.2
Survival of Representations
. Borrower and Maryland Loan Guarantor agree that all of
the representations and warranties of Borrower and Maryland Loan Guarantor set forth in
Section
4.1
and elsewhere in this Agreement and in the other Loan Documents shall survive for so long
as any amount remains owing to Lenders under this Agreement or any of the other Loan Documents by
Borrower or Maryland Loan Guarantor (it being understood, however, that except as otherwise
provided in this Agreement or any of the other Loan Documents, such representations and warranties
shall be true and correct only as of the date hereof). All representations, warranties, covenants
and agreements made in this Agreement or in the other Loan Documents by Borrower and Maryland Loan
Guarantor shall be deemed to have been relied upon by Lender notwithstanding any investigation
heretofore or hereafter made by Lender or on its behalf.
4.3
Borrowers or Maryland Loan Guarantors Knowledge
. Wherever in this Agreement a
representation and warranty is made to Borrowers knowledge (and variations thereon used herein,
including an Individual Borrowers knowledge), or to the knowledge of Borrower (and variations
thereon used herein, including to the knowledge of an Individual Borrower, such representation and
warranty shall also be deemed to be limited to Maryland Loan Guarantors, and such knowledge shall
mean the actual (as opposed to constructive or imputed) knowledge of any of the following
individuals after reasonable inquiry under the circumstances of the applicable representation and
warranty: Gary Cummings, Vice President of Real Estate and Doug Goforth, Controller, which Persons
Borrower and Maryland Loan Guarantor hereby represent and warrant are in a position to have
meaningful knowledge with respect to the subject matter of such representations and warranties.
V.
BORROWER AND MARYLAND LOAN GUARANTOR COVENANTS
5.1
Affirmative Covenants
. From the Closing Date and until payment and performance in full
of all obligations of Borrower and Maryland Loan Guarantor under the Loan Documents or the earlier
release of the Liens of the Security Instrument encumbering the Property (and all related
obligations) in accordance with the terms of this Agreement and the other Loan Documents, each of
Borrower and Maryland Loan Guarantor hereby covenants and agrees with Lenders that:
5.1.1
Performance by Borrower and Maryland Loan Guarantor
. Each of Borrower and Maryland
Loan Guarantor shall in a timely manner observe, perform and fulfill each and every covenant, term
and provision of each Loan Document executed and delivered by, or applicable to, it, and shall not
enter into or otherwise suffer or permit any amendment, waiver, supplement, termination or other
modification of any Loan Document executed and delivered by, or applicable to, it, as applicable,
without the prior written consent of Lender.
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5.1.2
Existence; Compliance with Legal Requirements; Insurance
. Subject to Borrowers (or
in the case of the Maryland Property, Maryland Loan Guarantors) right of contest pursuant to
Section 7.3
, Borrower (or in the case of the Maryland Property, Maryland Loan Guarantors)
shall at all times comply and cause Master Lessee and the Property to be in compliance with all
Legal Requirements applicable to Borrower, Maryland Loan Guarantor, Master Lessee and/or the
Property and/or the uses permitted upon the Property. Borrower (or in the case of the Maryland
Property, Maryland Loan Guarantors) shall do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises necessary to comply with all Legal Requirements applicable to it
and the Property. There shall never be committed by Borrower or Maryland Loan Guarantor, and
neither Borrower nor Maryland Loan Guarantor shall knowingly permit Master Lessee to commit any act
or omission affording the federal government or any state or local government the right of
forfeiture as against the Property or any part thereof or any monies paid in performance of
Borrowers or Maryland Loan Guarantors obligations under any of the Loan Documents. Each of
Borrower and Maryland Loan Guarantor hereby covenants and agrees not to commit, knowingly permit or
suffer to exist any act or omission affording such right of forfeiture. Borrower (or in the case
of the Maryland Property, Maryland Loan Guarantors) shall at all times maintain, preserve and
protect all franchises and trade names, and preserve all the remainder of its property used in the
conduct of its business and shall keep or cause the Master Lessee to keep the Property in good
working order and repair, and from time to time make, or cause to be made, all reasonably necessary
repairs, renewals, replacements, betterments and improvements thereto, all as more fully set forth
in the Security Instrument. Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantors) shall keep the Property insured at all times to such extent and against such risks,
and maintain liability and such other insurance, as is more fully set forth in this Agreement.
5.1.3
Litigation
. Borrower shall give prompt written notice to Lender of any litigation or
governmental proceedings pending or, to Borrowers knowledge, threatened in writing against
Borrower, Maryland Loan Guarantor, Master Lessee or the Property which, if determined adversely,
would reasonably be expected to have a Material Adverse Effect.
5.1.4
Single Purpose Entity
. Each of Borrower, Maryland Loan Guarantor and each other SPE
Entity has been since the date of its formation and shall remain a Single Purpose Entity.
(a) Each of Borrower, Maryland Loan Guarantor and each other SPE Entity shall continue to
maintain its own deposit account or accounts, separate from those of any Affiliate, with commercial
banking institutions. None of the funds of Borrower, Maryland Loan Guarantor or any other SPE
Entity will be diverted to any other Person or for other than business uses of Borrower, Maryland
Loan Guarantor or such other SPE Entity, as applicable, nor will such funds be commingled with the
funds of any other Affiliate.
(b) To the extent that Borrower, Maryland Loan Guarantor or any other SPE Entity shares the
same officers or other employees as any of Borrower, Maryland Loan Guarantor, any other SPE Entity
or their Affiliates, the salaries of and the expenses related to providing benefits to such
officers and other employees shall be fairly allocated among such entities, and each such entity
shall bear its fair share of the salary and benefit costs associated with all such common officers
and employees.
64
(c) To the extent that Borrower, Maryland Loan Guarantor or any other SPE Entity jointly
contracts with any of Borrower, Maryland Loan Guarantor, any other SPE Entity or any of their
Affiliates, as applicable, to do business with vendors or service providers or to share overhead
expenses, the costs incurred in so doing shall be allocated fairly among such entities, and each
such entity shall bear its fair share of such costs. To the extent that any of Borrower,
Maryland Loan Guarantor or any other SPE Entity contracts or does business with vendors or
service providers where the goods and services provided are partially for the benefit of any other
Person, the costs incurred in so doing shall be fairly allocated to or among such entities for
whose benefit the goods and services are provided, and each such entity shall bear its fair share
of such costs. All material transactions between (or among) Borrower, Maryland Loan Guarantor or
each other SPE Entity and any of their respective Affiliates shall be conducted on substantially
the same terms (or on more favorable terms for Borrower, Maryland Loan Guarantor or any other SPE
Entity, as applicable) as would be conducted with third parties.
(d) To the extent that Borrower, Maryland Loan Guarantor any other SPE Entity or any of their
Affiliates have offices in the same location, there shall be a fair and appropriate allocation of
overhead costs among them, and each such entity shall bear its fair share of such expenses.
(e) Borrower, Maryland Loan Guarantor and each other SPE Entity shall conduct its affairs
strictly in accordance with its organizational documents, and observe all necessary, appropriate
and customary corporate, limited liability company or partnership formalities, as applicable,
including, but not limited to, obtaining any and all members consents necessary to authorize
actions taken or to be taken, and maintaining accurate and separate books, records and accounts,
including, without limitation, payroll and intercompany transaction accounts.
(f) In addition, Borrower, Maryland Loan Guarantor and each other SPE Entity shall each: (i)
maintain books and records separate from those of any other Person; (ii) maintain its assets in
such a manner that it is not more costly or difficult to segregate, identify or ascertain such
assets; (iii) hold regular meetings of its board of directors, shareholders, partners or members,
as the case may be, and observe all other corporate, partnership or limited liability company, as
the case may be, formalities; (iv) hold itself out to creditors and the public as a legal entity
separate and distinct from any other entity; (v) prepare separate tax returns and financial
statements, or if part of a consolidated group, it will be shown as a separate member of such
group; (vi) transact all business with its Affiliates on an arms-length basis and pursuant to
enforceable agreements; (vii) conduct business in its name and use separate stationery, invoices
and checks; (viii) not commingle its assets or funds with those of any other Person; and (ix) not
assume, guarantee or pay the debts or obligations of any other Person.
5.1.5
Consents
. If Borrower, Maryland Loan Guarantor or any other SPE Entity is a
corporation, the board of directors of such Person may not take any action requiring the unanimous
affirmative vote of one hundred percent (100%) of the members of the board of directors unless all
of the directors, including the Independent Directors, shall have participated in such vote. If
Borrower, Maryland Loan Guarantor or any other SPE Entity is a limited liability company, (a) if
such Person is managed by a board of managers, the board of managers of such Person may not take
any action requiring the unanimous affirmative vote of one hundred percent (100%) of the members of
the board of managers unless all of the managers, including the Independent Managers, shall have
participated in such vote, (b) if such Person is not managed by a board of managers, the members of
such Person may not take any action requiring the affirmative vote of one hundred percent (100%) of
the members of such Person unless all of the members, including the Independent Members, shall have
participated in such vote. An affirmative vote of one hundred percent (100%) of the directors,
board of managers or members,
as applicable, of Borrower, Maryland Loan Guarantor and any other SPE Entity shall be required to
(i) file a bankruptcy or insolvency petition or otherwise institute insolvency proceedings or to
authorize Borrower, Maryland Loan Guarantor or any other SPE Entity to do so or (ii) file an
involuntary bankruptcy petition against any Affiliate. Furthermore, the formation documents of
Borrower, Maryland Loan Guarantor and each other SPE Entity shall expressly state that for so long
as the Loan is outstanding, none of Borrower, Maryland Loan Guarantor nor any other SPE Entity
shall be permitted to (i) dissolve, liquidate, consolidate, merge or sell all or substantially all
of the assets of Borrower, Maryland Loan Guarantor or any other SPE Entity, other than in
connection with the repayment of the Loan or (ii) engage in any other business activity and such
restrictions shall not be modified or violated for so long as the Loan is outstanding.
65
5.1.6
Access to Property
. Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantor) shall permit agents, representatives and employees of Lender and the Rating Agencies to
inspect the Property or any part thereof during normal business hours on Business Days upon
reasonable advance notice.
5.1.7
Notice of Default
. Borrower and Maryland Loan Guarantor shall promptly advise Lender
(a) of any event or condition that has or is likely to have a Material Adverse Effect and (b) of
the occurrence of any Default or Event of Default of which Borrower has knowledge.
5.1.8
Cooperate in Legal Proceedings
. Borrower and Maryland Loan Guarantor shall cooperate
fully with Lender with respect to any proceedings before any court, board or other Governmental
Authority which would reasonably be expected to affect, in any material adverse way, the rights of
Lender hereunder or under any of the other Loan Documents and, in connection therewith, permit
Lender, at its election, to participate in any such proceedings which may have a Material Adverse
Effect.
5.1.9
Insurance
.
(a) Borrower and Maryland Loan Guarantor shall cooperate with Lender in obtaining for Lender
the benefits of any Proceeds lawfully or equitably payable in connection with any Individual
Property and Lender shall be reimbursed for any actual out-of-pocket expenses incurred in
connection therewith (including reasonable attorneys fees and disbursements) out of such Proceeds.
(b) Borrower and Maryland Loan Guarantor shall comply with all Insurance Requirements and
shall not bring or keep or permit to be brought or kept any article upon any of the Property or
cause or permit any condition to exist thereon which would be prohibited by any Insurance
Requirement, or would invalidate insurance coverage required hereunder to be maintained by Borrower
or Maryland Loan Guarantor on or with respect to any part of the Property pursuant to
Section
6.1
.
5.1.10
Further Assurances; Severance of Notes and Mezzanine Loan
.
(a) Borrower and Maryland Loan Guarantor shall execute and acknowledge (or cause to be
executed and acknowledged) and deliver to Lender all documents, and take all actions, reasonably
required by Lender from time to time to confirm the rights created or now or hereafter intended to
be created under this Agreement and the other Loan Documents and any
security interest created or purported to be created thereunder, to protect and further the
validity, priority and enforceability of this Agreement and the other Loan Documents, to subject to
the Loan Documents any property of Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantors) intended by the terms of any one or more of the Loan Documents to be encumbered by the
Loan Documents, or otherwise carry out the purposes of the Loan Documents and the transactions
contemplated thereunder.
66
(b) Borrower and Maryland Loan Guarantor each agrees that it shall, upon request, reasonably
cooperate with Lender in connection with any request by Lender to sever one or more of the Notes
into two (2) or more separate substitute notes in an aggregate principal amount equal to the
Principal Amount and to reapportion the Loan among such separate substitute notes, including,
without limitation, by executing and delivering to Lender new substitute notes to replace the
applicable Note or Notes, amendments to or replacements of existing Loan Documents to reflect such
severance and/or Opinions of Counsel with respect to such substitute notes, amendments and/or
replacements. Borrower shall bear no costs or expenses in connection with any such severance or
bifurcation, except that Borrower shall be responsible for one hundred percent (100%) of the costs
and expenses of Borrower and Lender with respect to the initial bifurcation of the Loan and the
related transfer of a portion of the Loan to Wachovia. Any such substitute notes may have varying
principal amounts and economic terms,
provided
,
however
, that (i) Borrower shall
not be required to incur, suffer or accept (except to a de minimis extent)) any greater obligations
or liabilities than as currently set forth in the Loan Documents, (ii) the maturity date of any
such substitute notes shall be the same as the scheduled Maturity Date of the Notes immediately
prior to the issuance of such substitute notes, (iii) the weighted average Interest Rate (as
defined in the Notes) for the term of the substitute notes shall not exceed the Interest Rate (as
defined in the Notes) under the Notes, whether before, after or during an Event of Default (it
being acknowledged that the Default Rate shall be applicable during the continuance of an Event of
Default); and (iv) the economics of the Loan, taken as a whole, shall not change in a manner which
is adverse to Borrower. Subject to the foregoing clauses (i) through (iv), upon the occurrence and
during the continuance of an Event of Default, Lender may apply payment of all sums due under such
substitute notes in such order and priority as Lender shall elect in its sole and absolute
discretion.
(c) Borrower, Maryland Loan Guarantor and Lender agree that, subject to the conditions set
forth in the last sentence of this
Section 5.1.11(c)
, Lender may, at any time, elect to
reduce the mortgage debt on the Property and re-size the principal amount of the Loan and allocate
the reduced portion to one or more mezzanine loans (a
Mezzanine Loan
). In connection
with the foregoing, at Lenders sole cost and expense, Borrower and Maryland Loan Guarantor each
agrees to (i) create one or more (as applicable) new single purpose entities which will become the
mezzanine borrower (a
Mezzanine Borrower
) and cause the Mezzanine Borrower and any
members of Mezzanine Borrower to enter into the documents deemed reasonably necessary by Lender to
evidence the Mezzanine Loan, including, without limitation, a promissory note and a mezzanine loan
agreement and such other documents reasonably required by Lender which are in a form and substance
reasonably satisfactory to Borrower and substantially similar to the Loan Documents (collectively,
the
Mezzanine Loan Documents
); (ii) cause Mezzanine Borrower to pledge the equity
interests in Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor); and (iii)
execute and deliver such documents and other agreements reasonably required by Lender to reduce the
amount of the mortgage debt
encumbering the Property, including, without limitation, an amendment to the Notes and the
other Loan Documents, an endorsement to the Title Policy reflecting a change in the insured amount
thereunder, legal opinions and other customary loan documentation. Borrowers and Maryland Loan
Guarantors obligations under the foregoing provisions of this
Section 5.1.11(c)
are
subject to the condition that (A) Borrower shall bear no costs or expenses in connection therewith;
(B) Borrower shall not be required to incur, suffer or accept (except to a de minimis extent)) any
greater obligations or liabilities than as currently set forth in the Loan Documents; (C) the
maturity date of any mezzanine notes shall be the same as the scheduled Maturity Date of the Notes
immediately prior to the issuance of such mezzanine notes; (D) the weighted average Interest Rate
(as defined in the Notes) for the term of the mezzanine notes shall not exceed the Interest Rate
(as defined in the Notes) under the Notes, whether before, after or during an Event of Default (it
being acknowledged that the Default Rate shall be applicable during the continuance of an Event of
Default); and (E) the economics of the Loan, taken as a whole, shall not change in a manner which
is adverse to Borrower.
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5.1.11
Mortgage Taxes
. Borrower and Maryland Loan Guarantor shall pay all taxes, charges,
filing, registration and recording fees, excises and levies payable with respect to the Notes or
the Liens created or secured by the Loan Documents, other than income, franchise and doing business
taxes imposed on Lender. In the case of the Maryland Property, such taxes shall include any
recordation taxes imposed by Title 12 of the Tax-Property Article of the Maryland Annotated Code
(1994 Replacement Volume), as amended from time to time, including any fines, penalties, interest
or similar charges arising from the non-payment thereof, which may now or hereafter become due and
payable in connection with the Security Instrument and shall be paid by Borrower and Maryland Loan
Guarantor as and when the same becomes due and payable, whether at the time of the recording of the
Security Instrument or any later date. Subject to the terms and provisions of Section 18.1 of
this Agreement, Borrower and Maryland Loan Guarantor shall, jointly and severally, indemnify,
defend and hold harmless Lender from and against any and all claims, charges, actions, suits,
proceedings, law suits, obligations, losses, damages, expenses or liabilities, including attorneys
fees, suffered or incurred by Lender as a result of any assessment by any applicable governmental
authority with respect to recording fees and expenses. This indemnity shall be a continuing one
and shall be unaffected by repayment of the Loan.
5.1.12
Business and Operations
. Borrower and Maryland Loan Guarantor shall each continue
to engage in the businesses presently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management and operation of the Property. Borrower (or in the case
of the Maryland Property, Maryland Loan Guarantor) shall qualify to do business and shall remain in
good standing under the laws of the State in which the Property is located to the extent required
for the ownership, maintenance, management and operation of the Property.
5.1.13
Title to the Property
. Borrower (or in the case of the Maryland Property, Maryland
Loan Guarantors) shall warrant and defend (a) its title to each Individual Property and every part
thereof, subject only to Liens permitted hereunder (including Permitted Encumbrances) and (b) the
validity and priority of the Liens of the Security Instrument, the Assignment of Leases and this
Agreement on the Property, subject only to Liens permitted hereunder (including Permitted
Encumbrances), in each case against the claims of all Persons whomsoever. Borrower and Maryland
Loan Guarantor shall reimburse Lender for any losses, costs, damages or expenses
(including reasonable attorneys fees and court costs) incurred by Lender if an interest in any
Individual Property, other than as permitted hereunder, is claimed by another Person.
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5.1.14
Costs of Enforcement
. In the event (a) that this Agreement or the Security
Instrument is foreclosed upon in whole or in part or that this Agreement or the Security Instrument
is put into the hands of an attorney for collection, suit, action or foreclosure, (b) of the
foreclosure of any security agreement prior to or subsequent to this Agreement encumbering any
Individual Property in which proceeding Lender is made a party, or a mortgage prior to or
subsequent to the Security Instrument encumbering any Individual Property in which proceeding
Lender is made a party, or (c) of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of Borrower, Maryland Loan Guarantor or any of their respective constituent
Persons or an assignment by Borrower, Maryland Loan Guarantor or any of their respective
constituent Persons for the benefit of its creditors, Borrower and Maryland Loan Guarantor, and
their successors or assigns, shall be chargeable with and agrees to pay all costs of collection and
defense, including reasonable attorneys fees and costs, incurred by Lender or Borrower in
connection therewith and in connection with any appellate proceeding or post-judgment action
involved therein, together with all required service or use taxes.
5.1.15
Estoppel Statements
.
(a) Borrower and Maryland Loan Guarantor shall, from time to time, upon thirty (30) days
prior written request from Lender, execute, acknowledge and deliver to the Lender, an Officers
Certificate, stating that this Agreement and the other Loan Documents are unmodified and in full
force and effect (or, if there have been modifications, that this Agreement and the other Loan
Documents are in full force and effect as modified and setting forth such modifications), stating
the amount of accrued and unpaid interest and the outstanding principal amount of the Notes and
containing such other information with respect to the Borrower, Maryland Loan Guarantor, the
Property and the Loan as Lender shall reasonably request. The estoppel certificate shall also
state that to Borrowers knowledge either that no Event of Default exists hereunder or, if any
Event of Default shall exist hereunder, specify such Event Default and the steps being taken to
cure such Event of Default.
(b) Lender shall, from time to time, upon thirty (30) days prior written request from
Borrower, execute, acknowledge and deliver to the Borrower, a certificate executed by an officer of
Lender, stating that this Agreement and the other Loan Documents are unmodified and in full force
and effect (or, if there have been modifications, that this Agreement and the other Loan Documents
are in full force and effect as modified and setting forth such modifications), stating the amount
of accrued and paid interest and the outstanding balance of the Notes, and such other information
as Borrower may reasonably request. The estoppel certificate shall also state whether Lender has
issued any notice of an Event of Default.
5.1.16
Loan Proceeds
. Borrower shall use the proceeds of the Loan received by it on the
Closing Date only for the purposes set forth in
Section 2.1.4
.
5.1.17
No Joint Assessment
. Borrower (or in the case of the Maryland Property, Maryland
Loan Guarantor) shall not suffer, permit or initiate the joint assessment of the Property, (a) with
any other real property constituting a tax lot separate from the Property and (b) which
constitutes real property with any portion of the Property which may be deemed to constitute
personal property, or any other procedure whereby the lien of any taxes which may be levied against
such personal property shall be assessed or levied or charged to such real property portion of the
Property.
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5.1.18
No Further Encumbrances
. Borrower shall do, or cause to be done, all things
necessary to keep and protect the Property and all portions thereof unencumbered from any Liens,
easements or agreements granting rights in or restricting the use or development of the Property,
except for (a) Permitted Encumbrances, (b) Liens permitted pursuant to the Loan Documents, (c)
Liens for Impositions prior to the imposition of any interest, charges or expenses for the
non-payment thereof and (d) any Liens permitted pursuant to the Leases.
5.1.19
Leases and Material Subleases
. Borrower (or in the case of the Maryland Property,
Maryland Loan Guarantor) shall, promptly after receipt thereof, deliver to Lender a copy of any
notice received with respect to the Leases or any Material Subleases claiming that Borrower,
Maryland Loan Guarantor or Master Lessee, as applicable, is in default in the performance or
observance of any of the material terms, covenants or conditions of any of the Leases or Material
Subleases.
5.1.20
Management
.
(a) Borrower(or in the case of the Maryland Property, Maryland Loan Guarantor) shall, and
shall use commercially reasonable efforts to cause any third party property manager under any
management agreement executed pursuant to
Section 5.2.14
to, (i) promptly perform and/or
observe all of the covenants and agreements required to be performed and observed by it under such
management agreement and do all things necessary to preserve and to keep unimpaired its material
rights thereunder; (ii) promptly notify Lender of any event of default under such management
agreement of which it is aware; (iii) promptly deliver to Lender a copy of each financial
statement, capital expenditures plan, property improvement plan and any other notice, report and
estimate received by it under such management agreement; and (iv) enforce in a commercially
reasonable manner the performance and observance of all of the covenants and agreements required to
be performed and/or observed by it under such management agreement.
(b) If (a) an Event of Default has occurred and is continuing or (b) the third party property
manager under any management agreement executed pursuant to
Section 5.2.14
shall become
insolvent, Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) shall, at
the request of Lender, terminate or cause Master Lessee to terminate such management agreement and
replace the third party property manager thereunder with a third party property manager approved by
Lender in accordance with
Section 5.2.14
.
5.1.21
Master Lease
.
(a) Each Individual Property shall at all times be leased directly and exclusively by the
Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) to Master Lessee under
the Master Lease (and not to any other Person under the Master Lease or any replacement Master
Lease). Master Lessee shall be permitted to enter into Leases subject to and in accordance with
Section 8.7
.
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(b) The Master Lease shall have a term extending at least through 2021.
(c) The Master Lease shall require Master Lessee to make payments of Master Lease Rent.
Pursuant to the Master Lease and the Master Lease Rent Payment Direction Letter (i) all Master
Lease Scheduled Rent shall at all times during the term of the Loan be made directly to the Holding
Account (the Master Lessee Base Rent portion of which shall be payable on a monthly basis), (ii)
other than during any Low LCR Cash Sweep Period or any period during which an Event of Default is
continuing, all Master Lease Variable Additional Rent shall be paid directly by Master Lessee to
the Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) or to the party
entitled to such sums, as specified in the Master Lease, and (iii) during any Low LCR Cash Sweep
Period or any period during which an Event of Default is continuing, all Master Lease Variable
Additional Rent shall be paid directly to the Holding Account, and none of the foregoing payments
of Master Lease Rent under clauses (i) and (iii) above shall be deemed made until such payment has
been deposited into the Holding Account. Lender shall pay all Master Lease Variable Additional
Rent directly to the Person having the right to receive such funds on or prior to the respective
due dates therefore, and shall promptly notify Borrower of such payments in accordance with the
terms of
Section 3.1.6
.
(d) The Master Lease shall require the Master Lessee to prepare applicable reports of expenses
and revenue in accordance with
Article XI
and to submit copies to Lender.
(e) Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) shall not
terminate the Master Lease or consent to the termination of the Master Lease without the prior
written consent of Lender. The Master Lease shall provide for the release of an Individual
Property therefrom only in connection with (i) a casualty or Taking in the circumstances set forth
therein, (ii) the payment of amounts with respect to such Individual Property as required by, and
the release of such Individual Property from the lien of the Security Instrument pursuant to, the
provisions of
Section 2.3
, (iii) the release of an Outparcel, or (iv) the substitution of
an Individual Property with a Replaced Property in accordance with the provisions of
Section
2.3
. Upon any such release of an Individual Property from the Master Lease, the Master Lease
will be amended to reduce the Master Lease Rent by the amount allocable to such Individual Property
(as specified in the Master Lease).
(f) Except for the Assignment of Leases and the Permitted Encumbrances, Borrower (or in the
case of the Maryland Property, Maryland Loan Guarantor) shall not shall pledge, transfer, sublease,
assign, mortgage, encumber, or allow to be encumbered its interest in the Master Lease or any
interest therein without the prior written consent of the Lender. The Borrower (or in the case of
the Maryland Property, Maryland Loan Guarantor) shall not permit and shall not consent to any
assignment by the Master Lessee of its interest in the Master Lease or its rights and interests
thereunder without the prior written consent of the Lender.
(g) Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) shall not,
without the prior written consent of Lender, (i) renew (other than pursuant to renewal rights
expressly set forth in the Master Lease), extend, release any Individual Property from (except in
connection with a Property Release, the release of an Outparcel, a Defeasance or a Substitution in
compliance with
Sections 2.3.4
,
2.3.5
,
2.3.6
and
2.3.7
hereof),
terminate, waive any provisions of, reduce rents or other sums payable under, accept a surrender
of, or shorten the
term of, the Master Lease, (ii) waive any provisions of the Master Lease or (iii) amend or
modify any provision of the Master Lease in any material respect except as permitted in the last
sentence of
Section 5.1.21(e)
.
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(h) The Master Lease shall be subject and subordinate to the Loan pursuant to the Master Lease
SNDA. Each of Borrower and Maryland Loan Guarantor agrees to terminate the Master Lease and/or
exercise and enforce its remedies under the Master Lease as directed by Lender following an event
of default under the Master Lease, as more particularly set forth in Section 2(B) of the Master
Lease SNDA.
(i) Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) shall (i)
promptly perform and/or observe all of the covenants and agreements required to be performed and
observed by it under the Master Lease and do all things necessary to preserve and to keep
unimpaired its material rights thereunder; (ii) promptly notify Lender of default by Master Lessee
under the Master Lease; (iii) promptly deliver to Lender a copy of each financial statement,
capital expenditures plan, property improvement plan and any other notice, report and estimate
received by it under the Master Lease; and (iv) enforce in a commercially reasonable manner the
performance and observance of all of the covenants and agreements required to be performed and/or
observed by the Master Lessee under the Master Lease.
5.2
Negative Covenants
. From the Closing Date until payment and performance in full of all
obligations of Borrower and Maryland Loan Guarantor under the Loan Documents or the earlier release
of the Lien of this Agreement or the Security Instrument in accordance with the terms of this
Agreement and the other Loan Documents, Borrower and Maryland Loan Guarantor each covenants and
agrees with Lender that it will not do, directly or indirectly, any of the following:
5.2.1
Incur Debt
. Incur, create or assume any Debt other than Permitted Debt or Transfer
or lease all or any part of the Property or any interest therein, except as permitted in the Loan
Documents;
5.2.2
Encumbrances
. Incur, create or assume or permit the incurrence, creation or
assumption of any Debt secured by an interest in Borrower, Maryland Loan Guarantor, Master Lessee
or any other SPE Entity;
5.2.3
Engage in Different Business
. Engage, directly or indirectly, in any business other
than that of entering into this Agreement and the other Loan Documents to which Borrower and/or
Maryland Loan Guarantor is a party and the use, ownership, management, leasing, renovation,
financing, development, operation and maintenance of the Property and activities related thereto;
5.2.4
Make Advances
. Make advances or make loans to any Person, or hold any investments,
except as expressly permitted pursuant to the terms of this Agreement or any other Loan Document;
5.2.5
Partition
. Partition any Individual Property;
5.2.6
Commingle
. Commingle its assets with the assets of any of its Affiliates;
72
5.2.7
Guarantee Obligations
. Guarantee any obligations of any Person;
5.2.8
Transfer Assets
. Transfer any asset other than in the ordinary course of business or
Transfer any interest in the Property except, in each case, as may be permitted hereby or in the
other Loan Documents;
5.2.9
Amend Organizational Documents
. Amend or modify any of its organizational documents
without Lenders consent, other than in connection with any Transfer permitted pursuant to
Article VIII
or to reflect any change in capital accounts, contributions, distributions,
allocations or other provisions that do not and could not reasonably be expected to have a Material
Adverse Effect and
provided
that Borrower, Maryland Loan Guarantor and each other SPE
Entity each remain a Single Purpose Entity;
5.2.10
Dissolve
. Dissolve, wind-up, terminate, liquidate, merge with or consolidate into
another Person, except as expressly permitted pursuant to this Agreement;
5.2.11
Bankruptcy
. (i) File a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings, (ii) dissolve, liquidate, consolidate, merge or sell all or substantially
all of Borrowers or Maryland Loan Guarantors assets other than in connection with the repayment
of the Loan, (iii) engage in any other business activity or (iv) file or solicit the filing of an
involuntary bankruptcy petition against Borrower, Maryland Loan Guarantor, Master Lessee, Guarantor
or any SPE Entity without obtaining the prior consent of all of the directors, members or managers,
as applicable, of the applicable Person;
5.2.12
ERISA
. Engage in any activity that would subject Borrower or Maryland Loan
Guarantor to regulation under ERISA or qualify it as an employee benefit plan (within the meaning
of Section 3(3) of ERISA) to which ERISA applies and Borrowers and Maryland Loan Guarantors
assets do not and will not constitute plan assets within the meaning of 29 C.F.R. Section
2510.3-101;
5.2.13
Distributions
. From and after the occurrence and during the continuance of an Event
of Default, make any distributions to or for the benefit of any of its partners or members or its
or their Affiliates;
5.2.14
Management
.
(a) The Property is currently self-managed by Master Lessee. None of Borrower, Maryland Loan
Guarantor nor Master Lessee shall, without the prior written consent of Lender, which consent shall
not be unreasonably withheld or delayed (
provided
, if a Securitization shall have occurred,
Borrower obtains a Rating Agency Confirmation with respect to such action) retain a third party
property manager to manage the Property. Upon the retention of a third party property manager in
accordance with the foregoing sentence, Lender, and if a Securitization shall have occurred, the
Rating Agencies, shall have the right to approve any management agreement with such third party
property manager (which approval by Lender shall not be unreasonably withheld or delayed). Without
limitation to the foregoing, none of Borrower, Maryland Loan Guarantor nor Master Lessee shall
enter into a management agreement for the Property unless Lender shall have received a managers
consent and subordination of management agreement, executed by Borrower (or in the case of the
Maryland Property, Maryland Loan Guarantor),
Master Lessee and the applicable third party property manager, in form and substance
reasonably acceptable to Lender, pursuant to which the management agreement is collaterally
assigned to Lender and the third party property manager agrees that its rights under the management
agreement are subject and subordinate to the Loan;
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(b) With respect to any management agreement executed by Borrower (or in the case of the
Maryland Property, Maryland Loan Guarantor) or Master Lessee in accordance with
Section
5.2.14(a)
, neither Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor)
nor Master Lessee shall, without the prior written consent of Lender, which consent shall not be
unreasonably withheld or delayed (
provided
, if a Securitization shall have occurred,
Borrower obtains a Rating Agency Confirmation with respect to such action): (i) materially modify,
change, supplement, alter or amend such management agreement or waive or release any of its right
and remedies under such management agreement or (ii) replace the third party property manager under
such management agreement with any Person which has not been approved in accordance with
Section 5.2.14(a)
;
5.2.15
Reserved
.
5.2.16
Modify Account Agreement
. Without the prior consent of Lender, which shall not be
unreasonably withheld, delayed or conditioned (and if a Securitization shall have occurred, a
Rating Agency Confirmation obtained by Borrower), execute any modification to the Account
Agreement;
5.2.17
Zoning Reclassification
. Without the prior written consent of Lender, (a) initiate
or consent to any zoning reclassification of any portion of the Property, (b) seek any variance
under any existing zoning ordinance that could result in the use of the Property becoming a
non-conforming use under any zoning ordinance or any other applicable land use law, rule or
regulation, or (c) allow any portion of the Property to be used in any manner that could result in
the use of the Property becoming a non-conforming use under any zoning ordinance or any other
applicable land use law, rule or regulation;
5.2.18
Change of Principal Place of Business
. Change its principal place of business and
chief executive office set forth on the first page of this Agreement without first giving Lender
thirty (30) days prior written notice (but in any event, within the period required pursuant to
the UCC) and there shall have been taken such action, reasonably satisfactory to Lender, as may be
necessary to maintain fully the effect, perfection and priority of the security interest of Lender
hereunder in the Account Collateral at all times;
5.2.19
Debt Cancellation
. Cancel or otherwise forgive or release any material claim or
debt owed to it by any Person, except for adequate consideration or in the ordinary course of its
business and except for termination of a Lease as permitted by
Section 8.7
;
5.2.20
Misapplication of Funds
. Distribute any revenue from the Property or any Proceeds
in violation of the provisions of this Agreement, fail to remit amounts to the Holding Account as
required by
Section 3.1
, misappropriate any security deposit or portion thereof or apply
the proceeds of the Loan in violation of
Section 2.1.4
; or
74
5.2.21
Single Purpose Entity
. Fail to be a Single Purpose Entity or take or suffer any
action or inaction the result of which would be to cause it or any SPE Entity to cease to be a
Single Purpose Entity.
VI.
INSURANCE; CASUALTY; CONDEMNATION; RESTORATION
6.1
Insurance Coverage Requirements
. Borrower (or in the case of the Maryland Property,
Maryland Loan Guarantor) shall, at its sole cost and expense, keep in full force and effect, or
cause the Master Lessee to keep in full force and effect, insurance coverage of the types and
minimum limits as follows during the term of this Agreement (it being understood that to the extent
that Master Lessee maintains any such coverage on the Closing Date, but thereafter fails to
maintain such coverage, Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor)
shall obtain such coverage at its sole cost and expense):
6.1.1
Property Insurance
. Insurance against loss customarily included under so called All
Risk policies including flood, windstorm, earthquake, vandalism, and malicious mischief, boiler
and machinery, and such other insurable hazards as, under good insurance practices, from time to
time are insured against for other property and buildings similar to the Improvements and Building
Equipment in nature, use, location, height, and type of construction. Such insurance policy shall
also insure the additional expense of demolition and if any of the Improvements or the use of the
Property shall at any time constitute legal non-conforming structures or uses, provide coverage for
contingent liability from Operation of Building Laws, Demolition Costs and Increased Cost of
Construction Endorsements and containing an Ordinance or Law Coverage or Enforcement
endorsement. The amount of such All Risk insurance shall be not less than one hundred percent
(100%) of the replacement cost value of the Improvements and the Building Equipment. Each such
insurance policy shall contain an agreed amount (coinsurance waiver) and replacement cost value
endorsement and shall cover, without limitation, all tenant improvements and betterments which
Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) is required to insure
in accordance with any Lease. Lender shall be named Loss Payee on a Standard Mortgagee
Endorsement and be provided not less than thirty (30) days advance notice of change in coverage,
cancellation or non-renewal.
6.1.2
Liability Insurance
. Commercial General Liability insurance and Umbrella
Liability coverage for Personal Injury, Bodily Injury including Accident or Death and
Property Damage, providing in combination no less than $50,000,000 per occurrence and in the
annual aggregate and Automobile insurance including coverage for Owned (if any), Hired and Non
Owned vehicles. The policies described in this paragraph shall cover Contractual Liability
including elevators, escalators and independent contractors (covering Borrowers (or in the case of
the Maryland Property, Maryland Loan Guarantor) obligation to indemnify Lender as required under
this Agreement and Products and Completed Operations Liability coverage). All liability
insurance shall name Lender as Additional Insured either on a specific endorsement or under a
blanket endorsement reasonably satisfactory to Lender.
6.1.3
Workers Compensation Insurance
. Workers compensation insurance as required by law.
75
6.1.4
Business Interruption Insurance
. Supplemental Business Interruption
insurance in an amount equal to twelve (12) months actual rental loss and with a coverage limit of
$7,000,000. Each such insurance policy shall contain an agreed amount (coinsurance waiver). In
the event business interruption insurance is no longer available at commercially reasonable rates,
then in lieu of obtaining business interruption insurance, Borrower may elect to deposit into the
LCR Deterioration Reserve Account Cash or Cash Equivalents or deliver to Lender a Letter of Credit,
in either case in an amount equal to (i) $7,000,000 or (ii) the difference between $7,000,000 and
the amount of business interruption insurance below $7,000,000 (the
Business Interruption
Reserve Amount
). The Business Interruption Reserve Amount shall be applied by Lender against
Master Lease Rent Shortfalls resulting from a casualty or a Taking. During the continuance of an
Event of Default, Lender shall have the right to draw all undrawn sums on any such Letter of Credit
and deposit same into the LCR Deterioration Reserve Account for application as set forth in the
preceding sentence, and, notwithstanding anything to the contrary contained herein, the Business
Interruption Reserve Amount shall not be applied against the Obligations during the continuance of
an Event of Default. In the event of a Master Lease Rent Shortfall resulting from a casualty or
Taking, Lender shall have the right to draw an amount equal to such Master Lease Rent Shortfall on
any such Letter of Credit and deposit same into the LCR Deterioration Reserve Account. Upon
written request of Borrower, Lender agrees to reasonably modify the requirements herein in the
event business interruption insurance is no longer commercially available.
6.1.5
Builders All-Risk Insurance
. During any period of repair or restoration, builders
All-Risk insurance in an amount equal to not less than the full insurable value of the Property
against such risks (including so called All Risk perils coverage and collapse of the Improvements
to agreed limits as Lender may request, in form and substance acceptable to Lender).
6.1.6
Boiler and Machinery Insurance
. Comprehensive boiler and machinery insurance
(without exclusion for explosion) covering all mechanical and electrical equipment against physical
damage, rent loss and improvements loss and covering, without limitation, all tenant improvements
and betterments that Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) or
Master Lessee is required to insure pursuant to the Master Lease or any Lease on a replacement cost
basis. The minimum amount of limits to be provided shall be $10,000,000 per accident.
6.1.7
Flood Insurance and Earthquake Insurance
.
(a) If any portion of the Improvements is located within an area designated as flood Zone A
or V or a special flood hazard area (as defined under the regulations adopted under the National
Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973), flood insurance shall
be provided, in an amount not less than the maximum limit of coverage available under the Federal
Flood Insurance plan with respect to the Property. Lender reserves the right to require flood
insurance in excess of that available under the Federal Flood Insurance plan in commercially
reasonable amounts. Lender agrees to (a) reasonably modify the requirements herein if such
insurance is not commercially available and (b) accept any reduced coverage requirements acceptable
to the Rating Agencies as evidenced by a Rating Agency Confirmation.
76
(b) If earthquake insurance limits and aggregates are shared with locations other than the
Property insured on the same policy as any of the Property or, if the amount of Earthquake
insurance provided is less than one hundred percent (100%) of the insurable values of the Property
and business interruption coverage combined, then the amount of earthquake coverage shall be based
on a Probable Maximum Loss Study for the applicable Individual Property, which must be conducted
by a firm satisfactory to Lender, which for purposes of this Agreement, Lender agrees that Aon Risk
Services, Borrowers property insurance broker is satisfactory. The results of the Probable
Maximum Loss Study, on an Individual Property basis and for all locations insured in the same
earthquake insurance policies, shall be used to determine the amount of earthquake coverage to be
provided by Borrower. The amount of insurance shall be determined by adding the total expected
damage to all Improvements subject to a single earthquake event in a given region together along
with the expected loss of Rents and other income from the applicable Individual Property. The
total amount of earthquake insurance in limits shall be the sum of expected property damage,
reconstruction cost and annual business income expected loss. Should the available aggregate
limits of earthquake insurance be eroded by losses so that the remaining limits available to pay
losses are less than forty percent (40%) of the required limits, Borrower shall purchase additional
coverage to restore the available limit and aggregate limit to not less than eighty percent (80%)
of the required amount of insurance. If the earthquake insurance and associated aggregate limits
are shared among other locations the risks associated with other locations also insured in the same
policy shall be taken into consideration in determining the amount of insurance to be provided
herein. Lender agrees to (a) reasonably modify the requirements herein if such insurance is not
commercially available and (b) accept any reduced coverage requirements acceptable to the Rating
Agencies as evidenced by a Rating Agency Confirmation.
6.1.8
Terrorism Insurance
. To the extent commercially available, Borrower (or in the case
of the Maryland Property, Maryland Loan Guarantor) shall be required to carry insurance with
respect to the Improvements and Building Equipment covering acts of sabotage or acts by terrorist
groups or individuals (
Terrorism Insurance
) throughout the Loan term consistent with the
amounts of insurance required by
Sections 6.1.1
and
6.1.5
in an amount not less
than $25,000,000, and having a deductible commensurate with the deductibles under the insurance
required by
Sections 6.1.1
and
6.1.5
, or following a Securitization, such lesser
coverage amount or such greater deductible, on a blanket basis, that is acceptable to the Rating
Agencies as evidenced by a Rating Agency Confirmation. Borrower (or in the case of the Maryland
Property, Maryland Loan Guarantor) agrees that if any property insurance policy covering any
Individual Property provides for any exclusions of coverage for acts of terrorism, then a separate
Terrorism Insurance policy in the coverage amount required under this section and in form and
substance reasonably acceptable to Lender will be obtained by the Borrower (or in the case of the
Maryland Property, Maryland Loan Guarantor) for such Property to the extent such Terrorism
Insurance is commercially available. Lender agrees that Terrorism Insurance coverage may be
provided under a Blanket Policy that is reasonably acceptable to Lender. Notwithstanding anything
to the contrary in this
Section 6.1.8
, Borrower (or in the case of the Maryland Property,
Maryland Loan Guarantor) shall not be obligated to maintain Terrorism Insurance in an amount more
than that which can be purchased for a sum equal to $150,000 or such lesser amount of coverage
acceptable to the Rating Agencies as evidenced by a Rating Agency Confirmation.
77
6.1.9
Storage Tank System Third Party Liability and Cleanup Insurance
. Storage Tank
System Third Party Liability and Cleanup Insurance providing coverage amounts not less than
$2,000,000 per occurrence and $4,000,000 in the annual aggregate.
6.1.10
Other Insurance
. At Lenders reasonable request, such other insurance (including,
without limitation, to the extent requested by Lender, windstorm insurance) with respect to the
Property against loss or damage of the kinds from time to time customarily insured against and in
such amounts as are generally required by institutional lenders on loans of similar amounts and
secured by properties comparable to, and in the general vicinity of, the Property.
6.1.11
Ratings of Insurers
. Borrower (or in the case of the Maryland Property, Maryland
Loan Guarantor) shall maintain the insurance coverage described in
Section 6.1.1
through
Section 6.1.10
above, in all cases, with one or more domestic primary insurers reasonably
acceptable to Lender, having both (x) claims-paying-ability and financial strength ratings by S&P
of not less than A and its equivalent by the other Rating Agencies and (y) an Alfred M. Best
Company, Inc. rating of A- or better and a financial size category of not less than X. All
insurers providing insurance required by this Agreement shall be authorized to issue insurance in
the State.
6.1.12
Form of Insurance Policies; Endorsements
. All insurance policies shall be in such
form and with such endorsements as are specified herein (and Lender shall have the right to
reasonably approve deductibles and loss payees on the Property secured under this Agreement). A
certificate of insurance with respect to all of the above-mentioned insurance policies has been
delivered to Lender and copies of all such policies shall be delivered to Lender when the same are
available upon request by Lender and shall be held by Lender. Borrower (or in the case of the
Maryland Property, Maryland Loan Guarantor) shall name Lender as an additional insured, shall
provide that all Proceeds (except with respect to Proceeds of general liability, automobile
liability, excess liability and workers compensation insurance) be payable to Lender as and to the
extent set forth in Section 6.2, and shall contain: (i) a standard non-contributory mortgagee
endorsement or its equivalent relating, inter alia, to recovery by Lender notwithstanding the
negligent or willful acts or omissions of Borrower (or in the case of the Maryland Property,
Maryland Loan Guarantor); (ii) a waiver of subrogation endorsement in favor of Lender; (iii) an
endorsement providing for a deductible per loss of an amount not more than that which is
customarily maintained by prudent owners of properties with a standard of operation and maintenance
comparable to and in the general vicinity of the Property, but in no event in excess of an amount
reasonably acceptable to Lender (and Lender hereby agrees and acknowledges that in no event shall
Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) be required to maintain
a deductible in an amount less than $1,000,000 with respect to any insurance policy obtained
pursuant to Section 6.1.1); and (iv) a provision that such policies shall not be canceled,
terminated or expire without at least thirty (30) days prior written notice to Lender, in each
instance.
78
6.1.13
Evidence of Insurance
. Borrower (or in the case of the Maryland Property, Maryland
Loan Guarantor) shall deliver to Lender annually, prior to the expiration of the insurance policies
required hereunder, evidence that the insurance policies required pursuant to this Section 6.1 are
maintained with insurers who comply with the terms of Section 6.1.10, setting forth a schedule
describing all premiums required to be paid to maintain the policies of
insurance required under this Section 6.1, and stating that Borrower (or in the case of the
Maryland Property, Maryland Loan Guarantor) has or will pay such premiums when due. Evidence of
insurance with respect to all replacement policies shall be delivered to Lender prior to the
expiration date of any of the insurance policies required to be maintained hereunder. If Borrower
(or in the case of the Maryland Property, Maryland Loan Guarantor) fails to maintain and deliver to
Lender the evidence of insurance required by this Agreement, Lender may procure such insurance, and
all costs thereof (and interest thereon at the Default Rate) shall be added to the Indebtedness.
Lender shall not, by the fact of approving, disapproving, accepting, preventing, obtaining or
failing to obtain any insurance, incur any liability for or with respect to the amount of insurance
carried, the form or legal sufficiency of insurance contracts, solvency of insurance companies, or
payment or defense of lawsuits, and Borrower (or in the case of the Maryland Property, Maryland
Loan Guarantor) hereby expressly assumes full responsibility therefor and all liability, if any,
with respect to such matters.
6.1.14
Separate Insurance
. Borrower (or in the case of the Maryland Property, Maryland
Loan Guarantor) shall not take out separate insurance contributing in the event of loss with such
required to be maintained pursuant to this
Section 6.1
unless such insurance complies with
this
Section 6.1
.
6.1.15
Blanket Policies
. The insurance coverage required under this
Section 6.1
may be effected under a blanket policy or policies covering the Property and other properties and
assets not constituting a part of the Property (a
Blanket Policy
),
provided
that
any blanket insurance policy shall cover each Individual Property in an amount of coverage that is
not less than the amounts required pursuant to this
Section 6.1
and which shall in any case
comply in all other respects with the requirements of this
Section 6.1
.
6.2
Condemnation and Insurance Proceeds
.
6.2.1
Notification
. Borrower shall promptly notify Lender in writing upon obtaining
knowledge of (i) the institution of any proceedings relating to any Taking (whether material or
immaterial) of, or (ii) the occurrence of any casualty, damage or injury to, the Property or any
portion thereof, the restoration of which is estimated by Borrower in good faith to cost more than
the Casualty Amount as to any Individual Property. In addition, each such notice shall set forth
such good faith estimate of the cost of repairing or restoring such casualty, damage, injury or
Taking in reasonable detail if the same is then available and, if not, as soon thereafter as it can
reasonably be provided. Borrower shall promptly provide Lender with copies of any material
documentation available to Borrower and requested by Lender relating to any Taking.
79
6.2.2
Proceeds
. In the event of any Taking of or any casualty or other damage or injury to
the Property, Borrowers (or in the case of the Maryland Property, Maryland Loan Guarantor) right,
title and interest in and to all compensation, awards, proceeds, damages, claims, insurance
recoveries, causes and rights of action (whether accrued prior to or after the date hereof) and
payments which Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) may
receive or become entitled with respect to the Property or any part thereof other than payments
received in connection with any liability or business interruption insurance and other than any of
the foregoing with respect to the Excluded Personal Property (collectively,
Proceeds
) in connection with any such Taking of, or casualty or other damage or injury
to, the Property or any part thereof are hereby assigned by Borrower (or in the case of the
Maryland Property, Maryland Loan Guarantor) to Lender and, except as otherwise herein provided,
shall be paid to the Lender. Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantor) shall, in good faith and in a commercially reasonable manner, file and prosecute the
adjustment, compromise or settlement of any claim for Proceeds and, subject to Borrowers (or in
the case of the Maryland Property, Maryland Loan Guarantors) right to receive the direct payment
of any Proceeds as herein provided, will cause the same to be paid directly to Lender to be held
and applied in accordance with the provisions of this Agreement. Except upon the occurrence and
during the continuance of an Event of Default, Borrower (or in the case of the Maryland Property,
Maryland Loan Guarantor) may settle any insurance claim with respect to Proceeds which does not
exceed the Casualty Amount as to any Individual Property. Whether or not an Event of Default shall
have occurred and be continuing, Lender shall have the right to approve, such approval not to be
unreasonably withheld, any settlement which might result in any Proceeds in excess of the Casualty
Amount as to any Individual Property and Borrower (or in the case of the Maryland Property,
Maryland Loan Guarantor) shall deliver or cause to be delivered to Lender all instruments
reasonably requested by Lender to permit such approval. Borrower shall pay all reasonable
out-of-pocket costs, fees and expenses reasonably incurred by Lender (including all reasonable
attorneys fees and expenses, the reasonable fees of insurance experts and adjusters and reasonable
costs incurred in any litigation or arbitration), and interest thereon at the Default Rate to the
extent not paid within ten (10) Business Days after delivery of a request for reimbursement by
Lender, in connection with the settlement of any claim for Proceeds and seeking and obtaining of
any payment on account thereof in accordance with the foregoing provisions. If any Proceeds are
received by Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) and may be
retained by Borrower or Maryland Loan Guarantor pursuant to this
Section 6.2
, such Proceeds
shall, until the completion of the related Work, be held in trust for Lender and shall be
segregated from other funds of Borrower and Maryland Loan Guarantor to be used to pay for the cost
of the Work in accordance with the terms hereof, and in the event such Proceeds exceed the Casualty
Amount as to any Individual Property, such Proceeds shall be forthwith paid directly to and held by
Lender in the Proceeds Reserve Account in trust for Borrower (or in the case of the Maryland
Property, Maryland Loan Guarantor), in each case to be applied or disbursed in accordance with this
Section 6.2
. Notwithstanding anything to the contrary set forth in this Agreement,
however, and excluding situations requiring prepayment of the Notes, to the extent any Proceeds
(either singly or when aggregated with all other then unapplied Proceeds with respect to the
Property) do not exceed the Casualty Amount as to any Individual Property, such Proceeds are to be
paid directly to Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) to be
applied to restoration of the Property in accordance with the terms hereof (except that Proceeds
paid in respect of the insurance described in
Section 6.1.4
shall be deposited directly to
the Holding Account as revenue of the Property).
80
6.2.3
Lender to Take Proceeds
. If (i) the Proceeds with respect to any
particular Individual Property shall equal or exceed the Allocated Loan Amount for such Individual
Property at a time when the aggregate Allocated Loan Amounts of Individual Properties then
currently impacted by a casualty, damage, destruction or Taking is greater than 10% of the
Principal Amount, (ii) an Event of Default shall
have occurred and be continuing, (iii) a Total Loss with respect to any Individual Property
shall have occurred, (iv) the Work is not capable of being completed before the earlier to occur of
the date which is six (6) months prior to the earlier of the Maturity Date and the date on which
the business interruption insurance carried with respect to such Individual Property on which the
business interruption insurance carried with respect to such Individual Property shall expire (the
Cut-Off Date
), unless on or prior to the Cut-Off Date (A) Borrower shall deliver to the
Lender and there shall remain in effect a binding written offer, subject only to customary
conditions, of an Approved Bank or such other financial institution or investment bank duly
authorized to originate loans secured by real property located in the State and reasonably
satisfactory to Lender for a loan from such Approved Bank or such other financial institution or
investment bank to the Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor)
in a principal amount of not less than the then outstanding Allocated Loan Amount for such
Individual Property and which shall, in the Lenders reasonable judgment, enable the Borrower (or
in the case of the Maryland Property, Maryland Loan Guarantor) to refinance the Allocated Loan
Amount with respect to such Individual Property at or prior to the Maturity Date and (B) if a
Securitization shall have occurred, Borrower shall obtain a Rating Agency Confirmation, (v) the
Individual Property is not capable of being restored substantially to its condition prior to such
Taking or casualty and such incapacity shall have a Material Adverse Effect, (vi) the Master Lessee
or Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) shall exercise any
termination right under the Master Lease or (vii) Lender determines that, upon the completion of
the restoration, the gross cash flow and the net cash flow of the Property will not be restored to
a level sufficient to cover all carrying costs and operating expenses of the Property, including,
without limitation, debt service on the Notes at a coverage ratio (after deducting all required
reserves, as required by Lender, from net operating income) of at least 1.0 to 1.0, which coverage
ratio shall be determined by Lender in its reasonable discretion; then in any such case, all
Proceeds shall be paid over to Lender (if not paid directly to Lender) for application as set forth
in clause (b) below. Any Proceeds remaining after reimbursement of Lenders or its agents costs
and expenses incurred in connection with recovery of any such Proceeds (including, without
limitation, administrative costs and inspection fees) shall, except to the extent required under
the provisions hereof to be applied for restoration, be paid to the Holding Account to be applied
by Lender to prepay the Notes to the extent of the Release Price for such Individual Property in
accordance with the provisions hereof (without the imposition of any Yield Maintenance Premium),
with the balance, if any, to be paid to the Borrowers Account. If the Proceeds applied by Lender
pursuant to the preceding sentence equal or exceed the Release Price for such Individual Property,
Borrower shall be entitled to obtain a Property Release subject to and in accordance with
Section 2.3.4
. If the Proceeds so applied by Lender pursuant to clauses (a)(iii), (v) or
(vi) above are not sufficient to pay the Release Price with respect to an Individual Property in
full, Borrower shall be entitled to prepay the remainder of the Release Price and obtain a Property
Release with respect to the Individual Property for which the Proceeds were received in accordance
with
Section 2.3.4
without the imposition of any Yield Maintenance Premium and otherwise in
accordance with the terms and provisions of the Note.
81
6.2.4
Borrower to Restore
.
(a) Subject to Borrowers rights pursuant to
Section 2.3.4
to cause the Property to be
released from the Lien of the Security Instrument, and provided that the Proceeds, if any, shall be
made available to Borrower by Lender, Borrower (or in the case of the Maryland Property, Maryland
Loan Guarantor) shall (whether or not such Proceeds shall be sufficient) promptly after the
occurrence of any damage or destruction to all or any portion of the Property or a Taking of a
portion of the Property, commence and diligently prosecute, or cause to be commenced and diligently
prosecuted, to completion, subject to Excusable Delays, the repair, restoration and rebuilding of
the Property (in the case of a partial Taking, to the extent it is capable of being restored) so
damaged, destroyed or remaining after such Taking in full compliance with all material Legal
Requirements and free and clear of any and all Liens except Permitted Encumbrances (such repair,
restoration and rebuilding are collectively referred to herein as the
Work
). The plans
and specifications shall require that the Work be done in a workmanlike manner at least equivalent
to the quality and character prior to the damage or destruction (
provided
,
however
,
that in the case of a partial Taking, the Property restoration shall be done to the extent
reasonably practicable after taking into account the consequences of such partial Taking), so that
upon completion thereof, the Property shall be at least equal in value and general utility to the
Property prior to the damage or destruction; it being understood, however, that Borrower (or in the
case of the Maryland Property, Maryland Loan Guarantor) shall not be obligated to restore the
Property to the precise condition of the Property prior to any partial Taking of, or casualty or
other damage or injury to, the Property, if the Work actually performed, if any, or failed to be
performed, shall have no Material Adverse Effect on the value of the Property from the value that
the Property would have had if the same had been restored to its condition immediately prior to
such Taking or casualty.
(b) If Proceeds are not required to be applied toward payment of the Indebtedness pursuant to
the terms hereof, then Lender shall make the Proceeds which it is holding pursuant to the terms
hereof (after payment of any expenses incurred by Lender in connection with the collection thereof
plus interest thereon at the Default Rate from the date advanced through the date of reimbursement)
available to Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) for
payment or reimbursement of Borrowers (or in the case of the Maryland Property, Maryland Loan
Guarantors) or the applicable Tenants expenses incurred with respect to the Work, upon the terms
and subject to the conditions set forth in paragraphs (i), (ii) and (iii) below and in
Section
6.2.5
:
(i) at the time of loss or damage or at any time thereafter while Borrower (or in the case of
the Maryland Property, Maryland Loan Guarantor) is holding any portion of the Proceeds, there shall
be no Event of Default;
(ii) if, at any time, the estimated cost of the Work (as estimated by the Independent
Architect referred to in clause (iii) below) shall exceed the Proceeds (a
Deficiency
) and
for so long as such Deficiency shall exist, Lender shall not be required to make any Proceeds
disbursement to Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) unless
Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) (within a reasonable
period of time after receipt of such estimate), at its election, either deposits with or delivers
to Lender (A) Cash and Cash Equivalents or a Letter or Letters of Credit in an amount equal to the
estimated cost of the Work less the Proceeds available, or (B) such other evidence of
Borrowers (or in the case of the Maryland Property, Maryland Loan Guarantors) ability to
meet such excess costs and which is satisfactory to Lender and the Rating Agencies;
82
(iii) Each of Lender and the Independent Architect shall have reasonably approved the plans
and specifications for the Work and any change orders in connection with such plans and
specifications; and
(iv) Lender shall, within a reasonable period of time prior to request for initial
disbursement, be furnished with an estimate of the cost of the Work accompanied by an Independent
Architects certification as to such costs and appropriate plans and specifications for the Work.
Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) shall restore all
Improvements such that when they are fully restored and/or repaired, such Improvements and their
contemplated use fully comply with all applicable Legal Requirements including zoning,
environmental and building laws, codes, ordinances and regulations.
6.2.5
Disbursement of Proceeds
.
(a) Disbursements of the Proceeds in Cash or Cash Equivalents to Borrower (or in the case of
the Maryland Property, Maryland Loan Guarantor) hereunder shall be made from time to time (but not
more frequently than once in any month) by Lender but only for so long as no Event of Default shall
have occurred and be continuing, as the Work progresses upon receipt by Lender of (i) an Officers
Certificate dated not more than ten (10) Business Days prior to the application for such payment,
requesting such payment or reimbursement and describing the Work performed that is the subject of
such request, the parties that performed such Work and the actual cost thereof, and also certifying
that such Work and materials are or, upon disbursement of the payment requested to the parties
entitled thereto, will be free and clear of Liens other than Permitted Encumbrances, (ii) evidence
reasonably satisfactory to Lender that (A) all materials installed and work and labor performed in
connection with such Work have been paid for in full and (B) there exists no notices of pendency,
stop orders, mechanics liens or notices of intention to file same (unless the same is required by
the applicable State law as a condition to the payment of a contractor) or any liens or
encumbrances of any nature whatsoever on the Property arising out of the Work which have not been
either fully bonded to the satisfaction of Lender or discharged of record or in the alternative,
fully insured to the satisfaction of Lender by the Title Company and (iii) an Independent
Architects certificate certifying performance of the Work together with an estimate of the cost to
complete the Work. No payment made prior to the final completion of the Work, as certified by the
Architect, except for payment made to contractors or subcontractors whose Work shall have been
fully completed and from which final lien waivers have been received, shall exceed ninety percent
(90%) of the value of the Work performed and materials furnished and incorporated into the
Improvements from time to time, and at all times the undisbursed balance of said Proceeds together
with all amounts deposited, bonded, guaranteed or otherwise provided for pursuant to
Section
6.2.4(b)
above, shall be at least sufficient to pay for the estimated cost of completion of the
Work; final payment of all Proceeds remaining with Lender shall be made upon receipt by Lender of a
certification by an Independent Architect, as to the completion of the Work substantially in
accordance with the submitted plans and specifications, final lien releases, and the filing of a
notice of completion and the expiration of the period provided under the law of the applicable
State for the filing of mechanics and materialmens liens which are entitled to priority as to
other creditors, encumbrances and
purchasers, as certified pursuant to an Officers Certificate, and delivery of a certificate
of occupancy with respect to the Work, or, if not applicable, an Officers Certificate to the
effect that a certificate of occupancy is not required.
83
(b) If, after the Work is completed in accordance with the provisions hereof and Lender
receives evidence that all costs of completion have been paid, there are excess Proceeds, such
excess Proceeds shall be paid over to Lender for application in accordance with
Section
6.2.3(b)
.
VII.
IMPOSITIONS, OTHER CHARGES, LIENS AND OTHER ITEMS
7.1
Borrower or Maryland Loan Guarantor to Pay Impositions and Other Charges
. Borrower (or
in the case of the Maryland Property, Maryland Loan Guarantor) shall pay all Impositions now or
hereafter levied or assessed or imposed against the Property or any part thereof prior to the
imposition of any interest, charges or expenses for the non-payment thereof and shall pay all Other
Charges on or before the date they are due. Borrower shall deliver to Lender annually, no later
than fifteen (15) Business Days after the first day of each fiscal year of Borrower, and shall
update as new information is received, a schedule describing all Impositions, payable or estimated
to be payable during such fiscal year attributable to or affecting the Property or Borrower.
Subject to Borrowers right of contest set forth in
Section 7.3
, as set forth in the next
two (2) sentences and
provided
that there are sufficient funds available in the Tax Reserve
Account, Lender, on behalf of Borrower, shall pay all Impositions and Other Charges which are
attributable to or affect the Property or Borrower, prior to the date such Impositions or Other
Charges shall become delinquent or late charges may be imposed thereon, directly to the applicable
taxing authority with respect thereto. Lender shall, or Lender shall direct the Cash Management
Bank to, pay to the taxing authority such amounts to the extent funds in the Tax Reserve Account
are sufficient to pay such Impositions. Nothing contained in this Agreement or the Security
Instrument shall be construed to require Borrower or Maryland Loan Guarantor to pay any tax,
assessment, levy or charge imposed on Lender in the nature of a franchise, capital levy, estate,
inheritance, succession, income or net revenue tax.
7.2
No Liens
. Subject to its right of contest set forth in
Section 7.3
, Borrower
(or in the case of the Maryland Property, Maryland Loan Guarantor) shall at all times keep, or
cause to be kept, the Property free from all Liens (other than Permitted Encumbrances) and shall
pay when due and payable (or bond over) all claims and demands of mechanics, materialmen, laborers
and others which, if unpaid, might result in or permit the creation of a Lien on the Property or
any portion thereof and shall in any event cause the prompt, full and unconditional discharge of
all Liens imposed on or against the Property or any portion thereof within forty-five (45) days
after receiving written notice of the filing (whether from Lender, the lienor or any other Person)
thereof. Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) shall do or
cause to be done, at the sole cost of Borrower, everything reasonably necessary to fully preserve
the first priority of the Lien of the Security Instrument against the Property, subject to the
Permitted Encumbrances. Upon the occurrence and during the continuance of an Event of Default with
respect to its Obligations as set forth in this
Article VII
, Lender may (but shall not be
obligated to) make such payment or discharge such Lien, and Borrower shall reimburse Lender on
demand for all such advances pursuant to
Section 19.12
(together with interest thereon at
the Default Rate).
84
7.3
Contest
. Nothing contained herein shall be deemed to require Borrower to pay, or cause
to be paid, any Imposition or to satisfy any Lien, or to comply with any Legal Requirement or
Insurance Requirement, so long as Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantor) is in good faith, and by proper legal proceedings, where appropriate, diligently
contesting the validity, amount or application thereof,
provided
that in each case, at the
time of the commencement of any such action or proceeding, and during the pendency of such action
or proceeding (i) no Event of Default shall exist and be continuing hereunder, (ii) Borrower shall
keep Lender informed of the status of such contest at reasonable intervals, (iii) if Borrower is
not providing security as provided in clause (vi) below, adequate reserves with respect thereto are
maintained on Borrowers books in accordance with GAAP or in the Tax Reserve Account or Insurance
Reserve Account, as applicable, (iv) either such contest operates to suspend collection or
enforcement as the case may be, of the contested Imposition, Lien or Legal Requirement and such
contest is maintained and prosecuted continuously and with diligence or the Imposition or Lien is
bonded, (v) in the case of any Insurance Requirement, the failure of Borrower to comply therewith
shall not impair the validity of any insurance required to be maintained by Borrower under
Section 6.1
or the right to full payment of any claims thereunder, and (vi) in the case of
Impositions and Liens which are not bonded in excess of an amount equal to five percent (5%) of the
Allocated Loan Amount of the applicable Individual Property, or Two Million Dollars ($2,000,000) in
the aggregate, during such contest, Borrower (or in the case of the Maryland Property, Maryland
Loan Guarantor), shall deposit with or deliver to Lender either Cash and Cash Equivalents or a
Letter of Credit or Letters of Credit in an amount equal to one hundred twenty-five percent (125%)
of (A) the amount of Borrowers (or in the case of the Maryland Property, Maryland Loan
Guarantors) obligations being contested plus (B) any additional interest, charge, or penalty
arising from such contest. Notwithstanding the foregoing, the creation of any such reserves or the
furnishing of any bond or other security, Borrower and Maryland Loan Guarantor promptly shall
comply with any contested Legal Requirement or Insurance Requirement or shall pay any contested
Imposition or Lien, and compliance therewith or payment thereof shall not be deferred, if, at any
time the Property or any portion thereof shall be, in Lenders reasonable judgment, in imminent
danger of being forfeited or lost or Lender is likely to be subject to criminal damages as a result
thereof. If such action or proceeding is terminated or discontinued adversely to Borrower (or in
the case of the Maryland Property, Maryland Loan Guarantor), Borrower or Maryland Loan Guarantor,
as applicable, shall deliver to Lender reasonable evidence of its compliance with such contested
Imposition, Lien, Legal Requirements or Insurance Requirements, as the case may be.
VIII.
TRANSFERS, INDEBTEDNESS AND SUBORDINATE LIENS
8.1
General Restriction on Transfers and Debt
. Unless such action is permitted by the
provisions of this Agreement, Borrower and Maryland Loan Guarantor shall not, and shall not permit
Master Lessee or any Person holding any direct or indirect ownership interest in Borrower, Maryland
Loan Guarantor, Master Lessee, or any other SPE Entity or the Property to, except with the prior
written consent of Lender and, if a Securitization has occurred, delivery of a Rating Agency
Confirmation, (i) Transfer all or any part of the Property, (ii) incur any Debt, other than
Permitted Debt or Permitted Encumbrances, or (iii) permit any Transfer (directly or indirectly) of
any direct or indirect interest in Borrower, Maryland Loan Guarantor, Master Lessee, any SPE Entity
or Guarantor. Notwithstanding the forgoing or anything to the contrary contained in this
Agreement, the provisions of this
Article VIII
shall not apply to or prohibit and
the Lenders consent shall not be required for (A) the transfer of shares of stock of any Person
(other than Borrower or Maryland Loan Guarantor) that is an Affiliate of Borrower, Maryland Loan
Guarantor, Master Lessee, any SPE Entity or Guarantor (1) in connection with an initial public
offering of such Persons stock
provided
that Borrower complies with
Section
8.4(b)(i)
,
(ii)
,
(iv)
,
(v)
and
(vi)
and/or (2) if such Person
is publicly traded, in ordinary course trading on a nationally recognized stock exchange, or (B)
the incurrence of Debt by Master Lessee and the grant of a Lien by Master Lessee on the Excluded
Personal Property as security for such Debt.
85
8.2
Sale of Building Equipment
. Borrower (or in the case of the Maryland Property,
Maryland Loan Guarantor) may Transfer or dispose of Building Equipment which is being replaced or
which is no longer necessary in connection with the operation of the Property free from the Lien of
the Security Instrument
provided
that such Transfer or disposal will not have a Material
Adverse Effect on the value of the Property taken as a whole, will not materially impair the
utility of the Property and will not result in a reduction or abatement of, or right of offset
against, the Rents payable under the Master Lease or any Lease, in either case as a result thereof,
and
provided
,
further
, that any new Building Equipment acquired by Borrower (or in
the case of the Maryland Property, Maryland Loan Guarantor) (and not so disposed of) shall be
subject to the Lien of the Security Instrument. Lender shall, from time to time, upon receipt of
an Officers Certificate requesting the same and confirming satisfaction of the conditions set
forth above, execute a written instrument in form reasonably satisfactory to Lender to confirm that
such Building Equipment which is to be, or has been, sold or disposed of is free from the Lien of
the Security Instrument.
8.3
Immaterial Transfers and Easements, etc.
Borrower (or in the case of the Maryland
Property, Maryland Loan Guarantor) may, without the consent of Lender, (i) make immaterial
Transfers of portions of the Property to Governmental Authorities for dedication or public use
(subject to the provisions of
Section 6.2
) or, portions of the Property to third parties
for the purpose of erecting and operating additional structures whose use is integrated with the
use of the Property, and (ii) grant easements, restrictions, covenants, reservations and rights of
way in the ordinary course of business for access, water and sewer lines, telephone and telegraph
lines, electric lines or other utilities or for other similar purposes,
provided
that no
such Transfer, conveyance or encumbrance set forth in the foregoing clauses (i) and (ii) shall
materially impair the utility and operation of the Property or have a Material Adverse Effect on
the value of the Property taken as a whole. In connection with any Transfer permitted pursuant to
this
Section 8.3
, Lender shall execute and deliver any instrument reasonably necessary or
appropriate, in the case of the Transfers referred to in clause (i) above, to release the portion
of the Property affected by such Taking or such Transfer from the Lien of the Security Instrument
or, in the case of clause (ii) above, to subordinate the Lien of the Security Instrument to such
easements, restrictions, covenants, reservations and rights of way or other similar grants upon
receipt by Lender of:
(a) thirty (30) days prior written notice thereof;
(b) a copy of the instrument or instruments of Transfer;
(c) an Officers Certificate stating (x) with respect to any Transfer, the consideration, if
any, being paid for the Transfer and (y) that such Transfer does not materially impair the utility
and operation of the Property, materially reduce the value of the Property or have a Material
Adverse Effect; and
(d) reimbursement of all of Lenders costs and expenses incurred in connection with such
Transfer.
86
8.4
Permitted Equity Transfers
.
(a) A Transfer (but not a pledge or encumbrance) of a direct or indirect beneficial interest
in Borrower (other than Maryland Borrower), Maryland Loan Guarantor or Master Lessee that is
otherwise prohibited hereunder shall nevertheless be permitted without Lenders prior written
consent if (i) Lender receives thirty (30) days prior written notice thereof, (ii) immediately
prior to such Transfer, no Event of Default shall have occurred and be continuing, (iii) no more
than forty-nine percent (49%) of the direct or indirect ownership interests in Borrower is being
Transferred (in the aggregate of all such Transfers), (iv) the transferee is not a Disqualified
Transferee, (v) Guarantor retains Control of Borrower and Master Lessee and continues to own,
directly and/or indirectly, at least fifty-one percent (51%) of the equity interests in Borrower
and Master Lessee, (vi) Master Lessee remains the master lessee under the Master Lease, (vii)
Borrower retains control and management of the Property, (viii) Maryland Loan Guarantor retains a
100% direct ownership interest in Maryland Borrower and (ix) if the Loan has been restructured to
include any mezzanine component, such Transfer is not a Transfer of the direct interests in
Borrower (or in the case of the Maryland Property, the Maryland Loan Guarantor) which serve as
collateral for such mezzanine loan.
(b) A Transfer of more than forty-nine percent (49%) of the direct or indirect ownership
interests in Borrower (other than direct interests in Maryland Borrower) and Maryland Loan
Guarantor (in the aggregate of all such Transfers) shall be permitted only upon the satisfaction of
the following conditions precedent: (i) Lender shall have received thirty (30) days prior written
notice thereof, (ii) immediately prior to such Transfer, no Event of Default shall have occurred
and be continuing, (iii) Lender shall have granted its prior written consent to such Transfer, such
consent not to be unreasonably withheld, conditioned or delayed, (iv) the proposed transferee shall
be a Qualified Transferee, (v) Borrower shall have reimbursed to Lender all of Lenders costs and
expenses incurred in connection with such Transfer, (vi) Borrower shall have delivered to Lender
and, if a Securitization has occurred, the Rating Agencies, (A) a Non-consolidation Opinion and (B)
such other documentation and Opinions of Counsel as shall be reasonably required by Lender and/or,
if a Securitization has occurred, required by the Rating Agencies, in each case in a form
reasonably satisfactory to Lender and, if the Loan is the subject of a Securitization, in a form
satisfactory to the Rating Agencies in their sole discretion and (vii) prior to such Transfer,
Borrower shall have obtained a Rating Agency Confirmation.
(c) Notwithstanding anything herein to the contrary, the following Transfers shall not require
the prior written consent of Lender or a Rating Agency Confirmation (but shall be subject to the
remaining conditions of
Section 8.4(a)
and
(b)
as applicable other than
8(a)(v)
,
8(b)(iii)
,
(iv)
and
(vii)
all of which shall not be
required: a Transfer (but not a pledge or encumbrance) of any direct or indirect interests in
Guarantor, Master Lessee, Maryland Loan Guarantor or Borrower (other than direct interests in
Maryland Borrower), provided that
subsequent to any such Transfer, more than fifty-one percent (51%) percent of Borrower,
Maryland Loan Guarantor and Master Lessee is directly or indirectly owned by one or more investment
funds, limited liability companies, limited partnerships or general partnerships with combined
committed capital of at least $1,000,000,000 where one or more Permitted Fund Managers acts as the
general partners, managing members or fund managers and at least fifty-one percent (51%) of the
equity interests in each of such Permitted Fund Managers are owned, directly or indirectly, by
Guarantor, Cerberus Capital Management, L.P. or a wholly owned subsidiary of Guarantor or Cerberus
Capital Management, L.P.
87
8.5
Deliveries to Lender
. Not less than thirty (30) days prior to the closing of any
transaction subject to the provisions of this
Article VIII
, Borrower shall deliver to
Lender an Officers Certificate describing the proposed transaction and stating that such
transaction is permitted by this
Article VIII
, together with any appraisal or other
documents upon which such Officers Certificate is based. In addition, Borrower shall provide
Lender with copies of executed deeds or other similar closing documents within ten (10) Business
Days after such closing.
8.6
Loan Assumption
. Upon receipt of Lenders prior written consent (which consent shall
not be unreasonably withheld or delayed) and
provided
no Event of Default is then
continuing, Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) may sell,
assign, convey or transfer (but not mortgage, hypothecate or otherwise encumber or grant a security
interest in) legal or equitable title to all (but not fewer than all) of the Individual Properties
only if, after giving effect to the proposed transaction, the Individual Properties will be owned
by one or more Single Purpose Entities wholly owned by a Qualified Transferee which shall have
executed and delivered to Lender an assumption agreement in form and substance acceptable to
Lender. Any such assumption of the Loan shall be conditioned upon, among other things, (i) the
delivery of financial information, including, without limitation, audited financial statements, for
such purchaser and the direct and indirect owners such purchaser, (ii) the delivery of evidence
that the purchaser is a Single Purpose Entity and is a Qualified Transferee, (iii) the execution
and delivery of all documentation reasonably requested by Lender or, if applicable, requested by
the Rating Agencies, (iv) the delivery of Opinions of Counsel requested by Lender or the Rating
Agencies, including, without limitation, a Non-Consolidation Opinion with respect to the purchaser
and other entities identified by Lender and Opinions of Counsel with respect to the valid
formation, due authority and good standing of the purchaser and any additional pledgors and the
continued enforceability of the Loan Documents and any other matters requested by Lender or, if
applicable, the Rating Agencies, (v) the delivery of an endorsement to the Title Policy in form and
substance acceptable to Lender, insuring the lien of the Security Instrument, as assumed, subject
only to the Permitted Encumbrances, (vi) the payment of (A) all of Lenders fees, costs and
expenses, including, without limitation, reasonable attorneys fees and costs, incurred by Lender
in connection with such assumption, (B) any fees of the Rating Agencies and (C) an assumption fee
in the amount of $200,000 and (vii) if the Loan is the subject of a Securitization, delivery of a
Rating Agency Confirmation with respect to such assumption.
88
8.7
Leases and Subleases
.
8.7.1
Leasing Conditions
. Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantor) shall not enter into any Lease without the prior written consent of Lender. During the
continuance of Event of Default, Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantor) shall not permit Master Lessee to (i) enter into any Sublease (a
New Sublease
)
or (ii) modify any Sublease (including, without limitation, accept a surrender of any portion of
the Property subject to a Sublease (unless otherwise permitted or required by law), allow a
reduction in the term of any Sublease or a reduction in the rent payable under any Sublease, change
any renewal provisions of any Sublease, materially increase the obligations of the landlord or
materially decrease the obligations of any Tenant) or terminate any Sublease unless the Tenant
under such Sublease is in default (any such action referred to in clause (ii) being referred to
herein as a
Sublease Modification
), without the prior written consent of Lender. If no
Event of Default is then continuing, Borrower (or in the case of the Maryland Property, Maryland
Loan Guarantor) may permit Master Lessee to enter into any New Sublease or execute or effect any
Sublease Modification without Lenders consent (
provided
that, in each case, the terms
thereof are market terms and, unless consented to in writing by Lender (such consent not to be
unreasonably, withheld, conditioned or delayed) the tenant thereunder is a bona fide third party);
provided
,
however
, that during any Low LCR Cash Flow Sweep Period, Borrower (or in
the case of the Maryland Property, Maryland Loan Guarantor) shall not permit Master Lessee to enter
into a New Sublease that is a Material Sublease or execute or effect any Sublease Modification with
respect to a Material Sublease, without the prior written consent of Lender.
8.7.2
Delivery of New Sublease or Sublease Modification
. Upon the execution of any New
Sublease or Sublease Modification, as applicable, Borrower shall deliver to Lender an executed copy
of thereof.
8.7.3
Security Deposits
. All security or other deposits of Tenants of the Property shall
be treated by Borrower as trust funds and shall not be commingled with any other funds of Borrower,
and such deposits shall be deposited, upon receipt of the same by Borrower in a separate trust
account maintained by Borrower expressly for such purpose. Within ten (10) Business Days after
written request by Lender, Borrower shall furnish to Lender reasonably satisfactory evidence of
compliance with this
Section 8.7.3
, together with a statement of all lease securities
deposited with Borrower by the Tenants and the location and account number of the account in which
such security deposits are held.
8.7.4
No Default Under Subleases
. Borrower (or in the case of the Maryland Property,
Maryland Loan Guarantor) shall cause Master Lessee to (i) use reasonable efforts to promptly
perform and observe all of the material terms, covenants and conditions required to be performed
and observed by Master Lessee under the Subleases, (ii) exercise, within ten (10) Business Days
after a written request by Lender made not more than two (2) times in any calendar year, any right
to request from the Tenant under any Lease a certificate with respect to the status thereof and
(iii) not collect any of the rents thereunder, more than one (1) month in advance.
8.7.5
Subordination
. All Sublease Modifications and New Subleases entered into by Master
Lessee after the date hereof shall by their express terms be subject and subordinate to the Master
Lease.
89
8.7.6
Attornment
. Each New Sublease entered into from and after the date hereof shall
provide that, (a) in the event of a termination of the Master Lease the Tenant under such Sublease
shall attorn to Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) and
shall recognize Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) as
lessor under such Sublease without change in the provisions thereof and (b) in the event, following
any termination of the Master Lease, of the enforcement by Lender of any remedy under this
Agreement or the Security Instrument, the Tenant under such Lease shall, at the option of Lender or
of any other Person succeeding to the interest of Lender as landlord under such Lease as a result
of such enforcement, attorn to Lender or to such Person and shall recognize Lender or such
successor in the interest as lessor under such Lease without change in the provisions thereof;
provided
,
however
, Lender or such successor in interest shall not be liable for or
bound by (i) any payment of an installment of rent or additional rent made more than thirty (30)
days before the due date of such installment, (ii) any act or omission of or default by Borrower
(or in the case of the Maryland Property, Maryland Loan Guarantor) or Master Lessee, as applicable,
under any such Lease, (iii) any credits, claims, setoffs or defenses which any Tenant may have
against Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) or Master
Lessee, as applicable, (iv) any obligation on the part of Borrower (or in the case of the Maryland
Property, Maryland Loan Guarantor) or Master Lessee, as applicable, pursuant to such Lease, to
perform any tenant improvement work or (v) any obligation on the part of Borrower (or in the case
of the Maryland Property, Maryland Loan Guarantor) or Master Lessee, as applicable, pursuant to
such Lease, to pay any sum of money to any Tenant. Each such New Sublease shall also provide that,
upon the reasonable request by Lender or such successor in interest, the Tenant shall execute and
deliver an instrument or instruments confirming such attornment.
8.7.7
Non-Disturbance Agreements
. Lender shall enter into, and, if required by applicable
law to provide constructive notice or requested by a Tenant, record in the county where the subject
Property is located, a subordination, attornment and non-disturbance agreement, substantially in
form and substance substantially similar to the form attached hereto as
Exhibit N
(a
Non-Disturbance Agreement
), with any Tenant (other than an Affiliate of Borrower)
entering into a Lease or Sublease, within ten (10) Business Days after written request therefor by
Borrower;
provided
that Lenders consent to such Lease or Sublease has been obtained if and
to the extent required hereunder and such request is accompanied by an Officers Certificate
stating that such Lease or Sublease (as applicable) complies in all material respects with this
Section 8.7
and payment of all costs and expenses incurred by Lender in connection with the
negotiation, preparation, execution and delivery of any Non-Disturbance Agreement, including,
without limitation, reasonable attorneys fees and disbursements.
IX.
RESERVED
X.
MAINTENANCE OF PROPERTY; ALTERATIONS
10.1
Maintenance of Property
. Borrower (or in the case of the Maryland Property, Maryland
Loan Guarantor) shall keep and maintain, or cause to be kept and maintained, the Property and every
part thereof in good condition and repair, subject to ordinary wear and tear, and, subject to
Excusable Delays and the provisions of this Agreement with respect to damage or destruction caused
by casualty events or Takings, shall not permit or commit any waste,
impairment or deterioration of any portion of the Property in any material respect. Borrower (or
in the case of the Maryland Property, Maryland Loan Guarantor) further covenants to do all other
acts which from the character or use of the Property may be reasonably necessary to protect the
security hereof, the specific enumerations herein not excluding the general. Borrower (or in the
case of the Maryland Property, Maryland Loan Guarantor) shall not remove or demolish any
Improvement on the Property except as the same may be necessary in connection with an Alteration or
a restoration in connection with a Taking or casualty, or as otherwise permitted herein, in each
case in accordance with the terms and conditions hereof.
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10.2
Conditions to Alteration
. Provided that no Event of Default shall have occurred and
be continuing hereunder, Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantor) shall have the right, without Lenders consent, to undertake any alteration,
improvement, demolition or removal of the Property or any portion thereof (any such alteration,
improvement, demolition or removal, an
Alteration
) so long as (i) Borrower provides
Lender with prior written notice of any Material Alteration, and (ii) such Alteration is undertaken
in accordance with the applicable provisions of this Agreement and the other Loan Documents, is not
prohibited by any relevant Lease or Sublease and shall not, upon completion (giving credit to rent
and other charges attributable to Leases executed upon such completion), have a Material Adverse
Effect on the value, use or operation of the Property taken as a whole or otherwise. Any Material
Alteration shall be conducted under the supervision of an Independent Architect and, in connection
with any Material Alteration, Borrower shall deliver to Lender, for information purposes only and
not for approval by Lender, detailed plans and specifications and cost estimates therefor prepared
or approved by such Independent Architect, as well as an Officers Certificate stating that such
Alteration will involve estimated costs of no more than the Threshold Amount. Such plans and
specifications may be revised at any time and from time to time by such Independent Architect
provided
that material revisions of such plans and specifications are filed with Lender,
for information purposes only. All work done in connection with any Alteration shall be performed
with due diligence in a good and workmanlike manner, all materials used in connection with any
Alteration shall not be less than the standard of quality of the materials currently used at the
Property and all materials used shall be in accordance with all applicable material Legal
Requirements and Insurance Requirements.
10.3
Costs of Alteration
. Notwithstanding anything to the contrary contained in this
Article X
, no Material Alteration or Alteration which, when aggregated with all other
Alterations (other than Material Alterations) then being undertaken by Borrower (or in the case of
the Maryland Property, Maryland Loan Guarantor) or Master Lessee (exclusive of Alterations being
directly paid for by Tenants at the Property), exceeds the Threshold Amount shall be performed by
or on behalf of Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) or
Master Lessee unless Borrower shall have delivered to Lender Cash and Cash Equivalents and/or a
Letter of Credit as security in an amount not less than (a) the estimated cost of the Material
Alteration or the Alterations minus the Threshold Amount (as set forth in the Independent
Architects written estimate referred to above) or (b) in the case of Alterations being performed
by or on behalf of the Master Lessee, any sums required to be deposited by Master Lessee under the
Master Lease. Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) shall
deliver to Lender any security deposited by the Master Lessee for any Alteration under the Master
Lease. In addition to payment or reimbursement from time to time of Borrowers expenses incurred
in connection with any Material Alteration or any such
Alteration, the amount of any such security shall be reduced on any given date to the Independent
Architects written estimate of the cost to complete the Material Alteration or the Alterations
(including any retainages), free and clear of Liens, other than Permitted Encumbrances. Costs
which are subject to retainage (which in no event shall be less than five percent (5%) in the
aggregate until fifty percent (50%) of the work to be performed under the applicable contract has
been substantially completed) shall be treated as due and payable and unpaid from the date they
would be due and payable but for their characterization as subject to retainage. In the event that
any Material Alteration or Alteration shall be made in conjunction with any restoration with
respect to which Borrower shall be entitled to withdraw Proceeds pursuant to
Section 6.2
,
the amount of the Cash and Cash Equivalents and/or Letter of Credit to be furnished pursuant hereto
need not exceed the aggregate cost of such restoration and such Material Alteration or Alteration
(as estimated by the Independent Architect), less the sum of the amount of any Proceeds which
Borrower may be entitled to withdraw pursuant to
Section 6.2
and which are held by Lender
in accordance with
Section 6.2
. Payment or reimbursement of Borrowers expenses incurred
with respect to any Material Alteration or any such Alteration shall be accomplished upon the terms
and conditions specified in
Section 6.2
.
91
At any time after substantial completion of any Material Alteration or any such Alteration in
respect of which Cash and Cash Equivalents and/or a Letter of Credit is deposited pursuant hereto,
the whole balance of any Cash and Cash Equivalents so deposited by Borrower with Lender and then
remaining on deposit (together with earnings thereon), as well as all retainages, may be withdrawn
by Borrower and shall be paid by Lender to Borrower, and any other Cash and Cash Equivalents and/or
a Letter of Credit so deposited or delivered shall, to the extent it has not been called upon,
reduced or theretofore released, be released to Borrower, within ten (10) days after receipt by
Lender of an application for such withdrawal and/or release together with an Officers Certificate,
and signed also (as to the following clause (a)) by the Independent Architect, setting forth in
substance as follows:
(a) that to the knowledge of the certifying Person, the Material Alteration or Alteration in
respect of which such Cash and Cash Equivalents and/or a Letter of Credit was deposited has been
substantially completed in all material respects substantially in accordance with any plans and
specifications therefor previously filed with Lender under
Section 10.2
and that, if
applicable, a certificate of occupancy has been issued with respect to such Material Alteration or
Alteration by the relevant Governmental Authority(ies) or, if not applicable, that a certificate of
occupancy is not required; and
(b) that to the knowledge of the certifying Person all amounts which Borrower is or may become
liable to pay in respect of such Material Alteration or Alteration through the date of the
certification have been paid in full or adequately provided for or are being contested in
accordance with
Section 7.3
and that, except to the extent of such contests, lien waivers
have been obtained from the general contractor and major subcontractors performing such Material
Alterations or Alterations (or such waivers are not customary and reasonably obtainable by prudent
owners in the area where the Property is located).
Notwithstanding the foregoing, in lieu of posting Cash and Cash Equivalents and/or a Letter of
Credit with Lender pursuant to the provisions of this
Section 10.3
, Borrower may, at its
election, deliver to lender a guaranty from Guarantor in form acceptable to Lender, pursuant to
which Guarantor unconditionally guaranties the lien free completion of the subject Alteration and payment
in full of all costs related thereto in excess of the Threshold Amount.
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XI.
BOOKS AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION
11.1
Books and Records
. Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantor) shall keep and maintain on a fiscal year basis proper books and records separate from
any other Person, in which accurate and complete entries shall be made of all dealings or
transactions of or in relation to the Notes, the Property and the business and affairs of Borrower
(or in the case of the Maryland Property, Maryland Loan Guarantor) relating to the Property which
shall reflect all items of income and expense in connection with the operation of the Property and
in connection with any services, equipment or furnishings provided in connection with the operation
of the Property, in accordance with GAAP. Lender and its authorized representatives shall have the
right, at reasonable times and upon reasonable notice, to examine the books and records of Borrower
(or in the case of the Maryland Property, Maryland Loan Guarantor) relating to the operation of the
Property and to make such copies or extracts thereof as Lender may reasonably require.
11.2
Financial Statements
.
11.2.1
Quarterly Reports
. Commencing not later than forty-five (45) days following the end
of each Fiscal Quarter (commencing with the Fiscal Quarter ending in June, 2006), Borrower shall
deliver, and shall cause Master Lessee to deliver, to Lender unaudited financial statements of
Guarantor, Borrower, Maryland Loan Guarantor and Master Lessee, internally prepared in accordance
with GAAP, reporting Master Lessees EBITDAR, including (i) a balance sheet and profit and loss
statement, as of the end of such Fiscal Quarter and for the corresponding Fiscal Quarter of the
previous year, including a statement of net income (in respect of the Property) for the year to
date and (ii) a statement of revenues and expenses for such Fiscal Quarter, together with a
comparison of the year to date results with (A) the results for the same period of the previous
year, (B) the results that had been projected by Borrower and Master Lessee for such period and (C)
the portion of the Annual Budget applicable to such period, and (c) a calculation of the LCR for
such period and a statement of the Master Lease Variable Additional Rent and Master Lease Recurrent
Additional Rent for such period. Such statements for each Fiscal Quarter shall be accompanied by
an Officers Certificate certifying to the signers knowledge, (1) that such statements fairly
represent the financial condition and results of operations of Borrower, Maryland Loan Guarantor
and Master Lessee, (2) that as of the date of such Officers Certificate, no Default exists under
this Agreement, the Notes or any other Loan Document or, if so, specifying the nature and status of
each such Default and the action then being taken by Borrower or proposed to be taken to remedy
such Default, (3) that as of the date of each Officers Certificate, no litigation exists (A)
involving Borrower, Maryland Loan Guarantor or the Property in which the amount involved is
$500,000 (in the aggregate) or more or in which all or substantially all of the potential liability
is not covered by insurance, or (B) involving Master Lessee which if adversely determined would be
reasonably likely to have a Material Adverse Effect, or if so, specifying such litigation and the
actions being taking in relation thereto and (4) the amount by which actual operating expenses were
greater than or less than the operating expenses anticipated in the applicable Annual Budget.
Borrower shall provide
such other financial information as shall be reasonably requested by Lender for purposes of
calculations to be made by Lender pursuant to the terms of this Agreement.
93
11.2.2
Annual Reports
. Concurrently with the public filings of any financial statements of
Borrower and in any event not later than one-hundred twenty (120) days after the end of each Fiscal
Year of Borrowers operations, Borrower shall deliver, and shall cause Master Lessee to deliver, to
Lender (a) consolidated audited financial statements of Guarantor certified by an Independent
Accountant in accordance with GAAP and unaudited financial statements of Borrower, Maryland Loan
Guarantor and Master Lessee, including a balance sheet as of the end of such Fiscal Year and a
statement of revenues and expenses for such Fiscal Year, as well as a supplemental schedule of net
income or loss presenting the net income or loss for the Property and the figures for the previous
Fiscal Year and the figures set forth in the Annual Budget for such Fiscal Year, (b) a calculation
of the LCR, Master Lease Variable Additional Rent and Master Lease Recurrent Additional Rent for
such period and (c) copies of all federal income tax returns of Borrower, Maryland Loan Guarantor,
Master Lessee and Guarantor if and to the extend such tax returns are required to be filed under
applicable law. Such annual financial statements shall also be accompanied by an Officers
Certificate in the form required pursuant to
Section 11.2.1
.
11.2.3
Capital Expenditures Summaries
. Borrower shall, or shall cause Master Lessee to,
within ninety (90) days after the end of each calendar year during the term of the Notes, deliver
to Lender an annual summary of material Capital Expenditures made at the Property during the prior
twelve (12) month period.
11.2.4
Master Lease
. Without duplication of any other provision of this Agreement or any
other Loan Documents, Borrower shall deliver to Lender, within ten (10) Business Days of the
receipt thereof by Borrower, a copy of all reports prepared by Master Lessee, if any, pursuant to
the Master Lease, including, without limitation, the Annual Budget and any inspection reports.
11.2.5
Annual Budget
. Borrower shall deliver to Lender the Annual Budget for Lenders
review, but not approval, not more than ninety (90) days after the end of each Fiscal Year. Any
proposed modifications to such Annual Budget shall be delivered to Lender for its review, but not
approval.
11.2.6
Other Information
. Borrower shall, promptly after written request by Lender or, if
a Securitization shall have occurred, the Rating Agencies, furnish or cause to be furnished to
Lender, in such manner and in such detail as may be reasonably requested by Lender or requested by
the Rating Agencies, such reasonable additional financial information as may be reasonably
requested by Lender or requested by the Rating Agencies with respect to the Property, Borrower,
Maryland Loan Guarantor, Master Lessee and/or Guarantor.
11.2.7
Consolidation
. Lender acknowledges that all financial reporting of
Borrower and Maryland Loan Guarantor will be consolidated.
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XII.
ENVIRONMENTAL MATTERS
12.1
Representations
. Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantor) hereby represents and warrants that except as set forth in the environmental reports and
studies delivered to Lender (the
Environmental Reports
), to Borrowers knowledge, (i)
Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) has not engaged in or
knowingly permitted any operations or activities upon, or any use or occupancy of the Property, or
any portion thereof, for the purpose of or in any way involving the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining, dumping or disposal of any
Hazardous Materials on, under, in or about the Property, or transported any Hazardous Materials to,
from or across the Property, except in all cases in material compliance with Environmental Laws and
only in the course of legitimate business operations at the Property; (ii) no tenant, occupant or
user of the Property, or any other Person, has engaged in or permitted any operations or activities
upon, or any use or occupancy of the Property, or any portion thereof, for the purpose of or in any
material way involving the handling, manufacture, treatment, storage, use, generation, release,
discharge, refining, dumping or disposal of any Hazardous Materials on, in or about the Property,
or transported any Hazardous Materials to, from or across the Property, except in all cases in
material compliance with Environmental Laws and only in the course of legitimate business
operations at the Property; (iii) no Hazardous Materials are presently constructed, deposited,
stored, or otherwise located on, under, in or about the Property except in material compliance with
Environmental Laws; (iv) no Hazardous Materials have migrated from the Property upon or beneath
other properties which would reasonably be expected to result in material liability for Borrower
(or in the case of the Maryland Property, Maryland Loan Guarantor); and (v) no Hazardous Materials
have migrated or threaten to migrate from other properties upon, about or beneath the Property
which would reasonably be expected to result in material liability for Borrower (or in the case of
the Maryland Property, Maryland Loan Guarantor).
12.2
Covenants
.
12.2.1
Compliance with Environmental Laws
. Subject to Borrowers right to contest under
Section 7.3
, each of Borrower and Maryland Loan Guarantor covenants and agrees with Lender
that it shall comply with all Environmental Laws. If at any time during the continuance of the
Lien of the Security Instrument, a Governmental Authority having jurisdiction over the Property
requires remedial action to correct the presence of Hazardous Materials in, around, or under the
Property (an
Environmental Event
), Borrower shall deliver prompt notice of the occurrence
of such Environmental Event to Lender. Within thirty (30) days after Borrower has knowledge of the
occurrence of an Environmental Event, Borrower shall deliver to Lender an Officers Certificate (an
Environmental Certificate
) explaining the Environmental Event in reasonable detail and
setting forth the proposed remedial action, if any. Borrower shall promptly provide Lender with
copies of all notices which allege or identify any actual or potential violation or noncompliance
received by or prepared by or for Borrower in connection with any Environmental Law. For purposes
of this paragraph, the term notice shall mean any summons, citation, directive, order, claim,
pleading, letter, application, filing, report, findings, declarations or other materials pertinent
to compliance of the Property and Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantor) with such Environmental Laws.
95
12.3
Environmental Reports
. Upon the occurrence and during the continuance of an
Environmental Event with respect to any Individual Property or any Event of Default, Lender shall
have the right to have its consultants perform a comprehensive environmental audit of such affected
Individual Property. Such audit shall be conducted by an environmental consultant chosen by Lender
and may include a visual survey, a record review, an area reconnaissance assessing the presence of
hazardous or toxic waste or substances, PCBs or storage tanks at such Individual Property, an
asbestos survey of such Individual Property, which may include random sampling of the Improvements
and air quality testing, and such further site assessments as Lender may reasonably require due to
the results obtained from the foregoing. Borrower (or in the case of the Maryland Property,
Maryland Loan Guarantor) grants Lender, its agents, consultants and contractors the right to enter
any Individual Property affected by an Environmental Event as reasonable or appropriate for the
circumstances for the purposes of performing such studies and the reasonable cost of such studies
shall be due and payable by Borrower to Lender upon demand and shall be secured by the Lien of the
Security Instrument. Lender shall not unreasonably interfere with, and Lender shall direct the
environmental consultant to use its commercially reasonable efforts not to hinder, Borrowers,
Maryland Loan Guarantors, Master Lessees or any Tenants operations upon such Individual Property
when conducting such audit, sampling or inspections. By undertaking any of the measures identified
in and pursuant to this
Section 12.3
, Lender shall not be deemed to be exercising any
control over the operations of Borrower (or in the case of the Maryland Property, Maryland Loan
Guarantor) or the handling of any environmental matter or hazardous wastes or substances of
Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) for purposes of
incurring or being subject to liability therefor.
12.4
Environmental Indemnification
. Borrower (or in the case of the Maryland Property,
Maryland Loan Guarantor) shall protect, indemnify, save, defend, and hold harmless the Indemnified
Parties from and against any and all liability, loss, damage, actions, causes of action, costs or
expenses whatsoever (including reasonable attorneys fees and expenses) and any and all claims,
suits and judgments which any Indemnified Party may suffer, as a result of or with respect to: (a)
any Environmental Claim relating to or arising from the Property; (b) the violation of any
Environmental Law in connection with the Property; (c) any release, spill, or the presence of any
Hazardous Materials affecting the Property; and (d) the presence at, in, on or under, or the
release, escape, seepage, leakage, discharge or migration at or from, the Property of any Hazardous
Materials, whether or not such condition was known or unknown to Borrower,
provided
that,
in each case, the liabilities and obligations of Borrower (or in the case of the Maryland Property,
Maryland Loan Guarantor) hereunder shall not apply to the extent that any event or condition
described in the foregoing
clauses (a)
through
(d)
(i) is fully insured against by
an Environmental Insurance Policy and the related insurer defends Lender and fully pays Lenders
claims thereunder, (ii) is caused by or results from the gross negligence or willful misconduct of
any of the Indemnified Parties or any of their respective Affiliates, agents, employees or
contractors, or (iii) did not occur (but need not have been discovered) prior to (A) the
foreclosure of the Security Instrument, (B) the delivery by Borrower (or in the case of the
Maryland Property, Maryland Loan Guarantor) to Lender or its designee of a deed-in-lieu of
foreclosure with respect to the Property, or (C) Lenders or its designees taking possession and
control of the Property after the occurrence of an Event of Default. If any action or other
proceeding shall be brought against Lender which Borrower (or in the case of the Maryland Property,
Maryland Loan Guarantor) is required to defend pursuant to the foregoing provisions
of this
Section 12.4
, upon written notice from Borrower to Lender (given reasonably
promptly following Lenders notice to Borrower of such action or proceeding), Borrower (or in the
case of the Maryland Property, Maryland Loan Guarantor) shall be entitled to assume the defense
thereof, at Borrowers expense, with counsel reasonably acceptable to Lender;
provided
,
however
, Lender may, at its own expense, retain separate counsel to participate in such
defense, but such participation shall not be deemed to give Lender a right to control such defense,
which right Borrower expressly retains. Notwithstanding the foregoing, each Indemnified Party
shall have the right to employ separate counsel in any action or other proceeding which Borrower
(or in the case of the Maryland Property, Maryland Loan Guarantor) is required to defend pursuant
to the foregoing provisions of this
Section 12.4
, at Borrowers expense if, in the
reasonable opinion of legal counsel, a conflict or potential conflict exists between the
Indemnified Party and Borrower that would make such separate representation advisable.
Notwithstanding the foregoing, Lender and the other Indemnified Parties agree to seek recovery
against Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) for losses for
which they are indemnified under this
Section 12.4
only after a claim for such losses has
been filed under any Environmental Insurance Policy then in full force and effect which covers such
losses and Lender has received any written communication from the insurer rejecting such claim. In
addition, Borrower shall have no obligation to indemnify an Indemnified Party for damage or loss
resulting from such Indemnified Partys gross negligence or willful misconduct.
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12.5
Recourse Nature of Certain Indemnifications
. Except as otherwise provided in this
Agreement or in any other Loan Document, including, without limitation, the provisions of
Article XVIII
, the indemnification provided in
Section 12.4
shall be fully recourse
to Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) and shall be
independent of, and shall survive, the discharge of the Indebtedness, the release of the Lien
created by the Security Instrument, and/or the conveyance of title to the Property to Lender or any
purchaser or designee in connection with a foreclosure of the Security Instrument or conveyance in
lieu of foreclosure.
XIII.
RESERVED
XIV.
SECURITIZATION
14.1
Sale of Notes and Securitization
. At the request of Lender and, to the extent not
already required to be provided by Borrower or Maryland Loan Guarantor under this Agreement,
Borrower and Maryland Loan Guarantor shall use reasonable efforts to cooperate with Lender and the
Rating Agencies in connection with the sale of one or more of the Notes or a participation interest
therein as part of the securitization (such sale and/or securitization, the
Securitization
) of rated single or multi-class securities (the
Securities
)
secured by or evidencing ownership interests in the applicable Note or Notes and this Agreement,
including using reasonable efforts to cooperate with Lender and the Rating Agencies in connection
with the actions set forth in clauses (a) through (d) below, but Borrower shall not, in connection
with a Securitization, be required to incur, suffer or accept (except to a de minimis extent)) (i)
any greater obligations or liabilities than as currently set forth in the Loan Documents or (ii)
any cost or expense.
(a)
Provided Information
. (i) Use reasonable efforts to provide such financial and
other information (but not projections) with respect to the Property, Borrower, Maryland Loan
Guarantor, Master Lessee and Guarantor to the extent such information is reasonably available to
Borrower and provided any such request for financial information is consistent with the financial
reporting requirements set forth in
Article XI
, (ii) provide business plans (but not
projections) and budgets relating to the Property, to the extent previously prepared by or on
behalf of the Borrower, and (iii) cooperate with the holder of the Notes (and its representatives)
in obtaining such site inspection, appraisals, market studies, environmental reviews and reports,
engineering reports and other due diligence investigations of the Property, as may be reasonably
requested by the holder of the Notes or reasonably requested by the Rating Agencies (all
information provided pursuant to this
Section 14.1
together with all other information
heretofore provided to Lender in connection with the Loan, as such may be updated, at Lenders
request, in connection with a Securitization, or hereafter provided to Lender in connection with
the Loan or a Securitization, being herein collectively called the
Provided Information
);
97
(b)
Opinions of Counsel
. Use reasonable efforts to cause to be rendered such
customary updates or customary modifications to the Opinions of Counsel delivered at the closing of
the Loan as may be reasonably requested by the holder of the Notes or the Rating Agencies in
connection with the Securitization;
(c)
Modifications to Loan Documents
. Execute such amendments to the Security
Instrument and Loan Documents as may be reasonably requested by Lender or the Rating Agencies in
order to achieve the required rating or to effect the Securitization (including, without
limitation, modifying the Payment Date and modifying the commencement and expiration of the
Interest Period, in each case to dates other than as originally set forth in the Notes to the
extent provided in the Note), and
(d)
Cooperation with Rating Agencies
. Borrower and Maryland Loan Guarantor shall, on
reasonable prior notice, (i) at Lenders request, meet with representatives of the Rating Agencies
at reasonable times to discuss the business and operations of the Property and (ii) cooperate with
the reasonable requests of the Rating Agencies in connection with the Property. After a
Securitization and until the Obligations are paid in full, Lender may provide the Rating Agencies
with all financial reports and other information required hereunder, including copies of any
default notices or other material notices delivered to and received from Lender hereunder, to
enable them to continuously monitor the creditworthiness of Borrower and Maryland Loan Guarantor
and to permit an annual surveillance of the implied credit rating of the Securities.
14.2
Securitization Financial Statements
. Borrower acknowledges that all financial
information delivered by Borrower to Lender pursuant to
Article XI
may, at Lenders option,
be delivered to the Rating Agencies.
14.3
Securitization Indemnification
.
14.3.1
Disclosure Documents
. Borrower understands that certain of the Provided Information
may be included in disclosure documents in connection with the Securitization, including a
prospectus, private placement memorandum, collateral term sheet or a public registration statement
(each, a
Disclosure Document
) and may also be included in filings with
the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
Securities Act
) or the Securities and Exchange Act of 1934, as amended (the
Exchange
Act
), or provided or made available to investors or prospective investors in the Securities,
the Rating Agencies, and service providers relating to the Securitization. In the event that the
Disclosure Document is required to be revised prior to the sale of all Securities, upon request,
Borrower and Maryland Loan Guarantor shall reasonably cooperate with the holder of the Notes, at no
cost or expense to Borrower, in updating the Provided Information for inclusion or summary in the
Disclosure Document by providing all current information pertaining to Borrower, Maryland Loan
Guarantor and the Property reasonably requested by Lender:
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14.3.2
Indemnification Certificate
. In connection with each applicable Disclosure
Document, Borrower and Maryland Loan Guarantor each agrees to provide, at Lenders reasonable
request, an indemnification certificate:
(a) certifying that Borrower and Maryland Loan Guarantor each has carefully examined those
portions of such memorandum or prospectus, as applicable, reasonably designated in writing by
Lender for Borrowers review pertaining to Borrower, Maryland Loan Guarantor, the Property,
Guarantor, the Loan and/or the Provided Information and insofar as such sections or portions
thereof specifically pertain to Borrower, Maryland Loan Guarantor, the Property, Guarantor, the
Provided Information or the Loan (such portions, the
Relevant Portions
), the Relevant
Portions do not (except to the extent specified by Borrower if Borrower does not agree with the
statements therein), as of the date of such certificate, to Borrowers knowledge, contain any
untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made, not misleading.
(b) subject to the provisions of
Article XVIII
hereof, indemnifying Lender and the
Affiliates of Deutsche Bank Securities, Inc. (collectively,
DBS
) as well as Wachovia
Bank, National Association and its Affiliates (
Wachovia
) that have prepared the
Disclosure Document relating to the Securitization, each of their respective directors, each of
their respective officers who have signed the Disclosure Document and each person or entity who
controls DBS or Wachovia within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act (collectively, the
Lender Group
), and DBS and Wachovia, together with
the Lender Group, each of their respective directors and each person who controls DBS or Wachovia
or the Lender Group, within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act (collectively, the
Underwriter Group
) for any actual, out-of-pocket losses,
third party claims, damages (excluding lost profits, diminution in value and other consequential
damages) or liabilities arising out of third party claims (the
Liabilities
) to which any
member of the Underwriter Group may become subject to the extent such Liabilities arise out of or
are based upon any untrue statement of any material fact contained in the Relevant Portions and in
the Provided Information or arise out of or are based upon the omission by Borrower to state
therein a material fact required to be stated in the Relevant Portions in order to make the
statements in the Relevant Portions in light of the circumstances under which they were made, not
misleading (except that (x) Borrowers obligation to indemnify in respect of any information
contained in a Disclosure Document that is derived in part from information provided by Borrower or
any Affiliate of Borrower and in part from information provided by others unrelated to or not
employed by Borrower, and (y) Borrower shall have no responsibility
for the failure of any member of the Underwriting Group to accurately transcribe written
information supplied by Borrower or to include such portions of the Provided Information);
provided
that Liabilities shall exclude all actual, out-of-pocket losses, third party
claims, damages or liabilities arising out any corrections, qualifications and/or clarifications to
the Relevant Portions which are disclosed by Borrower to Lender in writing as provided above and as
to which Lender does not change the Relevant Portions to reflect such corrections, qualifications
and/or clarifications). The indemnity contained in the indemnification certificate will be in
addition to any liability which Borrower may otherwise have.
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(c) The indemnification certificate shall provide that Borrowers and Maryland Loan
Guarantors liability under the indemnification certificate shall be (i) limited solely to
Liabilities arising solely out of or based upon any such untrue statement or omission made in a
Disclosure Document in reliance upon and in conformity with the Relevant Portions and (ii) subject
to the provisions of
Article XVIII
hereof.
(d) The indemnification certificate shall also provide that promptly after receipt by an
indemnified party of notice of the commencement of any action covered by the indemnification
certificate, such indemnified party will notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will not relieve the
indemnifying party from any liability which the indemnifying party may have to any indemnified
party thereunder except to the extent that failure to notify causes prejudice to the indemnifying
party. In the event that any action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be entitled, jointly
with any other indemnifying party, to participate therein and, to the extent that it (or they) may
elect by written notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. After such notice from the indemnifying party to such
indemnified party of its assumption of such defense, the indemnifying party shall not be liable for
any legal or other expenses subsequently incurred by such indemnified party in connection with the
defense thereof;
provided
,
however
, if an indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that there are any legal defenses
available to it that are different from or in conflict with those available to the indemnifying
party, or indemnified party or parties shall have the right to select separate counsel to assert
such legal defenses and to otherwise participate in the defense of such action on behalf of such
indemnified party or parties at the expense of the indemnifying party.
(e)
Retention of Servicer
. Lender reserves the right to retain the Servicer at no
cost or expense to Borrower. Lender has advised Borrower that the Servicer initially retained by
Lender shall be Wachovia Bank, National Association or its Affiliate. Borrower shall pay any fees
and expenses of the Servicer and any reasonable third party fees and expenses of the Servicer,
including, without limitation, special servicing fees, work out fees and reasonable attorneys fees
and disbursements, in connection with a prepayment, release or substitution of the Property,
assumption or modification of the Loan, or following an event of Default, special servicing or work
out of the Loan or enforcement of the Loan Documents; provided however that Servicer fees
(excluding any reasonable third party fees and expenses) for releases, substitutions and
prepayments shall not exceed the following amounts:
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(i)
|
|
Releases: $2500 (inclusive of payoff calculation) per release;
|
|
|
(ii)
|
|
Substitutions: $7500 per substitution; and
|
|
|
(iii)
|
|
Prepayments: $300 for payoff quote calculation.
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100
XV.
ASSIGNMENTS AND PARTICIPATIONS
15.1
Assignment and Acceptance
. Lender may assign to one or more Persons all or a portion
of its rights and obligations under this Agreement and the other Loan Documents (including, without
limitation, all or a portion of one or more of the Notes);
provided
that the parties to
each such assignment shall execute and deliver to Lender, for its acceptance and recording in the
Register (as hereinafter defined), an Assignment and Acceptance. In addition, Lender may
participate to one or more Persons all or any portion of its rights and obligations under this
Agreement and the other Loan Documents (including without limitation, all or a portion of one or
more of the Notes) utilizing such documentation to evidence such participation and the parties
respective rights thereunder as Lender, in its sole discretion, shall elect.
15.2
Effect of Assignment and Acceptance
. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in such Assignment and Acceptance, (i) the
assignee thereunder shall be a party hereto and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of Lender, as the case may be, hereunder and such assignee shall be deemed to have
assumed such rights and obligations, and (ii) Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement and the other Loan
Documents (and, in the case of an Assignment and Acceptance covering all or the remaining portion
of Lenders rights and obligations under this Agreement and the other Loan Documents, Lender shall
cease to be a party hereto) accruing from and after the effective date of the Assignment and
Acceptance, except with respect to (A) any payments made by Borrower to Lender pursuant to the
terms of the Loan Documents after the effective date of the Assignment and Acceptance and (B) any
letter of credit, cash deposit or other deposits or security (other than the Lien of the Security
Instrument and the other Loan Documents) delivered to or for the benefit of or deposited with
German American Capital Corporation, on behalf of the holders of the Notes, as Lender, for which
German American Capital Corporation, on behalf of the holders of the Notes, shall remain
responsible for the proper disposition thereof until such items are delivered to a party who is
qualified as an Approved Bank and agrees to hold the same in accordance with the terms and
provisions of the agreement pursuant to which such items were deposited.
15.3
Content
. By executing and delivering an Assignment and Acceptance, Lender and the
assignee thereunder confirm to and agree with each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance, Lender makes no representation or
warranty and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any other Loan
Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any lien or security interest created or purported to be
created under or in connection with, this Agreement or any other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (ii) Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition of Borrower or
Maryland Loan Guarantor or the performance or observance by Borrower or Maryland Loan Guarantor of
any of its obligations under any Loan Documents or any other instrument or document furnished
pursuant thereto; (iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents; (v) such assignee
appoints and authorizes Lender to take such action as agent on its behalf and to exercise such
powers and discretion under the Loan Documents as are delegated to Lender by the terms hereof
together with such powers and discretion as are reasonably incidental thereto; and (vi) such
assignee agrees that it will perform, in accordance with their terms, all of the obligations which
by the terms of this Agreement and the other Loan Documents are required to be performed by Lender.
101
15.4
Register
. Lender shall maintain a copy of each Assignment and Acceptance delivered to
and accepted by it and a register for the recordation of the names and addresses of Lender and each
assignee pursuant to this
Article XV
and the principal amount of the Loan owing to each
such assignee from time to time (the
Register
). The entries in the Register shall, with
respect to such assignees, be conclusive and binding for all purposes, absent manifest error. The
Register shall be available for inspection by Borrower or any assignee pursuant to this
Article
XV
at any reasonable time and from time to time upon reasonable prior written notice.
15.5
Substitute Notes
. Upon its receipt of an Assignment and Acceptance executed by an
assignee, together with any Note or Notes subject to such assignment, Lender shall, if such
Assignment and Acceptance has been completed and is in substantially the form of
Exhibit M
hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in
the Register, and (iii) give prompt written notice thereof to Borrower. Within five (5) Business
Days after its receipt of such notice, Borrower, at Lenders expense, shall execute and deliver to
Lender in exchange and substitution for the surrendered Note or Notes a new Note to the order of
such assignee in an amount equal to the portion of the Loan assigned to it and a new Note to the
order of Lender in an amount equal to the portion of the Loan retained by it hereunder. Such new
Note or Notes shall be in an aggregate principal amount equal to the aggregate then outstanding
principal amount of such surrendered Note or Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of the Notes
(
modified
,
however
, to the extent necessary so as not to impose duplicative or
increased obligations on Borrower and to delete obligations previously satisfied by Borrower).
Notwithstanding the provisions of this
Article XV
, Borrower shall not be responsible or
liable for any additional taxes, reserves, adjustments or other costs and expenses that are related
to, or arise as a result of, any transfer of the Loan or any interest or participation therein that
arise from the transfer of the Loan or any interest or participation therein or from the execution
of the new Note contemplated by this
Section 15.5
, including, without limitation, any
mortgage tax. Lender
and/or the assignees, as the case may be, shall from time to time designate one agent through which
Borrower shall request all approvals and consents required or contemplated by this Agreement and on
whose statements Borrower may rely.
102
15.6
Participations
. Each assignee pursuant to this
Article XV
may sell
participations to one or more Persons (other than Borrower or any of its Affiliates) in or to all
or a portion of its rights and obligations under this Agreement and the other Loan Documents
(including, without limitation, all or a portion of the Note held by it);
provided
,
however
, that (i) such assignees obligations under this Agreement and the other Loan
Documents shall remain unchanged, (ii) such assignee shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such assignee shall remain the holder
of any such Note for all purposes of this Agreement and the other Loan Documents, (iv) Borrower,
Lender and the assignees pursuant to this
Article XV
shall continue to deal solely and
directly with such assignee in connection with such assignees rights and obligations under this
Agreement and the other Loan Documents, (v) Borrower shall bear no costs or expenses in connection
therewith, (vi) Borrower shall not be required to incur, suffer or accept (except to a de minimis
extent)) any greater obligations or liabilities than as currently set forth in the Loan Documents,
and (vii) the economics of the Loan, taken as a whole, shall not change in a manner which is
adverse to Borrower. In the event that more than one (1) party comprises Lender, Lender shall
designate one party to act on the behalf of all parties comprising Lender in providing approvals
and all other necessary consents under the Loan Documents and on whose statements Borrower may
rely.
15.7
Disclosure of Information
. Any assignee pursuant to this
Article XV
may, in
connection with any assignment or participation or proposed assignment or participation pursuant to
this
Article XV
, disclose to the assignee or participant or proposed assignee or
participant, any information relating to Borrower furnished to such assignee by or on behalf of
Borrower;
provided
,
however
, that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree in writing for the benefit of Borrower
to preserve the confidentiality of any confidential information received by it.
15.8
Security Interest in Favor of Federal Reserve Bank
. Notwithstanding any other
provision set forth in this Agreement or any other Loan Document, any assignee pursuant to this
Article XV
may at any time create a security interest in all or any portion of its rights
under this Agreement or the other Loan Documents (including, without limitation, the amounts owing
to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System.
XVI.
RESERVE ACCOUNTS
16.1
Tax Reserve Account
. In accordance with the time periods set forth in
Section
3.1
, Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) shall cause to
be deposited into the Tax Reserve Account an amount equal to (a) one-twelfth of the annual
Impositions that Lender reasonably estimates, based on the most recent tax bill for the Property,
will be payable during the next ensuing twelve (12) months in order to accumulate with Lender
sufficient funds to pay all such Impositions thirty (30) days prior to the imposition of any
interest, charges or expenses for the non-payment thereof and (b) one-twelfth of the annual Other
Charges that Lender reasonably estimates will be payable during the next ensuing twelve (12) months
(said monthly amounts in (a) and (b) above hereinafter called the
Monthly Tax Reserve
Amount
, and the aggregate amount of funds held in the Tax Reserve Account being the
Tax
Reserve Amount
). As of the Closing Date, the Monthly Tax Reserve Amount is $739,696.79, but
such amount is subject to adjustment by Lender upon notice to Borrower. The Monthly Tax Reserve
Amount shall be paid by Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor)
to Lender on each
103
Payment Date. Lender will apply the Monthly Tax Reserve Amount to payments of
Impositions and Other Charges required to be made by Borrower (or in the case of the Maryland
Property, Maryland Loan Guarantor) pursuant to
Article V
and
Article VII
and under
the Security Instrument, subject to Borrowers right to contest Impositions in accordance with
Section 7.3
. In making any payment relating to the Tax Reserve Account, Lender may do so
according to any bill, statement or estimate procured from the appropriate public office, without
inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax,
assessment, sale, forfeiture, tax lien or title or claim thereof. If the amount of funds in the
Tax Reserve Account shall exceed the amounts due for Impositions and Other Charges pursuant to
Article V
and
Article VII
, Lender shall credit such excess against future payments
to be made to the Tax Reserve Account. If at any time Lender reasonably determines that the Tax
Reserve Amount is not or will not be sufficient to pay Impositions and Other Charges by the dates
set forth above, Lender shall notify Borrower of such determination and Borrower (or in the case of
the Maryland Property, Maryland Loan Guarantor) shall increase its monthly payments to Lender by
the amount that Lender reasonably estimates is sufficient to make up the deficiency at least thirty
(30) days prior to the imposition of any interest, charges or expenses for the non-payment of the
Impositions and Other Charges. Upon payment of the Impositions and Other Charges, Lender shall
reassess the amount necessary to be deposited in the Tax Reserve Account for the succeeding period,
which calculation shall take into account any excess amounts remaining in the Tax Reserve Account.
16.2
Insurance Reserve Account
. Borrower (or in the case of the Maryland Property,
Maryland Loan Guarantor) shall, in accordance with the time periods set forth in
Section
3.1
, cause to be deposited into the Insurance Reserve Account an amount equal to one-twelfth of
the insurance premiums that Lender reasonably estimates, based on the most recent bill, will be
payable for the renewal of the coverage afforded by the insurance policies upon the expiration
thereof in order to accumulate with Lender sufficient funds to pay all such insurance premiums
thirty (30) days prior to the expiration of the policies required to be maintained by Borrower
pursuant to the terms hereof (said monthly amounts hereinafter called the
Monthly Insurance
Reserve Amount
, and the aggregate amount of funds held in the Insurance Reserve Account being
the
Insurance Reserve Amount
). As of the Closing Date, the Monthly Insurance Reserve
Amount is $206,007.88, but such amount is subject to adjustment by Lender upon notice to Borrower.
The Monthly Insurance Reserve Amount shall be paid by Borrower (or in the case of the Maryland
Property, Maryland Loan Guarantor) to Lender on each Payment Date. Lender will apply the Monthly
Insurance Reserve Amount to payments of insurance premiums required to be made by Borrower (or in
the case of the Maryland Property, Maryland Loan Guarantor) pursuant to
Article VI
and
under the Security Instrument. In making any payment relating to the Insurance Reserve Account,
Lender may do so according to any bill, statement or estimate procured from the insurer or agent,
without inquiry into the accuracy of such bill, statement or estimate or into the validity thereof.
If the amount of funds in the Insurance Reserve Account shall exceed the amounts due for insurance
premiums pursuant to
Article VI
, Lender shall credit such excess against future payments to
be made to the Insurance Reserve Account. If at any time
Lender reasonably determines that the Insurance Reserve Amount is not or will not be sufficient to
pay insurance premiums by the dates set forth above, Lender shall notify Borrower of such
determination and Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) shall
increase its monthly payments to Lender by the amount that Lender reasonably estimates is
sufficient to make up the deficiency at least thirty (30) days prior to expiration of the
applicable insurance policies. Upon payment of such insurance premiums, Lender shall reassess the
amount necessary to be deposited in the Insurance Reserve Account for the succeeding period, which
calculation shall take into account any excess amounts remaining in the Insurance Reserve Account.
104
16.3
Structural Repair Reserve Account
.
(a) In accordance with the time periods set forth in
Section 3.1
, Borrower (or in the
case of the Maryland Property, Maryland Loan Guarantor) shall deposit, or cause to be deposited
into the Structural Repair Reserve Account, an amount equal to the Monthly Structural Repair
Reserve Amount to be held by the Cash Management Bank for the benefit of Lender as additional
security for the Loan in accordance with
Section 3.1
and the Account Agreement.
(b) Lender shall make disbursements from the Structural Repair Reserve Account to or as
directed by Borrower to pay or reimburse Borrower for the cost of Structural Repairs in accordance
with and in the manner provided in this
Section 16.3
. Any Structural Repairs that in the
aggregate with all related Structural Repairs (collectively, a
Project
) would reasonably
be expected to cost in excess of the Threshold Amount shall be subject to compliance with
Section 10.2
. Lender shall, within fifteen (15) Business Days of a written request from
Borrower and upon satisfaction of the requirements set forth in this
Section 16.3
, disburse
to Borrower amounts from the Structural Repair Reserve Account necessary to pay for the actual
costs incurred with respect to Structural Repairs, which work shall be subject to the inspection of
Lender for compliance with the requirements of this Agreement. In no event shall Lender be
obligated to disburse funds from the Structural Repair Reserve Account if a Monetary Default or an
Event of Default exists.
(c) Each request for disbursement from the Structural Repair Reserve Account shall be in a
form reasonably specified or reasonably approved by Lender and be submitted together with an
Officers Certificate specifying the specific items for which the disbursement is requested,
certifying that such item qualifies as a Structural Repair, the estimated cost for the applicable
Project through completion and the cost of each item purchased. Each request for disbursement
shall be delivered at least fifteen (15) Business Days prior to the date of the requested
disbursement and shall include copies of invoices for all costs incurred and each request shall
include evidence satisfactory to Lender of payment of all such amounts or evidence that such
amounts will be paid by such disbursement. Borrower shall not make a request for disbursement from
the Structural Repair Reserve Account more frequently than once in any calendar month and the total
amount of any request shall not be less than $10,000 (except in the case of the final request for
disbursement).
105
16.4
Immediate Repair and Remediation Reserve Account
.
(a) On the Closing Date, a portion of the Loan in the amount of $404,310, representing one
hundred twenty-five percent (125%) of the cost to complete the Immediate Repairs and Remediation,
will be deposited by Lender into the Immediate Repair and Remediation Reserve Account. Subject to
the pre-conditions to disbursement set forth in this
Section 16.4
, Lender shall make
disbursements of amounts deposited in the Immediate Repair and Remediation Reserve Account from
time to time (but no more frequently than once a calendar month) to pay for the costs of completing
the Immediate Repairs and Remediation. Lender shall, upon written request from Borrower and
satisfaction of the requirements to final disbursement set forth in this
Section 16.4
(the
Completion
), instruct the Cash Management Bank to disburse to Borrower the amounts
remaining in the Immediate Repair and Remediation Reserve Account. Subject to Excusable Delay, the
Completion shall occur on or before the date which is one hundred eighty (180) days following the
date hereof (the
Immediate Repairs and Remediation Completion Deadline
). In the event
Completion does not occur on or before the Immediate Repairs Completion Deadline, Lender shall
notify Borrower of such fact and Borrower shall have a period of at least thirty (30) days, as
determined by Lender and set forth in such notice, to effect the Completion. It shall be an Event
of Default hereunder in the event the Completion does not occur on or before the Immediate Repairs
and Remediation Completion Deadline or any date afforded by Lenders notice to effect the
Completion as set forth in Lenders notice, and upon such event, Lender shall have no further
obligation to disburse the remaining amounts deposited in the Immediate Repair and Remediation
Reserve Account to Borrower and such remaining amounts shall be applied by Lender reduce the
Principal Amount then outstanding under the Notes.
(b) Amounts deposited in the Immediate Repair and Remediation Reserve Account may be disbursed
from time to time, (
provided
that Borrower shall not make a request for disbursement
therefrom more frequently than once in any calendar month and the total amount of any request shall
not be less than $10,000 (except in the case of the final request for disbursement)) upon
Borrowers satisfaction of the conditions set forth in subsection (c) below, except that the final
disbursement of amounts deposited in the Immediate Repair and Remediation Reserve Account shall not
be disbursed until the conditions set forth in subsection (c)(ii)(E) shall have also been
satisfied.
(c) The obligation of Lender to disburse any portion of the amounts deposited in the Immediate
Repair and Remediation Reserve Account is subject to the condition precedent that all of the
following requirements shall have been completed to Lenders reasonable satisfaction:
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(i)
|
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No Event of Default shall have occurred and be continuing;
|
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(ii)
|
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Lender shall have received the following items:
|
(A) a request for advance duly executed by an authorized officer of the Borrower delivered to
Lender no earlier than ten (10) Business Days prior to the date the disbursement is requested;
(B) with respect to all but the final disbursement of the amounts deposited in the Immediate
Repair and Remediation Reserve Account, a certificate from
Borrower certifying to Lender that there are sufficient funds remaining in the Immediate
Repair and Remediation Reserve Account to attain Completion;
106
(C) with respect to all but the final disbursement of the amounts deposited in the Immediate
Repair and Remediation Reserve Account, evidence reasonably satisfactory to Lender that the
applicable Immediate Repairs and Remediation have been completed and all amounts due in respect
thereof have been paid, including specific general ledger entries and/or copies of invoices, in
either case, equal to (or greater than) the amount being disbursed from the Immediate Repair and
Remediation Reserve Account;
(D) payment of all of Lenders costs and expenses, if any, incurred in connection with
disbursement from the Immediate Repair and Remediation Reserve Account, including, without
limitation, reasonable attorneys fees and disbursements (which may, at the option of Lender, be
paid from the amounts deposited in the Immediate Repair and Remediation Reserve Account); and
(E) in connection with the final disbursement (in addition to satisfying each of the
conditions, other than the condition in clauses (B) and (C), set forth above), a certificate from
Lenders Consultant certifying to Lender that the Immediate Repairs and Remediation have been
completed to the satisfaction of such Person.
16.5
Master Lease Variable Additional Rent Reserve Account and LCR Deterioration Reserve
Account
.
(a) Pursuant to and in accordance with the provisions of
Section 3.1
, during a Low LCR
Cash Sweep Period, certain monies shall be transferred, in accordance with
Section 3.1
hereof, from the Holding Account into the Master Lease Variable Additional Rent Reserve Account and
retained by Lender as additional security for the Indebtedness and shall be applied or disbursed as
hereinafter provided. From and after the occurrence and continuation of an Event of Default,
Lender shall have the right to apply any amounts then remaining in the Master Lease Variable
Additional Rent Reserve Account to repay the Indebtedness or any other amounts due hereunder or
under the other Loan Documents in such order, manner and amount as Lender shall determine in its
sole discretion. Provided no Event of Default has occurred and is then continuing hereunder,
Lender shall instruct the Cash Management Bank to transfer to Borrowers Account, free and clear of
all Liens, any amounts remaining in the Master Lease Variable Additional Rent Reserve Account
within ten (10) Business Days following the termination of a Low LCR Cash Sweep Period.
(b) Following each Fiscal Quarter after the Closing Date, Lender will perform an LCR Test to
determine whether a Low LCR Cash Sweep Period has occurred and is continuing. Such LCR Test shall
be made by Lender based on the financial information delivered by Borrower pursuant to
Section
11.1
hereof. Pursuant to and in accordance with the provisions of
Section 3.1
, during
a Low LCR Cash Sweep Period, the Excess Proceeds shall be transferred, in accordance with
Section 3.1
hereof, from the Holding Account into the LCR Deterioration Reserve Account and
retained by Lender as additional security for the Indebtedness and shall be
applied or disbursed as hereinafter provided. From and after the occurrence and continuation
of an Event of Default, Lender shall have the right to apply any amounts then remaining in the LCR
Deterioration Reserve Account to repay the Indebtedness or any other amounts due hereunder or under
the other Loan Documents in such order, manner and amount as Lender shall determine in its sole
discretion. Provided no Event of Default has occurred and is then continuing hereunder, Lender
shall instruct the Cash Management Bank to transfer to Borrowers Account, free and clear of all
Liens, any amounts remaining in the LCR Deterioration Reserve Account within ten (10) Business Days
following the termination of a Low LCR Cash Sweep Period.
107
XVII.
DEFAULTS
17.1
Event of Default
.
(a) Each of the following events shall constitute an event of default hereunder (an
Event
of Default
):
(i) if (A) the Indebtedness is not paid in full on the Maturity Date, (B) any regularly
scheduled monthly payment of interest due under the Notes is not paid in full on or before the
fifth (5
th
) calendar day following the applicable Payment Date (or, if such fifth
(5
th
) calendar day is not a Business Day, on or before the immediately preceding
Business Day), (C) any prepayment of principal due under this Agreement or the Notes is not paid on
or before the fifth (5
th
) calendar day following the date the same is due (or, if such
fifth (5
th
) calendar day is not a Business Day, on or before the immediately preceding
Business Day), (D) the Yield Maintenance Premium is not paid when due, (E) any deposit to the
Holding Account is not made when due, and such failure continuing for ten (10) Business Days after
Lender delivers written notice thereof to Borrower, or (F) except as to any amount included in (A),
(B), (C) or (D) of this clause (i), any other amount payable pursuant to this Agreement, the Notes
or any other Loan Document is not paid in full when due and payable in accordance with the
provisions of the applicable Loan Document, with such failure continuing for ten (10) Business Days
after Lender delivers written notice thereof to Borrower;
(ii) subject to Borrowers right to contest as set forth in
Section 7.3
, if any of the
Impositions or Other Charges are not paid prior to the imposition of any interest, penalty, charge
or expense for the non-payment thereof;
(iii) if the insurance policies required by
Section 6.1
are not kept in full force and
effect or if certified copies of any of such insurance policies are not delivered to Lender within
fifteen (15) days of the effective date of such insurance policies;
(iv) if, except as permitted pursuant to this Agreement, any of the following shall occur:
(a) any Transfer of any direct or indirect legal, beneficial or equitable interest in all or any
portion of the Property, (b) any Transfer of any direct or indirect interest in Borrower, Master
Lessee, Maryland Loan Guarantor any other SPE Entity or Guarantor, (c) Borrower (or in the case of
the Maryland Property, Maryland Loan Guarantor) fails to remove any Lien or encumbrance (other than
a Permitted Encumbrance) on all or any portion of the Property (other than a Permitted Encumbrance)
within thirty (30) days after Lender delivers written notice thereof to Borrower, (d) any pledge,
hypothecation, creation of a security interest in or other
encumbrance of any direct or indirect interests in Borrower, Maryland Loan Guarantor, Master
Lessee, any other SPE Entity or Guarantor or (e) the filing of a declaration of condominium with
respect to the Property;
108
(v) if any representation or warranty made by Borrower or Maryland Loan Guarantor herein or by
Borrower, Maryland Loan Guarantor or Guarantor in any other Loan Document, or in any report,
certificate, financial statement or other instrument, agreement or document furnished to Lender
shall have been false or misleading in any material respect as of the date the representation or
warranty was made, unless, if the representation or warranty is of a nature that can be made to be
true and correct as of the then-current date, and is not likely to have a Material Adverse Effect
and was not intentionally false or misleading in any material respect when made, then same does not
constitute an Event of Default if Borrower makes such representation or warranty true and correct
and not misleading within thirty (30) days after written notice thereof from Lenders;
(vi) if Borrower, Maryland Loan Guarantor, Master Lessee, any other SPE Entity or Guarantor
shall make an assignment for the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed for Borrower, Maryland Loan
Guarantor, Master Lessee, any other SPE Entity or Guarantor or Borrower, Maryland Loan Guarantor,
Master Lessee, any other SPE Entity or Guarantor shall be adjudicated a bankrupt or insolvent, or
if any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law,
or any similar federal or state law, shall be filed by or against, consented to, or acquiesced in
by, Borrower, Maryland Loan Guarantor, Master Lessee, any other SPE Entity or Guarantor, or if any
proceeding for the dissolution or liquidation of Borrower, Maryland Loan Guarantor, Master Lessee,
any other SPE Entity or Guarantor shall be instituted;
provided
,
however
, if such
appointment, adjudication, petition or proceeding was involuntary and not consented to by Borrower,
Maryland Loan Guarantor, Master Lessee, any other SPE Entity or Guarantor upon the same not being
discharged, stayed or dismissed within one hundred (120) days;
(viii) if Borrower, Maryland Loan Guarantor, any other SPE Entity or Guarantor, as applicable,
attempts to assign its rights under this Agreement or any of the other Loan Documents or any
interest herein or therein in contravention of the Loan Documents;
(ix) with respect to any term, covenant or provision set forth herein (other than the other
subsections of this
Section 17.l
) which specifically contains a notice requirement or grace
period, if Borrower, Maryland Loan Guarantor, any other SPE Entity or Guarantor shall be in default
under such term, covenant or condition after the giving of such notice or the expiration of such
grace period;
(x) if any of the assumptions contained in the Non-Consolidation Opinion, in any Additional
Non-Consolidation Opinion or in any other non-consolidation opinion delivered to Lender in
connection with the Loan, or in any other non-consolidation opinion delivered subsequent to the
closing of the Loan, is or shall become untrue;
(xi) if Borrower or Maryland Loan Guarantor shall fail to comply with any covenants set forth
in
Section 5.1.4
,
Section 5.2.9
or
Section 5.2.21
;
(xii) except as provided clause (xi) above, if Borrower or Maryland Loan Guarantor shall fail
to comply with any covenants set forth in
Article V
or
Section XI
with such failure
continuing for ten (10) Business Days after Lender delivers written notice thereof to Borrower;
109
(xiii) if Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) shall
fail to comply with any covenants set forth in Section 3(d) or Section 8 of the Security Instrument
with such failure continuing for ten (10) Business Days after Lender delivers written notice
thereof to Borrower;
(xiv) if Borrower or Maryland Loan Guarantor shall fail to deposit any sums required to be
deposited in the Collateral Accounts pursuant to
Article XVI
when due;
(xv) if this Agreement or any other Loan Document or any Lien granted hereunder or thereunder,
in whole or in part, shall terminate or shall cease to be effective or shall cease to be a legally
valid, binding and enforceable obligation of Borrower, Maryland Loan Guarantor or Guarantor, or any
Lien securing the Indebtedness shall, in whole or in part, cease to be a perfected first priority
Lien, subject to the Permitted Encumbrances (except in any of the foregoing cases in accordance
with the terms hereof or under any other Loan Document or by reason of any affirmative act of
Lender);
(xvi) except as expressly permitted pursuant to the Loan Documents, if Borrower (or in the
case of the Maryland Property, Maryland Loan Guarantor) or Master Lessee grants any easement,
covenant or restriction (other than the Permitted Encumbrances) over the Property and such
easement, covenant or restriction is not terminated within thirty (30) days after Lender delivers
written notice thereof to Borrower;
(xvii) if the Master Lease shall be materially modified without the prior written consent of
Lender, except as expressly permitted hereunder;
(xviii) if Borrower (or in the case of the Maryland Property, Maryland Loan Guarantor) shall
be in default in any material obligation on the part of Borrower (or in the case of the Maryland
Property, Maryland Loan Guarantor) beyond any applicable notice periods and cure periods pursuant
to the terms of the Master Lease and such default is reasonably likely to have a Material Adverse
Effect;
(xix) if the Master Lease shall terminate;
(xx) if Borrower or Maryland Loan Guarantor shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement or of any Loan Document not specified in
clauses (i) through (xix) above, for thirty (30) days after notice from Lender;
provided
,
however
, that if such Default is susceptible of cure but cannot reasonably be cured within
such thirty (30) day period and
provided
,
further
, that Borrower or Maryland Loan
Guarantor, as applicable, shall have commenced to cure such Default within such thirty (30) day
period and thereafter diligently proceeds to cure the same, such thirty (30) day period shall be
extended for such time as is reasonably necessary for Borrower or Maryland Loan Guarantor, as
applicable, in the exercise of due diligence to cure such Default, such additional period not to
exceed ninety (90) days.
110
(b) Unless waived in writing by Lender, upon the occurrence and during the continuance of an
Event of Default (other than an Event of Default described in clauses (a)(vi), (vii) or (viii)
above) Lender may, without notice or demand, in addition to any other rights or remedies available
to it pursuant to this Agreement and the other Loan Documents or at law or in equity, take such
action that Lender deems advisable to protect and enforce its rights against Borrower and Maryland
Loan Guarantor and in the Property, including, without limitation, (i) declaring immediately due
and payable the entire Principal Amount together with interest thereon and all other sums due by
Borrower and Maryland Loan Guarantor under the Loan Documents, (ii) collecting interest on the
Principal Amount at the Default Rate whether or not Lender elects to accelerate the Notes and (iii)
enforcing or availing itself of any or all rights or remedies set forth in the Loan Documents
against Borrower, Maryland Loan Guarantor and the Property, including, without limitation, all
rights or remedies available at law or in equity; and upon any Event of Default described in
clauses (a)(vi) or (a)(vii) above, the Indebtedness and all other obligations of Borrower and
Maryland Loan Guarantor hereunder and under the other Loan Documents shall immediately and
automatically become due and payable, without notice or demand, and Borrower and Maryland Loan
Guarantor each hereby expressly waives any such notice or demand, anything contained herein or in
any other Loan Document to the contrary notwithstanding. The foregoing provisions shall not be
construed as a waiver by Lender of its right to pursue any other remedies available to it under
this Agreement, the Security Instrument or any other Loan Document. Any payment hereunder may be
enforced and recovered in whole or in part at such time by one or more of the remedies provided to
Lender in the Loan Documents.
17.2
Remedies
.
(a) Unless waived in writing by Lender, upon the occurrence and during the continuance of an
Event of Default, all or any one or more of the rights, powers, privileges and other remedies
available to Lender against Borrower and Maryland Loan Guarantor under this Agreement or any of the
other Loan Documents executed and delivered by, or applicable to, Borrower or Maryland Loan
Guarantor or at law or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Indebtedness shall be declared due and payable, and whether or not
Lender shall have commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect to the Property. Any such actions
taken by Lender shall be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender may determine in its
sole discretion, to the fullest extent permitted by law, without impairing or otherwise affecting
the other rights and remedies of Lender permitted by law, equity or contract or as set forth herein
or in the other Loan Documents. Without limiting the generality of the foregoing, Borrower and
Maryland Loan Guarantor each agrees that if an Event of Default is continuing (i) Lender shall not
be subject to any one action or election of remedies law or rule and (ii) all liens and other
rights, remedies or privileges provided to Lender shall remain in full force and effect until
Lender has exhausted all of its remedies against the Property and the Security Instrument has been
foreclosed, sold and/or
otherwise realized upon in satisfaction of the Indebtedness or the Indebtedness has been paid
in full.
111
(b) Upon the occurrence and during the continuance of an Event of Default, with respect to the
Account Collateral, the Lender may:
(i) without notice to Borrower, except as required by law, and at any time or from time to
time, charge, set-off and otherwise apply all or any part of the Account Collateral against the
Obligations, operating expenses and/or Capital Expenditures for the Property or any part thereof;
(ii) in Lenders sole discretion, at any time and from time to time, exercise any and all
rights and remedies available to it under this Agreement, and/or as a secured party under the UCC;
(iii) demand, collect, take possession of or receipt for, settle, compromise, adjust, sue for,
foreclose or realize upon the Account Collateral (or any portion thereof) as Lender may determine
in its sole discretion; and
(iv) take all other actions provided in, or contemplated by, this Agreement.
(c) With respect to Borrower, Maryland Loan Guarantor, the Account Collateral and the
Property, nothing contained herein or in any other Loan Document shall be construed as requiring
Lender to resort to the Property for the satisfaction of any of the Indebtedness, and Lender may
seek satisfaction out of the Property or any part thereof, in its absolute discretion in respect of
the Indebtedness. In addition, Lender shall have the right from time to time to partially
foreclose this Agreement and the Security Instrument in any manner and for any amounts secured by
this Agreement or the Security Instrument then due and payable as determined by Lender in its sole
discretion including, without limitation, the following circumstances: (i) in the event Borrower
or Maryland Loan Guarantor defaults beyond any applicable grace period in the payment of one or
more scheduled payments of principal or interest, Lender may foreclose this Agreement and the
Security Instrument to recover such delinquent payments, or (ii) in the event Lender elects to
accelerate less than the entire outstanding principal balance of the Loan, Lender may foreclose
this Agreement and the Security Instrument to recover so much of the principal balance of the Loan
as Lender may accelerate and such other sums secured by this Agreement or the Security Instrument
as Lender may elect. Notwithstanding one or more partial foreclosures, the Property shall remain
subject to this Agreement and the Security Instrument to secure payment of sums secured by this
Agreement and the Security Instrument and not previously recovered.
17.3
Remedies Cumulative; Waivers
. The rights, powers and remedies of Lender under this
Agreement and the Security Instrument shall be cumulative and not exclusive of any other right,
power or remedy which Lender may have against Borrower or Maryland Loan Guarantor pursuant to this
Agreement or the other Loan Documents, or existing at law or in equity or otherwise. Lenders
rights, powers and remedies may be pursued singly, concurrently or otherwise, at such time and in
such order as Lender may determine in Lenders sole discretion. No delay or omission to exercise
any remedy, right or power accruing upon an Event of Default
shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any
such remedy, right or power may be exercised from time to time and as often as may be deemed
expedient. A waiver of one Default or Event of Default with respect to Borrower, Maryland Loan
Guarantor or Guarantor shall not be construed to be a waiver of any subsequent Default or Event of
Default by Borrower, Maryland Loan Guarantor or Guarantor or to impair any remedy, right or power
consequent thereon.
112
17.4
Costs of Collection
. In the event that after an Event of Default: (i) the Notes or
any of the Loan Documents is placed in the hands of an attorney for collection or enforcement or is
collected or enforced through any legal proceeding; (ii) an attorney is retained to represent
Lender in any bankruptcy, reorganization, receivership, or other proceedings affecting creditors
rights and involving a claim under the Notes or any of the Loan Documents; or (iii) an attorney is
retained to protect or enforce the lien or any of the terms of this Agreement, the Security
Instrument or any of the Loan Documents; then Borrower shall pay to Lender all reasonable
attorneys fees, costs and expenses actually incurred in connection therewith, including costs of
appeal, together with interest on any judgment obtained by Lender at the Default Rate.
XVIII.
SPECIAL PROVISIONS
18.1
Exculpation
.
18.1.1
Exculpated Parties
. Except as set forth in this
Section 18.1
, the Recourse
Guaranty and the Environmental Indemnity, no personal liability shall be asserted, sought or
obtained by Lender or enforceable against (i) Borrower, (ii) any Affiliate of Borrower, (iii) any
Person owning, directly or indirectly, any legal or beneficial interest in Borrower or any
Affiliate of Borrower or (iv) any direct or indirect partner, member, principal, officer,
Controlling Person, beneficiary, trustee, advisor, shareholder, employee, agent, Affiliate or
director of any Persons described in clauses (i) through (iii) above (collectively, the
Exculpated Parties
) and none of the Exculpated Parties shall have any personal liability
(whether by suit deficiency judgment or otherwise) in respect of the Obligations, this Agreement,
the Security Instrument, the Notes, the Property or any other Loan Document, or the making,
issuance or transfer thereof, all such liability, if any, being expressly waived by Lender. The
foregoing limitation shall not in any way limit or affect Lenders right to any of the following
and Lender shall not be deemed to have waived any of the following:
(a) Foreclosure of the lien of this Agreement and the Security Instrument in accordance with
the terms and provisions set forth herein and in the Security Instrument;
(b) Action against any other security at any time given to secure the payment of the Notes and
the other Obligations;
(c) Exercise of any other remedy set forth in this Agreement or in any other Loan Document
which is not inconsistent with the terms of this
Section 18.1
;
(d) Any right which Lender may have under Sections 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the Indebtedness secured
by this Agreement and the Security Instrument or to require that all collateral shall
continue to secure all of the Indebtedness owing to Lender in accordance with the Loan
Documents; or
(e) The liability of any given Exculpated Party with respect to any separate written guaranty
or agreement given by any such Exculpated Party in connection with the Loan (including, without
limitation, the Recourse Guaranty and the Environmental Indemnity).
113
18.1.2
Carveouts From Non-Recourse Limitations
. Notwithstanding the foregoing or anything
in this Agreement or any of the other Loan Documents to the contrary, there shall at no time be any
limitation on Borrowers, Maryland Loan Guarantors or, except as set forth in the Recourse
Guaranty, Guarantors liability for the payment, in accordance with the terms of this Agreement,
the Notes, the Security Instrument and the other Loan Documents, to Lender of and for:
(a) any actual out-of-pocket loss, damage, cost, expense, liability, claim and any other
obligation incurred by or on behalf of Lender arising out of or in connection with fraud or
intentional material misrepresentation by Borrower, Maryland Loan Guarantor, Master Lessee,
Guarantor or any of their principals, officers, agents or employees in connection with the Loan;
(b) damage to the Property arising from intentional misconduct of Borrower, Maryland Loan
Guarantor, Master Lessee, Guarantor or any of their principals, officers, agents or employees, and
any removal of assets forming part of any Individual Property by Borrower, Maryland Loan Guarantor
or Master Lessee in violation of the Loan Documents;
(c) any actual out-of-pocket loss, damage, cost, expense, liability, claim and any other
obligation incurred by or on behalf of Lender arising out of or in connection with the breach of
any representation, warranty, covenant or indemnification provision in the Environmental Indemnity
or herein concerning environmental laws, hazardous substances and asbestos and any indemnification
of Lender with respect thereto in the Environmental Indemnity or herein, but only to the extent
that the same are not insured against by an Environmental Insurance Policy;
(d) the amount of any misappropriation or conversion by Borrower, Maryland Loan Guarantor or
Master Lessee of (A) any Proceeds paid by reason of any casualty, damage or destruction of the
Property, (B) any Proceeds received in connection with a Taking, (C) any Rents following and during
the continuance of an Event of Default, or (D) any Rents paid more than one (1) month in advance
(it being agreed that no use of funds for the repair, maintenance or operations of the Property
shall be treated as a misappropriation hereunder);
(e) any actual out-of-pocket loss, damage, cost, expense, liability, claim and any other
obligation incurred by or on behalf of Lender arising out of or in connection with a breach of any
representation set forth in
Section 4.1.29
;
(f) any actual out-of-pocket loss, damage, cost, expense, liability, claim and any other
obligation incurred by or on behalf of Lender arising out of or in connection with Borrowers or
Maryland Loan Guarantors failure to obtain Lenders prior consent to any Debt or voluntary Lien
encumbering the Property as required by this Agreement or by the Security Instruments;
114
(g) any actual out-of-pocket loss, damage, cost, expense, liability, claim and any other
obligation incurred by or on behalf of Lender (including, without limitation, reasonable attorneys
fees, causes of action, suits, claims, demands and adjustments of any nature or description
whatsoever) which may at any time be imposed upon, incurred by or awarded against Lender, in the
event (and arising out of such circumstances) that Borrower or Maryland Loan Guarantor should raise
any defense, counterclaim and/or allegation in any foreclosure action by Lender relative to any
Individual Property or the Account Collateral or any part thereof which is found by a court of
competent jurisdiction in a final, unappealable decision to have been raised by Borrower or
Maryland Loan Guarantor in bad faith or to be without basis in fact or law;
(h) any actual out-of-pocket loss, damage, cost, expense, liability, claim and any other
obligation incurred by or on behalf of Lender arising out of or in connection with (A) any Borrower
or Maryland Loan Guarantor filing a voluntary petition under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law; (B) any Borrower or Maryland Loan Guarantor
soliciting or causing to be solicited petitioning creditors for an involuntary petition against any
Borrower or Maryland Loan Guarantor under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law, or an involuntary case being commenced against any Borrower or
Maryland Loan Guarantor under the Bankruptcy Code or any other Federal or state bankruptcy or
insolvency law with the collusion of any Individual Borrower or Maryland Loan Guarantor or any of
its Affiliates, (C) any Borrower or Maryland Loan Guarantor filing an answer consenting to or
otherwise acquiescing in or joining in any involuntary petition filed against it, by any other
Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (D)
any Borrower or Maryland Loan Guarantor consenting to or acquiescing in or joining in an
application for the appointment of a custodian, receiver, trustee, or examiner for any such
Borrower or Maryland Loan Guarantor or any portion of the Property; (E) any Borrower or Maryland
Loan Guarantor making an assignment for the benefit of creditors, or admitting, in writing or in
any legal proceeding, its insolvency or inability to pay its debts as they become due;
(i) any actual out-of-pocket loss, damage, cost, expense, liability, claim and any other
obligation incurred by or on behalf of Lender arising out of or in connection with any Borrowers
or Maryland Loan Guarantors failure to obtain Lenders prior written consent to any Transfer as
required by the Loan Agreement or the Security Instruments; or
(j) reasonable attorneys fees and expenses incurred by Lender in connection with any
successful suit filed on account of any of the foregoing clauses (a) through (i).
Notwithstanding the foregoing provisions of this
Section 18.1.2
, Borrower and Maryland
Loan Guarantor shall not be liable for the payment of any such costs and expenses to the extent
that a court of competent jurisdiction determines in a final decision that the same arose by reason
of the gross negligence, criminal acts, fraud or willful misconduct of Lender.
115
XIX.
MISCELLANEOUS
19.1
Survival
. This Agreement and all covenants, indemnifications, agreements,
representations and warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to Lender of the Notes,
and shall continue in full force and effect so long as all or any of the Indebtedness is
outstanding and unpaid unless a longer period is expressly set forth herein or in the other Loan
Documents. Whenever in this Agreement any of the parties hereto is referred to, such reference
shall be deemed to include the successors and assigns of such party. All covenants, promises and
agreements in this Agreement, by or on behalf of Borrower or Maryland Loan Guarantor, shall inure
to the benefit of the successors and assigns of Lender. If Borrower consists of more than one
person, the obligations and liabilities of each such person hereunder and under the other Loan
Documents shall be joint and several. The obligations and liabilities of Borrower and Maryland
Loan Guarantor hereunder and under the other Loan Documents shall be joint and several.
19.2
Lenders Discretion
. Whenever pursuant to this Agreement, Lender exercises any right
given to it to approve or disapprove, or any arrangement or term is to be satisfactory to Lender,
the decision of Lender to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically herein provided) be in
the sole discretion of Lender and shall be final and conclusive.
19.3
Governing Law
.
(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY LENDER AND
ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW
OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER AND MARYLAND
LOAN GUARANTOR EACH HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW
OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTES, AND THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
116
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER OR MARYLAND LOAN GUARANTOR
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDERS OPTION BE INSTITUTED IN ANY FEDERAL OR
STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW AND BORROWER AND MARYLAND LOAN GUARANTOR EACH WAIVES ANY OBJECTIONS WHICH
IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER AND MARYLAND
LOAN GUARANTOR EACH HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING. BORROWER AND MARYLAND LOAN GUARANTOR EACH DOES HEREBY DESIGNATE AND APPOINT:
CORPORATION SERVICE COMPANY
80 STATE STREET
ALBANY, NEW YORK 12207-2543
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS
WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW
YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN
NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER AND MARYLAND LOAN GUARANTOR IN THE MANNER
PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER AND
MARYLAND LOAN GUARANTOR IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER
AND MARYLAND LOAN GUARANTOR (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS
AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE
AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE
SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS
DISSOLVED WITHOUT LEAVING A SUCCESSOR.
19.4
Modification, Waiver in Writing
. No modification, amendment, extension, discharge,
termination or waiver of any provision of this Agreement, or of the Notes, or of any other Loan
Document, or consent to any departure therefrom, shall in any event be effective unless the same
shall be in a writing signed by the party against whom enforcement is sought (and, if a
Securitization shall have occurred, a Rating Agency Confirmation is obtained), and then such waiver
or consent shall be effective only in the specific instance, and for the purpose, for which given.
Except as otherwise expressly provided herein, no notice to or demand on Borrower shall entitle
Borrower to any other or future notice or demand in the same, similar or other circumstances.
19.5
Delay Not a Waiver
. Neither any failure nor any delay on the part of Lender in
insisting upon strict performance of any term, condition, covenant or agreement, or exercising any
right, power, remedy or privilege hereunder, or under the Notes or under any other Loan Document,
or any other instrument given as security therefor, shall operate as or constitute a waiver
thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the
exercise of any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under this Agreement, the
Notes or any other Loan Document, Lender shall not be deemed to have waived any right either to
require prompt payment when due of all other amounts due under this Agreement, the
Notes or the other Loan Documents, or to declare a default for failure to effect prompt payment of
any such other amount.
117
19.6
Notices
. All notices, consents, approvals and requests required or permitted
hereunder or under any other Loan Document shall be given in writing and shall be effective for all
purposes if hand delivered or sent by (a) certified or registered United States mail, postage
prepaid, return receipt requested, or (b) expedited prepaid delivery service, either commercial or
United States Postal Service, with proof of attempted delivery, addressed as follows (or at such
other address and Person as shall be designated from time to time by any party hereto, as the case
may be, in a written notice to the other parties hereto in the manner provided for in this
Section):
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If to Lender:
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German American Capital Corporation, on behalf of the holders of the Notes
|
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60 Wall Street, 10
th
floor
|
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New York, NY 10005
|
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Attention: Todd Sammann and General Counsel
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With a copy to:
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Wachovia Bank, National Assocation, as Servicer, at such notice address as shall be
designated by notice delivered in accordance with this Section.
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With a copy to:
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Skadden, Arps, Slate, Meagher & Flom LLP
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Four Times Square
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New York, New York 10036
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Attention: Harvey R. Uris, Esq.
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With a copy to:
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Wachovia Bank, National Association
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375 Park Avenue, 5
th
Floor
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New York, New York 10022
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Attention: Mr. Peter Scola
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If to Borrower (which shall
be deemed notice to
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Maryland Loan Guarantor):
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c/o BlueLinx Holdings Inc.
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4300 Wildwood Parkway
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Atlanta, Georgia 30339
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Attention: Mr. David Morris, CFO & Treasurer
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With a copy to:
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Schulte Roth & Zabel LLP
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919 Third Avenue
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New York, New York 10022
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Attention: Jeffrey A. Lenobel, Esq.
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All notices, elections, requests and demands under this Agreement shall be effective and deemed
received upon the earliest of (i) the actual receipt of the same by personal delivery or otherwise,
(ii) one (1) Business Day after being deposited with a nationally recognized overnight courier
service as required above, or (iii) three (3) Business Days after being deposited in the United
States mail as required above. Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given as herein required shall be deemed to be
receipt of the notice, election, request, or demand sent.
118
19.7
TRIAL BY JURY
. EACH OF BORROWER, MARYLAND LOAN GUARANTOR AND LENDER AND ALL PERSONS
CLAIMING BY, THROUGH OR UNDER IT, HEREBY EXPRESSLY, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS
AGREEMENT, THE SECURITY INSTRUMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT, INCLUDING, WITHOUT
LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (II) IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT,
THE SECURITY INSTRUMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT (AS NOW OR HEREAFTER MODIFIED) OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE;
AND BORROWER AND MARYLAND LOAN GUARANTOR EACH HEREBY AGREES AND CONSENTS THAT AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT HERETO TO THE WAIVER OF ANY RIGHT TO TRIAL BY JURY. BORROWER AND MARYLAND LOAN GUARANTOR
EACH ACKNOWLEDGES THAT IT HAS CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS WAIVER AND
ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE MAKING OF THE LOAN. THIS WAIVER
SHALL SURVIVE THE REPAYMENT OF THE LOAN.
19.8
Headings
. The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
19.9
Severability
. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
19.10
Preferences
. To the extent Borrower or Maryland Loan Guarantor makes a payment or
payments to Lender, which payment or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law, common law or equitable
cause, then, to the extent of such payment or proceeds received, the obligations hereunder or part
thereof intended to be satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by Lender.
119
19.11
Waiver of Notice
. Borrower and Maryland Loan Guarantor shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters for which this
Agreement or the other Loan Documents specifically and expressly provide for the giving of notice
by Lender to Borrower and except with respect to matters for which Borrower is not, pursuant to
applicable Legal Requirements, permitted to waive the giving of notice. Borrower hereby expressly
waives the right to receive any notice from Lender with respect to any matter for which this
Agreement or the other Loan Documents do not specifically and expressly provide for the giving of
notice by Lender to Borrower.
19.12
Expenses; Indemnity
.
(a) Borrower and Maryland Loan Guarantor each covenants and agrees to pay or, if Borrower or
Maryland Loan Guarantor fails to pay, to reimburse, Lender upon receipt of written notice from
Lender for all reasonable costs and expenses (including reasonable attorneys fees and
disbursements) actually incurred by Lender in connection with (i) the preparation, negotiation,
execution and delivery of this Agreement and the other Loan Documents and the consummation of the
transactions contemplated hereby and thereby and all the costs of furnishing all opinions by
counsel for Borrower (including without limitation any opinions requested by Lender pursuant to
this Agreement); (ii) the servicing of the Loan by the Servicer after the Closing Date in
accordance with
Section 14.3.2(e)
; (iii) the negotiation, preparation, execution, delivery
and administration of any consents, amendments, waivers or other modifications to this Agreement
and the other Loan Documents and any other documents or matters as required herein or under the
other Loan Documents; (iv) securing Borrowers compliance with any requests made pursuant to the
provisions of this Agreement; (v) the filing and recording fees and expenses, mortgage recording
taxes, title insurance and reasonable fees and expenses of counsel for providing to Lender all
required legal opinions, and other similar expenses incurred in creating and perfecting the Lien in
favor of Lender pursuant to this Agreement and the other Loan Documents; (vi) enforcing or
preserving any rights, in response to third party claims or the prosecuting or defending of any
action or proceeding or other litigation, in each case against, under or affecting Borrower,
Maryland Loan Guarantor, this Agreement, the other Loan Documents, the Property, or any other
security given for the Loan; (vii) enforcing any obligations of or collecting any payments due from
Borrower or Maryland Loan Guarantor under this Agreement, the other Loan Documents or with respect
to the Property or in connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a work-out or of any insolvency or bankruptcy
proceedings and (viii) procuring insurance policies pursuant to
Section 6.1
;
provided
,
however
, that Borrower shall not be liable for the payment of any such
costs and expenses to the extent the same arise by reason of the gross negligence, illegal acts,
fraud or willful misconduct of Lender. Any cost and expenses due and payable to Lender may be paid
from any amounts in the Holding Account.
120
(b) Subject to the non-recourse provisions of
Section 18.1
, Borrower and Maryland Loan
Guarantor shall protect, indemnify and save harmless Lender, and all officers, directors,
stockholders, members, partners, employees, agents, successors and assigns thereof (collectively,
the Indemnified Parties) from and against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and expenses (including all reasonable attorneys fees and expenses
actually incurred) imposed upon or incurred by or asserted against the Indemnified Parties or the
Property or any part of its interest therein, by reason of the occurrence or existence of any of
the following (to the extent Proceeds payable on account of the following shall be inadequate; it
being understood that in no event will the Indemnified Parties be required to actually pay or incur
any costs or expenses as a condition to the effectiveness of the foregoing indemnity) prior to (i)
the acceptance by Lender or its designee of a deed-in-lieu of foreclosure with respect to the
Property, or (ii) an Indemnified Party or its designee taking possession or control of the Property
or (iii) the foreclosure of the Security Instrument, except to the extent caused by the actual
willful misconduct or gross negligence of any Indemnified Party (other than such willful
misconduct, criminal acts, fraud or gross negligence imputed to the Indemnified Parties because of
their interest in the Property): (1) ownership of Borrowers (or in the case of the Maryland
Property, Maryland Loan Guarantors) interest in the Property, or any interest therein, or receipt
of any Rents or other sum therefrom, (2) any accident, injury to or death of any persons or loss of
or damage to property occurring on or about the Property or any Appurtenances thereto, (3) any
design, construction, operation, repair, maintenance, use, non-use or condition of the Property or
Appurtenances thereto, including claims or penalties arising from violation of any Legal
Requirement, Environmental Law or Insurance Requirement, as well as any claim based on any patent
or latent defect, whether or not discoverable by Lender, any claim the insurance as to which is
inadequate, and any Environmental Claim except to the extent such Environmental Claim is covered by
the Environmental Insurance Policy and the related insurer agrees to pay Lenders claims
thereunder, (4) any Event of Default under this Agreement or any of the other Loan Documents, (5)
any performance of any labor or services or the furnishing of any materials or other property in
respect of the Property or any part thereof, (6) any negligence or tortious act or omission on the
part of Borrower, Maryland Loan Guarantor or any of its agents, contractors, servants, employees,
sublessees, licensees or invitees, (7) any contest referred to in
Section 7.3
hereof, or
(8) any obligation or undertaking relating to the performance or discharge of any of the terms,
covenants and conditions of the landlord contained in the Leases. Any amounts the Indemnified
Parties are legally entitled to receive under this
Section 19.12(b)
which are not paid
within thirty (30) days after written demand therefor by the Indemnified Parties or Lender, setting
forth in reasonable detail the amount of such demand and the basis therefor, shall bear interest
from the date of demand at the Default Rate, and shall, together with such interest, be part of the
Indebtedness and secured by the Security Instrument. In case any action, suit or proceeding is
brought against the Indemnified Parties by reason of any such occurrence, Borrower shall at
Borrowers expense resist and defend such action, suit or proceeding or will cause the same to be
resisted and defended by counsel at Borrowers reasonable expense for the insurer of the liability
or by counsel designated by Borrower (unless reasonably disapproved by Lender promptly after Lender
has been notified of such counsel);
provided
,
however
, that nothing herein shall
compromise the right of Lender (or any Indemnified Party) to appoint its own counsel at Borrowers
reasonable expense for its defense with respect to any action which in its reasonable opinion
presents a conflict or potential conflict between Lender and Borrower that would make such separate
representation advisable;
provided
,
further
, that if Lender shall have appointed
separate counsel pursuant to the foregoing, Borrower shall not be responsible for the expense of
additional separate counsel of any Indemnified Party unless in the reasonable opinion of Lender a
conflict or potential conflict exists between such Indemnified Party and Lender. So long as
Borrower is resisting and defending such action, suit or proceeding as provided above in a prudent
and commercially reasonable manner, Lender and the Indemnified Parties shall not be entitled to
settle such action, suit or proceeding without Borrowers consent which shall not be unreasonably
withheld or delayed, and claim the benefit of this
Section 19.12(b)
with respect to
such action, suit or proceeding and Lender agrees that it will not settle any such action,
suit or proceeding without the consent of Borrower. Any Indemnified Party will give Borrower
prompt notice after such Indemnified Party obtains actual knowledge of any potential claim by such
Indemnified Party for indemnification hereunder.
121
19.13
Exhibits and Schedules Incorporated
. The Exhibits and Schedules annexed hereto are
hereby incorporated herein as a part of this Agreement with the same effect as if set forth in the
body hereof.
19.14
Offsets, Counterclaims and Defenses
. Any assignee of Lenders interest in and to
this Agreement, the Notes and the other Loan Documents shall take the same free and clear of all
offsets, counterclaims or defenses which are unrelated to such documents which Borrower or Maryland
Loan Guarantor may otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower or Maryland Loan Guarantor in
any action or proceeding brought by any such assignee upon such documents and any such right to
interpose or assert any such unrelated offset, counterclaim or defense in any such action or
proceeding is hereby expressly waived by Borrower and Maryland Loan Guarantor.
19.15
Liability of Assignees of Lender
. No assignee of Lender shall have any personal
liability, directly or indirectly, under or in connection with this Agreement or any other Loan
Document or any amendment or amendments hereto made at any time or times, heretofore or hereafter,
any different than the liability of Lender hereunder. In addition, no assignee shall have at any
time or times hereafter any personal liability, directly or indirectly, under or in connection with
or secured by any agreement, lease, instrument, encumbrance, claim or right affecting or relating
to the Property or to which the Property is now or hereafter subject any different than the
liability of Lender hereunder. The limitation of liability provided in this
Section 19.15
is (i) in addition to, and not in limitation of, any limitation of liability applicable to the
assignee provided by law or by any other contract, agreement or instrument, and (ii) shall not
apply to any assignees gross negligence or willful misconduct.
19.16
No Joint Venture or Partnership; No Third Party Beneficiaries
.
(a) Borrower and Lender intend that the relationships created hereunder and under the other
Loan Documents be solely that of borrower and lender. Nothing herein or therein is intended to
create a joint venture, partnership, tenancy-in-common, or joint tenancy relationship between
Borrower and Lender or to grant Lender any interest in the Property other than that of mortgagee,
beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the benefit of Lender and
Borrower and Maryland Loan Guarantor and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender, Borrower and Maryland Loan
Guarantor any right to insist upon or to enforce the performance or observance of any of the
obligations contained herein or therein. All conditions to the obligations of Lender to make the
Loan hereunder are imposed solely and exclusively for the benefit of Lender and no other Person
shall have standing to require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to
make the Loan in the absence of strict compliance with any or all thereof and no other Person
shall under any circumstances be deemed to be a beneficiary of such conditions, any or all of which
may be freely waived in whole or in part by Lender if, in Lenders sole discretion, Lender deems it
advisable or desirable to do so.
122
19.17
Publicity
. Other than legally required disclosures, filings and reporting
requirements, all news releases, publicity or advertising by Borrower or Lender or their respective
Affiliates through any media intended to reach the general public which refers to the Loan
Documents or the financing evidenced by the Loan Documents, to Lender, or any of its Affiliates
shall be subject to the prior written approval of Lender and Borrower.
19.18
Waiver of Marshalling of Assets
. To the fullest extent permitted by law, Borrower
and Maryland Loan Guarantor, for itself and its successors and assigns, waives all rights to a
marshalling of the assets of Borrower, Maryland Loan Guarantor, Borrowers and Maryland Loan
Guarantors members and others with interests in Borrower, Maryland Loan Guarantor and of the
Property, and agrees not to assert any right under any laws pertaining to the marshalling of
assets, the sale in inverse order of alienation, homestead exemption, the administration of estates
of decedents, or any other matters whatsoever to defeat, reduce or affect the right of Lender under
the Loan Documents to a sale of the Property for the collection of the Indebtedness without any
prior or different resort for collection or of the right of Lender to the payment of the
Indebtedness out of the net proceeds of the Property in preference to every other claimant
whatsoever.
19.19
Waiver of Counterclaim and other Actions
. Borrower and Maryland Loan Guarantor each
hereby expressly and unconditionally waives, in connection with any suit, action or proceeding
brought by Lender on this Agreement, the Notes, the Security Instrument or any Loan Document, any
and every right it may have to (i) interpose any counterclaim therein (other than a counterclaim
which can only be asserted in the suit, action or proceeding brought by Lender on this Agreement,
the Notes, the Security Instrument or any Loan Document and cannot be maintained in a separate
action) and (ii) have any such suit, action or proceeding consolidated with any other or separate
suit, action or proceeding.
19.20
Conflict; Construction of Documents; Reliance
. In the event of any conflict between
the provisions of this Agreement and any of the other Loan Documents, the provisions of this
Agreement shall control. The parties hereto acknowledge that they were represented by competent
counsel in connection with the negotiation, drafting and execution of the Loan Documents and that
such Loan Documents shall not be subject to the principle of construing their meaning against the
party which drafted same. Borrower acknowledges that, with respect to the Loan, Borrower shall
rely solely on its own judgment and advisors in entering into the Loan without relying in any
manner on any statements, representations or recommendations of Lender or any parent, subsidiary or
Affiliate of Lender. Lender shall not be subject to any limitation whatsoever in the exercise of
any rights or remedies available to it under any of the Loan Documents or any other agreements or
instruments which govern the Loan by virtue of the ownership by it or any parent, subsidiary or
Affiliate of Lender of any equity interest any of them may acquire in Borrower or Maryland Loan
Guarantor, and Borrower and Maryland Loan Guarantor each hereby irrevocably waives the right to
raise any defense or take any action on the basis of the foregoing with respect to Lenders
exercise of any such rights or remedies. Borrower
acknowledges that Lender engages in the business of real estate financings and other real estate
transactions and investments which may be viewed as adverse to or competitive with the business of
Borrower or its Affiliates.
123
19.21
Prior Agreements
. This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and
thereby, and all prior agreements among or between such parties, whether oral or written, are
superseded by the terms of this Agreement and the other Loan Documents and unless specifically set
forth in a writing contemporaneous herewith the terms, conditions and provisions of any and all
such prior agreements do not survive execution of this Agreement.
19.22
Counterparts
. This Agreement may be executed in multiple counterparts, each of which
shall constitute an original, but all of which shall constitute one document.
[NO FURTHER TEXT ON THIS PAGE]
124
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
duly authorized representatives, all as of the day and year first above written.
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ABP AL (MIDFIELD) LLC
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ABP AR (LITTLE ROCK) LLC
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ABP CA (CITY OF INDUSTRY) LLC
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ABP CA (NATIONAL CITY) LLC
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ABP CA (NEWARK) LLC
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ABP CO I (DENVER) LLC
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ABP CA (RIVERSIDE) LLC
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ABP CT (NEWTON) LLC
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ABP CO II (DENVER) LLC
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ABP FL (MIAMI) LLC
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ABP FL (LAKE CITY) LLC
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ABP FL (TAMPA) LLC
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ABP FL (PENSACOLA) LLC
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ABP GA (LAWRENCEVILLE) LLC
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ABP FL (YULEE) LLC
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ABP IL (UNIVERSITY PARK) LLC
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ABP IA (DES MOINES) LLC
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ABP KY (INDEPENDENCE) LLC
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ABP IN (ELKHART) LLC
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ABP MA (BELLINGHAM) LLC
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ABP LA (SHREVEPORT) LLC
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ABP ME (PORTLAND) LLC
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ABP MD (BALTIMORE) SUBSIDIARY LLC
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ABP MI (GRAND RAPIDS) LLC
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ABP MI (DETROIT) LLC
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ABP MN (MAPLE GROVE) LLC
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ABP MN (EAGAN) LLC
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ABP MO (KANSAS CITY) LLC
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ABP MO (BRIDGETON) LLC
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ABP MS (PEARL) LLC
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ABP MO (SPRINGFIELD) LLC
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ABP NC (CHARLOTTE) LLC
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ABP NC (BUTNER) LLC
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ABP NJ (DENVILLE) LLC
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ABP ND (NORTH FARGO) LLC
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ABP NY (YAPHANK) LLC
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ABP NM (ALBUQUERQUE) LLC
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ABP OK (TULSA) LLC
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ABP OH (TALMADGE) LLC
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ABP PA (ALLENTOWN) LLC
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ABP OR (BEAVERTON) LLC
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ABP SC (CHARLESTON) LLC
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ABP PA (STANTON) LLC
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ABP TN (ERWIN) LLC
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ABP SD (SIOUX FALLS) LLC
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ABP TN (NASHVILLE) LLC
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ABP TN (MEMPHIS) LLC
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ABP TX (FORT WORTH) LLC
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ABP TX (EL PASO) LLC
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ABP TX (HOUSTON) LLC
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ABP TX (HARLINGEN) LLC
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ABP TX (SAN ANTONIO) LLC
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ABP TX (LUBBOCK) LLC
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ABP VA (VIRGINIA BEACH) LLC
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ABP VA (RICHMOND) LLC
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ABP WA (WOODINVILLE) LLC
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ABP VT (SHELBURNE) LLC
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ABP WI (WAUSAU) LLC
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By:
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/s/ David Morris
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Name:
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David Morris
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Title:
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Vice President
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S-1 (Borrower)
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MARYLAND LOAN GUARANTOR:
ABP MD (BALTIMORE) LLC
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By:
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/s/ David Morris
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Name:
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David Morris
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Title:
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Vice President
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[Lenders signature appears on following page]
S-2 (Borrower)
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LENDER:
GERMAN AMERICAN CAPITAL
CORPORATION, a Maryland corporation, on
behalf of the holders of the Notes
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By:
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/s/ Todd O. Sammann
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Name:
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Todd O. Sammann
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Title:
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Vice President
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By:
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/s/ Thomas R. Traynor
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Name:
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Thomas R. Traynor
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Title:
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Vice President
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S-1 (Lender)
EXHIBIT A
TITLE INSURANCE REQUIREMENTS, ENDORSEMENTS
AND AFFIRMATIVE COVERAGES
1.
General
. Borrower and/or its counsel is responsible for ordering or updating any
title insurance work. Lender requires a lenders title insurance policy insuring German American
Capital Corporation, a Maryland corporation, for the benefit of the holders of the Notes, and its
successors and assigns. The approved title underwriters, type and amount of insurance and
required endorsements are described below. The list of endorsements is subject to review by
Lenders counsel, local counsel and additional specific coverages may be required after review of
the related title commitment. The requirements of this Exhibit A shall not limit any requirements
set forth in the Loan Agreement with respect to the matters set forth herein.
2.
Title Insurer
. The title company or title companies must be approved by Lender and
licensed to do business in the jurisdiction in which the Property is located. The Title Company (as
defined in the Loan Agreement) has been pre-approved by Lender.
3.
Title Agent
. Unless Lender otherwise agrees, all title work shall be ordered and
coordinated, and the closing of the Loan shall be conducted through the Title Company.
4.
Primary Title Insurance Requirements
.
(a)
Amount of Coverage
. As required pursuant to the Loan Agreement.
(b)
Effective Date
. The later of the date of recording of the Security Instrument or
the date of funding of the Loan. Borrower shall be required to provide a customary gap indemnity
in order to enable the Title Company to provide gap coverage.
(c)
Insured
. German American Capital Corporation, a Maryland corporation, for the
benefit of the holders of the Notes, and its successors and assigns.
(d)
Legal Description
. Metes and bounds description to be provided which must conform
to that shown on the Survey, the Security Instrument and any other Loan Documents that require a
legal description of the Property. A lot and block description shall be acceptable in place of a
metes and bounds description if accepted by the Title Company for issuance of a Title Policy for an
Individual Property.
(e)
Policy Form
. An ALTA (or equivalent) lenders policy of title insurance in form
and substance acceptable to Lender. Without limiting Lenders right to require specific coverages,
endorsements or other title work, the Title Policy shall (i) be in the 1970 ALTA (as amended 84)
form or, if not available, ALTA 1992 form (deleting arbitration and creditor rights exclusions) or,
if not available, the form commonly used in
the state where the Property is located, (ii) to the extent available, include the extended
coverage provisions described in paragraph 5 below, (iii) include all applicable endorsements
described in paragraph 6 below, and (iv) include Schedule B exceptions in a form and to the extent
acceptable to Lenders counsel.
A-1
5.
Extended Coverage Requirements
. The Title Policy shall:
(a) not contain any exception for filed or unfiled mechanic, materialmen or similar liens;
(b) limit any general exception for real estate taxes and other charges to real estate or
other similar taxes or assessments that are not yet due and payable or delinquent and are not a
current lien on the Property;
(c) limit any general exception for the rights of persons in possession to the rights of
specified tenants, as tenants only with no right or option to purchase, set forth on the rent roll
for the Property and attached to the Title Policy; and
(d) not contain any general exception as to matters that an accurate Survey of the Property
would disclose, but may contain specific exceptions to matters disclosed on the Survey to be
delivered on the Closing Date, subject to review by Lenders counsel.
6.
Required Endorsements
. In addition to any other endorsements required by Lender to
be obtained by Borrower pursuant to the terms of the Loan Agreement, the following
endorsements are required, to the extent applicable and otherwise available in the
jurisdiction in which the Property is located:
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Restrictions, Encroachments, Minerals Endorsement ALTA Form 9 or equivalent. (If
not available, the Title Policy must insure by way of affirmative coverage statements
that there are no encroachments by any of the improvements onto easements, rights of
way or other exceptions to streets or adjacent property, or insure against loss or
damage resulting therefrom.)
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Deletion of Creditors Rights Exclusion Endorsement.
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Environmental Protection Lien Endorsement. (The Title Policy may make an exception
only for specific state statutes that provide for potential subsequent liens that
could take priority over the lien securing the Loan.)
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Direct Access to Public Road Endorsement;
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Land Same As Survey/Legal Description Endorsement.
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A-2
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Zoning 3.1 Endorsement (including parking).
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Subdivision Endorsement.
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Doing Business Endorsement.
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Deletion of Arbitration Endorsement.
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Separate Tax Lot Endorsement.
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Street Address Endorsement
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Contiguity Endorsement.
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Variable Rate Endorsement.
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Mortgage Recording Tax Endorsement.
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Any of the following endorsements customary in the state in which the Property is
located or as required by the nature of the transaction:
|
Tie-In Endorsement for Multiple Policies
Mortgage Assignment Endorsement
First Loss / Last Dollar Endorsement
Blanket Un-located Easements Endorsement
Closure Endorsement
A-3
EXHIBIT B
GERMAN AMERICAN CAPITAL CORPORATION
SURVEY REQUIREMENTS
The requirements of this Exhibit A shall not limit any requirements set forth in the Loan
Agreement with respect to the matters set forth herein. The Surveys shall contain the following:
The legal description of the Property;
The courses and measured distances of the exterior boundary lines of the Property and
the identification of owners of abutting parcels;
The total acreage of the Property to the nearest tenth of an acre;
The location of any existing improvements, the dimensions thereof at the ground
surface level and their relationship to the facing exterior property lines, streets and set-back
lines of the Property;
The location, lines and widths of adjoining publicly dedicated and accepted streets
showing the number and location of existing curb cuts, driveways, and fences;
The location and dimensions of encroachments, if any, upon the Property;
The location of all set-back lines, restrictions of record, other restrictions
established by zoning or building code ordinance, utilities, easements, rights-of-way and other
matters affecting title to the Property which are to be shown in Schedule B-2 of the Title Policy
identifying each by reference to its recording data, where applicable;
Evidence that adequate means of ingress and egress to and from the Property exist and
that the Property does not serve any adjoining property for ingress, egress or any other purpose;
If the Property is described as being on a recorded map or plat, a legend relating the
survey to such map or plat;
The street address of the Property;
Parking areas at the Property and, if striped, the striping and type (
e.g.
,
handicapped, motorcycle, regular, etc.) and number of parking spaces at the Property;
A statement as to whether the Property is located in a special flood or mudslide
hazard area as determined by a review of a stated and identified Flood Hazard Boundary Map
published by the Federal Insurance Administration of the U.S. Department of Housing and Urban
Development;
B-1
A vicinity map showing the property in reference to nearby highways or major street
intersections.
The exterior dimensions of all buildings at ground level and the square footage of the
exterior footprint of all buildings, or gross floor area of all buildings, at ground level.
The location of utilities serving or existing on the property as evidenced by on-site
observation or as determined by records provided by client, utility companies and other appropriate
sources (with reference as to the source of information) (for example)
|
|
|
railroad tracks and sidings;
|
|
|
|
manholes, catch basins, valve vaults or other surface indications
of subterranean uses;
|
|
|
|
wire and cables (including their function) crossing the surveyed
premises, all poles on or within ten feet of the surveyed premises,
and the dimensions of all crosswires or overhangs affecting the
surveyed premises; and
|
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utility company installations on the surveyed premises.
|
A certificate in substantially the following form:
The undersigned being a registered surveyor of the State of [State] hereby certifies to GERMAN
AMERICAN CAPITAL CORPORATION, A MARYLAND CORPORATION, ON BEHALF OF THE HOLDERS OF THE NOTES [NAME
OF BORROWING ENTITY] and [INSERT NAME OF TITLE COMPANY], and each of their respective successors
and assigns, as of the date below, as follows:
I,
, a Registered Land Surveyor in the [State/Commonwealth] of
, do hereby certify to the aforesaid parties, their successors and assigns,
as of the date set forth above that I have made a careful survey of a tract of land described as
follows:
See Surveyors Legal Description.
I further certify that:
i. The survey map and the survey on which it is based were made (a) in accordance
with: Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys jointly
established and adopted by ALTA and ACSM in 1999, including items 1 (except for states that
require record monument platting), 2, 3, 4, 6, 7(a), 7(b)(1), 7(c), 8, 9, 10, 11(a), 13,
14, 15 and 16 of Table A thereof, (b) pursuant to Accuracy Standards (as adopted by ALTA
and ACSM and in effect on the date of this certification), with Positional Uncertainties
resulting from the survey measurements made on the survey not exceeding the
allowable Positional Tolerance, and (c) in compliance with all applicable laws of the
jurisdiction in which the subject property lies.
B-2
ii. The survey is an accurate survey of all of the real property legally described
therein (the Property).
iii. The survey map properly and accurately indicates and locates: (a) all visible
improvements on the Property as of the date of the survey; (b) visible utility structures
for power, telephone, storm drainage, sanitary waste disposal and drinking water; (c)
visible footprint foundations, parking spaces, loading docks and other visible structures
and improvements on the Property; and (d) any changes in street right of way lines
completed and available from the controlling jurisdiction, as well as observable evidence
of recent street or sidewalk construction repairs.
iv. The survey map was prepared under the direct supervision and control of the
undersigned from an actual instrument survey made of the Property.
v. There are no encroachments either across property lines or zoning district lines or
restriction lines in effect as of the date of the survey except as follows [if no
encroachments are specified, there are NONE]:
;
vi. The Property described hereon is the same as the property described in title
insurance commitment #
issued by the
Title
Insurance Company dated
, 2005 (the Title Commitment), and the survey map
properly designates and locates all visible or recorded easements, rights-of-way, party
walls and restricted areas as of the date of the survey and areas affected by other
survey-related matters, if any, listed on the Title Commitment;
vii. The Property has direct physical ingress and egress to [names of streets or roads
] upon which the Property abuts, the same being paved and public
streets, or paved and private ways leading to public streets.
viii. The Property is [or in not] located in an area designated as a special flood
hazard area by the United States Department of Housing and Urban Development and lies in an
area having a Zone Designation
by the Secretary of Housing and Urban
Development, on Flood Insurance Rate Map No.
, with a date of identification of
,
_____, which is the current Flood Insurance Rate Map for the community in
which the Property is situated.
ix. The Property does not service any adjoining property for drainage, ingress or
egress.
B-3
x. The Property [is/is not] an acceptable subdivision of land under state law or
local, county or city ordinances.
If the Property constitutes more than one parcel or lot, there are no gaps, gores or strips
between them.
Date:
[seal]
B-4
EXHIBIT C
SINGLE PURPOSE ENTITY PROVISIONS
It is a requirement that the borrower be a bankruptcy remote, special purpose entity. A
bankruptcy remote, special purpose entity is an entity which is unlikely to become insolvent as a
result of its own activities and which is adequately insulated from the consequences of any other
partys insolvency. Set forth below is language to be included in the organizational documents of
corporations, limited partnerships and limited liability companies to evidence such entities
existence as bankruptcy remote, special purpose entities.
I.
CORPORATION
.
If the Single Purpose Entity is a corporation, its certificate of incorporation will have to
have the following provisions to be considered a special purpose entity:
A.
Purpose
.
The corporations purpose should be limited to owning and operating the mortgaged
property (or interests in the Borrower).
Notwithstanding any provision hereof or of any other document governing the
formation, management or operation of the Corporation to the contrary, the following shall
govern: The nature of the business and of the purposes to be conducted and promoted by the
Corporation, is to engage solely in the following activities:
1. To acquire that certain parcel of real property, together with all improvements located
thereon, in the City of
, State of
[
interests in [insert Borrower
or other applicable entitys name]] (the
Property
).
2. To own, hold, sell, assign, transfer, operate, lease, mortgage, pledge and otherwise deal
with the Property.
3. To exercise all powers enumerated in the [General Corporation Law] of
necessary or convenient to the conduct, promotion or attainment of the business or purposes
otherwise set forth herein.
B.
Certain Prohibited Activities
.
The corporation shall be prohibited, except in certain circumstances, from engaging in
certain activities, including various types of insolvency proceedings, dissolution,
liquidation, consolidation, merger, sale of all or substantially all of the corporations
assets, transfer of ownership assets, incurrence of additional debt and amendment of the
corporations articles of incorporation.
C-1
Notwithstanding any provision hereof or of any other document governing the
formation, management or operation of the Corporation to the contrary, the following shall
govern: The Corporation shall only incur indebtedness in an amount necessary to acquire,
operate and maintain the [Property] [use other term for the real estate if necessary]. For
so long as any mortgage lien exists on the [Property] [use other term for the real estate
if necessary], the Corporation shall not incur, assume, or guaranty any other indebtedness.
The Corporation shall not consolidate or merge with or into any other entity or convey or
transfer its properties and assets substantially as an entirety to any entity unless (i)
the entity (if other than the Corporation) formed or surviving such consolidation or merger
or that acquired by conveyance or transfer the properties and assets of the Corporation
substantially as an entirety (a) shall be organized and existing under the laws of the
United States of America or any State or the District of Columbia, (b) shall include in its
organizational documents the same limitations set forth in this Article
_____
and in
Article [insert section setting forth Separateness Covenants], and (c) shall expressly
assume the due and punctual performance of the Corporations obligations; and (ii)
immediately after giving effect to such transaction, no default or event of default under
any agreement to which it is a party shall have been committed by this corporation and be
continuing. For so long as a mortgage lien exists on the [Property] [use other term for
the real estate if necessary], the Corporation will not voluntarily commence a case with
respect to itself, as debtor, under the Federal Bankruptcy Code or any similar federal or
state statute without the unanimous consent of the Board of Directors. For so long as a
mortgage lien exists on the [Property] [use other term for the real estate if necessary],
(ii) no amendment to this certificate of incorporation or to the Corporations By-Laws may
be made without first obtaining approval of the mortgagee holding a first mortgage lien on
the [Property] [use other term for the real estate if necessary] and (ii) the Corporation
shall not dissolve, terminate or liquidate.
The Board of Directors may not take any action requiring the unanimous affirmative vote of
100% of the members of the Board of Directors unless all directors including the
Independent Directors shall have participated in such vote.
C.
Indemnification
.
Indemnification of a corporations directors and officers should be fully subordinated
to obligations respecting the Property.
Notwithstanding any provision hereof or of any other document governing the
formation, management or operation of the Corporation to the contrary, the following shall
govern: Any indemnification shall be fully subordinated to any obligations respecting the
[Property] [use other term for the real estate if necessary] and shall not constitute a
claim against the Corporation in the event that cash flow is insufficient to pay such
obligations.
C-2
D.
Separateness Covenants
.
In order to demonstrate that it is a bankruptcy remote entity not at risk of having
its assets substantively consolidated with those of another entity, the corporation must
observe certain covenants designed to make evident the special purpose entitys
separateness from its affiliates.
Notwithstanding any provision hereof or of any other document governing the
formation, management or operation of the Corporation to the contrary, the following shall
govern: For so long as any mortgage lien exists on the [Property] [use other term for the
real estate if necessary], in order to preserve and ensure its separate and distinct
corporate identity, in addition to the other provisions set forth in this certificate of
incorporation, the Corporation shall conduct its affairs in accordance with the following
provisions:
1. It shall establish and maintain an office through which its business shall be conducted
separate and apart from those of its parent and any affiliate and shall allocate fairly and
reasonably any overhead for shared office space.
2. It shall maintain separate corporate records and books of account from those of its parent
and any affiliate.
3. Its Board of Directors shall hold appropriate meetings (or act by unanimous consent) to
authorize all appropriate corporate actions, and in authorizing such actions, shall observe all
corporate formalities. The Board of Directors shall include at least two (2) individuals who are
Independent Directors. As used herein, an
Independent Director
shall mean an individual
who shall not have been at the time of such individuals appointment, and may not have been at any
time (i) a partner, member, shareholder of, or an officer or employee of, the Corporation or any of
its respective partners, members, shareholders, subsidiaries or affiliates, (ii) a customer of, or
supplier to, the Corporation or managing member of the Corporation or any of their respective
partners, members, shareholders, subsidiaries or affiliates, (iii) a person controlling any such
partner, member, shareholder, supplier or customer, or (iv) a member of the immediate family of any
such shareholder, officer, employee, supplier or customer of any other director of the Corporation
or of the managing member of the Corporation. As used herein, the term
control
means the
possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of a person or entity, whether through ownership of voting securities, by contract or
otherwise.
4. It shall not commingle assets with those of its parent and any affiliate.
5. It shall conduct its own business in its own name.
6. It shall maintain financial statements separate from its parent and any affiliate.
7. It shall pay any liabilities out of its own funds, including salaries of any employees, not
funds of its parent or any affiliate.
C-3
8. It shall maintain an arms length relationship with its parent and any affiliate.
9. It shall maintain adequate capital in light of its contemplated business operations.
10. It shall not guarantee or become obligated for the debts of any other entity, including
its parent or any affiliate or hold out its credit as being available to satisfy the obligations of
others.
11. It shall not acquire obligations or securities of its partners, members or shareholders.
12. It shall use stationery, invoices and checks separate from its parent and any affiliate.
13. It shall not pledge its assets for the benefit of any other entity, including its parent
and any affiliate or make any loans or advances to any other person.
14. It shall hold itself out as an entity separate from its parent and any affiliate.
15. It shall correct any known misunderstanding regarding its separate identity.
For purpose of this Article
_____, the following terms shall have the following
meanings:
affiliate
means any person controlling or controlled by or under common
control with the parent, including, without limitation (i) any person who has a familial
relationship, by blood, marriage or otherwise with any director, officer or employee of the
Corporation, its parent, or any affiliate thereof and (ii) any person which receives
compensation for administrative, legal or accounting services from this corporation, its
parent or any affiliate. For purposes of this definition, control when used with respect
to any specified person, means the power to direct the management and policies of such
person, directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms
controlling
and
controlled
have
meanings correlative to the foregoing.
parent
means, with respect to a corporation, any other corporation owning or
controlling, directly or indirectly, fifty percent (50%) or more of the voting stock of the
Corporation.
person
means any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization, or government or any agency or political subdivision
thereof.
C-4
II.
LIMITED PARTNERSHIP
.
If the Single Purpose Entity is a limited partnership, to be a special purpose entity, all
of its general partners shall be special purpose entities. If such limited partnership has
more than one general partner, then such limited partnership shall continue (and not
dissolve) for so long as a solvent general partner exists. Consequently, both the limited
partnerships partnership agreement and the certificate of incorporation of its general
partner(s) will have to meet certain requirements to be considered special purpose
entities. Such requirements are as follows:
A.
Limited Partnership Agreement
.
a.
Purpose
.
The limited partnerships purpose should be limited to owning and operating the
mortgaged property.
Notwithstanding any provision hereof or of any other document governing the
formation, management or operation of the Partnership to the contrary, the following shall
govern: The nature of the business and of the purposes to be conducted and promoted by the
Partnership, is to engage solely in the following activities:
1. To acquire that certain parcel of real property, together with all improvements located
thereon, in the City of
, State of
[
interests in [insert
Borrower or other applicable entitys name]] (the
Property
).
2. To own, hold, sell, assign, transfer, operate, lease, mortgage, pledge and otherwise deal
with the Property.
3. To exercise all powers enumerated in the Uniform Limited Partnership Act of
necessary or convenient to the conduct, promotion or attainment of the business or purposes
otherwise set forth herein.
b.
Certain Prohibited Activities
.
The partnership shall be prohibited, except in certain circumstances, from engaging in
certain activities, including various types of insolvency proceedings, dissolution,
liquidation, consolidation, merger, sale of all or substantially all of the partnerships
assets, transfer of partnership interests, incurrence of additional debt and amendment of
the partnership agreement.
C-5
Notwithstanding any provision hereof or of any other document governing the
formation, management or operation of the Partnership to the contrary, the following shall
govern: The Partnership shall only incur indebtedness in an amount necessary to acquire,
operate and maintain the [Property] [use other term for the real estate if necessary]. For
so long as any mortgage lien exists on the [Property] [use other term for the real estate
if necessary] , the Partnership shall not incur, assume, or guaranty any other
indebtedness. The Partnership shall not consolidate or merge with or into any other entity
or convey or transfer its properties and assets substantially as an entirety to any entity
unless (i) the entity (if other than the Partnership) formed or surviving such
consolidation or merger or that acquired by conveyance or transfer the properties and
assets of the Partnership substantially as an entirety (a) shall be organized and existing
under the laws of the United States of America or any State or the District of Columbia,
(b) shall include in its organizational documents the same limitations set forth in this
Article
and in Article [insert section setting forth Separateness Covenants], and
(c) shall expressly assume the due and punctual performance of the Partnerships
obligations; and (ii) immediately after giving effect to such transaction, no default or
event of default under any agreement to which it is a party shall have been committed by
this partnership and be continuing. For so long as a mortgage lien exists on the
[Property] [use other term for the real estate if necessary], the Partnership will not
voluntarily commence a case with respect to itself, as debtor, under the Federal Bankruptcy
Code or any similar federal or state statute without the unanimous consent of all of the
partners of the Partnership. For so long as a mortgage lien exists on the [Property] [use
other term for the real estate if necessary], (i) no amendment to this partnership
agreement may be made and (ii) the partnership shall not dissolve, liquidate or terminate
without first obtaining approval of the mortgagee holding a first mortgage lien on the
[Property] [use other term for the real estate if necessary] .
c.
Indemnification
.
Indemnification of a partnerships partners should be fully subordinated to obligations
respecting the Property.
Notwithstanding any provision hereof or of any other document governing the formation,
management or operation of the Partnership to the contrary, the following shall govern: Any
indemnification shall be fully subordinated to any obligations respecting the [Property]
[use other term for the real estate if necessary] and shall not constitute a claim against
the Partnership in the event that cash flow is insufficient to pay such obligations.
d.
Separateness Covenants
.
In order to demonstrate that it is a bankruptcy remote entity not at risk of having
its assets substantively consolidated with those of another entity, the partnership must
observe certain covenants designed to make evident the special purpose entitys
separateness from its affiliates.
C-6
Notwithstanding any provision hereof or of any other document governing the
formation, management or operation of the Partnership to the contrary, the following shall
govern: For so long as any mortgage lien exists on the [Property] [use other term for the
real estate if necessary] , in order to preserve and ensure its separate and distinct
identity, in addition to the other provisions set
forth in this partnership agreement, the Partnership shall conduct its affairs in
accordance with the following provisions:
1. It shall establish and maintain an office through which its business shall be conducted
separate and apart from that of any of its affiliate and shall allocate fairly and reasonably any
overhead for shared office space.
2. It shall maintain separate partnership records and books of account from those of any
affiliate.
3. It shall not commingle assets with those of any affiliate.
4. It shall conduct its own business in its own name.
5. It shall observe all partnership formalities.
6. It shall maintain financial statements separate from any affiliate.
7. It shall pay any liabilities out of its own funds, including salaries of any employees, not
funds of any affiliate.
8. It shall maintain an arms length relationship with any affiliate.
9. It shall maintain adequate capital in light of its contemplated business operations.
10. It shall not guarantee or become obligated for the debts of any other entity, including
any affiliate, or hold out its credit as being available to satisfy the obligations of others.
11. It shall not acquire obligations or securities of its partners, members or shareholders.
12. It shall use stationery, invoices and checks separate from any affiliate.
13. It shall not pledge its assets for the benefit of any other entity, including any
affiliate or make any loans or advances to any other person.
14. It shall hold itself out as an entity separate from any affiliate.
15. It shall correct any known misunderstanding regarding its separate identity.
16. At all times have all of its general partners shall be special purpose corporate entities
with at least two (2) Independent Directors.
C-7
For purpose of this Article
, the following terms shall have the following
meanings:
affiliate
means any person controlling or controlled by or under common
control with the Partnership including, without limitation (i) any person who has a
familial relationship, by blood, marriage or otherwise with any partner or employee of the
Partnership, or any affiliate thereof and (ii) any person which receives compensation for
administrative, legal or accounting services from this partnership, or any affiliate. For
purposes of this definition,
control
when used with respect to any specified
person, means the power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or otherwise;
and the terms
controlling
and
controlled
have meanings correlative to
the foregoing.
Independent Director
shall mean an individual who shall not have been at the
time of such individuals appointment, and may not have been at any time (i) a partner,
member, shareholder of, or an officer or employee of, the Partnership or any of its
respective partners, members, shareholders, subsidiaries or affiliates, (ii) a customer of,
or supplier to, the Partnership or managing member of the Partnership or any of their
respective partners, members, shareholders, subsidiaries or affiliates, (iii) a person
controlling any such partner, member, shareholder, supplier or customer, or (iv) a member
of the immediate family of any such shareholder, officer, employee, supplier or customer of
any other director of the Partnership or of the managing member of the Partnership. As
used herein, the term
control
means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a person or
entity, whether through ownership of voting securities, by contract or otherwise.
person
means any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization, or government or any agency or political subdivision
thereof.
e.
Dissolution
.
The limited partnership agreement should provide that the partnership will continue (and
not dissolve) so long as a solvent general partner exists.
Notwithstanding any provision or of any other document governing the formation, management
or operation of the Partnership hereof to the contrary, the following shall govern: The
Partnership shall not terminate solely as a consequence of the [Bankruptcy] of one or more
of the general partners of the Partnership so long as there remains a solvent general
partner of the Partnership.
In addition, dissolution of the partnership must not occur so long as the partnership
remains mortgagor of the mortgaged properly.
Notwithstanding any provision hereof or of any other document governing the formation,
management or operation of the Partnership to the contrary, the
following shall govern: Subject to applicable law, dissolution of the Partnership shall not
occur so long as the Partnership remains mortgagor of the [Property] [use other term for
the real estate if necessary] .
C-8
B.
Corporate General Partner
a.
Purpose
.
The corporations purpose should be limited to acting as general partner of the
limited partnership whose purpose, as set forth above, generally should be limited to
owning and operating the mortgaged property.
Notwithstanding any provision hereof or of any other document governing the
formation, management or operation of the Corporation to the contrary, the following shall
govern: The nature of the business and of the purposes to be conducted and promoted by the
Corporation is to engage solely in the activity of acting as a general partner of a limited
partnership (the
Partnership
) whose purpose is to acquire that certain parcel of
real property, together with all improvements located thereon, in the City of
, State of
(the
Property
) and own, hold, sell,
assign, transfer, operate, lease, mortgage, pledge and otherwise deal with the Property.
The Corporation shall exercise all powers enumerated in the General Corporation Law of
necessary or convenient to the conduct, promotion or attainment of the business
or purposes otherwise set forth herein.
b.
Certain Prohibited Activities
.
The corporation shall be prohibited, except in certain circumstances, from engaging in
or causing the partnership to engage in certain activities, including various types of
insolvency proceedings, dissolution, liquidation, consolidation, merger, sale of all or
substantially all of the corporations or partnerships assets, transfer of ownership
assets, transfer of partnership interests, incurrence of additional debt, amendment of the
corporations articles of incorporation and amendment of the partnership agreement.
Notwithstanding any provision hereof or of any other document governing the
formation, management or operation of the Corporation to the contrary, the following shall
govern: The Corporation shall only incur or cause the Partnership to incur indebtedness in
an amount necessary to acquire, operate and maintain the Property. For so long as any
mortgage lien exists on the Property, the Corporation shall not and shall not cause the
Partnership to incur, assume, or guaranty any other indebtedness. For so long as the
Partnership remains mortgagor of the Property, the Corporation shall not cause the
Partnership to dissolve. The Corporation shall not and shall not cause the Partnership to
consolidate or merge with or into any other entity or convey or transfer its properties and
assets substantially as an entirety to any entity unless (i) the entity
C-9
(if other than the
Corporation or Partnership) formed or surviving such consolidation or merger or that acquired by conveyance or transfer the properties and
assets of the Corporation or Partnership substantially as an entirety (a) shall be
organized and existing under the laws of the United States of America or any State or the
District of Columbia, (b) shall include in its organizational documents the same
limitations set forth in this Article
and in Article [insert section setting forth
Separateness Covenants], and (c) shall expressly assume the due and punctual performance of
the Corporations obligations; and (ii) immediately after giving effect to such
transaction, no default or event of default under any agreement to which it is a party
shall have been committed by this corporation or the Partnership and be continuing. For so
long as a mortgage lien exists on the Property, the Corporation shall not voluntarily
commence a case with respect to itself or cause the Partnership to voluntarily commence a
case with respect to itself, as debtor, under the Federal Bankruptcy Code or any similar
federal or state statute without the unanimous consent of the Board of Directors. For so
long as a mortgage lien exists on the Property, (i) no amendment to this certificate of
incorporation or to the Corporations By-Laws nor to the Partnership agreement of the
Partnership may be made and (ii) neither the Corporation nor the Partnership shall be
dissolved, liquidated or terminated without first obtaining approval of the mortgagee
holding a first mortgage lien on the Property.
The Board of Directors may not take any action requiring the unanimous affirmative vote of
100% of the members of the Board of Directors unless all directors including the
Independent Directors shall have participated in such vote.
c.
Indemnification
.
Indemnification of a corporations directors and officers should be fully subordinated to
obligations respecting the Property.
Notwithstanding any provision hereof or of any other document governing the formation,
management or operation of the Corporation to the contrary, the following shall govern:
Any indemnification shall be fully subordinated to any obligations respecting the
Partnership or the Property and shall not constitute a claim against the Corporation in the
event that cash flow is insufficient to pay such obligations.
d.
Separateness Covenants
.
In order to demonstrate that it is a bankruptcy remote entity not at risk of having its
assets substantively consolidated with those of another entity, the Corporation must
observe certain covenants designed to make evident the special purpose entitys
separateness from its affiliates.
C-10
Notwithstanding any provision hereof or of any other document governing the formation,
management or operation of the Corporation to the contrary, the following shall govern:
For so long as any mortgage lien exists on the Property,
in order to preserve and ensure its separate and distinct corporate identity, in addition
to the other provisions set forth in this certificate of incorporation, the Corporation
shall conduct its affairs in accordance with the following provisions:
1. It shall establish and maintain an office through which its business shall be conducted
separate and apart from those of its parent and any affiliate and shall allocate fairly and
reasonably any overhead for shared office space.
2. It shall maintain separate corporate records and books of account from those of its parent
and any affiliate.
3. Its Board of Directors shall hold appropriate meetings (or act by unanimous consent) to
authorize all appropriate corporate actions, and in authorizing such actions, shall observe all
corporate formalities. The Board of Directors shall include at least two (2) individuals who are
Independent Directors. As used herein, an
Independent Director
shall mean an individual
who shall not have been at the time of such individuals appointment, and may not have been at any
time (i) a partner, member, shareholder of, or an officer or employee of, the Corporation or any of
its respective partners, members, shareholders, subsidiaries or affiliates, (ii) a customer of, or
supplier to, the Corporation or managing member of the Corporation or any of their respective
partners, members, shareholders, subsidiaries or affiliates, (iii) a person controlling any such
partner, member, shareholder, supplier or customer, or (iv) a member of the immediate family of any
such shareholder, officer, employee, supplier or customer of any other director of the Corporation
or of the managing member of the Corporation. As used herein, the term
control
means the
possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of a person or entity, whether through ownership of voting securities, by contract or
otherwise.
4. It shall not commingle assets with those of its parent and any affiliate.
5. It shall conduct its own business in its own name.
6. It shall maintain financial statements separate from its parent and any affiliate.
7. It shall pay any liabilities out of its own funds, including salaries of any employees, not
funds of its parent or any affiliate.
8. It shall maintain an arms length relationship with its parent and any affiliate.
9. It shall maintain adequate capital in light of its contemplated business operations.
10. It shall not guarantee or, except to the extent of its liability for the debt secured by
such mortgage lien, become obligated for the debts of any other entity, including its parent or any
affiliate or hold out its credit as being available to satisfy the obligations of others.
C-11
11. It shall not acquire obligations or securities of its partners, members or shareholders.
12. It shall use stationery, invoices and checks separate from its parent and any affiliate.
13. It shall not pledge its assets for the benefit of any other entity, including its parent
and any affiliate or make any loans or advances to any other person.
14. It shall hold itself out as an entity separate from its parent and any affiliate.
15. It shall correct any known misunderstanding regarding its separate identity.
For purpose of this Article
, the following terms shall have the
following meanings:
affiliate
means any person controlling or controlled by or under common
control with the parent, including, without limitation (i) any person who has a familial
relationship, by blood, marriage or otherwise with any director, officer or employee of the
Corporation, its parent, or any affiliate thereof and (ii) any person which receives
compensation for administrative, legal or accounting services from this corporation, its
parent or any affiliate. For purposes of this definition,
control
when used with
respect to any specified person, means the power to direct the management and policies of
such person, directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms
controlling
and
controlled
have
meanings correlative to the foregoing.
parent
means, with respect to a corporation, any other corporation owning or
controlling, directly or indirectly, fifty percent (50%) or more of the voting stock of the
Corporation.
person
means any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization, or government or any agency or political subdivision
thereof.
III.
LIMITED LIABILITY COMPANY
If the Single Purpose Entity is a limited liability company, to be a special purpose
entity, each managing member shall be a special purpose corporation. If such limited
liability company has more than one managing member then such limited liability company
shall continue (and not dissolve) for so long as a solvent managing member exists.
Consequently, both the Limited Liability Companys articles of organization and the
certificate of incorporation of its outside member will have to meet certain requirements
to be considered special purpose entities. Such requirements are as follows:
A.
Articles of Organization
a.
Purpose
.
The limited liability companys purpose should be limited to owning and operating the
mortgaged property.
C-12
Notwithstanding any provision hereof or of any other document governing the formation,
management or operation of the Limited Liability Company to the contrary, the following
shall govern: The nature of the business and of the purposes to be conducted and promoted
by the Limited Liability Company, is to engage solely in the following activities:
1. To acquire that certain parcel of real property, together with all improvements located
thereon, in the City of
, State of
[_____
interests in [insert Borrower
or other applicable entitys name]] (the
Property
).
2. To own, hold, sell, assign, transfer, operate, lease, mortgage, pledge and otherwise deal
with the Property.
3. To exercise all powers enumerated in the Limited Liability Company Act of
necessary or convenient to the conduct, promotion or attainment of the business or purposes
otherwise set forth herein.
b.
Certain Prohibited Activities
.
The limited liability company shall be prohibited, except in certain circumstances from
engaging in certain activities, including various types of insolvency proceedings,
dissolution, liquidation, consolidation, merger, sale of all or substantially all of the
limited liability companys assets, transfer of limited liability company interests,
incurrence of additional debt and amendment of the articles of organization.
Notwithstanding any provision hereof or of any other document governing the formation,
management or operation of the Limited Liability Company to the contrary, the following
shall govern: The Limited Liability Company shall only incur indebtedness in an amount
necessary to acquire, operate and maintain the [Property] [use other term for the real
estate if necessary]. For so long as any mortgage lien exists on the [Property] [use other
term for the real estate if necessary], the Limited Liability Company shall not incur,
assume, or guaranty any other indebtedness. The Limited Liability Company shall not
consolidate or merge with or into any other entity or convey or transfer its properties and
assets substantially as an entirety to any entity unless (i) the entity (if other than the
Limited Liability Company) formed or surviving such consolidation or merger or that
acquired by conveyance or transfer the properties and assets of the Limited Liability
Company substantially as an entirety (a) shall be organized and existing under the laws of
the United States of America or any State or the District of Columbia, (b) shall include in
its organizational documents the same limitations set forth in this Article
_____
and in
Article [insert section setting forth Separateness Covenants], and (c) shall expressly
assume the due
C-13
and punctual performance of the Limited Liability Companys obligations; and (ii) immediately after
giving effect to such transaction, no default or event of default under any agreement to
which it is a party shall have been committed by this limited liability company and be
continuing. For so long as a mortgage lien exists on the [Property] [use other term for
the real estate if necessary], the Limited Liability Company will not voluntarily commence
a case with respect to itself, as debtor, under the Federal Bankruptcy Code or any similar
federal or state statute without the unanimous consent of all of the members of the Limited
Liability Company. For so long as a mortgage lien exists on the [Property] [use other term
for the real estate if necessary], (i) no amendment to these articles of organization may
be made and (ii) the Limited Liability Company shall not be dissolved, liquidated or
terminated without first obtaining approval of the mortgagee holding a first mortgage lien
on the [Property] [use other term for the real estate if necessary].
c.
Indemnification
.
Indemnification of a limited liability companys partners should be fully subordinated to
obligations respecting the Property.
Notwithstanding any provision hereof or of any other document governing the formation,
management or operation of the Limited Liability Company to the contrary, the following
shall govern: Any indemnification shall be fully subordinated to any obligations
respecting the [Property] [use other term for the real estate if necessary] and shall not
constitute a claim against the Limited Liability Company in the event that cash flow is
insufficient to pay such obligations.
d.
Separateness Covenants
.
In order to demonstrate that it is a bankruptcy remote entity not at risk of having its
assets substantively consolidated with those of another entity, the limited liability
company must observe certain covenants designed to make evident the special purpose
entitys separateness from its affiliates.
Notwithstanding any provision hereof or of any other document governing the formation,
management or operation of the Limited Liability Company to the contrary, the following
shall govern: For so long as any mortgage lien exists on the [Property] [use other term
for the real estate if necessary], in order to preserve and ensure its separate and
distinct identity, in addition to the other provisions set forth in these articles of
organization, the Limited Liability Company shall conduct its affairs in accordance with
the following provisions:
1. It shall establish and maintain an office through which its business shall be conducted
separate and apart from that of any of its affiliates and shall allocate fairly and reasonably any
overhead for shared office space.
2. It shall maintain separate records and books of account from those of any affiliate.
C-14
3. It shall not commingle assets with those of any affiliate.
4. It shall conduct its own business in its own name.
5. It shall maintain financial statements separate from any affiliate.
6. It shall pay any liabilities out of its own funds, including salaries of any employees, not
funds of any affiliate.
7. It shall maintain an arms length relationship with any affiliate.
8. It shall maintain adequate capital in light of its contemplated business operations.
9. It shall not guarantee or become obligated for the debts of any other entity, including any
affiliate, or hold out its credit as being available to satisfy the obligations of others.
10. It shall not acquire obligations or securities of its partners, members or shareholders.
11. It shall use stationery, invoices and checks separate from any affiliate.
12. It shall not pledge its assets for the benefit of any other entity, including any
affiliate or make any loans or advances to any other person.
13. It shall hold itself out as an entity separate from any affiliate.
14. It shall correct any known misunderstanding regarding its separate identity.
15. At all times all managing members shall be a special purpose corporate member with at
least two (2) Independent Directors.
For purpose of this Article
_____, the following terms shall have the following meanings:
affiliate
means any person controlling or controlled by or under common
control with the Limited Liability Company including, without limitation (i) any person who
has a familial relationship, by blood, marriage or otherwise with any partner or employee
of the Limited Liability Company, or any affiliate thereof and (ii) any person which
receives compensation for administrative, legal or accounting services from this limited
liability company, or any affiliate. For purposes of this definition,
control
when used with respect to any specified person, means the power to direct the management
and policies of such person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms
controlling
and
controlled
have meanings correlative to the foregoing.
C-15
Independent Director
shall mean an individual who shall not have been at the
time of such individuals appointment, and may not have been at any time (i) a partner,
member, shareholder of, or an officer or employee of, the Limited Liability Company or any
of its respective partners, members, shareholders, subsidiaries or affiliates, (ii) a
customer of, or supplier to, the Limited Liability Company or managing member of the
Limited Liability Company or any of their respective partners, members, shareholders,
subsidiaries or affiliates, (iii) a person controlling any such partner, member,
shareholder, supplier or customer, or (iv) a member of the immediate family of any such
shareholder, officer, employee, supplier or customer of any other director of the Limited
Liability Company or of the managing member of the Limited Liability Company. As used
herein, the term
control
means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a person or
entity, whether through ownership of voting securities, by contract or otherwise.
person
means any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization, or government or any agency or political subdivision
thereof.
e.
Dissolution
.
To the extent permitted by tax law the articles of organization should provide that the
vote of a majority-in-interest of the remaining members is sufficient to continue the life
of the limited liability company. If such vote is not obtained, for so long as a mortgage
lien exists on the [Property] [use other term for the real estate if necessary] the limited
liability company may not be permitted to liquidate the [Property] [use other term for the
real estate if necessary] without first obtaining approval of the mortgagee holding a first
mortgage lien on the [Property] [use other term for the real estate if necessary]. Such
holders may continue to exercise all of their rights under the existing security agreements
or mortgages until the debt underlying the mortgage lien has been paid in full or otherwise
completely discharged.
Notwithstanding any provision hereof or of any other document governing the formation,
management or operation of the Limited Liability Company to the contrary, the following
shall govern: To the extent permissible under applicable federal and state tax law, the
vote of a majority-in-interest of the remaining members is sufficient to continue the life
of the Limited Liability Company. If such vote is not obtained, for so long as a mortgage
lien exists on the [Property] [use other term for the real estate if necessary] the Limited
Liability Company shall not liquidate the [Property] [use other term for the real estate if
necessary] without first obtaining approval of the mortgagee holding a first mortgage lien
on the [Property] [use other term for the real estate if necessary]. Such holders may
continue to exercise all of their rights under the existing security agreements or
mortgages until the debt underlying the mortgage liens has been paid in full or otherwise
completely discharged.
C-16
f.
Voting
.
When acting on matters subject to the vote of the members, notwithstanding that the limited
liability company is not then insolvent, the members and the outside member must take into
account the interest of the Limited Liability Companys creditors, as well as those of the
members.
Notwithstanding any provision hereof or of any other document governing the formation,
management or operation of the Limited Liability Company to the contrary, the following
shall govern: When acting on matters subject to the vote of the members, notwithstanding
that the Limited Liability Company is not then insolvent, all of the members shall take
into account the interest of the Limited Liability Companys creditors, as well as those of
the members.
B.
Outside Corporate Member
a.
Purpose
.
The outside corporate members purpose should be limited to acting as corporate member of
the limited liability company whose purpose, as set forth above, generally should be
limited to owning and operating the mortgaged property.
Notwithstanding any provision hereof or of any other document governing the formation,
management or operation of the Corporation to the contrary, the following shall govern:
The nature of the business and of the purposes to be conducted and promoted by the
Corporation is to engage solely in the activity of acting as the outside member of a
limited liability company (the
Limited Liability Company
) whose purpose is to
acquire that certain parcel of real property, together with all improvements located
thereon, in the City of
, State of
(the
Property
) and
own, hold, sell, assign, transfer, operate, lease, mortgage, pledge and otherwise deal with
the Property. The Corporation shall exercise all powers enumerated in the General
Corporation Law of
necessary or convenient to the conduct, promotion or
attainment of the business or purposes otherwise set forth herein.
b.
Certain Prohibited Activities
.
The corporation shall be prohibited, except in certain circumstances, from engaging in or
causing the limited liability company to engage in certain activities, including various
types of insolvency proceedings, dissolution, liquidation, consolidation, merger, sale of
all or substantially all of the corporations or the limited liability companys assets,
transfer of ownership assets, transfer of limited liability company interests, incurrence
of additional debt, amendment of the corporations articles of incorporation and amendment
of the articles of organization.
C-17
Notwithstanding any provision hereof or of any other document governing the
formation, management or operation of the Corporation to the
contrary, the following shall govern: The Corporation shall only incur or cause the
Limited Liability Company to incur indebtedness in an amount necessary to acquire, operate
and maintain the Property. For so long as any mortgage lien exists on the Property, the
Corporation shall not and shall not cause the Limited Liability Company to incur, assume,
or guaranty any other indebtedness. The Corporation shall not and shall not cause the
Limited Liability Company to consolidate or merge with or into any other entity or convey
or transfer its properties and assets substantially as an entirety to any entity unless (i)
the entity (if other than the Corporation or Limited Liability Company) formed or surviving
such consolidation or merger or that acquired by conveyance or transfer of the properties
and assets of the Corporation or Limited Liability Company substantially as an entirety (a)
shall be organized and existing under the laws of the United States of America or any State
or the District of Columbia, (b) shall include in its organizational documents the same
limitations set forth in this Article
and in Article [insert section setting
forth Separateness Covenants], and (c) shall expressly assume the due and punctual
performance of the Corporations obligations; and (ii) immediately after giving effect to
such transaction, no default or event of default under any agreement to which it is a party
shall have been committed by this corporation or the Limited Liability Company and be
continuing. For so long as a mortgage lien exists on the Property, the Corporation shall
not voluntarily commence a case with respect to itself or cause the Limited Liability
Company to voluntarily commence a case with respect to itself, as debtor, under the Federal
Bankruptcy Code or any similar federal or state statute without the unanimous consent of
the Board of Directors. For so long as a mortgage lien exists on the Property, without
first obtaining approval of the mortgagee holding a first mortgage lien on the Property (i)
no material amendment to this certificate of incorporation or to the Corporations By-Laws
nor to the articles of organization of the Limited Liability Company may be made and (ii)
neither the Corporation nor the Limited Liability Company shall dissolve, liquidate or
terminate without first obtaining approval of the mortgagee holding a first mortgage lien
on the Property.
The Board of Directors may not take any action requiring the unanimous affirmative vote of
100% of the members of the Board of Directors unless all directors including the
Independent Directors shall have participated in such vote.
c.
Indemnification
.
Indemnification of a corporations directors and officers should be fully subordinated to
obligations respecting the Property.
Notwithstanding any provision hereof or of any other document governing the formation,
management or operation of the Corporation to the contrary, the following shall govern:
Any indemnification shall be fully subordinated to any obligations respecting the Limited
Liability Company or the Property and shall
not constitute a claim against the Corporation in the event that cash flow is insufficient
to pay such obligations.
C-18
d.
Separateness Covenants
.
In order to demonstrate that it is a bankruptcy remote entity not at risk of having its
assets substantively consolidated with those of another entity, the corporation must
observe certain covenants designed to make evident the special purpose entitys
separateness from its affiliates.
Notwithstanding any provision hereof or of any other document governing the formation,
management or operation of the Corporation to the contrary, the following shall govern:
For so long as any mortgage lien exists on the Property, in order to preserve and ensure
its separate and distinct corporate identity, in addition to the other provisions set forth
in this certificate of incorporation, the Corporation shall conduct its affairs in
accordance with the following provisions:
1. It shall establish and maintain an office through which its business shall be conducted
separate and apart from those of its parent and any affiliate and shall allocate fairly and
reasonably any overhead for shared office space.
2. It shall maintain separate corporate records and books of account from those of its parent
and any affiliate.
3. Its Board of Directors shall hold appropriate meetings (or act by unanimous consent) to
authorize all appropriate corporate actions, and in authorizing such actions, shall observe all
corporate formalities. The Board of Directors shall include at least two (2) individuals who are
Independent Directors. As used herein, an Independent Director shall mean an individual who
shall not have been at the time of such individuals appointment, and may not have been at any time
(i) a partner, member, shareholder of, or an officer or employee of, the Corporation or any of its
respective partners, members, shareholders, subsidiaries or affiliates, (ii) a customer of, or
supplier to, the Corporation or managing member of the Corporation or any of their respective
partners, members, shareholders, subsidiaries or affiliates, (iii) a person controlling any such
partner, member, shareholder, supplier or customer, or (iv) a member of the immediate family of any
such shareholder, officer, employee, supplier or customer of any other director of the Corporation
or of the managing member of the Corporation. As used herein, the term control means the
possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of a person or entity, whether through ownership of voting securities, by contract or
otherwise.
4. It shall not commingle assets with those of its parent and any affiliate.
5. It shall conduct its own business in its own name.
6. It shall maintain financial statements separate from its parent and any affiliate.
C-19
7. It shall pay any liabilities out of its own funds, including salaries of any employees, not
funds of its parent or any affiliate.
8. It shall maintain an arms length relationship with its parent and any affiliate.
9. It shall maintain adequate capital in light of its contemplated business operations.
10. It shall not guarantee or become obligated for the debts of any other entity, including
its parent or any affiliate or hold out its credit as being available to satisfy the obligations of
others.
11. It shall not acquire obligations or securities of its partners, members or shareholders.
12. It shall use stationery, invoices and checks separate from its parent and any affiliate.
13. It shall not pledge its assets for the benefit of any other entity, including its parent
and any affiliate or make any loans or advances to any other person.
14. It shall hold itself out as an entity separate from its parent and any affiliate.
15. It shall correct any known misunderstanding regarding its separate identity.
For purpose of this Article
_____, the following terms shall have the following
meanings:
affiliate
means any person controlling or controlled by or under common
control with the parent, including, without limitation (i) any person who has a familial
relationship, by blood, marriage or otherwise with any director, officer or employee of the
Corporation, its parent, or any affiliate thereof and (ii) any person which receives
compensation for administrative, legal or accounting services from this corporation, its
parent or any affiliate. For purposes of this definition,
control
when used with
respect to any specified person, means the power to direct the management and policies of
such person, directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms
controlling
and
controlled
have
meanings correlative to the foregoing.
parent
means, with respect to a corporation, any other corporation owning
or controlling, directly or indirectly, fifty percent (50%) or more of the voting stock of
the Corporation.
person
means any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization, or government or any agency or political subdivision
thereof.
C-20
e.
Voting
.
When voting on matters concerning the limited liability company, notwithstanding that the
limited liability company is not then insolvent, the Corporation must take into account the
interest of the Limited Liability Companys creditors, as well as those of its members.
Notwithstanding any provision hereof or of any other document governing the formation,
management or operation of the Corporation to the contrary, the following shall govern:
When voting on matters concerning the Limited Liability Company, notwithstanding that the
Limited Liability Company is not then insolvent, the Corporation shall take into account
the interest of the Limited Liability Companys creditors, as well as those of its
members.
IV.
OTHER STRUCTURES
The foregoing provisions do not exhaustively contemplate all ownership structures for a
mortgaged property. Situations involving ownership structures not specifically
contemplated by the provisions set forth on this
Exhibit C
shall nevertheless
require Single Purpose Entities substantively to comply with the requirements to these
provisions, modified as appropriate to accommodate the ownership structure in question.
C-21
EXHIBIT D
ENFORCEABILITY OPINION REQUIREMENTS
1.
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The Opinion shall be delivered on the Closing Date and shall satisfy all applicable
requirements of the Rating Agencies in relation thereto.
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2.
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The Opinion shall be given by a professional law firm selected by Borrower and reasonably
acceptable to Lender.
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3.
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The Opinion shall be in form and substance acceptable to Lender and shall be given in
relation to Borrower, Guarantor, Manager and any other relevant party to the Loan (each a
Loan Party
). Depending on the nature of the transaction, the Opinion shall address
the applicable law of the State of New York, the State where the Property is located and each
State where any Loan Party is organized (collectively, the
Relevant States
). To the
extent that the Property is located in a jurisdiction outside of the State of New York and/or
any Loan Party is organized under a jurisdiction outside the States of New York or Delaware,
the appropriate opinions below should be given by local counsel. The Opinion shall be given
on the basis of an examination of an executed original of each completed Loan Document in
addition to such other documents or instruments counsel deems relevant.
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4.
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The Opinion shall contain the following opinions:
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I.
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Opinions with respect to the law of the State of Formation or Organization of the Loan
Parties
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(a)
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Each Loan Party is a [
Describe Legal Form
] duly organized, validly existing
and in good standing under the laws of the State of [
State of Organization
] and is
authorized to do business and in good standing in the State of [
State of
Organization
].
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(b)
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Each Loan Party has the requisite power to own its properties and to carry on
its business as now being conducted and to enter into the transactions covered by the
Loan Documents.
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(c)
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The execution and delivery by each Loan Party of each Loan Document to which
it is a party has been duly authorized by all necessary partnership, company and/or
corporate action, as applicable. To the extent a party thereto, the Loan Documents
have been duly executed and delivered by each Loan Party.
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(d)
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The execution, delivery and performance by each Loan Party of the Loan
Documents to which it is a party does not:
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(i)
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conflict with or result in a breach of any of the terms,
conditions or provisions of, or constitute a default under, the partnership
agreement, partnership certificate, articles of incorporation, by-laws,
trust agreement or trust certificate, as applicable, of such Loan Party;
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D-1
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(ii)
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contravene any law, statute or regulation of the United
States of America or the [
State of Organization
] or any agency or political
subdivision of either thereof;
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(iii)
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violate any order, writ, injunction, or decree of which,
after due inquiry, counsel has actual knowledge, issued by any court or
governmental authority of the United States of America or the [
State of
Organization
] or any agency or political subdivision of either thereof to
which such Loan Party is subject; or
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(iv)
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conflict with or result in any breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any lien other than the
lien of the Loan Documents upon any of the assets or properties of such Loan
Party pursuant to the terms of any material indenture, mortgage, deed of
trust, agreement, contract or instrument to which such Loan Party is a party
or by which it or any of its assets or properties is bound.
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(e)
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No order, consent, approval, license or authorization of, or filing,
recording or registration with, any governmental or public body or authority of the
United States of America or the State of [
Relevant State
] or any agency or political
subdivision of either thereof is required in connection with the execution and
delivery of any of the Loan Documents, the validity, binding effect or enforceability
of any of the Loan Documents or the consummation of the transactions contemplated
thereby.
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(f)
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There are no actions, suits or proceedings by or before any court,
governmental or regulatory authority or agency of which, after due inquiry, we have
actual knowledge pending or threatened against or affecting any Loan Party or
Borrowers rights with respect to the Property wherein an adverse ruling or decision,
individually or collectively with other such actions, suits or proceedings, is
reasonably likely (i) to affect materially and adversely the ability of any Loan Party
to consummate the transactions contemplated by the Loan Documents or to perform its
obligations under any of the Loan Documents, or (ii) to result in a challenge to the
legality, validity, binding effect or enforceability of any of the Loan Documents.
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(g)
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To the extent the State of [
State of Organization
] UCC is applicable to the
authorization of the Financing Statement, pursuant to the provisions of the Loan
Agreement and the Security Instrument, Borrower has authorized the
filing of the Financing Statement for purposes of Section 9-509 of the State of
[
State of Organization
] UCC.
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D-2
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(h)
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To the extent the State of [
State of Organization
] UCC is applicable, the
financing Statement includes not only all of the types of information required by
Section 9-502(a) of the State of [
State of Organization
] UCC but also the types of
information without which the Filing Office may refuse to accept the Financing
Statement pursuant to Section 9-516 of the State of [
State of Organization
] UCC.
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(i)
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To the extent the State of [
State of Organization
] UCC is applicable, the
security interest of the Secured Party will be perfected in Borrowers rights in all
UCC Collateral upon the later of the attachment of the security interest and the
filing of the Financing Statement in the Filing Office; provided, however, we express
no opinion with respect to (i) money, (ii) deposit accounts, (iii) letter of credit
rights, (iv) goods covered by a certificate of title statute, (v) as-extracted
collateral, timber to be cut, or (vi) any property subject to a statute, regulation or
treaty of the United States whose requirements for a security interests obtaining
priority over the rights of a lien creditor with respect to the property preempt
Section 9-310(a) of the State of [
State of Organization
]. UCC Collateral means the
portion of the Property (as defined in the Security Instrument), the Rate Cap
Collateral, the Account Collateral (as defined in the Loan Agreement) and the
Collateral Accounts (as defined in the Account Agreement) to the extent the UCC
governs a security interest in such collateral.
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(j)
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You have asked whether Borrower is a registered organization as such term
is defined in Section 9-102(a)(70) of the State of [
State of Organization
] UCC.
Pursuant to Section 9-102(a)(70) of the State of [
State of Organization
] UCC, a
registered organization must be (i) organized solely under the laws of a single
State (or the United States) and (ii) the State (or the United States) must maintain a
public record showing the organization to have been organized.
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II.
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Opinions with respect to New York Law
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(a)
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To the extent governed by New York law and to the extent a party thereto, the
Loan Documents are the legal, valid and binding obligations of each Loan Party,
enforceable against such Loan Party in accordance with their terms.
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D-3
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(b)
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The execution, delivery and performance by each Loan Party of the Loan
Documents to which it is a party does not:
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(i)
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contravene any law, statute or regulation of the United
States of America or the State of New York or any agency or political
subdivision of either thereof;
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(ii)
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violate any order, writ, injunction, or decree of which,
after due inquiry, counsel has actual knowledge, issued by any court or
governmental authority of the United States of America or the State of New
York or any agency or political subdivision of either thereof to which such
Loan Party is subject; or
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(iii)
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conflict with or result in any breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any lien other than the
lien of the Loan Documents upon any of the assets or properties of such Loan
Party pursuant to the terms of any material indenture, mortgage, deed of
trust, agreement, contract or instrument to which such Loan Party is a party
or by which it or any of its assets or properties is bound.
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(c)
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No order, consent, approval, license or authorization of, or filing,
recording or registration with, any governmental or public body or authority of the
United States of America or the State of New York or any agency or political
subdivision of either thereof is required in connection with the execution and
delivery of any of the Loan Documents, the validity, binding effect or enforceability
of any of the Loan Documents or the consummation of the transactions contemplated
thereby.
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(d)
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There are no actions, suits or proceedings by or before any court,
governmental or regulatory authority or agency of which, after due inquiry, we have
actual knowledge pending or threatened against or affecting any Loan Party or
Borrowers rights with respect to the Property wherein an adverse ruling or decision,
individually or collectively with other such actions, suits or proceedings, is
reasonably likely (i) to affect materially and adversely the ability of any Loan Party
to consummate the transactions contemplated by the Loan Documents or to perform its
obligations under any of the Loan Documents, or (ii) to result in a challenge to the
legality, validity, binding effect or enforceability of any of the Loan Documents.
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(e)
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The payment by Borrower and receipt by Lender of all principal and interest
will not violate the usury laws of the State of New York or otherwise constitute
unlawful interest.
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(f)
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The provisions of the Loan Agreement and the Security Instrument are
effective to create, in favor of Lender to secure the obligations purported to be
secured thereby, a valid security interest in Borrowers rights in the UCC Collateral.
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D-4
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(g)
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Under New York UCC, the provisions of the Account Agreement are effective to
perfect the security interest of Lender in Borrowers rights in the Collateral
Accounts (as defined in the Account Agreement).
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III.
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Opinions with respect to the law of States in which the Property is located
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(a)
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Each Loan Party is authorized to do business and in good standing in the
State of [
Relevant State
].
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(b)
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To the extent governed by the laws of the State of [
Relevant States
], the
Security Instrument and the Assignment of Leases are the legal, valid and binding
obligations of Borrower, enforceable against Borrower in accordance with their terms.
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(c)
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The Security Instrument is in proper form so as to comply with recording
requirements of the State of [
Relevant State
]. The Security Instrument creates in
favor of Lender valid liens on the portion of the Property that are located in the
State of [
Relevant States
], securing payment of the Obligations (as defined in the
Security Instrument), and no further action will be required for the valid creation of
such liens. Upon recordation in the office of the [
Recording Office
] the Security
Instrument will provide constructive notice of the terms thereof and the liens created
thereby to third parties acquiring interests in the portion of the Property that are
located in the State of [
Relevant States
] subsequent to such recordation.
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(d)
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The Assignment of Leases is in proper form so as to comply with the recording
requirements of the State of [
Relevant States
]. At the time the Assignment of Leases
is delivered to the Recording Office for recording, it will take effect as to all
creditors and subsequent purchasers for a valuable consideration without notice, and
it shall be entitled to priority over any other similar instrument delivered to said
Recording Office for recording after that time, in the absence of actual notice.
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(e)
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Pursuant to the provisions of the Security Instrument Borrower has authorized
the filing of the Fixture Financing Statement identifying the Fixture Collateral for
purposes of Section 9-509 of the [
Relevant States
] UCC. Fixture Collateral means
that portion of the UCC Collateral which consists of fixtures (as defined in Article
9 of the UCC) to the extent the UCC governs a security interest in such collateral.
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(f)
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The Fixture Financing Statement includes not only all the types of
information required by Section 9-502(a) and 9-502(b) of the [
Relevant States
] UCC but
also the types of information without which the Fixture Filing Office may refuse to
accept the Fixture Financing Statement pursuant to Section 9-516 of the State of
[
Relevant States
] UCC.
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D-5
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(g)
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Under the [
Relevant States
] UCC, the security interest of the Secured Party
will be perfected in Borrowers rights in any Fixture Collateral
located on the real property described on Schedule 1 to the Fixture Financing
Statement upon the later of the attachment of the security interest and the filing
of the Fixture Financing Statement in the Fixture Filing Office.
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(h)
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Borrower has paid all recording tax due in connection with the recording of
the Security Instrument and the Assignment of Leases. No additional deed of trust
recording, intangibles tax, documentary stamp tax or similar taxes or charges, other
than nominal recordation or filing fees, are required to be paid as a condition of the
legality of enforceability of the Security Instrument or the Assignment of Leases.
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(i)
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The State of [
Relevant States
] has no law pursuant to which a lien against
any assets or properties of Borrower (whether real, personal, mixed, tangible or
intangible) superior to the lien created by the Security Instrument could arise as a
result of a violation of environmental laws or regulations of such State. No
environmental law or regulation of the State of [Relevant States] would require any
remedial or removal action or certification of nonapplicability as a condition to the
granting of the Security Instrument, the foreclosure or other enforcement of the Loan
Documents or the sale of any assets or properties of Borrower (whether real, personal,
mixed, tangible or intangible) located in the State of [
Relevant States
].
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(j)
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No order, consent, approval, license or authorization of, or filing,
recording or registration with, any governmental or public body or authority of the
United States of America or the State of [
Relevant States
] or any agency or political
subdivision of either thereof is required in connection with the execution and
delivery of any of the Loan Documents, the validity, binding effect or enforceability
of any of the Loan Documents or the consummation of the transactions contemplated
thereby.
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(k)
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There are no actions, suits or proceedings by or before any court,
governmental or regulatory authority or agency of which, after due inquiry, we have
actual knowledge pending or threatened against or affecting any Loan Party or
Borrowers rights with respect to the Property wherein an adverse ruling or decision,
individually or collectively with other such actions, suits or proceedings, is
reasonably likely (i) to affect materially and adversely the ability of any Loan Party
to consummate the transactions contemplated by the Loan Documents or to perform its
obligations under any of the Loan Documents, or (ii) to result in a challenge to the
legality, validity, binding effect or enforceability of any of the Loan Documents.
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D-6
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(l)
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If the Obligations (as defined in the Security Instrument) were to be
governed by the laws of the State of [
Relevant States
], the payment by Borrower and
receipt by Lender of all principal and interest will not
violate the usury laws of the State of [
Relevant States
] or otherwise constitute
unlawful interest.
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(m)
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A federal court sitting in the State of
[Relevant States
] and applying the
conflict of law rules of the State of [
Relevant States
], and the state courts in the
State of [
Relevant States
], would give effect to the choice of law provisions
contained in the Loan Documents. If counsel is not able to give this opinion as an
unqualified opinion, an opinion that the Loan Agreement and Note would be enforceable
under the law of the State of [
Relevant States
] if such law were held to apply will be
required.
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(n)
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The operation of any term of the Loan Documents, including, without
limitation, the terms regarding late charges, default interest or prepayment premiums,
or the lawful exercise of any right thereunder, shall not render the Loan Documents
unenforceable, in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense.
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5.
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The Opinion shall be addressed to Lender and its successors and assigns and shall state that
it may be relied upon by (i) any assignee of Lenders interest in the Loan, (ii) any servicer
of the Loan, (iii) any purchaser of the Loan or any portion thereof in any Securitization,
(iv) any Rating Agency involved in a Securitization of the Loan, (v) the issuer of securities
in a Securitization of the Loan, and (vi) any trustee or servicer appointed in connection with
a Securitization of the Loan.
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D-7
EXHIBIT E
INTENTIONALLY DELETED
E-1
EXHIBIT F
INTENTIONALLY DELETED
F-1
EXHIBIT G
INTENTIONALLY DELETED
G-1
EXHIBIT H
INTENTIONALLY DELETED
H-1
EXHIBIT I
INTENTIONALLY DELETED
I-1
EXHIBIT J
INTENTIONALLY DELETED
J-1
EXHIBIT K
BORROWER ORGANIZATIONAL STRUCTURE
BLUELINX HOLDINGS INC.
ABP AL (MIDFIELD) LLC
ABP AR (LITTLE ROCK) LLC
ABP CA (CITY OF INDUSTRY) LLC
ABP CA (NATIONAL CITY) LLC
ABP CA (NEWARDK) LLC
ABP CO I (DENVER) LLC
ABP CA (RIVERSIDE) LLC
ABP CT (NEWTON) LLC
ABP FL (MIAMI) LLC
ABP FL (LAKE CITY) LLC
ABP FL (TAMPA) LLC
ABP FL (PENSACOLA) LLC
ABP GA (LAWRENCEVILLE) LLC
ABP FL (YULEE) LLC
ABP IL (UNIVERSITY PARK) LLC
ABP IA (DES MOINES) LLC
ABP KY (INDEPENDENCE) LLC
ABP IN (ELKHART) LLC
ABP MA (BELLINGHAM) LLC
ABP LA (SHEVEPORT) LLC
ABP ME (PORTLAND) LLC
ABP MI (GRAND RAPIDS) LLC
ABP MI (DETROIT) LLC
ABP MN (MAPLE GROVE) LLC
ABP MN (EAGAN) LLC
ABP MO (KANSAS CITY) LLC
ABP MO (BRIDGETON) LLC
ABP MS (PEARL) LLC
ABP MO (SPRINGFIELD) LLC
ABP NC (CHARLOTTE) LLC
ABP NC (BUTNER) LLC
ABP NJ (DENVILLE) LLC
ABP ND (NORTH FARGO) LLC
ABP NY (YAPHANK) LLC
ABP NM (ALBUQUERQUE) LLC
ABP OK (TULSA) LLC
ABP OH (TALMADGE) LLC
ABP PA (ALLENTOWN) LLC
ABP OR (BEAVERTON) LLC
ABP SC (CHARLESTON) LLC
ABP PA (STANTON) LLC
ABP TN (ERWIN) LLC
ABP SD (SIOUX FALLS) LLC
ABP TN (NASHVILLE) LLC
ABP TN (MEMPHIS) LLC
ABP TX (FORT WORTH) LLC
ABP TX (EL PASO) LLC
ABP TX (HOUSTON) LLC
ABP TX (HARLINGEN) LLC
ABP TX (SAN ANTONIO) LLC
ABP TX (LUBBOCK) LLC
ABP VA (VIRGINIA BEACH) LLC
ABP VA (RICHMOND) LLC
ABP VA (RICHMOND) LLC
ABP VT (SHELBURNE) LLC
ABP WI (WAUSAU) LLC
ABP MD (BALTIMORE) LLC
ABP MD (BALTIMORE) SUBSIDIARY LLC
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K-1
EXHIBIT L
INTENTIONALLY DELETED
L-1
EXHIBIT M
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
Reference is made to that certain Loan and Security Agreement, dated as of
200__
(as amended, supplemented or otherwise modified from time to time, the
Loan Agreement
)
between the borrower signatory thereto (collectively,
Borrower
), and German American
Capital Corporation, a Maryland corporation (
Lender
), and certain notes of even date with
the Loan Agreement (collectively, the
Note
), made by Borrower in favor of Lender. Terms
defined in the Loan Agreement and not otherwise defined herein are used herein with the same
meaning.
The Assignor and the Assignee referred to on
Schedule 1
attached hereto agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases
and assumes from the Assignor, an interest in and to the Assignors rights and obligations under
the Note and the Loan Agreement as of the date hereof equal to the percentage interest specified on
Schedule 1 attached hereto. After giving effect to such sale and assignment, the amount of the
Loan and the Note owing to the Assignee will be as set forth on Schedule 1 attached hereto.
2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear of any adverse
claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the
perfection or priority of any lien or security interest created or purported to be created under or
in connection with the Loan Documents or any other instrument or document furnished pursuant
thereto; (iii) makes no representation or warranty and assumes no responsibility with respect to
the financial condition of Borrower or the performance or observance by Borrower of any of its
obligations under any Loan Document or any other instrument or document furnished pursuant thereto;
and (iv) attaches the Note or notes held by the Assignor and requests that the Lender exchange such
Note or notes for a new note or notes payable to the order of the Assignee in an amount equal to
the principal amount of the Loan assumed by the Assignee pursuant hereto or new notes payable to
the order of the Assignee in an amount equal to the principal amount of the Loan assumed by the
Assignee pursuant hereto and the Assignor in an amount equal to the principal amount of the Loan
retained by the Assignor under the Note and the Loan Agreement, respectively, as specified on
Schedule 1
attached hereto.
M-1
3. The Assignee (i) confirms that it has received a copy of the Note and the Loan Agreement,
together with such financial statements and other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this Assignment and
Acceptance; (ii) agrees that it will, independently and without reliance upon Lender or the
Assignor based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit decisions in taking
or not taking action under the Loan Agreement or the Note; (iii) appoints and authorizes Lender to
take such action as agent on its behalf and to exercise such powers and discretion under the Loan
Documents as are delegated to Lender by the terms thereof, together with such powers and discretion
as are reasonably incidental thereto; and (iv) agrees that it will perform in accordance with their
terms all of the obligations that by the terms of the Loan Agreement and the Note are required to
be performed by it as an assignee of an interest therein.
4. Following the execution of this Assignment and Acceptance, it will be delivered to Lender
for acceptance and recording. The effective date for this Assignment and Acceptance (the
Effective Date
) shall be the date of acceptance hereof by the Lender, unless otherwise
specified on Schedule 1 attached hereto.
5. Upon such acceptance and recording by Lender, as of the Effective Date, (i) the Assignee
shall be a party to the Loan Agreement and the Note and, to the extent provided in this Assignment
and Acceptance, have the rights and obligations of an assignee thereof, and (ii) the Assignor
shall, to the extent provided in the Loan Agreement and this Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Loan Agreement and the Note.
6. Upon such acceptance and recording by Lender, from and after the Effective Date, Lender
shall make all payments under the Loan Agreement and the Note or notes in respect of the interest
assigned hereby (including, without limitation, all payments of principal, interest and commitment
fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Loan Agreement and the Note or notes for periods prior to the
Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the
laws of the State of New York.
8. This Assignment and Acceptance may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of
Schedule 1
to this Assignment and Acceptance by
telecopier shall be effective as delivery of a manually executed counterpart of this Assignment and
Acceptance.
* * *
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment and Acceptance and
Schedule 1
to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified on
Schedule 1
.
M-2
Schedule 1
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As to the Loan in respect of which an interest is being assigned:
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Percentage interest assigned:
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%
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Aggregate outstanding principal amount of the Loan assigned:
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$
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Principal amount of Note payable to Assignee:
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$
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Principal amount of Note payable to Assignor:
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$
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Effective Date (if other than date of acceptance by Lender):
__, ______
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[NAME OF ASSIGNOR], as Assignor
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By:
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Name:
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Title:
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Dated:
__, ____
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[NAME OF ASSIGNEE], as Assignee
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By:
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Name:
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Title:
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Dated:
, ____
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Accepted this
_____
day of
,
_____
[NAME OF LENDER]
M-3
EXHIBIT N
FORM OF
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
,
Tenant
AND
GERMAN AMERICAN CAPITAL CORPORATION
Lender
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County:
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[ ]
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Section:
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[ ]
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Block:
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[ ]
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Lot:
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[ ]
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Premises:
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Dated: as of
, ____
Record and return by mail to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Attention: Harvey R. Uris, Esq.
N-1
SUBORDINATION,
NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS AGREEMENT made as of this
_____
day of
_____, 200_, between GERMAN AMERICAN CAPITAL
CORPORATION, a Maryland corporation, having an address at 60 Wall Street, New York, New York 10005
(hereinafter called
Lende
r), and
_____, a
, having an address at
(hereinafter called Tenant).
RECITALS:
WHEREAS, by a lease (the
Original Lease
) dated
_____, 200__
between
(hereinafter called
Landlord
), as landlord, and Tenant, as tenant, as
amended by lease amendment[s] dated
_____, 200_, [_____, 200__
and
_____, 200_] (the
Original Lease, as so amended, is hereinafter the Lease), a memorandum of which Lease was dated
_____
and was recorded in
_____
in Reel
_____, Page
_____, [ADD RECORDING DATA FOR MEMORANDA OF
AMENDMENTS, IF APPLICABLE], Landlord leased to Tenant certain premises located in
(the
Premises
) on the property described in Schedule A
annexed hereto and made a part hereof (the
Property
); and
WHEREAS, Lender is about to make a loan to Landlord, which loan shall be secured by, among
other things, a mortgage or deed of trust (which mortgage or deed of trust, and all amendments,
renewals, increases, modifications, replacements, substitutions, extensions, spreaders and
consolidations thereof and all re-advances thereunder and addictions thereto, is referred to as the
Security Instrument
) encumbering the Property; and
WHEREAS, Lender and Tenant desire to confirm their understanding and agreement with respect to
the Lease and the Security Instrument.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained,
Lender and Tenant hereby agree and covenant as follows:
1. The Lease, and all of the terms, covenants, provisions and conditions thereof (including,
without limitation, any right of first refusal, right of first offer, option or any similar right
with respect to the sale or purchase of the Property, or any portion thereof) is, shall be and
shall at all times remain and continue to be subject and subordinate in all respects to the lien,
terms, covenants, provisions and conditions of the Security Instrument and to all advances and
re-advances made thereunder and all sums secured thereby. This provision shall be self-operative
but Tenant shall execute and deliver any additional instruments which Lender may reasonably require
to effect such subordination.
N-2
2. So long as (i) Tenant is not in default (beyond any period given in the Lease to Tenant to
cure such default) in the payment of rent, percentage rent or additional
rent or in the performance or observance of any of the other terms, covenants, provisions or
conditions of the Lease on Tenants part to be performed or observed, (ii) Tenant is not in default
under this Agreement and (iii) the Lease is in full force and effect: (a) Tenants possession of
the Premises and Tenants rights and privileges under the Lease, or any extensions or renewals
thereof which may be effected in accordance with any option therefor which is contained in the
Lease, shall not be diminished or interfered with by Lender, and Tenants occupancy of the Premises
shall not be disturbed by Lender for any reason whatsoever during the term of the Lease or any such
extensions or renewals thereof and (b) Lender will not join Tenant as a party defendant in any
action or proceeding to foreclose the Security Instrument or to enforce any rights or remedies of
Lender under the Security Instrument which would cut-off, destroy, terminate or extinguish the
Lease or Tenants interest and estate under the Lease (except to the extent required so that
Tenants right to receive or set-off any monies or obligations owed or to be performed by any of
Lenders predecessors-in-interest shall not be enforceable thereafter against Lender or any of
Lenders successors-in-interest). Notwithstanding the foregoing provisions of this paragraph, if
it would be procedurally disadvantageous for Lender not to name or join Tenant as a party in a
foreclosure proceeding with respect to the Security Instrument, Lender may so name or join Tenant
without in any way diminishing or otherwise affecting the rights and privileges granted to, or
inuring to the benefit of, Tenant under this Agreement.
3. (A) After notice is given by Lender that the Security Instrument is in default and that
the rentals under the Lease should be paid to Lender, Tenant will attorn to Lender and pay to
Lender, or pay in accordance with the directions of Lender, all rentals and other monies due and to
become due to Landlord under the Lease or otherwise in respect of the Premises. Such payments
shall be made regardless of any right of set-off, counterclaim or other defense which Tenant may
have against Landlord, whether as the tenant under the Lease or otherwise.
(B) In addition, if Lender (or its nominee or designee) shall succeed to the rights of
Landlord under the Lease through possession or foreclosure action, delivery of a deed or otherwise,
or another person purchases the Property or the portion thereof containing the Premises upon or
following foreclosure of the Security Instrument or in connection with any bankruptcy case
commenced by or against Landlord, then at the request of Lender (or its nominee or designee) or
such purchaser (Lender, its nominees and designees, and such purchaser, and their respective
successors and assigns, each being a
Successor-Landlord
), Tenant shall attorn to and
recognize Successor-Landlord as Tenants landlord under the Lease and shall promptly execute and
deliver any instrument that Successor-Landlord may reasonably request to evidence such attornment.
Upon such attornment, the Lease shall continue in full force and effect as, or as if it were, a
direct lease between Successor-Landlord and Tenant upon all terms, conditions and covenants as are
set forth in the Lease. If the Lease shall have terminated by operation of law or otherwise as a
result of or in connection with a bankruptcy case commenced by or against Landlord or a foreclosure
action or proceeding or delivery of a deed in lieu, upon request of Successor-Landlord, Tenant
shall promptly execute and deliver a direct lease with Successor-Landlord which direct lease shall
be on substantially the same terms and conditions as the Lease (subject, however, to the provisions
of clauses (i)-(v) of this
paragraph 3(B)) and shall be effective as of the day the Lease shall have terminated as
aforesaid. Notwithstanding the continuation of the Lease, the attornment of Tenant thereunder or
the execution of a direct lease between Successor-Landlord and Tenant as aforesaid,
Successor-Landlord shall not:
(i) be liable for any previous act or omission of Landlord under the Lease;
(ii) be subject to any off-set, defense or counterclaim which shall have theretofore accrued
to Tenant against Landlord;
N-3
(iii) be bound by any modification of the Lease or by any previous prepayment of rent or
additional rent made more than one (1) month prior to the date same was due which Tenant might have
paid to Landlord, unless such modification or prepayment shall have been expressly approved in
writing by Lender;
(iv) be liable for any security deposited under the Lease unless such security has been
physically delivered to Lender or Successor-Landlord; and
(v) be liable or obligated to comply with or fulfill any of the obligations of the Landlord
under the Lease or any agreement relating thereto with respect to the construction of, or payment
for, improvements on or above the Premises (or any portion thereof), leasehold improvements, tenant
work letters and/or similar items.
4. Tenant agrees that without the prior written consent of Lender, it shall not (a) amend,
modify, terminate or cancel the Lease or any extensions or renewals thereof, (b) tender a surrender
of the Lease, (c) make a prepayment of any rent or additional rent more than one (1) month in
advance of the due date thereof, or (d) subordinate or permit the subordination of the Lease to any
lien subordinate to the Security Instrument. Any such purported action without such consent shall
be void as against the holder of the Security Instrument.
5. (A) Tenant shall promptly notify Lender of any default by Landlord under the Lease and of
any act or omission of Landlord which would give Tenant the right to cancel or terminate the Lease
or to claim a partial or total eviction.
(B) In the event of a default by Landlord under the Lease which would give Tenant the right,
immediately or after the lapse of a period of time, to cancel or terminate the Lease or to claim a
partial or total eviction, or in the event of any other act or omission of Landlord which would
give Tenant the right to cancel or terminate the Lease, Tenant shall not exercise such right (i)
until Tenant has given written notice of such default, act or omission to Lender and (ii) unless
Lender has failed, within sixty (60) days after Lender receives such notice, to cure or remedy the
default, act or omission or, if such default, act or omission shall be one which is not reasonably
capable of being remedied by Lender within such sixty (60) day period, until a reasonable period
for remedying such default, act or omission shall have elapsed following the giving of such notice
and following the time when Lender shall have become entitled under the Security Instrument to
remedy the same (which reasonable period shall in no event be less than the
period to which Landlord would be entitled under the Lease or otherwise, after similar notice,
to effect such remedy), provided that Lender shall with due diligence give Tenant written notice of
its intention to and shall commence and continue to, remedy such default, act or omission. If
Lender cannot reasonably remedy a default, act or omission of Landlord until after Lender obtains
possession of the Premises, Tenant may not terminate or cancel the Lease or claim a partial or
total eviction by reason of such default, act or omission until the expiration of a reasonable
period necessary for the remedy after Lender secures possession of the Premises. To the extent
Lender incurs any expenses or other costs in curing or remedying such default, act or omission,
including, without limitation, attorneys fees and disbursements, Lender shall be subrogated to
Tenants rights against Landlord.
(C) Notwithstanding the foregoing, Lender shall have no obligation hereunder to remedy such
default, act or omission.
N-4
6. To the extent that the Lease shall entitle Tenant to notice of the existence of any
mortgage and the identity of any mortgagee or any ground lessor, this Agreement shall constitute
such notice to Tenant with respect to the Security Instrument and Lender.
7. Upon and after the occurrence of a default under the Security Instrument, which is not
cured after any applicable notice and/or cure periods, Lender shall be entitled, but not obligated,
to exercise the claims, rights, powers, privileges and remedies of Landlord under the Lease and
shall be further entitled to the benefits of, and to receive and enforce performance of, all of the
covenants to be performed by Tenant under the Lease as though Lender were named therein as
Landlord.
8. Anything herein or in the Lease to the contrary notwithstanding, in the event that a
Successor-Landlord shall acquire title to the Property or the portion thereof containing the
Premises, Successor-Landlord shall have no obligation, nor incur any liability, beyond
Successor-Landlords then interest, if any, in the Property, and Tenant shall look exclusively to
such interest, if any, of Successor-Landlord in the Property for the payment and discharge of any
obligations imposed upon Successor-Landlord hereunder or under the Lease, and Successor-Landlord is
hereby released or relieved of any other liability hereunder and under the Lease. Tenant agrees
that, with respect to any money judgement which may be obtained or secured by Tenant against
Successor-Landlord, Tenant shall look solely to the estate or interest owned by Successor-Landlord
in the Property, and Tenant will not collect or attempt to collect any such judgement out of any
other assets of Successor-Landlord.
9. Notwithstanding anything to the contrary in the Lease, Tenant agrees for the benefit of
Landlord and Lender that, except as permitted by, and fully in accordance with, applicable law,
Tenant shall not generate, store, handle, discharge or maintain in, on or about any portion of the
Property, any asbestos, polychlorinated biphenyls, or any other hazardous or toxic materials,
wastes and substances which are defined, determined or identified as such (including, but not
limited to, pesticides and petroleum products if they are defined, determined or identified as
such) in any federal, state or local laws, rules or regulations (whether now existing or hereafter
enacted or promulgated) or any judicial
or administrative interpretation of any thereof, including any judicial or administrative
interpretation of any thereof, including any judicial or administrative orders or judgments.
N-5
10. If the Lease provides that Tenant is entitled to expansion space, Successor-Landlord shall
have no obligation nor any liability for failure to provide such expansion space if a prior
landlord (including, without limitation, Landlord), by reason of a lease or leases entered into by
such prior landlord with other tenants of the Property, has precluded the availability of such
expansion space.
11. Except as specifically provided in this Agreement, Lender shall not, by virtue of this
Agreement, the Security Instrument or any other instrument to which Lender may be a party, be or
become subject to any liability or obligation to Tenant under the Lease or otherwise.
12. (A) Tenant acknowledges and agrees that this Agreement satisfies and complies in all
respects with the provisions of Article
_____
of the Lease and that this Agreement supersedes (but
only to the extent inconsistent with) the provisions of such Article and any other provision of the
Lease relating to the priority or subordination of the Lease and the interests or estates created
thereby to the Security Instrument.
(B) Tenant agrees to enter into a subordination, non-disturbance and attornment agreement with
any lender which shall succeed Lender as lender with respect to the Property, or any portion
thereof, provided such agreement is substantially similar to this Agreement. Tenant does herewith
irrevocably appoint and constitute Lender as its true and lawful attorney-in-fact in its name,
place and stead to execute such subordination, non-disturbance and attornment agreement, without
any obligation on the part of Lender to do so. This power, being coupled with an interest, shall
be irrevocable as long as the Indebtedness secured by the Security Instrument remains unpaid.
Lender agrees not to exercise its rights under the preceding two sentences if Tenant promptly
enters into the subordination, non-disturbance and attornment agreement as required pursuant to the
first sentence of this subparagraph (B).
13. (A) Any notice required or permitted to be given by Tenant to Landlord shall be
simultaneously given also to Lender, and any right to Tenant dependent upon notice shall take
effect only after notice is so given. Performance by Lender shall satisfy any conditions of the
Lease requiring performance by Landlord, and Lender shall have a reasonable time to complete such
performance as provided in Paragraph 5 hereof.
(B) All notices or other communications required or permitted to be given to Tenant or to
Lender pursuant to the provisions of this Agreement shall be in writing and shall be deemed given
only if mailed by United States registered mail, postage prepaid, or if sent by nationally
recognized overnight delivery service (such as Federal Express or United States Postal Service
Express Mail), addressed as follows: to Tenant, at the address first set forth above, Attention:
; to Lender, at the address first set forth above, Attention:
and General
Counsel, with a copy to Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New
York 10036,
Attention: Harvey R. Uris, Esq.; or to such other address or number as such party may
hereafter designate by notice delivered in accordance herewith. All such notices shall be deemed
given three (3) business days after delivery to the United States Post office registry clerk if
given by registered mail, or on the next business day after delivery to an overnight delivery
courier.
N-6
14. This Agreement may be modified only by an agreement in writing signed by the parties
hereto, or their respective successors-in-interest. This Agreement shall inure to the benefit of
and be binding upon the parties hereto, and their respective successors and assigns. The term
Lender shall mean the then holder of the Security Instrument. The term Landlord shall mean the
then holder of the landlords interest in the Lease. The term person shall mean an individual,
joint venture, corporation, partnership, trust, limited liability company, unincorporated
association or other entity. All references herein to the Lease shall mean the Lease as modified
by this Agreement and to any amendments or modifications to the Lease which are consented to in
writing by Lender. Any inconsistency between the Lease and the provisions of this Agreement shall
be resolved, to the extent of such inconsistency, in favor of this Agreement.
15. Tenant hereby represents to Lender as follows:
(a) The Lease is in full force and effect and has not been further amended.
(b) There has been no assignment of the Lease or subletting of any portion of the premises
demised under the Lease.
(c) There are no oral or written agreements or understandings between Landlord and Tenant
relating to the premises demised under the Lease or the Lease transaction except as set forth in
the Lease.
(d) The execution of the Lease was duly authorized and the Lease is in full force and effect
and to the best of Tenants knowledge there exists no default (beyond any applicable grace period)
on the part of either Tenant or Landlord under the Lease.
(e) There has not been filed by or against nor to the best of the knowledge and belief of
Tenant is there threatened against Tenant, any petition under the bankruptcy laws of the United
States.
(f) To the best of Tenants knowledge, there is no present assignment, hypothecation or pledge
of the Lease or rents accruing under the Lease by Landlord, other than pursuant to the Security
Instrument.
16. Whenever, from time to time, reasonably requested by Lender (but not more than three (3)
times during any calendar year), Tenant shall execute and deliver to or at the direction of Lender,
and without charge to Lender, one or more written certifications, in a form acceptable to Tenant,
of all of the matters set forth in Paragraph 15 above, and any other information the Lender may
reasonably require to confirm the current status of the Lease.
N-7
17. BOTH TENANT AND LENDER HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
18. This Agreement shall be governed by and construed in accordance with the laws of the State
in which the Property is located.
N-8
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and
year first above written.
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GERMAN AMERICAN CAPITAL CORPORATION,
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a Maryland corporation
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By:
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Name:
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Title:
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By:
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Name:
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Title:
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[TENANT]
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By:
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Name:
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Title:
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AGREED AND CONSENTED TO:
LANDLORD:
[
]
N-9
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STATE OF NEW YORK
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)
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) ss.
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COUNTY OF NEW YORK
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)
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On the
_____
day of
in the year 200__
before me, the undersigned, a notary public
in and for said state, personally appeared
, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
capacity, and that by his/her/their signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument.
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[Notary Seal]
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My commission expires:
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STATE OF NEW YORK
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)
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) ss.
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COUNTY OF NEW YORK
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)
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On the
_____
day of
in the year 200__
before me, the undersigned, a notary public
in and for said state, personally appeared
, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
capacity, and that by his/her/their signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument.
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[Notary Seal]
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My commission expires:
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N-10
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STATE OF NEW YORK
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)
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) ss.
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COUNTY OF NEW YORK
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)
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On the
_____
day of
in the year 200__
before me, the undersigned, a notary public
in and for said state, personally appeared
, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
capacity, and that by his/her/their signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument.
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[Notary Seal]
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My commission expires:
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STATE OF NEW YORK
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)
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) ss.
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COUNTY OF NEW YORK
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)
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On the
_____
day of
in the year 200__
before me, the undersigned, a notary public
in and for said state, personally appeared
, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
capacity, and that by his/her/their signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument.
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[Notary Seal]
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My commission expires:
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N-11
SCHEDULE A TO SNDA
Legal Description of Property
N-12
EXHIBIT O
[INTENTIONALLY DELETED]
O-1
EXHIBIT P
FORM OF MASTER LEASE RENT PAYMENT DIRECTION LETTER
[Borrower Letterhead]
BlueLinx Corporation
[Address]
[
], 2006
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Re:
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[Master Lease Agreement] between [Borrower] (
Borrower
), as lessor,
and BlueLinx Corporation, a Delaware corporation, as lessee, dated [
], 2006
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Ladies and Gentlemen:
With reference to the above referenced lease (the
Master Lease
), please be advised
that Borrower has obtained a loan (the
Loan
) with German American Capital Corporation,
having an address at 60 Wall Street, New York, New York 10005 (together with its successors and
assigns,
Lender
) pursuant to that certain Loan and Security Agreement of even date
herewith between Borrower and Lender (the Loan Agreement), which Loan is secured by, among other
things, the properties demised by the Master Lease. Capitalized terms not separately defined
herein shall the meanings provided in the Loan Agreement.
In connection with the Loan, from and after the date hereof and until notified otherwise by
written instruction from Lender, you are hereby irrevocably instructed to (a) make all payments of
Master Lease Scheduled Rent directly to the Holding Account at all times during the term of the
Loan and (b) make all payment of Master Lease Variable Additional Rent directly to the Holding
Account at all times during the continuance of an Event of Default and during any Low LCR Cash
Sweep Period, in each case by wire transfer as follows:
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Bank:
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[
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Account Name:
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[
]
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Account No.:
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[
]
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ABA No.:
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[
]
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P-1
If you have any questions regarding this letter, please contact Borrower at the address
indicated above.
Very truly yours,
BORROWER:
[Borrower Signature Block(s)]
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cc:
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German American Capital Corporation
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60 Wall Street, 10
th
Floor
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New York, New York 10005
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Attention: Todd Sammann
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P-2
EXHIBIT Q
INTENTIONALLY DELETED
Q-1
EXHIBIT R
INTENTIONALLY DELETED
R-1
EXHIBIT S
INTENTIONALLY DELETED
S-1
EXHIBIT T
CERTIFICATE OF INDEPENDENT MANAGER/MEMBER/DIRECTOR
*
THE UNDERSIGNED,
, hereby certifies as follows:
1. I have been elected to serve as an independent member/manager of [INSERT BORROWER NAME], a
Delaware limited liability company (the
Company
).
2. I am aware that, under its Limited Liability Company Agreement, the Company is required to
have at least two so-called
Independent Managers
and/or
Independent Members
.
3. I hereby certify that I am aware of the definition of and requirement for Independent
Managers and Independent Members as set forth in the Limited Liability Company Agreement of the
Company, including but not limited to, the requirement that when voting on a matter put to the vote
of the membership or board of managers, that notwithstanding that the Company [may be insolvent, an
Independent Manager shall, to the extent permitted by law, take into account the interest of the
creditors of the Company as well as the interest of the Company. As an Independent Manager and/or
Independent Member of the Company, I will vote in accordance with my fiduciary duties under
applicable law.
4. I hereby certify that I meet the requirements of an Independent Manager and/or Independent
Member as set forth in the Limited Liability Company Agreement.
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*
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Following are contacts for independent
directors/managers/members appinted by borrowers on prior transaction:
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CT Corporation System
Attention: Corporate Staffing Division
The Corporation Trust Center
1209 Orange Street
Wilmington, DE 19801
Attention: Domenic Borriello
Telephone: (302) 777-0240
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Mark A. Ferrucci (no longer employed by CT Corporation System)
212 Mangum Drive
Bear, DE 19701
(302) 836-9162 (telephone)
(302) 8376-836-9182 (fax)
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T-1
5. I certify that, subject to my fiduciary duties as an Independent Manager and/or Independent
Member, it is my intention as a so-called Independent Manager and/or Independent Member to take
into account, to the extent permitted by law, the interest of all creditors of the Company as well
as the Company in fulfilling my duties as an Independent Manager and/or Independent Member of the
Company.
6. I understand that German American Capital Corporation and its successors, participants,
transferees and assigns, will rely on this Certificate in conjunction with loans to be made to the
Borrower.
Executed as of this
_____
day of
, 2006.
T-2
SCHEDULE I
ALLOCATION LOAN AMOUNTS
Blue Linx Portfolio
Loan Allocations
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Allocated
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Loan %
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As-Is
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of
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No.
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Name
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Gross Revenue
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As-Stabilized U/W
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DSCR
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Appraised Value
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Allocated Loan
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Value
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UW Cap
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Riverside
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$
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366,301
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$
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322,345
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1.20
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***
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$
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4,116,143
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***
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***
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Charlotte
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$
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262,570
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$
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231,062
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1.20
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***
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$
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2,950,512
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***
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***
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Bridgeton
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$
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577,500
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$
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508,200
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1.20
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***
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$
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6,489,396
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***
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***
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Denver
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$
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395,640
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$
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348,163
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1.20
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***
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$
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4,445,826
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***
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***
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La Puente
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$
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733,433
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$
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645,421
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1.20
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***
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$
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8,241,623
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***
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***
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Lawrenceville (Corp. HQ)
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$
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1,400,000
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$
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1,232,000
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1.20
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***
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$
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15,731,870
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***
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***
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National City
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$
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669,600
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$
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589,248
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1.20
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***
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$
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7,524,329
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***
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***
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Ft. Worth
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$
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817,347
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$
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719,265
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1.20
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***
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$
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9,184,569
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***
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***
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Frederick
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$
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2,847,500
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$
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2,505,800
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1.30
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***
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$
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29,536,153
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***
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***
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Nashville
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$
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277,750
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$
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244,420
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1.25
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***
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$
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2,996,247
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***
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***
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Ypsilanti
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$
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740,684
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$
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651,802
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1.25
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***
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$
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7,990,179
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***
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***
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|
|
|
|
Memphis
|
|
$
|
220,943
|
|
|
$
|
194,430
|
|
|
|
1.25
|
|
|
|
***
|
|
|
$
|
2,383,438
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Pensacola
|
|
$
|
323,532
|
|
|
$
|
284,708
|
|
|
|
1.25
|
|
|
|
***
|
|
|
$
|
3,490,123
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Pearl
|
|
$
|
92,625
|
|
|
$
|
81,510
|
|
|
|
1.15
|
|
|
|
***
|
|
|
$
|
948,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Woodinville
|
|
$
|
444,820
|
|
|
$
|
391,442
|
|
|
|
1.15
|
|
|
|
***
|
|
|
$
|
4,542,500
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Butner
|
|
$
|
1,004,120
|
|
|
$
|
883,626
|
|
|
|
1.16
|
|
|
|
***
|
|
|
$
|
10,230,500
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Albuquerque
|
|
$
|
261,720
|
|
|
$
|
230,314
|
|
|
|
1.18
|
|
|
|
***
|
|
|
$
|
2,607,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Des Moines
|
|
$
|
153,192
|
|
|
$
|
134,809
|
|
|
|
1.18
|
|
|
|
***
|
|
|
$
|
1,524,700
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Miami
|
|
$
|
437,189
|
|
|
$
|
384,726
|
|
|
|
1.18
|
|
|
|
***
|
|
|
$
|
4,345,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Beaverton
|
|
$
|
578,424
|
|
|
$
|
509,013
|
|
|
|
1.17
|
|
|
|
***
|
|
|
$
|
5,800,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Newark
|
|
$
|
1,039,360
|
|
|
$
|
914,637
|
|
|
|
1.19
|
|
|
|
***
|
|
|
$
|
10,270,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Independence
|
|
$
|
656,568
|
|
|
$
|
577,780
|
|
|
|
1.18
|
|
|
|
***
|
|
|
$
|
6,560,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
New Stanton
|
|
$
|
267,015
|
|
|
$
|
234,973
|
|
|
|
1.19
|
|
|
|
***
|
|
|
$
|
2,640,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Portland
|
|
$
|
246,611
|
|
|
$
|
217,018
|
|
|
|
1.20
|
|
|
|
***
|
|
|
$
|
2,424,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Englewood (OFFICE) SE
Denver
|
|
$
|
687,210
|
|
|
$
|
604,745
|
|
|
|
1.20
|
|
|
|
***
|
|
|
$
|
6,720,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
San Antonio
|
|
$
|
285,693
|
|
|
$
|
251,410
|
|
|
|
1.21
|
|
|
|
***
|
|
|
$
|
2,784,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
N. Kansas City
|
|
$
|
586,708
|
|
|
$
|
516,303
|
|
|
|
1.21
|
|
|
|
***
|
|
|
$
|
5,704,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Erwin
|
|
$
|
382,673
|
|
|
$
|
336,752
|
|
|
|
1.21
|
|
|
|
***
|
|
|
$
|
3,720,000
|
|
|
|
***
|
|
|
|
***
|
|
***
Portions hereof have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for
confidential treatment in accordance with Rule 24b-2 of the Exchange Act.
I-1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As-Is
|
|
|
|
|
|
|
of
|
|
|
|
|
No.
|
|
|
Name
|
|
Gross Revenue
|
|
|
As-Stabilized U/W
|
|
|
DSCR
|
|
|
Appraised Value
|
|
|
Allocated Loan
|
|
|
Value
|
|
|
UW Cap
|
|
|
|
|
|
Bellingham
|
|
$
|
2,242,500
|
|
|
$
|
1,973,400
|
|
|
|
1.21
|
|
|
|
***
|
|
|
$
|
21,744,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Yulee
|
|
$
|
1,388,400
|
|
|
$
|
1,221,792
|
|
|
|
1.22
|
|
|
|
***
|
|
|
$
|
13,440,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Yaphank
|
|
$
|
266,409
|
|
|
$
|
234,440
|
|
|
|
1.22
|
|
|
|
***
|
|
|
$
|
2,560,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Tampa
|
|
$
|
571,473
|
|
|
$
|
502,896
|
|
|
|
1.24
|
|
|
|
***
|
|
|
$
|
5,440,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Charleston
|
|
$
|
143,297
|
|
|
$
|
126,101
|
|
|
|
1.24
|
|
|
|
***
|
|
|
$
|
1,360,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Little Rock
|
|
$
|
230,750
|
|
|
$
|
203,060
|
|
|
|
1.25
|
|
|
|
***
|
|
|
$
|
2,176,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Newtown
|
|
$
|
322,500
|
|
|
$
|
283,800
|
|
|
|
1.25
|
|
|
|
***
|
|
|
$
|
3,040,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Lake City
|
|
$
|
238,561
|
|
|
$
|
209,934
|
|
|
|
1.25
|
|
|
|
***
|
|
|
$
|
2,240,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Allentown
|
|
$
|
311,250
|
|
|
$
|
273,900
|
|
|
|
1.26
|
|
|
|
***
|
|
|
$
|
2,900,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Tallmadge
|
|
$
|
231,000
|
|
|
$
|
203,280
|
|
|
|
1.32
|
|
|
|
***
|
|
|
$
|
2,060,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Virginia Beach
|
|
$
|
240,090
|
|
|
$
|
211,279
|
|
|
|
1.33
|
|
|
|
***
|
|
|
$
|
2,128,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Denville
|
|
$
|
551,469
|
|
|
$
|
485,293
|
|
|
|
1.35
|
|
|
|
***
|
|
|
$
|
4,800,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Wausau
|
|
$
|
151,590
|
|
|
$
|
133,399
|
|
|
|
1.36
|
|
|
|
***
|
|
|
$
|
1,312,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Tulsa
|
|
$
|
358,750
|
|
|
$
|
315,700
|
|
|
|
1.36
|
|
|
|
***
|
|
|
$
|
3,104,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Lubbock
|
|
$
|
143,442
|
|
|
$
|
126,229
|
|
|
|
1.36
|
|
|
|
***
|
|
|
$
|
1,240,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Sioux Falls
|
|
$
|
201,015
|
|
|
$
|
176,893
|
|
|
|
1.38
|
|
|
|
***
|
|
|
$
|
1,720,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Houston
|
|
$
|
473,475
|
|
|
$
|
416,658
|
|
|
|
1.38
|
|
|
|
***
|
|
|
$
|
4,041,900
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Shreveport
|
|
$
|
264,200
|
|
|
$
|
232,496
|
|
|
|
1.38
|
|
|
|
***
|
|
|
$
|
2,251,800
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Harlingen
|
|
$
|
174,200
|
|
|
$
|
153,296
|
|
|
|
1.38
|
|
|
|
***
|
|
|
$
|
1,482,300
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
El Paso
|
|
$
|
180,125
|
|
|
$
|
158,510
|
|
|
|
1.38
|
|
|
|
***
|
|
|
$
|
1,530,900
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Grand Rapids
|
|
$
|
160,529
|
|
|
$
|
141,266
|
|
|
|
1.39
|
|
|
|
***
|
|
|
$
|
1,360,800
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Fargo
|
|
$
|
272,619
|
|
|
$
|
239,905
|
|
|
|
1.41
|
|
|
|
***
|
|
|
$
|
2,280,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Maple Grove
|
|
$
|
431,052
|
|
|
$
|
379,326
|
|
|
|
1.41
|
|
|
|
***
|
|
|
$
|
3,600,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
University Park
|
|
$
|
1,909,500
|
|
|
$
|
1,680,360
|
|
|
|
1.41
|
|
|
|
***
|
|
|
$
|
15,936,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Midfield
|
|
$
|
371,250
|
|
|
$
|
326,700
|
|
|
|
1.42
|
|
|
|
***
|
|
|
$
|
3,080,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Shelburne
|
|
$
|
280,125
|
|
|
$
|
246,510
|
|
|
|
1.40
|
|
|
|
***
|
|
|
$
|
2,361,600
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Springfield
|
|
$
|
221,405
|
|
|
$
|
194,836
|
|
|
|
1.40
|
|
|
|
***
|
|
|
$
|
1,861,400
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Elkhart
|
|
$
|
411,750
|
|
|
$
|
362,340
|
|
|
|
1.40
|
|
|
|
***
|
|
|
$
|
3,460,400
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
St. Paul (Eagan)
|
|
$
|
237,096
|
|
|
$
|
208,644
|
|
|
|
1.44
|
|
|
|
***
|
|
|
$
|
1,944,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
Richmond
|
|
$
|
335,960
|
|
|
$
|
295,645
|
|
|
|
1.50
|
|
|
|
***
|
|
|
$
|
2,644,792
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
30,072,510
|
|
|
$
|
26,463,809
|
|
|
|
1.21
|
|
|
|
***
|
|
|
$
|
295,000,000
|
|
|
|
***
|
|
|
|
***
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
295,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
***
|
|
Portions hereof have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2
of the Exchange Act.
|
I-2
SCHEDULE II
GEOGRAPHIC QUADRANTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Address
|
|
Location Name
|
|
State
|
|
Country
|
|
Zip Code
|
|
Region
|
|
306
|
|
4300 GEORGIA-PACIFIC BLVD
|
|
FREDERICK (Baltimore),
|
|
MD
|
|
USA
|
|
21704
|
|
|
1
|
|
303
|
|
419 Maple Street
|
|
BELLINGHAM (Worcester),
|
|
MA
|
|
USA
|
|
02019
|
|
|
1
|
|
307
|
|
LUGER ROAD
|
|
DENVILLE,
|
|
NJ
|
|
USA
|
|
07834
|
|
|
1
|
|
899
|
|
210 South Main Street
|
|
NEWTOWN,
|
|
CT
|
|
USA
|
|
06470
|
|
|
1
|
|
310
|
|
DABNEY & BETHLEHAM
|
|
RICHMOND,
|
|
VA
|
|
USA
|
|
23230
|
|
|
1
|
|
305
|
|
508 Warrant Ave
|
|
PORTLAND,
|
|
ME
|
|
USA
|
|
04104
|
|
|
1
|
|
308
|
|
YAPHANK AV & PARK ST, YAPHANK
|
|
LONG ISLAND (Yaphank),
|
|
NY
|
|
USA
|
|
11980
|
|
|
1
|
|
566
|
|
6980 SNOWDRIFT RD N.
|
|
ALLENTOWN,
|
|
PA
|
|
USA
|
|
18106
|
|
|
1
|
|
311
|
|
200 PRICE STREET, VIRGINIA BEACH
|
|
NORFOLK (Virginia Beach),
|
|
VA
|
|
USA
|
|
23462
|
|
|
1
|
|
304
|
|
Pine Haven Shore Road
|
|
BURLINGTON,
|
|
VT
|
|
USA
|
|
|
|
|
1
|
|
300
|
|
HUNKER RD & RT. 119, NEW STANTON
|
|
PITTSBURG (New Stanton)
|
|
PA
|
|
USA
|
|
15672
|
|
|
1
|
|
580
|
|
591 Gene Lasserre Blvd, Yulee
|
|
JACKSONVILLE (Yulee),
|
|
FL
|
|
USA
|
|
32097
|
|
|
2
|
|
606
|
|
200 HOSEA ROAD
|
|
LAWRENCEVILLE,
|
|
GA
|
|
USA
|
|
30248
|
|
|
2
|
|
309
|
|
1712 D Street, Butner
|
|
RALEIGH (Butner),
|
|
NC
|
|
USA
|
|
27509
|
|
|
2
|
|
626
|
|
1040 S INDUSTRIAL BLVD
|
|
ERWIN (Bristol),
|
|
TN
|
|
USA
|
|
37650
|
|
|
2
|
|
607
|
|
1523 Industrial Blvd
|
|
MIDFIELD (Birmingham)
|
|
AL
|
|
USA
|
|
35228
|
|
|
2
|
|
582
|
|
815 So 56th Street
|
|
TAMPA,
|
|
FL
|
|
USA
|
|
33675
|
|
|
2
|
|
584
|
|
3201 NW 110TH ST
|
|
MIAMI
|
|
FL
|
|
USA
|
|
33168
|
|
|
2
|
|
336
|
|
1820 BELLAMAH AVE NW
|
|
ALBUQUERQUE,
|
|
NM
|
|
USA
|
|
87104
|
|
|
2
|
|
581
|
|
4601 McCoy Drive
|
|
PENSACOLA
|
|
FL
|
|
USA
|
|
32513
|
|
|
2
|
|
829
|
|
Price Creek Road & Hwy 100
|
|
LAKE CITY,
|
|
FL
|
|
USA
|
|
32025
|
|
|
2
|
|
632
|
|
4287 PILOT DRIVE
|
|
MEMPHIS,
|
|
TN
|
|
USA
|
|
38130
|
|
|
2
|
|
647
|
|
331 28TH AVE NORTH
|
|
NASHVILLE,
|
|
TN
|
|
USA
|
|
37202
|
|
|
2
|
|
786
|
|
330 Parkside Drive
|
|
CHARLOTTE,
|
|
NC
|
|
USA
|
|
28266
|
|
|
2
|
|
330
|
|
2801 Valley View Drive
|
|
SHREVEPORT,
|
|
LA
|
|
USA
|
|
71108
|
|
|
2
|
|
583
|
|
4290 ATLANTA STREET
|
|
CHARLESTON
|
|
SC
|
|
USA
|
|
29418
|
|
|
2
|
|
592
|
|
555 GULF LINE ROAD, PEARL
|
|
JACKSON (Pearl),
|
|
MS
|
|
USA
|
|
39288
|
|
|
2
|
|
585
|
|
3101 Dugan Street
|
|
LITTLE ROCK
|
|
AR
|
|
USA
|
|
72216
|
|
|
2
|
|
312
|
|
2101 Dralle Road, University Park
|
|
UNIVERSITY PARK (Chicago)
|
|
IL
|
|
USA
|
|
60466
|
|
|
3
|
|
315
|
|
13860 Corp Woods Tr.
|
|
ST. LOUIS (Bridgeton),
|
|
MO
|
|
USA
|
|
63044
|
|
|
3
|
|
313
|
|
10347 Toebben Drive
|
|
CINCINNATI (Union, KY),
|
|
OH
|
|
USA
|
|
41051
|
|
|
3
|
|
314
|
|
6101 McKean, Ypsilanti
|
|
DETROIT (Ypsilanti),
|
|
MI
|
|
USA
|
|
48197
|
|
|
3
|
|
317
|
|
1727 WARREN STREET, NORTH KANSAS CITY
|
|
KANSAS CITY,
|
|
MO
|
|
USA
|
|
64116
|
|
|
3
|
|
642
|
|
225 Collins Rd
|
|
ELKHART,
|
|
IN
|
|
USA
|
|
46515
|
|
|
3
|
|
319
|
|
8175 JEFFERSON HWY, MAPLE GROVE
|
|
MINNEAPOLIS (Maple Grove)
|
|
MN
|
|
USA
|
|
55369
|
|
|
3
|
|
329
|
|
5717 North Mingo
|
|
TULSA,
|
|
OK
|
|
USA
|
|
74117
|
|
|
3
|
|
323
|
|
4501 N 4TH AVENUE
|
|
SIOUX FALLS,
|
|
SD
|
|
USA
|
|
57104
|
|
|
3
|
|
322
|
|
3941 15th Ave, North
|
|
FARGO,
|
|
ND
|
|
USA
|
|
58105
|
|
|
3
|
|
316
|
|
825 Buchanan Ave SW
|
|
GRAND RAPIDS
|
|
MI
|
|
USA
|
|
49501
|
|
|
3
|
|
320
|
|
5631 NE 17th
|
|
DES MOINES,
|
|
IA
|
|
USA
|
|
50316
|
|
|
3
|
|
321
|
|
2871 West Service Rd.
|
|
ST. PAUL (Eagan),
|
|
MN
|
|
USA
|
|
55121
|
|
|
3
|
|
563
|
|
809 South 62nd Avenue
|
|
WAUSAU,
|
|
WI
|
|
USA
|
|
54401
|
|
|
3
|
|
302
|
|
550 MUNROE FALLS RD OFF GILCHR
|
|
AKRON (Tallmadge),
|
|
OH
|
|
USA
|
|
44278
|
|
|
3
|
|
318
|
|
3220 E. Cherry Street
|
|
SPRINGFIELD,
|
|
MO
|
|
USA
|
|
65808
|
|
|
3
|
|
337
|
|
38811 Cherry St.
|
|
FREMONT (Newark),
|
|
CA
|
|
USA
|
|
94560
|
|
|
4
|
|
485
|
|
14750 Nelson Avenue
|
|
LOS ANGELES (City of Industry)
|
|
CA
|
|
USA
|
|
91749
|
|
|
4
|
|
743
|
|
360 INVERNESS DR SO, ENGLEWOOD
|
|
DENVER (Englewood)
|
|
CO
|
|
USA
|
|
80111
|
|
|
4
|
|
392
|
|
901 W 24th Street
|
|
SAN DIEGO
|
|
CA
|
|
USA
|
|
91951
|
|
|
4
|
|
395
|
|
12815 NE 178
th
Street
|
|
SEATTLE,
|
|
WA
|
|
USA
|
|
98072
|
|
|
4
|
|
333
|
|
3900 Uvalda Street
|
|
DENVER,
|
|
CO
|
|
USA
|
|
80239
|
|
|
4
|
|
339
|
|
1450 Citrus Avenue
|
|
RIVERSIDE,
|
|
CA
|
|
USA
|
|
92507
|
|
|
4
|
|
393
|
|
10515 SW ALLEN BLVD, BEAVERTON
|
|
PORTLAND (Beaverton),
|
|
OR
|
|
USA
|
|
97005
|
|
|
4
|
|
325
|
|
4747 MARK IV PKWY
|
|
FORTH WORTH,
|
|
TX
|
|
USA
|
|
76106
|
|
|
4
|
|
326
|
|
650 GELLHORN DRIVE
|
|
HOUSTON
|
|
TX
|
|
USA
|
|
77229
|
|
|
4
|
|
334
|
|
6990 Market Street
|
|
EL PASO,
|
|
TX
|
|
USA
|
|
79915
|
|
|
4
|
|
324
|
|
I/4 Mi. West Wilson Road
|
|
HARLINGEN
|
|
TX
|
|
USA
|
|
78550
|
|
|
4
|
|
328
|
|
535 N WW WHITE RD
|
|
SAN ANTONIO
|
|
TX
|
|
USA
|
|
78219
|
|
|
4
|
|
327
|
|
702 East 44th Street
|
|
LUBBOCK
|
|
TX
|
|
USA
|
|
79404
|
|
|
4
|
|
II-1
SCHEDULE III
IMMEDIATE REPAIRS AND REMEDIATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BRIEF DESCRIPTION OF ANY IMMEDIATE,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
Total Short
|
|
|
Total
|
|
|
Total
|
|
|
Uninflated
|
|
|
Inflated
|
|
|
Weighted
|
|
SHORT TERM OR RESERVE COSTS
|
Project
|
|
Project
|
|
|
|
|
|
Date of
|
|
Date of
|
|
Immediate
|
|
|
Immediate
|
|
|
Term
|
|
|
Reserve
|
|
|
Square
|
|
|
Reserves
|
|
|
Reserves
|
|
|
PML
|
|
AND/OR ANY ADDITIONAL ENGINEERING
|
Name
|
|
Address
|
|
City
|
|
State
|
|
Report
|
|
Inspection
|
|
Reserve
|
|
|
Costs
|
|
|
Costs
|
|
|
Costs
|
|
|
Feet
|
|
|
$/SF/Yr
|
|
|
$/SF/Yr
|
|
|
Value
|
|
STUDIES REQUIRED
|
Akron
|
|
550 Munroe Falls Rd
|
|
Tallmadge
|
|
OH
|
|
5/18/2006
|
|
5/9/2006
|
|
|
80,410
|
|
|
$
|
80,410
|
|
|
$
|
0
|
|
|
$
|
49,600
|
|
|
|
63,000
|
|
|
$
|
0.07
|
|
|
$
|
0.08
|
|
|
N/A
|
|
Roof replacement ($72,450); parking lot repair ($1,600); repair damaged wall panels on west and south warehouse and east wall of north shed ($6,360)
|
Fargo
|
|
3941 15th Avenue
|
|
Fargo
|
|
ND
|
|
5/31/2006
|
|
5/22/2006
|
|
|
32,250
|
|
|
$
|
32,250
|
|
|
$
|
21,400
|
|
|
$
|
50,200
|
|
|
|
83,100
|
|
|
$
|
0.05
|
|
|
$
|
0.06
|
|
|
N/A
|
|
Repair/replace damaged ceiling insulation ($20,000); replace exterior siding on east elevation of office area ($3,250); repair damaged concrete on loading dock near railroad spur ($1,500); repair chain link fence along the perimeter ($7,500)
|
Pittsburgh
|
|
Old Route 119 & Hunker Road
|
|
New Stanton
|
|
PA
|
|
6/1/2006
|
|
5/11/2006
|
|
|
51,788
|
|
|
$
|
51,788
|
|
|
$
|
0
|
|
|
$
|
32,860
|
|
|
|
63,154
|
|
|
$
|
0.04
|
|
|
$
|
0.05
|
|
|
N/A
|
|
Replace roof on the eastern portion of warehouse ($51,788)
|
Miami
|
|
3201 NW 110th Street
|
|
Miami
|
|
FL
|
|
6/1/2006
|
|
5/11/2006
|
|
|
74,000
|
|
|
$
|
74,000
|
|
|
$
|
0
|
|
|
$
|
187,250
|
|
|
|
103,870
|
|
|
$
|
0.15
|
|
|
$
|
0.16
|
|
|
N/A
|
|
West building roof was damaged during hurricane Wilma (work to be completed under 2006 capital plan) and parking needs repair ($58,000); exterior paint is faded and peeling, repainting required ($16,000)
|
Lake City
|
|
694 S.E. County Road 245
|
|
Lake City
|
|
FL
|
|
6/2/2006
|
|
5/26/2006
|
|
|
45,000
|
|
|
$
|
45,000
|
|
|
$
|
0
|
|
|
$
|
61,092
|
|
|
|
106,519
|
|
|
$
|
0.05
|
|
|
$
|
0.06
|
|
|
N/A
|
|
Replace roof on Building No. 2 ($45,000)
|
Charleston
|
|
4290 Atlanta Street
|
|
North Charleston
|
|
SC
|
|
6/5/2006
|
|
5/22/2006
|
|
|
40,000
|
|
|
$
|
40,000
|
|
|
$
|
0
|
|
|
$
|
28,200
|
|
|
|
41,580
|
|
|
$
|
0.06
|
|
|
$
|
0.07
|
|
|
N/A
|
|
Install adequate storm drainage
along railroad spur as required by local officials ($25,000); rake/clean expansion joints and install new sealant to prevent more cracking on concrete pavement ($10,000); sawcut areas of failed concrete pavement, remove and install new pavement ($3,750); replace missing gutters and downspouts ($1,250)
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
$
|
323,448
|
|
|
$
|
323,448
|
|
|
$
|
21,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
immediate repair escrow (125%)
|
|
$
|
404,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
III-1
SCHEDULE IV
SUBLEASES
1.
591 Gene Lasserre Boulevard, Yulee, FL
Lease Agreement between BlueLinx Corporation
(successor in interest to Georgia-Pacific Corporation), as Landlord, and Masonite Door Corporation
(successor in interest to Door Fabrication Services, Inc.), as Tenant, dated March 2, 1998 and
amended by:
|
a)
|
|
First Lease Amendment dated April
_____, 1999;
|
|
|
b)
|
|
Second Lease Amendment dated
, 1999;
|
|
|
c)
|
|
Third Lease Amendment dated June 1, 2001;
|
|
|
d)
|
|
Fourth Lease Amendment dated May 21, 2002;
|
|
|
e)
|
|
Fifth Lease Amendment dated September 1, 2003; and
|
|
|
f)
|
|
Sixth Lease Amendment dated June 1, 2004.
|
2.
4300 Georgia Pacific Boulevard, Frederick, MD
Lease Agreement between BlueLinx
Corporation (successor in interest to Georgia-Pacific Corporation), as Landlord, and Masonite Door
Corporation (successor in interest to Door Fabrication Services, Inc.), as Tenant, dated March 2,
1998 and amended by:
|
a)
|
|
First Lease Amendment dated August 1, 1999;
|
|
|
b)
|
|
Second Lease Amendment dated
, 2000;
|
|
|
c)
|
|
Third Lease Amendment dated June 1, 2001; and
|
|
|
d)
|
|
Fourth Lease Amendment dated June 1, 2004.
|
IV-1
SCHEDULE V
INTENTIONALLY DELETED
V-1
SCHEDULE VI
LITIGATION SCHEDULE
1.
Wickes Inc. v. Georgia Pacific Distribution Division (BlueLinx)
. The following language
was filed most recently in BlueLinx Holdings Inc.s 10-Q for the three month period ended April 1,
2006, and also filed in BlueLinx Holdings Inc.s Annual Report on Form 10-K for the year ended
December 31, 2005: On November 19, 2004, we received a letter from Wickes Lumber, or Wickes,
asserting that approximately $16 million in payments received by the Distribution Division of
Georgia-Pacific Corporation during the 90-day period prior to Wickes January 20, 2004 Chapter 11
filing were preferential payments under section 547 of the United States Bankruptcy Code. On
October 14, 2005, Wickes Inc. filed a lawsuit in the United States Bankruptcy Court for the
Northern District of Illinois titled Wickes Inc. v. Georgia Pacific Distribution Division
(BlueLinx), (Bankruptcy Adversary Proceeding No. 05-2322) asserting its claim. On November 14,
2005, we filed our answer to the complaint denying liability. Although the ultimate outcome of this
matter cannot be determined with certainty, we believe Wickes assertion to be without merit and,
in any event, subject to one or more complete defenses, including, but not limited to, that the
payments were made and received in the ordinary course of business and were a substantially
contemporaneous exchange for new value given to Wickes. Accordingly, we have not recorded a reserve
with respect to the asserted claim.
2.
In re Oakwood Homes Corp; OHC Liquidation Trust v. Georgia-Pacific Corporation
. This
is a lawsuit to avoid and recover $4,241,798.66 of preference-period payments from BlueLinx
Corporation. The case was mediated in early May of 2006. The trustee offered to settle the matter
by subtracting $250,000 from BlueLinx $270,000 reclamation claim against the Oakwood Homes
bankruptcy estate and to pay the $20,000 balance of the reclamation claim over to BlueLinx.
BlueLinx declined this result, and the parties were unable to settle their differences. The matter
is now scheduled for trial on September 9, 2006.
3.
In re Scott Acquisition Corp.; Official Creditors Committee v. BlueLinx Corporation
.
This is a lawsuit to avoid and recover $600,668.24 of preference-period payments from BlueLinx
Corporation. The bankruptcy court has ordered that the matter be subject to mediation to be
completed by June 30, 2006, and the matter is otherwise set for trial on August 10, 2006.
4.
BlueLinx Corporation v. Wachovia Bank NA
. This a lawsuit against Wachovia filed on May
11, 2006 to recover $126,062.82 that Wachovia paid from the BlueLinx account against a check that
was evidently stolen and fraudulently modified.
VI-1
SCHEDULE VII
OUTPARCEL LEGAL DESCRIPTIONS
Frederick, MD
: A Portion of that certain tract, piece or parcel of land lying and being situated in
Frederick County, Maryland and being more particularly described as follows:
Beginning at a point in the South line of Geoffrey Way, which point is 2348 from the Northeast
intersection of Buckeystown Pike and Geoffrey Way;
Thence along the south line of said Geoffrey Way South 38 degrees 13 minutes 56 seconds East 327.89
feet to a point;
Thence South 02 degrees 58 minutes 05 seconds East 34.64 feet to a point;
Thence along a curve to the left with a radius of 60.00 feet, an arc distance of 168.09 feet, a
chord bearing of South 51 degrees 46 minutes 22 seconds East and a chord of 118.27 feet to a point;
Thence South 38 degrees 13 minutes 58 seconds East 320.64 feet to a point;
Thence leaving said road South 34 degrees 23 minutes 21 seconds West 575.15 feet to a point;
Thence North 63 degrees 25 minutes 07 seconds West 639.00 feet to a
point;
Thence North 26 degrees 24 minutes 43 seconds East 899.82 feet to the point and place of beginning,
containing 11.466 acres or 499,445 square feet, less and except rail extension of no more than
100,000 square feet.
University Park, IL:
The south 800 feet, as measured along the east line thereof, of lot 2 less
and except the improved land thereof, and the following described part of lot 3 in the subdivision
of section 16, township 34 north, range 13 east of the third principal meridian, in Will county,
Illinois:
Beginning at the northwest corner of lot 3; thence east along and upon the north line of lot 3, for
a distance of 50.00 feet; thence southerly to a point on the west line of said lot 3, which line is
also the southeasterly right of way line of the railroad right of way, said point being 200.00 feet
southwesterly of the northwest corner of said lot 3; thence northeasterly along and upon said west
line, which is also said southeasterly right of way line, for a distance of 200.00 feet to the
point of beginning, in Will county, Illinois.
Maple Grove, MN:
The South 417.30 feet of the East 710.00 feet, except the South 70.00 feet thereof
all in the Southeast Quarter of the Northeast Quarter of Section 24, Township 119, Range 22,
Hennepin County, Minnesota
Woodinville, WA:
Parcel A 12811 Northeast 178
th
Street, Tax ID: 726910-0047
Independence, KY:
Beginning at an iron pin of the southern right of way of Toebben Road at the
terminus of the first course of D.B. 595, page 155 and running with property of Toebben LTD and
JJEMS INV. LLC South 05 degrees 19 minutes 41 seconds West for 600 feet; thence North 84 degrees 44
minutes 47 seconds West for 400 feet; thence North 05 degrees 19 minutes 41 seconds East for 600
feet to the south line of Toebben drive; thence South 85 degrees 29 minutes 18 seconds East to the
point of beginning.
VII-1
Newtown, CT:
A certain piece or parcel of land situated on the easterly side of Route 25 in the
Town of Newtown, County of Fairfield and State of Connecticut, being a part of the land as shown
and designated on a certain map entitled Map prepared for Georgia Pacific Corporation Conn. Route
25, Newtown, Connecticut, Scale 1=60 Dec. 14, 1976 by C James Osborne, Jr. RLS, Charles J.
Osborne Associates, New Milford, Connecticut. Said map being on file in the office of the Town
Clerk of the Town of Newtown as Map No. 4562. Also being part of the premises conveyed to Georgia
Pacific Corporation by The Homer C Godfrey Company in a deed recorded in Vol. 262 Page 708.
Beginning at a point marked by and existing marble monument, said point lying 16.17 southwesterly
from the Southeast corner of the herein described parcel. Said point being on the northerly line of
the property of N/F Union Water Co., Inc. recorded in Deed Book 510 Page 35 & Deed Book 291 Page
641)Thence along said line the following courses and distances:
S37°1213W a distance of 235.24 feet;
S50°1638W a distance of 200.00 feet;
N62°4322W a distance of 35.00 feet;
S62°1638W a
distance of 57.07 feet to a point on the northeasterly side of Connecticut Route
25; said point marking the southwest corner of the herein described parcel. Thence turning and
running along said CT Route 25 the following courses:
N53°1214W a distance of 217.06 feet;
N62°0718W a distance of 64.21 feet;
Thence continuing along said CT Route 25 on a curve to the right having a radius of 2404.20 feet
and a length of 529.90 feet to a CHD monument;
Thence N52°5931E a distance of 8.82 feet:
Thence N64°0854E a distance of 139.54 feet to an existing chain link fence corner post;
Thence S79°2006E a distance of 109.56 feet to an existing chain link fence corner post;
Thence N67°2800E a distance of 428.76 feet to an existing chain link fence corner post;
Thence S79°2320E a distance of 181.07 feet to a point on the West line of the New York, New Haven
and Hartford Railroad (formerly Con-Rail) said point being the Northerly most corner of a 50
Right of Way (0.763 acres) recorded in Book 147 Page 319 and shown on the above referenced map
being on file in the office of the Town Clerk of the Town of Newtown as Map No. 4562;
Thence along said railroad S23°5528E a distance of 152.52 feet;
Thence continuing along said railroad S30°1451E a distance of 254.65 feet;
Thence leaving said railroad S37°1213W a distance of 16.17 feet along the line of Union Water
Co., Inc. to an existing marble monument marking the point or place of beginning, containing
9.6 acres more or less.
VII-2
Ft Worth, TX:
Being a tract of land situated in the D. ODUM SURVEY, ABSTRACT NO. 1184, City of Fort
Worth, Tarrant County, Texas and being a portion of those tracts of land (Tract One & Tract Two) as
described in Deed to Ballister Group, Inc. recorded in Volume 11577, Page 287 of the Deed Records
of Tarrant County, Texas and being more particularly described as follows:
BEGINNING at a
1
/
2
iron rod with a plastic cap found at the northwest corner of Site 1-Block 8, Mark
IV Industrial Park, an addition to the City of Fort Worth, Tarrant County, Texas as recorded in
Volume 388-79, Page 38 of the Plat Records of Tarrant County, Texas (Prtct);
THENCE South 89 degrees 58 minutes 34 seconds West, 464.68 feet, along the Southern right-of-way of
Great Southwest Parkway (60 R/W), to a capped iron pin found, being the PRINCIPLE POINT OF
BEGINNING of herein described tract;
THENCE, South 00 degrees 01 minutes 31 seconds East, 506.27 feet, departing the South right-of-way
of Great Southwest Parkway, to a capped iron pin found;
THENCE, South 89 degrees 58 minutes 23 seconds West, 325.02 feet to a point;
THENCE, South 00 degrees 05 minutes 11 seconds East, 754.06 feet to a point in the Northern
right-of-way of a 53-foot wide Railroad Easement;
THENCE; North 90 degrees 00 minutes 00 seconds West, 830.83 feet, along said Railroad right-of-way
to a capped iron pin found;
THENCE; North 00 degrees 00 minutes 00 seconds East, 1260.00 feet, to a
1
/
2
inch pipe found in the
Southern right-of-way of Great Southwest Parkway;
THENCE; North 89 degrees 58 minutes 34 seconds East, 1154.49 feet to the PRINCIPLE POINT OF
BEGINNING, containing 27.789 acres more or less.
St Louis (Bridgeton), MO:
The Northwest 400 feet measured along the Southwest line thereof; of Lot
17 of a line drawn parallel to the Northwest boundary line bearing N 52
o
44 21 E of
the Hoechst Tract Subdivision according to the Plat thereof recorded in Plat book 341, Page 3 St.
Louis County, Missouri;
VII-3
SCHEDULE VIII
BORROWER TAXPAYER IDENTIFICATION NUMBERS
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Entity
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EIN
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1.
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ABP AL (MIDFIELD) LLC
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77-0627356
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2.
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ABP AR (LITTLE ROCK) LLC
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77-0627356
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3.
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ABP CA (CITY OF INDUSTRY) LLC
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77-0627356
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4.
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ABP CA (NATIONAL CITY) LLC
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77-0627356
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5.
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ABP CA (NEWARK) LLC
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77-0627356
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6.
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ABP CA (RIVERSIDE) LLC
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77-0627356
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7.
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ABP CO I (DENVER) LLC
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77-0627356
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8.
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ABP CO II (DENVER) LLC
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77-0627356
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9.
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ABP CT (NEWTON) LLC
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36-4553871
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10.
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ABP FL (LAKE CITY) LLC
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77-0627356
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11.
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ABP FL (MIAMI) LLC
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77-0627356
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12.
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ABP FL (PENSACOLA) LLC
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77-0627356
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13.
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ABP FL (TAMPA) LLC
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77-0627356
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14.
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ABP FL (YULEE) LLC
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77-0627356
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15.
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ABP GA (LAWRENCEVILLE) LLC
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77-0627356
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16.
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ABP IA (DES MOINES) LLC
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77-0627356
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17.
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ABP IL (UNIVERSITY PARK) LLC
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77-0627356
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18.
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ABP IN (ELKHART) LLC
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77-0627356
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19.
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ABP KY (INDEPENDENCE) LLC
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77-0627356
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20.
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ABP LA (SHREVEPORT) LLC
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30-0247739
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21.
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ABP MA (BELLINGHAM) LLC
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77-0627356
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22.
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ABP MD (BALTIMORE) LLC
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77-0627356
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23.
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ABP ME (PORTLAND) LLC
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61-1470388
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24.
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ABP MI (DETROIT) LLC
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77-0627356
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25.
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ABP MI (GRAND RAPIDS) LLC
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77-0627356
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26.
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ABP MN (EAGAN) LLC
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77-0627356
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VIII-1
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Entity
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EIN
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27.
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ABP MN (MAPLE GROVE) LLC
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77-0627356
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28.
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ABP MO (BRIDGETON) LLC
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77-0627356
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29.
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ABP MO (KANSAS CITY) LLC
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77-0627356
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30.
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ABP MO (SPRINGFIELD) LLC
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77-0627356
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31.
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ABP MS (PEARL) LLC
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77-0627356
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32.
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ABP NC (BUTNER) LLC
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77-0627356
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33.
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ABP NC (CHARLOTTE) LLC
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77-0627356
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34.
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ABP ND (NORTH FARGO) LLC
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77-0634934
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35.
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ABP NJ (DENVILLE) LLC
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77-0627356
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36.
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ABP NM (ALBUQUERQUE) LLC
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77-0627356
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37.
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ABP NY (YAPHANK) LLC
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77-0627356
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38.
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ABP OH (TALMADGE) LLC
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77-0627356
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39.
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ABP OK (TULSA) LLC
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77-0627356
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40.
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ABP OR (BEAVERTON) LLC
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77-0627356
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41.
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ABP PA (ALLENTOWN) LLC
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77-0627356
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42.
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ABP PA (STANTON) LLC
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77-0627356
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43.
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ABP SC (CHARLESTON) LLC
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77-0627356
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44.
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ABP SD (SIOUX FALLS) LLC
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77-0627356
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45.
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ABP TN (ERWIN) LLC
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77-0627356
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46.
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ABP TN (MEMPHIS) LLC
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77-0627356
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47.
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ABP TN (NASHVILLE) LLC
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77-0627356
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48.
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ABP TX (EL PASO) LLC
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77-0627356
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49.
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ABP TX (FORT WORTH) LLC
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77-0627356
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50.
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ABP TX (HARLINGEN) LLC
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77-0627356
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51.
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ABP TX (HOUSTON) LLC
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77-0627356
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52.
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ABP TX (LUBBOCK) LLC
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77-0627356
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53.
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ABP TX (SAN ANTONIO) LLC
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77-0627356
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54.
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ABP VA (RICHMOND) LLC
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77-0627356
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55.
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ABP VA (VIRGINIA BEACH) LLC
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77-0627356
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56.
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ABP VT (SHELBURNE) LLC
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05-0602221
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57.
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ABP WA (WOODINVILLE) LLC
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77-0627356
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58.
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ABP WI (WAUSAU) LLC
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05-0602220
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59.
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ABP MD (BALTIMORE) SUBSIDIARY LLC
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77-0627356
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VIII-2
***
Portions hereof have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for
confidential treatment in accordance with Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
EXHIBIT 10.2
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
by and among
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as Lenders,
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative and Collateral Agent,
WACHOVIA CAPITAL MARKETS, LLC
as Sole Lead Arranger and Sole Syndication Agent,
BANK OF AMERICA, N.A.,
JPMORGAN CHASE BANK, N.A.,
and WELLS FARGO FOOTHILL, LLC,
as Documentation Agents,
BLUELINX CORPORATION,
BLUELINX FLORIDA LP,
and BLUELINX SERVICES INC.
as Borrowers,
and
BLUELINX FLORIDA HOLDING NO. 1 INC.,
BLUELINX FLORIDA HOLDING NO. 2 INC.,
BLX TEXAS ACQUISITION I LLC, and
BLX TEXAS ACQUISITION II LLC
as Guarantors
Dated: August 4, 2006
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Amended and Restated Loan and Security Agreement (this
Agreement
), dated August
4, 2006, is entered into by and among the financial institutions from time to time parties hereto,
whether by execution of an Assignment and Acceptance Agreement (as defined below) or this Agreement
(each a
Lender
and collectively the
Lenders
), Wachovia Bank, National
Association, successor by merger to Congress Financial Corporation (
Wachovia
), as
administrative and collateral agent for the Lenders and for the Bank Product Providers (as defined
below) (in such capacity,
Administrative and Collateral Agent
), Wachovia Capital Markets,
LLC, as sole lead arranger for the credit facility (in such capacity,
Sole Lead Arranger
)
and as sole syndication agent for the credit facility (in such capacity,
Sole Syndication
Agent
), Bank of America, N.A., Wells Fargo Foothill, LLC, and JPMorgan Chase Bank, N.A.,
formerly known as JPMorgan Chase Bank, as documentation agents (each a
Documentation
Agent
and collectively,
Documentation Agents
, and together with the Administrative
and Collateral Agent, the Sole Lead Arranger, and the Sole Syndication Agent, each individually an
Agent
and collectively,
Agents
), BlueLinx Corporation, a Georgia corporation
(
BlueLinx
), BlueLinx Services Inc., a Georgia corporation (
BSI
), and BlueLinx
Florida LP, a Florida limited partnership (
BFLP
, and together with BlueLinx and BSI, each
individually a
Borrower
and collectively,
Borrowers
as hereinafter further
defined), BlueLinx Florida Holding No. 1 Inc., a Georgia corporation (
BFH1
), BlueLinx
Florida Holding No. 2 Inc., a Georgia corporation (
BFH2
), BLX Texas Acquisition I LLC, a
Georgia limited liability company (
BLX1
), and BLX Texas Acquisition II LLC, a Georgia
limited liability company (
BLX2
, and together with BFH1, BFH2, and BLX1, each
individually a
Guarantor
and collectively,
Guarantors
as hereinafter further
defined).
W I T N E S S E T H:
WHEREAS, BlueLinx, Administrative and Collateral Agent, the Documentation Agents, and the
persons party thereto as lenders (the
Original Lenders
), among others, have previously
entered into that certain Loan and Security Agreement dated May 7, 2004 (as amended, restated,
supplemented or otherwise modified from time to time, the
Original Loan Agreement
),
pursuant to which, among other things, the Original Lenders have made certain loans and financial
accommodations available to BlueLinx.
WHEREAS, BSI and BFLP are Subsidiaries of BlueLinx and together they are inter-related
entities which collectively constitute an integrated business unit;
WHEREAS, the directors of each Borrower view the entities as sufficiently dependent upon each
other and so inter-related that any advance made hereunder to any Borrower would benefit all of the
Borrowers as a result of their consolidated operations and identity of interests;
2
WHEREAS, each Borrower has requested that Administrative and Collateral Agent and the Lenders
treat them as co-borrowers hereunder, jointly and severally responsible for the obligations of each
other hereunder;
WHEREAS, each Revolving Loan Lender is willing (severally and not jointly) to make such loans
and provide such financial accommodations to Borrowers on a pro rata basis according to its
commitment provided for herein on the terms and conditions set forth herein; and
WHEREAS, Wachovia is willing to continue to act as administrative agent and collateral agent
for Lenders on the terms and conditions set forth herein and in the other Financing Agreements (as
defined below).
WHEREAS, the parties hereto have agreed to amend and restate, in their entirety, the
agreements contained in the Original Loan Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto amend and restate the Original Loan Agreement and agree as
follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the respective meanings given
to them below:
1.1
ACH Transactions
shall mean any overdrafts, cash management or related services,
including the automatic clearing house transfer of funds by Administrative and Collateral Agent or
any of its Affiliates for the account any Borrower or any of their respective Subsidiaries, in each
case pursuant to agreements entered into with any Borrower or any of their respective Subsidiaries.
1.2
Accounts
shall mean, as to each Borrower and each Guarantor, all present and
future rights of such Borrower and such Guarantor to payment of a monetary obligation, whether or
not earned by performance, which is not evidenced by chattel paper or an instrument, (a) for
property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b)
for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred,
or (d) arising out of the use of a credit, charge or debit card along with all information
contained on or for use with such card.
1.3
Acquisition
shall mean (a) any Stock Acquisition, or (b) any Asset Acquisition.
1.4
Acquisition Subsidiary
shall mean any wholly owned Subsidiary of any Borrower
which is formed by such Borrower solely in connection with a Permitted Acquisition.
3
1.5
Adjusted Eurodollar Rate
shall mean, with respect to each Interest Period for
any Eurodollar Rate Loan, the rate per annum (rounded upwards, if necessary, to the next one-
sixteenth (1/16) of one percent (1%)) determined by dividing (a) the Eurodollar Rate for such
Interest Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage, if
any. For purposes hereof,
Reserve Percentage
shall mean the reserve percentage,
expressed as a decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits of United States
dollars in a non-United States or an international banking office of the Reference Bank used to
fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with the proceeds of such deposit,
whether or not the Reference Bank actually holds or has made any such deposits or loans. The
Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of any change in the
Reserve Percentage.
1.6
Administrative Borrower
shall mean BlueLinx Corporation, a Georgia corporation,
in its capacity as Administrative Borrower on behalf of itself and the other Borrowers pursuant to
Section 6.12 hereof and its successors and assigns in such capacity.
1.7
Affiliate
shall mean, with respect to a specified Person, any other Person which
directly or indirectly through one or more intermediaries controls, or is controlled by, or is
under common control with such Person, and without limiting the generality of the foregoing,
includes (a) any Person which beneficially owns or holds twenty percent (20%) or more of any class
of Voting Stock of such Person or other equity interests in such Person, and (b) any director or
executive officer of such Person. For purposes of this definition, the term control (including,
with correlative meanings, the terms controlled by and under common control with), as used with
respect to any Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether through the ownership of
Voting Stock, by agreement or otherwise.
1.8
Affiliate Lease
shall mean that certain Amended and Restated Master Lease
Agreement, dated as of June 9, 2006, by and among BlueLinx, ABP AL (MIDFIELD) LLC, a Delaware
limited liability company, and the other Affiliates of Parent identified as Landlords on the
signature pages thereof, as the same may be amended, restated, supplemented or otherwise modified
from time to time in accordance with the terms hereof.
1.9
Asset Acquisition
shall mean the purchase or other acquisition by any Borrower
or any Acquisition Subsidiary of all or substantially all of the assets of any other Person engaged
in substantially the same or a related business as Borrowers.
1.10
Assignment and Acceptance
shall mean an Assignment and Acceptance substantially
in the form of
Exhibit A
attached hereto delivered to Administrative and Collateral Agent
in connection with an assignment of a Lenders interest hereunder in accordance with the provisions
of Section 13.6 hereof.
1.11
Bank Products
shall mean any one or more of the following types of services or
facilities extended to any Borrower or any of their respective Subsidiaries by a Bank Product
Provider: (a) credit cards, (b) ACH Transactions, (c) Hedging Transactions, and (d) foreign
exchange contracts.
4
1.12
Bank Product Providers
shall mean Wachovia and any of its Affiliates that may,
from time to time, provide any Bank Products to any Borrower or any of their respective
Subsidiaries.
1.13
Bank Product Reserve
shall mean any and all reserves that Administrative and
Collateral Agent may establish from time to time, in its reasonable discretion, for the Bank
Products provided by any Bank Product Provider which are then outstanding.
1.14
Blocked Accounts
shall have the meaning set forth in Section 6.3(a) hereof.
1.15
Blocked Account Activation Period
shall have the meaning given in Section
6.3(a) hereof.
1.16
Borrowers
shall mean, collectively, the following (together with their
respective successors and assigns): (a) BlueLinx Corporation, a Georgia corporation; (b) BlueLinx
Services Inc., a Georgia corporation; (c) BlueLinx Florida LP, a Florida limited partnership; and
(d) any other Person that at any time after the date hereof becomes a Borrower; each sometimes
being referred to herein individually as a
Borrower
.
1.17
Borrowing Base
shall mean, at any time, the amount equal to:
(a) 85% of the Net Amount of Eligible Accounts;
provided
,
however
, such
percentage shall be reduced by one percentage point for each percentage point (or fraction thereof)
by which Dilution exceeds 5%, plus
(b) the lesser of: (i) 70% (or 75% during the Seasonal Period) of the sum of (A) the Value of
Eligible Inventory, (B) the Value of Eligible Domestic In-Transit Inventory, (C) the Value of
Eligible International In-Transit Inventory and (D) the Value of Eligible Re-Load Inventory or (ii)
85% of the sum of the Net Orderly Liquidation Value;
provided
,
however
, Revolving
Loans outstanding with respect to Eligible Domestic In-Transit Inventory, Eligible International
In-Transit Inventory and Eligible Re-Load Inventory shall not exceed, in the aggregate at any one
time outstanding, $85,000,000, minus
(c) the sum of all Reserves.
1.18
Business Day
shall mean any day other than a Saturday, Sunday, or other day on
which commercial banks are authorized or required to close under the laws of the State of New York
or the State of North Carolina, and a day on which the Reference Bank, Administrative and
Collateral Agent and each Lender are open for the transaction of business, except that if a
determination of a Business Day shall relate to any Eurodollar Rate Loans, the term Business Day
shall also exclude any day on which banks are closed for dealings in dollar deposits in the London
interbank market or other applicable Eurodollar Rate market.
5
1.19
Canadian Priority Payables
shall mean, as of any date of determination, the
full amount of the liabilities of any Borrower as of such date of determination which (a) have a
trust imposed to provide for payment or a security interest, pledge, lien, hypothec or charge
ranking or capable of ranking senior to or pari passu with security interests, liens or charges
securing the Obligations on any of the Accounts or Inventory of such Borrower under Canadian
federal,
Provincial, state, county, district, municipal or local law, or (b) have a right imposed to
provide for payment ranking or capable of ranking senior to or pari passu with the Obligations
under local or national Canadian laws, regulations or directives, including, but not limited to,
claims for unremitted and/or accelerated rents, taxes, wages, withholding taxes, VAT and other
amounts payable to an insolvency administrator, employee withholdings or deductions and vacation
pay, workers compensation obligations, government royalties or pension fund obligations, in each
case to the extent such trust or security interest, lien or charge has been or may be imposed,
including, without limitation, Inventory upon which the Borrowing Base is calculated which is
subject to a right of a supplier to repossess goods pursuant to Section 81.1 of the Bankruptcy and
Insolvency Act (Canada) or any applicable laws granting revendication or similar rights to unpaid
suppliers or any similar laws of Canada or any other applicable jurisdiction.
1.20
Capital Expenditures
shall mean, for any period, any expenditure of money for
the purchase or other acquisition of any capital asset or for the purchase or construction of
assets, or for improvements or additions thereto, which are capitalized on a Persons balance sheet
in accordance with GAAP, including the principal amount of capital expenditures financed with
Capital Leases.
1.21
Capital Leases
shall mean, as applied to any Person, any lease of (or any
agreement conveying the right to use) any property (whether real, personal or mixed) by such Person
as lessee which in accordance with GAAP, is or is required to be reflected as a capital lease on
the balance sheet of such Person.
1.22
Capital Stock
shall mean, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such Persons capital stock,
or partnership, limited liability company or other equity interests at any time outstanding, and
any and all rights, warrants or options exchangeable for or convertible into such capital stock or
other interests (but excluding any debt security that is exchangeable for or convertible into such
capital stock).
1.23
Cash Equivalents
shall mean, at any time, (a) any evidence of Indebtedness with
a maturity date of one hundred eighty (180) days or less issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality thereof; provided, that,
the full faith and credit of the United States of America is pledged in support thereof; (b)
certificates of deposit or bankers acceptances with a maturity of one hundred eighty (180) days or
less of any financial institution that is a member of the Federal Reserve System having combined
capital and unimpaired surplus of not less than Five Hundred Million Dollars ($500,000,000); (c)
commercial paper (including variable rate demand notes) with a maturity of one hundred eighty (180)
days or less issued by a corporation (except an Affiliate of any Borrower or any Guarantor)
organized under the laws of any State of the United States of America or the District of Columbia
and rated at least A-2 by Standard & Poors Ratings Service, a division of The McGraw-Hill
Companies, Inc. or at least P-2 by Moodys Investors Service, Inc.; (d) repurchase obligations with
a term of not more than thirty (30) days for underlying securities of the types described in clause
(a) above entered into with any financial institution having combined capital and unimpaired
surplus of not less than Five Hundred Million Dollars ($500,000,000); (e) repurchase agreements and
reverse repurchase agreements relating to marketable direct obligations issued or unconditionally
guaranteed by the United
States of America or issued by any governmental agency thereof and backed by the full faith
and credit of the United States of America, in each case maturing within one hundred eighty (180)
days or less from the date of acquisition; provided, that, the terms of such agreements comply with
the guidelines set forth in the Federal Financial Agreements of Depository Institutions with
Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985;
and (f) investments in money market funds and mutual funds that are registered under the Investment
Company Act of 1940, as amended, which invest substantially all of their assets in securities of
the types described in clauses (a) through (e) above.
6
1.24
CFC
shall mean a Person that is organized under the laws of a jurisdiction
other than the District of Columbia or any State within the United States of America that is a
controlled foreign corporation as that term is defined in Section 957(a) of the Code.
1.25
Change of Control
shall mean (a) except as permitted by Section 9.7, the
liquidation or dissolution of any Borrower or any Guarantor or the adoption of a plan by the
stockholders of any Borrower or any Guarantor relating to the dissolution or liquidation of such
Borrower or such Guarantor; (b) the failure of the Permitted Holders to, directly or indirectly,
own and control at least thirty percent (30%) of the Voting Stock of BlueLinx if either: (i) any
other Person and/or one or more of its Affiliates, collectively, own or control more of the Voting
Stock of BlueLinx than the Permitted Holders; or (ii) any other Person and/or one or more of its
Affiliates, collectively, own or control more than twenty percent (20%) of the Voting Stock of
BlueLinx; (c) the failure of the Permitted Holders to, directly or indirectly, own and control at
least thirty percent (30%) of the Capital Stock of BlueLinx if either: (i) any other Person and/or
one or more of its Affiliates, collectively, own or control more of the Capital Stock of BlueLinx
than the Permitted Holders; or (ii) any other Person and/or one or more of its Affiliates,
collectively, own or control more than twenty percent (20%) of the Capital Stock of BlueLinx; or
(d) the failure of BlueLinx to own directly or indirectly one hundred percent (100%) of the Capital
Stock of any other Borrower or Guarantor.
1.26
Code
shall mean the Internal Revenue Code of 1986, as amended.
1.27
Collateral
shall have the meaning set forth in Section 5 hereof.
1.28
Collateral Access Agreement
shall mean an agreement in writing, in form and
substance reasonably satisfactory to Administrative and Collateral Agent, by a lessor of premises
to any Borrower or any Guarantor, or any other Person to whom any Collateral (including Inventory,
Equipment, bills of lading or other documents of title) is consigned or who has custody, control or
possession of any such Collateral or is otherwise the owner or operator of any premises on which
any of such Collateral is located, pursuant to which such lessor, consignee or other Person, inter
alia, acknowledges the first priority security interest of Administrative and Collateral Agent, for
itself and the ratable benefit of the Lenders and the Bank Product Providers, in such Collateral,
agrees to waive or subordinate any and all claims such lessor, consignee or other person may, at
any time, have against such Collateral, whether for processing, storage or otherwise, and agrees to
permit Administrative and Collateral Agent access to, and the right to remain on, the premises of
such lessor, consignee or other Person so as to exercise Administrative and Collateral Agents
rights and remedies and otherwise deal with such Collateral and, in the case of any consignee or
other person who at any time has custody, control
or possession of any Collateral, acknowledges that it holds and will hold possession of the
Collateral for the benefit of Administrative and Collateral Agent and agrees to follow all
reasonable instructions of Administrative and Collateral Agent with respect thereto.
7
1.29
Collection Account
shall mean any of the deposit accounts set forth on Schedule
1.29 hereto so long as such deposit account is subject to a Deposit Account Control Agreement.
1.30
Compliance Period
shall mean the period commencing on (a) any date on which
Excess Availability has been less than $40,000,000 for the third (3
rd
) consecutive
Business Day and ending on (b) a subsequent date on which Modified Adjusted Excess Availability has
been equal to or greater than $40,000,000 for the sixtieth (60
th
) consecutive day.
1.31
Debt
shall mean, for any Person, all items of indebtedness or liability which
in accordance with GAAP would be included in determining total liabilities as shown on the
liabilities side of a balance sheet of such Person as at the date as of which Debt is to be
determined and the aggregate payments required to be made by such Person at any time under any
Capital Lease.
1.32
Default
shall mean an act, condition or event which with notice or passage of
time or both would constitute an Event of Default.
1.33
Defaulting Lender
shall have the meaning set forth in Section 6.10(d) hereof.
1.34
Deposit Account Control Agreement
shall mean an agreement in writing, in form
and substance reasonably satisfactory to Administrative and Collateral Agent, by and among
Administrative and Collateral Agent, any Borrower or any Guarantor with a deposit account at any
bank and the bank at which such deposit account is at any time maintained which provides that such
bank will comply with instructions originated by Administrative and Collateral Agent directing
disposition of the funds in the deposit account without further consent by such Borrower or such
Guarantor and has such other terms and conditions as Administrative and Collateral Agent may
reasonably require, including, pursuant to Section 6.3 hereof, as to any such agreement with
respect to any Blocked Account, providing that all items received or deposited in the Blocked
Accounts are the property of Administrative and Collateral Agent, for itself and the ratable
benefit of the Lenders and the Bank Product Providers, that the bank has no lien upon, or right to
setoff against, the Blocked Accounts, the items received for deposit therein, or the funds from
time to time on deposit therein, other than as may be agreed to by Administrative and Collateral
Agent for usual and customary charges associated with the maintenance of such deposit account or
charges for returned items, and that, at the direction of Administrative and Collateral Agent, the
bank will wire, or otherwise transfer, in immediately available funds, on a daily basis to the
Payment Account all funds received or deposited into the Blocked Accounts.
1.35
Dilution
shall mean, as determined by Administrative and Collateral Agent for
any period as of any date, the ratio, expressed as a percentage, of the aggregate amount of
non-cash reductions in Borrowers Accounts for such period to the aggregate dollar amount of the
sales of Borrowers for such period.
8
1.36
EBITDA
shall mean, as of any date of determination, for a specified period
ending on such date of determination, an amount equal to: (a) Net Income,
plus
(b)
depreciation, amortization and other non-cash charges (including, but not limited to, imputed
interest and deferred compensation) of Borrowers and their respective Subsidiaries for such period
(to the extent deducted in the computation of Net Income), all in accordance with GAAP,
plus
(c) Interest Expense of Borrowers and their respective Subsidiaries for such period
(to the extent deducted in the computation of Net Income),
plus
(d) charges for Federal,
State, local and foreign income taxes for such period (to the extent deducted in the computation of
Net Income).
1.37
Eligible Accounts
shall mean Accounts created by a Borrower which are and
continue to be acceptable to Administrative and Collateral Agent, acting in good faith and in its
reasonable credit judgment, based on the criteria set forth below. In general, Accounts shall be
Eligible Accounts if:
(a) such Accounts are invoiced and arise from the actual and bona fide sale and delivery of
goods by such Borrower or rendition of services by such Borrower in the ordinary course of its
business which transactions are completed in accordance with the material terms and provisions
contained in any documents related thereto;
(b) such Accounts are not unpaid more than ninety (90) days after the date of the original
invoice for them or more than sixty (60) days past the original due date for them;
(c) such Accounts comply with the terms and conditions contained in Section 7.2(b) of this
Agreement;
(d) such Accounts do not arise from sales of goods owned by Persons other than such Borrower
but held by such Borrower on consignment, guaranteed sales, sales and returns, sales on approval,
or other terms under which payment by the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor owing such Accounts is located in the
United States of America or Canada or, at Administrative and Collateral Agents option, if the
chief executive office and principal place of business of the account debtor with respect to such
Accounts is located other than in the United States of America or Canada, then if either: (i) the
account debtor has delivered to such Borrower an irrevocable letter of credit issued or confirmed
by a bank that would constitute an Eligible Transferee or is otherwise satisfactory to
Administrative and Collateral Agent and payable only in the United States of America and in U.S.
Dollars, sufficient to cover the amount of such Account, in form and substance reasonably
satisfactory to Administrative and Collateral Agent and if required by Administrative and
Collateral Agent, the original of such letter of credit has been delivered to Administrative and
Collateral Agent or Administrative and Collateral Agents agent and such Borrower has complied with
the terms of Section 5.2(f) hereof with respect to the assignment of the proceeds of such letter of
credit to Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders
and the Bank Product Providers, or naming Administrative and Collateral Agent, for itself and the
ratable benefit of the Lenders and the Bank Product Providers, as transferee beneficiary
thereunder, as Administrative and Collateral Agent may specify, or (ii) such Account is subject to
credit insurance payable to Administrative and Collateral Agent, for itself and the
ratable benefit of the Lenders and the Bank Product Providers, issued by an insurer and on
terms and in an amount reasonably acceptable to Administrative and Collateral Agent, or (iii) such
Account is otherwise acceptable in all respects to Administrative and Collateral Agent (subject to
such lending formula with respect thereto as Administrative and Collateral Agent may determine);
9
(f) such Accounts do not consist of progress billings (such that the obligation of the account
debtors with respect to such Accounts is conditioned upon such Borrowers satisfactory completion
of any further performance under the agreement giving rise thereto), bill and hold invoices or
retainage invoices, except as to bill and hold invoices, if Administrative and Collateral Agent
shall have received an agreement in writing from the account debtor, in form and substance
reasonably satisfactory to Administrative and Collateral Agent, confirming the unconditional
obligation of the account debtor to take the goods related thereto and pay such invoice;
(g) the account debtor with respect to such Accounts has not asserted a counterclaim, defense
or dispute and does not have, and neither it nor its Affiliates engage in transactions with such
Borrower which may give rise to any legal right of setoff or recoupment against such Accounts (but
the portion of the Accounts of such account debtor in excess of the amount at any time and from
time to time owed by such Borrower to such account debtor or claimed owed by such account debtor
may be deemed Eligible Accounts subject to the other criteria set forth herein);
(h) none of the following events has occurred with respect to the account debtor owing such
Accounts: (i) the death or judicial declaration of incompetency of such account debtor if it is an
individual; (ii) the filing by or against such account debtor of a request or petition for
liquidation, reorganization, arrangement, readjustment of debts, dissolution, adjudication as a
bankrupt, winding-up, moratorium, administration, receivership, arrangement or other relief under
the bankruptcy, insolvency, or similar laws of the United States of America, any State or territory
thereof, or under the bankruptcy or insolvency laws of Canada (including the Bankruptcy and
Insolvency Act (Canada) and the Companies Creditors Arrangement Act (Canada)), or any similar law
now or hereafter in effect in any jurisdiction (provided, that, Administrative and Collateral Agent
may determine, in its reasonable credit judgment, to include Accounts of an account debtor subject
to a Chapter 11 case under the U.S. Bankruptcy Code, subject to such terms, conditions and
limitations, as Administrative and Collateral Agent may establish with respect thereto); (iii) the
making of any general assignment by such account debtor for the benefit of creditors; (iv) the
appointment of a receiver or trustee for such account debtor or for any of the assets of such
account debtor, including, without limitation, the appointment of or taking possession by a
custodian, as defined in the U.S. Bankruptcy Code; (v) the commencement by or against such
account debtor of any other type of insolvency proceeding (under the bankruptcy laws of the United
States of America or under the bankruptcy or insolvency laws of Canada (including the Bankruptcy
and Insolvency Act (Canada) and the Companies Creditors Arrangement Act (Canada)), or any similar
law now or hereafter in effect in any jurisdiction) or of any formal or informal proceeding for the
dissolution or liquidation of, settlement of claims against, or winding up of affairs of, such
account debtor; (vi) the sale, assignment, or transfer of all or substantially all of the assets of
such account debtor; (vii) the
nonpayment generally by such account debtor of its debts as they become due; or (viii) the
failure, suspension or cessation of the business of such account debtor as a going concern;
10
(i) such Accounts are subject to the first priority, valid and perfected security interest of
Administrative and Collateral Agent and any goods giving rise thereto are not, and were not at the
time of the sale thereof, subject to any liens except those permitted in this Agreement;
(j) neither the account debtor nor any officer of the account debtor with respect to such
Accounts is an Affiliate (other than a Sponsor Portfolio Company) of any Borrower or any Guarantor;
(k) the account debtors with respect to such Accounts are not any foreign government, the
United States of America, Canada, any State, political subdivision, department, agency or
instrumentality thereof, unless, (i) if the account debtor is the United States of America, any
State, political subdivision, department, agency or instrumentality thereof, upon Administrative
and Collateral Agents request, the Federal Assignment of Claims Act of 1940, as amended or any
similar State or local law, if applicable, has been complied with in a manner reasonably
satisfactory to Administrative and Collateral Agent or (ii) if the account debtor is Her Majesty in
right of Canada or any Provincial or local Governmental Authority, or any Ministry thereof, such
Borrower has assigned its rights to payment of such Account to Administrative and Collateral Agent
pursuant to, and in accordance with, the Financial Administration Act, R.S.C. 185, C.F.-11, as
amended, or any similar applicable Provincial or local law regulation or requirement has been
complied with in a manner reasonably satisfactory to Administrative and Collateral Agent;
(l) such Accounts of a single account debtor and its Affiliates do not constitute more than
fifteen percent (15%) of all otherwise Eligible Accounts (but the portion of the Accounts not in
excess of such percentage may, subject to the other criteria set forth herein, be deemed Eligible
Accounts);
(m) such Accounts are not owed by an account debtor who has Accounts unpaid more than ninety
(90) days after the original invoice date for them or more than sixty (60) days after the original
due date for them which constitute more than fifty percent (50%) of the total Accounts of such
account debtor;
(n) the account debtor is not located in a state requiring the filing of a Notice of Business
Activities Report or similar report in order to permit such Borrower to seek judicial enforcement
in such State of payment of such Account, unless such Borrower has qualified to do business in such
state or has filed a Notice of Business Activities Report or equivalent report for the then current
year or such failure to file and inability to seek judicial enforcement is capable of being
remedied without any material delay or material cost; and
(o) Agent does not believe, in good faith and its reasonable credit judgment, that the
prospect of collection of such Account is impaired or that the Account may not be paid by reason of
the account debtors financial inability to pay.
11
The criteria for Eligible Accounts set forth above may only be changed and any new criteria for
Eligible Accounts may only be established by Administrative and Collateral Agent in good faith and
its reasonable credit judgment based on either: (x) an event, condition or other circumstance
arising after the date hereof, or (y) an event, condition or other circumstance existing on the
date hereof to the extent Administrative and Collateral Agent has no written notice thereof from a
Borrower or other actual knowledge prior to the date hereof, in either case under clause (x) or (y)
which adversely affects or could reasonably be expected to adversely affect the Accounts in the
good faith and reasonable credit determination of Administrative and Collateral Agent. Any
Accounts which are not Eligible Accounts shall nevertheless be part of the Collateral.
1.38
Eligible Domestic In-Transit Inventory
shall mean, as to each Borrower,
Inventory of such Borrower (other than Eligible International In-Transit Inventory or Eligible
Re-Load Inventory) which is not located at premises operated by any Borrower but which:
(a) otherwise would constitute Eligible Inventory;
(b) is either (i) in-transit between any of Borrowers domestic facilities or (ii) in transit
to such Borrower from a domestic or Canadian vendor; and
(c) either (i) has been paid for by such Borrower, (ii) has been vouchered for payment on such
Borrowers accounts payable systems and is in fact paid for within 4 days thereafter, or (iii) the
vendor thereof has delivered a waiver, in form and substance reasonably satisfactory to
Administrative and Collateral Agent, of its reclamation and other rights with respect to such
Inventory.
The criteria for Eligible Domestic In-Transit Inventory set forth above may only be changed and any
new criteria for Eligible Domestic In-Transit Inventory may only be established by Administrative
and Collateral Agent in good faith based on either: (x) an event, condition or other circumstance
arising after the date hereof, or (y) an event, condition or other circumstance existing on the
date hereof to the extent Administrative and Collateral Agent has no written notice thereof from a
Borrower or other actual knowledge prior to the date hereof, in either case under clause (x) or (y)
which adversely affects or could reasonably be expected to adversely affect the Eligible Domestic
In-Transit Inventory in the good faith and reasonable credit determination of Administrative and
Collateral Agent. Any Inventory which is not Eligible Domestic In-Transit Inventory shall
nevertheless be part of the Collateral.
1.39
Eligible International In-Transit Inventory
shall mean, as to each Borrower,
Inventory of such Borrower (other than Eligible Domestic In-Transit Inventory or Eligible Re-Load
Inventory) which is not located at premises operated by any Borrower and/or is not located within
the United States of America or Canada but which:
(a) otherwise would constitute Eligible Inventory;
(b) either (i) has been paid for by such Borrower or (ii) has been vouchered for payment on
such Borrowers accounts payable systems and is in fact paid for within 4 days thereafter;
12
(c) is in transit to such Borrower from an international (other than Canadian) vendor; and
(d) is in the possession or under the control of a Qualified Bailee.
The criteria for Eligible International In-Transit Inventory set forth above may only be changed
and any new criteria for Eligible International In-Transit Inventory may only be established by
Administrative and Collateral Agent in good faith based on either: (x) an event, condition or
other circumstance arising after the date hereof, or (y) an event, condition or other circumstance
existing on the date hereof to the extent Administrative and Collateral Agent has no written notice
thereof from a Borrower or other actual knowledge prior to the date hereof, in either case under
clause (x) or (y) which adversely affects or could reasonably be expected to adversely affect the
Eligible International In-Transit Inventory in the good faith and reasonable credit determination
of Administrative and Collateral Agent. Any Inventory which is not Eligible International
In-Transit Inventory shall nevertheless be part of the Collateral.
1.40
Eligible Inventory
shall mean, as to each Borrower, Inventory of such Borrower
consisting of finished goods held for resale in the ordinary course of the business of such
Borrower, in each case which are acceptable to Administrative and Collateral Agent, in good faith
and its reasonable credit judgment, based on the criteria set forth below. In general, Eligible
Inventory shall not include:
(a) raw materials unless held for sale as finished goods in the ordinary course of such
Borrowers business;
(b) work-in process unless held for sale as finished goods in the ordinary course of such
Borrowers business;
(c) components which are not part of finished goods (unless sold as such by such Borrower in
the ordinary course of its business);
(d) spare parts for equipment (unless sold as such by such Borrower in the ordinary course of
its business);
(e) packaging and shipping materials;
(f) supplies used or consumed in such Borrowers business (unless also sold as such by such
Borrower in the ordinary course of its business);
(g) Inventory at premises other than those controlled by any Borrower and with respect to
which a Collateral Access Agreement has been delivered to Administrative and Collateral Agent (or
Administrative and Collateral Agent has established any applicable Reserves for rent payable with
respect to such location);
(h) Inventory subject to a security interest or lien in favor of any person other than
Administrative and Collateral Agent except those security interests or liens permitted in this
Agreement;
13
(i) bill and hold goods;
(j) Inventory which is not fit for sale in the ordinary course of such Borrowers business or
which is obsolete or slow moving;
(k) Inventory which is not subject to the first priority, valid and perfected security
interest of Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders
and the Bank Product Providers;
(l) returned, damaged and/or defective Inventory;
(m) Inventory purchased or sold on consignment;
provided
,
however
, Inventory
owned by such Borrower and held by Lowes or Home Depot on consignment may, subject to the other
criteria set forth in this Agreement, be deemed Eligible Inventory so long as (i) such Person
continues to be deemed creditworthy by Administrative and Collateral Agent in good faith, (ii) such
consigned Inventory is subject to an effective consignment agreement, pursuant to which, among
other things, such Person acknowledges such Borrowers ownership of such Inventory, acknowledges
Administrative and Collateral Agents liens on such Inventory, authorizes the filing of UCC
financing statements naming such Person as consignee, such Borrower as consignor, and
Administrative and Collateral Agent as such Borrowers assignee, Administrative and Collateral
Agent is permitted to access such Persons premises for the purpose of removing, auditing or
otherwise accessing such consigned Inventory, and which is otherwise in form and substance
satisfactory to Administrative and Collateral Agent, (iii) Administrative and Collateral Agent has
received evidence, in form and substance satisfactory to it, that a UCC financing statement
regarding the consignment arrangement between such Person and such Borrower has been filed in the
appropriate jurisdiction, and (iv) Administrative and Collateral Agent has received UCC searches
with respect to such Person from each jurisdiction in which such consigned Inventory is located and
from the jurisdiction under whose laws such Person is organized; and
(n) Inventory located outside the United States of America or Canada.
The criteria for Eligible Inventory set forth above may only be changed and any new criteria for
Eligible Inventory may only be established by Administrative and Collateral Agent in good faith
based on either: (x) an event, condition or other circumstance arising after the date hereof, or
(y) an event, condition or other circumstance existing on the date hereof to the extent
Administrative and Collateral Agent has no written notice thereof from a Borrower or other actual
knowledge prior to the date hereof, in either case under clause (x) or (y) which adversely affects
or could reasonably be expected to adversely affect the Inventory in the good faith and reasonable
credit determination of Administrative and Collateral Agent. Any Inventory which is not Eligible
Inventory shall nevertheless be part of the Collateral.
14
1.41
Eligible Re-Load Inventory
shall mean, as to each Borrower, Inventory of such
Borrower (other than Eligible Domestic In-Transit Inventory or Eligible International In-Transit
Inventory) which is located at a domestic warehouse owned and operated by a Person who is not an
Affiliate of such Borrower pursuant to a contract for storage and/or handling between such Borrower
and such Person and with respect to which:
(a) such Inventory would constitute Eligible Inventory but for the fact that such Inventory is
not located at a domestic facility operated by a Borrower; and
(b) the Person owning and operating the facility at which such Inventory is located is a
Qualified Bailee;
provided
,
however
, Inventory which would otherwise constitute
Eligible Re-Load Inventory but for the fact that it is not located at a facility owned and operated
by a Qualified Bailee may, subject to all other applicable eligibility criteria contained in this
Agreement, constitute Eligible Re-Load Inventory if at least 2/3 of the total value of Eligible
Re-Load Inventory is located at a facility owned and operated by a Qualified Bailee.
The criteria for Eligible Re-Load Inventory set forth above may only be changed and any new
criteria for Eligible Re-Load Inventory may only be established by Administrative and Collateral
Agent in good faith based on either: (x) an event, condition or other circumstance arising after
the date hereof, or (y) an event, condition or other circumstance existing on the date hereof to
the extent Administrative and Collateral Agent has no written notice thereof from a Borrower or
other actual knowledge prior to the date hereof, in either case under clause (x) or (y) which
adversely affects or could reasonably be expected to adversely affect the Eligible Re-Load
Inventory in the good faith and reasonable credit determination of Administrative and Collateral
Agent. Any Inventory which is not Eligible Re-Load Inventory shall nevertheless be part of the
Collateral.
1.42
Eligible Transferee
shall mean (a) any Lender; (b) any Affiliate of a Lender;
and (c) any other commercial bank, financial institution or accredited investor (as defined in
Regulation D under the Securities Exchange Act) approved by Administrative and Collateral Agent
and, unless an Event of Default has occurred and is continuing at the time any assignment is
effected hereunder, Administrative Borrower, such approval not to be unreasonably withheld,
conditioned or delayed by Administrative Borrower, and such approval to be deemed given by
Administrative Borrower if no objection from Administrative Borrower is received by the assigning
Lender and Administrative and Collateral Agent within five (5) Business Days after notice of such
proposed assignment has been provided by the assigning Lender or Administrative and Collateral
Agent to Administrative Borrower;
provided
,
that
, none of Administrative Borrower,
any other Borrower, any Guarantor, or any of their respective Affiliates (other than Sponsor
Affiliated Lenders) shall qualify as an Eligible Transferee.
1.43
Environmental Laws
shall mean all foreign (including, without limitation,
Canadian), Federal, State and local laws (including common law), legislation, rules, codes,
licenses, permits (including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between any Borrower or any Guarantor and any
Governmental Authority, (a) relating to the environment (including air, water vapor, surface water,
ground water, drinking water, drinking water supply, surface land, subsurface land, plant and
animal life or any other natural resource), (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, transportation, handling, labeling, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with regard to
recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials.
The term Environmental Laws includes (i) the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act,
the Federal Water Pollution Control Act of 1972, the
Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource Conservation and
Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal
Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide,
Fungicide and Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii) applicable
state or Provincial counterparts to such laws, and (iii) any common law or equitable doctrine that
may impose liability or obligations for injuries or damages due to, or threatened as a result of,
the presence of or exposure to any Hazardous Materials.
15
1.44
Equipment
shall mean, as to each Borrower and each Guarantor, all of such
Borrowers and such Guarantors now owned and hereafter acquired equipment, wherever located,
including machinery, data processing and computer equipment and hardware, software embedded in any
equipment (whether owned or licensed), vehicles, tools, furniture, fixtures, all attachments,
accessions and property now or hereafter affixed thereto or used in connection therewith, and
substitutions and replacements thereof, wherever located.
1.45
ERISA
shall mean the United States Employee Retirement Income Security Act of
1974, together with all rules, regulations and interpretations thereunder or related thereto.
1.46
ERISA Affiliate
shall mean any person required to be aggregated with any
Borrower, any Guarantor or any of its or their respective Subsidiaries under Sections 414(b),
414(c), 414(m) or 414(o) of the Code.
1.47
ERISA Event
shall mean (a) any reportable event, as defined in Section
4043(c) of ERISA or the regulations issued thereunder (other than an event not subject to the
provision for 30 days notice to the Pension Benefit Guaranty Corporation under such regulations,
with respect to a Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the
existence with respect to any Plan of an accumulated funding deficiency (as defined in Section
412 of the Code or Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section
412 of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a prohibited transaction (not subject to
a statutory, class or individual exemption) with respect to which Borrower or any of its
Subsidiaries is a disqualified person (within the meaning of Section 4975 of the Code) or with
respect to which any Borrower, any Guarantor or any of their respective Subsidiaries could
otherwise be liable; (f) a complete or partial withdrawal by any Borrower, any Guarantor or any
ERISA Affiliate from a Multiemployer Plan or a cessation of operations which is treated as such a
withdrawal or notification that a Multiemployer Plan is in reorganization; (g) the filing of a
notice of intent to terminate, the treatment of a Plan amendment as a termination under Section
4041 or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit Guaranty
Corporation to terminate a Plan; (h) an event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan; (i) the imposition of any liability under Title IV of ERISA, other
than the Pension Benefit Guaranty Corporation premiums due but not delinquent under Section 4007 of
ERISA, upon any Borrower, any Guarantor or any ERISA Affiliate, and other than contributions to a
Plan to be made timely under the Code and ERISA, in excess of Five Million Dollars ($5,000,000);
and (j) any other event or condition with respect to a Plan subject to Title IV of ERISA
maintained, or contributed
to, by any ERISA Affiliate that could reasonably be expected to result in material liability
of any Borrower or any Guarantor.
16
1.48
Eurodollar Rate
shall mean with respect to the Interest Period for a Eurodollar
Rate Loan, the interest rate per annum equal to the arithmetic average of the rates of interest per
annum (rounded upwards, if necessary, to the next one-sixteenth (1/16) of one percent (1%)) at
which Reference Bank is offered deposits of United States dollars in the London interbank market
(or other Eurodollar Rate market selected by Borrower and approved by Lender) on or about 11:00
a.m. (New York time) two (2) Business Days prior to the commencement of such Interest Period in
amounts substantially equal to the principal amount of the Eurodollar Rate Loans requested by and
available to Borrowers in accordance with this Agreement, with a maturity of comparable duration to
the Interest Period selected by Administrative Borrower.
1.49
Eurodollar Rate Loans
shall mean any Loans or portion thereof on which interest
is payable based on the Adjusted Eurodollar Rate in accordance with the terms hereof.
1.50
Event of Default
shall have the meaning set forth in Section 10.1 hereof.
1.51
Excess
shall have the meaning set forth in Section 3.1(e) hereof.
1.52
Excess Availability
shall mean the amount, as determined by Administrative and
Collateral Agent, calculated at any time, equal to: (a) the lesser of: (i) the Borrowing Base
(when calculated after giving effect to any Reserves other than Reserves in respect of Letter of
Credit Accommodations) and (ii) the Revolving Loan Limit,
plus
(b) the then available
amount of all Qualified Cash
minus
(c) the sum of: (i) the amount of all then outstanding
and unpaid Obligations (but not including for this purpose the then outstanding aggregate principal
amount of the Term Loan), plus (ii) the amount of all Reserves then established in respect of
Letter of Credit Accommodations.
1.53
Exchange Act
shall mean the Securities Exchange Act of 1934, as amended,
together with all rules, regulations and interpretations thereunder or related thereto.
1.54
Excluded Taxes
shall have the meaning set forth in Section 6.5(a) hereof.
1.55
Fee Letter
shall mean the letter agreement, dated May 7, 2004, by and between
BlueLinx and Administrative and Collateral Agent, setting forth certain fees payable by BlueLinx to
Administrative and Collateral Agent for the benefit of itself and the Lenders, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.56
Final Maturity Date
shall mean May 7, 2011.
1.57
Financing Agreements
shall mean, collectively, this Agreement, the Fee Letter
and all notes, guaranties, security agreements, stock pledge agreements, Deposit Account Control
Agreements, Investment Property Control Agreements, Collateral Access Agreements, intercreditor
agreements, and all other agreements, documents and instruments now or at any time hereafter
executed and/or delivered by any Borrower or any Guarantor in connection with this Agreement.
17
1.58
Fixed Charge Coverage Ratio
shall mean the ratio, as of any date of
determination, calculated either for the trailing twelve-month period ending on such date of
determination, of (a) EBITDA to (b) the sum of cash payments for income taxes, Interest Expense,
cash dividends (other than with respect to the repayment of any Mortgage Proceeds Investment in
accordance with Section 9.11(f) hereof) or stock redemptions, principal payments on Debt (other
than with respect to principal payments made on account of a revolving line of credit, and other
than with respect to the repayment of any Mortgage Proceeds Investment in accordance with Section
9.9(q) hereof) and Capital Expenditures.
1.59
Funding Bank
shall have the meaning set forth in Section 3.2(a) hereof.
1.60
GAAP
shall mean generally accepted accounting principles in the United States
of America as in effect from time to time as set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public Accountants and the
statements and pronouncements of the Financial Accounting Standards Board which are applicable to
the circumstances as of the date of determination consistently applied, except that, for purposes
of Section 9.17 hereof, GAAP shall be determined on the basis of such principles in effect on the
date hereof and consistent with those used in the preparation of the most recent audited financial
statements delivered to Administrative and Collateral Agent prior to the date hereof.
1.61
Governmental Authority
shall mean any nation or government, any state,
province, or other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.
1.62
Guarantors
shall mean, collectively, the following (together with their
respective successors and assigns): (a) BlueLinx Florida Holding No. 1 Inc., a Georgia corporation;
(b) BlueLinx Florida Holding No. 2 Inc., a Georgia corporation; (c) BLX Texas Acquisition I LLC, a
Georgia limited liability company; (d) BLX Texas Acquisition II LLC, a Georgia limited liability
company; and (e) any other Person that at any time after the date hereof becomes party to a
guarantee in favor of Administrative and Collateral Agent or any Lender or otherwise liable on or
with respect to the Obligations or who is the owner of any property which is security for the
Obligations (other than Borrowers); each sometimes being referred to herein individually as a
Guarantor
.
1.63
Hazardous Materials
shall mean any hazardous, toxic or dangerous substances,
materials and wastes regulated under Environmental Laws, including hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, biological substances, polychlorinated biphenyls,
pesticides, herbicides and any other kind and/or type of pollutants or contaminants (including
materials which include hazardous constituents), sewage, sludge, industrial slag, solvents and/or
any other similar substances, materials, or wastes and including any other substances, materials or
wastes that are or become regulated under any Environmental Law.
18
1.64
Hedging Transactions
shall mean (a) any and all rate swap transactions, basis
swaps, forward rate transactions, commodity swaps, commodity options, forward commodity contracts,
equity or equity index swaps or options, bond or bond price or bond index swaps or options, forward
bond or forward bond price or forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency
swap transactions, cross-currency rate swap transaction, currency options or any other similar
transactions or any combination of any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to any master
agreement, or (b) any and all transactions of any kind, and the related confirmations, that are
subject to the terms or conditions of, or governed by, any form of master agreement published by
the International Swaps and Derivatives Association, Inc., or any other master agreement, as
amended, restated, extended, supplemented or otherwise modified in writing from time to time,
including but not limited to, any such obligations or liabilities under any such agreement.
1.65
Home Depot
shall mean Home Depot U.S.A., Inc., a Delaware corporation and its
Affiliates.
1.66
Indebtedness
shall mean, with respect to any Person, any liability, whether or
not contingent, (a) in respect of borrowed money (whether or not the recourse of the lender is to
the whole of the assets of such Person or only to a portion thereof) or evidenced by bonds, notes,
debentures or similar instruments; (b) representing the balance deferred and unpaid of the purchase
price of any property or services (except any such balance that constitutes an account payable to a
trade creditor (whether or not an Affiliate) created, incurred, assumed or guaranteed by such
Person in the ordinary course of business of such Person in connection with obtaining goods,
materials or services that is not overdue by more than ninety (90) days, unless the trade payable
is being contested in good faith); (c) all obligations as lessee under leases which have been, or
should be, in accordance with GAAP recorded as Capital Leases; (d) any contractual obligation,
contingent or otherwise, of such Person to pay or be liable for the payment of any indebtedness
described in this definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed (other than guaranties of a such Persons
Subsidiarys operating leases made in the ordinary course of such Persons business), or any
agreement to purchase, repurchase, or otherwise acquire such indebtedness, obligation or liability
or any security therefor, or to provide funds for the payment or discharge thereof, or to maintain
solvency, assets, level of income, or other financial condition; (e) all obligations with respect
to redeemable stock and redemption or repurchase obligations under any Capital Stock or other
equity securities issued by such Person; (f) all reimbursement obligations and other liabilities of
such Person with respect to surety bonds (whether bid, performance or otherwise), letters of
credit, bankers acceptances, drafts or similar documents or instruments issued for such Persons
account; (g) all indebtedness of such Person in respect of indebtedness of another Person for
borrowed money or indebtedness of another Person otherwise described in this definition which is
secured by any consensual lien, security interest, collateral assignment, conditional sale,
mortgage, deed of trust, or other encumbrance on any asset of such Person, whether or not such
obligations, liabilities or indebtedness are assumed by or are a personal liability of such Person,
all as of such time; (h) all obligations, liabilities and indebtedness of such Person (marked to
market) arising under swap agreements, cap agreements and collar agreements and other agreements or
arrangements designed to protect such Person against fluctuations in interest rates
or currency or commodity values; and (i) all obligations owed by such Person under License
Agreements with respect to non-refundable, advance or minimum guaranty royalty payments.
19
1.67
Information Certificate
shall mean, collectively, the Information Certificates
of Borrowers and Guarantors constituting
Exhibit B
hereto containing material information
with respect to Borrowers and Guarantors, their respective businesses and assets provided by or on
behalf of Borrowers and Guarantors to Administrative and Collateral Agent in connection with the
preparation of this Agreement and the other Financing Agreements and the financing arrangements
provided for herein.
1.68
Intellectual Property
shall mean, as to each Borrower and each Guarantor, all
of such Borrowers and such Guarantors now owned and hereafter arising or acquired: patents,
patent rights, patent applications, copyrights, works which are the subject matter of copyrights,
copyright registrations, trademarks, service marks, trade names, trade styles, trademark and
service mark applications, and licenses and rights to use any of the foregoing; all extensions,
renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing;
all rights to sue for past, present and future infringement of any of the foregoing; inventions,
trade secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys, reports,
manuals, and operating standards; goodwill (including any goodwill associated with any trademark or
the license of any trademark); customer and other lists in whatever form maintained; and trade
secret rights, copyright rights, rights in works of authorship, domain names and domain name
registrations; software and contract rights relating to software, in whatever form created or
maintained.
1.69
Interest Expense
shall mean, for any period, as to any Person and its
Subsidiaries, all of the following as determined in accordance with GAAP, total interest expense,
whether paid or accrued (including the interest component of Capital Leases for such period),
including, without limitation, all bank fees, commissions, discounts and other fees and charges
owed with respect to letters of credit, bankers acceptances or similar instruments and all amounts
paid or accrued in connection with Hedging Transactions, but excluding (a) amortization of discount
and amortization of deferred financing fees and closing costs paid in cash in connection with the
transactions contemplated hereby, (b) interest paid in property other than cash, (c) any other
interest expense not payable in cash and (d) any amounts received in connection with Hedging
Transactions.
1.70
Interest Period
shall mean for any Eurodollar Rate Loan, a period of
approximately fourteen (14) days or one (1), two (2), three (3) or six (6) months duration, as
Administrative Borrower may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar Rate market; provided, that, Administrative
Borrower may not elect an Interest Period which will end after the last day of the then-current
term of this Agreement.
20
1.71
Interest Rate
shall mean,
(a) Subject to subsections (b) and (c) of this Section 1.71:
(i) as to Prime Rate Loans, a per annum rate equal to the Prime Rate; and
(ii) as to Eurodollar Rate Loans, a per annum rate equal to the Adjusted Eurodollar Rate
(based on the Eurodollar Rate applicable for the Interest Period selected by Administrative
Borrower as in effect three (3) Business Days after the date of receipt by Administrative and
Collateral Agent of the request of Administrative Borrower for such Eurodollar Rate Loans in
accordance with the terms hereof, whether such rate is higher or lower than any rate previously
quoted to any Borrower) plus one and one-half of one (1.50) percentage points.
(b) So long as no Event of Default has occurred and is continuing, for each Interest Period
commencing after delivery of Borrowers financial statements required to be delivered pursuant to
this Agreement for each fiscal quarter ending after June 1, 2006, effective on the first day of
such Interest Period, the Interest Rate will be adjusted to be: (i) as to Prime Rate Loans, a per
annum rate equal to the Prime Rate plus the Applicable Prime Rate Margin set forth below based on
(A) Borrowers EBITDA as of the end of such fiscal quarter for the prior 12 month period then ended
and (B) the average month end amount of Modified Adjusted Excess Availability, as determined by
Administrative and Collateral Agent, for such fiscal quarter then ended; and (ii) as to Eurodollar
Rate Loans, a per annum rate equal to the Adjusted Eurodollar Rate (based on the Eurodollar Rate
applicable for the Interest Period selected by Administrative Borrower as in effect three (3)
Business Days after the date of receipt by Administrative and Collateral Agent of the request of
Administrative Borrower for such Eurodollar Rate Loans in accordance with the terms hereof, whether
such rate is higher or lower than any rate previously quoted to any Borrower) plus the Applicable
Eurodollar Rate Margin set forth below based on (A) Borrowers EBITDA as of the end of such fiscal
quarter for the prior 12 month period then ended and (B) the average month end amount of Modified
Adjusted Excess Availability, as determined by Administrative and Collateral Agent, for such fiscal
quarter then ended;
provided
,
however
, in each case, if the Borrowers have not
delivered the financial statements required to be delivered to Administrative and Collateral Agent
hereunder within the time frames specified herein, without limiting any other provision of this
Agreement, until such financial statements are delivered to Administrative and Collateral Agent in
accordance with this Agreement, the Interest Rate shall be calculated using the highest Applicable
Prime Rate Margin or the highest Applicable Eurodollar Rate Margin, as applicable, set forth below:
|
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Average Modified
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Applicable
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Applicable
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|
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Adjusted Excess
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Prime Rate
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Eurodollar Rate
|
EBITDA
|
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Availability
|
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Margin
|
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Margin
|
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|
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|
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|
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Greater than $160,000,000
|
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Greater than $250,000,000
|
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0.00
|
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1.00
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|
|
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|
|
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Greater than $160,000,000
|
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Greater than $200,000,000 but
equal to or less than
$250,000,000
|
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0.00
|
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1.25
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|
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Greater than $160,000,000
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Equal to or less than $200,000,000
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0.00
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1.50
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21
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Average Modified
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Applicable
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Applicable
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Adjusted Excess
|
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Prime Rate
|
|
Eurodollar Rate
|
EBITDA
|
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Availability
|
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Margin
|
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Margin
|
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Greater than $130,000,000 but
equal to or less than
$160,000,000
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Greater than $250,000,000
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0.00
|
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1.25
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|
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Greater than $130,000,000 but
equal to or less than
$160,000,000
|
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Greater than $200,000,000 but
equal to or less than
$250,000,000
|
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0.00
|
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1.50
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Greater than $130,000,000 but
equal to or less than
$160,000,000
|
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Equal to or less than $200,000,000
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.25
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1.75
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Greater than $100,000,000 but
equal to or less than
$130,000,000
|
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Greater than $250,000,000
|
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0.00
|
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1.50
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Greater than $100,000,000 but
equal to or less than
$130,000,000
|
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Greater than $200,000,000 but
equal to or less than
$250,000,000
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.25
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1.75
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Greater than $100,000,000 but
equal to or less than
$130,000,000
|
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Equal to or less than $200,000,000
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.50
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2.00
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Greater than $70,000,000 but
equal to or less than
$100,000,000
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Greater than $250,000,000
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.25
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1.75
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22
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Average Modified
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Applicable
|
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Applicable
|
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Adjusted Excess
|
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Prime Rate
|
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Eurodollar Rate
|
EBITDA
|
|
Availability
|
|
Margin
|
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Margin
|
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|
|
|
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|
Greater than $70,000,000 but
equal to or less than
$100,000,000
|
|
Greater than $200,000,000 but
equal to or less than
$250,000,000
|
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|
.50
|
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2.00
|
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Greater than $70,000,000 but
equal to or less than
$100,000,000
|
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Equal to or less than $200,000,000
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.75
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2.25
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Equal to or less than $70,000,000
|
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Greater than $250,000,000
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.50
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2.00
|
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Equal to or less than $70,000,000
|
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Greater than $200,000,000 but
equal to or less than
$250,000,000
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.75
|
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2.25
|
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Equal to or less than $70,000,000
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Equal to or less than $200,000,000
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1.00
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2.50
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(c) Notwithstanding anything to the contrary contained herein, at Administrative and
Collateral Agents option, without notice, (i) for the period on and after the date of termination
or non-renewal hereof until such time as all Obligations are paid and satisfied in full in
immediately available funds, and (ii) for the period from and after the date of the occurrence of
any Event of Default, and for so long as such Event of Default is continuing as determined by
Administrative and Collateral Agent, a per annum rate equal to the Interest Rate which would
otherwise be in effect plus two (2) percentage points.
1.72
Inventory
shall mean, as to each Borrower and each Guarantor, all of such
Borrowers and such Guarantors now owned and hereafter existing or acquired goods, wherever
located, which (a) are held for lease by such Borrower or such Guarantor as lessor; (b) are held by
such Borrower or such Guarantor for sale or lease or to be furnished under a contract of service;
(c) are furnished by such Borrower or such Guarantor under a contract of service; or (d) consist of
raw materials, work in process, finished goods or materials used or consumed in its business.
23
1.73
Investment Property Control Agreement
shall mean an agreement in writing, in
form and substance reasonably satisfactory to Administrative and Collateral Agent, by and among
Administrative and Collateral Agent, any Borrower or any Guarantor (as the case may be), and any
securities intermediary, commodity intermediary or other Person who has custody, control or
possession of any investment property of such Borrower or such Guarantor, agreeing and
acknowledging that, inter alia, such Person has custody, control or possession of such investment
property on behalf of Administrative and Collateral Agent, that such Person comply with entitlement
orders originated by Administrative and Collateral Agent with respect to such investment property,
or other instructions of Administrative and Collateral Agent, and such Person will apply any value
distributed on account of any commodity contract as directed by Administrative and Collateral
Agent, in each case, without the further consent of such Borrower or such Guarantor, and including
such other terms and conditions as Administrative and Collateral Agent may reasonably require.
1.74
Letter of Credit Accommodations
shall mean, collectively, the letters of
credit, merchandise purchase or other guaranties which are from time to time either (a) issued or
opened by Administrative and Collateral Agent or any Revolving Loan Lender for the account of any
Borrower or any Guarantor or (b) with respect to which Administrative and Collateral Agent on
behalf of the Revolving Loan Lenders has agreed to indemnify the issuer or guaranteed to the issuer
the performance by any Borrower of its obligations to such issuer; sometimes being referred to
herein individually as a Letter of Credit Accommodation.
1.75
License Agreements
shall have the meaning set forth in Section 8.11 hereof.
1.76
Licensor Agreement
shall mean an agreement, in form and substance reasonably
satisfactory to Administrative and Collateral Agent, pursuant to which a licensor of Intellectual
Property that is affixed to any Inventory agrees to allow Administrative and Collateral Agent to
sell or otherwise dispose of such Inventory in connection with the exercise of its rights and
remedies under this Agreement.
1.77
Loans
shall mean the Revolving Loans, the Term Loan, Special Agent Advances and
Letter of Credit Accommodations.
1.78
Lowes
shall mean Lowes Companies, Inc., a North Carolina corporation, and its
Affiliates.
1.79
Material Adverse Change
shall mean a material adverse change in (a) the
financial condition, business, performance or operations of Borrower or the legality, validity or
enforceability of this Agreement or any of the other Financing Agreements; (b) the legality,
validity, enforceability, perfection or priority of the security interests and liens of
Administrative and Collateral Agent on the Collateral; (c) the value of the Collateral taken as a
whole; (d) the ability of Borrower to repay the Obligations or of Borrower to perform its
obligations under this Agreement or any of the other Financing Agreements as and when to be
performed; or (e) the ability of Administrative and Collateral Agent or any Lender to enforce the
Obligations or realize upon the Collateral or otherwise with respect to the rights and remedies of
Administrative and Collateral Agent and Lenders under this Agreement or any of the other Financing
Agreements.
24
1.80
Material Adverse Effect
shall mean a material and adverse effect on the
business, assets, properties, operations, financial condition or results of operations of the
Borrowers or the Purchased Business taken as a whole;
provided
,
however
, that the
following shall not be taken into account in determining whether there has been or would be a
Material Adverse Effect: (i) any adverse changes or developments resulting from conditions
affecting the United States of America or any foreign economy generally; (ii) any adverse changes
or developments that are primarily caused by conditions affecting the building products and the
building products distribution industries generally unless such changes or developments
disproportionately affect the Borrowers or the Purchased Business; (iii) any adverse changes or
developments in the laws, regulations, rules or orders of any governmental authority; (iv) any
adverse changes or developments that are attributable to seasonal fluctuations in the building
products and the building products distribution industries; (v) any acts of war, insurrection,
sabotage or terrorism unless such changes or developments disproportionately affect the Borrowers
or the Purchased Business; and (vi) any adverse changes or developments arising
primarily out of, or resulting primarily from, actions taken by any party to the Purchase
Agreements in connection with (but not in breach of) the Purchase Agreements and the transactions
contemplated thereunder, or which are primarily attributable to the announcement of the entering
into of the Purchase Agreements and the transactions contemplated thereby or the identity of
BlueLinx (including, to the extent so attributable, any litigation, employee attrition, any loss or
postponement of business resulting from the termination or modification of any vendor, customer or
other business relationships, any delay of customer orders or otherwise, as well as any
corresponding change in the margins, profitability or financial condition of such person);
provided
,
further
, that the failure by either Seller or its Affiliates to meet
their respective internal revenue or earnings predictions or expectations with respect to the
Purchased Business for any period ending or for which earnings are released on or after the date of
the Purchase Agreements shall not in and of itself be deemed to constitute a Material Adverse
Effect.
1.81
Material Contract
shall mean (a) any written contract or other executed
agreement of any Borrower or any Guarantor involving monetary liability of or to any Person in an
amount in excess of Twenty-Five Million Dollars ($25,000,000) in any fiscal year other than (i) the
Financing Agreements, (ii) purchase orders issued in the ordinary course of such Borrowers or such
Guarantors business, (iii) contracts which by their terms may be terminated by either party
thereto, without penalty, obligation or other such adverse consequences, on less than 60 days
prior notice (or 90 days prior notice in the case of exclusive supply contracts) or (iv) supply
contracts (by such Borrower or such Guarantor as supplier) which do not provide for committed
purchases in excess of Fifty Million Dollars ($50,000,000) in any fiscal year, and (b) any other
written contract or other executed agreement (other than the Financing Agreements) to which any
Borrower or any Guarantor is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto would constitute a Material Adverse Change.
1.82
Maximum Interest Rate
shall mean the maximum non-usurious rate of interest
under applicable Federal or State law as in effect from time to time that may be contracted for,
taken, reserved, charged or received in respect of the Obligations.
1.83
Modified Adjusted Excess Availability
shall mean the amount, as determined by
Administrative and Collateral Agent, calculated at any time, equal to: (a) Excess Availability
minus
(b) the sum of: (i) the aggregate amount of outstanding and unpaid trade payables
and other obligations of each Borrower which are more than thirty (30) days past due as of the end
of the month most recently ended, plus (ii) the amount of checks issued by each Borrower to pay
trade payables and other obligations which are more than thirty (30) days past due as of the end of
the month most recently ended.
25
1.84
Mortgage Loan Agreement
shall mean that certain Loan and Security Agreement
dated as of June 9, 2006, by and among German American Capital Corporation and certain Subsidiaries
of Parent (other than the Borrowers and the Guarantors).
1.85
Mortgage Proceeds Investment
shall mean any capital contribution or
subordinated loan made by Parent to BlueLinx using the excess proceeds under the Mortgage Loan
Agreement.
1.86
Multiemployer Plan
shall mean a multi-employer plan as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or the immediately
preceding six (6) years contributed to by any Borrower, any Guarantor or any ERISA Affiliate.
1.87
Net Amount of Eligible Accounts
shall mean, the gross amount of Eligible
Accounts less (to the extent Reserves therefor have not been established or a reduction in the
advance rate for Eligible Accounts due to an increase in Dilution as a result thereof has not been
made), returns, discounts, claims, credits and allowances of any nature at any time issued, owing,
granted, outstanding, available or claimed with respect thereto.
1.88
Net Income
shall mean, as of any date of determination, as determined in
accordance with GAAP, when calculated for a specified period ending on such date of determination,
the aggregate of the net income (loss) of Borrowers and their respective Subsidiaries, on a
consolidated basis, for such period (but excluding to the extent included therein any extraordinary
or one-time gains or losses or non-recurring events, including, but not limited to, restructuring
charges, unusual severance charges, casualty losses and acquisitions or divestiture related
charges),
provided
,
that
, (a) the net income of any Person that is not a
wholly-owned Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid or payable to any
Borrower or a wholly-owned Subsidiary of any Borrower; (b) the effect of any change in accounting
principles adopted by any Borrower or their respective Subsidiaries after the date hereof shall be
excluded; and (c) the net income (if positive) of any wholly-owned Subsidiary to the extent that
the declaration or payment of dividends or similar distributions by such wholly-owned Subsidiary to
any Borrower or to any other wholly-owned Subsidiary of any Borrower is not at the time permitted
by operation of the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule of government regulation applicable to such wholly-owned Subsidiary shall be
excluded. For the purpose of this definition, net income excludes any gain or loss, together with
any related Provision for Taxes for such gain or loss realized upon the sale or other disposition
of any assets that are not sold in the ordinary course of business (including, without limitation,
dispositions pursuant to sale and leaseback transactions), or of any Capital Stock of any Borrower
or any Subsidiary of any Borrower and any net income realized as a result of changes in accounting
principles or the application thereof to any Borrower.
1.89
Net Orderly Liquidation Value
shall mean, as of any date of determination, the
net orderly liquidation percentage set forth in the most recent appraisal of each Borrowers
Inventory provided to Administrative and Collateral Agent pursuant to the terms hereof times the
Value of such Borrowers Inventory.
1.90
New Lending Office
shall have the meaning set forth in Section 6.5(e) hereof.
26
1.91
Non-Consenting Lenders
shall have the meaning set forth in Section 11.3(d)
hereof.
1.92
Non-U.S. Lender
shall have the meaning set forth in Section 6.5(e) hereof.
1.93
Obligations
shall mean any and all Loans and all other obligations, liabilities
and indebtedness of every kind, nature and description owing by any or all of Borrowers to any
Agent or any Lender and/or any of their respective Affiliates, including all obligations
arising under or in connection with Bank Products to the extent the same have been reserved for as
part of the Bank Product Reserve or would not cause the total amount of the Obligations to exceed
the value of the Collateral; in each case, whether consisting of principal, interest, charges,
fees, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or
otherwise, whether arising under this Agreement or otherwise, whether now existing or hereafter
arising, whether arising before, during or after the initial or any renewal term of this Agreement
or after the commencement of any case with respect to any Borrower under the United States
Bankruptcy Code or any similar statute (including the payment of interest and other amounts which
would accrue and become due but for the commencement of such case, whether or not such amounts are
allowed or allowable in whole or in part in such case), whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured, and however acquired by any such Agent, Lender or Affiliate.
1.94
Original Closing Date
shall mean May 7, 2004.
1.95
Other Taxes
shall mean any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with respect to, this
Agreement or any of the other Financing Agreements.
1.96
Parent
shall mean BlueLinx Holding Inc., a Delaware corporation, as successor
in interest by merger to ADP Distribution Holdings Inc., a Georgia corporation.
1.97
Participant
shall mean any financial institution that acquires and holds a
participation in the interest of any Lender in any of the Loans in conformity with the provisions
of Section 13.6 of this Agreement governing participations.
1.98
Payment Account
shall mean account no. 5000000030321 of Administrative and
Collateral Agent at Wachovia, or such other account of Administrative and Collateral Agent as
Administrative and Collateral Agent may from time to time designate to Administrative Borrower as
the Payment Account for purposes of this Agreement.
27
1.99
Permitted Acquisitions
shall mean any Acquisition so long as: (a) Modified
Adjusted Excess Availability at all times for the thirty (30) day period prior to the closing date
for such Acquisition, and on the closing date for such Acquisition after giving effect to such
proposed Acquisition, shall be equal to or greater than $70,000,000; (b) no Default or Event of
Default has occurred and is continuing or would result from the consummation of the proposed
Acquisition; (c) both before and after giving effect to such proposed Acquisition, Borrowers Fixed
Charge Coverage Ratio, on a consolidated basis, shall not be less than 1.1 to 1.0;
provided
,
however
, if Modified Adjusted Excess Availability is greater than
$120,000,000 at all times for the thirty (30) day period prior to the closing date for such
Acquisition, and on the closing date for such Acquisition after giving effect to such proposed
Acquisition, Borrowers Fixed Charge Coverage Ratio may be calculated, for purposes of this Section
1.99(c) only, without giving effect to (i) any Capital Expenditures incurred by any Borrower which
are otherwise permitted to be incurred by such Borrower under the terms of this Agreement, (ii) any
dividends to Parent
which are otherwise permitted to be made by BlueLinx under the terms of this Agreement, and
(iii) any repayment by BlueLinx to Parent of any Mortgage Proceeds Investment in accordance with
Section 9.11(f) hereof; (d) Administrative Borrower provides Administrative and Collateral Agent
with prior written notice of such proposed Acquisition; (e) Administrative and Collateral Agent,
for the ratable benefit of the Lenders and the Bank Product Providers, shall be granted a first
priority security interest (subject to the security interests, mortgages, pledges, liens, charges
and other encumbrances otherwise permitted under Section 9.8 hereof) in all assets (including any
Capital Stock) acquired by any Borrower or any Acquisition Subsidiary and all assets (including any
Capital Stock) owned by any Person acquired by any Borrower or any Acquisition Subsidiary as part
of such Acquisition and such Borrower shall, and shall cause any applicable Subsidiary to, execute
any documents and take all actions that may be required under applicable law or that Administrative
and Collateral Agent may reasonably request, in order to grant, preserve, protect and perfect such
security interest, all in form and substance satisfactory to Administrative and Collateral Agent;
and (f) in the case of a Stock Acquisition, in Administrative and Collateral Agents election,
either (i) Borrowers shall cause the acquired Person to execute a (A) general continuing guaranty
in favor of Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders
and the Bank Product Providers, in form and substance satisfactory to Administrative and Collateral
Agent, and (B) a joinder to this Agreement, in form and substance satisfactory to Administrative
and Collateral Agent, whereby such acquired Person acknowledges and agrees that it is a Guarantor
hereunder; or (ii) the acquired Person shall execute a joinder to this Agreement, in form and
substance satisfactory to Administrative and Collateral Agent, whereby such acquired Person
acknowledges and agrees that it is a Borrower hereunder subject to the terms hereunder and
subject to such acquired Person and Borrowers executing such documentation requested by
Administrative Agent in its reasonable discretion.
1.100
Permitted Holders
shall mean Sponsor and any of its affiliated funds or
managed accounts which are managed or advised by Sponsor or an Affiliate of Sponsor.
1.101
Person
or
person
shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S status under the
Code), limited liability company, limited liability partnership, business trust, unincorporated
association, joint stock corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.102
Plan
means an employee benefit plan (as defined in Section 3(3) of ERISA)
which any Borrower, any Guarantor or any ERISA Affiliate sponsors, maintains, or to which it makes,
is making, or is obligated to make contributions other than a Multiemployer Plan.
28
1.103
PPSA
shall mean the Personal Property Security Act of any province of Canada
in which any of the Collateral is located and any other applicable Canadian or Provincial personal
property security legislation (including, without limitation, the Civil Code of Quebec) as all such
legislation now exists or may from time to time hereafter be amended, modified, recodified,
supplemented or replaced, together with all rules, regulations and interpretations thereunder or
related thereto.
1.104
Prime Rate
shall mean the rate from time to time publicly announced by the
Reference Bank as its prime rate, whether or not such announced rate is the best rate available at
such bank.
1.105
Prime Rate Loans
shall mean any Loans or portion thereof on which interest is
payable based on the Prime Rate in accordance with the terms thereof.
1.106
Pro Rata Share
shall mean the fraction (expressed as a percentage) the
numerator of which is such Lenders Revolving Loan Commitment and the denominator of which is the
aggregate amount of all of the Revolving Loan Commitments of all Revolving Loan Lenders.
1.107
Provision for Taxes
shall mean, as of any date of determination, calculated
for the twelve month period ending on such date of determination, an amount equal to all taxes
imposed on or measured by net income, whether Federal, State or local, and whether foreign or
domestic, that are paid or payable by any Borrower and its Subsidiaries in respect of such period
on a consolidated basis in accordance with GAAP.
1.108
PTCE 95-60
shall have the meaning set forth in Section 13.6(a) hereof.
1.109
Purchase Agreements
shall mean, individually and collectively, the Asset
Purchase Agreement, dated March 12, 2004, between BlueLinx and Seller, together with bills of sale,
quitclaim deeds, assignment and assumption agreements and such other instruments of transfer as are
referred to therein and all side letters with respect thereto, and all agreements, documents and
instruments executed and/or delivered in connection therewith, including, without limitation, a
Human Resources Agreement, a Transition Services Agreement, an IT Support Services Agreement, an
Agreement Concerning Private Label Agreements and a Master Purchase, Supply and Distribution
Agreement, as the foregoing now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced;
provided
,
that
, the term Purchase
Agreements as used herein shall not include any of the Financing Agreements as such term is
defined herein or the Real Property Purchase Agreement.
1.110
Purchased Assets
shall mean all of the assets and properties acquired by
BlueLinx from Seller pursuant to the Purchase Agreements.
1.111
Purchased Business
shall mean the building products distribution business
conducted by Seller through its building products distribution operating segment immediately prior
to the consummation of the transactions contemplated by the Purchase Agreements.
1.112
Qualified Bailee
shall mean a bailee, carrier, processor or other such Person
from time to time in possession or control of any Borrowers Inventory or documents of title
related thereto who has executed a Collateral Access Agreement in favor of Administrative and
Collateral Agent.
29
1.113
Qualified Cash
shall mean, as of any date of determination, the aggregate
amount of cash carried by each Borrower on its balance sheet (a) which is in a savings account or
investment account subject to Administrative and Collateral Agents first priority perfected
security interest pursuant to a Deposit Account Control Agreement or Investment Property
Control Agreement, as the case may be, (b) with respect to which Administrative and Collateral
Agent has received statements of the available balances thereof from the bank or other financial
institution at which such account is maintained which confirm such amounts and (c) which is not
pledged or deposited to secure any obligations of any Borrower other than the Obligations.
1.114
Real Property
shall mean all now owned and hereafter acquired real property of
each Borrower and each Guarantor, including leasehold interests, together with all buildings,
structures, and other improvements located thereon and all licenses, easements and appurtenances
relating thereto, wherever located.
1.115
Real Property Purchase Agreement
shall mean that certain Real Property
Purchase and Sale Agreement, dated March 12, 2004, by and between Parent and Seller, and all
documents, agreements and instruments executed, delivered or entered into in connection therewith.
1.116
Receivables
shall mean all of the following now owned or hereafter arising or
acquired property of each Borrower and each Guarantor: (a) all Accounts; (b) all interest, fees,
late charges, penalties, collection fees and other amounts due or to become due or otherwise
payable in connection with any Account; and (c) all payment intangibles of such Borrower or such
Guarantor and other contract rights, chattel paper, instruments, notes, and other forms of
obligations owing to any Borrower or any Guarantor, whether from the sale and lease of goods or
other property, licensing of any property (including Intellectual Property or other general
intangibles), rendition of services or from loans or advances by any Borrower or any Guarantor or
to or for the benefit of any third person (including loans or advances to any Affiliates or
Subsidiaries of any Borrower or any Guarantor) or otherwise associated with any Accounts, Inventory
or general intangibles of any Borrower or any Guarantor (including, without limitation, choses in
action, causes of action, tax refunds, tax refund claims, any funds which may become payable to any
Borrower or any Guarantor in connection with the termination of any Plan or other employee benefit
plan and any other amounts payable to any Borrower or any Guarantor from any Plan or other employee
benefit plan, rights and claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, casualty or any similar types of insurance and any
proceeds thereof and proceeds of insurance covering the lives of employees on which any Borrower or
any Guarantor is a beneficiary).
1.117
Records
shall mean, as to each Borrower and each Guarantor, all of such
Borrowers and such Guarantors present and future books of account of every kind or nature,
purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data relating to the Collateral or
any account debtor, together with the tapes, disks, diskettes and other data and software storage
media and devices, file cabinets or containers in or on which the foregoing are stored (including
any rights of any Borrower or any Guarantor with respect to the foregoing maintained with or by any
other person).
30
1.118
Reference Bank
shall mean Wachovia, its successor or such other bank as
Administrative and Collateral Agent may from time to time designate.
1.119
Register
shall have the meaning set forth in Section 13.6(b) hereof.
1.120
Report
and
Reports
shall have the meaning set forth in Section
12.10(a) hereof.
1.121
Required Lenders
shall mean, at any time, those Revolving Loan Lenders, other
than Sponsor Affiliate Lenders, whose Pro Rata Shares aggregate fifty-one percent (51%) or more of
the aggregate of the Revolving Loan Commitments of all Revolving Loan Lenders other than Sponsor
Affiliate Lenders.
1.122
Required Super-Majority Lenders
shall mean, at any time, those Revolving Loan
Lenders, other than Sponsor Affiliate Lenders, whose Pro Rata Shares aggregate eighty percent (80%)
or more of the aggregate of the Revolving Loan Commitments of all Revolving Loan Lenders other than
Sponsor Affiliate Lenders.
1.123
Reserves
shall mean as of any date of determination, such amounts as
Administrative and Collateral Agent may from time to time establish and revise in good faith and in
its reasonable credit judgment reducing the amount of Revolving Loans and Letter of Credit
Accommodations which would otherwise be available to Borrowers under the lending formula(s)
provided for herein: (a) to reflect events, conditions, contingencies or risks which, as
determined by Administrative and Collateral Agent in good faith and its reasonable credit judgment,
adversely affect, or could reasonably be expected to adversely affect, either (i) any of the
Collateral or its value or (ii) the security interests and other rights of Administrative and
Collateral Agent in the Collateral (including the enforceability, perfection and priority thereof)
or (b) to reflect Administrative and Collateral Agents good faith belief that any collateral
report or financial information furnished by or on behalf of any Borrower or any Guarantor to any
Agent is or may have been incomplete, inaccurate or misleading in any material respect or (c) to
reflect outstanding Letter of Credit Accommodations as provided in Section 2.2 hereof or (d) with
respect to any Default or Event of Default. To the extent Administrative and Collateral Agent may
revise the lending formulas used to determine the Borrowing Base or establish new criteria or
revise existing criteria for Eligible Accounts, Eligible Inventory, Eligible Domestic In-Transit
Inventory, Eligible International In-Transit Inventory or Eligible Re-Load Inventory so as to
address any circumstances, condition, event or contingency in a manner satisfactory to
Administrative and Collateral Agent, Administrative and Collateral Agent shall not establish a
Reserve for the same purpose. The amount of any Reserve established by Administrative and
Collateral Agent shall have a reasonable relationship to the event, condition or other matter which
is the basis for such reserve as determined by Administrative and Collateral Agent in good faith
and its reasonable credit judgment. Without limiting the generality of the foregoing, and without
duplication, Reserves shall be established, at Administrative and Collateral Agents option, (q) in
the amount of the Bank Product Reserve, (r) for the amount of the Canadian Priority Payables then
outstanding, (s) for three (3) months rental payments with regard to any leased location of any
Borrower (i) for which Administrative and Collateral Agent has not received a Collateral Access
Agreement, (ii) subject to an Affiliate Lease until such time as
31
Administrative and Collateral
Agent has received an updated appraisal of the Inventory which accounts for such rental payments as
part of liquidation expenses or (iii) which was owned by Parent as of the date hereof but which has
ceased to be owned by Parent or an Affiliate of any Borrower, (t) for reductions in the amount of
Eligible Accounts due to currency conversion rates, (u) for freight, shipping, storage, warehousing
or other such handling costs associated with Eligible Domestic In-Transit Inventory, Eligible
International In-Transit Inventory or Eligible
Re-Load Inventory or any other amounts Administrative and Collateral Agent determines in good
faith and its reasonable credit judgment must be paid in order to allow Administrative and
Collateral Agent to take possession of such Inventory, (v) to reflect that returns, discounts,
claims, credits and allowances of any nature that are not paid pursuant to the reduction of
Accounts, (w) for sales, excise or similar taxes included in the amount of any Accounts reported to
Administrative and Collateral Agent, (x) to reflect, since the date of the most recent appraisal,
that a change in the turnover, age or mix of the categories of Inventory that adversely affects the
aggregate value of all Inventory or (y) to reflect, since the date of the most recent appraisal,
that the liquidation value of Inventory, has decreased. In the event that, based on the
calculation of the Borrowing Base by Administrative and Collateral Agent, the establishment of a
Reserve of a type not previously established will result in there being Excess Availability of less
than $40,000,000, Administrative and Collateral Agent shall give Administrative Borrower three (3)
Business Days notice prior to establishing such a Reserve;
provided
,
that
,
Administrative and Collateral Agent shall not be required to provide any such notice with regard to
(1) any further Reserves established or increased while Excess Availability remains less than
$40,000,000 or (2) with regard to any Reserve established or increased in connection with an event
which either constitutes an Event of Default or could reasonably be expected to materially impair
Administrative and Collateral Agents liens on the Collateral or its ability to realize upon the
Collateral.
1.124
Revolving Loan Commitment
shall mean, as to any Lender: (a) at any time prior
to the termination of the Revolving Loan Commitments, the amount of such Lenders revolving loan
commitment as set forth on Schedule 1.124 hereto or on Schedule 1 to the Assignment and Acceptance
Agreement pursuant to which such Lender became a Lender under this Agreement, as such amount may be
adjusted from time to time in accordance with the provisions of Section 13.6 hereof, and (b) after
the termination of the Revolving Loan Commitments, the unpaid amount of Revolving Loans, Term Loan
and Special Agent Advances made by such Lender and such Lenders interest in the outstanding Letter
of Credit Accommodations, in each case as the same may be required to be adjusted from time to time
in accordance with the terms hereof.
1.125
Revolving Loan Credit Facility
shall mean the Revolving Loans and Letter of
Credit Accommodations provided to or for the benefit of Borrowers pursuant to the terms of this
Agreement.
1.126
Revolving Loan Lender
shall mean any Lender having a Revolving Loan
Commitment.
1.127
Revolving Loan Threshold Limit
shall mean the amount, calculated at any time,
equal to Eight Hundred Million Dollars ($800,000,000); unless Administrative Borrower shall have
exercised its right to reduce such amount pursuant to Section 2.1(c) hereof, in which event
Revolving Loan Threshold Limit shall mean such reduced amount.
32
1.128
Revolving Loan Limit
shall mean the amount, calculated at any time, equal to
(a) the Revolving Loan Threshold Limit
minus
(b) the then outstanding principal amount of
the Term Loan.
1.129
Revolving Loans
shall mean the loans now or hereafter made by or on behalf of
any Revolving Loan Lender or by Administrative and Collateral Agent for the ratable account of any
Revolving Loan Lender on a revolving basis pursuant to the Revolving Loan Credit Facility
(involving advances, repayments and readvances) as set forth in Section 2.1 hereof.
1.130
Seasonal Period
shall mean, collectively, (i) the period beginning on January
1 and ending on June 30 of each year; and (ii) the period beginning on November 1 and ending on
December 31 of each year.
1.131
Seller
shall mean Georgia-Pacific Corporation, a Georgia corporation, and
Georgia-Pacific Building Materials Sales, Ltd., a company organized under the laws of New
Brunswick, and their respective successors and assigns.
1.132
Settlement Period
shall have the meaning set forth in Section 6.10(b) hereof.
1.133
Solvent
shall mean, at any time with respect to any Person, that at such time
such Person (a) is able to pay its debts as they mature and has (and has a reasonable basis to
believe it will continue to have) sufficient capital (and not unreasonably small capital) to carry
on its business as currently conducted or proposed to be conducted as previously disclosed to
Administrative and Collateral Agent in writing prior to the date hereof or in accordance with
Section 9.6, and (b) the assets and properties of such Person at a fair valuation (and including as
assets for this purpose at a fair valuation all rights of subrogation, contribution or
indemnification arising pursuant to any guaranties given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent liabilities computed at the
amount which, such person has a reasonable basis to believe, represents an amount which can
reasonably be expected to become an actual or matured liability (and including as to contingent
liabilities arising pursuant to any guaranty the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).
1.134
Special Agent Advances
shall have the meaning set forth in Section 12.11(a)
hereof.
1.135
Sponsor
shall mean Cerberus Capital Management, L.P., a Delaware limited
partnership.
1.136
Sponsor Affiliated Lenders
shall mean Ableco Finance LLC, a Delaware limited
liability company, Madeleine L.L.C., a New York limited liability company, and funds and managed
accounts which are managed or advised by such Person, Sponsor or an Affiliate of such Person or
Sponsor.
1.137
Sponsor Portfolio Company
shall mean any Person that is an Affiliate of any
Borrower solely due to the fact that such Person is controlled, directly or indirectly, by Sponsor
and which is not otherwise involved in such Borrowers business in any capacity.
33
1.138
Stock Acquisition
shall mean the purchase or other acquisition by any Borrower
or any Acquisition Subsidiary of all or substantially all of the Capital Stock of any other Person
engaged in substantially the same or a related business as Borrowers.
1.139
Subsidiary
or
subsidiary
shall mean, with respect to any Person, any
corporation, limited liability company, limited liability partnership or other limited or general
partnership, trust, association or other business entity of which an aggregate of at least a
majority of the outstanding Capital Stock or other interests entitled to vote in the election of
the board of directors of such corporation (irrespective of whether, at the time, Capital Stock of
any other class or classes of such corporation shall have or might have voting power by reason of
the happening of any contingency), managers, trustees or other controlling persons, or an
equivalent controlling interest therein, of such Person is, at the time, directly or indirectly,
owned by such Person and/or one or more subsidiaries of such Person.
1.140
Taxes
shall mean any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto, other than Excluded
Taxes.
1.141
Term Loans
shall have the meaning set forth in Section 2.5 hereof; sometimes
being referred to herein individually as a Term Loan.
1.142
Term Notes
shall mean, collectively, those certain Amended and Restated Term
Promissory Notes, dated on or about the date hereof, issued by Borrowers to each Revolving Loan
Lender, as the same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.143
Transferee
shall have the meaning set forth in Section 6.5(a) hereof.
1.144
UCC
shall mean the Uniform Commercial Code as in effect in the State of New
York, and any successor statute, as in effect from time to time (except that terms used herein
which are defined in the Uniform Commercial Code as in effect in the State of New York on the date
hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such
statute except as Lender may otherwise determine;
provided
,
that
, if, with respect
to any financing statement or by reason of any provisions of law, the perfection or the effect of
perfection or non-perfection of the security interests granted to the Administrative and Collateral
Agent pursuant to the applicable Financing Agreement is governed by the Uniform Commercial Code as
in effect in a jurisdiction of the United States other than the State of New York, then UCC means
the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes
of the provisions of each Financing Agreement and any financing statement relating to such
perfection or effect of perfection or non-perfection.
1.145
Value
shall mean, as determined by Administrative and Collateral Agent in good
faith, with respect to Inventory, the lower of (a) cost computed on either a first-in-first-out or
rolling average cost basis, in each case in accordance with GAAP or (b) market value;
provided
,
that
, for purposes of the calculation of the Borrowing Base, (i) the
Value of the Inventory shall not include: (A) the portion of the value of Inventory equal to the
profit earned by any Affiliate of any Borrower or any Guarantor (other than a Sponsor Portfolio
Company) on the sale thereof to any Borrower or (B) write-ups or write-downs in value with respect
to currency exchange rates and (ii) notwithstanding anything to the contrary contained herein, the
cost of the Inventory shall be computed in the same manner and consistent with the most recent
appraisal of the Inventory received and accepted by Administrative and Collateral Agent.
34
1.146
VAT
shall mean Value Added Tax imposed in Canada or any other jurisdiction and
any equivalent tax applicable in any jurisdiction (including Goods and Services Tax, Harmonized
Sales Tax and Quebec Sales Tax).
1.147
Voting Stock
shall mean with respect to any Person, (a) one (1) or more
classes of Capital Stock of such Person having general voting powers to elect at least a majority
of the board of directors, managers or trustees of such Person, irrespective of whether at the time
Capital Stock of any other class or classes have or might have voting power by reason of the
happening of any contingency, and (b) any Capital Stock of such Person convertible or exchangeable
without restriction at the option of the holder thereof into Capital Stock of such Person described
in clause (a) of this definition.
1.148
Wachovia
shall mean Wachovia Bank, National Association, in its individual
capacity, and its successors and assigns.
SECTION 2. CREDIT FACILITIES
2.1
Revolving Loans
.
(a) Subject to and upon the terms and conditions contained herein, each Revolving Loan Lender
severally (and not jointly) agrees to fund its Pro Rata Share of Revolving Loans to Borrowers from
time to time in amounts requested by Administrative Borrower up to the amount equal to the lesser
of: (i) the Borrowing Base or (ii) the Revolving Loan Limit.
(b) Except in Administrative and Collateral Agents discretion, with the consent of all
Lenders other than the Sponsor Affiliated Lenders, (i) the aggregate principal amount of the
Revolving Loans and the Letter of Credit Accommodations outstanding at any time shall not exceed
the Revolving Loan Limit. In the event that the aggregate principal amount of the outstanding
Revolving Loans and Letter of Credit Accommodations exceed the amounts available pursuant to the
Borrowing Base (prior to giving effect to Reserves established at the issuance of such Letter of
Credit Accommodations), the Revolving Loan Limit or the sublimits for Letter of Credit
Accommodations set forth in Section 2.2(e), as applicable, such event shall not limit, waive or
otherwise affect any rights of any Agent or any Lender in that circumstance or on any future
occasions and Borrowers shall, upon demand by Administrative and Collateral Agent, which may be
made at any time or from time to time, immediately repay to Administrative and Collateral Agent,
for the ratable benefit of the Revolving Loan Lenders, the entire amount of any such excess(es) for
which payment is demanded, or, if no Revolving Loans are then outstanding, provide cash collateral
with respect to any Letter of Credit Accommodations outstanding in excess of the Borrowing Base or
sublimit for Letter of Credit Accommodations set forth in Section 2.2(e) in an amount equal to one
hundred five percent (105%) of the amount of such excess plus the amount of any fees and expenses
payable in connection therewith through the end of the expiration of such Letter of Credit
Accommodations.
35
(c) At Borrowers option, upon not less than five (5) Business Days prior written notice to
Administrative and Collateral Agent by Administrative Borrower, Borrowers may permanently reduce
the Revolving Loan Threshold Limit;
provided
,
however
, (i) no more
than twenty (20) such reductions may be made during the term of this Agreement; (ii) such
reductions are requested in increments of $10,000,000 and (iii) the Revolving Loan Threshold Limit
may not be reduced to an amount that is less than $250,000,000 unless reduced to zero in connection
with the termination of the Agreement in accordance with the provisions of Section 13.1(a) hereof.
2.2
Letter of Credit Accommodations
.
(a) Subject to and upon the terms and conditions contained herein, at the request of
Administrative Borrower on behalf of itself or any other Borrower, Administrative and Collateral
Agent agrees, for the ratable risk of each Revolving Loan Lender according to its Pro Rata Share,
to provide or arrange for Letter of Credit Accommodations for the account such Borrower containing
terms and conditions acceptable to Administrative and Collateral Agent and the issuer thereof. Any
payments made by Administrative and Collateral Agent or any Lender to any issuer thereof and/or
related parties in connection with the Letter of Credit Accommodations shall constitute additional
Revolving Loans to Borrower pursuant to this Section 2.
(b) In addition to any charges, fees or expenses charged by any bank or issuer in connection
with the Letter of Credit Accommodations, Borrowers shall pay to Administrative and Collateral
Agent: (i) for its own account, a letter of credit fee at a rate equal to one-eighth percent
(0.125%) per annum on the daily outstanding balance of the Letter of Credit Accommodations for the
immediately preceding month (or part thereof), payable in arrears as of the first day of each
succeeding month; and (ii) for the ratable benefit of Revolving Loan Lenders, a letter of credit
fee at a per annum rate equal to the Applicable Eurodollar Rate Margin then in effect pursuant to
Section 1.71 hereof, on the daily outstanding balance of the Letter of Credit Accommodations for
the immediately preceding month (or part thereof), payable in arrears as of the first day of each
succeeding month;
provided
,
however
, Administrative and Collateral Agent may, and
upon the written direction of the Required Lenders shall, require Borrowers to pay such letter of
credit fees, at a rates that are two (2.0) percentage points higher than the rates set forth above:
(A) during the period from and after the date of termination or non-renewal hereof until
Administrative and Collateral Agent, for the ratable benefit of Revolving Loan Lenders, has
received full and final payment of all Obligations (notwithstanding entry of a judgment against any
Borrower or any Guarantor); (B) during the period from and after the date of the occurrence of an
Event of Default for so long as such Event of Default is continuing as determined by Administrative
and Collateral Agent; and (C) with respect to any Letter of Credit Accommodations issued in excess
of the sublimit set forth in Section 2.2(e) below. Such letter of credit fees shall be calculated
on the basis of a three hundred sixty (360) day year and actual days elapsed and the obligation of
Borrowers to pay such fees shall survive the termination or non-renewal of this Agreement.
36
(c) Administrative Borrower shall give Administrative and Collateral Agent two (2) Business
Days prior written notice of their request for the issuance of a Letter of Credit Accommodation.
Such notice shall be irrevocable and shall specify the original face amount of the Letter of Credit
Accommodation requested, the effective date (which date shall be a Business Day) of issuance of
such requested Letter of Credit Accommodation, whether such Letter of Credit Accommodations may be
drawn in a single or in partial draws, the date on which such requested Letter of Credit
Accommodation is to expire (which date shall be a Business Day), the
purpose for which such Letter of Credit Accommodation is to be issued, and the beneficiary of
the requested Letter of Credit Accommodation. Administrative Borrower shall attach to such notice
the proposed terms of the Letter of Credit Accommodation.
(d) In addition to being subject to the satisfaction of the applicable conditions precedent
contained in Section 4 hereof and the other terms and conditions contained herein, no Letter of
Credit Accommodations shall be available unless each of the following conditions precedent have
been satisfied in a manner reasonably satisfactory to Administrative and Collateral Agent in its
reasonable credit judgment: (i) Administrative Borrower shall have delivered to the proposed
issuer of such Letter of Credit Accommodation at such times and in such manner as such proposed
issuer may require, an application in form and substance satisfactory to such proposed issuer and
Administrative and Collateral Agent for the issuance of the Letter of Credit Accommodation and such
other documents as may be required pursuant to the terms thereof, and the form and terms of the
proposed Letter of Credit Accommodation shall be satisfactory to Administrative and Collateral
Agent and such proposed issuer, (ii) as of the date of issuance, no order of any court, arbitrator
or other Governmental Authority shall purport by its terms to enjoin or restrain money center banks
generally from issuing letters of credit of the type and in the amount of the proposed Letter of
Credit Accommodation, and no law, rule or regulation applicable to money center banks generally and
no request or directive (whether or not having the force of law) from any Governmental Authority
with jurisdiction over money center banks generally shall prohibit, or request that the proposed
issuer of such Letter of Credit Accommodation refrain from, the issuance of letters of credit
generally or the issuance of such Letters of Credit Accommodation; and (iii) Excess Availability,
prior to giving effect to any Reserves with respect to such Letter of Credit Accommodations, on the
date of the proposed issuance of any Letter of Credit Accommodations, shall be equal to or greater
than an amount equal to the sum of (A) one hundred percent (100%) of the face amount thereof plus
(B) the amount of all other commitments and obligations made or incurred by Administrative and
Collateral Agent and Lenders with respect to charges, fees or expenses charged by any bank or
issuer in connection with such Letter of Credit Accommodation. Effective on the issuance of each
Letter of Credit Accommodation, a Reserve shall be established in the amount set forth in Section
2.2(d)(iii) above.
(e) Except in Administrative and Collateral Agents discretion, with the consent of the
Required Lenders, the amount of all outstanding Letter of Credit Accommodations and all other
commitments and obligations made or incurred by Administrative and Collateral Agent or any Lender
in connection therewith shall not at any time exceed Thirty Million Dollars ($30,000,000).
37
(f) Borrowers and Guarantors shall indemnify and hold Administrative and Collateral Agent and
Lenders harmless from and against any and all losses, claims, damages, liabilities, costs and
expenses which Administrative and Collateral Agent or any Lender may suffer or incur, other than as
a result of the gross negligence or willful misconduct of such Person seeking indemnification, in
connection with any Letter of Credit Accommodations and any documents, drafts or acceptances
relating thereto, including any losses, claims, damages, liabilities, costs and expenses due to any
action taken by any issuer or correspondent with respect to any Letter of Credit Accommodation.
Each Borrower and each Guarantor assumes all risks with respect to the acts or omissions of the
drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be deemed such Borrowers
agent. Each Borrower and each Guarantor assumes all risks for, and agrees to pay (if any), all
foreign, Federal, State and local taxes, duties and levies relating to any goods subject to any
Letter of Credit Accommodations or any documents, drafts or acceptances thereunder. Each Borrower
and each Guarantor hereby releases and holds Administrative and Collateral Agent and each Lender
harmless from and against any acts, waivers, errors, delays or omissions, whether caused by any
Borrower, by any Guarantor, by any issuer or correspondent or otherwise with respect to or relating
to any Letter of Credit Accommodation, except for the gross negligence or willful misconduct of
Administrative and Collateral Agent or such Lender as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction. The provisions of this Section 2.2(f)
shall survive the payment of Obligations and the termination or non-renewal of this Agreement.
(g) In connection with Inventory purchased pursuant to Letter of Credit Accommodations,
Borrowers and Guarantors shall, at Administrative and Collateral Agents request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others receiving or holding cash,
checks, Inventory, documents or instruments in which Administrative and Collateral Agent, for
itself and the ratable benefit of the Lenders and the Bank Product Providers, holds a security
interest to deliver them to Administrative and Collateral Agent and/or subject to Administrative
and Collateral Agents order, and if they shall come into such Borrowers or such Guarantors
possession, to deliver them, upon Administrative and Collateral Agents request, to Administrative
and Collateral Agent. Borrowers and Guarantors shall also, at Administrative and Collateral
Agents request, designate Administrative and Collateral Agent as the consignee on all bills of
lading and other negotiable and non-negotiable documents.
(h) Each Borrower and each Guarantor hereby irrevocably authorizes and directs any issuer of a
Letter of Credit Accommodation to name such Borrower or such Guarantor as the account party therein
and to deliver to Administrative and Collateral Agent all instruments, documents and other writings
and property received by issuer pursuant to the Letter of Credit Accommodations and to accept and
rely upon Administrative and Collateral Agents instructions and agreements with respect to all
matters arising in connection with the Letter of Credit Accommodations or the applications
therefor. Nothing contained herein shall be deemed or construed to grant any Borrower or any
Guarantor any right or authority to pledge the credit of any Agent or any Lender in any manner.
Neither Administrative and Collateral Agent nor any Lender shall have any liability of any kind
with respect to any Letter of Credit Accommodation provided by an issuer other than Administrative
and Collateral Agent or such Lender unless Administrative and Collateral Agent has duly executed
and delivered to such issuer the application or a guaranty or indemnification in writing with
respect to such Letter of Credit Accommodation. Borrowers and Guarantors shall be bound by any
interpretation made in good faith by Administrative and Collateral Agent, or any other issuer or
correspondent under or in connection with any Letter of Credit Accommodation or any documents,
drafts or acceptances thereunder, notwithstanding that such interpretation may be inconsistent with
any instructions of any Borrower or any Guarantor.
38
(i) So long as no Event of Default exists, with respect to any Letter of Credit Accommodation,
Borrowers and Guarantors may, after notice to Administrative and Collateral Agent, (i) approve or
resolve any questions of non-compliance of documents, (ii) give any
instructions as to acceptance or rejection of any documents or goods, (iii) execute any and
all applications for steamship or airway guaranties, indemnities or delivery orders, and (iv) with
Administrative and Collateral Agents consent, grant any extensions of the maturity of, time of
payment for, or time of presentation of, any drafts, acceptances, or documents, and agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letter of Credit Accommodations, or documents, drafts or
acceptances thereunder or any letters of credit included in the Collateral.
(j) At any time an Event of Default exists or has occurred and is continuing, Administrative
and Collateral Agent shall have the right and authority to, and no Borrower or Guarantor shall,
without the prior written consent of Administrative and Collateral Agent, (i) approve or resolve
any questions of non-compliance of documents, (ii) give any instructions as to acceptance or
rejection of any documents or goods, (iii) execute any and all applications for steamship or airway
guaranties, indemnities or delivery orders, (iv) grant any extensions of the maturity of, time of
payments for, or time of presentation of, any drafts, acceptances, or documents, and (v) agree to
any amendments, renewals, extensions, modifications, changes or cancellations of any of the terms
or conditions of any of the applications, Letter of Credit Accommodations, or documents, drafts or
acceptances thereunder or any letters of credit included in the Collateral. Administrative and
Collateral Agent may take such actions either in its own name or in a Borrowers or a Guarantors
name.
(k) Any rights, remedies, duties or obligations granted or undertaken by any Borrower or any
Guarantor to any issuer or correspondent in any application for any Letter of Credit Accommodation,
or any other agreement in favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been granted or undertaken by such Borrower or such
Guarantor to Administrative and Collateral Agent for the ratable benefit of Revolving Loan Lenders.
Any duties or obligations undertaken by Administrative and Collateral Agent or any Revolving Loan
Lender to any issuer or correspondent in any application for any Letter of Credit Accommodation, or
any other agreement by Administrative and Collateral Agent or any Revolving Loan Lender in favor of
any issuer or correspondent relating to any Letter of Credit Accommodation, shall be deemed to have
been undertaken by Borrowers to Administrative and Collateral Agent or such Revolving Loan Lender
and to apply in all respects to Borrowers.
2.3
Commitments
. The aggregate amount of each Revolving Loan Lenders Pro Rata Share
of the Revolving Loans, Term Loan and Letter of Credit Accommodations shall not exceed the amount
of such Lenders Revolving Loan Commitment, as the same may from time to time be amended in
accordance with the terms of this Agreement.
39
2.4
Bank Products
. Any Borrower or any of their respective Subsidiaries may (but no
such Person is required to) request that the Administrative and Collateral Agent provide or arrange
for such Person to obtain Bank Products from Administrative and Collateral Agent or its Affiliates,
and Administrative and Collateral Agent may, in its sole discretion, provide or arrange for such
Person to obtain the requested Bank Products. Any Borrower or any of their respective Subsidiaries
that obtains Bank Products shall indemnify and hold Administrative and Collateral Agent, each
Lender and their respective Affiliates harmless from any and all obligations now or hereafter owing
to any other Person by Administrative and Collateral Agent
or its Affiliates in connection with any Bank Products other than for gross negligence or
willful misconduct on the part of any such indemnified Person. Each Borrower and each of their
respective Subsidiaries acknowledge and agree that the obtaining of Bank Products from the
Administrative and Collateral Agent and its Affiliates (a) is in the sole discretion of the
Administrative and Collateral Agent or such Affiliate, as the case may be, and (b) is subject to
all rules and regulations of the Person that provides the Bank Product.
2.5
Term Loan
.
(a) The Original Lenders under the Original Loan Agreement made a term loan to BlueLinx on
July 14, 2005, in the aggregate original principal sum of Six Million Dollars ($6,000,000) and with
an aggregate outstanding principal balance of Six Million Dollars ($6,000,000). Upon the
effectiveness of this Agreement, each Revolving Loan Lender severally (and not jointly) shall have
been deemed to make a term loan to Borrowers (each a
Term Loan
and collectively the
Term Loans
) in an amount equal to such Revolving Loan Lenders Pro Rata Share of such
outstanding principal balance.
(b) The Term Loans are (i) evidenced by the Term Notes duly executed and delivered by
Borrowers to each Revolving Loan Lender, (ii) to be repaid, together with interest and other
amounts, in accordance with this Agreement, the Term Notes and the other Financing Agreements, and
(iii) secured by all of the Collateral. The principal amount of the Term Loan shall be due and
payable on the Final Maturity Date (or earlier as provided herein).
SECTION 3. INTEREST AND FEES
3.1
Interest
.
(a) Borrowers shall pay to Administrative and Collateral Agent, for the ratable benefit of
Lenders, interest on the outstanding principal amount of the Loans (other than the Letter of Credit
Accommodations) at the Interest Rate. All interest accruing hereunder during the existence of any
Event of Default or after the date of any termination or non-renewal hereof shall be payable on
demand.
40
(b) Administrative Borrower, on behalf of Borrowers, may from time to time request Eurodollar
Rate Loans or may request that Prime Rate Loans be converted to Eurodollar Rate Loans or that any
existing Eurodollar Rate Loans continue for an additional Interest Period. Such request from
Administrative Borrower shall specify the amount of the Eurodollar Rate Loans or the amount of the
Prime Rate Loans to be converted to Eurodollar Rate Loans or the amount of the Eurodollar Rate
Loans to be continued (subject to the limits set forth below) and the Interest Period to be
applicable to such Eurodollar Rate Loans. Subject to the terms and conditions contained herein,
three (3) Business Days after receipt by Administrative and Collateral Agent of such a request from
Administrative Borrower, such Eurodollar Rate Loans shall be made, such Prime Rate Loans shall be
converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the case may
be, provided, that, (i) no Default or Event of Default shall exist or have occurred and be
continuing, (ii) no party hereto shall have sent any notice of termination or, if applicable,
non-renewal of this Agreement, (iii) Borrowers shall have complied with such customary procedures
as are established by Administrative and Collateral
Agent and specified by Administrative and Collateral Agent to Administrative Borrower from
time to time for requests by Administrative Borrower for Eurodollar Rate Loans, (iv) no more than
six (6) Interest Periods may be in effect at any one time and no more than two (2) Interest Periods
that are fourteen (14) day Interests Periods may be in effect at any one time, (v) the aggregate
amount of all Eurodollar Rate Loans outstanding must be in an amount not less than Ten Million
Dollars ($10,000,000) or an integral multiple of One Million Dollars ($1,000,000) in excess thereof
and (vi) Administrative and Collateral Agent and Revolving Loan Lenders shall have determined that
the Interest Period or Adjusted Eurodollar Rate is available to such Lender and can be readily
determined as of the date of the request for such Eurodollar Rate Loan by Administrative Borrower.
Any request by Administrative Borrower for Eurodollar Rate Loans or to convert Prime Rate Loans to
Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be irrevocable.
Notwithstanding anything to the contrary contained herein, Administrative and Collateral Agent,
Revolving Loan Lenders and Reference Bank shall not be required to purchase United States Dollar
deposits in the London interbank market or other applicable Eurodollar Rate market to fund any
Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as if Administrative and
Collateral Agent, Revolving Loan Lenders and Reference Bank had purchased such deposits to fund the
Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate Loans upon the last
day of the applicable Interest Period, unless Administrative and Collateral Agent has received and
approved a request to continue such Eurodollar Rate Loan at least three (3) Business Days prior to
such last day in accordance with the terms hereof. Any Eurodollar Rate Loans shall, at
Administrative and Collateral Agents option, upon notice by Administrative and Collateral Agent to
Administrative Borrower, convert to Prime Rate Loans in the event that this Agreement shall
terminate or, if applicable, not be renewed. Borrowers shall pay to Administrative and Collateral
Agent, for the benefit of Lenders, upon demand by Administrative and Collateral Agent to
Administrative Borrower (or Administrative and Collateral Agent may, at its option, charge any loan
account of any Borrower) any amounts required to compensate any Lender, the Reference Bank or any
Participant with any Lender for any loss (including loss of anticipated profits), cost or expense
incurred by such Person, as a result of the conversion of Eurodollar Rate Loans to Prime Rate Loans
pursuant to any of the foregoing, provided that such demand is made within 180 days of the
incurrence of such loss, costs or expenses. At the request of Administrative Borrower,
Administrative and Collateral Agent shall provide to Administrative Borrower all available
supporting documentation with respect to such loss, cost or expense.
(d) Interest shall be payable by Borrowers to Administrative and Collateral Agent, for the
benefit of Lenders monthly in arrears not later than the first day of each calendar month and shall
be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed. The
interest rate on non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or
decrease by an amount equal to each increase or decrease in the Prime Rate effective on the first
day of the month after any change in such Prime Rate is announced based on the Prime Rate in effect
on the last day of the month in which any such change occurs.
41
(e) No agreements, conditions, provisions or stipulations contained in this Agreement or any
of the other Financing Agreements or any Event of Default, or the exercise by Administrative and
Collateral Agent or any Lender of the right to accelerate the payment or the maturity of all or any
portion of the Obligations, or the exercise by Administrative and Collateral
Agent or any Lender of any option whatsoever contained in this Agreement or any of the other
Financing Agreements, or the prepayment by Borrowers of any of the Obligations, or the occurrence
of any event or contingency whatsoever, shall entitle Administrative and Collateral Agent and
Lenders to contract for, charge or receive, in any event, interest exceeding the Maximum Interest
Rate. In no event shall Borrowers be obligated to pay interest exceeding such Maximum Interest
Rate. All agreements, conditions or stipulations, if any, which may in any event or contingency
whatsoever operate to bind, obligate or compel Borrowers to pay a rate of interest exceeding the
Maximum Interest Rate shall be without binding force or effect, at law or in equity, to the extent
of the excess of interest over such Maximum Interest Rate. In the event any interest is contracted
for, charged or received in excess of the Maximum Interest Rate (
Excess
), each Borrower
and each Guarantor acknowledges and stipulates that any such contract, charge or receipt shall be
the result of an accident and
bona
fide
error, and that any Excess received by
Administrative and Collateral Agent or any Lender shall be applied, first, to the payment of the
then outstanding and unpaid principal hereunder; second, to the payment of the other Obligations
then outstanding and unpaid; and third, returned to Borrowers, it being the intent of the parties
hereto not to enter at any time into a usurious or otherwise illegal relationship. Each Borrower
and each Guarantor recognizes that, with fluctuations in the rate of interest set forth in this
Section 3.1 of this Agreement and the Maximum Interest Rate, such an unintentional result could
inadvertently occur. By the execution of this Agreement, each Borrower and each Guarantor agrees
that (i) the credit or return of any Excess shall constitute the acceptance by such Borrower of
such Excess, and (ii) no Borrower or Guarantor shall seek or pursue any other remedy, legal or
equitable, against any Agent or any Lender, based in whole or in part upon contracting for,
charging or receiving of any interest in excess of the Maximum Interest Rate. For the purpose of
determining whether or not any Excess has been contracted for, charged or received by any Agent or
any Lender, all interest at any time contracted for, charged or received by any Agent or any Lender
in connection with this Agreement or any of the other Financing Agreements shall be amortized,
prorated, allocated and spread during the entire term of this Agreement in accordance with the
amounts outstanding from time to time hereunder and the Maximum Interest Rate from time to time in
effect in order to lawfully charge the maximum amount of interest permitted under applicable law.
42
3.2
Changes in Laws and Increased Costs of Loans
.
(a) If after the date hereof, either (i) any change in, or in the interpretation of, any law
or regulation is introduced, including, without limitation, with respect to reserve requirements,
applicable to any Agent, any Lender or any banking or financial institution from whom any Agent or
any Lender borrows funds or obtains credit (a
Funding Bank
) other than any change in, or
in the interpretation of any Tax and any Excluded Taxes, or (ii) a Funding Bank, any Agent or any
Lender complies with any future guideline or request from any central bank or other Governmental
Authority or (iii) a Funding Bank, any Agent or any Lender determines that the adoption of any
applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof has or would have the
effect described below, or a Funding Bank, any Agent or any Lender complies with any request or
directive regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, and in the case of any event set forth in this clause
(iii), such adoption, change or compliance has or
would have the direct or indirect effect of reducing the rate of return on such Agents or
such Lenders capital as a consequence of its obligations hereunder to a level below that which
such Agent or such Lender could have achieved but for such adoption, change or compliance (taking
into consideration the Funding Banks, such Agents or such Lenders policies with respect to
capital adequacy) by an amount deemed by such Agent or such Lender to be material, and the result
of any of the foregoing events described in clauses (i), (ii) or (iii) is or results in an increase
in the cost to any Agent or any Lender of funding or maintaining the Loans, then Borrowers and
Guarantors shall from time to time upon demand by Administrative and Collateral Agent, for itself
or the applicable Lender, pay to Administrative and Collateral Agent, for itself or the applicable
Lender, additional amounts sufficient to indemnify Agents or the applicable Lender against such
increased cost on an after-tax basis (after taking into account applicable deductions and credits
in respect of the amount indemnified), provided that such demand is made within 180 days of the
incurrence of such loss, costs or expenses. A certificate as to the amount of such increased cost
shall be submitted to Administrative Borrower by Administrative and Collateral Agent and shall be
conclusive, absent manifest error.
(b) If prior to the first day of any Interest Period, (i) Administrative and Collateral Agent
shall have determined in good faith (which determination shall be conclusive and binding upon
Borrowers and Guarantors) that, by reason of circumstances affecting the relevant market, adequate
and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period,
(ii) Administrative and Collateral Agent determines that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly reflect the cost to
Administrative and Collateral Agent and/or the Lenders of making or maintaining Eurodollar Rate
Loans during such Interest Period, or (iii) Dollar deposits in the principal amounts of the
Eurodollar Rate Loans to which such Interest Period is to be applicable are not generally available
in the London interbank market, Administrative and Collateral Agent shall give telecopy or
telephonic notice thereof to Administrative Borrower as soon as practicable thereafter, and will
also give prompt written notice to Administrative Borrower when such conditions no longer exist.
If such notice is given (A) any Eurodollar Rate Loans requested to be made on the first day of such
Interest Period shall be made as Prime Rate Loans, (B) any Loans that were to have been converted
on the first day of such Interest Period to or continued as Eurodollar Rate Loans shall be
converted to or continued as Prime Rate Loans and (C) each outstanding Eurodollar Rate Loan shall
be converted, on the last day of the then-current Interest Period thereof, to Prime Rate Loans.
Until such notice has been withdrawn by Administrative and Collateral Agent, no further Eurodollar
Rate Loans shall be made or continued as such, nor shall Borrowers have the right to convert Prime
Rate Loans to Eurodollar Rate Loans.
43
(c) Notwithstanding any other provision herein, if the adoption of or any change in any law,
treaty, rule or regulation or final, non-appealable determination of an arbitrator or a court or
other Governmental Authority or in the interpretation or application thereof occurring after the
date hereof shall make it unlawful for Administrative and Collateral Agent or any Lender to make or
maintain Eurodollar Rate Loans as contemplated by this Agreement, (i) Administrative and Collateral
Agent shall promptly give written notice of such circumstances to Administrative Borrower (which
notice shall be withdrawn whenever such circumstances no longer exist), (ii) the commitment of such
Lender hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such and convert
Prime Rate Loans to Eurodollar Rate Loans shall forthwith be canceled and, until such time as it
shall no longer be
unlawful for Administrative and Collateral Agent and/or such Lender to make or maintain
Eurodollar Rate Loans, such Lender shall then have a commitment only to make a Prime Rate Loan when
a Eurodollar Rate Loan is requested and (iii) Loans of such Lender then outstanding as Eurodollar
Rate Loans, if any, shall be converted automatically to Prime Rate Loans on the respective last
days of the then current Interest Periods with respect to such Loans or within such earlier period
as required by law. If any such conversion of a Eurodollar Rate Loan occurs on a day which is not
the last day of the then current Interest Period with respect thereto, Borrowers and Guarantors
shall pay to Administrative and Collateral Agent, for the benefit of the Lenders, such amounts, if
any, as may be required pursuant to Section 6.3(c) below.
(d) Borrowers and Guarantors shall indemnify and hold harmless Administrative and Collateral
Agent and each Lender from any loss or expense which Administrative and Collateral Agent or any
Lender may sustain or incur as a consequence of (i) default by Borrowers in making a borrowing of,
conversion into or extension of Eurodollar Rate Loans after Administrative Borrower has given a
notice requesting the same in accordance with the provisions of this Agreement, (ii) default by
Borrowers in making any prepayment of a Eurodollar Rate Loan after Administrative Borrower has
given a notice thereof in accordance with the provisions of this Agreement, and (iii) the making of
a prepayment of Eurodollar Rate Loans on a day which is not the last day of an Interest Period with
respect thereto. With respect to Eurodollar Rate Loans, such indemnification may include an amount
equal to the excess, if any, of (A) the amount of interest which would have accrued on the amount
so prepaid, or not so borrowed, converted or extended, for the period from the date of such
prepayment or of such failure to borrow, convert or extend to the last day of the applicable
Interest Period (or, in the case of a failure to borrow, convert or extend, the Interest Period
that would have commenced on the date of such failure) in each case at the applicable rate of
interest for such Eurodollar Rate Loans provided for herein
over
(B) the amount of interest
(as reasonably determined by Administrative and Collateral Agent) which would have accrued to
Lenders on such amount by placing such amount on deposit for a comparable period with leading banks
in the interbank Eurodollar market. This covenant shall survive the termination or non-renewal of
this Agreement and the payment of the Obligations.
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(e) If any Borrower or any Guarantor is required to pay additional amounts to any Lender
pursuant to Section 3.2(a) hereof that increase the effective lending rate of such Lender with
respect to its share of the Loans to greater than one-eighth (1/8%) percent in excess of the
percentage of the effective lending rate of the other Lenders, then such Lender shall use
reasonable efforts (consistent with legal and regulatory restrictions) to change the jurisdiction
of its lending office with respect to making Eurodollar Rate Loans so as to eliminate any such
additional payment by Borrowers and Guarantors which may thereafter accrue, if such change in the
judgment of such Lender is not otherwise disadvantageous to such Lender. In the event that any one
or more Lenders, pursuant to Section 3.2(a) hereof, incur any increased costs (other than increased
costs to the extent such increased costs are not a recurring cost) for which any such Lender
demands compensation pursuant to Section 3.2(a) hereof which increases the effective lending rate
of such Lender with respect to its share of the Loans to greater than one-eighth (1/8%) percent in
excess of the percentage of the effective lending rate of the other Lenders and such Lender has not
mitigated such costs within sixty (60) days after receipt by such Lender from Administrative
Borrower of a written notice that such Lenders effective lending rate has so exceeded the
effective lending rate of the other Lenders, then and in any such event, Borrowers
may substitute another financial institution which is an Eligible Transferee acceptable to
Administrative and Collateral Agent for such Lender to assume the Revolving Loan Commitment of such
Lender and to purchase the Loans of such Lender, without recourse to or warranty by, or expense to,
such Lender for a purchase price equal to the outstanding principal amount of the Loans owing to
such Lender plus any accrued but unpaid interest on such Loans and accrued but unpaid fees and
other amounts in respect of such Lenders Revolving Loan Commitment and share of the Loans (other
than any prepayment penalty or other premiums). Upon such purchase such Lender shall no longer be
a party hereto or have any rights or benefits hereunder (except for rights or benefits that such
Lender would retain hereunder and under the other Financing Agreements upon payment in full of all
of the Obligations) and the replacement Lender shall succeed to the rights and benefits, and shall
assume the obligations, of such replaced Lender hereunder and thereunder. Administrative and
Collateral Agent and Lenders shall cooperate with Borrowers to amend the Financing Agreements to
reflect such substitution. In no event may Borrowers replace a Lender that is also an Agent or an
issuer of a Letter of Credit Accommodation.
3.3
Fees
. In addition to any other fees provided for herein or in any other Financing
Agreement, Borrowers agree to pay to Administrative and Collateral Agent:
(a) for the benefit of the parties specified therein, the fees and other amounts set forth in
the Fee Letter in the amounts and at the times specified therein; and
(b) for the ratable benefit of the Revolving Loan Lenders, payable on the first day of each
month in arrears while this Agreement is in effect and for so long thereafter as any of the
Obligations are outstanding, an unused line fee at a rate equal to one-quarter of one percent
(0.25%) per annum calculated upon the amount by which the Revolving Loan Limit exceeds the average
daily principal balance of the outstanding Revolving Loans and Letter of Credit Accommodations
during the immediately preceding month, or part thereof.
SECTION 4. CONDITIONS PRECEDENT AND SUBSEQUENT
4.1
Conditions Precedent to Effectiveness of this Agreement
. Each of the following is
a condition precedent to the effectiveness of this Agreement and to this Agreement amending and
restating the Original Loan Agreement in its entirety:
(a) Administrative and Collateral Agent shall have received, in form and substance reasonably
satisfactory to Administrative and Collateral Agent, all releases, terminations and such other
documents as Administrative and Collateral Agent may request to evidence and effectuate the
termination of all existing liens and security interests (other than those of Administrative and
Collateral Agent or any other liens permitted under Section 9.8 hereof) with respect to the assets
of each Borrower and each Guarantor, including, but not limited to, UCC and PPSA termination
statements for all such UCC and PPSA financing statements previously filed by any Person with
respect to any Borrower or any Guarantor;
45
(b) Administrative and Collateral Agent shall have received all UCC financing statements and
PPSA filings reasonably required by Administrative and Collateral Agent, each duly authorized or
executed (as applicable) by each Borrower and each Guarantor,
and Administrative and Collateral Agent shall have received searches reflecting the filing of
all such UCC financing statements and PPSA filings, indicating that a valid, perfected,
first-priority (under both the UCC and PPSA) lien on the Collateral has been granted to
Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank
Product Providers;
(c) all requisite corporate action and proceedings in connection with this Agreement and the
other Financing Agreements shall be reasonably satisfactory in form and substance to Administrative
and Collateral Agent, and Administrative and Collateral Agent shall have received all information
and copies of all documents, including records of requisite corporate action and proceedings which
Administrative and Collateral Agent may have reasonably requested in connection therewith, such
documents where requested by Administrative and Collateral Agent or its counsel to be certified by
appropriate corporate officers or Governmental Authority (and including a copy of the certificate
of incorporation of each Borrower and each Guarantor certified by the Secretary of State (or
equivalent Governmental Authority) which shall set forth the same complete corporate name of each
Borrower and each Guarantor as is set forth herein and such document as shall set forth the
organizational identification number of such Borrower or such Guarantor, if one is issued in its
jurisdiction of incorporation);
(d) Administrative and Collateral Agent shall have received, in form and substance reasonably
satisfactory to Administrative and Collateral Agent, all consents, waivers, acknowledgments and
other agreements from third persons which Administrative and Collateral Agent may deem necessary or
desirable in order to permit, protect and perfect Administrative and Collateral Agents security
interests in and liens upon the Collateral or to effectuate the provisions or purposes of this
Agreement and the other Financing Agreements, including, without limitation, Collateral Access
Agreements by owners and lessors of leased premises of each Borrower and each Guarantor, by
warehouses at which any Collateral is located and from bailees or other third parties who may from
time to time be in possession or control of any portion of the Collateral;
(e) Administrative and Collateral Agent shall have received, in form and substance reasonably
satisfactory to Administrative and Collateral Agent, Deposit Account Control Agreements by and
among Administrative and Collateral Agent, each Borrower and each Guarantor, as the case may be,
and each bank where such Borrower (or Guarantor) has a deposit account (including, without
limitation, the Blocked Accounts), in each case, duly authorized, executed and delivered by such
bank and such Borrower or such Guarantor (or Administrative and Collateral Agent shall be the
banks customer with respect to such deposit account as Administrative and Collateral Agent may
specify);
46
(f) Administrative and Collateral Agent shall have received evidence, in form and substance
satisfactory to Administrative and Collateral Agent, that Administrative and Collateral Agent, for
itself and the ratable benefit of the Lenders and the Bank Product Providers, has valid perfected
and first priority security interests in and liens upon the Collateral and any other property which
is intended to be security for the Obligations or the liability of any Borrower or any Guarantor in
respect thereof, subject only to the security interests and liens permitted herein or in the other
Financing Agreements;
(g) Administrative and Collateral Agent shall have received and reviewed lien and judgment
search results for the jurisdiction of incorporation or organization of each Borrower (other than
BlueLinx) and each Guarantor, the jurisdiction of the chief executive office of each Borrower
(other than BlueLinx) and each Guarantor and all U.S. and Canadian jurisdictions in which assets of
each Borrower (other than BlueLinx) and each Guarantor are located, which search results shall be
in form and substance satisfactory to Administrative and Collateral Agent;
(h) Administrative and Collateral Agent shall have received, in form and substance reasonably
satisfactory to them, patent and trademark security agreements executed by each Borrower and each
Guarantor (to the extent not previously provided in connection with the Original Loan Agreement) in
favor of Administrative and Collateral Agent with regard to all patents, trademarks and rights
related thereto held by any Borrower or any Guarantor;
(i) Administrative and Collateral Agent shall have received, in form and substance reasonably
satisfactory to them, an amended and restated intercompany subordination agreement duly executed by
Borrowers, Guarantors, and each of their respective Subsidiaries;
(j) Administrative and Collateral Agent shall have received evidence of insurance and loss
payee endorsements required hereunder and under the other Financing Agreements, in form and
substance reasonably satisfactory to Administrative and Collateral Agent, and certificates of such
required insurance policies and/or endorsements naming Administrative and Collateral Agent as loss
payee and/or additional insured, as applicable, under such required insurance policies;
(k) Administrative and Collateral Agent shall have received, in form and substance
satisfactory to Administrative and Collateral Agent, the opinion letter of counsel to each Borrower
and each Guarantor with respect to the Financing Agreements and the security interests and liens of
Administrative and Collateral Agent with respect to the Collateral and such other matters as
Administrative and Collateral Agent may request;
(l) Administrative and Collateral Agent shall have received originals of the shares of the
stock certificates representing all of the issued and outstanding shares of the Capital Stock of
each Borrower and each Guarantor (other than BlueLinx) and owned by any Borrower or any Guarantor,
in each case together with stock powers duly executed in blank with respect thereto;
47
(m) Administrative and Collateral Agent shall have received, in form and substance
satisfactory to Administrative and Collateral Agent, the Term Notes duly executed by Borrowers;
(n) Administrative and Collateral Agent shall have received, in form and substance
satisfactory to Administrative and Collateral Agent, the amended and restated Fee Letter duly
executed by the Borrowers;
(o) Administrative and Collateral Agent shall have received, in form and substance
satisfactory to Administrative and Collateral Agent, an amended and restated stock pledge
agreement, duly executed by BlueLinx;
(p) Administrative and Collateral Agent shall have received, in form and substance
satisfactory to Administrative and Collateral Agent, a general continuing guaranty, duly executed
by BFH1, BFH2, BLX1 and BLX2;
(q) Administrative and Collateral Agent shall have received, in form and substance
satisfactory to Administrative and Collateral Agent, a stock pledge agreement, duly executed by
BFH1 and BFH2;
(r) the other Financing Agreements and all instruments and documents hereunder and thereunder
shall have been duly executed and delivered to Administrative and Collateral Agent, in form and
substance satisfactory to Administrative and Collateral Agent.
4.2
Conditions Precedent to All Revolving Loans and Letter of Credit Accommodations
.
Each of the following is an additional condition precedent to Lenders (or Administrative and
Collateral Agent on behalf of Lenders) making Revolving Loans and/or providing Letter of Credit
Accommodations to Borrowers, including the initial Revolving Loans and Letter of Credit
Accommodations and any future Revolving Loans and Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in the other Financing Agreements
shall be true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of the making of each such Loan
or providing each such Letter of Credit Accommodation and after giving effect thereto, except to
the extent that such representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate in all material
respects on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any Governmental Authority shall exist,
and no action, suit, investigation, litigation or proceeding shall be pending or threatened in any
court or before any arbitrator or Governmental Authority, which purports to enjoin, prohibit,
restrain or otherwise adversely condition (i) the making of the Revolving Loans or providing the
Letter of Credit Accommodations, or (ii) the consummation of the transactions contemplated pursuant
to the terms hereof or the other Financing Agreements;
(c) no Material Adverse Change shall have occurred; and
(d) no Default or Event of Default shall exist or have occurred and be continuing on and as of
the date of the making of such Loan or providing each such Letter of Credit Accommodation and after
giving effect thereto.
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SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1
Grant of Security Interest
. To secure payment and performance of all Obligations,
each Borrower and each Guarantor hereby grants to Administrative and Collateral Agent, for itself
and the ratable benefit of the Lenders and the Bank Product Providers, a continuing security
interest in, a lien upon, and a right of set off against, and hereby collaterally assigns to
Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank
Product Providers, as security, all personal property and trade fixtures and interests
in personal property and trade fixtures of each Borrower and each Guarantor, whether now owned
or hereafter acquired or existing, and wherever located (together with all other collateral
security for the Obligations at any time granted to or held or acquired by Agent or any Lender,
collectively, the
Collateral
), including:
(a) all Accounts;
(b) all general intangibles, including, without limitation, all Intellectual Property;
(c) all goods, including, without limitation, Inventory and Equipment;
(d) all trade fixtures;
(e) all chattel paper (including all tangible and electronic chattel paper);
(f) all instruments (including all promissory notes);
(g) all documents;
(h) all deposit accounts;
(i) all letters of credit, bankers acceptances and similar instruments and including all
letter-of-credit rights;
(j) all supporting obligations and all present and future liens, security interests, rights,
remedies, title and interest in, to and in respect of Receivables and other Collateral, including
(i) rights and remedies under or relating to guaranties, contracts of suretyship, letters of credit
and credit and other insurance related to the Collateral, (ii) rights of stoppage in transit,
replevin, repossession, reclamation and other rights and remedies of an unpaid vendor, lienor or
secured party, (iii) goods described in invoices, documents, contracts or instruments with respect
to, or otherwise representing or evidencing, Receivables or other Collateral, including returned,
repossessed and reclaimed goods, and (iv) deposits by and property of account debtors or other
persons securing the obligations of account debtors;
49
(k) all (i) investment property (including securities, whether certificated or uncertificated,
securities accounts, security entitlements, commodity contracts or commodity accounts) and (ii)
monies, credit balances, deposits and other property of any Borrower or any Guarantor now or
hereafter held or received by or in transit to any Agent, any Lender or any of their respective
Affiliates or at any other depository or other institution from or for the account of any Borrower
or any Guarantor, whether for safekeeping, pledge, custody, transmission, collection or otherwise;
(l) all commercial tort claims, including, without limitation, those identified on
Schedule 5.2(g)
hereto;
(m) to the extent not otherwise described above, all Receivables;
(n) all Records; and
(o) all products and proceeds of the foregoing, in any form, including insurance proceeds and
all claims against third parties for loss or damage to or destruction of or other involuntary
conversion of any kind or nature of any or all of the other Collateral.
Notwithstanding anything to the contrary set forth in Section 5.1 hereof, the types or items of
Collateral shall not include (x) any rights or interest in any contract, license or license
agreement covering personal property of any Borrower or any Guarantor, so long as under the terms
of such contract, license or license agreement, or applicable law with respect thereto, the grant
of a security interest or lien therein to Administrative and Collateral Agent is prohibited and
such prohibition has not been waived or the consent of the other party to such contract, license or
license agreement has not been obtained or a lawful waiver of such prohibition under applicable law
has not been obtained;
provided
,
that
, the foregoing exclusion shall in no way be
construed to apply if (i) any such prohibition is unenforceable under Sections 9-406, 9-407 or
9-408 of the UCC or other applicable law or (ii) any such property constitutes or relates to a
portion of the Borrowing Base at any time reported by Borrowers to Administrative and Collateral
Agent; (y) stock of a CFC or any assets of a CFC except to the extent such stock does not exceed
65% of the Voting Stock of a CFC which is a direct Subsidiary of any Borrower or any Guarantor; (z)
any application to register any trademark, service mark or other mark (i) prior to the filing under
applicable law of a verified statement of use (or the equivalent) for such trademark or service
mark or (ii) the granting of a security interest in which would be prohibited by applicable law.
5.2
Perfection of Security Interests
.
(a) Each Borrower and each Guarantor irrevocably and unconditionally authorizes Administrative
and Collateral Agent (or its agent) to file at any time and from time to time such financing
statements with respect to the Collateral naming Administrative and Collateral Agent or its
designee as the secured party and such Borrower or such Guarantor as debtor, as Administrative and
Collateral Agent may require, and including any other information with respect to such Borrower or
such Guarantor or otherwise required by part 5 of Article 9 of the Uniform Commercial Code of such
jurisdiction as Administrative and Collateral Agent may determine or under the PPSA, together with
any amendment and continuations with respect thereto,
50
which authorization shall apply to all
financing statements filed on, prior to or after the date hereof. Each Borrower and each Guarantor
hereby ratifies and approves all financing statements naming Administrative and Collateral Agent or
its designee as secured party and such Borrower or such Guarantor as debtor with respect to the
Collateral (and any amendments with respect to such financing statements) filed by or on behalf of
Administrative and Collateral Agent prior to the date hereof and ratifies and confirms the
authorization of Administrative and Collateral Agent to file such financing statements (and
amendments, if any). Each Borrower and each Guarantor hereby authorizes Administrative and
Collateral Agent to adopt on behalf of such Borrower or such Guarantor any symbol required for
authenticating any electronic filing. In the event that the description of the collateral in any
financing statement naming Administrative and Collateral Agent or its designee as the secured party
and any Borrower or any Guarantor as debtor includes assets and properties of such Borrower or such
Guarantor that do not at any time constitute Collateral, whether hereunder, under any of the other
Financing Agreements or otherwise, the filing of such financing statement shall nonetheless be
deemed authorized by such
Borrower or such Guarantor to the extent of the Collateral included in such description and it
shall not render the financing statement ineffective as to any of the Collateral or otherwise
affect the financing statement as it applies to any of the Collateral. In no event shall any
Borrower or any Guarantor at any time file, or permit or cause to be filed, any correction
statement or termination statement with respect to any financing statement (or amendment or
continuation with respect thereto) naming Administrative and Collateral Agent or its designee as
secured party and any Borrower or any Guarantor as debtor. Upon request, Administrative and
Collateral Agent shall provide Administrative Borrower with copies of all financing statements
filed by Administrative and Collateral Agent hereunder.
(b) No Borrower or Guarantor has any chattel paper (whether tangible or electronic) or
instruments as of the date hereof in excess of $2,500,000 in any one case or $5,000,000 in the
aggregate, except as set forth on
Schedule 5.2(b)
hereto. In the event that any Borrower
or any Guarantor shall be entitled to or shall receive any chattel paper or instruments in excess
of $2,500,000 in any one case or $5,000,000 in the aggregate or after the date hereof, or, if an
Event of Default shall then exist, if any Borrower or any Guarantor shall be entitled to or shall
receive chattel paper or instruments in any amount which has not previously been delivered to
Administrative and Collateral Agent, Borrowers and Guarantors shall promptly notify Administrative
and Collateral Agent thereof in writing. Promptly upon the receipt thereof by or on behalf of any
Borrower or any Guarantor (including by any agent or representative), such Borrower or such
Guarantor shall deliver, or cause to be delivered to Administrative and Collateral Agent, all such
tangible chattel paper and instruments, accompanied by such instruments of transfer or assignment
duly executed in blank as Administrative and Collateral Agent may from time to time specify, in
each case except as Administrative and Collateral Agent may otherwise agree. At Administrative and
Collateral Agents option, each Borrower and each Guarantor shall, or Administrative and Collateral
Agent may at any time on behalf of any Borrower or any Guarantor, cause the original of any such
instrument or chattel paper to be conspicuously marked in a form and manner acceptable to
Administrative and Collateral Agent with the following legend referring to chattel paper or
instruments as applicable: This [chattel paper] [instrument] is subject to the security interest
of Wachovia Bank, National Association, as Administrative and Collateral Agent, and any sale,
transfer, assignment or encumbrance of this [chattel paper] [instrument] violates the rights of
such secured party.
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(c) In the event that any Borrower or any Guarantor shall at any time hold or acquire an
interest in any electronic chattel paper or any transferable record (as such term is defined in
Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section
16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction), such
Borrower or such Guarantor shall promptly notify Administrative and Collateral Agent thereof in
writing. Promptly upon Administrative and Collateral Agents request, such Borrower or such
Guarantor shall take, or cause to be taken, such actions as Administrative and Collateral Agent may
reasonably request to give Administrative and Collateral Agent control of such electronic chattel
paper under Section 9-105 of the UCC and control of such transferable record under Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be,
Section 16 of the Uniform Electronic Transactions Act, as in effect in such jurisdiction.
(d) No Borrower or Guarantor has any deposit accounts as of the date hereof, except as set
forth in the Information Certificate. No Borrower or Guarantor shall, directly or indirectly,
after the date hereof open, establish or maintain any deposit account unless each of the following
conditions is satisfied: (i) Administrative and Collateral Agent shall have received not less than
five (5) Business Days prior written notice of the opening or establishing of such account which
notice shall specify, in reasonable detail and specificity acceptable to Administrative and
Collateral, the name of the account, the owner of the account, the name and address of the bank at
which such account is to be opened or established, the individual at such bank with whom such
Borrower or such Guarantor is dealing and the purpose of the account, (ii) the bank where such
account is opened or maintained shall constitute an Eligible Transferee or otherwise be reasonably
acceptable to Administrative and Collateral Agent, and (iii) on or before the opening of such
deposit account, such Borrower or such Guarantor shall, as Administrative and Collateral Agent may
specify, either (A) deliver to Administrative and Collateral Agent a Deposit Account Control
Agreement with respect to such deposit account duly authorized, executed and delivered by such
Borrower or such Guarantor and the bank at which such deposit account is opened and maintained or
(B) arrange for Administrative and Collateral Agent, for itself and the ratable benefit of the
Lenders and the Bank Product Providers, to become the customer of the bank with respect to the
deposit account on terms and conditions acceptable to Administrative and Collateral Agent. The
terms of this Section 5.2(d) shall not apply to deposit accounts specifically and exclusively used
for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of
any Borrowers or any Guarantors or any of their respective Subsidiaries salaried employees.
(e) No Borrower or Guarantor owns or holds, directly or indirectly, beneficially or as record
owner or both, any investment property, as of the date hereof, or have any investment account,
securities account, commodity account or other similar account with any bank or other financial
institution or other securities intermediary or commodity intermediary as of the date hereof, in
each case except as set forth in the Information Certificate.
(i) In the event that any Borrower or any Guarantor shall be entitled to or shall at any time
after the date hereof hold or acquire any certificated securities that constitute Collateral, such
Borrower or such Guarantor shall promptly endorse, assign and deliver the same to Administrative
and Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in
blank as Administrative and Collateral Agent may from time to time specify. If any securities that
constitute Collateral, now or hereafter acquired by such Borrower or such Guarantor are
uncertificated and are issued to such Borrower or such Guarantor or its nominee directly by the
issuer thereof, such Borrower or such Guarantor shall immediately notify Administrative and
Collateral Agent thereof in writing and shall, as Administrative and Collateral Agent may specify,
either (A) cause the issuer to agree to comply with instructions from Administrative and Collateral
Agent as to such securities, without further consent of any Borrower or any Guarantor or such
nominee, or (B) arrange for Administrative and Collateral Agent, for itself and the ratable benefit
of the Lenders and the Bank Product Providers, to become the registered owner of the securities.
52
(ii) No Borrower or Guarantor shall, directly or indirectly, after the date hereof open,
establish or maintain any investment account, securities account, commodity account or any other
similar account (other than a deposit account) with any securities
intermediary or commodity intermediary unless each of the following conditions is satisfied:
(A) Administrative and Collateral Agent shall have received not less than five (5) Business Days
prior written notice of the opening or establishing of such account which notice shall specify, in
reasonable detail and reasonably specificity acceptable to Administrative and Collateral Agent, the
name of the account, the owner of the account, the name and address of the securities intermediary
or commodity intermediary at which such account is to be opened or established, the individual at
such intermediary with whom such Borrower or such Guarantor is dealing and the purpose of the
account, (B) the securities intermediary or commodity intermediary (as the case may be) where such
account is opened or maintained shall constitute an Eligible Transferee or otherwise be reasonably
acceptable to Administrative and Collateral Agent, and (C) on or before the opening of such
investment account, securities account or other similar account with a securities intermediary or
commodity intermediary, such Borrower or such Guarantor shall, as Administrative and Collateral
Agent may specify, either (1) execute and deliver, and cause to be executed and delivered to
Administrative and Collateral Agent, an Investment Property Control Agreement with respect thereto
duly authorized, executed and delivered by such Borrower or such Guarantor and such securities
intermediary or commodity intermediary or (2) arrange for Administrative and Collateral Agent, for
itself and the ratable benefit of the Lenders and the Bank Product Providers, to become the
entitlement holder with respect to such investment property on terms and conditions acceptable to
Administrative and Collateral Agent.
(f) No Borrower or Guarantor is the beneficiary of or otherwise entitled to any right to
payment under any letter of credit, bankers acceptance or similar instrument as of the date
hereof, except as set forth on
Schedule 5.2(f)
hereto. In the event that any Borrower or
any Guarantor shall be entitled to or shall receive any right to payment under any letter of
credit, bankers acceptance or any similar instrument, whether as beneficiary thereof or otherwise
after the date hereof, such Borrower or such Guarantor shall promptly notify Administrative and
Collateral Agent thereof in writing. Such Borrower or such Guarantor shall, if requested by
Administrative and Collateral Agent, either (i) deliver, or cause to be delivered to Administrative
and Collateral Agent, with respect to any such letter of credit, bankers acceptance or similar
instrument, the written agreement of the issuer and any other nominated person obligated to make
any payment in respect thereof (including any confirming or negotiating bank), in form and
substance reasonably satisfactory to Administrative and Collateral Agent, consenting to the
assignment of the proceeds of the letter of credit by such Borrower or such Guarantor to
Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank
Product Providers, and agreeing to make all payments thereon directly to Administrative and
Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers,
or as Administrative and Collateral Agent may otherwise direct or (ii) cause Administrative and
Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers,
to become, at Borrowers expense, the transferee beneficiary of the letter of credit, bankers
acceptance or similar instrument (as the case may be).
53
(g) No Borrower or Guarantor has any commercial tort claims as of the date hereof, except as
set forth on
Schedule 5.2(g)
hereto. In the event that any Borrower or any Guarantor shall
at any time after the date hereof have any commercial tort claims for an amount in excess of
$3,500,000 in any one case or in the aggregate, or, if an Event of Default exists and any Borrower
or any Guarantor has any commercial tort claims not previously reported to Administrative and
Collateral Agent, such Borrower or Guarantor shall promptly notify
Administrative and Collateral Agent thereof in writing, which notice shall (i) set forth in
reasonable detail the basis for and nature of such commercial tort claim and (ii) include the
express grant by such Borrower or such Guarantor to Administrative and Collateral Agent, for itself
and the ratable benefit of the Lenders and the Bank Product Providers, of a security interest in
such commercial tort claim (and the proceeds thereof). In the event that such notice does not
include such grant of a security interest, the sending thereof by such Borrower or such Guarantor
to Administrative and Collateral Agent shall be deemed to constitute a grant of security interest
therein to Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders
and the Bank Product Providers. Upon the sending of such notice, any commercial tort claim
described therein shall constitute part of the Collateral and shall be deemed included therein.
Without limiting the authorization of Administrative and Collateral Agent provided in Section
5.2(a) hereof or otherwise arising by the execution by such Borrower or such Guarantor of this
Agreement or any of the other Financing Agreements, Administrative and Collateral Agent is hereby
irrevocably authorized from time to time and at any time to file such financing statements naming
Administrative and Collateral Agent or its designee as secured party and such Borrower or such
Guarantor as debtor, or any amendments to any financing statements, covering any such commercial
tort claim as Collateral. In addition, each Borrower and each Guarantor shall promptly upon
Administrative and Collateral Agents request, execute and deliver, or cause to be executed and
delivered, to Administrative and Collateral Agent such other agreements, documents and instruments
as Administrative and Collateral Agent may reasonably require in connection with such commercial
tort claim.
(h) No Borrower or Guarantor has any goods, documents of title or other Collateral in the
custody, control or possession of a third party as of the date hereof, except as set forth in the
Information Certificate. In the event that any goods, documents of title or other Collateral of
any Borrower or any Guarantor are at any time after the date hereof in the custody, control or
possession of any other person not referred to in an Information Certificate or otherwise disclosed
to Administrative and Collateral Agent in writing pursuant to the terms of this Agreement, such
Borrower or such Guarantor shall promptly notify Administrative and Collateral Agent thereof in
writing. During the existence of an Event of Default, promptly upon Administrative and Collateral
Agents request, such Borrower and such Guarantor shall deliver to Administrative and Collateral
Agent a Collateral Access Agreement duly authorized, executed and delivered by such person and such
Borrower or such Guarantor, and with respect to any Inventory on consignment with any Person, if
requested by Administrative and Collateral Agent, such Borrower or such Guarantor shall take all
actions reasonably requested by Administrative and Collateral Agent to protect such Borrowers or
such Guarantors and Administrative and Collateral Agents interests in such Inventory, including
filing UCC-1 or PPSA Financing Statements as to such consignment (with such UCC-1 or PPSA Financing
Statements listing Administrative and Collateral Agent as the assignee) and sending notices of such
consignment to such consignees creditors.
54
(i) Each Borrower and each Guarantor shall take any other actions reasonably requested by
Administrative and Collateral Agent from time to time to cause the attachment, perfection and first
priority of, and the ability of Administrative and Collateral Agent and the Lenders to enforce, the
security interests of Administrative and Collateral Agent in any and all of the Collateral,
including, without limitation, (i) executing, delivering and, where appropriate, filing financing
statements and amendments relating thereto under the UCC, PPSA or other
applicable law, to the extent, if any, that any Borrowers or any Guarantors signature
thereon is required therefor, (ii) causing Administrative and Collateral Agents name, for itself
and in its capacity as agent for Lenders, to be noted as secured party on any certificate of title
for a titled good if such notation is a condition to attachment, perfection or priority of, or
ability of Administrative and Collateral Agent to enforce, the security interest of Administrative
and Collateral Agent and the Lenders in such Collateral, (iii) complying with any provision of any
statute, regulation or treaty of the United States or Canada as to any Collateral if compliance
with such provision is a condition to attachment, perfection or priority of, or ability of
Administrative and Collateral Agent and the Lenders to enforce, the security interests of
Administrative and Collateral Agent and the Lenders in such Collateral, and (iv) obtaining the
consents and approvals of any Governmental Authority or third party, including, without limitation,
any consent of any licensor, lessor or other person obligated on Collateral, and taking all actions
required by any earlier versions of the UCC, PPSA or by other law, as applicable in any relevant
jurisdiction.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1
Borrowers Loan Accounts
. Administrative and Collateral Agent shall maintain one
or more loan accounts on its books in which shall be recorded (a) all Loans, other Obligations and
the Collateral, (b) all payments made by or on behalf of any Borrower or any Guarantor and (c) all
other appropriate debits and credits as provided in this Agreement, including fees, charges, costs,
expenses and interest. All entries in such loan accounts shall be made in accordance with
Administrative and Collateral Agents customary practices as in effect from time to time.
6.2
Statements
. Administrative and Collateral Agent shall render to Administrative
Borrower each month a statement setting forth the balance in Borrowers loan account maintained by
Administrative and Collateral Agent for Borrowers pursuant to the provisions of this Agreement,
including principal, interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Administrative and Collateral Agent but shall, absent manifest errors or
omissions, be considered correct and deemed accepted by Borrowers and Guarantors and conclusively
binding upon Borrowers and Guarantors as an account stated except to the extent that Administrative
and Collateral Agent receives a written notice from Administrative Borrower of any specific
exceptions of Administrative Borrower thereto within thirty (30) days after the date such statement
has been mailed by Administrative and Collateral Agent. Until such time as Administrative and
Collateral Agent shall have rendered to Administrative Borrower a written statement as provided
above, the balance in any Borrowers loan account shall be presumptive evidence of the amounts due
and owing to Agents and Lenders by Borrowers and Guarantors.
55
6.3
Collection of Accounts
.
(a) Borrowers shall establish and maintain, at its expense, blocked accounts or lockboxes and
related blocked accounts (in either case,
Blocked Accounts
), as Administrative and
Collateral Agent may specify, with such banks as are reasonably acceptable to Administrative and
Collateral Agent into which Borrowers shall promptly deposit and direct their respective account
debtors to directly remit all payments on Receivables and all payments
constituting proceeds of Inventory or other Collateral in the identical form in which such
payments are made, whether by cash, check or other manner. Borrowers shall deliver, or cause to be
delivered to Administrative and Collateral Agent, a Deposit Account Control Agreement duly
authorized, executed and delivered by each bank where a Blocked Account is maintained as provided
in Section 5.2 hereof or at any time and from time to time Administrative and Collateral Agent, for
itself and the ratable benefit of the Lenders and the Bank Product Providers, may become banks
customer with respect to the Blocked Accounts and promptly upon Administrative and Collateral
Agents request, Borrowers shall execute and deliver such agreements or documents as Administrative
and Collateral Agent may require in connection therewith. Notwithstanding anything to the contrary
contained herein or in any Deposit Account Control Agreement relating to a Blocked Account,
Administrative and Collateral Agent shall not issue to any bank at which a Blocked Account is
maintained a notice of sole control or other such instruction providing that the funds in such
deposit accounts are to be automatically on each Business Day be remitted directly to the Payment
Account and that Borrowers are not permitted to access or otherwise direct such funds unless either
(i) an Event of Default or a Default with respect to non-payment of the Obligations has occurred or
(ii) Excess Availability is less than $40,000,000;
provided
,
that
, if either (x)
such Event of Default is subsequently waived in accordance with the terms of this Agreement or such
Default did not mature into an Event of Default or (y) Modified Adjusted Excess Availability is
greater than $40,000,000 at all times thereafter for a period of 60 consecutive days and no Event
of Default or Default with respect to non-payment of the Obligations has occurred, Administrative
and Collateral Agent shall promptly rescind such notice of sole control or other such instructions
(any such period during which the Blocked Accounts are subject to the sole control of
Administrative and Collateral Agent and Borrowers are not permitted to access the Blocked Accounts
is referred to herein is a
Blocked Account Activation Period
). Unless a Blocked Account
Activation Period shall exist, Borrowers shall be permitted to access and direct the transfer of
funds in the Blocked Accounts. Each Borrower and each Guarantor agrees that, during any Blocked
Account Activation Period, all payments made to such Blocked Accounts or other funds received and
collected by Administrative and Collateral Agent or any Lender, whether in respect of the
Receivables, as proceeds of Inventory or other Collateral or otherwise shall be treated as payments
to Administrative and Collateral Agent and Lenders in respect of the Obligations and therefore
shall constitute the property of Administrative and Collateral Agent and Lenders to the extent of
the then outstanding Obligations.
56
(b) For purposes of calculating the amount of the Loans available to Borrowers, payments will
be applied (conditional upon final collection) to the Obligations on the Business Day of receipt by
Administrative and Collateral Agent of immediately available funds in the Payment Account provided
such payments and notice thereof are received in accordance with Administrative and Collateral
Agents usual and customary practices as in effect from time to time and within sufficient time to
credit Borrowers loan accounts on such day, and if not, then on the next Business Day. For the
purposes of calculating interest on the Obligations, during any Blocked Account Activation Period,
such payments or other funds received from the Blocked Account will be applied (conditional upon
final collection) to the Obligations on the date of receipt of immediately available funds by
Administrative and Collateral Agent in the Payment Account provided such payments or other funds
and notice thereof are received in accordance with Administrative and Collateral Agents usual and
customary practices as in effect
from time to time and within sufficient time to credit Borrowers loan accounts on such day,
and if not, then on the next Business Day.
(c) If, during any Blocked Account Activation Period, any Borrower or any Guarantor receives
possession of or otherwise has control of any monies, checks, notes, drafts or any other payment
relating to and/or proceeds of Accounts or other Collateral, such Person shall hold such items as
trustee for Administrative and Collateral Agent and Lenders and shall immediately upon receipt
thereof, deposit or cause the same to be deposited in the Blocked Accounts, or remit the same or
cause the same to be remitted, in kind, to Administrative and Collateral Agent. In no event shall
the same be commingled with any Borrowers or any Guarantors own funds during any Blocked Account
Activation Period. Borrowers agree to reimburse Administrative and Collateral Agent and the
Lenders on demand for any amounts owed or paid to any bank or other financial institution at which
a Blocked Account, other deposit account or investment account is established or any other bank,
financial institution or other Person involved in the transfer of funds to or from the Blocked
Accounts, any other deposit account or any investment account arising out of Administrative and
Collateral Agents or any Lenders payments to or indemnification of such bank, financial
institution or other Person. The obligation of Borrowers to reimburse Administrative and
Collateral Agent and Lenders for such amounts pursuant to this Section 6.3 shall survive the
termination or non-renewal of this Agreement.
6.4
Payments
.
(a) Borrowers shall pay all Obligations when due. Payments on Obligations shall be made by
Borrowers remitting funds to the Payment Account or, at any time when a Blocked Account Activation
Period exists, by payments and proceeds of Collateral being directly remitted to the Payment
Account as provided in Section 6.3 or such other place within the United States of America as
Administrative and Collateral Agent may designate from time to time. Administrative and Collateral
Agent shall apply payments received or collected from Borrowers or Guarantors or for the account of
Borrowers or Guarantors (including the monetary proceeds of collections or of realization upon any
Collateral) to the specific Obligation designated by such Borrower or such Guarantor in connection
with such payment so long as no Event of Default exists, and otherwise all such payments shall be
applied as follows:
(i) So long as no Event of Default shall then exist or result from the application of such
payment:
(A) first, to pay in full all indemnities or expense reimbursements then due to Administrative
and Collateral Agent from Borrowers and Guarantors (other than fees);
57
(B) second, ratably to pay in full indemnities or expense reimbursements then due to any other
Agent or Lenders from Borrowers and Guarantors (other than fees);
(C) third, ratably to pay in full all fees payable by Borrowers under the Financing Agreements
then due;
(D) fourth, ratably to pay in full interest due in respect of the Loans;
(E) fifth, to pay or prepay principal in respect of Special Agent Advances;
(F) sixth, to pay principal in respect of the Revolving Loans then outstanding (whether or not
then due) until paid in full, and then to pay principal in respect of the Term Loan then
outstanding (whether or not then due) until paid in full;
(G) seventh, to cash collateralize any outstanding Letter of Credit Accommodations if required
under the terms of this Agreement;
(H) eighth, to pay any Obligations due in respect of the Bank Products; and
(I) ninth, to pay any other Obligations then due, in such order and manner as Administrative
and Collateral Agent determines; or
(ii) If an Event of Default shall then exist or will result from the application of such
payment:
(A) first, to pay in full the expenses of Administrative and Collateral Agent for the
collection and enforcement of the Obligations and for the protection, preservation or sale,
disposition or other realization upon the Collateral, including all expenses, liabilities and
advances (including Special Agent Advances) incurred or made by or on behalf of Administrative and
Collateral Agent, in connection therewith (including reasonable attorneys fees and legal expenses
and other expenses of Administrative and Collateral Agent);
(B) second, to pay all Obligations, other than any Obligations related to the Bank Products,
until paid in full, in cash or other immediately available funds, in such order and manner as
Administrative and Collateral Agent shall elect in its discretion (including cash collateral for
any outstanding Letter of Credit Accommodations in accordance with the terms of this Agreement);
58
(C) third, to pay all Obligations related to the Bank Products, or provide cash collateral
therefor up to the amount of the Bank Products Reserve,
(D) fourth, to pay all remaining Obligations related to the Bank Products, and
(E) fifth, ratably to pay in full all other Obligations.
(b) Notwithstanding anything to the contrary contained in this Agreement:
(i) should any payment or distribution on security or instrument or proceeds thereof be
received by a Lender other than in accordance with this Section 6.4, such Lender shall receive and
hold the same in trust, for the benefit of Administrative and Collateral
Agent, the Lenders and the Bank Product Providers, and shall forthwith deliver the same to
Administrative and Collateral Agent (together with any endorsement or assignment of such Lender
where necessary), for application by Administrative and Collateral Agent to the Obligations in
accordance with the terms of this Section 6.4;
(ii) unless so directed by a Borrower, Administrative and Collateral Agent shall not apply any
payments which it receives to any Revolving Loans that are Eurodollar Rate Loans except on the
expiration date of the Interest Period applicable to any such Revolving Loans that are Eurodollar
Rate Loans and if payments are received or collected from any Borrower that otherwise would be
applied to Eurodollar Rate Loans, provided no Event of Default or Blocked Account Activation Period
exists, Administrative Borrower may instruct Administrative and Collateral Agent to remit such
funds to such Borrower, otherwise, such payments shall be held by Administrative and Collateral
Agent and shall bear interest at the Federal Funds Rate per annum commencing on the second Business
Day following the date such payments are received or collected from such Borrower and continuing
through the date such payments are applied to the Obligations, which shall be upon the expiration
of the first Interest Period after receipt or collection of such payments, to the extent of the
principal amount of the applicable Eurodollar Rate Loan or otherwise, in Administrative and
Collateral Agents sole discretion, remitted to such Borrower; and
(iii) to the extent Borrowers use any proceeds of the Loans to acquire rights in or the use of
any Collateral or to repay any Indebtedness used to acquire rights in or the use of any Collateral,
payments in respect of the Obligations shall be deemed applied first to the Obligations arising
from Loans that were not used for such purposes and second to the Obligations arising from Loans
the proceeds of which were used to acquire rights in or the use of any Collateral in the
chronological order in which Borrowers acquired such rights or use.
59
(c) At Administrative and Collateral Agents option, all principal, interest, fees, costs,
expenses and other charges provided for in this Agreement or the other Financing Agreements may be
charged directly to the loan accounts of Borrowers and Guarantors. Borrowers and Guarantors shall
make all payments to Administrative and Collateral Agent and the Lenders on the Obligations free
and clear of, and without deduction or withholding for or on account of, any setoff, counterclaim,
defense, duties, taxes (subject to the limitations provided for in Section 6.5 hereof), levies,
imposts, fees, deductions, withholding, restrictions or conditions of any kind. If after receipt
of any payment of, or proceeds of Collateral applied to the payment of, any of the Obligations,
Administrative and Collateral Agent or any Lender is required to surrender or return such payment
or proceeds to any Person for any reason, then the Obligations intended to be satisfied by such
payment or proceeds shall be reinstated and continue and this Agreement shall continue in full
force and effect as if such payment or proceeds had not been received by such Person. Borrowers
and Guarantors shall be liable to pay to Administrative and Collateral Agent and Lenders, and each
does hereby indemnify and hold Administrative and Collateral Agent and each Lender harmless for the
amount of any payments or proceeds surrendered or returned, to the extent such payments were
required to be made under the terms of this Agreement. This Section 6.4 shall remain effective
notwithstanding any contrary action which may be taken by Administrative and Collateral Agent or
any Lender in reliance upon such payment or proceeds. This Section 6.4 shall survive the payment
of the Obligations and the termination or non-renewal of this Agreement.
(d) Except as otherwise provided with respect to Defaulting Lenders, aggregate principal
payments and interest payments shall be apportioned ratably among the Lenders (according to their
applicable Pro Rata Shares) and payments of the fees (other than fees designated for Administrative
and Collateral Agents sole and separate account and fees otherwise payable in accordance with the
Fee Letter) shall, as applicable, be apportioned ratably among the Lenders.
6.5
Taxes
.
(a) Any and all payments by or on behalf of any Borrower or any Guarantor hereunder and under
any other Financing Agreement shall be made in accordance with Section 6.4 and free and clear of
and without deduction or withholding for or on account of any and all Taxes, excluding: (i) income
taxes imposed on the net income of any Lender (or any transferee or assignee of such Lender,
including any Participant, any such transferee or assignee being referred to as a
Transferee
), (ii) franchise or similar taxes imposed on or determined by reference to the
net income of any Lender (or Transferee or Participant), in each case by the United States of
America or by the jurisdiction under the laws of which such Lender (or Transferee or Participant)
(A) is organized or any political subdivision thereof or (B) has its applicable lending office
located and (iii) to the extent that such tax results from a change in the circumstances of the
Lender (or any Transferee or Participant), including a change in the residence, place of
organization, or principal place of business of the Lender (or any Transferee or Participant), or
change in the branch or lending office of the Lender (or Transferee or Participant) (collectively,
Excluded Taxes
). In addition, Borrowers and Guarantors agree to pay to the relevant
Governmental Authority, in accordance with applicable law, any Other Taxes.
(b) If any Borrower or any Guarantor shall be required by law to deduct or withhold in respect
of any Taxes or Other Taxes from or in respect of any sum payable hereunder to any Agent or any
Lender, then:
(i) the sum payable shall be increased as necessary so that after making all required
deductions and withholdings (including deductions and withholdings applicable to additional sums
payable under this Section) such Lender (or Administrative and Collateral Agent on behalf of such
Lender) receives an amount equal to the sum it would have received had no such deductions or
withholdings been made;
60
(ii) such Borrower or such Guarantor shall make such deductions and withholdings; and
(iii) such Borrower or such Guarantor shall pay the full amount deducted or withheld to the
relevant taxing authority or other authority in accordance with applicable law.
(c) Within thirty (30) days after the date of any payment by any Borrower or any Guarantor of
Taxes or Other Taxes, such Person shall furnish to Administrative and Collateral Agent the original
or a certified copy of a receipt evidencing payment thereof, or other evidence of payment
reasonably satisfactory to Administrative and Collateral Agent.
(d) Each Borrower and each Guarantor will indemnify Administrative and Collateral Agent and
each Lender (or Transferee) for the full amount of Taxes and Other Taxes paid by Administrative and
Collateral Agent or such Lender (or Transferee, as the case may be). If Administrative and
Collateral Agent or such Lender (or Transferee) receives a refund in respect of any Taxes or Other
Taxes for which Lender (or Transferee) has received payment from any Borrower or any Guarantor
hereunder, so long as no Default or Event of Default shall exist or have occurred and be
continuing, Administrative and Collateral Agent or such Lender (as the case may be) shall credit to
the loan account of Borrowers the amount of such refund plus any interest received (but only to the
extent of indemnity payments made, or additional amounts paid, by any Borrower or any Guarantor
under this Section 6.5 with respect to the Taxes or Other Taxes giving rise to such refund). If a
Lender (or any Transferee) claims a tax credit in respect of any Taxes for which it has been
indemnified by any Borrower or any Guarantor pursuant to this Section 6.5, such Lender will apply
the amount of the actual dollar benefit received by such Lender as a result thereof, as reasonably
calculated by Lender and net of all expenses related thereto, to the Loans. If Taxes or Other
Taxes were not correctly or legally asserted, Administrative and Collateral Agent or such Lender
shall, upon Administrative Borrowers request and at Borrowers expense, provide such documents to
Borrowers as Administrative Borrower may reasonably request, to enable Borrowers to contest such
Taxes or Other Taxes pursuant to appropriate proceedings then available to Borrowers (so long as
providing such documents shall not, in the good faith determination of Administrative and
Collateral Agent, have a reasonable likelihood of resulting in any liability of Administrative and
Collateral Agent or any Lender).
(e) In the event any Lender or Transferee is organized under the laws of a jurisdiction other
than the United States, any State thereof or the District of Columbia (a
Non-U.S. Lender
)
such Non-U.S. Lender shall deliver to Adminsitrative Borrower two (2) accurate, complete and signed
copies of (i) either United States Internal Revenue Service Form W-8ECI or successor form or Form
W-8BEN or successor form, or (ii) in the case of a Non-U.S. Lender claiming exemption from U.S.
Federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of
portfolio interest, a Form W-8BEN, or
61
any subsequent versions thereof or successors thereto (and,
if such Non-U.S. Lender delivers a Form W-8BEN, a certificate representing that such Non-U.S.
Lender is not a bank for purposes of Section 881(c) of the Code, is not a ten (10%) percent
shareholder (within the meaning of Section 881(c)(3)(B) of the Code) of any Borrower or any
Guarantor and is not a controlled foreign corporation described in Section 881(c)(3)(C) of the
Code), properly completed and duly executed by such Non-U.S. Lender claiming complete exemption
from U.S. Federal withholding tax on payments by any Borrower or any Guarantor under this Agreement
and the other Financing Agreements. Such forms shall be delivered by any Non-U.S. Lender on or
before the date it becomes a party to this Agreement (or, in the case of a Transferee that is a
Participant, on or before the date such Participant becomes a Transferee hereunder) and on or
before the date, if any, such Non-U.S. Lender changes its applicable lending office by designating
a different lending office (a
New Lending Office
). In addition, a Non-U.S. Lender shall
promptly deliver such new forms as are required by the Code or the regulations issued thereunder to
claim exemption from, or reduction in the rate of, U.S. Federal withholding tax upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender.
Notwithstanding any other provision of this Section 6.5(e), a Non-U.S. Lender shall not be required
to deliver any form pursuant to this Section 6.5(e) that such Non-U.S. Lender is not legally able
to deliver. Each Lender (or
Transferee) that is a United States person, as that term is defined under Section
7701(a)(30) of the Code, other than a Lender (or Transferee) that may be treated as an exempt
recipient based on the indicators described in Treasury Regulation Section 1.6049-4(c)(1)(ii),
agrees that it will, no later than the date it becomes a party to this Agreement, deliver to
Administrative Borrower and Administrative and Collateral Agent two (2) accurate, complete and
signed copies of United States Internal Revenue Service Form W-9 or successor form stating that it
is entitled to an exemption from United States backup withholding tax. Notwithstanding the
foregoing, any failure by any Lender to deliver any tax form set forth above shall not excuse or
otherwise affect any Borrowers or any Guarantors performance of its obligations under this
Agreement except as set forth in Section 6.5(f)(ii) below.
(f) Borrowers and Guarantors shall not be required to indemnify any Lender or to pay any
additional amounts to any Lender, in respect of United States Federal withholding tax pursuant to
subsections (a) or (d) above to the extent that (i) the obligation to withhold amounts with respect
to United States Federal withholding tax was applicable on the date such Non-U.S. Lender became a
party to this Agreement (or, in the case of a Transferee, on the date such Person became a
Transferee hereunder) or, with respect to payments to a New Lending Office, the date such Non-U.S.
Lender designated such New Lending Office with respect to a Loan;
provided
,
that
,
this subsection (f) shall not apply (A) to any Transferee or New Lending Office that becomes a
Transferee or New Lending Office as a result of an assignment, participation, transfer or
designation made at the request of any Borrower or any Guarantor and (B) to the extent the
indemnity payment or additional amounts any Transferee, acting through a New Lending Office, would
be entitled to receive (without regard to this subsection (f)) do not exceed the indemnity payment
or additional amounts that the person making the assignment, participation or transfer to such
Transferee making the designation of such New Lending Office, would have been entitled to receive
in the absence of such assignment, participation, transfer or designation or (ii) the obligation to
pay such additional amounts would not have arisen but for a failure by such Lender to comply with
the provisions of subsection (e) above.
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6.6
Authorization to Make Loans
. Administrative and Collateral Agent and each Lender
is authorized to provide Loans based upon telephonic or other instructions received from anyone
purporting to be an officer of any Borrower or other authorized person or, at the discretion of
Administrative and Collateral Agent or any Lender, if such Loans are necessary to satisfy any
Obligations. All requests for Loans hereunder shall specify the date on which the requested Loan
is to be made (or in the case of Letter of Credit Accommodations, established), which day shall be
a Business Day, and the amount of the requested Loan. Requests received after 12:00 noon New York
time on any day shall be deemed to have been made as of the opening of business on the immediately
following Business Day. Subject to all applicable provisions of the Agreement regarding the
conditions to providing Loans, requests for Loans received prior to 12:00 noon New York time on a
Business Day shall be made by the close of business on such Business Day. All Loans under this
Agreement shall be conclusively presumed to have been made to, and at the request of and for the
benefit of, Borrowers when deposited to the credit of any Borrower or otherwise disbursed or
established in accordance with the instructions of any Borrower or in accordance with the terms and
conditions of this Agreement.
6.7
Use of Proceeds
. All Loans made or provided by or on behalf of Lenders to
Borrowers pursuant to the provisions hereof shall be used by Borrowers only for general
operating, working capital and other proper corporate purposes of Borrowers not otherwise
prohibited by the terms hereof. None of the proceeds will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security or for the purposes of reducing or retiring
any indebtedness which was originally incurred to purchase or carry any margin security or for any
other purpose which might cause any of the Loans to be considered a purpose credit within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System, as amended.
6.8
Pro Rata Treatment
. Except to the extent otherwise provided in this Agreement:
(a) the making and conversion of Revolving Loans shall be made among the Revolving Loan Lenders
based on their respective Pro Rate Shares thereof, and the making of Term Loans shall be made among
the Revolving Loan Lenders based on their respective Pro Rate Shares thereof; and (b) each payment
on account of any Obligations to or for the account of one or more of Lenders in respect of any
Obligations due on a particular day shall be allocated among the Lenders entitled to such payments
based on their respective Pro Rata Shares and shall be distributed accordingly.
6.9
Sharing of Payments, Etc
.
(a) Each Borrower and each Guarantor agrees that, in addition to (and without limitation of)
any right of setoff, bankers lien or counterclaim any Agent or Lender may otherwise have, each
Lender shall be entitled, at its option (but subject, as among Agents and Lenders, to the
provisions of Section 6.9(b) hereof), to offset balances held by it for the account of such
Borrower or such Guarantor at any of its offices, in dollars or in any other currency, against any
principal of or interest on any Loans owed to such Lender or any other amount payable to such
Lender hereunder, that is not paid when due (regardless of whether such balances are then due to
such Borrower or such Guarantor), in which case it shall promptly notify Administrative Borrower
and Administrative and Collateral Agent thereof;
provided
,
that
, such Lenders
failure to give such notice shall not affect the validity thereof.
63
(b) If any Lender (including Administrative and Collateral Agent) shall obtain from any
Borrower or any Guarantor payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any other Financing Agreement through the
exercise (in accordance with the terms hereof) of any right of setoff, bankers lien or
counterclaim or similar right or otherwise (other than from Administrative and Collateral Agent as
provided herein), and, as a result of such payment, such Lender shall have received more than its
Pro Rata Share of the principal of the Loans or more than its share of such other amounts then due
hereunder or thereunder by any Borrower or any Guarantor to such Lender than the percentage thereof
received by any other Lender, it shall promptly pay to Administrative and Collateral Agent, for the
benefit of Lenders, the amount of such excess and simultaneously purchase from such other Lenders a
participation in the Loans or such other amounts, respectively, owing to such other Lenders (or
such interest due thereon, as the case may be) in such amounts, and make such other adjustments
from time to time as shall be equitable, to the end that all Lenders shall share the benefit of
such excess payment (net of any expenses that may be incurred by such Lender in obtaining or
preserving such excess payment) in accordance with their respective Pro Rata Shares or as otherwise
agreed by Lenders. To such end all Lenders
shall make appropriate adjustments among themselves (by the resale of participation sold or
otherwise) if such payment is rescinded or must otherwise be restored.
(c) Each Borrower and each Guarantor agrees that any Lender so purchasing a participation
pursuant to subsection (b) above (or direct interest) may exercise, in a manner consistent with
this Section, all rights of setoff, bankers lien, counterclaim or similar rights with respect to
such participation as fully as if such Lender were a direct holder of Loans or other amounts (as
the case may be) owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any such right or shall
affect the right of any Lender to exercise, and retain the benefits of exercising, any such right
with respect to any other Indebtedness or obligation of any Borrower or any Guarantor. If, under
any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in
lieu of a setoff to which this Section applies, such Lender shall, to the extent practicable,
assign such rights to Administrative and Collateral Agent, for itself and the ratable benefit of
the Lenders and the Bank Product Providers, and, in any event, exercise its rights in respect of
such secured claim in a manner consistent with the rights of Lenders entitled under this Section to
share in the benefits of any recovery on such secured claim.
6.10
Settlement Procedures
.
(a) In order to administer the Credit Facility in an efficient manner and to minimize the
transfer of funds between Administrative and Collateral Agent and Lenders, Administrative and
Collateral Agent may, subject to the terms of this Section, make available, on behalf of Lenders,
the full amount of the Loans requested or charged to any Borrowers loan account or otherwise to be
advanced by Lenders pursuant to the terms hereof, without any requirement of prior notice to
Lenders of the proposed Loans.
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(b) With respect to all Revolving Loans made by Administrative and Collateral Agent on behalf
of Revolving Loan Lenders as provided in this Section, the amount of each Revolving Loan Lenders
Pro Rata Share of the outstanding Revolving Loans shall be computed weekly, and shall be adjusted
upward or downward on the basis of the amount of the outstanding Revolving Loans as of 5:00 p.m.
New York time on the Business Day immediately preceding the date of each settlement computation;
provided
,
that
, Administrative and Collateral Agent retains the absolute right at
any time or from time to time to make the above described adjustments at intervals more frequent
than weekly, but in no event more than twice in any week. Administrative and Collateral Agent
shall deliver to each of the Revolving Loan Lenders after the end of each week, or at such lesser
period or periods as Administrative and Collateral Agent shall determine, a summary statement of
the amount of outstanding Revolving Loans for such period (such week or lesser period or periods
being hereinafter referred to as a
Settlement Period
). If the summary statement is sent
by Administrative and Collateral Agent and received by a Revolving Loan Lender prior to 2:00 p.m.
New York time, then such Revolving Loan Lender shall make the settlement transfer described in this
Section by no later than 2:00 p.m. New York time on the next Business Day following the date of
receipt. If, as of the end of any Settlement Period, the amount of a Lenders Pro Rata Share of
the outstanding Revolving Loans is more than such Lenders Pro Rata Share of the outstanding
Revolving Loans as of the end of the previous Settlement Period, then such Lender shall forthwith
(but in no event later than the
time set forth in the preceding sentence) transfer to Administrative and Collateral Agent by
wire transfer in immediately available funds the amount of the increase. Alternatively, if the
amount of a Lenders Pro Rata Share of the outstanding Revolving Loans in any Settlement Period is
less than the amount of such Lenders Pro Rata Share of the outstanding Revolving Loans for the
previous Settlement Period, Administrative and Collateral Agent shall forthwith transfer to such
Lender by wire transfer in immediately available funds the amount of the decrease. The obligation
of each of the Revolving Loan Lenders to transfer such funds and effect such settlement shall be
irrevocable and unconditional and without recourse to or warranty by Administrative and Collateral
Agent. Each of Administrative and Collateral Agent and Revolving Loan Lenders agrees to mark its
books and records at the end of each Settlement Period to show at all times the dollar amount of
its Pro Rate Share of the outstanding Revolving Loans and Letter of Credit Accommodations. Each
Revolving Loan Lender shall only be entitled to receive interest on its Pro Rata Share of the Loans
to the extent such Loans have been funded by such Lender. Because the Administrative and
Collateral Agent on behalf of Revolving Loan Lenders may be advancing and/or may be repaid
Revolving Loans prior to the time when Lenders will actually advance and/or be repaid such
Revolving Loans, interest with respect to Revolving Loans shall be allocated by Administrative and
Collateral Agent in accordance with the amount of Revolving Loans actually advanced by and repaid
to each Revolving Loan Lender and the Administrative and Collateral Agent and shall accrue from and
including the date such Revolving Loans are so advanced to but excluding the date such Revolving
Loans are either repaid by Borrowers or actually settled with the applicable Lender as described in
this Section.
(c) To the extent that Administrative and Collateral Agent has made any such amounts available
and the settlement described above shall not yet have occurred, upon repayment of any Loans by
Borrowers, Administrative and Collateral Agent may apply such amounts repaid directly to any
amounts made available by any Administrative and Collateral Agent pursuant to this Section. In
lieu of weekly or more frequent settlements, Administrative and Collateral Agent may at any time
require each Lender to provide Administrative and Collateral Agent with immediately available funds
representing its Pro Rata Share of each Loan, prior to Administrative and Collateral Agents
disbursement of such Loan to Borrowers. In such event, all Loans under this Agreement shall be
made by the Lenders simultaneously and proportionately to their Pro Rata Shares. No Lender shall
be responsible for any default by any other Lender in the other Lenders obligation to make a Loan
requested hereunder nor shall the Revolving Loan Commitment of any Revolving Loan Lender be
increased or decreased as a result of the default by any other Lender in the other Lenders
obligation to make a Loan hereunder.
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(d) If Administrative and Collateral Agent is not funding a particular Loan to Borrowers
pursuant to this Section on any day, Administrative and Collateral Agent may assume that each
Lender will make available to Administrative and Collateral Agent such Lenders Pro Rata Share of
the Revolving Loan requested or otherwise made on such day and Administrative and Collateral Agent
may, in its discretion, but shall not be obligated to, cause a corresponding amount to be made
available to Borrowers on such day. If Administrative and Collateral Agent makes such
corresponding amount available to Borrowers and such corresponding amount is not in fact made
available to Administrative and Collateral Agent by such Lender, Administrative and Collateral
Agent shall be entitled to recover such corresponding amount on demand from
such Lender together with interest thereon for each day from the date such payment was due
until the date such amount is paid to Administrative and Collateral Agent at the interest rate
provided for in Section 3.1 hereof. During the period in which such Lender has not paid such
corresponding amount to Administrative and Collateral Agent, notwithstanding anything to the
contrary contained in this Agreement or any of the other Financing Agreements, the amount so
advanced by Administrative and Collateral Agent to Borrowers shall, for all purposes hereof, be a
Loan made by Administrative and Collateral Agent for its own account. Upon any such failure by a
Lender to pay Administrative and Collateral Agent, Administrative and Collateral Agent shall
promptly thereafter notify Administrative Borrower of such failure and Borrowers shall immediately
pay such corresponding amount to Administrative and Collateral Agent for its own account. A Lender
who fails to pay Administrative and Collateral Agent its Pro Rata Share of any Loans made available
by the Administrative and Collateral Agent on such Lenders behalf, or any Lender who fails to pay
any other amount owing to Administrative and Collateral Agent, is a
Defaulting Lender
.
Administrative and Collateral Agent shall not be obligated to transfer to a Defaulting Lender any
payments made by or on behalf of any Borrower or any Guarantor to Administrative and Collateral
Agent for the Defaulting Lenders benefit, nor shall a Defaulting Lender be entitled to the sharing
of any payments hereunder. Amounts payable to a Defaulting Lender shall instead be paid to or
retained by Administrative and Collateral Agent. Administrative and Collateral Agent may hold and,
in its discretion, re-lend to Borrowers the amount of all such payments received or retained by it
for the account of such Defaulting Lender. For purposes of voting or consenting to matters with
respect to this Agreement and the other Financing Agreements and determining Pro Rata Shares, such
Defaulting Lender shall be deemed not to be a Lender and such Defaulting Lenders Revolving Loan
Commitment shall be deemed to be zero (0). This Section shall remain effective with respect to a
Defaulting Lender until such default is cured. The operation of this Section shall not be
construed to increase or otherwise affect the Revolving Loan Commitment of any Lender, or relieve
or excuse the performance by any Borrower or any Guarantor of their duties and obligations
hereunder.
(e) Nothing in this Section or elsewhere in this Agreement or the other Financing Agreements
shall be deemed to require Administrative and Collateral Agent to advance funds on behalf of any
Lender or to relieve any Lender from its obligation to fulfill its Revolving Loan Commitment
hereunder or to prejudice any rights that any Borrower may have against any Lender as a result of
any default by any Lender hereunder in fulfilling its Revolving Loan Commitment.
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6.11
Obligations Several; Independent Nature of Lenders Rights
. The obligation of
each Lender hereunder is several, and no Lender shall be responsible for the obligation or
commitment of any other Lender hereunder. Nothing contained in this Agreement or any of the other
Financing Agreements and no action taken by the Lenders pursuant hereto or thereto shall be deemed
to constitute the Lenders to be a partnership, an association, a joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and subject to Section 12 hereof, each Lender shall be entitled to protect and
enforce its rights arising out of this Agreement and it shall not be necessary for any other Lender
to be joined as an additional party in any proceeding for such purpose.
6.12
Appointment of Administrative Borrower as Agent for Requesting Loans and Receipts of
Loans and Statements
.
(a) Each Borrower hereby irrevocably appoints and constitutes Administrative Borrower as its
agent and attorney-in-fact to request and receive Loans and Letter of Credit Accommodations
pursuant to this Agreement and the other Financing Agreements from Administrative and Collateral
Agent or any Lender in the name or on behalf of such Borrower. Administrative and Collateral Agent
and Lenders may disburse the Loans to such bank account of Administrative Borrower or a Borrower or
otherwise make such Loans to a Borrower and provide such Letter of Credit Accommodations to a
Borrower as Administrative Borrower may designate or direct, without notice to any other Borrower
or Guarantor. Notwithstanding anything to the contrary contained herein, Administrative and
Collateral Agent may at any time and from time to time require that Loans to or for the account of
any Borrower be disbursed directly to an operating account of such Borrower.
(b) Administrative Borrower hereby accepts the appointment by Borrowers to act as the agent
and attorney-in-fact of Borrowers pursuant to this Section 6.12. Administrative Borrower shall
ensure that the disbursement of any Loans to each Borrower requested by or paid to or for the
account of a Borrower, or the issuance of any Letter of Credit Accommodations for a Borrower
hereunder, shall be paid to or for the account of such Borrower.
(c) Each Borrower and each Guarantor hereby irrevocably appoints and constitutes
Administrative Borrower as its agent to receive statements on account and all other notices from
Administrative and Collateral Agent and Lenders with respect to the Obligations or otherwise under
or in connection with this Agreement and the other Financing Agreements.
(d) Any notice, election, representation, warranty, agreement or undertaking by or on behalf
of any other Borrower or any Guarantor by Administrative Borrower shall be deemed for all purposes
to have been made by such Borrower or such Guarantor, as the case may be, and shall be binding upon
and enforceable against such Borrower or such Guarantor to the same extent as if made directly by
such Borrower or such Guarantor.
(e) No purported termination of the appointment of Administrative Borrower as agent as
aforesaid shall be effective, except after ten (10) days prior written notice to Administrative
and Collateral Agent.
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SECTION 7. COLLATERAL REPORTING AND COLLATERAL COVENANTS
7.1
Collateral Reporting
.
(a) Borrowers shall provide Administrative and Collateral Agent with the following documents
in a form satisfactory to Administrative and Collateral Agent:
(i) on a monthly basis, a schedule of sales made, credits issued and cash received;
(ii) as soon as possible after the end of each month (but in any event within ten (10) days
after the end thereof), on a monthly basis, (A) perpetual inventory reports,
(B) inventory reports by location and category (including identifying Inventory at locations
owned and operated by third parties, inventory held by any Borrower or any Guarantor on consignment
and Inventory of any Borrower or any Guarantor held by third Persons on consignment), (C) agings of
accounts payable (and including information indicating the status of payments to owners and lessors
of the leased premises of any Borrower or any Guarantor) and (D) agings of accounts receivable
(together with a reconciliation to the previous months aging and general ledger);
(iii) weekly, a detailed calculation of the Borrowing Base;
provided
,
however
,
if at any time Excess Availability is less then $70,000,000 and until such time as Excess
Availability has thereafter been $70,000,000 or more for 5 consecutive Business Days, Borrowers
shall provide Administrative and Collateral Agent with a detailed calculation of the Borrowing Base
on a daily basis.
(iv) upon Administrative and Collateral Agents reasonable request, (A) copies of customer
statements, purchase orders, sales invoices and credit memos, remittance advices and reports, and
copies of deposit slips and bank statements, (B) copies of shipping and delivery documents and (C)
copies of purchase orders, invoices and delivery documents for Inventory and Equipment acquired by
any Borrower or any Guarantor; and
(v) such additional, interim or other reports, schedules and calculations (and backup
documentation therefor) with regard to the Collateral as Administrative and Collateral Agent may
reasonably request from time to time.
(b) If any Borrowers or any Guarantors records or reports of the Collateral are prepared or
maintained by an accounting service, contractor, shipper or other agent, such Borrower and such
Guarantor hereby irrevocably authorizes such service, contractor, shipper or agent to deliver such
records, reports, and related documents to Administrative and Collateral Agent as it may reasonably
request and, at any time an Event of Default exists, to follow Administrative and Collateral
Agents instructions with respect to further services at such time.
68
7.2
Accounts Covenants
.
(a) Borrowers shall notify Administrative and Collateral Agent promptly of: (i) any material
delay in any Borrowers performance of any of its material obligations to any account debtor or the
assertion of any claims, offsets, defenses or counterclaims by any account debtor, or any disputes
with account debtors, or any settlement, adjustment or compromise thereof in excess of $1,500,000
in any one case or $2,500,000 in the aggregate at any one time; (ii) all material adverse
information relating to the financial condition of any account debtor known to any Borrower or any
Guarantor; and (iii) any event or circumstance which, to any Borrowers or any Guarantors
knowledge would cause Administrative and Collateral Agent to consider any then existing Accounts
reported as part of the Borrowing Base as no longer constituting Eligible Accounts. No credit,
discount, allowance or extension or agreement for any of the foregoing shall be granted by any
Borrower or any Guarantor to any account debtor without Administrative and Collateral Agents
consent, except as generally consistent with the past practices of the Purchased Business or as set
forth in the schedules delivered to Administrative and Collateral Agent pursuant to Section 7.1(a)
above. So long as no Event of
Default exists or has occurred and is continuing, Borrowers and Guarantors shall have the
exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute with any
account debtor. At any time that an Event of Default exists, Administrative and Collateral Agent
shall, at its option, notify Administrative Borrower that it intends to, and thereafter shall, have
the exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute with
account debtors or grant any credits, discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on any invoice delivered to
Administrative and Collateral Agent or schedule thereof delivered to Administrative and Collateral
Agent shall be true and complete, (ii) no payments shall be made thereon except payments
immediately deposited or remitted to a Collection Account or otherwise delivered to Administrative
and Collateral Agent pursuant to the terms of this Agreement, (iii) in the case of Eligible
Accounts there shall be no setoffs, deductions, contras, defenses, counterclaims or disputes
existing or asserted with respect thereto except those generally consistent with the past practices
of the Purchased Business or as reported to Administrative and Collateral Agent in accordance with
the terms of this Agreement, and (iv) none of the transactions giving rise thereto will violate any
applicable foreign, Federal, State, Provincial or local laws or regulations, all documentation
relating thereto will be legally sufficient under such laws and regulations and all such
documentation will be legally enforceable in accordance with its terms, except as enforceability
thereof may be limited by insolvency laws affecting the rights of creditors generally.
(c) Administrative and Collateral Agent shall have the right at any time or times (but, so
long as no Default or Event of Default shall exist, subject to reasonable intervals consistent with
Administrative and Collateral Agents customary practices), in the name of a nominee of
Administrative and Collateral Agent, or if Administrative and Collateral Agent shall otherwise
determine that it is necessary or desirable to do so, then in the name of Administrative and
Collateral Agent, to verify the validity, amount or any other matter relating to any Account or
other Collateral, by mail, telephone, facsimile transmission or otherwise.
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7.3
Inventory Covenants
. With respect to the Inventory: (a) each Borrower and each
Guarantor shall at all times maintain inventory records reasonably satisfactory to Administrative
and Collateral Agent, keeping correct and accurate records itemizing and describing the kind, type,
quality and quantity of Inventory, such Borrowers or such Guarantors cost therefor and daily
withdrawals therefrom and additions thereto; (b) Borrowers and Guarantors shall conduct a physical
count of the Inventory at least once each year (which may be done by way of a cycle count), but at
any time or times as Administrative and Collateral Agent may reasonably request during the
existence of an Event of Default, and promptly following such physical inventory shall supply
Administrative and Collateral Agent with a report in the form and with such specificity as may be
reasonably satisfactory to Administrative and Collateral Agent concerning such physical count; (c)
Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted
herein, without the prior written consent of Administrative and Collateral Agent, except for sales
of Inventory in the ordinary course of its business and except to move Inventory directly from one
location set forth or permitted herein to another such location and except for Inventory shipped
from the manufacturer thereof to such Borrower or such Guarantor which is in transit to the
locations set forth or permitted herein; (d) upon Administrative and Collateral Agents request,
Borrowers shall, at their expense, no more
than once in any twelve (12) month period, but at any time or times as Administrative and
Collateral Agent may request on or after an Event of Default, deliver or cause to be delivered to
Administrative and Collateral Agent a full written appraisal as to the Inventory in form, scope and
methodology reasonably acceptable to Administrative and Collateral Agent and by an appraiser
acceptable to Administrative and Collateral Agent, addressed to Administrative and Collateral Agent
and Lenders and upon which Administrative and Collateral Agent and Lenders are expressly permitted
to rely; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all
reasonable care and caution and in accordance with applicable standards of any insurance and in
conformity with applicable laws (including the requirements of the Federal Fair Labor Standards Act
of 1938, as amended and all rules, regulations and orders related thereto); (f) none of the
Inventory or other Collateral constitutes farm products or the proceeds thereof; (g) Borrowers and
Guarantors will hold Agents and each Lender harmless from and indemnify each of them with respect
to all liability arising from or relating to the production, use, sale or other disposition of the
Inventory unless such liability arises from the gross negligence or willful misconduct of such
Agent or Lender; (h) except as disclosed to Administrative and Collateral Agent in writing or to
the extent accounted for in the determination of the Net Orderly Liquidation Value, Borrowers and
Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles
the customer to return or may obligate any Borrower or any Guarantor to repurchase such Inventory
(excluding customary warranty terms and returns accepted by such Borrower or such Guarantor in the
ordinary course of business); (i) Borrowers shall keep the Eligible Inventory in good and
marketable condition; and (j) Borrowers and Guarantors shall not, without prior written notice to
Administrative and Collateral Agent or the specific identification of such Inventory with respect
thereto provided by Administrative Borrower to Administrative and Collateral Agent pursuant to
Section 7.1(a) hereof, acquire or accept any Inventory on consignment or approval.
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7.4
Equipment and Real Property Covenants
. With respect to the Equipment and/or Real
Property: (a) upon Administrative and Collateral Agents request after an Event of Default,
Borrowers shall deliver or cause to be delivered to Administrative and Collateral Agent written
appraisals as to the Equipment in form, scope and methodology acceptable to Administrative and
Collateral Agent and by an appraiser acceptable to Administrative and Collateral Agent, addressed
to Administrative and Collateral Agent and Lenders and upon which Administrative and Collateral
Agent and Lenders are expressly permitted to rely; (b) except where failure to do so could not
reasonably be expected to cause a Material Adverse Change, each Borrower and each Guarantor shall
keep the Equipment in good order, repair, running and marketable condition (ordinary wear and tear
excepted); (c) Borrowers and Guarantors shall use the Equipment and Real Property with all
commercially reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity with all applicable laws; (d) the Equipment is and shall be used in the
business of Borrowers and Guarantors and not for personal, family, household or farming use; (e)
Borrowers and Guarantors shall not remove any Equipment from the locations set forth or permitted
herein, except to the extent necessary to have any Equipment repaired or maintained in the ordinary
course of its business or to move Equipment directly from one location set forth or permitted
herein to another such location and except for the movement of motor vehicles used by or for the
benefit of such Borrower or such Guarantor in the ordinary course of business; (f) the Equipment is
now and shall remain personal property and Borrowers and Guarantors shall not permit any of the
Equipment to be or become a
part of or affixed to real property; and (g) each Borrower and each Guarantor assumes all
responsibility and liability arising from the use of the Equipment and Real Property.
7.5
Power of Attorney
. Each Borrower and each Guarantor hereby irrevocably designates
and appoints Administrative and Collateral Agent (and all Persons designated by Administrative and
Collateral Agent) as such Borrowers or such Guarantors true and lawful attorney-in-fact, and
authorizes Administrative and Collateral Agent, in such Borrowers, such Guarantors or
Administrative and Collateral Agents name, to: (a) at any time an Event of Default exists or has
occurred and is continuing (i) demand payment on Receivables or other Collateral, (ii) enforce
payment of Receivables by legal proceedings or otherwise, (iii) exercise all of such Borrowers or
such Guarantors rights and remedies to collect any Receivable or other Collateral, (iv) sell or
assign any Receivable upon such terms, for such amount and at such time or times as Administrative
and Collateral Agent deems advisable, (v) settle, adjust, compromise, extend or renew an Account,
(vi) discharge and release any Receivable, (vii) prepare, file and sign such Borrowers or such
Guarantors name on any proof of claim in bankruptcy or other similar document against an account
debtor or other obligor in respect of any Receivables or other Collateral, (viii) notify the post
office authorities to change the address for delivery of remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral to an address designated by
Administrative and Collateral Agent, and open and dispose of all mail addressed to such Borrower or
such Guarantor and handle and store all mail relating to the Collateral; and (ix) do all acts and
things which are necessary, in Administrative and Collateral Agents determination, to fulfill such
Borrowers or such Guarantors obligations under this Agreement and the other Financing Agreements
and (b) at any time during a Blocked Account Activation Period or during the existence of an Event
of Default, to (i) take control in any manner of any item of payment in respect of Receivables or
constituting Collateral or otherwise received in or for deposit in the Blocked Accounts or
otherwise received by Administrative and Collateral Agent or any Lender, (ii) have access to any
lockbox or postal box into which remittances from account debtors or other obligors in respect of
Receivables or other proceeds of Collateral are sent or received, (iii) endorse such Borrowers or
such Guarantors name upon any items of payment in respect of Receivables or constituting
Collateral or otherwise received by or on behalf of Administrative and Collateral Agent or any
Lender and deposit the
71
same in Administrative and Collateral Agents or a Lenders account for
application to the Obligations, (iv) endorse such Borrowers or such Guarantors name upon any
chattel paper, document, instrument, invoice, or similar document or agreement relating to any
Receivable or any goods pertaining thereto or any other Collateral, including any warehouse or
other receipts, or bills of lading and other negotiable or non-negotiable documents, (v) clear
Inventory the purchase of which was financed with Letter of Credit Accommodations through U.S.
Customs or foreign export control authorities in such Borrowers or such Guarantors name,
Administrative and Collateral Agents name or the name of Administrative and Collateral Agents
designee, and to sign and deliver to customs officials powers of attorney in such Borrowers or
such Guarantors name for such purpose, and to complete in such Borrowers, such Guarantors or
Administrative and Collateral Agents name, any order, sale or transaction, obtain the necessary
documents in connection therewith and collect the proceeds thereof, (vi) sign such Borrowers or
such Guarantors name on any verification of Receivables and notices thereof to account debtors or
any secondary obligors or other obligors in respect thereof. Each Borrower and each Guarantor
hereby releases Administrative and Collateral Agent and each Lender and its officers, employees and
designees from any liabilities arising from any act or acts
under this power of attorney and in furtherance thereof, whether of omission or commission,
except as a result of Administrative and Collateral Agents or such Lenders own gross negligence
or willful misconduct as determined pursuant to a final non-appealable order of a court of
competent jurisdiction.
7.6
Right to Cure
. Administrative and Collateral Agent may, at its option, (a) upon
reasonable prior notice to Administrative Borrower, cure any default by any Borrower or any
Guarantor under any material agreement with a third party that affects the Collateral, its value or
the ability of Administrative and Collateral Agent or any Lender to collect, sell or otherwise
dispose of the Collateral or the rights and remedies of Administrative and Collateral Agent or any
Lender therein or the ability of any Borrower or any Guarantor to perform its obligations hereunder
or under the other Financing Agreements, (b) upon reasonable prior notice to Administrative
Borrower, pay or bond on appeal any judgment entered against any Borrower or any Guarantor, (c)
after failure by any Borrower or any Guarantor to do so pursuant to the terms of this Agreement,
discharge taxes, liens, security interests or other encumbrances at any time levied on or existing
with respect to the Collateral and (d) upon reasonable prior notice to Administrative Borrower, pay
any amount, incur any expense or perform any act which, in Administrative and Collateral Agents
judgment, is necessary or appropriate to preserve, protect, insure or maintain the Collateral and
the rights of Administrative and Collateral Agent and Lenders with respect thereto. Administrative
and Collateral Agent and Lenders may add any amounts so expended to the Obligations and charge
Borrowers accounts therefor, such amounts to be repayable by Borrowers on demand. Administrative
and Collateral Agent and Lenders shall be under no obligation to effect such cure, payment or
bonding and shall not, by doing so, be deemed to have assumed any obligation or liability of any
Borrower or any Guarantor. Any payment made or other action taken by Administrative and Collateral
Agent or any Lender under this Section shall be without prejudice to any right to assert an Event
of Default hereunder and to proceed accordingly.
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7.7
Access to Premises
. From time to time as reasonably requested by Administrative
and Collateral Agent, at the cost and expense of Borrowers (subject to applicable limitations
thereon set forth in this Agreement, including Section 9.20 hereof), (a) Administrative and
Collateral Agent or its designee shall have complete access to all of each Borrowers and each
Guarantors premises during normal business hours and after not less than 2 Business Days notice
to Administrative Borrower, or at any time and without notice to any Borrower or any Guarantor if
an Event of Default exists or has occurred and is continuing, for the purposes of inspecting,
verifying and auditing the Collateral and all of each Borrowers and each Guarantors books and
records, including the Records, and (b) each Borrower and each Guarantor shall promptly furnish to
Administrative and Collateral Agent such copies of such books and records or extracts therefrom as
Administrative and Collateral Agent may reasonably request, and (c) Administrative and Collateral
Agent or its designee may use during normal business hours such of any Borrowers or any
Guarantors personnel, equipment, supplies and premises as may be reasonably necessary for the
foregoing and if an Event of Default exists or has occurred and is continuing for the collection of
Receivables and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Borrower and each Guarantor hereby represents and warrants to Agents and Lenders the
following (which shall survive the execution and delivery of this Agreement), the truth and
accuracy of which are a continuing condition to providing Loans to Borrowers:
8.1
Corporate Existence; Power and Authority
. Each Borrower and each Guarantor is
duly organized and in good standing under the laws of its state of incorporation or formation and
is duly qualified and in good standing in all states or other jurisdictions where the nature and
extent of the business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify would not cause a
Material Adverse Change. The execution, delivery and performance of this Agreement, the other
Financing Agreements and the transactions contemplated hereunder and thereunder (a) are all within
each Borrowers and each Guarantors corporate powers, (b) have been duly authorized, (c) are not
in contravention of law or the terms of any Borrowers or any Guarantors certificate of
incorporation or formation, by-laws, partnership agreement, operating agreement, or other
organizational documentation, or any indenture, agreement or undertaking to which such Borrower or
such Guarantor is a party or by which such Borrower or such Guarantor or its property are bound and
(d) will not result in the creation or imposition of, or require or give rise to any obligation to
grant, any lien, security interest, charge or other encumbrance upon any property of such Borrower
or such Guarantor except pursuant to the Financing Agreements. This Agreement and the other
Financing Agreements to which any Borrower or any Guarantor is a party constitute legal, valid and
binding obligations of such Borrower and such Guarantor enforceable in accordance with their
respective terms except as such enforceability may be limited by bankruptcy, insolvency, moratorium
or similar laws limiting creditors rights generally or by general equitable principles.
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8.2
Name; State of Organization; Chief Executive Office; Collateral Locations
.
(a) The exact legal name of each Borrower and each Guarantor is as set forth on the signature
pages of this Agreement and in the Information Certificate. No Borrower or Guarantor has, during
the five years immediately prior to the date of this Agreement, been known by or used any other
corporate or fictitious name or been a party to any merger or consolidation, or acquired all or
substantially all of the assets of any Person, or acquired any of its property or assets out of the
ordinary course of business, except as set forth in the Information Certificate.
(b) Each Borrower and each Guarantor is an organization of the type and organized in the
jurisdiction set forth in the Information Certificate. The Information Certificate accurately sets
forth the organizational identification number of each Borrower and each Guarantor or accurately
states that such Borrower or such Guarantor has none and accurately sets forth the federal employer
identification number of each Borrower and each Guarantor.
(c) The chief executive office and mailing address of each Borrower and each Guarantor and
each Borrowers and each Guarantors Records concerning Accounts are located only at the address
identified as such in the Information Certificate and its only other places of business and the
only other locations of Collateral, if any, are the addresses set forth in such
Information Certificate, subject to the right of Borrowers and Guarantors to establish new
locations in accordance with Section 9.2 below. The Information Certificate correctly identifies
any of such locations which are not owned by any Borrower or any Guarantor and sets forth the
owners and/or operators thereof.
8.3
Financial Statements
. All financial statements relating to each Borrower and each
Guarantor which have been or may hereafter be delivered by any Borrower or any Guarantor to Agents
or any Lender have been prepared in accordance with GAAP (except as to any interim financial
statements, to the extent such statements are subject to normal year-end adjustments and do not
include any notes) and fairly present the financial condition and the results of operation of such
Borrower or such Guarantor as at the dates and for the periods set forth therein.
8.4
Priority of Liens; Title to Properties
. The security interests and liens granted
to Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and the
Bank Product Providers, under this Agreement and the other Financing Agreements constitute valid
and perfected first priority liens and security interests in and upon the Collateral subject only
to the liens indicated on
Schedule 8.4
hereto and the other liens permitted under Section
9.8 hereof. Each Borrower and each Guarantor has good and marketable fee simple title to or valid
leasehold interests in all of its Real Property and good, valid and merchantable title to all of
its other properties and assets subject to no liens, mortgages, pledges, security interests,
encumbrances or charges of any kind, except those granted to Administrative and Collateral Agent,
for itself and the ratable benefit of the Lenders and the Bank Product Providers, and such others
as are specifically listed on
Schedule 8.4
hereto or permitted under Section 9.8 hereof.
8.5
Tax Returns
. Except where failure to do so would not cause a Material Adverse
Change, each Borrower and each Guarantor has filed, or caused to be filed, in a timely manner all
tax returns, reports and declarations which are required to be filed by it. All information in
such tax returns, reports and declarations is complete and accurate in all material respects.
Except where failure to do so would not cause a Material Adverse Change, each Borrower and each
Guarantor has paid or caused to be paid all taxes due and payable or claimed due and payable in any
assessment received by it, except taxes the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to such Borrower or such Guarantor and
with respect to which adequate reserves have been set aside on its books. Adequate provision has
been made for the payment of all accrued and unpaid Federal, State, Provincial, county, local,
foreign and other taxes whether or not yet due and payable and whether or not disputed.
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8.6
Litigation
. Except as set forth in the Information Certificate, there is no
present investigation by any Governmental Authority pending, or to the best of any Borrowers or
any Guarantors knowledge threatened, against or affecting any Borrower or any Guarantor, its or
their assets or business and there is no action, suit, proceeding or claim by any Person pending,
or to the best of any Borrowers or any Guarantors knowledge threatened, against any Borrower, any
Guarantor or any of its or their assets or goodwill, or against or affecting any transactions
contemplated by this Agreement, which if adversely determined against any Borrower or any Guarantor
would cause a Material Adverse Change.
8.7
Compliance with Other Agreements and Applicable Laws
. No Borrower or Guarantor is
in default under, or in violation of any of the terms of, any agreement, contract, instrument,
lease or other commitment to which it is a party or by which it or any of its assets are bound
where such default or violation could reasonably be expected to cause a Material Adverse Change,
and, except where failure to do so would not cause a Material Adverse Change, each Borrower and
each Guarantor is in compliance with all applicable provisions of laws, rules, regulations,
licenses, permits, approvals and orders of any foreign, Federal, State, Provincial or local
Governmental Authority.
8.8
Environmental Compliance
.
(a) Except as set forth on
Schedule 8.8
hereto, to the best of each Borrowers and
each Guarantors knowledge, no Borrower or Guarantor or any of their respective Subsidiaries has
generated, used, stored, treated, transported, handled, disposed of or arranged for the disposal of
any Hazardous Materials, on or off its premises (whether or not owned by it) in any manner which at
any time violates any applicable Environmental Law or any license, permit, certificate, approval or
similar authorization thereunder and the operations of each Borrower, each Guarantor and each of
their respective Subsidiaries complies in all respects with all Environmental Laws and all
licenses, permits, certificates, approvals and similar authorizations thereunder except, in each
case, where such violation or non-compliance could not reasonably be expected to cause a Material
Adverse Change.
(b) Except as set forth on
Schedule 8.8
hereto, there has been no investigation,
proceeding, complaint, order, directive, claim, citation or written notice by any Governmental
Authority or any other person nor is any pending or to the best of each Borrowers and each
Guarantors knowledge threatened, with respect to any material violation of the requirements of any
Environmental Law by any Borrower, any Guarantor or any Subsidiary of any Borrower or any Guarantor
or the release, spill or discharge, threatened or actual, of any Hazardous Material or the
generation, use, storage, treatment, transportation, handling or disposal of any Hazardous
Materials in material violation of any Environmental Law or any other environmental matter, which
has caused or could reasonably be expected to cause a Material Adverse Change.
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(c) To the best of each Borrowers and each Guarantors knowledge, no Borrower or Guarantor or
any of their respective Subsidiaries has any material liability (contingent or otherwise) in
connection with a release, spill or discharge, threatened or actual, of any Hazardous Materials or
the generation, use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials in material violation of any Environmental Law which has caused
or could reasonably be expected to cause a Material Adverse Change.
(d) Each Borrower, each Guarantor and each of their respective Subsidiaries have all licenses,
permits, certificates, approvals or similar authorizations required to be obtained or filed in
connection with the operations of such Borrower, such Guarantor or such Subsidiary under any
Environmental Law where failure to obtain such permits has caused or could reasonably be expected
to cause a Material Adverse Change and all of such licenses, permits, certificates, approvals or
similar authorizations are valid and in full force and effect where failure
to have such permits has caused or could reasonably be expected to cause a Material Adverse
Change.
8.9
Employee Benefits
.
(a) Each Plan is in substantial compliance with the applicable provisions of ERISA, the Code
and other Federal or State law. Each Plan which is intended to qualify under Section 401(a) of the
Code has received or Borrowers and Guarantors will file an application to receive a favorable
determination letter from the Internal Revenue Service within the remedial amendment period
prescribed by Section 401(b) of the Code and to the best of each Borrowers and each Guarantors
knowledge, nothing has occurred which would cause the loss of such qualification. Each Borrower
and each Guarantor and their respective ERISA Affiliates have made all required contributions to
any Plan subject to Section 412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code has been made with respect
to any Plan. As of December 31, 2003, the liabilities of all Plans subject to Title IV of ERISA
did not exceed the assets of all such Plans by more than $17,500,000 (determined in accordance with
the assumptions used for Plan termination by the Pension Benefit Guaranty Corporation).
(b) There are no pending, or to the best of each Borrowers and each Guarantors knowledge,
threatened, claims, actions or lawsuits, or action by any Governmental Authority, with respect to
any Plan. There has been no prohibited transaction or violation of the fiduciary responsibility
rules with respect to any Plan.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Borrower,
Guarantor, or any of their respective ERISA Affiliates have incurred or reasonably expect to
incur, any material liability under Title IV of ERISA with respect to any Plan (other than premiums
due and not delinquent under Section 4007 of ERISA and any contributions to be made timely under
the Code and ERISA); (iii) no Borrower, Guarantor or any of their respective ERISA Affiliates have
incurred or reasonably expect to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (iv) no Borrower, Guarantor or any of their
respective ERISA Affiliates have engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.
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8.10
Bank Accounts
. All of the deposit accounts, investment accounts or other
accounts in the name of or used by any Borrower or any Guarantor maintained at any bank or other
financial institution are set forth in the Information Certificate of such Borrower or such
Guarantor, subject to the right of each Borrower and each Guarantor to establish new accounts in
accordance with Section 5.2 hereof.
8.11
Intellectual Property
. To the best of each Borrowers and each Guarantors
knowledge, each Borrower and each Guarantor owns or licenses or otherwise has the right to use all
Intellectual Property necessary for the operation of its business as presently conducted or
proposed to be conducted. As of the date hereof, no Borrower or Guarantor has any Intellectual
Property registered, or subject to pending applications, in the United States Patent and Trademark
Office or any similar office or agency in the United States, any State thereof, any
political subdivision thereof or in any other country, other than those described in the
Information Certificate and has not granted any material written licenses with respect thereto
other than as set forth in such Information Certificate. To the best of each Borrowers and each
Guarantors knowledge, no event has occurred which permits or would permit after notice or passage
of time or both, the revocation, suspension or termination of such rights. To the best of each
Borrowers and each Guarantors knowledge, no slogan or other advertising device, product, process,
method, substance or other Intellectual Property or goods bearing or using any Intellectual
Property presently contemplated to be sold by or employed by such Borrower or such Guarantor
infringes any patent, trademark, servicemark, tradename, copyright, license or other Intellectual
Property owned by any other Person presently and no claim or litigation is pending or threatened in
writing against or affecting any Borrower or any Guarantor contesting its right to sell or use any
such Intellectual Property. The Information Certificate sets forth all Material Contracts of each
Borrower and each Guarantor pursuant to which any Borrower or any Guarantor has a license or other
right to use any trademarks, logos, designs, representations or other Intellectual Property owned
by another person as in effect on the date hereof and the dates of the expiration of such
agreements or other arrangements of each Borrower and each Guarantor as in effect on the date
hereof (collectively, together with such agreements or other arrangements as may be entered into by
any Borrower or any Guarantor after the date hereof, collectively, the
License Agreements
and individually, a
License Agreement
). No trademark, servicemark or other Intellectual
Property currently used by any Borrower or any Guarantor which is owned by another person, or owned
by any Borrower or any Guarantor subject to any security interest, lien, collateral assignment,
pledge or other encumbrance in favor of any person other than Administrative and Collateral Agent,
for itself and the ratable benefit of the Lenders and the Bank Product Providers, or any other lien
or security interest permitted under this Agreement, is affixed to any Eligible Inventory, except
to the extent Administrative and Collateral Agent has received Licensor Agreement with respect
thereto or would otherwise be permitted to sell or dispose of such Inventory under applicable laws.
8.12
Subsidiaries; Affiliates; Capitalization; Solvency
.
(a) No Borrower or Guarantor has any direct or indirect Subsidiaries or Affiliates (other than
Sponsor Portfolio Companies) and is not engaged in any joint venture or partnership except as set
forth in the Information Certificate, subject to the right of Borrowers and Guarantors to form or
acquire Subsidiaries in accordance with Section 9.10 hereof.
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(b) Each Borrower and each Guarantor is the record and beneficial owner of all of the issued
and outstanding shares of Capital Stock of each of the Subsidiaries listed in the Information
Certificate as being owned by such Borrower or such Guarantor and there are no proxies, irrevocable
or otherwise, with respect to such shares and no equity securities of any of such Subsidiaries are
or may become required to be issued by reason of any options, warrants, rights to subscribe to,
calls or commitments of any kind or nature and there are no contracts, commitments, understandings
or arrangements by which any such Subsidiary is or may become bound to issue additional shares of
it Capital Stock or securities convertible into or exchangeable for such shares.
(c) As of the date hereof, the issued and outstanding shares of Capital Stock of each Borrower
and each Guarantor are directly and beneficially owned and held by the
Persons indicated in the Information Certificate, and in each case all of such shares have
been duly authorized and are fully paid and non-assessable, free and clear of all claims, liens,
pledges and encumbrances of any kind, except as disclosed in writing to Agents prior to the date
hereof.
(d) Each Borrower and each Guarantor is Solvent and will continue to be Solvent after the
creation of the Obligations, the security interests of Administrative and Collateral Agent, for
itself and the ratable benefit of the Lenders and the Bank Product Providers, and the other
transaction contemplated hereunder.
8.13
Labor Disputes
.
(a) Set forth on
Schedule 8.13
hereto is a list (including dates of termination) of
all collective bargaining or similar agreements between or applicable to any Borrower or any
Guarantor and any union, labor organization or other bargaining agent in respect of the employees
of any Borrower or any Guarantor on the date hereof.
(b) There is (i) no significant unfair labor practice complaint pending against any Borrower
or any Guarantor or, to the best of any Borrowers or any Guarantors knowledge, threatened against
it, before the National Labor Relations Board, and no significant grievance or significant
arbitration proceeding arising out of or under any collective bargaining agreement is pending on
the date hereof against any Borrower or any Guarantor or, to best of each Borrowers and each
Guarantors knowledge, threatened against it, and (ii) no significant strike, labor dispute,
slowdown or stoppage is pending against any Borrower or any Guarantor or, to the best of each
Borrowers and each Guarantors knowledge, threatened against any Borrower or any Guarantor.
8.14
Restrictions on Subsidiaries
. Except for restrictions contained in this
Agreement or any other agreement with respect to Indebtedness of any Borrower or any Guarantor
permitted hereunder as in effect on the date hereof, there are no contractual or consensual
restrictions in any Material Contract or charter document of any Borrower or any Guarantor or any
of their respective Subsidiaries which prohibit or otherwise restrict (a) the transfer of cash or
other assets (i) between any Borrower or any Guarantor and any of its or their Subsidiaries or (ii)
between any Subsidiaries of any Borrower or any Guarantor or (b) the ability of any Borrower or any
Guarantor or any of its or their Subsidiaries to incur Indebtedness or grant security interests to
Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank
Product Providers, in the Collateral.
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8.15
Material Contracts
.
Schedule 8.15
hereto sets forth all Material
Contracts to which any Borrower or any Guarantor is a party or is bound as of the date hereof.
Each Borrower and each Guarantor has delivered true, correct and complete copies of such Material
Contracts to Agents on or before the date hereof. No Borrower or Guarantor is in breach of or in
default under any Material Contract and no Borrower or Guarantor has received any notice of the
intention of any other party thereto to terminate any Material Contract (except where such breach,
default or termination would not cause a Material Adverse Change).
8.16
Payable Practices
. Except as disclosed to Administrative and Collateral Agent in
writing, no Borrower or Guarantor has made any material change in the historical
accounts payable practices of the Purchased Business from those generally in effect
immediately prior to the Original Closing Date.
8.17
Acquisition of Purchased Assets
.
(a) The Purchase Agreements and the transactions contemplated thereunder have been duly
executed, delivered and performed by BlueLinx (or its Affiliates or Subsidiaries) and, to its
knowledge, the Seller, in accordance with their terms in all material respects, including the
fulfillment (not merely the waiver, except as may be disclosed to Agents) of all conditions
precedent set forth therein and giving effect to the terms of the Purchase Agreements and the
assignments to be executed and delivered by Seller (or any of its Affiliates or Subsidiaries)
thereunder, BlueLinx acquired and has good and marketable title to the Purchased Assets, free and
clear of all claims, liens, pledges and encumbrances of any kind, except as permitted hereunder.
(b) All actions and proceedings (other than obtaining any consents thereto where failure to do
so would not cause a Material Adverse Effect), required by the Purchase Agreements, applicable law
or regulation (including, but not limited to, compliance with the Hart-Scott-Rodino Anti-Trust
Improvements Act of 1976, as amended, and any similar laws of Canada regarding sales of assets or
combinations of business entities) have been taken and the transactions required thereunder have
been duly and validly taken and consummated.
(c) No court of competent jurisdiction has issued any injunction, restraining order or other
order which prohibits consummation of the transactions described in the Purchase Agreements and no
governmental or other action or proceeding has, to BlueLinxs knowledge, been threatened or
commenced, seeking any injunction, restraining order or other order which seeks to void or
otherwise modify the transactions described in the Purchase Agreements, all consents thereto from
all applicable Governmental Authorities and other third parties, except where failure to obtain
would not cause a Material Adverse Change, have been obtained and all waiting periods imposed by
applicable law with regard thereto have expired.
(d) BlueLinx has delivered, or caused to be delivered, to Agents, true, correct and complete
copies of the Purchase Agreements. The Purchase Agreements have not been amended, supplemented,
waived or otherwise modified in any material respect without, in the case of the Purchase
Agreements, the prior written consent of Agents if such amendment, supplement, waiver or other
modification would, as determined by the Agents in their reasonable discretion, cause a Material
Adverse Change. No material default exists under any Purchase Agreement by BlueLinx or, to
BlueLinxs knowledge, Seller.
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8.18
Accuracy and Completeness of Information
. All information furnished by or on
behalf of any Borrower or any Guarantor in writing to any Agent or any Lender in connection with
this Agreement or any of the other Financing Agreements or any transaction contemplated hereby or
thereby, including all information on the Information Certificate, is true and correct in all
material respects on the date as of which such information is dated or certified and does not,
taken as a whole, omit any material fact necessary in order to make such information not
misleading. To the extent any Borrower or any Guarantor furnishes any projections of the financial
position and results of operations of any Borrower or any Guarantor
and any of their respective Subsidiaries for, or as at the end of, certain future periods,
such projections were believed at the time furnished to be reasonable, have been or will have been
prepared on a reasonable basis and in good faith by such Borrower or such Guarantor and have been
or will be based on assumptions believed by such Borrower or such Guarantor to be reasonable at the
time made and upon the best information then reasonably available to such Borrower or such
Guarantor.
8.19
Survival of Warranties; Cumulative
. All representations and warranties contained
in this Agreement or any of the other Financing Agreements shall survive the execution and delivery
of this Agreement and shall be deemed to have been made again to Agents and Lenders on the date of
each additional borrowing or other credit accommodation hereunder and shall be conclusively
presumed to have been relied on by Agents and Lenders regardless of any investigation made or
information possessed by any Agent or Lender. The representations and warranties set forth herein
shall be cumulative and in addition to any other representations or warranties which any Borrower
or any Guarantor shall now or hereafter give, or cause to be given, to any Agent or Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1
Maintenance of Existence
.
(a) Except as otherwise permitted under the terms of this Agreement, each Borrower and each
Guarantor shall at all times preserve, renew and keep in full, force and effect its corporate
existence and rights and franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases and contracts
necessary to carry on the business as presently or proposed to be conducted.
(b) No Borrower or Guarantor shall change its name unless each of the following conditions is
satisfied: (i) Administrative and Collateral Agent shall have received not less than thirty (30)
days prior written notice from Administrative Borrower of such proposed change in its corporate
name, which notice shall accurately set forth the new name; and (ii) Administrative and Collateral
Agent shall have received a copy of the amendment to the Certificate of Incorporation or Formation
of such Borrower or such Guarantor providing for the name change certified by the Secretary of
State of the jurisdiction of incorporation or organization of such Borrower or such Guarantor as
soon as it is available.
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(c) No Borrower or Guarantor shall change its chief executive office or its mailing address or
organizational identification number (or if it does not have one, shall not acquire one) unless
Administrative and Collateral Agent shall have received not less than thirty (30) days prior
written notice from Administrative Borrower of such proposed change, which notice shall set forth
such information with respect thereto as Administrative and Collateral Agent may require and
Administrative and Collateral Agent shall have received such agreements as Administrative and
Collateral Agent may reasonably require in connection therewith. No Borrower or Guarantor shall
change its type of organization, jurisdiction of organization or other legal structure without the
prior written consent of Administrative and Collateral Agent, such consent not to be unreasonably
withheld, conditioned or delayed.
9.2
New Collateral Locations
. Each Borrower and each Guarantor may only establish new
locations of its business or Collateral so long as such new location is within the United States of
America and provided such Borrower or such Guarantor (a) gives Administrative and Collateral Agent
thirty (30) days prior written notice of the intended opening of any such new location (or ten (10)
days prior written notice of the intended opening if such new location is acquired in connection
with a Permitted Acquisition) and (b) executes and delivers, or causes to be executed and
delivered, to Administrative and Collateral Agent such agreements, documents, and instruments as
Administrative and Collateral Agent may deem necessary or desirable to protect its interests in the
Collateral at such location;
provided
,
however
, no Borrower or Guarantor shall be
required to comply with the provisions of this Section 9.2 to the extent (x) such new location of
Collateral is within the United States of America, (y) such new location of Collateral is not
leased or otherwise controlled by any Borrower or any Guarantor and (z) if such new and un-reported
location(s) contain(s) Collateral having a value in excess of $3,750,000 for any one location or
$7,500,000 in the aggregate for all such locations, Administrative Borrower has provided
Administrative and Collateral Agent with five (5) days prior written notice of the intended opening
of such new location.
9.3
Compliance with Laws, Regulations, Etc
.
(a) Each Borrower and each Guarantor shall, and shall cause each of its Subsidiaries to, at
all times, comply with all laws, rules, regulations, licenses, permits, approvals and orders
applicable to it and duly observe all requirements of any foreign, Federal, State or local
Governmental Authority except where failure to do so could not reasonably be expected to cause a
Material Adverse Change.
(b) Each Borrower and each Guarantor shall give written notice to Administrative and
Collateral Agent promptly upon any Borrowers or any Guarantors receipt of any notice of, or any
Borrowers or any Guarantors otherwise obtaining knowledge of, (i) the occurrence of any event
involving the release, spill or discharge, threatened or actual, of any Hazardous Material in
material violation of any Environmental Law which is required by law to be reported to the
Governmental Authority having jurisdiction over such event or (ii) any investigation, proceeding,
complaint, order, directive, claims, citation or written notice with respect to: (A) any material
violation of any applicable Environmental Law by any Borrower or any Guarantor or (B) the release,
spill or discharge, threatened or actual, of any Hazardous Material other than in the ordinary
course of business and other than as permitted under any applicable Environmental Law. Copies of
all material environmental surveys, audits, assessments, feasibility studies and results of
remedial investigations conducted by or on behalf of any Borrower or any Guarantor shall be
promptly furnished, or caused to be furnished, by such Borrower or such Guarantor to Administrative
and Collateral Agent. Each Borrower and each Guarantor shall take all reasonably prompt and
appropriate action to respond to any non-compliance with any of the Environmental Laws and shall
regularly report to Administrative and Collateral Agent on material activities or events composing
such response.
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(c) Without limiting the generality of the foregoing, whenever Administrative and Collateral
Agent reasonably determines that there is material violation, or any condition which requires any
action by or on behalf of any Borrower or any Guarantor in order to avoid any violation, of any
Environmental Law which could reasonably be expected to cause a
Material Adverse Change, Borrowers shall, at Administrative and Collateral Agents request and
Borrowers expense: (i) cause an independent environmental engineer acceptable to Administrative
and Collateral Agent to conduct such tests or studies of the site where material violation or
alleged material violation of such Environmental Laws has occurred as may be appropriate and as to
such material violation, prepare and deliver to Administrative and Collateral Agent a report
setting forth the results of such tests or studies, a proposed plan for responding to any
environmental problems described therein, and an estimate of the costs thereof and (ii) provide to
Administrative and Collateral Agent a supplemental report of such engineer whenever the scope of
such material violation, or such Borrowers or such Guarantors response thereto or the estimated
costs thereof, shall change in any material respect.
(d) Each Borrower and each Guarantor shall indemnify and hold harmless Agents, Lenders and
their respective directors, officers, employees, agents, invitees, representatives, successors and
assigns, from and against any and all losses, claims, damages, liabilities, costs, and expenses
(including attorneys fees and legal expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage, release, threatened
release, spill, discharge, disposal or presence of a Hazardous Material, including the costs of any
required or necessary repair, cleanup or other remedial work with respect to any property of any
Borrower or any Guarantor and the preparation and implementation of any closure, remedial or other
required plans; provided, however, Borrowers and Guarantors need not indemnity any such Person for
losses, claims, damages, liabilities costs or expenses arising from such Persons gross negligence
or willful misconduct. All representations, warranties, covenants and indemnifications in this
Section 9.3 shall survive the payment of the Obligations and the termination or non-renewal of this
Agreement.
9.4
Payment of Taxes and Claims
. Each Borrower and each Guarantor shall, and shall
cause each of its Subsidiaries to, duly pay and discharge all taxes, assessments, contributions and
governmental charges upon or against it or its properties or assets, except (i) for taxes the
validity of which are being contested in good faith by appropriate proceedings diligently pursued
and available to such Borrower, such Guarantor or such Subsidiary, as the case may be and with
respect to which adequate reserves have been set aside on its books in accordance with GAAP and
(ii) as could not reasonably be expected to cause a Material Adverse Change.
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9.5
Insurance
. Each Borrower and each Guarantor shall at all times maintain with
financially sound and reputable insurers insurance with respect to the Collateral against loss or
damage and all other insurance of the kinds and in the amounts customarily insured against or
carried by corporations of established reputation engaged in the same or similar businesses and
similarly situated. Said policies of insurance shall be reasonably satisfactory to Administrative
and Collateral Agent as to form, amount and insurer. Each Borrower and each Guarantor shall
furnish certificates, policies or endorsements to Administrative and Collateral Agent as
Administrative and Collateral Agent shall require as proof of such insurance, and, if any Borrower
or any Guarantor fails to do so, Administrative and Collateral Agent is authorized, but not
required, to obtain such insurance at the expense of such Borrower or such Guarantor. All such
policies shall provide for at least 10 days prior written notice to Administrative and Collateral
Agent of any cancellation or reduction of coverage due to non-payment of premiums and at least 30
days prior written notice to Administrative and Collateral Agent of any other
cancellation or reduction of coverage and that Administrative and Collateral Agent may act as
attorney for any Borrower or any Guarantor in obtaining, and at any time an Event of Default exists
or has occurred and is continuing, adjusting, settling, amending and canceling such insurance.
Each Borrower and each Guarantor shall cause Administrative and Collateral Agent to be named as a
loss payee for property and casualty insurance and an additional insured for liability insurance
(but without any liability for any premiums) under such insurance policies of Borrowers and
Guarantors and each Borrower and each Guarantor shall obtain non-contributory lenders loss payable
endorsements to all such insurance policies in form and substance satisfactory to Administrative
and Collateral Agent. Such lenders loss payable endorsements shall specify that the proceeds of
such insurance shall be payable to Administrative and Collateral Agent, for itself and the ratable
benefit of the Lenders and the Bank Product Providers, as its interests may appear and further
specify that Administrative and Collateral Agent shall be paid regardless of any act or omission by
any relevant Person. At its option, Administrative and Collateral Agent may (a) apply any
insurance proceeds received by Administrative and Collateral Agent with respect to Accounts,
Inventory or any other assets or events, at any time to the cost of repairs or replacement of
Collateral and/or to payment of the Obligations, whether or not then due, in any order and in such
manner as Administrative and Collateral Agent may determine or hold such proceeds as cash
collateral for the Obligations or (b) if an Event of Default then exists, apply any insurance
proceeds received by Administrative and Collateral Agent to the cost of repairs or replacement of
Collateral and/or to payment of the Obligations, whether or not then due, in any order and in such
manner as Administrative and Collateral Agent may determine or hold such proceeds as cash
collateral for the Obligations. Upon application of such proceeds to the Obligations, Loans may be
available subject and pursuant to the terms hereof to be used for the costs of repair or
replacement of the Collateral lost or damages resulting in the payment of such insurance proceeds.
So long as no Event of Default exists, all other insurance proceeds may be collected by Borrowers
and Guarantors.
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9.6
Financial Statements and Other Information
.
(a) Each Borrower and each Guarantor shall, and shall cause each of its and their Subsidiaries
to, keep proper books and records in which true and complete entries shall be made of all dealings
or transactions of or in relation to the Collateral and the business of each Borrower, each
Guarantor and each of their respective Subsidiaries in accordance with GAAP. Borrowers and
Guarantors shall promptly furnish to Administrative and Collateral Agent any and all financial or
other information as Administrative and Collateral Agent may reasonably request relating to the
Collateral and the assets, business and operations of Borrowers and Guarantors, and to notify the
auditors and accountants of Borrowers and Guarantors that Administrative and Collateral Agent is
authorized to obtain such information directly from them. Without limiting the foregoing,
Borrowers shall furnish or cause to be furnished to Administrative and Collateral Agent, the
following: (i) within thirty (30) days after the end of each fiscal month (or within forty-five
(45) days if such fiscal month end is also a fiscal quarter end), unaudited consolidated financial
statements (including in each case balance sheets, statements of income and loss, statements of
cash flow, and statements of shareholders equity), all in reasonable detail, fairly presenting the
financial position and the results of the operations of BlueLinx and its Subsidiaries as of the end
of and through such fiscal month (or quarter), certified to be correct by the chief financial
officer of BlueLinx, subject to normal year-end adjustments and lack of footnotes and, if a
Compliance Period is then in effect, accompanied by a compliance certificate substantially in
the form of
Exhibit C
hereto, along with a schedule in form reasonably satisfactory to
Administrative and Collateral Agent of the calculations used in determining, as of the end of such
month (or quarter), whether Borrowers were in compliance with the covenants set forth in Section
9.17 of this Agreement for such month (or quarter); and (ii) within ninety (90) days after the end
of each fiscal year, audited consolidated financial statements of BlueLinx and its Subsidiaries
(including in each case balance sheets, statements of income and loss, statements of cash flow and
statements of shareholders equity), and the accompanying notes thereto, all in reasonable detail,
fairly presenting the financial position and the results of the operations of BlueLinx and its
Subsidiaries as of the end of and for such fiscal year, together with (A) the unqualified opinion
of independent certified public accountants, which accountants shall be an independent accounting
firm selected by Borrowers and reasonably acceptable to Administrative and Collateral Agent, that
such financial statements have been prepared in accordance with GAAP, and present fairly the
results of operations and financial condition of BlueLinx and its Subsidiaries as of the end of and
for the fiscal year then ended and (B) any management letters that may be issued with regard to the
Borrowers or Guarantors.
(b) Borrowers and Guarantors shall promptly notify Administrative and Collateral Agent in
writing of the details of (i) any loss, damage, investigation, action, suit, proceeding or claim
relating to the Collateral, or any other property which is security for the Obligations, which
constitutes a Material Adverse Change, (ii) any Material Contract of any Borrower or any Guarantor
being terminated (where such termination would cause a Material Adverse Change) or amended (in any
way that would materially and adversely alter such Borrowers or such Guarantors rights or
obligations thereunder, in which event such Borrower or such Guarantor shall provide Administrative
and Collateral Agent a copy of such amendment) or any new Material Contract being entered into (in
which event such Borrower or such Guarantor shall provide Administrative and Collateral Agent with
a copy of such new Material Contract or amendment), (iii) any order, judgment or decree in excess
of Five Million Dollars ($5,000,000) having been entered against any Borrower, any Guarantor, or
any of their respective properties or assets, (iv) any notification of the violation of any laws or
regulation received by any Borrower or any Guarantor where such violation could reasonably be
expected to cause a Material Adverse Change, (v) any ERISA Event, (vi) the occurrence of any
Default or Event of Default and (vii) any notice of a material default or of termination received
by any Borrower or any Guarantor with respect to any Purchase Agreement or Affiliate Lease.
84
(c) Borrowers shall promptly after the sending or filing thereof furnish or cause to be
furnished to Administrative and Collateral Agent copies of all reports which BlueLinx or Parent
sends to its stockholders generally and copies of all reports and registration statements which
BlueLinx or Parent files with the Securities and Exchange Commission, any national securities
exchange or the National Association of Securities Dealers, Inc.
(d) Borrowers and Guarantors shall furnish or cause to be furnished to Administrative and
Collateral Agent such information with respect to the Collateral and the business of Borrowers and
Guarantors, as Administrative and Collateral Agent may reasonably request, including, without
limitation, at least 30 days before the beginning of each Borrowers and each Guarantors fiscal
year, updated projections for such fiscal year (including balance sheets and statements of
operations, stockholders equity and cash flows and Borrowing Base and Excess Availability
projections on a month-by-month basis). Agents and Lenders are hereby
authorized to deliver a copy of any financial statement or any other information relating to
any Borrower or any Guarantor to any court or other Governmental Authority, Affiliate of any Agent
or any Lender or to any Participant or assignee or prospective Participant or assignee. Each
Borrower and each Guarantor hereby irrevocably authorizes and directs all accountants or auditors
to deliver to Administrative and Collateral Agent, at Borrowers expense, copies of the financial
statements of each Borrower and each Guarantor and any reports or management letters prepared by
such accountants or auditors on behalf of any Borrower or any Guarantor and to disclose to
Administrative and Collateral Agent such information as they may have regarding the business of any
Borrower or any Guarantor. Any documents, schedules, invoices or other papers delivered to Agents
may be destroyed or otherwise disposed of by Agents one (1) year after the same are delivered to
Agents, except as otherwise designated by Administrative Borrower to Agents in writing.
9.7
Sale of Assets, Consolidation, Merger, Dissolution, Etc
. Each Borrower and each
Guarantor shall not, and shall not permit any of its Subsidiaries to (and Agents and Lenders do not
authorize any Borrower, any Guarantor or any of their respective Subsidiaries to), directly or
indirectly:
(a) merge into or with, consolidate or amalgamate with any other Person or permit any other
Person to merge into or with or consolidate with it;
provided
,
that
,
(i) any Subsidiary of any Borrower or any Guarantor that is not another Guarantor or another
Borrower may merge with or into or consolidate with any other Subsidiary of any Borrower or any
Guarantor that is not another Guarantor or another Borrower,
(ii) upon the prior written consent of Administrative and Collateral Agent, such consent not
to be unreasonably withheld, a domestic Subsidiary of any Borrower (other than another Borrower or
a Guarantor) may merge with and into such Borrower with such Borrower being the surviving entity,
85
(iii) any Borrower may merge with and into another Borrower so long as (A) as of the effective
date of the merger and after giving effect thereto, no Default or Event of Default shall exist or
have occurred, (B) Administrative Borrower provides Administrative and Collateral Agent not less
than 10 Business Days prior written notice thereof, (C) Borrowers and Guarantors execute and
deliver, prior to or simultaneously with any such action, any and all documents and agreements
requested by Administrative and Collateral Agent to confirm the continuation and preservation of
all security interests and liens granted to Administrative and Collateral Agent hereunder, and (D)
Administrative and Collateral Agent shall have received, true, correct and complete copies of all
agreements, documents and instruments relating to such merger, including, but not limited to, the
certificate or certificates of merger to be filed with each appropriate Secretary of State (with a
copy as filed promptly after such filing), and
(iv) any Guarantor may merge with and into another Guarantor so long as (1) as of the
effective date of the merger and after giving effect thereto, no Default or Event of Default shall
exist or have occurred, (2) Administrative Borrower provides Administrative and Collateral Agent
not less than 10 Business Days prior written notice thereof, (3) Borrowers and Guarantors execute
and deliver, prior to or simultaneously with any such action, any and all
documents and agreements requested by Administrative and Collateral Agent to confirm the
continuation and preservation of all security interests and liens granted to Administrative and
Collateral Agent hereunder, and (4) Administrative and Collateral Agent shall have received, true,
correct and complete copies of all agreements, documents and instruments relating to such merger,
including, but not limited to, the certificate or certificates of merger to be filed with each
appropriate Secretary of State (with a copy as filed promptly after such filing); or
(b) sell, issue, assign, lease, license, transfer, abandon, sell and leaseback or otherwise
dispose of any Capital Stock or Indebtedness to any other Person or any of its assets to any other
Person, except for:
(i) sales of Inventory in the ordinary course of business,
(ii) the disposition of worn-out or obsolete Equipment so long as (A) any proceeds are
deposited to the Blocked Account, and (B) such sales do not involve Equipment having an aggregate
fair market value in excess of Twenty Million Dollars ($20,000,000) for all such Equipment disposed
of in any fiscal year of Borrowers and Guarantors;
provided
,
however
, if such sales
of Equipment in any fiscal year involve Equipment having an aggregate fair market value of less
than $20,000,000 (such difference referred to herein as an
Unused Equipment Sale
Allowance
), up to $10,000,000 of such Unused Equipment Sale Allowance may be sold in the
succeeding fiscal year;
(iii) the disposition of assets other than Accounts, Inventory or worn-out or obsolete
Equipment so long as (A) any proceeds are deposited to the Blocked Account, and (B) such sales do
not involve assets having an aggregate fair market value in excess of Twenty Million Dollars
($20,000,000) for all such assets disposed of in any fiscal year of Borrowers and Guarantors;
86
(iv) the issuance and sale by any Borrower or any Guarantor of Capital Stock of such Borrower
or such Guarantor after the date hereof; provided, that, (A) Administrative and Collateral Agent
shall have received not less than ten (10) Business Days prior written notice of such issuance and
sale by such Borrower or such Guarantor, which notice shall specify the parties to whom such shares
are to be sold, the terms of such sale, the total amount which it is anticipated will be realized
from the issuance and sale of such stock and the net cash proceeds which it is anticipated will be
received by such Borrower or such Guarantor from such sale, (B) such Borrower or such Guarantor
shall not be required to pay any cash dividends or repurchase or redeem such Capital Stock or make
any other payments in respect thereof, (C) the terms of such Capital Stock, and the terms and
conditions of the purchase and sale thereof, shall not include any terms that include any
limitation on the right of such Borrower or such Guarantor to request or receive Loans or the right
of such Borrower or such Guarantor to amend or modify any of the terms and conditions of this
Agreement or any of the other Financing Agreements or otherwise in any way relate to or affect the
arrangements of such Borrower or such Guarantor with Agents and Lenders or are more restrictive or
burdensome to such Borrower or such Guarantor than the terms of any Capital Stock in effect on the
date hereof, (D) no Event of Default would occur as a result of such sale or issuance, and (E)
except as Administrative and Collateral Agent and the Lenders may otherwise agree in writing, if an
Event of Default exists on the date of such issuance and sale or after giving effect thereto, all
of the
proceeds of such sale and issuance shall be paid to Administrative and Collateral Agent for
application to the Obligations in accordance with the terms of Section 6.4(a) hereof;
(v) the sale and leaseback of Equipment so long as (A) any proceeds are deposited to the
Blocked Account, and (B) such sale and leaseback transactions do not involve Equipment having an
aggregate fair market value in excess of Ten Million Dollars ($10,000,000) for all such Equipment
sold and leased in such transactions in any fiscal year of Borrowers and Guarantors;
(vi) the sale, lease, transfer or other disposition of assets by a Borrower to another
Borrower so long as at the time of any such sale, lease, transfer or other disposition, no Default
or Event of Default exists or is continuing; and
(vii) the sale, lease, transfer or other disposition of assets by a Guarantor to another
Guarantor so long as at the time of any such sale, lease, transfer or other disposition, no Default
or Event of Default exists or is continuing;
(c) wind up, liquidate or dissolve except in the case of Subsidiaries of any Borrower or any
Guarantor that are not a Borrower or a Guarantor;
(d) agree to do any of the foregoing;
provided
,
however
, any Borrower, any
Guarantor or any of their respective Subsidiaries may enter into agreements to effectuate any
transaction otherwise prohibited by this Section 9.7 so long as (i) concurrently with or promptly
after entering into any such agreement, such Borrower, such Guarantor or such Subsidiary gives
Administrative and Collateral Agent written notice thereof to the extent not prohibited by any
confidentiality provisions relating thereto and binding on such Borrower, such Guarantor or such
Subsidiary, and (ii) the consummation of transactions contemplated by any such agreement is
conditioned upon obtaining the consent of Administrative and Collateral Agent and such Lenders as
may be required pursuant to Section 11.3 hereof or repaying the Obligations in full and terminating
this Agreement in accordance with its terms.
87
To the extent Administrative and Collateral Agent and any Lenders whose consent is required
pursuant to Section 11.3 hereof waive the provisions of this Section 9.7 with respect to the sale
of any Collateral, or any Collateral is sold to a Person as permitted by this Section 9.7, to the
extent the proceeds of any such sale are remitted to Administrative and Collateral Agent pursuant
to all applicable terms of this Agreement, such Collateral shall be sold free and clear of the
liens created by the Financing Agreements (and, in the event that such Collateral consists of all
of the capital stock of a Person that is a Guarantor, such Person, and the assets of such Person,
shall be released from the Financing Agreements to which it is a party), and Administrative and
Collateral Agent shall be authorized to take any actions deemed appropriate in order to effect the
foregoing.
9.8
Encumbrances
. Each Borrower and each Guarantor shall not, and shall not permit
any of its Subsidiaries to, create, incur, assume, suffer or permit to exist any security interest,
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on any of its assets
or properties, including the Collateral or file or permit the filing of, or permit to remain
in effect, any financing statement or other similar notice of any security interest or lien
with respect to such assets or properties, except:
(a) the security interests and liens of Administrative and Collateral Agent, for itself and
the ratable benefit of the Lenders and Bank Product Providers;
(b) liens securing the payment of taxes, either not yet overdue or the validity of which are
being contested in good faith by appropriate proceedings diligently pursued and available to such
Borrower, such Guarantor or such Subsidiary, as the case may be and with respect to which adequate
reserves have been set aside on its books;
(c) statutory liens (other than liens securing the payment of taxes) arising in the ordinary
course of such Borrowers, such Guarantors or such Subsidiarys business to the extent: (i) such
liens secure Indebtedness which is not overdue or (ii) such liens secure Indebtedness relating to
claims or liabilities which are fully insured or bonded and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by appropriate
proceedings diligently pursued and available to such Borrower, such Guarantor or such Subsidiary,
in each case prior to the commencement of foreclosure or other similar proceedings and with respect
to which adequate reserves have been set aside on its books;
(d) zoning restrictions, easements, licenses, covenants and other restrictions affecting the
use of Real Property which do not interfere in any material respect with the use of such Real
Property or ordinary conduct of the business of such Borrower, such Guarantor or such Subsidiary as
presently conducted thereon or materially impair the value of the Real Property which may be
subject thereto;
(e) purchase money security interests in Equipment (including Capital Leases) and purchase
money mortgages on Real Property to secure Indebtedness permitted under Sections 9.9(a) and 9.9(c)
hereof;
(f) Intentionally Omitted;
(g) the security interests and liens set forth on
Schedule 8.4
hereto;
88
(h) renewals and extensions of any of the foregoing security interests and liens so long as
the aggregate principal amount of the Indebtedness (plus any accrued and unpaid fees and interest),
if any, secured thereby is not increased and such renewal or extension does not encumber additional
assets of such Borrower, such Guarantor or such Subsidiary;
(i) leases or subleases granted to third Persons that do not materially interfere with the
conduct of the business of such Borrower, such Guarantor or such Subsidiary;
(j) security interests in and liens on property or assets acquired pursuant to an acquisition
permitted by Section 9.10 hereof, or on property or assets of a Person in existence at the time
such Person is acquired pursuant to an acquisition permitted by Section 9.10 hereof so long as: (i)
any Indebtedness that is secured by such security interests and liens is otherwise permitted under
Section 9.9 hereof and (ii) such security interests and liens are not incurred in
connection with, or in contemplation of, such acquisition and do not attach to any other asset
of any Borrower or any Guarantor or such acquired Person or otherwise violate any of the provisions
of this Agreement;
(k) pledges and deposits of cash by any Borrower or any Guarantor after the date hereof in the
ordinary course of business and commercially reasonable in connection with workers compensation,
unemployment insurance and other types of social security benefits or in connection with
obligations under Hedging Transactions;
(l) judgments liens arising in connection with legal proceedings that do not constitute an
Event of Default;
provided
,
that
, (i) such liens are being contested in good faith
and by appropriate proceedings diligently pursued, (ii) adequate reserves or other appropriate
provision, if any, as are required by GAAP have been established therefor, (iii) a stay of
enforcement of any such liens is in effect and (iv) Administrative and Collateral Agent may
establish a Reserve with respect thereto; and
(m) liens on assets other than Accounts, collections on Accounts or Inventory to the extent
such liens do not secure obligations in excess of $10,000,000 in the aggregate at any one time
outstanding.
9.9
Indebtedness
. Each Borrower and each Guarantor shall not, and shall not permit
any of its Subsidiaries to, incur, create, assume, become or be liable in any manner with respect
to, suffer or permit to exist, any Indebtedness or guarantee, assume, endorse, or otherwise become
responsible for (directly or indirectly) the performance, dividends or other obligations of any
Person, except:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) arising after the date hereof to
the extent secured by purchase money security interests in Equipment (including Capital Leases) not
to exceed Twenty Million Dollars ($20,000,000) in the aggregate at any time outstanding so long as
such security interests do not apply to any property of any Borrower, any Guarantor or any of their
respective Subsidiaries other than the Equipment so acquired, and the Indebtedness secured thereby
does not exceed the cost of the Equipment so acquired;
89
(c) purchase money mortgages on Real Property not to exceed Thirty-Five Million Dollars
($35,000,000) in the aggregate at any time outstanding so long as such mortgages do not apply to
any property of any Borrower, any Guarantor or any of their respective Subsidiaries other than the
Real Property so acquired, and the Indebtedness secured thereby does not exceed the cost of the
Real Property so acquired;
(d) guaranties by any Subsidiaries of any Borrower or any Guarantor of the Obligations in
favor of Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and
the Bank Product Providers;
(e) Indebtedness with respect to any Hedging Transactions;
provided
,
that
,
such arrangements are: (i) with any Bank Product Provider, any Person that constitutes an Eligible
Transferee or any other bank or other financial institution that has combined capital and
unimpaired surplus of not less than Five Hundred Million Dollars ($500,000,000), (ii) were
entered into for the purpose of protecting such Borrower, such Guarantor or such Subsidiary against
fluctuations in interest rates and not for speculative purposes and (iii) except with respect to
Indebtedness owed to Bank Product Providers or secured by pledges or deposits of cash pursuant to
Section 9.8(k), Indebtedness arising thereunder or in connection therewith is unsecured;
(f) the issuance by Borrower, and guaranties thereof by its Subsidiaries, of no more than
$400,000,000 in senior unsecured notes on terms and conditions reasonably satisfactory to
Administrative and Collateral Agent so long as: (i) no Default or Event of Default exists at the
time such notes are issued or would occur as a result thereof; (ii) the net cash proceeds of such
notes are used first to repay the obligations of Borrower under the Term Loan Agreement, and any
remaining proceeds are remitted to Administrative and Collateral Agent for application to the
Obligations as set forth in Section 6.4(a) hereof; (iii) prior to its incurrence, Administrative
and Collateral Agent shall have received such information with regard to such notes as it may
reasonably request, including, without limitation, true, correct and complete copies of all
agreements, documents and instruments evidencing or otherwise related to such Indebtedness; (iv)
Borrower does not, directly or indirectly, (A) without the prior written consent of Administrative
and Collateral Agent, amend, modify, alter or change the terms of such notes or any agreement,
document or instrument related thereto in a manner materially more adverse to the Lenders or so as
to make the terms thereof materially more burdensome or restrictive to Borrower, in each case, than
the terms thereof in effect prior to such amendment, modification, alteration or change, or
(B) redeem, retire, defease, purchase or otherwise acquire such notes (except pursuant to regularly
scheduled payments permitted under the terms of this Agreement and any subordination agreement
related to such notes), or set aside or otherwise deposit or invest any sums for such purpose, and
(v) Borrower shall furnish to Administrative and Collateral Agent all material notices or demands
in connection with such Indebtedness either received by Borrower or on its behalf promptly after
the receipt thereof, or sent by Borrower or on its behalf concurrently with the sending thereof, as
the case may be;
(g) Intentionally Omitted;
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(h) the Indebtedness set forth on
Schedule 9.9
hereto; provided, that, (i) Borrowers
and Guarantors may only make regularly scheduled payments of principal and interest in respect of
such Indebtedness in accordance with the terms of the agreement or instrument evidencing or giving
rise to such Indebtedness as in effect on the date hereof, (ii) Borrowers and Guarantors shall not,
directly or indirectly, (A) without the prior written consent of Administrative and Collateral
Agent, amend, modify, alter or change the terms of such Indebtedness in a manner materially more
adverse to the Lenders or so as to make the terms thereof materially more burdensome or restrictive
to Borrowers and Guarantors, in each case, than the terms thereof in effect prior to such
amendment, modification, alteration or change, or (B) redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, (iii) Borrowers and Guarantors shall furnish to Administrative and Collateral Agent all
notices or demands in connection with such Indebtedness either received by any Borrower, any
Guarantor or on any of their behalf, promptly after the receipt thereof, or sent by any Borrower,
any Guarantor or on any of their behalf, concurrently with the sending thereof, as the case may be
and (iv) with respect to Indebtedness
arising in connection with the letters of credit listed on
Schedule 9.9
hereto: (A) in
no event may such Indebtedness be secured or cash-collateralized and (B) such Indebtedness may not
be renewed, extended, replaced or otherwise continue to be outstanding beyond the maturity dates of
such letters of credit set forth on
Schedule 9.9
hereto;
(i) so long as the aggregate amount thereof does not exceed $5,000,000 at any time,
Indebtedness with respect to surety bonds, appeal bonds or like instruments acquired in the
ordinary course of business or in connection with the enforcement of rights or claims of any
Borrower, any Guarantor or any of their respective Subsidiaries or in connection with judgments
that do not result in a Default or an Event of Default;
(j) to the extent subject to the intercompany subordination agreement described in Section
4.1(i) and otherwise permitted under Section 9.10 hereof (i) Indebtedness of any Borrower or any
Guarantor or any of their respective Subsidiaries to any other Subsidiary or any Borrower or any
Guarantor, or (ii) Indebtedness of BlueLinx to Parent;
(k) unsecured guaranties by any Borrower of Indebtedness or other obligations of its
Subsidiaries that are permitted to be incurred hereunder;
(l) Indebtedness of a Subsidiary of any Borrower acquired pursuant to the terms of Section
9.10 hereof, or assumed by any Borrower in connection with the acquisition of an asset pursuant to
the terms of Section 9.10 hereof, so long as such Indebtedness was not incurred in connection with,
or in contemplation of, such acquisition or such investment and otherwise does not violate any
provision of this Agreement;
(m) Indebtedness owing in connection with the liens permitted under Sections 9.8(b), 9.8(c),
9.8(k) or 9.8(m);
(n) up to $5,000,000, in the aggregate at any one time outstanding, of Indebtedness
representing the unpaid balance of the purchase price of any property or services that constitutes
an account payable to a trade creditor (whether or not an Affiliate) which (i) was created,
incurred, assumed or guaranteed by a Borrower or a Guarantor in the ordinary course of business of
such Borrower or such Guarantor in connection with obtaining goods, materials or services, (ii) is
overdue by more than ninety (90) days and (iii) is not being contested by such Borrower or such
Guarantor in good faith;
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(o) unsecured Indebtedness of any Borrower or any Guarantor to any third person (other than
another Borrower or Guarantor) arising after the date hereof in an amount at any one time
outstanding not to exceed Twenty-Five Million Dollars ($25,000,000) in the aggregate for all such
Indebtedness to all such third persons;
provided
,
that
, (i) Borrowers and
Guarantors may only make regularly scheduled payments of principal and interest in respect of such
Indebtedness in accordance with the terms of the agreement or instrument evidencing or giving rise
to such Indebtedness, (ii) Each Borrower and each Guarantor shall not, directly or indirectly, (A)
without the prior written consent of Administrative and Collateral Agent, amend, modify, alter or
change the terms of such Indebtedness in a manner materially more adverse to the Lenders or so as
to make the terms thereof materially more burdensome or restrictive to such Borrower or such
Guarantor, in each case, than the terms thereof in effect prior to such
amendment, modification, alteration or change, or (B) redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, and (iii) Borrowers and Guarantors shall furnish to Administrative and Collateral Agent
all material notices or demands in connection with such Indebtedness either received by any
Borrower, any Guarantor or on any of their behalf, promptly after the receipt thereof, or sent by
any Borrower, any Guarantor or on any of their behalf, concurrently with the sending thereof, as
the case may be;
(p) unsecured Indebtedness of any Borrower to sellers incurred as part of the purchase price
in connection with any Permitted Acquisitions not to exceed Twenty-Five Million Dollars
($25,000,000) in the aggregate among all Borrowers at any one time outstanding, so long as such
Indebtedness is subordinated to the Obligations under terms and conditions reasonably satisfactory
to Administrative and Collateral Agent; and
(q) any Indebtedness of BlueLinx consisting of a Mortgage Proceeds Investment;
provided
,
that
, BlueLinx shall not make any repayments with respect thereto unless:
(i) Modified Adjusted Excess Availability after giving effect to any such repayment is equal to or
greater than $120,000,000; (b) both before and after giving effect to any such repayment,
Borrowers Fixed Charge Coverage Ratio for the immediately trailing twelve month period, on a
consolidated basis, is equal to or greater than 1.1:1.0 (for purposes of this Section 9.9(q) only,
Fixed Charge Coverage Ratio shall be calculated by excluding the amount of any such repayment and
by adjusting the interest component of the calculation to include any interest payments which would
have been made by the Borrowers had the amount of Mortgage Proceeds Investment which is being
repaid never been loaned to the BlueLinx); (c) Administrative Borrower shall have provided
Administrative and Collateral Agent with at least ten (10) Business Days prior written notice of
any such repayment; (d) no Default or Event of Default shall have occurred and be continuing or
would result from such repayment; and (e) prior to the making of any such repayment, Administrative
and Collateral Agent shall have received Borrowers unaudited internally prepared financial
statements for the month immediately preceding the date of such prepayment, accompanied by a
certificate of Administrative Borrowers chief financial officer as to Borrowers compliance with
the terms of this Section 9.9(q) together with such supporting documentation therefor as
Administrative and Collateral Agent may reasonably request.
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9.10
Loans, Investments, Etc
. Each Borrower and each Guarantor shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, make, or suffer or permit to exist,
any loans or advance money or property to any Person, or any investment in (by capital
contribution, dividend or otherwise) or purchase or repurchase the Capital Stock or Indebtedness or
all or a substantial part of the assets or property of any Person, or form or acquire any
Subsidiaries, or agree to do any of the foregoing, except:
(a) the endorsement of instruments for collection or deposit in the ordinary course of
business;
(b) investments in cash or Cash Equivalents so long as the terms and conditions of Section 5.2
hereof shall have been satisfied with respect to the deposit account or investment account in which
such cash or Cash Equivalents are held;
provided
,
however
, such
cash or Cash Equivalents must be held in a savings or investment account which is subject to
Administrative and Collateral Agents first priority perfected security interest if any Revolving
Loans or Term Loans are then outstanding;
(c) the existing equity investments of each Borrower and each Guarantor as of the date hereof
in their respective Subsidiaries, provided, that, no Borrower or Guarantor shall have any
obligation to make any other investment in, or loans to, or other payments in respect of, any of
such Subsidiaries;
(d) stock or obligations issued to any Borrower or any Guarantor by any Person (or the
representative of such Person) in respect of Indebtedness of such Person owing to such Borrower or
such Guarantor in connection with the insolvency, bankruptcy, receivership or reorganization of
such Person or a composition or readjustment of the debts of such Person; provided, that, the
original of any such stock or instrument having a principal amount in excess of $1,000,000
evidencing such obligations shall be promptly delivered to Administrative and Collateral Agent,
upon Administrative and Collateral Agents request, together with such stock power, assignment or
endorsement by such Borrower or such Guarantor as Administrative and Collateral Agent may request;
(e) obligations of account debtors to any Borrower or any Guarantor arising from Accounts
which are past due evidenced by a promissory note made by such account debtor payable to such
Borrower or such Guarantor; provided, that, promptly upon the receipt of the original of any such
promissory note by such Borrower or such Guarantor having a principal amount in excess of
$1,000,000, such promissory note shall be endorsed to the order of Administrative and Collateral
Agent by such Borrower or such Guarantor and promptly delivered to Administrative and Collateral
Agent as so endorsed;
(f) the loans and advances set forth on
Schedule 9.10
hereto; provided, that, as to
such loans and advances, (i) Borrowers and Guarantors shall not, directly or indirectly, amend,
modify, alter or change the terms of such loans and advances or any agreement, document or
instrument related thereto and (ii) Borrowers and Guarantors shall furnish to Administrative and
Collateral Agent all notices or demands in connection with such loans and advances either received
by any Borrower, any Guarantor or on any of their behalf, promptly after the receipt thereof, or
sent by any Borrower, any Guarantor or on any of their behalf, concurrently with the sending
thereof, as the case may be;
93
(g) loans and advances by any Borrower or any Guarantor to officers and employees of such
Borrower or such Guarantor so long as such loans are made in the ordinary course of such Borrowers
or such Guarantors business and with respect to activities arising from such persons employment by
such Borrower or such Guarantor;
(h) loans and advances by BlueLinx to BlueLinx Building Products Canada Ltd., a company
organized under the laws of British Columbia, not to exceed $10,000,000 in the aggregate at any one
time outstanding; and
(i) Permitted Acquisitions;
provided
,
however
, in the case of a Permitted
Acquisition which is an Asset Acquisition, the assets acquired by any Borrower shall not be
included in the calculation of the Borrowing Base until the Administrative and Collateral
Agent shall have had the opportunity to perform a field examination and appraisal through its
examiners or through representatives that it may retain in order to determine the eligibility of
such assets for inclusion in the calculation of the Borrowing Base;
(j) any Borrower may form an Acquisition Subsidiary so long as; (i) Administrative Borrower
provides Administrative and Collateral Agent with prior written notice of the formation of any
Acquisition Subsidiary; (ii) no Default or Event of Default has occurred and is continuing or would
result from the formation of such Acquisition Subsidiary; (iii) Administrative and Collateral
Agent, for the ratable benefit of the Lenders and the Bank Product Providers, shall be granted a
first priority security interest (subject to the security interests, mortgages, pledges, liens,
charges and other encumbrances otherwise permitted under Section 9.8 hereof) in all assets
(including any Capital Stock) of such Acquisition Subsidiary and such Borrower shall cause such
Acquisition Subsidiary to execute any documents and take all actions that may be required under
applicable law or that Administrative and Collateral Agent may reasonably request, in order to
grant, preserve, protect and perfect such security interest, all in form and substance satisfactory
to Administrative and Collateral Agent; and (iv) either (A) such Borrower shall cause such newly
formed Acquisition Subsidiary to execute a (1) general continuing guaranty in favor of
Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank
Product Providers, in form and substance satisfactory to Administrative and Collateral Agent, and
(2) a joinder to this Agreement, in form and substance satisfactory to Administrative and
Collateral Agent, whereby such newly formed Acquisition Subsidiary acknowledges and agrees that it
is a Guarantor hereunder; or (B) such newly formed Acquisition Subsidiary shall execute a joinder
to this Agreement, in form and substance satisfactory to Administrative and Collateral Agent,
whereby such newly formed Acquisition Subsidiary acknowledges and agrees that it is a Borrower
hereunder subject to the terms hereunder and subject to such newly formed Acquisition Subsidiary
and Borrowers executing such documentation requested by Administrative Agent in its reasonable
discretion.
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9.11
Dividends and Redemptions
. Each Borrower and each Guarantor shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, declare or pay any dividends on
account of any shares of any class of Capital Stock of such Borrower, such Guarantor or such
Subsidiary, as the case may be, now or hereafter outstanding, or set aside or otherwise deposit or
invest any sums for such purpose, or redeem, retire, defease, purchase or otherwise acquire any
shares of any class of Capital Stock (or set aside or otherwise deposit or invest any sums for such
purpose) for any consideration or apply or set apart any sum, or make any other distribution (by
reduction of capital or otherwise) in respect of any such shares or agree to do any of the
foregoing, except:
(a) in any case, dividends may be made in the form of shares of Capital Stock consisting of
common stock;
(b) any Subsidiary of any Borrower may pay dividends to such Borrower;
(c) BlueLinx may pay in kind dividends to Parent upon any issuance of Capital Stock permitted
under the terms of this Agreement;
(d) BlueLinx may pay dividends to Parent (i) in an amount equal to the sum of the federal,
state and local income tax liability of Parent that is attributable to BlueLinx and its
Subsidiaries and (ii) for general administrative expenses of Parent and/or general operating
expenses incurred by Parent on behalf of Bluelinx and its Subsidiaries in an amount not to exceed
$2,500,000 in any fiscal year;
(e) commencing at the conclusion of BlueLinxs fiscal year ending 2004, BlueLinx may pay
dividends to Parent in an aggregate amount not to exceed the sum of (x) 50% of BlueLinxs
cumulative Net Income earned since the Original Closing Date; (y) 50% of the first $100,000,000 of
capital contributions made by Parent to BlueLinx after October 26, 2004; and (z) 100% of each
capital contribution made by Parent to BlueLinx after such first $100,000,000 of capital
contributions; so long as: (i) BlueLinx does not pay dividends to Parent in excess of Twenty-Five
Million Dollars ($25,000,000) in the aggregate in any fiscal year of BlueLinx; (ii) no Default or
Event of Default exists at the time of any such dividend or would occur after giving effect
thereto; (iii) both immediately before and after giving effect to any such dividend, Modified
Adjusted Excess Availability is at least $70,000,000; and (iv) prior to the making of any such
dividend, Administrative and Collateral Agent shall have received BlueLinxs unaudited internally
prepared financial statements for the fiscal quarter immediately preceding the date of such
dividend, accompanied by a certificate of BlueLinxs chief financial officer as to BlueLinxs
compliance with the terms of this Section 9.11(e) together with such supporting documentation
therefor as Administrative and Collateral Agent may reasonably request; and
(f) in addition to any dividends permitted under Section 9.11(e), BlueLinx may pay dividends
to Parent to repay any capital contribution consisting of a Mortgage Proceeds Investment so long as
(a) Modified Adjusted Excess Availability after giving effect to any such repayment is equal to or
greater than $120,000,000; (b) both before and after giving effect to any such repayment,
BlueLinxs Fixed Charge Coverage Ratio for the immediately trailing twelve month period, on a
consolidated basis, is equal to or greater than 1.1:1.0 (for purposes of this Section 9.11(f) only,
Fixed Charge Coverage Ratio shall be calculated by excluding the amount of any such repayment and
by adjusting the interest component of the calculation to include any interest payments which would
have been made by the Borrowers had the amount of Mortgage Proceeds Investment which is being
repaid never been invested in BlueLinx); (c) Administrative Borrower shall have provided
Administrative and Collateral Agent with at least ten (10) Business Days prior written notice of
any such repayment; (d) no Default or Event of Default shall have occurred and be continuing or
would result from such repayment; and (e) prior to the making of any such repayment, Administrative
and Collateral Agent shall have received BlueLinxs unaudited internally prepared financial
statements for the month immediately preceding the date of such prepayment, accompanied by a
certificate of BlueLinxs chief financial officer as to BlueLinxs compliance with the terms of
this Section 9.11(f) together with such supporting documentation therefor as Administrative and
Collateral Agent may reasonably request.
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9.12
Transactions with Affiliates
. Each Borrower and each Guarantor shall not,
directly or indirectly, (a) purchase, acquire or lease any property from, or sell, transfer or
lease any property to, any Affiliate or agent of such Borrower or such Guarantor, except in the
ordinary course of and pursuant to the reasonable requirements of such Borrowers or such
Guarantors business and upon fair and reasonable terms no less favorable to such Borrower or
such Guarantor than such Borrower or such Guarantor would obtain in a comparable arms length
transaction with a Person that is not an Affiliate or agent of such Borrower or such Guarantor or
(b) make any payments of management, consulting or other fees for management or similar services,
or of any Indebtedness owing to any officer, employee, shareholder, director or other Affiliate of
such Borrower or such Guarantor except (i) reasonable compensation to officers, employees and
directors for services rendered to such Borrower or such Guarantor in the ordinary course of
business; (ii) so long as Sponsor owns Capital Stock of Parent, management fees of no more than
$1,000,000 per fiscal year paid by BlueLinx to Sponsor; (iii) payments required to be made under
the Affiliate Leases to the extent the Affiliate Leases comply with the provisions of Section
9.12(a) hereof; (iv) amounts payable to any Sponsor Affiliated Lender pursuant to this Agreement;
and (iv) any amounts permitted to be paid pursuant to Section 9.11.
9.13
Compliance with ERISA
. Each Borrower and each Guarantor shall and shall cause
each of its ERISA Affiliates to: (a) maintain each Plan (other than a Multiemployer Plan) in
compliance in all material respects with the applicable provisions of ERISA, the Code and other
Federal and State law; (b) cause each Plan which is qualified under Section 401(a) of the Code to
maintain such qualification; (c) not terminate any of such Plans so as to incur any liability to
the Pension Benefit Guaranty Corporation; (d) not allow or suffer to exist any prohibited
transaction involving any of such Plans or any trust created thereunder which would subject such
Borrower, such Guarantor or such ERISA Affiliate to a tax or penalty or other liability on
prohibited transactions imposed under Section 4975 of the Code or ERISA; (e) make all required
contributions to any Plan which it is obligated to pay under Section 302 of ERISA, Section 412 of
the Code or the terms of such Plan; (f) not allow or suffer to exist any accumulated funding
deficiency, whether or not waived, with respect to any such Plan; or (g) not allow or suffer to
exist any occurrence of a reportable event or any other event or condition which presents a
material risk of termination by the Pension Benefit Guaranty Corporation of any such Plan that is a
single employer plan, which termination could result in any liability to the Pension Benefit
Guaranty Corporation.
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9.14
End of Fiscal Years and Fiscal Quarters; Changes in Accounting Practices
.
(a) Each Borrower and each Guarantor shall, for financial reporting purposes, cause its, and
each of its Subsidiaries (i) fiscal years to end on the dates set forth on
Schedule 9.14
hereto as fiscal year ends, (ii) fiscal quarters to end on the dates set forth on
Schedule
9.14
hereto as fiscal quarter ends and (iii) fiscal months to end on the dates set forth on
Schedule 9.14
hereto as fiscal month ends.
(b) Each Borrower and each Guarantor shall not materialy change any of its accounting policies
except as may be required or permitted in accordance with GAAP.
9.15
Change in Business
. Each Borrower and each Guarantor shall not engage in any
business other than the business of such Borrower or such Guarantor on the date hereof and any
business reasonably related, ancillary or complimentary to the business in which such Borrower or
such Guarantor is engaged on the date hereof.
9.16
Limitation of Restrictions Affecting Subsidiaries
. Each Borrower and each
Guarantor shall not, directly, or indirectly, create or otherwise cause or suffer to exist any
encumbrance or restriction which prohibits or limits the ability of any Subsidiary of such Borrower
or such Guarantor to (a) pay dividends or make other distributions or pay any Indebtedness owed to
such Borrower or such Guarantor or any Subsidiary of such Borrower or such Guarantor; (b) make
loans or advances to such Borrower or such Guarantor or any Subsidiary of such Borrower or such
Guarantor, or (c) create, incur, assume or suffer to exist any lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, other than encumbrances and
restrictions (i) that are void or ineffective under applicable law or (ii) arising under (A)
applicable law, (B) this Agreement, (C) customary provisions restricting subletting or assignment
of any lease governing a leasehold interest of such Borrower or such Guarantor or any Subsidiary of
such Borrower or such Guarantor, (D) customary restrictions on dispositions of real property
interests found in reciprocal easement agreements of such Borrower or such Guarantor or any
Subsidiary of such Borrower or such Guarantor, (E) any agreement relating to permitted Indebtedness
incurred by a Subsidiary of such Borrower or such Guarantor prior to the date on which such
Subsidiary was acquired by such Borrower or such Guarantor and outstanding on such acquisition
date, and (F) the extension or continuation of contractual obligations in existence on the date
hereof; provided, that, any such encumbrances or restrictions contained in such extension or
continuation are no less favorable to Administrative and Collateral Agent and Lenders than those
encumbrances and restrictions under or pursuant to the contractual obligations so extended or
continued.
9.17
Financial Covenants
. During a Compliance Period, Borrowers and Guarantors shall,
when measured as of the month most recently ended:
(a)
Fixed Charge Coverage Ratio
. Maintain, on a consolidated basis, their Fixed
Charge Coverage Ratio at not less than 1.1 to 1.0.
(b)
Capital Expenditures
. Not incur Capital Expenditures of more than $20,000,000 in
any fiscal year in the aggregate for all Borrowers and Guarantors;
provided
,
however
, if Capital Expenditures of less than $20,000,000 are incurred in any fiscal year
(such difference referred to herein as an
Unused CapEx Allowance
), up to $10,000,000 of
the amount of such Unused CapEx Allowance may be incurred in the succeeding fiscal year.
97
9.18
License Agreements
.
(a) Except where failure to do so could not reasonably be expected to cause a Material Adverse
Change and with respect to License Agreements that are Material Contracts, each Borrower and each
Guarantor shall (i) promptly and faithfully observe and perform all of the terms, covenants,
conditions and provisions of such License Agreement to be observed and performed by it, at the
times set forth therein, if any, (ii) not do, permit, suffer or refrain from doing anything that
could reasonably be expected to result in a default under or breach of any of the terms of such
License Agreement, (iii) not cancel, surrender, modify, amend, waive or release such License
Agreement in any respect or any material term, provision or right of the licensee thereunder in any
respect, or consent to or permit to occur any of the foregoing, (iv) give Administrative and
Collateral Agent prompt written notice of such License Agreement entered into by such Borrower or
such Guarantor after the date hereof, together with a true, correct and
complete copy thereof and such other information with respect thereto as Administrative and
Collateral Agent may reasonably request, (v) give Administrative and Collateral Agent prompt
written notice of any breach of any obligation, or any default, by any party under such License
Agreement, and deliver to Administrative and Collateral Agent (promptly upon the receipt thereof by
such Borrower or such Guarantor in the case of a notice to such Borrower or such Guarantor, and
concurrently with the sending thereof in the case of a notice from such Borrower or such Guarantor)
a copy of each notice of default and every other notice and other communication received or
delivered by such Borrower or such Guarantor in connection with such License Agreement which
relates to any adverse change in the right of any Borrower or any Guarantor to continue to use the
property subject to such License Agreement, and (vi) furnish to Administrative and Collateral
Agent, promptly upon the request of Administrative and Collateral Agent, such information and
evidence as Administrative and Collateral Agent may require from time to time concerning the
observance, performance and compliance by such Borrower or such Guarantor or the other party or
parties thereto with the terms, covenants or provisions of such License Agreement.
(b) Except where failure to do so could not reasonably be expected to cause a Material Adverse
Change and with respect to License Agreements that are Material Contracts, each Borrower and each
Guarantor will either exercise any option to renew or extend the term of such License Agreement in
such manner as will cause the term of such License Agreement to be effectively renewed or extended
for the period provided by such option and give prompt written notice thereof to Administrative and
Collateral Agent or give Administrative and Collateral Agent prior written notice that such
Borrower or such Guarantor does not intend to renew or extend the term of any such License
Agreement or that the term thereof shall otherwise be expiring, not less than sixty (60) days prior
to the date of any such non-renewal or expiration. In the event of the failure of any Borrower or
any Guarantor to extend or renew any such License Agreement, Administrative and Collateral Agent
shall have, and is hereby granted, the irrevocable right and authority, at its option, to renew or
extend the term of such License Agreement, whether in its own name as agent for the Lenders, or in
the name of a designee or nominee of Administrative and Collateral Agent or in the name of any
Borrower or any Guarantor, as Administrative and Collateral Agent shall determine at any time that
an Event of Default shall exist or have occurred and be continuing. Administrative and Collateral
Agent may, but shall not be required to, perform any or all of such obligations of any Borrower or
any Guarantor under any of such License Agreement, including, but not limited to, the payment of
any or all sums due from any Borrower or any Guarantor thereunder. Any sums so paid by
Administrative and Collateral Agent shall constitute part of the Obligations.
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9.19
After Acquired Real Property
. If any Borrower or any Guarantor hereafter
acquires any Real Property, fixtures or similar property and such Real Property, fixtures or other
property at any one location has a fair market value in an amount equal to or greater than Five
Million Dollars ($5,000,000) (or if an Event of Default exists, then regardless of the fair market
value of such assets), without limiting any other rights of Administrative and Collateral Agent, or
duties or obligations of such Borrower or such Guarantor, upon Administrative and Collateral
Agents request, such Borrower or such Guarantor shall execute and deliver to Administrative and
Collateral Agent a mortgage, deed of trust or deed to secure debt, as Administrative and Collateral
Agent may determine, in form and substance satisfactory to Administrative and Collateral Agent and
in form appropriate for recording in the real estate records of the
jurisdiction in which such Real Property or other property is located granting to
Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank
Product Providers, a first and only lien and mortgage on and security interest in such Real
Property, fixtures or other property (except as such Borrower or such Guarantor would otherwise be
permitted to incur hereunder or as otherwise consented to in writing by Administrative and
Collateral Agent) and such other agreements, documents and instruments as Administrative and
Collateral Agent may require in connection therewith.
9.20
Costs and Expenses
. Borrowers and Guarantors shall pay to Administrative and
Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers,
on demand and if requested, accompanied by an invoice in reasonable detail, all costs, expenses,
filing fees and filing or recording taxes paid or payable by any Agent in connection with the
preparation, negotiation, execution, delivery, recording, administration, collection, liquidation,
enforcement and defense of the Obligations, Administrative and Collateral Agents and Lenders
rights in the Collateral, this Agreement, the other Financing Agreements and all other documents
related hereto or thereto, including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and thereof, including:
(a) all costs and expenses of filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, recording taxes and fees, if applicable); (b)
costs and expenses and fees for insurance premiums, environmental audits, surveys, assessments,
engineering reports and inspections, background checks, appraisal fees and search fees, costs and
expenses of remitting loan proceeds, collecting checks and other items of payment, and establishing
and maintaining the Blocked Accounts, together with Administrative and Collateral Agents customary
charges and fees with respect thereto; (c) charges, fees or expenses charged by any bank or issuer
in connection with the Letter of Credit Accommodations; (d) costs and expenses of preserving and
protecting the Collateral; (e) costs and expenses paid or incurred in connection with obtaining
payment of the Obligations, enforcing the security interests and liens of Administrative and
Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers,
selling or otherwise realizing upon the Collateral, and otherwise enforcing the provisions of this
Agreement and the other Financing Agreements or defending any claims made or threatened against any
Agent and/or Lenders arising out of the transactions contemplated hereby and thereby (including
preparations for and consultations concerning any such matters); (f) all out-of-pocket expenses and
costs heretofore and from time to time hereafter incurred by Administrative and Collateral Agent or
any Lender during the course of periodic field examinations of the Collateral and such Borrowers
or such Guarantors operations, plus a per diem charge at the then standard rate of Administrative
and Collateral Agent, per person per day for Administrative and Collateral Agents examiners in the
field and office (which rate is currently $850 per person per day);
provided
,
however
, unless an Event of Default exists, Borrowers and Guarantors shall not be required
to pay such costs and expenses associated with more than 3 such field examinations per year; and
(g) the reasonable fees and disbursements of counsel (including legal assistants) to any Agent in
connection with any of the foregoing.
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9.21
Further Assurances
. At the request of Administrative and Collateral Agent at any
time and from time to time, each Borrower and each Guarantor shall, at its expense, duly execute
and deliver, or cause to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the priority
thereof in the Collateral and to otherwise effectuate the provisions or purposes of this Agreement
or any of the other Financing Agreements, including, without limitation, upon Administrative and
Collateral Agents request, executing and delivering, or causing to be executed and delivered, such
other agreements, documents and instruments as may be required by Administrative and Collateral
Agent to perfect the security interests of Administrative and Collateral Agent, for itself and the
ratable benefit of the Lenders and the Bank Product Providers, in those Accounts of an account
debtor with its chief executive office or principal place of business in Canada in accordance with
the applicable laws of the Province of Canada in which such chief executive office or principal
place of business is located and taking or causing to be taken such other and further actions as
Administrative and Collateral Agent may reasonably request to enable Administrative and Collateral
Agent, as secured party with respect thereto, to collect such Accounts under the applicable Federal
or Provincial laws of Canada. If requested by Administrative and Collateral Agent, each Borrower
and each Guarantor agrees to cause a certificate to be issued by one of its officer representing
that, as of such date, all conditions precedent to providing Loans contained herein are satisfied.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1
Events of Default
. The occurrence or existence of any one or more of the
following events are referred to herein individually as an
Event of Default
, and
collectively as
Events of Default
:
(a) (i) any Borrower fails to pay any of the Obligations pursuant to Section 2.1(b) within one
(1) Business Day after demand therefor, (ii) any Borrower fails to pay any of the other Obligations
(including amounts due pursuant to Section 9.20) within two (2) Business Days after the same
becomes due and payable, (iii) any Borrower or any Guarantor fails to perform any of the covenants
contained in Sections 9.3, 9.4, 9.5, 9.6, 9.13, 9.14, 9.16, 9.18, 9.19 or 9.21 of this Agreement or
any of the affirmative covenants set forth in any other Financing Agreement (other than payment
obligations) and such failure continues for ten (10) Business Days;
provided
,
that
,
such ten (10) Business Day period shall not apply in the case of: (A) any failure to observe any
such covenant which is not capable of being cured at all or within such ten (10) Business Day
period or which has been the subject of a prior failure within a six (6) month period or (B) an
intentional breach by any Borrower or any Guarantor of any such covenant or (iv) any Borrower or
any Guarantor fails to perform any of the terms, covenants, conditions or provisions contained in
this Agreement or any of the other Financing Agreements other than those described in subsections
(i), (ii) or (iii) of this Section 10.1(a);
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(b) any representation or warranty made by any Borrower or any Guarantor to any Agent or any
Lender in this Agreement, the other Financing Agreements or any other agreement, schedule,
confirmatory assignment or otherwise shall when made or deemed made be false or misleading in any
material respect;
(c) any Guarantor revokes or terminates or fails to perform any of the material terms,
covenants, conditions or provisions of any guaranty, endorsement or other agreement of such party
in favor of Administrative and Collateral Agent or any Lender;
(d) any judgments for the payment of money are rendered against any Borrower or any Guarantor
in excess of Five Million Dollars ($5,000,000) in any one case or Ten Million Dollars ($10,000,000)
in the aggregate which remain undischarged or unvacated for a period in excess of sixty (60) days
or execution thereof is not at any time effectively stayed, or any other judgment other than for
the payment of money, injunction, attachment, garnishment or execution is rendered against any
Borrower or any Guarantor or any of their assets which constitutes a Material Adverse Change;
(e) any Borrower or any Guarantor dissolves or suspends or discontinues doing business except
as permitted by Section 9.7 hereunder;
(f) any Borrower or any Guarantor becomes insolvent (however defined or evidenced), makes an
assignment for the benefit of creditors, makes or sends notice of a bulk transfer or calls a
meeting of its creditors or principal creditors;
(g) a case or proceeding under the bankruptcy laws of the United States of America now or
hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether
at law or in equity) is filed against any Borrower or any Guarantor or all or any part of their
respective properties and such petition or application is not dismissed within forty-five (45) days
after the date of its filing or any Borrower or any Guarantor shall file any answer admitting or
not contesting such petition or application or indicates its consent to, acquiescence in or
approval of, any such action or proceeding or the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United States of America now or
hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether
at a law or equity) is filed by any Borrower or any Guarantor or for all or any part of its
property; or
(i) any default occurs with respect any Indebtedness of any Borrower or any Guarantor (other
than Indebtedness owing hereunder), in any case in an amount in excess of Ten Million Dollars
($10,000,000), which default continues for more than the applicable cure period, if any, with
respect thereto;
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(j) any material provision hereof or of any of the other Financing Agreements shall for any
reason cease to be valid, binding and enforceable with respect to any party hereto or thereto
(other than Agents and Lenders) in accordance with its terms, or any such party shall challenge the
enforceability hereof or thereof, or shall assert in writing, or take any action or fail to take
any action based on the assertion that any material provision hereof or of any of the other
Financing Agreements has ceased to be or is otherwise not valid, binding or enforceable in
accordance with its terms, or any security interest provided for herein or in any of the other
Financing Agreements shall cease to be a valid and perfected first priority security interest in
any of the Collateral purported to be subject thereto (except as otherwise permitted herein or
therein);
(k) an ERISA Event shall occur which (i) results in or could reasonably be expected to result
in liability of any Borrower or any Guarantor in an aggregate amount in excess of Ten Million
Dollars ($10,000,000) which is not removed or resolved without liability to such Borrower or such
Guarantor or reasonably likely to be removed or resolved without liability to such Borrower or such
Guarantor within forty-five (45) days after the date such liability is incurred or (ii) results in
a lien in favor of the Pension Benefit Guaranty Corporation;
(l) any Change of Control shall occur; or
(m) the indictment by any Governmental Authority of any Borrower or any Guarantor of which any
Borrower, any Guarantor or any Agent receives notice, in either case, as to which there is a
reasonable possibility of an adverse determination, in the good faith determination of
Administrative and Collateral Agent, under any criminal statute, or commencement by any
Governmental Authority of criminal or civil proceedings against any Borrower or any Guarantor,
pursuant to which statute or proceedings the penalties or remedies sought or available include
forfeiture of (i) any of the Collateral having a value in excess of Five Million Dollars
($5,000,000) or (ii) any other property of any Borrower or any Guarantor which is necessary or
material to the conduct of its business.
10.2
Remedies
.
(a) At any time an Event of Default exists or has occurred and is continuing, Agents and
Lenders shall have all rights and remedies provided in this Agreement, the other Financing
Agreements, the UCC, the PPSA and other applicable law, all of which rights and remedies may be
exercised without notice to or consent by any Borrower or any Guarantor, except as such notice or
consent is expressly provided for hereunder or required by applicable law. All rights, remedies
and powers granted to any Agent or any Lender hereunder, under any of the other Financing
Agreements, the UCC, the PPSA or other applicable law, are cumulative, not exclusive and
enforceable, in Administrative and Collateral Agents discretion, alternatively, successively, or
concurrently on any one or more occasions, and shall include, without limitation, the right to
apply to a court of equity for an injunction to restrain a breach or threatened breach by any
Borrower or any Guarantor of this Agreement or any of the other Financing Agreements. Subject to
Section 12 hereof, Administrative and Collateral Agent shall, upon the direction of the Required
Lenders, at any time or times an Event of Default exists or has occurred and is continuing, proceed
directly against any Borrower or any Guarantor to collect the Obligations without prior recourse to
any other Borrower or Guarantor or any of the Collateral.
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(b) Without limiting the foregoing, at any time an Event of Default exists or has occurred and
is continuing, Administrative and Collateral Agent may, to the extent permitted by applicable law,
and upon the direction of the Required Lenders, shall (i) accelerate the payment of all Obligations
and demand immediate payment thereof to Administrative and Collateral Agent, for itself and the
ratable benefit of the Lenders and the Bank Product Providers, (provided, that, upon the occurrence
of any Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations shall
automatically become immediately due and payable), (ii) with or without judicial process or the aid
or assistance of others, enter upon any premises on or in which any of the Collateral may be
located and take possession of the Collateral or complete processing, manufacturing and repair of
all or any portion of the Collateral, (iii) require any
Borrower or any Guarantor, at its expense, to assemble and make available to Administrative
and Collateral Agent any part or all of the Collateral at any place and time designated by
Administrative and Collateral Agent, (iv) collect, foreclose, receive, appropriate, setoff and
realize upon any and all Collateral, (v) remove any or all of the Collateral from any premises on
or in which the same may be located for the purpose of effecting the sale, foreclosure or other
disposition thereof or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including entering into contracts with respect
thereto, public or private sales at any exchange, brokers board, at any office of Administrative
and Collateral Agent or elsewhere) at such prices or terms as Administrative and Collateral Agent
may deem reasonable, for cash, upon credit or for future delivery, with Administrative and
Collateral Agent or any Lender having the right to purchase the whole or any part of the Collateral
at any such public sale, all of the foregoing being free from any right or equity of redemption of
any Borrower or any Guarantor, which right or equity of redemption is hereby expressly waived and
released by each Borrower and each Guarantor and/or (vii) terminate this Agreement. If any of the
Collateral is sold or leased by Administrative and Collateral Agent upon credit terms or for future
delivery, the Obligations shall not be reduced as a result thereof until payment therefor is
finally collected by Administrative and Collateral Agent, for itself and the ratable benefit of the
Lenders and the Bank Product Providers. If notice of disposition of Collateral is required by law,
ten (10) days prior notice by Administrative and Collateral Agent to Administrative Borrower
designating the time and place of any public sale or the time after which any private sale or other
intended disposition of Collateral is to be made, shall be deemed to be reasonable notice thereof
and each Borrower and each Guarantor waives any other notice. In the event Administrative and
Collateral Agent institutes an action to recover any Collateral or seeks recovery of any Collateral
by way of prejudgment remedy, each Borrower and each Guarantor waives the posting of any bond which
might otherwise be required. At any time an Event of Default exists or has occurred and is
continuing, upon Administrative and Collateral Agents request, Borrowers will either, as
Administrative and Collateral Agent shall specify, furnish cash collateral to the issuer to be used
to secure and fund Administrative and Collateral Agents and/or Lenders reimbursement obligations
to the issuer in connection with any Letter of Credit Accommodations or furnish cash collateral to
Administrative and Collateral Agent, for itself and the ratable benefit of the Revolving Loan
Lenders, for the Letter of Credit Accommodations. Such cash collateral shall be in the amount
equal to one hundred five percent (105%) of the amount of the Letter of Credit Accommodations plus
the amount of any fees and expenses payable in connection therewith through the end of the
expiration of such Letter of Credit Accommodations.
103
(c) Administrative and Collateral Agent may, at any time or times that an Event of Default
exists or has occurred and is continuing, enforce any Borrowers or any Guarantors rights against
any account debtor, secondary obligor or other obligor in respect of any of the Accounts or other
Receivables. Without limiting the generality of the foregoing, Administrative and Collateral Agent
may at such time or times (i) notify any or all account debtors, secondary obligors or other
obligors in respect thereof that the Receivables have been assigned to Administrative and
Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers,
and that Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and
the Bank Product Providers, has a security interest therein and Administrative and Collateral Agent
may direct any or all account debtors, secondary obligors and other obligors to make payment of
Receivables directly to Administrative and Collateral Agent, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of
merchandise or otherwise, and upon any terms or conditions, any and all Receivables or other
obligations included in the Collateral and thereby discharge or release the account debtor, any
secondary obligors or other obligors in respect thereof without affecting any of the Obligations,
(iii) demand, collect or enforce payment of any Receivables or such other obligations, but without
any duty to do so, and Administrative and Collateral Agent shall not be liable for its failure to
collect or enforce the payment thereof nor for the negligence of its agents or attorneys with
respect thereto and (iv) take whatever other action Administrative and Collateral Agent may deem
necessary or desirable for the protection of its and Lenders interests. At any time that an Event
of Default exists or has occurred and is continuing, at Administrative and Collateral Agents
request, all invoices and statements sent to any account debtor shall state that the Accounts and
such other obligations have been assigned to Administrative and Collateral Agent and are payable
directly and only to Administrative and Collateral Agent and Borrowers and Guarantors shall deliver
to Administrative and Collateral Agent such originals of documents evidencing the sale and delivery
of goods or the performance of services giving rise to any Accounts as Administrative and
Collateral Agent may require. In the event any account debtor returns Inventory when an Event of
Default exists or has occurred and is continuing, Borrowers shall, upon Administrative and
Collateral Agents request, hold the returned Inventory in trust for Administrative and Collateral
Agent and Lenders, segregate all returned Inventory from all of its other property, dispose of the
returned Inventory solely according to Administrative and Collateral Agents instructions, and not
issue any credits, discounts or allowances with respect thereto without Administrative and
Collateral Agents prior written consent.
(d) To the extent that applicable law imposes duties on Administrative and Collateral Agent or
Lenders to exercise remedies in a commercially reasonable manner (which duties cannot be waived
under such law), each Borrower and each Guarantor acknowledges and agrees, to the extent permitted
by applicable law, that it is not commercially unreasonable for Administrative and Collateral Agent
or any Lender (i) to fail to incur expenses reasonably deemed significant by such Person to prepare
Collateral for disposition or otherwise to complete raw material or work in process into finished
goods or other finished products for disposition, (ii) to fail to obtain third party consents for
access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to
obtain consents of any Governmental Authority or other third party for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection
remedies against account debtors, secondary obligors or other persons obligated on Collateral or to
remove liens or encumbrances on or any adverse claims against Collateral, (iv) to exercise
collection remedies against account debtors and other persons obligated on Collateral directly or
through the use of collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through
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publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (vi) to contact other persons, whether or not in the same
business as any Borrower or any Guarantor, for expressions of interest in acquiring all or any
portion of the Collateral, (vii) to hire one or more professional auctioneers to assist in the
disposition of Collateral, whether or not the collateral is of a specialized nature, (viii) to
dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the
types included in the Collateral or that have the reasonable capability of doing so, or that match
buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets,
(x) to disclaim disposition warranties, (xi) to purchase insurance or credit enhancements to insure
such Person against risks of loss, collection or disposition of Collateral or to provide to such
Person a guaranteed return from the collection or disposition of Collateral,
or (xii) to the extent deemed appropriate by such Person, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist such Person in the
collection or disposition of any of the Collateral. Each Borrower and each Guarantor acknowledges
that the purpose of this Section is to provide non-exhaustive indications of what actions or
omissions by Administrative and Collateral Agent or any Lender would not be commercially
unreasonable in such Persons exercise of remedies against the Collateral and that other actions or
omissions by such Person shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section. Without limitation of the foregoing, nothing contained in this
Section shall be construed to grant any rights to any Borrower or any Guarantor or to impose any
duties on Administrative and Collateral Agent or any Lender that would not have been granted or
imposed by this Agreement or by applicable law in the absence of this Section.
(e) For the purpose of enabling Administrative and Collateral Agent and Lenders to exercise
the rights and remedies hereunder, each Borrower and each Guarantor hereby grants to Administrative
and Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank Product
Providers, to the extent assignable, an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to any Borrower or any Guarantor) to use, assign, license
or sublicense any of the trademarks, service-marks, trade names, business names, trade styles,
designs, logos and other source of business identifiers and other Intellectual Property and general
intangibles now owned or hereafter acquired by any Borrower or any Guarantor, wherever the same
maybe located, including in such license reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer programs used for the compilation or
printout thereof.
(f) Administrative and Collateral Agent may apply the cash proceeds of Collateral actually
received by it from any sale, lease, foreclosure or other disposition of the Collateral to payment
of the Obligations, in whole or in part and in such order as Administrative and Collateral Agent
may elect, whether or not then due. Borrowers and Guarantors shall remain liable to Administrative
and Collateral Agent and Lenders for the payment of any deficiency with interest at the highest
rate provided for herein and all costs and expenses of collection or enforcement, including
reasonable attorneys fees and legal expenses.
(g) Without limiting the foregoing, during the existence of a Default or Event of Default,
Administrative and Collateral Agent may, and upon the direction of the Required Lenders, shall,
without notice, (i) cease providing Loans or reduce the lending formulas or amounts of Loans
available to Borrowers, (ii) terminate any provision of this Agreement providing for any future
Loans to be provided by Administrative and Collateral Agent or Lenders to Borrowers and/or (iii)
establish such Reserves as Administrative and Collateral Agent determines without limitation or
restriction, notwithstanding anything to the contrary contained herein.
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SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1
Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver
.
(a) The validity, interpretation and enforcement of this Agreement and the other Financing
Agreements and any dispute arising out of the relationship between the parties hereto, whether in
contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New
York but excluding any principles of conflicts of law or other rule of law that would cause the
application of the law of any jurisdiction other than the laws of the State of New York.
(b) Borrowers, Guarantors, Agents and Lenders irrevocably consent and submit to the
non-exclusive jurisdiction of the State of New York and the State and Federal courts located in the
Borough of Manhattan, County of New York, State of New York, whichever Administrative and
Collateral Agent may elect, and waive any objection based on venue or forum non conveniens with
respect to any action instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to the dealings of the parties
hereto in respect of this Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter arising, and whether in
contract, tort, equity or otherwise, and agree that any dispute with respect to any such matters
shall be heard only in the courts described above (except that Administrative and Collateral Agent
or any Lender shall have the right to bring any action or proceeding against any Borrower, any
Guarantor or its or their property in the courts of any other jurisdiction which such Person deems
necessary or appropriate in order to realize on the Collateral or to otherwise enforce its rights
against any Borrower, any Guarantor or its or their property).
(c) Each Borrower and each Guarantor hereby waives personal service of any and all process
upon it and consents that all such service of process may be made by certified mail (return receipt
requested) directed to its address set forth herein and service so made shall be deemed to be
completed five (5) days after the same shall have been so deposited in the U.S. mails, or, at
Administrative and Collateral Agents or any Lenders option, by service upon any Borrower or any
Guarantor in any other manner provided under the rules of any such courts. Within thirty (30) days
after such service, such Borrower or such Guarantor shall appear in answer to such process, failing
which such Borrower or such Guarantor shall be deemed in default and judgment may be entered by
Administrative and Collateral Agent or any Lender against such Borrower or such Guarantor for the
amount of the claim and other relief requested.
106
(d) EACH BORROWER, EACH GUARANTOR, EACH AGENT AND EACH LENDER HEREBY WAIVE ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OF
THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND
WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. EACH BORROWER, EACH GUARANTOR, EACH AGENT AND
EACH LENDER HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART
OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) No Agent or any Lender shall have any liability to any Borrower or any Guarantor (whether
in tort, contract, equity or otherwise) for losses suffered by any Borrower or any Guarantor in
connection with, arising out of, or in any way related to the transactions or relationships
contemplated by this Agreement, or any act, omission or event occurring in connection herewith,
unless it is determined by a final and non-appealable judgment or court order binding on such
Person, that the losses were the result of acts or omissions constituting gross negligence or
willful misconduct of such Person. Except as prohibited by law, each Borrower and each Guarantor
waives any right which it may have to claim or recover in any litigation with any Agent or any
Lender any special, exemplary, punitive or consequential damages or any damages other than, or in
addition to, actual damages. Each Borrower and each Guarantor: (i) certifies that none of any
Agent, any Lender, or any of their respective representatives, agents or attorneys acting for or on
behalf of such Person has, prior to the date hereof, represented, expressly or otherwise, that such
Person would not, in the event of litigation, seek to enforce any of the waivers provided for in
this Agreement or any of the other Financing Agreements and (ii) acknowledges that in entering into
this Agreement and the other Financing Agreements, Agents and Lenders are relying upon, among other
things, the waivers and certifications set forth in this Section 11.1 and elsewhere herein and
therein.
11.2
Waiver of Notices
. Each Borrower and each Guarantor hereby expressly waives
demand, presentment, protest and notice of protest and notice of dishonor with respect to any and
all instruments and chattel paper, included in or evidencing any of the Obligations or the
Collateral, and any and all other demands and notices of any kind or nature whatsoever with respect
to the Obligations, the Collateral and this Agreement, except such as are expressly provided for
herein. No notice to or demand on any Borrower or any Guarantor which Administrative and
Collateral Agent or any Lender may elect to give shall entitle such Borrower or such Guarantor to
any other or further notice or demand in the same, similar or other circumstances.
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11.3
Amendments and Waivers
.
(a) Neither this Agreement nor any other Financing Agreement nor any terms hereof or thereof
may be amended, waived, discharged or terminated unless such amendment, waiver, discharge or
termination is in writing signed by Administrative and Collateral Agent and the Required Lenders or
at Administrative and Collateral Agents option, by Administrative and Collateral Agent with the
authorization of the Required Lenders, and as to amendments to any of the Financing Agreements
(other than with respect to any provision of Section 12 hereof), by any Borrower;
except
,
that
:
(i) without the prior written consent of Administrative and Collateral Agent and each Lender
other than the Sponsor Affiliated Lenders, no such amendment, waiver, discharge or termination
shall:
(A) amend, modify or waive any of the provisions of the introductory paragraph of Section
11.3(a) or any of the provisions of this Section 11.3(a)(i);
(B) reduce any percentage specified in the definition of Required Lenders or Required
Super-Majority Lenders or amend, modify or waive any provision of the definition of Pro Rata Share;
(C) consent to the assignment or transfer by any Borrower or any Guarantor of any of their
rights and obligations under this Agreement; or
(D) reduce the Interest Rate or any fees or indemnities related to the Revolving Loans or
Letter of Credit Accommodations, amend, modify or waive the provisions of Section 13.1(a) hereof or
otherwise extend the Final Maturity Date or the time of payment of principal of the Revolving
Loans, extend the time of payment of interest or any fees related to the Revolving Loans or reduce
the principal amount of any Revolving Loans or Letter of Credit Accommodations; or
(E) release all or substantially all of the Collateral;
(ii) without the prior written consent of Administrative and Collateral Agent and the Required
Super-Majority Lenders, no such amendment, waiver, discharge or termination shall:
(A) amend, modify or waive any of the provisions of this Section 11.3(a)(ii);
(B) release any Collateral (except as expressly required hereunder or under any of the other
Financing Agreements or applicable law and except as permitted under Section 12.11(b) hereof);
(C) amend, modify or waive any of the provisions of Sections 6.4, 12.8 or 12.11(a) hereof;
(D) increase (1) the advance rates set forth in the definition of Borrowing Base, (2) the
Revolving Loan Limit or the Revolving Loan Threshold Limit, or (3) the amount of Revolving Loans or
Letter of Credit Accommodations available to Borrowers at any time;
108
(E) amend, modify or waive any of the provisions of the definition of Borrowing Base or of any
of the defined terms referred to in the definition of Borrowing Base if the effect thereof
increases the amount of the Borrowing Base; or
(F) amend, modify or waive any provision of the definitions of, Blocked Account Activation
Period, Modified Adjusted Excess Availability, Compliance Period, Excess Availability or Qualified
Cash; and
(iii) Without the prior written consent of the Revolving Loan Lender directly affected
thereby, no such amendment, waiver, discharge or termination shall increase the Revolving Loan
Commitment of such Revolving Loan Lender over the amount thereof then in effect or provided
hereunder.
(b) Notwithstanding anything to the contrary contained in Section 11.3(a) above,
Administrative and Collateral Agent may, in its discretion and without the consent of the Lenders
or the other Agent, amend or otherwise modify the Borrowing Base, the Reserves or any of their
respective components which amendments or modifications have the effect of increasing the Borrowing
Base, decreasing the Reserves or otherwise increasing the amounts available for borrowing hereunder
to the extent that such amendment or modification is made to restore the Borrowing Base, Reserves
or other components thereof if the reason for such reduction or increase no longer exists, as
determined by Administrative and Collateral Agent.
(c) Agents and Lenders shall not, by any act, delay, omission or otherwise be deemed to have
expressly or impliedly waived any of its or their rights, powers and/or remedies unless such waiver
shall be in writing and signed as provided herein. Any such waiver shall be enforceable only to
the extent specifically set forth therein. A waiver by any Agent or any Lender of any right, power
and/or remedy on any one occasion shall not be construed as a bar to or waiver of any such right,
power and/or remedy which any Agent or any Lender would otherwise have on any future occasion,
whether similar in kind or otherwise.
(d) Notwithstanding anything to the contrary contained in Section 11.3(a) above, in the event
that Borrowers and Guarantors request that this Agreement or any other Financing Agreements be
amended or otherwise modified in a manner which would require the unanimous consent of all of the
Lenders and such amendment or other modification is agreed to by the Administrative and Collateral
Agent and the Required Lenders, then, Borrowers, Administrative and Collateral Agent and the
Required Lenders, may amend this Agreement without the consent of the Lender or Lenders which did
not agree to such amendment or other modification (collectively, the
Non-Consenting
Lenders
) to provide for (i) the termination of the Commitment of each of the Non-Consenting
Lenders, (ii) the addition to this Agreement of one or more other Lenders, or an increase in the
Commitment of one or more of the Required Lenders, so that the Commitments, after giving effect to
such amendment, shall be in the same aggregate amount as the Commitments immediately before giving
effect to such amendment, (iii) if any Loans are outstanding at the time of such amendment, the
making of such additional Loans by such new Lenders or Required Lenders, as the case may be, as may
be necessary to repay in full the outstanding Loans of the Non-Consenting Lenders immediately
before giving effect to such amendment, (iv) the payment of all interest, fees and other
Obligations payable or accrued in favor of the Non-Consenting Lenders and (v) such other
modifications to this Agreement as Borrowers and the Required Lenders may determine to be
appropriate.
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(e) The consent of Administrative and Collateral Agent shall be required for any amendment,
waiver or consent affecting the rights or duties of Administrative and Collateral
Agent hereunder or under any of the other Financing Agreements, in addition to the consent of
the Lenders otherwise required by this Section. The consent of the applicable Agent shall be
required for any amendment, waiver or consent affecting the rights or duties of such Agent
hereunder or under any of the other Financing Agreements, in addition to the consent of the Lenders
otherwise required by this Section. The exercise by Administrative and Collateral Agent of any of
its rights hereunder with respect to Reserves, Eligible Accounts, Eligible Inventory, Eligible
Domestic In-Transit Inventory, Eligible International In-Transit Inventory or Eligible Re-Load
Inventory shall not be deemed an amendment to the advance rates for purposes of this Section 11.3.
(f) Notwithstanding anything to the contrary contained in this Agreement or any other
Financing Agreement, in no event shall any Sponsor Affiliated Lender be entitled to (i) consent to
any amendment, modification, waiver, consent or other such action with respect to any of the terms
of this Agreement or any other Financing Agreement, (ii) require any Agent or other Lender to
undertake any action (or refrain from taking any action) with respect to this Agreement or any
other Financing Agreement or (iii) otherwise vote on any matter related to this Agreement or any
other Financing Agreement;
provided
,
however
, no amendment, modification or waiver
shall deprive any Sponsor Affiliate Lender of its Pro Rata Share of any payments to which the
Lenders are entitled to share on a pro rata basis hereunder.
(g) Notwithstanding anything to the contrary contained in Section 11.3(a) above,
Administrative and Collateral Agent may, in its discretion and without the consent of the Lenders
or the other Agents, amend this Agreement or any of the other Financing Agreements to add a Person
formed or acquired by any Borrower in connection with a Permitted Acquisition as a Borrower or a
Guarantor hereunder;
provided
,
however
, that any Person which is not organized or
incorporated under the laws of the United States of America, any state thereof or the District of
Columbia, shall not be added as a Borrower hereunder without the prior written consent of all
Lenders.
11.4
Confidentiality
. Each Lender agrees that it will use its reasonable best efforts
not to disclose, without the prior consent of Administrative Borrower, confidential information
with respect to any Borrower, any Guarantor or any of their respective Subsidiaries which is
furnished pursuant to this Agreement and which is specifically designated as confidential in
writing by Administrative Borrower or which such Lender would otherwise reasonably be expected to
know is confidential;
provided
,
that
, any Lender may disclose any such information
(a) to its employees, Affiliates, auditors or counsel, or to another Lender if the disclosing
Lender or such disclosing Lenders holding or parent company in its sole discretion determines that
any such party should have access to such information, (b) as has become generally available to the
public, (c) as may be required or appropriate in any report, statement or testimony submitted to
any Governmental Authority having or claiming to have jurisdiction over such Lender, (d) as may be
required or appropriate in response to any summons or subpoena or in connection with any
litigation, (e) in order to comply with any statute or regulation, and (f) to any prospective or
actual assignee or Participant in connection with any contemplated transfer or participation of any
of the Revolving Loan Commitments or any interest therein by such Lender,
provided
,
that
, such assignee or Participant has been generally advised as to the confidentiality of
any such confidential information and such assignee or Participant agrees in writing to abide by
the terms of this Section 11.4.
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11.5
Other Waivers
. Each Borrower and each Guarantor waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other than compulsory
counterclaims) in any action or proceeding with respect to this Agreement, the Obligations, the
Collateral or any matter arising therefrom or relating hereto or thereto. To the extent permitted
by applicable law, each Borrower and each Guarantor shall not assert, and each Borrower and each
Guarantor hereby waives, any claim against any Agent and/or any Lender, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any of the other Financing
Agreements or any undertaking or transaction contemplated hereby.
11.6
Indemnification
. Each Borrower and each Guarantor shall, jointly and severally,
indemnify and hold each Agent and each Lender, and its directors, agents, employees and counsel,
harmless from and against any and all losses, claims, damages, liabilities, reasonable costs or
expenses (other than Excluded Taxes or any other Taxes for which Borrowers are not obligated to
provide indemnification pursuant to Section 6.5 hereof) imposed on, incurred by or asserted against
any of them in connection with any litigation, investigation, claim or proceeding commenced or
threatened related to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any undertaking or
proceeding related to any of the transactions contemplated hereby or any act, omission, event or
transaction related or attendant thereto, including amounts paid in settlement, court costs, and
the reasonable fees and expenses of counsel, but excluding any losses, claims, damages,
liabilities, costs or expenses arising from the gross negligence or willful misconduct of any
indemnified Person and excluding any indirect, consequential or punitive damages. To the extent
that the undertaking to indemnify, pay and hold harmless set forth in this Section may be
unenforceable because it violates any law or public policy, Borrowers and Guarantors shall pay the
maximum portion which it is permitted to pay under applicable law to Agents and Lenders in
satisfaction of indemnified matters under this Section. The foregoing indemnity shall survive the
payment of the Obligations and the termination or non-renewal of this Agreement.
SECTION 12. THE ADMINISTRATIVE AND COLLATERAL AGENT
12.1
Appointment; Powers and Immunities
.
(a) Each Lender hereby, and each Bank Product Provider by providing any Bank Products to
Borrowers or Guarantors, irrevocably designates, appoints and authorizes Wachovia to act as
Administrative and Collateral Agent hereunder and under the other Financing Agreements with such
powers as are specifically delegated to Administrative and Collateral Agent by the terms of this
Agreement and of the other Financing Agreements, together with such other powers as are reasonably
incidental thereto. Administrative and Collateral Agent: (i) shall have no duties or
responsibilities except those expressly set forth in this Agreement and in the other Financing
Agreements, and shall not by reason of this Agreement or any other Financing Agreement be a trustee
or fiduciary for any Lender or Bank Product Provider; (ii) shall not be responsible to Lenders or
Bank Product Providers for any recitals, statements, representations or warranties contained in
this Agreement or in any other Financing Agreement, or in any certificate or other document
referred to or provided for in, or received by any of them under, this Agreement or any other
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Financing Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Financing Agreement
or any other document referred to or provided for herein or therein or for any failure by any
Borrower or any Guarantor or any other Person to perform any of its obligations hereunder or
thereunder; and (iii) shall not be responsible to Lenders or Bank Product Providers for any action
taken or omitted to be taken by it hereunder or under any other Financing Agreement or under any
other document or instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful misconduct as determined by a
final non-appealable judgment of a court of competent jurisdiction. Administrative and Collateral
Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith. Administrative
and Collateral Agent may deem and treat the payee of any note as the holder thereof for all
purposes hereof unless and until the assignment thereof pursuant to an agreement (if and to the
extent permitted herein) in form and substance satisfactory to Administrative and Collateral Agent
shall have been delivered to and acknowledged by Administrative and Collateral Agent.
(b) Without prejudice to the foregoing paragraph, each Lender, each Bank Product Provider by
providing any Bank Products to BlueLinx, and the Administrative and Collateral Agent (collectively
the Creditors for purposes of this Section 12.1(b) only), hereby designate and appoint Wachovia
(and hereby reiterate such designation and appointment made in the Original Loan Agreement in
respect of Congress Financial Corporation, a predecessor of Wachovia (
Congress
)) as the
person holding the power of attorney (
fondé de pouvoir
) of the Creditors as contemplated under
Article 2692 of the Civil Code of Quebec, to enter into, to take and to hold on their behalf, and
for their benefit, a deed of hypothec (
Deed of Hypothec
) executed by BlueLinx under the
laws of the Province of Quebec and creating a hypothec (security interest) on BlueLinxs Collateral
located in such Province and to exercise such powers and duties which are conferred upon Wachovia
under such deed. Each Creditor hereby additionally designates and appoints Wachovia (and hereby
reiterate such designation and appointment made in the Original Loan Agreement in respect of
Congress) as agent and custodian for and on behalf of each of them (i) to hold and to be the sole
registered holder of any bond (
Bond
) issued under the Deed of Hypothec, the whole
notwithstanding Section 32 of the
Act respecting the special powers of legal persons
(Quebec) or
any other applicable law, and (ii) to enter into, to take and to hold on their behalf, and for
their benefit, a movable hypothec (
Movable Hypothec
) executed by BlueLinx under the laws
of the Province of Quebec and pledging the Bond as security for the payment and performance of the
Obligations (which include any and all obligations under the Deed of Hyphothec). In this respect,
(m) Wachovia, as agent and custodian of the Creditors, shall keep a record indicating the names and
addresses of, and the pro rata portion of the Obligations and indebtedness secured by the Movable
Hypothec, owing to the Persons for and on behalf of whom the Bond is so held from time to time, and
(n) each Creditor will be entitled to the benefits of any Collateral of BlueLinx charged under the
Deed of Hypothec and the Movable Hypothec and will participate in the proceeds of realization of
any such Collateral, the whole in accordance with the terms hereof. Wachovia, in such aforesaid
capacities shall (x) have the sole and exclusive right and authority to exercise, except as may be
otherwise specifically restricted by the terms hereof, all rights and remedies given to Wachovia
with respect to the Collateral under the Deed of Hypothec and Movable Hypothec, applicable law or
otherwise, and (y) benefit from and be subject to all provisions hereof with respect to the
Administrative and Collateral Agent
mutatis mutandis
, including, without limitation, all such
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provisions with respect to the liability or responsibility to and
indemnification by the Lenders and Bank Product Providers. Any Person who becomes a Lender or a
Bank Product Provider, as the case may be, shall be deemed to have consented to and confirmed
Wachovia as the person holding the power of attorney (
fondé de pouvoir
) and as the agent and
custodian as aforesaid and to have ratified, as of the date it becomes a Lender or a Bank Product
Provider, as the case may be, all actions taken by Wachovia in such capacities. Wachovia shall be
entitled to delegate from time to time any of its powers or duties under the Deed of Hypothec and
the Movable Hypothec to any Person and on such terms and conditions as Wachovia may determine from
time to time. It is hereby understood that (a) the Deed of Hypothec, the Bond and Movable Hypothec
executed by BlueLinx prior to the date hereof in favor of Congress continue to be valid and
enforceable in accordance with their respective terms and remain in full force and effect, and all
reference therein to Congress Financial Corporation shall be deemed to refer to Wachovia, and (b)
no novation of any kind has occurred in connection with any of the obligations secured by the Deed
of Hypothec nor the Movable Hypothec, any such novation being hereby expressly disclaimed.
12.2
Reliance By Administrative and Collateral Agent
. Administrative and Collateral
Agent shall be entitled to rely upon any certification, notice or other communication (including
any thereof by telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants and other experts selected by
Administrative and Collateral Agent. As to any matters not expressly provided for by this
Agreement or any other Financing Agreement, Administrative and Collateral Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance
with instructions given by the Required Lenders or all of Lenders as is required in such
circumstance, and such instructions of such Lenders and any action taken or failure to act pursuant
thereto shall be binding on all Lenders.
12.3
Events of Default
.
(a) Administrative and Collateral Agent shall not be deemed to have knowledge or notice of the
occurrence of an Event of Default or other failure of a condition precedent to the Loans hereunder,
unless and until Administrative and Collateral Agent has received written notice from a Lender, any
Borrower or any Guarantor specifying such Event of Default or any unfulfilled condition precedent,
and stating that such notice is a Notice of Default or Failure of Condition. In the event that
Administrative and Collateral Agent receives such a notice, Administrative and Collateral Agent
shall give prompt notice thereof to the Lenders. Administrative and Collateral Agent shall
(subject to Section 12.7) take such action with respect to any such Event of Default or failure of
condition precedent as shall be directed by the Required Lenders;
provided
,
that
,
unless and until Administrative and Collateral Agent shall have received such directions,
Administrative and Collateral Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to or by reason of such Event of Default or failure
of condition precedent, as it shall deem advisable in the best interest of Lenders. Without
limiting the foregoing, and notwithstanding the existence or occurrence and continuance of an Event
of Default or any other failure to satisfy any of the conditions precedent set forth in Section 4
of this Agreement to the contrary, subject to the provisions of Section 12.8 and Section 12.11(a),
Administrative and Collateral Agent may, but
shall have no obligation to, continue to provide Loans for the ratable account and risk of
Lenders from time to time if Administrative and Collateral Agent believes providing such Loans is
in the best interests of Lenders.
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(b) Except with the prior written consent of Administrative and Collateral Agent, no Lender
may assert or exercise any enforcement right or remedy in respect of the Loans or other
Obligations, as against any Borrower or any Guarantor or any of the Collateral or other property of
any Borrower or any Guarantor.
12.4
Wachovia in its Individual Capacity
. With respect to its Revolving Loan
Commitment and the Loans made and Letter of Credit Accommodations issued or caused to be issued by
it (and any successor acting as Administrative and Collateral Agent), so long as Wachovia shall be
a Lender hereunder, it shall have the same rights and powers hereunder as any other Lender and may
exercise the same as though it were not acting as Administrative and Collateral Agent, and the term
Lender or Lenders shall, unless the context otherwise indicates, include Wachovia in its
individual capacity as Lender hereunder. Wachovia (and any successor acting as Administrative and
Collateral Agent) and its Affiliates may (without having to account therefor to any Lender) lend
money to, make investments in and generally engage in any kind of business with any Borrower or any
Guarantor (and any of their respective Subsidiaries or Affiliates) as if it were not acting as
Administrative and Collateral Agent, and Wachovia and its Affiliates may accept fees and other
consideration from any Borrower or any Guarantor for services in connection with this Agreement or
otherwise without having to account for the same to Lenders.
12.5
Indemnification
. Lenders agree to indemnify Administrative and Collateral Agent
(to the extent not reimbursed by Borrowers and Guarantors hereunder and without limiting the
Obligations of any Borrower or any Guarantor hereunder) ratably, in accordance with their Pro Rata
Shares, for any and all claims of any kind and nature whatsoever that may be imposed on, incurred
by or asserted against Administrative and Collateral Agent (including by any Lender) arising out of
or by reason of any investigation in or in any way relating to or arising out of this Agreement or
any other Financing Agreement or any other documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby (including the costs and expenses that
Administrative and Collateral Agent is obligated to pay hereunder) or the enforcement of any of the
terms hereof or thereof or of any such other documents,
provided
,
that
, no Lender
shall be liable for any of the foregoing to the extent it arises from the gross negligence or
willful misconduct of the party to be indemnified as determined by a final non-appealable judgment
of a court of competent jurisdiction.
12.6
Non-Reliance on Agents and Other Lenders
. Each Lender agrees that it has,
independently and without reliance on any Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own credit analysis of Borrowers and
Guarantors and has made its own decision to enter into this Agreement and that it will,
independently and without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any of the other Financing
Agreements. Agents shall not be required to keep themselves informed as to the performance or
114
observance by any Borrower or any Guarantor of any term or provision of this Agreement or any of the other Financing Agreements or any other document referred to or
provided for herein or therein or to inspect the properties or books of any Borrower or any
Guarantor. Agents will use reasonable efforts to provide Lenders with any information received by
Agents from any Borrower or any Guarantor which is required to be provided to Lenders hereunder and
with a copy of any Notice of Default or Failure of Condition received by any Agent from any
Borrower, any Guarantor or any Lender;
provided
,
that
, no Agent shall be liable to
any Lender for any failure to do so, except to the extent that such failure is attributable to such
Agents own gross negligence or willful misconduct as determined by a final non-appealable judgment
of a court of competent jurisdiction. Except for notices, reports and other documents expressly
required to be furnished to Lenders by any Agent hereunder, no Agent shall have any duty or
responsibility to provide any Lender with any other credit or other information concerning the
affairs, financial condition or business of any Borrower or any Guarantor that may come into the
possession of such Agent.
12.7
Failure to Act
. Except for action expressly required of Administrative and
Collateral Agent hereunder and under the other Financing Agreements, Administrative and Collateral
Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder
unless it shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such action.
12.8
Additional Revolving Loans
. Administrative and Collateral Agent shall not make
any Revolving Loans or provide any Letter of Credit Accommodations to Borrowers on behalf of
Lenders intentionally and with actual knowledge that such Revolving Loans or Letter of Credit
Accommodations would cause the aggregate amount of the total outstanding Revolving Loans and Letter
of Credit Accommodations to Borrowers to exceed the Borrowing Base, without the prior consent of
the Required Super-Majority Lenders,
except
,
that
, Administrative and Collateral
Agent may make such additional Revolving Loans or provide such additional Letter of Credit
Accommodations on behalf of Revolving Loan Lenders, intentionally and with actual knowledge that
such Revolving Loans or Letter of Credit Accommodations will cause the total outstanding Revolving
Loans and Letter of Credit Accommodations to Borrowers exceed the Borrowing Base as Administrative
and Collateral Agent may deem necessary or advisable in its discretion,
provided
,
that
, (a) without the consent of the Required Super-Majority Lenders: (i) the total
principal amount of the additional Revolving Loans or additional Letter of Credit Accommodations to
Borrowers which Administrative and Collateral Agent may make or provide after obtaining such actual
knowledge that the aggregate principal amount of the Revolving Loans equal or exceed the Borrowing
Base, together with the Special Agent Advances then outstanding, shall not exceed the amount equal
to ten (10%) percent of the Borrowing Base at the time and shall not cause the total principal
amount of the Revolving Loans and Letter of Credit Accommodations to exceed the Revolving Loan
Limit and (ii) Administrative and Collateral Agent shall not make any such additional Revolving
Loans or Letter of Credit Accommodations more than ninety (90) days from the date of the first such
additional Revolving Loans or Letter of Credit Accommodations and (b) at the direction of the
Required Lenders, Administrative and Collateral Agent shall cease making such additional Revolving
Loans or Letter of Credit Accommodations. Each Revolving Lender shall be obligated to pay
Administrative and Collateral Agent the amount of its Pro Rata Share of any such additional
Revolving Loans or
Letter of Credit Accommodations provided that Administrative and Collateral Agent is acting in
accordance with the terms of this Section 12.8.
115
12.9
Concerning the Collateral and the Related Financing Agreements
. Each Lender
authorizes and directs Administrative and Collateral Agent to enter into this Agreement and the
other Financing Agreements relating to the Collateral for its ratable benefit. Each Lender agrees
that any action taken by Administrative and Collateral Agent or Required Lenders in accordance with
the terms of this Agreement or the other Financing Agreements relating to the Collateral, and the
exercise by Administrative and Collateral Agent or Required Lenders of their respective powers set
forth therein or herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders.
12.10
Field Audits; Examination Reports and other Information; Disclaimer by Lenders
.
By signing this Agreement, each Lender:
(a) is deemed to have requested that Administrative and Collateral Agent furnish Lender,
promptly after it becomes available, a copy of each field audit or examination report and a weekly
report with respect to the Borrowing Base prepared by Administrative and Collateral Agent (each
field audit or examination report and weekly report with respect to the Borrowing Base being
referred to herein as a
Report
and collectively, the
Reports
);
(b) expressly agrees and acknowledges that Administrative and Collateral Agent (i) does not
make any representation or warranty as to the accuracy of any Report, or (ii) shall not be liable
for any information contained in any Report;
provided
,
that
, nothing contained in
this Section 12.10 shall be construed to limit the liability of Administrative and Collateral Agent
under Section 12.1(c) hereof in the event of the gross negligence or willful misconduct of
Administrative and Collateral Agent as determined pursuant to a final non-appealable order of a
court of competent jurisdiction;
(c) expressly agrees and acknowledges that the Reports are not comprehensive audits or
examinations, that Administrative and Collateral Agent or other party performing any audit or
examination will inspect only specific information regarding Borrowers and Guarantors and will rely
significantly upon Borrowers and Guarantors books and records, as well as on representations of
Borrowers and Guarantors personnel; and
(d) agrees to keep all Reports confidential and strictly for its internal use in accordance
with the terms of Section 11.3(a) hereof, and not to distribute or use any Report in any other
manner.
116
12.11
Collateral Matters
.
(a) Administrative and Collateral Agent may, at its option, from time to time, at any time on
or after an Event of Default and for so long as the same is continuing or upon any other failure of
a condition precedent to the Loans hereunder, make such disbursements and advances (
Special
Agent Advances
) which Administrative and Collateral Agent, in its reasonable credit judgment,
deems necessary or desirable either (i) to preserve or protect the Collateral or any portion
thereof or (ii) to pay any other amount chargeable to Borrowers or Guarantors pursuant to the terms
of this Agreement consisting of costs, fees and expenses and
payments to any issuer of Letter of Credit Accommodations;
provided
that
,
without the consent of the Required Super-Majority Lenders, in no event shall the aggregate amount
of Special Agent Advances, together with the Revolving Loans and Letter of Credit Accommodations
made pursuant to Section 12.8 hereof, exceed an amount equal to ten percent (10%) of the Borrowing
Base at any time or cause the total principal amount of the Revolving Loans and Letter of Credit
Accommodations to exceed the Revolving Loan Limit. Special Agent Advances shall be repayable on
demand and be secured by the Collateral. Administrative and Collateral Agent shall notify each
Lender and Administrative Borrower in writing of each such Special Agent Advance, which notice
shall include a description of the purpose of such Special Agent Advance. Without limitation of
its obligations pursuant to Section 6.10, each Lender agrees that it shall make available to
Administrative and Collateral Agent, upon Administrative and Collateral Agents demand, in
immediately available funds, the amount equal to such Lenders Pro Rata Share of each such Special
Agent Advance. If such funds are not made available to Administrative and Collateral Agent by such
Lender, Administrative and Collateral Agent shall be entitled to recover such funds, on demand from
such Lender together with interest thereon, for each day from the date such payment was due until
the date such amount is paid to Administrative and Collateral Agent at the Interest Rate then
payable by Borrowers in respect of the Revolving Loans as set forth in Section 3.1 hereof.
(b) Lenders hereby irrevocably authorize Administrative and Collateral Agent, at its option
and in its discretion to release any security interest in, mortgage or lien upon, any of the
Collateral: (i) upon termination of the Revolving Loan Commitments and payment and satisfaction of
all of the Obligations and delivery of cash collateral to the extent required under Section 13.1
hereof, (ii) constituting property being sold or disposed of in compliance with the applicable
terms of this Agreement or any consent granted in connection with this Agreement, (iii)
constituting property in which no Borrower or any Guarantor owned an interest at the time the
security interest, mortgage or lien was granted or at any time thereafter, (iv) having a value of
less than $25,000,000 or (v) in accordance with the terms of Sections 11.3(a)(i)(E) or
11.3(a)(ii)(B). Except as provided above, Administrative and Collateral Agent will not release any
security interest in, mortgage or lien upon, any of the Collateral without the prior written
authorization of all of Lenders (and any Lender may require that the proceeds from any sale or
other disposition of the Collateral to be so released be applied to the Obligations in a manner
satisfactory to such Lender). Upon request by Administrative and Collateral Agent at any time,
Lenders will promptly confirm in writing Administrative and Collateral Agents authority to release
particular types or items of Collateral pursuant to this Section.
(c) Without in any manner limiting Administrative and Collateral Agents authority to act
without any specific or further authorization or consent by the Required Lenders, each Lender
agrees to confirm in writing, upon request by Administrative and Collateral Agent, the authority to
release Collateral conferred upon Administrative and Collateral Agent under this Section.
Administrative and Collateral Agent shall (and is hereby irrevocably authorized by Lenders to)
execute such documents as may be necessary to evidence the release of the security interest,
mortgage or liens granted to Administrative and Collateral Agent, for itself and the ratable
benefit of the Lenders and the Bank Product Providers, upon any Collateral to the extent set forth
above;
provided
,
that
, (i) Administrative and Collateral Agent shall not be
required to execute any such document on terms which, in Administrative and Collateral Agents
opinion, would expose Administrative and Collateral Agent to liability or create any obligations or
entail
any consequence other than the release of such security interest, mortgage or liens without
recourse or warranty and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any security interest, mortgage or lien upon (or obligations of any Borrower or any
Guarantor in respect of) the Collateral retained by such Borrower or such Guarantor.
117
(d) Except as expressly required under the terms of this Agreement, Administrative and
Collateral Agent shall have no obligation whatsoever to any Lender or any other Person to
investigate, confirm or assure that the Collateral exists or is owned by any Borrower or any
Guarantor or is cared for, protected or insured or has been encumbered, or that any particular
items of Collateral meet the eligibility criteria applicable in respect of the Loans hereunder, or
whether any particular reserves are appropriate, or that the liens and security interests granted
to Administrative and Collateral Agent herein or pursuant hereto or otherwise have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to Administrative and Collateral Agent in this Agreement or in any of the
other Financing Agreements, it being understood and agreed that in respect of the Collateral, or
any act, omission or event related thereto, Administrative and Collateral Agent may act in any
manner it may deem appropriate, in its discretion, given Administrative and Collateral Agents own
interest in the Collateral as a Lender and that Administrative and Collateral Agent shall have no
duty or liability whatsoever to any other Lender.
12.12
Agency for Perfection
. Administrative and Collateral Agent and each Lender
hereby appoints each Lender as agent for the purpose of perfecting the security interests in and
liens upon the Collateral of Administrative and Collateral Agent, for itself and the ratable
benefit of the Lenders and the Bank Product Providers, in assets which, in accordance with Article
9 of the UCC can be perfected only by possession. Should any Lender obtain possession of any such
Collateral, such Lender shall notify Administrative and Collateral Agent thereof, and, promptly
upon Administrative and Collateral Agents request therefor shall deliver such Collateral to
Administrative and Collateral Agent or in accordance with Administrative and Collateral Agents
instructions. Each Lender confirms the appointment by Administrative and Collateral Agent of any
Person as its or the Lenders agent for the purpose of perfecting the security interests granted
under this Agreement and the other Financing Agreements.
12.13
Failure to Respond Deemed Consent
. In the event any Lenders consent is
required pursuant to the provisions of this Agreement and such Lender does not respond to any
request by Administrative and Collateral Agent for such consent within ten (10) days after such
request is made to such Lender, such failure to respond shall be deemed a consent.
12.14
Legal Representation of Agents
. In connection with the negotiation, drafting,
and execution of this Agreement and the other Financing Agreements, or in connection with future
legal representation relating to loan administration, amendments, modifications, waivers, or
enforcement of remedies, Mayer, Brown, Rowe & Maw LLP (
MBR&M
) only has represented and
only shall represent Wachovia in its capacity as an Agent and as a Lender. Each other Lender
hereby acknowledges that MBR&M does not represent it in connection with any such matters.
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SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1
Term
.
(a) This Agreement and the other Financing Agreements shall become effective as of the date
set forth on the first page hereof and shall continue in full force and effect for a term ending on
the Final Maturity Date, unless sooner terminated pursuant to the terms hereof. Borrowers may,
upon not less than ten (10) days prior written notice to Administrative and Collateral Agent,
terminate this Agreement and the other Financing Agreements. Upon the effective date of
termination of this Agreement and the other Financing Agreements, Borrowers shall pay to
Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank
Product Providers, in full, all outstanding and unpaid Obligations and shall furnish cash
collateral to Administrative and Collateral Agent, (or at Administrative and Collateral Agents
option, a letter of credit issued for the account of Borrowers and at Borrowers expense, in form
and substance satisfactory to Administrative and Collateral Agent, by an issuer acceptable to
Administrative and Collateral Agent and payable to Administrative and Collateral Agent as
beneficiary, for itself and the ratable benefit of the Lenders and the Bank Product Providers) in
such amounts as Administrative and Collateral Agent determines are reasonably necessary to secure
(or reimburse) Administrative and Collateral Agent and Lenders from loss, cost, damage or expense,
including attorneys fees and legal expenses, in connection with any contingent Obligations,
including issued and outstanding Letter of Credit Accommodations and checks or other payments
provisionally credited to the Obligations and/or as to which Administrative and Collateral Agent
and Lenders have not yet received final and indefeasible payment and any continuing obligations of
Administrative and Collateral Agent or any Lender to any bank, financial institution or other
Person under or pursuant to any Deposit Account Control Agreement or Investment Property Control
Agreement. Such payments in respect of the Obligations and cash collateral shall be remitted by
wire transfer in Federal funds to such bank account of Administrative and Collateral Agent, as
Administrative and Collateral Agent may, in its discretion, designate in writing to Administrative
Borrower for such purpose. Interest shall be due until and including the next Business Day, if the
amounts so paid by Borrowers to the bank account designated by Administrative and Collateral Agent
are received in such bank account later than 12:00 noon, New York time.
(b) No termination of this Agreement or the other Financing Agreements shall relieve or
discharge any Borrower or any Guarantor of its duties, obligations and covenants under this
Agreement or the other Financing Agreements until all Obligations due and owing have been fully and
finally discharged and paid (or cash collateralized in accordance with the terms of this
Agreement), and the continuing security interest of Administrative and Collateral Agent, for itself
and the ratable benefit of the Lenders and the Bank Product Providers, in the Collateral and the
rights and remedies of Administrative and Collateral Agent and Lenders hereunder, under the other
Financing Agreements and applicable law, shall remain in effect until all such Obligations due and
owing have been fully and finally discharged and paid (or cash collateralized in accordance with
the terms of this Agreement). Accordingly, each Borrower and each Guarantor waives any rights
which it may have under the UCC to demand the filing of termination statements with respect to the
Collateral, and neither Administrative and Collateral Agent nor any Lender shall be required to
send such termination statements to any Borrower or any Guarantor, or to file them with any filing
office, unless and until this Agreement is
terminated in accordance with its terms and all of the Obligations due and owing are paid (or
cash collateralized in accordance with the terms of this Agreement) and satisfied in full in
immediately available funds.
119
13.2
Interpretive Provisions
.
(a) All terms used herein which are defined in Article 1 or Article 9 of the UCC shall have
the meanings given therein unless otherwise defined in this Agreement.
(b) All references to the plural herein shall also mean the singular and to the singular shall
also mean the plural unless the context otherwise requires.
(c) All references to any party hereto pursuant to the definitions set forth in the recitals
hereto, or to any other person herein, shall include their respective successors and assigns.
(d) The words hereof, herein, hereunder, this Agreement and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not any particular
provision of this Agreement and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(e) The word including when used in this Agreement shall mean including, without
limitation.
(f) All references to the term good faith used herein when applicable to any Agent or any
Lender shall mean, notwithstanding anything to the contrary contained herein or in the UCC, honesty
in fact in the conduct or transaction concerned. Borrowers and Guarantors shall have the burden of
proving any lack of good faith on the part of any Agent or any Lender alleged by any Borrower or
any Guarantor at any time.
(g) An Event of Default shall exist or continue or be continuing until such Event of Default
is waived in accordance with Section 11.3 or is cured, if such Event of Default is capable of being
cured as determined by Administrative and Collateral Agent.
(h) Any accounting term used in this Agreement shall have, unless otherwise specifically
provided herein, the meaning customarily given in accordance with GAAP, and all financial
computations hereunder shall be computed unless otherwise specifically provided herein, in
accordance with GAAP as consistently applied and using the same method for inventory valuation as
used in the preparation of the financial statements of Borrowers most recently received by
Administrative and Collateral Agent.
(i) In the computation of periods of time from a specified date to a later specified date, the
word from means from and including, the words to and until each mean to but excluding and
the word through means to and including.
120
(j) Unless otherwise expressly provided herein, (i) references herein to any agreement,
document or instrument shall be deemed to include all subsequent amendments, modifications,
supplements, extensions, renewals, restatements or replacements with respect
thereto, but only to the extent the same are not prohibited by the terms hereof or of any
other Financing Agreement, and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending, replacing, recodifying,
supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for convenience of reference only and
shall not affect the interpretation of this Agreement.
(l) This Agreement and other Financing Agreements may use several different limitations, tests
or measurements to regulate the same or similar matters. All such limitations, tests and
measurements are cumulative and shall each be performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements are the result of negotiations among and
have been reviewed by counsel to Agents and Lenders and the other parties, and are the products of
all parties. Accordingly, this Agreement and the other Financing Agreements shall not be construed
against Agents or Lenders merely because of their involvement in their preparation.
13.3
Notices
. All notices, requests and demands hereunder shall be in writing and
deemed to have been given or made: if delivered in person, immediately upon delivery; if by
facsimile transmission, immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next Business Day, one (1)
Business Day after sending; and if by certified mail, return receipt requested, five (5) days after
mailing. All notices, requests and demands upon the parties are to be given to the following
addresses (or to such other address as any party may designate by notice in accordance with this
Section):
|
|
|
If to any Borrower
or any Guarantor:
|
|
BlueLinx Corporation
|
|
|
4100 Wildwood Parkway
|
|
|
Atlanta, Georgia 30339
|
|
|
Attention: David Morris
|
|
|
Telephone No.: (770) 221-2668
|
|
|
Telecopy No.: (770) 221-2090
|
|
|
|
with a copy to:
|
|
Schulte, Roth & Zabel LLP
|
|
|
919 Third Avenue
|
|
|
New York, New York 10022
|
|
|
Attention: Stuart D. Freedman, Esq.
|
|
|
Daniel V. Oshinsky, Esq.
|
|
|
Telephone No.: (212) 756-2000
|
|
|
Telecopy No.: (212) 593-5955
|
|
|
|
and a copy to:
|
|
Cerberus Capital Management, LP
|
|
|
299 Park Avenue, Floors 21-23
|
|
|
New York, New York 10171
|
|
|
Attention: Lenard Tessler
|
|
|
Telephone No.: (212) 891-2100
|
|
|
Telecopy No.: (212) 909-1409
|
121
|
|
|
If to Agents:
|
|
Wachovia Bank, National Association
|
|
|
1133 Avenue of the Americas
|
|
|
New York, New York 10036
|
|
|
Attention: Portfolio Manager
|
|
|
Telephone No.: (212) 545-4200
|
|
|
Telecopy No.: (212) 545-4283
|
|
|
|
with a copy to:
|
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Mayer, Brown, Rowe & Maw LLP
|
|
|
350 South Grand Avenue, 25
th
Floor
|
|
|
Los Angeles, California 90071
|
|
|
Attention: Marshall C. Stoddard, Jr., Esq.
|
|
|
Telephone No.: (213) 229-9500
|
|
|
Telecopy No.: (213) 625-0248
|
13.4
Partial Invalidity
. If any provision of this Agreement is held to be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate this Agreement as a whole,
but this Agreement shall be construed as though it did not contain the particular provision held to
be invalid or unenforceable and the rights and obligations of the parties shall be construed and
enforced only to such extent as shall be permitted by applicable law.
13.5
Successors
. This Agreement, the other Financing Agreements and any other
document referred to herein or therein shall be binding upon and inure to the benefit of and be
enforceable by Agents, Lenders, Bank Product Providers, Borrowers, Guarantors and their respective
successors and assigns, except that no Borrower or Guarantor may assign its rights under this
Agreement, the other Financing Agreements and any other document referred to herein or therein
without the prior written consent of Administrative and Collateral Agent and Lenders. No Lender
may assign its rights and obligations under this Agreement (or any part thereof) without the prior
written consent of all Lenders other than the Sponsor Affiliated Lenders and Administrative and
Collateral Agent, except as permitted under Section 13.6 hereof. Any purported assignment by a
Lender without such prior express consent or compliance with Section 13.6 where applicable, shall
be void. The terms and provisions of this Agreement and the other Financing Agreements are for the
purpose of defining the relative rights and obligations of Borrowers, Guarantors, Agents and
Lenders with respect to the transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement or any of the other Financing
Agreements.
122
13.6
Assignments; Participations
.
(a) Each Lender may (i) assign all or a portion of its rights and obligations under this
Agreement (including, without limitation, a portion of its Revolving Loan Commitment, the Loans
owing to it and its rights and obligations as a Lender with respect to Letters of Credit
Accommodations) and the other Financing Agreements: (A) to its parent company and/or any Affiliate
of such Lender which is at least fifty (50%) percent owned by such
Lender or its parent company or to one or more Lenders or (B) in connection with any merger,
consolidation, sale, transfer or other disposition of all or any substantial portion of the
business or loan portfolio of such Lender; or (ii) assign all, or if less than all a portion equal
to at least $10,000,000 in the aggregate for the assigning Lender or assigning Lenders, of such
rights and obligations under this Agreement to one or more Eligible Transferees, each of which
assignees shall become a party to this Agreement as a Lender by execution of an Assignment and
Acceptance;
provided
,
that
, (A) the consent of Administrative and Collateral Agent
shall be required in connection with any assignment to an Eligible Transferee pursuant to clause
(ii) above, (B) if such Eligible Transferee is not a bank, Administrative and Collateral Agent
shall receive a representation in writing by such Eligible Transferee that either (1) no part of
its acquisition of its Loans is made out of assets of any employee benefit plan, or (2) after
consultation, in good faith, with Borrowers and provision by Borrowers of such information as may
be reasonably requested by such Eligible Transferee, the acquisition and holding of such Revolving
Loan Commitments and Loans does not constitute a non-exempt prohibited transaction under Section
406 of ERISA and Section 4975 of the Code, or (3) such assignment is an insurance company general
account, as such term is defined in the Department of Labor Prohibited Transaction Class Exemption
95.60 (issued July 12, 1995) (
PTCE 95-60
), and, as of the date of the assignment, there
is no employee benefit plan with respect to which the aggregate amount of such general accounts
reserves and liabilities for the contracts held by or on behalf of such employee benefit plan and
all other employee benefit plans maintained by the same employer (and affiliates thereof as
defined in Section V(a)(1) of PTCE 95-60) or by the same employee organization (in each case
determined in accordance with the provisions of PTCE 95-60) exceeds ten (10%) percent of the total
reserves and liabilities of such general account (as determined under PTCE 95-60) (exclusive of
separate account liabilities) plus surplus as set forth in the National Association of Insurance
Commissioners Annual Statement filed with the state of domicile of such Eligible Transferee, and
(C) such transfer or assignment will not be effective until recorded by Administrative and
Collateral Agent on the Register and Administrative and Collateral Agent has received, for its own
account, payment of a processing fee from the assigning Lender or the assignee in the amount of
$5,000. As used in this Section, the term employee benefit plan shall have the meaning assigned
to it in Title I of ERISA and shall also include a plan as defined in Section 4975(e)(1) of the
Code.
(b) Administrative and Collateral Agent shall maintain a register of the names and addresses
of Lenders, their Revolving Loan Commitments and the principal amount of their Loans (the
Register
). Administrative and Collateral Agent shall also maintain a copy of each
Assignment and Acceptance delivered to and accepted by them and shall modify the Register to give
effect to each Assignment and Acceptance. Upon their receipt of each Assignment and Acceptance,
Administrative and Collateral Agent will give prompt notice thereof to Lenders and deliver to each
of them a copy of the executed Assignment and Acceptance. The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and Borrowers, Guarantors, Agents
and Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for inspection by Borrowers,
Guarantors and any Lender at any reasonable time and from time to time upon reasonable prior
notice.
123
(c) Upon such execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, (i) the assignee thereunder shall
be a party hereto and to the other Financing Agreements and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations (including, without limitation, the obligation to participate in Letter of
Credit Accommodations) of a Lender hereunder and thereunder;
provided
,
however
, if
at the time of such assignment, such assigning Lender is not then entitled to receive any amounts
pursuant to Section 6.5 hereof, Borrowers and Guarantors shall not be obligated to make any
payments to such assignee under Section 6.5 hereof if the assignee would otherwise be entitled to
receive such amounts at the time of such assignment and (ii) the assigning Lender shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights and be released from its obligations under this Agreement.
(d) By execution and delivery of an Assignment and Acceptance, the assignor and assignee
thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the other Financing
Agreements or the execution, legality, enforceability, genuineness, sufficiency or value of this
Agreement or any of the other Financing Agreements furnished pursuant hereto, (ii) the assigning
Lender makes no representation or warranty and assumes no responsibility with respect to the
financial condition of any Borrower, any Guarantor or any of their respective Subsidiaries or the
performance or observance by any Borrower or any Guarantor of any of the Obligations; (iii) such
assignee confirms that it has received a copy of this Agreement and the other Financing Agreements,
together with such other documents and information it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance, (iv) such assignee will,
independently and without reliance upon the assigning Lender, any Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this Agreement and the other
Financing Agreements, (v) such assignee appoints and authorizes Administrative and Collateral Agent
to take such action as agent on its behalf and to exercise such powers under this Agreement and the
other Financing Agreements as are delegated to Administrative and Collateral Agent by the terms
hereof and thereof, together with such powers as are reasonably incidental thereto, (vi) such
assignee appoints and authorizes each Agents to take such action as agent on its behalf and to
exercise such powers under this Agreement and the other Financing Agreements as are delegated to
such Agent by the terms hereof and thereof, together with such powers as are reasonably incidental
thereto, and (vii) such assignee agrees that it will perform in accordance with their terms all of
the obligations which by the terms of this Agreement and the other Financing Agreements are
required to be performed by it as a Lender. Agents and Lenders may furnish any information
concerning any Borrower, any Guarantor or their respective Subsidiaries in the possession of Agents
or any Lender from time to time to assignees and Participants.
124
(e) Each Lender may sell participations to one or more banks or other entities in or to all or
a portion of its rights and obligations under this Agreement and the other Financing Agreements
(including, without limitation, all or a portion of its Revolving Loan Commitments and the Loans
owing to it and its participation in the Letter of Credit Accommodations, without the consent of
Administrative and Collateral Agent or the other Lenders);
provided
,
that
, (i) such
Lenders obligations under this Agreement (including, without limitation, its Revolving Loan
Commitment hereunder) and the other Financing Agreements shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance of such
obligations, and Borrowers, Guarantors, Agents and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lenders rights and obligations under this
Agreement and the other Financing Agreements, (iii) the Participant shall not have any rights under
this Agreement or any of the other Financing Agreements (the Participants rights against such
Lender in respect of such participation to be those set forth in the agreement executed by such
Lender in favor of the Participant relating thereto) and all amounts payable by any Borrower or any
Guarantor hereunder shall be determined as if such Lender had not sold such participation, (iv) if
such Participant is not a bank, represent that either (A) no part of its acquisition of its
participation is made out of assets of any employee benefit plan, or (B) after consultation, in
good faith, with Borrowers and provision by Borrowers of such information as may be reasonably
requested by the Participant, the acquisition and holding of such participation does not constitute
a non-exempt prohibited transaction under Section 406 of ERISA and Section 4975 of the Code, or (C)
such participation is an insurance company general account, as such term is defined in the PTCE
95-60, and, as of the date of the transfer there is no employee benefit plan with respect to
which the aggregate amount of such general accounts reserves and liabilities for the contracts
held by or on behalf of such employee benefit plan and all other employee benefit plans
maintained by the same employer (and affiliates thereof as defined in Section V(a)(1) of PTCE
95-60) or by the same employee organization (in each case determined in accordance with the
provisions of PTCE 95-60) exceeds ten (10%) percent of the total reserves and liabilities of such
general account (as determined under PTCE 95-60) (exclusive of separate account liabilities) plus
surplus as set forth in the National Association of Insurance Commissioners Annual Statement filed
with the state of domicile of the Participant and (v) the agreements between such Lender and such
Participant shall not grant such Participant the right to consent to or vote on (A) any matters
other than those set forth in Section 11.3(a)(i) hereof or (B) if such Participant is a Sponsor
Affiliate Lender, any matters which pursuant to Section 11.3(f) hereof, a Sponsor Affiliate Lender
is not permitted to consent to or vote on.
(f) Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loans
hereunder to a Federal Reserve Bank in support of borrowings made by such Lenders from such Federal
Reserve Bank.
(g) Borrowers and Guarantors shall assist Agents or any Lender permitted to sell assignments
or participations under this Section 13.6 in whatever manner reasonably necessary in order to
enable or effect any such assignment or participation, including (but not limited to) the execution
and delivery of any and all agreements, notes and other documents and instruments as shall be
requested and the delivery of informational materials, appraisals or other documents for, and the
participation of relevant management in meetings and conference calls with, potential assignees or
Participants. Each Borrower and each Guarantor shall certify the correctness, completeness and
accuracy of all descriptions of such Borrower and such Guarantor and its affairs provided, prepared
or reviewed by such Borrower or such Guarantor that are contained in any selling materials and all
other information provided by it and included in such materials.
125
(h) Administrative and Collateral Agent agrees that, so long as an Event of Default does not
then exist, Administrative and Collateral Agent shall not, without the prior consent of
Administrative Borrower (such consent not to be unreasonably withheld, conditioned or delayed)
assign to any Person (i) its rights and duties as administrative agent for the Lenders without also
assigning to such Person its rights and duties as collateral agent for the Lenders and Bank Product
Providers, (ii) its rights and duties as collateral agent for the Lenders and Bank Product
Providers without also assigning to such Person its rights and duties as administrative agent for
the Lenders, or (iii) its rights and duties as administrative and collateral agent for the Lenders
and Bank Product Providers unless such assignment is made (A) to its parent company or any of its
Affiliates which is at least 50% owned by Administrative and Collateral Agent or its parent or (B)
in connection with any merger, consolidation, sale, transfer or other disposition of all or any
substantial portion of the business or loan portfolio of Administrative Collateral Agent.
Notwithstanding anything to the contrary in this Agreement, in no event shall any Sponsor Affiliate
Lender be appointed as, or succeed to the rights and duties of, the Administrative and Collateral
Agent, or any Agent, under this Agreement.
13.7
Participants Security Interests
. If a Participant shall at any time participate
with any Lender in the Loans, each Borrower and each Guarantor hereby grants to such Participant
and such Participant shall have and is hereby given, a continuing lien on and security interest in
any money, securities and other property of such Borrower or such Guarantor in the custody or
possession of such Participant, including the right of setoff, to the extent of such Participants
participation in the Obligations, and such Participant shall be deemed to have the same right of
setoff to the extent of its participation in the Obligations, as it would have if it were a direct
Lender.
13.8
ERISA Representation
. Each Lender hereby represents and warrants to Borrowers
and Administrative and Collateral Agent that either (a) no part of the Loans made by such Lender
are made out of plan assets of any employee benefit plan subject to ERISA or any plan subject to
Section 4975 of the Code or (b) the making and holding of such Lenders Revolving Loan Commitments
and Loans does not constitute a non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code.
13.9
Entire Agreement
. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to be delivered in
connection herewith or therewith represents the entire agreement and understanding concerning the
subject matter hereof and thereof between the parties hereto, and supersede all other prior
agreements, understandings, negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether oral or written. In
the event of any inconsistency between the terms of this Agreement and any schedule or exhibit
hereto, the terms of this Agreement shall govern.
13.10
Counterparts, Etc
. This Agreement or any of the other Financing Agreements may
be executed in any number of counterparts, each of which shall be an original, but all of which
taken together shall constitute one and the same agreement. Delivery of an executed counterpart of
this Agreement or any of the other Financing Agreements by telefacsimile or a substantially similar
electronic transmission shall have the same force and effect as the delivery of an original
executed counterpart of this Agreement or any of such other
Financing Agreements. Any party delivering an executed counterpart of any such agreement by
telefacsimile or a substantially similar electronic transmission shall also deliver an original
executed counterpart, but the failure to do so shall not affect the validity, enforceability or
binding effect of such agreement.
126
SECTION 14. JOINT AND SEVERAL LIABILITY; SURETYSHIP WAIVERS.
14.1
Independent Obligations; Subrogation
. The Obligations of each Borrower hereunder
are joint and several. To the maximum extent permitted by law, each Borrower hereby waives any
claim, right or remedy which such Borrower now has or hereafter acquires against any other Borrower
that arises hereunder including, without limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, contribution, indemnification, or participation in any claim, right or
remedy of Administrative and Collateral Agent or any Lender against any Borrower or any Collateral
which Administrative and Collateral Agent or any Lender now has or hereafter acquires, whether or
not such claim, right or remedy arises in equity, under contract, by statute, under common law or
otherwise until the Obligations are fully paid and finally discharged. In addition, each Borrower
hereby waives any right to proceed against the other Borrowers, now or hereafter, for contribution,
indemnity, reimbursement, and any other suretyship rights and claims, whether direct or indirect,
liquidated or contingent, whether arising under express or implied contract or by operation of law,
which any Borrower may now have or hereafter have as against the other Borrowers with respect to
the Obligations until the Obligations are fully paid and finally discharged. Each Borrower also
hereby waives any rights of recourse to or with respect to any asset of the other Borrowers until
the Obligations are fully paid and finally discharged.
14.2
Authority to Modify Obligations and Security
. Each Borrower authorizes
Administrative and Collateral Agent and Lenders, without notice or demand and without affecting any
Borrowers liability hereunder, from time to time, whether before or after any notice of
termination hereof or before or after any default in respect of the Obligations, to: (a) renew,
extend, accelerate, or otherwise change the time for payment of, or otherwise change any other term
or condition of, any document or agreement evidencing or relating to any Obligations as such
Obligations relate to the other Borrowers, including, without limitation, to increase or decrease
the rate of interest thereon; (b) accept, substitute, waive, defease, increase, release, exchange
or otherwise alter any Collateral, in whole or in part, securing the other Borrowers Obligations;
(c) apply any and all such Collateral and direct the order or manner of sale thereof as
Administrative and Collateral Agent and Lenders, in their sole discretion, may determine; (d) deal
with the other Borrowers as Administrative and Collateral Agent or any Lender may elect; (e) in
Administrative and Collateral Agents and Lenders sole discretion, settle, release on terms
satisfactory to them, or by operation of law or otherwise, compound, compromise, collect or
otherwise liquidate any of the other Borrowers Obligations and/or any of the Collateral in any
manner, and bid and purchase any of the collateral at any sale thereof; (vi) apply any and all
payments or recoveries from the other Borrowers as Administrative and Collateral Agent or Lenders,
in their sole discretion, may determine, whether or not such indebtedness relates to the
Obligations; all whether such Obligations are secured or unsecured or guaranteed or not guaranteed
by others; and (vii) apply any sums realized from Collateral furnished by the other Borrowers upon
any of its indebtedness or obligations to Administrative and Collateral Agent or Lenders as they in
their sole discretion, may determine, whether or not such indebtedness relates
to the Obligations; all without in any way diminishing, releasing or discharging the liability
of any Borrower hereunder.
127
14.3
Waiver of Defenses
. Upon an Event of Default by any Borrower in respect of any
Obligations, Administrative and Collateral Agent and Lenders may, at their option and without
notice to any Borrower, proceed directly against any Borrower to collect and recover the full
amount of the liability hereunder, or any portion thereof, and each Borrower waives any right to
require Administrative and Collateral Agent or any Lender to: (a) proceed against the other
Borrowers or any other person whomsoever; (b) proceed against or exhaust any Collateral given to or
held by Administrative and Collateral Agent or any Lender in connection with the Obligations; (c)
give notice of the terms, time and place of any public or private sale of any of the Collateral
except as otherwise provided herein; or (d) pursue any other remedy in Administrative and
Collateral Agents or any Lenders power whatsoever. A separate action or actions may be brought
and prosecuted against any Borrower whether or not action is brought against the other Borrowers
and whether the other Borrowers be joined in any such action or actions; and each Borrower waives
the benefit of any statute of limitations affecting the liability hereunder or the enforcement
hereof, and agrees that any payment of any Obligations or other act which shall toll any statute of
limitations applicable thereto shall similarly operate to toll such statute of limitations
applicable to the liability hereunder.
14.4
Exercise of Administrative and Collateral Agents and Lenders Rights
. Each
Borrower hereby authorizes and empowers Administrative and Collateral Agent and Lenders in their
sole discretion, without any notice or demand to such Borrower whatsoever and without affecting the
liability of such Borrower hereunder, to exercise any right or remedy which Administrative and
Collateral Agent or any Lender may have available to them against the other Borrowers.
14.5
Additional Waivers
. Each Borrower waives any defense arising by reason of any
disability or other defense of the other Borrowers or by reason of the cessation from any cause
whatsoever of the liability of the other Borrowers or by reason of any act or omission of
Administrative and Collateral Agent or any Lender or others which directly or indirectly results in
or aids the discharge or release of the other Borrowers or any Obligations or any Collateral by
operation of law or otherwise. The Obligations shall be enforceable against each Borrower without
regard to the validity, regularity or enforceability of any of the Obligations with respect to any
of the other Borrowers or any of the documents related thereto or any collateral security documents
securing any of the Obligations. No exercise by Administrative and Collateral Agent or any Lender
of, and no omission of Administrative and Collateral Agent or any Lender to exercise, any power or
authority recognized herein and no impairment or suspension of any right or remedy of
Administrative and Collateral Agent or any Lender against any Borrower or any Collateral shall in
any way suspend, discharge, release, exonerate or otherwise affect any of the Obligations or any
Collateral furnished by the Borrowers or give to the Borrowers any right of recourse against
Administrative and Collateral Agent or any Lender. Each Borrower specifically agrees that the
failure of Administrative and Collateral Agent or any Lender: (a) to perfect any lien on or
security interest in any property heretofore or hereafter given any Borrower to secure payment of
the Obligations, or to record or file any document relating thereto or (b) to file or enforce a
claim against the estate (either in administration, bankruptcy or other proceeding) of
any Borrower shall not in any manner whatsoever terminate, diminish, exonerate or otherwise
affect the liability of any Borrower hereunder.
128
14.6
Additional Indebtedness
. Additional Obligations may be created from time to
time at the request of any Borrower and without further authorization from or notice to any other
Borrower even though the borrowing Borrowers financial condition may deteriorate since the date
hereof. Each Borrower waives the right, if any, to require Administrative and Collateral Agent or
any Lender to disclose to such Borrower any information it may now have or hereafter acquire
concerning the other Borrowers character, credit, Collateral, financial condition or other
matters. Each Borrower has established adequate means to obtain from the other Borrowers, on a
continuing basis, financial and other information pertaining to such Borrowers business and
affairs, and assumes the responsibility for being and keeping informed of the financial and other
conditions of the other Borrowers and of all circumstances bearing upon the risk of nonpayment of
the Obligations which diligent inquiry would reveal. Neither Administrative and Collateral Agent
nor any Lender need inquire into the powers of any Borrower or the authority of any of their
respective officers, directors, partners or agents acting or purporting to act in their behalf, and
any Obligations created in reliance upon the purported exercise of such power or authority is
hereby guaranteed. All Obligations of each Borrower to Administrative and Collateral Agent and
Lenders heretofore, now or hereafter created shall be deemed to have been granted at each
Borrowers special insistence and request and in consideration of and in reliance upon this
Agreement.
14.7
Notices, Demands, Etc
. Except as expressly provided by this Agreement, neither
Administrative and Collateral Agent nor any Lender shall be under any obligation whatsoever to make
or give to any Borrower, and each Borrower hereby waives diligence, all rights of setoff and
counterclaim against Administrative and Collateral Agent or any Lender, all demands, presentments,
protests, notices of protests, notices of protests, notices of nonperformance, notices of dishonor,
and all other notices of every kind or nature, including notice of the existence, creation or
incurring of any new or additional Obligations.
14.8
Subordination
. Except as otherwise provided in this Section 14.8, any
indebtedness of any Borrower now or hereafter owing to any other Borrower is hereby subordinated to
the Obligations, whether heretofore, now or hereafter created, and whether before or after notice
of termination hereof, and, following the occurrence and during the continuation of an Event of
Default, no Borrower shall, without the prior consent of Required Lenders, pay in whole or in part
any of such indebtedness nor will any such Borrower accept any payment of or on account of any such
indebtedness at any time while such Borrower remains liable hereunder. At the request of
Administrative and Collateral Agent, after the occurrence and during the continuance of an Event of
Default, each Borrower shall pay to Administrative and Collateral Agent all or any part of such
subordinated indebtedness and any amount so paid to Administrative and Collateral Agent at its
request shall be applied to payment of the Obligations. Each payment on the indebtedness of any
Borrower to the other Borrowers received in violation of any of the provisions hereof shall be
deemed to have been received by any other Borrower as trustee for Administrative and Collateral
Agent and Lenders and shall be paid over to Administrative and Collateral Agent immediately on
account of the Obligations, but without otherwise affecting in any manner any such Borrowers
liability under any of the provisions of this Agreement. Each
129
Borrower agrees to file all claims
against the other Borrowers in any bankruptcy or other proceeding in which the filing of claims is required by law in respect of
any indebtedness of the other Borrowers to such Borrower, and Administrative and Collateral Agent
and Lenders shall be entitled to all of any such Borrowers rights thereunder. If for any reason
any such Borrower fails to file such claim at least thirty (30) days prior to the last date on
which such claim should be filed, Administrative and Collateral Agent, as such Borrowers
attorney-in-fact, is hereby authorized to do so in Borrowers name or, in Administrative and
Collateral Agents discretion, to assign such claim to, and cause a proof of claim to be filed in
the name of, Administrative and Collateral Agents nominee. In all such cases, whether in
administration, bankruptcy or otherwise, the person or persons authorized to pay such claim shall
pay to Administrative and Collateral Agent the full amount payable on the claim in the proceeding,
and to the full extent necessary for that purpose any such Borrower hereby assigns to
Administrative and Collateral Agent, for itself and the ratable benefit of Lenders, all such
Borrowers rights to any payments or distributions to which such Borrower otherwise would be
entitled. If the amount so paid is greater than any such Borrowers liability hereunder,
Administrative and Collateral Agent will pay the excess amount to the person entitled thereto.
14.9
Revival
. If any payments of money or transfers of property made to
Administrative and Collateral Agent or any Lender by any Borrower should for any reason
subsequently be declared to be fraudulent (within the meaning of any state or federal law relating
to fraudulent conveyances), preferential or otherwise voidable or recoverable in whole or in part
for any reason (hereinafter collectively called voidable transfers) under the Bankruptcy Code or
any other federal or state law and Administrative and Collateral Agent or any Lender is required to
repay or restore any such voidable transfer, or the amount or any portion thereof, then as to any
such voidable transfer or the amount repaid or restored and all reasonable costs and expenses
(including reasonable attorneys fees) of Administrative and Collateral Agent or any Lender related
thereto, such Borrowers liability hereunder shall automatically be revived, reinstated and
restored and shall exist as though such voidable transfer had never been made to Administrative and
Collateral Agent or such Lender.
14.10
Understanding of Waivers
. Each Borrower warrants and agrees that the waivers
set forth in this Section 14 are made with full knowledge of their significance and consequences.
If any of such waivers are determined to be contrary to any applicable law or public policy, such
waivers shall be effective only to the maximum extent permitted by law.
[Signatures follow on next page]
130
IN WITNESS WHEREOF, the parties hereto have caused these presents to be duly executed as of
the day and year first above written.
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BORROWERS
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BLUELINX CORPORATION,
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a Georgia corporation
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By:
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/s/ David J. Morris
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Name:
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David J. Morris
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Title:
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CFO and Treasurer
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BLUELINX FLORIDA LP,
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a Florida limited partnership
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By:
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BlueLinx Florida Holding No. 2 Inc.,
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its General Partner
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By:
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/s/ Barbara V. Tinsley
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Name:
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Barbara V. Tinsley
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Title:
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Secretary
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BLUELINX SERVICES, INC.
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a Georgia corporation
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By:
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/s/ Barbara V. Tinsley
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Name:
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Barbara V. Tinsley
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Title:
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Secretary
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131
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GUARANTORS
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BLUELINX FLORIDA HOLDING NO. 1 INC.,
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a Georgia corporation
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By:
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/s/ Barbara V. Tinsley
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Name:
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Barbara V. Tinsley
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Title:
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Secretary
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BLUELINX FLORIDA HOLDING NO. 2 INC.,
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a Georgia corporation
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By:
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/s/ Barbara V. Tinsley
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Name:
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Barbara V. Tinsley
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Title:
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Secretary
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BLX TEXAS ACQUISITION I LLC,
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a Georgia limited liability company
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By:
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/s/ Barbara V. Tinsley
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Name:
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Barbara V. Tinsley
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Title:
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Secretary
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BLX TEXAS ACQUISITION II LLC,
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a Georgia limited liability company
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By:
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/s/ Barbara V. Tinsley
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Name:
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Barbara V. Tinsley
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Title:
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Secretary
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132
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ADMINISTRATIVE AND COLLATERAL AGENT
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WACHOVIA BANK, NATIONAL ASSOCIATION,
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as successor by merger to Congress Financial
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Corporation, as Administrative and Collateral Agent
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By:
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/s/ James OConnell
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Name:
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James OConnell
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Title:
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Vice President
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133
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DOCUMENTATION AGENTS
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BANK OF AMERICA, N.A.,
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as a Documentation Agent
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By:
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/s/ Robert Scalzitti
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Name:
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Robert Scalzitti
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Title:
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Vice President
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WELLS FARGO FOOTHILL, LLC,
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as a Documentation Agent
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By:
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/s/ David Hill
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Name:
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David Hill
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Title:
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Vice President
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JPMORGAN CHASE BANK, N.A.
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(formerly known as JPMorgan Chase Bank),
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as a Documentation Agent
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By:
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/s/ John M. Hariaczyi
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Name:
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John M. Hariaczyi
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Title:
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Vice President
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134
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LENDERS
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WACHOVIA BANK, NATIONAL ASSOCIATION,
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as successor by merger to Congress Financial
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Corporation, as a Lender
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By:
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/s/ James OConnell
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Name:
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James OConnell
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Title:
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Vice President
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BANK OF AMERICA, N.A.,
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as a Lender
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By:
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/s/ Robert Scalzitti
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Name:
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Robert Scalzitti
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Title:
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Vice President
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WELLS FARGO FOOTHILL, LLC,
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as a Lender
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By:
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/s/ David Hill
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Name:
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David Hill
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Title:
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Vice President
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GENERAL ELECTRIC CAPITAL CORPORATION,
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as a Lender
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By:
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/s/ James R. Persico
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Name:
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James R. Persico
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Title:
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Duly Authorized Signatory
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135
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GMAC COMMERCIAL FINANCE LLC,
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as a Lender
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By:
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/s/ Robert J. Brandow
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Name:
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Robert J. Brandow
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Title:
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Director
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ING CAPITAL LLC,
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as a Lender
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By:
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/s/ Bennett C. Whitehurst
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Name:
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Bennett C. Whitehurst
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Title:
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Vice President
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THE CIT GROUP/BUSINESS CREDIT, INC.,
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as a Lender
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By:
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/s/ Evelyn Kusold
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Name:
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Evelyn Kusold
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Title:
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Vice President
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JPMORGAN CHASE BANK, N.A.
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(formerly known as JPMorgan Chase Bank),
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as a Lender
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By:
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/s/ John M. Hariaczyi
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Name:
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John M. Hariaczyi
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Title:
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Vice President
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136
TABLE OF CONTENTS
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Page
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SECTION 1. DEFINITIONS
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3
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SECTION 2. CREDIT FACILITIES
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35
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2.1 Revolving Loans
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35
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2.2 Letter of Credit Accommodations
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36
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2.3 Commitments
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39
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2.4 Bank Products
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40
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2.5 Term Loan
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40
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SECTION 3. INTEREST AND FEES
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40
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3.1 Interest
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40
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3.2 Changes in Laws and Increased Costs of Loans
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43
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3.3 Fees
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45
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SECTION 4. CONDITIONS PRECEDENT AND SUBSEQUENT
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45
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4.1 Conditions Precedent to Initial Revolving Loans and Letter of Credit Accommodations
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45
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4.2 Conditions Precedent to All Revolving Loans and Letter of Credit Accommodations
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48
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SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
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49
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5.1 Grant of Security Interest
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49
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5.2 Perfection of Security Interests
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50
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SECTION 6. COLLECTION AND ADMINISTRATION
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55
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6.1 Borrowers Loan Account
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55
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6.2 Statements
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55
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6.3 Collection of Accounts
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56
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6.4 Payments
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57
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6.5 Taxes
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60
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6.6 Authorization to Make Loans
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63
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6.7 Use of Proceeds
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63
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6.8 Pro Rata Treatment
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63
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6.9 Sharing of Payments, Etc
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63
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6.10 Settlement Procedures
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64
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6.11 Obligations Several; Independent Nature of Lenders Rights.
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67
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6.12 Appointment of Administrative Borrower as Agent for Requesting Loans and Receipts of Loans and Statements
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67
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-i-
TABLE OF CONTENTS
(continued)
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Page
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SECTION 7. COLLATERAL REPORTING AND COLLATERAL COVENANTS
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68
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7.1 Collateral Reporting
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68
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7.2 Accounts Covenants
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69
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7.3 Inventory Covenants
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70
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7.4 Equipment and Real Property Covenants
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71
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7.5 Power of Attorney
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71
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7.6 Right to Cure
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72
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7.7 Access to Premises
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73
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SECTION 8. REPRESENTATIONS AND WARRANTIES
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73
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8.1 Corporate Existence; Power and Authority
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73
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8.2 Name; State of Organization; Chief Executive Office; Collateral Locations
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74
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8.3 Financial Statements
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74
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8.4 Priority of Liens; Title to Properties
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74
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8.5 Tax Returns
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74
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8.6 Litigation
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75
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8.7 Compliance with Other Agreements and Applicable Laws
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75
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8.8 Environmental Compliance
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75
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8.9 Employee Benefits
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76
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8.10 Bank Accounts
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77
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8.11 Intellectual Property
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77
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8.12 Subsidiaries; Affiliates; Capitalization; Solvency
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77
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8.13 Labor Disputes
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78
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8.14 Restrictions on Subsidiaries
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78
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8.15 Material Contracts
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79
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8.16 Payable Practices
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79
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8.17 Acquisition of Purchased Assets
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79
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8.18 Accuracy and Completeness of Information
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80
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8.19 Survival of Warranties; Cumulative
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80
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-ii-
TABLE OF CONTENTS
(continued)
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Page
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SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
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80
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9.1 Maintenance of Existence
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80
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9.2 New Collateral Locations
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81
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9.3 Compliance with Laws, Regulations, Etc.
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81
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9.4 Payment of Taxes and Claims
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82
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9.5 Insurance
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83
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9.6 Financial Statements and Other Information
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84
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9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
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85
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9.8 Encumbrances
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88
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9.9 Indebtedness
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89
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9.10 Loans, Investments, Etc.
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93
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9.11 Dividends and Redemptions
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95
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9.12 Transactions with Affiliates
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96
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9.13 Compliance with ERISA
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96
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9.14 End of Fiscal Years and Fiscal Quarters; Changes in Accounting Practices
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97
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9.15 Change in Business
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97
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9.16 Limitation of Restrictions Affecting Subsidiaries
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97
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9.17 Financial Covenants
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97
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9.18 License Agreements
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98
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9.19 After Acquired Real Property
|
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99
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9.20 Costs and Expenses
|
|
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99
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|
9.21 Further Assurances
|
|
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100
|
|
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
|
|
|
100
|
|
10.1 Events of Default
|
|
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100
|
|
10.2 Remedies
|
|
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102
|
|
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
|
|
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106
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|
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver
|
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106
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11.2 Waiver of Notices
|
|
|
107
|
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11.3 Amendments and Waivers
|
|
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108
|
|
-iii-
TABLE OF CONTENTS
(continued)
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Page
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11.4 Confidentiality
|
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110
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|
11.5 Other Waivers
|
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111
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11.6 Indemnification
|
|
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111
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SECTION 12. THE ADMINISTRATIVE AND COLLATERAL AGENT
|
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111
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|
12.1 Appointment; Powers and Immunities
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111
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|
12.2 Reliance By Administrative and Collateral Agent
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113
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|
12.3 Events of Default
|
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113
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|
12.4 Wachovia in its Individual Capacity
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114
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|
12.5 Indemnification
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|
114
|
|
12.6 Non-Reliance on Agents and Other Lenders
|
|
|
114
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|
12.7 Failure to Act
|
|
|
115
|
|
12.8 Additional Revolving Loans
|
|
|
115
|
|
12.9 Concerning the Collateral and the Related Financing Agreements
|
|
|
116
|
|
12.10 Field Audits; Examination Reports and other Information; Disclaimer by Lenders
|
|
|
116
|
|
12.11 Collateral Matters
|
|
|
117
|
|
12.12 Agency for Perfection
|
|
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118
|
|
12.13 Failure to Respond Deemed Consent
|
|
|
118
|
|
12.14 Legal Representation of Agents
|
|
|
118
|
|
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
|
|
|
119
|
|
13.1 Term
|
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119
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|
13.2 Interpretive Provisions
|
|
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120
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|
13.3 Notices
|
|
|
121
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|
13.4 Partial Invalidity
|
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122
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|
13.5 Successors
|
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122
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|
13.6 Assignments; Participations
|
|
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123
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|
13.7 Participants Security Interests
|
|
|
126
|
|
13.8 ERISA Representation
|
|
|
126
|
|
13.9 Entire Agreement
|
|
|
126
|
|
13.10 Counterparts, Etc.
|
|
|
126
|
|
-iv-
TABLE OF CONTENTS
(continued)
|
|
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|
Page
|
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|
SECTION 14. JOINT AND SEVERAL LIABILITY; SURETYSHIP WAIVERS
|
|
|
127
|
|
14.1 Independent Obligations; Subrogation
|
|
|
127
|
|
14.2 Authority to Modify Obligations and Security
|
|
|
127
|
|
14.3 Waiver of Defenses
|
|
|
128
|
|
14.4 Exercise of Agents and Lenders Rights
|
|
|
128
|
|
14.5 Additional Waivers
|
|
|
128
|
|
14.6 Additional Indebtedness
|
|
|
129
|
|
14.7 Notices, Demands, Etc
|
|
|
129
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|
14.8 Subordination
|
|
|
129
|
|
14.9 Revival
|
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130
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|
14.10 Understanding of Waivers
|
|
|
130
|
|
-v-
INDEX TO
EXHIBITS AND SCHEDULES
|
|
|
Exhibit A
|
|
Form of Assignment and Acceptance
|
|
|
|
Exhibit B
|
|
Information Certificate
|
|
|
|
Exhibit C
|
|
Form of Compliance Certificate
|
|
|
|
Schedule 1.29
|
|
Collection Accounts
|
|
|
|
Schedule 1.124
|
|
Commitments
|
|
|
|
Schedule 5.2(b)
|
|
Chattel Paper and Instruments
|
|
|
|
Schedule 5.2(f)
|
|
Letters of Credit, etc.
|
|
|
|
Schedule 5.2(g)
|
|
Commercial Tort Claims
|
|
|
|
Schedule 8.4
|
|
Liens
|
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|
Schedule 8.8
|
|
Environmental Disclosures
|
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|
Schedule 8.13
|
|
Labor Relations
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|
Schedule 8.15
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Material Contracts
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|
Schedule 9.9
|
|
Indebtedness
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Schedule 9.10
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|
Loans and Advances
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Schedule 9.14
|
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Fiscal Year, Quarter and Month Ending Dates
|
Exhibit A
Form of
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE (this
Assignment and Acceptance
) dated as of
,
is made by and between
(the
Assignor
) on
the one hand and
(the
Assignee
) on the other hand.
W
I
T
N
E
S
S
E
T
H
:
WHEREAS, BlueLinx Corporation, a Georgia corporation (
BlueLinx
), BlueLinx Services
Inc., a Georgia corporation (
BSI
), and BlueLinx Florida LP, a Florida limited partnership
(
BFLP
, and together with BlueLinx and BSI, each individually a
Borrower
and
collectively,
Borrowers
as further defined in the Loan Agreement, as defined below),
BlueLinx Florida Holding No. 1 Inc., a Georgia corporation (
BFH1
), BlueLinx Florida
Holding No. 2 Inc., a Georgia corporation (
BFH2
), BLX Texas Acquisition I LLC, a Georgia
limited liability company (
BLX1
), and BLX Texas Acquisition II LLC, a Georgia limited
liability company (
BLX2
, and together with BFH1, BFH2, and BLX1, each individually a
Guarantor
and collectively,
Guarantors
as further defined in the Loan
Agreement, as defined below), the financial institutions from time to time party to the Loan
Agreement as lenders (each a
Lender
and collectively, the
Lenders
), Wachovia
Bank, National Association, successor by merger to Congress Financial Corporation
(
Wachovia
), as administrative and collateral agent for the Lenders and for the Bank
Product Providers (as defined in the Loan Agreement, as defined below) (in such capacity,
Administrative and Collateral Agent
), Wachovia Capital Markets, LLC, as sole lead
arranger for the credit facility (in such capacity,
Sole Lead Arranger
) and as sole
syndication agent for the credit facility (in such capacity,
Sole Syndication Agent
),
Bank of America, N.A., Wells Fargo Foothill, LLC, and JPMorgan Chase Bank, N.A., formerly known as
JPMorgan Chase Bank, as documentation agents (each a
Documentation Agent
and
collectively,
Documentation Agents
, and together with the Administrative and Collateral
Agent, the Sole Lead Arranger, and the Sole Syndication Agent, each individually an
Agent
and collectively,
Agents
), have entered into that certain Amended and Restated Loan and
Security Agreement, dated as of August 4, 2006 (as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, the
Loan Agreement
),
pursuant to which the Lenders have and may continue to make loans and provide other financial
accommodations to Borrowers. Capitalized terms not otherwise defined herein shall have the
respective meanings ascribed thereto in the Loan Agreement.
WHEREAS, as provided under the Loan Agreement, Assignor committed to making Loans (the
Committed Loans
) to Borrowers in an aggregate amount not to exceed $
(the
Commitment
);
WHEREAS, Assignor wishes to assign to Assignee
[part of]
the rights and obligations of
Assignor under the Loan Agreement in respect of its Commitment in an amount equal to
$
(the
Assigned Commitment Amount
) on the terms and subject to the
conditions set forth herein and Assignee wishes to accept assignment of such rights and to assume
such obligations from Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein,
the parties hereto agree as follows:
1.
Assignment and Acceptance
.
(a) Subject to the terms and conditions of this Assignment and Acceptance, (i) Assignor hereby
sells, transfers and assigns to Assignee, and (ii) Assignee hereby purchases, assumes and
undertakes from Assignor, without recourse and without representation or warranty (except as
provided in this Assignment and Acceptance) an interest in (A) the Commitment and each of the
Committed Loans of Assignor and (B) all related rights, benefits, obligations, liabilities and
indemnities of Assignor under and in connection with the Loan Agreement and the other agreements,
documents and instruments referred to therein or at any time executed and/or delivered in
connection therewith or related thereto (all of the foregoing, together with the Loan Agreement, as
the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced, being collectively referred to herein as the
Financing Agreements
), so that
after giving effect thereto, the Commitment of Assignee and the Commitment of Assignor shall be as
set forth in clauses (c) and (d) below and the Pro Rata Share (as defined in the Loan Agreement) of
Assignee shall be
percent (
%).
(b) With effect on and after the Effective Date (as defined in Section 5 hereof), Assignee
shall be a party to the Loan Agreement and succeed to all of the rights and be obligated to perform
all of the obligations of a Lender under the Loan Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an amount equal to the
Assigned Commitment Amount. Assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of the Loan Agreement are required to be performed by it
as a Lender. It is the intent of the parties hereto that the Commitment of Assignor shall, as of
the Effective Date, be reduced by an amount equal to the Assigned Commitment Amount and Assignor
shall relinquish its rights and be released from its obligations under the Loan Agreement to the
extent such obligations have been assumed by Assignee;
provided
,
that
, Assignor
shall not relinquish their rights under the Loan Agreement to the extent such rights relate to the
time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth herein, on the Effective
Date Assignees Commitment will be $
.
(d) After giving effect to the assignment and assumption set forth herein, on the Effective
Date Assignors Commitment will be $
_.
2.
Payments
. As consideration for the sale, assignment and transfer contemplated in
Section 1 hereof, Assignee shall pay to Administrative and Collateral Agent, for the benefit of
Assignor, on the Effective Date in immediately available funds an amount equal to $
,
representing Assignees Pro Rata Share of the principal amount of all Committed Loans.
3.
Reallocation of Payments
. Any interest, fees and other payments accrued to the
Effective Date with respect to the Commitment, Committed Loans and outstanding Letter of Credit
Accommodations shall be for the account of Assignor. Except as Assignor or Assignee
may otherwise agree in writing (with or without the consent of any Borrower) any interest,
fees and other payments accrued on and after the Effective Date with respect to the Assigned
Commitment Amount shall be for the account of Assignee. Each of Assignor and Assignee agrees that
it will hold in trust for the other parties any interest, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding sentence and pay to the
other party any such amounts which it may receive promptly upon receipt.
4.
Independent Credit Decision
. Assignee (a) acknowledges that it has received a copy
of the Loan Agreement and the Schedules and Exhibits thereto, together with copies of the most
recent financial statements of Borrowers, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter into this Assignment
and Acceptance and (b) agrees that it will, independently and without reliance upon Assignor, any
Agent or any Lender, and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit and legal decisions in taking or not taking action under
the Loan Agreement.
5.
Effective Date; Notices
.
(a) As between Assignor and Assignee, the effective date for this Assignment and Acceptance
shall be
,
(the
Effective Date
);
provided
,
that
, the
following conditions precedent have been satisfied on or before the Effective Date:
(i) this Assignment and Acceptance shall be executed and delivered by Assignor and Assignee;
(ii) the consent of Administrative and Collateral Agent as required for an effective
assignment of the Assigned Commitment Amount by Assignor to Assignee shall have been duly obtained
and shall be in full force and effect as of the Effective Date;
(iii) written notice of such assignment, together with payment instructions, addresses and
related information with respect to Assignee, shall have been given to Administrative Borrower and
Administrative and Collateral Agent; and
(iv) Assignee shall pay to Assignor all amounts due to Assignor under this Assignment and
Acceptance.
(b) Promptly following the execution of this Assignment and Acceptance, Assignor shall deliver
to Administrative Borrower and Administrative and Collateral Agent for acknowledgment by
Administrative and Collateral Agent, a Notice of Assignment in the form attached hereto as Schedule
1.
6.
Administrative and Collateral Agent
.
(a) Assignee hereby appoints and authorizes Wachovia Bank, National Association, in its
capacity as Administrative and Collateral Agent to take such action as agent on its behalf to
exercise such powers under the Loan Agreement as are delegated to Administrative and Collateral
Agent.
(b)
[Assignee shall assume no duties or obligations nor shall Assignee accede to any rights
held by Assignor in its capacity as [Administrative and Collateral Agent] [Sole Lead Arranger]
[Sole Syndication Agent] [Agent] [Documentation Agent] under the Loan Agreement.]
7.
Withholding Tax
. Assignee (a) represents and warrants to Assignor, Agents and
Borrowers that under applicable law and treaties no tax will be required to be withheld by
Assignee, Administrative and Collateral Agent or any Borrower with respect to any payments to be
made to Assignee hereunder or under any of the Financing Agreements, (b) agrees to furnish to
Administrative and Collateral Agent and Administrative Borrower prior to the time that
Administrative and Collateral Agent or any Borrower are required to make any payment of principal,
interest or fees hereunder, two accurate, complete and signed originals of (i) U.S. Internal
Revenue Service Form W-8ECI or successor form, (ii) U.S. Internal Revenue Service
Form W-8BEN
or
successor form (wherein Assignee claims entitlement to the benefits of a tax treaty that provides
for a complete exemption from U.S. federal income withholding tax on all payments hereunder) or
(iii) U.S. Internal Revenue Service
Form W-9
or successor form and agrees to provide such forms
upon the expiration of any previously delivered form or comparable statements in accordance with
applicable U.S. law and regulations and amendments thereto, duly executed and completed by
Assignee, and (c) agrees to comply with all applicable U.S. laws and regulations with regard to
such withholding tax exemption.
8.
Representations and Warranties
.
(a) Assignor represents and warrants that (i) it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear of any security
interest, lien, encumbrance or other adverse claim, (ii) it is duly organized and existing and it
has the full power and authority to take, and has taken, all action necessary to execute and
deliver this Assignment and Acceptance and any other documents required or permitted to be executed
or delivered by it in connection with this Assignment and Acceptance and to fulfill its obligations
hereunder, (iii) no notices to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due execution, delivery and performance
of this Assignment and Acceptance, and apart from any agreements or undertakings or filings
required by the Loan Agreement, no further action by, or notice to, or filing with, any Person is
required of it for such execution, delivery or performance, and (iv) this Assignment and Acceptance
has been duly executed and delivered by it and constitutes the legal, valid and binding obligation
of Assignor, enforceable against Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general
application relating to or affecting creditors rights and to general equitable principles.
(b) Assignor makes no representation or warranty and does not assume any responsibility with
respect to any statements, warranties or representations made in or in connection with the Loan
Agreement or any of the other Financing Agreements or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Agreement or any other instrument or
document furnished pursuant thereto. Assignor makes no representation or warranty in connection
with, nor does it assume any responsibility with respect to, the solvency, financial condition,
asset valuation or realization, or statements of any Borrower, any Guarantor
or any of their respective Affiliates, or the performance or observance by any Borrower, any
Guarantor or any other Person, of any of its respective obligations under the Loan Agreement or any
other instrument or document furnished in connection therewith.
(c) Assignee represents and warrants that (i) it is duly organized and existing and it has
full power and authority to take, and has taken, all action necessary to execute and deliver this
Assignment and Acceptance and any other documents required or permitted to be executed or delivered
by it in connection with this Assignment and Acceptance, and to fulfill its obligations hereunder,
(ii) no notices to, or consents, authorizations or approvals of, any Person are required (other
than any already given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or filings required by the
Loan Agreement, no further action by, or notice to, or filing with, any Person is required of it
for such execution, delivery or performance; and (iii) this Assignment and Acceptance has been duly
executed and delivered by it and constitutes the legal, valid and binding obligation of Assignee,
enforceable against Assignee in accordance with the terms hereof, subject, as to enforcement, to
bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating
to or affecting creditors rights to general equitable principles.
9.
Further Assurances
. Assignor and Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as any party hereto may reasonably request in
connection with the transactions contemplated by this Assignment and Acceptance, including the
delivery of any notices or other documents or instruments to any party to the Loan Agreement, which
may be required in connection with the assignment and assumption contemplated hereby.
10.
Miscellaneous
(a) Any amendment or waiver of any provision of this Assignment and Acceptance must be in
writing and signed by the parties hereto, except as otherwise provided herein. No failure or delay
by either party hereto in exercising any right, power or privilege hereunder shall operate as a
waiver thereof and any waiver of any breach of the provisions of this Assignment and Acceptance
shall be without prejudice to any rights with respect to any other for further breach thereof.
(b) All payments made hereunder shall be made without any set-off or counterclaim.
(c) Assignor and Assignee shall each pay its own costs and expenses incurred in connection
with the negotiation, preparation, execution and performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number of counterparts and all of
such counterparts taken together shall be deemed to constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF NEW
YORK. Each party hereto irrevocably submits to the non-exclusive jurisdiction of any State or
Federal court sitting in the Borough of Manhattan, County of New York, State of New York, over any
suit, action or proceeding arising out of or relating to this Assignment and Acceptance and
irrevocably agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York State or Federal court. Each party to this Assignment and Acceptance
hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding.
(f) EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE LOAN AGREEMENT, ANY OF THE OTHER FINANCING
AGREEMENTS OR ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR
STATEMENTS (WHETHER ORAL OR WRITTEN).
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and Acceptance to be
executed and delivered by their duly authorized officers as of the date first above written.
|
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a
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By:
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Name:
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Title:
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,
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a
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By:
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Name:
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Title:
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SCHEDULE 1
to Assignment and Acceptance
Form of
NOTICE OF ASSIGNMENT AND ACCEPTANCE
,
Wachovia Bank, National Association, as Administrative and Collateral Agent
1133 Avenue of the Americas
New York, New York 10036
Attn: Portfolio Manager
BlueLinx Corporation, as Administrative Borrower
4100 Wildwood Parkway
Atlanta, Georgia 30339
Attn: Lenard Tessler
Re: Notice of and Consent to Assignment and Acceptance Agreement
Ladies and Gentlemen:
Reference is hereby made to (a) that certain Amended and Restated Loan and Security Agreement,
dated as of August 4, 2006 (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, the
Loan Agreement
) by and among
BlueLinx Corporation, a Georgia corporation (
BlueLinx
), BlueLinx Services Inc., a Georgia
corporation (
BSI
), and BlueLinx Florida LP, a Florida limited partnership
(
BFLP
, and together with BlueLinx and BSI, each individually a
Borrower
and
collectively,
Borrowers
as therein further defined), BlueLinx Florida Holding No. 1 Inc.,
a Georgia corporation (
BFH1
), BlueLinx Florida Holding No. 2 Inc., a Georgia corporation
(
BFH2
), BLX Texas Acquisition I LLC, a Georgia limited liability company
(
BLX1
), and BLX Texas Acquisition II LLC, a Georgia limited liability company
(
BLX2
, and together with BFH1, BFH2, and BLX1, each individually a
Guarantor
and collectively,
Guarantors
as therein further defined), the financial institutions from
time to time party to the Loan Agreement as lenders (each a
Lender
and collectively, the
Lenders
), Wachovia Bank, National Association, successor by merger to Congress Financial
Corporation (
Wachovia
), as administrative and collateral agent for the Lenders and for
the Bank Product Providers (as defined in the Loan Agreement) (in such capacity,
Administrative and Collateral Agent
), Wachovia Capital Markets, LLC, as sole lead
arranger for the credit facility (in such capacity,
Sole Lead Arranger
) and as sole
syndication agent for the credit facility (in such capacity,
Sole Syndication Agent
),
Bank of America, N.A., Wells Fargo Foothill, LLC, and JPMorgan Chase Bank, N.A., formerly known as
JPMorgan Chase Bank, as documentation agents (each a
Documentation Agent
and
collectively,
Documentation Agents
, and together with the Administrative and Collateral
Agent, the Sole Lead Arranger, and the Sole Syndication Agent, each individually an
Agent
and collectively,
Agents
), pursuant to which the Lenders have
and may continue to make loans and provide other financial accommodations to Borrowers, and
(b) the other agreements, documents and instruments referred to in the Loan Agreement or at any
time executed and/or delivered in connection therewith or related thereto (all of the foregoing,
together with the Loan Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the
Financing Agreements
). Capitalized terms not otherwise defined herein shall have the
respective meanings ascribed thereto in the Loan Agreement.
1. We hereby give you notice of, and request Administrative and Collateral Agents consent to,
the assignment by
(the
Assignor
) to
(the
Assignee
) such that after giving effect to the
assignment, Assignee shall have an interest equal to
percent (
%) of the total
Commitments pursuant to the Assignment and Acceptance Agreement attached hereto (the
Assignment and Acceptance
). We understand that Assignors Commitment shall be reduced by
$
.
2. Assignee agrees that, upon receiving the consent of Administrative and Collateral Agent to
such assignment, Assignee will be bound by the terms of the Loan Agreement as fully and to the same
extent as if the Assignee were the Lender originally holding such interest under the Loan
Agreement.
3. The following administrative details apply to Assignee:
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(a)
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Notice address:
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Assignee:
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Address:
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Attention:
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Telephone:
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Telecopier:
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(b)
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Payment instructions:
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Account No.:
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At:
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ABA No.:
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For Credit To:
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Reference:
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4. You are entitled to rely upon the representations, warranties and covenants of each party
to the Assignment and Acceptance as contained therein.
IN WITNESS WHEREOF, Assignor and Assignee have each caused this Notice of Assignment and
Acceptance to be executed by its duly authorized officials, officers or agents as of the date first
above mentioned.
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Very truly yours,
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By:
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Name:
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Title:
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By:
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Name:
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Title:
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ACKNOWLEDGED AND CONSENTED TO:
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative and Collateral Agent
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By:
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Name:
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Title:
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ACKNOWLEDGED:
BLUELINX CORPORATION,
as Administrative Borrower
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By:
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Name:
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Title:
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Exhibit B
GUIDELINES FOR PREPARATION OF INFORMATION CERTIFICATE
The attached document is a form of Information Certificate, which you should complete
carefully
,
completely
and
accurately
.
Please note:
1. You should consult your attorneys and accountants in order to complete the Information
Certificate.
2. Prepare a separate information certificate for each entity that is a proposed borrower or
guarantor.
3. If there is insufficient space provided in the Information Certificate for a response to
any question, please include additional pages as exhibits to the certificate.
4. Return the Information Certificate to us as soon as possible. The information in it is
necessary for us to prepare the loan documentation.
5. We will rely on the information you give us in the Information Certificate and it may be
incorporated into the Loan and Security Agreement between us. You should consider your responses
to have the importance of your representations in the Loan Agreement.
If you have any questions in connection with the preparation of the Information Certificate,
please let us know.
Thank you for your cooperation. We look forward to working with you.
INFORMATION CERTIFICATE
OF
Dated: __________, 20__
In order to assist Wachovia Bank, National Association (
you
) in the evaluation of the
financing you are considering of
_____
(the
Company
), to expedite the
preparation of required documentation, and to induce you to provide financing to the Company, we
represent and warrant to you the following information about the Company, its organizational
structure and other matters of interest to you:
1.
|
|
The Company has been formed by filing the following document with the Secretary of State of
the State of
_____:
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o
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Certificate/Articles of Incorporation
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o
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Certificate/Articles of Organization
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o
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Other [specify]
|
The date of formation of the Company by the filing of the document specified above with the
Secretary of State was
_____,
_____.
2.
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|
The Company was not formed by filing a document with any Secretary of State. The Company is
organized as a [specify type of organization, (e.g., general partnership, sole proprietorship,
etc.)]
_____. The Companys governing document is a [name
legal document, if one exists, (e.g., partnership agreement, etc.]
_____.
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3.
|
|
The full and exact name of the Company as set forth in the document specified in Item 1 or 2,
or (if no document is specified in Item 1 or 2) the full and exact legal name used in the
Companys business, is:
|
4.
|
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The Company uses and owns the following trade name(s) in the operation of its business (e.g.
billing, advertising, etc.; note: do not include names which are product names only):
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[Check one of the boxes below.]
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o
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We have attached a blank sample of every invoice that uses a tradename.
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o
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We do not use any tradename on any invoices.
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5.
|
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The Company maintains offices, leases or owns real estate, has employees, pays taxes, or
otherwise conducts business in the following States (including the State of its organization):
|
6.
|
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The Company has filed the necessary documents with the Secretary of State to qualify as a
foreign corporation in the following States:
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7.
|
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The Companys authority to do business has been revoked or suspended, or the Company is
otherwise not in good standing in the following States:
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8.
|
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The Company is the owner of the following licenses and permits, issued by the federal, state
or local agency or authority indicated opposite thereto:
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Type of License
|
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Issuing Agency or Authority
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9.
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In conducting its business activities, the Company is subject to regulation by federal, state
or local agencies or authorities (e.g., FDA, EPA, state or municipal liquor licensing
agencies, federal or state carrier commissions, etc.) as follows:
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Type of Activity
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Regulatory Agency or Authority
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10.
|
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The Company has never been involved in a bankruptcy or reorganization except: [explain]
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11.
|
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Between the date the Company was formed and now, the Company has used other names as set
forth below:
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Period of Time
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Prior Name
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From
to
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From
to
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From
to
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From
to
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12.
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Between the date the Company was formed and now, the Company has made or entered into mergers
or acquisitions with other companies as set forth below:
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Approximate Date
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Other Entity
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Description of Transaction
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13.
|
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The chief executive office of the Company is located at the street address set forth below,
which is in
_____
County, in the State of
_____:
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14.
|
|
The books and records of the Company pertaining to accounts, contract rights, inventory, etc.
are located at the following street address:
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15.
|
|
In addition to the chief executive office, the Company has inventory, equipment or other
assets located at the addresses set forth below. In each case, we have noted whether the
location is owned, leased or operated by third parties and the names and addresses of any
mortgagee, lessor or third party operator:
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Name and Address of
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Third Party with Interest in
|
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Companys Interest
|
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Location
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(e.g., owner, lessee or
|
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(e.g., mortgagee, lessor or
|
Street Address with County
|
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bailee)
|
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warehouseman)
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16.
|
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In the course of its business, the Companys inventory and/or other assets are handled by the
following customs brokers and/or freight forwarders:
|
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Name
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Address
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Type of Service/Assets Handled
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17.
|
|
The places of business or other locations of any assets used by the Company during the last
four (4) months other than those listed above are as follows:
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State & Zip
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Street Address
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City
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Code
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County
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18.
|
|
The Company is affiliated with, or has ownership in, the following entities (including
subsidiaries):
|
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Ownership
|
|
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Chief Executive
|
|
Jurisdiction of
|
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Percentage or
|
Name of Entity
|
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Office
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Incorporation
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Relationship
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19.
|
|
The Federal Employer Identification Number of the Company is
.
|
20.
|
|
Under the Companys charter documents, and under the laws of the State in which the Company
is organized, the shareholders, members or other equity holders do not have to consent in
order for the Company to borrow money, incur debt or obligations, pledge or mortgage the
property of the Company, grant a security interest in the property of the Company or guaranty
the debt of obligations of another person or entity.
|
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o
True
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o
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Incorrect [explain]:
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The power to take the foregoing actions is vested exclusively in the
[name the body (e.g. Board of Directors) or person (e.g. general partner, sole Manager) that
has such authority].
21.
|
|
The officers of the Company (or people performing similar functions) and their respective
titles are as follows:
|
The following people will have signatory powers as to all your of transactions with the
Company:
22.
|
|
With respect to the officers noted above, such officers are affiliated with or have ownership
in the following corporations (indicate name and address of affiliated companies, type of
operations, ownership percentage or other relationship):
|
23.
|
|
The Company is governed by
_____
[insert name of governing body or person
(e.g. Board of Directors, sole Manager, General Partner)]. The members of such governing body
of the Company are:
|
24.
|
|
The name of the stockholders, members, partners or other equity holders of the Company and
their equity holdings are as follows (if equity interests are widely held indicate only equity
owners with 10% or more of the equity interests):
|
|
|
|
|
|
|
|
|
|
Ownership
|
Name
|
|
No. of Shares or Units
|
|
Percentage
|
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25.
|
|
There are no judgments or litigation pending by or against the Company, its subsidiaries
and/or affiliates or any of its officers/principals, except as follows:
|
26.
|
|
At the present time, there are no delinquent taxes due (including, but not limited to, all
payroll taxes, personal property taxes, real estate taxes or income taxes) except as follows:
|
27.
|
|
The Companys assets are owned and held free and clear of any security interests, liens or
attachments, except as follows:
|
|
|
|
|
|
|
|
|
|
Amount of
|
Lienholder
|
|
Assets Pledged
|
|
Debt Secured
|
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28.
|
|
The Company has not guaranteed and is not otherwise liable for the obligations of others,
except as follows:
|
|
|
|
|
|
|
|
|
|
Amount of
|
Debtor
|
|
Creditor
|
|
Obligation
|
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29.
|
|
The Company does not own or license any trademarks, patents, copyrights or other intellectual
property, except as follows (indicate type of intellectual property and whether owned or
licensed, registration number, date of registration, and, if licensed, the name and address of
the licensor):
|
|
|
|
|
|
|
|
Type of
|
|
Registration
|
|
|
|
|
Intellectual
|
|
Number and Date
|
|
|
|
Name and Address
|
Property
|
|
of Registration
|
|
Owned or Licensed
|
|
of Licensor
|
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30.
|
|
The Company owns or uses the following materials (e.g., software, film footage, scripts,
etc.) that are subject to registration with the United States Copyright Office, though at
present copyright registrations have not been filed with respect to such materials:
|
31.
|
|
The Company does not have any deposit or investment accounts with any bank, savings and loan
or other financial institution, except as follows, for the purposes and of the types
indicated:
|
|
|
|
|
|
|
|
Bank Name and
|
|
Contact Person and
|
|
|
|
|
Branch Address
|
|
Phone Number
|
|
Account No.
|
|
Purpose/Type
|
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32.
|
|
The Company has no processing arrangements for credit card payments or payments made by check
(e.g. Telecheck) except as follows:
|
|
|
|
|
|
Processor Name
|
|
Contact Person
|
|
|
and Address
|
|
and Phone Number
|
|
Account No.
|
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33.
|
|
The Company owns or has registered to it the following motor vehicles, the original title
certificates for which shall be delivered to Lender prior to closing:
|
|
|
|
|
|
|
|
State Where Titled
|
|
Name of Registrant
|
|
|
|
|
and, if different,
|
|
as it appears on the
|
|
|
|
Year, Make and
|
Registered
|
|
Title Certificate
|
|
VIN
|
|
Model
|
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34.
|
|
With regard to any pension or profit sharing plan:
|
|
(a)
|
|
A determination as to qualification has been issued.
|
|
|
(b)
|
|
Funding is on a current basis and in compliance with established requirements.
|
35.
|
|
The Companys fiscal year ends:
.
|
36.
|
|
Certified Public Accountants for the Company is the firm of:
|
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|
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Name:
|
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Address:
|
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|
|
Telephone:
|
|
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|
|
Facsimile:
|
|
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|
|
E-Mail:
|
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|
|
Partner Handling Relationship:
|
|
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|
|
Were statements uncertified for any fiscal year?
|
|
|
37.
|
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The Companys counsel with respect to the proposed loan transaction is the firm of:
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Name:
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Address:
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Telephone:
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Facsimile:
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E-Mail:
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Partner Handling Relationship:
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38.
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The Companys counsel with respect to matters other than the proposed loan transaction, if
different, is the firm of:
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Name:
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Address:
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Telephone:
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Facsimile:
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E-Mail:
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Partner Handling Relationship:
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We agree to give you prompt written notice of any change or amendment with respect to any of
the foregoing information. Until you receive such notice, you will be entitled to rely in all
respects on the foregoing information.
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Very truly yours,
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[NAME OF PROPOSED BORROWER]
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By:
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Title:
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By:
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Title:
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Exhibit C
Compliance Certificate
To:
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Wachovia Bank, National Association, as Administrative and Collateral Agent
1133 Avenue of the Americas
New York
,
New York 10036
|
Ladies and Gentlemen:
Re: Fiscal Period Ending _______________, 20___
The undersigned hereby certifies to you pursuant to Section 9.6 of the Loan Agreement (as
defined below) as follows:
1. I am the duly elected Chief Financial Officer of BlueLinx Corporation, a Georgia
corporation (
Administrative Borrower
). Capitalized terms used herein without definition
shall have the meanings given to such terms in the Amended and Restated Loan and Security
Agreement, dated as of August 4, 2006 (as amended, modified, supplemented, extended, renewed,
restated or replaced from time to time, the
Loan Agreement
), by and among the financial
institutions from time to time parties thereto (each a
Lender
and collectively the
Lenders
), Wachovia Bank, National Association, successor by merger to Congress Financial
Corporation (
Wachovia
), as administrative and collateral agent for the Lenders and for
the Bank Product Providers (as defined in the Loan Agreement) (in such capacity,
Administrative and Collateral Agent
), Wachovia Capital Markets, LLC, as sole lead
arranger for the credit facility (in such capacity,
Sole Lead Arranger
) and as sole
syndication agent for the credit facility (in such capacity,
Sole Syndication Agent
),
Bank of America, N.A., Wells Fargo Foothill, LLC, and JPMorgan Chase Bank, N.A., formerly known as
JPMorgan Chase Bank, as documentation agents (each a
Documentation Agent
and
collectively,
Documentation Agents
, and together with the Administrative and Collateral
Agent, the Sole Lead Arranger, and the Sole Syndication Agent, each individually an
Agent
and collectively,
Agents
), Administrative Borrower, BlueLinx Services Inc., a Georgia
corporation (
BSI
), and BlueLinx Florida LP, a Florida limited partnership
(
BFLP
, and together with BlueLinx, BSI, and any other Person that at any time becomes a
Borrower under the Loan Agreement in accordance with the terms thereof, each individually a
Borrower
and collectively,
Borrowers
), BlueLinx Florida Holding No. 1 Inc., a
Georgia corporation (
BFH1
), BlueLinx Florida Holding No. 2 Inc., a Georgia corporation
(
BFH2
), BLX Texas Acquisition I LLC, a Georgia limited liability company
(
BLX1
), and BLX Texas Acquisition II LLC, a Georgia limited liability company
(
BLX2
, and together with BFH1, BFH2, BLX1, and any other Person that at any time becomes
a Guarantor under the Loan Agreement in accordance with the terms thereof, each individually a
Guarantor
and collectively,
Guarantors
).
2. I have reviewed the terms of the Loan Agreement, and have made, or have caused to be made
under my supervision, a review in reasonable detail of the transactions and the financial condition
of the Administrative Borrower and each of its Subsidiaries, during the immediately preceding
fiscal month.
3. The review described in Section 2 above did not disclose the existence during or at the end
of such fiscal month, and I have no knowledge of the existence and continuance on the date hereof,
of any condition or event which constitutes a Default or an Event of Default, except as set forth
on Schedule I attached hereto. Described on Schedule I attached hereto are the exceptions, if any,
to this section 3 listing, in detail, the nature of the condition or event, the period during which
it has existed and the action which any Borrower or any Guarantor has taken, is taking, or proposes
to take with respect to such condition or event.
4. I further certify that, based on the review described in Section 2 above, Borrowers and
Guarantors have not at any time during or at the end of such fiscal month, except specifically
described on Schedule II attached hereto or as permitted by the Loan Agreement, done any of the
following:
(a) changed their respective corporate names, or transacted business under any trade name,
style, or fictitious name, other than those previously described to you and set forth in the
Financing Agreements;
(b) changed the location of their respective chief executive offices, changed their respective
jurisdictions of incorporation, changed their respective types of organization or changed the
location of or disposed of any of their respective properties or assets (other than pursuant to the
sale of Inventory in the ordinary course of such Borrowers or such Guarantors business or as
otherwise permitted by Section 9.7 of the Loan Agreement), or established any new asset locations;
(c) materially changed the terms upon which any Borrower or any Guarantor sells goods
(including sales on consignment) or provides services, nor has any vendor or trade supplier to any
Borrower or any Guarantor during or at the end of such period materially adversely changed the
terms upon which it supplies goods to such Borrower or such Guarantor;
(d) permitted or suffered to exist any security interest in or liens on any of their
respective properties, whether real or personal, other than as specifically permitted in the
Financing Agreements;
(e) received any notice of, or obtained knowledge of any of the following not previously
disclosed to Agents: (i) the occurrence of any event involving the release, spill or discharge of
any Hazardous Material in violation of applicable Environmental Law in a material respect or (ii)
any investigation, proceeding, complaint, order, directive, claims, citation or notice with respect
to: (A) any non-compliance with or violation of any applicable Environmental Law by any Borrower or
any Guarantor in any material respect or (B) the release, spill or discharge of any Hazardous
Material in
violation of applicable Environmental Law in a material respect or (C) the generation, use,
storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous
Materials in violation of applicable Environmental Laws in a material respect or (D) any other
environmental, health or safety matter, which constitutes a Material Adverse Change or has a
material adverse effect on any properties at which such Borrower or such Guarantor transported,
stored or disposed of any Hazardous Materials; or
(f) become aware of, obtained knowledge of, or received notification of, any breach or
violation of any material covenant contained in any instrument or agreement in respect of
Indebtedness for money borrowed by any Borrower or any Guarantor.
Attached hereto as Schedule III are the calculations used in determining, as of the end of
such fiscal period, whether Borrowers and Guarantors are in compliance with the covenants set forth
in Section 9.17 of the Loan Agreement for such fiscal period.
The foregoing certifications are made and delivered this
_____
day of
_____, 20
_____.
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Very truly yours,
BLUELINX CORPORATION,
a Georgia corporation
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By:
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Name:
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David J. Morris
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Title:
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Chief Financial Officer
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BLUELINX/WACHOVIA LOAN AND SECURITY AGREEMENT SCHEDULES
SCHEDULE 1.29
Collection Accounts
|
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Depository Bank
|
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Account Number
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Bank One, NA
|
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****
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Wachovia Bank, National Association
|
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****
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Bank of America, N.A.
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****
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PNC
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****
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Sun Trust
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****
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Wells Fargo
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****
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****
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Portions hereof have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2
of the Exchange Act.
|
SCHEDULE 5.2(b)
Chattel Paper and Instruments
None
SCHEDULE 5.2(f)
Letters of Credit, etc.
|
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Account #
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Customer Name
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Amount
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12327689
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CHARLIES LUMBER & SUPPLY dba ONEIL LUMBER & MILLWORK
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$
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50,000
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12338232
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CUSTOM PARK HOMES
|
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$
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25,000
|
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10080263
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EAGLE INDUSTRIES
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$
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90,000
|
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12349158
|
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FOUR STAR BUILDING MATERIALS
|
|
$
|
50,000
|
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12348901
|
|
JOBSITE MATERIALS
|
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$
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40,000
|
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12307046
|
|
SMITH SHEPPARD SUPPLY INC
|
|
$
|
50,000
|
|
12348034
|
|
V & N CONCRETE PRODUCTS
|
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$
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20,000
|
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12349785
|
|
MCC BUILDING COMPONENTS
|
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$
|
50,000
|
|
|
|
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Subtotal Customer LCs in favor of BlueLinx
|
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$
|
375,000
|
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12328171
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341 LUMBER & TRUSS CO
|
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$
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19,100
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12307949
|
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BUILDERS CHOICE SUPPLY
|
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$
|
40,189
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10045626
|
|
MIKES HARDWARE
|
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$
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91,273
|
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12348031
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MILL BRANCH INDUSTRIES
|
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$
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84,329
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12340826
|
|
OLM ACQUISITION & OWEN LUMBER
|
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$
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338,400
|
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12347516
|
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PROSIDE BUILDING SUPPLY
|
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$
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84,759
|
|
12332056
|
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C.W. ENTERPRISES dba THE LUMBER YARD
|
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$
|
137,282
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12346844
|
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SUPERIOR KRAFT HOMES, INC
|
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$
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41,293
|
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|
|
|
|
|
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|
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Subtotal Customer Guaranties
|
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$
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836,625
|
|
|
|
|
|
|
|
|
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Grand Total Letters of Credit and Customer Guaranties
|
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$
|
1,211,625
|
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|
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*Note:
|
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The Guaranty amount equals the A/R balance or amount owing as of 7/20/2006.
|
SCHEDULE 5.2(g)
Commercial Tort Claims
None
SCHEDULE 8.4
Liens
|
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|
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ORIGINAL FILE
|
|
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|
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|
|
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|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corp.
P.O. Box 659
Belk, AL 35545
|
|
Thompson Tractor Co., Inc.
P.O. Box 10367
Birmingham, AL 35202
|
|
Specific Construction Equipment
|
|
AL
|
|
Secretary of State
|
|
1/5/00
2000-00486 FS
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
7530 Highway 114
Pennington, AL 36916
|
|
Fleet Capital Leasing
Technology Finance
P.O. Box 7023
Troy, MI 48007-7023
|
|
Konica Copiers in connection
with certain Lease Agreement
|
|
AL
|
|
Secretary of State
|
|
4/11/01
2001-13417 FS
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
7530 Highway 114
Pennington, AL 36916
|
|
Fleet Capital Leasing
Technology Finance
P.O. Box 7023
Troy, MI 48007-7023
|
|
Konica Copiers in connection with certain Lease Agreement
|
|
AL
|
|
Secretary of State
|
|
4/11/01
2001-13418 FS
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
7530 Highway 114
Pennington, AL 36916
|
|
Fleet Capital Leasing
Technology Finance
P.O. Box 7023
Troy, MI 48007-7023
|
|
Konica Copiers in connection with certain Lease Agreement
|
|
AL
|
|
Secretary of State
|
|
6/8/01
2001-22125 FS
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
7530 Highway 114
Pennington, AL 36916
|
|
Fleet Capital Leasing
Technology Finance
P.O. Box 7023
Troy, MI 48007-7023
|
|
Konica Copiers in connection with certain Lease Agreement
|
|
AL
|
|
Secretary of State
|
|
6/8/01
2001-22127 FS
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific
P.O. Box 496
Ashdown, AR 71822
|
|
Pitney Bowes Credit Corporation
27 Waterview
Dr. Shelton, CT 06484
|
|
All equipment manufactured, sold or distributed by the Secured
Party in connection with certain Lease Agreement
|
|
AR
|
|
Secretary of State
|
|
4/27/99
1184982
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
100 Supply Rd.
Crossett, AR 71635
|
|
IBM Credit Corporation
1 North Castle
Dr. Armonk, NY 10504-2575
|
|
Specific computer equipment in connection with certain Lease Agreement
|
|
AR
|
|
Secretary of State
|
|
11/10/99
1215820
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation,
as Lessee
133 Peachtree Street NE
Atlanta, GA 30303
|
|
Newcourt Communications
Finance Corporation, as Lessor
2 Gatehall
Dr. Parsippany, NJ 07054
|
|
Specific electronic equipment in connection with certain Lease Agreement
|
|
AR
|
|
Secretary of State
|
|
8/8/00
01258396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORIGINAL FILE
|
|
|
|
|
|
|
|
|
|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
24600 Avenue 13
Madera, CA 93687
|
|
The Cit Group/Equipment
Financing Inc.
P.O. Box 27248
Tempe, AZ 85285
|
|
Seven New Hyster
Lift Trucks
|
|
CA
|
|
Secretary of
State
|
|
6/4/96
9615960177
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
6300 Regio Ave.
Buena Park, CA 90620
|
|
Tennant Financial Services
4333 Edgewood Road N.E.
Cedar Rapids, IA 52411
|
|
Specific Equipment
in connection with
certain Lease Agreement
|
|
CA
|
|
Secretary of
State
|
|
9/8/99
9925660681
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
10399 E. Stockton Blvd.
Elk Grove, CA 95624
|
|
TMCC Equipment Finance
MS R307 P.O. Box 3457
Torrance, CA 90510
|
|
One New Toyota Forklift
|
|
CA
|
|
Secretary of
State
|
|
8/14/00
0023560034
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Allied Packaging Corp.
P.O. Box 8010
Phoenix, AZ 85066-8010
|
|
Stretch Wrap Machine
|
|
CA
|
|
Secretary of
State
|
|
9/9/02
0225360884
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Allied Packaging Corp.
P.O. Box 8010
Phoenix, AZ 85066-8010
|
|
Stretch Wrap Machine
|
|
CA
|
|
Secretary of
State
|
|
6/2/03
0315560509
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Citicorp Del Lease, Inc.
as Agent for
Harrison Credit Corp.
|
|
One New Caterpillar
|
|
FL
|
|
Secretary of
State
|
|
4/2/01
2001000071731
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific
7061 A.C Skinner Pkwy
Jacksonville, FL 32256
|
|
Atlas Worldwide Leasing, Inc.
8930 Western Way, Suite 14
Jacksonville, FL 32256
|
|
Specific Equipment
in connection with
certain Lease Agreement
|
|
FL
|
|
Secretary of
State
|
|
2/13/03
20030326584X
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp
County Rd 216E
Palatka, FL 32077
|
|
IBM Credit Corporation
1 North Castle Drive
Armonk, NY 10504
|
|
Specific computer equipment
in connection with certain
Lease Agreement
|
|
FL
|
|
Secretary of
State
|
|
11/1/00
200000248756
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corp.
400 S.R. 70 West
Lake Placid, FL 33852
|
|
Network Capital Alliance, a
Division of Sovereign
368 Veterans Memorial Highway
Commack, FL
11725
|
|
Specific Equipment
|
|
FL
|
|
Secretary of
State
|
|
8/14/00
200000185890
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
County Road 216; No. 155
Palatka, FL 32177
|
|
Caterpillar Financial Services
Corporation
1800 Parkway Place, Suite 820
Marietta, GA 30067
|
|
1 Caterpillar
226 Skid Steer Loader
|
|
FL
|
|
Secretary of
State
|
|
7/19/99
990000163614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORIGINAL FILE
|
|
|
|
|
|
|
|
|
|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
4600 NE Expressway
Doraville, GA 30340
|
|
Barloworld Fleet Leasing, LLC
11301-C Granite Street
Charlotte, NC 28273
|
|
One Gene Z45/22 in connection
with certain Lease Agreement
|
|
GA
|
|
Gwinnett County
|
|
12/23/02
012980
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific
100 Supply Rd.
Crossett, AR 71635
|
|
A.W. Chesterton
225 Fallon Rd.
Stoneham, MA 02180
|
|
Mechanical Seals and Braided Packing
|
|
GA
|
|
UCC Central Indexing
System
|
|
034-2002-001500
6/24/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corp.
4210 N. Trontage Rd.
Meridian, MS 39307
|
|
Konica Business Technologies, Inc.
500 Day Hill Rd.
Windsor, CT 06095
|
|
Konica Copiers in connection
with certain Contract Agreement
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2003-001933
2/21/03
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corp.
4210 N. Trontage Rd.
Meridian, MS 39307
|
|
Konica Business Technologies, Inc.
500 Day Hill Rd.
Windsor, CT 06095
|
|
Konica Copy in connection
with certain Contract Agreement
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2003-010061
9/11/03
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corp.
4210 N. Trontage Rd.
Meridian, MS 39307
|
|
Konica Business Technologies, Inc.
500 Day Hill Rd.
Windsor, CT 06095
|
|
Konica Copiers in connection with
certain Contract Agreement
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2003-010326
9/19/03
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corp.
4210 N. Trontage Rd.
Meridian, MS 39307
|
|
Konica Business Technologies, Inc.
500 Day Hill Rd.
Windsor, CT 06095
|
|
Konica Copy in connection with
certain Contract Agreement
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2003-010562
9/24/03
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corp.
4210 N. Trontage Rd.
Meridian, MS 39307
|
|
Konica Business Technologies, Inc.
500 Day Hill Rd.
Windsor, CT 06095
|
|
Konica Copy in connection with certain Contract Agreement
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2003-013154
1/20/03
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corp.
4210 N. Trontage Rd.
Meridian, MS 39307
|
|
Konica Business Technologies, Inc.
500 Day Hill Rd.
Windsor, CT 06095
|
|
Konica Copiers in connection with
certain Contract Agreement
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2004-002982
3/12/04
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corp.
133 Peachtree St NE
Atlanta, GA 30303
|
|
Safeco Credit Co. Inc.
Safeco Plaza, A-Bldg.
Seattle, WA 98185
|
|
Specific Equipment in connection
with certain Lease Agreement
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-99-004811
4/30/99
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company Finance &
Remarketing Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-1999-009377
9/9/99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORIGINAL FILE
|
|
|
|
|
|
|
|
|
|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company Finance &
Remarketing Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-1999-009413
9/9/99
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company Finance &
Remarketing Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-003392
3/24/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company Finance &
Remarketing Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-003393
3/24/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company Finance &
Remarketing Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-003352
3/29/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
327 Margaret Street
Plattsburgh, GA 12901
|
|
Motion Industries, Inc.
P.O. Box 1477
Birmingham, AL 35201
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2002-002434
3/4/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company Finance &
Remarketing Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
044-2001-001661
2/27/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company Finance &
Remarketing Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
044-2001-002039
3/13/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
1650 Lake Cook Rd.
Deerfield, IL 60015
|
|
Republic Credit Corporation
3300 S Parker Rd.,
Suite 500
Aurora, CO 80014
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
051-2003-00270
4/28/03
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company Finance &
Remarketing Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2000-023101
12/11/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company Finance &
Remarketing Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2000-023102
12/11/00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORIGINAL FILE
|
|
|
|
|
|
|
|
|
|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-023103
12/11/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-023104
12/11/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-023105
12/11/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-023106
12/11/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-023107
12/11/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2001-004012 2/28/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2001-0040267
3/5/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2001-004268 3/5/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2001-004269 3/5/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2001-004270 3/5/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORIGINAL FILE
|
|
|
|
|
|
|
|
|
|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2001-004271
3/5/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2001-004272
3/5/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2001-004273
3/5/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2001-004749
3/13/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2001-014004
8/7/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2001-014066 8/8/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Hewlett-Packard Company
Finance & Remarketing
Division
20 Perimeter Summit Blvd.
Atlanta, GA
30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2001-014067 8/8/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Durametal Corporation 9560 S.W. Herman Rd. Tualatin, OR 97062
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2001-18506 11/23/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
5495 Clyattville Lake Park Rd.
Clyattville, GA 31601
|
|
Tennant Financial Services
4333 Edgewood Road N.E.
Cedar Rapids, IA 52441
|
|
Specific Equipment in
connection with certain Lease
Agreement
|
|
GA
|
|
UCC Central
Indexing
System
|
|
092-2000-002985 11/6/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
d/b/a J&J Mid-South Container
1745
Doug Barnard Parkway
Augusta, GA 30906
|
|
Barloworld Handling
P.O. Box 3109
Cayce/W. Columbia, SC 29171
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
121-2001-001463 5/17/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORIGINAL FILE
|
|
|
|
|
|
|
|
|
|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
W.9
th
Street
Brunswick, GA 315203200
|
|
IBM Credit Corporation
1 North Castle Drive
Armonk, NY 10504
|
|
Specific Equipment in connection with certain Lease Agreement
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-1999-006347
6/21/99
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
4300 Wildwood Parkway
Atlanta, GA 30339
|
|
IBM Credit Corporation
1 North Castle Drive
Armonk, NY 10504
|
|
Specific Equipment in connection with certain Lease Agreement
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-1999-008192
8/10/99
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
4300 Wildwood Parkway
Atlanta, GA 30339
|
|
IBM Credit Corporation
1 North Castle Drive
Armonk, NY 10504
|
|
Specific Equipment in connection with certain Lease Agreement
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-1999-008193
810/99
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
133 Peachtree Street
Atlanta, GA 30303
|
|
Tennant Financial Services
4333 Edgewood Rd. N.E.
Cedar Rapids, IA 52441
|
|
Special Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
002-2001-000381
10/5/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-1999-009594
9/14/99
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-1999-009595
9/14/99
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company 20 Perimeter Summit Blvd. Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-1999-009597
9/14/99
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-1999-009668
9/17/99
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-1999-012686
12/8/99
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-1999-012713
12/8/99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORIGINAL FILE
|
|
|
|
|
|
|
|
|
|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street,
NE Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-1999-012742
12/9/99
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-003404
3/24/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-003405
3/24/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-003406
3/24/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-003407
3/24/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-003408
3/24/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-003409
3/24/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-003411
3/24/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-003412
3/24/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-003413
3/24/00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORIGINAL FILE
|
|
|
|
|
|
|
|
|
|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-003414
3/24/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-003552
3/29/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-005587
5/15/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-008314
7/12/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-008315
7/12/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-008316
7/12/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-008317
7/12/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-008318
7/12/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2000-008376
7/13/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Citicorp Del Lease, Inc.
As Agent for Harrison Credit Corp.
450 Mamaroneck
Avenue Harrison,
NY 10528
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
007-2001-002905
7/13/01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORIGINAL FILE
|
|
|
|
|
|
|
|
|
|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
55
Park Place, 6
th
Floor
Atlanta, GA 30348
|
|
Harbour Capital Corporation
11 Merrill Drive
Hampton, NH 03842
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
007-2001-004315
5/3/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Solarcom LLC
One Sun Court
Norcross, GA 30092
|
|
Specific Equipment in
connection with certain Lease
Agreement
|
|
GA
|
|
UCC Central
Indexing System
|
|
007-2001-008431
8/2/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Citicorp Del Lease, Inc.
As Agent for Harrison Credit Corp.
450 Mamaroneck Avenue
Harrison,
NY 10528
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
007-2001-010715
9/28/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
IBM Credit Corporation
1 North Castle Drive
Amonk, NY 10504
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
007-2002-005490
5/28/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
440 E 138
th
Street
Chicago, IL 60627
|
|
Harris Bank Naperville
503 N. Washington Street
Naperville, IL 60566
|
|
Specific Equipment in connection with certain Lease Agreement
|
|
GA
|
|
UCC Central
Indexing
System
|
|
007-2002-007112
7/11/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
5600 E. Olympic Blvd.
Los Angeles, CA 90022
|
|
Harris Bank Barrington
201 S. Grove Avenue
Barrington, IL 60010
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
007-2002-009025
9/4/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
IBM Credit Corporation
1 North Castle Drive
Amonk, NY 10504
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
007-2002-011189
11/1/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
IBM Credit Corporation
1 North Castle Drive
Amonk, NY 10504
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
007-2002-011240
11/4/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
IBM Credit Corporation
1 North Castle Drive
Amonk, NY 10504
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
007-2003-004452
4/21/03
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
2410 Northhampton Street
Easton, PA 18042
|
|
Greatamerica Leasing
Corporation
P.O. Box 609
Cedar Rapids, IA 52406
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
007-2003-012052
10/27/03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORIGINAL FILE
|
|
|
|
|
|
|
|
|
|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
044-2001-001705
2/28/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
044-2001-001706
2/28/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
044-2001-001707
2/28/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
044-2001-001708
2/28/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
044-2001-001709
2/28/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
044-2001-001710
2/28/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
044-2001-001711
2/28/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-013736
7/24/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-013748
7/24/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-013750
7/24/00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORIGINAL FILE
|
|
|
|
|
|
|
|
|
|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-013751
7/24/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-017365
9/18/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-017366
9/18/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-017367
9/18/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-017368
9/18/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-017369
9/18/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-017370
9/18/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-017371
9/18/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-017916
9/26/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
060-2000-017918
9/26/00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORIGINAL FILE
|
|
|
|
|
|
|
|
|
|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2000-017919
9/26/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2000-017920
9/26/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2000-017921
9/26/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2000-017922
9/26/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2000-017923
9/26/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2000-017924
9/26/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2000-017925
9/26/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2000-017926
9/26/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2001-018911
10/9/00
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2001-018913
10/9/00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORIGINAL FILE
|
|
|
|
|
|
|
|
|
|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Fleet Business Credit Corp.
One South Wacker Dr., Suite
3900
Chicago, IL 60606
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2001-001643
1/23/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Inventory
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2001-008423
5/3/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Tennant Financial Services
4333 Edgewood Road N.E.
Cedar Rapids, IA 52411
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2001-016251
10/4/01
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Associates Commercial
Corporation
P.O. Box 168647
Irving, TX 750168647
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2002-002663
2/26/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2002-003188
3/8/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2002-003189
3/8/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2002-003190
3/8/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2002-003191
3/8/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2002-003192
3/8/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2002-003262
3/11/02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORIGINAL FILE
|
|
|
|
|
|
|
|
|
|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2002-003263
3/11/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Hewlett-Packard Company
20 Perimeter Summit Blvd.
Atlanta, GA 30319
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2002-003264
3/11/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
1220 Railroad Street
Duluth, MN 55802
|
|
The Peltz Group, Inc.
4600 N. Port Washington Rd.
Milwaukee, WI 53217
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2002-010924
8/1/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Pope & Talbot, Inc.
1500 S.W. First Avenue, Suite
200
Portland, OR 97201
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2002-012867
9/12/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Pope & Talbot, Inc.
1500 S.W. First Avenue, Suite
200
Portland, OR 97201
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2002-013120
9/19/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
1203 Fones Road
Olympia, WA 98501
|
|
Tennant Financial Services
10 Riverview Drive
Danbury, CT 06810
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2002-016263
11/26/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Alliance Energy Corp.
800 South Street
P.O. Box 9161
Waltham, MA 02454
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2003-002831
3/7/03
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Toyota Motor Credit
Corporation
P.O. Box 3457
Torrance, CA 90510
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2003-003662
3/24/03
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
133 Peachtree Street, NE
Atlanta, GA 30303
|
|
Maxus Leasing Group, Inc.
31300 Bainbridge Road
Cleveland, OH 44139
|
|
Specific Equipment
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2003-014368
11/20/03
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
North East 4
th
and Adams
Camas, WA 98607
|
|
Air Liquide America LP
10450 SW Tualatin-Sherwood
Road
Tualatin, OR 97062
|
|
3,000 gal nitrogen vessel
|
|
GA
|
|
UCC Central Indexing
System
|
|
060-2003-015621
12/18/03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORIGINAL FILE
|
|
|
|
|
|
|
|
|
|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
4600 NE Expressway
Doraville, GA 30340
|
|
Barloworld Fleet Leasing, LLC
11301-C Granite Street
Charlotte, NC 28273
|
|
Specific Equipment
|
|
GA
|
|
UCC Central
Indexing
System
|
|
067-2002-012980
12/23/02
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
440 E. 138
th
Street
Chicago, IL 60627
|
|
Safeco Credit Co.
Safeco Plaza Building A
Seattle, WA 98185
|
|
One Compressor (model TS20) in connection with certain Lease Agreement
|
|
IL
|
|
Secretary of State
|
|
4/30/99
4029288
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
440 E. 138
th
Street
Chicago, IL 60627
|
|
United Financial of Illinois, Inc.
800 East Diehl Road
Naperville, IL 60563
|
|
One Lighting Retrofit Project in connection with certain Lease Agreement
|
|
IL
|
|
Secretary of State
|
|
5/12/00
4209256
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
Old Route 66 & 8
th
Street
Mount Olive, IL 62069
|
|
Sun Chemical Corporation
135 W. Lake Street
Northlake, IL 60164
|
|
Specific electronic equipment and office furniture
|
|
IL
|
|
Secretary of State
|
|
7/1/02
5490758
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
60 Main Street
Woodland, ME 04694
|
|
Associates Commercial Corporation
711 P.O. Box 168647
Irving, TX 75016
|
|
One Sweeper One Cab & Chassis Truck
|
|
ME
|
|
Secretary of State
|
|
8/26/98
1980001282485
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
60 Main Street
Woodland, ME 04694
|
|
Irving Oil Corporation
700 Maine Avenue
Bangor, ME 04402-0401
|
|
Mechanical Tank Gauge Tank Transmitter Mini Computer/Receiver
|
|
ME
|
|
Secretary of State
|
|
7/19/99
19990001326276
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
951 County Street
Milan, MI 48160
|
|
Ervin Leasing Company
3893 Research Park Drive
P.O. Box 1689
Ann Arbor, MI 48106-1689
|
|
1 Bandsaw
|
|
MI
|
|
Secretary of State
|
|
4/23/01
D765997
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
510 Industrial Park Access Rd.
Columbus, MS 39705
|
|
Fleet Capital Leasing-
Technology Finance
P.O. Box 7023
Troy, MI 48007-7023
|
|
Konica Copier in connection with certain Lease Agreement
|
|
MS
|
|
Secretary of State
|
|
6/8/01
01531272
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Group
8600 NE 38
th
Street
Kansas City, MO 64161
|
|
Mid-Continent Leasing Services, Inc.
6045 Martway, Suite 100
Mission, KS
|
|
Specific Equipment in connection with certain Lease Agreement
|
|
MO
|
|
Secretary of State
|
|
4/10/00
4036979
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
327 Margaret Street
Plattsburgh, NY 12901-1719
|
|
Weavexx Corporation
11120 Capital Blvd.
Wake Forest, NC 27587
|
|
Weavexx Paper Machine
|
|
NY
|
|
Secretary of State
|
|
6/22/01
121388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORIGINAL FILE
|
|
|
|
|
|
|
|
|
|
|
DATE AND
|
DEBTOR
1
|
|
SECURED PARTY
|
|
COLLATERAL
|
|
STATE
|
|
JURISDICTION
|
|
NUMBER
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific
P.O. Box 489
2128 Horner Waldorf Rd.
Creedmro, NC 27522
|
|
Interstate Equipment Co.
P.O. Box 868
Statesville, NC 28687
|
|
Specific Equipment: Rosco RB-48
|
|
NC
|
|
Secretary of State
|
|
6/10/99
19990056602
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
200 McDowell Road
Asheboro, NC 27203
|
|
Barloworld Fleet Leasing LLC
11301-C Granite Street
Charlotte, NC 28273
|
|
One (1) JLG 450AJ
|
|
NC
|
|
Secretary of State
|
|
8/31/01
20010518534F
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific
P.O. Box 489
2128 Horner Waldorf Rd.
Creedmro, NC 27522
|
|
Interstate Equipment Co.
P.O. Box 868
Statesville, NC 28687
|
|
Specific Equipment: Rosco RB-48
|
|
NC
|
|
Granville County
|
|
6/10/99
99-483
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
10515 SW Allen Ave.
Beaverton, OR 97005
|
|
Les Schwab Tire Center
10340 SW Canyon Rd. Beaverton, OR 97005
|
|
All new and used tires purchased from Secured Party
|
|
OR
|
|
Secretary of State
|
|
9/30/02
600426
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corp.
One Owens Way
Bradford, PA 16701
|
|
Lease Corporation of America
340 E. Big Beaver Rd., Ste 560
Troy, MI 48083
|
|
Radios Portables
|
|
PA
|
|
Secretary of State
|
|
1/27/99
29841399
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific
P.O. Box 280
Prosperity, SC 29127
|
|
Interstate Equipment Company
122 Gardners Terrace Road
West Columbia, SC 29172
|
|
Specific Equipment: Rosco RB-48
|
|
SC
|
|
Secretary of State
|
|
9/15/00
000915-091424A
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
511 Winchester Rd
Memphis, TN 38116
|
|
Tennant Financial Services
10 Riverview Dr.
Danbury, CT 06810
|
|
1 Tennant Model 6500 Sweeper in connection with certain Lease Agreement
|
|
TN
|
|
Secretary of State
|
|
1/18/02
102-004380
|
|
|
|
|
|
|
|
|
|
|
|
Georgia Pacific Corporation
4200 Old Tasso Rd
Cleveland, TN 37312
|
|
Icemakers, Inc.
909 Creekside Rd
Chattanooga, TN 37406
|
|
2 Scotsman (equipment)
|
|
TN
|
|
Secretary of State
|
|
10/17/01
301-104952
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corp.
611 Winchester Rd.
Memphis, TN 38116
|
|
Hyster Credit Company
P.O. Box 4366
Portland, OR 97208
|
|
One Rico 8000 Roll Handler
|
|
TN
|
|
Secretary of State
|
|
12/10/99
992-056404
|
|
|
|
|
|
|
|
|
|
|
|
Georgia-Pacific Corporation
Loop 285
Quanah, TX 79252
|
|
Tennant Financial Services
4333 Edgewood Rd. N.E.
Cedar Rapids, IA 52441
|
|
1 Tennant Model 7400 LP Scrubber in connection with certain Lease
Agreement
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TX
|
|
Secretary of Secretary
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3/1/01
01-037238
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ORIGINAL FILE
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DATE AND
|
DEBTOR
1
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SECURED PARTY
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COLLATERAL
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STATE
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JURISDICTION
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NUMBER
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Georgia-Pacific Corp.
634 Davis St.
Emporia, VA 23847
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Pugh Oil Co. Inc.
701 McDovell Rd.
Asbeboro, SC
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Specific oil industry equipment
|
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VA
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Secretary of Secretary
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3/30/01
010330 7015
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Georgia Pacific Corp.
1203 Fones Rd.
Olympia, WA 98501
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Tennant Financial Services
4333 Edgewood Rd. NE
Cedar Rapids, IA 52411
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Specific Equipment in connection with certain Lease Agreement
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WA
|
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Secretary of State
|
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9/27/99
99270082
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Georgia Pacific Corp.
P.O. Box 1058
Bellingham, WA 98227
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Tricon Metals & Services, Inc.
P.O. Box 101447
2700 5
th
Ave. S
Birmingham, AL 35210
|
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Specific Equipment
|
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WA
|
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Secretary of State
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12/5/00
2003400162
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Georgia-Pacific Corp
520 Pike
Street Seattle, WA 98101
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Citicorp Vendor Finance, Inc.
P.O. Box 728
Park Ridge, NJ 07656
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Sharp Copier & Fax Machine
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WA
|
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Secretary of State
|
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12/29/03
2003-363-7807-5
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Georgia Pacific
100 Wisconsin River
Port Edwards, WI 54469
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Pitney Bowes Credit Corp.
27 Waterview Dr.
Shelton, CT 06484
|
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Specific equipment in connection with certain Lease Agreement
|
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WI
|
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Secretary of State
|
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12/9/99
01906288
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Georgia Pacific
100 Main Street
Menasha, WI 54952
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Hyster Credit Co.
P.O. Box 4366
Portland, OR 97208
|
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One new Hyster Lift Truck
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WI
|
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Secretary of State
|
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12/29/99
01912123
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Georgia-Pacific Corp.
1927 Erie Ave.
Sheboygan, WI 53082
|
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Wisconsin Power & Light
P.O. Box 192
Madison, WI 53701
|
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Specific Equipment
|
|
WI
|
|
Secretary of State
|
|
11/29/01
010009313117
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Georgia-Pacific
113 Peachtree St. N.E.
Atlanta, GA 30303
|
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Sterling Water, Inc.
Culligan Water Conditioning
2465 Trailwood Lane
Mosinee, WI 54455
|
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Specific Equipment
|
|
WI
|
|
Secretary of State
|
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9/17/02 0
20016719024
|
SCHEDULE 8.8
Environmental Disclosures
(a)
|
|
Compliance with Environmental Laws
|
|
|
|
Information Relating to Underground Storage Tanks
:
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1.
|
|
Akron, OH Underground Storage Tank Closure Report 9/30/99 Ohio Action levels not
exceeded.
|
|
2.
|
|
Albuquerque, NM Underground Storage Tank Removal Report 5/3/94 no further action
required.
|
|
3.
|
|
Allentown, PA Underground Storage Tank Closure Report 6/3/97
|
|
4.
|
|
Beaverton (Portland), OR Underground Storage Tank Removal Closure Report 6/10/98
|
|
|
|
No further action letter from Oregon Department of Environmental Quality
|
|
5.
|
|
Burlington, VT Underground Storage Tank Permit 9/17/97
|
|
|
|
Correspondence from Vermont Agency of Natural Resources approving permit for
installation of replacement UST.
|
|
|
|
|
Permit for UST installation expired 9/1/02
|
|
6.
|
|
Burlington, VT Underground Storage Tank Removal Report 10/1/97
|
|
|
|
Report prepared by Aqua-Terra, Inc. No additional action recommended.
|
|
7.
|
|
Charleston, SC Underground Storage Tank Closure Report 11/21/91
|
|
8.
|
|
Charleston, SC Standard Limited Assessment Report 9/94
|
|
9.
|
|
Charlotte, NC Permit Rescission of Permit #SR 0300073
|
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|
Permit rescinded on 8/23/93 after remediation of contaminated soils completed.
|
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10.
|
|
City of Industry (Los Angeles), CA Underground Storage Tank Removal 2/21/92
|
|
11.
|
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Denver, CO Underground Storage Tank Removal Closure Report 2/98
|
|
|
|
No further action letter from Colorado Department of Labor and Employment, Oil
Inspection Section dated 4/30/98 re: UST removal
|
|
12.
|
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Denville, NJ Underground Storage Tank Systems Registration Certificate
|
|
13.
|
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Denville, NJ Underground Storage Tank Site Assessment Summary 8/94
|
|
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|
New Jersey Dept of Environmental Protection and Energy form. GP discovered
contamination from diesel and unleaded gasoline was found. Decommissioning was approved
(closure approval #C93-5093). Soil contamination was found, but no ground water
contamination found.
|
|
14.
|
|
Denville, NJ Underground Storage Tank Closure & Corrective Action Report 8/11/94
|
|
|
|
Report prepared by TTI Environmental, Inc. Removal of 2 old USTs and
installation of 1 new UST. Remediation activities required.
|
|
15.
|
|
Denville, NJ Underground Storage Tank No Further Action Letter 12/2/94
|
|
|
|
No further action letter from NJ Department of Environmental Protection and
Energy.
|
|
16.
|
|
Des Moines, IA Underground Storage Tank Closure Report 7/22/98
|
|
|
|
Report prepared by Burns & McDonnell. No further action recommended.
|
|
17.
|
|
Elkhart, IN No Further Action Letter for Underground Storage Tank 3/5/02
|
|
|
|
No further action letter from Indiana Department of Environmental Management
|
|
18.
|
|
Elkhart, IN Response to Underground Storage Tank Closure Checklist 11/12/01
|
|
|
|
Report prepared by DLZ Michigan, Inc. in response to IDEM closure review
checklist. Relates to 1998 removal of UST and installation of new UST.
|
|
19.
|
|
Elkhart, IN Notification for Underground Storage Tanks
|
|
|
|
Notification provided to Indiana Department of Environmental Management.
Relates to new UST installed 5/98.
|
|
20.
|
|
Elkhart, IN Underground Storage Tank Removal Closure Report 12/98
|
|
|
|
Report prepared by Burns & McDonnell re: removal of UST. Remediation performed
site downgradient from an ACCRA-PAC plant which is an aerosol company with history of
environmental issues, it is a CERCLA site. Monitoring well installed. No further
action recommended.
|
|
21.
|
|
Erwin, TN Underground Storage Tank Registration Certificate
|
|
22.
|
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Fargo, ND Notification for Underground Storage Tanks 12/90
|
|
|
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Appears that new UST installed per site assessment below
|
|
23.
|
|
Fargo, ND Underground Storage Tank Site Assessment 10/89
|
|
|
|
Report prepared by Special Resource Management. Recommend reporting
contamination to North Dakota State Department of Health.
|
|
24.
|
|
Fort Worth, TX Underground Storage Tank Removal Report -
|
|
|
|
No further action letter from Texas Water Commission dated 12/10/92
|
|
25.
|
|
Grand Rapids, MI Underground Storage Tank Closure Report
|
|
|
|
Correspondence from Michigan Department of Environmental Quality dated 3/18/03.
Due to leaking UST restrictive covenant recorded prohibiting installation of water well
on the land. Any conveyance of the land must provision for compliance with corrective
action plan and notice must be given to purchasers. Monitoring wells installed.
Monitoring well abandonment may occur after MDEQ provides a letter indicating that the
closure report has been audited or after the 6 month time frame for the department to
conduct a closure audit expires. The monitoring wells have been abandoned.
|
|
|
|
|
Closure report prepared by DLZ Michigan, Inc. 2/03. Tank was an open Leaking
UST based on confirmed release discovered during tank removal 3/23/92. Initial closure
report submitted in August 1997 after 5 years of remediation and monitoring, but the
MDEQ indicated that additional corrective action was necessary. Additional remediation
activity performed beginning in 2000 by DLZ. DLZ recommends no further action.
|
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26.
|
|
Harlingen, TX Underground Storage Tank Closure Report 9/20/94
|
|
|
|
No further action letter from Texas Natural Resource Conservation Commission
dated 10/4/94 re: UST closure.
|
|
27.
|
|
Houston, TX Underground Storage Tank Closure/Removal 9/19/91
|
|
|
|
No further action letter from Texas Natural Resource Conservation Commission
dated 11/22/93 re: UST closure 4/92 (at the time the TNRCC did not issue no further
action letter).
|
|
28.
|
|
Jackson (Pearl), MS Underground Storage Tank Closure No Further Action Letter
|
|
|
|
No further action letter from Mississippi Department of Environmental Quality
dated 8/8/91.
|
|
29.
|
|
Little Rock, AR Underground Storage Tank Removal Closure Report 4/98
|
|
|
|
No further action letter from Arkansas Department of Pollution Control and
Ecology dated 1/31/91 re: closure of UST on 11/6/90
|
|
30.
|
|
Lubbock, TX Underground Storage Tank Closure/Removal 3/1/94
|
|
|
|
Report prepared by CURA. No further action recommended. File is missing a no
further action letter from TNRCC, but references the fact that a representative of the
TNRCC informed CURA that no further action would be required.
|
|
31.
|
|
Lubbock, TX Underground Storage Tank Registration 3/31/94
|
|
32.
|
|
Maple Grove (Minneapolis), MN Petroleum Tank Release Site File Closure 1/26/94
|
|
|
|
No further action / site closure letter from Minnesota Pollution Control Agency
dated 10/27/95.
|
|
|
|
|
Underground Storage Tank Closure Report 2/17/94
|
|
33.
|
|
Memphis, TN Underground Storage Tank Closure
|
|
|
|
No further action / site closure letter from Tennessee Department of Environment
and Conservation dated 5/29/96.
|
|
|
|
|
Permanent Closure Report 4/17/96
|
|
34.
|
|
Missouri Dept. of Natural Resources Underground Storage Tank Certificate
|
|
35.
|
|
Missouri Dept. of Natural Resources Underground Storage Tank Certificate
|
|
36.
|
|
Nashville, TN Underground Storage Tank Amended Notification 11/8/99
|
|
37.
|
|
Nashville, TN Underground Storage Tank Closure Report
|
|
|
|
Report prepared by Key Environmental 6/23/90 re: removal of UST. No further
action recommended.
|
|
38.
|
|
National City (San Diego), CA Underground Storage Tank Removal Report 4/28/94
|
|
|
|
Prepared by TRC Environmental Corporation. Elevated levels of contaminants
found at site. TRC recommends work plan for ongoing monitoring to evaluate the extent
of potential impact of petroleum hydrocarbons at site.
|
|
|
|
|
Supplemental Groundwater Monitoring and Sampling Report 7/97
|
|
|
|
|
County of San Diego letter confirming completion of site investigation and
remedial action dated 6/11/98
|
|
39.
|
|
New Orleans, LA Underground Storage Tank Removal Notification of closure of UST
|
|
|
|
Letter to LADEQ with Removal Information form and other pertinent documents
dated 2/25/93
|
|
40.
|
|
New Stanton, PA Addendum to Underground Storage Tank Closure Report
|
|
41.
|
|
New Stanton, PA Underground Storage Tank Closure Report 4/5/93
|
|
|
|
Report prepared by Environmental Resources Management, Inc. Documented
contamination further assessment required.
|
|
42.
|
|
Newark, CA Underground Storage Tank Permit application
|
|
|
|
Application for permit and letter from City of Newark dated 8/6/97 indicating
that permit will be issued when fees paid. Actual permit not in file.
|
|
|
|
|
Semi-Annual Groundwater Monitoring Report dated 7/21/03 performed in
accordance with Clean-up Requirements Order 97-114, issued to PACCAR Inc. (former
owner), and the Containment Management Plan
|
|
|
|
|
GP is actively remediating the site.
|
|
43.
|
|
Newtown, CT Underground Storage Tank Removal 9/9/97
|
|
|
|
Report prepared by Aqua-Terra, Inc. No further action recommended.
|
|
44.
|
|
North Highlands (Sacramento), CA Underground Storage Tank Removal Report 7/18/94
|
|
|
|
Report prepared by TRC Environmental. No further action recommended.
|
|
45.
|
|
North Kansas City, MO No Further Action Letter re: Underground Storage Tank Closure
|
|
|
|
No further action letter from Missouri Department of Natural Resources dated
7/21/99 after remediation was completed.
|
|
46.
|
|
North Kansas City, MO Permit Termination Closure Approval 8/20/99
|
|
|
|
From Missouri Department of Natural Resources re: Termination of Permit
MO-R401212. Remediation complete and permit is terminated.
|
|
47.
|
|
North Kansas City, MO Underground Storage Tank Closure Report 8/25/98
|
|
48.
|
|
North Kansas City, MO Correspondence re: Permit Termination Request 6/28/99
|
|
|
|
From SECOR to Missouri Department of Natural Resources. Request for Termination
of General Permit for landfarming of impacted soil at GP site. Requests final closure
of site.
|
|
49.
|
|
Lake City, FL Storage Tank Registration 2003-2004
|
|
50.
|
|
Portland, ME Underground Storage Tank Removal Site Assessment 10/26/93
|
|
|
|
Report by JB Plunkett and Associates. No further action required per Maine
Department of Environmental Protection.
|
|
51.
|
|
Riverside, CA Underground Storage Tank Removal
|
|
|
|
No further action letter from Riverside Department of Environmental Health dated
5/15/95.
|
|
52.
|
|
San Antonio, TX Underground Storage Tank Closure Report 11/16/92
|
|
|
|
Report by LGL-ECT Environmental Services. No further action recommended.
|
|
|
|
|
Letter from Texas Water Commission dated 10/23/92 requesting corrective action
be stopped and reports submitted to TWC for further evaluation.
|
|
|
|
|
Letter from TWC dated 11/3/92 reassigning case to central office in Austin
|
|
|
|
|
TNRCC LPST Data Base Query Results case closed
|
|
53.
|
|
Sioux Falls, SD Underground Storage Tank Closure Report 10/97
|
|
|
|
Report prepared by Burns & McDonnell. No further action recommended.
|
|
|
|
|
South Dakota DENR letter Closure of DENR Resources File #97.360 DENR has
determined that work at this site can end and that the file can be closed.
|
|
54.
|
|
Springfield, MO Underground Storage Tank Closure Report 5/24/94
|
|
55.
|
|
Tennessee Underground Storage Tank Registration Certificate
|
|
56.
|
|
Virginia Beach (Norfolk), VA Underground Storage Tank Notification of Permanent Closure
|
|
|
|
Report of Site Assessment for Tank Closure 5/30/90
|
|
|
|
|
No further action letter from Virginia State Water Control Board dated 10/9/90.
|
|
57.
|
|
Yaphank, NY Underground Storage Tank Removal / Installation
|
|
|
|
Intracompany memo re: removal of UST.
|
|
58.
|
|
Ypsilanti, MI Underground Storage Tank Registration Certificate
|
|
|
|
Expires 9/30/03; renewal by 1/13/04
|
|
1.
|
|
Phase I Environmental Site Assessment and Limited Compliance Audit for sixty-three (63)
locations by ATC Associates, Inc., dated April 2004. The April 2004 Phase I Environmental
Site Assessments for fifty-eight (58) locations were updated June 2006 by ATC Associates,
Inc.
|
|
2.
|
|
Phase I Environmental Site Assessment and Limited Compliance Audit for six (6) leased
locations acquired in July 2005, performed by ATC Associates, Inc.
|
(c)
|
|
Consent Orders or Decrees
|
Fremont Distribution Center, Newark, CA
- Seller purchased the Fremont Distribution
Center (Newark, CA) from PACCAR Inc. in November 1995. PACCAR paid Seller $171,800 as compensation
for future monitoring and remediation of groundwater contamination caused by leaking USTs during
the ownership of PACCAR. The current liability loss reserve for Seller is unknown. The site
concern is dissolved volatile organic compounds. The Regional Water Quality Control Board approved
a Containment Zone Management Plan (CZMP) for PACCAR in 1997 under Cleanup Requirement Order
97-114. Seller took over the semi-annual self (groundwater) monitoring requirements stipulated in
the CZMP as required under the terms of the G-P/ PACCAR sale agreement. Recent (December 2005)
groundwater monitoring results indicate that dissolved diesel contamination is the only constituent
exceeding the RBSLs (risk based screening levels) in site groundwater.
(d)
|
|
Material Environmental Audits, Reports, etc. Pertaining to Acquired Assets
|
|
|
|
Various Environmental Reports:
|
|
1.
|
|
Wausau, WI Piping Closure Assessment Report
|
|
2.
|
|
Newark, CA Semi-Annual Ground Water Monitoring Report First Half 2003
|
|
3.
|
|
Newark, CA Memo dated 6/13/1996
|
|
4.
|
|
Charlotte, NC Letter Report Closure of Bioremediation Area
|
|
5.
|
|
Charlotte, NC Memo Test Results from Stockpile
|
|
6.
|
|
Charlotte, NC Closure of Bioremediation Area
|
|
7.
|
|
Charlotte, NC Test Report #A83972
|
|
8.
|
|
Charlotte, NC Test Report #A83668
|
|
9.
|
|
Charlotte, NC Certificate of Approval for Disposal of Soils containing Petroleum
Products
|
|
10.
|
|
North Kansas City, MO Land Farm Sampling Results
|
|
11.
|
|
North Kansas City, MO Correspondence 6/30/99
|
|
|
|
From SECOR regarding land farm decommissioning.
|
|
12.
|
|
Lake City, FL Petroleum Dispenser Closure
|
|
13.
|
|
Woodinville, WA Letter Report for Compliance Groundwater Monitoring
|
|
14.
|
|
Woodinville, WA Independent Remedial Action Report
|
|
15.
|
|
Elkhart, IN Exempt Construction & Operation Status Cut-to-Size Saw Shop Baghouse
|
|
16.
|
|
New Stanton, PA Draft Site Characterization Report
|
|
17.
|
|
El Paso, TX Delivery Certificate
|
|
18.
|
|
Ypsilanti, MI Emissions Calculations
|
|
20.
|
|
Missouri Treated Timber Dealer License
|
SCHEDULE 8.13
Labor Relations
|
|
|
Collective Bargaining Agreements
:
|
|
1.
|
|
Agreement between Georgia-Pacific Corporation Building Materials Distribution Center,
Akron, Ohio and International Brotherhood of Teamsters Local 348 effective June 24, 2000
through June 23, 2012.
|
|
2.
|
|
Agreement between Georgia-Pacific Corporation Triad Logistics Center, Bellingham,
Massachusetts and Teamsters Local Union No. 653 effective April 1, 2003 through March 31,
2008.
|
|
3.
|
|
Agreement between Georgia-Pacific Corporation Trial Logistics Center, Buffalo, New York
and Truck Drivers Local Union No. 449 effective April 10, 2003 through April 9, 2009.
|
|
4.
|
|
Agreement between Georgia-Pacific Building Materials Distribution Center, Charleston,
South Carolina and General Drivers, Warehousemen and Helpers Local Union No. 509 effective
May 20, 1998 through May 19, 2009.
|
|
5.
|
|
Agreement between Georgia-Pacific Building Materials Distribution Center, Charlotte,
North Carolina and Teamsters Local Union No. 71 affiliated with the International
Brotherhood of Teamsters effective August 1, 2001 through July 31, 2007.
|
|
6.
|
|
Agreement between Georgia-Pacific Corporation, University Park, Chicago, Illinois and
Sand, Gravel & Crushed Stone Workers Local 681 effective June 1, 1998 through May 31,
2009.
|
|
7.
|
|
Agreement between Georgia-Pacific Corporation, University Park, Chicago, Illinois and
Building Material, Lumber, Box, Shaving, Roofing and Insulating Chauffeurs, Teamsters,
Warehousemen and Helpers, and Related Industry Employees, Watchmen, Security Guards,
Chicago and Vicinity, Illinois; as well as Notions, Candies Cigar, Tobacco and Cigarette
Salesmen, Drivers, Helpers, and Inside Workers, and Vending Machine Drivers, Servicemen,
and Inside Workers Union Local 786 affiliated with the International Brotherhood of
Teamsters and Teamsters Joint Council No. 25 effective October 1, 2002 through September
30, 2010.
|
|
8.
|
|
Agreement between Georgia-Pacific Building Materials Distribution Center, Denver,
Colorado and Teamsters Local Union No. 435 affiliated with the International Brotherhood of
Teamsters effective February 15, 2002 through February 14, 2008.
|
|
9.
|
|
Agreement between Georgia-Pacific Building Materials Distribution Center, Denville, New
Jersey and Teamsters Local Union No. 408 effective February 1, 2000 through January 31,
2010.
|
|
10.
|
|
Agreement between Georgia-Pacific Corporation Building Materials Distribution Center,
Des Moines, Iowa and Local Union No. 147 an affiliate of the International Brotherhood of
Teamsters effective July 1, 2001 through June 30, 2007.
|
|
11.
|
|
Agreement between Georgia-Pacific Corporation Distribution Division, Detroit, Michigan
and International Brotherhood of Teamsters Local Union Number 247 effective April 1, 2003
through March 31, 2008.
|
|
12.
|
|
Agreement between Georgia-Pacific Corporation Distribution Center, El Paso, Texas and
Truck Drivers, Chauffeurs, Warehousemen and Helpers Local Union No. 745 effective January
1, 2003 through December 31, 2009.
|
|
13.
|
|
Agreement between Georgia-Pacific Corporation, Elkhart, Indiana and Teamsters Local
Union No. 364 effective May 15, 2003 through May 14, 2009.
|
|
14.
|
|
Agreement between Georgia-Pacific Corporation Distribution Center, Erwin, Tennessee and
Teamsters Local Union No. 549 effective April 11, 2004 through April 10, 2008.
|
|
15.
|
|
Agreement between Georgia-Pacific Corporation Building Materials Distribution Center,
Fargo, North Dakota and Teamsters Local Union No. 116 effective September 1, 2001 to August
31, 2007.
|
|
16.
|
|
Labor Agreement between Georgia-Pacific Corporation, Ft. Worth, Texas and United
Brotherhood of Carpenters and Joiners of America, ALF-CIO, Southern Council of Industrial
Workers and its affiliate Shop, Mill and Industrial Local Union 2848 Ft. Worth, Texas
effective October 1, 2003 through September 30, 2009.
|
|
17.
|
|
Agreement between Georgia-Pacific Corporation Full Mix Distribution Center, Fremont,
California and Teamsters, Warehouse, Wholesale Liquor Salespersons, Milk Drivers and Dairy
Employees, Construction and Building Materials and Miscellaneous Union Local 853 effective
June 22, 2002 through June 21, 2008.
|
|
18.
|
|
Agreement between Georgia-Pacific Corporation Building Products and Distribution
Center, Grand Rapids, Michigan and General Teamsters Union Local No. 406 affiliated with
the International Brotherhood of Teamsters effective June 1, 1997 through May 31, 2007.
|
|
19.
|
|
Agreement between Georgia-Pacific Corporation Building Materials Distribution Center,
Houston, Texas and Texas State District Council of Carpenters, United Brotherhood of
Carpenters & Joiners of America, Local Union 724 affiliate effective March 10, 2004 through
March 9, 2010.
|
|
20.
|
|
Agreement between Georgia-Pacific Corporation, Independence, Kentucky FMDC and
Teamsters Local Union No. 100 Cincinnati, Ohio effective January 1, 2000 through December
31, 2009.
|
|
21.
|
|
Agreement between Georgia-Pacific Corporation Building Materials Distribution Center,
Pearl, Mississippi and Local 891 affiliated with International Brotherhood of Teamsters,
Chauffeurs, Warehousemen and Helpers of America effective February 14, 2004 through
February 13, 2010.
|
|
22.
|
|
Agreement between Georgia-Pacific Corporation Kansas City Distribution Center and
Teamsters Local Union No. 541 effective December 1, 2000 through November 30, 2006.
|
|
23.
|
|
Agreement between Georgia-Pacific Corporation Triad Logistics Center, Lawrenceville,
Georgia and the International Brotherhood of Teamsters Local Union No. 528 effective
January 1, 2001 through December 31, 2006.
|
|
24.
|
|
Agreement between Georgia-Pacific Corporation Building Material and Distribution
Center, Los Angeles, California and Teamsters Local No. 986 Construction Division effective
April 1, 2000 through March 31, 2012.
|
|
25.
|
|
Agreement between Georgia-Pacific Corporation Building Materials Distribution Center,
Lubbock, Texas and General Drivers, Warehousemen and Helpers Local Union No. 577 effective
August 20, 2003 through September 8, 2009.
|
|
26.
|
|
Agreement between Georgia-Pacific Corporation, Memphis, Tennessee and Highway and Local
Motor Freight Employees, Teamsters Local Union No. 667. Contract expires 10/31/07.
|
|
27.
|
|
Agreement between Georgia-Pacific Corporation Building Materials Distribution Center,
Miami, Florida and Teamsters, Chauffeurs, Warehousemen and Helpers of America Local Union
No. 390 effective October 1, 2003 through October 30, 2007.
|
|
28.
|
|
Agreement between Georgia-Pacific Corporation, Midfield, Alabama and Teamsters Local
Union No. 612 effective November 26, 2003 through November 25, 2008.
|
|
29.
|
|
Agreement between Georgia-Pacific Corporation, Minneapolis Minnesota FMDC and
International Brotherhood of Teamsters Local 221 effective July 15, 2003 through July 14,
2008.
|
|
30.
|
|
Agreement between Georgia-Pacific Corporation Distribution Center, New Orleans,
Louisiana and General Truck Drivers, Chauffeurs, Warehousemen and Helpers Local Union No.
270 effective January 30, 1999 through January 29, 2011.
|
|
31.
|
|
Agreement between Georgia-Pacific Corporation Building Materials Distribution Center,
Newtown, Connecticut and Teamsters, Chauffeurs, Warehousemen and Helpers Local Union No.
191 effective October 1, 2003 through September 30, 2009.
|
|
32.
|
|
Agreement between Georgia-Pacific Building Materials Distribution Center, Virginia
Beach, Virginia and Drivers, Chauffeurs, Warehousemen and Helpers Local Union No. 822
effective September 1, 2001 through August 31, 2007.
|
|
33.
|
|
Agreement between Georgia-Pacific Corporation Bulk Distribution Center, Pensacola,
Florida and Teamsters Local Union No. 991 affiliated with International Brotherhood of
Teamsters effective August 1, 2002 through July 31, 2008.
|
|
34.
|
|
Agreement between Georgia-Pacific Building Materials Distribution center, New Stanton,
Pennsylvania and Teamsters, Chauffeurs, Warehousemen and Helpers Local Union No. 30
effective May 1, 2002 through April 30, 2007.
|
|
35.
|
|
Agreement between Georgia-Pacific Building Materials Distribution Center, New Stanton,
Pennsylvania and The Laborers District Council of Western Pennsylvania Local Union No. 1058
effective January 1, 2002 through December 31, 2006.
|
|
36.
|
|
Agreement between Georgia-Pacific Corporation, Portland, Oregon and General Teamsters
Local Union No. 162 Drivers effective May 1, 1999 through April 30, 2011.
|
|
37.
|
|
Agreement between Georgia-Pacific Corporation, Portland, Oregon and Teamsters Local
Union No. 206 effective May 1, 1999 through May 1, 2011.
|
|
38.
|
|
Agreement between Georgia-Pacific Corporation Building Materials Distribution Center,
Richmond, Virginia and Teamsters Local Union No. 592 affiliated with the International
Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America effective August
1, 2002 through July 31, 2007.
|
|
39.
|
|
Agreement between Georgia-Pacific Corporation and Wholesale and Retail Food
Distribution Teamster Local Union No. 63 effective April 1, 2003 through March 31, 2009,
Riverside, California.
|
|
40.
|
|
Agreement between Georgia-Pacific Corporation Full Mix Distribution Center, San Diego,
California and Building Material, Construction, Industrial, Professional and Technical
Teamsters Local Union No. 36 effective August 1, 2002 through July 31, 2008.
|
|
41.
|
|
Agreement between Georgia-Pacific Corporation, Seattle, Washington Reload Operation and
General Teamsters Local Union No. 174, Seattle, Washington effective April 1, 2000 through
March 31, 2010.
|
|
42.
|
|
Agreement between Georgia-Pacific Corporation, Shreveport, Louisiana and UBC-Southern
Council of Industrial Workers Local Union 2345 effective October 17, 2002 through October
16, 2008.
|
|
43.
|
|
Agreement between Georgia-Pacific Building Materials Distribution Center, Sioux Falls,
South Dakota and General Drivers and Helpers Union No. 749 affiliated with the
International Brotherhood of Teamsters effective March 2, 2002 through March 1, 2008.
|
|
44.
|
|
Agreement between Georgia-Pacific Corporation Bulk Distribution Center, Springfield,
Missouri and Teamsters Local Union No. 245 affiliated with the IBT effective December 6,
1997 through December 5, 2009.
|
|
45.
|
|
Agreement between Georgia-Pacific Full Mix Distribution Center, St. Louis, Missouri
(Bridgeton, Missouri) and Construction, Building Material, Ice and Coal, Laundry, Dry
Cleaning and Industrial Laundry and Dry Cleaning, Drivers, Helpers, Warehousemen, Yardmen
and Allied Workers Local Union No. 682 effective January 15, 2002 through January 14, 2008.
|
|
46.
|
|
Agreement between Georgia-Pacific Corporation, St. Paul, Minnesota and Warehouse
Employees Union Local No. 503 affiliated with the International Brotherhood of Teamsters,
Chauffeurs, Warehousemen and Helpers of America effective July 15, 2000 through July 14,
2012.
|
|
47.
|
|
Agreement between Georgia-Pacific Building Materials Distribution Center, Tulsa,
Oklahoma and Tulsa General Drivers Warehousemen and Helpers Local Union No. 523 effective
October 15, 2003 through October 30, 2007.
|
|
48.
|
|
Agreement between Georgia-Pacific Corporation Building Materials Distribution Center,
Wausau, Wisconsin and General Teamsters Union Local No. 662 affiliated with the
International Brotherhood of Teamsters effective May 1, 1999 through April 30, 2005.
|
|
49.
|
|
Agreement between Georgia-Pacific Corporation Building Materials Distribution Center,
Yaphank, New York and International Brotherhood of Teamsters, Chauffeurs, Warehousemen and
Helpers of America Local Union No. 1205 effective May 1, 2003 through August 31, 2006.
|
SCHEDULE 8.15
Material Contracts
|
1.
|
|
Master Supply & Purchase Agreement Georgia Pacific Corporation
|
|
2.
|
|
Master Lease Agreement ABP Alabama (Midfield) LLC and other Affiliates
|
SCHEDULE 9.9
Indebtedness
|
1.
|
|
[All Capital Leases referenced on Schedule 8.4.]
|
Standby Letters of Credit (as of 7/20/06)
|
|
|
|
|
|
|
LC Number
|
|
Beneficiary
|
|
Bank
|
|
Amount
|
SM208829W
|
|
Zurich American Insurance Company
|
|
Wachovia Bank
|
|
9,400,000.00
|
SM211584W
|
|
International Brotherhood of Teamsters Local 1205 Pension Fund
|
|
Wachovia Bank
|
|
46,218.74
|
SM211570W
|
|
Central States Southeast and Southwest Areas Pension Fund
|
|
Wachovia Bank
|
|
682,144.00
|
SM211579W
|
|
Western Conference of Teamsters Pension Fund
|
|
Wachovia Bank
|
|
431,716.83
|
SM211583W
|
|
Southern Council of Industrial Workers Pension Fund
|
|
Wachovia Bank
|
|
14,913.91
|
SM219419W
|
|
Wachovia Securities
|
|
Wachovia Bank
|
|
322,443.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,897,436.48
|
Documentary Letters of Credit (as of 7/20/06)
|
|
|
|
|
|
|
LC Number
|
|
Beneficiary
|
|
Bank
|
|
Amount
|
IC583838H
|
|
Mindanao Timber Co, Inc.
|
|
Wachovia Bank
|
|
46,244.10
|
SCHEDULE 9.10
Loans and Advances
None
SCHEDULE 9.14
Fiscal Year, Quarter and Month Ending Dates
See Attached Chart