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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-Q  
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 26, 2020
 OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-32383
BXC-20200926_G1.JPG
BlueLinx Holdings Inc.  
(Exact name of registrant as specified in its charter)  
 
Delaware 77-0627356
(State of Incorporation) (I.R.S. Employer Identification No.)
   
1950 Spectrum Circle, Suite 300
Marietta GA 30067
(Address of principal executive offices) (Zip Code)
 
(770) 953-7000
(Registrant’s telephone number, including area code)
 Not applicable
(Former name or former address, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.01 per share BXC New York Stock Exchange

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 ☑ No  ☐
Indicate by check mark whether the registrant has submitted electronically (Section 232.405 of this chapter) 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 ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer  ☐ Accelerated Filer ☑ Non-accelerated Filer ☐ Smaller Reporting Company ☑
Emerging Growth Company  ☐    
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
                                                                                          
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
As of October 26, 2020, there were 9,461,540 shares of BlueLinx Holdings Inc. common stock, par value $0.01, outstanding.



BLUELINX HOLDINGS INC.
Form 10-Q
For the Quarterly Period Ended September 26, 2020
 
INDEX
  PAGE 
 
1
1
2
3
4
6
18
27
27
 
28
28
30
30
30
30
31
32

i

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended Nine Months Ended
  September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
Net sales $ 871,063  $ 678,665  $ 2,231,909  $ 2,023,814 
Cost of sales 711,603  584,952  1,878,420  1,749,889 
Gross profit 159,460  93,713  353,489  273,925 
Operating expenses:      
Selling, general, and administrative 78,992  76,095  222,306  215,330 
Depreciation and amortization 7,087  7,577  21,785  22,408 
Gains from sales of property (8,684) (38) (9,209) (9,798)
Other operating expenses 609  3,786  6,736  13,062 
Total operating expenses 78,004  87,420  241,618  241,002 
Operating income 81,456  6,293  111,871  32,923 
Non-operating expenses (income):        
Interest expense, net 10,776  13,409 36,691  40,527
Other income, net (238) (317) (58) (212)
Income (loss) before provision for income taxes 70,918  (6,799) 75,238  (7,392)
Provision for income taxes 15,802  244  14,214  69 
Net income (loss) $ 55,116  $ (7,043) $ 61,024  $ (7,461)
Basic income (loss) per share $ 5.83  $ (0.75) $ 6.49  $ (0.80)
Diluted income (loss) per share $ 5.72  $ (0.75) $ 6.48  $ (0.80)
Comprehensive income (loss):        
Net income (loss) $ 55,116  $ (7,043) $ 61,024  $ (7,461)
Other comprehensive income (loss):        
Foreign currency translation, net of tax (12) (9) 8  (2)
Amortization of unrecognized pension loss, net of tax 294  (1,834) 604  (1,403)
Pension curtailment, net of tax —  —  —  (632)
Other 7  (7) (10) 9 
Total other comprehensive income (loss) 289  (1,850) 602  (2,028)
Comprehensive income (loss) $ 55,405  $ (8,893) $ 61,626  $ (9,489)
 
See accompanying Notes.
 

1


BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
  September 26, 2020 December 28, 2019
ASSETS
Current assets:    
Cash $ 10,154  $ 11,643 
Receivables, less allowances of $4,158 and $3,236, respectively
308,584  192,872 
Inventories, net 306,030  345,806 
Other current assets 23,395  27,718 
Total current assets 648,163  578,039 
Property and equipment, at cost 302,814  308,067 
Accumulated depreciation (119,960) (112,299)
Property and equipment, net 182,854  195,768 
Operating lease right-of-use assets 53,124  54,408 
Goodwill 47,772  47,772 
Intangible assets, net 20,769  26,384 
Deferred tax assets 50,036  53,993 
Other non-current assets 20,516  15,061 
Total assets $ 1,023,234  $ 971,425 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:    
Accounts payable $ 178,948  $ 132,348 
Accrued compensation 18,469  7,639 
Current maturities of long-term debt, net of debt issuance costs of $74 and $74, respectively
1,535  2,176 
Finance lease liabilities - short-term 5,469  6,486 
Operating lease liabilities - short-term 6,926  7,317 
Real estate deferred gains - short-term 4,040  3,935 
Other current liabilities 18,668  11,222 
Total current liabilities 234,055  171,123 
Non-current liabilities:    
Long-term debt, net of debt issuance costs of $9,930 and $12,481, respectively
309,249  458,439 
Finance lease liabilities - long-term 267,753  191,525 
Operating lease liabilities - long-term 45,883  47,091 
Real estate deferred gains - long-term 78,998  81,886 
Pension benefit obligation 21,441  23,420 
Other non-current liabilities 27,642  24,024 
Total liabilities 985,021  997,508 
Commitments and Contingencies
STOCKHOLDERS’ EQUITY (DEFICIT):    
Common Stock, $0.01 par value, 20,000,000 shares authorized,
     9,461,540 and 9,365,768 outstanding on September 26, 2020 and December 28, 2019, respectively
95  94 
Additional paid-in capital 263,643  260,974 
Accumulated other comprehensive loss (33,961) (34,563)
Accumulated stockholders’ deficit (191,564) (252,588)
Total stockholders’ equity (deficit) 38,213  (26,083)
Total liabilities and stockholders’ equity (deficit) $ 1,023,234  $ 971,425 
See accompanying Notes.
2


BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
  September 26, 2020 September 28, 2019
Cash flows from operating activities:
Net income (loss) $ 61,024  $ (7,461)
Adjustments to reconcile net income (loss) to cash provided by (used in) operations:
Provision for income taxes 14,214  69 
Depreciation and amortization 21,785  22,408 
Amortization of debt issuance costs 2,888  2,465 
Gains from sales of property (9,209) (9,798)
Amortization of deferred gain (2,951) (2,972)
Share-based compensation 2,915  2,498 
Changes in operating assets and liabilities:
Accounts receivable (115,712) (35,471)
Inventories 39,776  (20,538)
Accounts payable 46,600  30,188 
Prepaid and other current assets (1,380) (8,075)
Other assets and liabilities 14,446  (10,936)
Net cash provided by (used in) operating activities 74,396  (37,623)
Cash flows from investing activities:  
Acquisition of business, net of cash acquired —  6,009 
Proceeds from sale of assets 10,742  13,699 
Property and equipment investments (1,943) (3,321)
Net cash provided by investing activities 8,799  16,387 
Cash flows from financing activities:  
Borrowings on revolving credit facilities 541,700  512,379 
Repayments on revolving credit facilities (605,221) (490,842)
Repayments on term loan (88,861) (31,899)
Proceeds from real estate financing transactions 78,263  44,725 
Debt financing costs (2,983) (2,359)
Repurchase of shares to satisfy employee tax withholdings (255) (208)
Principal payments on finance lease liabilities (7,327) (6,652)
Net cash (used in) provided by financing activities (84,684) 25,144 
Net change in cash (1,489) 3,908 
Cash at beginning of period 11,643  8,939 
Cash at end of period $ 10,154  $ 12,847 
Supplemental Cash Flow Information
Net income tax payments during the period $ 610  $ 4,461 
Interest paid during the period $ 33,716  $ 38,594 

See accompanying Notes.
3


BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands)
(Unaudited)
Common Stock Additional
Paid-In Capital 		Accumulated
Other
Comprehensive Loss 		Accumulated Deficit Stockholders’ Equity (Deficit) Total
  Shares Amount
Balance, December 28, 2019 9,366  $ 94  $ 260,974  $ (34,563) $ (252,588) $ (26,083)
Net loss —  —  —  —  (787) (787)
Foreign currency translation, net of tax —  —  —  3  —  3 
Unrealized gain from pension plan, net of tax —  —  —  196  —  196 
Vesting of restricted stock units 2  —  —  —  —  — 
Compensation related to share-based grants —  —  1,004  —  —  1,004 
Repurchase of shares to satisfy employee tax withholdings (1) —  (7) —  —  (7)
Other —  —  9  (19) —  (10)
Balance, March 28, 2020 9,367  94  261,980  (34,383) (253,375) (25,684)
Net income —  —  —  —  6,695  6,695 
Foreign currency translation, net of tax —  —  —  17  —  17 
Unrealized gain from pension plan, net of tax —  —  —  114  —  114 
Vesting of restricted stock units 122  1  —  —  —  1 
Compensation related to share-based grants —  —  854  —  —  854 
Repurchase of shares to satisfy employee tax withholdings (28) —  (247) —  —  (247)
Other —  —  —  2  —  2 
Balance, June 27, 2020 9,461  95  262,587  (34,250) (246,680) (18,248)
Net income —  —  —  —  55,116  55,116 
Foreign currency translation, net of tax —  —  —  (12) —  (12)
Unrealized gain from pension plan, net of tax —  —  —  294  —  294 
Vesting of restricted stock units 1  —  —  —  —  — 
Compensation related to share-based grants —  —  1,057  —  —  1,057 
Repurchase of shares to satisfy employee tax withholdings —  —  (1) —  —  (1)
Other —  —  —  7  —  7 
Balance, September 26, 2020 9,462  $ 95  $ 263,643  $ (33,961) $ (191,564) $ 38,213 





















4


BLUELINX HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(In thousands)
(Unaudited)
Common Stock Additional
Paid-In Capital 		Accumulated
Other
Comprehensive Loss 		Accumulated Deficit Stockholders’ Deficit Total
  Shares Amount
Balance, December 29, 2018 9,294  $ 92  $ 258,596  $ (37,129) $ (236,222) $ (14,663)
Net loss —  —  —  —  (6,719) (6,719)
Adoption of ASC 842, net of tax —  —  —  —  1,291  1,291 
Foreign currency translation, net of tax —  —  —  7  —  7 
Unrealized gain from pension plan, net of tax —  —  —  1,077  —  1,077 
Vesting of restricted stock units 49  1  —  —  —  1 
Compensation related to share-based grants —  —  706  —  —  706 
Other —  —  —  15  —  15 
Balance, March 30, 2019 9,343  93  259,302  (36,030) (241,650) (18,285)
Net income —  —  —  —  6,301  6,301 
Unrealized loss from pension plan, net of tax —  —  —  (1,278) —  (1,278)
Vesting of restricted stock units 32  1  —  —  —  1 
Compensation related to share-based grants —  —  635  —  —  635 
Repurchase of shares to satisfy employee tax withholdings (10) —  (208) —  —  (208)
Other —  —  (2) 1  —  (1)
Balance, June 29, 2019 9,365  94  259,727  $ (37,307) $ (235,349) $ (12,835)
Net loss —  —  —  —  (7,043) (7,043)
Foreign currency translation, net of tax —  —  —  (9) —  (9)
Unrealized loss from pension plan, net of tax —  —  —  (1,834) —  (1,834)
Compensation related to share-based grants —  —  1,156  —  —  1,156 
Other —  —  —  (7) 1  (6)
Balance, September 28, 2019 9,365  $ 94  $ 260,883  $ (39,157) $ (242,391) $ (20,571)
 

See accompanying Notes.

5


BLUELINX HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 26, 2020
(Unaudited)
1. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim Condensed Consolidated Financial Statements include the accounts of BlueLinx Holdings Inc. and its wholly owned subsidiaries (“the Company”). We derived the condensed consolidated balance sheet at September 26, 2020, from the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 (the “Fiscal 2019 Form 10-K”), as filed with the Securities and Exchange Commission on March 11, 2020. In the opinion of our management, the condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of our statements of operations and comprehensive income (loss) for the three and nine months ended September 26, 2020, and September 28, 2019, our balance sheets at September 26, 2020, and December 28, 2019, our statements of cash flows for the nine months ended September 26, 2020, and September 28, 2019, and our statements of stockholders’ equity (deficit) for the three and nine months ended September 26, 2020, and September 28, 2019.
 
We have condensed or omitted certain notes and other information from the interim condensed consolidated financial statements presented in this report. Therefore, these condensed consolidated interim financial statements should be read in conjunction with the Fiscal 2019 Form 10-K. In addition, certain prior period amounts have been reclassified to conform to the current period's presentation. These reclassifications did not materially impact operating income or consolidated net income (loss). The results for the three and nine months ended September 26, 2020, are not necessarily indicative of results that may be expected for the full year ending January 2, 2021, or any other interim period.
We operate on a 5-4-4 fiscal calendar. Our fiscal year ends on the Saturday closest to December 31 of that fiscal year and may comprise 53 weeks in certain years. Our 2020 fiscal year contains 53 weeks and ends on January 2, 2021. Fiscal 2019 contained 52 weeks and ended on December 28, 2019.
Our financial statements are prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”), which requires us to make estimates based on assumptions about current and, for some estimates, future economic and market conditions, which affect reported amounts and related disclosures in our financial statements. Although our current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from our expectations, which could materially affect our results of operations and financial position. Some of our estimates may be affected by the ongoing novel coronavirus (“COVID-19”) pandemic. The severity, magnitude, and duration, as well as the economic consequences of the COVID-19 pandemic, are uncertain, rapidly changing, and difficult to predict. As a result, our accounting estimates and assumptions may change over time in response to COVID-19.
On April 13, 2018, we completed the acquisition of Cedar Creek Holdings, Inc. (“Cedar Creek”). Results for Cedar Creek are included in the consolidated financial information presented herein.
Reclassification of Prior Period Presentation
An adjustment has been made to the Condensed Consolidated Statements of Cash Flows for the nine months ended September 28, 2019, to include outstanding payments as part of the change in accounts payable within cash flows from operating activities.  In previous periods, this change was included within cash flows from financing activities. 

We have reclassified certain costs within the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the nine months ended September 26, 2020, and the three and nine months ended September 28, 2019, from selling, general and administrative to other operating expenses. These costs primarily relate to the integration of the acquisition of Cedar Creek.


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Recently Adopted Accounting Standards
Leases.  In 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842).” Topic 842 established a new lease accounting model. The most significant changes included the clarification of the definition of a lease, the requirement for lessees to recognize for all leases a right-of-use asset and a corresponding lease liability in the consolidated balance sheet, and additional quantitative and qualitative disclosures which were designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. Expenses were recognized in the consolidated statement of income in a manner similar to prior accounting guidance. Lessor accounting under the new standard was substantially unchanged. We adopted this standard, and all related amendments thereto, effective December 30, 2018, the first day of our 2019 fiscal year, using a modified retrospective approach, which applied the provisions of the new guidance at the effective date without adjusting the comparative periods presented. We have elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical accounting relating to lease identification and classification for existing leases upon adoption. We have made an accounting policy election to keep leases with an initial term of 12 months or less off of the consolidated balance sheet. We implemented internal controls and a lease accounting information system to enable the preparation of financial information required by the new standard. The adoption of Topic 842 had a material impact on our condensed consolidated balance sheets but did not have a material impact on our condensed consolidated statements of operations and comprehensive loss. The most significant impact was the recognition of right-of-use assets and lease liabilities of $57.5 million on the condensed consolidated balance sheet as of the adoption date. Additionally, $1.7 million of deferred gains associated with sale-leaseback transactions was recorded as a cumulative-effect adjustment to accumulated deficit.
Accounting Standards Effective in Future Periods

Credit Impairment Losses. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326).” This ASU sets forth a current expected credit loss (“CECL”) model which requires the measurement of all expected credit losses for financial instruments or other assets (e.g., trade receivables), held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model, is applicable to the measurement of credit losses on financial assets measured at amortized cost, and applies to some off-balance sheet credit exposures. The standard also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity's portfolio. ASU 2019-10 extended the effective date of ASU 2016-13 to interim and annual periods beginning after December 15, 2022, for certain public business entities, including smaller reporting companies. We have not completed our assessment of the standard, but we do not expect the adoption to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.
Defined Benefit Pension Plan. In August 2018, the FASB issued ASU No. 2018-14, “Compensation-Retirement-Benefits-Defined Benefit Plans-General (Subtopic 715-20).” The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans by removing six previously required disclosures and adding two. The amendments also clarify certain other disclosure requirements. The amendments in this standard are effective for fiscal years ending after December 15, 2020. Early adoption is permitted. We have not completed our assessment of the standard, but we do not expect the adoption to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.
Income Taxes. In December 2019, the FASB issued ASU No.2019-12, “Income taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. The amendments in this standard are effective for interim periods and fiscal years beginning after December 15, 2020. Early adoption is permitted. We are currently assessing the impact of the new guidance, but do not expect the adoption to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.
2. Goodwill and Other Intangible Assets
In connection with the acquisition of Cedar Creek, we acquired certain intangible assets. As of September 26, 2020, our intangible assets consist of goodwill and other intangible assets including customer relationships, noncompete agreements, and trade names.


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Goodwill
Goodwill is the excess of the cost of an acquired entity over the fair value of tangible and intangible assets (including customer relationships, noncompete agreements, and trade names) acquired, and liabilities assumed, under acquisition accounting for business combinations. As of September 26, 2020, goodwill was $47.8 million.
Goodwill is not subject to amortization but must be tested for impairment at least annually. This test requires us to assign goodwill to a reporting unit and to determine if the fair value of the reporting unit’s goodwill is less than its carrying amount. We evaluate goodwill for impairment during the fourth quarter of each fiscal year. In addition, we will evaluate the carrying value for impairment between annual impairment tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. Such events and indicators may include, without limitation, significant declines in the industries in which our products are used, significant changes in capital market conditions, and significant changes in our market capitalization. Our one reporting unit has a fair value that exceeds its book value as of September 26, 2020.
Definite-Lived Intangible Assets
On September 26, 2020, the gross carrying amounts, accumulated amortization, and net carrying amounts of our definite-lived intangible assets were as follows:
Gross carrying amounts Accumulated
Amortization
(1)
Net carrying amounts
     (In thousands)
Customer relationships $ 25,500  $ (9,131) $ 16,369 
Noncompete agreements 8,254  (5,079) 3,175 
Trade names 6,826  (5,601) 1,225 
Total $ 40,580  $ (19,811) $ 20,769 

(1) Intangible assets, except customer relationships, are amortized on a straight-line basis. Customer relationships are amortized on a double declining balance method.
Amortization Expense
The weighted average estimated useful life remaining for customer relationships, noncompete agreements, and trade names is approximately 10 years, 2 years, and 1 year, respectively. Amortization expense for the definite-lived intangible assets was $1.8 million and $5.6 million for the three- and nine-month periods ended September 26, 2020, respectively. For the three- and nine-month periods ended September 28, 2019, amortization expense was $2.0 million and $6.1 million, respectively.
Estimated amortization expense for definite-lived intangible assets for the remaining portion of 2020 and the next five fiscal years is as follows:
Estimated Amortization
(In thousands)
2020 $ 1,823 
2021 5,321 
2022 2,763 
2023 1,807 
2024 1,505 
2025 1,423 

3. Revenue Recognition
We recognize revenue when control of promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

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Contracts with our customers are generally in the form of standard terms and conditions of sale. From time to time, we may enter into specific contracts, which may affect delivery terms. Performance obligations in our contracts generally consist solely of delivery of goods. For all sales channel types, consisting of warehouse, direct, and reload sales, we typically satisfy our performance obligations upon shipment. Our customer payment terms are typical for our industry and may vary by the type and location of our customer and the products or services offered. The term between invoicing and when payment is due is not deemed to be significant by us. For certain sales channels and/or products, our standard terms of payment may be as early as ten days.
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 remain with us.
All revenues recognized are net of trade allowances (i.e., rebates), 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. Certain customers may receive cash-based incentives or credits, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We believe that there will not be significant changes to our estimates of variable consideration.
The following table presents our revenues disaggregated by revenue source. Certain prior year amounts have been reclassified to conform to the current year product mix of structural and specialty products. Sales and usage-based taxes are excluded from revenues.
Three Months Ended Nine Months Ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
(In thousands) (In thousands)
Structural products $ 375,072  $ 225,689  $ 865,302  $ 646,646 
Specialty products 495,991  452,976  1,366,607  1,377,168 
Total net sales $ 871,063  $ 678,665  $ 2,231,909  $ 2,023,814 

The following table presents our revenues disaggregated by sales channel. Following the acquisition and integration of Cedar Creek, our reload sales were less distinct from warehouse sales, as they have been classified in prior periods. In addition, from time to time we may also make changes to certain intercompany allocations amongst sales channels. As a result, certain prior period amounts have been reclassified to conform to the current period revenues disaggregated by sales channel. Such reclassifications do not have an impact on total net sales as reported in any period. Sales and usage-based taxes are excluded from revenues.
Three Months Ended Nine Months Ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
(In thousands) (In thousands)
Warehouse and reload $ 745,185  $ 589,550  $ 1,901,285  $ 1,706,800 
Direct 138,750  102,480  363,250  347,692 
Customer discounts and rebates (12,872) (13,365) (32,626) (30,678)
Total net sales $ 871,063  $ 678,665  $ 2,231,909  $ 2,023,814 

Practical Expedients and Exemptions

We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general, and administrative expense.

We have made an accounting policy election to treat outbound shipping and handling activities as an expense.

4. Assets Held for Sale

Two of our non-operating properties were designated as held for sale as of September 26, 2020. These properties consisted of two former distribution facilities located in the Midwest and Southeast. We vacated these properties and designated them as
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held for sale during fiscal 2019 due to their proximity to other locations after the Cedar Creek acquisition. During the three-month period ended September 26, 2020, one property identified as held for sale during fiscal 2019 was returned to operations as we decided to restart operations at our owned Grand Rapids facility. As of September 26, 2020, and December 28, 2019, the net book value of total assets held for sale was $0.7 million and $1.1 million, respectively, and was included in “Other current assets” in our Condensed Consolidated Balance Sheets. We continue to actively market all properties that are designated as held for sale, and we plan to sell these properties within the next 12 months.

5. Long-Term Debt

As of September 26, 2020, and December 28, 2019, long-term debt consisted of the following:
September 26, 2020 December 28, 2019
(In thousands)
Revolving Credit Facility (1)
$ 262,975  $ 326,496 
Term Loan Facility (2)
57,813  146,674 
Finance lease obligations (3)
273,222  198,011 
594,010  671,181 
Unamortized debt issuance costs (10,004) (12,555)
584,006  658,626 
Less: current maturities of long-term debt 7,004  8,662 
Long-term debt, net of current maturities $ 577,002  $ 649,964 

(1) The weighted average interest rate was 2.5 percent and 3.9 percent as of September 26, 2020 and December 28, 2019, respectively.
(2) The weighted average interest rate was 8.0 percent and 8.7 percent as of September 26, 2020 and December 28, 2019, respectively.
(3) Refer to Note 8, Leases, for interest rates associated with finance lease obligations.

Revolving Credit Facility

We have a revolving credit facility that we entered into in April 2018 with Wells Fargo Bank, National Association, as administrative agent, and certain other financial institutions party thereto (the “Revolving Credit Facility”), with a maturity date of October 10, 2022. The Revolving Credit facility includes a committed senior secured asset-based revolving loan and letter of credit facility of up to $600 million, and an uncommitted accordion feature that permits us to increase the facility by an aggregate additional principal amount of up to $150 million. Our obligations under the Revolving Credit Facility are secured by a security interest in substantially all of our assets other than real property.

Loans under the Revolving Credit Facility bear interest at a rate per annum equal to (i) LIBOR plus a margin ranging from 1.75 percent to 2.25 percent, with the amount of such margin determined based upon the average of our excess availability for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on LIBOR, or (ii) the administrative agent’s base rate plus a margin ranging from 0.75 percent to 1.25 percent, with the amount of such margin determined based upon the average of our excess availability for the immediately preceding fiscal quarter as calculated by the administrative agent, for loans based on the base rate.
We amended the Revolving Credit Facility on January 31, 2020, to provide that (i) the “Seasonal Period” will run from November 15, 2019, through July 15, 2020, for the calendar year 2019, and from December 15 of each calendar year through April 15 of each immediately succeeding calendar year for the calendar year 2020 and thereafter, and (ii) the measurement period in the definition of “Cash Dominion Event” will be five consecutive business days instead of three consecutive business days. The adjustment to the Seasonal Period better aligns advance rates under the Revolving Credit Facility with the seasonality in our business and provided us with an enhanced borrowing base and greater liquidity through July 15, 2020.
As of September 26, 2020, we had outstanding borrowings of $263.0 million, excess availability of $202.1 million, and a weighted average interest rate of 2.5 percent. As of December 28, 2019, our principal balance was $326.5 million, excess availability was $80.0 million, and our weighted average interest rate was 3.9 percent.
The Revolving Credit Facility contains certain financial and other covenants, and our right to borrow under the Revolving Credit Facility is conditioned upon, among other things, our compliance with these covenants. We were in compliance with all covenants under the Revolving Credit Facility as of September 26, 2020.
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Term Loan Facility

We have a term loan facility that we entered into in April 2018 with HPS Investments Partners, LLC, as administrative and collateral agent, and certain other financial institutions party thereto (the “Term Loan Facility”), with a maturity date of October 13, 2023. The Term Loan Facility provides for a senior secured first lien loan facility in an initial aggregate principal amount of $180 million and is secured by a security interest in substantially all of our assets.
The Term Loan Facility requires monthly interest payments, and also requires quarterly principal payments of $402,282, in arrears, with the remaining balance due on the maturity date. The Term Loan Facility also requires certain mandatory prepayments of outstanding loans, subject to certain exceptions. The Term Loan Facility required maintenance of a total net leverage ratio of 8.75 to 1.00 for the quarter ending September 26, 2020. We were in compliance with all covenants under the Term Loan Facility as of September 26, 2020.
Borrowings under the Term Loan Facility may be made as Base Rate Loans or Eurodollar Rate Loans. The Base Rate Loans will bear interest at the rate per annum equal to (i) the greatest of the (a) U.S. prime lending rate published in The Wall Street Journal, (b) the Federal Funds Effective Rate plus 0.50 percent, and (c) the sum of the Adjusted Eurodollar Rate of one month plus 1.00 percent, provided that the Base Rate shall at no time be less than 2.00 percent per annum; plus (ii) the Applicable Margin, as described below. Eurodollar Rate Loans will bear interest at the rate per annum equal to (i) the ICE Benchmark Administration LIBOR Rate, provided that the Adjusted Eurodollar Rate shall at no time be less than 1.00 percent per annum; plus (ii) the Applicable Margin. The Applicable Margin will be 6.00 percent with respect to Base Rate Loans and 7.00 percent with respect to Eurodollar Rate Loans.
We amended the Term Loan Facility on December 31, 2019, to extend the period for satisfying the designated principal balance level required to maintain the modified total net leverage ratio covenant levels for the 2019 fourth and subsequent quarters thereunder, which was satisfied on January 31, 2020, through repayments from proceeds from the real estate financing transactions described in Note 8. On February 28, 2020, we further amended the Term Loan Facility to provide that we would not be subject to the facility’s total net leverage ratio covenant from and after the time, and then for so long as, the principal balance level under the facility is less than $45 million. On April 1, 2020, we amended the Term Loan Facility to, among other things, modify the total net leverage ratio covenant levels for the 2020 second and third quarters. All other total net leverage ratio covenant levels for prior and future quarters were unchanged.
As of September 26, 2020, we had outstanding borrowings of $57.8 million under the Term Loan Facility and an interest rate of 8.0 percent per annum. As of December 28, 2019, our principal balance was $146.7 million with an interest rate of 8.7 percent per annum. The decrease in the outstanding borrowings was due to the principal payments described above and the net proceeds of the real estate financing transactions described in Note 8 being applied to the Term Loan Facility.

On October 2, 2020, we reduced the principal balance of the Term Loan Facility to $44.4 million, and as a result we are no longer subject to the Facility’s total net leverage ratio covenant beginning with our 2020 fourth quarter.

Finance Lease Obligations

Our finance lease liabilities consist of leases related to equipment and vehicles, and real estate, with the majority of those finance leases related to real estate. For more information on our finance lease obligations, refer to Note 8, Leases.

6. Net Periodic Pension (Benefit) Cost
The following table shows the components of our net periodic pension (benefit) cost:
Three Months Ended Nine Months Ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
(In thousands) (In thousands)
Service cost $ —  $ 29  $ —  $ 190 
Interest cost on projected benefit obligation 723  881  2,169  2,899 
Expected return on plan assets (1,210) (1,339) (3,630) (3,828)
Amortization of unrecognized loss 263  278  789  857 
Net periodic pension (benefit) cost $ (224) $ (151) $ (672) $ 118 
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7. Stock Compensation
Stock Compensation Expense
During the three months ended September 26, 2020, and September 28, 2019, we incurred stock compensation expense of $1.1 million and $1.2 million, respectively. During the nine months ended September 26, 2020, and September 28, 2019, we incurred stock compensation expense of $2.9 million and $2.5 million, respectively. The increase in our stock compensation expense for the nine-month period is attributable to having more outstanding equity-based awards during these periods than in the prior year and the vesting of awards in connection with the departure of certain employees.
8. Leases
We have operating and finance leases for certain of our distribution facilities, office space, land, mobile fleet, and equipment. Many of our leases are non-cancelable and typically have a defined initial lease term, and some provide options to renew at our election for specified periods of time. The majority of our leases have remaining lease terms of 1 year to 15 years, some of which include one or more options to extend the leases for 5 years. Our leases generally provide for fixed annual rentals. Certain of our leases include provisions for escalating rent based on, among other things, contractually defined increases and/or changes in the Consumer Price Index (“CPI”). Some of our leases require us to pay taxes, insurance, and maintenance expenses associated with the leased assets. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
We determine if an arrangement is a lease at inception and assess lease classification as either operating or finance at lease inception or modification. Operating lease right-of use (“ROU”) assets and liabilities are presented separately on the condensed consolidated balance sheets. Finance lease ROU assets are included in property and equipment and the finance lease obligations are presented separately in the condensed consolidated balance sheet. When a lease does not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. We have also made the accounting policy election to not separate lease components from non-lease components related to our mobile fleet asset class.
Finance Lease Liabilities
Our finance lease liabilities consist of leases related to equipment and vehicles, and real estate. As noted in the table below, a majority of our finance leases, formally known as capital leases, relate to real estate.

During 2017 and 2018, we entered into real estate financing transactions on warehouse facilities in Tampa, FL; Ft. Worth, TX; Bellingham, PA; Frederick, MD; Lawrenceville, GA; and Raleigh, NC. These transactions were completed pursuant to sale-leaseback arrangements, and upon their completion, we entered into long-term leases on the properties for initial terms of 15 years with multiple 5-year renewal options, with one having a single 10-year renewal option. We accounted for these transactions in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 840, which was the lease accounting standard in effect at the inception of these arrangements. We have recorded these transactions as finance lease liabilities on our balance sheet. As of September 26, 2020, and December 28, 2019, total unrecognized deferred gains related to these transactions were $83.0 million and $85.8 million, respectively.

On May 19, 2019, we completed a real estate financing transaction on a warehouse facility in University Park, IL for net proceeds of $21.8 million. On June 20, 2019, we completed a real estate financing transaction on a warehouse facility in Yulee, FL for net proceeds of $13.3 million. These two transactions were completed pursuant to sale-leaseback arrangements, and upon their completion, we entered into long-term leases on the properties for initial terms of 15 years with multiple 5-year renewal options. Gross proceeds of these transactions were $45.0 million.

During the first quarter of fiscal 2020, we completed several real estate financing transactions. On December 31, 2019, we completed real estate financing transactions on warehouse facilities in Madison, TN; Kansas City, MO; Richmond, VA; and Bridgeton, MO for aggregate net proceeds of $27.2 million. On January 31, 2020, we completed real estate financing transactions on warehouse facilities in Charlotte, NC; Memphis, TN; Independence, KY; San Antonio, TX; Portland, ME; Denville, NJ; Yaphank, NY; Pensacola, FL; and Tallmadge, OH for aggregate net proceeds of $34.1 million. On February 28, 2020, we completed a real estate financing transaction on a warehouse facility in Elkhart, IN for net proceeds of $7.5 million. These transactions were completed pursuant to sale-leaseback arrangements, and upon their completion, we entered into long-term leases on the properties for initial terms from 15 years to 18 years with multiple 5-year renewal options. Gross proceeds of these transactions were $78.3 million.

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We determined that the transactions in fiscal 2019 and in the first quarter of the current fiscal year did not qualify as sales in accordance with ASC 842. Therefore, for accounting purposes, the transactions were not accounted for as sale-leaseback transactions, and no gain or loss was recorded. We determined that these leases qualified for finance lease treatment and recorded them accordingly. The net book value of the assets related to these transactions remains on our books as property and equipment and we continue to depreciate the assets over their remaining useful lives.

On August 14, 2020, we entered into a sale-leaseback arrangement on our warehouse facility in Denver, CO. We determined that this transaction qualified as a sale in accordance with ASC 842 and the lease qualified for operating lease treatment. Gross proceeds of this transaction were $11.0 million and we recognized a related gain of $8.7 million. Upon completion of the transaction, we entered into a long-term lease on the property for an initial term of five years with multiple 5-year renewal options. Net proceeds of the transaction were $10.6 million, which were used to pay down our Term Loan Facility.

A portion of our real estate lease cost is generally subject to annual changes in the Consumer Price Index (“CPI”). The known changes to lease payments are included in the lease liability at lease commencement. Unknown changes related to CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. In addition, a subset of our vehicle lease cost is considered variable.
The following table presents our assets and liabilities related to our leases as of September 26, 2020 and December 28, 2019:
September 26, 2020 December 28, 2019
(In thousands)
Assets Classification
Operating lease right-of-use assets Operating lease right-of-use assets $ 53,124  $ 54,408 
Finance lease right-of-use assets (1)
Property and equipment, net 151,017  141,922 
Total lease right-of-use assets $ 204,141  $ 196,330 
Liabilities
Current portion
Operating lease liabilities Operating lease liabilities - short term $ 6,926  $ 7,317 
Finance lease liabilities Finance lease liabilities - short term 5,469  6,486 
Non-current portion
Operating lease liabilities Operating lease liabilities - long term 45,883  47,091 
Finance lease liabilities Finance lease liabilities - long term 267,753  191,525 
Total lease liabilities $ 326,031  $ 252,419 
(1) Finance lease right-of-use assets are presented net of accumulated amortization of $55.9 million and $30.8 million as of September 26, 2020 and December 28, 2019, respectively.
The components of lease expense were as follows:
Three Months Ended Nine Months Ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
(In thousands) (In thousands)
Operating lease cost: $ 3,108  $ 2,911  $ 9,206  $ 9,047 
Finance lease cost:
   Amortization of right-of-use assets $ 4,648  $ 2,699  $ 11,526  $ 8,722 
   Interest on lease liabilities 4,949  4,347  17,670  12,216 
Total finance lease costs $ 9,597  $ 7,046  $ 29,196  $ 20,938 

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Supplemental cash flow information related to leases was as follows:
Three Months Ended Nine Months Ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
(In thousands)
(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
   Operating cash flows from operating leases $ 3,029  $ 2,990  $ 8,662  $ 8,957 
   Operating cash flows from finance leases 4,949  4,347  17,670  12,216 
   Financing cash flows from finance leases $ 2,893  $ 2,421  $ 7,327  $ 6,652 
Right-of-use assets obtained in exchange for lease obligations
   Operating leases $ 3,640  $ —  $ 3,668  $ — 
   Finance leases $ 3,145  $ 14,403  $ 3,145  $ 18,652 
Supplemental balance sheet information related to leases was as follows:
September 26, 2020 December 28, 2019
(In thousands)
Finance leases
   Property and equipment $ 206,920  $ 172,720 
   Accumulated depreciation (55,903) (30,798)
Property and equipment, net $ 151,017  $ 141,922 
Weighted Average Remaining Lease Term (in years)
   Operating leases 11.12 11.71
   Finance leases 16.29 17.12
Weighted Average Discount Rate
   Operating leases 9.24  % 9.34  %
   Finance leases 9.86  % 10.11  %
The major categories of our finance lease liabilities as of September 26, 2020 and December 28, 2019 are as follows:
September 26, 2020 December 28, 2019
(In thousands)
Equipment and vehicles $ 29,451  $ 32,471 
Real estate 243,771  165,540 
Total finance leases $ 273,222  $ 198,011 






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As of September 26, 2020, maturities of lease liabilities were as follows:
Operating leases Finance leases
(In thousands)
2020 $ 11,727  $ 6,729 
2021 9,383  30,025 
2022 8,641  29,325 
2023 7,286  28,996 
2024 7,590  28,376 
Thereafter 45,803  408,808 
Total lease payments $ 90,430  $ 532,259 
Less: imputed interest (37,621) (259,037)
Total $ 52,809  $ 273,222 

On December 28, 2019, maturities of lease liabilities were as follows:
Operating leases Finance leases
(In thousands)
2020 $ 11,348  $ 24,002 
2021 10,111  23,052 
2022 8,048  22,230 
2023 7,330  21,854 
2024 6,413  21,380 
Thereafter 50,901  327,439 
Total lease payments $ 94,151  $ 439,957 
Less: imputed interest (39,743) (241,946)
Total $ 54,408  $ 198,011 

9. 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 and receivables recorded for expected receipts from settlements. Management further believes that, while the ultimate outcome of one or more of these matters could be material to operating results in any given quarter, it will not have a materially adverse effect on our consolidated financial condition, our results of operations, or our cash flows.
Collective Bargaining Agreements
As of September 26, 2020, we had 2,000 employees on a full-time basis, and approximately 22 percent of our employees were represented by various local labor union Collective Bargaining Agreements (“CBAs”). Approximately 1 percent of our employees are covered by three CBAs that are up for renewal in fiscal 2020. As of September 26, 2020, one of these CBAs was renewed and the remaining two are expected to be renegotiated before the end of the year.
10. Accumulated Other Comprehensive Loss
Comprehensive loss includes both net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) results from items deferred from recognition into our Condensed Consolidated Statements of Operations and Comprehensive Loss. Accumulated other comprehensive loss is separately presented on our Condensed Consolidated Balance Sheets as part of stockholders’ equity (deficit).
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The changes in balances for each component of accumulated other comprehensive loss for the nine months ended September 26, 2020, were as follows:
Foreign currency, net
of tax 		Defined
benefit pension
plan, net of tax 		Other,
net of tax 		Total Accumulated Other Comprehensive Loss
(In thousands)
December 28, 2019, beginning balance $ 666  $ (35,441) $ 212  $ (34,563)
Other comprehensive income, net of tax (1)
8  604  (10) 602 
September 26, 2020, ending balance, net of tax $ 674  $ (34,837) $ 202  $ (33,961)

(1) For the nine months ended September 26, 2020, the actuarial loss recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as a component of net periodic pension cost was $0.8 million, net of tax of $0.2 million. Please see Note 6, Net Periodic Pension (Benefit) Cost, for further information.

11. Income Taxes

Our effective tax rate for the three months ended September 26, 2020, and September 28, 2019, was 22.3 percent and (3.6) percent, respectively. Our effective tax rate for the three months ended September 26, 2020, was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and officer’s compensation, and the effect of the partial valuation allowance for separate company state income tax losses and previously nondeductible interest under 163(j) of the Internal Revenue Code (“IRC”). Our effective tax rate for the three months ended September 28, 2019, was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, and the effect of the partial valuation allowance for separate company state income tax losses and consolidated interest expense limitation, including $0.6 million in discrete tax expense related to prior periods. In addition, we recorded discrete tax expense of $0.2 million for a shortfall on the vesting of our restricted stock units, which was offset by a $0.2 million discrete tax benefit for claiming tax credits.

Our effective tax rate was 18.9 percent and (0.9) percent, for the first nine months of fiscal 2020 and 2019, respectively. Our effective tax rate for the nine months ended September 26, 2020, was impacted by (i) the discrete tax benefit of $3.9 million resulting from the release of the valuation allowance associated with the nondeductible interest expense under Section 163(j) of the IRC as a result of changes under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act (which was enacted on March 27, 2020, and contained, among other things, several tax-based measures meant to counteract the effects of the COVID-19 pandemic) to increase the allowable percentage from 30 percent of adjusted taxable income to 50 percent of adjusted taxable income, (ii) recording discrete tax expense of $0.4 million for a shortfall on the vesting of our restricted stock units, (iii) the permanent addback of certain nondeductible expenses, including meals and entertainment and nondeductible compensation, and (iv) the effect of the partial valuation allowance for separate company state income tax losses and previously nondeductible interest expense under Section 163(j) of the IRC. Our effective tax rate for the nine months ended September 28, 2019, was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation and the effect of the valuation allowance for separate company state income tax losses and consolidated interest expense limitation, including $0.6 million in discrete tax expense related to prior periods. In addition, during the first nine months of fiscal 2019, we recorded discrete tax expense of $0.2 million for a shortfall on vesting of our restricted stock units, which was offset by a $0.2 million discrete tax benefit for claiming state tax credits.

Our financial statements contain certain deferred tax assets which primarily resulted from tax benefits associated with temporary differences related to certain reserves, pension obligations, differences between book and tax depreciation and amortization, realized gains upon the sales of real estate, and both federal and state net operating losses. Currently, we have a valuation allowance that covers (i) certain company state net operating loss carryforwards and (ii) disallowed interest calculated pursuant to the changes made by the Tax Cuts and Jobs Act of 2017, as adjusted by the CARES Act.

We record a valuation allowance against our net deferred tax assets when we determine that, based on the weight of available evidence, it is more likely than not that our net deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences can be carried forward under tax law. At the end of each quarter, we evaluate the weight of available evidence (both positive and negative). We considered the recent reported income generated in the current quarter and prior years (adjusted for unusual one-time items) and income generated in 2017, including the prior year income from Cedar Creek. We also considered evidence
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related to the four sources of taxable income to determine whether such positive evidence outweighed the negative evidence. The evidence considered included:

•future reversals of existing taxable temporary differences;
•future taxable income exclusive of reversing temporary differences and carryforwards;
•taxable income in prior carryback years if carryback is permitted under the tax law; and
•tax planning strategies.

At the end of the 2020 and 2019 fiscal third quarters, in our evaluation of the weight of available evidence, we concluded that the weight of the positive evidence outweighed the negative evidence. In addition to the evidence discussed above, we considered as positive evidence forecasted future taxable income, the detail scheduling of the timing of the reversal of our deferred tax assets and liabilities, and the evidence from business and tax planning strategies described below. Although we believe our estimates are reasonable, the ultimate determination of the appropriate amount of valuation allowance involves significant judgments.

One of our long-standing deferred tax assets has been our net operating losses for federal income tax purposes. With our real estate sales discussed in Note 8 and our net income during the first nine months of 2020, we believe we will fully utilize all of our remaining federal net operating losses upon filing of our 2020 federal income tax return in 2021. In addition, we believe that the change in control under IRC Section 382 resulting from the completion of the secondary offering on October 23, 2017, will not cause any of our federal net operating losses to be limited as we have effectively implemented a real estate strategy involving the sale and leaseback of real estate. Those sale and leaseback transactions involved four warehouses in January 2018, two warehouses during 2019, and fifteen warehouses in 2020. Additionally, the acquisition of Cedar Creek did not generate any limitations under IRC Section 382 on Cedar Creek’s tax assets.

12. Income (Loss) per Share
We calculate basic income (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding. We calculate diluted income (loss) per share using the treasury stock method, by dividing net income (loss) by the weighted average number of common shares outstanding plus the dilutive effect of outstanding share-based awards, including restricted stock units, and performance units. Due to the financial results for the three- and nine-month periods ended September 28, 2019, 0.1 million and 0.0 million of incremental shares were excluded from the computation of diluted weighted averages outstanding, because their effect would be anti-dilutive.
The reconciliation of basic net income (loss) and diluted net income (loss) per common share for the three- and nine-month periods ended September 26, 2020, and September 28, 2019, were as follows:
Three Months Ended Nine Months Ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
(In thousands, except per share data) (In thousands, except per share data)
Net income (loss) $ 55,116  $ (7,043) $ 61,024  $ (7,461)
Weighted-average shares outstanding - basic 9,461  9,366  9,408  9,351 
Dilutive effect of share-based awards 170  —  11  — 
Weighted-average shares outstanding - diluted 9,631  9,366  9,419  9,351 
Basic income (loss) per share $ 5.83  $ (0.75) $ 6.49  $ (0.80)
Diluted income (loss) per share $ 5.72  $ (0.75) $ 6.48  $ (0.80)
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a leading distributor of building and industrial products in the U.S with a combination of market position and geographic coverage, the buying power of certain centralized procurement, and the strength of a locally focused sales force. BlueLinx is able to provide a wide range of value-added services and solutions to our customers and suppliers. We are headquartered in Marietta, Georgia, and we operate our distribution business through a broad network of distribution centers. We serve many major metropolitan areas in the U.S. and deliver building and industrial products to a variety of wholesale and retail customers. We distribute products in two principal categories: specialty products and structural products. Specialty products include primarily engineered wood products, moulding, siding and trim, cedar, metal products (excluding rebar and remesh), and insulation. Specialty products represented between 55 percent and 65 percent of our net sales over the past twelve months. Structural products include primarily plywood, oriented strand board, rebar and remesh, lumber, spruce and other wood products primarily used for structural support in construction projects. Structural products represented between 35 percent and 45 percent of our net sales over the past twelve months.
On April 13, 2018, we completed the acquisition of Cedar Creek. Cedar Creek was established in 1977 as a wholesale building materials distribution company that distributed wood products across the United States. Its products included specialty lumber, oriented strand board, siding, cedar, spruce, engineered wood products, and other building products. This acquisition allowed us to expand our product offerings, while maintaining our existing geographical footprint.
Recent Developments - Update on Impact of COVID-19 Pandemic
A novel strain of coronavirus (“COVID-19”) was first identified in December 2019 in certain Far East and European countries. On March 11, 2020, the spread of COVID-19 was declared a global pandemic by the World Health Organization, with a high concentration of cases in the United States. In response to the pandemic, governmental authorities around the world implemented numerous measures to combat the virus, such as travel bans and restrictions, quarantines, “shelter-in-place” orders, and business shutdowns. These measures have been successful to various degrees in containing and reducing the spread of the COVID-19 virus in many locations, and many governmental authorities have eased restrictions and executed plans to re-open businesses. However, the rates of infection, hospitalization, and mortality associated with the virus continue to fluctuate, and the rates have increased or rebounded in many U.S. states and localities, causing governmental authorities to consider new or reinstated mitigation measures. The pandemic and these containment measures have had, and are expected to continue to have, a substantial negative impact on businesses around the world and on global, regional, and national economies.

We began preparations for the pandemic in late February, and in early March we implemented policies and procedures to protect our associates, serve our customers, and support our suppliers. We also moved quickly to develop and execute plans and take actions designed to give us financial and operating flexibility during the pandemic. To date, our business has been designated as “essential” in all states in which we operate, and we have continued to operate and provide service to our customers and suppliers.

During the recently completed quarter, we continued to practice safety and hygiene protocols consistent with the Centers for Disease Control and Prevention (“CDC”) and local guidance. We also continued our efforts to reduce operating costs and optimize liquidity and took actions designed to sustain many of our first and second quarter cost reduction actions long-term. Cost structure and liquidity will remain as areas of acute focus for us as the pandemic continues.

While the pandemic continued to impact many aspects of our business and operations during the quarter, that impact was offset by the recovery in single-family residential housing starts and the rapid escalation in wood-based commodity pricing. Our net sales and gross margin increased, largely driven by the significant increase in wood-based commodity pricing over the course of the quarter. For the third quarter of 2020, net sales increased $192.4 million and net income improved $62.2 million, compared to the third quarter of 2019. For the first nine months of 2020, net sales increased $208.1 million and net income improved $68.5 million as we moved from a net loss for the first nine months of 2019 to net income for the first nine months of 2020.

The extent of the impact of the pandemic on our business and sales for the remaining three months of 2020 and into fiscal 2021 will depend on future developments, including, among others, the duration of the pandemic, the success of actions taken by governmental authorities to contain the pandemic and address its impact, the success of local return to work and business reopening plans, and the impact the COVID-19 pandemic has on demand in the markets we service. The trajectory of the pandemic continues to evolve rapidly, and we cannot predict the extent to which our financial condition, results of operations,
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or cash flows will ultimately be impacted. We are closely monitoring the impact of the pandemic on industry conditions, the progress of local return to work and reopening plans, and any pandemic-related restrictions that may have an impact on our business.
Industry Conditions
Many of the factors that cause our operations to fluctuate have been seasonal or cyclical in nature and we expect that to continue.

Our operating results are affected by commodity markets, primarily in the markets for wood-based commodities that we classify as structural products. After declining in the early part of April, lumber and panel commodity index prices significantly increased through the end of the third quarter, with the average prices for both more than doubling from the third quarter of 2019. These market trends resulted in substantially favorable revenue and gross margin comparisons in the third quarter of 2020 for our structural products and our business as a whole. Wood-based commodity index prices began to decline at the beginning of the fourth quarter as supply constraints show indications of abating. We anticipate that lumber and panel index prices will generally continue to trend downward from their peak levels at the end of the third quarter.

Historically, our operating results have also been generally correlated with the level of single-family residential housing starts in the U.S. However, at any time, the demand for new homes is dependent on a variety of factors, including job growth, changes in population and demographics, the availability and cost of mortgage financing, the supply of new and existing homes, and consumer confidence. The COVID-19 pandemic has had a significant negative effect on single family housing starts during the first half of 2020. However, housing starts have rebounded during the third quarter of 2020. The U.S. Census Bureau reported that single family housing starts were up 17 percent for the third quarter of 2020 compared to the third quarter of 2019. During the quarter, housing starts grew 12 percent in July, 15 percent in August, and 24 percent in September, all compared to the same months in 2019. Additionally, October data from the National Association of Home Builders/Wells Fargo Housing Market Index shows a record positive outlook in builder confidence in the market for newly built single-family homes. Low interest rates, shortages in existing home inventory, and a potential growing trend toward relocating away from populated metropolitan areas to areas with single-family homes may help drive long-term improvement in single-family housing starts.

Factors That Affect Our Operating Results
Our results of operations and financial performance are influenced by a variety of factors, including the following: changes in the prices, supply and/or demand for products that we distribute; inventory management and commodities pricing; new housing starts; repair and remodeling activity; the COVID-19 pandemic and other contagious illness outbreaks and their potential effects on our industry, suppliers and supply chains, and customers, our business, results of operations, cash flows, financial condition, and future prospects; general economic and business conditions in the U.S.; disintermediation by our customers and suppliers; acceptance by our customers of our branded and privately branded products; financial condition and credit worthiness of our customers; supply from key vendors; reliability of the technologies we utilize; activities of competitors; changes in significant operating expenses; fuel costs; risk of losses associated with accidents; exposure to product liability claims and other legal proceedings; changes in the availability of capital and interest rates; adverse weather patterns or conditions; acts of cyber intrusion or other disruptions to our information technology systems; tariffs, anti-dumping and counter-vailing duties, anti-dumping charges, and similar import costs and restrictions; variations in the performance of the financial markets, including the credit markets.
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Results of Operations
The following table sets forth our results of operations for the third quarter of fiscal 2020 and fiscal 2019:
Third Quarter of Fiscal 2020 % of
Net
Sales 		Third Quarter of Fiscal 2019 % of
Net
Sales
(In thousands) (In thousands)
Net sales $ 871,063  100.0% $ 678,665  100.0%
Gross profit 159,460  18.3% 93,713  13.8%
Selling, general, and administrative 78,992  9.1% 76,095  11.2%
Depreciation and amortization 7,087  0.8% 7,577  1.1%
Gains from sales of property (8,684) (1.0)% (38) (0.0)%
Other operating expenses 609  0.1% 3,786  0.6%
Operating income 81,456  9.4% 6,293  0.9%
Interest expense, net 10,776  1.2% 13,409  2.0%
Other income, net (238) (0.0)% (317) (0.0)%
Income (loss) before provision for income taxes 70,918  8.1% (6,799) (1.0)%
Provision for income taxes 15,802  1.8% 244  0.0%
Net income (loss) $ 55,116  6.3% $ (7,043) (1.0)%

The following table sets forth our results of operations for the nine-month periods of fiscal 2020 and fiscal 2019:
First Nine Months of Fiscal 2020 % of
Net
Sales 		First Nine Months of Fiscal 2019 % of
Net
Sales
(In thousands) (In thousands)
Net sales $ 2,231,909  100.0% $ 2,023,814  100.0%
Gross profit 353,489  15.8% 273,925  13.5%
Selling, general, and administrative 222,306  10.0% 215,330  10.6%
Depreciation and amortization 21,785  1.0% 22,408  1.1%
Gains from sales of property (9,209) (0.4)% (9,798) (0.5)%
Other operating expenses 6,736  0.3% 13,062  0.6%
Operating income 111,871  5.0% 32,923  1.6%
Interest expense, net 36,691  1.6% 40,527  2.0%
Other income, net (58) (0.0)% (212) (0.0)%
Income (loss) before benefit from income taxes 75,238  3.4% (7,392) (0.4)%
Provision for income taxes 14,214  0.6% 69  0.0%
Net income (loss) $ 61,024  2.7% $ (7,461) (0.4)%

The following table sets forth net sales by product category for the three and nine-month periods ending September 26, 2020, and September 28, 2019:
Three Months Ended Nine Months Ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
(In thousands) (In thousands)
Structural products $ 375,072  $ 225,689  $ 865,302  $ 646,646 
Specialty products 495,991  452,976  1,366,607  1,377,168 
Net sales $ 871,063  $ 678,665  $ 2,231,909  $ 2,023,814 

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The following table sets forth gross profit and gross margin percentages by product category for the three and nine-month periods of fiscal 2020 and 2019:
Three Months Ended Nine Months Ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
(Dollars in thousands) (Dollars in thousands)
Structural products $ 73,370  $ 20,229  $ 120,673  $ 56,284 
Specialty products 86,090  73,484  232,816  217,641 
Gross profit $ 159,460  $ 93,713  $ 353,489  $ 273,925 
Gross margin percentage by category        
Structural products 19.6  % 9.0  % 13.9  % 8.7  %
Specialty products 17.4  % 16.2  % 17.0  % 15.8  %
Total 18.3  % 13.8  % 15.8  % 13.5  %

Third Quarter of Fiscal 2020 Compared to Third Quarter of Fiscal 2019

Net sales.  For the third quarter of fiscal 2020, net sales increased 28.3 percent, or $192.4 million, compared to the third quarter of fiscal 2019. The sales increase was primarily a result of wood-based commodity price inflation, partially offset by a slight decline in sales volume attributable to supply outages in structural products occurring toward the second half of the quarter.
Gross profit and gross margin.  For the third quarter of fiscal 2020, gross profit increased by $65.7 million, or 70.2 percent, compared to the third quarter of fiscal 2019, primarily due to improved gross margins on both our specialty and structural products businesses. Gross margin during the same period was 18.3 percent, an increase compared to 13.8 percent in the third quarter of fiscal 2019.
Selling, general, and administrative expenses.  The increase in selling, general, and administrative expenses of 3.8 percent, or $2.9 million, for the third quarter of fiscal 2020, compared to the third quarter of fiscal 2019, is primarily due to an increase in variable incentive compensation of approximately $6.6 million and higher sales commissions of approximately $2.9 million, offset by reductions in our fixed cost structure, combined with decreases in our operational expenses.
Depreciation and amortization expense. For the third quarter of fiscal 2020, depreciation and amortization expense decreased by $0.5 million to $7.1 million due to a lower base of depreciable assets.
Gains from sales of property. Gains from sales of property increased by $8.6 million for the third quarter of fiscal 2020, compared to the third fiscal quarter of 2019, as we completed the sale and leaseback of our Denver facility in August 2020 and we sold no property during the third quarter of 2019.
Other operating expenses. For the third quarter of fiscal 2020, other operating expenses decreased by $3.2 million, or 83.9 percent, compared to the third quarter of fiscal 2019, primarily due to a decrease in spending related to the integration of the Cedar Creek acquisition.
Interest expense, net. Interest expense decreased by $2.6 million for the third quarter of fiscal 2020, compared to the third quarter of fiscal 2019. The decrease was largely attributable to a decrease in the average bank debt balance, as well as a reduction in the variable LIBOR rate that is a component of the interest rate on the Revolving Credit Facility and Term Loan Facility.
Provision for income taxes. Our effective tax rate was 22.3 percent and (3.6) percent for the third quarter of fiscal 2020 and 2019, respectively. Our effective tax rate for the third quarter of fiscal 2020 was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and officer’s compensation, and the effect of the partial valuation allowance for separate company state income tax losses and previously nondeductible interest under 163(j) of the IRC. Our effective tax rate for the third quarter of fiscal 2019 was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, and the effect of the partial valuation allowance for separate company state income tax losses and consolidated interest expense limitation, including $0.6 million in discrete tax expense related to prior periods. In addition, we recorded discrete tax expense of $0.2 million for a shortfall on vesting of our restricted stock units, which was offset by a $0.2 million discrete tax benefit for claiming state tax credits.
Net income (loss). Our net loss improved to net income from the prior year period due to increased gross margins resulting from wood-based commodity price inflation for our structural products and overall reduced costs.
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First Nine Months of Fiscal 2020 Compared to First Nine Months of Fiscal 2019
Net sales.  For the first nine months of fiscal 2020, net sales increased 10.3 percent, or $208.1 million, compared to the first nine months of fiscal 2019. The sales increase was driven by wood-based commodity price inflation and higher sales volume, partially offset by the loss of $50.5 million of sales related to a siding program that was discontinued in conjunction with our Cedar Creek integration activities in the prior year.
Gross profit and gross margin.  For the first nine months of fiscal 2020, gross profit increased by $79.6 million, or 29.0 percent, compared to the first nine months of fiscal 2019, primarily due to increased sales revenue and improved gross margins on both our specialty and structural products businesses from price inflation and higher sales volume. Gross margin during the same period was 15.8 percent, an increase compared to 13.5 percent in the first nine months of fiscal 2019.
Selling, general, and administrative expenses.  The increase in selling, general, and administrative expenses of 3.2 percent, or $7.0 million, for the first nine months of fiscal 2020, compared to the first nine months of fiscal 2019, is primarily due to an increase in variable incentive compensation of approximately $10.0 million and higher sales commission of approximately $4.5 million, offset by reductions in our fixed cost structure, combined with decreases in our operational expenses.
Depreciation and amortization expense. For the first nine months of fiscal 2020, depreciation and amortization expense decreased by $0.6 million to $21.8 million compared to the first nine months of fiscal 2019, due to a lower base of depreciable assets.
Gains from sales of property. Gains from sales of property decreased by $0.6 million for the first nine months of fiscal 2020, compared to the first nine months of fiscal 2019, due to lower net proceeds from property sales in the current year period.
Other operating expenses. For the first nine months of fiscal 2020, other operating expenses decreased by $6.3 million, or 48.4 percent, compared to the first nine months of fiscal 2019, primarily due to a decrease in spending related to the integration of the Cedar Creek acquisition, partially offset by severance expense incurred in relation to headcount reductions that occurred throughout the period.
Interest expense. Interest expense decreased by $3.8 million for the first nine months of fiscal 2020, compared to the first nine months of fiscal 2019. The decrease was largely attributable to a decrease in the average bank debt balance, as well as a reduction in the variable LIBOR rate that is a component of the interest rate on the Revolving Credit Facility and Term Loan Facility.
Provision for income taxes. Our effective tax rate was 18.9 percent and (0.9) percent for the first nine months of fiscal 2020 and 2019, respectively. Our effective tax rate for the first nine months of fiscal 2020 was impacted by (i) the discrete tax benefit of $3.9 million resulting from the release of the valuation allowance associated with the nondeductible interest expense under IRC Section 163(j) as a result of the CARES Act changing the allowable percentage from 30 percent of adjusted taxable income to 50 percent of adjusted taxable income, (ii) recording discrete tax expense of $0.4 million for a shortfall on vesting of our restricted stock units, (iii) the permanent addback of certain nondeductible expenses, including meals and entertainment and nondeductible compensation, and (iv) the effect of the partial valuation allowance for separate company state income tax losses and previously nondeductible interest expense under Section 163(j) of the IRC. Our effective tax rate for the first nine months of fiscal 2019 was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, and the effect of the partial valuation allowance for separate company state income tax losses and consolidated interest expense limitations, including $0.6 million in discrete tax expense related to prior periods.. In addition, we recorded discrete tax expense of $0.2 million for a shortfall on vesting of our restricted stock units, which was offset by a $0.2 million discrete tax benefit for claiming state tax credits.
Net income (loss). Our net loss improved to net income from the prior year period due to higher sales, increased gross margins, and reduced costs associated with the acquisition of Cedar Creek. Acquisition related costs declined from $11.3 million in the first nine fiscal months of 2019 to $1.8 million in the same period in 2020.
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Seasonality
We are exposed to fluctuations in quarterly sales volumes and expenses due to seasonal factors common in the building products distribution industry. The first and fourth fiscal quarters are typically our lower volume quarters, due to the impact of less favorable weather on the construction market. Our second and third fiscal quarters are typically our higher volume quarters, reflecting an increase in construction, due to more favorable weather conditions. In past years, assuming no change in underlying inventory costs, our working capital has increased in the fiscal second and third quarters, reflecting general increases in seasonal demand. During the fiscal second and third quarters of 2020, our inventory working capital balance decreased despite increasing commodity prices, reflecting enhancements in our working capital management throughout the year. Due to the COVID-19 pandemic, it remains a possibility that we could experience changes to our typical seasonality trends during the rest of 2020 and into 2021.
Liquidity and Capital Resources
We expect our primary sources of liquidity to be cash flows from sales in the normal course of our operations and borrowings under our Revolving Credit Facility. We expect that these sources will fund our ongoing cash requirements for the foreseeable future. We believe that, assuming that our operations are not significantly impacted by the COVID-19 pandemic for a prolonged period, our sales in the normal course of our operations, and amounts currently available from our Revolving Credit Facility and other sources, will be sufficient to fund our routine operations, including working capital requirements, for at least the next twelve months.
Revolving Credit Facility
In April 2018, we amended and restated our Revolving Credit Facility to provide for a senior secured revolving loan and letter of credit facility of up to $600 million and an uncommitted accordion feature that permits us to increase the facility by an aggregate additional principal amount of up to $150 million. If we obtain the full amount of the additional increases in commitments, the Revolving Credit Facility will allow borrowings of up to $750 million. Borrowings under the Revolving Credit Facility are subject to availability under the Borrowing Base (as that term is defined in the Revolving Credit Facility). Letters of credit in an aggregate amount of up to $30 million are also available under the Revolving Credit Facility, which would reduce the amount of the revolving loans available thereunder. Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to (i) LIBOR plus a margin ranging from 1.75 percent to 2.25 percent, with the margin determined based upon average excess availability for the immediately preceding fiscal quarter for loans based on LIBOR, or (ii) the administrative agent’s base rate plus a margin ranging from 0.75 percent to 1.25 percent, with the margin based upon average excess availability for the immediately preceding fiscal quarter for loans based on the base rate.
If excess availability falls below the greater of (i) $50 million and (ii) 10 percent of the lesser of (a) the borrowing base and (b) the maximum permitted credit at such time, the Revolving Credit Facility requires maintenance of a fixed charge coverage ratio of 1.0 to 1.0 until excess availability has been at least the greater of (i) $50 million and (ii) 10 percent of the lesser of (a) the borrowing base and (b) the maximum permitted credit at such time for a period of 30 consecutive days.

We amended the Revolving Credit Facility on January 31, 2020, to provide that (i) the “Seasonal Period” will run from November 15, 2019, through July 15, 2020, for the calendar year 2019, and from December 15 of each calendar year through April 15 of each immediately succeeding calendar year for the calendar year 2020 and thereafter, and (ii) the measurement period in the definition of “Cash Dominion Event” will be five consecutive business days instead of three consecutive business days.
As of September 26, 2020, we had outstanding borrowings of $263.0 million, excess availability of $202.1 million, and a weighted average interest rate of 2.5 percent under the Revolving Credit Facility. As of December 28, 2019, our principal balance was $326.5 million, excess availability was $80.0 million, and our weighted average interest rate was 3.9 percent.
We were in compliance with all covenants under the Revolving Credit Facility as of September 26, 2020.
Term Loan Facility
In April 2018, we entered into our Term Loan Facility with HPS Investment Partners, LLC, and other financial institutions as party thereto, which provides for a term loan of $180 million secured by substantially all of our assets. Borrowings under the Term Loan Facility may be made as Base Rate Loans or Eurodollar Rate Loans. The Base Rate Loans will bear interest at the rate per annum equal to (i) the greatest of the (a) U.S. prime lending rate published in The Wall Street Journal, (b) the Federal Funds Effective Rate plus 0.50 percent, and (c) the sum of the Adjusted Eurodollar Rate of one month plus 1.00 percent,
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provided that the Base Rate shall at no time be less than 2.00 percent per annum; plus (ii) the Applicable Margin, as described below. Eurodollar Rate Loans will bear interest at the rate per annum equal to (i) the ICE Benchmark Administration LIBOR Rate, provided that the Adjusted Eurodollar Rate shall at no time be less than 1.00 percent per annum; plus (ii) the Applicable Margin. The Applicable Margin will be 6.00 percent with respect to Base Rate Loans and 7.00 percent with respect to Eurodollar Rate Loans.
We amended the Term Loan Facility on December 31, 2019, to extend the period for satisfying the designated principal balance level required to maintain the modified total net leverage ratio covenant levels for the 2019 fourth and subsequent quarters thereunder, which was satisfied on January 31, 2020, through repayments from proceeds from the real estate financing transactions described in Note 8. On February 28, 2020, we further amended the Term Loan Facility to provide that we would not be subject to the facility’s total net leverage ratio covenant from and after the time, and then for so long as, the principal balance level under the facility is less than $45 million. On April 1, 2020, we amended the Term Loan Facility by, among other things, modifying the total net leverage ratio covenant levels for the 2020 second and third quarters. All other total net leverage ratio covenant levels for prior and future quarters were unchanged.

The Term Loan Facility permits us to enter into real estate sale leaseback transactions with the net proceeds therefrom to be used for repayment of indebtedness under the facility, subject to payment of an applicable prepayment premium. In addition, proceeds from the sale of “Specified Properties” will be used for the repayment of indebtedness under the Term Loan Facility, subject to payment of an applicable prepayment premium, or, under certain circumstances, repayment of indebtedness under our Revolving Credit Facility. Prepayment premiums associated with the repayment of indebtedness were $0.3 million and $2.6 million for the three and nine-month periods ended September 26, 2020, respectively. For the nine-month period ended September 28, 2019, prepayment premiums were $0.5 million. No prepayment premiums were paid during the three-month period ending September 28, 2019.

The Term Loan Facility required maintenance of a total net leverage ratio of 8.75 to 1.00 for the quarter ending September 26, 2020. We were in compliance with all covenants under the Term Loan Facility as of September 26, 2020.
As of September 26, 2020, we had outstanding borrowings of $57.8 million under our Term Loan Facility and an interest rate of 8.0 percent per annum. As of December 28, 2019, our principal balance was $146.7 million with an interest rate of 8.7 percent per annum. The decrease in the outstanding borrowings was due to required quarterly principal payments and net proceeds of the real estate financing transactions described in Note 8 being applied to the Term Loan Facility.
On October 2, 2020, we reduced the principal balance of the Term Loan Facility to $44.4 million, and as a result we are no longer subject to the Facility’s total net leverage ratio covenant beginning with our 2020 fourth quarter.
Finance Lease Commitments
Our finance lease liabilities consist of leases related to equipment and vehicles, and to real estate, with the majority of those finance lease commitments relating to the real estate financing transactions that we have completed in recent years. During fiscal 2017 and 2018, we completed real estate financing transactions on six warehouse facilities; during 2019, we completed real estate financing transactions on two warehouse facilities; and, to date in fiscal 2020, we completed real estate financing transactions on fourteen warehouse facilities. We recognized finance lease assets and obligations as a result of each of these transactions. Our total finance lease commitments, including the properties associated with these transactions, totaled $273.2 million as of September 26, 2020.
Interest Rates
Our Revolving Credit Facility and our Term Loan Facility include available interest rate options based on the London Inter-bank Offered Rate (“LIBOR”). It is widely expected that LIBOR will be discontinued after 2021, and the U.S. and other countries are currently working to replace LIBOR with alternative reference rates. The consequences of these developments with respect to LIBOR cannot be entirely predicted; however, we do not believe that the discontinuation of LIBOR as a reference rate in our loan agreements will have a material adverse effect on our financial position or materially affect our interest expense.







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Sources and Uses of Cash
Operating Activities
Net cash provided by operating activities for the first nine months of fiscal 2020 was $74.4 million, compared to net cash used in operating activities of $37.6 million in the first nine months of fiscal 2019. The increase in cash provided by operating activities during the first nine months of fiscal 2020 was a result of increased net income for the current year period, combined with improvements in our working capital balances compared to the prior year period.
Investing Activities
Net cash provided by investing activities for the first nine months of fiscal 2020 was $8.8 million compared to net cash provided by investing activities of $16.4 million in the first nine months of fiscal 2019. The decrease in net cash provided by investing activities was due to $6.0 million that was returned from escrow after the Cedar Creek acquisition was finalized in the prior year and declines in proceeds from the sales of assets as well as cash investments in property and equipment. For further details on our investments in property and equipment, refer to the “Investments in Capital Assets” section below.
Financing Activities
Net cash used in financing activities totaled $84.7 million for the first nine months of fiscal 2020, compared to net cash provided by financing activities of $25.1 million for the first nine months of fiscal 2019. The decrease in net cash provided by financing activities is primarily due to an increase in repayments on our Revolving Credit Facility and Term Loan Facility of $171.3 million, offset by an increase in borrowings on our Revolving Credit Facility of $29.3 million and an increase in proceeds from real estate financing transactions of $33.5 million.
Operating Working Capital (1)
Selected financial information
September 26, 2020 December 28, 2019 September 28, 2019
(In thousands)
Current assets:    
Cash $ 10,154  $ 11,643  $ 12,847 
Receivables, less allowance for doubtful accounts 308,584  192,872  243,905 
Inventories, net 306,030  345,806  362,389 
$ 624,768  $ 550,321  $ 619,141 
Current liabilities:    
Accounts payable (2)
$ 178,948  $ 132,348  $ 179,376 
$ 178,948  $ 132,348  $ 179,376 
Operating working capital $ 445,820  $ 417,973  $ 439,765 

(1) Operating working capital is defined as the sum of cash, receivables, and inventory less accounts payable.
(2) Accounts payable includes outstanding payments of $17.8 million, $16.1 million, and $39.8 million as of September 26, 2020, December 28, 2019, and September 28, 2019, respectively. Outstanding payments represent outstanding checks and electronic payments that have not been presented for payment as of the end of the period; these amounts are typically funded within 24 hours.
Operating working capital is an important measurement we use to determine the efficiencies of our operations and our ability to readily convert assets into cash.
Operating working capital of $445.8 million on September 26, 2020, compared to $418.0 million as of December 28, 2019, increased on a net basis by approximately $27.8 million. The increase in operating working capital is primarily driven by increases in accounts receivable, offset by decreases in inventory due to tighter management. The net increase in current assets was offset by an increase in accounts payable due to recent inventory purchases during the month of September.

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Operating working capital of $445.8 million on September 26, 2020, compared to $439.8 million as of September 28, 2019, increased by $6.0 million, driven by an increase in accounts receivable, offset by a decrease in inventory due to tighter management of inventory levels.

Investments in Capital Assets

Our investments in capital assets consist of cash paid for owned assets and the inception of financing lease arrangements for long-lived assets to support our distribution infrastructure. The gross value of these assets are included in “Property and equipment, at cost” on our condensed consolidated balance sheet. For the third quarter ended September 26, 2020, we invested $0.2 million in cash related to investments in long-lived assets and entered into finance leases totaling $3.1 million, for a total investment of $3.3 million. For the first nine months of 2020, we invested $1.9 million in cash and entered into finance leases totaling $3.1 million, for a total investment of $5.0 million.

Critical Accounting Policies

The preparation of our consolidated financial statements and related disclosures in conformity with GAAP requires our management to make judgments and estimates that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. There have been no material changes to our critical accounting policies from the information provided in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 28, 2019.

Forward-Looking Statements

This report contains forward-looking statements. Forward-looking statements include, without limitation, any statement that predicts, forecasts, indicates or implies future results, performance, liquidity levels 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. The forward-looking statements in this report include statements about the COVID-19 pandemic, its duration and effects, and its potential effects on our business and results of operations; anticipated effects of adopting certain accounting standards; estimated future annual amortization expense; potential changes to estimates made in connection with revenue recognition; the expected outcome of legal proceedings; industry conditions; seasonality; and liquidity and capital resources.
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 that may cause our business, strategy, or actual results to differ materially from the forward-looking statements. These risks and uncertainties include those discussed under the heading “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 28, 2019, and those discussed elsewhere in this report (including Item 1A of Part II of this report) and in future reports that we file with the SEC. 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 that may cause these differences include, among other things: fluctuations in commodity prices; inventory management; changes in prices, supply and/or demand for products that we distribute; adverse housing market conditions; levels of new residential housing starts and residential repair and remodeling activity; the COVID-19 pandemic and other contagious illness outbreaks and their potential effects on our industry, suppliers and supply chain, and customers, and our business, results of operations, cash flows, financial condition, and future prospects; our ability to integrate and realize anticipated synergies from acquisitions; loss of material customers, suppliers, or product lines in connection with acquisitions; operational disruption in connection with the integration of acquisitions; our indebtedness and its related limitations; sufficiency of cash flows and capital resources; our ability to monetize real estate assets; disintermediation by customers and suppliers; competitive industry pressures; industry consolidation; product shortages; loss of and dependence on key suppliers and manufacturers; import taxes and costs, including new or increased tariffs, anti-dumping duties, countervailing duties or similar duties; our ability to successfully implement our strategic initiatives; fluctuations in operating results; sale-leaseback transactions and their effects; real estate leases; changes in interest rates; exposure to product liability claims; our ability to complete offerings under our shelf registration statement on favorable terms, or at all; changes in our product mix; petroleum prices; information technology security and business interruption risks; litigation and legal proceedings; natural disasters and unexpected events; activities of activist stockholders; labor and union matters; limits on net operating loss carryovers; pension plan assumptions and liabilities; risks related to our internal controls; retention of associates and key personnel; federal, state, local and other regulations, including environmental laws and regulations; and changes in accounting principles. Given these risks and uncertainties, we caution you not to place undue reliance on forward-looking statements. We expressly disclaim any obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Our management performed an evaluation, as of the end of the period covered by this 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 SEC’s 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.

During the period covered by this report, other than described below, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
During the third quarter of fiscal 2020, there were no material changes to our legal proceedings as disclosed in our Annual Report on Form 10-K for the year ended December 28, 2019. 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
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A.Risk Factors" in our Annual Report on Form 10-K for the year ended December 28, 2019, as updated and supplemented below, which could materially affect our business, financial condition or future results. The risks described in this report and in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

Our business, results of operations, and financial condition may be materially adversely impacted by the COVID-19 pandemic.

A novel strain of coronavirus (“COVID-19”) was first identified in December 2019 in certain Far East and European countries. On March 11, 2020, the spread of COVID-19 was declared a global pandemic by the World Health Organization, with a high concentration of cases in the United States. On March 13, 2020, the United States declared a national emergency concerning the pandemic, and many U.S. states and municipalities declared public health emergencies. In response, U.S. federal, state, and local governments and agencies have enacted wide-ranging actions to combat the pandemic, including “shelter-in-place” orders and quarantines, social distancing mandates, and face covering and hygiene protocols. In addition, some U.S. states and municipalities placed significant limits on non-essential construction projects. These actions substantially restricted daily activities for individuals and businesses, and have caused many businesses to curtail or cease normal operations.

While certain market conditions for our business, such as single-family housing starts, have rebounded quickly or otherwise been more resilient than we expected, the widespread health crisis created by the COVID-19 pandemic and the actions taken to combat it have had significant adverse effects on the economies and financial markets of the U.S. and many other countries. These effects include increased unemployment, decreases in disposable income, declines in consumer confidence, general economic slowdowns, bankruptcies, and significant volatility in financial markets. These effects may reduce demand for our products, which could materially reduce our sales and profitability. In addition, any bankruptcy or financial distress of our customers or suppliers due to these adverse economic conditions could result in other significant negative impacts to our business including reduced sales, decreased collectability of accounts receivable, impaired credit, an ineffective supply chain, loss of credit from our suppliers, and a reduction in certain key product brands. Deteriorating economic conditions and reduced sales and profitability could also limit the availability of credit, or increase our borrowing costs, including by requiring additional collateral. We also may be required to record impairment charges with respect to assets whose fair values may be negatively affected by the effects of the pandemic on our operations.

In addition, although our operations and those of most of our direct customers and suppliers are considered “essential” and are therefore exempt from remaining state and local business closure orders, these exemptions may not mitigate the impact to our markets caused by the COVID-19 pandemic, and they may be curtailed or revoked in the future. As the pandemic continues, business closure orders also may be implemented or reinstated in states or localities that experience a rebound or surge in COVID-19 cases, and those orders may not include the same exemptions. If these exemptions are curtailed or revoked, or if business closures orders are implemented or reinstated without exemptions, it could require us, or our customers or suppliers, to further limit our operations or suspend them altogether, which would adversely impact our business, operating results, and financial condition. The pandemic has also caused, and may continue to cause, disruption to the global supply chain. While this disruption contributed to rapid increases in certain wood-based commodity prices in the second and third quarters of 2020, which benefited our business, those increases are expected to reverse in the near-term, which could result in reduced revenues and margins, and potentially in substantial declines in profitability and possible net losses. The disruption also could negatively impact our ability to source products from our suppliers, many of whom are located outside of the United States, including China.

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In response to the pandemic, we instituted, and continue to follow, a number of actions to protect our workforce, including restricting business travel, imposing mandatory quarantine periods for employees who have traveled to areas impacted by the pandemic, modifying office functions to allow employees to work remotely, and modifying our warehouse and delivery operations to enforce enhanced safety protocols around social distancing, hygiene, and health screening. While all of these steps are necessary and appropriate in light of the pandemic, they, coupled with state and local business closure orders and regulations, do impact our ability to operate our business in its ordinary and traditional course, and they have and may continue to cause us to experience reductions in productivity and disruptions to our business routines while they remain in place.
While many states have lifted or are in various stages of lifting or curtailing shelter-in-place, business closure, and related orders, the rates of infection, hospitalization, and mortality associated with the COVID-19 virus continue to fluctuate, and remain high or are increasing in many localities. As a result, some localities are contemplating the reinstatement of certain prior restrictions, or the adoption of new restrictions, on businesses and individuals. The potential magnitude or duration of the business and economic impacts from this pandemic continue to remain uncertain, and many of the associated negative trends may continue through fiscal 2020 and into fiscal 2021. While the impact on our business from the COVID-19 pandemic has not been as significant as we initially expected, it could still become more severe. Any of the negative impacts of the COVID-19 pandemic, including those described above, alone or in combination with others, may have a material adverse effect on our results of operations, financial condition, and cash flows. In addition, any of these negative impacts, alone or in combination with others, could exacerbate many of the risks described in Part I, “Item 1A. Risk Factors”, in our Annual Report on Form 10-K for the year ended December 28, 2019, and the other risks described in this report. The full extent to which the COVID-19 pandemic will negatively affect our results of operations, financial condition, and cash flows will depend on future developments that are highly uncertain and cannot be predicted.

We have been notified that we are not in compliance with certain listing standards of the New York Stock Exchange (“NYSE”), and we may be unable to regain compliance.

On April 22, 2020, we were notified by the NYSE that we were not in compliance with the continued listing standards set forth in Section 802.01B of the New York Stock Exchange Listed Company Manual because our average global market capitalization over a consecutive 30 trading-day period as of April 20, 2020, was less than $50 million, and, at the same time, our stockholders’ equity was less than $50 million.

On April 28, 2020, we submitted, and on May 14, 2020, the NYSE accepted, our plan to regain conformity with this NYSE listing standard by January 1, 2022, in accordance with NYSE rules. Our common stock will continue to be listed and traded on the NYSE during the cure period, subject to our compliance with other continued listing standards, and we will be subject to quarterly monitoring by the NYSE for compliance with the plan. The NYSE will deem us to have regained compliance if, during the cure period, we comply with the relevant continued listing standards, or qualify under an original listing standard, for a period of two consecutive quarters. Until the NYSE determines that we have regained compliance, our common stock trading symbol of “BXC” will have an added designation of “.BC” to indicate that the status of the common stock is “below compliance” with the NYSE continued listing standards. If we fail to comply with the plan, do not meet continued listing standards at the end of the allowed cure period, or in the event that our common stock trades at levels viewed to be abnormally low by the NYSE, our common stock will be subject to the prompt initiation of NYSE suspension and delisting procedures. There can be no assurance that our plans to regain compliance will be successful.

We believe that the erosion of our average market capitalization was a direct result of the effects of the COVID-19 pandemic on the stock market, and as of the end of our 2020 second and third quarters, our average market capitalization exceeded the $50 million required by the listing standard. Our 30 trading-day average global market capitalization was $69.8 million and $184.1 million at June 27, 2020, and September 26, 2020, respectively. However, a delisting would have an adverse effect on the liquidity of our common stock and, as a result, the market price for our common stock might decline if our common stock is delisted. Delisting could also make it more difficult for us to raise additional capital.


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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table summarizes the Company’s common stock repurchase activity for each month of the quarter ended September 26, 2020:
     Total Number     
of Shares Average Price
Period
Purchased(1)
  Paid Per Share  
June 28 - August 1 —     $ — 
August 2 - August 29 71     $ 18.76 
August 30 - September 26 —     $ — 
Total 71    
(1) The Company did not repurchase any of its equity securities during the period covered by this report pursuant to any publicly announced plan or program, and no such plan or program is presently in effect. All purchases reflected in the table above pertain to purchases of common stock by the Company in connection with tax withholding obligations of the Company’s employees upon the vesting of such employees’ restricted stock awards.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
On October 26, 2020, the Company recognized the extraordinary contributions of management in 2020 (including leadership through the COVID-19 pandemic, timely cost reductions and/or temporary voluntary salary reductions) by entering into amendments to certain of the outstanding performance-based restricted stock unit awards that were granted on June 8, 2018, under the Company’s Long-Term Equity Incentive Plan (the "RSUs"). The amendments modify only the performance target of the RSUs, which was reduced by 10% from $150 million to $135 million of trailing twelve month Adjusted EBITDA as of the end of any fiscal quarter during the three-year performance period. In approving the amendments, the Compensation Committee of the Company's Board of Directors also acknowledged that the performance target was originally established prior to the COVID-19 pandemic and its effect on the global economic environment and the Company's ability to achieve the performance target. The amendments were entered into with all current employees who were recipients of the June 8, 2018, awards, including Mitchell B. Lewis, President and Chief Executive Officer, and Alexander S. Averitt, Chief Operating Officer.

The foregoing description of the material terms of the amendments is qualified in its entirety by reference to the form of amendment, which will be filed as an exhibit to the Company’s Annual Report on Form 10-K.


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ITEM 6. EXHIBITS
Exhibit
Number 		Description
10.1 *
10.2 *
31.1 *
31.2 *
32.1 **
32.2 **
101.Def Definition Linkbase Document.
101.Pre Presentation Linkbase Document.
101.Lab Labels Linkbase Document.
101.Cal Calculation Linkbase Document.
101.Sch Schema Document.
101.Ins Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
104 The cover page from this Quarterly Report on Form 10-Q for the quarter ended September 26, 2020, formatted in Inline XBRL.
* Filed herewith.
** Exhibit is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended.

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SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
       
    BlueLinx Holdings Inc.  
    (Registrant)  
       
Date: October 28, 2020 By: /s/ Kelly C. Janzen  
  Kelly C. Janzen  
  Senior Vice President and Chief Financial Officer
 

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EXHIBIT 10.1 PURCHASE AND SALE AGREEMENT THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made and entered into as of the Effective Date (as hereinafter defined), by and between ABP CO II (DENVER) LLC, a Delaware limited liability company (“Seller”), and BIG ACQUISITIONS LLC, an Illinois limited liability company (“Buyer”). RECITALS: A. Seller is the fee simple owner of the Land. B. Buyer desires to acquire said land, together with the improvements located thereon and certain other property interests related thereto, from Seller for the purchase price of Eleven Million and No/100 Dollars ($11,000,000.00) (the “Purchase Price”). C. Seller is willing to convey said property to Buyer for the Purchase Price, but only upon the terms and conditions hereinafter set forth. OPERATIVE TERMS: NOW, THEREFORE, for and in consideration of the foregoing recitals and the promises, covenants, representations and warranties hereinafter set forth, the sum of One Hundred Dollars ($100.00) and other good and valuable consideration in hand paid by Seller to Buyer and by Buyer to Seller upon the execution of this Agreement, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereto hereby agree as follows: 1. Recitals; Definitions. The foregoing recitals are true and correct in all material respects. Capitalized terms and phrases used but not otherwise defined in the body of this Agreement shall have the meanings ascribed to such terms and phrases in Schedule A attached hereto. 2. Purchase and Sale. Seller agrees to convey, transfer and assign, and Buyer agrees to acquire, accept and assume, the Property, on the terms, conditions and provisions set forth in this Agreement. 3. Purchase Price. The Purchase Price shall be due and payable as follows: 3.1 Deposit. Buyer shall make the Initial Deposit with Escrow Agent within three (3) Business Days after the Effective Date. In addition, no later than the Due Diligence Deadline (provided that this Agreement is not sooner Terminated in accordance with the terms hereof), Buyer shall also make the Secondary Deposit. Notwithstanding any provision in this Agreement to the contrary, if Buyer fails to timely make the Initial Deposit or the Secondary Deposit as provided herein, Seller may Terminate this Agreement by notice to Buyer given no later than five (5) days following the due date of the Initial Deposit or the Secondary Deposit, as the case may be, and any Deposit previously paid by Buyer shall be promptly returned to Buyer. Except as expressly otherwise set forth herein, the Deposit shall be applied against the Purchase Price on the Closing Date and shall otherwise be held and delivered by Escrow Agent in accordance with the provisions of Paragraph 15.

 
3.2 Remainder of Purchase Price. At Closing, Buyer shall pay to Seller an amount equal to the difference between (a) the Purchase Price and (b) the Deposit previously or simultaneously paid to Seller, subject to the adjustments set forth herein, in cash by wire transfer to such account and bank as Seller shall designate in writing, to be confirmed received in Seller’s account on or before 3:00 p.m. Eastern time on the Closing Date. 4. Buyer’s Due Diligence and Inspection Rights; Termination Right. 4.1 Inspection of Property. Until Closing, and subject to the terms of Paragraph 4.2, Seller shall provide Buyer and Buyer’s Representatives access to the Real Property, upon reasonable prior notice at reasonable times during business hours, with the right and license to conduct Due Diligence with respect to the Property. 4.2 Inspection Requirements. Buyer’s rights to conduct Due Diligence shall be subject to the following further requirements: (a) Due Diligence inspections of the Property may only be performed during normal business hours and Buyer must provide Seller with at least 48 hours’ prior notice of its intent to perform Due Diligence inspections of the Property; (b) Seller shall have the right to have a representative of Seller present during any entry upon the Property by Buyer or Buyer’s Representatives; (c) there shall be no physical testing of the Property whatsoever, including, without limitation, any invasive sampling, boring, testing, or analysis of soils, surface water or groundwater at the Property; (d) Buyer shall immediately return the Property to the condition existing prior to any inspection. Prior to any entry upon the Land, Buyer shall provide to Seller, and shall cause any of Buyer’s Representatives entering upon the Land to provide to Seller, evidence of insurance which complies with the requirements of Schedule B attached hereto. Notwithstanding any provision in this Agreement to the contrary, except in connection with the issuance of a standard “zoning letter” with respect to the Property or the preparation of a third-party zoning report, neither Buyer nor any Buyer’s Representative shall contact any governmental official or representative regarding hazardous materials on, or the environmental condition of, the Property, or the status of compliance of the Property with zoning, building code or similar Laws, without Seller’s prior written consent thereto, which consent Seller may withhold in its sole and absolute discretion. In addition, Seller shall be entitled to at least two (2) Business Days’ prior notice of the intended contact and to have a representative present when Buyer or any Buyer’s Representative has any such contact with any governmental official or representative. 4.3 Title Examination. A. Title Objections. Seller shall order the Title Commitment within five (5) Business Days after the Effective Date. Buyer shall have until 10 days after delivery of the Title Commitment to notify Seller of any Title Objections. If Buyer fails to notify Seller of any Title Objections on or before the day that is 10 days after delivery of the Title Commitment then, notwithstanding any other provisions set forth herein, such failure to notify Seller shall constitute a waiver of such right to object to such matters existing as of the Effective Date. Any such Title Objection so waived (or deemed waived) by Buyer shall be deemed to constitute a Permitted Title Exception and the Closing shall occur as herein provided without any reduction of or credit against the Purchase Price. B. Cure of Title Matters. At Closing, Seller shall Remove or cause to be Removed any Title Objections to the extent (and only to the extent) that the same constitute Required 2

 
Removal Items. In addition, Seller may elect (but shall not be obligated) to Remove or cause to be Removed any other Title Objections, and, with respect thereto, Seller may notify Buyer on or before the Title Cure Deadline whether Seller elects to Remove the same (and the failure to provide such notice on or before the Title Cure Deadline shall be deemed to constitute an election of Seller not to effect any such cure). C. Buyer’s Right To Terminate. If any such Title Objection is not so cured on or before the Title Cure Deadline, then Buyer may Terminate this Agreement by notice to Seller within five (5) Business Days after the Title Cure Deadline. Failure of Buyer to respond within such period shall be deemed an election by Buyer to waive such Title Objections and proceed to Closing. Any such Title Objection so waived (or deemed waived) by Buyer shall be deemed to constitute a Permitted Title Exception and the Closing shall occur as herein provided without any reduction of or credit against the Purchase Price. D. Pre-Closing “Gap” Defects. Whether or not Buyer shall have furnished to Seller any notice of Title Objections before the Due Diligence Deadline, Buyer may at or prior to Closing notify Seller of any defects in title arising between the Due Diligence Deadline and the Closing Date. With respect to any Title Objections set forth in such notice, Buyer shall have the same rights as those which apply to any notice of defects in title resulting from a notice of title defects by Buyer on or before the Due Diligence Deadline and Seller shall have the same rights and obligations to cure the same at or prior to Closing. If necessary, the date for Closing shall be automatically extended (by not more than 15 days) to allow Seller to cure such pre-closing “gap” defects. 4.4 As-Is, Where-Is, With All Faults Sale. Buyer shall conduct such Due Diligence as Buyer deems necessary or appropriate prior to the Due Diligence Deadline, and shall independently confirm to its satisfaction all information that it considers material to its purchase of the Property or the Transaction. Accordingly, the Property shall be sold, and Buyer shall accept possession of the Property on the Closing Date, “AS IS, WHERE IS, WITH ALL FAULTS”, with no right of setoff or reduction in the Purchase Price. Without limiting the foregoing, except for Seller’s Warranties, none of the Seller Parties have or shall be deemed to have made any verbal or written representations, warranties, promises or guarantees (whether express, implied, statutory or otherwise) to Buyer with respect to the Property; any matter set forth, contained or addressed in the Documents (including, but not limited to, the accuracy and completeness thereof); or the results of Buyer’s Due Diligence. In addition, Buyer expressly understands and acknowledges that any documents made available to Buyer may not be complete in all respects and that Seller may not have complete information concerning the Property in Seller’s possession or control. Buyer acknowledges that all such information must be verified independently during Due Diligence. In addition, Buyer expressly understands and acknowledges that it is possible that unknown Liabilities may exist with respect to the Property and that Buyer explicitly took that possibility into account in determining and agreeing to the Purchase Price, and that a portion of such consideration, having been bargained for between the parties with the knowledge of the possibility of such unknown Liabilities shall be given in exchange for the existence of any and all such Liabilities. In furtherance of the foregoing commitments, Buyer shall execute and deliver to Seller at the Closing, an As Is Agreement as required by Paragraph 6.3. 4.5 Termination Right. Buyer may, at any time prior to the Due Diligence Deadline, Terminate this Agreement by notice to Seller if Buyer, in its sole and absolute discretion, determines not to proceed with the Transaction or is not satisfied with any matters relating to the Property. If, at or prior to the Due Diligence Deadline, Buyer has not given Seller a termination notice 3

 
as aforesaid, then Buyer shall be deemed to have accepted the condition of the Property (subject to Seller’s compliance with the representations, warranties and covenants of this Agreement, and the conditions set forth in Paragraph 10) and shall thereafter have no right to Terminate this Agreement on account of such Due Diligence termination right under this Paragraph 4 and, except as set forth in Article 9 or Paragraphs 10.1.C. and 12.2 hereinbelow, Buyer shall not be entitled to the return of the Deposit. If after the Due Diligence Deadline Buyer conducts further Due Diligence, Buyer acknowledges and agrees that Buyer shall have no further right to terminate this Agreement with respect to such further Due Diligence or otherwise in accordance with this Paragraph 4 after the Due Diligence Deadline. 4.6 Underground Storage Tank. Seller has informed Buyer, and Buyer acknowledges, that the Property includes one (1) operational 10,000 gallon underground tank used for the storage of diesel fuel. Buyer acknowledges, subject to Buyer’s right to perform Due Diligence pursuant to this Agreement and to terminate this Agreement pursuant to the foregoing paragraph, that it is a material factor in Seller’s acceptance of the Purchase Price that Buyer agree to accept said tank with the Property. 5. Seller’s Covenants. Between the Effective Date and the Closing Date: 5.1 No Alteration of Title. Seller shall not transfer or further alter or encumber (which shall include entering into any new lease of all or part of the Real Property; permitting any new sublease of all or part of the Real Property or consenting to any modification of any existing sublease of all or part of the Real Property) in any way Seller’s title to the Property as it exists as of the Effective Date without written notice to, and the prior written consent of, Buyer. If Buyer fails to object in writing to any such proposed instrument within three (3) Business Days after receipt of the aforementioned notice, Buyer shall be deemed to have approved the proposed instrument. Buyer’s consent shall not be unreasonably withheld or delayed with respect to any such instrument that is proposed prior to the Due Diligence Deadline. 5.2 Status of Property. Seller shall maintain and keep the Property in a manner consistent with Seller’s past practices with respect to the Property, and shall maintain in force the insurance coverage consistent with Seller’s insurance coverage practices as of the Effective Date. 6. Closing. The actual day of Closing shall be mutually agreed to by the parties. If no such selection is timely made, the Closing shall be held on the Closing Deadline. 6.1 Closing Mechanics. Buyer and Seller shall conduct an escrow-style closing through the Escrow Agent so that it will not be necessary for any party to attend the Closing. 6.2 Seller’s Deliveries. At Closing, Seller shall deliver or cause to be delivered the following items: A. Deed. The Deed. B. Withholding and Tax Certificate. A certificate with respect to Section 1445 of the Internal Revenue Code stating whether or not Seller is a foreign person as defined in said Section 1445 and applicable regulations thereunder. 4

 
C. Affidavit of Title. An Affidavit of Title with respect to liens and title matters in substantially the form of Exhibit B. D. Closing Statement. A Closing Statement Agreement in the form of Exhibit C attached hereto and incorporated herein by this reference. Seller and Buyer shall authorize and instruct the Escrow Agent to file, as the “reporting person,” Internal Revenue Service Form 1099- B (“Proceeds from Real Estate, Broker, and Barter Exchange Transactions”), if and as required by Section 6045(d) of the Code. E. Evidence of Authority. If requested by the Title Company, evidence that Seller has the requisite power and authority to execute and deliver, and perform under, this Agreement and all Closing Documents. F. Transfer Tax Declarations. To the extent applicable, duly completed real estate state, county and local transfer tax declarations. G. Lease. Tenant’s counterpart of the Lease. H. Assignment. Seller’s counterpart of the Assignment. I. Bring-Down Certificate. A reaffirmation of Seller’s Warranties in the form of Exhibit G attached hereto, to which shall be attached a current representation exception schedule identifying all exceptions to Seller’s Warranties then applicable. J. Other Instruments. Such other instruments or documents as may be necessary to effect or carry out the purposes of this Agreement, subject to Seller’s prior approval thereof, which approval shall not be unreasonably withheld or delayed. K. Memorandum of Lease. Tenant’s counterpart of the Memorandum of Lease. L. SNDA. Tenant’s counterpart of SNDA. M. Other State or Local Specific Requirements. At Closing Seller shall execute and deliver to Escrow Agent a Colorado Form DR-1083 and Form TD-1000 (Real Property Transfer Declaration). 6.3 Buyer’s Deliveries. At the Closing, Buyer shall deliver or cause to be delivered to Seller the following: A. Net Purchase Price. The net Purchase Price due at Closing under this Agreement. B. As Is Agreement. The As Is Agreement of Buyer in the form of Exhibit D attached hereto. C. Bring-Down Certificate. A reaffirmation of the representations, warranties and covenants set forth in Paragraph 8.5 hereof in the form of Exhibit H attached hereto. 5

 
D. Closing Document Counterparts. Executed counterparts of any of the Closing Documents described in Paragraph 6.2 which are also to be signed by Buyer. E. Landlord Agreement. The Landlord Agreement, executed by Buyer and Landlord. F. Other Instruments. Such other funds, instruments or documents as may be necessary to effect or carry out the purposes of this Agreement, subject to Buyer’s prior approval thereof, which approval shall not be unreasonably withheld or delayed. G. Lease. Landlord’s counterpart of the Lease. H. Memorandum of Lease. Landlord’s counterpart of the Memorandum of Lease. I. SNDA. Buyer’s and Lender’s counterparts to the SNDA. J. Leasehold Policy Requirements. Such instruments or documents as the Title Company may reasonably require of Landlord in order to issue a leasehold policy insuring Tenant’s interest under the Lease including, but not limited to, copies of the lease agreements evidencing the interest of Landlord in the Property and documents evidencing the legal existence and organizational power and authority of Landlord to enter into such agreements. 6.4 Buyer’s Ability to Close. Buyer covenants to Seller that Buyer shall, as of the Closing Date, have sufficient immediately available funds (through financing sources or otherwise) to pay the balance of the net Purchase Price required pursuant to the foregoing subparagraph 6.3(A). 7. Prorations and Closing Costs. 7.1 Prorations. The parties acknowledge that there shall be no prorations of any expense items with respect to the Property at Closing, all such items being addressed in the Lease. 7.2 Seller’s Closing Costs. Seller shall pay the following: (a) the fees and expenses of Seller’s attorneys; (b) the costs (including recording costs) of any cure of title defects required of Seller hereunder; (c) all recording fees imposed in connection with the recording of the Memorandum of Lease; (d) one-half of all escrow agent fees (if any are charged in connection with this Transaction), and (e) the costs, expenses and premiums for the Title Commitment and the Title Policy (including all examinations and reports in connection therewith). 7.3 Buyer’s Closing Costs. Buyer shall pay the following: (a) all costs of Buyer’s Due Diligence, (b) the fees and expenses of Buyer’s attorneys, (c) all costs related to any financing to be obtained by Buyer; (d) all transfer, documentary, excise, recording or other taxes, fees or assessments imposed in connection with the recording of the Deed; (e) all recording charges due on recordation of any Closing Documents, (f) one-half of all escrow agent fees (if any are charged in connection with this Transaction), and (g) the costs, expenses and premiums for any extended coverage and any endorsements to the Title Policy, any reinsurance required by Buyer, and any loan policy of title insurance. 6

 
8. Representations and Warranties. 8.1 Seller’s Representations and Warranties. Seller represents and warrants to Buyer as follows: A. Organization, Power and Authority. Seller is duly organized, validly existing and in good standing under the Laws of the State of Delaware; is, to the extent required by Law, duly qualified to do business in the State in which the Land is located; and has all necessary power to execute and deliver this Agreement and perform all its obligations hereunder. Seller has the full power and authority to enter into and perform this Agreement and the execution, delivery and performance of this Agreement by Seller (i) has been duly and validly authorized by all necessary action on the part of Seller, (ii) does not conflict with or result in a violation of the organizational documents of Seller, or any judgment, order or decree of any court or arbiter in any proceeding to which Seller is a party, and, (iii) does not conflict with or constitute a material breach of, or constitute a material default under, any contract, agreement, loan agreement or other instrument by which Seller is bound or to which it is a party. B. No Other Agreements. Seller has not entered into any currently effective agreement (other than this Agreement) to sell or dispose of all or any portion of its interest in and to the Property. Except as disclosed in the Record Exceptions, Seller has not entered into any options, puts, calls, rights of first offer, opportunity or refusal, or other preemptive rights to purchase or occupy the Property which are in effect as of the Effective Date. C. Possession. As of the Effective Date, no party other than Seller and Tenant is in possession or occupancy of the Real Property or any part thereof. D. Foreign Entity. Seller is not a “foreign person” as such phrase is defined in Section 1445 of the United States Internal Revenue Code. E. Notice of Violations. To Seller’s knowledge, Seller has received no written notice (i) from any governmental authority that the Property is not in material compliance with all applicable laws, except for such failures to comply, if any, which have been remedied; or (ii) from any insurance company or underwriter of any defect that would adversely affect the insurability of the Property or cause an increase in insurance premiums with respect to the Property. F. Condemnation. To Seller’s knowledge, Seller has not received any written notice of any (i) pending, contemplated, threatened or anticipated condemnation of any part of the Real Property, or (ii) widening, change of grade or limitation on the use of streets abutting the Land. G. No Bankruptcy. Seller has not (A) commenced a voluntary case, or, to Seller’s knowledge, had entered against it a petition, for relief under any federal bankruptcy act or any similar petition, order or decree under any federal or state Law relative to bankruptcy, insolvency or other relief for debtors, (B) caused, suffered or consented to the appointment of a receiver, trustee, administrator, conservator, liquidator or similar official in any federal, state or foreign judicial or non-judicial proceeding, to hold, administer and/or liquidate all or substantially all of its assets, or (C) made an assignment for the benefit of creditors. 7

 
H. Pending Actions or Proceedings. There are no actions or proceedings pending or, to Seller’s knowledge, threatened against Seller or relating to the Property which, if decided adversely, would impair Seller’s ability to perform its obligations under this Agreement or prevent the use of the Land for the purposes for which Tenant currently uses it. I. Other Prohibitions. Neither Seller nor, to Seller’s knowledge, any person owning a direct interest in Seller (i) is included on any Government List; (ii) has been determined by competent authority to be subject to the prohibitions contained in Presidential Executive Order No. 133224 (September 23, 2001) or in any enabling or implementing legislation or other Presidential Executive Orders in respect thereof; (iii) has been previously indicted for or convicted of any felony involving a crime or crimes of moral turpitude or for any offense under the criminal laws against terrorists, the criminal laws against money laundering, the Bank Secrecy Act, as amended, the Money Laundering Control Act of 1986, as amended, or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorists (USA PATRIOT ACT) Act of 2001, Public Law 107-56 (October 26, 2001), as amended; or (iv) to Seller’s knowledge, is currently under investigation by any governmental authority for alleged criminal activity. J. Municipal Inspections. To Seller’s knowledge, there are no formally required municipal inspections of the Property required in connection with the delivery of the Deed (for avoidance of doubt, Seller makes no representation or warranty concerning any inspection that may be required as a result of Buyer’s Due Diligence). In the event the foregoing Seller’s Warranty is inaccurate, untrue or incorrect, Seller shall have the right to cure such misrepresentation or breach by obtaining the required municipal inspection in accordance with the notice and cure provisions set forth in Section 8.3 below. 8.2 Seller’s Warranties Deemed Modified. Because Buyer’s primary reliance on the status of the matters addressed by Seller’s Warranties is Buyer’s own Due Diligence, to the extent that Buyer knows prior to the Due Diligence Deadline that Seller’s Warranties are inaccurate, untrue or incorrect in any way, such Seller’s Warranties shall be deemed modified to reflect Buyer’s knowledge. As used herein, “knows,” “knew” or “knowledge” means with respect to any statement following such phrase that to the date hereof no information has come to the attention of any such person or such person’s agents, which would cause such person or its agents to believe that such statement is not true and correct. 8.3 Claims of Breach Prior To Closing. If at or prior to the Closing, Seller obtains actual knowledge that any Seller’s Warranty is untrue, inaccurate or incorrect in any material respect, Seller shall give Buyer notice thereof within five (5) Business Days of obtaining such knowledge (but, in any event, prior to the Closing). If at or prior to the Closing Buyer or any Buyer’s Representative obtains actual knowledge that any Seller’s Warranty is untrue, inaccurate or incorrect in any material respect, Buyer shall give Seller notice thereof within five (5) Business Days of obtaining such knowledge (but, in any event, prior to the Closing). In either such event, Seller shall have the right to cure such misrepresentation or breach and shall be entitled to a reasonable adjournment of the Closing (not to exceed 15 days) to attempt such cure. If any Seller’s Warranty is untrue, inaccurate or incorrect in any material respect as of the date made, and Seller is unable to so cure such misrepresentation or breach, then Buyer, as its sole remedy, shall elect either (a) to waive such misrepresentation or breach and consummate the Transaction without any reduction of or credit against the Purchase Price, or (b) to Terminate this Agreement by notice given to Seller no later than five (5) days after the end of such cure period, in which event the Deposit shall be returned to Buyer 8

 
and Seller shall reimburse to Buyer, within twenty (20) days after Seller’s receipt of documentation thereof, the Buyer’s Transaction Costs. 8.4 Survival and Limits on Buyer’s Claims. Seller’s Warranties shall survive the Closing and not be merged therein for the Survival Period and Seller shall only be liable to Buyer hereunder for a breach of Seller’s Warranties made herein or in any of the documents executed by Seller at the Closing with respect to which a claim is made by Buyer against Seller in writing, specifying in reasonable detail the circumstances giving rise to the alleged breach, within the Survival Period. Anything in this Agreement to the contrary notwithstanding, the maximum aggregate liability of Seller for breaches of Seller’s Warranties shall be subject to Seller’s Liability Limit. Notwithstanding the foregoing, however, if the Closing occurs, Buyer hereby expressly waives, relinquishes and releases any right or remedy available to it at law, in equity, under this Agreement or otherwise to make a claim against Seller for damages that Buyer may incur, or to rescind this Agreement and the Transaction, as the result of any of Seller’s Warranties being untrue, inaccurate or incorrect if (a) Buyer knew that such representation or warranty was untrue, inaccurate or incorrect at the time of the Closing (Buyer’s remedy being as set forth in Paragraph 8.3), or (b) Buyer’s damages as a result of such representations or warranties being untrue, inaccurate or incorrect are reasonably estimated to aggregate less than $37,500.00. 8.5 Buyer’s Representations and Warranties. Buyer represents and warrants to Seller as follows: A. Organization, Power and Authority. Buyer is duly organized, validly existing and in good standing under the Laws of the State of Delaware; is, to the extent required by Law, duly qualified to do business in the State in which the Land is located; and has all necessary power to execute and deliver this Agreement and perform all its obligations hereunder. Buyer has the full power and authority to enter into and perform this Agreement and the execution, delivery and performance of this Agreement by Buyer (i) has been duly and validly authorized by all necessary action on the part of Buyer, (ii) does not conflict with or result in a violation of the organizational documents of Buyer, or any judgment, order or decree of any court or arbiter in any proceeding to which Buyer is a party, and (iii) does not conflict with or constitute a material breach of, or constitute a material default under, any contract, agreement or other instrument by which Buyer is bound or to which it is a party. There are no lawsuits pending against Buyer or, to Buyer’s knowledge, threatened, the outcome of which could adversely affect Buyer’s ability to purchase the Property or otherwise perform its obligations under this Agreement. B. Sophisticated Buyer. Buyer is experienced in the ownership and operation of properties like and in the locale of the Property, and has experience in the acquisition, ownership and operation of properties similar to the Property. Buyer warrants and represents that it has the ability through its own employees, or through agents, independent contractors, consultants or other experts with whom it has a relationship, to evaluate fully the material characteristics of the Property and to assess fully all issues pertaining to title to the Real Property, the value of the Property, the rights and liabilities of Buyer as the successor to Seller, the structural integrity and soundness of all improvements and structures located on the Real Property, the environmental condition of the Property, and the compliance of the Property with all Laws. Accordingly, Buyer acknowledges that, except for Seller’s Warranties, Buyer has not and will not rely upon any warranty, representation, statement of fact, or other information made by or furnished by or on behalf of Seller or any of its affiliates. 9

 
C. Funds. Buyer has sufficient funds in immediately available cash to pay the Deposit. D. No Bankruptcy. Buyer has not (A) commenced a voluntary case, or had entered against it a petition, for relief under any federal bankruptcy act or any similar petition, order or decree under any federal or state Law relative to bankruptcy, insolvency or other relief for debtors, (B) caused, suffered or consented to the appointment of a receiver, trustee, administrator, conservator, liquidator or similar official in any federal, state or foreign judicial or non-judicial proceeding, to hold, administer and/or liquidate all or substantially all of its assets, or (C) made an assignment for the benefit of creditors. E. Other Prohibitions. Neither Buyer nor any person controlling Buyer (i) is included on any Government List; (ii) has been determined by competent authority to be subject to the prohibitions contained in Presidential Executive Order No. 133224 (September 23, 2001) or in any enabling or implementing legislation or other Presidential Executive Orders in respect thereof; (iii) has been previously indicted for or convicted of any felony involving a crime or crimes of moral turpitude or for any offense under the criminal laws against terrorists, the criminal laws against money laundering, the Bank Secrecy Act, as amended, the Money Laundering Control Act of 1986, as amended, or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorists (USA PATRIOT ACT) Act of 2001, Public Law 107-56 (October 26, 2001), as amended; or (iv) to Buyer’s knowledge, is currently under investigation by any governmental authority for alleged criminal activity. 9. Casualty and Condemnation. 9.1. Minor Damage. In the event of loss or damage to the Property or any portion thereof which is not “major” (as hereinafter defined), then Seller shall have the following option: A. Purchase Price Reduction. If the loss or damage is a fire or other casualty event, but not a condemnation event, reduce the Purchase Price by an amount equal to the cost (the “Restoration Cost”) of restoring the Property to a condition substantially identical to that of the Property prior to the event of damage, as determined by a general contractor licensed by the State of Colorado selected by Seller and reasonably approved by Buyer; or B. Assignment. If the loss or damage is a fire or other casualty event or a condemnation event, assign to Buyer all of Seller’s right to any claims and proceeds Seller may have with respect to any casualty related insurance policies (including, without limitation, rental loss proceeds applicable to the period on and after the Closing) or condemnation awards relating to the premises in question, and the Purchase Price shall be reduced by an amount equal to the uninsured portion of the Restoration Cost (including, without limitation, the deductible amount under Seller’s insurance policy); or C. Neither of the Foregoing. Elect neither to reduce the Purchase Price nor assign insurance proceeds and/or condemnation awards pursuant to the foregoing subparagraphs A. and B. 10

 
Seller shall make the elections required by this Paragraph 9.1 by written notice delivered to Buyer within ten (10) days following the date on which the Restoration Cost is determined and, if Seller fails to deliver its written election within such ten (10) day period, then Seller shall be deemed to have made the election under subparagraph C. above. If Seller makes an election under the foregoing subparagraphs A. or B., then this Agreement shall remain in full force and effect and the parties shall proceed to Closing as contemplated by this Agreement; provided that Seller shall reduce the Purchase Price and/or assign insurance and/or condemnation proceeds as provided in the foregoing subparagraphs A. or B., as applicable. However, if Seller makes (or is deemed to have made) the election under subparagraph C. above, then Buyer shall have the right to Terminate this Agreement by written notice delivered to Seller within five (5) days after receiving Seller’s election (or deemed election), in which event Buyer shall receive a refund of the Deposit (unless such loss or damage is caused by or contributed to by Buyer in which event Buyer shall not be entitled to a return of the Deposit) and neither party shall have any further obligation to the other under this Agreement (except for those obligations which expressly survive the termination hereof). 9.2. Major Damage. In the event of a “major” loss or damage, Buyer may terminate this Agreement by written notice to Seller, in which event the Deposit shall be returned to Buyer unless such loss or damage is caused by or contributed to by Buyer in which event Buyer shall not be entitled to a return of the Deposit. If Buyer does not elect to Terminate this Agreement within ten (10) days after Seller sends Buyer written notice of the occurrence of major loss or damage, then Buyer shall be deemed to have elected to proceed with Closing. 9.3. Definition of “Major” Loss or Damage. For purposes of the foregoing Paragraphs 9.1 and 9.2, “major” loss or damage refers to the following: (a) Any loss or damage to the Property or any portion thereof such that the cost of restoring the premises in question to a condition substantially identical to that of the premises in question prior to the event of damage would be, in the opinion of an architect selected by Seller and reasonably approved by Buyer, equal to or greater than Three Hundred Fifty Thousand and No/100 Dollars ($350,000.00), (b) Any loss that is not fully covered by insurance, and (c) with respect to condemnation, any improvements or access to the Property or more than ten percent (10%) of the Land is condemned or taken or threatened to be condemned or taken. 10. Other Conditions to Closing. The obligations of Buyer and Seller to close the Transaction shall be further subject to the satisfaction at or prior to Closing of the conditions precedent set forth in this Paragraph 10. 10.1 Conditions to Buyer’s Obligations. The conditions precedent to Buyer’s obligations at Closing referenced above are as follows, any or all of which may be waived by Buyer, at its sole option: A. Representations. Seller’s Warranties, subject to Paragraphs 8.2 and 8.3, shall be true and correct in all material respects on and as of the Closing Date, except as modified in a manner permitted by this Agreement, as if made on and as of such date except to the extent that they expressly relate to an earlier date. B. Seller Compliance. Seller shall have performed all of the covenants, undertakings and obligations under this Agreement to be performed or complied with by Seller at or prior to the Closing. 11

 
C. Title Policy. At Closing, Seller shall have conveyed title to the Real Property as will enable the Title Company to issue the Title Policy (or a specimen or proforma policy thereof or “marked” Title Commitment) to Buyer subject only to the Permitted Title Exceptions and consistent with Paragraph 4.3 hereof. If the condition set forth in this subparagraph C. has not been satisfied as of the Closing Date, and has not been waived by Buyer as of such date, Buyer may, as its sole and exclusive remedy, elect to Terminate this Agreement by notice to Seller and receive a return of the Deposit. 10.2 Conditions to Seller’s Obligations. The conditions precedent to Seller’s obligations at Closing referenced above are as follows, any or all of which may be waived by Seller, at its sole option: A. Representations. Buyer’s warranties set forth in Paragraph 8.5 shall be true and correct in all material respects on and as of the Closing Date, except as modified in a manner permitted by the Agreement, as if made on and as of such date except to the extent that they expressly relate to an earlier date. B. Buyer Compliance. Buyer shall have performed all of the covenants, undertakings and obligations to be performed or complied with by Buyer at or prior to the Closing. 10.3 Conclusive Waiver of Conditions. By closing the Transaction, Seller and Buyer shall be conclusively deemed to have waived the benefit of any remaining unfulfilled conditions set forth in Paragraphs 10.1 and 10.2, respectively. 11. Other Transaction Issues. 11.1 Brokers. Each party represents to the other that such party has not incurred any obligation to any broker or real estate agent with respect to the purchase or sale of the Property or the lease of the Real Property. Seller and Buyer each hereby (a) represent and warrant to the other that it has not employed, retained or consulted any other broker, agent, or finder in carrying on a negotiation in connection with this Agreement or the Transaction, and (b) indemnifies and agrees to hold the other harmless from and against any and all claims, demands, causes of action, debts, liabilities, judgments and damages (including costs and reasonable attorneys’ fees actually incurred in connection with the enforcement of this indemnity) which may be asserted or recovered against the indemnified party on account of any brokerage fee, commission or other compensation arising by reason of the indemnitor’s breach of this representation and warranty. 11.2 Confidentiality. Buyer and Seller, for the benefit of each other, hereby agree that they will not release or cause or permit to be released, and will use best efforts to prevent the Buyer’s Representatives and Seller’s Representatives, respectively, from releasing or causing or permitting the release of, any press notices, publicity (oral or written) or advertising promotion relating to, or otherwise announce or disclose or cause or permit to be announced or disclosed, in any manner whatsoever, the terms, conditions or substance of this Agreement or the Transaction. The foregoing shall not preclude either party from (a) discussing the substance or any relevant details of the transactions contemplated in this Agreement with any of its representatives, employees, agents or consultants, or the Title Company; (b) complying with any Laws applicable to such party, including, without limitation, governmental regulatory, disclosure, tax and reporting requirements; (c) disclosing 12

 
the terms of the Transaction to the extent necessary in connection with any tax appeal either party may pursue with respect to the Property; or (d) disclosing the terms of the Transaction to the extent necessary in written filings, evidence or testimony made or given in connection with any court proceedings either party may pursue in the event of the other party’s alleged default hereunder. Buyer and Seller shall indemnify and hold the other harmless from and against any and all Liabilities suffered or incurred by the indemnified party and arising out of or in connection with a breach by Buyer or Seller, as the case may be, of the provisions of this Paragraph. The obligations of Buyer contained in this Paragraph shall survive the Closing or the earlier termination of this Agreement; provided, however, that Buyer shall be permitted to announce the Transaction in a press release after Closing, the substance of which release shall be subject to Seller’s prior review and approval, which approval shall not be unreasonably withheld. 11.3 Indemnity. Buyer hereby agrees to indemnify, defend, and hold Seller and each of the other Seller Parties free and harmless from and against any and all Liabilities (including reasonable attorneys’ fees, expenses and disbursements) arising out of or resulting from the entry on the Property and/or the conduct of any Due Diligence by Buyer or any of Buyer’s Representatives at any time prior to the Closing; provided, however, that the foregoing indemnity shall not apply to any Liabilities to the extent such Liabilities arise out of the negligence or intentional acts of Seller or the mere discovery by Buyer of a pre-existing condition at the Property. The foregoing indemnity shall survive the Closing (and not be merged therein) or any earlier termination of this Agreement. 11.4 Tax Appeals. Seller shall have the right to continue and to control the progress of and to make all decisions with respect to any contest of the real estate taxes and personal property taxes for the Property due and payable during any Tax Year prior to the Closing Tax Year. Subject to the terms and conditions of the Lease, the lessee under the Lease shall have the right to continue and to control the progress of and to make all decisions with respect to any contest of the real estate taxes and personal property taxes for the Property due and payable during the Closing Tax Year, and Seller shall assign to the lessee at Closing all of its rights to continue any such appeal. Buyer and Seller agree to cooperate with each other and to execute any and all documents reasonably requested in furtherance of the foregoing, at no out-of-pocket cost or expense to Buyer. The provisions of this paragraph shall survive the Closing. 12. Default at or Prior to Closing. 12.1 Buyer Default. Except as set forth hereinbelow, if Buyer defaults in the observance or performance of its covenants and obligations hereunder, or in the event of any breach by Buyer of any of the representations and warranties set forth in Paragraph 8.5, and such default or breach continues for five (5) Business Days after the date Seller gives notice demanding cure thereof, Seller shall be entitled, as its sole and exclusive remedy therefor, to Terminate this Agreement by notice to Buyer of such termination and to receive payment of the Deposit as full liquidated damages for such default or breach of Buyer, the parties hereto acknowledging the difficulty of ascertaining the actual damages in the event of such a default or breach, that it is impossible more precisely to estimate the damages to be suffered by Seller upon Buyer’s default or breach, that such forfeiture of the Deposit is intended not as a penalty, but as full liquidated damages and that such amount constitutes a reasonable good faith estimate of the potential damages arising therefrom, it being otherwise difficult or impossible to estimate Seller’s actual damages which would be suffered by Seller in the event of default or breach by Buyer. Except with respect to any right, obligation or liability which survives Closing or termination of this Agreement, including any indemnification provisions set forth in this 13

 
Agreement, and except as set forth in Paragraph 14.17, Seller’s right to Terminate this Agreement and receive payment of the Deposit as full liquidated damages, are Seller’s sole and exclusive remedies in the event of default or breach hereunder by Buyer, and Seller hereby waives, relinquishes and releases any and all other rights and remedies (except any that survive Closing or termination pursuant to the express provisions of this Agreement), including, but not limited to: (A) any right to sue Buyer for damages or to prove that Seller’s actual damages exceed the Deposit which is hereby provided Seller as full liquidated damages, (B) any right to sue Buyer for specific performance, or (C) any other right or remedy which Seller may otherwise have against Buyer, either at law, or equity or otherwise, including, without limitation, the right to seek and/or receive consequential damages. 12.2 Seller Default. If Seller defaults in the observance or performance of its covenants and obligations hereunder, and such default continues for five (5) Business Days after the date Buyer gives notice demanding cure of such default, in either such event, Buyer shall be entitled, as its sole and exclusive remedy therefor, to Terminate this Agreement by giving Seller notice of such termination and to receive the Deposit from Escrow Agent, in which event Seller shall reimburse to Buyer, within twenty (20) days after Seller’s receipt of reasonable documentation thereof, the Buyer’s Transaction Costs. Except with respect to any right, obligation or liability which survives Closing or termination of this Agreement, including any indemnification provisions set forth in this Agreement, Buyer’s right to so Terminate this Agreement and receive reimbursement of all Buyer’s Transaction Costs as described in the foregoing sentence is Buyer’s sole and exclusive remedy hereunder in the event of default hereunder by Seller, and Buyer hereby waives, relinquishes and releases any and all other rights and remedies (except any that survive Closing or termination pursuant to the express provisions of this Agreement), including, but not limited to: (A) any right to sue for damages (except to compel Seller to make the reimbursement described in the foregoing sentence), (B) any right to sue Seller for specific performance, or (C) any other right or remedy which Buyer may otherwise have against Seller either at law, in equity or otherwise, including, without limitation, the right to seek and/or receive consequential damages. 13. Notices. All notices, consents, approvals and other communications which may be or are required to be given by either Seller or Buyer under this Agreement shall be properly given only if made in writing and sent by (a) hand delivery; (b) a nationally recognized overnight delivery service (such as Federal Express or UPS Next Day Air), with all delivery charges paid by the sender; or (c) by email, with confirmed receipt from the recipient, in each instance addressed to Buyer or Seller, as applicable, as set forth below. Such notices shall be deemed given on the date of delivery or rejection of delivery. Said notice addresses are as follows (and Seller and Buyer shall have the right to designate changes to their respective notice addresses, effective five (5) days after giving notice thereof): 14

 
If to Seller: ABP CO II (Denver) LLC c/o BlueLinx Corporation 1950 Spectrum Circle, Suite 300 Marietta, Georgia 30067 Attn: General Counsel with a copy to: ABP CO II (Denver) LLC c/o BlueLinx Corporation 1950 Spectrum Circle, Suite 300 Marietta, Georgia 30067 Attn: Shyam K. Reddy, Chief Administrative Officer Email: shyam.reddy@bluelinxco.com If to Buyer: BIG Acquisitions LLC 9450 W. Bryn Mawr, Suite 750 Rosemont, Illinois 60018 Attention: Michael W. Brennan E-Mail: mbrennan@brennanllc.com with a copy to: Brennan Investment Group 9450 W. Bryn Mawr, Suite 750 Rosemont, Illinois 60018 Attention: Samuel A. Mandarino E-Mail: smandarino@brennanllc.com and with a copy to: Attention: E-Mail: 14. General Provisions. 14.1 Execution Necessary. This Agreement shall not be binding upon Seller unless fully executed and delivered by a proper official of Seller, and no action taken by Seller’s representatives shall be deemed an acceptance of this Agreement until this Agreement has been so executed by Seller and delivered to Buyer. 14.2 Counterparts. This Agreement may be executed in separate counterparts. It shall be fully executed when each party whose signature is required has signed at least one counterpart even though no one counterpart contains the signatures of all of the parties to this Agreement. 14.3 Successors and Assigns. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and inure to the benefit of the parties hereto and their respective permitted successors and assigns. Buyer shall not have the right to assign or delegate any right, duty or obligation of Buyer under this Agreement to any other party without the prior 15

 
written consent of Seller, which consent Seller may grant or withhold in its sole and absolute discretion, and any such assignment without Seller’s consent shall be null and void ab initio. Notwithstanding the foregoing, Buyer shall have the right to assign this Agreement to (a) an affiliate of Buyer which is under common control with Buyer or (b) an entity owned by a corporate services company pursuant to a corporate services agreement with either (1) Buyer or (2) any entity under common control with Buyer. Any such assignee so consented to by Seller or otherwise permitted pursuant to the terms of the foregoing sentence of this paragraph shall be designated by Buyer by the delivery to Seller of a written assignment of this Agreement pursuant to which Buyer’s obligations hereunder are expressly assumed by such assignee, together with delivery to Seller of evidence reasonably satisfactory to Seller of the valid legal existence of Buyer’s assignee, its qualification (if necessary) to do business in the jurisdiction in which the Property is located and of the authority of Buyer’s assignee to execute and deliver any and all documents required of Buyer under the terms of this Agreement, which items shall be received by Seller not less than three (3) Business Days prior to the Closing Date; notwithstanding the foregoing, the exercise of such right by Buyer shall not relieve Buyer of any of its obligations and liabilities hereunder including obligations and liabilities which survive the Closing or the termination of this Agreement, nor shall any such assignment alter, impair or relieve such assignee from the waivers, acknowledgements and agreements of Buyer set forth herein, all of which are binding upon the assignee of Buyer. In the event of any permitted assignment by Buyer, any assignee shall assume any and all obligations and liabilities of Buyer under this Agreement but, notwithstanding such assumption, Buyer shall continue to be liable hereunder. 14.4 Governing Law. This Agreement shall be governed by the Laws of the state in which the Land is located. 14.5 Entire Agreement. This Agreement and all the exhibits referenced herein and annexed hereto contain the entire agreement of the parties hereto with respect to the matters contained herein, and no prior agreement or understanding pertaining to any of the matters connected with this Transaction shall be effective for any purpose. Neither this Agreement nor any provision hereof may be waived, modified, amended, discharged or terminated except by an instrument signed by the party against whom the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such instrument. 14.6 Time Is of the Essence. TIME IS OF THE ESSENCE of the Transaction and this Agreement. 14.7 Interpretation. The titles, captions and paragraph headings are inserted for convenience only and are in no way intended to interpret, define, limit or expand the scope or content of this Agreement or any provision hereof. If any party to this Agreement is made up of more than one person or entity, then all such persons and entities shall be included jointly and severally, even though the defined term for such party is used in the singular in this Agreement. If any time period under this Agreement ends on a day other than a Business Day, then the time period shall be extended until the next Business Day. This Agreement shall be construed without regard to any presumption or other rule requiring construction against the party causing this Agreement to be drafted. If any words or phrases in this Agreement shall have been stricken out or otherwise eliminated, whether or not any other words or phrases have been added, this Agreement shall be construed as if the words or phrases so stricken out or otherwise eliminated were never included in this Agreement and no implication or inference shall be drawn from the fact that said words or phrases were so stricken out or otherwise eliminated. 16

 
14.8 Survival. The covenants, agreements, indemnities, representations and warranties contained herein shall not survive the Closing Date or any termination of this Agreement, except as set forth in Paragraphs 8, 11, 13 and 14, each of which shall survive the Closing or any earlier termination of this Agreement (limited, as applicable, as set forth therein). 14.9 Exclusive Application. Nothing in this Agreement is intended or shall be construed to confer upon or to give to any person, firm or corporation other than Buyer and Seller hereto any right, remedy or claim under or by reason of this Agreement. All terms and conditions of this Agreement shall be for the sole and exclusive benefit of the parties hereto, and such benefit may not be assigned by Buyer except as set forth in Paragraph 14.3. 14.10 Partial Invalidity. If all or any portion of any of the provisions of this Agreement shall be declared invalid by Laws applicable thereto, then the performance of said offending provision shall be excused by the parties hereto; provided, however, that, if the performance of such excused provision materially affects any material aspect of this Transaction and the other party does not upon demand enter into a modification or separate agreement which sets forth in valid fashion the covenants of such offending provision in a manner which counsel to both parties determine is valid, then the party hereto for whose benefit such excused provision was inserted in this Agreement shall have the right, exercisable by notice given to the other party within ten (10) days after such provision is so declared invalid, to Terminate this Agreement. 14.11 Waiver Rights. Buyer reserves the right to waive, in whole or in part, any provision hereof which is for the benefit of Buyer. Seller reserves the right to waive, in whole or in part, any provision hereof that is for the benefit of Seller. 14.12 No Implied Waiver. Except as otherwise expressly provided in this Agreement, no waiver by Seller or Buyer of any provision hereof shall be deemed to have been made unless expressed in writing and signed by such party, and no delay or omission in the exercise of any right or remedy accruing to Seller or Buyer upon any breach under this Agreement shall impair such right or remedy or be construed as a waiver of any such breach theretofore or thereafter occurring. The waiver by Seller or Buyer of any breach of any term, covenant or condition herein stated shall not be deemed to be a waiver of any other breach, or of a subsequent breach of the same or any other term, covenant or condition herein contained. 14.13 Rights Cumulative. All rights, powers, options or remedies afforded to Seller or Buyer either hereunder or by Law shall be cumulative and not alternative, and the exercise of one right, power, option or remedy shall not bar other rights, powers, options or remedies allowed herein or by Law, unless expressly provided to the contrary herein. 14.14 Attorneys’ Fees. Should either party employ an attorney or attorneys to enforce any of the provisions hereof or to protect its interest in any manner arising under this Agreement, or to recover damages for breach of this Agreement, the non-prevailing party in any action pursued in a court of competent jurisdiction (the finality of which is not legally contested) shall pay to the prevailing party all reasonable costs, damages and expenses, including attorneys’ fees, expended or incurred in connection therewith. Such recovery shall be mandatory and shall not be in the discretion of the court. 17

 
14.15 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES TRIAL BY JURY IN ANY PROCEEDINGS BROUGHT BY THE OTHER PARTY IN CONNECTION WITH ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE TRANSACTION, THIS AGREEMENT, THE PROPERTY OR THE RELATIONSHIP OF BUYER AND SELLER HEREUNDER. THE PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE THE CLOSING (AND NOT BE MERGED THEREIN) OR ANY EARLIER TERMINATION OF THIS AGREEMENT. 14.16 Signatures. Signatures to this Agreement transmitted by electronic copy shall be valid and effective to bind the party so signing. Each party agrees to promptly deliver an execution original to this Agreement with its actual signature to the other party, but a failure to do so shall not affect the enforceability of this Agreement, it being expressly agreed that each party to this Agreement shall be bound by its own signature delivered by electronic copy and shall accept the electronic copy of the signature of the other party to this Agreement. 14.17 No Recordation. Seller and Buyer each agrees that neither this Agreement nor any memorandum or notice hereof shall be recorded and Buyer shall not file any notice of pendency or other instrument (other than a judgment) against the Property or any portion thereof in connection herewith. Buyer expressly acknowledges and agrees that, in the event of any breach by Buyer of its obligations as set forth in the foregoing sentence, the provisions of Paragraph 12.1 limiting Seller’s remedies shall not apply, and that Seller shall, in such event, be entitled to any remedy which Seller may otherwise have against Buyer, whether at law or in equity, or otherwise, including, without limitation, the right to seek and/or receive consequential damages. 14.18 Maximum Aggregate Liability. Notwithstanding any provision to the contrary contained in this Agreement or any documents executed by Seller pursuant hereto or in connection herewith, the maximum aggregate liability of Seller and the Seller Parties, and the maximum aggregate amount which may be awarded to and collected by Buyer, in connection with the Transaction, the Property, under this Agreement and under any and all documents executed pursuant hereto or in connection herewith (including, without limitation, in connection with the breach of any of Seller’s Warranties for which a claim is timely made by Buyer) shall not exceed Seller’s Liability Limit. The provisions of this section shall survive the Closing (and not be merged therein) or any earlier termination of this Agreement. 14.19 Exhibits and Schedules. All exhibits and schedules referred to in, and attached to, this Agreement are hereby incorporated herein in full by this reference. 14.20 Oil, Gas, Water and Mineral Disclosure. A. THE SURFACE ESTATE OF THE PROPERTY MAY BE OWNED SEPARATELY FROM THE UNDERLYING MINERAL ESTATE, AND TRANSFER OF THE SURFACE ESTATE MAY NOT INCLUDE TRANSFER OF THE MINERAL ESTATE. THIRD PARTIES MAY OWN OR LEASE INTERESTS IN OIL, GAS, OR OTHER MINERALS UNDER THE SURFACE, AND THEY MAY ENTER AND USE THE SURFACE ESTATE TO ACCESS THE MINERAL ESTATE. THE USE OF THE SURFACE ESTATE TO ACCESS THE MINERALS MAY BE GOVERNED BY A SURFACE USE AGREEMENT, A MEMORANDUM OR OTHER NOTICE OF WHICH MAY BE RECORDED WITH THE COUNTY CLERK AND RECORDER. THE OIL AND GAS ACTIVITY THAT MAY OCCUR ON OR ADJACENT TO THIS PROPERTY 18

 
MAY INCLUDE, BUT IS NOT LIMITED TO, SURVEYING, DRILLING, WELL COMPLETION OPERATIONS, STORAGE, OIL AND GAS, OR PRODUCTION FACILITIES, PRODUCING WELLS, REWORKING OF CURRENT WELLS, AND GAS GATHERING AND PROCESSING FACILITIES. THE BUYER IS ENCOURAGED TO SEEK ADDITIONAL INFORMATION REGARDING OIL AND GAS ACTIVITY ON OR ADJACENT TO THIS PROPERTY, INCLUDING DRILLING PERMIT APPLICATIONS. THIS INFORMATION MAY BE AVAILABLE FROM THE COLORADO OIL AND GAS CONSERVATION COMMISSION. B. Without limiting the foregoing, Buyer specifically acknowledges the mineral rights held by Anadarko Land Corp., a Nebraska corporation, successor by merger to Union Pacific Land Resources Corporation, as set forth in the deeds listed in that certain Mineral Ownership Report prepared by Colorado Land and Mineral Company LLC dated November 22, 2017, a copy of which has been provided to Buyer, as well as the restrictive covenants set forth in such deeds. Buyer agrees that the reservations of such mineral rights and related restrictive covenants are Permitted Title Exceptions and Buyer shall not be entitled to make Title Objections with respect thereto. 15. Earnest Money and Escrow Agent. The Escrow Deposits shall be held by Escrow Agent, in trust, and disposed of only in accordance with the following provisions: 15.1 Deposit. Escrow Agent shall not invest the Escrow Deposits or commingle the Escrow Deposits with any funds of Escrow Agent or others. 15.2 Delivery at Closing. If the Closing occurs, Escrow Agent shall deliver the Escrow Deposits to, or upon the instructions of, Buyer and Seller on the Closing Date. 15.3 Return or Delivery of Deposit Outside Closing. Escrow Agent shall deliver the Escrow Deposits to Seller or Buyer only in accordance with the terms of this Paragraph 15.3. Upon receipt of a written demand for the Escrow Deposits from Buyer prior to the Due Diligence Deadline, Escrow Agent shall promptly deliver the Escrow Deposits to Buyer. Upon receipt of a written demand for the Escrow Deposits from either Buyer or Seller at any time thereafter, Escrow Agent shall give notice to the other party of such demand. Thereafter, (a) if Escrow Agent does not receive a written objection from the other party to the proposed payment within five (5) days after the giving of such notice, then Escrow Agent is hereby authorized to make such payment, but (b) if Escrow Agent does receive such written objection within such period, Escrow Agent shall continue to hold such amount until otherwise directed by written instructions signed by Seller and Buyer or a final judgment of a court. In the event of any return of the Deposit to Buyer pursuant to Paragraph 4.5, One Hundred and No/100 Dollars ($100.00) thereof shall be payable to Seller, and such amount shall in effect constitute option money, making this Agreement binding even if any conditions or provisions herein are entirely within the discretion or control of Buyer. 15.4 Stakeholder. The parties acknowledge that Escrow Agent is acting solely as a stakeholder at their request and for their convenience, that Escrow Agent shall not be deemed to be the agent of either of the parties, and that Escrow Agent shall not be liable to either of the parties for any action or omission on its part taken or made in good faith, and not in disregard of this Agreement, but shall be liable for its negligent acts and for any Liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred by Seller or Buyer resulting from Escrow Agent’s mistake of Law respecting Escrow Agent’s scope or nature of its duties. Seller and Buyer shall jointly and severally indemnify and hold Escrow Agent harmless from and against all Liabilities (including 19

 
reasonable attorneys’ fees, expenses and disbursements) incurred in connection with the performance of Escrow Agent’s duties hereunder, except with respect to actions or omissions taken or made by Escrow Agent in bad faith, in disregard of this Agreement or involving negligence on the part of Escrow Agent. 15.5 Taxes. The party receiving the Escrow Deposits (or the benefit thereof) shall pay any income taxes on any interest earned on the Escrow Deposits. 15.6 Execution by Escrow Agent. Escrow Agent has executed this Agreement in order to confirm that Escrow Agent has received and shall hold the Escrow Deposits, in escrow, and shall disburse the Escrow Deposits pursuant to the provisions of this Paragraph 15. [The remainder of this page has been intentionally left blank. Signatures begin on the following page.] 20

 
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as of the Effective Date. SELLER: ABP CO II (DENVER) LLC, a Delaware limited liability company By: /s/ Justin B. Heineman Name: Justin B. Heineman Title: Vice President and Corporate Secretary Date: June 1, 2020 [Signatures continued on following page.]

 
BUYER: BIG ACQUISITIONS LLC, an Illinois limited liability company By: /s/ Michael Brennan Name: Michael Brennan Title: Manager Date: June 1, 2020 [Signatures continued on following page.]

 
The undersigned has executed this Agreement solely to confirm its agreement to (i) hold the Escrow Deposits in escrow in accordance with the provisions hereof and (ii) comply with the provisions of Paragraph 15. ESCROW AGENT: FIDELITY NATIONAL TITLE INSURANCE COMPANY By: /s/ Lindsey Mann Name: Lindsey Mann Title: Senior National Commercial Escrow Officer Date: June 1, 2020

 
SCHEDULE A “Agreement” shall mean this Purchase and Sale Agreement. “Assignment” shall mean an Assignment of Intangible Property in the form attached hereto as Exhibit I. “Business Day” shall mean Monday through Friday excluding holidays recognized by the state government of the State in which the Property is located. “Buyer” shall mean the buyer referenced in the first paragraph of this Agreement. “Buyer’s Reports” shall mean the results of any examinations, inspections, investigations, tests, studies, analyses, appraisals, evaluations and/or investigations prepared by or for or otherwise obtained by Buyer or Buyer’s Representatives in connection with Buyer’s Due Diligence. “Buyer’s Representatives” shall mean Buyer’s officers, employees, agents, advisors, representatives, attorneys, accountants, consultants, lenders, investors, contractors, architects and engineers. “Buyer’s Transaction Costs” shall mean, to the extent that Buyer has provided to Seller reasonable documentation thereof, Buyer’s reasonable actual out-of-pocket Due Diligence expenses incurred in connection with the Transaction after the Effective Date, in an aggregate amount not to exceed $75,000.00. “Closing” shall mean the consummation and closing of the Transaction. “Closing Date” shall mean the date on which the Closing occurs, which shall be on or before the Closing Deadline. “Closing Deadline” shall mean the date that is twenty (20) days after the Due Diligence Deadline. “Closing Documents” shall mean the documents and instruments delivered by Buyer and Seller, in order to consummate the Transaction. “Closing Tax Year” shall mean the Tax Year in which the Closing Date occurs. “Condemnation Proceeding” shall mean any proceeding in condemnation, eminent domain or any written request for a conveyance in lieu thereof, or any notice that such proceedings have been or will be commenced against any portion of the Property. “Deed” shall mean a special warranty deed in the form attached hereto as Exhibit E. “Deposit” shall mean the sum of Two Hundred Twenty Thousand and No/100 Dollars ($220,000.00), consisting of, collectively, the Initial Deposit of One Hundred Ten Thousand and

 
No/100 Dollars ($110,000.00), and the Secondary Deposit of One Hundred Ten Thousand and No/100 Dollars ($110,000.00). “Documents” shall mean any documents and instruments applicable to the Property or any portion thereof that Seller or any of the other Seller Parties deliver or make available to Buyer or Buyer’ Representatives prior to Closing or which are otherwise obtained by Buyer or Buyer’s Representatives prior to Closing, including, but not limited to, the Title Commitment. “Due Diligence” shall mean the investigation by Buyer and Buyer’s Representatives of the feasibility and desirability of purchasing the Property, including all audits, surveys, examinations, inspections, investigations, tests, studies, analyses, appraisals, evaluations, investigations and verifications with respect to the Property, the Documents, title matters, applicable land use and zoning Laws and other Laws applicable to the Property, the physical condition of the Property, the economic status of the Property, and other information and documents regarding the Property, including, but not limited to, investigations of the legal and physical status of the Property by such consultants, engineers and architects as Buyer requires, structural review, examination of title to the Property, preparation of a survey of the Land, and verification of all information made or to be made available to Buyer with respect to Property. “Due Diligence Deadline” shall mean 6:00 P.M. Eastern time on the date that is forty (40) days after the Effective Date. “Effective Date” shall mean the date on which Seller or Buyer shall have executed this Agreement, as indicated under their respective signatures, whichever is the later to do so. “Escrow Agent” shall mean the Title Company. “Escrow Deposits” shall mean the Deposit, and any other sums (including, without limitation, any interest earned thereon) which the parties agree shall be held in escrow hereunder. “Government List” shall mean (1) the Specialty Designated Nationals and Blocked Persons Lists maintained by the Office of Foreign Assets Control, United States Department of the Treasury (“OFAC”), (2) the Denied Persons List and the Entity List maintained by the United States Department of Commerce, (3) the List of Terrorists and List of Disbarred Parties maintained by the United States Department of State, (4) any other list of terrorists, terrorist organizations or narcotics traffickers maintained pursuant to any of the lists, laws, rules and regulations maintained by OFAC pursuant to any authorizing statute, Executive Order or regulation, (5) any other similar list maintained by the United States Department of State, the United States Department of Commerce or any other governmental authority or pursuant to any Executive Order of the President of the United States of America, and (6) any list or qualification of “Designated Nationals” as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, as all such Government Lists may be updated from time to time. “Initial Deposit” shall mean an amount equal to One Hundred Ten Thousand and No/100 Dollars ($110,000.00), in immediately available funds, to the extent the same is deposited by Buyer in accordance with the terms of Paragraph 3.1 hereof, together with any interest earned thereon. Exhibit A – Page 2 of 6

 
“Land” shall mean all of Seller’s right, title and interest in and to that certain tract or parcel of land located in the City and County of Denver, Colorado more particularly described on Exhibit A attached hereto and commonly known as 3900 Uvalda Street, Denver, Colorado 80239-3438. “Landlord” shall mean Buyer or its permitted assignee taking title to the Property as of the Closing Date. “Landlord Agreement” shall mean a Landlord Agreement in the form attached to the Lease as Schedule 3.01. “Law” shall mean any federal, state or local law, statute, ordinance, code, order, decrees, or other governmental rule, regulation or requirement, including common law. “Lease” shall mean a Lease Agreement by and between Landlord and Tenant, in the form attached hereto as Exhibit F. “Lender” shall mean, collectively, any and all parties taking a security interest in the interest of Buyer or Landlord in the Real Property, to the extent any such security interest is not intended to be subordinate to Tenant’s interest in the Real Property under the Lease. “Lien” shall mean any mortgage, deed of trust, security deed, lien, judgment, pledge, conditional sales contract, security interest, past due taxes, past due assessments, contractor’s lien, materialmen’s lien, judgment or similar encumbrance against the Property of a monetary nature. “Liabilities” shall mean any and all direct or indirect damages, demands, claims, payments, problems, conditions, obligations, actions or causes of action, assessments, losses, Liens, liabilities, costs and expenses of any kind or nature whatsoever, including, without limitation, penalties, interest on any amount payable to a third party, lost income and profits, and any legal or other expenses (including, without limitation, reasonable attorneys’ fees and expenses) reasonably incurred in connection with investigating or defending any claims or actions, whether or not resulting in any liability. “Memorandum of Lease” shall mean a Memorandum of Lease in the form attached hereto as Exhibit K. “Other Interests” shall mean the following other interests of Seller in and to the Real Property, or pertaining thereto: (a) to the extent that the same are in effect as of the Closing Date, any licenses, permits and other written authorizations necessary for the use, operation or ownership of the Real Property, and (b) any guaranties and warranties in effect with respect to any portion of the Real Property as of the Closing Date; provided, however, that Other Interests shall not include any such licenses, permits, authorizations, guaranties or warranties to the extent that said items are necessary or desirable for Tenant’s use of and operations upon the Land following Closing pursuant to the terms of the Lease. “Permitted Title Exceptions” shall mean, subject to Buyer’s rights to review and make objection to the status of title and survey as set forth in this Agreement, and the right of Buyer to Terminate this Agreement pursuant to Paragraph 4.5 if the Due Diligence is not satisfactory, the following: (a) all real estate taxes and assessments not yet due and payable as of the Closing Date; (b) any Laws affecting the Property; (c) the Record Exceptions; (d) the Lease; (e) any state of facts Exhibit A – Page 3 of 6

 
which would be disclosed by a current survey or other inspection of the Land; and (f) any other matters approved as Permitted Title Exceptions by Buyer prior to Closing or deemed approved as Permitted Title Exceptions pursuant to this Agreement. “Property” shall mean the Real Property and the Other Interests. “Purchase Price” is defined in the Recitals to this Agreement. “Real Property” shall mean the Land, including, without limitation, (a) any and all buildings located on the Land and all other improvements, (b) all easements appurtenant to the Land and other easements, grants of right, licenses, privileges or other agreements for the benefit of, belonging to or appurtenant to the Land whether or not situate upon the Land, including, without limitation, signage rights and parking rights or agreements, all whether or not specifically referenced on Exhibit A, (c) all sewer rights and other utility rights allocated to the Land, (d) all right, title and interest, if any, of the owner of the Land in and to any and all strips and gores of land located on or adjacent to the Land, and (e) all right, title and interest of the owner of the Land in and to any roads, streets and ways, public or private, open or proposed, in front of or adjoining all or any part of the Land and serving the Land. “Record Exceptions” shall mean all instruments recorded in the real estate records of the County in which the Land is located which affect the status of title to the Real Property. “Remove” with respect to any exception to title shall mean that Seller causes the Title Company to remove or affirmatively insure over the same as an exception to the Title Policy, without any additional cost to Buyer, whether such removal or insurance is made available in consideration of payment, bonding, indemnity of Seller or otherwise. “Required Removal Items” shall mean, collectively, any Title Objections to the extent (and only to the extent) that the same (a) have not been caused by Buyer or any Buyer’s Representatives, and (b) are either: (i) Liens evidencing monetary encumbrances (other than liens for non-delinquent general real estate taxes or assessments) which can be Removed by payment of liquidated amounts, but only if such Liens have been created by written instrument signed by Seller or assumed by written instrument signed by Seller, and provided that in no event shall Seller be required to Remove any such Lien which is not related to the operation of the Property by any method other than indemnity of Seller in favor of the Title Company (for example, unrelated items would include a judgment against such party in connection with its other operations; whereas a mechanic’s lien for work on the Property pursuant to a contract entered into by Seller would be related to Property operations), or (ii) liens or encumbrances (including, but not limited to, Liens) created by Seller after the Effective Date. “Secondary Deposit” shall mean an amount equal to One Hundred Ten Thousand and No/100 Dollars ($110,000.00), in immediately available funds, to the extent the same is deposited by Buyer in accordance with the terms of Paragraph 3.1 hereof, together with any interest earned thereon. “Seller” shall mean the seller referenced in the first paragraph of this Agreement. “Seller Parties” shall mean and include, collectively, (a) Seller; (b) its counsel; (c) any direct or indirect owner of any beneficial interest in Seller, or any subsidiaries, parents or affiliates of Seller; (d) any officer, director, employee, affiliate, principal, partner, shareholder, representative or agent of Seller, its counsel or any direct or indirect owner of any beneficial interest in Seller or of any Exhibit A – Page 4 of 6

 
subsidiaries, parents or affiliates of Seller; and (e) any other entity or individual affiliated or related in any way to any of the foregoing, and their successors and assigns. “Seller’s knowledge” or words of similar import shall refer only to the actual knowledge of Shyam K. Reddy, Chief Administrative Officer, and Gary Cummings, and shall not be construed to refer to the knowledge of any other Seller Party, or to impose or have imposed upon such individual any duty to investigate the matters to which such knowledge, or the absence thereof, pertains. There shall be no personal liability on the part of such individual arising out of any of the Seller’s Warranties. “Seller’s Liability Limit” shall mean an amount equal to the Purchase Price. “Seller’s Representatives” shall mean Seller’s officers, employees, agents, advisors, representatives, attorneys, accountants, consultants, investors, contractors, architects and engineers. “Seller’s Warranties” shall mean Seller’s representations and warranties set forth in Paragraph 8.1, as the same may be deemed modified or waived by Buyer pursuant to this Agreement. “SNDA” shall mean a commercially reasonable subordination, non-disturbance and attornment agreement on a form provided by Lender. “Survey” shall mean an ALTA survey of the Property prepared by a surveyor licensed in the State in which the Property is located, to be certified to Seller and Buyer. “Survival Period” shall mean the first 180 days after Closing. “Tax Year” shall mean the year period commencing on January 1 of each calendar year and ending on December 31 of each calendar year. “Tenant” shall mean BlueLinx Corporation, a Georgia corporation. “Terminate” shall mean the termination of this Agreement by notice from Buyer or Seller, as applicable, as set forth this Agreement, in which event thereafter neither party hereto shall have any further rights, obligations or liabilities hereunder except to the extent that any right, obligation or liability set forth herein expressly survives termination of this Agreement. “Title Commitment” shall mean the Commitment of the Title Company to issue the Title Policy, which commitment shall include hyperlinks providing access to copies of the Record Exceptions referenced therein. “Title Company” shall mean Fidelity National Title Insurance Company, or such other title insurance company as may be designated by Seller in writing from time to time. “Title Cure Deadline” shall mean 6:00 P.M. Eastern time on that day which is 15 days after the date on which Buyer delivers to Seller the Title Objections. “Title Objections” shall mean any defects in title (including any Record Exceptions which are not acceptable to Buyer) or survey (including the description of the Land) which may be revealed by Buyer’s examinations thereof to which Buyer timely objects in accordance with the terms of Paragraph 4.3. Exhibit A – Page 5 of 6

 
“Title Policy” shall mean the ALTA Owner’s Policy of Title Insurance issued by the Title Company in the amount of the Purchase Price and in the form of the Title Commitment, and containing, unless prohibited by applicable statutes or regulations, such endorsements as Buyer may obtain from the Title Company in the Title Commitment prior to the Due Diligence Deadline. Buyer shall be entitled to request that the Title Company provide extended coverage and such endorsements (or amendments) to the Title Policy as Buyer may reasonably require, provided that (a) such extended coverage and/or endorsements (or amendments) shall be at no cost to, and shall impose no additional liability on, Seller, (b) Buyer’s obligations under this Agreement shall not be conditioned upon Buyer’s ability to obtain such extended coverage or endorsements and, if Buyer is unable to obtain such extended coverage or endorsements, Buyer shall nevertheless be obligated to proceed to close the Transaction without reduction of or set off against the Purchase Price, and (c) the Closing shall not be delayed as a result of Buyer’s request. “Transaction” shall mean the purchase and sale transaction contemplated by this Agreement. Exhibit A – Page 6 of 6

 
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT This First Amendment to Purchase and Sale Agreement (this “Amendment”) dated as of the Effective Date (as hereinafter defined) is by and between ABP CO II (DENVER) LLC, a Delaware limited liability company (“Seller”), and BIG ACQUISITIONS LLC, an Illinois limited liability company (“Buyer”). RECITALS: A. Seller and Buyer are parties to that certain Purchase and Sale Agreement dated as of June 1, 2020 pertaining to the proposed sale by Seller to Buyer of certain real property more particularly described therein (the “Agreement”). B. Buyer has requested an extension of time to complete its Due Diligence with respect to the Property. C. The requested extension of the Due Diligence Deadline will necessitate a corresponding extension of the Closing Deadline. D. Seller is willing to agree to such requests, upon the terms and conditions of this Amendment. E. The parties also desire to amend certain provisions of the Agreement regarding the Lease. OPERATIVE TERMS: NOW, THEREFORE, for and in consideration of the foregoing recitals, the mutual covenants set forth in the Agreement and in this Amendment, Ten Dollars ($10.00) and other good and valuable consideration in hand paid, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer hereby agree as follows: 1. Recitals; Defined Terms. The foregoing recitals are true and correct in all material respects and incorporated in this Amendment and the Agreement. Capitalized terms and phrases used but not otherwise defined in this Amendment shall have the meanings ascribed to such terms and phrases in the Agreement or the Lease, as applicable. Unless the context clearly indicates otherwise, all references to “this Agreement” in the Agreement and in this Amendment shall hereinafter be deemed to refer to the Agreement, as amended hereby. As used in this Amendment (but not for purposes of the Agreement, in which context the definition of the term “Effective Date” shall remain unchanged), “Effective Date” shall mean the date on which Seller or Buyer shall have executed this Amendment, as indicated under their respective signatures, whichever is the later to do so. 2. Due Diligence Deadline. The definition of “Due Diligence Deadline” in Schedule A to the Agreement is hereby deleted in its entirety and replaced with the following definition: “‘Due Diligence Deadline’ shall mean 6:00 P.M. Eastern time on July 31, 2020”.

 
3. Closing Deadline. The definition of “Closing Deadline” in Schedule A to the Agreement is hereby deleted in its entirety and replaced with the following definition: “‘Closing Deadline’ shall mean August 14, 2020”. 4. Lease Amendment regarding Right of Renewal. Section 1.05 of the Lease is hereby deleted and replaced with the following: “Section 1.05 Right of Renewal. Tenant shall have the right to renew the Term for all of the Premises for two (2) renewal terms of five (5) years (each, a “Renewal Term”), each of which shall commence on the day following the expiration of the Term, as previously extended and end on the fifth (5th) anniversary of the last day of the Term, unless such Renewal Term shall sooner terminate pursuant to any of the terms of this Lease or otherwise. Each Renewal Term shall commence only if (a) Tenant shall have notified Landlord in writing of Tenant’s exercise of such renewal right not later than one year prior to the then last day of the Term and (b) at the time of the exercise of such right and immediately prior to the then last day of the Term, no Event of Default shall have occurred and be continuing hereunder. Time is of the essence with respect to the giving of the notice of Tenant’s exercise of each renewal option, and Tenant’s failure to timely give notice of Tenant’s exercise of a renewal option shall render null and void the subject renewal option and any subsequent renewal options hereunder. Each Renewal Term shall be upon all of the agreements, terms, covenants and conditions hereof binding upon Tenant, except that Basic Rent shall increase by two percent (2%) annually beginning with the first day of the first year of each Renewal Term, and Tenant shall have no further right to renew the Term beyond the second Renewal Term. Upon the commencement of each Renewal Term, (1) such Renewal Term shall be added to and become part of the Term and (2) any reference to “this Lease”, to the “Term”, the “term of this Lease” or any similar expression shall be deemed to include such Renewal Term.” 5. Lease Amendment regarding Security Deposit. Section 9.17 of the Lease is deleted and replaced with the following: “Section 9.17 Security Deposit. (a) Tenant shall deposit or cause to be deposited with Landlord or Mortgagee, as Landlord shall designate, on or before the date hereof, $269,500.00 as a “Security Deposit” for its full and faithful performance of the terms of this Lease, it being expressly understood that such Security Deposit shall not be considered an advance payment of any Basic Rent, additional rent or other sums payable under this Lease or a measure of Landlord’s damages in case of an Event of Default. Payment of said Security Deposit shall be satisfied by Tenant’s deposit of cash and any interest earned shall remain as an additional Security Deposit. If Landlord transfers its interest in the Premises during the Term to a Transferee who assumes Landlord’s obligations hereunder and to whom the Security Deposit is transferred, Landlord may assign the Security Deposit to the Transferee and, thereafter, Landlord shall have no further liability for the return of such Security Deposit to Tenant. Effective as of the first day of the first Renewal Term, provided that that there exists no Event of Default under this Lease at such time, the amount of the Security Deposit shall 2

 
be reduced to $67,375.00, and Landlord shall refund the reduction of the Security Deposit to Tenant within fifteen (15) days after the first day of the Renewal Term. (b) Beginning March 31, 2022 and continuing on March 31st of each fiscal year thereafter during the initial Term (each, a “Reduction Request Date”), Tenant shall have the right to request, by written notice to Landlord, a reduction of the Security Deposit to $134,750.00, provided that (i) Tenant’s Adjusted EBITDA (hereinafter defined) for each of the two (2) previous fiscal years prior to such applicable Reduction Request Date (as publicly reported in connection with BlueLinx Holdings Inc.’s (“BlueLinx”) filings with the Securities and Exchange Commission or as shown on the financial statements that Tenant is required to deliver pursuant to Section 8.02(b) of this Lease if BlueLinx is no longer publicly traded, as the case may be) is greater than $100,000,000.00 and Tenant’s Leverage is four (4) times or less as of the end of each such fiscal year, and (ii) at such time there exists no Event of Default under this Lease. If Tenant is entitled to a reduction in the Security Deposit, Tenant shall provide Landlord with (A) written notice requesting that the Security Deposit be reduced, (B) a calculation of Tenant’s Adjusted EBITDA and Tenant’s Leverage, as provided above, and (C) financial statements required to be delivered pursuant to Section 8.02(b) (collectively, the “Reduction Notice”). If Tenant provides Landlord with a Reduction Notice, and Tenant is entitled to reduce the Security Deposit as provided herein, Landlord shall refund the reduction of the Security Deposit to Tenant within fifteen (15) days after Landlord’s receipt of the Reduction Notice, if the Security Deposit is held in cash, or, if the Security Deposit is in the form of a Letter of Credit, Tenant shall be entitled to replace or cause the amendment of the Letter of Credit accordingly. For the purposes of this Lease, Tenant’s “Adjusted EBITDA” shall mean the following, as applicable: (i) as publicly reported in connection with BlueLinx’s filings with the Securities and Exchange Commission for so long as BlueLinx is a publicly traded company, or (ii) in the event BlueLinx is not a publicly traded company, an amount as calculated on a consolidated basis for BlueLinx and its subsidiaries for any period as of any date of determination equal to (a) the sum, without duplication, of the amounts for such period of (1) net income (loss), plus (2) interest expense and all interest expense related items, plus (3) depreciation expense and amortization expense, plus (4) income tax expense, plus (5) non-cash stock option and other equity-based compensation expenses, plus (6) other non-cash expenses, charges and adjustments to net income (loss) (excluding any such expense, charge or adjustment incurred in the ordinary course of business that constitutes an accrual of, or a reserve for, cash charges for any future period), plus (7) to the extent approved by Landlord in its sole discretion and not otherwise contemplated above, other one-time charges, plus (8) to the extent approved by Landlord in its sole discretion and not otherwise contemplated above, any losses arising from the sale, exchange, transfer or other disposition of assets not in the ordinary course of business, minus (b) the sum, without duplication, of the amounts for such period of (1) other non- cash items increasing net income for such period (excluding any such non-cash item to the extent it represents the reversal of an accrual or reserve for potential cash item in any prior period), plus (2) interest income, plus (3) other income, plus (4) gains from dispositions of assets or liabilities outside of the ordinary course of business for such period. For the purposes of this Lease, “Leverage” for a fiscal year shall mean, as calculated on a consolidated basis for BlueLinx and its subsidiaries as of the date of the determination, the quotient obtained by dividing all of BlueLinx’s 3

 
outstanding third-party borrowings (net of cash and cash equivalents) as of the end of such fiscal year by Tenant’s Adjusted EBITDA for such fiscal year. (c) Following an Event of Default (and, for the avoidance of doubt, taking into account any applicable cure period under the Lease), Landlord may use, apply or retain such portion of the Security Deposit as is required for the reimbursement or payment of any sum then payable or due and owing by Tenant under the terms of this Lease in respect thereof that is not timely paid by Tenant under the terms of this Lease.” 6. Headings. The headings to sections of this Amendment are for convenient reference only and shall not be used in interpreting this Amendment. 7. Entire Agreement. This Amendment contains the entire agreement and understanding between the parties concerning the subject matter of this Amendment and supersedes all prior agreements, terms, understandings, conditions, representations and warranties, whether written or oral, concerning the matters that are the subject of this Amendment. 8. Force and Effect. Except as otherwise expressly modified by this Amendment, the Agreement shall remain in full force and effect. Seller and Buyer hereby ratify and confirm their respective rights and obligations under the Agreement, as amended by this Amendment. 9. Counterparts. This Amendment may be executed in counterparts, and all such counterparts shall when taken together, constitute one and the same instrument. 10. Electronic Execution. This Amendment may be executed and delivered by electronic transmission, with the same force and effect as a fully-executed or counterpart original document. 4

 
IN WITNESS WHEREOF, Seller and Buyer have executed this Amendment as of the Effective Date. SELLER: ABP CO II (DENVER) LLC, a Delaware limited liability company By: /s/ Justin B. Heineman Name: Justin B. Heineman Title: Vice President and Corporate Secretary Date signed: July 8, 2020 5

 
BUYER: BIG ACQUISITIONS LLC, a Delaware limited liability company By: /s/ Michael W. Brennan Name: Michael W. Brennan Title: Manager Date signed: July 8, 2020 6

 

EXHIBIT 31.1

 CERTIFICATION REQUIRED BY RULE 13a-14(a) OR RULE 15d-14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934

I, Mitchell B. Lewis, certify that:
 
(1)I have reviewed this quarterly report on Form 10-Q of BlueLinx Holdings Inc.;
(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4)The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5)The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
October 28, 2020 /s/ Mitchell B. Lewis
  Mitchell B. Lewis
  President and Chief Executive Officer
 


EXHIBIT 31.2

 CERTIFICATION REQUIRED BY RULE 13a-14(a) OR RULE 15d-14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934

I, Kelly C. Janzen, certify that:
 
(1)I have reviewed this quarterly report on Form 10-Q of BlueLinx Holdings Inc.;
(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4)The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5)The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
October 28, 2020 /s/ Kelly C. Janzen
  Kelly C. Janzen
  Senior Vice President and Chief Financial Officer
 




EXHIBIT 32.1
 
BLUELINX HOLDINGS INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the quarterly report of BlueLinx Holdings Inc. (the “Company”) on Form 10-Q for the period ending September 26, 2020, as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), I, Mitchell B. Lewis, Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
October 28, 2020 /s/ Mitchell B. Lewis
  Mitchell B. Lewis
  President and Chief Executive Officer
 



EXHIBIT 32.2
 
BLUELINX HOLDINGS INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the quarterly report of BlueLinx Holdings Inc. (the “Company”) on Form 10-Q for the period ending September 26, 2020, as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), I, Kelly C. Janzen, Senior Vice President and Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
October 28, 2020 /s/ Kelly C. Janzen
  Kelly C. Janzen
  Senior Vice President and Chief Financial Officer