EX-10.1 THE AMENDED AND RESTATED LOAN



 







EXHIBIT 10.1




AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT




by and among




THE FINANCIAL INSTITUTIONS NAMED HEREIN,




as Lenders,




WACHOVIA BANK, NATIONAL ASSOCIATION,




as Administrative and Collateral Agent,




WACHOVIA CAPITAL MARKETS, LLC




as Sole Lead Arranger and Sole Syndication Agent,




BANK OF AMERICA, N.A.,




JPMORGAN CHASE BANK, N.A.,




and WELLS FARGO FOOTHILL, LLC,




as Documentation Agents,




BLUELINX CORPORATION,

BLUELINX FLORIDA LP,

and BLUELINX SERVICES INC.




as Borrowers,




and




BLUELINX FLORIDA HOLDING NO. 1 INC.,

BLUELINX FLORIDA HOLDING NO. 2 INC.,

BLX TEXAS ACQUISITION I LLC, and

BLX TEXAS ACQUISITION II LLC




as Guarantors




Dated: August 4, 2006














 





AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT




          This Amended and Restated Loan and Security Agreement (this “Agreement”), dated August
4, 2006, is entered into by and among the financial institutions from time to time parties hereto,
whether by execution of an Assignment and Acceptance Agreement (as defined below) or this Agreement
(each a “Lender” and collectively the “Lenders”), Wachovia Bank, National
Association, successor by merger to Congress Financial Corporation (“Wachovia”), as
administrative and collateral agent for the Lenders and for the Bank Product Providers (as defined
below) (in such capacity, “Administrative and Collateral Agent”), Wachovia Capital Markets,
LLC, as sole lead arranger for the credit facility (in such capacity, “Sole Lead Arranger”)
and as sole syndication agent for the credit facility (in such capacity, “Sole Syndication
Agent”), Bank of America, N.A., Wells Fargo Foothill, LLC, and JPMorgan Chase Bank, N.A.,
formerly known as JPMorgan Chase Bank, as documentation agents (each a “Documentation
Agent” and collectively, “Documentation Agents”, and together with the Administrative
and Collateral Agent, the Sole Lead Arranger, and the Sole Syndication Agent, each individually an
“Agent” and collectively, “Agents”), BlueLinx Corporation, a Georgia corporation
(“BlueLinx”), BlueLinx Services Inc., a Georgia corporation (“BSI”), and BlueLinx
Florida LP, a Florida limited partnership (“BFLP”, and together with BlueLinx and BSI, each
individually a “Borrower” and collectively, “Borrowers” as hereinafter further
defined), BlueLinx Florida Holding No. 1 Inc., a Georgia corporation (“BFH1”), BlueLinx
Florida Holding No. 2 Inc., a Georgia corporation (“BFH2”), BLX Texas Acquisition I LLC, a
Georgia limited liability company (“BLX1”), and BLX Texas Acquisition II LLC, a Georgia
limited liability company (“BLX2”, and together with BFH1, BFH2, and BLX1, each
individually a “Guarantor” and collectively, “Guarantors” as hereinafter further
defined).




W I T N E S S E T H:




          WHEREAS, BlueLinx, Administrative and Collateral Agent, the Documentation Agents, and the
persons party thereto as lenders (the “Original Lenders”), among others, have previously
entered into that certain Loan and Security Agreement dated May 7, 2004 (as amended, restated,
supplemented or otherwise modified from time to time, the “Original Loan Agreement”),
pursuant to which, among other things, the Original Lenders have made certain loans and financial
accommodations available to BlueLinx.




          WHEREAS, BSI and BFLP are Subsidiaries of BlueLinx and together they are inter-related
entities which collectively constitute an integrated business unit;




          WHEREAS, the directors of each Borrower view the entities as sufficiently dependent upon each
other and so inter-related that any advance made hereunder to any Borrower would benefit all of the
Borrowers as a result of their consolidated operations and identity of interests;




          WHEREAS, each Borrower has requested that Administrative and Collateral Agent and the Lenders
treat them as co-borrowers hereunder, jointly and severally responsible for the obligations of each
other hereunder;

2









 









          WHEREAS, each Revolving Loan Lender is willing (severally and not jointly) to make such loans
and provide such financial accommodations to Borrowers on a pro rata basis according to its
commitment provided for herein on the terms and conditions set forth herein; and




          WHEREAS, Wachovia is willing to continue to act as administrative agent and collateral agent
for Lenders on the terms and conditions set forth herein and in the other Financing Agreements (as
defined below).




          WHEREAS, the parties hereto have agreed to amend and restate, in their entirety, the
agreements contained in the Original Loan Agreement on the terms and conditions set forth herein.




          NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto amend and restate the Original Loan Agreement and agree as
follows:




SECTION 1. DEFINITIONS




          For purposes of this Agreement, the following terms shall have the respective meanings given
to them below:




     1.1 “ACH Transactions” shall mean any overdrafts, cash management or related services,
including the automatic clearing house transfer of funds by Administrative and Collateral Agent or
any of its Affiliates for the account any Borrower or any of their respective Subsidiaries, in each
case pursuant to agreements entered into with any Borrower or any of their respective Subsidiaries.



     1.2 “Accounts” shall mean, as to each Borrower and each Guarantor, all present and
future rights of such Borrower and such Guarantor to payment of a monetary obligation, whether or
not earned by performance, which is not evidenced by chattel paper or an instrument, (a) for
property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b)
for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred,
or (d) arising out of the use of a credit, charge or debit card along with all information
contained on or for use with such card.



     1.3 “Acquisition” shall mean (a) any Stock Acquisition, or (b) any Asset Acquisition.



     1.4 “Acquisition Subsidiary” shall mean any wholly owned Subsidiary of any Borrower
which is formed by such Borrower solely in connection with a Permitted Acquisition.



     1.5 “Adjusted Eurodollar Rate” shall mean, with respect to each Interest Period for
any Eurodollar Rate Loan, the rate per annum (rounded upwards, if necessary, to the next
one-sixteenth (1/16) of one percent (1%)) determined by dividing (a) the Eurodollar Rate for such
Interest Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage, if
any. For purposes hereof, “Reserve Percentage” shall mean the reserve percentage,
expressed as a decimal, prescribed by any United States or foreign banking authority for
determining the



3









 







reserve requirement which is or would be applicable to deposits of United States dollars in a
non-United States or an international banking office of the Reference Bank used to fund a
Eurodollar Rate Loan or any Eurodollar Rate Loan made with the proceeds of such deposit, whether or
not the Reference Bank actually holds or has made any such deposits or loans. The Adjusted
Eurodollar Rate shall be adjusted on and as of the effective day of any change in the Reserve
Percentage.



     1.6 “Administrative Borrower” shall mean BlueLinx Corporation, a Georgia corporation,
in its capacity as Administrative Borrower on behalf of itself and the other Borrowers pursuant to
Section 6.12 hereof and its successors and assigns in such capacity.



     1.7 “Affiliate” shall mean, with respect to a specified Person, any other Person which
directly or indirectly through one or more intermediaries controls, or is controlled by, or is
under common control with such Person, and without limiting the generality of the foregoing,
includes (a) any Person which beneficially owns or holds twenty percent (20%) or more of any class
of Voting Stock of such Person or other equity interests in such Person, and (b) any director or
executive officer of such Person. For purposes of this definition, the term “control” (including,
with correlative meanings, the terms “controlled by” and “under common control with”), as used with
respect to any Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether through the ownership of
Voting Stock, by agreement or otherwise.



     1.8 “Affiliate Lease” shall mean that certain Amended and Restated Master Lease
Agreement, dated as of June 9, 2006, by and among BlueLinx, ABP AL (MIDFIELD) LLC, a Delaware
limited liability company, and the other Affiliates of Parent identified as Landlords on the
signature pages thereof, as the same may be amended, restated, supplemented or otherwise modified
from time to time in accordance with the terms hereof.



     1.9 “Asset Acquisition” shall mean the purchase or other acquisition by any Borrower
or any Acquisition Subsidiary of all or substantially all of the assets of any other Person engaged
in substantially the same or a related business as Borrowers.



     1.10 “Assignment and Acceptance” shall mean an Assignment and Acceptance substantially
in the form of Exhibit A attached hereto delivered to Administrative and Collateral Agent
in connection with an assignment of a Lender’s interest hereunder in accordance with the provisions
of Section 13.6 hereof.



     1.11 “Bank Products” shall mean any one or more of the following types of services or
facilities extended to any Borrower or any of their respective Subsidiaries by a Bank Product
Provider: (a) credit cards, (b) ACH Transactions, (c) Hedging Transactions, and (d) foreign
exchange contracts.



     1.12 “Bank Product Providers” shall mean Wachovia and any of its Affiliates that may,
from time to time, provide any Bank Products to any Borrower or any of their respective
Subsidiaries.



4









 





     1.13 “Bank Product Reserve” shall mean any and all reserves that Administrative and
Collateral Agent may establish from time to time, in its reasonable discretion, for the Bank
Products provided by any Bank Product Provider which are then outstanding.



     1.14 “Blocked Accounts” shall have the meaning set forth in Section 6.3(a) hereof.



     1.15 “Blocked Account Activation Period” shall have the meaning given in Section
6.3(a) hereof.



     1.16 “Borrowers” shall mean, collectively, the following (together with their
respective successors and assigns): (a) BlueLinx Corporation, a Georgia corporation; (b) BlueLinx
Services Inc., a Georgia corporation; (c) BlueLinx Florida LP, a Florida limited partnership; and
(d) any other Person that at any time after the date hereof becomes a Borrower; each sometimes
being referred to herein individually as a “Borrower”.



     1.17 “Borrowing Base” shall mean, at any time, the amount equal to:



          (a) 85% of the Net Amount of Eligible Accounts; provided, however, such
percentage shall be reduced by one percentage point for each percentage point (or fraction thereof)
by which Dilution exceeds 5%, plus




          (b) the lesser of: (i) 70% (or 75% during the Seasonal Period) of the sum of (A) the Value of
Eligible Inventory, (B) the Value of Eligible Domestic In-Transit Inventory, (C) the Value of
Eligible International In-Transit Inventory and (D) the Value of Eligible Re-Load Inventory or (ii)
85% of the sum of the Net Orderly Liquidation Value; provided, however, Revolving
Loans outstanding with respect to Eligible Domestic In-Transit Inventory, Eligible International
In-Transit Inventory and Eligible Re-Load Inventory shall not exceed, in the aggregate at any one
time outstanding, $85,000,000, minus




          (c) the sum of all Reserves.




     1.18 “Business Day” shall mean any day other than a Saturday, Sunday, or other day on
which commercial banks are authorized or required to close under the laws of the State of New York
or the State of North Carolina, and a day on which the Reference Bank, Administrative and
Collateral Agent and each Lender are open for the transaction of business, except that if a
determination of a Business Day shall relate to any Eurodollar Rate Loans, the term Business Day
shall also exclude any day on which banks are closed for dealings in dollar deposits in the London
interbank market or other applicable Eurodollar Rate market.



     1.19 “Canadian Priority Payables” shall mean, as of any date of determination, the
full amount of the liabilities of any Borrower as of such date of determination which (a) have a
trust imposed to provide for payment or a security interest, pledge, lien, hypothec or charge
ranking or capable of ranking senior to or pari passu with security interests, liens or charges
securing the Obligations on any of the Accounts or Inventory of such Borrower under Canadian
federal, Provincial, state, county, district, municipal or local law, or (b) have a right imposed
to provide for payment ranking or capable of ranking senior to or pari passu with the Obligations
under local or national Canadian laws, regulations or directives, including, but not limited to,
claims for unremitted and/or accelerated rents, taxes, wages, withholding taxes, VAT and other
amounts



5









 







payable to an insolvency administrator, employee withholdings or deductions and vacation pay,
workers’ compensation obligations, government royalties or pension fund obligations, in each case
to the extent such trust or security interest, lien or charge has been or may be imposed,
including, without limitation, Inventory upon which the Borrowing Base is calculated which is
subject to a right of a supplier to repossess goods pursuant to Section 81.1 of the Bankruptcy and
Insolvency Act (Canada) or any applicable laws granting revendication or similar rights to unpaid
suppliers or any similar laws of Canada or any other applicable jurisdiction.



     1.20 “Capital Expenditures” shall mean, for any period, any expenditure of money for
the purchase or other acquisition of any capital asset or for the purchase or construction of
assets, or for improvements or additions thereto, which are capitalized on a Person’s balance sheet
in accordance with GAAP, including the principal amount of capital expenditures financed with
Capital Leases.



     1.21 “Capital Leases” shall mean, as applied to any Person, any lease of (or any
agreement conveying the right to use) any property (whether real, personal or mixed) by such Person
as lessee which in accordance with GAAP, is or is required to be reflected as a capital lease on
the balance sheet of such Person.



     1.22 “Capital Stock” shall mean, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such Person’s capital stock,
or partnership, limited liability company or other equity interests at any time outstanding, and
any and all rights, warrants or options exchangeable for or convertible into such capital stock or
other interests (but excluding any debt security that is exchangeable for or convertible into such
capital stock).



     1.23 “Cash Equivalents” shall mean, at any time, (a) any evidence of Indebtedness with
a maturity date of one hundred eighty (180) days or less issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality thereof; provided, that,
the full faith and credit of the United States of America is pledged in support thereof; (b)
certificates of deposit or bankers’ acceptances with a maturity of one hundred eighty (180) days or
less of any financial institution that is a member of the Federal Reserve System having combined
capital and unimpaired surplus of not less than Five Hundred Million Dollars ($500,000,000); (c)
commercial paper (including variable rate demand notes) with a maturity of one hundred eighty (180)
days or less issued by a corporation (except an Affiliate of any Borrower or any Guarantor)
organized under the laws of any State of the United States of America or the District of Columbia
and rated at least A-2 by Standard & Poor’s Ratings Service, a division of The McGraw-Hill
Companies, Inc. or at least P-2 by Moody’s Investors Service, Inc.; (d) repurchase obligations with
a term of not more than thirty (30) days for underlying securities of the types described in clause
(a) above entered into with any financial institution having combined capital and unimpaired
surplus of not less than Five Hundred Million Dollars ($500,000,000); (e) repurchase agreements and
reverse repurchase agreements relating to marketable direct obligations issued or unconditionally
guaranteed by the United States of America or issued by any governmental agency thereof and backed
by the full faith and credit of the United States of America, in each case maturing within one
hundred eighty (180) days or less from the date of acquisition; provided, that, the terms of such
agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository
Institutions with



6









 







Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31,
1985; and (f) investments in money market funds and mutual funds that are registered under the
Investment Company Act of 1940, as amended, which invest substantially all of their assets in
securities of the types described in clauses (a) through (e) above.



     1.24 “CFC” shall mean a Person that is organized under the laws of a jurisdiction
other than the District of Columbia or any State within the United States of America that is a
“controlled foreign corporation” as that term is defined in Section 957(a) of the Code.



     1.25 “Change of Control” shall mean (a) except as permitted by Section 9.7, the
liquidation or dissolution of any Borrower or any Guarantor or the adoption of a plan by the
stockholders of any Borrower or any Guarantor relating to the dissolution or liquidation of such
Borrower or such Guarantor; (b) the failure of the Permitted Holders to, directly or indirectly,
own and control at least thirty percent (30%) of the Voting Stock of BlueLinx if either: (i) any
other Person and/or one or more of its Affiliates, collectively, own or control more of the Voting
Stock of BlueLinx than the Permitted Holders; or (ii) any other Person and/or one or more of its
Affiliates, collectively, own or control more than twenty percent (20%) of the Voting Stock of
BlueLinx; (c) the failure of the Permitted Holders to, directly or indirectly, own and control at
least thirty percent (30%) of the Capital Stock of BlueLinx if either: (i) any other Person and/or
one or more of its Affiliates, collectively, own or control more of the Capital Stock of BlueLinx
than the Permitted Holders; or (ii) any other Person and/or one or more of its Affiliates,
collectively, own or control more than twenty percent (20%) of the Capital Stock of BlueLinx; or
(d) the failure of BlueLinx to own directly or indirectly one hundred percent (100%) of the Capital
Stock of any other Borrower or Guarantor.



     1.26 “Code” shall mean the Internal Revenue Code of 1986, as amended.



     1.27 “Collateral” shall have the meaning set forth in Section 5 hereof.



     1.28 “Collateral Access Agreement” shall mean an agreement in writing, in form and
substance reasonably satisfactory to Administrative and Collateral Agent, by a lessor of premises
to any Borrower or any Guarantor, or any other Person to whom any Collateral (including Inventory,
Equipment, bills of lading or other documents of title) is consigned or who has custody, control or
possession of any such Collateral or is otherwise the owner or operator of any premises on which
any of such Collateral is located, pursuant to which such lessor, consignee or other Person, inter
alia, acknowledges the first priority security interest of Administrative and Collateral Agent, for
itself and the ratable benefit of the Lenders and the Bank Product Providers, in such Collateral,
agrees to waive or subordinate any and all claims such lessor, consignee or other person may, at
any time, have against such Collateral, whether for processing, storage or otherwise, and agrees to
permit Administrative and Collateral Agent access to, and the right to remain on, the premises of
such lessor, consignee or other Person so as to exercise Administrative and Collateral Agent’s
rights and remedies and otherwise deal with such Collateral and, in the case of any consignee or
other person who at any time has custody, control or possession of any Collateral, acknowledges
that it holds and will hold possession of the Collateral for the benefit of Administrative and
Collateral Agent and agrees to follow all reasonable instructions of Administrative and Collateral
Agent with respect thereto.



7









 





     1.29 “Collection Account” shall mean any of the deposit accounts set forth on Schedule
1.29 hereto so long as such deposit account is subject to a Deposit Account Control Agreement.



     1.30 “Compliance Period” shall mean the period commencing on (a) any date on which
Excess Availability has been less than $40,000,000 for the third (3rd) consecutive
Business Day and ending on (b) a subsequent date on which Modified Adjusted Excess Availability has
been equal to or greater than $40,000,000 for the sixtieth (60th) consecutive day.



     1.31 “Debt” shall mean, for any Person, all items of indebtedness or liability which
in accordance with GAAP would be included in determining total liabilities as shown on the
liabilities side of a balance sheet of such Person as at the date as of which Debt is to be
determined and the aggregate payments required to be made by such Person at any time under any
Capital Lease.



     1.32 “Default” shall mean an act, condition or event which with notice or passage of
time or both would constitute an Event of Default.



     1.33 “Defaulting Lender” shall have the meaning set forth in Section 6.10(d) hereof.



     1.34 “Deposit Account Control Agreement” shall mean an agreement in writing, in form
and substance reasonably satisfactory to Administrative and Collateral Agent, by and among
Administrative and Collateral Agent, any Borrower or any Guarantor with a deposit account at any
bank and the bank at which such deposit account is at any time maintained which provides that such
bank will comply with instructions originated by Administrative and Collateral Agent directing
disposition of the funds in the deposit account without further consent by such Borrower or such
Guarantor and has such other terms and conditions as Administrative and Collateral Agent may
reasonably require, including, pursuant to Section 6.3 hereof, as to any such agreement with
respect to any Blocked Account, providing that all items received or deposited in the Blocked
Accounts are the property of Administrative and Collateral Agent, for itself and the ratable
benefit of the Lenders and the Bank Product Providers, that the bank has no lien upon, or right to
setoff against, the Blocked Accounts, the items received for deposit therein, or the funds from
time to time on deposit therein, other than as may be agreed to by Administrative and Collateral
Agent for usual and customary charges associated with the maintenance of such deposit account or
charges for returned items, and that, at the direction of Administrative and Collateral Agent, the
bank will wire, or otherwise transfer, in immediately available funds, on a daily basis to the
Payment Account all funds received or deposited into the Blocked Accounts.



     1.35 “Dilution” shall mean, as determined by Administrative and Collateral Agent for
any period as of any date, the ratio, expressed as a percentage, of the aggregate amount of
non-cash reductions in Borrowers’ Accounts for such period to the aggregate dollar amount of the
sales of Borrowers for such period.



     1.36 “EBITDA” shall mean, as of any date of determination, for a specified period
ending on such date of determination, an amount equal to: (a) Net Income, plus (b)
depreciation, amortization and other non-cash charges (including, but not limited to, imputed
interest and



8









 







deferred compensation) of Borrowers and their respective Subsidiaries for such period (to the
extent deducted in the computation of Net Income), all in accordance with GAAP, plus (c)
Interest Expense of Borrowers and their respective Subsidiaries for such period (to the extent
deducted in the computation of Net Income), plus (d) charges for Federal, State, local and
foreign income taxes for such period (to the extent deducted in the computation of Net Income).



     1.37 “Eligible Accounts” shall mean Accounts created by a Borrower which are and
continue to be acceptable to Administrative and Collateral Agent, acting in good faith and in its
reasonable credit judgment, based on the criteria set forth below. In general, Accounts shall be
Eligible Accounts if:



          (a) such Accounts are invoiced and arise from the actual and bona fide sale and delivery of
goods by such Borrower or rendition of services by such Borrower in the ordinary course of its
business which transactions are completed in accordance with the material terms and provisions
contained in any documents related thereto;




          (b) such Accounts are not unpaid more than ninety (90) days after the date of the original
invoice for them or more than sixty (60) days past the original due date for them;




          (c) such Accounts comply with the terms and conditions contained in Section 7.2(b) of this
Agreement;




          (d) such Accounts do not arise from sales of goods owned by Persons other than such Borrower
but held by such Borrower on consignment, guaranteed sales, sales and returns, sales on approval,
or other terms under which payment by the account debtor may be conditional or contingent;




          (e) the chief executive office of the account debtor owing such Accounts is located in the
United States of America or Canada or, at Administrative and Collateral Agent’s option, if the
chief executive office and principal place of business of the account debtor with respect to such
Accounts is located other than in the United States of America or Canada, then if either: (i) the
account debtor has delivered to such Borrower an irrevocable letter of credit issued or confirmed
by a bank that would constitute an Eligible Transferee or is otherwise satisfactory to
Administrative and Collateral Agent and payable only in the United States of America and in U.S.
Dollars, sufficient to cover the amount of such Account, in form and substance reasonably
satisfactory to Administrative and Collateral Agent and if required by Administrative and
Collateral Agent, the original of such letter of credit has been delivered to Administrative and
Collateral Agent or Administrative and Collateral Agent’s agent and such Borrower has complied with
the terms of Section 5.2(f) hereof with respect to the assignment of the proceeds of such letter of
credit to Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders
and the Bank Product Providers, or naming Administrative and Collateral Agent, for itself and the
ratable benefit of the Lenders and the Bank Product Providers, as transferee beneficiary
thereunder, as Administrative and Collateral Agent may specify, or (ii) such Account is subject to
credit insurance payable to Administrative and Collateral Agent, for itself and the ratable benefit
of the Lenders and the Bank Product Providers, issued by an insurer and on terms and in an amount
reasonably acceptable to Administrative and Collateral Agent, or (iii) such Account is otherwise
acceptable in all respects to Administrative and Collateral Agent (subject to




9









 




such lending formula with respect thereto as Administrative and Collateral Agent may
determine);




          (f) such Accounts do not consist of progress billings (such that the obligation of the account
debtors with respect to such Accounts is conditioned upon such Borrower’s satisfactory completion
of any further performance under the agreement giving rise thereto), bill and hold invoices or
retainage invoices, except as to bill and hold invoices, if Administrative and Collateral Agent
shall have received an agreement in writing from the account debtor, in form and substance
reasonably satisfactory to Administrative and Collateral Agent, confirming the unconditional
obligation of the account debtor to take the goods related thereto and pay such invoice;




          (g) the account debtor with respect to such Accounts has not asserted a counterclaim, defense
or dispute and does not have, and neither it nor its Affiliates engage in transactions with such
Borrower which may give rise to any legal right of setoff or recoupment against such Accounts (but
the portion of the Accounts of such account debtor in excess of the amount at any time and from
time to time owed by such Borrower to such account debtor or claimed owed by such account debtor
may be deemed Eligible Accounts subject to the other criteria set forth herein);




          (h) none of the following events has occurred with respect to the account debtor owing such
Accounts: (i) the death or judicial declaration of incompetency of such account debtor if it is an
individual; (ii) the filing by or against such account debtor of a request or petition for
liquidation, reorganization, arrangement, readjustment of debts, dissolution, adjudication as a
bankrupt, winding-up, moratorium, administration, receivership, arrangement or other relief under
the bankruptcy, insolvency, or similar laws of the United States of America, any State or territory
thereof, or under the bankruptcy or insolvency laws of Canada (including the Bankruptcy and
Insolvency Act (Canada) and the Companies’ Creditors Arrangement Act (Canada)), or any similar law
now or hereafter in effect in any jurisdiction (provided, that, Administrative and Collateral Agent
may determine, in its reasonable credit judgment, to include Accounts of an account debtor subject
to a Chapter 11 case under the U.S. Bankruptcy Code, subject to such terms, conditions and
limitations, as Administrative and Collateral Agent may establish with respect thereto); (iii) the
making of any general assignment by such account debtor for the benefit of creditors; (iv) the
appointment of a receiver or trustee for such account debtor or for any of the assets of such
account debtor, including, without limitation, the appointment of or taking possession by a
“custodian,” as defined in the U.S. Bankruptcy Code; (v) the commencement by or against such
account debtor of any other type of insolvency proceeding (under the bankruptcy laws of the United
States of America or under the bankruptcy or insolvency laws of Canada (including the Bankruptcy
and Insolvency Act (Canada) and the Companies’ Creditors Arrangement Act (Canada)), or any similar
law now or hereafter in effect in any jurisdiction) or of any formal or informal proceeding for the
dissolution or liquidation of, settlement of claims against, or winding up of affairs of, such
account debtor; (vi) the sale, assignment, or transfer of all or substantially all of the assets of
such account debtor; (vii) the nonpayment generally by such account debtor of its debts as they
become due; or (viii) the failure, suspension or cessation of the business of such account debtor
as a going concern;




10









 








          (i) such Accounts are subject to the first priority, valid and perfected security interest of
Administrative and Collateral Agent and any goods giving rise thereto are not, and were not at the
time of the sale thereof, subject to any liens except those permitted in this Agreement;




          (j) neither the account debtor nor any officer of the account debtor with respect to such
Accounts is an Affiliate (other than a Sponsor Portfolio Company) of any Borrower or any Guarantor;




          (k) the account debtors with respect to such Accounts are not any foreign government, the
United States of America, Canada, any State, political subdivision, department, agency or
instrumentality thereof, unless, (i) if the account debtor is the United States of America, any
State, political subdivision, department, agency or instrumentality thereof, upon Administrative
and Collateral Agent’s request, the Federal Assignment of Claims Act of 1940, as amended or any
similar State or local law, if applicable, has been complied with in a manner reasonably
satisfactory to Administrative and Collateral Agent or (ii) if the account debtor is Her Majesty in
right of Canada or any Provincial or local Governmental Authority, or any Ministry thereof, such
Borrower has assigned its rights to payment of such Account to Administrative and Collateral Agent
pursuant to, and in accordance with, the Financial Administration Act, R.S.C. 185, C.F.-11, as
amended, or any similar applicable Provincial or local law regulation or requirement has been
complied with in a manner reasonably satisfactory to Administrative and Collateral Agent;




          (l) such Accounts of a single account debtor and its Affiliates do not constitute more than
fifteen percent (15%) of all otherwise Eligible Accounts (but the portion of the Accounts not in
excess of such percentage may, subject to the other criteria set forth herein, be deemed Eligible
Accounts);




          (m) such Accounts are not owed by an account debtor who has Accounts unpaid more than ninety
(90) days after the original invoice date for them or more than sixty (60) days after the original
due date for them which constitute more than fifty percent (50%) of the total Accounts of such
account debtor;




          (n) the account debtor is not located in a state requiring the filing of a Notice of Business
Activities Report or similar report in order to permit such Borrower to seek judicial enforcement
in such State of payment of such Account, unless such Borrower has qualified to do business in such
state or has filed a Notice of Business Activities Report or equivalent report for the then current
year or such failure to file and inability to seek judicial enforcement is capable of being
remedied without any material delay or material cost; and




          (o) Agent does not believe, in good faith and its reasonable credit judgment, that the
prospect of collection of such Account is impaired or that the Account may not be paid by reason of
the account debtor’s financial inability to pay.




     The criteria for Eligible Accounts set forth above may only be changed and any new criteria for
Eligible Accounts may only be established by Administrative and Collateral Agent in good faith and
its reasonable credit judgment based on either: (x) an event, condition or other circumstance



11









 







arising after the date hereof, or (y) an event, condition or other circumstance existing on the
date hereof to the extent Administrative and Collateral Agent has no written notice thereof from a
Borrower or other actual knowledge prior to the date hereof, in either case under clause (x) or (y)
which adversely affects or could reasonably be expected to adversely affect the Accounts in the
good faith and reasonable credit determination of Administrative and Collateral Agent. Any
Accounts which are not Eligible Accounts shall nevertheless be part of the Collateral.



     1.38 “Eligible Domestic In-Transit Inventory” shall mean, as to each Borrower,
Inventory of such Borrower (other than Eligible International In-Transit Inventory or Eligible
Re-Load Inventory) which is not located at premises operated by any Borrower but which:



          (a) otherwise would constitute Eligible Inventory;




          (b) is either (i) in-transit between any of Borrowers’ domestic facilities or (ii) in transit
to such Borrower from a domestic or Canadian vendor; and




          (c) either (i) has been paid for by such Borrower, (ii) has been vouchered for payment on such
Borrower’s accounts payable systems and is in fact paid for within 4 days thereafter, or (iii) the
vendor thereof has delivered a waiver, in form and substance reasonably satisfactory to
Administrative and Collateral Agent, of its reclamation and other rights with respect to such
Inventory.




     The criteria for Eligible Domestic In-Transit Inventory set forth above may only be changed and any
new criteria for Eligible Domestic In-Transit Inventory may only be established by Administrative
and Collateral Agent in good faith based on either: (x) an event, condition or other circumstance
arising after the date hereof, or (y) an event, condition or other circumstance existing on the
date hereof to the extent Administrative and Collateral Agent has no written notice thereof from a
Borrower or other actual knowledge prior to the date hereof, in either case under clause (x) or (y)
which adversely affects or could reasonably be expected to adversely affect the Eligible Domestic
In-Transit Inventory in the good faith and reasonable credit determination of Administrative and
Collateral Agent. Any Inventory which is not Eligible Domestic In-Transit Inventory shall
nevertheless be part of the Collateral.



     1.39 “Eligible International In-Transit Inventory” shall mean, as to each Borrower,
Inventory of such Borrower (other than Eligible Domestic In-Transit Inventory or Eligible Re-Load
Inventory) which is not located at premises operated by any Borrower and/or is not located within
the United States of America or Canada but which:



          (a) otherwise would constitute Eligible Inventory;




          (b) either (i) has been paid for by such Borrower or (ii) has been vouchered for payment on
such Borrower’s accounts payable systems and is in fact paid for within 4 days thereafter;




          (c) is in transit to such Borrower from an international (other than Canadian) vendor; and




          (d) is in the possession or under the control of a Qualified Bailee.





12









 






The criteria for Eligible International In-Transit Inventory set forth above may only be
changed and any new criteria for Eligible International In-Transit Inventory may only be
established by Administrative and Collateral Agent in good faith based on either: (x) an event,
condition or other circumstance arising after the date hereof, or (y) an event, condition or other
circumstance existing on the date hereof to the extent Administrative and Collateral Agent has no
written notice thereof from a Borrower or other actual knowledge prior to the date hereof, in
either case under clause (x) or (y) which adversely affects or could reasonably be expected to
adversely affect the Eligible International In-Transit Inventory in the good faith and reasonable
credit determination of Administrative and Collateral Agent. Any Inventory which is not Eligible
International In-Transit Inventory shall nevertheless be part of the Collateral.




     1.40 “Eligible Inventory” shall mean, as to each Borrower, Inventory of such Borrower
consisting of finished goods held for resale in the ordinary course of the business of such
Borrower, in each case which are acceptable to Administrative and Collateral Agent, in good faith
and its reasonable credit judgment, based on the criteria set forth below. In general, Eligible
Inventory shall not include:



          (a) raw materials unless held for sale as finished goods in the ordinary course of such
Borrower’s business;




          (b) work-in process unless held for sale as finished goods in the ordinary course of such
Borrower’s business;




          (c) components which are not part of finished goods (unless sold as such by such Borrower in
the ordinary course of its business);




          (d) spare parts for equipment (unless sold as such by such Borrower in the ordinary course of
its business);




          (e) packaging and shipping materials;




          (f) supplies used or consumed in such Borrower’s business (unless also sold as such by such
Borrower in the ordinary course of its business);




          (g) Inventory at premises other than those controlled by any Borrower and with respect to
which a Collateral Access Agreement has been delivered to Administrative and Collateral Agent (or
Administrative and Collateral Agent has established any applicable Reserves for rent payable with
respect to such location);




          (h) Inventory subject to a security interest or lien in favor of any person other than
Administrative and Collateral Agent except those security interests or liens permitted in this
Agreement;




          (i) bill and hold goods;




          (j) Inventory which is not fit for sale in the ordinary course of such Borrower’s business or
which is obsolete or slow moving;




13









 








          (k) Inventory which is not subject to the first priority, valid and perfected security
interest of Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders
and the Bank Product Providers;




          (l) returned, damaged and/or defective Inventory;




          (m) Inventory purchased or sold on consignment; provided, however, Inventory
owned by such Borrower and held by Lowe’s or Home Depot on consignment may, subject to the other
criteria set forth in this Agreement, be deemed Eligible Inventory so long as (i) such Person
continues to be deemed creditworthy by Administrative and Collateral Agent in good faith, (ii) such
consigned Inventory is subject to an effective consignment agreement, pursuant to which, among
other things, such Person acknowledges such Borrower’s ownership of such Inventory, acknowledges
Administrative and Collateral Agent’s liens on such Inventory, authorizes the filing of UCC
financing statements naming such Person as consignee, such Borrower as consignor, and
Administrative and Collateral Agent as such Borrower’s assignee, Administrative and Collateral
Agent is permitted to access such Person’s premises for the purpose of removing, auditing or
otherwise accessing such consigned Inventory, and which is otherwise in form and substance
satisfactory to Administrative and Collateral Agent, (iii) Administrative and Collateral Agent has
received evidence, in form and substance satisfactory to it, that a UCC financing statement
regarding the consignment arrangement between such Person and such Borrower has been filed in the
appropriate jurisdiction, and (iv) Administrative and Collateral Agent has received UCC searches
with respect to such Person from each jurisdiction in which such consigned Inventory is located and
from the jurisdiction under whose laws such Person is organized; and




          (n) Inventory located outside the United States of America or Canada.



The criteria for Eligible Inventory set forth above may only be changed and any new criteria for
Eligible Inventory may only be established by Administrative and Collateral Agent in good faith
based on either: (x) an event, condition or other circumstance arising after the date hereof, or
(y) an event, condition or other circumstance existing on the date hereof to the extent
Administrative and Collateral Agent has no written notice thereof from a Borrower or other actual
knowledge prior to the date hereof, in either case under clause (x) or (y) which adversely affects
or could reasonably be expected to adversely affect the Inventory in the good faith and reasonable
credit determination of Administrative and Collateral Agent. Any Inventory which is not Eligible
Inventory shall nevertheless be part of the Collateral.




     1.41 “Eligible Re-Load Inventory” shall mean, as to each Borrower, Inventory of such
Borrower (other than Eligible Domestic In-Transit Inventory or Eligible International In-Transit
Inventory) which is located at a domestic warehouse owned and operated by a Person who is not an
Affiliate of such Borrower pursuant to a contract for storage and/or handling between such Borrower
and such Person and with respect to which:



          (a) such Inventory would constitute Eligible Inventory but for the fact that such Inventory is
not located at a domestic facility operated by a Borrower; and




14









 








          (b) the Person owning and operating the facility at which such Inventory is located is a
Qualified Bailee; provided, however, Inventory which would otherwise constitute
Eligible Re-Load Inventory but for the fact that it is not located at a facility owned and operated
by a Qualified Bailee may, subject to all other applicable eligibility criteria contained in this
Agreement, constitute Eligible Re-Load Inventory if at least 2/3 of the total value of Eligible
Re-Load Inventory is located at a facility owned and operated by a Qualified Bailee.



The criteria for Eligible Re-Load Inventory set forth above may only be changed and any new
criteria for Eligible Re-Load Inventory may only be established by Administrative and Collateral
Agent in good faith based on either: (x) an event, condition or other circumstance arising after
the date hereof, or (y) an event, condition or other circumstance existing on the date hereof to
the extent Administrative and Collateral Agent has no written notice thereof from a Borrower or
other actual knowledge prior to the date hereof, in either case under clause (x) or (y) which
adversely affects or could reasonably be expected to adversely affect the Eligible Re-Load
Inventory in the good faith and reasonable credit determination of Administrative and Collateral
Agent. Any Inventory which is not Eligible Re-Load Inventory shall nevertheless be part of the
Collateral.




     1.42 “Eligible Transferee” shall mean (a) any Lender; (b) any Affiliate of a Lender;
and (c) any other commercial bank, financial institution or “accredited investor” (as defined in
Regulation D under the Securities Exchange Act) approved by Administrative and Collateral Agent
and, unless an Event of Default has occurred and is continuing at the time any assignment is
effected hereunder, Administrative Borrower, such approval not to be unreasonably withheld,
conditioned or delayed by Administrative Borrower, and such approval to be deemed given by
Administrative Borrower if no objection from Administrative Borrower is received by the assigning
Lender and Administrative and Collateral Agent within five (5) Business Days after notice of such
proposed assignment has been provided by the assigning Lender or Administrative and Collateral
Agent to Administrative Borrower; provided, that, none of Administrative Borrower,
any other Borrower, any Guarantor, or any of their respective Affiliates (other than Sponsor
Affiliated Lenders) shall qualify as an Eligible Transferee.



     1.43 “Environmental Laws” shall mean all foreign (including, without limitation,
Canadian), Federal, State and local laws (including common law), legislation, rules, codes,
licenses, permits (including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between any Borrower or any Guarantor and any
Governmental Authority, (a) relating to the environment (including air, water vapor, surface water,
ground water, drinking water, drinking water supply, surface land, subsurface land, plant and
animal life or any other natural resource), (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, transportation, handling, labeling, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with regard to
recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials.
The term “Environmental Laws” includes (i) the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act,
the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air
Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid
Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances
Control Act, the Federal



15









 







Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water Act of 1974,
(ii) applicable state or Provincial counterparts to such laws, and (iii) any common law or
equitable doctrine that may impose liability or obligations for injuries or damages due to, or
threatened as a result of, the presence of or exposure to any Hazardous Materials.



     1.44 “Equipment” shall mean, as to each Borrower and each Guarantor, all of such
Borrower’s and such Guarantor’s now owned and hereafter acquired equipment, wherever located,
including machinery, data processing and computer equipment and hardware, software embedded in any
equipment (whether owned or licensed), vehicles, tools, furniture, fixtures, all attachments,
accessions and property now or hereafter affixed thereto or used in connection therewith, and
substitutions and replacements thereof, wherever located.



     1.45 “ERISA” shall mean the United States Employee Retirement Income Security Act of
1974, together with all rules, regulations and interpretations thereunder or related thereto.



     1.46 “ERISA Affiliate” shall mean any person required to be aggregated with any
Borrower, any Guarantor or any of its or their respective Subsidiaries under Sections 414(b),
414(c), 414(m) or 414(o) of the Code.



     1.47 “ERISA Event” shall mean (a) any “reportable event”, as defined in Section
4043(c) of ERISA or the regulations issued thereunder (other than an event not subject to the
provision for 30 days notice to the Pension Benefit Guaranty Corporation under such regulations,
with respect to a Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the
existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section
412 of the Code or Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section
412 of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a “prohibited transaction” (not subject to
a statutory, class or individual exemption) with respect to which Borrower or any of its
Subsidiaries is a “disqualified person” (within the meaning of Section 4975 of the Code) or with
respect to which any Borrower, any Guarantor or any of their respective Subsidiaries could
otherwise be liable; (f) a complete or partial withdrawal by any Borrower, any Guarantor or any
ERISA Affiliate from a Multiemployer Plan or a cessation of operations which is treated as such a
withdrawal or notification that a Multiemployer Plan is in reorganization; (g) the filing of a
notice of intent to terminate, the treatment of a Plan amendment as a termination under Section
4041 or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit Guaranty
Corporation to terminate a Plan; (h) an event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan; (i) the imposition of any liability under Title IV of ERISA, other
than the Pension Benefit Guaranty Corporation premiums due but not delinquent under Section 4007 of
ERISA, upon any Borrower, any Guarantor or any ERISA Affiliate, and other than contributions to a
Plan to be made timely under the Code and ERISA, in excess of Five Million Dollars ($5,000,000);
and (j) any other event or condition with respect to a Plan subject to Title IV of ERISA
maintained, or contributed to, by any ERISA Affiliate that could reasonably be expected to result
in material liability of any Borrower or any Guarantor.



16









 





     1.48 “Eurodollar Rate” shall mean with respect to the Interest Period for a Eurodollar
Rate Loan, the interest rate per annum equal to the arithmetic average of the rates of interest per
annum (rounded upwards, if necessary, to the next one-sixteenth (1/16) of one percent (1%)) at
which Reference Bank is offered deposits of United States dollars in the London interbank market
(or other Eurodollar Rate market selected by Borrower and approved by Lender) on or about 11:00
a.m. (New York time) two (2) Business Days prior to the commencement of such Interest Period in
amounts substantially equal to the principal amount of the Eurodollar Rate Loans requested by and
available to Borrowers in accordance with this Agreement, with a maturity of comparable duration to
the Interest Period selected by Administrative Borrower.



     1.49 “Eurodollar Rate Loans” shall mean any Loans or portion thereof on which interest
is payable based on the Adjusted Eurodollar Rate in accordance with the terms hereof.



     1.50 “Event of Default” shall have the meaning set forth in Section 10.1 hereof.



     1.51 “Excess” shall have the meaning set forth in Section 3.1(e) hereof.



     1.52 “Excess Availability” shall mean the amount, as determined by Administrative and
Collateral Agent, calculated at any time, equal to: (a) the lesser of: (i) the Borrowing Base
(when calculated after giving effect to any Reserves other than Reserves in respect of Letter of
Credit Accommodations) and (ii) the Revolving Loan Limit, plus (b) the then available
amount of all Qualified Cash minus (c) the sum of: (i) the amount of all then outstanding
and unpaid Obligations (but not including for this purpose the then outstanding aggregate principal
amount of the Term Loan), plus (ii) the amount of all Reserves then established in respect of
Letter of Credit Accommodations.



     1.53 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended,
together with all rules, regulations and interpretations thereunder or related thereto.



     1.54 “Excluded Taxes” shall have the meaning set forth in Section 6.5(a) hereof.



     1.55 “Fee Letter” shall mean the letter agreement, dated May 7, 2004, by and between
BlueLinx and Administrative and Collateral Agent, setting forth certain fees payable by BlueLinx to
Administrative and Collateral Agent for the benefit of itself and the Lenders, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.



     1.56 “Final Maturity Date” shall mean May 7, 2011.



     1.57 “Financing Agreements” shall mean, collectively, this Agreement, the Fee Letter
and all notes, guaranties, security agreements, stock pledge agreements, Deposit Account Control
Agreements, Investment Property Control Agreements, Collateral Access Agreements, intercreditor
agreements, and all other agreements, documents and instruments now or at any time hereafter
executed and/or delivered by any Borrower or any Guarantor in connection with this Agreement.



     1.58 “Fixed Charge Coverage Ratio” shall mean the ratio, as of any date of
determination, calculated either for the trailing twelve-month period ending on such date of



17









 







determination, of (a) EBITDA to (b) the sum of cash payments for income taxes, Interest
Expense, cash dividends (other than with respect to the repayment of any Mortgage Proceeds
Investment in accordance with Section 9.11(f) hereof) or stock redemptions, principal payments on
Debt (other than with respect to principal payments made on account of a revolving line of credit,
and other than with respect to the repayment of any Mortgage Proceeds Investment in accordance with
Section 9.9(q) hereof) and Capital Expenditures.



     1.59 “Funding Bank” shall have the meaning set forth in Section 3.2(a) hereof.



     1.60 “GAAP” shall mean generally accepted accounting principles in the United States
of America as in effect from time to time as set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public Accountants and the
statements and pronouncements of the Financial Accounting Standards Board which are applicable to
the circumstances as of the date of determination consistently applied, except that, for purposes
of Section 9.17 hereof, GAAP shall be determined on the basis of such principles in effect on the
date hereof and consistent with those used in the preparation of the most recent audited financial
statements delivered to Administrative and Collateral Agent prior to the date hereof.



     1.61 “Governmental Authority” shall mean any nation or government, any state,
province, or other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.



     1.62 “Guarantors” shall mean, collectively, the following (together with their
respective successors and assigns): (a) BlueLinx Florida Holding No. 1 Inc., a Georgia corporation;
(b) BlueLinx Florida Holding No. 2 Inc., a Georgia corporation; (c) BLX Texas Acquisition I LLC, a
Georgia limited liability company; (d) BLX Texas Acquisition II LLC, a Georgia limited liability
company; and (e) any other Person that at any time after the date hereof becomes party to a
guarantee in favor of Administrative and Collateral Agent or any Lender or otherwise liable on or
with respect to the Obligations or who is the owner of any property which is security for the
Obligations (other than Borrowers); each sometimes being referred to herein individually as a
“Guarantor”.



     1.63 “Hazardous Materials” shall mean any hazardous, toxic or dangerous substances,
materials and wastes regulated under Environmental Laws, including hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, biological substances, polychlorinated biphenyls,
pesticides, herbicides and any other kind and/or type of pollutants or contaminants (including
materials which include hazardous constituents), sewage, sludge, industrial slag, solvents and/or
any other similar substances, materials, or wastes and including any other substances, materials or
wastes that are or become regulated under any Environmental Law.



     1.64 “Hedging Transactions” shall mean (a) any and all rate swap transactions, basis
swaps, forward rate transactions, commodity swaps, commodity options, forward commodity contracts,
equity or equity index swaps or options, bond or bond price or bond index swaps or



18









 







options, forward bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transaction, currency options or
any other similar transactions or any combination of any of the foregoing (including any options to
enter into any of the foregoing), whether or not any such transaction is governed by or subject to
any master agreement, or (b) any and all transactions of any kind, and the related confirmations,
that are subject to the terms or conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc., or any other master
agreement, as amended, restated, extended, supplemented or otherwise modified in writing from time
to time, including but not limited to, any such obligations or liabilities under any such
agreement.



     1.65 “Home Depot” shall mean Home Depot U.S.A., Inc., a Delaware corporation and its
Affiliates.



     1.66 “Indebtedness” shall mean, with respect to any Person, any liability, whether or
not contingent, (a) in respect of borrowed money (whether or not the recourse of the lender is to
the whole of the assets of such Person or only to a portion thereof) or evidenced by bonds, notes,
debentures or similar instruments; (b) representing the balance deferred and unpaid of the purchase
price of any property or services (except any such balance that constitutes an account payable to a
trade creditor (whether or not an Affiliate) created, incurred, assumed or guaranteed by such
Person in the ordinary course of business of such Person in connection with obtaining goods,
materials or services that is not overdue by more than ninety (90) days, unless the trade payable
is being contested in good faith); (c) all obligations as lessee under leases which have been, or
should be, in accordance with GAAP recorded as Capital Leases; (d) any contractual obligation,
contingent or otherwise, of such Person to pay or be liable for the payment of any indebtedness
described in this definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed (other than guaranties of a such Person’s
Subsidiary’s operating leases made in the ordinary course of such Person’s business), or any
agreement to purchase, repurchase, or otherwise acquire such indebtedness, obligation or liability
or any security therefor, or to provide funds for the payment or discharge thereof, or to maintain
solvency, assets, level of income, or other financial condition; (e) all obligations with respect
to redeemable stock and redemption or repurchase obligations under any Capital Stock or other
equity securities issued by such Person; (f) all reimbursement obligations and other liabilities of
such Person with respect to surety bonds (whether bid, performance or otherwise), letters of
credit, banker’s acceptances, drafts or similar documents or instruments issued for such Person’s
account; (g) all indebtedness of such Person in respect of indebtedness of another Person for
borrowed money or indebtedness of another Person otherwise described in this definition which is
secured by any consensual lien, security interest, collateral assignment, conditional sale,
mortgage, deed of trust, or other encumbrance on any asset of such Person, whether or not such
obligations, liabilities or indebtedness are assumed by or are a personal liability of such Person,
all as of such time; (h) all obligations, liabilities and indebtedness of such Person (marked to
market) arising under swap agreements, cap agreements and collar agreements and other agreements or
arrangements designed to protect such Person against fluctuations in interest rates or currency or
commodity values; and (i) all obligations owed by such Person under License Agreements with respect
to non-refundable, advance or minimum guaranty royalty payments.



19









 





     1.67 “Information Certificate” shall mean, collectively, the Information Certificates
of Borrowers and Guarantors constituting Exhibit B hereto containing material information
with respect to Borrowers and Guarantors, their respective businesses and assets provided by or on
behalf of Borrowers and Guarantors to Administrative and Collateral Agent in connection with the
preparation of this Agreement and the other Financing Agreements and the financing arrangements
provided for herein.



     1.68 “Intellectual Property” shall mean, as to each Borrower and each Guarantor, all
of such Borrower’s and such Guarantor’s now owned and hereafter arising or acquired: patents,
patent rights, patent applications, copyrights, works which are the subject matter of copyrights,
copyright registrations, trademarks, service marks, trade names, trade styles, trademark and
service mark applications, and licenses and rights to use any of the foregoing; all extensions,
renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing;
all rights to sue for past, present and future infringement of any of the foregoing; inventions,
trade secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys, reports,
manuals, and operating standards; goodwill (including any goodwill associated with any trademark or
the license of any trademark); customer and other lists in whatever form maintained; and trade
secret rights, copyright rights, rights in works of authorship, domain names and domain name
registrations; software and contract rights relating to software, in whatever form created or
maintained.



     1.69 “Interest Expense” shall mean, for any period, as to any Person and its
Subsidiaries, all of the following as determined in accordance with GAAP, total interest expense,
whether paid or accrued (including the interest component of Capital Leases for such period),
including, without limitation, all bank fees, commissions, discounts and other fees and charges
owed with respect to letters of credit, banker’s acceptances or similar instruments and all amounts
paid or accrued in connection with Hedging Transactions, but excluding (a) amortization of discount
and amortization of deferred financing fees and closing costs paid in cash in connection with the
transactions contemplated hereby, (b) interest paid in property other than cash, (c) any other
interest expense not payable in cash and (d) any amounts received in connection with Hedging
Transactions.



     1.70 “Interest Period” shall mean for any Eurodollar Rate Loan, a period of
approximately fourteen (14) days or one (1), two (2), three (3) or six (6) months duration, as
Administrative Borrower may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar Rate market; provided, that, Administrative
Borrower may not elect an Interest Period which will end after the last day of the then-current
term of this Agreement.



     1.71 “Interest Rate” shall mean,



          (a) Subject to subsections (b) and (c) of this Section 1.71:




               (i) as to Prime Rate Loans, a per annum rate equal to the Prime Rate; and



20









 





               (ii) as to Eurodollar Rate Loans, a per annum rate equal to the Adjusted Eurodollar Rate
(based on the Eurodollar Rate applicable for the Interest Period selected by Administrative
Borrower as in effect three (3) Business Days after the date of receipt by Administrative and
Collateral Agent of the request of Administrative Borrower for such Eurodollar Rate Loans in
accordance with the terms hereof, whether such rate is higher or lower than any rate previously
quoted to any Borrower) plus one and one-half of one (1.50) percentage points.



          (b) So long as no Event of Default has occurred and is continuing, for each Interest Period
commencing after delivery of Borrowers’ financial statements required to be delivered pursuant to
this Agreement for each fiscal quarter ending after June 1, 2006, effective on the first day of
such Interest Period, the Interest Rate will be adjusted to be: (i) as to Prime Rate Loans, a per
annum rate equal to the Prime Rate plus the “Applicable Prime Rate Margin” set forth below based on
(A) Borrowers’ EBITDA as of the end of such fiscal quarter for the prior 12 month period then ended
and (B) the average month end amount of Modified Adjusted Excess Availability, as determined by
Administrative and Collateral Agent, for such fiscal quarter then ended; and (ii) as to Eurodollar
Rate Loans, a per annum rate equal to the Adjusted Eurodollar Rate (based on the Eurodollar Rate
applicable for the Interest Period selected by Administrative Borrower as in effect three (3)
Business Days after the date of receipt by Administrative and Collateral Agent of the request of
Administrative Borrower for such Eurodollar Rate Loans in accordance with the terms hereof, whether
such rate is higher or lower than any rate previously quoted to any Borrower) plus the “Applicable
Eurodollar Rate Margin” set forth below based on (A) Borrowers’ EBITDA as of the end of such fiscal
quarter for the prior 12 month period then ended and (B) the average month end amount of Modified
Adjusted Excess Availability, as determined by Administrative and Collateral Agent, for such fiscal
quarter then ended; provided, however, in each case, if the Borrowers have not
delivered the financial statements required to be delivered to Administrative and Collateral Agent
hereunder within the time frames specified herein, without limiting any other provision of this
Agreement, until such financial statements are delivered to Administrative and Collateral Agent in
accordance with this Agreement, the Interest Rate shall be calculated using the highest Applicable
Prime Rate Margin or the highest Applicable Eurodollar Rate Margin, as applicable, set forth below:




	 	 	 	 	 	 	 	 	 	 	 
	 	 	Average Modified	 	Applicable	 	Applicable
	 	 	Adjusted Excess	 	Prime Rate	 	Eurodollar Rate
	EBITDA	 	Availability	 	Margin	 	Margin
	Greater than

$160,000,000

	 	Greater than

$250,000,000
	 	 	0.00	 	 	 	1.00	 
	 
	 	 	 	 	 	 	 	 	 	 
	Greater than

$160,000,000

	 	Greater than
$200,000,000 but
equal to or less
than $250,000,000
	 	 	0.00	 	 	 	1.25	 
	 
	Greater than

$160,000,000

	 	Equal to or less
than $200,000,000
	 	 	0.00	 	 	 	1.50	 






21









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	Average Modified	 	Applicable	 	Applicable
	 	 	Adjusted Excess	 	Prime Rate	 	Eurodollar Rate
	EBITDA	 	Availability	 	Margin	 	Margin
	Greater
than
$130,000,000
but equal
to or less
than
$160,000,000

	 	Greater than

$250,000,000
	 	 	0.00	 	 	 	1.25	 
	 
	 	 	 	 	 	 	 	 	 	 
	Greater
than
$130,000,000
but equal
to or less
than
$160,000,000

	 	Greater than
$200,000,000 but
equal to or less
than $250,000,000
	 	 	0.00	 	 	 	1.50	 
	 
	 	 	 	 	 	 	 	 	 	 
	Greater
than
$130,000,000
but equal
to or less
than
$160,000,000

	 	Equal to or less
than $200,000,000
	 	 	.25	 	 	 	1.75	 
	 
	 	 	 	 	 	 	 	 	 	 
	Greater
than
$100,000,000
but equal
to or less
than
$130,000,000

	 	Greater than

$250,000,000
	 	 	0.00	 	 	 	1.50	 
	 
	 	 	 	 	 	 	 	 	 	 
	Greater
than
$100,000,000
but equal
to or less
than
$130,000,000

	 	Greater than
$200,000,000 but
equal to or less
than $250,000,000
	 	 	.25	 	 	 	1.75	 
	 
	 	 	 	 	 	 	 	 	 	 
	Greater
than
$100,000,000
but equal
to or less
than
$130,000,000

	 	Equal to or less
than $200,000,000
	 	 	.50	 	 	 	2.00	 
	 
	 	 	 	 	 	 	 	 	 	 
	Greater
than
$70,000,000
but equal
to or less
than
$100,000,000

	 	Greater than

$250,000,000
	 	 	.25	 	 	 	1.75	 
	 
	 	 	 	 	 	 	 	 	 	 
	Greater
than
$70,000,000
but equal
to or less
than
$100,000,000

	 	Greater than
$200,000,000 but
equal to or less
than $250,000,000
	 	 	.50	 	 	 	2.00	 
	 
	 	 	 	 	 	 	 	 	 	 
	Greater
than
$70,000,000
but equal
to or less
than
$100,000,000

	 	Equal to or less
than $200,000,000
	 	 	.75	 	 	 	2.25	 






22









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	Average Modified	 	Applicable	 	Applicable
	 	 	Adjusted Excess	 	Prime Rate	 	Eurodollar Rate
	EBITDA	 	Availability	 	Margin	 	Margin
	Equal to or
less than
$70,000,000

	 	Greater than

$250,000,000
	 	 	.50	 	 	 	2.00	 
	 
	 	 	 	 	 	 	 	 	 	 
	Equal to or
less than
$70,000,000

	 	Greater than
$200,000,000 but
equal to or less
than $250,000,000
	 	 	.75	 	 	 	2.25	 
	 
	 	 	 	 	 	 	 	 	 	 
	Equal to or
less than
$70,000,000

	 	Equal to or less
than $200,000,000
	 	 	1.00	 	 	 	2.50	 






          (c) Notwithstanding anything to the contrary contained herein, at Administrative and
Collateral Agent’s option, without notice, (i) for the period on and after the date of termination
or non-renewal hereof until such time as all Obligations are paid and satisfied in full in
immediately available funds, and (ii) for the period from and after the date of the occurrence of
any Event of Default, and for so long as such Event of Default is continuing as determined by
Administrative and Collateral Agent, a per annum rate equal to the Interest Rate which would
otherwise be in effect plus two (2) percentage points.




     1.72 “Inventory” shall mean, as to each Borrower and each Guarantor, all of such
Borrower’s and such Guarantor’s now owned and hereafter existing or acquired goods, wherever
located, which (a) are held for lease by such Borrower or such Guarantor as lessor; (b) are held by
such Borrower or such Guarantor for sale or lease or to be furnished under a contract of service;
(c) are furnished by such Borrower or such Guarantor under a contract of service; or (d) consist of
raw materials, work in process, finished goods or materials used or consumed in its business.



     1.73 “Investment Property Control Agreement” shall mean an agreement in writing, in
form and substance reasonably satisfactory to Administrative and Collateral Agent, by and among
Administrative and Collateral Agent, any Borrower or any Guarantor (as the case may be), and any
securities intermediary, commodity intermediary or other Person who has custody, control or
possession of any investment property of such Borrower or such Guarantor, agreeing and
acknowledging that, inter alia, such Person has custody, control or possession of such investment
property on behalf of Administrative and Collateral Agent, that such Person comply with entitlement
orders originated by Administrative and Collateral Agent with respect to such investment property,
or other instructions of Administrative and Collateral Agent, and such Person will apply any value
distributed on account of any commodity contract as directed by Administrative and Collateral
Agent, in each case, without the further consent of such Borrower



23









 







or such Guarantor, and including such other terms and conditions as Administrative and
Collateral Agent may reasonably require.



     1.74 “Letter of Credit Accommodations” shall mean, collectively, the letters of
credit, merchandise purchase or other guaranties which are from time to time either (a) issued or
opened by Administrative and Collateral Agent or any Revolving Loan Lender for the account of any
Borrower or any Guarantor or (b) with respect to which Administrative and Collateral Agent on
behalf of the Revolving Loan Lenders has agreed to indemnify the issuer or guaranteed to the issuer
the performance by any Borrower of its obligations to such issuer; sometimes being referred to
herein individually as a “Letter of Credit Accommodation.”



     1.75 “License Agreements” shall have the meaning set forth in Section 8.11 hereof.



     1.76 “Licensor Agreement” shall mean an agreement, in form and substance reasonably
satisfactory to Administrative and Collateral Agent, pursuant to which a licensor of Intellectual
Property that is affixed to any Inventory agrees to allow Administrative and Collateral Agent to
sell or otherwise dispose of such Inventory in connection with the exercise of its rights and
remedies under this Agreement.



     1.77 “Loans” shall mean the Revolving Loans, the Term Loan, Special Agent Advances and
Letter of Credit Accommodations.



     1.78 “Lowe’s” shall mean Lowe’s Companies, Inc., a North Carolina corporation, and its
Affiliates.



     1.79 “Material Adverse Change” shall mean a material adverse change in (a) the
financial condition, business, performance or operations of Borrower or the legality, validity or
enforceability of this Agreement or any of the other Financing Agreements; (b) the legality,
validity, enforceability, perfection or priority of the security interests and liens of
Administrative and Collateral Agent on the Collateral; (c) the value of the Collateral taken as a
whole; (d) the ability of Borrower to repay the Obligations or of Borrower to perform its
obligations under this Agreement or any of the other Financing Agreements as and when to be
performed; or (e) the ability of Administrative and Collateral Agent or any Lender to enforce the
Obligations or realize upon the Collateral or otherwise with respect to the rights and remedies of
Administrative and Collateral Agent and Lenders under this Agreement or any of the other Financing
Agreements.



     1.80 “Material Adverse Effect” shall mean a material and adverse effect on the
business, assets, properties, operations, financial condition or results of operations of the
Borrowers or the Purchased Business taken as a whole; provided, however, that the
following shall not be taken into account in determining whether there has been or would be a
“Material Adverse Effect”: (i) any adverse changes or developments resulting from conditions
affecting the United States of America or any foreign economy generally; (ii) any adverse changes
or developments that are primarily caused by conditions affecting the building products and the
building products distribution industries generally unless such changes or developments
disproportionately affect the Borrowers or the Purchased Business; (iii) any adverse changes or
developments in the laws, regulations, rules or orders of any governmental authority; (iv) any
adverse changes or developments that are attributable to seasonal fluctuations in the building



24









 







products and the building products distribution industries; (v) any acts of war, insurrection,
sabotage or terrorism unless such changes or developments disproportionately affect the Borrowers
or the Purchased Business; and (vi) any adverse changes or developments arising primarily out of,
or resulting primarily from, actions taken by any party to the Purchase Agreements in connection
with (but not in breach of) the Purchase Agreements and the transactions contemplated thereunder,
or which are primarily attributable to the announcement of the entering into of the Purchase
Agreements and the transactions contemplated thereby or the identity of BlueLinx (including, to the
extent so attributable, any litigation, employee attrition, any loss or postponement of business
resulting from the termination or modification of any vendor, customer or other business
relationships, any delay of customer orders or otherwise, as well as any corresponding change in
the margins, profitability or financial condition of such person); provided,
further, that the failure by either Seller or its Affiliates to meet their respective
internal revenue or earnings predictions or expectations with respect to the Purchased Business for
any period ending or for which earnings are released on or after the date of the Purchase
Agreements shall not in and of itself be deemed to constitute a Material Adverse Effect.



     1.81 “Material Contract” shall mean (a) any written contract or other executed
agreement of any Borrower or any Guarantor involving monetary liability of or to any Person in an
amount in excess of Twenty-Five Million Dollars ($25,000,000) in any fiscal year other than (i) the
Financing Agreements, (ii) purchase orders issued in the ordinary course of such Borrower’s or such
Guarantor’s business, (iii) contracts which by their terms may be terminated by either party
thereto, without penalty, obligation or other such adverse consequences, on less than 60 days’
prior notice (or 90 days’ prior notice in the case of exclusive supply contracts) or (iv) supply
contracts (by such Borrower or such Guarantor as supplier) which do not provide for committed
purchases in excess of Fifty Million Dollars ($50,000,000) in any fiscal year, and (b) any other
written contract or other executed agreement (other than the Financing Agreements) to which any
Borrower or any Guarantor is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto would constitute a Material Adverse Change.



     1.82 “Maximum Interest Rate” shall mean the maximum non-usurious rate of interest
under applicable Federal or State law as in effect from time to time that may be contracted for,
taken, reserved, charged or received in respect of the Obligations.



     1.83 “Modified Adjusted Excess Availability” shall mean the amount, as determined by
Administrative and Collateral Agent, calculated at any time, equal to: (a) Excess Availability
minus (b) the sum of: (i) the aggregate amount of outstanding and unpaid trade payables
and other obligations of each Borrower which are more than thirty (30) days past due as of the end
of the month most recently ended, plus (ii) the amount of checks issued by each Borrower to pay
trade payables and other obligations which are more than thirty (30) days past due as of the end of
the month most recently ended.



     1.84 “Mortgage Loan Agreement” shall mean that certain Loan and Security Agreement
dated as of June 9, 2006, by and among German American Capital Corporation and certain Subsidiaries
of Parent (other than the Borrowers and the Guarantors).



25









 





     1.85 “Mortgage Proceeds Investment” shall mean any capital contribution or
subordinated loan made by Parent to BlueLinx using the excess proceeds under the Mortgage Loan
Agreement.



     1.86 “Multiemployer Plan” shall mean a “multi-employer plan” as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or the immediately
preceding six (6) years contributed to by any Borrower, any Guarantor or any ERISA Affiliate.



     1.87 “Net Amount of Eligible Accounts” shall mean, the gross amount of Eligible
Accounts less (to the extent Reserves therefor have not been established or a reduction in the
advance rate for Eligible Accounts due to an increase in Dilution as a result thereof has not been
made), returns, discounts, claims, credits and allowances of any nature at any time issued, owing,
granted, outstanding, available or claimed with respect thereto.



     1.88 “Net Income” shall mean, as of any date of determination, as determined in
accordance with GAAP, when calculated for a specified period ending on such date of determination,
the aggregate of the net income (loss) of Borrowers and their respective Subsidiaries, on a
consolidated basis, for such period (but excluding to the extent included therein any extraordinary
or one-time gains or losses or non-recurring events, including, but not limited to, restructuring
charges, unusual severance charges, casualty losses and acquisitions or divestiture related
charges), provided, that, (a) the net income of any Person that is not a
wholly-owned Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid or payable to any
Borrower or a wholly-owned Subsidiary of any Borrower; (b) the effect of any change in accounting
principles adopted by any Borrower or their respective Subsidiaries after the date hereof shall be
excluded; and (c) the net income (if positive) of any wholly-owned Subsidiary to the extent that
the declaration or payment of dividends or similar distributions by such wholly-owned Subsidiary to
any Borrower or to any other wholly-owned Subsidiary of any Borrower is not at the time permitted
by operation of the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule of government regulation applicable to such wholly-owned Subsidiary shall be
excluded. For the purpose of this definition, net income excludes any gain or loss, together with
any related Provision for Taxes for such gain or loss realized upon the sale or other disposition
of any assets that are not sold in the ordinary course of business (including, without limitation,
dispositions pursuant to sale and leaseback transactions), or of any Capital Stock of any Borrower
or any Subsidiary of any Borrower and any net income realized as a result of changes in accounting
principles or the application thereof to any Borrower.



     1.89 “Net Orderly Liquidation Value” shall mean, as of any date of determination, the
net orderly liquidation percentage set forth in the most recent appraisal of each Borrower’s
Inventory provided to Administrative and Collateral Agent pursuant to the terms hereof times the
Value of such Borrower’s Inventory.



     1.90 “New Lending Office” shall have the meaning set forth in Section 6.5(e) hereof.



     1.91 “Non-Consenting Lenders” shall have the meaning set forth in Section 11.3(d)
hereof.



26









 





     1.92 “Non-U.S. Lender” shall have the meaning set forth in Section 6.5(e) hereof.



     1.93 “Obligations” shall mean any and all Loans and all other obligations, liabilities
and indebtedness of every kind, nature and description owing by any or all of Borrowers to any
Agent or any Lender and/or any of their respective Affiliates, including all obligations arising
under or in connection with Bank Products to the extent the same have been reserved for as part of
the Bank Product Reserve or would not cause the total amount of the Obligations to exceed the value
of the Collateral; in each case, whether consisting of principal, interest, charges, fees, costs
and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise,
whether arising under this Agreement or otherwise, whether now existing or hereafter arising,
whether arising before, during or after the initial or any renewal term of this Agreement or after
the commencement of any case with respect to any Borrower under the United States Bankruptcy Code
or any similar statute (including the payment of interest and other amounts which would accrue and
become due but for the commencement of such case, whether or not such amounts are allowed or
allowable in whole or in part in such case), whether direct or indirect, absolute or contingent,
joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or
unsecured, and however acquired by any such Agent, Lender or Affiliate.



     1.94 “Original Closing Date” shall mean May 7, 2004.



     1.95 “Other Taxes” shall mean any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with respect to, this
Agreement or any of the other Financing Agreements.



     1.96 “Parent” shall mean BlueLinx Holding Inc., a Delaware corporation, as successor
in interest by merger to ADP Distribution Holdings Inc., a Georgia corporation.



     1.97 “Participant” shall mean any financial institution that acquires and holds a
participation in the interest of any Lender in any of the Loans in conformity with the provisions
of Section 13.6 of this Agreement governing participations.



     1.98 “Payment Account” shall mean account no. 5000000030321 of Administrative and
Collateral Agent at Wachovia, or such other account of Administrative and Collateral Agent as
Administrative and Collateral Agent may from time to time designate to Administrative Borrower as
the Payment Account for purposes of this Agreement.



     1.99 “Permitted Acquisitions” shall mean any Acquisition so long as: (a) Modified
Adjusted Excess Availability at all times for the thirty (30) day period prior to the closing date
for such Acquisition, and on the closing date for such Acquisition after giving effect to such
proposed Acquisition, shall be equal to or greater than $70,000,000; (b) no Default or Event of
Default has occurred and is continuing or would result from the consummation of the proposed
Acquisition; (c) both before and after giving effect to such proposed Acquisition, Borrowers’ Fixed
Charge Coverage Ratio, on a consolidated basis, shall not be less than 1.1 to 1.0;
provided, however, if Modified Adjusted Excess Availability is greater than
$120,000,000 at all times for the thirty (30) day period prior to the closing date for such
Acquisition, and on the closing date



27









 







for such Acquisition after giving effect to such proposed Acquisition, Borrowers’ Fixed Charge
Coverage Ratio may be calculated, for purposes of this Section 1.99(c) only, without giving effect
to (i) any Capital Expenditures incurred by any Borrower which are otherwise permitted to be
incurred by such Borrower under the terms of this Agreement, (ii) any dividends to Parent which are
otherwise permitted to be made by BlueLinx under the terms of this Agreement, and (iii) any
repayment by BlueLinx to Parent of any Mortgage Proceeds Investment in accordance with Section
9.11(f) hereof; (d) Administrative Borrower provides Administrative and Collateral Agent with prior
written notice of such proposed Acquisition; (e) Administrative and Collateral Agent, for the
ratable benefit of the Lenders and the Bank Product Providers, shall be granted a first priority
security interest (subject to the security interests, mortgages, pledges, liens, charges and other
encumbrances otherwise permitted under Section 9.8 hereof) in all assets (including any Capital
Stock) acquired by any Borrower or any Acquisition Subsidiary and all assets (including any Capital
Stock) owned by any Person acquired by any Borrower or any Acquisition Subsidiary as part of such
Acquisition and such Borrower shall, and shall cause any applicable Subsidiary to, execute any
documents and take all actions that may be required under applicable law or that Administrative and
Collateral Agent may reasonably request, in order to grant, preserve, protect and perfect such
security interest, all in form and substance satisfactory to Administrative and Collateral Agent;
and (f) in the case of a Stock Acquisition, in Administrative and Collateral Agent’s election,
either (i) Borrowers shall cause the acquired Person to execute a (A) general continuing guaranty
in favor of Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders
and the Bank Product Providers, in form and substance satisfactory to Administrative and Collateral
Agent, and (B) a joinder to this Agreement, in form and substance satisfactory to Administrative
and Collateral Agent, whereby such acquired Person acknowledges and agrees that it is a “Guarantor”
hereunder; or (ii) the acquired Person shall execute a joinder to this Agreement, in form and
substance satisfactory to Administrative and Collateral Agent, whereby such acquired Person
acknowledges and agrees that it is a “Borrower” hereunder subject to the terms hereunder and
subject to such acquired Person and Borrowers executing such documentation requested by
Administrative Agent in its reasonable discretion.



     1.100 “Permitted Holders” shall mean Sponsor and any of its affiliated funds or
managed accounts which are managed or advised by Sponsor or an Affiliate of Sponsor.



     1.101 “Person” or “person” shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S status under the
Code), limited liability company, limited liability partnership, business trust, unincorporated
association, joint stock corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.



     1.102 “Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA)
which any Borrower, any Guarantor or any ERISA Affiliate sponsors, maintains, or to which it makes,
is making, or is obligated to make contributions other than a Multiemployer Plan.



     1.103 “PPSA” shall mean the Personal Property Security Act of any province of Canada
in which any of the Collateral is located and any other applicable Canadian or Provincial personal
property security legislation (including, without limitation, the Civil Code of Quebec) as all such
legislation now exists or may from time to time hereafter be amended, modified,



28









 







recodified, supplemented or replaced, together with all rules, regulations and interpretations
thereunder or related thereto.



     1.104 “Prime Rate” shall mean the rate from time to time publicly announced by the
Reference Bank as its prime rate, whether or not such announced rate is the best rate available at
such bank.



     1.105 “Prime Rate Loans” shall mean any Loans or portion thereof on which interest is
payable based on the Prime Rate in accordance with the terms thereof.



     1.106 “Pro Rata Share” shall mean the fraction (expressed as a percentage) the
numerator of which is such Lender’s Revolving Loan Commitment and the denominator of which is the
aggregate amount of all of the Revolving Loan Commitments of all Revolving Loan Lenders.



     1.107 “Provision for Taxes” shall mean, as of any date of determination, calculated
for the twelve month period ending on such date of determination, an amount equal to all taxes
imposed on or measured by net income, whether Federal, State or local, and whether foreign or
domestic, that are paid or payable by any Borrower and its Subsidiaries in respect of such period
on a consolidated basis in accordance with GAAP.



     1.108 “PTCE 95-60” shall have the meaning set forth in Section 13.6(a) hereof.



     1.109 “Purchase Agreements” shall mean, individually and collectively, the Asset
Purchase Agreement, dated March 12, 2004, between BlueLinx and Seller, together with bills of sale,
quitclaim deeds, assignment and assumption agreements and such other instruments of transfer as are
referred to therein and all side letters with respect thereto, and all agreements, documents and
instruments executed and/or delivered in connection therewith, including, without limitation, a
Human Resources Agreement, a Transition Services Agreement, an IT Support Services Agreement, an
Agreement Concerning Private Label Agreements and a Master Purchase, Supply and Distribution
Agreement, as the foregoing now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced; provided, that, the term “Purchase
Agreements” as used herein shall not include any of the “Financing Agreements” as such term is
defined herein or the Real Property Purchase Agreement.



     1.110 “Purchased Assets” shall mean all of the assets and properties acquired by
BlueLinx from Seller pursuant to the Purchase Agreements.



     1.111 “Purchased Business” shall mean the building products distribution business
conducted by Seller through its building products distribution operating segment immediately prior
to the consummation of the transactions contemplated by the Purchase Agreements.



     1.112 “Qualified Bailee” shall mean a bailee, carrier, processor or other such Person
from time to time in possession or control of any Borrower’s Inventory or documents of title
related thereto who has executed a Collateral Access Agreement in favor of Administrative and
Collateral Agent.



29









 





     1.113 “Qualified Cash” shall mean, as of any date of determination, the aggregate
amount of cash carried by each Borrower on its balance sheet (a) which is in a savings account or
investment account subject to Administrative and Collateral Agent’s first priority perfected
security interest pursuant to a Deposit Account Control Agreement or Investment Property Control
Agreement, as the case may be, (b) with respect to which Administrative and Collateral Agent has
received statements of the available balances thereof from the bank or other financial institution
at which such account is maintained which confirm such amounts and (c) which is not pledged or
deposited to secure any obligations of any Borrower other than the Obligations.



     1.114 “Real Property” shall mean all now owned and hereafter acquired real property of
each Borrower and each Guarantor, including leasehold interests, together with all buildings,
structures, and other improvements located thereon and all licenses, easements and appurtenances
relating thereto, wherever located.



     1.115 “Real Property Purchase Agreement” shall mean that certain Real Property
Purchase and Sale Agreement, dated March 12, 2004, by and between Parent and Seller, and all
documents, agreements and instruments executed, delivered or entered into in connection therewith.



     1.116 “Receivables” shall mean all of the following now owned or hereafter arising or
acquired property of each Borrower and each Guarantor: (a) all Accounts; (b) all interest, fees,
late charges, penalties, collection fees and other amounts due or to become due or otherwise
payable in connection with any Account; and (c) all payment intangibles of such Borrower or such
Guarantor and other contract rights, chattel paper, instruments, notes, and other forms of
obligations owing to any Borrower or any Guarantor, whether from the sale and lease of goods or
other property, licensing of any property (including Intellectual Property or other general
intangibles), rendition of services or from loans or advances by any Borrower or any Guarantor or
to or for the benefit of any third person (including loans or advances to any Affiliates or
Subsidiaries of any Borrower or any Guarantor) or otherwise associated with any Accounts, Inventory
or general intangibles of any Borrower or any Guarantor (including, without limitation, choses in
action, causes of action, tax refunds, tax refund claims, any funds which may become payable to any
Borrower or any Guarantor in connection with the termination of any Plan or other employee benefit
plan and any other amounts payable to any Borrower or any Guarantor from any Plan or other employee
benefit plan, rights and claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, casualty or any similar types of insurance and any
proceeds thereof and proceeds of insurance covering the lives of employees on which any Borrower or
any Guarantor is a beneficiary).



     1.117 “Records” shall mean, as to each Borrower and each Guarantor, all of such
Borrower’s and such Guarantor’s present and future books of account of every kind or nature,
purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data relating to the Collateral or
any account debtor, together with the tapes, disks, diskettes and other data and software storage
media and devices, file cabinets or containers in or on which the foregoing are stored (including
any rights of any Borrower or any Guarantor with respect to the foregoing maintained with or by any
other person).



30









 





     1.118 “Reference Bank” shall mean Wachovia, its successor or such other bank as
Administrative and Collateral Agent may from time to time designate.



     1.119 “Register” shall have the meaning set forth in Section 13.6(b) hereof.



     1.120 “Report” and “Reports” shall have the meaning set forth in Section
12.10(a) hereof.



     1.121 “Required Lenders” shall mean, at any time, those Revolving Loan Lenders, other
than Sponsor Affiliate Lenders, whose Pro Rata Shares aggregate fifty-one percent (51%) or more of
the aggregate of the Revolving Loan Commitments of all Revolving Loan Lenders other than Sponsor
Affiliate Lenders.



     1.122 “Required Super-Majority Lenders” shall mean, at any time, those Revolving Loan
Lenders, other than Sponsor Affiliate Lenders, whose Pro Rata Shares aggregate eighty percent (80%)
or more of the aggregate of the Revolving Loan Commitments of all Revolving Loan Lenders other than
Sponsor Affiliate Lenders.



     1.123 “Reserves” shall mean as of any date of determination, such amounts as
Administrative and Collateral Agent may from time to time establish and revise in good faith and in
its reasonable credit judgment reducing the amount of Revolving Loans and Letter of Credit
Accommodations which would otherwise be available to Borrowers under the lending formula(s)
provided for herein: (a) to reflect events, conditions, contingencies or risks which, as
determined by Administrative and Collateral Agent in good faith and its reasonable credit judgment,
adversely affect, or could reasonably be expected to adversely affect, either (i) any of the
Collateral or its value or (ii) the security interests and other rights of Administrative and
Collateral Agent in the Collateral (including the enforceability, perfection and priority thereof)
or (b) to reflect Administrative and Collateral Agent’s good faith belief that any collateral
report or financial information furnished by or on behalf of any Borrower or any Guarantor to any
Agent is or may have been incomplete, inaccurate or misleading in any material respect or (c) to
reflect outstanding Letter of Credit Accommodations as provided in Section 2.2 hereof or (d) with
respect to any Default or Event of Default. To the extent Administrative and Collateral Agent may
revise the lending formulas used to determine the Borrowing Base or establish new criteria or
revise existing criteria for Eligible Accounts, Eligible Inventory, Eligible Domestic In-Transit
Inventory, Eligible International In-Transit Inventory or Eligible Re-Load Inventory so as to
address any circumstances, condition, event or contingency in a manner satisfactory to
Administrative and Collateral Agent, Administrative and Collateral Agent shall not establish a
Reserve for the same purpose. The amount of any Reserve established by Administrative and
Collateral Agent shall have a reasonable relationship to the event, condition or other matter which
is the basis for such reserve as determined by Administrative and Collateral Agent in good faith
and its reasonable credit judgment. Without limiting the generality of the foregoing, and without
duplication, Reserves shall be established, at Administrative and Collateral Agent’s option, (q) in
the amount of the Bank Product Reserve, (r) for the amount of the Canadian Priority Payables then
outstanding, (s) for three (3) month’s rental payments with regard to any leased location of any
Borrower (i) for which Administrative and Collateral Agent has not received a Collateral Access
Agreement, (ii) subject to an Affiliate Lease until such time as Administrative and Collateral
Agent has received an updated appraisal of the Inventory which



31









 







accounts for such rental payments as part of liquidation expenses or (iii) which was owned by
Parent as of the date hereof but which has ceased to be owned by Parent or an Affiliate of any
Borrower, (t) for reductions in the amount of Eligible Accounts due to currency conversion rates,
(u) for freight, shipping, storage, warehousing or other such handling costs associated with
Eligible Domestic In-Transit Inventory, Eligible International In-Transit Inventory or Eligible
Re-Load Inventory or any other amounts Administrative and Collateral Agent determines in good faith
and its reasonable credit judgment must be paid in order to allow Administrative and Collateral
Agent to take possession of such Inventory, (v) to reflect that returns, discounts, claims, credits
and allowances of any nature that are not paid pursuant to the reduction of Accounts, (w) for
sales, excise or similar taxes included in the amount of any Accounts reported to Administrative
and Collateral Agent, (x) to reflect, since the date of the most recent appraisal, that a change in
the turnover, age or mix of the categories of Inventory that adversely affects the aggregate value
of all Inventory or (y) to reflect, since the date of the most recent appraisal, that the
liquidation value of Inventory, has decreased. In the event that, based on the calculation of the
Borrowing Base by Administrative and Collateral Agent, the establishment of a Reserve of a type not
previously established will result in there being Excess Availability of less than $40,000,000,
Administrative and Collateral Agent shall give Administrative Borrower three (3) Business Days’
notice prior to establishing such a Reserve; provided, that, Administrative and
Collateral Agent shall not be required to provide any such notice with regard to (1) any further
Reserves established or increased while Excess Availability remains less than $40,000,000 or (2)
with regard to any Reserve established or increased in connection with an event which either
constitutes an Event of Default or could reasonably be expected to materially impair Administrative
and Collateral Agent’s liens on the Collateral or its ability to realize upon the Collateral.



     1.124 “Revolving Loan Commitment” shall mean, as to any Lender: (a) at any time prior
to the termination of the Revolving Loan Commitments, the amount of such Lender’s revolving loan
commitment as set forth on Schedule 1.124 hereto or on Schedule 1 to the Assignment and Acceptance
Agreement pursuant to which such Lender became a Lender under this Agreement, as such amount may be
adjusted from time to time in accordance with the provisions of Section 13.6 hereof, and (b) after
the termination of the Revolving Loan Commitments, the unpaid amount of Revolving Loans, Term Loan
and Special Agent Advances made by such Lender and such Lender’s interest in the outstanding Letter
of Credit Accommodations, in each case as the same may be required to be adjusted from time to time
in accordance with the terms hereof.



     1.125 “Revolving Loan Credit Facility” shall mean the Revolving Loans and Letter of
Credit Accommodations provided to or for the benefit of Borrowers pursuant to the terms of this
Agreement.



     1.126 “Revolving Loan Lender” shall mean any Lender having a Revolving Loan
Commitment.



     1.127 “Revolving Loan Threshold Limit” shall mean the amount, calculated at any time,
equal to Eight Hundred Million Dollars ($800,000,000); unless Administrative Borrower shall have
exercised its right to reduce such amount pursuant to Section 2.1(c) hereof, in which event
Revolving Loan Threshold Limit shall mean such reduced amount.



32









 





     1.128 “Revolving Loan Limit” shall mean the amount, calculated at any time, equal to
(a) the Revolving Loan Threshold Limit minus (b) the then outstanding principal amount of
the Term Loan.



     1.129 “Revolving Loans” shall mean the loans now or hereafter made by or on behalf of
any Revolving Loan Lender or by Administrative and Collateral Agent for the ratable account of any
Revolving Loan Lender on a revolving basis pursuant to the Revolving Loan Credit Facility
(involving advances, repayments and readvances) as set forth in Section 2.1 hereof.



     1.130 “Seasonal Period” shall mean, collectively, (i) the period beginning on January
1 and ending on June 30 of each year; and (ii) the period beginning on November 1 and ending on
December 31 of each year.



     1.131 “Seller” shall mean Georgia-Pacific Corporation, a Georgia corporation, and
Georgia-Pacific Building Materials Sales, Ltd., a company organized under the laws of New
Brunswick, and their respective successors and assigns.



     1.132 “Settlement Period” shall have the meaning set forth in Section 6.10(b) hereof.



     1.133 “Solvent” shall mean, at any time with respect to any Person, that at such time
such Person (a) is able to pay its debts as they mature and has (and has a reasonable basis to
believe it will continue to have) sufficient capital (and not unreasonably small capital) to carry
on its business as currently conducted or proposed to be conducted as previously disclosed to
Administrative and Collateral Agent in writing prior to the date hereof or in accordance with
Section 9.6, and (b) the assets and properties of such Person at a fair valuation (and including as
assets for this purpose at a fair valuation all rights of subrogation, contribution or
indemnification arising pursuant to any guaranties given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent liabilities computed at the
amount which, such person has a reasonable basis to believe, represents an amount which can
reasonably be expected to become an actual or matured liability (and including as to contingent
liabilities arising pursuant to any guaranty the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).



     1.134 “Special Agent Advances” shall have the meaning set forth in Section 12.11(a)
hereof.



     1.135 “Sponsor” shall mean Cerberus Capital Management, L.P., a Delaware limited
partnership.



     1.136 “Sponsor Affiliated Lenders” shall mean Ableco Finance LLC, a Delaware limited
liability company, Madeleine L.L.C., a New York limited liability company, and funds and managed
accounts which are managed or advised by such Person, Sponsor or an Affiliate of such Person or
Sponsor.



     1.137 “Sponsor Portfolio Company” shall mean any Person that is an Affiliate of any
Borrower solely due to the fact that such Person is controlled, directly or indirectly, by Sponsor
and which is not otherwise involved in such Borrower’s business in any capacity.



33









 





     1.138 “Stock Acquisition” shall mean the purchase or other acquisition by any Borrower
or any Acquisition Subsidiary of all or substantially all of the Capital Stock of any other Person
engaged in substantially the same or a related business as Borrowers.



     1.139 “Subsidiary” or “subsidiary” shall mean, with respect to any Person, any
corporation, limited liability company, limited liability partnership or other limited or general
partnership, trust, association or other business entity of which an aggregate of at least a
majority of the outstanding Capital Stock or other interests entitled to vote in the election of
the board of directors of such corporation (irrespective of whether, at the time, Capital Stock of
any other class or classes of such corporation shall have or might have voting power by reason of
the happening of any contingency), managers, trustees or other controlling persons, or an
equivalent controlling interest therein, of such Person is, at the time, directly or indirectly,
owned by such Person and/or one or more subsidiaries of such Person.



     1.140 “Taxes” shall mean any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto, other than Excluded
Taxes.



     1.141 “Term Loans” shall have the meaning set forth in Section 2.5 hereof; sometimes
being referred to herein individually as a “Term Loan.”



     1.142 “Term Notes” shall mean, collectively, those certain Amended and Restated Term
Promissory Notes, dated on or about the date hereof, issued by Borrowers to each Revolving Loan
Lender, as the same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.



     1.143 “Transferee” shall have the meaning set forth in Section 6.5(a) hereof.



     1.144 “UCC” shall mean the Uniform Commercial Code as in effect in the State of New
York, and any successor statute, as in effect from time to time (except that terms used herein
which are defined in the Uniform Commercial Code as in effect in the State of New York on the date
hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such
statute except as Lender may otherwise determine; provided, that, if, with respect
to any financing statement or by reason of any provisions of law, the perfection or the effect of
perfection or non-perfection of the security interests granted to the Administrative and Collateral
Agent pursuant to the applicable Financing Agreement is governed by the Uniform Commercial Code as
in effect in a jurisdiction of the United States other than the State of New York, then UCC means
the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes
of the provisions of each Financing Agreement and any financing statement relating to such
perfection or effect of perfection or non-perfection.



     1.145 “Value” shall mean, as determined by Administrative and Collateral Agent in good
faith, with respect to Inventory, the lower of (a) cost computed on either a first-in-first-out or
rolling average cost basis, in each case in accordance with GAAP or (b) market value;
provided, that, for purposes of the calculation of the Borrowing Base, (i) the
Value of the Inventory shall not include: (A) the portion of the value of Inventory equal to the
profit earned by any Affiliate of any Borrower or any Guarantor (other than a Sponsor Portfolio
Company) on



34









 







the sale thereof to any Borrower or (B) write-ups or write-downs in value with respect to
currency exchange rates and (ii) notwithstanding anything to the contrary contained herein, the
cost of the Inventory shall be computed in the same manner and consistent with the most recent
appraisal of the Inventory received and accepted by Administrative and Collateral Agent.



     1.146 “VAT” shall mean Value Added Tax imposed in Canada or any other jurisdiction and
any equivalent tax applicable in any jurisdiction (including Goods and Services Tax, Harmonized
Sales Tax and Quebec Sales Tax).



     1.147 “Voting Stock” shall mean with respect to any Person, (a) one (1) or more
classes of Capital Stock of such Person having general voting powers to elect at least a majority
of the board of directors, managers or trustees of such Person, irrespective of whether at the time
Capital Stock of any other class or classes have or might have voting power by reason of the
happening of any contingency, and (b) any Capital Stock of such Person convertible or exchangeable
without restriction at the option of the holder thereof into Capital Stock of such Person described
in clause (a) of this definition.



     1.148 “Wachovia” shall mean Wachovia Bank, National Association, in its individual
capacity, and its successors and assigns.


SECTION 2. CREDIT FACILITIES




     2.1 Revolving Loans.



          (a) Subject to and upon the terms and conditions contained herein, each Revolving Loan Lender
severally (and not jointly) agrees to fund its Pro Rata Share of Revolving Loans to Borrowers from
time to time in amounts requested by Administrative Borrower up to the amount equal to the lesser
of: (i) the Borrowing Base or (ii) the Revolving Loan Limit.




          (b) Except in Administrative and Collateral Agent’s discretion, with the consent of all
Lenders other than the Sponsor Affiliated Lenders, (i) the aggregate principal amount of the
Revolving Loans and the Letter of Credit Accommodations outstanding at any time shall not exceed
the Revolving Loan Limit. In the event that the aggregate principal amount of the outstanding
Revolving Loans and Letter of Credit Accommodations exceed the amounts available pursuant to the
Borrowing Base (prior to giving effect to Reserves established at the issuance of such Letter of
Credit Accommodations), the Revolving Loan Limit or the sublimits for Letter of Credit
Accommodations set forth in Section 2.2(e), as applicable, such event shall not limit, waive or
otherwise affect any rights of any Agent or any Lender in that circumstance or on any future
occasions and Borrowers shall, upon demand by Administrative and Collateral Agent, which may be
made at any time or from time to time, immediately repay to Administrative and Collateral Agent,
for the ratable benefit of the Revolving Loan Lenders, the entire amount of any such excess(es) for
which payment is demanded, or, if no Revolving Loans are then outstanding, provide cash collateral
with respect to any Letter of Credit Accommodations outstanding in excess of the Borrowing Base or
sublimit for Letter of Credit Accommodations set forth in Section 2.2(e) in an amount equal to one
hundred five percent




35









 







(105%) of the amount of such excess plus the amount of any fees and expenses payable in
connection therewith through the end of the expiration of such Letter of Credit Accommodations.




          (c) At Borrowers’ option, upon not less than five (5) Business Days prior written notice to
Administrative and Collateral Agent by Administrative Borrower, Borrowers may permanently reduce
the Revolving Loan Threshold Limit; provided, however, (i) no more than twenty (20)
such reductions may be made during the term of this Agreement; (ii) such reductions are requested
in increments of $10,000,000 and (iii) the Revolving Loan Threshold Limit may not be reduced to an
amount that is less than $250,000,000 unless reduced to zero in connection with the termination of
the Agreement in accordance with the provisions of Section 13.1(a) hereof.




     2.2 Letter of Credit Accommodations.



          (a) Subject to and upon the terms and conditions contained herein, at the request of
Administrative Borrower on behalf of itself or any other Borrower, Administrative and Collateral
Agent agrees, for the ratable risk of each Revolving Loan Lender according to its Pro Rata Share,
to provide or arrange for Letter of Credit Accommodations for the account such Borrower containing
terms and conditions acceptable to Administrative and Collateral Agent and the issuer thereof. Any
payments made by Administrative and Collateral Agent or any Lender to any issuer thereof and/or
related parties in connection with the Letter of Credit Accommodations shall constitute additional
Revolving Loans to Borrower pursuant to this Section 2.




          (b) In addition to any charges, fees or expenses charged by any bank or issuer in connection
with the Letter of Credit Accommodations, Borrowers shall pay to Administrative and Collateral
Agent: (i) for its own account, a letter of credit fee at a rate equal to one-eighth percent
(0.125%) per annum on the daily outstanding balance of the Letter of Credit Accommodations for the
immediately preceding month (or part thereof), payable in arrears as of the first day of each
succeeding month; and (ii) for the ratable benefit of Revolving Loan Lenders, a letter of credit
fee at a per annum rate equal to the “Applicable Eurodollar Rate Margin” then in effect pursuant to
Section 1.71 hereof, on the daily outstanding balance of the Letter of Credit Accommodations for
the immediately preceding month (or part thereof), payable in arrears as of the first day of each
succeeding month; provided, however, Administrative and Collateral Agent may, and
upon the written direction of the Required Lenders shall, require Borrowers to pay such letter of
credit fees, at a rates that are two (2.0) percentage points higher than the rates set forth above:
(A) during the period from and after the date of termination or non-renewal hereof until
Administrative and Collateral Agent, for the ratable benefit of Revolving Loan Lenders, has
received full and final payment of all Obligations (notwithstanding entry of a judgment against any
Borrower or any Guarantor); (B) during the period from and after the date of the occurrence of an
Event of Default for so long as such Event of Default is continuing as determined by Administrative
and Collateral Agent; and (C) with respect to any Letter of Credit Accommodations issued in excess
of the sublimit set forth in Section 2.2(e) below. Such letter of credit fees shall be calculated
on the basis of a three hundred sixty (360) day year and actual days elapsed and the obligation of
Borrowers to pay such fees shall survive the termination or non-renewal of this Agreement.




36









 








          (c) Administrative Borrower shall give Administrative and Collateral Agent two (2) Business
Days’ prior written notice of their request for the issuance of a Letter of Credit Accommodation.
Such notice shall be irrevocable and shall specify the original face amount of the Letter of Credit
Accommodation requested, the effective date (which date shall be a Business Day) of issuance of
such requested Letter of Credit Accommodation, whether such Letter of Credit Accommodations may be
drawn in a single or in partial draws, the date on which such requested Letter of Credit
Accommodation is to expire (which date shall be a Business Day), the purpose for which such Letter
of Credit Accommodation is to be issued, and the beneficiary of the requested Letter of Credit
Accommodation. Administrative Borrower shall attach to such notice the proposed terms of the
Letter of Credit Accommodation.




          (d) In addition to being subject to the satisfaction of the applicable conditions precedent
contained in Section 4 hereof and the other terms and conditions contained herein, no Letter of
Credit Accommodations shall be available unless each of the following conditions precedent have
been satisfied in a manner reasonably satisfactory to Administrative and Collateral Agent in its
reasonable credit judgment: (i) Administrative Borrower shall have delivered to the proposed
issuer of such Letter of Credit Accommodation at such times and in such manner as such proposed
issuer may require, an application in form and substance satisfactory to such proposed issuer and
Administrative and Collateral Agent for the issuance of the Letter of Credit Accommodation and such
other documents as may be required pursuant to the terms thereof, and the form and terms of the
proposed Letter of Credit Accommodation shall be satisfactory to Administrative and Collateral
Agent and such proposed issuer, (ii) as of the date of issuance, no order of any court, arbitrator
or other Governmental Authority shall purport by its terms to enjoin or restrain money center banks
generally from issuing letters of credit of the type and in the amount of the proposed Letter of
Credit Accommodation, and no law, rule or regulation applicable to money center banks generally and
no request or directive (whether or not having the force of law) from any Governmental Authority
with jurisdiction over money center banks generally shall prohibit, or request that the proposed
issuer of such Letter of Credit Accommodation refrain from, the issuance of letters of credit
generally or the issuance of such Letters of Credit Accommodation; and (iii) Excess Availability,
prior to giving effect to any Reserves with respect to such Letter of Credit Accommodations, on the
date of the proposed issuance of any Letter of Credit Accommodations, shall be equal to or greater
than an amount equal to the sum of (A) one hundred percent (100%) of the face amount thereof plus
(B) the amount of all other commitments and obligations made or incurred by Administrative and
Collateral Agent and Lenders with respect to charges, fees or expenses charged by any bank or
issuer in connection with such Letter of Credit Accommodation. Effective on the issuance of each
Letter of Credit Accommodation, a Reserve shall be established in the amount set forth in Section
2.2(d)(iii) above.




          (e) Except in Administrative and Collateral Agent’s discretion, with the consent of the
Required Lenders, the amount of all outstanding Letter of Credit Accommodations and all other
commitments and obligations made or incurred by Administrative and Collateral Agent or any Lender
in connection therewith shall not at any time exceed Thirty Million Dollars ($30,000,000).




          (f) Borrowers and Guarantors shall indemnify and hold Administrative and Collateral Agent and
Lenders harmless from and against any and all losses, claims, damages,

37









 








liabilities, costs and expenses which Administrative and Collateral Agent or any Lender may
suffer or incur, other than as a result of the gross negligence or willful misconduct of such
Person seeking indemnification, in connection with any Letter of Credit Accommodations and any
documents, drafts or acceptances relating thereto, including any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or correspondent with respect
to any Letter of Credit Accommodation. Each Borrower and each Guarantor assumes all risks with
respect to the acts or omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be deemed such Borrower’s
agent. Each Borrower and each Guarantor assumes all risks for, and agrees to pay (if any), all
foreign, Federal, State and local taxes, duties and levies relating to any goods subject to any
Letter of Credit Accommodations or any documents, drafts or acceptances thereunder. Each Borrower
and each Guarantor hereby releases and holds Administrative and Collateral Agent and each Lender
harmless from and against any acts, waivers, errors, delays or omissions, whether caused by any
Borrower, by any Guarantor, by any issuer or correspondent or otherwise with respect to or relating
to any Letter of Credit Accommodation, except for the gross negligence or willful misconduct of
Administrative and Collateral Agent or such Lender as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction. The provisions of this Section 2.2(f)
shall survive the payment of Obligations and the termination or non-renewal of this Agreement.




          (g) In connection with Inventory purchased pursuant to Letter of Credit Accommodations,
Borrowers and Guarantors shall, at Administrative and Collateral Agent’s request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others receiving or holding cash,
checks, Inventory, documents or instruments in which Administrative and Collateral Agent, for
itself and the ratable benefit of the Lenders and the Bank Product Providers, holds a security
interest to deliver them to Administrative and Collateral Agent and/or subject to Administrative
and Collateral Agent’s order, and if they shall come into such Borrower’s or such Guarantor’s
possession, to deliver them, upon Administrative and Collateral Agent’s request, to Administrative
and Collateral Agent. Borrowers and Guarantors shall also, at Administrative and Collateral
Agent’s request, designate Administrative and Collateral Agent as the consignee on all bills of
lading and other negotiable and non-negotiable documents.




          (h) Each Borrower and each Guarantor hereby irrevocably authorizes and directs any issuer of a
Letter of Credit Accommodation to name such Borrower or such Guarantor as the account party therein
and to deliver to Administrative and Collateral Agent all instruments, documents and other writings
and property received by issuer pursuant to the Letter of Credit Accommodations and to accept and
rely upon Administrative and Collateral Agent’s instructions and agreements with respect to all
matters arising in connection with the Letter of Credit Accommodations or the applications
therefor. Nothing contained herein shall be deemed or construed to grant any Borrower or any
Guarantor any right or authority to pledge the credit of any Agent or any Lender in any manner.
Neither Administrative and Collateral Agent nor any Lender shall have any liability of any kind
with respect to any Letter of Credit Accommodation provided by an issuer other than Administrative
and Collateral Agent or such Lender unless Administrative and Collateral Agent has duly executed
and delivered to such issuer the application or a guaranty or indemnification in writing with
respect to such Letter of Credit Accommodation. Borrowers and Guarantors shall be bound by any
interpretation made in good faith by Administrative and Collateral Agent, or any other issuer or
correspondent under or in

38









 








connection with any Letter of Credit Accommodation or any documents, drafts or acceptances
thereunder, notwithstanding that such interpretation may be inconsistent with any instructions of
any Borrower or any Guarantor.




          (i) So long as no Event of Default exists, with respect to any Letter of Credit Accommodation,
Borrowers and Guarantors may, after notice to Administrative and Collateral Agent, (i) approve or
resolve any questions of non-compliance of documents, (ii) give any instructions as to acceptance
or rejection of any documents or goods, (iii) execute any and all applications for steamship or
airway guaranties, indemnities or delivery orders, and (iv) with Administrative and Collateral
Agent’s consent, grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents, and agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or conditions of any of the
applications, Letter of Credit Accommodations, or documents, drafts or acceptances thereunder or
any letters of credit included in the Collateral.




          (j) At any time an Event of Default exists or has occurred and is continuing, Administrative
and Collateral Agent shall have the right and authority to, and no Borrower or Guarantor shall,
without the prior written consent of Administrative and Collateral Agent, (i) approve or resolve
any questions of non-compliance of documents, (ii) give any instructions as to acceptance or
rejection of any documents or goods, (iii) execute any and all applications for steamship or airway
guaranties, indemnities or delivery orders, (iv) grant any extensions of the maturity of, time of
payments for, or time of presentation of, any drafts, acceptances, or documents, and (v) agree to
any amendments, renewals, extensions, modifications, changes or cancellations of any of the terms
or conditions of any of the applications, Letter of Credit Accommodations, or documents, drafts or
acceptances thereunder or any letters of credit included in the Collateral. Administrative and
Collateral Agent may take such actions either in its own name or in a Borrower’s or a Guarantor’s
name.




          (k) Any rights, remedies, duties or obligations granted or undertaken by any Borrower or any
Guarantor to any issuer or correspondent in any application for any Letter of Credit Accommodation,
or any other agreement in favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been granted or undertaken by such Borrower or such
Guarantor to Administrative and Collateral Agent for the ratable benefit of Revolving Loan Lenders.
Any duties or obligations undertaken by Administrative and Collateral Agent or any Revolving Loan
Lender to any issuer or correspondent in any application for any Letter of Credit Accommodation, or
any other agreement by Administrative and Collateral Agent or any Revolving Loan Lender in favor of
any issuer or correspondent relating to any Letter of Credit Accommodation, shall be deemed to have
been undertaken by Borrowers to Administrative and Collateral Agent or such Revolving Loan Lender
and to apply in all respects to Borrowers.




     2.3 Commitments. The aggregate amount of each Revolving Loan Lender’s Pro Rata Share
of the Revolving Loans, Term Loan and Letter of Credit Accommodations shall not exceed the amount
of such Lender’s Revolving Loan Commitment, as the same may from time to time be amended in
accordance with the terms of this Agreement.



39









 





     2.4 Bank Products. Any Borrower or any of their respective Subsidiaries may (but no
such Person is required to) request that the Administrative and Collateral Agent provide or arrange
for such Person to obtain Bank Products from Administrative and Collateral Agent or its Affiliates,
and Administrative and Collateral Agent may, in its sole discretion, provide or arrange for such
Person to obtain the requested Bank Products. Any Borrower or any of their respective Subsidiaries
that obtains Bank Products shall indemnify and hold Administrative and Collateral Agent, each
Lender and their respective Affiliates harmless from any and all obligations now or hereafter owing
to any other Person by Administrative and Collateral Agent or its Affiliates in connection with any
Bank Products other than for gross negligence or willful misconduct on the part of any such
indemnified Person. Each Borrower and each of their respective Subsidiaries acknowledge and agree
that the obtaining of Bank Products from the Administrative and Collateral Agent and its Affiliates
(a) is in the sole discretion of the Administrative and Collateral Agent or such Affiliate, as the
case may be, and (b) is subject to all rules and regulations of the Person that provides the Bank
Product.



     2.5 Term Loan.



          (a) The Original Lenders under the Original Loan Agreement made a term loan to BlueLinx on
July 14, 2005, in the aggregate original principal sum of Six Million Dollars ($6,000,000) and with
an aggregate outstanding principal balance of Six Million Dollars ($6,000,000). Upon the
effectiveness of this Agreement, each Revolving Loan Lender severally (and not jointly) shall have
been deemed to make a term loan to Borrowers (each a “Term Loan” and collectively the
“Term Loans”) in an amount equal to such Revolving Loan Lender’s Pro Rata Share of such
outstanding principal balance.




          (b) The Term Loans are (i) evidenced by the Term Notes duly executed and delivered by
Borrowers to each Revolving Loan Lender, (ii) to be repaid, together with interest and other
amounts, in accordance with this Agreement, the Term Notes and the other Financing Agreements, and
(iii) secured by all of the Collateral. The principal amount of the Term Loan shall be due and
payable on the Final Maturity Date (or earlier as provided herein).



SECTION 3. INTEREST AND FEES




     3.1 Interest.



          (a) Borrowers shall pay to Administrative and Collateral Agent, for the ratable benefit of
Lenders, interest on the outstanding principal amount of the Loans (other than the Letter of Credit
Accommodations) at the Interest Rate. All interest accruing hereunder during the existence of any
Event of Default or after the date of any termination or non-renewal hereof shall be payable on
demand.




          (b) Administrative Borrower, on behalf of Borrowers, may from time to time request Eurodollar
Rate Loans or may request that Prime Rate Loans be converted to Eurodollar Rate Loans or that any
existing Eurodollar Rate Loans continue for an additional Interest Period. Such request from
Administrative Borrower shall specify the amount of the Eurodollar Rate Loans or the amount of the
Prime Rate Loans to be converted to Eurodollar Rate Loans or the amount of the Eurodollar Rate
Loans to be continued (subject to the limits set forth below) and

40









 








the Interest Period to be applicable to such Eurodollar Rate Loans. Subject to the terms and
conditions contained herein, three (3) Business Days after receipt by Administrative and Collateral
Agent of such a request from Administrative Borrower, such Eurodollar Rate Loans shall be made,
such Prime Rate Loans shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans
shall continue, as the case may be, provided, that, (i) no Default or Event of Default shall exist
or have occurred and be continuing, (ii) no party hereto shall have sent any notice of termination
or, if applicable, non-renewal of this Agreement, (iii) Borrowers shall have complied with such
customary procedures as are established by Administrative and Collateral Agent and specified by
Administrative and Collateral Agent to Administrative Borrower from time to time for requests by
Administrative Borrower for Eurodollar Rate Loans, (iv) no more than six (6) Interest Periods may
be in effect at any one time and no more than two (2) Interest Periods that are fourteen (14) day
Interests Periods may be in effect at any one time, (v) the aggregate amount of all Eurodollar Rate
Loans outstanding must be in an amount not less than Ten Million Dollars ($10,000,000) or an
integral multiple of One Million Dollars ($1,000,000) in excess thereof and (vi) Administrative and
Collateral Agent and Revolving Loan Lenders shall have determined that the Interest Period or
Adjusted Eurodollar Rate is available to such Lender and can be readily determined as of the date
of the request for such Eurodollar Rate Loan by Administrative Borrower. Any request by
Administrative Borrower for Eurodollar Rate Loans or to convert Prime Rate Loans to Eurodollar Rate
Loans or to continue any existing Eurodollar Rate Loans shall be irrevocable. Notwithstanding
anything to the contrary contained herein, Administrative and Collateral Agent, Revolving Loan
Lenders and Reference Bank shall not be required to purchase United States Dollar deposits in the
London interbank market or other applicable Eurodollar Rate market to fund any Eurodollar Rate
Loans, but the provisions hereof shall be deemed to apply as if Administrative and Collateral
Agent, Revolving Loan Lenders and Reference Bank had purchased such deposits to fund the Eurodollar
Rate Loans.




          (c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate Loans upon the last
day of the applicable Interest Period, unless Administrative and Collateral Agent has received and
approved a request to continue such Eurodollar Rate Loan at least three (3) Business Days prior to
such last day in accordance with the terms hereof. Any Eurodollar Rate Loans shall, at
Administrative and Collateral Agent’s option, upon notice by Administrative and Collateral Agent to
Administrative Borrower, convert to Prime Rate Loans in the event that this Agreement shall
terminate or, if applicable, not be renewed. Borrowers shall pay to Administrative and Collateral
Agent, for the benefit of Lenders, upon demand by Administrative and Collateral Agent to
Administrative Borrower (or Administrative and Collateral Agent may, at its option, charge any loan
account of any Borrower) any amounts required to compensate any Lender, the Reference Bank or any
Participant with any Lender for any loss (including loss of anticipated profits), cost or expense
incurred by such Person, as a result of the conversion of Eurodollar Rate Loans to Prime Rate Loans
pursuant to any of the foregoing, provided that such demand is made within 180 days of the
incurrence of such loss, costs or expenses. At the request of Administrative Borrower,
Administrative and Collateral Agent shall provide to Administrative Borrower all available
supporting documentation with respect to such loss, cost or expense.




          (d) Interest shall be payable by Borrowers to Administrative and Collateral Agent, for the
benefit of Lenders monthly in arrears not later than the first day of each calendar month and shall
be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed. The
interest rate on non-contingent Obligations (other than Eurodollar Rate

41









 








Loans) shall increase or decrease by an amount equal to each increase or decrease in the Prime
Rate effective on the first day of the month after any change in such Prime Rate is announced based
on the Prime Rate in effect on the last day of the month in which any such change occurs.




          (e) No agreements, conditions, provisions or stipulations contained in this Agreement or any
of the other Financing Agreements or any Event of Default, or the exercise by Administrative and
Collateral Agent or any Lender of the right to accelerate the payment or the maturity of all or any
portion of the Obligations, or the exercise by Administrative and Collateral Agent or any Lender of
any option whatsoever contained in this Agreement or any of the other Financing Agreements, or the
prepayment by Borrowers of any of the Obligations, or the occurrence of any event or contingency
whatsoever, shall entitle Administrative and Collateral Agent and Lenders to contract for, charge
or receive, in any event, interest exceeding the Maximum Interest Rate. In no event shall
Borrowers be obligated to pay interest exceeding such Maximum Interest Rate. All agreements,
conditions or stipulations, if any, which may in any event or contingency whatsoever operate to
bind, obligate or compel Borrowers to pay a rate of interest exceeding the Maximum Interest Rate
shall be without binding force or effect, at law or in equity, to the extent of the excess of
interest over such Maximum Interest Rate. In the event any interest is contracted for, charged or
received in excess of the Maximum Interest Rate (“Excess”), each Borrower and each
Guarantor acknowledges and stipulates that any such contract, charge or receipt shall be the result
of an accident and bona fide error, and that any Excess received by Administrative
and Collateral Agent or any Lender shall be applied, first, to the payment of the then outstanding
and unpaid principal hereunder; second, to the payment of the other Obligations then outstanding
and unpaid; and third, returned to Borrowers, it being the intent of the parties hereto not to
enter at any time into a usurious or otherwise illegal relationship. Each Borrower and each
Guarantor recognizes that, with fluctuations in the rate of interest set forth in this Section 3.1
of this Agreement and the Maximum Interest Rate, such an unintentional result could inadvertently
occur. By the execution of this Agreement, each Borrower and each Guarantor agrees that (i) the
credit or return of any Excess shall constitute the acceptance by such Borrower of such Excess, and
(ii) no Borrower or Guarantor shall seek or pursue any other remedy, legal or equitable, against
any Agent or any Lender, based in whole or in part upon contracting for, charging or receiving of
any interest in excess of the Maximum Interest Rate. For the purpose of determining whether or not
any Excess has been contracted for, charged or received by any Agent or any Lender, all interest at
any time contracted for, charged or received by any Agent or any Lender in connection with this
Agreement or any of the other Financing Agreements shall be amortized, prorated, allocated and
spread during the entire term of this Agreement in accordance with the amounts outstanding from
time to time hereunder and the Maximum Interest Rate from time to time in effect in order to
lawfully charge the maximum amount of interest permitted under applicable law.




     3.2 Changes in Laws and Increased Costs of Loans.



          (a) If after the date hereof, either (i) any change in, or in the interpretation of, any law
or regulation is introduced, including, without limitation, with respect to reserve requirements,
applicable to any Agent, any Lender or any banking or financial institution from whom any Agent or
any Lender borrows funds or obtains credit (a “Funding Bank”) other than any change in, or
in the interpretation of any Tax and any Excluded Taxes, or (ii) a Funding Bank, any Agent or any
Lender complies with any future guideline or request from any central

42









 








bank or other Governmental Authority or (iii) a Funding Bank, any Agent or any Lender
determines that the adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the interpretation or
administration thereof has or would have the effect described below, or a Funding Bank, any Agent
or any Lender complies with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable agency, and in the case
of any event set forth in this clause (iii), such adoption, change or compliance has or would have
the direct or indirect effect of reducing the rate of return on such Agent’s or such Lender’s
capital as a consequence of its obligations hereunder to a level below that which such Agent or
such Lender could have achieved but for such adoption, change or compliance (taking into
consideration the Funding Bank’s, such Agent’s or such Lender’s policies with respect to capital
adequacy) by an amount deemed by such Agent or such Lender to be material, and the result of any of
the foregoing events described in clauses (i), (ii) or (iii) is or results in an increase in the
cost to any Agent or any Lender of funding or maintaining the Loans, then Borrowers and Guarantors
shall from time to time upon demand by Administrative and Collateral Agent, for itself or the
applicable Lender, pay to Administrative and Collateral Agent, for itself or the applicable Lender,
additional amounts sufficient to indemnify Agents or the applicable Lender against such increased
cost on an after-tax basis (after taking into account applicable deductions and credits in respect
of the amount indemnified), provided that such demand is made within 180 days of the incurrence of
such loss, costs or expenses. A certificate as to the amount of such increased cost shall be
submitted to Administrative Borrower by Administrative and Collateral Agent and shall be
conclusive, absent manifest error.




          (b) If prior to the first day of any Interest Period, (i) Administrative and Collateral Agent
shall have determined in good faith (which determination shall be conclusive and binding upon
Borrowers and Guarantors) that, by reason of circumstances affecting the relevant market, adequate
and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period,
(ii) Administrative and Collateral Agent determines that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly reflect the cost to
Administrative and Collateral Agent and/or the Lenders of making or maintaining Eurodollar Rate
Loans during such Interest Period, or (iii) Dollar deposits in the principal amounts of the
Eurodollar Rate Loans to which such Interest Period is to be applicable are not generally available
in the London interbank market, Administrative and Collateral Agent shall give telecopy or
telephonic notice thereof to Administrative Borrower as soon as practicable thereafter, and will
also give prompt written notice to Administrative Borrower when such conditions no longer exist.
If such notice is given (A) any Eurodollar Rate Loans requested to be made on the first day of such
Interest Period shall be made as Prime Rate Loans, (B) any Loans that were to have been converted
on the first day of such Interest Period to or continued as Eurodollar Rate Loans shall be
converted to or continued as Prime Rate Loans and (C) each outstanding Eurodollar Rate Loan shall
be converted, on the last day of the then-current Interest Period thereof, to Prime Rate Loans.
Until such notice has been withdrawn by Administrative and Collateral Agent, no further Eurodollar
Rate Loans shall be made or continued as such, nor shall Borrowers have the right to convert Prime
Rate Loans to Eurodollar Rate Loans.




          (c) Notwithstanding any other provision herein, if the adoption of or any change in any law,
treaty, rule or regulation or final, non-appealable determination of an

43









 








arbitrator or a court or other Governmental Authority or in the interpretation or application
thereof occurring after the date hereof shall make it unlawful for Administrative and Collateral
Agent or any Lender to make or maintain Eurodollar Rate Loans as contemplated by this Agreement,
(i) Administrative and Collateral Agent shall promptly give written notice of such circumstances to
Administrative Borrower (which notice shall be withdrawn whenever such circumstances no longer
exist), (ii) the commitment of such Lender hereunder to make Eurodollar Rate Loans, continue
Eurodollar Rate Loans as such and convert Prime Rate Loans to Eurodollar Rate Loans shall forthwith
be canceled and, until such time as it shall no longer be unlawful for Administrative and
Collateral Agent and/or such Lender to make or maintain Eurodollar Rate Loans, such Lender shall
then have a commitment only to make a Prime Rate Loan when a Eurodollar Rate Loan is requested and
(iii) Loans of such Lender then outstanding as Eurodollar Rate Loans, if any, shall be converted
automatically to Prime Rate Loans on the respective last days of the then current Interest Periods
with respect to such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Rate Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, Borrowers and Guarantors shall pay to Administrative and
Collateral Agent, for the benefit of the Lenders, such amounts, if any, as may be required pursuant
to Section 6.3(c) below.




          (d) Borrowers and Guarantors shall indemnify and hold harmless Administrative and Collateral
Agent and each Lender from any loss or expense which Administrative and Collateral Agent or any
Lender may sustain or incur as a consequence of (i) default by Borrowers in making a borrowing of,
conversion into or extension of Eurodollar Rate Loans after Administrative Borrower has given a
notice requesting the same in accordance with the provisions of this Agreement, (ii) default by
Borrowers in making any prepayment of a Eurodollar Rate Loan after Administrative Borrower has
given a notice thereof in accordance with the provisions of this Agreement, and (iii) the making of
a prepayment of Eurodollar Rate Loans on a day which is not the last day of an Interest Period with
respect thereto. With respect to Eurodollar Rate Loans, such indemnification may include an amount
equal to the excess, if any, of (A) the amount of interest which would have accrued on the amount
so prepaid, or not so borrowed, converted or extended, for the period from the date of such
prepayment or of such failure to borrow, convert or extend to the last day of the applicable
Interest Period (or, in the case of a failure to borrow, convert or extend, the Interest Period
that would have commenced on the date of such failure) in each case at the applicable rate of
interest for such Eurodollar Rate Loans provided for herein over (B) the amount of interest
(as reasonably determined by Administrative and Collateral Agent) which would have accrued to
Lenders on such amount by placing such amount on deposit for a comparable period with leading banks
in the interbank Eurodollar market. This covenant shall survive the termination or non-renewal of
this Agreement and the payment of the Obligations.




          (e) If any Borrower or any Guarantor is required to pay additional amounts to any Lender
pursuant to Section 3.2(a) hereof that increase the effective lending rate of such Lender with
respect to its share of the Loans to greater than one-eighth (1/8%) percent in excess of the
percentage of the effective lending rate of the other Lenders, then such Lender shall use
reasonable efforts (consistent with legal and regulatory restrictions) to change the jurisdiction
of its lending office with respect to making Eurodollar Rate Loans so as to eliminate any such
additional payment by Borrowers and Guarantors which may thereafter accrue, if such change in the
judgment of such Lender is not otherwise disadvantageous to such Lender. In the event that

44









 








any one or more Lenders, pursuant to Section 3.2(a) hereof, incur any increased costs (other
than increased costs to the extent such increased costs are not a recurring cost) for which any
such Lender demands compensation pursuant to Section 3.2(a) hereof which increases the effective
lending rate of such Lender with respect to its share of the Loans to greater than one-eighth
(1/8%) percent in excess of the percentage of the effective lending rate of the other Lenders and
such Lender has not mitigated such costs within sixty (60) days after receipt by such Lender from
Administrative Borrower of a written notice that such Lender’s effective lending rate has so
exceeded the effective lending rate of the other Lenders, then and in any such event, Borrowers may
substitute another financial institution which is an Eligible Transferee acceptable to
Administrative and Collateral Agent for such Lender to assume the Revolving Loan Commitment of such
Lender and to purchase the Loans of such Lender, without recourse to or warranty by, or expense to,
such Lender for a purchase price equal to the outstanding principal amount of the Loans owing to
such Lender plus any accrued but unpaid interest on such Loans and accrued but unpaid fees and
other amounts in respect of such Lender’s Revolving Loan Commitment and share of the Loans (other
than any prepayment penalty or other premiums). Upon such purchase such Lender shall no longer be
a party hereto or have any rights or benefits hereunder (except for rights or benefits that such
Lender would retain hereunder and under the other Financing Agreements upon payment in full of all
of the Obligations) and the replacement Lender shall succeed to the rights and benefits, and shall
assume the obligations, of such replaced Lender hereunder and thereunder. Administrative and
Collateral Agent and Lenders shall cooperate with Borrowers to amend the Financing Agreements to
reflect such substitution. In no event may Borrowers replace a Lender that is also an Agent or an
issuer of a Letter of Credit Accommodation.




     3.3 Fees. In addition to any other fees provided for herein or in any other Financing
Agreement, Borrowers agree to pay to Administrative and Collateral Agent:



          (a) for the benefit of the parties specified therein, the fees and other amounts set forth in
the Fee Letter in the amounts and at the times specified therein; and




          (b) for the ratable benefit of the Revolving Loan Lenders, payable on the first day of each
month in arrears while this Agreement is in effect and for so long thereafter as any of the
Obligations are outstanding, an unused line fee at a rate equal to one-quarter of one percent
(0.25%) per annum calculated upon the amount by which the Revolving Loan Limit exceeds the average
daily principal balance of the outstanding Revolving Loans and Letter of Credit Accommodations
during the immediately preceding month, or part thereof.




SECTION 4. CONDITIONS PRECEDENT AND SUBSEQUENT




     4.1 Conditions Precedent to Effectiveness of this Agreement. Each of the following is
a condition precedent to the effectiveness of this Agreement and to this Agreement amending and
restating the Original Loan Agreement in its entirety:



          (a) Administrative and Collateral Agent shall have received, in form and substance reasonably
satisfactory to Administrative and Collateral Agent, all releases, terminations and such other
documents as Administrative and Collateral Agent may request to evidence and effectuate the
termination of all existing liens and security interests (other than

45









 








those of Administrative and Collateral Agent or any other liens permitted under Section 9.8
hereof) with respect to the assets of each Borrower and each Guarantor, including, but not limited
to, UCC and PPSA termination statements for all such UCC and PPSA financing statements previously
filed by any Person with respect to any Borrower or any Guarantor;




          (b) Administrative and Collateral Agent shall have received all UCC financing statements and
PPSA filings reasonably required by Administrative and Collateral Agent, each duly authorized or
executed (as applicable) by each Borrower and each Guarantor, and Administrative and Collateral
Agent shall have received searches reflecting the filing of all such UCC financing statements and
PPSA filings, indicating that a valid, perfected, first-priority (under both the UCC and PPSA) lien
on the Collateral has been granted to Administrative and Collateral Agent, for itself and the
ratable benefit of the Lenders and the Bank Product Providers;




          (c) all requisite corporate action and proceedings in connection with this Agreement and the
other Financing Agreements shall be reasonably satisfactory in form and substance to Administrative
and Collateral Agent, and Administrative and Collateral Agent shall have received all information
and copies of all documents, including records of requisite corporate action and proceedings which
Administrative and Collateral Agent may have reasonably requested in connection therewith, such
documents where requested by Administrative and Collateral Agent or its counsel to be certified by
appropriate corporate officers or Governmental Authority (and including a copy of the certificate
of incorporation of each Borrower and each Guarantor certified by the Secretary of State (or
equivalent Governmental Authority) which shall set forth the same complete corporate name of each
Borrower and each Guarantor as is set forth herein and such document as shall set forth the
organizational identification number of such Borrower or such Guarantor, if one is issued in its
jurisdiction of incorporation);




          (d) Administrative and Collateral Agent shall have received, in form and substance reasonably
satisfactory to Administrative and Collateral Agent, all consents, waivers, acknowledgments and
other agreements from third persons which Administrative and Collateral Agent may deem necessary or
desirable in order to permit, protect and perfect Administrative and Collateral Agent’s security
interests in and liens upon the Collateral or to effectuate the provisions or purposes of this
Agreement and the other Financing Agreements, including, without limitation, Collateral Access
Agreements by owners and lessors of leased premises of each Borrower and each Guarantor, by
warehouses at which any Collateral is located and from bailees or other third parties who may from
time to time be in possession or control of any portion of the Collateral;




          (e) Administrative and Collateral Agent shall have received, in form and substance reasonably
satisfactory to Administrative and Collateral Agent, Deposit Account Control Agreements by and
among Administrative and Collateral Agent, each Borrower and each Guarantor, as the case may be,
and each bank where such Borrower (or Guarantor) has a deposit account (including, without
limitation, the Blocked Accounts), in each case, duly authorized, executed and delivered by such
bank and such Borrower or such Guarantor (or Administrative and Collateral Agent shall be the
bank’s customer with respect to such deposit account as Administrative and Collateral Agent may
specify);




46









 








          (f) Administrative and Collateral Agent shall have received evidence, in form and substance
satisfactory to Administrative and Collateral Agent, that Administrative and Collateral Agent, for
itself and the ratable benefit of the Lenders and the Bank Product Providers, has valid perfected
and first priority security interests in and liens upon the Collateral and any other property which
is intended to be security for the Obligations or the liability of any Borrower or any Guarantor in
respect thereof, subject only to the security interests and liens permitted herein or in the other
Financing Agreements;




          (g) Administrative and Collateral Agent shall have received and reviewed lien and judgment
search results for the jurisdiction of incorporation or organization of each Borrower (other than
BlueLinx) and each Guarantor, the jurisdiction of the chief executive office of each Borrower
(other than BlueLinx) and each Guarantor and all U.S. and Canadian jurisdictions in which assets of
each Borrower (other than BlueLinx) and each Guarantor are located, which search results shall be
in form and substance satisfactory to Administrative and Collateral Agent;




          (h) Administrative and Collateral Agent shall have received, in form and substance reasonably
satisfactory to them, patent and trademark security agreements executed by each Borrower and each
Guarantor (to the extent not previously provided in connection with the Original Loan Agreement) in
favor of Administrative and Collateral Agent with regard to all patents, trademarks and rights
related thereto held by any Borrower or any Guarantor;




          (i) Administrative and Collateral Agent shall have received, in form and substance reasonably
satisfactory to them, an amended and restated intercompany subordination agreement duly executed by
Borrowers, Guarantors, and each of their respective Subsidiaries;




          (j) Administrative and Collateral Agent shall have received evidence of insurance and loss
payee endorsements required hereunder and under the other Financing Agreements, in form and
substance reasonably satisfactory to Administrative and Collateral Agent, and certificates of such
required insurance policies and/or endorsements naming Administrative and Collateral Agent as loss
payee and/or additional insured, as applicable, under such required insurance policies;




          (k) Administrative and Collateral Agent shall have received, in form and substance
satisfactory to Administrative and Collateral Agent, the opinion letter of counsel to each Borrower
and each Guarantor with respect to the Financing Agreements and the security interests and liens of
Administrative and Collateral Agent with respect to the Collateral and such other matters as
Administrative and Collateral Agent may request;




          (l) Administrative and Collateral Agent shall have received originals of the shares of the
stock certificates representing all of the issued and outstanding shares of the Capital Stock of
each Borrower and each Guarantor (other than BlueLinx) and owned by any Borrower or any Guarantor,
in each case together with stock powers duly executed in blank with respect thereto;




47









 








          (m) Administrative and Collateral Agent shall have received, in form and substance
satisfactory to Administrative and Collateral Agent, the Term Notes duly executed by Borrowers;




          (n) Administrative and Collateral Agent shall have received, in form and substance
satisfactory to Administrative and Collateral Agent, the amended and restated Fee Letter duly
executed by the Borrowers;




          (o) Administrative and Collateral Agent shall have received, in form and substance
satisfactory to Administrative and Collateral Agent, an amended and restated stock pledge
agreement, duly executed by BlueLinx;




          (p) Administrative and Collateral Agent shall have received, in form and substance
satisfactory to Administrative and Collateral Agent, a general continuing guaranty, duly executed
by BFH1, BFH2, BLX1 and BLX2;




          (q) Administrative and Collateral Agent shall have received, in form and substance
satisfactory to Administrative and Collateral Agent, a stock pledge agreement, duly executed by
BFH1 and BFH2;




          (r) the other Financing Agreements and all instruments and documents hereunder and thereunder
shall have been duly executed and delivered to Administrative and Collateral Agent, in form and
substance satisfactory to Administrative and Collateral Agent.




     4.2 Conditions Precedent to All Revolving Loans and Letter of Credit Accommodations.
Each of the following is an additional condition precedent to Lenders (or Administrative and
Collateral Agent on behalf of Lenders) making Revolving Loans and/or providing Letter of Credit
Accommodations to Borrowers, including the initial Revolving Loans and Letter of Credit
Accommodations and any future Revolving Loans and Letter of Credit Accommodations:



          (a) all representations and warranties contained herein and in the other Financing Agreements
shall be true and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of the making of each such Loan
or providing each such Letter of Credit Accommodation and after giving effect thereto, except to
the extent that such representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate in all material
respects on and as of such earlier date);




          (b) no law, regulation, order, judgment or decree of any Governmental Authority shall exist,
and no action, suit, investigation, litigation or proceeding shall be pending or threatened in any
court or before any arbitrator or Governmental Authority, which purports to enjoin, prohibit,
restrain or otherwise adversely condition (i) the making of the Revolving Loans or providing the
Letter of Credit Accommodations, or (ii) the consummation of the transactions contemplated pursuant
to the terms hereof or the other Financing Agreements;




          (c) no Material Adverse Change shall have occurred; and




48









 








          (d) no Default or Event of Default shall exist or have occurred and be continuing on and as of
the date of the making of such Loan or providing each such Letter of Credit Accommodation and after
giving effect thereto.




SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST




     5.1 Grant of Security Interest. To secure payment and performance of all Obligations,
each Borrower and each Guarantor hereby grants to Administrative and Collateral Agent, for itself
and the ratable benefit of the Lenders and the Bank Product Providers, a continuing security
interest in, a lien upon, and a right of set off against, and hereby collaterally assigns to
Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank
Product Providers, as security, all personal property and trade fixtures and interests in personal
property and trade fixtures of each Borrower and each Guarantor, whether now owned or hereafter
acquired or existing, and wherever located (together with all other collateral security for the
Obligations at any time granted to or held or acquired by Agent or any Lender, collectively, the
“Collateral”), including:



          (a) all Accounts;




          (b) all general intangibles, including, without limitation, all Intellectual Property;




          (c) all goods, including, without limitation, Inventory and Equipment;




          (d) all trade fixtures;




          (e) all chattel paper (including all tangible and electronic chattel paper);




          (f) all instruments (including all promissory notes);




          (g) all documents;




          (h) all deposit accounts;




          (i) all letters of credit, banker’s acceptances and similar instruments and including all
letter-of-credit rights;




          (j) all supporting obligations and all present and future liens, security interests, rights,
remedies, title and interest in, to and in respect of Receivables and other Collateral, including
(i) rights and remedies under or relating to guaranties, contracts of suretyship, letters of credit
and credit and other insurance related to the Collateral, (ii) rights of stoppage in transit,
replevin, repossession, reclamation and other rights and remedies of an unpaid vendor, lienor or
secured party, (iii) goods described in invoices, documents, contracts or instruments with respect
to, or otherwise representing or evidencing, Receivables or other Collateral, including returned,
repossessed and reclaimed goods, and (iv) deposits by and property of account debtors or other
persons securing the obligations of account debtors;




49









 








          (k) all (i) investment property (including securities, whether certificated or uncertificated,
securities accounts, security entitlements, commodity contracts or commodity accounts) and (ii)
monies, credit balances, deposits and other property of any Borrower or any Guarantor now or
hereafter held or received by or in transit to any Agent, any Lender or any of their respective
Affiliates or at any other depository or other institution from or for the account of any Borrower
or any Guarantor, whether for safekeeping, pledge, custody, transmission, collection or otherwise;




          (l) all commercial tort claims, including, without limitation, those identified on
Schedule 5.2(g) hereto;




          (m) to the extent not otherwise described above, all Receivables;




          (n) all Records; and




          (o) all products and proceeds of the foregoing, in any form, including insurance proceeds and
all claims against third parties for loss or damage to or destruction of or other involuntary
conversion of any kind or nature of any or all of the other Collateral.



Notwithstanding anything to the contrary set forth in Section 5.1 hereof, the types or items of
Collateral shall not include (x) any rights or interest in any contract, license or license
agreement covering personal property of any Borrower or any Guarantor, so long as under the terms
of such contract, license or license agreement, or applicable law with respect thereto, the grant
of a security interest or lien therein to Administrative and Collateral Agent is prohibited and
such prohibition has not been waived or the consent of the other party to such contract, license or
license agreement has not been obtained or a lawful waiver of such prohibition under applicable law
has not been obtained; provided, that, the foregoing exclusion shall in no way be
construed to apply if (i) any such prohibition is unenforceable under Sections 9-406, 9-407 or
9-408 of the UCC or other applicable law or (ii) any such property constitutes or relates to a
portion of the Borrowing Base at any time reported by Borrowers to Administrative and Collateral
Agent; (y) stock of a CFC or any assets of a CFC except to the extent such stock does not exceed
65% of the Voting Stock of a CFC which is a direct Subsidiary of any Borrower or any Guarantor; (z)
any application to register any trademark, service mark or other mark (i) prior to the filing under
applicable law of a verified statement of use (or the equivalent) for such trademark or service
mark or (ii) the granting of a security interest in which would be prohibited by applicable law.




     5.2 Perfection of Security Interests.



          (a) Each Borrower and each Guarantor irrevocably and unconditionally authorizes Administrative
and Collateral Agent (or its agent) to file at any time and from time to time such financing
statements with respect to the Collateral naming Administrative and Collateral Agent or its
designee as the secured party and such Borrower or such Guarantor as debtor, as Administrative and
Collateral Agent may require, and including any other information with respect to such Borrower or
such Guarantor or otherwise required by part 5 of Article 9 of the Uniform Commercial Code of such
jurisdiction as Administrative and Collateral Agent may determine or under the PPSA, together with
any amendment and continuations with respect thereto, which authorization shall apply to all
financing statements filed on, prior to or after the

50









 








date hereof. Each Borrower and each Guarantor hereby ratifies and approves all financing
statements naming Administrative and Collateral Agent or its designee as secured party and such
Borrower or such Guarantor as debtor with respect to the Collateral (and any amendments with
respect to such financing statements) filed by or on behalf of Administrative and Collateral Agent
prior to the date hereof and ratifies and confirms the authorization of Administrative and
Collateral Agent to file such financing statements (and amendments, if any). Each Borrower and
each Guarantor hereby authorizes Administrative and Collateral Agent to adopt on behalf of such
Borrower or such Guarantor any symbol required for authenticating any electronic filing. In the
event that the description of the collateral in any financing statement naming Administrative and
Collateral Agent or its designee as the secured party and any Borrower or any Guarantor as debtor
includes assets and properties of such Borrower or such Guarantor that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing Agreements or otherwise,
the filing of such financing statement shall nonetheless be deemed authorized by such Borrower or
such Guarantor to the extent of the Collateral included in such description and it shall not render
the financing statement ineffective as to any of the Collateral or otherwise affect the financing
statement as it applies to any of the Collateral. In no event shall any Borrower or any Guarantor
at any time file, or permit or cause to be filed, any correction statement or termination statement
with respect to any financing statement (or amendment or continuation with respect thereto) naming
Administrative and Collateral Agent or its designee as secured party and any Borrower or any
Guarantor as debtor. Upon request, Administrative and Collateral Agent shall provide
Administrative Borrower with copies of all financing statements filed by Administrative and
Collateral Agent hereunder.




          (b) No Borrower or Guarantor has any chattel paper (whether tangible or electronic) or
instruments as of the date hereof in excess of $2,500,000 in any one case or $5,000,000 in the
aggregate, except as set forth on Schedule 5.2(b) hereto. In the event that any Borrower
or any Guarantor shall be entitled to or shall receive any chattel paper or instruments in excess
of $2,500,000 in any one case or $5,000,000 in the aggregate or after the date hereof, or, if an
Event of Default shall then exist, if any Borrower or any Guarantor shall be entitled to or shall
receive chattel paper or instruments in any amount which has not previously been delivered to
Administrative and Collateral Agent, Borrowers and Guarantors shall promptly notify Administrative
and Collateral Agent thereof in writing. Promptly upon the receipt thereof by or on behalf of any
Borrower or any Guarantor (including by any agent or representative), such Borrower or such
Guarantor shall deliver, or cause to be delivered to Administrative and Collateral Agent, all such
tangible chattel paper and instruments, accompanied by such instruments of transfer or assignment
duly executed in blank as Administrative and Collateral Agent may from time to time specify, in
each case except as Administrative and Collateral Agent may otherwise agree. At Administrative and
Collateral Agent’s option, each Borrower and each Guarantor shall, or Administrative and Collateral
Agent may at any time on behalf of any Borrower or any Guarantor, cause the original of any such
instrument or chattel paper to be conspicuously marked in a form and manner acceptable to
Administrative and Collateral Agent with the following legend referring to chattel paper or
instruments as applicable: “This [chattel paper] [instrument] is subject to the security interest
of Wachovia Bank, National Association, as Administrative and Collateral Agent, and any sale,
transfer, assignment or encumbrance of this [chattel paper] [instrument] violates the rights of
such secured party.”




51









 








          (c) In the event that any Borrower or any Guarantor shall at any time hold or acquire an
interest in any electronic chattel paper or any “transferable record” (as such term is defined in
Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section
16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction), such
Borrower or such Guarantor shall promptly notify Administrative and Collateral Agent thereof in
writing. Promptly upon Administrative and Collateral Agent’s request, such Borrower or such
Guarantor shall take, or cause to be taken, such actions as Administrative and Collateral Agent may
reasonably request to give Administrative and Collateral Agent control of such electronic chattel
paper under Section 9-105 of the UCC and control of such transferable record under Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be,
Section 16 of the Uniform Electronic Transactions Act, as in effect in such jurisdiction.




          (d) No Borrower or Guarantor has any deposit accounts as of the date hereof, except as set
forth in the Information Certificate. No Borrower or Guarantor shall, directly or indirectly,
after the date hereof open, establish or maintain any deposit account unless each of the following
conditions is satisfied: (i) Administrative and Collateral Agent shall have received not less than
five (5) Business Days prior written notice of the opening or establishing of such account which
notice shall specify, in reasonable detail and specificity acceptable to Administrative and
Collateral, the name of the account, the owner of the account, the name and address of the bank at
which such account is to be opened or established, the individual at such bank with whom such
Borrower or such Guarantor is dealing and the purpose of the account, (ii) the bank where such
account is opened or maintained shall constitute an Eligible Transferee or otherwise be reasonably
acceptable to Administrative and Collateral Agent, and (iii) on or before the opening of such
deposit account, such Borrower or such Guarantor shall, as Administrative and Collateral Agent may
specify, either (A) deliver to Administrative and Collateral Agent a Deposit Account Control
Agreement with respect to such deposit account duly authorized, executed and delivered by such
Borrower or such Guarantor and the bank at which such deposit account is opened and maintained or
(B) arrange for Administrative and Collateral Agent, for itself and the ratable benefit of the
Lenders and the Bank Product Providers, to become the customer of the bank with respect to the
deposit account on terms and conditions acceptable to Administrative and Collateral Agent. The
terms of this Section 5.2(d) shall not apply to deposit accounts specifically and exclusively used
for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of
any Borrower’s or any Guarantor’s or any of their respective Subsidiaries’ salaried employees.




          (e) No Borrower or Guarantor owns or holds, directly or indirectly, beneficially or as record
owner or both, any investment property, as of the date hereof, or have any investment account,
securities account, commodity account or other similar account with any bank or other financial
institution or other securities intermediary or commodity intermediary as of the date hereof, in
each case except as set forth in the Information Certificate.




               (i) In the event that any Borrower or any Guarantor shall be entitled to or shall at any time
after the date hereof hold or acquire any certificated securities that constitute Collateral, such
Borrower or such Guarantor shall promptly endorse, assign and deliver the same to Administrative
and Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in
blank as Administrative and Collateral Agent may from time to time



52









 







specify. If any securities that constitute Collateral, now or hereafter acquired by such
Borrower or such Guarantor are uncertificated and are issued to such Borrower or such Guarantor or
its nominee directly by the issuer thereof, such Borrower or such Guarantor shall immediately
notify Administrative and Collateral Agent thereof in writing and shall, as Administrative and
Collateral Agent may specify, either (A) cause the issuer to agree to comply with instructions from
Administrative and Collateral Agent as to such securities, without further consent of any Borrower
or any Guarantor or such nominee, or (B) arrange for Administrative and Collateral Agent, for
itself and the ratable benefit of the Lenders and the Bank Product Providers, to become the
registered owner of the securities.



               (ii) No Borrower or Guarantor shall, directly or indirectly, after the date hereof open,
establish or maintain any investment account, securities account, commodity account or any other
similar account (other than a deposit account) with any securities intermediary or commodity
intermediary unless each of the following conditions is satisfied: (A) Administrative and
Collateral Agent shall have received not less than five (5) Business Days prior written notice of
the opening or establishing of such account which notice shall specify, in reasonable detail and
reasonably specificity acceptable to Administrative and Collateral Agent, the name of the account,
the owner of the account, the name and address of the securities intermediary or commodity
intermediary at which such account is to be opened or established, the individual at such
intermediary with whom such Borrower or such Guarantor is dealing and the purpose of the account,
(B) the securities intermediary or commodity intermediary (as the case may be) where such account
is opened or maintained shall constitute an Eligible Transferee or otherwise be reasonably
acceptable to Administrative and Collateral Agent, and (C) on or before the opening of such
investment account, securities account or other similar account with a securities intermediary or
commodity intermediary, such Borrower or such Guarantor shall, as Administrative and Collateral
Agent may specify, either (1) execute and deliver, and cause to be executed and delivered to
Administrative and Collateral Agent, an Investment Property Control Agreement with respect thereto
duly authorized, executed and delivered by such Borrower or such Guarantor and such securities
intermediary or commodity intermediary or (2) arrange for Administrative and Collateral Agent, for
itself and the ratable benefit of the Lenders and the Bank Product Providers, to become the
entitlement holder with respect to such investment property on terms and conditions acceptable to
Administrative and Collateral Agent.



          (f) No Borrower or Guarantor is the beneficiary of or otherwise entitled to any right to
payment under any letter of credit, banker’s acceptance or similar instrument as of the date
hereof, except as set forth on Schedule 5.2(f) hereto. In the event that any Borrower or
any Guarantor shall be entitled to or shall receive any right to payment under any letter of
credit, banker’s acceptance or any similar instrument, whether as beneficiary thereof or otherwise
after the date hereof, such Borrower or such Guarantor shall promptly notify Administrative and
Collateral Agent thereof in writing. Such Borrower or such Guarantor shall, if requested by
Administrative and Collateral Agent, either (i) deliver, or cause to be delivered to Administrative
and Collateral Agent, with respect to any such letter of credit, banker’s acceptance or similar
instrument, the written agreement of the issuer and any other nominated person obligated to make
any payment in respect thereof (including any confirming or negotiating bank), in form and
substance reasonably satisfactory to Administrative and Collateral Agent, consenting to the
assignment of the proceeds of the letter of credit by such Borrower or such Guarantor to
Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and the

53









 








Bank Product Providers, and agreeing to make all payments thereon directly to Administrative
and Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank Product
Providers, or as Administrative and Collateral Agent may otherwise direct or (ii) cause
Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank
Product Providers, to become, at Borrowers’ expense, the transferee beneficiary of the letter of
credit, banker’s acceptance or similar instrument (as the case may be).




          (g) No Borrower or Guarantor has any commercial tort claims as of the date hereof, except as
set forth on Schedule 5.2(g) hereto. In the event that any Borrower or any Guarantor shall
at any time after the date hereof have any commercial tort claims for an amount in excess of
$3,500,000 in any one case or in the aggregate, or, if an Event of Default exists and any Borrower
or any Guarantor has any commercial tort claims not previously reported to Administrative and
Collateral Agent, such Borrower or Guarantor shall promptly notify Administrative and Collateral
Agent thereof in writing, which notice shall (i) set forth in reasonable detail the basis for and
nature of such commercial tort claim and (ii) include the express grant by such Borrower or such
Guarantor to Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders
and the Bank Product Providers, of a security interest in such commercial tort claim (and the
proceeds thereof). In the event that such notice does not include such grant of a security
interest, the sending thereof by such Borrower or such Guarantor to Administrative and Collateral
Agent shall be deemed to constitute a grant of security interest therein to Administrative and
Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers.
Upon the sending of such notice, any commercial tort claim described therein shall constitute part
of the Collateral and shall be deemed included therein. Without limiting the authorization of
Administrative and Collateral Agent provided in Section 5.2(a) hereof or otherwise arising by the
execution by such Borrower or such Guarantor of this Agreement or any of the other Financing
Agreements, Administrative and Collateral Agent is hereby irrevocably authorized from time to time
and at any time to file such financing statements naming Administrative and Collateral Agent or its
designee as secured party and such Borrower or such Guarantor as debtor, or any amendments to any
financing statements, covering any such commercial tort claim as Collateral. In addition, each
Borrower and each Guarantor shall promptly upon Administrative and Collateral Agent’s request,
execute and deliver, or cause to be executed and delivered, to Administrative and Collateral Agent
such other agreements, documents and instruments as Administrative and Collateral Agent may
reasonably require in connection with such commercial tort claim.




          (h) No Borrower or Guarantor has any goods, documents of title or other Collateral in the
custody, control or possession of a third party as of the date hereof, except as set forth in the
Information Certificate. In the event that any goods, documents of title or other Collateral of
any Borrower or any Guarantor are at any time after the date hereof in the custody, control or
possession of any other person not referred to in an Information Certificate or otherwise disclosed
to Administrative and Collateral Agent in writing pursuant to the terms of this Agreement, such
Borrower or such Guarantor shall promptly notify Administrative and Collateral Agent thereof in
writing. During the existence of an Event of Default, promptly upon Administrative and Collateral
Agent’s request, such Borrower and such Guarantor shall deliver to Administrative and Collateral
Agent a Collateral Access Agreement duly authorized, executed and delivered by such person and such
Borrower or such Guarantor, and with respect to any Inventory on consignment with any Person, if
requested by Administrative and Collateral Agent,

54









 








such Borrower or such Guarantor shall take all actions reasonably requested by Administrative
and Collateral Agent to protect such Borrower’s or such Guarantor’s and Administrative and
Collateral Agent’s interests in such Inventory, including filing UCC-1 or PPSA Financing Statements
as to such consignment (with such UCC-1 or PPSA Financing Statements listing Administrative and
Collateral Agent as the assignee) and sending notices of such consignment to such consignee’s
creditors.




          (i) Each Borrower and each Guarantor shall take any other actions reasonably requested by
Administrative and Collateral Agent from time to time to cause the attachment, perfection and first
priority of, and the ability of Administrative and Collateral Agent and the Lenders to enforce, the
security interests of Administrative and Collateral Agent in any and all of the Collateral,
including, without limitation, (i) executing, delivering and, where appropriate, filing financing
statements and amendments relating thereto under the UCC, PPSA or other applicable law, to the
extent, if any, that any Borrower’s or any Guarantor’s signature thereon is required therefor, (ii)
causing Administrative and Collateral Agent’s name, for itself and in its capacity as agent for
Lenders, to be noted as secured party on any certificate of title for a titled good if such
notation is a condition to attachment, perfection or priority of, or ability of Administrative and
Collateral Agent to enforce, the security interest of Administrative and Collateral Agent and the
Lenders in such Collateral, (iii) complying with any provision of any statute, regulation or treaty
of the United States or Canada as to any Collateral if compliance with such provision is a
condition to attachment, perfection or priority of, or ability of Administrative and Collateral
Agent and the Lenders to enforce, the security interests of Administrative and Collateral Agent and
the Lenders in such Collateral, and (iv) obtaining the consents and approvals of any Governmental
Authority or third party, including, without limitation, any consent of any licensor, lessor or
other person obligated on Collateral, and taking all actions required by any earlier versions of
the UCC, PPSA or by other law, as applicable in any relevant jurisdiction.




SECTION 6. COLLECTION AND ADMINISTRATION




     6.1 Borrowers’ Loan Accounts. Administrative and Collateral Agent shall maintain one
or more loan accounts on its books in which shall be recorded (a) all Loans, other Obligations and
the Collateral, (b) all payments made by or on behalf of any Borrower or any Guarantor and (c) all
other appropriate debits and credits as provided in this Agreement, including fees, charges, costs,
expenses and interest. All entries in such loan accounts shall be made in accordance with
Administrative and Collateral Agent’s customary practices as in effect from time to time.



     6.2 Statements. Administrative and Collateral Agent shall render to Administrative
Borrower each month a statement setting forth the balance in Borrowers’ loan account maintained by
Administrative and Collateral Agent for Borrowers pursuant to the provisions of this Agreement,
including principal, interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Administrative and Collateral Agent but shall, absent manifest errors or
omissions, be considered correct and deemed accepted by Borrowers and Guarantors and conclusively
binding upon Borrowers and Guarantors as an account stated except to the extent that Administrative
and Collateral Agent receives a written notice from Administrative Borrower of any specific
exceptions of Administrative Borrower



55









 







thereto within thirty (30) days after the date such statement has been mailed by
Administrative and Collateral Agent. Until such time as Administrative and Collateral Agent shall
have rendered to Administrative Borrower a written statement as provided above, the balance in any
Borrower’s loan account shall be presumptive evidence of the amounts due and owing to Agents and
Lenders by Borrowers and Guarantors.



     6.3 Collection of Accounts.



          (a) Borrowers shall establish and maintain, at its expense, blocked accounts or lockboxes and
related blocked accounts (in either case, “Blocked Accounts”), as Administrative and
Collateral Agent may specify, with such banks as are reasonably acceptable to Administrative and
Collateral Agent into which Borrowers shall promptly deposit and direct their respective account
debtors to directly remit all payments on Receivables and all payments constituting proceeds of
Inventory or other Collateral in the identical form in which such payments are made, whether by
cash, check or other manner. Borrowers shall deliver, or cause to be delivered to Administrative
and Collateral Agent, a Deposit Account Control Agreement duly authorized, executed and delivered
by each bank where a Blocked Account is maintained as provided in Section 5.2 hereof or at any time
and from time to time Administrative and Collateral Agent, for itself and the ratable benefit of
the Lenders and the Bank Product Providers, may become bank’s customer with respect to the Blocked
Accounts and promptly upon Administrative and Collateral Agent’s request, Borrowers shall execute
and deliver such agreements or documents as Administrative and Collateral Agent may require in
connection therewith. Notwithstanding anything to the contrary contained herein or in any Deposit
Account Control Agreement relating to a Blocked Account, Administrative and Collateral Agent shall
not issue to any bank at which a Blocked Account is maintained a notice of sole control or other
such instruction providing that the funds in such deposit accounts are to be automatically on each
Business Day be remitted directly to the Payment Account and that Borrowers are not permitted to
access or otherwise direct such funds unless either (i) an Event of Default or a Default with
respect to non-payment of the Obligations has occurred or (ii) Excess Availability is less than
$40,000,000; provided, that, if either (x) such Event of Default is subsequently
waived in accordance with the terms of this Agreement or such Default did not mature into an Event
of Default or (y) Modified Adjusted Excess Availability is greater than $40,000,000 at all times
thereafter for a period of 60 consecutive days and no Event of Default or Default with respect to
non-payment of the Obligations has occurred, Administrative and Collateral Agent shall promptly
rescind such notice of sole control or other such instructions (any such period during which the
Blocked Accounts are subject to the sole control of Administrative and Collateral Agent and
Borrowers are not permitted to access the Blocked Accounts is referred to herein is a “Blocked
Account Activation Period”). Unless a Blocked Account Activation Period shall exist, Borrowers
shall be permitted to access and direct the transfer of funds in the Blocked Accounts. Each
Borrower and each Guarantor agrees that, during any Blocked Account Activation Period, all payments
made to such Blocked Accounts or other funds received and collected by Administrative and
Collateral Agent or any Lender, whether in respect of the Receivables, as proceeds of Inventory or
other Collateral or otherwise shall be treated as payments to Administrative and Collateral Agent
and Lenders in respect of the Obligations and therefore shall constitute the property of
Administrative and Collateral Agent and Lenders to the extent of the then outstanding Obligations.




56









 








          (b) For purposes of calculating the amount of the Loans available to Borrowers, payments will
be applied (conditional upon final collection) to the Obligations on the Business Day of receipt by
Administrative and Collateral Agent of immediately available funds in the Payment Account provided
such payments and notice thereof are received in accordance with Administrative and Collateral
Agent’s usual and customary practices as in effect from time to time and within sufficient time to
credit Borrowers’ loan accounts on such day, and if not, then on the next Business Day. For the
purposes of calculating interest on the Obligations, during any Blocked Account Activation Period,
such payments or other funds received from the Blocked Account will be applied (conditional upon
final collection) to the Obligations on the date of receipt of immediately available funds by
Administrative and Collateral Agent in the Payment Account provided such payments or other funds
and notice thereof are received in accordance with Administrative and Collateral Agent’s usual and
customary practices as in effect from time to time and within sufficient time to credit Borrowers’
loan accounts on such day, and if not, then on the next Business Day.




          (c) If, during any Blocked Account Activation Period, any Borrower or any Guarantor receives
possession of or otherwise has control of any monies, checks, notes, drafts or any other payment
relating to and/or proceeds of Accounts or other Collateral, such Person shall hold such items as
trustee for Administrative and Collateral Agent and Lenders and shall immediately upon receipt
thereof, deposit or cause the same to be deposited in the Blocked Accounts, or remit the same or
cause the same to be remitted, in kind, to Administrative and Collateral Agent. In no event shall
the same be commingled with any Borrower’s or any Guarantor’s own funds during any Blocked Account
Activation Period. Borrowers agree to reimburse Administrative and Collateral Agent and the
Lenders on demand for any amounts owed or paid to any bank or other financial institution at which
a Blocked Account, other deposit account or investment account is established or any other bank,
financial institution or other Person involved in the transfer of funds to or from the Blocked
Accounts, any other deposit account or any investment account arising out of Administrative and
Collateral Agent’s or any Lender’s payments to or indemnification of such bank, financial
institution or other Person. The obligation of Borrowers to reimburse Administrative and
Collateral Agent and Lenders for such amounts pursuant to this Section 6.3 shall survive the
termination or non-renewal of this Agreement.




     6.4 Payments.



          (a) Borrowers shall pay all Obligations when due. Payments on Obligations shall be made by
Borrowers remitting funds to the Payment Account or, at any time when a Blocked Account Activation
Period exists, by payments and proceeds of Collateral being directly remitted to the Payment
Account as provided in Section 6.3 or such other place within the United States of America as
Administrative and Collateral Agent may designate from time to time. Administrative and Collateral
Agent shall apply payments received or collected from Borrowers or Guarantors or for the account of
Borrowers or Guarantors (including the monetary proceeds of collections or of realization upon any
Collateral) to the specific Obligation designated by such Borrower or such Guarantor in connection
with such payment so long as no Event of Default exists, and otherwise all such payments shall be
applied as follows:




57









 








               (i) So long as no Event of Default shall then exist or result from the application of such
payment:



                    (A) first, to pay in full all indemnities or expense reimbursements then due to Administrative
and Collateral Agent from Borrowers and Guarantors (other than fees);



                    (B) second, ratably to pay in full indemnities or expense reimbursements then due to any other
Agent or Lenders from Borrowers and Guarantors (other than fees);



                    (C) third, ratably to pay in full all fees payable by Borrowers under the Financing Agreements
then due;



                    (D) fourth, ratably to pay in full interest due in respect of the Loans;



                    (E) fifth, to pay or prepay principal in respect of Special Agent Advances;



                    (F) sixth, to pay principal in respect of the Revolving Loans then outstanding (whether or not
then due) until paid in full, and then to pay principal in respect of the Term Loan then
outstanding (whether or not then due) until paid in full;



                    (G) seventh, to cash collateralize any outstanding Letter of Credit Accommodations if required
under the terms of this Agreement;



                    (H) eighth, to pay any Obligations due in respect of the Bank Products; and



                    (I) ninth, to pay any other Obligations then due, in such order and manner as Administrative
and Collateral Agent determines; or



               (ii) If an Event of Default shall then exist or will result from the application of such
payment:



                    (A) first, to pay in full the expenses of Administrative and Collateral Agent for the
collection and enforcement of the Obligations and for the protection, preservation or sale,
disposition or other realization upon the Collateral, including all expenses, liabilities and
advances (including Special Agent Advances) incurred or made by or on behalf of Administrative and
Collateral Agent, in connection therewith (including reasonable attorneys’ fees and legal expenses
and other expenses of Administrative and Collateral Agent);



                    (B) second, to pay all Obligations, other than any Obligations related to the Bank Products,
until paid in full, in cash or other immediately available funds, in such order and manner as
Administrative and Collateral Agent shall elect in its discretion (including cash collateral for
any outstanding Letter of Credit Accommodations in accordance with the terms of this Agreement);



58









 





                    (C) third, to pay all Obligations related to the Bank Products, or provide cash collateral
therefor up to the amount of the Bank Products Reserve,



                    (D) fourth, to pay all remaining Obligations related to the Bank Products, and



                    (E) fifth, ratably to pay in full all other Obligations.



          (b) Notwithstanding anything to the contrary contained in this Agreement:




               (i) should any payment or distribution on security or instrument or proceeds thereof be
received by a Lender other than in accordance with this Section 6.4, such Lender shall receive and
hold the same in trust, for the benefit of Administrative and Collateral Agent, the Lenders and the
Bank Product Providers, and shall forthwith deliver the same to Administrative and Collateral Agent
(together with any endorsement or assignment of such Lender where necessary), for application by
Administrative and Collateral Agent to the Obligations in accordance with the terms of this Section
6.4;



               (ii) unless so directed by a Borrower, Administrative and Collateral Agent shall not apply any
payments which it receives to any Revolving Loans that are Eurodollar Rate Loans except on the
expiration date of the Interest Period applicable to any such Revolving Loans that are Eurodollar
Rate Loans and if payments are received or collected from any Borrower that otherwise would be
applied to Eurodollar Rate Loans, provided no Event of Default or Blocked Account Activation Period
exists, Administrative Borrower may instruct Administrative and Collateral Agent to remit such
funds to such Borrower, otherwise, such payments shall be held by Administrative and Collateral
Agent and shall bear interest at the Federal Funds Rate per annum commencing on the second Business
Day following the date such payments are received or collected from such Borrower and continuing
through the date such payments are applied to the Obligations, which shall be upon the expiration
of the first Interest Period after receipt or collection of such payments, to the extent of the
principal amount of the applicable Eurodollar Rate Loan or otherwise, in Administrative and
Collateral Agent’s sole discretion, remitted to such Borrower; and



               (iii) to the extent Borrowers use any proceeds of the Loans to acquire rights in or the use of
any Collateral or to repay any Indebtedness used to acquire rights in or the use of any Collateral,
payments in respect of the Obligations shall be deemed applied first to the Obligations arising
from Loans that were not used for such purposes and second to the Obligations arising from Loans
the proceeds of which were used to acquire rights in or the use of any Collateral in the
chronological order in which Borrowers acquired such rights or use.



          (c) At Administrative and Collateral Agent’s option, all principal, interest, fees, costs,
expenses and other charges provided for in this Agreement or the other Financing Agreements may be
charged directly to the loan accounts of Borrowers and Guarantors. Borrowers and Guarantors shall
make all payments to Administrative and Collateral Agent and the Lenders on the Obligations free
and clear of, and without deduction or withholding for or on account of, any setoff, counterclaim,
defense, duties, taxes (subject to the limitations provided for in Section 6.5 hereof), levies,
imposts, fees, deductions, withholding, restrictions or

59









 








conditions of any kind. If after receipt of any payment of, or proceeds of Collateral applied
to the payment of, any of the Obligations, Administrative and Collateral Agent or any Lender is
required to surrender or return such payment or proceeds to any Person for any reason, then the
Obligations intended to be satisfied by such payment or proceeds shall be reinstated and continue
and this Agreement shall continue in full force and effect as if such payment or proceeds had not
been received by such Person. Borrowers and Guarantors shall be liable to pay to Administrative
and Collateral Agent and Lenders, and each does hereby indemnify and hold Administrative and
Collateral Agent and each Lender harmless for the amount of any payments or proceeds surrendered or
returned, to the extent such payments were required to be made under the terms of this Agreement.
This Section 6.4 shall remain effective notwithstanding any contrary action which may be taken by
Administrative and Collateral Agent or any Lender in reliance upon such payment or proceeds. This
Section 6.4 shall survive the payment of the Obligations and the termination or non-renewal of this
Agreement.




          (d) Except as otherwise provided with respect to Defaulting Lenders, aggregate principal
payments and interest payments shall be apportioned ratably among the Lenders (according to their
applicable Pro Rata Shares) and payments of the fees (other than fees designated for Administrative
and Collateral Agent’s sole and separate account and fees otherwise payable in accordance with the
Fee Letter) shall, as applicable, be apportioned ratably among the Lenders.




     6.5 Taxes.



          (a) Any and all payments by or on behalf of any Borrower or any Guarantor hereunder and under
any other Financing Agreement shall be made in accordance with Section 6.4 and free and clear of
and without deduction or withholding for or on account of any and all Taxes, excluding: (i) income
taxes imposed on the net income of any Lender (or any transferee or assignee of such Lender,
including any Participant, any such transferee or assignee being referred to as a
“Transferee”), (ii) franchise or similar taxes imposed on or determined by reference to the
net income of any Lender (or Transferee or Participant), in each case by the United States of
America or by the jurisdiction under the laws of which such Lender (or Transferee or Participant)
(A) is organized or any political subdivision thereof or (B) has its applicable lending office
located and (iii) to the extent that such tax results from a change in the circumstances of the
Lender (or any Transferee or Participant), including a change in the residence, place of
organization, or principal place of business of the Lender (or any Transferee or Participant), or
change in the branch or lending office of the Lender (or Transferee or Participant) (collectively,
“Excluded Taxes”). In addition, Borrowers and Guarantors agree to pay to the relevant
Governmental Authority, in accordance with applicable law, any Other Taxes.




          (b) If any Borrower or any Guarantor shall be required by law to deduct or withhold in respect
of any Taxes or Other Taxes from or in respect of any sum payable hereunder to any Agent or any
Lender, then:




               (i) the sum payable shall be increased as necessary so that after making all required
deductions and withholdings (including deductions and withholdings applicable to additional sums
payable under this Section) such Lender (or Administrative and



60









 







Collateral Agent on behalf of such Lender) receives an amount equal to the sum it would have
received had no such deductions or withholdings been made;



               (ii) such Borrower or such Guarantor shall make such deductions and withholdings; and



               (iii) such Borrower or such Guarantor shall pay the full amount deducted or withheld to the
relevant taxing authority or other authority in accordance with applicable law.



          (c) Within thirty (30) days after the date of any payment by any Borrower or any Guarantor of
Taxes or Other Taxes, such Person shall furnish to Administrative and Collateral Agent the original
or a certified copy of a receipt evidencing payment thereof, or other evidence of payment
reasonably satisfactory to Administrative and Collateral Agent.




          (d) Each Borrower and each Guarantor will indemnify Administrative and Collateral Agent and
each Lender (or Transferee) for the full amount of Taxes and Other Taxes paid by Administrative and
Collateral Agent or such Lender (or Transferee, as the case may be). If Administrative and
Collateral Agent or such Lender (or Transferee) receives a refund in respect of any Taxes or Other
Taxes for which Lender (or Transferee) has received payment from any Borrower or any Guarantor
hereunder, so long as no Default or Event of Default shall exist or have occurred and be
continuing, Administrative and Collateral Agent or such Lender (as the case may be) shall credit to
the loan account of Borrowers the amount of such refund plus any interest received (but only to the
extent of indemnity payments made, or additional amounts paid, by any Borrower or any Guarantor
under this Section 6.5 with respect to the Taxes or Other Taxes giving rise to such refund). If a
Lender (or any Transferee) claims a tax credit in respect of any Taxes for which it has been
indemnified by any Borrower or any Guarantor pursuant to this Section 6.5, such Lender will apply
the amount of the actual dollar benefit received by such Lender as a result thereof, as reasonably
calculated by Lender and net of all expenses related thereto, to the Loans. If Taxes or Other
Taxes were not correctly or legally asserted, Administrative and Collateral Agent or such Lender
shall, upon Administrative Borrower’s request and at Borrowers’ expense, provide such documents to
Borrowers as Administrative Borrower may reasonably request, to enable Borrowers to contest such
Taxes or Other Taxes pursuant to appropriate proceedings then available to Borrowers (so long as
providing such documents shall not, in the good faith determination of Administrative and
Collateral Agent, have a reasonable likelihood of resulting in any liability of Administrative and
Collateral Agent or any Lender).




          (e) In the event any Lender or Transferee is organized under the laws of a jurisdiction other
than the United States, any State thereof or the District of Columbia (a “Non-U.S. Lender”)
such Non-U.S. Lender shall deliver to Adminsitrative Borrower two (2) accurate, complete and signed
copies of (i) either United States Internal Revenue Service Form W-8ECI or successor form or Form
W-8BEN or successor form, or (ii) in the case of a Non-U.S. Lender claiming exemption from U.S.
Federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of
“portfolio interest”, a Form W-8BEN, or any subsequent versions thereof or successors thereto (and,
if such Non-U.S. Lender delivers a Form W-8BEN, a certificate representing that such Non-U.S.
Lender is not a bank for purposes of Section 881(c)




61









 




of the Code, is not a ten (10%) percent shareholder (within the meaning of Section
881(c)(3)(B) of the Code) of any Borrower or any Guarantor and is not a controlled foreign
corporation described in Section 881(c)(3)(C) of the Code), properly completed and duly executed by
such Non-U.S. Lender claiming complete exemption from U.S. Federal withholding tax on payments by
any Borrower or any Guarantor under this Agreement and the other Financing Agreements. Such forms
shall be delivered by any Non-U.S. Lender on or before the date it becomes a party to this
Agreement (or, in the case of a Transferee that is a Participant, on or before the date such
Participant becomes a Transferee hereunder) and on or before the date, if any, such Non-U.S. Lender
changes its applicable lending office by designating a different lending office (a “New Lending
Office”). In addition, a Non-U.S. Lender shall promptly deliver such new forms as are required
by the Code or the regulations issued thereunder to claim exemption from, or reduction in the rate
of, U.S. Federal withholding tax upon the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Lender. Notwithstanding any other provision of this Section 6.5(e), a
Non-U.S. Lender shall not be required to deliver any form pursuant to this Section 6.5(e) that such
Non-U.S. Lender is not legally able to deliver. Each Lender (or Transferee) that is a “United
States person,” as that term is defined under Section 7701(a)(30) of the Code, other than a Lender
(or Transferee) that may be treated as an exempt recipient based on the indicators described in
Treasury Regulation Section 1.6049-4(c)(1)(ii), agrees that it will, no later than the date it
becomes a party to this Agreement, deliver to Administrative Borrower and Administrative and
Collateral Agent two (2) accurate, complete and signed copies of United States Internal Revenue
Service Form W-9 or successor form stating that it is entitled to an exemption from United States
backup withholding tax. Notwithstanding the foregoing, any failure by any Lender to deliver any
tax form set forth above shall not excuse or otherwise affect any Borrower’s or any Guarantor’s
performance of its obligations under this Agreement except as set forth in Section 6.5(f)(ii)
below.




          (f) Borrowers and Guarantors shall not be required to indemnify any Lender or to pay any
additional amounts to any Lender, in respect of United States Federal withholding tax pursuant to
subsections (a) or (d) above to the extent that (i) the obligation to withhold amounts with respect
to United States Federal withholding tax was applicable on the date such Non-U.S. Lender became a
party to this Agreement (or, in the case of a Transferee, on the date such Person became a
Transferee hereunder) or, with respect to payments to a New Lending Office, the date such Non-U.S.
Lender designated such New Lending Office with respect to a Loan; provided, that,
this subsection (f) shall not apply (A) to any Transferee or New Lending Office that becomes a
Transferee or New Lending Office as a result of an assignment, participation, transfer or
designation made at the request of any Borrower or any Guarantor and (B) to the extent the
indemnity payment or additional amounts any Transferee, acting through a New Lending Office, would
be entitled to receive (without regard to this subsection (f)) do not exceed the indemnity payment
or additional amounts that the person making the assignment, participation or transfer to such
Transferee making the designation of such New Lending Office, would have been entitled to receive
in the absence of such assignment, participation, transfer or designation or (ii) the obligation to
pay such additional amounts would not have arisen but for a failure by such Lender to comply with
the provisions of subsection (e) above.




     6.6 Authorization to Make Loans. Administrative and Collateral Agent and each Lender
is authorized to provide Loans based upon telephonic or other instructions received from anyone
purporting to be an officer of any Borrower or other authorized person or, at the




62









 






discretion of Administrative and Collateral Agent or any Lender, if such Loans are
necessary to satisfy any Obligations. All requests for Loans hereunder shall specify the date on
which the requested Loan is to be made (or in the case of Letter of Credit Accommodations,
established), which day shall be a Business Day, and the amount of the requested Loan. Requests
received after 12:00 noon New York time on any day shall be deemed to have been made as of the
opening of business on the immediately following Business Day. Subject to all applicable
provisions of the Agreement regarding the conditions to providing Loans, requests for Loans
received prior to 12:00 noon New York time on a Business Day shall be made by the close of business
on such Business Day. All Loans under this Agreement shall be conclusively presumed to have been
made to, and at the request of and for the benefit of, Borrowers when deposited to the credit of
any Borrower or otherwise disbursed or established in accordance with the instructions of any
Borrower or in accordance with the terms and conditions of this Agreement.




     6.7 Use of Proceeds. All Loans made or provided by or on behalf of Lenders to
Borrowers pursuant to the provisions hereof shall be used by Borrowers only for general operating,
working capital and other proper corporate purposes of Borrowers not otherwise prohibited by the
terms hereof. None of the proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security or for the purposes of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin security or for any
other purpose which might cause any of the Loans to be considered a “purpose credit” within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System, as amended.



     6.8 Pro Rata Treatment. Except to the extent otherwise provided in this Agreement:
(a) the making and conversion of Revolving Loans shall be made among the Revolving Loan Lenders
based on their respective Pro Rate Shares thereof, and the making of Term Loans shall be made among
the Revolving Loan Lenders based on their respective Pro Rate Shares thereof; and (b) each payment
on account of any Obligations to or for the account of one or more of Lenders in respect of any
Obligations due on a particular day shall be allocated among the Lenders entitled to such payments
based on their respective Pro Rata Shares and shall be distributed accordingly.



     6.9 Sharing of Payments, Etc.



          (a) Each Borrower and each Guarantor agrees that, in addition to (and without limitation of)
any right of setoff, banker’s lien or counterclaim any Agent or Lender may otherwise have, each
Lender shall be entitled, at its option (but subject, as among Agents and Lenders, to the
provisions of Section 6.9(b) hereof), to offset balances held by it for the account of such
Borrower or such Guarantor at any of its offices, in dollars or in any other currency, against any
principal of or interest on any Loans owed to such Lender or any other amount payable to such
Lender hereunder, that is not paid when due (regardless of whether such balances are then due to
such Borrower or such Guarantor), in which case it shall promptly notify Administrative Borrower
and Administrative and Collateral Agent thereof; provided, that, such Lender’s
failure to give such notice shall not affect the validity thereof.




          (b) If any Lender (including Administrative and Collateral Agent) shall obtain from any
Borrower or any Guarantor payment of any principal of or interest on any Loan owing




63









 







to it or
payment of any other amount under this Agreement or any other Financing Agreement through the
exercise (in accordance with the terms hereof) of any right of setoff, banker’s lien or
counterclaim or similar right or otherwise (other than from Administrative and Collateral Agent as
provided herein), and, as a result of such payment, such Lender shall have received more than its
Pro Rata Share of the principal of the Loans or more than its share of such other amounts then due
hereunder or thereunder by any Borrower or any Guarantor to such Lender than the percentage thereof
received by any other Lender, it shall promptly pay to Administrative and Collateral Agent, for the
benefit of Lenders, the amount of such excess and simultaneously purchase from such other Lenders a
participation in the Loans or such other amounts, respectively, owing to such other Lenders (or
such interest due thereon, as the case may be) in such amounts, and make such other adjustments
from time to time as shall be equitable, to the end that all Lenders shall share the benefit of
such excess payment (net of any expenses that may be incurred by such Lender in obtaining or
preserving such excess payment) in accordance with their respective Pro Rata Shares or as otherwise
agreed by Lenders. To such end all Lenders shall make appropriate adjustments among themselves (by
the resale of participation sold or otherwise) if such payment is rescinded or must otherwise be
restored.




          (c) Each Borrower and each Guarantor agrees that any Lender so purchasing a participation
pursuant to subsection (b) above (or direct interest) may exercise, in a manner consistent with
this Section, all rights of setoff, banker’s lien, counterclaim or similar rights with respect to
such participation as fully as if such Lender were a direct holder of Loans or other amounts (as
the case may be) owing to such Lender in the amount of such participation.




          (d) Nothing contained herein shall require any Lender to exercise any such right or shall
affect the right of any Lender to exercise, and retain the benefits of exercising, any such right
with respect to any other Indebtedness or obligation of any Borrower or any Guarantor. If, under
any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in
lieu of a setoff to which this Section applies, such Lender shall, to the extent practicable,
assign such rights to Administrative and Collateral Agent, for itself and the ratable benefit of
the Lenders and the Bank Product Providers, and, in any event, exercise its rights in respect of
such secured claim in a manner consistent with the rights of Lenders entitled under this Section to
share in the benefits of any recovery on such secured claim.




     6.10 Settlement Procedures.



          (a) In order to administer the Credit Facility in an efficient manner and to minimize the
transfer of funds between Administrative and Collateral Agent and Lenders, Administrative and
Collateral Agent may, subject to the terms of this Section, make available, on behalf of Lenders,
the full amount of the Loans requested or charged to any Borrower’s loan account or otherwise to be
advanced by Lenders pursuant to the terms hereof, without any requirement of prior notice to
Lenders of the proposed Loans.




          (b) With respect to all Revolving Loans made by Administrative and Collateral Agent on behalf
of Revolving Loan Lenders as provided in this Section, the amount of each Revolving Loan Lender’s
Pro Rata Share of the outstanding Revolving Loans shall be
computed weekly, and shall be adjusted upward or downward on the basis of the amount of the
outstanding Revolving Loans as of 5:00 p.m. New York time on the Business Day immediately




64









 







preceding
the date of each settlement computation; provided, that, Administrative and
Collateral Agent retains the absolute right at any time or from time to time to make the above
described adjustments at intervals more frequent than weekly, but in no event more than twice in
any week. Administrative and Collateral Agent shall deliver to each of the Revolving Loan Lenders
after the end of each week, or at such lesser period or periods as Administrative and Collateral
Agent shall determine, a summary statement of the amount of outstanding Revolving Loans for such
period (such week or lesser period or periods being hereinafter referred to as a “Settlement
Period”). If the summary statement is sent by Administrative and Collateral Agent and received
by a Revolving Loan Lender prior to 2:00 p.m. New York time, then such Revolving Loan Lender shall
make the settlement transfer described in this Section by no later than 2:00 p.m. New York time on
the next Business Day following the date of receipt. If, as of the end of any Settlement Period,
the amount of a Lender’s Pro Rata Share of the outstanding Revolving Loans is more than such
Lender’s Pro Rata Share of the outstanding Revolving Loans as of the end of the previous Settlement
Period, then such Lender shall forthwith (but in no event later than the time set forth in the
preceding sentence) transfer to Administrative and Collateral Agent by wire transfer in immediately
available funds the amount of the increase. Alternatively, if the amount of a Lender’s Pro Rata
Share of the outstanding Revolving Loans in any Settlement Period is less than the amount of such
Lender’s Pro Rata Share of the outstanding Revolving Loans for the previous Settlement Period,
Administrative and Collateral Agent shall forthwith transfer to such Lender by wire transfer in
immediately available funds the amount of the decrease. The obligation of each of the Revolving
Loan Lenders to transfer such funds and effect such settlement shall be irrevocable and
unconditional and without recourse to or warranty by Administrative and Collateral Agent. Each of
Administrative and Collateral Agent and Revolving Loan Lenders agrees to mark its books and records
at the end of each Settlement Period to show at all times the dollar amount of its Pro Rate Share
of the outstanding Revolving Loans and Letter of Credit Accommodations. Each Revolving Loan Lender
shall only be entitled to receive interest on its Pro Rata Share of the Loans to the extent such
Loans have been funded by such Lender. Because the Administrative and Collateral Agent on behalf
of Revolving Loan Lenders may be advancing and/or may be repaid Revolving Loans prior to the time
when Lenders will actually advance and/or be repaid such Revolving Loans, interest with respect to
Revolving Loans shall be allocated by Administrative and Collateral Agent in accordance with the
amount of Revolving Loans actually advanced by and repaid to each Revolving Loan Lender and the
Administrative and Collateral Agent and shall accrue from and including the date such Revolving
Loans are so advanced to but excluding the date such Revolving Loans are either repaid by Borrowers
or actually settled with the applicable Lender as described in this Section.




          (c) To the extent that Administrative and Collateral Agent has made any such amounts available
and the settlement described above shall not yet have occurred, upon repayment of any Loans by
Borrowers, Administrative and Collateral Agent may apply such amounts repaid directly to any
amounts made available by any Administrative and Collateral Agent pursuant to this Section. In
lieu of weekly or more frequent settlements, Administrative and Collateral Agent may at any time
require each Lender to provide Administrative and Collateral Agent with immediately available funds
representing its Pro Rata Share of each Loan, prior to Administrative and Collateral Agent’s
disbursement of such Loan to Borrowers. In such
event, all Loans under this Agreement shall be made by the Lenders simultaneously and
proportionately to their Pro Rata Shares. No Lender shall be responsible for any default by any




65









 







other Lender in the other Lender’s obligation to make a Loan requested hereunder nor shall the
Revolving Loan Commitment of any Revolving Loan Lender be increased or decreased as a result of the
default by any other Lender in the other Lender’s obligation to make a Loan hereunder.




          (d) If Administrative and Collateral Agent is not funding a particular Loan to Borrowers
pursuant to this Section on any day, Administrative and Collateral Agent may assume that each
Lender will make available to Administrative and Collateral Agent such Lender’s Pro Rata Share of
the Revolving Loan requested or otherwise made on such day and Administrative and Collateral Agent
may, in its discretion, but shall not be obligated to, cause a corresponding amount to be made
available to Borrowers on such day. If Administrative and Collateral Agent makes such
corresponding amount available to Borrowers and such corresponding amount is not in fact made
available to Administrative and Collateral Agent by such Lender, Administrative and Collateral
Agent shall be entitled to recover such corresponding amount on demand from such Lender together
with interest thereon for each day from the date such payment was due until the date such amount is
paid to Administrative and Collateral Agent at the interest rate provided for in Section 3.1
hereof. During the period in which such Lender has not paid such corresponding amount to
Administrative and Collateral Agent, notwithstanding anything to the contrary contained in this
Agreement or any of the other Financing Agreements, the amount so advanced by Administrative and
Collateral Agent to Borrowers shall, for all purposes hereof, be a Loan made by Administrative and
Collateral Agent for its own account. Upon any such failure by a Lender to pay Administrative and
Collateral Agent, Administrative and Collateral Agent shall promptly thereafter notify
Administrative Borrower of such failure and Borrowers shall immediately pay such corresponding
amount to Administrative and Collateral Agent for its own account. A Lender who fails to pay
Administrative and Collateral Agent its Pro Rata Share of any Loans made available by the
Administrative and Collateral Agent on such Lender’s behalf, or any Lender who fails to pay any
other amount owing to Administrative and Collateral Agent, is a “Defaulting Lender”.
Administrative and Collateral Agent shall not be obligated to transfer to a Defaulting Lender any
payments made by or on behalf of any Borrower or any Guarantor to Administrative and Collateral
Agent for the Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing
of any payments hereunder. Amounts payable to a Defaulting Lender shall instead be paid to or
retained by Administrative and Collateral Agent. Administrative and Collateral Agent may hold and,
in its discretion, re-lend to Borrowers the amount of all such payments received or retained by it
for the account of such Defaulting Lender. For purposes of voting or consenting to matters with
respect to this Agreement and the other Financing Agreements and determining Pro Rata Shares, such
Defaulting Lender shall be deemed not to be a Lender and such Defaulting Lender’s Revolving Loan
Commitment shall be deemed to be zero (0). This Section shall remain effective with respect to a
Defaulting Lender until such default is cured. The operation of this Section shall not be
construed to increase or otherwise affect the Revolving Loan Commitment of any Lender, or relieve
or excuse the performance by any Borrower or any Guarantor of their duties and obligations
hereunder.




          (e) Nothing in this Section or elsewhere in this Agreement or the other Financing Agreements
shall be deemed to require Administrative and Collateral Agent to advance funds on behalf of any
Lender or to relieve any Lender from its obligation to fulfill its
Revolving Loan Commitment hereunder or to prejudice any rights that any Borrower may have




66









 







against any Lender as a result of any default by any Lender hereunder in fulfilling its Revolving
Loan Commitment.




     6.11 Obligations Several; Independent Nature of Lenders’ Rights. The obligation of
each Lender hereunder is several, and no Lender shall be responsible for the obligation or
commitment of any other Lender hereunder. Nothing contained in this Agreement or any of the other
Financing Agreements and no action taken by the Lenders pursuant hereto or thereto shall be deemed
to constitute the Lenders to be a partnership, an association, a joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and subject to Section 12 hereof, each Lender shall be entitled to protect and
enforce its rights arising out of this Agreement and it shall not be necessary for any other Lender
to be joined as an additional party in any proceeding for such purpose.



     6.12 Appointment of Administrative Borrower as Agent for Requesting Loans and Receipts of
Loans and Statements.



          (a) Each Borrower hereby irrevocably appoints and constitutes Administrative Borrower as its
agent and attorney-in-fact to request and receive Loans and Letter of Credit Accommodations
pursuant to this Agreement and the other Financing Agreements from Administrative and Collateral
Agent or any Lender in the name or on behalf of such Borrower. Administrative and Collateral Agent
and Lenders may disburse the Loans to such bank account of Administrative Borrower or a Borrower or
otherwise make such Loans to a Borrower and provide such Letter of Credit Accommodations to a
Borrower as Administrative Borrower may designate or direct, without notice to any other Borrower
or Guarantor. Notwithstanding anything to the contrary contained herein, Administrative and
Collateral Agent may at any time and from time to time require that Loans to or for the account of
any Borrower be disbursed directly to an operating account of such Borrower.




          (b) Administrative Borrower hereby accepts the appointment by Borrowers to act as the agent
and attorney-in-fact of Borrowers pursuant to this Section 6.12. Administrative Borrower shall
ensure that the disbursement of any Loans to each Borrower requested by or paid to or for the
account of a Borrower, or the issuance of any Letter of Credit Accommodations for a Borrower
hereunder, shall be paid to or for the account of such Borrower.




          (c) Each Borrower and each Guarantor hereby irrevocably appoints and constitutes
Administrative Borrower as its agent to receive statements on account and all other notices from
Administrative and Collateral Agent and Lenders with respect to the Obligations or otherwise under
or in connection with this Agreement and the other Financing Agreements.




          (d) Any notice, election, representation, warranty, agreement or undertaking by or on behalf
of any other Borrower or any Guarantor by Administrative Borrower shall be deemed for all purposes
to have been made by such Borrower or such Guarantor, as the case may be, and shall be binding upon
and enforceable against such Borrower or such Guarantor to the same extent as if made directly by
such Borrower or such Guarantor.




67









 








          (e) No purported termination of the appointment of Administrative Borrower as agent as
aforesaid shall be effective, except after ten (10) days’ prior written notice to Administrative
and Collateral Agent.




SECTION 7. COLLATERAL REPORTING AND COLLATERAL COVENANTS




     7.1 Collateral Reporting.



          (a) Borrowers shall provide Administrative and Collateral Agent with the following documents
in a form satisfactory to Administrative and Collateral Agent:




               (i) on a monthly basis, a schedule of sales made, credits issued and cash received;



               (ii) as soon as possible after the end of each month (but in any event within ten (10) days
after the end thereof), on a monthly basis, (A) perpetual inventory reports, (B) inventory reports
by location and category (including identifying Inventory at locations owned and operated by third
parties, inventory held by any Borrower or any Guarantor on consignment and Inventory of any
Borrower or any Guarantor held by third Persons on consignment), (C) agings of accounts payable
(and including information indicating the status of payments to owners and lessors of the leased
premises of any Borrower or any Guarantor) and (D) agings of accounts receivable (together with a
reconciliation to the previous month’s aging and general ledger);



               (iii) weekly, a detailed calculation of the Borrowing Base; provided, however,
if at any time Excess Availability is less then $70,000,000 and until such time as Excess
Availability has thereafter been $70,000,000 or more for 5 consecutive Business Days, Borrowers
shall provide Administrative and Collateral Agent with a detailed calculation of the Borrowing Base
on a daily basis.



               (iv) upon Administrative and Collateral Agent’s reasonable request, (A) copies of customer
statements, purchase orders, sales invoices and credit memos, remittance advices and reports, and
copies of deposit slips and bank statements, (B) copies of shipping and delivery documents and (C)
copies of purchase orders, invoices and delivery documents for Inventory and Equipment acquired by
any Borrower or any Guarantor; and



               (v) such additional, interim or other reports, schedules and calculations (and backup
documentation therefor) with regard to the Collateral as Administrative and Collateral Agent may
reasonably request from time to time.



          (b) If any Borrower’s or any Guarantor’s records or reports of the Collateral are prepared or
maintained by an accounting service, contractor, shipper or other agent, such Borrower and such
Guarantor hereby irrevocably authorizes such service, contractor, shipper or agent to deliver such
records, reports, and related documents to Administrative and Collateral Agent as it may reasonably
request and, at any time an Event of Default exists, to follow Administrative and Collateral
Agent’s instructions with respect to further services at such time.




68









 








     7.2 Accounts Covenants.



          (a) Borrowers shall notify Administrative and Collateral Agent promptly of: (i) any material
delay in any Borrower’s performance of any of its material obligations to any account debtor or the
assertion of any claims, offsets, defenses or counterclaims by any account debtor, or any disputes
with account debtors, or any settlement, adjustment or compromise thereof in excess of $1,500,000
in any one case or $2,500,000 in the aggregate at any one time; (ii) all material adverse
information relating to the financial condition of any account debtor known to any Borrower or any
Guarantor; and (iii) any event or circumstance which, to any Borrower’s or any Guarantor’s
knowledge would cause Administrative and Collateral Agent to consider any then existing Accounts
reported as part of the Borrowing Base as no longer constituting Eligible Accounts. No credit,
discount, allowance or extension or agreement for any of the foregoing shall be granted by any
Borrower or any Guarantor to any account debtor without Administrative and Collateral Agent’s
consent, except as generally consistent with the past practices of the Purchased Business or as set
forth in the schedules delivered to Administrative and Collateral Agent pursuant to Section 7.1(a)
above. So long as no Event of Default exists or has occurred and is continuing, Borrowers and
Guarantors shall have the exclusive right to settle, adjust or compromise any claim, offset,
counterclaim or dispute with any account debtor. At any time that an Event of Default exists,
Administrative and Collateral Agent shall, at its option, notify Administrative Borrower that it
intends to, and thereafter shall, have the exclusive right to settle, adjust or compromise any
claim, offset, counterclaim or dispute with account debtors or grant any credits, discounts or
allowances.




          (b) With respect to each Account: (i) the amounts shown on any invoice delivered to
Administrative and Collateral Agent or schedule thereof delivered to Administrative and Collateral
Agent shall be true and complete, (ii) no payments shall be made thereon except payments
immediately deposited or remitted to a Collection Account or otherwise delivered to Administrative
and Collateral Agent pursuant to the terms of this Agreement, (iii) in the case of Eligible
Accounts there shall be no setoffs, deductions, contras, defenses, counterclaims or disputes
existing or asserted with respect thereto except those generally consistent with the past practices
of the Purchased Business or as reported to Administrative and Collateral Agent in accordance with
the terms of this Agreement, and (iv) none of the transactions giving rise thereto will violate any
applicable foreign, Federal, State, Provincial or local laws or regulations, all documentation
relating thereto will be legally sufficient under such laws and regulations and all such
documentation will be legally enforceable in accordance with its terms, except as enforceability
thereof may be limited by insolvency laws affecting the rights of creditors generally.




          (c) Administrative and Collateral Agent shall have the right at any time or times (but, so
long as no Default or Event of Default shall exist, subject to reasonable intervals consistent with
Administrative and Collateral Agent’s customary practices), in the name of a nominee of
Administrative and Collateral Agent, or if Administrative and Collateral Agent shall otherwise
determine that it is necessary or desirable to do so, then in the name of Administrative and
Collateral Agent, to verify the validity, amount or any other matter relating to any Account or
other Collateral, by mail, telephone, facsimile transmission or otherwise.




69









 








     7.3 Inventory Covenants. With respect to the Inventory: (a) each Borrower and each
Guarantor shall at all times maintain inventory records reasonably satisfactory to Administrative
and Collateral Agent, keeping correct and accurate records itemizing and describing the kind, type,
quality and quantity of Inventory, such Borrower’s or such Guarantor’s cost therefor and daily
withdrawals therefrom and additions thereto; (b) Borrowers and Guarantors shall conduct a physical
count of the Inventory at least once each year (which may be done by way of a cycle count), but at
any time or times as Administrative and Collateral Agent may reasonably request during the
existence of an Event of Default, and promptly following such physical inventory shall supply
Administrative and Collateral Agent with a report in the form and with such specificity as may be
reasonably satisfactory to Administrative and Collateral Agent concerning such physical count; (c)
Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted
herein, without the prior written consent of Administrative and Collateral Agent, except for sales
of Inventory in the ordinary course of its business and except to move Inventory directly from one
location set forth or permitted herein to another such location and except for Inventory shipped
from the manufacturer thereof to such Borrower or such Guarantor which is in transit to the
locations set forth or permitted herein; (d) upon Administrative and Collateral Agent’s request,
Borrowers shall, at their expense, no more than once in any twelve (12) month period, but at any
time or times as Administrative and Collateral Agent may request on or after an Event of Default,
deliver or cause to be delivered to Administrative and Collateral Agent a full written appraisal as
to the Inventory in form, scope and methodology reasonably acceptable to Administrative and
Collateral Agent and by an appraiser acceptable to Administrative and Collateral Agent, addressed
to Administrative and Collateral Agent and Lenders and upon which Administrative and Collateral
Agent and Lenders are expressly permitted to rely; (e) Borrowers and Guarantors shall produce, use,
store and maintain the Inventory with all reasonable care and caution and in accordance with
applicable standards of any insurance and in conformity with applicable laws (including the
requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations
and orders related thereto); (f) none of the Inventory or other Collateral constitutes farm
products or the proceeds thereof; (g) Borrowers and Guarantors will hold Agents and each Lender
harmless from and indemnify each of them with respect to all liability arising from or relating to
the production, use, sale or other disposition of the Inventory unless such liability arises from
the gross negligence or willful misconduct of such Agent or Lender; (h) except as disclosed to
Administrative and Collateral Agent in writing or to the extent accounted for in the determination
of the Net Orderly Liquidation Value, Borrowers and Guarantors shall not sell Inventory to any
customer on approval, or any other basis which entitles the customer to return or may obligate any
Borrower or any Guarantor to repurchase such Inventory (excluding customary warranty terms and
returns accepted by such Borrower or such Guarantor in the ordinary course of business); (i)
Borrowers shall keep the Eligible Inventory in good and marketable condition; and (j) Borrowers and
Guarantors shall not, without prior written notice to Administrative and Collateral Agent or the
specific identification of such Inventory with respect thereto provided by Administrative Borrower
to Administrative and Collateral Agent pursuant to Section 7.1(a) hereof, acquire or accept any
Inventory on consignment or approval.



     7.4 Equipment and Real Property Covenants. With respect to the Equipment and/or Real
Property: (a) upon Administrative and Collateral Agent’s request after an Event of Default,
Borrowers shall deliver or cause to be delivered to Administrative and Collateral Agent written
appraisals as to the Equipment in form, scope and methodology acceptable to
Administrative and



70









 







Collateral Agent and by an appraiser acceptable to Administrative and
Collateral Agent, addressed to Administrative and Collateral Agent and Lenders and upon which
Administrative and Collateral Agent and Lenders are expressly permitted to rely; (b) except where
failure to do so could not reasonably be expected to cause a Material Adverse Change, each Borrower
and each Guarantor shall keep the Equipment in good order, repair, running and marketable condition
(ordinary wear and tear excepted); (c) Borrowers and Guarantors shall use the Equipment and Real
Property with all commercially reasonable care and caution and in accordance with applicable
standards of any insurance and in conformity with all applicable laws; (d) the Equipment is and
shall be used in the business of Borrowers and Guarantors and not for personal, family, household
or farming use; (e) Borrowers and Guarantors shall not remove any Equipment from the locations set
forth or permitted herein, except to the extent necessary to have any Equipment repaired or
maintained in the ordinary course of its business or to move Equipment directly from one location
set forth or permitted herein to another such location and except for the movement of motor
vehicles used by or for the benefit of such Borrower or such Guarantor in the ordinary course of
business; (f) the Equipment is now and shall remain personal property and Borrowers and Guarantors
shall not permit any of the Equipment to be or become a part of or affixed to real property; and
(g) each Borrower and each Guarantor assumes all responsibility and liability arising from the use
of the Equipment and Real Property.



     7.5 Power of Attorney. Each Borrower and each Guarantor hereby irrevocably designates
and appoints Administrative and Collateral Agent (and all Persons designated by Administrative and
Collateral Agent) as such Borrower’s or such Guarantor’s true and lawful attorney-in-fact, and
authorizes Administrative and Collateral Agent, in such Borrower’s, such Guarantor’s or
Administrative and Collateral Agent’s name, to: (a) at any time an Event of Default exists or has
occurred and is continuing (i) demand payment on Receivables or other Collateral, (ii) enforce
payment of Receivables by legal proceedings or otherwise, (iii) exercise all of such Borrower’s or
such Guarantor’s rights and remedies to collect any Receivable or other Collateral, (iv) sell or
assign any Receivable upon such terms, for such amount and at such time or times as Administrative
and Collateral Agent deems advisable, (v) settle, adjust, compromise, extend or renew an Account,
(vi) discharge and release any Receivable, (vii) prepare, file and sign such Borrower’s or such
Guarantor’s name on any proof of claim in bankruptcy or other similar document against an account
debtor or other obligor in respect of any Receivables or other Collateral, (viii) notify the post
office authorities to change the address for delivery of remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral to an address designated by
Administrative and Collateral Agent, and open and dispose of all mail addressed to such Borrower or
such Guarantor and handle and store all mail relating to the Collateral; and (ix) do all acts and
things which are necessary, in Administrative and Collateral Agent’s determination, to fulfill such
Borrower’s or such Guarantor’s obligations under this Agreement and the other Financing Agreements
and (b) at any time during a Blocked Account Activation Period or during the existence of an Event
of Default, to (i) take control in any manner of any item of payment in respect of Receivables or
constituting Collateral or otherwise received in or for deposit in the Blocked Accounts or
otherwise received by Administrative and Collateral Agent or any Lender, (ii) have access to any
lockbox or postal box into which remittances from account debtors or other obligors in respect of
Receivables or other proceeds of Collateral are sent or received, (iii) endorse such Borrower’s or
such Guarantor’s name upon any items of payment in respect of Receivables or constituting
Collateral or otherwise received by or on behalf of Administrative and Collateral Agent or any
Lender and



71









 







deposit the same in Administrative and Collateral Agent’s or a Lender’s account for
application to the Obligations, (iv) endorse such Borrower’s or such Guarantor’s name upon any
chattel paper, document, instrument, invoice, or similar document or agreement relating to any
Receivable or any goods pertaining thereto or any other Collateral, including any warehouse or
other receipts, or bills of lading and other negotiable or non-negotiable documents, (v) clear
Inventory the purchase of which was financed with Letter of Credit Accommodations through U.S.
Customs or foreign export control authorities in such Borrower’s or such Guarantor’s name,
Administrative and Collateral Agent’s name or the name of Administrative and Collateral Agent’s
designee, and to sign and deliver to customs officials powers of attorney in such Borrower’s or
such Guarantor’s name for such purpose, and to complete in such Borrower’s, such Guarantor’s or
Administrative and Collateral Agent’s name, any order, sale or transaction, obtain the necessary
documents in connection therewith and collect the proceeds thereof, (vi) sign such Borrower’s or
such Guarantor’s name on any verification of Receivables and notices thereof to account debtors or
any secondary obligors or other obligors in respect thereof. Each Borrower and each Guarantor
hereby releases Administrative and Collateral Agent and each Lender and its officers, employees and
designees from any liabilities arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result of Administrative and
Collateral Agent’s or such Lender’s own gross negligence or willful misconduct as determined
pursuant to a final non-appealable order of a court of competent jurisdiction.



     7.6 Right to Cure. Administrative and Collateral Agent may, at its option, (a) upon
reasonable prior notice to Administrative Borrower, cure any default by any Borrower or any
Guarantor under any material agreement with a third party that affects the Collateral, its value or
the ability of Administrative and Collateral Agent or any Lender to collect, sell or otherwise
dispose of the Collateral or the rights and remedies of Administrative and Collateral Agent or any
Lender therein or the ability of any Borrower or any Guarantor to perform its obligations hereunder
or under the other Financing Agreements, (b) upon reasonable prior notice to Administrative
Borrower, pay or bond on appeal any judgment entered against any Borrower or any Guarantor, (c)
after failure by any Borrower or any Guarantor to do so pursuant to the terms of this Agreement,
discharge taxes, liens, security interests or other encumbrances at any time levied on or existing
with respect to the Collateral and (d) upon reasonable prior notice to Administrative Borrower, pay
any amount, incur any expense or perform any act which, in Administrative and Collateral Agent’s
judgment, is necessary or appropriate to preserve, protect, insure or maintain the Collateral and
the rights of Administrative and Collateral Agent and Lenders with respect thereto. Administrative
and Collateral Agent and Lenders may add any amounts so expended to the Obligations and charge
Borrowers’ accounts therefor, such amounts to be repayable by Borrowers on demand. Administrative
and Collateral Agent and Lenders shall be under no obligation to effect such cure, payment or
bonding and shall not, by doing so, be deemed to have assumed any obligation or liability of any
Borrower or any Guarantor. Any payment made or other action taken by Administrative and Collateral
Agent or any Lender under this Section shall be without prejudice to any right to assert an Event
of Default hereunder and to proceed accordingly.



     7.7 Access to Premises. From time to time as reasonably requested by Administrative
and Collateral Agent, at the cost and expense of Borrowers (subject to applicable limitations
thereon set forth in this Agreement, including Section 9.20 hereof), (a) Administrative and



72









 







Collateral Agent or its designee shall have complete access to all of each
Borrower’s and each Guarantor’s premises during normal business hours and after not less than 2
Business Days’ notice to Administrative Borrower, or at any time and without notice to any Borrower
or any Guarantor if an Event of Default exists or has occurred and is continuing, for the purposes
of inspecting, verifying and auditing the Collateral and all of each Borrower’s and each
Guarantor’s books and records, including the Records, and (b) each Borrower and each Guarantor
shall promptly furnish to Administrative and Collateral Agent such copies of such books and records
or extracts therefrom as Administrative and Collateral Agent may reasonably request, and (c)
Administrative and Collateral Agent or its designee may use during normal business hours such of
any Borrower’s or any Guarantor’s personnel, equipment, supplies and premises as may be reasonably
necessary for the foregoing and if an Event of Default exists or has occurred and is continuing for
the collection of Receivables and realization of other Collateral.



SECTION 8. REPRESENTATIONS AND WARRANTIES




          Each Borrower and each Guarantor hereby represents and warrants to Agents and Lenders the
following (which shall survive the execution and delivery of this Agreement), the truth and
accuracy of which are a continuing condition to providing Loans to Borrowers:




     8.1 Corporate Existence; Power and Authority. Each Borrower and each Guarantor is
duly organized and in good standing under the laws of its state of incorporation or formation and
is duly qualified and in good standing in all states or other jurisdictions where the nature and
extent of the business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify would not cause a
Material Adverse Change. The execution, delivery and performance of this Agreement, the other
Financing Agreements and the transactions contemplated hereunder and thereunder (a) are all within
each Borrower’s and each Guarantor’s corporate powers, (b) have been duly authorized, (c) are not
in contravention of law or the terms of any Borrower’s or any Guarantor’s certificate of
incorporation or formation, by-laws, partnership agreement, operating agreement, or other
organizational documentation, or any indenture, agreement or undertaking to which such Borrower or
such Guarantor is a party or by which such Borrower or such Guarantor or its property are bound and
(d) will not result in the creation or imposition of, or require or give rise to any obligation to
grant, any lien, security interest, charge or other encumbrance upon any property of such Borrower
or such Guarantor except pursuant to the Financing Agreements. This Agreement and the other
Financing Agreements to which any Borrower or any Guarantor is a party constitute legal, valid and
binding obligations of such Borrower and such Guarantor enforceable in accordance with their
respective terms except as such enforceability may be limited by bankruptcy, insolvency, moratorium
or similar laws limiting creditors’ rights generally or by general equitable principles.



     8.2 Name; State of Organization; Chief Executive Office; Collateral Locations.



          (a) The exact legal name of each Borrower and each Guarantor is as set forth on the signature
pages of this Agreement and in the Information Certificate. No Borrower or Guarantor has, during
the five years immediately prior to the date of this Agreement, been known by or used any other
corporate or fictitious name or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any Person, or acquired
any of




73









 







its property or assets out of the ordinary course of business, except as set forth in the
Information Certificate.




          (b) Each Borrower and each Guarantor is an organization of the type and organized in the
jurisdiction set forth in the Information Certificate. The Information Certificate accurately sets
forth the organizational identification number of each Borrower and each Guarantor or accurately
states that such Borrower or such Guarantor has none and accurately sets forth the federal employer
identification number of each Borrower and each Guarantor.




          (c) The chief executive office and mailing address of each Borrower and each Guarantor and
each Borrower’s and each Guarantor’s Records concerning Accounts are located only at the address
identified as such in the Information Certificate and its only other places of business and the
only other locations of Collateral, if any, are the addresses set forth in such Information
Certificate, subject to the right of Borrowers and Guarantors to establish new locations in
accordance with Section 9.2 below. The Information Certificate correctly identifies any of such
locations which are not owned by any Borrower or any Guarantor and sets forth the owners and/or
operators thereof.




     8.3 Financial Statements. All financial statements relating to each Borrower and each
Guarantor which have been or may hereafter be delivered by any Borrower or any Guarantor to Agents
or any Lender have been prepared in accordance with GAAP (except as to any interim financial
statements, to the extent such statements are subject to normal year-end adjustments and do not
include any notes) and fairly present the financial condition and the results of operation of such
Borrower or such Guarantor as at the dates and for the periods set forth therein.



     8.4 Priority of Liens; Title to Properties. The security interests and liens granted
to Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and the
Bank Product Providers, under this Agreement and the other Financing Agreements constitute valid
and perfected first priority liens and security interests in and upon the Collateral subject only
to the liens indicated on Schedule 8.4 hereto and the other liens permitted under Section
9.8 hereof. Each Borrower and each Guarantor has good and marketable fee simple title to or valid
leasehold interests in all of its Real Property and good, valid and merchantable title to all of
its other properties and assets subject to no liens, mortgages, pledges, security interests,
encumbrances or charges of any kind, except those granted to Administrative and Collateral Agent,
for itself and the ratable benefit of the Lenders and the Bank Product Providers, and such others
as are specifically listed on Schedule 8.4 hereto or permitted under Section 9.8 hereof.



     8.5 Tax Returns. Except where failure to do so would not cause a Material Adverse
Change, each Borrower and each Guarantor has filed, or caused to be filed, in a timely manner all
tax returns, reports and declarations which are required to be filed by it. All information in
such tax returns, reports and declarations is complete and accurate in all material respects.
Except where failure to do so would not cause a Material Adverse Change, each Borrower and each
Guarantor has paid or caused to be paid all taxes due and payable or claimed due and payable in any
assessment received by it, except taxes the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to such
Borrower or such Guarantor and with respect to which adequate reserves have been set aside on
its books. Adequate provision has been made for the payment of all accrued and unpaid Federal,
State,



74









 




Provincial, county, local, foreign and other taxes whether or not yet due and payable and
whether or not disputed.




     8.6 Litigation. Except as set forth in the Information Certificate, there is no
present investigation by any Governmental Authority pending, or to the best of any Borrower’s or
any Guarantor’s knowledge threatened, against or affecting any Borrower or any Guarantor, its or
their assets or business and there is no action, suit, proceeding or claim by any Person pending,
or to the best of any Borrower’s or any Guarantor’s knowledge threatened, against any Borrower, any
Guarantor or any of its or their assets or goodwill, or against or affecting any transactions
contemplated by this Agreement, which if adversely determined against any Borrower or any Guarantor
would cause a Material Adverse Change.



     8.7 Compliance with Other Agreements and Applicable Laws. No Borrower or Guarantor is
in default under, or in violation of any of the terms of, any agreement, contract, instrument,
lease or other commitment to which it is a party or by which it or any of its assets are bound
where such default or violation could reasonably be expected to cause a Material Adverse Change,
and, except where failure to do so would not cause a Material Adverse Change, each Borrower and
each Guarantor is in compliance with all applicable provisions of laws, rules, regulations,
licenses, permits, approvals and orders of any foreign, Federal, State, Provincial or local
Governmental Authority.



     8.8 Environmental Compliance.



          (a) Except as set forth on Schedule 8.8 hereto, to the best of each Borrower’s and
each Guarantor’s knowledge, no Borrower or Guarantor or any of their respective Subsidiaries has
generated, used, stored, treated, transported, handled, disposed of or arranged for the disposal of
any Hazardous Materials, on or off its premises (whether or not owned by it) in any manner which at
any time violates any applicable Environmental Law or any license, permit, certificate, approval or
similar authorization thereunder and the operations of each Borrower, each Guarantor and each of
their respective Subsidiaries complies in all respects with all Environmental Laws and all
licenses, permits, certificates, approvals and similar authorizations thereunder except, in each
case, where such violation or non-compliance could not reasonably be expected to cause a Material
Adverse Change.




          (b) Except as set forth on Schedule 8.8 hereto, there has been no investigation,
proceeding, complaint, order, directive, claim, citation or written notice by any Governmental
Authority or any other person nor is any pending or to the best of each Borrower’s and each
Guarantor’s knowledge threatened, with respect to any material violation of the requirements of any
Environmental Law by any Borrower, any Guarantor or any Subsidiary of any Borrower or any Guarantor
or the release, spill or discharge, threatened or actual, of any Hazardous Material or the
generation, use, storage, treatment, transportation, handling or disposal of any Hazardous
Materials in material violation of any Environmental Law or any other environmental matter, which
has caused or could reasonably be expected to cause a Material Adverse Change.




          (c) To the best of each Borrower’s and each Guarantor’s knowledge, no Borrower or Guarantor or
any of their respective Subsidiaries has any material liability (contingent or otherwise) in
connection with a release, spill or discharge, threatened or actual, of





75









 







any Hazardous Materials or
the generation, use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials in material violation of any Environmental Law which has caused
or could reasonably be expected to cause a Material Adverse Change.




          (d) Each Borrower, each Guarantor and each of their respective Subsidiaries have all licenses,
permits, certificates, approvals or similar authorizations required to be obtained or filed in
connection with the operations of such Borrower, such Guarantor or such Subsidiary under any
Environmental Law where failure to obtain such permits has caused or could reasonably be expected
to cause a Material Adverse Change and all of such licenses, permits, certificates, approvals or
similar authorizations are valid and in full force and effect where failure to have such permits
has caused or could reasonably be expected to cause a Material Adverse Change.




     8.9 Employee Benefits.



          (a) Each Plan is in substantial compliance with the applicable provisions of ERISA, the Code
and other Federal or State law. Each Plan which is intended to qualify under Section 401(a) of the
Code has received or Borrowers and Guarantors will file an application to receive a favorable
determination letter from the Internal Revenue Service within the remedial amendment period
prescribed by Section 401(b) of the Code and to the best of each Borrower’s and each Guarantor’s
knowledge, nothing has occurred which would cause the loss of such qualification. Each Borrower
and each Guarantor and their respective ERISA Affiliates have made all required contributions to
any Plan subject to Section 412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code has been made with respect
to any Plan. As of December 31, 2003, the liabilities of all Plans subject to Title IV of ERISA
did not exceed the assets of all such Plans by more than $17,500,000 (determined in accordance with
the assumptions used for Plan termination by the Pension Benefit Guaranty Corporation).




          (b) There are no pending, or to the best of each Borrower’s and each Guarantor’s knowledge,
threatened, claims, actions or lawsuits, or action by any Governmental Authority, with respect to
any Plan. There has been no prohibited transaction or violation of the fiduciary responsibility
rules with respect to any Plan.




          (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Borrower,
Guarantor, or any of their respective ERISA Affiliates have incurred or reasonably expect to
incur, any material liability under Title IV of ERISA with respect to any Plan (other than premiums
due and not delinquent under Section 4007 of ERISA and any contributions to be made timely under
the Code and ERISA); (iii) no Borrower, Guarantor or any of their respective ERISA Affiliates have
incurred or reasonably expect to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a
Multiemployer Plan; and (iv) no Borrower, Guarantor or any of their respective ERISA
Affiliates have engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.




76









 








     8.10 Bank Accounts. All of the deposit accounts, investment accounts or other
accounts in the name of or used by any Borrower or any Guarantor maintained at any bank or other
financial institution are set forth in the Information Certificate of such Borrower or such
Guarantor, subject to the right of each Borrower and each Guarantor to establish new accounts in
accordance with Section 5.2 hereof.



     8.11 Intellectual Property. To the best of each Borrower’s and each Guarantor’s
knowledge, each Borrower and each Guarantor owns or licenses or otherwise has the right to use all
Intellectual Property necessary for the operation of its business as presently conducted or
proposed to be conducted. As of the date hereof, no Borrower or Guarantor has any Intellectual
Property registered, or subject to pending applications, in the United States Patent and Trademark
Office or any similar office or agency in the United States, any State thereof, any political
subdivision thereof or in any other country, other than those described in the Information
Certificate and has not granted any material written licenses with respect thereto other than as
set forth in such Information Certificate. To the best of each Borrower’s and each Guarantor’s
knowledge, no event has occurred which permits or would permit after notice or passage of time or
both, the revocation, suspension or termination of such rights. To the best of each Borrower’s and
each Guarantor’s knowledge, no slogan or other advertising device, product, process, method,
substance or other Intellectual Property or goods bearing or using any Intellectual Property
presently contemplated to be sold by or employed by such Borrower or such Guarantor infringes any
patent, trademark, servicemark, tradename, copyright, license or other Intellectual Property owned
by any other Person presently and no claim or litigation is pending or threatened in writing
against or affecting any Borrower or any Guarantor contesting its right to sell or use any such
Intellectual Property. The Information Certificate sets forth all Material Contracts of each
Borrower and each Guarantor pursuant to which any Borrower or any Guarantor has a license or other
right to use any trademarks, logos, designs, representations or other Intellectual Property owned
by another person as in effect on the date hereof and the dates of the expiration of such
agreements or other arrangements of each Borrower and each Guarantor as in effect on the date
hereof (collectively, together with such agreements or other arrangements as may be entered into by
any Borrower or any Guarantor after the date hereof, collectively, the “License Agreements”
and individually, a “License Agreement”). No trademark, servicemark or other Intellectual
Property currently used by any Borrower or any Guarantor which is owned by another person, or owned
by any Borrower or any Guarantor subject to any security interest, lien, collateral assignment,
pledge or other encumbrance in favor of any person other than Administrative and Collateral Agent,
for itself and the ratable benefit of the Lenders and the Bank Product Providers, or any other lien
or security interest permitted under this Agreement, is affixed to any Eligible Inventory, except
to the extent Administrative and Collateral Agent has received Licensor Agreement with respect
thereto or would otherwise be permitted to sell or dispose of such Inventory under applicable laws.



     8.12 Subsidiaries; Affiliates; Capitalization; Solvency.



          (a) No Borrower or Guarantor has any direct or indirect Subsidiaries or Affiliates (other than
Sponsor Portfolio Companies) and is not engaged in any joint venture or
partnership except as set forth in the Information Certificate, subject to the right of
Borrowers and Guarantors to form or acquire Subsidiaries in accordance with Section 9.10 hereof.




77









 








          (b) Each Borrower and each Guarantor is the record and beneficial owner of all of the issued
and outstanding shares of Capital Stock of each of the Subsidiaries listed in the Information
Certificate as being owned by such Borrower or such Guarantor and there are no proxies, irrevocable
or otherwise, with respect to such shares and no equity securities of any of such Subsidiaries are
or may become required to be issued by reason of any options, warrants, rights to subscribe to,
calls or commitments of any kind or nature and there are no contracts, commitments, understandings
or arrangements by which any such Subsidiary is or may become bound to issue additional shares of
it Capital Stock or securities convertible into or exchangeable for such shares.




          (c) As of the date hereof, the issued and outstanding shares of Capital Stock of each Borrower
and each Guarantor are directly and beneficially owned and held by the Persons indicated in the
Information Certificate, and in each case all of such shares have been duly authorized and are
fully paid and non-assessable, free and clear of all claims, liens, pledges and encumbrances of any
kind, except as disclosed in writing to Agents prior to the date hereof.




          (d) Each Borrower and each Guarantor is Solvent and will continue to be Solvent after the
creation of the Obligations, the security interests of Administrative and Collateral Agent, for
itself and the ratable benefit of the Lenders and the Bank Product Providers, and the other
transaction contemplated hereunder.




     8.13 Labor Disputes.



          (a) Set forth on Schedule 8.13 hereto is a list (including dates of termination) of
all collective bargaining or similar agreements between or applicable to any Borrower or any
Guarantor and any union, labor organization or other bargaining agent in respect of the employees
of any Borrower or any Guarantor on the date hereof.




          (b) There is (i) no significant unfair labor practice complaint pending against any Borrower
or any Guarantor or, to the best of any Borrower’s or any Guarantor’s knowledge, threatened against
it, before the National Labor Relations Board, and no significant grievance or significant
arbitration proceeding arising out of or under any collective bargaining agreement is pending on
the date hereof against any Borrower or any Guarantor or, to best of each Borrower’s and each
Guarantor’s knowledge, threatened against it, and (ii) no significant strike, labor dispute,
slowdown or stoppage is pending against any Borrower or any Guarantor or, to the best of each
Borrower’s and each Guarantor’s knowledge, threatened against any Borrower or any Guarantor.




     8.14 Restrictions on Subsidiaries. Except for restrictions contained in this
Agreement or any other agreement with respect to Indebtedness of any Borrower or any Guarantor
permitted hereunder as in effect on the date hereof, there are no contractual or consensual
restrictions in any Material Contract or charter document of any Borrower or any Guarantor or any
of their respective Subsidiaries which prohibit or otherwise restrict (a) the transfer of cash or
other assets (i) between any Borrower or any Guarantor and any of its or their
Subsidiaries or (ii) between any Subsidiaries of any Borrower or any Guarantor or (b) the
ability of any Borrower or any Guarantor or any of its or their Subsidiaries to incur Indebtedness
or grant security interests to



78









 




Administrative and Collateral Agent, for itself and the ratable
benefit of the Lenders and the Bank Product Providers, in the Collateral.




     8.15 Material Contracts. Schedule 8.15 hereto sets forth all Material
Contracts to which any Borrower or any Guarantor is a party or is bound as of the date hereof.
Each Borrower and each Guarantor has delivered true, correct and complete copies of such Material
Contracts to Agents on or before the date hereof. No Borrower or Guarantor is in breach of or in
default under any Material Contract and no Borrower or Guarantor has received any notice of the
intention of any other party thereto to terminate any Material Contract (except where such breach,
default or termination would not cause a Material Adverse Change).



     8.16 Payable Practices. Except as disclosed to Administrative and Collateral Agent in
writing, no Borrower or Guarantor has made any material change in the historical accounts payable
practices of the Purchased Business from those generally in effect immediately prior to the
Original Closing Date.



     8.17 Acquisition of Purchased Assets.



          (a) The Purchase Agreements and the transactions contemplated thereunder have been duly
executed, delivered and performed by BlueLinx (or its Affiliates or Subsidiaries) and, to its
knowledge, the Seller, in accordance with their terms in all material respects, including the
fulfillment (not merely the waiver, except as may be disclosed to Agents) of all conditions
precedent set forth therein and giving effect to the terms of the Purchase Agreements and the
assignments to be executed and delivered by Seller (or any of its Affiliates or Subsidiaries)
thereunder, BlueLinx acquired and has good and marketable title to the Purchased Assets, free and
clear of all claims, liens, pledges and encumbrances of any kind, except as permitted hereunder.




          (b) All actions and proceedings (other than obtaining any consents thereto where failure to do
so would not cause a Material Adverse Effect), required by the Purchase Agreements, applicable law
or regulation (including, but not limited to, compliance with the Hart-Scott-Rodino Anti-Trust
Improvements Act of 1976, as amended, and any similar laws of Canada regarding sales of assets or
combinations of business entities) have been taken and the transactions required thereunder have
been duly and validly taken and consummated.




          (c) No court of competent jurisdiction has issued any injunction, restraining order or other
order which prohibits consummation of the transactions described in the Purchase Agreements and no
governmental or other action or proceeding has, to BlueLinx’s knowledge, been threatened or
commenced, seeking any injunction, restraining order or other order which seeks to void or
otherwise modify the transactions described in the Purchase Agreements, all consents thereto from
all applicable Governmental Authorities and other third parties, except where failure to obtain
would not cause a Material Adverse Change, have been obtained and all waiting periods imposed by
applicable law with regard thereto have expired.




     (d) BlueLinx has delivered, or caused to be delivered, to Agents, true, correct and complete
copies of the Purchase Agreements. The Purchase Agreements have not been amended, supplemented,
waived or otherwise modified in any material respect without, in the



79









 




case of the Purchase
Agreements, the prior written consent of Agents if such amendment, supplement, waiver or other
modification would, as determined by the Agents in their reasonable discretion, cause a Material
Adverse Change. No material default exists under any Purchase Agreement by BlueLinx or, to
BlueLinx’s knowledge, Seller.




     8.18 Accuracy and Completeness of Information. All information furnished by or on
behalf of any Borrower or any Guarantor in writing to any Agent or any Lender in connection with
this Agreement or any of the other Financing Agreements or any transaction contemplated hereby or
thereby, including all information on the Information Certificate, is true and correct in all
material respects on the date as of which such information is dated or certified and does not,
taken as a whole, omit any material fact necessary in order to make such information not
misleading. To the extent any Borrower or any Guarantor furnishes any projections of the financial
position and results of operations of any Borrower or any Guarantor and any of their respective
Subsidiaries for, or as at the end of, certain future periods, such projections were believed at
the time furnished to be reasonable, have been or will have been prepared on a reasonable basis and
in good faith by such Borrower or such Guarantor and have been or will be based on assumptions
believed by such Borrower or such Guarantor to be reasonable at the time made and upon the best
information then reasonably available to such Borrower or such Guarantor.



     8.19 Survival of Warranties; Cumulative. All representations and warranties contained
in this Agreement or any of the other Financing Agreements shall survive the execution and delivery
of this Agreement and shall be deemed to have been made again to Agents and Lenders on the date of
each additional borrowing or other credit accommodation hereunder and shall be conclusively
presumed to have been relied on by Agents and Lenders regardless of any investigation made or
information possessed by any Agent or Lender. The representations and warranties set forth herein
shall be cumulative and in addition to any other representations or warranties which any Borrower
or any Guarantor shall now or hereafter give, or cause to be given, to any Agent or Lender.



SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS




     9.1 Maintenance of Existence.



          (a) Except as otherwise permitted under the terms of this Agreement, each Borrower and each
Guarantor shall at all times preserve, renew and keep in full, force and effect its corporate
existence and rights and franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases and contracts
necessary to carry on the business as presently or proposed to be conducted.




          (b) No Borrower or Guarantor shall change its name unless each of the following conditions is
satisfied: (i) Administrative and Collateral Agent shall have received not less than thirty (30)
days prior written notice from Administrative Borrower of such proposed change in its corporate
name, which notice shall accurately set forth the new name; and (ii)
Administrative and Collateral Agent shall have received a copy of the amendment to the
Certificate of Incorporation or Formation of such Borrower or such Guarantor providing for the




80









 







name
change certified by the Secretary of State of the jurisdiction of incorporation or organization of
such Borrower or such Guarantor as soon as it is available.




          (c) No Borrower or Guarantor shall change its chief executive office or its mailing address or
organizational identification number (or if it does not have one, shall not acquire one) unless
Administrative and Collateral Agent shall have received not less than thirty (30) days’ prior
written notice from Administrative Borrower of such proposed change, which notice shall set forth
such information with respect thereto as Administrative and Collateral Agent may require and
Administrative and Collateral Agent shall have received such agreements as Administrative and
Collateral Agent may reasonably require in connection therewith. No Borrower or Guarantor shall
change its type of organization, jurisdiction of organization or other legal structure without the
prior written consent of Administrative and Collateral Agent, such consent not to be unreasonably
withheld, conditioned or delayed.




     9.2 New Collateral Locations. Each Borrower and each Guarantor may only establish new
locations of its business or Collateral so long as such new location is within the United States of
America and provided such Borrower or such Guarantor (a) gives Administrative and Collateral Agent
thirty (30) days prior written notice of the intended opening of any such new location (or ten (10)
days prior written notice of the intended opening if such new location is acquired in connection
with a Permitted Acquisition) and (b) executes and delivers, or causes to be executed and
delivered, to Administrative and Collateral Agent such agreements, documents, and instruments as
Administrative and Collateral Agent may deem necessary or desirable to protect its interests in the
Collateral at such location; provided, however, no Borrower or Guarantor shall be
required to comply with the provisions of this Section 9.2 to the extent (x) such new location of
Collateral is within the United States of America, (y) such new location of Collateral is not
leased or otherwise controlled by any Borrower or any Guarantor and (z) if such new and un-reported
location(s) contain(s) Collateral having a value in excess of $3,750,000 for any one location or
$7,500,000 in the aggregate for all such locations, Administrative Borrower has provided
Administrative and Collateral Agent with five (5) days prior written notice of the intended opening
of such new location.



     9.3 Compliance with Laws, Regulations, Etc.



          (a) Each Borrower and each Guarantor shall, and shall cause each of its Subsidiaries to, at
all times, comply with all laws, rules, regulations, licenses, permits, approvals and orders
applicable to it and duly observe all requirements of any foreign, Federal, State or local
Governmental Authority except where failure to do so could not reasonably be expected to cause a
Material Adverse Change.




          (b) Each Borrower and each Guarantor shall give written notice to Administrative and
Collateral Agent promptly upon any Borrower’s or any Guarantor’s receipt of any notice of, or any
Borrower’s or any Guarantor’s otherwise obtaining knowledge of, (i) the occurrence of any event
involving the release, spill or discharge, threatened or actual, of any Hazardous Material in
material violation of any Environmental Law which is required by law to be reported to the
Governmental Authority having jurisdiction over such event or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or written notice
with respect to: (A) any material violation of any applicable Environmental Law by any Borrower or




81









 







any Guarantor or (B) the release, spill or discharge, threatened or actual, of any Hazardous
Material other than in the ordinary course of business and other than as permitted under any
applicable Environmental Law. Copies of all material environmental surveys, audits, assessments,
feasibility studies and results of remedial investigations conducted by or on behalf of any
Borrower or any Guarantor shall be promptly furnished, or caused to be furnished, by such Borrower
or such Guarantor to Administrative and Collateral Agent. Each Borrower and each Guarantor shall
take all reasonably prompt and appropriate action to respond to any non-compliance with any of the
Environmental Laws and shall regularly report to Administrative and Collateral Agent on material
activities or events composing such response.




          (c) Without limiting the generality of the foregoing, whenever Administrative and Collateral
Agent reasonably determines that there is material violation, or any condition which requires any
action by or on behalf of any Borrower or any Guarantor in order to avoid any violation, of any
Environmental Law which could reasonably be expected to cause a Material Adverse Change, Borrowers
shall, at Administrative and Collateral Agent’s request and Borrowers’ expense: (i) cause an
independent environmental engineer acceptable to Administrative and Collateral Agent to conduct
such tests or studies of the site where material violation or alleged material violation of such
Environmental Laws has occurred as may be appropriate and as to such material violation, prepare
and deliver to Administrative and Collateral Agent a report setting forth the results of such tests
or studies, a proposed plan for responding to any environmental problems described therein, and an
estimate of the costs thereof and (ii) provide to Administrative and Collateral Agent a
supplemental report of such engineer whenever the scope of such material violation, or such
Borrower’s or such Guarantor’s response thereto or the estimated costs thereof, shall change in any
material respect.




          (d) Each Borrower and each Guarantor shall indemnify and hold harmless Agents, Lenders and
their respective directors, officers, employees, agents, invitees, representatives, successors and
assigns, from and against any and all losses, claims, damages, liabilities, costs, and expenses
(including attorneys’ fees and legal expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage, release, threatened
release, spill, discharge, disposal or presence of a Hazardous Material, including the costs of any
required or necessary repair, cleanup or other remedial work with respect to any property of any
Borrower or any Guarantor and the preparation and implementation of any closure, remedial or other
required plans; provided, however, Borrowers and Guarantors need not indemnity any such Person for
losses, claims, damages, liabilities costs or expenses arising from such Person’s gross negligence
or willful misconduct. All representations, warranties, covenants and indemnifications in this
Section 9.3 shall survive the payment of the Obligations and the termination or non-renewal of this
Agreement.




     9.4 Payment of Taxes and Claims. Each Borrower and each Guarantor shall, and shall
cause each of its Subsidiaries to, duly pay and discharge all taxes, assessments, contributions and
governmental charges upon or against it or its properties or assets, except (i) for taxes the
validity of which are being contested in good faith by appropriate proceedings diligently pursued
and available to such Borrower, such Guarantor or such Subsidiary, as the case may be and with
respect to which adequate reserves have been set aside on its books in
accordance with GAAP and (ii) as could not reasonably be expected to cause a Material Adverse
Change.



82









 





     9.5 Insurance. Each Borrower and each Guarantor shall at all times maintain with
financially sound and reputable insurers insurance with respect to the Collateral against loss or
damage and all other insurance of the kinds and in the amounts customarily insured against or
carried by corporations of established reputation engaged in the same or similar businesses and
similarly situated. Said policies of insurance shall be reasonably satisfactory to Administrative
and Collateral Agent as to form, amount and insurer. Each Borrower and each Guarantor shall
furnish certificates, policies or endorsements to Administrative and Collateral Agent as
Administrative and Collateral Agent shall require as proof of such insurance, and, if any Borrower
or any Guarantor fails to do so, Administrative and Collateral Agent is authorized, but not
required, to obtain such insurance at the expense of such Borrower or such Guarantor. All such
policies shall provide for at least 10 days prior written notice to Administrative and Collateral
Agent of any cancellation or reduction of coverage due to non-payment of premiums and at least 30
days prior written notice to Administrative and Collateral Agent of any other cancellation or
reduction of coverage and that Administrative and Collateral Agent may act as attorney for any
Borrower or any Guarantor in obtaining, and at any time an Event of Default exists or has occurred
and is continuing, adjusting, settling, amending and canceling such insurance. Each Borrower and
each Guarantor shall cause Administrative and Collateral Agent to be named as a loss payee for
property and casualty insurance and an additional insured for liability insurance (but without any
liability for any premiums) under such insurance policies of Borrowers and Guarantors and each
Borrower and each Guarantor shall obtain non-contributory lender’s loss payable endorsements to all
such insurance policies in form and substance satisfactory to Administrative and Collateral Agent.
Such lender’s loss payable endorsements shall specify that the proceeds of such insurance shall be
payable to Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders
and the Bank Product Providers, as its interests may appear and further specify that Administrative
and Collateral Agent shall be paid regardless of any act or omission by any relevant Person. At
its option, Administrative and Collateral Agent may (a) apply any insurance proceeds received by
Administrative and Collateral Agent with respect to Accounts, Inventory or any other assets or
events, at any time to the cost of repairs or replacement of Collateral and/or to payment of the
Obligations, whether or not then due, in any order and in such manner as Administrative and
Collateral Agent may determine or hold such proceeds as cash collateral for the Obligations or (b)
if an Event of Default then exists, apply any insurance proceeds received by Administrative and
Collateral Agent to the cost of repairs or replacement of Collateral and/or to payment of the
Obligations, whether or not then due, in any order and in such manner as Administrative and
Collateral Agent may determine or hold such proceeds as cash collateral for the Obligations. Upon
application of such proceeds to the Obligations, Loans may be available subject and pursuant to the
terms hereof to be used for the costs of repair or replacement of the Collateral lost or damages
resulting in the payment of such insurance proceeds. So long as no Event of Default exists, all
other insurance proceeds may be collected by Borrowers and Guarantors.



     9.6 Financial Statements and Other Information.



          (a) Each Borrower and each Guarantor shall, and shall cause each of its and their Subsidiaries
to, keep proper books and records in which true and complete entries shall be
made of all dealings or transactions of or in relation to the Collateral and the business of
each Borrower, each Guarantor and each of their respective Subsidiaries in accordance with GAAP.
Borrowers and Guarantors shall promptly furnish to Administrative and Collateral Agent any and





83









 







all
financial or other information as Administrative and Collateral Agent may reasonably request
relating to the Collateral and the assets, business and operations of Borrowers and Guarantors, and
to notify the auditors and accountants of Borrowers and Guarantors that Administrative and
Collateral Agent is authorized to obtain such information directly from them. Without limiting the
foregoing, Borrowers shall furnish or cause to be furnished to Administrative and Collateral Agent,
the following: (i) within thirty (30) days after the end of each fiscal month (or within
forty-five (45) days if such fiscal month end is also a fiscal quarter end), unaudited consolidated
financial statements (including in each case balance sheets, statements of income and loss,
statements of cash flow, and statements of shareholders’ equity), all in reasonable detail, fairly
presenting the financial position and the results of the operations of BlueLinx and its
Subsidiaries as of the end of and through such fiscal month (or quarter), certified to be correct
by the chief financial officer of BlueLinx, subject to normal year-end adjustments and lack of
footnotes and, if a Compliance Period is then in effect, accompanied by a compliance certificate
substantially in the form of Exhibit C hereto, along with a schedule in form reasonably
satisfactory to Administrative and Collateral Agent of the calculations used in determining, as of
the end of such month (or quarter), whether Borrowers were in compliance with the covenants set
forth in Section 9.17 of this Agreement for such month (or quarter); and (ii) within ninety (90)
days after the end of each fiscal year, audited consolidated financial statements of BlueLinx and
its Subsidiaries (including in each case balance sheets, statements of income and loss, statements
of cash flow and statements of shareholders’ equity), and the accompanying notes thereto, all in
reasonable detail, fairly presenting the financial position and the results of the operations of
BlueLinx and its Subsidiaries as of the end of and for such fiscal year, together with (A) the
unqualified opinion of independent certified public accountants, which accountants shall be an
independent accounting firm selected by Borrowers and reasonably acceptable to Administrative and
Collateral Agent, that such financial statements have been prepared in accordance with GAAP, and
present fairly the results of operations and financial condition of BlueLinx and its Subsidiaries
as of the end of and for the fiscal year then ended and (B) any management letters that may be
issued with regard to the Borrowers or Guarantors.




          (b) Borrowers and Guarantors shall promptly notify Administrative and Collateral Agent in
writing of the details of (i) any loss, damage, investigation, action, suit, proceeding or claim
relating to the Collateral, or any other property which is security for the Obligations, which
constitutes a Material Adverse Change, (ii) any Material Contract of any Borrower or any Guarantor
being terminated (where such termination would cause a Material Adverse Change) or amended (in any
way that would materially and adversely alter such Borrower’s or such Guarantor’s rights or
obligations thereunder, in which event such Borrower or such Guarantor shall provide Administrative
and Collateral Agent a copy of such amendment) or any new Material Contract being entered into (in
which event such Borrower or such Guarantor shall provide Administrative and Collateral Agent with
a copy of such new Material Contract or amendment), (iii) any order, judgment or decree in excess
of Five Million Dollars ($5,000,000) having been entered against any Borrower, any Guarantor, or
any of their respective properties or assets, (iv) any notification of the violation of any laws or
regulation received by any Borrower or any Guarantor where such violation could reasonably be
expected to cause a Material Adverse Change, (v) any ERISA Event, (vi) the occurrence of any
Default or
Event of Default and (vii) any notice of a material default or of termination received by any
Borrower or any Guarantor with respect to any Purchase Agreement or Affiliate Lease.




84









 








          (c) Borrowers shall promptly after the sending or filing thereof furnish or cause to be
furnished to Administrative and Collateral Agent copies of all reports which BlueLinx or Parent
sends to its stockholders generally and copies of all reports and registration statements which
BlueLinx or Parent files with the Securities and Exchange Commission, any national securities
exchange or the National Association of Securities Dealers, Inc.




          (d) Borrowers and Guarantors shall furnish or cause to be furnished to Administrative and
Collateral Agent such information with respect to the Collateral and the business of Borrowers and
Guarantors, as Administrative and Collateral Agent may reasonably request, including, without
limitation, at least 30 days before the beginning of each Borrower’s and each Guarantor’s fiscal
year, updated projections for such fiscal year (including balance sheets and statements of
operations, stockholders’ equity and cash flows and Borrowing Base and Excess Availability
projections on a month-by-month basis). Agents and Lenders are hereby authorized to deliver a copy
of any financial statement or any other information relating to any Borrower or any Guarantor to
any court or other Governmental Authority, Affiliate of any Agent or any Lender or to any
Participant or assignee or prospective Participant or assignee. Each Borrower and each Guarantor
hereby irrevocably authorizes and directs all accountants or auditors to deliver to Administrative
and Collateral Agent, at Borrowers’ expense, copies of the financial statements of each Borrower
and each Guarantor and any reports or management letters prepared by such accountants or auditors
on behalf of any Borrower or any Guarantor and to disclose to Administrative and Collateral Agent
such information as they may have regarding the business of any Borrower or any Guarantor. Any
documents, schedules, invoices or other papers delivered to Agents may be destroyed or otherwise
disposed of by Agents one (1) year after the same are delivered to Agents, except as otherwise
designated by Administrative Borrower to Agents in writing.




     9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each Borrower and each
Guarantor shall not, and shall not permit any of its Subsidiaries to (and Agents and Lenders do not
authorize any Borrower, any Guarantor or any of their respective Subsidiaries to), directly or
indirectly:



          (a) merge into or with, consolidate or amalgamate with any other Person or permit any other
Person to merge into or with or consolidate with it; provided, that,




               (i) any Subsidiary of any Borrower or any Guarantor that is not another Guarantor or another
Borrower may merge with or into or consolidate with any other Subsidiary of any Borrower or any
Guarantor that is not another Guarantor or another Borrower,



               (ii) upon the prior written consent of Administrative and Collateral Agent, such consent not
to be unreasonably withheld, a domestic Subsidiary of any Borrower (other than another Borrower or
a Guarantor) may merge with and into such Borrower with such Borrower being the surviving entity,



               (iii) any Borrower may merge with and into another Borrower so long as (A) as of the effective
date of the merger and after giving effect thereto, no Default or Event of Default shall exist or
have occurred, (B) Administrative Borrower provides Administrative and Collateral Agent not less
than 10 Business Days’ prior written notice thereof, (C) Borrowers



85









 







and Guarantors execute and
deliver, prior to or simultaneously with any such action, any and all documents and agreements
requested by Administrative and Collateral Agent to confirm the continuation and preservation of
all security interests and liens granted to Administrative and Collateral Agent hereunder, and (D)
Administrative and Collateral Agent shall have received, true, correct and complete copies of all
agreements, documents and instruments relating to such merger, including, but not limited to, the
certificate or certificates of merger to be filed with each appropriate Secretary of State (with a
copy as filed promptly after such filing), and



               (iv) any Guarantor may merge with and into another Guarantor so long as (1) as of the
effective date of the merger and after giving effect thereto, no Default or Event of Default shall
exist or have occurred, (2) Administrative Borrower provides Administrative and Collateral Agent
not less than 10 Business Days’ prior written notice thereof, (3) Borrowers and Guarantors execute
and deliver, prior to or simultaneously with any such action, any and all documents and agreements
requested by Administrative and Collateral Agent to confirm the continuation and preservation of
all security interests and liens granted to Administrative and Collateral Agent hereunder, and (4)
Administrative and Collateral Agent shall have received, true, correct and complete copies of all
agreements, documents and instruments relating to such merger, including, but not limited to, the
certificate or certificates of merger to be filed with each appropriate Secretary of State (with a
copy as filed promptly after such filing); or



          (b) sell, issue, assign, lease, license, transfer, abandon, sell and leaseback or otherwise
dispose of any Capital Stock or Indebtedness to any other Person or any of its assets to any other
Person, except for:




               (i) sales of Inventory in the ordinary course of business,



               (ii) the disposition of worn-out or obsolete Equipment so long as (A) any proceeds are
deposited to the Blocked Account, and (B) such sales do not involve Equipment having an aggregate
fair market value in excess of Twenty Million Dollars ($20,000,000) for all such Equipment disposed
of in any fiscal year of Borrowers and Guarantors; provided, however, if such sales
of Equipment in any fiscal year involve Equipment having an aggregate fair market value of less
than $20,000,000 (such difference referred to herein as an “Unused Equipment Sale
Allowance”), up to $10,000,000 of such Unused Equipment Sale Allowance may be sold in the
succeeding fiscal year;



               (iii) the disposition of assets other than Accounts, Inventory or worn-out or obsolete
Equipment so long as (A) any proceeds are deposited to the Blocked Account, and (B) such sales do
not involve assets having an aggregate fair market value in excess of Twenty Million Dollars
($20,000,000) for all such assets disposed of in any fiscal year of Borrowers and Guarantors;



               (iv) the issuance and sale by any Borrower or any Guarantor of Capital Stock of such Borrower
or such Guarantor after the date hereof; provided, that, (A)
Administrative and Collateral Agent shall have received not less than ten (10) Business Days
prior written notice of such issuance and sale by such Borrower or such Guarantor, which notice
shall specify the parties to whom such shares are to be sold, the terms of such sale, the total
amount which it is anticipated will be realized from the issuance and sale of such stock and the



86









 







net cash proceeds which it is anticipated will be received by such Borrower or such Guarantor from
such sale, (B) such Borrower or such Guarantor shall not be required to pay any cash dividends or
repurchase or redeem such Capital Stock or make any other payments in respect thereof, (C) the
terms of such Capital Stock, and the terms and conditions of the purchase and sale thereof, shall
not include any terms that include any limitation on the right of such Borrower or such Guarantor
to request or receive Loans or the right of such Borrower or such Guarantor to amend or modify any
of the terms and conditions of this Agreement or any of the other Financing Agreements or otherwise
in any way relate to or affect the arrangements of such Borrower or such Guarantor with Agents and
Lenders or are more restrictive or burdensome to such Borrower or such Guarantor than the terms of
any Capital Stock in effect on the date hereof, (D) no Event of Default would occur as a result of
such sale or issuance, and (E) except as Administrative and Collateral Agent and the Lenders may
otherwise agree in writing, if an Event of Default exists on the date of such issuance and sale or
after giving effect thereto, all of the proceeds of such sale and issuance shall be paid to
Administrative and Collateral Agent for application to the Obligations in accordance with the terms
of Section 6.4(a) hereof;



               (v) the sale and leaseback of Equipment so long as (A) any proceeds are deposited to the
Blocked Account, and (B) such sale and leaseback transactions do not involve Equipment having an
aggregate fair market value in excess of Ten Million Dollars ($10,000,000) for all such Equipment
sold and leased in such transactions in any fiscal year of Borrowers and Guarantors;



               (vi) the sale, lease, transfer or other disposition of assets by a Borrower to another
Borrower so long as at the time of any such sale, lease, transfer or other disposition, no Default
or Event of Default exists or is continuing; and



               (vii) the sale, lease, transfer or other disposition of assets by a Guarantor to another
Guarantor so long as at the time of any such sale, lease, transfer or other disposition, no Default
or Event of Default exists or is continuing;



          (c) wind up, liquidate or dissolve except in the case of Subsidiaries of any Borrower or any
Guarantor that are not a Borrower or a Guarantor;




          (d) agree to do any of the foregoing; provided, however, any Borrower, any
Guarantor or any of their respective Subsidiaries may enter into agreements to effectuate any
transaction otherwise prohibited by this Section 9.7 so long as (i) concurrently with or promptly
after entering into any such agreement, such Borrower, such Guarantor or such Subsidiary gives
Administrative and Collateral Agent written notice thereof to the extent not prohibited by any
confidentiality provisions relating thereto and binding on such Borrower, such Guarantor or such
Subsidiary, and (ii) the consummation of transactions contemplated by any such agreement is
conditioned upon obtaining the consent of Administrative and Collateral Agent and such Lenders as
may be required pursuant to Section 11.3 hereof or repaying the Obligations in full and terminating
this Agreement in accordance with its terms.



To the extent Administrative and Collateral Agent and any Lenders whose consent is required
pursuant to Section 11.3 hereof waive the provisions of this Section 9.7 with respect to the sale
of any Collateral, or any Collateral is sold to a Person as permitted by this Section 9.7, to the




87









 







extent the proceeds of any such sale are remitted to Administrative and Collateral Agent pursuant
to all applicable terms of this Agreement, such Collateral shall be sold free and clear of the
liens created by the Financing Agreements (and, in the event that such Collateral consists of all
of the capital stock of a Person that is a Guarantor, such Person, and the assets of such Person,
shall be released from the Financing Agreements to which it is a party), and Administrative and
Collateral Agent shall be authorized to take any actions deemed appropriate in order to effect the
foregoing.




     9.8 Encumbrances. Each Borrower and each Guarantor shall not, and shall not permit
any of its Subsidiaries to, create, incur, assume, suffer or permit to exist any security interest,
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on any of its assets
or properties, including the Collateral or file or permit the filing of, or permit to remain in
effect, any financing statement or other similar notice of any security interest or lien with
respect to such assets or properties, except:



          (a) the security interests and liens of Administrative and Collateral Agent, for itself and
the ratable benefit of the Lenders and Bank Product Providers;




          (b) liens securing the payment of taxes, either not yet overdue or the validity of which are
being contested in good faith by appropriate proceedings diligently pursued and available to such
Borrower, such Guarantor or such Subsidiary, as the case may be and with respect to which adequate
reserves have been set aside on its books;




          (c) statutory liens (other than liens securing the payment of taxes) arising in the ordinary
course of such Borrower’s, such Guarantor’s or such Subsidiary’s business to the extent: (i) such
liens secure Indebtedness which is not overdue or (ii) such liens secure Indebtedness relating to
claims or liabilities which are fully insured or bonded and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by appropriate
proceedings diligently pursued and available to such Borrower, such Guarantor or such Subsidiary,
in each case prior to the commencement of foreclosure or other similar proceedings and with respect
to which adequate reserves have been set aside on its books;




          (d) zoning restrictions, easements, licenses, covenants and other restrictions affecting the
use of Real Property which do not interfere in any material respect with the use of such Real
Property or ordinary conduct of the business of such Borrower, such Guarantor or such Subsidiary as
presently conducted thereon or materially impair the value of the Real Property which may be
subject thereto;




          (e) purchase money security interests in Equipment (including Capital Leases) and purchase
money mortgages on Real Property to secure Indebtedness permitted under Sections 9.9(a) and 9.9(c)
hereof;




          (f) Intentionally Omitted;




          (g) the security interests and liens set forth on Schedule 8.4 hereto;





88









 








          (h) renewals and extensions of any of the foregoing security interests and liens so long as
the aggregate principal amount of the Indebtedness (plus any accrued and unpaid fees and interest),
if any, secured thereby is not increased and such renewal or extension does not encumber additional
assets of such Borrower, such Guarantor or such Subsidiary;




          (i) leases or subleases granted to third Persons that do not materially interfere with the
conduct of the business of such Borrower, such Guarantor or such Subsidiary;




          (j) security interests in and liens on property or assets acquired pursuant to an acquisition
permitted by Section 9.10 hereof, or on property or assets of a Person in existence at the time
such Person is acquired pursuant to an acquisition permitted by Section 9.10 hereof so long as: (i)
any Indebtedness that is secured by such security interests and liens is otherwise permitted under
Section 9.9 hereof and (ii) such security interests and liens are not incurred in connection with,
or in contemplation of, such acquisition and do not attach to any other asset of any Borrower or
any Guarantor or such acquired Person or otherwise violate any of the provisions of this Agreement;




          (k) pledges and deposits of cash by any Borrower or any Guarantor after the date hereof in the
ordinary course of business and commercially reasonable in connection with workers’ compensation,
unemployment insurance and other types of social security benefits or in connection with
obligations under Hedging Transactions;




          (l) judgments liens arising in connection with legal proceedings that do not constitute an
Event of Default; provided, that, (i) such liens are being contested in good faith
and by appropriate proceedings diligently pursued, (ii) adequate reserves or other appropriate
provision, if any, as are required by GAAP have been established therefor, (iii) a stay of
enforcement of any such liens is in effect and (iv) Administrative and Collateral Agent may
establish a Reserve with respect thereto; and




          (m) liens on assets other than Accounts, collections on Accounts or Inventory to the extent
such liens do not secure obligations in excess of $10,000,000 in the aggregate at any one time
outstanding.




     9.9 Indebtedness. Each Borrower and each Guarantor shall not, and shall not permit
any of its Subsidiaries to, incur, create, assume, become or be liable in any manner with respect
to, suffer or permit to exist, any Indebtedness or guarantee, assume, endorse, or otherwise become
responsible for (directly or indirectly) the performance, dividends or other obligations of any
Person, except:



          (a) the Obligations;




          (b) purchase money Indebtedness (including Capital Leases) arising after the date hereof to
the extent secured by purchase money security interests in Equipment (including Capital Leases) not
to exceed Twenty Million Dollars ($20,000,000) in the aggregate at any time outstanding so long as
such security interests do not apply to any property of any Borrower, any
Guarantor or any of their respective Subsidiaries other than the Equipment so acquired, and
the Indebtedness secured thereby does not exceed the cost of the Equipment so acquired;




89









 








          (c) purchase money mortgages on Real Property not to exceed Thirty-Five Million Dollars
($35,000,000) in the aggregate at any time outstanding so long as such mortgages do not apply to
any property of any Borrower, any Guarantor or any of their respective Subsidiaries other than the
Real Property so acquired, and the Indebtedness secured thereby does not exceed the cost of the
Real Property so acquired;




          (d) guaranties by any Subsidiaries of any Borrower or any Guarantor of the Obligations in
favor of Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and
the Bank Product Providers;




          (e) Indebtedness with respect to any Hedging Transactions; provided, that,
such arrangements are: (i) with any Bank Product Provider, any Person that constitutes an Eligible
Transferee or any other bank or other financial institution that has combined capital and
unimpaired surplus of not less than Five Hundred Million Dollars ($500,000,000), (ii) were entered
into for the purpose of protecting such Borrower, such Guarantor or such Subsidiary against
fluctuations in interest rates and not for speculative purposes and (iii) except with respect to
Indebtedness owed to Bank Product Providers or secured by pledges or deposits of cash pursuant to
Section 9.8(k), Indebtedness arising thereunder or in connection therewith is unsecured;




          (f) the issuance by Borrower, and guaranties thereof by its Subsidiaries, of no more than
$400,000,000 in senior unsecured notes on terms and conditions reasonably satisfactory to
Administrative and Collateral Agent so long as: (i) no Default or Event of Default exists at the
time such notes are issued or would occur as a result thereof; (ii) the net cash proceeds of such
notes are used first to repay the obligations of Borrower under the Term Loan Agreement, and any
remaining proceeds are remitted to Administrative and Collateral Agent for application to the
Obligations as set forth in Section 6.4(a) hereof; (iii) prior to its incurrence, Administrative
and Collateral Agent shall have received such information with regard to such notes as it may
reasonably request, including, without limitation, true, correct and complete copies of all
agreements, documents and instruments evidencing or otherwise related to such Indebtedness; (iv)
Borrower does not, directly or indirectly, (A) without the prior written consent of Administrative
and Collateral Agent, amend, modify, alter or change the terms of such notes or any agreement,
document or instrument related thereto in a manner materially more adverse to the Lenders or so as
to make the terms thereof materially more burdensome or restrictive to Borrower, in each case, than
the terms thereof in effect prior to such amendment, modification, alteration or change, or (B)
redeem, retire, defease, purchase or otherwise acquire such notes (except pursuant to regularly
scheduled payments permitted under the terms of this Agreement and any subordination agreement
related to such notes), or set aside or otherwise deposit or invest any sums for such purpose, and
(v) Borrower shall furnish to Administrative and Collateral Agent all material notices or demands
in connection with such Indebtedness either received by Borrower or on its behalf promptly after
the receipt thereof, or sent by Borrower or on its behalf concurrently with the sending thereof, as
the case may be;




          (g) Intentionally Omitted;




          (h) the Indebtedness set forth on Schedule 9.9 hereto; provided, that, (i) Borrowers
and Guarantors may only make regularly scheduled payments of principal and interest






90









 







in respect of
such Indebtedness in accordance with the terms of the agreement or instrument evidencing or giving
rise to such Indebtedness as in effect on the date hereof, (ii) Borrowers and Guarantors shall not,
directly or indirectly, (A) without the prior written consent of Administrative and Collateral
Agent, amend, modify, alter or change the terms of such Indebtedness in a manner materially more
adverse to the Lenders or so as to make the terms thereof materially more burdensome or restrictive
to Borrowers and Guarantors, in each case, than the terms thereof in effect prior to such
amendment, modification, alteration or change, or (B) redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, (iii) Borrowers and Guarantors shall furnish to Administrative and Collateral Agent all
notices or demands in connection with such Indebtedness either received by any Borrower, any
Guarantor or on any of their behalf, promptly after the receipt thereof, or sent by any Borrower,
any Guarantor or on any of their behalf, concurrently with the sending thereof, as the case may be
and (iv) with respect to Indebtedness arising in connection with the letters of credit listed on
Schedule 9.9 hereto: (A) in no event may such Indebtedness be secured or
cash-collateralized and (B) such Indebtedness may not be renewed, extended, replaced or otherwise
continue to be outstanding beyond the maturity dates of such letters of credit set forth on
Schedule 9.9 hereto;




          (i) so long as the aggregate amount thereof does not exceed $5,000,000 at any time,
Indebtedness with respect to surety bonds, appeal bonds or like instruments acquired in the
ordinary course of business or in connection with the enforcement of rights or claims of any
Borrower, any Guarantor or any of their respective Subsidiaries or in connection with judgments
that do not result in a Default or an Event of Default;




          (j) to the extent subject to the intercompany subordination agreement described in Section
4.1(i) and otherwise permitted under Section 9.10 hereof (i) Indebtedness of any Borrower or any
Guarantor or any of their respective Subsidiaries to any other Subsidiary or any Borrower or any
Guarantor, or (ii) Indebtedness of BlueLinx to Parent;




          (k) unsecured guaranties by any Borrower of Indebtedness or other obligations of its
Subsidiaries that are permitted to be incurred hereunder;




          (l) Indebtedness of a Subsidiary of any Borrower acquired pursuant to the terms of Section
9.10 hereof, or assumed by any Borrower in connection with the acquisition of an asset pursuant to
the terms of Section 9.10 hereof, so long as such Indebtedness was not incurred in connection with,
or in contemplation of, such acquisition or such investment and otherwise does not violate any
provision of this Agreement;




          (m) Indebtedness owing in connection with the liens permitted under Sections 9.8(b), 9.8(c),
9.8(k) or 9.8(m);




          (n) up to $5,000,000, in the aggregate at any one time outstanding, of Indebtedness
representing the unpaid balance of the purchase price of any property or services that constitutes
an account payable to a trade creditor (whether or not an Affiliate) which (i) was created,
incurred, assumed or guaranteed by a Borrower or a Guarantor in the ordinary course of
business of such Borrower or such Guarantor in connection with obtaining goods, materials or





91









 







services, (ii) is overdue by more than ninety (90) days and (iii) is not being contested by such
Borrower or such Guarantor in good faith;




          (o) unsecured Indebtedness of any Borrower or any Guarantor to any third person (other than
another Borrower or Guarantor) arising after the date hereof in an amount at any one time
outstanding not to exceed Twenty-Five Million Dollars ($25,000,000) in the aggregate for all such
Indebtedness to all such third persons; provided, that, (i) Borrowers and
Guarantors may only make regularly scheduled payments of principal and interest in respect of such
Indebtedness in accordance with the terms of the agreement or instrument evidencing or giving rise
to such Indebtedness, (ii) Each Borrower and each Guarantor shall not, directly or indirectly, (A)
without the prior written consent of Administrative and Collateral Agent, amend, modify, alter or
change the terms of such Indebtedness in a manner materially more adverse to the Lenders or so as
to make the terms thereof materially more burdensome or restrictive to such Borrower or such
Guarantor, in each case, than the terms thereof in effect prior to such amendment, modification,
alteration or change, or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness, or set aside or otherwise deposit or invest any sums for such purpose, and (iii)
Borrowers and Guarantors shall furnish to Administrative and Collateral Agent all material notices
or demands in connection with such Indebtedness either received by any Borrower, any Guarantor or
on any of their behalf, promptly after the receipt thereof, or sent by any Borrower, any Guarantor
or on any of their behalf, concurrently with the sending thereof, as the case may be;




          (p) unsecured Indebtedness of any Borrower to sellers incurred as part of the purchase price
in connection with any Permitted Acquisitions not to exceed Twenty-Five Million Dollars
($25,000,000) in the aggregate among all Borrowers at any one time outstanding, so long as such
Indebtedness is subordinated to the Obligations under terms and conditions reasonably satisfactory
to Administrative and Collateral Agent; and




          (q) any Indebtedness of BlueLinx consisting of a Mortgage Proceeds Investment;
provided, that, BlueLinx shall not make any repayments with respect thereto unless:
(i) Modified Adjusted Excess Availability after giving effect to any such repayment is equal to or
greater than $120,000,000; (b) both before and after giving effect to any such repayment,
Borrowers’ Fixed Charge Coverage Ratio for the immediately trailing twelve month period, on a
consolidated basis, is equal to or greater than 1.1:1.0 (for purposes of this Section 9.9(q) only,
Fixed Charge Coverage Ratio shall be calculated by excluding the amount of any such repayment and
by adjusting the interest component of the calculation to include any interest payments which would
have been made by the Borrowers had the amount of Mortgage Proceeds Investment which is being
repaid never been loaned to the BlueLinx); (c) Administrative Borrower shall have provided
Administrative and Collateral Agent with at least ten (10) Business Days prior written notice of
any such repayment; (d) no Default or Event of Default shall have occurred and be continuing or
would result from such repayment; and (e) prior to the making of any such repayment, Administrative
and Collateral Agent shall have received Borrowers’ unaudited internally prepared financial
statements for the month immediately preceding the date of such prepayment, accompanied by a
certificate of Administrative Borrower’s chief financial officer as to Borrowers’ compliance with
the terms of this Section
9.9(q) together with such supporting documentation therefor as Administrative and Collateral
Agent may reasonably request.




92









 








     9.10 Loans, Investments, Etc. Each Borrower and each Guarantor shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, make, or suffer or permit to exist,
any loans or advance money or property to any Person, or any investment in (by capital
contribution, dividend or otherwise) or purchase or repurchase the Capital Stock or Indebtedness or
all or a substantial part of the assets or property of any Person, or form or acquire any
Subsidiaries, or agree to do any of the foregoing, except:



          (a) the endorsement of instruments for collection or deposit in the ordinary course of
business;




          (b) investments in cash or Cash Equivalents so long as the terms and conditions of Section 5.2
hereof shall have been satisfied with respect to the deposit account or investment account in which
such cash or Cash Equivalents are held; provided, however, such cash or Cash
Equivalents must be held in a savings or investment account which is subject to Administrative and
Collateral Agent’s first priority perfected security interest if any Revolving Loans or Term Loans
are then outstanding;




          (c) the existing equity investments of each Borrower and each Guarantor as of the date hereof
in their respective Subsidiaries, provided, that, no Borrower or Guarantor shall have any
obligation to make any other investment in, or loans to, or other payments in respect of, any of
such Subsidiaries;




          (d) stock or obligations issued to any Borrower or any Guarantor by any Person (or the
representative of such Person) in respect of Indebtedness of such Person owing to such Borrower or
such Guarantor in connection with the insolvency, bankruptcy, receivership or reorganization of
such Person or a composition or readjustment of the debts of such Person; provided, that, the
original of any such stock or instrument having a principal amount in excess of $1,000,000
evidencing such obligations shall be promptly delivered to Administrative and Collateral Agent,
upon Administrative and Collateral Agent’s request, together with such stock power, assignment or
endorsement by such Borrower or such Guarantor as Administrative and Collateral Agent may request;




          (e) obligations of account debtors to any Borrower or any Guarantor arising from Accounts
which are past due evidenced by a promissory note made by such account debtor payable to such
Borrower or such Guarantor; provided, that, promptly upon the receipt of the original of any such
promissory note by such Borrower or such Guarantor having a principal amount in excess of
$1,000,000, such promissory note shall be endorsed to the order of Administrative and Collateral
Agent by such Borrower or such Guarantor and promptly delivered to Administrative and Collateral
Agent as so endorsed;




          (f) the loans and advances set forth on Schedule 9.10 hereto; provided, that, as to
such loans and advances, (i) Borrowers and Guarantors shall not, directly or indirectly, amend,
modify, alter or change the terms of such loans and advances or any agreement, document or
instrument related thereto and (ii) Borrowers and Guarantors shall furnish to
Administrative and Collateral Agent all notices or demands in connection with such loans and
advances either received by any Borrower, any Guarantor or on any of their behalf, promptly





93









 







after
the receipt thereof, or sent by any Borrower, any Guarantor or on any of their behalf, concurrently
with the sending thereof, as the case may be;




          (g) loans and advances by any Borrower or any Guarantor to officers and employees of such
Borrower or such Guarantor so long as such loans are made in the ordinary course of such Borrower’s
or such Guarantor’s business and with respect to activities arising from such persons employment by
such Borrower or such Guarantor;




          (h) loans and advances by BlueLinx to BlueLinx Building Products Canada Ltd., a company
organized under the laws of British Columbia, not to exceed $10,000,000 in the aggregate at any one
time outstanding; and




          (i) Permitted Acquisitions; provided, however, in the case of a Permitted
Acquisition which is an Asset Acquisition, the assets acquired by any Borrower shall not be
included in the calculation of the Borrowing Base until the Administrative and Collateral Agent
shall have had the opportunity to perform a field examination and appraisal through its examiners
or through representatives that it may retain in order to determine the eligibility of such assets
for inclusion in the calculation of the Borrowing Base;




          (j) any Borrower may form an Acquisition Subsidiary so long as; (i) Administrative Borrower
provides Administrative and Collateral Agent with prior written notice of the formation of any
Acquisition Subsidiary; (ii) no Default or Event of Default has occurred and is continuing or would
result from the formation of such Acquisition Subsidiary; (iii) Administrative and Collateral
Agent, for the ratable benefit of the Lenders and the Bank Product Providers, shall be granted a
first priority security interest (subject to the security interests, mortgages, pledges, liens,
charges and other encumbrances otherwise permitted under Section 9.8 hereof) in all assets
(including any Capital Stock) of such Acquisition Subsidiary and such Borrower shall cause such
Acquisition Subsidiary to execute any documents and take all actions that may be required under
applicable law or that Administrative and Collateral Agent may reasonably request, in order to
grant, preserve, protect and perfect such security interest, all in form and substance satisfactory
to Administrative and Collateral Agent; and (iv) either (A) such Borrower shall cause such newly
formed Acquisition Subsidiary to execute a (1) general continuing guaranty in favor of
Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank
Product Providers, in form and substance satisfactory to Administrative and Collateral Agent, and
(2) a joinder to this Agreement, in form and substance satisfactory to Administrative and
Collateral Agent, whereby such newly formed Acquisition Subsidiary acknowledges and agrees that it
is a “Guarantor” hereunder; or (B) such newly formed Acquisition Subsidiary shall execute a joinder
to this Agreement, in form and substance satisfactory to Administrative and Collateral Agent,
whereby such newly formed Acquisition Subsidiary acknowledges and agrees that it is a “Borrower”
hereunder subject to the terms hereunder and subject to such newly formed Acquisition Subsidiary
and Borrowers executing such documentation requested by Administrative Agent in its reasonable
discretion.




     9.11 Dividends and Redemptions. Each Borrower and each Guarantor shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, declare or pay any dividends
on account of any shares of any class of Capital Stock of such Borrower, such Guarantor or
such Subsidiary, as the case may be, now or hereafter outstanding, or set aside or otherwise
deposit or



94









 







invest any sums for such purpose, or redeem, retire, defease, purchase or otherwise
acquire any shares of any class of Capital Stock (or set aside or otherwise deposit or invest any
sums for such purpose) for any consideration or apply or set apart any sum, or make any other
distribution (by reduction of capital or otherwise) in respect of any such shares or agree to do
any of the foregoing, except:



          (a) in any case, dividends may be made in the form of shares of Capital Stock consisting of
common stock;




          (b) any Subsidiary of any Borrower may pay dividends to such Borrower;




          (c) BlueLinx may pay in kind dividends to Parent upon any issuance of Capital Stock permitted
under the terms of this Agreement;




          (d) BlueLinx may pay dividends to Parent (i) in an amount equal to the sum of the federal,
state and local income tax liability of Parent that is attributable to BlueLinx and its
Subsidiaries and (ii) for general administrative expenses of Parent and/or general operating
expenses incurred by Parent on behalf of Bluelinx and its Subsidiaries in an amount not to exceed
$2,500,000 in any fiscal year;




          (e) commencing at the conclusion of BlueLinx’s fiscal year ending 2004, BlueLinx may pay
dividends to Parent in an aggregate amount not to exceed the sum of (x) 50% of BlueLinx’s
cumulative Net Income earned since the Original Closing Date; (y) 50% of the first $100,000,000 of
capital contributions made by Parent to BlueLinx after October 26, 2004; and (z) 100% of each
capital contribution made by Parent to BlueLinx after such first $100,000,000 of capital
contributions; so long as: (i) BlueLinx does not pay dividends to Parent in excess of Twenty-Five
Million Dollars ($25,000,000) in the aggregate in any fiscal year of BlueLinx; (ii) no Default or
Event of Default exists at the time of any such dividend or would occur after giving effect
thereto; (iii) both immediately before and after giving effect to any such dividend, Modified
Adjusted Excess Availability is at least $70,000,000; and (iv) prior to the making of any such
dividend, Administrative and Collateral Agent shall have received BlueLinx’s unaudited internally
prepared financial statements for the fiscal quarter immediately preceding the date of such
dividend, accompanied by a certificate of BlueLinx’s chief financial officer as to BlueLinx’s
compliance with the terms of this Section 9.11(e) together with such supporting documentation
therefor as Administrative and Collateral Agent may reasonably request; and




          (f) in addition to any dividends permitted under Section 9.11(e), BlueLinx may pay dividends
to Parent to repay any capital contribution consisting of a Mortgage Proceeds Investment so long as
(a) Modified Adjusted Excess Availability after giving effect to any such repayment is equal to or
greater than $120,000,000; (b) both before and after giving effect to any such repayment,
BlueLinx’s Fixed Charge Coverage Ratio for the immediately trailing twelve month period, on a
consolidated basis, is equal to or greater than 1.1:1.0 (for purposes of this Section 9.11(f) only,
Fixed Charge Coverage Ratio shall be calculated by excluding the amount of any such repayment and
by adjusting the interest component of the calculation to include any
interest payments which would have been made by the Borrowers had the amount of Mortgage
Proceeds Investment which is being repaid never been invested in BlueLinx); (c) Administrative




95









 







Borrower shall have provided Administrative and Collateral Agent with at least ten (10) Business
Days prior written notice of any such repayment; (d) no Default or Event of Default shall have
occurred and be continuing or would result from such repayment; and (e) prior to the making of any
such repayment, Administrative and Collateral Agent shall have received BlueLinx’s unaudited
internally prepared financial statements for the month immediately preceding the date of such
prepayment, accompanied by a certificate of BlueLinx’s chief financial officer as to BlueLinx’s
compliance with the terms of this Section 9.11(f) together with such supporting documentation
therefor as Administrative and Collateral Agent may reasonably request.




     9.12 Transactions with Affiliates. Each Borrower and each Guarantor shall not,
directly or indirectly, (a) purchase, acquire or lease any property from, or sell, transfer or
lease any property to, any Affiliate or agent of such Borrower or such Guarantor, except in the
ordinary course of and pursuant to the reasonable requirements of such Borrower’s or such
Guarantor’s business and upon fair and reasonable terms no less favorable to such Borrower or such
Guarantor than such Borrower or such Guarantor would obtain in a comparable arm’s length
transaction with a Person that is not an Affiliate or agent of such Borrower or such Guarantor or
(b) make any payments of management, consulting or other fees for management or similar services,
or of any Indebtedness owing to any officer, employee, shareholder, director or other Affiliate of
such Borrower or such Guarantor except (i) reasonable compensation to officers, employees and
directors for services rendered to such Borrower or such Guarantor in the ordinary course of
business; (ii) so long as Sponsor owns Capital Stock of Parent, management fees of no more than
$1,000,000 per fiscal year paid by BlueLinx to Sponsor; (iii) payments required to be made under
the Affiliate Leases to the extent the Affiliate Leases comply with the provisions of Section
9.12(a) hereof; (iv) amounts payable to any Sponsor Affiliated Lender pursuant to this Agreement;
and (iv) any amounts permitted to be paid pursuant to Section 9.11.



     9.13 Compliance with ERISA. Each Borrower and each Guarantor shall and shall cause
each of its ERISA Affiliates to: (a) maintain each Plan (other than a Multiemployer Plan) in
compliance in all material respects with the applicable provisions of ERISA, the Code and other
Federal and State law; (b) cause each Plan which is qualified under Section 401(a) of the Code to
maintain such qualification; (c) not terminate any of such Plans so as to incur any liability to
the Pension Benefit Guaranty Corporation; (d) not allow or suffer to exist any prohibited
transaction involving any of such Plans or any trust created thereunder which would subject such
Borrower, such Guarantor or such ERISA Affiliate to a tax or penalty or other liability on
prohibited transactions imposed under Section 4975 of the Code or ERISA; (e) make all required
contributions to any Plan which it is obligated to pay under Section 302 of ERISA, Section 412 of
the Code or the terms of such Plan; (f) not allow or suffer to exist any accumulated funding
deficiency, whether or not waived, with respect to any such Plan; or (g) not allow or suffer to
exist any occurrence of a reportable event or any other event or condition which presents a
material risk of termination by the Pension Benefit Guaranty Corporation of any such Plan that is a
single employer plan, which termination could result in any liability to the Pension Benefit
Guaranty Corporation.



     9.14 End of Fiscal Years and Fiscal Quarters; Changes in Accounting Practices.



96









 





          (a) Each Borrower and each Guarantor shall, for financial reporting purposes, cause its, and
each of its Subsidiaries’ (i) fiscal years to end on the dates set forth on Schedule 9.14
hereto as fiscal year ends, (ii) fiscal quarters to end on the dates set forth on Schedule
9.14 hereto as fiscal quarter ends and (iii) fiscal months to end on the dates set forth on
Schedule 9.14 hereto as fiscal month ends.




          (b) Each Borrower and each Guarantor shall not materialy change any of its accounting policies
except as may be required or permitted in accordance with GAAP.




     9.15 Change in Business. Each Borrower and each Guarantor shall not engage in any
business other than the business of such Borrower or such Guarantor on the date hereof and any
business reasonably related, ancillary or complimentary to the business in which such Borrower or
such Guarantor is engaged on the date hereof.



     9.16 Limitation of Restrictions Affecting Subsidiaries. Each Borrower and each
Guarantor shall not, directly, or indirectly, create or otherwise cause or suffer to exist any
encumbrance or restriction which prohibits or limits the ability of any Subsidiary of such Borrower
or such Guarantor to (a) pay dividends or make other distributions or pay any Indebtedness owed to
such Borrower or such Guarantor or any Subsidiary of such Borrower or such Guarantor; (b) make
loans or advances to such Borrower or such Guarantor or any Subsidiary of such Borrower or such
Guarantor, or (c) create, incur, assume or suffer to exist any lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, other than encumbrances and
restrictions (i) that are void or ineffective under applicable law or (ii) arising under (A)
applicable law, (B) this Agreement, (C) customary provisions restricting subletting or assignment
of any lease governing a leasehold interest of such Borrower or such Guarantor or any Subsidiary of
such Borrower or such Guarantor, (D) customary restrictions on dispositions of real property
interests found in reciprocal easement agreements of such Borrower or such Guarantor or any
Subsidiary of such Borrower or such Guarantor, (E) any agreement relating to permitted Indebtedness
incurred by a Subsidiary of such Borrower or such Guarantor prior to the date on which such
Subsidiary was acquired by such Borrower or such Guarantor and outstanding on such acquisition
date, and (F) the extension or continuation of contractual obligations in existence on the date
hereof; provided, that, any such encumbrances or restrictions contained in such extension or
continuation are no less favorable to Administrative and Collateral Agent and Lenders than those
encumbrances and restrictions under or pursuant to the contractual obligations so extended or
continued.



     9.17 Financial Covenants. During a Compliance Period, Borrowers and Guarantors shall,
when measured as of the month most recently ended:



          (a) Fixed Charge Coverage Ratio. Maintain, on a consolidated basis, their Fixed
Charge Coverage Ratio at not less than 1.1 to 1.0.




          (b) Capital Expenditures. Not incur Capital Expenditures of more than $20,000,000 in
any fiscal year in the aggregate for all Borrowers and Guarantors; provided,
however, if Capital Expenditures of less than $20,000,000 are incurred in any fiscal year
(such
difference referred to herein as an “Unused CapEx Allowance”), up to $10,000,000 of
the amount of such Unused CapEx Allowance may be incurred in the succeeding fiscal year.




97









 








     9.18 License Agreements.



          (a) Except where failure to do so could not reasonably be expected to cause a Material Adverse
Change and with respect to License Agreements that are Material Contracts, each Borrower and each
Guarantor shall (i) promptly and faithfully observe and perform all of the terms, covenants,
conditions and provisions of such License Agreement to be observed and performed by it, at the
times set forth therein, if any, (ii) not do, permit, suffer or refrain from doing anything that
could reasonably be expected to result in a default under or breach of any of the terms of such
License Agreement, (iii) not cancel, surrender, modify, amend, waive or release such License
Agreement in any respect or any material term, provision or right of the licensee thereunder in any
respect, or consent to or permit to occur any of the foregoing, (iv) give Administrative and
Collateral Agent prompt written notice of such License Agreement entered into by such Borrower or
such Guarantor after the date hereof, together with a true, correct and complete copy thereof and
such other information with respect thereto as Administrative and Collateral Agent may reasonably
request, (v) give Administrative and Collateral Agent prompt written notice of any breach of any
obligation, or any default, by any party under such License Agreement, and deliver to
Administrative and Collateral Agent (promptly upon the receipt thereof by such Borrower or such
Guarantor in the case of a notice to such Borrower or such Guarantor, and concurrently with the
sending thereof in the case of a notice from such Borrower or such Guarantor) a copy of each notice
of default and every other notice and other communication received or delivered by such Borrower or
such Guarantor in connection with such License Agreement which relates to any adverse change in the
right of any Borrower or any Guarantor to continue to use the property subject to such License
Agreement, and (vi) furnish to Administrative and Collateral Agent, promptly upon the request of
Administrative and Collateral Agent, such information and evidence as Administrative and Collateral
Agent may require from time to time concerning the observance, performance and compliance by such
Borrower or such Guarantor or the other party or parties thereto with the terms, covenants or
provisions of such License Agreement.




          (b) Except where failure to do so could not reasonably be expected to cause a Material Adverse
Change and with respect to License Agreements that are Material Contracts, each Borrower and each
Guarantor will either exercise any option to renew or extend the term of such License Agreement in
such manner as will cause the term of such License Agreement to be effectively renewed or extended
for the period provided by such option and give prompt written notice thereof to Administrative and
Collateral Agent or give Administrative and Collateral Agent prior written notice that such
Borrower or such Guarantor does not intend to renew or extend the term of any such License
Agreement or that the term thereof shall otherwise be expiring, not less than sixty (60) days prior
to the date of any such non-renewal or expiration. In the event of the failure of any Borrower or
any Guarantor to extend or renew any such License Agreement, Administrative and Collateral Agent
shall have, and is hereby granted, the irrevocable right and authority, at its option, to renew or
extend the term of such License Agreement, whether in its own name as agent for the Lenders, or in
the name of a designee or nominee of Administrative and Collateral Agent or in the name of any
Borrower or any Guarantor, as Administrative and Collateral Agent shall determine at any time that
an Event of
Default shall exist or have occurred and be continuing. Administrative and Collateral Agent
may, but shall not be required to, perform any or all of such obligations of any Borrower or any
Guarantor under any of such License Agreement, including, but not limited to, the payment of




98









 







any or
all sums due from any Borrower or any Guarantor thereunder. Any sums so paid by Administrative and
Collateral Agent shall constitute part of the Obligations.




     9.19 After Acquired Real Property. If any Borrower or any Guarantor hereafter
acquires any Real Property, fixtures or similar property and such Real Property, fixtures or other
property at any one location has a fair market value in an amount equal to or greater than Five
Million Dollars ($5,000,000) (or if an Event of Default exists, then regardless of the fair market
value of such assets), without limiting any other rights of Administrative and Collateral Agent, or
duties or obligations of such Borrower or such Guarantor, upon Administrative and Collateral
Agent’s request, such Borrower or such Guarantor shall execute and deliver to Administrative and
Collateral Agent a mortgage, deed of trust or deed to secure debt, as Administrative and Collateral
Agent may determine, in form and substance satisfactory to Administrative and Collateral Agent and
in form appropriate for recording in the real estate records of the jurisdiction in which such Real
Property or other property is located granting to Administrative and Collateral Agent, for itself
and the ratable benefit of the Lenders and the Bank Product Providers, a first and only lien and
mortgage on and security interest in such Real Property, fixtures or other property (except as such
Borrower or such Guarantor would otherwise be permitted to incur hereunder or as otherwise
consented to in writing by Administrative and Collateral Agent) and such other agreements,
documents and instruments as Administrative and Collateral Agent may require in connection
therewith.



     9.20 Costs and Expenses. Borrowers and Guarantors shall pay to Administrative and
Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers,
on demand and if requested, accompanied by an invoice in reasonable detail, all costs, expenses,
filing fees and filing or recording taxes paid or payable by any Agent in connection with the
preparation, negotiation, execution, delivery, recording, administration, collection, liquidation,
enforcement and defense of the Obligations, Administrative and Collateral Agent’s and Lender’s
rights in the Collateral, this Agreement, the other Financing Agreements and all other documents
related hereto or thereto, including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and thereof, including:
(a) all costs and expenses of filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, recording taxes and fees, if applicable); (b)
costs and expenses and fees for insurance premiums, environmental audits, surveys, assessments,
engineering reports and inspections, background checks, appraisal fees and search fees, costs and
expenses of remitting loan proceeds, collecting checks and other items of payment, and establishing
and maintaining the Blocked Accounts, together with Administrative and Collateral Agent’s customary
charges and fees with respect thereto; (c) charges, fees or expenses charged by any bank or issuer
in connection with the Letter of Credit Accommodations; (d) costs and expenses of preserving and
protecting the Collateral; (e) costs and expenses paid or incurred in connection with obtaining
payment of the Obligations, enforcing the security interests and liens of Administrative and
Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers,
selling or otherwise realizing upon the Collateral, and otherwise enforcing the provisions of this
Agreement and the other Financing Agreements or defending any claims made or threatened against any
Agent and/or
Lenders arising out of the transactions contemplated hereby and thereby (including
preparations for and consultations concerning any such matters); (f) all out-of-pocket expenses and
costs heretofore and from time to time hereafter incurred by Administrative and Collateral Agent or



99









 




any Lender during the course of periodic field examinations of the Collateral and such Borrower’s
or such Guarantor’s operations, plus a per diem charge at the then standard rate of Administrative
and Collateral Agent, per person per day for Administrative and Collateral Agent’s examiners in the
field and office (which rate is currently $850 per person per day); provided,
however, unless an Event of Default exists, Borrowers and Guarantors shall not be required
to pay such costs and expenses associated with more than 3 such field examinations per year; and
(g) the reasonable fees and disbursements of counsel (including legal assistants) to any Agent in
connection with any of the foregoing.




     9.21 Further Assurances. At the request of Administrative and Collateral Agent at any
time and from time to time, each Borrower and each Guarantor shall, at its expense, duly execute
and deliver, or cause to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or proper to
evidence, perfect, maintain and enforce the security interests and the priority thereof in the
Collateral and to otherwise effectuate the provisions or purposes of this Agreement or any of the
other Financing Agreements, including, without limitation, upon Administrative and Collateral
Agent’s request, executing and delivering, or causing to be executed and delivered, such other
agreements, documents and instruments as may be required by Administrative and Collateral Agent to
perfect the security interests of Administrative and Collateral Agent, for itself and the ratable
benefit of the Lenders and the Bank Product Providers, in those Accounts of an account debtor with
its chief executive office or principal place of business in Canada in accordance with the
applicable laws of the Province of Canada in which such chief executive office or principal place
of business is located and taking or causing to be taken such other and further actions as
Administrative and Collateral Agent may reasonably request to enable Administrative and Collateral
Agent, as secured party with respect thereto, to collect such Accounts under the applicable Federal
or Provincial laws of Canada. If requested by Administrative and Collateral Agent, each Borrower
and each Guarantor agrees to cause a certificate to be issued by one of its officer representing
that, as of such date, all conditions precedent to providing Loans contained herein are satisfied.



SECTION 10. EVENTS OF DEFAULT AND REMEDIES




     10.1 Events of Default. The occurrence or existence of any one or more of the
following events are referred to herein individually as an “Event of Default”, and
collectively as “Events of Default”:



          (a) (i) any Borrower fails to pay any of the Obligations pursuant to Section 2.1(b) within one
(1) Business Day after demand therefor, (ii) any Borrower fails to pay any of the other Obligations
(including amounts due pursuant to Section 9.20) within two (2) Business Days after the same
becomes due and payable, (iii) any Borrower or any Guarantor fails to perform any of the covenants
contained in Sections 9.3, 9.4, 9.5, 9.6, 9.13, 9.14, 9.16, 9.18, 9.19 or 9.21 of this Agreement or
any of the affirmative covenants set forth in any other Financing Agreement (other than payment
obligations) and such failure continues for ten (10) Business Days; provided, that,
such ten (10) Business Day period shall not apply in the case of: (A) any
failure to observe any such covenant which is not capable of being cured at all or within such
ten (10) Business Day period or which has been the subject of a prior failure within a six (6)
month period or (B) an intentional breach by any Borrower or any Guarantor of any such
covenant or





100









 







(iv) any Borrower or any Guarantor fails to perform any of the terms, covenants, conditions or
provisions contained in this Agreement or any of the other Financing Agreements other than those
described in subsections (i), (ii) or (iii) of this Section 10.1(a);




          (b) any representation or warranty made by any Borrower or any Guarantor to any Agent or any
Lender in this Agreement, the other Financing Agreements or any other agreement, schedule,
confirmatory assignment or otherwise shall when made or deemed made be false or misleading in any
material respect;




          (c) any Guarantor revokes or terminates or fails to perform any of the material terms,
covenants, conditions or provisions of any guaranty, endorsement or other agreement of such party
in favor of Administrative and Collateral Agent or any Lender;




          (d) any judgments for the payment of money are rendered against any Borrower or any Guarantor
in excess of Five Million Dollars ($5,000,000) in any one case or Ten Million Dollars ($10,000,000)
in the aggregate which remain undischarged or unvacated for a period in excess of sixty (60) days
or execution thereof is not at any time effectively stayed, or any other judgment other than for
the payment of money, injunction, attachment, garnishment or execution is rendered against any
Borrower or any Guarantor or any of their assets which constitutes a Material Adverse Change;




          (e) any Borrower or any Guarantor dissolves or suspends or discontinues doing business except
as permitted by Section 9.7 hereunder;




          (f) any Borrower or any Guarantor becomes insolvent (however defined or evidenced), makes an
assignment for the benefit of creditors, makes or sends notice of a bulk transfer or calls a
meeting of its creditors or principal creditors;




          (g) a case or proceeding under the bankruptcy laws of the United States of America now or
hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether
at law or in equity) is filed against any Borrower or any Guarantor or all or any part of their
respective properties and such petition or application is not dismissed within forty-five (45) days
after the date of its filing or any Borrower or any Guarantor shall file any answer admitting or
not contesting such petition or application or indicates its consent to, acquiescence in or
approval of, any such action or proceeding or the relief requested is granted sooner;




          (h) a case or proceeding under the bankruptcy laws of the United States of America now or
hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether
at a law or equity) is filed by any Borrower or any Guarantor or for all or any part of its
property; or




          (i) any default occurs with respect any Indebtedness of any Borrower or any Guarantor (other
than Indebtedness owing hereunder), in any case in an amount in excess of Ten Million Dollars
($10,000,000), which default continues for more than the applicable cure period, if any, with
respect thereto;





101









 








          (j) any material provision hereof or of any of the other Financing Agreements shall for any
reason cease to be valid, binding and enforceable with respect to any party hereto or thereto
(other than Agents and Lenders) in accordance with its terms, or any such party shall challenge the
enforceability hereof or thereof, or shall assert in writing, or take any action or fail to take
any action based on the assertion that any material provision hereof or of any of the other
Financing Agreements has ceased to be or is otherwise not valid, binding or enforceable in
accordance with its terms, or any security interest provided for herein or in any of the other
Financing Agreements shall cease to be a valid and perfected first priority security interest in
any of the Collateral purported to be subject thereto (except as otherwise permitted herein or
therein);




          (k) an ERISA Event shall occur which (i) results in or could reasonably be expected to result
in liability of any Borrower or any Guarantor in an aggregate amount in excess of Ten Million
Dollars ($10,000,000) which is not removed or resolved without liability to such Borrower or such
Guarantor or reasonably likely to be removed or resolved without liability to such Borrower or such
Guarantor within forty-five (45) days after the date such liability is incurred or (ii) results in
a lien in favor of the Pension Benefit Guaranty Corporation;




          (l) any Change of Control shall occur; or




          (m) the indictment by any Governmental Authority of any Borrower or any Guarantor of which any
Borrower, any Guarantor or any Agent receives notice, in either case, as to which there is a
reasonable possibility of an adverse determination, in the good faith determination of
Administrative and Collateral Agent, under any criminal statute, or commencement by any
Governmental Authority of criminal or civil proceedings against any Borrower or any Guarantor,
pursuant to which statute or proceedings the penalties or remedies sought or available include
forfeiture of (i) any of the Collateral having a value in excess of Five Million Dollars
($5,000,000) or (ii) any other property of any Borrower or any Guarantor which is necessary or
material to the conduct of its business.




     10.2 Remedies.



          (a) At any time an Event of Default exists or has occurred and is continuing, Agents and
Lenders shall have all rights and remedies provided in this Agreement, the other Financing
Agreements, the UCC, the PPSA and other applicable law, all of which rights and remedies may be
exercised without notice to or consent by any Borrower or any Guarantor, except as such notice or
consent is expressly provided for hereunder or required by applicable law. All rights, remedies
and powers granted to any Agent or any Lender hereunder, under any of the other Financing
Agreements, the UCC, the PPSA or other applicable law, are cumulative, not exclusive and
enforceable, in Administrative and Collateral Agent’s discretion, alternatively, successively, or
concurrently on any one or more occasions, and shall include, without limitation, the right to
apply to a court of equity for an injunction to restrain a breach or threatened breach by any
Borrower or any Guarantor of this Agreement or any of the other
Financing Agreements. Subject to Section 12 hereof, Administrative and Collateral Agent
shall, upon the direction of the Required Lenders, at any time or times an Event of Default exists
or has occurred and is continuing, proceed directly against any Borrower or any Guarantor to
collect the Obligations without prior recourse to any other Borrower or Guarantor or any of the
Collateral.




102









 








          (b) Without limiting the foregoing, at any time an Event of Default exists or has occurred and
is continuing, Administrative and Collateral Agent may, to the extent permitted by applicable law,
and upon the direction of the Required Lenders, shall (i) accelerate the payment of all Obligations
and demand immediate payment thereof to Administrative and Collateral Agent, for itself and the
ratable benefit of the Lenders and the Bank Product Providers, (provided, that, upon the occurrence
of any Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations shall
automatically become immediately due and payable), (ii) with or without judicial process or the aid
or assistance of others, enter upon any premises on or in which any of the Collateral may be
located and take possession of the Collateral or complete processing, manufacturing and repair of
all or any portion of the Collateral, (iii) require any Borrower or any Guarantor, at its expense,
to assemble and make available to Administrative and Collateral Agent any part or all of the
Collateral at any place and time designated by Administrative and Collateral Agent, (iv) collect,
foreclose, receive, appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located for the purpose of
effecting the sale, foreclosure or other disposition thereof or for any other purpose, (vi) sell,
lease, transfer, assign, deliver or otherwise dispose of any and all Collateral (including entering
into contracts with respect thereto, public or private sales at any exchange, broker’s board, at
any office of Administrative and Collateral Agent or elsewhere) at such prices or terms as
Administrative and Collateral Agent may deem reasonable, for cash, upon credit or for future
delivery, with Administrative and Collateral Agent or any Lender having the right to purchase the
whole or any part of the Collateral at any such public sale, all of the foregoing being free from
any right or equity of redemption of any Borrower or any Guarantor, which right or equity of
redemption is hereby expressly waived and released by each Borrower and each Guarantor and/or (vii)
terminate this Agreement. If any of the Collateral is sold or leased by Administrative and
Collateral Agent upon credit terms or for future delivery, the Obligations shall not be reduced as
a result thereof until payment therefor is finally collected by Administrative and Collateral
Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers. If notice
of disposition of Collateral is required by law, ten (10) days prior notice by Administrative and
Collateral Agent to Administrative Borrower designating the time and place of any public sale or
the time after which any private sale or other intended disposition of Collateral is to be made,
shall be deemed to be reasonable notice thereof and each Borrower and each Guarantor waives any
other notice. In the event Administrative and Collateral Agent institutes an action to recover any
Collateral or seeks recovery of any Collateral by way of prejudgment remedy, each Borrower and each
Guarantor waives the posting of any bond which might otherwise be required. At any time an Event
of Default exists or has occurred and is continuing, upon Administrative and Collateral Agent’s
request, Borrowers will either, as Administrative and Collateral Agent shall specify, furnish cash
collateral to the issuer to be used to secure and fund Administrative and Collateral Agent’s and/or
Lenders’ reimbursement obligations to the issuer in connection with any Letter of Credit
Accommodations or furnish cash collateral to Administrative and Collateral Agent, for itself and
the ratable benefit of the Revolving Loan Lenders, for the Letter of Credit Accommodations.
 Such
cash collateral shall be in the amount equal to one hundred five percent (105%) of the amount of
the Letter of Credit
Accommodations plus the amount of any fees and expenses payable in connection therewith
through the end of the expiration of such Letter of Credit Accommodations.




          (c) Administrative and Collateral Agent may, at any time or times that an Event of Default
exists or has occurred and is continuing, enforce any Borrower’s or any





103









 







Guarantor’s rights against
any account debtor, secondary obligor or other obligor in respect of any of the Accounts or other
Receivables. Without limiting the generality of the foregoing, Administrative and Collateral Agent
may at such time or times (i) notify any or all account debtors, secondary obligors or other
obligors in respect thereof that the Receivables have been assigned to Administrative and
Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank Product Providers,
and that Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and
the Bank Product Providers, has a security interest therein and Administrative and Collateral Agent
may direct any or all account debtors, secondary obligors and other obligors to make payment of
Receivables directly to Administrative and Collateral Agent, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or otherwise, and upon any
terms or conditions, any and all Receivables or other obligations included in the Collateral and
thereby discharge or release the account debtor, any secondary obligors or other obligors in
respect thereof without affecting any of the Obligations, (iii) demand, collect or enforce payment
of any Receivables or such other obligations, but without any duty to do so, and Administrative and
Collateral Agent shall not be liable for its failure to collect or enforce the payment thereof nor
for the negligence of its agents or attorneys with respect thereto and (iv) take whatever other
action Administrative and Collateral Agent may deem necessary or desirable for the protection of
its and Lenders’ interests. At any time that an Event of Default exists or has occurred and is
continuing, at Administrative and Collateral Agent’s request, all invoices and statements sent to
any account debtor shall state that the Accounts and such other obligations have been assigned to
Administrative and Collateral Agent and are payable directly and only to Administrative and
Collateral Agent and Borrowers and Guarantors shall deliver to Administrative and Collateral Agent
such originals of documents evidencing the sale and delivery of goods or the performance of
services giving rise to any Accounts as Administrative and Collateral Agent may require. In the
event any account debtor returns Inventory when an Event of Default exists or has occurred and is
continuing, Borrowers shall, upon Administrative and Collateral Agent’s request, hold the returned
Inventory in trust for Administrative and Collateral Agent and Lenders, segregate all returned
Inventory from all of its other property, dispose of the returned Inventory solely according to
Administrative and Collateral Agent’s instructions, and not issue any credits, discounts or
allowances with respect thereto without Administrative and Collateral Agent’s prior written
consent.




          (d) To the extent that applicable law imposes duties on Administrative and Collateral Agent or
Lenders to exercise remedies in a commercially reasonable manner (which duties cannot be waived
under such law), each Borrower and each Guarantor acknowledges and agrees, to the extent permitted
by applicable law, that it is not commercially unreasonable for Administrative and Collateral Agent
or any Lender (i) to fail to incur expenses reasonably deemed significant by such Person to prepare
Collateral for disposition or otherwise to complete raw material or work in process into finished
goods or other finished products for disposition, (ii) to fail to obtain third party consents for
access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to
obtain consents of any Governmental Authority or other third party for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against account debtors, secondary obligors or other persons
obligated on Collateral or to remove liens or encumbrances on or any adverse claims against
Collateral, (iv) to exercise collection remedies against account debtors and other persons
obligated on Collateral directly or through the use of collection agencies and other collection
specialists, (v) to advertise dispositions of Collateral through publications or media of general




104









 







circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other
persons, whether or not in the same business as any Borrower or any Guarantor, for expressions of
interest in acquiring all or any portion of the Collateral, (vii) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the collateral is of a
specialized nature, (viii) to dispose of Collateral by utilizing Internet sites that provide for
the auction of assets of the types included in the Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in
wholesale rather than retail markets, (x) to disclaim disposition warranties, (xi) to purchase
insurance or credit enhancements to insure such Person against risks of loss, collection or
disposition of Collateral or to provide to such Person a guaranteed return from the collection or
disposition of Collateral, or (xii) to the extent deemed appropriate by such Person, to obtain the
services of other brokers, investment bankers, consultants and other professionals to assist such
Person in the collection or disposition of any of the Collateral. Each Borrower and each Guarantor
acknowledges that the purpose of this Section is to provide non-exhaustive indications of what
actions or omissions by Administrative and Collateral Agent or any Lender would not be commercially
unreasonable in such Person’s exercise of remedies against the Collateral and that other actions or
omissions by such Person shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section. Without limitation of the foregoing, nothing contained in this
Section shall be construed to grant any rights to any Borrower or any Guarantor or to impose any
duties on Administrative and Collateral Agent or any Lender that would not have been granted or
imposed by this Agreement or by applicable law in the absence of this Section.




          (e) For the purpose of enabling Administrative and Collateral Agent and Lenders to exercise
the rights and remedies hereunder, each Borrower and each Guarantor hereby grants to Administrative
and Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank Product
Providers, to the extent assignable, an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to any Borrower or any Guarantor) to use, assign, license
or sublicense any of the trademarks, service-marks, trade names, business names, trade styles,
designs, logos and other source of business identifiers and other Intellectual Property and general
intangibles now owned or hereafter acquired by any Borrower or any Guarantor, wherever the same
maybe located, including in such license reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer programs used for the compilation or
printout thereof.




          (f) Administrative and Collateral Agent may apply the cash proceeds of Collateral actually
received by it from any sale, lease, foreclosure or other disposition of the Collateral to payment
of the Obligations, in whole or in part and in such order as Administrative and Collateral Agent
may elect, whether or not then due. Borrowers and Guarantors shall remain liable to Administrative
and Collateral Agent and Lenders for the payment of any deficiency with interest at the highest
rate provided for herein and all costs and expenses of collection or enforcement, including
reasonable attorneys’ fees and legal expenses.




          (g) Without limiting the foregoing, during the existence of a Default or Event of Default,
Administrative and Collateral Agent may, and upon the direction of the Required Lenders, shall,
without notice, (i) cease providing Loans or reduce the lending formulas or amounts of Loans
available to Borrowers, (ii) terminate any provision of this Agreement providing for any future
Loans to be provided by Administrative and Collateral Agent or Lenders




105









 







to Borrowers and/or (iii)
establish such Reserves as Administrative and Collateral Agent determines without limitation or
restriction, notwithstanding anything to the contrary contained herein.




SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW




     11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.



          (a) The validity, interpretation and enforcement of this Agreement and the other Financing
Agreements and any dispute arising out of the relationship between the parties hereto, whether in
contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New
York but excluding any principles of conflicts of law or other rule of law that would cause the
application of the law of any jurisdiction other than the laws of the State of New York.




          (b) Borrowers, Guarantors, Agents and Lenders irrevocably consent and submit to the
non-exclusive jurisdiction of the State of New York and the State and Federal courts located in the
Borough of Manhattan, County of New York, State of New York, whichever Administrative and
Collateral Agent may elect, and waive any objection based on venue or forum non conveniens with
respect to any action instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to the dealings of the parties
hereto in respect of this Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter arising, and whether in
contract, tort, equity or otherwise, and agree that any dispute with respect to any such matters
shall be heard only in the courts described above (except that Administrative and Collateral Agent
or any Lender shall have the right to bring any action or proceeding against any Borrower, any
Guarantor or its or their property in the courts of any other jurisdiction which such Person deems
necessary or appropriate in order to realize on the Collateral or to otherwise enforce its rights
against any Borrower, any Guarantor or its or their property).




          (c) Each Borrower and each Guarantor hereby waives personal service of any and all process
upon it and consents that all such service of process may be made by certified mail (return receipt
requested) directed to its address set forth herein and service so made shall be deemed to be
completed five (5) days after the same shall have been so deposited in the U.S. mails, or, at
Administrative and Collateral Agent’s or any Lender’s option, by service upon any Borrower or any
Guarantor in any other manner provided under the rules of any such courts. Within thirty (30) days
after such service, such Borrower or such Guarantor shall appear in answer to such process, failing
which such Borrower or such Guarantor shall be deemed in default and judgment may be entered by
Administrative and Collateral Agent or any Lender against such Borrower or such Guarantor for the
amount of the claim and other relief requested.




          (d) EACH BORROWER, EACH GUARANTOR, EACH AGENT AND EACH LENDER HEREBY WAIVE ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OF
THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY





106










 






CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. EACH BORROWER, EACH
GUARANTOR, EACH AGENT AND EACH LENDER HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY
FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.




          (e) No Agent or any Lender shall have any liability to any Borrower or any Guarantor (whether
in tort, contract, equity or otherwise) for losses suffered by any Borrower or any Guarantor in
connection with, arising out of, or in any way related to the transactions or relationships
contemplated by this Agreement, or any act, omission or event occurring in connection herewith,
unless it is determined by a final and non-appealable judgment or court order binding on such
Person, that the losses were the result of acts or omissions constituting gross negligence or
willful misconduct of such Person. Except as prohibited by law, each Borrower and each Guarantor
waives any right which it may have to claim or recover in any litigation with any Agent or any
Lender any special, exemplary, punitive or consequential damages or any damages other than, or in
addition to, actual damages. Each Borrower and each Guarantor: (i) certifies that none of any
Agent, any Lender, or any of their respective representatives, agents or attorneys acting for or on
behalf of such Person has, prior to the date hereof, represented, expressly or otherwise, that such
Person would not, in the event of litigation, seek to enforce any of the waivers provided for in
this Agreement or any of the other Financing Agreements and (ii) acknowledges that in entering into
this Agreement and the other Financing Agreements, Agents and Lenders are relying upon, among other
things, the waivers and certifications set forth in this Section 11.1 and elsewhere herein and
therein.




     11.2 Waiver of Notices. Each Borrower and each Guarantor hereby expressly waives
demand, presentment, protest and notice of protest and notice of dishonor with respect to any and
all instruments and chattel paper, included in or evidencing any of the Obligations or the
Collateral, and any and all other demands and notices of any kind or nature whatsoever with respect
to the Obligations, the Collateral and this Agreement, except such as are expressly provided for
herein. No notice to or demand on any Borrower or any Guarantor which Administrative and
Collateral Agent or any Lender may elect to give shall entitle such Borrower or such Guarantor to
any other or further notice or demand in the same, similar or other circumstances.



     11.3 Amendments and Waivers.



          (a) Neither this Agreement nor any other Financing Agreement nor any terms hereof or thereof
may be amended, waived, discharged or terminated unless such amendment, waiver, discharge or
termination is in writing signed by Administrative and Collateral Agent and the Required Lenders or
at Administrative and Collateral Agent’s option, by Administrative and Collateral Agent with the
authorization of the Required Lenders, and as to amendments to any of




107









 







the Financing Agreements
(other than with respect to any provision of Section 12 hereof), by any Borrower; except,
that:




               (i) without the prior written consent of Administrative and Collateral Agent and each Lender
other than the Sponsor Affiliated Lenders, no such amendment, waiver, discharge or termination
shall:



                    (A) amend, modify or waive any of the provisions of the introductory paragraph of Section
11.3(a) or any of the provisions of this Section 11.3(a)(i);



                    (B) reduce any percentage specified in the definition of Required Lenders or Required
Super-Majority Lenders or amend, modify or waive any provision of the definition of Pro Rata Share;



                    (C) consent to the assignment or transfer by any Borrower or any Guarantor of any of their
rights and obligations under this Agreement; or



                    (D) reduce the Interest Rate or any fees or indemnities related to the Revolving Loans or
Letter of Credit Accommodations, amend, modify or waive the provisions of Section 13.1(a) hereof or
otherwise extend the Final Maturity Date or the time of payment of principal of the Revolving
Loans, extend the time of payment of interest or any fees related to the Revolving Loans or reduce
the principal amount of any Revolving Loans or Letter of Credit Accommodations; or



                    (E) release all or substantially all of the Collateral;



               (ii) without the prior written consent of Administrative and Collateral Agent and the Required
Super-Majority Lenders, no such amendment, waiver, discharge or termination shall:



                    (A) amend, modify or waive any of the provisions of this Section 11.3(a)(ii);



                    (B) release any Collateral (except as expressly required hereunder or under any of the other
Financing Agreements or applicable law and except as permitted under Section 12.11(b) hereof);



                    (C) amend, modify or waive any of the provisions of Sections 6.4, 12.8 or 12.11(a) hereof;



                    (D) increase (1) the advance rates set forth in the definition of Borrowing Base, (2) the
Revolving Loan Limit or the Revolving Loan Threshold Limit, or (3) the amount of Revolving Loans or
Letter of Credit Accommodations available to Borrowers at any time;



                    (E) amend, modify or waive any of the provisions of the definition of Borrowing Base or of any
of the defined terms referred to in the definition of Borrowing Base if the effect thereof
increases the amount of the Borrowing Base; or



108









 





                    (F) amend, modify or waive any provision of the definitions of, Blocked Account Activation
Period, Modified Adjusted Excess Availability, Compliance Period, Excess Availability or Qualified
Cash; and



               (iii) Without the prior written consent of the Revolving Loan Lender directly affected
thereby, no such amendment, waiver, discharge or termination shall increase the Revolving Loan
Commitment of such Revolving Loan Lender over the amount thereof then in effect or provided
hereunder.



          (b) Notwithstanding anything to the contrary contained in Section 11.3(a) above,
Administrative and Collateral Agent may, in its discretion and without the consent of the Lenders
or the other Agent, amend or otherwise modify the Borrowing Base, the Reserves or any of their
respective components which amendments or modifications have the effect of increasing the Borrowing
Base, decreasing the Reserves or otherwise increasing the amounts available for borrowing hereunder
to the extent that such amendment or modification is made to restore the Borrowing Base, Reserves
or other components thereof if the reason for such reduction or increase no longer exists, as
determined by Administrative and Collateral Agent.




          (c) Agents and Lenders shall not, by any act, delay, omission or otherwise be deemed to have
expressly or impliedly waived any of its or their rights, powers and/or remedies unless such waiver
shall be in writing and signed as provided herein. Any such waiver shall be enforceable only to
the extent specifically set forth therein. A waiver by any Agent or any Lender of any right, power
and/or remedy on any one occasion shall not be construed as a bar to or waiver of any such right,
power and/or remedy which any Agent or any Lender would otherwise have on any future occasion,
whether similar in kind or otherwise.




          (d) Notwithstanding anything to the contrary contained in Section 11.3(a) above, in the event
that Borrowers and Guarantors request that this Agreement or any other Financing Agreements be
amended or otherwise modified in a manner which would require the unanimous consent of all of the
Lenders and such amendment or other modification is agreed to by the Administrative and Collateral
Agent and the Required Lenders, then, Borrowers, Administrative and Collateral Agent and the
Required Lenders, may amend this Agreement without the consent of the Lender or Lenders which did
not agree to such amendment or other modification (collectively, the “Non-Consenting
Lenders”) to provide for (i) the termination of the Commitment of each of the Non-Consenting
Lenders, (ii) the addition to this Agreement of one or more other Lenders, or an increase in the
Commitment of one or more of the Required Lenders, so that the Commitments, after giving effect to
such amendment, shall be in the same aggregate amount as the Commitments immediately before giving
effect to such amendment,
(iii) if any Loans are outstanding at the time of such amendment, the making of such
additional Loans by such new Lenders or Required Lenders, as the case may be, as may be necessary
to repay in full the outstanding Loans of the Non-Consenting Lenders immediately before giving
effect to such amendment, (iv) the payment of all interest, fees and other Obligations payable or
accrued in favor of the Non-Consenting Lenders and (v) such other modifications to this Agreement
as Borrowers and the Required Lenders may determine to be appropriate.




          (e) The consent of Administrative and Collateral Agent shall be required for any amendment,
waiver or consent affecting the rights or duties of Administrative and Collateral



109









 




Agent hereunder
or under any of the other Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section. The consent of the applicable Agent shall be required for any amendment,
waiver or consent affecting the rights or duties of such Agent hereunder or under any of the other
Financing Agreements, in addition to the consent of the Lenders otherwise required by this Section.
The exercise by Administrative and Collateral Agent of any of its rights hereunder with respect to
Reserves, Eligible Accounts, Eligible Inventory, Eligible Domestic In-Transit Inventory, Eligible
International In-Transit Inventory or Eligible Re-Load Inventory shall not be deemed an amendment
to the advance rates for purposes of this Section 11.3.




          (f) Notwithstanding anything to the contrary contained in this Agreement or any other
Financing Agreement, in no event shall any Sponsor Affiliated Lender be entitled to (i) consent to
any amendment, modification, waiver, consent or other such action with respect to any of the terms
of this Agreement or any other Financing Agreement, (ii) require any Agent or other Lender to
undertake any action (or refrain from taking any action) with respect to this Agreement or any
other Financing Agreement or (iii) otherwise vote on any matter related to this Agreement or any
other Financing Agreement; provided, however, no amendment, modification or waiver
shall deprive any Sponsor Affiliate Lender of its Pro Rata Share of any payments to which the
Lenders are entitled to share on a pro rata basis hereunder.




          (g) Notwithstanding anything to the contrary contained in Section 11.3(a) above,
Administrative and Collateral Agent may, in its discretion and without the consent of the Lenders
or the other Agents, amend this Agreement or any of the other Financing Agreements to add a Person
formed or acquired by any Borrower in connection with a Permitted Acquisition as a “Borrower” or a
“Guarantor” hereunder; provided, however, that any Person which is not organized or
incorporated under the laws of the United States of America, any state thereof or the District of
Columbia, shall not be added as a “Borrower” hereunder without the prior written consent of all
Lenders.




     11.4 Confidentiality. Each Lender agrees that it will use its reasonable best efforts
not to disclose, without the prior consent of Administrative Borrower, confidential information
with respect to any Borrower, any Guarantor or any of their respective Subsidiaries which is
furnished pursuant to this Agreement and which is specifically designated as confidential in
writing by Administrative Borrower or which such Lender would otherwise reasonably be expected to
know is confidential; provided, that, any Lender may disclose any such information
(a) to its employees, Affiliates, auditors or counsel, or to another Lender if the disclosing
Lender or such disclosing Lender’s holding or parent company in its sole discretion determines that
any such party should have access to such information, (b) as has become
generally available to the public, (c) as may be required or appropriate in any report,
statement or testimony submitted to any Governmental Authority having or claiming to have
jurisdiction over such Lender, (d) as may be required or appropriate in response to any summons or
subpoena or in connection with any litigation, (e) in order to comply with any statute or
regulation, and (f) to any prospective or actual assignee or Participant in connection with any
contemplated transfer or participation of any of the Revolving Loan Commitments or any interest
therein by such Lender, provided, that, such assignee or Participant has been
generally advised as to the confidentiality of any such confidential information and such assignee
or Participant agrees in writing to abide by the terms of this Section 11.4.



110









 





     11.5 Other Waivers. Each Borrower and each Guarantor waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other than compulsory
counterclaims) in any action or proceeding with respect to this Agreement, the Obligations, the
Collateral or any matter arising therefrom or relating hereto or thereto. To the extent permitted
by applicable law, each Borrower and each Guarantor shall not assert, and each Borrower and each
Guarantor hereby waives, any claim against any Agent and/or any Lender, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any of the other Financing
Agreements or any undertaking or transaction contemplated hereby.



     11.6 Indemnification. Each Borrower and each Guarantor shall, jointly and severally,
indemnify and hold each Agent and each Lender, and its directors, agents, employees and counsel,
harmless from and against any and all losses, claims, damages, liabilities, reasonable costs or
expenses (other than Excluded Taxes or any other Taxes for which Borrowers are not obligated to
provide indemnification pursuant to Section 6.5 hereof) imposed on, incurred by or asserted against
any of them in connection with any litigation, investigation, claim or proceeding commenced or
threatened related to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any undertaking or
proceeding related to any of the transactions contemplated hereby or any act, omission, event or
transaction related or attendant thereto, including amounts paid in settlement, court costs, and
the reasonable fees and expenses of counsel, but excluding any losses, claims, damages,
liabilities, costs or expenses arising from the gross negligence or willful misconduct of any
indemnified Person and excluding any indirect, consequential or punitive damages. To the extent
that the undertaking to indemnify, pay and hold harmless set forth in this Section may be
unenforceable because it violates any law or public policy, Borrowers and Guarantors shall pay the
maximum portion which it is permitted to pay under applicable law to Agents and Lenders in
satisfaction of indemnified matters under this Section. The foregoing indemnity shall survive the
payment of the Obligations and the termination or non-renewal of this Agreement.



SECTION 12. THE ADMINISTRATIVE AND COLLATERAL AGENT




     12.1 Appointment; Powers and Immunities.



          (a) Each Lender hereby, and each Bank Product Provider by providing any Bank Products to
Borrowers or Guarantors, irrevocably designates, appoints and authorizes Wachovia to act as
Administrative and Collateral Agent hereunder and under the other Financing
Agreements with such powers as are specifically delegated to Administrative and Collateral
Agent by the terms of this Agreement and of the other Financing Agreements, together with such
other powers as are reasonably incidental thereto. Administrative and Collateral Agent: (i) shall
have no duties or responsibilities except those expressly set forth in this Agreement and in the
other Financing Agreements, and shall not by reason of this Agreement or any other Financing
Agreement be a trustee or fiduciary for any Lender or Bank Product Provider; (ii) shall not be
responsible to Lenders or Bank Product Providers for any recitals, statements, representations or
warranties contained in this Agreement or in any other Financing Agreement, or in any certificate
or other document referred to or provided for in, or received by any of them under, this Agreement
or any other Financing Agreement, or for the value, validity, effectiveness,





111









 







genuineness,
enforceability or sufficiency of this Agreement or any other Financing Agreement or any other
document referred to or provided for herein or therein or for any failure by any Borrower or any
Guarantor or any other Person to perform any of its obligations hereunder or thereunder; and (iii)
shall not be responsible to Lenders or Bank Product Providers for any action taken or omitted to be
taken by it hereunder or under any other Financing Agreement or under any other document or
instrument referred to or provided for herein or therein or in connection herewith or therewith,
except for its own gross negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction. Administrative and Collateral Agent may employ
agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it in good faith. Administrative and Collateral Agent
may deem and treat the payee of any note as the holder thereof for all purposes hereof unless and
until the assignment thereof pursuant to an agreement (if and to the extent permitted herein) in
form and substance satisfactory to Administrative and Collateral Agent shall have been delivered to
and acknowledged by Administrative and Collateral Agent.




          (b) Without prejudice to the foregoing paragraph, each Lender, each Bank Product Provider by
providing any Bank Products to BlueLinx, and the Administrative and Collateral Agent (collectively
the “Creditors” for purposes of this Section 12.1(b) only), hereby designate and appoint Wachovia
(and hereby reiterate such designation and appointment made in the Original Loan Agreement in
respect of Congress Financial Corporation, a predecessor of Wachovia (“Congress”)) as the
person holding the power of attorney (fondé de pouvoir) of the Creditors as contemplated under
Article 2692 of the Civil Code of Quebec, to enter into, to take and to hold on their behalf, and
for their benefit, a deed of hypothec (“Deed of Hypothec”) executed by BlueLinx under the
laws of the Province of Quebec and creating a hypothec (security interest) on BlueLinx’s Collateral
located in such Province and to exercise such powers and duties which are conferred upon Wachovia
under such deed. Each Creditor hereby additionally designates and appoints Wachovia (and hereby
reiterate such designation and appointment made in the Original Loan Agreement in respect of
Congress) as agent and custodian for and on behalf of each of them (i) to hold and to be the sole
registered holder of any bond (“Bond”) issued under the Deed of Hypothec, the whole
notwithstanding Section 32 of the Act respecting the special powers of legal persons (Quebec) or
any other applicable law, and (ii) to enter into, to take and to hold on their behalf, and for
their benefit, a movable hypothec (“Movable Hypothec”) executed by BlueLinx under the laws
of the Province of Quebec and pledging the Bond as security for the payment and performance of the
Obligations (which include any and all obligations under the Deed of Hyphothec). In this respect,
(m) Wachovia, as agent and custodian of the Creditors, shall keep a record indicating the names and
addresses of,
and the pro rata portion of the Obligations and indebtedness secured by the Movable Hypothec,
owing to the Persons for and on behalf of whom the Bond is so held from time to time, and (n) each
Creditor will be entitled to the benefits of any Collateral of BlueLinx charged under the Deed of
Hypothec and the Movable Hypothec and will participate in the proceeds of realization of any such
Collateral, the whole in accordance with the terms hereof. Wachovia, in such aforesaid capacities
shall (x) have the sole and exclusive right and authority to exercise, except as may be otherwise
specifically restricted by the terms hereof, all rights and remedies given to Wachovia with respect
to the Collateral under the Deed of Hypothec and Movable Hypothec, applicable law or otherwise, and
(y) benefit from and be subject to all provisions hereof with respect to the Administrative and
Collateral Agent mutatis mutandis, including, without





112









 







limitation, all such provisions with respect
to the liability or responsibility to and indemnification by the Lenders and Bank Product
Providers. Any Person who becomes a Lender or a Bank Product Provider, as the case may be, shall
be deemed to have consented to and confirmed Wachovia as the person holding the power of attorney
(fondé de pouvoir) and as the agent and custodian as aforesaid and to have ratified, as of the date
it becomes a Lender or a Bank Product Provider, as the case may be, all actions taken by Wachovia
in such capacities. Wachovia shall be entitled to delegate from time to time any of its powers or
duties under the Deed of Hypothec and the Movable Hypothec to any Person and on such terms and
conditions as Wachovia may determine from time to time. It is hereby understood that (a) the Deed
of Hypothec, the Bond and Movable Hypothec executed by BlueLinx prior to the date hereof in favor
of Congress continue to be valid and enforceable in accordance with their respective terms and
remain in full force and effect, and all reference therein to “Congress Financial Corporation”
shall be deemed to refer to Wachovia, and (b) no novation of any kind has occurred in connection
with any of the obligations secured by the Deed of Hypothec nor the Movable Hypothec, any such
novation being hereby expressly disclaimed.




     12.2 Reliance By Administrative and Collateral Agent. Administrative and Collateral
Agent shall be entitled to rely upon any certification, notice or other communication (including
any thereof by telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants and other experts selected by
Administrative and Collateral Agent. As to any matters not expressly provided for by this
Agreement or any other Financing Agreement, Administrative and Collateral Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance
with instructions given by the Required Lenders or all of Lenders as is required in such
circumstance, and such instructions of such Lenders and any action taken or failure to act pursuant
thereto shall be binding on all Lenders.



     12.3 Events of Default.



          (a) Administrative and Collateral Agent shall not be deemed to have knowledge or notice of the
occurrence of an Event of Default or other failure of a condition precedent to the Loans hereunder,
unless and until Administrative and Collateral Agent has received written notice from a Lender, any
Borrower or any Guarantor specifying such Event of Default or any unfulfilled condition precedent,
and stating that such notice is a “Notice of Default or Failure of Condition”. In the event that
Administrative and Collateral Agent receives such a notice, Administrative and Collateral Agent
shall give prompt notice thereof to the
Lenders. Administrative and Collateral Agent shall (subject to Section 12.7) take such action
with respect to any such Event of Default or failure of condition precedent as shall be directed by
the Required Lenders; provided, that, unless and until Administrative and
Collateral Agent shall have received such directions, Administrative and Collateral Agent may (but
shall not be obligated to) take such action, or refrain from taking such action, with respect to or
by reason of such Event of Default or failure of condition precedent, as it shall deem advisable in
the best interest of Lenders. Without limiting the foregoing, and notwithstanding the existence or
occurrence and continuance of an Event of Default or any other failure to satisfy any of the
conditions precedent set forth in Section 4 of this Agreement to the contrary, subject to the
provisions of Section 12.8 and Section 12.11(a), Administrative and Collateral Agent may, but

113









 








shall
have no obligation to, continue to provide Loans for the ratable account and risk of Lenders from
time to time if Administrative and Collateral Agent believes providing such Loans is in the best
interests of Lenders.




          (b) Except with the prior written consent of Administrative and Collateral Agent, no Lender
may assert or exercise any enforcement right or remedy in respect of the Loans or other
Obligations, as against any Borrower or any Guarantor or any of the Collateral or other property of
any Borrower or any Guarantor.




     12.4 Wachovia in its Individual Capacity. With respect to its Revolving Loan
Commitment and the Loans made and Letter of Credit Accommodations issued or caused to be issued by
it (and any successor acting as Administrative and Collateral Agent), so long as Wachovia shall be
a Lender hereunder, it shall have the same rights and powers hereunder as any other Lender and may
exercise the same as though it were not acting as Administrative and Collateral Agent, and the term
“Lender” or “Lenders” shall, unless the context otherwise indicates, include Wachovia in its
individual capacity as Lender hereunder. Wachovia (and any successor acting as Administrative and
Collateral Agent) and its Affiliates may (without having to account therefor to any Lender) lend
money to, make investments in and generally engage in any kind of business with any Borrower or any
Guarantor (and any of their respective Subsidiaries or Affiliates) as if it were not acting as
Administrative and Collateral Agent, and Wachovia and its Affiliates may accept fees and other
consideration from any Borrower or any Guarantor for services in connection with this Agreement or
otherwise without having to account for the same to Lenders.



     12.5 Indemnification. Lenders agree to indemnify Administrative and Collateral Agent
(to the extent not reimbursed by Borrowers and Guarantors hereunder and without limiting the
Obligations of any Borrower or any Guarantor hereunder) ratably, in accordance with their Pro Rata
Shares, for any and all claims of any kind and nature whatsoever that may be imposed on, incurred
by or asserted against Administrative and Collateral Agent (including by any Lender) arising out of
or by reason of any investigation in or in any way relating to or arising out of this Agreement or
any other Financing Agreement or any other documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby (including the costs and expenses that
Administrative and Collateral Agent is obligated to pay hereunder) or the enforcement of any of the
terms hereof or thereof or of any such other documents, provided, that, no Lender
shall be liable for any of the foregoing to the extent it arises from the gross negligence or
willful misconduct of the party to be indemnified as determined by a final non-appealable judgment
of a court of competent jurisdiction.



     12.6 Non-Reliance on Agents and Other Lenders. Each Lender agrees that it has,
independently and without reliance on any Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own credit analysis of Borrowers and
Guarantors and has made its own decision to enter into this Agreement and that it will,
independently and without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any of the other Financing
Agreements. Agents shall not be required to keep themselves informed as to the performance or
observance by any Borrower or any Guarantor of any term or provision of this



114









 




Agreement or any of
the other Financing Agreements or any other document referred to or provided for herein or therein
or to inspect the properties or books of any Borrower or any Guarantor. Agents will use reasonable
efforts to provide Lenders with any information received by Agents from any Borrower or any
Guarantor which is required to be provided to Lenders hereunder and with a copy of any “Notice of
Default or Failure of Condition” received by any Agent from any Borrower, any Guarantor or any
Lender; provided, that, no Agent shall be liable to any Lender for any failure to
do so, except to the extent that such failure is attributable to such Agent’s own gross negligence
or willful misconduct as determined by a final non-appealable judgment of a court of competent
jurisdiction. Except for notices, reports and other documents expressly required to be furnished
to Lenders by any Agent hereunder, no Agent shall have any duty or responsibility to provide any
Lender with any other credit or other information concerning the affairs, financial condition or
business of any Borrower or any Guarantor that may come into the possession of such Agent.




     12.7 Failure to Act. Except for action expressly required of Administrative and
Collateral Agent hereunder and under the other Financing Agreements, Administrative and Collateral
Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder
unless it shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such action.



     12.8 Additional Revolving Loans. Administrative and Collateral Agent shall not make
any Revolving Loans or provide any Letter of Credit Accommodations to Borrowers on behalf of
Lenders intentionally and with actual knowledge that such Revolving Loans or Letter of Credit
Accommodations would cause the aggregate amount of the total outstanding Revolving Loans and Letter
of Credit Accommodations to Borrowers to exceed the Borrowing Base, without the prior consent of
the Required Super-Majority Lenders, except, that, Administrative and Collateral
Agent may make such additional Revolving Loans or provide such additional Letter of Credit
Accommodations on behalf of Revolving Loan Lenders, intentionally and with actual knowledge that
such Revolving Loans or Letter of Credit Accommodations will cause the total outstanding Revolving
Loans and Letter of Credit Accommodations to Borrowers exceed the Borrowing Base as Administrative
and Collateral Agent may deem necessary or advisable in its discretion, provided,
that, (a) without the consent of the Required Super-Majority Lenders: (i) the total
principal amount of the additional Revolving Loans or additional Letter of Credit Accommodations to
Borrowers which Administrative and Collateral Agent may make or provide after obtaining such actual
knowledge that the aggregate principal amount of the Revolving Loans equal or exceed the Borrowing
Base, together with the Special Agent Advances then outstanding, shall not exceed the amount equal
to ten (10%) percent of the Borrowing Base at the
time and shall not cause the total principal amount of the Revolving Loans and Letter of
Credit Accommodations to exceed the Revolving Loan Limit and (ii) Administrative and Collateral
Agent shall not make any such additional Revolving Loans or Letter of Credit Accommodations more
than ninety (90) days from the date of the first such additional Revolving Loans or Letter of
Credit Accommodations and (b) at the direction of the Required Lenders, Administrative and
Collateral Agent shall cease making such additional Revolving Loans or Letter of Credit
Accommodations. Each Revolving Lender shall be obligated to pay Administrative and Collateral
Agent the amount of its Pro Rata Share of any such additional Revolving Loans or



115









 




Letter of Credit
Accommodations provided that Administrative and Collateral Agent is acting in accordance with the
terms of this Section 12.8.




     12.9 Concerning the Collateral and the Related Financing Agreements. Each Lender
authorizes and directs Administrative and Collateral Agent to enter into this Agreement and the
other Financing Agreements relating to the Collateral for its ratable benefit. Each Lender agrees
that any action taken by Administrative and Collateral Agent or Required Lenders in accordance with
the terms of this Agreement or the other Financing Agreements relating to the Collateral, and the
exercise by Administrative and Collateral Agent or Required Lenders of their respective powers set
forth therein or herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders.



     12.10 Field Audits; Examination Reports and other Information; Disclaimer by Lenders.
By signing this Agreement, each Lender:



          (a) is deemed to have requested that Administrative and Collateral Agent furnish Lender,
promptly after it becomes available, a copy of each field audit or examination report and a weekly
report with respect to the Borrowing Base prepared by Administrative and Collateral Agent (each
field audit or examination report and weekly report with respect to the Borrowing Base being
referred to herein as a “Report” and collectively, the “Reports”);




          (b) expressly agrees and acknowledges that Administrative and Collateral Agent (i) does not
make any representation or warranty as to the accuracy of any Report, or (ii) shall not be liable
for any information contained in any Report; provided, that, nothing contained in
this Section 12.10 shall be construed to limit the liability of Administrative and Collateral Agent
under Section 12.1(c) hereof in the event of the gross negligence or willful misconduct of
Administrative and Collateral Agent as determined pursuant to a final non-appealable order of a
court of competent jurisdiction;




          (c) expressly agrees and acknowledges that the Reports are not comprehensive audits or
examinations, that Administrative and Collateral Agent or other party performing any audit or
examination will inspect only specific information regarding Borrowers and Guarantors and will rely
significantly upon Borrowers’ and Guarantors’ books and records, as well as on representations of
Borrowers’ and Guarantors’ personnel; and




          (d) agrees to keep all Reports confidential and strictly for its internal use in accordance
with the terms of Section 11.3(a) hereof, and not to distribute or use any Report in any other
manner.




     12.11 Collateral Matters.



          (a) Administrative and Collateral Agent may, at its option, from time to time, at any time on
or after an Event of Default and for so long as the same is continuing or upon any other failure of
a condition precedent to the Loans hereunder, make such disbursements and advances (“Special
Agent Advances”) which Administrative and Collateral Agent, in its reasonable credit judgment,
deems necessary or desirable either (i) to preserve or protect the Collateral or any portion
thereof or (ii) to pay any other amount chargeable to Borrowers or Guarantors pursuant to the terms
of this Agreement consisting of costs, fees and expenses and





116









 







payments to any issuer of Letter of
Credit Accommodations; provided that, without the consent of the Required
Super-Majority Lenders, in no event shall the aggregate amount of Special Agent Advances, together
with the Revolving Loans and Letter of Credit Accommodations made pursuant to Section 12.8 hereof,
exceed an amount equal to ten percent (10%) of the Borrowing Base at any time or cause the total
principal amount of the Revolving Loans and Letter of Credit Accommodations to exceed the Revolving
Loan Limit. Special Agent Advances shall be repayable on demand and be secured by the Collateral.
Administrative and Collateral Agent shall notify each Lender and Administrative Borrower in writing
of each such Special Agent Advance, which notice shall include a description of the purpose of such
Special Agent Advance. Without limitation of its obligations pursuant to Section 6.10, each Lender
agrees that it shall make available to Administrative and Collateral Agent, upon Administrative and
Collateral Agent’s demand, in immediately available funds, the amount equal to such Lender’s Pro
Rata Share of each such Special Agent Advance. If such funds are not made available to
Administrative and Collateral Agent by such Lender, Administrative and Collateral Agent shall be
entitled to recover such funds, on demand from such Lender together with interest thereon, for each
day from the date such payment was due until the date such amount is paid to Administrative and
Collateral Agent at the Interest Rate then payable by Borrowers in respect of the Revolving Loans
as set forth in Section 3.1 hereof.




          (b) Lenders hereby irrevocably authorize Administrative and Collateral Agent, at its option
and in its discretion to release any security interest in, mortgage or lien upon, any of the
Collateral: (i) upon termination of the Revolving Loan Commitments and payment and satisfaction of
all of the Obligations and delivery of cash collateral to the extent required under Section 13.1
hereof, (ii) constituting property being sold or disposed of in compliance with the applicable
terms of this Agreement or any consent granted in connection with this Agreement, (iii)
constituting property in which no Borrower or any Guarantor owned an interest at the time the
security interest, mortgage or lien was granted or at any time thereafter, (iv) having a value of
less than $25,000,000 or (v) in accordance with the terms of Sections 11.3(a)(i)(E) or
11.3(a)(ii)(B). Except as provided above, Administrative and Collateral Agent will not release any
security interest in, mortgage or lien upon, any of the Collateral without the prior written
authorization of all of Lenders (and any Lender may require that the proceeds from any sale or
other disposition of the Collateral to be so released be applied to the Obligations in a manner
satisfactory to such Lender). Upon request by Administrative and Collateral Agent at any time,
Lenders will promptly confirm in writing Administrative and Collateral Agent’s authority to release
particular types or items of Collateral pursuant to this Section.




          (c) Without in any manner limiting Administrative and Collateral Agent’s authority to act
without any specific or further authorization or consent by the Required Lenders,
each Lender agrees to confirm in writing, upon request by Administrative and Collateral Agent,
the authority to release Collateral conferred upon Administrative and Collateral Agent under this
Section. Administrative and Collateral Agent shall (and is hereby irrevocably authorized by
Lenders to) execute such documents as may be necessary to evidence the release of the security
interest, mortgage or liens granted to Administrative and Collateral Agent, for itself and the
ratable benefit of the Lenders and the Bank Product Providers, upon any Collateral to the extent
set forth above; provided, that, (i) Administrative and Collateral Agent shall not
be required to execute any such document on terms which, in Administrative and Collateral Agent’s
opinion, would expose Administrative and Collateral Agent to liability or create any obligations or
entail




117









 







any consequence other than the release of such security interest, mortgage or liens without
recourse or warranty and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any security interest, mortgage or lien upon (or obligations of any Borrower or any
Guarantor in respect of) the Collateral retained by such Borrower or such Guarantor.




          (d) Except as expressly required under the terms of this Agreement, Administrative and
Collateral Agent shall have no obligation whatsoever to any Lender or any other Person to
investigate, confirm or assure that the Collateral exists or is owned by any Borrower or any
Guarantor or is cared for, protected or insured or has been encumbered, or that any particular
items of Collateral meet the eligibility criteria applicable in respect of the Loans hereunder, or
whether any particular reserves are appropriate, or that the liens and security interests granted
to Administrative and Collateral Agent herein or pursuant hereto or otherwise have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to Administrative and Collateral Agent in this Agreement or in any of the
other Financing Agreements, it being understood and agreed that in respect of the Collateral, or
any act, omission or event related thereto, Administrative and Collateral Agent may act in any
manner it may deem appropriate, in its discretion, given Administrative and Collateral Agent’s own
interest in the Collateral as a Lender and that Administrative and Collateral Agent shall have no
duty or liability whatsoever to any other Lender.




     12.12 Agency for Perfection. Administrative and Collateral Agent and each Lender
hereby appoints each Lender as agent for the purpose of perfecting the security interests in and
liens upon the Collateral of Administrative and Collateral Agent, for itself and the ratable
benefit of the Lenders and the Bank Product Providers, in assets which, in accordance with Article
9 of the UCC can be perfected only by possession. Should any Lender obtain possession of any such
Collateral, such Lender shall notify Administrative and Collateral Agent thereof, and, promptly
upon Administrative and Collateral Agent’s request therefor shall deliver such Collateral to
Administrative and Collateral Agent or in accordance with Administrative and Collateral Agent’s
instructions. Each Lender confirms the appointment by Administrative and Collateral Agent of any
Person as it’s or the Lenders’ agent for the purpose of perfecting the security interests granted
under this Agreement and the other Financing Agreements.



     12.13 Failure to Respond Deemed Consent. In the event any Lender’s consent is
required pursuant to the provisions of this Agreement and such Lender does not respond to any
request by Administrative and Collateral Agent for such consent within ten (10) days after such
request is made to such Lender, such failure to respond shall be deemed a consent.



     12.14 Legal Representation of Agents. In connection with the negotiation, drafting,
and execution of this Agreement and the other Financing Agreements, or in connection with future
legal representation relating to loan administration, amendments, modifications, waivers, or
enforcement of remedies, Mayer, Brown, Rowe & Maw LLP (“MBR&M”) only has represented and
only shall represent Wachovia in its capacity as an Agent and as a Lender. Each other Lender
hereby acknowledges that MBR&M does not represent it in connection with any such matters.



118









 





SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS




     13.1 Term.



          (a) This Agreement and the other Financing Agreements shall become effective as of the date
set forth on the first page hereof and shall continue in full force and effect for a term ending on
the Final Maturity Date, unless sooner terminated pursuant to the terms hereof. Borrowers may,
upon not less than ten (10) days prior written notice to Administrative and Collateral Agent,
terminate this Agreement and the other Financing Agreements. Upon the effective date of
termination of this Agreement and the other Financing Agreements, Borrowers shall pay to
Administrative and Collateral Agent, for itself and the ratable benefit of the Lenders and the Bank
Product Providers, in full, all outstanding and unpaid Obligations and shall furnish cash
collateral to Administrative and Collateral Agent, (or at Administrative and Collateral Agent’s
option, a letter of credit issued for the account of Borrowers and at Borrowers’ expense, in form
and substance satisfactory to Administrative and Collateral Agent, by an issuer acceptable to
Administrative and Collateral Agent and payable to Administrative and Collateral Agent as
beneficiary, for itself and the ratable benefit of the Lenders and the Bank Product Providers) in
such amounts as Administrative and Collateral Agent determines are reasonably necessary to secure
(or reimburse) Administrative and Collateral Agent and Lenders from loss, cost, damage or expense,
including attorneys’ fees and legal expenses, in connection with any contingent Obligations,
including issued and outstanding Letter of Credit Accommodations and checks or other payments
provisionally credited to the Obligations and/or as to which Administrative and Collateral Agent
and Lenders have not yet received final and indefeasible payment and any continuing obligations of
Administrative and Collateral Agent or any Lender to any bank, financial institution or other
Person under or pursuant to any Deposit Account Control Agreement or Investment Property Control
Agreement. Such payments in respect of the Obligations and cash collateral shall be remitted by
wire transfer in Federal funds to such bank account of Administrative and Collateral Agent, as
Administrative and Collateral Agent may, in its discretion, designate in writing to Administrative
Borrower for such purpose. Interest shall be due until and including the next Business Day, if the
amounts so paid by Borrowers to the bank account designated by Administrative and Collateral Agent
are received in such bank account later than 12:00 noon, New York time.




          (b) No termination of this Agreement or the other Financing Agreements shall relieve or
discharge any Borrower or any Guarantor of its duties, obligations and covenants under this
Agreement or the other Financing Agreements until all Obligations due and owing have been fully and
finally discharged and paid (or cash collateralized in accordance with the terms of this
Agreement), and the continuing security interest of Administrative and Collateral Agent, for itself
and the ratable benefit of the Lenders and the Bank Product Providers, in the
Collateral and the rights and remedies of Administrative and Collateral Agent and Lenders
hereunder, under the other Financing Agreements and applicable law, shall remain in effect until
all such Obligations due and owing have been fully and finally discharged and paid (or cash
collateralized in accordance with the terms of this Agreement). Accordingly, each Borrower and
each Guarantor waives any rights which it may have under the UCC to demand the filing of
termination statements with respect to the Collateral, and neither Administrative and Collateral
Agent nor any Lender shall be required to send such termination statements to any Borrower or any
Guarantor, or to file them with any filing office, unless and until this Agreement is





119









 







terminated in
accordance with its terms and all of the Obligations due and owing are paid (or cash collateralized
in accordance with the terms of this Agreement) and satisfied in full in immediately available
funds.




     13.2 Interpretive Provisions.



          (a) All terms used herein which are defined in Article 1 or Article 9 of the UCC shall have
the meanings given therein unless otherwise defined in this Agreement.




          (b) All references to the plural herein shall also mean the singular and to the singular shall
also mean the plural unless the context otherwise requires.




          (c) All references to any party hereto pursuant to the definitions set forth in the recitals
hereto, or to any other person herein, shall include their respective successors and assigns.




          (d) The words “hereof”, “herein”, “hereunder”, “this Agreement” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not any particular
provision of this Agreement and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.




          (e) The word “including” when used in this Agreement shall mean “including, without
limitation”.




          (f) All references to the term “good faith” used herein when applicable to any Agent or any
Lender shall mean, notwithstanding anything to the contrary contained herein or in the UCC, honesty
in fact in the conduct or transaction concerned. Borrowers and Guarantors shall have the burden of
proving any lack of good faith on the part of any Agent or any Lender alleged by any Borrower or
any Guarantor at any time.




          (g) An Event of Default shall exist or continue or be continuing until such Event of Default
is waived in accordance with Section 11.3 or is cured, if such Event of Default is capable of being
cured as determined by Administrative and Collateral Agent.




          (h) Any accounting term used in this Agreement shall have, unless otherwise specifically
provided herein, the meaning customarily given in accordance with GAAP, and all financial
computations hereunder shall be computed unless otherwise specifically provided herein, in
accordance with GAAP as consistently applied and using the same method for inventory valuation as
used in the preparation of the financial statements of Borrowers most recently received by
Administrative and Collateral Agent.




          (i) In the computation of periods of time from a specified date to a later specified date, the
word “from” means “from and including”, the words “to” and “until” each mean “to but excluding” and
the word “through” means “to and including”.




          (j) Unless otherwise expressly provided herein, (i) references herein to any agreement,
document or instrument shall be deemed to include all subsequent amendments, modifications,
supplements, extensions, renewals, restatements or replacements with respect




120









 







thereto, but only to
the extent the same are not prohibited by the terms hereof or of any other Financing Agreement, and
(ii) references to any statute or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, recodifying, supplementing or
interpreting the statute or regulation.




          (k) The captions and headings of this Agreement are for convenience of reference only and
shall not affect the interpretation of this Agreement.




          (l) This Agreement and other Financing Agreements may use several different limitations, tests
or measurements to regulate the same or similar matters. All such limitations, tests and
measurements are cumulative and shall each be performed in accordance with their terms.




          (m) This Agreement and the other Financing Agreements are the result of negotiations among and
have been reviewed by counsel to Agents and Lenders and the other parties, and are the products of
all parties. Accordingly, this Agreement and the other Financing Agreements shall not be construed
against Agents or Lenders merely because of their involvement in their preparation.




     13.3 Notices. All notices, requests and demands hereunder shall be in writing and
deemed to have been given or made: if delivered in person, immediately upon delivery; if by
facsimile transmission, immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next Business Day, one (1)
Business Day after sending; and if by certified mail, return receipt requested, five (5) days after
mailing. All notices, requests and demands upon the parties are to be given to the following
addresses (or to such other address as any party may designate by notice in accordance with this
Section):



	 	 	 	 	 	 	 
	 

	 	If to any Borrower	 	 	 	 
	 	 	or any Guarantor:	 	BlueLinx Corporation
	 	 	 	 	4100 Wildwood Parkway
	 	 	 	 	Atlanta, Georgia 30339
	 	 	 	 	Attention: David Morris
	 	 	 	 	Telephone No.: (770) 221-2668
	 	 	 	 	Telecopy No.: (770) 221-2090
	 
	 	 	 	 	 	 
	 	 	with a copy to:	 	Schulte, Roth & Zabel LLP
	 	 	 	 	919 Third Avenue
	 	 	 	 	New York, New York 10022
	 

	 	 	 	Attention:
	 	Stuart D. Freedman, Esq.
	 

	 	 	 	 	 	Daniel V. Oshinsky, Esq.
	 	 	 	 	Telephone No.: (212) 756-2000
	 	 	 	 	Telecopy No.: (212) 593-5955
	 
	 	 	 	 	 	 
	 	 	and a copy to:	 	Cerberus Capital Management, LP
	 	 	 	 	299 Park Avenue, Floors 21-23
	 	 	 	 	New York, New York 10171






121









 






	 	 	 	 	 
	 

	 	 	 	Attention: Lenard Tessler
	 

	 	 	 	Telephone No.: (212) 891-2100
	 

	 	 	 	Telecopy No.: (212) 909-1409
	 
	 	 	 	 
	 

	 	If to Agents:
	 	Wachovia Bank, National Association
	 

	 	 	 	1133 Avenue of the Americas
	 

	 	 	 	New York, New York 10036
	 

	 	 	 	Attention: Portfolio Manager
	 

	 	 	 	Telephone No.: (212) 545-4200
	 

	 	 	 	Telecopy No.: (212) 545-4283
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Mayer, Brown, Rowe & Maw LLP
	 

	 	 	 	350 South Grand Avenue, 25th Floor
	 

	 	 	 	Los Angeles, California 90071
	 

	 	 	 	Attention: Marshall C. Stoddard, Jr., Esq.
	 

	 	 	 	Telephone No.: (213) 229-9500
	 

	 	 	 	Telecopy No.: (213) 625-0248






     13.4 Partial Invalidity. If any provision of this Agreement is held to be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate this Agreement as a whole,
but this Agreement shall be construed as though it did not contain the particular provision held to
be invalid or unenforceable and the rights and obligations of the parties shall be construed and
enforced only to such extent as shall be permitted by applicable law.



     13.5 Successors. This Agreement, the other Financing Agreements and any other
document referred to herein or therein shall be binding upon and inure to the benefit of and be
enforceable by Agents, Lenders, Bank Product Providers, Borrowers, Guarantors and their respective
successors and assigns, except that no Borrower or Guarantor may assign its rights under this
Agreement, the other Financing Agreements and any other document referred to herein or therein
without the prior written consent of Administrative and Collateral Agent and Lenders. No Lender
may assign its rights and obligations under this Agreement (or any part thereof) without the prior
written consent of all Lenders other than the Sponsor Affiliated Lenders and Administrative and
Collateral Agent, except as permitted under Section 13.6 hereof. Any purported assignment by a
Lender without such prior express consent or compliance with Section 13.6 where applicable, shall
be void. The terms and provisions of this Agreement and the other Financing Agreements are for the
purpose of defining the relative rights and obligations of Borrowers, Guarantors, Agents and
Lenders with respect to the transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement or any of the other Financing
Agreements.



     13.6 Assignments; Participations.



          (a) Each Lender may (i) assign all or a portion of its rights and obligations under this
Agreement (including, without limitation, a portion of its Revolving Loan Commitment, the Loans
owing to it and its rights and obligations as a Lender with respect to Letters of Credit
Accommodations) and the other Financing Agreements: (A) to its parent company and/or any Affiliate
of such Lender which is at least fifty (50%) percent owned by such




122









 







Lender or its parent company or
to one or more Lenders or (B) in connection with any merger, consolidation, sale, transfer or other
disposition of all or any substantial portion of the business or loan portfolio of such Lender; or
(ii) assign all, or if less than all a portion equal to at least $10,000,000 in the aggregate for
the assigning Lender or assigning Lenders, of such rights and obligations under this Agreement to
one or more Eligible Transferees, each of which assignees shall become a party to this Agreement as
a Lender by execution of an Assignment and Acceptance; provided, that, (A) the
consent of Administrative and Collateral Agent shall be required in connection with any assignment
to an Eligible Transferee pursuant to clause (ii) above, (B) if such Eligible Transferee is not a
bank, Administrative and Collateral Agent shall receive a representation in writing by such
Eligible Transferee that either (1) no part of its acquisition of its Loans is made out of assets
of any employee benefit plan, or (2) after consultation, in good faith, with Borrowers and
provision by Borrowers of such information as may be reasonably requested by such Eligible
Transferee, the acquisition and holding of such Revolving Loan Commitments and Loans does not
constitute a non-exempt prohibited transaction under Section 406 of ERISA and Section 4975 of the
Code, or (3) such assignment is an “insurance company general account,” as such term is defined in
the Department of Labor Prohibited Transaction Class Exemption 95.60 (issued July 12, 1995)
(“PTCE 95-60”), and, as of the date of the assignment, there is no “employee benefit plan”
with respect to which the aggregate amount of such general account’s reserves and liabilities for
the contracts held by or on behalf of such “employee benefit plan” and all other “employee benefit
plans” maintained by the same employer (and affiliates thereof as defined in Section V(a)(1) of
PTCE 95-60) or by the same employee organization (in each case determined in accordance with the
provisions of PTCE 95-60) exceeds ten (10%) percent of the total reserves and liabilities of such
general account (as determined under PTCE 95-60) (exclusive of separate account liabilities) plus
surplus as set forth in the National Association of Insurance Commissioners Annual Statement filed
with the state of domicile of such Eligible Transferee, and (C) such transfer or assignment will
not be effective until recorded by Administrative and Collateral Agent on the Register and
Administrative and Collateral Agent has received, for its own account, payment of a processing fee
from the assigning Lender or the assignee in the amount of $5,000. As used in this Section, the
term “employee benefit plan” shall have the meaning assigned to it in Title I of ERISA and shall
also include a “plan” as defined in Section 4975(e)(1) of the Code.




          (b) Administrative and Collateral Agent shall maintain a register of the names and addresses
of Lenders, their Revolving Loan Commitments and the principal amount of their Loans (the
“Register”). Administrative and Collateral Agent shall also maintain a copy of each
Assignment and Acceptance delivered to and accepted by them and shall modify the Register to give
effect to each Assignment and Acceptance. Upon their receipt of each Assignment and Acceptance,
Administrative and Collateral Agent will give prompt notice thereof to Lenders and deliver to each
of them a copy of the executed Assignment and Acceptance. The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and Borrowers,
Guarantors, Agents and Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register shall be available for
inspection by Borrowers, Guarantors and any Lender at any reasonable time and from time to time
upon reasonable prior notice.




          (c) Upon such execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, (i) the assignee thereunder shall




123









 







be a party hereto
and to the other Financing Agreements and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations
(including, without limitation, the obligation to participate in Letter of Credit Accommodations)
of a Lender hereunder and thereunder; provided, however, if at the time of such
assignment, such assigning Lender is not then entitled to receive any amounts pursuant to Section
6.5 hereof, Borrowers and Guarantors shall not be obligated to make any payments to such assignee
under Section 6.5 hereof if the assignee would otherwise be entitled to receive such amounts at the
time of such assignment and (ii) the assigning Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement.




          (d) By execution and delivery of an Assignment and Acceptance, the assignor and assignee
thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the other Financing
Agreements or the execution, legality, enforceability, genuineness, sufficiency or value of this
Agreement or any of the other Financing Agreements furnished pursuant hereto, (ii) the assigning
Lender makes no representation or warranty and assumes no responsibility with respect to the
financial condition of any Borrower, any Guarantor or any of their respective Subsidiaries or the
performance or observance by any Borrower or any Guarantor of any of the Obligations; (iii) such
assignee confirms that it has received a copy of this Agreement and the other Financing Agreements,
together with such other documents and information it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance, (iv) such assignee will,
independently and without reliance upon the assigning Lender, any Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this Agreement and the other
Financing Agreements, (v) such assignee appoints and authorizes Administrative and Collateral Agent
to take such action as agent on its behalf and to exercise such powers under this Agreement and the
other Financing Agreements as are delegated to Administrative and Collateral Agent by the terms
hereof and thereof, together with such powers as are reasonably incidental thereto, (vi) such
assignee appoints and authorizes each Agents to take such action as agent on its behalf and to
exercise such powers under this Agreement and the other Financing Agreements as are delegated to
such Agent by the terms hereof and thereof, together with such powers as are reasonably incidental
thereto, and (vii) such assignee agrees that it will perform in accordance with their terms all of
the obligations which by the terms of this Agreement and the other Financing Agreements are
required to be performed by it as a Lender. Agents and Lenders may furnish any information
concerning any Borrower, any Guarantor or their respective Subsidiaries in the possession of
Agents or any Lender from time to time to assignees and Participants.




          (e) Each Lender may sell participations to one or more banks or other entities in or to all or
a portion of its rights and obligations under this Agreement and the other Financing Agreements
(including, without limitation, all or a portion of its Revolving Loan Commitments and the Loans
owing to it and its participation in the Letter of Credit Accommodations, without the consent of
Administrative and Collateral Agent or the other Lenders); provided, that, (i) such




124









 







Lender’s obligations under this Agreement (including, without limitation, its Revolving Loan
Commitment hereunder) and the other Financing Agreements shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance of such
obligations, and Borrowers, Guarantors, Agents and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and obligations under this
Agreement and the other Financing Agreements, (iii) the Participant shall not have any rights under
this Agreement or any of the other Financing Agreements (the Participant’s rights against such
Lender in respect of such participation to be those set forth in the agreement executed by such
Lender in favor of the Participant relating thereto) and all amounts payable by any Borrower or any
Guarantor hereunder shall be determined as if such Lender had not sold such participation, (iv) if
such Participant is not a bank, represent that either (A) no part of its acquisition of its
participation is made out of assets of any employee benefit plan, or (B) after consultation, in
good faith, with Borrowers and provision by Borrowers of such information as may be reasonably
requested by the Participant, the acquisition and holding of such participation does not constitute
a non-exempt prohibited transaction under Section 406 of ERISA and Section 4975 of the Code, or (C)
such participation is an “insurance company general account, “ as such term is defined in the “PTCE
95-60”, and, as of the date of the transfer there is no “employee benefit plan” with respect to
which the aggregate amount of such general account’s reserves and liabilities for the contracts
held by or on behalf of such “employee benefit plan” and all other “employee benefit plans”
maintained by the same employer (and affiliates thereof as defined in Section V(a)(1) of PTCE
95-60) or by the same employee organization (in each case determined in accordance with the
provisions of PTCE 95-60) exceeds ten (10%) percent of the total reserves and liabilities of such
general account (as determined under PTCE 95-60) (exclusive of separate account liabilities) plus
surplus as set forth in the National Association of Insurance Commissioners Annual Statement filed
with the state of domicile of the Participant and (v) the agreements between such Lender and such
Participant shall not grant such Participant the right to consent to or vote on (A) any matters
other than those set forth in Section 11.3(a)(i) hereof or (B) if such Participant is a Sponsor
Affiliate Lender, any matters which pursuant to Section 11.3(f) hereof, a Sponsor Affiliate Lender
is not permitted to consent to or vote on.




          (f) Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loans
hereunder to a Federal Reserve Bank in support of borrowings made by such Lenders from such Federal
Reserve Bank.




          (g) Borrowers and Guarantors shall assist Agents or any Lender permitted to sell assignments
or participations under this Section 13.6 in whatever manner reasonably necessary in order to
enable or effect any such assignment or participation, including (but not limited to) the execution
and delivery of any and all agreements, notes and other documents and instruments as shall be
requested and the delivery of informational materials, appraisals or other
documents for, and the participation of relevant management in meetings and conference calls
with, potential assignees or Participants. Each Borrower and each Guarantor shall certify the
correctness, completeness and accuracy of all descriptions of such Borrower and such Guarantor and
its affairs provided, prepared or reviewed by such Borrower or such Guarantor that are contained in
any selling materials and all other information provided by it and included in such materials.




125









 








          (h) Administrative and Collateral Agent agrees that, so long as an Event of Default does not
then exist, Administrative and Collateral Agent shall not, without the prior consent of
Administrative Borrower (such consent not to be unreasonably withheld, conditioned or delayed)
assign to any Person (i) its rights and duties as administrative agent for the Lenders without also
assigning to such Person its rights and duties as collateral agent for the Lenders and Bank Product
Providers, (ii) its rights and duties as collateral agent for the Lenders and Bank Product
Providers without also assigning to such Person its rights and duties as administrative agent for
the Lenders, or (iii) its rights and duties as administrative and collateral agent for the Lenders
and Bank Product Providers unless such assignment is made (A) to its parent company or any of its
Affiliates which is at least 50% owned by Administrative and Collateral Agent or its parent or (B)
in connection with any merger, consolidation, sale, transfer or other disposition of all or any
substantial portion of the business or loan portfolio of Administrative Collateral Agent.
Notwithstanding anything to the contrary in this Agreement, in no event shall any Sponsor Affiliate
Lender be appointed as, or succeed to the rights and duties of, the Administrative and Collateral
Agent, or any Agent, under this Agreement.




     13.7 Participant’s Security Interests. If a Participant shall at any time participate
with any Lender in the Loans, each Borrower and each Guarantor hereby grants to such Participant
and such Participant shall have and is hereby given, a continuing lien on and security interest in
any money, securities and other property of such Borrower or such Guarantor in the custody or
possession of such Participant, including the right of setoff, to the extent of such Participant’s
participation in the Obligations, and such Participant shall be deemed to have the same right of
setoff to the extent of its participation in the Obligations, as it would have if it were a direct
Lender.



     13.8 ERISA Representation. Each Lender hereby represents and warrants to Borrowers
and Administrative and Collateral Agent that either (a) no part of the Loans made by such Lender
are made out of “plan assets” of any employee benefit plan subject to ERISA or any plan subject to
Section 4975 of the Code or (b) the making and holding of such Lender’s Revolving Loan Commitments
and Loans does not constitute a non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code.



     13.9 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to be delivered in
connection herewith or therewith represents the entire agreement and understanding concerning the
subject matter hereof and thereof between the parties hereto, and supersede all other prior
agreements, understandings, negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether oral or written. In
the event of any inconsistency between the terms of this Agreement and any schedule or exhibit
hereto, the terms of this Agreement shall govern.



     13.10 Counterparts, Etc. This Agreement or any of the other Financing Agreements may
be executed in any number of counterparts, each of which shall be an original, but all of which
taken together shall constitute one and the same agreement. Delivery of an executed counterpart of
this Agreement or any of the other Financing Agreements by telefacsimile or a substantially similar
electronic transmission shall have the same force and effect as the delivery of an original
executed counterpart of this Agreement or any of such other Financing



126









 




Agreements. Any party
delivering an executed counterpart of any such agreement by telefacsimile or a substantially
similar electronic transmission shall also deliver an original executed counterpart, but the
failure to do so shall not affect the validity, enforceability or binding effect of such agreement.




SECTION 14. JOINT AND SEVERAL LIABILITY; SURETYSHIP WAIVERS.




     14.1 Independent Obligations; Subrogation. The Obligations of each Borrower hereunder
are joint and several. To the maximum extent permitted by law, each Borrower hereby waives any
claim, right or remedy which such Borrower now has or hereafter acquires against any other Borrower
that arises hereunder including, without limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, contribution, indemnification, or participation in any claim, right or
remedy of Administrative and Collateral Agent or any Lender against any Borrower or any Collateral
which Administrative and Collateral Agent or any Lender now has or hereafter acquires, whether or
not such claim, right or remedy arises in equity, under contract, by statute, under common law or
otherwise until the Obligations are fully paid and finally discharged. In addition, each Borrower
hereby waives any right to proceed against the other Borrowers, now or hereafter, for contribution,
indemnity, reimbursement, and any other suretyship rights and claims, whether direct or indirect,
liquidated or contingent, whether arising under express or implied contract or by operation of law,
which any Borrower may now have or hereafter have as against the other Borrowers with respect to
the Obligations until the Obligations are fully paid and finally discharged. Each Borrower also
hereby waives any rights of recourse to or with respect to any asset of the other Borrowers until
the Obligations are fully paid and finally discharged.



     14.2 Authority to Modify Obligations and Security. Each Borrower authorizes
Administrative and Collateral Agent and Lenders, without notice or demand and without affecting any
Borrowers’ liability hereunder, from time to time, whether before or after any notice of
termination hereof or before or after any default in respect of the Obligations, to: (a) renew,
extend, accelerate, or otherwise change the time for payment of, or otherwise change any other term
or condition of, any document or agreement evidencing or relating to any Obligations as such
Obligations relate to the other Borrowers, including, without limitation, to increase or decrease
the rate of interest thereon; (b) accept, substitute, waive, defease, increase, release, exchange
or otherwise alter any Collateral, in whole or in part, securing the other Borrowers’ Obligations;
(c) apply any and all such Collateral and direct the order or manner of sale thereof as
Administrative and Collateral Agent and Lenders, in their sole discretion, may determine; (d) deal
with the other Borrowers as Administrative and Collateral Agent or any Lender may elect; (e) in
Administrative and Collateral Agent’s and Lenders’ sole discretion, settle, release on terms
satisfactory to them, or by operation of law or otherwise, compound, compromise, collect or
otherwise liquidate any of the other Borrowers’ Obligations and/or any of the Collateral in any
manner, and bid and purchase any of the collateral at any sale thereof; (vi) apply any and all
payments or recoveries from the other Borrowers as Administrative and Collateral Agent or
Lenders, in their sole discretion, may determine, whether or not such indebtedness relates to the
Obligations; all whether such Obligations are secured or unsecured or guaranteed or not guaranteed
by others; and (vii) apply any sums realized from Collateral furnished by the other Borrowers upon
any of its indebtedness or obligations to Administrative and Collateral Agent or Lenders as they in
their sole discretion, may determine, whether or not such indebtedness relates



127









 




to the Obligations;
all without in any way diminishing, releasing or discharging the liability of any Borrower
hereunder.




     14.3 Waiver of Defenses. Upon an Event of Default by any Borrower in respect of any
Obligations, Administrative and Collateral Agent and Lenders may, at their option and without
notice to any Borrower, proceed directly against any Borrower to collect and recover the full
amount of the liability hereunder, or any portion thereof, and each Borrower waives any right to
require Administrative and Collateral Agent or any Lender to: (a) proceed against the other
Borrowers or any other person whomsoever; (b) proceed against or exhaust any Collateral given to or
held by Administrative and Collateral Agent or any Lender in connection with the Obligations; (c)
give notice of the terms, time and place of any public or private sale of any of the Collateral
except as otherwise provided herein; or (d) pursue any other remedy in Administrative and
Collateral Agent’s or any Lender’s power whatsoever. A separate action or actions may be brought
and prosecuted against any Borrower whether or not action is brought against the other Borrowers
and whether the other Borrowers be joined in any such action or actions; and each Borrower waives
the benefit of any statute of limitations affecting the liability hereunder or the enforcement
hereof, and agrees that any payment of any Obligations or other act which shall toll any statute of
limitations applicable thereto shall similarly operate to toll such statute of limitations
applicable to the liability hereunder.



     14.4 Exercise of Administrative and Collateral Agent’s and Lenders’ Rights. Each
Borrower hereby authorizes and empowers Administrative and Collateral Agent and Lenders in their
sole discretion, without any notice or demand to such Borrower whatsoever and without affecting the
liability of such Borrower hereunder, to exercise any right or remedy which Administrative and
Collateral Agent or any Lender may have available to them against the other Borrowers.



     14.5 Additional Waivers. Each Borrower waives any defense arising by reason of any
disability or other defense of the other Borrowers or by reason of the cessation from any cause
whatsoever of the liability of the other Borrowers or by reason of any act or omission of
Administrative and Collateral Agent or any Lender or others which directly or indirectly results in
or aids the discharge or release of the other Borrowers or any Obligations or any Collateral by
operation of law or otherwise. The Obligations shall be enforceable against each Borrower without
regard to the validity, regularity or enforceability of any of the Obligations with respect to any
of the other Borrowers or any of the documents related thereto or any collateral security documents
securing any of the Obligations. No exercise by Administrative and Collateral Agent or any Lender
of, and no omission of Administrative and Collateral Agent or any Lender to exercise, any power or
authority recognized herein and no impairment or suspension of any right or remedy of
Administrative and Collateral Agent or any Lender against any Borrower or any Collateral shall in
any way suspend, discharge, release, exonerate or otherwise affect any of the Obligations or any
Collateral furnished by the Borrowers or give to the Borrowers any right of
recourse against Administrative and Collateral Agent or any Lender. Each Borrower
specifically agrees that the failure of Administrative and Collateral Agent or any Lender: (a) to
perfect any lien on or security interest in any property heretofore or hereafter given any Borrower
to secure payment of the Obligations, or to record or file any document relating thereto or (b) to
file or enforce a claim against the estate (either in administration, bankruptcy or other
proceeding) of



128









 




any Borrower shall not in any manner whatsoever terminate, diminish, exonerate or
otherwise affect the liability of any Borrower hereunder.




     14.6 Additional Indebtedness . Additional Obligations may be created from time to
time at the request of any Borrower and without further authorization from or notice to any other
Borrower even though the borrowing Borrower’s financial condition may deteriorate since the date
hereof. Each Borrower waives the right, if any, to require Administrative and Collateral Agent or
any Lender to disclose to such Borrower any information it may now have or hereafter acquire
concerning the other Borrowers’ character, credit, Collateral, financial condition or other
matters. Each Borrower has established adequate means to obtain from the other Borrowers, on a
continuing basis, financial and other information pertaining to such Borrower’s business and
affairs, and assumes the responsibility for being and keeping informed of the financial and other
conditions of the other Borrowers and of all circumstances bearing upon the risk of nonpayment of
the Obligations which diligent inquiry would reveal. Neither Administrative and Collateral Agent
nor any Lender need inquire into the powers of any Borrower or the authority of any of their
respective officers, directors, partners or agents acting or purporting to act in their behalf, and
any Obligations created in reliance upon the purported exercise of such power or authority is
hereby guaranteed. All Obligations of each Borrower to Administrative and Collateral Agent and
Lenders heretofore, now or hereafter created shall be deemed to have been granted at each
Borrower’s special insistence and request and in consideration of and in reliance upon this
Agreement.



     14.7 Notices, Demands, Etc. Except as expressly provided by this Agreement, neither
Administrative and Collateral Agent nor any Lender shall be under any obligation whatsoever to make
or give to any Borrower, and each Borrower hereby waives diligence, all rights of setoff and
counterclaim against Administrative and Collateral Agent or any Lender, all demands, presentments,
protests, notices of protests, notices of protests, notices of nonperformance, notices of dishonor,
and all other notices of every kind or nature, including notice of the existence, creation or
incurring of any new or additional Obligations.



     14.8 Subordination. Except as otherwise provided in this Section 14.8, any
indebtedness of any Borrower now or hereafter owing to any other Borrower is hereby subordinated to
the Obligations, whether heretofore, now or hereafter created, and whether before or after notice
of termination hereof, and, following the occurrence and during the continuation of an Event of
Default, no Borrower shall, without the prior consent of Required Lenders, pay in whole or in part
any of such indebtedness nor will any such Borrower accept any payment of or on account of any such
indebtedness at any time while such Borrower remains liable hereunder. At the request of
Administrative and Collateral Agent, after the occurrence and during the continuance of an Event of
Default, each Borrower shall pay to Administrative and Collateral Agent all or any part of such
subordinated indebtedness and any amount so paid to Administrative and Collateral Agent at its
request shall be applied to payment of the Obligations. Each payment on the indebtedness of any
Borrower to the other Borrowers received in violation
of any of the provisions hereof shall be deemed to have been received by any other Borrower as
trustee for Administrative and Collateral Agent and Lenders and shall be paid over to
Administrative and Collateral Agent immediately on account of the Obligations, but without
otherwise affecting in any manner any such Borrower’s liability under any of the provisions of this
Agreement. Each Borrower agrees to file all claims against the other Borrowers in any



129









 




bankruptcy
or other proceeding in which the filing of claims is required by law in respect of any indebtedness
of the other Borrowers to such Borrower, and Administrative and Collateral Agent and Lenders shall
be entitled to all of any such Borrower’s rights thereunder. If for any reason any such Borrower
fails to file such claim at least thirty (30) days prior to the last date on which such claim
should be filed, Administrative and Collateral Agent, as such Borrower’s attorney-in-fact, is
hereby authorized to do so in Borrowers’ name or, in Administrative and Collateral Agent’s
discretion, to assign such claim to, and cause a proof of claim to be filed in the name of,
Administrative and Collateral Agent’s nominee. In all such cases, whether in administration,
bankruptcy or otherwise, the person or persons authorized to pay such claim shall pay to
Administrative and Collateral Agent the full amount payable on the claim in the proceeding, and to
the full extent necessary for that purpose any such Borrower hereby assigns to Administrative and
Collateral Agent, for itself and the ratable benefit of Lenders, all such Borrower’s rights to any
payments or distributions to which such Borrower otherwise would be entitled. If the amount so
paid is greater than any such Borrower’s liability hereunder, Administrative and Collateral Agent
will pay the excess amount to the person entitled thereto.




     14.9 Revival. If any payments of money or transfers of property made to
Administrative and Collateral Agent or any Lender by any Borrower should for any reason
subsequently be declared to be fraudulent (within the meaning of any state or federal law relating
to fraudulent conveyances), preferential or otherwise voidable or recoverable in whole or in part
for any reason (hereinafter collectively called “voidable transfers”) under the Bankruptcy Code or
any other federal or state law and Administrative and Collateral Agent or any Lender is required to
repay or restore any such voidable transfer, or the amount or any portion thereof, then as to any
such voidable transfer or the amount repaid or restored and all reasonable costs and expenses
(including reasonable attorneys’ fees) of Administrative and Collateral Agent or any Lender related
thereto, such Borrower’s liability hereunder shall automatically be revived, reinstated and
restored and shall exist as though such voidable transfer had never been made to Administrative and
Collateral Agent or such Lender.



     14.10 Understanding of Waivers . Each Borrower warrants and agrees that the waivers
set forth in this Section 14 are made with full knowledge of their significance and consequences.
If any of such waivers are determined to be contrary to any applicable law or public policy, such
waivers shall be effective only to the maximum extent permitted by law.



[Signatures follow on next page]




130









 








     IN WITNESS WHEREOF, the parties hereto have caused these presents to be duly executed as of
the day and year first above written.



	 	 	 	 	 
	BORROWERS	 	 
	 
	 	 	 	 
	BLUELINX CORPORATION,

a Georgia corporation	 	 
	 
	 	 	 	 
	By:

Name:

	 	/s/ David J. Morris
 

David J. Morris
	 	 
	Title:

	 	 CFO and Treasurer	 	 






	 	 	 	 	 	 	 
	BLUELINX FLORIDA LP,

a Florida limited partnership	 	 
	 
	 	 	 	 	 	 
	By:	 	BlueLinx Florida Holding No. 2 Inc., its General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Barbara V. Tinsley
 

Barbara V. Tinsley
	 	 
	 

	 	Title:
	 	Secretary	 	 






	 	 	 	 	 
	BLUELINX SERVICES, INC.

a Georgia corporation	 	 
	 
	 	 	 	 
	By:

Name:

	 	/s/ Barbara V. Tinsley
 

Barbara V. Tinsley
	 	 
	Title:

	 	Secretary	 	 






131









 






	 	 	 	 	 
	GUARANTORS	 	 
	 
	 	 	 	 
	BLUELINX FLORIDA HOLDING NO. 1 INC.,

a Georgia corporation	 	 
	 
	 	 	 	 
	By:

Name:

	 	/s/ Barbara V. Tinsley
 

Barbara V. Tinsley
	 	 
	Title:

	 	Secretary	 	 
	 
	 	 	 	 
	BLUELINX FLORIDA HOLDING NO. 2 INC.,

a Georgia corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ Barbara V. Tinsley	 	 
	 

	 	 	 	 
	Name:

	 	Barbara V. Tinsley	 	 
	Title:

	 	Secretary	 	 
	 
	 	 	 	 
	BLX TEXAS ACQUISITION I LLC,

a Georgia limited liability company	 	 
	 
	 	 	 	 
	By:

	 	/s/ Barbara V. Tinsley	 	 
	 

	 	 	 	 
	Name:

	 	Barbara V. Tinsley	 	 
	Title:

	 	Secretary	 	 
	 
	 	 	 	 
	BLX TEXAS ACQUISITION II LLC,

a Georgia limited liability company	 	 
	 
	 	 	 	 
	By:

	 	/s/ Barbara V. Tinsley	 	 
	 

	 	 	 	 
	Name:

	 	Barbara V. Tinsley	 	 
	Title:

	 	Secretary	 	 






132









 






	 	 	 	 	 
	ADMINISTRATIVE AND COLLATERAL AGENT	 	 
	 
	 	 	 	 
	WACHOVIA BANK, NATIONAL ASSOCIATION,

as successor by merger to Congress Financial Corporation, as Administrative and
Collateral Agent	 	 
	 
	 	 	 	 
	By:

Name:

	 	/s/ James O’Connell
 

James O’Connell
	 	 
	Title:

	 	Vice President	 	 






133









 






	 	 	 	 	 
	DOCUMENTATION AGENTS	 	 
	 
	 	 	 	 
	BANK OF AMERICA, N.A.,

as a Documentation Agent	 	 
	 
	 	 	 	 
	By:

Name:

	 	/s/ Robert Scalzitti
 

Robert Scalzitti
	 	 
	Title:

	 	Vice President	 	 
	 
	 	 	 	 
	WELLS FARGO FOOTHILL, LLC,

as a Documentation Agent	 	 
	 
	 	 	 	 
	By:

	 	/s/ David Hill	 	 
	 

	 	 	 	 
	Name:

	 	David Hill	 	 
	Title:

	 	Vice President	 	 
	 
	 	 	 	 
	JPMORGAN CHASE BANK, N.A.

(formerly known as JPMorgan Chase Bank), as a Documentation Agent	 	 
	 
	 	 	 	 
	By:

	 	/s/ John M. Hariaczyi	 	 
	 

	 	 	 	 
	Name:

	 	John M. Hariaczyi	 	 
	Title:

	 	Vice President	 	 






134









 






	 	 	 	 	 
	LENDERS	 	 
	 
	 	 	 	 
	WACHOVIA BANK, NATIONAL ASSOCIATION,

as successor by merger to Congress Financial Corporation, as a Lender	 	 
	 
	 	 	 	 
	By:

Name:

	 	/s/ James O’Connell
 

James O’Connell
	 	 
	Title:

	 	Vice President	 	 
	 
	 	 	 	 
	BANK OF AMERICA, N.A.,

as a Lender	 	 
	 
	 	 	 	 
	By:

	 	/s/ Robert Scalzitti	 	 
	 

	 	 	 	 
	Name:

	 	Robert Scalzitti	 	 
	Title:

	 	Vice President	 	 
	 
	 	 	 	 
	WELLS FARGO FOOTHILL, LLC,

as a Lender	 	 
	 
	 	 	 	 
	By:

	 	/s/ David Hill	 	 
	 

	 	 	 	 
	Name:

	 	David Hill	 	 
	Title:

	 	Vice President	 	 
	 
	 	 	 	 
	GENERAL ELECTRIC CAPITAL CORPORATION,

as a Lender	 	 
	 
	 	 	 	 
	By:

	 	/s/ James R. Persico	 	 
	 

	 	 	 	 
	Name:

	 	James R. Persico	 	 
	Title:

	 	Duly Authorized Signatory	 	 






135









 






	 	 	 	 	 
	GMAC COMMERCIAL FINANCE LLC,

as a Lender	 	 
	 
	 	 	 	 
	By:

	 	/s/ Robert J. Brandow	 	 
	 

	 	 	 	 
	Name:

	 	Robert J. Brandow	 	 
	Title:

	 	Director	 	 
	 
	 	 	 	 
	ING CAPITAL LLC,

as a Lender	 	 
	 
	 	 	 	 
	By:

	 	/s/ Bennett C.Whitehurst	 	 
	 

	 	 	 	 
	Name:

	 	Bennett C. Whitehurst	 	 
	Title:

	 	Vice President	 	 
	 
	 	 	 	 
	THE CIT GROUP/BUSINESS CREDIT, INC.,

as a Lender	 	 
	 
	 	 	 	 
	By:

	 	/s/ Evelyn Kusold	 	 
	 

	 	 	 	 
	Name:

	 	Evelyn Kusold	 	 
	Title:

	 	Vice President	 	 
	 
	 	 	 	 
	JPMORGAN CHASE BANK, N.A.

(formerly known as JPMorgan Chase Bank),
as a Lender	 	 
	 
	 	 	 	 
	By:

	 	/s/ John M. Hariaczyi	 	 
	 

	 	 	 	 
	Name:

	 	John M. Hariaczyi	 	 
	Title:

	 	Vice President	 	 






136









 






TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	SECTION 1. DEFINITIONS	 	 	1	 
	 
	SECTION 2. CREDIT FACILITIES	 	 	30	 
	 
	 	2.1	 	Revolving Loans	 	 	30	 
	 
	 	2.2	 	Letter of Credit Accommodations	 	 	31	 
	 
	 	2.3	 	Commitments	 	 	34	 
	 
	 	2.4	 	Bank Products	 	 	34	 
	 
	 	2.5	 	Term Loan	 	 	34	 
	 
	SECTION 3. INTEREST AND FEES	 	 	35	 
	 
	 	3.1	 	Interest	 	 	35	 
	 
	 	3.2	 	Changes in Laws and Increased Costs of Loans	 	 	37	 
	 
	 	3.3	 	Fees	 	 	39	 
	 
	SECTION 4. CONDITIONS PRECEDENT AND SUBSEQUENT	 	 	40	 
	 
	 	4.1	 	Conditions Precedent to Initial Revolving Loans and Letter of Credit Accommodations	 	 	40	 
	 
	 	4.2	 	Conditions Precedent to All Revolving Loans and Letter of Credit Accommodations	 	 	44	 
	 
	SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST	 	 	44	 
	 
	 	5.1	 	Grant of Security Interest	 	 	44	 
	 
	 	5.2	 	Perfection of Security Interests	 	 	46	 
	 
	SECTION 6. COLLECTION AND ADMINISTRATION	 	 	50	 
	 
	 
	 	6.1	 	Borrowers’ Loan Account	 	 	50	 
	 
	 	6.2	 	Statements	 	 	51	 
	 
	 	6.3	 	Collection of Accounts	 	 	51	 
	 
	 	6.4	 	Payments	 	 	52	 
	 
	 	6.5	 	Taxes	 	 	55	 
	 
	 	6.6	 	Authorization to Make Loans	 	 	58	 
	 
	 	6.7	 	Use of Proceeds	 	 	58	 
	 
	 	6.8	 	Pro Rata Treatment	 	 	58	 
	 
	 	6.9	 	Sharing of Payments, Etc	 	 	59	 
	 
	 	6.10	 	Settlement Procedures	 	 	60	 
	 
	 	6.11	 	Obligations Several; Independent Nature of Lenders’ Rights	 	 	62	 






-i-









 






TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	6.12	 	Appointment of Administrative Borrower as Agent for Requesting Loans and Receipts of Loans and Statements	 	 	62	 
	 
	SECTION 7. COLLATERAL REPORTING AND COLLATERAL COVENANTS	 	 	62	 
	 
	 	7.1	 	Collateral Reporting	 	 	62	 
	 
	 	7.2	 	Accounts Covenants	 	 	63	 
	 
	 	7.3	 	Inventory Covenants	 	 	64	 
	 
	 	7.4	 	Equipment and Real Property Covenants	 	 	65	 
	 
	 	7.5	 	Power of Attorney	 	 	65	 
	 
	 	7.6	 	Right to Cure	 	 	66	 
	 
	 	7.7	 	Access to Premises	 	 	67	 
	 
	SECTION 8. REPRESENTATIONS AND WARRANTIES	 	 	67	 
	 
	 	8.1	 	Corporate Existence; Power and Authority	 	 	67	 
	 
	 	8.2	 	Name; State of Organization; Chief Executive Office; Collateral Locations	 	 	68	 
	 
	 	8.3	 	Financial Statements	 	 	68	 
	 
	 	8.4	 	Priority of Liens; Title to Properties	 	 	68	 
	 
	 	8.5	 	Tax Returns	 	 	68	 
	 
	 	8.6	 	Litigation	 	 	69	 
	 
	 	8.7	 	Compliance with Other Agreements and Applicable Laws	 	 	69	 
	 
	 	8.8	 	Environmental Compliance	 	 	69	 
	 
	 	8.9	 	Employee Benefits	 	 	70	 
	 
	 	8.10	 	Bank Accounts	 	 	71	 
	 
	 	8.11	 	Intellectual Property	 	 	71	 
	 
	 	8.12	 	Subsidiaries; Affiliates; Capitalization; Solvency	 	 	71	 
	 
	 	8.13	 	Labor Disputes	 	 	72	 
	 
	 	8.14	 	Restrictions on Subsidiaries	 	 	72	 
	 
	 	8.15	 	Material Contracts	 	 	72	 
	 
	 	8.16	 	Payable Practices	 	 	73	 
	 
	 	8.17	 	Acquisition of Purchased Assets	 	 	73	 
	 
	 	8.18	 	Accuracy and Completeness of Information	 	 	73	 
	 
	 	8.19	 	Survival of Warranties; Cumulative	 	 	74	 






-ii-









 






TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS	 	 	74	 
	 
	 	9.1	 	Maintenance of Existence	 	 	74	 
	 
	 	9.2	 	New Collateral Locations	 	 	74	 
	 
	 	9.3	 	Compliance with Laws, Regulations, Etc	 	 	75	 
	 
	 	9.4	 	Payment of Taxes and Claims	 	 	76	 
	 
	 	9.5	 	Insurance	 	 	76	 
	 
	 	9.6	 	Financial Statements and Other Information	 	 	77	 
	 
	 	9.7	 	Sale of Assets, Consolidation, Merger, Dissolution, Etc	 	 	79	 
	 
	 	9.8	 	Encumbrances	 	 	80	 
	 
	 	9.9	 	Indebtedness	 	 	82	 
	 
	 	9.10	 	Loans, Investments, Etc	 	 	85	 
	 
	 	9.11	 	Dividends and Redemptions	 	 	86	 
	 
	 	9.12	 	Transactions with Affiliates	 	 	87	 
	 
	 	9.13	 	Compliance with ERISA	 	 	88	 
	 
	 	9.14	 	End of Fiscal Years and Fiscal Quarters; Changes in Accounting Practices	 	 	88	 
	 
	 	9.15	 	Change in Business	 	 	88	 
	 
	 	9.16	 	Limitation of Restrictions Affecting Subsidiaries	 	 	88	 
	 
	 	9.17	 	Financial Covenants	 	 	89	 
	 
	 	9.18	 	License Agreements	 	 	89	 
	 
	 	9.19	 	After Acquired Real Property	 	 	90	 
	 
	 	9.20	 	Costs and Expenses	 	 	90	 
	 
	 	9.21	 	Further Assurances	 	 	91	 
	 
	SECTION 10. EVENTS OF DEFAULT AND REMEDIES	 	 	92	 
	 
	 	10.1	 	Events of Default	 	 	92	 
	 
	 	10.2	 	Remedies	 	 	94	 
	 
	SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW	 	 	97	 
	 
	 	11.1	 	Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver	 	 	97	 
	 
	 	11.2	 	Waiver of Notices	 	 	98	 
	 
	 	11.3	 	Amendments and Waivers	 	 	99	 






-iii-









 






TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	11.4	 	Confidentiality	 	 	101	 
	 
	 	11.5	 	Other Waivers	 	 	102	 
	 
	 	11.6	 	Indemnification	 	 	102	 
	 
	SECTION 12. THE ADMINISTRATIVE AND COLLATERAL AGENT	 	 	102	 
	 
	 	12.1	 	Appointment; Powers and Immunities	 	 	102	 
	 
	 	12.2	 	Reliance By Administrative and Collateral Agent	 	 	104	 
	 
	 	12.3	 	Events of Default	 	 	104	 
	 
	 	12.4	 	Wachovia in its Individual Capacity	 	 	105	 
	 
	 	12.5	 	Indemnification	 	 	105	 
	 
	 	12.6	 	Non-Reliance on Agents and Other Lenders	 	 	105	 
	 
	 	12.7	 	Failure to Act	 	 	106	 
	 
	 	12.8	 	Additional Revolving Loans	 	 	106	 
	 
	 	12.9	 	Concerning the Collateral and the Related Financing Agreements	 	 	106	 
	 
	 	12.10	 	Field Audits; Examination Reports and other Information; Disclaimer by Lenders	 	 	107	 
	 
	 	12.11	 	Collateral Matters	 	 	107	 
	 
	 	12.12	 	Agency for Perfection	 	 	109	 
	 
	 	12.13	 	Failure to Respond Deemed Consent	 	 	109	 
	 
	 	12.14	 	Legal Representation of Agents	 	 	109	 
	 
	SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS	 	 	109	 
	 
	 	13.1	 	Term	 	 	109	 
	 
	 	13.2	 	Interpretive Provisions	 	 	110	 
	 
	 	13.3	 	Notices	 	 	112	 
	 
	 	13.4	 	Partial Invalidity	 	 	113	 
	 
	 	13.5	 	Successors	 	 	113	 
	 
	 	13.6	 	Assignments; Participations	 	 	113	 
	 
	 	13.7	 	Participant’s Security Interests	 	 	117	 
	 
	 	13.8	 	ERISA Representation	 	 	117	 
	 
	 	13.9	 	Entire Agreement	 	 	117	 
	 
	 	13.10	 	Counterparts, Etc.	 	 	117	 






-iv-









 






TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	SECTION 14. JOINT AND SEVERAL LIABILITY; SURETYSHIP WAIVERS	 	 	125	 
	 
	 	14.1	 	Independent Obligations; Subrogation	 	 	125	 
	 
	 	14.2	 	Authority to Modify Obligations and Security	 	 	125	 
	 
	 	14.3	 	Waiver of Defenses	 	 	126	 
	 
	 	14.4	 	Exercise of Agent’s and Lenders’ Rights	 	 	126	 
	 
	 	14.5	 	Additional Waivers	 	 	126	 
	 
	 	14.6	 	Additional Indebtedness	 	 	127	 
	 
	 	14.7	 	Notices, Demands, Etc	 	 	127	 
	 
	 	14.8	 	Subordination	 	 	127	 
	 
	 	14.9	 	Revival	 	 	128	 
	 
	 	14.10	 	Understanding of Waivers	 	 	128	 






-v-









 






INDEX TO

EXHIBITS AND SCHEDULES




	 	 	 
	Exhibit A

	 	Form of Assignment and Acceptance
	 
	Exhibit B

	 	Information Certificate
	 
	Exhibit C

	 	Form of Compliance Certificate
	 
	Schedule 1.29

	 	Collection Accounts
	 
	Schedule 1.124

	 	Commitments
	 
	Schedule 5.2(b)

	 	Chattel Paper and Instruments
	 
	Schedule 5.2(f)

	 	Letters of Credit, etc.
	 
	Schedule 5.2(g)

	 	Commercial Tort Claims
	 
	Schedule 8.4

	 	Liens
	 
	Schedule 8.8

	 	Environmental Disclosures
	 
	Schedule 8.13

	 	Labor Relations
	 
	Schedule 8.15

	 	Material Contracts
	 
	Schedule 9.9

	 	Indebtedness
	 
	Schedule 9.10

	 	Loans and Advances
	 
	Schedule 9.14

	 	Fiscal Year, Quarter and Month Ending Dates