Document:

exv10w4

 

EXHIBIT 10.4

February 10, 2006

$53 Million Term Loan Facility

Commitment Letter

Integrated Electrical Services, Inc.

1800 West Loop South

Houston, Texas 77027

Attn: David A. Miller, Chief Financial Officer

Ladies and Gentlemen:

          You have advised Eton Park Fund, L.P., Eton Park Master Fund, Ltd. (collectively, “Eton
Park”), Flagg Street Partners LP, Flagg Street Partners Qualified LP and Flagg Street Offshore,
L.P. (collectively, “Flagg Street” and together with Eton Park, the “Initial
Lenders” ) that Integrated Electrical Services, Inc. (the “Borrower”) and its direct
and indirect subsidiaries (collectively, the “Loan Parties”) intend to commence voluntary
cases (the “Cases”) under Chapter 11 of Title 11 of the United States Code (as amended, the
“Bankruptcy Code”) in the United States Bankruptcy Court for the Northern District of Texas
(the “Bankruptcy Court”). You have further advised us that you expect that the Loan
Parties will be reorganized pursuant to a pre-arranged Chapter 11 plan of reorganization (the
“Plan of Reorganization”), and that the total consideration necessary to consummate the
Plan of Reorganization will be provided through (i) borrowings under a $80,000,000 revolving
facility to be provided by Bank of America (the “Revolving Facility”), (ii) borrowings
under a $53,000,000 term loan facility and (iii) the issuance to holders of certain senior
subordinated notes due 2009 (the “Bondholders”) and current equity holders and management
of new equity interests in the reorganized Borrower and the cancellation of such subordinated
notes.

          The consummation of the Plan of Reorganization, including the entering into and funding of the
Revolving Facility and the Facility (as defined below) and all related transactions contemplated by
the Plan of Reorganization, are hereinafter collectively referred to as the “Transaction”.
The proposed sources and uses for the financing for the Transaction are as set forth on
Schedule I annexed hereto.

          In connection with the Transaction, you have requested that each of Eton Park and Flagg Street
commit to provide a portion of a term loan facility for the Borrower, in an aggregate principal
amount of $53,000,000 (the “Facility”). Eton Park and Flagg Street are pleased to advise
you of their commitment to provide in the aggregate the entire amount of the Facility upon the
terms and subject to the conditions set forth or referred to in this commitment letter (the
“Commitment Letter”) and in the Summary of Terms and Conditions attached hereto as Exhibit
A (the “Term Sheet”) with Eton Park’s several commitment to provide $44,000,000 of the
Facility and Flagg Street’s several commitment to provide $9,000,000 of the Facility (collectively,
the “Commitments”).

          You agree promptly to prepare and provide to the Initial Lenders all information with respect
to the Loan Parties and their subsidiaries, the Transaction and the other transactions contemplated
hereby, including all financial information and projections (the “Projections”), as
the Initial Lenders may

 

 

reasonably request. You hereby represent and covenant that (a) all
information other than the Projections (the “Information”) that has been or will be made
available to the Initial Lenders by you or any of your representatives is or will be, when
furnished, complete and correct in all material respects and does not or will not, when furnished,
contain any untrue statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not materially misleading in light of the circumstances
under which such statements are made taken as a whole and (b) the Projections that have been or
will be made available to us by you or any of your representatives have been or will be prepared in
good faith based upon reasonable assumptions at the time made.

          As consideration for the commitments and agreements of the Initial Lenders hereunder, you
agree upon execution of this Commitment Letter to become obligated to pay the Commitment Fee
identified in the Term Sheet, which Commitment Fee shall be classified under the Plan of
Reorganization as a “Class 4-General Unsecured Claim”.

          Each Initial Lender’s commitments and agreements hereunder are subject to (a) there not
occurring or becoming known to such Initial Lender any event, development or circumstance since
November 30, 2005, except for the commencement of the Cases, that has had or could reasonably be
expected to have a material adverse effect on the business, operations, property, condition
(financial or otherwise) or prospects of the Loan Parties and their subsidiaries, taken as a whole,
(b) such Initial Lender not becoming aware after the date hereof of any information or other matter
(including any matter relating to financial models and underlying assumptions relating to the
Projections) affecting the Loan Parties or the Transaction that in such Initial Lender’s reasonable
judgment is inconsistent in a material and adverse manner with any such information or other matter
disclosed to such Initial Lender prior to the date hereof, (c) there not having occurred a material
disruption of or material adverse change in conditions in the financial, banking or capital market,
that, in such Initial Lender’s reasonable judgment, could reasonably be expected to materially
impair the Initial Lenders’ ability to fund their commitments under the Facility, (d) the payment
of all fees and expenses set forth in the Term Sheet in accordance with the terms thereof, (e) the
closing of the Facility on or before the date that is 120 days after the date hereof;
provided that the Initial Lenders may extend such deadline in their sole discretion, and
(f) the other conditions set forth or referred to in the Term Sheet. The terms and conditions of
the commitments hereunder and of the Facility are not limited to those set forth herein and in the
Term Sheet. Those matters that are not covered by the provisions hereof and of the Term Sheet are
subject to the approval and agreement of each of the Initial Lenders and you.

          You agree, jointly and severally, (a) to indemnify and hold harmless the Initial Lenders,
their affiliates and their respective directors, employees, advisors, and agents (each, an
“indemnified person”) from and against any and all losses, claims, damages and liabilities
to which any such indemnified person may become subject arising out of or in connection with this
Commitment Letter, the Facility, the use of the proceeds thereof, the Cases, the Transaction, or
any related transaction or any claim, litigation, investigation or proceeding relating to any of
the foregoing, regardless of whether any indemnified person is a party thereto, and to reimburse
each indemnified person upon demand for any reasonable legal or other expenses incurred in
connection with investigating or defending any of the foregoing, provided that the
foregoing indemnity will not, as to any indemnified person, apply to losses, claims, damages,
liabilities or related expenses to the extent they are found by a final, non-appealable judgment of
a court to arise from the bad faith, willful misconduct or gross negligence of such indemnified
person, and (b) to reimburse each Initial Lender and its affiliates on demand for all reasonable
out-of-pocket expenses (including due diligence expenses, consultant’s fees and expenses, travel
expenses, and reasonable fees, charges and disbursements of counsel) incurred in connection with
the Facility and any related documentation (including this Commitment Letter and the definitive
financing documentation) or the administration, amendment, modification or waiver thereof (it being
understood that any amounts paid pursuant to the Expense Deposit Letter (as defined below)
shall not be

2

 

deemed to be a limit or cap on the amount of expenses that may be incurred by the
Initial Lenders, and which the Borrower shall reimburse, in connection with the Transaction, and
that any additional expenses that may be incurred by the Initial Lenders shall be paid regardless
of whether any of the transactions contemplated hereby are consummated). No indemnified person
shall be liable for any damages arising from the use by others of Information or other materials
obtained through electronic, telecommunications or other information transmission systems or for
any special, indirect, consequential or punitive damages in connection with the Facility.

          You acknowledge that each Initial Lender and its affiliates (the term “Initial Lender”
as used below in this paragraph being understood to include such affiliates) may be providing debt
financing, equity capital or other services (including financial advisory services) to other
companies in respect of which you may have conflicting interests regarding the transactions
described herein (including without limitation, the Facility and the Plan of Reorganization) and
otherwise. Initial Lenders may hold long or short positions in debt or equity securities or loans
of the Borrower or of other companies that may be affected by the transactions contemplated by this
Commitment Letter. No Initial Lender will use confidential information obtained from you by virtue
of the transactions contemplated hereby or its other relationships with you in connection with the
performance by such Initial Lender of services for other companies, and no Initial Lender will
furnish any such information to other companies. You also acknowledge that no Initial Lender has
any obligation to use in connection with the transactions contemplated hereby, or to furnish to
you, confidential information obtained from other companies.

          Each Initial Lender may employ the services of its affiliates in providing certain services
hereunder and, in connection with the provision of such services, may exchange with such affiliates
information concerning you and the other companies that may be the subject of the transactions
contemplated by this Commitment Letter, and, to the extent so employed, such affiliates shall be
entitled to the benefits afforded such Initial Lender hereunder.

          This Commitment Letter shall not be assignable by you without the prior written consent of
each Initial Lender (and any purported assignment without such consent shall be null and void).
This Commitment Letter is intended to be solely for the benefit of the parties hereto and is not
intended to confer any benefits upon, or create any rights in favor of, any person other than the
parties hereto and the indemnified persons. This Commitment Letter may not be amended or waived
except by an instrument in writing signed by you and each Initial Lender. This Commitment Letter
may be executed in any number of counterparts, each of which shall be an original, and all of
which, when taken together, shall constitute one agreement. Delivery of an executed signature page
of this Commitment Letter by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof. This Commitment Letter and the Expense Deposit Letter, dated as of
January 31, 2006 (the “Expense Deposit Letter”), between you and the Initial Lenders are
the only agreements that have been entered into among us with respect to the Facility and set forth
the entire understanding of the parties with respect thereto. This Commitment Letter shall be
governed by, and construed and interpreted in accordance with, the laws of the State of New York.
Each of the parties hereto hereby irrevocably waives all rights to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Commitment Letter, the Term Sheet, the transactions contemplated hereby or thereby
or the actions of the parties in the negotiation, performance or enforcement hereof or thereof.

          Each of the parties hereto hereby irrevocably and unconditionally (a) submits, for itself and
its property, to the non-exclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Commitment Letter or the transactions
contemplated hereby, or for recognition or enforcement of any judgment, and agrees that all claims
in respect of any
such action or proceeding may be heard and determined in such New York State court, or to the
extent

3

 

permitted by law, in such Federal Court, (b) waives, to the fullest extent it may legally
and effectively do so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Commitment Letter or the
transactions contemplated hereby in any New York State court or in any such Federal Court and (c)
waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

          This Commitment Letter is delivered to you on the understanding that neither this Commitment
Letter, the Term Sheet nor any of their terms or substance shall be disclosed, directly or
indirectly, to any other person (including, without limitation, other potential providers or
arrangers of financing) except (i) that this Commitment Letter, the Term Sheet and the terms and
substance thereof may be disclosed (a) to your officers, agents and advisors who are directly
involved in the consideration of this matter, (b) to the members of the ad hoc committee of the
Bondholders and their advisors and to Bank of America, N.A., and its advisors, (c) existing and
proposed providers of surety bonds and their advisors or (d) as may be compelled in a judicial or
administrative proceeding or as otherwise required by law (in which case you agree to inform us
promptly thereof) and (ii) this Commitment Letter and the Term Sheet may be filed with (x) the
Bankruptcy Court pursuant to a motion or as part of the Plan of Reorganization and the Disclosure
Statement associated therewith and (y) the Securities and Exchange Commission.

          The compensation, reimbursement, indemnification and confidentiality provisions contained
herein and any other provision herein which by its terms expressly survives the termination of this
Commitment Letter shall remain in full force and effect regardless of whether definitive financing
documentation shall be executed and delivered and notwithstanding the termination of this
Commitment Letter or the commitments hereunder.

          The Initial Lenders hereby notify you that pursuant to the requirements of the USA PATRIOT
Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “PATRIOT Act”),
each Lender is required to obtain, verify and record information that identifies the Borrower,
which information includes the name, address, tax identification number and other information
regarding the Borrower that will allow such Lender to identify the Borrower in accordance with the
PATRIOT Act. This notice is given in accordance with the requirements of the PATRIOT Act and is
effective as to each Lender.

          If the foregoing correctly sets forth our agreement, please indicate your acceptance of the
terms hereof and of the Term Sheet by returning to us executed counterparts hereof not later than
5:00 p.m., New York City time, on February 13, 2006. This offer will automatically expire at such
time if we have not received such executed counterparts in accordance with the preceding sentence.

4

 

          We are pleased to have been given the opportunity to assist you in connection with this
important financing.

	 	 	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	ETON PARK FUND, L.P.,

by its investment manager Eton Park Capital
Management, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Marcy Engel	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Marcy Engel	 	 
	 	 	 	 	Title: General Counsel	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	ETON PARK MASTER FUND, LTD.,

by its investment manager Eton Park Capital
Management, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Marcy Engel	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Marcy Engel	 	 
	 	 	 	 	Title: General Counsel	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	FLAGG STREET PARTNERS LP,

by its general partner Flagg Street Capital LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Andrew Moss	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Andrew Moss	 	 
	 	 	 	 	Title: COO & General Counsel	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	FLAGG STREET PARTNERS QUALIFIED LP,

by its general partner Flagg Street Capital LLC
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Andrew Moss	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Andrew Moss	 	 
	 	 	 	 	Title: COO & General Counsel	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	FLAGG STREET OFFSHORE L.P.,

by its general partner Flagg Street Capital LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Andrew Moss	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Andrew Moss	 	 
	 	 	 	 	Title: COO & General Counsel	 	 

5

 

Accepted and agreed to as of

the date first above written:

	 	 	 	 	 	 	 
	INTEGRATED ELECTRICAL SERVICES, INC.	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ David A. Miller	 	 
	 	 	 	 	 
	 

	 	Name:
	 	David A. Miller	 	 
	 

	 	Title:
	 	Chief Financial Officer	 	 

6

 

Schedule I

Sources and Uses Table

	 	 	 	 	 	 	 	 	 	 	 
	Sources	 	 	 	 	 	Uses	 	 	 	 
	Senior Secured Term Loan
	 	$	53,000,000	 	 	Cash to Convertible Noteholders	 	$	53,000,000	*
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Total sources:
	 	$	53,000,000	 	 	Total uses:	 	$	53,000,000	 

 

			
	*	 	Approximate amounts with any unused balance to be available to the Borrower for
transaction costs and general corporate purposes.

7

 

EXHIBIT A

 

INTEGRATED ELECTRICAL SERVICES, INC.

$53,000,000 TERM LOAN EXIT FACILITY

Summary of Terms and Conditions

 

          Unless otherwise defined herein, capitalized terms are used herein as defined in the
Commitment Letter.

	 	 	 
	PARTIES
	 	 
	 
	 	 
	Borrower:

	 	Integrated Electrical Services, Inc., a Delaware
corporation (the “Borrower”).
	 
	 	 
	Guarantors:

	 	Each of the Borrower’s direct and indirect, existing and
future, domestic subsidiaries (collectively, the
“Guarantors”; the Borrower and the Guarantors,
collectively, the “Loan Parties”).
	 
	 	 
	Administrative Agent:

	 	An administrative agent to be identified by the Initial
Lenders and its function to be discussed (in such
capacity, the “Administrative Agent”), with the reasonable
fees and expenses of any such Administrative Agent to be
paid by the Borrower.
	 
	 	 
	Lenders:

	 	A syndicate of financial institutions and other entities,
including the Initial Lenders (collectively, the
“Lenders”).
	 
	 	 
	TYPE AND AMOUNT OF FACILITY
	 
	 	 
	Type and Amount:

	 	A term loan facility (the “Facility”) in the amount of
$53,000,000 (the loans thereunder, the “Loans”). The
Loans shall be repayable on the Maturity Date (as defined
below). For purposes hereof, the “Aggregate Principal
Amount Outstanding” shall mean at any time the amount
equal to the sum of (a) the principal amount of the Loans
outstanding at such time and (b) the amount of interest
that has accrued and been paid by capitalizing such
interest as additional loans under the Facility at such
time.
	 
	 	 
	Availability:

	 	The Loans shall be made in a single drawing on the Closing
Date, other than Loans in the form of capitalized
interest.
	 
	 	 
	Purpose:

	 	The proceeds of the Loans shall be used to finance the
Loan Parties’ obligations under their Plan of
Reorganization, including repayment in full of the holders
of the Borrower’s Series A 6.5% Senior Convertible Notes
due 2014 and Series B 6.5% Senior Convertibles Notes due
2014 (collectively, the “Convertible

8

 

	 	 	 
	 

	 	Notes”) and to pay fees and expenses arising from this Facility.
	 
	 	 
	Tenor:

	 	The Aggregate Principal Amount Outstanding shall be due
and payable on the seventh anniversary from the Closing
Date (the “Maturity Date”); provided that the Required
Lenders may, subject to sixty days’ notice, demand
repayment in full of the Aggregate Principal Amount
Outstanding at any time on or after the fourth anniversary
of the Closing Date.
	 
	 	 
	CERTAIN PAYMENT PROVISIONS
	 
	 	 
	Fees and Interest Rates:

	 	As set forth on Annex I.
	 
	 	 
	Optional Prepayments:

	 	The Aggregate Principal Amount Outstanding may be prepaid
at any time upon five business days’ notice, in minimum
principal amounts to be agreed upon; provided that the
Borrower shall, together with such prepayment, also pay
(i) any cash interest (as opposed to paid in kind
interest) that has accrued to the date of the prepayment
on the Loans so prepaid and (ii) all amounts required
under “Call Protection”. Optional prepayments of the Loans
may not be reborrowed.
	 
	 	 
	Mandatory Prepayments:

	 	The following amounts shall be applied to prepay the Loans:
	 
	 	 
	 

	 	100% of the net proceeds of any sale or other disposition
(including as a result of casualty or condemnation) by the
Loan Parties, except for the sale of inventory or obsolete
or worn-out property, in each case in the ordinary course
of business, and subject to certain other customary
exceptions (including a cumulative basket of $7 million
and capacity for reinvestment) to be agreed upon. Net
proceeds from asset sales not covered by such exceptions
shall be applied first, to prepay any amounts outstanding,
or to replenish the borrowing base, under the Revolving
Facility, and, second, to prepay the Loans.
	 
	 	 
	 

	 	The Borrower shall, together with such prepayment, also
pay (i) any cash interest (as opposed to paid in kind
interest) that has accrued to the date of the prepayment
on the Loans so prepaid and (ii) all amounts required
under “Call Protection”. Mandatory prepayments of the
Loans may not be reborrowed.
	 
	 	 
	Call Protection

	 	In the event all or any portion of the Facility is
voluntarily or mandatorily prepaid for any reason at any
time following the Closing Date, such prepayments shall be
made as follows:
	 
	 	 
	 

	 	(a) 105.5% of the amount of Aggregate Principal Amount
Outstanding prepaid, if such prepayment occurs on or prior
to the first anniversary of the Closing Date;
	 
	 	 
	 

	 	(b) 104.5% of the amount of Aggregate Principal Amount
Outstanding prepaid, if such prepayment occurs after the
first

9

 

	 	 	 
	 

	 	anniversary of the Closing Date but on or before the
second anniversary of the Closing Date;
	 
	 	 
	 

	 	(c) 103.5% of the amount of Aggregate Principal Amount
Outstanding prepaid, if such prepayment occurs after the
second anniversary of the Closing Date but on or before
the third anniversary of the Closing Date;
	 
	 	 
	 

	 	(d) 102.5% of the amount of Aggregate Principal Amount
Outstanding prepaid, if such prepayment occurs after the
third anniversary of the Closing Date but on or before the
fourth anniversary of the Closing Date and does not result
from the Required Lenders exercising their put option;
	 
	 	 
	 

	 	(e) 101.5% of the amount of Aggregate Principal Amount
Outstanding prepaid, if such prepayment occurs after the
fourth anniversary of the Closing Date but on or before
the fifth anniversary of the Closing Date and does not
result from the Required Lenders exercising their put
option; and
	 
	 	 
	 

	 	(f) 100.5% of the amount of Aggregate Principal Amount
Outstanding prepaid, if such prepayment occurs after the
fifth anniversary of the Closing Date but on or before the
sixth anniversary of the Closing Date and does not result
from the Required Lenders exercising their put option.
	 
	 	 
	Prepayment in Full

	 	If, after giving effect to any optional or mandatory
prepayment hereunder, the principal amount outstanding
under the Facility is less than $12,000,000, then the
Borrower shall immediately prepay the Aggregate Principal
Amount Outstanding. The Borrower shall, together with
such prepayment, also pay (i) any cash interest (as
opposed to paid in kind interest) that has accrued to the
date of the prepayment on the Loans so prepaid and (ii)
all amounts required under “Call Protection”.

10

 

	 	 	 
	COLLATERAL

	 	The obligations of each Loan Party in respect of the
Facility and shall be secured by (a) all of the tangible
and intangible personal property of the Loan Parties,
including, without limitation, all accounts, inventory,
equipment, instruments, chattel paper, documents, general
intangibles, deposit accounts, investment property, all of
the capital stock of the Borrower and each of its direct
and indirect subsidiaries (limited, in the case of foreign
subsidiaries, to 66% of the capital stock of first tier
foreign subsidiaries to the extent a pledge of a greater
percentage could reasonably be expected to result in
adverse tax consequences) and all proceeds thereof and (b)
all owned real property with a value not less than an
amount to be determined (the “Collateral’). For avoidance
of doubt, the Collateral securing the obligations shall be
substantially the same as the collateral securing the
obligations under the Revolving Facility and shall exclude
all collateral granted to sureties.
	 
	 	 
	 

	 	All the pledges, security interests and mortgages on the
Collateral shall be created on terms, and pursuant to
documentation, reasonably satisfactory to the Initial
Lenders, and none of the Collateral shall be subject to
any other pledges, security interests or mortgages,
subject to customary and limited exceptions to be agreed
and except to the extent securing the Revolving Facility
and the related guarantees (collectively, the “Revolving
Facility Obligations”).
	 
	 	 
	 

	 	The liens securing the Facility will be second in priority
to the liens securing the Revolving Facility Obligations.
The priority of the security interests in the Collateral
and related creditors’ rights will be set forth in an
intercreditor agreement reasonably acceptable in form and
substance to the Initial Lenders (the “Intercreditor
Agreement”); provided that the Intercreditor Agreement
shall provide for a “silent” second in respect of the
right of the Lenders to exercise rights and enforce
remedies under the Facility upon terms satisfactory to the
Agent for the Revolving Facility.
	 
	 	 
	CERTAIN CONDITIONS
	 	 
	 
	 	 
	Initial Conditions:

	 	The availability of the Facility shall be conditioned upon
the satisfaction of conditions precedent usual for
facilities and transactions of this type, including,
without limitation, the following conditions (the date
upon which all such conditions precedent shall be
satisfied, the “Closing Date”):
	 
	 	 
	 

	 	Each Loan Party shall have executed and delivered
satisfactory definitive financing documentation with
respect to the Facility, including without limitation the
Intercreditor Agreement (the “Loan Documentation”), and
the Initial Lenders shall have received all fees required
to be paid to each of them, and all expenses required to
be paid for which invoices have been

11

 

	 	 	 
	 

	 	presented, two (2)business days before the Closing Date.
	 
	 	 
	 

	 	The confirmation order of the Bankruptcy Court approving
the Plan of Reorganization (i) shall be in form and
substance reasonably satisfactory to the Initial Lenders
and shall authorize the Facility and the Transaction and
(ii) shall be in full force and effect and shall not have
been reversed or modified and shall not be stayed or
subject to a motion to stay, and the period for appealing
the confirmation order shall have elapsed. No provision
of the Plan of Reorganization shall have been amended,
supplemented or otherwise modified in any material respect
that is adverse to the Lenders without the prior written
consent of the Initial Lenders. The effective date under
the Plan of Reorganization shall have occurred (and all
conditions precedent thereto as set forth therein shall
have been satisfied) or shall occur simultaneously with
the closing of the Facility. The documentation to
effectuate the Plan of Reorganization and the Transaction
shall have reasonably satisfactory terms and conditions,
and no provision of such documentation shall have been
waived, amended, supplemented or otherwise modified in any
material respect without the approval of the Initial
Lenders. The capitalization, structure and equity
ownership of each Loan Party, and the organizational
documents and senior management of the Loan Parties, after
the consummation of the Plan of Reorganization shall be
consistent in all material respects with the description
set forth in the Disclosure Statement filed with the
Bankruptcy Court (the “Disclosure Statement”).
	 
	 	 
	 

	 	With respect to any debtor-in-possession financing, such
financing shall have been (i) repaid in full in cash, all
commitments relating to the foregoing shall have been
terminated and all liens and security interests related
thereto shall have been terminated or released or (ii)
converted, pursuant to the Plan of Reorganization, into a
commitment to provide the Revolving Facility after the
effective date of the Plan of Reorganization, and no
prepetition indebtedness, debtor-in-possession financing
or other claims against the Loan Parties shall remain
outstanding as obligations of the Loan Parties, except to
the extent converted as set forth in clause (ii) above or
as otherwise specifically contemplated by the Plan of
Reorganization.
	 
	 	 
	 

	 	All governmental and third party approvals necessary in
connection with the Transaction, the financing
contemplated hereby and the continuing operations of the
Borrower and its subsidiaries (including shareholder
approvals, if any) shall have been obtained on
satisfactory terms and shall be in full force and effect,
and all applicable waiting periods shall have expired
without any action being taken or threatened by any
competent authority that would restrain, prevent or
otherwise impose adverse conditions on the Transaction or
the financing thereof or

12

 

	 	 	 
	 

	 	any of the transactions contemplated hereby.
	 
	 	 
	 

	 	The Borrower shall have delivered (i) unaudited interim
consolidated financial statements of the Borrower for each
quarterly period ended subsequent to the date of the most
recent financial statements delivered to the Initial
Lenders and (ii) any budgets, projections or any other
financial information delivered to Bank of America, N.A.
during the Cases.
	 
	 	 
	 

	 	The Initial Lenders shall have received the results of a
recent lien search in each relevant jurisdiction with
respect to the Loan Parties, and such search shall reveal
no liens on any of the assets of the Loan Parties, except
for liens permitted under the Revolving Facility or
otherwise permitted by the Loan Documentation.
	 
	 	 
	 

	 	All documents and instruments required to perfect the
Lenders’ security interest in the Collateral under the
Facility (including delivery to the Agent under the
Revolving Facility of stock certificates and undated stock
powers executed in blank) shall have been executed and be
in proper form for filing.
	 
	 	 
	 

	 	The Initial Lenders shall have received such legal
opinions (including opinions (i) from counsel to the
Borrower and its subsidiaries, and (ii) from such special
and local counsel as may be required by the Initial
Lenders), documents and other instruments as are customary
for transactions of this type or as the Initial Lenders
may reasonably request.
	 
	 	 
	 

	 	The accuracy in all material respects of all
representations and warranties in the Loan Documentation
(including, without limitation, the material adverse
change and litigation representations).
	 
	 	 
	 

	 	The Revolving Facility shall provide for a revolving
commitment for the Borrower in an aggregate principal
amount not to exceed $80,000,000 and shall otherwise be on
terms and conditions reasonably satisfactory to the
Initial Lenders.
	 
	 	 
	CERTAIN DOCUMENTATION MATTERS
	 
	 	 
	 

	 	The Loan Documentation shall contain representations,
warranties, covenants and events of default (in each case,
applicable to the Loan Parties) customary for financings
of this type and other terms deemed appropriate by the
Initial Lenders (subject in certain cases to baskets to be
agreed upon), including, without limitation:
	 
	 	 
	Representations and

Warranties:

	 	Financial statements (including pro forma financial
statements); absence of undisclosed liabilities; no
material adverse change (as used herein and in the Loan
Documentation a “material adverse

13

 

	 	 	 
	 

	 	change” shall mean any
event, development or circumstance that has had or could
reasonably be expected to have a material adverse effect
on (a) the business, operations, property, condition
(financial or otherwise) or prospects of the Borrower and
its subsidiaries taken as a whole or (b) the validity or
enforceability of any of the Loan Documentation or the
rights and remedies of the Administrative Agent and the
Lenders thereunder); corporate existence; compliance with
law; corporate power and authority; enforceability of Loan
Documentation; no conflict with law or contractual
obligations; no material litigation; no default; ownership
of property; liens; intellectual property; taxes; labor
matters, ERISA; Investment Company Act and other
regulations; subsidiaries; use of proceeds; environmental
matters; accuracy of disclosure; creation and perfection
of security interests; solvency; and delivery of certain
documents.
	 
	 	 
	Affirmative Covenants:

	 	Delivery of financial statements, reports, projections,
officers’ certificates and other information reasonably
requested by the Lenders; payment of taxes and other
obligations; continuation of business and maintenance of
existence and material rights and privileges; compliance
with laws and material contractual obligations;
maintenance of property and insurance; maintenance of
books and records; right of the Lenders to inspect
property and books and records; notices of defaults,
litigation and other material events; compliance with
environmental laws; and further assurances (including,
without limitation, with respect to security interests in
after-acquired property).
	 
	 	 
	Financial Covenants:

	 	Minimum levels of EBITDA (to be defined in a manner to be
agreed upon and not to operate in a manner which is more
restrictive than the Revolving Facility so long as such
facility remains outstanding); maximum levels of Capital
Expenditures per fiscal year of the Borrower.
	 
	 	 
	Negative Covenants:

	 	Limitations on: indebtedness (including guarantee
obligations), with a basket of up to $90 million in
aggregate commitments under the Revolving Facility with a
sublimit of funded outstandings in an aggregate amount not
to exceed $25 million (subject to upward adjustment, on
terms to be further discussed, for net proceeds received
in connection with the issuance of equity) (exclusive of
any letters of credit issued in connection with (i)
insurance contracts, (ii) surety bonds, (iii) the Loan
Parties’ self-insurance program or (iv) vendors for
purposes of purchases of products and services and to
customers to secure performance and with respect to this
clause (iv) only, in an aggregate amount not to exceed $12
million at any one time outstanding, in each case in the
ordinary course of business, by the lenders under the
Revolving Facility); provided, that for the first 45 days
after the effective date of the Plan of Reorganization,
all reimbursed or unreimbursed letter of credit drawings
shall be ignored for purposes of determining

14

 

	 	 	 
	 

	 	compliance
with the $25 million cap; provided further, that the
sublimit of permitted funded outstandings shall be
permanently reduced dollar-for-dollar by any net proceeds
from asset sales other than sales of inventory or obsolete
or worn-out property in the ordinary course of business;
liens (except for liens in collateral securing the
Revolving Facility and/or reimbursement obligations for
surety bonds incurred by Borrower in the ordinary course
of business); mergers, consolidations, liquidations and
dissolutions; sales of assets, provided that the Loan
Parties may dispose of assets for cash having a fair
market value not to exceed (x) $7 million in any single
transaction or series of related transactions and (y) in
any case $20 million in the aggregate during the term of
the Facility; dividends and other payments in respect of
capital stock; acquisitions, investments, loans and
advances; modifications of documentation governing the
Revolving Facility; transactions with affiliates;
sale-leasebacks; changes in fiscal year; hedging
arrangements; negative pledge clauses and clauses
restricting subsidiary distributions; changes in lines of
business; and amendments to documents relating to the
Transaction.
	 
	 	 
	Events of Default:

	 	Nonpayment of principal and interest when due; nonpayment
of fees or other amounts after a grace period to be agreed
upon; material inaccuracy of a representation or warranty
when made; violation of a covenant (subject, in the case
of certain affirmative covenants, to a grace period to be
agreed upon); cross-default to material indebtedness;
bankruptcy events; certain ERISA events; material
judgments; actual or asserted invalidity of any guarantee
or security document; and a change of control (the
definition of which is to be agreed upon).
	 
	 	 
	Voting:

	 	Amendments and waivers with respect to the Loan
Documentation shall require the approval of Lenders
holding more than 50% of the aggregate amount of the Loans
and each of the Initial Lenders so long as such Initial
Lender holds more than $8 million of the Aggregate
Principal Amount Outstanding, except that (a) the consent
of each Lender directly affected thereby shall be required
with respect to (i) reductions in the amount or extensions
of the scheduled date of the final maturity of any Loan,
(ii) reductions in the rate of interest or any fee or
extensions of any due date thereof and (iii) increases in
the amount or extensions of the expiry date of any
Lender’s commitment and (b) the consent of 100% of the
Lenders shall be required with respect to (i) reductions
of any of the voting percentages, (ii) releases of all or
substantially all of the Collateral and (iii) releases of
all or substantially all the Guarantors.
	 
	 	 
	Assignments and

Participations:

	 	The Lenders shall be permitted to assign freely all or a
portion of (a) their Loans and (b) their commitments, and
only in the case of clause (b), with the consent of the
Borrower (which consent

15

 

	 	 	 
	 

	 	shall not be unreasonably withheld
or delayed), unless the assignee is an Initial Lender or
an affiliate of an Initial Lender. The mechanisms for
assignments shall be determined in consultation with the
Administrative Agent. The Lenders shall also be
permitted to sell participations in their Loans freely.
Participants shall have the same benefits as the Lenders
with respect to yield protection and increased cost
provisions subject to customary limitations. Voting
rights of participants shall be limited to those matters
set forth in clause (a) under “Voting” with respect to
which the affirmative vote of the Lender from which it
purchased its participation would be required. Pledges of
Loans in accordance with applicable law shall be permitted
without restriction.
	 
	 	 
	Yield Protection:

	 	The Loan Documentation shall contain customary provisions
protecting the Lenders against increased costs or loss of
yield resulting from changes in reserve, tax, capital
adequacy and other requirements of law and from the
imposition of or changes in withholding or other taxes.
	 
	 	 
	Expenses and
Indemnification:

	 	The Borrower shall pay (a) all reasonable out-of-pocket
expenses of the Initial Lenders associated with the
preparation, execution and delivery of the Loan
Documentation and any amendment or waiver with respect
thereto (including the reasonable fees, disbursements and
other charges of counsel) and (b) all out-of-pocket
expenses of the Administrative Agent and the Lenders
(including the fees, disbursements and other charges of
counsel) in connection with the enforcement of the Loan
Documentation.
	 
	 	 
	 

	 	The Administrative Agent and the Lenders (and their
affiliates and their respective officers, directors,
employees, advisors and agents) (any such person, an
“indemnified person”) will have no liability for, and will
be indemnified and held harmless against, any losses,
claims, damages, liabilities or expenses incurred in
respect of the financing contemplated hereby or the use or
the proposed use of proceeds thereof, except to the extent
they are found by a final, non-appealable judgment of a
court to arise from the bad faith, gross negligence or
willful misconduct of the relevant indemnified person.
	 
	 	 
	Drafts of Documents

	 	The Initial Lenders shall use commercially reasonable
efforts to deliver drafts of the credit agreement and the
guarantee and collateral agreement for this Facility to
counsel for the Borrower prior to the hearing date on the
Disclosure Statement.
	 
	 	 
	Governing Law and Forum:

	 	State of New York.
	 
	 	 
	Counsel to the Initial
	 	 
	Lenders:

	 	Simpson Thacher & Bartlett LLP.

16

 

INTEREST AND CERTAIN FEES

	 	 	 
	Interest Rate:

	 	The interest rate under the Facility
shall be the greater of (a) 10.75%
per annum and (b) 2% above the
interest rate agreed upon by the
Borrower with the Agent under the
Revolving Facility as such interest
rate would be calculated on the date
that the commitment letter for the
Revolving Facility is executed (the
“Applicable Interest Rate”), in each
case subject to certain adjustments
as provided below (as adjusted, the
“Adjusted Applicable Interest
Rate”).
	 
	 	 
	 

	 	The Applicable Interest Rate shall
be adjusted in accordance with each
of, and, if applicable, both
paragraphs (I) and (II) below:
	 
	 	 
	 

	 	(I) If at any time the amount
outstanding under the Revolving
Facility exceeds the “Revolving
Facility Amount” as hereinafter
defined at such time (exclusive of
any letters of credit issued in
connection with (i) insurance
contracts, (ii) surety bonds, (iii)
the Loan Parties’ self-insurance
program or (iv) to vendors for
purposes of purchases of products
and services and to customers to
secure performance, in each case in
the ordinary course of business, by
the lenders under the Revolving
Facility), then the Adjusted
Applicable Interest Rate under the
Facility shall be for the next
succeeding fiscal quarter of the
Borrower an amount equal to the sum
of (a) the Applicable Interest Rate
in effect at such time and (b) the
product of (x) a whole number equal
to the difference between (i) the
peak amount outstanding under the
Revolving Facility in such earlier
fiscal quarter and (ii) the
Revolving Facility Amount (with such
difference to be divided by
$1,000,000 and rounded up to the
next whole number) and (y) 0.10%. As
used herein, the phrase “Revolving
Facility Amount” means, for the
initial 45 days after the effective
date of the Plan of Reorganization,
$15,000,000; thereafter,
$10,000,000.
	 
	 	 
	 

	 	(II) If at any time prior to
December 31, 2006, the EBITDA-CapEx
Level is less than zero (a “Negative
EBITDA-CapEx Level”), then the
Adjusted Applicable Interest Rate
under the Facility shall be an
amount equal to the sum of (a) the
Applicable Interest Rate and (b) the
product of (x) the absolute value of
the EBITDA-CapEx Level at such time
(with such amount to be divided by
$1,000,000 and rounded up to the
next whole number) and (y) 0.15%
until the earlier of (i) the
remainder of the term of the
Facility and (ii) the EBITDA-CapEx
Level exceeds zero for more than two
consecutive fiscal quarters and such
EBITDA-CapEx Level is greater than
the absolute value of the Negative
EBITDA-CapEx Level. If the
EBITDA-CapEx Level is greater than
zero for more than two consecutive
fiscal quarters and such
EBITDA-CapEx Level is greater than
the absolute value of the Negative
EBITDA-CapEx Level, then any
adjustments made pursuant to this
paragraph (II) shall no longer
apply. It shall be an immediate
Event of Default if the EBITDA-CapEx
Level is

 

 

	 	 	 
	 

	 	less than negative
$20,000,000 (i) for any fiscal
quarter, as of the last day of the
second, third or fourth fiscal
quarters of the Borrower’s 2006
fiscal year or as of the last day of
the first quarter of the Borrower’s
2007 fiscal year, or (ii) on a
cumulative basis for any consecutive
fiscal quarters, as measured on the
last day of such period, commencing
on the first day of the second
fiscal quarter of the Borrower’s
2006 fiscal year and ending on the
last day of the first quarter of the
Borrower’s 2007 fiscal year. For
purposes hereof, the term
“EBITDA-CapEx Level” shall mean at
any time the difference between
EBITDA for a given period and
Capital Expenditures of the Loan
Parties for such period.
	 
	 	 
	Default Rate:

	 	At any time when the Borrower is in
default in the payment of any amount
of principal due under the Facility,
all outstanding Loans shall bear
interest at 2% above the Adjusted
Applicable Interest Rate in effect
at such time. Overdue interest,
fees and other amounts shall bear
interest at 2% above the Adjusted
Applicable Interest Rate in effect
at such time.
	 
	 	 
	Rate and Fee Basis:

	 	All per annum rates shall be
calculated on the basis of a year of
360 days for actual days elapsed.
	 
	 	 
	Method of Payment of 

Interest:

	 	The interest on the Loans shall be
payable in cash, in arrears,
quarterly and on the date of any
prepayment; provided that, in the
sole discretion of the Borrower,
until the third anniversary of the
Closing Date, the Borrower shall
have the option, to be exercised at
least ten business days prior to the
Closing Date or at least ten
business days prior to each six
month anniversary thereof as the
case may be, to direct that interest
accruing over the following two
quarters of the Borrower on the
Aggregate Principal Amount
Outstanding shall be paid by
capitalizing such interest as
additional Loans under the Facility;
provided further that,
notwithstanding the foregoing
provision, if at any time prior to
December 31, 2006, there is Negative
EBITDA-CapEx Level, the privilege of
capitalizing interest shall be
terminated immediately until the
earlier of (a) the term of the Loans
and (b) the EBITDA-CapEx Level
exceeds zero for more than two
consecutive fiscal quarters and such
EBITDA-CapEx Level is greater than
the absolute value of the Negative
EBITDA-CapEx Level; and provided
further that interest shall be
payable in cash on demand at any
time when an Event of Default has
occurred and is continuing.
	 
	 	 
	Commitment Fee

	 	On the date of execution of the
Commitment Letter, in consideration
for the commitments and other
agreements hereunder, the Borrower
shall be obligated to pay the
Initial Lenders pro rata a
commitment fee of $2,000,000 (the
“Commitment Fee”). The Commitment
Fee shall be paid (and not waived)
if at consummation of the Plan of
Reorganization, (a) the Convertible
Notes shall have been reinstated,
(b) the

 

 

	 	 	 
	 

	 	holders of the Convertible
Notes shall have received new debt
or equity securities, or a hybrid
thereof, in exchange for the
Convertible Notes, (c) the
Convertible Notes shall have been
refinanced with a third party, (d)
the holders of the Convertible Notes
shall have been paid in full from
the proceeds from a single or a
series of related transactions
consummated during the Cases or
pursuant to the Plan of
Reorganization or (e) any
combination of any of the foregoing
events in clauses (a), (b), (c) or
(d) shall have occurred. The
payment of the Commitment Fee shall
be waived (i) if the Transaction is
consummated and the transactions
contemplated hereby and thereby
close, (ii) if the Initial Lenders
terminate the Commitments or permit
the Commitments to expire, (iii) if
the Loan Documentation, including
the Intercreditor Agreement, is not
in substantially final form for
execution and the Initial Lenders
fail to certify their willingness
and ability to fund the Commitments
(subject to any unsatisfied
conditions precedent set forth in
this Term Sheet other than paragraph
(a), (g) and (h)) on the effective
date of the Plan of Reorganization,
in each case at least ten days prior
to the date of the hearing on
confirmation of the Plan of
Reorganization, or (iv) if the
Company is not in compliance
(whether or not such noncompliance
is waived) on the effective date of
its Plan of Reorganization with the
negative covenant limiting the
amount of funded outstandings under
the Revolving Facility due to a
reimbursed or unreimbursed letter of
credit drawing and the Company has
not caused such noncompliance in
order to avoid paying the Commitment
Fee.exv10w10

 

EXHIBIT 10.10

FIFTH AMENDMENT TO LEASE AGREEMENT

     THIS FIFTH AMENDMENT TO LEASE AGREEMENT (this “Amendment”) is made as of the 31st day of
August, 2005, by and between 1899 L STREET TOWER LLC, a Delaware limited liability company
(“Landlord”), and BLACKBOARD INC. (“Tenant”).

W I T N E S S E T H:

     WHEREAS, 1899 L Street LLC (“Original Landlord”) and Tenant entered into that certain Office
Lease dated November 22, 1999 (the “Original Lease”), as amended by that certain Amendment to Lease
Agreement dated February 16, 2000 (the “First Amendment”) as further amended by that certain Second
Amendment to Lease Agreement dated July ___, 2000, as further amended by that certain Third
Amendment to Lease Agreement dated January 31, 2001 (the “Third Amendment”), as further amended by
that certain Fourth Amendment to Lease Agreement dated March 22, 2002 (the “Fourth Amendment”: all
of the foregoing being collectively, the “Lease”) pertaining to 46,209 square feet of space (the
“Existing Premises”) located in that certain building (the “Building”) located at 1899 L Street NW,
Washington D.C.; and

     WHEREAS, Landlord is the successor-in-interest to Original Landlord’s interest in and under
the Lease; and

     WHEREAS, Landlord and Tenant have agreed that Tenant will expand the Existing Premises, as
more particularly provided for herein.

     NOW THEREFORE, in consideration of the covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, Landlord and Tenant
hereby amend the Lease as follows:

A G R E E M E N T

     1. Inclusion of Additional Third Floor Premises. Effective as of the Additional Third
Floor Premises Commencement Date (defined below):

          (a) A portion of the third floor of the Building containing 5,206 square feet, as shown on the
plan attached hereto as Exhibit A-1 (the “Additional Third Floor Premises”); shall be added
to and constitute a part of the Premises, subject to all of the terms and conditions of the Lease
(including, but not limited to, Section 5, except as provided in this Amendment; and

          (b) The rentable area of the Premises shall be increased by five thousand two hundred and six
(5,206) square feet, and therefore, effective on the Additional Third Floor Premises Commencement
Date, the total rentable area of the Premises shall be fifty-one thousand four hundred fifteen
(51,415) square feet.

     2. Occupancy Dates and Term. The term (the “Additional Third Floor Premises Term”) of
the leasing of the Additional Third Floor Premises shall commence on and shall be the date that is
fifteen (15) days after the tenant occupying the Additional Third Floor Premises as of the date hereof vacates the Additional
Third Floor Premises (the “Additional Third Floor Premises Commencement Date”), provided Landlord
will use commercially reasonable efforts to notify Tenant of

 

 

the Additional Third Floor Premises Commencement Date at least twenty (20) days prior to such date. Landlord anticipates that the
existing tenant will vacate the Additional Third Floor Premises around January 1, 2006. Unless
sooner terminated pursuant to the provisions of the Lease, the term of the leasing of the
Additional Third Floor Premises shall be coterminous with the Term of the Lease (May 31, 2007) and
the period from the Additional Third Floor Premises Commencement Date to the last day of the
twelfth (12th) full calendar month following the calendar month in which the Additional
Third Floor Premises Commencement Date occurs shall be the first “Lease Year” of the Additional
Third Floor Premises Term. Thereafter, each consecutive twelve (12) calendar month period during
the Additional Third Floor Premises shall constitute one (1) Lease Year. Notwithstanding anything
contained herein to the contrary, if the Additional Third Floor Premises Commencement Date occurs
on the first (1st) day of a calendar month, the first Lease Year during the Additional
Third Floor Premises Term shall be twelve (12) full calendar months.

     3. Rent for Additional Third Floor Premises. Effective as of the Additional Third Floor
Premises Commencement Date, Rent for the Additional Third Floor Premises only shall be as
follows:

Rent Schedule

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Per Square	 	 	 	 	 	 	 
	Period	 	Foot	 	 	Annual Rent	 	 	Monthly Rent	 
	Lease Year 1
	 	$	36.75	 	 	$	191,320.56	 	 	$	15,943.38	 
	Lease Year 2
(to be prorated)
	 	$	37.67	 	 	$	196,110.00	 	 	$	16,342.50	 

     4. Operating Expenses and Real Estate Taxes; Adjustment of Additional Rent. As of the
second Lease Year of the Additional Third Floor Premises Term, Tenant’s “pro rata share”
referenced in Paragraph 2.2(a)(iii) of the Lease, as amended, shall be increased from
“35.17%” to “39.13%”. For purposes of Paragraph 2.2(a)(iii) of the Lease, the “Base
Year” shall continue to be the 2000 calendar year with respect to the original 23.45%, and
shall continue to be the 2001 calendar year with respect to the 7.77% relating to the
12th Floor Premises added pursuant to the Third Amendment, and shall continue to be
the 2002 calendar year with respect to the 3.95% relating to the Additional Seventh Floor
Premises added pursuant to the Fourth Amendment but the “Base Year” with respect to the
additional 3.96% relating to the Additional Third Floor Premises shall be calendar year 2006.
Additionally, in no event shall Tenant be required to pay Tenant’s prorata share of any
Operating Expense Increase for the Additional Third Floor Premises prior to the expiration of
the first Lease Year of the Additional Third Floor Premises Term.

     5. Acceptance of the Additional Third Floor Premises.

          (a) Tenant acknowledges that Tenant has inspected and is fully familiar with the Additional
Third Floor Premises and, Tenant shall accept the same in its broom clean, “as is” condition
subject to Landlord’s repair obligations in Section 3.3 of the Lease.

          (b) If Tenant makes alterations to the Premises in accordance with the Lease generally and
with Section 4.1 in particular during the period from the Additional Third Floor Premises
Commencement Date until twelve (12) months after the Additional Third Floor Premises Commencement
Date (the “Contribution Period”), and provided Tenant is not in default under the Lease, Landlord
shall contribute (the “Improvement Contribution”) of $26,030.00 towards the cost of said work.
Tenant shall have the right, without the need to receive the consent of Landlord, to retain a
general contractor selected

 

 

by Tenant to perform such alterations, provided Tenant notifies
Landlord of the name of such general contractor and general contractor is licensed, bonded and
insured to do business in the District of Columbia. Within ten (10) days after Tenant’s completion
of the alterations made during the Contribution Period (but in no event later than twelve (12)
months after Additional Third Floor Premises Commencement Date), Tenant shall submit to Landlord a
detailed breakdown of the costs of said alterations, together with final lien waivers, contractors’
affidavits and architects’ certificates, in each case to the extent applicable, in such form as may
be reasonably required by Landlord and any other documentation required at the completion of
alterations pursuant to the Lease. Landlord shall pay to Tenant (up to the Improvement
Contribution) the amount incurred by Tenant in the performance of the alterations made during the
Contribution Period within thirty (30) days after receipt of the documentation required in the
immediately preceding sentence. Tenant shall not be entitled to any portion of the Improvement
Contribution not used in the performance of alterations during the Contribution Period. Landlord
shall not be entitled to any compensation or fee in connection with the alterations performed by
Tenant.

     6. Parking Spaces. The number of unreserved parking spaces to be made available by
Landlord to Tenant pursuant to Paragraph 11.2 of the Lease is hereby increased from
“forty (40)” to “forty-four (44)”. Tenant’s rights to the four (4) additional spaces shall
terminate if Tenant does not notify Landlord in writing of Tenant’s exercise of such rights on
or before March 30, 2006.

     7. Use of Internal Building Stairwells. In addition to the lease of the Premises,
Landlord grants to Tenant the non-exclusive right to use the internal stairwells servicing the
Premises for the passage of Tenant’s employees and guests between the floors constituting the
Premises. Tenant shall have no right to use the internal stairwells for any other purpose,
including but not limited to storage. Subject to the approval of Landlord, in the event that
Tenant elects to exercise the right to use internal stairwells as set forth above, Tenant
shall install and maintain an electronic access system in the stairwell to maintain secure
access to the Premises. Any such electronic access system shall be installed, operated and
maintained at Tenant’s sole cost and expense, and the design, location, installation,
operation and maintenance thereof shall be subject to all of the terms and conditions of the
Lease. Tenant agrees, prior to the expiration of the Lease, to remove any such system and to
return the portion of the stairwell permitted to be utilized by Tenant under this Paragraph as
well as the doors to the Premises to their respective condition as of the date hereof,
ordinary wear and tear excepted. Tenant acknowledges that the internal stairwells in the
Building are part of the emergency access and egress to and from the Building, and in addition
to all other terms and conditions of the Lease, Tenant shall at all times comply with all
Applicable Laws regarding the internal stairwell, the physical condition of the Premises or
that relate to the lawful use or occupancy of the Premises. In the exercise of the rights
granted under this Paragraph, Tenant shall in no event temporarily or permanently obstruct any
portion of the internal stairwell, and Landlord, in addition to any other rights granted to
Landlord hereunder, may remove any obstructions, refuse or objectionable matter from the
stairwell without notice or liability to Tenant. In addition to all other rights and remedies
provided in the Lease, Landlord may terminate the rights granted to Tenant under this
Paragraph in the event that the use of the internal stairwell in the Building violates any
Applicable Laws or creates, in the commercially reasonable judgment of Landlord,
a hazardous or disruptive condition in the Building. The use of the stairwell by Tenant shall be
subject to all of the insurance and indemnification obligations imposed on Tenant under the Lease.

     8. Broker Warranty. Landlord and Tenant each warrant that it has had no dealings with
any broker, agent or any other person in connection with the negotiation or execution of this
Amendment other than Studley Inc., and Transwestern Commercial Services (collectively, the
“Brokers”). Landlord and Tenant agree to indemnify and hold harmless the other from and
against any and all cost, expense, or liability for commissions or other compensation and
charges claimed by any broker or agent (other than the Brokers) with respect to this Amendment
on account of the acts of the indemnifying party.

 

 

     9. ERISA. Tenant hereby represents and warrants to Landlord that

          (a) Tenant is not a “party in interest” (within the meaning of Section 3(14) of the Employee
Retirement Income Security Act of 1974, as amended) or a “disqualified person” (within the meaning
of Section 4975 of the Internal Revenue Code of 1986, as amended) with respect to The Metropolitan
Life Retirement Plan for United States Employees, and (ii) no portion of or interest in the Lease
will be treated as the asset of any (a) “employee benefit plan” (within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended), (b) “plan” (within the meaning
of Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended, or (c) entity whose
underlying assets include “plan assets” by reason of a plan’s investment in such entity; and

          (b) Neither Tenant nor any twenty percent (20%) or greater owner of Tenant owns, directly or
indirectly, more than twenty percent (20%) of (i) any class of stock of Metropolitan Life Insurance
Company or any affiliate of Metropolitan Life Insurance Company; or (ii) any class of stock of
BlackRock Realty Corporation or any affiliate of BlackRock Realty Corporation (including PNC Bank).

     10. OFAC Compliance.

          (a) Each party represents and warrants to the other party that it is (i) not currently
identified on the Specially Designated Nationals and Blocked Persons List maintained by the Office
of Foreign Assets Control, Department of the Treasury (“OFAC”) and/or on any other similar list
maintained by OFAC pursuant to any authorizing statute, executive order or regulation
(collectively, the “List”) and (ii) not a person or entity with whom a citizen of the United States
is prohibited to engage in transactions by any trade embargo, economic sanction, or other
prohibition of United States law, regulation, or Executive Order of the President of the United
States.

          (b) Tenant represents and warrants to Landlord that (i) none of the funds or other assets of
Tenant constitute property of, or are beneficially owned, directly or indirectly, by any Embargoed
Person (as hereinafter defined), and (ii) none of the funds of Tenant have been derived from any
unlawful activity with the result that the investment in Tenant is prohibited by law or that the
Lease, as amended and/or extended, is in violation of Applicable Law. The term “Embargoed Person”
means any person, entity or government subject to trade restrictions under U.S. law, including but
not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §1701, et
seq., The Trading with the Enemy Act, 50 U.S.C. App. 1, et seq., and any
Executive Orders or regulations promulgated thereunder
with the result that the investment in Tenant is prohibited by any Applicable Law or Tenant is
in violation of any Applicable Law.

          (c) Each party covenants and agrees with the other party (i) to comply with all Applicable
Laws relating to money laundering, anti-terrorism, trade embargos and economic sanctions, now or
hereafter in effect, (ii) to promptly notify the other party in writing if any of the
representations, warranties or covenants set forth in this sub-paragraph or the preceding
sub-paragraphs are no longer true or have been breached or if such party has a reasonable basis to
believe that they may no longer be true or have been breached, (iii) not to use funds from any
“Prohibited Person” (as such term is defined in the September 24, 2001 Executive Order Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism) to make any payment due to the other party under the Lease, as amended and/or extended,
and (iv) at the reasonable request by a party, to provide such information as may be requested by
such party to determine the other party’s compliance with the terms hereof.

          (d) Each party hereby acknowledges and agrees that its inclusion on the List at any time
during the Term shall be a material default of the Lease. Notwithstanding anything herein to the

 

 

contrary, Tenant shall not permit the Premises or any portion thereof to be used or occupied by any
person or entity on the List or by any Embargoed Person (on a permanent, temporary or transient
basis), and any such knowing use or occupancy of the Premises by any such person or entity shall be
a material default of the Lease.

     11. Definitions. Unless the context otherwise requires, any capitalized term used herein
shall have its respective meaning as set forth in the Lease.

     12. Integration of Amendment and Lease. This Amendment and the Lease shall be deemed to
be, for all purposes, one instrument. In the event of any conflict between the terms and
provisions of this Amendment and the terms and provisions of the Lease, the terms and
provisions of this Amendment shall, in all instances, control and prevail.

     13. Counterparts. This Amendment may be executed by each of the parties hereto in
separate counterparts and have the same force and effect as if all of the parties had executed
it as a single document.

     14. Ratification. Except as modified herein, all of the remaining terms and provisions
of the Lease shall remain in full force and effect.

[signatures on following page]

 

 

     IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Amendment as of the day
and year first above written.

	 	 	 	 	 	 	 	 	 
	 	 	LANDLORD:
	 
	 	 	 	 	 	 	 	 
	 	 	1899 L STREET TOWER LLC,

a Delaware limited liability company
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	BlackRock Realty Advisors, Inc.,

its investment advisor
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Cathy Bernstein	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	Name: Cathy Bernstein
	 	 	 	 	Title: Director
	 
	 	 	 	 	 	 	 	 
	 	 	TENANT:
	 
	 	 	 	 	 	 	 	 
	 	 	BLACKBOARD INC.
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Matthew Small	 	 
	 	 	 	 	 	 	 
	 	 	Name: Matthew Small
	 	 	Title: General Counsel

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]