Environmental Indemnity Agreement

Exhibit 10.17

ENVIRONMENTAL INDEMNITY AGREEMENT

THIS ENVIRONMENTAL INDEMNITY AGREEMENT (the " Agreement" ) is made as of the 26th day of October, 2004 by THE ENTITIES IDENTIFIED ON THE SIGNATURE PAGES OF THIS AGREEMENT AS BORROWER (collectively, " Borrower" ) and BLUELINX HOLDINGS, INC. , a Delaware corporation, with an office at 4300 Wildwood Parkway, Atlanta, Georgia 30339 (" Sponsor" ; Borrower and Sponsor, collectively, " Indemnitor" ) in favor of COLUMN FINANCIAL, INC. , a Delaware corporation, having an address at 11 Madison Avenue, New York, New York 10010 (" Indemnitee" ) and other Indemnified Parties (defined below).

RECITALS:

A. Indemnitee is prepared to make a loan (the " Loan" ) to Borrower in the principal amount of One Hundred Sixty-Five Million and No/100 Dollars ($165,000,000) pursuant to a Loan Agreement of even date herewith between Borrower and Indemnitee (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the " Loan Agreement" ), which Loan shall be evidenced by that certain Promissory Note of even date herewith given by Borrower in favor of Indemnitee (as amended, restated, replaced, supplemented or otherwise modified from time to time, the " Note" ) and secured by, among other things, certain mortgages, deeds of trust and/or deeds to secure debt, each of even date herewith, given by Borrower to Indemnitee (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, collectively, the " Mortgages" ) encumbering the real properties described therein (said real properties being collectively referred to as the " Land" ; the Land, together with all structures, buildings and improvements now or hereafter located on the Land, being collectively referred to as the " Properties" ).

B. Indemnitee is unwilling to make the Loan unless Indemnitor agrees to provide the indemnification, representations, warranties, covenants and other matters described in this Agreement for the benefit of the Indemnified Parties.

C. Indemnitor is entering into this Agreement to induce Indemnitee to make the Loan.

AGREEMENT:

NOW THEREFORE , in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitor hereby represents, warrants, covenants and agrees for the benefit of the Indemnified Parties as follows:

1. Environmental Representations and Warranties . Except as otherwise disclosed by those certain Phase I environmental reports (or Phase II environmental reports, if required by Indemnitee) with respect to the Properties delivered to Indemnitee by Indemnitor in connection with the origination of the Loan (hereinafter referred to as the " Environmental


Report" ) (a) all Hazardous Substances (defined below) and underground storage tanks in, on or under any Property are in compliance with all Environmental Laws (defined below) and with permits issued pursuant thereto; (b) there are no past or present Releases (defined below) of Hazardous Substances in, on, under or from any Property which have not been (or are not being) fully remediated in accordance with Environmental Law; (c) Indemnitor has no actual knowledge of, and has not received any written notice from, any Person (including, but not limited to, a Governmental Authority) relating to a threat of any Release of Hazardous Substances migrating to any Property; (d) there is no past or present non-compliance with Environmental Laws, or with permits issued pursuant thereto, in connection with any Property which has not been fully remediated in accordance with Environmental Law; (e) Indemnitor does not know of, and has not received any written notice from any Person (including, but not limited to, a Governmental Authority) relating to Hazardous Substances or Remediation (defined below) thereof, of possible liability of Indemnitor pursuant to any Environmental Law, any other environmental conditions in violation of Environmental Law in connection with any Property, or any administrative or judicial proceedings in connection with any of the foregoing; and (f) Indemnitor has truthfully and fully delivered or made available for inspection to Indemnitee all written information relating to conditions in, on, under or from each Property that is known to Indemnitor or all information that is contained in files and records of Indemnitor, including but not limited to any reports relating to Hazardous Substances in, on, under or from any Property and/or to the environmental condition of any Property.

2. Environmental Covenants . Indemnitor covenants and agrees that: (a) all uses and operations on or of each Property, whether by Indemnitor or any other Person, shall be in compliance in all material respects with all Environmental Laws and permits issued pursuant thereto; (b) Indemnitor shall use commercially reasonable efforts to prevent any Releases of Hazardous Substances in, on, under or from any Property, except those that are both (i) in compliance with all Environmental Laws and with permits issued pursuant thereto and (ii) fully disclosed to Indemnitee in writing; (c) there shall be no Hazardous Substances in, on, or under any Property, except those that are in material compliance with all applicable Environmental Laws and with permits issued pursuant thereto; (d) Indemnitor shall keep each Property free and clear of all liens and other encumbrances imposed pursuant to any Environmental Law, whether due to any act or omission of Indemnitor or any other Person (the " Environmental Liens" ); (e) Indemnitor shall, at its sole cost and expense, fully and expeditiously cooperate in all activities pursuant to Paragraph 3 of this Agreement, including, but not limited to, providing all relevant information and making knowledgeable persons available for interviews upon reasonable prior notice during business hours; (f) Indemnitor shall, at its sole cost and expense, perform any environmental site assessment or other investigation of environmental conditions in connection with the Properties, if any, to the extent required by any Environmental Law or Governmental Authority (including, but not limited to, sampling, testing and analysis of soil, water, air, building materials, and other materials and substances whether solid, liquid or gas as applicable and required), and share with Indemnitee all reports and results thereof, and Indemnitee and the other Indemnified Parties shall be entitled to rely on such reports and results thereof; (g) Indemnitor shall, at its sole cost and expense, comply with all reasonable written requests of Indemnitee to (i) effectuate Remediation of any condition (including, but not limited to, a Release of a Hazardous Substance) in, on, under or from any Property; (ii) comply with any Environmental Law; (iii) comply with any directive from any Governmental Authority; and (iv) take any other reasonable action necessary or appropriate for protection of human health or


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the environment; (h) Indemnitor shall not do, or allow Master Tenant or any other tenant or user of any Property to do, any act that materially increases the dangers to human health or the environment, poses an unreasonable risk of harm to any Person (whether on or off the Properties), impairs or may impair the value of any Property, is contrary to any requirement of any insurer, constitutes a public or private nuisance, constitutes waste, or violates any covenant, condition, agreement or easement relating to environmental matters which is applicable to any Property; and (i) Indemnitor shall, to the extent Indemnitor has knowledge of the same, immediately notify Indemnitee in writing of (i) any presence or Releases or threatened Releases of Hazardous Substances in, on, under, from or migrating towards any Property; (ii) any material non-compliance with any Environmental Laws related in any way to any Property; (iii) any Environmental Lien encumbering any Property; (iv) any required Remediation of environmental conditions relating to any Property; and (v) any written notice from any source whatsoever (including, but not limited to, a Governmental Authority) alleging a Release or requiring Remediation at any Property, alleging direct or indirect liability of Indemnitor pursuant to any Environmental Law, other Hazardous Substances affecting any Property in violation of Environmental Law, or any actual or threatened administrative or judicial proceedings in connection with or relating to any of the subject matters of this Agreement.

3. Indemnified Rights/Cooperation and Access . In the event the Indemnified Parties reasonably believe that there has been or may be a Release, a material violation of the Environmental Laws or an environmental hazard at any Property that, in the sole, but reasonable, discretion of the Indemnified Parties, endangers any tenants or other occupants of such Property or their guests or the general public or materially and adversely affect the value of such Property, upon reasonable notice from the Indemnitee, Indemnitor shall, at Indemnitor' s sole cost and expense, promptly cause an engineer or consultant reasonably satisfactory to the Indemnified Parties to conduct an environmental assessment or audit (the scope of which shall be determined in the sole, but reasonable, discretion of the Indemnified Parties) and take any samples of soil, groundwater or other water, air, or building materials or any other invasive testing reasonably requested by Indemnitee and promptly deliver to Indemnitee the results of any such assessment, audit, sampling or other testing; provided, however, if such results are not delivered to the Indemnified Parties within a reasonable period, upon reasonable notice to Borrower, the Indemnified Parties and any other Person designated by the Indemnified Parties, including, but not limited to, any receiver, any representative of a governmental entity, and any environmental consultant, shall have the right, but not the obligation, to enter upon such Property at all reasonable times to assess any and all aspects of the environmental condition of such Property and its use, including but not limited to, conducting any environmental assessment or audit (the scope of which shall be determined in the sole, but reasonable, discretion of the Indemnified Parties) and taking samples of soil, groundwater or other water, air, or building materials, and reasonably conducting other invasive testing. Indemnitor shall cooperate with and provide, or cause to be provided, the Indemnified Parties and any such Person designated by the Indemnified Parties with reasonable access to the applicable Property. In performing any such assessment or audit, Indemnified Parties shall use commercially reasonable efforts to minimize interference with the use and operation of such Property by Borrower or any tenants thereof and to avoid exacerbating the applicable Release, violation of Environmental Laws or environmental hazard.


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4. Indemnification . (a) Indemnitor covenants and agrees, at its sole cost and expense, to protect, defend, indemnify, release and hold Indemnified Parties harmless from and against any and all Losses (defined below) imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any one or more of the following, except in each case, to the extent caused by or arising from the gross negligence or willful misconduct of Indemnitee: (i) any presence of any Hazardous Substances in, on, above, or under any Property; (ii) any past, present or threatened Release of Hazardous Substances in, on, above, under or from any Property; (iii) any activity by Indemnitor, any Affiliate of the Indemnitor, and/or any tenant or other user of any Property in connection with any actual, proposed or threatened use, treatment, storage, holding, existence, disposition or other Release, generation, production, manufacturing, processing, refining, control, management, abatement, removal, handling, transfer or transportation to or from any Property of any Hazardous Substances at any time located in, under, on or at such Property; (iv) any activity by Indemnitor, any Affiliate of the Indemnitor, and/or any tenant or other user of any Property in connection with any actual or proposed Remediation of any Hazardous Substances at any time located in, under, on or at any Property, whether or not such Remediation is voluntary or pursuant to court or administrative order, including, but not limited to, any removal, remedial or corrective action; (v) any past, present or threatened non-compliance or violation of any Environmental Laws (or the terms and conditions, if any, of any permit issued pursuant to any Environmental Law or the failure to obtain any necessary permits under any Environmental Law) in connection with any Property or operations thereon, including, but not limited to, any failure by Indemnitor, any Affiliate of the Indemnitor, and/or any tenant or other user of such Property to comply with any order of any Governmental Authority in connection with any Environmental Law; (vi) the imposition, recording or filing or the threatened imposition, recording or filing of any Environmental Lien encumbering any Property; (vii) any administrative processes or proceedings or judicial proceedings in any way connected with any matter addressed in this Agreement; (viii) any past, present or threatened injury to, destruction of or loss of natural resources in any way connected with any Property, including, but not limited to, costs to investigate and assess such injury, destruction or loss; (ix) any acts of Indemnitor, any Affiliate of the Indemnitor, and/or any tenant or other user of any Property in arranging for the disposal or treatment, or arranging with a transporter for transport for disposal or treatment, of Hazardous Substances at any facility or incineration vessel containing such or similar Hazardous Substances; (x) any acts of Indemnitor, any Affiliate of the Indemnitor, and/or any tenant or other user of any Property in accepting any Hazardous Substances for transport to disposal or treatment facilities, incineration vessels or sites from which there is a Release, or a threatened Release of any Hazardous Substance which causes the incurrence of costs for Remediation; (xi) any personal injury, wrongful death, or property or other damage due to exposure from Hazardous Substances arising under any statutory or common law or tort law theory, including, but not limited to, damages assessed for private or public nuisance or for the conducting of an abnormally dangerous activity on or near any Property; and (xii) any misrepresentation or inaccuracy in any representation or warranty or material breach or failure to perform any covenants or other obligations relating to Environmental Laws pursuant to this Agreement, the Loan Agreement or any Mortgage. Nothing in this Agreement or the other Loan Documents shall preclude Indemnitor from pursuing any remedies or recourse against any third parties (including any governmental entities or other Persons) for liabilities, costs or obligations for any matter subject to indemnification under this Agreement.


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(b) Notwithstanding anything to the contrary contained herein, if and so long as a pollution liability insurance policy with respect to the Properties obtained by Indemnitor and reasonably approved by Indemnitee is in effect and names Indemnitee as an insured ...