SCP POOL CORP (Form: 10-K, Received: 03/01/2005 17:30:37)

SCP DISTRIBUTORS LLC, its General Partner

By: / s/ Manuel Perez de la Mesa

Manuel Perez de la Mesa

Title: President & CEO

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

X	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004 OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM______TO_______.

COMMISSION FILE NO.: 0-26640

SCP POOL CORPORATION

(Exact name of registrant as specified in its charter)

______________

DELAWARE 36-3943363

(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)

109 Northpark Boulevard, Covington, Louisiana 70433-5001

(Address of principal executive offices) (Zip Code)

985-892-5521

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001 per share

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO __

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. __

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). YES X NO __

The aggregate market value of voting and non-voting common equity held by non-affiliates of the Registrant based on the closing sales price of the Registrant’s common stock as of June 30, 2004 was approximately $1,561,160,985.

As of February 14, 2005, the Registrant had 52,338,195 shares of common stock outstanding.

Documents Incorporated by Reference

Portions of the Registrant’s Proxy Statement to be mailed to stockholders on or about March 28, 2005 for the Annual Meeting to be held on May 10, 2005, are incorporated by reference in Part III.

SCP POOL CORPORATION

Part I.

Item 1.

Business

General

Based on industry data, SCP Pool Corporation (the Company , which may be referred to as POOL , we , us or our ) is the world’s largest wholesale distributor of swimming pool supplies, equipment and related leisure products. The Company was incorporated in the State of Delaware in 1993 under the name SCP Holding Corporation, and in 1995 changed its name to SCP Pool Corporation.

The swimming pool industry is highly fragmented, and as such, we add considerable value to the industry by purchasing products from a large number of manufacturers and then distributing the products and offering a range of services to our customer base on conditions that are more favorable than these customers could obtain on their own.

As of February 14, 2005, we operated 203 customer service centers in North America and Europe.

Net sales by geographic region were as follows (in thousands):

		2004		2003		2002
United States	$	1,226,654	$	1,094,035	$	945,357
International		84,199		61,797		37,889
	$	1,310,853	$	1,155,832	$	983,246

Property and equipment by geographic region were as follows (in thousands):

		2004		2003		2002
United States	$	16,214	$	22,535	$	19,996
International		2,381		2,108		925
	$	18,595	$	24,643	$	20,921

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, definitive proxy statements pursuant to Regulation 14A, current reports on Form 8-K, and any amendments to those reports, are made available free of charge on our website at www.poolcorp.com as soon as reasonably practicable after we file these reports with the Securities and Exchange Commission.

The Swimming Pool Industry

We believe that the swimming pool industry is relatively young, with room for continued growth from increased penetration of new pools. Of the approximately 69 million homes in the United States that have the economic capacity and the yard space to have a swimming pool, approximately 11% own a pool. The industry has grown at a 4 to 5% annual rate for the past several years. New homes are being constructed at a higher rate over the last 3-5 years, which creates even more potential pool owners annually.

We believe the swimming pool industry will continue to grow at a rate of approximately 4 to 5% annually over the next five years, primarily because of the need to maintain the growing installed base of pools and secondarily because of new pool installations. We expect our sales growth to be higher than the industry average due to increases in market share and expansion of our product offerings.

SCP POOL CORPORATION

Part I.

Item 1.

Business (continued)

A large portion of consumer spending in our industry is derived from the maintenance of existing swimming pools, including the repair and replacement of the equipment for those pools. Thus, the industry has generally not been negatively affected by economic downturns, although there is no assurance that this will continue.

The demand for new pools is driven by the perceived benefits of pool ownership including relaxation, entertainment, family activity, exercise, convenience and landscaping. The industry competes for new pool sales against other discretionary consumer purchases such as kitchen and bathroom remodeling, boats, motorcycles, recreational vehicles and vacations.

Our industry is seasonal, and weather is the principal external factor which affects our business. Peak industry activity occurs during the warmest months of the year, typically May through August. The industry is also affected by other factors including consumer saving and discretionary spending levels, the increase in pool eligible households and consumer attitudes toward pool products for environmental or safety reasons.

Business Strategy and Growth

Our mission is to provide exceptional value to our customers and suppliers, in order to provide exceptional return to our shareholders while providing exceptional opportunities to our employees. Our three core strategies are to promote the growth of the industry, to promote the growth of our customers’ businesses and to continuously strive to operate more effectively.

We promote the growth of the swimming pool industry through various advertising and promotional programs intended to raise consumer awareness of the benefits and affordability of pool ownership, the ease of pool maintenance and the many ways in which a pool may be enjoyed beyond swimming. These programs include media advertising, industry-oriented website development such as www.swimmingpool.com ™ and public relations campaigns, which are tools we use to educate consumers and lead prospective pool owners to our customers.

We promote the growth of our customers’ businesses through comprehensive support programs that offer promotional tools and marketing support to help generate increased sales for our customers. Our uniquely tailored programs include such things as customer lead generation, personalized websites, brochures, marketing campaigns and business development training. As a customer service, we also provide certain retail store customers assistance with everything from site selection to store layout and design to business management system implementation.

We strive to operate more effectively by continuously focusing on improvements in our operations such as product sourcing, procurement and logistics initiatives, adoption of enhanced business practices and improved working capital management.

In addition to our efforts aimed at industry and customer growth, we have increased our product breadth, as described in the Customers and Products section below, and expanded our service center network through acquisitions and by opening new service centers.

We have grown organically through increases in base business sales of 10% in 2004, 11% in 2003 and 10% in 2002. Since 2000, we have opened 28 new service centers. Acquisitions have historically been an important source of sales growth as well, and since 2000, we have successfully completed 12 acquisitions, consisting of 74 service centers (net of service center closings and consolidations).

SCP POOL CORPORATION

Part I.

Item 1.

Business (continued)

We intend to pursue additional strategic acquisitions, although at a reduced rate from historical levels, which will allow us to further penetrate existing markets and expand into new geographic markets and product categories. For additional discussion of recent acquisitions, read Note 3 to the Consolidated Financial Statements. You should also read the Liquidity and Capital Resources section of Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Customers and Products

We serve roughly 48,000 customers, none of which account for more than 1% of our sales. We primarily serve three types of customers:

•	swimming pool remodelers and builders;
•	retail swimming pool stores; and
•	swimming pool repair and service companies.

These customers are mostly small, family owned businesses with relatively limited capital resources. We maintain a strict credit policy. In the past, losses from customer receivables have been within our expectations.

We conduct our operations through 203 service centers in North America and Europe. Our primary markets, which have the highest concentration of swimming pools, are California, Florida, Texas and Arizona, representing approximately 51% of our net sales in 2004. We use a combination of national and local sales and marketing personnel to promote the growth of our business and develop and strengthen our customers’ businesses. Our national personnel focus on developing customer programs and promotional activities, creating and enhacing sales management tools and providing product and market expertise. Our local sales personnel work from the service centers and are charged with understanding and meeting our customers’ specific needs.

We offer our customers more than 91,000 national brand and private label products. We believe that our selection of pool equipment and supplies, chemicals, replacement parts and complementary products is the most comprehensive in the swimming pool industry. The products we sell can be categorized as follows:

•	maintenance products such as chemicals, supplies and pool accessories;
•	repair and replacement parts for cleaners, filters, heaters, pumps and lights;

•	packaged pool kits including walls, liners, bracing, filters, heaters, pumps and lights for in-ground and above-ground pools;

•	pool equipment and materials for new pool construction and the remodeling of existing pools;

•	discretionary products that enhance consumers use and enjoyment of their pool including water features, fountains, decorative tile, toys and games; and
•	other recreational and backyard related products sold by our customers including hot tubs, patio furniture, grills and artificial Christmas trees.

SCP POOL CORPORATION

Part I.

Item 1.

Business (continued)

Maintenance products and repair and replacement parts are non-discretionary in nature, meaning that these items must be purchased by pool owners to maintain existing swimming pools. Over 60% of our gross profits are derived from the sale of products used to maintain and repair the installed base of pools and less than 40% are derived from the construction (equipment, building materials, plumbing, electrical) of new in-ground and above-ground pools.

In 1999, in an effort to provide more of a one-stop shopping experience for our customers, we began to offer products which our customers traditionally purchased from other suppliers. These products, which we refer to as Complementary Products, include:

•	building materials;
•	plumbing and electrical supplies;
•	toys and games;
•	hot tubs and hot tub accessories; and
•	other products traditionally not sold by most swimming pool distributors.

We have identified other product categories that could become part of our Complementary Product offerings in the future. We typically choose two to three categories each year and introduce them in certain markets. We then evaluate the performance of these test categories and focus on those which we believe exhibit long-term growth potential.

POOL’s Complementary Products sales have grown from $3 million in 1999 to over $100 million in 2004. This growth has been an important factor in our base business sales growth over the past six years. Complementary Product sales grew 27% in 2004 and accounted for nearly 8% of our total net sales at comparable margins to our traditional product offerings. In 2005, we intend to continue to expand our Complementary Products initiative by increasing the number of locations which offer Complementary Products, increasing the number of Complementary Products offered at certain locations and also through a modest broadening of the product offerings on a company-wide basis. We expect Complementary Product sales to approach 10% of our total sales in 2005.

Operating Strategy

We operate two distribution networks in North America: the SCP Distributors network (SCP) and the Superior Pool Products (Superior) network. The SCP network consists of 142 service centers, including 11 locations in Europe, and the Superior network consists of 61 locations.

We adopted this strategy of operating two distinct distribution networks primarily for two reasons:

1.	To offer our customers a choice of different distributors, featuring distinctive product selections and relationships with manufacturers; and
2.	To increase the level of customer service and operational efficiency provided by the service centers in each network by promoting healthy competition between the two networks.

SCP POOL CORPORATION

Part I.

Item 1.

Business (continued)

Our service centers are evaluated based upon their performance relative to predetermined standards that include both financial and operational measures. Our corporate support groups provide our field operations with services including customer and vendor related programs, systems and expert resources to use to help achieve their goals. We employ incentive programs and feedback mechanisms along with the competitive nature of our internal networks to stimulate performance.

Employees

We employed approximately 2,700 people at February 14, 2005. Given the seasonal nature of our business, our peak employment period is the summer, when we add up to 15% more employees to our work force to meet seasonal demand.

Distribution

Our service centers are located near customer concentrations, typically in industrial, commercial or mixed-use zones. Customers may pick up products at any service center location, or products may be delivered via our trucks or third party carriers.

Our service centers maintain well-stocked inventories to meet customers’ immediate needs. We utilize warehouse management technology to optimize receiving, inventory control, picking, packing and shipping functions.

In addition, we operate five centralized shipping locations and two construction materials centers that redistribute products we purchase in bulk quantities to our service centers or directly to customers.

Purchasing and Suppliers

We enjoy good relationships with our suppliers, who generally offer competitive pricing, return policies and promotional allowances. It is customary in the swimming pool supply industry for manufacturers to seasonally offer extended payment terms to qualifying purchasers such as POOL. These terms are typically available to us for pre-season or early season purchases.

We initiated a preferred vendor program in 1999 which encourages our buyers to purchase products from a smaller number of vendors. We work closely with these vendors to develop programs and services to better meet the needs of our customers and concentrate our purchasing activities. These practices, together with a more comprehensive service offering, have resulted in improved margins at the service center level.

We regularly evaluate supplier relationships and consider alternate sourcing to assure competitive cost, service and quality standards. Our largest suppliers include Pentair Corporation, Hayward Pool Products, Inc. and Waterpik Technologies, Inc., which accounted for approximately 16%, 9% and 7%, respectively, of the cost of products we sold in 2004.

Competition

Based on industry knowledge and available data, management believes POOL is the largest wholesale distributor in the swimming pool supply industry, and the only truly national wholesale distributor focused on the pool industry in the United States. We face intense competition from many regional and local distributors in our markets and to a

SCP POOL CORPORATION

Part I.

Item 1.

Business (continued)

lesser extent, mass-market retailers and large pool supply retailers with their own internal distribution networks. Some geographic markets we serve, particularly our largest, higher density markets in California, Florida, Texas and Arizona, are more competitive than others. Barriers to entry in the swimming pool supply industry are relatively low. We compete with other distributors for rights to distribute brand-name products. If we lose or are unable to obtain these rights, we might be materially and adversely affected. We believe that the size of our operations allows us to compete favorably for such distribution rights.

We believe that the principal competitive factors in swimming pool supply distribution are:

•	the breadth and availability of products offered;
•	the quality and level of customer service;
•	the breadth and depth of sales and marketing programs;
•	consistency and stability of business relationships with customers; and
•	competitive product pricing.

We believe that we generally compete favorably with respect to each of these factors.

Seasonality and Weather

See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Seasonality and Quarterly Fluctuations”.

Environmental, Health and Safety Regulations

Our business is subject to regulation under local fire codes and federal, state and local environmental and health and safety requirements including:

•	the Emergency Planning and Community Right-to-Know Act and other Environmental Protection Agency regulations;

•	the Hazardous Materials Transportation Act and other Department of Transportation regulations; and
•	the Occupational Safety and Health Act (OSHA).

Most of these requirements govern the packaging, labeling, handling, transportation, storage and sale of pool chemicals. We store chemicals at each of our service centers. The storage of these chemicals is strictly regulated by local fire codes. In addition, we sell algaecides that are regulated as pesticides under the Federal Insecticide, Fungicide and Rodenticide Act and state pesticide laws. These laws primarily relate to labeling and annual registration.

Intellectual Property

We maintain both domestic and foreign registered trademarks primarily for our private label products and we intend to maintain the trademark registrations important to our business operations. We also own rights to several Internet domain names.

SCP POOL CORPORATION

Part I.

Item 2.

Properties

We lease the POOL corporate and SCP Distributors LLC administrative offices which consist of approximately 40,000 square feet of office space in Covington, Louisiana. We own three service centers in Florida. All of our other properties are leased for terms that expire between 2005 and 2017. In addition to minimum rental payments, which are set at competitive rates, certain leases require reimbursement for taxes, maintenance and insurance. Most of our leases contain renewal options, some of which involve rent increases.

Our service centers range in size from approximately 3,000 square feet to 100,000 square feet and generally consist of warehouse, counter, display and office space. Our centralized shipping locations range in size from 33,000 square feet to 57,000 square feet.

We believe that our facilities are well maintained, suitable for our business and occupy sufficient space to meet our operating needs. As part of our normal business, we regularly evaluate service center performance and site suitability and may relocate a service center or consolidate two locations if a service center is redundant in a market, under performing or otherwise deemed unsuitable. We do not believe that any single lease is material to our operations.

SCP POOL CORPORATION

Part I.

Item 2.

Properties (continued)

The table below identifies the number of service centers by state and foreign country as of February 14, 2005:

Location	# of Service Centers
Florida	35
California	32
Texas	16
Arizona	8
Canada	7
Tennessee	7
Alabama	6
Georgia	6
New York	6
New Jersey	5
Ohio	5
France	4
Indiana	4
Louisiana	4
Missouri	4
North Carolina	4
Pennsylvania	4
Illinois	3
Michigan	3
Nevada	3
Oklahoma	3
United Kingdom	3
Virginia	3
Arkansas	2
Colorado	2
Kansas	2
Massachusetts	2
Minnesota	2
Portugal	2
South Carolina	2
Spain	2
Connecticut	1
Iowa	1
Kentucky	1
Maine	1
Maryland	1
Mexico	1
Mississippi	1
Nebraska	1
New Mexico	1
Oregon	1
Washington	1
Wisconsin	1
Total	203

SCP POOL CORPORATION

Part I.

Item 3.

Legal Proceedings

From time to time, we are subject to various claims and litigation arising in the ordinary course of business, including product liability, personal injury, commercial, contract and employment matters. With respect to product related matters, we believe that if any such product related cases are determined in favor of a claimant, the manufacturers of such products would have primary responsibility for any damages because we are a distributor of finished goods manufactured by third parties, although no assurance can be given. While the outcome of any litigation is inherently unpredictable, we do not believe, based on currently available facts, that the ultimate disposition of any of these matters will have a material adverse impact on our financial condition, results of operations or cash flows.

Item 4.

Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of our stockholders during the quarter ended December 31, 2004.

Part II.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock began trading on the Nasdaq National Market under the symbol “POOL” in October 1995. On February 14, 2005, there were approximately 26,377 beneficial holders of our common stock.

The table below sets forth the high and low sales prices of our common stock and dividends declared for each quarter during the last two years. The prices and dividends for 2003 and the first two quarters of 2004 have been adjusted to reflect the three-for-two stock split effective September 10, 2004.

							Dividends
Fiscal Year			High		Low		Declared
2004
First Quarter	$	25.11		$	20.57	$	—
Second Quarter		30.24			24.25		0.067
Third Quarter		31.26			26.13		0.067
Fourth Quarter		32.40			24.80		0.070
2003
First Quarter	$	13.64		$	11.15	$	—
Second Quarter		15.49			13.11		—
Third Quarter		19.67			14.57		—
Fourth Quarter		24.90			18.43		—

In the second quarter of 2004, we initiated a dividend payment to our shareholders, which we continued in the third quarter and increased in the fourth quarter. Payment of future dividends will be at the discretion of our Board of Directors, after taking into account various factors, including earnings, capital requirements and surplus, financial position, contractual restrictions and other relevant business considerations. We plan to continue to pay quarterly dividends, but there can be no assurance that dividends will be declared or paid any time in the future if our Board of Directors deems that there is a better use of those funds.

SCP POOL CORPORATION

Part II.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (continued)

The table below summarizes the repurchases of our common stock in the fourth quarter of 2004.

Issuer Purchases of Equity Securities



			Total number of shares	Maximum approximate
	Total number of	Average price	purchased as part of	dollar value that may yet be
Period	shares purchased	paid per share	publicly announced plan ⁽¹⁾	purchased under the plan

October 1-31, 2004	670,722	$ 26.23	670,722	$27,402,231

⁽¹⁾ In July 2002, our Board of Directors authorized $50.0 million for the repurchase of shares of our common stock in the open market. In August 2004, when approximately $17.6 million of the amount authorized remained available for share repurchases, our Board of Directors increased the authorization for the repurchase of shares of our common stock in the open market to a total of $50.0 million of which approximately $27.4 million remained available as of February 14, 2005.

SCP POOL CORPORATION

Part II.

Item 6.

Selected Financial Data

The table below sets forth selected financial data from the Consolidated Financial Statements. You should read this information in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with the Consolidated Financial Statements and accompanying Notes.

(In thousands, except per share data)					Year Ended December 31, ⁽¹⁾
			2004		2003		2002		2001		2000
Statement of Income Data
Net sales		$	1,310,853	$	1,155,832	$	983,246	$	854,234	$	672,273
Net income			66,941		50,848		41,303		35,444		28,076
Earnings per share
	Basic	$	1.27		0.96		0.76		0.62		0.49
	Diluted	$	1.19		0.91		0.72		0.59		0.47
Cash dividends declared per common share		$	0.20		—		—		—		—
Balance Sheet Data
Working capital ⁽²⁾		$	128,189	$	60,030	$	144,174	$	136,856	$	88,908
Total assets			480,866		450,272		402,094		348,590		251,905
Total long-term debt, including current portion			54,910		48,346		129,602		85,091		40,991
Stockholders’ equity			220,335		195,241		141,941		144,572		123,195
Other
Base business sales growth ⁽³⁾			10	%	11	%	10	%	3	%	n/c
Number of service centers at year end			201		197		185		172		129

(1) During the years 2000 to 2004, we successfully completed 12 acquisitions consisting of 88 service centers, of which 14 were closed or consolidated into existing service centers. For further discussion, see Item 1.

(2) The approximate 58% decrease in working capital from 2002 to 2003 is due to long-term debt related to our revolving line of credit, which expired in November 2004 and was classified as current at December 31, 2003 and also to an accounts receivable securitization facility we entered into in 2003 which is also classified as current. The revolving line of credit was renegotiated in November 2004 for a five year period and borrowings under this facility are classified as long-term debt at December 31, 2004.

(3) We calculate base business sales growth by excluding the following service centers from the calculation for 15 months: (i) service centers acquired within the past 15 months, (ii) service centers consolidated with acquired locations and (iii) new service centers opened in new markets within the past 15 months. Base business sales growth was not calculated prior to 2001.

SCP POOL CORPORATION

Part II.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Our 2004 financial results reflect the continuing execution of our strategies to grow our customers’ businesses faster than the overall market, including the introduction of new products to our existing customer base, and to incrementally improve all aspects of our business operations.

Net sales grew 13% to $1.31 billion in 2004 compared to $1.16 billion in 2003. This is slightly lower than the 18% sales growth experienced in 2003 and 15% in 2002 as one of our vehicles for sales growth, acquisitions, was lower than historical levels, a trend we expect to continue. Growth in our base business has been relatively stable over this time period at 10%, 11% and 10% for 2004, 2003 and 2002, respectively. We attribute much of this growth to the success of the programs we offer to our customers, which are aimed at growing their businesses. This contrasts with the growth of the overall market for swimming pool equipment and supplies, which we estimate grew from 4% to 5% per year over this same time period.

Weather is the single biggest external factor impacting our business, and we believe our operating results in 2004 were impacted by the less than favorable weather conditions throughout much of the United States. Although we experienced favorable weather conditions in the western portion of the United States, much of the central and northeastern regions experienced unusually cold and wet conditions in the peak summer season, which adversely impacted our business. The impact of weather on the pool markets we serve drives the seasonal nature of our business. Our peak selling season is the second quarter, followed by the third quarter, with the first and fourth quarters being the weakest. Our working capital needs tend to precede the seasonal impact by two to three months.

Our results reflect the continued drive into newer product areas, as sales of Complementary Products have grown from $3 million since 1999 to over $100 million in 2004. In 2004, Complementary Product sales grew 27% over 2003 and accounted for 8% of our total net sales. These products, which our customers historically purchased from other suppliers, carry gross margins comparable to our traditional product categories. Additionally, we have recognized some incremental benefits through the utilization of our existing distribution infrastructure. Our service centers have augmented their product offerings with Complementary Products at various rates based upon an assortment of factors including regional market conditions. We supplement our Complementary Product offerings each year to some degree by adding new products that we believe will be of interest to our customers and discontinuing products that are less promising. Overall, we expect Complementary Product sales to continue to grow at a rate much faster than the growth rate of our traditional product offerings, approaching 10% of net sales in 2005.

Our net income increased 32% to $66.9 million in 2004 due primarily to the growth in sales and to other ongoing improvements in our operations, such as product sourcing, procurement and logistics initiatives, adoption of enhanced business practices and improved working capital management. We expect to make continued operational improvements in the future.

During 2004, as more fully described in the Liquidity and Capital Resources section below, we executed a new five-year Credit Facility that, along with our accounts receivables securitization facility, is our primary source of funds to meet our capital needs. In the second quarter of 2004, we initiated a dividend payment to our shareholders, which we continued in the third quarter and increased in the fourth quarter. The initiation of this dividend reflects our belief that over the long term, we will generate sufficient cash flow and have adequate access to capital to both fund our business objectives and provide a direct return to our shareholders in the form of a dividend payment.

SCP POOL CORPORATION

Part II.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

In December 2004, we exchanged the assets of our manufacturing facilities in Fort Wayne, Indiana and Quebec, Canada for three distribution sites in Ontario, Canada and a minority equity interest in Latham Acquisition Corporation, as more fully described herein. We believe this transaction will allow us to focus more on our core distribution business while also providing us with a strategic relationship with an important supplier.

Our business is subject to significant risks, including weather, competition, general economic conditions and other risks detailed below in our “Cautionary Statement for Purpose of the ‘Safe Harbor’ Provisions of the Private Securities Litigation Reform Act of 1995”.

Critical Accounting Policies

Critical accounting policies are those that are both important to the accurate portrayal of a company’s financial condition and results, and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

In order to prepare financial statements that conform to accounting principles generally accepted in the United States (GAAP), we make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Certain estimates are particularly sensitive due to their significance to the financial statements and the possibility that future events may be significantly different from our expectations.

We have identified the following six accounting policies that require us to make the most difficult, subjective or complex judgments in order to fairly present our consolidated financial position and results of operations.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for an estimate of the losses we will incur if our customers do not make required payments. We perform periodic credit evaluations of our customers and typically do not require collateral. Consistent with industry practices, we require payment from our customers within 30 days except for sales under early-buy programs for which we provide extended payment terms to qualified customers. The extended terms require payments in equal installments in April, May and June or May and June, depending on geographical location. In the past, credit losses have been within or better than our expectations.

As our business is seasonal, our customers’ businesses are also seasonal. Sales are lowest in the winter months, and our past due accounts receivable balance as a percentage of total receivables generally increases during this time. We provide reserves for uncollectible accounts based on the accounts receivable aging ranging from 0.12% for amounts currently due up to 100% for specific accounts more than 60 days past due.

SCP POOL CORPORATION

Part II.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

At the end of each year, we perform a reserve analysis of all accounts with past due balances greater than $25,000. Additionally, we perform a separate reserve analysis on the balance of our accounts receivables with emphasis on the remainder of the past due portion of the aging. As we review these past due accounts, we evaluate collectibility based on a combination of factors, including:

•	aging statistics and trends;
•	customer payment history;
•	independent credit reports; and
•	discussions with customers.

During the year, we write off account balances when we have exhausted reasonable collection efforts and determined that the likelihood of collection is remote. Such write-offs are charged against our allowance for doubtful accounts. In the past five years, write-offs have averaged less than 0.2% of net sales.

If the balance of the accounts receivable reserve increased or decreased by 20% at December 31, 2004, pretax income would change by approximately $0.6 million and earnings per share would change by less than $0.01 per diluted share based on the number of diluted shares outstanding at December 31, 2004.

Inventory Obsolescence and Shrink

Product inventories represent the largest asset on our balance sheet. Our goal is to manage our inventory such that we minimize stock-outs to provide the highest level of service to our customers. To do this, we maintain at each service center an adequate inventory of stock keeping units (SKUs) with the highest sales volume. At the same time, we continuously strive to better manage our slower moving classes of inventory, which are not as critical to our customers and thus, inherently have lower velocity. Service centers classify products into 13 classes based on sales at that location over the past 12 months. The table below presents a description of these inventory classes:

Classes 1-3	fastest moving items, which represent approximately 80% of net sales at the service center

Classes 4-12	slower moving items, which we keep in stock to provide a high level of customer service

Class 13	products with no sales at a particular service center for the past twelve months or special
	order products not yet delivered to the customer

There is little risk of obsolescence for products in classes 1-3 because products in these classes turn quickly. We establish our reserve for inventory obsolescence based on inventory classes 5-13, which we believe represent some exposure to inventory obsolescence, with particular emphasis on SKUs with the least sales over the previous 12 months. The reserve is intended to reflect the value of inventory that we may not be able to sell at a profit. We provide a reserve of 5% for inventory in classes 5-13. We also provide an additional 5% reserve for excess inventory in classes 5-12 and an additional 45% for class 13 inventory. We define excess inventory as the amount of inventory on hand in excess of the previous 12 months usage on a company-wide basis.

SCP POOL CORPORATION

Part II.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

In evaluating the adequacy of our reserve for inventory obsolescence and shrink at the service center level, we consider a combination of factors including:

•	the level of inventory in relationship to historical sales by product, including inventory usage by class based on product sales at both the service center and Company levels;

•	changes in customer preferences;
•	the experience of the service center manager;
•	the previous inventory management performance of the service center;
•	geographical location; and
•	new product offerings.

Our reserve for inventory obsolescence may periodically require adjustment as changes occur in the above-identified factors.

If the balance of our inventory reserve increased or decreased by 20% at December 31, 2004, pretax income would change by approximately $0.6 million and earnings per share would change by less than $0.01 per diluted share based on the number of diluted shares outstanding at December 31, 2004.

Revenue Recognition

We recognize revenue in accordance with SEC Staff Accounting Bulletin (SAB) 101, Revenue Recognition in Financial Statements, and the appropriate amendments. SAB 101 requires that four basic criteria must be met before we can recognize revenue:

1.	persuasive evidence of an arrangement exists;
2.	delivery has occurred or services have been rendered;
3.	the seller’s price to the buyer is fixed or determinable; and
4.	collectibility is reasonably assured.

We record revenue when customers take delivery of products. Customers may pick up products at any service center location, or products may be delivered via our trucks or third party carriers. Products shipped via third party carriers are considered delivered based on the shipping terms, which are generally FOB shipping point.

We may offer volume rebates, which we accrue monthly as an adjustment to net sales. We record customer returns, including those associated with early-buy programs, as an adjustment to net sales. In the past, customer returns have not been material.

Vendor Rebates

We account for vendor rebates in accordance with the Emerging Issues Task Force Issue 02-16, Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor. Many of our arrangements with our vendors provide for us to receive a rebate of a specified amount of consideration, payable to us when we achieve any of a number of measures, generally related to the volume level of purchases from our vendors. We account for such rebates as a reduction of the prices of the vendor’s products and therefore as a reduction of inventory until we sell the product, at which time such rebates reduce cost of sales in our income statement. Throughout the year, we estimate the amount of the rebate earned based on our estimate of purchases to date relative to the purchase levels that mark

SCP POOL CORPORATION

Part II.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

our progress toward earning the rebates. We continually revise these estimates to reflect actual rebates earned based on actual purchase levels.

If market conditions were to change, vendors may change the terms of some or all of these programs. Although such changes would not affect the amounts we have recorded related to product already purchased, it may lower or raise our gross margins on products we sell or revenues earned in future periods.

Income Taxes

We record deferred tax assets or liabilities based on differences between financial reporting and tax basis of assets and liabilities using currently enacted rates and laws that will be in effect when we expect the differences to reverse. Due to changing tax laws and state income tax rates, significant judgment is required to estimate the effective tax rate expected to apply to tax differences that are expected to reverse in the future.

As of December 31, 2004, United States taxes were not provided on earnings of our foreign subsidiaries, as we have invested or expect to invest the undistributed earnings indefinitely. If in the future these earnings are repatriated to the United States, or if we determine that the earnings will be remitted in the foreseeable future, additional tax provisions may be required.

We hold, through our affiliates, cash balances in the countries in which we operate, including substantial amounts held outside the United States. Most of the amounts held outside the United States could be repatriated to the United States, but, under current law, may be subject to United States federal income taxes, less applicable foreign tax credits. Repatriation of some foreign balances is restricted by local laws including the imposition of withholding taxes in some jurisdictions. We have not provided for the United States federal tax liability on these amounts and for financial statement purposes, these foreign cash balances are considered indefinitely reinvested outside the United States.

The American Jobs Creation Act of 2004, enacted on October 22, 2004 (the Jobs Act), provides for a temporary 85% dividends received deduction on certain foreign earnings repatriated during a one-year period. The deduction would result in an approximate 5.25% federal tax rate on the repatriated earnings. To qualify for the deduction, the earnings must be reinvested in the United States pursuant to a domestic reinvestment plan established by a company’s chief executive officer and approved by its board of directors. Certain other criteria in the Jobs Act must be satisfied as well. The maximum amount of our foreign earnings, if any, that qualify for the temporary deduction has not been determined. The one-year period during which we may make the qualifying distributions is fiscal 2005.

We are in the process of evaluating whether we have foreign earnings that qualify for the dividend received deduction and whether we will repatriate all or a portion of any qualifying foreign earnings. We have not determined the range of reasonably possible amounts that we may repatriate or an estimate of the possible United States federal and state income tax expense related to repatriation. We do not anticipate that the United States federal and state income tax will be material. We expect to determine the amounts and sources of foreign earnings to be repatriated, if any, by the third quarter of fiscal 2005.

SCP POOL CORPORATION

Part II.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

We have operations in 37 states and six foreign countries. The amount of income taxes we pay is subject to adjustment by the applicable tax authorities. We are currently under examination by federal and state income tax authorities. Our estimate for the potential outcome for any uncertain tax issue is highly judgmental. We believe we have adequately provided for any reasonably foreseeable outcome related to these matters. However, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved or when statutes of limitation on potential assessments expire. As a result of these uncertainties, our effective tax rate may fluctuate significantly on a quarterly basis.

Goodwill

Goodwill represents the excess of the amount we paid to acquire a company over the estimated fair value of tangible assets and identifiable intangible assets acquired, less liabilities assumed. At December 31, 2004, our goodwill balance was $104.7 million, representing 22% of total assets and 48% of stockholders’ equity.

We account for goodwill under the provisions of SFAS 142, Goodwill and Other Intangible Assets . Under these rules, we test goodwill for impairment annually or at any other time when impairment indicators exist.

In October 2004, we performed our annual goodwill impairment test, which requires comparison of our estimated fair value to our book value, including goodwill. In accordance with SFAS 142, we retested goodwill for impairment as of December 31, 2004 after we divested a portion of our goodwill in connection with the divestiture of our manufacturing facilities in Fort Wayne, Indiana and Quebec, Canada. As a result of these tests, we believe the goodwill on our balance sheet is not impaired.

If circumstances change or events occur to indicate that our fair market value has fallen below book value, we will compare the estimated fair value of the goodwill to its book value. If the book value of goodwill exceeds the estimated fair value of goodwill, we will recognize the difference as an impairment loss in operating income.

Results of Operations

The table below summarizes information derived from our Consolidated Statements of Income expressed as a percentage of net sales for the past three years:

		Year Ended December 31,
		2004		2003		2002
Net sales		100.0	%	100.0	%	100.0	%
Cost of sales		71.7		72.7		74.0
	Gross profit	28.3		27.3		26.0
Selling and administrative expenses		19.6		19.6		18.6
	Operating income	8.7		7.6		7.4
Interest expense		0.3		0.4		0.5
Income before income taxes		8.4		7.2		6.9

Note: Due to rounding, percentages may not add to total income before income taxes.

SCP POOL CORPORATION

Part II.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

The following discussion of consolidated operating results includes the operating results from acquisitions in 2004, 2003 and 2002. We accounted for these acquisitions using the purchase method of accounting, and we have included the results of operations in our consolidated results since the respective acquisition dates.

We calculate base business growth by excluding the following service centers from the calculation for 15 months:

•	service centers acquired within the past 15 months;
•	service centers consolidated with acquired service centers; and
•	new service centers opened in new markets in the past 15 months.

Additionally, we allocate overhead expenses to the base business by considering base business net sales as a percentage of total net sales.

2004 compared to 2003

(Unaudited)		Base Business				Acquired and Consolidated					Total
(In thousands)		Twelve Months				Twelve Months					Twelve Months
		Ended				Ended					Ended
		December 31,				December 31,					December 31,
		2004		2003		2004		2003			2004		2003
Net sales	$	1,254,907	$	1,138,133	$	55,946	$	17,699		$	1,310,853	$	1,155,832

Gross profit		356,555		309,909		14,279		5,229			370,834		315,138
Gross margin		28.4	%	27.2	%	25.5	%	29.5	%		28.3	%	27.3	%

Selling and operating expenses		240,943		219,554		16,297		7,558			257,240		227,112
Expenses as a % of net sales		19.2	%	19.3	%	29.1	%	42.7	%		19.6	%	19.6	%

Operating income (loss)		115,612		90,355		(2,018)		(2,329)			113,594		88,026
Operating income (loss) margin		9.2	%	7.9	%	(3.6)	%	(13.2)	%		8.7	%	7.6	%

For purposes of comparing operating results for the year ended December 31, 2004 to the year ended December 31, 2003, 195 service centers were included in the base business calculations, and six service centers were excluded because they were acquired within the last 15 months.

SCP POOL CORPORATION

Part II.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

The effect of service center acquisitions and consolidations in the table above includes the operations of the following:

•	Service centers consolidated with Fort Wayne locations – January and February 2003 and January and February 2004

•	Les Industries R.P., Inc – January through July 2004 and May through July 2003
•	SCP Mexico S.A. de C.V. – January through October 2004 and August through October 2003
•	Sud Ouest Filtration – January through October 2004 and August through October 2003

•	Distribution division of Litehouse Products - January through December 2004 and October through December 2003
•	SCP Pool Distributors Spain, S.L. – January through December 2004 and November through December 2003

Net Sales

		Twelve Months Ended December 31,
(in millions)		2004		2003		Change
Net sales	$	1,310.9	$	1,155.8	$	155.1	13	%

Base business growth of 10% contributed $116.8 million to the increase, while acquired service centers and service centers consolidated with acquired locations accounted for the remaining increase. Base business net sales increased primarily due to the following:

•	a larger installed base of swimming pools resulting in increased sales of non-discretionary products;
•	the continued successful execution of our sales, marketing and service programs;
•	27% growth in Complementary Product sales; and
•	price increases on products sold.

We expect these above mentioned factors will continue to have a positive impact on our net sales in 2005.

Gross Profit

		Twelve Months Ended December 31,
(in millions)		2004		2003			Change
Gross profit	$	370.8	$	315.1		$	55.7	18	%
Gross profit as a percent of net sales		28.3	%	27.3	%		1.0	%

Base business gross profit growth of 15% contributed $46.6 million to the increase in 2004, while acquired service centers and service centers consolidated with acquired locations accounted for the remaining increase. The base

business gross profit growth is primarily due to the growth in base business net sales as discussed above and growth in our gross profit margins.

Base business gross profit as a percentage of net sales (gross margin) improved to 28.4% in 2004 from 27.2% in 2003 primarily due to improved selling and supply chain management practices.

SCP POOL CORPORATION

Part II.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Going forward, we expect to continue to increase our focus on supply chain management, including expansion of international sourcing and private labeling opportunities, particularly where margin expansion opportunities exist.

Operating Expenses

		Twelve Months Ended December 31,
(in millions)		2004		2003			Change
Operating expenses	$	257.2	$	227.1		$	30.1	13	%
Operating expenses as a percent of net sales		19.6	%	19.6	%		—	%

Operating expenses relating to the base business contributed $21.4 million to the increase in 2004 in order to support increased sales activity, while acquired service centers and service centers consolidated with acquired locations accounted for the remaining increase.

Base business operating expenses as a percentage of net sales decreased slightly to 19.2% in the 2004 from 19.3% in 2003.

Interest Expense

Interest expense decreased to $3.9 million in 2004 from $4.7 million 2003 as a result of lower average outstanding debt in 2004 compared to 2003, a decline in the effective interest rate to 2.5% in 2004 from 2.6% in 2003 and a decrease of $0.5 million in amortization expense related to capitalized finance costs.

Income Taxes

Income taxes increased to $42.8 million in 2004 from $32.5 million in 2003 primarily due to the $26.4 million increase in income before income taxes. Our effective income tax rate remained unchanged at 39% at December 31, 2004 and December 31, 2003.

Net Income and Earnings Per Share

Net income increased 32% to $66.9 million in 2004 from $50.8 million while diluted earnings per share increased 31% to $1.19 per share in 2004 from $0.91 per share.

Given our expectations regarding our ability to grow our revenues and to continue to drive additional supply chain and other business improvements, we expect our earnings per share to grow in the range of 15%-18% in 2005.

SCP POOL CORPORATION

Part II.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

2003 compared to 2002

(Unaudited)		Base Business				Acquired and Consolidated					Total
(In thousands)		Year Ended				Year Ended					Year Ended
		December 31,				December 31,					December 31,
		2003		2002		2003		2002			2003		2002
Net sales	$	1,003,403	$	900,988	$	152,429	$	82,258		$	1,155,832	$	983,246

Gross profit		266,686		236,781		48,452		18,751			315,138		255,532
Gross margin		26.6	%	26.3	%	31.8	%	22.8	%		27.3	%	26.0	%

Selling and operating expenses		186,820		164,596		40,292		18,249			227,112		182,845
Expenses as a % of net sales		18.6	%	18.3	%	26.4	%	22.2	%		19.6	%	18.6	%

Operating income		79,866		72,185		8,160		502			88,026		72,687
Operating income margin		8.0	%	8.0	%	5.4	%	0.6	%		7.6	%	7.4	%

For purposes of comparing operating results for the year ended December 31, 2003 to the year ended December 31, 2002, 178 service centers were included in the base business calculations. Of the excluded service centers, six were acquired within the last 15 months and 13 were existing service centers that were consolidated with acquired locations within the last 15 months.

The effect of service center acquisitions and consolidations in the table above includes the operations of the following:

•	Fort Wayne Pools – January 2003 through October 2003 and August through October 2002
•	Service centers consolidated with Fort Wayne locations – January 2002 through December 2003
•	Capital Pools – January 2003 and January 2002
•	Les Industries R.P., Inc – May through December 2003
•	SCP Mexico S.A. de C.V. – August through December 2003
•	Sud Ouest Filtration – August through December 2003
•	Distribution division of Litehouse Products - October through December 2003
•	SCP Pool Distributors Spain, S.L. – November and December 2003

Net Sales

		Twelve Months Ended December 31,
(in millions)		2003		2002		Change
Net sales	$	1,155.8	$	983.2	$	172.6	18	%

SCP POOL CORPORATION

Part II .

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Base business growth of 11% contributed $102.4 million to the increase, while acquired service centers and service centers consolidated with acquired locations accounted for the remaining increase. Base business net sales increased primarily due to the following:

•	a larger installed base of swimming pools resulting in increased sales of non-discretionary products;
•	the continued successful execution of our sales, marketing and service programs; and
•	an increase in Complementary Product sales.

Gross Profit

		Twelve Months Ended December 31,
(in millions)		2003		2002			Change
Gross profit	$	315.1	$	255.5		$	59.6	23	%
Gross profit as a percent of net sales		27.3	%	26.0	%		1.3	%

Base business gross profit growth of 13% contributed $29.9 million to the increase, while acquired service centers and service centers consolidated with acquired locations accounted for the remaining increase.

Base business gross margin increased 30 basis points to 26.6% in 2003 from 26.3% in 2002 primarily due to improved selling and purchasing practices. The remaining increase in gross margin is attributable to the business acquired in our August 2002 Fort Wayne acquisition, including the retention of margins from the manufacturing business.

Operating Expenses

		Twelve Months Ended December 31,
(in millions)		2003		2002			Change
Operating expenses	$	227.1	$	182.8		$	44.3	24	%
Operating expenses as a percent of net sales		19.6	%	18.6	%		1.0	%

Operating expenses relating to the base business contributed $22.2 million to the increase, while acquired service centers and locations consolidated with acquired service centers accounted for the remaining increase. Base business operating expenses as a percentage of net sales increased to 18.6% in 2003 from 18.3% in 2002. The increase in base business operating expenses is primarily due to our continued investment in our sales and marketing programs.

Interest Expense

Interest expense decreased $0.3 million to $4.7 million in 2003 from $5.0 million in 2002. Although average debt outstanding was higher in 2003, our effective interest rate decreased to 2.6% in 2003 from 3.7% in 2002, primarily due to an accounts receivable securitization facility we instituted in the first quarter of 2003, which provides us with a lower cost form of financing.

Income Taxes

Income taxes increased $6.1 million to $32.5 million for 2003 compared to $26.4 million for 2002, primarily due to the $15.6 million increase in income before income taxes. Our effective income tax rate remained unchanged at 39% throughout 2002 and 2003.

SCP POOL CORPORATION

Part II.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Seasonality and Quarterly Fluctuations

Our business is highly seasonal, and weather is the principal external factor affecting our business. The table below presents some of the possible effects resulting from various weather conditions:

Weather		Possible Effects
Hot and dry	•	Increased purchases of chemicals and supplies
		for existing swimming pools
	•	Increased purchases of above-ground pools

Unseasonably cool weather or	•	Fewer pool installations
extraordinary amounts of rain	•	Decreased purchases of chemicals and supplies
	•	Decreased purchases of impulse items such as
		above-ground pools and accessories

Unseasonably early warming trends	•	A longer pool season, thus increasing our sales
(primarily in the northern half of the US)

Unseasonably late warming trends	•	A shorter pool season, thus decreasing our sales
(primarily in the northern half of the US)

For example, in 2004, we believe our operating results were impacted by the less than favorable weather conditions throughout much of the United States. Although we experienced favorable weather conditions in the western portion of the United States, much of the central and northeastern regions experienced unusually cold and wet conditions in the peak summer season, which adversely impacted our business.

In general, sales and operating income are highest during the second and third quarters, which represent the peak months of swimming pool use and installation. Sales are substantially lower during the first and fourth quarters when we may incur net losses.

In 2004, approximately 66% of net sales were generated in the second and third quarters of the year, and approximately 96% of operating income was generated in that same period.

We typically experience a build-up of product inventories and accounts payable during the winter months in anticipation of the peak selling season. Excluding borrowings to finance acquisitions and share repurchases, our peak borrowing usually occurs during the second quarter, primarily because extended payment terms offered by our suppliers typically are payable in April, May and June, while our peak accounts receivable collections typically occur in June, July and August.

SCP POOL CORPORATION

Part II.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

We expect that our quarterly results of operations will continue to fluctuate depending on the timing and amount of revenue contributed by new and acquired service centers. We attempt to open new service centers at the end of the fourth quarter or the first quarter of the subsequent year to take advantage of preseason sales programs and the following peak selling season.

The following table presents certain unaudited quarterly data for 2004 and 2003. In our opinion, this information reflects all normal and recurring adjustments considered necessary for a fair presentation of this data. Due to the seasonal nature of the swimming pool industry, the results of any one or more quarters are not necessarily a good indication of results for an entire fiscal year or of continuing trends.

(Unaudited)			QUARTER
(in thousands)			2004								2003
			First		Second		Third		Fourth		First		Second		Third		Fourth
Net sales		$	234,648		504,177		362,091		209,937	$	196,388	$	431,885	$	337,611	$	189,948
Gross profit			65,032		145,215		104,183		56,404		52,523		120,862		92,157		49,596
Operating income (loss)			7,672		72,589		36,949		(3,616)		3,520		57,189		31,220		(3,903)
Net sales as a % of annual net sales			18	%	38	%	28	%	16	%	17	%	37	%	29	%	17	%
Gross profit as a % of annual
	gross profit		18	%	39	%	28	%	15	%	17	%	38	%	29	%	16	%
Operating income (loss) as a % of
	annual operating income		7	%	64	%	32	%	(3)	%	4	%	65	%	35	%	(4)	%

Liquidity and Capital Resources

Liquidity is defined as the ability to generate adequate amounts of cash to meet current cash needs. We assess our liquidity in terms of our ability to generate cash to fund our operating activities, taking into consideration the seasonal nature of our business. Significant factors which could affect our liquidity include the following:

•	cash flows generated from operating activities;
•	the adequacy of available bank lines of credit;
•	acquisitions;
•	the timing and extent of share repurchases;
•	capital expenditures;
•	dividend payments; and
•	the ability to attract long-term capital with satisfactory terms.

SCP POOL CORPORATION

Part II.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Our primary capital needs are seasonal working capital obligations and other general corporate purposes, including acquisitions, share repurchases and dividend payments. Our primary sources of working capital are cash from operations supplemented by bank borrowings. Borrowings, together with cash from operations and seller financing, historically have been sufficient to support our growth and finance acquisitions. Our priorities for the use of cash are as follows:

•	maintenance and new service center capital expenditures estimated at 0.5% to 0.75% of net sales;
•	strategic acquisitions executed opportunistically;
•	repurchase of common stock at Board defined parameters;
•	payment of cash dividends as and when declared by the Board; and
•	repayment of debt.

On November 2, 2004, we entered into an unsecured syndicated senior credit facility (the Credit Facility) with a group of banks. This Credit Facility replaced our previous senior secured credit facility dated November 27, 2001. The Credit Facility, which matures on November 2, 2009, provides for a $120.0 million five-year revolving credit facility, which includes sublimits for the issuance of swingline loans and standby letters of credit. The aggregate maximum principal amount of the commitments under the Credit Facility may be increased from time to time by a total amount up to $40.0 million.

During the twelve months ended December 31, 2004, we received net proceeds of $11.5 million on the Credit Facility. At December 31, 2004, there was $50.4 million outstanding and $68.4 million available for borrowing under the Credit Facility. The average effective interest rate of the Credit Facility was approximately 3.2% for the year ended December 31, 2004.

Our obligations under the Credit Facility are guaranteed by all of our existing and future direct and indirect subsidiaries. Borrowings and standby letters of credit under the Credit Facility bear interest, at our option, at either (a) a base rate, which is the greater of (i) the Wachovia Bank, National Association prime rate or (ii) the overnight Federal Funds Rate plus 0.50%, or (b) the London Interbank Offered Rate (LIBOR) plus a spread ranging from 0.600% to 1.25%, with such spread in each case depending on our leverage ratio. We are also required to pay (a) an annual facility fee of 0.150% to 0.250%, with such spread in each case depending on our leverage ratio, (b) an annual commercial letter of credit issuance fee of 0.125% multiplied by the face amount of each letter of credit and (c) a letter of credit commission of 0.150% to 0.250% multiplied by face amount of each letter of credit, with such spread in each case depending on our leverage ratio.

The Credit Facility contains terms and provisions (including representations, covenants and conditions) customary for transactions of this type. Financial covenants include maintenance of a maximum average total leverage ratio and a minimum fixed charge coverage ratio. Other covenants include restrictions on our ability to, among other things, pay dividends or make other capital distributions (other than in accordance with our current dividend policy).

The Credit Facility contains customary events of default. If an event of default occurs and is continuing under the Credit Facility, the lenders may terminate their obligations thereunder and may require us to repay all amounts thereunder. As of December 31, 2004, we were in compliance with all covenants and financial ratio requirements.

SCP POOL CORPORATION

Part II.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

At December 31, 2004, we had outstanding borrowings of $42.6 million under our accounts receivable securitization facility (the Receivables Facility). In the first quarter of 2004, we renewed the Receivables Facility, which has a seasonal borrowing capacity up to $100.0 million, through March 2005. The Receivables Facility provides for the true sale of certain of our receivables as they are created to a wholly-owned, bankruptcy-remote subsidiary. This subsidiary grants an undivided security interest in the receivables to an unrelated commercial paper conduit. Because of the structure of the bankruptcy-remote subsidiary and our ability to control its activities, we include the transferred receivables and related debt in our consolidated balance sheet. We employed this arrangement because it provides us with a lower cost form of financing. At December 31, 2004, the average effective interest rate of the Receivables Facility was approximately 2.0%.

At December 31, 2004, our contractual obligations of long-term debt and operating leases were as follows (in thousands):

				Payments due by period
Contractual				Less than						5 years and
obligations		Total		1 year		1-2 years		3-4 years		thereafter
Long-term debt	$	54,910	$	1,350	$	1,350	$	1,790	$	50,420
Short-term financing		42,595		42,595
Operating leases		98,799		25,908		22,815		28,871		21,205
	$	196,304	$	69,853	$	24,165	$	30,661	$	71,625

Net cash provided by operating activities was $56.0 million, or 84% of net income, compared to net cash provided by operations of $78.1 million in 2003. In 2004, we continued to secure better vendor terms reducing our average days payable outstanding by eight days and increasing terms discounts by $1.1 million.

In 2003, net cash provided by operating activities increased $19.9 million to $78.1 million from $58.2 million in 2002. This increase is due to an increase in net income and improved working capital management as we continued to better manage our inventory, and generally improved discipline on working capital. Additionally, we realized the cash benefit from the consolidation/closing of 14 service centers acquired in the Fort Wayne Pools transaction.

Initially, acquisitions are financed through increased bank borrowings, and those borrowings are then reduced with cash flows from operations. The same principle applies for funds used for share repurchases and capital expenditures.

We believe we have adequate availability of capital to fund present operations and anticipated growth, including expansion in existing and targeted market areas. We continually evaluate potential acquisitions and hold discussions with acquisition candidates. If suitable acquisition opportunities or working capital needs arise that would require additional financing, we believe that our financial position and earnings history provide a solid base for obtaining additional financing resources at competitive rates and terms. Additionally, we may issue common or preferred stock to raise funds.

SCP POOL CORPORATION

Part II.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Accounts Receivable and the Allowance for Doubtful Accounts

Accounts receivable increased $13.8 million, or 16%, to $97.6 million at December 31, 2004, compared to $83.8 million at December 31, 2003. This increase is consistent with the increase in net sales between years.

The allowance for doubtful accounts decreased to $3.1 million at December 31, 2004 from $3.8 million at December 31, 2003. The allowance represented 51% of the accounts receivable greater than 60 days past due in December 2004 compared to 54% in December 2003.

Product Inventories and the Reserve for Shrink and Obsolescence

Product inventories increased $1.9 million, or 1%, to $195.8 million at December 31, 2004 from $193.9 million at December 31, 2003.

At December 31, 2004, the inventory reserve of $3.1 million was unchanged from the prior year. The slowest moving class of inventory decreased approximately $0.1 million from 2003 to 2004.

Share Repurchase Program

As part of our share repurchase program, in 2004 we purchased 1.6 million shares of our common stock at an average price of $26.03 per share. We subsequently canceled these shares.

The impact of our common stock repurchases had the effect of reducing diluted weighted average shares outstanding by approximately 0.7 million shares for the year ended December 31, 2004.

On February 14, 2005, $27.4 million remained available under the authorization of our Board of Directors for future share repurchases. We intend to continue to repurchase shares on the open market from time to time, depending on market conditions. We may use cash flows from operations to fund these purchases, or we may incur additional debt.

SCP POOL CORPORATION

Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995

Our disclosure and analysis in this report contains forward-looking information that involves risks and uncertainties. Our forward-looking statements express our current expectations or forecasts of possible future results or events, including projections of future performance, statements of management’s plans and objectives, future contracts, and forecasts of trends and other matters. You can identify these statements by the fact that they do not relate strictly to historic or current facts and often use words such as “anticipate”, “estimate”, “expect”, “believe,” “will likely result,” “outlook,” “project” and other words and expressions of similar meaning. No assurance can be given that the results in any forward-looking statements will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act.

Certain factors that may affect our business and could cause actual results to differ materially from those expressed in any forward-looking statements include the following:

We are susceptible to adverse weather conditions.

Weather is the principal external factor affecting our business. For example, unseasonably late warming trends can decrease the length of the pool season and unseasonably cool weather or extraordinary rainfall during the peak season can decrease swimming pool use, installation and maintenance, which adversely affects sales of our products.

Our business is highly seasonal.

In 2004, approximately 66% of our net sales were generated in the second and third quarters of the year, which represent the peak months of swimming pool use, installation, remodeling and repair, and 96% of our operating income was generated in the same period. Our sales are substantially lower during the first and fourth quarters of the year, when we may incur net losses.

We face intense competition both from other leisure product alternatives and from within the pool industry.

We face competition from both outside our industry with sellers of other leisure product alternatives, such as boats and motor homes, and from within our industry with various regional and local distributors and, to a lesser extent, mass market retailers and large pool supply retailers. New competitors may emerge as there are low barriers to entry in our industry. Some geographic markets that we serve, particularly our largest, higher density markets in California, Florida, Texas and Arizona, representing approximately 51% of our net sales in 2004, also tend to be more competitive than others.

More aggressive competition by mass merchants could adversely affect our sales.

Mass market retailers today carry a limited range of, and devote a limited amount of shelf space to, merchandise and products targeted to the pool industry. Historically, mass market retailers have generally expanded by adding new stores and product breadth, but their product offering of pool related products has remained relatively constant. Should mass market retailers increase their focus on the pool industry or increase the breadth of their pool related product offerings and become a more significant competitor for direct and end-use customers, this could have an adverse impact on our business.

SCP POOL CORPORATION

Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995 (continued)

The demand for our swimming pool and leisure related products may be adversely affected by economic downturns.

In economic downturns, the demand for swimming pool or leisure related products may decline as discretionary consumer spending, the increase in pool eligible households and swimming pool construction decline. Although maintenance products and repair and replacement equipment that must be purchased by pool owners to maintain existing swimming pools account for more than 60% of our gross profits, the growth of our business depends on the expansion of the installed pool base, which may be viewed by most consumers as a discretionary expenditure that may be adversely affected by economic downturns.

The nature of our business subjects us to compliance with Environmental, Health, Transportation and Safety Regulations.

We are subject to regulation under federal, state and local environmental, health, transportation and safety requirements, which govern such things as packaging, labeling, handling, transportation, storage and sale of pool chemicals and other products. For example, we sell algaecides that are regulated as pesticides under the Federal Insecticide, Fungicide and Rodenticide Act and state pesticide laws, which primarily relate to labeling and annual registration.

Failure to comply with these laws and regulations may result in the assessment of administrative, civil, and criminal penalties or the imposition of injunctive relief. Moreover, compliance with such laws and regulations in the future could prove to be costly, and there can be no assurance that we will not incur such costs in material amounts. These laws and regulations have changed substantially and rapidly over the last 20 years, and we anticipate that there will be continuing changes. The clear trend in environmental, health, transportation and safety regulation is to place more restrictions and limitations on activities that impact the environment, such as the use and handling of chemical substances. Increasingly, strict restrictions and limitations have resulted in increased operating costs for us, and it is possible that the costs of compliance with such laws and regulations will continue to increase. We will attempt to anticipate future regulatory requirements that might be imposed and to plan accordingly in order to remain in compliance with changing regulations and to minimize the costs of such compliance.

We store chemicals and other combustible materials that involve fire, safety and casualty risks.

We store chemicals, including certain combustible, oxidizing compounds, at our service centers. A fire, explosion or flood affecting one of our facilities could give rise to fire, safety and casualty losses and related liability claims. We maintain what we believe is prudent insurance protection. However, we cannot guarantee that we will be able to maintain adequate insurance in the future at rates we consider reasonable or that our insurance coverage will be adequate to cover future claims that may arise. Successful claims for which we are not fully insured may adversely affect our working capital and profitability. In addition, changes in the insurance industry have generally led to higher insurance costs and decreased availability of coverage.

SCP POOL CORPORATION

Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995 (continued )

We may not be able to sustain our pace of growth.

We have experienced substantial sales growth in recent years through acquisitions and the opening of new locations that have increased our size, scope and geographic distribution. Since 2000, we have opened 28 new service centers and have completed 12 acquisitions, consisting of 74 service centers (net of service center closings and consolidations). While we contemplate continued growth through acquisitions and internal expansion, no assurance can be made as to our ability to:

•	penetrate new markets;
•	identify appropriate acquisition candidates;
•	complete acquisitions on satisfactory terms and successfully integrate acquired businesses;
•	obtain financing;
•	generate sufficient cash flows to support expansion plans and general operating activities;
•	maintain favorable supplier arrangements and relationships; and
•	identify and divest assets which do not continue to create value consistent with our objectives.

If we do not manage these potential difficulties successfully, our operating results could be adversely affected.

We depend on key personnel.

Our future success depends to an extent upon the continued service of Manuel Perez de la Mesa, our Chief Executive Officer, and to a lesser degree, our other executive officers and key management personnel, and on our ability to continue to attract, retain and motivate qualified personnel. The loss of Mr. Perez de la Mesa in particular could have a material adverse effect on our business. Mr. Perez de la Mesa is not nearing retirement age, and we have no indication that he intends to retire in the near future. We do not currently maintain key man insurance on Mr. Perez de la Mesa.

Our distribution business is highly dependent on our ability to maintain favorable relationships with suppliers and manufacturers.

As a distribution company, maintaining favorable relationships with our suppliers is critical to the success of our business. We believe that we add considerable value to the swimming pool supply chain by purchasing products from a large number of manufacturers and distributing the products to a highly fragmented customer base on conditions that are more favorable than these customers could obtain on their own. We believe that we currently enjoy good relationships with our suppliers, who generally offer us competitive pricing, return policies and promotional allowances. However, our inability to maintain favorable relationships with our suppliers could have an adverse effect on our business.

Our largest suppliers are Pentair Corporation, Hayward Pool Products, Inc. and Waterpik Technologies, Inc., which accounted for approximately 16%, 9% and 7%, respectively, of the costs of products we sold in 2004. While we do not believe that the loss of any single supplier would adversely affect our business, a decision by several suppliers, acting in concert, to sell their products directly to retail customers and other end-users of their products, bypassing distribution companies like ours, would have an adverse effect on our business. We dedicate significant resources promoting the benefits and affordability of pool ownership, which we believe greatly benefits our customers and suppliers.

SCP POOL CORPORATION

Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995 (continued)

The growth of our business depends on effective marketing programs.

The growth of our business depends on the expansion of the installed pool base. Thus, an important part of our strategy is to promote the growth of the pool industry through our extensive advertising and promotional programs that attempt to raise consumer awareness regarding the benefits and affordability of pool ownership, the ease of pool maintenance and the many ways in which a pool may be enjoyed beyond swimming. These programs include media advertising, website development such as www.swimmingpool.com ™ and public relations campaigns. We believe these programs benefit the entire supply chain from our suppliers to our customers.

We also promote the growth of our customers’ businesses through comprehensive support programs that offer promotional tools and marketing support to help generate increased sales for our customers. Our programs include such things as personalized websites, brochures, marketing campaigns and business development training. We also provide certain retail store customers with assistance in site selection, store layout and design and business management system implementation. Our inability to sufficiently develop effective advertising, marketing and promotional programs to succeed in an weakened economic environment and an increasingly competitive marketplace, in which we (and our entire supply chain) also compete with other luxury product alternatives, could have a material adverse effect on our business.

A terrorist attack or the threat of a terrorist attack could have a material adverse effect on our business.

The terrorist attacks that took place on September 11, 2001, in the U.S. were unprecedented events that have created many economic and political uncertainties, some of which may materially impact our business. Discretionary spending on leisure products such as ours is generally adversely affected during times of economic uncertainty. The potential for future terrorist attacks, the national and international responses to terrorist attacks, and other acts of war or hostility have created many economic and political uncertainties, which could adversely affect our business for the short or long-term in ways that cannot presently be predicted.

SCP POOL CORPORATION

Item 7a.

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks, including interest rate risk and foreign currency risk. The adverse effects of potential changes in these market risks are discussed below. The following discussion does not consider the effects of the reduced level of overall economic activity that could exist following such changes. Further, in the event of changes of such magnitude, we would likely take actions to mitigate our exposure to such changes.

Interest Rate Risk

Our earnings are exposed to changes in short-term interest rates because of the variable interest rates on our debt. If (i) the variable rates on our Credit Facility and our Receivables Facility increased or decreased 1.0% from the rate at December 31, 2004; and (ii) we borrowed the maximum amount available under the Credit Facility ($120 million) and the Receivables Facility ($100 million) for all of 2005, then our pretax income would change by approximately $2.2 million and earnings per share would change by $0.02 per diluted share based on the number of weighed average diluted shares outstanding at December 31, 2004. The fair value of our Credit Facility is not affected by changes in market interest rates.

Foreign Exchange Risk

We have wholly-owned subsidiaries in Canada, Mexico, the United Kingdom, France, Portugal and Spain. In the past, we have not hedged our foreign currency exposure, and fluctuations in exchange rates have not materially affected our operating results. Future changes in exchange rates may positively or negatively impact our revenues, operating expenses and earnings. Due to the size of our foreign operations, however, we do not anticipate that exposure to foreign currency rate fluctuations will be material in 2005.

Functional Currencies
Canada	Canadian Dollar
Mexico	Peso
United Kingdom	British Pound
France	Euro
Portugal	Euro
Spain	Euro

Item 8.

Financial Statements and Supplementary Data

See the attached Consolidated Financial Statements and related Notes (pages F-1 through F-28).

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

SCP POOL CORPORATION

Item 9A.

Controls and Procedures

The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the Act). The rules refer to the controls and other procedures designed to ensure that information required to be disclosed in reports that we file or submit under the Act is recorded, processed, summarized and reported within the time periods specified. As of December 31, 2004, management, including the CEO and CFO, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, management, including the CEO and CFO, concluded that as of December 31, 2004, our disclosure controls and procedures were effective at ensuring that material information related to us or our consolidated subsidiaries is made known to them and is disclosed on a timely basis in our reports filed under the Act.

We maintain a system of internal control over financial reporting that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Based on the most recent evaluation, we have concluded that no significant changes in our internal control over financial reporting occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

POOL’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control system was designed to provide reasonable assurance to POOL’s management and Board of Directors regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Any evaluation or projection of effectiveness to future periods is also subject to risk that controls may become inadequate due to changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

POOL’s management assessed the effectiveness of our internal control over financial reporting as of December 31, 2004. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this assessment, management has concluded that, as of December 31, 2004, POOL’s internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

The registered public accounting firm that audited the financial statements included on pages F-3 – F-28 has issued an attestation report on management’s assessment of POOL’s internal controls over financial reporting. This report appears below.

SCP POOL CORPORATION

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of SCP Pool Corporation

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that SCP Pool Corporation maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). SCP Pool Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that SCP Pool Corporation maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, SCP Pool Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of SCP Pool Corporation as of December 31, 2004 and 2003, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2004 of SCP Pool Corporation and our report dated February 25, 2005 expressed an unqualified opinion thereon.

ERNST & YOUNG LLP

February 25, 2005

SCP POOL CORPORATION

Item 9B.

Other Information

Not applicable.

Part III.

Item 10.

Directors and Executive Officers of the Registrant

Incorporated by reference to the Company’s 2005 Proxy Statement to be filed with the SEC.

Item 11.

Executive Compensation

Incorporated by reference to the Company’s 2005 Proxy Statement to be filed with the SEC.

Item 12.

Security Ownership of Certain Beneficial Owners and Management

Incorporated by reference to the Company’s 2005 Proxy Statement to be filed with the SEC.

Item 13.

Certain Relationships and Related Transactions

Incorporated by reference to the Company’s 2005 Proxy Statement to be filed with the SEC.

Item 14.

Principal Accounting Fees and Services

Incorporated by reference to the Company’s 2005 Proxy Statement to be filed with the SEC.

SCP POOL CORPORATION

Part IV.

Item 15.

Exhibits and Financial Statement Schedules

a.	1.	The Consolidated Financial Statements included in Item 8 and set forth on pages
		F-1 through F-28.

	2.	Financial Statement Schedules. Schedule II – Valuation and Qualifying Accounts
		All other schedules are omitted because they are not applicable or are not required,
		or because the required information is included in the Consolidated Financial
		Statements or Notes.

	3.	The exhibits listed in the Index to the Exhibits.

SCP POOL CORPORATION

INDEX TO FINANCIAL STATEMENTS

Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheets	F-3

Consolidated Statements of Income	F-4

Consolidated Statements of Stockholders’ Equity	F-5

Consolidated Statements of Cash Flows	F-6

Notes to Consolidated Financial Statements	F-8

F-1

SCP POOL CORPORATION

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of SCP Pool Corporation

We have audited the accompanying consolidated balance sheets of SCP Pool Corporation as of December 31, 2004 and 2003, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2004. Our audits also included the financial statement schedule listed in the index at Item 15a2. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of SCP Pool Corporation at December 31, 2004 and 2003, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2005 expressed an unqualified opinion thereon.

ERNST & YOUNG LLP

New Orleans, Louisiana

February 25, 2005

F-2

SCP POOL CORPORATION

Consolidated Balance Sheets
(In thousands, except share data)				December 31,
				2004		2003
Assets
Current assets
	Cash and cash equivalents		$	21,762	$	12,812
	Receivables, net			33,887		25,728
	Receivables pledged under receivables facility			63,702		58,096
	Product inventories, net			195,787		193,905
	Prepaid expenses			6,057		3,991
	Deferred income taxes			2,340		1,864
Total current assets			$	323,535	$	296,396

Property and equipment, net				18,595		24,643
Goodwill				104,684		112,140
Other intangible assets, net				12,620		14,631
Investments				18,616		—
Other assets, net				2,816		2,462
Total assets			$	480,866	$	450,272
Liabilities and stockholders’ equity
Current liabilities
	Accounts payable			113,114		118,312
	Accrued and other current liabilities			38,287		35,386
	Short-term financing			42,595		42,418
	Current portion of long-term debt			1,350		40,250
Total current liabilities			$	195,346	$	236,366

Deferred income taxes				11,625		10,569
Long-term debt, less current portion				50,420		3,607
Other long-term liabilities				3,140		4,489

Stockholders’ equity
	Common stock, $.001 par value; 100,000,000 shares
		authorized; 52,186,711 and 53,222,003 shares
		issued and outstanding at December 31, 2004
		and 2003, respectively		52		53
	Additional paid-in capital			76,729		67,844
	Retained earnings			141,772		126,359
	Unearned compensation			(1,092)		(290)
	Accumulated other comprehensive income			2,874		1,275
Total stockholders’ equity			$	220,335	$	195,241
Total liabilities and stockholders’ equity			$	480,866	$	450,272

The accompanying Notes are an integral part of these Consolidated Financial Statements.

F-3

SCP POOL CORPORATION

Consolidated Statements of Income
(In thousands, except per share data)			Year Ended December 31,
			2004		2003		2002
Net sales		$	1,310,853	$	1,155,832	$	983,246
Cost of sales			940,019		840,694		727,714
	Gross profit	$	370,834	$	315,138	$	255,532
Selling and administrative expenses			257,240		227,112		182,845
	Operating income	$	113,594	$	88,026	$	72,687
Interest expense			3,855		4,669		4,977
Income before income taxes		$	109,739	$	83,357	$	67,710
Provision for income taxes			42,798		32,509		26,407
Net income		$	66,941	$	50,848	$	41,303
Earnings per share
Basic		$	1.27	$	0.96	$	0.76
Diluted		$	1.19	$	0.91	$	0.72
Weighted average shares outstanding
Basic			52,838		53,058		54,521
Diluted			56,139		55,773		57,432
Cash dividends declared per common share		$	0.20	$	—	$	—

The accompanying Notes are an integral part of these Consolidated Financial Statements.

F-4

SCP POOL CORPORATION

Consolidated Statements of Stockholders’ Equity
(In thousands; amounts in Dollars except share data)									Accumulated
						Additional			Other
			Common Stock		Treasury	Paid-In	Unearned	Retained	Comprehensive
			Shares	Amount	Stock	Capital	Compensation	Earnings	Income (Loss)	Total
Balance at December 31, 2001			60,675	59	(27,567)	61,321	(909)	112,611	(943)	144,572
	Net income		—	—	—	—	—	41,303	—	41,303
	Foreign currency translation		—	—	—	—	—	—	372	372
	Interest rate swaps		—	—	—	—	—	—	662	662
	Comprehensive income, net of tax		—	—	—	—	—	—	—	42,337
	Treasury stock, 4,082 shares of
		common stock	—	—	(47,504)	—	—	—	—	(47,504)
	Retirement of treasury shares		(8,577)	(6)	75,071	—	—	(75,067)	—	—
	Unearned compensation		—	—	—	—	334	—	—	334
	Exercise of stock options
		including tax benefit of $996	234	—	—	1,616	—	—	—	1,616
	Employee stock purchase plan		50	—	—	495	—	—	—	495
	Conversion of convertible debt		706	—	—	91	—	—	—	91
Balance at December 31, 2002			53,088	53	—	63,525	(575)	78,847	91	141,941
	Net income		—	—	—	—	—	50,848	—	50,848
	Foreign currency translation,
		net of tax of $763	—	—	—	—	—	—	1,201	1,201
	Interest rate swaps, net of tax of $11		—	—	—	—	—	—	(17)	(17)
	Comprehensive income, net of tax		—	—	—	—	—	—	—	52,032
	Treasury stock, 288 shares of
		common stock	—	—	(3,336)	—	—	—	—	(3,336)
	Retirement of treasury shares		(288)	—	3,336	—	—	(3,336)	—	—
	Unearned compensation		—	—	—	—	285	—	—	285
	Exercise of stock options
		including tax benefit of $2,107	372	—	—	3,755	—	—	—	3,755
	Employee stock purchase plan		50	—	—	564	—	—	—	564
Balance at December 31, 2003			53,222	53	—	67,844	(290)	126,359	1,275	195,241
	Net income		—	—	—	—	—	66,941	—	66,941
	Foreign currency translation,
		net of tax of $1,011	—	—	—	—	—	—	1,582	1,582
	Interest rate swaps, net of tax of $11		—	—	—	—	—	—	17	17
	Comprehensive income, net of tax		—	—	—	—	—	—	—	68,540
	Treasury stock,1,568 shares of
		common stock	—	—	(40,823)	—	—	—	—	(40,823)
	Retirement of treasury shares		(1,568)	(1)	40,823	—	—	(40,822)	—	—
	Unearned compensation		—	—	—	—	(802)	—	—	(802)
	Exercise of stock options
		including tax benefit of $3,886	419	—	—	6,512	—	—	—	6,512
	Declaration of cash dividends		—	—	—	—	—	(10,706)	—	(10,706)
	Issuance of restricted stock		55	—	—	1,226	—	—	—	1,226
	Employee stock purchase plan		58	—	—	1,147	—	—	—	1,147
Balance at December 31, 2004			52,186	52	—	76,729	(1,092)	141,772	2,874	220,335

The accompanying Notes are an integral part of these Consolidated Financial Statements.

F-5

SCP POOL CORPORATION

Consolidated Statements of Cash Flows
(In thousands)						Year Ended December 31,
						2004		2003		2002
Operating activities
Net income					$	66,941	$	50,848	$	41,303
Adjustments to reconcile net income to net cash
	provided by operating activities
		Depreciation and amortization				10,275		8,940		6,842
		Provision for doubtful accounts receivable, net of write-offs				(774)		544		522
		Provision for inventory obsolescence, net of write-offs				(51)		16		(821)
		Change in deferred income taxes				703		7,456		5,937
		Loss on sale of property and equipment				43		329		70
		Changes in operating assets and liabilities,
			net of effects of acquisitions and divestitures
				Receivables		(12,879)		(4,976)		6,086
				Product inventories		(2,681)		2,030		16,635
				Prepaid expenses and other assets		(2,405)		(1,307)		1,312
				Accounts payable		(6,880)		16,322		(18,306)
				Accrued expenses and other current liabilities		3,660		(2,068)		(1,418)
Net cash provided by operating activities						55,952		78,134		58,162

Investing activities
Acquisition of businesses, net of cash acquired						(644)		(21,772)		(45,350)
Equity interest investment						(6,961)		—		—
Purchase of property and equipment, net of sale proceeds						(6,063)		(8,351)		(6,416)
Net cash used in investing activities						(13,668)		(30,123)		(51,766)

Financing activities
Proceeds from revolving line of credit						340,104		195,800		209,748
Payments on revolving line of credit						(328,584)		(282,075)		(169,573)
Proceeds from asset-backed financing						66,522		102,270		—
Payments on asset-backed financing						(66,345)		(62,029)		—
Proceeds from other long-term debt						—		3,711		—
Payments on other long-term debt						(2,023)		(1,014)		—
Issuance of common stock under stock option plans						6,917		4,322		2,108
Payment of cash dividends						(10,706)		—		—
Purchase of treasury stock						(40,823)		(3,336)		(47,505)
Net cash used in financing activities						(34,938)		(42,351)		(5,222)
Effect of exchange rate changes on cash						1,604		2,020		434
Increase in cash and cash equivalents						8,950		7,680		1,608
Cash and cash equivalents at beginning of year						12,812		5,132		3,524
Cash and cash equivalents at end of year					$	21,762	$	12,812	$	5,132

F-6

SCP POOL CORPORATION

Consolidated Statements of Cash Flows (continued)

Supplemental cash flow information			Year Ended December 31,
			2004		2003		2002
Cash paid during the year for
	Interest	$	2,965	$	3,256	$	4,282
	Income taxes, net of refunds		36,053		24,883		18,738
Non-cash financing and investing transactions
	Convertible note exchanged for stock		—		—		91

As more fully described in Note 3 to the Consolidated Financial Statements, in December 2004, we exchanged certain assets and cash consideration for the assets of Pool Tech Distribution Inc. and a 42% interest in Latham Acquisition Corporation. In conjunction with this transaction, we acquired and divested assets and liabilities as follows (in thousands):

Assets acquired	$	32,473
Liabilities assumed		4,119
Assets divested		28,287
Liabilities divested		6,894

The accompanying Notes are an integral part of these Consolidated Financial Statements .

F-7

SCP POOL CORPORATION

1.	Organization and Summary of Significant Accounting Policies

Description of Business

As of December 31, 2004, SCP Pool Corporation and its wholly-owned subsidiaries (the Company , which may be referred to as POOL , we, us or our ), maintained 201 service centers in North America and Europe from which we sell swimming pool equipment, parts and supplies to pool builders, retail stores and service companies. We distribute products through two networks: The SCP Distributors network (SCP) and the Superior Pool Products (Superior) network.

Net sales by geographic region were as follows (in thousands):

		2004		2003		2002
United States	$	1,226,654	$	1,094,035	$	945,357
International		84,199		61,797		37,889
	$	1,310,853	$	1,155,832	$	983,246

Property and equipment by geographic region were as follows (in thousands):.

		2004		2003		2002
United States	$	16,214	$	22,535	$	19,996
International		2,381		2,108		925
	$	18,595	$	24,643	$	20,921

Basis of Presentation and Principles of Consolidation

We prepared the consolidated financial statements following accounting principles generally accepted in the United States (GAAP) and the requirements of the Securities and Exchange Commission (SEC). The financial statements include all normal and recurring adjustments that are necessary for a fair presentation of our financial position and operating results.

The consolidated financial statements include the accounts of SCP Pool Corporation and our wholly-owned subsidiaries. We eliminated all significant intercompany accounts and transactions among our wholly-owned subsidiaries.

As of December 31, 2004, we have a 42% investment in Latham Acquisition Corporation (LAC), which we account for using the equity method of accounting. Accordingly, we report our share of income or loss based on our ownership interest in LAC. Equity earnings were not material in 2004.

Use of Estimates

In order to prepare financial statements that conform to GAAP, we make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Our most significant estimates are those relating to the allowance for doubtful accounts, the inventory reserve and the reserve for tax contingencies. We continually review our estimates and make adjustments as necessary, but actual results could be significantly different from what we expected when we made these estimates.

F-8

SCP POOL CORPORATION

1.	Organization and Summary of Significant Accounting Policies (continued)

Segment Reporting

Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) 131, Disclosures about Segments of an Enterprise and Related Information, establishes standards for the way that public companies report information about operating segments in annual financial statements and establishes standards for related disclosures about products and services, geographic areas and major customers. We have reviewed SFAS 131 and determined that we have a single reportable segment.

Seasonality and Weather

Our business is highly seasonal, and weather is the principal external factor affecting our business. The table below presents some of the possible effects resulting from various weather conditions:

Weather		Possible Effects
Hot and dry	•	Increased purchases of chemicals and supplies
		for existing swimming pools
	•	Increased purchases of above-ground pools

Unseasonably cool weather or	•	Fewer pool installations
extraordinary amounts of rain	•	Decreased purchases of chemicals and supplies
	•	Decreased purchases of impulse items such as
		above-ground pools and accessories

Unseasonably early warming trends	•	A longer pool season, thus increasing our sales
(primarily in the northern half of the US)

Unseasonably late warming trends	•	A shorter pool season, thus decreasing our sales
(primarily in the northern half of the US)

In general, sales and net income are highest during the second and third quarters, which represent the peak months of swimming pool use and installation. Sales are substantially lower during the first and fourth quarters when we may incur net losses. For further discussion, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Stock Split

In August 2004, our Board of Directors declared a three-for-two stock split of our common stock, which was paid in the form of a stock dividend on September 10, 2004 to the stockholders of record at the close of business on August 23, 2004. Accordingly, all share and per share data and the related capital amounts for all periods presented reflect the effects of this split.

F-9

SCP POOL CORPORATION

1.	Organization and Summary of Significant Accounting Policies (continued)

Earnings Per Share

In accordance with SFAS 128, Earnings per Share , we calculate basic earnings per share by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share includes the dilutive effects of stock awards.

Financial Instruments

The carrying values of cash, receivables, accounts payable and accrued liabilities approximate fair value due to the short maturity of those instruments. The carrying amount of long-term debt approximates fair value as it bears interest at variable rates.

Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Credit Risk and Allowance for Doubtful Accounts

We record our trade receivables at the invoiced amount less an allowance for doubtful accounts for estimated losses if our customers do not make required payments. We perform periodic credit evaluations of our customers and we typically do not require collateral. Consistent with industry practices, we require payment from our customers within 30 days except for sales under early-buy programs for which we provide extended payment terms to qualified customers. In the past, credit losses have been within our expectations.

Product Inventories and Reserve for Inventory Obsolescence and Shrink

Product inventories consist primarily of goods we purchase from manufacturers and intend to sell to our customers. We record inventory at the lower of cost, using the average cost method, or market. We establish our reserve for inventory obsolescence based on inventory turns by category with particular emphasis on stock keeping units with the least sales over the previous 12 months. The reserve is intended to reflect the value of inventory that we may not be able to sell at a profit.

In evaluating the adequacy of our reserve for inventory obsolescence and shrink at the service center level, we consider a combination of factors including:

•	the level of inventory in relationship to historical sales by product, including inventory usage by class based on product sales at both the service center and Company levels;

•	changes in customer preferences;
•	the experience of the service center manager;
•	the previous inventory management performance of the service center;
•	geographical location; and
•	new product offerings.

Our reserve for inventory obsolescence may periodically require adjustment as changes occur in the above-identified factors.

F-10

SCP POOL CORPORATION

1.	Organization and Summary of Significant Accounting Policies (continued)

Property and Equipment

Property and equipment are stated at cost. We depreciate property and equipment on a straight-line basis over the following estimated useful lives:

Buildings		40 years
Leasehold improvements		the life of the lease, including any expected renewals
Autos and trucks		3 years
Machinery and equipment		10 years
Computer equipment		3 - 5 years
Furniture and fixtures		10 years

The table below presents depreciation expense for the past three years (in thousands):

	2004		2003		2002
$	5,898	$	5,592	$	4,203

Goodwill and Other Intangible Assets

Goodwill represents the excess of the amount we paid to acquire a company over the estimated fair value of tangible assets and identifiable intangible assets acquired, less liabilities assumed. We account for goodwill under the provisions of SFAS 142, Goodwill and Other Intangible Assets . In accordance with these rules, we test goodwill for impairment annually or at any other time when impairment indicators exist. Under the provisions of SFAS 142, we amortize our intangible assets consisting of non-compete agreements and a distribution agreement because they have finite lives.

For additional discussion of goodwill and other intangible assets, see Note 2 to the Consolidated Financial Statements.

Self Insurance

We retain certain self-insurance risks for both health benefits and property and casualty insurance programs. We have limited our exposure by maintaining excess and aggregate liability coverage. We establish self-insurance reserves based on claims filed and estimates of claims incurred but not reported. The estimates are based on information provided to us by the claims administrators.

F-11

SCP POOL CORPORATION

1.	Organization and Summary of Significant Accounting Policies (continued)

Advertising Costs

We expense advertising costs when incurred. The table below presents advertising expense for the past three years (in thousands)

	2004		2003		2002
$	6,830	$	7,106	$	4,927

Income Taxes

Stock Compensation Arrangements

Under the provisions of SFAS 123, Accounting for Stock-Based Compensation , companies may account for employee stock options and stock equity grants using either (i) SFAS 123’s fair value method or (ii) the intrinsic value method provided by APB 25, Accounting for Stock Issued to Employees. Under the SFAS 123 fair value method, companies recognize compensation expense related to employee stock options based on the fair value of the options on the grant date as estimated by an option pricing model. The intrinsic value method prescribed by APB 25 requires recognition of compensation expense over the option vesting period when the exercise price of the granted options is less than the stock’s market price on the grant date. Under both methods, stock equity grants are recognized as compensation expense over the grant vesting period based on the fair value of the grant at time of issuance.

We account for our employee stock options under the intrinsic value method described by APB 25. Accordingly, we do not record compensation expense for options issued with an exercise price equal to the stock’s market price on the grant date. The table below presents pre-tax compensation expense for stock options with a five year vesting period granted below market price in 1999, 2000 and 2001 (in thousands):

	2004		2003		2002
$	184	$	286	$	334

F-12

SCP POOL CORPORATION

1.	Organization and Summary of Significant Accounting Policies (continued)

If we had accounted for our stock-based compensation using the fair value method described in SFAS 123, our net income and earnings per share would have been reduced to the pro-forma amounts below (in thousands, except per share data):

		Year Ended December 31,
			2004		2003		2002
Reported net income		$	66,941	$	50,848	$	41,303

Add:	Stock-based employee compensation
	expense included in reported net
	income, net of the tax effect		537		523		204

Deduct:	Stock-based employee compensation
	expense determined under the fair
	value method for all awards,
	net of the tax effect		(3,672)		(2,888)		(2,350)
Pro-forma net income		$	63,806	$	48,483	$	39,157

Basic earnings per share
	As reported	$	1.27	$	0.96	$	0.76
	Pro-forma	$	1.21	$	0.91	$	0.72
Diluted earnings per share
	As reported	$	1.19	$	0.91	$	0.72
	Pro-forma	$	1.14	$	0.87	$	0.68

For purposes of pro-forma disclosures, the estimated fair value of employee options is ratably expensed over the options’ vesting period. We estimated the fair value of these options at the grant date using a Black-Scholes option pricing model with the following weighted average assumptions:

	December 31,
	2004		2003		2002
Risk-free interest rate	3.87	%	3.38	%	4.98	%
Expected dividend yield	—		—		—
Expected volatility	0.35		0.33		0.35
Weighted average expected life	7.0	years	7.0	years	8.0	years

The Black-Scholes option valuation model was developed to estimate the fair value of traded options that have no vesting restrictions and are fully transferable. Additionally, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. In our opinion, the existing models do not necessarily provide a reliable single measure of the fair value of our employee stock options because:

1. the characteristics of our employee stock options are significantly different from those of traded options; and

2.	changes in the subjective input assumptions can materially affect the fair value estimate.

F-13

In December 2004, the FASB issued SFAS 123(R), Share-Based Payment. This new standard will require companies to recognize compensation cost for stock options and other stock-based awards based on their value as measured on the grant date. The new standard prohibits companies from accounting for

F-14

SCP POOL CORPORATION

1.	Organization and Summary of Significant Accounting Policies (continued)

stock-based compensation under the provisions of APB 25. We are required to adopt SFAS 123(R) on July 1, 2005, although earlier adoption is permitted. Upon adoption, two transition methods are available. Under the modified-prospective, method companies will be required to apply the provisions of SFAS 123(R) to all share-based payments that are granted, modified or settled after the date of adoption. Under the modified-retrospective transition method, companies may restate prior periods by recognizing compensation cost in the amounts previously reported in the pro-forma footnote disclosures required by SFAS 123. New awards and unvested awards would be accounted for in the same manner as the modified-prospective method.

We are in the process of reviewing the provisions of SFAS 123(R), and currently we have made no definitive decisions regarding the possibility of early adoption. We are also in the process of evaluating the transition methods and option valuation models available. In 2005, we expect the annualized impact from SFAS 123(R) to our diluted earnings per share will approximate $0.05 to $0.06.

Revenue Recognition

1.	persuasive evidence of an arrangement exists;
2.	delivery has occurred or services have been rendered;
3.	the seller’s price to the buyer is fixed or determinable; and
4.	collectibility is reasonably assured.

Derivatives and Hedging Activities

We recognize all derivatives at fair value on the balance sheet. The effective portion of changes in the fair value of derivatives qualifying as cash flow hedges are recognized in other comprehensive income until the hedged item is recognized in earnings, or until it becomes unlikely that the hedged transaction will occur. The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings.

In May 2003, we entered into an interest rate swap agreement as a cash flow hedge to reduce our exposure to fluctuations in interest rates. Any difference paid or received on the interest rate swap was recognized as an adjustment to interest expense over the life of the swap. The swap became effective September 30, 2003 and terminated on May 28, 2004. We had no derivatives outstanding at December 31, 2004.

F-15

SCP POOL CORPORATION

1.	Organization and Summary of Significant Accounting Policies (continued)

Shipping and Handling Costs

We include shipping and handling fees billed to customers in net sales, and we record shipping and handling costs associated with inbound freight as cost of sales. The table below presents shipping and handling costs associated with outbound freight, which we include in selling, general and administrative expenses (in thousands):

	2004		2003		2002
$	23,261	$	19,908	$	15,703

Reclassifications

We reclassified certain deferred tax amounts in our 2003 Consolidated Balance Sheet to conform to the 2004 presentation. This reclassification had no effect on net income or earnings per share as previously reported.

2.	Goodwill and Other Intangible Assets

In October 2004, we performed our annual goodwill impairment test, which requires comparison of our Company’s estimated fair value to the book value, including goodwill. In accordance with SFAS 142, Goodwill and Other Intangible Assets , we also tested goodwill for impairment as of December 31, 2004 because we disposed of goodwill in connection with the divestiture of our manufacturing facilities in Fort Wayne, Indiana and Quebec, Canada. As a result of these tests, we believe the goodwill on our balance sheet is not impaired.

We amortize non-compete agreements and a distribution agreement using the straight-line method over the contractual term of the agreement.

The changes in the carrying amount of goodwill are as follows (in thousands):

Balance at December 31, 2002	$	107,739
Acquired goodwill		4,401
Balance at December 31, 2003		112,140
Acquired goodwill		4,728
Purchase price adjustments		672
Goodwill disposal		(12,856)
Balance at December 31, 2004	$	104,684

We recorded purchase price adjustments in 2004 related to acquisitions completed in 2003. These adjustments related primarily to additional payments we made in connection with the Quebec Acquisition in May 2003. We made these payments in accordance with the original purchase agreement, under which a portion of the purchase price was contingent upon the future operating results of the acquired service centers.

F-16

SCP POOL CORPORATION

2.	Goodwill and Other Intangible Assets (continued)

Other intangible amortization expense was $4.0 million in 2004 and $3.1 million in 2003. The table below presents estimated amortization expense for other intangible assets for the next five years (in thousands):

2005	$	3,989
2006		3,314
2007		2,969
2008		1,909
2009		420

3.	Acquisitions and Divestitures

2004 Acquisitions and Divestitures

In December 2004, we acquired certain assets of Latham International LP’s Canadian subsidiary, Pool Tech Distribution Inc., (Pool Tech or the Pool Tech Acquisition). Pool Tech distributes swimming pool supplies and equipment through three service centers in Ontario, Canada. We funded this transaction primarily through the exchange of manufacturing assets held by our subsidiary, Les Industries R.P. Inc. As a part of this transaction, we also completed the divestiture of our manufacturing assets located in Fort Wayne, Indiana to Latham Acquisition Corporation (LAC). In exchange for these assets and cash consideration, we received a 42% interest in LAC. We recorded approximately $4.7 million of goodwill in connection with this transaction, and we signed a non-compete agreement which we recorded as an intangible asset at the estimated fair value of $1.9 million. We are amortizing the non-compete agreement using the straight-line method over the five year contractual life. In connection with this transaction, LAC acquired the business of Latham International, LP, a manufacturer of vinyl swimming pool liners, polymer and steel panels, steps and related swimming pool products based in Albany, New York. We account for our interest in LAC using the equity method of accounting as prescribed by APB 18, The Equity Method of Accounting for Investments in Common Stock. We disposed of approximately $12.9 million of goodwill in connection with the divestiture of our manufacturing assets in Canada and Indiana. We recorded a $5.3 million gain on the exchange, the entire amount of which was deferred and recorded as a reduction of our investment in LAC.

Our decision to divest of our manufacturing facilities in Canada and Indiana will allow us to focus on our core distribution business while our investment in LAC will provide us with a strategic relationship with an important supplier.

2003 Acquisitions

In May 2003, we acquired the capital stock of Les Industries R.P. Inc. (the Quebec Acquisition), a distributor and manufacturer of swimming pool products operating one service center in Quebec, Canada. In connection with the Quebec Acquisition, we recorded the cost of a non-compete agreement totaling $0.7 million, which we are amortizing using the straight-line method over the agreement’s six-year contractual life. We also recorded approximately $1.3 million of goodwill in connection with the acquisition. As discussed above, in December 2004 we disposed of the manufacturing assets acquired in the Quebec Acquisition.

In August 2003, we acquired Sud Ouest Filtration (the SOFI Acquisition), a distributor and manufacturer of swimming pool products operating one service center in Bordeaux, France. The SOFI Acquisition represents our fourth location in France and expanded our market presence to the southwest part of that country. We also acquired in August certain assets of Mepasa Albercas, a swimming pool distributor in Cuernavaca, Mexico (the Mepasa Acquisition). The Cuernavaca service center is our first location in Latin America.

F-17

SCP POOL CORPORATION

3.	Acquisitions and Divestitures (continued)

On October 1, 2003, we purchased substantially all of the assets of the distribution division of Litehouse Products, Inc. (the Litehouse Acquisition). This distribution division sells primarily in the Ohio, Pennsylvania and Michigan markets. This acquisition establishes a strong presence for us in northern Ohio and adjacent markets. We recorded approximately $2.5 million of goodwill in connection with this acquisition, all of which we expect will be deductible for tax purposes. The purchase agreement includes that a portion of the purchase price be paid in annual installments of $0.4 million for five years. We recorded these future payments as goodwill at the present value of $1.9 million, which we calculated using an interest rate of 2.6%. We signed two non-compete agreements totaling $3.0 million with certain shareholders of Litehouse Products, Inc. Additionally, we recorded a distribution agreement with the Litehouse retail stores as an intangible asset at the present value of the estimated fair value of $6.1 million, which we calculated using an interest rate of 2.6%. We are amortizing the non-compete and distribution agreements using the straight-line method over the five year contractual lives.

In November 2003, we purchased substantially all of the distribution assets of Hayward Iberica, S.A., an indirect wholly-owned subsidiary of Hayward Pool Products, Inc. (the Iberica Acquisition). Iberica distributed primarily Hayward equipment from two service centers in Madrid and Valencia, Spain. These two service centers are our first locations in Spain and allow us to further our presence in the European market.

We have included the results of operations of the Quebec, SOFI, Mepasa, Litehouse and Iberica Acquisitions in the Consolidated Financial Statements since the respective acquisition dates.

2002 Acquisitions

In August 2002, we purchased 100% of the outstanding common shares of Fort Wayne Pools, Inc. (the Fort Wayne Acquisition). Fort Wayne was a distributor and manufacturer of swimming pool equipment, parts and supplies, and its distribution network consisted of 22 service centers in 16 states.

The Fort Wayne Acquisition is consistent with our strategy of complementing our internal growth with the purchase of additional service centers. The acquisition of these additional 22 service centers expanded the reach and market share of our Superior network allowing us to enhance our service capabilities and better serve the growing pool industry. In the fourth quarter of 2002, we closed one location and consolidated 13 of the 22 acquired service centers with SPP locations. The remaining eight service centers operate as part of the Superior network.

The approximate $49.7 million cash purchase price was determined based on negotiations with the former shareholders of Fort Wayne and our valuation considerations, which included historical and prospective earnings, net asset value and other valuation considerations consistent with our historical valuations of acquisitions. In accordance with the purchase agreement, we placed $1.0 million of the purchase price in an escrow account to secure certain indemnification and other post-closing obligations of the sellers, and any amounts remaining in the escrow account in August 2005 will be paid to the sellers.

F-18

SCP POOL CORPORATION

3.	Acquisitions and Divestitures (continued)

We allocated the purchase price, net of cash acquired, as follows (in thousands):

Receivables	$	16,500
Product inventories		18,000
Property and equipment		3,000
Goodwill		33,900
Non-compete agreements		4,400
Other assets		800
Accounts payable and other liabilities		(26,900)
	$	49,700

We do not expect the goodwill recorded in connection with the Fort Wayne Acquisition to be deductible for tax purposes. We signed non-compete agreements with certain former Fort Wayne shareholders providing for payments in the aggregate of $5.0 million over five years. We recorded the non-compete agreements at their present value of $4.4 million, which we calculated using an interest rate of 4.2%.

We have included the results of Fort Wayne’s operations in the Consolidated Financial Statements since the acquisition date. As discussed above, in December 2004 we divested of the manufacturing assets acquired in the Fort Wayne Acquisition.

F-19

SCP POOL CORPORATION

4.	Details of Certain Balance Sheet Accounts

The table below presents additional information regarding certain balance sheet accounts (in thousands):

		December 31,
			2004		2003
Receivables
	Trade accounts	$	10,545	$	10,397
	Trade accounts, pledged		63,702		58,096
	Vendor rebates		21,662		17,251
	Other		4,818		1,923
			100,727		87,667
	Less allowance for doubtful accounts		(3,138)		(3,843)
		$	97,589	$	83,824
Property and equipment
	Land	$	1,026	$	1,105
	Building		1,342		1,141
	Leasehold improvements		7,182		8,992
	Autos and trucks		499		597
	Machinery and equipment		12,270		18,038
	Computer equipment		12,647		11,671
	Furniture and fixtures		7,441		8,414
			42,407		49,958
	Less accumulated depreciation		(23,812)		(25,315)
		$	18,595	$	24,643
Intangible assets
	Non-compete agreements	$	15,531	$	17,623
	Distribution agreement		6,115		6,115
			21,646		23,738
	Less accumulated amortization		(9,026)		(9,107)
		$	12,620	$	14,631
Other assets
	Loan financing fees	$	2,010	$	1,527
	Escrow for Fort Wayne Acquisition		1,012		1,006
	Deposits and other		1,357		1,115
			4,379		3,648
	Less accumulated amortization		(1,563)		(1,186)
		$	2,816	$	2,462
Accrued expenses and other current liabilities
	Salaries, bonuses and profit sharing	$	17,532	$	17,296
	Current deferred tax liability		9,202		10,389
	Other		11,553		7,701
		$	38,287	$	35,386
Accumulated other comprehensive income
	Foreign currency items	$	2,874	$	1,292
	Net loss on cash flow hedge derivative		—		(17)
		$	2,874	$	1,275

F-20

SCP POOL CORPORATION

Debt

The components of our long-term debt for the past two years were as follows (in thousands):

			December 31,
			2004		2003
Revolving Line of Credit, variable rate (effective interest
	rate of 3.2% at December 31, 2004), due in 2009	$	50,420	$	38,900
Purchase price payments to Litehouse			1,482		1,852
Payments due - non-compete agreements			3,008		3,987
Other			—		3,607
			54,910		48,346
Less current portion			(1,350)		(40,250)
Total long-term debt		$	53,560	$	8,096

We capitalized $0.5 million of financing costs we incurred in implementing the Credit Facility and we are amortizing these costs over the five year contractual life of the Credit Facility. All capitalized costs related to our previous senior secured credit facility were fully amortized prior to when we replaced the facility in November 2004.

At December 31, 2004, there was $50.4 million outstanding and $68.4 million available for borrowing under the Credit Facility. The average effective interest rate of the Credit Facility was approximately 3.2% for the year ended December 31, 2004.

Our obligations are guaranteed by all of our existing and future direct and indirect subsidiaries. Borrowings and standby letters of credit under the Credit Facility bear interest, at our option, at either (a) a base rate, which is the greater of (i) the Wachovia Bank, National Association prime rate or (ii) the overnight Federal Funds Rate plus 0.50%, or (b) the London Interbank Offered Rate (LIBOR) plus a spread ranging from 0.600% to 1.25%, with such spread in each case depending on our leverage ratio. We are also required to pay (a) an annual facility fee of 0.150% to 0.250%, with such spread in each case depending on our leverage ratio, (b) an annual commercial letter of credit issuance fee of 0.125% multiplied by the face amount of each letter of credit and (c) a letter of credit commission of 0.150% to 0.250% multiplied by face amount of each letter of credit, with such spread in each case depending on our leverage ratio.

F-21

SCP POOL CORPORATION

5.	Debt (continued)

The Receivables Facility has numerous restrictive covenants, which require that we maintain a minimum average total leverage ratio, fixed charge coverage ratio and minimum net worth ratio. As of December 31, 2004, we were in compliance with all covenants and financial ratio requirements.

Additionally, in 2003 we signed a $0.5 million non-compete agreement with a Litehouse shareholder, which provides for monthly payments over five years. We recorded the agreement at its $0.5 million present value. As discussed in Note 3 above, the Litehouse purchase agreement requires a portion of the purchase price to be paid in annual installments of $0.4 million for five years. We recorded these future payments as goodwill at the present value of $1.9 million. We calculated the present value of the non-compete agreement and goodwill payments using an interest rate of 2.6%.

In 2002, we signed non-compete agreements with certain former Fort Wayne shareholders providing for $1.0 million annual payments over five years. We recorded the non-compete agreements at their present value of $4.4 million, which we calculated using an interest rate of 4.2%.

6.	Income Taxes

Income from continuing operations before the provision for income taxes is attributable to the following jurisdictions (in thousands):

		Year Ended December 31,
		2004		2003		2002
United States	$	104,224	$	80,430	$	66,705
Foreign		5,515		2,927		1,005
Total	$	109,739	$	83,357	$	67,710

F-22

SCP POOL CORPORATION

6.	Income Taxes (continued)

The provision for income taxes consisted of the following (in thousands):

			Year Ended December 31,
			2004		2003		2002
Current
	Federal	$	37,448	$	28,140	$	19,891
	Foreign		1,358		945		275
	Other, primarily state		3,528		3,081		3,333
			42,334		32,166		23,499
Deferred
	Federal		793		317		2,693
	Other, primarily state		(329)		26		215
			464		343		2,908
Total		$	42,798	$	32,509	$	26,407

We made payments related to income taxes totaling $36.7 million in 2004 and $25.2 million in 2003.

A reconciliation of the U.S. federal statutory tax rate to our effective tax rate on income before income taxes is as follows:

	Year Ended December 31,
	2004		2003		2002
Federal statutory rate	35.00	%	35.00	%	35.00	%
Other, primarily state income tax rate	4.00		4.00		4.00
Total effective tax rate	39.00	%	39.00	%	39.00	%

F-23

SCP POOL CORPORATION

6.	Income Taxes (continued)

The components of the deferred tax assets and liabilities are as follows (in thousands):

			December 31,
			2004		2003
Deferred tax liabilities
	Trade discounts on purchases	$	3,851	$	6,670
	Prepaid expenses		2,145		1,850
	Allowance for doubtful accounts		165		—
	Accumulated other comprehensive income		1,843		827
	Other		1,198		1,042
Total current deferred tax liabilities			9,202		10,389
	Intangible assets, primarily goodwill		10,706		10,081
	Depreciation		919		488
Total non-current deferred tax liabilities			11,625		10,569
Total deferred tax liabilities			20,827		20,958
Deferred tax assets
	Product inventories		2,075		1,398
	Allowance for doubtful accounts		—		333
	Accrued expenses		265		133
Total current deferred tax assets			2,340		1,864
	Leases		642		—
Total non-current deferred tax assets			642		—
Total deferred tax assets			2,982		1,864
Deferred tax liabilities net of deferred tax assets		$	17,845	$	19,094

We reduce federal, state and foreign income taxes payable by the tax benefits associated with the exercise of stock options. We receive an income tax benefit based on the difference between the option exercise price and the fair market value of the stock at the time the option is exercised. This benefit, which we record in stockholders’ equity, was $3.9 million in 2004 and $2.1 million in 2003.

F-24

SCP POOL CORPORATION

6.	Income Taxes (continued)

As presented in the Consolidated Statement of Cash Flows, the change in deferred income taxes includes, among other items, the change in deferred income taxes related to the deferred income tax provision, the change between the deferred income taxes estimated for 2003 and actual deferred income taxes for 2003 and the change in deferred income taxes related to the estimated tax impact of accumulated other comprehensive income.

7.	Common Stock and Earnings Per Share

The table below presents the reconciliation of basic and diluted weighted average number of shares outstanding and the related earnings per share calculation (in thousands):

				Year Ended December 31,
				2004		2003		2002
Numerator
	Net income		$	66,941	$	50,848	$	41,303
	Adjustment for interest expense, net of tax, on convertible notes			—		—		6
	Numerator for diluted earnings per share		$	66,941	$	50,848	$	41,309

Denominator
	Denominator for basic earnings per share – weighted average shares			52,838		53,058		54,521
	Effect of dilutive securities
		Stock options		3,276		2,706		2,223
		Restricted stock awards		8		—		—
		Employee stock purchase plan		17		9		5
		Convertible notes		—		—		683
	Denominator for diluted earnings per share			56,139		55,773		57,432

F-25

SCP POOL CORPORATION

8.	Commitments and Contingencies

We lease facilities for our corporate office, service centers, vehicles and equipment under non-cancelable operating leases that expire in various years through 2017. Most of our leases contain renewal options, some of which involve rate increases. For leases with step rent provisions whereby the rental payments increase incrementally over the life of the lease, we recognize the total minimum lease payments on a straight-line basis over the minimum lease term. The table below presents rent expense associated with operating leases for the past three years (in thousands):

	2004		2003		2002
$	38,513	$	34,071	$	29,949

The table below sets forth the approximate future minimum lease payments as of December 31, 2004 related to non-cancelable operating leases with initial terms of one year or more (in thousands):

2005	$	25,908
2006		22,815
2007		16,724
2008		12,147
2009		7,498
Thereafter		13,707

9.	Related Party Transactions

In October 1999, we entered into a lease agreement with S&C Development, LLC for a service center in Mandeville, Louisiana. The sole member of S&C Development, LLC is A. David Cook, a POOL executive officer. The seven year lease term commenced on January 1, 2000, and we pay rent of $6,510 per month. In January 2002, we entered into a lease agreement with S&C Development, LLC for additional warehouse space adjacent to our Mandeville service center. The five year lease term commenced on February 4, 2002, and we pay rent of $4,123 per month. The total $10,633 monthly lease payment is for both facilities consisting of 21,100 square feet.

In January 2001, we entered into a lease agreement with S&C Development, LLC for a service center in Oklahoma City, Oklahoma. The ten year lease term commenced on November 10, 2001, and we pay rent of $12,371 per month for the 25,000 square foot facility.

In March 1997, we entered into a lease agreement with Kenneth St. Romain for a service center in Baton Rouge, Louisiana. Kenneth St. Romain is the son of Frank J. St. Romain, who was President and Chief Executive Officer of SCP until January 1999 and was a director of SCP until May 2003. In January 2002, we extended this lease for a second term of five years which commenced on March 1, 2002. We pay rent of $10,137 per month for the 23,500 square foot facility.

F-26

SCP POOL CORPORATION

9.	Related Party Transactions (continued)

In May 2001, we entered into a lease agreement with Kenneth St. Romain for a service center in Jackson, Mississippi. The seven year lease term commenced on November 16, 2001, and we pay rent of $8,566 per month for the 20,000 square foot facility.

We believe the leases discussed above reflect fair market rates and are as favorable to us as we could have obtained from unrelated third parties. The table below presents rent expense associated with these leases for the past three years (in thousands):

	2004		2003		2002
$	501	$	493	$	493

10.

Employee Benefit Plans

We offer a 401(k) savings and retirement plan, which provides benefits for substantially all employees who meet minimum age and length of service requirements. Eligible employees are able to contribute up to 25% of their base compensation, subject to the federal dollar limit. For plan participants, we contribute 50% of employee contributions up to 6% of their base compensation. Additionally, we make discretionary contributions to this plan under a profit-sharing provision.

The employee and Company sponsored contributions are invested in certain equity and fixed income securities based on individual employee elections.

The table below sets forth our matching contributions and profit-sharing contributions for the past three years (in thousands):

		2004		2003		2002
Matching contributions	$	1,843	$	2,365	$	1,600
Profit-sharing contributions		1,280		—		831

F-27

SCP POOL CORPORATION

11.

Stock Option and Stock Purchase Plans

Stock options represent the right to purchase shares of our common stock in the future at a price that is fixed on the day the options are granted (the grant date).

The table below summarizes our stock option activity for the past three years (in thousands, except weighted average exercise price and fair value):

		2004			2003			2002
				Weighted			Weighted			Weighted
				Average			Average			Average
				Exercise			Exercise			Exercise
		Options		Price	Options		Price	Options		Price
Outstanding - beginning of year		7,270,027	$	6.35	6,720,193	$	5.36	6,150,312	$	4.27
Granted		691,401		21.94	987,638		12.05	885,825		12.46
Exercised		421,290		3.53	374,191		2.98	233,994		2.63
Forfeitures		65,279		11.31	63,613		9.79	81,950		9.73
Outstanding - end of year		7,474,859		7.91	7,270,027		6.35	6,720,193		5.36

Exercisable at end of year		3,593,055		4.06	3,114,395		3.66	2,846,307		3.09

Weighted average fair value of
	options granted during the year			9.67			4.97			6.18

The table below summarizes information about stock options outstanding and exercisable at December 31, 2004 (shares in thousands):

	Outstanding Stock Options				Exercisable Stock Options
		Weighted Average	Weighted			Weighted
		Remaining	Average			Average
Range of exercise prices	Shares	Contractual Life	Exercise Price		Shares	Exercise Price
$ 0.00 to $5.99	3,699	3.8 years	$	2.97	2,828	$	2.48
$ 6.00 to $ 11.99	2,252	7.0 years	$	10.06	642	$	9.25
$ 12.00 to $ 17.99	839	7.2 years	$	12.51	123	$	13.31
$ 18.00 to $ 23.99	647	9.1 years	$	21.67	—	$	—
$ 24.00 to $ 29.80	38	9.5 years	$	26.69	—	$	—
$ 0.00 to $ 29.80	7,475	6.3 years	$	7.91	3,593	$	4.06

Under the 1995 Stock Option Plan (the 1995 Plan) our Board of Directors (the Board) was authorized to grant stock options to employees, agents, consultants or independent contractors. These options generally were exercisable two years after the grant date, and they expire ten years from the grant date. In May 1998, the Board suspended the 1995 Plan. Options granted prior to the suspension were not affected by this action.

In May 1998, our stockholders approved the 1998 Stock Option Plan (the 1998 Plan), which authorized the Board to grant stock options, stock appreciation rights, restricted stock and performance awards to employees, agents, consultants or independent contractors. These options generally were exercisable

F-28

SCP POOL CORPORATION

11.

Stock Option and Stock Purchase Plans (continued)

three or more years after the grant date, and they expire ten years after the grant date. In May 2002, the Board suspended the 1998 Plan. Options granted prior to the suspension were not affected by this action.

In May 2002, our stockholders approved the 2002 Long-Term Incentive Plan (the 2002 Plan), which authorized the Board to grant stock options and restricted stock awards to employees, agents, consultants or independent contractors. In May 2004, our stockholders approved an amendment to increase the number of shares authorized for issuance under the 2002 Plan from 1,575,000 to 2,700,000 shares. In 2004, we granted 614,901 options and 54,900 restricted shares under the 2002 Plan. As of December 31, 2004, 1,179,765 shares were available for grant. Granted options have an exercise price equal to our stock’s market price on the grant date. These options generally may be exercised three or more years after the grant date, and they expire ten years after the grant date. The restricted stock awards vest in five years.

The SCP Pool Corporation Non-Employee Directors Equity Incentive Plan permits the Board to grant stock options to each non-employee director. No more than 1,350,000 shares may be issued under this plan. In 2004, we granted 76,500 options to the non-employee directors. As of December 31, 2004, 226,896 shares were available for grant. The exercise price of the granted options was equal to our stock’s market price on the grant date. The options generally may be exercised one year after the grant date, and they expire ten years after the grant date.

In March 1998, the Board adopted the SCP Pool Corporation Employee Stock Purchase Plan. Under this plan, employees who meet minimum age and length of service requirements may purchase stock at 85% of the lower of:

a. the closing price of our common stock at the end of a six month period ending either June 30 or December 31; or

b.	the average of the beginning and ending closing prices of our common stock for such six month period.

No more than 956,250 shares of our common stock may be issued under this plan. In 2004, we issued 58,867 shares under this plan, and 626,048 shares remained available at December 31, 2004.

12.

Quarterly Financial Data (Unaudited)

The table below summarizes the unaudited quarterly operating results of operations for the past two years (in thousands, except per share data):

			Quarter
			2004									2003
			First			Second		Third		Fourth		First		Second		Third		Fourth
Net sales		$		234,648	$	504,177	$	362,091	$	209,937	$	196,388	$	431,885	$	337,611	$	189,948
Gross profit				65,032		145,215		104,183		56,404		52,523		120,862		92,157		49,596
Net income (loss)				4,080		43,595		22,010		(2,744)		1,484		33,963		18,396		(2,995)
Net income (loss) per share
	Basic	$		0.08	$	0.82	$	0.42	$	(0.05)	$	0.03	$	0.64	$	0.35	$	(0.06)
	Diluted	$		0.07	$	0.77	$	0.39	$	(0.05)	$	0.03	$	0.61	$	0.33	$	(0.06)

The sum of diluted earnings per share for each of the quarters may not equal the total diluted earnings per share for the annual period because there is a difference in the way that in-the-money stock options are considered from quarter to quarter under the requirements of SFAS 128, Earnings per Share.

F-29

SCP POOL CORPORATION

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 1, 2005.

	SCP POOL CORPORATION




By:	/S/ WILSON B. SEXTON
	Wilson B. Sexton, Chairman of the Board
	and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated on March 1, 2005.

Signature:	Title:
/S/ WILSON B. SEXTON
Wilson B. Sexton	Chairman of the Board and Director

/S/ MANUEL J. PEREZ DE LA MESA
Manuel J. Perez de la Mesa	President, Chief Executive Officer and Director

/S/ MARK W. JOSLIN
Mark W. Joslin	Vice President and Chief Financial Officer

/S/ DONALD L. MEYER
Donald L. Meyer	Controller (Principal Accounting Officer) and
	Assistant Treasurer

/S/ ANDREW W. CODE
Andrew W. Code	Director

/S/ JAMES J. GAFFNEY
James J. Gaffney	Director

/S/ GEORGE T. HAYMAKER
George T. Haymaker	Director

/S/ HARLAN F. SEYMOUR
Harlan F. Seymour	Director

/S/ ROBERT C. SLEDD
Robert C. Sledd	Director

Signature Page

/S/ JOHN E. STOKELY
John E. Stokely	Director

Signature Page

SCP POOL CORPORATION

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
Description		Balance at Beginning of Period		Charged to Costs and Expenses		Charged to Other Accounts (1)		Deductions (2)		Balance at End of Period

YEAR ENDED DECEMBER 31, 2004:
Reserves and allowances deducted from asset accounts:
Allowance for uncollectible accounts	$	3,843		1,308	$		$	2,013	$	3,138
Allowance for inventory obsolescence		3,115		346				377		3,085
YEAR ENDED DECEMBER 31, 2003:
Reserves and allowances deducted from asset accounts:
Allowance for uncollectible accounts	$	3,299	$	2,136	$	350	$	1,942	$	3,843
Allowance for inventory obsolescence		3,099		(6)				(22)		3,115
YEAR ENDED DECEMBER 31, 2002:
Reserves and allowances deducted from asset accounts:
Allowance for uncollectible accounts		2,778		1,450		693		1,622		3,299
Allowance for inventory obsolescence		3,920		(191)		100		730		3,099

(1)	Acquisition of business.
(2)	Deductions represent uncollectible accounts written-off net of recoveries and inventory adjustments.

SCP POOL CORPORATION

Exhibit
Number		Document Description
3.1		Composite Certificate of Incorporation of the Company. (1)
3.2		Composite Bylaws of the Company. (2)
4.1		Form of certificate representing shares of common stock of the Company. (3)
10.1		SCP Pool Corporation 1995 Stock Option Plan. (3)(11)
10.2		Form of Individual Stock Option Agreement under 1995 Stock Option Plan. (3)(11)
10.3		Amended and Restated Non-Employee Directors Equity Incentive Plan (7), as amended by Amendment No. 1. (4)(11)
10.4		SCP Pool Corporation 1998 Stock Option Plan. (5)(11)
10.5		Form of Stock Option Agreement under 1998 Stock Option Plan. (6)(11)
10.6		Amended and Restated SCP Pool Corporation Employee Stock Purchase Plan. (4)(11)
10.7		Amended and Restated SCP Pool Corporation 2002 Long-Term Incentive Plan.(11)
10.8		Form of Stock Option Agreement under 2002 Long-Term Incentive Plan.(11)
10.9		Employment Agreement, dated January 25, 1999, among SCP Pool Corporation, South Central Pool
		Supply, Inc. and Manuel J. Perez de la Mesa (6) (11).
10.10		Employment Agreement, dated January 17, 2003, between SCP Distributors, LLC and John M. Murphy (11).
10.11		Employment Agreement, dated January 17, 2003, between SCP Distributors, LLC and A. David Cook (11).
10.12		Employment Agreement, dated January 17, 2003, between SCP Distributors, LLC and Christopher W. Wilson (11).
10.13		Employment Agreement, dated January 17, 2003, between SCP Distributors, LLC and Stephen C. Nelson (11).
10.14		2004 Compensation of Non-Employee Directors (11)
10.15		Form of Indemnity Agreement for Directors and Officers (9) (11).
10.16		Louisiana Tax Equalization Agreement (9).
10.17		Tax Reimbursement Arrangement (1) (11).
10.18		Receivables Sale Agreement dated as of March 27, 2003, among SCP Distributors LLC, SCP Services LP and
		Superior Pool Products LLC, as Originators, and Superior Commerce LLC, as Buyer (2)
10.19		Receivables Purchase Agreement dated as of March 27, 2003, among Superior Commerce, LLC, as Seller, SCP
		Distributors LLC, as Servicer, Jupiter Securitization Corporation and Bank One, NA (Main Office Chicago) as
		Agent (2), as amended by amendment dated as of March 25, 2004 (10).
10.20		Intercreditor Agreement dated as of March 27, 2003, by and between Bank One, NA, as agent under the Credit
		Agreement, and Bank One, NA (Main Office Chicago), as agent under the Receivables Purchase Agreement (2).
10.21		Credit Agreement dated as of November 2, 2004, among SCP Pool Corporation, as US Borrower, SCP Distributors Inc.,
		as Canadian Borrower, the Lenders, Wachovia Bank, National Association, as Administrative Agent, Swingline Lender
		and Issuing Lender, Congress Financial Corporation (Canada) as Canadian Dollar Lender, JPMorgan Chase Bank, as
		syndication Agent, Hibernia National Bank as Documentation Agent and Wells Fargo Bank Association, as Documentation
		Agent.
10.22		Subsidiary Guaranty Agreement dated as of November 2, 2004.
10.23		Performance Undertaking dated as of March 27, 2003, by and between SCP Pool Corporation and Superior
		Commerce LLC. (2).
10.24		Asset Exchange Agreement, dated as of November 12, 2004 by and among SCP Pool Corporation, Les Industries R.P. Inc.
		and Latham Acquisition Corp.
10.25		Asset Contribution Agreement, dated as of November 12, 2004 by and among SCP Pool Corporation, Fort Wayne Pools, Inc
		and Latham Acquisition Corp.
10.26		Subscription and Stockholders’ Agreement, dated as of November 12, 2004, by and among Latham Acquisition Corp.,
		Fort Wayne Pools Inc., Brockway Moran & Partners Fund II, L.P. and Brockway Moran & Partners II Co-Invest Fund, L.P.
10.27		Lease (Mandeville Service Center) entered into as of October 19, 1999, by and between S&C
		Development Company, LLC and South Central Pool Supply, Inc, as amended by Lease
		Agreement Amendment No. One, entered into as of May 26, 2000, by and between S&C
		Development Company, LLC and South Central Pool Supply, Inc, as amended by Lease
		Agreement (Warehouse) entered into as of January 16, 2002, by and between S&C Development Company, LLC

		and SCP Distributors, LLC, as amended by First Amendment entered into as of
		February 11, 2002 by and between S&C Development Company, LLC and SCP Distributors, LLC. (1)
10.28		Lease (Oklahoma Service Center) entered into as of January 15, 2001, by and between Dave Cook,
		individually and SCP Pool Corporation, as amended by First Amendment, entered into as of
		October 24, 2001 by and between S&C Development, LLC and SCP Pool Corporation,
		as amended by First Amendment, entered into, as of December 5, 2001 by and between S&C
		Development, LLC and SCP Pool Corporation.(1)
10.29		Form of Stock Option Agreement under the Non-employee Directors Equity Incentive Plan (11)
14		Code of Business Conduct and Ethics for Directors, Officers and Employees (8)
21.1		Subsidiaries of the registrant.
23.1		Consent of Ernst & Young LLP.
31.1		Certification by Mark W. Joslin pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to
		Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification by Manuel J. Perez de la Mesa pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to
		Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification by Manuel J. Perez de la Mesa and Mark W. Joslin pursuant to 18 U.S.C. Section 1350,
		as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


(1)		Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2004.
(2)		Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2003.
(3)		Incorporated by reference to the Company’s Registration Statement No. 33-92738.
(4)		Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2002.
(5)		Incorporated by reference to the Company’s Definitive Proxy Statement on Schedule 14A, filed April 8, 1998.
(6)		Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998
(7)		Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2001.
(8)		Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003.
(9)		Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2004.
(10)		Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2004.
(11)		Management contract or compensatory plan or arrangement.

SCP POOL CORPORATION

2002 LONG-TERM INCENTIVE PLAN

1. Purpose. The purpose of the 2002 Long-Term Incentive Plan (the “Plan”) of SCP Pool Corporation (“SCP”) is to increase shareholder value and to advance the interests of SCP and its subsidiaries (collectively, the “Company”) by furnishing stock-based economic incentives (the “Incentives”) designed to attract, retain, reward and motivate key employees, officers and consultants and advisors to the Company and to strengthen the mutuality of interests between such persons and SCP’s shareholders. Incentives consist of opportunities to purchase or receive shares of common stock, $.001 par value per share, of SCP (the “Common Stock”), on terms determined under the Plan. As used in the Plan, the term “subsidiary” means any corporation, limited liability company or other entity, of which SCP owns (directly or indirectly) within the meaning of Section 424(f) of the Internal Revenue Code of 1986, as amended (the “Code”), 50% or more of the total combined voting power of all classes of stock, membership interests or other equity interests issued thereby.

2.	Administration.

2.1.

Composition. The Plan shall be administered by the Compensation Committee of the Board of Directors of SCP or by a subcommittee thereof (the “Committee”). The Committee shall consist of not fewer than two members of the Board of Directors, each of whom shall (a) qualify as a “non-employee director” under Rule 16b-3 under the Securities Exchange Act of 1934 (the “1934 Act”) or any successor rule, and (b) qualify as an “outside director” under Section 162(m) of the Code (“Section 162(m)”).

2.2.

Authority. The Committee shall have plenary authority to award Incentives under the Plan, to interpret the Plan, to establish any rules or regulations relating to the Plan that it determines to be appropriate, to enter into agreements with or provide notices to participants as to the terms of the Incentives (the “Incentive Agreements”) and to make any other determination that it believes necessary or advisable for the proper administration of the Plan. Its decisions in matters relating to the Plan shall be final and conclusive on the Company and participants. The Committee may delegate its authority hereunder to the extent provided in Section 3 hereof.

3. Eligible Participants. Key employees, officers (including officers who are also directors) and persons providing services as consultants or advisors to the Company shall become eligible to receive Incentives under the Plan when designated by the Committee. Employees may be designated individually or by groups or categories, as the Committee deems appropriate. With respect to participants not subject to Section 16 of the 1934 Act or Section 162(m) of the Code, the Committee may delegate to appropriate officers of the Company its authority to designate participants, to determine the size and type of Incentives to be received by those participants and to set and modify the terms of the Incentives; provided, however, that the per share exercise price of any options granted by an officer, rather than by the Committee, shall be equal to the Fair Market Value (as defined in Section 9.11) of a share of Common Stock. Directors who are not also employees of the Company are not eligible to receive awards under the Plan.

4. Types of Incentives. Incentives may be granted under the Plan to eligible participants in the forms of (a) incentive stock options; (b) non-qualified stock options; and (c) restricted stock.

Shares Subject to the Plan.

5.1.	Number of Shares. Subject to adjustment as provided in Section 9.5, the maximum number of shares of Common Stock that may be delivered to participants and their permitted transferees under the Plan shall be 1,800,000. No additional awards will be made under the Company’s predecessor stock option plans (The SCP Pool Corporation 1995 Stock Option Plan and The SCP Pool Corporation 1998 Stock Option Plan).
5.2.	Share Counting. To the extent any shares of Common Stock covered by a stock option are not delivered to a participant or permitted transferee because the Option is forfeited or canceled or because of a Net Share Exercise, as defined in Section 6.5 hereof, or shares of Common Stock are not delivered because an Incentive is paid or settled in cash or used to satisfy the applicable tax withholding obligation, such shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of Common Stock available for delivery under this Plan. In the event that shares of Common Stock are issued as an Incentive and thereafter are forfeited or reacquired by the Company pursuant to rights reserved upon issuance thereof, such forfeited and reacquired Shares may again be issued under the Plan. If the exercise price of any stock option granted under the Plan or the applicable withholding tax obligation is satisfied by tendering shares of Common Stock to the Company (by either actual delivery or by attestation), only the number of shares of Common Stock issued net of the shares of Common Stock tendered shall be deemed delivered for purposes of determining the maximum number of shares of Common Stock available for delivery under the Plan.
5.3.	Limitations on Awards. Subject to Section 9.5, the following additional limitations are imposed under the Plan:

A. The maximum number of shares of Common Stock that may be issued upon exercise of stock options intended to qualify as incentive stock options under Section 422 of the Code shall be 1,800,000 shares. Notwithstanding any other provision herein to the contrary, (i) all shares issuable under incentive stock options shall be counted against this limit and (ii) shares that are issued and are later forfeited, cancelled or reacquired by the Company, shares withheld to satisfy withholding tax obligations and shares delivered in payment of the option exercise price or withholding taxes shall have no effect on this limitation.

B. The maximum number of shares of Common Stock that may be covered by Incentives granted under the Plan to any one individual during any one calendar-year period shall be 200,000.

C. The maximum number of shares of Common Stock that may be issued as restricted stock shall be 50,000 shares.

5.4.	Type of Common Stock. Common Stock issued under the Plan may be authorized and unissued shares or issued shares held as treasury shares.

6. Stock Options. A stock option is a right to purchase shares of Common Stock from SCP. Stock options granted under the Plan may be incentive stock options (as such term is defined in Section 422 of the Code) or non-qualified stock options. Any option that is designated as a non-qualified stock option shall not be treated as an incentive stock option. Each stock option granted by the Committee under this Plan shall be subject to the following terms and conditions:

6.1.

Price. The exercise price per share shall be determined by the Committee, subject to adjustment under Section 9.5; provided that in no event shall the exercise price be less than the Fair Market Value of a share of Common Stock on the date of grant, except in case of a stock option granted in assumption or substitution for an outstanding award of a company acquired by the Company or with which the Company combines.

6.2.

Number. The number of shares of Common Stock subject to the option shall be determined by the Committee, subject to Section 5 and subject to adjustment as provided in Section 9.5.

6.3.

Duration and Time for Exercise. The term of each stock option shall be determined by the Committee but shall not exceed 10 years from date of grant. Each stock option shall become exercisable at such time or times during its term as shall be determined by the Committee; provided, however, that except as provided in Sections 9.3 and 9.10 herein, or as otherwise provided in an Incentive Agreement entered into in compliance with this Plan prior to February 10, 2004, no more than 24,000 stock options with a vesting period of one year or less shall be granted under this Plan and each other stock option granted under this Plan shall become vested and exercisable no earlier than three years from the date of grant.

6.4.	Repurchase. Upon approval of the Committee, the Company may repurchase a previously granted stock option from a participant by mutual agreement before such option has been exercised by payment to the participant of the amount per share by which: (i) the Fair Market Value (as defined in Section 9.11) of the Common Stock subject to the option on the business day immediately preceding the date of purchase exceeds (ii) the exercise price.
6.5.	Manner of Exercise. A stock option may be exercised, in whole or in part, by giving written notice to the Company, specifying the number of shares of Common Stock to be purchased. The exercise notice shall be accompanied by the full purchase price for such shares. The option price shall be payable in United States dollars and may be paid (a) in cash; (b) by check; (c) by delivery of shares of Common Stock which, unless otherwise determined by the Committee, shall have been held by the optionee for at least six months, and which shares shall be valued for this purpose at the Fair Market Value on the business day immediately preceding the date such option is exercised; (d) by delivery of irrevocable written instructions to a broker approved by the Company (with a copy to the Company) to immediately sell a portion of the shares issuable under the option and to deliver promptly to the Company the amount of sale proceeds (or loan proceeds if the broker lends funds to the participant for delivery to the Company) to pay the exercise price; (e) if permitted by the Committee, by authorizing the Company to withhold from the exercise that number of shares of Common Stock which, when multiplied by the Fair Market Value of a share of Common Stock on the date of exercise, is equal to the aggregate exercise price payable with respect to the options being exercised (a “Net Share Exercise”) or (f) in such other manner as may be authorized from time to time by the Committee.
6.6.	Incentive Stock Options. Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to the grant of stock options that are intended to qualify as incentive stock options (as such term is defined in Section 422 of the Code):

A. Any incentive stock option agreement authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain or be deemed to contain all provisions required in order to qualify the options as incentive stock options.

B. All incentive stock options must be granted within ten years from the date on which this Plan is adopted by the Board of Directors.

C. No incentive stock options shall be granted to any participant who, at the time such option is granted, would own (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the employer corporation or of its parent or subsidiary corporation.

D. The aggregate Fair Market Value (determined with respect to each incentive stock option as of the time such incentive stock option is granted) of the Common Stock with respect to which incentive stock options are exercisable for the first time by a participant during any calendar year (under the Plan or any other plan of SCP or any of its subsidiaries) shall not exceed $100,000. To the extent that such limitation is exceeded, such options shall not be treated, for federal income tax purposes, as incentive stock options.

6.7.	Repricing. Except for adjustments pursuant to Section 9.5 or actions permitted to be taken by the Committee under Section 9.10C. in the event of a Change of Control, unless approved by the stockholders of the Company, (a) the exercise price for any outstanding option granted under this

Plan may not be decreased after the date of grant; and (b) an outstanding option that has been granted under this Plan may not, as of any date that such option has a per share exercise price that is greater than the then current Fair Market Value of a share of Common Stock, be surrendered to the Company as consideration for the grant of a new option with a lower exercise price, shares of Common Stock or a cash payment.

7.	Restricted Stock.

7.1.	Grant of Restricted Stock. The Committee may award shares of restricted stock to such eligible participants as the Committee determines pursuant to the terms of Section 3. An award of restricted stock shall be subject to such restrictions on transfer and forfeitability provisions and such other terms and conditions, including the attainment of specified performance goals, as the Committee may determine, subject to the provisions of the Plan. To the extent restricted stock is intended to qualify as “performance-based compensation” under Section 162(m), it must be granted subject to the attainment of performance goals as described in Section 8 below and meet the additional requirements imposed by Section 162(m).
7.2.	The Restricted Period. At the time an award of restricted stock is made, the Committee shall establish a period of time during which the transfer of the shares of restricted stock shall be restricted and after which the shares of restricted stock shall be vested (the “Restricted Period”). Except for shares of restricted stock that vest based on the attainment of performance goals, the Restricted Period shall be a minimum of three years, with incremental vesting of portions of the award over the three-year period permitted. If the vesting of the shares of restricted stock is based upon the attainment of performance goals, a minimum Restricted Period of one year is allowed, with incremental vesting of portions of the award over the one-year period permitted. Each award of restricted stock may have a different Restricted Period. The expiration of the Restricted Period shall also occur as provided under Section 9.3 and under the conditions described in Section 9.10 hereof.
7.3.	Escrow. The participant receiving restricted stock shall enter into an Incentive Agreement with the Company setting forth the conditions of the grant. Certificates representing shares of restricted stock shall be registered in the name of the participant and deposited with the Company, together with a stock power endorsed in blank by the participant. Each such certificate shall bear a legend in substantially the following form:

The transferability of this certificate and the shares of Common Stock represented by it are subject to the terms and conditions (including conditions of forfeiture) contained in the SCP Pool Corporation 2002 Long-Term Incentive Plan (the “Plan”), and an agreement entered into between the registered owner and SCP Pool Corporation thereunder. Copies of the Plan and the agreement are on file at the principal office of the Company

7.4.	Dividends on Restricted Stock. Any and all cash and stock dividends paid with respect to the shares of restricted stock shall be subject to any restrictions on transfer, forfeitability provisions or reinvestment requirements as the Committee may, in its discretion, prescribe in the Incentive Agreement.
7.5.	Forfeiture. In the event of the forfeiture of any shares of restricted stock under the terms provided in the Incentive Agreement (including any additional shares of restricted stock that may result from the reinvestment of cash and stock dividends, if so provided in the Incentive Agreement), such forfeited shares shall be surrendered and the certificates cancelled. The participants shall have the same rights and privileges, and be subject to the same forfeiture provisions, with respect to any additional shares received pursuant to Section 9.5 due to a recapitalization, merger or other change in capitalization.
7.6.	Expiration of Restricted Period. Upon the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Committee, the restrictions applicable to the restricted stock shall lapse and a stock certificate for the number of shares of restricted stock with respect to which the restrictions have lapsed shall be delivered, free of all such restrictions

and legends, except any that may be imposed by law, to the participant or the participant’s estate, as the case may be.

7.7.

Rights as a Shareholder. Subject to the terms and conditions of the Plan and subject to any restrictions on the receipt of dividends that may be imposed in the Incentive Agreement, each participant receiving restricted stock shall have all the rights of a shareholder with respect to shares of stock during the Restricted Period, including without limitation, the right to vote any shares of Common Stock.

8. Performance Goals for Section 162(m) Awards. To the extent that shares of restricted stock granted under the Plan are intended to qualify as “performance-based compensation” under Section 162(m), the vesting or grant of such awards shall be conditioned on the achievement of one or more performance goals and must satisfy the other requirements of Section 162(m). The performance goals pursuant to which such shares of restricted stock shall vest or be granted shall be any or a combination of the following performance measures applied to the Company, SCP, a division or a subsidiary: earnings per share, return on assets, an economic value added measure, shareholder return, earnings, stock price, return on equity, return on total capital, reduction of expenses, increase in cash flow, increase in revenues or customer growth. The performance goals may be subject to such adjustments as are specified in advance by the Committee. For any performance period, such performance objectives may be measured on an absolute basis or relative to a group of peer companies selected by the Committee, relative to internal goals or relative to levels attained in prior years. For grants intended to qualify as performance-based compensation under Section 162(m), the Committee may not waive any of the pre-established performance goal objectives, except for an automatic waiver under Section 9.10 hereof, or as may be provided by the Committee in the event of death or disability

General

9.1.	Duration. Subject to Section 9.9, the Plan shall remain in effect until all Incentives granted under the Plan have either been satisfied by the issuance of shares of Common Stock or otherwise been terminated under the terms of the Plan and all restrictions imposed on shares of Common Stock in connection with their issuance under the Plan have lapsed.
9.2.	Transferability. No Incentives granted hereunder may be transferred, pledged, assigned or otherwise encumbered by a participant except: (a) by will; (b) by the laws of descent and distribution; (c) pursuant to a domestic relations order, as defined in the Code; or (d) as to options only, if permitted by the Committee and so provided in the Incentive Agreement or an amendment thereto, (i) to Immediate Family Members, (ii) to a partnership in which the participant and/or Immediate Family Members, or entities in which the participant and/or Immediate Family Members are the sole owners, members or beneficiaries, as appropriate, are the sole partners, (iii) to a limited liability company in which the participant and/or Immediate Family Members, or entities in which the participant and/or Immediate Family Members are the sole owners, members or beneficiaries, as appropriate, are the sole members, (iv) to a trust for the sole benefit of the participant and/or Immediate Family Members or (v) to a charitable organization. “Immediate Family Members” shall be defined as the spouse and natural or adopted children or grandchildren of the participant and their spouses. To the extent that an incentive stock option is permitted to be transferred during the lifetime of the participant, it shall be treated thereafter as a nonqualified stock option. Any attempted assignment, transfer, pledge, hypothecation or other disposition of Incentives, or levy of attachment or similar process upon Incentives not specifically permitted herein, shall be null and void and without effect.
9.3.	Effect of Termination of Employment or Death. In the event that a participant ceases to be an employee of the Company or to provide services to the Company for any reason, including death, disability, early retirement or normal retirement, any Incentives may be exercised, shall vest or shall expire at such times as may be determined by the Committee and provided in the Incentive Agreement.
9.4.	Additional Conditions. Anything in this Plan to the contrary notwithstanding: (a) the Company may, if it shall determine it necessary or desirable for any reason, at the time of award of any

Incentive or the issuance of any shares of Common Stock pursuant to any Incentive, require the recipient of the Incentive, as a condition to the receipt thereof or to the receipt of shares of Common Stock issued pursuant thereto, to deliver to the Company a written representation of present intention to acquire the Incentive or the shares of Common Stock issued pursuant thereto for his own account for investment and not for distribution; and (b) if at any time the Company further determines, in its sole discretion, that the listing, registration or qualification (or any updating of any such document) of any Incentive or the shares of Common Stock issuable pursuant thereto is necessary on any securities exchange or under any federal or state securities or blue sky law, or that the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with the award of any Incentive, the issuance of shares of Common Stock pursuant thereto, or the removal of any restrictions imposed on such shares, such Incentive shall not be awarded or such shares of Common Stock shall not be issued or such restrictions shall not be removed, as the case may be, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company.

9.5.

Adjustment. In the event of any recapitalization, stock dividend, stock split, combination of shares or other similar change in the Common Stock, the number of shares of Common Stock then subject to the Plan, including shares subject to outstanding Incentives, and all limitations on the number of shares that may be issued hereunder shall be adjusted in proportion to the change in outstanding shares of Common Stock. In the event of any such adjustments, the purchase price of any option and the performance objectives of any Incentive, shall also be adjusted as and to the extent appropriate, in the reasonable discretion of the Committee, to provide participants with the same relative rights before and after such adjustment. No substitution or adjustment shall require the Company to issue a fractional share under the Plan and the substitution or adjustment shall be limited by deleting any fractional share.

9.6.	Withholding

A. The Company shall have the right to withhold from any stock issued under the Plan or to collect as a condition of issuance or vesting, any taxes required by law to be withheld. At any time that a participant is required to pay to the Company an amount required to be withheld under applicable income tax laws in connection with the lapse of restrictions on Common Stock or the exercise of an option, the participant may, subject to disapproval by the Committee, satisfy this obligation in whole or in part by electing (the “Election”) to deliver currently owned shares of Common Stock or to have the Company withhold shares of Common Stock, in each case having a value equal to the minimum statutory amount required to be withheld under federal, state and local law. The value of the shares to be delivered or withheld shall be based on the Fair Market Value of the Common Stock on the date that the amount of tax to be withheld shall be determined (“Tax Date”).

B. Each Election must be made prior to the Tax Date. The Committee may disapprove of any Election, may suspend or terminate the right to make Elections, or may provide with respect to any Incentive that the right to make Elections shall not apply to such Incentive. If a participant makes an election under Section 83(b) of the Code with respect to shares of restricted stock, an Election to have shares withheld to satisfy withholding taxes is not permitted to be made.

9.7.	No Continued Employment. No participant under the Plan shall have any right, because of his or her participation, to continue in the employ of the Company for any period of time or to any right to continue his or her present or any other rate of compensation.
9.8.	Deferral Permitted. Payment of an Incentive may be deferred at the option of the participant if permitted in the Incentive Agreement.
9.9.	Amendments to or Termination of the Plan. The Board may amend or discontinue this Plan at any time; provided, however, that no such amendment may:

A. without the approval of the shareholders, (i) except for adjustments permitted herein, increase the maximum number of shares of Common Stock that may be issued through the Plan, (ii) materially increase the benefits accruing to participants under the Plan, (iii) materially expand the classes of persons eligible to participate in the Plan, or (iv) amend Section 6.7 to permit repricing of options; or

	B.	materially impair, without the consent of the recipient, an Incentive previously granted.
9.10.	Change of Control.
	A.	A Change of Control shall mean:

i. the acquisition by any person of beneficial ownership of 50% or more of the outstanding shares of the Common Stock or 50% or more of the combined voting power of SCP’s then outstanding securities entitled to vote generally in the election of directors; provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control:

a. any acquisition (other than a Business Combination (as defined below) which constitutes a Change of Control under Section 9.10(A)(iii) hereof) of Common Stock directly from the Company,

b.	any acquisition of Common Stock by the Company,

c. any acquisition of Common Stock by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or

d. any acquisition of Common Stock by any corporation pursuant to a Business Combination that does not constitute a Change of Control under Section 9.10(A)(iii) hereof.

ii. individuals who, as of January 1, 2002, constituted the Board of Directors of SCP (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to such date whose election, or nomination for election by SCP’s shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board shall be considered a member of the Incumbent Board, unless such individual’s initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Incumbent Board; or

iii. consummation of a reorganization, share exchange, merger or consolidation (including any such transaction involving any direct or indirect subsidiary of SCP) or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”); provided, however, that in no such case shall any such transaction constitute a Change of Control if immediately following such Business Combination:

a. the individuals and entities who were the beneficial owners of SCP’s outstanding Common Stock and SCP’s voting securities entitled to vote generally in the election of directors immediately prior to such Business Combination have direct or indirect beneficial ownership, respectively, of more than 50% of the then outstanding shares of common stock, and more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the surviving or successor corporation, or, if applicable, the ultimate parent company thereof (the “Post-Transaction Corporation”), and

b. except to the extent that such ownership existed prior to the Business Combination, no person (excluding the Post-Transaction Corporation and any employee

benefit plan or related trust of either SCP, the Post-Transaction Corporation or any subsidiary of either corporation) beneficially owns, directly or indirectly, 50% or more of the then outstanding shares of common stock of the corporation resulting from such Business Combination or 50% or more of the combined voting power of the then outstanding voting securities of such corporation, and

c. at least a majority of the members of the board of directors of the Post-Transaction Corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination; or

iv. approval by the shareholders of SCP of a complete liquidation or dissolution of SCP.

For purposes of this Section 9.10, the term “person” shall mean a natural person or entity, and shall also mean the group or syndicate created when two or more persons act as a syndicate or other group (including, without limitation, a partnership or limited partnership) for the purpose of acquiring, holding, or disposing of a security, except that “person” shall not include an underwriter temporarily holding a security pursuant to an offering of the security.

B. Upon a Change of Control of the type described in clause (A)(i) or (A)(ii) of this Section 9.10 or immediately prior to any Change of Control of the type described in clause (A)(iii) or (A)(iv) of this Section 9.10, all outstanding Incentives granted pursuant to this Plan shall automatically become fully vested and exercisable, all restrictions or limitations on any Incentives shall automatically lapse and, unless otherwise provided in the applicable Incentive Agreement, all performance criteria and other conditions relating to the payment of Incentives shall be deemed to be achieved or waived by SCP without the necessity of action by any person. As used in the immediately preceding sentence, ‘immediately prior’ to the Change of Control shall mean sufficiently in advance of the Change of Control to permit the grantee to take all steps reasonably necessary (i) if an optionee, to exercise any such option fully and (ii) to deal with the shares purchased or acquired under any such option and any formerly restricted shares on which restrictions have lapsed so that all types of shares may be treated in the same manner in connection with the Change of Control as the shares of Common Stock of other shareholders.

C. No later than 30 days after a Change of Control of the type described in subsections (A)(i) or (A)(ii) of this Section 9.10 and no later than 30 days after the approval by the Board of a Change of Control of the type described in subsections (A)(iii) or (A)(iv) of this Section 9.10, the Committee, acting in its sole discretion without the consent or approval of any participant (and notwithstanding any removal or attempted removal of some or all of the members thereof as directors or Committee members), may act to effect one or more of the alternatives listed below, which may vary among individual participants and which may vary among Incentives held by any individual participant:

i. require that all outstanding options be exercised on or before a specified date (before or after such Change of Control) fixed by the Committee, after which specified date all unexercised options and all rights of participants thereunder shall terminate,

ii. make such equitable adjustments to Incentives then outstanding as the Committee deems appropriate to reflect such Change of Control (provided, however, that the Committee may determine in its sole discretion that no adjustment is necessary),

iii. provide for mandatory conversion of some or all of the outstanding options held by some or all participants as of a date, before or after such Change of Control, specified by the Committee, in which event such options shall be deemed automatically cancelled and the Company shall pay, or cause to be paid, to each such participant an amount of cash per share equal to the excess, if any, of the Change of Control Value of the shares subject to such option, as defined and calculated below, over the exercise price of such

options or, in lieu of such cash payment, the issuance of Common Stock or securities of an acquiring entity having a Fair Market Value equal to such excess, or

iv. provide that thereafter, upon any exercise of an option, the holder shall be entitled to purchase or receive under such option, in lieu of the number of shares of Common Stock then covered by such option, the number and class of shares of stock or other securities or property (including, without limitation, cash) to which the holder would have been entitled pursuant to the terms of the agreement providing for the reorganization, share exchange, merger, consolidation or asset sale, if, immediately prior to such Change of Control, the holder had been the record owner of the number of shares of Common Stock then covered by such option.

D. For the purposes of paragraph (iii) of Section 9.10(C), the "Change of Control Value" shall equal the amount determined by whichever of the following items is applicable:

i. the per share price to be paid to holders of Common Stock in any such merger, consolidation or other reorganization,

ii. the price per share offered to holders of Common Stock in any tender offer or exchange offer whereby a Change of Control takes place,

iii. in all other events, the fair market value per share of Common Stock into which such options being converted are exercisable, as determined by the Committee as of the date determined by the Committee to be the date of conversion of such options, or

iv. in the event that the consideration offered to holders of Common Stock in any transaction described in this Section 9.10 consists of anything other than cash, the Committee shall determine the fair cash equivalent of the portion of the consideration offered that is other than cash.

9.11.

Definition of Fair Market Value. Whenever “Fair Market Value” of Common Stock shall be determined for purposes of this Plan, it shall be determined as follows: (i) if the Common Stock is listed on an established stock exchange or any automated quotation system that provides sale quotations, the closing sale price for a share of the Common Stock on such exchange or quotation system on the applicable date, or if no sale of the Common Stock shall have been made on that day, on the next preceding day on which there was a sale of the Common Stock; (ii) if the Common Stock is not listed on any exchange or quotation system, but bid and asked prices are quoted and published, the mean between the quoted bid and asked prices on the applicable date, and if bid and asked prices are not available on such day, on the next preceding day on which such prices were available; and (iii) if the Common Stock is not regularly quoted, the fair market value of a share of Common Stock on the applicable date as established by the Committee in good faith.

9.12.

Incentive Agreements. Each award of an Incentive hereunder shall be evidenced by an agreement or notice delivered to the participant, by paper copy or electronic copy, that shall specify the terms and conditions thereof and any rules applicable thereto, including but not limited to the effect on such Incentive of the participant’s ceasing to be employed by or to provide services to the Company. The Incentive Agreement may also provide for the forfeiture of an Incentive in the event that the participant competes with the Company or engages in other activities that are harmful to or against the interests of the Company.

STOCK OPTION AGREEMENT

FOR THE GRANT OF

NON-QUALIFIED STOCK OPTIONS UNDER THE

SCP POOL CORPORATION

2002 LONG-TERM INCENTIVE PLAN

THIS AGREEMENT is entered into and effective as of _ DATE_ by and between SCP Pool Corporation, a Delaware corporation (the “Company”), and First Name Last Name (the “Optionee”).

WHEREAS Optionee is a key employee of the Company and the Company considers it desirable and in its best interest that Optionee be given an inducement to acquire a proprietary interest in the Company and an incentive to advance the interests of the Company by possessing an option to purchase shares of the common stock of the Company, $.001 par value per share (the “Common Stock”) in accordance with the SCP Pool Corporation 2002 Long-Term Incentive Plan (the “Plan”).

NOW, THEREFORE, in consideration of the premises, it is agreed by and between the parties as follows:

Grant of Option

In consideration of future services, the Company hereby grants to Optionee effective as of the date hereof (the “Date of Grant”) the right, privilege and option to purchase # shares of Common Stock (the “Option”) at an exercise price of $$$$ per share (the “Exercise Price”). The Option shall be exercisable at the time specified in Section II below. The Option is a non-qualified stock option and shall not be treated as an incentive stock option under Section 422 of the Code. Any capitalized term used herein, but not defined herein, shall have the meaning provided in the Plan.

Time of Exercise

2.1 Subject to the provisions of the Plan and the other provisions of this Section II, the Option shall become vested and exercisable beginning on the dates set forth below, provided Optionee continues to be an employee or to perform services for the Company on such dates:

[50% of the Option will vest on Vesting Date 1 and the other 50% of the Option will vest on Vesting Date 2]

[the Option will vest on Vesting Date1]

2.2 During Optionee's lifetime, the Option may be exercised only by him, his guardian if he has been declared incompetent or by a permitted transferee under Article VI hereof. In the event of death, the Option may be exercised as provided herein by the Optionee’s estate or by the person to whom such right devolves as a result of the Optionee’s death.

2.3 If the Optionee ceases to be an employee of, or to perform other services for, the Company or a Subsidiary of the Company:

{N0791602.1}

(a) due to death or Disability, the Option shall become fully vested and exercisable and shall remain exercisable for one year following the date of such death or Disability;

(b) as a result of termination by the Company or a Subsidiary for Cause, the Option shall be forfeited immediately upon such cessation, whether or not then exercisable;

(c) due to Retirement, provided that the Optionee does not engage in Competition directly or indirectly against the Company, as determined by the Committee or the President of the Company (i) the Option, to the extent vested and exercisable on the date of Retirement, shall remain exercisable for, and shall otherwise terminate on the original expiration date of such Option; and (ii) the portion of the Option that was not vested and exercisable on the date of Retirement shall continue to vest in accordance with the original vesting schedule and shall remain exercisable for, and shall otherwise terminate on the original expiration date of such Option; and

(d) for any reason other than death, Disability, Retirement or Cause, provided that the Optionee does not engage in Competition directly or indirectly against the Company, as determined by the Committee or the President of the Company (i) the portion of the Option that was vested and exercisable on the date of such cessation shall remain exercisable for, and shall otherwise terminate on the original expiration date of such Option; and (ii) the portion of the Option that was not vested and exercisable on the date of such cessation shall immediately terminate, except that such unvested portion of the Option may continue to vest in accordance with the original vesting schedule and remain exercisable for, and otherwise terminate on the original expiration date of such Option, if so determined by 1) the President of the Company for employees with an unvested Option for less than 5,000 shares, or 2) the Committee for employees with an unvested Option of 5,000 shares or more.

provided, however, that under no circumstances may the Option be exercised later than ten years after the Date of Grant.

2.4	For purposes of this Agreement:

(a) “Cause” shall mean (i) conviction of a felony or any crime or offense lesser than a felony involving the property of the Company or a Subsidiary; (ii) conduct that has caused demonstrable and serious injury to the Company or a Subsidiary, monetary or otherwise; (iii) willful refusal to perform or substantial disregard of duties properly assigned, as determined by the Board; or (iv) breach of duty of loyalty to the Company or a Subsidiary or other act of fraud or dishonesty with respect to the Company or a Subsidiary. The determination as to whether the Optionee was terminated for Cause shall be made by the Board in its sole discretion.

(b) “Competition” is deemed to occur if an Optionee, who ceases to be employed by the Company or its Subsidiaries or who ceases to provide services to the Company or its Subsidiaries, obtains a position as a full-time or part-time employee of, as a member of the board of directors of, or as a consultant or advisor with or to, or acquires an ownership interest in excess of 5% of, a corporation, partnership, firm or other entity (i) that engages in any of the businesses of the Company or any Subsidiary with which the Optionee was involved at any time during employment with or other service for the Company or any Subsidiary; (ii) that serves as a supplier to the Company, a Subsidiary or a competitor of the Company or a Subsidiary; or (iii) that is a customer of the Company, a Subsidiary or a competitor of the Company or a Subsidiary.

(c) “Disability” shall mean a disability that would entitle Optionee to payment of disability payments under any Company or a Subsidiary disability plan or as otherwise determined by the Committee.

(d) “Retirement” shall mean termination of the Optionee’s employment if the Optionee has been employed by the Company or a Subsidiary on a continuous basis for a period of at least ten years and the Optionee has attained the age of 55 years.

(e) “Subsidiary” shall mean any corporation or other entity of which the Company owns securities having a majority of the ordinary voting power in electing the board of directors or similar governing body, either directly or through one or more Subsidiaries.

{N0791602.1}

2.5	The Option shall expire and may not be exercised later than ten years following the Date of Grant.

III

Method of Exercise of Option

3.1 Optionee may exercise all or a portion of the Option by delivering to the Company a signed written notice of his intention to exercise the Option, specifying therein the number of shares to be purchased. Upon receiving such notice, and after the Company has received full payment of the Exercise Price, the appropriate officer of the Company shall cause the transfer of title of the shares purchased to Optionee on the Company's stock records and cause to be issued to Optionee a stock certificate for the number of shares being acquired. Optionee shall not have any rights as a shareholder until the stock certificate is issued to him.

3.2 The Option may be exercised by the payment of the Exercise Price in cash, in shares of Common Stock held for six months or in a combination of cash and shares of Common Stock held for six months. The Optionee may also pay the Exercise Price by delivering a properly executed exercise notice together with irrevocable instructions to a broker approved by the Company (with a copy to the Company) to promptly deliver to the Company the amount of sale or loan proceeds to pay the Exercise Price.

No Contract of Employment Intended

Nothing in this Agreement shall confer upon Optionee any right to continue in the employment of the Company or any of its subsidiaries, or to interfere in any way with the right of the Company or any of its subsidiaries to terminate Optionee's employment relationship with the Company or any of its subsidiaries at any time.

Binding Effect

This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators and successors.

Non-Transferability

The Option granted hereby may not be transferred, assigned, pledged or hypothecated in any manner, by operation of law or otherwise, other than by will, by the laws of descent and distribution or pursuant to a domestic relations order, as defined in the Code, or as permitted by the Committee and so provided herein, (i) to Immediate Family Members, (ii) to a partnership in which the participant and/or Immediate Family Members, or entities in which the participant and/or Immediate Family Members are the sole owners, members or beneficiaries, as appropriate, are the sole partners, (iii) to a limited liability company in which the participant and/or Immediate Family Members, or entities in which the participant and/or Immediate Family Members are the sole owners, members or beneficiaries, as appropriate, are the sole members, (iv) to a trust for the sole benefit of the participant and/or Immediate Family Members or (v) to a charitable organization. “Immediate Family Members” shall be defined as the spouse and natural or adopted children or grandchildren of the participant and their spouses. To the extent that an incentive stock option is permitted to be transferred during the lifetime of the participant, it shall be treated thereafter as a nonqualified stock option. Any attempted assignment, transfer, pledge, hypothecation or other disposition of Incentives, or levy of attachment or similar process upon Incentives not specifically permitted herein, shall be null and void and without effect.

{N0791602.1}

VII

Inconsistent Provisions

The Option granted hereby is subject to the provisions of the Plan as in effect on the date hereof and as it may be amended. In the event any provision of this Agreement conflicts with such a provision of the Plan, the Plan provision shall control.

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed on the day and year first above written.

SCP POOL CORPORATION

By:

Chairman, Compensation Committee

Optionee

{N0791602.1}

SCP DISTRIBUTORS, LLC

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made and entered into this 17th day of January, 2003, by and between SCP Distributors, LLC, a Delaware corporation (“Employer”), and John M. Murphy (“Employee”).

RECITALS

A. Employer operates swimming pool wholesale distribution facilities throughout the country operating as SCP Distributors, LLC of Covington (“SCP Covington”).

B. Employee is currently employed by Employer, and Employer desires to continue to employ Employee, pursuant to the terms of this Agreement.

C. The parties desire to specify their rights and responsibilities with regards to each other by entering into this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and promises as specified hereinafter, and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties agree as follows:

1. EMPLOYMENT . Employer continues to employ Employee, and Employee continues to accept employment with Employer upon the terms and conditions stated in this Agreement.

2. TERM . The Agreement shall become effective upon execution by both parties, and shall remain in full force and effect until terminated pursuant to the provisions of this Agreement.

3.	COMPENSATION.

3.1 Salary . Employer shall pay Employee’s gross annual salary (“Salary”) during such time Employee is employed by Employer in the amount of $170,000 payable in equal installments not less than bi-weekly, and provide a bonus plan as described in section 3.2. All salary and bonus payments shall be subject to withholding and other applicable taxes. The annual salary may be increased, from time to time, at the sole discretion of Employer.

3.2 Annual Bonus . Employee is eligible for an annual bonus based on criteria set forth in a separate bonus agreement. The Annual Bonus shall be paid by Employer to Employee on, and shall not be earned by Employee unless Employee is employed on, February 28 ^th of the year following the calendar year in which Annual Bonus is applicable. If Employee is not employed, for any reason, on February 28 ^th of the year following each applicable calendar year, Employee shall not be eligible to receive Annual Bonus for the preceding calendar year.

3.3 Bonus Acknowledgment . Employee acknowledges and agrees that the calculation and formulas used to define the Annual Bonus as set forth in Section 3.2 is subject to change, from year to year, and that it is Employer’s policy that Profitability Bonuses do not accrue, nor are they subject to pro rata payment.

3.4 Withholding Taxes . All compensation paid to Employee pursuant to this section 3 shall be subject to all applicable state, federal and local withholding taxes.

4. DUTIES . Employee will serve as an Vice President for SCP Covington, and shall perform such other specific services or duties as Employer assigns from time to time.

5. EMPLOYEE BENEFITS . Employee shall be entitled to participate in all benefits Employer provides, or makes available to similarly situated employees in the same classification or equivalent level of responsibility, as changed from time to time by Employer.

Page -1-

SCP Executive Louisiana Employment Agreement.doc

6. AUTOMOBILE ALLOWANCE . Employer shall pay to Employee an amount equal to $700.00 per month, as an automobile allowance or be provided a vehicle under its guidelines for like managers in SCP.

7. EXTENT OF SERVICES . Employee shall devote his entire time, attention and energies to Employer’s business and shall not, during the term of this Agreement, be engaged in any other business activity that, in the good faith discretion of the Employer, interferes with Employee’s duties for Employer, whether or not such business activity is pursued for gain, profit or other pecuniary advantage. However, Employee may invest his assets in such form or other manner as will not require his services in the operation of the affairs of the companies in which such investments are made.

8. DISCLOSURE OF INFORMATION . Employee acknowledges his position with Employer has given Employee access to and will continue to give Employee access to certain confidential and proprietary information (“Confidential Information”) of Employer and such Confidential Information, including but not limited to Employer’s products and services, business plans, business acquisitions, processes, product or service research and development methods or techniques, training methods and other operational methods or techniques, quality assurance procedures or standards, operating procedures, files, plans, specifications, proposals, drawings, charts, graphs, support data, trade secrets, supplier lists, supplier information, purchasing methods or practices, distribution and selling activities, consultants’ reports, marketing or other technical studies, maintenance records, employment or personnel data, marketing data, strategies or techniques, financial reports, budgets, projections, cost analyses, price lists, formulae and analyses, employee lists, customer records, customer lists, customer source lists, proprietary computer software, and internal notes and memoranda relating to any of the foregoing; is a valuable, special and unique asset of Employer’s business. In consideration of Employee’s continued employment with Employer, Employee agrees that, during his employment, and for a period of one year after termination of this Agreement, he will not communicate, disclose, divulge or make available to any person or entity (other than Employer) any Confidential Information that he may know or possess or hereafter come to know or possess as a result of his employment hereunder, except upon the prior written authorization of Employer or as may be required by law or legal process. In the event of a breach or threatened breach by Employee of the provisions of this section 8, Employer shall be entitled to an injunction restraining Employee from disclosing, in whole or in part, the Employer’s Confidential Information, or from rendering any services to any person, firm corporation, association, or another entity to whom such list or Confidential Information, in whole or in part, has been disclosed or is threatened to be disclosed, it being acknowledged by Employee that any such breach or threatened breach will cause irreparable injury to Employer. Nothing in this section 8 shall be construed as prohibiting Employer from pursuing any other remedies available to Employer for such breach or threatened breach, including the recovery from Employee of damages, attorney fees and other costs and expenses incurred by Employer. All memoranda, notes, records or other documents compiled by Employee or made available to Employee during the Term, concerning the business of Employer and its customers, shall be the property of Employer and shall be delivered to Employer on the termination of Employee’s employment as provided herein, or at any other time upon request.

9.	TERMINATION .

9.1 Except as provided in Sections 9.3 and 9.4, Employer may terminate Employee’s employment under this Agreement only upon fourteen (14) days written notice to Employee. Employee may terminate Employee’s employment under this Agreement only upon fourteen (14) days written notice to Employer.

9.2 If Employer terminates Employee’s employment for any reason other than as provided in Section 9.3 and 9.4, Employer shall pay to Employee one week of severance compensation for each twelve month period of completed service with a minimum amount equal to one-half of a month’s Salary and a maximum of three months’ salary as provided in Section 3.1 (“Severance Compensation”). Such Severance Compensation shall be paid within thirty (30) days of the effective date of termination, and such Severance Compensation shall be the sole severance benefit payable to Employee by Employer.

9.3 If Employee terminates his employment as provided in section 9.1, Employer shall have the option of immediately terminating Employee without any further liability or obligation to Employee, including the obligation to pay Severance Compensation under Section 9.2.

Page -2-

SCP Executive Louisiana Employment Agreement.doc

9.4 Employer may terminate Employee’s employment under this Agreement for Cause without any obligation of providing advance notice to Employee. For the purposes of this Agreement, Cause shall mean the Employee’s material breach of this Agreement; or the Employee’s misconduct which may reasonably be anticipated to have a material adverse effect upon Employer’s business; or the Employee’s disregard of the lawful instructions of the Board of Directors or Officers of Employer that are consistent with Employee’s position; or the abuse of alcohol or drugs by the Employee; or the commission by Employee of a felony or an act involving fraud, theft or dishonesty; or failure of Employee to adequately perform his duties as determined in the sole discretion of the Employer.

10.	RESTRICTIVE COVENANT.

10.1 The Employee hereby acknowledges and recognizes that during the term of his employment with Employer, he will be privy to trade secrets and confidential and proprietary information critical to Employer’s business within certain markets, and that Employer may find it extremely difficult and disruptive to replace the Employee. Accordingly, Employee agrees that, in consideration of the premises contained herein and the consideration to be received by Employee hereunder, he will not, from and after the date hereof until the first anniversary of the termination of Employee’s employment with Employer:

10.1.1 directly or indirectly carry on or engage in, represent in any way, or be connected with, any business or activity (such business or activity being hereinafter called a “Competing Business”) like or similar to or directly competing with SCP, or solicit any customer of SCP in any of the following Louisiana parishes in which SCP is doing business: Caddo, Baton Rouge, Jefferson and St. Tammany, whether such engagement shall be as an officer, director, owner, employee, agent, partner, affiliate, or other participant in any Competing Business;

10.1.2 assist others in engaging in any Competing Business in any manner described in the foregoing section 10.1.1;

10.1.3 induce the Employer’s customers to change or alter in any manner their business dealings with Employer or either directly or indirectly contact or cause to be contacted any of SCP customers as they exist at the time Employee’s employment is terminated, for a period of one year from the effective date of termination; or

10.1.4 induce other employees of Employer to terminate their employment with Employer or engage in any Competing Business.

10.2 The Employee acknowledges and agrees that the foregoing restrictions will limit his ability to become employed with a Competing Business, but he nevertheless understands that he has received and will in the future receive sufficient consideration and other benefits as an Employee of Employer and as otherwise provided hereunder to clearly justify such restrictions, which in any event (given his education, skills, and ability) the Employee does not believe would prevent him from earning a living.

10.3 In the event of Employee’s actual or threatened breach of the provisions of this section 10, Employer shall be entitled to obtain an injunction enjoining Employee from committing such actual or threatened breach. Employer shall also be permitted to pursue any other available remedies available for such breach or threatened breach, including the recovery of damages from Employee, and Employee shall reimburse Employer for all reasonable costs associated with the enforcement of this section 10 including court costs and reasonable attorneys’ fees. If a court of competent jurisdiction determines that any provision or restriction in this section 10 is unreasonable or unenforceable, said court shall modify such restriction or provision so that it then becomes an enforceable restriction of the activities of Employee that are competitive with Employer.

11.	NOTICES.

11.1 Any notice, request, or other communication required or permitted under this Agreement shall be in writing. Notice shall be deemed given only if personally delivered or sent by registered or certified mail, return receipt requested. Any notice so mailed shall be deemed given on the date received.

Page -3-

SCP Executive Louisiana Employment Agreement.doc

All such notices shall be given to the respective parties at the addresses designated below, or to such other address as a party may designate in a like manner:

If to Employer:

Patricia H. Finger

Director of Human Resources

SCP Distributors, LLC

109 Northpark Blvd., 4 ^th Floor

Covington, LA 70433

Copy to:

Manuel Perez de la Mesa

Chief Executive Officer

		If to Employee:	John M. Murphy
	11.2	The refusal by a party to accept a notice does not affect the giving of the notice.
12.	MISCELLANEOUS.

12.1 Entire Agreement: Further Assurances. This Agreement and the Bonus Agreement described in Section 3.2 hereof, constitute the entire agreement between the parties pertaining to Employee’s employment as Vice President of SCP and all prior negotiations, and agreements, whether written or oral, are merged into this Agreement. Each party hereto agrees to execute and deliver such other documents, agreements or instruments and to take such further action as may be reasonably requested by the other party hereto for the implementation of this Agreement and the consummation of the transaction contemplated hereby.

12.2 Severability . If any provision of this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision or part of a provision of this Agreement; but this Agreement shall be reformed and construed as if such provision had never been contained in it, and any such provision shall be reformed so that it would be valid, legal and enforceable to the maximum extent permitted.

12.3 Counterparts . This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which counterparts collectively shall constitute one document representing the agreement among the parties.

12.4 Binding Agreement . This Agreement shall be binding upon and shall inure to the benefit of the parties to this Agreement and their respective successors and assigns.

12.5 Amendment . This Agreement may not be amended, discharged, or terminated, or changed orally; and any such proposed amendment, discharge, termination, or change shall be in writing and signed by the party against whom such amendment, change, discharge, or termination is sought.

12.6 Waiver of Breach . The waiver by any party of a breach of any provision of this Agreement or the failure of any party to insist upon compliance with any condition hereof shall not operate or be construed as a waiver of any subsequent breach; and no waiver shall be valid unless it is in writing and is signed by the party against whom such waiver is sought.

12.7 Extension of Noncompete Period. The period of time during which Employee is prohibited from competing with Employer pursuant to section 9 shall be extended by any length of time during which Employee is in breach of any of such covenants.

12.8 Applicable Law . This Agreement shall be construed in accordance with the laws of the State of Louisiana without reference to principles of conflicts of law.

12.9 Survival . The provisions and restrictions contained in sections 8 and 10 shall survive the termination of this Agreement.

Page -4-

SCP Executive Louisiana Employment Agreement.doc

12.10 Attorneys’ Fees and Expenses . In the event a party is required to enforce any of the rights granted under this Agreement, the other party shall be entitled to recover from the breaching party the reasonable attorneys’ fees, costs and expenses incurred by the other party as a result of such breach.

12.11 Recitals. All recitals set forth at the outset of this Agreement are incorporated by reference in it and are true.

12.12 Full Disclosure . Employee acknowledges that receipt of stock options from the Employer is conditioned upon the execution of this Agreement. Employee represents and acknowledges that Employee has carefully reviewed all of the terms and conditions in this Agreement, and has been advised of Employee’s right to seek independent legal counsel prior to execution of this Agreement.

12.13 Successors and Assigns; Benefits. This Agreement is a personal contract and the Employee’s rights and obligations hereunder may not be transferred or assigned by the Employee other than by will or the laws of dissent or distribution. The rights and obligations of Employer hereunder shall be binding upon and run in favor of the successors and assigns of Employer, and this Agreement shall inure to the benefit of Employer’s successors and assigns. In the event of any attempted assignment or transfer of rights hereunder by the Employee contrary to the provisions hereof, Employer shall have no further liability for payments hereunder.

IN WITNESS WHEREOF, the parties have entered into this Agreement the date first written above.

EMPLOYER

EMPLOYEE

SCP DISTRIBUTORS, LLC.

By: /s/ Manuel Perez de la Mesa	/s/ John M Murphy
Manuel Perez de la Mesa	John M Murphy

President

Page -5-

SCP Executive Louisiana Employment Agreement.doc

SCP DISTRIBUTORS, LLC

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made and entered into this 17th day of January, 2003, by and between SCP Distributors, LLC, a Delaware corporation (“Employer”), and Arthur D. Cook (“Employee”).

RECITALS

A. Employer operates swimming pool wholesale distribution facilities throughout the country operating as SCP Distributors, LLC of Covington (“SCP Covington”).

B. Employee is currently employed by Employer, and Employer desires to continue to employ Employee, pursuant to the terms of this Agreement.

C. The parties desire to specify their rights and responsibilities with regards to each other by entering into this Agreement.

1. EMPLOYMENT . Employer continues to employ Employee, and Employee continues to accept employment with Employer upon the terms and conditions stated in this Agreement.

2. TERM . The Agreement shall become effective upon execution by both parties, and shall remain in full force and effect until terminated pursuant to the provisions of this Agreement.

3.	COMPENSATION.

3.4 Withholding Taxes . All compensation paid to Employee pursuant to this section 3 shall be subject to all applicable state, federal and local withholding taxes.

4. DUTIES . Employee will serve as an Vice President for SCP Covington, and shall perform such other specific services or duties as Employer assigns from time to time.

Page -1-

SCP Executive Louisiana Employment Agreement.doc

6. AUTOMOBILE ALLOWANCE . Employer shall pay to Employee an amount equal to $700.00 per month, as an automobile allowance or be provided a vehicle under its guidelines for like managers in SCP.

9.	TERMINATION .

Page -2-

SCP Executive Louisiana Employment Agreement.doc

10.	RESTRICTIVE COVENANT .

10.1.2 assist others in engaging in any Competing Business in any manner described in the foregoing section 10.1.1;

10.1.4 induce other employees of Employer to terminate their employment with Employer or engage in any Competing Business.

11.	NOTICES.

Page -3-

SCP Executive Louisiana Employment Agreement.doc

All such notices shall be given to the respective parties at the addresses designated below, or to such other address as a party may designate in a like manner:

If to Employer:

Patricia H. Finger

Director of Human Resources

SCP Distributors, LLC

109 Northpark Blvd., 4 ^th Floor

Covington, LA 70433

Copy to:

Manuel Perez de la Mesa

Chief Executive Officer

		If to Employee:	Arthur D. Cook
	11.2	The refusal by a party to accept a notice does not affect the giving of the notice.
12.	MISCELLANEOUS.

12.4 Binding Agreement . This Agreement shall be binding upon and shall inure to the benefit of the parties to this Agreement and their respective successors and assigns.

12.8 Applicable Law . This Agreement shall be construed in accordance with the laws of the State of Louisiana without reference to principles of conflicts of law.

12.9 Survival . The provisions and restrictions contained in sections 8 and 10 shall survive the termination of this Agreement.

Page -4-

SCP Executive Louisiana Employment Agreement.doc

12.11 Recitals. All recitals set forth at the outset of this Agreement are incorporated by reference in it and are true.

IN WITNESS WHEREOF, the parties have entered into this Agreement the date first written above.

EMPLOYER

EMPLOYEE

SCP DISTRIBUTORS, LLC.

By: /s/ Manuel Perez de la Mesa	/s/ A. David Cook
Manuel Perez de la Mesa	A. David Cook

President

Page -5-

SCP Executive Louisiana Employment Agreement.doc

SCP DISTRIBUTORS, LLC

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made and entered into this 17th day of January, 2003, by and between SCP Distributors, LLC, a Delaware corporation (“Employer”), and Christopher W. Wilson (“Employee”).

RECITALS

A. Employer operates swimming pool wholesale distribution facilities throughout the country operating as SCP Distributors, LLC.

B. Employee is currently employed by Employer, and Employer desires to continue to employ Employee, pursuant to the terms of this Agreement.

C. The parties desire to specify their rights and responsibilities with regards to each other by entering into this Agreement.

1. EMPLOYMENT . Employer continues to employ Employee, and Employee continues to accept employment with Employer upon the terms and conditions stated in this Agreement.

2. TERM . The Agreement shall become effective upon execution by both parties, and shall remain in full force and effect until terminated pursuant to the provisions of this Agreement.

3.	COMPENSATION.

3.1 Salary . Employer shall pay Employee’s gross annual salary (“Salary”) during such time Employee is employed by Employer in the amount of $147,000 payable in equal installments not less than bi-weekly, and provide a bonus plan as described in section 3.2. All salary and bonus payments shall be subject to withholding and other applicable taxes. The annual salary may be increased, from time to time, at the sole discretion of Employer.

3.4 Withholding Taxes . All compensation paid to Employee pursuant to this section 3 shall be subject to all applicable state, federal and local withholding taxes.

4. DUTIES . Employee will serve as a Vice President for SCP, and shall perform such other specific services or duties as Employer assigns from time to time.

Page -1-

SCP California Initial Employment Agreement.doc

6. AUTOMOBILE ALLOWANCE . Employer shall pay to Employee an amount equal to $700.00 per month, as an automobile allowance or be provided a vehicle under its guidelines for like managers in SCP.

9.	TERMINATION .

9.3 If Employee terminates his employment as provided in section 9.1, Employer shall have the option of paying Employee fourteen (14) days’ compensation and immediately terminating

Page -2-

SCP California Initial Employment Agreement.doc

Employee without any further liability or obligation to Employee, including the obligation to pay Severance Compensation under Section 9.2.

10.	RESTRICTIVE COVENANT .

10.1.1 directly or indirectly engage in, represent in any way, or be connected with, any business or activity (such business or activity being hereinafter called a “Competing Business”), directly competing with any SCP branch Employee has responsibility for directing or managing within a 75 mile radius of the branch, whether such engagement shall be as an officer, director, owner, employee, partner, affiliate, or other participant in any Competing Business;

10.1.2 assist others in engaging in any Competing Business in any manner described in the foregoing section 10.1.1;

10.1.4 induce other employees of Employer to terminate their employment with Employer or engage in any Competing Business.

11.	NOTICES.

11.1 Any notice, request, or other communication required or permitted under this Agreement shall be in writing. Notice shall be deemed given only if personally delivered or sent by

Page -3-

SCP California Initial Employment Agreement.doc

registered or certified mail, return receipt requested. Any notice so mailed shall be deemed given on the date received. All such notices shall be given to the respective parties at the addresses designated below, or to such other address as a party may designate in a like manner:

If to Employer:

Patricia H. Finger

Director of Human Resources

SCP Distributors, LLC

109 Northpark Blvd., 4 ^th Floor

Covington, LA 70433

Copy to:

Manuel Perez de la Mesa

Chief Executive Officer

		If to Employee:	Christopher W. Wilson
	11.2	The refusal by a party to accept a notice does not affect the giving of the notice.
12.	MISCELLANEOUS .

12.1 Entire Agreement: Further Assurances. This Agreement and the Bonus Agreement described in Section 3.2 hereof, constitute the entire agreement between the parties pertaining to Employee’s employment as Vice President of SCP Riverside and all prior negotiations, and agreements, whether written or oral, are merged into this Agreement. Each party hereto agrees to execute and deliver such other documents, agreements or instruments and to take such further action as may be reasonably requested by the other party hereto for the implementation of this Agreement and the consummation of the transaction contemplated hereby.

12.4 Binding Agreement . This Agreement shall be binding upon and shall inure to the benefit of the parties to this Agreement and their respective successors and assigns.

12.7 Extension of Non-compete Period. The period of time during which Employee is prohibited from competing with Employer pursuant to section 9 shall be extended by any length of time during which Employee is in breach of any of such covenants.

12.8 Applicable Law . This Agreement shall be construed in accordance with the laws of the State of California without reference to principles of conflicts of law.

Page -4-

SCP California Initial Employment Agreement.doc

12.9 Survival . The provisions and restrictions contained in sections 8 and 10 shall survive the termination of this Agreement.

12.11 Recitals. All recitals set forth at the outset of this Agreement are incorporated by reference in it and are true.

IN WITNESS WHEREOF, the parties have entered into this Agreement the date first written above.

EMPLOYER

EMPLOYEE

SCP DISTRIBUTORS, LLC.

By:	/s/ Manuel Perez de la Mesa	/s/ Christopher W. Wilson
Manuel Perez de la Mesa		Christopher W. Wilson

President

Page -5-

SCP California Initial Employment Agreement.doc

SCP DISTRIBUTORS, LLC

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made and entered into this 17th day of January, 2003, by and between SCP Distributors, LLC, a Delaware corporation (“Employer”), and Stephen C. Nelson (“Employee”).

RECITALS

A. Employer operates swimming pool wholesale distribution facilities throughout the country operating as SCP Distributors, LLC of Covington (“SCP Covington”).

B. Employee is currently employed by Employer, and Employer desires to continue to employ Employee, pursuant to the terms of this Agreement.

C. The parties desire to specify their rights and responsibilities with regards to each other by entering into this Agreement.

1. EMPLOYMENT . Employer continues to employ Employee, and Employee continues to accept employment with Employer upon the terms and conditions stated in this Agreement.

2. TERM . The Agreement shall become effective upon execution by both parties, and shall remain in full force and effect until terminated pursuant to the provisions of this Agreement.

3.	COMPENSATION .

3.1 Salary . Employer shall pay Employee’s gross annual salary (“Salary”) during such time Employee is employed by Employer in the amount of $132,300 payable in equal installments not less than bi-weekly, and provide a bonus plan as described in section 3.2. All salary and bonus payments shall be subject to withholding and other applicable taxes. The annual salary may be increased, from time to time, at the sole discretion of Employer.

3.4 Withholding Taxes . All compensation paid to Employee pursuant to this section 3 shall be subject to all applicable state, federal and local withholding taxes.

4. DUTIES . Employee will serve as an Vice President for SCP Covington, and shall perform such other specific services or duties as Employer assigns from time to time.

Page -1-

SCP Executive Louisiana Employment Agreement.doc

6. AUTOMOBILE ALLOWANCE . Employer shall pay to Employee an amount equal to $700.00 per month, as an automobile allowance or be provided a vehicle under its guidelines for like managers in SCP.

9.	TERMINATION.

Page -2-

SCP Executive Louisiana Employment Agreement.doc

10.	RESTRICTIVE COVENANT .

10.1.2 assist others in engaging in any Competing Business in any manner described in the foregoing section 10.1.1;

10.1.4 induce other employees of Employer to terminate their employment with Employer or engage in any Competing Business.

11.	NOTICES.

Page -3-

SCP Executive Louisiana Employment Agreement.doc

date received. All such notices shall be given to the respective parties at the addresses designated below, or to such other address as a party may designate in a like manner:

If to Employer:

Patricia H. Finger

Director of Human Resources

SCP Distributors, LLC

109 Northpark Blvd., 4 ^th Floor

Covington, LA 70433

Copy to:

Manuel Perez de la Mesa

Chief Executive Officer

		If to Employee:	Stephen C. Nelson
	11.2	The refusal by a party to accept a notice does not affect the giving of the notice.
12.	MISCELLANEOUS.

12.4 Binding Agreement . This Agreement shall be binding upon and shall inure to the benefit of the parties to this Agreement and their respective successors and assigns.

12.8 Applicable Law . This Agreement shall be construed in accordance with the laws of the State of Louisiana without reference to principles of conflicts of law.

12.9 Survival . The provisions and restrictions contained in sections 8 and 10 shall survive the termination of this Agreement.

Page -4-

SCP Executive Louisiana Employment Agreement.doc

12.11 Recitals. All recitals set forth at the outset of this Agreement are incorporated by reference in it and are true.

IN WITNESS WHEREOF, the parties have entered into this Agreement the date first written above.

EMPLOYER

EMPLOYEE

SCP DISTRIBUTORS, LLC.

By: /s/ Manuel Perez de la Mesa	/s/ Stephen C. Nelson
Manuel Perez de la Mesa	Stephen C. Nelson

President

Page -5-

SCP Executive Louisiana Employment Agreement.doc

Compensation of Non-Employee Directors

Fees for Non-Employee Directors

Annual Cash Retainer Fees. Non-employee Directors receive an annual cash retainer of $8,000. In addition, non-employee Directors receive an attendance fee of $4,000 for each Board meeting attended.

Committee Meeting Fees. Non-employee Directors that are committee members receive an attendance fee of $2,000 for each committee meeting attended. The chair of each committee receives an attendance fee of $4,000 for each committee meeting attended.

Telephone Conference Meeting Fees . Non-employee Directors receive an attendance fee of $1,000 for each scheduled telephone meeting attended in lieu of any Board or Committee meeting fees referenced above.

All directors are reimbursed for reasonable out-of-pocket expenses incurred in attending Board and committee meetings.

Stock Options

Non-employee Directors are annually granted an option to purchase 8,500 shares of Common Stock pursuant to the Company’s Non-Employee Directors Equity Incentive Plan (the “Directors’ Plan”). Except under certain limited circumstances, no options granted pursuant to the Director’s Plan become exercisable earlier than one year after the date of grant. The option price per share of Common Stock under the Directors’ Plan is equal to 100% of the fair market value of the Common Stock at the date of grant. Each option granted under the Directors’ Plan is exercisable for ten years after the date of grant. Non-employee Directors may elect to receive additional shares of Common Stock under the Directors’ Plan in lieu of the cash compensation otherwise due them.

EXECUTION COPY

$120,000,000

CREDIT AGREEMENT

dated as of November 2, 2004,

by and among

SCP POOL CORPORATION,

as US Borrower,

SCP DISTRIBUTORS INC.,

as Canadian Borrower,

the Lenders referred to herein,

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent,

Swingline Lender and Issuing Lender,

CONGRESS FINANCIAL CORPORATION (CANADA),

as Canadian Dollar Lender,

JPMORGAN CHASE BANK,

as Syndication Agent,

HIBERNIA NATIONAL BANK,

as Documentation Agent

and

WELLS FARGO BANK NATIONAL ASSOCIATION,

as Documentation Agent

	2270524.10
LIB: CHARLOTTE

WACHOVIA CAPITAL MARKETS, LLC

as Sole Lead Arranger and Sole Book Manager

	2270524.10
LIB: CHARLOTTE

TABLE OF CONTENTS

ARTICLE I DEFINITIONS

SECTION 1.1

Definitions

SECTION 1.2

Other Definitions and Provisions

SECTION 1.3

Accounting Terms

SECTION 1.4

UCC Terms

SECTION 1.5

Rounding

SECTION 1.6

References to Agreement and Laws

SECTION 1.7

Times of Day

SECTION 1.8

Letter of Credit Amounts

ARTICLE II

REVOLVING CREDIT FACILITY

SECTION 2.1

Revolving Credit Loans

SECTION 2.2

Canadian Dollar Loans.

SECTION 2.3

Swingline Loans

SECTION 2.4

Procedure for Advances of Revolving Credit Loans, Canadian Dollar Loans and Swingline Loans 28

SECTION 2.5

Repayment of Loans

SECTION 2.6

Permanent Reduction of the Aggregate Commitment

SECTION 2.7

Termination of Revolving Credit Facility

SECTION 2.8

Nature of Obligations

SECTION 2.9

Increase of Aggregate Commitment

ARTICLE III

LETTER OF CREDIT FACILITY

SECTION 3.1

L/C Commitment

SECTION 3.2

Procedure for Issuance of Letters of Credit

SECTION 3.3

Commissions and Other Charges

SECTION 3.4

L/C Participations

SECTION 3.5

Reimbursement Obligation of the US Borrower

SECTION 3.6

Obligations Absolute

SECTION 3.7

Effect of Letter of Credit Application

ARTICLE IV

GENERAL LOAN PROVISIONS

SECTION 4.1

Interest

SECTION 4.2

Notice and Manner of Conversion or Continuation of Revolving Credit Loans

SECTION 4.3

Fees

SECTION 4.4

Manner of Payment

SECTION 4.5

Evidence of Indebtedness

SECTION 4.6

Adjustments

SECTION 4.7

Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by the Administrative Agent 44

SECTION 4.8	Changed Circumstances					44
SECTION 4.9	Indemnity			45
SECTION 4.10		Increased Costs			46
SECTION 4.11		Taxes	48
SECTION 4.12		Mitigation Obligations; Replacement of Lenders					50

	2270524.10
LIB: CHARLOTTE

SECTION 4.13

Redenomination of Canadian Dollar Loans

SECTION 4.14

US Borrower as Agent for the Canadian Borrower

ARTICLE V

CLOSING; CONDITIONS OF CLOSING AND BORROWING

SECTION 5.1

Closing

SECTION 5.2

Conditions to Closing and Initial Extensions of Credit

SECTION 5.3

Conditions to All Extensions of Credit

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF THE BORROWERS

SECTION 6.1

Representations and Warranties

SECTION 6.2

Survival of Representations and Warranties, Etc

ARTICLE VII

FINANCIAL INFORMATION AND NOTICES

SECTION 7.1

Financial Statements and Projections

SECTION 7.2

Officer’s Compliance Certificate

SECTION 7.3

Accountants’ Certificate

SECTION 7.4

Other Reports

SECTION 7.5

Notice of Litigation and Other Matters

SECTION 7.6

Accuracy of Information

ARTICLE VIII

AFFIRMATIVE COVENANTS

SECTION 8.1

Preservation of Corporate Existence and Related Matters

SECTION 8.2

Maintenance of Property

SECTION 8.3

Insurance

SECTION 8.4

Accounting Methods and Financial Records

SECTION 8.5

Payment and Performance of Obligations

SECTION 8.6

Compliance With Laws and Approvals

SECTION 8.7

Environmental Laws

SECTION 8.8

Compliance with ERISA

SECTION 8.9

Compliance With Agreements

SECTION 8.10

Visits and Inspections

SECTION 8.11

Additional Subsidiaries

SECTION 8.12

Use of Proceeds

SECTION 8.13

Further Assurances

ARTICLE IX

FINANCIAL COVENANTS

SECTION 9.1

Average Total Leverage Ratio

SECTION 9.2

Fixed Charge Coverage Ratio

ARTICLE X

NEGATIVE COVENANTS

SECTION 10.1

Limitations on Indebtedness

SECTION 10.2

Limitations on Liens

SECTION 10.3

Limitations on Loans, Advances, Investments and Acquisitions

SECTION 10.4

Limitations on Mergers and Liquidation

SECTION 10.5

Limitations on Sale of Assets

SECTION 10.6

Limitations on Dividends and Distributions

SECTION 10.7

Limitations on Exchange and Issuance of Capital Stock

SECTION 10.8

Transactions with Affiliates.

SECTION 10.9

Certain Accounting Changes; Organizational Documents

SECTION 10.10

Amendments; Payments and Prepayments of Subordinated Indebtedness

	2270524.10
LIB: CHARLOTTE

SECTION 10.11

Restrictive Agreements

SECTION 10.12

Nature of Business.

ARTICLE XI

UNCONDITIONAL US BORROWER GUARANTY

SECTION 11.1

Guaranty of Obligations

SECTION 11.2

Nature of Guaranty

SECTION 11.3

Demand by the Administrative Agent

SECTION 11.4

Waivers

SECTION 11.5

Modification of Loan Documents etc.

SECTION 11.6

SECTION 11.7

ARTICLE XII

SECTION 12.1

SECTION 12.2

SECTION 12.3

Rights and Remedies Cumulative; Non-Waiver; etc

SECTION 12.4

Crediting of Payments and Proceeds

SECTION 12.5

Administrative Agent May File Proofs of Claim

SECTION 12.6

Judgment Currency

ARTICLE XIII

THE ADMINISTRATIVE AGENT

SECTION 13.1

Appointment and Authority

SECTION 13.2

Delegation of Duties

SECTION 13.3

Exculpatory Provisions

SECTION 13.4

Reliance by the Administrative Agent

SECTION 13.5

Notice of Default

SECTION 13.6

Non-Reliance on the Administrative Agent and Other Lenders

SECTION 13.7

Indemnification

SECTION 13.8

The Administrative Agent in Its Individual Capacity

SECTION 13.9

Resignation of the Administrative Agent; Successor Administrative Agent

SECTION 13.10

Guaranty Matters

SECTION 13.11

Other Agents, Arrangers and Managers

ARTICLE XIV

MISCELLANEOUS

SECTION 14.1

Notices

SECTION 14.2

Amendments, Waivers and Consents

SECTION 14.3

Expenses; Indemnity

SECTION 14.4

Set-off

SECTION 14.5

Governing Law

SECTION 14.6

Jurisdiction and Venue

SECTION 14.7

Binding Arbitration; Waiver of Jury Trial

SECTION 14.8

Reversal of Payments

SECTION 14.9

Injunctive Relief; Punitive Damages

SECTION 14.10

Accounting Matters

SECTION 14.11

Successors and Assigns; Participations

100

SECTION 14.12

Confidentiality

102

SECTION 14.13

Performance of Duties

103

SECTION 14.14

All Powers Coupled with Interest

103

iii

	2270524.10
LIB: CHARLOTTE

SECTION 14.15

Survival of Indemnities

103

SECTION 14.16

Titles and Captions

103

SECTION 14.17

Severability of Provisions

103

SECTION 14.18

Counterparts

104

SECTION 14.19

Integration

104

SECTION 14.20

Term of Agreement

104

SECTION 14.21

Advice of Counsel, No Strict Construction.

104

SECTION 14.22

Inconsistencies with Other Documents; Independent Effect of Covenants

104

	2270524.10
LIB: CHARLOTTE

EXHIBITS

Exhibit A-1

Form of Revolving Credit Note

Exhibit A-2

Form of Swingline Note

Exhibit A-3

Form of Canadian Note

Exhibit B

Form of Notice of Borrowing

Exhibit C

Form of Notice of Account Designation

Exhibit D

Form of Notice of Repayment

Exhibit E

Form of Notice of Conversion/Continuation

Exhibit F

Form of Officer’s Compliance Certificate

Exhibit G

Form of Assignment and Assumption

Exhibit H

Form of Subsidiary Guaranty Agreement

SCHEDULES

Schedule 1.1

Existing Letters of Credit

Schedule 6.1(a)

Jurisdictions of Organization and Qualification

Schedule 6.1(b)

Subsidiaries and Capitalization

Schedule 6.1(i)

ERISA Plans

Schedule 6.1(l)

Material Contracts

Schedule 6.1(m)

Labor and Collective Bargaining Agreements

Schedule 6.1(t)

Indebtedness and Guaranty Obligations

Schedule 6.1(u)

Litigation

Schedule 10.2

Existing Liens

Schedule 10.3

- Existing Loans, Advances and Investments

	2270524.10
LIB: CHARLOTTE

CREDIT AGREEMENT, dated as of November 2, 2004, by and among SCP POOL CORPORATION, a Delaware corporation (the “ US Borrower ”), SCP DISTRIBUTORS INC., a company organized under the laws of Ontario (the “ Canadian Borrower ”), the lenders who are or may become a party to this Agreement (collectively, the “ Lenders ”), WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent for the Lenders, CONGRESS FINANCIAL CORPORATION (CANADA), as Canadian Dollar Lender, JPMORGAN CHASE BANK, as Syndication Agent, HIBERNIA NATIONAL BANK, as Documentation Agent and WELLS FARGO BANK NATIONAL ASSOCIATION, as Documentation Agent.

STATEMENT OF PURPOSE

The Borrowers have requested, and the Lenders have agreed, to extend certain credit facilities to the Borrowers on the terms and conditions of this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, such parties hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1 Definitions . The following terms when used in this Agreement shall have the meanings assigned to them below:

“ Accounts Securitization ” means, with respect to the US Borrower and its Subsidiaries (other than Superior Commerce), any pledge, sale, transfer, contribution, conveyance or other disposition of (i) accounts, chattel paper, instruments or general intangibles (each as defined in the UCC) arising in connection with the sale of goods or the rendering of services by such Person, including, without limitation, the related rights to any finance, interest, late payment charges or similar charges (such items, the “ Receivables ”), (ii) such Person’s interest in the inventory or goods the sale of which by such Person gave rise to such Receivable (but only to the extent such inventory or goods consists of returned or repossessed inventory or goods, if any), (iii) all other guaranties, letters of credit, insurance and security interests or liens purporting to secure or support payment of such Receivable, (iv) all insurance contracts, service contracts, books and records associated with such Receivable, (v) any lockbox, post office box or similar deposit account related solely to the accounts being transferred, (vi) cash collections and cash proceeds of such Receivable and (vii) any proceeds of the foregoing (all such items referenced in clauses (i) through (vii), the “ Transferred Assets ”) which such sale, transfer, contribution, conveyance or other disposition is funded by the recipient of such Transferred Assets in whole or in part by borrowings or the issuance of instruments or securities that are paid principally from the cash derived from such Transferred Assets; provided that the aggregate amount of gross proceeds available to the US Borrower or any Subsidiary in connection with all such transactions shall not at any time exceed $125,000,000 and provided further that such sale, transfer, contribution, conveyance or other disposition and any Indebtedness arising from such sale, transfer, contribution, conveyance or other disposition shall be without recourse to the US Borrower or any of its Subsidiaries (other than Superior Commerce) except with respect to (A) reductions in the balance of such Receivable as a result of any defective or rejected goods or set off by the obligor of such Receivable transferred by such Person, (B) breaches of representations or warranties by such Person in the Receivables Sale Agreement or any other receivables sale agreements which contain representations and warranties which are no broader in scope and obligation than the representations and warranties contained in the Receivables Sale Agreement and (C) indemnification of Superior Commerce to the extent provided in the Receivables Sale Agreement or any other receivables sale agreements which contain indemnification terms and provisions which are no broader in scope and obligation than the terms and provisions contained in the Receivables Sale Agreement.

“ Administrative Agent ” means Wachovia in its capacity as Administrative Agent hereunder, and any successor thereto appointed pursuant to Section 13.9 .

	2270524.10
LIB: CHARLOTTE

“ Administrative Agent’s Office ” means the office of the Administrative Agent specified in or determined in accordance with the provisions of Section 14.1(c).

“ Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

“ Affiliate ” means, with respect to any Person, any other Person (other than with respect to any Borrower or any Subsidiary thereof) which directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person or any Subsidiary thereof. The term “control” means (a) the power to vote ten percent (10%) or more of the securities or other equity interests of a Person having ordinary voting power, or (b) the possession, directly or indirectly, of any other power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

“ Aggregate Commitment ” means the aggregate amount of the Lenders’ Commitments hereunder, as such amount may be reduced or otherwise modified at any time or from time to time pursuant to the terms hereof. On the Closing Date, the Aggregate Commitment shall be One Hundred Twenty Million Dollars ($120,000,000).

“ Agreement ” means this Credit Agreement, as amended, restated, supplemented or otherwise modified from time to time.

“ Applicable Law ” means all applicable provisions of constitutions, laws, statutes, ordinances, rules, treaties, regulations, permits, licenses, approvals, interpretations and orders of courts or Governmental Authorities and all orders and decrees of all courts and arbitrators.

“ Applicable Margin ” means the corresponding percentages per annum as set forth below:

Pricing Level	Average Total Leverage Ratio	Facility Fee	LIBOR +	Base Rate + and Canadian Base Rate+
1	Greater than or equal to 2.50 to 1.00	0.250%	1.250%	0.000%
2	Greater than or equal to 2.00 to 1.00, but less than 2.50 to 1.00	0.225%	1.025%	0.000%
3	Greater than or equal to 1.50 to 1.00, but less than 2.00 to 1.00	0.200%	0.800%	0.000%
4	Greater than or equal to 1.00 to 1.00 but less than 1.50 to 1.00	0.175%	0.700%	0.000%
5	Less than 1.00 to 1.00	0.150%	0.600%	0.000%

The Applicable Margin shall be determined and adjusted quarterly on the date (each a “ Calculation Date ”) ten (10) Business Days after the date by which the Borrowers are required to provide an Officer’s Compliance Certificate pursuant to Section 7.2 for the most recently ended fiscal quarter of the US Borrower; provided , however , that (a) the Applicable Margin shall be based on Pricing Level 4 until the first Calculation Date occurring after the Closing Date and, thereafter the Pricing Level shall be determined by reference to the Average Total Leverage Ratio as of the last day of the most recently ended fiscal quarter of the US Borrower preceding the applicable Calculation Date, and (b) if the Borrowers fail to provide the Officer’s Compliance Certificate as required by Section 7.2 for the most recently ended fiscal quarter of the US Borrower preceding the applicable Calculation Date, the Applicable Margin from such Calculation Date shall be based on Pricing Level 1 until such time as an appropriate Officer’s Compliance Certificate is provided, at which time the Pricing Level shall be determined by reference to the Average Total Leverage Ratio as of the last day of the most recently ended fiscal quarter of the US Borrower preceding such Calculation Date. The Applicable Margin shall be effective from one Calculation Date until the next Calculation

	2270524.10
LIB: CHARLOTTE

Date. Any adjustment in the Applicable Margin shall be applicable to all Extensions of Credit then existing or subsequently made or issued.

“ Approved Fund ” means any Person (other than a natural Person), including, without limitation, any special purpose entity, that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business; provided , that such Approved Fund must be administered by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“ Arbitration Rules ” has the meaning assigned thereto in Section 14.7(a).

“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 14.11 ), and accepted by the Administrative Agent, in substantially the form of Exhibit G or any other form approved by the Administrative Agent.

“ Attributable Indebtedness ” means, on any date, (a) in respect of any Capital Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease, the capitalized amount or principal amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a Capital Lease.

“ Average Accounts Securitization Proceeds ” means, for any period, as determined on a Consolidated basis, without duplication, for the US Borrower and its Subsidiaries, the average for such period of the total amount of borrowings or issuances of instruments or securities in connection with any Accounts Securitization as of each calendar month end during such period; provided that if any calendar month ending as of any date set forth below is included in any period for which the Average Accounts Securitization is being determined, the total amount of borrowings or issuances of instruments or securities as of such calendar month end shall be deemed to be the amount set forth below opposite such date:

Calendar		Total Borrowings or
Month Ending			Issuances as of such Calendar Month End
	November 30, 2003			$45,767,000
	December 31, 2003			$42,418,000
	January 31, 2004			$33,478,000
	February 29, 2004			$40,838,000
	March 31, 2004			$49,998,000
	April 30, 2004			$83,203,000
	May 31, 2004			$100,000,000
	June 30, 2004			$100,000,000
	July 31, 2004			$97,000,000
	August 31, 2004			$79,480,000
	September 30, 2004			$69,770,000
	October 31, 2004			$59,670,000

“ Average Total Funded Indebtedness ” means, for any period, as determined on a Consolidated basis, without duplication, for the US Borrower and its Subsidiaries in accordance with GAAP, the average for such period of the Total Funded Indebtedness as of each calendar month end during such period; provided that if any calendar month ending as of any date set forth below is included in any period for which the Average Total Funded Indebtedness is being determined, the Total Funded Indebtedness as of such calendar month end shall be deemed to be the amount set forth below opposite such date:

Calendar
Month Ending		Total Funded Indebtedness as of such Calendar Month End
	November 30, 2003		$ 44,289,538

	2270524.10
LIB: CHARLOTTE

December 31, 2003	$ 48,863,621
January 31, 2004	$ 70,382,695
February 29, 2004	$ 74,096,929
March 31, 2004	$103,259,639
April 30, 2004	$ 87,908,276
May 31, 2004	$ 80,183,191
June 30, 2004	$ 64,328,922
July 31, 2004	$ 60,452,652
August 31, 2004	$ 37,215,034
September 30, 2004	$ 35,671,129
October 31, 2004	$ 53,537,267

“ Average Total Leverage Ratio ” means the ratio determined pursuant to Section 9.1 .
“ Bankruptcy Event of Default ” means any Event of Default pursuant to Sections 12.1(j) or (k).

“ Base Rate ” means, at any time, the higher of (a) the Prime Rate and (b) the Federal Funds Rate plus 1/2 of 1%; each change in the Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate or the Federal Funds Rate.

“ Base Rate Loan ” means any Loan bearing interest at a rate based upon the Base Rate as provided in Section 4.1(a).

“ Benefited Lender ” has the meaning assigned thereto in Section 4.6 .
“ Borrowers ” means, collectively, the US Borrower and the Canadian Borrower.
“Business Day ” means:

(a) for all purposes other than as set forth in clauses (b) or (c) below, any day other than a Saturday, Sunday or legal holiday on which banks in Charlotte, North Carolina and New York, New York, are open for the conduct of their commercial banking business;

(b) with respect to all notices and determinations in connection with, and payments of principal and interest on, any LIBOR Rate Loan, any day that is a Business Day described in clause (a) and that is also a day for trading by and between banks in Dollar deposits in the London interbank market; and

(c) with respect to all notices and determinations in connection with, and payments of principal and interest on, any Canadian Dollar Loan, any day that is a Business Day described in clause (a) and on which banks are open for business in Toronto, Ontario.

“ Calculation Date ” has the meaning assigned thereto in the definition of Applicable Margin.

“ Canadian Base Rate ” means at any time, the greater of (i) the rate of interest publicly announced from time to time by the Canadian Reference Bank as its prime rate in effect for determining interest rates on Canadian Dollar denominated commercial loans in Canada (which such rate is not necessarily the most favored rate of the Canadian Reference Bank and the Canadian Reference Bank may lend to its customers at rates that are at, above or below such rate) or, if the Canadian Reference Bank ceases to announce a rate so designated, any similar successor rate designated by the Canadian Reference Bank and (ii) the annual rate of interest equal to the sum of (A) the CDOR Rate at such time plus (B) one percent (1%) per annum.

“ Canadian Base Rate Loan ” means any Canadian Dollar Loan which bears interest at a rate determined by reference to the Canadian Base Rate.

“ Canadian Borrower ” has the meaning assigned thereto in the introductory paragraph hereto.
“ Canadian Dollar” or “C$” means, at any time of determination, the then official currency of Canada.

	2270524.10
LIB: CHARLOTTE

“ Canadian Dollar Commitment ” means the lesser of (a) Five Million Dollars ($5,000,000) and (b) the Aggregate Commitment.

“ Canadian Dollar Lender ” means Congress Financial Corporation (Canada), in its capacity as Canadian Dollar Lender hereunder.

“ Canadian Dollar Loan ” means any revolving credit loan made by the Canadian Dollar Lender pursuant to Section 2.2 .

“ Canadian Note ” means the Canadian Note made by the Canadian Borrower payable to the order of the Canadian Dollar Lender, substantially in the form of Exhibit A-3 hereto, evidencing the Canadian Dollar Loans, and any amendments, supplements and modifications thereto, any substitutes therefor and any replacements, restatements, renewals or extensions thereof, in whole or in part.

“ Canadian Reference Bank ” means Bank of Montreal, or its successor and assigns, or such other bank as the Canadian Dollar Lender may from time to time designate.

“ Capital Asset ” means, with respect to the US Borrower and its Subsidiaries, any asset that should, in accordance with GAAP, be classified and accounted for as a capital asset on a Consolidated balance sheet of the US Borrower and its Subsidiaries.

“ Capital Expenditures ” means with respect to the US Borrower and its Subsidiaries for any period, the aggregate cost of all Capital Assets acquired by the US Borrower and its Subsidiaries during such period, as determined in accordance with GAAP.

“ Capital Lease ” means any lease of any property by the US Borrower or any of its Subsidiaries, as lessee, that should, in accordance with GAAP, be classified and accounted for as a capital lease on a Consolidated balance sheet of the US Borrower and its Subsidiaries.

“ Capital Stock ” means (a) in the case of a corporation, capital stock, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (c) in the case of a partnership, partnership interests (whether general or limited), (d) in the case of a limited liability company, membership interests and (e) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

“ Cash Equivalents ” means any investments permitted pursuant to Section 10.3(b).

“ CDOR Rate ” means the rate of interest per annum determined on the basis of an average thirty (30) day rate applicable to Canadian Dollar bankers’ acceptances appearing on the “Reuters Screen CDOR Page” (as defined in the International Swap Dealer Association, Inc.’s definitions, as amended, restated, supplemented or otherwise modified from time to time) as of 10:00 a.m. (Toronto, Ontario time) one Canadian Business Day prior to the first day of the applicable Interest Period (rounded upward, if necessary, to the nearest 1/100 ^th of 1%). If, for any reason, such rate does not appear on the Reuters Screen CDOR Page, then the “CDOR Rate” shall be determined by the Canadian Dollar Lender to be the arithmetic average of the rate per annum at which deposits in Canadian Dollars would be offered by first class banks in Canada to the Canadian Dollar Lender. Each calculation by the Canadian Dollar Lender of the CDOR Rate shall be conclusive and binding for all purposes, absent manifest error.

“ Change in Control ” means (a) any event or series of events in which in any person or group of persons (within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended) acting in concert obtain beneficial ownership or control in one or more series of transactions of more than thirty percent (30%) of the Capital Stock or thirty percent (30%) of the voting power of the US Borrower entitled to vote in the election of members of the board of directors of the US Borrower, (b) during any period of twelve (12) consecutive months, a majority of the members of the board of directors of the US Borrower cease to be composed of individuals (i) who were members of the board of directors on the first day of such period, (ii) whose election or nomination to the board of directors was approved by individuals who comprised a majority of the board of directors on the first day of such period or (iii) whose election or nomination to the board of directors was approved by (A) individuals who were members of the board of directors on the first day of such period or (B) individuals whose election or nomination to the board of directors was approved by a majority of the board of directors on the first day of such period; provided that in each case such individuals constituted a majority of the board of directors at the time of such election or

	2270524.10
LIB: CHARLOTTE

nomination, or (c) there shall have occurred under any indenture or other evidence of Indebtedness in excess of $5,000,000 any “change in control” (as defined in such indenture or other evidence of Indebtedness) obligating the US Borrower to repurchase, redeem or repay all or any part of the Indebtedness or Capital Stock provided for therein.

“ Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.

“ Closing Date ” means the date of this Agreement or such later Business Day upon which each condition described in Section 5.2 shall be satisfied or waived in all respects in a manner acceptable to the Administrative Agent, in its sole discretion.

“ Code ” means the Internal Revenue Code of 1986, and the rules and regulations thereunder, each as amended or modified from time to time.

“ Commitment ” means, as to any Lender, the obligation of such Lender to make Loans (including, without limitation, to participate in Canadian Dollar Loans and Swingline Loans) to and issue or participate in Letters of Credit issued for the account of any Borrower hereunder, in an aggregate principal or face amount at any time outstanding not to exceed the amount set forth opposite such Lender’s name on the Register, as the same may be reduced or modified at any time or from time to time pursuant to the terms hereof.

“ Commitment Percentage ” means, as to any Lender at any time, the ratio of (a) the amount of the Commitment of such Lender to (b) the Aggregate Commitment.

“ Consolidated ” means, when used with reference to financial statements or financial statement items of the US Borrower and its Subsidiaries, such statements or items on a consolidated basis in accordance with applicable principles of consolidation under GAAP.

“ Credit Facility ” means, collectively, the Revolving Credit Facility, the Swingline Facility and the L/C Facility.

“ Credit Parties ” means, collectively, the US Borrower, the Canadian Borrower and the Subsidiary Guarantors.

“ Default ” means any of the events specified in Section 12.1 which with the passage of time, the giving of notice or any other condition, would constitute an Event of Default.

“ Defaulting Lender ” means any Lender that (a) has failed to fund any portion of the Revolving Credit Loans, participations in Canadian Dollar Loans, participations in Swingline Loans or participations in L/C Obligations required to be funded by it hereunder within one (1) Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within one (1) Business Day of the date when due, unless such amount is the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.

“ Disputes ” has the meaning set forth in Section 14.7 .

“ Dollar Amount ” means, (a) with respect to each Loan made or continued (or to be made or continued) in Dollars, the principal amount thereof and (b) with respect to each Loan made or continued (or to be made or continued) in Canadian Dollars, the amount of Dollars which is equivalent to the principal amount of such Loan at the most favorable spot exchange rate determined by the Administrative Agent at approximately 11:00 a.m. (Toronto, Ontario time) two (2) Business Days before such Loan is made or continued (or to be made or continued. When used with respect to any other sum expressed in Canadian Dollars, “Dollar Amount” shall mean the amount of Dollars which is equivalent to the amount so expressed in Canadian Dollars at the most favorable spot exchange rate determined by the Administrative Agent to be available to it at the relevant time.

“ Dollars” or “$” means, unless otherwise qualified, dollars in lawful currency of the United States.

	2270524.10
LIB: CHARLOTTE

“ Domestic Subsidiary ” means any Subsidiary organized under the laws of any political subdivision of the United States.

“ EBITDA ” means, for any period, the sum of the following determined on a Consolidated basis, without duplication, for the US Borrower and its Subsidiaries in accordance with GAAP: (a) Net Income for such period plus (b) the sum of the following to the extent deducted in determining Net Income: (i) income and franchise taxes, (ii) Interest Expense, and (iii) amortization, (iv) depreciation, and (v) extraordinary losses incurred other than in the ordinary course of business less (c) any extraordinary gains realized other than in the ordinary course of business.

“ EBITR ” means, for any period, the sum of the following determined on a Consolidated basis, without duplication, for the US Borrower and its Subsidiaries in accordance with GAAP: (a) Net Income for such period plus (b) the sum of the following to the extent deducted in determining Net Income: (i) income and franchise taxes, (ii) Interest Expense, (iii) Rental Expense and (iv) extraordinary losses incurred other than in the ordinary course of business less (c) any extraordinary gains realized other than in the ordinary course of business.

“ Eligible Assignee ” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent, (ii) in the case of any assignment of a Commitment, the Canadian Dollar Lender, the Swingline Lender and the Issuing Lender, and (iii) unless a Default or Event of Default has occurred and is continuing, the Borrowers (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include the US Borrower, the Canadian Borrower or any of their Affiliates or Subsidiaries.

“ Employee Benefit Plan ” means any employee benefit plan within the meaning of Section 3(3) of ERISA which (a) is maintained for employees of the US Borrower or any ERISA Affiliate or (b) has at any time within the preceding six (6) years been maintained for the employees of the US Borrower or any current or former ERISA Affiliate.

“ Environmental Claims ” means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, accusations, allegations, notices of noncompliance or violation, investigations (other than internal reports prepared by any Person in the ordinary course of business and not in response to any third party action or request of any kind) or proceedings relating in any way to any actual or alleged violation of or liability under any Environmental Law or relating to any permit issued, or any approval given, under any such Environmental Law, including, without limitation, any and all claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages, contribution, indemnification cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to human health or the environment.

“ Environmental Laws ” means any and all federal, foreign, state, provincial and local laws, statutes, ordinances, codes, rules, standards and regulations, permits, licenses, approvals, interpretations and orders of courts or Governmental Authorities, relating to the protection of human health or the environment, including, but not limited to, requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation of Hazardous Materials.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, and the rules and regulations thereunder, each as amended or modified from time to time.

“ ERISA Affiliate ” means any Person who together with any Credit Party is treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA.

“ Eurodollar Reserve Percentage ” means, for any day, the percentage (expressed as a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%) which is in effect for such day as prescribed by the Board of Governors of the Federal Reserve system (or any successor) for determining the maximum reserve requirement (including, without limitation, any basic, supplemental or emergency reserves) in respect of eurocurrency liabilities or any similar category of liabilities for a member bank of the Federal Reserve System in New York City.

“ Event of Default ” means any of the events specified in Section 12.1 ; provided that any requirement for passage of time, giving of notice, or any other condition, has been satisfied.

	2270524.10
LIB: CHARLOTTE

“ Excluded Taxes ” means, with respect to the Administrative Agent, any Lender, the Canadian Dollar Lender, the Issuing Lender or any other recipient of any payment to be made by or on account of any obligation of any Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which such Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrowers under Section 4.12(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new lending office) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 4.11(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the applicable Borrower with respect to such withholding tax pursuant to Section 4.11(a). Notwithstanding anything to the contrary contained in this definition, “Excluded Taxes” shall not include any withholding tax imposed at any time on payments made by or on behalf of the Canadian Borrower (including, without limitation, any payment made to any Lender under Section 2.2(b)(iii)) or any other Foreign Subsidiary to any Lender hereunder or under any other Loan Document, provided that such Lender shall have complied with the last paragraph of Section 4.11(e).

“ Existing Facility ” means that certain credit facility established pursuant to the Credit Agreement dated as of November 27, 2001 by among the US Borrower, as borrower, the lenders party thereto, as lenders and Bank One, NA, as administrative agent (as amended, restated, supplemented or otherwise modified).

“ Existing Letters of Credit ” means all letters of credit described on Schedule 1.1 .

“ Extensions of Credit ” means, as to any Lender at any time, (a) an amount equal to the sum of (i) the aggregate principal amount of all Revolving Credit Loans made by such Lender then outstanding, (ii) such Lender’s Commitment Percentage of the L/C Obligations then outstanding, (iii) such Lender’s Commitment Percentage of the Swingline Loans then outstanding and (iv) such Lender’s Commitment Percentage of the Canadian Dollar Loans then outstanding, or (b) the making of any Loan or participation in any Letter of Credit by such Lender, as the context requires.

“ FDIC ” means the Federal Deposit Insurance Corporation, or any successor thereto.

“ Federal Funds Rate ” means, the rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) representing the daily effective federal funds rate as quoted by the Administrative Agent and confirmed in Federal Reserve Board Statistical Release H.15 (519) or any successor or substitute publication selected by the Administrative Agent. If, for any reason, such rate is not available, then “Federal Funds Rate” shall mean a daily rate which is determined, in the opinion of the Administrative Agent, to be the rate at which federal funds are being offered for sale in the national federal funds market at 9:00 a.m. (Charlotte time). Rates for weekends or holidays shall be the same as the rate for the most immediately preceding Business Day.

“ Fee Letter ” means the separate fee letter agreement executed by the US Borrower and the Administrative Agent and/or certain of its affiliates dated October 8, 2004.

“ Fiscal Year ” means the fiscal year of the US Borrower and its Subsidiaries ending on December 31.

“ Foreign Lender ” means, with respect to any Borrower, any Lender that is organized under the laws of a jurisdiction other than that in which such Borrower is resident for tax purposes. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“ Foreign Subsidiary ” means any Subsidiary that is not a Domestic Subsidiary.

“ GAAP ” means generally accepted accounting principles, as recognized by the American Institute of Certified Public Accountants and the Financial Accounting Standards Board, consistently applied and maintained on a consistent basis for the US Borrower and its Subsidiaries throughout the period indicated and (subject to Section 14.10 ) consistent with the prior financial practice of the US Borrower and its Subsidiaries.

	2270524.10
LIB: CHARLOTTE

“ Governmental Approvals ” means all authorizations, consents, approvals, permits, licenses and exemptions of, registrations and filings with, and reports to, all Governmental Authorities.

“ Governmental Authority ” means the government of the United States or any other nation, or of any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“ Guaranty Obligation ” means, with respect to the US Borrower and its Subsidiaries, without duplication, any obligation, contingent or otherwise, of any such Person pursuant to which such Person has directly or indirectly guaranteed any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of any such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement condition or otherwise) or (b) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided , that the term Guaranty Obligation shall not include endorsements for collection or deposit in the ordinary course of business.

“ Hazardous Materials ” means any substances or materials (a) which are or become defined as hazardous wastes, hazardous substances, pollutants, contaminants, chemical substances or mixtures or toxic substances under any Environmental Law, (b) which are toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human health or the environment and are or become regulated by any Governmental Authority, (c) the presence of which require investigation or remediation under any Environmental Law or common law, (d) the discharge or emission or release of which requires a permit or license under any Environmental Law or other Governmental Approval, (e) which are deemed to constitute a nuisance or a trespass which pose a health or safety hazard to Persons or neighboring properties, (f) which consist of underground or aboveground storage tanks, whether empty, filled or partially filled with any substance, or (g) which contain, without limitation, asbestos, polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.

“ Hedging Agreement ” means any agreement with respect to any Interest Rate Contract, forward rate agreement, commodity swap, forward foreign exchange agreement, currency swap agreement, cross-currency rate swap agreement, currency option agreement or other agreement or arrangement designed to alter the risks of any Person arising from fluctuations in interest rates, currency values or commodity prices, all as amended, restated, supplemented or otherwise modified from time to time.

“ Hedging Obligations ” means all existing or future payment and other obligations owing by any Borrower under any Hedging Agreement (which such Hedging Agreement is permitted hereunder) with any Person that is a Lender or an Affiliate of a Lender at the time such Hedging Agreement is executed.

“ Indebtedness ” means, with respect to the US Borrower and its Subsidiaries at any date and without duplication, the sum of the following calculated in accordance with GAAP:

(a) all liabilities, obligations and indebtedness for borrowed money including, but not limited to, obligations evidenced by bonds, debentures, notes or other similar instruments of any such Person;

(b) all obligations to pay the deferred purchase price of property or services of any such Person (including, without limitation, all obligations under non-competition, earn-out or similar agreements), except trade payables arising in the ordinary course of business not more than ninety (90) days past due;

(c) the Attributable Indebtedness of such Person with respect to such Person’s obligations in respect of Capital Leases and Synthetic Leases (regardless of whether accounted for as indebtedness under GAAP);

(d) all Indebtedness of any other Person secured by a Lien on any asset owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

	2270524.10
LIB: CHARLOTTE

(e)	all Guaranty Obligations of any such Person;

(f) all obligations, contingent or otherwise, of any such Person relative to the face amount of letters of credit, whether or not drawn, including, without limitation, any Reimbursement Obligation, and banker’s acceptances issued for the account of any such Person;

(g) all obligations of any such Person to redeem, repurchase, exchange, defease or otherwise make payments in respect of Capital Stock of such Person;

(h)	all net obligations incurred by any such Person pursuant to Hedging Agreements;
(i)	the outstanding attributed principal amount under any asset securitization program; and
(j)	all outstanding payment obligations with respect to Synthetic Leases.

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Hedging Agreement on any date shall be deemed to be the Termination Value thereof as of such date.

“ Indemnified Taxes ” means Taxes and Other Taxes other than Excluded Taxes.

“ Independent Issuer ” means either Wachovia (or any successor thereto) or, solely with respect to certain Independent Letters of Credit in existence on the Closing Date, Bank One, NA (or any successor thereto), in its capacity as issuer of an Independent Letter of Credit; provided that Bank One, NA, shall cease to be an Independent Issuer upon the original expiration of any Independent Letters of Credit issued by Bank One, NA.

“ Independent Letters of Credit ” means those letters of credit issued by the Independent Issuer for the account of the US Borrower in an aggregate maximum face amount not to exceed $3,000,000. The Independent Letters of Credit shall be issued outside of the Credit Facility and shall not constitute Letters of Credit under this Agreement. Each Independent Letter of Credit shall expire on a date satisfactory to the Independent Issuer, which date shall be no later than the earlier of (A) one (1) year after the date of its issuance (but any Independent Letter of Credit may, by its terms, be renewable annually with the consent of the Independent Issuer), and (B) the fifth (5th) Business Day prior to the Maturity Date.

“ Interest Expense ” means, with respect to the US Borrower and its Subsidiaries for any period, the gross interest expense (including, without limitation, interest expense attributable to Capital Leases and all net payment obligations pursuant to Hedging Agreements) of the US Borrower and its Subsidiaries, all determined for such period on a Consolidated basis, without duplication, in accordance with GAAP.

“ Interest Period ” has the meaning assigned thereto in Section 4.1(b).

“ Interest Rate Contract ” means any interest rate swap agreement, interest rate cap agreement, interest rate floor agreement, interest rate collar agreement, interest rate option or any other agreement regarding the hedging of interest rate risk exposure executed in connection with hedging the interest rate exposure of any Person and any confirming letter executed pursuant to such agreement, all as amended, restated, supplemented or otherwise modified from time to time.

“ ISP98 ” means the International Standby Practices (1998 Revision, effective January 1, 1999), International Chamber of Commerce Publication No. 590.

“ Issuing Lender ” means (a) Wachovia (or any successor thereto), in its capacity as issuer of any Letter of Credit under this Agreement and (b) solely with respect to the Existing Letters of Credit, Bank One, NA (or any successor thereto) ( provided that Bank One, NA, shall cease to be an Issuing Lender upon the original expiration of any Existing Letters of Credit issued by Bank One, NA).

“ L/C Commitment ” means the lesser of (a) Twenty Million Dollars ($20,000,000) and (b) the Aggregate Commitment.

“ L/C Facility ” means the letter of credit facility established pursuant to Article III .

	2270524.10
LIB: CHARLOTTE

“ L/C Obligations ” means at any time, an amount equal to the sum of (a) the aggregate undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit which have not then been reimbursed pursuant to Section 3.5 .

“ L/C Participants ” means the collective reference to all the Lenders other than the Issuing Lender and the Canadian Dollar Lender.

“ Lender ” means each Person executing this Agreement as a Lender (including, without limitation, the Canadian Dollar Lender, the Issuing Lender and the Swingline Lender unless the context otherwise requires) set forth on the signature pages hereto and each Person that hereafter becomes a party to this Agreement as a Lender pursuant to Section 14.11 .

“ Lending Office ” means, with respect to any Lender, the office of such Lender maintaining such Lender’s Commitment Percentage of the Extensions of Credit.

“ Letter of Credit Application ” means an application, in the form specified by the Issuing Lender from time to time, requesting the Issuing Lender to issue a Letter of Credit.

“ Letters of Credit ” means the collective reference to the standby letters of credit issued pursuant to Section 3.1 and the Existing Letters of Credit.

“ LIBOR ” means the rate of interest per annum determined on the basis of the rate for deposits in Dollars in minimum amounts of at least $5,000,000 for a period equal to the applicable Interest Period which appears on the Telerate Page 3750 at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period (rounded upward, if necessary, to the nearest 1/100 ^th of 1%). If, for any reason, such rate does not appear on Telerate Page 3750, then “LIBOR” shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars in minimum amounts of at least $5,000,000 would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period for a period equal to such Interest Period. Each calculation by the Administrative Agent of LIBOR shall be conclusive and binding for all purposes, absent manifest error.

“ LIBOR Rate ” means a rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) determined by the Administrative Agent pursuant to the following formula:

LIBOR Rate =	LIBOR
1.00-Eurodollar Reserve Percentage

“ LIBOR Rate Loan ” means any Loan bearing interest at a rate based upon the LIBOR Rate as provided in Section 4.1(a).

“ Lien ” means, with respect to any asset, any mortgage, leasehold mortgage, lien, pledge, charge, security interest, hypothecation or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, Capital Lease or other title retention agreement relating to such asset.

“ Loan Documents ” means, collectively, this Agreement, each Note, the Letter of Credit Applications, the Subsidiary Guaranty Agreement and each other document, instrument, certificate and agreement executed and delivered by each Borrower or any Subsidiary thereof in connection with this Agreement or otherwise referred to herein or contemplated hereby (excluding any Hedging Agreement), all as may be amended, restated, supplemented or otherwise modified from time to time.

“ Loans ” means the collective reference to the Revolving Credit Loans, the Canadian Dollar Loans and the Swingline Loans and “Loan” means any of such Loans.

“ Material Adverse Effect ” means, with respect to the US Borrower or any of its Subsidiaries, a material adverse effect on (a) the properties, business, operations or condition (financial or otherwise) of such Persons taken as a whole, (b) the ability of any such Person to perform its obligations under the Loan Documents to which it is a

	2270524.10
LIB: CHARLOTTE

party or (c) the legality, validity, binding effect or enforceability against the US Borrower or any Subsidiary thereof of any Loan Document to which it is a party.

“ Material Contract ” means (a) any contract or other agreement, written or oral, of the US Borrower or any of its Subsidiaries involving monetary liability of or to any such Person in an amount in excess of $5,000,000 per annum, or (b) any other contract or agreement, written or oral, of the US Borrower or any of its Subsidiaries the failure to comply with which could reasonably be expected to have a Material Adverse Effect.

“ Maturity Date ” means the earliest to occur of (a) November 2, 2009, (b) the date of termination by the Borrowers pursuant to Section 2.6 , or (c) the date of termination by the Administrative Agent on behalf of the Lenders pursuant to Section 12.2(a).

“ Multiemployer Plan ” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which the US Borrower or any ERISA Affiliate is making, or is accruing an obligation to make, or has accrued an obligation to make contributions within the preceding six (6) years.

“ Net Income ” means, with respect to the US Borrower and its Subsidiaries, for any period of determination, the net income (or loss) of the US Borrower and its Subsidiaries for such period, determined on a Consolidated basis in accordance with GAAP; provided that there shall be excluded from Net Income (a) the net income (or loss) of any Person (other than a Subsidiary which shall be subject to clause (c) below), in which the US Borrower or any of its Subsidiaries has a joint interest with a third party, except to the extent such net income is actually paid to the US Borrower or any of its Subsidiaries by dividend or other distribution during such period, (b) the net income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of such Person or is merged into or consolidated with such Person or any of its Subsidiaries or that Person’s assets are acquired by such Person or any of its Subsidiaries except to the extent included pursuant to the foregoing clause (a), (c) the net income (if positive) of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary to the US Borrower or any of its Subsidiaries of such net income (i) is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute rule or governmental regulation applicable to such Subsidiary or (ii) would be subject to any taxes payable on such dividends or distributions.

“ Note ” means a Revolving Credit Note, a Canadian Note or a Swingline Note.
“Notice of Account Designation ” has the meaning assigned thereto in Section 2.4(b).
“ Notice of Borrowing ” has the meaning assigned thereto in Section 2.4(a).
“Notice of Conversion/Continuation ” has the meaning assigned thereto in Section 4.2 .
“ Notice of Repayment ” has the meaning assigned thereto in Section 2.5(c).

“ Obligations ” means, in each case, whether now in existence or hereafter arising: (a) the principal of and interest on (including interest accruing after the filing of any bankruptcy or similar petition) the Loans, (b) the L/C Obligations, (c) all Hedging Obligations and (d) all other fees and commissions (including attorneys’ fees), charges, indebtedness, loans, liabilities, financial accommodations, obligations, covenants and duties owing by the US Borrower or any of its Subsidiaries to the Lenders or the Administrative Agent, in each case under any Loan Document or otherwise, with respect to any Loan or Letter of Credit of every kind, nature and description, direct or indirect, absolute or contingent, due or to become due, contractual or tortious, liquidated or unliquidated, and whether or not evidenced by any note.

“ Officer’s Compliance Certificate ” means a certificate of the chief financial officer or the treasurer of the US Borrower substantially in the form of Exhibit F .

“ Operating Lease ” means, as to any Person as determined in accordance with GAAP, any lease of property (whether real, personal or mixed) by such Person as lessee which is not a Capital Lease.

“ Other Taxes ” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

	2270524.10
LIB: CHARLOTTE

“ Participant ” has the meaning assigned thereto in Section 14.11(d).
“ Payment Event of Default ” means any Event of Default pursuant to Sections 12.1(a) or (b).
“ PBGC ” means the Pension Benefit Guaranty Corporation or any successor agency.

“ Pension Plan ” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of the Code and which (a) is maintained for the employees of the US Borrower or any ERISA Affiliates or (b) has at any time within the preceding six (6) years been maintained for the employees of the US Borrower or any of its current or former ERISA Affiliates.

“ Permitted Acquisition ” means any Permitted Domestic Acquisition or any Permitted Foreign Acquisition.

“ Permitted Acquisition Consideration ” means the aggregate amount of the purchase price (including, but not limited to, any assumed debt, earn-outs (valued at the maximum amount payable thereunder), deferred payments, or Capital Stock of the US Borrower, net of the applicable acquired company’s cash (including Cash Equivalents) balance as shown on its most recent financial statements delivered in connection with the applicable Permitted Acquisition) to be paid on a singular basis in connection with any applicable Permitted Acquisition as set forth in the applicable acquisition documents executed by the US Borrower or any of its Subsidiaries in order to consummate the applicable Permitted Acquisition.

“ Permitted Domestic Acquisition ” means any acquisition permitted pursuant to Section 10.3(c).

“ Permitted Foreign Acquisition ” means any acquisition permitted pursuant to Section 10.3(d).

“ Permitted Liens ” means the Liens permitted pursuant to Section 10.2 .

“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity.

“ Prime Rate ” means, at any time, the rate of interest per annum publicly announced from time to time by Wachovia as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in such prime rate occurs. The parties hereto acknowledge that the rate announced publicly by Wachovia as its prime rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks.

“ Quoted Swingline Rate ” means a rate to be agreed upon from time to time by the Swingline Lender and the US Borrower.

“ Quoted Swingline Rate Loan ” means any Swingline Loan bearing interest at a rate based upon the Quoted Swingline Rate as provided in Section 4.1 .

“ Receivables Sale Agreement ” means that certain Receivables Sale Agreement dated as of March 27, 2003 by and among SCP Distributors LLC, SCP Services LP and Superior Pool Products LLC, as originators, and Superior Commerce, as buyer (as amended, restated, supplemented or otherwise modified).

“ Register ” has the meaning assigned thereto in Section 14.11(c).

“ Reimbursement Obligation ” means the obligation of the US Borrower to reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit.

“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

“ Rental Expense ” means, with respect to the US Borrower and its Subsidiaries for any period, the aggregate fixed amounts payable with respect to Operating Leases of the US Borrower and its Subsidiaries for such period, determined on a Consolidated basis in accordance with GAAP.

“ Required Lenders ” means, at any date, any combination of Lenders whose Commitments aggregate more than fifty percent (50%) of the Aggregate Commitment or, if the Credit Facility has been terminated pursuant to Section 12.2 , any combination of Lenders holding more than fifty percent (50%) of the aggregate Extensions of

	2270524.10
LIB: CHARLOTTE

Credit (with the aggregate amount of each Lender’s risk participation and funded participation in Canadian Dollar Loans, Swingline Loans and L/C Obligations being deemed “held” by such Lender for the purposes of this definition); provided that the Commitment of, and the portion of the Extensions of Credit, as applicable, held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

“ Responsible Officer ” means the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of a Credit Party or any other officer of a Credit Party reasonably acceptable to the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Credit Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Credit Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Credit Party.

“ Revolving Credit Facility ” means the revolving credit facility established pursuant to Article II .

“ Revolving Credit Loans ” means any revolving credit loan denominated in Dollars made to the US Borrower pursuant to Section 2.1 , and all such revolving credit loans collectively as the context requires.

“ Revolving Credit Note ” means a promissory note made by the US Borrower in favor of a Lender evidencing the Revolving Credit Loans made by such Lender, substantially in the form of Exhibit A-1 hereto, and any amendments, supplements and modifications thereto, any substitutes therefor, and any replacements, restatements, renewals or extension thereof, in whole or in part.

“ Solvent ” means, as to the US Borrower and its Subsidiaries on a particular date, that any such Person (a) has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage and is able to pay its debts as they mature, (b) has assets having a value, both at fair valuation and at present fair saleable value, greater than the amount required to pay its probable liabilities (including contingencies), and (c) does not believe that it will incur debts or liabilities beyond its ability to pay such debts or liabilities as they mature.

“ Subordinated Indebtedness ” means the collective reference to any Indebtedness of the US Borrower or any Subsidiary subordinated in right and time of payment to the Obligations and containing such other terms and conditions, in each case as are satisfactory to the Required Lenders.

“ Subsidiary ” means as to any Person, any corporation, partnership, limited liability company or other entity of which more than fifty percent (50%) of the outstanding Capital Stock having ordinary voting power to elect a majority of the board of directors or other managers of such corporation, partnership, limited liability company or other entity is at the time owned by or the management is otherwise controlled, directly or indirectly, by such Person (irrespective of whether, at the time, Capital Stock of any other class or classes of such corporation, partnership, limited liability company or other entity shall have or might have voting power by reason of the happening of any contingency). Unless otherwise qualified references to “Subsidiary” or “Subsidiaries” herein shall refer to those of the US Borrower.

“ Subsidiary Guarantors ” means each Domestic Subsidiary of the US Borrower in existence on the Closing Date (other than the Superior Commerce) or which becomes a party to the Subsidiary Guaranty Agreement pursuant to Section 8.11 .

“ Subsidiary Guaranty Agreement ” means the unconditional guaranty agreement of even date executed by the Subsidiary Guarantors in favor of the Administrative Agent for the ratable benefit of itself and the Lenders, substantially in the form of Exhibit H , as amended, restated, supplemented or otherwise modified from time to time.

“ Superior Commerce ” means Superior Commerce LLC, a Delaware limited liability company, and its successors and assigns.

“ Swingline Commitment ” means the lesser of (a) Fifteen Million Dollars ($15,000,000) and (b) the Aggregate Commitment.

“ Swingline Facility ” means the swingline facility established pursuant to Section 2.3 .
“ Swingline Lender ” means Wachovia in its capacity as swingline lender hereunder.

	2270524.10
LIB: CHARLOTTE

“ Swingline Loan ” means any swingline loan made by the Swingline Lender to the US Borrower pursuant to Section 2.3 , and all such swingline loans collectively as the context requires.

“ Swingline Note ” means a promissory note made by the US Borrower in favor of the Swingline Lender evidencing the Swingline Loans made by the Swingline Lender, substantially in the form of Exhibit A-2 hereto, and any amendments, supplements and modifications thereto, any substitutes therefor, and any replacements, restatements, renewals or extension thereof, in whole or in part.

“ Swingline Termination Date ” means the first to occur of (a) the resignation of Wachovia as Administrative Agent in accordance with Section 13.9 and (b) the Maturity Date.

“ Synthetic Lease ” means any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an Operating Lease in accordance with GAAP.

“ Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“ Termination Event ” means except for any such event or condition that could not reasonably be expected to have a Material Adverse Effect: (a) a “Reportable Event” described in Section 4043 of ERISA for which the notice requirement has not been waived by the PBGC, or (b) the withdrawal of the US Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, or (c) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination, under Section 4041 of ERISA, if the plan assets are not sufficient to pay all plan liabilities, or (d) the institution of proceedings to terminate, or the appointment of a trustee with respect to, any Pension Plan by the PBGC, or (e) any other event or condition which would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, or (f) the imposition of a Lien pursuant to Section 412 of the Code or Section 302 of ERISA, or (g) the partial or complete withdrawal of the US Borrower of any ERISA Affiliate from a Multiemployer Plan if withdrawal liability is asserted by such plan, or (h) any event or condition which results in the reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA, or (i) any event or condition which results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by PBGC of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.

“ Termination Value ” means, in respect of any one or more Hedging Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Hedging Agreements, (a) for any date on or after the date such Hedging Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Hedging Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedging Agreements (which may include a Lender or any Affiliate of a Lender).

“ Total Funded Indebtedness ” means, with respect to the US Borrower and its Subsidiaries at any date and without duplication, the sum of the following calculated in accordance with GAAP:

(a) all liabilities, obligations and indebtedness for borrowed money including, but not limited to, obligations evidenced by bonds, debentures, notes or other similar instruments of any such Person;

	2270524.10
LIB: CHARLOTTE

(e) all obligations, contingent or otherwise, of any such Person relative to the face amount of letters of credit, whether or not drawn, including, without limitation, any Reimbursement Obligation, and banker’s acceptances issued for the account of any such Person; and

(f) all Guaranty Obligations of any such Person with respect to outstanding Indebtedness of the types specified in clauses (a) through (e) above.

For all purposes hereof, the Total Funded Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person.

“ UCC ” means the Uniform Commercial Code as in effect in the State of North Carolina, as amended or modified from time to time.

“ Uniform Customs ” means the Uniform Customs and Practice for Documentary Credits (1993 Revision), effective January, 1994 International Chamber of Commerce Publication No. 500.

“ United States ” means the United States of America.
“ US Borrower ” has the meaning assigned thereto in the introductory paragraph hereto.
“US Borrower Guaranteed Obligations ” shall have the meaning set forth in Section 11.1 .

“ US Borrower Guaranty ” means the unconditional guaranty of the payment of the Obligations of the Canadian Borrower by the US Borrower under Article XI hereof.

“ Wachovia ” means Wachovia Bank, National Association, a national banking association, and its successors.

“ Wholly-Owned ” means, with respect to a Subsidiary, that all of the shares of Capital Stock of such Subsidiary are, directly or indirectly, owned or controlled by the US Borrower and/or one or more of its Wholly-Owned Subsidiaries (except for directors’ qualifying shares or other shares required by Applicable Law to be owned by a Person other than the US Borrower).

SECTION 1.2 Other Definitions and Provisions . With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document: (a) the definitions of terms herein shall apply equally to the singular and plural forms of the terms defined, (b) whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms, (c) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (d) the word “will” shall be construed to have the same meaning and effect as the word “shall”, (e) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (f) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (g) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (h) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (i) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights, (j) the term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form, (k) 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”, and (l) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

SECTION 1.3 Accounting Terms . All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a

	2270524.10
LIB: CHARLOTTE

consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the audited financial statements required by Section 7.1(b), except as otherwise specifically prescribed herein.

SECTION 1.4 UCC Terms . Terms defined in the UCC in effect on the Closing Date and not otherwise defined herein shall, unless the context otherwise indicates, have the meanings provided by those definitions. Subject to the foregoing, the term “ UCC ” refers, as of any date of determination, to the UCC then in effect.

SECTION 1.5 Rounding . Any financial ratios required to be maintained by the Borrowers pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

SECTION 1.6 References to Agreement and Laws . Unless otherwise expressly provided herein, (a) references to formation documents, governing documents, agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document; and (b) references to any Applicable Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Applicable Law.

SECTION 1.7 Times of Day . Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

SECTION 1.8 Letter of Credit Amounts . Unless otherwise specified, all references herein to the amount of a Letter of Credit at any time shall be deemed to mean the maximum face amount of such Letter of Credit after giving effect to all increases thereof contemplated by such Letter of Credit or the Letter of Credit Application therefor, whether or not such maximum face amount is in effect at such time.

ARTICLE II

REVOLVING CREDIT FACILITY

SECTION 2.1 Revolving Credit Loans . Subject to the terms and conditions of this Agreement, and in reliance upon the representations and warranties set forth herein, each Lender severally agrees to make Revolving Credit Loans to the US Borrower in Dollars from time to time from the Closing Date through, but not including, the Maturity Date as requested by the US Borrower in accordance with the terms of Section 2.4 ; provided that, based upon the Dollar Amount of all outstanding Loans and L/C Obligations, (a) the aggregate principal amount of all outstanding Revolving Credit Loans (after giving effect to any amount requested) shall not exceed the Aggregate Commitment less the sum of all outstanding Canadian Dollar Loans, Swingline Loans and L/C Obligations and (b) the aggregate principal amount of all outstanding Revolving Credit Loans from any Lender to the US Borrower shall not at any time exceed such Lender’s Commitment less such Lender’s Commitment Percentage of all outstanding Canadian Dollar Loans, Swingline Loans and L/C Obligations. Each Revolving Credit Loan by a Lender shall be in a principal amount equal to such Lender’s Commitment Percentage of the aggregate principal amount of Revolving Credit Loans requested on such occasion. Subject to the terms and conditions hereof, the US Borrower may borrow, repay and reborrow Revolving Credit Loans hereunder until the Maturity Date.

SECTION 2.2

Canadian Dollar Loans .

(a) Availability . Subject to the terms and conditions of this Agreement, and in reliance upon the representations and warranties set forth herein, the Canadian Dollar Lender agrees to make Canadian Dollar Loans to the Canadian Borrower from time to time from the Closing Date through, but not including, the Maturity Date as requested by the US Borrower, on behalf of the Canadian Borrower, in accordance with the terms of Section 2.4 ; provided that, based upon the Dollar Amount of all outstanding Loans and L/C Obligations, the aggregate principal amount of all outstanding Canadian Dollar Loans (after giving effect to any amount requested) shall not exceed the lesser of (i) the Aggregate Commitment less the sum of all outstanding Revolving Credit Loans, Swingline Loans and L/C Obligations and (ii) the Canadian Dollar Commitment. Subject to the terms and conditions hereof, the Canadian Borrower may borrow, repay and reborrow Canadian Dollar Loans hereunder until the Maturity Date.

(b)	Refunding of Canadian Dollar Loans .

(i) Upon the occurrence and during the continuance of an Event of Default, each Canadian Dollar Loan may, at the discretion of the Canadian Dollar Lender, be converted immediately to a Base Rate Loan funded in Dollars by

	2270524.10
LIB: CHARLOTTE

the Lenders in an amount equal to the Dollar Amount of such Canadian Dollar Loan; provided that the Borrowers shall pay to the Canadian Dollar Lender any and all costs, fees and other expenses incurred by the Canadian Dollar Lender in effecting such conversion. Such Base Rate Loan shall thereafter be reflected as a Revolving Credit Loan of the Lenders to the US Borrower on the books and records of the Administrative Agent. Each Lender shall fund its respective Commitment Percentage of such Revolving Credit Loan as required to repay Canadian Dollar Loans outstanding to the Canadian Dollar Lender upon such demand by the Canadian Dollar Lender in no event later than 1:00 p.m. on the next succeeding Business Day after such demand is made. No Lender’s obligation to fund its respective Commitment Percentage of any Revolving Credit Loan required to repay such Canadian Dollar Loan shall be affected by any other Lender’s failure to fund its Commitment Percentage of such Revolving Credit Loan, nor shall any Lender’s Commitment Percentage be increased as a result of any such failure of any other Lender to fund its Commitment Percentage of such Revolving Credit Loan.

(ii) The Borrowers shall pay to the Canadian Dollar Lender on demand the amount of such Canadian Dollar Loans to the extent that the Lenders fail to refund in full the outstanding Canadian Dollar Loans requested or required to be refunded. In addition, the Borrowers hereby authorize the Administrative Agent to charge any account maintained by Borrowers with the Canadian Dollar Lender or any Affiliate thereof (up to the amount available therein) in order to immediately pay the Canadian Dollar Lender the amount of such Canadian Dollar Loans to the extent amounts received from the Lenders are not sufficient to repay in full the outstanding Canadian Dollar Loans requested or required to be refunded. If any portion of any such amount paid to the Canadian Dollar Lender shall be recovered by or on behalf of the Canadian Borrower or US Borrower from the Canadian Dollar Lender in bankruptcy or otherwise, the loss of the amount so recovered shall be ratably shared among all the Lenders in accordance with their respective Commitment Percentages.

(iii) Each Lender acknowledges and agrees that its obligation to refund Canadian Dollar Loans in accordance with the terms of this Section is absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, non-satisfaction of the conditions set forth in Article V . Further, each Lender acknowledges and agrees that if prior to the refunding of any outstanding Canadian Dollar Loans pursuant to this Section, a Bankruptcy Event of Default shall have occurred, each Lender will, on the date the applicable Revolving Credit Loan would have been made to refund such Canadian Dollar Loans, purchase an undivided participating interest in such Canadian Dollar Loans in an amount equal to its Commitment Percentage of the aggregate amount of such Canadian Dollar Loans. Each Lender will immediately transfer to the Administrative Agent, for the account of the Canadian Dollar Lender, in immediately available funds in Canadian Dollars, the amount of its participation. Whenever, at any time after the Canadian Dollar Lender has received from any Lender such Lender’s participating interest in the refunded Canadian Dollar Loans, the Canadian Dollar Lender receives any payment on account thereof, the Canadian Dollar Lender will distribute to such Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s participating interest was outstanding and funded).

(iv) In the event that any Lender fails to make payment to the Canadian Dollar Lender of any amount due under this Section, the Administrative Agent, on behalf of the Canadian Dollar Lender, shall be entitled to receive, retain and apply against such obligation the principal and interest otherwise payable to such Lender hereunder until the Canadian Dollar Lender receives such payment from such Lender or such obligation is otherwise fully satisfied. In addition to the foregoing, if for any reason any Lender fails to make payment to the Canadian Dollar Lender of any amount due under this Section, such Lender shall be deemed, at the option of the Administrative Agent, to have unconditionally and irrevocably purchased from the Canadian Dollar Lender, without recourse or warranty, an undivided interest and participation in the applicable Canadian Dollar Loan, and such interest and participation may be recovered from such Lender together with interest thereon at the Federal Funds Effective Rate for each day during the period commencing on the date of demand and ending on the date such amount is received.

SECTION 2.3

Swingline Loans .

(a) Availability . Subject to the terms and conditions of this Agreement, the Swingline Lender agrees to make Swingline Loans to the US Borrower from time to time from the Closing Date through, but not including, the Swingline Termination Date; provided , that (i) all Swingline Loans shall be denominated in Dollars and (ii) based upon the Dollar Amount of all outstanding Loans and L/C Obligations, the aggregate principal amount of all outstanding Swingline Loans (after giving effect to any amount requested), shall not exceed the lesser of (i) the Aggregate Commitment less the sum of all outstanding Revolving Credit Loans, Canadian Dollar Loans and L/C

	2270524.10
LIB: CHARLOTTE

Obligations and (ii) the Swingline Commitment. Subject to the terms and conditions hereof, the US Borrower may borrow, repay and reborrow Swingline Loans hereunder until the Maturity Date.

(b)	Refunding .

(i) Swingline Loans shall be refunded by the Lenders on demand by the Swingline Lender. Such refundings shall be made by the Lenders in accordance with their respective Commitment Percentages and shall thereafter be reflected as Revolving Credit Loans of the Lenders on the books and records of the Administrative Agent. Each Lender shall fund its respective Commitment Percentage of Revolving Credit Loans as required to repay Swingline Loans outstanding to the Swingline Lender upon demand by the Swingline Lender but in no event later than 1:00 p.m. on the next succeeding Business Day after such demand is made. No Lender’s obligation to fund its respective Commitment Percentage of a Swingline Loan shall be affected by any other Lender’s failure to fund its Commitment Percentage of a Swingline Loan, nor shall any Lender’s Commitment Percentage be increased as a result of any such failure of any other Lender to fund its Commitment Percentage of a Swingline Loan.

(ii) The US Borrower shall pay to the Swingline Lender on demand the amount of such Swingline Loans to the extent amounts received from the Lenders are not sufficient to repay in full the outstanding Swingline Loans requested or required to be refunded. In addition, the US Borrower hereby authorizes the Administrative Agent to charge any account maintained by the US Borrower with the Swingline Lender or any Affiliate thereof (up to the amount available therein) in order to immediately pay the Swingline Lender the amount of such Swingline Loans to the extent amounts received from the Lenders are not sufficient to repay in full the outstanding Swingline Loans requested or required to be refunded. If any portion of any such amount paid to the Swingline Lender shall be recovered by or on behalf of the US Borrower from the Swingline Lender in bankruptcy or otherwise, the loss of the amount so recovered shall be ratably shared among all the Lenders in accordance with their respective Commitment Percentages.

(iii) Each Lender acknowledges and agrees that its obligation to refund Swingline Loans in accordance with the terms of this Section is absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, non-satisfaction of the conditions set forth in Article V . Further, each Lender acknowledges and agrees and acknowledges that if prior to the refunding of any outstanding Swingline Loans pursuant to this Section, a Bankruptcy Event of Default shall have occurred, each Lender will, on the date the applicable Revolving Credit Loan would have been made, purchase an undivided participating interest in the Swingline Loan to be refunded in an amount equal to its Commitment Percentage of the aggregate amount of such Swingline Loan. Each Lender will immediately transfer to the Swingline Lender, in immediately available funds, the amount of its participation and upon receipt thereof the Swingline Lender will deliver to such Lender a certificate evidencing such participation dated the date of receipt of such funds and for such amount. Whenever, at any time after the Swingline Lender has received from any Lender such Lender’s participating interest in a Swingline Loan, the Swingline Lender receives any payment on account thereof, the Swingline Lender will distribute to such Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s participating interest was outstanding and funded).

(iv) In the event that any Lender fails to make payment to the Swingline Lender of any amount due under this Section, the Administrative Agent, on behalf of the Swingline Lender, shall be entitled to receive, retain and apply against such obligation the principal and interest otherwise payable to such Lender hereunder until the Swingline Lender receives such payment from such Lender or such obligation is otherwise fully satisfied. In addition to the foregoing, if for any reason any Lender fails to make payment to the Swingline Lender of any amount due under this Section, such Lender shall be deemed, at the option of the Administrative Agent, to have unconditionally and irrevocably purchased from the Swingline Lender, without recourse or warranty, an undivided interest and participation in the applicable Swingline Loan, and such interest and participation may be recovered from such Lender together with interest thereon at the Federal Funds Effective Rate for each day during the period commencing on the date of demand and ending on the date such amount is received.

SECTION 2.4

Procedure for Advances of Revolving Credit Loans, Canadian Dollar Loans and Swingline Loans .

(a) Requests for Borrowing . The US Borrower, on behalf of itself and the Canadian Borrower, shall give the Administrative Agent irrevocable prior written notice substantially in the form attached hereto as Exhibit B (a “ Notice of Borrowing ”) not later than (i) 12:00 noon on the same Business Day as each Base Rate Loan and each Swingline Loan, (ii) 12:00 noon at least three (3) Business Days before each LIBOR Rate Loan, and (iii) 12:00 noon (Toronto, Ontario time) at least one (1) Business Day before each Canadian Base Rate Loan, of its intention to borrow, specifying:

	2270524.10
LIB: CHARLOTTE

(A)			if the applicable Borrower is the US Borrower or the Canadian Borrower;
	(B)	the date of such borrowing, which shall be a Business Day;
	(C)	whether such Loan is to be a Revolving Credit Loan, Swingline Loan or Canadian Dollar Loan;

(D)	if such Loan is a Revolving Credit Loan, whether such Revolving Credit Loan shall be a LIBOR Rate Loan or a Base Rate Loan;

(E)	if such Loan is a LIBOR Rate Loan, the duration of the Interest Period applicable thereto;

	(F)	if such Loan is a Swingline Loan, whether such Swingline Loan shall be a Base Rate Loan or a Quoted Swingline Rate Loan; and
(G)		the amount of such borrowing, which shall be, (1) with respect to Base Rate Loans (other than Swingline Loans) in an aggregate principal amount of $500,000 or a whole multiple of $100,000 in excess thereof, (2) with respect to LIBOR Rate Loans in an aggregate principal amount of $1,000,000 or a whole multiple of $1,000,000 in excess thereof, (3) with respect to Swingline Loans in an aggregate principal amount of $100,000 or a whole multiple of $100,000 in excess thereof and (4) with respect to Canadian Base Rate Loans in an aggregate principal amount of C$500,000 or a whole multiple of C$100,000 in excess thereof.

A Notice of Borrowing received after the times set forth above shall be deemed received on the next Business Day. The Administrative Agent shall promptly notify the Lenders of each Notice of Borrowing.

(b)	Disbursement of Revolving Credit Loans, Canadian Dollar Loans and Swingline Loans .

(i) Not later than 1:00 p.m. on the proposed borrowing date for any Revolving Credit Loan, each Lender will make available to the Administrative Agent, for the account of the US Borrower, at the office of the Administrative Agent in Dollars in funds immediately available to the Administrative Agent, such Lender’s Commitment Percentage of the Revolving Credit Loans to be made on such borrowing date.

(ii) Not later than 12:00 noon (Toronto, Ontario time) on the proposed borrowing date for any Canadian Base Rate Loan, the Canadian Dollar Lender will make available to the Administrative Agent, for the account of the Canadian Borrower, at the office of the Canadian Dollar Lender in Canadian Dollars in funds immediately available to the Administrative Agent, the Canadian Base Rate Loan to be made on such borrowing date.

(iii) Not later than 1:00 p.m. on the proposed borrowing date for any Swingline Loan, as applicable, the Swingline Lender will make available to the Administrative Agent, for the account of the US Borrower, at the office of the Administrative Agent in Dollars in funds immediately available to the Administrative Agent, the Swingline Loans to be made on such borrowing date.

(iv) The Borrowers hereby irrevocably authorize the Administrative Agent to disburse the proceeds of each borrowing requested pursuant to this Section in immediately available funds by crediting or wiring such proceeds to the deposit account of the applicable Borrower identified in the most recent notice substantially in the form of Exhibit C hereto (a “ Notice of Account Designation ”) delivered by the US Borrower, on behalf of itself and the Canadian Borrower, to the Administrative Agent or as may be otherwise agreed upon by the US Borrower, on behalf of itself and the Canadian Borrower, and the Administrative Agent from time to time. Subject to Section 4.7 hereof, the Administrative Agent shall not be obligated to disburse any amount with respect to any Revolving Credit Loan, Canadian Dollar Loan or Swingline Loan requested pursuant to this Section to the extent that such amount has not been made available by the applicable to the Administrative Agent.

(v) Revolving Credit Loans to be made for the purpose of (A) refunding Swingline Loans shall be made by the Lenders as provided in Section 2.3(b) and (B) refunding Canadian Dollar Loans shall be made by the Lenders as provided in Section 2.2(b).

SECTION 2.5

Repayment of Loans .

(a) Repayment on Maturity Date . The Borrowers agree to repay the outstanding principal amount of (i) all Revolving Credit Loans in full in Dollars on the Maturity Date, (ii) all Canadian Dollar Loans in full in Canadian Dollars on the Maturity Date, and (iii) all Swingline Loans in accordance with Section 2.3(b) or, if earlier, on the Maturity Date, together, in each case, with all accrued but unpaid interest thereon.

(b)	Mandatory Repayment of Revolving Credit Loans .

(i) Aggregate Commitment . If at any time (as determined by the Administrative Agent under Section 2.5(b)(v)), based upon the Dollar Amount of all outstanding Loans and L/C Obligations, (A) solely because of currency fluctuation, the outstanding principal amount of all outstanding Extensions of Credit exceeds one hundred and five percent (105%) of the Aggregate Commitment or (B) for any other reason, the outstanding principal amount of all

	2270524.10
LIB: CHARLOTTE

outstanding Extensions of Credit exceeds the Aggregate Commitment, then, in each such case, the Borrowers shall (1) first , if (and to the extent) necessary to eliminate such excess, immediately repay outstanding Swingline Loans (and/or reduce any pending request for a borrowing of such Loans submitted in respect of such Loans on such day) by the Dollar Amount of such excess, (2) second , if (and to the extent) necessary to eliminate such excess, immediately repay outstanding Revolving Credit Loans which are Base Rate Loans (and/or reduce any pending requests for a borrowing or continuation or conversion of such Loans submitted in respect of such Loans on such day) by the Dollar Amount of such excess, (3) third , if (and to the extent) necessary to eliminate such excess, immediately repay outstanding Revolving Credit Loans which are LIBOR Rate Loans (and/or reduce any pending requests for a borrowing or continuation or conversion of such Loans submitted in respect of such Loans on such day) by the Dollar Amount of such excess, (4) fourth , if (and to the extent) necessary to eliminate such excess, immediately repay outstanding Canadian Dollar Loans (and/or reduce any pending requests for a borrowing or continuation or conversion of such Loans submitted in respect of such Loans on such day) by the Dollar Amount of such excess, and (4) fifth , with respect to any Letters of Credit then outstanding, make a payment of cash collateral into a cash collateral account opened by the Administrative Agent for the benefit of the Lenders in an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit (such cash collateral to be applied in accordance with Section 12.2(b)).

(ii) Canadian Dollar Commitment . If at any time (as determined by the Administrative Agent under Section 2.5(b)(v)), based upon the Dollar Amount of all outstanding Loans and L/C Obligations, (A) solely because of currency fluctuation, the outstanding principal amount of all Canadian Dollar Loans exceeds one hundred five percent (105%) of the Canadian Dollar Commitment or (B) for any other reason, the outstanding principal amount of all Canadian Dollar Loans exceeds the Canadian Dollar Commitment, then, in each such case, such excess shall be immediately repaid, in Canadian Dollars, by the Canadian Borrower to the Administrative Agent for the account of the Canadian Dollar Lender.

(iii) Swingline Commitment . If at any time (as determined by the Administrative Agent under Section 2.5(b)(v)), based upon the Dollar Amount of all outstanding Loans and L/C Obligations, and for any reason, the outstanding principal amount of all Swingline Loans exceeds the Swingline Commitment, then, in each such case, such excess shall be immediately repaid, in Dollars, by the US Borrower to the Administrative Agent for the account of the Swingline Lender.

(iv) Excess L/C Obligations . If at any time (as determined by the Administrative Agent under Section 2.5(b)(v)), based upon the Dollar Amount of all outstanding Loans and L/C Obligations, and for any reason, the outstanding amount of all L/C Obligations exceeds the L/C Commitment, then, in each such case, the US Borrower shall make a payment of cash collateral into a cash collateral account opened by the Administrative Agent, for the benefit of itself and the Lenders, in an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit (such cash collateral to be applied in accordance with Section 12.2(b)).

(v) Compliance and Payments . The Borrowers’ compliance with this Section 2.5(b) shall be tested from time to time by the Administrative Agent at its sole discretion, but in any event shall be tested on the date on which (A) the US Borrower requests that the applicable Lenders make a Revolving Credit Loan, (B) the US Borrower, on behalf of the Canadian Borrower, requests that the Canadian Lender make a Canadian Dollar Loan, (C) the US Borrower requests that the Swingline Lender make a Swingline Loan or (D) the US Borrower requests that the Issuing Lender issue a Letter of Credit. Each such repayment pursuant to this Section 2.5(b) shall be accompanied by any amount required to be paid pursuant to Section 4.9 .

(c) Optional Repayments . The Borrowers may at any time and from time to time repay the Loans, in whole or in part, (i) upon at least three (3) Business Days’ irrevocable notice to the Administrative Agent with respect to LIBOR Rate Loans and (ii) upon irrevocable notice to the Administrative Agent before 12:00 noon on the same Business Day with respect to Base Rate Loans, Swingline Loans and Canadian Dollar Loans, substantially in the form attached hereto as Exhibit D (a “ Notice of Repayment ”), specifying (A) the date of repayment, (B) the amount of repayment, (C) whether the repayment is of Revolving Credit Loans, Canadian Dollar Loans, Swingline Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each, (D) with respect to Revolving Credit Loans, whether the repayment is of LIBOR Rate Loans, Base Rate Loans, or a combination thereof, and, if of a combination thereof, the amount allocable to each and (E) with respect to Swingline Loans, whether the repayment is of Base Rate Loans, Quoted Swingline Rate Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each. Upon receipt of such notice, the Administrative Agent shall promptly notify each Lender. If any such notice is given, the amount specified in such notice shall be due and payable on the date set forth in such notice. Partial repayments shall be in an aggregate amount of (i) $500,000 or a whole multiple of $100,000 in excess thereof with respect to Base Rate Loans (other than Swingline Loans), (ii) $1,000,000 or a whole multiple of

	2270524.10
LIB: CHARLOTTE

$1,000,000 in excess thereof with respect to LIBOR Rate Loans, (iii) C$500,000 or a whole multiple of C$100,000 in excess thereof with respect to Canadian Dollar Loans and (iv) $100,000 or a whole multiple of $100,000 in excess thereof with respect to Swingline Loans. A Notice of Repayment received after applicable time set forth above shall be deemed received on the next Business Day. Each such repayment shall be accompanied by any amount required to be paid pursuant to Section 4.9 .

(d) Limitation on Repayment of LIBOR Rate Loans . The Borrowers may not repay any LIBOR Rate Loan on any day other than on the last day of the Interest Period applicable thereto unless such repayment is accompanied by any amount required to be paid pursuant to Section 4.9 hereof.

(e) Payment of Interest . Each repayment pursuant to this Section shall be accompanied by accrued interest on the amount repaid.

(f) Hedging Agreements . No repayment pursuant to this Section shall affect any Borrower’s obligations under any Hedging Agreement.

SECTION 2.6

Permanent Reduction of the Aggregate Commitment .

(a) Voluntary Reduction . The Borrowers shall have the right at any time and from time to time, upon at least five (5) Business Days prior written notice to the Administrative Agent, to permanently reduce, without premium or penalty, (i) the entire Aggregate Commitment at any time or (ii) portions of the Aggregate Commitment, from time to time, in an aggregate principal amount not less than $5,000,000 or any whole multiple of $1,000,000 in excess thereof. Any reduction of the Aggregate Commitment shall be applied to the Commitment of each Lender according to its Commitment Percentage. All fees accrued until the effective date of any termination of the Aggregate Commitment shall be paid on the effective date of such termination.

(b) Corresponding Payment . Each permanent reduction permitted pursuant to this Section shall be accompanied by a payment of principal sufficient to reduce (i) the aggregate Dollar Amount of all outstanding Revolving Credit Loans, Canadian Dollar Loans, Swingline Loans and L/C Obligations, as applicable, after such reduction to the Aggregate Commitment as so reduced and (ii) to the extent that the Canadian Commitment is reduced, the aggregate Dollar Amount of all outstanding Canadian Dollar Loans to the Canadian Commitment as so reduced. If the Aggregate Commitment as so reduced is less than the aggregate amount of all outstanding Letters of Credit, the Borrowers shall be required to deposit cash collateral in a cash collateral account opened by the Administrative Agent in an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Such cash collateral shall be applied in accordance with Section 12.2(b). Any reduction of the Aggregate Commitment to zero shall be accompanied by payment of all outstanding Revolving Credit Loans, Swingline Loans and Canadian Dollar Loans (and furnishing of cash collateral satisfactory to the Administrative Agent for all L/C Obligations) and shall result in the termination of the Aggregate Commitment, the Swingline Commitment, the Canadian Commitment and the Revolving Credit Facility. Such cash collateral shall be applied in accordance with Section 12.2(b). If the reduction of the Aggregate Commitment requires the repayment of any LIBOR Rate Loan, such repayment shall be accompanied by any amount required to be paid pursuant to Section 4.9 hereof.

SECTION 2.7 Termination of Revolving Credit Facility . The Revolving Credit Facility shall terminate on the Maturity Date.

SECTION 2.8 Nature of Obligations . The obligations of the US Borrower hereunder and under the other Loan Documents shall be joint and several with the Obligations of the Canadian Borrower. The obligations of the Canadian Borrower hereunder and under the other Loan Documents shall not be joint and several.

SECTION 2.9 Increase of Aggregate Commitment . So long as no Default or Event of Default shall have occurred and be continuing, at any time prior to the Maturity Date, the US Borrower shall have the right from time to time upon not less than thirty (30) days prior written notice to the Administrative Agent to increase the Aggregate Commitment; provided that in no event shall the Aggregate Commitment be increased to an amount greater than $160,000,000; provided further that:

(a) (i) Each existing Lender shall have the right, but not the obligation, to commit to all or a portion of the proposed increase, (ii) the failure by any existing Lender to respond to a request for such increase shall be deemed to be a refusal of such request by such existing Lender and (iii) if the Administrative Agent does not receive sufficient commitments from the existing Lenders to fund the entire amount of the proposed increase, the US Borrower may then solicit commitments from other banks, financial institutions or investment funds.

(b) Any increase in the Aggregate Commitment which is accomplished by increasing the Commitment of any Lender or Lenders who are at the time of such increase party to this Agreement (which Lender or Lenders shall consent to such increase in their sole and absolute discretion) shall be accomplished as follows: (i) this Agreement

	2270524.10
LIB: CHARLOTTE

will be amended by the Borrowers, the Administrative Agent and those Lender(s) whose Commitment(s) is or are being increased (but without any requirement that the consent of any other Lender be obtained) to reflect the revised Commitment of each of the Lenders, (ii) entries in the Register will be revised to reflect the revised Commitment and Commitment Percentage of each of the Lenders, (iii) the outstanding Revolving Credit Loans and Commitment Percentages of Canadian Dollar Loans, Swingline Loans and L/C Obligations will be reallocated on the effective date of such increase among the Lenders in accordance with their revised Commitment Percentages (and the Lenders agree to make all payments and adjustments necessary to effect the reallocation and the Borrowers shall pay any and all costs required pursuant to Section 4.9 in connection with such reallocation as if such reallocation were a repayment) and (iv) if requested by such Lender or Lenders, the US Borrower will deliver new Revolving Credit Note(s) to the Lender or Lenders whose Commitment(s) is or are being increased reflecting the revised Commitment of such Lender(s).

(c) Any increase in the Aggregate Commitment which is accomplished by addition of a new Lender or Lenders under the Agreement shall be accomplished as follows: (i) each new Lender shall be an Eligible Assignee and shall be subject to the consent of the Administrative Agent and the US Borrower, on behalf of itself and the Canadian Borrower, which consents shall not be unreasonably withheld, (ii) this Agreement will be amended by the Borrowers, the Administrative Agent and each new Lender (but without any requirement that the consent of the any other Lender be obtained) to reflect the addition of each new Lender as a Lender hereunder, (iii) entries in the Register will be revised to reflect the revised Commitment and Commitment Percentages of each of the Lenders (including each new Lender), (iv) the outstanding Revolving Credit Loans and Commitment Percentages of Canadian Dollar Loans, Swingline Loans and L/C Obligations will be reallocated on the effective date of such increase among the Lenders (including each new Lender) in accordance with their revised Commitment Percentages (and the Lenders (including each new Lender) agree to make all payments and adjustments necessary to effect the reallocation and the Borrowers shall pay any and all costs required pursuant to Section 4.9 in connection with such reallocation as if such reallocation were a repayment) and (v) at the request of each new Lender, the US Borrower will deliver a Revolving Credit Note to each new Lender.

ARTICLE III

LETTER OF CREDIT FACILITY

SECTION 3.1 L/C Commitment . Subject to the terms and conditions hereof, the Issuing Lender, in reliance on the agreements of the other Lenders set forth in Section 3.4(a), agrees to issue Letters of Credit for the account of the US Borrower on any Business Day from the Closing Date through but not including the Maturity Date in such form as may be approved from time to time by the Issuing Lender; provided , that the Issuing Lender shall have no obligation to issue any Letter of Credit if, after giving effect to such issuance, based upon the Dollar Amount of all outstanding Loans and L/C Obligations, the aggregate amount of all outstanding L/C Obligations would exceed the lesser of (i) the L/C Commitment or (ii) the Aggregate Commitment less the aggregate principal amount of all outstanding Loans. Each Letter of Credit (other than the Existing Letters of Credit) shall (i) be denominated in Dollars in a minimum amount of $30,000 or a lesser amount acceptable to the Issuing Lender, (ii) be a standby letter of credit issued to support obligations of the US Borrower or any of its Subsidiaries, contingent or otherwise, incurred in the ordinary course of business, (iii) expire on a date no later than the earlier of (A) five (5) Business Days prior to the Maturity Date and (B) one year after its date of issuance, and (iv) be subject to the Uniform Customs and/or ISP98, as set forth in the Letter of Credit Application or as determined by the Issuing Lender and, to the extent not inconsistent therewith, the laws of the State of North Carolina. As of the Closing Date, each of the Existing Letters of Credit shall constitute, for all purposes of this Agreement and the other Loan Documents, a Letter of Credit issued and outstanding hereunder. The Issuing Lender shall not at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause the Issuing Lender or any L/C Participant to exceed any limits imposed by, any Applicable Law. References herein to “issue” and derivations thereof with respect to Letters of Credit shall also include extensions or modifications of any existing Letters of Credit, unless the context otherwise requires.

SECTION 3.2 Procedure for Issuance of Letters of Credit . The US Borrower may from time to time request that the Issuing Lender issue a Letter of Credit by delivering to the Issuing Lender at the Administrative Agent’s Office a Letter of Credit Application therefor, completed to the satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as the Issuing Lender may request. Upon receipt of any Letter of Credit Application, the Issuing Lender shall process such Letter of Credit Application and the certificates,

	2270524.10
LIB: CHARLOTTE

documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall, subject to Section 3.1 and Article V , promptly issue the Letter of Credit requested thereby (but in no event shall the Issuing Lender be required to issue any Letter of Credit earlier than three (3) Business Days after its receipt of the Letter of Credit Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender and the US Borrower. The Issuing Lender shall promptly furnish to the US Borrower a copy of such Letter of Credit and promptly notify each Lender of the issuance and upon request by any Lender, furnish to such Lender a copy of such Letter of Credit and the amount of such Lender’s participation therein.

SECTION 3.3

Commissions and Other Charges .

(a) Letter of Credit Commissions . The US Borrower shall pay to the Administrative Agent, for the account of the Issuing Lender and the L/C Participants, a letter of credit commission with respect to each Letter of Credit in an amount equal to the face amount of such Letter of Credit multiplied by the Applicable Margin with respect to Revolving Credit Loans that are LIBOR Rate Loans (determined on a per annum basis). Such commission shall be payable quarterly in arrears on the last Business Day of each calendar quarter, on the Maturity Date and thereafter on demand of the Administrative Agent. The Administrative Agent shall, promptly following its receipt thereof, distribute to the Issuing Lender and the L/C Participants all commissions received pursuant to this Section in accordance with their respective Commitment Percentages.

(b) Issuance Fee . In addition to the foregoing commission, the US Borrower shall pay to the Administrative Agent, for the account of the Issuing Lender, an issuance fee with respect to each Letter of Credit in an amount equal to the face amount of such Letter of Credit multiplied by one eighth of one percent (0.125%) per annum. Such issuance fee shall be payable quarterly in arrears on the last Business Day of each calendar quarter commencing with the first such date to occur after the issuance of such Letter of Credit, on the Maturity Date and thereafter on demand of the Issuing Lender (through the Administrative Agent).

(c) Other Costs . In addition to the foregoing fees and commissions, the US Borrower shall pay or reimburse the Issuing Lender for such normal and customary costs and expenses as are incurred or charged by the Issuing Lender in issuing, effecting payment under, amending or otherwise administering any Letter of Credit.

SECTION 3.4

L/C Participations .

(a) The Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce the Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participant’s own account and risk an undivided interest equal to such L/C Participant’s Commitment Percentage in the Issuing Lender’s obligations and rights under and in respect of each Letter of Credit issued hereunder and the amount of each draft paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for which the Issuing Lender is not reimbursed in full by the US Borrower through a Revolving Credit Loan or otherwise in accordance with the terms of this Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at the Issuing Lender’s address for notices specified herein an amount equal to such L/C Participant’s Commitment Percentage of the amount of such draft, or any part thereof, which is not so reimbursed.

(b) Upon becoming aware of any amount required to be paid by any L/C Participant to the Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion of any payment made by the Issuing Lender under any Letter of Credit, the Issuing Lender shall notify each L/C Participant of the amount and due date of such required payment and such L/C Participant shall pay to the Issuing Lender the amount specified on the applicable due date. If any such amount is paid to the Issuing Lender after the date such payment is due, such L/C Participant shall pay to the Issuing Lender on demand, in addition to such amount, the product of (i) such amount, times (ii) the daily average Federal Funds Rate as determined by the Administrative Agent during the period from and including the date such payment is due to the date on which such payment is immediately available to the Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. A certificate of the Issuing Lender with respect to any amounts owing under this Section shall be conclusive in the absence of manifest error. With respect to payment to the Issuing Lender of the unreimbursed amounts described in this Section, if the L/C Participants receive notice that any such payment is due (A) prior to 1:00 p.m. (Charlotte time) on any Business Day, such payment shall be due that Business Day, and (B) after 1:00 p.m. (Charlotte time) on any Business Day, such payment shall be due on the following Business Day.

	2270524.10
LIB: CHARLOTTE

(c) Whenever, at any time after the Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its Commitment Percentage of such payment in accordance with this Section, the Issuing Lender receives any payment related to such Letter of Credit (whether directly from the US Borrower or otherwise, or any payment of interest on account thereof, the Issuing Lender will distribute to such L/C Participant its pro rata share thereof; provided , that in the event that any such payment received by the Issuing Lender shall be required to be returned by the Issuing Lender, such L/C Participant shall return to the Issuing Lender the portion thereof previously distributed by the Issuing Lender to it.

SECTION 3.5 Reimbursement Obligation of the US Borrower . In the event of any drawing under any Letter of Credit, the US Borrower agrees to reimburse (either with the proceeds of a Revolving Credit Loan as provided for in this Section or with funds from other sources), in same day funds, the Issuing Lender on each date on which the Issuing Lender notifies the US Borrower of the date and amount of a draft paid under any Letter of Credit for the amount of (a) such draft so paid and (b) any amounts referred to in Section 3.3(c) incurred by the Issuing Lender in connection with such payment. Unless the US Borrower shall immediately notify the Issuing Lender that the US Borrower intends to reimburse the Issuing Lender for such drawing from other sources or funds, the US Borrower shall be deemed to have timely given a Notice of Borrowing to the Administrative Agent requesting that the Lenders make a Revolving Credit Loan bearing interest at the Base Rate on such date in the amount of (a) such draft so paid and (b) any amounts referred to in Section 3.3(c) incurred by the Issuing Lender in connection with such payment, and the Lenders shall make a Revolving Credit Loan bearing interest at the Base Rate in such amount, the proceeds of which shall be applied to reimburse the Issuing Lender for the amount of the related drawing and costs and expenses. Each Lender acknowledges and agrees that its obligation to fund a Revolving Credit Loan in accordance with this Section to reimburse the Issuing Lender for any draft paid under a Letter of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, non-satisfaction of the conditions set forth in Section 3.4(a) or Article V . If the US Borrower has elected to pay the amount of such drawing with funds from other sources and shall fail to reimburse the Issuing Lender as provided above, the unreimbursed amount of such drawing shall bear interest at the rate which would be payable on any outstanding Base Rate Loans which were then overdue from the date such amounts become payable (whether at stated maturity, by acceleration or otherwise) until payment in full.

SECTION 3.6 Obligations Absolute . The US Borrower’s obligations under this Article III (including, without limitation, the Reimbursement Obligation) shall be absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which the US Borrower may have or have had against the Issuing Lender or any beneficiary of a Letter of Credit or any other Person. The US Borrower also agrees that the Issuing Lender and the L/C Participants shall not be responsible for, and the US Borrower’s Reimbursement Obligation under Section 3.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the US Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the US Borrower against any beneficiary of such Letter of Credit or any such transferee. The Issuing Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions caused by the Issuing Lender’s gross negligence or willful misconduct. The US Borrower agrees that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct, shall be binding on the US Borrower and shall not result in any liability of the Issuing Lender or any L/C Participant to the US Borrower. The responsibility of the Issuing Lender to the US Borrower in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are in conformity with such Letter of Credit.

SECTION 3.7 Effect of Letter of Credit Application . To the extent that any provision of any Letter of Credit Application related to any Letter of Credit is inconsistent with the provisions of this Article III , the provisions of this Article III shall apply.

	2270524.10
LIB: CHARLOTTE

ARTICLE IV

GENERAL LOAN PROVISIONS

SECTION 4.1

Interest .

(a) Interest Rate Options . Subject to the provisions of this Section, at the election of the US Borrower, on behalf of itself and the Canadian Borrower:

(i)

Revolving Credit Loans shall bear interest at (A) the Base Rate plus the Applicable Margin or (B) the LIBOR Rate plus the Applicable Margin ( provided that the LIBOR Rate shall not be available until three (3) Business Days after the Closing Date unless the US Borrower has delivered to the Administrative Agent a letter in form and substance satisfactory to the Administrative Agent indemnifying the Lenders in the manner set forth in Section 4.9 of this Agreement);

(ii)	Canadian Dollar Loans shall bear interest at the Canadian Base Rate plus the Applicable Margin; and

(iii)

Swingline Loans shall bear interest at (A) the Base Rate plus the Applicable Margin or (B) the Quoted Swingline Rate.

The US Borrower, on behalf of itself and the Canadian Borrower, shall select the rate of interest and Interest Period, if any, applicable to any Loan at the time a Notice of Borrowing is given pursuant to Section 2. 4 or at the time a Notice of Conversion/Continuation is given pursuant to Section 4.2 . Any Revolving Credit Loan or any portion thereof as to which the US Borrower has not duly specified an interest rate as provided herein shall be deemed a Base Rate Loan. Any LIBOR Rate Loan or any portion thereof as to which the US Borrower has not duly specified an Interest Period as provided herein shall be deemed a LIBOR Rate Loan with an Interest Period of one (1) month. Any Swingline Loan or any portion thereof as to which the US Borrower has not duly specified an interest rate as provided herein shall be deemed a Base Rate Loan.

(b) Interest Periods . In connection with each LIBOR Rate Loan, the US Borrower, on behalf of itself and the Canadian Borrower, by giving notice at the times described in Section 2.4 or 4.2 , as applicable, shall elect an interest period (each, an “ Interest Period ”) to be applicable to such LIBOR Rate Loan, which Interest Period shall be a period of one (1), two (2), three (3), or six (6) months; provided that:

(i) the Interest Period shall commence on the date of advance of or conversion to any LIBOR Rate Loan and, in the case of immediately successive Interest Periods, each successive Interest Period shall commence on the date on which the immediately preceding Interest Period expires;

(ii) if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided , that if any Interest Period with respect to a LIBOR Rate Loan would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the immediately preceding Business Day;

(iii) any Interest Period with respect to a LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the relevant calendar month at the end of such Interest Period;

(iv)	no Interest Period shall extend beyond the Maturity Date; and
(v)	there shall be no more than six (6) Interest Periods in effect at any time.

(c) Default Rate . Subject to Section 12.3 , upon the occurrence and during the continuance of a Payment Event of Default or a Bankruptcy Event of Default or, at the discretion of the Administrative Agent or as directed by the Required Lenders, upon the occurrence and during the continuance of an Event of Default other than a Payment Event of Default or Bankruptcy Event of Default, (i) the Borrowers shall no longer have the option to request LIBOR Rate Loans, Swingline Loans or Letters of Credit, (ii) all outstanding LIBOR Rate Loans shall bear interest at a rate per annum of two percent (2%) in excess of the rate then applicable to LIBOR Rate Loans until the end of the applicable Interest Period and thereafter at a rate equal to two percent (2%) in excess of the rate then applicable to Base Rate Loans, (iii) all outstanding Canadian Base Rate Loans shall bear interest at a rate per annum equal to two percent (2%) in excess of the rate then applicable to Canadian Base Rate Loans and (iv) all outstanding Base Rate Loans, Swingline Loans and other Obligations arising hereunder or under any other Loan Document shall bear interest at a rate per annum equal to two percent (2%) in excess of the rate then applicable to Base Rate Loans. Interest shall continue to accrue on the Obligations after the filing by or against any Borrower of any petition

	2270524.10
LIB: CHARLOTTE

seeking any relief in bankruptcy or under any act or law pertaining to insolvency or debtor relief, whether state, federal or foreign. The interest accrued pursuant to this Section 4.1(c) shall be payable by the applicable Borrower on demand of the Administrative Agent.

(d)	Interest Payment and Computation .

	(i)	Interest on each Base Rate Loan, each Canadian Base Rate Loan and each Quoted Swingline Rate Loan shall be due and payable in arrears on the last Business Day of each calendar quarter commencing December 31, 2004; and interest on each LIBOR Rate Loan shall be due and payable on the last day of each Interest Period applicable thereto, and if such Interest Period extends over three (3) months, at the end of each three (3) month interval during such Interest Period. Interest on LIBOR Rate Loans and all fees payable hereunder shall be computed on the basis of a 360-day year and assessed for the actual number of days elapsed and interest on Base Rate Loans and Canadian Base Rate Loans shall be computed on the basis of a 365/66-day year and assessed for the actual number of days elapsed.
(ii)		For greater certainty, whenever any amount is payable under this Agreement or any other Loan Document by the Canadian Borrower as interest or as a fee which requires the calculation of an amount using a percentage per annum, each party to this Agreement acknowledges and agrees that such amount shall be calculated as of the date payment is due without application of the “deemed reinvestment principle” or the “effective yield method” (e.g., when interest is calculated and payable monthly, the rate of interest payable per month is 1/12 of the stated rate of interest per annum).

(e)	Maximum Rate .

	(i)	In no contingency or event whatsoever shall the aggregate of all amounts deemed interest under this Agreement charged or collected pursuant to the terms of this Agreement exceed the highest rate permissible under any Applicable Law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a court determines that the Lenders have charged or received interest hereunder in excess of the highest applicable rate, the rate in effect hereunder shall automatically be reduced to the maximum rate permitted by Applicable Law and the Lenders shall at the Administrative Agent’s option (A) promptly refund to the Borrowers any interest received by the Lenders in excess of the maximum lawful rate or (B) apply such excess to the principal balance of the Obligations on a pro rata basis. It is the intent hereof that the Borrowers not pay or contract to pay, and that neither the Administrative Agent nor any Lender receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be paid by the Borrowers under Applicable Law.
(ii)		Notwithstanding the provisions of this Section 4.1 or any other provision of this Agreement, in no event shall the aggregate “interest” (as such term is defined in Section 347 of the Criminal Code (Canada)) exceed the effective annual rate of interest on the “credit advanced” (as such term is defined in Section 347 of the Criminal Code (Canada)) lawfully permitted under Section 347 of the Criminal Code (Canada). The effective annual rate of interest shall be determined in accordance with generally accepted actuarial practices and principles over the term of the applicable Loan, and in the event of a dispute, a certificate of a Fellow of the Canadian Institute of Actuaries qualified for a period of ten (10) years and appointed by the Canadian Dollar Lender will be conclusive for the purposes of such determination. A certificate of an authorized signing officer of the Canadian Dollar Lender as to each amount and/or each rate of interest payable hereunder from time to time shall be conclusive evidence of such amount and of such rate, absent manifest error.

SECTION 4.2 Notice and Manner of Conversion or Continuation of Revolving Credit Loans . Provided that no Default or Event of Default has occurred and is then continuing, the US Borrower, on behalf of itself and the Canadian Borrower, shall have the option to (a) convert at any time following the third Business Day after the Closing Date all or any portion of any outstanding Base Rate Loans (other than Swingline Loans) in a principal amount equal to $1,000,000 or any whole multiple of $1,000,000 in excess thereof into one or more LIBOR Rate Loans and (b) upon the expiration of any Interest Period, (i) convert all or any part of its outstanding LIBOR Rate Loans in a principal amount equal to $500,000 or a whole multiple of $100,000 in excess thereof into Base Rate Loans (other than Swingline Loans) or (ii) continue such LIBOR Rate Loans as LIBOR Rate Loans. Whenever the US Borrower, on behalf of itself and the Canadian Borrower, desires to convert or continue Revolving Credit Loans as provided above, the US Borrower, on behalf of itself and the Canadian Borrower, shall give the Administrative Agent irrevocable prior written notice in the form attached as Exhibit E (a “ Notice of Conversion/Continuation ”) not later than 12:00 noon (Charlotte time) three (3) Business Days before the day on which a proposed conversion or

	2270524.10
LIB: CHARLOTTE

continuation of such Revolving Credit Loan is to be effective specifying (A) the Revolving Credit Loans to be converted or continued, and, in the case of any LIBOR Rate Loan to be converted or continued, the last day of the Interest Period therefor, (B) the effective date of such conversion or continuation (which shall be a Business Day), (C) the principal amount of such Revolving Credit Loans to be converted or continued, and (D) the Interest Period to be applicable to such converted or continued LIBOR Rate Loan. The Administrative Agent shall promptly notify the Lenders of such Notice of Conversion/Continuation.

SECTION 4.3

Fees .

(a) Facility Fee . Commencing on the Closing Date, the Borrowers shall pay to the Administrative Agent, for the account of the Lenders, a non-refundable facility fee at a rate per annum equal to the Applicable Margin on the Aggregate Commitment (regardless of usage). The facility fee shall be payable in arrears on the last Business Day of each calendar quarter during the term of this Agreement commencing December 31, 2004, and on the Maturity Date. Such facility fee shall be distributed by the Administrative Agent to the Lenders pro rata in accordance with the Lenders’ respective Commitment Percentages.

(b) Administrative Agent’s and Other Fees . In order to compensate the Administrative Agent for structuring and syndicating the Loans and for its obligations hereunder, the Borrowers agree to pay to the Administrative Agent and its affiliates, for their own account, the fees set forth in the Fee Letter.

SECTION 4.4

Manner of Payment .

(a) Loans Denominated in Dollars . Each payment by the US Borrower on account of the principal of or interest on any Loan or Letter of denominated in Dollars or of any fee, commission or other amounts (including the Reimbursement Obligation) payable to the Lenders under this Agreement or any Note (except as set forth in Section 4.4(b)) shall be made in Dollars not later than 2:00 p.m. on the date specified for payment under this Agreement to the Administrative Agent at the Administrative Agent’s Office for the account of the Lenders (other than as set forth below) pro rata in accordance with their respective Commitment Percentages (except as specified below) in immediately available funds and shall be made without any set-off, counterclaim or deduction whatsoever. Any payment received after such time but before 3:00 p.m. on such day shall be deemed a payment on such date for the purposes of Section 12.1 , but for all other purposes shall be deemed to have been made on the next succeeding Business Day. Any payment received after 3:00 p.m. shall be deemed to have been made on the next succeeding Business Day for all purposes.

(b) Canadian Dollar Loans . Each payment by the Borrowers on account of the principal of or interest on the Canadian Dollar Loans shall be made in Canadian Dollars not later than 2:00 p.m. (Toronto, Ontario time) on the date specified for payment under this Agreement to the Administrative Agent’s account with the Canadian Dollar Lender for the account of the Canadian Dollar Lender (other than as set forth below) in immediately available funds, and shall be made without any set-off, counterclaim or deduction whatsoever. Any payment received after such time but before 3:00 p.m. (Toronto, Ontario time) on such day shall be deemed a payment on such date for the purposes of Section 12.1 , but for all other purposes shall be deemed to have been made on the next succeeding Business Day. Any payment received after 3:00 p.m. (Toronto, Ontario time) shall be deemed to have been made on the next succeeding Business Day for all purposes.

(c) General Payment Provisions . Upon receipt by the Administrative Agent of each such payment, the Administrative Agent shall distribute to each Lender at its address for notices set forth herein its pro rata share of such payment in accordance with such Lender’s Commitment Percentage (except as specified below) and shall wire advice of the amount of such credit to each Lender. Each payment to the Administrative Agent of the Issuing Lender’s fees or L/C Participants’ commissions shall be made in like manner, but for the account of the Issuing Lender or the L/C Participants, as the case may be. Each payment to the Administrative Agent of Administrative Agent’s fees or expenses shall be made for the account of the Administrative Agent and any amount payable to any Lender under Sections 4.9 , 4.10 , 4.11 or 14.2 shall be paid to the Administrative Agent for the account of the applicable Lender. Each payment to the Administrative Agent with respect to Swingline Loans (including, without limitation, the Swingline Lender’s fees or expenses) shall be made for the account of the Swingline Lender. Each payment to the Administrative Agent with respect to the Canadian Dollar Loans (including, without limitation, the Canadian Dollar Lender’s fees or expenses) shall be made for the account of the Canadian Dollar Lender. Subject to Section 4.1(b)(ii) if any payment under this Agreement shall be specified to be made upon a day which is not a Business Day, it shall be made on the next succeeding day which is a Business Day and such extension of time shall in such case be included in computing any interest if payable along with such payment.

SECTION 4.5

Evidence of Indebtedness .

	2270524.10
LIB: CHARLOTTE

(a) Extensions of Credit . The Extensions of Credit made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Extensions of Credit made by the Lenders to the Borrowers and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the Borrowers shall execute and deliver to such Lender (through the Administrative Agent) a Revolving Credit Note, a Canadian Note and/or a Swingline Note, as applicable, which shall evidence such Lender’s Revolving Credit Loans, Canadian Dollar Loans and/or Swingline Loans in addition to such accounts or records. Each Lender may attach schedules to its Notes and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.

(b) Participations . In addition to the accounts and records referred to in subsection (a), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Canadian Dollar Loans, Swingline Loans and Letters of Credit. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

SECTION 4.6 Adjustments . If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations (other than pursuant to Sections 4.9 , 4.10 , 4.11 or 14.3 hereof) greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that

(i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and

(ii) the provisions of this Section shall not be construed to apply to (x) any payment made by the Borrowers pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in Canadian Dollar Loans, Swingline Loans and Letters of Credit to any assignee or participant, other than to a Borrower or any Subsidiary thereof (as to which the provisions of this Section shall apply).

Each Credit Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Credit Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Credit Party in the amount of such participation.

SECTION 4.7 Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by the Administrative Agent . The obligations of the Lenders under this Agreement to make, to issue or to participate in Loans and Letters of Credit, as applicable, are several and are not joint or joint and several. Unless the Administrative Agent shall have received notice from a Lender prior to a proposed borrowing date that such Lender will not make available to the Administrative Agent such Lender’s ratable portion of the amount to be borrowed on such date (which notice shall not release such Lender of its obligations hereunder), the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the proposed borrowing date in accordance with Sections 2.4(b), and the Administrative Agent may, in reliance upon such assumption, make available to the Borrowers on such date a corresponding amount. If such amount is made available to the Administrative Agent on a date after such borrowing date, such Lender shall pay to the Administrative Agent on demand an amount, until paid, equal to the product of (a) the amount not made available by such Lender in accordance with the terms hereof, times

	2270524.10
LIB: CHARLOTTE

(b) the daily average Federal Funds Rate during such period as determined by the Administrative Agent, times (c) a fraction the numerator of which is the number of days that elapse from and including such borrowing date to the date on which such amount not made available by such Lender in accordance with the terms hereof shall have become immediately available to the Administrative Agent and the denominator of which is 360. A certificate of the Administrative Agent with respect to any amounts owing under this Section shall be conclusive, absent manifest error. If such Lender’s Commitment Percentage of such borrowing is not made available to the Administrative Agent by such Lender within three (3) Business Days after such borrowing date, the Administrative Agent shall be entitled to recover such amount made available by the Administrative Agent with interest thereon at the rate per annum applicable to Base Rate Loans hereunder, on demand, from the Borrowers. The failure of any Lender to make available its Commitment Percentage of any Loan requested by the Borrowers shall not relieve it or any other Lender of its obligation, if any, hereunder to make its Commitment Percentage of such Loan available on the borrowing date, but no Lender shall be responsible for the failure of any other Lender to make its Commitment Percentage of such Loan available on the borrowing date. Notwithstanding anything set forth herein to the contrary, any Lender that fails to make available its Commitment Percentage of any Loan shall not (a) have any voting or consent rights under or with respect to any Loan Document (except that the Commitment of such Lender may not be increased or extended without the consent of such Lender) or (b) constitute a “Lender” (or be included in the calculation of Required Lenders hereunder) for any voting or consent rights under or with respect to any Loan Document.

SECTION 4.8

Changed Circumstances .

(a) Circumstances Affecting LIBOR Rate and Canadian Dollar Availability . If (i) with respect to any Interest Period for any LIBOR Rate Loan the Administrative Agent or any Lender (after consultation with the Administrative Agent) shall determine that, by reason of circumstances affecting the foreign exchange and interbank markets generally, deposits in eurodollars, in the applicable amounts are not being quoted via the Telerate Page 3750 or offered to the Administrative Agent or such Lender for such Interest Period, (ii) a fundamental change has occurred in the foreign exchange or interbank markets with respect to Canadian Dollars (including, without limitation, changes in national or international financial, political or economic conditions or currency exchange rates or exchange controls) or (iii) it has become otherwise materially impractical for the Canadian Dollar Lender to make any Canadian Dollar Loans, then the Administrative Agent shall forthwith give notice thereof to the Borrowers. Thereafter, until the Administrative Agent notifies the Borrowers that such circumstances no longer exist, the obligation of the Lenders or the Canadian Dollar Lender, as applicable, to make LIBOR Rate Loans or Canadian Dollar Loans, as applicable, and the right of the US Borrower to convert any Revolving Credit Loan to or continue any Revolving Credit Loan as a LIBOR Rate Loan shall be suspended, and (i) the US Borrower or the Canadian Borrower, as applicable, shall repay in full (or cause to be repaid in full) the then outstanding principal amount of each such LIBOR Rate Loan or Canadian Dollar Loan, as applicable, together with accrued interest thereon, (A) with respect to any LIBOR Rate Loan, on the last day of the then current Interest Period applicable to such LIBOR Rate Loan or (B) with respect to any Canadian Dollar Loan, immediately upon the request of the Administrative Agent or (ii) with respect to any LIBOR Rate Loan, convert the then outstanding principal amount of such LIBOR Rate Loan to a Base Rate Loan as of the last day of such Interest Period.

(b) Laws Affecting LIBOR Rate and Canadian Dollar Availability . If, after the date hereof, the introduction of, or any change in, any Applicable Law 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, or compliance by any of the Lenders (or any of their respective Lending Offices) with any request or directive (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, shall make it unlawful or impossible for any of the Lenders (or any of their respective Lending Offices) to honor its obligations hereunder to make or maintain any LIBOR Rate Loan or Canadian Dollar Loan, such Lender shall promptly give notice thereof to the Administrative Agent and the Administrative Agent shall promptly give notice to the Borrowers and the other Lenders. Thereafter, until the Administrative Agent notifies the Borrowers that such circumstances no longer exist, (i) the obligations of the Lenders or the Canadian Dollar Lender, as applicable, to make LIBOR Rate Loans or Canadian Dollar Loans, as applicable, and the right of the US Borrower to convert any Revolving Credit Loan or continue any Revolving Credit Loan as a LIBOR Rate Loan shall be suspended and thereafter the US Borrower may select only Base Rate Loans hereunder, (ii) if any of the Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the end of the then current Interest Period applicable thereto as a LIBOR Rate Loan, the applicable LIBOR Rate Loan shall immediately be converted to a Base Rate Loan for the remainder of such Interest Period and (iii) if the Canadian Dollar Lender may not lawfully continue to

	2270524.10
LIB: CHARLOTTE

maintain a Canadian Dollar Loan, the applicable Canadian Dollar Loan shall immediately be repaid in full (together with accrued interest thereon).

SECTION 4.9 Indemnity . The US Borrower hereby indemnifies each of the Lenders against any loss or expense which may arise or be attributable to each Lender’s obtaining, liquidating or employing deposits or other funds acquired to effect, fund or maintain any Revolving Credit Loan (a) as a consequence of any failure by the US Borrower to make any payment when due of any amount due hereunder in connection with a LIBOR Rate Loan, (b) due to any failure of the US Borrower to borrow, continue or convert on a date specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation or (c) due to any payment, prepayment or conversion of any LIBOR Rate Loan on a date other than the last day of the Interest Period therefor. The amount of such loss or expense shall be determined, in the applicable Lender’s sole discretion, based upon the assumption that such Lender funded its Commitment Percentage of the LIBOR Rate Loans in the London interbank market and using any reasonable attribution or averaging methods which such Lender deems appropriate and practical. A certificate of such Lender setting forth the basis for determining such amount or amounts necessary to compensate such Lender shall be forwarded to the US Borrower through the Administrative Agent and shall be conclusively presumed to be correct save for manifest error.

SECTION 4.10		Increased Costs .
	(a)		Increased Costs Generally . If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or advances, loans or other credit extended or participated in by, any Lender (except any reserve requirement reflected in the LIBOR Rate), the Canadian Dollar Lender or the Issuing Lender (or any of their respective Lending Offices);

(ii) subject any Lender, the Canadian Dollar Lender or the Issuing Lender to any tax of any kind whatsoever with respect to this Agreement, any Canadian Dollar Loan, any Letter of Credit, any participation in a Canadian Dollar Loan or a Letter of Credit or any LIBOR Rate Loan made by it, or change the basis of taxation of payments to such Lender, the Canadian Dollar Lender or the Issuing Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 4.11 and the imposition of, or any change in the rate of any Excluded Tax payable by such Lender, the Canadian Dollar Lender or the Issuing Lender); or

(iii) impose on any Lender, the Canadian Dollar Lender or the Issuing Lender (or any of their respective Lending Offices) or the London interbank market any other condition, cost or expense affecting this Agreement, any Canadian Dollar Loan, any Letter of Credit, any participation in a Canadian Dollar Loan or a Letter of Credit or any LIBOR Rate Loan made by it;

and the result of any of the foregoing shall be to increase the cost to such Lender, the Canadian Dollar Lender or the Issuing Lender of making, converting into or maintaining any LIBOR Rate Loan or Canadian Dollar Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender, the Canadian Dollar Lender or the Issuing Lender of participating in, issuing or maintaining any Canadian Dollar Loan or Letter of Credit (or of maintaining its obligation to participate in or to issue any Canadian Dollar Loan or Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender, the Canadian Dollar Lender or the Issuing Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, the Canadian Dollar Lender or the Issuing Lender, the Borrowers shall promptly pay to any such Lender, the Canadian Dollar Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender, the Canadian Dollar Lender or the Issuing Lender, as the case may be, for such additional costs incurred or reduction suffered.

(b) Capital Requirements . If any Lender, the Canadian Dollar Lender or the Issuing Lender determines that any Change in Law affecting such Lender, the Canadian Dollar Lender or the Issuing Lender or any lending office of such Lender, the Canadian Dollar Lender or such Lender’s, the Canadian Dollar Lender’s or the Issuing Lender’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s, the Canadian Dollar Lender’s or the Issuing Lender’s capital or on the capital of such Lender’s, the Canadian Dollar Lender’s or the Issuing Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender, the Canadian Lender or the Issuing Lender or the Loans made by,

	2270524.10
LIB: CHARLOTTE

or participations in Letters of Credit held by, such Lender, the Canadian Dollar Lender or the Issuing Lender or the Letters of Credit issued by the Issuing Lender, to a level below that which such Lender, the Canadian Dollar or the Issuing Lender or such Lender’s, the Canadian Dollar Lender’s or the Issuing Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s, the Canadian Dollar Lender’s or the Issuing Lender’s policies and the policies of such Lender’s, the Canadian Dollar Lender’s or the Issuing Lender’s holding company with respect to capital adequacy), then from time to time the Borrowers shall promptly pay to such Lender, the Canadian Dollar Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender, the Canadian Dollar Lender or the Issuing Lender or such Lender’s, the Canadian Dollar Lender’s or the Issuing Lender’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement . A certificate of a Lender, the Canadian Dollar Lender or the Issuing Lender setting forth the amount or amounts necessary to compensate such Lender, the Canadian Dollar Lender or the Issuing Lender or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrowers shall be conclusive absent manifest error. The Borrowers shall pay such Lender, the Canadian Dollar Lender or the Issuing Lender, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.

(d) Delay in Requests . Failure or delay on the part of any Lender, the Canadian Dollar Lender or the Issuing Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s, the Canadian Dollar Lender’s or the Issuing Lender’s right to demand such compensation; provided that the Borrowers shall not be required to compensate a Lender, the Canadian Dollar Lender or the Issuing Lender pursuant to this Section for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that such Lender, the Canadian Dollar Lender or the Issuing Lender, as the case may be, notifies the Borrowers of the Change in Law giving rise to such increased costs or reductions and of such Lender’s, the Canadian Dollar Lender’s or the Issuing Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

SECTION 4.11

Taxes .

(a) Payments Free of Taxes . Any and all payments by or on account of any obligation of the Borrowers hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes; provided that if any Borrower shall be required by Applicable Law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, the Lenders or the Issuing Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with Applicable Law.

(b) Payment of Other Taxes by the Borrowers . Without limiting the provisions of subsection (a) above, the Borrowers shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with Applicable Law.

(c) Indemnification by the Borrowers . The Borrowers shall indemnify the Administrative Agent, each Lender and the Issuing Lender, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent, such Lender or the Issuing Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the US Borrower by a Lender or the Issuing Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Lender, shall be conclusive absent manifest error.

(d) Evidence of Payments . As soon as practicable after any payment of Indemnified Taxes or Other Taxes by any Borrower to a Governmental Authority, such Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of

	2270524.10
LIB: CHARLOTTE

the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Status of Lenders . Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which a Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the applicable Borrower (with a copy to the Administrative Agent), at the time or times prescribed by Applicable Law or reasonably requested by the applicable Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by Applicable Law as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if requested by applicable Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the applicable Borrower or the Administrative Agent as will enable the applicable Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Without limiting the generality of the foregoing, in the event that applicable Borrower is a resident for tax purposes in the United States, any Foreign Lender shall deliver to the applicable Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the applicable Borrower or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

(i) duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party,

(ii)	duly completed copies of Internal Revenue Service Form W-8ECI,

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the applicable Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or

(iv) any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by Applicable Law to permit applicable Borrower to determine the withholding or deduction required to be made.

Without limiting the obligations of the Lenders set forth above regarding delivery of certain forms and documents to establish each Lender’s status for U.S. withholding tax purposes, each Lender agrees promptly to deliver to the Administrative Agent or the US Borrower, on behalf of itself and the Canadian Borrower, as the Administrative Agent or the US Borrower, on behalf of itself and the Canadian Borrower, shall reasonably request, on or prior to the Closing Date, and in a timely fashion thereafter, such other documents and forms required by any relevant taxing authorities under the Laws of any other jurisdiction, duly executed and completed by such Lender, as are required under such Laws to confirm such Lender’s entitlement to any available exemption from, or reduction of, applicable withholding taxes in respect of all payments to be made to such Lender outside of the United States by the Borrowers pursuant to this Agreement or otherwise to establish such Lender’s status for withholding tax purposes in such other jurisdiction. Each Lender shall promptly (i) notify the Administrative Agent of any change in circumstances which would modify or render invalid any such claimed exemption or reduction, and (ii) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re-designation of its Lending Office) to avoid any requirement of Applicable Laws of any such jurisdiction that any Borrower make any deduction or withholding for taxes from amounts payable to such Lender. Additionally, each Borrower shall promptly deliver to the Administrative Agent or any Lender, as the Administrative Agent or such Lender shall reasonably request, on or prior to the Closing Date, and in a timely fashion thereafter, such documents and forms required by any relevant taxing authorities under the Laws of any jurisdiction, duly executed and completed by such Borrower, as are required to be furnished by such Lender or the Administrative Agent under such Laws in connection with any payment by the Administrative Agent or any Lender of Taxes or Other Taxes, or otherwise in connection with the Loan Documents, with respect to such jurisdiction

	2270524.10
LIB: CHARLOTTE

(f) Treatment of Certain Refunds . If the Administrative Agent, a Lender or the Issuing Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrowers or with respect to which the Borrowers have paid additional amounts pursuant to this Section, it shall pay to the Borrowers an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrowers under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent, such Lender or the Issuing Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrowers, upon the request of the Administrative Agent, such Lender or the Issuing Lender, agree to repay the amount paid over to the Borrowers (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, such Lender or the Issuing Lender in the event the Administrative Agent, such Lender or the Issuing Lender is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require the Administrative Agent, any Lender or the Issuing Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrowers or any other Person.

(g) Survival . Without prejudice to the survival of any other agreement of the Borrowers hereunder, the agreements and obligations of the Borrowers contained in this Section shall survive the payment in full of the Obligations and the termination of the Commitments.

SECTION 4.12

Mitigation Obligations; Replacement of Lenders .

(a) Designation of a Different Lending Office . If any Lender requests compensation under Section 4.10 , or requires the Borrowers to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 4.11 , then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 4.10 or Section 4.11 , as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b) Replacement of Lenders . If any Lender requests compensation under Section 4.10 , or if the Borrowers are required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 4.11 , or if any Lender defaults in its obligation to fund Loans hereunder, then the Borrowers may, at their sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 14.11 ), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:

(i) the Borrowers shall have paid to the Administrative Agent the assignment fee specified in Section 14.11 ;

(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in Letters of Credit, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 4.9 ) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts);

(iii) in the case of any such assignment resulting from a claim for compensation under Section 4.10 or payments required to be made pursuant to Section 4.11 , such assignment will result in a reduction in such compensation or payments thereafter; and

(iv)	such assignment does not conflict with Applicable Law.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply.

	2270524.10
LIB: CHARLOTTE

SECTION 4.13 Redenomination of Canadian Dollar Loans . If any Canadian Dollar Loan is required to bear interest based at the Base Rate rather than the Canadian Base Rate pursuant to any applicable provision hereof, such Loan shall be funded in Dollars in an amount equal to the Dollar Amount of such Canadian Dollar Loan, all subject to the provisions of Section 2.4(b). The Borrowers shall reimburse the Lenders upon any such conversion for any amounts required to be paid under Section 4.9 .

SECTION 4.14 US Borrower as Agent for the Canadian Borrower . The Canadian Borrower hereby irrevocably appoints and authorizes the US Borrower (a) to provide the Administrative Agent with all notices with respect to Extensions of Credit obtained for the benefit of either Borrower and all other notices and instructions under this Agreement, (b) to take such action on behalf of the Borrowers as the US Borrower deems appropriate on its behalf to obtain Extensions of Credit and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement and (c) to act as its agent for service of process and notices required to be delivered under this Agreement or the other Loan Documents, it being understood and agreed that receipt by the US Borrower of any summons, notice or other similar item shall be deemed effective receipt by the Borrowers and their Subsidiaries.

ARTICLE V

CLOSING; CONDITIONS OF CLOSING AND BORROWING

SECTION 5.1 Closing . The closing shall take place at the offices of Kennedy Covington Lobdell & Hickman, L.L.P. at 10:00 a.m. on November 2, 2004, or on such other place, date and time as the parties hereto shall mutually agree.

SECTION 5.2 Conditions to Closing and Initial Extensions of Credit . The obligation of the Lenders to close this Agreement and to make the initial Loan or issue or participate in the initial Letter of Credit, if any, is subject to the satisfaction of each of the following conditions:

(a) Executed Loan Documents . This Agreement, a Revolving Credit Note in favor of each Lender requesting a Revolving Credit Note, a Canadian Note in favor of the Canadian Dollar Lender (if requested thereby), a Swingline Note in favor of the Swingline Lender (if requested thereby), the Subsidiary Guaranty Agreement, together with any other applicable Loan Documents, shall have been duly authorized, executed and delivered to the Administrative Agent by the parties thereto, shall be in full force and effect and no Default or Event of Default shall exist hereunder or thereunder.

(b) Closing Certificates; Etc. The Administrative Agent shall have received each of the following in form and substance reasonably satisfactory to the Administrative Agent:

(i) Officer’s Certificate of the US Borrower . A certificate from a Responsible Officer of the US Borrower to the effect that all representations and warranties of the Credit Parties contained in this Agreement and the other Loan Documents are true, correct and complete in all material respects as of the Closing Date, except for any representation and warranty made as of an earlier date, which representation and warranty shall remain true and correct as of such earlier date; provided that any representation and warranty that is qualified by materiality or by reference to Material Adverse Effect shall be true, correct and complete in all respects as of the Closing Date; that none of the Credit Parties are in violation of any of the covenants contained in this Agreement and the other Loan Documents; that, after giving effect to the transactions contemplated by this Agreement, no Default or Event of Default has occurred and is continuing; and that each of the Credit Parties, as applicable, has satisfied each of the conditions set forth in Section 5.2 and Section 5.3 .

(ii) Certificate of Responsible Officer of each Credit Party . A certificate of a Responsible Officer of each Credit Party certifying as to the incumbency and genuineness of the signature of each officer of such Credit Party executing Loan Documents to which it is a party and certifying that attached thereto is a true, correct and complete copy of (A) the articles of incorporation (or equivalent documentation) of such Credit Party and all amendments thereto, certified as of a recent date by the appropriate Governmental Authority in its jurisdiction of incorporation or formation, (B) the bylaws (or equivalent documentation) of such Credit Party as in effect on the Closing Date, (C) resolutions duly adopted by the board of directors (or equivalent governing body) of such Credit Party authorizing the transactions contemplated hereunder and the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party, and (D) each certificate required to be delivered pursuant to Section 5.2(b)(iii).

	2270524.10
LIB: CHARLOTTE

(iii) Certificates of Good Standing . Certificates as of a recent date of the good standing or status of each Credit Party under the laws of its jurisdiction of organization and, to the extent requested by the Administrative Agent, each other jurisdiction where such Credit Party is qualified to do business and, to the extent available, a certificate of the relevant taxing authorities of such jurisdictions certifying that such Credit Party has filed required tax returns and owes no delinquent taxes.

(iv) Opinions of Counsel . Favorable opinions of counsel to the Credit Parties addressed to the Administrative Agent and the Lenders with respect to the Credit Parties, the Loan Documents and such other matters as the Lenders shall request, each in form and substance satisfactory to the Administrative Agent (including, without limitation, favorable opinions of foreign counsel to the Credit Parties).

(v)	Tax Forms . Copies of the United States Internal Revenue Service forms required by Section 4.11(e).

(vi) Liability Insurance . The Administrative Agent shall have received certificates of and liability insurance, evidence of payment of all insurance premiums for the current policy year of each (naming the Administrative Agent as additional insured on all certificates for liability insurance), and, if requested by the Administrative Agent, copies (certified by a Responsible Officer) of insurance policies in form and substance reasonably satisfactory to the Administrative Agent.

(c)	Consents; Defaults .

(i) Governmental and Third Party Approvals . The Credit Parties shall have received all material governmental, shareholder and third party consents and approvals necessary (or any other material consents as determined in the reasonable discretion of the Administrative Agent) in connection with the transactions contemplated by this Agreement and the other Loan Documents and the other transactions contemplated hereby and all applicable waiting periods shall have expired without any action being taken by any Person that could reasonably be expected to restrain, prevent or impose any material adverse conditions on any of the Credit Parties or such other transactions or that could seek or threaten any of the foregoing, and no law or regulation shall be applicable which in the reasonable judgment of the Administrative Agent could reasonably be expected to have such effect.

(ii) No Injunction, Etc. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain substantial damages in respect of, or which is related to or arises out of this Agreement or the other Loan Documents or the consummation of the transactions contemplated hereby or thereby, or which, in the Administrative Agent’s sole discretion, would make it inadvisable to consummate the transactions contemplated by this Agreement or the other Loan Documents or the consummation of the transactions contemplated hereby or thereby.

(d)	Financial Matters .

(i) Financial Statements . The Administrative Agent and the Lenders shall have received the following financial statements of the US Borrower and its Subsidiaries, all in form and substance reasonably satisfactory to the Administrative Agent and the Lenders and prepared in accordance with GAAP (and, with respect to all audited financial statements, to be audited by an independent certified public accounting firm reasonably satisfactory to the Administrative Agent):

(A) the audited consolidated financial statements of the US Borrower and its Subsidiaries for the Fiscal Years ended December 31, 2001, December 31, 2002 and December 31, 2003; and

(B) the unaudited consolidated financial statements of the US Borrower and its Subsidiaries for each interim quarterly period ended at least forty-five (45) days prior to the Closing Date.

(ii) Financial Projections . The Administrative Agent shall have received financial projections with respect to the US Borrower and its Subsidiaries prepared by a Responsible Officer of the US Borrower, in form reasonably satisfactory to the Administrative Agent, of balance sheets, income statements and cash flow statements on a quarterly basis for the first year following the Closing Date and an annual basis for the next five (5) years thereafter.

(iii) Financial Condition Certificate . The US Borrower shall have delivered to the Administrative Agent a certificate, in form and substance satisfactory to the Administrative Agent, and certified as accurate by a Responsible Officer of the US Borrower, that (A) the US Borrower and each of its Subsidiaries are each Solvent, (B) the US Borrower’s and each of its Subsidiaries’ payables are current and not past due (except to the extent consistent with the past practice of the US Borrower and its Subsidiaries), (C) attached thereto are calculations evidencing compliance on a pro forma basis with the covenants contained in Article IX hereof, (D) the financial projections previously delivered to the Administrative Agent represent the good faith estimates (utilizing reasonable

	2270524.10
LIB: CHARLOTTE

assumptions) of the financial condition and operations of the US Borrower and its Subsidiaries; (E) attached thereto is a calculation of the Applicable Margin; and (F) attached thereto is a calculation of EBITDA of the US Borrower and its Subsidiaries, determined on a pro forma basis for the twelve (12) consecutive calendar month period ending September 30, 2004, demonstrating to the reasonable satisfaction of the Administrative Agent that EBITDA (as determined in such manner) is greater than $115,000,000.

(iv) Payment at Closing; Fee Letters . The Borrowers shall have paid to the Administrative Agent and the Lenders the fees set forth or referenced in Section 4.3 and any other accrued and unpaid fees or commissions due hereunder (including, without limitation, legal fees and expenses) and to any other Person such amount as may be due thereto in connection with the transactions contemplated hereby, including all taxes, fees and other charges in connection with the execution, delivery, recording, filing and registration of any of the Loan Documents.

(e)	Miscellaneous .

(i) Notice of Borrowing . The Administrative Agent shall have received a Notice of Borrowing from the applicable Borrower in accordance with Section 2.4(a) and a Notice of Account Designation from the US Borrower specifying the account or accounts to which the proceeds of any Loans made after the Closing Date are to be disbursed.

(ii) Due Diligence . The Administrative Agent shall have completed, to its satisfaction, all legal and other due diligence with respect to the business, assets, liabilities, operations and condition (financial or otherwise) of the US Borrower and its Subsidiaries in scope and determination satisfactory to the Administrative Agent in its sole discretion. In connection therewith, the Administrative Agent may request the results of a Lien search (including a search as to judgments, pending litigation and tax matters), in form and substance reasonably satisfactory thereto, made against the Credit Parties under the Uniform Commercial Code (or applicable judicial docket) as in effect in any state or comparable legislation in other jurisdictions in which any of the assets of such Credit Party are located, indicating among other things that its assets are free and clear of any Lien except for Permitted Liens.

(iii) Existing Facility . The Existing Facility (other than the Existing Letters of Credit) shall be repaid in full and terminated and all collateral security therefor shall be released, and the Administrative Agent shall have received a pay-off letter in form and substance satisfactory to it evidencing such repayment, termination, reconveyance and release.

(iv) Other Documents . All opinions, certificates and other instruments and all proceedings in connection with the transactions contemplated by this Agreement shall be satisfactory in form and substance to the Administrative Agent. The Administrative Agent shall have received copies of all other documents, certificates and instruments reasonably requested thereby, with respect to the transactions contemplated by this Agreement.

SECTION 5.3 Conditions to All Extensions of Credit . The obligations of the Lenders to make any Extensions of Credit (including the initial Extension of Credit), convert or continue any Loan and/or the Issuing Lender to issue or extend any Letter of Credit are subject to the satisfaction of the following conditions precedent on the relevant borrowing, continuation, conversion, issuance or extension date:

(a) Continuation of Representations and Warranties . The representations and warranties contained in Article VI shall be true and correct on and as of such borrowing, continuation, conversion, issuance or extension date with the same effect as if made on and as of such date, except for any representation and warranty made as of an earlier date, which representation and warranty shall remain true and correct as of such earlier date.

(b) No Existing Default . No Default or Event of Default shall have occurred and be continuing (i) on the borrowing, continuation or conversion date with respect to such Loan or after giving effect to the Loans to be made, continued or converted on such date or (ii) on the issuance or extension date with respect to such Letter of Credit or after giving effect to the issuance or extension of such Letter of Credit on such date.

(c) Notices . The Administrative Agent shall have received a Notice of Borrowing or Notice of Conversion/Continuation, as applicable, from the applicable Borrower in accordance with Section 2.4(a) and Section 4.2 .

(d) Additional Documents . The Administrative Agent shall have received each additional document, instrument, legal opinion or other item reasonably requested by it.

	2270524.10
LIB: CHARLOTTE

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF THE BORROWERS

SECTION 6.1 Representations and Warranties . To induce the Administrative Agent and Lenders to enter into this Agreement and to induce the Lenders to make Extensions of Credit, each Borrower hereby represents and warrants to the Administrative Agent and Lenders both before and after giving effect to the transactions contemplated hereunder that:

(a) Organization; Power; Qualification . Each of the US Borrower and its Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation, has the power and authority to own its properties and to carry on its business as now being and hereafter proposed to be conducted and is duly qualified and authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification and authorization, except where the failure to be qualified or authorized, individually or in the aggregate could not reasonably be excepted to have a Material Adverse Effect. The jurisdictions in which the US Borrower and its Subsidiaries are organized and qualified to do business as of the Closing Date are described on Schedule 6.1(a).

(b) Ownership . Each Subsidiary of the US Borrower as of the Closing Date is listed on Schedule 6.1(b). As of the Closing Date, the capitalization of the US Borrower and its Subsidiaries consists of the number of shares, authorized, issued and outstanding, of such classes and series, with or without par value, described on Schedule 6.1(b). All outstanding shares have been duly authorized and validly issued and are fully paid and nonassessable, with no personal liability attaching to the ownership thereof, and not subject to any preemptive or similar rights. The shareholders of the Subsidiaries of the US Borrower and the number of shares owned by each as of the Closing Date are described on Schedule 6.1(b). As of the Closing Date, there are no outstanding stock purchase warrants, subscriptions, options, securities, instruments or other rights of any type or nature whatsoever, which are convertible into, exchangeable for or otherwise provide for or permit the issuance of Capital Stock of the US Borrower or its Subsidiaries, except as described on Schedule 6.1(b).

(c) Authorization of Agreement, Loan Documents and Borrowing . Each of the US Borrower and its Subsidiaries has the right, power and authority and has taken all necessary corporate and other action to authorize the execution, delivery and performance of this Agreement and each of the other Loan Documents to which it is a party in accordance with their respective terms. This Agreement and each of the other Loan Documents have been duly executed and delivered by the duly authorized officers of the US Borrower and each of its Subsidiaries party thereto, and each such document constitutes the legal, valid and binding obligation of the US Borrower or its Subsidiary party thereto, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors’ rights in general and the availability of equitable remedies.

(d) Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc. The execution, delivery and performance by the US Borrower and its Subsidiaries of the Loan Documents to which each such Person is a party, in accordance with their respective terms, the Extensions of Credit hereunder and the transactions contemplated hereby do not and will not, by the passage of time, the giving of notice or otherwise, (i) require any Governmental Approval or violate any Applicable Law relating to the US Borrower or any of its Subsidiaries, (ii) conflict with, result in a breach of or constitute a default under the articles of incorporation, bylaws or other organizational documents of the US Borrower or any of its Subsidiaries or any indenture, agreement or other instrument to which such Person is a party or by which any of its properties may be bound or any Governmental Approval relating to such Person, (iii) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by such Person other than Liens arising under the Loan Documents or (iv) require any consent or authorization of, filing with, or other act in respect of, an arbitrator or Governmental Authority and no consent of any other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement.

(e) Compliance with Law; Governmental Approvals . Each of the US Borrower and its Subsidiaries (i) has all Governmental Approvals required by any Applicable Law for it to conduct its business, each of which is in full force and effect, is final and not subject to review on appeal and is not the subject of any pending or, to the best of its knowledge, threatened attack by direct or collateral proceeding, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect (ii) is in compliance with each Governmental Approval applicable to it and in compliance with all other Applicable Laws relating to it or any of its respective properties, except where the failure to comply, individually or in the aggregate, could not reasonably be

	2270524.10
LIB: CHARLOTTE

expected to have a Material Adverse Effect and (iii) has timely filed all material reports, documents and other materials required to be filed by it under all Applicable Laws with any Governmental Authority and has retained all material records and documents required to be retained by it under Applicable Law, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

(f) Tax Returns and Payments . Each of the US Borrower and its Subsidiaries has duly filed or caused to be filed all federal, state, provincial, local and other material tax returns required by Applicable Law to be filed, and has paid, or made adequate provision for the payment of, all federal, state, provincial, local and other material taxes, assessments and governmental charges or levies upon it and its property, income, profits and assets which are due and payable (other than any amount the validity of which is currently being contested in good faith by appropriate proceedings and with respect to which adequate reserves in conformity with GAAP have been provided for on the books of the US Borrower and its Subsidiaries and no Lien exists). Such returns accurately reflect in all material respects all liability for taxes of the US Borrower and its Subsidiaries for the periods covered thereby. There is no ongoing audit or examination or other investigation by any Governmental Authority of the tax liability of the US Borrower and its Subsidiaries in each case, except as could not reasonably be expected to have a liability in excess of $5,000,000. No Governmental Authority has asserted any Lien or other claim against the US Borrower or any Subsidiary thereof with respect to unpaid taxes which has not been discharged, resolved or adequately reserved for on the books of the US Borrower and its Subsidiaries. The charges, accruals and reserves on the books of the US Borrower and any of its Subsidiaries in respect of federal, state, provincial, local and other taxes for all Fiscal Years and portions thereof since the organization of the US Borrower and any of its Subsidiaries are in the judgment of the Borrowers adequate, and the Borrowers do not anticipate any additional taxes or assessments for any of such years beyond those for which such reserves have been made.

(g) Intellectual Property Matters . Each of the US Borrower and its Subsidiaries owns or possesses rights to use all franchises, licenses, copyrights, copyright applications, patents, patent rights or licenses, patent applications, trademarks, trademark rights, service mark, service mark rights, trade names, trade name rights, copyrights and rights with respect to the foregoing which are required to conduct its business, except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. No event has occurred which permits, or after notice or lapse of time or both would permit, the revocation or termination of any such rights, and neither the US Borrower nor any Subsidiary thereof is liable to any Person for infringement under Applicable Law with respect to any such rights as a result of its business operations, except any such revocation, termination or liability as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

(h)	Environmental Matters .

(i) The properties owned, leased or operated by the US Borrower and its Subsidiaries now or in the past do not contain, and to their knowledge have not previously contained, any Hazardous Materials in amounts or concentrations which (A) constitute or constituted a violation of applicable Environmental Laws or (B) could give rise to liability under applicable Environmental Laws, except where such violation or liability could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect;

(ii) The US Borrower, each Subsidiary and such properties and all operations conducted in connection therewith are in compliance, and have been in compliance, with all applicable Environmental Laws, and there is no contamination at, under or about such properties or such operations which could interfere with the continued operation of such properties or impair the fair saleable value thereof, except for any such noncompliance or contamination, that could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect;

(iii) Neither the US Borrower nor any Subsidiary thereof has received any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters, Hazardous Materials, or compliance with Environmental Laws, nor does the US Borrower or any Subsidiary thereof have knowledge or reason to believe that any such notice will be received or is being threatened, except where such violation, alleged violation, noncompliance, liability or potential liability which is the subject of such notice could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect;

(iv) Hazardous Materials have not been transported or disposed of to or from the properties owned, leased or operated by the US Borrower and its Subsidiaries in violation of, or in a manner or to a location which could give rise to liability under, Environmental Laws, nor have any Hazardous Materials been generated, treated, stored or disposed of at, on or under any of such properties in violation of, or in a manner that could give rise to liability under, any applicable Environmental Laws, except where such violation or liability could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect;

	2270524.10
LIB: CHARLOTTE

(v) No judicial proceedings or governmental or administrative action is pending, or, to the knowledge of the Borrowers, threatened, under any Environmental Law to which the US Borrower or any Subsidiary thereof is or will be named as a potentially responsible party with respect to such properties or operations conducted in connection therewith, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to US Borrower, any Subsidiary or such properties or such operations; except where such proceeding, action, degree, order or other requirement could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; and

(vi) There has been no release, or to the best of the Borrowers’ knowledge, threat of release, of Hazardous Materials at or from properties owned, leased or operated by the US Borrower or any Subsidiary, now or in the past, in violation of or in amounts or in a manner that could give rise to liability under Environmental Laws, except where such violation or liability could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

(i)

ERISA .

(i) As of the Closing Date, neither the US Borrower nor any ERISA Affiliate maintains or contributes to, or has any obligation under, any Employee Benefit Plans other than those identified on Schedule 6.1(i);

(ii) The US Borrower and each ERISA Affiliate is in material compliance with all applicable provisions of ERISA and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans except for any required amendments for which the remedial amendment period as defined in Section 401(b) of the Code has not yet expired and except where a failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has been determined by the Internal Revenue Service to be so qualified, and each trust related to such plan has been determined to be exempt under Section 501(a) of the Code except for such plans that have not yet received determination letters but for which the remedial amendment period for submitting a determination letter has not yet expired. No liability has been incurred by the US Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or penalties with respect to any Employee Benefit Plan or any Multiemployer Plan except for a liability that could not reasonably be expected to have a Material Adverse Effect;

(iii) As of the Closing Date, no Pension Plan has been terminated, nor has any accumulated funding deficiency (as defined in Section 412 of the Code) been incurred (without regard to any waiver granted under Section 412 of the Code), nor has any funding waiver from the Internal Revenue Service been received or requested with respect to any Pension Plan, nor has the US Borrower or any ERISA Affiliate failed to make any contributions or to pay any amounts due and owing as required by Section 412 of the Code, Section 302 of ERISA or the terms of any Pension Plan prior to the due dates of such contributions under Section 412 of the Code or Section 302 of ERISA, nor has there been any event requiring any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension Plan;

(iv) Except where the failure of any of the following representations to be correct in all material respects could not reasonably be expected to have a Material Adverse Effect, neither the US Borrower nor any ERISA Affiliate has: (A) engaged in a nonexempt prohibited transaction described in Section 406 of the ERISA or Section 4975 of the Code, (B) incurred any liability to the PBGC which remains outstanding other than the payment of premiums and there are no premium payments which are due and unpaid, (C) failed to make a required contribution or payment to a Multiemployer Plan, or (D) failed to make a required installment or other required payment under Section 412 of the Code;

(v)	No Termination Event has occurred or is reasonably expected to occur; and

(vi) Except where the failure of any of the following representations to be correct in all material respects could not reasonably be expected to have a Material Adverse Effect, no proceeding, claim (other than a benefits claim in the ordinary course of business), lawsuit and/or investigation is existing or, to the best knowledge of the Borrowers after due inquiry, threatened concerning or involving any (A) employee welfare benefit plan (as defined in Section 3(1) of ERISA) currently maintained or contributed to by the US Borrower or any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer Plan.

(j) Margin Stock . Neither the US Borrower nor any Subsidiary thereof is engaged principally or as one of its activities in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” (as each such term is defined or used, directly or indirectly, in Regulation U of the Board of Governors of the Federal Reserve System). No part of the proceeds of any of the Loans or Letters of Credit will be used for purchasing or

	2270524.10
LIB: CHARLOTTE

carrying margin stock or for any purpose which violates, or which would be inconsistent with, the provisions of Regulation T, U or X of such Board of Governors.

(k) Government Regulation . Neither the US Borrower nor any Subsidiary thereof is an “investment company” or a company “controlled” by an “investment company” (as each such term is defined or used in the Investment Company Act of 1940, as amended) and neither the US Borrower nor any Subsidiary thereof is, or after giving effect to any Extension of Credit will be, subject to regulation under the Public Utility Holding Company Act of 1935 or the Interstate Commerce Act, each as amended, or any other Applicable Law which limits its ability to incur or consummate the transactions contemplated hereby.

(l) Material Contracts . Schedule 6.1(l) sets forth a complete and accurate list of all Material Contracts of the US Borrower and its Subsidiaries in effect as of the Closing Date not listed on any other Schedule hereto; other than as set forth in Schedule 6.1(l), each such Material Contract is, and after giving effect to the consummation of the transactions contemplated by the Loan Documents will be, in full force and effect in accordance with the terms thereof. The US Borrower and its Subsidiaries have delivered to the Administrative Agent a true and complete copy of each Material Contract required to be listed on Schedule 6.1(l) or any other Schedule hereto. Neither the US Borrower nor any Subsidiary (nor, to the knowledge of the Borrowers, any other party thereto) is in breach of or in default under any Material Contract in any material respect.

(m) Employee Relations . Each of the US Borrower and its Subsidiaries has a stable work force in place and is not, as of the Closing Date, party to any collective bargaining agreement nor has any labor union been recognized as the representative of its employees except as set forth on Schedule 6.1(m). The Borrowers know of no pending, threatened or contemplated strikes, work stoppage or other collective labor disputes involving its employees or those of its Subsidiaries.

(n) Burdensome Provisions . Neither the US Borrower nor any Subsidiary thereof is a party to any indenture, agreement, lease or other instrument, or subject to any corporate or partnership restriction, Governmental Approval or Applicable Law which is so unusual or burdensome as in the foreseeable future could be reasonably expected to have a Material Adverse Effect. The US Borrower and its Subsidiaries do not presently anticipate that future expenditures needed to meet the provisions of any statutes, orders, rules or regulations of a Governmental Authority will be so burdensome as to have a Material Adverse Effect. No Subsidiary is party to any agreement or instrument or otherwise subject to any restriction or encumbrance that restricts or limits its ability to make dividend payments or other distributions in respect of its Capital Stock to the US Borrower or any Subsidiary or to transfer any of its assets or properties to the US Borrower or any other Subsidiary in each case other than existing under or by reason of the Loan Documents or Applicable Law.

(o) Financial Statements . The (i) audited Consolidated balance sheet of the US Borrower and its Subsidiaries as of December 31, 2003 and the related audited statements of income and retained earnings and cash flows for the Fiscal Year then ended and (ii) unaudited Consolidated balance sheet of the US Borrower and its Subsidiaries as of June 30, 2004 and related unaudited interim statements of income and retained earnings, copies of which have been furnished to the Administrative Agent and each Lender, are complete and correct and fairly present on a Consolidated basis the assets, liabilities and financial position of the US Borrower and its Subsidiaries as at such dates, and the results of the operations and changes of financial position for the periods then ended (other than customary year-end adjustments for unaudited financial statements). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP. The US Borrower and its Subsidiaries have no Indebtedness, obligation or other unusual forward or long-term commitment which is not fairly reflected in the foregoing financial statements or in the notes thereto.

(p) No Material Adverse Change . Since December 31, 2003, there has been no material adverse change in the properties, business, operations, prospects, or condition (financial or otherwise) of the US Borrower and its Subsidiaries and no event has occurred or condition arisen that could reasonably be expected to have a Material Adverse Effect.

(q) Solvency . As of the Closing Date and after giving effect to each Extension of Credit made hereunder, the US Borrower and each of its Subsidiaries will be Solvent.

(r) Titles to Properties . Each of the US Borrower and its Subsidiaries has such title to the real property owned or leased by it as is necessary or desirable to the conduct of its business and valid and legal title to all of its personal property and assets, including, but not limited to, those reflected on the balance sheets of the US Borrower and its Subsidiaries delivered pursuant to Section 6.1(o), except those which have been disposed of by the US Borrower or its Subsidiaries subsequent to the date of such balance sheets pursuant to dispositions in the ordinary course of business or as otherwise expressly permitted hereunder.

	2270524.10
LIB: CHARLOTTE

(s) Liens . None of the properties and assets of the US Borrower or any Subsidiary thereof is subject to any Lien, except Permitted Liens. No financing statement under the Uniform Commercial Code of any state or comparable legislation in other jurisdictions which names the US Borrower or any Subsidiary thereof or any of their respective trade names or divisions as debtor and which has not been terminated, has been filed in any state or other jurisdiction and neither the US Borrower nor any Subsidiary thereof has signed any such financing statement or any security agreement authorizing any secured party thereunder to file any such financing statement, except to perfect those Permitted Liens.

(t) Indebtedness and Guaranty Obligations . Schedule 6.1(t) is a complete and correct listing of all Indebtedness and Guaranty Obligations of the US Borrower and its Subsidiaries as of the Closing Date in excess of $5,000,000. The US Borrower and its Subsidiaries have performed and are in compliance with all of the terms of such Indebtedness and Guaranty Obligations and all instruments and agreements relating thereto, and no default or event of default, or event or condition which with notice or lapse of time or both would constitute such a default or event of default on the part of the US Borrower or any of its Subsidiaries exists with respect to any such Indebtedness or Guaranty Obligation.

(u) Litigation . Except for matters existing on the Closing Date and set forth on Schedule 6.1(u), there are no actions, suits or proceedings pending nor, to the knowledge of the Borrowers, threatened against or in any other way relating adversely to or affecting the US Borrower or any Subsidiary thereof or any of their respective properties in any court or before any arbitrator of any kind or before or by any Governmental Authority that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions provided for herein or therein, or (b) either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect.

(v) Absence of Defaults . No event has occurred or is continuing which constitutes a Default or an Event of Default, or which constitutes, or which with the passage of time or giving of notice or both would constitute, a default or event of default by the US Borrower or any Subsidiary thereof under any Material Contract or judgment, decree or order to which the US Borrower or its Subsidiaries is a party or by which the US Borrower or its Subsidiaries or any of their respective properties may be bound or which would require the US Borrower or its Subsidiaries to make any payment thereunder prior to the scheduled maturity date therefor.

(w) Senior Indebtedness Status . The Obligations of the US Borrower and each of its Subsidiaries under this Agreement and each of the other Loan Documents ranks and shall continue to rank at least senior in priority of payment to all Subordinated Indebtedness and at least equal to all senior unsecured Indebtedness of each such Person and is designated as “Senior Indebtedness” (or the equivalent term) under all instruments and documents, now or in the future, relating to all Subordinated Indebtedness and all senior unsecured Indebtedness of such Person.

(x) Accuracy and Completeness of Information . All written information, reports and other papers and data produced by or on behalf of the US Borrower or any Subsidiary thereof (other than financial projections, which shall be subject to the standard set forth in Section 7.1(c)) and furnished to the Lenders were, at the time the same were so furnished, complete and correct in all respects to the extent necessary to give the recipient a true and accurate knowledge of the subject matter.

(y) Disclosure . The Borrowers have disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which any of the Credit Parties are subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No financial statement, material report, material certificate or other material information furnished (whether in writing or orally) by or on behalf of any of the Credit Parties to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, pro forma financial information, estimated financial information and other projected or estimated information, the Borrowers represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

SECTION 6.2 Survival of Representations and Warranties, Etc . All representations and warranties set forth in this Article VI and all representations and warranties contained in any certificate, or any of the Loan Documents (including, but not limited to, any such representation or warranty made in or in connection with any amendment thereto) shall constitute representations and warranties made under this Agreement. All representations and warranties made under this Agreement shall be made or deemed to be made at and as of the Closing Date (except those that are expressly made as of a specific date), shall survive the Closing Date and shall not be waived by the

	2270524.10
LIB: CHARLOTTE

execution and delivery of this Agreement, any investigation made by or on behalf of the Lenders or any borrowing hereunder.

ARTICLE VII

FINANCIAL INFORMATION AND NOTICES

Until all the Obligations have been paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner set forth in Section 14.2 , the Borrowers will furnish or cause to be furnished to the Administrative Agent at the Administrative Agent’s Office at the address set forth in Section 14.1 and to the Lenders at their respective addresses as set forth on the Register, or such other office as may be designated by the Administrative Agent and Lenders from time to time:

SECTION 7.1

Financial Statements and Projections .

(a) Quarterly Financial Statements . As soon as practicable and in any event within forty-five (45) days (or, if earlier, on the date of any required public filing thereof) after the end of each fiscal quarter of each Fiscal Year, an unaudited Consolidated balance sheet of the US Borrower and its Subsidiaries as of the close of such fiscal quarter and unaudited Consolidated statements of income, retained earnings and cash flows for the fiscal quarter then ended and that portion of the Fiscal Year then ended, including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the corresponding period in the preceding Fiscal Year and prepared by the US Borrower in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the period, and certified by the chief financial officer of the US Borrower to present fairly in all material respects the financial condition of the US Borrower and its Subsidiaries on a Consolidated basis as of their respective dates and the results of operations of the US Borrower and its Subsidiaries for the respective periods then ended, subject to normal year end adjustments. Delivery by the Borrowers to the Administrative Agent and the Lenders of the US Borrower’s quarterly report to the SEC on Form 10-Q with respect to any fiscal quarter, or the availability of such report on EDGAR Online, within the period specified above shall be deemed to be compliance by the Borrowers with this Section 7.1(a).

(b) Annual Financial Statements . As soon as practicable and in any event within ninety (90) days (or, if earlier, on the date of any required public filing thereof) after the end of each Fiscal Year, an audited Consolidated balance sheet of the US Borrower and its Subsidiaries as of the close of such Fiscal Year and audited Consolidated statements of income, retained earnings and cash flows for the Fiscal Year then ended, including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the preceding Fiscal Year and prepared in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the year. Such annual financial statements shall be audited by an independent certified public accounting firm acceptable to the Administrative Agent, and accompanied by a report thereon by such certified public accountants that is not qualified with respect to scope limitations imposed by the US Borrower or any of its Subsidiaries or with respect to accounting principles followed by the US Borrower or any of its Subsidiaries not in accordance with GAAP. Delivery by the US Borrower to the Administrative Agent and the Lenders of the US Borrower’s annual report to the SEC on Form 10-K with respect to any fiscal year, or the availability of such report on EDGAR Online, within the period specified above shall be deemed to be compliance by the US Borrower with this Section 7.1(b).

(c) Annual Business Plan and Financial Projections . As soon as practicable and in any event within forty-five (45) days prior to the beginning of each Fiscal Year, a business plan of the US Borrower and its Subsidiaries for the ensuing four (4) fiscal quarters, such plan to be prepared in accordance with GAAP and to include, on a quarterly basis, the following: a quarterly operating and capital budget, a projected income statement, statement of cash flows and balance sheet and a report containing management’s discussion and analysis of such projections, accompanied by a certificate from the chief financial officer of the US Borrower to the effect that, to the best of such officer’s knowledge, such projections are good faith estimates (utilizing reasonable assumptions) of the financial condition and operations of the US Borrower and its Subsidiaries for such four (4) quarter period.

SECTION 7.2 Officer’s Compliance Certificate . At each time financial statements are delivered pursuant to Sections 7.1(a) or (b) and at such other times as the Administrative Agent shall reasonably request, an Officer’s Compliance Certificate.

	2270524.10
LIB: CHARLOTTE

SECTION 7.3 Accountants’ Certificate . At each time financial statements are delivered pursuant to Section 7.1(b), a certificate of the independent public accountants certifying such financial statements that in connection with their audit, nothing came to their attention that caused them to believe that the Borrowers failed to comply with the terms, covenants, provisions or conditions of Article IX and X , insofar as they relate to financial and accounting matters or, if such is not the case, specifying such non-compliance and its nature and period of existence.

SECTION 7.4

Other Reports .

(a) Promptly after becoming available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the US Borrower generally, and copies of all annual, regular, periodic and special reports and registration statements which the US Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto; provided that, delivery of the foregoing shall be deemed to have been made if made available on Edgar Online or the website of the US Borrower and the US Borrower shall have given notice thereof to Administrative Agent;

(b) Promptly upon receipt thereof, copies of all reports, if any, submitted to the US Borrower or its Board of Directors by its independent public accountants in connection with their auditing function, including, without limitation, any management report and any management responses thereto; and

(c) Such other information regarding the operations, business affairs and financial condition of the US Borrower or any of its Subsidiaries as the Administrative Agent or any Lender may reasonably request.

SECTION 7.5

Notice of Litigation and Other Matters . Prompt telephonic and written notice of:

(a) the commencement of all proceedings and investigations by or before any Governmental Authority and all actions and proceedings in any court or before any arbitrator against or involving the US Borrower or any Subsidiary thereof or any of their respective properties, assets or businesses which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect;

(b) any notice of any violation received by the US Borrower or any Subsidiary thereof from any Governmental Authority including, without limitation, any notice of violation of Environmental Laws which in any such case could reasonably be expected to have a Material Adverse Effect;

(c) any labor controversy that (i) has resulted in a strike or other work stoppage or slow down against the US Borrower or any Subsidiary thereof, or (ii) threatens to result in, a strike or other work stoppage or slow down against the US Borrower or any Subsidiary thereof which could reasonably be expected to, individually or in the aggregate with any other labor controversy, work stoppage or slow down, have a Material Adverse Effect;

(d) any attachment, judgment, lien, levy or order exceeding $1,000,000 (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) that may be assessed against or threatened against the US Borrower or any Subsidiary thereof;

(e) (i) any Default or Event of Default or (ii) any event which constitutes or which with the passage of time or giving of notice or both would constitute a default or event of default under any Material Contract to which the US Borrower or any of its Subsidiaries is a party or by which the US Borrower or any Subsidiary thereof or any of their respective properties may be bound;

(f) (i) any unfavorable determination letter from the Internal Revenue Service regarding the qualification of an Employee Benefit Plan under Section 401(a) of the Code (along with a copy thereof), (ii) all notices received by the US Borrower or any ERISA Affiliate of the PBGC’s intent to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan, (iii) all notices received by the US Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA and (iv) the Borrowers obtaining knowledge or reason to know that the US Borrower or any ERISA Affiliate has filed or intends to file a notice of intent to terminate any Pension Plan under a distress termination within the meaning of Section 4041(c) of ERISA; and

(g)	any event which makes any of the representations set forth in Section 6.1 inaccurate in any respect.

Each notice pursuant to this Section 7.5 shall be accompanied by a statement of a Responsible Officer of the US Borrower setting forth details of the occurrence referred to therein and stating what action the US Borrower or any Subsidiary thereof, as applicable, has taken and proposes to take with respect thereto. Each notice pursuant to Section 7.5(e)(i) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached; provided that, delivery of the foregoing notices shall be deemed to have been

	2270524.10
LIB: CHARLOTTE

made if made available on Edgar Online or the website of the US Borrower and the US Borrower shall have given notice thereof to Administrative Agent.

SECTION 7.6 Accuracy of Information . All written information, reports, statements and other papers and data furnished by or on behalf of the Borrowers to the Administrative Agent or any Lender whether pursuant to this Article VII or any other provision of this Agreement, shall, at the time the same is so furnished, comply with the representations and warranties set forth in Section 6.1(x).

ARTICLE VIII

AFFIRMATIVE COVENANTS

Until all of the Obligations have been paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner provided for in Section 14.2 , the Borrowers will, and will cause each of their Subsidiaries to:

SECTION 8.1 Preservation of Corporate Existence and Related Matters . Except as permitted by Section 10.4 , preserve and maintain its separate corporate existence and all rights, franchises, licenses and privileges necessary to the conduct of its business, and qualify and remain qualified as a foreign corporation and authorized to do business in each jurisdiction in which the failure to so qualify could reasonably be expected to have a Material Adverse Effect.

SECTION 8.2 Maintenance of Property . Protect and preserve all properties useful in and material to its business, including copyrights, patents, trade names, service marks and trademarks; maintain in good working order and condition, ordinary wear and tear excepted, all buildings, equipment and other tangible real and personal property; and from time to time make or cause to be made all repairs, renewals and replacements thereof and additions to such property necessary for the conduct of its business, so that the business carried on in connection therewith may be conducted in a commercially reasonable manner.

SECTION 8.3 Insurance . Maintain insurance with financially sound and reputable insurance companies against such risks and in such amounts as are customarily maintained by similar businesses and as may be required by Applicable Law (including, without limitation, hazard and business interruption insurance), and on the Closing Date and from time to time thereafter deliver to the Administrative Agent upon its request a detailed list of the insurance then in effect, stating the names of the insurance companies, the amounts and rates of the insurance, the dates of the expiration thereof and the properties and risks covered thereby.

SECTION 8.4 Accounting Methods and Financial Records . Maintain a system of accounting, and keep such books, records and accounts (which shall be true and complete in all material respects) as may be required or as may be necessary to permit the preparation of financial statements in accordance with GAAP and in compliance with the regulations of any Governmental Authority having jurisdiction over it or any of its properties.

SECTION 8.5 Payment and Performance of Obligations . Pay and perform all Obligations under this Agreement and the other Loan Documents, and pay or perform (a) all taxes, assessments and other governmental charges that may be levied or assessed upon it or any of its property, and (b) all other indebtedness, obligations and liabilities in accordance with customary trade practices; provided , that the US Borrower or such Subsidiary may contest any item described in clauses (a) or (b) of this Section in good faith so long as adequate reserves are maintained with respect thereto in accordance with GAAP.

SECTION 8.6 Compliance With Laws and Approvals . Observe and remain in compliance in all material respects with all Applicable Laws and maintain in full force and effect all Governmental Approvals, in each case applicable to the conduct of its business, except where the failure to so comply or maintain such Governmental Approval could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

SECTION 8.7 Environmental Laws . In addition to and without limiting the generality of Section 8.6 , (a) comply with, and ensure such compliance by all tenants and subtenants with all applicable Environmental Laws and obtain and comply with and maintain, and ensure that all tenants and subtenants, if any, obtain and comply with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws, except where the failure to do so could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, (b) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws, and promptly comply with

	2270524.10
LIB: CHARLOTTE

all lawful orders and directives of any Governmental Authority regarding Environmental Laws, except where the failure to conduct or complete such actions, or comply with such orders or directions, could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, and (c) defend, indemnify and hold harmless the Administrative Agent and the Lenders, and their respective parents, Subsidiaries, Affiliates, employees, agents, officers and directors, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or in any way relating to the presence of Hazardous Materials, or the violation of, noncompliance with or liability under any Environmental Laws applicable to the operations of the US Borrower or any such Subsidiary, or any orders, requirements or demands of Governmental Authorities related thereto, including, without limitation, reasonable attorney’s and consultant’s fees, investigation and laboratory fees, response costs, court costs and litigation expenses, except to the extent that any of the foregoing directly result from the gross negligence or willful misconduct of the party seeking indemnification therefor.

SECTION 8.8 Compliance with ERISA . In addition to and without limiting the generality of Section 8.6 , (a) except where the failure to so comply could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) comply with all material applicable provisions of ERISA and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans, (ii) not take any action or fail to take action the result of which could be a liability to the PBGC or to a Multiemployer Plan, (iii) not participate in any prohibited transaction that could result in any civil penalty under ERISA or tax under the Code and (iv) operate each Employee Benefit Plan in such a manner that will not incur any tax liability under Section 4980B of the Code or any liability to any qualified beneficiary as defined in Section 4980B of the Code and (b) furnish to the Administrative Agent upon the Administrative Agent’s request such additional information about any Employee Benefit Plan as may be reasonably requested by the Administrative Agent.

SECTION 8.9 Compliance With Agreements . Comply in all respects with each term, condition and provision of all leases, agreements and other instruments entered into in the conduct of its business including, without limitation, any Material Contract; provided , that the Borrowers or any Subsidiary thereof may contest any such lease, agreement or other instrument in good faith through applicable proceedings so long as adequate reserves are maintained in accordance with GAAP.

SECTION 8.10 Visits and Inspections . Permit representatives of the Administrative Agent or any Lender, from time to time, to visit and inspect its properties; inspect, audit and make extracts from its books, records and files, including, but not limited to, management letters prepared by independent accountants; and discuss with its principal officers, and its independent accountants, its business, assets, liabilities, financial condition, results of operations and business prospects; provided that so long as no Default or Event of Default has occurred and is continuing, the Administrative Agent or applicable Lender shall give reasonable prior to notice to the US Borrower of its intention to visit and inspect the properties and records pursuant to this Section.

SECTION 8.11 Additional Subsidiaries . Notify the Administrative Agent of the creation or acquisition of any Domestic Subsidiary and promptly thereafter (and in any event within thirty (30) days), cause such Person to (i) become a Subsidiary Guarantor by delivering to the Administrative Agent a duly executed supplement to the Subsidiary Guaranty Agreement or such other document as the Administrative Agent shall deem appropriate for such purpose, (ii) deliver to the Administrative Agent such documents and certificates referred to in Section 5.2 as may be reasonably requested by the Administrative Agent, (iii) deliver to the Administrative Agent such updated Schedules to the Loan Documents as requested by the Administrative Agent with respect to such Person, and (iv) deliver to the Administrative Agent such other documents as may be reasonably requested by the Administrative Agent, all in form, content and scope reasonably satisfactory to the Administrative Agent.

SECTION 8.12 Use of Proceeds . The Borrowers shall use the proceeds of the Extensions of Credit (a) to finance the acquisition of Capital Assets in the ordinary course of business, (b) to refinance the Existing Facility, and (c) for working capital and general corporate requirements of the US Borrower and its Subsidiaries, including Permitted Acquisitions, dividends, stock repurchases and the payment of certain fees and expenses incurred in connection with the transactions.

SECTION 8.13 Further Assurances . Make, execute and deliver all such additional and further acts, things, deeds and instruments as the Administrative Agent or the Required Lenders (through the Administrative Agent) may reasonably require to document and consummate the transactions contemplated hereby and to vest completely in and insure the Administrative Agent and the Lenders their respective rights under this Agreement, the Letters of Credit and the other Loan Documents.

	2270524.10
LIB: CHARLOTTE

ARTICLE IX

FINANCIAL COVENANTS

Until all of the Obligations have been paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner set forth in Section 14.2 , the US Borrower and its Subsidiaries on a Consolidated basis will not:

SECTION 9.1 Average Total Leverage Ratio . As of any fiscal quarter end, permit the ratio of (a) the sum of (i) the Average Total Funded Indebtedness for the period of twelve (12) consecutive months ending on or immediately prior to such date plus (ii) the Average Accounts Securitization Proceeds for the period of twelve (12) consecutive months ending on or immediately prior to such date to (b) EBITDA for the period of twelve (12) consecutive months ending on or immediately prior to such date to be greater than or equal to 3.0 to 1.0.

SECTION 9.2 Fixed Charge Coverage Ratio . As of any fiscal quarter end, permit the ratio of (a) EBITR for the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date to (b) the sum of (i) Interest Expense paid or payable in cash for the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date plus (ii) Rental Expense for the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date to be less than 3.0 to 1.0.

ARTICLE X

NEGATIVE COVENANTS

Until all of the Obligations have been paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner set forth in Section 14.2 , the Borrowers have not and will not and will not permit any of their Subsidiaries to:

SECTION 10.1			Limitations on Indebtedness . Create, incur, assume or suffer to exist any Indebtedness except:
	(a)	the Obligations (excluding Hedging Obligations permitted pursuant to Section 10.1(b));

(b) Indebtedness incurred in connection with a Hedging Agreement with a counterparty and upon terms and conditions (including interest rate) reasonably satisfactory to the Administrative Agent; provided , that any counterparty that is a Lender or an Affiliate of a Lender shall be deemed satisfactory to the Administrative Agent;

(c) Indebtedness existing on the Closing Date and not otherwise permitted under this Section, as set forth on Schedule 6.1(t), and the renewal, refinancing, extension and replacement (but not the increase in the aggregate principal amount) thereof;

(d) Indebtedness of the US Borrower and its Subsidiaries incurred in connection with Capital Leases in an aggregate amount not to exceed $5,000,000 on any date of determination;

(e) purchase money Indebtedness of the US Borrower and its Subsidiaries in an aggregate amount not to exceed $5,000,000 on any date of determination;

(f) Guaranty Obligations in favor of the Administrative Agent for the benefit of the Administrative Agent and the Lenders;

(g) Guaranty Obligations with respect to Indebtedness permitted pursuant to subsections (a) through (e) of this Section;

(h) Indebtedness owed (i) by the US Borrower to any Subsidiary Guarantor, (ii) by any Subsidiary Guarantor to the US Borrower, (iii) by any Subsidiary Guarantor to any other Subsidiary Guarantor, or (iv) by any Subsidiary that is not a Subsidiary Guarantor to any other Subsidiary that is not a Subsidiary Guarantor;

(i) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, Indebtedness owed by the US Borrower and any Subsidiary Guarantor to any Foreign Subsidiary or Indebtedness owed by any Foreign Subsidiary to the US Borrower and any Subsidiary Guarantor which, together with the Permitted Acquisition Consideration payable in connection with all Permitted Foreign Acquisitions and the total amount of any transactions permitted under Sections 10.3(i) and 10.5(f), does not exceed $60,000,000 in the aggregate during the term of this Agreement;

	2270524.10
LIB: CHARLOTTE

(j) Subordinated Indebtedness; provided that in the case of each issuance of Subordinated Indebtedness, (i) no Default or Event of Default shall have occurred and be continuing or would be caused by the issuance of such Subordinated Indebtedness and (ii) the Administrative Agent shall have received satisfactory written evidence that the Borrowers would be in compliance with all covenants contained in this Agreement on a pro forma basis after giving effect to the issuance of any such Subordinated Indebtedness;

(k) additional Indebtedness of the US Borrower and the Subsidiary Guarantors not otherwise permitted pursuant to this Section in an aggregate amount outstanding not to exceed $5,000,000;

(l) so long as no Default or Event of Default has occurred and is continuing or would occur as a result therefrom, Indebtedness arising in connection with an Accounts Securitization;

(m)	endorsements of negotiable instruments for deposit or collection in the ordinary course of business;

(n) unsecured Indebtedness in respect of performance bonds, worker’s compensation claims, surety or appeal bonds and payment obligations in connection with self insurance or similar obligations, in each case to the extent incurred in the ordinary course of business; and

(o) Indebtedness consisting of all obligations, contingent or otherwise, of the US Borrower or any of its Subsidiaries relative to the face amount of the Independent Letters of Credit, whether drawn or undrawn, including, without limitation, any reimbursement obligations in connection with the Independent Letters of Credit.

provided , that no agreement or instrument with respect to Indebtedness permitted to be incurred by this Section shall restrict, limit or otherwise encumber (by covenant or otherwise) the ability of any Subsidiary of any Borrower to make any payment to such Borrower or any of its Subsidiaries (in the form of dividends, intercompany advances or otherwise) for the purpose of enabling such Borrower to pay the Obligations.

SECTION 10.2 Limitations on Liens . Create, incur, assume or suffer to exist, any Lien on or with respect to any of its assets or properties (including, without limitation, shares of Capital Stock), real or personal, whether now owned or hereafter acquired, except:

(a) Liens for taxes, assessments and other governmental charges or levies (excluding any Lien imposed pursuant to any of the provisions of ERISA or Environmental Laws) not yet due or as to which the period of grace (not to exceed thirty (30) days), if any, related thereto has not expired or which are being contested in good faith and by appropriate proceedings if adequate reserves are maintained to the extent required by GAAP;

(b) the claims of materialmen, mechanics, carriers, warehousemen, processors or landlords for labor, materials, supplies or rentals incurred in the ordinary course of business, (i) which are not overdue for a period of more than thirty (30) days or (ii) which are being contested in good faith and by appropriate proceedings;

(c) Liens consisting of deposits or pledges made in the ordinary course of business in connection with, or to secure payment of, obligations under workers’ compensation, unemployment insurance or similar legislation;

(d) Liens constituting encumbrances in the nature of zoning restrictions, easements and rights or restrictions of record on the use of real property as are of a nature generally existing with respect to properties of a similar character, which in the aggregate are not substantial in amount and which do not, in any case, materially detract from the value of such property or materially impair the use thereof in the ordinary conduct of business;

(e)	Liens securing the Obligations;

(f) Liens not otherwise permitted hereunder securing obligations not at any time exceeding in the aggregate $5,000,000;

(g) Liens not otherwise permitted by this Section and in existence on the Closing Date and described on Schedule 10.2 ;

(h) Liens securing Indebtedness permitted under Sections 10.1(d) and (e); provided that (i) such Liens shall be created substantially simultaneously with the acquisition or lease of the related asset, (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness, (iii) the amount of Indebtedness secured thereby is not increased and (iv) the principal amount of Indebtedness secured by any such Lien shall at no time exceed one hundred percent (100%) of the original purchase price or lease payment amount of such property at the time it was acquired;

(i) Liens incurred in connection with any Accounts Securitization (which Liens shall attach solely to the Transferred Assets sold or transferred in connection with such Accounts Securitization); and

(j)	Liens securing Indebtedness permitted under Section 10.1(k).

	2270524.10
LIB: CHARLOTTE

SECTION 10.3 Limitations on Loans, Advances, Investments and Acquisitions . Purchase, own, invest in or otherwise acquire, directly or indirectly, any Capital Stock, interests in any partnership or joint venture (including, without limitation, the creation or capitalization of any Subsidiary), evidence of Indebtedness or other obligation or security, substantially all or a portion of the business or assets of any other Person or any other investment or interest whatsoever in any other Person, or make or permit to exist, directly or indirectly, any loans, advances or extensions of credit to, or any investment in cash or by delivery of property in, any Person except:

(a) (i) investments existing on the Closing Date in Subsidiaries, and (ii) the other loans, advances and investments existing on the Closing Date which are described on Schedule 10.3 ;

(b) investments in (i) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency thereof maturing within one hundred twenty (120) days from the date of acquisition thereof, (ii) commercial paper maturing no more than one hundred twenty (120) days from the date of creation thereof and currently having the highest rating obtainable from either Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. or Moody’s Investors Service, Inc., (iii) certificates of deposit maturing no more than one hundred twenty (120) days from the date of creation thereof issued by commercial banks incorporated under the laws of the United States, each having combined capital, surplus and undivided profits of not less than $500,000,000 and having a rating of “A” or better by a nationally recognized rating agency; provided , that the aggregate amount invested in such certificates of deposit shall not at any time exceed $5,000,000 for any one such certificate of deposit and $10,000,000 for any one such bank, (iv) time deposits maturing no more than thirty (30) days from the date of creation thereof with commercial banks or savings banks or savings and loan associations each having membership either in the FDIC or the deposits of which are insured by the FDIC and in amounts not exceeding the maximum amounts of insurance thereunder or (v) demand deposit accounts maintained in the ordinary course of business;

(c) investments by the US Borrower or any Subsidiary thereof in the form of acquisitions of all or substantially all of the business or a line of business (whether by the acquisition of Capital Stock, assets or any combination thereof) of any other Person if each such acquisition meets all of the following requirements (such acquisition being referred to herein as a “ Permitted Domestic Acquisition ”):

					(i)	the Person to be acquired shall be organized under the laws of the United States of America, or the assets to be acquired shall be located in the continental United States of America, and such Person shall be engaged in a business, or such assets shall be used in a business, permitted pursuant to Section 10.12 ;
				(ii)		the US Borrower or any Subsidiary (including any entity being acquired that becomes a Subsidiary) shall be the surviving Person and no Change of Control shall have been effected thereby;
		(iii)				the Person to be acquired shall not be subject to any material pending litigation which could reasonably be expected to have a Material Adverse Effect;
	(iv)					prior to the closing of such acquisition, the acquisition is approved by the board of directors (or a majority of the holders of the Capital Stock of such Person) of the Person whose assets or Capital Stock are being acquired pursuant to such acquisition;
			(v)			no Default or Event of Default shall have occurred and be continuing both before and after giving effect to such proposed acquisition;
	(vi)					if the aggregate amount of Permitted Acquisition Consideration payable in cash with respect to such proposed acquisition or series of related acquisitions exceeds $50,000,000, the US Borrower shall have (A) demonstrated to the Administrative Agent pro forma compliance (as of the date of the proposed acquisition and after giving effect thereto and any Extensions of Credit made or to be made in connection therewith) with each covenant contained in, and in the manner set forth in, Article IX , (B) delivered to the Administrative Agent evidence of the approval referred to in clause (iv) above, and (C) delivered written notice of such proposed acquisition to the Administrative Agent and the Lenders, which notice shall include the proposed closing date of such proposed acquisition and a description of the acquisition in the form customarily prepared by the US Borrower, not less than five (5) Business Days prior to such proposed closing date; and
(vii)						the US Borrower shall have delivered to the Administrative Agent such documents reasonably requested by the Administrative Agent or the Required Lenders (through the Administrative Agent) pursuant to Section 8.11 to be delivered at the time required pursuant to Section 8.11 .

(d) investments by the US Borrower or any Subsidiary thereof in the form of acquisitions of all or substantially all of the business or a line of business (whether by the acquisition of Capital Stock, assets or any combination

	2270524.10
LIB: CHARLOTTE

thereof) of any other Person if each such acquisition meets all of the following requirements (such acquisition being referred to herein as a “ Permitted Foreign Acquisition ”):

					(i)	the Person to be acquired shall be organized under the laws of a jurisdiction other than the United States of America, or the assets to be acquired shall be located outside of the continental United States of America, and such Person shall be engaged in a business, or such assets shall be used in a business, permitted pursuant to Section 10.12 ;
				(ii)		the US Borrower or any Subsidiary (including any entity being acquired that becomes a Subsidiary) shall be the surviving Person and no Change of Control shall have been effected thereby;
		(iii)				the Person to be acquired shall not be subject to any material pending litigation which could reasonably be expected to have a Material Adverse Effect;
	(iv)					prior to the closing of such acquisition, the acquisition is approved by the board of directors (or a majority of the holders of the Capital Stock of such Person) of the Person whose assets or Capital Stock are being acquired pursuant to such acquisition;
			(v)			no Default or Event of Default shall have occurred and be continuing both before and after giving effect to such proposed acquisition;
	(vi)					the aggregate amount of Permitted Acquisition Consideration payable (A) with respect to any Permitted Foreign Acquisition or series of related Permitted Foreign Acquisitions does not exceed $20,000,000 in cash and (B) with respect to all Permitted Foreign Acquisitions and the total amount of any transactions permitted under Sections 10.1(i), 10.3(i) and 10.5(f) does not exceed $60,000,000 in the aggregate during the term of this Agreement; and
(vii)						if the aggregate amount of Permitted Acquisition Consideration payable in cash with respect to such proposed acquisition or series of related acquisitions exceeds $20,000,000, the US Borrower shall have (A) demonstrated to the Administrative Agent pro forma compliance (as of the date of the proposed acquisition and after giving effect thereto and any Extensions of Credit made or to be made in connection therewith) with each covenant contained in, and in the manner set forth in, Article IX , (B) delivered to the Administrative Agent evidence of the approval referred to in clause (iv) above, and (C) delivered written notice of such proposed acquisition to the Administrative Agent and the Lenders, which notice shall include the proposed closing date of such proposed acquisition and a description of the acquisition in the form customarily prepared by the US Borrower, not less than five (5) Business Days prior to such proposed closing date.

(e)			Hedging Agreements permitted pursuant to Section 10.1 ;
	(f)	purchases of assets in the ordinary course of business;

(g) investments in the form of loans and advances to employees in the ordinary course of business, which, in the aggregate, do not exceed at any time $500,000;

(h)	intercompany Indebtedness permitted pursuant to Section 10.1(h);

(i) the creation of new Foreign Subsidiaries, the investment in which, together with the Permitted Acquisition Consideration payable in connection with all Permitted Foreign Acquisitions and the total amount of any transactions permitted under Sections 10.1(i) and 10.5(f), does not exceed $60,000,000 in the aggregate during the term of this Agreement;

(j) the creation of Domestic Subsidiaries after the Closing Date so long as (i) each such Domestic Subsidiary shall comply with Section 8.11 and (ii) the creation of such Domestic Subsidiary is otherwise made in accordance with the terms and conditions of this Agreement (including, without limitation, this Section 10.3 );

(k) equity investments (i) by the US Borrower in any Subsidiary Guarantor, (ii) by any Subsidiary in the US Borrower, (iii) by any Subsidiary in any Subsidiary Guarantor or (iv) by any Subsidiary that is not a Subsidiary Guarantor in any other Subsidiary that is not a Subsidiary Guarantor;

(l) so long as no Default or Event of Default has occurred or would result therefrom, the initial investment by the US Borrower and its Subsidiaries in a proposed joint venture previously described to the Administrative Agent in an aggregate amount not to exceed the lesser of (A) $40,000,000 or (B) the aggregate amount reasonably determined by the US Borrower and its Subsidiaries as necessary to initially capitalize such joint venture; and

(m) other additional domestic investments not otherwise permitted pursuant to this Section not exceeding $5,000,000 in the aggregate in any Fiscal Year.

	2270524.10
LIB: CHARLOTTE

SECTION 10.4 Limitations on Mergers and Liquidation . Merge, consolidate, amalgamate or enter into any similar combination with any other Person or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution) except:

(a) any Wholly-Owned Subsidiary of the US Borrower may be merged or consolidated with or into the US Borrower ( provided that the US Borrower shall be the continuing or surviving Person) or with or into any Subsidiary Guarantor ( provided that the Subsidiary Guarantor shall be the continuing or surviving Person);

(b) any Wholly Owned Subsidiary may sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the US Borrower or any other Wholly-Owned Subsidiary; provided that if the transferor in such a transaction is a Subsidiary Guarantor, then the transferee must either be the US Borrower or a Subsidiary Guarantor;

(c) any Wholly-Owned Subsidiary of the US Borrower may merge into the Person such Wholly-Owned Subsidiary was formed to acquire in connection with a Permitted Acquisition; and

(d)	any Subsidiary of the US Borrower may wind-up into a Borrower or any Subsidiary Guarantor.

SECTION 10.5 Limitations on Sale of Assets . Convey, sell, lease, assign, transfer or otherwise dispose of any of its property, business or assets (including, without limitation, the sale of any receivables and leasehold interests and any sale-leaseback or similar transaction), whether now owned or hereafter acquired except:

(a)	the sale of inventory in the ordinary course of business;

(b) the sale of obsolete assets no longer used or usable in the business of the US Borrower or any of its Subsidiaries;

(c)	the transfer of assets to a Borrower or any Subsidiary Guarantor pursuant to Section 10.4 ;

(d) the sale or discount without recourse of accounts receivable arising in the ordinary course of business in connection with the compromise or collection thereof;

(e)	the disposition of any Hedging Agreement;

(f) sales of assets to Foreign Subsidiaries the fair market value with respect to which, together with the Permitted Acquisition Consideration payable in connection with all Permitted Foreign Acquisitions and the total amount of any transactions permitted under Sections 10.1(i) and 10.3(i), does not exceed $60,000,000 in the aggregate during the term of this Agreement;

(g) so long as no Default or Event of Default has occurred and is continuing or would occur as a result therefrom, transfers of an interest in the Transferred Assets in connection with an Account Securitization;

(h) so long as no Default or Event of Default has occurred and is continuing or would occur as a result therefrom, transfers of assets from the US Borrower and its Subsidiaries to the joint venture permitted pursuant to Section 10.3(l); and

(i) additional dispositions of assets not otherwise permitted pursuant to this Section the fair market value with respect to which does not exceed $5,000,000 in the aggregate in any Fiscal Year.

SECTION 10.6 Limitations on Dividends and Distributions . Declare or pay any dividends upon any of its Capital Stock; purchase, redeem, retire or otherwise acquire, directly or indirectly, any shares of its Capital Stock, or make any distribution of cash, property or assets among the holders of shares of its Capital Stock, or make any change in its capital structure which such change in its capital structure could reasonably be expected to have a Material Adverse Effect; provided that:

(a)	the US Borrower or any Subsidiary may pay dividends in shares of its own Capital Stock;

(b) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, the US Borrower may declare and pay dividends in a manner consistent with the past practice of the US Borrower in an amount reasonably determined by the board of directors of the US Borrower; provided that such amount shall not exceed fifty percent (50%) of Net Income for the preceding Fiscal Year;

(c)	any Subsidiary may pay cash dividends to the Borrowers; and

(d) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, the US Borrower may repurchase shares of its Capital Stock.

SECTION 10.7 Limitations on Exchange and Issuance of Capital Stock . Issue, sell or otherwise dispose of any class or series of Capital Stock that, by its terms or by the terms of any security into which it is convertible or exchangeable, is, or upon the happening of an event or passage of time would be, (a) convertible or exchangeable

	2270524.10
LIB: CHARLOTTE

into Indebtedness or (b) required to be redeemed or repurchased, including at the option of the holder, in whole or in part, or has, or upon the happening of an event or passage of time would have, a redemption or similar payment due.

SECTION 10.8 Transactions with Affiliates . Except for transactions permitted by Sections 10.3 , 10.6 and 10.7 , directly or indirectly (a) make any loan or advance to, or purchase or assume any note or other obligation to or from, any of its officers, directors, shareholders or other Affiliates, or to or from any member of the immediate family of any of its officers, directors, shareholders or other Affiliates, or subcontract any operations to any of its Affiliates or (b) enter into, or be a party to, any other transaction not described in clause (a) above with any of its Affiliates, except pursuant to the reasonable requirements of its business and upon fair and reasonable terms that are no less favorable to it than it would obtain in a comparable arm’s length transaction with a Person not its Affiliate.

SECTION 10.9 Certain Accounting Changes; Organizational Documents . (a) Change its Fiscal Year end, or make any change in its accounting treatment and reporting practices except as required by GAAP or (b) amend, modify or change its articles of incorporation (or corporate charter or other similar organizational documents) or amend, modify or change its bylaws (or other similar documents) in any manner adverse in any respect to the rights or interests of the Lenders.

SECTION 10.10

Amendments; Payments and Prepayments of Subordinated Indebtedness .

(a) Amend or modify (or permit the modification or amendment of) any of the terms or provisions of any Subordinated Indebtedness.

(b) Cancel, forgive, make any payment or prepayment on, or redeem or acquire for value (including, without limitation, (i) by way of depositing with any trustee with respect thereto money or securities before due for the purpose of paying when due and (ii) at the maturity thereof) any Subordinated Indebtedness, except refinancings, refundings, renewals, extensions or exchange of any Subordinated Indebtedness permitted by Section 10.1(j).

SECTION 10.11

Restrictive Agreements .

(a) Enter into any Indebtedness which contains any negative pledge on assets or any covenants more restrictive than the provisions of Articles VIII , IX and X hereof, or which restricts, limits or otherwise encumbers its ability to incur Liens on or with respect to any of its assets or properties other than the assets or properties securing such Indebtedness (other than Superior Commerce solely in connection with an Accounts Securitization).

(b) Enter into or permit to exist any agreement which impairs or limits the ability of any Subsidiary of a Borrower (other than Superior Commerce solely in connection with an Accounts Securitization) to pay dividends to such Borrower.

SECTION 10.12 Nature of Business . Substantively alter in any material respect the character or conduct of the business conducted by the US Borrower and its Subsidiaries as of the Closing Date.

ARTICLE XI

UNCONDITIONAL US BORROWER GUARANTY

SECTION 11.1 Guaranty of Obligations . The US Borrower hereby unconditionally guarantees to the Administrative Agent for the ratable benefit of the Administrative Agent and the Lenders, and their respective successors, endorsees, transferees and assigns, the prompt payment of all Obligations of the Canadian Borrower, whether primary or secondary (whether by way of endorsement or otherwise), whether now existing or hereafter arising, whether or not from time to time reduced or extinguished (except by payment thereof) or hereafter increased or incurred, whether or not recovery may be or hereafter become barred by the statute of limitations, whether enforceable or unenforceable as against the Canadian Borrower, whether or not discharged, stayed or otherwise affected by any bankruptcy, insolvency or other similar law or proceeding, whether created directly with the Administrative Agent or any Lender or acquired by the Administrative Agent or any Lender through assignment, endorsement or otherwise, whether matured or unmatured, whether joint or several, as and when the same become due and payable (whether at maturity or earlier, by reason of acceleration, mandatory repayment or otherwise), in accordance with the terms of any such instruments evidencing any such obligations, including all renewals, extensions or modifications thereof (all Obligations of the Canadian Borrower to the Administrative Agent and the Lenders, including all of the foregoing, being hereinafter collectively referred to as the “ US Borrower Guaranteed Obligations ”).

	2270524.10
LIB: CHARLOTTE

SECTION 11.2 Nature of Guaranty . The US Borrower agrees that this US Borrower Guaranty is a continuing, unconditional guaranty of payment and not of collection, and that its obligations under this US Borrower Guaranty shall be primary, absolute and unconditional, irrespective of, and unaffected by (a) the genuineness, validity, regularity, enforceability or any future amendment of, or change in, this Agreement or any other Loan Document or any other agreement, document or instrument to which the Canadian Borrower is or may become a party, (b) the absence of any action to enforce this US Borrower Guaranty, this Agreement or any other Loan Document or the waiver or consent by the Administrative Agent or any Lender with respect to any of the provisions of this US Borrower Guaranty, this Agreement or any other Loan Document, (c) the existence, value or condition of, or failure to perfect a Lien, if any, against, any security for or other guaranty of the US Borrower Guaranteed Obligations or any action, or the absence of any action, by the Administrative Agent or any Lender in respect of such security or guaranty (including, without limitation, the release of any such security or guaranty), (d) any structural change in, restructuring of or other similar change of the Canadian Borrower or any of its Subsidiaries or (e) any other action or circumstances which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor; it being agreed by the US Borrower that its obligations under this US Borrower Guaranty shall not be discharged until the final and indefeasible payment, in full, of the US Borrower Guaranteed Obligations and the termination of the Commitments. To the extent permitted by law, the US Borrower expressly waives all rights it may now or in the future have under any statute (including, without limitation, North Carolina General Statutes Section 26-7, et seq. or similar law), or at law or in equity, or otherwise, to compel the Administrative Agent or any Lender to proceed in respect of the US Borrower Guaranteed Obligations against the Canadian Borrower, any other guarantor or any other party or against any security for or other guaranty of the payment of the US Borrower Guaranteed Obligations before proceeding against, or as a condition to proceeding against, the US Borrower. To the extent permitted by law, the US Borrower further expressly waives and agrees not to assert or take advantage of any defense based upon the failure of the Administrative Agent or any Lender to commence an action in respect of the US Borrower Guaranteed Obligations against the Canadian Borrower, the US Borrower, any other guarantor or any other party or any security for the payment of the US Borrower Guaranteed Obligations. The US Borrower agrees that any notice or directive given at any time to the Administrative Agent or any Lender which is inconsistent with the waivers in the preceding two sentences shall be null and void and may be ignored by the Administrative Agent or such Lender, and, in addition, may not be pleaded or introduced as evidence in any litigation relating to this US Borrower Guaranty for the reason that such pleading or introduction would be at variance with the written terms of this US Borrower Guaranty, unless the Administrative Agent and the Required Lenders have specifically agreed otherwise in writing. The foregoing waivers are of the essence of the transaction contemplated by the Loan Documents and, but for this US Borrower Guaranty and such waivers, the Administrative Agent and the Lenders would decline to enter into this Agreement.

SECTION 11.3 Demand by the Administrative Agent . In addition to the terms set forth in Section 11.2 , and in no manner imposing any limitation on such terms, if all or any portion of the then outstanding US Borrower Guaranteed Obligations under this Agreement are declared to be immediately due and payable in accordance with the terms of this Agreement, then the US Borrower shall, upon demand in writing therefor by the Administrative Agent to the US Borrower, pay all or such portion of the outstanding US Borrower Guaranteed Obligations then declared due and payable. Payment by the US Borrower shall be made to the Administrative Agent, to be credited and applied upon the US Borrower Guaranteed Obligations, in immediately available funds to an account designated by the Administrative Agent or at the Administrative Agent’s Office or at any other address that may be specified in writing from time to time by the Administrative Agent.

SECTION 11.4 Waivers . In addition to the waivers contained in Section 11.2 , the US Borrower waives, and agrees that it shall not at any time insist upon, plead or in any manner whatever claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, marshalling of assets or redemption laws, or exemption, whether now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance by the US Borrower of its obligations under, or the enforcement by the Administrative Agent or the Lenders of, this US Borrower Guaranty. The US Borrower further hereby waives diligence, presentment, demand, protest and notice of whatever kind or nature with respect to any of the US Borrower Guaranteed Obligations and waives the benefit of all provisions of law which are or might be in conflict with the terms of this US Borrower Guaranty. The US Borrower represents, warrants and agrees that its obligations under this US Borrower Guaranty are not and shall not be subject to any counterclaims, offsets or defenses of any kind against the Administrative Agent, the Lenders or the Canadian Borrower whether now existing or which may arise in the future.

SECTION 11.5 Modification of Loan Documents etc . If the Administrative Agent or the Lenders shall at any time or from time to time, with or without the consent of, or notice to, the US Borrower (a) change or extend the manner,

	2270524.10
LIB: CHARLOTTE

place or terms of payment of, or renew or alter all or any portion of, the US Borrower Guaranteed Obligations, (b) take any action under or in respect of the Loan Documents in the exercise of any remedy, power or privilege contained therein or available to it at law, in equity or otherwise, or waive or refrain from exercising any such remedies, powers or privileges, (c) amend or modify, in any manner whatsoever, the Loan Documents, (d) extend or waive the time for performance by the US Borrower, any other guarantor, the Canadian Borrower or any other Person of, or compliance with, any term, covenant or agreement on its part to be performed or observed under a Loan Document (other than this US Borrower Guaranty), or waive such performance or compliance or consent to a failure of, or departure from, such performance or compliance, (e) take and hold security or collateral for the payment of the US Borrower Guaranteed Obligations or sell, exchange, release, dispose of, or otherwise deal with, any property pledged, mortgaged or conveyed, or in which the Administrative Agent or any Lender has been granted a Lien, to secure any Indebtedness of the US Borrower, any other guarantor or the Canadian Borrower to the Administrative Agent or any Lender, (f) release anyone who may be liable in any manner for the payment of any amounts owed by the US Borrower, any other guarantor or the Canadian Borrower to the Administrative Agent or any Lender, (g) modify or terminate the terms of any intercreditor or subordination agreement pursuant to which claims of other creditors of the US Borrower, any other guarantor or the Canadian Borrower are subordinated to the claims of the Administrative Agent or any Lender or (h) apply any sums by whomever paid or however realized to any US Borrower Guaranteed Obligations owing by the US Borrower, any other guarantor or the Canadian Borrower to the Administrative Agent or any Lender in such manner as the Administrative Agent or any Lender shall determine in its reasonable discretion; then neither the Administrative Agent nor any Lender shall incur any liability to the US Borrower as a result thereof, and no such action shall impair or release the obligations of the US Borrower under this US Borrower Guaranty.

SECTION 11.6 Reinstatement . The US Borrower agrees that, if any payment made by the Canadian Borrower or any other Person applied to the Obligations is at any time annulled, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of any collateral are required to be returned by the Administrative Agent or any Lender to the Canadian Borrower, its estate, trustee, receiver, liquidator, administrator or any other party, including, without limitation, the US Borrower, under any Applicable Law or equitable cause, then, to the extent of such payment or repayment, the US Borrower’s liability hereunder shall be and remain in full force and effect, as fully as if such payment had never been made, and, if prior thereto, this US Borrower Guaranty shall have been canceled or surrendered, this US Borrower Guaranty shall be reinstated in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of the US Borrower in respect of the amount of such payment.

SECTION 11.7 No Subrogation . Notwithstanding any payment or payments by the US Borrower hereunder, or any set-off or application of funds of the US Borrower by the Administrative Agent or any Lender, or the receipt of any amounts by the Administrative Agent or any Lender with respect to any of the US Borrower Guaranteed Obligations, the US Borrower shall not be entitled to be subrogated to any of the rights of the Administrative Agent or any Lender against the Canadian Borrower or any other guarantor or against any collateral security held by the Administrative Agent or any Lender for the payment of the US Borrower Guaranteed Obligations nor shall the US Borrower seek any reimbursement from the Canadian Borrower or any of the other guarantors in respect of payments made by the US Borrower in connection with the US Borrower Guaranteed Obligations, until all amounts owing to the Administrative Agent and the Lenders on account of the US Borrower Guaranteed Obligations are paid in full and the Aggregate Commitment is terminated. If any amount shall be paid to the US Borrower on account of such subrogation rights at any time when all of the US Borrower Guaranteed Obligations shall not have been paid in full, such amount shall be held by the US Borrower in trust for the Administrative Agent, segregated from other funds of the US Borrower, and shall, forthwith upon receipt by the US Borrower, be turned over to the Administrative Agent in the exact form received by the US Borrower (duly endorsed by the US Borrower to the Administrative Agent, if required) to be applied against the US Borrower Guaranteed Obligations, whether matured or unmatured, in such order as set forth herein.

	2270524.10
LIB: CHARLOTTE

ARTICLE XII

DEFAULT AND REMEDIES

SECTION 12.1 Events of Default .Each of the following shall constitute an Event of Default, whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment or order of any court or any order, rule or regulation of any Governmental Authority or otherwise:

(a) Default in Payment of Principal of Loans and Reimbursement Obligations . The Borrowers shall default in any payment of principal of any Loan when due or in any payment of a Reimbursement Obligation (whether at maturity, by reason of acceleration or otherwise).

(b) Other Payment Default . The Borrowers or any other Credit Party shall default in the payment when and as due (whether at maturity, by reason of acceleration or otherwise) of interest on any Loan or Reimbursement Obligation or the payment of any other Obligation, and such default shall continue for a period of five (5) days.

(c) Misrepresentation . Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Borrower or any other Credit Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith that is subject to materiality or Material Adverse Effect qualifications, shall be incorrect or misleading in any respect when made or deemed made or any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Borrower or any other Credit Party herein, any other Loan Document, or in any document delivered in connection herewith or therewith that is not subject to materiality or Material Adverse Effect qualifications, shall be incorrect or misleading in any material respect when made or deemed made.

(d) Default in Performance of Certain Covenants . The US Borrower or any other Credit Party shall (i) default in the performance or observance of any covenant or agreement contained in Sections 7.1(a), 7.1(b), or 7.5(e)(i) or Articles IX or X of this Agreement or (ii) default in the performance or observance of any covenant or agreement contained in Section 7.2 and such default shall continue for a period of five (5) days.

(e) Default in Performance of Other Covenants and Conditions . The US Borrower or any other Credit Party shall default in the performance or observance of any term, covenant, condition or agreement contained in this Agreement (other than as specifically provided for otherwise in this Section) or any other Loan Document and such default shall continue for a period of thirty (30) days after written notice thereof has been given to the US Borrower by the Administrative Agent.

(f) Hedging Agreement . The US Borrower or any other Credit Party shall default in the performance or observance of any terms, covenant, condition or agreement (after giving effect to any applicable grace or cure period) under any Hedging Agreement and such default causes the termination of such Hedging Agreement and the Termination Value owned by such Credit Party as a result thereof exceeds $5,000,000.

(g) Indebtedness Cross-Default . The US Borrower or any other Credit Party shall (i) default in the payment of any Indebtedness (other than the Loans or any Reimbursement Obligation) the aggregate outstanding amount of which Indebtedness is in excess of $5,000,000 beyond the period of grace if any, provided in the instrument or agreement under which such Indebtedness was created, or (ii) default in the observance or performance of any other agreement or condition relating to any Indebtedness (other than the Loans or any Reimbursement Obligation) the aggregate outstanding amount of which Indebtedness is in excess of $5,000,000 or contained in any instrument or agreement evidencing, securing or relating thereto or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, any such Indebtedness to become due prior to its stated maturity (any applicable grace period having expired).

(h) Other Cross-Defaults . The US Borrower or any other Credit Party shall default in the payment when due, or in the performance or observance, of any obligation or condition of any Material Contract unless, but only as long as, the existence of any such default is being contested by the US Borrower or any such Subsidiary in good faith by appropriate proceedings and adequate reserves in respect thereof have been established on the books of the US Borrower or such Credit Party to the extent required by GAAP.

(i)	Change in Control . A Change in Control shall occur.

(j) Voluntary Bankruptcy Proceeding . The US Borrower or any Subsidiary thereof shall (i) commence a voluntary case under the federal bankruptcy laws (as now or hereafter in effect), (ii) file a petition seeking to take advantage of any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or composition for adjustment of debts, (iii) consent to or fail to contest in a timely and appropriate manner any

	2270524.10
LIB: CHARLOTTE

petition filed against it in an involuntary case under such bankruptcy laws or other laws, (iv) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of a substantial part of its property, domestic or foreign, (v) admit in writing its inability to pay its debts as they become due, (vi) make a general assignment for the benefit of creditors, or (vii) take any corporate action for the purpose of authorizing any of the foregoing.

(k) Involuntary Bankruptcy Proceeding . A case or other proceeding shall be commenced against the US Borrower or any Subsidiary thereof in any court of competent jurisdiction seeking (i) relief under the federal bankruptcy laws (as now or hereafter in effect) or under any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or adjustment of debts, or (ii) the appointment of a trustee, receiver, custodian, liquidator or the like for the US Borrower or any Subsidiary thereof or for all or any substantial part of their respective assets, domestic or foreign, and such case or proceeding shall continue without dismissal or stay for a period of sixty (60) consecutive days, or an order granting the relief requested in such case or proceeding (including, but not limited to, an order for relief under such federal bankruptcy laws) shall be entered.

(l) Failure of Agreements . Any provision of this Agreement or any provision of any other Loan Document shall for any reason cease to be valid and binding on the US Borrower or any Subsidiary thereof party thereto or any such Person shall so state in writing.

(m) Termination Event . The occurrence of any of the following events: (i) the US Borrower or any ERISA Affiliate fails to make full payment when due of all amounts which, under the provisions of any Pension Plan or Section 412 of the Code, the US Borrower or any ERISA Affiliate is required to pay as contributions thereto, (ii) an accumulated funding deficiency in excess of $5,000,000 occurs or exists, whether or not waived, with respect to any Pension Plan, (iii) a Termination Event or (iv) the US Borrower or any ERISA Affiliate as employers under one or more Multiemployer Plans makes a complete or partial withdrawal from any such Multiemployer Plan and the plan sponsor of such Multiemployer Plans notifies such withdrawing employer that such employer has incurred a withdrawal liability requiring payments in an amount exceeding $5,000,000 in the aggregate or $2,000,000 per annum.

(n) Judgment . A judgment or order for the payment of money which causes the aggregate amount of all such judgments to exceed $5,000,000 in any Fiscal Year (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), shall be entered against the US Borrower or any Subsidiary thereof by any court and such judgment or order shall continue without having been discharged, vacated or stayed for a period of thirty (30) days after the entry thereof.

(o) Environmental . Any one or more Environmental Claims shall have been asserted against the US Borrower or any Subsidiary thereof; the US Borrower and any Subsidiary thereof would be reasonable likely to incur liability as a result thereof; and such liability would be reasonably likely, individually or in the aggregate, to have a Material Adverse Effect.

SECTION 12.2 Remedies . Upon the occurrence of an Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the US Borrower:

(a) Acceleration; Termination of Facilities . Terminate the Commitments and declare the principal of and interest on the Loans and the Reimbursement Obligations at the time outstanding, and all other amounts owed to the Lenders and to the Administrative Agent under this Agreement or any of the other Loan Documents (including, without limitation, all L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented or shall be entitled to present the documents required thereunder) and all other Obligations (other than Hedging Obligations), to be forthwith due and payable, whereupon the same shall immediately become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by each Credit Party, anything in this Agreement or the other Loan Documents to the contrary notwithstanding, and terminate the Credit Facility and any right of the Borrowers to request borrowings or Letters of Credit thereunder; provided , that upon the occurrence of an Event of Default specified in Section 12.1(j) or (k), the Credit Facility shall be automatically terminated and all Obligations (other than Hedging Obligations) shall automatically become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by each Credit Party, anything in this Agreement or in any other Loan Document to the contrary notwithstanding.

(b) Letters of Credit . With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to the preceding subsection, the Borrowers shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be

	2270524.10
LIB: CHARLOTTE

applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay the other Obligations on a pro rata basis. After all such Letters of Credit shall have expired or been fully drawn upon, the Reimbursement Obligation shall have been satisfied and all other Obligations shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrowers.

(c) Rights of Collection . Exercise on behalf of the Lenders all of its other rights and remedies under this Agreement, the other Loan Documents and Applicable Law, in order to satisfy all of the Borrowers’ Obligations.

SECTION 12.3 Rights and Remedies Cumulative; Non-Waiver; etc . Neither the Administrative Agent nor any Lender shall by any act (except by a written instrument pursuant to Section 14.1 ), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No delay or failure to take action on the part of the Administrative Agent or any Lender in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default. No course of dealing between the Borrowers, the Administrative Agent and the Lenders or their respective agents or employees shall be effective to change, modify or discharge any provision of this Agreement or any of the other Loan Documents or to constitute a waiver of any Event of Default. The enumeration of the rights and remedies of the Administrative Agent and the Lenders set forth in this Agreement is not intended to be exhaustive and the exercise by the Administrative Agent and the Lenders of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given hereunder or under the other Loan Documents or that may now or hereafter exist at law or in equity or by suit or otherwise.

SECTION 12.4 Crediting of Payments and Proceeds . In the event that the Borrowers shall fail to pay any of the Obligations when due and the Obligations have been accelerated pursuant to Section 12.2 , all payments received by the Lenders upon the Obligations and all net proceeds from the enforcement of the Obligations shall be applied:

First , to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts, including attorney fees, payable to the Administrative Agent in its capacity as such and the Issuing Lender in its capacity as such (ratably among the Administrative Agent and the Issuing Lender in proportion to the respective amounts described in this clause First payable to them);

Second , to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders, including attorney fees (ratably among the Lenders in proportion to the respective amounts described in this clause Second payable to them);

Third , to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and Reimbursement Obligations and any Hedging Obligations (including any termination payments and any accrued and unpaid interest thereon) (ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them);

Fourth , to payment of that portion of the Obligations constituting unpaid principal of the Loans and Reimbursement Obligations (ratably among the Lenders in proportion to the respective amounts described in this clause Fourth held by them);

Fifth , to the Administrative Agent for the account of the Issuing Lender, to cash collateralize any L/C Obligations then outstanding; and

Last , the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrowers or as otherwise required by Law.

SECTION 12.5 Administrative Agent May File Proofs of Claim . In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Credit Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrowers) shall be entitled and empowered, by intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may

	2270524.10
LIB: CHARLOTTE

be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 3.3, 4.3 and 14.3 ) allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 4.3 and 14.3 .

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

SECTION 12.6

Judgment Currency .

(a) The obligation of the Borrowers to make payments of the principal of and interest on the Notes and the obligation of any such Person to make payments of any other amounts payable hereunder or pursuant to any other Loan Document in the currency specified for such payment shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment, which is expressed in or converted into any other currency, except to the extent that such tender or recovery shall result in the actual receipt by each of the Administrative Agent and Lenders of the full amount of the particular currency expressed to be payable pursuant to the applicable Loan Document. The Administrative Agent shall, using all amounts obtained or received from the Borrowers pursuant to any such tender or recovery in payment of principal of and interest on the Obligations, promptly purchase the applicable currency at the most favorable spot exchange rate determined by the Administrative Agent to be available to it. The obligation of the Borrowers to make payments in the applicable currency shall be enforceable as an alternative or additional cause of action solely for the purpose of recovering in the applicable currency the amount, if any, by which such actual receipt shall fall short of the full amount of the currency expressed to be payable pursuant to the applicable Loan Document.

(b) Without limiting Section 12.6(a), the Borrowers shall indemnify and hold harmless the Administrative Agent, the Lenders and the Issuing Lender, as applicable, against any loss incurred by the Administrative Agent, any Lender or the Issuing Lender as a result of any payment or recovery described in Section 12.6(a) and as a result of any variation having occurred in rates of exchange between the date of any such amount becoming due under this Agreement or any other Loan Document and the date of actual payment thereof. The foregoing indemnity shall constitute a separate and independent obligation of the Borrowers and shall continue in full force and effect notwithstanding any such payment or recovery.

ARTICLE XIII

THE ADMINISTRATIVE AGENT

SECTION 13.1 Appointment and Authority . Each of the Lenders hereby irrevocably designates and appoints Wachovia to act on its behalf as the Administrative Agent of such Lender under this Agreement and the other Loan Documents for the term hereof and each such Lender irrevocably authorizes Wachovia, as Administrative Agent for such Lender, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and such other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement or such other Loan Documents, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein and therein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or the other Loan Documents or otherwise exist against the Administrative Agent. Any reference to the Administrative Agent in this Article XIII

	2270524.10
LIB: CHARLOTTE

shall be deemed to refer to the Administrative Agent solely in its capacity as Administrative Agent and not in its capacity as a Lender.

SECTION 13.2 Delegation of Duties . The Administrative Agent may execute any of its respective duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by the Administrative Agent with reasonable care.

SECTION 13.3 Exculpatory Provisions . Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or the other Loan Documents (except for actions occasioned solely by its or such Person’s own gross negligence or willful misconduct), or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrowers or any of the Credit Parties or any officer thereof contained in this Agreement or the other Loan Documents or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or the other Loan Documents or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or the other Loan Documents or for any failure of the Borrowers or any of the Credit Parties to perform their respective obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement, or to inspect the properties, books or records of the Borrowers or any of the Credit Parties.

SECTION 13.4

Reliance by the Administrative Agent .

(a) The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrowers), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement and the other Loan Documents unless it shall first receive such advice or concurrence of the Required Lenders (or, when expressly required hereby or by the relevant other Loan Documents, all the Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action except for its own gross negligence or willful misconduct. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Required Lenders (or, when expressly required hereby, all the Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.

(b) For purposes of determining compliance with the conditions specified in Section 5.2 , each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

SECTION 13.5 Notice of Default . The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless it has received notice from a Lender or the Borrowers referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Administrative Agent receives such a notice, it shall promptly give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, when expressly required hereby, all the Lenders); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders, except to the extent that other provisions of this Agreement expressly require that any such action be taken or not be taken only with the consent and authorization or the request of the Lenders or Required Lenders, as applicable.

SECTION 13.6 Non-Reliance on the Administrative Agent and Other Lenders . Each Lender expressly acknowledges that neither the Administrative Agent nor any of its respective officers, directors, employees, agents,

	2270524.10
LIB: CHARLOTTE

attorneys-in-fact, Subsidiaries or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereafter taken, including any review of the affairs of the Borrowers or any Credit Party, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrowers and its Subsidiaries and made its own decision to make its Loans and issue or participate in Letters of Credit hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative 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 analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrowers or any Credit Party. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder or by the other Loan Documents, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of the Borrowers or any of the Credit Parties which may come into the possession of the Administrative Agent or any of its respective officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates.

SECTION 13.7 Indemnification . The Lenders agree to indemnify the Administrative Agent in its capacity as such and (to the extent not reimbursed by the Borrowers and without limiting the obligation of the Borrowers to do so), ratably according to the respective amounts of their Commitment Percentages from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Loans or any Reimbursement Obligation) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or the other Loan Documents, or any documents, reports or other information provided to the Administrative Agent or any Lender or contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the Administrative Agent’s bad faith, gross negligence or willful misconduct. The agreements in this Section shall survive the payment of the Obligations and the termination of this Agreement.

SECTION 13.8 The Administrative Agent in Its Individual Capacity . The Administrative Agent and its respective Subsidiaries and Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrowers as though the Administrative Agent were not the Administrative Agent hereunder. With respect to any Loans made or renewed by it and with respect to any Letter of Credit issued by it or participated in by it, the Administrative Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms “Lender” and “Lenders” shall include the Administrative Agent in its individual capacity.

SECTION 13.9

Resignation of the Administrative Agent; Successor Administrative Agent .

(a) Subject to the appointment and acceptance of a successor as provided below, Wachovia may resign as the Administrative Agent at any time by giving notice thereof to the Lenders and the US Borrower. Upon any such resignation, the Required Lenders shall appoint from among the Lenders a successor administrative agent for the Lenders, which successor administrative agent shall be consented to by the Borrowers at all times other than during the existence of an Event of Default (which consent of the Borrowers shall not be unreasonably withheld or delayed). If no successor administrative agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the Administrative Agent’s giving of notice of resignation, then the Administrative Agent may, on behalf of the Lenders, appoint a successor administrative agent. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor administrative agent, such successor administrative agent shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the retiring Administrative Agent and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder without any other or further act or deed on the part of such retiring Administrative Agent or any other Lender. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article XIII and Section 14.3 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. If no successor administrative agent has

	2270524.10
LIB: CHARLOTTE

accepted appointment as Administrative Agent by the date which is thirty (30) days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.

(b) Notwithstanding anything to the contrary contained herein, Wachovia may, (i) upon thirty (30) days’ notice to the US Borrower and the Lenders, resign as Issuing Lender and/or (ii) upon thirty (30) days’ notice to the US Borrower, resign as Swingline Lender. In the event of any such resignation as Issuing Lender or Swingline Lender, the US Borrower shall be entitled to appoint from among the Lenders a successor Issuing Lender or Swingline Lender hereunder; provided that no failure by the US Borrower to appoint any such successor shall affect the resignation of Wachovia as Issuing Lender or Swingline Lender, as the case may be. If Wachovia resigns as Issuing Lender, it shall retain all the rights and obligations of the Issuing Lender hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as Issuing Lender and all L/C Obligations with respect thereto, including the right to require the Lenders to make Revolving Credit Loans or fund risk participations for unreimbursed amounts of Letters of Credit pursuant to Section 3.4 . If Wachovia resigns as Swingline Lender, it shall retain all the rights of the Swingline Lender provided for hereunder with respect to Swingline Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Revolving Credit Loans or fund risk participations in outstanding Swingline Loans pursuant to Section 2.3(b).

SECTION 13.10 Guaranty Matters . The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion, to release any Subsidiary Guarantor from its obligations under the Subsidiary Guaranty Agreement if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.

Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release any Subsidiary Guarantor from its obligations under the Subsidiary Guaranty Agreement pursuant to this Section.

SECTION 13.11 Other Agents, Arrangers and Managers . None of the Lenders or other Persons identified on the facing page or signature pages of this Agreement as a “syndication agent,” “documentation agent,” “co-agent,” “book manager,” “lead manager,” “arranger,” “lead arranger” or “co-arranger” shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than, in the case of such Lenders, those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders or other Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder.

ARTICLE XIV

MISCELLANEOUS

SECTION 14.1

Notices .

(a) Method of Communication . Except as otherwise provided in this Agreement, all notices and communications hereunder shall be in writing (for purposes hereof, the term “writing” shall include information in electronic format such as electronic mail and internet web pages), or by telephone subsequently confirmed in writing. Any notice shall be effective if delivered by hand delivery or sent via electronic mail, posting on an internet web page, telecopy, recognized overnight courier service or certified mail, return receipt requested, and shall be presumed to be received by a party hereto (i) on the date of delivery if delivered by hand or sent by electronic mail, posting on an internet web page, telecopy, (ii) on the next Business Day if sent by recognized overnight courier service and (iii) on the third (3 ^rd ) Business Day following the date sent by certified mail, return receipt requested. A telephonic notice to the Administrative Agent as understood by the Administrative Agent will be deemed to be the controlling and proper notice in the event of a discrepancy with or failure to receive a confirming written notice.

(b) Addresses for Notices . Notices to any party shall be sent to it at the following addresses, or any other address as to which all the other parties are notified in writing.

If to the Borrowers:	SCP Pool Corporation
109 Northpark Boulevard
Covington, Louisiana 70433

	2270524.10
LIB: CHARLOTTE

Attention: Mark Joslin, Chief Financial Officer

Telephone No.: (985) 801-5702

Telecopy No.: (985) 801-8302

With copies to:

SCP Pool Corporation

109 Northpark Blvd

Covington, Louisiana 70433

Attention: Jennifer Neil, General Counsel

Telephone No.: 985-801-5269

Telecopy No.: 985-801-8269

If to Wachovia as

Wachovia Bank, National Association

Administrative Agent:

Charlotte Plaza, CP-8

201 South College Street

Charlotte, North Carolina 28288-0680

Attention: Syndication Agency Services

Telephone No.: (704) 374-2698
Telecopy No.: (704) 383-0288
With copies to:	Wachovia Bank, National Association
One Wachovia Center
Charlotte, North Carolina 28288
Attention: David Hauglid
Telephone No.: (704) 383-3544
Telecopy No.: (704) 383-6647
If to any Lender:		To the address set forth on the Register

(c) Administrative Agent’s Office . The Administrative Agent hereby designates its office located at the address set forth above, or any subsequent office which shall have been specified for such purpose by written notice to the Borrowers and Lenders, as the Administrative Agent’s Office referred to herein, to which payments due are to be made and at which Loans will be disbursed and Letters of Credit requested.

SECTION 14.2 Amendments, Waivers and Consents . Except as set forth below or as specifically provided in any Loan Document, any term, covenant, agreement or condition of this Agreement or any of the other Loan Documents may be amended or waived by the Lenders, and any consent given by the Lenders, if, but only if, such amendment, waiver or consent is in writing signed by the Required Lenders (or by the Administrative Agent with the consent of the Required Lenders) and delivered to the Administrative Agent and, in the case of an amendment, signed by the Borrowers; provided , that no amendment, waiver or consent shall:

(a)	waive any condition set forth in Section 5.2 without the written consent of each Lender;

(b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 12.2 ) or the amount of Loans of any Lender without the written consent of each Lender directly affected thereby;

(c) postpone any date fixed by this Agreement or any other Loan Document for any payment or mandatory repayment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;

(d) reduce the principal of, or the rate of interest specified herein on, any Loan or Reimbursement Obligation, or (subject to clause (v) of the second proviso to this Section) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided that only the consent of the Required Lenders shall be necessary (i) to waive any obligation of the Borrowers to pay interest at the rate set forth in Section 4.1(c) during the continuance of an Event of Default, or (ii)

	2270524.10
LIB: CHARLOTTE

to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan or L/C Borrowing or to reduce any fee payable hereunder;

(e) change Section 4.4 or Section 12.4 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender directly affected thereby;

(f) change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; or

(g) release all of the Subsidiary Guarantors or release Subsidiary Guarantors comprising substantially all of the credit support for the Obligations, in either case, from the Subsidiary Guaranty Agreement (other than as authorized in Section 13.10 ), without the written consent of each Lender;

provided further , that (i) no amendment, waiver or consent shall, unless in writing and signed by the Issuing Lender in addition to the Lenders required above, affect the rights or duties of the Issuing Lender under this Agreement or any Letter of Credit Application relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swingline Lender in addition to the Lenders required above, affect the rights or duties of the Swingline Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the Canadian Dollar Lender in addition to the Lenders required above, affect the rights or duties of the Canadian Dollar Lender under this Agreement; (iv) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (v) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Lender.

SECTION 14.3 Expenses; Indemnity . The Borrowers will (a) pay all out-of-pocket expenses (including, without limitation, all costs of electronic or internet distribution of any information hereunder) of the Administrative Agent in connection with (i) the preparation, execution and delivery of this Agreement and each other Loan Document, whenever the same shall be executed and delivered, including, without limitation, all out-of-pocket syndication and due diligence expenses and reasonable fees, disbursements and other charges of counsel for the Administrative Agent and (ii) the preparation, execution and delivery of any waiver, amendment or consent by the Administrative Agent or the Lenders relating to this Agreement or any other Loan Document, including, without limitation, reasonable fees and disbursements of counsel for the Administrative Agent, (b) pay all reasonable out-of-pocket expenses of the Administrative Agent and each Lender actually incurred in connection with the administration and enforcement of any rights and remedies of the Administrative Agent and Lenders under the Credit Facility, including, without limitation, in connection with any workout, restructuring, bankruptcy or other similar proceeding, creating and perfecting Liens in favor of Administrative Agent on behalf of Lenders, enforcing any Obligations of, or collecting any payments due from, the Borrowers or any Subsidiary Guarantor by reason of an Event of Default (including in connection with the sale of, collection from, or other realization upon any collateral or the enforcement of the Subsidiary Guaranty Agreement); consulting with appraisers, accountants, engineers, attorneys and other Persons concerning the nature, scope or value of any right or remedy of the Administrative Agent or any Lender hereunder or under any other Loan Document or any factual matters in connection therewith, which expenses shall include without limitation the reasonable fees and disbursements of such Persons, and (c) defend, indemnify and hold harmless the Administrative Agent and the Lenders, and their respective parents, Subsidiaries, Affiliates, partners, employees, agents, officers, advisors and directors, from and against any losses, penalties, fines, liabilities, settlements, damages, costs and expenses, suffered by any such Person in connection with any claim (including, without limitation, any Environmental Claims), investigation, litigation or other proceeding (whether or not the Administrative Agent or any Lender is a party thereto) and the prosecution and defense thereof, arising out of or in any way connected with the Loans, this Agreement, any other Loan Document, or any documents, reports or other information provided to the Administrative Agent or any Lender or contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby, including, without limitation, reasonable attorney’s and consultant’s fees, except to the extent that any of the foregoing (a) are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted directly from the gross negligence or willful misconduct of the party seeking indemnification therefor or (b) result from a claim brought by any Credit Party

	2270524.10
LIB: CHARLOTTE

against an indemnitee for breach in bad faith of the obligations under this Agreement or the other Loan Documents of the party seeking indemnification if such Credit Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

SECTION 14.4 Set-off . If an Event of Default shall have occurred and be continuing, each Lender, the Issuing Lender, the Canadian Dollar Lender, the Swingline Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the Issuing Lender, the Canadian Dollar Lender, the Swingline Lender or any such Affiliate to or for the credit or the account of the Borrowers or any other Credit Party against any and all of the obligations of the Borrowers or such Credit Party now or hereafter existing under this Agreement or any other Loan Document to such Lender, the Issuing Lender, the Canadian Dollar Lender or the Swingline Lender, irrespective of whether or not such Lender, the Issuing Lender, the Canadian Dollar Lender or the Swingline Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrowers or such Credit Party may be contingent or unmatured or are owed to a branch or office of such Lender, the Issuing Lender, the Canadian Dollar Lender or the Swingline Lender different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender, the Issuing Lender, the Canadian Dollar Lender, the Swingline Lender and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the Issuing Lender, the Canadian Dollar Lender, the Swingline Lender or their respective Affiliates may have. Each Lender, the Issuing Lender, the Canadian Dollar Lender and the Swingline Lender agrees to notify the Borrowers and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

SECTION 14.5 Governing Law . This Agreement and the other Loan Documents, unless otherwise expressly set forth therein, shall be governed by, construed and enforced in accordance with the laws of the State of North Carolina, without reference to the conflicts or choice of law principles thereof.

SECTION 14.6

Jurisdiction and Venue .

(a) Jurisdiction . The Borrowers hereby irrevocably consent to the personal jurisdiction of the state and federal courts located in Mecklenburg County, North Carolina (and any courts from which an appeal from any of such courts must or may be taken), in any action, claim or other proceeding arising out of any dispute in connection with this Agreement and the other Loan Documents, any rights or obligations hereunder or thereunder, or the performance of such rights and obligations. The Borrowers hereby irrevocably consent to the service of a summons and complaint and other process in any action, claim or proceeding brought by the Administrative Agent or any Lender in connection with this Agreement or the other Loan Documents, any rights or obligations hereunder or thereunder, or the performance of such rights and obligations, on behalf of itself or its property, in the manner specified in Section 14.1 . Nothing in this Section shall affect the right of the Administrative Agent or any Lender to serve legal process in any other manner permitted by Applicable Law or affect the right of the Administrative Agent or any Lender to bring any action or proceeding against the Borrowers or their respective properties in the courts of any other jurisdictions.

(b) Venue . The Borrowers hereby irrevocably waive any objection they may have now or in the future to the laying of venue in the aforesaid jurisdiction in any action, claim or other proceeding arising out of or in connection with this Agreement, any other Loan Document or the rights and obligations of the parties hereunder or thereunder. The Borrowers irrevocably waive, in connection with such action, claim or proceeding, any plea or claim that the action, claim or proceeding has been brought in an inconvenient forum.

SECTION 14.7

Binding Arbitration; Waiver of Jury Trial .

	2270524.10
LIB: CHARLOTTE

Charlotte, North Carolina. The expedited procedures set forth in Rule 51, et seq. of the Arbitration Rules shall be applicable to claims of less than $1,000,000. All applicable statutes of limitations shall apply to any Dispute. A judgment upon the award may be entered in any court having jurisdiction. Notwithstanding anything foregoing to the contrary, any arbitration proceeding demanded hereunder shall begin within ninety (90) days after such demand thereof and shall be concluded within one hundred twenty (120) days after such demand. These time limitations may not be extended unless a party hereto shows cause for extension and then such extension shall not exceed a total of sixty (60) days. The panel from which all arbitrators are selected shall be comprised of licensed attorneys selected from the Commercial Financial Dispute Arbitration Panel of the AAA. The single arbitrator selected for expedited procedure shall be a retired judge from the highest court of general jurisdiction, state or federal, of the state where the hearing will be conducted. The parties hereto do not waive any applicable Federal or state substantive law except as provided herein. Notwithstanding the foregoing, this subsection shall not apply to any Hedging Agreement.

(b) Jury Trial . THE ADMINISTRATIVE AGENT, EACH LENDER AND THE BORROWERS HEREBY ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.

(c) Preservation of Certain Remedies . Notwithstanding the preceding binding arbitration provisions, the parties hereto and the other Loan Documents preserve, without diminution, certain remedies that such Persons may employ or exercise freely, either alone, in conjunction with or during a Dispute. Each such Person shall have and hereby reserves the right to proceed in any court of proper jurisdiction or by self help to exercise or prosecute the following remedies, as applicable: (i) all rights to foreclose against any real or personal property or other security by exercising a power of sale granted in the Loan Documents or under Applicable Law or by judicial foreclosure and sale, including a proceeding to confirm the sale, (ii) all rights of self help including peaceful occupation of property and collection of rents, set off, and peaceful possession of property, (iii) obtaining provisional or ancillary remedies including injunctive relief, sequestration, garnishment, attachment, appointment of receiver and in filing an involuntary bankruptcy proceeding, and (iv) when applicable, a judgment by confession of judgment. Preservation of these remedies does not limit the power of an arbitrator to grant similar remedies that may be requested by a party in a Dispute.

SECTION 14.8 Reversal of Payments . To the extent a Borrower makes a payment or payments to the Administrative Agent for the ratable benefit of the Lenders or the Administrative Agent receives any payment or proceeds of the collateral which payments or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state, provincial or federal law, common law or equitable cause, then, to the extent of such payment or proceeds repaid, the Obligations or part thereof intended to be satisfied shall be revived and continued in full force and effect as if such payment or proceeds had not been received by the Administrative Agent.

SECTION 14.9

Injunctive Relief; Punitive Damages .

(a) The Borrowers recognize that, in the event the Borrowers fail to perform, observe or discharge any of their obligations or liabilities under this Agreement, any remedy of law may prove to be inadequate relief to the Administrative and the Lenders. Therefore, the Borrowers agree that the Administrative Agent and the Lenders, at the Administrative Agent’s or the Required Lenders’ option, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.

(b) The Administrative Agent, the Lenders and the US Borrower (on behalf of itself and the Credit Parties) hereby agree that no such Person shall have a remedy of punitive or exemplary damages against any other party to a Loan Document and each such Person hereby waives any right or claim to punitive or exemplary damages that they may now have or may arise in the future in connection with any Dispute, whether such Dispute is resolved through arbitration or judicially.

SECTION 14.10 Accounting Matters . If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrowers or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrowers shall provide to the

	2270524.10
LIB: CHARLOTTE

Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

SECTION 14.11

Successors and Assigns; Participations .

(a) Successors and Assigns Generally . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that no Borrower nor any other Credit Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders . Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that

(i) except in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000, in the case of any assignment, unless such assignment is made to an existing Lender, to an Affiliate thereof, or to an Approved Fund, in which case no minimum amount shall apply, unless each of the Administrative Agent and, so long as no Default or Event of Default has occurred and is continuing, the US Borrower otherwise consent (each such consent not to be unreasonably withheld or delayed); provided that the US Borrower shall be deemed to have given its consent five (5) Business Days after the date written notice thereof has been delivered by the assigning Lender (through the Administrative Agent) unless such consent is expressly refused by the US Borrower prior to such fifth (5 ^th ) Business Day;

(ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loan or the Commitment assigned;

(iii) any assignment of a Commitment must be approved by the Administrative Agent, the Canadian Dollar Lender, the Swingline Lender and the Issuing Lender unless the Person that is the proposed assignee is itself a Lender with a Commitment (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and

(iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 , and the Eligible Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to

	2270524.10
LIB: CHARLOTTE

the benefits of Sections 4.8 , 4.9 , 4.10 , 4.11 and 14.3 with respect to facts and circumstances occurring prior to the effective date of such assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c) Register . The Administrative Agent, acting solely for this purpose as an agent of the US Borrower, shall maintain at one of its offices in Charlotte, North Carolina, a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive, and the US Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the US Borrower and any Lender, solely to the extent of any entries applicable to such Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Participations . Any Lender may at any time, without the consent of, or notice to, the Borrowers or the Administrative Agent, sell participations to any Person (other than a natural person or a Borrower or any of the Borrowers’ Affiliates or Subsidiaries) (each, a “ Participant ”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent 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.

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver or modification described in the Section 14.2 that directly affects such Participant. Subject to subsection (e) of this Section, the Borrowers agree that each Participant shall be entitled to the benefits of Sections 4.8 , 4.9 , 4.10 and 4.11 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 14.4 as though it were a Lender, provided such Participant agrees to be subject to Section 4.6 as though it were a Lender.

(e) Limitations upon Participant Rights . A Participant shall not be entitled to receive any greater payment under Sections 4.10 and 4.11 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the US Borrower’s prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 4.11 unless the US Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the US Borrower, to comply with Section 4.11(e) as though it were a Lender.

(f) Certain Pledges . Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

SECTION 14.12 Confidentiality . Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by, or required to be disclosed to, any rating agency, or regulatory or similar authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies under this Agreement or under any other Loan Document (or any Hedging Agreement with a Lender or the Administrative Agent) or any action or proceeding relating to this Agreement or any other Loan Document (or any

	2270524.10
LIB: CHARLOTTE

Hedging Agreement with a Lender or the Administrative Agent) or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any Purchasing Lender, proposed Purchasing Lender, Participant or proposed Participant or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to any Borrower and its obligations, (g) with the consent of the US Borrower, (h) to Gold Sheets and other similar bank trade publications, such information to consist of deal terms and other information customarily found in such publications, or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrowers. For purposes of this Section, “ Information ” means all information received from any Credit Party relating to any Credit Party or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by any Credit Party; provided that, in the case of information received from a Credit Party after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

SECTION 14.13 Performance of Duties . Each of the Credit Party’s obligations under this Agreement and each of the other Loan Documents shall be performed by such Credit Party at its sole cost and expense.

SECTION 14.14 All Powers Coupled with Interest . All powers of attorney and other authorizations granted to the Lenders, the Administrative Agent and any Persons designated by the Administrative Agent or any Lender pursuant to any provisions of this Agreement or any of the other Loan Documents shall be deemed coupled with an interest and shall be irrevocable so long as any of the Obligations remain unpaid or unsatisfied, any of the Commitments remain in effect or the Credit Facility has not been terminated.

SECTION 14.15 Survival of Indemnities . Notwithstanding any termination of this Agreement, the indemnities to which the Administrative Agent and the Lenders are entitled under the provisions of this Article XIV and any other provision of this Agreement and the other Loan Documents shall continue in full force and effect and shall protect the Administrative Agent and the Lenders against events arising after such termination as well as before.

SECTION 14.16 Titles and Captions . Titles and captions of Articles, Sections and subsections in, and the table of contents of, this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement.

SECTION 14.17 Severability of Provisions . Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.

SECTION 14.18 Counterparts . This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and shall be binding upon all parties, their successors and assigns, and all of which taken together shall constitute one and the same agreement.

SECTION 14.19 Integration . This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of the Administrative Agent or the Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof.

SECTION 14.20 Term of Agreement . This Agreement shall remain in effect from the Closing Date through and including the date upon which all Obligations arising hereunder or under any other Loan Document shall have been indefeasibly and irrevocably paid and satisfied in full and all Commitments have been terminated. No termination of this Agreement shall affect the rights and obligations of the parties hereto arising prior to such termination or in respect of any provision of this Agreement which survives such termination.

SECTION 14.21 Advice of Counsel, No Strict Construction . Each of the parties represents to each other party hereto that it has discussed this Agreement with its counsel. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this

	2270524.10
LIB: CHARLOTTE

Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

SECTION 14.22

Inconsistencies with Other Documents; Independent Effect of Covenants .

(a) In the event there is a conflict or inconsistency between this Agreement and any other Loan Document, the terms of this Agreement shall control; provided that any provision of the Security Documents which imposes additional burdens on any Borrower or its Subsidiaries or further restricts the rights of any Borrower or its Subsidiaries or gives the Administrative Agent or Lenders additional rights shall not be deemed to be in conflict or inconsistent with this Agreement and shall be given full force and effect.

(b) The Borrowers expressly acknowledge and agree that each covenant contained in Articles VIII , IX , or X hereof shall be given independent effect. Accordingly, the Borrowers shall not engage in any transaction or other act otherwise permitted under any covenant contained in Articles VIII , IX , or X if, before or after giving effect to such transaction or act, the Borrowers shall or would be in breach of any other covenant contained in Articles VIII , IX , or X .

[Signature pages to follow]

	2270524.10
LIB: CHARLOTTE

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under seal by their duly authorized officers, all as of the day and year first written above.

SCP POOL CORPORATION , as US Borrower

By: / s/ Manuel Perez de la Mesa
Name: Manuel Perez de la Mesa
Title: President & CEO

SCP DISTRIBUTORS INC., as Canadian Borrower

By: / s/ Manuel Perez de la Mesa
Name: Manuel Perez de la Mesa
Title: President & CEO

[Credit Agreement – SCP Pool Corporation]

	2270524.10
LIB: CHARLOTTE

AGENTS AND LENDERS:

WACHOVIA BANK, NATIONAL ASSOCIATION ,

as Administrative Agent, Swingline Lender, Issuing Lender and Lender

By: / s/ Kira Deter
Name: Kira Deter
Title:	Officer

[Credit Agreement – SCP Pool Corporation]

	2270524.10
LIB: CHARLOTTE

CONGRESS FINANCIAL CORPORATION (CANADA), as Canadian Dollar Lender

By: / s/ Niall Hamilton
Name: Niall Hamilton
Title: Senior Vice President

[Credit Agreement – SCP Pool Corporation]

	2270524.10
LIB: CHARLOTTE

JP MORGAN CHASE BANK , as Syndication Agent and Lender

By: / s/ H. David Jones
Name : H. David Jones
Title : Vice President

[Credit Agreement – SCP Pool Corporation]

	2270524.10
LIB: CHARLOTTE

HIBERNIA NATIONAL BANK , as Document Agent and Lender

By: / s/ Katherine Kay
Name: Katherine Kay
Title : Vice President

[Credit Agreement – SCP Pool Corporation]

	2270524.10
LIB: CHARLOTTE

WELLS FARGO BANK NATIONAL ASSOCIATION , as Documentation Agent and Lender

By: /s/ Linda Masera
Name : Linda Masera
Title : Vice President

[Credit Agreement – SCP Pool Corporation]

	2270524.10
LIB: CHARLOTTE

REGIONS BANK , as Lender

By: / s/ Jorge E. Goris
Name : Jorge E. Goris
Title: Senior Vice President

[Credit Agreement – SCP Pool Corporation]

	2270524.10
LIB: CHARLOTTE

BANK ONE NA , as Issuing Lender

By: / s/ H. David Jones
Name: H. David Jones
Title: Vice President

[Credit Agreement – SCP Pool Corporation]

	2270524.10
LIB: CHARLOTTE

Exhibit 10.22

SUBSIDIARY GUARANTY AGREEMENT, dated as of November 2, 2004, made by certain Domestic Subsidiaries (collectively, the “ Subsidiary Guarantors ”, each, a “ Subsidiary Guarantor ”) of SCP POOL CORPORATION, a Delaware corporation (the “ US Borrower ”), in favor of WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent (in such capacity, the “ Administrative Agent ”) for the ratable benefit of itself, and the financial institutions (the “ Lenders ”) from time to time parties to the Credit Agreement, dated of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), by and among the US Borrower, SCP DISTRIBUTORS INC., a company organized under the laws of Ontario (the “ Canadian Borrower ” and together with the US Borrower, the “ Borrowers ”), the Lenders, and the Administrative Agent.

STATEMENT OF PURPOSE

Pursuant to the terms of the Credit Agreement, the Lenders have agreed to make Extensions of Credit to the Borrowers upon the terms and subject to the conditions set forth therein.

The Borrowers and the Subsidiary Guarantors, though separate legal entities, comprise one integrated financial enterprise, and all Extensions of Credit to the Borrowers will inure, directly or indirectly, to the benefit of each of the Subsidiary Guarantors.

It is a condition precedent to the obligation of the Lenders to make their respective Extensions of Credit to the Borrowers under the Credit Agreement that the Subsidiary Guarantors shall have executed and delivered this Guaranty to the Administrative Agent, for the ratable benefit of itself and the Lenders.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, and to induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective Extensions of Credit to the Borrowers thereunder, each Subsidiary Guarantor hereby agrees with the Administrative Agent, for the ratable benefit of itself and the Lenders, as follows:

ARTICLE I

DEFINED TERMS

SECTION 1.1 Definitions . The following terms when used in this Guaranty shall have the meanings assigned to them below:

“ Applicable Insolvency Laws ” means all Applicable Laws governing bankruptcy, reorganization, arrangement, adjustment of debts, relief of debtors, dissolution, insolvency, fraudulent transfers or conveyances or other similar laws (including, without limitation, 11 U.S.C. Sections 544, 547, 548 and 550 and other “avoidance” provisions of Title 11 of the United States Code, as amended or supplemented).

“ Guaranteed Obligations ” has the meaning set forth in Section 2.1 .

“ Guaranty ” means this Subsidiary Guaranty Agreement, as amended, restated, supplemented or otherwise modified from time to time.

SECTION 1.2 Other Definitional Provisions . Capitalized terms used and not otherwise defined in this Guaranty including the preambles and recitals hereof shall have the meanings ascribed to them in the Credit Agreement. In the event of a conflict between capitalized terms defined herein and in the Credit Agreement, the Credit Agreement shall control. The words “hereof,” “herein”, “hereto” and “hereunder” and words of similar import when used in this Guaranty shall refer to this Guaranty as a whole and not to any particular provision of this Guaranty, and Section references are to this Guaranty unless otherwise specified. The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

	2272622.05
LIB: CHARLOTTE

ARTICLE II

GUARANTY

SECTION 2.1 Guaranty . Each Subsidiary Guarantor hereby, jointly and severally with the other Subsidiary Guarantors, unconditionally guarantees to the Administrative Agent for the ratable benefit of itself and the Lenders, and their respective permitted successors, endorsees, transferees and assigns, the prompt payment and performance of all Obligations of the Borrowers, whether primary or secondary (whether by way of endorsement or otherwise), whether now existing or hereafter arising, whether or not from time to time reduced or extinguished (except by payment thereof) or hereafter increased or incurred, whether or not recovery may be or hereafter becomes barred by the statute of limitations, whether enforceable or unenforceable as against such Borrower, whether or not discharged, stayed or otherwise affected by any Applicable Insolvency Law or proceeding thereunder, whether created directly with the Administrative Agent or any Lender or acquired by the Administrative Agent or any Lender through assignment, endorsement or otherwise, whether matured or unmatured, whether joint or several, as and when the same become due and payable (whether at maturity or earlier, by reason of acceleration, mandatory repayment or otherwise), in accordance with the terms of any such instruments evidencing any such obligations, including all renewals, extensions or modifications thereof (all Obligations of the Borrowers, including all of the foregoing being hereafter collectively referred to as the “ Guaranteed Obligations ”).

SECTION 2.2 Bankruptcy Limitations on each Guarantor . Notwithstanding anything to the contrary contained in Section 2.1 , it is the intention of each Subsidiary Guarantor, the Administrative Agent and the Lenders that, in any proceeding involving the bankruptcy, reorganization, arrangement, adjustment of debts, relief of debtors, dissolution or insolvency or any similar proceeding with respect to any Subsidiary Guarantor or its assets, the amount of such Subsidiary Guarantor’s obligations with respect to the Guaranteed Obligations shall be equal to, but not in excess of, the maximum amount thereof not subject to avoidance or recovery by operation of Applicable Insolvency Laws after giving effect to Section 2.3 . To that end, but only in the event and to the extent that after giving effect to Section 2.3 such Subsidiary Guarantor’s obligations with respect to the Guaranteed Obligations or any payment made pursuant to such Guaranteed Obligations would, but for the operation of the first sentence of this Section 2.2 , be subject to avoidance or recovery in any such proceeding under Applicable Insolvency Laws after giving effect to Section 2.3 , the amount of each Subsidiary Guarantor’s obligations with respect to the Guaranteed Obligations shall be limited to the largest amount which, after giving effect thereto, would not, under Applicable Insolvency Laws, render such Subsidiary Guarantor’s obligations with respect to the Guaranteed Obligations unenforceable or avoidable or otherwise subject to recovery under Applicable Insolvency Laws. To the extent any payment actually made pursuant to the Guaranteed Obligations exceeds the limitation of the first sentence of this Section 2.2 and is otherwise subject to avoidance and recovery in any such proceeding under Applicable Insolvency Laws, the amount subject to avoidance shall in all events be limited to the amount by which such actual payment exceeds such limitation and the Guaranteed Obligations as limited by the first sentence of this Section 2.2 shall in all events remain in full force and effect and be fully enforceable against each Subsidiary Guarantor. The first sentence of this Section 2.2 is intended solely to preserve the rights of the Administrative Agent and the Lenders hereunder against each Subsidiary Guarantor in such proceeding to the maximum extent permitted by Applicable Insolvency Laws and neither such Subsidiary Guarantor, any Borrower, any other Subsidiary Guarantor nor any other Person shall have any right or claim under such sentence that would not otherwise be available under Applicable Insolvency Laws in such proceeding.

SECTION 2.3

Agreements for Contribution .

(a) To the extent any Subsidiary Guarantor is required, by reason of its obligations hereunder, to pay to the Administrative Agent or any Lender an amount greater than the amount of value (as determined in accordance with Applicable Insolvency Laws) actually made available to or for the benefit of such Subsidiary Guarantor on account of the Credit Agreement, this Guaranty or any other Loan Document, such Subsidiary Guarantor shall have an enforceable right of contribution against the Borrowers and the remaining Subsidiary Guarantors, and the Borrowers and the remaining Subsidiary Guarantors shall be jointly and severally liable for repayment of the full amount of such excess payment. Subject only to the subordination provided in Section 2.3(d), such Subsidiary Guarantor further shall be subrogated to any and all rights of the Lenders against the Borrowers and the remaining Subsidiary Guarantors to the extent of such excess payment.

(b) To the extent that any Subsidiary Guarantor would, but for the operation of this Section 2.3 and by reason of its obligations hereunder or its obligations to other Subsidiary Guarantors under this Section 2.3 , be rendered insolvent for any purpose under Applicable Insolvency Laws, each of the Subsidiary Guarantors hereby agrees to indemnify such Subsidiary Guarantor and commits to make a contribution to such Subsidiary Guarantor’s capital in

	2272622.05
LIB: CHARLOTTE

an amount at least equal to the amount necessary to prevent such Subsidiary Guarantor from having been rendered insolvent by reason of the incurrence of any such obligations.

(c) To the extent that any Subsidiary Guarantor would, but for the operation of this Section 2.3 , be rendered insolvent under any Applicable Insolvency Law by reason of its incurring of obligations to any other Subsidiary Guarantor under the foregoing Sections 2.3(a) and (b), such Subsidiary Guarantor shall, in turn, have rights of contribution and indemnity, to the full extent provided in the foregoing Sections 2.3(a) and (b), against the Borrowers and the remaining Subsidiary Guarantors, such that all obligations of all of the Subsidiary Guarantors hereunder and under this Section 2.3 shall be allocated in a manner such that no Subsidiary Guarantor shall be rendered insolvent for any purpose under Applicable Insolvency Law by reason of its incurrence of such obligations.

(d) Notwithstanding any payment or payments by any of the Subsidiary Guarantors hereunder, or any set-off or application of funds of any of the Subsidiary Guarantors by the Administrative Agent or any Lender, or the receipt of any amounts by the Administrative Agent or any Lender with respect to any of the Guaranteed Obligations, none of the Subsidiary Guarantors shall be entitled to be subrogated to any of the rights of the Administrative Agent or any Lender against the Borrowers or the other Subsidiary Guarantors or against any collateral security held by the Administrative Agent or any Lender for the payment of the Guaranteed Obligations nor shall any of the Subsidiary Guarantors seek any reimbursement from the Borrowers or any of the other Subsidiary Guarantors in respect of payments made by such Subsidiary Guarantor in connection with the Guaranteed Obligations, until all amounts owing to the Administrative Agent and the Lenders on account of the Guaranteed Obligations are paid in full and the Commitments are terminated. If any amount shall be paid to any Subsidiary Guarantor on account of such subrogation rights at any time when all of the Guaranteed Obligations shall not have been paid in full or the Commitments shall not have been terminated, such amount shall be held by such Subsidiary Guarantor in trust for the Administrative Agent, segregated from other funds of such Subsidiary Guarantor, and shall, forthwith upon receipt by such Subsidiary Guarantor, be turned over to the Administrative Agent in the exact form received by such Subsidiary Guarantor (duly endorsed by such Subsidiary Guarantor to the Administrative Agent, if required) to be applied against the Guaranteed Obligations, whether matured or unmatured, in such order as set forth in the Credit Agreement.

SECTION 2.4

Nature of Guaranty .

(a) Each Subsidiary Guarantor agrees that this Guaranty is a continuing, unconditional guaranty of payment and performance and not of collection, and that its obligations under this Guaranty shall be primary, absolute and unconditional, irrespective of, and unaffected by:

				(i)	the genuineness, validity, regularity, enforceability or any future amendment of, or change in, the Credit Agreement or any other Loan Document or any other agreement, document or instrument to which any Borrower, any Subsidiary Guarantor or any of their respective Subsidiaries or Affiliates is or may become a party;
			(ii)		the absence of any action to enforce this Guaranty, the Credit Agreement or any other Loan Document or the waiver or consent by the Administrative Agent or any Lender with respect to any of the provisions of this Guaranty, the Credit Agreement or any other Loan Document;
	(iii)				the existence, value or condition of, or failure to perfect its Lien against, any security for or other guaranty of the Guaranteed Obligations or any action, or the absence of any action, by the Administrative Agent or any Lender in respect of such security or guaranty (including, without limitation, the release of any such security or guaranty);
(iv)					any structural change in, restructuring of or similar change of any Borrower, any Subsidiary Guarantor or any of their respective Subsidiaries; or
		(v)			any other action or circumstances which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor;

it being agreed by each Subsidiary Guarantor that, subject to the first sentence of Section 2.2 , its obligations under this Guaranty shall not be discharged until the final indefeasible payment and performance, in full, of the Guaranteed Obligations and the termination of the Commitments; provided that a Subsidiary Guarantor may be released from the Guaranteed Obligations pursuant to Section 4.16 of this Guaranty.

(b) Each Subsidiary Guarantor represents, warrants and agrees that its obligations under this Guaranty are not and shall not be subject to any counterclaims, offsets or defenses of any kind against the Administrative Agent the Lenders or the Borrowers whether now existing or which may arise in the future.

	2272622.05
LIB: CHARLOTTE

(c) Each Subsidiary Guarantor hereby agrees and acknowledges that the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guaranty, and all dealings between any Borrower and any Subsidiary Guarantor, on the one hand, and the Administrative Agent and the Lenders, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon this Guaranty.

SECTION 2.5 Waivers . To the extent permitted by law, each Subsidiary Guarantor expressly waives all of the following rights and defenses (and agrees not to take advantage of or assert any such right or defense):

(a) any rights it may now or in the future have under any statute (including, without limitation, North Carolina General Statutes Section 26-7, et seq. or similar law), or at law or in equity, or otherwise, to compel the Administrative Agent or any Lender to proceed in respect of the Obligations against any Borrower or any other Person or against any security for or other guaranty of the payment and performance of the Guaranteed Obligations before proceeding against, or as a condition to proceeding against, such Subsidiary Guarantor;

(b) any defense based upon the failure of the Administrative Agent or any Lender to commence an action in respect of the Guaranteed Obligations against any Borrower, any Subsidiary Guarantor or any other Person or any security for the payment and performance of the Guaranteed Obligations;

(c) any right to insist upon, plead or in any manner whatever claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, marshalling of assets or redemption laws, or exemption, whether now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance by such Subsidiary Guarantor of its obligations under, or the enforcement by the Administrative Agent or the Lenders of this Guaranty;

(d) any right of diligence, presentment, demand, protest and notice (except as specifically required herein) of whatever kind or nature with respect to any of the Guaranteed Obligations and waives, to the extent permitted by Applicable Law, the benefit of all provisions of law which are or might be in conflict with the terms of this Guaranty; and

(e) any and all right to notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Administrative Agent or any Lender upon, or acceptance of, this Guaranty.

Each Subsidiary Guarantor agrees that any notice or directive given at any time to the Administrative Agent or any Lender which is inconsistent with any of the foregoing waivers shall be null and void and may be ignored by the Administrative Agent or such Lender, and, in addition, may not be pleaded or introduced as evidence in any litigation relating to this Guaranty for the reason that such pleading or introduction would be at variance with the written terms of this Guaranty, unless the Administrative Agent and the Required Lenders have specifically agreed otherwise in writing. The foregoing waivers are of the essence of the transaction contemplated by the Credit Agreement and the other Loan Documents and, but for this Guaranty and such waivers, the Administrative Agent and the Lenders would decline to enter into the Credit Agreement and the other Loan Documents.

SECTION 2.6 Modification of Loan Documents, etc . Neither the Administrative Agent nor any Lender shall incur any liability to any Subsidiary Guarantor as a result of any of the following, and none of the following shall impair or release this Guaranty or any of the obligations of any Subsidiary Guarantor under this Guaranty:

(a) any change or extension of the manner, place or terms of payment of, or renewal or alteration of all or any portion of, the Guaranteed Obligations;

(b) any action under or in respect of the Credit Agreement or the other Loan Documents in the exercise of any remedy, power or privilege contained therein or available to any of them at law, in equity or otherwise, or waiver or refrain from exercising any such remedies, powers or privileges;

(d) any extension or waiver of the time for performance by any Borrower, any Subsidiary Guarantor or any other Person of, or compliance with, any term, covenant or agreement on its part to be performed or observed under the Credit Agreement or any other Loan Document, or waive such performance or compliance or consent to a failure of, or departure from, such performance or compliance;

(e) any taking and holding of security or collateral for the payment of the Obligations or the sale, exchange, release, disposal of, or other dealing with, any property pledged, mortgaged or conveyed, or in which the Administrative Agent or the Lenders have been granted a Lien, to secure any Indebtedness of any Borrower, any Subsidiary Guarantor or any other Person to the Administrative Agent or the Lenders;

	2272622.05
LIB: CHARLOTTE

(f) any release of anyone who may be liable in any manner for the payment of any amounts owed by any Borrower, any Subsidiary Guarantor or any other Person to the Administrative Agent or any Lender;

(g) any modification or termination of the terms of any intercreditor or subordination agreement pursuant to which claims of other creditors of any Borrower, any Subsidiary Guarantor or any other Person are subordinated to the claims of the Administrative Agent or any Lender; or

(h) any application of any sums by whomever paid or however realized to any Obligations owing by any Borrower, any Subsidiary Guarantor or any other Person to the Administrative Agent or any Lender in such manner as the Administrative Agent or any Lender shall determine in its reasonable discretion.

SECTION 2.7 Demand by the Administrative Agent . In addition to the terms set forth in this Article II and in no manner imposing any limitation on such terms, if all or any portion of the then outstanding Guaranteed Obligations under the Credit Agreement are declared to be immediately due and payable, then the Subsidiary Guarantors shall, upon demand in writing therefor by the Administrative Agent to the Subsidiary Guarantors, pay all or such portion of the outstanding Guaranteed Obligations due hereunder then declared due and payable. Notwithstanding the foregoing, each Subsidiary Guarantor agrees that, in the event of the dissolution or insolvency of any Borrower or any Subsidiary Guarantor, or the inability or failure of any Borrower or any Subsidiary Guarantor to pay debts as they become due, or an assignment by any Borrower or any Subsidiary Guarantor for the benefit of creditors, or the commencement of any case or proceeding in respect of any Borrower or any Subsidiary Guarantor under bankruptcy, insolvency or similar laws, and if such event shall occur at a time when any of the Guaranteed Obligations may not then be due and payable, each Subsidiary Guarantor will pay to the Administrative Agent, for the ratable benefit of the Lenders and their respective successors, indorsees, transferees and assigns, forthwith the full amount which would be payable hereunder by each Subsidiary Guarantor if all such Guaranteed Obligations were then due and payable.

SECTION 2.8

Remedies .

Upon the occurrence and during the continuance of any Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, enforce against the Subsidiary Guarantors their respective obligations and liabilities hereunder and exercise such other rights and remedies as may be available to the Administrative Agent hereunder, under the Credit Agreement or the other Loan Documents or otherwise.

SECTION 2.9 Benefits of Guaranty . The provisions of this Guaranty are for the benefit of the Administrative Agent and the Lenders and their respective permitted successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between any Borrower, the Administrative Agent and the Lenders, the obligations of any Borrower under the Credit Agreement and the other Loan Documents. In the event all or any part of the Obligations are transferred, endorsed or assigned by the Administrative Agent or any Lender to any Person or Persons as permitted under the Credit Agreement, any reference to an “Administrative Agent” or “Lender” herein shall be deemed to refer equally to such Person or Persons.

SECTION 2.10

Termination ; Reinstatement .

(a) Subject to subsection (c) below, this Guaranty shall remain in full force and effect until all the Guaranteed Obligations and all the obligations of the Subsidiary Guarantors shall have been paid in full and the Commitments terminated.

(b) No payment made by any Borrower, any Subsidiary Guarantor, or any other Person received or collected by the Administrative Agent or any Lender from any Borrower, any Subsidiary Guarantor, or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Guaranteed Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Subsidiary Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Subsidiary Guarantor in respect of the obligations of the Subsidiary Guarantors or any payment received or collected from such Subsidiary Guarantor in respect of the obligations of the Subsidiary Guarantors), remain liable for the obligations of the Subsidiary Guarantors up to the maximum liability of such Subsidiary Guarantor hereunder until the Guaranteed Obligations and all the obligations of the Subsidiary Guarantors shall have been paid in full and the Commitments terminated.

(c) Each Subsidiary Guarantor agrees that, if any payment made by any Borrower or any other Person applied to the Guaranteed Obligations is at any time annulled, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid or the proceeds of any Collateral are required to be refunded by the Administrative Agent or any Lender to any Borrower, its estate, trustee, receiver or any other

	2272622.05
LIB: CHARLOTTE

Person, including, without limitation, any Subsidiary Guarantor, under any Applicable Law or equitable cause, then, to the extent of such payment or repayment, each Subsidiary Guarantor’s liability hereunder (and any Lien or Collateral securing such liability) shall be and remain in full force and effect, as fully as if such payment had never been made, and, if prior thereto, this Guaranty shall have been canceled or surrendered (and if any Lien or Collateral securing such Subsidiary Guarantor’s liability hereunder shall have been released or terminated by virtue of such cancellation or surrender), this Guaranty (and such Lien or Collateral) shall be reinstated in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of such Subsidiary Guarantor in respect of the amount of such payment (or any Lien or Collateral securing such obligation).

SECTION 2.11 Payments . Payments by the Subsidiary Guarantors shall be made to the Administrative Agent to be credited and applied to the Guaranteed Obligations in accordance with Sections 4.4 and 12.4 of the Credit Agreement, in immediately available Dollars or Canadian Dollars, as the case may be, to an account designated by the Administrative Agent or at the Administrative Agent’s Office or at any other address that may be specified in writing from time to time by the Administrative Agent.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to make any Extensions of Credit each Subsidiary Guarantor hereby represents and warrants that:

SECTION 3.1 Existence . Such Subsidiary Guarantor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation, has the power and authority to own its properties and to carry on its business as now being and hereafter proposed to be conducted and is duly qualified and authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification and authorization, except where the failure to be qualified or authorized, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. The jurisdictions in which such Subsidiary Guarantor is organized and qualified to do business as of the Closing Date are described on Schedule 6.1(a) to the Credit Agreement.

SECTION 3.2 Authorization of Agreement; Enforceability . Such Subsidiary Guarantor has the right, power and authority and has taken all necessary corporate or other action to authorize the execution, delivery and performance of this Guaranty in accordance with its terms. This Guaranty has been duly executed and delivered by the duly authorized officers of such Subsidiary Guarantor and this Guaranty constitutes the legal, valid and binding obligation of such Subsidiary Guarantor, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors’ rights in general and the availability of equitable remedies.

SECTION 3.3 No Conflict; Consents . The execution, delivery and performance by such Subsidiary Guarantor of this Guaranty, in accordance with its terms, and the transactions contemplated hereby do not and will not, by the passage of time, the giving of notice or otherwise, (i) require any Governmental Approval or violate any Applicable Law relating to such Subsidiary Guarantor; (ii) conflict with, result in a breach of or constitute a default under the articles of incorporation, bylaws or other organizational documents of such Subsidiary Guarantor or any indenture, agreement or other instrument to which such Person is a party or by which any of its properties may be bound or any Governmental Approval relating to such Person, (iii) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by such Subsidiary Guarantor other than Liens arising under the Loan Documents or (iv) require any consent or authorization of, filing with, or other act in respect of, an arbitrator or Governmental Authority and no consent of any other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Guaranty.

SECTION 3.4 Litigation . Except for matters existing on the Closing Date and set forth on Schedule 6.1(u) to the Credit Agreement, there are no actions, suits or proceedings pending nor, to the knowledge of such Subsidiary Guarantor, threatened against or in any way relating adversely to or affecting such Subsidiary Guarantor or any its properties in any court or before any arbitrator of any kind or before or by any Governmental Authority that (a) purport to affect or pertain to this Guaranty or any of the transactions contemplated hereby, or (b) either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect.

	2272622.05
LIB: CHARLOTTE

SECTION 3.5 Title to Properties; Liens . Such Subsidiary Guarantor has such title to the real property owned or leased by it as is necessary or desirable to the conduct of its business and valid and legal title to all of its personal property and assets, including, but not limited to, those reflected on the balance sheets of the US Borrower and its Subsidiaries delivered pursuant to the Credit Agreement, except those which have been disposed of by such Subsidiary Guarantor subsequent to the date of such balance sheets pursuant to dispositions in the ordinary course of business or as otherwise expressly permitted under the Credit Agreement. None of the properties and assets of such Subsidiary Guarantor is subject to any Lien, except Permitted Liens. No financing statement under the Uniform Commercial Code of any state which names such Subsidiary Guarantor or any of its trade names or divisions as debtor and which has not been terminated, has been filed in any state or other jurisdiction nor has such Subsidiary Guarantor signed any such financing statement or any security agreement authorizing any secured party thereunder to file any such financing statement, except to perfect Permitted Liens.

SECTION 3.6 Solvency . Subject in each case to the first sentence of Section 2.2 , as of the Closing Date (or such later date upon which such Subsidiary Guarantor became a party hereto), and after giving effect to the transactions contemplated hereby, such Subsidiary Guarantor will be Solvent.

SECTION 3.7 Compliance with the Credit Agreement . Until the Guaranteed Obligations shall have been paid in full and the Commitments terminated, such Subsidiary Guarantor shall comply with the provisions of Articles VIII , IX and X of the Credit Agreement as if a party thereto.

ARTICLE IV

MISCELLANEOUS

SECTION 4.1 Amendments , Waivers and Consents . None of the terms, covenants, agreements or conditions of this Guaranty may be amended, supplemented or otherwise modified, nor may they be waived, nor may any consent be given, except in accordance with Section 14.2 of the Credit Agreement.

SECTION 4.2 Notices . All notices and communications hereunder shall be given to the addresses and otherwise made in accordance with Section 14.1 of the Credit Agreement; provided that notices and communications to the Subsidiary Guarantors shall be directed to the Subsidiary Guarantors at the address of the US Borrower set forth in Section 14.1(b) of the Credit Agreement.

SECTION 4.3

Enforcement Expenses, Indemnification .

(a) Each Subsidiary Guarantor agrees to pay or reimburse each Lender and the Administrative Agent for all its costs and expenses incurred in connection with enforcing or preserving any rights under this Guaranty and the other Loan Documents to which such Subsidiary Guarantor is a party, including, without limitation, in connection with any workout, restructuring, bankruptcy or other similar proceeding. Such costs and expenses shall include, without limitation, the reasonable fees and disbursements of counsel to each Lender, of counsel to the Canadian Dollar Lender and of counsel to the Administrative Agent. All such costs and expenses shall be additional Guaranteed Obligations.

(b) Each Subsidiary Guarantor agrees to pay, and to save the Administrative Agent and the Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable or in connection with any of the transactions contemplated by this Guaranty.

(c) Each Subsidiary Guarantor agrees to pay, and to save the Administrative Agent and the Lenders harmless from, any and all liabilities, obligations, losses, damages, penalties, costs and expenses in connection with actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Guaranty to the extent the Borrowers would be required to do so pursuant to Section 14.3 of the Credit Agreement.

(d) The agreements in this Section 4.3 shall survive termination of the Commitments and repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Loan Documents.

SECTION 4.4 Governing Law . This Guaranty, unless otherwise expressly set forth herein, shall be governed by, construed and enforced in accordance with the laws of the State of North Carolina, without reference to the conflicts or choice of law principles thereof.

SECTION 4.5

Jurisdiction and Venue .

	2272622.05
LIB: CHARLOTTE

(a) Jurisdiction . Each Subsidiary Guarantor hereby irrevocably consents to the personal jurisdiction of the state and federal courts located in Mecklenburg County, North Carolina (and any courts from which an appeal from any of such courts must or may be taken), in any action, claim or other proceeding arising out of any dispute in connection with this Guaranty, any rights or obligations hereunder, or the performance of such rights and obligations. Each Subsidiary Guarantor hereby irrevocably consents to the service of a summons and complaint and other process in any action, claim or proceeding brought by the Administrative Agent or any Lender in connection with this Guaranty, any rights or obligations hereunder, or the performance of such rights and obligations, on behalf of itself or its property, in the manner specified in Section 4.1 . Nothing in this Section 4.5 shall affect the right of the Administrative Agent or any Lender to serve legal process in any other manner permitted by Applicable Law or affect the right of the Administrative Agent or any Lender to bring any action or proceeding against any Subsidiary Guarantor or its properties in the courts of any other jurisdictions.

(b) Venue . Each Subsidiary Guarantor hereby irrevocably waives any objection it may have now or in the future to the laying of venue in the aforesaid jurisdiction in any action, claim or other proceeding arising out of or in connection with this Guaranty or the rights and obligations of the parties hereunder. Each Subsidiary Guarantor irrevocably waives, in connection with such action, claim or proceeding, any plea or claim that the action, claim or proceeding has been brought in an inconvenient forum.

SECTION 4.6

Binding Arbitration; Waiver of Jury Trial .

(a) Binding Arbitration . Upon demand of any party, whether made before or after institution of any judicial proceeding, any dispute, claim or controversy arising out of, connected with or relating to this Guaranty or any other Loan Document between or among parties hereto and to the other Loan Documents shall be resolved by binding arbitration as provided herein. Institution of a judicial proceeding by a party does not waive the right of that party to demand arbitration hereunder. Disputes may include, without limitation, tort claims, counterclaims, claims brought as class actions, claims arising from Loan Documents executed in the future, disputes as to whether a matter is subject to arbitration, or claims concerning any aspect of the past, present or future relationships arising out of or connected with the Loan Documents. Arbitration shall be conducted under and governed by the Commercial Financial Disputes Arbitration Rules (the “ Arbitration Rules ”) of the American Arbitration Association (the “ AAA ”) and the Federal Arbitration Act. All arbitration hearings shall be conducted in Charlotte, North Carolina. The expedited procedures set forth in Rule 51, et seq. of the Arbitration Rules shall be applicable to claims of less than $1,000,000. All applicable statutes of limitations shall apply to any Dispute. A judgment upon the award may be entered in any court having jurisdiction. Notwithstanding anything foregoing to the contrary, any arbitration proceeding demanded hereunder shall begin within ninety (90) days after such demand thereof and shall be concluded within one hundred twenty (120) days after such demand. These time limitations may not be extended unless a party hereto shows cause for extension and then such extension shall not exceed a total of sixty (60) days. The panel from which all arbitrators are selected shall be comprised of licensed attorneys selected from the Commercial Financial Dispute Arbitration Panel of the AAA. The single arbitrator selected for expedited procedure shall be a retired judge from the highest court of general jurisdiction, state or federal, of the state where the hearing will be conducted. The parties hereto do not waive any applicable Federal or state substantive law except as provided herein. Notwithstanding the foregoing, this subsection shall not apply to any Hedging Agreement.

(b) Jury Trial . THE ADMINISTRATIVE AGENT, EACH LENDER AND EACH SUBSIDIARY GUARANTOR HEREBY ACKNOWLEDGES THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS GUARANTY OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.

	2272622.05
LIB: CHARLOTTE

including injunctive relief, sequestration, garnishment, attachment, appointment of receiver and in filing an involuntary bankruptcy proceeding, and (iv) when applicable, a judgment by confession of judgment. Preservation of these remedies does not limit the power of an arbitrator to grant similar remedies that may be requested by a party in a Dispute.

SECTION 4.7

Injunctive Relief; Punitive Damages .

(a) Each Subsidiary Guarantor recognizes that, in the event such Subsidiary Guarantor fails to perform, observe or discharge any of its obligations or liabilities under this Guaranty, any remedy of law may prove to be inadequate relief to the Administrative Agent and the Lenders. Therefore, each Subsidiary Guarantor agrees that the Administrative Agent and the Lenders, at the Administrative Agent’s option or the Required Lenders’ option, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.

(b) The Administrative Agent and each Subsidiary Guarantor hereby agree that no such Person shall have a remedy of punitive or exemplary damages against any other party to this Guaranty and each such Person hereby waives any right or claim to punitive or exemplary damages that they may now have or may arise in the future in connection with any Dispute, whether such Dispute is resolved through arbitration or judicially.

SECTION 4.8 No Waiver by Course of Conduct, Cumulative Remedies . Neither the Administrative Agent nor any Lender shall by any act (except by a written instrument pursuant to Section 4.1 ), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No delay or failure to take action on the part of the Administrative Agent or any Lender in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default. No course of dealing between any Subsidiary Guarantor, the Administrative Agent and any Lenders or their respective agents or employees shall be effective to change, modify or discharge any provision of this Guaranty or to constitute a waiver of any Event of Default. The enumeration of the rights and remedies of the Administrative Agent and the Lenders set forth in this Guaranty is not intended to be exhaustive and the exercise by the Administrative Agent and the Lenders of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given hereunder or under the other Loan Documents or that may now or hereafter exist at law or in equity or by suit or otherwise.

SECTION 4.9 Successors and Assigns . This Guaranty shall be binding upon and inure to the benefit of each of the parties hereto and its permitted successors and assigns (and shall bind all Persons who become bound as a Subsidiary Guarantor under this Guaranty), except that no Subsidiary Guarantor may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender (given in accordance with Section 4.1 ).

SECTION 4.10 Severability . Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.

SECTION 4.11 Titles and Captions . Titles and captions of Articles, Sections and subsections in, and the table of contents of, this Guaranty are for convenience only, and neither limit nor amplify the provisions of this Guaranty.

SECTION 4.12 Counterparts . This Guaranty may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and shall be binding upon all parties, their successors and assigns, and all of which taken together shall constitute one and the same agreement.

SECTION 4.13 Set-Off . If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of the applicable Subsidiary Guarantor against any and all of the obligations of the such Subsidiary Guarantor now or hereafter existing under this Guaranty or any other Loan Document to such Lender, irrespective of whether or not such Lender shall have made any demand under this Guaranty or any other Loan Document and although such obligations of such Subsidiary Guarantor may be contingent or unmatured or are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender and its Affiliates under this Section are in

	2272622.05
LIB: CHARLOTTE

addition to other rights and remedies (including other rights of setoff) that such Lender or its Affiliates may have. Each Lender agrees to notify the applicable Subsidiary Guarantor and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

SECTION 4.14 Integration . This Guaranty, together with the other Loan Documents comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter.

SECTION 4.15

Acknowledgements Each Subsidiary Guarantor hereby acknowledges that:

(a) it has been advised by counsel in the negotiation, execution and delivery of this Guaranty and the other Loan Documents to which it is a party;

(b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to any Subsidiary Guarantor arising out of or in connection with this Guaranty or any of the other Loan Documents, and the relationship between the Subsidiary Guarantors, on the one hand, and the Administrative Agent and Lenders, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Subsidiary Guarantors and the Lenders.

SECTION 4.16 Releases . At such time as (a) the Guaranteed Obligations shall have been paid in full and the Commitments have been terminated, this Guaranty and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Subsidiary Guarantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, or (b) a Subsidiary Guarantor ceases to be a Subsidiary of a Borrower in connection with a transaction expressly permitted under the terms and conditions of the Credit Agreement, such Subsidiary Guarantor shall be released from the Guaranteed Obligations.

SECTION 4.17 Additional Subsidiary Guarantors . Each Domestic Subsidiary of a Borrower that is required to become a party to this Guaranty pursuant to Section 8.11 of the Credit Agreement shall become a Subsidiary Guarantor for all purposes of this Guaranty upon execution and delivery by such Subsidiary of a supplement in form and substance satisfactory to the Administrative Agent.

SECTION 4.18 Powers Coupled with an Interest . All powers of attorney and other authorizations granted to the Lenders, the Administrative Agent and any Persons designated by the Administrative Agent or any Lender pursuant to any provisions of this Guaranty or any of the other Loan Documents shall be deemed coupled with an interest and shall be irrevocable so long as any of the Guaranteed Obligations remain unpaid or unsatisfied, any of the Commitments remain in effect or the Credit Facility has not been terminated.

[Signature Pages to Follow]

	2272622.05
LIB: CHARLOTTE

IN WITNESS WHEREOF, each of the Subsidiary Guarantors has executed and delivered this Guaranty under seal by their duly authorized officers, all as of the day and year first above written.

SCP DISTRIBUTORS LLC, as Subsidiary Guarantor

By: / s/ Manuel Perez de la Mesa
Name:	Manuel Perez de la Mesa
Title: President & CEO

ALLIANCE TRADING, INC., as Subsidiary Guarantor

	By: /s/ Shaleen Lee
	Name: Shaleen Lee
	Title:	Secterary
CYPRESS, INC., as Subsidiary Guarantor
	By: /s/ Ernest Vierra
	Name: Ernest Vierra
	Title: President

[Signature Pages Continue]

[SCP – Subsidiary Guaranty Agreement]

SCP NORTHPARK LLC, as Subsidiary Guarantor

	By: / s/ Manuel Perez de la Mesa
	Name:	Manuel Perez de la Mesa
	Title: President & CEO
SUPERIOR POOL PRODUCTS LLC,
as Subsidiary Guarantor
	By: / s/ Manuel Perez de la Mesa
	Name:	Manuel Perez de la Mesa
	Title: President & CEO

SCP ACQUISITION CO. LLC, as Subsidiary Guarantor

By: / s/ Manuel Perez de la Mesa
Name:	Manuel Perez de la Mesa
Title: President & CEO

SCP INTERNATIONAL, INC., as Subsidiary

Guarantor

By: / s/ Manuel Perez de la Mesa
Name:	Manuel Perez de la Mesa
Title: President & CEO

[Signature Pages Continue]

[SCP – Subsidiary Guaranty Agreement]

POOL DEVELOPMENT LLC, as Subsidiary

Guarantor

By: / s/ Manuel Perez de la Mesa
Name:	Manuel Perez de la Mesa
Title: President & CEO

SCP SERVICES LP, as Subsidiary Guarantor

FORT WAYNE POOLS, INC., as Subsidiary

Guarantor

By: / s/ Manuel Perez de la Mesa
Name:	Manuel Perez de la Mesa
Title: President & CEO

[Signature Pages Continue]

[SCP – Subsidiary Guaranty Agreement]

WACHOVIA BANK, NATIONAL

ASSOCIATION, as Administrative Agent

By: / s/ Kira Deter
Name: Kira Deter

Title: Officer

[SCP – Subsidiary Guaranty Agreement]

2272622.04

LIB: CH

ASSET EXCHANGE AGREEMENT

This Asset Exchange Agreement (the “ Agreement ”), dated as of November 12, 2004, is entered into by and among (i) Les Industries R.P. Inc., a corporation incorporated under the laws of the Province of Quebec (“ RP ”), (ii) SCP Pool Corporation, a Delaware corporation (“ Parent ”), and (iii) Latham Acquisition Corp., a Delaware corporation (“ Acquisition Corp ”).

WHEREAS, immediately prior to the closing of the transactions contemplated hereby, Acquisition Corp or a subsidiary of Acquisition Corp shall acquire all of the outstanding capital stock of Pool Technology Distributors, Inc., a corporation incorporated under the laws of the Province of Ontario (“ Pool Tech ”), pursuant to the certain Stock Purchase Agreement, dated as of November 12, 2004, by and among Latham International, L.P. and Acquisition Corp (the “ Latham Purchase ”);

WHEREAS, RP and Acquisition Corp desire to exchange certain assets of Pool Tech (having a value of $1,853,385) for substantially all of RP’s Canadian manufacturing assets (having a value of $659,953) and RP’s assumption of $1,193,432 of Pool Tech Indebtedness;

WHEREAS, at the time of the closing of the transaction contemplated hereby, Pool Tech shall be a wholly owned subsidiary of Acquisition Corp, and, accordingly, Acquisition Corp will derive substantial benefit from the transactions contemplated hereby; and

WHEREAS, in addition to the other defined terms used herein, certain terms are defined in Section 9.1 hereof.

NOW, THEREFORE, in consideration of the respective representations, warranties and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

Article 1

Asset exchange

1.1 Asset Exchange. On the terms and subject to the conditions of this Agreement, at the Closing (as defined in Section 2.1 ), RP shall (i) sell, assign, transfer, convey and deliver to Pool Tech, all the right, title and interest as of the Closing of RP, in, to and under the RP Assets (as defined in Section 1.2 ) and (ii) assume the Pool Tech Liabilities (as defined in Section 1.8 ) in exchange for (iii) all the right, title and interest as of the Closing of Pool Tech, in, to and under the Pool Tech Assets (as defined in Section 1.4 ) and (iv) the assumption by Pool Tech of the RP Liabilities (as defined in Section 1.7 ).

1.2 RP Assets. The term “ RP Assets ” means all the business, properties, assets, goodwill and rights of RP of whatever kind and nature, real or personal, tangible or intangible, wherever located and by whomever possessed, that are owned, leased or licensed by RP on the Closing Date and used, held for use or intended to be used solely or primarily in the operation or conduct of the RP Business (as defined in Section 9.1 ), including without limitation, the following:

(a) all raw materials, works-in-process, inventories and other materials of the RP Business wherever located and including all inventory in transit or on order and not yet delivered, and all rights with respect to the processing and completion of any works-in-process of the RP Business as of the Closing Date (collectively, the “ RP Inventory ”);

(b) all other tangible personal property and interests therein, including without limitation all machinery, equipment, furniture, furnishings and vehicles of the RP Business, including without limitation those listed on Schedule 3.10(a)(i) (the “ RP Personal Property ”);

(c) all accounts receivable and notes receivable of the RP Business as of the Closing Date, including without limitation those listed on Schedule 1.2(c), except to the extent the items listed on Schedule 1.2(c) are collected prior to the Closing Date (the “ RP Receivables ”);

(d) all service marks, trade names, business names, copyrights, designs, design registrations, patents, trademarks, trade secrets, confidential information, know-how, inventions, designs and procedures, of RP that are used, held for use or intended to be used in the operation or conduct of the RP Business and all rights to any of the foregoing (the “ RP Intellectual Property ”);

(e) all claims and rights of RP under all agreements, contracts, leases, subleases, licenses, indentures, agreements, commitments and all other legally binding arrangements, whether oral or written, to which RP is a party or by which RP is bound to the extent listed on Schedule 3.8 or not required to be listed on Schedule 3.8 (collectively, the “ RP Contracts ”);

(f) all credits, rebates or adjustments from vendors, prepaid expenses, deferred charges, advance payments, security deposits and prepaid items of RP to the extent related to the RP Business (“ RP Prepaid Items ”);

(g) all files, customers’ and suppliers’ lists, other distribution lists, billing records, sales and promotional literature, manuals, customer and supplier correspondence relating solely to the RP Business (in all cases, in any form or medium) (the “ RP Records ”);

(h) to the extent transferable, all permits, licenses, franchises, orders, registrations, certificates, variances, approvals and similar rights obtained from Governmental entities related to the RP Business and all data and records pertaining thereto, including without limitation, those listed on Schedule 3.16 (the “ RP Licenses and Permits ”);

(i) all claims, refunds, credits, causes of action, rights of recovery and rights of set-off of every kind and nature related solely to the RP Business;

(j) all rights to receive and retain mail and other communications related solely to the RP Business;

(k) all goodwill generated by or associated solely with the RP Business and all other intangible property of the RP Business; and

(l)	all other assets of the RP Business not listed in Section 1.3 .

1.3 Excluded RP Assets. Notwithstanding the foregoing, the following assets (the “ Excluded RP Assets ”) are expressly excluded from the asset exchange contemplated hereby:

(a) all cash, cash equivalents and marketable and other investment securities or stock of any corporation;

(b) all Pool Tech Assets to be received by RP pursuant to this Agreement and all other rights of RP under this Agreement;

(c) RP’s corporate charter and all qualifications of RP to conduct business as a corporation, arrangement with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute books, stock transfer books and blank stock certificates and other documents relating to the organization, maintenance and existence of RP as a corporation;

(d)	all insurance policies;
(e)	RP’s tax returns and tax refunds;
(f)	all rights to real property owned or leased by RP;
(g)	all bank accounts of RP; and
(h)	assets of any RP Plan (as defined in Section 3.19 ).

1.4 Pool Tech Assets. The term “ Pool Tech Assets ” means all the business, properties, assets, goodwill and rights of Pool Tech of whatever kind and nature, real or personal, tangible or intangible, wherever located and by whomever possessed, that are owned, leased or licensed by Pool Tech on the Closing Date and used,

phx-srv01\1470349v04

held for use or intended to be used solely or primarily in the operation or conduct of the Pool Tech Business (as defined in Section 9.1), including without limitation, the following:

(a) all raw materials, works-in-process, inventories and other materials of the Pool Tech Business wherever located and including all inventory in transit or on order and not yet delivered, and all rights with respect to the processing and completion of any works-in-process of the Pool Tech Business as of the Closing Date (collectively, the “ Pool Tech Inventory ”);

(b) all other tangible personal property and interests therein, including without limitation all machinery, equipment, furniture, furnishings and vehicles of the Pool Tech Business, including without limitation those listed on Schedule 4.9(a)(i) (the “ Pool Tech Personal Property ”);

(c) all rights to real property owned or leased by Pool Tech to the extent used in the Pool Tech Business, including without limitation those real estate leases listed on Schedule 4.9(a)(ii);

(d) all accounts receivable and notes receivable of the Pool Tech Business as of the Closing Date (the “ Pool Tech Receivables ”);

(e) all service marks, trade names, business names, copyrights, designs, design registrations, patents, trademarks, trade secrets, confidential information, know-how, inventions, designs and procedures, of Pool Tech that are used, held for use or intended to be used in the operation or conduct of the Pool Tech Business and all rights to any of the foregoing, including without limitation those specifically listed on Schedule 1.4(e) (the “ Pool Tech Intellectual Property ”);

(f) all claims and rights of Pool Tech under all agreements, contracts, leases, subleases, licenses, indentures, agreements, commitments and all other legally binding arrangements, whether oral or written, to which Pool Tech is a party or by which Pool Tech is bound to the extent they relate primarily to the Pool Tech Business, including without limitation those listed on Schedule 4.7 (collectively, the “ Pool Tech Contracts ”);

(g) all credits, rebates or adjustments from vendors, prepaid expenses, deferred charges, advance payments, security deposits and prepaid items of the Pool Tech Business (“ Pool Tech Prepaid Items ”);

(h) all files, customers’ and suppliers’ lists, other distribution lists, billing records, sales and promotional literature, manuals, customer and supplier correspondence relating solely to the Pool Tech Business (in all cases, in any form or medium) (the “ Pool Tech Records ”);

(i) to the extent transferable, all permits, licenses, franchises, orders, registrations, certificates, variances, approvals and similar rights obtained from Governmental entities related to the Pool Tech Business and all data and records pertaining thereto (the “ Pool Tech Licenses and Permits ”);

(j) all claims, refunds, credits, causes of action, rights of recovery and rights of set-off of every kind and nature related solely to the Pool Tech Business;

(k) all rights to receive and retain mail and other communications related solely to the Pool Tech Business;

(l) all goodwill generated by or associated solely with the Pool Tech Business and all other intangible property of the Pool Tech Business ; and

(m)	all other assets of the Pool Tech Business not listed in Section 1.5 .

1.5 Excluded Pool Tech Assets. Notwithstanding the foregoing, the following assets (the “ Excluded Pool Tech Assets ”) are expressly excluded from the asset exchange contemplated hereby:

(a) all stock and assets of Kafko International Inc. (“ Kafko Canada ”), a wholly owned subsidiary of Pool Tech;

(b) all cash, cash equivalents and marketable and other investment securities or stock of any corporation;

phx-srv01\1470349v04

(c) all RP Assets to be received by Pool Tech pursuant to this Agreement and all other rights of Pool Tech under this Agreement;

(d) Pool Tech’s corporate charter and all qualifications of Pool Tech to conduct business as a corporation, arrangement with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute books, stock transfer books and blank stock certificates and other documents relating to the organization, maintenance and existence of Pool Tech as a corporation;

(e)	all insurance policies;
(f)	Pool Tech’s tax returns and tax refunds;
(g)	all bank accounts of Pool Tech; and
(h)	assets of any Pool Tech Plan (as defined in Section 4.18 ).

1.6 Method of Conveyance. The sale, transfer, conveyance, assignment and delivery by RP of the RP Assets to Pool Tech, on the one hand, and the sale, transfer, conveyance, assignment and delivery by Pool Tech of the Pool Tech Assets to RP, on the other hand, each in accordance with Section 1.1 shall be effected on the Closing Date by the parties’ execution and delivery to each other of one or more bills of sale, assignments and other conveyance instruments with respect to RP’s transfer of the RP Assets and Pool Tech’s transfer of the Pool Tech Assets, each in form and scope reasonably satisfactory to the parties (collectively, the “ Conveyance Documents ”). At the Closing, (i) good, valid and marketable title to all of the Pool Tech Assets shall be transferred, conveyed, assigned and delivered by Pool Tech to RP, and (ii) good, valid and marketable title to all of the RP Assets shall be transferred, conveyed, assigned and delivered by RP to Pool Tech, free and clear of any and all liens, encumbrances, mortgages, security interests, pledges, claims, equities and other restrictions or charges of any kind or nature whatsoever.

1.7	Assumption of Certain RP Liabilities; Excluded RP Liabilities.

(a) Upon the terms and subject to the conditions of this Agreement, Acquisition Corp shall cause Pool Tech to assume, effective as of the Closing, and from and after the Closing, Acquisition Corp shall cause Pool Tech to pay, perform and discharge when due, only the following liabilities, obligations and commitments of RP (subject to Pool Tech’s right to dispute such liabilities and obligations in good faith with parties to whom such obligations are owed) (such liabilities, obligations and commitments being the “ RP Liabilities ”):

(i) all of RP’s payment and performance obligations arising subsequent to the Closing under the RP Contracts and the RP Licenses and Permits (but in each case not including any liability or obligations for breaches thereof arising out of or related to events or occurrences prior to the Closing Date);

(ii) all current accrued liabilities of the RP Business incurred in the ordinary course of business, to the extent that such items are properly recorded in accordance with GAAP as current liabilities in the Closing RP Working Capital Statement prepared in accordance with Section 1.9 (“ RP Accrued Liabilities ”);

(iii) the accounts payable of the RP Business as of the Closing Date to the extent incurred in the ordinary course of business and properly recorded in accordance with GAAP as accounts payable in the Closing RP Working Capital Statement (“ RP Accounts Payable ”); and

(iv) all other liabilities, obligations and commitments, whether known or unknown, express or implied, absolute, contingent or otherwise, arising out of Pool Tech’s operation or conduct of the RP Business subsequent to the Closing.

(b) Except as expressly set forth in Section 1.7(a), Pool Tech shall not assume or be responsible at any time for any liability, obligation, debt or commitment of RP, whether absolute or contingent, accrued or unaccrued, asserted or unasserted, or otherwise, including but not limited to any liabilities, obligations, debts or commitments of RP incident to, arising out of or incurred with respect to, this Agreement and the transactions contemplated hereby (including any and all sales, income or other Taxes arising out of the transactions contemplated hereby). Without limiting the generality of the foregoing, RP and Parent expressly acknowledge and agree that RP shall retain, and that Pool Tech shall not assume or otherwise be obligated to pay, perform, defend or discharge, (i) any liability of RP and/or Parent for income Taxes or other Taxes, (ii) any liability of RP arising from

phx-srv01\1470349v04

breach of law, breach of Contract or tort, (iii) any liability, obligation, debt or commitment of RP to Parent or any other Affiliate of RP or Parent, (iv) any liability, obligation, or commitment of RP with respect to any collective bargaining or similar agreement to which RP is a party, or (v) any Indebtedness of RP (collectively, the “ Excluded RP Liabilities ”). RP and Parent further agree to satisfy and discharge as the same shall become due all obligations and liabilities of RP not specifically assumed by Pool Tech hereunder.

1.8	Assumption of Certain Pool Tech Liabilities; Excluded Pool Tech Liabilities.

(a) Upon the terms and subject to the conditions of this Agreement, RP shall assume, effective as of the Closing, and from and after the Closing, RP shall pay, perform and discharge when due, only the following liabilities, obligations and commitments of Pool Tech (subject to RP’s right to dispute such liabilities and obligations in good faith with parties to whom such obligations are owed) (such liabilities, obligations and commitments being the “ Pool Tech Liabilities ”):

(i) all of Pool Tech’s payment and performance obligations arising subsequent to the Closing under the Pool Tech Contracts and the Pool Tech Licenses and Permits (but in each case not including any liability or obligations for breaches thereof arising out of or related to events or occurrences prior to the Closing Date);

(ii) all current accrued liabilities of the Pool Tech Business incurred in the ordinary course of business, to the extent that such items are properly recorded in accordance with GAAP as current liabilities in the Closing Pool Tech Working Capital Statement prepared in accordance with Section 1.10 (“ Pool Tech Accrued Liabilities ”);

(iii) the accounts payable of the Pool Tech Business as of the Closing Date to the extent incurred in the ordinary course of business and properly recorded in accordance with GAAP as accounts payable in the Closing Pool Tech Working Capital Statement (“ Pool Tech Accounts Payable ”);

(iv) the liabilities and obligations of Pool Tech under that certain promissory note payable to Ft. Wayne Pools, Inc. in the principal amount of $1,193,432 originally issued by Latham Splash Canada, Inc., an Ontario corporation, and assigned to and assumed by Pool Tech (the “ FWP Note ”); and

(v) all other liabilities, obligations and commitments, whether known or unknown, express or implied, absolute, contingent or otherwise, arising out of RP’s operation or conduct of the Pool Tech Business subsequent to the Closing.

(b) Except as expressly set forth in Section 1.8(a), RP shall not assume or be responsible at any time for any liability, obligation, debt or commitment of Pool Tech, whether absolute or contingent, accrued or unaccrued, asserted or unasserted, or otherwise, including but not limited to any liabilities, obligations, debts or commitments of Pool Tech incident to, arising out of or incurred with respect to, this Agreement and the transactions contemplated hereby (including any and all sales, income or other Taxes arising out of the transactions contemplated hereby). Without limiting the generality of the foregoing, Acquisition Corp expressly acknowledges and agrees that Pool Tech shall retain, and that RP shall not assume or otherwise be obligated to pay, perform, defend or discharge, (i) any liability of Pool Tech and/or Acquisition Corp for income Taxes or other Taxes, (ii) any liability of Pool Tech arising from breach of law, breach of Contract or tort, (iii) any liability, obligation, debt or commitment of Pool Tech to Acquisition Corp or any other Affiliate of Pool Tech or Acquisition Corp, or (iv) any Indebtedness of Pool Tech other than the FWP Note (collectively, the “ Excluded Pool Tech Liabilities ”). Acquisition Corp further agrees to cause Pool Tech to satisfy and discharge as the same shall become due all obligations and liabilities of Pool Tech not specifically assumed by RP hereunder.

1.9	RP Working Capital Adjustment.

(a) As soon as practicable, but in no event later than 90 days following the Closing Date, Acquisition Corp shall cause Pool Tech to determine the Working Capital of the RP Business as of the Closing Date in accordance with GAAP (the “ RP Working Capital ”) and shall deliver to RP a written statement (“ Pool Tech’s Statement ”) setting forth its determination of the RP Working Capital. Acquisition Corp shall cause Pool Tech to afford RP, or its representatives, access to the records and personnel of the RP Business for the purpose of reviewing such determination. If RP objects to any item contained in Pool Tech’s Statement, such objection shall be made in writing and delivered to Pool Tech within 20 business days following RP’s receipt of Pool Tech’s Statement, failing

phx-srv01\1470349v04

which such statement shall be deemed to have been accepted by RP (such accepted statement and RP Working Capital are referred to herein as the “ Closing RP Working Capital Statement ” and “ Closing RP Working Capital ,” respectively). If RP so notifies Pool Tech of an objection to Pool Tech’s Statement, the parties shall negotiate in good faith regarding such disagreement.

(b) If the parties fail to agree on any item contained in Pool Tech’s Statement within 10 business days of receipt by Pool Tech of RP’s statement of objections, RP shall submit Pool Tech’s Statement to PricewaterhouseCoopers (the “ Independent Accountant ”). RP shall use its reasonable best efforts to cause the Independent Accountant to review Pool Tech’s Statement as soon as practicable, but in any event within thirty (30) business days after the delivery of Pool Tech’s Statement to the Independent Accountant. The determination of the Closing RP Working Capital by the Independent Accountant shall be final and binding on RP and Acquisition Corp and not subject to review, challenge or adjustment absent fraud. The costs and expenses of the services of the Independent Accountant’s review shall be borne and paid by the party that the Independent Accountant determines to be least correct in its determination of the RP Working Capital.

(c) On a date that is mutually convenient to Acquisition Corp and RP, but in any event not more than 5 business days after the final determination of the Closing RP Working Capital in accordance with Section 1.9(b) and (c) above (the “ Adjustment Date ”), Acquisition Corp and RP shall make the following working capital adjustments:

(i) if the Closing RP Working Capital is less than $387,000 (the “ Target RP Working Capital ”) by more than $50,000 , RP shall pay to Pool Tech an amount equal to such deficit; or

(ii) if the Closing RP Working Capital is greater than the Target RP Working Capital by more than $50,000, Acquisition Corp shall cause Pool Tech to pay to RP an amount equal to such excess.

(d) Any amounts payable pursuant to Section 1.9(c) shall be paid within five (5) business days after the Adjustment Date in immediately available funds.

(e) All calculations to be made for the purpose of calculating those amounts which are required to be calculated in accordance with this Section 1.9 shall be made in U.S. Dollars, and if any of the underlying amounts required to be used for making such calculations are expressed in Canadian Dollars, such underlying amounts shall be converted into U.S. Dollars using the closing exchange rate as quoted by the Bank of Canada on the last day preceding the Closing.

1.10	Pool Tech Working Capital Adjustment.

(a) As soon as practicable, but in no event later than 90 days following the Closing Date, RP shall determine the Working Capital of the Pool Tech Business as of the Closing Date in accordance with GAAP (the “ Pool Tech Working Capital ”) and shall deliver to Acquisition Corp a written statement (“ RP’s Statement ”) setting forth its determination of the Pool Tech Working Capital. RP shall afford Acquisition Corp, or its representatives, access to the records and personnel of the Pool Tech Business for the purpose of reviewing such determination. If Acquisition Corp objects to any item contained in the RP Statement, such objection shall be made in writing and delivered to RP within 20 business days following Acquisition Corp’s receipt of the RP Statement, failing which such statement shall be deemed to have been accepted by Acquisition Corp (such accepted statement and Pool Tech Working Capital are referred to herein as the “ Closing Pool Tech Working Capital Statement ” and “ Closing Pool Tech Working Capital ,” respectively). If Acquisition Corp so notifies RP of an objection to RP’s Statement, the parties shall negotiate in good faith regarding such disagreement.

(b) If the parties fail to agree on any item contained in RP’s Statement within 10 business days of receipt by RP of Acquisition Corp’s statement of objections, Acquisition Corp shall submit RP’s Statement to PricewaterhouseCoopers (the “ Independent Accountant ”). Acquisition Corp shall use its reasonable best efforts to cause the Independent Accountant to review RP’s Statement as soon as practicable, but in any event within thirty (30) business days after the delivery of RP’s Statement to the Independent Accountant. The determination of the Closing Pool Tech Working Capital by the Independent Accountant shall be final and binding on Acquisition Corp and RP and not subject to review, challenge or adjustment absent fraud. The costs and expenses of the services of the Independent Accountant’s review shall be borne and paid by the party that the Independent Accountant determines to be least correct in its determination of the Pool Tech Working Capital.

phx-srv01\1470349v04

(c) On a date that is mutually convenient to RP and Acquisition Corp, but in any event not more than 5 business days after the final determination of the Closing Pool Tech Working Capital in accordance with Section 1.10(b) and (c) above (the “ Adjustment Date ”), RP and Acquisition Corp shall make the following working capital adjustments:

(i) if the Closing Pool Tech Working Capital is less than $1,176,611(the “ Target Pool Tech Working Capital”) by more than $50,000, Acquisition Corp shall cause Pool Tech to pay to RP an amount equal to such deficit; or

(ii) if the Closing Pool Tech Working Capital is greater than the Target Pool Tech Working Capital by more than $50,000, RP shall pay to Pool Tech an amount equal to such excess.

(d) Any amounts payable pursuant to Section 1.10(c) shall be paid within five (5) business days after the Adjustment Date in immediately available funds.

(e) All calculations to be made for the purpose of calculating those amounts which are required to be calculated in accordance with this Section 1.10 shall be made in U.S. Dollars, and if any of the underlying amounts required to be used for making such calculations are expressed in Canadian Dollars, such underlying amounts shall be converted into U.S. Dollars using the closing exchange rate as quoted by the Bank of Canada on the last day preceding the Closing.

1.11	Accounts Payable and Accrued Liabilities.

(a) RP shall pay all of its accounts payable, accrued liabilities and all other Excluded RP Liabilities (including without limitation all wages and salaries payable) arising out of the ownership or operation of the RP Assets or the RP Business prior to the Closing Date as they come due and payable, except those RP Accounts Payable and RP Accrued Liabilities which are not due or payable prior to the Closing Date and are assumed by Pool Tech at the Closing pursuant to Section 1.7 hereof. In the event Pool Tech receives an invoice, bill or other demand for payment relating to any accounts payable, accrued liabilities or other liabilities in connection with the ownership or operation of the RP Assets or the RP Business prior to the Closing Date and which is not included in the Closing RP Working Capital as shown in the Closing RP Working Capital Statement, such invoice, bill or demand for payment, as the case may be, shall be forwarded to RP and/or Parent, each of whom agrees to promptly (but in no event later than 30 days after demand by Pool Tech) make payment therefore.

(b) Acquisition Corp shall cause Pool Tech to pay all of its accounts payable, accrued liabilities and all other Excluded Pool Tech Liabilities (including without limitation all wages and salaries payable) arising out of the ownership or operation of the Pool Tech Assets or the Pool Tech Business prior to the Closing Date as they come due and payable, except those Pool Tech Accounts Payable and Pool Tech Accrued Liabilities which are not due or payable prior to the Closing Date and are assumed by RP at the Closing pursuant to Section 1.8 hereof. In the event RP receives an invoice, bill or other demand for payment relating to any accounts payable, accrued liabilities or other liabilities in connection with the ownership or operation of the Pool Tech Assets or the Pool Tech Business prior to the Closing Date and which is not included in the Closing Pool Tech Working Capital as shown in the Closing Pool Tech Working Capital Statement, such invoice, bill or demand for payment, as the case may be, shall be forwarded to Pool Tech and/or Acquisition Corp, each of whom agrees to promptly (but in no event later than 30 days after demand by RP) make payment therefore.

1.12

Taxes.

(a) At Closing, RP shall pay all stamp, transfer, documentary, excise, sales or other comparable taxes due with respect to the sale of the RP Assets. Acquisition Corp shall cause Pool Tech to pay any taxes accruing with respect to the RP Business and the RP Assets on and after the Closing Date. RP shall be responsible for and shall pay all income, gross revenue, or similar taxes with respect to the RP Business and the RP Assets accruing before the Closing Date. All taxes referred to in this Section 1.12(a) shall include any penalties and interest incurred in relation to such taxes.

(b) At Closing, Acquisition Corp shall cause Pool Tech to pay all stamp, transfer, documentary, excise, sales or other comparable taxes due with respect to the sale of the Pool Tech Assets. RP shall pay any taxes accruing with respect to the Pool Tech Business and the Pool Tech Assets on and after the Closing Date. Acquisition Corp shall cause Pool Tech to be responsible for and shall pay all income, gross revenue, or

phx-srv01\1470349v04

similar taxes with respect to the Pool Tech Business and the Pool Tech Assets accruing before the Closing Date. All taxes referred to in this Section 1.12(b) shall include any penalties and interest incurred in relation to such taxes.

1.13	Risk of Loss.

(a) Risk of loss or destruction or damage to the RP Assets shall pass to Pool Tech at and upon Closing, regardless of the physical location of the RP Assets. RP shall, and Acquisition Corp shall cause Pool Tech to, take all steps and actions as may be required to put Pool Tech in actual possession, operation, control and responsibility for the RP Assets on the Closing Date.

(b) Risk of loss or destruction or damage to the Pool Tech Assets shall pass to RP at and upon Closing, regardless of the physical location of the Pool Tech Assets. RP shall, and Acquisition Corp shall cause Pool Tech to, take all steps and actions as may be required to put RP in actual possession, operation, control and responsibility for the Pool Tech Assets on the Closing Date.

1.14	Cost of Transfer.

(a) RP shall bear all responsibilities and pay any and all costs associated with the transfer and delivery of the RP Assets from RP to Pool Tech. Acquisition Corp shall cause Pool Tech to bear all responsibilities and pay any and all costs associated with registering its ownership interests in the RP Assets.

(b) Acquisition Corp shall cause Pool Tech to bear all responsibilities and pay any and all costs associated with the transfer and delivery of the Pool Tech Assets from Pool Tech to RP. RP shall bear all responsibilities and pay any and all costs associated with registering its ownership interests in the Pool Tech Assets.

Article 2

CLOSING

2.1 Closing. The closing of the Acquisition (the “ Closing ”) shall take place immediately after the closing of the Latham Purchase (the “ Closing Date ”).

2.2	Items to be Delivered at Closing.

(a) At or prior to the Closing and subject to the terms and conditions herein contained, RP shall deliver to Pool Tech the following:

(i) such bills of sale and other good and sufficient instruments and documents of conveyance and transfer, in form reasonably satisfactory to Acquisition Corp and its counsel, as shall be necessary and effective to transfer and assign to, and vest in, Pool Tech all of RP’s right, title and interest in and to the RP Assets and assigning to Pool Tech (together with any necessary consents) all RP Contracts included in the RP Assets to the extent assignable (to the extent non-assignable, it is understood and agreed that Pool Tech shall receive the economic benefit thereto, to the extent reasonably practicable, as provided in Section 2.3(a));

(ii) copies of all of the documents, books, records, papers, files, computer programs, data and other tangible property belonging to RP which relate to or are part of the RP Assets;

(iii) evidence of the release of any mortgages, liens, pledges, security interests, charges, claims, restrictions and encumbrances affecting any of the RP Assets; and

(iv) such other documents as may be necessary to consummate the transactions contemplated by this Agreement

and simultaneously with such delivery, all such steps will be taken as may be required to put Pool Tech in actual possession and operating control of the RP Assets.

(b) At or prior to the Closing and subject to the terms and conditions herein contained, Acquisition Corp shall cause Pool Tech to deliver to RP the following:

phx-srv01\1470349v04

(i) such bills of sale and other good and sufficient instruments and documents of conveyance and transfer, in form reasonably satisfactory to RP and its counsel, as shall be necessary and effective to transfer and assign to, and vest in, RP all of Pool Tech’s right, title and interest in and to the Pool Tech Assets and assigning to RP (together with any necessary consents) all Pool Tech Contracts included in the Pool Tech Assets to the extent assignable (to the extent non-assignable, it is understood and agreed that RP shall receive the economic benefit thereto, to the extent reasonably practicable, as provided in Section 2.3(b));

(ii) copies of all of the documents, books, records, papers, files, computer programs, data and other tangible property belonging to Pool Tech which relate to or are part of the Pool Tech Assets;

(iii) evidence of the release of any mortgages, liens, pledges, security interests, charges, claims, restrictions and encumbrances affecting any of the Pool Tech Assets; and

(iv) such other documents as may be necessary to consummate the transactions contemplated by this Agreement

and simultaneously with such delivery, all such steps will be taken as may be required to put RP in actual possession and operating control of the Pool Tech Assets.

(c) At or prior to the Closing and subject to the terms and conditions herein contained, RP and Acquisition Corp shall deliver to each other the certificates referred to in Article 6 .

2.3	Assignment of Certain Contracts.

(a) To the extent that RP’s rights under any RP Contract to be assigned to Pool Tech hereunder may not be assigned without the consent of another person which has not been obtained, this Agreement shall not constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof or be unlawful and RP, at its expense, shall use its best effort to obtain any such required consent(s) as promptly as possible. If any such consent shall not be obtained or if any attempted assignment would be ineffective or would impair Pool Tech’s rights under the RP Contract in question so that Pool Tech would not in effect acquire the benefit of all such rights, RP, to the maximum extent permitted by law and the RP Contract, shall act after the Closing as Pool Tech’s agent in order to obtain for it the benefits thereunder and shall cooperate, to the maximum extent permitted by law and the RP Contract, with Pool Tech in any other reasonable arrangement designed to provide such benefits to Pool Tech.

(b) To the extent that Pool Tech’s rights under any Pool Tech Contract to be assigned to RP hereunder may not be assigned without the consent of another person which has not been obtained, this Agreement shall not constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof or be unlawful and Acquisition Corp shall cause Pool Tech to, at Pool Tech’s expense, use its best effort to obtain any such required consent(s) as promptly as possible. If any such consent shall not be obtained or if any attempted assignment would be ineffective or would impair RP’s rights under the Pool Tech Contract in question so that RP would not in effect acquire the benefit of all such rights, Acquisition Corp shall cause Pool Tech, to the maximum extent permitted by law and the Pool Tech Contract, to act after the Closing as RP’s agent in order to obtain for it the benefits thereunder and shall cooperate, to the maximum extent permitted by law and the Pool Tech Contract, with RP in any other reasonable arrangement designed to provide such benefits to RP.

2.4	Further Assurances.

(a) RP from time to time after the Closing, at Pool Tech’s request, will execute, acknowledge and deliver to Pool Tech such other instruments of conveyance and transfer and will take such other actions and execute and deliver such other documents, certifications and further assurances as Pool Tech may reasonably require in order to vest more effectively in Pool Tech, or to put Pool Tech more fully in possession of, any of the RP Assets.

(b) Acquisition Corp shall cause Pool Tech from time to time after the Closing, at RP’s request, to execute, acknowledge and deliver to RP such other instruments of conveyance and transfer and will take such other actions and execute and deliver such other documents, certifications and further assurances as RP may reasonably require in order to vest more effectively in RP, or to put RP more fully in possession of, any of the Pool Tech Assets.

2.5	Termination in Absence of Closing.

phx-srv01\1470349v04

(a) If by the close of business on February 28, 2005, the Closing has not occurred, then either Acquisition Corp or RP may thereafter terminate this agreement by written notice to such effect, to the other parties hereto, without liability of or to any party to this Agreement or any shareholder, director, officer, employee or representative of such party unless the reason for the Closing having not occurred is (i) such party’s willful breach of the provisions of this Agreement, or (ii) if all of the conditions to such party’s obligations set forth in Article 6 have been satisfied or waived in writing by the date scheduled for the Closing pursuant to Section 2.1 , the failure of such party to perform its obligations under this Article 2 on such date; provided , however , that any termination pursuant to this Section 2.5 shall not relieve any party hereto who was responsible for Closing having not occurred as described in clauses (i) or (ii) above of any liability for (x) such party’s willful breach of the provisions of this Agreement, or (y) if all of the conditions to such party’s obligations set forth in Article 6 have been satisfied or waived in writing by the date scheduled for the Closing pursuant to Section 2.1 , the failure of such party to perform its obligations under this Article 2 on such date.

(b) This Agreement and the transactions contemplated herein may be terminated and abandoned at any time on or prior to the Closing Date by Acquisition Corp if:

(i) any representation or warranty made herein for the benefit of Acquisition Corp, or any certificate, schedule or document furnished to Acquisition Corp pursuant to this Agreement is untrue in any material respect; or

(ii) RP or Parent shall have defaulted in any material respect in the performance of any material obligation under this Agreement.

(c) This Agreement and the transactions contemplated herein may be terminated and abandoned at any time on or prior to the Closing Date by RP if:

(i) any representation or warranty made herein for the benefit of RP, or any certificate, schedule or document furnished to RP pursuant to this Agreement is untrue in any material respect; or

(ii) Acquisition Corp shall have defaulted in any material respect in the performance of any material obligation under this Agreement.

Article 3

REPRESENTATIONS AND WARRANTIES OF RP

RP hereby represents and warrants to Acquisition Corp:

3.1 Corporate Existence of RP and Parent. Each of Parent and RP is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized, and RP has all requisite corporate power to carry on its business as currently conducted and to own and operate the RP Assets.

3.2 Corporate Power of RP and Parent; Authorization; Enforceable Obligations. Each of RP and Parent has the corporate power, authority and legal right to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by each of RP and Parent has been duly authorized by all necessary corporate and shareholder action. This Agreement has been duly executed and delivered on behalf of each of RP and Parent by duly authorized officers of RP and Parent, and constitutes the legal, valid and binding obligations of RP and Parent, enforceable against each of RP and Parent in accordance with its terms, except as such enforcement may be limited by general equitable principles or by applicable bankruptcy, insolvency, moratorium, or similar laws and judicial decisions from time to time in effect which affect creditors’ rights generally.

3.3	Capitalization of RP. Parent beneficially owns all of the outstanding capital stock of RP.

3.4 No RP Conflicts; Consents. Except as set forth in Schedule 3.4 , the execution, delivery and performance of this Agreement by RP does not and will not violate, conflict with or result in the breach of any term, condition or provision of, or require the consent of any Person under, (a) any existing law, ordinance, or governmental rule or regulation to which RP is subject, (b) any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which is applicable to RP, (c) the

phx-srv01\1470349v04

charter documents or bylaws of RP or any securities issued by RP, or (d) any mortgage, indenture, loan, agreement, contract, commitment, lease, or other instrument, document or understanding, oral or written, to which RP is a party, by which RP may have rights or by which any of the RP Assets may be bound or affected, or give any party with rights thereunder the right to terminate, modify, accelerate or otherwise change the existing rights or obligations of RP thereunder. Except for the Hart-Scott-Rodino filing with respect to the Latham Purchase, no authorization, approval or consent of, and no registration or filing with, any governmental or regulatory official, body or authority or any other person is required in connection with the execution, delivery or performance of this Agreement by RP.

3.5 No Parent Conflicts; Consents. The execution, delivery and performance of this Agreement by Parent does not and will not violate, conflict with or result in the breach of any term, condition or provision of, or require the consent of any Person under, (a) any existing law, ordinance, or governmental rule or regulation to which Parent is subject, (b) any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which is applicable to Parent, (c) the charter documents or bylaws of Parent or any securities issued by Parent, or (d) any mortgage, indenture, loan, agreement, contract, commitment, lease, or other instrument, document or understanding, oral or written, to which Parent is a party, by which Parent may have rights or by which any of the RP Assets may be bound or affected, or give any party with rights thereunder the right to terminate, modify, accelerate or otherwise change the existing rights or obligations of Parent thereunder. Except for the Hart-Scott-Rodino filing with respect to the Latham Purchase, no authorization, approval or consent of, and no registration or filing with, any governmental or regulatory official, body or authority or any other person is required in connection with the execution, delivery or performance of this Agreement by Parent.

3.6 Financial Statements. Copies of the unaudited balance sheets and income statements of the RP Business as of and for the fiscal years ended December 31, 2003, and as of and for the eight-month period ended August 31, 2004 (collectively, the “ RP Financial Statements ”) are attached hereto as Schedule 3.6 . The RP Financial Statements were prepared from RP’s books and records, and the RP Financial Statements present fairly the financial condition and results of operations of the RP Business for the periods referred to therein and have been prepared in accordance with GAAP, except, in the case of the interim RP Financial Statements, for normal year-end adjustments.

3.7 Inventory. The RP Inventory consists, and as of the Closing Date will consist, only of items of a quality, condition and quantity consistent with normal seasonally-adjusted inventory levels of the RP Business and be usable and saleable in the ordinary and usual course of business for the purposes for which intended except to the extent written down or reserved against in the Closing RP Working Capital Statement. The RP Inventory is reflected in the books and records of RP in accordance with GAAP (on a standard cost basis) at the lower of cost or market, and the value of obsolete materials, materials below standard quality and slow-moving materials have been written down in accordance with GAAP. Except as set forth in Schedule 3.7 , during 2004, there have not been any changes in the value of, or establishment of any reserve against any RP Inventory, except for changes and reserves in the ordinary course of business and consistent with past practices.

3.8 Status of Contracts. Set forth on Schedule 3.8 is a list of all RP Contracts relating to the operation of the RP Business or the RP Assets, except (a) any RP Contracts entered into in the ordinary course of business that involve an aggregate expenditure in any year of less than $50,000, provided that all of such undisclosed RP Contracts do not involve expenditures in excess of $100,000 in the aggregate, (b) any purchase orders or commitments entered into in the ordinary course of business for less than $10,000 per calendar quarter, and (c) any RP Contracts relating to Excluded RP Assets. Except as set forth on Schedule 3.8 , all such RP Contracts are valid and in full force and effect, and neither RP, nor to the knowledge of RP, any other party thereto is in default in any material respect under the terms thereof.

3.9 Receivables. All the RP Receivables (a) represent actual indebtedness incurred by the applicable account debtor, (b) have arisen from bona fide transactions in the ordinary course of business and (c) are not subject to any defense, deduction, setoff or similar right, except to the extent fully reserved against as set forth in the August 31, 2004 balance sheet included in the RP Financial Statements. During 2004, there have not been any changes in reserves or write-offs as uncollectible of any RP Receivables, except for write-offs and reserves in the ordinary course of business and consistent with past practices.

3.10	Schedules ; Title to RP Assets .
	(a)	The following Schedules set forth the information indicated:

phx-srv01\1470349v04

(i)	Schedule 3.10(a)(i) is a list/description of the RP Personal Property;

(ii) Schedule 3.10(a)(ii) is a list of the RP Assets that are not owned by RP, but are leased to RP, such that the interest therein to be conveyed to Pool Tech is that of a leasehold interest, together with an identification of such lease;

(iii) Schedule 3.10(a)(iii) is a list of all leases to which any of the RP Assets owned by RP are subject;

(b) RP has good, valid and marketable title to all of the RP Assets free and clear of any Liens other than Permitted Liens and the Liens listed on Schedule 3.10(b) (which will be released prior to the Closing) and except for (i) any RP Assets subject to a leasehold interest, as identified on Schedule 3.10(a)(ii) and (ii) such RP Inventory as has been disposed of in the ordinary course of business.

3.11 Absence of Known Undisclosed Liabilities. Except as disclosed on Schedule 3.11 , RP has no knowledge of any basis for the assertion against the RP Business of any material liability of the type required to be reflected on a balance sheet prepared in accordance with GAAP in connection with or affecting the RP Assets, and there are no circumstances, conditions, happenings, events, or arrangements, contractual or otherwise, which may give rise to such liabilities, except commercial liabilities and obligations incurred in the ordinary course of business by RP and consistent with past practices.

3.12 Creditors. The transactions contemplated by this Agreement were not entered into by RP with the intent to hinder, delay or defraud any of RP’s creditors.

3.13	Intellectual Property.

(a) RP owns or has (and following the Closing, Pool Tech will own or have) the right to use, pursuant to a license, a sublicense, an agreement, or permission, the RP Intellectual Property. The consummation of the transactions contemplated by this Agreement will not result in the termination, modification or cancellation of the interests of RP or, following the Closing, Pool Tech in the RP Intellectual Property to be transferred to Pool Tech hereunder.

(b) RP has not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any intellectual property rights of third parties, and RP has not received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation (including any claim that RP must license or refrain from using any intellectual property rights of any third party). To the knowledge of RP, no third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any intellectual property rights of RP.

(c) RP has delivered to Acquisition Corp correct and complete copies of all registrations, applications, licenses, agreements, and permissions (as amended to date) relating to the RP Intellectual Property and has made available to Acquisition Corp correct and complete copies of all other written documentation evidencing ownership and prosecution (if applicable) of the RP Intellectual Property. With respect to each item of RP Intellectual Property:

(i) In the case of owned RP Intellectual Property, RP possesses all right, title, and interest in and to the item, free and clear of any Lien (other than Liens listed on Schedule 3.10(b), which will be released prior to Closing), encumbrance, privilege, or other security interest in favor of a third person; and in the case of licensed RP Intellectual Property, RP possesses the rights set forth in the applicable license agreements;

(ii) the item is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge;

(iii) no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or is threatened which challenges the legality, validity, enforceability, use, or ownership of the item; and

(iv) RP has never agreed to indemnify any person other than Pool Tech and/or Acquisition Corp for or against any interference, infringement, misappropriation, or other conflict with respect to the item.

phx-srv01\1470349v04

3.14 Litigation and Claims. Except as set forth in Schedule 3.14 , there is no action, suit, investigation or proceeding at law or in equity, any arbitration or any administrative or other proceeding relating to the RP Business or the RP Assets or to RP’s ability or right to sell the RP Assets, by or before any court, governmental instrumentality or agency, pending or, to the knowledge of RP, threatened or contemplated in writing against or affecting RP, or any of its properties or rights, that is likely to have a Material Adverse Effect. RP is not currently subject to any judgment, order or decree entered in any lawsuit or proceeding.

3.15	Compliance with Laws.

(a) RP is in compliance in all material respects with, and is not in default or violation in any material respect under, and has not conducted its operations in violation in any material respect of, any law, rule, regulation, decree or order applicable to the RP Business or the RP Assets.

(b) Except as set forth in Schedules 3.15 , at no time during the last three years has RP been notified in writing that it was the subject of any federal, provincial or foreign criminal investigation, or been notified in writing by any Governmental Entity of any violation of any law, regulation, ordinance, rule or order, except for failures to so comply that would not have a Material Adverse Effect on the RP Business.

3.16 Licenses and Permits. RP possesses such material federal, provincial, and local licenses, permits and other authorizations necessary for the continued conduct of the RP Business in the ordinary course, consistent with past practices, without material interruption (collectively “ RP Permits ”), including, without limitation, those listed on Schedule 3.16 other than such RP Permits the absence of which, individually, or in the aggregate, has not had and could not reasonably be expected to have a Material Adverse Effect, and such RP Permits are in full force and effect and have been and are being fully complied with by RP in all material respects. None of the governmental agencies or instrumentalities that have issued the RP Permits has notified RP in writing of its intent to modify, revoke, terminate or fail to renew any such RP Permit, and, to the knowledge of RP, no such action has been threatened. No RP Permit shall be modified, revoked or shall lapse as a result of the Acquisition.

3.17	Environmental Compliance.

(a) With respect to the RP Business and the RP Assets, RP possesses all necessary RP Permits that are required under, and at all times in the past has been in material compliance with, all Environmental Laws, including all Environmental Laws governing the generation, use, collection, treatment, storage, transportation, recover, removal, discharge or disposal of Hazardous Materials and all Environmental Laws imposing record-keeping, maintenance, testing, inspection, notification and reporting requirements with respect to Hazardous Materials.

(b) During the past five years RP has not been subject to any administrative or judicial proceeding pursuant to, or has not received any notice of any violation of, or claim alleging liability under, any Environmental Laws with respect to the RP Business and the RP Assets. No facts or circumstances exist that would be likely to result in a claim, citation or allegation against the RP for a violation of, or alleging liability under any Environmental Law with respect to the RP Business and the RP Assets.

(c) There are no underground tanks of any type (including tanks storing gasoline, diesel fuel, oil or other petroleum products) or disposal sites for Hazardous Materials or any other regulated waste, located on or under the immoveable property subject to the RP Leases.

(d) Except in the ordinary course of business, and in all cases in compliance with all Environmental Laws, RP has not engaged any third party to handle, transport or dispose of Hazardous Materials on its behalf with respect to the RP Business and the RP Assets.

3.18

Taxes.

(a) RP has properly prepared and duly and timely filed or caused to be filed all Returns required to be filed on or prior to the date hereof with respect to the RP Business and the RP Assets. RP has not executed or filed with any Government Entity any agreement extending the period for assessment or collection of any Taxes.

(b) RP has paid all Taxes owed to any Government Entity by RP for a period covered by such Returns, and all claims, demands, assessments, judgments, costs and expenses connected with the RP Business

phx-srv01\1470349v04

and the RP Assets have been duly and timely paid in full or RP has made adequate provisions for the payment of all Taxes.

(d) None of the RP Assets is property that is required to be treated as owned by a person other than RP.

(e) To RP’s knowledge, there are, and will hereafter be, no net Tax deficiencies of any kind assessed against or relating to RP with respect to any taxable periods ending on or before the Closing Date of a character or nature which would result on liens or claims on any of the RP Assets or on Pool Tech’s title thereto or use thereof, or would result in any claim against Pool Tech.

3.19	[ Reserved].

3.20 Absence of Changes or Events. Except as expressly provided for elsewhere herein, RP has not, with respect to the RP Business or the RP Assets, during 2004: (a) incurred any Indebtedness other than in the ordinary course of business, consistent with past practices, (b) permitted any of the RP Assets to be subjected to any Lien, other than a Permitted Lien and the Liens listed on Schedule 3.10(b) hereto, (c) sold, transferred or otherwise disposed of any assets that would constitute RP Assets, except for dispositions or consumptions of assets or RP Inventory in the ordinary course of business consistent with past practices, (d) made any capital expenditure or commitment therefor in excess of $50,000 in aggregate consistent with past practices, (e) made any loan to any Person other than in the ordinary course of business, consistent with past practices, (f) waived any rights or settled any claims, in excess of $50,000 consistent with past practices, (g) granted any increase in the rate of wages, salaries or other compensation or benefits to any of its employees, other than increases or payments in the ordinary course of its business consistent with past practices, (h) adopted, or amended or modified in any respect, any Benefit Plan, Employee Plan, or other benefit arrangement, (i) made any change in any method of accounting practice, (j) suffered or incurred any damage, destruction, fire explosion, accident, flood, or other casualty loss or act of God (whether or not covered by insurance) that has had or could reasonably be expected to have a Material Adverse Effect, (k) amended or terminated, or suffered any amendment or termination of, any RP Permit, RP Contract, RP License, purchase order or similar commitment or right that is likely to have a Material Adverse Effect, (l) suffered any labor disputes or disturbances that is likely to have a Material Adverse Effect (other than possible disturbances arising from the disclosure prior to the Closing of the transactions contemplated by this Agreement to shareholders and employees), (m) otherwise failed to operate its business in the ordinary course consistent with past practices so as to preserve its business organization intact and to preserve the goodwill of its customers, suppliers, employees and others with whom it has business relations (other than possible disturbances arising from the disclosure prior to the Closing of the transactions contemplated by this Agreement to shareholders and employees), (n) any event, circumstance or change that has had or could reasonably be expected to have a Material Adverse Effect, (i) any material adverse change in RP’s sales patterns, pricing policies, accounts receivable or accounts payable, or (p) agreed to do any of the foregoing.

3.21	[ Reserved].

3.22 Transactions with Affiliates. Except as set forth in Schedule 3.22 , none of the RP Contracts between RP, on the one hand, and any Affiliates of RP, on the other hand, will continue in effect subsequent to the Closing. Except as set forth in Schedule 3.22 , after the Closing, none of RP’s Affiliates will have any interest in any property (real or personal, tangible or intangible) or Contract used in or pertaining to the RP Business. Except as set forth in Schedule 3.22 or otherwise provided for herein, Parent does not provide any material services to the RP Business.

3.23 Suppliers and Customers. During 2004, RP has not entered into or made any contract or commitment for the purchase of raw materials or other merchandise in connection with the RP Business, other than in the ordinary course of business consistent with past practices. Set forth on Schedule 3.23 are the top ten customers (in terms of dollars spent) of goods or services sold by the RP Business during its most recent full fiscal year and the top ten suppliers (in terms of dollars spent) of goods or services purchased by the RP Business during the 12 months ended September 30, 2004. Except as set forth in Schedule 3.23 , during 2004, there has not been (i) any material adverse change in the business relationship of the RP Business with any supplier or customer named in

phx-srv01\1470349v04

Schedule 3.23 or (ii) any change in any material term (including credit terms) of the supply agreements or related arrangements with any such supplier or customer.

3.24 Product Liability. Except as set forth in Schedule 3.24 , RP has no liabilities that have not been satisfied (and to the knowledge of RP, there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against RP giving rise to any liability) arising out of any injury to individuals or property as a result of any defective product sold, distributed or delivered by RP and relating to the RP Business.

3.25 Pool Tech’s Ability to Operate the RP Business. Except as disclosed on Schedule 3.25 , upon the sale to Pool Tech of the RP Assets and the assumption by Pool Tech of the Assumed RP Liabilities hereunder, Pool Tech shall have received from RP all the property, equipment, inventory, contracts, permits, intellectual property, leasehold interests, books and records, and other assets and rights necessary for Pool Tech to conduct the RP Business in substantially the same manner as it is presently conducted by RP.

3.26 Absence of Certain Business Practices. Neither RP nor any other person acting on behalf of or associated with RP, acting alone or together, has (a) received, directly or indirectly, any rebates, payments commissions, promotional allowances or any other economic benefits, regardless of their nature or type, from any customer supplier, employee or agent of any customer or supplier; or (b) directly or indirectly given or agreed to give any money, gift or similar benefit to any customer, supplier, employee or agent of any customer or supplier, any official or employee of any government (domestic or foreign), or any political party or candidate for office (domestic or foreign), or other person who was, is or may be in a position to help or hinder the RP Business (or assist the RP Business in connection with any actual or proposed transaction), in each case which (i) may subject the RP Business to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (ii) if not given in the past, may have a material adverse effect on the RP Business, or (iii) if not continued in the future may adversely affect the RP Business.

3.27 Leased Premises. Schedule 3.10(a)(ii) sets forth a list of all leases, licenses or similar agreements relating to RP’s use or occupancy of real estate owned by a third party (“ RP Leases ”), true and correct copies of which have previously been furnished to Acquisition Corp, in each case setting forth (i) the lessor and lessee thereof and the commencement date, term and renewal rights under each of the RP Leases, and (ii) the street address and legal description of each property covered thereby (the “ RP Leased Premises ”). The RP Leases and all guaranties with respect thereto, are in full force and effect and have not been amended in writing or otherwise, and no party thereto is in default or breach under any such Lease. No event has occurred which, with the passage of time or the giving of notice or both, would cause a material breach of or default under any of such RP Leases. Neither RP nor its agents or employees have received written notice of any claimed abatements, offsets, defenses or other bases for relief or adjustment.

3.28 Insurance. Schedule 3.28 hereto is a complete and correct list of all insurance policies (including, without limitation, fire, liability, product liability, workers’ compensation and vehicular) presently in effect that relate to RP or the RP Assets, including the amounts of such insurance and annual premiums with respect thereto, all of which have been in full force and effect from and after the date(s) set forth on Schedule 3.28 . Such policies are sufficient for compliance by RP with all applicable material RP Contracts. None of the insurance carriers has indicated to RP an intention to cancel any such policy or to materially increase any insurance premiums (including, without limitation, workers’ compensation premiums), or that any insurance required to be listed on Schedule 3.28 will not be available in the future on substantially the same terms as currently in effect. RP has no claim pending or anticipated against any of its insurance carriers under any of such policies and, to the knowledge of RP, there has been no actual or alleged occurrence of any kind which could reasonably be expected to give rise to any such claim. During the prior three years, all notices required to have been given by RP to any insurance company have been timely and duly given, and no insurance company has asserted that any claim is not covered by the applicable policy relating to such claim.

3.29 Equipment and Other Personal Property. The RP Personal Property, including its equipment and machinery, is suitable for the purposes for which intended and in good operating condition and repair consistent with normal industry standards. To the knowledge of RP, the RP Personal Property is free of any structural or engineering defects. During the past five years there has not been any significant interruption of the RP Business due to inadequate maintenance or obsolescence of any of the RP Personal Property.

phx-srv01\1470349v04

Article 4

REPRESENTATIONS AND WARRANTIES

OF ACQUISITION CORP

Acquisition Corp and, as of the Closing, Pool Tech hereby represent and warrant to RP:

4.1 Corporate Existence of Acquisition Corp and Pool Tech. Each of Acquisition Corp and Pool Tech is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized, and Pool Tech has all requisite corporate power to carry on its business as currently conducted and to own and operate the Pool Tech Assets.

4.2 Corporate Power of Acquisition Corp; Authorization; Enforceable Obligations. Acquisition Corp has the corporate power, authority and legal right to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by Acquisition Corp has been duly authorized by all necessary corporate action. This Agreement has been duly executed and delivered on behalf of Acquisition Corp by duly authorized officers of Acquisition Corp, and constitutes the legal, valid and binding obligations of Acquisition Corp, enforceable against Acquisition Corp in accordance with its terms, except as such enforcement may be limited by general equitable principles or by applicable bankruptcy, insolvency, moratorium, or similar laws and judicial decisions from time to time in effect which affect creditors’ rights generally.

4.3 Capitalization of Pool Tech. At Closing, Acquisition Corp will beneficially own all of the outstanding capital stock of Pool Tech.

4.4 No Conflicts; Consents. Except as set forth in Schedule 4.4, the execution, delivery and performance of this Agreement by Acquisition Corp does not and will not violate, conflict with or result in the breach of any term, condition or provision of, or require the consent of any person under, (a) any existing law, ordinance, or governmental rule or regulation to which Acquisition Corp is subject, (b) any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which is applicable to Acquisition Corp, (c) the charter documents or bylaws of Acquisition Corp or any securities issued by Acquisition Corp, or (d) any mortgage, indenture, loan, agreement, contract, commitment, lease, or other instrument, document or understanding, oral or written, to which Acquisition Corp is a party, by which Acquisition Corp may have rights or by which any of the Pool Tech Assets may be bound or affected, or give any party with rights thereunder the right to terminate, modify, accelerate or otherwise change the existing rights or obligations of Acquisition Corp thereunder. Except for the Hart-Scott-Rodino filing with respect to the Latham Purchase, no authorization, approval or consent of, and no registration or filing with, any governmental or regulatory official, body or authority or any other person is required in connection with the execution, delivery or performance of this Agreement by Acquisition Corp.

4.5 Financial Statements. Acquisition Corp has furnished RP with copies of the unaudited balance sheets and income statements of the Pool Tech Business as of and for the fiscal years ended December 31, 2003, and as of and for the eight-month period ended August 31, 2004 (collectively, the “ Pool Tech Financial Statements ”), copies of which are attached hereto as Schedule 4.5 . The Pool Tech Financial Statements were prepared from Pool Tech’s books and records, and the Financial Statements present fairly the financial condition and results of operations of Pool Tech for the periods referred to therein and have been prepared in accordance with GAAP, except, in the case of the interim Pool Tech Financial Statements, for normal year end adjustments.

4.6 Inventory. The Pool Tech Inventory consists, and as of the Closing Date will consist, only of items of a quality, condition and quantity consistent with normal seasonally-adjusted inventory levels of the Pool Tech Business and be usable and saleable in the ordinary and usual course of business for the purposes for which intended except to the extent written down or reserved against in the Closing Pool Tech Working Capital Statement. The Pool Tech Inventory is reflected in the books and records of Pool Tech in accordance with GAAP (on an average cost basis) at the lower of cost or market, and the value of obsolete materials, materials below standard quality and slow-moving materials have been written down in accordance with GAAP. Except as set forth in Schedule 4.6 , during 2004, there have not been any changes in the value of, or establishment of any reserve against

phx-srv01\1470349v04

any Pool Tech Inventory, except for changes and reserves in the ordinary course of business and consistent with past practices.

4.7 Status of Contracts. Set forth on Schedule 4.7 is a list of all Pool Tech Contracts relating to the operation of the Pool Tech Business or the Pool Tech Assets, except (a) any Pool Tech Contracts entered into in the ordinary course of business that involve an aggregate expenditure in any year of less than $50,000, provided that all of such undisclosed Pool Tech Contracts do not involve expenditures in excess of $100,000 in the aggregate, (b) any purchase orders or commitments entered into in the ordinary course of business for less than $10,000 per calendar quarter, and (c) any Pool Tech Contracts relating to Pool Tech Excluded Assets. Except as set forth on Schedule 4.7 , all such Pool Tech Contracts are valid and in full force and effect, and neither Pool Tech, nor to the knowledge of Pool Tech, any other party thereto is in default in any material respect under the terms thereof.

4.8 Receivables. All the Pool Tech Receivables (a) represent actual indebtedness incurred by the applicable account debtor, (b) have arisen from bona fide transactions in the ordinary course of business and (c) are not subject to any defense, deduction, setoff or similar right, except to the extent fully reserved against as set forth in the August 31, 2004 balance sheet included in the Pool Tech Financial Statements. During 2004, there have not been any changes in reserves or write-offs as uncollectible of any Pool Tech Receivables, except for write-offs and reserves in the ordinary course of business and consistent with past practices.

4.9	Schedules ; Title to Pool Tech Assets .
	(a)	The following Schedules set forth the information indicated:
		(i)	Schedule 4.9(a)(i) is a list/description of the Pool Tech Personal Property;

(ii) Schedule 4.9(a)(ii) is a list of the Pool Tech Assets that are not owned by Pool Tech, but are leased to Pool Tech, such that the interest therein to be conveyed to Purchaser is that of a leasehold interest, together with an identification of such lease;

(iii) Schedule 4.9(a)(iii) is a list of all leases to which any of the Pool Tech Assets owned by Pool Tech are subject;

(b) Pool Tech has good, valid and marketable title to all of the Pool Tech Assets free and clear of any Liens other than Permitted Liens and the Liens listed on Schedule 4.9(b) (which will be released prior to the Closing) and except for (i) any Pool Tech Assets subject to a leasehold interest, as identified on Schedule 4.9(a)(ii) and (ii) such Pool Tech Inventory as has been disposed of in the ordinary course of business.

4.10 Absence of Known Undisclosed Liabilities. Pool Tech has no knowledge of any basis for the assertion against the Pool Tech Business of any material liability of the type required to be reflected on a balance sheet prepared in accordance with GAAP in connection with or affecting the Pool Tech Assets, and there are no circumstances, conditions, happenings, events, or arrangements, contractual or otherwise, which may give rise to such liabilities, except commercial liabilities and obligations incurred in the ordinary course of business by Pool Tech and consistent with past practices.

4.11 Creditors. The transactions contemplated by this Agreement were not entered into by Acquisition Corp with the intent to hinder, delay or defraud any of Acquisition Corp’s or Pool Tech’s creditors.

4.12	Intellectual Property.

(a) Pool Tech owns or has (and following the Closing, RP will own or have) the right to use, pursuant to a license, a sublicense, an agreement, or permission, the Pool Tech Intellectual Property. The consummation of the transactions contemplated by this Agreement will not result in the termination, modification or cancellation of the interests of Pool Tech or, following the Closing, RP in the Pool Tech Intellectual Property to be transferred to RP hereunder.

(b) Pool Tech has not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any intellectual property rights of third parties, and Pool Tech has not received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation (including any claim that Pool Tech must license or refrain from using any intellectual property rights of any third

phx-srv01\1470349v04

party). To the knowledge of Pool Tech, no third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any intellectual property rights of Pool Tech.

(c) Acquisition Corp has delivered to RP correct and complete copies of all registrations, applications, licenses, agreements, and permissions (as amended to date) relating to the Pool Tech Intellectual Property and has made available to RP correct and complete copies of all other written documentation evidencing ownership and prosecution (if applicable) of the Pool Tech Intellectual Property. With respect to each item of Pool Tech Intellectual Property:

(i) In the case of owned Pool Tech Intellectual Property, Pool Tech possesses all right, title, and interest in and to the item, free and clear of any Lien (other than Liens listed on Schedule 4.9(b), which will be released prior to Closing), encumbrance, privilege, or other security interest in favor of a third person; and in the case of licensed Pool Tech Intellectual Property, Pool Tech possesses the rights set forth in the applicable license agreements;

(ii) the item is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge;

(iv) Neither Acquisition Corp nor Pool Tech has agreed to indemnify any person other than RP for or against any interference, infringement, misappropriation, or other conflict with respect to the item.

4.13 Litigation and Claims. Except as set forth in Schedule 4.13 , there is no action, suit, investigation or proceeding at law or in equity, any arbitration or any administrative or other proceeding relating to the Pool Tech Business or the Pool Tech Assets or to Pool Tech’s ability or right to sell the Pool Tech Assets, by or before any court, governmental instrumentality or agency, pending or, to the knowledge of Pool Tech, threatened or contemplated in writing against or affecting Pool Tech, or any of its properties or rights, that is likely to have a Material Adverse Effect. Pool Tech is not currently subject to any judgment, order or decree entered in any lawsuit or proceeding.

4.14	Compliance with Laws.

(a) Pool Tech is in compliance in all material respects with, and is not in default or violation in any material respect under, and has not conducted its operations in violation in any material respect of, any law, rule, regulation, decree or order applicable to the Pool Tech Business or the Pool Tech Assets.

(b) Except as set forth in Schedules 4.14 and 4.16 , at no time during the last three years has Pool Tech been notified in writing that it was the subject of any federal, state or local criminal investigation, or been notified in writing by any Governmental Entity of any violation of any law, regulation, ordinance, rule or order, except for failures to so comply that would not have a Material Adverse Effect on the Pool Tech Business.

4.15 Licenses and Permits. Pool Tech possesses such material federal, provincial, and local licenses, permits and other authorizations necessary for the continued conduct of the Pool Tech Business in the ordinary course, consistent with past practices, without material interruption (collectively “ Pool Tech Permits ”), including, without limitation, those listed on Schedule 4.15 other than such Pool Tech Permits the absence of which, individually, or in the aggregate, has not had and could not reasonably be expected to have a Material Adverse Effect, and such Pool Tech Permits are in full force and effect and have been and are being fully complied with by Pool Tech in all material respects. None of the governmental agencies or instrumentalities that have issued the Pool Tech Permits has notified Pool Tech in writing of its intent to modify, revoke, terminate or fail to renew any such Pool Tech Permit, and, to the knowledge of Pool Tech, no such action has been threatened. No Pool Tech Permit shall be modified, revoked or shall lapse as a result of the Acquisition.

4.16	Environmental Compliance.

(a) With respect to the Pool Tech Business and the Pool Tech Assets, Pool Tech possesses all necessary Pool Tech Permits that are required under, and at all times in the past has been in material compliance

phx-srv01\1470349v04

with, all Environmental Laws, including all Environmental Laws governing the generation, use, collection, treatment, storage, transportation, recover, removal, discharge or disposal of Hazardous Materials and all Environmental Laws imposing record-keeping, maintenance, testing, inspection, notification and reporting requirements with respect to Hazardous Materials.

(b) Except as set forth in Schedule 4.16 , during the past five years Pool Tech has not been subject to any administrative or judicial proceeding pursuant to, or has not received any notice of any violation of, or claim alleging liability under, any Environmental Laws with respect to the Pool Tech Business and the Pool Tech Assets. No facts or circumstances exist that would be likely to result in a claim, citation or allegation against the Pool Tech for a violation of, or alleging liability under any Environmental Law with respect to the Pool Tech Business and the Pool Tech Assets.

(d) Except in the ordinary course of business, and in all cases in compliance with all Environmental Laws, Pool Tech has not engaged any third party to handle, transport or dispose of Hazardous Materials on its behalf with respect to the Pool Tech Business and the Pool Tech Assets.

4.17

Taxes.

(a) Pool Tech has properly prepared and duly and timely filed or caused to be filed all Returns required to be filed on or prior to the date hereof with respect to the Pool Tech Business and the Pool Tech Assets. Pool Tech has not executed or filed with any Government Entity any agreement extending the period for assessment or collection of any Taxes.

(b) Pool Tech has paid all Taxes owed to any Government Entity by Pool Tech for a period covered by such Returns, and all claims, demands, assessments, judgments, costs and expenses connected with the Pool Tech Business and the Pool Tech Assets have been duly and timely paid in full or Pool Tech has made adequate provisions for the payment of all Taxes.

(d) None of the Pool Tech Assets is property that is required to be treated as owned by a person other than Pool Tech.

(e) To Pool Tech’s knowledge, there are, and will hereafter be, no net Tax deficiencies of any kind assessed against or relating to Pool Tech with respect to any taxable periods ending on or before the Closing Date of a character or nature which would result on liens or claims on any of the Pool Tech Assets or on RP’s title thereto or use thereof, or would result in any claim against RP.

4.18	Benefit Plans.

(a) Schedule 4.18(a) sets forth an accurate and complete list of Benefit Plans in which the employees of Pool Tech participate (the “ Pool Tech Plans ”), and RP has been provided with accurate and complete copies or descriptions of the Pool Tech Plans.

(b) None of the Pool Tech Plans are in violation of any law, statute or rule of any Governmental Entity. Neither RP nor Parent shall be liable for any acts of Pool Tech or its employees or agents with respect to any Pool Tech Plan prior to and including the Closing Date. Benefits under Pool Tech Plans are as represented in the governing documents and have not been increased or modified (whether written or not written) subsequent to the dates of such documents. There has been no communication to any employee or former employee of any intention or commitment to modify any Pool Tech Plan or to establish or implement any other Benefit Plan. Full payment has been made of all amounts that Pool Tech has been required to have paid as contributions to any Pool Tech Plan or other employee benefit arrangement under applicable law or under the terms of any such plan or arrangement.

phx-srv01\1470349v04

(c) Schedule 4.18(c) lists the employees of Pool Tech employed in the Pool Tech Business who are on sick leave, personal absence or other leave as of the date hereof.

(d) Except as set forth on Schedule 4.18(d), no employee or former employee of Pool Tech will become entitled to any bonus, retirement, severance, job security or similar benefit or enhanced benefit or any fee or payment of any kind solely as a result of the transactions contemplated hereby.

(e) Pool Tech has complied in all material respects with the requirements of all applicable federal and provincial laws, rules and regulations.

4.19 Absence of Changes or Events. Except as set forth in Schedule 4.19 or as expressly provided for elsewhere herein, Pool Tech has not, with respect to the Pool Tech Business or the Pool Tech Assets, during 2004: (a) incurred any Indebtedness other than in the ordinary course of Business, consistent with past practices, (b) permitted any of the Pool Tech Assets to be subjected to any Lien, other than a Permitted Lien and the Liens listed on Schedule 4.9(b) hereto, (c) sold, transferred or otherwise disposed of any assets that would constitute Pool Tech Assets, except for dispositions or consumptions of assets or Pool Tech Inventory in the ordinary course of business consistent with past practices, (d) made any capital expenditure or commitment therefor in excess of $50,000 in aggregate consistent with past practices, (e) made any loan to any Person other than in the ordinary course of business, consistent with past practices, (f) waived any rights or settled any claims, in excess of $50,000 consistent with past practices, (g) granted any increase in the rate of wages, salaries or other compensation or benefits to any of its employees, other than increases or payments in the ordinary course of its business consistent with past practices, (h) adopted, or amended or modified in any respect, any Benefit Plan, Employee Plan, or other benefit arrangement, (i) made any change in any method of accounting practice, (j) suffered or incurred any damage, destruction, fire explosion, accident, flood, or other casualty loss or act of God (whether or not covered by insurance) that has had or could reasonably be expected to have a Material Adverse Effect, (k) amended or terminated, or suffered any amendment or termination of, any Pool Tech Permit, Pool Tech Contract, Pool Tech License, purchase order or similar commitment or right that is likely to have a Material Adverse Effect, (l) suffered any labor disputes or disturbances that is likely to have a Material Adverse Effect (other than possible disturbances arising from the disclosure prior to the Closing of the transactions contemplated by this Agreement to shareholders and employees), (m) otherwise failed to operate its business in the ordinary course consistent with past practices so as to preserve its business organization intact and to preserve the goodwill of its customers, suppliers, employees and others with whom it has business relations (other than possible disturbances arising from the disclosure prior to the Closing of the transactions contemplated by this Agreement to shareholders and employees), (n) any event, circumstance or change that has had or could reasonably be expected to have a Material Adverse Effect, (i) any material adverse change in Pool Tech’s sales patterns, pricing policies, accounts receivable or accounts payable, or (p) agreed to do any of the foregoing.

4.20 Employment Relations. There are no (a) unfair labor practice complaints against Pool Tech relating to the Pool Tech Business or the Pool Tech Assets pending before the applicable provincial labour relations board or equivalent body, (b) labor strikes, slowdowns or stoppages pending or, to the knowledge of Pool Tech, threatened against or involving the employees of Pool Tech, (c) labor unions that claim to represent the employees of Pool Tech, (d) collective bargaining agreements currently being negotiated by Pool Tech with respect to the employees of Pool Tech, (e) pending labor or labor related grievances related to the Pool Tech Business that is likely to have a Material Adverse Effect, (f) arbitration proceedings arising out of or under any collective bargaining agreement of Pool Tech and no claim therefor has been asserted, and (g) material labor difficulties that have been experienced by Pool Tech relating to the Pool Tech Business or the Pool Tech Assets during the past three years. There are no employment contracts or agreements with any employees of Pool Tech, except for those agreements listed on Schedule 4.20 .

4.21 Transactions with Affiliates. None of the Pool Tech Contracts between Pool Tech on the one hand, and any of its Affiliates, on the other hand, will continue in effect subsequent to the Closing. After the Closing none of Pool Tech’s Affiliates will have any interest in any property (real or personal, tangible or intangible) or Contract used in or pertaining to the Pool Tech Business. Acquisition Corp does not provide any material services to the Pool Tech Business.

4.22 Suppliers and Customers. During 2004, Pool Tech has not entered into or made any contract or commitment for the purchase of raw materials or other merchandise in connection with the Pool Tech Business, other than in the ordinary course of business consistent with past practices. Set forth on Schedule 4.22 are the top ten

phx-srv01\1470349v04

suppliers and customers (in terms of dollars spent) of goods or services purchased and sold by the Pool Tech Business during its most recent full fiscal year. Except as set forth in Schedule 4.22 , during 2004, there has not been (i) any material adverse change in the business relationship of the Pool Tech Business with any supplier or customer named in Schedule 4.22 or (ii) any change in any material term (including credit terms) of the supply agreements or related arrangements with any such supplier or customer.

4.23 Product Liability. Except as set forth in Schedule 4.23 , Pool Tech has no liabilities that have not been satisfied (and to the knowledge of Pool Tech, there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against Pool Tech giving rise to any liability) arising out of any injury to individuals or property as a result of any defective product sold, distributed or delivered by Pool Tech and relating to the Pool Tech Business.

4.24 RP’s Ability to Operate the Pool Tech Business. Upon the sale to RP of the Pool Tech Assets and the assumption by RP of the Pool Tech Liabilities hereunder, RP shall have received from Pool Tech all the property, equipment, inventory, contracts, permits, intellectual property, leasehold interests, books and records, and other assets and rights necessary for RP to conduct the Pool Tech Business in substantially the same manner as it is presently conducted by Pool Tech.

4.25 Absence of Certain Business Practices. Neither Pool Tech nor any other person acting on behalf of or associated with the Pool Tech, acting alone or together, has (a) received, directly or indirectly, any rebates, payments commissions, promotional allowances or any other economic benefits, regardless of their nature or type, from any customer supplier, employee or agent of any customer or supplier; or (b) directly or indirectly given or agreed to give any money, gift or similar benefit to any customer, supplier, employee or agent of any customer or supplier, any official or employee of any government (domestic or foreign), or any political party or candidate for office (domestic or foreign), or other person who was, is or may be in a position to help or hinder the Pool Tech Business (or assist the Pool Tech Business in connection with any actual or proposed transaction), in each case which (i) may subject the Pool Tech Business to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (ii) if not given in the past, may have a material adverse effect on the Pool Tech Business, or (iii) if not continued in the future may adversely affect the Pool Tech Business.

4.26 Leased Premises. Schedule 4.9(a)(ii) sets forth a list of all leases, licenses or similar agreements relating to Pool Tech’s use or occupancy of real estate owned by a third party (“ Pool Tech Leases ”), true and correct copies of which have previously been furnished to RP, in each case setting forth (i) the lessor and lessee thereof and the commencement date, term and renewal rights under each of the Pool Tech Leases, and (ii) the street address and legal description of each property covered thereby (the “ Pool Tech Leased Premises ”). The Pool Tech Leases and all guaranties with respect thereto, are in full force and effect and have not been amended in writing or otherwise, and no party thereto is in default or breach under any such Pool Tech Lease. No event has occurred which, with the passage of time or the giving of notice or both, would cause a material breach of or default under any of such Pool Tech Leases. Neither Pool Tech nor its agents or employees have received written notice of any claimed abatements, offsets, defenses or other bases for relief or adjustment.

4.27 Insurance. Schedule 4.27 hereto is a complete and correct list of all insurance policies (including, without limitation, fire, liability, product liability, workers’ compensation and vehicular) presently in effect that relate to Pool Tech or the Pool Tech Assets, including the amounts of such insurance and annual premiums with respect thereto, all of which have been in full force and effect from and after the date(s) set forth on Schedule 4.27 . Such policies are sufficient for compliance by Pool Tech with all applicable material Pool Tech Contracts. None of the insurance carriers has indicated to Pool Tech an intention to cancel any such policy or to materially increase any insurance premiums (including, without limitation, workers’ compensation premiums), or that any insurance required to be listed on Schedule 4.27 will not be available in the future on substantially the same terms as currently in effect. Pool Tech has no claim pending or anticipated against any of its insurance carriers under any of such policies and, to the knowledge of Pool Tech, there has been no actual or alleged occurrence of any kind which could reasonably be expected to give rise to any such claim. During the prior three years, all notices required to have been given by Pool Tech to any insurance company have been timely and duly given, and no insurance company has asserted that any claim is not covered by the applicable policy relating to such claim.

4.28 Equipment and Other Personal Property. The Pool Tech Personal Property, including its equipment and machinery, is suitable for the purposes for which intended and in good operating condition and repair consistent with normal industry standards. To the knowledge of Pool Tech, the Pool Tech Personal Property is free

phx-srv01\1470349v04

of any structural or engineering defects. During the past five years there has not been any significant interruption of the Pool Tech Business due to inadequate maintenance or obsolescence of any of the Pool Tech Personal Property.

Article 5

COVENANTS

5.1 Cooperation. Parent, RP and Acquisition Corp will promptly take all reasonable actions necessary to obtain, and will cooperate with each other in obtaining, any consent, authorization, order or approval of, or any exemption by, any Governmental Entity or other public or private party, required to be obtained or made by it in connection with this Agreement, and will cooperate with each other in the taking of any action contemplated by this Agreement. Parent, RP and Acquisition Corp shall use their reasonable efforts to cause all of the conditions to Closing to be satisfied as soon as practicable.

5.2	Conduct of Business.

(a) Through the Closing Date, RP shall conduct the RP Business in the ordinary course and consistent with past practices, except as expressly required or otherwise permitted by this Agreement, and shall not take or permit any action which would cause any of its representations made in this Agreement not to be true and correct on the Closing Date. Without limiting the generality of the foregoing, through the Closing Date, RP shall not enter into, terminate or modify any material RP Contracts and shall not incur any material liabilities.

(b) Acquisition Corp shall use reasonable efforts to require Pool Tech, through the Closing Date, to conduct the Pool Tech Business in the ordinary course consistent with past practices, such as including a covenant from Latham International, L.P. to such effect in the Stock Purchase Agreement entered into in connection with the Latham Purchase.

5.3 Access to Properties and Records. RP shall allow Acquisition Corp and its authorized representatives full access, during normal business hours and on reasonable notice, to all of RP’s properties, offices, equipment, inventory and assets, documents, files, books and records relating to the RP Business, in order to allow Acquisition Corp a full opportunity to make such investigation and inspection as it desires of the RP Business and the RP Assets. RP shall further use its best efforts to cause its employees, accountants and agents to be available upon reasonable notice to answer questions of Acquisition Corp’s representatives concerning the business and affairs of RP relating to the RP Business and the RP Assets, and shall further use their best efforts to cause them to make available all relevant books and records in connection with such inspection and examination. Acquisition Corp shall be entitled to make copies, at its own expense, of any documents, records and information relating to the RP Business and the RP Assets. In the event of the termination of this Agreement pursuant to Section 2.5 , (i) Acquisition Corp shall promptly return to RP any and all documents, records and information relating to the RP Business and the RP Assets that Acquisition Corp has received from RP, and (ii) RP shall promptly return to Acquisition Corp any and all documents, records and information relating to the Pool Tech Business and the Pool Tech Assets that RP has received from Acquisition Corp.

5.4 Public Statements. None of the parties to this Agreement shall, and each party shall use its best efforts so that none of its advisors, officers, directors or employees shall, except with the prior written consent of the other party, publicize, announce or describe to any third person, except its advisors and employees, the execution or terms of this Agreement, the parties hereto or the transactions contemplated hereby, except as required by law, in which case the party required to make any such disclosure shall allow the other party reasonable time to review and comment on the content of such disclosure in advance of its issuance, or as required pursuant to this Agreement to obtain the consent of such third person. This covenant shall apply both before and after the Closing.

phx-srv01\1470349v04

Article 6

CONDITIONS PRECEDENT TO THE CLOSING

6.1 Conditions Precedent to Acquisition Corp’s Obligations. The obligations of Acquisition Corp to consummate the transactions contemplated by this Agreement are subject to the fulfillment or satisfaction, prior to or at the Closing, of each of the following conditions precedent:

(a) Representations and Warranties . The representations and warranties of RP contained in this Agreement or in any schedule, certificate or document delivered by RP to Acquisition Corp or Pool Tech pursuant to the provisions hereof shall have been true on the date hereof and shall be true in all material respects on the Closing Date with the same effect as though such representations and warranties were made as of such date.

(b) Compliance with this Agreement . Each of RP and Parent shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing.

(c) Closing Certificate . Acquisition Corp shall have received a certificate from RP dated the Closing Date, certifying in such detail as Acquisition Corp may reasonably request that the conditions specified in Sections 6.1(a) and 6.1(b) hereof have been fulfilled.

(d) No Threatened or Pending Litigation . No suit, action or other proceeding, or injunction or final judgment relating thereto, shall be threatened or be pending before any court or governmental or regulatory official, body or authority in which it is sought to restrain or prohibit or to obtain damages or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby, and no investigation that might result in any such suit, action or proceeding shall be pending or threatened. No statute, rule, regulation, executive order or decree shall have been enacted, promulgated or enforced which prohibits or restricts the consummation of the transactions contemplated by this Agreement.

(e) Sublease . RP shall have executed and delivered to Pool Tech a sublease in form and substance reasonably acceptable to Acquisition Corp for the premises located at 3465 boul.des Enterprises, city of Terrebonne in the Province of Quebec, together with written evidence in form and substance reasonably acceptable to Acquisition Corp of the consent of the landlord to such sublease.

(f) Lease . RP and each landlord shall have executed lease assignments in form and substance reasonably acceptable to Acquisition Corp for the real property leases set forth on Schedule 4.9 (a)(ii).

(g) Hart-Scott Rodino. Acquisition Corp shall have received written evidence, in form and substance satisfactory to Acquisition Corp, of (i) the termination or expiration of the HSR waiting period related to the Latham Purchase, and (ii) the consent to the transactions contemplated by this Agreement of all governmental, quasi-governmental and private third parties (including, without limitation, persons or other entities leasing real or personal property to RP) where the absence of any such consent would result in a violation of law or a breach or default under any agreement to which RP is subject.

(h) Conveyance Documents . RP shall have executed and delivered to Pool Tech, the Conveyance Documents.

(i) Assumption of Liabilities and Obligations . RP shall have executed an assumption agreement with respect to Assumed Pool Tech Liabilities in a form reasonably acceptable to Acquisition Corp.

6.2 Conditions Precedent to the Obligations of RP. The obligations of RP to consummate the transactions contemplated by this Agreement are subject to the fulfillment or satisfaction, prior to or at the Closing, of each of the following conditions precedent:

(a) Representations and Warranties . The representations and warranties of Acquisition Corp contained in this Agreement or in any schedule, certificate or document delivered by Acquisition Corp or Pool Tech to RP pursuant to the provisions hereof shall have been true on the date hereof and shall be true in all material respects on the Closing Date with the same effect as though such representations and warranties were made as of such date.

phx-srv01\1470349v04

(b) Compliance with this Agreement . Acquisition Corp shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing.

(c) Closing Certificate . RP shall have received a certificate from Acquisition Corp dated the Closing Date, certifying in such detail as RP may reasonably request that the conditions specified in Sections 6.2(a) and 6.2(b) hereof have been fulfilled.

(e) Assumption of Liabilities and Obligations . Pool Tech shall have executed an assumption agreement with respect to the Assumed RP Liabilities in a form reasonably acceptable to RP.

(f) Conveyance Documents . Pool Tech shall have executed and delivered to RP, the Conveyance Documents.

(g) Lease . Pool Tech and each landlord shall have executed lease assignments in form and substance reasonably acceptable to RP for the real property leases set forth on Schedule 4.9 (a)(ii).

(h) Sublease . Pool Tech shall have executed and delivered to RP a sublease in form and substance reasonably acceptable to RP for the premises located at 3465 boul.des Enterprises, city of Terrebonne in the Province of Quebec.

(i) Hart-Scott Rodino. Parent shall have received written evidence, in form and substance satisfactory to Parent, of (i) the termination or expiration of the HSR waiting period related to the Latham Purchase, and (ii) the consent to the transactions contemplated by this Agreement of all governmental, quasi-governmental and private third parties (including, without limitation, persons or other entities leasing real or personal property to Pool Tech) where the absence of any such consent would result in a violation of law or a breach or default under any agreement to which Pool Tech is subject.

(j) FWP Contribution . Acquisition Corp shall have acquired certain assets and assumed certain liabilities pursuant to the certain Asset Contribution Agreement, dated as of November 12, 2004, by and among Fort Wayne Pools, Inc., SCP Pool Corporation, and Acquisition Corp.

(k) Latham Purchase . Acquisition Corp shall have acquired all of the outstanding capital stock of Latham Investments, Inc., Technican Pacific Industries Inc., Pool Tech, and Pacific Pools Europe from Latham International, LP pursuant to the certain Stock Purchase Agreement, dated as of November 12, 2004, by and among Latham International, LP and Acquisition Corp.

Article 7

INDEMNIFICATION

7.1	Indemnification.

(a) After the Closing Date, subject to the terms and conditions of this Section 7 , including the limits on indemnity set forth in Section 7.4 , RP and Parent shall jointly and severally indemnify and hold harmless Acquisition Corp and Pool Tech and their Affiliates, and their respective officers, directors, employees, agents and representatives (the “ Pool Tech Indemnitees ”) from and against, and will pay to the Pool Tech Indemnitees the amount (net of any proceeds received by the Pool Tech Indemnitee from insurance or any quantifiable tax benefits in the year incurred, but giving effect to any tax detriment from receipt of indemnification proceeds) of, any loss, liability, judgment, damage, cost or expense (including interest, penalties, and the reasonable fees, disbursements and expenses of attorneys, accountants and other professional advisors) (collectively, “ Losses ”)

phx-srv01\1470349v04

arising from or in connection with (i) any breach of any representation or warranty of RP contained in Section 3 , (ii) a breach of any agreement or covenant contained herein that by its terms is to be performed by RP or Parent, (iii) any Excluded RP Liabilities, (iv) any Assumed Pool Tech Liabilities, (v) any collective bargaining or similar agreement to which RP is a party, or (vi) RP’s operation or conduct of the Pool Tech Business after the Closing Date.

(b) After the Closing Date, subject to the terms and conditions of this Section 7 , Acquisition Corp shall indemnify and hold harmless RP and its Affiliates and their respective officers, directors, employees, agents and representatives (the “ RP Indemnitees ”) from and against, and will pay to the RP Indemnitees the amount (net of any proceeds received by the RP Indemnitee from insurance or any quantifiable tax benefits in the year incurred, but giving effect to any tax detriment from receipt of indemnification proceeds) of, any Losses arising from or in connection with (i) any breach of any representation or warranty of Acquisition Corp contained in Section 4 , (ii) a breach of any agreement or covenant contained herein that by its terms is to be performed by Acquisition Corp, (iii) any Excluded Pool Tech Liabilities, (iv) any Assumed RP Liabilities or (v) Pool Tech’s operation or conduct of the RP Business after the Closing Date.

7.2	Notice and Defense of Claims.

(a) Any Person seeking indemnification under this Section 7 (the “ Indemnified Person ”) shall give prompt written notice to the indemnifying person or persons, or successors thereto (the “ Indemnifying Person ”), of any matter with respect to which the Indemnified Person seeks to be indemnified (the “ Indemnity Claim ”). Such notice shall state the nature of the Indemnity Claim and, if known, the amount of the Loss. If the Indemnity Claim arises from a claim of a third party, the Indemnified Person shall give such notice within a reasonable time after the Indemnified Person has actual notice of such claim, and in the event that a suit or other proceeding is commenced, within 20 days after receipt of written notice by the Indemnified Person thereof. Notwithstanding anything in this paragraph to the contrary, the failure of an Indemnified Person to give timely notice of an Indemnity Claim shall not bar such Indemnity Claim except and to the extent that the failure to give timely notice has impaired materially the ability of the Indemnifying Person to defend the Indemnity Claim.

(b) If the Indemnity Claim arises from the claim or demand of a third party, the Indemnifying Person shall assume its defense, including the hiring of counsel and the payment of all fees and expenses. The Indemnified Person shall have the right to employ separate counsel and to participate in the defense thereof. However, if the Indemnified Party employs separate counsel, the fees and expenses of such counsel shall be at the expense of the Indemnified Person unless both the Indemnified Person and the Indemnifying Person are named as parties and the Indemnified Person shall in good faith determine that representation by the same counsel is inappropriate. In the event that the Indemnifying Person, within 30 days after notice of any such action or claim, fails to assume the defense thereof, the Indemnified Person shall have the right to undertake the defense, compromise or settlement of such action, claim or proceeding for the account of the Indemnifying Person, subject to the right of the Indemnifying Person to assume the defense of such action, claim or proceeding at any time prior to the settlement, compromise or final determination thereof. Anything in this Section 7 to the contrary notwithstanding, the Indemnifying Person shall not, without the Indemnified Person's prior consent, settle or compromise any action or claim or consent to the entry of any judgment with respect to any action, claim or proceeding for anything other than money damages paid by the Indemnifying Person. The Indemnifying Person may, without the Indemnified Person's prior consent, settle or compromise any such action, claim or proceeding or consent to entry of any judgment with respect to any such action or claim that requires solely the payment of money damages by the Indemnifying Person and that includes as an unconditional term thereof the release by the claimant or the plaintiff of the Indemnified Person from all liability in respect of such action, claim or proceeding.

phx-srv01\1470349v04

arbitrator will be selected by the joint agreement of the parties, but if they do not agree within 20 calendar days of the lapse of the ten-Business Day period referred to above, the selection shall be made in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the “ Rules ”). If no such arbitrator is appointed within 45 calendar days of any such request to such association, either party may apply to a court having jurisdiction to make such appointment. The arbitrator shall conduct the arbitration in Fort Wayne, Indiana, in accordance with the Rules and shall make a final determination, to be provided in writing to each party, that resolves the dispute. Either party may apply to the arbitrator seeking injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved. Either party may also, without waiving any remedy under this Agreement, seek from any court having jurisdiction any interim or provisional relief that is necessary to protect the rights or property of that party, pending the appointment of the arbitrator. The prevailing party shall be entitled to recover from the other party the fees of the arbitrator and the administrative costs of the arbitration. The arbitrator shall apply the statutory and decisional law of the State of Indiana in substantially the same manner as do the courts of the State of Indiana in the case of contracts made and wholly performed within that jurisdiction. All results of the arbitration proceeding shall be final, conclusive and binding on all parties to this Agreement, and judgement upon the arbitrator’s award may be entered in any court of the State of Indiana having competent jurisdiction or any other court having competent jurisdiction, unless such results or award are clearly erroneous on the record before the arbitrator.

7.3 Survival of Representations and Warranties. The right to indemnification under Section 7.1 for any breach of the representations and warranties made by each party herein shall survive until April 1, 2006, except that the representations set forth in Sections 3.1, 3.2, 3.3, 3.8(b), 3.17, 3.18, 3.19, 4.1, 4.2, 4.3, 4.7(b), 4.16, 4.17 and 4.18 shall survive until the fifth anniversary of the Closing Date.

7.4	Limitations. Notwithstanding anything to the contrary in this Agreement:

(a) RP shall have no liability to the Pool Tech Indemnitees and Acquisition Corp shall have no liability to the RP Indemnities with respect to Indemnity Claims arising under Sections 7.1(a)(i) or 7.1(b)(i) unless and solely to the extent that the aggregate amount of all such Indemnity Claims, taken together, exceeds $100,000.

(b) In no event shall RP’s aggregate liability for all Indemnity Claims brought under Section 7.1(a)(i) exceed $1,000,000, except in the case of fraud, nor shall Acquisition Corp’s aggregate liability for all Indemnity Claims brought under Section 7.1(b)(i) exceed $1,000,000, except in the case of fraud.

(c) In the absence of fraud and except as otherwise provided in Article 8 , this Article 7 shall serve as the sole and exclusive remedy of the Pool Tech Indemnitees and the RP Indemnitees for Losses and for any other claims in any way relating to breaches of representations and warranties under this Agreement to the exclusion of all other statutory or common law remedies, whether based on contract, tort, strict liability or otherwise.

Article 8

POST CLOSING MATTERS

8.1 Maintenance of Books and Records. RP shall, and Acquisition Corp shall cause Pool Tech to, preserve until the fifth anniversary of the Closing Date, or such longer period required by law, all records possessed or to be possessed by such party relating to any of the RP Assets, Pool Tech Assets, RP Business or the Pool Tech Business. After the Closing Date, where there is a legitimate purpose, such party shall provide the other party with access, upon prior reasonable written request specifying the need therefor, during regular business hours, to (a) the officers and employees of such party and, subject to certain limitations described below, and (b) the books of account and records of such party, but, in each case, only to the extent relating to the RP Assets, Pool Tech Assets, RP Business or the Pool Tech Business prior to the Closing Date, and the other party and its representatives shall have the right to make copies of such books and records. Such records may nevertheless be destroyed by a party if such party sends to the other party written notice of its intent to destroy records, specifying with particularity the contents of the records to be destroyed. Such records may then be destroyed after the thirtieth (30 ^th ) day after such notice is given unless the other party objects to the destruction in which case the party seeking to destroy the records shall deliver such records to the objecting party.

phx-srv01\1470349v04

8.2 Mail and Other Communications. From and after the Closing Date, RP shall promptly refer all inquiries and forward all mail with respect to the RP Assets and the RP Business to Pool Tech, and Acquisition Corp shall cause Pool Tech to promptly refer all inquiries and forward all mail with respect to the Pool Tech Assets and the Pool Tech Business to RP.

8.3	Collection of Receivables.

(a) From and after the Closing Date, (i) Pool Tech shall have the right and authority to endorse with the name of RP any checks or drafts received with respect to any RP Receivables or such other related items, and (ii) RP shall have the right and authority to endorse with the name of Pool Tech any checks or drafts received with respect to any Pool Tech Receivables or such other related items.

(b) In the event that RP shall receive any remittance from or on behalf of any account debtor with respect to any RP Receivables after the Closing Date, RP shall endorse without recourse such remittance to the order of Pool Tech and forward such remittance to Pool Tech promptly upon receipt thereof. In the event that Pool Tech shall receive any remittance from or on behalf of any account debtor with respect to any Pool Tech Receivables after the Closing Date, Acquisition Corp shall cause Pool Tech to endorse without recourse such remittance to the order of RP and forward such remittance to RP promptly upon receipt thereof.

(c) In the event that after the Closing, Pool Tech receives any remittance from any customer of RP that is not intended to be in payment of the RP Receivables, Acquisition Corp shall cause Pool Tech to endorse without recourse such remittance to the order of RP and forward such remittance to RP promptly upon receipt thereof. In the event that after the Closing, RP receives any remittance from any customer of Pool Tech that is not intended to be in payment of the Pool Tech Receivables, RP shall endorse without recourse such remittance to the order of Pool Tech and forward such remittance to Pool Tech promptly upon receipt thereof.

8.4 Notice to Customers. Immediately following the Closing Date, Pool Tech and RP shall execute and deliver to customers, suppliers and vendors of or to the Pool Tech and RP Businesses a joint notice of the consummation of the transactions contemplated hereby. Such notice shall be prepared and mailed by Pool Tech, but shall be in the form and substance reasonably satisfactory to RP.

8.5	Employee Matters.

(a) RP shall take all steps necessary and appropriate so that at and immediately after the Closing Date substantially all individuals who are employed by the Pool Tech, including those on vacation, sick leave, personal absence, holiday, jury duty or short term disability, shall be employed by RP at the same base salary, as in effect prior to the Closing Date (such employees being the “ Pool Tech Continuing Employees ”). Set forth on Schedule 8.5(a) is a list of the Pool Tech Continuing Employees. RP shall not be required to employ any individual who is receiving benefits under Pool Tech’s long term disability plan at the time of Closing Date and such individuals shall remain the responsibility of Pool Tech. RP shall secure customary workers’ compensation coverage as required by applicable provincial law to cover all Pool Tech Continuing Employees effective on the Closing Date.

	(b)	Pool Tech shall not be required to employ any individuals employed by RP.
8.6	Benefit Plan Matters .
	(a)	Benefit Liabilities .

(i) Unless otherwise specifically set forth in this Agreement to the contrary, Pool Tech shall retain and be fully responsible for all liabilities, obligations and commitments relating to all wages, salaries and other forms of compensation and related expenses incurred or accrued on or prior to the Closing Date and all benefits incurred or accrued under Pool Tech Benefit Plans maintained or contributed to by Pool Tech or any affiliate on or prior to the Closing Date, except for unpaid bonuses, commissions and vacation pay for Pool Tech Continuing Employees to the extent accrued as a compensation expense and reflected in the Closing Pool Tech Working Capital Statement.

(ii) Effective as of the Closing Date, the Pool Tech Continuing Employees shall cease to participate in any Pool Tech Benefit Plan. Pool Tech shall retain responsibility under all Benefit Plans for all costs of coverage and all amounts payable by reason of claims incurred by Pool Tech Continuing Employees on

phx-srv01\1470349v04

or prior to the Closing Date, including claims that are not submitted until after the Closing Date except for any unpaid vacation pay for Pool Tech Continuing Employees. A claim shall be deemed to have been incurred on the date of occurrence of (A) death or dismemberment in the case of claims under life insurance and accidental death and dismemberment benefits, (B) the date the employee became entitled to receive disability in the case of claims under disability benefits, or (C) the date on which the charges or expense giving rise to such claim is incurred in the case of all other claims. Pool Tech shall be responsible for worker compensation claims of Pool Tech Continuing Employees based on injuries occurring prior to the Closing Date.

(b) Compensation . Pool Tech shall pay to the Pool Tech Continuing Employees promptly following the Closing Date all wages and salaries (except accrued bonuses and vacation pay to the extent reflected in the Closing Pool Tech Working Capital Statement) for all periods up to the Closing Date, shall pay all payroll taxes with respect to all amounts due to such employees for all periods up to the Closing Date and shall provide benefits under the Pool Tech Benefit Plans for such employees up to the Closing Date in accordance with the terms of such plans and Pool Tech's established policies and procedures.

(c) Severance Plan . Pool Tech shall be responsible for any severance benefits or other liabilities incurred pursuant to any severance plan of Pool Tech or any affiliated company that may arise with respect to, or as a result of the severance of the employment of the Pool Tech Continuing Employees with Pool Tech or any such affiliated company in connection with the Closing.

(d) Post-Closing Benefit Plans . Effective as of the Closing, RP shall offer the Pool Tech Continuing Employees the right to participate in RP's medical and dental plans and any other employee benefit plans made available to similarly situated employees of RP, subject to the terms and conditions of such benefit plans. Pool Tech Continuing Employees will receive credit, for purposes of deductibles and co-payments under RP's medical plan, for amounts paid or payable by reason of claims incurred under Pool Tech's plan during the calendar year in which the Closing occurs. Pool Tech shall retain responsibility for all costs of coverage and all amounts payable by reason of claims incurred on or prior to the Closing Date. Nothing herein shall prevent RP from terminating the employment of any such employee or modifying or terminating any such plans.

8.7 Hart-Scott Rodino. Each of the parties hereto shall furnish to the others such information and assistance as any other party may reasonably request in connection with the preparation of any Notification and Report Forms under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“ HSR Act ”), including any filings or submissions and provide the others with copies of all correspondence, filings or communications (or memoranda setting forth the substance thereof) between such party or any of its representatives, on the one hand, and any Governmental Authority or members of their respective staffs, on the other hands, with respect to this Agreement and the transactions contemplated hereby.

8.8	Post-Closing Cooperation.

(a) Acquisition Corp and RP shall cooperate with each other, and shall cause their officers, employees, agents, auditors and representatives to cooperate with each other, after the Closing to ensure the orderly transition of the RP Business from RP to Pool Tech, and of the Pool Tech Business from Pool Tech to RP, and to minimize any disruption to the RP Business and the Pool Tech Business and the other respective businesses of RP and Acquisition Corp that might result from the transactions contemplated hereby. Acquisition Corp and Pool Tech shall allow RP to use its computer system for operation of the Pool Tech Business for up to six months after the Closing Date and during such time, agrees to provide RP with all necessary and reasonable technical support and assistance in the normal course of business so that the RP Business’ computer system shall operate consistent with past practices and efficiencies. Acquisition Corp and Pool Tech shall also cooperate and use its best efforts to assist in the transition of Pool Tech’s computer system to RP’s computer system. To the extent that Pool Tech is requested to provide any additional assistance beyond that described above, RP shall reimburse Pool Tech for Pool Tech’s reasonable costs incurred in providing such additional assistance.

(b) After the Closing, upon reasonable written notice, Acquisition Corp and RP shall furnish or cause to be furnished to each other, as promptly as practicable, such information and assistance (to the extent within the control of such party) relating to the RP Assets and Pool Tech Assets (including, access to books and records) as is reasonably necessary for the filing of all Returns, and making of any election related to Taxes, the preparation for any audit by any taxing authority, and the prosecution or defense of any claim, suit or proceeding

phx-srv01\1470349v04

related to any Return. RP and Acquisition Corp shall cooperate with each other in the conduct of any audit or other proceeding relating to Taxes involving the RP Business and/or the Pool Tech Business.

8.9	Limited Covenant Not to Compete.

(a) Acquisition Corp and Acquisition Corp’s affiliates, subsidiaries, agents, successors, and assigns agree that, for the period from and after the Closing Date through the later of (i) the five-year anniversary of the Closing Date or (ii) the date in which Parent or Parent’s subsidiaries shall cease to hold 10% or more of the outstanding common stock of Acquisition Corp, or any affiliate, subsidiary, agent successor or assign of Acquisition Corp, they will not, directly or indirectly, own, manage, operate, control, carry on, engage or participate in, or otherwise be connected in any manner with the ownership, management, operation or control of any person, entity, or business that is engaged in or competes with Parent or Parent’s subsidiaries within Canada. Acquisition Corp acknowledges and agrees that the covenants provided for in this Section 8.9 are reasonable and necessary in terms of time, area and line of business to protect Parent’s legitimate business interests.

(b) Notwithstanding clause (a) of this Section 8.9 , Kafko Canada Inc. and Technican Pacific Industries Inc. shall not be prohibited from engaging in the distribution of products manufactured by Acquisition Corp.

(c) The parties hereto specifically acknowledge and agree that the remedies at law for any breach of this Section 8.9 will be inadequate and that the Purchaser, in addition to any other relief available to it, shall be entitled to temporary and permanent injunctive relief without the necessity of proving actual damage or the posting of any bond, except as required by non-waivable applicable law. In the event that the provisions of this Section 8.9 should ever be deemed to exceed the limitation provided by applicable law, then the parties hereto agree that such provisions shall be reformed to set forth the maximum limitations permitted. Any dispute regarding the reasonableness of the covenants and agreements set forth in this Section 8.9 , or the territorial scope or duration thereof, or the remedies available to the Purchaser upon any breach of such covenants and agreements, shall be governed by and interpreted in accordance with the laws of the jurisdiction in which the prohibited activity occurs.

Article 9

DEFINITIONS

9.1 Certain Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, each of the following terms shall have the meanings set forth below:

“ Acquisition ” means the exchange of the RP Assets for the Pool Tech Assets and the assumption of the Assumed RP Liabilities and Assumed Pool Tech Liabilities.

An “ Affiliate ” means, with respect to any natural person, corporation, partnership, limited liability company, trust and any other entity or organization of any kind (“ Person ”), any other Person that, directly or indirectly, through one or more intermediaries, controls, has the right to control (in fact or by agreement), is controlled by, or is under control with, such Person.

“ Benefit Plans ” means all employee benefit plans.

“ Environmental Laws ” means all federal, state and local laws, statutes, ordinances, regulations, rules of common or civil law now in effect, and in each case as amended, and any judicial for administrative order, consent decree or judgment relating to the regulation and protection of human health, safety, the environment and natural resources (including, without limitation, ambient air, surface water, groundwater, wetlands, land, surface or subsurface strata, and wildlife, aquatic species and vegetation), including, without limitation, laws and regulations relating to emissions, discharges, disposal, releases or threatened releases of Hazardous Materials or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials.

“ Excess Inventory ” means the amount of any item or SKU of RP Inventory or Pool Tech Inventory (other than items or SKUs that were first offered for sale by RP or Pool Tech during its respective most recent fiscal year)

phx-srv01\1470349v04

on hand at Closing that exceeds the amount sold by RP or Pool Tech, respectively, during the 12 months prior to Closing.

“ FSA ” means any medical flexible spending account of the RP.

“ GAAP ” means generally accepted accounting principles in Canada, consistently applied.

“ Governmental Entity ” means any Canadian federal, provincial or local or any foreign court or tribunal in any jurisdiction or any Canadian federal, provincial or local or any foreign public, governmental or regulatory body, agency, department commission, board, bureau or other authority or instrumentality.

“ Hazardous Materials ” means, collectively, (a) any petroleum or petroleum products, flammable explosives, radioactive materials, asbestos in any form that is or could become friable, lead paint, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls, and radon gas; (b) any chemicals, materials, substances or wastes which are now or hereafter become defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “pollutants,” “contaminants,” “toxic chemical,” “hazardous chemical,” “hazardous materials,” “extremely hazardous substances,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” or words of similar import, under any applicable Environmental Law; and (c) any other chemical, material, substance, or waste, exposure to which is prohibited, limited or regulated by any governmental or regulatory authority.

“ Indebtedness ” means all obligations of the RP Business or the Pool Tech Business, as the case may be, (whether for principal, interest, premium, fees or otherwise) for or arising under (i) all indebtedness for borrowed money (including all notes payable and all obligations evidenced by bonds, debentures, notes or other similar instruments), (ii) unpaid reimbursement obligations arising in connection with guaranties, or (iii) any lease obligation that would be required to be capitalized in accordance with GAAP.

A “ Lien ” means, with respect to any asset of RP or Pool Tech, as the case may be, any title defect, lien, mortgage, easement, pledge, charge, transfer restriction, right of first refusal, preemptive right, option, claim, security interest, right of others or other encumbrance of any nature whatsoever, other than restrictions imposed by federal or state securities laws.

A “ Material Adverse Effect ” means, with respect to RP or Pool Tech, a material adverse effect on the results of operations or financial condition of the RP Business or the Pool Tech Business, as the case may be, or any material limitation on the ability of the RP, on the one hand, or Acquisition Corp, on the other hand, to consummate the Acquisition; provided that, the parties agree that only those acts, events or occurrences that result, or are reasonably likely to result, individually or in the aggregate, in a quantifiable loss, cost or expense that equals or exceeds $100,000 shall be deemed to constitute a Material Adverse Effect.

A “ Permitted Lien ” means (i) Liens consisting of zoning or planning restrictions, easements, permits and other restrictions or limitations on the use of real property that in the aggregate do not materially detract from the value or interfere with the use of such real property or materially impair the marketability thereof, (ii) Liens for current taxes or assessments on property that are accrued but not yet payable, and (iii) mechanic's, materialman's and other liens for goods and services incorporated into or provided with respect to the property encumbered thereby arising by operation of law in the ordinary course of business, provided that the obligations secured by such Liens (A) are not more than 30 days past due, (B) are fully reflected in the RP Financial Statements or the Pool Tech Financial Statements, or the Closing RP Working Capital Statement or the Pool Tech Working Capital Statement and (C) do not materially interfere with the use or enjoyment of any of the properties or assets or RP or Pool Tech, as the case may be, and do not materially impair the marketability thereof.

“ Pool Tech Business ” means Pool Tech’s distribution business, which is engaged in the wholesale distribution of swimming pool components and accessories, and excludes the distribution business of Kafko Canada.

“ RP Business ” means RP’s manufacturing business, which is engaged in the manufacture of steel swimming pool components and accessories, including steel wall panels and braces and aluminum coping.

“ Returns ” means all returns, declarations, reports, statements and other documents required to be filed in respect of Taxes, and any claims for refunds of Taxes, including any amendments or supplements to any of the foregoing. The term “ Return ” further means any one of the foregoing.

phx-srv01\1470349v04

“ Taxes ” means all federal, provincial, local and other taxes including, without limitation, income taxes, estimated taxes, alternative minimum taxes, excise taxes, sales taxes, use taxes, value added taxes, gross receipts taxes, capital stock taxes, franchise taxes, employment and payroll related taxes, withholding taxes, property taxes, whether measured in whole or in part by net income, and all deficiencies, or other additions to tax, interest, fines and penalties.

“ Working Capital ” means (a) with respect to RP, the excess, if any, of (i) current assets, including accounts receivable, inventory, prepaid expenses and deposits (but excluding deferred or other income tax assets), included in the RP Assets, and (ii) current liabilities, including accounts payable and accrued expenses (but excluding payables, provisions or reserves for income Taxes), assumed by Pool Tech, hereunder, in each case calculated in accordance with GAAP, and (b) with respect to Pool Tech, the excess, if any, of (i) current assets, including accounts receivable, inventory, prepaid expenses and deposits (but excluding deferred or other income tax assets), included in the Pool Tech Assets, and (ii) current liabilities, including accounts payable and accrued expenses (but excluding payables, provisions or reserves for income Taxes), assumed by RP, hereunder, in each case calculated in accordance with GAAP.

Article 10

MISCELLANEOUS

10.1 Exhibits and Schedules. The exhibits and Schedules referred to herein are attached hereto and incorporated herein by this reference. Disclosure of a specific item in any one Schedule shall be deemed restricted only to the Section to which such disclosure specifically relates except where (i) there is an explicit cross-reference to another Schedule, and (ii) the party receiving such Schedule could reasonably be expected to ascertain the scope of the modification to a representation intended by such cross-reference.

10.2 Expenses. Except as otherwise provided in this Agreement, each party hereto shall pay its own expenses incidental to the preparation of this Agreement, the carrying out of the provisions of this Agreement and the consummation of the transactions contemplated hereby.

10.3 Entire Agreement; Amendment. This Agreement sets forth the entire understanding of the parties hereto with respect to the transactions contemplated hereby. Any and all previous agreements and understandings between or among the parties regarding the subject matter hereof, whether written or oral, are superseded by this Agreement. Other than the representations and warranties set forth herein, no additional or other representation or warranties shall be applicable to the transactions contemplated by this Agreement. This Agreement shall not be amended or modified except by written instrument duly executed by each of the parties hereto.

10.4 Assignment and Binding Effect. Prior to the Closing, this Agreement may not be assigned by any party hereto without the prior written consent of the other party. Subject to the foregoing, all of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors and assigns of RP and Purchaser.

10.5 Waiver. Any term or provision of this Agreement may be waived at any time by the party entitled to the benefit thereof by a written instrument duly executed by such party.

10.6 Notices. Any notice, request, demand, waiver, consent, approval or other communication which is required or permitted hereunder shall be in writing and shall be deemed given only upon of delivery by: (a) personal delivery to the designated individual; (b) certified or registered mail, postage prepaid, return receipt requested; (c) a nationally recognized overnight courier service with confirmation of receipt; or (d) facsimile transmission with confirmation of receipt. All such notices must be addressed as follows or such other address as to which any party hereto may have notified the other in writing:

If to RP, to:

SCP Pool Corporation

109 Northpark Boulevard, 4 ^th Floor

phx-srv01\1470349v04

Covington, Louisiana 70433-5001

Attention: President

Facsimile: 985-801-8105

With a copy to:

SCP Pool Corporation

109 Northpark Boulevard, 4 ^th Floor

Covington, Louisiana 70433-5001

Attention: General Counsel

Facsimile: 985-801-8269

If to Purchaser, to:

Latham Acquisition Corp.

c/o Brockway Moran & Partners, Inc.

225 N.E. Mizner Boulevard, 7th Floor

Boca Raton, Florida 33432

Attention: Peter Klein

Facsimile: (561) 750-2001

With a copy to:

Greenberg Traurig, LLP

2375 E. Camelback Road, Suite 700

Phoenix, Arizona 85016

Attention: Bruce Macdonough

Facsimile: (602)445-8618

10.7 Governing Law. This Agreement shall be governed by and interpreted and enforced in accordance with the internal laws and not the choice of law rules of the Province of Ontario.

10.8 No Benefit to Others. The representations, warranties, covenants and agreements contained in this Agreement are for the sole benefit of the parties hereto and, in the case of Article 7 hereof, the other Indemnified Persons, and their heirs, executors, administrators, legal representatives, successors and assigns, and they shall not be construed as conferring any rights on any other persons.

10.9 Schedules and Exhibits. All Schedules and Exhibits referred to herein are intended to be and hereby are specifically made a part of this Agreement.

10.10 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by reason of any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any adverse manner to either party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible, and in any case such term or provision shall be deemed amended to the extent necessary to make it no longer invalid, illegal or unenforceable.

phx-srv01\1470349v04

10.11 Counterparts. This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument.

[signature page follows]

phx-srv01\1470349v04

EXECUTION VERSION

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the date first written.

SCP POOL CORPORATION

By:	/ s/ Manuel J. Perez de la Mesa
Name:	Manuel J. Perez de la Mesa
Title:	President

LES INDUSTRIES R.P. INC.,

By:	/ s/ Manuel J. Perez de la Mesa
Name:	Manuel J. Perez de la Mesa
Title:	President

LATHAM ACQUISITION CORP.

By:	/ s/ Mark A. Eidemueller
Name:	Mark A. Eidemueller
Title:	Vice President

phx-srv01\1470349v04

ASSET CONTRIBUTION AGREEMENT

This Asset Contribution Agreement (the “ Agreement ”), dated as of November 12, 2004, is entered into by and among (i) Fort Wayne Pools, Inc., an Indiana corporation (“ Seller ”), (ii) SCP Pool Corporation, a Delaware corporation (“ Parent ”) and (iii) Latham Acquisition Corp., a Delaware corporation (“ Purchaser ”).

WHEREAS, Purchaser desires to issue common stock to Seller in exchange for substantially all of Seller’s assets, properties and business (as more specifically defined in Section 9.1 of this Agreement, the “ Business ”);

WHEREAS, Seller desires to acquire common stock of Purchaser in exchange for Seller’s contribution of the Business;

WHEREAS, for federal income tax purposes, transaction contemplated by this Agreement shall constitute a transaction described in Section 351 of the Code;

WHEREAS, contemporaneously with the execution of this Agreement, Seller, Purchaser and certain other stockholders of Purchaser are entering into a Subscription and Stockholders’ Agreement (the “ Subscription Agreement ”);

WHEREAS, Parent’s wholly owned subsidiary SCP Acquisition Co., LLC, a Delaware limited liability company, owns 100% of Seller’s outstanding capital stock and will derive substantial benefit from the transactions contemplated hereby;

WHEREAS, immediately following the closing of the transactions contemplated hereby, Purchaser shall acquire all of the outstanding capital stock of Latham Investments, Inc., Technican Pacific Industries Inc., Pool Technology Distributors, Inc. (“ Pool Tech ”), and Pacific Pools Europe from Latham International, L.P. (“ Latham”) pursuant to the certain Stock Purchase Agreement, dated as of November 12, 2004, by and among Latham and Purchaser (the “ Latham Purchase ”);

WHEREAS, immediately following the closing of the Latham Purchase, Parent shall cause Les Industries R.P. Inc. (“ Les Industries ”) to transfer to Pool Tech certain assets of its Canadian manufacturing operations and Purchaser shall cause Pool Tech to transfer to Les Industries certain assets of Pool Tech, all pursuant to an Asset Exchange Agreement of even date herewith by and among Parent, Les Industries and Purchaser (the “ Pool Tech Agreement ”);

WHEREAS, concurrent with the closing of the transactions contemplated hereby, Parent shall cause Alliance Trading, Inc. (“ Alliance ”) to grant to Purchaser a perpetual, royalty-free license to use certain trademarks and slogans currently owned by Alliance and licensed to Seller (the “ Alliance License ”); and

WHEREAS, in addition to the other defined terms used herein, certain terms are defined in Section 9.1 hereof.

Article 1

PURCHASE AND SALE

1.1 Purchase and Sale. On the terms and subject to the conditions of this Agreement, at the Closing (as defined in Section 2.1 ), Seller shall sell, assign, transfer, convey and deliver to Purchaser, and Purchaser shall purchase from Seller, all the right, title and interest as of the Closing of Seller, in, to and under the Acquired Assets (as defined in Section 1.2 ) in exchange for (i) such number of shares of Purchaser’s outstanding common stock, par value $0.01 per share (the “ Shares ”), as set forth in the Subscription Agreement, and (ii) the assumption of the Assumed Liabilities (as defined in Section 1.5 ). The Shares are expected to constitute approximately 41% of all shares of Purchaser’s common stock issued and outstanding, on a fully diluted basis, immediately following the

phx-srv01\1468313v05

Closing. The contribution of the Acquired Assets and the assumption of the Assumed Liabilities is referred to in this Agreement as the “ Acquisition .”

1.2 Acquired Assets. The term “ Acquired Assets ” means all the business, properties, assets, goodwill and rights of Seller of whatever kind and nature, real or personal, tangible or intangible, wherever located and by whomever possessed, that are owned, leased or licensed by Seller on the Closing Date and used, held for use or intended to be used solely or primarily in the operation or conduct of the Seller’s Business, including without limitation, the following:

(a) all raw materials, works-in-process, inventories and other materials of Seller wherever located and including all inventory in transit or on order and not yet delivered, and all rights with respect to the processing and completion of any works-in-process of Seller as of the Closing Date (collectively, the “ Inventory ”);

(b) all other tangible personal property and interests therein, including without limitation all machinery, equipment, furniture, furnishings and vehicles of the Business, including without limitation those listed on Schedule 3.10(a)(i) (the “ Personal Property ”);

(c) all rights to real property owned or leased by Seller to the extent used in the Business, including without limitation those real estate leases listed on Schedule 3.10(a)(ii);

(d) all accounts receivable and notes receivable of the Business as of the Closing Date, including without limitation those listed on Schedule 1.2(d), except to the extent the items listed on Schedule 1.2(d) are collected prior to the Closing Date (the “ Receivables ”);

(e) all service marks, trade names, business names, copyrights, designs, design registrations, patents, trademarks, trade secrets, confidential information, know-how, inventions, designs and procedures, of Seller that are used, held for use or intended to be used in the operation or conduct of the Business and all rights to any of the foregoing, including without limitation those specifically listed on Schedule 1.2(e) (the “ Intellectual Property ”);

(f) all claims and rights of Seller under all agreements, contracts, leases, subleases, licenses, indentures, agreements, commitments and all other legally binding arrangements, whether oral or written, to which Seller is a party or by which Seller is bound to the extent listed on Schedule 3.8 or not required to listed on Schedule 3.8 (collectively, the “ Contracts ”);

(g) all credits, rebates or adjustments from vendors, prepaid expenses, deferred charges, advance payments, security deposits and prepaid items of Seller (“ Prepaid Items ”);

(h) all files, customers’ and suppliers’ lists, other distribution lists, billing records, sales and promotional literature, manuals, customer and supplier correspondence relating solely to Seller (in all cases, in any form or medium) (the “ Records ”);

(i) to the extent transferable, all permits, licenses, franchises, orders, registrations, certificates, variances, approvals and similar rights obtained from Governmental entities related to the Business and all data and records pertaining thereto, including without limitation, those listed on Schedule 3.16 (the “ Licenses and Permits ”);

(j) all claims, refunds, credits, causes of action, rights of recovery and rights of set-off of every kind and nature related solely to the Business;

(k) all rights to receive and retain mail and other communications related solely to the Business;

(l) all goodwill generated by or associated solely with Seller’s Business and all other intangible property of Seller; and

(m)	all other assets of Seller not listed in Section 1.3 .

1.3 Excluded Assets. Notwithstanding the foregoing, the following assets (the “ Excluded Assets ”) are expressly excluded from the purchase and sale contemplated hereby:

phx-srv01\1468313v05

(a) all cash, cash equivalents and marketable and other investment securities or stock of any corporation;

(b) all moneys or stock of any corporation to be received by Seller from Purchaser pursuant to this Agreement and all other rights of Seller under this Agreement;

(c) Seller’s corporate charter and all qualifications of Seller to conduct business as a corporation, arrangement with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute books, stock transfer books and blank stock certificates and other documents relating to the organization, maintenance and existence of Seller as a corporation;

(d)	all insurance policies;
(e)	Seller’s tax returns and tax refunds;
(f)	all bank accounts of Seller; and
(g)	assets of any Seller Plan (as defined in Section 3.19 ).

1.4 Method of Conveyance. The sale, transfer, conveyance, assignment and delivery by Seller of the Acquired Assets to Purchaser in accordance with Section 1.1 shall be effected on the Closing Date by Seller’s execution and delivery to Purchaser of one or more bills of sale, assignments and other conveyance instruments with respect to Seller’s transfer of the Acquired Assets in form and scope reasonably satisfactory to Purchaser (collectively, the “ Conveyance Documents ”). At the Closing, good, valid and marketable title to all of the Acquired Assets shall be transferred, conveyed, assigned and delivered by Seller to Purchaser pursuant to the Conveyance Documents, free and clear of any and all liens, encumbrances, mortgages, security interests, pledges, claims, equities and other restrictions or charges of any kind or nature whatsoever.

1.5	Assumption of Certain Liabilities; Excluded Liabilities.

(a) Upon the terms and subject to the conditions of this Agreement, Purchaser shall assume, effective as of the Closing, and from and after the Closing, Purchaser shall pay, perform and discharge when due, only the following liabilities, obligations and commitments of Seller (subject to Purchaser’s right to dispute such liabilities and obligations in good faith with parties to whom such obligations are owed) (such liabilities, obligations and commitments being the “ Assumed Liabilities ”):

(i) all of Seller’s payment and performance obligations arising subsequent to the Closing under the Contracts and the Licenses and Permits (but in each case not including any liability or obligations for breaches thereof arising out of or related to events or occurrences prior to the Closing Date);

(ii) all of Seller’s current accrued liabilities incurred in the ordinary course of business, to the extent that such items are properly recorded in accordance with GAAP as current liabilities in the Closing Working Capital Statement prepared in accordance with Section 1.6 (“ Accrued Liabilities ”);

(iii) the accounts payable of Seller as of the Closing Date to the extent incurred in the ordinary course of business and properly recorded in accordance with GAAP as accounts payable in the Closing Working Capital Statement (“ Accounts Payable ”); and

(iv) all other liabilities, obligations and commitments, whether known or unknown, express or implied, absolute, contingent or otherwise, arising out of Purchaser’s operation or conduct of the Business subsequent to the Closing.

(b) Except as expressly set forth in Section 1.5(a), Purchaser shall not assume or be responsible at any time for any liability, obligation, debt or commitment of Seller, whether absolute or contingent, accrued or unaccrued, asserted or unasserted, or otherwise, including but not limited to any liabilities, obligations, debts or commitments of Seller incident to, arising out of or incurred with respect to, this Agreement and the transactions contemplated hereby (including any and all sales, income or other taxes arising out of the transactions contemplated hereby). Without limiting the generality of the foregoing, Seller and Parent expressly acknowledge and agree that Seller shall retain, and that Purchaser shall not assume or otherwise be obligated to pay, perform, defend or discharge, (i) any liability of Seller and/or Parent for income Taxes or other Taxes, (ii) any liability of

phx-srv01\1468313v05

Seller arising from breach of law, breach of Contract or tort, (iii) any liability, obligation, debt or commitment of Seller to Parent or any other Affiliate of Seller or Parent, (iv) any liability, obligation or commitment of Seller pursuant to any non-competition agreement, or (v) any Indebtedness of Seller (collectively, the “ Excluded Liabilities ”). Seller and Parent further agree to satisfy and discharge as the same shall become due all obligations and liabilities of Seller not specifically assumed by Purchaser hereunder.

1.6	Working Capital Adjustments.

(a) As soon as practicable, but in no event later than 90 days following the Closing Date, Purchaser shall determine the Working Capital of Seller as of the Closing Date in accordance with GAAP (the “ Seller’s Working Capital ”) and shall deliver to Seller a written statement (the “ Purchaser’s Statement ”) setting forth its determination of the Seller’s Working Capital. Purchaser shall afford Seller , or its representatives, access to the records and personnel of the Business for the purpose of reviewing such determination. If Seller objects to any item contained in Purchaser’s Statement, such objection shall be made in writing and delivered to Purchaser within 20 business days following Seller’s receipt of the Purchaser’s Statement, failing which such statement shall be deemed to have been accepted by Seller (such accepted statement and Working Capital are referred to herein as the “ Closing Working Capital Statement ” and “ Closing Working Capital ,” respectively). If Seller so notifies Purchaser of an objection to the Purchaser’s Statement, the parties shall negotiate in good faith regarding such disagreement.

(b) If the parties fail to agree on any item contained in the Purchaser’s Statement within 10 business days of receipt by Purchaser of the Seller’s statement of objections, Seller shall submit the Purchaser’s Statement to PricewaterhouseCoopers (the “ Independent Accountant ”). Seller shall use its reasonable best efforts to cause the Independent Accountant to review the Purchaser’s Statement as soon as practicable, but in any event within thirty (30) business days after the delivery of Purchaser’s Statement to the Independent Accountant. The determination of the Closing Working Capital and Closing Working Capital Statement by the Independent Accountant shall be final and binding on the Seller and Purchaser and not subject to review, challenge or adjustment absent fraud. The costs and expenses of the services of the Independent Accountant’s review shall be borne and paid by the party that the Independent Accountant determines to be least correct in its determination of Seller’s Working Capital.

(c) On a date that is mutually convenient to Purchaser and Seller, but in any event not more than 5 business days after the final determination of the Closing Working Capital and Closing Working Capital Statement in accordance with Section 1.6(b) and (c) above (the “ Adjustment Date ”), Purchaser and Seller shall make the following working capital adjustments:

(i) if the Closing Working Capital is less than $5,349,000 (the “ Target Working Capital ”) by $100,000 or more, Seller shall pay to Purchaser an amount equal to such deficit; or

(ii) if the Closing Working Capital is greater than the Target Working Capital by $100,000 or more, Purchaser shall pay to Seller an amount equal to such excess.

(d) Any amounts payable pursuant to Section 1.6(d) shall be paid within five (5) business days after the Adjustment Date in immediately available funds.

1.7 Adjusted Tax Basis. On or before February 28, 2005, Seller shall deliver to Purchaser a preliminary schedule setting forth the adjusted tax basis of the Acquired Assets as of the Closing Date. Within ten (10) business days after the filing date of the Seller's consolidated federal income tax return to include the Fort Wayne business results for the fiscal year that includes the Closing Date, Seller shall deliver to Purchaser a final schedule setting forth the adjusted tax basis of the Acquired Assets as of the Closing Date; provided, however, that such tax return be filed no later than September 15, 2005.

1.8 Accounts Payable and Accrued Liabilities. Seller shall pay all of its accounts payable, accrued liabilities and all other Excluded Liabilities (including without limitation all wages and salaries payable) arising out of the ownership or operation of the Acquired Assets or the Business prior to the Closing Date as they come due and payable, except those Accounts Payable and Accrued Liabilities which are not due or payable prior to the Closing Date and are assumed by Purchaser at Closing pursuant to Section 1.5 hereof. In the event Purchaser receives an invoice, bill or other demand for payment relating to any accounts payable, accrued liabilities or other liabilities in connection with the ownership or operation of the Acquired Assets or the Business prior to the Closing Date and

phx-srv01\1468313v05

which is not included in the Closing Working Capital as shown in the Closing Working Capital Statement, such invoice, bill or demand for payment, as the case may be, shall be forwarded to Seller and/or Parent, each of whom agrees to promptly (but in no event later than 30 days after demand by Purchaser) make payment therefore.

1.9 Taxes. At Closing, Seller shall pay all stamp, transfer, documentary, excise, sales or other comparable taxes due with respect to the sale of the Acquired Assets. Purchaser shall pay any taxes accruing with respect to the Business and the Acquired Assets on and after the Closing Date. Seller shall be responsible for and shall pay all income, gross revenue, or similar taxes with respect to the Business and the Acquired Assets accruing before the Closing Date. All taxes referred to in this Section 1.9 shall include any penalties and interest incurred in relation to such taxes.

1.10 Risk of Loss. Risk of loss or destruction or damage to the Acquired Assets shall pass to Purchaser at and upon Closing, regardless of the physical location of the Acquired Assets. Purchaser and Seller shall take all steps and actions as may be required to put Purchaser in actual possession, operation, control and responsibility for the Acquired Assets on the Closing Date.

1.11 Cost of Transfer. Seller shall bear all responsibilities and pay any and all costs associated with the transfer and delivery of the Acquired Assets from Seller to Purchaser. Purchaser shall bear all responsibilities and pay any and all costs associated with registering its ownership interests in the Acquired Assets.

Article 2

CLOSING

2.1 Closing. The closing of the Acquisition (the “ Closing ”) shall take place immediately prior to the closing of the Latham Purchase (the “ Closing Date ”).

2.2	Items to be Delivered at Closing.

(a) At or prior to the Closing and subject to the terms and conditions herein contained, Seller shall deliver to Purchaser the following:

(i) a bill of sale and such other good and sufficient instruments and documents of conveyance and transfer, in form reasonably satisfactory to Purchaser and its counsel, as shall be necessary and effective to transfer and assign to, and vest in, Purchaser all of Seller’s right, title and interest in and to the Acquired Assets and assigning to Purchaser (together with any necessary consents) all Contracts included in the Acquired Assets to the extent assignable (to the extent non-assignable, it is understood and agreed that the Purchaser shall receive the economic benefit thereto, to the extent reasonably practicable, as provided in Section 2.3 );

(ii) copies of all of the documents, books, records, papers, files, computer programs, data and other tangible property belonging to Seller which relate to or are part of the Acquired Assets;

(iii) evidence of the release of any mortgages, liens, pledges, security interests, charges, claims, restrictions and encumbrances affecting any of the Acquired Assets; and

(iv) such other documents as may be necessary to consummate the transactions contemplated by this Agreement

and simultaneously with such delivery, all such steps will be taken as may be required to put Purchaser in actual possession and operating control of the Acquired Assets.

(b) At or prior to the Closing and subject to the terms and conditions herein contained, Purchaser shall deliver to Seller the Shares, free and clear of all encumbrances of any kind.

(c) At or prior to the Closing and subject to the terms and conditions herein contained, Parent shall cause Alliance to execute and deliver to Purchaser the Alliance License in substantially the form attached hereto as Exhibit A .

phx-srv01\1468313v05

(d) At or prior to the Closing and subject to the terms and conditions herein contained, the parties shall deliver to each other the certificates referred to in Article 6 .

(e) Immediately after the Closing, Purchaser shall acquire all of the outstanding capital stock of certain entities from Latham pursuant to the Stock Purchase Agreement.

(f) Immediately after the Closing of the Latham Purchase, Parent shall cause Les Industries to exchange its assets for certain assets of Pool Tech, pursuant to the Pool Tech Agreement; and

(g) Immediately after the Closing of the Latham Purchase, Purchaser shall cause Pool Tech to exchange certain of its assets for assets of Les Industries, pursuant to the Pool Tech Agreement.

2.3 Assignment of Certain Contracts. To the extent that Seller’s rights under any Contract to be assigned to Purchaser hereunder may not be assigned without the consent of another person which has not been obtained, this Agreement shall not constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof or be unlawful and Seller, at its expense, shall use its best effort to obtain any such required consent(s) as promptly as possible. If any such consent shall not be obtained or if any attempted assignment would be ineffective or would impair Purchaser’s rights under the Contract in question so that Purchaser would not in effect acquire the benefit of all such rights, Seller, to the maximum extent permitted by law and the Contract, shall act after the Closing as Purchaser’s agent in order to obtain for it the benefits thereunder and shall cooperate, to the maximum extent permitted by law and the Contract, with Purchaser in any other reasonable arrangement designed to provide such benefits to Purchaser.

2.4 Further Assurances. Seller from time to time after the Closing, at Purchaser’s request, will execute, acknowledge and deliver to Purchaser such other instruments of conveyance and transfer and will take such other actions and execute and deliver such other documents, certifications and further assurances as Purchaser may reasonably require in order to vest more effectively in Purchaser, or to put Purchaser more fully in possession of, any of the Acquired Assets.

2.5	Termination in Absence of Closing.

(a) If by the close of business on February 28, 2005, the Closing has not occurred, then either Purchaser or Seller may thereafter terminate this agreement by written notice to such effect, to the other parties hereto, without liability of or to any party to this Agreement or any shareholder, director, officer, employee or representative of such party unless the reason for the Closing having not occurred is (i) such party’s willful breach of the provisions of this Agreement, or (ii) if all of the conditions to such party’s obligations set forth in Article 6 have been satisfied or waived in writing by the date scheduled for the Closing pursuant to Section 2.1 , the failure of such party to perform its obligations under this Article 2 on such date; provided , however , that any termination pursuant to this Section 2.5 shall not relieve any party hereto who was responsible for Closing having not occurred as described in clauses (i) or (ii) above of any liability for (x) such party’s willful breach of the provisions of this Agreement, or (y) if all of the conditions to such party’s obligations set forth in Article 6 have been satisfied or waived in writing by the date scheduled for the Closing pursuant to Section 2.1 , the failure of such party to perform its obligations under this Article 2 on such date.

(b) This Agreement and the transactions contemplated herein may be terminated and abandoned at any time on or prior to the Closing Date by the Purchaser if:

(i) any representation or warranty made herein for the benefit of Purchaser, or any certificate, schedule or document furnished to Purchaser pursuant to this Agreement is untrue in any material respect; or

(ii) Seller or Parent shall have defaulted in any material respect in the performance of any material obligation under this Agreement.

(c) This Agreement and the transactions contemplated herein may be terminated and abandoned at any time on or prior to the Closing Date by Seller if:

(i) any representation or warranty made herein for the benefit of Seller, or any certificate, schedule or document furnished to Seller pursuant to this Agreement is untrue in any material respect; or

phx-srv01\1468313v05

(ii) Purchaser shall have defaulted in any material respect in the performance of any material obligation under this Agreement.

Article 3

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Purchaser:

3.1 Corporate Existence of Seller. Seller is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has all requisite corporate power to carry on its business as currently conducted and to own and operate the Acquired Assets.

3.2 Corporate Power of Seller; Authorization; Enforceable Obligations. Each of Seller and Parent has the corporate power, authority and legal right to execute, deliver and perform this Agreement and each of the Collateral Agreements to which it is a party. The execution, delivery and performance of this Agreement and the Collateral Agreements by each of Seller and Parent has been duly authorized by all necessary corporate and shareholder action. This Agreement has been duly executed and delivered on behalf of each of Seller and Parent by duly authorized officers of Seller and Parent, and constitutes the legal, valid and binding obligations of Seller and Parent, enforceable against each of Seller and Parent in accordance with its terms, except as such enforcement may be limited by general equitable principles or by applicable bankruptcy, insolvency, moratorium, or similar laws and judicial decisions from time to time in effect which affect creditors’ rights generally.

3.3	Capitalization of Seller. Parent beneficially owns all of the outstanding capital stock of Seller.

3.4 No Seller Conflicts; Consents. Except as set forth in Schedule 3. 4, the execution, delivery and performance of this Agreement by Seller does not and will not violate, conflict with or result in the breach of any term, condition or provision of, or require the consent of any Person under, (a) any existing law, ordinance, or governmental rule or regulation to which Seller is subject, (b) any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which is applicable to Seller, (c) the charter documents or bylaws of Seller or any securities issued by Seller, or (d) any mortgage, indenture, loan, agreement, contract, commitment, lease, or other instrument, document or understanding, oral or written, to which Seller is a party, by which Seller may have rights or by which any of the Acquired Assets may be bound or affected, or give any party with rights there under the right to terminate, modify, accelerate or otherwise change the existing rights or obligations of Seller there under. No authorization, approval or consent of, and no registration or filing with, any governmental or regulatory official, body or authority or any other person is required in connection with the execution, delivery or performance of this Agreement by Seller.

3.5 No Parent Conflicts; Consents. The execution, delivery and performance of this Agreement and/or the Collateral Agreements by Parent does not and will not violate, conflict with or result in the breach of any term, condition or provision of, or require the consent of any Person under, (a) any existing law, ordinance, or governmental rule or regulation to which Parent is subject, (b) any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which is applicable to Parent, (c) the charter documents or bylaws of Parent or any securities issued by Parent, or (d) any mortgage, indenture, loan, agreement, contract, commitment, lease, or other instrument, document or understanding, oral or written, to which Parent is a party, by which Parent may have rights or by which any of the Acquired Assets may be bound or affected, or give any party with rights thereunder the right to terminate, modify, accelerate or otherwise change the existing rights or obligations of Parent thereunder. Except for the Hart-Scott-Rodino filing with respect to the Latham Purchase, no authorization, approval or consent of, and no registration or filing with, any governmental or regulatory official, body or authority or any other person is required in connection with the execution, delivery or performance of this Agreement by Parent.

3.6 Financial Statements. Copies of the unaudited balance sheets and income statements of Seller as of and for the fiscal years ended December 31, 2001, 2002 and 2003, and as of and for the eight-month period ended August 31, 2004 (collectively, the “ Financial Statements ”) are attached hereto as Schedule 3.6 . The Financial Statements were prepared from Seller’s books and records, and the Financial Statements present fairly the financial

phx-srv01\1468313v05

condition and results of operations of Seller for the periods referred to therein and have been prepared in accordance with GAAP, except, in the case of the interim Financial Statements, for normal year-end adjustments.

3.7 Inventory. The Inventory consists, and as of the Closing Date will consist, only of items of a quality, condition and quantity consistent with normal seasonally-adjusted Inventory levels of Seller and be usable and saleable in the ordinary and usual course of business for the purposes for which intended except to the extent written down or reserved against in the Closing Working Capital Statement. The Inventory is reflected in the books and records of Seller in accordance with GAAP (on a standard cost basis) at the lower of cost or market, and the value of obsolete materials, materials below standard quality and slow-moving materials have been written down in accordance with GAAP. During 2004, there have not been any changes in the value of, or establishment of any reserve against any Inventory of Seller, except for changes and reserves in the ordinary course of business and consistent with past practices.

3.8 Status of Contracts. Set forth on Schedule 3.8 is a list of all Contracts of Seller relating to the operation of the Business or the Acquired Assets, except (a) any Contracts entered into in the ordinary course of business that involve an aggregate expenditure in any year of less than $50,000, provided that all of such undisclosed Contracts do not involve expenditures in excess of $100,000 in the aggregate, (b) any purchase orders or commitments entered into in the ordinary course of business for less than $10,000 per calendar quarter, and (c) any Contracts relating to Excluded Assets. Except as set forth on Schedule 3.8 , all such Contracts are valid and in full force and effect, and neither Seller, nor to the knowledge of Seller, any other party thereto is in default in any material respect under the terms thereof.

3.9 Receivables. All the Receivables (a) represent actual indebtedness incurred by the applicable account debtor, (b) have arisen from bona fide transactions in the ordinary course of business and (c) are not subject to any defense, deduction, setoff or similar right, except to the extent fully reserved against as set forth in the August 31, 2004 balance sheet included in the Financial Statements. During 2004, there have not been any changes in reserves or write-offs as uncollectible of any Receivables, except for write-offs and reserves in the ordinary course of business and consistent with past practices.

3.10	Schedules ; Title to Acquired Assets .
	(a)	The following Schedules set forth the information indicated:
		(i)	Schedule 3.10(a)(i) is a list/description of the Personal Property;

(ii) Schedule 3.10(a)(ii) is a list of the Acquired Assets that are not owned by Seller, but are leased to Seller, such that the interest therein to be conveyed to Purchaser is that of a leasehold interest, together with an identification of such lease;

(iii) Schedule 3.10(a)(iii) is a list of all leases to which any of the Acquired Assets owned by Seller are subject;

(b) Seller has good, valid and marketable title to all of the Acquired Assets free and clear of any Liens other than Permitted Liens and the Liens listed on Schedule 3.10(b) (which will be released prior to the Closing) and except for (i) any Acquired Assets subject to a leasehold interest, as identified on Schedule 3.10(a)(ii) and (ii) such Inventory as has been disposed of in the ordinary course of business.

3.11 Absence of Known Undisclosed Liabilities. Seller has no knowledge of any basis for the assertion against the Seller of any material liability of the type required to be reflected on a balance sheet prepared in accordance with GAAP in connection with or affecting the Acquired Assets, and there are no circumstances, conditions, happenings, events, or arrangements, contractual or otherwise, which may give rise to such liabilities, except commercial liabilities and obligations incurred in the ordinary course of the Business by Seller and consistent with past practices.

3.12 Creditors. The transactions contemplated by this Agreement were not entered into by Seller with the intent to hinder, delay or defraud any of Seller’s creditors.

3.13	Intellectual Property.

phx-srv01\1468313v05

(a) Seller owns or has (and following the Closing, Purchaser will own or have) the right to use, pursuant to a license, a sublicense, an agreement, or permission, the Intellectual Property. The consummation of the transactions contemplated by this Agreement will not result in the termination, modification or cancellation of the interests of Seller or, following the Closing, Purchaser in the Intellectual Property to be transferred to Purchaser hereunder.

(b) Except as set forth in Schedule 3.13(b), Seller has not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any intellectual property rights of third parties, and Seller has not received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation (including any claim that Seller must license or refrain from using any intellectual property rights of any third party). To the knowledge of Seller, no third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights of Seller.

(c) Seller has delivered to Purchaser correct and complete copies of all registrations, applications, licenses, agreements, and permissions (as amended to date) relating to the Intellectual Property and has made available to Purchaser correct and complete copies of all other written documentation evidencing ownership and prosecution (if applicable) of the Intellectual Property. With respect to each item of Intellectual Property:

(i) In the case of owned Intellectual Property, Seller possesses all right, title, and interest in and to the item, free and clear of any Lien (other than Liens listed on Schedule 3.10(b), which will be released prior to Closing), encumbrance, privilege, or other security interest in favor of a third person; and in the case of licensed Intellectual Property, Seller possesses the rights set forth in the applicable license agreements;

(ii) the item is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge;

(iv) Seller has never agreed to indemnify any person other than Purchaser for or against any interference, infringement, misappropriation, or other conflict with respect to the item.

3.14 Litigation and Claims. Except as set forth in Schedule 3.14 , there is no action, suit, investigation or proceeding at law or in equity, any arbitration or any administrative or other proceeding relating to the Business or the Acquired Assets or to Seller’s ability or right to sell the Acquired Assets, by or before any court, governmental instrumentality or agency, pending or, to the knowledge of Seller, threatened or contemplated in writing against or affecting Seller, or any of its properties or rights, that is likely to have a Material Adverse Effect. Seller is not currently subject to any judgment, order or decree entered in any lawsuit or proceeding.

3.15	Compliance with Laws.

(a) Seller is in compliance in all material respects with, and is not in default or violation in any material respect under, and has not conducted its operations in violation in any material respect of, any law, rule, regulation, decree or order applicable to the Business or the Acquired Assets.

(b) Except as set forth in Schedules 3.15 and 3.17 , at no time during the last three years has Seller been notified in writing that it was the subject of any federal, state or local criminal investigation, or been notified in writing by any Governmental Entity of any violation of any law, regulation, ordinance, rule or order, except for failures to so comply that would not have a Material Adverse Effect on the Business.

3.16 Licenses and Permits. Seller possesses such material federal, state, and local licenses, permits and other authorizations necessary for the continued conduct of the Business in the ordinary course, consistent with past practices, without material interruption (collectively “ Permits ”), including, without limitation, those listed on Schedule 3.16 other than such Permits the absence of which, individually, or in the aggregate, has not had and could not reasonably be expected to have a Material Adverse Effect, and such Permits are in full force and effect and have been and are being fully complied with by Seller in all material respects. None of the governmental agencies or instrumentalities that have issued the Permits has notified Seller in writing of its intent to modify, revoke, terminate

phx-srv01\1468313v05

or fail to renew any such Permit, and, to the knowledge of Seller, no such action has been threatened. No Permit shall be modified, revoked or shall lapse as a result of the Acquisition.

3.17	Environmental Compliance.

(a) With respect to the Business and the Acquired Assets, Seller possesses all necessary Permits that are required under, and at all times in the past has been in material compliance with, all Environmental Laws, including all Environmental Laws governing the generation, use, collection, treatment, storage, transportation, recover, removal, discharge or disposal of Hazardous Materials and all Environmental Laws imposing record-keeping, maintenance, testing, inspection, notification and reporting requirements with respect to Hazardous Materials.

(b) Except as set forth in Schedule 3.17 , during the past five years Seller has not been subject to any administrative or judicial proceeding pursuant to, or has not received any notice of any violation of, or claim alleging liability under, any Environmental Laws with respect to the Business and the Acquired Assets. No facts or circumstances exist that would be likely to result in a claim, citation or allegation against the Seller for a violation of, or alleging liability under any Environmental Law with respect to the Business and the Acquired Assets.

(d) Except in the ordinary course of business, and in all cases in compliance with all Environmental Laws, the Seller has not engaged any third party to handle, transport or dispose of Hazardous Materials on its behalf with respect to the Business and the Acquired Assets.

3.18

Taxes.

(a) Except as set forth in Schedule 3.18(a), Seller has properly prepared and duly and timely filed or caused to be filed all Returns required to be filed on or prior to the date hereof with respect to the Business and the Acquired Assets. Seller has not executed or filed with any Government Entity any agreement extending the period for assessment or collection of any Taxes.

(b) Seller has paid all Taxes owed to any Government Entity by Seller for a period covered by such Returns, and all claims, demands, assessments, judgments, costs and expenses connected with the Business and the Acquired Assets have been duly and timely paid in full or Seller has made adequate provisions for the payment of all Taxes.

(d) None of the Acquired Assets is property that is required to be treated as owned by a person other than Seller.

(e) None of the Acquired Assets directly or indirectly secures any debt the interest on which is tax-exempt under Section 103(a) of the Code.

(f) None of the Acquired Assets is “tax-exempt use property” within the meaning of Section 168(b) of the Code.

(g)	Seller is a United States person within the meaning of the Code.

(h) To Seller’s knowledge, the transactions contemplated herein are not subject to the tax withholding provisions of Code Section 3406, or of subchapter A of Chapter 3 of the Code or any other provision of federal or state law.

(i) To Seller’s knowledge, there are, and will hereafter be, no net Tax deficiencies of any kind assessed against or relating to Seller with respect to any taxable periods ending on or before the Closing Date of a character or nature which would result on liens or claims on any of the Acquired Assets or on Purchaser’s title thereto or use thereof, or would result in any claim against Purchaser.

phx-srv01\1468313v05

3.19	Benefit Plans.

(a) Schedule 3.19(a) sets forth an accurate and complete list of Benefit Plans in which the employees of Seller participate (the “ Seller Plans ”), and Purchaser has been provided with accurate and complete copies or descriptions of the Seller Plans.

(b) Except as set forth in Schedule 3.19(b), none of the Seller Plans are in violation of any law, statute or rule of any Governmental Entity. Purchaser shall not be liable for any acts of Seller or its employees or agents with respect to any Seller Plan prior to and including the Closing Date. Benefits under Seller Plans are as represented in the governing documents and have not been increased or modified (whether written or not written) subsequent to the dates of such documents. There has been no communication to any employee or former employee of any intention or commitment to modify any Seller Plan or to establish or implement any other Benefit Plan. Full payment has been made of all amounts that Seller has been required to have paid as contributions to any Seller Plan or other employee benefit arrangement under applicable law or under the terms of any such plan or arrangement.

(c) Schedule 3.19(c) lists the employees of Seller employed in the Business who are on sick leave, personal absence or other leave as of the date hereof.

(d) No employee or former employee of Seller will become entitled to any bonus, retirement, severance, job security or similar benefit or enhanced benefit or any fee or payment of any kind solely as a result of the transactions contemplated hereby.

(e) Seller has complied in all material respects with the requirements of COBRA. Seller has no obligation or liability to provide post-employment welfare benefits to any current or former employee of the Business (other than as required by COBRA).

(f) With respect to the Business and the Acquired Assets, Seller has not made any payments, is not obligated to make any payments, and is not a party to any agreement that could obligate it to make any payments, that will not be fully deductible under Sections 162(m) or 280G of the Code (or any similar provision of foreign, state or local law).

(g) Neither Seller nor any member of Seller’s controlled group, as defined in Section 414 of the Code, (i) maintains or has ever maintained (A) a “multiemployer plan” (as defined in Section 3(37) of ERISA), (B) an employee benefit plan subject to Title VII of ERISA (other than a defined contribution plan), or (C) a plan to which Section 412 of the Code applies, or (ii) has engaged in, within the last five years, a transaction described in Section 4069 of ERISA.

3.20 Absence of Changes or Events. Except as expressly provided for elsewhere herein, Seller has not, with respect to the Business or the Acquired Assets, during 2004: (a) incurred any Indebtedness other than in the ordinary course of Business, consistent with past practices, (b) permitted any of the Acquired Assets to be subjected to any Lien, other than a Permitted Lien and the Liens listed on Schedule 3.10(b) hereto, (c) sold, transferred or otherwise disposed of any assets that would constitute Acquired Assets, except for dispositions or consumptions of assets or Inventory in the ordinary course of business consistent with past practices, (d) made any capital expenditure or commitment therefor in excess of $50,000 in aggregate consistent with past practices, (e) made any loan to any Person other than in the ordinary course of Business, consistent with past practices, (f) waived any rights or settled any claims, in excess of $50,000 consistent with past practices, (g) granted any increase in the rate of wages, salaries or other compensation or benefits to any of its employees, other than increases or payments in the ordinary course of its business consistent with past practices, (h) adopted, or amended or modified in any respect, any Benefit Plan, Employee Plan, or other benefit arrangement, (i) made any change in any method of accounting practice, (j) suffered or incurred any damage, destruction, fire explosion, accident, flood, or other casualty loss or act of God (whether or not covered by insurance) that has had or could reasonably be expected to have a Material Adverse Effect, (k) amended or terminated, or suffered any amendment or termination of, any Permit, Contract, License, purchase order or similar commitment or right that is likely to have a Material Adverse Effect, (l) suffered any labor disputes or disturbances that is likely to have a Material Adverse Effect (other than possible disturbances arising from the disclosure prior to the Closing of the transactions contemplated by this Agreement to shareholders and employees), (m) otherwise failed to operate its business in the ordinary course consistent with past practices so as to preserve its business organization intact and to preserve the goodwill of its customers, suppliers, employees and others with whom it has business relations (other than possible disturbances arising from the disclosure prior to

phx-srv01\1468313v05

the Closing of the transactions contemplated by this Agreement to shareholders and employees), (n) any event, circumstance or change that has had or could reasonably be expected to have a Material Adverse Effect, (i) any material adverse change in Seller’s sales patterns, pricing policies, accounts receivable or accounts payable, or (p) agreed to do any of the foregoing.

3.21 Employment Relations. There are no (a) unfair labor practice complaints against Seller relating to the Business or the Acquired Assets pending before the National Labor Relations Board, (b) labor strikes, slowdowns or stoppages pending or, to the knowledge of Seller, threatened against or involving the employees of the Business, (c) labor unions that claim to represent the employees of the Business, (d) collective bargaining agreements currently being negotiated by Seller with respect to the employees of the Business, (e) pending labor or labor related grievances related to the Business that is likely to have a Material Adverse Effect, (f) arbitration proceedings arising out of or under any collective bargaining agreement of Seller and no claim therefor has been asserted, and (g) material labor difficulties that have been experienced by Seller relating to the Business or the Acquired Assets during the past three years. There are no employment contracts or agreements with any employees of the Business, except for those agreements listed on Schedule 3.21 .

3.22 Transactions with Affiliates. Except as set forth in Schedule 3.22 , none of the Contracts between the Business, on the one hand, and Seller or any of its Affiliates, on the other hand, will continue in effect subsequent to the Closing. Except as set forth in Schedule 3.22 , after the Closing none of Seller’s Affiliates will have any interest in any property (real or personal, tangible or intangible) or Contract used in or pertaining to the Business. Except as set forth in Schedule 3.22 or otherwise provided for herein, Parent does not provide any material services to the Business.

3.23 Suppliers and Customers. Except as set forth in Schedule 3.23 , during 2004, Seller has not entered into or made any contract or commitment for the purchase of raw materials or other merchandise in connection with the Business, other than in the ordinary course of business consistent with past practices. Set forth on Schedule 3.23 are the top ten customers (in terms of dollars spent) of goods or services sold by the Business during its most recent full fiscal year and the top ten suppliers (in terms of dollars spent) of goods or services purchased by the Business during the twelve (12) months ended September 30, 2004. Except as set forth in Schedule 3.23 , during 2004, there has not been (i) any material adverse change in the business relationship of the Business with any supplier or customer named in Schedule 3.23 or (ii) any change in any material term (including credit terms) of the supply agreements or related arrangements with any such supplier or customer.

3.24 Product Liability. Except as set forth in Schedule 3.24 , Seller has no liabilities that have not been satisfied (and to the knowledge of Seller, there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against Seller giving rise to any liability) arising out of any injury to individuals or property as a result of any defective product sold, distributed or delivered by Seller and relating to the Business.

3.25 Purchaser’s Ability to Operate the Business. Except as disclosed on Schedule 3.25 , upon the sale to Purchaser of the Acquired Assets and the assumption by Purchaser of the Assumed Liabilities hereunder, Purchaser shall have received from Seller all the property, equipment, inventory, contracts, permits, intellectual property, leasehold interests, books and records, and other assets and rights necessary for Purchaser to conduct the Business in substantially the same manner as it is presently conducted by Seller.

3.26 Absence of Certain Business Practices. Neither the Seller nor any other person acting on behalf of or associated with the Seller, acting alone or together, has (a) received, directly or indirectly, any rebates, payments commissions, promotional allowances or any other economic benefits, regardless of their nature or type, from any customer supplier, employee or agent of any customer or supplier; or (b) directly or indirectly given or agreed to give any money, gift or similar benefit to any customer, supplier, employee or agent of any customer or supplier, any official or employee of any government (domestic or foreign), or any political party or candidate for office (domestic or foreign), or other person who was, is or may be in a position to help or hinder the Business (or assist the Business in connection with any actual or proposed transaction), in each case which (i) may subject the Business to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (ii) if not given in the past, may have a material adverse effect on the Business, or (iii) if not continued in the future may adversely affect the Business.

phx-srv01\1468313v05

3.27 Leased Premises. Schedule 3.10(a)(ii) sets forth a list of all leases, licenses or similar agreements relating to Seller’s use or occupancy of real estate owned by a third party (“ Leases ”), true and correct copies of which have previously been furnished to Purchaser, in each case setting forth (i) the lessor and lessee thereof and the commencement date, term and renewal rights under each of the Leases, and (ii) the street address and legal description of each property covered thereby (the “ Leased Premises ”). The Leases and all guaranties with respect thereto, are in full force and effect and have not been amended in writing or otherwise, and no party thereto is in default or breach under any such Lease. No event has occurred which, with the passage of time or the giving of notice or both, would cause a material breach of or default under any of such Leases. Neither Seller nor its agents or employees have received written notice of any claimed abatements, offsets, defenses or other bases for relief or adjustment.

3.28 Insurance. Schedule 3.28 hereto is a complete and correct list of all insurance policies (including, without limitation, fire, liability, product liability, workers’ compensation and vehicular) presently in effect that relate to Seller or the Acquired Assets, including the amounts of such insurance and annual premiums with respect thereto, all of which have been in full force and effect from and after the date(s) set forth on Schedule 3.28 . Such policies are sufficient for compliance by Seller with all applicable material Contracts. None of the insurance carriers has indicated to Seller an intention to cancel any such policy or to materially increase any insurance premiums (including, without limitation, workers’ compensation premiums), or that any insurance required to be listed on Schedule 3.28 will not be available in the future on substantially the same terms as currently in effect. Seller has no claim pending or anticipated against any of its insurance carriers under any of such policies and, to the knowledge of Seller, there has been no actual or alleged occurrence of any kind which could reasonably be expected to give rise to any such claim. During the prior three years, all notices required to have been given by Seller to any insurance company have been timely and duly given, and no insurance company has asserted that any claim is not covered by the applicable policy relating to such claim.

3.29 Equipment and Other Personal Property. Seller’s Personal Property, including its equipment and machinery, is suitable for the purposes for which intended and in good operating condition and repair consistent with normal industry standards. To the knowledge of Seller, the Personal Property is free of any structural or engineering defects. During the past five years there has not been any significant interruption of the Business due to inadequate maintenance or obsolescence of any of the Personal Property.

Article 4

REPRESENTATIONS AND WARRANTIES

OF PURCHASER

Purchaser represents and warrants to Seller as follows:

4.1 Corporate Existence of Purchaser. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has all requisite corporate power to carry on its business as currently conducted and to own and operate the Acquired Assets.

4.2 Power; Authorization; Enforceable Obligations. Purchaser has the power, authority and legal right to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by Purchaser have been duly authorized by all necessary proceedings and action on the part of Purchaser and its members necessary to authorize this Agreement and the transactions contemplated hereby. This Agreement has been duly executed and delivered on behalf of Purchaser by duly authorized officers of Purchaser, and constitutes the legal, valid and binding obligations of Purchaser enforceable against Purchaser in accordance with its terms; , except as such enforcement may be limited by general equitable principles or by applicable bankruptcy, insolvency, moratorium, or similar laws and judicial decisions from time to time in effect which affect creditors’ rights generally.

4.3 No Conflicts; Consents. The execution, delivery and performance of this Agreement by Purchaser does not and will not violate, conflict with or result in the breach of any term, condition or provision of, or require the consent of any party to (a) any existing law, ordinance, or governmental rule or regulation to which Purchaser is subject; (b) any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or

phx-srv01\1468313v05

regulatory official, body or authority which is applicable to Purchaser; (c) the charter documents or bylaws of, or any securities issued by Purchaser; or (d) any mortgage, indenture, loan, agreement, contract, commitment, lease, or other instrument, document or understanding, oral or written, to which Purchaser is a party or by which Purchaser is otherwise bound. No authorization, approval or consent of, and no registration or filing with, any governmental or regulatory official, body or authority or any other person is required in connection with the execution, delivery and performance of this Agreement by Purchaser.

Article 5

COVENANTS

5.1 Cooperation. Parent, Seller and Purchaser will promptly take all reasonable actions necessary to obtain, and will cooperate with each other in obtaining, any consent, authorization, order or approval of, or any exemption by, any Governmental Entity or other public or private party, required to be obtained or made by it in connection with this Agreement, and will cooperate with each other in the taking of any action contemplated by this Agreement. Parent, Seller and Purchaser shall use their reasonable efforts to cause all of the conditions to Closing to be satisfied as soon as practicable.

5.2 Conduct of Business. Through the Closing Date, Seller shall conduct the Business in the ordinary course and consistent with past practices, except as expressly required or otherwise permitted by this Agreement, and shall not take or permit any action which would cause any of its representations made in this Agreement not to be true and correct on the Closing Date. Without limiting the generality of the foregoing, through the Closing Date, Seller shall not enter into, terminate or modify any material Contracts and shall not incur any material liabilities.

5.3 Access to Properties and Records. Seller shall allow Purchaser and its authorized representatives full access, during normal business hours and on reasonable notice, to all of Seller’s properties, offices, equipment, inventory and assets, documents, files, books and records relating to the Business, in order to allow Purchaser a full opportunity to make such investigation and inspection as it desires of the Business and the Acquired Assets. Seller shall further use its best efforts to cause its employees, accountants and agents to be available upon reasonable notice to answer questions of Purchaser’s representatives concerning the business and affairs of Seller relating to the Business and the Acquired Assets, and shall further use their best efforts to cause them to make available all relevant books and records in connection with such inspection and examination. Purchaser shall be entitled to make copies, at Purchaser’s expense, of any documents, records and information relating to the Business and the Acquired Assets. In the event of the termination of this Agreement pursuant to Section 10.1, Purchaser shall promptly return to Seller any and all documents, records and information relating to the Business and the Acquired Assets that Purchaser has received from Seller.

5.5 Name Change. Seller shall, prior to Closing, file an appropriate amendment to the Seller’s Articles of Incorporation changing its name to a name which is in no way similar to the corporate name set forth on the signature page hereof and shall furnish such written consents and assignments as the Purchaser shall hereafter reasonably request in connection with such name change

phx-srv01\1468313v05

Article 6

CONDITIONS PRECEDENT TO THE CLOSING

6.1 Conditions Precedent to Purchaser’s Obligations. The obligations of Purchaser to consummate the transactions contemplated by this Agreement are subject to the fulfillment or satisfaction, prior to or at the Closing, of each of the following conditions precedent:

(a) Representations and Warranties . The representations and warranties of Seller contained in this Agreement or in any schedule, certificate or document delivered by Seller to Purchaser pursuant to the provisions hereof shall have been true on the date hereof and shall be true in all material respects on the Closing Date with the same effect as though such representations and warranties were made as of such date.

(b) Compliance with this Agreement . Each of Seller and Parent shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing.

(c) Closing Certificate . Purchaser shall have received a certificate from Seller dated the Closing Date, certifying in such detail as Purchaser may reasonably request that the conditions specified in Sections 6.1(a) and 6.1(b) hereof have been fulfilled.

(e) Lease and Sublease . Seller and each landlord shall have executed lease assignments in form and substance reasonably acceptable to Purchaser for the real property leases set forth on Schedule 3.10(a)(ii).

(f) Hart-Scott Rodino. Purchaser shall have received written evidence, in form and substance satisfactory to Purchaser, of (i) the termination or expiration of the HSR waiting period related to the Latham Purchase, and (ii) the consent to the transactions contemplated by this Agreement of all governmental, quasi-governmental and private third parties (including, without limitation, persons or other entities leasing real or personal property to Seller) where the absence of any such consent would result in a violation of law or a breach or default under any agreement to which Seller is subject, including the required consents set forth on Schedule 3.4 .

(g) Conveyance Documents . Seller shall have executed and delivered to Purchaser, the Conveyance Documents, including the bill of sale and the patent and trademark assignments.

(h) Financing . Purchaser shall have obtained financing for the transactions contemplated hereby on terms satisfactory to it.

(i) Alliance License Agreement . Parent shall have caused Alliance to execute and deliver to Purchaser the Alliance License in the form attached hereto as Exhibit A .

6.2 Conditions Precedent to the Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by this Agreement are subject to the fulfillment or satisfaction, prior to or at the Closing, of each of the following conditions precedent:

(a) Representations and Warranties . The representations and warranties of Purchaser contained in this Agreement or in any schedule, certificate or document delivered by Purchaser to Seller pursuant to the provisions hereof shall have been true on the date hereof and shall be true in all material respects on the Closing Date with the same effect as though such representations and warranties were made as of such date.

phx-srv01\1468313v05

(b) Compliance with this Agreement . Purchaser shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing.

(c) Closing Certificate . Seller shall have received a certificate from Purchaser dated the Closing Date, certifying in such detail as Seller may reasonably request that the conditions specified in Sections 6.2(a) and 6.2(b) hereof have been fulfilled.

(e) Lease and Sublease . Purchaser and each landlord shall have executed lease assignments in form and substance reasonably acceptable to Seller for the real property leases set forth on Schedule 3.10(a)(ii).

(f) Assumption of Liabilities and Obligations . Purchaser shall have executed the assumption of liabilities and obligations in a form reasonably satisfactory to Seller and its counsel.

(g) Hart-Scott Rodino. Purchaser shall have received written evidence, in form and substance satisfactory to Seller, of (i) the termination or expiration of the HSR waiting period related to the Latham Purchase, and (ii) the consent to the transactions contemplated by this Agreement of all governmental, quasi-governmental and private third parties (including, without limitation, persons or other entities leasing real or personal property to Seller) where the absence of any such consent would result in a violation of law or a breach or default under any agreement to which Seller is subject, including the required consents set forth on Schedule 3.4 .

(h) Financing . Purchaser shall have obtained financing for the transactions contemplated hereby, including the Latham Purchase, on terms satisfactory to it and shall be willing and able to close the Latham Purchase immediately following the Closing.

Article 7

INDEMNIFICATION

7.1	Indemnification.

(a) After the Closing Date, subject to the terms and conditions of this Section 7 , including the limits on indemnity set forth in Section 7.4 , Seller and Parent shall jointly and severally indemnify and hold harmless Purchaser and its Affiliates, and their respective officers, directors, employees, agents and representatives (the “ Purchaser Indemnitees ”) from and against, and will pay to the Purchaser Indemnitees the amount (net of any proceeds received by the Purchaser Indemnitee from insurance or any quantifiable tax benefits in the year incurred, but giving effect to any tax detriment from receipt of indemnification proceeds) of, any loss, liability, judgment, damage, cost or expense (including interest, penalties, and the reasonable fees, disbursements and expenses of attorneys, accountants and other professional advisors) (collectively, “ Losses ”) arising from or in connection with (i) any breach of any representation or warranty of Seller contained in Section 3 , (ii) a breach of any agreement or covenant contained herein that by its terms is to be performed by Seller or Parent, or (iii) any Excluded Liabilities.

(b) After the Closing Date, subject to the terms and conditions of this Section 7, Purchaser shall indemnify and hold harmless Seller and its Affiliates and their respective officers, directors, employees, agents and representatives (the “ Seller Indemnitees ”) from and against, and will pay to the Seller Indemnitees the amount (net of any proceeds received by the Seller Indemnitee from insurance or any quantifiable tax benefits in the year incurred, but giving effect to any tax detriment from receipt of indemnification proceeds) of, any Losses arising from or in connection with (i) any breach of any representation or warranty of Purchaser contained in Section 4 , (ii) a breach of any agreement or covenant contained herein that by its terms is to be performed by Purchaser, (iii) any Assumed Liabilities, or (iv) Purchaser’s operation or conduct of the Business after the Closing Date.

phx-srv01\1468313v05

7.2	Notice and Defense of Claims.

(c) If the Indemnity Claim does not arise from the claim or demand of a third party, the Indemnifying Person shall have 30 days after receipt of written notice of such Indemnity Claim to object to such claim by giving written notice to the Indemnified Person specifying the reasons for such objection or objections. If the Indemnifying Person has not so objected to the Indemnity Claim as of the close of Company on such thirtieth day, the total amount of the Indemnity Claim shall thereupon become chargeable to and payable by the Indemnifying Person in accordance with the terms and conditions of this section. If the Indemnifying Person objects to the Indemnity Claim, the parties shall attempt to resolve the challenge through negotiation in good faith. If the parties are unable to settle any such dispute within ten business days after notice of the Indemnifying Person’s objection is received by the Indemnified Person, either party may submit such matter to a single arbitrator. The arbitrator will be selected by the joint agreement of the parties, but if they do not agree within 20 calendar days of the lapse of the ten-Business Day period referred to above, the selection shall be made in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the “ Rules ”). If no such arbitrator is appointed within 45 calendar days of any such request to such association, either party may apply to a court having jurisdiction to make such appointment. The arbitrator shall conduct the arbitration in Fort Wayne, Indiana, in accordance with the Rules and shall make a final determination, to be provided in writing to each party, that resolves the dispute. Either party may apply to the arbitrator seeking injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved. Either party may also, without waiving any remedy under this Agreement, seek from any court having jurisdiction any interim or provisional relief that is necessary to protect the rights or property of that party, pending the appointment of the arbitrator. The prevailing party shall be entitled to recover from the other party the fees of the arbitrator and the administrative costs of the arbitration. The arbitrator shall apply the statutory and decisional law of the State of Indiana in substantially the same manner as do the courts of the State of Indiana in the case of contracts made and wholly performed within that jurisdiction. All results of the arbitration proceeding shall be final, conclusive and binding on all parties to this Agreement, and judgement upon the arbitrator’s award may be entered in any court of the State of Indiana having competent jurisdiction or any other

phx-srv01\1468313v05

court having competent jurisdiction, unless such results or award are clearly erroneous on the record before the arbitrator.

7.3 Survival of Representations and Warranties. The right to indemnification under Section 7.1 for any breach of the representations and warranties made by each party herein shall survive until April 1, 2006, except that the representations set forth in Sections 3.1, 3.2, 3.3, 3.8(b), 3.17, 3.18 and 3.19 shall survive until the fifth anniversary of the Closing Date.

7.4	Limitations. Notwithstanding anything to the contrary in this Agreement:

(a) Seller shall have no liability to the Purchaser Indemnitees and Purchaser shall have no liability to the Seller Indemnities with respect to Indemnity Claims arising under Sections 7.1(a)(i) or 7.1(b)(i) unless and solely to the extent that the aggregate amount of all such Indemnity Claims, taken together, exceeds $100,000.

(b) In no event shall Seller’s aggregate liability for all Indemnity Claims brought under Section 7.1(a)(i) exceed $2,500,000, except in the case of fraud.

(c) In the absence of fraud and except as otherwise provided in Article 8 , this Article 7 shall serve as the sole and exclusive remedy of the Purchaser Indemnitees and the Seller’s Indemnitees for Losses and for any other claims in any way relating to breaches of representations and warranties under this Agreement to the exclusion of all other statutory or common law remedies (including without limitation rights under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended), whether based on contract, tort, strict liability or otherwise.

Article 8

POST CLOSING MATTERS

8.1 Maintenance of Books and Records. Each of Seller and Purchaser shall preserve until the fifth anniversary of the Closing Date, or such longer period required by law, all records possessed or to be possessed by such party relating to any of the Acquired Assets or the Business. After the Closing Date, where there is a legitimate purpose, such party shall provide the other party with access, upon prior reasonable written request specifying the need therefor, during regular business hours, to (a) the officers and employees of such party and, subject to certain limitations described below, and (b) the books of account and records of such party, but, in each case, only to the extent relating to the Acquired Assets or the Business prior to the Closing Date, and the other party and its representatives shall have the right to make copies of such books and records. Such records may nevertheless be destroyed by a party if such party sends to the other party written notice of its intent to destroy records, specifying with particularity the contents of the records to be destroyed. Such records may then be destroyed after the thirtieth (30 ^th ) day after such notice is given unless the other party objects to the destruction in which case the party seeking to destroy the records shall deliver such records to the objecting party.

8.2 Mail and Other Communications. From and after the Closing Date, Seller shall promptly refer all inquiries and forward all mail with respect to the Acquired Assets to Purchaser.

8.3	Collection of Receivables.

(a) From and after the Closing Date, Purchaser shall have the right and authority to endorse with the name of Seller any checks or drafts received with respect to any Receivables or such other related items.

(b) In the event that Seller shall receive any remittance from or on behalf of any account debtor with respect to any Receivables after the Closing Date, Seller shall endorse without recourse such remittance to the order of Purchaser and forward such remittance to Purchaser promptly upon receipt thereof.

(c) In the event that after the Closing, Purchaser receives any remittance from any customer of Seller that is not intended to be in payment of the Receivables, Purchaser shall endorse without recourse such remittance to the order of Purchaser and forward such remittance to Seller promptly upon receipt thereof.

phx-srv01\1468313v05

8.4 Notice to Customers. Immediately following the Closing Date, Purchaser and Seller shall execute and deliver to customers, suppliers and vendors of or to the Business a joint notice of the consummation of the transactions contemplated hereby. Such notice shall be prepared and mailed by Purchaser, but shall be in the form and substance reasonably satisfactory to Seller.

8.5 Employee Matters. Purchaser shall take all steps necessary and appropriate so that at and immediately after the Closing Date substantially all individuals who are employed by the Seller, including those on vacation, sick leave, personal absence, holiday, jury duty or short term disability, shall be employed by Purchaser at the same base salary, as in effect prior to the Closing Date (such employees being the “ Continuing Employees ”). Set forth on Schedule 8.5 is a list of the Continuing Employees. Purchaser shall not be required to employ any individual who is receiving benefits under Seller’s long term disability plan at the time of Closing Date and such individuals shall remain the responsibility of Seller. Purchaser shall secure workers’ compensation insurance coverage as required by applicable state law to cover all Continuing Employees effective on the Closing Date.

8.6	Benefit Plan Matters.
	(a)	Benefit Liabilities .

(i) Unless otherwise specifically set forth in this Agreement to the contrary, Seller shall retain and be fully responsible for all liabilities, obligations and commitments relating to all wages, salaries and other forms of compensation and related expenses incurred or accrued on or prior to the Closing Date and all benefits incurred or accrued under Seller Benefit Plans maintained or contributed to by Seller or any affiliate on or prior to the Closing Date, except for unpaid bonuses, commissions and vacation pay for Continuing Employees to the extent accrued as a compensation expense and reflected in the Closing Working Capital Statement.

(ii) Effective as of the Closing Date, the Continuing Employees shall cease to participate in any Benefit Plan, except as provided in Section 8.6(d) below. Seller shall retain responsibility under all Benefit Plans for all costs of coverage and all amounts payable by reason of claims incurred by Continuing Employees on or prior to the Closing Date, including claims that are not submitted until after the Closing Date except for any unpaid vacation pay for Continuing Employees. A claim shall be deemed to have been incurred on the date of occurrence of (A) death or dismemberment in the case of claims under life insurance and accidental death and dismemberment benefits, (B) the date the employee became entitled to receive disability in the case of claims under disability benefits, or (C) the date on which the charges or expense giving rise to such claim is incurred in the case of all other claims. Seller shall be responsible for worker compensation claims of Continuing Employees based on injuries occurring prior to the Closing Date.

(iii) For purposes of any vesting periods in the Purchaser’s 401(k) plan for which a Continuing Employee may be eligible after the Closing, Purchaser shall grant credit for service with Seller and its respective affiliates by any such Continuing Employee based upon the dates of employment and reemployment contained in records to be provided to Purchaser by Seller within 90 days of Closing.

(iv) Effective as of the Closing Date, the Continuing Employees will cease to participate in the SCP Pool Corporation 401(k) Plan ("SCP Plan"). The Continuing Employees will vest in both the SCP Plan and the Fort Wayne Pools, Inc. Employee Savings Plan ("Fort Wayne Plan"). In a trustee to trustee transfer, the account balances of Continuing Employees from the Fort Wayne Plan and the SCP Plan, including any outstanding loans, will be transferred to the Purchaser's 401(k) Plan in accordance with Internal Revenue Code and Treasury Regulation Section 1.414(l)-1(m).

(b) Compensation . Seller shall pay to the Continuing Employees promptly following the Closing Date all wages and salaries (except accrued bonuses and vacation pay to the extent reflected in the Closing Working Capital Statement) for all periods up to the Closing Date, shall pay all payroll taxes with respect to all amounts due to such employees for all periods up to the Closing Date and shall provide benefits under the Seller Pension Plans for such employees up to the Closing Date in accordance with the terms of such plans and Seller’s established policies and procedures.

(c) Severance Plan . Seller shall be responsible for any severance benefits or other liabilities incurred pursuant to any severance plan of Seller or any affiliated company that may arise with respect to, or as a result of the severance of the employment of the Continuing Employees with Seller or any such affiliated company in connection with the Closing.

phx-srv01\1468313v05

(d) Post-Closing Benefit Plans . Effective as of the date of Closing, Purchaser will become a successor employer to the medical and dental plan, that is part of the Fort Wayne Pools, Inc. Health & Welfare Plan, provided that Seller’s reinsurance contract with Trustmark Insurance Company is assigned or transferred to Purchaser. If the Purchaser becomes a successor employer to such medical and dental plan, it will assume the continuation health (COBRA) responsibilities of the Seller. If Seller's medical and dental plan cannot be continued for the reason stated above, Continuing Employees will receive credit, for purposes of deductibles and co-payments under Purchaser's medical plan, for amounts paid or payable by reason of claims incurred under Seller's plan during the calendar year in which the Closing occurs. Seller shall retain responsibility for all costs of coverage and all amounts payable by reason of claims incurred on or prior to the Closing Date not otherwise accrued and accounted for in the Closing Working Capital Statement. Effective as of the date of Closing, Purchaser shall become a successor employer to the Fort Wayne Pools, Inc. Section 125 plan, including the healthcare and dependent care reimbursement benefits. If any benefit plan is not continued by the Purchaser, the Continuing Employees will be eligible for coverage under the employee benefit plans then made available to similarly situated employees of Purchaser, subject to the terms and conditions of such benefit plans, effective as of the date of Closing or the day after the Closing Date. Nothing herein shall prevent Purchaser from terminating the employment of any such employee or modifying or terminating any such plans.

8.8	Post-Closing Cooperation.

(a) Purchaser and Seller shall cooperate with each other, and shall cause their officers, employees, agents, auditors and representatives to cooperate with each other, after the Closing to ensure the orderly transition of the Business from Seller to Purchaser and to minimize any disruption to the Business and the other respective businesses of Seller and Purchaser that might result from the transactions contemplated hereby. Seller shall allow Purchaser to use its computer system for operation of the Business for up to six months after the Closing Date and during such time, agrees to provide Purchaser with all necessary and reasonable technical support and assistance in the normal course of business so that the Business’ computer system shall operate consistent with past practices. Seller shall also cooperate and use its best efforts to assist in the transition of Seller’s computer system to Purchaser’s computer system. To the extent that Seller is requested to provide any additional assistance beyond that described above, Purchaser shall reimburse Seller for Seller’s reasonable and documented costs incurred in providing such additional assistance.

(b) After the Closing, upon reasonable written notice, Purchaser and Seller shall furnish or cause to be furnished to each other, as promptly as practicable, such information and assistance (to the extent within the control of such party) relating to the Acquired Assets (including, access to books and records) as is reasonably necessary for the filing of all Returns, and making of any election related to Taxes, the preparation for any audit by any taxing authority, and the prosecution or defense of any claim, suit or proceeding related to any Return. Seller and Purchaser shall cooperate with each other in the conduct of any audit or other proceeding relating to Taxes involving the Business.

Article 9

DEFINITIONS

“ Acquisition ” means the purchase and sale of the Acquired Assets and the assumption of the Assumed Liabilities.

phx-srv01\1468313v05

“ Benefit Plans ” means all “employee welfare benefit plans” or “employee pension benefit plans” as those terms are respectively defined in sections 3(1) and 3(2) of ERISA, and all retirement or deferred compensation plans, incentive compensation plans, stock plans, vacation pay, severance pay, bonus or other benefit arrangements, insurance or hospitalization programs, life insurance, disability, or any fringe benefit arrangements which do not constitute “employee benefit plans” (as defined in section 3(3) of ERISA) covering any employee.

The “ Business ” means Seller’s manufacturing business, which is engaged in the manufacture of swimming pool components and accessories, including inground liners, above ground liners, polymer walls and braces, polymer steps, steel pool panels and braces, and fiberglass steps.

“ COBRA ” means Sections 601 et seq. of ERISA, Section 4980B(f) of the Code and applicable Department of Labor and Internal Revenue Service pronouncements, including treasury regulations, notices, rulings, procedures and opinions.

The “ Code ” means the Internal Revenue Code of 1986, as amended.

“ Collateral Agreements ” means the Conveyance Documents and the License Agreement.

“ Employee Plan ” means (a) a plan or arrangement as defined in Section 3(3) of ERISA that (i) is maintained, administered or contributed to by the Business, the Seller or any ERISA Affiliate or (ii) covers any employee or former employee of the Business, the Seller or any ERISA Affiliate, and (b) a plan or arrangement as defined in Section 3(37) and Section 4001(a)(3) of ERISA that covers, or covered at any time during the five year period prior to the Closing Date, any employee or former employee of the Business, the Seller or any ERISA Affiliate.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ Excess Inventory ” means the amount of any item or SKU of Inventory (other than items or SKUs that were first offered for sale by Seller or Purchaser during its respective most recent fiscal year) on hand at Closing that exceeds the amount sold by both Seller and Purchaser and its Affiliates during the 12 months prior to Closing.

“ GAAP ” means generally accepted accounting principles in the United States, consistently applied.

“ Governmental Entity ” means any U.S. or foreign court or tribunal in any jurisdiction or any U.S. or foreign public, governmental or regulatory body, agency, department commission, board, bureau or other authority or instrumentality.

phx-srv01\1468313v05

“ Indebtedness ” means all obligations of the Business (whether for principal, interest, premium, fees or otherwise) for or arising under (i) all indebtedness for borrowed money (including all notes payable and all obligations evidenced by bonds, debentures, notes or other similar instruments), (ii) unpaid reimbursement obligations arising in connection with guaranties, or (iii) any lease obligation that would be required to be capitalized in accordance with GAAP.

A “ Lien ” means, with respect to any asset of Seller, any title defect, lien, mortgage, easement, pledge, charge, transfer restriction, right of first refusal, preemptive right, option, claim, security interest, right of others or other encumbrance of any nature whatsoever, other than restrictions imposed by federal or state securities laws.

A “ Material Adverse Effect ” means a material adverse effect on the results of operations or financial condition of the Business, or any material limitation on the ability of the Seller, on the one hand, or Purchaser, on the other hand, to consummate the Acquisition; provided that, the parties agree that only those acts, events or occurrences that result, or are reasonably likely to result, individually or in the aggregate, in a quantifiable loss, cost or expense that equals or exceeds $100,000 shall be deemed to constitute a Material Adverse Effect.

A “ Permitted Lien ” means (i) Liens consisting of zoning or planning restrictions, easements, permits and other restrictions or limitations on the use of real property that in the aggregate do not materially detract from the value or interfere with the use of such real property or materially impair the marketability thereof, (ii) Liens for current taxes or assessments on property that are accrued but not yet payable, and (iii) mechanic's, materialman's and other liens for goods and services incorporated into or provided with respect to the property encumbered thereby arising by operation of law in the ordinary course of business, provided that the obligations secured by such Liens (A) are not more than 30 days past due, (B) are fully reflected in the Financial Statements or the Closing Working Capital Statement and (C) do not materially interfere with the use or enjoyment of any of the Business’ properties or assets and do not materially impair the marketability thereof.

“ Taxes ” means all federal, state, local and other taxes including, without limitation, income taxes, estimated taxes, alternative minimum taxes, excise taxes, sales taxes, use taxes, value added taxes, gross receipts taxes, capital stock taxes, franchise taxes, employment and payroll related taxes, withholding taxes, property taxes, whether measured in whole or in part by net income, and all deficiencies, or other additions to tax, interest, fines and penalties.

“ Working Capital ” means the excess, if any, of (i) Seller’s current assets, including accounts receivable, inventory, prepaid expenses and deposits (but excluding deferred or other income tax assets), included in the Acquired Assets, and (ii) Seller’s current liabilities, including accounts payable and accrued expenses (but excluding payables, provisions or reserves for income Taxes), assumed by Purchaser hereunder, in each case calculated in accordance with GAAP.

Article 10

MISCELLANEOUS

10.1 Exhibits and Schedules. The exhibits and Schedules referred to herein are attached hereto and incorporated herein by this reference. Disclosure of a specific item in any one Schedule shall be deemed restricted only to the Section to which such disclosure specifically relates except where (i) there is an explicit cross-reference to another Schedule, and (ii) Purchaser could reasonably be expected to ascertain the scope of the modification to a representation intended by such cross-reference.

phx-srv01\1468313v05

between or among the parties regarding the subject matter hereof, whether written or oral, are superseded by this Agreement. Other than the representations and warranties set forth herein, no additional or other representation or warranties shall be applicable to the transactions contemplated by this Agreement. This Agreement shall not be amended or modified except by written instrument duly executed by each of the parties hereto.

10.4 Assignment and Binding Effect. This Agreement may not be assigned by any party hereto without the prior written consent of the other party, provided , however , that nothing herein shall prohibit the assignment of Purchaser’s rights and obligations to any direct or indirect subsidiary or prohibit the assignment of Purchaser’s rights (but not obligations) to any lender.. Subject to the foregoing, all of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors and assigns of Seller and Purchaser.

10.5 Waiver. Any term or provision of this Agreement may be waived at any time by the party entitled to the benefit thereof by a written instrument duly executed by such party.

If to Seller, to:

SCP Pool Corporation

109 Northpark Boulevard, 4 ^th Floor

Covington, Louisiana 70433-5001

Attention: President

Facsimile: 985-801-8105

With a copy to:

SCP Pool Corporation

109 Northpark Boulevard, 4 ^th Floor

Covington, Louisiana 70433-5001

Attention: General Counsel

Facsimile: 985-801-8269

If to Purchaser, to:

Latham Acquisition Corp.

c/o Brockway Moran & Partners, Inc.

225 N.E. Mizner Boulevard, 7th Floor

Boca Raton, Florida 33432

Attention: Peter Klein

Facsimile: (561) 750-2001

With a copy to:

Greenberg Traurig, LLP

phx-srv01\1468313v05

2375 E. Camelback Road, Suite 700

Phoenix, Arizona 85016

Attention: Bruce Macdonough

Facsimile: (602)445-8618

10.7 Governing Law. This Agreement shall be governed by and interpreted and enforced in accordance with the internal laws and not the choice of law rules of the State of Indiana.

10.9 Schedules and Exhibits. All Schedules and Exhibits referred to herein are intended to be and hereby are specifically made a part of this Agreement.

[signature page follows]

phx-srv01\1468313v05

EXECUTION VERSION

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the date first written.

SCP POOL CORPORATION

By:	/ s/ Manuel J. Perez de la Mesa
Name:	Manuel J. Perez de la Mesa
Title:	President

FORT WAYNE POOLS, INC.

By:	/ s/ Manuel J. Perez de la Mesa
Name:	Manuel J. Perez de la Mesa
Title:	President

LATHAM ACQUISITION CORP.

By:	/ s/ Mark A. Eidemueller
Name:	Mark A. Eidemueller
Title:	Vice President

phx-srv01\1468313v05

Final

LATHAM ACQUISITION CORP.

BROCKWAY MORAN & PARTNERS fund ii, l.p.,

brockway moran & partners ii co-invest fund, l.p.,

AND

FORT WAYNE POOLS, INC.

SUBSCRIPTION AND STOCKHOLDERS’ AGREEMENT

phx-srv01\1468546v07

table of contents

Page

1. Interpretation of this Agreement 1

2. Purchase of Restricted Securities 5

3. Information and Inspection Rights; Non-Competition; Other Company Covenants 8

4. Voting and Corporate Governance 11

5. Protective Covenants 12

6. Restrictions on Transfer 13

7. Additional Restrictions on Transfer 14

8. Tag-Along Rights 15

9. Preemptive Rights 16

10. Registration Rights 17

11. Redemption Rights 20

12. Expenses 21

13. Notices 21

14. Severability 22

15. Complete Agreement 22

16. Counterparts 22

17. Successors and Assigns 22

18. Choice of Law; Jurisdiction 22

19. Waiver of Jury Trial 23

20. Remedies 23

21. Amendments and Waivers 23

22. Business Days 23

23. Failure to Deliver Securities 23

24. No Third Party Beneficiary 23

25. Transfers in Violation of Agreement 23

26. Attorneys’ Fees 23

TOC28

phx-srv01\1468546v07

-i-

LATHAM ACQUISITION CORP.

BROCKWAY MORAN & PARTNERS fund ii, l.p.,

brockway moran & partners ii c0-invest fund, l.p.,

AND

FORT WAYNE POOLS, INC.

SUBSCRIPTION AND STOCKHOLDERS’ AGREEMENT

THIS SUBSCRIPTION AND STOCKHOLDERS’ AGREEMENT is made as of this 12 ^th day of November, 2004, by and among Latham Acquisition Corp., a Delaware corporation (the “ Company ”), Brockway Moran & Partners Fund II, L.P., a Delaware limited partnership (“ BMP II ”), Brockway Moran & Partners II Co-Invest Fund, L.P., a Delaware limited partnership (“ Co-Invest ” and collectively with BMP II, the “ BMP Investors ”) and Fort Wayne Pools, Inc. (“ SCP ”), an Indiana corporation and a wholly owned subsidiary of SCP Pool Corporation, a Delaware corporation (“ Parent ”). Each of the BMP Investors and SCP is referred to as a “Stockholder,” and collectively as the “Stockholders.”

Recitals

A. Each of the BMP Investors and SCP desire to purchase from the Company shares of the Company’s Common Stock.

B. The BMP Investors and SCP believe that it would be in the best interest of the Company to place certain restrictions upon the right of transfer of the Restricted Securities (as defined below).

C. The directors of the Company, having considered the provisions of this Agreement, have resolved that, in their opinion, the restrictions upon the transfer of the Restricted Securities and the establishment of rights and obligations upon the occurrence of certain events, all as hereinafter set forth, are in the best interest of the Company and its stockholders.

Agreement

NOW THEREFORE, in consideration of the mutual covenants contained in this Agreement, the parties hereto agree as follows:

1.	Interpretation of this Agreement.

(a) Terms Defined . As used in this Agreement, the following terms when used in this Agreement have the meanings set forth below:

“ Acquisition ” shall have the meaning given to it in Section 2(c)(vii) of this Agreement.

“ Add-On Acquisition Fee ” shall have the meaning given to it in Section 2(c)(vii) of this Agreement.

“ Affiliate ” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act of 1934, as amended.

“ Agreement ” means this Subscription and Stockholders’ Agreement and all exhibits and schedules hereto, as amended, modified or supplemented from time to time.

“ Applicable Percentage ” shall mean the fraction (expressed as a percentage), the numerator of which is the aggregate number of shares of Common Stock to be transferred by the Tag-Along Stockholder and the denominator of which is the aggregate number of shares of Common Stock owned by the BMP Investors, SCP, and all other Persons subject to a Stockholders’ Agreement that provides such Persons with “tag along” rights

phx-srv01\1468546v07

comparable to those set forth in Section 8 hereof. All such calculations shall be carried out to one hundred thousandth of a share and then rounded to the nearest share.

“ Authorization Period ” shall have the meaning given to it in Section 6(b) of this Agreement.

“ BMP Directors ” shall have the meaning given to it in Section 4(a)(ii) of this Agreement.

“ BMP Investors ” shall have the meaning given to it in the first sentence of this Agreement.

“ BMP Shares ” shall have the meaning given to it in Section 2(a)(i) of this Agreement.

“ Board ” means the Board of Directors of the Company.

“ Business ” means the Company’s business of manufacturing pool products, including, steel and polymer walls, steps, liners, and/or related products.

“ Common Stock ” means the Company’s common stock, par value $.01 per share.

“ Company ” shall have the meaning given to it in the first sentence of this Agreement.

“ Company Information ” means Confidential Information and Trade Secrets.

“ Confidential Information ” means confidential data and confidential information relating to the business of the Company or any of its Subsidiaries (which does not rise to the status of a Trade Secret under applicable law) which is or has been disclosed to a Stockholder or of which a Stockholder became aware in connection with or as a consequence of investment in the Company and which has value to the Company. Confidential Information shall not include any data or information that (i) has been voluntarily disclosed to the general public by the Company, (ii) has been independently developed and disclosed to the general public by others, (iii) otherwise enters the public domain through lawful means, (iv) was or becomes known to the Stockholders prior to disclosure to a Stockholder in connection with or as a consequence of investment in the Company, (v) is independently developed or derived by a Stockholder, or (vi) was heretofore or is hereafter obtained by a Stockholder from another Person who, to the knowledge of the Stockholder, is lawfully in possession of such information and not in violation of any confidentiality agreement with the Company or any of its Affiliates in disclosing such information to the Stockholder.

“ Exempt Issuance ” means an issuance of New Stock or New Securities by the Company:

(i) as a pro rata stock dividend or other distribution in respect of, or upon any subdivision or combination of, the Company’s capital stock as a result of which there is no change in the relative ownership interest or rights of the holders of the Company’s capital stock;

(ii) to any employee of the Company pursuant to the Company’s Key Employee Equity Plan;

(iii) in connection with any transfer to the public pursuant to a registration effected in accordance with the Securities Act;

(iv) in connection with the acquisition by the Company or any of its Subsidiaries of any unaffiliated Person or business on an arms’-length basis; and

(v) in connection with equipment or debt financing or leases (including securities issued in consideration of guarantees of such financing or such leases) provided by an unaffiliated Person on an arms’-length basis.

“ Exempt Transfers ” shall have the meaning given to it in Section 6(a) of this Agreement.

“ Fair Market Value ” means the fair market value determined by mutual agreement of SCP and the BMP Investors. In the event of a disagreement, Fair Market Value shall be determined by a professional appraiser chosen by mutual agreement of SCP and the BMP Investors, whose fees shall be paid for by the Company. Fair Market Value shall be determined without any discount for minority interest or lack of marketability.

phx-srv01\1468546v07

“ Family Group ” means with respect to any individual, such an individual’s spouse and lineal descendants, parents, grandparents and any family limited partnership, family limited liability company or trust or other fiduciary relationship solely for the benefit of such individual and/or such individual’s spouse, parents, grandparents and/or lineal descendants.

“ Fort Wayne Contribution Agreement ” means that certain Asset Contribution Agreement, dated as of the date hereof, among SCP Pool Corporation, Fort Wayne Pools, Inc., an Indiana corporation, and the Company.

“ Independent Third Party ” means any Person who, prior to the occurrence of a Liquidity Event, does not own in excess of 5% of the Company’s Common Stock on a fully diluted basis, who is not controlling, controlled by or under common control with any such 5% owner of the Company’s Common Stock and who is not the spouse, ancestor or descendant (by birth or adoption) of any such 5% owner of the Company’s Common Stock.

“ Key Employee Equity Plan ” means a non-qualified stock option plan covering 7.0% of the Company’s fully diluted common equity value to be adopted at the Subscription Closing.

“ Liquidity Event ” means any one or more of the following events: (a) the sale of all, or substantially all, of the Company’s consolidated assets in any single transaction or series of related transactions; (b) the sale or issuance, or series of related sales or issuances, of Common Stock possessing the ordinary voting power (on a fully diluted basis) to elect a majority of the Board to an Independent Third Party or a group of affiliated Independent Third Parties; (c) the consummation of a Qualified Public Offering; or (d) any merger or consolidation of the Company with or into another corporation or other business entity (regardless of which entity is the surviving corporation) if, after giving effect to such merger or consolidation the holders of the Company’s voting securities (on a fully diluted basis) immediately prior to the merger or consolidation own voting securities of the surviving or resulting corporation or other business entity representing less than a majority of the ordinary voting power to elect directors of the surviving or resulting corporation (on a fully diluted basis).

“ Loan Agreements ” means the senior and subordinated loan agreements that the Company will enter into in connection with the Acquisition.

“ New Securities ” shall have the meaning given to it in Section 9(a) of this Agreement.

“ New Stock ” shall have the meaning given to it in Section 9(a) of this Agreement.

“ Notice of Transfer ” shall have the meaning given to it in Section 8(b) of this Agreement.

“ Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

“ Preemptive Rights Notice ” shall have the meaning given to it in Section 9(a) of this Agreement.

“ Qualified Public Offering ” means the public sale of Common Stock pursuant to a registration statement that has become effective under the Securities Act, the net proceeds of which sale to the Company are at least $25 million.

“ Redemption Notice ” shall have the meaning given to it in Section 11(a) of this Agreement.

“ Redemption Price ” shall have the meaning given to it in Section 11(b) of this Agreement.

“ Registration Expenses ” shall have the meaning given to it in Section 10(e) of this Agreement.

“ Required Payment Date ” shall have the meaning given to it in Section 11(b) of this Agreement.

“ Restricted Securities ” means: (a) all shares of Common Stock (including the Shares) now owned (beneficially or of record) or hereafter acquired (beneficially or of record) by a Stockholder (including all Common Stock issued by way of stock dividend or stock split or in connection with any combination of shares, merger, consolidation, recapitalization or other reorganization); and (b) all securities exercisable for, convertible into or exchangeable for Common Stock now owned (beneficially or of record) or hereafter acquired (beneficially or of record) by a Stockholder. For purposes of this Agreement: (i) a Stockholder shall be deemed to own or control that number of shares of Common Stock then directly owned or controlled by the Stockholder, plus that number of

phx-srv01\1468546v07

shares of Common Stock into or for which any securities then directly or indirectly owned or controlled by the Stockholder are then, directly or indirectly, convertible, exercisable or exchangeable; and (ii) references in this Agreement to “shares” of Restricted Securities other than Common Stock shall be deemed to refer to the number of shares of Common Stock into or for which any securities then directly or indirectly owned or controlled by a Stockholder are then, directly or indirectly, convertible, exercisable or exchangeable. Except as otherwise provided herein, all Restricted Securities will continue to be Restricted Securities in the hands of any transferee of a Stockholder, other than (x) the Company, and (y) purchasers pursuant to an offering registered with the Securities and Exchange Commission pursuant to the Securities Act or purchasers pursuant to a public sale through a market-maker, broker or dealer under Rule 144 (or any successor rule) promulgated under the Securities Act.

“ Sale Notice ” shall have the meaning given to it in Section 6(b) of this Agreement.

“ SCP ” shall have the meaning given to it in the first sentence of this Agreement.

“ SCP Directors ” shall have the meaning given to it in Section 4(a)(iii) of this Agreement.

“ SCP Shares ” shall have the meaning given to it in Section 2(a)(i) of this Agreement.

“ SEC ” shall have the meaning given to it in Section 10(b) of this Agreement.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Selling Stockholder ” shall have the meaning given to it in Section 8(a) of this Agreement.

“ Shares ” shall have the meaning given to it in Section 2(a)(i) of this Agreement.

“ Stockholder ” shall have the meaning given to it in the first sentence of this Agreement.

“ Stock Purchase Agreement ” shall have the meaning given to it in Section 2(c)(vii) of this Agreement.

“ Subscription Closing ” shall have the meaning given to it in Section 2(a)(i) of this Agreement.

“ Subsidiary ” when used with respect to any Person means any other Person, whether incorporated or unincorporated, of which (a) more than 50% of the securities or other ownership interests or (b) securities or other interests having by their terms ordinary voting power to elect more than 50% of the board of directors or others performing similar functions with respect to such corporation or other organization, is directly owned or controlled by such Person or by any one or more of its Subsidiaries.

“ Tag-Along Stockholder ” shall have the meaning given to it in Section 8(a) of this Agreement.

“ Territory ” shall have the meaning given to it in Section 3(c)(i)(A) of this Agreement.

“ Trade Secrets ” means information of the Company and its Subsidiaries including, but not limited to, technical or nontechnical data, formulae, methods, programs, financial data, financial plans, product or service plans or lists of actual or potential customers or suppliers which (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other Persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

(b) Interpretation . Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in masculine, feminine or neuter gender shall include the masculine, feminine and the neuter.

2.	Purchase of Restricted Securities.
	(a)	Purchase and Sale of Restricted Securities and Note .

(i) Each Stockholder hereby subscribes for and agrees to purchase, and the Company hereby agrees to issue and sell to such Stockholder, the number of shares of Common Stock set forth opposite the Stockholder’s name on Schedule 1 hereto. The purchase and sale of the Common Stock will be consummated simultaneous with the “Closing” under the Fort Wayne Contribution Agreement and immediately

phx-srv01\1468546v07

prior to consummation of the Acquisition (the “ Subscription Closing ”). At the Subscription Closing, SCP shall acquire 198,000 shares of Common Stock (the “ SCP Shares ”) in exchange for (x) the contribution of assets contemplated by the Fort Wayne Contribution Agreement, and (y) SCP’s payment to the Company of $2,327,568 in immediately available funds. At the Subscription Closing, the BMP Investors shall acquire an aggregate of 198,000 shares of Common Stock (the “ BMP Shares ”) in exchange for the BMP Investors’ payment to the Company of an aggregate of $19,800,000 in immediately available funds. The SCP Shares and the BMP Shares are collectively referred to herein as the “ Shares .”

(ii) Upon receipt of the consideration set forth in Section 2(a)(i), the Company shall deliver to each Stockholder a certificate representing the applicable Shares, registered in the name of the applicable Stockholder.

(iii) At the Subscription Closing, SCP shall pay to a wholly owned Canadian subsidiary of the Company (the “ Canadian Sub ”) $1,193,432 in immediately available funds, and in exchange the Company shall cause the Canadian Sub to issue and deliver to SCP the Promissory Note in the form attached hereto as Exhibit A (the “ Note ”). SCP acknowledges and agrees that, subsequent to the Acquisition, Pool Technology Distributors, Inc. shall assume all of the Canadian Sub’s obligations under the Note.

(b) Representations and Warranties of the Company . The Company hereby represents and warrants to each Stockholder as follows:

(i) Organization; Power and Authority . The Company is a corporation duly organized, validly existing, and in good standing under the laws of state of Delaware. The Company has full corporate power and authority to carry on the business in which it is engaged and to own and use the properties owned and used by it. Except for its right to acquire capital stock pursuant to the Acquisition, the Company does not have any Subsidiary, and does not own, directly or indirectly, any capital stock or other equity interests in any other Person.

(ii) Authorization of Transaction; Agreement Binding . The Company has full corporate power and authority to execute and deliver, and to perform its obligations under, this Agreement. This Agreement constitutes the valid and legally binding obligation of the Company, enforceable in accordance with its terms, except as such enforcement may be limited by general equitable principles or by applicable bankruptcy, insolvency or similar laws which affect creditors’ rights generally.

(iii) Capitalization . The Company’s authorized capital stock consists of 100,000,000 shares of Common Stock, none of which are currently issued and outstanding. The Shares acquired by the Stockholders pursuant to the provisions of this Agreement will be duly authorized, validly issued, fully paid and nonassessable with no personal liability attaching to the ownership thereof. Except as set forth on Schedule 1 , (A) no Person owns of record any share of the Company’s capital stock, (B) no subscription, warrant, option, convertible security or other right to purchase or otherwise acquire from the Company (or to the knowledge of the Company, from any other Person) any Company capital stock is authorized or outstanding, and (C) there are no additional commitments by the Company to issue shares of capital stock or warrants, options, convertible securities or other rights to purchase Company capital stock. The Company has made available to each Stockholder true and correct copies of the Company’s Certificate of Incorporation and bylaws.

(iv) No Conflict . The execution, delivery and performance of this Agreement by the Company do not and will not violate, conflict with, or result in a breach of or default under (A) the Company’s Certificate of Incorporation or bylaws; (B) any applicable law, order, judgment or decrees; or (C) any agreement, contract, understanding, mortgage, indenture or other obligation to which the Company is a party or by which any of its assets or properties are bound.

(c) Representations and Warranties of the Stockholders . Each Stockholder hereby represents and warrants to the Company severally and not jointly as follows:

(i) Authorization of Transaction; Agreement Binding . The Stockholder has full power and authority to execute and deliver, and to perform its obligations under, this Agreement. This Agreement constitutes the valid and legally binding obligation of the Stockholder, enforceable in accordance with its terms, except as such enforcement may be limited by general equitable principles or by applicable bankruptcy, insolvency or similar laws which affect creditors’ rights generally.

phx-srv01\1468546v07

(ii) No Conflict . The execution, delivery and performance of this Agreement by the Stockholder do not and will not violate, conflict with, or result in a breach of or default under (A) the Stockholder’s charter or other governing instruments, (B) any applicable law, order, judgment or decree, or (C) any agreement, contract or other obligation to which the Stockholder is a party, in each case except to the extent that such violation, conflict, default or breach could not reasonably be expected to impair the Stockholder’s ability to perform its obligations hereunder.

(iii) Acquisition for Investment . The Stockholder is acquiring the Shares for investment solely for the Stockholder’s account and not with a view to or for sale in connection with any distribution thereof in violation of the federal securities laws, applicable state securities laws or this Agreement.

(iv) Restrictions on Transfer . The Stockholder understands that the Stockholder must bear the economic risk of the purchase of the Shares for an indefinite period of time because, except as provided in this Agreement, (A) the Company’s sale of the Shares to the Stockholder will not be registered under the Securities Act and applicable state securities laws in reliance on the Stockholder’s representations, (B) the Shares may not be sold, transferred, pledged, or otherwise disposed of without an opinion of counsel, if requested, for or satisfactory to the Company that registration under the Securities Act or any applicable state securities laws is not required, and (C) the Company does not have an obligation to register a sale of the Shares (or perfect any exemption) nor has it agreed to do so in the future.

(v) Restrictive Legends . The Stockholder understands that the certificate(s) evidencing the Shares will bear a restrictive legend prohibiting the transfer thereof except in compliance with (A) applicable state and federal securities laws (and may not be transferred of record except in compliance therewith), and (B) the terms of this Agreement.

(vi) Opportunity to Ask Questions . The Stockholder has had an opportunity to ask questions and receive answers concerning the capitalization of the Company, the terms of this Agreement and the financial condition and operations of the Company, and has had full access to such other information concerning the Company as the Stockholder has requested.

(vii) Certain Risk Factors . The Stockholder has reviewed, or has had an opportunity to review, copies of all documents entered into in connection with the acquisition of stock (the “ Acquisition ”) effected pursuant to that certain Stock Purchase Agreement, dated as of November 12, 2004 (including the exhibits and schedules thereto (the “ Stock Purchase Agreement ”), between the Company and Latham International, L.P., a Delaware limited partnership (“ Seller ”). The Stockholder has also reviewed, or has had an opportunity to review, such other documents and information requested by the Stockholder to the Stockholder’s satisfaction. The Stockholder understands the speculative nature of and risks involved in the proposed investment in the Company, and all matters relating to the structure and the operations of the Company have been discussed and explained to such Stockholder’s satisfaction. The Stockholder specifically acknowledges such Stockholder’s understanding that:

(A) the Company intends to incur substantial debt to finance the Acquisition and the presence of substantial amounts of debt creates significant risks, including that (1) although equity investments in highly leveraged companies such as the Company offer the opportunity for significant capital appreciation, such investments involve the highest degree of risks and can result in the loss of the Stockholder’s entire investment, (2) other general business risks, including the effects of a recession, may have a more pronounced effect, and (3) lending institutions may have certain limited rights to participate in certain decisions relating to the management of the Company;

(B) the amount contributed by such Stockholder for its Shares may not be indicative of the fair market value of the Shares;

(D)	the Loan Agreements are not presently available for inspection;

(E) each of (x) the BMP Investors or their Affiliates, and (y) SCP (1) will receive from the Company an annual management fee of $175,000, subject to increase, (2) will receive a cash transaction fee in the amount of 0.5% of the Acquisition purchase price upon the consummation of the Acquisition, and (3) each will receive an Add-On Acquisition Fee for future Company acquisitions. The “Add-On Acquisition

phx-srv01\1468546v07

Fee” for each of (A) the BMP Investors or their Affiliates, and (B) SCP shall equal 1.5% of the first $10 million of the purchase price and 0.5% of the portion of the purchase price that exceeds $10 million; and

(F) Section 13.7 of the Stock Purchase Agreement provides that, if the Acquisition is not consummated on or before December 31, 2004, and certain other conditions exist, Seller shall be a third party beneficiary of this Agreement and be entitled to enforce the obligations of the BMP Investors and SCP pursuant to Section 2(a) hereof.

(viii) Representations Relied Upon by Stockholder . The Stockholder is acquiring the Shares without having been furnished any representations or warranties of any kind whatsoever with respect to the business and financial condition of the Company, other than the representations and warranties contained in this Agreement.

(d) Tax Certifications and Acknowledgments . The Stockholder certifies under penalty of perjury that (i) the Taxpayer Identification Number for the Stockholder provided under the Stockholder’s name on the signature pages to this Agreement is correct, (ii) the Stockholder is not subject to backup withholding either because the Stockholder has not been notified that such Stockholder is subject to backup withholding as a result of a failure to report all interest or dividends or because the Internal Revenue Service has notified the Stockholder that such Stockholder is no longer subject to backup withholding and (iii) the Stockholder is not a nonresident alien, foreign partnership, foreign trust or foreign estate.

3.	Information and Inspection Rights; Non-Competition; Other Company Covenants.

(a) Information and Inspection Rights . As long as a Stockholder and its Affiliates continue to own at least 10% of the Company’s fully diluted equity, (x) the Company shall permit such Stockholder (and such persons as it may designate subject to the Company’s reasonable approval and the execution of a confidentiality agreement acceptable to the Company), at Stockholder’s expense, to visit and inspect, during normal business hours and without disruption to the Company’s business, the properties of the Company, examine its books, discuss the affairs, finances and accounts of the Company with its officers and employees, and consult with and advise the management of the Company as to its affairs, finances and accounts, all at reasonable times and upon reasonable notice, and (y) such Stockholder shall be entitled to receive, and the Company shall mail to such Stockholder, at the times specified, the following reports:

(i) as soon as available, and in any event within thirty (30) days after the end of each month, a consolidated balance sheet for the Company as of the end of such month and the related consolidated statements of income for the year to date;

(ii) as soon as practicable, but in any event within sixty (60) days after the end of each of the first three (3) quarters of each fiscal year of the Company, an unaudited consolidated profit or loss statement for such fiscal quarter, a consolidated unaudited balance sheet as of the end of such fiscal quarter, and an unaudited statement of consolidated cash flows for such quarter;

(iii) as soon as available and in any event within one hundred twenty (120) days after the end of each fiscal year of the Company, a balance sheet of the Company as of the end of such fiscal year and the related statements of income, stockholders’ equity and cash flows for the fiscal year then ended, prepared in accordance with U.S. generally accepted accounting principles and audited by a firm of independent public accountants of national recognition selected by the Board of Directors of the Company;

(iv) promptly following receipt by the Company, each audit response letter, accountants’ management letter and other written report submitted to the Company by its independent public accountants in connection with an annual or interim audit of the books of the Company or any of its Subsidiaries;

(v) promptly after the commencement thereof, notice of all actions, suits, claims, proceedings, investigations and inquiries that are likely to materially adversely affect the Company or any of its Subsidiaries;

(vi) promptly upon sending, making available or mailing the same, all press releases, reports and financial statements that the Company sends or makes available generally to its stockholders;

phx-srv01\1468546v07

(vii) promptly after receipt thereof, notice of all claims of material default (whether or not constituting an “Event of Default”) under the Loan Agreements or any material financial obligation to which the Company or any Subsidiary is a party or obligor; and

(viii) promptly, from time to time, such other material information regarding the business, prospects, financial condition, operations, property or affairs of the Company and its Subsidiaries as the Stockholder reasonably may request.

(b) Confidentiality . Except as required by applicable law (including regulations promulgated thereunder) or court order, each Stockholder (i) will maintain the confidentiality of all Company Information, and (ii) will not, directly or indirectly, use, disseminate or otherwise disclose any Company Information to any third party without the prior written consent of the Company, which may be withheld in the Company’s absolute discretion; provided , however , each Stockholder may disclose such information (i) to its attorneys, accountants and other professionals and representatives to the extent necessary or appropriate in connection with its investment in the Company, (ii) to any prospective permitted transferee of the Shares, so long as the prospective transferee agrees to be bound by the provisions of this Section 3(b), (iii) to any partner or Affiliate of the Stockholder, so long as such partner or Affiliate agrees to be bound by the provisions of this Section 3(b), and (iv) to any other Company stockholder. The provisions of this Section 3(b) shall survive the termination of this Agreement (i) for a period of two years with respect to Confidential Information, and (ii) with respect to Trade Secrets, for so long as any such information qualifies as a Trade Secret under applicable law.

(c)	Non -Competition, Non-Solicitation and Non-Disclosure .

(i) General . Each of the Stockholders hereby severally covenants and agrees as follows:

(A) Without the prior written consent of the Company and the other Stockholders, neither such Stockholder nor any of its Affiliates (other than the Company) shall, for so long as such Stockholder owns any Common Stock, (1) directly or indirectly acquire or own in any manner any interest in any person, firm, partnership, corporation, association or other entity which competes or plans to compete in any way with the Business of the Company or any of its Subsidiaries or Affiliates, anywhere in North America (the “ Territory ”), (2) serve as a consultant to any person, firm, partnership, corporation, association or other entity which competes or plans to compete in any way with the Business of the Company or any of its Subsidiaries or Affiliates within the Territory, or (3) market, sell or distribute, within the Territory, any pool products (including steel and polymer walls, steps, liners, and/or related products) that are manufactured by any Affiliate (other than the Company) of the type that are currently manufactured by the Company or the Subsidiaries to be acquired in the Acquisition. Such Stockholder acknowledges and agrees that the covenants provided for in this Section 3(c) are reasonable and necessary in terms of time, area and line of business to protect the Company’s Trade Secrets. Such Stockholder further acknowledges and agrees that such covenants are reasonable and necessary in terms of time, area and line of business to protect the Company’s legitimate business interests, which include its interests in protecting the Company’s (i) valuable confidential business information, (ii) substantial relationships with customers throughout the United States, and (iii) customer goodwill associated with the Company. Each Stockholder expressly authorizes the enforcement of the covenants provided for in this Section 3(c) by (A) the Company and its Subsidiaries, (B) the Company’s permitted assigns, and (C) any successors to the Company’s business. To the extent that the covenants provided for in this Section 3(c) may later be deemed by a court to be too broad to be enforced with respect to its duration or with respect to any particular activity or geographic area, the court making such determination shall have the power to reduce the duration or scope of the provision, and to add or delete specific words or phrases to or from the provision. The provision as modified shall then be enforced.

(B) Without the prior consent of the Company and the other Stockholder, such Stockholder shall not, for so long as such Stockholder owns any Common Stock, directly or indirectly, for itself or for any other person, firm, corporation, partnership, association or other entity (including the Company), attempt to employ or enter into any contractual arrangement with any employee or former employee of the Company, unless such employee or former employee has not been employed by the Company for a period in excess of 18 months.

(C) Such Stockholder shall not at any time divulge, communicate, use to the detriment of the Company or for the benefit of any other person or persons, or misuse in any way, any Confidential Information pertaining to the Company. Any Confidential Information now known or hereafter

phx-srv01\1468546v07

acquired by such Stockholder with respect to the Company shall be deemed a valuable, special and unique asset of the Company that is received by such Stockholder in confidence and as a fiduciary, and such Stockholder shall remain a fiduciary to the Company with respect to all of such information.

(ii) Exception for SCP . Notwithstanding Section 3(c)(i), SCP and its Affiliates shall not be prohibited from engaging in the distribution of pool spa equipment, pool parts and supplies, and other related leisure products so long as neither SCP nor any of its Affiliates distributes in North America any such products that are manufactured by any SCP Affiliate other than the Company.

(iii) Injunction . It is recognized and hereby acknowledged by the parties hereto that a breach or violation by a Stockholder of any or all of the covenants and agreements contained in this Section 3(c) may cause irreparable harm and damage to the Company in a monetary amount which may be virtually impossible to ascertain. As a result, each Stockholder recognizes and hereby acknowledges that the Company shall be entitled to an injunction from any court of competent jurisdiction enjoining and restraining any breach or violation of any or all of the covenants and agreements contained in this Section 3(c) by such Stockholder and/or its associates, Affiliates, partners or agents, either directly or indirectly, and that such right to injunction shall be cumulative and in addition to whatever other rights or remedies the Company may possess hereunder, at law or in equity. Nothing contained in this Section 3(c) shall be construed to prevent the Company from seeking and recovering from a Stockholder damages sustained by it as a result of any breach or violation by such Stockholder of any of the covenants or agreements contained herein.

(d) Termination of Information and Inspection Rights . The obligations of the Company to furnish information to the Stockholders pursuant to Section 3(a) shall terminate upon the earlier to occur of (i) the completion of a Qualified Public Offering, or (ii) such time as the Company otherwise becomes subject to the reporting requirements of the Exchange Act.

(e) Transactions with Affiliates . Without the prior written consent of SCP and the BMP Investors, the Company shall not enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except (i) in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm’s length transaction with a Person that is not an Affiliate thereof, (ii) customary payments for services as employees, officers and directors, and (iii) pursuant to the terms of the Management Services Agreements to be entered into between the Company and the Stockholders or their Affiliates.

4.	Voting and Corporate Governance.

(a) Voting for Directors . The parties agree to vote their Shares or consent in writing in the manner necessary to produce the following effect:

(i) the Board of Directors of the Company shall initially consist of seven (7) members (with the approval of SCP and the BMP Investors necessary to increase or decrease the number of directors constituting the Board of Directors);

(ii) for so long as the BMP Investors hold any Shares, the Stockholders shall vote their Shares in such a manner as to elect to the Board of Directors of the Company three (3) individuals designated by the BMP Investors (such individuals being the “ BMP Directors ”);

(iii) for so long as SCP holds any Shares, the Stockholders shall vote their Shares in such a manner as to elect to the Board of Directors of the Company two (2) individuals designated by SCP (such individuals being the “ SCP Directors ”);

(iv) the Stockholders shall vote their shares in such a manner as to elect to the Board of Directors of the Company two (2) individual(s) designated by the mutual agreement of the Stockholders (it being agreed that each of Mark Laven and Doug Laver shall be designated pursuant to this clause (iv) for so long as he serves as an executive officer of the Company); and

(v) the Stockholders shall vote their shares in such a manner as to enable Stockholders entitled to designate members of the Company’s Board of Directors pursuant to any of subsections

phx-srv01\1468546v07

4(a)(ii), (iii) and (iv), in their sole discretion, to remove and replace, whether upon the occurrence of a vacancy for any reason, or otherwise, their respective designees.

(b) Approval of the Board of Directors . The Board of Directors shall be consulted on the Company’s entry into or amendment of significant manufacturing, distribution, licensing or other material agreements or contracts. The approval of a majority of the Board of Directors of the Company then in office shall be required for the Company to: (i) incur additional indebtedness other than bank borrowings in the ordinary course of business or refinancing of existing indebtedness; (ii) enter into or amend agreements, whether oral or written, relating to executive compensation; (iii) approve the Company’s annual budget and capital budget; (iv) make any capital expenditures in excess of those reflected in the Company’s capital budget previously approved by the Board of Directors; and (v) approve the Company’s sale of any Company security.

(b) Meetings of the Board of Directors . The Board of Directors shall meet at least quarterly. The Company shall reimburse members of the Board of Directors for the customary and reasonable expenses of attending the meetings of the Board of Directors.

(c) Formation of Compensation Committee . As soon as practicable after execution of this Agreement, the Board of Directors shall establish a Compensation Committee consisting of two BMP Directors and one SCP Director. The Compensation Committee shall be responsible for making recommendations to the full Board of Directors for approving all management compensation, employee benefit plans and stock option grants. The Board of Directors shall have the power to accept or reject any recommendation of the Compensation Committee, but shall not approve an employee’s compensation in amounts that differ from the amounts recommended by the Compensation Committee.

(e) Formation of Audit Committee . As soon as practicable after the execution of this Agreement, the Board of Directors shall establish an Audit Committee consisting of two BMP Directors and one SCP Director. The Audit Committee shall be responsible for (i) selecting and engaging the Company’s independent auditors, (ii) meeting with the Company’s independent auditors and principal financial personnel to review the scope of audit and non-audit services performed by the independent public accountants, (iii) reviewing the independence of the independent public accountants, and (iv) reviewing the adequacy of internal accounting controls.

(d) Formation of Management Committee . As soon as practicable after execution of this Agreement, the Board of Directors shall establish a Management Committee consisting of the three BMP Directors. The Management Committee shall be responsible for appointing, removing, and replacing key members of the Company’s management.

(e) Indemnification . The Company shall not amend the indemnification provisions of the Company’s Certificate of Incorporation or bylaws to eliminate or reduce the indemnification provided for all directors and such provisions as so written shall be deemed to be a contract with each director regarding his or her indemnification by the Company. The Company shall also enter into separate indemnification agreements with each director.

(f) D&O Insurance . The Company shall at all times maintain directors and officers liability insurance coverage in amounts and subject to such limits as shall be reasonably acceptable to the BMP Directors and SCP Directors.

5.	Protective Covenants.

(a) As long as the BMP Investors collectively hold at least 10% of the outstanding stock of the Company, the Company shall not, without the approval of the BMP Investors:

(i) except as expressly contemplated by this Agreement and for redemptions on agreed terms from employees following termination of employment, directly or indirectly redeem, purchase or otherwise acquire, or permit any Subsidiary to redeem, purchase or otherwise acquire, any of the Company’s equity securities (including, without limitation, warrants, options and other rights to acquire equity securities);

(ii) except as expressly contemplated by this Agreement, authorize, issue or enter into any agreement providing for the issuance (contingent or otherwise) of, any equity or debt securities (or any derivative securities convertible into or exercisable or exchangeable for any equity or debt securities);

phx-srv01\1468546v07

(iii) merge or consolidate with any entity or permit any Subsidiary of the Company to merge or consolidate with any entity (other than a wholly owned Subsidiary);

(iv) sell, lease or otherwise dispose of, or permit any Subsidiary of the Company to sell, lease or otherwise dispose of assets with an aggregate fair market value in excess of $2 million in any one year (other than sales in the ordinary course of business);

(v) liquidate, dissolve or effect a recapitalization or reorganization in any form of transaction (including, without limitation, any reorganization into partnership form);

(vi) acquire, or permit any Subsidiary to acquire, any interest in any business (whether by a purchase of assets, purchase of stock, merger or otherwise), or enter into any joint venture;

(vii) enter into, or permit any Subsidiary to enter into, the ownership, active management or operation of any business other than a business engaged in the manufacture of swimming pool products and accessories;

(viii) except as expressly contemplated by this Agreement, make any amendment to the Company’s certificate of incorporation or bylaws which would impair the rights or relative priority of the holders of the Shares under this Agreement;

(ix) create, incur, assume or suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to exist, any indebtedness which aggregates in excess of $2 million (other than (a) the Loan Agreements, and (b) intercompany indebtedness);

(x) amend or modify the Key Employee Equity Plan, adopt any new stock option plan or employee stock ownership plan or issue any shares of stock to its or its Subsidiaries’ employees other than pursuant to the Key Employee Equity Plan;

(xi) issue or sell any shares of the capital stock, or rights to acquire shares of the capital stock, of any Subsidiary to any entity other than the Company or another Subsidiary; or

(xii)

initiate an initial public offering of the Company’s Stock.

(b) As long as SCP holds at least 10% of the outstanding Common Stock of the Company, the Company shall not, without the approval of SCP:

(i) except as expressly contemplated by this Agreement, authorize, issue or enter into any agreement providing for the issuance (contingent or otherwise) of, any equity or debt securities (or any derivative securities convertible into or exercisable or exchangeable for any equity or debt securities) in excess of $10 million in any single transaction or series of related transactions;

(ii) liquidate, dissolve or effect a recapitalization or reorganization in any form of transaction (including, without limitation, any reorganization into partnership form);

(iii) sell, lease or otherwise dispose of, or permit any Subsidiary of the Company to sell, lease or otherwise dispose of, assets with an aggregate fair market value in excess of $10 million in any single transaction or series of related transactions (other than sales in the ordinary course of business);

(iv) except as expressly contemplated by this Agreement, make any amendment to the Company’s certificate of incorporation or bylaws which would impair the rights or relative priority of the holders of the Shares under this Agreement;

(v) acquire, or permit any Subsidiary to acquire, any interest in any business (whether by a purchase of assets, purchase of stock, merger or otherwise) with an acquisition price in excess of $10 million; or

(vi) create, incur, assume or suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to exist, any indebtedness which aggregates in excess of $10 million (other than (a) the Loan Agreements, (b) intercompany indebtedness, and (c) indebtedness incurred to acquire any interest in any business (whether by a purchase of assets, purchase of stock, merger or otherwise) with an acquisition price less than or equal to $10 million ).

phx-srv01\1468546v07

6.	Restrictions on Transfer.

(a) Transfer of Restricted Securities . The Stockholders will not sell, pledge or otherwise directly or indirectly transfer (whether with or without consideration and whether voluntarily or involuntarily or by operation of law or otherwise) any interest in or any beneficial interest in any Restricted Securities except pursuant to the provisions of Section 6(c) or Section 11 of this Agreement (“ Exempt Transfers ”) and pursuant to the provisions of Section 6(b) hereof.

(b) First Refusal Rights . At least 30 days prior to making any transfer other than an Exempt Transfer, the transferring Stockholder will deliver a written notice (the “ Sale Notice ”) to the Company and the other Stockholder (in the case of a proposed transfer by SCP, the BMP Investors shall collectively be deemed the other Stockholder and in the case of a proposed transfer by the BMP Investors, SCP shall be deemed the other Stockholder). The Sale Notice will disclose in reasonable detail the identity of the prospective transferee(s) and the terms and conditions of the proposed transfer. The Company may elect to purchase all or any portion of the Restricted Securities to be transferred upon the same terms and conditions as those set forth in the Sale Notice by delivering a written notice of such election to the transferring Stockholder within 20 days after the receipt of the Sale Notice by the Company. To the extent that the Company has not elected to purchase all of the Restricted Securities to be transferred, the other Stockholder may elect to purchase all (but not less than all) of the Restricted Securities to be transferred which the Company has not elected to purchase, upon the same terms and conditions as those set forth in the Sale Notice, by delivering a written notice of such election to the Stockholder within 30 days after the receipt of the Sale Notice by the other Stockholder. Any Person who has the right to acquire Restricted Securities pursuant to this Section 6(b) will be given up to 20 days (after it has been determined that such Person has such right) to consummate the purchase and sale of Restricted Securities (the “ Authorization Period ”). If the Company and the other Stockholder have not elected to purchase, in the aggregate, all of the Restricted Securities specified in the Sale Notice, the transferring Stockholder may transfer the Restricted Securities specified in the Sale Notice to the transferee (and not to any assignee) identified, at a price and on terms no more favorable to the transferee(s) thereof than specified in the Sale Notice, during the 20-day period immediately following the Authorization Period (or, if there is no Authorization Period, during the 50-day period immediately following the date of the Sale Notice); provided, that the transferee(s) thereof agree in writing to be bound by the provisions of this Agreement relating to Restricted Securities. Any Restricted Securities not transferred within such 20-day period will be subject to the provisions of this Section 6(b) upon subsequent transfer.

(c) Certain Permitted Transfers . The restrictions contained in Section 6(b) will not apply with respect to transfers of Restricted Securities to or among the Stockholder’s partners or Affiliates, or any individual partner’s Family Group; provided that with respect to transfers contemplated by this Section 6(c), the restrictions contained in this Section 6 will continue to be applicable to Restricted Securities after any such transfer; and provided further that the transferees of such Restricted Securities have agreed in writing to be bound by the provisions of this Agreement relating to Restricted Securities.

(d) Termination of Restrictions . The restrictions on the transfer of Restricted Securities set forth in Section 6(a) and Section 6(b) will continue with respect to all Restricted Securities until consummation of a Liquidity Event or the completion of any offering of the Company’s equity securities registered pursuant to the Securities Act.

7.	Additional Restrictions on Transfer.

(a) Legend . Until a Liquidity Event has occurred or the restrictions set forth herein otherwise lapse, the certificates representing the Common Stock held by the holders of Restricted Securities will bear the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN A SUBSCRIPTION AND STOCKHOLDERS’ AGREEMENT AMONG THE COMPANY AND CERTAIN OF ITS STOCKHOLDERS, DATED AS OF NOVEMBER [ __ ] , 2004, A COPY OF WHICH MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE.

phx-srv01\1468546v07

(b) Opinion of Counsel . No holder of Restricted Securities may sell, pledge or otherwise directly or indirectly transfer (whether with or without consideration and whether voluntarily or involuntarily or by operation of law) any Restricted Securities (except pursuant to an effective registration statement under the Securities Act) without first delivering to the Company, if requested, an opinion of counsel (reasonably acceptable in form and substance to the Company) that neither registration nor qualification under the Securities Act and applicable state securities laws is required in connection therewith.

8.	Tag-Along Rights.

(a) If a Stockholder proposes to transfer any Company equity securities at that time owned by such Stockholder (the “ Selling Stockholder ”) to any Independent Third Party or the Company, then, as a condition precedent thereto, such Stockholder shall afford the other Stockholders (the “ Tag-Along Stockholder ”) the right to participate in such transfer in accordance with this Section 8.

(b) The Selling Stockholder shall give written notice to the Tag-Along Stockholder (a “ Notice of Transfer ”) not less than 20 nor more than 60 days prior to any proposed transfer of any such Common Stock or other Company equity securities. Each such Notice of Transfer shall:

(i) specify in reasonable detail (A) the number of shares of Common Stock or other equity securities the Selling Stockholder proposes to transfer, (B) the identity of the proposed transferee or transferees of such shares of Common Stock or other equity securities, (C) the time within which, the price per share at which and all other terms and conditions upon which the Selling Stockholder proposes to transfer such shares (including a description of all consideration payable in connection with the transfer), and (D) the percentage of the shares of Common Stock (and other Company equity securities, if any) then owned by the Selling Stockholder which the Selling Stockholder proposes to transfer to such proposed transferee or transferees; and

(ii) make explicit reference to this Section 8 and state that the right of the Tag-Along Stockholder to participate in such transfer under this Section 8 shall expire unless exercised within 20 days after receipt of such Notice of Transfer; and

(iii) contain an irrevocable offer by the Selling Stockholder to the Tag-Along Stockholder to participate in the proposed transfer to the extent provided in Section 8(c) below.

(c) The Tag-Along Stockholder shall have the right to transfer to the proposed transferee or transferees that number of Restricted Securities which is equal to the Applicable Percentage (or, if the Tag-Along Stockholder shall elect, any lesser percentage) of the Restricted Securities owned by the Tag-Along Stockholder, for the same terms and conditions and amount of consideration as is applicable to the proposed transfer by the Selling Stockholder (and, if and to the extent the Tag-Along Stockholder shall exercise such right, then the securities to be transferred by the Selling Stockholder shall be correspondingly reduced); provided, that, notwithstanding anything to the contrary herein, the Tag-Along Stockholder shall be obligated to indemnify the proposed transferee or transferees upon the same terms and conditions as are applicable to the indemnification given by the Selling Stockholder in connection with such proposed transfer so long as (i) all indemnification obligations are several, and not joint and several, among all transferors in proportion to the consideration paid to each transferor, and (ii) the maximum obligation of the Tag-Along Stockholder shall not exceed the net cash proceeds actually received by it as a result of such transfer.

(d) The Tag-Along Stockholder must notify the Selling Stockholder of any acceptances under this Section 8(d) within 20 days after receipt of the Notice of Transfer, if the Tag-Along Stockholder desires to accept such offer and to transfer any of its Restricted Securities in accordance with this Section 8. The failure of the Tag-Along Stockholder to provide such notice within such 20 day period shall, for the purposes of this Section 8, be deemed to constitute an irrevocable waiver by the Tag-Along Stockholder of its right to transfer any of its Restricted Securities in connection with the proposed transfer described in such Notice of Transfer. The Selling Stockholder shall use all commercially reasonable efforts to obtain the agreement of the prospective transferee or transferees to the participation of the Tag-Along Stockholder, if the Tag-Along Stockholder properly elects to participate in such proposed transfer, and shall not consummate any such proposed transfer unless the Tag-Along Stockholder is permitted to participate in accordance with the provisions of this Section 8. The Tag-Along Stockholder shall not be obligated to transfer any Restricted Securities pursuant to this Section 8, except to the extent that the Tag-Along Stockholder has notified the Selling Stockholder of the Tag-Along Stockholder’s acceptance of the offer contained in the Notice of Transfer. Any and all transfers of Restricted Securities by the Tag-

phx-srv01\1468546v07

Along Stockholder pursuant to this Section 8 shall be subject to, made concurrently with, the actual transfer of equity securities by the Selling Stockholder.

(e) Subject to the consummation of the transfer contemplated by the Notice of Transfer, the Tag-Along Stockholder shall take such actions and shall execute such documents and instruments as shall be reasonably necessary (and not adverse in any material respect to its interests) to consummate the proposed sale as expeditiously as is reasonably prudent.

(f) At the closing of any such transfer, the Tag-Along Stockholder shall deliver a certificate or certificates, registered in the Tag-Along Stockholder’s name, properly endorsed and with all required transfer stamps, if any, representing the securities being sold by the Tag-Along Stockholder against delivery of the applicable consideration by the proposed transferee.

(g) Notwithstanding anything to the contrary contained in this Section 8, no Stockholder shall have any rights pursuant to this Section 8 to participate in any transfer by a Selling Stockholder to any of its direct or indirect partners, any other private investment company affiliated with the Selling Stockholder, and/or any employees or directors of the Selling Stockholder so long as the purpose of such transfer is not to avoid the Tag-Along Stockholder’s rights pursuant to this Section 8.

(h) The Notice of Transfer contemplated by this Section 8 and the Sale Notice contemplated by Section 6(b) may be combined in a single notice.

(i) The provisions of this Section 8 will terminate upon the completion of a Qualified Public Offering.

9.	Preemptive Rights.

(a) If at any time the Company proposes to issue, sell or grant (other than pursuant to an Exempt Issuance) any shares of Common Stock, preferred stock or other equity securities, whether now or hereafter authorized (“ New Stock ”), or proposes to issue, sell or grant (other than pursuant to an Exempt Issuance) any securities or instruments convertible into, exchangeable or exercisable for New Stock or any options or rights to purchase any such securities or instruments (“ New Securities ”), then not less than 30 days nor more than 60 days prior to consummating such transaction, the Company shall give notice thereof to each Stockholder (a “ Preemptive Rights Notice ”). Each such Preemptive Rights Notice shall:

(i) specify in reasonable detail (A) the number and type of New Stock and/or New Securities which the Company proposes to issue or sell, and (B) the time within which, the price per share at which and all other material terms and conditions upon which the Company proposes to issue or sell such securities; and

(ii) make explicit reference to this Section 9 and state that the right of each Stockholder to purchase any of such securities pursuant to this Section 9 shall expire unless exercised within 20 days after receipt of such Preemptive Rights Notice.

(b) Each Stockholder shall have the right, in the nature of a preemptive right, to purchase that amount of such New Stock or New Securities, on the same terms and conditions as shall be applicable to the issue or sale of such New Stock or New Securities, as will enable the Stockholder to maintain its fully diluted percentage ownership of securities of the Company following such issuance or sale at the level held by it immediately prior to such issuance or sale. Each Stockholder may purchase the total amount of New Stock or New Securities to which it is entitled or any lesser amount as such Stockholder may elect. To the extent that a Stockholder elects to purchase less than the total amount of New Stock or New Securities to which it is entitled, the other Stockholders may purchase the amount not so elected.

(c) A Stockholder must notify the Company within 20 days after receipt of the Preemptive Rights Notice if the Stockholder desires to exercise its purchase rights under this Section 9. The failure of a Stockholder to provide such notice within such 20-day period shall, for purposes of this Section 9, be deemed to constitute an irrevocable waiver by such Stockholder of its right to purchase any portion of the New Stock and/or New Securities specified in such Preemptive Rights Notice. The Company will not consummate any such proposed issue or sale unless any Stockholder electing to exercise its purchase rights under this Section 9 is permitted to purchase the securities it is entitled to pursuant to this Section 9. A Stockholder shall not be obligated to purchase

phx-srv01\1468546v07

any securities pursuant to this Section 9, except to the extent that such Stockholder has notified the Company of the Stockholder’s exercise of the preemptive rights granted in this Section 9.

(d) The provisions of this Section 9 will terminate upon the completion of a Qualified Public Offering.

10.	Registration Rights.
	(a)	Demand Registration .

(i) Following the date which is six (6) months following the date of a Qualified Public Offering, a Stockholder may request the Company to register under the Securities Act all or any portion of the shares of Common Stock held by such Stockholder for sale in the manner specified in such notice; provided , however , that the Company may, by notice to the requesting holders, delay such requested registration if the Company’s Board of Directors determines in good faith that such registration at the time requested would have a material adverse effect upon the Company; provided , further , however, that the Company’s ability to delay such registration shall be limited to durations of no longer than ninety (90) days and the Company shall not delay more than once during any twelve (12) month period.

The Company shall not be obligated pursuant to this Section 10(a)(i) to effectuate more than one (1) registration after a Qualified Public Offering. In addition, the aggregate offering price of the Common Stock to be sold pursuant to each such registration shall be at least $5,000,000. Notwithstanding anything to the contrary contained herein, no request may be made under this Section 10:

(A) within ninety (90) days after the effective date of a registration statement filed by the Company covering a firm commitment underwritten public offering of securities of the Company under the Securities Act, or

(B) during the period starting with the date sixty (60) days prior to the Company’s estimated date of filing of, and ending on the date six (6) months immediately following the effective date of, any registration statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective and that the Company’s estimate of the date of filing such registration statement is made in good faith.

(ii) Following receipt of any notice pursuant to Section 10(a)(i), the Company shall promptly notify the Stockholder from whom such notice has not been received and, as soon thereafter as practicable, shall use its reasonable efforts to register under the Securities Act, for public sale in accordance with the method of disposition specified in such notice from requesting holders, the number of shares of Common Stock specified in such notice (and in all notices received by the Company from other holders within twenty (20) days after the giving of such notice by the Company). If such method of disposition shall be an underwritten public offering, the Company shall designate the managing underwriter of such offering, following consultation and subject to the approval of the Stockholders from whom notice has been received, which approval shall not be unreasonably withheld or delayed. All sellers must participate in the underwriting. The Company’s registration obligation hereunder shall be deemed satisfied only when a registration statement or statements covering all shares of Common Stock specified in notices received as aforesaid, for sale in accordance with the method of disposition specified by the requesting holders, shall have become effective and, if such method of disposition is a firm commitment underwritten public offering, all such shares shall have been sold pursuant thereto.

(iii) The Company shall be entitled to include in any registration statement referred to in this Section 10(a), for sale in accordance with the method of disposition specified by the requesting holders, shares of Common Stock to be sold by the Company for its own account and for the account of other selling stockholders, except as and to the extent that, in the reasonable opinion of the managing underwriter (if such method of disposition shall be an underwritten public offering), such inclusion would materially adversely affect the marketing of the Common Stock to be sold. Except for registration statements on Form S-4, S-8 or any successor thereto, the Company will not file with the SEC any other registration statement with respect to its Common Stock, whether for its own account or that of other stockholders, from the date of receipt of a notice from requesting holders pursuant to this Section 10(a) until the completion of the lesser of (i) the period of distribution of the shares of Common Stock registered thereby or (ii) ninety (90) days from the effective date of the registration statement,

phx-srv01\1468546v07

unless the Common stock owned by the Stockholders shall be entitled to be included therein in accordance with Section 10(b) below.

(iv) The Company will use commercially reasonable efforts to maintain the effectiveness of any form used to register the shares pursuant to this Section 10(a) for up to one hundred eighty (180) days or such earlier time as all of the Common Stock have been sold.

(b) Piggyback Rights . If at any time after the Company has completed a public offering of equity securities registered pursuant to the Securities Act, the Company proposes to file a registration statement under the Securities Act for any underwritten sale of shares of any of the Company’s equity securities, whether for a secondary offering or for a primary offering of equity securities by the Company, the Company shall give written notice of such registration to each Stockholder no later than 15 days before its filing with the Securities and Exchange Commission (the “ SEC ”). If a Stockholder so requests in writing within 15 days, the Company shall include in any registration the Common Stock of the Stockholder requested to be included in such registration.

(c) Pro Rata Reduction . The Company shall not be obligated pursuant to Section 10(b) to so include the Common Stock of a Stockholder to the extent the underwriter or underwriters of such securities being otherwise registered by the Company shall determine in good faith that the inclusion of the Stockholder’s Common Stock would jeopardize the successful sale at the desired price of such other securities proposed to be sold by such underwriter or underwriters, in which case the Stockholder shall be entitled to participate in any such reduced number of shares of Common Stock (if any) which may be included in such registration along with any stockholders of the Company exercising rights with respect to such registration on a pro rata basis in proportion to their relative holdings of shares of Common Stock (including shares of Common Stock issuable upon exercise of any vested and immediately exercisable options held by such Stockholder), in the aggregate (subject to any right of priority of financial institutions who have provided financing to the Company from time to time). This Section 10 shall be interpreted to permit a Stockholder to participate in public offerings on at least a pro rata basis with other stockholders and their Affiliates.

(d) Registration Procedures . Whenever a Stockholder has requested that any Common Stock be registered in accordance with this Section 10, the Company shall use its best efforts to effect the registration and the sale of such Common Stock in accordance with the intended method of disposition thereof and pursuant thereto the Company shall as expeditiously as possible:

(i) prepare and file with the SEC a registration statement with respect to such Common Stock and use its best efforts to cause such registration statement to become and remain effective until completion of the contemplated distribution (provided that nothing herein shall limit the Company’s right to delay and/or terminate any proposed offering of securities);

(ii) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective during the applicable distribution period;

(iii) furnish to each Stockholder such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as the Stockholders may reasonably request in order to facilitate the disposition of the Common Stock owned by the Stockholders;

(iv) use its best efforts to register or qualify such Common Stock under such other securities or blue sky laws of such jurisdictions as a Stockholder may reasonably request and do any and all other acts and things which may be reasonably necessary or advisable to enable the Stockholders to consummate the disposition in such jurisdictions of the Common Stock owned by the Stockholders (provided that the Company shall not be required to (a) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this clause (iv), (b) subject itself to taxation in any such jurisdiction or (c) consent to general service of process in any such jurisdiction);

(v) notify each Stockholder, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading;

phx-srv01\1468546v07

(vi) use its best efforts to cause all such Common Stock to be listed on each securities exchange on which similar securities issued by the Company are then listed;

(vii) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Common Stock being sold reasonably request in order to expedite or facilitate the disposition of such Common Stock ( provided , however , that (x) a Stockholder shall be required only to make representations, warranties, covenants and indemnities as to itself and as to its title to the Common Stock being offered by such Stockholder, and (y) in no event shall the liability of a Stockholder for indemnification exceed the lesser of (a) that proportion of the total of such losses, claims, damages or liabilities indemnified against equal to the proportion of the total securities sold pursuant to such registration statement which is being sold by such Stockholder, or (b) the net proceeds received by such Stockholder from its sale of Common Stock pursuant to such registration statement); and

(viii) permit any holder of Common Stock which is reasonably likely to be deemed to be an underwriter or a controlling person of the Company to participate in the preparation of such registration statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included.

(e) Registration Expenses . All expenses incident to the Company’s performance of or compliance with this Section 10, including without limitation all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions) and other persons or entities retained by the Company (all such expenses being herein called “ Registration Expenses ”), shall be borne by the Company, and the Company shall, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or on the NASD automated quotation system. The Company shall not, however, pay (i) underwriting discounts or commissions to the extent related to the sale of a Stockholder’s Common Stock sold in any registration and qualification, or (ii) fees and expenses of counsel to a Stockholder relating to such registration and qualification.

(f) Indemnification . The Company shall indemnify and hold harmless each Stockholder and any underwriter (as defined in the Securities Act) for the Stockholders and each person, if any, who controls a Stockholder or underwriter within the meaning of the Securities Act against any losses, claims, damages or liabilities, joint or several, and expenses (including reasonable attorneys’ fees and expenses and reasonable costs of investigation) to which a Stockholder or underwriter or such controlling person may be subject, under the Securities Act or otherwise, insofar as any thereof arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in (A) any registration statement under which a Stockholder’s Common Stock was registered under the Securities Act pursuant to this Section 10, any prospectus or preliminary prospectus contained therein, or any amendment or supplement thereto or (B) any other document incident to the registration of the Common Stock under the Securities Act or the qualification of the Common Stock under any state securities laws applicable to the Company, (ii) the omission or alleged omission to state in any item referred to in the preceding clause (i) a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any violation or alleged violation by the Company of the Securities Act, the Securities Exchange Act of 1934 or any other federal or state securities law, rule or regulation applicable to the Company and relating to action or inaction by the Company in connection with any such registration or qualification, except insofar as such losses, claims, damages, liabilities or expenses arise out of or are based upon any untrue statement of material fact or alleged untrue statement of material fact or omission to state a material fact or alleged omission to state a material fact in information furnished to the Company in writing by a Stockholder expressly for use therein (with respect to which information such Stockholder shall so indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of the Securities Act, provided that in no event shall the liability of such Stockholder exceed the net proceeds received by such Stockholder from its sales pursuant to such registration statement).

(g) Lock-Up . Each holder of Restricted Securities agrees not to effect any public sale or other distribution of any Common Stock or other equity securities of the Company, or any securities convertible into or exchangeable or exercisable for any of the Company’s equity securities, during the seven days prior to and the 90

phx-srv01\1468546v07

days after the effectiveness of any underwritten public offering (180 days in the case of the Company’s initial public offering), except as part of such underwritten public offering or if otherwise permitted by the Company; provided , however , that in no event shall a Stockholder be subject to “lock-up” restrictions more extensive than those applicable to the other Stockholders.

11. Redemption Rights. At any time on or after the fifth (5th) anniversary of the Subscription Closing, and from time to time thereafter, the BMP Investors shall have the right to require the Company to redeem all of the Shares held by the BMP Investors and their Affiliates, in accordance with this Section 11, at the Redemption Price hereinafter specified.

(a) The BMP Investors may exercise their right to require redemption pursuant to this Section 11 by providing written notice to the Company (a “ Redemption Notice ”) of the BMP Investors’ desire to exercise the right. Upon its receipt of a Redemption Notice, the Company shall provide written notice to SCP stating that the BMP Investors have elected to exercise redemption rights pursuant to this Section 11. SCP, at its option, shall have the right, by binding notice to the Company and the BMP Investors within twenty (20) business days of its receipt of the Redemption Notice, to assume the Company’s redemption obligations under this Section 11 or exercise its rights in accordance with Section 8 of this Agreement and require the Company to redeem all of its Shares along with the Shares of the BMP Investors and their Affiliates.

(b) Upon surrender of the Shares held by the BMP Investors or an Affiliate thereof and, if applicable, SCP, the Company shall pay to the BMP Investors and, if applicable, SCP, an amount (the “ Redemption Price ”) in cash or other immediately available funds equal to the Fair Market Value of such Shares. The Company shall be required to pay the Redemption Price on the 31st day following its receipt of the Redemption Notice (or any appraisal described in the definition of Fair Market Value) (the “ Required Payment Date ”), subject to obtaining any required consents under the loan agreements of the Company and its Subsidiaries to the redemption. If the Company is prohibited from effecting such redemption due to the provisions of such loan agreements for more than 45 days, then, if requested by the BMP Investors, any appraisal shall be updated to a date which is no more than 30 days prior to the date on which such redemption is to be effected and the Redemption Price paid.

(c) On or before the date of such redemption, the BMP Investors and, if applicable, SCP shall execute such instruments as the Company may reasonably require to ensure that such Shares are duly and validly transferred to the Company (or SCP, if applicable), free of all liens, claims and encumbrances and on such date the Redemption Price for such Shares shall be paid to the order of the BMP Investors or as directed by the BMP Investors and, if applicable, SCP.

(d) In the event that the Redemption Price is not paid in full within one year after the date of the Redemption Notice (including, without limitation, because the Company is prohibited from doing so pursuant to the terms of any loan agreement binding upon the Company and/or any of its Subsidiaries), then, subject to Section 8 of this Agreement, the BMP Investors and, if applicable, SCP may, or shall have the right to cause the Company to, commence a process to sell (and to consummate the sale of) the Company, either through a sale of all or substantially all of the Company’s assets or shares, or by merger, consolidation, or otherwise, to any third party that is not an Affiliate of the BMP Investors, on such terms as the BMP Investors and SCP deem appropriate, including executing all documents required in connection therewith as attorney-in-fact for the Company or any Subsidiary (as may be necessary or appropriate), and SCP shall cooperate with the BMP Investors and the Company in effecting such transaction and execute all customary documents necessary to accomplish the same.

12. Expenses. The Company will reimburse documented reasonable out-of-pocket expenses incurred by the Stockholders including, but not limited to, travel, consulting fees, third party diligence fees and reasonable attorneys’ fees relating to due diligence and documentation for the Acquisition. If the Acquisition is not consummated, (i) the Stockholders will be responsible for their own out-of-pocket travel related expenses and (ii) all other expenses incurred relating to the transaction, including, but not limited to, third party diligence fees and expenses such as accounting, tax, environmental, insurance and legal, shall be shared equally by each of (A) the BMP Investors as a group, and (B) SCP.

13. Notices. All notices, requests, demands, claims and other communications hereunder will be in writing. Any notice, request, demand, claim or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:

phx-srv01\1468546v07

(a)	If to the Company :

Latham Acquisition Corp.

787 Watervliet–Shaker Road

Latham, NY 12110

Attention: Mark Laven

Facsimile: (518) 785-1592

with copies to :

Greenberg Traurig, LLP

2375 East Camelback Road

Suite 700

Phoenix, AZ 85016

Attention: Bruce E. Macdonough

Facsimile: (602) 445-8618

and to the BMP Investors and SCP (at the addresses set forth below).

(b)	If to either or both of the BMP Investors :

c/o Brockway Moran & Partners, Inc.

225 N.E. Mizner Boulevard

7th Floor

Boca Raton, FL 33432

Attention: Peter Klein

Facsimile: (561) 750-2001

(c)	If to SCP :

SCP Pool Corporation

109 Northpark Boulevard

Covington, LA 70433

Attention: Jennifer M. Neil

Facsimile: (985) 801-8269

Any party hereto may send any notice, request, demand, claim or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail or electronic mail), but no such notice, request, demand, claim or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any party hereto may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other party notice in the manner herein set forth.

14. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed,

phx-srv01\1468546v07

construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained in this Agreement.

15. Complete Agreement. This Agreement embodies the complete agreement and understanding among the parties and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter of this Agreement in any way.

16. Counterparts. This Agreement may be executed on separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. Any telecopied signature shall be deemed a manually executed and delivered original.

17. Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by the BMP Investors, SCP, the Company, and their respective successors and assigns (including subsequent holders of the Shares) and, where applicable, heirs and personal representatives.

18. Choice of Law; Jurisdiction. This Agreement shall be governed and construed in accordance with the laws of the state of Delaware without regard to conflicts of laws principles thereof and all questions concerning the validity and construction of this Agreement shall be determined in accordance with the laws of such state. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION LOCATED IN THE STATE OF DELAWARE IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND HEREBY IRREVOCABLY AGREES, ON BEHALF OF ITSELF AND ON BEHALF OF SUCH PARTY’S SUCCESSOR’S AND ASSIGNS, THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION SUCH PERSON MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.

19. Waiver of Jury Trial. THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, THE RELATED DOCUMENTS OR THE RELATIONSHIP ESTABLISHED UNDER THIS AGREEMENT.

20. Remedies. Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement. Without limiting the generality of the foregoing, the BMP Investors (on the one hand) and SCP (on the other hand) shall be able to enforce, individually and on behalf of the Company, the performance of the other party’s(ies’) obligations under Section 2(a) hereof. In addition, Seller shall be a third party beneficiary of this Agreement as contemplated by Section 2(c)(vii)(F) hereof.

21. Amendments and Waivers. No provision of this Agreement may be amended or waived without the prior written consent or agreement of the Company, the BMP Investors and SCP.

22. Business Days. Whenever the terms of this Agreement call for the performance of a specific act on a specified date, which date falls on a Saturday, Sunday or legal holiday, the date for the performance of such act shall be postponed to the next succeeding regular business day following such Saturday, Sunday or legal holiday.

23. Failure to Deliver Securities. If a Stockholder or other holder of Restricted Securities (or a Stockholder’s or such other holder’s estate or any other representative of such Stockholder or holder of Restricted Securities) who has become obligated to sell Restricted Securities under this Agreement shall fail to deliver such Restricted Securities on the terms and in accordance with this Agreement, the Company, in addition to all other remedies it may have, may send to such obligated party by registered mail, return receipt requested, the purchase price for such Restricted Securities on the terms provided for in this Agreement. Thereupon, the Company, upon written notice to such holder, shall cancel on its books the Restricted Securities to be sold; and thereupon, all of such obligated holder’s rights in and to such Restricted Securities shall terminate.

phx-srv01\1468546v07

24. No Third Party Beneficiary. Except for the parties to this Agreement and their respective successors and assigns, nothing expressed or implied in this Agreement is intended, or will be construed, to confer upon or give any person other than the parties hereto and their respective successors and assigns any rights or remedies under or by reason of this Agreement.

25. Transfers in Violation of Agreement. Any transfer or attempted transfer of any Restricted Securities or other securities in violation of any provision of this Agreement shall be void, and the Company shall not record such transfer on its books or treat any purported transferee of such Restricted Securities as the owner of such stock for any purpose.

26. Attorneys’ Fees. In the event any suit or other legal proceeding is brought for the enforcement of any of the provisions of this Agreement, the parties hereto agree that the prevailing party or parties shall be entitled to recover from the other party or parties upon final judgment on the merits reasonable attorneys’ fees (and sales taxes thereon, if any), including attorneys’ fees for any appeal, and costs incurred in bringing such suit or proceeding.

[SIGNATURES BEGIN ON THE FOLLOWING PAGE]

phx-srv01\1468546v07

IN WITNESS WHEREOF, intending to be legally bound hereby, each of the undersigned has duly executed and delivered this Subscription and Stockholders’ Agreement as of the day and year first above written.

LATHAM ACQUISITION CORP.

By : /s/ Mark A Eidemueller

Name: / Mark A Eidemueller

Title: Vice President

BROCKWAY MORAN & PARTNERS FUND II, L.P.

By:	Brockway Moran & Partners Management II, L.P., its General Partner
	By:	Brockway Moran & Partners, Inc., its General Partner

By : /s/ Peter C. Brockway

Name: Peter C. Brockway

Title: Chairman

Taxpayer Identification Number: 65-1133310

BROCKWAY MORAN & PARTNERS II CO-INVEST FUND, L.P.

By:	Brockway Moran & Partners Management II, L.P., its General Partner
	By:	Brockway Moran & Partners, Inc., its General Partner

By : /s/ Peter C. Brockway

Name: :Peter C. Brockway

Title: Chairman

Taxpayer Identification Number:

SCP POOL CORPORATION , on behalf of itself and its wholly owned subsidiary, Fort Wayne Pools, Inc.

By : /s/ Manuel J Perez de la Mesa

Name: Manuel J Perez de la Mesa

Title: President

Taxpayer Identification Number:

phx-srv01\1468546v07

SCHEDULE 1

Capitalization

Name	Number of Shares	Consideration
Brockway Moran & Partners Fund II, L.P.	198,000	$19,800,000 (1)(2)
Brockway Moran & Partners II Co-Invest Fund, L.P.	(1)	(1)
Fort Wayne Pools, Inc. (3)	198,000	(2)(3)
Apollo Investment Corporation (4)	30,000	$3,000,000
Mark Laven	40,000	(5)
Doug Laver	10,000	$1,000,000 (6)
Charles Trego, Jr.	6,000	(5)
Scott Hollander	1,600	(5)
Gary Whitcher	1,300	(5)
Other (7)

(1) Brockway Moran fund investments and shares will be allocated 97.9689% to Fund II and 2.0311% to Co-Invest Fund.

(2) Additional cash equity may be required because of lender leverage requirements, working capital at closing, and the extent of participation by Apollo. Any additional equity will be acquired at $100 per share equally by the BMP Investors (taken as a whole) and SCP.

(3) Will contribute to the Company (i) substantially all of its assets, which, after taking into account specified assumed liabilities, are valued at $17,472,432; and (ii) $2,327,568 in cash.

(4) There is no formal commitment from Apollo at the date hereof. Amount could range from $2.5-4.0 million. See footnote 2.

(5)	Stock of Latham Investments, Inc.
(6)	Paid $800,000 in cash and $200,000 through the delivery of a 3% promissory note.

(7) The Company anticipates that it will adopt a stock option or other equity incentive plan that could dilute investors’ ownership interest by approximately 7%.

phx-srv01\1468546v07

SCP POOL CORPORATION

109 Northpark Boulevard, 4 ^th Floor

Covington, Louisiana 70433-5001

Telephone: (985) 892-5521

Facsimile: (985) 892-1657

February 26, 2003

«Title" «FirstName" «LastName"

Re:	SCP Pool Corporation Grant of

Nonqualified Stock Options

Dear «Title" «LastName":

Pursuant to the SCP Pool Corporation Non-Employee Directors Equity Incentive Plan (the “Plan”) you are hereby granted a stock option (an “Option”), as provided below, under the Plan, a copy of which is attached hereto.

1.	Definitions . For the purposes of this Agreement, the following terms shall have the meanings set forth below:

“Common Stock” means the Company’s Common Stock, par value $.001 per share, or, in the event that the outstanding Common Stock is hereafter changed into or exchanged for different stock or securities of the Company, such other stock or securities.

“Code” means the Internal Revenue Code of 1986, as amended, and any successor statute.

“Committee” means committee of the Company’s Board of Directors which may be appointed to administer the Plan. The Committee shall be composed of two or more directors as appointed from time to time to serve by the Company’s Board of Directors.

“Company” shall mean SCP Pool Corporation, a Delaware corporation.

“ ERISA ” shall mean the Employee Retirement Security Income Act of 1974, as amended.

“Fair Market Value” of any security of the Company shall mean (a) the closing sale price of a share of such security on the Nasdaq National Market, or the domestic stock exchange on which such security is then listed on such date, or if the Nasdaq National Market (or the applicable exchange) is closed on that date, on the last preceding date on which the Nasdaq National Market or such exchange was open for trading or (b) if the foregoing clause does not apply, the fair value as determined in good faith by the Committee.

“Grant Date” shall mean February 11, 2003.

“Option Shares” shall mean (i) all shares of Common Stock issued or issuable upon the exercise of the Option and (ii) all shares of Common Stock issued with respect to the Common Stock referred to in clause (i) above by way of stock dividend or stock split or in connection with any conversion, merger, consolidation or recapitalization or other reorganization affecting the Common Stock.

“ Retirement ” shall mean termination of your employment if you have been employed by the Company or a subsidiary of the Company on a continuous basis for a period of at least ten years and you have attained the age of 55 years.

“Sale of the Company” shall mean a merger of the Company with or into another corporation constituting a change of control, a sale of all or substantially all of the Company’s assets or a sale of a majority of the Company’s outstanding voting securities.

“ Securities Act ” shall mean the Securities Act of 1933, as amended, and any successor statute.

Option.

(a) Terms . Your Option is to purchase «Shares" shares of Common Stock at an option price per share of $26.95 (the “ Exercise Price ”), payable upon exercise as set forth in paragraph 2(b) below. Your Option will expire at the close of business on February 11, 2013 (the “ Expiration Date ”), subject to earlier expiration in connection with the termination of your term as a director as provided in paragraph 4(b) below. Your Option is not intended to be an “incentive stock option” within the meaning of Section 422A of the Code.

(b) Payment of Option Price . Subject to paragraph 3 below, your Option may be exercised in whole (and not in part, except as provided in paragraph 3(b) below) upon payment of an amount equal to the product of (i) the Exercise Price multiplied by (ii) the number of Option Shares to be acquired. Payment shall be made in cash (including check, bank draft or money order), by delivery of Common Stock (valued at the Fair Market Value thereof on the date of exercise) or by delivery of a combination of cash and Common Stock; provided, however, that the Committee may require the Exercise Price to be paid in cash.

3.	Exercisability /Vesting.

(a) Your Option may be exercised only to the extent it has vested. Your Option will fully vest and become exercisable with respect to all of your Option Shares on «VestDate", but only if you are still serving as a director of the Company on such date or as otherwise provided in paragraph 4(b) below.

(b) Acceleration of Vesting on Sale of the Company . If you have been continuously serving as a director of the Company from the date of this Agreement until a Sale of the Company, any outstanding Option which has not vested at the date of such event, has not been assumed by the successor corporation or a parent of such successor corporation, has not been exchanged for substantially equivalent options by the successor corporation or a parent of such successor corporation and has not been assumed by the successor corporation will immediately vest and become exercisable with respect to 100% of the Option Shares simultaneously with the consummation of the Sale of the Company, and any portion of your Option which has not been exercised prior to or in connection with the Sale of the Company will be forfeited, unless otherwise determined by the Committee.

4.	Expiration of Option.

(a) Normal Expiration. In no event shall any part of your Option be exercisable after the Expiration Date set forth in paragraph 2(a) above.

(b) Early Expiration Upon Termination of Service as a Director . Any Option that is vested or not vested on the date your service as a director of the Company terminates (for any reason whatsoever) will expire and be forfeited on such date, provided, however, (i) if you die, any Option that is vested and exercisable will expire three months from the date of your death, but in no event after the Expiration Date; (ii) if you are not re-elected as a director, any Option that is vested and exercisable will expire fifteen days from the date on which you fail to be reelected as a director, but in no event after the Expiration Date; (iii) if you cease to be a director upon the occurrence of your Retirement, provided that you do not engage in competition directly or indirectly against the Company, as determined by the Board, any Options that are vested and exercisable on the date of Retirement shall remain exercisable and shall terminate on the Expiration Date; and (iv) if you cease to be a director for any reason other than failure to be re-elected, death, or Retirement, provided that you do not engage in competition directly or indirectly against the Company, as determined by the Board, any Options that are vested and exercisable on the date of such cessation shall remain exercisable and shall terminate on the Expiration Date.

5. Procedure for Exercise . You may exercise all or any portion of your Option, to the extent it has vested and is outstanding, at any time and from time to time prior to its expiration, by delivering written notice to the Company (to the attention of the Company’s Secretary).

6. Securities Laws Restrictions and Other Restrictions on Transfer of Option Shares . You represent that when you exercise your Option you will be purchasing Option Shares for your own account and not on behalf of others. You understand and acknowledge that federal and state securities laws govern and restrict your right to offer, sell or otherwise dispose of any Option Shares unless your offer, sale or other disposition thereof is registered under the Securities Act and state securities laws, or in the opinion of the Company’s counsel, such offer, sale or other disposition is exempt from registration or qualification thereunder. You agree that you will not offer, sell or otherwise dispose of any Option Shares in any manner which would: (i) require the Company to file any registration statement with the Securities and Exchange Commission (or any similar filing under state law) or to amend or supplement any such filing or (ii) violate or cause the Company to violate the Securities Act, the rules and regulations promulgated thereunder or any other state or federal law. You further understand that the certificates for any Option Shares you purchase will bear such legends as the Company deems necessary or desirable in connection with the Securities Act or other rules, regulations or laws.

7. Non-Transferability of Option . Your Option is personal to you and is not transferable by you other than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order, as defined by §1 et seq. of the Code, Title I of ERISA and the rules thereunder. During your lifetime only you (or your guardian or legal representative) may exercise your Option. In the event of your death, your Option may be exercised only (i) by the executor or administrator of your estate or the person or persons to whom your rights under the Option shall pass by will or the laws of descent and distribution and (ii) to the extent that you were entitled hereunder at the date of your death.

8. Conformity with Plan. Your Option is intended to conform in all respects with, and is subject to all applicable provisions of, the Plan, which is incorporated herein by reference. Inconsistencies between this Agreement and the Plan shall be resolved in accordance with the terms of the Plan. By executing and returning the enclosed copy of this Agreement, you acknowledge your receipt of this Agreement and the Plan and agree to be bound by all of the terms of this Agreement and the Plan.

9. Withholding of Taxes . The Company shall be entitled, if necessary or desirable, to withhold from you from any amounts due and payable by the Company to you (or secure payment from you in lieu of withholding) the amount of any withholding or other tax due from the Company with respect to any Option Shares issuable under this Plan, and the Company may defer such issuance unless indemnified by you to its satisfaction.

10. Adjustments. In the event of a reorganization, recapitalization, stock dividend or stock split, combination of shares, merger, consolidation or other change in the Common Stock, appropriate adjustments in the number and type of shares authorized by the Plan, the number and type of shares covered by your Option and the Exercise Price specified herein will be made.

11. Amendment . Except as otherwise provided herein, any provision of this Agreement may be amended or waived only with the prior written consent of you and the Company.

12. Successors and Assigns . Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of the respective successors and permitted assigns of the parties hereto whether so expressed or not.

13. Severability . Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

14. Counterparts . This Agreement may be executed simultaneously in two or more counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same Agreement.

15. Descriptive Headings . The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

16. Governing Law . The corporate law of Delaware will govern all questions concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity and interpretation of this Agreement will be governed by the internal law, and not the law of conflicts, of Illinois.

17. Entire Agreement . This Agreement constitutes the entire understanding between you and the Company, and supersedes all other agreements, whether written or oral, with respect to the subject matter hereof.

( ( ( ( (

Please execute the extra copy of this Agreement in the space below and return it to the Company’s Secretary at its executive offices to confirm your understanding and acceptance of the agreements contained in this Agreement.

Very truly yours,

SCP POOL CORPORATION

Name

Title

Enclosures:

1. Extra copy of this Agreement

2. Copy of the Plan

The undersigned hereby acknowledges having read this Agreement and the Plan and hereby agrees to be bound by all provisions set forth herein and in the Plan.

Dated as of:

PARTICIPANT

March, 2003

«FirstName" «LastName"

EXHIBIT 21.1

List of Subsidiaries

Subsidiary	State or Jurisdiction of Incorporation or Organization
SCP Distributors LLC	Delaware
Superior Commerce LLC	Delaware
SCP Northpark LLC	Delaware
SCP Services LP	Delaware
Alliance Trading, Inc.	Delaware
SCP Acquisition Co. LLC	Delaware
Superior Pool Products LLC	Delaware
SCP International, Inc.	Delaware
Pool Development LLC	Delaware
SCP Pool Holdings, BV	Netherlands
SCP Pool, BV	Netherlands
SCP (UK) Holdings Limited	United Kingdom
SCP (UK) Limited	United Kingdom
Garden Leisure Products, Ltd	United Kingdom
Swimming Pool Warehouse Ltd	United Kingdom
Cascade Swimming	United Kingdom
Norcal Pool Supplies Ltd	United Kingdom
Bonin Consultores E Servicos, LDA	Portugal
SCP Pool Portugal LDA	Portugal
SCP Europe, SAS	France
SCP France SAS	France
SCP Distributors Inc.	Ontario
Superior Pool Products, Inc.	Ontario
Splash Holdings, Inc.	Indiana
Windsor International, Ltd	Cayman Islands
SCP Pool Distributors Spain, S.L.	Spain
SCP Mexico S.A. de C.V	Mexico
Les Industries R.P. Inc.	Quebec
Sud Ouest Filtration SAS	France
SCP (Shanghai) Purchasing Co Ltd	China
Cypress, Inc.	Nevada
Cypress Hong Kong Limited	Hong Kong

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements (Form S-8 No. 333-16641, No. 333-16639, No. 333-58805, No. 333-75617, and No. 333-97905) pertaining to the SCP Pool Corporation Non-Employee Directors Equity Incentive Plan, the SCP Pool Corporation 1995 Stock Option Plan, the SCP Pool Corporation Employee Stock Purchase Plan, the SCP Pool Corporation 1998 Stock Option Plan, and the SCP Pool Corporation 2002 Long-Term Incentive Plan of our reports dated February 25, 2005,with respect to the consolidated financial statements and schedule of SCP Pool Corporation, SCP Pool Corporation management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of SCP Pool Corporation, included in this Annual Report (Form 10-K) for the year ended December 31, 2004.

ERNST & YOUNG LLP

New Orleans, Louisiana

February 25, 2005

EXHIBIT 31.1

I, Mark W. Joslin, certify that:

1.	I have reviewed this annual report on Form 10-K of SCP Pool Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: March 1, 2005	/s/ Mark W. Joslin
	Vice President and Chief Financial Officer

EXHIBIT 31.2

I, Manuel J. Perez de la Mesa, certify that:

1.	I have reviewed this annual report on Form 10-K of SCP Pool Corporation;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: March 1, 2005	/s/ Manuel J. Perez de la Mesa
	President and Chief Executive Officer

EXHIBIT 32.1

Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350

(Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Annual Report on Form 10-K of SCP Pool Corporation (the “Company”) for the period ending December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Manuel J. Perez de la Mesa, as Chief Executive Officer of the Company, and Mark W. Joslin, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 1, 2005

/s/ Manuel J. Perez de la Mesa

Manuel J. Perez de la Mesa

President and

Chief Executive Officer

/s/ Mark W. Joslin

Mark W. Joslin

Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.