Amended and Restated Loan and Security Agreement, dated as of January 25, 2005



 Exhibit 10.03 

  
 AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT 
  
 among 
  
 LESLIE’S POOLMART, INC., 
 and 
 LPM MANUFACTURING, INC., 
 as Borrowers, on the one hand, 
  
 THE FINANCIAL INSTITUTIONS NAMED HEREIN, 
 as Lenders, 
  
 and 
  
 WELLS FARGO RETAIL FINANCE LLC, 
 as Agent, on the other hand 
  
 Dated as of January 25, 2005 
  









							
	 1.
	  	DEFINITIONS AND CONSTRUCTION	  	1
				
	 	  	1.1.	  	Definitions	  	1
	 	  	1.2.	  	Accounting Terms	  	22
	 	  	1.3.	  	Code	  	23
	 	  	1.4.	  	Construction	  	23
	 	  	1.5.	  	Schedules and Exhibits	  	23
			
	 2.
	  	LOAN AND TERMS OF PAYMENT	  	23
				
	 	  	2.1.	  	Revolving Advances	  	23
	 	  	2.2.	  	Letters of Credit	  	29
	 	  	2.3.	  	Intentionally Omitted	  	33
	 	  	2.4.	  	Intentionally Omitted	  	33
	 	  	2.5.	  	Payments	  	33
	 	  	2.6.	  	Overadvances	  	34
	 	  	2.7.	  	Interest and Letter of Credit Fees: Rates, Payments, and Calculations	  	34
	 	  	2.8.	  	Collection of Accounts	  	36
	 	  	2.9.	  	Crediting Payments; Application of Collections	  	36
	 	  	2.10.	  	Designated Account	  	37
	 	  	2.11.	  	Maintenance of Loan Account; Statements of Obligations	  	37
	 	  	2.12.	  	Fees	  	37
	 	  	2.13.	  	Eurodollar Rate Loans	  	38
	 	  	2.14.	  	Illegality	  	39
	 	  	2.15.	  	Requirements of Law	  	40
	 	  	2.16.	  	Indemnity	  	42
			
	 3.
	  	CONDITIONS; TERM OF AGREEMENT	  	42
				
	 	  	3.1.	  	Conditions Precedent to the Initial Advance and the Initial Letter of Credit	  	42
	 	  	3.2.	  	Conditions Precedent to all Advances and all Letters of Credit	  	44
	 	  	3.3.	  	Reserved	  	44
	 	  	3.4.	  	Term; Automatic Renewal	  	44
	 	  	3.5.	  	Effect of Termination	  	44
	 	  	3.6.	  	Early Termination or Reduction of Commitments and Base Commitment Amount by Borrowers	  	45
	 	  	3.7.	  	Termination Upon Event of Default	  	45
			
	 4.
	  	CREATION OF SECURITY INTEREST	  	46
				
	 	  	4.1.	  	Grant of Security Interest	  	46
	 	  	4.2.	  	Negotiable Collateral	  	46
	 	  	4.3.	  	Collection of Accounts, General Intangibles, and Negotiable Collateral	  	46
	 	  	4.4.	  	Delivery of Additional Documentation Required	  	46
	 	  	4.5.	  	Power of Attorney	  	46









							
	 	  	4.6.	  	Right to Inspect	  	47
			
	 5.
	  	REPRESENTATIONS AND WARRANTIES	  	47
				
	 	  	5.1.	  	No Encumbrances	  	47
	 	  	5.2.	  	Intentionally Omitted	  	48
	 	  	5.3.	  	Inventory	  	48
	 	  	5.4.	  	Equipment	  	48
	 	  	5.5.	  	Location of Inventory and Equipment	  	48
	 	  	5.6.	  	Inventory Records	  	48
	 	  	5.7.	  	Location of Chief Executive Office; FEIN	  	48
	 	  	5.8.	  	Due Organization and Qualification; Subsidiaries	  	48
	 	  	5.9.	  	Due Authorization; No Conflict	  	49
	 	  	5.10.	  	Litigation	  	50
	 	  	5.11.	  	No Material Adverse Change	  	50
	 	  	5.12.	  	Solvency. Borrowers are Solvent	  	50
	 	  	5.13.	  	Employee Benefits	  	50
	 	  	5.14.	  	Environmental Condition	  	50
	 	  	5.15.	  	Taxes	  	51
	 	  	5.16.	  	Foreign Asset Control Regulations, etc	  	51
			
	 6.
	  	AFFIRMATIVE COVENANTS	  	51
				
	 	  	6.1.	  	Accounting System	  	51
	 	  	6.2.	  	Collateral Reporting	  	51
	 	  	6.3.	  	Financial Statements, Reports, Certificates	  	52
	 	  	6.4.	  	Intentionally Omitted	  	53
	 	  	6.5.	  	Intentionally Omitted	  	53
	 	  	6.6.	  	Returns	  	53
	 	  	6.7.	  	Title to Equipment	  	53
	 	  	6.8.	  	Maintenance of Equipment	  	53
	 	  	6.9.	  	Taxes	  	53
	 	  	6.10.	  	Insurance	  	54
	 	  	6.11.	  	No Setoffs or Counterclaims	  	55
	 	  	6.12.	  	Location of Inventory and Equipment	  	55
	 	  	6.13.	  	Compliance with Laws	  	55
	 	  	6.14.	  	Employee Benefits	  	55
	 	  	6.15.	  	Leases	  	55
			
	 7.
	  	NEGATIVE COVENANTS	  	56
				
	 	  	7.1.	  	Indebtedness	  	56
	 	  	7.2.	  	Liens	  	57
	 	  	7.3.	  	Restrictions on Fundamental Changes	  	57
	 	  	7.4.	  	Disposal of Assets	  	57
	 	  	7.5.	  	Change Name	  	57
	 	  	7.6.	  	Guarantee	  	57









							
	 	  	7.7.	  	Nature of Business	  	58
	 	  	7.8.	  	Prepayments and Amendments	  	58
	 	  	7.9.	  	Change of Control	  	58
	 	  	7.10.	  	Consignments	  	58
	 	  	7.11.	  	Distributions	  	58
	 	  	7.12.	  	Accounting Methods	  	59
	 	  	7.13.	  	Investments and Acquisitions	  	59
	 	  	7.14.	  	Transactions with Affiliates	  	59
	 	  	7.15.	  	Suspension	  	59
	 	  	7.16.	  	Intentionally Omitted	  	59
	 	  	7.17.	  	Use of Proceeds	  	59
	 	  	7.18.	  	Change in Location of Chief Executive Office; Inventory and Equipment with Bailees	  	59
	 	  	7.19.	  	No Prohibited Transactions Under ERISA	  	59
	 	  	7.20.	  	Financial Covenants	  	60
	 	  	7.21.	  	Capital Expenditures	  	61
			
	 8.
	  	EVENTS OF DEFAULT	  	61
				
	 	  	8.13.	  	If a “Change in Control” occurs under and as defined in the Indenture	  	63
			
	 9.
	  	THE LENDER GROUP’S RIGHTS AND REMEDIES	  	63
				
	 	  	9.1.	  	Rights and Remedies	  	63
	 	  	9.2.	  	Remedies Cumulative	  	65
			
	 10.
	  	TAXES AND EXPENSES	  	65
			
	 11.
	  	WAIVERS; INDEMNIFICATION	  	66
				
	 	  	11.1.	  	Demand; Protest; etc	  	66
	 	  	11.2.	  	The Lender Group’s Liability for Collateral	  	66
	 	  	11.3.	  	Indemnification	  	66
	 	  	11.4.	  	Joint Borrowers	  	66
			
	 12.
	  	NOTICES	  	72
			
	 13.
	  	CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER	  	73
			
	 14.
	  	DESTRUCTION OF BORROWERS’ DOCUMENTS	  	74
			
	 15.
	  	ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS	  	74
				
	 	  	15.1.	  	Assignments and Participations	  	74
	 	  	15.2.	  	Successors	  	76
			
	 16.
	  	AMENDMENTS; WAIVERS	  	77









							
	 	  	16.1.	  	Amendments and Waivers	  	77
	 	  	16.2.	  	No Waivers; Cumulative Remedies	  	78
			
	 17.
	  	AGENT; THE LENDER GROUP	  	78
				
	 	  	17.1.	  	Appointment and Authorization of Agent	  	78
	 	  	17.2.	  	Delegation of Duties	  	79
	 	  	17.3.	  	Liability of Agent-Related Persons	  	79
	 	  	17.4.	  	Reliance by Agent	  	80
	 	  	17.5.	  	Notice of Default or Event of Default	  	80
	 	  	17.6.	  	Credit Decision	  	81
	 	  	17.7.	  	Costs and Expenses; Indemnification	  	81
	 	  	17.8.	  	Agent in Individual Capacity	  	82
	 	  	17.9.	  	Successor Agent	  	82
	 	  	17.10.	  	Withholding Tax	  	83
	 	  	17.11.	  	Collateral Matters	  	84
	 	  	17.12.	  	Restrictions on Actions by Lenders; Sharing of Payments	  	85
	 	  	17.13.	  	Agency for Perfection	  	86
	 	  	17.14.	  	Payments by Agent to the Lenders	  	86
	 	  	17.15.	  	Concerning the Collateral and Related Loan Documents	  	86
	 	  	17.16.	  	Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information	  	86
	 	  	17.17.	  	Several Obligations; No Liability	  	88
			
	 18.
	  	GENERAL PROVISIONS	  	88
				
	 	  	18.1.	  	Effectiveness	  	88
	 	  	18.2.	  	Section Headings	  	88

	 	  	18.3.	  	Interpretation	  	88
	 	  	18.4.	  	Severability of Provisions	  	88
	 	  	18.5.	  	Counterparts; Telefacsimile Execution	  	88
	 	  	18.6.	  	Revival and Reinstatement of Obligations	  	89
	 	  	18.7.	  	Integration	  	89
	 	  	18.8.	  	Existing Loan Agreement Superseded	  	89
	 	  	18.9.	  	U.S. Patriot Act	  	90

  
  







 SCHEDULES AND EXHIBITS 
  

			
	 Schedule C-1
	  	Commitments on Closing Date
	 Schedule E-1
	  	Inventory Locations
	 Schedule P-1
	  	Permitted Liens
	 Schedule 5.7
	  	Chief Executive Offices, FEINs
	 Schedule 5.8
	  	Subsidiaries
	 Schedule 5.10
	  	Litigation
	 Schedule 6.12
	  	Location of Inventory and Equipment
	 Schedule 7.1
	  	Indebtedness
	 Schedule 7.4
	  	Sale and Leaseback Properties
	 Exhibit A-1
	  	Form of Assignment and Acceptance
	 Exhibit B-1
	  	Form of Business Plan
	 Exhibit C-1
	  	Form of Compliance Certificate
	 Exhibit E-1
	  	Eligible Transferees
	 Exhibit F-1
	  	Confirmation of Winter 2006 Seasonal Extra Amount Commitment

  
  
  







 AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT 
  
 THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this
“Agreement”), is entered into as of January 25, 2005, among LESLIE’S POOLMART, INC., a Delaware corporation (“Poolmart”), LPM MANUFACTURING, INC., a California corporation (“LPM”; each of
Poolmart and LPM, a “Borrower,” and collectively, “Borrowers”), with Borrowers’ chief executive office located at 3925 E. Broadway Road, Suite 100, Phoenix, Arizona 85040, on the one hand, and the financial institutions
listed on the signature pages hereof (such financial institutions, together with their respective successors and assigns, are referred to hereinafter each individually as a “Lender” and collectively as the “Lenders”), and
WELLS FARGO RETAIL FINANCE LLC, as Agent, on the other hand. 
  
 RECITALS 
  
 WHEREAS, the Borrowers, the
lenders and agents party thereto (the “Existing Lenders”), are parties to that Existing Loan Agreement (as hereinafter defined), pursuant to which the Existing Lenders have made loans and other extensions of credit to the
Borrowers; 
  
 WHEREAS, the Lenders are willing to amend
and restate the Existing Loan Agreement, and the Lenders are willing to make loans and other extensions of credit to the Borrower, all on the terms and conditions set forth herein; 
  
 NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged (these recitals being an integral part of this Agreement), the Borrowers, the Agent and the Lenders hereby agree that, as of the Closing Date (as defined below), the Existing Loan Agreement shall be
amended and restated in its entirety and shall remain in full force and effect only as set forth herein and parties hereto hereby agree as follows: 
  
 The parties agree as follows: 
  
 1. DEFINITIONS AND CONSTRUCTION. 
  
 1.1. Definitions. As used in this Agreement, the following terms shall have the following definitions: 
  
 “ACH Transactions” means any cash management or related
services (including the Automated Clearing House processing of electronic funds transfers through the direct Federal Reserve Fedline system) provided by WFRF or its Affiliates for the account of the Borrowers. 
  
 “Account Debtor” means any Person who is or who may become
obligated under, with respect to, or on account of, an Account. 







 “Accounts” means all currently existing and hereafter arising accounts, contract
rights, and all other forms of obligations owing to Borrower arising out of the sale or lease of goods or the rendition of services by Borrower, irrespective of whether earned by performance, and any and all credit insurance, guaranties, or security
therefor. 
  
 “Adjusted Eurodollar Rate” means,
with respect to each Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, to the next whole multiple of 1/100 of 1% per annum) determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage
equal to (i) 100% minus (ii) the Reserve Percentage. The Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of any change in the Reserve Percentage. 
  
 “Advances” has the meaning set forth in Section 2.1(a). 
  
 “Affiliate” means, as applied to any Person, any other
Person who directly or indirectly controls, is controlled by, is under common control with or is a director or executive officer of such Person. For purposes of this definition, “control” means the possession, directly or indirectly, of
the power to vote 15% or more of the securities having ordinary voting power for the election of directors or the direct or indirect power to direct the management and policies of a Person. 
  
 “Agent” means WFRF, solely in its capacity as agent for the
Lenders, and shall include any successor agent. 
  
 “Agent Advance” has the meaning set forth in Section 2.1(h). 
  
 “Agent Loan” has the meaning set forth in Section 2.1(g). 
  
 “Agent-Related Persons” means Agent, together with its Affiliates, and the officers, directors, employees, and agents of Agent and such
Affiliates. 
  
 “Agent’s Account” has the
meaning set forth in Section 2.8. 
  
 “Agent’s Fee Letter” means that certain letter, of even date herewith, by Agent addressed to Borrower concerning certain fees payable to Agent. 
  
 “Agreement” has the meaning set forth in the preamble hereto. 
  
 “Applicable Margin” means, at any time, with respect to any
Advance: (a) from the Closing Date through and including July 25, 2005, (i) 2.00% with respect to Eurodollar Rate Loans consisting of Advances; and (ii) 0.00% with respect to Reference Rate Loans consisting of Advances; and (b) commencing on the
first day of the first month following an adjustment as provided in the immediately succeeding sentence, the rate set forth below which corresponds to the EBITDA of Borrower for which Agent receives the financial statements and Compliance
Certificate required below, determined and adjusted as provided herein. At all times after July 25, 2005, the 

  

 2 








 
Applicable Margin shall be adjusted quarterly after each delivery to Agent of the financial statements of Borrower required pursuant to Section 6.3,
together with the corresponding Compliance Certificate, each such adjustment to be effective on the first day of the first calendar. month after each such delivery. 
  
 Applicable Margin For: 
  

									
	 Level

	  	 EBITDA Level

	  	Eurodollar
Rate Loans

	 	 	Reference
Rate Loans

	 
	 I
	  	 greater than or equal to $50 million
	  	1.75	%	 	0.00	%
				
	 II
	  	 greater than or equal to $35 million but less than $50 million
	  	2.00	%	 	0.00	%
				
	 III
	  	 greater than or equal to $20 million but less than $35 million
	  	2.25	%	 	0.00	%
				
	 IV
	  	 less than $20 million
	  	2.50	%	 	0.00	%

  
 Notwithstanding
anything in this definition to the contrary, in the event that Agent shall fail to receive any such financial statements and the related Compliance Certificate for any calendar month within 45 days following the end of such month, then the
Applicable Margin shall, at the end of such 45th day, immediately and without notice or further action be the
highest Applicable Margin provided herein (such Applicable Margin to be in effect until the Agent receives the monthly financial statements of Borrower required under Section 6.3 for the most recent month and the related Compliance
Certificate). 
  
 “Assignee” has the meaning set
forth in Section 15.1. 
  
 “Assignment and
Acceptance” has the meaning set forth in Section 15.1(a) and shall be in the form of Exhibit A-1. 
  
 “Authorized Person” means any officer or other employee of Borrower. 
  

 3 








 “Availability” means, as of the date of determination, the result (so long as such
result is a positive number) of (a) the Seasonal Commitment Amount, less (b) the Revolving Facility Usage. 
  
 “Availability Condition” means (i) no Default or Event of Default shall have occurred or be continuing or would result from such event,
(ii) immediately before and after giving effect to such event, Availability hereunder is not less than $25,000,000, (iii) prior to such event the Borrowers have delivered to the Agent reasonably satisfactory financial projections forecasting that
Availability will not be less than $25,000,000 at any time during the six (6) month period immediately following such event, and (iv) not less than five (5) Business Days prior to such event, the Borrowers have delivered a certificate of the chief
financial officer certifying that the requirements set forth in clauses (i) through (iii) above are satisfied and the projections delivered to the Agent in connection with such transaction were prepared based on reasonable assumptions and reflect
good faith estimates of the Borrowers’ future financial performance. 
  
 “Average Monthly Availability” means, as of any date of determination, (a) the average daily borrowing availability for the preceding month, less (b) the sum of (i) the average daily amount of
Advances that were outstanding during the immediately preceding month, plus (ii) the average daily amount of the undrawn Letters of Credit that were outstanding during the immediately preceding month. 
  
 “Bank Products” means any service or facility extended to
Borrowers by WFRF or any Affiliate of WFRF including: (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions, (f) cash management, including controlled disbursement, accounts or services, or
(g) any Hedge Agreement. 
  
 “Bankruptcy Code”
means the United States Bankruptcy Code (11 U.S.C. § 101 et seq.), as amended, and any successor statute. 
  
 “Base Commitment Amount” means $75,000,000. 
  
 “Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of ERISA) for which Borrower, any Subsidiary of
Borrower, or any ERISA Affiliate has been an “employer” (as defined in Section 3(5) of ERISA) within the past six years. 
  
 “Board of Directors” means the board of directors (or comparable managers) of Poolmart or any committee thereof duly authorized to act
on behalf of the board. 
  
 “Borrower” and
“Borrowers” mean Poolmart and LPM, a Borrower and collectively, the Borrowers. 
  

 4 








 “Borrowers’ Books” means all of Borrowers’ Books and records including:
ledgers; records indicating, summarizing, or evidencing Borrowers’ properties or assets (including the Collateral) or liabilities; all information relating to Borrowers’ business operations or financial condition; and all computer
programs, disk or tape files, printouts, runs, or other computer prepared information. 
  
 “Borrowing” means a borrowing hereunder consisting of Advances made on the same day by the Lenders, or by Agent in the case of an Agent Loan or an Agent Advance. 
  
 “Business Day” means (a) any day that is not a Saturday,
Sunday, or a day on which banks in Los Angeles, California, are required or permitted to be closed, and (b) with respect to all notices, determinations, fundings and payments in connection with the Eurodollar Rate or Eurodollar Rate Loans, any day
that is a Business Day pursuant to clause (a) above and that is also a day on which trading in Dollars is carried on by and between banks in the London interbank market. 
  
 “Business Plan” means Borrower’s and its Subsidiaries’ projections attached hereto as Exhibit
B-1. 
  
 “Capital Assets” means fixed
assets, both tangible (such as land, buildings, fixtures, machinery and equipment) and intangible (such as patents, copyrights, trademarks, franchises and good will); provided that Capital Assets shall not include any item customarily charged
directly to expense or depreciated over a useful life of twelve (12) months or less in accordance with GAAP. 
  
 “Capital Expenditures” means amounts paid or Indebtedness incurred by the Borrowers or any of its Subsidiaries in connection with (i)
the purchase or lease by the Borrowers or any of their Subsidiaries of Capital Assets that would be required to be capitalized and shown on the balance sheet of such Person in accordance with GAAP or (ii) the lease of any assets by the Borrowers or
any of their Subsidiaries as lessee under any Synthetic Lease to the extent that such assets would have been Capital Assets had the Synthetic Lease been treated for accounting purposes as a Capital Lease. 
  
 “Capital Lease” means, for any Person, any lease of
property (whether personal, real or mixed) which, in accordance with GAAP, would, at the time a determination is made, be required to be recorded as a capital lease in respect of which such Person is liable as lessee. 
  
 “Capital Stock” of any person means any and all shares,
interest; participation, or other equivalents (however designated) of or rights, warrants, or options to purchase, corporate stock or any other equity interest (however designated) of or in such Person. 
  
 “Cash Equivalents” means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any agency thereof and 

  

 5 








 
backed by the full faith and credit of the United States, in each case maturing within 1 year from the date of acquisition thereof, (b) marketable direct
obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within 1 year from the date of acquisition thereof and, at the time of acquisition, having the highest
rating obtainable from either S&P or Moody’s, (c) commercial paper maturing no more than 1 year from the date of acquisition thereof and, at the time of acquisition, having a rating of A-1 or P-1, or better, from S&P or Moody’s,
and (d) certificates of deposit or bankers’ acceptances maturing within 1 year from the date of acquisition thereof either (i) issued by any bank organized under the laws of the United States or any state thereof which bank has a rating of A or
A2, or better, from S&P or Moody’s, or (ii) certificates of deposit less than or equal to $100,000 in the aggregate issued by any other bank insured by the Federal Deposit Insurance Corporation. 
  
 “Change of Control” means (a) any “person” or
“group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act), other than Permitted Holder, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of an amount equal to the
greater of (x) 35% of, or (y) the percentage held by the Permitted Holder of, the Stock of Poolmart having the right to vote for the election of members of the Board of Directors, or (b) a majority of the members of the Board of Directors of
Poolmart do not constitute Continuing Directors, or (c) Permitted Holder ceases to own at least 35% of the Stock of Poolmart having the right to vote for the election of the members of the Board of Directors, or (d) Poolmart ceases to directly own
and control 100% of the outstanding capital Stock of each of its Subsidiaries extant as of the Closing Date. 
  
 “Closing Date” means the date of the first to occur of the making of the initial Advance or the issuance of the initial Letter of
Credit. 
  
 “Code” means the California
Commercial Code, as amended from time to time. 
  
 “Collateral,” means each Borrower’s right, title and interest in each of the following: 
  
 (a) the Accounts, 
  
 (b) Borrowers’ Books, 
  
 (c) the Equipment, 
  
 (d) the General Intangibles, 
  
 (e) the Inventory, 
  
 (f) the Investment Property, 
  

 6 








 (g) the Negotiable Collateral, 
  
 (h) any money, or other assets of Borrower that now or hereafter come into the possession, custody, or control of the
Lender Group, and 
  
 (i) the proceeds and products, whether
tangible or intangible, of any of the foregoing, including proceeds of insurance covering any or all of the Collateral of Borrowers, and any and all Accounts, Borrowers’ Books, Equipment, General Intangibles, Inventory, Investment Property,
Negotiable Collateral, Real Property, money, deposit accounts, or other tangible or intangible property resulting from the sale, exchange, collection, or other disposition of any of the foregoing, or any portion thereof or interest therein, and the
proceeds thereof. 
  
 “Collateral Access
Agreement” means a landlord waiver, mortgagee waiver, bailee letter, or acknowledgement agreement with respect to Poolmart’s chief executive office and Borrowers’ distribution centers, in form and substance satisfactory to Agent.

  
 “Collections” means all cash, checks, notes,
instruments, and other items of payment (including, insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds). 
  
 “Commitment” means, at any time with respect to a Lender, the principal amount set forth beside such Lender’s name under the
heading “Commitment” on Schedule C-1 or on the signature page of the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 15.1, as such Commitment may
be adjusted from time to time in accordance with the provisions of Section 2.1(l) and 15.1 and “Commitments” means, collectively, the aggregate amount of the commitments of all the Lenders. 
  
 “Compliance Certificate” means a certificate substantially
in the form of Exhibit C-1 and delivered by the chief accounting officer of Borrower to Agent. 
  
 “Concentration Account” has the meaning ascribed to such term in Section 2.9. 
  
 “Confirmation of Winter 2006 Seasonal Extra Amount
Commitment” has the meaning set forth in Section 2.1(l). 
  
 “Consolidated Total Debt Service” means with respect to the Borrowers and their Subsidiaries and for any period, the sum, without duplication, of (a) Consolidated Total Interest Expense for such period plus (b) any
and all scheduled repayments of principal during such period in respect of Indebtedness that become due and payable during such period pursuant to any agreement or instrument to which the Borrowers or any of their Subsidiaries is a party relating to
(i) the borrowing of money or the obtaining of credit, including the issuance of notes or bonds, (ii) the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business), and (iii) any Synthetic Lease or any
Capital Lease. 
  

 7 








 “Consolidated Total Interest Expense” means for any period, the aggregate amount of
interest that is paid in cash by the Borrowers and their Subsidiaries during such period on all Indebtedness of the Borrowers and their Subsidiaries outstanding during all or any part of such period, whether such interest was or is required to be
reflected as an item of expense or capitalized, including payments consisting of interest in respect of any Capital Lease or any Synthetic Lease, and including commitment fees, agency fees, facility fees, balance deficiency fees and similar fees or
expenses in connection with the borrowing of money. 
  
 “Continuing Director” means (a) any member of the Board of Directors who was a director (or comparable manager) of Poolmart on the Closing Date, and (b) any individual who becomes a member of the Board of Directors after
the Closing Date if such individual was appointed or nominated for election to the Board of Directors by a majority of the Continuing Directors, but excluding any such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election contest relating to the election of the directors (or comparable managers) of Poolmart (as such terms are used in Rule 14a-11 under the Exchange Act) and whose initial
assumption of office resulted from such contest or the settlement thereof. 
  
 “Daily Balance” means, with respect to each day during the term of this Agreement, the amount of an Obligation owed at the end of such day. 
  
 “Default” means an event, condition, or default that, with
the giving of notice, the passage of time, or both, would be an Event of Default. 
  
 “Defaulting Lender” has the meaning set forth in Section 2.1(f)(ii). 
  
 “Defaulting Lenders Rate” means the Reference Rate for the first three days from and after the date the relevant payment is due and
thereafter at the interest rate then applicable to Advances. 
  
 “Designated Account” means account number 4801907023 of Borrowers maintained with Borrowers’ Designated Account Bank, or such other deposit account of Borrowers (located within the United States) which has been
designated, in writing and from time to time, by Borrowers to Agent. 
  
 “Designated Account Bank” means WFRF or its Affiliates. 
  
 “Disbursement Letter” means an instructional letter executed and delivered by Borrower to Agent regarding the extensions of credit to be made on the Closing Date, the form and substance of which shall
be satisfactory to Agent. 
  

 8 








 “Dollars or $” means United States dollars. 
  
 “Early Termination Premium” has the meaning set forth in
Section 3.6. 
  
 “EBITDA” means, for any
Person at any time, the consolidated net earnings (or loss) of such Person and its Subsidiaries for the period of 12 consecutive calendar months most recently ended, minus extraordinary gains for such period, plus all interest expense
(including without limitation amortization of capitalized financing costs), income taxes, extraordinary or nonrecurring losses (but not including any write-down of Inventory or cash store closing costs), non-cash charges (including without
limitation non-cash compensation, write-off of fixed assets, and accrued but unpaid Management Fees), employee termination charges incurred prior to the Closing Date, and depreciation and amortization for such period, determined in accordance with
GAAP. 
  
 “Eligible Transferee” means those
entities (and any Affiliate thereof) set forth on Exhibit E-1 hereto as the same may be amended from time to time by Agent, with the consent of Borrowers, which consent shall not be unreasonably withheld. 
  
 “Equipment” means all of a Borrower’s present and
hereafter acquired machinery, machine tools, motors, equipment, furniture, furnishings, fixtures, vehicles (including motor vehicles and trailers), tools, parts, goods (other than consumer goods, farm products, or Inventory), wherever located,
including, (a) any interest of such Borrower in any of the foregoing, and (b) all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing. 
  
 “ERISA” means the Employee Retirement Income Security Act
of 1974, 29 U.S.C. §§ 1000 et seq., amendments thereto, successor statutes, and regulations or guidance promulgated thereunder. 
  
 “ERISA Affiliate” means (a) any corporation subject to ERISA whose employees are treated as employed by the same employer as the
employees of a Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA whose employees are treated as employed by the same employer as the employees of a Borrower under IRC Section 414(c), (c) solely for purposes of Section 302
of ERISA and Section 412 of the IRC, any organization subject to ERISA that is a member of an affiliated service group of which Borrower is a member under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of the
IRC, any party subject to ERISA that is a party to an arrangement with Borrower and whose employees are aggregated with the employees of Borrower under IRC Section 414(o). 
  
 “ERISA Event” means (a) a Reportable Event with respect to any Benefit Plan or Multiemployer Plan, (b) the
withdrawal of a Borrower, any of its Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan year in which it was a “substantial employer” (as defined in Section 4001(a)(2) of ERISA), (c) the providing of 

  

 9 








 
notice of intent to terminate a Benefit Plan in a distress termination (as described in Section 4041(c) of ERISA), (d) the institution by the PBGC of
proceedings to terminate a Benefit Plan or Multiemployer Plan, (e) any event or condition (i) that provides a basis under Section 4042(a)(1), (2), or (3) of ERISA for the termination of, or the appointment of a trustee to administer, any Benefit
Plan or Multiemployer Plan, or (ii) that may result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of a Borrower, any of its
Subsidiaries or ERISA Affiliates from a Multiemployer Plan, or (g) providing any security to any Plan under Section 401(a)(29) of the IRC by Borrower or its Subsidiaries or any of their ERISA Affiliates. 
  
 “Event of Default” has the meaning set forth in Section
8. 
  
 “Eurodollar Rate” means, with respect
to each Interest Period for a Eurodollar Rate Loan, the interest rate per annum (rounded upwards, if necessary, to the next whole multiple of 1/100 of 1% per annum) at which United States dollar deposits are offered to WFRF (or its Affiliates) by
major banks in the London interbank market (or other eurodollar market selected by Agent) on or about 11:00 a.m. (California time) two Business Days prior to the commencement of such Interest Period in amounts comparable to the amount of the
Eurodollar Rate Loans requested by and available to Borrower in accordance with this Agreement and for the applicable Interest Period. 
  
 “Eurodollar Rate Loan” means any Advance made or outstanding hereunder during any period when interest on such Advance is payable based
on the Adjusted Eurodollar Rate. 
  
 “Existing Letter of
Credit” means each letter of credit issued by an issuing lender under the Existing Loan Agreement. 
  
 “Existing Loan Agreement” means the Loan and Security Agreement, dated as of June 22, 2000, among the Borrowers, as the borrowers, the
lenders from time to time parties thereto, and Wells Fargo Retail Finance LLC, as Agent, as assignee from Foothill Capital Corporation, as amended by that certain Amendment Number One to Loan and Security Agreement, dated as of February 28, 2001, as
further amended by that certain Amendment Number Two to Loan and Security Agreement, dated as of January 8, 2003, as further amended by that certain Amendment Number Three to Loan and Security Agreement, dated as of May 21, 2003, as further amended
by that certain Amendment Number Four to Loan and Security Agreement, dated as of October 31, 2003. 
  
 “Existing Lenders” has the meaning set forth in the Recitals. 
  
 “FEIN” means Federal Employer Identification Number. 
  
 “Fixed Charge Coverage Ratio” means, as of any date of
determination, the ratio of (a) an amount equal to the result of (i) EBITDA, less (ii) 

  

 10 








 
Capital Expenditures made during the twelve (12) consecutive calendar months most recently ended less (iii) cash taxes paid during the twelve (12)
consecutive calendar months most recently ended, to (b) Consolidated Total Debt Service for the twelve (12) consecutive calendar months most recently ended. 
  
 Funded Debt. means (a) Indebtedness of the Borrower and its Subsidiaries relating to (i) the borrowing of money or the obtaining of credit,
including the issuance of notes or bonds, (ii) the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business), (iii) in respect of any Synthetic Leases or any Capitalized Leases, and (iv) the
maximum drawing amount of all letters of credit outstanding and (b) Indebtedness of the type referred to in clause (a) of another Person guaranteed by the Borrower or any of its Subsidiaries.  
  
 “Funding Date” means the date on which a Borrowing occurs.

  
 “GAAP” means generally accepted accounting
principles as in effect from time to time in the United States, consistently applied. 
  
 “GEI” means Green Equity Investors II, L.P. or, after a pro rata distribution of all of the capital stock of Poolmart to its partners, such partners. 
  
 “General Intangibles” means all of any Person’s
present and future general intangibles and other personal property (including contract rights, rights arising under common law, statutes, or regulations, choses or things in action, goodwill, patents, trade names, trademarks, service marks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment and other rights under any royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, literature, reports, catalogs, deposit accounts, insurance premium rebates, tax refunds, and tax refund claims), other than goods, Accounts, and Negotiable Collateral. 
  
 “Governing Documents” means the certificate or articles of
incorporation, by-laws, or other organizational or governing documents of any Person. 
  
 “Governmental Authority” means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government. 
  
 “Hazardous
Materials” means (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous materials,” “hazardous wastes,”
“toxic substances,” or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude 

  

 11 








 
oil, natural gas, or geothermal resources, (c) any flammable substances or explosives or any radioactive materials, and (d) asbestos in any form or
electrical equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of 50 parts per million. 
  
 “Hedge Agreement” means any and all transactions, agreements, or documents now existing or hereafter entered into between the Borrowers
and WFRF or its Affiliates, which provide for an interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, or any combination of, or option
with respect to, these or similar transactions, for the purpose of hedging Borrowers’ exposure to fluctuations in interest or exchange rates, loan, credit exchange, security or currency valuations or commodity prices. 
  
 “Indebtedness” means: (a) all obligations of a Person for
borrowed money, (b) all obligations of a Person evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations of a Person in respect of letters of credit, bankers acceptances, interest rate swaps, or
other similar financial products, (c) all obligations of a Person under capital leases, (d) all obligations or liabilities of others secured by a Lien on any property or asset of a Person, irrespective of whether such obligation or liability is
assumed, to the extent, if such obligation or liability is non-recourse, of the lesser of (x) the value of such asset and (y) the amount of the obligation or liability so secured, and (e) any obligation of a Person guaranteeing or intended to
guarantee (whether guaranteed, endorsed, co-made, discounted, or sold with recourse to such Person) any indebtedness, lease, dividend, letter of credit, or other obligation of any other Person. 
  
 “Indemnified Liabilities” has the meaning set forth in
Section 11.3. “Indemnified Person” has the meaning set forth in Section 11.3. 
  
 “Indenture” means that certain Indenture, dated as of January     , 2005 for Poolmart’s Senior Notes,
between The Bank of New York, as trustee, and Poolmart, as issuer, as amended from time to time in accordance with the terms hereof. 
  
 “Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any
other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief. 

 
 “Intangible Assets” means, with respect to any Person,
that portion of the book value of all of such Person’s assets that would be treated as intangibles under GAAP. 
  

 12 








 “Intellectual Property Security Agreement” means that certain Grant of Security
Interest in Trademarks and Licenses, dated as of June 22, 2000, between a Borrower and the Agent, as assignee of Foothill Capital Corporation. 
  
 “Interest Period” means, for any Eurodollar Rate Loan, the period commencing on the Business Day such Eurodollar Rate Loan is disbursed
or continued, or on the Business Day on which a Reference Rate Loan is converted to such Eurodollar Rate Loan, and ending on the date that is one, two, three, or six months thereafter, as selected by Borrower and notified to Agent as provided in
Sections 2.13(a) and (b). 
  
 “Initial Seasonal
Commitment Amount Period” has the meaning set forth in the definition of Seasonal Commitment Amount. 
  
 “Inventory” means all present and future inventory in which a Person has any interest, including goods held for sale or lease or to be
furnished under a contract of service and all of such Person’s present and future raw materials, work in process, finished goods, and packing and shipping materials, wherever located. 
  
 “Inventory Reserves” means the reserves, if applicable, as
provided under Section 2.1(b). 
  
 “Investment” means, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of loans, guarantees, advances, transfers of property to, or capital contributions
(excluding (a) commission, travel, and similar advances to officers and employees of such Person made in the ordinary course of business, and (b) bona fide Accounts arising in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness or Stock or other securities. In determining the aggregate amount of Investments outstanding at any particular time: (a) the amount of any Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (b) there shall be deducted in respect of each such Investment any amount received as a return of capital; (c) there shall not be deducted in respect of any Investment any amounts
received as earnings on such Investment, whether as dividends, interest or otherwise; and (d) there shall not be deducted from the aggregate amount of Investments any decrease in the value thereof. 
  
 “Investment Property” means all of a Person’s
presently existing and hereafter acquired or arising investment property (as that term is defined in Section 9115 of the Code). 
  
 “IP Reaffirmation Agreement” means that certain Intellectual Property Reaffirmation Agreement, dated as of the date hereof, between
Poolmart and the Agent, for the benefit of the Agent and the Lenders. 
  
 “IRC” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder. 
  

 13 








 “L/C’ has the meaning set forth in Section 2.2(a). 
  
 “L/C Guaranty” has the meaning set forth in Section
2.2(a). 
  
 “Lender” and “Lenders”
have the respective meanings set forth in the preamble to this Agreement, and shall include any other Person made a party to this Agreement in accordance with the provisions of Section 15.1. 
  
 “Lender Group” means, individually and collectively, each
of the individual Lenders and Agent. 
  
 “Lender Group
Expenses” means all (a) costs or expenses (including taxes, and insurance premiums) required to be paid by a Borrower under any of the Loan Documents that are paid or incurred by the Lender Group, (b) reasonable and documented fees or
charges actually paid or incurred by Agent in connection with the Lender Group’s transactions with Borrowers, including, fees or charges for photocopying, notarization, couriers and messengers, telecommunication, public record searches
(including tax lien, litigation, and UCC searches and including searches with the patent and trademark office, the copyright office, or the department of motor vehicles), filing, recording, publication, appraisal (including periodic Collateral
appraisals or business valuations to the extent of the fees and charges (and up to the amount of any limitation) contained in this Agreement, real estate surveys, real estate title policies and endorsements, and environmental audits, (c) reasonable
and documented costs and expenses incurred by Agent in the disbursement of funds to or for the account of Borrowers (by wire transfer or otherwise), (d) charges paid or incurred by Agent resulting from the dishonor of checks, (e) reasonable and
documented costs and expenses paid or incurred by the Agent to correct any default or enforce any provision of the Loan Documents, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated, (f) reasonable and documented audit fees and expenses of Agent related to audit examinations of the books to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement, (g) reasonable and documented costs and expenses of third party claims or any other suit paid or incurred by the Lender Group in enforcing or defending the Loan Documents
or in connection with the transactions contemplated by the Loan Documents or the Lender Group’s relationship with any Borrower or any guarantor of the Obligations, (h) Agent’s reasonable and documented fees and expenses (including
attorneys fees) incurred in advising, structuring, drafting, reviewing, syndicating, administering, amending or modifying the Loan Documents and any related document or instrument, and (i) Agent’s reasonable fees and expenses (including
attorneys fees and, in the case of the Agent, consulting, accounting, appraisal, investment banking and similar professional fees and charges) incurred in terminating, enforcing (including attorneys fees and expenses incurred in connection with a
“workout,” a “restructuring,” or an Insolvency Proceeding concerning any Borrower or in exercising rights or remedies under the Loan Documents), or defending the Loan Documents, irrespective of whether suit is brought, or in
taking any remedial action concerning the Collateral. 
  

 14 








 “Letter of Credit” means an L/C or an L/C Guaranty, as the context requires.

  
 “LGP” means Leonard Green & Partners,
L.P. 
  
 “Lien” means any interest in property
securing an obligation owed to, or a claim by, any Person other than the owner of the property, whether such interest shall be based on the common law, statute, or contract, whether such interest shall be recorded or perfected, and whether such
interest shall be contingent upon the occurrence of some future event or events or the existence of some future circumstance or circumstances, including the lien or security interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, adverse claim or charge, conditional sale or trust receipt, or from a lease, consignment, or bailment for security purposes and also including reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Real Property. 
  
 “Loan Account” has the meaning set forth in Section 2.11. 
  
 “Loan Documents” means this Agreement, the Disbursement Letter, the Letters of Credit, the Restricted
Account Agreements, the Securities Account Control Agreements, the Intellectual Property Security Agreement, the IP Reaffirmation Agreement, the Agent’s Fee Letter, any note or notes executed by any Borrower and payable to any member of the
Lender Group, any perfection certificate delivered in connection with this Agreement and any other agreement entered into, now or in the future, in connection with this Agreement. 
  
 “Local Account” has the meaning set forth in Section 2.8. 
  
 “LPM” means LPM Manufacturing, Inc., a California
corporation. 
  
 “LPM Acquisition” means LPM
Acquisition LLC, a newly formed entity controlled by affiliates of LGP. 
  
 “Management Agreement” means that certain Management Agreement, dated January 25, 2005, between Poolmart and LGP, in the substantially the form delivered by Poolmart to Agent prior to the Closing
Date. 
  
 “Material Adverse Change” means (a) a
material adverse change in the business, prospects, operations, results of operations, assets, liabilities or condition (financial or otherwise) of Poolmart on a consolidated basis, (b) the material impairment of the Borrowers’ ability to
perform their obligations under the Loan Documents or of the Lender Group to enforce the Obligations or realize upon the Collateral, (c) a material adverse effect on the value of the Collateral or the amount that the Lender Group would be likely to
receive (after giving consideration to delays in payment and costs of enforcement) in the liquidation of such Collateral, or (d) a material impairment of the priority of the Lender Group’s Liens with respect to the Collateral. 
  

 15 








 “Maturity Date” has the meaning set forth in Section 3.4. 
  
 “Maximum Commitment Amount” means (a) $105,000,000 prior to
July 1, 2005, (b) $95,0000,000 from July 1, 2005 through March 31, 2006, (c) $75,000,000 from April 1, 2006 through March 31, 2007, subject to increase pursuant to Section 2.1(l) and (d) $75,000,000 from April 1, 2007 and at all times thereafter, in
each case reduced dollar for dollar by any reductions in the Base Commitment Amount made pursuant to Section 3.6. 
  
 “Multiemployer Plan” means a “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA) to which a Borrower, any
of its Subsidiaries, or any ERISA Affiliate has contributed, or was obligated to contribute, within the past six years. 
  
 “Negotiable Collateral” means all of a Person’s present and future letters of credit, notes, drafts, instruments, Investment
Property, securities (including the shares of stock of Subsidiaries of such Person), documents, personal property leases (wherein such Person is the lessor), and chattel paper. 
  
 “Net Book Value” means, at any time, the gross amount of the Borrower’s Inventory that is located in
the United States, conforms to the representations and warranties contained in Section 5.3 hereof, less reserves required by GAAP, and is reflected on the most recent consolidated balance sheet of Poolmart delivered pursuant to Section
6.3 hereof. 
  
 “Old Notes” means
Poolmart’s 10.375% Notes due July 15, 2008. 
  
 “Obligations” means all Advances, including the principal thereof and interest thereon (including any interest that, but for the provisions of the Bankruptcy Code, would have accrued), contingent reimbursement obligations
under any outstanding Letters of Credit, premiums (including Early Termination Premiums), obligations in respect of any Hedge Agreement, Permitted Hedge Agreement or any Bank Products with WFRF or any of its Affiliates, liabilities (including all
amounts charged to Borrowers’ Loan Account pursuant hereto), obligations, fees, charges, costs, or Lender Group Expenses (including any fees or expenses that, but for the provisions of the Bankruptcy Code, would have accrued), covenants, and
duties owing by a Borrower to any member of the Lender Group under any of the Loan Documents and irrespective of whether for the payment of money, whether absolute or contingent, due or to become due, now existing or hereafter arising, and further
including all interest not paid when due and all Lender Group Expenses that a Borrower is required to pay or reimburse by the Loan Documents, by law, or otherwise. 
  
 “Originating Lender” has the meaning set forth in Section 15.1(e). 
  

 16 








 “Participant” has the meaning set forth in Section 15.1(e). 
  
 “PBGC” means the Pension Benefit Guaranty Corporation as
defined in Title N of ERISA, or any successor thereto. 
  
 “Permitted Hedge Agreement” means any interest rate swap, cap, collar or similar agreement entered into between a Borrower and any Lender and any of its Affiliates in respect of notional amounts corresponding to the
obligations under this Agreement. 
  
 “Permitted
Holder” means LGP and any Affiliate thereof. 
  
 “Permitted Investments” means (a) investments in Cash Equivalents, (b) investments in negotiable instruments for collection, and (c) advances made in connection with purchases of goods or services in the ordinary course of
business. 
  
 “Permitted Liens” means (a) Liens
held by the Lender Group, (b) Liens for unpaid taxes that either (i) are not yet due and payable or (ii) are the subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the interests of lessors under operating leases and
purchase money security interests and Liens of lessors under capital leases to the extent that the acquisition or lease of the underlying asset is permitted under Section 7.21. and so long as the Lien only attaches to the asset purchased or
acquired and only secures the purchase price of the asset, (e) Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course of business of Borrower
and not in connection with the borrowing of money, and which Liens either (i) are for sums not yet due and payable, or (ii) are the subject of Permitted Protests, (f) Liens arising from deposits made in connection with obtaining worker’s
compensation or other unemployment insurance, (g) Liens or deposits to secure performance of bids, tenders, or leases (to the extent permitted under this Agreement), incurred in the ordinary course of business of Borrower and not in connection with
the borrowing of money, (h) Liens arising by reason of security for surety or appeal bonds in the ordinary course of business of a Borrower, (i) Liens of or resulting from any judgment or award that would not cause a Material Adverse Change and as
to which the time for the appeal or petition for rehearing of which has not yet expired, or in respect of which a Borrower is in good faith prosecuting an appeal or proceeding for a review, and in respect of which a stay of execution pending such
appeal or proceeding for review has been secured, and (j) easements, rights of way, zoning and similar covenants and restrictions, and similar encumbrances that do not materially interfere with or impair the use or operation of the Collateral by any
Borrower, or materially interfere with the ordinary conduct of the business of a Borrower. 
  
 “Permitted Protest” means the right of Borrower to protest any Lien (other than any such Lien that secures the Obligations), tax (other than payroll taxes or taxes that are the subject of a United
States federal tax lien), or rental payment, provided that (a) Borrower establishes any reserve required in respect of such obligation 

  

 17 








 
in accordance with GAAP, (b) any such protest is instituted and diligently prosecuted by such Borrower in good faith, and (c) Agent is satisfied that, while
any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of the Liens of the Lender Group in and to the Collateral or, if Agent is not so satisfied, Agent shall have established such reserve
against Availability as it deems appropriate in its reasonable commercial judgment. 
  
 “Person” means and includes natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts,
business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof. 
  
 “Plan” means any employee benefit plan, program, or arrangement maintained or contributed to by a Borrower or with respect to which it
may incur liability. 
  
 “Poolmart” has the
meaning set forth in the preamble to this Agreement. 
  
 “Preferred Stock” means Poolmart’s 10% Senior Exchangeable Cumulative Redeemable Preferred Stock, par value $0.001 per share, the terms of which are designated in the Preferred Stock Designation. 
  
 “Preferred Stock Designation” means the Designation,
Preferences and Rights of 10% Series A Redeemable Exchangeable Cumulative Preferred Stock. The preferred is being issued in the merger as part of the new charter, not in a separate certificate of designation 
  
 “Pro-Rata Share” means, with respect to a Lender, a
fraction (expressed as a percentage), the numerator of which is the amount of such Lender’s Commitment and the denominator of which is the aggregate amount of the Commitments. 
  
 “Real Property” means any estates or interests in real property now owned or hereafter acquired by a
Borrower. 
  
 “Recapitalization” means (a) the
merger of LPM Acquisition with and into Poolmart, with Poolmart continuing as the surviving entity in the merger, (b) in connection with such merger, the exchange of all shares of the existing common and preferred stock of Poolmart (other than those
owned by LPM Acquisition) for $189.7 million, (c) the issuance of the Preferred Stock for $40.1 million in cash, (d) the issuance of the Senior Notes and (e) the redemption of up to $59.5 million of Poolmart’s Old Notes by Poolmart from the
holders thereof. 
  
 “Reference Rate” means the
rate of interest announced within Wells Fargo Bank, National Association at its principal office in San Francisco as its 

  

 18 








 
“prime rate,” with the understanding that the “prime rate” is one of Wells Fargo Bank, National Association’s base rates (not
necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal
publication or publications as WFRF may designate. 
  
 “Reference Rate Loans” means any Advance made or outstanding hereunder during any period when interest on such Advance is payable based on the Reference Rate. 
  
 “Reportable Event” means any of the events described in Section 4043(c) of ERISA or the regulations
thereunder other than a Reportable Event as to which the provision of 30 days notice to the PBGC is waived under applicable regulations. 
  
 “Required Lenders” means, at any time, Agent together with such other Lenders whose Pro Rata Shares together with Agent aggregate 50.1%
or more of the Commitments; provided that, at any time there are two or more Lenders, “Required Lenders shall be comprised of at least two Lenders. 
  
 “Requirement of Law” means, as to any Person: (a) (i) all statutes and regulations and (ii) court orders and injunctions,
arbitrators’ decisions, and/or similar rulings, in each instance by any Governmental Authority or arbitrator applicable to or binding upon such Person or any of such Person’s property or to which such Person or any of such Person’s
property is subject; and (b) that Person’s organizational documents, by-laws and/or other instruments which deal with corporate or similar governance, as applicable. 
  
 “Reserve Percentages” for any Interest Period means, as of the date of determination thereof, the maximum
percentage (rounded upward, if necessary to the nearest 1/100th of 1%), that is in effect on such date as prescribed
by the Board of Governors of the Federal Reserve System for determining the reserve requirements (including supplemental, marginal, and emergency reserve requirements) with respect to “eurocurrency liabilities” (as defined in Federal
Reserve Board Regulation D). 
  
 “Restricted
Accounts” shall mean a depositary account established pursuant to the Restricted Account Agreements. 
  
 “Restricted Account Agreements” means each Depository Account Agreement, in form and substance satisfactory to Agent, among Borrower,
Agent, and the Restricted Account Banks. 
  
 “Restricted
Account Bank” means WFRF or such other bank(s) as may be agreed to by Agent and Borrower from time to time. 
  

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 “Retiree Health Plan” means an “employee welfare benefit plan” within the
meaning of Section 3(1) of ERISA that provides benefits to individuals after termination of their employment, other than as required by Section 601 of ERISA. 
  
 “Revolving Facility Usage” means, as of any date of determination, the aggregate amount of Advances and
undrawn Letters of Credit, and unpaid reimbursement obligations in respect of drawings under Letter of Credit, then outstanding. 
  
 “Seasonal Advanced Amounts” means to the extent that the amount by which Revolving Facility Usage exceeds the Base Commitment Amount, a
portion of the Advances equal to such excess. 
  
 “Seasonal Commitment Amount” means the lesser of (a) the Maximum Commitment Amount and (b)(i) $105,000,000 for the period from the Closing Date through and including June 30, 2005 (the “Initial Seasonal Commitment
Amount Period”) and (ii) Base Commitment Amount at all other times; provided, however, if the Winter 2005 Seasonal Commitment Conditions have been satisfied for the period from September 30, 2005 through and including March
31, 2006 (the “Winter 2005 Seasonal Commitment Amount Period”) the Seasonal Commitment Amount shall be $95,000,000; provided, further, if the Winter 2006 Seasonal Commitment Conditions have been satisfied, for the
period from September 30, 2006 through and including March 31, 2007 (the “Winter 2006 Seasonal Commitment Amount Period”), the Seasonal Commitment Amount shall be $85,000,000. 
  
 “Seasonal Increased Amount Period” means the Initial
Seasonal Commitment Amount Period, and the Winter 2005 Seasonal Commitment Amount Period and the Winter 2006 Seasonal Commitment Amount Period to the extent that the Seasonal Commitment Conditions have been satisfied with regard to such time
periods. 
  
 “Securities Account Control
Agreement” means each Securities Account Control Agreement, in form and substance satisfactory to Agent, among Borrower, Agent, and a securities intermediary. 
  
 “Senior Leverage Ratio” means as at any date of determination, the ratio of (a) Total Senior Secured Debt
outstanding on such date to (b) EBITDA. 
  
 “Senior
Notes” means Poolmart’s 7.75% Senior Notes due February 1, 2013. 
  
 “Settlement” has the meaning set forth in Section 2.1(i)(i). 
  
 “Settlement Date” has the meaning set forth in Section 2.1(i)(i). 
  
 “Solvent” means, with respect to any Person on a particular date, that on such date, on a consolidated
basis, (a) at fair valuations, all of the properties and 

  

 20 








 
assets of such Person as an entirety on a going concern basis are greater than the sum of the debts, including contingent liabilities, of such Person, (b)
the present fair salable value of the properties and assets of such Person as an entirety on a going concern basis is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute
and matured, (c) such Person is able to pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur
debts beyond such Person’s ability to pay as such debts mature, and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s properties and assets would
constitute unreasonably small capital after giving due consideration to the prevailing practices in the industry in which such Person is engaged. In computing the amount of contingent liabilities at any time, it is intended that such liabilities
will be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that reasonably can be expected to become an actual or matured liability. 
  
 “Stock” means all shares, options, warrants, interests,
participation, or other equivalents (regardless of how designated) of or in a Person, whether voting or nonvoting, including common stock, preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the Securities Exchange Commission under the Securities Exchange Act of 1934). 
  
 “Subsidiary” of a Person means a corporation, partnership, limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of stock or other ownership interests having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such corporation, partnership, limited liability
company, or other entity. 
  
 “Subordinated
Debt” means unsecured Indebtedness of the Borrowers or any of their Subsidiaries that is expressly subordinated and made junior to the payment and performance in full of the Obligations, and evidenced by a written instrument containing
subordination provisions in form and substance approved by the Lenders in writing. 
  
 “Synthetic Lease” means any lease of goods or other property, whether real or personal, which is treated as an operating lease under GAAP and as a loan or financing for U.S. income tax purposes.

  
 “Total Senior Secured Debt” means with
respect to the Borrowers and their Subsidiaries, the result of, without duplication, of (a) the aggregate amount of Indebtedness of the Borrowers and their Subsidiaries, on a consolidated basis, relating to (i) the borrowing of money or the
obtaining of credit, including the issuance of notes or bonds, (ii) the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business), (iii) in respect of any Synthetic Lease or any Capital Lease, and (iv)
the maximum drawing amount of all letters of credit outstanding, in each case relating to such amounts that are secured by a Lien plus (b) Indebtedness of the type referred to in clause (a) of another Person guaranteed by the Borrowers or any
of their Subsidiaries minus (c) the Senior Notes minus (d) Subordinated Debt. 
  

 21 








 “Voidable Transfer” has the meaning set forth in Section 18.6. 
  
 “WFRF” means Wells Fargo Retail Finance LLC, a Delaware
limited liability company. 
  
 “Winter 2005 Seasonal
Commitment Amount Period” has the meaning set forth in the definition of Seasonal Commitment Amount. 
  
 “Winter 2005 Seasonal Commitment Conditions” means the Agent having received not less than 10 days prior to the Winter 2005 Seasonal
Commitment Amount Period (a) a certificate signed by the Borrower’s chief financial officer stating that the Borrowers intends to increase the Seasonal Commitment Amount during such period and that no Default or Event of Default then exist and
(b) a fee in an amount equal to $50,000, for the pro rata account of the Lenders. 
  
 “Winter 2006 Seasonal Commitment Amount Period” has the meaning set forth in the definition of Seasonal Commitment Amount. 
  
 “Winter 2006 Seasonal Commitment Conditions” has the meaning set forth in Section 2.1(l).

  
 “Winter 2006 Seasonal Extra Amount” means an
amount of $10,000,000. 
  
 “Winter 2006 Seasonal Extra
Amount Activation Notice” has the meaning set forth in Section 2.1(l). 
  
 “Winter 2006 Seasonal Extra Amount Commitment” means the commitments of the Winter 2006 Seasonal Extra Amount Lenders to fund the Winter 2006 Seasonal Extra Amount as set forth in Section
2.1(l). 
  
 “Winter 2006 Seasonal Extra Amount
Lenders” means the Lenders that shall be identified as “Winter 2006 Seasonal Extra Amount Lenders” on Schedule C-1 (as amended pursuant to subsection 2.1(l)(iii)) to this Agreement that shall have delivered to the
Agent a Confirmation of Winter 2006 Seasonal Extra Amount Commitment and, when used in the context of a particular Winter 2006 Seasonal Extra Amount Commitment, shall mean Winter 2006 Seasonal Extra Amount Lender having such Winter 2006 Seasonal
Extra Amount Commitment. 
  
 1.2. Accounting Terms. All
accounting terms not specifically defined herein shall be construed in accordance with GAAP. When used herein, the term “financial statements” shall include the notes and schedules thereto. Whenever the term “Borrower” is used in
respect of a financial covenant or a related definition, it shall be understood to mean Borrowers on a consolidated basis unless the context clearly requires otherwise. 
  

 22 








 1.3. Code. Any terms used in this Agreement that are defined in the Code shall be construed and
defined as set forth in the Code unless otherwise defined herein. 
  
 1.4. Construction. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the term “including” is not limiting, and the
term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this
Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. An Event of Default shall “continue” or be “continuing” until such Event of Default has been cured or waived in writing by the
requisite members of the Lender Group. Section, subsection, clause, schedule, and exhibit references are to this Agreement unless otherwise specified. Any reference in this Agreement or in the Loan Documents to this Agreement or any of the Loan
Documents shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, and supplements, thereto and thereof, as applicable. 
  
 1.5. Schedules and Exhibits. All of the schedules and exhibits attached to this Agreement shall be deemed
incorporated herein by reference. 
  
 2. LOAN AND TERMS OF
PAYMENT. 
  
 2.1. Revolving Advances. 
  
 (a) Amounts. Subject to the terms and conditions of this Agreement,
each Lender agrees to make advances (“Advances”) to Borrowers in an amount at any one time outstanding not to exceed such Lender’s Pro Rata Share of an amount equal to the lesser of (i) the Commitments less the outstanding
balance of all undrawn or unreimbursed Letters of Credit or (ii) the Seasonal Commitment Amount less the outstanding balance of all undrawn or unreimbursed Letters of Credit. Any Advances requested by the Borrowers in excess of $75,000,000 during
the Initial Seasonal Commitment Amount Period or the Winter 2005 Seasonal Commitment Period shall be in integral multiples of $2,500,000. 
  
 (b) Reserved. 
  
 (c) Revolving Nature. Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the terms and conditions of this Agreement,
reborrowed at any time during the term of this Agreement. 
  
 (d)
Procedure for Borrowing. Each Borrowing shall be made upon Borrower’s irrevocable request therefor delivered to Agent (which notice must be 

  

 23 








 
received by Agent no later than 11:00 a.m. (California time) on the Funding Date specifying (i) the amount of the Borrowing; and (ii) the requested Funding
Date, which shall be a Business Day. 
  
 (e) Agent’s
Election. Promptly after receipt of a request for a Borrowing pursuant to Section 2.1(d) in excess of $5,000,000, the Agent shall elect, in its discretion, (1) to have the terms of Section 2.1(f) apply to such requested Borrowing,
or (ii) to make an Agent Loan pursuant to the terms of Section 2.1(g) in the amount of the requested Borrowing. Any requested Borrowing of $5,000,000 or less shall be made as an Agent Loan pursuant to the terms of Section 2.1(g).

  
 (f) Making of Advances. 
  
 (i) In the event that the Agent shall elect to have the terms of this
Section 2.1(f) apply to a requested Borrowing in excess of $5,000,000 as described in Section 2.1(e), then promptly after receipt of a request for a Borrowing pursuant to Section 2.1(d), the Agent shall notify the Lenders, not
later than 1:00 p.m. (California time) on the Business Day immediately preceding the Funding Date applicable thereto, by telephone and promptly followed by telecopy, or other similar form of transmission, of the requested Borrowing. Each Lender
shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to the Agent in same day funds, to such account of the Agent as the Agent may designate, not later than 12:00 p.m. (California time) on the Funding Date
applicable thereto. After the Agent’s receipt of the proceeds of such Advances, upon satisfaction of the applicable conditions precedent set forth in Sections 3.1 and 3.2, the Agent shall make the proceeds of such Advances
available to Borrower on the applicable Funding Date by transferring same day funds equal to the proceeds of such Advances received by the Agent to the Designated Deposit Account; provided, however, that, subject to the provisions of
Section 2.1(1), the Agent shall not request any Lender to make, and no Lender shall have the obligation to make, any Advance if the Agent has actual knowledge, that (A) one or more of the applicable conditions precedent set forth in
Sections 3.1 or 3.2 will not be satisfied on the requested Funding Date for the applicable Borrowing, or (B) the requested Borrowing would exceed the Availability on such Funding Date. 
  
 (ii) Unless Agent receives notice from a Lender on or prior to the Closing
Date or, with respect to any Borrowing after the Closing Date, at least one Business Day prior to the date of such Borrowing, that such Lender will not make available as and when required hereunder to Agent for the account of Borrower the amount of
that Lender’s Pro Rata Share of the Borrowing, Agent may assume that each Lender has made or will make such amount available to Agent in immediately available funds on the Funding Date and Agent may (but shall not be so required), in reliance
upon such assumption, make available to Borrower on such date a corresponding amount. If and to the extent any Lender shall not have made its full amount available to Agent in immediately available funds and Agent in such circumstances has made
available to Borrower such amount, that Lender shall on the Business Day following such Funding Date make such amount available to Agent, together with interest at the Defaulting 

  

 24 








 
Lenders Rate for each day during such period. A notice from Agent submitted to any Lender with respect to amounts owing under this subsection shall be
conclusive, absent manifest error. If such amount is paid to Agent such payment to Agent shall constitute such Lender’s Advance on the date of Borrowing for all purposes of this Agreement. If such amount is not paid to Agent on the Business Day
following the Funding Date, Agent will notify Borrower of such failure to fund and, upon demand by Agent, Borrower shall pay such amount to Agent for Agent’s account, together with interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Advances composing such Borrowing. The failure of any Lender to make any Advance on any Funding Date shall not relieve any other Lender of any obligation
hereunder to make an Advance on such Funding Date, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on any Funding Date. Any Lender that fails to make any Advance that it is
required to make hereunder on any Funding Date and that has not cured such failure by making such Advance within one Business Day after written demand upon it by Agent to do so, shall constitute a “Defaulting Lender” for purposes of this
Agreement until such Advance is made. 
  
 (iii) Agent shall not
be obligated to transfer to a Defaulting Lender any payments made by Borrower to Agent for the Defaulting Lender’s benefit unless and until all Advances made by other Lenders and the Agent are repaid in full and either (x) the Commitments are
terminated or (y) the Borrowers so request; nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder unless and until all Advances made by other Lenders and the Agent are repaid in full and either (x) the Commitments are
terminated or (y) the Borrowers so request. Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may hold and, in its discretion, re-lend to Borrower the amount of all such payments received or retained by it
for the account of such Defaulting Lender. Solely for the purposes of voting or consenting to matters with respect to the Loan Documents and determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a “Lender” and such
Defaulting Lender’s Commitment shall be deemed to be zero. This section shall remain effective with respect to such Defaulting Lender until (A) the Obligations under this Agreement shall have been declared or shall have become immediately due
and payable or (B) the requisite non-Defaulting Lenders, Agent, and Borrower shall have waived such Defaulting Lender’s default in writing. The operation of this section shall not be construed to increase or otherwise affect the Commitment of
any non-Defaulting Lender, or relieve or excuse the performance by Borrower of their duties and obligations hereunder. 
  
 (g) Making of Agent Loans. 
  
 (i) In the event the Agent shall elect to have the terms of this Section 2.1(g) apply to a requested Borrowing in excess of $5,000,000 as
described in Section 2.1(e) or in the event of any requested Borrowing of $5,000,000 or less, Agent shall make an Advance in the amount of such Borrowing (any such Advance 

  

 25 








 
made solely by Agent pursuant to this Section 2.1(g) being referred to as an “Agent Loan” and such Advances being referred to collectively
as “Agent Loans”) available to Borrower on the Funding Date applicable thereto by transferring same day funds to Borrower’s Designated Account. Each Agent Loan is an Advance hereunder and shall be subject to all the terms and
conditions applicable to other Advances, except that all payments thereon shall be payable to Agent solely for its own account (and for the account of the holder of any participation interest with respect to such Advance). Subject to the provisions
of Section 2.1(1), the Agent shall not make any Agent Loan if the Agent has actual knowledge, that (i) one or more of the applicable conditions precedent set forth in Sections 3.1 or 3.2 will not be satisfied on the requested
Funding Date for the applicable Borrowing, or (ii) the requested Borrowing would exceed the Availability on such Funding Date. Agent shall not otherwise be required to determine whether the applicable conditions precedent set forth in Sections
3.1 or 3.2 have been satisfied on the Funding Date applicable thereto prior to making, in its sole discretion, any Agent Loan. 
  
 (ii) The Agent Loans shall be secured by the Collateral and shall constitute Advances and Obligations hereunder, and shall bear interest at the rate
applicable from time to time to Obligations pursuant to Section 2.7. 
  
 (h) Agent Advances. 
  
 (i)
Agent hereby is authorized by Borrower and the Lenders, from time to time in Agent’s sole discretion, (1) after the occurrence of a Default or an, Event of Default (but without constituting a waiver of such Default or Event of Default), or (2)
at any time that any of the other applicable conditions precedent set forth in Section 3.1 or 3.2 have not been satisfied, to make Advances to Borrower on behalf of the Lenders which Agent, in its reasonable business judgment, deems
necessary or desirable (A) to preserve or protect the Collateral, or any portion thereof; (B) to enhance the likelihood of, or maximize the amount of repayment of the Obligations, or (C) to pay any other amount chargeable to Borrower pursuant to the
terms of this Agreement, including Lender Group Expenses and the costs, fees, and expenses described in Section 10 (any of the Advances described in this Section 2.1(h) being hereinafter referred to as “Agent Advances”);
provided, that Agent shall not make any Agent Advances to Borrower without the consent of the Required Lenders if the amount thereof would exceed $5,000,000 in the aggregate at any one time. 
  
 (ii) Agent Advances shall be repayable on demand and secured by the
Collateral, shall constitute Advances and Obligations hereunder, and shall bear interest at the rate applicable from time to time to the Obligations pursuant to Section 2.7. 
  
 (i) Settlement. It is agreed that each Lender’s funded portion of the Advances is intended by the Lenders to be
equal at all times to such Lender’s Pro Rata Share of the outstanding Advances. Such agreement notwithstanding, the Agent and the Lenders agree (which agreement shall not be for the benefit of or enforceable by Borrower) that in order to
facilitate the administration of this Agreement and the other 

  

 26 








 
Loan Documents, settlement among them as to the Advances, the Agent Loans, and the Agent Advances shall take place on a periodic basis in accordance with the
following provisions: 
  
 (i) The Agent shall request settlement
(“Settlement”) with the Lenders on a weekly basis, or on a more frequent basis if so determined by the Agent, (1) for itself, with respect to each Agent Loan and Agent Advance, and (2) with respect to Collections received, as to each by
notifying the Lenders by telephone and promptly followed by telecopy, or other similar form of transmission, of such requested Settlement, no later than 1:00 p.m. (California time) on the Business Day immediately preceding the date of such requested
Settlement (the “Settlement Date”). Such notice of a Settlement Date shall include a summary statement of the amount of outstanding Advances, Agent Loans, and Agent Advances for the period since the prior Settlement Date, the amount of
repayments received in such period, and the amounts allocated to each Lender of the principal, interest, fees, and other charges for such period. Subject to the terms and conditions contained herein (including Section 2.1(i)(ii)): (y) if a
Lender’s balance of the Advances, Agent Loans, and Agent Advances exceeds such Lender’s Pro Rata Share of the Advances, Agent Loans, and Agent Advances as of a Settlement Date, then Agent shall by no later than 1:00 p.m. (California time)
on the Settlement Date transfer in same day funds to the account of such Lender as Lender may designate, an amount such that each such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances,
Agent Loans, and Agent Advances; and (z) if a Lender’s balance of the Advances, Agent Loans, and Agent Advances is less than such Lender’s Pro Rata Share of the Advances, Agent Loans, and Agent Advances as of a Settlement Date, such Lender
shall no later than 1:00 p.m. (California time) on the Settlement Date transfer in same day funds to such account of the Agent as the Agent may designate, an amount such that each such Lender shall, upon transfer of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances, Agent Loans, and Agent Advances. Such amounts made available to the Agent under clause (z) of the immediately preceding sentence shall be applied against the amounts of the applicable Agent Loan
or Agent Advance and, together with the portion of such Agent Loan or Agent Advance representing WFRF’s Pro Rata Share thereof, shall constitute Advances of such Lenders. If any such amount is not made available to the Agent by any Lender on
the Settlement Date applicable thereto to the extent required by the terms hereof, the Agent shall be entitled to recover for its account such amount on demand from such Lender together with interest thereon at the Defaulting Lenders Rate.

  
 (ii) In determining whether a Lender’s balance of the
Advances, Agent Loans, and Agent Advances is less than, equal to, or greater than such Lender’s Pro Rata Share of the Advances, Agent Loans, and Agent Advances as of a Settlement Date, Agent shall, as part of the relevant Settlement, apply to
such balance the portion of payments actually received by Agent with respect to principal, interest, fees payable by Borrower and allocable to the Lenders hereunder, and proceeds of Collateral. To the extent that a net amount is owed to any such
Lender after such application, such net amount shall be distributed by Agent to that Lender as part of such Settlement; 

  

 27 








 
provided, however, that the closing fee payable by Borrower under Section 2.12(a) shall be distributed to the Lenders within three
Business Days following the Closing Date without regard to the netting of amounts owing to or owed by any Lender as part of a Settlement. 
  
 (iii) Between Settlement Dates, the Agent, to the extent no Agent Advances or Agent Loans are outstanding, may pay over to WFRF any payments received by
the Agent, which in accordance with the terms of the Agreement would be applied to the reduction of the Advances, for application to WFRF’s Pro Rata Share of the Advances. If, as of any Settlement Date, Collections received since the then
immediately preceding Settlement Date have been applied to WFRF’s Pro Rata Share of the Advances other than to Agent Loans or Agent Advances, as provided for in the previous sentence, WFRF shall pay to the Agent for the accounts of the Lenders,
and Agent shall pay to the Lenders, to be applied to the outstanding Advances of such Lenders, an amount such that each Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Advances. During the
period between Settlement Dates, the Agent with respect to Agent Loans and Agent Advances, and each Lender with respect to the Advances other than Agent Loans and Agent Advances, shall be entitled to interest at the applicable rate or rates payable
under this Agreement on the daily amount of funds employed by the Agent or the Lenders, as applicable. 
  
 (j) Notation. The Agent shall record on its books the principal amount of the Advances owing to each Lender, including the Agent Loans and Agent
Advances owing to the Agent, and the interests therein of each Lender, from time to time. In addition, each Lender is authorized, at such Lender’s option, to note the date and amount of each payment or prepayment of principal of such
Lender’s Advances in its books and records, including computer records, such books and records constituting rebuttably presumptive evidence, absent manifest error, of the accuracy of the information contained therein. 
  
 (k) Lenders’ Failure to Perform. All Advances (other than Agent
Loans and Agent Advances) shall be made by the Lenders simultaneously and in accordance with their Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any
Advances hereunder, nor shall any Commitment of any Lender be increased or decreased .as a result of any failure by any other Lender to perform its obligation to make any Advances hereunder, and (ii) no failure by any Lender to perform its
obligation to make any Advances hereunder shall excuse any other Lender from its obligation to make any Advances hereunder. 
  
 (l) Winter 2006 Seasonal Extra Amount Option. (i) The Borrowers may request by notice to the Agent no later than September 1, 2006 (the
“Winter 2006 Seasonal Extra Amount Activation Notice”) that the Winter 2006 Seasonal Extra Amount Lenders increase Commitments hereunder (in the case of existing Lenders) or make a Commitment (in the case of a financial institution
which is not a Lender at such time) for the Winter 2006 Seasonal Commitment Amount Period; (ii) upon receipt 

  

 28 








 
of the Winter 2006 Seasonal Extra Amount Activation Notice, Agent shall have the right (but not the obligation) to solicit additional financial institutions
to become Lenders for purposes of this Agreement or to encourage any Lender to increase its Commitment hereunder; provided that (A) each such financial institution that becomes a Lender shall agree to become a party to, and shall
assume and agree to be bound by, this Agreement subject to all terms and conditions hereof, (B) the Agent shall have no obligation to any Borrower or to any Lender to solicit additional financial institutions or any Lender pursuant to this
Section 2.1(l) and each such Winter 2006 Seasonal Extra Amount Lender making or increasing its Commitment pursuant to this Section 2.1(l) shall execute a Confirmation of Winter 2006 Seasonal Extra Amount Commitment in the form of
Exhibit F-1 attached hereto (a “Confirmation of Winter 2006 Seasonal Extra Amount Commitment”), (C) no Lender shall have any obligation to the Borrowers, the Agent or any other Lender to increase its Commitment or such
Lender’s Pro Rata Share, (D) in no event shall the Commitments of the Winter 2006 Seasonal Extra Amount Lenders be increased pursuant to this Section 2.1(l) (x) by an amount which exceeds, in the aggregate, $10,000,000 or (y) beyond the
last day of the Winter 2006 Seasonal Amount Period, and (E) on the effective date specified in any Confirmation of Winter 2006 Seasonal Extra Amount Commitment hereunder, Borrowers shall pay to Agent for the pro rata accounts of the Winter 2006
Seasonal Extra Amount Lenders, a nonrefundable activation fee in an amount equal to 0.25% of the aggregate amount of the Winter 2006 Seasonal Extra Amount Commitments activated hereunder; and (iii) in the event that the Agent shall have received
Confirmations of Winter 2006 Seasonal Extra Amount Commitments prior to September 30, 2006 (the “Winter 2006 Seasonal Commitment Conditions”) on the effective date of the Winter 2006 Seasonal Extra Amount Commitments effected in
accordance with this Section 2.1(l), the Agent shall without further consent of the Lenders, amend (a) Schedule C-1 annexed hereto to updated the name, Commitment, and Pro Rata Share of each Lender and to reflect the Seasonal
Commitment Amount as increased by the Winter 2006 Seasonal Extra Amount and (b) this Agreement and the other Loan Documents to make such conforming changes to this Agreement and the other Loan Documents as the Agent may determine are necessary to
effectuate the Winter 2006 Seasonal Extra Amount. 
  
 (m)
Effect of Bankruptcy. If a case is commenced by or against any Borrower under the Bankruptcy Code, or other statute providing for debtor relief, then, without the approval of Required Lenders the Lender Group shall not make additional loans
or provide additional financial accommodations under the Loan Documents to such Borrower as debtor or debtor-in-possession, or to any trustee for such Borrower, nor consent to the use of cash collateral (provided that the applicable Loan Account
shall continue to be charged, to the fullest extent permitted by law, for accruing interest, fees, and Lender Group Expenses). 
  
 2.2. Letters of Credit. 
  
 (a) Agreement to Cause Issuance. Amounts; Outside Expiration Date. Subject to the terms and conditions of this Agreement, Agent agrees to 

  

 29 








 
issue letters of credit for the account of a Borrower (each, an “L/C”) or to issue guarantees of payment (each such guaranty, an “L/C
Guaranty”) with respect to letters of credit issued by an issuing bank for the account of a Borrower. Agent shall have no obligation to issue a Letter of Credit if the following would result in the aggregate amount of all undrawn or
unreimbursed Letters of Credit exceeding the lower of (x) the Seasonal Commitment Amount less the amount of outstanding Advances (including any Agent Advances and Agent Loans); or (y) $5,000,000. 
  
 Each Borrower expressly understands and agrees that Agent shall have no
obligation to arrange for the issuance by issuing banks of the letters of credit that are to be the subject of L/C Guarantees. Each Borrower and the Lender Group acknowledge and agree that certain of the letters of credit that are to be the subject
of L/C Guarantees may be outstanding on the Closing Date. Each Letter of Credit shall have an expiry date no later than 60 days prior to the date on which this Agreement is scheduled to terminate under Section 3.4 (without regard to any
potential renewal term) and all such Letters of Credit shall be in form and substance acceptable to Agent in its sole discretion. If the Lender Group is obligated to advance funds under a Letter of Credit, Borrowers immediately shall reimburse such
amount to Agent and, in the absence of such reimbursement, the amount so advanced immediately and automatically shall be deemed to be an Advance hereunder and, thereafter, shall bear interest at the rate then applicable to Advances under Section
2.7. 
  
 (b) Indemnification. Each Borrower hereby
agrees to indemnify, save, defend, and hold the Lender Group harmless from any loss, cost, reasonable and documented out-of-pocket expense, or liability, including payments made by the Lender Group, and reasonable and documented attorneys fees
incurred by the Lender Group arising out of or in connection with any Letter of Credit; provided that the Borrowers shall have no obligation to indemnify any issuing bank (including the Agent) (x) in respect of its failure to make payment of a draft
that strictly conforms to the requirements of the Letter of Credit under which it is drawn or (y) in respect of its payment of a draft that does not so strictly conform (and, notwithstanding anything herein to the contrary, the Borrowers do not
herein waive any claim they may have against such issuing bank in respect of such payment). Each Borrower agrees to be bound by the issuing bank’s regulations and interpretations of any letters of credit guarantied by the Lender Group and
opened to or for such Borrower’s account or by Agent’s interpretations of any Letter of Credit issued by Agent to or for such Borrower’s account, even though this interpretation may be different from such Borrower’s own, and
Borrowers understands and agrees that the Lender Group shall not be liable for any error, negligence, or mistake, whether of omission or commission, in following Borrower’s instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower understands that the L/C Guarantees may require the Lender Group to indemnify the issuing bank for certain costs or liabilities arising out of claims by a Borrower against such issuing
bank. Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group harmless with respect to any loss, cost, reasonable and documented out-of-pocket expense (including reasonable and documented attorneys fees), or liability
incurred by the Lender Group under any L/C Guaranty as a result of the Lender Group’s indemnification of any such issuing bank. 
  

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 (c) Supporting Materials. Each Borrower hereby authorizes and directs any bank that issues a
letter of credit guaranteed by an L/C Guaranty to deliver to Agent all instruments, documents, and other writings and property received by the issuing bank pursuant to such letter of credit, and to accept and rely upon Agent’s instructions and
agreements with respect to all matters arising in connection with such letter of credit and the related application. A Borrower may or may not be the “applicant” or “account party” with respect to such letter of credit.

  
 (d) Costs of Letters of Credit. Any and all charges,
commissions, fees, and costs incurred by Agent relating to the letters of credit guaranteed by an L/C Guaranty shall be considered Lender Group Expenses for purposes of this Agreement and immediately shall be reimbursable by Borrowers to Agent.

  
 (e) Indemnification. Immediately upon the termination
of this Agreement, Borrowers agrees to either (i) provide cash collateral to be held by Agent in an amount equal to 105% of the maximum amount of the Lender Group’s obligations under outstanding Letters of Credit (which cash collateral shall be
returned to Borrowers by Agent net of the amount of all drawings under such Letters of Credit and all costs and expenses associated therewith), or (ii) cause to be delivered to Agent releases of all of the Lender Group’s obligations under
outstanding Letters of Credit. At Agent’s discretion, any proceeds of Collateral received by Agent after the occurrence and during the continuation of an Event of Default may be held as the cash collateral required by this Section
2.2(e). 
  
 (f) Increased Costs. If by reason of (1)
any change in any applicable law, treaty, rule, or regulation or any change in the interpretation or application by any governmental authority of any such applicable law, treaty, rule, or regulation, or (ii) compliance by the issuing bank or the
Lender Group with any direction, request, or requirement (irrespective of whether having the force of law) of any governmental authority or monetary authority including, without limitation, Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect (and any successor thereto): 
  
 (i) any reserve, deposit, or similar requirement is or shall be imposed or modified in respect of any Letters of Credit issued hereunder, or 
  
 (ii) there shall be imposed on the issuing bank or the Lender Group any other condition regarding any letter of credit, or
Letter of Credit, as applicable, issued pursuant hereto; 
  
 and the result of the
foregoing is to increase, directly or indirectly, the cost to the issuing bank or the Lender Group of issuing, making, guaranteeing, or maintaining any letter of credit, or Letter of Credit, as applicable, or to reduce the amount receivable in
respect 
  

 31 








 thereof by such issuing bank or the Lender Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced, notify Borrowers, and Borrowers shall pay on demand such amounts as the issuing bank or Agent may specify to be necessary to compensate the issuing bank or Agent for
such additional cost or reduced receipt, together with interest on such amount from the date of such demand until payment in full thereof at the rate set forth in Section 2.7(a) or (c)(i), as applicable. The determination by the issuing bank or
Agent, as the case may be, of any amount due pursuant to this Section 2.2(f), as set forth in a certificate setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error, be final and conclusive
and binding on all of the parties hereto. 
  
 (g) Participations.

  
 (i) Purchasing of Participations. Immediately upon
issuance of any Letter of Credit in accordance with this Section 2.2, each Lender shall be deemed to have irrevocably and unconditionally purchased and received without recourse or warranty, an undivided interest and participation in the
credit support or enhancement provided through the Agent to such issuer in connection with the issuance of such Letter of Credit, equal to such Lender’s Pro Rata Share of the face amount of such Letter of Credit (including, without limitation,
all obligations of Borrower with respect thereto, and any security therefor or guaranty pertaining thereto). 
  
 (ii) Documentation. Upon the request of any Lender, the Agent shall furnish to such Lender copies of any Letter of Credit, reimbursement
agreements executed in connection therewith, application for any Letter of Credit and credit support or enhancement provided through the Agent in connection with the issuance of any Letter of Credit, and such other documentation as may reasonably by
requested by such Lender. 
  
 (iii) Obligations
Irrevocable. The obligations of each Lender to make payments to the Agent with respect to any Letter of Credit or with respect to any credit support or enhancement provided through the Agent with respect to a Letter of Credit, and the
obligations of Borrower to make payments to the Agent, for the account of the Lenders, shall be irrevocable, not subject to any qualification or exception whatsoever, including, without limitation, any of the following circumstances: 
  
 (A) any lack of validity or enforceability of this Agreement or any of the
other Loan Documents; 
  
 (B) the existence of any claim, setoff,
defense, or other right which any Borrower may have at any time against a beneficiary named in a Letter of Credit or any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), any Lender, the Agent, the issuer
of such Letter of Credit, or any other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transactions between such Borrower or any
other Person and the beneficiary named in any Letter of Credit); 
  

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 (C) any draft, certificate, or any other document presented under the Letter of Credit proving to be
forged, fraudulent, or invalid in any respect or any statement therein being untrue or inaccurate in any respect; 
  
 (D) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Loan Documents; or 
  
 (E) the occurrence of any Default or Event of Default. 
  
 (h) On the Closing Date, (i) Existing Letters of Credit shall be deemed to
be Letters of Credit issued pursuant to and in compliance with this Agreement, (iii) the face amount of such Existing Letters of Credit shall be included in the calculation of the Availability, (iv) the provisions of this Agreement shall apply
thereto, and the Borrowers and the Lenders hereunder hereby expressly assume all obligations with respect to such Letters of Credit that they would have if such Letters of Credit had been issued pursuant to this Agreement and (v) all liabilities of
any Borrower with respect to such Existing Letters of Credit shall constitute obligations of the Borrower hereunder. 
  
 2.3. Intentionally Omitted. 
  
 2.4. Intentionally Omitted. 
  
 2.5. Payments. 
  
 (a) Payments by Borrower. 
  
 (i) All payments to be made by Borrower shall be made without set-off, recoupment, deduction, or counterclaim, except as otherwise required by law.
Except as otherwise expressly provided herein, all payments by Borrower shall be made to Agent for the account of the Lenders or Agent, as the case may be, at Agent’s address set forth in Section 12, and shall be made in immediately
available funds, no later than 11:00 a.m. (California time) on the date specified herein. Any payment received by Agent later than 11:00 a.m. (California time), at the option of Agent, shall be deemed to have been received on the following Business
Day and any applicable interest or fee shall continue to accrue until such following Business Day. 
  
 (ii) Whenever any payment is due on a day other than a Business Day, such payment shall be made on the following Business Day, and such extension of time
shall in such case be included in the computation of interest or fees, as the case may be. 
  
 (iii) Unless Agent receives notice from Borrower prior to the date on which any payment is due to the Lenders that Borrower will not make such 

  

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payment in full as and when required, Agent may assume that Borrower has made such payment in full to Agent on such date in immediately available funds and
Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent Borrower has not made such payment in full to Agent, each
Lender shall repay to Agent on demand such amount distributed to such Lender, together with interest thereon at the Reference Rate for each day from the date such amount is distributed to such Lender until the date repaid. 
  
 (b) Apportionment and Application of Payments. Except as otherwise
provided with respect to Defaulting Lenders, aggregate principal and interest payments shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Advances to which such payments relate held by each Lender) and
payments of the fees (other than fees designated for Agent’s separate account) shall, as applicable, be apportioned ratably among the Lenders. All payments shall be remitted to Agent and all such payments not relating to principal or interest
on specific Advances, or not constituting payment of specific fees and all proceeds of Collateral received by Agent, shall be applied, first, to pay any fees or expense reimbursements then due to Agent from Borrower; second, to pay any fees or
expense reimbursements then due to the Lenders from Borrower; third, to pay interest due in respect of all Advances, including Agent Loans and Agent Advances; fourth, to pay or prepay principal of Agent Loans and Agent Advances; fifth, ratably to
pay principal of the Advances (other than Agent Loans and Agent Advances) and unreimbursed obligations in respect of Letters of Credit; and sixth, ratably to pay any other Obligations due to Agent or any Lender by Borrower. Agent shall promptly
distribute to each Lender, pursuant to the applicable wire transfer instructions received from each Lender in writing, such funds as it may be entitled to receive, subject to a Settlement delay as provided for in Section 2.1(i). 

 
 2.6. Overadvances. If, at any time or for any reason, the amount of
Obligations owed by Borrowers to the Lender Group pursuant to Sections 2.1 and 2.2 is greater than either the Dollar limitations set forth in Sections 2.1 or 2.2, Borrowers immediately shall pay to Agent, in cash, the
amount of such excess to be used by Agent to reduce the Obligations pursuant to the terms of Section 2.5(b). 
  
 2.7. Interest and Letter of Credit Fees: Rates, Payments, and Calculations. 
  
 (a) Interest Rate. Except as provided in Section 2.7(c), all Obligations (except for undrawn Letters of
Credit), shall bear interest as follows: (i) each Eurodollar Rate Loan (other than Seasonal Advanced Amounts) shall bear interest at a per annum rate equal to the Adjusted Eurodollar Rate plus the Applicable Margin for Eurodollar Rate Loans,
(ii) each Reference Rate Loan shall bear interest at a per annum rate equal to the Reference Rate plus the Applicable Margin for Reference Rate Loans and (iii) Seasonal Advanced Amounts shall bear interest at a per annum rate equal to the
Adjusted Eurodollar Rate plus 4.00%. 
  

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 (b) Letter of Credit Fee. Borrower shall pay Agent, for the benefit of the Lender Group, a fee
(in addition to the charges, commissions, fees, and costs set forth in Section 2.2(d)) equal to 1.25% per annum times the aggregate undrawn amount of all Letters of Credit outstanding as of the end of the day. 
  
 (c) Default Rate. Upon the occurrence and during the continuation of
an Event of Default, (i) all Obligations (except for undrawn Letters of Credit and Seasonal Advanced Amounts) shall bear interest on the Daily Balance at a per annum rate equal to two percentage points above the sum of the Reference Rate plus
the Applicable Margin, (ii) the Letter of Credit fee provided in Section 2.7(b) shall be increased to 3.25% per annum times the aggregate undrawn amount of all Letters of Credit outstanding as of the end of each day and (iii) Seasonal
Advanced Amounts shall bear interest at a rate that is two percentage points above the rate of interest otherwise applicable thereto. 
  
 (d) Intentionally Omitted. 
  
 (e) Payments. Interest in respect of Reference Rate Loans and Letter of Credit fees payable hereunder shall be due and payable, in arrears, on the
first day of each month during the term hereof. Interest in respect of each Eurodollar Rate Loan shall be due and payable, in arrears, on (i) the last day of the applicable Interest Period, and (ii) for Interest Periods longer than three months, on
the three-month anniversary date of the commencement of such Interest Period. Each Borrower hereby authorizes Agent, at its option, without prior notice to such Borrower, to charge such interest and Letter of Credit fees, all Lender Group Expenses
(as and when incurred), the charges, commissions, fees, and costs provided for in Section 2.2(d) (as and when accrued or incurred), the fees and charges provided for in Section 2.12 (as and when accrued or incurred), and all
installments or other payments due under any Loan Document to the applicable Borrowers’ Loan Account, which amounts thereafter shall accrue interest at the rate then applicable to Advances hereunder. Any interest not paid when due shall be
compounded and shall thereafter accrue interest at the rate then applicable to Advances hereunder. 
  
 (f) Computation. The Reference Rate as of the date of this Agreement is 5.25% per annum. In the event the Reference Rate is changed from time to
time hereafter, the applicable rate of interest hereunder automatically and immediately shall be increased or decreased by an amount equal to such change in the Reference Rate. All interest and fees chargeable under the Loan Documents shall be
computed on the basis of a 360 day year for the actual number of days elapsed. 
  
 (g) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the interest rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable. Borrowers and the Lender Group, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest
and manner of payment stated within it; 

  

 35 








 
provided, however, that, anything contained herein to the contrary notwithstanding, if said rate or rates of interest or manner of payment
exceeds the maximum allowable under applicable law, then, ipso facto as of the date of this Agreement, Borrowers are and shall be liable only for the payment of such maximum as allowed by law, and payment received from Borrower in excess of such
legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations to the extent of such excess. 
  
 2.8. Collection of Accounts. Borrowers shall at all times maintain a Restricted Account and, immediately after the Closing Date, shall deposit all
Collections in respect thereof to such Restricted Account or into Local Accounts (as defined below) subject to the requirements of this Section 2.8. Borrowers, Agent, and the Restricted Account Bank shall enter into the Restricted Account Agreement,
which among other things shall provide for the opening of the Restricted Account for the deposit of Collections at the Restricted Account Bank. Each Borrower agrees that all Collections and other amounts received by such Borrower from any Account
Debtor or any other source immediately upon receipt shall be deposited (i) into the Restricted Account or (ii) into deposit accounts with local financial institutions satisfactory to the Agent (“Local Accounts”) who shall be directed by
the Borrowers via irrevocable written notice in form and substance satisfactory to the Agent to remit all such Collections and such other amounts no less frequently than once each day to, and only to, the Restricted Account. The Restricted Account
Agreement and arrangement contemplated thereby shall not be modified by a Borrower without the prior written consent of Agent. Upon the terms and subject to the conditions set forth in the Restricted Account Agreement, so long as no Event of Default
has occurred and is continuing, Borrowers shall have the right to have the entire collected balance in the Restricted Account transferred, on a daily basis, to the Operating Account (as defined in the Restricted Account Agreement), and upon the
occurrence and during the continuation of an Event of Default and direction by Agent to the Restricted Account Bank, amounts on deposit in the Restricted Account may be retained therein or transferred, all at the direction of the Agent, or, the
Restricted Account may be transferred, at the direction of the Agent, into the name of Agent and all amounts received in the Restricted Account wired each Business Day into an account (the “Agent’s Account”) maintained by Agent at a
depositary selected by Agent. 
  
 2.9. Crediting
Payments; Application of Collections. The receipt of any Collections by Agent immediately shall be applied provisionally to reduce the Obligations outstanding under Section 2.1, but shall not be considered a payment on account unless such
Collection item is a wire transfer of immediately available federal funds and is made to the Agent’s Account or unless and until such Collection item is honored when presented for payment. Should any Collection item not be honored when
presented for payment, then Borrowers shall be deemed not to have made such payment, and interest shall be recalculated accordingly. Anything to the contrary contained herein notwithstanding, any Collection item shall be deemed received by Agent
only if it is received into the Agent’s Account on a Business Day on or before 11:00 a.m. California time. If any Collection item is received into the Agent’s Account on a non-Business Day or after 11:00 a.m. California time on a Business
Day, it shall be deemed to have been received by Agent as of the opening of business on the immediately following Business Day. 
  

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 2.10. Designated Account. Agent and the Lender Group are authorized to make the Advances and the
Letters of Credit under this Agreement based upon telephonic or other instructions received from anyone purporting to be an Authorized Person, or without instructions if pursuant to Section 2.7(e). Borrowers agrees to establish and maintain a
single Designated Account with the Designated Account Bank for the purpose of receiving the proceeds of the Advances requested by Borrowers and made by the Lender Group hereunder. Unless otherwise agreed by Agent and Borrowers, any Advance requested
by Borrowers and made by the Lender Group hereunder shall be made to the Designated Account. 
  
 2.11. Maintenance of Loan Account; Statements of Obligations. At the request of Borrowers, to facilitate and expedite the administration and accounting processes and procedures of their borrowings under this
Agreement, Agent shall maintain a single account on its books in the names of Borrowers (the “Loan Account”) on which Borrowers will be charged with all Advances made by the Lender Group to Borrowers or for Borrower’s account,
including, accrued interest, Lender Group Expenses, and any other payment Obligations of Borrower. In accordance with Section 2.9, the Loan Account will be credited with all payments received by Agent from any Borrowers or for any
Borrowers’ account. Agent shall render one statement regarding the Loan Account to Poolmart on behalf of Borrowers, including principal, interest, fees, and including an itemization of all charges and expenses constituting the Lender Group
Expenses owing, and such statements shall be conclusively presumed to be correct and accurate and constitute an account stated between Borrowers and the Lender Group unless, within 30 days after receipt thereof by Borrowers, Borrowers shall deliver
to Agent written objection thereto describing the error or errors contained in any such statements. Each Borrower hereby expressly agrees and acknowledges that WFRF shall have no obligation to account separately to such Borrower. 
  
 2.12. Fees. Borrowers shall pay to Agent the following fees and
charges, which fees and charges shall be non-refundable when paid (irrespective of whether this Agreement is terminated thereafter) and shall be apportioned among the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders: 
  
 (a) Fee Letter Fees. As and when
due and payable under the terms of the Fee Letter, Borrowers shall pay to Agent the fees set forth in the Agent’s Fee Letter; 
  
 (b) Unused Line Fee. On the first day of each month during the term of this Agreement, an unused line fee in an amount equal to 0.25% per annum
times the Average Monthly Availability; and 
  

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 (c) Financial Examination and Appraisal Fees. For the sole account of Agent: (i) expenses for
each financial analysis and examination (i.e., audits) of Borrowers performed in connection with the audit performed (x) during the 2005 fiscal year of the Borrowers and (y) any audits performed after the occurrence and during the continuation of an
Event of Default; and (ii) the actual charges paid or incurred by Agent to appraise and examine the Collateral (w) during the 2005 fiscal year of the Borrowers, (x) during the 2006 fiscal year of the Borrowers if there are Seasonal Advance Amounts
during the Winter 2005 Seasonal Commitment Amount Period, (y) during the 2007 fiscal year of the Borrowers if there are Seasonal Advance Amounts during the Winter 2006 Seasonal Commitment Amount Period and (z) after the occurrence and during the
continuation of an Event of Default; provided that if no Event of Default shall have occurred and be continuing, the audits and the appraisals referenced in the foregoing clauses (i) and (ii) shall be conducted at the Borrowers’ expense
no more than one (1) time during any consecutive twelve (12) month period). Following the occurrence of an Event of Default, all appraisal and audit expenses shall be for the account of the Borrowers and shall be conducted at the discretion of the
Agent. 
  
 2.13. Eurodollar Rate Loans. Any other
provisions herein to the contrary notwithstanding, the following provisions shall govern with respect to Eurodollar Rate Loans as to the matters covered: 
  
 (a) Borrowing; Conversion; Continuation. Borrower may from time to time, on or after the Closing Date (and subject to the satisfaction of the
requirements of Sections 3.1 and 3.2), request in a written or telephonic communication with Agent: (i) Advances made up of Eurodollar Rate Loans; (ii) that Reference Rate Loans be converted into Eurodollar Rate Loans; or (iii) that
existing Eurodollar Rate Loans continue for an additional Interest Period. Any such request shall specify the aggregate amount of the requested Eurodollar Rate Loans, the proposed Funding Date therefor (which shall be a Business Day, and with
respect to continued Eurodollar Rate Loans shall be the last day of the Interest Period of the existing Eurodollar Rate Loans being continued), and the proposed Interest Period (in each case subject to the limitations set forth below). Eurodollar
Rate Loans may only be made, continued, or extended if, as of the proposed Funding Date therefor, each of the following conditions is satisfied: 
  
 (v) no Event of Default exists; 
  
 (w) no more than five Interest Periods would be in effect at any one time; 
  
 (x) the amount of each Eurodollar Rate Loan borrowed, converted, or continued must be in an amount not less
than $500,000 and integral multiples of $100,000 in excess thereof; 
  
 (y) Agent shall have determined that the Interest Period or Adjusted Eurodollar Rate is available to it and can be readily determined as of the date of the request for such Eurodollar Rate Loan by Borrower; and

  

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 (z) Agent shall have received such request at least two Business Days prior to the
proposed Funding Date therefor. 
  
 Any request by Borrower to
borrow Eurodollar Rate Loans, to convert Reference Rate Loans to Eurodollar Rate Loans, or to continue any existing Eurodollar Rate Loans shall be irrevocable, except to the extent that the Agent shall determine under Section 2.13(a), or as
to any Lender that determines under Section 2.14, that such Eurodollar Rate Loans cannot be made or continued. 
  
 (b) Determination of Interest Period. By giving notice as set forth in Section 2.13(a), Borrower shall select an Interest Period for such
Eurodollar Rate Loan. The determination of the Interest Period shall be subject to the following provisions: 
  
 (i) in the case of immediately successive Interest Periods, each successive Interest Period shall commence on the day on which the next preceding
Interest Period expires; 
  
 (ii) if any Interest Period would
otherwise expire on a day which is not a Business Day, the Interest Period shall be extended to expire on the next succeeding Business Day; provided, however, that if the next succeeding Business Day occurs in the following calendar month,
then such Interest Period shall expire on the immediately preceding Business Day; 
  
 (iii) if any Interest Period begins on the last Business Day of a month, or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, then the Interest
Period shall end on the last Business Day of the calendar month at the end of such Interest Period; and 
  
 (iv) Borrower may not select an Interest Period which expires later than the Maturity Date. 
  
 (c) Automatic Conversion. Any Eurodollar Rate Loan shall automatically convert to a Reference Rate Loan upon the
last day of the applicable interest Period, unless Agent has received a request to continue such Eurodollar Rate Loan at least two Business Days prior to the end of such Interest Period in accordance with the terms of Section 2.13(a). 
  
 2.14. Illegality. Any other provision herein to the contrary
notwithstanding, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof by a Governmental Authority made subsequent to the Closing Date shall make it unlawful for any Lender to make or maintain
Eurodollar Rate Loans as contemplated by this Agreement, (a) the obligation of such Lender hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such, and convert Reference Rate Loans to Eurodollar Rate Loans shall forthwith be
suspended and (b) such Lender’s then outstanding Eurodollar Rate Loans, if any, shall be converted 

  

 39 








 
automatically to Reference Rate Loans on the respective last days of the then current Interest Periods with respect thereto or within such earlier period as
required by law; provided, however, that before making any such demand, each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions and so long as such efforts would not be disadvantageous
to it, in its reasonable discretion, in any legal, economic, or regulatory manner) to designate a different lending office if the making of such a designation would allow such Lender or its lending office to continue to perform its obligations to
make Eurodollar Rate Loans. If any such conversion of a Eurodollar Rate Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 2.16. If circumstances subsequently change so that such Lender shall determine that it is no longer so affected, such Lender will promptly notify Agent and Borrower, and upon receipt of such notice, the
obligations of such Lender to make or continue Eurodollar Rate Loans or to convert Reference Rate Loans into Eurodollar Rate Loans shall be reinstated. 
  
 2.15. Requirements of Law. 
  
 (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof by a Governmental Authority made
subsequent to the Closing Date or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the Closing Date 
  
 (i) shall subject such Lender to any tax, levy, charge, fee, reduction, or
withholding of any kind whatsoever with respect to Eurodollar Rate Loans, or change the basis of taxation of payments to such Lender in respect thereof (except for (x) the establishment of a tax based on the net income of such Lender or changes in
the rate of tax on the net income of such Lender and (y) United States withholding taxes in respect of payments made to any Lender that is organized under the law of any jurisdiction other than the United States or a political subdivision thereof);

  
 (ii) shall in respect of Eurodollar Rate Loans impose, modify
or hold applicable any reserve, special deposit, compulsory loan, or similar requirement against assets held by, deposits or other liabilities in or for the account of, Advances or other extensions of credit by, or any other acquisition of funds by,
any office of such Lender; or 
  
 (iii) shall impose on such
Lender any other condition with respect to Eurodollar Rate Loans; 
  
 and the
result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing, or maintaining Eurodollar Rate Loans or to increase the cost to such Lender in
respect of Eurodollar Rate Loans, by an amount which such Lender deems to be material, or to reduce any amount receivable hereunder in respect of Eurodollar Rate Loans, or to forego 

  

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any other sum payable thereunder or make any payment on account thereof in respect of Eurodollar Rate Loans, then, in any such case, if such Lender is
demanding payment of additional amounts in respect thereof by borrowers generally that are reasonably similarly situated with the Borrowers, Borrowers shall promptly pay to Agent (for the benefit of such Lender), upon such Lender’s demand, any
additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable; provided, however, that before making any such demand, each Lender agrees to use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions and so long as such efforts would not be disadvantageous to it, in its reasonable discretion, in any legal, economic, or regulatory manner) to designate a different Eurodollar lending office if the making of such
designation would allow such Lender or its Eurodollar lending office to continue to perform its obligations to make Eurodollar Rate Loans or to continue to fund or maintain Eurodollar Rate Loans and avoid the need for, or materially reduce the
amount of, such increased cost; provided, further, that the Lender shall not be entitled to demand payment of any such amount that is attributable to any period prior to 60 days before such demand is made. If a Lender becomes entitled to claim any
additional amounts pursuant to this Section 2.15, such Lender shall promptly notify Agent and Borrower of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this Section
2.15 submitted in reasonable detail by such Lender to Agent and Borrower shall be conclusive in the absence of manifest error. Within five Business Days after a Lender notifies Borrower and Agent of any increased cost pursuant to the foregoing
provisions of this Section 2.15, Borrower may convert all Eurodollar Rate Loans then outstanding into Reference Rate Loans in accordance with Section 2.13 and, additionally, reimburse such Lender for any cost in accordance with
Section 2.16. This covenant shall survive the termination of this Agreement and the payment of the Advances and all other amounts payable hereunder for nine months following such termination and repayment. 
  
 (b) If a Lender shall have determined that the adoption of or any change in
any Requirement of Law regarding capital adequacy or in the interpretation or application thereof by a Governmental Authority made subsequent to the Closing Date or compliance by such Lender or any Person controlling such Lender with any request or
directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the Closing Date does or shall have the effect of increasing the amount of capital required to be maintained or reducing
the rate of return on such Lender’s or such Person’s capital as a consequence of its obligations hereunder to a level below that which such Lender or such Person could have achieved but for such change or compliance (taking into
consideration such Lender’s or such Person’s policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to Agent and Borrower of a prompt written
request therefor accompanied by a certified calculation in reasonable detail, Borrower shall pay to Agent (for the benefit of such Lender) such additional amount or amounts as will compensate such Lender or such Person for such reduction. This
covenant shall survive the termination of this Agreement and the payment of the Advances and all other amounts payable hereunder for nine months following such termination and repayment. 
  

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 2.16. Indemnity. Borrower agrees to indemnify Agent and each Lender and to hold Agent and Lenders
harmless from any loss or expense which Agent or any Lender may sustain or incur as a consequence of (a) default by Borrower in payment when due of the principal amount of or interest on any Eurodollar Rate Loan, (b) default by Borrower in making a
Borrowing of, conversion into, or continuation of Eurodollar Rate Loans after Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (c) default by Borrower in making any prepayment of a Eurodollar Rate
Loan after Borrower has given a notice thereof in accordance with the provisions of this Agreement, or (d) the making of a prepayment of Eurodollar Rate Loans on a day which is not the last day of an Interest Period with respect thereto (whether due
to the termination of this Agreement, upon an Event of Default, or otherwise), including, in each case, any such loss or expense (but excluding loss of margin or anticipated profits) arising from the reemployment of funds obtained by it or from fees
payable to terminate the deposits from which such funds were obtained; provided, however, that Agent or any Lender, if requesting indemnification, shall have delivered to the Borrower a certificate as to the amount of such loss or expense, which
certificate shall be conclusive in the absence of manifest error. Calculation of all amounts payable to any such Lender under this Section 2.16 shall be made as though such Lender had actually funded the relevant Eurodollar Rate Loan through
the purchase of a deposit bearing interest at the Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a maturity comparable to the relevant Interest Period; provided, however, that each Lender may fund each of
the Eurodollar Rate Loans in any manner it sees fit, and the foregoing assumption shall be utilized only for the calculation of amounts payable under this Section 2.16. This covenant shall survive the termination of this Agreement and the
payment of the Obligations hereunder. 
  
 3. CONDITIONS; TERM
OF AGREEMENT. 
  
 3.1. Conditions Precedent to the Initial
Advance and the Initial Letter of Credit. The obligation of the Lender Group to make the initial Advance or to issue the initial Letter of Credit is subject to the fulfillment, to the satisfaction of Agent and its counsel, of each of the
following conditions on or before the Closing Date: 
  
 (a) The
Closing Date shall occur on or before January 31, 2005; 
  
 (b)
The Loan Documents shall be effective to create in favor of the Agent a legal, valid and enforceable first (except for Permitted Liens entitled to priority under applicable law) security interest in and lien upon the Collateral for the benefit of
the Agent and the Lenders. All filings, recordings, deliveries of instruments and other actions necessary or desirable in the opinion of the Agent to protect and preserve such security interests shall have been duly effected. The Agent shall have
received evidence thereof in form and substance satisfactory to the Collateral Agent; 
  

 42 








 (c) Agent shall have received each of the following documents, duly executed, and each such document
shall be in full force and effect: 
  
 a. the Disbursement
Letter; and 
  
 b. the Agent’s Fee Letter; 
  
 (d) Agent shall have received a certificate from the Secretary of each of
the Borrowers attesting to the resolutions of each Borrower’s Board of Directors authorizing its execution, delivery, and performance of this Agreement, the other Loan Documents and the transactions contemplated hereby to which such Borrower is
a party and authorizing specific officers of such Borrower to execute the same; 
  
 (e) Agent shall have received copies of each Borrower’s Governing Documents, as amended, modified, or supplemented to the Closing Date, certified by the Secretary of such Borrower; 
  
 (f) Agent shall have received a certificate of status with respect to each
Borrower, dated within 10 days of the Closing Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of such Borrower, which certificate shall indicate that such Borrower is in good standing in such
jurisdiction; 
  
 (g) Agent shall have received certificates of
status with respect to each Borrower, each dated within 15 days of the Closing Date, such certificates to be issued by the appropriate officer of the jurisdictions in which its failure to be duly qualified or licensed would constitute a Material
Adverse Change, which certificates shall indicate that such Borrower is in good standing in such jurisdictions; 
  
 (h) Agent shall have received a certificate of insurance, together with the endorsements thereto, as are required by Section 6.10, the form and
substance of which shall be satisfactory to Agent and its counsel; 
  
 (i) Agent shall have received an opinion of Borrowers’ counsel in form and substance satisfactory to Agent in its sole discretion; 
  
 (j) The Borrowers shall have caused to be delivered to the Agent fully executed Restricted Account Agreements, in form and substance satisfactory to each
of the Lenders, for each account maintained by the Borrowers; 
  
 (k) The Borrowers shall have paid in cash all fees due and payable on the date hereof to the Agent and the Lenders, including, without limitation, the fees as required by the Agent’s fee letter dated the date hereof; 
  
 (l) The Recapitalization shall have been consummated on terms and conditions
satisfactory to the Agent; 
  

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 (m) The terms of the Indenture and the Senior Notes shall be satisfactory to the Agent; 
  
 (n) The Preferred Stock shall be on terms and conditions satisfactory to the
Agent; and 
  
 (o) All other documents and legal matters in
connection with the transactions contemplated by this Agreement shall have been delivered, executed, or recorded and shall be in form and substance satisfactory to Agent. 
  
 3.2. Conditions Precedent to all Advances and all Letters of Credit. The following shall be conditions precedent to
all Advances and all Letters of Credit hereunder: 
  
 (a) the
representations and warranties contained in this Agreement and the other Loan Documents shall be true and correct in all respects on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that
such representations and warranties relate solely to an earlier date); 
  
 (b) no Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof; 
  
 (c) no injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the extending
of such credit shall have been issued and remain in force by any Governmental Authority against any Borrower, the Lender Group or any of their Affiliates; 
  
 (d) the amount of any requested Advance or Letter of Credit shall not exceed the Availability at such time; and 
  
 (e) no Material Adverse Change shall have occurred. 
  
 3.3. Reserved. 
  
 3.4. Term; Automatic Renewal. This Agreement shall become effective
upon the execution and delivery hereof by Borrowers and the Lender Group and shall continue in full force and effect for a term ending on January     , 2010 (the “Maturity Date”). The foregoing notwithstanding,
the Lender Group, upon the election of the Required Lenders, shall have the right to terminate the Lender Group’s obligations under this Agreement immediately and without notice upon the occurrence and during the continuation of an Event of
Default. 
  
 3.5. Effect of Termination. On the date of
termination of this Agreement, all Obligations (including contingent reimbursement obligations of Borrowers with respect to any outstanding Letters of Credit) immediately shall become due and payable without notice or demand. No termination of this
Agreement, however, 

  

 44 








 
shall relieve or discharge Borrowers or Borrowers’ duties, Obligations, or covenants hereunder, and the Lender Group’s continuing security
interests in the Collateral shall remain in effect until all Obligations have been fully and finally discharged and the Lender Group’s obligation to provide additional credit hereunder is terminated. 
  
 3.6. Early Termination or Reduction of Commitments and Base Commitment
Amount by Borrowers. The provisions of Section 3.4 that allow termination of this Agreement by Borrowers only on the Maturity Date notwithstanding, Borrowers have the option: at any time upon at least 15 days prior written notice to
Agent, to terminate this Agreement in full (but not in part) by paying to Agent (for the ratable benefit of the Lender Group), in cash, the Obligations (including depositing with Agent an amount equal to 105% of the undrawn amount of the Letters of
Credit, which cash collateral shall be returned to Borrowers by Agent net of the amount of all drawings under such Letters of Credit and all costs and expenses associated therewith), in full, together with a premium (the “Early Termination
Premium”) equal to the following amount: 
  

			
	 Effective Date of Termination

	  	 Early Termination Premium


	 Prior to and including January 25, 2007
	  	 1.00% of the Base Commitment Amount

		
	 Prior to and including January 25, 2008
	  	 0.50% of the Base Commitment Amount

		
	 Thereafter
	  	 No Early Termination Premium


  
 And, in any event, if Obligations are
repaid in full from a refinancing by a commercial banking unit of WFRF, then no Early Termination Premium shall be payable. 
  
 3.7. Termination Upon Event of Default. If the Lender Group terminates this Agreement upon the occurrence and during the continuation of an Event
of Default which Agent has reasonably determined to be been caused intentionally by a Borrower, in view of the impracticability and extreme difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable
calculation of the Lender Group’s lost profits as a result thereof, Borrowers shall pay to Agent (for the ratable benefit of the Lender Group) upon the effective date of such termination, a premium in an amount equal to the Early Termination
Premium. The Early Termination Premium shall be presumed to be the amount of damages sustained by the Lender Group as the result of the early termination and Borrowers agree that it is reasonable under the circumstances currently existing. The Early
Termination Premium provided for in this Section 3.7, shall be deemed included in the Obligations. 
  

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 4. CREATION OF SECURITY INTEREST. 
  
 4.1. Grant of Security Interest. Each Borrower confirms that it has granted and, for the avoidance of doubt, hereby
grants to Agent for the benefit of the Lender Group a continuing security interest in all of such Borrower’s currently existing and hereafter acquired or arising Collateral in order to secure prompt repayment of any and all Obligations and in
order to secure prompt performance by such Borrower of each of its covenants and duties under the Loan Documents. The security interests of Agent for the benefit of the Lender Group in the Collateral shall attach to all Collateral without further
act on the part of the Lender Group or Borrowers. 
  
 4.2.
Negotiable Collateral. In the event that any Collateral, including proceeds, of value in excess of $250,000 is evidenced by or consists of Negotiable Collateral, Borrowers, immediately upon the request of Agent, shall endorse and deliver
physical possession of such Negotiable Collateral to Agent. 
  
 4.3. Collection of Accounts, General Intangibles, and Negotiable Collateral. At any time after the occurrence and during the continuation of an Event of Default, Agent or Agent’s designee may (a) notify customers or Account
Debtors of any Borrower that the Accounts, General Intangibles, or Negotiable Collateral of such Borrower have been assigned to Agent for the benefit of the Lender Group or that Agent for the benefit of the Lender Group has a security interest
therein, and (b) collect the Accounts, General Intangibles, and Negotiable Collateral of such Borrower directly and charge the collection costs and expenses to the Loan Account. After the occurrence and during the continuation of an Event of
Default, each Borrower agrees that it will hold in trust for the Lender Group, as the Lender Group’s trustee, any Collections that it receives and immediately will deliver said Collections to Agent in their original form as received by
Borrower. 
  
 4.4. Delivery of Additional Documentation
Required. At any time upon the request of Agent, Borrowers shall execute and deliver to Agent all financing statements, continuation financing statements, fixture filings, security agreements, pledges, assignments, control agreements,
affidavits, reports, notices, schedules of accounts, letters of authority, and, after the occurrence and during the continuation of an Event of Default, endorsements of certificates of title, applications for title, and, in any event (whether prior
to or after the occurrence of an Event of Default), all other documents that Agent reasonably may request, in form satisfactory to Agent, to perfect and continue perfected the Liens of the Lender Group in the Collateral, and in order to fully
consummate all of the transactions contemplated hereby and under the other the Loan Documents. 
  
 4.5. Power of Attorney. Each Borrower hereby irrevocably makes, constitutes, and appoints Agent (and any of Agent’s officers, employees, or agents 

  

 46 








 
designated by Agent) as such Borrower’s true and lawful attorney, with power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on any of the documents described in Section 4.4, (b) at any time that an Event of Default has occurred and is continuing, sign such Borrower’s name on
any invoice or bill of lading relating to any Account of such Borrower, drafts against Account Debtors, schedules and assignments of Accounts of such Borrower, verifications of Accounts of such Borrower, and notices to Account Debtors, (c) send
requests for verification of Accounts, (d) endorse such Borrower’s name on any Collection item that may come into the Lender Group’s possession, (e) at any time that an Event of Default has occurred and is continuing, notify the post
office authorities to change the address for delivery of such Borrower’s mail to an address designated by Agent, to receive and open all mail addressed to such Borrower, and to retain all mail relating to the Collateral of such Borrower and
forward all other mail to such Borrower, (f) at any time that an Event of Default has occurred and is continuing, make, settle, and adjust all claims under such Borrower’s policies of insurance and make all determinations and decisions with
respect to such policies of insurance, and (g) at any time that an Event of Default has occurred and is continuing, settle and adjust disputes and claims respecting the Accounts of such Borrower directly with Account Debtors, for amounts and upon
terms that Agent determines to be reasonable, and Agent may cause to be executed and delivered any documents and releases that Agent determines to be necessary. The appointment of Agent as such Borrower’s attorney, and each and every one of
Agent’s rights and powers, being coupled with an interest, is irrevocable until all of the Obligations have been fully and finally repaid and performed and the Lender Group’s obligation to extend credit hereunder is terminated. 

 
 4.6. Right to Inspect. Agent (through any of its officers,
employees, or agents) shall have the right, once per year so long as the trailing six-month average Availability is at least $8,000,000 and otherwise from time to time (upon reasonable intervals and upon reasonable notice so long as no Event of
Default has occurred and is continuing), to inspect Borrowers’ Books and to audit and, after the occurrence and during the continuation of an Event of Default, appraise, the Collateral in order to verify Borrowers’ financial condition or
the amount, quality, value, condition of or any other matter relating to, the Collateral. 
  
 5. REPRESENTATIONS AND WARRANTIES. 
  
 In order to induce the Lender Group to enter into this Agreement, each Borrower makes the following representations and warranties which shall be true, correct, and complete in all respects as of the date hereof and
shall be true, correct, and complete in all respects as of the Closing Date, and at and as of the date of the making of each Advance or Letter of Credit made thereafter, as though made on and as of the date of such Advance or Letter of Credit
(except to the extent that such representations and warranties relate solely to an earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement: 
  
 5.1. No Encumbrances. Each Borrower has good and indefeasible title
to its Collateral, free and clear of Liens except for Permitted Liens. 
  

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 5.2. Intentionally Omitted. 
  
 5.3. Inventory. The Borrowers have established such reserves with respect to their Inventory as are adequate in
accordance with GAAP, and such reserves are reflected on Poolmart’s most recent consolidated balance sheet delivered pursuant to Section 6.3; such Inventory is owned solely by a Borrower and such Borrower has good title thereto, subject
to no Liens that are prohibited hereby; is located at one of the locations set forth on Schedule E-1, (as amended from time to time in accordance with Section 6.12) or in transit in the United States to such a location; such Inventory,
if located at a distribution center of a Borrower, is subject to a Collateral Access Agreement; and such Inventory is subject to a valid and perfected first priority security interest in favor of the Lender Group. 
  
 5.4. Equipment. All of the Equipment of Borrowers is used or held for
use in Borrowers’ business and is fit for such purposes. 
  
 5.5. Location of Inventory and Equipment. The Inventory and Equipment of Borrowers are not stored with a bailee, warehouseman, or similar party (without delivery to Agent of a Collateral Access Agreement or Agent’s prior written
consent) and are located only at the locations identified on Schedule 6.12 or otherwise permitted by Section 6.12. 
  
 5.6. Inventory Records. Consistent with past practices, each Borrower keeps records itemizing and describing the kind, type and quantity of its
Inventory and the Net Book Value thereof. 
  
 5.7. Location of
Chief Executive Office; FEIN. The chief executive office of each Borrower and Borrower’s FEIN is set forth on Schedule 5.7. 
  
 5.8. Due Organization and Qualification; Subsidiaries. 
  
 (a) Each Borrower is duly organized and existing and in good standing under the laws of the jurisdiction of its incorporation and qualified and licensed
to do business in, and in good standing in, any state where the failure to be so licensed or qualified reasonably could be expected to cause a Material Adverse Change. 
  
 (b) Set forth on Schedule 5.8, is a complete and accurate list of each Borrower’s direct and indirect
Subsidiaries, showing: (i) the jurisdiction of their incorporation; (ii) the number of shares of each class of common and preferred stock authorized for each of such Subsidiaries; and (iii) the number and the percentage of the outstanding shares of
each such class owned directly or indirectly by such Borrower. All of the outstanding capital stock of each such Subsidiary has been validly issued and is fully paid and non-assessable. 
  

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 (c) Except as set forth on Schedule 5.8, no capital stock (or any securities, instruments,
warrants, options, purchase rights, conversion or exchange rights, calls, commitments or claims of any character convertible into or exercisable for capital stock) of any direct or indirect Subsidiary of any Borrower is subject to the issuance of
any security, instrument, warrant, option, purchase right, conversion or exchange right, call, commitment or claim of any right, title, or interest therein or thereto. 
  
 5.9. Due Authorization; No Conflict. 
  
 (a) The execution, delivery, and performance by each Borrower of this Agreement and the Loan Documents to which it is a
party have been duly authorized by all necessary corporate action. 
  
 (b) The execution, delivery, and performance by each Borrower of this Agreement and the Loan Documents to which it is a party do not and will not (i) violate any provision of federal, state, or local law or regulation (including Regulations
T, U, and X of the Federal Reserve Board) applicable to such Borrower, the Governing Documents of such Borrower, or any order, judgment, or decree of any court or other Governmental Authority binding on such Borrower, (ii) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default under the Indenture, any other material contractual obligation or material lease of such Borrower, (iii) result in or require the creation or imposition of any Lien of any
nature whatsoever upon any properties or assets of such Borrower, other than Permitted Liens, or (iv) require any approval of stockholders or any approval or consent of any Person under any material contractual obligation of such Borrower.

  
 (c) Other than the filing of appropriate financing
statements, fixture filings, and mortgages, the execution, delivery, and performance by each Borrower of this Agreement and the Loan Documents to which such Borrower is a party do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any federal, state, foreign, or other Governmental Authority or other Person. 
  
 (d) This Agreement and the Loan Documents to which any Borrower is a party, and all other documents contemplated hereby and thereby, when executed and
delivered by such Borrower will be the legally valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their respective terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally. 
  
 (e) The Liens granted by each Borrower to Agent (for the benefit of the Lender Group) in and to its properties and assets pursuant to this Agreement and
the other Loan Documents are validly created, perfected, and first priority Liens, subject only to Permitted Liens. 
  

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 5.10. Litigation. There are no actions or proceedings pending by or against any Borrower before
any court or administrative agency and no Borrower does not have knowledge or belief of any pending, threatened, or imminent litigation, governmental investigations, or claims, complaints, actions, or prosecutions involving any Borrower or any
guarantor of the Obligations, except for: (a) ongoing collection matters in which a Borrower is the plaintiff, (b) matters disclosed on Schedule 5.10; and (c) matters that would not reasonably be expected to cause a Material Adverse Change.

  
 5.11. No Material Adverse Change. All of
Poolmart’s consolidated financial statements that have been delivered to the Lender Group have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and fairly present Poolmart’s consolidated financial condition as of the date thereof and results of operations for the period then ended. There has not been a Material Adverse Change on or before the Closing Date with
respect to Borrowers (taken as a whole) since the date of the latest financial statements submitted to the Lender Group on or before the Closing Date. 
  
 5.12. Solvency. Borrowers are Solvent. No transfer of property is being made by any Borrower and no obligation is being incurred by any Borrower in
connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of any Borrower. 
  
 5.13. Employee Benefits. Each Borrower and each Subsidiary of a
Borrower are in compliance in all material respects with all applicable provisions of ERISA; each Borrower and each such Subsidiary have not violated in any material respect any provision of any Benefit Plan maintained or contributed to by Borrower
or any such Subsidiary; no Reportable Event as defined in ERISA has occurred and is continuing with respect to any Benefit Plan initiated by a Borrower or any such Subsidiary; Borrowers and each Subsidiary of a Borrower have met their minimum
funding requirements under ERISA with respect to each Benefit Plan; and each Benefit Plan will be able to fulfill its benefit obligations as they come due in accordance with the Benefit Plan documents and under GAAP. 
  
 5.14. Environmental Condition. Except as disclosed by Borrowers to
Agent in writing prior to the date hereof to the best of Borrowers’ knowledge, Borrowers and each Subsidiary of a Borrower are in compliance in all material respects with all applicable environmental, hazardous waste, health, and safety
statutes and regulations governing their operations and/or properties or relating to the disposal, handling, production, storage, transport or release of Hazardous Materials. To the best of Borrowers’ knowledge, none of the operations of
Borrowers or any Subsidiary of a Borrower are the subject of any federal or state investigation evaluating whether any remedial action involving a material expenditure is needed to respond to a release of any Hazardous Material into the environment.
To the best of Borrowers’ knowledge, no Borrower nor any such Subsidiary has any material contingent liability in connection with any such release. 
  

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 5.15. Taxes. Borrowers have timely filed all tax returns required to be filed by Borrowers and all
taxes upon each Borrower or its properties, assets, income, and franchises (including real property taxes and payroll taxes) have been paid prior to delinquency, except such taxes that are the subject of a Permitted Protest. 
  
 5.16. Foreign Asset Control Regulations, etc. None of the requesting
or borrowing of the Advances, the requesting or issuance, extension or renewal of any Letters of Credit or the use of the proceeds of any thereof will violate the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the
“Trading With the Enemy Act”) or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) (the “Foreign Assets
Control Regulations”) or any enabling legislation or executive order relating thereto (which for the avoidance of doubt shall include, but shall not be limited to (a) Executive Order 13224 of September 21, 2001 Blocking Property
and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and (b) the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)). Furthermore, neither the Borrower nor any of its Subsidiaries or other Affiliates (a) is or will become a “blocked person” as described in the Executive Order,
the Trading With the Enemy Act or the Foreign Assets Control Regulations or (b) engages or will engage in any dealings or transactions, or be otherwise associated, with any such “blocked person”. 
  
 6. AFFIRMATIVE COVENANTS. 
  
 Each Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations, such Borrower shall do all of the following: 
  
 6.1. Accounting System. Maintain a system of accounting that enables such Borrower to produce financial statements in accordance with GAAP,
consistent with past practices. 
  
 6.2. Collateral
Reporting. At the request of the Agent, provide Agent (and if so requested by Agent, with copies for each Lender) with the following documents at the following times in form satisfactory to Agent: (a) a detailed calculation of the Net Book Value
of Inventory, including Inventory mix by major category (including a separate parts inventory category), all in such form and detail as Agent may reasonably require, (b) a summary aging, by vendor, of such Borrower’s accounts payable and any
book overdraft, (c) a physical inventory report together with an inventory shrinkage reconciliation schedule based upon such count, (d) a reconciliation of the Borrowers’ general ledger to the perpetual inventory report, and (e) such other
reports as to the Collateral or the financial condition of such Borrower as Agent may reasonably request from time to time. 
  

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 6.3. Financial Statements, Reports, Certificates. (a) Deliver to Agent: (i) as soon as available,
but in any event within 30 days after the end of each month during each of such Borrower’s fiscal years (or 45 days after end of the last month in each fiscal quarter), a company prepared balance sheet, income statement, and, on a quarterly
basis only, a statement of cash flow covering such Borrower’s operations during such period; and (ii) as soon as available, but in any event within 90 days after the end of each of such Borrower’s fiscal years, financial statements of such
Borrower for each such fiscal year, audited by independent certified public accountants from a “Big 4” accounting firm or such other accounting firm as is reasonably acceptable to Agent and certified, without any material qualifications,
by such accountants to have been prepared in accordance with GAAP, together with a certificate of such accountants addressed to Agent stating that such accountants do not have knowledge of the existence of any Default or Event of Default. Such
audited financial statements shall include a balance sheet, profit and loss statement, and statement of cash flow and, if prepared, such accountants’ letter to management. 
  
 (b) Together with the above, such Borrower also shall deliver to Agent such Borrower’s Form 10-Q Quarterly Reports,
Form 10-K Annual Reports, and Form 8-K Current Reports, and any other filings made by such Borrower with the Securities and Exchange Commission, if any, as soon as the same are filed, and any other report reasonably requested by Agent relating to
the financial condition of such Borrower. 
  
 (c) Each month,
together with the financial statements provided pursuant to Section 6.3(a), such Borrower shall deliver to Agent a Compliance Certificate signed by its chief financial officer to the effect that: (i) all financial statements delivered or caused to
be delivered to Agent hereunder have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments) and fairly present the consolidated
financial condition of such Borrower, (ii) the representations and warranties of such Borrower contained in this Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of such certificate, as
though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date), (iii) for each month that also is the date on which a financial covenant in Section 7.20 is to be tested, such
Borrower is in compliance at the end of such period with the applicable financial covenants contained in Section 7.20 (and demonstrating such compliance in reasonable detail), (iv) in any month in which any principal amount of Indebtedness arising
under the Indenture is redeemed, a statement of the principal amount of such Indebtedness redeemed during such month and during the term hereof; and (v) on the date of delivery of such certificate to Agent there does not exist any condition or event
that constitutes a Default or Event of Default (or, in the case of clauses (i), (ii), or (iii), to the extent of any noncompliance, describing such non-compliance as to which he or she may have knowledge and what action such Borrower has taken, is
taking, or proposes to take with respect thereto). 
  

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 (d) Poolmart shall, from time to time, not more frequently than once in any year unless an Event of
Default has occurred and is continuing, at the request of the Agent cause its independent certified public accountants to meet and confer with Agent, in the presence of management of Poolmart, to discuss with Agent the Borrowers’ financial
affairs. 
  
 6.4. Intentionally Omitted. 
  
 6.5. Intentionally Omitted. 
  
 6.6. Returns. Cause returns and allowances, if any, as between such
Borrower and its Account Debtors to be on the same basis and in accordance with the usual customary practices of such Borrower, as they exist at the time of the execution and delivery of this Agreement. 
  
 6.7. Title to Equipment. Upon Agent’s request after the
occurrence and during the continuation of an Event of Default, such Borrower immediately shall deliver to Agent, properly endorsed, any and all evidences of ownership of, certificates of title, or applications for title to any items of Equipment.

  
 6.8. Maintenance of Equipment. Maintain the Equipment
in good operating condition and repair (ordinary wear and tear excepted), and make all necessary replacements thereto so that the value and operating efficiency thereof shall at all times be maintained and preserved. Other than those items of
Equipment that constitute fixtures on the Closing Date, such Borrower shall not permit any item of Equipment to become a fixture to real estate or an accession to other property, and such Equipment shall at all times remain personal property.

  
 6.9. Taxes. Cause all assessments and taxes, whether
real, personal, or otherwise, due or payable by, or imposed, levied, or assessed against such Borrower or any of its property to be paid in full, before delinquency or before the expiration of any extension period, except to the extent that the
validity of such assessment or tax shall be the subject of a Permitted Protest. Such Borrower shall make due and timely payment or deposit of all such federal, state, and local taxes, assessments, or contributions required of it by law, and will
execute and deliver to Agent, on demand, appropriate certificates attesting to the payment thereof or deposit with respect thereto. Such Borrower will make timely payment or deposit of all tax payments and withholding taxes required of it by
applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Agent with proof satisfactory to Agent indicating that such Borrower has made such
payments or deposits. 
  

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 6.10. Insurance. 
  
 (a) Maintain and keep in force, and cause each Subsidiary of such Borrower to maintain and keep in force, insurance of the
types and in amounts customarily carried in similar lines of business, including but not limited to fire, extended coverage, public liability, property damage, and workers’ compensation, carried with companies and in amounts reasonably
satisfactory to Agent, and deliver to Agent from time to time at Agent’s request certificates of insurance setting forth all insurance then in effect; provided, however, that (a) with respect to Borrowers’ and each such Subsidiary’s
commercial liability insurance, each Borrower and each such Subsidiary may maintain deductibles which do not exceed, in the aggregate, $500,000 per occurrence, (b) each Borrower and each such Subsidiary may self-insure for workers’ compensation
upon disclosure by Borrower to Agent in writing, so long as such selfinsurance program is instituted and maintained in compliance with all applicable laws, rules, and regulations, and (c) with respect to each Borrower’s and each such
Subsidiary’s fire and property damage insurance, each Borrower and each Subsidiary may maintain deductibles which do not exceed, in the aggregate, five percent (5%) of their combined net current assets per occurrence. 
  
 (b) Except as otherwise provided in (a) above, all hazard insurance and such
other insurance as Agent shall specify, shall contain a California Form 438BFU (NS) mortgagee endorsement, or an equivalent endorsement satisfactory to Agent, showing Agent (for the ratable benefit of the Lenders) as sole loss payee thereof and
shall contain a waiver of warranties. Every policy of insurance referred to in this Section 6.10 shall contain an agreement by the insurer that it will not cancel such policy except after 30 days prior written notice to Agent (for the ratable
benefit of the Lenders) and that any loss payable thereunder shall be payable notwithstanding any act or negligence of such Borrower or the Lender Group which might, absent such agreement, result in a forfeiture of all or apart of such insurance
payment. 
  
 (c) Original policies or certificates thereof
satisfactory to Agent evidencing such insurance shall be delivered to Agent at least 30 days prior to the expiration of the existing or preceding policies. Such Borrower shall give Agent prompt notice of any loss covered by such insurance, and,
after the occurrence and during the continuation of an Event of Default, Agent shall have the right to adjust any loss. In such event, Agent shall have the exclusive right to adjust all losses payable under any such insurance policies without any
liability to such Borrower whatsoever in respect of such adjustments. 
  
 (d) Such Borrower shall not take out separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 6.10, unless Agent is included thereon as named insured with the
loss payable to Agent (for the ratable benefit of Lenders) under a standard California 438BFU (NS) Mortgagee endorsement, or its local equivalent. Such Borrower immediately shall notify Agent whenever such separate insurance is taken out, specifying
the insurer thereunder and full particulars as to the policies evidencing the same, and originals of such policies immediately shall be provided to Agent. 
  

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 6.11. No Setoffs or Counterclaims. Make payments hereunder and under the other Loan Documents by
or on behalf of such Borrower without setoff or counterclaim and free and clear of and without deduction or withholding for or on account of, any federal, state, or local taxes. 
  
 6.12. Location of Inventory and Equipment. Except for in-transit Inventory, keep the Inventory and Equipment only at
the locations (including store locations) identified on Schedule 6.12; provided, however, that Borrower may amend Schedule 6.12 so long as such amendment occurs by written notice to Agent not less than 30 days prior to
the date on which the Inventory or Equipment of Borrower is moved to such new location, so long as such new location is within the continental United States, and so long as, at the time of such written notification, Borrower provides any financing
statements or fixture filings necessary to perfect and continue perfected (the Lien of Agent for the benefit of the Lender Group), security interests in such assets and also provides to Agent, if requested by Agent, a Collateral Access Agreement.

  
 6.13. Compliance with Laws. Comply with the
requirements of all applicable laws, rules, regulations, and orders of any governmental authority, including the Fair Labor Standards Act and the Americans With Disabilities Act, other than laws, rules, regulations, and orders the non-compliance
with which, individually or in the aggregate, would not reasonably be expected to cause a Material Adverse Change. 
  
 6.14. Employee Benefits. Deliver to Agent: (i) promptly, and in any event within 10 Business Days after such Borrower or any of its Subsidiaries
knows or has reason to know that an ERISA Event has occurred that reasonably could be expected to result in a Material Adverse Change, a written statement of the chief financial officer of such Borrower describing such ERISA Event and any action
that is being taking with respect thereto by Borrower, any such Subsidiary or ERISA Affiliate, and any action taken or threatened by the IRS, Department of Labor, or PBGC. Such Borrower or such Subsidiary, as applicable, shall be deemed to know all
facts known by the administrator of any Benefit Plan of which it is the plan sponsor, (ii) promptly, and in any event within three Business Days after the filing thereof with the IRS, a copy of each funding waiver request filed with respect to any
Benefit Plan and all communications received by such Borrower, any of its Subsidiaries or, to the knowledge of such Borrower, any ERISA Affiliate with respect to such request, and (iii) promptly, and in any event within three Business Days after
receipt by such Borrower, any of its Subsidiaries or, to the knowledge of such Borrower, any ERISA Affiliate, of the PBGC’s intention to terminate a Benefit Plan or to have a trustee appointed to administer a Benefit Plan, copies of each such
notice. 
  
 6.15. Leases. Pay when due all rents and other
amounts payable under any leases to which such Borrower is a party or by which such Borrower’s properties and assets are bound, unless such payments are the subject of a Permitted Protest. To the extent that such Borrower fails timely to make
payment of such rents and other amounts payable when due under its leases, Agent shall be entitled, in its discretion, to reserve an amount equal to such unpaid amounts against the Seasonal Commitment Amount. 
  

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 7. NEGATIVE COVENANTS. 
  
 Each Borrower covenants and agrees that, so long as any credit hereunder shall be available and until full and final payment
of the Obligations, such Borrower will not do any of the following: 
  
 7.1. Indebtedness. Create, incur, assume, permit, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except: 
  
 (a) Indebtedness evidenced. by this Agreement, together with Indebtedness to issuers of letters of credit that is the
subject of L/C Guarantees and Indebtedness under Permitted Hedging Agreements; 
  
 (b) Indebtedness under the Indenture outstanding as of the Closing Date (and Indebtedness in exchange thereof not to exceed the aggregate amount of the Indebtedness so exchanged) and such other Indebtedness as set
forth on Schedule 7.1; 
  
 (c) Indebtedness in respect of
Poolmart’s Old Notes in an amount not to exceed $5,500,000 in the aggregate. 
  
 (d) Indebtedness incurred by Poolmart hereafter to finance the acquisition by Poolmart of real estate or other fixed assets for use in the on-going operations of Poolmart, provided (i) that such Indebtedness is
secured only by the real estate or other assets financed thereby, and that such investments in real estate or other assets are permitted under Section 7.21 hereof and (ii) that the aggregate amount of such Indebtedness outstanding at any time
shall not exceed $10,000,000; 
  
 (e) Intentionally Omitted.

  
 (f) Indebtedness arising under Capital Leases entered into by
Borrower or any of its Subsidiaries in the ordinary course of business, provided that the aggregate amount of such Indebtedness outstanding at any time shall not exceed $10,000,000; 
  
 (g) Indebtedness incurred by Borrower (exclusive of Subordinated Exchange Indebtedness) in an aggregate amount not to
exceed $10,000,000 at any time outstanding; 
  
 (h) Indebtedness
of any Subsidiary of a Borrower to a Borrower incurred in the ordinary course of business; and 
  
 (i) refinancings, renewals, or extensions of Indebtedness permitted under clauses (b) (other than Indebtedness under the Indenture), (d), and (g) of this
Section 7.1 (and continuance or renewal of any Permitted Liens associated therewith) so long as: (i) the terms and conditions of such refinancings, renewals, or extensions do 

  

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not materially impair the prospects of repayment of the Obligations by Borrowers, (ii) the net cash proceeds of such refinancings, renewals, or extensions do
not result in an increase in the aggregate principal amount of the Indebtedness so refinanced, renewed, or extended, (iii) such refinancings, renewals, refundings, or extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, and (iv) to the extent that Indebtedness that is refinanced was subordinated in right of payment to the Obligations, then the subordination terms and conditions of the refinancing Indebtedness must
be at least as favorable to the Lender Group as those applicable to the refinanced Indebtedness. 
  
 7.2. Liens. Create, incur, assume, or permit to exist, directly or indirectly, any Lien on or with respect to any of its property or assets, of any
kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens (including Liens that are replacements of Permitted Liens to the extent that the original Indebtedness is refinanced under Section
7.1(d) and so long as the replacement Liens only encumber those assets or property that secured the original Indebtedness); provided that in any event, with respect to any of fee interest in Real Property, Borrower shall not create or suffer to
exist any consensual Liens, or sell or enter into any sale and leaseback transaction relating to any such interest in any Real Property which is owned by a Borrower on the Closing Date. 
  
 7.3. Restrictions on Fundamental Changes. Enter into any merger or consolidation (other than of a Subsidiary of a
Borrower into a Borrower, or a Borrower into the other Borrower), reorganization or recapitalization (other than in connection with an acquisition permitted by Section 7.13, in which the Borrower or a Subsidiary is the surviving corporation),
or reclassify its capital stock, or liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, assign, lease, transfer, or otherwise dispose of, in one transaction or a series of transactions, all or
substantially all of its property or assets. 
  
 7.4. Disposal
of Assets. Sell, lease, assign, transfer, or otherwise dispose of any of such Borrower’s properties or assets other than sales of or other disposition of (a) Inventory, (b) obsolete Equipment, (c) Equipment not used or useful in the conduct
of the applicable Borrower’s business, (d) sale and leasebacks of the properties listed on Schedule 7.4 or of any Real Property or fixed assets acquired after the Closing Date, and (e) other assets (other than Inventory) not exceeding $500,000
per year in book value. 
  
 7.5. Change Name. Change such
Borrower’s name, FEIN, corporate structure (within the meaning of Section 9402(7) of the Code), or identity, or add any new fictitious name. 
  
 7.6. Guarantee. Guarantee or otherwise become in any way liable with respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of such Borrower or which are transmitted or turned over to Agent. 
  

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 7.7. Nature of Business. Make any material change in the principal nature of such Borrower’s
business. 
  
 7.8. Prepayments and Amendments. 

 
 (a) Unless the Availability Condition has been satisfied at such time,
prepay, redeem, retire, defease, purchase, or otherwise acquire any Funded Debt owing to any Person; provided, however, that that Borrowers may redeem Poolmart’s outstanding Old Notes referred to in Section 7.1(c). 
  
 (b) Directly or indirectly, amend, modify, alter, increase, or change any of
the terms or conditions of the Indenture or any other agreement, instrument, document, indenture, or other writing evidencing or concerning Indebtedness permitted under Sections 7.1(b), (c), or (d). 
  
 7.9. Change of Control. Cause, permit, or suffer, directly or
indirectly, any Change of Control. 
  
 7.10. Consignments.
Consign any Inventory or sell any inventory on bill and hold, sale or return, sale on approval, or other conditional terms of sale. 
  
 7.11. Distributions. Make any distribution or declare or pay any dividends (in cash or other property, other than capital stock) on, or purchase,
acquire, redeem, or retire any of such Borrower’s capital stock, of any class, whether now or hereafter outstanding; provided, however, that (a) each Subsidiary of a Borrower may pay cash dividends or distributions to a Borrower;
(b) a Borrower (i) may pay dividends payable on the Preferred Stock in the form of additional shares of Preferred Stock, (ii) may, so long as no Default or Event of Default shall have occurred or be continuing or would result therefrom, repurchase
capital stock of a Borrower or options, warrants or other securities exercisable or convertible into capital stock of a Borrower from employees and directors of a Borrower or any of its Subsidiaries or their authorized representatives upon the
death, disability or termination of employment or directorship of such employees or directors, in an aggregate amount not to exceed $1,000,000 in any calendar year and $4,000,000 in the aggregate plus, in the case of any such repurchase of capital
stock, the amount of net cash proceeds received by the Borrower from the resale of repurchased capital stock to officers or directors of the Borrower and its Subsidiaries; (iii) may declare and pay dividends on its capital stock other than the
Preferred Stock in the form of additional shares of such capital stock; and (iv) may, so long as no Default or Event of Default shall have occurred or be continuing or would result therefrom, pay dividends payable in cash on the shares of Preferred
Stock with (x) the net proceeds of a sale for cash (other than to a Subsidiary of a Borrower) of shares of capital stock of Poolmart or (y) the net proceeds of any capital contribution to Poolmart; and (c) if the Availability Condition has been
satisfied, a Borrower may make any other distributions or declare or pay any other dividends (in cash or other property) on, or otherwise purchase, acquire, redeem, or retire any of such Borrower’s capital stock, of any class. 
  

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 7.12. Accounting Methods. Other than pursuant to GAAP or with the concurrence of a “Big
4” accounting firm, modify or change its method of accounting. 
  
 7.13. Investments and Acquisitions. Directly or indirectly make any Investment or acquire any assets outside of the ordinary course of business consistent with past practices other than (a) Permitted Investments, (b) loans by a
Borrower to employees which do not exceed $1,000,000 in the aggregate outstanding at any time, (c) trade credit extended to customers of Borrowers in the ordinary course of business, (d) acquisitions of any assets outside of the ordinary course of
business in an amount not to exceed $15,000,000 in the aggregate over the term of this Agreement and (e) other Investments or acquisitions so long as the Availability Conditions is satisfied at the time such event occurs. 
  
 7.14. Transactions with Affiliates. Directly or indirectly enter into
or permit to exist any material transaction with any Affiliate of such Borrower except for (x) transactions contemplated under the Management Agreement as in effect as of the Closing Date and (y) transactions that are in the ordinary course of such
Borrower’s business and upon fair and reasonable terms, and that are no less favorable to such Borrower than would be obtained in an arm’s length transaction with a non-Affiliate. 
  
 7.15. Suspension. Suspend or go out of a substantial portion of its
business. 
  
 7.16. Intentionally Omitted. 
  
 7.17. Use of Proceeds. Use the proceeds of the Advances for any
purpose other than (i) on the Closing Date, to provide financing for the Recapitalization transaction and (ii) consistent with the terms and conditions hereof, for its lawful and permitted corporate purposes. 
  
 7.18. Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees. Relocate its chief executive office to a new location without providing 30 days prior written notification thereof to Agent and so long as, at the time of such written notification, such Borrower provides any financing
statements or fixture filings necessary to perfect and continue perfected the Lien of Agent (for the benefit of the Lender Group) and also provides to Agent a Collateral Access Agreement with respect to such new location. The Inventory and Equipment
of such Borrower shall not at anytime now or hereafter be stored with a bailee, warehouseman, or similar party without Agent’s prior written consent. 
  
 7.19. No Prohibited Transactions Under ERISA. Directly or indirectly: 
  
 (a) engage, or permit any Subsidiary of such Borrower to engage, in any prohibited transaction which is reasonably likely
to result in a civil penalty or excise tax described in Sections 406 of ERISA or 4975 of the IRC for which a statutory or class exemption is not available or a private exemption has not been previously obtained from the Department of Labor;

  

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 (b) permit to exist with respect to any Benefit Plan any accumulated funding deficiency (as defined in
Sections 302 of ERISA and 412 of the IRC), whether or not waived; 
  
 (c) fail, or permit any Subsidiary of such Borrower to fail, to pay timely required contributions or annual installments due with respect to any waived funding deficiency to any Benefit Plan; 
  
 (d) terminate, or permit any Subsidiary of such Borrower to terminate, any
Benefit Plan where such event would result in any liability of such Borrower, any of its Subsidiaries or any ERISA Affiliate under Title IV of ERISA; 
  
 (e) fail, or permit any Subsidiary of such Borrower to fail, to make any required contribution or payment to any Multiemployer Plan; 
  
 (f) fail, or permit any Subsidiary of such Borrower to fail, to pay any
required installment or any other payment required under Section 412 of the IRC on or before the due date for such installment or other payment; 
  
 (g) amend, or permit any Subsidiary of such Borrower to amend, a Plan resulting in an increase in current liability for the plan year such that either of
such Borrower, any Subsidiary of such Borrower or any ERISA Affiliate is required to provide security to such Plan under Section 401(a)(29) of the IRC; or 
  
 (h) withdraw, or permit any Subsidiary of such Borrower to withdraw, from any Multiemployer Plan where such withdrawal is
reasonably likely to result in any liability of any such entity under Title IV of ERISA; 
  
 which, individually or in the aggregate, results in or reasonably would be expected to result in a claim against or liability of such Borrower, any of its Subsidiaries or any ERISA Affiliate in excess of $1,000,000.

  
 7.20. Financial Covenants. 
  
 (a) Allow the Fixed Charge Coverage Ratio at the end of any fiscal quarter
of the Borrowers to be less than (i) on each such date occurring during the period from the Closing Date though September 30, 2005, 1.10 to 1.00, and (ii) on each such date occurring thereafter, 1.25 to 1.00. 
  
 (b) Allow the Senior Leverage Ratio at the end of any fiscal quarter of the
Borrowers to exceed the ratio of (i) on each such date occurring during the period from the Closing Date though September 30, 2006, 2.25 to 1.00, and (ii) on each such date occurring thereafter, 2.00 to 1.00. 
  

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 (c) Allow EBITDA at the end of any fiscal quarter of the Borrower during any period set forth below to
be less than the amount set forth below opposite such period: 
  

				
	 Period

	  	Amount


	 Closing Date though September 30, 2006
	  	$	35,000,000
	 October 1, 2006 though September 30, 2006
	  	$	40,000,000
	 Thereafter
	  	$	45,000,000

  
 Notwithstanding
anything to the contrary contained in this Section 7.20, at all times during a Seasonal Increased Amount Period, each reference in this Section 7.20 to “fiscal quarter” shall be deemed to be a reference to “fiscal
month” and the financial covenants referred to in clauses (a) though (c) above shall be tested at the end of each fiscal month of the Borrowers. 
  
 7.21. Capital Expenditures. Make capital expenditures in any fiscal year in excess of 50% of Borrowers’ EBITDA for the prior fiscal year.

  
 8. EVENTS OF DEFAULT. 
  
 Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement: 
  
 8.1. If Borrowers fail to pay, within five (5) Business Days of the date due or the date when declared due and payable, any portion of the Obligations (whether of principal, interest (including any interest which, but for the
provisions of the Bankruptcy Code, would have accrued on such amounts), fees and charges due the Lender Group, reimbursement of Lender Group Expenses, or other amounts constituting Obligations), provided that nothing contained herein shall prohibit
Agent from charging such amounts to the Borrowers’ loan account on the due date thereof; 
  
 8.2. If any Borrower fails to perform or observe any term, provision, condition, covenant or agreement contained in Section 7 of this Agreement; 
  
 8.3. If any Borrower fails to perform or observe any term, provision, condition, covenant or agreement in this
Agreement or any of the Loan Documents (other than those listed in Sections 8.1 or 8.2), and, with respect to any such failure which by its nature can be cured, such failure shall continue for a period of 20 days from the date of its occurrence;
provided, however, that in the case of a failure which by its nature can be cured under any of the following sections of this Agreement, such failure shall continue for a period of 20 days from the date the Borrower receives written notice from
Agent of the existence of such failure: Section 6.1 with respect to the maintenance of adequate books and records; Section 6.3 with respect to Agent’s satisfaction with form of the financial statements furnished to Agent; Sections 6.8 and 6.9
with respect to the failure to make provision to the satisfaction of Agent for payment of the obligations described therein; 
  

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 8.4. Many material portion of any Borrower’s properties or assets is attached, seized,
subjected to a writ or distress warrant; or is levied upon, or comes into the possession of any-third Person; 
  
 8.5. If an Insolvency Proceeding is commenced by any Borrower, 
  
 8.6. If an Insolvency Proceeding is commenced against any Borrower and any of the following events occur: (a) such
Borrower consents to the institution of the Insolvency Proceeding against it; (b) the petition commencing the Insolvency Proceeding is not timely controverted; (c) the petition commencing the Insolvency Proceeding is not dismissed within 60 calendar
days of the date of the filing thereof; provided, however, that, during the pendency of such period, the Lender Group shall be relieved of its obligation to extend credit hereunder; (d) an interim trustee is appointed to take possession of all or a
substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, such Borrower; or (e) an order for relief shall have been issued or entered therein; 
  
 8.7. If any Borrower is enjoined, restrained, or in any way prevented
by court order from continuing to conduct all or any material part of its business affairs; 
  
 8.8. If a notice of Lien, levy, or assessment is filed of record with respect to any of any Borrower’s properties or assets by the United States Government, or any department, agency, or instrumentality
thereof, or by any state, county, municipal, or governmental agency, or if any taxes or debts owing at any time hereafter to any one or more of such entities becomes a Lien, whether choate or otherwise, upon any of such Borrower’s properties or
assets and the same is not paid on the payment date thereof, provided that any such Lien, levy or assessment shall not be an Event of Default if for less than $500,000 and if fully reserved by Agent against Availability; 
  
 8.9. If a judgment or other claim in excess of $500,000 becomes a Lien
or encumbrance upon any material portion of any Borrower’s properties or assets and is not stayed, satisfied or bonded against within ten days; 
  
 8.10. If there is a default in the Indenture or any other material agreement to which any Borrower is a party with one or more third Persons and
such default (a) occurs at the final maturity of the obligations thereunder, or (b) results in a right by such third Person(s), irrespective of whether exercised, to accelerate the maturity of such Borrower’s obligations thereunder; 

 
 8.11. If any Borrower makes any optional redemption of Indebtedness
under the Indenture (other than as contemplated under Section 7.8) or any payment on account of Indebtedness that has been contractually subordinated in right of payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such Indebtedness; 
  

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 8.12. If any misstatement or misrepresentation exists now or hereafter in any warranty,
representation, statement, or report made to the Lender Group by any Borrower or any officer, employee, agent, or director of any Borrower, on the date any such warranty, representation, statement, or report is made; or 
  
 8.13. If a “Change in Control” occurs under and as defined
in the Indenture. 
  
 9. THE LENDER GROUP’S RIGHTS AND
REMEDIES. 
  
 9.1. Rights and Remedies. Upon the
occurrence, and during the continuation, of an Event of Default Agent may, pursuant to Sections 17.4 and 17.5, without notice of its election and without demand, do any one or more of the following, all of which are authorized by
Borrower: 
  
 (a) Declare all Obligations immediately due and
payable; 
  
 (b) Cease advancing money or extending credit to or
for the benefit of Borrower under this Agreement or under any of the Loan Documents; 
  
 (c) Terminate this Agreement and any of the other Loan Documents as to any future liability or obligation of the Lender Group, but without affecting the Lender Group’s rights and security interests in the
Collateral and without affecting the Obligations; 
  
 (d) Settle
or adjust disputes and claims directly with Account Debtors for amounts and upon terms which Agent considers advisable, and in such cases, Agent will credit Borrowers’ Loan Account with only the net amounts received by Agent in payment of such
disputed, Accounts after deducting all Lender Group Expenses incurred or expended in connection therewith; 
  
 (e) Cause Borrower to hold all of their returned Inventory in trust for the Lender Group, segregate all such returned Inventory from all other property
of any Borrower or in any Borrower’s possession and conspicuously label said returned Inventory as the property of the Lender Group; 
  
 (f) Without notice to or demand upon any Borrower or any guarantor, make such payments and do such acts as Agent considers necessary or reasonable to
protect its security interests in the Collateral. Borrowers agree to assemble the Collateral if Agent so requires, and to make the Collateral available to Agent as Agent may designate. Each Borrower authorizes Agent to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any part of it, 

  

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and to pay, purchase, contest, or compromise any encumbrance, charge, or Lien that in Agent’s determination appears to conflict with the Liens of Agent
(for the benefit of the Lender Group) in the Collateral and to pay all expenses incurred in connection therewith. With respect to any of Borrowers’ owned or leased premises, each Borrower hereby grants Agent a license to enter into possession
of such premises and to occupy the same, without charge, for up to 120 days in order to exercise any of the Lender Group’s rights or remedies provided herein, at law, in equity, or otherwise; 
  
 (g) Without notice to any Borrower (such notice being expressly
‘waived), and without constituting a retention of any collateral in satisfaction of an obligation (within the meaning of Section 9505 of the Code), set off and apply to the Obligations any and all (i) balances and deposits of Borrower held by
the Lender Group (including any amounts received in any Restricted Account), or (ii) indebtedness at any time owing to or for the credit or the account of any Borrower held by the Lender Group; 
  
 (h) Hold, as cash collateral, any and all balances and deposits of any
Borrower held by the Lender Group, and any amounts received in any Restricted Account, to secure the full and final repayment of all of the Obligations; 
  
 (i) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the
Collateral. Agent is hereby granted a license or other right to use, without charge, any Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and each Borrower’s rights under all licenses and all franchise agreements shall inure to the Lender
Group’s benefit; 
  
 (j) Sell the Collateral at either a
public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including any Borrower’s premises) as Agent determines is commercially reasonable. It is not necessary
that the Collateral be present at any such sale; 
  
 (k) Agent
shall give notice of the disposition of the Collateral as follows: 
  
 (1) Agent shall give Borrower and each holder of a security interest in the Collateral who has filed with Agent a written request for notice, a notice in writing of the time and place of public sale, or, if the sale
is a private sale or some other disposition other than a public sale is to be made of the Collateral, then the time on or after which the private sale or other disposition is to be made; 
  
 (2) The notice shall be personally delivered or mailed, postage prepaid, to Borrowers as provided in.
Section 12, at least five days before the date fixed for the sale, or at least five days before the date on or after which 

  

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the private sale or other disposition is to be made; no notice needs to be given prior to the disposition of any portion of the Collateral that is perishable
or threatens to decline speedily in value or that is of a type customarily sold on a recognized market. Notice to Persons other than Borrowers claiming an interest in the Collateral shall be sent to such addresses as they have furnished to Agent;

  
 (3) If the sale is to be a public sale,
Agent also shall give notice of the time and place by publishing a notice one time at least five days before the date of the sale in a newspaper of general circulation in the county in which the sale is to be held; 
  
 (l) Agent may credit bid and purchase at any public sale; and 
  
 (m) Any deficiency that exists after disposition of the Collateral as
provided above will be paid immediately by Borrower. Any excess will be returned, without interest and subject to the rights of third Persons, by Agent to Borrower. 
  
 9.2. Remedies Cumulative. The Lender Group’s rights and remedies under this Agreement, the Loan Documents, and
all other agreements shall be cumulative. The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by the Lender Group of one right or remedy shall be deemed an
election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing waiver. No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it. 
  
 10. TAXES AND EXPENSES. 
  
 If, after written request by Agent to Borrower, any Borrower fails to pay
any monies (whether taxes, assessments, insurance premiums, or, in the case of leased properties or assets, rents or other amounts payable under such leases) due to third Persons, or fails to make any deposits or furnish any required proof of
payment or deposit, all as required under the terms of this Agreement, then, to the extent that Agent determines that such failure by such Borrower could result in a Material Adverse Change, in its discretion and without prior notice to Borrower,
Agent may do any or all of the following: (a) make payment of the same or any part thereof; (b) set up such reserves in Borrowers’ Loan Account as Agent deems necessary to protect the Lender Group from the exposure created by such failure; or
(c) obtain and maintain insurance policies of the type described in Section 6.10, and take any action with respect to such policies as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender Group Expenses. Any such
payments made by Agent shall not constitute an agreement by the Lender Group to make similar payments in the future or a waiver by the Lender Group of any Event of Default under this Agreement. Agent need not inquire as to, or contest the validity
of, any such expense, tax, or Lien and the receipt of the usual official notice for the payment thereof shall be conclusive evidence that the same was validly due and owing. 
  

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 11. WAIVERS; INDEMNIFICATION. 
  
 11.1. Demand; Protest; etc. Each Borrower waives demand, protest, notice of protest, notice of default or dishonor,
notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees at any time held by the Lender Group on which such Borrower may in
any way be liable. 
  
 11.2. The Lender Group’s Liability
for Collateral. So long as the Lender Group complies with its obligations, if any, under Section 9207 of the Code, the Lender Group shall not in any way or manner be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss
or damage thereto occurring or arising in any manner or fashion from any cause; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person. All risk of loss, damage, or
destruction of the Collateral shall be borne by Borrower. 
  
 11.3. Indemnification. Borrowers shall pay, indemnify, defend, and hold each Agent-Related Person, each Lender, each Participant, and each of their respective officers, directors, employees, agents (each, an “Indemnified
Person”) harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, and damages, and all reasonable attorneys fees and disbursements and other reasonable and
documented out-of-pocket costs and expenses actually incurred in connection therewith (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them in connection
with or as a result of or related to the execution, delivery, enforcement, performance, and administration (including any of the foregoing arising out of the administration of the credit facilities hereunder on a joint borrowing basis) of this
Agreement and any other Loan Documents or the transactions contemplated herein, and with respect to any investigation, litigation, or proceeding related to this Agreement, any other Loan Document, or the use of the proceeds of the credit provided
hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event or circumstance in any manner related thereto (all the foregoing, collectively, the “Indemnified Liabilities”). Borrower shall have
no obligation to any Indemnified Person under this Section 11.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the repayment of the Obligations. 
  
 11.4. Joint Borrowers. 
  
 (a) Each Borrower agrees that it is jointly and severally, directly and primarily liable to the Agent and the Lenders for payment in full of all
Obligations, whether for principal, interest or otherwise and that such liability is independent of the duties, obligations, and liabilities of the other Borrowers. The Agent may bring a separate action or actions on each, any, or all of the
Obligations against any 

  

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Borrower, whether action is brought against the other Borrowers or whether the other Borrowers are joined in such action. In the event that any Borrower
fails to make any payment of any Obligations on or before the due date thereof, the other Borrowers immediately shall cause such payment to be made or each of such Obligations to be performed, kept, observed, or fulfilled. 
  
 (b) The Loan Documents are a primary and original obligation of each
Borrower, are not the creation of a surety relationship, and are an absolute, unconditional, and continuing promise of payment and performance which shall remain in full force and effect without respect to future changes in conditions, including any
change of law or any invalidity or irregularity with respect to the Loan Documents. Each Borrower agrees that its liability under the Loan Documents shall be immediate and shall not be contingent upon the exercise or enforcement by WFRF of whatever
remedies it may have against the other Borrowers, or the enforcement of any lien or realization upon any security WFRF may at any time possess. Each Borrower consents and agrees that WFRF shall be under no obligation (under Section 2899 or 3433 of
the California Civil Code or otherwise) to marshal any assets of any Borrower against or in payment of any or all of the Obligations. 
  
 (c) Each Borrower acknowledges that it is presently informed as to the financial condition of the other Borrowers and of all other circumstances which a
diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each Borrower hereby covenants that it will continue to keep informed as to the financial condition of the other Borrowers, the status of the other
Borrowers and of all circumstances which bear upon the risk of nonpayment of the Obligations. Absent a written request from any Borrower to WFRF for information, such Borrower hereby waives any and all rights it may have to require WFRF to disclose
to such Borrower any information which WFRF may now or hereafter acquire concerning the condition or circumstances of the other Borrowers. 
  
 (d) The liability of each Borrower under the Loan Documents includes Obligations arising under successive transactions continuing, compromising,
extending, increasing, modifying, releasing, or renewing the Obligations, changing the interest rate, payment terms, or other terms and conditions thereof, or creating new or additional Obligations after prior Obligations have been satisfied in
whole or in part. To the maximum extent permitted by law, each Borrower hereby waives any right to revoke its liability under the Loan Documents as to future indebtedness, and in connection therewith, each Borrower hereby waives any rights it may
have under Section 2815 of the California Civil Code. If such a revocation is effective notwithstanding the foregoing waiver, each Borrower acknowledges and agrees that (a) no such revocation shall be effective until written notice thereof has been
received by WFRF, (b) no such revocation shall apply to any Obligations in existence on such date (including, any subsequent continuation, extension, or renewal thereof, or change in the interest rate, payment terms, or other terms and conditions
thereof), (c) no such revocation shall apply to any Obligations made or created after such date to the extent made or created pursuant to a 

  

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legally binding commitment of WFRF in existence on the date of such revocation, (d) no payment by such Borrower or from any other source prior to the date of
such revocation shall reduce the maximum obligation of the other Borrowers hereunder, and (e) any payment by such Borrower or from any source other than Borrowers, subsequent to the date of such revocation, shall first be applied to that portion of
the Obligations as to which the revocation is effective and which are not, therefore, guaranteed hereunder, and to the extent so applied shall not reduce the maximum obligation of each Borrower hereunder. 
  
 (e) (i) Each Borrower absolutely, unconditionally, knowingly, and expressly
waives: 
  
 (1) (A) notice of acceptance hereof;
(B) notice of any loans or other financial accommodations made or extended under the Loan Documents or the creation or existence of any Obligations; (C) notice of the amount of the Obligations, subject, however, to each Borrower’s right to make
inquiry of WFRF to ascertain the amount of the Obligations at any reasonable time; (D) notice of any adverse change in the financial condition of the other Borrowers or of any other fact that might increase such Borrower’s risk hereunder, (E)
notice of presentment for payment, demand, protest, and notice thereof as to any instruments among the Loan Documents;. and (F) all notices (except if such notice is specifically required to be given to Borrowers hereunder or under the Loan
Documents) and demands to which such Borrower might otherwise be entitled. 
  
 (2) its right, under Sections 2845 or 2850 of the California Civil Code, or otherwise, to require WFRF to institute suit against, or to exhaust any rights and remedies which WFRF has or may have against, the other
Borrowers or any third party, or against any Collateral provided by the other Borrowers, or any third party. In this regard, each Borrower agrees that it is bound to the payment of all Obligations, whether now existing or hereafter accruing, as
fully as if such Obligations were directly owing to WFRF by such Borrower. Each Borrower further waives any defense arising by reason of any disability or other defense (other than the defense that the Obligations shall have been fully and finally
performed and indefeasibly paid) of the other Borrowers or by reason of the cessation from any cause whatsoever of the liability of the other Borrowers in respect thereof. 
  
 (3) (A) any rights to assert against WFRF any defense (legal or equitable), set-off, counterclaim, or claim
which such Borrower may now or at any time hereafter have against the other Borrowers or any other party liable to WFRF; (B) any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or
future lack of perfection, sufficiency, validity, or enforceability of the Obligations or any security therefor, (C) any defense such Borrower has to performance hereunder, and any right such Borrower has to be exonerated, provided by Sections 2819,
2822, or 2825 of the 

  

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California Civil Code, or otherwise, arising by reason of the impairment or suspension of WFRF’s rights or remedies against the other Borrowers; the
alteration by WFRF of the Obligations; any discharge of the other Borrowers’ obligations to WFRF by operation of law as a result of WFRF’s intervention or omission; or the acceptance by WFRF of anything in partial satisfaction of the
Obligations; (D) the benefit of any statute of limitations affecting such Borrower’s liability hereunder or the enforcement thereof, and any act which shall defer or delay the operation of any statute of limitations applicable to the
Obligations shall similarly operate to defer or delay the operation of such statute of limitations applicable to such Borrower’s liability hereunder. 
  
 (ii) Each Borrower absolutely, unconditionally, knowingly, and expressly waives any defense arising by reason of or deriving from (i) any claim or
defense based upon an election of remedies by WFRF including any defense based upon an election of remedies by WFRF under the provisions of Sections 580a, 580b, 580d, and 726 of the California Code of Civil Procedure or any similar law of California
or any other jurisdiction; or (ii) any election by WFRF under Bankruptcy Code Section 1111(b) to limit the amount of, or any collateral securing, its claim against the Borrowers. Pursuant to California Civil Code Section 2856(b): 
  
 “Each Borrower waives all rights and defenses arising
out of an election of remedies by the creditor, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed such Borrower’s rights of subrogation and reimbursement
against the other Borrowers by the operation of Section 580(d) of the California Code of Civil Procedure or otherwise.” 
  
 “Each Borrower waives all rights and defenses that such Borrower may have because the Obligations are secured by real property. This
means, among other things: 
  
 a. WFRF may
collect from such Borrower without first foreclosing on any real or personal property collateral pledged by the other Borrower or any third Person. 
  
 b. If WFRF forecloses on any real property collateral pledged by the other Borrower or any third Person: 
  
 1) The amount of the Obligations may be reduced only by the
price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price. 
  
 2) WFRF may collect from such Borrower even if WFRF, by foreclosing on the real property collateral, has destroyed any right such
Borrower may have to collect from the other Borrower or any third Person. 
  

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 This is an unconditional and irrevocable waiver of any rights and defenses each Borrower
may have because the Obligations are secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure.” 

 
 If any of the Obligations at any time is secured by a mortgage or deed of trust upon real
property, WFRF may elect, in its sole discretion, upon a default with respect to the Obligations, to foreclose such mortgage or deed of trust judicially or nonjudicially in any manner permitted by law, before or after enforcing the Loan Documents,
without diminishing or affecting the liability of any Borrower hereunder except to the extent the Obligations are repaid with the proceeds of such foreclosure. Each Borrower understands that (a) by virtue of the operation of California’s
antideficiency law applicable to nonjudicial foreclosures, an election by WFRF nonjudicially to foreclose such a mortgage or deed of trust probably would have the effect of impairing or destroying rights of subrogation, reimbursement, contribution,
or indemnity of such Borrower against the other Borrowers or other guarantors or sureties, and (b) absent the waiver given by such Borrower, such an election would prevent WFRF from enforcing the Loan Documents against such Borrower. Understanding
the foregoing, and understanding that such Borrower is hereby relinquishing a defense to the enforceability of the Loan Documents, such Borrower hereby waives any right to assert against WFRF any defense to the enforcement of the Loan Documents,
whether denominated “estoppel” or otherwise, based on or arising from an election by WFRF nonjudicially to foreclose any such mortgage or deed of trust. Each Borrower understands that the effect of the foregoing waiver may be that each
Borrower may have liability hereunder for amounts with respect to which such Borrower may be left without rights of subrogation, reimbursement, contribution, or indemnity against the other Borrower or other guarantors or sureties. Each Borrower also
agrees that the “fair market value” provisions of Section 580a of the California Code of Civil Procedure shall have no applicability with respect to the determination of such Borrower’s liability under the Loan Documents. 

 
 (iii) Until such time as all Obligations have been fully, finally, and
indefeasibly paid in full, in cash, each Borrower hereby absolutely, unconditionally, knowingly, and expressly postpones: (1) any right of subrogation such Borrower has or may have as against the other Borrowers with respect to the Obligations; (2)
any right to proceed against the other Borrowers or any other Person, now or hereafter, for contribution, indemnity, reimbursement, or any other suretyship rights and claims, whether direct or indirect, liquidated or contingent, whether arising
under express or implied contract or by operation of law, which such Borrower may now have or hereafter have as against the other Borrowers with respect to the Obligations; and (3) any right to proceed or seek recourse against or with respect to any
property or asset of the other Borrowers. 
  

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 (iv) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS
SECTION 11.4, EACH BORROWER HEREBY ABSOLUTELY, KNOWINGLY, UNCONDITIONALLY, AND EXPRESSLY WAIVES AND AGREES NOT TO ASSERT ANY AND ALL BENEFITS OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE SECTIONS 2799,
2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2825, 2839, 2845, 2848, 2849, AND 2850, CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580a, 580b, 580c, 580d, AND 726, CALIFORNIA UNIFORM COMMERCIAL CODE SECTIONS 3116, 3118, 3119, 3419, 3605, 9610,
9612, 9615, 9624, 9625 AND 9627, AND CHAPTER 2 OF TITLE 14 OF PART 4 OF DIVISION 3 OF THE CALIFORNIA CIVIL CODE. 
  
 (f) Each Borrower consents and agrees that, without notice to or by such Borrower, and without affecting or impairing the liability of such Borrower
hereunder, WFRF may, by action or inaction: 
  

	 	(i)	compromise, settle, extend the duration or the time for the payment of, or discharge the performance of, or may refuse to or otherwise not enforce the Loan Documents, or any part
thereof, with respect to the other Borrowers; 

  

	 	(ii)	release the other Borrowers or grant other indulgences to the other Borrowers in respect thereof; or 

  

	 	(iii)	release or substitute any guarantor, if any, of the Obligations, or enforce, exchange, release, or waive any security for the Obligations or any guaranty of the Obligations, or any
portion thereof. 

  
 (g) WFRF shall have the right
to seek recourse against each Borrower to the fullest extent provided for herein, and no election by WFRF to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of WFRF’s right to
proceed in any other form of action or proceeding or against other parties unless WFRF has expressly waived such right in writing. Specifically, but without limiting the generality of the foregoing, no action or proceeding by WFRF under the Loan
Documents shall serve to diminish the liability of any Borrower thereunder except to the extent that WFRF finally and unconditionally shall have realized indefeasible payment by such action or proceeding. 
  
 (h) The Obligations shall not be considered indefeasibly paid for purposes
of this Section 11.4 unless and until all payments to WFRF are no longer subject to any right on the part of any person, including any Borrower, any Borrower as a debtor in possession, or any trustee (whether appointed pursuant to 11 U.S.C.,
or 

  

 71 








 
otherwise) of any Borrower’s assets to invalidate or set aside such payments or to seek to recoup the amount of such payments or any portion thereof, or
to declare same to be fraudulent or preferential. Upon such full and final performance and indefeasible payment of the Obligations, WFRF shall have no obligation whatsoever to transfer or assign its interest in the Loan Documents to any Borrower. In
the event that, for any reason, any portion of such payments to WFRF is set aside or restored, whether voluntarily or involuntarily, after the making thereof, then the obligation intended to be satisfied thereby shall be revived and continued in
full force and effect as if said payment or payments had not been made, and each Borrower shall be liable for the full amount WFRF is required to repay plus any and all costs and expenses (including attorneys’ fees and attorneys’ fees
incurred pursuant to 11 U.S.C.) paid by WFRF in connection therewith. 
  
 Borrowers and each of them warrant and agree that each of the waivers and consents set forth herein are made after consultation with legal counsel and with full knowledge of their significance and consequences, with the understanding that
events giving rise to any defense or right waived may diminish, destroy or otherwise adversely affect rights which Borrowers otherwise may have against other Borrowers, the Lender Group or others, or against Collateral. If any of the waivers or
consents herein are determined to be contrary to any applicable law or public policy, such waivers and consents shall be effective to the maximum extent permitted by law. 
  
 12. NOTICES. 
  
 Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other Loan Document shall be in writing
and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested),
overnight courier, or telefacsimile to Borrower or to Agent, as the case may be, at its address set forth below: 
  

			
	             If to Borrowers:
	  	3925 E. Broadway Road
	 	  	Suite 100
	 	  	Phoenix, Arizona 85040
	 	  	Attn: Chief Financial Officer
	 	  	Fax No. 602-366-3942
		
	             with copies to:
	  	GIBSON, DUNN & CRUTCHER LLP
	 	  	333 South Grand Avenue
	 	  	Los Angeles, California 90071-3197
	 	  	Attn: Brian D. Kilb, Esq.
	 	  	Fax No. 213.229.7520
		
	             If to Agent or the
	  	WELLS FARGO RETAIL FINANCE
	             Lender Group in case
	  	One Boston Place
	             of Agent:
	  	18th Floor

  

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	 	 	Boston, Massachusetts 02108
	 	 	Attn: Jennifer Blanchette
	 	 	Fax No. 617.523.4029
		
	 with copies to:
	 	BINGHAM McCUTCHEN LLP
	 	 	150 Federal Street
	 	 	Boston, Massachusetts 02110
	 	 	Attn: Robert A.J. Barry, Esq.
	 	 	Fax No. 617.951.8736

  
 The parties hereto may
change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other. All notices or demands sent in accordance with this Section 12, other than notices by Agent in connection with
Sections 9504 or 9505 of the Code, shall be deemed received on the earlier of the date of actual receipt or three days after the deposit thereof in the mail. Each Borrower acknowledges and agrees that notices sent by Agent in connection with
Sections 9610, 9611, 9612, or 9620 of the Code shall be deemed sent when deposited in the mail or personally delivered, or, where permitted by law, transmitted by telefacsimile or other similar method set forth above. 
  
 13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. 
  
 THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR
RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE OPTION OF THE LENDER GROUP, IN ANY OTHER COURT IN WHICH THE LENDER GROUP SHALL INITIATE LEGAL OR
EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF
FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13. EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING 

  

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OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND EACH MEMBER OF THE LENDER GROUP REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 
  
 14. DESTRUCTION OF BORROWERS’ DOCUMENTS. 
  
 All documents, schedules, invoices, agings, or other papers delivered to Agent may be destroyed or otherwise disposed of by Agent four months after they
are delivered to or received by Agent, unless Borrowers requests, in writing, the return of said documents, schedules, or other papers and makes arrangements, at Borrowers’ expense, for their return. 
  
 15. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS. 
  
 15.1. Assignments and Participations. 
  
 (a) Any Lender may, with the written consent of Agent, assign and delegate
to one or more Eligible Transferees (each an “Assignee”) all, or any ratable part, of the Obligations, the Commitments, and the other rights and obligations of such Lender hereunder and under the other Loan Documents, in a minimum amount
of $5,000,000; provided. however, that Borrower and Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the Assignee, shall have been given to Borrower and Agent by such Lender and the Assignee; (ii) such Lender and its Assignee shall have delivered to Borrower and Agent a fully executed
Assignment and Acceptance (“Assignment and Acceptance”) in the form of Exhibit A-1; and (iii) the assignor Lender or Assignee has paid to Agent for Agent’s sole and separate account a processing fee in the amount of $5,000. Anything
contained herein to the contrary notwithstanding, the consent of Agent shall not be required (and payment of any fees shall not be required) if such assignment is in connection with any merger, consolidation, sale, transfer, or other disposition of
all or any substantial portion of the business or loan portfolio of such Lender. 
  
 (b) From and after the date that Agent notifies the assignor Lender that it has received a fully executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender 

  

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under the Loan Documents, and (ii) the assignor Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the. remaining portion of an assigning
Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto), and such assignment shall effect a novation between Borrower and the Assignee. 
  
 (c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (1) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties, or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency, or value of this Agreement or any
other Loan Document furnished pursuant hereto; (2) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or any guarantor or the performance or observance by
Borrower or any guarantor of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto; (3) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (4) such Assignee will, independently and without reliance upon Agent, such assigning Lender, or any other Lender,
and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (5) such Assignee appoints and authorizes Agent to take such action
as agent on its behalf and to exercise such powers under this Agreement as are delegated to Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (6) such Assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. 
  
 (d) Immediately upon each Assignee’s making its processing fee payment under the Assignment and Acceptance, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments of the Assignor and Assignee arising therefrom. The Commitment allocated to each Assignee shall reduce
such Commitment of the assigning Lender pro tanto. 
  
 (e) Any
Lender may at any time, with the written consent of Agent, which consent shall not be unreasonably withheld, sell to one or more Persons (a “Participant”) participating interests in the Obligations, the Commitment, and the other rights and
interests of that Lender (the “Originating Lender”) hereunder and under the other Loan Documents; provided, however, that (i) the Originating Lender’s obligations 

  

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under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii)
Borrower and Agent shall continue to deal solely and directly with the Originating Lender in connection with the, Originating Lender’s rights and obligations under this Agreement and the other Loan Documents, (iv) no Originating Lender shall
transfer or grant any participating interest under which the Participant has any right to approve or consent to, or vote with respect to, any amendment to, or waiver with respect to, this Agreement or any other Loan Document, except to the extent
such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would (A) extend the final maturity date of the Obligations hereunder in which such participant is participating; (B) reduce the interest rate
applicable to the Obligations hereunder in which such Participant is participating; (C) release all or a material portion of the Collateral (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Obligations
hereunder in which such Participant is participating; (D) postpone the payment of or reduce the amount of, the interest or fees hereunder in which such Participant is participating; or (E) change the amount or due dates of scheduled principal
repayments or prepayments or premiums in respect of the Obligations hereunder in which such Participant is participating; and (v) all amounts payable by Borrower hereunder shall be determined as if such Originating Lender had not sold such
participation. The rights of any Participant shall only be derivative through the Originating Lender with whom such Participant participates and no Participant shall have any direct rights as to the other Lenders, Agent, Borrower, the Collections,
the Collateral, or otherwise in respect of the Advances or the Letters of Credit. No Participant shall have the right to participate directly in the making of decisions by the Lenders among themselves. 
  
 (f) In connection with any such assignment or participation or proposed
assignment or participation, a Lender may disclose to the proposed assignee or participant all documents and information which it now or hereafter may have relating to Borrower or Borrower’s business if such Person has agreed to be bound by the
confidentiality provisions of this Agreement. 
  
 (g)
Notwithstanding any other provision in this Agreement, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or U.S. Treasury Regulation 31 CFR §203.14, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law. 
  
 15.2. Successors. This Agreement shall bind and inure to the benefit
of the respective successors and permitted assigns of each of the parties; provided, however, that no Borrower may assign this Agreement or any rights or duties hereunder without the Lenders’ prior written consent and any prohibited assignment
shall be absolutely void. No consent to assignment by the Lenders shall release Borrower from its Obligations. A Lender may assign this Agreement and its rights and duties hereunder pursuant to Section 15.1 and, except as expressly
required pursuant to Section 15.1, no consent or approval by Borrower is required in connection with any such assignment. 
  

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 16. AMENDMENTS; WAIVERS. 
  
 16.1. Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any other Loan Document,
and no consent with respect to any departure by Borrower therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by Agent at the written request of the Required Lenders) and Borrower and then any such
waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by all the Lenders and Borrower and
acknowledged by Agent, do any of the following: 
  
 (a) increase
or extend the Commitment of any Lender; 
  
 (b) postpone or delay
any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document; 
  
 (c) reduce the principal of, or the rate of interest specified herein on,
any Loan, or any fees or other amounts payable hereunder or under any other Loan Document; 
  
 (d) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Advances which is required for the Lenders or any of them to take any action hereunder; 
  
 (e) increase the advance rate with respect to Advances (except for the
restoration of an advance rate after the prior reduction thereof), or change Section 2.1(b); 
  
 (f) amend this Section or any provision of the Agreement providing for consent or other action by all Lenders; 
  
 (g) release Collateral other than as permitted by Section 17.11;

  
 (h) change the definition of “Required Lenders”;

  
 (i) release Borrower from any Obligation for the payment of
money; or 
  
 (j) amend any of the provisions of Article
17. 
  
 and, provided further that no amendment, waiver or
consent shall, unless in writing and signed by Agent, affect the rights or duties of Agent under this Agreement or any other Loan Document; and, provided further, that the limitation contained in clause (e) above 

  

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shall not be deemed to limit the ability of Agent to make Advances or Agent Loans, as applicable, in accordance with the provisions of Sections
2,1(g), (h), or (l). The foregoing notwithstanding, any amendment, modification, waiver, consent, termination, or release of or with respect to any provision of this Agreement or any other Loan Document that relates only to the
relationship of the Lender Group among themselves, and that does not affect the rights or obligations of Borrower, shall not require consent by or the agreement of Borrower. 
  
 16.2. No Waivers; Cumulative Remedies. No failure by Agent or any Lender to exercise any right, remedy, or option
under this Agreement, any other Loan Document, or any present or future supplement hereto or thereto, or in any other agreement between or among Borrower and Agent and/or any Lender, or delay by Agent or any Lender in exercising the same, will
operate as a waiver thereof. No waiver by Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by Agent or the Lenders on any occasion shall affect or diminish Agent’s and
each Lender’s rights thereafter to require strict performance by Borrower of any provision of this Agreement. Agent’s and each Lender’s rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy which Agent or any Lender may have. 
  
 17. AGENT; THE LENDER GROUP. 
  
 17.1.
Appointment and Authorization of Agent. Each Lender hereby designates and appoints WFRF as its Agent under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes Agent to take such action on its behalf under
the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably
incidental thereto. Agent agrees to act as such on the express conditions contained in this Article 17. The provisions of this Article 17 are solely for the benefit of Agent and the Lenders, and Borrower shall not have any rights as a
third party beneficiary of any of the provisions contained herein; provided, however, that the provisions of Sections 17.10, 17.11, and 17.16(d) also shall be for the benefit of Borrower. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary or other non-contractual
relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations, or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent. Except as expressly otherwise
provided in this Agreement, Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions which Agent is expressly entitled to take
or assert under or pursuant to this Agreement and the other Loan Documents, including making the determinations contemplated by Section 2.1(b). Without limiting the generality of the foregoing, or of any other provision of the Loan 

  

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Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this Agreement
remains in effect: (a) maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Advances, the Collateral, the Collections, and related matters; (b) execute and/or file any and all financing or
similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim for Lenders, notices and other written agreements with respect to the Loan Documents; (c) make Advances for itself or on behalf of Lenders as
provided in the Loan Documents; (d) exclusively receive, apply, and distribute the Collections as provided in the Loan Documents; (e) open and maintain such bank accounts and lock boxes as Agent deems necessary and appropriate in accordance with the
Loan Documents for the foregoing purposes with respect to the Collateral and the Collections; (f) perform, exercise, and enforce any and all other rights and remedies of the Lender Group with respect to Borrower, the Advances, the Collateral, the
Collections, or otherwise related to any of same as provided in the Loan Documents; and (g) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant
to the Loan Documents. 
  
 17.2. Delegation of Duties.
Except as otherwise provided in this Section, Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees, or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters
pertaining to such duties. Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects as long as such selection was made in compliance with this Section and without gross negligence or willful
misconduct. The foregoing notwithstanding, Agent shall not make any material delegation of duties to subagents or non-employee delegees without the prior written consent of Required Lenders (it being understood that routine delegation of such
administrative matters as filing financing statements, or conducting appraisals or audits, is not viewed as a material delegation that requires prior Required Lender approval). 
  
 17.3. Liability of Agent-Related Persons. None of the Agent-Related Persons shall (i) be liable for any action taken
or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or, (ii) be responsible in any manner to
any of the Lenders for any recital, statement, representation or warranty made by Borrower, or any Subsidiary or Affiliate of Borrower, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement, or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Loan Document, or for any failure of Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements 

  

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contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books, or records of Borrower, or any of
Borrower’s Subsidiaries or Affiliates. 
  
 17.4. Reliance
by Agent. Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex, or telephone message, statement 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 counsel to Borrower or counsel to any Lender), independent
accountants, and other experts selected by Agent. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required
Lenders or all Lenders, as applicable, and until such instructions are received, Agent shall act, or refrain from acting, as it deems advisable so long as it is not grossly negligent or guilty of willful misconduct. If Agent so requests, it shall
first be indemnified to its reasonable satisfaction by 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. Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders or all Lenders, as applicable, and such request and any action taken or failure to act pursuant thereto shall
be binding upon all of the Lenders. 
  
 17.5. Notice of Default
or Event of Default. Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to
Agent for the account of Agent or the Lenders, except with respect to Defaults and Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Borrower referring to this Agreement,
describing such Default or Event of Default, and stating that such notice is a “notice of default.” Agent promptly will notify the Lenders of its receipt of any such notice or of any Event of Default of which Agent has, or is deemed to
have, actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default. Each Lender shall be solely responsible for giving any notices to its
Participants, if any. Subject to Section 17.4, Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders; provided, however, that: 
  
 (a) At all times, Agent may propose and, with the consent of Required
Lenders (which shall not be unreasonably withheld and which shall be deemed to have been given by a Lender unless such Lender has notified Agent to the contrary in writing within three Business Days of notification of such proposed actions by Agent)
exercise, any remedies on behalf of the Lender Group; and 
  
 (b)
At all times, once Required Lenders or all Lenders, as the case may be, have approved the exercise of a particular remedy or pursuit of a course of 

  

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action, Agent may, but shall not be obligated to, make all administrative decisions in connection therewith or take all other actions reasonably incidental
thereto (for example, if the Required Lenders approve the foreclosure of certain Collateral, Agent shall not be required to seek consent for the administrative aspects of conducting such sale or handling of such Collateral). 
  
 17.6. Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of Borrower and its Subsidiaries or Affiliates, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender represents to Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations, property, financial and other condition, and creditworthiness of Borrower and any other Person (other than the Lender Group) party to a Loan Document, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrower. Each Lender also represents that it will, independently and without reliance upon any
Agent-Related Person 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 investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition, and creditworthiness of Borrower, and any other Person (other than the Lender
Group) party to a Loan Document. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial and other condition, or creditworthiness of Borrower, and any other Person party to a Loan Document that may come into the possession of any of the Agent-Related
Persons. 
  
 17.7. Costs and Expenses; Indemnification.
Agent may incur and pay Lender Group Expenses to the extent Agent deems reasonably necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including without limiting the
generality of the foregoing, but subject to any requirements of the Loan Documents that it obtain any applicable consents or engage in any required consultation, court costs, reasonable attorneys fees and expenses, costs of collection by outside
collection agencies and auctioneer fees and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not Borrower are obligated to reimburse Agent or Lenders for such expenses pursuant to the Loan Agreement or
otherwise. Agent is authorized and directed to deduct and retain sufficient amounts from Collections to reimburse Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders. In the event Agent is not
reimbursed for such costs and expenses from Collections, each Lender hereby agrees that it is and shall be obligated to pay to or reimburse Agent for the amount of such Lender’s 

  

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Pro Rata Share thereof. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of Borrower and without limiting the obligation of Borrower to do so), according to their Pro Rata Shares, from and against any and all Indemnified Liabilities; provided, however,
that no Lender shall be liable for the payment to the Agent-Related Persons of any portion of such Indemnified Liabilities resulting solely from such Person’s gross negligence, bad faith, or willful misconduct. Without limitation of the
foregoing, each Lender shall reimburse Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including attorney fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrower. The undertaking in this Section 17.7 shall survive the payment of all Obligations hereunder and the resignation or replacement of
Agent. 
  
 17.8. Agent in Individual Capacity. WFRF and its
Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests, in and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Borrower and
its Subsidiaries and Affiliates and any other Person party to any Loan Documents as though WFRF were not Agent hereunder without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, WFRF and its Affiliates
may receive information regarding Borrower or its Affiliates and any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Agent will use its reasonable best efforts to obtain), Agent shall be under no
obligation to provide such information to them. With respect to the Agent Loans and Agent Advances, WFRF shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not Agent, and the
terms “Lender” and “Lenders” include WFRF in its individual capacity. 
  
 17.9. Successor Agent. Agent may resign as Agent following notice of such resignation (“Notice”) to the Lenders and Borrower, and effective upon the appointment of and acceptance of such appointment
by, a successor Agent. If Agent resigns under this Agreement, the Required Lenders shall appoint any Lender or Eligible Transferee as successor Agent for the Lenders. If no successor Agent is appointed within 30 days of such retiring Agent’s
Notice, Agent may appoint a successor Agent, after consulting with the Lenders and Borrower. In any such event, upon the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term “Agent” shall mean such successor Agent and the retiring Agent’s appointment, powers, and duties as Agent shall be terminated. After any retiring Agent’s resignation hereunder as Agent,
the provisions of this Section 17 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. 
  

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 17.10. Withholding Tax. 
  
 (a) If any Lender is a “foreign corporation, partnership or trust” within the meaning of the IRC and such Lender
claims exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such Lender agrees with and in favor of Agent and Borrower, to deliver to Agent and Borrower: 
  
 (i) if such Lender claims an exemption from, or a reduction of, withholding
tax under a United States tax treaty, properly completed IRS Forms 1001 and W-8 before the payment of any interest in the first calendar year and before the payment of any interest in each third succeeding calendar year during which interest may be
paid under this Agreement; 
  
 (ii) if such Lender claims that
interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States trade or business of such Lender, two properly completed and executed copies of IRS Form 4224 before the payment
of any interest is due in the first taxable year of such Lender and in each succeeding taxable year of such Lender during which interest may be paid under this Agreement, and IRS Form W-9; and 
  
 (iii) such other form or forms as may be required under the IRC or other
laws of the United States as a condition to exemption from, or reduction of, United States withholding tax. 
  
 Such Lender agrees to promptly notify Agent and Borrower of any change in circumstances which would modify or render invalid any claimed exemption or reduction. 
  
 (b) If any Lender claims exemption from, or reduction of withholding tax
under a United States tax treaty by providing IRS Form 1001 and such Lender sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of Borrower, such Lender agrees to notify Agent and Borrower of the
percentage amount in which it is no longer the beneficial owner of . Obligations of Borrower to such Lender. To the extent of such percentage amount, Agent and Borrower will treat such Lender’s IRS Form 1001 as no longer valid. 
  
 (c) If any Lender claiming exemption from United States withholding tax by
filing IRS Form 4224 with Agent sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of Borrower to such Lender, such Lender agrees to undertake sole responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the IRC. 
  

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 (d) If any Lender is entitled to a reduction in the applicable withholding tax, Agent may withhold from
any interest payment to such Lender an amount equivalent to the applicable withholding tax after taking into account such reduction. If the forms or other documentation required by subsection (a) of this Section are not delivered to Agent, then
Agent may withhold from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax. 
  
 (e) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that Agent or
Borrower did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify Agent and Borrower of a change in
circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify Agent and Borrower fully for all amounts paid, directly or indirectly, by Agent or Borrower as tax or
otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to Agent or Borrower under this Section, together with all costs and expenses (including attorneys fees and expenses). The
obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation of Agent. 
  
 17.11. Collateral Matters. 
  
 (a) The Lenders hereby irrevocably authorize Agent, to release any Lien on any Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrower of all Obligations; and upon such termination and payment Agent shall deliver to Borrower, at Borrower’s sole cost and expense, all UCC termination statements and any other documents necessary to terminate the
Loan Documents and release the Liens with respect to the Collateral; (ii) constituting property being sold or disposed of if a release is required or desirable in connection therewith and if Borrower certifies to Agent that the sale or disposition
is permitted under Section 7.4 of this Agreement or the other Loan Documents (and Agent may rely conclusively on any such certificate, without further inquiry); (iii) constituting property in which Borrower owned no interest at the time the
Lien was granted or at any time thereafter, or (iv) constituting property leased to Borrower under a lease that has expired or been terminated in a transaction permitted under this Agreement. Except as provided above, Agent will not release any Lien
on any Collateral without the prior written authorization of the Lenders; provided, however, that Agent may, in its discretion, without prior authorization of Lenders, release any Lien on Collateral where the value of such Collateral
released at any one time is not in excess of $100,000 and the value of all such Collateral released in any calendar year is not in excess of $250,000. Upon request by Agent or Borrower at any time, the Lenders will confirm in writing Agent’s
authority to release any such Liens on particular types or items of Collateral pursuant to this Section 17.11; provided, however, that (i) Agent shall not be required to execute any document necessary to evidence such release on
terms that, in Agent’s opinion, would expose 

  

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Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty, and
(ii) such release shall not in any manner discharge, affect or impair the Obligations or any Liens (other than those expressly being released), upon (or obligations of Borrower in respect of) all interests retained by Borrower, including, the
proceeds of any sale, all of which shall continue to constitute part of the Collateral. 
  
 (b) Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by Borrower, is cared for, protected, or insured or has been encumbered, or that the Liens of the
Agent (for the benefit of the Lender Group) have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of
care, disclosure, or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, subject to the terms and conditions contained herein, Agent may act in any manner it may deem appropriate, in its sole discretion given Agent’s own interest in the Collateral in its capacity as one of the
Lenders and that Agent shall have no other duty or liability whatsoever to any Lender as to any of the foregoing, except as otherwise provided herein. 
  
 17.12. Restrictions on Actions by Lenders; Sharing of Payments. 
  
 (a) Each of the Lenders agrees that it shall not, without the express consent of Agent, and that it shall, to the extent it
is lawfully entitled to do so, upon the request of Agent, set off against the Obligations any amounts owing by such Lender to Borrower or any accounts of Borrower now or hereafter maintained with such Lender. Each of the Lenders further agrees that
it shall not, unless specifically requested to do so by Agent, take or cause to be taken any action, including the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of
the Collateral the purpose of which is, or could be, to give such Lender any preference or priority against the other Lenders with respect to the Collateral. 
  
 (b) Subject to Section 17.8, if, at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of
Collateral or any payments with respect to the Obligations of Borrower to such Lender arising under, or relating to, this Agreement or the other Loan Documents, except for any such proceeds or payments received by such Lender from Agent pursuant to
the terms of this Agreement, or (ii) payments from Agent in excess of such Lender’s Pro Rata Share of all such distributions by Agent, such Lender shall promptly (1) turn the same over to Agent, in kind, and with such endorsements as may be
required to negotiate the same to Agent, or in same day funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (2) purchase, without
recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata 

  

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Shares; provided, however, that if all or part of such excess payment received by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such
purchasing party is required to pay interest in connection with the recovery of the excess payment. 
  
 17.13. Agency for Perfection. Agent and each Lender hereby appoints each other Lender as agent for the purpose of perfecting the Liens of the
Lender Group in assets which, in accordance with Division 9 of the UCC can be perfected only by possession. Should any Lender obtain possession of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request
therefor shall deliver such Collateral to Agent or in accordance with Agent’s instructions. 
  
 17.14. Payments by Agent to the Lenders. All payments to be made by Agent to the Lenders shall be made by bank wire transfer or internal transfer
of immediately available funds pursuant to the instructions set forth on Schedule C-1, or pursuant to such other wire transfer instructions as each party may designate for itself by written notice to Agent. Concurrently with each such payment, Agent
shall identify whether such payment (or any portion thereof) represents principal, premium or interest on revolving advances or otherwise. 
  
 17.15. Concerning the Collateral and Related Loan Documents. Each member of the Lender Group authorizes and directs Agent to enter into this
Agreement and the other Loan Documents relating to the Collateral, for the ratable benefit (subject to Section 4.1) of the Lender Group. Each member of the Lender Group agrees that any action taken by Agent, Required Lenders, or all Lenders,
as applicable, in accordance with the terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent, Required Lenders, or all Lenders, as applicable, of their respective powers set forth therein or herein,
together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders. 
  
 17.16. Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information. By signing this Agreement,
each Lender, 
  
 (a) is deemed to have requested that Agent
furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report (each a “Report” and collectively, “Reports”) prepared by Agent, and Agent shall so furnish each Lender with such Reports;

  
 (b) expressly agrees and acknowledges that Agent (i) does not
make any representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any information contained in any Report; 
  

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

  
 (d) agrees to keep all Reports and other material information
obtained by it pursuant to the requirements of this Agreement in accordance with its reasonable customary procedures for handling confidential information; it being understood and agreed by Borrower that in any event such Lender may make disclosures
(i) reasonably required by any bona fide potential or actual Assignee, transferee, or Participant in connection with any contemplated or actual assignment or transfer by such Lender of an interest herein or any participation interest in such
Lender’s rights hereunder, (ii) of information that has become public by disclosures made by Persons other than such Lender, its Affiliates, assignees, transferees, or participants, or (iii) as required or requested by any court, governmental
or administrative agency, pursuant to any subpoena or other legal process, or by any law, statute, regulation, or court order; provided, however, that, unless prohibited by applicable law, statute, regulation, or court order, such Lender shall
notify Borrower of any request by any court, governmental or administrative agency, or pursuant to any subpoena or other legal process for disclosure of any such non-public material information concurrent with, or where practicable, prior to the
disclosure thereof, and 
  
 (e) without limiting the generality
of any other indemnification provision contained in this Agreement, agrees: (i) to hold Agent and any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to Borrower, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan
or loans of Borrower; and (ii) to pay and protect, and indemnify, defend, and hold Agent and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses and other amounts (including,
attorney costs) incurred by Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender. 
  
 In addition to the foregoing: (x) any Lender may from time to time request of Agent in
writing that Agent provide to such Lender a copy of any report or document provided by Borrower to Agent, and, upon receipt of such request, Agent shall provide a copy of same to such Lender promptly upon receipt thereof; (y) to the extent that
Agent is entitled, under any provision of the Loan Documents, to request additional reports or information from Borrower, any Lender may, from time to time, reasonably request Agent to exercise such right as specified in such Lender’s notice to
Agent, whereupon Agent promptly shall request of Borrower the additional reports or information specified by such Lender, and, upon receipt thereof, Agent promptly shall provide a copy of same to such Lender; and (z) any time that Agent renders to
Borrower a statement regarding the Loan Account, Agent shall send a copy of such statement to each Lender. 
  

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 17.17. Several Obligations; No Liability. Notwithstanding that certain of the Loan Documents now
or hereafter may have been or will be executed only by or in favor of Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of Agent (if any) to make any Advances shall constitute the several (and
not joint) obligations of the respective Lenders on a ratable basis, according to their respective Commitments, to make an amount of such Advances not to exceed, in principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest in, or subject any Lender to. any liability for, or in respect of the business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other Lender. Except as
provided in Section 17.7, no member of the Lender Group shall have any liability for the acts of any other member of the Lender Group. No Lender shall be responsible to Borrower or any other Person for any failure by any other Lender to
fulfill its obligations to make Advances, nor to advance for it or on its behalf in connection with its Commitment, nor to take any other action on its behalf hereunder or in connection with the financing contemplated herein. 
  
 18. GENERAL PROVISIONS. 
  
 18.1. Effectiveness. This Agreement shall be binding and deemed
effective when executed by Borrowers and the Lender Group. 
  
 18.2. Section Headings. Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each section applies equally to this entire. Agreement.

  
 18.3. Interpretation. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against the Lender Group or Borrower, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of all parties hereto. 
  
 18.4. Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision. 
  
 18.5. Counterparts; Telefacsimile Execution. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an
original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery 

  

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of an executed counterpart of this Agreement by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Agreement. 
  
 18.6. Revival and Reinstatement of Obligations. 
  
 (a) If the incurrence or payment of the Obligations by any Borrower or any guarantor of the Obligations or the transfer by any or all of such parties to the Lender Group of any property of either or both of such parties should for any
reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, and other voidable or recoverable
payments of money or transfers of property (collectively, a “Voidable Transfer”), and if the Lender Group is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of
its counsel, then, as to any such Voidable Transfer, or the amount thereof that the Lender Group is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of the Lender Group related thereto, the
liability of Borrowers or such guarantor automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made. 
  
 18.7. Integration. This Agreement, together with the other Loan Documents, reflects the entire understanding of the
parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof. 
  
 18.8. Existing Loan Agreement Superseded. On the Closing Date, this Agreement shall supersede the Existing Loan
Agreement in its entirety, except as provided in this §18.8. On the Closing Date, the rights and obligations of the parties evidenced by the Existing Loan Agreement shall be evidenced by this Agreement and the other Loan Documents, the
“Advances” and all other “Obligations” as each such term is defined in the Existing Loan Agreement shall be converted to Advances and Obligations as defined herein and the Existing Letters of Credit issued by the Agent for the
account of the Borrowers prior to the Closing Date shall be converted into L/Cs or L/C Guaranties, as applicable, under this Agreement. Without limiting the generality of the foregoing and to the extent necessary, the Lenders and the Agent reserve
all of their rights under the Existing Loan Agreement in respect of all present and future Obligations under, inter alia, the Existing Credit Agreement, as amended and restated by this Agreement. All interest and fees and expenses, if any,
owing or accruing under or in respect of the Existing Loan Agreement through the Closing Date shall be calculated as of the Closing Date (pro rated in the case of any fractional periods), and shall be paid on the Closing Date. Commencing on the
Closing Date, the all fees hereunder shall be payable by the Borrowers to the Administrative Agent for the account of the Lenders in accordance with this Agreement. 
  

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 18.9. U.S. Patriot Act. Each Lender hereby notifies each Borrower that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies such Borrower, which information includes the
name and address of such Borrower and other information that will allow such Lender to identify such Borrower in accordance with the Act.. 
  

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 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in Los Angeles,
California. 
  

			
	 LESLIE’S POOLMART, INC.,
 a Delaware corporation


		
	 By
	 	 /s/ Donald J. Anderson


	 Title:
	 	Executive Vice President and Chief Executive Officer.
	
	LPM MANUFACTURING, INC.,
	 a California corporation

		
	 By
	 	 /s/ Donald J. Anderson


	 Title:
	 	Executive Vice President and Chief Executive Officer.


  

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	 WELLS FARGO RETAIL FINANCE LLC, as
 Agent and as a Lender

		
	 By
	 	 /s/


	 Title:
	 	Senior Vice President