Document:

Third Amendment of Credit Agreement

    THIRD
      AMENDMENT 

    

    THIS
      THIRD AMENDMENT (this “Amendment”),
      is
      made and entered into as of this 9th
      day of
      February, 2007, with an effective date as set forth in Section
      3
      hereof,
      by and among POOL
      CORPORATION (formerly known as SCP POOL CORPORATION), a Delaware corporation
      (the “US
      Borrower”),
      SCP
      DISTRIBUTORS INC., a company organized under the laws of Ontario (the
“Canadian
      Borrower”
      and,
      together with the US Borrower, the “Borrowers”),
      the
      lenders who are or may become a party to this Agreement (collectively, the
      “Lenders”),
      WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as
      Administrative Agent for the Lenders, WACHOVIA CAPITAL FINANCE CORPORATION
      (CANADA) (formerly known as Congress Financial Corporation (Canada)), as
      Canadian Dollar Lender, JPMORGAN CHASE BANK, as Syndication Agent, CAPITAL
      ONE,
      NATIONAL ASSOCIATION (successor-by-merger to HIBERNIA NATIONAL BANK), as
      Documentation Agent and WELLS FARGO BANK NATIONAL ASSOCIATION, as Documentation
      Agent.

    

    Statement
      of Purpose

    

    A. The
      Lenders agreed to extend certain credit facilities to the Borrowers pursuant
      to
      the Credit Agreement dated as of November 2, 2004 (as amended, restated,
      supplemented or otherwise modified from time to time, the “Credit
      Agreement”)
      by and
      among the Borrowers, the Lenders, the Administrative Agent, the Syndication
      Agent and the Documentation Agents;

    

    B. The
      US
      Borrower desires to enter into a transaction where the US Borrower will issue
      and sell $100,000,000 senior unsecured notes pursuant to a note purchase
      agreement (the “Proposed
      Transaction”);
      and

    

    C. Subject
      to the terms and conditions set forth in this Amendment, the Borrowers desire
      to
      amend or modify certain provisions of the Credit Agreement in certain respects
      in connection with the Proposed Transaction as more particularly set forth
      herein and to make certain other amendments and modifications as more
      particularly set forth herein. 

    

    NOW
      THEREFORE, for good and valuable consideration, the receipt and adequacy of
      which is hereby acknowledged, the parties hereto agree as follows:

    

    SECTION 1. Definitions. All
      capitalized, undefined terms used in this Amendment shall have the meanings
      assigned thereto in the Credit Agreement.

    

    SECTION 2. Amendment. The
      following sections of the Credit Agreement are modified as follows:

    

    A. Section
      1.1
      of the
      Credit Agreement (“Definitions”) is hereby amended by amending and restating the
      definitions of “Canadian Dollar Commitment” and “Letters of Credit” as
      follows:

    

    ““Canadian
      Dollar Commitment”
means
      the lesser of (a) Ten Million Dollars ($10,000,000) and (b) the Revolving Credit
      Commitment.”

    

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

    

    B. Section
      1.1
      of the
      Credit Agreement (“Definitions”) is hereby amended by adding the following new
      definitions in appropriate alphabetical order:

    

    ““February
      2007 Note Purchase Agreement”
means
      that certain Note Purchase Agreement dated as of February __, 2007 pursuant
      to
      which the US Borrower will issue the February 2007 Notes, as such agreement
      may
      be amended, restated, supplemented or otherwise modified, in each case, in
      accordance with Section
      10.10
      of this
      Agreement.”

    

    ““February
      2007 Notes”
means
      the senior unsecured notes issued by the US Borrower pursuant to the February
      2007 Note Purchase Agreement in an initial aggregate principal amount of
      $100,000,000.”

    

    C. Section
      3.1
      of the
      Credit Agreement (“L/C Commitment”) is hereby amended by adding the words “or a
      trade letter of credit” after the words “standby letter of credit” in clause
      (ii) of the second sentence of such Section.

    

    D. Section
      10.1
      of the
      Credit Agreement (“Limitations on Indebtedness”) is hereby amended
      by:

    

    (1) adding
      the words “or subsection (q)” after the words “subsections (a) through (e)” in
      subsection (g); 

    

    (2) moving
      the word “and” from the end of subsection (o) to the end of subsection (p); and

    

    (3) adding
      a
      new subsection (q) as follows:

    

    “(q) (i)
      Indebtedness in connection with the February 2007 Notes upon terms and
      conditions reasonably satisfactory to the Administrative Agent and (ii) any
      additional unsecured Indebtedness issued under, or by a supplement to, the
      February 2007 Note Purchase Agreement or any similar note purchase agreement
      or
      other debt instrument; provided
      that
      such additional unsecured Indebtedness shall be on terms and conditions that
      are, taken as a whole, (A) consistent with the then-current market terms and
      conditions of such type of unsecured debt (as reasonably determined in good
      faith by the Board of Directors of the US Borrower) and (B) no less favorable
      to
      the Lenders than the terms of the February 2007 Notes (as reasonably determined
      by the Administrative Agent); provided
      further
      that with respect to any Indebtedness incurred pursuant to clause (ii), (1)
      no
      Default or Event of Default exists and is continuing or would be caused by
      the
      issuance thereof, (2) the Administrative Agent shall have received satisfactory
      written evidence that the US Borrower would be in compliance with all covenants
      in this Agreement on a pro forma
      basis
      after giving effect to the issuance thereof, and (3) the maturity date of such
      senior Indebtedness shall
      be
      no earlier than the Indebtedness (if any) being refinanced and in any event
      shall be at
      least
      six (6) months after each of the Revolving Credit Maturity Date and the Term
      Loan Maturity Date;”
      

    

    E. Section
      10.3 of the Credit Agreement (“Limitations on Loans, Advances, Investments and
      Acquisitions”) is hereby amended by deleting subsection (i) in its entirety and
      replacing it with the following: 

    

    “(i) the
      creation of new Foreign Subsidiaries or additional investments in existing
      Foreign Subsidiaries, the investment in which,
      together with the Permitted Acquisition Consideration payable in connection
      with
      all Permitted Foreign Acquisitions and the total amount of any transactions
      permitted under Sections 10.1(i)
      and
10.5(f),
      does
      not exceed $75,000,000 in the aggregate during the term of this Agreement;”
 

    

    F. Section
      10.4 of the Credit Agreement (“Limitations on Mergers and Liquidation”) is
      hereby amended by deleting subsection (e) in its entirety and replacing it
      with
      the following:

    

    “(e) the
      dissolution of SCP Northpark LLC, SCP Services LP and Cypress Hong Kong,
      Ltd.”

    

    G. Section
      10.5 of the Credit Agreement (“Limitations on Sale of Assets”) is hereby amended
      by deleting subsection (c) in its entirety and replacing it with the
      following:

    

    “(c) the
      transfer of assets pursuant to Section 10.4;”

    

    H. Section
      10.6 of the Credit Agreement (“Limitations on Dividends and Distributions”) is
      hereby amended by deleting subsection (c) in its entirety and replacing it
      with
      the following:

    

    “(c) any
      Subsidiary may declare and pay dividends of any type (cash or non-cash) to
      the
      US Borrower or any other Wholly-Owned Subsidiary, provided
      that if
      the Subsidiary paying the dividend is a Subsidiary Guarantor then the recipient
      of the dividend must be either the US Borrower or another Subsidiary
      Guarantor;”

    

    I. Section
      10.10
      of the
      Credit Agreement “Amendments; Payments and Prepayments of Subordinated
      Indebtedness” is hereby amended by:

     

    (1) deleting
      the title of such Section in its entirety and replacing it with “Amendments,
      Payments and Prepayments of Certain Indebtedness”;

    

    (2) adding
      the words “or any Indebtedness permitted pursuant to Section
      10.1(q)
      of this
      Agreement” before the period at the end of subsection (a); and

    

    (3) amending
      and restating subsection (b) in its entirety as follows:

    

    “(b) Cancel,
      forgive, make any payment or prepayment on, or redeem or acquire for value
      (including, without limitation, (i) by way of depositing with any trustee with
      respect thereto money or securities before due for the purpose of paying when
      due and (ii) at the maturity thereof) any Subordinated Indebtedness or any
      Indebtedness permitted pursuant to Section
      10.1(q)
      of this
      Agreement, except (x) refinancings, refundings, renewals, extensions or exchange
      of any such Indebtedness to the extent permitted by Section
      10.1(j)
      (in the
      case of Subordinated Indebtedness) or Section
      10.1(q)
      (in the
      case of Indebtedness permitted by Section
      10.1(q))
      or (y)
      so long as no Default or Event of Default has occurred or would result therefrom
      regularly scheduled payments of interest on Indebtedness issued pursuant to
      Section
      10.1(q).”

    

     

    SECTION 3. Effectiveness.
      This
Amendment
      shall
      become effective on the date that each of the following conditions has been
      satisfied:

    

    A. Amendment
      Documents.
      The
      Administrative Agent shall have received a
      duly
      executed counterpart of this Amendment from the Administrative Agent, the
      Issuing Lender, the Canadian Dollar Lender, the Borrowers, the Subsidiary
      Guarantors and the Required Lenders;

    

    B. Proposed
      Transaction Documents.
      The
      Administrative Agent shall have received the final executed agreements entered
      into in connection with the Proposed Transaction (including all schedules and
      exhibits thereto) and all related transaction documents with respect thereto,
      in
      each case in form and substance reasonably satisfactory to the Administrative
      Agent;

    

    C. Fees
      and Expenses.
      The
      Administrative Agent shall have been reimbursed for all reasonable fees and
      out-of-pocket charges and other expenses incurred in connection with this
Amendment,
      including, without limitation, the fees and expenses referred to in Section
      7
      of this
Amendment,
      the
      Credit Agreement and the transactions contemplated thereby; 

    

    D. Canadian
      Note.
      The
      Administrative Agent shall have received a
      new
      executed Canadian Note
      in
      favor of the Canadian Dollar Lender; and

    

    E. Other
      Documents.
      The
      Administrative Agent shall have received copies of each other document,
      instrument or item reasonably requested by it.

    

    SECTION 4. Reaffirmation
      of Loan Documents.
      By
      its
      execution hereof, each Borrower and each Subsidiary Guarantor hereby expressly
      (i) consents to the modifications and amendments set forth in this Amendment,
      (ii)
      reaffirms all of its respective covenants, representations, warranties and
      other
      obligations set forth in the Credit Agreement, the Subsidiary Guaranty Agreement
      and the other Loan Documents to which it is a party and (iii) acknowledges,
      represents and agrees that its respective covenants, representations, warranties
      and other obligations set forth in the Credit Agreement, the Subsidiary Guaranty
      Agreement and the other Loan Documents to which it is a party remain in full
      force and effect.

    

    SECTION 5. Effect
      of Amendment.
      Except
      as
      expressly provided herein, the Credit Agreement and the other Loan Documents
      shall remain in full force and effect. This Amendment
      shall
      not be deemed (i) to be a waiver of, or consent to, a modification or amendment
      of, any other term or condition of the Credit Agreement or any other Loan
      Document or (ii) to be a waiver of, or consent to, a modification or amendment
      to any term or provision of any Loan Document specifically consented to, waived,
      amended or modified by this Amendment
      on
      any
      other occasion, or (iii) to prejudice any other right or rights which the
      Administrative Agent or the Lenders may now have or may have in the future
      under
      or in connection with the Credit Agreement or the other Loan Documents or any
      of
      the instruments or agreements referred to therein, as the same may be amended
      or
      modified from time to time. References in the Credit Agreement to “this
      Agreement” (and indirect references such as “hereunder”, “hereby”, “herein”, and
“hereof”) and in any Loan Document to the Credit Agreement shall be deemed to be
      references to the Credit Agreement as modified hereby.

    

    SECTION 6. Representations
      and Warranties/No Default.

    

    A. By
      its
      execution hereof, each Borrower and each Subsidiary Guarantor hereby certifies
      that (i) each of the representations and warranties set forth in the Credit
      Agreement and the other Loan Documents (after giving effect to this Amendment)
      is true and correct as of the date hereof as if fully set forth herein, except
      for any representation and warranty made as of an earlier date, which
      representation and warranty shall remain true and correct as of such earlier
      date and (ii) no Default or Event of Default has occurred and is continuing
      as
      of the date hereof.

    

    B. By
      its
      execution hereof, each Borrower and each Subsidiary Guarantor hereby represents
      and warrants that it has the right, power and authority and has taken all
      necessary corporate and company action to authorize the execution, delivery
      and
      performance of this Amendment
      and each other document executed in connection herewith to which it is a party
      in accordance with their respective terms. 

    

    C. By
      its
      execution hereof, each Borrower and each Subsidiary Guarantor hereby represents
      and warrants that this Amendment
      and each other document executed in connection herewith has been duly executed
      and delivered by its duly authorized officers, and each such document
      constitutes the legal, valid and binding obligation of such Borrower or such
      Subsidiary Guarantor, enforceable in accordance with its terms except as such
      enforceability may be limited by bankruptcy, insolvency, reorganization,
      moratorium or similar state or federal debtor relief laws from time to time
      in
      effect which affect the enforcement of creditors’ rights in general and the
      availability of equitable remedies.

    

    SECTION 7. Fees
      and Expenses.
      The
      Borrowers shall pay all reasonable, out-of-pocket fees and expenses of the
      Administrative Agent (including, without limitation, all costs of electronic
      or
      internet distribution of any information hereunder) in connection with the
      preparation, execution and delivery of this Amendment,
      including, without limitation, the reasonable, fees, disbursements and other
      charges of counsel for the Administrative Agent.

    

    SECTION 8. Governing
      Law.
      This
Amendment
      shall be
      governed by, construed and enforced in accordance with the laws of the State
      of
      North
      Carolina, without reference to the conflicts or choice of law principles
      thereof.

    

    SECTION 9. Counterparts.
      This
Amendment
      may be
      executed in any number of counterparts and by different parties hereto in
      separate counterparts, each of which when so executed shall be deemed to be
      an
      original and shall be binding upon all parties, their successors and assigns,
      and all of which taken together constitute one and the same
      agreement.

    

    SECTION 10. Fax
      Transmission.
      A
      facsimile, telecopy or other reproduction of this Amendment
      may be
      executed by one or more parties hereto, and an executed copy of this
Amendment
      may be
      delivered by one or more parties hereto by facsimile or similar instantaneous
      electronic transmission device pursuant to which the signature of or on behalf
      of such party can be seen, and such execution and delivery shall be considered
      valid, binding and effective for all purposes. At the request of any party
      hereto, all parties hereto agree to execute an original of this Amendment
      as well
      as any facsimile, telecopy or other reproduction hereof.

    

    

    [Signature
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          1

          4827-4488-3457.05

        

         

      

      
         

        
          

        

      

      
         

        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Amendment
      to be duly executed as of the date and year first above written.

    

    

    

    US
      BORROWER:

    

    

    POOL
      CORPORATION (formerly
      known as SCP POOL CORPORATION), as US Borrower

    

    

    By:
      /s/
      Mark W. Joslin

    Name:
      Mark
      W. Joslin

    Title:
      Vice
      President & Chief Financial Officer

    

    

    CANADIAN
      BORROWER:

    

    

    SCP
      DISTRIBUTORS INC.,
      as
      Canadian Borrower

    

    

    By:
      /s/
      Manuel J. Perez de la Mesa

    Name:
      Manuel
      J. Perez de la Mesa

    Title:
      President
      and Chief Executive Officer

    

    

    

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          Third
            Amendment - SCP Pool Corporation

        

         

      

      
         

        
          

        

      

      
         

        
        

      

    

    ACKNOWLEDGED
      AND AGREED TO BY:

    

    SUBSIDIARY
      GUARANTORS:

     

    

    SCP
      DISTRIBUTORS LLC,
      as
      Subsidiary Guarantor

    

    

    By:
      /s/
      Craig K. Hubbard

    Name:
      Craig
      K. Hubbard

    Title:
      Treasurer
       

    

    

    ALLIANCE
      TRADING, INC.,
      as
      Subsidiary Guarantor

    

    

    By:
      /s/
      Shaleen Lee

    Name:
      Shaleen
      Lee

    Title:
      Secretary 

    

    

    CYPRESS,
      INC.,
      as
      Subsidiary Guarantor

    

    

    By:
      /s/
      Shaleen Lee

    Name:
      Shaleen
      Lee

    Title:
      Secretary

    

    

    SUPERIOR
      POOL PRODUCTS LLC,
      as
      Subsidiary Guarantor

    

    

    By:
      /s/
      Craig K. Hubbard

    Name:
      Craig
      K. Hubbard

    Title:
      Treasurer 

    

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    SCP
      ACQUISITION CO. LLC,
      as
      Subsidiary Guarantor

    

    By:
      SCP
      Distributors LLC, its Sole Member

    

    By:
      /s/
      Craig K. Hubbard

    Name:
      Craig
      K. Hubbard

    Title:
      Treasurer 

    

    

    SCP
      INTERNATIONAL, INC.,
      as
      Subsidiary Guarantor

    

    

    By:
      /s/
      Mark W. Joslin

    Name:
      Mark
      W. Joslin

    Title:
      Treasurer 

    

    

    POOL
      DEVELOPMENT LLC,
      as
      Subsidiary Guarantor

    

    

    By:
      /s/
      Mark W. Joslin

    Name:
      Mark
      W. Joslin

    Title:
      Treasurer

    

    

    SPLASH
      HOLDINGS, INC.
      (formerly known as FORT WAYNE POOLS, INC.), as Subsidiary Guarantor

    

    

    By:
      /s/
      Mark W. Joslin

    Name:
      Mark
      W. Joslin

    Title:
      Treasurer 

    

    HORIZON
      DISTRIBUTORS, INC.,
      as
      Subsidiary Guarantor

    

    

    By:
      /s/
      Jennifer M. Neil

    Name:
      Jennifer
      M. Neil

    Title:
      Secretary 

    

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    POOLCORP
      FINANCIAL MORTGAGE, LLC,
      as
      Subsidiary Guarantor

    

    

    By:
      /s/
      Mark W. Joslin

    Name:
      Mark
      W. Joslin

    Title:
      President
      & Treasurer 

    

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    AGENTS
      AND LENDERS:

    

    
      	 	 	 	 	 	 	
              WACHOVIA
                BANK, NATIONAL ASSOCIATION,
                as Administrative Agent, Swingline Lender, Issuing Lender and
                Lender

            

    

    

    

    By:
      /s.
      Richard E. Anglin III

    Name:
      Richard
      E. Anglin III

    Title:
      Vice
      President

    

    

    

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    WACHOVIA
      CAPITAL FINANCE CORPORATION (CANADA) (formerly
      known as Congress Financial Corporation (Canada)), as Canadian Dollar
      Lender

    

    

    By:
      /s/
      Enza Agosta

    Name:
      Enza
      Agosta

    Title:
      Vice
      President

    

    

    

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    JPMORGAN
      CHASE BANK,
      as
      Syndication Agent and Lender

     

    

    

    By:
      /s/
      H.
      David Jones

    Name:
      H.
      David Jones

    Title:
      Senior
      Vice President

    

    

    

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    CAPITAL
      ONE, NATIONAL ASSOCIATION (successor-by-merger
      to HIBERNIA
      NATIONAL BANK), as Documentation Agent and Lender

     

    

    

    By:
      /s/
      Katharine G. Kay

    Name:
      Katharine
      G. Kay

    Title:
      Vice
      President

    

    

    

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    WELLS
      FARGO BANK NATIONAL ASSOCIATION,
      as
      Documentation Agent and Lender

    

    

    By:
      /s/
      Linda Masera

    Name:
      Linda
      Masera

    Title:
      Vice
      President

    

    

    

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    REGIONS
      BANK,
      as
      Lender

    

    

    By:
      /s/
      Jorge E. Goris

    Name:
      Jorge
      E. Goris

    Title:
      Senior
      Vice PresidentPool Corporation Executive Bonus Plan

    Pool
      Corporation Executive Bonus Plan

    

    The
      following is a description of the Pool Corporation Executive Bonus Plan (the
      “Bonus Plan”) provided pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K,
      which requires a written description of a compensatory plan or arrangement
      when
      no formal document contains the compensation information. 

    Under
      the
      terms of each executive officer’s employment agreement, each executive officer
      is eligible to earn incentive bonuses. The purpose of the incentive bonuses
      is
      to promote the interests of our Company and our stockholders by providing key
      employees with financial rewards upon achievement of specified business
      objectives, as well as to help our company attract and retain key employees
      by
      providing attractive compensation opportunities linked to performance results.
      In addition, we utilize annual incentive bonuses to focus corporate behavior
      on
      the achievement of goals for growth, financial performance and other specific
      annual objectives. 

    Our
      Chief
      Executive Officer and the four most-highly-compensated executive officers
      besides our Chief Executive Officer (collectively, our “Named Executive
      Officers”), as well as other officers and certain key employees, are eligible to
      earn annual incentive bonuses in an amount equal to up to 100% of their base
      salary. Bonuses payable to our Named Executive Officers are annually approved
      by
      the Compensation Committee of our Board of Directors.

    The
      annual cash bonuses paid to our Named Executive Officers are paid according
      to
      formulas that are based almost entirely on objective performance criteria with
      a
      small component being discretionary. On February 13, 2005, the Compensation
      Committee of our Board of Directors approved the following objective performance
      measures for calculation of Mr. Perez de la Mesa’s bonus: earnings per share,
      return on total assets, cash flow from operations, strategic planning and
      organizational development. Additionally, the Compensation Committee approved
      the following objective performance measures for calculation of Mr. Joslin’s
      bonus: earnings per share, return on total assets, cash flow from operations,
      expense management and certain operational and organizational objectives
      relating to treasury, investor relations, internal audit, tax, human resources,
      and business support.

    On
      February 13, 2007, the Compensation Committee of our Board of Directors amended
      the objective performance measures for each of the following Named Executive
      Officers as follows: Mr. A. David Cook - earnings per share, operating profit,
      return on assets, complementary sales and gross margin, organization planning
      and development and certain sales and marketing program initiatives; Mr. John
      M.
      Murphy - earnings per share, gross margin, sales, complementary product sales
      and gross profit and certain global sourcing and supply related objectives;
      and
      Mr. Christopher W. Wilson - earnings per share, operating profit, return on
      assets, complementary sales and gross margin, organization planning and
      development and certain sales and marketing program initiatives. 

    These
      same performance measures will continue to be used for future years until
      changed by the Compensation Committee of our Board of Directors. Payment of
      bonuses (if any) is normally made in February after the end of the performance
      period during which the bonuses were earned.

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