10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON‚ D. C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30‚ 2004 OR

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ____________.

COMMISSION FILE NO.: 0-26640

SCP POOL CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE	36-3943363
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
109 Northpark Boulevard‚
Covington‚ Louisiana	70433-5001
(Address of principal executive offices)	(Zip Code)
985-892-5521
(Registrant’s telephone number‚ including area code)
(former name‚ former address and former fiscal year‚ if changed since last report)

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

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

At July 23, 2004, there were 35,215,726 outstanding shares of the registrant’s common stock, $.001 par value per share.

SCP POOL CORPORATION

Form 10-Q
For the Quarter Ended June 30, 2004

INDEX
		Page
Part I.	Financial Information
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Condensed Consolidated Statements of Cash Flows	3
	Notes to Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition
	and Results of Operations
	Overview	5
	Results of Operations	6
	Seasonality and Quarterly Fluctuations	11
	Liquidity and Capital Resources	12
	Cautionary Statement	16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk
	Interest Rate Risk	19
	Foreign Exchange Risk	19
Item 4.	Controls and Procedures	20
Part II.	Other Information
Item 4.	Submission of Matters to a Vote of Security Holders	21
Item 6.	Exhibits and Reports on Form 8-K	22
Signature Page		23
Index to Exhibits		24

SCP POOL CORPORATION

Part I. Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets
(In thousands, except share data)	(Unaudited)		(Unaudited)		(Note)
	June 30,		June 30,		December 31,
	2004		2003		2003
Assets
Current assets
Cash and cash equivalents	$         21,124		$         32,185		$          12,812
Receivables, net	51,006		36,750		25,728
Receivables pledged under receivables facility	146,677		138,224		58,096
Product inventories, net	219,711		197,558		193,905
Prepaid expenses	9,494		5,797		3,991
Deferred income taxes	1,818		1,359		1,864
Total current assets	$      449,830		$      411,873		$      296,396
Property and equipment, net	25,499		23,870		24,643
Goodwill	112,488		108,536		112,140
Intangible assets, net	12,589		7,181		14,631
Other assets, net	1,626		2,456		2,462
Total assets	$      602,032		$      553,916		$      450,272
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$      144,029		$      156,695		$      118,312
Accrued and other current liabilities	50,276		48,606		24,997
Short-term financing	100,000		90,000		42,418
Current portion of long-term debt	53,980		885		40,250
Total current liabilities	$      348,285		$      296,186		$      225,977
Deferred income taxes	20,890		12,568		20,958
Long-term debt, less current portion	3,344		65,529		3,607
Other long-term liabilities	4,442		3,542		4,489
Stockholders’ equity
Common stock, $.001 par value; 100,000,000 shares
authorized; 35,215,107, 35,326,946 and 35,481,335
shares issued and outstanding at 6/30/04, 6/30/03 and 12/31/03,
respectively	35		35		35
Additional paid-in capital	72,602		64,887		67,862
Retained earnings	152,288		110,963		126,359
Unearned compensation	(1,106	)	(432	)	(290	)
Accumulated other comprehensive income	1,252		638		1,275
Total stockholders’ equity	$      225,071		$      176,091		$      195,241
Total liabilities and stockholders’ equity	$      602,032		$       553,916		$      450,272

Note: The balance sheet at December 31, 2003 has been derived from the audited financial statements at that date.

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

1

SCP POOL CORPORATION

Consolidated Statements of Income
(Unaudited)	Three Months Ended		Six Months Ended
(In thousands, except per share data)	June 30,		June 30,
	2004	2003	2004	2003
Net sales	$      504,177	$      431,885	$      738,825	$      628,273
Cost of sales	358,962	311,023	528,578	454,888
Gross profit	145,215	120,862	210,247	173,385
Selling and administrative expenses	72,626	63,673	129,986	112,676
Operating income	72,589	57,189	80,261	60,709
Interest expense	1,122	1,514	2,105	2,599
Income before income taxes	71,467	55,675	78,156	58,110
Provision for income taxes	27,872	21,712	30,481	22,663
Net income	$       43,595	$       33,963	$       47,675	$       35,447
Earnings per share
Basic	$         1.23	$         0.96	$         1.35	$         1.00
Diluted	$         1.16	$         0.92	$         1.27	$         0.96
Weighted average shares outstanding
Basic	35,375	35,309	35,443	35,326
Diluted	37,585	36,994	37,593	36,929
Cash dividends declared per common share	$       0.10	$       ---	$       0.10	$       ---

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

2

SCP POOL CORPORATION

Condensed Consolidated Statements of Cash Flows
(Unaudited)		Six Months Ended
(In thousands)		June 30,
		2004			2003
Operating activities
Net income	$	47,675		$	35,447
Adjustments to reconcile net income to net cash
provided by (used in) operating activities		4,823			5,330
Changes in operating assets and liabilities,
net of effects of acquisitions
Receivables		(113,673	)		(101,749	)
Product inventories		(26,305	)		(11,616	)
Accounts payable		25,717			60,352
Other current assets and liabilities		20,596			20,377
Net cash provided by (used in) operating activities		(41,167	)		8,141
Investing activities
Acquisition of businesses, net of cash acquired		(348	)		(3,355	)
Purchase of property and equipment, net of sale proceeds		(3,919	)		(4,955	)
Net cash used in investing activities		(4,267	)		(8,310	)
Financing activities
Proceeds from revolving line of credit		169,640			98,900
Payments on revolving line of credit		(155,910	)		(160,435	)
Proceeds from asset-backed financing		66,522			90,000
Payments on asset-backed financing		(8,940	)		---
Proceeds from other long-term debt		---			1,889
Payments on other long-term debt		(310	)		---
Payments on other short-term debt		---			(2,100	)
Issuance of common stock under stock option plans		3,713			1,347
Payment of cash dividends		(3,528	)		---
Purchase of treasury stock		(18,225	)		(3,336	)
Net cash provided by financing activities		52,962			26,265
Effect of exchange rate changes on cash		784			957
Change in cash and cash equivalents		8,312			27,053
Cash and cash equivalents at beginning of period		12,812			5,132
Cash and cash equivalents at end of period	$	21,124		$	32,185

The accompanying Notes are integral part of the Consolidated Financial Statements.

3

Notes to Consolidated Financial Statements (Unaudited)

1. Basis of Presentation

SCP Pool Corporation (the Company, which may be referred to as we, us or our) prepared the consolidated financial statements following accounting principles generally accepted in the United States (GAAP) for interim financial information and the requirements of the Securities and Exchange Commission (SEC). As permitted under those rules, certain footnotes or other financial information required by GAAP for complete financial statements have been condensed or omitted. In management’s opinion, the financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our financial position and operating results. The results for the three- and six-month periods ended June 30, 2004 are not necessarily indicative of the results to be expected for the twelve months ended December 31, 2004.

You should also read the financial statements and notes included in our 2003 Annual Report on Form 10-K. The accounting policies used in preparing these financial statements are the same as those described in our Annual Report.

2. Earnings Per Share

We calculate basic earnings per share (EPS) by dividing net income by the weighted average number of common shares outstanding. Diluted EPS includes the dilutive effects of stock awards.

3. Stock-Based Compensation

We account for our employee stock options under the intrinsic value method described by Accounting Principles Bulletin 25, Accounting for Stock Issued to Employees. Accordingly, we do not record compensation expense for options issued with an exercise price equal to the stock’s market price on the grant date. If we had accounted for our employee stock options using the fair value method described in Statement of Financial Accounting Standards 123, Accounting for Stock-Based Compensation, our net income and earnings per share would have been reduced to the pro-forma amounts below (in thousands, except per share data):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2004		2003		2004		2003
Reported net income	$       43,595		$       33,963		$       47,675		$       35,447
Add: Stock-based employee compensation
expense included in reported net
income, net of the tax effect	69		44		143		87
Deduct: Stock-based employee
compensation expense determined
under the fair value method for
all awards, net of the tax effect	(935	)	(730	)	(1,821	)	(1,490	)
Pro-forma net income	$       42,729		$       33,277		$       45,997		$       34,044
Basic earnings per share
As reported	$         1.23		$         0.96		$         1.35		$         1.00
Pro-forma	$         1.21		$         0.94		$         1.30		$         0.96
Diluted earnings per share
As reported	$         1.16		$         0.92		$         1.27		$         0.96
Pro-forma	$         1.14		$         0.90		$         1.22		$         0.92

4

Notes to Consolidated Financial Statements (Unaudited) (continued)

4. Comprehensive Income

Comprehensive income consists of net income and other gains and losses affecting stockholders’ equity that, under GAAP, are excluded from net income. In our case, these consist of foreign currency translation gains and losses and unrealized gains and losses on cash flow hedges, net of related income tax effects.

Comprehensive income for the quarter was $43.3 million at June 30, 2004 and $34.4 million at June 30, 2003. For the six month period, comprehensive income was $47.7 million at June 30, 2004 and $36.0 million at June 30, 2003.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with Management’s Discussion and Analysis included in our 2003 Annual Report on Form 10-K.

Overview

Based on industry knowledge, management believes that we are the world’s largest wholesale distributor of swimming pool supplies and related equipment. We purchase products from a large number of manufacturers and then distribute these goods to a customer base consisting of swimming pool remodelers and builders, retail swimming pool stores and swimming pool repair and service companies.

We distribute more than 91,000 products through 198 service centers in the United States and six foreign countries. Approximately 95% of our net sales are domestic. We operate two networks: the SCP Distributors network (SCP), which consists of 141 locations, and the Superior Pool Products network (SPP), which consists of 57 locations. We adopted this strategy to offer our customers a choice of different distributors, each featuring distinctive product selections and supplier relationships, and to encourage continued improvements in customer service through healthy competition between the two networks.

As part of our distribution businesses, we have acquired three small manufacturing facilities located in Fort Wayne, Indiana; Bordeaux, France; and Quebec, Canada, which engage in the manufacturing of packaged pool panels, steps, liners and coping. Approximately 2% of our consolidated cost of sales in 2003 consisted of items we manufactured at these facilities and sold through our distribution networks, which has contributed to higher gross margins in our Consolidated Statements of Income. Our manufacturing sales to third parties accounted for approximately 1% of our net sales in 2003.

We invest significant resources to promote the growth of the swimming pool industry. Our marketing philosophy incorporates a focus on increasing consumer awareness of the benefits regarding pool ownership and the affordability and ease of maintaining a pool.

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

5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

We currently conduct operations through 198 service centers in North America and Europe.

The following table presents information derived from the Consolidated Statements of Income expressed as a percentage of net sales.

(Note)	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2004		2003		2004		2003
Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales	71.2		72.0		71.5		72.4
Gross profit	28.8		28.0		28.5		27.6
Selling and administrative expenses	14.4		14.7		17.6		17.9
Operating income	14.4		13.2		10.9		9.7
Interest expense	0.2		0.4		0.3		0.4
Income before income taxes	14.2		12.9		10.6		9.3

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

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

• service centers acquired;
• service centers consolidated with acquired service centers; and
• new service centers opened in new markets.

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

At June 30, 2004, 192 service centers were included in the base business calculations, and six service centers were excluded because they were acquired within the last 15 months.

6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations (continued)

Three Months Ended June 30, 2004 Compared to Three Months Ended June 30, 2003

(In thousands)		Base Business					Acquired Service Centers						Total
(Unaudited)		Three Months					Three Months						Three Months
		Ended					Ended						Ended
		June 30,					June 30,						June 30,
		2004			2003			2004			2003			2004			2003
Net sales	$	479,441		$	428,085		$	24,736		$	3,800		$	504,177		$	431,885
Gross profit		138,826			119,490			6,389			1,372			145,215			120,862
Gross margin		29.0	%		27.9	%		25.8	%		36.1	%		28.8	%		28.0	%
Selling and operating expenses		67,971			62,254			4,655			1,419			72,626			63,673
Expenses as a % of net sales		14.2	%		14.5	%		18.8	%		37.3	%		14.4	%		14.7	%
Operating income (loss)		70,855			57,236			1,734			(47	)		72,589			57,189
Operating margin		14.8	%		13.4	%		7.0	%		(1.2	)%		14.4	%		13.2	%

Net Sales

	Three Months Ended June 30,
(in millions)		2004		2003		Change
Net sales	$	504.2	$	431.9	$	72.3   17%

Base business growth of 12% contributed $51.4 million to the increase in net sales in the second quarter of 2004, while acquired service centers accounted for the remaining increase. Base business net sales increased primarily due to the following:

• a larger installed base of swimming pools resulting in increased sales of non-discretionary products;
• the continued successful execution of our sales, marketing and service programs; and
• 35% growth in complementary product sales.

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations (continued)

Gross Profit

	Three Months Ended June 30,
(in millions)		2004		2003		Change
Gross profit	$	145.2	$	120.9	$	24.3   20%
Gross profit as a percent of net sales		28.8%		28.0%		0.8%

Base business gross profit growth of 16% contributed $19.3 million to the increase, while acquired service centers accounted for the remaining increase. The base business gross profit growth is primarily due to the growth in base business net sales as discussed above.

Base business gross margin improved to 29.0% in the second quarter of 2004 from 27.9% in the second quarter of 2003 primarily due to improved selling and purchasing practices.

Operating Expenses

	Three Months Ended June 30,
(in millions)		2004		2003		Change
Operating expenses	$	72.6	$	63.7	$	8.9   14%
Operating expenses as a percent of net sales		14.4%		14.7%		(0.3)%

Operating expenses relating to the base business contributed $5.7 million to the increase in the second quarter of 2004, while acquired service centers accounted for the remaining increase.

Base business operating expenses as a percentage of net sales decreased to 14.2% in the second quarter of 2004 from 14.5% in the second quarter of 2003 as headcount increased only slightly between periods while net sales increased 17%.

Interest Expense

Interest expense decreased between periods as a result of lower average outstanding debt in the second quarter of 2004 compared to the second quarter of 2003 and a decline in the effective interest rate to 2.2% in the second quarter of 2004 from 2.8% in the second quarter of 2003.

Income Taxes

The increase in income taxes is due to the $15.8 million increase in income before income taxes from the second quarter of 2003 to the second quarter of 2004. Our effective income tax rate remained unchanged at 39% at June 30, 2003 and June 30, 2004.

8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations (continued)

Six Months Ended June 30, 2004 Compared to Six Months Ended June 30, 2003

(In thousands)		Base Business					Acquired and Consolidated						Total
(Unaudited)		Six Months					Six Months						Six Months
		Ended					Ended						Ended
		June 30,					June 30,						June 30,
		2004			2003			2004			2003			2004			2003
Net sales	$	700,989		$	619,771		$	37,836		$	8,502		$	738,825		$	628,273
Gross profit		200,528			170,789			9,719			2,596			210,247			173,385
Gross margin		28.6	%		27.6	%		25.7	%		30.5	%		28.5	%		27.6	%
Selling and operating expenses		119,823			108,436			10,163			4,240			129,986			112,676
Expenses as a % of net sales		17.1	%		17.5	%		26.9	%		49.9	%		17.6	%		17.9	%
Operating income (loss)		80,705			62,353			(444	)		(1,644	)		80,261			60,709
Operating margin		11.5	%		10.1	%		(1.2	)%		(19.3	)%		10.9	%		9.7	%

Net Sales

	Six Months Ended June 30,
(in millions)		2004		2003		Change
Net sales	$	738.8	$	628.3	$	110.5   18%

Base business growth of 13% contributed $81.2 million to the increase in net sales in the first six months of 2004, while acquired service centers and service centers consolidated with acquired locations accounted for the remaining increase. Base business net sales increased primarily due to the following:

• a larger installed base of swimming pools resulting in increased sales of non-discretionary products;
• the continued successful execution of our sales, marketing and service programs; and
• 34% growth in complementary product sales.

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations (continued)

Gross Profit

	Six Months Ended June 30,
(in millions)		2004		2003		Change
Gross profit	$	210.2	$	173.4	$	36.8   21%
Gross profit as a percent of net sales		28.5%		27.6%		0.9%

Base business gross profit growth of 17% contributed $29.7 million to the increase in the first six months of 2004, while acquired service centers and service centers consolidated with acquired locations accounted for the remaining increase. The base business gross profit growth is primarily due to the growth in base business net sales as discussed above.

Base business gross margin increased to 28.6% in the first six months of 2004 from 27.6% in the comparable 2003 period primarily due to improved selling and purchasing practices.

Operating Expenses

	Six Months Ended June 30,
(in millions)		2004		2003		Change
Operating expenses	$	130.0	$	112.7	$	17.3   15%
Operating expenses as a percent of net sales		17.6%		17.9%		(0.3)%

Operating expenses relating to the base business contributed $11.4 million to the increase in the first six months of 2004, while acquired service centers and service centers consolidated with acquired locations accounted for the remaining increase.

Base business operating expenses as a percentage of net sales decreased to 17.1% in the first six months of 2004 from 17.5% in the first six months of 2003 as headcount increased only slightly between periods while net sales increased 18%.

Interest Expense

Interest expense decreased between periods as a result of lower average outstanding debt in the first six months of 2004 compared to the first six months of 2003 and a decline in the effective interest rate to 2.3% in 2004 from 2.7% in 2003.

Income Taxes

The increase in income taxes is due to the $20.0 million increase in income before income taxes in the first six months of 2004 compared to the first six months of 2003. Our effective income tax rate remained unchanged at 39% at June 30, 2003 and June 30, 2004.

10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Seasonality and Quarterly Fluctuations

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

Weather		Possible Effects
Hot and dry	•	Increased purchases of chemicals and supplies
		for existing swimming pools
	•	Increased purchases of above-ground pools
Unseasonably cool weather or	•	Fewer pool installations
extraordinary amounts of rain	•	Decreased purchases of chemicals and supplies
	•	Decreased purchases of impulse items such as
		above-ground pools and accessories
Unseasonably early warming trends	•	A longer pool season, thus increasing our sales
(primarily in the northern half of the US)
Unseasonably late warming trends	•	A shorter pool season, thus decreasing our sales
(primarily in the northern half of the US)

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

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

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

11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Seasonality and Quarterly Fluctuations (continued)

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

(Unaudited)	QUARTER
(In thousands)	2004		2003
	First	Second	First		Second		Third		Fourth
Net sales	$      234,648	$      504,177	$      196,388		$      431,885		$      337,611		$      189,948
Gross profit	65,032	145,215	52,523		120,862		92,157		49,596
Operating income (loss)	7,672	72,589	3,520		57,189		31,220		(3,903	)
Net sales as a % of annual
net sales	N/A	N/A	17	%	37	%	29	%	17	%
Gross profit as a % of
annual gross profit	N/A	N/A	17	%	38	%	29	%	16	%
Operating income (loss) as
a % of annual operating
income	N/A	N/A	4	%	65	%	35	%	(4	)%

Liquidity and Capital Resources

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

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

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

Our credit agreement, which matures on November 27, 2004, allows us to borrow under a revolving line of credit (the Revolving Credit Facility). In the first quarter of 2004, we decreased our borrowing capacity under the Revolving Credit Facility to $110.0 million from $130.0 million to reduce unused commitment fees. In July 2004, we further decreased our borrowing capacity under the Revolving Credit Facility to $90.0 million.

During the six months ended June 30, 2004, we received net proceeds of $13.7 million on the Revolving Credit Facility. At June 30, 2004, there was $52.6 million outstanding and $55.0 million available for borrowing

12

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources (continued)

under the Revolving Credit Facility, subject to borrowing base availability supported primarily by product inventories and to a lesser extent by trade accounts receivable. In the third quarter of 2004, we expect to begin negotiations to replace the Revolving Credit Facility with a new facility prior to the maturity date of November 27, 2004.

The average effective interest rate of the Revolving Credit Facility was approximately 2.9% for the six months ended June 30, 2004. Interest on borrowings under the Revolving Credit Facility may be paid at either of the following rates, in each case depending on our leverage ratio:

1. the agent’s corporate base rate or the federal funds rate plus 0.5%, whichever is higher, plus a margin ranging from 0.125% to 0.375%; or
   
   
2. the current Eurodollar Rate plus a margin ranging from 1.125% to 1.750%.

Excluding trade receivables secured under our accounts receivable securitization facility (the Receivables Facility) as discussed below, substantially all of our assets, including capital stock of our wholly-owned subsidiaries, secure our obligations under the Revolving Credit Facility. The Revolving Credit Facility has numerous restrictive covenants, which require that we maintain a minimum net worth and fixed charge coverage. As of June 30, 2004, we were in compliance with all covenants and financial ratio requirements.

In the first quarter of 2004, we renewed the Receivables Facility, which has a seasonal borrowing capacity up to $100.0 million, through March 2005. The Receivables Facility provides for the true sale of certain of our receivables as they are created to a wholly-owned, bankruptcy-remote subsidiary. This subsidiary grants an undivided security interest in the receivables to an unrelated commercial paper conduit. Because of the structure of the bankruptcy-remote subsidiary and our ability to control its activities, we include the transferred receivables and related debt in our consolidated balance sheet. We employed this arrangement because it provides us with a lower cost form of financing. At June 30, 2004, there was $100.0 million outstanding under the Receivables Facility at an average effective interest rate of 1.7%.

Cash used in operating activities was $41.2 million in the first six months of 2004 compared to cash provided by operations of $8.1 million in the same period in 2003. The use of cash is primarily due to the accelerated payment of inventory purchases as days payable outstanding decreased 15 days while the Company captured a 35% increase in term discounts between periods. The balance of cash used in operations is due to a 13% increase in accounts receivable and an 11% increase in inventory between periods, both of which are consistent with the 18% increase in net sales for the six months ended June 30, 2004.

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

13

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources (continued)

Accounts Receivable and the Allowance for Doubtful Accounts

Due to the seasonal nature of our business, accounts receivable increased $113.9 million to $197.7 million at June 30, 2004 from $83.8 million at December 31, 2003.

Accounts receivable increased $22.7 million, or 13%, to $197.7 million at June 30, 2004 from $175.0 million at June 30, 2003. This increase is consistent with the 18% increase in net sales between periods.

The allowance for doubtful accounts decreased to $3.7 million at June 30, 2004 from $3.8 million at December 31, 2003. The allowance represented 98% of the accounts receivable greater than 60 days past due in June 2004 compared to 54% in December 2003. Our allowance typically increases throughout the year because we accrue for doubtful accounts as a percentage of net sales. The majority of write-offs typically occur in the fourth quarter when the pool season has ended.

The allowance for doubtful accounts increased to $3.7 million at June 30, 2004 from $3.6 million at June 30, 2003, which is consistent with the increase in gross accounts receivable between periods. The allowance represented 98% and 96% of the accounts receivable greater than 60 days past due in June 2004 and June 2003, respectively.

Product Inventories and the Reserve for Shrink and Obsolescence

Due to the seasonal nature of our business, product inventories increased $25.8 million to $219.7 million at June 30, 2004 from $193.9 million at December 31, 2003. Inventory increased $22.1 million, or 11%, to $219.7 million at June 30, 2004 compared to $197.6 million at June 30, 2003, which is consistent with the 18% increase in net sales between periods.

The inventory reserve increased to $3.6 million at June 30, 2004 from $3.1 million at December 31, 2003, which is consistent with the increase in inventory discussed above.

The inventory reserve decreased to $3.6 million at June 30, 2004 compared to $4.0 million at June 30, 2003 and reflects improvement in our overall inventory. Our fastest moving classes of inventory (classes 1-3) increased to 71.2% of total inventory in June 2004 compared to 66.9% of total inventory in June 2003.

14

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Share Repurchase Program

In the second quarter of 2004, we repurchased 409,000 shares of our common stock at an average price of $39.32 per share. On July 23, 2004, approximately $17.6 million of the amount authorized by our Board of Directors for future share repurchases remained available. We intend to continue to repurchase shares on the open market from time to time, depending on market conditions.

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

			Total number of shares	Maximum approximate
	Total number of	Average price	purchased as part of	dollar value that may yet be
Period	shares purchased	paid per share	publicly announced plan (1)	purchased under the plan
May 2004	409,000	$   39.32	409,000	$17,616,400

⁽¹⁾     In July 2002, our Board of Directors authorized $50.0 million for the repurchase of shares of our common stock in the open market.

15

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

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

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

We are susceptible to adverse weather conditions.

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

Our business is highly seasonal.

In 2003, approximately 66% of our net sales were generated in the second and third quarters of the year, which represent the peak months of swimming pool use, installation, remodeling and repair, and 100% of our operating income was generated in the same period. Our sales are substantially lower during the first and fourth quarters of the year, when we may incur net losses.

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

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

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

In economic downturns, the demand for swimming pool or leisure related products may decline as discretionary consumer spending, new housing construction and swimming pool construction decline. Although maintenance products and repair and replacement equipment that must be purchased by pool owners to maintain existing swimming pools account for approximately 80% of our net sales, the growth of our business depends on the expansion of the installed pool base, which may be viewed by most consumers as a discretionary, and even luxury, expenditure that may be adversely affected by economic downturns.

16

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

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

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

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

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

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

17

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

We may not be able to continue our recent pace of rapid growth.

We have experienced substantial growth in recent years through acquisitions and the opening of new locations that have increased our size, scope and geographic distribution. Since 1999, we have opened 31 new service centers and have completed 15 acquisitions, consisting of 77 service centers (net of service center closings and consolidations). We expect to continue to open five to ten new service centers per year. While we contemplate continued growth through acquisitions and internal expansion, no assurance can be made as to our ability to:

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

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

We depend on key personnel.

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

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

As a distribution company, maintaining favorable relationships with our suppliers is critical to the success of our business. We believe that we add considerable value to the swimming pool supply chain by purchasing products from a large number of manufacturers and distributing the products to a highly fragmented customer base on conditions that are more favorable than these customers could obtain on their own. We currently purchase products from over 1,200 manufacturers. We believe that we currently enjoy good relationships with our suppliers, who generally offer us competitive pricing, return policies and promotional allowances. However, our inability to maintain favorable relationships with our suppliers could have an adverse effect on our business.

Our largest suppliers are Pentair Corporation, Hayward Pool Products, Inc. and Bio-Lab Inc. (a subsidiary of Great Lakes Chemicals, Inc.) which accounted for approximately 16%, 11% and 7%, respectively, of the costs of products we sold in 2003. While we do not believe that the loss of any single supplier would adversely affect our business, a decision by several suppliers, acting in concert, to sell their products directly to retail customers and other end-users of their products, bypassing distribution companies like ours, would have an adverse effect on our business. We dedicate significant resources promoting the benefits and affordability of pool ownership, which we believe greatly benefits our suppliers and manufacturers.

18

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

The growth of our business depends on effective marketing programs.

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

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

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

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

There have been no material changes from what we reported in our Form 10-K for the year ended December 31, 2003.

Foreign Exchange Risk

There have been no material changes from what we reported in our Form 10-K for the year ended December 31, 2003.

19

Item 4.   Controls and Procedures

The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the Act). The rules refer to the controls and other procedures designed to ensure that information required to be disclosed in reports that we file or submit under the Act is recorded, processed, summarized and reported within the time periods specified. As of June 30, 2004, management, including the CEO and CFO, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, management, including the CEO and CFO, concluded that as of June 30, 2004, our disclosure controls and procedures were effective at ensuring that material information related to us or our consolidated subsidiaries is made known to them and is disclosed on a timely basis in our reports filed under the Act.

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

20

Part II. Other Information

Item 4. Submission of Matters to a Vote of Security Holders

At the Annual Meeting of Stockholders held on May 6, 2004, the following proposals were adopted by the margins indicated:

1. To elect a Board of Directors to hold office until the next Annual Meeting of Stockholders and until their successors are elected and qualified.

	Number of Shares
	For	Withheld
Andrew W. Code	32,664,497	860,588
James J. Gaffney	32,969,329	555,756
George T. Haymaker	33,142,221	382,864
Manuel J. Perez de la Mesa	32,664,493	860,592
Harlan F. Seymour	32,886,941	638,144
Wilson B. Sexton	32,642,620	882,465
Robert C. Sledd	32,988,531	536,554
John E. Stokely	32,916,139	608,946

2. To approve an amendment to our Amended Certificate of Incorporation to increase the number of authorized shares of our Common Stock from 40,000,000 to 100,000,000.

For	29,343,630
Against	4,166,032
Abstain	15,421

3. To approve an amendment to our 2002 Long-Term Incentive Plan to increase the maximum number of shares of our Common Stock authorized for issuance thereunder from 1,050,000 to 1,800,000.

For	27,450,143
Against	2,082,951
Abstain	19,217

4. To ratify the appointment of Ernst & Young LLP, certified public accountants, as our independent auditors for the fiscal year ending December 31, 2004.

For	33,183,433
Against	320,662
Abstain	20,990

21

SCP POOL CORPORATION

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits required by Item 601 of Regulation S-K

Exhibit

Number Document Description

3.1 Composite Certificate of Incorporation of the Company.

3.2 Composite Bylaws of the Company. ⁽¹⁾

4.1 Form of certificate representing shares of common stock of the Company. ⁽²⁾

10.1 Lease(Mandeville Service Center) entered into as of October 19, 1999, by and between S&C Development Company, LLC and South Central Pool Supply, Inc, as amended by Lease Agreement Amendment No. One, entered into as of May 26, 2000, by and between S&C Development Company, LLC and South Central Pool Supply, Inc, as amended by Lease Agreement(Warehouse) entered into as of January 16, 2002, by and between S&C Development Company, LLC and SCP Distributors, LLC, as amended by First Amendment entered into as of February 11, 2002 by and between S&C Development Company, LLC and SCP Distributors, LLC.

10.2 Lease(Oklahoma Service Center) entered into as of January 15, 2001, by and between Dave Cook, individually and SCP Pool Corporation, as amended by First Amendment, entered into as of October 24, 2001 by and between S&C Development, LLC and SCP Pool Corporation, as amended by First Amendment, entered into as of December 5, 2001, by and between S&C Development, LLC and SCP Pool Corporation.

10.3 Tax Reimbursement Arrangement.⁽³⁾

10.4 2002 Long-Term Incentive Plan, as Amended and Restated ⁽³⁾

31.1 Certification by Craig K. Hubbard pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification by Manuel J. Perez de la Mesa pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification by Manuel J. Perez de la Mesa and Craig K. Hubbard pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

None

Items 1, 2, 3 and 5 are not applicable and have been omitted.

_________________

1. Incorporated by reference to our Quarterly Report on Form 10-Q for the period ended March 31, 2003.

2. Incorporated by reference to our Registration Statement No. 33-92738.

3. Management contract or compensatory plan or arrangement.

22

SCP POOL CORPORATION

Signature Page

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on July 30, 2004.

SCP POOL CORPORATION

By:  /s/ Craig K. Hubbard

Craig K. Hubbard

Chief Financial Officer, Treasurer and Secretary
and duly authorized signatory on behalf of the Registrant

23

SCP POOL CORPORATION

Index to Exhibits

3.1 Composite Certificate of Incorporation of the Company.

3.2 Composite Bylaws of the Company. ⁽¹⁾

4.1 Form of certificate representing shares of common stock of the Company. ⁽²⁾

10.1 Lease(Mandeville Service Center) entered into as of October 19, 1999, by and between S&C Development Company, LLC and South Central Pool Supply, Inc, as amended by Lease Agreement Amendment No. One, entered into as of May 26, 2000, by and between S&C Development Company, LLC and South Central Pool Supply, Inc, as amended by Lease Agreement (Warehouse)entered into as of January 16, 2002, by and between S&C Development Company, LLC and SCP Distributors, LLC, as amended by First Amendment entered into as of February 11, 2002 by and between S&C Development Company, LLC and SCP Distributors, LLC.

10.2 Lease(Oklahoma Service Center) entered into as of January 15, 2001, by and between Dave Cook, individually and SCP Pool Corporation, as amended by First Amendment, entered into as of October 24, 2001 by and between S&C Development, LLC and SCP Pool Corporation, as amended by First Amendment, entered into, as of December 5, 2001 by and between S&C Development, LLC and SCP Pool Corporation.

10.3 Tax Reimbursement Arrangement. ⁽³⁾

10.4 2002 Long-Term Incentive Plan, as Amended and Restated ⁽³⁾

31.1 Certification by Craig K. Hubbard pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 

31.2 Certification by Manuel J. Perez de la Mesa pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 

32.1 Certification by Manuel J. Perez de la Mesa and Craig K. Hubbard pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906  

of the Sarbanes-Oxley Act of 2002 

1. Incorporated by reference to our Quarterly Report on Form 10-Q for the period ended March 31, 2003.

2. Incorporated by reference to our Registration Statement No. 33-92738.

3. Management contract or compensatory plan or arrangement.

24

EX-3

         Exhibit 3.1

COMPOSITE

OF

CERTIFICATE OF INCORPORATION

OF

SCP POOL CORPORATION

(as of June 23, 2004)

ARTICLE ONE

        The name of the Corporation is SCP Pool Corporation.

ARTICLE TWO

        The address of the Corporation’s registered office in the State of Delaware is 1013 Centre Road in the City of Wilmington, County of New Castle, 19805. The name of its registered agent at such address is Corporation Service Company.

ARTICLE THREE

        The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

ARTICLE FOUR

PART A. AUTHORIZED SHARES

        The total number of shares of stock which the Corporation has authority to issue is 101,000,000, consisting of: (i) 1,000,000 shares of Preferred Stock, par value $.01 per share (the “Preferred Stock”), and (ii) 100,000,000 shares of Common Stock, par value $.001 per share (the “Common Stock”). All Preferred Stock and Common Stock shall be issued as fully paid and non-assessable shares, and any holder thereof shall not be liable for any further payments in respect thereof.

PART B. PREFERRED STOCK

        Section 1. Authorization; Series; Provisions.

    1A.        Authorization. The Board of Directors of the Corporation (the “Board of Directors”) is authorized, subject to limitations prescribed by law and the provisions of this Article Four, to provide for the issuance of shares of the Preferred Stock in series, and by filing a certificate pursuant to the General Corporation Law of the State of Delaware, to establish from time to time the number of shares to be included in each such series and to fix the designations, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof.

    1B.        Series. The Preferred Stock may be issued from time to time in one or more series, the shares of each series to have such powers, designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as are stated and expressed herein or in a resolution or resolutions providing for the issuance of such series, adopted by the Board of Directors as hereinafter provided.

    1C.        Provisions. Authority is hereby expressly granted to the Board of Directors, subject to the provisions of this Part B to authorize the issuance of one or more series of Preferred Stock, and with respect to each such series to fix by resolution or resolutions providing for the issuance of such series:

        (i)  the maximum number of shares to constitute such series and the distinctive designation thereof;

        (ii) whether the shares of such series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights;

        (iii) the dividend rate, if any, on the shares of such series, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends shall bear to the dividends payable on any other class or classes or on any other series of capital stock, and whether such dividends shall be cumulative or noncumulative;

        (iv) whether the shares of such series shall be subject to redemption by the Corporation or by the holders thereof and, if made subject to redemption, the times, prices and other terms and conditions of such redemption;

        (v) the rights of the holders of shares of such series upon the liquidation, dissolution or winding up of the Corporation;

        (vi) whether or not the shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such series for retirement or to other corporate purposes and the terms and provisions relative to the operation thereof;

        (vii) whether or not the shares of such series shall be convertible into, or exchangeable for, shares of stock of any other class or classes, or of any other series of the same class, and if so convertible or exchangeable, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same;

        (viii) the limitations and restrictions, if any, to be effective while any shares of such series are outstanding upon the payment of dividends or making of other distributions on, and upon the purchase, redemption or other acquisition by the Corporation of, Common Stock or any other class or classes of stock of the Corporation ranking junior to the shares of such series either as to dividends or upon liquidation;

        (ix) the conditions or restrictions, if any, upon the creation of indebtedness of the Corporation or upon the issue of any additional stock (including additional shares of such series or of any other series or of any other class) ranking on a parity with or prior to the shares of such series as to dividends or upon liquidation; and

        (x) any other preference and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof as shall not be inconsistent with this Article Four.

        Section 2. Series Identical; Rank. All shares of any one series of Preferred Stock shall be identical with each other in all respects, except that shares of any one series issued at different times may differ as to the dates from which dividends, if any, thereon shall be cumulative; and all series shall rank equally and be identical in all respects, except as permitted by the foregoing provisions of Section 1C hereof; and all shares of Preferred Stock shall rank senior to the Common Stock both as to dividends and upon liquidation.

        Section 3. Liquidation. In the event of any liquidation, dissolution or winding up of the Corporation, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of any class or classes of stock of the Corporation ranking junior to the Preferred Stock upon liquidation, the holders of the shares of the Preferred Stock shall be entitled to receive payment at the rate fixed herein or in the resolution or resolutions adopted by the Board of Directors providing for the issue of such series, plus (if dividends on shares of such series of Preferred Stock shall be cumulative) an amount equal to all dividends (whether or not earned or declared) accumulated to the date of final distribution to such holders; but they shall be entitled to no further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation or proceeds thereof, distributable among the holders of the shares of the Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid, then such assets, or the proceeds thereof, shall be distributed among such holders ratably in accordance with the respective amounts which would be payable on such shares if all amounts payable thereon were paid in full.

        Section 4. Voting Rights. Except as shall be otherwise stated and expressed herein or in the resolution or resolutions of the Board of Directors providing for the issue of any series and except as otherwise required by the laws of the State of Delaware, the holders of shares of Preferred Stock shall have, with respect to such shares, no right or power to vote on any question or in any proceeding or to be represented at, or to receive notice of, any meeting of stockholders.

        Section 5. Reacquired Shares. Shares of any Preferred Stock which shall be issued and thereafter acquired by the Corporation through purchase, redemption, exchange, conversion or otherwise shall return to the status of authorized but unissued Preferred Stock, undesignated as to series, unless otherwise provided in the resolution or resolutions of the Board of Directors.

        Section 6. Increase/Decrease in Authorized Shares of a Series. Unless otherwise provided in the resolution or resolutions of the Board of Directors providing for the issuance thereof, the number of authorized shares of stock of any such series may be increased or decreased (but not below the number of shares thereof outstanding) by resolution or resolutions of the Board of Directors. In case the number of shares of any such series of Preferred Stock shall be decreased, the shares representing such decrease shall, unless otherwise provided in the resolution or resolutions of the Board of Directors providing for the issuance thereof, resume the status of authorized but unissued Preferred Stock, undesignated as to series.

PART C. COMMON STOCK

        Section 1. Voting. Except as otherwise required by applicable law, the holders of Common Stock shall be entitled to one vote per share on all matters to be voted on by the corporation's stockholders.

        Section 2. Dividends. As and when dividends are declared or paid thereon, whether in cash, property or securities of the Corporation, the holders of Common Stock shall be entitled to participate in such dividends ratably on a per share basis. The rights of the holders of Common Stock to receive dividends are subject to the provisions of the Preferred Stock.

        Section 3. Liquidation. Subject to the provisions of the Preferred Stock, the holders of Common Stock shall be entitled to participate ratably on a per share basis in all distributions to the holders of the Common Stock in any liquidation, dissolution or winding up of the Corporation.

        Section 4. Registration of Transfer. The Corporation shall keep at its principal office (or such other place as the Corporation reasonably designates) a register for the registration of shares of Common Stock. Upon the surrender of any certificate representing shares of any class of Common Stock at such place, the Corporation shall, at the request of the registered holder of such certificate, execute and deliver a new certificate or certificates in exchange therefor representing in the aggregate the number of shares of such class represented by the surrendered certificate, and the Corporation forthwith shall cancel such surrendered certificate. Each such new certificate will be registered in such name and will represent such number of shares of such class as is requested by the holder of the surrendered certificate and shall be substantially identical in form to the surrendered certificate. The issuance of new certificates shall be made without charge to the holders of the surrendered certificates for any issuance tax in respect thereof or other cost incurred by the Corporation in connection with such issuance.

        Section 5. Replacement. Upon receipt of evidence reasonably satisfactory to the Corporation (an affidavit of the registered holder will be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing one or more shares of any class of Common Stock, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Corporation (provided that if the holder is a financial institution or other institutional investor its own agreement will be satisfactory), or, in the case of any such mutilation upon surrender of such certificate, the Corporation shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the number of shares of such class represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate.

        Section 6. Notices. All notices referred to herein shall be in writing, shall be delivered personally or by first class mail, postage prepaid, and shall be deemed to have been given when so delivered or mailed to the Corporation at its principal executive offices and to any stockholder at such holder’s address as it appears in the stock records of the Corporation (unless otherwise specified in a written notice to the Corporation by such holder).

        Section 7. Amendment and Waiver. No amendment or waiver of any provision of this Section C shall be effective without the prior approval of the holders of a majority of the then outstanding Common Stock.

PART D. GENERAL PROVISIONS

        Section 1. Nonliquidating Events. A consolidation or merger of the Corporation with or into another corporation or corporations or a sale, whether for cash, shares of stock, securities or properties, or any combination thereof, of all or substantially all of the assets of the Corporation shall not be deemed or construed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this Article Four.

        Section 2. No Preemptive Rights. No holder of Preferred Stock or Common Stock of the Corporation shall be entitled, as such, as a matter of right, to subscribe for or purchase any part of any new or additional issue of stock of any class or series whatsoever or of securities convertible into stock of any class whatsoever, whether now or hereafter authorized and whether issued for cash or other consideration, or by way of dividend.

ARTICLE FIVE

        The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, and the directors need not be elected by ballot unless required by the Bylaws of the Corporation. In furtherance and not in limitation of the powers conferred by statute, the Board of Directors of the Corporation is expressly authorized to adopt, amend or repeal the Bylaws of the Corporation.

ARTICLE SIX

        Section 1. Meetings; Books. Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws of the Corporation may provide. The books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation. The Board of Directors shall from time to time decide whether and to what extent and at what times and under what conditions and requirements the accounts and books of the Corporation, or any of them, except the stock book, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any books or documents of the Corporation except as conferred by the laws of the State of Delaware or as authorized by the Board of Directors.

        Section 2. Removal. Directors elected by holders of stock of the Corporation entitled to vote generally in the election of directors may be removed at any time by a majority vote of such stockholders.

ARTICLE SEVEN

        To the fullest extent permitted by the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended, a director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director. Any repeal or modification of this Article Seven shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

ARTICLE EIGHT

        Section 1. Indemnification of Officers, Directors and Employees. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including any action by or in the right of the Corporation) (a “Proceeding”) by reason of the fact that he is or was a director, officer or employee of the Corporation, or is or was serving at the request of the Corporation as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise (including service with respect to any employee benefit plan) against expenses (including attorneys’ fees), judgments, fines, ERISA excise taxes, penalties and amounts paid in settlement actually and reasonably incurred by him in connection with such Proceeding to the fullest extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment). The indemnification provided by this Article Eight shall not be deemed exclusive of any other rights to which any person may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity, and shall continue as to a person who has ceased to be a director, officer or employee and shall inure to the benefit of the heirs, executors, administrators and personal representatives of such a person. It is expressly understood that, notwithstanding the foregoing, no director, officer or employee shall have any rights under this Article Eight if the Proceeding giving rise to the claim for indemnification hereunder arises as a result of actions or failures to act in any capacity other than those set forth in this Section 1, and, as such, no such person shall have any rights under this Article Eight if the Proceeding giving rise to the claim for indemnification arises as a result of such person’s purchase and/or sale of securities of the Corporation (other than on behalf of the Corporation).

        Section 2. Procedure for Indemnification of Directors, Officers and Employees. Any indemnification of a director, officer or employee of the Corporation or advance of expenses under this Article Eight shall be made promptly upon the written request of the director, officer or employee, and in any event within 30 days after such request (or, if a determination as described below is required, within 30 days after such determination has been made or deemed made). If a determination by the Corporation that the director, officer or employee is entitled to indemnification pursuant to this Article Eight is required, and the Corporation fails to respond within sixty days to a written request for indemnity, the Corporation shall be deemed to have approved the request. If the Corporation denies a written request for indemnification or advancing of expenses, in whole or in part, or if payment in full pursuant to such request is not made within 30 days after such request (or, if a determination as described above is required, within 30 days after such determination has been made or deemed made), the right to indemnification or advances as granted by this Article Eight shall be enforceable by the director, officer or employee in any court of competent jurisdiction. Such person’s costs and expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any Proceeding in advance of its final disposition where the required undertaking has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the General Corporation Law of the State of Delaware for the Corporation to indemnify the claimant for the amount claimed, but the burden of such defense shall be on the Corporation. Neither the failure of the Corporation (including its board of directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the Corporation (including its board of directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

        Section 3. Insurance. The Corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was a director, officer or employee of the Corporation or was serving at the request of the Corporation as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise (including service with respect to any employee benefit plan) against any liability asserted against him and incurred by him in any such capacity, whether or not the Corporation would have the power to indemnify such person against such liability under this Article Eight.

        Section 4. Expenses. Expenses incurred by any person described in this Article Eight in defending a Proceeding shall be paid by the Corporation in advance of such Proceeding’s final disposition upon receipt of an undertaking by or on behalf of the director, officer or employee to repay such amount without interest if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation.

        Section 5. Contract Rights. The provisions of this Article Eight shall be deemed to be a contract between the Corporation and each director, officer or employee who serves in any such capacity at any time, and any repeal or modification of this Article Eight or of any relevant provisions of the General Corporation Law of the State of Delaware or other applicable law shall not affect any rights or obligations then existing with respect to any state of facts or Proceeding then existing.

        Section 6. Merger or Consolidation. For purposes of this Article Eight, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees, so that any person who is or was a director, officer or employee of such a constituent corporation, or is or was serving at the request of such a constituent corporation as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise (including service with respect to any employee benefit plan), shall stand in the same position under this Article Eight with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.

        Section 7. Indemnification of Agents. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any agent of the Corporation to the fullest extent of the provisions of this Article Eight with respect to the indemnification and advancement of expenses of directors, officers and employees of the Corporation.

ARTICLE NINE

        The Corporation is to have perpetual existence.

ARTICLE TEN

        The Corporation expressly elects not to be governed by Section 203 of the Delaware General Corporation Law.

ARTICLE ELEVEN

        The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed herein and by the laws of the State of Delaware, and all rights conferred upon stockholders herein are granted subject to this reservation.

EX-10

Exhibit 10.1

STATE OF LOUISIANA

PARISH OF ST. TAMMANY

        THIS LEASE, made this 19^th day of October, 1999, by and between S & C DEVELOPMENT COMPANY, LLC, a Louisiana limited liability company (hereinafter referred to as “Lessor”), and SOUTH CENTRAL POOL SUPPLY, INC., a Delaware Corporation (hereinafter referred to as “Lessee”).

WITNESSETH:

PREMISES

    1.        Lessor, for and in consideration of the rents, covenants, agreements and stipulations hereinafter mentioned, reserved and contained, to be kept, paid, and performed by Lessee, has leased and rented, and by these presents does lease and rent unto Lessee, and Lessee hereby agrees to lease and take upon the terms and conditions hereinafter set forth, approximately 12,500 gross square feet of office and warehouse space (1,500 square feet of showroom and office space, 11,000 square feet of main warehouse space) to be constructed by Lessor upon certain real property of Lessor, situated in Section 24, Township 7 South, Range 11, East, St. Tammany Parish, State of Louisiana, and being more fully described in the Legal Description, a copy of which is attached hereto and made a part hereof as Exhibit “A”; together with the unrestricted and non-exclusive license to the use of any of the parking areas, driveways, sidewalks and other facilities made available by Lessor in connection with Lessee’s use and occupancy of the Premises, and being hereinafter referred to as the “Premises”.

        Lessor covenants that it is the owner of the fee simple title to the Premises, the Building in which the Premises are located and the property upon which the Premises are situated and subject to this Lease. Lessor has the full right and authority to make and enter into this Lease.

RENTAL

    2.        Lessee shall pay to Lessor at the address stated in Paragraph 21 herein, or to such managing agent, or to such other address as Lessor, or Lessor’s attorney or agent, may, from time to time, designate by written notice to Lessee, promptly on the first day of each month, in advance, SIX THOUSAND FIVE HUNDRED TEN AND 42/100 ($6,510.42) — -DOLLARS, during the Term of this Lease as rental payable in lawful money of the United States of America.

        Any payment of monthly rental not received by Lessor by the tenth (10th) day of the month or any payment of additional rent not received when due shall bear a handling fee of five percent (5%) of the amount due to cover expenses incurred by Lessor such as bookkeeping, personnel, processing and other costs not contemplated hereunder and incapable of exact computation and shall be payable within thirty (30) days of written notice to Lessee from Lessor. Lessor and Lessee agree that said fee represents a fair and reasonable estimate of Lessor’s expenses. The postmark of the United States Postal Service shall be evidence of the date of mailing. The handling fee shall be in addition to the remedies available to Lessor pursuant to Paragraph 15 hereinbelow and shall in no way be construed to limit those remedies.

        Upon the execution of this Lease, Lessee shall pay to Lessor the full sum of THIRTEEN THOUDAND TWENTY AND 84/100 ($13,020.84) — -DOLLARS, representing prepayment by Lessee of Base Rent for the first two (2) months of the Term hereof.

TERM

    3.        The term of this Lease shall be for eighty-four (84) months, and shall commence upon Substantial Completion of the improvements to be constructed as shown on the Site Plan, Floor Plan, Building Elevation Plan and Electrical Blueprint, copies of which are attached hereto as Exhibits B-1, B-2, B-3 and B-4 respectively, and which plans are made an intregal part hereof; and shall terminate on the last day of the 84^TH month thereafter. The Premises shall be “Substantially Complete” on the date on which Lessor delivers to Tenant and architect’s notice that the Premises are Substantially Complete in accordance with the work to be performed pursuant to Exhibits B-1, B-2, B-3, B-4, attached hereto and made a part hereof, punch list items excluded, and full deliverance of the Premises to Tenant. Except as otherwise provided in this Lease, Lessee hereby accepts the Premises in the condition existing as of the Lease Commencement Date or the date that Lessee takes possession of the Premises, whichever is earlier, subject to all applicable zoning, municipal, county, state and federal laws, ordinances and regulations governing and regulating the use of the Premises, and any covenants, or restrictions now of record with respect to the Premises of which Lessee is notified. Lessee shall, at Lessee’s sole expense, comply with all zoning, municipal, county, state, and federal laws, ordinances, regulations, rules, orders, directions and requirements, collectively “Laws”, now in force or which may hereinafter be in force, which shall impose any duty upon Lessor or Lessee with respect to Lessee’s use or occupation of the Premises. However, Lessor is responsible for any and all costs associated with modifications to the Premises/Building necessary for compliance with the Americans with Disabilities Act (ADA) requirements in effect at the time the Lease commences, and any ADA requirements enacted anytime thereafter during the term of the Lease. Notwithstanding any provision herin to the contrary, Lessor hereby warrants and covenants that the Premises shall be in compliance with all laws, ordinances, codes, regulations, restrictions, covenants and easements (collectively “Laws”) in effect at the commencement of this Lease, except for those laws pertaining to Lessee’s storage of hazardous substances, which shall be Lessee’s responsibility. Lessor shall be solely liable to cure any breach of this warranty and Lessee may pursue all other remedies available in equity or at law due to Lessor’s breach of this specific warranty.

REPAIRS BY LESSOR

    4.        Lessor shall maintain the foundation, exterior walls, the roof, paved parking areas and paved driveways, provided, however, Lessor shall not be responsible for any repairs or replacements necessitated by the gross negligence or willful misconduct of Lessee, or Lessee’s agents, contractors, or employees. Lessor shall be responsible for termite and pest control.

REPAIRS AND MAINTENANCE BY LESSEE

    5.        Lessee shall maintain and keep in good working order the electrical and plumbing fixtures, the electrical switches and receptacles, the commodes and basins, the heating and air conditioning units, including thermostatic controls and filters, the windows and doors, and shall replace all broken glass in the windows and doors. Lessee agrees to enter into a service contract with a reliable, certified heating and air-conditioning company to maintain the heating and air-conditioning units and keep them in good working order. Upon Lessor’s request, Lessee shall furnish Lessor a copy of the service contract, and upon request of Lessor, shall also furnish copies of routine maintenance reports or invoices.

        In the event the air conditioning/heating system, or electrical or plumbing system cannot be reasonably repaired, Lessor shall be responsible for the cost to replace such. Lessee shall keep the Premises and the outside areas adjacent thereto, including the grounds, neat and free of trash, scraps, materials, products, or portions thereof used in its business. Lessee shall also maintain the sprinkler valves and alarm systems in the leased Premises, if any. In the event Lessee fails to make any repairs, or maintain the leased Premises, in accordance with the provisions of the Lease, the Lessor may, but shall not be obligated, to make said repairs, or maintenance, and bill Lessee for the cost of the same. Said amount shall be paid by Lessee within thirty (30) days of receipt of written notice therefor from Lessor.

        Lessee shall promptly notify Lessor, in writing, of any defective condition which Lessor is required to correct after which Lessor shall thirty (30) days to inspect the same and correct the deficiency unless such deficiency is incapable of being corrected within said thirty (30) day time period, in which case Lessor shall commence correction within said thirty (30) day time period and shall thereafter diligently pursue such correction to completion.

        Lessee shall make all other repairs which may be necessary other than those hereinabove set forth as the responsibility of Lessor. Lessee is not responsible for any capital replacements or improvements to the Premises, unless the replacement or improvement is necessary because of Lessee’s gross negligence or willful misconduct.

        Notwithstanding any provision herein to the contrary, Lessee shall, at all times during the term hereof, have the benefit of any warranties held by Lessor for the maintenance, repair or replacement of any system, appurtenance or improvement serving the Premises.

STRUCTURAL AND SYSTEMS ALTERATIONS BY LESSEE

    6.        Lessee agrees not to make any structural alteration to the building inside or out, or changes or additions to the electrical, plumbing, heating and air conditioning systems and equipment without prior written consent of the Lessor. Lessee will submit in writing to Lessor a plan detailing the alterations and materials to be used when seeking Lessor’s consent. Such consent will not be unreasonably withheld or delayed but will be given subject to Lessee’s compliance, at Lessee’s sole expense, with all building codes and all zoning, municipal, county, state, and federal laws, ordinances, regulations, rules, orders, directions and requirements, which impose any duty upon Lessor or Lessee with respect to the use, occupation or alteration of the Premises. Lessor’s consent shall also be given subject to receipt from Lessee of a building or construction permit issued by the appropriate local authority. Any such alteration or change shall become at once a part of the realty and shall belong to and become the property of Lessor. At Lessor’s option, Lessee may be required to remove any such alteration at the expiration of the term hereof and restore the Premises to its original condition at Lessee’s expense, provided however that Lessor provides written notice to Lessee, at least one hundred twenty (120) days prior to the expiration of the term hereof of its requirement for Lessee’s removal of alterations. Lessee, however, shall have the right to make repairs and decorations to the interior of the Premises without Lessor’s consent. All partitions, counters and other fixtures which shall be installed by Lessee for the operation of its business shall remain the property of the Lessee and shall be removable by Lessee at any time during the term hereof provided that any damage caused by such removal shall be promptly repaired by Lessee. Lessee agrees to pay when due all claims for labor or materials furnished to or for Lessee at or for use in the Premises. At Lessor’s option no alterations will be permitted which change the general nature of the leased facility to a special use purpose, or because of their nature, reduce the value of the building.

UTILITY BILLS

    7.        Lessor shall not be responsible to provide to Lessee any utilities services, including but not limited to water, gas, electricity, fuel and telephone services required by Lessee in connection with its occupancy of the Premises during the term of this lease, except that Lessor is responsible for ensuring the Premises are in such condition that the utilities companies can connect and provide services which Lessee shall be responsible for and Lessee shall pay for all utilities (including water, gas, electricity, fuel, and telephone service) used by it in connection with the Premises during the term of this Lease. Lessor shall have no duty or responsibility to Lessee for the stoppage or interruption of such utilities or services provided that Lessor shall, at all times, act in good faith and with due diligence to avoid the interruption of such services as same would unreasonably interfere with the ordinary conduct to Lessee’s business operations within the Premises.

USE OF PREMISES

    8.        Premises shall be used for office and warehouse purposes related to Lessee’s business as a wholesale distributor of swimming pool and spa related equipment, parts, chemicals and supplies; for all lawful purposes related thereto; and for no other purpose without the prior written consent of Lessor, which consent shall not be unreasonably withheld or delayed. Lessor acknowledges the Lessee shall, during the normal course of its business, receive, sell and have on the Premises certain hazardous materials and said acknowledgment by Lessor constitutes Lessor’s consent to Lessee’s use and occupancy of the Premises. Lessee certifies that it is presently and will continue to be in compliance with all local state and federal laws governing said hazardous materials. Lessee will permit no liens to attach or exist against the Premises, nor commit any hazardous waste. Premises shall not be used for any illegal purposes, nor in any manner to create any nuisance or trespass, nor in any way which would violate any law, ordinance, or restrictive covenant affecting the Premises, nor in any manner as would cause cancellation of, prevent the use of, or increase the rate of the standard form of All Risk coverage insurance policy to be carried by Lessor.

        In the event said insurance rate is increased due to the nature of the use of the Premises by Lessee, said increased amount shall be paid by Lessee as additional rental on the first day of the month following receipt of notification of the payment thereof by Lessor.

INDEMNIFICATION

    9.        Lessee shall indemnify and hold harmless Lessor from and against any and all losses, damages, liabilities and claims occasioned by, arising or resulting from or growing out of Lessee’s use of the Premises, or from the conduct of Lessee’s business, or from any activity, work or thing done, permitted or suffered by Lessee in or about the Premises. Lessee shall further indemnify and hold harmless Lessor from and against any and all suits and/or claims arising from any breach or default in the performance of any obligation on Lessee’s part to be performed under the terms of this Lease or arising from any act or omission of the Lessee or any of Lessee’s agents, contractors, or employees, and from and against all costs, reasonable attorney’s fees, expenses and liability incurred in the defense of any claim or action or proceeding brought thereon, except for those arising from the gross negligence or willful misconduct of Lessor or Lessor’s employees, contractors, representatives, agents and assigns. In case any action or proceeding be brought against Lessor by reason of any such claim, Lessee, upon notice from Lessor, shall defend the same at Lessee’s expense by counsel reasonably satisfactory to Lessor.

        Lessor shall indemnify and hold harmless Lessee from and against any and all suits and/or claims arising from any breach or default in the performance of any obligation on Lessor’s part to be performed under the terms of this Lease or arising from any act or omission of the Lessor, or any of Lessor’s agents, contractors or employees or from Lessor’s use of the Premises, the building, or the property or any act permitted thereon or about by Lessor or Lessor’s agents, contractors or employees and from and against all costs, reasonable attorney’s fees, expenses and liability incurred in the defense of any claim or action or proceeding brought thereon, except for those that arise out of the gross negligence or willful misconduct of Lessee, Lessee’s employees contractors, representatives, agents and assigns. In case action or proceeding be brought against Lessee by reason of any such claim, Lessor, upon notice from Lessee, shall defend the same at Lessor’s expense by counsel reasonably satisfactory to Lessee.

SUBORDINATION

    10.        Lessor shall have the right to subordinate this Lease to any ground lease, deed of trust, or mortgage encumbering the property upon which the Building and Leased Premises are located, any advances made on the security thereof and any renewals, modifications, consolidations, replacements, or extensions thereof, whenever made or recorded. Lessee shall cooperate with Lessor and Lender which is acquiring a security interest in the property and shall execute such further documents and assurances as such Lender may reasonably require, provided that Lessee is provided with a subordination, non-disturbance and attornment agreement that is reasonably acceptable to Lessee in form and in content. Lessor shall have the right to assign this Lease and to sell the Building, provided that Lessee’s obligations under this Lease shall not be increased in any material way (the performance of ministerial acts shall not be deemed material). Lessee shall not be deprived of any of its rights under this Lease, and Lessee’s right to quiet possession of the Leased Premises during the term of this Lease shall not be disturbed if Lessee pays the rent and performs all of Lessee’s obligations under this Lease prior to any assignment of this Lease and/or sale of the Building.

DESTRUCTION OF OR DAMAGE TO PREMISES

    11.        If Premises are totally or substantially destroyed by storm, fire, lightning, earthquake, or other casualty, this Lease shall terminate as of the date of such destruction, and rental shall be accounted for between Lessor and Lessee as of that date. If over 50% of the Premises are damaged but not wholly destroyed by any of such casualties (“Partially Damaged”), rental shall abate in such proportion as use of the Premises has been affected, and Lessor shall restore Premises to substantially the same condition as before damage as speedily as practicable, whereupon full rental shall recommence, provided further, however, that if the damage shall be so extensive that the same cannot be reasonably repaired and restored within ninety (90) days from the date of the casualty, then either Lessor or Lessee may cancel this Lease by giving written notice to the other party within thirty days from the date of such casualty. Lessor is responsible for determining whether or not the Premises can be reasonably repaired or restored within ninety (90) days within thirty (30) days of the date of the casualty. In such event repairs or restoration cannot be reasonably performed within the time period and either party elects to cancel this Lease, rental shall be apportioned and paid up to the date of such casualty. Lessor shall have no liability to Lessee with respect to any loss sustained by Lessee with respect to Lessee’s property or fixtures.

        In addition, if the Premises are Partially Damaged during the last twelve months of the term of this Lease, either party may cancel and terminate this Lease as of the date the Premises are Partially Damaged by giving written notice to the other party of said election to so cancel and terminate this Lease within 30 days of date the damage occurred and rental shall be accounted for between Lessor and Lessee as of the date of casualty. However, in the event that Lessee has an option to extend or renew this Lease, and the time within which said option may be exercised has not yet expired, Lessee may exercise such option, if it is to be exercised at all or, in the event Lessee has already exercised such option, shall reconfirm such exercise in writing, within twenty (20) days after the Premises are Partially Damaged. If Lessee duly exercises such option, or reconfirms such option, within the twenty (20) day period, Lessor shall promptly proceed to restore the Premises in accordance with the provisions of this paragraph set forth above and diligently pursue said restoration to completion.

CONDEMNATION

    12.        If the whole of the Premises, or such substantial portion thereof as will make Premises unusable for the purposes herein leased, be condemned by any legally constituted authority for any public or quasi-public use or purpose, then in either of said events the term hereby granted shall cease from the time when possession thereof is taken by the condemning authority, and rental shall be accounted for as between Lessor and Lessee as of that date. In the event the portion condemned is such that a minimum of eighty percent (80%) of the Premises can, after restoration and repair, be made useable for Lessee’s purposes, then this Lease shall not terminate; however, the rent shall be reduced equitably to the amount of the Premises taken. In such an event, Lessor shall make such repairs as may be necessary to restore the Premises to its original condition, or as nearly as possible, as soon as the same can be reasonably accomplished, but no longer than ninety (90) days. If such repairs and restoration are not accomplished within such ninety (90) day period, the Lessee may terminate this Lease upon ten (10) days written notice, prior to substantial (more than 85% complete) completion of such repairs and restoration. Such termination, however, shall be without prejudice to the rights of either Lessor, Lessee or both, to recover compensation and damage caused by condemnation from the condemning authority. It is further understood and agreed that neither the Lessee nor Lessor shall have any rights in any award made to the other by any condemnation authority.

ASSIGNMENT AND SUBLETTING

    13.        (1) Lessee covenants and agrees that neither this Lease nor the term hereby granted, nor any part thereof, will be assigned, mortgaged, pledged, encumbered or otherwise transferred, by operation of law or otherwise, and that neither the Premises, nor any part thereof, will be sublet or advertised for subletting or occupied, by anyone other than Lessee, or used for any purpose other than as hereinbefore set forth, without the prior written consent of Lessor, which shall not be unreasonably withheld or delayed. However, Lessor is informed that Lessee may request consent to sublet a portion of the Premises, at some time during the term of this Lease, and again, Lessor’s consent for such shall not be unreasonably withheld or delayed.

    (2)        The consent by Lessor to an assignment or subletting shall not relieve Lessee from obtaining the express consent, in writing, of Lessor to any subsequent assignment or subletting, nor shall it release Lessee from any of its obligations under this Lease, unless agreed to in writing by both Lessor and Lessee.

REMOVAL OF FIXTURES

    14.        Lessee may, if not in default hereunder, prior to the expiration of this Lease, or any extension thereof, remove all trade fixtures and equipment which it has placed in the Premises, provided Lessee repairs all damage to the Premises caused by such removal.

DEFAULT BY LESSEE

    15.        In the event Lessee shall fail to pay the monthly rental by the tenth (10^TH) day of the month and such failure continues for thirty (30) days after Lessee receives written notice from Lessor of such failure or if Lessee is adjudicated as bankrupt; or if Lessee files a petition in bankruptcy under any section or division of the bankruptcy law; or if an involuntary petition is bankruptcy is filed against Lessee, and same is not withdrawn or dismissed within sixty (60) days from the filing thereof; or if a receiver or trustee is appointed for Lessee’s property and the order appointing such receiver or trustee remains in force for sixty (60) days after the entry of such order; or if, whether voluntarily or involuntarily, Lessee takes advantage of any debtor relief proceedings, under any present or future law, whereby the rent or any part thereof is, or is proposed to be, reduced or payment thereof deferred; or if Lessee makes an assignment for the benefit of creditors; or if Lessee’s effects should be levied upon or attached under process against Lessee, not satisfied or dissolved within sixty (60) days after written notice from Lessor to Lessee to obtain satisfaction thereof; or if Lessee shall fail to perform or observe any other covenant, agreement, or condition to be performed or kept by the Lessee under the terms and provisions of this Lease, and such failure shall continue for thirty (30) days after written notice thereof has been given by Lessor to the Lessee; then in any one of such events, Lessor shall have the right, at the option of the Lessor, then or at any time thereafter while such default or defaults shall continue, to elect either: (1) to cure such default or defaults at the expense of Lessee and without prejudice to any other remedies which it might otherwise have, any payment made or expenses incurred by Lessor in curing such default shall bear interest thereon at 18% per annum, or at such maximum legal rate as permitted by Louisiana law, whichever shall be lower, to be and become additional rent to be paid by Lessee within thirty (30) days of written request therefor from Lessor; or (2) to terminate this Lease and upon said termination of this Lease, Lessee shall immediately surrender possession of the Premises to Lessor; or (3) re-enter the Premises and dispossess Lessee and anyone claiming under Lessee, by summary proceedings pursuant to the laws of the State of Louisiana and remove their effects, and take complete possession of the Premises and elect to continue this Lease in full force and effect, but with the right at any time thereafter to declare this Lease terminated and the term ended; or (4) exercise any other remedies or maintain any action permitted to Landlords pursuant to the Laws of the State of Louisiana. After such termination or in such re-entry the Lessor may, under process of law, have all persons and Lessee’s personal property removed from the Premises. Lessee hereby covenants in such event, for itself and all others occupying the Premises under Lessee, to peacefully yield up and surrender the Premises to the Lessor. Should Lessor declare this Lease terminated and the term ended, as provided for herein, the Lessor shall be entitled to recover from Lessee the rental and all other sums due and owing by Lessee to the date of termination, including any rental amounts heretofore waived, plus the costs of curing any of Lessee’s defaults existing at or prior to the date of termination, including reasonable attorney’s fees, plus the deficiency, if any, between Lessee’s rental hereunder and the rental that could be obtained by Lessor on another lease for the balance of the term remaining under this Lease, however, Lessor shall not be obligated to re-let the Premises, but shall use its best efforts to mitigate its damages. Should Lessor, following default as aforesaid, elect to continue this Lease in full force, Lessor may, but shall not be obligated to, rent the Premises by private negotiations, with or without advertising, and on the best terms available for the remainder of the term hereof, or for such longer or shorter period as Lessor shall deem advisable. Lessee shall remain liable for payment of all rentals and other charges and costs imposed on Lessee herein, in the amounts, at the times and upon the conditions as herein provided, but Lessor shall credit against such liability of the Lessee all amounts received by Lessor from such reletting after first reimbursing itself for all reasonable costs incurred in curing Lessee’s defaults and re-entering, preparing and refinishing the Premises for reletting, and reletting the Premises, and for the payment of any procurement fee or commission paid to obtain another tenant, and for all reasonable attorney fees and legal costs incurred by Lessor.

RE- ENTRY BY LESSOR; CUMULATIVE REMEDIES

    16.        No re-entry by Lessor or any action brought by Lessor to oust Lessee from the Premises shall operate to terminate this Lease unless Lessor shall given written notice of termination to Lessee, in which event Lessee’s liability shall be as above provided. No right or remedy granted to Lessor herein is intended to be exclusive of any other right or remedy, and each and every right and remedy herein provided shall be cumulative and in addition to any other right or remedy hereunder or now or hereafter existing in law or equity or by statute.

EXTERIOR SIGNS

    17.        Before erecting any sign on the exterior walls of the building, Lessee shall submit to Lessor, in writing, a design of the type, size and nature of the sign, and shall receive the written approval of Lessor, which approval shall not be unreasonably withheld or delayed. Any such sign shall conform to all laws, ordinances, regulations and restrictive covenants pertaining thereto. Lessee shall be responsible for any damage to the building occasioned by the installation of such sign. Lessee shall place no sign upon the roof of the Premises, nor shall Lessee allow such signs as are permitted under the terms of this clause to be attached to any part of the roof, including the flashing or gutters of the within Premises. Lessee shall remove said sign upon the termination of this Lease and repair any damage to the building caused by the removal of the sign.

EFFECT OF TERMINATION OF LEASE

    18.        No termination of this Lease prior to the normal ending thereof, by lapse of time or otherwise, shall affect Lessor’s right to collect rent for the period prior to termination thereof.

HOLDING OVER

    19.        In the event Lessee remains in possession of the Premises after the expiration of the term of this Lease, without having first extended this Lease by written agreement with Lessor, such holding over shall not be construed as a renewal or extension of this Lease. Such holding over shall be deemed to have created and be construed as a tenancy from month-to-month, terminable on sixty (60) days written notice from either party to the other. The monthly rental to be paid shall be 125% times the monthly rental payable during the last month of the term of the Lease. All other terms and conditions of this Lease shall continue to be applicable for both Lessor and Lessee.

RIGHTS CUMULATIVE

    20.        All rights, powers and privileges conferred hereunder upon the parties hereto shall be cumulative but not restrictive to those given by law.

NOTICES

    21.        Any notices given pursuant to this lease shall be in writing and personally served or sent by registered or certified mail or via other reasonably acceptable courier service to:

(a) Lessor at 423 Magnolia Lane, Mandeville, LA 70471, or such other address as Lessor may hereafter designate in writing to Lessee.

(b) Lessee at 109 Northpark Boulevard, Suite 400, Covington, LA 70433, or such other address as Lessee may hereafter designate in writing to Lessor.

(c) The holder of the Mortgage at such address as may be furnished to Lessee by Lessor.

WAIVER OF RIGHTS

    22.        No waiver by Lessor of any provision hereof shall be deemed to be a waiver of any other provision hereof or of any subsequent breach by Lessee of the same or any other provision. Lessor’s consent to or approval of any act shall not be deemed to render unnecessary the obtaining of Lessor’s consent to or approval of any subsequent act by Lessee. The acceptance of rent hereunder by Lessor shall not be a waiver of any preceding breach by Lessee of any provision hereof other than the failure of Lessee to pay the particular rent so accepted regardless of Lessor’s knowledge of said preceding breach at the time of acceptance of such rent.

FORCE MAJEURE

    23.        In the event that either party hereto shall be delayed or hindered in or prevented from the performance of any act required under this Lease by reason of materially adverse weather conditions, strikes, lockouts, labor troubles, failure of power, restrictive governmental laws or regulations, riots, insurrections, war or other reasons of a like nature not the fault of the party delayed in performing works or doing acts required under the terms of this Lease, then performance of such act shall be excused for the period of the delay, and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay, except as otherwise specifically provided herein to the contrary. The provisions of this Section shall not be applicable to delays resulting from the inability of a party to obtain financing or to proceed with its obligation under this Lease because of a lack of funds.

QUIET POSSESSION

    24.        Lessor warrants that Lessee, on paying the monthly rental installments and other payments provided for hereby, and on keeping, observing, and performing all other terms, conditions and provisions herein contained on the part of the Lessee to be kept, observed, and performed, shall during the full lease term, peaceably and quietly have, hold, and enjoy the Premises for the full term of this lease, subject to the terms, conditions and provisions hereof.

TIME OF ESSENCE

    25.        Time is of the essence of this agreement.

TAXES

    26.        Lessee agrees to pay to Lessor as additional rent the ad valorem taxes, or any other taxes assessed or levied against the real property where the Premises are located, by any municipality, county, or other governmental agency or body, within thirty (30) days after receipt of a notice, in writing, from Lessor, as to the amount of said taxes, accompanied by a copy of the applicable tax bill. If the first or final year of the Lease term does not coincide with the calendar year, which is also the tax year, the amount of taxes for the portion of that year shall be pro-rated for the portion of such year that Lessee was actually in possession of the Premises.

        The provisions hereof shall survive the termination of the Lease.

INSURANCE

    27.        Lessor shall maintain, during the Term hereof, Commercial General Liability Insurance in a commercially reasonable amount, which insures Lessor (and names Lessee as additional insured) against all claims and demands for injury of death of persons or for damage to property, which may be claimed to have occurred on Lessor’s property on which the Premises reside. Lessor shall also maintain “All Risk” fire and extended coverage insurance coverage on the Building in an amount not less than the full replacement cost of the Building.

        Lessee shall maintain, at Lessee’s expense, insurance coverage on all equipment, inventory, fixtures, furniture, appliances and other personal property on the Premises.

        Lessee shall maintain, at all times during the term of this Lease and any renewal hereof, Commercial General Liability Insurance insuring Lessee (and naming Lessor as additional insured) against all claims and demands for injury to, or death of, persons, or damage to property which may be claimed to have occurred upon the Premises in an amount not less than $1,000,000.00, per occurrence of coverage for injury (including death) to one or more persons attributable to a single occurrence and for property damage.

        To the full extent permitted by law and permitted by each party’s insurance carrier, Lessor and Lessee each waives all right of recovery against the other for, and agrees to release the other from liability for, loss or damage to the extent such loss or damage is covered by valid and collectible insurance in effect at the time of such loss or damage; provided however, that the foregoing release by each party is conditioned upon the other party’s carrying insurance with the above described waiver of subrogation, and if such coverage is not obtained or maintained by either party, then the other party’s foregoing release shall be deemed to be rescinded until such waiver is either obtained or reinstated.

        All insurance provided for in this Lease shall be affected under enforceable policies issued by insurers of recognized responsibility licensed to do business in the State of Louisiana.

        If the Lessee provides any insurance required by this Lease in the form of a blanket policy, the Lessee shall furnish proof that such blanket policy complies in all respects with the provisions of this Lease, and that the coverage thereunder is at lease equal to the coverage which would be provided under a separate policy covering only the Premises.

        If the Lessor so requires, the policies of insurance maintained by Lessee shall be payable to the holder of any mortgage, as the interest of such holder may appear, pursuant to a standard mortgagee clause. All such policies shall, to the extent obtainable, provide that any loss shall be payable to the Lessor or to the holder of any mortgage notwithstanding any willful act or gross negligence of the Lessee which might otherwise result in a forfeiture of such insurance. All such policies shall, to the extent obtainable, contain an agreement by the insurers that such policies shall not be canceled without at least thirty (30) days prior written notice to the Lessor and to the holder of any mortgage to whom, loss hereunder may be payable.

        Lessee agrees to pay to Lessor as additional rent for the amount of said insurance premiums for the property, buildings and improvements upon which the Premises are located, within thirty (30) days after receipt of a notice, in writing, from Lessor, accompanied by a copy of the insurance bill for the year being charged to Lessee. If the first or final year of the Lease term does not coincide with the calendar year, the amount of the insurance premium for the portion of that year shall be pro-rated for the portion of such year that Lessee was actually in possession of the Premises.

        The provisions hereof shall survive the termination of the Lease.

SURRENDER OF PREMISES

    28.        At the termination of this Lease, Lessee shall surrender the Premises to Lessor in the same condition as at the commencement of the term of this Lease, normal wear and tear and damage from casualty and/or condemnation only excepted, with all of Lessee’s personal property and signs removed therefrom. Lessee shall arrange a meeting with Lessor’s representative at the Premises for an inspection pertaining to the condition of the property, at which time Lessee shall surrender the keys to Lessor. The Premises shall be left broom-clean.

DEFINITIONS

    29.        “Lessor” as used in this Lease shall include first parties, their heirs, representatives, assigns and successors in title to the Premises. “Lessee” shall include second party, his heirs, representatives, and successors, and if this Lease shall be validly assigned or sublet, shall include also Lessee’s assignees or sublessees, as to the Premises covered by such assignment or sublease, but shall not include any right to exercise any option to extend the term of this Lease. “Lessor” and “Lessee” include male and female, singular and plural, corporation, partnership, or individual, as may be appropriate for the particular parties. This Lease and all instruments or documents relating thereto shall be construed in accordance with the laws of the State of Louisiana. The venue of any action or suit brought in connection herewith shall be in the parish wherein the Premises are located.

WAIVER OF SUBROGATION

    30.        Lessor and Lessee hereby waive any claim which may arise in its favor against the other party hereto during the term of this lease, or any renewal or extension thereof, for any loss or damage to any of its property located within, upon, or constituting a part of the Premises leased hereunder, which loss or damage is covered by a valid and collectible All Risk coverage insurance policy or policies, to the extent that such loss or damage is recoverable under said insurance policy or policies. Lessor and Lessee agree to notify its own insurance company, or companies, which have issued, or will issue to it, All Risk coverage insurance policies for the Premises, or anything located therein, and to have said policies properly endorsed, if necessary, to prevent the invalidation of said insurance coverage by reason of this mutual waiver.

HAZARDOUS MATERIALS

    31.        The term “Hazardous Substances,” as used in this Lease shall mean pollutants, contaminants, toxic or hazardous wastes, or any other substances, the use and/or the removal of which is required or the use of which is restricted, prohibited or penalized by any “Environmental Law,” which term shall mean any federal, state or local law, ordinance or other statute of a governmental or quasi-governmental authority relating to pollution or protection of the environment. Lessee hereby agrees that (I) no activity will be conducted on the Premises that will produce any Hazardous Substance, except for such activities that are part of the ordinary course of Lessee’s business activities (see “Use of Premises”) provided said Permitted Activities are conducted in accordance with all Environmental Laws, Lessee shall be responsible for obtaining any required permits and paying any fees and providing any testing required by any governmental agency; (ii) the Premises will not be used in any manner for the storage of any Hazardous Substances except for the storage of such materials that are used in the ordinary course of Lessee’ business (the “Permitted Materials”) provided such Permitted Materials are properly stored in a manner and location meeting all Environmental Laws; Lessee shall be responsible for obtaining any required permits and paying any fees and providing any testing required by any governmental agency; (iii) no portion of the Premises will be used as a landfill or a dump; (iv) Lessee will not install any underground tanks of any type; (v) Lessee will not allow any surface or subsurface conditions to exist or come into existence that constitute, or with the passage of time may constitute a public or private nuisance; Lessor or Lessor’s representative shall have the right but not the obligation to enter the Premises for the purpose of inspecting the storage, and use of Permitted Materials to ensure compliance with all Environmental Laws, subject to notice to Lessee and Lessee’s supervision. Should it be proven that said Permitted Materials are being improperly stored, used, or disposed of, then Lessee shall immediately take such corrective action as requested by Lessor. Should Lessee fail to commence to take such corrective action within 72 hours, Lessor shall have the right but not the obligation to perform such work and Lessee shall promptly reimburse Lessor for any and all costs associated with said work. If at any time during or after the term of this Lease, the Premises are found to be so contaminated or subject to said conditions, Lessee shall diligently institute proper and thorough cleanup procedures at Lessee’s sole cost, and Lessee agrees to indemnify and hold Lessor harmless from all claims, demands, actions, liabilities, costs, expenses, damages and obligations of any nature arising from or as a result of the use of the Premises by Lessee. The foregoing indemnification and the responsibilities of Lessee shall survive the termination or expiration of this Lease. Notwithstanding any provision herein to the contrary, Lessor hereby warrants, to the best of its knowledge and belief, there exist no hazardous materials in the Premises, the Building where the Premises reside, nor on the land upon which the Premises reside, and Lessee shall not be liable in any way for any breach of Lessor’s warranty herein, whether said breach was known or unknown to Lessor.

PERMITTED MATERIALS: swimming pool and spa chemicals, including, but not limited to, the following chemical families: HYPOCHLORITE; CHLORINATED ISOCYANURATE; HALOGENATED HYDANTOINS

LESSOR DEFAULTS

    32.        In the event of a default by Lessor under the terms of this Lease, Lessor shall 30 days’ after written notice to Lessor from Lessee, or such lesser period as specified in the Lease, to cure such default (unless such default is not capable of cure within such time period, in which event, Lessor shall have such reasonable additional period of time, provided Lessor has commenced such cure within such time period and is diligently pursuing such cure to completion). If Lessor fails to so cure such default, then Lessee may exercise “self help” to cure such default and offset the cost thereof against rent under the Lease.

ATTORNEY’S FEES

    33.        In the event either party hereto shall bring an action or proceeding to enforce the terms hereof or declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action or appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision, adjudication or judgment. The term “Prevailing Party” shall include, without limitation, the party who substantially obtains or defeats the relief sought, as shall include, without limitation, the party who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other party of its claim or defense. The attorneys’ fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all reasonable attorneys’ fees incurred by the Prevailing Party in pursuit or defense of any such action brought by the other party.

DELAY IN COMMENCEMENT

    34.        Lessor estimates that Substantial Completion of the improvements described above will be achieved on or before January 1, 2000. Lessor agrees to use its best commercially reasonable efforts to cause the Premises to be Substantially Completed on or before the target completion date stated above. If Substantial Completion of the Premises has not been achieved by the Target Completion Date for reasons other than delays caused by Force Majeure events (as hereinafter defined, which delays will extend the Target Completion Date and Outside Completion Date accordingly), Lessor shall not be liable to Lessee and the obligations of Lessee under this Lease shall not be thereby affected, except that the Commencement Date shall be delayed until Lessor delivers possession of the Premises to Lessee, and the Lease Term shall be extended by a period equal to the number of days of delay in delivery of possession of the Premises to Lessee. Notwithstanding any provisions herein to the contrary, in the event that Substantial Completion has not been achieved by the Outside Completion Date of March 1, 1999, for reasons other than Force Majeure Events, then Lessee shall be entitled to terminate this Lease by delivering written notice of such election to terminate to Lessor within ten (10) days of the Outside Completion Date, in addition to any other remedy at law or in equity for any delay in Substantial Completion of the Premises beyond the Outside Completion Date.

OCCUPANCY FOR PERMITTED USE:

    35.        In the event that it shall not be possible for Lessee to obtain all of the approvals and permits necessary to use and occupy the Premises for its intended use within ninety (90) days of the execution of this Lease, as stated in Paragraph 8 of this Lease, Lessee shall have the option to cancel this Lease by providing written notice of such to Lessor no later than thirty (30) days after the end of such ninety (90) day period. In the event that Lessee elects to exercise the option to cancel herein granted to it, Lessee shall be relieved and released from all further liability and obligation to Lessor in connection with this Lease, as if the same were never executed.

OPTION TO RENEW:

    36.        Provided that Lessee is not then in default hereunder, Lessor hereby grants Lessee one (1) option to renew this Lease for a period of seven (7) years, beginning on the day following the expiration of the preliminary term hereof and ending on the last day of the 84^TH month thereafter. Lessee must notify Lessor in writing of its intent to exercise this option to renew no later than ninety (90) days prior to the expiration of the Term of this Lease. All of the terms, covenants, conditions and provisions of this Lease shall remain in full force and effect during the renewal term, except that the Base Rent shall be payable at a fair market rental rate for similar properties in the area, and shall be negotiated between Lessor and Lessee.

ENTIRE AGREEMENT

    37.        This Lease and the Exhibits, if any, attached hereto, and forming a part hereof, set forth all of the covenants, promises, agreements, conditions, and understandings between Lessor and Lessee governing the Premises. There are no covenants, promises, agreements, conditions and understandings, either oral or written, between them other than those herein set forth. Except as herein provided, no subsequent alterations, amendments, changes or additions to this Lease shall be binding upon the Lessor and Lessee unless and until reduced to writing and signed by both parties. Submission of this instrument by Lessee to Lessor for examination shall not bind Lessee in any manner, nor constitute an offer for, a reservation of or an option for the Premises, and no lease, contact, option, agreement to lease or other obligation of Lessor shall arise until this instrument is signed by Lessor and delivered to Lessee.

        IN WITNESS WHEREOF, the parties hereto who are individuals have set their hands and seals and the parties who are corporations have caused this instrument to be duly executed by their proper officers as of the day and year first above written.

LESSOR:
S&C Development, LLC
By:

/S/ A. David Cook

LESSEE:
South Central Pool Supply, Inc.
By:

/S/ Rich Polizzotto, Vice President

LEASE AGREEMENT

AMENDMENT NO. ONE

        This Lease Amendment is made and entered into on this the 26^th, day of May, 2000, between S&C Development Company, LLC, a Louisiana limited liability company, (hereinafter referred to as “Lessor”) and South Central Pool Supply, Inc., a Delaware corporation, (hereinafter referred to as “Lessee”),

WITNESSETH:

        WHEREAS, Lessor and Lessee entered into a Lease, dated October 19, 1999 for approximately 12,500 square feet located at 21476 Marion Lane, Mandeville, Louisiana (further described as Section 24, Township 7, South, Range 11, East, St. Tammany Parish, State of Louisiana), which Lease is incorporated herein by reference (hereinafter referred to as the “Lease”).

        WHEREAS, Lessor and Lessee desire to amend said Lease.

        FOR GOOD AND VALUABLE CONSIDERATIONS, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree to the following amendments to the Lease.

    1.        In no event shall the Base Rent for the renewal period referenced in Paragraph 36 of the Lease be less than the Base Rent in effect at the time Lessee shall exercise its rights under Paragraph 36.

        All other terms and conditions of the Lease not affected by this Amendment shall remain in full force and effect, binding on both parties.

        In witness whereof, Lessor and Lessee have duly executed this Amendment on the day and year below.

	Lessor: S&C Development Company, LLC
/S/ Angela Collier	/S/ A David Cook	5/30/00
Witness	A David Cook	Date
	Lessee: South Central Pool Supply, Inc.
/S/ Julie Zavinthsanos	/S/ Rich Polizzotto	5/26/00
Witness	Rich Polizzotto - Vice President	Date

MANDEVILLE, LOUISIANA

LEASE AGREEMENT

BETWEEN

S& C DEVELOPMENT COMPANY, LLC, a Louisiana limited liability company

(“LANDLORD”)

AND

SCP DISTRIBUTORS, LLC, a Delaware limited liability company

(“TENANT”)

TABLE OF CONTENTS

1.		AGREEMENT OF LEASE	1
	1.1	Pro Rata Share	1
2.		TERM; OPTION TO EXTEND; AND TERMINATION OF LEASE	1
	2.1	Primary Term	1
	2.2	Adjustment of Commencement Date	1
	2.3	Option to Extend	1
	2.4	Acceleration Option	1
3.		RENT & OTHER CHARGES	1
	3.1	Rent	1
	3.2	Rent Abatement	2
	3.3	Late Fees	2
	3.4	Prepaid Rent and Security Deposit	2
4.		OTHER TENANT AND LANDLORD CHARGES	2
	4.1	Landlord Taxes	2
	4.3	Utilities	2
5.		USE AND OCCUPANCY	3
	5.1	Certificate of Occupancy	3
6.		WARRANTIES	3
7.		GOVERNMENTAL ORDERS	3
8.		MAINTENANCE AND REPAIRS	4
	8.1	Landlord	4
	8.2	Tenant	4
	8.3	Delivery at Commencement	4
	8.4	Common Area Maintenance	5
9.		ACCESS	5
	9.1	Pre-Commemcement Date to Access to Premises	5
	9.2	Landlord's Right to Access	5
10.		ALTERATIONS AND IMPROVEMENTS TO PREMISES; SIGNAGE	5
	10.1	Alterations and Improvements	5
	10.2	Signage	5
11.		DAMAGE OR DESTRUCTION	5
12.		CONDEMNATION	6
13.		INDEMNITY AND WAIVER OF CLAIMS	6
14.		INSURANCE	7
	14.1	Tenant's Insurance	7
	14.2	Landlord's Insurance	7
	14.3	Proof of Policy	7
15.		WAIVER OF SUBROGATION	7
16.		LIEN	7
17.		ASSIGNMENT, SUBLETTING	7
18.		SUBORDINATION; ESTOPPEL CERTIFICATE	8
19.		FIXTURES AND PERSINAL PROPERTY; SURRENDER	8
	19.1	Removal of Tenant Property	8
	19.2	Surredering of Premises	8
20.		EVENTS OF DEFAULT	8
	20.1	Default by Tenant	8
	20.2	Default by Landlord	8
21.		REMEDIES	9
	21.1	Landlord's Remedies	9
	21.2	Tenant's Remedies	9
22.		ENVIORMENTAL WARRANTY AND INDEMNIFICATION AGREEMENT	9
23.		HOLDING OVER	10
24.		MISCELLANEOUS	10
	24.1	Entire Agreement	10
	24.2	Notices	11
	24.3	Non-Waiver	11
	24.4	Attorneys Fees	11
	24.5	Parties Bound	11
	24.6	Survival of Obligations	11
	24.7	Governing Law	11
	24.8	Time	11
	24.9	Waiver of Trial by Jury	12
	24.10	Quiet Enjoyment	12
	24.11	Force Majeure	12
	24.12	Authority	12
	24.13	Parking	12
	24.14	Storage	12
	24.15	Landlord's Lien Waiver	12
	24.16	Submission of Lease	12

LEASE AGREEMENT

        This Lease Agreement (this “Lease”) is made and entered into as of the 16^th day of January, 2002, by and between S & C DEVELOPMENT COMPANY, LLC, a Louisiana limited liability company (“Landlord”), and SCP DISTRIBUTORS, LLC, a Delaware limited liability company (“Tenant”).

1. AGREEMENT OF LEASE

        Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, for the term and upon the conditions and agreements hereinafter set forth, the following described premises:

Approximately 8,604 square feet consisting of bulk warehouse space (“Premises”) located in a building consisting of 22,977 square feet bearing the municipal address 68399 James Street, Suite C, Mandeville, Louisiana 70471 (the “Building”), and all other improvements located on the property, including all of the driveways, sidewalks, parking spaces, and the truck loading dock, depicted on Exhibit A attached hereto and made a part hereof and legally described on Exhibit B (the “Land”).

1.1 Pro Rata Share

        Tenant’s pro rata share of the Building is 37.45%, which is the quotient (expressed as a percentage), derived by dividing the square footage of the Premises by the square footage of the Building, or building complex as applicable.

2. TERM; OPTION TO EXTEND; AND TERMINATION OF LEASE

2.1 Primary Term

        The term (“Primary Term”) of this Lease shall be for a period forty-seven (47) months commencing on February 1, 2002 (the “Commencement Date”). The Primary Term of this Lease shall expire at 11:59 p.m. on December 31, 2006 (the “Expiration Date”).

        However, if Landlord is required to Substantially Complete (defined in Section 2.2) any Landlord Work (defined herein) prior to the Commencement Date under the terms of a Work Letter (defined in Exhibit C): (1) the date set forth in the prior sentence as the “Commencement Date” shall instead be defined as the “Target Commencement Date”; and (2) the actual “Commencement Date” shall be the date on which the Landlord Work is Substantially Complete, as determined by Section 2.2. “Landlord Work” means the work, if any, that Landlord is obligated to perform in the Premises pursuant to a separate work letter agreement (the “Work Letter”), if any, attached as Exhibit C. Notwithstanding, the Termination Date shall not be extended and remain December 31, 2006.

        If Landlord does not deliver possession of the Premises to Tenant within sixty (60) days after the first date specified in Paragraph 1 of this Section 2.1, Tenant may elect to cancel the Lease by giving written notice to Landlord within ten (10) days after the sixty (60) day period ends. If Tenant gives such notice, the Lease shall be canceled effective as of the date of its execution, and no party hereto shall have any obligations, one to the other, and all monies, if any, paid by Tenant in advance will be refunded within ten (10) days of such cancellation. If Tenant does not give such notice, Tenant’s right to cancel the Lease shall expire and the Primary Term shall commence upon the delivery of possession of the Premises to Tenant. If delivery of possession of the Premises to Tenant is delayed, Landlord and Tenant shall, upon delivery, execute an amendment to this Lease setting forth the Commencement Date and Expiration Date of the Lease.

2.2 Adjustment of Commencement Date

        The Landlord Work shall be deemed to be “Substantially Complete” on the date that all Landlord Work has been performed except for punch list items which do not prevent in any material way the use of the Premises for the purposes for which they were intended, and upon receipt of a Certificate of Occupancy.

2.3 Option to Extend

        Tenant shall have the option (the “Option”) to extend the Primary Term of the Lease for one (1) additional term of seven (7) years (the “Extended Term”), on all of the same terms and conditions set forth herein. To exercise the Option, Tenant shall notify Landlord in writing ninety (90) days prior to the expiration of the Primary Term that Tenant intends to extend the Primary Term through the Extended Term.

2.4 Acceleration Option

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3. RENT & OTHER CHARGES

3.1 Rent

        This Lease is made for and in consideration of rent commencing upon the Commencement Date and continuing throughout the Primary Term or the Extended Term, as applicable, payable in equal monthly installments (“Rent”). The schedule of monthly installments of Rent payable with respect to the Premises during the Primary Term is the following:

Tenant shall pay Landlord the sum of $193,769.25 as Rent for the Premises during the Primary Term in forty-seven (47) monthly installments as follows:

A.         Forty-seven (47) equal installments of $4,122.75 each payable on or before the first day of each month during the period beginning February 1, 2002 and ending December 31, 2006.

        Each installment of Rent shall be due and payable on or before the first day of each calendar month during the Primary Term and the Extended Term, as applicable, at 328 Twin Rivers Drive, Covington, LA 70433 or at such other place as Landlord may from time to time designate in writing.

        Rent for partial months shall be prorated to reflect the period of such month that Tenant was actually in possession of the Premises. If the Commencement Date occurs on a day other than the first day of a calendar month, the Rent due for the first calendar month of the Primary Term or Extended Term, as applicable, will be prorated on a per diem basis and paid to Landlord on the Commencement Date, and the Primary Term or the Extended Term, as applicable, will be extended to terminate on the last day of the calendar month in which the Expiration Date occurs.

3.2 Rent Abatement

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3.3 Late Fees

        If Tenant fails to pay the foregoing Rent to Landlord on or before the 10th day of the month in which it is due, in addition to all other rights and remedies that Landlord may have hereunder, Landlord may assess a “late charge” on such amount equal to 5% of the then delinquent installment of Rent which late fee will not be subject to any interest charges.

3.4 Prepaid Rent and Security Deposit

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4. OTHER TENANT AND LANDLORD CHARGES

4.1 Landlord Taxes

        During the Primary Term and Extended Term, Landlord shall pay promptly when due to the appropriate governmental agency or authority all ad valorem, real estate and public improvement taxes, impositions or assessments in connection with the Premises (“Landlord Taxes”). In the event Landlord fails to pay the Landlord Taxes when due and payable, Tenant shall have the right, but not the obligation, to pay the Landlord Taxes on Landlord’s behalf, and to collect from Landlord the amount paid plus interest at the rate of 10% per annum from the date of payment until repaid. Landlord shall pay said amount within thirty (30) days of receipt of written demand from Tenant. If Landlord fails to reimburse Tenant within thirty (30) days, Tenant may deduct such amount from the payment of Rent. For purposes hereof, the Landlord Taxes for any year shall be the Landlord Taxes that are due for payment or paid in that year rather than the Landlord Taxes that are assessed, become a lien or accrue during such year. Tenant shall reimburse Landlord for it’s pro rata share of the Landlord Taxes paid by Landlord within thirty (30) days after Landlord’s written request therefor. Landlord shall provide Tenant with a copy of the actual tax bill and proof of payment. The Landlord Taxes will be prorated between Landlord and Tenant so that Tenant will be responsible only for the Landlord Taxes from (i) the Date of Commencement through December 31, 2002 for the first calendar year, and (ii) January 1 of the last calendar year until the Expiration Date or other termination date for the last calendar year, so that Tenant will be responsible only for such tax or assessment as may be attributable to the period of time that Tenant was actually in possession of the Premises.

        If the Landlord Taxes are assessed against the Premises jointly with other property not constituting a part of the Premises, the Landlord Taxes for such years shall be equal to the amount bearing the same proportion to the aggregate assessment that the total square feet of the Premises in the property bears to the total square feet of the Premises included in the joint assessment.

4.3 Utilities

        Tenant shall be solely responsible for and shall promptly pay all charges for electricity, gas, water, sewer and all other utilities used upon or furnished to the Premises and used by the Tenant. If some utilities or services are not separately metered and used by other tenants of the Building, then Tenant shall pay its pro rata share of such bills. Landlord is solely responsible for ensuring the Premises are in such condition that the utility companies can properly connect and provide all of the services used by and in connection with the Premises during the term of the Lease.

5. USE AND OCCUPANCY

        Tenant shall use the Premises for Tenant’s wholesale distribution operations, which may operate on a 24-hour a day schedule, for swimming pool and spa related products, equipment, chemicals and supplies and all other lawful uses related thereto.

        Tenant shall not do or permit to be done in or about the Premises anything that is illegal or unlawful or that is of an inherently dangerous nature. Tenant shall obtain all permits, licenses, certificates or other authorizations and any renewals, extensions or continuances of the same required in connection with the lawful and proper use of the Premises and shall pay when due all taxes upon its merchandise, stock, fixtures, equipment and leasehold improvements located on the Premises. 5.1 Certificate of Occupancy; Permits.

        If required, Landlord shall obtain a Certificate of Occupancy from the municipally in which the property is located prior to occupancy of the Premises. Landlord may apply for a Certificate of Occupancy prior to the Commencement Date and, if Landlord is unable to obtain a Certificate of Occupancy, Tenant shall have the right to terminate this Lease by written notice to Landlord if Landlord or Tenant is unwilling or unable to cure the defects which prevented the issuance of the Certificate of Occupancy. Landlord may, but has no obligation to, cure any such defects, including any repairs, installations, or replacements of any items, which are not presently, existing on the Premises, or which have not been expressly agreed upon by Landlord in writing. All monies, if any, paid by Tenant in advance will be refunded within ten (10) days of such termination.

        Tenant shall obtain all permits, licenses, and authorizations (“Permits”) from all applicable governing agencies having jurisdiction and authority over Tenant’s occupancy and use of the Premises to insure that Tenant’s use and occupancy of the Premises is permitted by all applicable governing agencies, the provisions of this Lease, and allow Tenant to reasonably conduct its normal business operations. All permits shall include, but shall not be limited to those required the presence, storage, and handling of the Hazardous Materials, Tenant has on site and which are subject to permit requirements. If Tenant is unable to obtain such Permits, Tenant shall have the right to terminate this Lease by written notice to Landlord; if either Landlord or Tenant is unwilling or unable to cure the defects which prevented the issuance such Permits. If this Lease is so terminated, all monies, if any, paid by Tenant in advance will be refunded within ten (10) days of such termination.

6. WARRANTIES

        Notwithstanding any requirements due to Tenant’s storage of permitted Hazardous Materials (as defined in Section 22 herein), Landlord represents and warrants that, at the commencement of this Lease, the Premises and all improvements thereon shall be in compliance with all applicable laws, statutes, ordinances, requirements, building codes, fire and zoning codes and/or local, city, state and federal regulations, including the American with Disabilities Act (“ADA”) (collectively “Laws”) of all governmental authorities with jurisdiction, and Landlord shall be responsible for curing all breaches of this representation and warranty at Landlord’s sole cost and expense, throughout the term of the Lease, and any extensions thereof. Tenant shall immediately notify Landlord in writing upon Tenant’s discovery that such a breach exists, along with all supporting information and documentation.

        Landlord further warrants that to its knowledge, the Premises, Building, and the Land upon which the Premises reside are free from the presence of any Hazardous Materials (as defined in Section 22 herein) contamination at the commencement of this Lease and Landlord shall be responsible to cure any breach of said warranty at Landlord’s sole cost and expense, and Tenant shall not be liable in any way for any breach of Landlord’s warranty herein, whether said breach was known or unknown to Landlord.

        However, if any breach of Landlord’s warranties herein exists and either the breach of the Landlord’s warranty and representation itself, or the cure of such a breach prevents Tenant from reasonably conducting its normal material business operations for a period greater than forty-five (45) days, Tenant may terminate this lease by providing Landlord thirty (30) days written notice no more than forty (45) days from the date Tenant and/or Landlord discover said breach and/or reasonably determine that the cure of such breach will cause the obstruction of Tenant’s business operations, as stipulated above. In the event Tenant does not choose to terminate the Lease under this stipulation and upon Landlord’s receipt of written notice of such from Tenant or the lapse of the forty-five (45) day period prescribed herein, Landlord shall immediately commence to cure said breach, at Landlord’s sole cost and expense and this Lease shall remain in full force and effect. In addition, Tenant may pursue any and all other remedies available in equity or at law due to Landlord’s breach.

7. GOVERNMENTAL ORDERS

        Tenant agrees, at its own expense and solely in relation to those portions of the Premises which Tenant is required to maintain or repair under Section 8.2 to promptly comply with all requirements of any legally constituted public authority made necessary by reason of Tenant’s specific use of the Premises. Notwithstanding the foregoing, Tenant shall not be liable for (a) repairs, alterations, replacements or retrofitting required by ADA; (b) removal or abatement of asbestos containing materials (“ACMs”); (c) repairs, alterations or replacements required to comply with federal, state or local indoor air quality laws, rules or regulations; (d) repairs or replacements incident to CFC conversions for heating and cooling systems; (e) installation of fire sprinkler systems; or (f) repairs, alterations or replacements described in Section 8. Landlord agrees to promptly comply with any other governmental or regulatory requirements if not made necessary by reason of Tenant’s occupancy of the Premises or relating to those portions of the Premises which Landlord is required to maintain or repair under Section 8.

8. MAINTENANCE AND REPAIRS

8.1 Landlord

        Landlord shall maintain, repair, and replace at its sole cost and expense: (i) the Building’s foundation and the structural soundness of the Building’s roof and floor, and the Building’s exterior walls and doors (excluding the interior surface of the exterior walls) except damage caused to the exterior walls by Tenant’s forklift or the negligence of Tenant; (ii) the downspouts and gutters, (iii) water and sewer pipes located underground or in the slab, sidewalks, parking lots and other vehicular access and maneuvering areas; gas lines and electrical services up to the point of entry into the Building; (iv) all of the other improvements on the land including the loading docks, sidewalks, driveways and parking areas; (v) the heating and air conditioning equipment (ordinary maintenance will be provided by Tenant); (vi) the water heater (ordinary maintenance will be provided by Tenant); (vii) Building fire/life safety and sprinkler and alarm systems; and (viii) ADA compliance (collectively, the “Landlord Repairs”). Landlord shall be responsible for any repairs or replacements which are structural in nature or which are extraordinary or capital in nature, which will increase the value of the Premises subsequent to the end of the Primary Term or Extended Term, and any other repairs not expressly delegated to Tenant in this Lease. Further, Landlord shall make all repairs and restorations made necessary by fire or other peril covered by the standard extended coverage endorsement on fire insurance policies; provided, however, that Tenant shall reimburse Landlord upon demand for the cost of repairing any damage to the Premises caused by the gross negligence or the deliberate act of Tenant, its employees, agents or invitees. Tenant shall promptly give Landlord notice of any repair required by Landlord pursuant to this Section 8.1, after which Landlord shall perform the reported repairs within ten (10) business or sooner if the reported damage requiring repair compromises the safety of Tenant, its employees or customers, or Tenant’s property within the Premises. If Landlord fails to make any of the Landlord Repairs, Tenant may make them at the expense of Landlord and Tenant may deduct such expenses from the payment of Rent. Landlord warrants the Premises are in compliance with all applicable building codes, local, city, state and federal regulations, laws, statutes, and ordinances in effect at the commencement of the Lease.

8.2 Tenant

        Subject to the Landlord Repairs and excepting ordinary and reasonable wear and tear and damage by casualty, Tenant shall, at its sole cost and expense, maintain in good repair and in a neat, clean and tenantable condition: (i) the interior of the Building; (ii) plumbing, water and sewer lines from the point of entry into the Premises; (iii) interior doors, including frames and hardware; (iv) lighting fixtures; (v) electrical switches and receptacles; (vi) plumbing fixtures; (vii) ceilings; (viii) window glass; (ix) repair and maintenance of the heating and air conditioning equipment; (x) repair and maintenance of the water heater; and (xi) interior walls. It is the intent of the parties that Tenant shall only be required to make minor repairs and not repairs or replacements which are structural in nature, which are extraordinary or capital in nature, which will increase the value of the Premises subsequent to the end of the Primary Term or Extended Term. In addition, Tenant shall not be required to repair latent defects in the Premises. Further, Tenant shall make all repairs necessitated by the negligence or deliberate act of Tenant, its employees, agents or invitees. Tenant shall keep the Premises neat and free of trash, scraps, materials, products used in its business. In the event Tenant fails to make any repairs, or maintain the Premises in accordance with the provisions of this Lease, the Landlord shall make such repairs, or maintenance, and bill Tenant for the cost of same. Tenant shall pay said amount within thirty (30) days of receipt of written demand from Landlord.

        Tenant shall, at all times, keep the exterior of the Premises free and clear of all trash, pallets, debris, glass, cartons, or any other unsightly matter caused by reason of Tenant or Tenant’s customers or invitees. Further, Tenant shall not permit or suffer any noise, smoke or odor which will constitute a public or private nuisance.

8.3 Delivery at Commencement

        At the Commencement Date, Landlord shall deliver the Premises and all equipment, Building systems and Alterations thereon, including all lamps, bulbs, ballasts and starters and those items required to be maintained and repaired by Tenant, in good working condition to Tenant. Landlord shall warrant the condition of the Building including each Building system and equipment serving the Premises for a period of six (6) months following the Commencement Date hereof. During this six (6) month period, Tenant shall have no obligation to repair or replace, nor shall Tenant bear any responsibility for any portion of the cost of any repair, to any system, piece of equipment or Alterations serving the Premises (except light bulb replacement), unless the same is necessitated by the gross negligence or willful misconduct of Tenant. At all times during the Primary Term and the Extended Term hereof, Tenant shall have the benefit of any and all warranties in effect and held by Landlord on the equipment and systems for which Tenant is responsible to maintain and repair.

8.4 Common Area Maintenance

        Landlord shall be responsible, at all times, for the maintenance, repair, and snow removal of those areas provided for the common use or benefit of all tenants and/or the public. Tenant shall reimburse Landlord its pro rata share of common area maintenance within fifteen (15) days after Tenant receives a written statement for such expense. Landlord shall provide Tenant with a copy of the actual bills. The common area charges will be prorated between Landlord and Tenant so that Tenant will be responsible only for the Landlord’s Insurance from (i) the Date of Commencement through December 31, 2002 for the first calendar year, and (ii) January 1 of the last calendar year until the Expiration Date or other termination date for the last calendar year, so that Tenant will be responsible only for such expenses as may be attributable to the period of time that Tenant was actually in possession of the Premises.

9. ACCESS

9.1 Pre-Commencement Date Access to Premises

        Landlord shall permit Tenant access to the Premises prior to the Commencement Date for the purpose of setting up storage racks, trade fixtures and other equipment for the operation of Tenant’s business, and all of the terms and conditions of this Lease shall apply to such prior period, except that Tenant will not have to pay any Rent during such pre-Commencement Date period.

9.2 Landlord’s Right to Access

        Landlord has the right with no less than 24 hours notice to Tenant, bona fide emergencies excepted, to enter the Premises periodically and with no less than 24 hours notice to Tenant, bona fide emergencies excepted, shall have access to the Premises during normal business hours for inspection or in connection with the improvement or repair of and the providing of utilities and other services to the Premises.

10. ALTERATIONS AND IMPROVEMENTS TO PREMISES; SIGNAGE

10.1 Alterations and Improvements

        Tenant may make any and all additions, modifications, improvements or alterations (collectively, “Alterations”) to the Premises that it deems necessary for the use and occupancy of the Premises, without Landlord’s consent if the cost of such Alterations does not exceed $5,000.00; or if in excess of $5,000.00, with Landlord’s prior written consent, which shall not be unreasonably withheld or delayed. Landlord’s failure to respond to Tenant’s request to make Alterations within fifteen (15) days of said request shall be deemed consent. Landlord shall make all repairs, alterations or improvements that Landlord may reasonably deem necessary for the preservation, safety or improvement of the Premises; provided, however, that in so doing Landlord shall not unreasonably interfere with Tenant’s use and occupancy of the Premises. All Alterations made by Tenant, no matter how affixed or attached to the Premises, except for plumbing, lighting, heating and cooling systems, and such improvements that support the structure of the Building on the Premises, shall remain the property of the Tenant and may, at Tenant’s sole option be removed by Tenant at or before the expiration of the Primary Term or Extended Term, as applicable. Tenant, however, shall have no obligation at the expiration of the Primary Term or Extended Term or other termination of this Lease, to remove any Alterations to the Premises made by the Tenant with Landlord’s prior consent. In the event Tenant does not remove its Alterations to the Premises at the expiration of the Primary Term or Extended Term or other termination of this Lease, then Tenant shall surrender the Premises, including the Alterations, to Landlord in good order and condition, ordinary wear and tear and damage by casualty excepted. Notwithstanding, in the event Tenant does remove its Alterations within ninety (90) days of the expiration of the Primary Term, Extended Term or other termination of this Lease and such removal damages the Premises, then Tenant shall repair any such damage.

10.2 Signage

        Tenant may display in, on, or above the Premises any sign or decoration, the nature of which is permitted by applicable law and is not dangerous, unsightly or detrimental to the Premises. At the termination of this Lease, Tenant shall remove any signs it has placed on the Premises during the Primary Term or the Extended Term, repairing any damage caused thereby.

11. DAMAGE OR DESTRUCTION

        Tenant shall give Landlord immediate notice if the Premises is damaged or destroyed by fire, storm, lightning, earthquake or any other casualty. Landlord must notify Tenant within ten (10) days of receipt of notice of the occurrence of such casualty as to whether the Premises can be reasonably restored within ninety (90) days from the date of casualty. If the Premises are damaged or destroyed to such an extent as to render the Premises wholly untenantable, this Lease shall terminate as of the date of such casualty and all rent shall be accounted for as of such date. If the Premises are damaged, but not wholly destroyed by any such casualties to such an extent as to render the same untenantable in substantial part (40%), and cannot reasonably be restored within ninety (90) days from the date of casualty, Landlord or Tenant may thereafter terminate this Lease by providing the other written notice of thereof within fifteen (15) days. If the Premises can reasonably be restored within ninety (90) days from the date of casualty, Landlord shall promptly commence said restoration and repair at its own expense and work diligently to complete same within the ninety (90) days, and this Lease shall continue in full force. Landlord shall use its diligent, good faith efforts to make such repair or restoration in such manner as not to unreasonably interfere with Tenant’s use and occupancy of the Premises. In addition, Landlord agrees to use reasonable efforts to assist Tenant in finding temporary substitute space, including available space owned by Landlord. Landlord shall submit initial plans and specifications, and any changes thereafter, for Tenant’s review and approval. Tenant shall have the right to inspect periodically the restoration and repair work. All repairs and restoration of the Premises shall be in compliance with all Laws of all governmental authorities having jurisdiction over the Premises.

        Tenant at Tenant’s expense, except if same is necessitated by Landlord’s acts or omissions, shall promptly perform, subject to delays arising from the collection of insurance proceeds, or from Force Majeure events, all repairs or restoration not required to be done by Landlord and shall promptly re-enter the Premises and commence doing business in accordance with this Lease.

        Notwithstanding the foregoing, either party may terminate this Lease if the Premises are substantially damaged during the last year of the Primary Term or the Extended Term and Landlord reasonably estimates that it will take more than one (1) month to repair such damage.

        If (a) the Property is damaged by fire or other casualty thereby causing the Premises to be untenantable or (b) the Premises are partially damaged by fire or other casualty, the Rent shall be proportionally abated to the extent of any actual loss of use of the Premises by Tenant.

12. CONDEMNATION

        If all of the Premises shall be acquired by the right of condemnation or eminent domain for any public or quasi-public use or purpose, or sold to a condemning authority under threat of condemnation, then the term of this Lease shall cease and terminate as of the date of title vesting in such proceeding (or sale) and all rent, if any, shall be paid up to that date.

        In the event of a partial taking or condemnation and Tenant determines that the remaining portion can be used to facilitate its wholesale distribution activities, this Lease shall continue in full force and effect but with an equitable reduction or abatement of rent, taxes and other charges payable by Tenant. Landlord shall promptly commence said restoration and repair as may be necessary to restore the Premises to its original condition, or as nearly as possible, as soon as the same be reasonably accomplished at its own expense and work diligently to complete same, but no longer than ninety (90) days. If such repairs and restoration are not accomplished within such ninety (90) day period, Tenant may terminate this Lease upon ten (10) days written notice, prior to substantial completion (more than 85% complete) of such repairs and restoration. Such termination, however, shall be without prejudice to the rights of Landlord, Tenant or both, to recover compensation and damage caused by condemnation from the condemning authority.

        In addition, Landlord agrees to use reasonable efforts to assist Tenant in finding temporary substitute space, including available space owned by Landlord. Landlord shall submit initial plans and specifications, and any changes therefor to Tenant for review and approval. Tenant shall have the right to inspect periodically the restoration and repair work. Landlord warrants that all repairs and restoration of the Premises shall be in compliance with all Laws of all governmental authorities having jurisdiction over the Premises.

        In the event of any condemnation, taking, or sale, whether whole or partial, Landlord and Tenant shall each be entitled to receive and retain such separate awards and portions of lump sum awards as may be allocated to their respective interests in any condemnation proceedings, or as may be otherwise agreed. Termination of this Lease shall not affect the right of the parties to such awards.

13. INDEMNITY AND WAIVER OF CLAIMS

        Except to the extent caused by the negligence or willful misconduct of Landlord or its trustees, members, principals, beneficiaries, partners, officers, directors, employees, mortgagee(s) and agents (“Landlord Related Parties”), Tenant shall indemnify, defend and hold Landlord harmless against all claims for injuries to persons or damages to property by reason of Tenant’s use or occupancy of the Premises, and all expenses incurred by Landlord because thereof, including reasonable attorneys’ fees and court costs, but Tenant shall not be liable for the acts of any other tenants of Landlord’s property.

        Except to the extent caused by the negligence or willful misconduct of Tenant or any Tenant Related Parties (defined below), Landlord shall indemnify, defend and hold Tenant, its trustees, members, principals, beneficiaries, partners, officers, directors, employees and agents (“Tenant Related Parties”) harmless against and from all liabilities, obligations, damages, penalties, claims, actions, costs (including environmental clean-up costs and response costs), charges and expenses, including, without limitation, reasonable attorneys’ fees and expenses of litigation, and other professional fees, arising during or after the Primary Term or Extended Term: (a) as a result of any violation by Landlord or prior owners or occupants of the Premises of any applicable federal, state or local environmental laws or regulations, as now or hereinafter in effect, regulating, relating to or imposing standards of conduct concerning any Hazardous Materials; or (b) as a result of the presence, disturbance, discharge, release, removal or cleanup of Hazardous Materials or as a result of environmental contamination or other similar conditions which existed prior to commencement of the Primary Term; or (c) as a result of any violation of requirements imposed by ADA; or (d) as a result of any of Landlord’s representations and warranties being untrue. These indemnities shall survive the expiration, cancellation or termination of the Lease.

14. INSURANCE

14.1 Tenant’s Insurance

        Tenant shall carry and maintain the following insurance (“Tenant’s Insurance”), at its sole cost and expense: commercial general liability insurance for bodily injury, personal injury and property damage applicable to the Premises and its appurtenances providing, on an occurrence basis, a minimum combined single limit of $1,000,000.00; and property insurance covering all of Tenant’s trade fixtures, equipment, furniture and other personal property within the Premises (“Tenant’s Property”). At Tenant’s option, Tenant may elect to provide fire and extended coverage insurance for the Premises at the actual replacement cost, excluding foundation and excavation costs, as determined by Landlord.

14.2 Landlord’s Insurance

        If Tenant does not elect to provide fire and extended coverage insurance for the Premises, Landlord covenants and agrees that it will procure and maintain during the Primary Term and Extended Term, property insurance for the Premises against loss by all risk, including flood, wind and earthquake, if required, for the full replacement cost of the Premises and Building and all of the items included in the leasehold improvements constructed in the Premises (collectively, the “Improvements”), and commercial general liability insurance in a combined single limit amount of not less than $1,000,000 insuring against injury or death to any person or persons and damage to property (“Landlord’s Insurance”). Such policy shall provide protection against loss of rents, and all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, special extended perils, sprinkler leakage and any other perils which Landlord deems reasonably necessary. Tenant shall reimburse Landlord its pro rata share of Landlord’s Insurance within fifteen (15) days after Tenant receives a written statement for such insurance. Landlord shall provide Tenant with a copy of the actual bill and proof of payment. The Landlord’s Insurance will be prorated between Landlord and Tenant so that Tenant will be responsible only for the Landlord’s Insurance from (i) the Date of Commencement through December 31, 2002 for the first calendar year, and (ii) January 1 of the last calendar year until the Expiration Date or other termination date for the last calendar year, so that Tenant will be responsible only for such insurance as may be attributable to the period of time that Tenant was actually in possession of the Premises.

14.3 Proof of Policy

        Reputable and solvent domestic insurers licensed to do business in Louisiana shall issue all insurance required to be carried by both parties hereunder. Tenant’s commercial general liability insurance policies shall name Tenant as a named insured and Landlord (or any successor) and their respective members, principals, beneficiaries, partners, officers, directors, employees, and agents, and other designees of Landlord as the interest of such designees shall appear, as additional insureds. All policies of Tenant’s Insurance shall contain endorsements that the insurer(s) shall give Landlord and its designees at least thirty (30) days’ advance written notice of any cancellation, termination or lapse of insurance. Tenant shall provide Landlord with a certificate of insurance evidencing Tenant’s Insurance prior to the earlier to occur of the Commencement Date or the date Tenant is provided with possession of the Premises for any reason. Landlord shall provide Tenant with a copy of a certificate of insurance evidencing Landlord’s Insurance upon request. All policies of Landlord’s Insurance shall contain endorsements that the insurer(s) shall give Tenant and its designees at least thirty (30) days’ advance written notice of any cancellation, termination or lapse of insurance.

15. WAIVER OF SUBROGATION

        Notwithstanding anything in this Lease to the contrary, as long as their respective insurers so permit, Landlord and Tenant shall cause their respective insurance carriers to waive any and all rights of recovery, claim, action or causes of action against the other and their respective trustees, principals, beneficiaries, partners, members, officers, directors, agents, advisors, shareholders, and employees, for any loss or damage that may occur to Landlord or Tenant or any party claiming by, through or under Landlord or Tenant, as the case may be, with respect to Tenant’s property, the Premises, any additions or improvements to the Premises, or any contents thereof.

16. LIEN

        Tenant will keep the Premises free and clear of all mechanics and material men’s liens and other liens on account of work done for or by Tenant or persons claiming under it. Should any such lien be filed against the Premises, Tenant shall, within thirty (30) days of notice from Landlord of the filing of the lien, fully discharge the lien by settling the claim which resulted in the lien or by bonding or insuring over the lien in the manner prescribed by the applicable lien Law.

17. ASSIGNMENT, SUBLETTING

        Tenant shall not assign or sublet the Premises without first obtaining Landlord’s prior written consent, which shall not be unreasonably withheld or delayed, and any attempt to so assign or sublet without Landlord’s written consent shall be null and void; and if any such assignment or sublease is made with the written consent of Landlord, Tenant shall nevertheless remain liable to Landlord for payment of rent according to the terms hereof and for due performance of all the terms, covenants and conditions of this Lease unless otherwise agreed to in writing by both parties.

        The following types of transactions shall not constitute an assignment or subletting for purposes of this Section: (a) a sale of all or substantially all of the Tenant’s business; (b) an assignment to a related entity or an entity controlled by the same principals that control the Tenant; (c) an assignment resulting from a merger or consolidation of a conversion of the Tenant’s form of business entity into another; and (d) a sale of substantially all of the stock (or other equity interests) in the Tenant.

        If written consent is once given by Landlord to any such assignment or subletting, such consent shall not operate as a waiver of the necessity for obtaining Landlord’s written consent to any subsequent assignment or subletting.

18. SUBORDINATION; ESTOPPEL CERTIFICATE

        Tenant’s rights shall be subject to any bona fide mortgage or deed to secure debt which is now, or may hereafter be placed upon the Premises by Landlord, and Tenant agrees, at Landlord’s cost, to execute and deliver such documentation as may be reasonably required by any such to effect any subordination. Provided, however, as a condition to such subordination, Landlord must secure from each mortgagee a nondisturbance agreement acceptable to Tenant providing that in the event of a foreclosure the mortgagee will recognize the validity of this Lease and, provided that Tenant is not in default, will not disturb Tenant’s possession or its rights under this Lease. Tenant shall, within ten (10) business days of Landlord’s written request, execute, acknowledge and deliver to Landlord a statement in writing certifying: (i) that this Lease is unmodified and in full force and effect (or if there has been any modification hereof that the same is in full force and effect as modified and stating the nature of the modification or modifications); (ii) that to the best of its knowledge, Landlord is not in default under this Lease (or if any such default exists the specific nature and extent thereof); and (iii) the date to which rent and other charges have been paid in advance, if any; and (iv) any other information regarding this Lease or Tenant’s occupancy as required by an Estoppel Certificate.

19. FIXTURES AND PERSONAL PROPERTY; SURRENDER

19.1 Removal of Tenant Property

        Trade fixtures, equipment, furniture and other personal property installed or placed in the Premises at the cost of Tenant shall be the property of Tenant unless otherwise specified in this Lease and Tenant shall remove the same prior to the expiration or sooner termination of this Lease. Tenant shall, at its own cost and expense, completely repair any and all damage to the Premises resulting from or caused by such removal. If Tenant fails to remove all or any of such property within ninety (90) days of the Expiration Date or other termination, Landlord may at Landlord’s option retain all or any of such property and title thereto shall thereupon vest in Landlord.

19.2 Surrendering of Premises

        Upon the expiration or sooner termination of this Lease, Tenant shall surrender to Landlord the Premises without any disturbance thereto in good condition and repair, reasonable wear and tear and damage by casualty not caused by Tenant or its agents or employees excepted.

20. EVENTS OF DEFAULT.

20.1 Default by Tenant.

        Tenant shall be considered to be in default of this Lease upon the occurrence of any of the following events of default:

(i)         If Tenant fails to pay any sum due under this Lease for fifteen (15) days after Landlord’s written notice to Tenant of such past due amount,

(ii)         If Tenant becomes insolvent, makes a transfer in fraud of creditors or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts when due; or

(iii)         If Tenant fails to remedy any default with respect to any of the other provisions, covenants or conditions of this Lease to be kept or performed by Tenant within fifteen (15) days after written notice (or such additional time as is reasonably required to correct any such default, provided Tenant has commenced such cure within fifteen (15) days of written notice and is diligently pursuing same to completion).

20.2 Default by Landlord.

        Landlord shall be considered in default if Landlord does not perform any of the provisions, covenants or conditions of this Lease to be kept or performed by Landlord and fails to remedy such non-performance within thirty (30) days after written notice by Tenant to Landlord properly specifying wherein Landlord has failed to perform any such obligation, or such lesser period as may be specified elsewhere herein (or such additional time as is reasonably required to correct any such non-performance, provided Landlord has commenced such cure within thirty (30) days of written notice and is diligently pursuing same to completion).

21. REMEDIES

21.1 Landlord’s Remedies.

        Upon default, only after all applicable notices have been given and all applicable cure periods have expired, Landlord shall have the right to pursue any of its rights and remedies at law or in equity, including any one or more of the following remedies:

    (i)        Terminate this Lease, in which case Tenant shall immediately surrender the Premises to Landlord. If Tenant fails to surrender the Premises, Landlord may, in compliance with applicable law, enter upon and take possession of the Premises and expel and remove Tenant, Tenant’s property and any party occupying all or any part of the Premises.

    (ii)        Terminate Tenant’s right to possession of the Premises and, in compliance with applicable law, expel and remove Tenant, Tenant’s Property and any parties occupying all or any part of the Premises. Landlord may relet all or any part of the Premises, without notice to Tenant, for a term that may be greater or less than the balance of the Primary Term or Extended Term as applicable, and on such conditions and for such uses as Landlord in its reasonable discretion shall determine. Landlord may collect and receive all rents and other income from the reletting. Landlord agrees to credit all rents and other income from reletting the Premises against Tenant’s liability after first reimbursing itself for all reasonable costs incurred in curing Tenant’s defaults.

21.2 Tenant’s Remedies.

        In the event of default by Landlord under the terms of this Lease, then Tenant may, at its option, elect to:

(i) Bring an action to require specific performance of Landlord’s obligations;

(ii) Exercise “self-help” and offset the reasonable cost together with interest from the date incurred at the lesser of 12% or the maximum rate allowed by law thereof against the payment(s) of Rent or other charges next becoming due to Landlord;

(iii) Pursue any other statutory remedies available, at the option of Tenant.

22. ENVIRONMENTAL WARRANTY AND INDEMNIFICATION AGREEMENT

This Section of the Lease shall govern any and all issues regarding Hazardous Materials referenced throughout the Lease.

I.     Definitions for purposes of this Lease:

(a)     “Hazardous Material” means: (1) “hazardous substances” or “toxic substances” as those terms are defined by the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. ” 9601, et seq., or the Hazardous Materials Transportation Act, 49 U.S.C. ss 1801, all as currently amended and amended after this date; (ii) “hazardous wastes,” as that term is defined by the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. “” 6901, et seq., as currently amended and amended after this date; (iii) crude oil or any faction thereof which is liquid at standard conditions of temperature and pressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute); (iv) any radioactive material, including any source, special nuclear or by-product material as defined at 42 U.S.C. “” 2011, et seq., as currently amended and amended after this date; (v) asbestos in any form or condition; and (vi) polychlorinated byphenyls (PCB’s) or substances or compounds containing PCB’s.

    (b)        “Environmental Laws” means: all applicable federal, state, and local laws, regulations, and ordinances relating to public health and safety and protection of the environment, including those statutes, laws, regulation and ordinances identified in subparagraph (a) all as amended and modified from time to time.

(c)     “Contamination” means: the presence of Hazardous Material(s) in concentrations which require remediation under applicable Environmental Laws.

II.     Landlord acknowledges that Tenant shall, as a normal and ordinary course of Tenant’s business as a wholesale distributor of swimming pool supplies, have certain Hazardous Materials present on the Premises. This acknowledgement shall be deemed Landlord’s approval of such, but limited to those Hazardous Materials which are a normal and ordinary course of Tenant’s business. Said Hazardous Materials include, but are not limited to, the following chemical families: HYPOCHLORITE; CHLORINATED ISOCYANURATE; HALOGENATED HYDANTOINS.

        Subject to the limitations and restrictions set forth in subparagraph II(f) below, Tenant represents, warrants and covenants to Landlord that during the term of this Lease and all renewals thereunder:

(a) Tenant has not permitted and will not permit to occur any release or disposal of Hazardous Materials, on, in, under, or from the Premises. Tenant, however, shall be permitted to have on the Premises those Hazardous Materials which are a normal and ordinary part of Tenant’s business operations, provided Tenant shall be in compliance with all applicable Environmental Laws relating to said Hazardous Materials.

(b) Tenant will notify Landlord of all written complaints, claims, citations, demands, inquiries, reports, notices or spills or releases of hazardous materials relating to compliance with Environmental Laws and Tenant’s use and occupancy of the Premises within five (5) business days of Tenant’s receipt thereof. To the extent possible, Tenant will promptly cure and resolve any such actions and proceedings that result from any Contamination caused solely by Tenant or Tenant’s agents, employees, contractors, customers or invitees (collectively, “Tenant’s Agents”). Tenant will keep the Premises free of any lien imposed pursuant to any Environmental Law for any Contamination caused solely by Tenant or Tenant’s Agents.

(c) If Tenant fails to undertake to cure a violation of any of the foregoing warranties, representations, and covenants within a reasonable time, Landlord may cause the removal of any Contamination from the Premises in accordance with Environmental Laws. As to Contamination caused solely by Tenant or Tenant’s Agents, the reasonable costs of any remediation of said Contamination required by Environmental Laws will be additional rent under this Lease, and such reasonable costs will become due and payable on demand by Landlord, but only if Tenant fails to undertake to comply with this paragraph within a reasonable time.

(d) Tenant agrees to indemnify, defend, and hold Landlord and Landlord’s affiliates, shareholders, directors, officers, employees, and agents free and harmless from and against all losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, costs, judgments, suits, proceedings, damages (including consequential damages), disbursements or expenses of any kind (including reasonable attorneys’ fees and investigation costs, whether defending or prosecuting any litigation, claim or proceeding) that may at any time be imposed upon, incurred by, or asserted or awarded against Landlord in connection with or arising from or out of:

(1) any Contamination which has been caused solely by Tenant or Tenant’s Agents on, in, or under or affecting all or any portions of the Premises;

(2) any misrepresentation, inaccuracy or breach of any warranty, covenant or agreement contained or referred to in this Section of the Lease by Tenant;

(3) any violation or claim of violation by Tenant or Tenant’s Agents of any Environmental Law that Tenant does not diligently undertake to resolve within a reasonable time.

This indemnification shall survive the termination of this Lease and shall be in full force and effect for five (5) years after the termination of the Lease, after which time, it shall be null, void, and of no force and effect.

    (f)        The acts set forth in Paragraph 22 (II)(d)(1), (2), and (3) for which indemnification is provided are hereinafter referred to as Predicate Acts. To the extent that any of the Predicate Acts are caused, in whole or in part, by the acts or omissions of the Landlord or any other person or party (other than Tenant or Tenant’s Agents) then Tenant’s obligation under this paragraph providing for indemnity shall be limited to the degree and percent that Tenant’s acts or omissions contributed to the Predicate Acts and Tenant shall be responsible only for that portion of the costs which would not otherwise have been incurred were it not for Tenant’s Predicate Acts.

23. HOLDING OVER

        If, without the execution of a new lease or written extension, Tenant shall hold over after the expiration of the Primary Term (or Extended Term if applicable), Tenant shall be deemed to be occupying the Premises as a tenant from month to month, which tenancy may be terminated by either Landlord or Tenant upon thirty (30) days prior written notice to the other. During such tenancy, Tenant agrees to pay to Landlord 125% of the monthly installment of Rent which was payable in the month immediately preceding the month in which the expiration or termination occurs, and to be otherwise bound by all of the other terms, covenants and conditions as herein specified.

24. MISCELLANEOUS

24.1 Entire Agreement.

This Lease, together with the exhibit(s) attached hereto, contains the entire agreement of the parties hereto with respect to the Lease, which alone fully and completely expresses the agreement of the parties.

      Exhibit A: PremisesExhibit
B: Legal DescriptionExhibit
C: Turn-Key Work Letter

No agreement shall be effective to modify this Lease, in whole or in part, unless such agreement is in writing, and is signed by both parties hereto.

24.2 Notices.

        Any notice, demand, request, or other communication or document required to be given by either party pursuant to this Lease, shall be in writing and shall be deemed to have been properly given, rendered or made only if personally delivered, or if sent by U.S. Mail, certified or registered mail, Federal Express or other comparable commercial overnight delivery service, addressed to the other party at the addresses set forth below (or to such other address as Landlord or Tenant may designate to each other from time to time by written notice), and shall be deemed to have been given, rendered or made on the day so delivered or on the first business day after having been deposited with the courier service:

       If to Tenant:

      SCP Distributors, LLC
      109 Northpark Blvd., Suite 400
      Covington, Louisiana 70433
      Attention: Lease Administrator
      Phone: 985.892.5521
      Fax: 985.892.1657

       If to Landlord:

      S & C Development, LLC
      328 Twin Rivers Dr.
      Covington, Louisiana 70433
      Phone: 985.892.3222

24.3 Non-Waiver.

        The failure of either party to insist, in any one or more instances, upon the strict performance of any one or more of the obligations of this Lease, or to exercise any election herein contained, shall not be construed as a waiver or relinquishment for the future of the performance of such one or more obligations of this Lease or of the right to exercise such election, but the Lease shall continue and remain in full force and effect with respect to any subsequent breach, act or omission. The receipt and acceptance by Landlord of Rent with knowledge of breach by Tenant of any obligation of this Lease shall not be deemed a waiver of such breach.

24.4 Attorneys Fees.

        In the event either party hereto shall bring an action or proceeding to enforce the terms hereof, declare rights hereunder or defend against an action brought by the other party, the Prevailing Party (as hereafter defined) in any such proceeding, action or appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision, adjudication or judgment. The term “Prevailing Party” shall include, without limitation, the party who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment or the abandonment by the other party of its claim or defense. The attorneys’ fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all reasonable attorneys’ fees incurred by the Prevailing Party in pursuit or defense of any such action brought by the other party.

24.5 Parties Bound.

        Except as otherwise expressly provided for in this Lease, this Lease shall be binding upon, and inure to the benefit of, the successors and assignees of the parties hereto. No obligation of Landlord or Tenant shall arise under this Lease until the instrument is signed by each party.

24.6 Survival of Obligations.

        Upon the expiration or other termination of this Lease, neither party shall have any further obligation nor liability to the other except as otherwise expressly provided in this Lease and except for such obligations as, by their nature or under the circumstances, can only be, or by the provisions of this Lease, may be performed after such expiration or other termination.

24.7 Governing Law.

        Premises is located. If any provision of this Lease shall be invalid or unenforceable, the remainder of this Lease shall not be affected but shall be enforced to the extent permitted by law. The captions, headings and titles in this Lease are solely for convenience of reference and shall not affect its interpretation. All terms and words used in this Lease, regardless of the number or gender, in which they are used, shall be deemed to include any other number and any other gender as the context may require. This Lease may be executed in counterpart and, when all counterpart documents are executed, the counterparts shall constitute a single binding instrument.

24.8 Time.

        Time is of the essence of this Lease. If the time for performance hereunder falls on a Saturday, Sunday or a day that is recognized as a holiday in the state in which the Premises is located, then such time shall be deemed extended to the next day that is not a Saturday, Sunday or holiday in said state.

24.9 Waiver of Trail by Jury.

        THE LANDLORD AND THE TENANT, TO THE FULLEST EXTENT THAT THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY ANY PARTY TO THIS LEASE WITH RESPECT TO THIS LEASE, THE PREMISES, OR ANY OTHER MATTER RELATED TO THIS LEASE OR THE PREMISES.

24.10 Quiet Enjoyment.

        If Tenant shall perform all of the covenants and agreements herein required to be performed by Tenant, Tenant shall, subject to the terms of this Lease, at all times during the Primary Term and the Extended Term, have peaceful and quiet enjoyment of the Premises against any person claiming by, through or under Landlord.

24.11 Force Majeure.

        Except as otherwise stated herein, if performance by either party of any term, condition or covenant in this Lease is delayed or prevented by an act of God, strike, lockout, shortage of material or labor, restriction by any governmental authority, civil riot, act of war, or flood, the period for performance of the term, condition or covenant shall be extended for a period equal to the period that such party is so delayed or prevented in the performance of such obligation. The provisions of the foregoing provision specifically do not apply to lack of funds or the inability of the performing party to obtain appropriate financing.

24.12 Authority.

        Landlord covenants and warrants that Landlord has good title to the Premises and the full right and lawful authority to enter into this Lease for the full term described and for all extensions, and that except for existing mortgages, the Premises are free and clear of all contracts, leases, liens, restrictions and encumbrances of whatever nature. Tenant covenants and warrants that Tenant has the requisite power and authority to enter into and execute this Lease and to perform the obligations hereunder, and the persons executing this agreement have the requisite power and authority to do so.

24.13 Parking.

        Landlord shall provide parking spaces for Tenant’s employees and customers at no additional cost to Tenant throughout the Primary Term and any Extended Terms.

24.14 Storage

      INTENTIONALLY OMITTED

24.15 Landlord’s Lien Waiver

        Landlord waives all rights relating to a Landlord’s lien of Tenant’s property including, but not limited to, inventory, equipment, contract rights, accounts receivable and the proceeds thereof, on the Premises.

24.16 Submission of Lease.

        This Lease is not effective until execution by and delivery to both Landlord and Tenant.

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

WITNESSES:	LANDLORD:
	S&C DEVELOPMENT, LLC Louisiana limited liability company
/S/ Angela McCue	By: /S/ A David Cook
	Name: Arthur David Cook
	Title: Owner
	Date: 1/16/02
WITNESSES:	TENANT:
	SCP DISTRIBUTORS, LLC a Delaware limited liability company
/S/ Cheri Sommer	By: /S/ Rich Polizzotto
	Name: Rich Polizzotto
	Title: Vice President
	Date: 1/15/02

FIRST AMENDMENT

        This First Amendment (the “Amendment”) is made and entered into as of the 11th day of February, 2002 by and between S & C DEVELOPMENT COMPANY, LLC (“Landlord”), and SCP DISTRIBUTORS, LLC (“Tenant”).

WITNESSETH

A. WHEREAS, Landlord and Tenant are parties to that certain lease dated January 16, 2002 for space currently containing approximately 8,604 square feet (the “Premises”) and the address of which is 68399 James Street, Suite C, Mandeville, Louisiana 70471, which lease has not been previously amended (collectively, the “Lease”); and

B. WHEREAS, Tenant and Landlord mutually desire that the Lease be amended on and subject to the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:

I. Amendment. Landlord and Tenant agree that the Lease shall be amended in accordance with the following terms and conditions:

1.     The Commencement Date of the Lease is February 4, 2002;

2.     The Termination Date of the Lease is December 31, 2006.

3.     The schedule of Rent payments in Section 3.1 of the Lease shall be modified and amended as follows:

A. One (1) installment of $3,681.00 (i.e., $147.24 per diem) for the period beginning February 4, 2002 and ending February 28, 2002.

B. Forty-six (46) equal installments of $4,122.75 each payable on or before the first day of each month during the period beginning March 1, 2002 and ending December 31, 2006.

        Except as herein modified or amended, the provisions, conditions and terms of the Lease shall remain unchanged and in full force and effect.

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

WITNESSES:	LANDLORD:
	S&C DEVELOPMENT, LLC
/S/ Ann Lacoste	By: /S/ A David Cook
/S/ Angela McCue	Name: Arthur David Cook
	Title: President
	Date: 2/11/02
WITNESSES:	TENANT:
	SCP DISTRIBUTORS
/S/ Cheri Sommer	By: /S/ Rich Polizzotto
/S/ Holly Coyne	Name: Rich Polizzotto
	Title: Vice President
	Date: 2/7/02

EX-10

Exhibit 10.2

Oklahoma City, OK

LEASE AGREEMENT

BETWEEN

DAVE COOK, individually

(“LANDLORD”)

AND

SCP POOL CORPORATION, a Delaware corporation

(“TENANT”)

1.		AGREEMENT OF LEASE	1
2.		TERM; OPTION TO EXTEND; AND TERMINATION OF LEASE	1
	2.1	Primary Term	1
	2.2	Adjustment of Commencement Date	1
	2.3	Option to Extend	1
3.		RENT & OTHER CHARGES	1
	3.1	Rent	1
	3.2	Late Fees	2
	3.3	Prepaid Rent and Security Deposit	2
	3.4	Disposition Fee	2
	3.5	Termination/Expiration Fees	2
4.		OTHER TENANT AND LANDLORD CHARGES	3
	4.1	Landlord Taxes	3
	4.2	Utilities	3
	4.3	Common Area	3
5.		USE AND OCCUPANCY	3
	5.1	Certificate of Occupancy	4
6.		MAINTENANCE AND REPAIRS	4
	6.1	Landdlord	4
	6.2	Tenant	5
	6.3	TDelivery at Commencement	6
	6.4	Landlord's and Tenant's Responsibilities	6
7.		ACCESS	3
	7.1	Pre-Commencement Date Access to Premises	6
	7.2	Landlord's Right to Access	6
8.		ALTERATIONS AND IMPROVEMENTS TO PREMISES; SIGNAGE	7
	8.1	Alterations and Improvements	7
	8.2	Signage	7
9.		DAMAGE OR DESTRUCTION	7
10.		CONDEMNATION	7
11.		INDEMNITY AND WAIVER OF CLAIMS	8
12.		INSURANCE	8
	12.1	Tenant's Insurance	8
	12.2	Landlord's Insurance	8
	12.3	Proof of Policy	8
13.		WAIVER OF SUBROGATION	9
14.		LIEN	9
15.		ASSIGNMENT, SUBLETTING	9
16.		ESTOPPEL CERTIFICATE	9
17.		NON-DISTURBANCE AGREEMENT	9
18.		FIXTURES AND PERSINAL PROPERTY; SURRENDER	9
	18.1	Removal of Tenant Property	9
	18.2	Surredering of Premises	9
19.		EVENTS OF DEFAULT	9
20.		REMEDIES	10
	20.1	Landlord's Remedies	10
	20.2	Tenant's Remedies	10
21.		ENVIORMENTAL WARRANTY AND INDEMNIFICATION AGREEMENT	10
22.		HOLDING OVER	11
23.		MISCELLANEOUS	12
	23.1	Entire Agreement	12
	23.2	Notices	12
	23.3	Non-Waiver	12
	23.4	Attorneys Fees	12
	23.5	Parties Bound	12
	23.6	Survival of Obligations	13
	23.7	Governing Law	13
	23.8	Time	13
	23.9	Waiver of Trial by Jury	13
	23.10	Quiet Enjoyment	13
	23.11	Force Majeure	13
	23.12	Authority	13
	23.13	Disposition of the Premises by the Landlord	13
	23.14	Non-Disturbance Agreement	13
	23.15	Submission of Lease	13

LEASE AGREEMENT

        This Lease Agreement (this “Lease”) is made and entered into as of the 15th day of January, 2001, by and between DAVE COOK, individually (“Landlord”), and SCP POOL CORPORATION, a Delaware corporation (“Tenant”).

1. AGREEMENT OF LEASE

        Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, for the term and upon the conditions and agreements hereinafter set forth, the following described premises:

Approximately 24,950 square feet consisting of 2,400 square feet of office and 22,550 square feet of warehouse space (“Premises”) located in a proposed building (the “Building”), and all other improvements located on the property, including all of the driveways, sidewalks, parking spaces, and the truck loading dock, which are more fully described in the Legal Description on Exhibit A attached hereto and made a part hereof (the “Land”).

2. TERM, OPTION TO EXTEND AND TERMINATION OF LEASE

2.1 Primary Term

        The term (“Primary Term”) of this Lease shall be for a period of ten (10) years commencing (11/20/01) on November 1, 2001 (the “Commencement Date”). The Primary Term of this Lease shall expire at 11:59 p.m. on October 31, 2011 (the “Expiration Date”).

        However, if Landlord is required to Substantially Complete (defined in Section 2.2) any Landlord Work (defined herein) prior to the Commencement Date under the terms of a Work Letter (defined in Exhibit B): (1) the date set forth in the prior sentence as the “Commencement Date” shall instead be defined as the “Target Commencement Date”; and (2) the actual “Commencement Date” shall be the date on which the Landlord Work is Substantially Complete, as determined by Section 2.2. “Landlord Work” means the work, if any, that Landlord is obligated to perform in the Premises pursuant to a separate work letter agreement (the “Work Letter”), if any, attached as Exhibit B. In such circumstances, the Termination Date will instead be the last day of the Primary Term as determined based upon the actual Commencement Date.

        If Landlord does not deliver possession of the Premises to Tenant within sixty (60) days after the first date specified in Paragraph 1 of this Section 2.1, Tenant may elect to cancel the Lease by giving written notice to Landlord within ten (10) days after the sixty (60) day period ends. If Tenant gives such notice, the Lease shall be canceled effective as of the date of its execution, and no party hereto shall have any obligations, one to the other, and all monies, if any, paid by Tenant in advance will be refunded within 10 days of such cancellation. If Tenant does not give such notice, Tenant’s right to cancel the Lease at such time shall expire and the Primary Term shall commence upon the delivery of possession of the Premises to Tenant. If delivery of possession of the Premises to Tenant is delayed, Landlord and Tenant shall, upon delivery, execute an amendment to this Lease setting forth the Commencement Date and Expiration Date of the Lease.

2.2 Adjustment of Commencement Date

        The Landlord Work shall be deemed to be “Substantially Complete” on the date that all Landlord Work has been performed except for punch list items which do not prevent in any material way the use of the Premises for the purposes for which they were intended, and upon receipt of a Certificate of Occupancy.

2.3 Option to Extend

        The Tenant shall have the option to extend the term of this Lease for up to two (2) additional five (5) year terms (the first of such five (5) year terms shall be referred to herein as the “First Extended Term”, and the second of such terms shall be referred to herein as the “Second Extended Term”) on all of the same terms and conditions set forth herein except Rent which shall be mutually agreed upon, so long as, with respect to the First Extended Term, Tenant is not in substantial default of its obligations under this Lease beyond any applicable grace or cure period at the expiration of the Primary Term, and, with respect to the Second Extended Term, Tenant is not in substantial default of its obligations under this Lease beyond any applicable grace or cure period at the expiration of the First Extended Term. To exercise the Option with respect to the First Extended Term, Tenant shall notify Landlord in writing not less than one hundred twenty (120) days prior to the expiration of the Primary Term that Tenant intends to extend the term of the Lease through the First Extended Term. To exercise the Option with respect to the Second Extended Term, Tenant shall notify Landlord in writing not less than one hundred twenty (120) days prior to the expiration of the First Extended Term that Tenant intends to extend the term of the Lease through the Second Extended Term. If Tenant elects not to exercise the Option with respect to the First Extended Term, Tenant shall notify Landlord in writing not less than one hundred twenty (120) days prior to the expiration of the Primary Term, and this Lease shall terminate upon the expiration of the Primary Term. If Tenant elects not to exercise the Option with respect to the Second Extended Term, Tenant shall notify Landlord in writing not less than one hundred twenty (120) days prior to the expiration of the First Extended Term, and this Lease shall terminate upon the expiration of the First Extended Term. Each of the First Extended Term and the Second Extended Term shall be referred to herein as an “Extended Term”.

3. RENT & OTHER CHARGES

3.1 Rent

        This Lease is made for and in consideration of rent commencing upon the Commencement Date and continuing throughout the Primary Term or each Extended Term, as applicable, payable in equal monthly installments (“Rent”). The schedule of monthly installments of Rent payable with respect to the Premises during the Primary Term is the following:

        Tenant shall pay Landlord the sum of $1,518,456.96 as Rent for the Premises during the Primary Term in one hundred twenty (120) monthly installments as follows:

    (a)        Twenty-four (24) equal installments of $11,955.21 each payable on or before the first day of each month during the period beginning November 1, 2001 and ending October 31, 2003.

    (b)        Twenty-four (24) equal installments of $12,371.04 each payable on or before the first day of each month during the period beginning November 1, 2003 and ending October 31, 2005.

    (c)        Twenty-four (24) equal installments of $12,745.29 each payable on or before the first day of each month during the period beginning November 1, 2005 and ending October 31, 2007.

    (d)        Twenty-four (24) equal installments of $12,994.79 each payable on or before the first day of each month during the period beginning November 1, 2008 and ending October 31, 2009.

(e)     Twenty-four (24) equal installments of $13,202.71 each payable on or before the first day of each month during the period beginning November 1, 2009 and ending October 31, 20011.

        Each installment of Rent shall be due and payable on or before the first day of each calendar month during the Primary Term and each Extended Term, as applicable, at 423 Magnolia Lane, Mandeville, LA 70471 or at such other place as Landlord may from time to time designate in writing.

        Rent for partial months shall be prorated to reflect the period of such month that Tenant was actually in possession of the Premises. If the Commencement Date occurs on a day other than the first day of a calendar month, the Rent due for the first calendar month of the Primary Term or Extended Term, as applicable, will be prorated on a per diem basis and paid to Landlord on the Commencement Date, and the Primary Term or each Extended Term, as applicable, will be extended to terminate on the last day of the calendar month in which the Expiration Date occurs.

3.2 Late Fees

        If Tenant fails to pay the foregoing Rent to Landlord on or before the 10^th day of the month in which it is due, in addition to all other rights and remedies that Landlord may have hereunder, Landlord may assess a “late charge” on such amount equal to 3% of the then delinquent installment of Rent which late fee will not be subject to any interest charges. Said late fee shall be due with the next rental payment.

3.3 Prepaid Rent and Security Deposit

Upon acceptance of this Lease Contract by all parties, Tenant will deposit with the Landlord the sum of $23,910.42, representing the first two (2) full calendar months rent. Upon written request by Landlord during the one hundred seventh (117^th) month of the Lease Term, Tenant shall pay to Landlord the amount of $13,202.71 which shall be held as a Security Deposit. No interest shall be paid on the Security Deposit. Landlord shall not be required to keep the Security Deposit separate from its other accounts and no trust relationship is created with respect to the Security Deposit. Upon any termination of this Lease, Landlord shall refund the unused portion of the Security Deposit to Tenant within thirty (30) days after the expiration of this Lease.

3.4 Disposition Fee

        If Landlord elects to sell or otherwise dispose of the Premises in accordance with Section 22.13 below, Landlord shall pay a fee to Tenant (the “Disposition Fee”) in an amount equal to the greater of (I) fifty percent (50%) of the Profit (as hereinafter defined) on the sale or other disposition of the Premises; or (ii) fifty percent (50%) of the amount by which the Fair Market Value (as hereinafter defined) of the Premises exceeds $850,000 (the initial cost of the Premises). The Disposition Fee shall be due and payable to Tenant within one hundred five (105) days after the delivery of the Notice of Disposition (as defined in Section 22.13 below) to Tenant. As used herein, “Profit” shall mean the amount by which (a) the sale price, in the event of the sale of the Premises, or (b) the proceeds of any other disposition of the Premises, in the event of such other disposition, exceed(s) $850,000. As used herein, “Fair Market Value” shall mean fair market value as determined by an appraisal of the Premises provided by an Oklahoma Certified Appraiser.

3.5 Termination/Expiration Fees

        If Tenant elects not to exercise the Option (2.3) with respect to the First Extended Term, Landlord shall, within thirty (30) days of the expiration of the Primary Term, pay to Tenant a fee in an amount equal to the greater of (I) fifty percent (50%) of the amount by which the Fair Market Value of the Premises exceeds $850,000; or (ii) if, as of the expiration of the Primary Term, Landlord has agreed to sell or otherwise dispose of the Premises, fifty percent (50%) of the Profit derived, or to be derived, from the sale or other disposition of the Premises, as the case may be. If Tenant elects not to exercise the Option with respect to the Second Extended Term, Landlord shall, within thirty (30) days of the expiration of the First Extended Term, pay to Tenant a fee in an amount equal to the greater of (I) fifty percent (50%) of the amount by which the Fair Market Value of the Premises exceeds $850,000; or (ii) if, as of the expiration of the First Extended Term, Landlord has agreed to sell or otherwise dispose of the Premises, fifty percent (50%) of the Profit derived, or to be derived, from the sale or other disposition of the Premises, as the case may be. If Tenant elects to exercise the Option with respect to both the First Extended Term and the Second Extended Term, Landlord shall, within thirty (30) days of the expiration of the Second Extended Term, pay to Tenant a fee in an amount equal to the greater of (I) fifty percent (50%) of the amount by which the Fair Market Value of the Premises exceeds $850,000; or (ii) if, as of the expiration of the Second Extended Term, Landlord has agreed to sell or otherwise dispose of the Premises, fifty percent (50%) of the Profit derived, or to be derived, from the sale or other disposition of the Premises, as the case may be.

4. OTHER TENANT AND LANDLORD CHARGES

4.1 Landlord Taxes

        During the Primary Term and Extended Term, Landlord shall pay promptly when due to the appropriate governmental agency or authority all ad valorem, real estate and public improvement taxes, impositions or assessments in connection with the Premises (“Landlord Taxes”). In the event Landlord fails to pay the Landlord Taxes when due and payable, Tenant shall have the right to pay the Landlord Taxes on Landlord’s behalf, and to collect from Landlord the amount paid plus interest at the rate of 10% per annum from the date of payment until repaid. Landlord shall pay said amount within 30 days of receipt of written demand from Tenant. If Landlord fails to reimburse Tenant within 30 days, Tenant may deduct such amount from the payment of Rent. For purposes hereof, the Landlord Taxes for any year shall be the Landlord Taxes that are due for payment or paid in that year rather than the Landlord Taxes that are assessed, become a lien or accrue during such year. Tenant shall reimburse Landlord for the Landlord Taxes paid by Landlord within 30 days after Landlord’s written request therefor. Landlord shall provide Tenant with a copy of the actual tax bill and proof of payment. The Landlord Taxes will be prorated between Landlord and Tenant so that Tenant will be responsible only for the Landlord Taxes from (I) the Date of Commencement through December 31, 2001 for the first calendar year, and (ii) January 1 of the last calendar year until the Expiration Date or other termination date for the last calendar year, so that Tenant will be responsible only for such tax or assessment as may be attributable to the period of time that Tenant was actually in possession of the Premises.

4.2 Utilities

        Tenant shall be solely responsible for and shall promptly pay all charges for electricity, gas, water, sewer and all other utilities used upon or furnished to the Premises and used by the Tenant. If some utilities or services are not separately metered and used by other tenants of the Building, then Tenant shall pay its pro rata share of such bills. Landlord shall not be liable for damages or otherwise for any interruption or failure in the supply of such utility services, or if either the quantity or character of such utilities supplied is changed or is no longer available or suitable for Tenant’s requirements. Landlord is solely responsible for ensuring the Premises are in such condition that the utility companies can properly connect and provide all of the services used by and in connection with the Premises during the term of the Lease.

4.3 Common Area

        During the Primary Term and each Extended Term, Landlord shall pay promptly when due any charges or assessments of any association in connection with the Premises. Tenant shall reimburse Landlord its pro rata share within 30 days after Landlord’s written request therefor. Landlord shall provide Tenant with a copy of the actual bill and proof of payment. Tenant will be responsible only for such charges or assessments as may be attributable to the period of time that Tenant was actually in possession of the Premises.

5. Use and Occupany

        Tenant shall use the Premises for Tenant’s wholesale distribution operations, which may operate on a 24-hour a day schedule, for swimming pool and spa related products, equipment, chemicals and supplies and all other lawful uses related thereto.

        Tenant shall not do or permit to be done in or about the Premises anything that is illegal or unlawful or that is of an inherently dangerous nature. Tenant shall obtain all permits, licenses, certificates or other authorizations and any renewals, extensions or continuances of the same required in connection with the lawful and proper use of the Premises and shall pay when due all taxes upon its merchandise, stock, fixtures, equipment and leasehold improvements located on the Premises.

        Notwithstanding any requirements due to Tenant’s storage of permitted Hazardous Materials (as defined in Section 20 herein), Landlord represents and warrants that, at the commencement of this Lease, the Premises and all improvements thereon shall be in compliance with all applicable laws, statutes, ordinances, requirements, building codes, fire and zoning codes and/or local, city, state and federal regulations, including the American with Disabilities Act (“ADA”) (collectively “Laws”) of all governmental authorities with jurisdiction, and Landlord shall be responsible for curing all breaches of this representation and warranty at Landlord’s sole cost and expense, throughout the term of the Lease, and any extensions thereof. Tenant shall immediately notify Landlord in writing upon Tenant’s discovery that such a breach exists, along with all supporting information and documentation.

        Landlord further warrants that to its knowledge, the Premises, and the land upon which the Premises reside are free from the presence of any Hazardous Materials (as defined in Section 20 herein) contamination at the commencement of this Lease and Landlord shall be responsible to cure any breach of said warranty at Landlord’s sole cost and expense, and Tenant shall not be liable in any way for any breach of Landlord’s warranty herein, whether said breach was known or unknown to Landlord.

        However, if any breach of Landlord’s warranties herein exists and either the breach of the Landlord’s warranty and representation itself, or the cure of such a breach prevents Tenant from reasonably conducting its normal material business operations for a period greater than forty-five (45) days, Tenant may terminate this lease by providing Landlord thirty (30) days written notice no more than forty (45) days from the date Tenant and/or Landlord discover said breach and/or reasonably determine that the cure of such breach will cause the obstruction of Tenant’s business operations, as stipulated above. In the event Tenant does not choose to terminate the Lease under this stipulation and upon Landlord’s receipt of written notice of such from Tenant or the lapse of the forty-five (45) day period prescribed herein, Landlord shall immediately commence to cure said breach, at Landlord’s sole cost and expense and this Lease shall remain in full force and effect. In addition, Tenant may pursue any and all other remedies available in equity or at law due to Landlord’s breach.

5.1 Certificate of Occupancy.

        If required, Tenant shall obtain a Certificate of Occupancy from the municipally in which the property is located prior to occupancy of the Premises. Tenant may apply for a Certificate of Occupancy prior to the Commencement Date and, if Tenant is unable to obtain a Certificate of Occupancy, Tenant shall have the right to terminate this Lease by written notice to Landlord if Landlord or Tenant is unwilling or unable to cure the defects which prevented the issuance of the Certificate of Occupancy. Landlord may, but has no obligation to, cure any such defects, including any repairs, installations, or replacements of any items, which are not presently, existing on the Premises, or which have not been expressly agreed upon by Landlord in writing. All monies, if any, paid by Tenant in advance will be refunded within 10 days of such termination.

6. MAINTENANCE AND REPAIRS

6.1 Landlord

        Landlord shall maintain in good repair and condition at its sole cost and expense: (I) the Building’s foundation and the structural soundness of the Building’s roof and floor, and the Building’s exterior walls and doors (excluding the interior surface of the exterior walls); (ii) the downspouts and gutters, (iii) water, sewer and gas lines and electrical services up to the point of entry into the Building; (iv) all of the other improvements on the Land including the sidewalk(s), (v) Building fire/life safety and sprinkler; and (vi) the Premises’ ADA compliance (collectively, the “Landlord Repairs”). Further, Landlord shall make all repairs and restorations made necessary by fire or other peril covered by the standard extended coverage endorsement on fire insurance policies; provided, however, that Tenant shall reimburse Landlord upon demand for the cost of repairing any damage to the Premises caused by the gross negligence or the deliberate act of Tenant, its employees, agents or invitees. If Landlord fails to make any of the Landlord Repairs, Tenant may make them at the expense of Landlord and Tenant may deduct such expenses from the payment of Rent. Landlord warrants the Premises are in compliance with all applicable building codes, local, city, state and federal regulations, laws, statutes, and ordinances in effect at the commencement of the Lease. Tenant shall promptly give Landlord notice of any repair required by Landlord pursuant to this Section 6, after which Landlord shall perform the reported repairs within 10 business days or sooner if the reported damage requiring repair compromises the safety of Tenant, its employees or customers, or Tenant’s property within the Premises.

6.2 Tenant

        Subject to the Landlord Repairs, Tenant shall, at its sole cost and expense, maintain in good repair and in a neat, clean and tenantable condition: (I) the interior of the Building; (ii) plumbing, water and sewer lines from the point of entry into the Premises; (iii) interior doors, including frames and hardware; (iv) lighting fixtures; (v) electrical switches and receptacles; (vi) plumbing fixtures; (vii) ceilings; (viii) window glass; (ix) parking lot, (x) loading dock and (xi) interior walls. Tenant must contract with a qualified and property insured HVAC contractor to have HVAC units serviced at a minimum of once every six months. Further, Tenant shall make all repairs necessitated by the gross negligence or deliberate act of Tenant, its employees, agents or invitees. Tenant shall keep the Premises neat and free of trash, scraps, materials, products used in its business. In the event Tenant fails to make any repairs, or maintain the Premises in accordance with the provisions of this Lease, the Landlord shall make such repairs, or maintenance, and bill Tenant for the cost of same. Tenant shall pay said amount within 30 days of receipt of written demand from Landlord. Tenant covenants that it shall, at all times, keep the exterior of the Premises free and clear of all trash, pallets, debris, glass, cartons, or any other unsightly matter caused by reason of Tenant or Tenant’s customers or invitees. Further, Tenant shall not permit or suffer any noise, smoke or odor which will constitute a public or private nuisance.

6.3 Delivery at Commencement

         At the Commencement Date, Landlord shall deliver the Premises and all equipment, Building systems and Alterations thereon, including all lamps, bulbs, ballasts and starters and those items required to be maintained and repaired by Tenant, in good working condition to Tenant. Landlord shall warrant the condition of the Building including each Building system and equipment serving the Premises for a period of 6 months following the Commencement Date hereof. During this 6 month period, Tenant shall have no obligation to repair or replace, nor shall Tenant bear any responsibility for any portion of the cost of any repair, to any system, piece of equipment or Alterations serving the Premises, unless the same is necessitated by the gross negligence or willful misconduct of Tenant. At all times during the Primary Term and each Extended Term hereof, Tenant shall have the benefit of any and all warranties in effect and held by Landlord on the equipment and systems for which Tenant is responsible to maintain and repair.

6.4 Landlord’s and Tenant’s Responsibilities

        Except as may be modified in other paragraphs contained in this Lease, Landlord and Tenant shall be responsible for providing and/or paying for certain items listed below, but not limited to the items below:

Item	Landlord	Tenant	Dollar Limit*
Natural or propane gas utility service		X
Water utlilty service		X
Sewer utility service		X
Electric utility service		X
Real estate taxes		X
Fire and extended coverage insurance		X
Liability insurance		X
Trash collection		X
Yard maintenance		X
Parking lot repairs and maintenance		X
Repair and maintenance of HVAC systems		X	Semi-annual basis
Replacement of HVAC Systems	X
Structural repair and maintenance	X
Interior repair and maintenance		X
Plumbing repair and maintenance		X
Plumbing replacement up to Building	X
Electrical repair and maintenance		X
Electrical replacements up to Building	X
Snow removal		X
Water heater and maintenance		X
Water heater replacement	X
Glass replacement excluding plate glass		X
Plate glass replacement		X
Janitorial - interior		X
Light bulb and ballast replacement		X
Repair and maintenance of roof	X
Roof replacement	X
Fire extinguishers		X

If blank, 0 or none, there is no dollar limit. Tenant shall not contract for or authorize repairs or replacement which are the responsibilities of the Landlord.

7. ACCESS

7.1 Pre-Commencement Date Access to Premises

        Landlord shall permit Tenant access to the Premises prior to the Commencement Date for the purpose of setting up storage racks, trade fixtures and other equipment for the operation of Tenant’s business, and all of the terms and conditions of this Lease shall apply to such prior period, except that Tenant will not have to pay any Rent during such pre-Commencement Date period.

7.2 Landlord’s Right to Access

        Landlord has the right with no less than 24 hours notice to Tenant, emergencies excepted, to enter the Premises periodically and with no less than 24 hours notice to Tenant, emergencies excepted, shall have access to the Premises during normal business hours for inspection or in connection with the improvement or repair of and the providing of utilities and other services to the Premises.

8. ALTERATIONS AND IMPROVEMENTS TO PREMISES; SIGNAGE

8.1 Alterations and Improvements

        Tenant may make any and all additions, modifications, improvements or alterations (collectively, “Alterations”) to the Premises that it deems necessary for the use and occupancy of the Premises, SO LONG AS Tenant obtains Landlord’s prior consent, which consent shall not be unreasonably withheld or delayed. Landlord shall make all repairs, alterations or improvements that Landlord may reasonably deem necessary for the preservation, safety or improvement of the Premises; provided, however, that in so doing Landlord shall not unreasonably interfere with Tenant’s use and occupancy of the Premises. Tenant, however, shall have no obligation at the expiration of the Primary Term or Extended Term or other termination of this Lease, to remove any Alterations to the Premises made by the Tenant with Landlord’s prior consent. In the event Tenant does not remove its Alterations to the Premises at the expiration of the Primary Term or Extended Term or other termination of this Lease, then Tenant shall surrender the Premises, including the Alterations, to Landlord in good order and condition, ordinary wear and tear and damage by casualty excepted.

8.2 Signage

        Tenant may display in, on, or above the Premises any sign or decoration, the nature of which is permitted by applicable law and is not dangerous, unsightly or detrimental to the Premises. At the termination of this Lease, Tenant shall remove any signs it has placed on the Premises during the Primary Term or each Extended Term. In the event Tenant removes any of its signs on the Premises and in doing so causes damage or disrepair to the Premises, ordinary wear and tear excepted, Tenant shall return that portion of the Premises to its original condition at its sole cost and expense.

9. DAMAGE OR DESTRUCTION

        If the Premises are damaged or destroyed by fire, earthquake or any other casualty to such an extent as to render the same untenantable in whole, Tenant shall give Landlord immediate notice of the occurrence of any such casualty, and this Lease shall terminate as of the date of such casualty and all rent shall be accounted for as of such date.

        If the Premises are damaged or destroyed by fire, earthquake or any other casualty to such an extent as to render 40% of the Premises untenantable, Tenant shall give Landlord immediate notice of the occurrence of any such casualty. Landlord must notify Tenant within 20 days of the occurrence of such casualty, if the Premises cannot reasonably be restored within 120 days from the date of casualty. Landlord or Tenant may terminate this Lease by providing the other written notice of same within 15 days of the date of casualty.

        If the Premises can reasonably be restored within 90 days from the date of casualty, Landlord shall notify Tenant in writing within 20 days of such casualty of Landlord’s intention to restore the Premises and shall promptly commence said restoration and repair at its own expense excluding the improvements installed by Tenant and work diligently to complete same within the 90 days, and this Lease shall continue in full force and effect subject to delays arising from the collection of insurance proceeds or from Force Majeure events. In addition, Landlord agrees to use reasonable efforts to assist Tenant in finding temporary substitute space, including available space owned by Landlord. Landlord shall submit initial plans and specifications, and any changes thereafter, for Tenant’s review and approval. Tenant shall have the right to inspect periodically the restoration and repair work. Landlord warrants that all repairs and restoration of the Premises shall be in compliance with all Laws of all governmental authorities having jurisdiction over the Premises.

        Tenant at Tenant’s expense, except if same is necessitated by Landlord’s acts or omissions, shall promptly perform, subject to delays arising from the collection of insurance proceeds, or from Force Majeure events, all repairs or restoration not required to be done by Landlord and shall promptly re-enter the Premises and commence doing business in accordance with this Lease. Notwithstanding the foregoing, either party may terminate this Lease if the Premises are substantially damaged during the last year of the Primary Term or each Extended Term and Landlord reasonably estimates that it will take more than 1 month to repair such damage.

        If (a) the Property is damaged by fire or other casualty thereby causing the Premises to be untenantable or (b) the Premises are partially damaged by fire or other casualty, the Rent shall be proportionally abated to the extent of any actual loss of use of the Premises by Tenant.

10. CONDEMNATION

        If all of the Premises (or less than all, but Tenant reasonably determines that the remaining portion cannot be used to facilitate its wholesale distribution activities) shall be acquired by the right of condemnation or eminent domain for any public or quasi-public use or purpose, or sold to a condemning authority under threat of condemnation, then the term of this Lease shall cease and terminate as of the date of title vesting in such proceeding (or sale) and all rent, if any, shall be paid up to that date. In the event of a partial taking or condemnation that takes less than a substantial portion of the Premises and Tenant determines that the remaining portion can be used to facilitate its wholesale distribution activities, this Lease shall continue in full force and effect but with an equitable reduction or abatement of rent. Landlord shall promptly commence said restoration and repair at its own expense excluding the improvements installed by Tenant and work diligently to complete same. In addition, Landlord agrees to use reasonable efforts to assist Tenant in finding temporary substitute space, including available space owned by Landlord. Landlord shall submit initial plans and specifications, and any changes thereafter, for Tenant’s review and approval. Tenant shall have the right to inspect periodically the restoration and repair work. Landlord warrants that all repairs and restoration of the Premises shall be in compliance with all Laws of all governmental authorities having jurisdiction over the Premises.

        In the event of any condemnation, taking, or sale, whether whole or partial, Landlord and Tenant shall each be entitled to receive and retain such separate awards and portions of lump sum awards as may be allocated to their respective interests in any condemnation proceedings, or as may be otherwise agreed. Termination of this Lease shall not affect the right of the parties to such awards.

11. INDEMNITY AND WAIVER OF CLAIMS

        Except to the extent caused by the negligence or willful misconduct of Landlord or any Landlord Related Parties (defined below), Tenant shall indemnify, defend and hold Landlord, its trustees, members, principals, beneficiaries, partners, officers, directors, employees, mortgagee(s) and agents (“Landlord Related Parties”) harmless against and from all liabilities, obligations, damages, penalties, claims, actions, costs, charges and expenses, including, without limitation, reasonable attorneys’ fees and other professional fees (if and to the extent permitted by Law), which may be imposed upon, incurred by or asserted against Landlord or any of the Landlord Related Parties and arising out of or in connection with any damage or injury occurring in the Premises or any acts or omissions (including violations of Law) of Tenant, the Tenant Related Parties (defined below) or any of Tenant’s transferees, contractors or licensees.

        Except to the extent caused by the negligence or willful misconduct of Tenant or any Tenant Related Parties (defined below), Landlord shall indemnify, defend and hold Tenant, its trustees, members, principals, beneficiaries, partners, officers, directors, employees and agents (“Tenant Related Parties”) harmless against and from all liabilities, obligations, damages, penalties, claims, actions, costs, charges and expenses, including, without limitation, reasonable attorneys’ fees and other professional fees (if and to the extent permitted by Law), which may be imposed upon, incurred by or asserted against Tenant or any of the Tenant Related Parties and arising out of or in connection with the acts or omissions (including violations of Law) of Landlord, or any of Landlord’s contractors, or other tenants.

12. INSURANCE

12.1 Tenant’s Insurance

        Tenant shall carry and maintain the following insurance (“Tenant’s Insurance”), at its sole cost and expense: (1) commercial general liability insurance applicable to the Premises and its appurtenances providing, on an occurrence basis, a minimum combined single limit of $1,000,000.00; and (2) all risk property covering all of the items included in the leasehold improvements constructed in the Premises collectively, the “Improvements”), written at replacement cost value and with a replacement cost endorsement covering all of Tenant’s trade fixtures, equipment, furniture and other personal property within the Premises (“Tenant’s Property”).

12.2 Landlord’s Insurance

        Landlord covenants and agrees that it will procure and maintain during the Primary Term and Extended Term, at Tenant’s expense, property insurance for the Premises against loss by all risk, including flood, wind and earthquake, if required, (“Landlord’s Insurance”) for the full replacement cost of the Premises, and commercial general liability insurance in a combined single limit amount of not less than $1,000,000 insuring against injury or death to any person or persons and damage to property. Tenant shall reimburse Landlord within fifteen (15) days after Tenant receives a written statement for such insurance. The Landlord’s Insurance will be prorated between Landlord and Tenant so that Tenant will be responsible only for the Landlord’s Insurance from (I) the Date of Commencement through December 31, 2001 for the first calendar year, and (ii) January 1 of the last calendar year until the Expiration Date or other termination date for the last calendar year, so that Tenant will be responsible only for such insurance as may be attributable to the period of time that Tenant was actually in possession of the Premises.

12.3 Proof of Policy

        Reputable and solvent insurers licensed to do business in Oklahoma shall issue all insurance required to be carried by both parties hereunder. Tenant’s commercial general liability insurance policies shall name Tenant as a named insured and Landlord (or any successor) and their respective members, principals, beneficiaries, partners, officers, directors, employees, and agents, and other designees of Landlord as the interest of such designees shall appear, as additional insureds. All policies of Tenant’s Insurance shall contain endorsements that the insurer(s) shall give Landlord and its designees at least 30 days’ advance written notice of any cancellation, termination or lapse of insurance. Tenant shall provide Landlord with a certificate of insurance evidencing Tenant’s Insurance prior to the earlier to occur of the Commencement Date or the date Tenant is provided with possession of the Premises for any reason. Landlord shall provide Tenant with a certificate of insurance evidencing Landlord’s Insurance upon request. All policies of Landlord’s Insurance shall contain endorsements that the insurer(s) shall give Tenant and its designees at least 30 days’ advance written notice of any cancellation, termination or lapse of insurance.

13. WAIVER OF SUBROGATION

        Notwithstanding anything in this Lease to the contrary, Landlord and Tenant shall cause their respective insurance carriers to waive any and all rights of recovery, claim, action or causes of action against the other and their respective trustees, principals, beneficiaries, partners, members, officers, directors, agents, advisors, shareholders, and employees, for any loss or damage that may occur to Landlord or Tenant or any party claiming by, through or under Landlord or Tenant, as the case may be, with respect to Tenant’s property, the Premises, any additions or improvements to the Premises, or any contents thereof.

14. LIEN

        Tenant will keep the Premises free and clear of all mechanics and materialmen’s liens and other liens on account of work done for or by Tenant or persons claiming under it. Should any such lien be filed against the Premises, Tenant shall, within 30 days of notice from Landlord of the filing of the lien, fully discharge the lien by settling the claim which resulted in the lien or by bonding or insuring over the lien in the manner prescribed by the applicable lien Law.

15. ASSIGNMENT, SUBLETTING

        Tenant shall not assign or sublet the Premises without first obtaining Landlord’s prior written consent, which shall not be unreasonably withheld or delayed, and any attempt to so assign or sublet without Landlord’s written consent shall be null and void; and if any such assignment or sublease is made with the written consent of Landlord, Tenant shall nevertheless remain liable to Landlord for payment of rent according to the terms hereof and for due performance of all the terms, covenants and conditions of this Lease unless otherwise agreed to in writing by both parties. If Tenant is a corporation, then any transfer of this Lease by merger, consolidation or liquidation or any change in the ownership of, or power to vote the majority of its outstanding voting stock shall not constitute an assignment for the purposes of this paragraph. If written Landlord once gives consent to any such assignment or subletting, such consent shall not operate as a waiver of the necessity for obtaining Landlord’s written consent to any subsequent assignment or subletting. Landlord shall not assign this Lease without first obtaining Tenant’s prior written consent, which shall not be unreasonably withheld or delayed, and any attempt to so assign without Tenant’s written consent shall be null and void. If Landlord is a corporation, then any transfer of this Lease by merger or consolidation shall not constitute an assignment for the purposes of this paragraph.

16. ESTOPPEL CERTIFICATE

        Tenant shall at any time, and from time to time, and upon Landlord’s written request, execute, acknowledge and deliver to Landlord a statement in writing certifying: (I) that this Lease is unmodified and in full force and effect (or if there has been any modification hereof that the same is in full force and effect as modified and stating the nature of the modification or modifications); (ii) that to the best of its knowledge, Landlord is not in default under this Lease (or if any such default exists the specific nature and extent thereof); and (iii) the date to which rent and other charges have been paid in advance, if any; and (iv) any other information regarding this Lease or Tenant’s occupancy as required by an Estoppel Certificate.

17. NON-DISTURBANCE AGREEMENT

        Landlord shall use its best efforts to cause Lender to not disturb Tenant’s possession of the Premises by providing Tenant with an acceptable Non-Disturbance Agreement.

18. FIXTURES AND PERSONAL PROPERTY; SURRENDER

18.1 Removal of Tenant Property

        Trade fixtures, equipment, furniture and other personal property installed or placed in the Premises at the cost of Tenant shall be the property of Tenant unless otherwise specified in this Lease and Tenant shall remove the same prior to the expiration or sooner termination of this Lease. Tenant shall, at its own cost and expense, completely repair any and all damage to the Premises resulting from or caused by such removal. If Tenant fails to remove all or any of such property within ninety (90) days of the Expiration Date or other termination, Landlord may at Landlord’s option retain all or any of such property and title thereto shall thereupon vest in Landlord.

18.2 Surrendering of Premises

        Upon the expiration or sooner termination of this Lease, Tenant shall surrender to Landlord the Premises without any disturbance thereto in good condition and repair, reasonable wear and tear and damage by casualty not caused by Tenant or its agents or employees excepted.

19. EVENTS OF DEFAULT.

        Tenant shall be considered to be in default of this Lease upon the occurrence of any of the following events of default:

If Tenant fails to pay any sum due under this Lease for 15 days after Landlord’s written notice to Tenant of such past due amount,

If Tenant becomes insolvent, makes a transfer in fraud of creditors or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts when due; or

If Tenant fails to remedy any default with respect to any of the other provisions, covenants or conditions of this Lease to be kept or performed by Tenant within 15 days after written notice (or such additional time as is reasonably required to correct any such default, provided Tenant has commenced such cure within 15 days of written notice and is diligently pursuing same to completion).

20. REMEDIES Remedies.

20.1 Landlord’s Remedies.

        Upon any default, Landlord shall have the right to pursue any of its rights and remedies at law or in equity, including any one or more of the following remedies:

    (i)        Terminate this Lease, in which case Tenant shall immediately surrender the Premises to Landlord. If Tenant fails to surrender the Premises, Landlord may, in compliance with applicable law and without prejudice to any other right or remedy, enter upon and take possession of the Premises and expel and remove Tenant, Tenant’s property and any party occupying all or any part of the Premises. Tenant shall pay Landlord on demand the amount of all past due rent and other losses and damages that Landlord may suffer as a result of Tenant’s default, whether by Landlord’s inability to relet the Premises on satisfactory terms or otherwise, including, without limitation, all Costs of Reletting (defined below) and any deficiency that may arise from reletting or the failure to relet the Premises. “Costs of Reletting” shall include all reasonable costs and expenses incurred by Landlord in reletting or attempting to relet the Premises, including, reasonable attorneys’ fees, brokerage commissions, repairing, altering, remodeling, or otherwise putting the Premises into the same condition as of the commencement of this Lease.

    (ii)        Terminate Tenant’s right to possession of the Premises and, in compliance with applicable Law, expel and remove Tenant, Tenant’s Property and any parties occupying all or any part of the Premises. Landlord may (but shall not be obligated to) relet all or any part of the Premises, without notice to Tenant, for a term that may be greater or less than the balance of the Primary Term or Extended Term as applicable, and on such conditions (which may include concessions and alterations of the Premises) and for such uses as Landlord in its reasonable discretion shall determine. Landlord may collect and receive all rents and other income from the reletting. Tenant shall pay Landlord on demand all past due Rent, all Costs of Reletting and any deficiency arising from the reletting or failure to relet the Premises.

        Landlord agrees to credit all rents and other income from reletting the Premises against Tenant’s liability after first reimbursing itself for all reasonable costs incurred in curing Tenant’s default.

20.2 Tenant’s Remedies.

        Landlord shall not be in default in the performance of any of its obligations in this Lease contained unless and until Landlord shall have failed to perform such obligation within 15 days (or such additional time as is reasonably required to correct any such default, provided Landlord has commenced such cure within 15 days of written notice and is diligently pursuing same to completion) after written notice by Tenant to Landlord properly specifying wherein Landlord has failed to perform any such obligation, or such lesser period as may be specified elsewhere herein. If Landlord fails to so cure such default as prescribed herein, then Tenant may exercise “self-help” and offset the reasonable cost thereof against the payment(s) of Rent next becoming due to Landlord, in addition to any other statutory remedies available, at the option of Tenant.

21. ENVIRONMENTAL WARRANTY AND INDEMNIFICATION AGREEMENT

This Section of the Lease shall govern any and all issues regarding Hazardous Materials referenced throughout the Lease.

I.     Definitions for purposes of this Lease:

(a)     “Hazardous Material” means: (1) “hazardous substances” or “toxic substances” as those terms are defined by the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. ” 9601, et seq., or the Hazardous Materials Transportation Act, 49 U.S.C. ss 1801, all as currently amended and amended after this date; (ii) “hazardous wastes,” as that term is defined by the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. “” 6901, et seq., as currently amended and amended after this date; (iii) crude oil or any faction thereof which is liquid at standard conditions of temperature and pressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute); (iv) any radioactive material, including any source, special nuclear or by-product material as defined at 42 U.S.C. “” 2011, et seq., as currently amended and amended after this date; (v) asbestos in any form or condition; and (vi) polychlorinated byphenyls (PCB’s) or substances or compounds containing PCB’s.

    (b)        “Environmental Laws” means: all applicable federal, state, and local laws, regulations, and ordinances relating to public health and safety and protection of the environment, including those statutes, laws, regulation and ordinances identified in subparagraph (a) all as amended and modified from time to time.

(c)     “Contamination” means: the presence of Hazardous Material(s) in concentrations which require remediation under applicable Environmental Laws.

II.     Landlord acknowledges that Tenant shall, as a normal and ordinary course of Tenant’s business as a wholesale distributor of swimming pool supplies, have certain Hazardous Materials present on the Premises. This acknowledgement shall be deemed Landlord’s approval of such, but limited to those Hazardous Materials which are a normal and ordinary course of Tenant’s business. Said Hazardous Materials include, but are not limited to, the following chemical families: HYPOCHLORITE; CHLORINATED ISOCYANURATE; HALOGENATED HYDANTOINS.

        Subject to the limitations and restrictions set forth in subparagraph II(f) below, Tenant represents, warrants and covenants to Landlord that during the term of this Lease and all renewals thereunder:

(a) Tenant has not permitted and will not permit to occur any release or disposal of Hazardous Materials, on, in, under, or from the Premises. Tenant, however, shall be permitted to have on the Premises those Hazardous Materials which are a normal and ordinary part of Tenant’s business operations, provided Tenant shall be in compliance with all applicable Environmental Laws relating to said Hazardous Materials.

(b) Tenant will notify Landlord of all written complaints, claims, citations, demands, inquiries, reports, notices or spills or releases of hazardous materials relating to compliance with Environmental Laws and Tenant’s use and occupancy of the Premises within five (5) business days of Tenant’s receipt thereof. To the extent possible, Tenant will promptly cure and resolve any such actions and proceedings that result from any Contamination caused solely by Tenant or Tenant’s agents, employees, contractors, customers or invitees (collectively, “Tenant’s Agents”). Tenant will keep the Premises free of any lien imposed pursuant to any Environmental Law for any Contamination caused solely by Tenant or Tenant’s Agents.

(c) If Tenant fails to undertake to cure a violation of any of the foregoing warranties, representations, and covenants within a reasonable time, Landlord may cause the removal of any Contamination from the Premises in accordance with Environmental Laws. As to Contamination caused solely by Tenant or Tenant’s Agents, the reasonable costs of any remediation of said Contamination required by Environmental Laws will be additional rent under this Lease, and such reasonable costs will become due and payable on demand by Landlord, but only if Tenant fails to undertake to comply with this paragraph within a reasonable time.

(d) Tenant agrees to indemnify, defend, and hold Landlord and Landlord’s affiliates, shareholders, directors, officers, employees, and agents free and harmless from and against all losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, costs, judgments, suits, proceedings, damages (including consequential damages), disbursements or expenses of any kind (including reasonable attorneys’ fees and investigation costs, whether defending or prosecuting any litigation, claim or proceeding) that may at any time be imposed upon, incurred by, or asserted or awarded against Landlord in connection with or arising from or out of:

(1) any Contamination which has been caused solely by Tenant or Tenant’s Agents on, in, or under or affecting all or any portions of the Premises;

(2) any misrepresentation, inaccuracy or breach of any warranty, covenant or agreement contained (other than (e)(1) above) or referred to in this Section of the Lease by Tenant;

(3) any violation or claim of violation by Tenant or Tenant’s Agents of any Environmental Law (other than (e)(1) or (e)(2) above) that Tenant does not diligently undertake to resolve within a reasonable time.

        This indemnification shall survive the termination of this Lease and shall be in full force and effect for five (5) years after the termination of the Lease, after which time, it shall be null, void, and of no force and effect.

    (f)        The acts set forth in Paragraph 20 (II)(d)(1), (2), and (3) for which indemnification is provided are hereinafter referred to as Predicate Acts. To the extent that any of the Predicate Acts are caused, in whole or in part, by the acts or omissions of the Landlord or any other person or party (other than Tenant or Tenant’s Agents) then Tenant’s obligation under this paragraph providing for indemnity shall be limited to the degree and percent that Tenant’s acts or omissions contributed to the Predicate Acts and Tenant shall be responsible only for that portion of the costs which would not otherwise have been incurred were it not for Tenant’s Predicate Acts.

22. HOLDING OVER

        If, without the execution of a new lease or written extension and with the consent of Landlord, Tenant shall hold over after the expiration of the Primary Term (or any Extended Term if applicable), Tenant shall be deemed to be occupying the Premises as a tenant from month to month, which tenancy may be terminated by either Landlord or Tenant upon 30 days prior written notice to the other. During such tenancy, Tenant agrees to pay to Landlord 125% of the monthly installment of Base Rent which was payable in the month immediately preceding the month in which the expiration or termination occurs, and to be otherwise bound by all of the other terms, covenants and conditions as herein specified. If Tenant fails to surrender the Premises upon the termination of this Lease, in addition to any other liabilities to Landlord arising therefrom, Tenant shall indemnify and hold Landlord harmless from loss or liability resulting from such failure, including any claims made by any succeeding tenant founded on such failure.

23. MISCELLANEOUS

23.1 Entire Agreement

        This Lease, together with the exhibit(s) attached hereto, contains the entire agreement of the parties hereto with respect to the Lease, which alone fully and completely expresses the agreement of the parties.

      Exhibit A: Premises
      Exhibit B: TurnKey Work Letter

No agreement shall be effective to modify this Lease, in whole or in part, unless such agreement is in writing, and is signed by both parties hereto.

23.2 Notices.

        Any notice required to be given by either party pursuant to this Lease, shall be in writing and shall be deemed to have been properly given, rendered or made only if personally delivered, or if sent by U.S. Mail, Federal Express or other comparable commercial overnight delivery service, addressed to the other party at the addresses set forth below (or to such other address as Landlord or Tenant may designate to each other from time to time by written notice), and shall be deemed to have been given, rendered or made on the day so delivered or on the first business day after having been deposited with the courier service:

       If to Tenant:

      SCP Pool Corporation
      109 Northpark Blvd., Suite 400
      Covington, Louisiana 70433
      Attention: Lease Administrator
      Phone: 985.892.5521
      Fax: 985.892.1657

       If to Landlord:

      Dave Cook
      423 Magnolia Lane
      Mandeville, Louisiana 70471

23.3 Non-Waiver.

        The failure of either party to insist, in any one or more instances, upon the strict performance of any one or more of the obligations of this Lease, or to exercise any election herein contained, shall not be construed as a waiver or relinquishment for the future of the performance of such one or more obligations of this Lease or of the right to exercise such election, but the Lease shall continue and remain in full force and effect with respect to any subsequent breach, act or omission. The receipt and acceptance by Landlord of Base Rent with knowledge of breach by Tenant of any obligation of this Lease shall not be deemed a waiver of such breach.

23.4 Attorneys Fees.

        In the event either party hereto shall bring an action or proceeding to enforce the terms hereof, declare rights hereunder or defend against an action brought by the other party, the Prevailing Party (as hereafter defined) in any such proceeding, action or appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision, adjudication or judgment. The term “Prevailing Party” shall include, without limitation, the party who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment or the abandonment by the other party of its claim or defense. The attorneys’ fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all reasonable attorneys’ fees incurred by the Prevailing Party in pursuit or defense of any such action brought by the other party.

23.5 Parties Bound.

        Except as otherwise expressly provided for in this Lease, this Lease shall be binding upon, and inure to the benefit of, the successors and assignees of the parties hereto. No obligation of Landlord or Tenant shall arise under this Lease until each party signs the instrument.

23.6 Survival of Obligations.

        Upon the expiration or other termination of this Lease, neither party shall have any further obligation nor liability to the other except as otherwise expressly provided in this Lease and except for such obligations as, by their nature or under the circumstances, can only be, or by the provisions of this Lease, may be performed after such expiration or other termination.

23.7 Governing Law.

        This Lease shall be governed by and construed in accordance with the laws of the state in which the Premises is located. If any provision of this Lease shall be invalid or unenforceable, the remainder of this Lease shall not be affected but shall be enforced to the extent permitted by law. The captions, headings and titles in this Lease are solely for convenience of reference and shall not affect its interpretation. All terms and words used in this Lease, regardless of the number or gender, in which they are used, shall be deemed to include any other number and any other gender as the context may require. This Lease may be executed in counterpart and, when all counterpart documents are executed, the counterparts shall constitute a single binding instrument.

23.8 Time

        Time is of the essence of this Lease. If the time for performance hereunder falls on a Saturday, Sunday or a day that is recognized as a holiday in the state in which the Property is located, then such time shall be deemed extended to the next day that is not a Saturday, Sunday or holiday in said state.

23.9 Waiver of Trail by Jury.

        THE LANDLORD AND THE TENANT, TO THE FULLEST EXTENT THAT THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY ANY PARTY TO THIS LEASE WITH RESPECT TO THIS LEASE, THE PREMISES, OR ANY OTHER MATTER RELATED TO THIS LEASE OR THE PREMISES.

23.10 Quiet Enjoyment.

        If Tenant shall perform all of the covenants and agreements herein required to be performed by Tenant, Tenant shall, subject to the terms of this Lease, at all times during the Primary Term and each Extended Term, have peaceful and quiet enjoyment of the Premises against any person claiming by, through or under Landlord.

23.11 Force Majeure.

        Except as otherwise stated herein, if performance by either party of any term, condition or covenant in this Lease is delayed or prevented by an Act of God, strike, lockout, shortage of material or labor, restriction by any governmental authority, civil riot, act of war, or flood, the period for performance of the term, condition or covenant shall be extended for a period equal to the period that such party is so delayed or prevented in the performance of such obligation. The provisions of the foregoing provision specifically do not apply to lack of funds or the inability of the performing party to obtain appropriate financing.

23.12 Authority.

        Landlord covenants and warrants that Landlord has good title to the Premises and the full right and lawful authority to enter into this Lease for the full term described and for all extensions, and that except for existing mortgages, the Premises are free and clear of all contracts, leases, liens, restrictions and encumbrances of whatever nature. Tenant covenants and warrants that Tenant has the requisite power and authority to enter into and execute this Lease and to perform the obligations hereunder, and the persons executing this agreement have the requisite power and authority to do so.

23.13 Disposition of the Premises by Landlord.

        Landlord hereby agrees that Landlord shall not sell or otherwise dispose of the Premises during the Primary Term of this Lease. Notwithstanding anything to the contrary contained herein, Landlord shall have the option, upon the expiration of the Primary Term of this Lease and at any time thereafter, to sell or otherwise dispose of the Premises; provided that any such sale or other disposition of the Premises shall be subject to this Lease. To exercise the option described in this Section 22.13, Landlord shall notify Tenant in writing ninety (90) days prior to the anticipated closing date of the sale or other disposition of the Premises that Landlord intends to sell or otherwise dispose of the Premises (the “Notice of Disposition”). The Notice of Disposition shall be irrevocable, and, upon the delivery of the Notice of Disposition to Tenant, Landlord shall be obligated to pay the Disposition Fee to Tenant in accordance with Section 3.4 above.

23.14 Non-Disturbance Agreement.

Landlord shall use its best efforts to cause Lender

23.15 Submission of Lease

This Lease is not effective until execution by and delivery to both Landlord and Tenant.

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

WITNESSES:	LANDLORD:
	DAVE COOK, individually
/S/ Connie Dickinson	By: /S/ A David Cook
	Name: Dave Cook
	Date: 1/12/01
WITNESSES:	TENANT:
	SCP POOL CORPORATION a Delaware corporation
/S/ Cheri Sommer	By: /S/ Rich Polizzotto
	Name: Rich Polizzotto
	Title: Vice President
	Date: 1/15/01

FIRST AMENDMENT

        This First Amendment (the “Amendment”) is made and entered into as of the 24th day of October, 2001, by and between S & C DEVELOPMENT, L.L.C., a Louisiana limited liability company (“Landlord”), and SCP POOL CORPORATION, a Delaware corporation (“Tenant”).

WITNESSETH

A. WHEREAS, Tenant did enter into that certain Lease dated January 15, 2001 with Dave Cook for space currently containing approximately 24,950 square feet (the “Premises”) described as Lots 16 and 17 of Hudiburg Industrial Addition, bearing the municipal address, of 308 Hudiburg Circle, Oklahoma City, OK 73107 which lease has not been previously amended (collectively, the “Lease”); and

B. WHEREAS, S & C Development, L.L.C., a Louisiana limited liability company wishes to covenant and agree with Tenant that S & C Development, L.L.C., a Louisiana limited liability company shall expressly assume each and every obligation, representation and warranty of Landlord pursuant to the Lease, and as amended herein;

C. Tenant and Landlord mutually desire that the Lease be amended on and subject to the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:

I. Amendment. Landlord and Tenant agree that the Lease shall be amended in accordance with the following terms and conditions:

A. Wherever the term “Landlord”, “Lessor” or similar word is used in the Lease or amendment to Lease, said word shall be deemed to refer to S & C Development, L.L.C., a Louisiana limited liability company. From and after execution of this Amendment, S & C Development, L.L.C., a Louisiana limited liability company expressly covenants and warrants, and represents to Tenant that it shall assume all obligations, responsibilities and liabilities of Landlord under the Lease, as amended, as though it were the original Landlord under said Lease.

B. Section 3.4, “Disposition Fee,” of the Lease shall be modified and amended by the substitution of following paragraph and shall read:

“If Landlord elects to sell or otherwise dispose of the Premises in accordance with Section 22.13 below, Landlord shall pay a fee to Tenant (the “Disposition Fee”) in an amount equal to the greater of (i) fifty percent (50%) of the Profit (as hereinafter defined) on the sale or other disposition of the Premises; or (ii) fifty percent (50%) of the amount by which the Fair Market Value (as hereinafter defined) of the Premises exceeds $898,664.57 (the initial cost of the Premises). The Disposition Fee shall be due and payable to Tenant within one hundred five (105) days after the delivery of the Notice of Disposition (as defined in Section 22.13 below) to Tenant. As used herein, “Profit” shall mean the amount by which (a) the sale price, in the event of the sale of the Premises, or (b) the proceeds of any other disposition of the Premises, in the event of such other disposition, exceed(s) $898,664.57. As used herein, “Fair Market Value” shall mean fair market value as determined by an appraisal of the Premises provided by an Oklahoma Certified Appraiser.”

C. Section 3.5, “Termination/Expiration Fees,” of the Lease shall be modified and amended by the substitution of following paragraph and shall read:

“If Tenant elects not to exercise the Option with respect to the First Extended Term, Landlord shall, within thirty (30) days of the expiration of the Primary Term, pay to Tenant a fee in an amount equal to the greater of (i) fifty percent (50%) of the amount by which the Fair Market Value of the Premises exceeds $898,664.57; or (ii) if, as of the expiration of the Primary Term, Landlord has agreed to sell or otherwise dispose of the Premises, fifty percent (50%) of the Profit derived, or to be derived, from the sale or other disposition of the Premises, as the case may be. If Tenant elects not to exercise the Option with respect to the Second Extended Term, Landlord shall, within thirty (30) days of the expiration of the First Extended Term, pay to Tenant a fee in an amount equal to the greater of (i) fifty percent (50%) of the amount by which the Fair Market Value of the Premises exceeds $898,664.57; or (ii) if, as of the expiration of the First Extended Term, Landlord has agreed to sell or otherwise dispose of the Premises, fifty percent (50%) of the Profit derived, or to be derived, from the sale or other disposition of the Premises, as the case may be. If Tenant elects to exercise the Option with respect to both the First Extended Term and the Second Extended Term, Landlord shall, within thirty (30) days of the expiration of the Second Extended Term, pay to Tenant a fee in an amount equal to the greater of (i) fifty percent (50%) of the amount by which the Fair Market Value of the Premises exceeds $898,664.57; or (ii) if, as of the expiration of the Second Extended Term, Landlord has agreed to sell or otherwise dispose of the Premises, fifty percent (50%) of the Profit derived, or to be derived, from the sale or other disposition of the Premises, as the case may be.”

      II. Miscellaneous.

A. This Amendment sets forth the entire agreement between the parties with respect to the matters set forth herein.

B. Except as herein modified or amended, the provisions, conditions and terms of the Lease shall remain unchanged and in full force and effect.

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

WITNESSES; ATTESTATION	LANDLORD
	S&C DEVELOPMENT, LLC a Louisiana limited liability company
/S/ Angela McCue	By: /S/ A David Cook
	Name: Arthur David Cook
	Title: Owner
	TENANT:
	SCP POOL CORPORATION, a Delaware corporation
/S/ Cheri Sommer	By: /S/ Rich Polizzotto
	Name: Rich Polizzotto
	Title: Vice President

FIRST AMENDMENT

        This First Amendment (the “Amendment”) is made and entered into as of the 5th day of December, 2001, by and between S & C DEVELOPMENT, L.L.C., a Louisiana limited liability company (“Landlord”), and SCP POOL CORPORATION, a Delaware corporation (“Tenant”).

WITNESSETH

A. WHEREAS, Tenant did enter into that certain Lease dated January 15, 2001 with Landlord for space currently containing approximately 24,950 square feet (the “Premises”) described as Lots 16 and 17 of Hudiburg Industrial Addition, bearing the municipal address, of 308 Hudiburg Circle, Oklahoma City, OK 73107 which lease has been previously amended by First Amendment dated October 24, 2001 (collectively, the “Lease”); and

B. WHEREAS, Tenant and Landlord mutually desire that the Lease be amended on and subject to the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:

I. Amendment. Landlord and Tenant agree that the Lease shall be amended in accordance with the following terms and conditions:

    1.        The Commencement Date of the Lease is November 10, 2001;

2.     The Termination Date of the Lease is November 30, 2011.

3.     The schedule of Rent payments in Section 3 of the Lease shall be amended as follows:

A. One (1) installment of $8,368.71 (i.e., $398.51 per diem) for the period beginning November 10, 2001 and ending November 30, 2001.

B. Twenty-four (24) equal installments of $11,955.21 each payable on or before the first day of each month during the period beginning December 1, 2001 and ending November 30, 2003.

B. Twenty-four (24) equal installments of $12,371.04 each payable on or before the first day of each month during the period beginning December 1, 2003 and ending November 30, 2005.

C. Twenty-four (24) equal installments of $12,745.29 each payable on or before the first day of each month during the period beginning December 1, 2005 and ending November 30, 2007.

D. Twenty-four (24) equal installments of $12,994.79 each payable on or before the first day of each month during the period beginning December 1, 2007 and ending November 30, 2009.

E. Twenty-four (24) equal installments of $13,202.71 each payable on or before the first day of each month during the period beginning December 1, 2009 and ending November 30, 2011.

      II. Miscellaneous.

A. This Amendment sets forth the entire agreement between the parties with respect to the matters set forth herein.

B. Except as herein modified or amended, the provisions, conditions and terms of the Lease shall remain unchanged and in full force and effect.

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

WITNESSES; ATTESTATION	LANDLORD
	S&C DEVELOPMENT, LLC a Louisiana limited liability company
/S/ Angela McCue	By: /S/ A David Cook
	Name: Arthur David Cook
	Title: Owner
	TENANT:
	SCP POOL CORPORATION, a Delaware corporation
/S/ Cheri Sommer	By: /S/ Rich Polizzotto
	Name: Rich Polizzotto
	Title: Vice President

EX-10

Exhibit 10.3

Tax Reimbursement Arrangement

        Pursuant to Item 601 of Regulation S-K, the following is a written description of a compensatory arrangement authorized by the Compensation Committee that is not set forth in any formal document:

        On May 6, 2004, the Compensation Committee authorized the reimbursement of certain federal taxes of Mr. Perez de la Mesa resulting from Mr. Perez de la Mesa’s exercise of certain stock options granted to him in 1999 and 2000. The reimbursement is anticipated to total approximately $1,125,000. This tax liability was created by the Company’s revision to Mr. Perez de la Mesa’s original employment agreement prior to Mr. Perez de la Mesa’s commencement of employment with the Company wherein the Company decided to substitute stock options with a $0.01 exercise price for an equal number of restricted shares. While the substantive value of this change is insignificant, the tax consequences resulting from the change were determined to be adverse to Mr. Perez de la Mesa and beneficial to the Company. Since such change in tax consequences was not intended, the Compensation Committee authorized the reimbursement of the net additional tax consequences plus associated interest to Mr. Perez de la Mesa.

EX-10

Exhibit 10.4

SCP POOL CORPORATION
2002 LONG-TERM INCENTIVE PLAN
AS AMENDED AND RESTATED

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

2. Administration.

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

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

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

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

5. Shares Subject to the Plan.

5.1. Number of Shares. Subject to adjustment as provided in Section 9.5, the maximum number of shares of Common Stock that may be delivered to participants and their permitted transferees under the Plan shall be 1,800,000. No additional awards will be made under the Company’s predecessor stock option plans (The SCP Pool Corporation 1995 Stock Option Plan and The SCP Pool Corporation 1998 Stock Option Plan).

5.2. Share Counting. To the extent any shares of Common Stock covered by a stock option are not delivered to a participant or permitted transferee because the Option is forfeited or canceled or because of a Net Share Exercise, as defined in Section 6.5 hereof, or shares of Common Stock are not delivered because an Incentive is paid or settled in cash or used to satisfy the applicable tax withholding obligation, such shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of Common Stock available for delivery under this Plan. In the event that shares of Common Stock are issued as an Incentive and thereafter are forfeited or reacquired by the Company pursuant to rights reserved upon issuance thereof, such forfeited and reacquired Shares may again be issued under the Plan. If the exercise price of any stock option granted under the Plan or the applicable withholding tax obligation is satisfied by tendering shares of Common Stock to the Company (by either actual delivery or by attestation), only the number of shares of Common Stock issued net of the shares of Common Stock tendered shall be deemed delivered for purposes of determining the maximum number of shares of Common Stock available for delivery under the Plan.

5.3. Limitations on Awards. Subject to Section 9.5, the following additional limitations are imposed under the Plan:

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

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

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

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

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

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

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

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

6.4. Repurchase. Upon approval of the Committee, the Company may repurchase a previously granted stock option from a participant by mutual agreement before such option has been exercised by payment to the participant of the amount per share by which: (i) the Fair Market Value (as defined in Section 9.11) of the Common Stock subject to the option on the business day immediately preceding the date of purchase exceeds (ii) the exercise price.

6.5. Manner of Exercise. A stock option may be exercised, in whole or in part, by giving written notice to the Company, specifying the number of shares of Common Stock to be purchased. The exercise notice shall be accompanied by the full purchase price for such shares. The option price shall be payable in United States dollars and may be paid (a) in cash; (b) by check; (c) by delivery of shares of Common Stock which, unless otherwise determined by the Committee, shall have been held by the optionee for at least six months, and which shares shall be valued for this purpose at the Fair Market Value on the business day immediately preceding the date such option is exercised; (d) by delivery of irrevocable written instructions to a broker approved by the Company (with a copy to the Company) to immediately sell a portion of the shares issuable under the option and to deliver promptly to the Company the amount of sale proceeds (or loan proceeds if the broker lends funds to the participant for delivery to the Company) to pay the exercise price; (e) if permitted by the Committee, by authorizing the Company to withhold from the exercise that number of shares of Common Stock which, when multiplied by the Fair Market Value of a share of Common Stock on the date of exercise, is equal to the aggregate exercise price payable with respect to the options being exercised (a “Net Share Exercise”) or (f) in such other manner as may be authorized from time to time by the Committee.

6.6. Incentive Stock Options. Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to the grant of stock options that are intended to qualify as incentive stock options (as such term is defined in Section 422 of the Code):

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

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

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

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

6.7. Repricing. Except for adjustments pursuant to Section 9.5 or actions permitted to be taken by the Committee under Section 9.10C. in the event of a Change of Control, unless approved by the stockholders of the Company, (a) the exercise price for any outstanding option granted under this Plan may not be decreased after the date of grant; and (b) an outstanding option that has been granted under this Plan may not, as of any date that such option has a per share exercise price that is greater than the then current Fair Market Value of a share of Common Stock, be surrendered to the Company as consideration for the grant of a new option with a lower exercise price, shares of Common Stock or a cash payment.

7. Restricted Stock.

7.1. Grant of Restricted Stock. The Committee may award shares of restricted stock to such eligible participants as the Committee determines pursuant to the terms of Section 3. An award of restricted stock shall be subject to such restrictions on transfer and forfeitability provisions and such other terms and conditions, including the attainment of specified performance goals, as the Committee may determine, subject to the provisions of the Plan. To the extent restricted stock is intended to qualify as “performance-based compensation” under Section 162(m), it must be granted subject to the attainment of performance goals as described in Section 8 below and meet the additional requirements imposed by Section 162(m).

7.2. The Restricted Period. At the time an award of restricted stock is made, the Committee shall establish a period of time during which the transfer of the shares of restricted stock shall be restricted and after which the shares of restricted stock shall be vested (the “Restricted Period”). Except for shares of restricted stock that vest based on the attainment of performance goals, the Restricted Period shall be a minimum of three years, with incremental vesting of portions of the award over the three-year period permitted. If the vesting of the shares of restricted stock is based upon the attainment of performance goals, a minimum Restricted Period of one year is allowed, with incremental vesting of portions of the award over the one-year period permitted. Each award of restricted stock may have a different Restricted Period. The expiration of the Restricted Period shall also occur as provided under Section 9.3 and under the conditions described in Section 9.10 hereof.

7.3. Escrow. The participant receiving restricted stock shall enter into an Incentive Agreement with the Company setting forth the conditions of the grant. Certificates representing shares of restricted stock shall be registered in the name of the participant and deposited with the Company, together with a stock power endorsed in blank by the participant. Each such certificate shall bear a legend in substantially the following form:

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

7.4. Dividends on Restricted Stock. Any and all cash and stock dividends paid with respect to the shares of restricted stock shall be subject to any restrictions on transfer, forfeitability provisions or reinvestment requirements as the Committee may, in its discretion, prescribe in the Incentive Agreement.

7.5. Forfeiture. In the event of the forfeiture of any shares of restricted stock under the terms provided in the Incentive Agreement (including any additional shares of restricted stock that may result from the reinvestment of cash and stock dividends, if so provided in the Incentive Agreement), such forfeited shares shall be surrendered and the certificates cancelled. The participants shall have the same rights and privileges, and be subject to the same forfeiture provisions, with respect to any additional shares received pursuant to Section 9.5 due to a recapitalization, merger or other change in capitalization.

7.6. Expiration of Restricted Period. Upon the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Committee, the restrictions applicable to the restricted stock shall lapse and a stock certificate for the number of shares of restricted stock with respect to which the restrictions have lapsed shall be delivered, free of all such restrictions and legends, except any that may be imposed by law, to the participant or the participant’s estate, as the case may be.

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

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

9. General

9.1. Duration. Subject to Section 9.9, the Plan shall remain in effect until all Incentives granted under the Plan have either been satisfied by the issuance of shares of Common Stock or otherwise been terminated under the terms of the Plan and all restrictions imposed on shares of Common Stock in connection with their issuance under the Plan have lapsed.

9.2. Transferability. No Incentives granted hereunder may be transferred, pledged, assigned or otherwise encumbered by a participant except: (a) by will; (b) by the laws of descent and distribution; (c) pursuant to a domestic relations order, as defined in the Code; or (d) as to options only, if permitted by the Committee and so provided in the Incentive Agreement or an amendment thereto, (i) to Immediate Family Members, (ii) to a partnership in which the participant and/or Immediate Family Members, or entities in which the participant and/or Immediate Family Members are the sole owners, members or beneficiaries, as appropriate, are the sole partners, (iii) to a limited liability company in which the participant and/or Immediate Family Members, or entities in which the participant and/or Immediate Family Members are the sole owners, members or beneficiaries, as appropriate, are the sole members, (iv) to a trust for the sole benefit of the participant and/or Immediate Family Members or (v) to a charitable organization. “Immediate Family Members” shall be defined as the spouse and natural or adopted children or grandchildren of the participant and their spouses. To the extent that an incentive stock option is permitted to be transferred during the lifetime of the participant, it shall be treated thereafter as a nonqualified stock option. Any attempted assignment, transfer, pledge, hypothecation or other disposition of Incentives, or levy of attachment or similar process upon Incentives not specifically permitted herein, shall be null and void and without effect.

9.3. Effect of Termination of Employment or Death. In the event that a participant ceases to be an employee of the Company or to provide services to the Company for any reason, including death, disability, early retirement or normal retirement, any Incentives may be exercised, shall vest or shall expire at such times as may be determined by the Committee and provided in the Incentive Agreement.

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

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

9.6. Withholding

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

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

9.7. No Continued Employment. No participant under the Plan shall have any right, because of his or her participation, to continue in the employ of the Company for any period of time or to any right to continue his or her present or any other rate of compensation.

9.8. Deferral Permitted. Payment of an Incentive may be deferred at the option of the participant if permitted in the Incentive Agreement.

9.9. Amendments to or Termination of the Plan. The Board may amend or discontinue this Plan at any time; provided, however, that no such amendment may:

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

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

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

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

b. any acquisition of Common Stock by the Company,

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

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

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

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

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

b. except to the extent that such ownership existed prior to the Business Combination, no person (excluding the Post-Transaction Corporation and any employee benefit plan or related trust of either SCP, the Post-Transaction Corporation or any subsidiary of either corporation) beneficially owns, directly or indirectly, 50% or more of the then outstanding shares of common stock of the corporation resulting from such Business Combination or 50% or more of the combined voting power of the then outstanding voting securities of such corporation, and

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

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

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

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

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

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

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

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

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

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

i. the per share price to be paid to holders of Common Stock in any such merger, consolidation or other reorganization, ii. the price per share offered to holders of Common Stock in any tender offer or exchange offer whereby a Change of Control takes place,

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

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

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

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

EX-31

EXHIBIT 31.1

I, Craig K. Hubbard, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SCP Pool Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2004	/s/ Craig K. Hubbard
	Chief Financial Officer, Treasurer and Secretary

EX-31

EXHIBIT 31.2

I, Manuel J. Perez de la Mesa, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SCP Pool Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2004	/s/ Manuel J. Perez de la Mesa
	President and Chief Executive Officer

EX-32

EXHIBIT 32.1

Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350
(Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

        In connection with the Quarterly Report on Form 10-Q of SCP Pool Corporation (the “Company”) for the period ending June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Manuel J. Perez de la Mesa, as Chief Executive Officer of the Company, and Craig K. Hubbard, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: July 30, 2004

        /s/ Manuel J. Perez de la Mesa

        Manuel J. Perez de la Mesa

        President and

        Chief Executive Officer

        /s/ Craig K. Hubbard

        Craig K. Hubbard

        Chief Financial Officer,

        Secretary and Treasurer

        A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

        This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.