HUGHES SUPPLY INC, S-3, 1996-04-03

HUGHES SUPPLY INC
S-3, 1996-04-03
ELECTRICAL APPARATUS & EQUIPMENT, WIRING SUPPLIES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 3, 1996.
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HUGHES SUPPLY, INC.
(Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S> <C>
FLORIDA 59-0559446
(State or Other Jurisdiction of Incorporation or (I.R.S. Employer Identification No.)
Organization)
</TABLE>

20 NORTH ORANGE AVENUE, SUITE 200
ORLANDO, FLORIDA 32801
(407) 841-4755
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
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DAVID H. HUGHES
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
HUGHES SUPPLY, INC.
20 NORTH ORANGE AVENUE, SUITE 200
ORLANDO, FLORIDA 32801
(407) 841-4755
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
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COPIES OF COMMUNICATIONS TO:

<TABLE>
<S> <C>
ROBERT N. BLACKFORD, ESQ. G. WILLIAM SPEER, ESQ.
MAGUIRE, VOORHIS & WELLS, P.A. POWELL, GOLDSTEIN, FRAZER & MURPHY
2 SOUTH ORANGE AVENUE 16TH FLOOR
ORLANDO, FLORIDA 32801 191 PEACHTREE STREET, N.E.
(407) 244-1100 ATLANTA, GEORGIA 30303
(404) 572-6600
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _____________
If the delivery of the Prospectus is expected to be made pursuant to Rule
434, please check the following box. / / ___________
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CALCULATION OF REGISTRATION FEE

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<CAPTION>
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TO BE AGGREGATE PRICE AGGREGATE REGISTRATION
TITLE OF SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE(2) FEE
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<S> <C> <C> <C> <C>
Common Stock, par value $1.00 per share......... 2,219,415 shares $29.00 $64,363,035 $22,195
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Rights to purchase Series A Junior Participating
Preferred Stock, no par value per share....... 2,219,415 rights N.A. N.A. $100(3)
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</TABLE>

(1) Includes 289,489 shares that the Underwriters have the option to purchase
solely to cover over-allotments, if any.
(2) Estimated solely for the purpose of determining the registration fee and
calculated in accordance with Rule 457(c) under the Securities Act on the
basis of the last reported sale price of the Company's Common Stock on April
1, 1996 as reported by the New York Stock Exchange, Inc.
(3) The rights to purchase the Series A Junior Participating Preferred Stock
will be attached to and trade with shares of the Company's Common Stock.
Value attributable to such rights, if any, will be reflected in the market
price of the shares of the Company's Common Stock. The fee paid represents
the minimum statutory fee pursuant to Section 6(b) of the Securities Act.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED APRIL 3, 1996

PROSPECTUS
1,929,926 SHARES

[HUGHES SUPPLY, INC. LOGO]

COMMON STOCK

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Of the 1,929,926 shares of Common Stock offered hereby, 1,250,000 shares
are being sold by Hughes Supply, Inc. ("Hughes Supply" or the "Company") and
679,926 shares are being sold by certain shareholders (the "Selling
Shareholders"). See "Principal and Selling Shareholders." The Company will not
receive any of the proceeds from the sale of shares of Common Stock by the
Selling Shareholders. This offering is contingent upon consummation of the PVF
Acquisition (as defined herein).

The Company's Common Stock is traded on the New York Stock Exchange, Inc.
(the "NYSE") under the symbol "HUG." The last reported sale price of the
Company's Common Stock on the NYSE on April 1, 1996 was $29.00 per share.

SEE "RISK FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE
COMMON STOCK OFFERED HEREBY.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

<TABLE>
<CAPTION>
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UNDERWRITING PROCEEDS TO
DISCOUNTS AND PROCEEDS TO SELLING
PRICE TO PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS
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<S> <C> <C> <C> <C>
Per Share $ $ $ $
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Total(3) $ $ $ $
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</TABLE>

(1) For information regarding indemnification of the Underwriters, see
"Underwriting."

(2) Before deducting expenses estimated at $425,000, all of which is payable
by the Company.

(3) The Company and one of the Selling Shareholders have granted the
Underwriters 30-day options to purchase up to 236,989 and 52,500
additional shares of Common Stock, respectively, solely to cover
over-allotments, if any. See "Underwriting." If such option is exercised
in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , $ and
$ , respectively.

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The shares of Common Stock are offered by the several Underwriters named
herein, subject to prior sale, when, as and if accepted by them and subject to
certain other conditions. It is expected that certificates for the shares of
Common Stock offered hereby will be available for delivery on or about
, 1996, at the offices of Smith Barney Inc., 388 Greenwich Street,
New York, New York 10013.

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SMITH BARNEY INC. ROBERT W. BAIRD & CO.
INCORPORATED

, 1996
<PAGE> 3

The following map shows the locations of the Company's branches and
distribution centers and the branch locations of two companies to be
acquired by the Company.

[MAP]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

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<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the financial statements and related notes thereto included
elsewhere or incorporated by reference in this Prospectus. As used in this
Prospectus, unless the context indicates otherwise, (i) the terms "Company" and
"Hughes Supply" mean Hughes Supply, Inc., its subsidiaries and its predecessors,
and (ii) the information in this Prospectus assumes that the Underwriters'
over-allotment option is not exercised. The Company's fiscal year ends on the
last Friday in January of each year.

THE COMPANY

Hughes Supply is one of the largest diversified wholesale distributors of
materials, equipment and supplies for the construction and industrial markets
operating primarily in the southeastern and midwestern United States. The
Company distributes more than 100,000 products through 221 branches located in
15 states and Puerto Rico. The Company's customers are subcontractors, general
contractors, utilities, municipalities and manufacturers. Management believes
that the Company holds significant market share in a majority of its local
markets and is one of the largest distributors of its range of products in the
southeastern and midwestern United States. The Company's largest geographic
market is Florida (representing approximately 43% of fiscal 1996 net sales),
which is one of the largest commercial and residential construction markets in
the United States.

The products which the Company distributes are used in new construction for
commercial, residential, utility and industrial applications and for replacement
and renovation projects. Such products include materials and supplies associated
with the Company's nine major product groups, as follows: electrical; plumbing;
water and sewer; air conditioning and heating; industrial pipe, valves and
fittings; building materials; electric utilities; water systems; and pool
equipment and supplies. Each product group is sold by the Company's own
specialized and experienced sales force consisting of outside sales
representatives and inside account executives. Management believes that the
Company's mix of commercial, residential, utility and industrial business,
geographic diversification and multiple product groups reduces the impact of
economic cycles on the Company's net sales and profitability. Management
believes that no other company competes against it across all of its product
groups.

The Company's principal business objective is to achieve profitable growth,
both internally and through selective acquisitions, primarily in existing and
contiguous geographic markets. The Company has grown internally through
increases in comparable branch net sales, new branch openings and the addition
of new product groups. Since January 29, 1993, the Company has opened 25 new
branches. In addition, the Company continues to pursue an active acquisition
program to capitalize on the opportunities presented by the substantial size and
highly fragmented ownership structure of its industry. Based upon estimates
available to the Company, industry sales in the United States of products sold
by the Company exceeded $100 billion in 1995, and no wholesale distributor of
these products accounted for more than 2% of the total market. Since January 29,
1993, the Company has completed 23 acquisitions representing 68 branches,
excluding the PVF Acquisition (as defined herein). In addition to increased
geographic penetration, acquisitions often provide opportunities for the Company
to gain market share and to enhance and diversify product offerings. Management
believes that the most cost effective way for the Company to enter new
geographic markets is through acquisitions. All of the Company's significant
acquisitions have been accretive to the Company's earnings per share.

The Company's acquisition strategy is to acquire profitable distribution
businesses with strong management and well-developed market positions and
customer franchises. Acquisitions can generally be categorized as fill-in
acquisitions or new market acquisitions. Fill-in acquisitions are generally
smaller in size and represent new branches within existing product groups and
existing geographic markets. Since January 29, 1993, the Company has completed
fill-in acquisitions of 28 branches, and management believes that significant
additional fill-in acquisition opportunities are available.

New market acquisitions represent the addition of new product groups,
within related commercial construction and industrial product categories, or the
entry into new geographic markets, or both. During the last three fiscal years,
the Company has increasingly focused on new market acquisitions with the goal of
adding products and product groups with higher gross margins, increasing sales
to the replacement and

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industrial markets (which tend to be less cyclical than new construction
markets), achieving greater geographic diversification and developing additional
opportunities for future fill-in acquisitions and new branch openings. Recent
new market acquisitions completed by the Company include (i) The Treaty
Distribution Group, resulting in a significant increase in the Company's water
and sewer products business in new geographic markets, (ii) Moore Electric
Supply, Inc., resulting in a significant increase in the Company's electrical
products business in new geographic markets, and (iii) Florida Pipe & Supply
Company, the Company's initial entry into the industrial pipe, valve and fitting
market.

The Company's operating strategy is based on decentralizing customer
related functions at the branch level, such as sales and local inventory
management, and centralizing certain administrative functions at the corporate
level, such as credit, human resources, finance and accounting, and management
information systems. Other key elements of the Company's operating strategy
include:

- Comprehensive and diversified product groups;

- Superior customer service;

- Local market focus;

- Well-trained and experienced workforce; and

- Volume purchasing power.

Hughes Supply differentiates itself from consumer-oriented, large format,
do-it-yourself ("DIY") home center retailers with respect to the type of
customer served, breadth of products offered and level of service provided.
Management believes that the Company's customers, unlike DIY customers, are
typically professionals who choose their building materials suppliers primarily
on the basis of product availability, price, relationships with sales personnel,
and the quality and scope of services offered by such suppliers. Furthermore,
professional customers generally buy in large volumes, are involved in ongoing
jobs or projects lasting months or years resulting in repeat buying situations,
and require specialized services not typically provided by large format DIY home
center retailers. Customer services provided by the Company include credit,
design assistance, material specifications, scheduled job site delivery, job
site visits to ensure satisfaction, technical product services, including
blueprint take-off and computerized order quotes, and assistance with product
returns. Accordingly, the Company has been able to serve customer groups that
large format DIY home center retailers generally do not emphasize.

As a result of the Company's operating and acquisition strategies, net
sales increased to $1.1 billion in fiscal 1996 from $735.0 million in fiscal
1994, a compound annual growth rate of 21.3%; operating income increased to
$29.9 million in fiscal 1996 from $13.1 million in fiscal 1994, a compound
annual growth rate of 51.0%; and the number of branches increased to 212
branches at the end of fiscal 1996 from 143 branches at the end of fiscal 1994,
a compound annual growth rate of 21.8%.

Hughes Supply was founded as a general partnership in Orlando, Florida in
1928 and was incorporated as a Florida corporation in 1947. The Company's
executive offices are located at 20 North Orange Avenue, Suite 200, Orlando,
Florida 32801, and its telephone number is (407) 841-4755.

THE PVF ACQUISITION

On March 27, 1996, the Company entered into an asset purchase agreement to
acquire substantially all of the assets, properties and business of PVF
Holdings, Inc. ("PVF") and its subsidiaries and to assume certain of their
liabilities (the "PVF Acquisition"). The aggregate consideration to be paid in
the PVF Acquisition is approximately $106 million, consisting of cash in the
amount of $74.4 million, the issuance of 669,956 shares of Common Stock and the
assumption of up to $13 million of bank debt. The PVF Acquisition is scheduled
to close on May 13, 1996. This offering is contingent upon the consummation of
the PVF Acquisition. Concurrently, the Company is offering privately (the "Notes
Offering") an aggregate of $100 million of Senior Notes (the "Notes"),
approximately $74.4 million of the proceeds of which will be used to partially
fund the PVF Acquisition. The balance of the proceeds will be used to repay a
portion of the Company's bank debt. See "Use of Proceeds" and "Description of
Notes."

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market, which is the sale of pipe, valve and fitting products for use by
industrial companies that operate manufacturing processes involving highly
corrosive or high temperature fluids, such as those of the petrochemical, food
and beverage, and paper industries. Management believes that PVF carries one of
the country's broadest and deepest inventories of such products, consisting of
more than 15,000 different items sold to approximately 4,000 active customers.
PVF sells both directly to end-users and to supply houses that sell to end-users
through 16 regional branch locations concentrated in the southeastern and
southwestern United States.

For the 12 months ended December 31, 1995, PVF had net sales of $109.2
million and operating income of $27.7 million. On a pro forma basis, giving
effect to the PVF Acquisition, the Company's fiscal 1996 net sales were $1.2
billion, operating income was $57.0 million and, as of the end of fiscal 1996,
the Company had 228 branches located in 19 states and Puerto Rico. See "Selected
Unaudited Pro Forma Consolidated Financial Data."

The PVF Acquisition is a new market acquisition which provides the Company
with several strategic benefits, including: (i) a well-established position in
the stainless steel and specialty alloy sector of the pipe, valve and fitting
products market; (ii) a higher gross margin product group than the Company's
other product groups; (iii) greater focus on targeted industrial and replacement
markets; (iv) a strong management team; and (v) new opportunities for additional
fill-in acquisitions. Additional growth opportunities for the Company related to
the PVF Acquisition include incremental sales of complementary valve products
(which represented only 2% of PVF's fiscal 1995 net sales) and new branch
openings, including the expected opening of a branch in Southern California.

RISK FACTORS

For a discussion of certain factors that should be considered by
prospective purchasers of the Common Stock offered hereby, see "Risk Factors."

FORWARD-LOOKING STATEMENTS

This Prospectus, including the information incorporated by reference
herein, includes "forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is
subject to the safe-harbor created by such sections. The Company's actual
results may differ significantly from the results discussed in such
forward-looking statements. Certain factors that might cause such differences
include, but are not limited to, the "Risk Factors" described herein.

THE OFFERING

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<S> <C>
Common Stock being offered by:
The Company............................................... 1,250,000 shares
The Selling Shareholders.................................. 679,926 shares
Common Stock to be outstanding after this offering.......... 9,222,864 shares(1)
Use of proceeds............................................. To repay indebtedness under
the Company's revolving credit
facility and line of credit
agreement. See "Use of
Proceeds."
NYSE symbol................................................. HUG
</TABLE>

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(1) Based on the number of shares of Common Stock outstanding on April 1, 1996
and including an aggregate of 1,155,749 shares of Common Stock to be issued
in the PVF Acquisition and the acquisition of Elasco Inc. Does not include
485,941 shares of Common Stock issuable upon the exercise of stock options
outstanding as of April 1, 1996.

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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
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JAN. 26, 1996
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JAN. 31, JAN. 29, JAN. 28, JAN. 27, PRO FORMA AS
1992(1) 1993 1994 1995 ACTUAL ADJUSTED(2)
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<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales...................... $558,299 $600,185 $734,958 $875,459 $1,082,179 $1,258,842
Gross profit................... 106,523 115,111 144,492 176,327 223,606 277,580
Operating expenses............. 107,958 109,352 131,383 154,693 193,718 202,246
Operating income (loss)........ (1,435) 5,759 13,109 21,634 29,888 59,683
Interest expense............... 6,439 5,117 5,055 5,284 7,484 12,823
Interest and other income...... 2,058 3,743 2,981 2,848 4,605 5,542
Income (loss) before
income taxes................. (5,816) 4,385 11,035 19,198 27,009 52,402
Net income (loss).............. $ (3,856) $ 2,841 $ 6,524 $ 11,485 $ 16,050 $ 31,133
======== ======== ======== ======== ========= ==========
Earnings (loss) per share
Primary...................... $ (0.76) $ 0.56 $ 1.27 $ 1.83 $ 2.34 $ 3.36
======== ======== ======== ======== ========= ==========
Fully diluted................ $ (0.76) $ 0.56 $ 1.19 $ 1.81 $ 2.31 $ 3.33
======== ======== ======== ======== ========= ==========
OPERATING DATA:
Branches at end of period...... 124 130 143 173 212 240
Comparable branch sales
increases (decrease)(3)...... (14)% 3% 17% 13% 8%
</TABLE>

<TABLE>
<CAPTION>
AS OF JANUARY 26, 1996
-----------------------------------
ACTUAL PRO FORMA AS ADJUSTED(4)
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<S> <C> <C>
BALANCE SHEET DATA:
Working capital.............................................. $180,512 $234,120
Total assets................................................. $379,096 $516,415
Long-term debt, less current portion......................... $106,215 $169,681
Shareholders' equity......................................... $154,143 $211,659
</TABLE>

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(1) Fiscal 1992 represents a 53-week fiscal year.
(2) Gives effect to the following as if each had occurred as of January 28,
1995: (i) the PVF Acquisition; (ii) the acquisitions completed by the
Company on or after January 27, 1996 through April 1, 1996 and the pending
acquisition of Elasco Inc. (the "Fiscal 1997 Acquisitions"); and (iii) this
offering, the Notes Offering and the application of the net proceeds
therefrom by the Company. See "Selected Unaudited Pro Forma Consolidated
Financial Data."
(3) Comparable branch sales increases are calculated for each period presented
by comparing the net sales results in a fiscal year with the net sales
results for the prior fiscal year (for those branches that were open for
the entire fiscal year and the entire prior fiscal year).
(4) Gives effect to the following as if each had occurred as of January 26,
1996: (i) the PVF Acquisition; (ii) the Fiscal 1997 Acquisitions; and (iii)
this offering, the Notes Offering and the application of the net proceeds
therefrom by the Company.

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RISK FACTORS

In addition to the other information included or incorporated by reference
in this Prospectus, prospective investors should consider carefully the
following information relating to the Company and the Common Stock before making
an investment in the Common Stock offered hereby.

RISKS OF ACQUISITION STRATEGY

A significant portion of the Company's growth strategy is based upon the
acquisition of other building products businesses. During the normal course of
its business, the Company pursues suitable acquisition opportunities in selected
markets. There can be no assurance, however, that the Company will be able to
continue to identify and acquire appropriate businesses or obtain financing for
such acquisitions on satisfactory terms. In addition, no assurance can be given
that the Company will be successful in integrating the business obtained in the
PVF Acquisition or any other acquired business into its existing operations, or
that such integration will not result in unforeseen operational difficulties or
require a disproportionate amount of management's attention. Future acquisitions
may be financed through the incurrence of additional indebtedness or through the
issuance of Common Stock or the issuance of equity-linked securities, which may
be dilutive to the Company's shareholders. Furthermore, there can be no
assurance that competition for acquisition opportunities in the building
products industry will not escalate, thereby increasing the cost to the Company
of making further acquisitions or causing the Company to refrain from making
further acquisitions. See "Business -- Acquisition Strategy" and "-- The PVF
Acquisition."

DEPENDENCE ON CONSTRUCTION MARKETS, ESPECIALLY IN FLORIDA

Demand for the Company's products depends to a significant degree on the
commercial, residential and industrial construction markets. The level of
activity in the commercial construction market depends largely on vacancy and
absorption rates, interest rates, regional economic outlooks, the availability
of financing and general economic conditions. The level of activity in the
residential construction market depends on new housing starts and residential
renovation projects, which are a function of many factors, including interest
rates, availability of financing, housing affordability, unemployment,
demographic trends, gross domestic product growth and consumer confidence. The
level of activity in the industrial construction market is linked to the
industrial economic outlook, corporate profitability, interest rates and
capacity utilization. Consequently, the level of activity in the commercial,
residential and industrial construction markets is determined by factors that
are not within the Company's control. Moreover, since such markets are sensitive
to cyclical changes in the economy, future downturns in the economy or lack of
further improvement in the economy could negatively affect the Company's results
of operations, especially in Florida where approximately 43% of the Company's
net sales were derived in fiscal 1996.

UNCERTAINTY OF SUPPLY AND PRICE OF PRODUCTS

The Company distributes construction materials and supplies manufactured by
over 5,500 manufacturers and suppliers, no one of which accounted for more than
6% of the Company's total purchases during fiscal 1996. Although the Company has
a widely diversified base of suppliers, future supply shortages may occur from
time to time as a result of unanticipated demand or production difficulties. In
such cases, suppliers often allocate products among distributors, which could
have a short-term adverse effect on the Company's results of operations.
Although the Company has entered into strategic partnerships with certain
suppliers, if the Company fails to maintain such strategic partnerships or if
such suppliers cease to offer competitive pricing terms, the Company's results
of operations may be adversely affected. Furthermore, the future financial
performance of PVF is directly influenced by the cost of stainless steel which,
as a commodity item, can be volatile. A significant fluctuation in the price of
stainless steel could have a material adverse effect on PVF's future
profitability and could create cyclicality in PVF's operating performance. See
"Business -- Operating Strategy -- Volume Purchasing Power" and "-- Customers
and Suppliers."

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COMPETITION

The building products industry is highly competitive and fragmented. The
principal competitive factors in the Company's business are availability of
materials and supplies, pricing of products, availability of credit, technical
product knowledge as to application and usage, and advisory and other service
capabilities. The Company competes with other wholesalers, manufacturers who
sell certain lines directly to contractors and other of the Company's customers
and, to a limited extent, retailers in the markets for plumbing, electrical
fixtures and supplies, building materials, pool supplies and contractor's tools.
The Company's competition varies by product line, customer classification and
geographic market. No assurance can be given that the Company will be able to
respond effectively to the competitive pressures created by those entities,
especially since certain of those entities have substantially greater financial
and other resources than those of the Company. See "Business -- Competition."

RELIANCE ON EXECUTIVE OFFICERS

The Company is highly dependent upon the skills, experience and efforts of
its executive officers. Loss of the services of one or more of the Company's
executive officers could have a material adverse effect on the Company's
business and development. The Company's continued growth also depends in part on
its ability to attract and retain qualified managers, salespersons and other key
employees and on its executive officers' ability to manage growth successfully.
No assurance can be given that the Company will be able to attract and retain
such employees or that such executive officers will be able to manage growth
successfully. See "Management."

SUBSTANTIAL INCREASE IN SHARES OUTSTANDING; LIMITATIONS ON PAYMENT OF DIVIDENDS

This offering, the PVF Acquisition and the acquisition of Elasco Inc. will
substantially increase the number of shares of Common Stock outstanding. The
amount of future dividends, as well as the decision to pay any dividends, in
respect of the Common Stock will depend on the Company's results of operations,
capital requirements and financial condition and other factors that the Board of
Directors deems relevant. In addition, certain debt instruments and agreements
to which the Company and its subsidiaries are or may in the future become
parties contain or may contain restrictive covenants and provisions that limit
the amount of dividends payable by the Company. See "Price Range of Common Stock
and Dividends" and "Description of Notes."

VOLATILITY OF MARKET PRICE FOR COMMON STOCK

From time to time after this offering, there may be significant volatility
in the market price for the Common Stock. Operating results of the Company or of
other companies participating in the building products industry, changes in
general economic conditions and the financial markets, or other developments
affecting the Company or its competitors could cause the market price for the
Common Stock to fluctuate substantially. See "-- Dependence on Construction
Markets, Especially in Florida" above and "Price Range of Common Stock and
Dividends."

8
<PAGE> 10

USE OF PROCEEDS

The net proceeds to the Company from the sale of 1,250,000 shares of Common
Stock offered hereby are estimated to be approximately $33.9 million
(approximately $40.4 million if the Underwriters' over-allotment option is
exercised in full). This assumes a public offering price of $29.00 per share of
Common Stock, the last reported sale price of the Common Stock on the NYSE on
April 1, 1996, and expenses payable by the Company estimated at $425,000. The
Company expects to apply the net proceeds from this offering to reduce
indebtedness outstanding under its revolving credit facility and line of credit
agreement. At the end of fiscal 1996, such indebtedness had a weighted average
interest rate of 6.29% per annum and becomes payable on June 30, 1998.

The net proceeds to the Company from the sale of the Notes are estimated to
be approximately $100 million. The Company expects to apply approximately $74.4
million of the net proceeds of the Notes Offering to partially fund the PVF
Acquisition. The remaining net proceeds therefrom will be used to further repay
indebtedness outstanding under the Company's revolving credit facility and line
of credit agreement. See "Business -- The PVF Acquisition" and "Description of
Notes."

This offering and the Notes Offering are contingent upon the consummation
of the PVF Acquisition. If the Company is unable to secure financing through the
Notes Offering, the Company has secured a commitment for interim financing of
$55 million from its bank syndication group which, along with interim financing
from the sellers in the PVF Acquisition of $30 million, would be utilized to
fund the PVF Acquisition. The Company will not receive any of the proceeds from
the sale of Common Stock by the Selling Shareholders.

CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company (i) as of January 26, 1996 and (ii) pro forma as adjusted to give effect
to the following as if each had occurred as of January 26, 1996: the PVF
Acquisition; the Fiscal 1997 Acquisitions; and this offering (assuming a public
offering price of $29.00 per share of Common Stock, the last reported sale price
of the Common Stock on the NYSE on April 1, 1996), the Notes Offering and the
application of the net proceeds therefrom by the Company. See "Use of Proceeds,"
"Selected Unaudited Pro Forma Consolidated Financial Data," and the Company's
Consolidated Financial Statements and related notes included in this Prospectus.

<TABLE>
<CAPTION>
JANUARY 26, 1996
----------------------
PRO FORMA
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Current portion of long-term debt....................................... $ 2,551 $ 2,551
-------- -----------
Long-term debt, less current portion:
Unsecured revolving bank notes........................................ 68,300 31,766
Short-term instruments classified as long-term debt................... 35,200 35,200
Other notes payable................................................... 558 558
Capital lease obligations............................................. 2,157 2,157
% Senior Notes...................................................... -- 100,000
-------- -----------
Total long-term debt, less current portion.................... 106,215 169,681
-------- -----------
Shareholders' equity:
Preferred Stock, no par value; 10,000,000 shares authorized; none
issued; preferences, limitations and relative rights to be
established by Board of Directors -- --
Common Stock, par value $1 per share; 20,000,000 shares authorized;
6,798,462 and 9,204,211 issued..................................... 6,798 9,204
Capital in excess of par value........................................ 40,553 91,586
Retained earnings..................................................... 106,792 110,869
-------- -----------
Total shareholders' equity.................................... 154,143 211,659
-------- -----------
Total capitalization..................................... $262,909 $ 383,891
======== =========
</TABLE>

9
<PAGE> 11

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

The Common Stock is listed on the NYSE under the symbol "HUG." The
following table sets forth the high and low sale prices of the Common Stock, as
reported on the NYSE for, and the dividends per share declared in, the periods
indicated.

<TABLE>
<CAPTION>
PRICE RANGE
-------------- DIVIDENDS
HIGH LOW PER SHARE
---- --- ---------
<S> <C> <C> <C>
Year Ended January 27, 1995:
1st Quarter.................................................... $32 1/4 $24 $ .05
2nd Quarter.................................................... 28 3/4 17 .05
3rd Quarter.................................................... 21 17 .06
4th Quarter.................................................... 19 3/8 15 7/8 .06
Year Ended January 26, 1996:
1st Quarter.................................................... 20 7/8 17 3/4 .07
2nd Quarter.................................................... 22 3/8 18 7/8 .07
3rd Quarter.................................................... 27 1/4 21 3/8 .07
4th Quarter.................................................... 30 1/2 23 5/8 .09
Year Ending January 31, 1997:
1st quarter (through April 1, 1996)............................ 29 5/8 26 5/8 .09
---- ---
</TABLE>

The closing sale price of the Common Stock, as reported on the NYSE, on
April 1, 1996 was $29.00 per share. As of April 1, 1996, there were 1,114
holders of record of the Common Stock.

The amount of future dividends, as well as the decision to pay any
dividends, in respect of the Common Stock will depend on the Company's results
of operations, capital requirements and financial condition and other factors
that the Board of Directors deems relevant. In addition, certain debt
instruments and agreements to which the Company and its subsidiaries are or may
in the future become parties contain or may contain restrictive covenants and
provisions that limit the amount of dividends payable by the Company. See
"Description of Notes."

10
<PAGE> 12

SELECTED UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA

The unaudited Pro Forma Consolidated Balance Sheet of the Company as of
January 26, 1996 gives effect to the following as if each had occurred as of
January 26, 1996: (i) the PVF Acquisition; (ii) the Fiscal 1997 Acquisitions;
and (iii) this offering, the Notes Offering and the application of the net
proceeds therefrom by the Company. The unaudited Pro Forma Consolidated
Statement of Income of the Company for the fiscal year ended January 26, 1996
gives effect to the following as if each had occurred on January 28, 1995: (i)
the PVF Acquisition; (ii) the Fiscal 1997 Acquisitions; and (iii) this offering,
the Notes Offering and the application of the net proceeds therefrom by the
Company.

The PVF Acquisition was accounted for under the purchase method of
accounting. The total purchase price was allocated to tangible and identifiable
intangible assets and liabilities based on management's estimate of their fair
values with the excess of cost over the fair value of the net assets acquired
allocated to goodwill.

The unaudited Pro Forma Consolidated Balance Sheet and Statement of Income
have been prepared by the Company based on the Consolidated Financial Statements
of the Company and PVF included in this Prospectus. The unaudited Pro Forma
Consolidated Balance Sheet and Statement of Income are presented for
illustration purposes only and do not purport to be indicative of the combined
financial condition or results of operations that actually would have occurred
if the transactions described above had been effected at the dates indicated or
to project future financial condition or results of operations for any future
period. In particular, PVF's gross margin may be adversely affected by
fluctuations in stainless steel prices. In addition, the volatility of stainless
steel prices may create cyclicality in PVF's operating performance. Therefore,
management believes that the pro forma consolidated financial data are not
necessarily indicative of future performance. The unaudited Pro Forma
Consolidated Balance Sheet and Statement of Income should be read in conjunction
with the Company's Consolidated Financial Statements and the Consolidated
Financial Statements of PVF and related notes thereto included in this
Prospectus.

11
<PAGE> 13

HUGHES SUPPLY, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JANUARY 26, 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON
STOCK
PRO FORMA PRO FORMA OFFERING AND
ADJUSTMENTS ADJUSTMENTS NOTES
HUGHES PVF FISCAL 1997 FISCAL 1997 PRO FORMA OFFERING PRO FORMA
SUPPLY PVF ACQUISITION ACQUISITIONS ACQUISITIONS COMBINED ADJUSTMENTS AS ADJUSTED
-------- ------- ----------- ------------ ------------ --------- ------------ -----------
(A) (A) (B) (B)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents... $ 3,432 $ 204 $ -- $ 274 $ -- $ 3,910 $ -- $ 3,910
Accounts
receivable,
net........ 143,354 12,584 -- 8,516 (62)(i) 164,392 -- 164,392
Inventories... 132,524 39,829 -- 8,572 -- 180,925 -- 180,925
Other current
assets..... 18,175 747 (747)(c) 44 (16)(i) 18,203 -- 18,203
-------- ------- ----------- ------------ ------------ --------- ------------ -----------
Total
current
assets... 297,485 53,364 (747) 17,406 (78) 367,430 -- 367,430
Property and
equipment,
net.......... 57,697 1,295 500(d) 3,107 (1,385)(i) 61,214 -- 61,214
Goodwill....... 16,637 -- 58,167(n) -- 4,327(o) 79,131 -- 79,131
Other assets... 7,277 1,270 (132)(e) 597 (500)(i) 8,512 128(l) 8,640
-------- ------- ----------- ------------ ------------ --------- ------------ -----------
$379,096 $55,929 $ 57,788 $ 21,110 $ 2,364 $516,287 $ 128 $ 516,415
======== ======= ========== ========= ========= ======== ========== =========
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Current
liabilities:
Accounts
payable.... $ 84,875 $ 8,233 $ -- $ 5,717 $ -- $ 98,825 $ -- $ 98,825
Other current
liabilities... 32,098 8,126 (6,595)(f) 1,062 (206)(i) 34,485 -- 34,485
-------- ------- ----------- ------------ ------------ --------- ------------ -----------
Total
current
liabilities... 116,973 16,359 (6,595) 6,779 (206) 133,310 -- 133,310
Long-term
debt......... 106,215 7,084 78,269(g)(p) 7,405 5,018(j) 203,991 (34,310)(m)(p) 169,681
Other
noncurrent
liabilities... 1,765 -- -- 605 (605)(i) 1,765 -- 1,765
-------- ------- ----------- ------------ ------------ --------- ------------ -----------
Total
liabilities... 224,953 23,443 71,674 14,789 4,207 339,066 (34,310) 304,756
-------- ------- ----------- ------------ ------------ --------- ------------ -----------
Shareholders'
equity:
Capital
stock...... 6,798 10 660(h) 521 (35)(k) 7,954 1,250(m) 9,204
Capital in
excess of
par
value...... 40,553 2,021 15,909(h) 85 (170)(k) 58,398 33,188(m) 91,586
Retained
earnings... 106,792 30,455 (30,455)(h) 5,715 (1,638)(k) 110,869 -- 110,869
-------- ------- ----------- ------------ ------------ --------- ------------ -----------
Total
shareholders'
equity... 154,143 32,486 (13,886) 6,321 (1,843) 177,221 34,438 211,659
-------- ------- ----------- ------------ ------------ --------- ------------ -----------
$379,096 $55,929 $ 57,788 $ 21,110 $ 2,364 $516,287 $ 128 $ 516,415
======== ======= ========== ========= ========= ======== ========== =========
</TABLE>

See notes to unaudited pro forma consolidated balance sheet.

12
<PAGE> 14

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(a) The Company has entered into an agreement to acquire certain assets and
liabilities of PVF for cash consideration of $74,400 and Common Stock
consideration of $18,600.

(b) The Company has acquired certain assets and liabilities of two entities
accounted for under the purchase method of accounting, and has entered into
an agreement to acquire a third entity which will be accounted for under
the poolings of interests method. Cash consideration of $5,430 has been
paid and Common Stock consideration of $13,250 will be issued for these
acquisitions. These acquisitions are immaterial individually and in the
aggregate.

(d) Adjustment to write-up property and equipment acquired in the PVF
Acquisition to its estimated fair value.

(e) Adjustment to record the elimination of $504 of other assets of PVF not
being acquired and to record debt issuance costs of $372 incurred on the
issuance of $74,772 of Notes.

(f) Adjustment to accrue for professional fees of $500 associated with the PVF
Acquisition, to eliminate $2,818 of other current liabilities which are not
being assumed, and to reclassify $4,277 of the current portion of PVF debt
to long term as it will be replaced by the Company's line of credit.

(g) Adjustment to reflect the issuance of $74,772 of Notes (assuming an
interest rate of 7.75% and debt issuance costs of $372) to be issued in
connection with the PVF Acquisition, the elimination of $780 of PVF debt
which is not being assumed, and the reclassification of $4,277 of the
current portion of PVF debt to long term as it will be replaced by the
Company's line of credit.

(h) Elimination of the shareholders' equity accounts of PVF and to reflect the
issuance of 669,956 shares of Common Stock in connection with the PVF
Acquisition at $27.76 per share, which approximates the estimated fair
value of the Common Stock at the date the terms of the acquisition were
agreed upon.

(i) Elimination of assets/liabilities of the Fiscal 1997 Acquisitions which
are not being acquired or assumed.

(j) Adjustment to reflect the borrowing of $5,430 under the Company's line of
credit facility to fund a portion of the purchase price for the Fiscal 1997
Acquisitions and the elimination of $412 of long-term debt of the acquired
companies which is not being assumed.

(k) Adjustment to reflect the issuance of 485,793 shares of Common Stock for
one of the Fiscal 1997 Acquisitions to be accounted for under the poolings
of interest method of accounting and the elimination of the capital
accounts of the Fiscal 1997 Acquisitions which have been accounted for
under the purchase method of accounting.

(l) Adjustment to reflect the balance of the debt issue costs to be incurred
upon the issuance of $25,228 of Notes.

(m) Adjustment to reflect the issuance of $25,228 of Notes (assuming an
interest rate of 7.75% and net proceeds to the Company of $25,100) and
the issuance of 1,250,000 shares of Common Stock at an assumed price of
$29.00 per share (estimated net proceeds to the Company of $27.55 per
share and $34,438 in the aggregate) with the net proceeds from these
offerings being used to reduce amounts outstanding under the Company's
line of credit facility.

(n) Adjustment to record the excess of acquisition cost over the fair value of
net assets acquired (goodwill) of PVF of $58,167.

(o) Adjustment to reflect the excess of the acquisition cost over the fair
value of net assets acquired (goodwill) of $4,327.

(p) Included in the adjustment to long-term debt is $74,772 and $25,228 for the
private placement of $100,000 of Notes with an assumed final maturity in
2008. Proceeds from the issuance of the Notes will be used to partially
fund the PVF Acquisition and to provide additional working capital to the
Company. Should the Notes Offering not be consummated, the Company intends
to finance the PVF Acquisition through a $55,000 bridge loan with the
Company's bank syndication group and issuance of a $30,000 promissory note
to the sellers. The bridge loan will carry interest at the same rate as the
Company's line of credit facility (an average rate of 6.29% in fiscal 1996)
for the first six months, and will increase 1% for months six through nine
and increase an additional 1% after nine months. The sellers' promissory
note will bear interest at 6% for the first six months, then will increase
to prime for the next six months. Thereafter, interest on such note will be
at prime plus 1/2%. The sellers' note will mature on May 31, 1998. See
"Description of Notes."

13
<PAGE> 15

HUGHES SUPPLY, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED JANUARY 26, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS
HUGHES PVF FISCAL 1997 FISCAL 1997
SUPPLY PVF ACQUISITION ACQUISITIONS ACQUISITIONS
------------ ----------- ----------- ------------ ---------------
(A) (A)
<S> <C> <C> <C> <C> <C>
Net sales................ $1,082,179 $ 109,159 $ -- $ 67,690 $ (186)(f)
Cost of sales............ 858,573 66,428 -- 56,261 --
------------ ----------- ----------- ------------ ---------------
Gross profit........... 223,606 42,731 -- 11,429 (186)
Operating expenses....... 183,133 14,349 (3,264)(b) 9,064 (1,036)(g)
Depreciation &
amortization........... 10,585 673 3,878(c) 266 249(h)
------------ ----------- ----------- ------------ ---------------
Total operating
expenses............... 193,718 15,022 614 9,330 (787)
------------ ----------- ----------- ------------ ---------------
Operating income....... 29,888 27,709 (614) 2,099 601
Interest and other
income................. 4,605 175 -- 762 --
Interest expense......... (7,484) (965) (5,537)(d)(j) (615) --
------------ ----------- ----------- ------------ ---------------
Income before taxes.... 27,009 26,919 (6,151) 2,246 601
Income taxes............. 10,959 10,910 (2,478)(e) 23 1,133(e)
------------ ----------- ----------- ------------ ---------------
Net income............. $ 16,050 $ 16,009 $(3,673) $ 2,223 $ (532)
=========== ========== =========== =========== =============
Earnings per share:
Primary................ $ 2.34
===========
Fully diluted.......... $ 2.31
===========
Average shares
outstanding:
Primary................ 6,856
===========
Fully diluted.......... 6,935
===========

<CAPTION>
COMMON
AND NOTES
PRO FORMA OFFERING PRO FORMA
COMBINED ADJUSTMENTS AS ADJUSTED
---------------- ----------- -----------
<S> <C> <C> <C>
Net sales................ $ 1,258,842 $ -- $ 1,258,842
Cost of sales............ 981,262 -- 981,262
---------------- ----------- -----------
Gross profit........... 277,580 -- 277,580
Operating expenses....... 202,246 -- 202,246
Depreciation &
amortization........... 15,651 -- 15,651
---------------- ----------- -----------
Total operating
expenses............... 217,897 -- 217,897
---------------- ----------- -----------
Operating income....... 59,683 -- 59,683
Interest and other
income................. 5,542 -- 5,542
Interest expense......... (14,601) 1,778(i)(j) (12,823)
---------------- ----------- -----------
Income before taxes.... 50,624 1,778 52,402
Income taxes............. 20,547 722(e) 21,269
---------------- ----------- -----------
Net income............. $ 30,077 $ 1,056 $ 31,133
========== =========== ==========
Earnings per share:
Primary................ $ 3.36
==========
Fully diluted.......... $ 3.33
==========
Average shares
outstanding:
Primary................ 9,262
==========
Fully diluted.......... 9,342
==========
</TABLE>

See notes to unaudited pro forma consolidated statement of income.

14
<PAGE> 16

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)

(a) Amounts represent results of acquired companies for the 12 months ended
December 31, 1995.
(b) Adjustments to operating expenses to eliminate overhead allocation from
PVF's parent of $2,341 and personnel costs of $923 which will be
reduced/eliminated as a result of the acquisition.
(c) Adjustment to reflect amortization on goodwill of $58,167 on a
straight-line basis over 15 years.
(d) Adjustment to interest expense as a result of the PVF Acquisition:

<TABLE>
<S> <C>
Interest on $74,772 of Notes (including $372 of debt issuance costs)
to be issued in connection with the PVF Acquisition, assuming an
interest rate of 7.75%............................................ $5,795
Reduction of interest on PVF average borrowings of $10,651 at
average rate of 9.06% replaced by the Company's line of credit
with an average rate of 6.29%..................................... (295)
Amortization of debt issuance costs................................. 37
------
$5,537
======
</TABLE>

(e) Federal income tax adjustments relating to the acquisitions using the
Company's annual effective tax rate of 40.6%. This amount also reflects the
effect on income taxes for earnings on a sub-chapter S corporation.
(f) Elimination of sales generated from assets which were not acquired.
(g) Adjustment to reflect a reduction in personnel costs of $855 as a result of
the acquisitions and the elimination of expenses of $181 associated with
assets which were not acquired.
(h) Adjustment to eliminate depreciation charges of $39 for plant and equipment
which was not acquired and to reflect amortization of $288 on $4,327 of
goodwill recorded on the acquisitions on a straight-line basis over 15
years.
(i) Adjustment to interest expense as a result of this offering and the Notes
Offering:

<TABLE>
<S> <C>
Use of proceeds from this offering to reduce amounts outstanding
under the Company's line of credit facility....................... $2,159
Increase in interest expense resulting from replacing amounts
outstanding under the line of credit facility with the Notes...... (381)
------
$1,778
======
</TABLE>

(j) If the Company is unable to secure financing through the Notes Offering,
the Company has secured a commitment for interim financing of $55,000 from
its bank syndication group which along with interim financing from the
sellers of $30,000 would be utilized to fund the PVF Acquisition. The
alternative financing would result in the Company incurring an additional
$187 of interest expense compared to the amount assumed with respect to the
Notes Offering.

15
<PAGE> 17

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

The following selected consolidated financial data have been derived from
audited consolidated financial statements of the Company. The following data
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Company's Consolidated
Financial Statements and related notes included in this Prospectus.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------------------
JAN. 31, JAN. 29, JAN. 28, JAN. 27, JAN. 26,
1992(1) 1993 1994 1995 1996
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales.................................. $558,299 $600,185 $734,958 $875,459 $1,082,179
Cost of sales.............................. 451,776 485,074 590,466 699,132 858,573
-------- -------- -------- -------- ----------
Gross profit............................... 106,523 115,111 144,492 176,327 223,606
Operating expenses......................... 107,958 109,352 131,383 154,693 193,718
-------- -------- -------- -------- ----------
Operating income (loss).................... (1,435) 5,759 13,109 21,634 29,888
Interest expense........................... 6,439 5,117 5,055 5,284 7,484
Interest and other income.................. 2,058 3,743 2,981 2,848 4,605
-------- -------- -------- -------- ----------
Income (loss) before income taxes.......... (5,816) 4,385 11,035 19,198 27,009
Income taxes (benefits).................... (1,960) 1,544 4,511 7,713 10,959
-------- -------- -------- -------- ----------
Net income (loss).......................... $ (3,856) $ 2,841 $ 6,524 $ 11,485 $ 16,050
======== ======== ======== ======== =========
Earnings (loss) per share:
Primary.................................. $ (0.76) $ 0.56 $ 1.27 $ 1.83 $ 2.34
======== ======== ======== ======== =========
Fully diluted............................ $ (0.76) $ 0.56 $ 1.19 $ 1.81 $ 2.31
======== ======== ======== ======== =========
Cash dividends per share................... $ 0.24 $ 0.12 $ 0.16 $ 0.22 $ 0.30
======== ======== ======== ======== =========
Shares outstanding:
Primary.................................. 5,046 5,058 5,143 6,259 6,856
Fully diluted............................ 5,046 5,086 6,313 6,443 6,935
OPERATING DATA:
Branches at end of period.................. 124 130 143 173 212
Comparable branch sales increases
(decrease)(2)............................ (14)% 3% 17% 13% 8%
BALANCE SHEET DATA (END OF PERIOD):
Working capital............................ $112,984 $120,522 $142,392 $172,794 $180,512
Total assets............................... 234,723 246,249 279,390 346,116 379,096
Long-term debt, less current portion....... 77,240 86,258 104,692 105,243 106,215
Shareholders' equity....................... 86,829 90,080 98,066 136,104 154,143
</TABLE>

- ---------------

(1) Fiscal 1992 represents a 53-week fiscal year.
(2) Comparable branch sales increases are calculated for each period presented
by comparing the net sales results in a fiscal year with the net sales
results for the prior fiscal year (for those branches that were open for
the entire fiscal year and the entire prior fiscal year).

16
<PAGE> 18

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Hughes Supply is one of the largest diversified wholesale distributors of
materials, equipment and supplies for construction and industrial markets
operating primarily in the southeastern and midwestern United States. The
Company distributes more than 100,000 products, through 221 branches located in
15 states and Puerto Rico. The Company's customers are subcontractors, general
contractors, electric utilities, municipalities and manufacturers. Management
believes that the Company holds significant market share in a majority of its
local markets and is one of the largest distributors of its range of products in
the southeastern and midwestern United States.

Since January 29, 1993, the Company has completed 23 acquisitions
representing 68 branches, excluding the PVF Acquisition. In addition to
increased geographical penetration, acquisitions often provide opportunities for
the Company to gain market share and to enhance and diversify product offerings.
Management believes that the most cost effective way for the Company to enter
new geographic markets is through acquisitions.

On March 27, 1996, the Company entered into an asset purchase agreement to
acquire substantially all of the assets, properties and business of PVF and its
subsidiaries and to assume certain of their liabilities. The aggregate
consideration to be paid in the PVF Acquisition is approximately $106 million,
consisting of cash in the amount of $74.4 million, the issuance of 669,956
shares of Common Stock and the assumption of up to $13 million of bank debt. The
PVF Acquisition is scheduled to close on May 13, 1996. This offering is
contingent upon the consummation of the PVF Acquisition.

On February 5, 1996, the Company acquired Waldorf Supply Inc. ("Waldorf"),
a wholesale distributor of plumbing supplies and materials in Waldorf, Maryland.
Waldorf has one location and had annual sales of approximately $6.2 million in
its last fiscal year. Waldorf is a fill-in acquisition.

On March 22, 1996, the Company acquired West Virginia Water and Waste
Supply Co. ("West Virginia Water"), a wholesale distributor of water and sewer
products in Charleston, West Virginia. West Virginia Water has two locations and
had annual sales of approximately $17.9 million in its last fiscal year. West
Virginia Water represents a new market acquisition.

The Company expects to acquire Elasco Inc., a wholesale distributor of
electric utility products in Mattoon, Illinois in May 1996. Elasco Inc. has
three locations and had annual sales of approximately $43.6 million in its last
fiscal year. Elasco Inc. is a new market acquisition in the Midwest and will be
accounted for as a poolings of interest.

The acquisitions of Waldorf, West Virginia Water and Elasco Inc. are
collectively referred to as the "Fiscal 1997 Acquisitions."

As described in Note 2 of the Notes to the Company's Consolidated Financial
Statements, in fiscal 1996 the Company entered into business combinations with
Moore Electric Supply, Inc. and Florida Pipe & Supply Company, and such business
combinations were accounted for as poolings of interests. Accordingly, all
financial data in this discussion and analysis is reported as though the
companies had always been combined.

In addition to the business combinations accounted for as poolings of
interests referred to above, in fiscal 1996 the Company purchased nine wholesale
distributor businesses for an aggregate amount of approximately $13 million ($10
million in cash and $3 million in Common Stock). In fiscal 1995, amounts paid
for acquisitions totaled approximately $21 million ($11 million in cash, $4
million in Common Stock and $6 million in other consideration), and amounts paid
for acquisitions in fiscal 1994 totaled approximately $4 million in cash. The
results of these acquired operations are included in the Company's Consolidated
Financial Statements from their respective dates of acquisition. See
"Business -- Acquisition Strategy."

17
<PAGE> 19

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage
of net sales represented by certain items in the Company's Consolidated
Statements of Income:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------
JAN. 28, JAN. 27, JAN. 26,
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
STATEMENTS OF INCOME DATA:
Net sales..................................................... 100.0% 100.0% 100.0%
Cost of sales................................................. 80.3 79.9 79.3
Gross profit................................................ 19.7 20.1 20.7
Operating expenses............................................ 17.9 17.7 17.9
Operating income............................................ 1.8 2.5 2.8
Interest and other income..................................... 0.4 0.3 0.4
Interest expense.............................................. 0.7 0.6 0.7
Income before income taxes.................................. 1.5 2.2 2.5
Income taxes.................................................. 0.6 0.9 1.0
Net income.................................................. 0.9 1.3 1.5
</TABLE>

NET SALES

Net sales were $1.1 billion in fiscal 1996, representing a 23.6% increase
over fiscal 1995 net sales of $875.5 million. Fiscal 1995 net sales represented
a 19.1% increase over fiscal 1994 net sales of $735.0 million. Newly-opened and
acquired branches accounted for approximately 66% of the increase in net sales
in fiscal 1996 and 40% of the increase in net sales in fiscal 1995. The
remainder of the increase in each period was a result of sales increases in
existing branches.

The Company's strategy of expansion and diversification has contributed to
the above-mentioned sales gains along with growth in comparable branch sales.
Although residential construction activity decreased in fiscal 1995 and fiscal
1996 following a period of substantial residential construction activity in
fiscal 1994, this decrease was offset by an increase in commercial and
industrial construction activity in fiscal 1995 which continued through fiscal
1996.

Construction activity, especially commercial construction activity in the
Southeast, is expected to remain strong during fiscal 1997. Management believes
that the continuing favorable construction markets together with the Company's
acquisition program and growth in comparable branch sales should result in
continued sales growth.

GROSS PROFIT

Gross profit was $223.6 million in fiscal 1996, representing a 26.8%
increase over fiscal 1995 gross profit of $176.3 million. Fiscal 1995 gross
profit increased 22.0% over fiscal 1994 gross profit of $144.5 million. Gross
margins have improved steadily over the past three fiscal years. The improvement
has resulted from several factors, including the introduction of product
offerings with better margins, efficiencies resulting from the Company's use of
central distribution centers, and increased volume and concentration of supply
sources in connection with the implementation of the Company's preferred vendor
program.

OPERATING EXPENSES

Operating expenses were $193.7 million in fiscal 1996, representing a 25.2%
increase over fiscal 1995 operating expenses of $154.7 million. Newly-opened and
acquired branches accounted for approximately 60% of the increase. The remainder
of the increase was due primarily to personnel and transportation costs
associated with growth in the Company's sales. The 17.7% increase in fiscal 1995
operating expenses over fiscal 1994 operating expenses of $131.4 million was
primarily attributable (approximately 45%) to branches opened and acquisitions
made during fiscal 1995, as well as to an increase in costs, such as personnel,

18
<PAGE> 20

transportation and insurance, associated with sales growth. Operating expenses
as a percentage of sales remained relatively constant over the three-year
period.

NON-OPERATING INCOME AND EXPENSES

Interest and other income increased to $4.6 million in fiscal 1996 compared
to $2.8 million in fiscal 1995, representing a 61.7% increase. This increase is
primarily the result of improved collection of service charge income on
delinquent accounts receivable. In fiscal 1995, interest and other income
decreased to $2.8 million compared to $3.0 million in fiscal 1994, representing
a 4.5% decrease.

Interest expense increased to $7.5 million in fiscal 1996, representing a
41.6% increase over fiscal 1995 interest expense of $5.3 million. Higher
interest rates and higher average borrowing levels were equally responsible for
the increase. Fiscal 1995 interest expense was $200,000 higher than fiscal 1994
interest expense of $5.1 million, representing a 4.5% increase. This increase
was attributable to higher interest rates which were partially offset by lower
borrowing levels resulting in part from the conversion of $23.0 million of
subordinated debentures in April, 1994.

NET INCOME

As a result of the foregoing factors, net income in fiscal 1996 increased
by 39.7% to $16.1 million from $11.5 million in fiscal 1995. In fiscal 1996,
fully diluted earnings per share increased 27.6% to $2.31 compared to $1.81 in
fiscal 1995. Net income in fiscal 1995 increased by 76% from $6.5 million in
fiscal 1994. In fiscal 1995, fully diluted earnings per share increased by 52.1%
from $1.19 in fiscal 1994.

LIQUIDITY AND CAPITAL RESOURCES

Working capital at the end of fiscal 1996 amounted to $180.5 million
compared to $172.8 million and $142.4 million at the end of fiscal 1995 and
fiscal 1994, respectively. The Company continues to maintain more than 75% of
total assets as current assets. The working capital ratio was 2.54 to 1, 2.67 to
1 and 2.89 to 1 for fiscal 1996, fiscal 1995 and fiscal 1994, respectively.

During periods of expansion when sales volumes are increasing, the Company
is required to carry higher levels of inventories and receivables to support its
growth. The Company strives to maintain inventories at levels that support, but
not exceed, its current sales activity through (i) increased use of its central
distribution facilities and (ii) investment in resources to improve the
efficiency and service capability of such facilities. As a result, the inventory
turnover rate has been in excess of six turns for each of the last three fiscal
years, ranging from a low of 6.2 turns in fiscal 1995 to a high of 6.7 turns in
fiscal 1996. During the same period, the accounts receivable turnover rate has
been in excess of seven turns, ranging from a low of 7.1 turns in fiscal 1995 to
a high of 7.6 turns in fiscal 1996.

Net cash provided by operations was $20.3 million in fiscal 1996 compared
to $3.7 million in fiscal 1995 and cash used in operations in fiscal 1994 was
$2.2 million. The foregoing changes are due primarily to fluctuations in
accounts receivable, inventories and accounts payable. Because of an increase in
the amount of cash generated in fiscal 1996, net borrowings under short-term
debt instruments decreased to $6.2 million compared to $23.8 million in fiscal
1995 and $16.7 million in fiscal 1994.

The Company invested $11.9 million in property and equipment and $10.0
million in business acquisitions in fiscal 1996. These business acquisitions
added 20 branches to the Company's operations. Capital expenditures, not
including amounts which may be paid for business acquisitions in fiscal 1997,
are expected to be approximately $12 million.

During fiscal 1996, the Company's revolving credit facility and line of
credit agreement with a group of banks was amended in order to expand the
Company's maximum borrowings thereunder from $130 million to $160 million (see
Note 4 of Notes to the Company's Consolidated Financial Statements). After
giving effect to this offering (assuming a public offering price of $29.00 per
share of Common Stock, the last reported sale price of the Common Stock on the
NYSE on April 1, 1996) and approximately $25.2 million from the Notes

19
<PAGE> 21

Offering to reduce bank debt, the Company will have approximately $96.8 million
available under this agreement.

Management believes that the Company has sufficient borrowing capacity to
take advantage of growth and business acquisition opportunities and has the
resources necessary (subject to certain covenants related to the Notes and in
the revolving credit facility and line of credit agreement) to fund ongoing
operating requirements and anticipated capital expenditures. Future expansion
will continue to be financed on a project-by-project basis through the
incurrence of additional indebtedness or, as circumstances allow, through the
issuance of Common Stock or equity-linked securities.

INFLATION AND CHANGING PRICES

The Company is aware of the potentially unfavorable effects inflationary
pressures may create as a result of higher asset replacement costs and related
depreciation, higher interest rates and higher material costs. The Company seeks
to minimize these effects by taking advantage of economies of scale in
purchasing and inventory management which result in cost reductions and improved
productivity. In addition, from time to time the Company will also implement
price increases in order to maintain reasonable profit margins. Management
believes, however, that inflation (which has been moderate over the past few
years) and changing prices have not significantly affected the Company's results
of operations or markets in its three most recent fiscal years.

SEASONALITY

The Company experiences some seasonality in its business. The Company's net
sales and net income during the first quarter and, to a lesser extent, the
fourth quarter of its fiscal year are generally lower than the second and third
quarters of its fiscal year. The first and fourth quarter are typically
adversely affected by winter construction cycles and weather patterns as the
level of activity in both the home improvement and new construction markets
decreases. The Company has a concentration of locations in the southeastern
United States, which can offset to some degree the effects of winter weather in
other states. Management closely monitors operating expenses and inventory
levels during seasonally affected periods and, to the extent possible, controls
variable operating costs.

20
<PAGE> 22

BUSINESS

GENERAL

The Company's principal business objective is to achieve profitable growth,
both internally and through selective acquisitions, primarily in existing and
contiguous geographic markets. The Company has grown internally through
increases in comparable branch net sales, new branch openings and the addition
of new product groups. Since January 29, 1993, the Company has opened 25 new
branches. In addition, the Company continues to pursue an active acquisition
program to capitalize on the opportunities presented by the substantial size and
highly fragmented ownership structure of its industry. Since January 29, 1993,
the Company has completed 23 acquisitions representing 68 branches, excluding
the PVF Acquisition. In addition to increased geographic penetration,
acquisitions often provide opportunities for the Company to gain market share
and to enhance and diversify product offerings. Management believes that the
most cost effective way for the Company to enter new geographic markets is
through acquisitions. All of the Company's significant acquisitions have been
accretive to the Company's earnings per share.

INDUSTRY OVERVIEW

Based on estimates available to the Company, industry sales in the United
States of products sold by the Company exceeded $100 billion in 1995, and no
wholesale distributor of these products accounted for more than 2% of the total
market. As a result of their smaller size, many of the local or regional
distributors generally lack the purchasing power of a larger entity, may lack
the resources to offer broad product lines and multiple brands, and may not
possess sophisticated inventory management and control systems necessary to
operate multiple branches efficiently.

As a result, during the past decade many of the large wholesale
distributors, including the Company, have grown considerably through
acquisitions. However, many independent distributors are still privately owned,
relationship-based companies that emphasize service, delivery and reliability to
their customers. Further, a majority of independent distributors focus on a
particular size or type of customer and a particular product

21
<PAGE> 23

group. In contrast, the Company services various sizes and types of customers
and multiple product groups and diversifies its sales across various types of
construction and users of its products. Due to its strong competitive position,
its size and its management infrastructure, management also believes that the
Company is well-positioned to continue to benefit from consolidation trends
within the wholesale distribution business.

ACQUISITION STRATEGY

New market acquisitions represent the addition of new product groups,
within related commercial construction and industrial products categories, or
the entry into new geographic markets, or both. During the last three fiscal
years, the Company has increasingly focused on new market acquisitions with the
goal of adding products and product groups with higher gross margins, increasing
sales to the replacement and industrial markets (which tend to be less cyclical
than new construction markets), achieving greater geographic diversification and
developing additional opportunities for future fill-in acquisitions and new
branch openings. Recent new market acquisitions completed by the Company include
(i) The Treaty Distribution Group, resulting in a significant increase in the
Company's water and sewer products business in new geographic markets, (ii)
Moore Electric Supply, Inc., resulting in a significant increase in the
Company's electrical products business in new geographic markets, and (iii)
Florida Pipe & Supply Company, the Company's initial entry into the industrial
pipe, valve and fitting market.

22
<PAGE> 24

The following table summarizes the fill-in and new market acquisitions
completed, or to be completed, by the Company since January 29, 1993:

<TABLE>
<CAPTION>
TYPE OF DATE OF NUMBER OF STATE(S)/TERRITORY MAJOR PRODUCT
ACQUISITION ACQUISITION ACQUISITION BRANCHES OF OPERATION GROUPS
- --------------------- ----------- ---------------- --------- ----------------- ---------------------
<S> <C> <C> <C> <C> <C>
Virginia branch...... Fill-in June, 1993 1 VA Plumbing
Florida and Georgia
branches........... Fill-in June, 1993 3 FL, GA Electrical and
Electric Utilities
Electrical
Distributors,
Inc.*.............. New market June, 1993 1 GA Electrical
Alabama Water Works
Supply, Inc........ New market July, 1993 3 AL Water and Sewer
Florida branches..... Fill-in December, 1993 2 FL Building Materials
Swaim Supply
Company*........... New market January, 1994 8 NC, VA Plumbing, Air
Conditioning and
Heating
Florida and Georgia
branches(1)........ Fill-in February- 4 FL, GA Water and Sewer,
September, 1994 Plumbing and
Electrical
Treaty Distribution
Group branches..... New market January, 1995 16 IN, OH Water and Sewer,
Plumbing, Air
Conditioning and
Heating
Olander & Brophy,
Inc................ New market March, 1995 4 OH, PA Pool Equipment and
Supplies, Water
Systems
Port City Electrical
Supply, Inc........ Fill-in March, 1995 3 GA, SC Electrical
Elec-Tel Supply
Company............ Fill-in April, 1995 1 GA Electric Utilities
Various
branches(1)........ Fill-in July, 1995 9 AL, FL, KY, MD, Electrical, Pool
February, 1996 NC, NJ, SC, TN, Equipment and
VA Supplies, Plumbing
Moore Electric
Supply, Inc.*...... New market August, 1995 5 NC, SC Electrical
Atlantic Pump &
Equipment
Companies.......... Fill-in September, 1995 4 FL, PR Pool Equipment and
Supplies
Florida Pipe & Supply
Company*........... New market December, 1995 1 FL Industrial Pipe,
Valves and Fittings
Waldorf Supply
Inc................ Fill-in February, 1996 1 MD Plumbing
West Virginia Water
and Waste Supply
Co................. New market March, 1996 2 WV Water and Sewer
Elasco Inc.*......... New market Pending 3 IL, OH Electrical and
Electrical Utilities
PVF.................. New market Pending 16 AL, GA, IL, LA, Industrial Pipe
MO, NC, NJ, TN, Valves and Fittings
TX, UT, WA
--
TOTAL.......
87
==========
</TABLE>

- ---------------

* Accounted for, or to be accounted for, as pooling of interests.

(1) Facilities acquired in purchases of assets from four entities.

23
<PAGE> 25

OPERATING STRATEGY

The Company's operating strategy is based on decentralizing customer
related functions at the branch level, such as sales and local inventory
management, and centralizing certain administrative functions at the corporate
level, such as credit, human resources, finance and accounting, and management
information systems. Key elements of the Company's operating strategy include:

Comprehensive and Diversified Product Groups. As part of its emphasis
on superior customer service, the Company offers more than 100,000 products
in nine product groups at competitive prices. Distribution of a wide
variety of products within product groups assists the Company's customers
in managing their inventory, arranging for consolidated delivery
requirements and providing a greater portion of total job specifications.
The depth and breadth of the Company's product groups allows it to make add
on sales of higher margin, non-commodity items.

The Company is diversified across nine product groups and various
sectors of the construction industry (such as commercial, residential,
utility and industrial), which lessens its dependence upon market
conditions applicable to any one of its products groups or any single
sector of the construction industry. Further, the Company's product
diversification allows it to participate in multiple phases of construction
projects.

Superior Customer Service. Substantially all of the Company's sales
are to professional customers with whom the Company has developed long-term
relationships. These relationships are largely based on the Company's
history of providing superior service. Customer services provided by the
Company include credit, design assistance, material specifications,
scheduled job site delivery, job site visits to ensure satisfaction,
technical product services, including blueprint take-off and computerized
order quotes, and assistance with product returns.

Local Market Focus. The Company has organized its branches as
autonomous, decentralized branches capable of meeting local market needs
and offering competitive prices. Each branch handles one or more of the
Company's product groups and operates as a separate profit center with its
own sales force. Each branch manager has the authority and responsibility
to set pricing and tailor the product offering and mix, as well as the
nature of services offered, to meet the local market demand. In addition,
each branch manager is responsible for purchasing, maintenance of adequate
inventory levels, cost controls and customer relations.

The Company has been able to tailor its branch size and product
offerings to perceived market demand. As a result, the Company has
successfully operated branches in secondary cities where it has achieved
significant market share and in larger metropolitan areas where it has
established a sound market presence.

Well-Trained and Experienced Workforce. The Company has implemented
extensive employee training and recruiting programs to ensure that its
employees have the skill levels necessary to compete effectively in today's
marketplace. The Company utilizes in-depth training seminars covering basic
and advanced product knowledge, and selling, purchasing, negotiating and
management skills. The Company has also developed a recruiting and training
program to increase the number of qualified applicants introduced into its
management and sales ranks. The Company has experienced a low rate of
turnover among its employees and, as a result, the Company's corporate
management group, branch managers, outside sales representatives and inside
sales account executives have considerable experience with the Company.

Centralized Administrative Functions. The Company has centralized
certain administrative functions such as credit, human resources, finance
and accounting and management information systems. The Company's credit
function is essential to its success. All credit decisions are researched,
analyzed and approved by a group of regional credit managers to ensure
conformity and quality of credit decisions across the Company's operations.
Management believes that its credit function has enabled it to be
recognized as an industry leader due to its consistently low level of bad
debt expense. Centralization of human resources, finance and accounting
functions ensure conformity in policy and lower overall cost of

24
<PAGE> 26

administration. The Company's comprehensive management information system
is based on point of sale information and provides managers with real time
inventory, receivables, purchasing, pricing, credit and margin information.
This management information system allows the Company's branches to more
effectively manage their inventory and receivables and respond more quickly
and accurately to specific customer needs and local market demand.

Volume Purchasing Power. The Company, as one of the largest
diversified wholesale distributors of construction products in its markets,
is able to achieve significant volume discounts and rebates from its
vendors. The Company established its Preferred Vendor Program in 1991 to
more effectively leverage its purchasing power. This program has reduced
the number of vendors and has resulted in stronger, more strategic
relationships with a more concentrated group of vendors. The concentration
of vendors has also improved the Company's ability to assure more timely
delivery, reduce errors, and to obtain better terms and greater financial
incentives. Other programs currently being employed with vendors include
vendor managed inventory systems, bar coding, and electronic exchange of
purchase orders and invoices, each of which has resulted in a reduction in
transaction costs and an improvement in operating efficiency.

PRODUCTS

The Company distributes products in the following nine major product
groups:

- Electrical: Electrical supplies, including wire, cable, cords, boxes,
covers, wiring devices, conduit, raceway duct, safety switches, motor
controls, breakers, panels, fuses and related supplies and accessories,
residential, commercial and industrial electrical fixtures and other
special use fixtures.

- Plumbing: Plumbing fixtures and related fittings, residential,
commercial and industrial water heaters, and plumbing accessories and
supplies.

- Water and Sewer: Water works and industrial supplies, including large
diameter plastic (PVC) and cast iron pipe, fire hydrants, water meters,
valves, backflow prevention devices and related hardware and accessories.

- Air Conditioning and Heating: Air conditioning and heating equipment,
furnaces, heaters, heat pumps, condensing units, duct, pipe, fittings,
registers, grills, freon, insulation and other refrigeration equipment,
supplies and service parts.

- Industrial Pipe, Valves and Fittings: Mechanical and weld pipe, valves
and related fittings, fire protection systems and supplies, high
performance valves, specialty pipe, stainless steel and other high alloy
pipe, valves and fittings.

- Building Materials: Reinforcing wire, reinforcing steel, plyform,
lumber, concrete chemicals, concrete forming accessories, road and bridge
products, masonry accessories and other building materials, hand tools,
power tools and equipment for all mechanical and building trades.

- Electric Utilities: Transformers, conductor cable, insulators,
prestressed concrete transmission and distribution poles, and other
electric utility supplies and related hardware, accessories and tools.

- Water Systems: Jet and submersible pumps and tanks, residential and
commercial water treatment, well liners, wire, poly pipe, accessories and
environmental products.

- Pool Equipment and Supplies: Above ground and in-ground pool packages,
pumps, filters, heaters, lights, slides, diving boards, skimmers, drains,
chemicals, solar equipment, pool liners and in-ground pool walls, deck
products and cleaning equipment.

25
<PAGE> 27

The following chart shows the Company's fiscal 1996 sales by product
category on a pro forma basis, giving effect to the PVF Acquisition and the
Fiscal 1997 Acquisitions:

[CHART]

SALES AND PURCHASING

The Company employs approximately 400 outside sales representatives who
call on customers and who also work with architects, engineers, and
manufacturers' representatives for major construction projects. For each outside
sales representative there are generally two inside account executives who
expedite orders, deliveries, quotations, and requests for pricing. Most orders
are received by telephone, and materials are delivered by the Company's trucks
to the customer's office or job site.

The Company's purchasing agents in its branches use a computerized
inventory system to monitor stock levels, while central distribution centers in
Orlando, Florida, College Park, Georgia, Hendersonville, North Carolina, Monroe,
North Carolina, Greenville, Ohio and Nashville, Tennessee provide purchasing
assistance as well as a broad stock of inventory which supplements the inventory
of the branches.

CUSTOMERS AND SUPPLIERS

The Company currently serves over 50,000 customers, and no single customer
accounts for more than 1% of total sales annually. Orders for larger
construction projects normally require long-term delivery schedules throughout
the period of construction, which in some cases may continue for several years.
The substantial majority of customer orders are shipped from inventory at the
Company's branches. The Company also accommodates special orders from its
customers and facilitates the shipment of certain large volume orders directly
from the manufacturer to the customer.

The Company regularly purchases from over 5,500 manufacturers and
suppliers, of which 575 are currently part of the Company's Preferred Vendor
Program. No single supplier accounted for more than 6% of the Company's total
purchases during fiscal 1996.

26
<PAGE> 28

COMPETITION

Management believes that the Company is one of the largest wholesale
distributors of its range of products in the southeastern and midwestern United
States. However, there is strong competition in each product group distributed
by the Company. The main sources of competition are other wholesalers,
manufacturers who sell certain lines directly to contractors and, to a limited
extent, retailers in the markets for plumbing, electrical fixtures and supplies,
building materials, pool supplies and contractor's tools. The principal
competitive factors in the Company's business are product availability, pricing,
technical product knowledge as to application and usage, and advisory and other
service capabilities.

EMPLOYEES

As of January 26, 1996, the Company had approximately 3,350 employees
consisting of approximately 15 executives, 550 managers, 950 sales personnel,
and 1,835 other employees, including truck drivers, warehouse personnel, office
and clerical workers. Over the last year, the Company's work force has increased
by approximately 20% compared to the prior year as a result of increased sales
volume and completed business acquisitions. None of the Company's employees is
represented by a union or covered by a collective bargaining agreement; 13 of
Elasco Inc.'s employees are represented by a union and are covered by a
collective bargaining agreement. The Company considers its relationship with its
employees to be excellent.

PROPERTIES

The Company leases approximately 31,000 square feet of an office building
in Orlando, Florida for its headquarters. In addition, the Company owns or
leases 214 branches in 15 states and Puerto Rico. The typical sales branch
consists of a combined office and warehouse facility ranging in size from 3,000
to 40,000 square feet, with paved parking and storage areas. The Company also
operates a computer center, five central distribution warehouses, and a garage
and trucking terminal.

LEGAL PROCEEDINGS

The Company is involved in various legal proceedings incidental to the
ordinary conduct of its business. Management believes that none of these
proceedings will have a material adverse impact on its financial condition,
results of operations or cash flows.

THE PVF ACQUISITION

General. On March 27, 1996, the Company entered into an asset purchase
agreement to acquire substantially all of the assets, properties and business of
PVF and its subsidiaries and to assume certain of their liabilities. The
aggregate consideration to be paid in the PVF Acquisition is approximately $106
million, consisting of cash in the amount of $74.4 million, the issuance of
669,956 shares of Common Stock and the assumption of up to $13 million of bank
debt. The amount of aggregate consideration to be paid is subject to increase or
decrease (on a dollar for dollar basis) for the difference between the book
value of net assets acquired, adjusted for certain inventory and accounts
receivable items, and the book value of such net assets at December 31, 1995.
The PVF Acquisition is scheduled to close on May 13, 1996. This offering is
contingent upon the consummation of the PVF Acquisition.

PVF, a privately owned company headquartered in Houston, Texas, is a
specialty distributor of stainless steel and nickel alloy based pipe, valve and
fitting products to industrial customers, and conducts its business through its
principal subsidiaries Southwest Stainless, Inc., Multalloy, Inc., a Texas
corporation, and Multalloy, Inc., a New Jersey corporation. PVF is a leader in
its market, which is the sale of pipe, valve and fitting products for use by
industrial companies that operate manufacturing processes involving highly
corrosive or high temperature fluids, such as those of the petrochemical, food
and beverage, and paper industries. Management believes that PVF carries one of
the country's broadest and deepest inventories of such products, consisting of
more than 15,000 different items sold to approximately 4,000 active customers.
PVF sells both directly to end-users and to supply houses that sell to end-users
through 16 regional branch locations concentrated in the southeastern and
southwestern United States.

27
<PAGE> 29

For the 12 months ended December 31, 1995, PVF had net sales of $109.2
million and operating income of $27.7 million. On a pro forma basis, giving
effect to the PVF Acquisition, the Company's fiscal 1996 net sales were $1.2
billion, operating income was $57.0 million and, as of the end of fiscal 1996,
the Company had 228 branches located in 19 states and Puerto Rico. See
"Unaudited Pro Forma Consolidated Financial Data."

Products. PVF carries over 15,000 different items in its inventory of
pipe, valve and fitting products. These products are differentiated on the basis
of size, material content, performance specifications and manufacturer.
Industrial pipe, valve and fitting products generally do not grow obsolete over
time, allowing PVF to maintain an extensive inventory of such products. The
substantial majority of PVF's products are used in the replacement market,
including a significant number in emergency applications.

The majority of PVF's products are made of stainless steel. Other nickel
alloy based products, however, represent a growing share of PVF's sales. PVF
entered the specialty alloy products market in 1993 to take advantage of a
market opportunity created by the limited number of sources of these products.
These specialty alloy products typically offer performance standards superior to
stainless steel products, sell at higher prices and higher margins and are
offered by a limited number of distributors. PVF management believes that its
sales of specialty alloy products should continue to grow if, as in the past, an
increasing number of customers move from stainless steel products to specialty
alloy products and as PVF extends its product line to include new specialty
alloy products.

Sales. PVF's sales force includes 19 outside salespeople and 31 inside
salespeople. Outside salespeople visit end-users and supply house customers at
their offices and work to develop good business relationships. The inside sales
force works on-site at PVF and handles the bulk of PVF's orders, as most of
PVF's sales come from a customer calling an inside salesperson directly with an
order.

PVF sells its products through its 50-person sales force and through 16
branches in 11 states. PVF's salespeople have substantial authority to set
prices within guidelines established by senior management. PVF is
well-represented in Texas, the largest end-user market for stainless steel pipe,
valve and fitting products. PVF has a single branch location in New Jersey which
is the second largest end-user market in the United States and thus represents
an opportunity for increased distribution of PVF's products.

Customers and Suppliers. The end-users of products sold by PVF generally
are manufacturers that operate plants involving the use of highly corrosive or
high temperature fluids. PVF sells both to supply houses that resell to
end-users and directly to end-users. Supply houses typically carry narrower
inventory than PVF in any particular PVF product group. Many of PVF's end-user
customers are Fortune 500 companies that have highly structured purchasing
organizations that typically prefer large, professional suppliers, such as PVF
or the Company. PVF has approximately 4,000 active customers, and for its most
recent fiscal year ended June 30, 1995 the largest customer accounted for less
than 4% of PVF's sales, while its top ten customers accounted for less than 15%
of sales.

Many of the 15,000 products sold by PVF require long manufacturing lead
times. Consequently, a large investment in inventory is often required. PVF's
financial strength combined with its product experience allows it to purchase
products in large volumes at favorable terms and maintain the large investment
in inventory required to be competitive. For its most recent fiscal year ended
June 30, 1995, PVF purchased from approximately 400 vendors, and no single
vendor accounted for more than 7% of PVF's purchases in such period.

28
<PAGE> 30

The future financial performance of PVF will be directly influenced by the
cost of stainless steel which, as a commodity item, can be volatile. Significant
fluctuations in the price of stainless steel could have an effect on PVF's
future profitability and could create cyclicality in PVF's operating
performance. In addition, while PVF has not experienced difficulty in obtaining
specialty alloy products, PVF currently purchases certain specialty alloy
products from one of only two available sources worldwide.

Properties. Headquartered in Houston, Texas, PVF has 17 facilities,
including 16 distribution centers located in 11 states. PVF owns two of its
facilities and leases 15 facilities. Ten of these leases are for properties
owned by third parties and five are leased from affiliates of PVF.

29
<PAGE> 31

MANAGEMENT

The following table sets forth certain information concerning executive
officers and directors of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
---------------------------------- --- --------------------------------------------------
<S> <C> <C>
David H. Hughes(1)................ 52 Chairman of the Board and Chief Executive Officer
A. Stewart Hall, Jr.(1)........... 53 President, Chief Operating Officer and Director
Russell V. Hughes(1).............. 70 Vice President and Director
Vincent S. Hughes(1).............. 55 Vice President and Director
Jasper L. Holland, Jr............. 54 Regional Vice President
Clyde E. Hughes, III.............. 48 Regional Vice President
James C. Plyler, Jr............... 52 Regional Vice President
Kenneth H. Stephens............... 55 Regional Vice President
Sidney J. Strickland, Jr.......... 46 Regional Vice President
Gradie E. Winstead, Jr............ 46 Regional Vice President
Peter J. Zabaski.................. 47 Regional Vice President
J. Stephen Zepf................... 46 Treasurer and Chief Financial Officer
John D. Baker, II(2).............. 47 Director
Robert N. Blackford(1)(3)......... 59 Secretary and Director
John B. Ellis(2).................. 71 Director
Clifford M. Hames(3).............. 70 Director
Donald C. Martin(2)............... 59 Director
Herman B. McManaway(3)............ 70 Director
</TABLE>

- ---------------

(1) Member of the Executive Committee
(2) Member of the Compensation Committee
(3) Member of the Audit Committee

David H. Hughes has served as the Company's Chairman of the Board and Chief
Executive Officer since November, 1986, as a director since August, 1968, and
has been employed with the Company since June, 1959. Mr. Hughes served as
President of the Company from June, 1972 until March, 1994. Mr. Hughes is also a
director of SunTrust Banks, Inc. and Lithium Technologies Corp.

A. Stewart Hall, Jr. has served as President, Chief Operating Officer and a
director since March, 1994, and has been employed with the Company since August,
1973. Mr. Hall served as Executive Vice President of the Company from January,
1988 until March, 1994.

Russell V. Hughes has served as Vice President since February, 1971, as a
director since May, 1964, and has been employed with the Company since March,
1949.

Vincent S. Hughes has served as Vice President since April, 1972, as a
director since April, 1966, and has been employed with the Company since June,
1957.

Jasper L. Holland, Jr. has served as Regional Vice President since June,
1994, and as a Vice President since February, 1980. Mr. Holland has been
employed by the Company since March, 1965.

Clyde E. Hughes, III has served as Regional Vice President since June,
1994. Previously, Mr. Hughes served as Regional Manager from December, 1990 to
June, 1994. Mr. Hughes has been employed by the Company since June, 1966.

James C. Plyler, Jr. has served as Regional Vice President since February,
1996. Prior to serving in this capacity, Mr. Plyler served as President of USCO
Incorporated, one of the Company's subsidiaries, from January, 1973 to February,
1996. Mr. Plyler has been employed by the Company since May, 1972.

Kenneth H. Stephens has served as Regional Vice President, since June,
1994, and as a Vice President since February, 1983. Mr. Stephens has been
employed by the Company since June, 1961.

30
<PAGE> 32

Sidney J. Strickland, Jr. has served as Vice President of Purchasing and
Administration since August, 1994. Previously, Mr. Strickland served as Director
of Corporate Services from February, 1994 to August, 1994. Prior to serving as
Director of Corporate Services, Mr. Strickland served as Director of Human
Resources from September, 1989 to August 1994. Mr. Strickland has been employed
by the Company since October, 1979.

Gradie E. Winstead, Jr. has served as Regional Vice President since June,
1994. Previously, Mr. Winstead served as Regional Manager from March, 1990 to
June, 1994. Mr. Winstead has been employed by the Company since September, 1975.

Peter J. Zabaski has served as Regional Vice President since June, 1994.
Previously, Mr. Zabaski served as President of One Stop Supply, Inc., a
subsidiary of the Company, from January, 1990 to June, 1994. Mr. Zabaski has
been employed by the Company since June, 1982.

J. Stephen Zepf has served as Treasurer and Chief Financial Officer since
April, 1984, and has been employed by the Company since May, 1983.

John D. Baker, II has served as a director since March, 1994. Mr. Baker
currently serves as President and a director of Florida Rock Industries, Inc.
Mr. Baker is also a director of FRP Properties, Inc.

Robert N. Blackford was elected Secretary of the Company in February, 1974,
and has served as a director since December, 1970. Mr. Blackford is an attorney
with the firm of Maguire, Voorhis & Wells, P.A., in Orlando, Florida, where he
has practiced since 1968.

John B. Ellis has been a director since November, 1986. Mr. Ellis is
retired. Prior to retiring in January, 1986, Mr. Ellis served as Senior Vice
President Finance and Treasurer of Genuine Parts Company for a period of 11
years. Mr. Ellis is also a director of Interstate/Johnson Lane Corporation,
Flowers Industries, Inc., Oxford Industries, Inc., Scotty's, Inc., Intermet
Corporation and Integrity Music, Inc., and is a director emeritus of Genuine
Parts Company.

Clifford M. Hames has been a director since February, 1972. He has been
retired from Sun Bank, N.A., in Orlando, Florida since 1989 where he served as
Vice Chairman of the Board for a period of 14 years.

Donald C. Martin has been a director since August, 1993. Mr. Martin
provides consulting services to the Company and has done so since July, 1993.
Prior to July, 1993, Mr. Martin served as President of Electrical Distributors,
Inc. ("EDI") from April, 1963 until June, 1993. EDI was acquired by the Company
in June, 1993.

Herman B. McManaway has been a director since October, 1985. Prior to
retiring in January, 1987, Mr. McManaway served as Vice President of Ruddick
Corporation for a period of 13 years and as President of Ruddick Investment Co.
for a period of 13 years. Mr. McManaway is also a director of Versa
Technologies, Inc.

The following family relationships exist between directors of the Company:
David H. Hughes and Vincent S. Hughes are brothers; and Russell V. Hughes is a
first cousin of David H. Hughes and Vincent S. Hughes. Clyde E. Hughes is not
related to any of the Hughes family members named above.

31
<PAGE> 33

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth, as of March 15, 1996, certain information
regarding the ownership of the Common Stock by (i) each of the Selling
Shareholders, (ii) each person known by the Company who is, or may be deemed to
be, the beneficial owner of more than 5% of the outstanding shares of Common
Stock, and (iii) all officers and directors of the Company as a group. Except as
otherwise indicated, each of the following shareholders has sole voting and
investment power with respect to shares beneficially owned by such shareholder.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO THE OFFERING AFTER THE OFFERING
--------------------------- -----------------------
PERCENT OF PERCENT OF
NUMBER OF OUTSTANDING SHARES NUMBER OF OUTSTANDING
NAME OF BENEFICIAL OWNER SHARES SHARES OFFERED SHARES SHARES
- ------------------------------------ --------- ----------- ------- --------- -----------
<S> <C> <C> <C> <C> <C>
The Employees' Retirement Plan of
Consolidated Electrical
Distributors, Inc.(1)............. 921,062 13.5 564,926 356,136 4.4
John V. Moore(2).................... 251,703 3.7 20,000 231,703 2.9
Russell V. Hughes(3)................ 250,723 3.7 20,000 230,723 2.9
Donald C. Martin(4)................. 197,828 2.9 30,000 167,828 2.1
John E. Petterson(5)................ 96,148 1.4 25,000 71,148 *
John F. Caswell, Jr.(6)............. 64,099 * 20,000 44,099 *
All directors and officers as a
group (18 persons)(7)............. 1,293,171 19.0(8) 1,273,171 15.8
</TABLE>

- ---------------

* Indicates less than one percent ownership.
(1) In Amendment No. 13 to Schedule 13D dated January 27, 1995 and filed with
the Securities and Exchange Commission (the "Commission"), The Employees'
Retirement Plan of Consolidated Electrical Distributors, Inc. (the "Plan")
reported aggregate beneficial ownership of 921,062 shares. Of the shares
reported as beneficially owned, 214,926 were reported as held with sole
voting and dispositive power, and 706,136 were reported as held with shared
voting and dispositive power. The address of the Plan is 1516 Pontius
Avenue, No. 201, Los Angeles, California 90025.
(2) The address of Mr. Moore is 3531 Castellaine Drive, Charlotte, North
Carolina 28226.
(3) The address of Mr. Hughes is 20 North Orange Avenue, Suite 200, Orlando,
Florida 32801.
(4) The address of Mr. Martin is 1303 Henderson Mill Road, Mansfield, Georgia
30255.
(5) The address of Mr. Petterson is 71 Shadow Lane, Lakeland, Florida 33813.
(6) The address of Mr. Caswell is 510 Goldenrod Court, Lakeland, Florida 33813.
(7) Includes an aggregate of 305,441 shares subject to options under the Hughes
Supply, Inc. 1988 Stock Option Plan which are exercisable within 60 days,
84,000 shares subject to options under the Directors' Stock Option Plan,
and 19,377 shares credited to the accounts of directors and officers under
the Hughes Supply, Inc. Employee Stock Ownership Plan. All officers and
directors as a group hold sole voting power with respect to 1,937,060
shares, shared voting power with respect to 356,111 shares, sole investment
power with respect to 1,917,683 shares and shared investment power with
respect to 375,488 shares.
(8) Calculated on the basis of 7,122,456 shares, including 6,817,015
outstanding shares and 305,441 shares subject to options exercisable within
60 days.

32
<PAGE> 34

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 20,000,000 shares
of Common Stock, $1.00 par value per share, and 10,000,000 shares of Preferred
Stock, no par value (the "Preferred Stock").

COMMON STOCK

All holders of Common Stock have the right to cast one vote for each share
held of record on matters coming before the shareholders for a vote. Holders of
Common Stock have no cumulative voting rights with respect to the election of
directors and have no preemptive or other rights to purchase additional
securities of the Company. The holders of Common Stock are entitled to receive
dividends, if any, as and if declared from time to time by the Board of
Directors in its discretion out of assets legally available therefore and
subject to the prior dividend rights of holders of any Preferred Stock then
outstanding. In the event of the liquidation, dissolution or winding up of the
Company, holders of Common Stock will be entitled to share equally and ratably
in the assets available for distribution after the payment of the liabilities,
subject to any prior rights of holders of any Preferred Stock then outstanding.
All outstanding shares of Common Stock are, and the shares offered hereby upon
payment therefor will be, validly issued, fully paid and non-assessable.

PREFERRED STOCK

The Board of Directors has the authority to issue up to 10,000,000 shares
of Preferred Stock in one or more series, and to fix the number of shares
constituting such series and the rights and preferences thereof, including
dividend rights, voting rights, terms of redemption and liquidation preferences,
without further vote or action by the shareholders. The Board of Directors has
established a Series A Junior Participating Preferred Stock, no par value per
share (the "Series A Stock"), consisting of 300,000 shares. No shares of Series
A Stock or any other shares of Preferred Stock have been issued or are presently
outstanding. The issuance of Preferred Stock with voting and conversion rights
may adversely affect the voting power of the holders of Common Stock.

SHAREHOLDER RIGHTS PLAN

The Company has a shareholder rights plan. Under the plan, the Company
distributed to shareholders a dividend of one right per share of the Common
Stock. When exercisable, each right will permit the holder to purchase from the
Company a unit consisting of one one-hundredth of a share of Series A Stock at a
purchase price of $65 per unit (the "Rights"). The Rights generally become
exercisable if a person or group acquires 20% or more of the Common Stock or
commences a tender offer that could result in such person or group owning 30% or
more of the Common Stock. If certain subsequent events occur after the Rights
first become exercisable, the Rights may become exercisable for the purchase of
shares of Common Stock of the Company, or of an acquiring company, having a
value equal to two times the exercise price of the Right. The Rights may be
redeemed by the Company at $.01 per Right at any time prior to ten days after
20% or more of the Common Stock is acquired by a person or group. The Rights
expire on June 2, 1998 unless sooner terminated in accordance with the rights
plan.

CERTAIN PROVISIONS OF THE RESTATED ARTICLES OF INCORPORATION

Under the Restated Articles of Incorporation of the Company (the
"Articles"), directors are classified with respect to the time for which they
severally hold office by being divided into three classes, each consisting of as
near to one-third of the whole number of directors as practicable, with
directors in each class being elected every third year. The provisions of the
Florida Business Corporation Act (the "Florida Act") permit any vacancy
occurring on the Board of Directors, including any vacancy created by reason of
an increase in the number of directors, to be filled by a director elected by
the affirmative vote of a majority of the remaining directors. Any such director
elected by the remaining directors shall hold office until the next meeting of
the shareholders at which directors are elected.

The Articles also provide that no plan of consolidation or merger in which
the Company is a constituent corporation but not the surviving corporation shall
be deemed approved by the shareholders unless such plan

33
<PAGE> 35

of consolidation or merger shall have been approved by the affirmative vote of
the holders of two-thirds of the total number of shares of voting stock of the
Company entitled to vote. The Articles also require the affirmative vote of
two-thirds of the outstanding shares of the Company's voting stock to approve
certain business combinations involving Company and any 10% shareholder unless
approved by a majority of the directors not affiliated with such shareholder or
unless certain price and procedural requirements are met; to require the
affirmative vote of at least 80% of the outstanding shares to remove directors
without cause; to provide that the size of the Board of Directors may be
determined by the affirmative vote of 80% or more of the outstanding shares; to
require the affirmative vote of at least 80% of the outstanding shares to alter
the provisions of the Articles in relating to the number, classification and
terms of office of directors; to require that special meetings called by the
shareholders be called by an 80% vote of shareholders; and to prohibit the
shareholders of the Company from taking action by means of a written consent.

These provisions may have the effect of delaying or preventing transactions
involving a change of control of the Company, including transactions in which
shareholders might otherwise receive a substantial premium for their shares over
then current market prices, and may limit the ability of shareholders to approve
transactions that they may deem to be in their best interests.

CERTAIN PROVISIONS OF FLORIDA LAW

The Company is subject to several anti-takeover provisions under the
Florida Act that apply to a public corporation organized under Florida law
unless the corporation has elected to opt out of such provisions in its Articles
or (depending on the provision in question) its Bylaws. The Company has not
elected to opt out of these provisions. The Florida Act contains a provision
that prohibits the voting of shares in a publicly-held Florida corporation which
are acquired in a "control share acquisition" unless the holders of a majority
of the corporation's voting shares (exclusive of shares held by officers of the
corporation, inside directors or the acquiring party) approve the granting of
voting rights as to the shares acquired in the control share acquisition. A
control share acquisition is defined as an acquisition that immediately
thereafter entitled the acquiring party to vote in the election of directors
within each of the following ranges of voting power: (i) one-fifth or more but
less than one-third of such voting power; (ii) one-third or more but less than a
majority of such voting power and (iii) more than a majority of such voting
power.

The Florida Act also contains an "affiliated transaction" provision that
prohibits a publicly-held Florida corporation from engaging in a broad range of
business combinations or other extraordinary corporate transactions with an
"interested shareholder" unless (i) the transaction is approved by a majority of
disinterested directors before the person becomes an interested shareholder or
(ii) the interested shareholder has owned at least 80% of the corporation's
outstanding voting shares other than those owned by the interested shareholder.
An interested shareholder is defined as a person who together with affiliates
and associates beneficially owns more than 10% of the corporation's outstanding
voting shares.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Company's Common Stock is American
Stock Transfer & Trust Company.

34
<PAGE> 36

DESCRIPTION OF NOTES

Concurrently with this offering, the Company is offering privately the
Notes in an aggregate principal amount of $100 million. The Notes will be issued
pursuant to a Note Agreement between the Company and SunTrust Capital Markets,
Inc., as agent (the "Note Agreement"). The following is a summary of the assumed
terms of the Notes, and there can be no assurance that the Notes will be issued
on such terms, or that the Notes Offering will be consummated. This offering is
not contingent upon consummation of the Notes Offering.

General. The Notes will mature on , 2008, will be limited to
$100 million aggregate principal amount, and will be pari passu to the Company's
revolving credit facility and line of credit agreement. The Notes will bear
interest at %, payable in cash semi-annually in arrears.

Sinking Fund. The Note Agreement will not provide for a sinking fund.

Optional Redemption. The Notes may be redeemed at the Company's option, in
whole or in part, on a pro rata basis, on any interest payment date for the sum
of (i) the greater of par or the present value of all, remaining interest and
principal payments, such present value to be determined using a discount rate
equal to the sum of (a) 50 basis points and (b) the yield on a U.S. Treasury
obligation having a maturity date corresponding with the remaining average life
of the Notes being prepaid, and (ii) accrued interest at the date of redemption.

Certain Covenants. The Note Agreement will contain a number of covenants
restricting the operations of the Company and its subsidiaries, including
covenants with respect to the following matters: (i) limitation on indebtedness;
(ii) limitation on restricted payments (in the form of the declaration or
payment of certain dividends or distributions, the purchase, redemption or other
acquisition of any capital stock of the Company (or any affiliate thereof), the
voluntary prepayment of subordinated indebtedness, the incurrence of any
guarantee of indebtedness of any affiliate of the Company or an investment in
any other person; (iii) limitation on transactions with affiliates; (iv)
limitation on liens; (v) limitation on issuance of other senior indebtedness;
(vi) limitation on sales of assets; (viii) limitation on capital stock issuances
and sales by subsidiaries; (viii) limitation on issuance of guarantees of and
pledges for indebtedness; and (ix) limitation on consolidations, mergers and
sale of all or substantially all assets of the Company.

Events of Default. The events of default ("Events of Default") under the
Note Agreement will include provisions that are typical of senior debt
financing, including a default by the Company or any subsidiary on any
indebtedness that has an aggregate principal amount of not less than $
million resulting in such indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise become due and payable.

Upon the occurrence of an Event of Default, the holders of not less than
% in principal amount of the outstanding Notes may immediately accelerate the
maturity of all the Notes as provided in the Note Agreement.

Interim Financing. In the event the Notes Offering cannot be consummated
concurrently with the PVF Acquisition, the Company intends to finance the PVF
Acquisition through a $55 million bridge loan with the Company's bank
syndication group and a $30 million note to be issued by the Company to the
sellers. The bridge loan will carry interest at the same rate as the Company's
line of credit facility (an average rate of 6.29% in fiscal 1996) for the first
six months. The sellers' promissory note will bear interest at 6% for the first
six months, then will increase to prime for the next six months. Thereafter,
interest on such note will be at prime plus 1/2%. The sellers' note will mature
on May 31, 1998.

35
<PAGE> 37

UNDERWRITING

Upon the terms and subject to the conditions stated in the Underwriting
Agreement dated the date hereof (the "Underwriting Agreement"), each of the
underwriters named below (the "Underwriters"), for whom Smith Barney Inc. and
Robert W. Baird & Co. Incorporated are acting as representatives (the
"Representatives"), has severally agreed to purchase, and the Company and the
Selling Shareholders have agreed to sell to such Underwriter, the number of
shares of Common Stock set forth opposite the name of such Underwriter.

<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
- ---------------------------------------------------------------------------------- ---------
<S> <C>
Smith Barney Inc..................................................................
Robert W. Baird & Co. Incorporated................................................

---------
Total...................................................................
========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to approval of certain legal matters by counsel and
to certain other conditions. The Underwriters are obligated to take and pay for
all of the shares of Common Stock offered hereby (other than those covered by
the over-allotment option described below) if any such shares are taken.

The Underwriters initially propose to offer part of the shares of Common
Stock directly to the public at the public offering price set forth on the cover
page of this Prospectus and part of such shares to certain dealers at a price
which represents a concession not in excess of $ per share below the
public offering price. The Underwriters may allow, and such dealers may reallow,
a concession not in excess of $ per share to certain other dealers.
After the offering, the public offering price and such concessions may be
changed by the Underwriters.

The Company and one of the Selling Shareholders have granted the
Underwriters options, exercisable for 30 days from the date of this Prospectus,
to purchase up to 236,989 and 52,500 additional shares of Common Stock,
respectively, at the public offering price set forth on the cover page of this
Prospectus less the underwriting discounts and commissions. The Underwriters may
exercise such options solely for the purpose of covering over-allotments, if
any, in connection with the offering of the shares of Common Stock offered
hereby. To the extent such options are exercised, each Underwriter will become
obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares as the number of shares set forth opposite
each Underwriter's name in the preceding table bears to the total number of
shares listed in such table.

The Company and its officers and directors have agreed that, for a period
of 180 days from the date of this Prospectus, they will not, without the prior
written consent of Smith Barney Inc., offer, sell, contract to sell, or
otherwise dispose of, any shares of Common Stock or any securities convertible
into, or exercisable or

36
<PAGE> 38

exchangeable for, Common Stock, or grant any options or warrants to purchase
Common Stock, except for the shares of Common Stock offered hereby, the grant of
options and the issuance shares of Common Stock pursuant to the Company's
existing stock option plans and the surrender of Common Stock in payment of the
exercise price of stock options. Further, the Selling Shareholders and certain
other shareholders of the Company designated by the Representatives have agreed
that, for a period of 90 days from the date of this Prospectus, they will not,
without the prior written consent of Smith Barney Inc., offer, sell, contract to
sell, or otherwise dispose of, any shares of Common Stock or any securities
convertible into, or exercisable or exchangeable for, Common Stock, or grant any
options or warrants to purchase Common Stock, except for the shares of Common
Stock offered hereby.

The Company, the Selling Shareholders, and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.

LEGAL MATTERS

The validity, authorization and issuance of the shares of Common Stock
offered hereby will be passed upon for the Company by Maguire, Voorhis & Wells,
P.A., Orlando, Florida. Robert N. Blackford, a member of Maguire, Voorhis &
Wells, P.A. is Secretary and a director of the Company. Certain members of
Maguire, Voorhis & Wells, P.A. beneficially own 24,237 shares of the Company's
Common Stock.

Certain legal matters will be passed upon for the Underwriters by Powell,
Goldstein, Frazer & Murphy, Atlanta, Georgia. Powell, Goldstein, Frazer & Murphy
will rely upon the opinion of Maguire, Voorhis & Wells, P.A., as to all matters
of Florida law.

EXPERTS

The Consolidated Balance Sheets as of January 26, 1996 and January 27,
1995, and the Consolidated Statements of Income, Shareholders' Equity and Cash
Flows of the Company for each of the two years in the period ended January 26,
1996, included in this Prospectus and incorporated in this Prospectus by
reference to the Company's Annual Report on Form 10-K for the year ended January
26, 1996, have been so included and incorporated in reliance on the report of
Price Waterhouse LLP, independent certified public accountants, given on the
authority of said firm as experts in auditing and accounting.

The Company's Consolidated Statements of Income, Shareholders' Equity and
Cash Flows for the year ended January 28, 1994, included in this Prospectus and
incorporated in this Prospectus by reference to the Company's Annual Report on
Form 10-K for the year ended January 26, 1996, have been so included and
incorporated in reliance on the reports of Price Waterhouse LLP, independent
certified public accountants, and Coopers & Lybrand, independent accountants,
given on the authority of said firms as experts in auditing and accounting.

The Consolidated Balance Sheets of PVF as of June 30, 1994 and June 30,
1995 and the Consolidated Statements of Income, Stockholders' Equity and Cash
Flows of PVF for each of the three years in the period ended June 30, 1995 have
been included herein in reliance upon the report of Deloitte & Touche LLP,
independent certified public accountants, given on the authority of that firm as
experts in accounting and auditing.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information may be inspected without charge at, and copies thereof may be
obtained at prescribed costs from, the public reference facilities maintained by
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following regional offices of the Commission: New York
Regional Office, 7 World Trade Center, Suite 1300, New York, New York 10048; and
Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. In addition, the aforemen-

37
<PAGE> 39

tioned materials may also be inspected at the offices of the NYSE, 20 Broad
Street, New York, New York 10005.

This Prospectus, which constitutes part of a registration statement on Form
S-3 (the "Registration Statement") filed by the Company with the Commission
under the Securities Act, omits certain of the information contained in the
Registration Statement and the exhibits and schedules thereto. Reference is
hereby made to the Registration Statement and to the exhibits and schedules
relating thereto for further information with respect to the Company and the
Common Stock offered hereby. Statements contained herein concerning the
provisions of documents are necessarily summaries of such documents, and each
such statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission. The Rights are attached to each
share of Common Stock currently outstanding and each share of Common Stock to be
sold pursuant to this offering. Any reference herein made to the Common Stock
shall include the Rights.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company's Annual Report on Form 10-K for the fiscal year ended January
26, 1996 has been filed with the Commission and is incorporated in this
Prospectus by reference and made a part hereof.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the respective dates
of filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document incorporated or
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute part of this Prospectus.

The Company undertakes to provide without charge to each person, including
any beneficial owner of Common Stock, to whom a copy of this Prospectus has been
delivered, upon written or oral request, a copy of any or all information
incorporated by reference in this Prospectus (not including exhibits to such
information, unless such exhibits are specifically incorporated by reference
into such information). Such requests should be directed to Hughes Supply, Inc.,
Attention: J. Stephen Zepf, Treasurer and Chief Financial Officer, at 20 North
Orange Avenue, Suite 200, Orlando, Florida 32801, telephone number (407)
841-4755.

38
<PAGE> 40

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
HUGHES SUPPLY, INC.
Report of Price Waterhouse LLP, Independent Certified Public Accountants.............. F-2
Report of Coopers and Lybrand L.L.P., Independent Accountants......................... F-3
Consolidated Balance Sheets as of January 27, 1995 and January 26, 1996............... F-4
Consolidated Statements of Income for the fiscal years ended January 28, 1994, January
27, 1995 and January 26, 1996....................................................... F-5
Consolidated Statements of Shareholders' Equity for the fiscal years ended January 28,
1994, January 27, 1995 and January 26, 1996......................................... F-6
Consolidated Statements of Cash Flows for the fiscal years ended January 28, 1994,
January 27, 1995 and January 26, 1996............................................... F-7
Notes to Consolidated Financial Statements............................................ F-8
PVF HOLDINGS, INC.
Report of Deloitte & Touche LLP, Independent Auditors................................. F-20
Consolidated Balance Sheets as of June 30, 1994, June 30, 1995 and December 31, 1995
(unaudited)......................................................................... F-21
Consolidated Statements of Income for the fiscal years ended June 30, 1993, 1994 and
1995, and for the six months ended December 31, 1994 and 1995 (unaudited)........... F-22
Consolidated Statements of Stockholders' Equity for the fiscal years ended June 30,
1993, 1994 and 1995, and for the six months ended December 31, 1995 (unaudited)..... F-23
Consolidated Statements of Cash Flows for the fiscal years ended June 30, 1993, 1994
and 1995, and for the six months ended December 31, 1994 and 1995 (unaudited)....... F-24
Notes to Consolidated Financial Statements............................................ F-25
</TABLE>

F-1
<PAGE> 41

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of Hughes Supply, Inc.

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income, shareholders' equity and of cash
flows present fairly, in all material respects, the financial position of Hughes
Supply, Inc. and its subsidiaries at January 26, 1996 and January 27, 1995, and
the results of their operations and their cash flows for the years ended January
26, 1996 and January 27, 1995, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above. The consolidated financial statements of Hughes Supply, Inc. and its
subsidiaries for the year ended January 28, 1994, prior to restatement, were
audited by other independent accountants whose report dated March 17, 1994
expressed an unqualified opinion on those financial statements.

The financial statements for 1994 have been restated to reflect the
poolings of interests described in Note 2. We have audited the restatement
adjustments described in Note 2 that were applied to restate the 1994 financial
statements. In our opinion, such adjustments are appropriate and have been
properly applied to the 1994 financial statements.

PRICE WATERHOUSE LLP

Orlando, Florida
March 14, 1996

F-2
<PAGE> 42

REPORT OF INDEPENDENT ACCOUNTANTS

Shareholders and Board of Directors
Hughes Supply, Inc.

We have audited the consolidated statements of income, shareholders'
equity, and cash flows of Hughes Supply, Inc. and subsidiaries for the fiscal
year ended January 28, 1994 (not presented herein). These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows
of Hughes Supply, Inc. and subsidiaries for the fiscal year ended January 28,
1994 (prior to the retroactive restatement to account for the poolings of
interests), in conformity with generally accepted accounting principles.

COOPERS & LYBRAND

Orlando, Florida
March 17, 1994

F-3
<PAGE> 43

HUGHES SUPPLY, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
JANUARY 27, JANUARY 26,
1995 1996
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............................................. $ 3,485 $ 3,432
Accounts receivable, less allowance for losses of $5,042 and $4,671... 131,907 143,354
Inventories........................................................... 125,159 132,524
Deferred income taxes................................................. 8,921 10,397
Other current assets.................................................. 6,551 7,778
----------- -----------
Total current assets.......................................... 276,023 297,485
Property and Equipment, Net............................................. 54,618 57,697
Deferred Income Taxes................................................... 2,095 2,430
Other Assets............................................................ 13,380 21,484
----------- -----------
$ 346,116 $ 379,096
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt..................................... $ 1,393 $ 2,551
Accounts payable...................................................... 78,275 84,875
Accrued compensation and benefits..................................... 9,823 12,622
Other current liabilities............................................. 13,738 16,925
----------- -----------
Total current liabilities..................................... 103,229 116,973
Long-Term Debt.......................................................... 105,243 106,215
Other Noncurrent Liabilities............................................ 1,540 1,765
----------- -----------
Total liabilities............................................. 210,012 224,953
----------- -----------
Commitments and Contingencies (Note 7)
Shareholders' Equity:
Preferred stock, no par value; 10,000,000 shares authorized; none
issued; preferences, limitations and relative rights to be
established by the Board of Directors.............................. -- --
Common stock, par value $1 per share; 20,000,000 shares authorized;
6,613,757 and 6,798,462 shares issued.............................. 6,614 6,798
Capital in excess of par value........................................ 37,653 40,553
Retained earnings..................................................... 93,525 106,792
----------- -----------
137,792 154,143
Less treasury stock, 108,988 shares and no shares, at cost............ (1,688) --
----------- -----------
Total shareholders' equity.................................... 136,104 154,143
----------- -----------
$ 346,116 $ 379,096
======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE> 44

HUGHES SUPPLY, INC.

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FISCAL YEARS ENDED
---------------------------------------
JANUARY 28, JANUARY 27, JANUARY 26,
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Net Sales.................................................... $ 734,958 $ 875,459 $ 1,082,179
Cost of Sales................................................ 590,466 699,132 858,573
----------- ----------- -----------
Gross Profit................................................. 144,492 176,327 223,606
----------- ----------- -----------
Operating Expenses:
Selling, general and administrative........................ 121,645 144,256 181,284
Depreciation and amortization.............................. 7,800 9,056 10,585
Provision for doubtful accounts............................ 1,938 1,381 1,849
----------- ----------- -----------
Total operating expenses........................... 131,383 154,693 193,718
----------- ----------- -----------
Operating Income............................................. 13,109 21,634 29,888
----------- ----------- -----------
Non-Operating Income and (Expenses):
Interest and other income.................................. 2,981 2,848 4,605
Interest expense........................................... (5,055) (5,284) (7,484)
----------- ----------- -----------
(2,074) (2,436) (2,879)
----------- ----------- -----------
Income Before Income Taxes................................... 11,035 19,198 27,009
Income Taxes................................................. 4,511 7,713 10,959
----------- ----------- -----------
Net Income................................................... $ 6,524 $ 11,485 $ 16,050
======== ======== =========
Earnings Per Share:
Primary.................................................... $ 1.27 $ 1.83 $ 2.34
======== ======== =========
Fully diluted.............................................. $ 1.19 $ 1.81 $ 2.31
======== ======== =========
Average Shares Outstanding:
Primary.................................................... 5,143 6,259 6,856
======== ======== =========
Fully diluted.............................................. 6,313 6,443 6,935
======== ======== =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE> 45

HUGHES SUPPLY, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN TREASURY STOCK
------------------ EXCESS OF RETAINED -------------------
SHARES AMOUNT PAR VALUE EARNINGS SHARES AMOUNT
--------- ------ ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 29, 1993, as
previously reported............... 5,453,249 $5,453 $ 22,410 $ 72,761 901,055 $(13,958)
Adjustment for poolings of
interests....................... 439,057 439 (276) 3,251 -- --
--------- ------ ---------- -------- -------- --------
Balance, January 29, 1993, as
restated........................... 5,892,306 5,892 22,134 76,012 901,055 (13,958)
Net income......................... -- -- -- 6,524 -- --
Cash dividends --
$.16 per share.................. -- -- -- (724) -- --
Pooled company.................. -- -- -- (13) -- --
Issuance of treasury shares for EDI
merger.......................... (374,998) (375) (5,434) -- (374,998) 5,809
Other acquisition.................. -- -- (1,557) 2,158 (101,368) 1,570
Treasury shares issued under stock
option plans.................... -- -- -- (18) (6,123) 95
Purchase and retirement of common
shares.......................... (2,581) (2) (9) (38) -- --
--------- ------ ---------- -------- -------- --------
Balance, January 28, 1994............ 5,514,727 5,515 15,134 83,901 418,566 (6,484)
Net income......................... -- -- -- 11,485 -- --
Cash dividends --
$.22 per share.................. -- -- -- (1,290) -- --
Pooled company.................. -- -- -- (27) -- --
Treasury shares contributed to
employee benefit plan........... -- -- 243 -- (16,597) 257
Conversion of subordinated
convertible debentures into
common stock.................... 1,081,146 1,081 21,670 -- -- --
Stock dividend by pooled company... 26,101 26 207 (233) -- --
Treasury shares issued under stock
option plans.................... -- -- -- (141) (44,341) 687
Purchase and retirement of common
shares.......................... (8,217) (8) (35) (170) -- --
Other acquisitions................. -- -- 434 -- (248,640) 3,852
--------- ------ ---------- -------- -------- --------
Balance, January 27, 1995............ 6,613,757 6,614 37,653 93,525 108,988 (1,688)
Net income......................... -- -- -- 16,050 -- --
Cash dividends --
$.30 per share.................. -- -- -- (1,971) -- --
Pooled company.................. -- -- -- (15) -- --
Stock dividend by pooled company... 28,710 29 260 (289) -- --
Shares issued under stock option
plans........................... 6,657 6 74 (154) (86,984) 1,347
Purchase and retirement of common
shares.......................... (19,642) (20) (146) (354) -- --
Other acquisitions................. 168,980 169 2,712 -- (22,004) 341
--------- ------ ---------- -------- -------- --------
Balance, January 26, 1996............ 6,798,462 $6,798 $ 40,553 $106,792 -- $ --
======== ====== ======= ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE> 46

HUGHES SUPPLY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FISCAL YEARS ENDED
---------------------------------------
JANUARY 28, JANUARY 27, JANUARY 26,
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents:
Cash flows from operating activities:
Cash received from customers.......................... $ 718,603 $ 861,732 $ 1,073,951
Cash paid to suppliers and employees.................. (712,125) (846,357) (1,034,589)
Interest received..................................... 2,001 2,323 3,454
Interest paid......................................... (5,134) (4,825) (7,273)
Income taxes paid..................................... (5,544) (9,181) (15,230)
----------- ----------- -----------
Net cash provided by (used in) operating
activities....................................... (2,199) 3,692 20,313
----------- ----------- -----------
Cash flows from investing activities:
Capital expenditures.................................. (8,885) (11,915) (11,853)
Proceeds from sale of property and equipment.......... 709 743 1,228
Business acquisitions, net of cash.................... (3,934) (11,099) (10,009)
----------- ----------- -----------
Net cash used in investing activities............... (12,110) (22,271) (20,634)
----------- ----------- -----------
Cash flows from financing activities:
Net borrowings under short-term debt arrangements..... 16,733 23,832 6,245
Proceeds from issuance of long-term debt.............. 580 -- --
Principal payments on:
Long-term notes..................................... (2,918) (1,266) (4,150)
Capital lease obligations........................... (660) (725) (844)
Proceeds from issuance of common shares under stock
option plans........................................ 77 546 1,273
Purchase of common shares............................. (49) (213) (520)
Dividends paid........................................ (629) (1,188) (1,736)
----------- ----------- -----------
Net cash provided by financing activities........... 13,134 20,986 268
----------- ----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents....... (1,175) 2,407 (53)
Cash and Cash Equivalents, beginning of year............... 2,253 1,078 3,485
----------- ----------- -----------
Cash and Cash Equivalents, end of year..................... $ 1,078 $ 3,485 $ 3,432
========= ========= ==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-7
<PAGE> 47

HUGHES SUPPLY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 1 -- DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INDUSTRY

Hughes Supply, Inc. and its subsidiaries (the "Company") are engaged in the
wholesale distribution of a broad range of materials, equipment and supplies
primarily to the construction industry. Major product lines distributed by the
Company include electrical, plumbing and electric utility equipment, building
materials, pool equipment and supplies, water and sewer products, heating and
air conditioning equipment and supplies, water systems and industrial pipe,
valves and fittings. The Company's principal customers are electrical, plumbing
and mechanical contractors, electric utility companies, municipal and industrial
accounts.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the Company and its
wholly-owned subsidiaries. All significant intercompany transactions and
accounts have been eliminated. Prior period financial statements have been
restated to include the accounts of companies acquired and accounted for as
poolings of interests. Results of operations of companies purchased and
immaterial poolings are included from dates of acquisition. The Company's
minority investment in affiliate is accounted for by the equity method.

FISCAL YEAR

The Company's fiscal year ends on the last Friday in January. Fiscal years
1994, 1995 and 1996 each contained 52 weeks.

CASH EQUIVALENTS

The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.

INVENTORIES

Inventories are carried at the lower of cost or market. The cost of
substantially all inventories is determined by the average cost method.

PROPERTY AND EQUIPMENT

Buildings and equipment are depreciated using both straight-line and
declining-balance methods based on the following estimated useful lives:

<TABLE>
<S> <C>
Buildings and improvements................................... 5-40 years
Transportation equipment..................................... 2-7 years
Furniture, fixtures and equipment............................ 3-10 years
Property under capital leases................................ 20-40 years
</TABLE>

Maintenance and repairs are charged to expense as incurred and major
renewals and betterments are capitalized. Gains or losses are credited or
charged to earnings upon disposition.

OTHER ASSETS

The excess of cost over the fair value of net assets of purchased companies
($8,806 and $16,637 at January 27, 1995 and January 26, 1996, respectively, net
of accumulated amortization) is being amortized by the straight-line method over
15 to 25 years.

F-8
<PAGE> 48

HUGHES SUPPLY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

IMPAIRMENT OF LONG-LIVED ASSETS

In the event that facts and circumstances indicate that the excess of cost
over the fair value of net assets of purchased companies or other assets may be
impaired, an evaluation of recoverability would be performed. If an evaluation
is required, the estimated future undiscounted cash flows associated with the
asset would be compared to the asset's carrying amount to determine if a
write-down to market value or discounted cash flow is required.

REVENUE RECOGNITION

The Company recognizes revenue from product sales when goods are received
by customers.

INCOME TAXES

Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus deferred taxes
resulting from temporary differences. Such temporary differences result from
differences in the carrying value of assets and liabilities for tax and
financial reporting purposes. The deferred tax assets and liabilities represent
the future tax consequences of those differences, which will either be taxable
or deductible when the assets and liabilities are recovered or settled. Deferred
taxes are also recognized for operating losses that are available to offset
future taxable income.

EARNINGS PER COMMON SHARE

Primary earnings per share are based on the weighted average number of
shares outstanding during each year plus the common stock equivalents issuable
upon the exercise of stock options. Fully diluted earnings per share assumes the
conversion of 7% convertible subordinated debentures (after elimination of
related interest expense, net of income tax effect) and exercise of stock
options.

DEFERRED EMPLOYEE BENEFITS

The present value of amounts estimated to be payable under unfunded
supplemental retirement agreements with certain officers is being accrued over
the remaining years of active employment of the officers and is included in
other noncurrent liabilities.

ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles necessarily requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

NOTE 2 -- BUSINESS COMBINATIONS

On August 1, 1995, the Company acquired all the common stock of Moore
Electric Supply, Inc. ("Moore") in exchange for 316,000 shares of the Company's
common stock. Moore is a wholesale distributor of electrical products with five
outlets in North Carolina and South Carolina.

On December 18, 1995, the Company acquired all the common stock of Florida
Pipe & Supply Company ("FPS") in exchange for 178,000 shares of the Company's
common stock. FPS is a wholesale distributor of industrial pipe, valves and
fittings with one outlet in Florida.

F-9
<PAGE> 49

HUGHES SUPPLY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

The above transactions have been accounted for as poolings of interests
and, accordingly, the consolidated financial statements for the periods
presented have been restated to include the accounts of Moore and FPS. Moore's
and FPS's fiscal year ends have been changed to the last Friday in January to
conform to the Company's fiscal year end.

Net sales and net income of the separate companies for the periods
preceding the acquisitions were as follows:

<TABLE>
<CAPTION>
NET NET
SALES INCOME
-------- -------
<S> <C> <C>
Six months ended July 31, 1995 (unaudited):
Hughes, as previously reported.................................. $494,239 $ 6,681
Moore........................................................... 32,297 1,023
-------- -------
Combined........................................................ $526,536 $ 7,704
======== =======
Nine months ended October 31, 1995 (unaudited):
Hughes, as previously reported.................................. $805,575 $11,732
FPS............................................................. 14,762 520
-------- -------
Combined........................................................ $820,337 $12,252
======== =======
Fiscal year ended January 27, 1995:
Hughes, as previously reported.................................. $802,445 $10,328
Moore........................................................... 54,115 423
FPS............................................................. 18,899 734
-------- -------
Combined........................................................ $875,459 $11,485
======== =======
Fiscal year ended January 28, 1994:
Hughes, as previously reported.................................. $660,938 $ 6,286
Moore........................................................... 54,854 358
FPS............................................................. 19,166 (120)
-------- -------
Combined........................................................ $734,958 $ 6,524
======== =======
</TABLE>

During fiscal years 1994, 1995 and 1996, the Company acquired several
wholesale distributors of materials to the construction industry that were
accounted for as purchases. These acquisitions, individually or in the
aggregate, did not have a material effect on the consolidated financial
statements. Results of operations of these companies from their respective dates
of acquisition have been included in the consolidated financial statements.

F-10
<PAGE> 50

HUGHES SUPPLY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 3 -- PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Land........................................................... $ 13,415 $ 14,380
Buildings and improvements..................................... 42,850 45,996
Transportation equipment....................................... 19,930 20,265
Furniture, fixtures and equipment.............................. 21,045 24,129
Property under capital leases.................................. 10,794 10,551
-------- --------
108,034 115,321
Less accumulated depreciation and amortization................. (53,416) (57,624)
-------- --------
$ 54,618 $ 57,697
======== ========
</TABLE>

NOTE 4 -- LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Unsecured revolving bank notes under $160,000 credit agreement,
payable June 30, 1998, fluctuating interest (6.3% to 6.4% at
January 26, 1996)............................................ $ 61,025 $ 68,300
Short-term instruments classified as long-term debt............ 34,803 35,200
Other notes payable............................................ 6,950 2,252
Capital lease obligations...................................... 3,858 3,014
-------- --------
106,636 108,766
Less current portion........................................... (1,393) (2,551)
-------- --------
$105,243 $106,215
======== ========
</TABLE>

On July 31, 1995, the Company's revolving credit and line of credit
agreement with a group of banks was amended. The agreement, as amended, now
permits the Company to borrow up to $160,000 (subject to borrowing limitations
under the agreement) -- $125,000 long-term, expiring June 30, 1998, and $35,000
line of credit convertible to a term note due two years from conversion date.
The $35,000 line of credit backs commercial paper. Under the credit facility,
interest is payable at market rates plus applicable margins. Commitment fees of
.25% and .125% are paid on the unused portions of the revolving and line of
credit facilities, respectively.

Loan covenants require the Company to maintain consolidated working capital
of not less than $75,000 and a maximum ratio of funded debt to total capital, as
defined, of .55 to 1.0. The covenants also restrict the Company's activities
regarding investments, liens, borrowing and leasing, and payment of dividends
other than stock. Under the dividend covenant, approximately $13,480 is
available at January 26, 1996 for payment of dividends.

The Company has a bank line of credit for short-term borrowing aggregating
$6,000 (subject to borrowing limitations under the long-term debt covenants)
under which $200 was outstanding at January 26, 1996. There were no amounts
outstanding at January 27, 1995. The line provides for interest at market rates.
The interest rate on short-term borrowings as of January 26, 1996 was 5.9%. In
addition, the Company has a commercial paper program backed by its revolving
credit facility. The weighted average interest rate on

F-11
<PAGE> 51

HUGHES SUPPLY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

outstanding commercial paper borrowings of $34,803 and $35,000 as of January 27,
1995 and January 26, 1996 was 6.0% and 5.9%, respectively.

The Company's credit facility enables the Company to refinance short-term
borrowings on a long-term basis to the extent that the credit facility is
unused. Accordingly, $34,803 and $35,200 of short-term borrowings at January 27,
1995 and January 26, 1996, respectively, have been classified as long-term debt.

The carrying value of notes payable is a reasonable estimate of fair value
since interest rates are based on prevailing market rates.

Maturities of long-term debt, excluding capital lease obligations, for each
of the five years subsequent to January 26, 1996 and in the aggregate are as
follows:

<TABLE>
<CAPTION>
FISCAL YEARS ENDING
------------------------------------------------------------------
<S> <C>
1997......................................................... $ 1,694
1998......................................................... 408
1999......................................................... 103,615
2000......................................................... 31
2001......................................................... 4
Later years.................................................. --
--------
$105,752
========
</TABLE>

NOTE 5 -- INCOME TAXES

The components of deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts................................ $ 1,854 $ 1,809
Inventories.................................................... 2,866 1,757
Capital leases................................................. 590 503
Property and equipment......................................... 744 1,148
Accrued vacation............................................... 667 911
Deferred compensation.......................................... 597 681
Environmental clean-up costs................................... 216 268
Operating leases............................................... -- 276
Other accrued liabilities...................................... 3,222 5,106
Other.......................................................... 310 389
------- -------
Total deferred tax assets.............................. 11,066 12,848
------- -------
Deferred tax liabilities:
Operating leases............................................... 42 --
Intangible assets.............................................. 8 21
------- -------
Total deferred tax liabilities......................... 50 21
------- -------
Net deferred tax asset........................................... $11,016 $12,827
======= =======
</TABLE>

No valuation allowance has been provided for these deferred tax assets at
January 27, 1995 and January 26, 1996 as full realization of these assets is
expected.

F-12
<PAGE> 52

HUGHES SUPPLY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

The consolidated provision for income taxes consists of the following:

<TABLE>
<CAPTION>
FISCAL YEARS ENDED
------------------------------
1994 1995 1996
------ ------- -------
<S> <C> <C> <C>
Currently payable:
Federal.............................................. $4,567 $ 9,927 $11,091
State................................................ 645 1,635 1,679
------ ------- -------
5,212 11,562 12,770
------ ------- -------
Deferred:
Federal.............................................. (906) (3,650) (1,555)
State................................................ 205 (199) (256)
------ ------- -------
(701) (3,849) (1,811)
------ ------- -------
$4,511 $ 7,713 $10,959
====== ======= =======
</TABLE>

The following is a reconciliation of tax computed at the statutory Federal
rate to the income tax expense in the consolidated statements of income:

<TABLE>
<CAPTION>
FISCAL YEARS ENDED
----------------------------------------------
1994 1995 1996
------------- ------------- --------------
AMOUNT % AMOUNT % AMOUNT %
------ ---- ------ ---- ------- ----
<S> <C> <C> <C> <C> <C> <C>
Tax computed at statutory Federal rate...... $3,862 35.0 $6,719 35.0 $ 9,453 35.0
Effect of:
State income tax, net of Federal income
tax benefit............................ 552 5.0 933 4.9 925 3.4
Nondeductible purchase adjustments........ 24 .2 38 .2 43 .2
Nondeductible expenses.................... 117 1.1 330 1.7 396 1.5
Other, net................................ (44) (.4) (307) (1.6) 142 .5
------ ---- ------ ---- ------- ----
Income tax expense.......................... $4,511 40.9 $7,713 40.2 $10,959 40.6
====== ==== ====== ==== ======= ====
</TABLE>

NOTE 6 -- EMPLOYEE BENEFIT PLANS

PROFIT SHARING AND EMPLOYEE STOCK OWNERSHIP PLANS

The Company has a 401(k) profit sharing plan which provides benefits for
substantially all employees of the Company who meet minimum age and length of
service requirements. Under the plan, employee contributions of not less than 2%
to not more than 3% of each eligible employee's compensation are matched (in
cash or stock) 50% by the Company. Additional annual contributions may be made
at the discretion of the Board of Directors.

The Company has an employee stock ownership plan (ESOP) covering
substantially all employees of the Company who meet minimum age and length of
service requirements. The plan is designed to enable eligible employees to
acquire a proprietary interest in the Company. Company contributions (whether in
cash or stock) are determined annually by the Board of Directors in an amount
not to exceed the maximum allowable as an income tax deduction. At January 27,
1995 and January 26, 1996, the plan owned approximately 172,000 and 184,000
shares, respectively, of the Company's common stock, all of which were allocated
to participants.

Amounts charged to expense for these and other similar plans during the
fiscal years ended in 1994, 1995 and 1996 were $1,000, $1,157 and $1,710,
respectively.

F-13
<PAGE> 53

HUGHES SUPPLY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

BONUS PLANS

The Company has bonus plans, based on profitability formulas, which provide
incentive compensation for key employees. Amounts charged to expense for bonuses
to executive officers were $533, $935 and $1,354 for the fiscal years ended in
1994, 1995 and 1996, respectively.

STOCK OPTION PLANS

The Company's stock option plans authorize the granting of both incentive
and non-incentive stock options for an aggregate of 1,635,000 shares of common
stock to key executive, management, and sales employees, and, with respect to
135,000 shares, to non-employee directors. Under the plans, options are granted
at prices not less than market value on the date of grant, and the maximum term
of an option may not exceed ten years. Prices for incentive stock options
granted to employees who own 10% or more of the Company's stock are at least
110% of market value at date of grant. Options may be granted from time to time
to May 1998, or May 2003 with regard to directors. An option becomes exercisable
at such times and in such installments as set by the Board of Directors.

The employee plan also permits the granting of stock appreciation rights
(SARs) to holders of options. Such rights permit the optionee to surrender an
exercisable option, in whole or in part, on any date that the fair market value
of the Company's common stock exceeds the option price for the stock and receive
payment in common stock, or, if the Board of Directors approves, in cash or any
combination of cash and common stock. Such payment would be equal to the excess
of the fair market value of the shares under the surrendered option over the
option price for such shares. The change in value of SARs would be reflected in
income based upon the market value of the stock. No SARs have been granted or
issued through January 26, 1996.

A summary of option transactions during each of the three fiscal years in
the period ended January 26, 1996 is shown below:

<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
SHARES RANGE
--------- -------------
<S> <C> <C>
Under option, January 29, 1993
(253,442 shares exercisable)............................ 406,442 $12.00 - $17.63
Granted................................................ 12,000 $16.25
Exercised.............................................. (6,023) $12.25 - $12.87
Cancelled.............................................. (12,835) $12.00 - $12.63
---------
Under option, January 28, 1994
(297,584 shares exercisable)............................ 399,584 $12.25 - $17.63
Granted................................................ 115,000 $18.13 - $25.37
Exercised.............................................. (44,241) $12.25 - $12.63
---------
Under option, January 27, 1995
(339,343 shares exercisable)............................ 470,343 $12.25 - $25.37
Granted................................................ 15,000 $19.25
Exercised.............................................. (93,541) $12.25 - $20.25
Cancelled.............................................. (1,861) $12.25 - $12.63
---------
Under option, January 26, 1996
(329,941 shares exercisable)............................ 389,941 $12.25 - $25.37
========
</TABLE>

There were 640,658 and 627,519 shares available for the granting of options
at January 27, 1995 and January 26, 1996, respectively.

F-14
<PAGE> 54

HUGHES SUPPLY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

STOCK-BASED COMPENSATION

The Company accounts for compensation cost related to employee stock
options and other forms of employee stock-based compensation plans in accordance
with the requirements of Accounting Principles Board Opinion 25 ("APB 25"). APB
25 requires compensation cost for stock-based compensation plans to be
recognized based on the difference, if any, between the fair market value of the
stock on the date of grant and the option exercise price. In October 1995, the
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation ("SFAS 123"). SFAS
123 established a fair value-based method of accounting for compensation cost
related to stock options and other forms of stock-based compensation plans.
However, SFAS 123 allows an entity to continue to measure compensation costs
using the principles of APB 25 if certain pro forma disclosures are made. SFAS
123 is effective for fiscal years beginning after December 15, 1995. The Company
intends to adopt the provisions for pro forma disclosure requirements of SFAS
123 in fiscal 1997.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

The Company has entered into agreements with certain key executive officers
providing for supplemental payments, generally for periods up to 15 years, upon
retirement, disability or death. The obligations are not funded apart from the
Company's general assets. Amounts charged to expense under the agreements were
$166, $390 and $238 in fiscal years ended 1994, 1995 and 1996, respectively.

NOTE 7 -- COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

A portion of the Company's operations are conducted from locations leased
under capital leases from a corporation which is owned by three of the directors
of Hughes Supply, Inc. The leases generally provide that all expenses related to
the properties are to be paid by the lessee. The leases also generally provide
for rental increases at specified intervals. The leases all expire within ten
years; however, it is expected that they will be renewed. Rents under these
agreements amounted to $1,165 for fiscal years ended 1994 and 1995 and $1,149 in
fiscal year ended 1996. Property under capital leases is included in the
consolidated balance sheets as follows:

<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Property under capital leases (consisting of land and
buildings)................................................... $10,794 $10,551
Accumulated amortization....................................... (8,458) (8,840)
------- -------
$ 2,336 $ 1,711
======= =======
</TABLE>

In addition, rents under operating leases paid to this related corporation
were $396, $400 and $358 in 1994, 1995 and 1996, respectively.

F-15
<PAGE> 55

HUGHES SUPPLY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

Future minimum payments, by year and in the aggregate, under the
aforementioned leases and other noncancellable operating leases with initial or
remaining terms in excess of one year as of January 26, 1996, are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
FISCAL YEARS ENDING LEASES LEASES
--------------------------------------------------------------- ------- ---------
<S> <C> <C>
1997...................................................... $ 1,141 $ 9,122
1998...................................................... 1,141 8,238
1999...................................................... 558 6,540
2000...................................................... 360 4,755
2001...................................................... 325 3,201
Later years............................................... 258 5,221
------- ---------
Total minimum lease payments................................... 3,783 $37,077
=======
Less amount representing interest.............................. (769)
-------
Present value of net minimum lease payments.................... 3,014
Less current portion........................................... (857)
-------
$ 2,157
======
</TABLE>

Lease-related expenses are as follows:

<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-----------------------------
1994 1995 1996
------ ------ -------
<S> <C> <C> <C>
Capital lease amortization...................................... $ 594 $ 594 $ 584
Capital lease interest expense.................................. 505 440 364
Operating lease rentals (excluding month-to-month rents)........ 6,397 7,412 12,090
</TABLE>

GUARANTEES OF AFFILIATE DEBT

A wholly-owned subsidiary of the Company owns a 20% interest in Accord
Industries Company ("Accord"), a joint venture formed from the Company's sale of
its manufacturing operations in 1990. As partial consideration for the sale, the
Company received $2,750 in notes receivable, part of which is convertible into
an additional partnership interest in Accord of up to 29%.

In connection with the investment in Accord, the Company guaranteed $500 of
Accord's indebtedness to a bank and the Company's subsidiary as a joint venturer
is contingently liable for the remaining bank debt of approximately $1,100 as of
January 26, 1996.

LEGAL MATTERS

The Company is involved in various legal proceedings incident to the
conduct of its business. In the opinion of management, none of the proceedings
are material in relation to the Company's consolidated operations or financial
position.

NOTE 8 -- CAPITAL STOCK

COMMON STOCK

On May 24, 1994, the shareholders approved an amendment to the articles of
incorporation of the Company increasing the number of authorized shares of
common stock to 20,000,000 shares, $1.00 par value per share.

F-16
<PAGE> 56

HUGHES SUPPLY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

On March 8, 1994, the Company issued a call for redemption of its
outstanding 7% convertible subordinated debentures to take place on April 7,
1994. Of the $22,960 debentures outstanding at January 28, 1994, $22,889, or
99.7%, were converted into the Company's common stock at $21.17 per share or
47.2 common shares for each $1 face amount of debentures. This conversion
resulted in the issuance of 1,081,146 common shares.

PREFERRED STOCK

The Company's Board of Directors established Series A Junior Participating
Preferred Stock (Series A Stock) consisting of 300,000 shares. Each share of
Series A Stock will be entitled to one vote on all matters submitted to a vote
of shareholders. Series A Stock is not redeemable or convertible into any other
security. Each share of Series A Stock shall have a minimum cumulative
preferential quarterly dividend rate equal to the greater of $1.25 per share or
100 times the aggregate per share amount of the dividend declared on common
stock. In the event of liquidation, shares of Series A Stock will be entitled to
the greater of $100 per share plus any accrued and unpaid dividend or 100 times
the payment to be made per share of common stock. No shares of Series A Stock
are presently outstanding, and no shares are expected to be issued except in
connection with the shareholder rights plan referred to below.

The Company has a shareholder rights plan. Under the plan, the Company
distributed to shareholders a dividend of one right per share of the Company's
common stock. When exercisable, each right will permit the holder to purchase
from the Company a unit consisting of one one-hundredth of a share of Series A
Stock at a purchase price of $65 per unit. The rights generally become
exercisable if a person or group acquires 20% or more of the Company's common
stock or commences a tender offer that could result in such person or group
owning 30% or more of the Company's common stock. If certain subsequent events
occur after the rights first become exercisable, the rights may become
exercisable for the purchase of shares of common stock of the Company, or of an
acquiring company, having a value equal to two times the exercise price of the
right. The rights may be redeemed by the Company at $.01 per right at any time
prior to ten days after 20% or more of the Company's stock is acquired by a
person or group. The rights expire on June 2, 1998 unless sooner terminated in
accordance with the rights plan.

NOTE 9 -- CONCENTRATION OF CREDIT RISK

The Company sells its products in the major areas of construction markets
in certain states of the eastern half of the United States. Approximately 90% of
the Company's sales are credit sales which are primarily to customers whose
ability to pay is dependent upon the construction industry economics prevailing
in these areas; however, concentration of credit risk with respect to trade
accounts receivable is limited due to the large number of customers comprising
the Company's customer base and no one customer comprises more than 1% of annual
sales. The Company performs ongoing credit evaluations of its customers and in
certain situations obtains collateral sufficient to protect its credit position.
The Company maintains reserves for potential credit losses, and such losses have
been within management's expectations.

F-17
<PAGE> 57

HUGHES SUPPLY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 10 -- SUPPLEMENTAL CASH FLOWS INFORMATION

The following is a reconciliation of net income to net cash provided by
(used in) operating activities:

<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-------------------------------
1994 1995 1996
-------- -------- -------
<S> <C> <C> <C>
Net income............................................ $ 6,524 $ 11,485 $16,050
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation..................................... 7,038 8,217 8,669
Amortization..................................... 762 839 1,916
Provision for doubtful accounts.................. 1,938 1,381 1,849
Gain on sale of property and equipment........... (270) (294) (621)
Undistributed (earnings) losses of affiliate..... (171) (139) 115
Treasury shares contributed to employee benefit
plan........................................... -- 500 --
Changes in assets and liabilities, net of effects
of business acquisitions:
(Increase) decrease in --
Accounts receivable......................... (16,894) (13,819) (8,872)
Inventories................................. (4,688) (16,539) 1,129
Other current assets........................ (81) (835) (1,119)
Other assets................................ 178 (262) (1,063)
Increase (decrease) in --
Accounts payable and accrued expenses....... 4,399 13,770 6,095
Accrued interest and income taxes........... (487) 2,840 (2,249)
Other noncurrent liabilities................ 178 397 225
Increase in deferred income taxes.............. (625) (3,849) (1,811)
-------- -------- -------
Net cash provided by (used in) operating activities... $ (2,199) $ 3,692 $20,313
======== ======== =======
</TABLE>

NONCASH INVESTING AND FINANCING ACTIVITIES

The net assets acquired and consideration for acquisitions accounted for as
purchases are summarized below:

<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-------------------------------
1994 1995 1996
-------- -------- -------
<S> <C> <C> <C>
Fair value of:
Assets acquired..................................... $ 8,421 $ 28,396 $22,600
Liabilities assumed................................. (4,487) (7,269) (9,369)
-------- -------- -------
Purchase price........................................ $ 3,934 $ 21,127 $13,231
======== ======== =======
</TABLE>

Consideration in fiscal 1995 included 249,000 shares of common stock (fair
value $4,286), a note for $1,525 and amounts payable of $4,217. Consideration in
fiscal 1996 included 191,000 shares of common stock (fair value $3,222).

Additional common stock was issued in fiscal year 1995 upon the conversion
of $22,889 convertible subordinated debentures.

F-18
<PAGE> 58

HUGHES SUPPLY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 11 -- SUBSEQUENT EVENT (UNAUDITED)

On March 27, 1996, the Company entered into an asset purchase agreement to
acquire substantially all of the assets, properties and business of PVF
Holdings, Inc. and its subsidiaries and to assume certain of their liabilities.
The aggregate consideration to be paid is approximately $106 million, consisting
of cash in the amount of $74.4 million, the issuance of 669,956 shares of common
stock and the assumption of bank debt not to exceed $13 million.

F-19
<PAGE> 59

INDEPENDENT AUDITORS' REPORT

To The Board of Directors of PVF Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of PVF Holdings,
Inc. and subsidiaries as of June 30, 1994 and 1995, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended June 30, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of PVF Holdings, Inc. and subsidiaries
as of June 30, 1994 and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended June 30, 1995 in
conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Birmingham, Alabama
September 25, 1995 (October 25, 1995 and
March 27, 1996 as to Note 9)

F-20
<PAGE> 60

PVF HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30,
------------------------- DECEMBER 31,
1994 1995 1995
----------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS (NOTE 4)
CURRENT ASSETS:
Cash.................................................. $ 197,118 $ 183,182 $ 203,512
Accounts receivable, less allowance for doubtful
accounts of $75,000 (June 30, 1994), $110,000
(June 30, 1995) and $120,000 (December 31,
1995)............................................ 8,590,232 12,346,105 12,583,641
Inventories........................................... 23,006,950 37,487,362 39,829,495
Prepaid expenses...................................... 33,457 21,020 74,946
Deferred income taxes (Note 5)........................ 231,468 576,000 672,000
----------- ----------- ------------
Total current assets.......................... 32,059,225 50,613,669 53,363,594
PROPERTY, PLANT AND EQUIPMENT -- NET (Note 2)........... 1,426,187 1,278,274 1,294,929
INVESTMENT IN AND LOANS TO AFFILIATE (Note 3)........... 183,740 636,108 688,157
GOODWILL, NET........................................... 530,400 494,560 476,633
OTHER ASSETS............................................ 163,189 121,244 105,874
----------- ----------- ------------
TOTAL......................................... $34,362,741 $53,143,855 $ 55,929,187
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving line of credit -- bank (Note 4)............. $ 6,738,000 $ 3,583,000 $ 3,423,000
Accounts payable...................................... 8,191,188 10,852,719 8,233,078
Accrued management fees (Note 3)...................... 265,466 1,866,118 750,494
Other accrued expenses (Note 3)....................... 745,836 1,887,870 1,884,228
Income taxes payable.................................. 82,269 2,456,746 985,157
Current portion of long-term debt (Note 4)............ 3,193,549 1,058,540 1,083,249
Current portion of subordinated debt (Note 4)......... 175,000 -- --
----------- ----------- ------------
Total current liabilities..................... 19,391,308 21,704,993 16,359,206
LONG-TERM DEBT (Note 4)................................. 462,660 6,719,230 6,384,126
SUBORDINATED DEBT (Notes 3 and 4)....................... 700,000 700,000 700,000
COMMITMENTS (Note 6)
STOCKHOLDER'S EQUITY (Notes 4 and 8):
Series A preferred stock; nonvoting and cumulative;
par value $1 per share; 9,500 shares authorized,
issued and outstanding............................. 9,500 9,500 9,500
Series B preferred stock; nonvoting, cumulative and
convertible; par value $1 per share; 310 shares
authorized; 310 (June 30, 1994 and 1995) and -0-
(December 31, 1995) shares issued and
outstanding........................................ 310 310 --
Common Stock; par value $.01 per share; 100,000 shares
authorized; 19,000 (June 30, 1994 and 1995) and
50,000 (December 31, 1995) shares issued and
outstanding........................................ 190 190 500
Additional paid-in-capital............................ 2,021,000 2,021,000 2,021,000
Retained earnings..................................... 12,013,447 21,988,632 30,454,855
Unearned compensation relating to stock award......... (235,674) -- --
----------- ----------- ------------
Total stockholders' equity.................... 13,808,773 24,019,632 32,485,855
----------- ----------- ------------
TOTAL......................................... $34,362,741 $53,143,855 $ 55,929,187
========== ========== ==========
</TABLE>

See notes to consolidated financial statements.

F-21
<PAGE> 61

PVF HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30, DECEMBER 31,
--------------------------------------- -------------------------
1993 1994 1995 1994 1995
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES....................... $48,297,228 $60,930,776 $92,790,481 $39,808,900 $56,514,677
----------- ----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Cost of goods sold............ 37,105,439 46,211,087 60,423,904 28,957,788 34,982,987
Operating expenses (Notes 3,
6, 7 and 8)................ 8,514,457 9,878,622 14,339,683 6,303,462 7,127,306
Interest expense (Note 3)..... 730,858 830,638 997,709 486,019 453,161
----------- ----------- ----------- ----------- -----------
Total costs and
expenses............ 46,350,754 56,920,347 75,761,296 35,747,269 42,563,454
----------- ----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES...... 1,946,474 4,010,429 17,029,185 4,061,361 13,951,223
INCOME TAXES (Note 5)........... 706,000 1,419,000 7,054,000 1,629,000 5,485,000
----------- ----------- ----------- ----------- -----------
NET INCOME...................... $ 1,240,474 $ 2,591,429 $ 9,975,185 $ 2,432,631 $ 8,466,223
========== ========== ========== ========== ==========
</TABLE>

See notes to consolidated financial statements.

F-22
<PAGE> 62

PVF HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
SERIES A SERIES B UNEARNED
PREFERRED STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL COMPENSATION
--------------- --------------- --------------- PAID-IN RETAINED RELATING TO
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS STOCK AWARD TOTAL
------ ------ ------ ------ ------ ------ ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JULY 1,
1992.............. 9,500 $9,500 310 $ 310 19,000 $190 $2,021,000 $ 8,181,544 $ (471,567) $ 9,740,977
Net income........ 1,240,474 1,240,474
Amortization of
shares vested
under stock
award (Note
8)............. 117,923 117,923
------ ------ ------ ------ ------ ------ ---------- ----------- ------------ -----------
BALANCE, JUNE 30,
1993.............. 9,500 9,500 310 310 19,000 190 2,021,000 9,422,018 (353,644) 11,099,374
Net income........ 2,591,429 2,591,429
Amortization of
shares vested
under stock
award (Note
8)............. 117,970 117,970
------ ------ ------ ------ ------ ------ ---------- ----------- ------------ -----------
BALANCE, JUNE 30,
1994.............. 9,500 9,500 310 310 19,000 190 2,021,000 12,013,447 (235,674) 13,808,773
Net income........ 9,975,185 9,975,185
Amortization of
shares vested
under stock
award (Note
8)............. 235,674 235,674
------ ------ ------ ------ ------ ------ ---------- ----------- ------------ -----------
BALANCE, JUNE 30,
1995.............. 9,500 9,500 310 310 19,000 190 2,021,000 21,988,632 -- 24,019,632
Conversion of
Series B
preferred stock
into common
stock (Note
8)............. (310) (310 ) 31,000 310
Net income
(unaudited).... 8,466,223 8,466,223
------ ------ ------ ------ ------ ------ ---------- ----------- ------------ -----------
BALANCE, DECEMBER
31, 1995
(unaudited)....... 9,500 $9,500 -- $ -- 50,000 $500 $2,021,000 $30,454,855 $ -- $32,485,855
===== ====== ===== ====== ====== ====== ========= ========== ========== ==========
</TABLE>

See notes to consolidated financial statements.

F-23
<PAGE> 63

PVF HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30, DECEMBER 31,
---------------------------------------- -------------------------
1993 1994 1995 1994 1995
----------- ----------- ------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income......................................... $ 1,240,474 $ 2,591,429 $ 9,975,185 $ 2,432,631 $ 8,466,223
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation..................................... 332,387 385,457 414,770 207,386 207,900
Amortization..................................... 259,684 148,459 98,512 49,188 31,829
Compensation expense relating to stock award and
performance stock plan......................... 117,923 117,970 418,916 280,673 209,260
Provision for losses on accounts receivable...... 59,119 73,228 97,630 39,832 (4,212)
Equity in net income of affiliate................ (104,143) (16,920) (52,049)
(Gain) loss on disposal of fixed
assets......................................... (8,478) 1,377
Changes in assets and liabilities provided (used)
cash:
Accounts receivable.............................. (1,624,606) (2,425,405) (3,853,503) (1,136,628) (233,324)
Inventories...................................... (5,734,882) (1,385,973) (14,480,412) (4,447,040) (2,342,133)
Prepaid expenses................................. (12,232) 29,695 12,437 (14,383) (53,926)
Deferred income taxes............................ (75,000) 1,000 (344,532) (147,532) (96,000)
Accounts payable and accrued expenses............ 2,131,773 1,124,603 5,220,975 1,692,347 (3,948,167)
Income taxes payable............................. 7,084 73,282 2,374,477 211,577 (1,471,589)
Other............................................ (18,271) (11,856) (20,727) (16,603) 1,469
----------- ----------- ------------ ----------- -----------
Net cash provided by (used in) operating
activities..................................... (3,316,547) 721,889 (198,893) (865,472) 716,658
----------- ----------- ------------ ----------- -----------
INVESTING ACTIVITIES:
Capital expenditures............................... (596,967) (165,801) (271,779) (133,931) (225,933)
Investment in and loans to affiliates.............. (183,740) (348,225) (348,225)
Proceeds from the sale of fixed assets............. 13,400
----------- ----------- ------------ ----------- -----------
Net cash used in investing activities............ (596,967) (349,541) (606,604) (482,156) (225,933)
----------- ----------- ------------ ----------- -----------
FINANCING ACTIVITIES:
Net borrowings (payments) under line of credit..... 4,934,000 772,000 (3,155,000) (3,245,000) (160,000)
Proceeds from issuance of long-term debt........... 28,412 7,500,000 7,500,000 147,045
Payments on long-term debt......................... (1,270,393) (1,187,364) (3,553,439) (2,947,905) (457,440)
----------- ----------- ------------ ----------- -----------
Net cash provided by (used in) financing
activities..................................... 3,692,019 (415,364) 791,561 1,307,095 (470,395)
----------- ----------- ------------ ----------- -----------
NET INCREASE (DECREASE) IN CASH...................... (221,495) (43,016) (13,936) (40,533) 20,330
CASH, BEGINNING OF PERIOD............................ 461,629 240,134 197,118 197,118 183,182
----------- ----------- ------------ ----------- -----------
CASH, END OF PERIOD.................................. $ 240,134 $ 197,118 $ 183,182 $ 156,585 $ 203,512
========== ========== =========== ========== ==========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for:
Interest......................................... $ 782,082 $ 882,922 $ 967,059 $ 483,159 $ 406,188
========== ========== =========== ========== ==========
Income taxes..................................... $ 828,735 $ 1,346,059 $ 5,113,069 $ 1,549,411 $ 7,058,914
========== ========== =========== ========== ==========
</TABLE>

See notes to consolidated financial statements.

F-24
<PAGE> 64

PVF HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

a. Principles of Consolidation -- The consolidated financial statements
include the accounts of PVF Holdings, Inc. ("PVF"), Southwest Stainless, Inc.
("SWS"), Coastline Products, Inc. ("Coastline"), Houston Products and Machine
("HPM"), and Multalloy, Inc., ("Multalloy") (hereinafter collectively referred
to as the "Company"). The Company's investment in C. F. Fluid Controls Inc.
("C.F. Fluid") a 50% owned unconsolidated investee, is accounted for on the
equity method (see Note 3). All significant intercompany accounts and
transactions have been eliminated in consolidation.

b. Description of the Company -- PVF was incorporated in Delaware on
November 30, 1989. At that time, it issued 19,000 shares of common stock, 9,500
shares of Series A preferred stock and 310 shares of Series B convertible
preferred stock for all of the similar shares of SWS, of which Coastline was a
wholly-owned subsidiary, in a non-taxable exchange. SWS and Coastline were
surviving companies from a purchase acquisition in 1988. In 1992, the Company
acquired the assets of HPM and, in 1994, it incorporated its Multalloy division.

The Company is a wholesale distributor, selling to customers located
primarily in the Southeastern and Southwestern United States, of stainless and
special-alloy pipe, valves and accessories for use primarily in the chemical,
paper and textile industries. Effective June 30, 1992, Jemison industries, Inc.
("Industries"), a majority-owned subsidiary of Jemison Investment Co., Inc.
("Investment"), transferred its interest in PVF to Investment. The stockholders
of the Company at June 30, 1995 include, among others, Investment, which is a
49% shareholder, and certain management members and shareholders of Investment
and Industries. As of July 1, 1995, Investment increased its ownership of the
Company to 80.5% by converting all of its Series B preferred stock (see Note 8).

c. Inventories -- Inventories, which consist of purchased materials, are
valued at average cost (using the weighted average method) and are stated at the
lower of cost or market.

d. Property, Plant and Equipment -- Property, plant and equipment is stated
at cost. Depreciation is computed using the straight-line method over the
estimated useful lives of the assets.

e. Goodwill -- Goodwill is being amortized on a straight-line basis
primarily over 40 years. Accumulated amortization of goodwill was $179,000 and
$215,000 at June 30, 1994 and 1995, respectively.

f. Income Taxes -- Effective July 1, 1993, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 109, Accounting for Income Taxes.
SFAS No. 109 requires that deferred income taxes be determined under an asset
and liability method. Under this method, deferred tax assets and liabilities are
based on the expected future tax consequences of temporary differences between
the book and tax bases of assets and liabilities. Previously, deferred income
taxes were determined under Accounting Principles Board Opinion No. 11,
Accounting for Income Taxes ("APB No. 11"). Under APB No. 11, deferred income
taxes were based on the historical tax effects of timing differences between
book and taxable income. The impact of adopting SFAS No. 109 was immaterial to
the Company's consolidated financial statements. Deferred income taxes are
provided for temporary differences between financial and tax reporting,
primarily attributable to capitalization of inventory costs under uniform
capitalization regulations.

g. Interim Period Presentation -- The unaudited consolidated financial
statements for the six months ended December 31, 1994 and 1995 have been
prepared on a basis substantially consistent with that of the audited financial
statements included herein. In the opinion of management, such unaudited
financial statements include all adjustments (consisting of only normal
recurring accruals) necessary for a fair presentation of the results of
operations and cash flows. The results of operations for the six months ended
December 31, 1995 are not necessarily indicative of results that may be expected
for the year ending June 30, 1996.

F-25
<PAGE> 65

PVF HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

h. Reclassifications -- Certain reclassifications have been made to the
1994 balance sheet amounts to conform to the 1995 presentation.

i. New Accounting Standards Not Yet Adopted -- In December 1991, SFAS No.
107, Disclosures About Fair Value of Financial Instruments was issued by the
Financial Accounting Standards Board ("FASB"). In October 1994, SFAS No. 107 was
amended by SFAS No. 119, Disclosure about Derivative Financial Instruments and
Fair Value of Financial Instruments. SFAS Nos. 107 and 119 require various
disclosures relating to nonderivative financial instruments and derivative
financial instruments. These statements are effective for fiscal years ending
after December 15, 1995 for entities with less than $150 million in total
assets. The adoption of these statements will impact the Company's financial
statements only in terms of increased disclosures regarding the affected
instruments.

The FASB has also issued SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of. This statement
establishes accounting standards for the impairment of long-lived assets,
certain identifiable intangibles, and goodwill related to those assets to be
held and used, and for long-lived assets and certain identifiable intangibles to
be disposed of. This statement is effective for fiscal years beginning after
December 15, 1995. Management believes there would be no impact on the Company's
consolidated financial statements if this Statement were adopted currently.

2. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
JUNE 30,
------------------------- DECEMBER 31,
1994 1995 1995
---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Land and buildings............................ $ 278,040 $ 278,040 $ 278,040
Furniture and fixtures........................ 149,918 167,610 175,360
Machinery and equipment....................... 1,720,451 1,914,347 2,008,807
Transportation equipment...................... 203,055 210,985 210,277
Leasehold improvements........................ 110,180 136,260 148,278
---------- ---------- ------------
2,461,644 2,707,242 2,820,762
Less accumulated depreciation and
amortization................................ 1,035,457 1,428,968 1,525,833
---------- ---------- ------------
Total............................... $1,426,187 $1,278,274 $1,294,929
========= ========= ==========
</TABLE>

3. RELATED PARTY TRANSACTIONS

The Company owes $700,000 to Investment, which until November 3, 1994 was
guaranteeing certain of the Company's other debt. Interest of $70,000 was
incurred on this obligation in 1993, 1994 and 1995. In exchange for these
guarantees and certain management services, the Company paid Investment an
annual consultant and guarantee fee based upon 5% of the Company's adjusted
pre-tax income. For the years ended June 30, 1993, 1994 and 1995, the Company
incurred approximately $160,000, $265,000 and $1,866,000, respectively, of these
fees, including in 1995 a special management fee of $900,000.

The Company leases certain branch facilities from related parties
consisting of its President, the Chairman of Investment and Investment. Related
party rents of approximately $266,000, $370,000 and $384,000 were incurred in
1993, 1994 and 1995, respectively.

At June 30, 1995, the Company has $348,000 in notes receivable from C. F.
Fluid plus $20,000 accrued interest on these notes. During 1995, the Company
purchased inventory from C.F. Fluid totaling $634,000, and as of June 30, 1995
had related accounts payable of $200,000.

F-26
<PAGE> 66

PVF HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. LONG-TERM DEBT

The Company's long-term debt consists of:

<TABLE>
<CAPTION>
JUNE 30,
------------------------- DECEMBER 31,
1994 1995 1995
---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Note payable to bank, refinanced in 1995 to
include additional borrowings, bearing
interest at prime (9% at June 30, 1995) due
in quarterly principal installments of
$187,500 through October 1, 1999 and a final
payment of $3,750,000 due January 1, 2000... $2,873,864 $7,125,000 $6,750,000
Two notes payable to former owners of
Coastline, due in annual installment of
$100,650 (including 14% interest) through
November 30, 1998........................... 345,538 293,264 233,671
Note payable to Investment in monthly
installments of $2,492 (including 11.5%
interest) through December 1, 1999.......... 121,476 104,673 98,713
Dividends payable to stockholders,
due June 30, 1996........................... 210,107 210,107 210,107
Other......................................... 105,224 44,726 174,884
---------- ---------- ------------
3,656,209 7,777,770 7,467,375
Less current portion.......................... 3,193,549 1,058,540 1,083,249
---------- ---------- ------------
Total............................... $ 462,660 $6,719,230 $6,384,126
========= ========= ==========
</TABLE>

The short-term revolving line of credit (under which the Company may borrow
up to $10,000,000 as of June 30, 1995, with interest payable at the prime rate)
and long-term note payable agreements with the bank contain various restrictive
covenants which among others, require the Company to maintain a net working
capital of not less than $8,000,000, a tangible net worth of not less than
$10,000,000, and a debt-to-equity ratio of not more than 1.5:1. The Company must
also maintain a current ratio of not less than 1.5:1 and no dividends in excess
of 10% of the prior fiscal year's net income may be paid. The Company is also
limited on acquisitions of capital assets and its incurrence of additional debt.
At June 30, 1994, the Company was in violation of certain of these covenants
and, accordingly, $2,173,864 of long-term obligations were classified as current
liabilities in the accompanying 1994 consolidated balance sheet. The Company was
in compliance with these covenants as of June 30, 1995.

Substantially all of the Company's assets are pledged as collateral on this
indebtedness.

At June 30, 1995, the future maturities of long-term debt were as follows:

<TABLE>
<S> <C>
1996............................................................. $1,058,540
1997............................................................. 863,804
1998............................................................. 851,132
1999............................................................. 864,848
2000............................................................. 4,139,446
----------
Total.................................................. $7,777,770
=========
</TABLE>

F-27
<PAGE> 67

PVF HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Subordinated Debt

The Company is obligated under an unsecured $700,000 note payable to
Investment, with 10% interest payable quarterly. The entire principal amount is
due on January 1, 2009. At June 30, 1994 the Company was also obligated under 8%
notes payable to former stockholders totaling $175,000 which matured in December
1994.

All principal payments relating to these notes are subordinate to the bank
debt.

5. INCOME TAXES

Provision (benefit) for income taxes consist of:

<TABLE>
<CAPTION>
1993 1994 1995
-------- ---------- ----------
<S> <C> <C> <C>
Current:
Federal........................................... $726,000 $1,338,000 $6,684,532
State............................................. 55,000 80,000 714,000
-------- ---------- ----------
781,000 1,418,000 7,398,532
-------- ---------- ----------
Deferred:
Federal........................................... (70,000) 1,000 (321,532)
State............................................. (5,000) -- (23,000)
-------- ---------- ----------
(75,000) 1,000 (344,532)
-------- ---------- ----------
$706,000 $1,419,000 $7,054,000
======== ========= =========
</TABLE>

Provision (benefit) for income taxes differ from the amounts computed by
applying the statutory federal income tax rate to income before income taxes as
follows:

<TABLE>
<CAPTION>
1993 1994 1995
-------- ---------- ----------
<S> <C> <C> <C>
Federal income tax at statutory rate................ $681,000 $1,404,000 $6,471,000
Effect of graduated rates........................... (19,000) (40,000) (171,000)
State income taxes, net of federal taxes............ 32,000 53,000 449,000
Nondeductible expenses.............................. 35,000 24,000 66,000
Other............................................... (23,000) (22,000) 239,000
-------- ---------- ----------
$706,000 $1,419,000 $7,054,000
======== ========= =========
</TABLE>

F-28
<PAGE> 68

PVF HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The approximate tax effects of temporary differences that give rise to the
deferred tax assets and liabilities at June 30, 1994 and 1995 are as follows:

<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Deferred tax assets:
Inventory valuation............................................ $356,000 $581,000
Performance stock plan expense................................. -- 70,000
Provision for bad debts........................................ 27,000 42,000
Other.......................................................... 16,468 29,000
-------- --------
Gross deferred tax assets...................................... 399,468 722,000
-------- --------
Deferred tax liabilities:
Depreciation................................................... 97,000 106,000
Compensation expense related to stock award.................... 65,000 --
Other.......................................................... 6,000 40,000
-------- --------
Gross deferred tax liabilities................................. 168,000 146,000
-------- --------
Net deferred tax asset......................................... $231,468 $576,000
======== ========
</TABLE>

6. LEASE ARRANGEMENTS

The Company leases its branch facilities and offices under operating lease
agreements. Several leases provide for multiple renewal options covering periods
of up to nine years.

In most cases, management expects that in the normal course of business,
leases will be renewed or replaced by other leases.

Minimum lease commitments at June 30, 1995 for all noncancelable operating
leases, excluding renewal periods, are as follows:

<TABLE>
<S> <C>
1996........................................................... $288,000
1997........................................................... 201,000
1998........................................................... 66,000
1999........................................................... 55,000
2000........................................................... 27,000
--------
Total................................................ $637,000
========
</TABLE>

Total rent expense was $557,000 (1993), $670,000 (1994) and $821,000
(1995).

7. EMPLOYEE BENEFIT PROGRAMS

401(k) Plan

The Company has elected to participate in the Jemison Multi-Company 401(k)
Plan (the "Plan"). Under the Plan, the Company has the option to contribute up
to 6% of a participant's earnings. Contributions by the Company for the years
ended June 30, 1993, 1994, and 1995 totaled $216,000, $250,000 and $288,000,
respectively.

Performance Stock Plan

Effective July 1, 1994 the Company established the PVF Holdings, Inc.
Performance Stock Plan under which certain designated employees are granted
performance shares to provide long-term incentives. The performance shares are
valued based on the greater of the Company's common stock book value per share
or

F-29
<PAGE> 69

PVF HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

six times the average of the previous five years' net income per share.
Participants vest 50% upon seven years of employment and continue to vest 10%
annually, becoming fully vested at twelve years of employment. Participants are
paid their vested balance upon termination of employment; however, if the award
exceeds $50,000 the Company may elect to pay $50,000 upon termination and the
balance in annual or quarterly installments, plus interest of 7% per annum.
Compensation expense related to this plan is recognized over the vesting period
and was $183,000 for the year ended June 30, 1995 and $209,000 (unaudited) for
the six-months ended December 31, 1995.

8. CAPITAL STOCK

The Company has three types of preferred stock authorized at June 30, 1995:

(a) Series A preferred stock has a dividend rate of $16 per share per
year as declared by the board of directors, a liquidation preference of
$200 per share ($1,900,000 total) held plus any unpaid accumulated
dividends whether or not declared, and is redeemable at the option of the
Company for the liquidation preference. Dividend arrearages were $848,667
(1995) and $696,667 (1994).

(b) Series B preferred stock has a dividend rate of $18 per share per
year as declared by the board of directors, a liquidation preference of
$300 per share ($93,000 total) held plus any unpaid accumulated dividends
(whether or not declared) but subject to the preferential rights of holders
of Series A preferred stock, and is redeemable at the option of the Company
for the liquidation preference. Dividend arrearages were $31,155 (1995) and
$25,575 (1994). Effective July 1, 1995, the Series B preferred stock was
converted into 31,000 shares of the Company's common stock.

(c) Other preferred stock, par $1.00, 10,190 shares authorized (none
of which have been issued), which the Board of Directors of the Company has
the authority to divide into series and to fix and determine the relative
rights and preferences of any series so established.

Pursuant to a stock restriction agreement, unless a shareholder obtains
written consent from Investment to sell his or her stock, Investment has first
option to purchase any or all of the preferred or common shares offered.

Stock Award

In December 1991, the Company issued 5,000 shares of common stock to a key
officer of the Company to satisfy a deferred compensation liability of
approximately $152,000 and to provide the officer additional compensation for
past and future services. Compensation expense related to this stock award was
recognized in accordance with the vesting schedule specified in the agreement,
which was 40% vested at June 30, 1992 (including the deferred compensation
amount) with an additional 15% vesting occurring annually through June 30, 1996.
In connection with the adoption of the Performance Stock Plan (see Note 7), the
key officer was deemed 100% vested as of August 15, 1994 and the remaining
unearned portion ($235,674) was charged to operations in 1995. Related
compensation expense of approximately $118,000 was charged to operations in 1993
and 1994.

9. SUBSEQUENT EVENTS

On October 25, 1995, the Company renewed its bank line of credit to provide
for maximum borrowings of $12 million.

On March 27, 1996, the Company entered into an agreement with Hughes
Supply, Inc. ("Hughes") to sell substantially all of its assets, properties and
business and to convey certain of its liabilities to Hughes. The aggregate
consideration is approximately $106 million, consisting of cash of $74.4
million, 669,956 shares of common stock of Hughes, and the assumption by Hughes
of up to $13 million of the Company's bank debt.

F-30
<PAGE> 70

------------------------------------------------------
------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, ANY OF THE SELLING SHAREHOLDERS OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE COMMON STOCK
OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF ANY OFFER TO BUY THE COMMON STOCK OFFERED HEREBY BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.

------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Use of Proceeds....................... 9
Capitalization........................ 9
Price Range of Common Stock and
Dividends........................... 10
Selected Unaudited Pro Forma
Consolidated Financial Data......... 11
Selected Consolidated Financial and
Operating Data...................... 16
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 17
Business.............................. 21
Management............................ 30
Principal and Selling Shareholders.... 32
Description of Capital Stock.......... 33
Description of Notes.................. 35
Underwriting.......................... 36
Legal Matters......................... 37
Experts............................... 37
Available Information................. 37
Incorporation of Certain Documents by
Reference........................... 38
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------

1,929,926 SHARES

[HUGHES SUPPLY, INC. LOGO]

COMMON STOCK
------------
PROSPECTUS

, 1996
------------
SMITH BARNEY INC.

ROBERT W. BAIRD & CO.
INCORPORATED
------------------------------------------------------
------------------------------------------------------
<PAGE> 71

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

It is estimated that the Company will incur the following expenses in
connection with the offering of the securities being registered:

<TABLE>
<S> <C>
SEC registration fee.............................................................. $ 22,295
NYSE additional listing fee....................................................... 29,500
NASD filing fee................................................................... 6,936
Accounting fees and expenses...................................................... 80,000
Legal fees and expenses........................................................... 50,000
Blue sky fees and expenses........................................................ 6,000
Printing and engraving expenses................................................... 165,000
Miscellaneous expenses............................................................ 65,269
--------
Total................................................................... $425,000
========
</TABLE>

The foregoing items, except for the SEC registration fee, the NYSE
additional listing fee, the NASD filing fee and blue sky fees and expenses, are
estimated. The Company has agreed to bear all expenses (other than underwriting
discounts and commissions) in connection with the registration and sale of the
shares of Common Stock.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 607.0850 of the Florida Business Corporation Act permits, and in
some cases requires, the Company as a Florida corporation to indemnify a
director, officer, employee, or agent of the Company, or any person serving at
the request of the Company in any such capacity with respect to another entity
against certain expenses and liabilities incurred as a party to any proceeding
brought against such person by reason of the fact that such person is or was a
director, officer, employee, or agent of the Company or is or was serving in
such capacity with respect to another entity at the request of the Company. With
respect to actions, other than in the right of the Company, such indemnification
is permitted if such person acted in good faith and in a manner such person
reasonably believed to be in, or not opposed to, the best interests of the
Company, and with respect to any criminal action or proceeding, if such person
had no reasonable cause to believe his or her conduct was unlawful. Termination
of any such action by judgment, order, settlement or conviction or a plea of
nolo contendere, or its equivalent shall not, of itself, create a presumption
that such person did not act in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the Company, or with
respect to any criminal action or proceeding, had reasonable cause to believe
that his or her conduct was unlawful.

With respect to any action threatened, pending or completed in the right of
the Company to procure a judgment in its favor against any such person, the
Company may indemnify any such person against expenses actually and reasonably
incurred by him or her in connection with the defense or settlement of such
action or suit, including the appeal thereof, if he or she acted in good faith
and in a manner he or she reasonably believed to be in, or not opposed to, the
best interests of the Company, except that no indemnification shall be made in
respect of any claim, issue or matter as to which any such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his or her duties to the Company unless the Court in which the action was
brought determines that despite the adjudication of liability, but in view of
all the circumstances in the case, such person is fairly and reasonably entitled
to indemnity for such expenses.

Section 607.0850 also provides that if any such person has been successful
on the merits or otherwise in defense of any action, suit or proceeding, whether
brought in the right of the Company or otherwise, such person shall be
indemnified against expenses actually and reasonably incurred by him or her in
connection therewith.

II-1
<PAGE> 72

If any director or officer does not succeed upon the merits or otherwise in
defense of an action, suit or proceeding, then unless pursuant to a
determination made by a court, indemnification by the Company shall be made only
as authorized in the specific case upon a determination that indemnification of
the director or officer is proper because he or she has met the applicable
standard of conduct. Any such determination may be made:

(a) By the Board of Directors by a majority vote of a quorum
consisting of directors who are not parties to such action, suit, or
proceeding;

(b) If such a quorum is not obtainable or, even if obtainable, by a
majority vote of a committee duly designated by the Board of Directors (in
which directors who are parties may participate) consisting solely of two
or more directors not at the time parties to the proceeding;

(c) By independent legal counsel selected by the Board of Directors
prescribed in paragraph (a) or the committee prescribed in paragraph (b);
or if a quorum of the directors cannot be obtained for paragraph (a) or the
committee cannot be designated under paragraph (b) selected by a majority
vote of the full Board of Directors (in which directors who are parties may
participate); or

(d) By the shareholders by a majority vote of a quorum consisting of
shareholders who were not parties to the proceeding or, if no such quorum
is obtainable, by a majority vote of shareholders who were not parties to
such proceedings.

Section 607.0850 also contains a provision authorizing corporations to
purchase and maintain liability insurance on behalf of its directors and
officers. For some years the Company has maintained an insurance policy which
insures directors and officers of the Company against amounts the director or
officer is obligated to pay in respect of his legal liability, whether actual or
asserted, for any negligent act, any error, any omission or any breach of duty
which, subject to the applicable limits and terms of the policy, include
damages, judgments, settlements, costs of investigation, and costs, charges and
expenses incurred in the defense of actions, suits, or proceedings or appeals
thereto, subject to the exceptions, limitations and conditions set forth in the
policy.

ITEM 16. EXHIBITS.

The following items are filed as exhibits to this registration statement:

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------
<C> <C> <S>
1 -- Form of Underwriting Agreement by and among the Company, the Selling Shareholders
named therein and Smith Barney Inc. and Robert W. Baird & Co. Incorporated, as
representatives of the several underwriters dated May , 1996.+
2 -- Asset Purchase Agreement by and among the Company, Jemison Investment Co., Inc., PVF
Holdings, Inc., Southwest Stainless, Inc., Multalloy, Inc. (Texas), Multalloy, Inc.
(New Jersey) and Houston Products & Machine, Inc., dated March 27, 1996
4.1 -- Restated Articles of Incorporation of the Company, as amended(1)
4.2 -- Composite By-Laws of the Company(2)
4.3 -- Specimen Stock Certificate representing shares of the Company's Common Stock(3)
4.4 -- Resolution approving and implementing Shareholder Rights Plan together with a copy
thereof(4)
5 -- Opinion of Maguire, Voorhis & Wells, P.A.+
11 -- Summary Schedule of Earnings Per Share Calculations
23.1 -- Consent of Maguire, Voorhis & Wells, P.A. (See Exhibit 5 hereto)+
</TABLE>

II-2
<PAGE> 73

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------------------------------
<C> <C> <S>
23.2 -- Consent of Coopers & Lybrand L.L.P.
23.3 -- Consent of Deloitte & Touche LLP
23.4 -- Consent of Price Waterhouse LLP
24 -- Power of Attorney (See the signature pages to this registration statement)
</TABLE>

- ---------------

+ To be filed by amendment.
(1) Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report
on Form 10-Q filed for the quarter ended July 31, 1994.
(2) Incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report
on Form 10-Q filed for the quarter ended July 31, 1994.
(3) Incorporated by reference to Exhibit 4.2 to the Company's Quarterly Report
on Form 10-Q filed for the quarter ended October 31, 1984.
(4) Incorporated by reference to Exhibit 4.4 to the Company's Current Report on
Form 8-K dated May 17, 1988.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted against the registrant by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE> 74

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Orlando, State of Florida, on this 2nd day of April,
1996.

HUGHES SUPPLY, INC.

By: /s/ DAVID H. HUGHES
------------------------------------
David H. Hughes
Chairman of the Board and Chief
Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints DAVID H. HUGHES, J. STEPHEN ZEPF and ROBERT N.
BLACKFORD, or any of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments to
this registration statement, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto each of said attorneys-in-fact and agents, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully as to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that each of said attorneys-in-fact and agents, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------- ---------------
<C> <S> <C>
/s/ DAVID H. HUGHES Chairman of the Board and Chief April 2, 1996
- --------------------------------------------- Executive Officer
David H. Hughes

/s/ JOHN D. BAKER, II Director April 2, 1996
- ---------------------------------------------
John D. Baker, II

/s/ ROBERT N. BLACKFORD Director April 2, 1996
- ---------------------------------------------
Robert N. Blackford

/s/ JOHN B. ELLIS Director April 2, 1996
- ---------------------------------------------
John B. Ellis

/s/ A. STEWART HALL, JR. Director April 2, 1996
- ---------------------------------------------
A. Stewart Hall, Jr.

/s/ CLIFFORD M. HAMES Director April 2, 1996
- ---------------------------------------------
Clifford M. Hames

/s/ RUSSELL V. HUGHES Director April 2, 1996
- ---------------------------------------------
Russell V. Hughes
</TABLE>

II-4
<PAGE> 75

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------- ---------------
<C> <S> <C>
/s/ VINCENT S. HUGHES Director April 2, 1996
- ---------------------------------------------
Vincent S. Hughes

/s/ HERMAN B. McMANAWAY Director April 2, 1996
- ---------------------------------------------
Herman B. McManaway

/s/ DONALD C. MARTIN Director April 2, 1996
- ---------------------------------------------
Donald C. Martin

/s/ J. STEPHEN ZEPF Treasurer and Chief Financial April 2, 1996
- --------------------------------------------- Officer (Principal and
J. Stephen Zepf Accounting Officer)
</TABLE>

II-5
<PAGE> 76

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- ------- ------------------------------------------------------------------------------ ----
<C> <C> <S> <C>
1 -- Form of Underwriting Agreement by and among the Company, the Selling
Shareholders named therein and Smith Barney Inc. and Robert W. Baird & Co.
Incorporated, as representatives of the several underwriters dated May ,
1996.+........................................................................
2 -- Asset Purchase Agreement by and among the Company, Jemison Investment Co.,
Inc., PVF Holdings, Inc., Southwest Stainless, Inc., Multalloy, Inc. (Texas),
Multalloy, Inc. (New Jersey) and Houston Products & Machine, Inc., dated March
27, 1996......................................................................
4.1 -- Restated Articles of Incorporation of the Company, as amended(1)..............
4.2 -- Composite By-Laws of the Company(2)...........................................
4.3 -- Specimen Stock Certificate representing shares of the Company's Common
Stock(3)......................................................................
4.4 -- Resolution approving and implementing Shareholder Rights Plan together with a
copy thereof(4)...............................................................
5 -- Opinion of Maguire, Voorhis & Wells, P.A.+....................................
11 -- Summary Schedule of Earnings Per Share Calculations...........................
23.1 -- Consent of Maguire, Voorhis & Wells, P.A. (See Exhibit 5 hereto)+.............
23.2 -- Consent of Coopers & Lybrand L.L.P............................................
23.3 -- Consent of Deloitte & Touche LLP..............................................
23.4 -- Consent of Price Waterhouse LLP...............................................
24 -- Power of Attorney (See the signature pages to this registration statement)....
</TABLE>

- ---------------

<PAGE> 1
EXHIBIT 2

________________________________________________________________________________
________________________________________________________________________________

ASSET PURCHASE AGREEMENT

BY AND AMONG

HUGHES SUPPLY, INC.

AND

JEMISON INVESTMENT CO., INC.,

PVF HOLDINGS, INC.,

SOUTHWEST STAINLESS, INC.,

MULTALLOY, INC. (TEXAS),

MULTALLOY, INC. (NEW JERSEY),

and

HOUSTON PRODUCTS & MACHINE, INC.,

Dated: March 27, 1996

________________________________________________________________________________
________________________________________________________________________________
<PAGE> 2

TABLE OF CONTENTS

(The Table of Contents for this Agreement is for convenience of
reference only and is not intended to define, limit or describe the
scope or intent of any provisions of this Asset Purchase Agreement.)

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
WITNESSETH: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-

ARTICLE I SALE AND PURCHASE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-

Section 1.01 Assets to be Acquired. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
(a) Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
(b) Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
(c) Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
(d) Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
(e) Other Promotional Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
(f) Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
(g) Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
(h) Assumed Contract Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
(i) Customer Lists and Other Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
(j) Sellers' Prepayments and Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
(k) Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
(l) Telephone and Fax Numbers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
(m) Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
(n) Claims Relating to Purchased Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
(o) Other Property and Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
(p) C.F. Fluid Controls, Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
Section 1.02 Assumed Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
(a) Trade Payables, Other Payables, and Accrued Expenses . . . . . . . . . . . . . . . . . . . . . . . . -4-
(b) Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
(c) Other Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
(d) Open Customer Purchase Orders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
(e) Customer Deposits and Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
(f) Purchase Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
(g) Bank Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
(h) Product Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
(i) Other Notes Payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
Section 1.03 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
(a) Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
(b) Claims Against Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
(c) Prepaid Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
(d) Rights Hereunder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
(e) Certain Intangible Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
(f) Contracts not Assigned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
(g) Other Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
</TABLE>

-i-
<PAGE> 3

<TABLE>
<S> <C> <C>
ARTICLE II PURCHASE PRICE; POST-CLOSING ADJUSTMENT;
ESCROW; CONSIGNMENT; ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
Section 2.01 Purchase Price and Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
Section 2.02 Escrowed Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
Section 2.03 Consignment of Non-Qualifying Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
Section 2.04 Allocation of Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
Section 2.05 No Fractional Shares; Fractional Cents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-

ARTICLE III CLOSING; DOCUMENTS OF CONVEYANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-

Section 3.01 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
Section 3.02 Assignment and Assumption Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
Section 3.03 Other Instruments of Conveyance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
Section 3.04 Other Deliveries at Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
Section 3.05 Allocation of Closing Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
Section 3.06 Prorations at Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
Section 3.07 Transfer of Possession. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
Section 3.08 Termination and Related Employee Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
Section 3.09 Utility Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
Section 3.10 Procedure Relating to Motor Vehicles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
Section 3.11 Other Actions and Instruments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-

Section 4.01 Organization, Good Standing and Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
Section 4.02 Corporate Power and Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
Section 4.03 Validity of Contemplated Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
Section 4.04 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
Section 4.05 Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
Section 4.06 Copies of Articles and Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
Section 4.07 Inventory Held for Resale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
Section 4.08 Litigation; Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
Section 4.09 Brokers' or Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
Section 4.10 Completeness of Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
Section 4.11 Buyer's Filings with SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
Section 4.12 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
Section 4.13 No Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
Section 4.14 Financial Position and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
Section 4.15 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-

ARTICLE V REPRESENTATIONS AND WARRANTIES OF
SELLERS, PVF AND JEMISON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-

Section 5.01 Organization, Good Standing and Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
Section 5.02 Corporate Power and Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
Section 5.03 Validity of Contemplated Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
Section 5.04 Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
Section 5.05 Copies of Articles of Incorporation and
Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
Section 5.06 Liabilities and Obligations of Sellers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
Section 5.07 Condition of and Title to Purchased Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
Section 5.08 Material Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
</TABLE>

-ii-
<PAGE> 4

<TABLE>
<S> <C> <C>
Section 5.09 Assumed Leases and Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
Section 5.10 Concerning the Leased Real Estate, the
Affiliate Real Estate and the Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
Section 5.11 Buildings, Structures and Other Improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
Section 5.12 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
Section 5.13 Certain Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
Section 5.14 Ad Valorem, Real Property Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
Section 5.15 Litigation: Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
Section 5.16 Permits and Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
Section 5.17 Intellectual Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
Section 5.18 All Necessary Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
Section 5.19 Labor or Employee Disputes; Employment
Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
Section 5.20 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
Section 5.21 Employee Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
Section 5.22 No Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
Section 5.23 No Affiliates' Assets, Leases or Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
Section 5.24 Insurance Coverages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
Section 5.25 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
Section 5.26 Customers and Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
Section 5.27 Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
Section 5.28 Brokers' or Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
Section 5.29 Investment Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
Section 5.30 Sellers Not a Foreign Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
Section 5.31 Completeness of Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
Section 5.32 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-

ARTICLE VI ACTIVITIES PRIOR TO THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -37-

Section 6.01 Activities by Sellers, PVF and Jemison Prior to
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
Section 6.02 Reports; Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
Section 6.03 Access; Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
Section 6.04 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -40-
Section 6.05 Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -41-
Section 6.06 Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
Section 6.07 Filings with SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
Section 6.08 Condition of Title; Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
Section 6.09 Surveys. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
Section 6.10 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -43-
Section 6.11 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -44-
Section 6.12 Activities by Buyer Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -44-

ARTICLE VII CASUALTY AND CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -44-

Section 7.01 Casualty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -44-
Section 7.02 Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -45-

ARTICLE VIII CONDITIONS TO OBLIGATIONS OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -46-

Section 8.01 Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -46-
Section 8.02 Performance of Covenants, Agreements and
</TABLE>

-iii-
<PAGE> 5

<TABLE>
<S> <C> <C>
Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -46-
Section 8.03 Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -46-
Section 8.04 Prohibitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -47-
Section 8.05 Opinion of Sellers' Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -47-
Section 8.06 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -47-
Section 8.07 Required Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -47-
Section 8.08 UCC Search Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -48-
Section 8.09 Noncompetition Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -48-
Section 8.10 Employment Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -48-
Section 8.11 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -48-
Section 8.12 Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -49-
Section 8.13 Approval of Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -49-
Section 8.14 Other Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -49-

ARTICLE IX CONDITIONS TO OBLIGATIONS OF SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -49-

Section 9.01 Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -50-
Section 9.02 Performance of Covenants, Agreements and
Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -50-
Section 9.03 Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -50-
Section 9.04 Prohibitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -50-
Section 9.05 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -51-
Section 9.06 Opinions of Buyer's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -51-
Section 9.07 H-S-R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -51-
Section 9.08 Employment Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -51-
Section 9.09 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -51-
Section 9.10 Approval of Counsel to the Sellers, PVF and
Jemison. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -51-
Section 9.11 Other Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -51-

ARTICLE X TRANSFERS OF BUYER'S COMMON STOCK; REGISTRATION
RIGHTS; RULE 144 AND RULE 144(k) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -52-

Section 10.1 Transfers of Buyer Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -52-
Section 10.2 Registration for Resale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -52-
Section 10.3 Demand Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -53-
Section 10.4 Piggyback Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -53-
Section 10.5 Filings; Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -54-
Section 10.6 Rule 144; Removal of Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -59-
Section 10.7 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -60-
Section 10.8 Cooperation of Sellers, PVF and Jemison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -60-

ARTICLE XI INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -61-

Section 11.01 Indemnification by the Sellers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -61-
Section 11.02 Indemnification by the Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -62-
Section 11.03 Survival of Obligation to Indemnify. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -62-
Section 11.04 Notice and Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -63-
Section 11.05 Limitation on Indemnification
Obligation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -64-
Section 11.06 Indemnification Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -64-
Section 11.07 Nature of Liability of Sellers, PVF and
</TABLE>

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<PAGE> 6

<TABLE>
<S> <C> <C>
Jemison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -64-
Section 11.08 Waiver of Bulk Sales and Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -64-
Section 11.09 No Consequential Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -65-
Section 11.10 Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -65-

ARTICLE XII CONDUCT OF THE PARTIES AFTER CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -65-

Section 12.01 Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -65-
Section 12.02 Access to Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -66-
Section 12.03 Manufacturers' and Suppliers' Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -66-
Section 12.04 Use of License Tags. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -66-
Section 12.05 Use of Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -67-
Section 12.06 Collection and Disposition of Accounts and
Noters Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -67-
Section 12.07 Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -67-

ARTICLE XIII EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -67-

Section 13.01 Transactional Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -67-

ARTICLE XIV TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -67-

Section 14.01 Termination by Mutual Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -67-
Section 14.02 Termination Due to Casualty or Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -68-
Section 14.03 Termination Attributable to Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -68-
Section 14.04 Termination Due to Failure to Satisfy
Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -68-

ARTICLE XV MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -69-

Section 15.01 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -69-
Section 15.02 Assignability and Parties in Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -69-
Section 15.03 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -70-
Section 15.04 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -70-
Section 15.05 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -70-
Section 15.06 Complete Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -70-
Section 15.07 Modifications, Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -71-
Section 15.08 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -71-
Section 15.09 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -71-
Section 15.10 Time of Essence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -71-
Section 15.11 Gender, Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -71-
Section 15.12 Exhibits and Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -71-
Section 15.13 Definition of Sellers', PVF's and Jemison's
Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -72-
Section 15.14 Definition of Buyer's Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -72-
Section 15.15 No Benefit to Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -72-
Section 15.16 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -72-
Section 15.17 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -72-
Section 15.18 Survival of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -73-
Section 15.19 Recitals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -73-
</TABLE>

-v-
<PAGE> 7

SCHEDULES AND EXHIBITS

<TABLE>
<CAPTION>
Schedules Description
- --------- -----------
<S> <C>
Schedule 1.01(a) . . . . . . . . . . . . . . . . . . . Fixed Assets
Schedule 1.01(d) . . . . . . . . . . . . . . . . . . . Intellectual Property
Schedule 1.01(g) . . . . . . . . . . . . . . . . . . . Real Property
Schedule 1.02(a) . . . . . . . . . . . . . . . . . . . Trade Payables, Etc.
Schedule 1.02(b) . . . . . . . . . . . . . . . . . . . Assumed Leases
Schedule 1.02(c) . . . . . . . . . . . . . . . . . . . Other Contracts
Schedule 1.02(g) . . . . . . . . . . . . . . . . . . . Bank Indebtedness
Schedule 1.02(i) . . . . . . . . . . . . . . . . . . . Other Notes Payable
Schedule 4.12 . . . . . . . . . . . . . . . . . . . . . Buyer's Financial Statements
Schedule 4.13 . . . . . . . . . . . . . . . . . . . . . No Changes - Exceptions
Schedule 5.03 . . . . . . . . . . . . . . . . . . . . . Validity of Transactions -Exceptions
Schedule 5.07 . . . . . . . . . . . . . . . . . . . . . Condition of and Title to Assets
Schedule 5.08 . . . . . . . . . . . . . . . . . . . . . Material Contracts
Schedule 5.09 . . . . . . . . . . . . . . . . . . . . . Assumed Leases and Contracts
Schedule 5.10 . . . . . . . . . . . . . . . . . . . . . Concerning the Real Property
Schedule 5.11 . . . . . . . . . . . . . . . . . . . . . Buildings, Structures, Etc.
Schedule 5.12 . . . . . . . . . . . . . . . . . . . . . PVF's and Sellers' Financial
Statements
Schedule 5.13 . . . . . . . . . . . . . . . . . . . . . Certain Tax Matters
Schedule 5.15 . . . . . . . . . . . . . . . . . . . . . Litigation: Compliance with Laws
Schedule 5.16 . . . . . . . . . . . . . . . . . . . . . Permits and Licenses
Schedule 5.17 . . . . . . . . . . . . . . . . . . . . . Intellectual Properties
Schedule 5.19 . . . . . . . . . . . . . . . . . . . . . Labor Matters
Schedule 5.21 . . . . . . . . . . . . . . . . . . . . . Employee Compensation
</TABLE>

-vi-
<PAGE> 8

<TABLE>
<CAPTION>
Schedules Description
- --------- -----------
<S> <C>
Schedule 5.22 . . . . . . . . . . . . . . . . . . . . . No Changes - Exceptions
Schedule 5.23 . . . . . . . . . . . . . . . . . . . . . Affiliates' Assets, Leases, etc.
Schedule 5.24 . . . . . . . . . . . . . . . . . . . . . Insurance Coverages
Schedule 5.25 . . . . . . . . . . . . . . . . . . . . . Environmental Matters
Schedule 5.26 . . . . . . . . . . . . . . . . . . . . . Customers and Supplies
Schedule 5.27 . . . . . . . . . . . . . . . . . . . . . Employee Benefit Plans
Schedule 5.29 . . . . . . . . . . . . . . . . . . . . . Investment Information
Schedule 5.32 . . . . . . . . . . . . . . . . . . . . . Accounts Receivable - Exceptions
Schedule 6.01 . . . . . . . . . . . . . . . . . . . . . Activities Prior to Closing -
Exceptions
Schedule 6.10 . . . . . . . . . . . . . . . . . . . . . Exclusivity
Schedule 15.13 . . . . . . . . . . . . . . . . . . . . Seller's Knowledge
</TABLE>

<TABLE>
<CAPTION>
Exhibits Description
- -------- -----------
<S> <C>
Exhibit 2.01(i) . . . . . . . . . . . . . . . . . . . Promissory Note
Exhibit 2.01(iii) . . . . . . . . . . . . . . . . . . Accountants' Review Procedures
Exhibit 2.03 . . . . . . . . . . . . . . . . . . . . Consignment Agreement
Exhibit 3.02 . . . . . . . . . . . . . . . . . . . . Assignment and Assumption
Agreement
Exhibit 3.03(a) . . . . . . . . . . . . . . . . . . . Bill of Sale
Exhibit 3.04(a) . . . . . . . . . . . . . . . . . . . Noncompetition Agreements
Exhibits 3.04(d)(1 through 5) . . . . . . . . . . . . Affiliate Leases
Exhibit 3.04(e) . . . . . . . . . . . . . . . . . . . Employment Agreement
Exhibit 8.03 . . . . . . . . . . . . . . . . . . . . Certificate of Sellers, PVF and
Jemison
Exhibit 8.12 . . . . . . . . . . . . . . . . . . . . Escrow Agreement
Exhibit 9.03 . . . . . . . . . . . . . . . . . . . . Certificate of Buyer
</TABLE>

-vii-
<PAGE> 9

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this "Agreement"), is made this 27th
day of March, 1996, by and among HUGHES SUPPLY, INC., a Florida corporation
(hereinafter referred to as the "Buyer"), JEMISON INVESTMENT CO., INC., a
Delaware corporation ("Jemison"), PVF HOLDINGS, INC., a Delaware corporation
("PVF"), SOUTHWEST STAINLESS, INC., a Texas corporation ("Southwest"),
MULTALLOY, INC., a New Jersey corporation formerly known as COASTLINE PRODUCTS,
INC. ("Multalloy NJ"), MULTALLOY, INC., a Texas corporation ("Multalloy TX"),
and HOUSTON PRODUCTS & MACHINE, INC., a Texas corporation ("HPM") (Southwest,
Multalloy NJ, Multalloy Tx, and HPM are hereinafter sometimes collectively
referred to as the "Sellers" and sometimes individually as a "Seller"). The
Buyer, Sellers, Jemison and PVF are sometimes referred to collectively herein
as the "parties" or individually as a "party."

W I T N E S S E T H:

WHEREAS, Jemison owns 80.5% of the issued and outstanding common stock
and 100% of the issued and outstanding preferred stock of PVF; and

WHEREAS, PVF and the Sellers, its wholly owned subsidiaries, are
engaged in the business of distributing stainless steel and other metal alloy
products (the "Business"); and

WHEREAS, Sellers desire to sell or cause to be sold to Buyer, and
Buyer wishes to purchase from Sellers, substantially all of the assets,
properties and business of the Sellers, upon the terms and subject to the
conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual promises, covenants, representations, warranties, and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement do
hereby agree as follows:

ARTICLE I

SALE AND PURCHASE OF ASSETS

Section 1.01 Assets to be Acquired. Subject to the terms and
conditions set forth herein, on the Closing Date (as set forth in Section
3.01), the Sellers shall sell, assign, transfer, convey and deliver to the
Buyer, free and clear of all mortgages, deeds of trust, pledges, liens,
conditional sales agreements, leases, lease-purchase agreements, security
interests, restrictions, encumbrances, and options (hereafter collectively
referred to as "Encumbrances"), except as approved by Buyer pursuant to Section
6.08 and as set forth on SCHEDULE 5.07 attached hereto, and the
<PAGE> 10

Buyer shall purchase, acquire and accept from the Sellers, all of the Sellers'
right, title and interest in and to the following assets of the Sellers which
are utilized in the Business, whether real, personal or mixed, and whether
tangible or intangible (hereafter collectively referred to as the "Purchased
Assets"):

(a) Fixed Assets. All machinery, equipment, Rolling
Stock, fixtures and leasehold improvements (but only to the extent owned by
Sellers), tools, furniture, furnishings, signs, displays and other fixed
assets, in each case owned by the Sellers as of the Effective Time, including,
without limitation, computer hardware and software, licenses covering software,
and those assets more particularly described in SCHEDULE 1.01(A) attached
hereto (the fixed assets to be purchased by the Buyer are hereafter
collectively referred to as the "Fixed Assets");

(b) Inventory. All merchandise, inventory and other
products held for sale to customers as of the Effective Time (the foregoing
items to be purchased by the Buyer are hereafter collectively referred to as
the "Inventory");

(c) Supplies. All supplies as of the Effective Time,
including, without limitation, all fuel, petroleum products, tires, parts,
product labels, packaging materials, sacks, bags, containers, shop supplies,
office supplies and cleaning supplies owned by the Sellers as of the Effective
Time (the supplies to be purchased by the Buyer are hereafter collectively
referred to as the "Supplies");

(d) Intellectual Property. All trademarks, patents,
service marks, copyrights and trade names (including the names of the Sellers
identified in the preamble hereto or any variation thereof) owned by Sellers as
of the Effective Time, including, without limitation, those set forth in
SCHEDULE 1.01(D) attached hereto, all of the intrinsic goodwill associated
therewith, and any applications therefor or registrations thereof (hereafter
referred to as the "Intellectual Property");

(e) Other Promotional Rights. All marketing or
promotional designs, brochures, advertisements, concepts, literature, books,
media rights, rights against any other Person in respect of any of the
foregoing and all other promotional properties (hereafter collectively referred
to as the "Promotional Rights"), in each case exclusively used or useful or
developed or acquired by the Sellers for use in connection with the ownership
and operation of the Purchased Assets;

(f) Accounts Receivable. All of the Sellers' accounts
receivable and miscellaneous receivables as of the Effective Time and the
proceeds thereof after the Effective Time resulting from the operations of the
Sellers (hereinafter referred to as the "Accounts Receivable");

-2-
<PAGE> 11

(g) Real Property. All of Sellers' interest in the real
property operated or utilized in the conduct of the Sellers' operations
reflected as owned (the "Real Property") in the most recent audited Financial
Statements (as defined in Section 5.12), the legal descriptions of which are
attached as SCHEDULE 1.01(G) hereto, together with all buildings, structures,
improvements and fixtures owned by Sellers and utilized in connection with the
Real Property;

(h) Assumed Contract Rights. All of Sellers' interest
and rights which Sellers may have as of the Effective Time in the Assumed
Leases or the Assumed Contracts, Assumed Purchase Orders and Materials Purchase
Obligations (all as hereinafter defined);

(i) Customer Lists and Other Intangible Assets. All
other intangible assets and cash, currency, coins or balances in checking or
other demand deposits, securities or money market accounts or other cash
equivalents, and deposits with others such as utility deposits in each case
owned by the Sellers as of the Effective Time, including, without limitation,
all customer lists (the "Customer Lists"), intrinsic goodwill, "know-how,"
proprietary information and trade secrets, and, to the extent assignable, all
suppliers' and manufacturers' warranties (including pending warranty claims),
and manuals in Sellers' possession relating to the Purchased Assets;

(j) Sellers' Prepayments and Deposits. All of the
Sellers' prepayments and deposits existing as of the Effective Time (including,
without limitation, prepaid ad valorem taxes and heavy vehicle highway use
taxes but excluding prepaid insurance premiums) (hereafter referred to as the
"Sellers' Prepayments");

(k) Permits. All Permits (as defined in Section 5.16),
to the extent such Permits are transferable, whether or not all action
necessary to effect such transfer has been taken prior to the Closing (as
defined in Section 3.01);

(l) Telephone and Fax Numbers. The right to use the
telephone and fax machine numbers (including any mobile telephone numbers)
assigned to Sellers and/or their employees, and to each of the Sellers' places
of business;

(m) Books and Records. Except as expressly set forth in
Section 1.03(a), true and correct copies of all papers, documents, computerized
databases and records of Sellers exclusively used in the conduct of the
Business, including, without limitation, all personnel, labor relations and
workers' compensation records relating to employees hired by the Buyer,
environmental control records, sales records, marketing records, accounting and
financial records, and maintenance records;

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(n) Claims Relating to Purchased Assets. To the extent
assignable, all claims, causes of action, rights of recovery and rights of
set-off of every type and kind relating to suppliers' and manufacturer's
warranties issued with respect to the Purchased Assets, and all claims, causes
of action, rights of recovery and rights of set-off of every type and kind
relating to the Assumed Obligations (as defined in Section 1.02), in each case
whether accruing before or after the Closing;

(o) Other Property and Rights. Unless otherwise
expressly excluded above or in Section 1.03, all other property and rights,
tangible and intangible, real, personal or mixed, which the Sellers own and
which are utilized exclusively in connection with the Business and which exist
as of the Effective Time;

(p) C.F. Fluid Controls, Inc. All of the outstanding
capital stock in C.F. Fluid Controls, Inc., a Texas corporation ("C.F."),
constituting 50% of all such stock outstanding, owned by SWS and notes(s) in
the principal amount of $349,020 (as of February 29, 1996) payable by C.F. to
Southwest. Buyer shall have the option, exercisable by notice to Sellers prior
to Closing, to treat the C.F. stock and notes(s) as Excluded Assets in the
event Buyer is unable prior to the Closing to reach arrangements with David
Jans, the other C.F. stockholder, regarding its future relationship with C.F.
that are mutually satisfactory to Buyer and David Jans;

provided, however, that the definition of Purchased Assets shall not include
any items defined as Excluded Assets in Section 1.03.

Section 1.02 Assumed Obligations. Subject to the terms and
conditions set forth herein, on the Closing Date, the Buyer shall assume, pay
and discharge in full when due all of the liabilities and obligations of the
Sellers with respect to which any of the Sellers have provided an accrual on
their books and records as of the Effective Time, and shall further assume, pay
and discharge in full when due all of the liabilities and obligations under the
following leases, contracts, purchase orders and liabilities of the Sellers
(hereafter collectively referred to as the "Assumed Obligations"):

(a) Trade Payables, Other Payables, and Accrued Expenses.
All (i) trade and other accounts payable as of the Effective Time, (ii) accrued
but unpaid compensation, payroll and withholding taxes relating to Sellers'
employees as of the Effective Time and (iii) other accrued expenses reflected
on the Closing Date Balance Sheet (hereinafter defined), including those
described in SCHEDULE 1.02(A), as of the Effective Time, presently expected to
include all accruals except intercompany accounts, bonus accruals, insurance
payables, dividends payable, accrued franchise taxes and income taxes payable;

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(b) Leases. The leases (other than the Affiliate Leases
described in Section 3.04(d)) relating to the Sellers' facilities (the "Real
Estate Leases"), as well as all operating leases and capital leases for
machinery and equipment, all as described in SCHEDULE 1.02(B) (hereafter
collectively referred to as the "Assumed Leases");

(c) Other Contracts. The material contracts described in
Section 5.08 (except as expressly excluded in Section 5.08), all other
contracts which do not meet the materiality criteria in Sections 5.08(a), (b),
and (c), and the contracts described in SCHEDULE 1.02(C) (hereafter referred to
as the "Assumed Contracts");

(d) Open Customer Purchase Orders. The Sellers'
obligations to deliver products to customers who have placed orders with the
Sellers for products which have not been delivered as of the Effective Time,
including all customer purchase orders and contracts relating thereto
(hereafter referred to as the "Assumed Purchase Orders");

(e) Customer Deposits and Prepayments. All deposits and
prepayments received from customers relating to Inventory to be delivered after
the Effective Time (referred to herein as the "Customer Deposits");

(f) Purchase Obligations. Any obligation of the Sellers
to purchase materials, supplies or inventory which were ordered by the Sellers
prior to the Effective Time and not delivered to the Sellers prior to the
Effective Time (hereafter referred to as the "Materials Purchase Obligations");

(g) Bank Indebtedness. All bank indebtedness identified
in SCHEDULE 1.02(G) hereto, which indebtedness shall not exceed Thirteen
Million Dollars ($13,000,000) at Closing;

(h) Product Warranties. All obligations of Sellers for
product warranty and return items by customers of Sellers; and

(i) Other Notes Payable. The Sellers' obligations under
the other notes described in SCHEDULE 1.02(I).

Except as otherwise expressly set forth in this Section 1.02, the
Buyer shall have no responsibility for any of the Sellers' obligations
(including contracts, leases, purchase orders and liabilities of any type, kind
or nature), whether fixed, accrued, contingent or otherwise, and whether
arising in contract, in tort, by operation or violation of law, or otherwise,
and all such obligations shall remain with the Sellers and are herein referred
to as the "Excluded Obligations." Without limiting the generality of the
foregoing, it is hereby agreed that Buyer is not assuming any liability and
shall have no obligation with respect to any

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liability or obligation of the Sellers (i) in respect of any current and
deferred federal and state income and franchise tax liabilities, any
intercompany accounts or notes payable (except with respect to rental of real
estate) by or to any of the Sellers or any Affiliate of Sellers, liability for
any insurance premiums payable, any liability for dividends payable, or any
liability under PVF's Performance Stock Plan or (ii) in respect of employees of
Sellers terminated prior to the Effective Time who do not become employees of
Buyer, or (iii) except as otherwise provided in this Section 1.02 and Section
11.02 hereto, arising out of any action, suit or proceeding based upon an event
occurring or a claim arising (x) prior to the Effective Time or (y) after the
Effective Time in the case of claims and attributable to acts performed or
omitted by Sellers prior to the Effective Time.

Section 1.03 Excluded Assets. The "Purchased Assets" shall not
include any of the Sellers' rights, privileges, title or interest in any of the
following assets (hereafter referred to as the "Excluded Assets"):

(a) Books and Records. All of the original copies of the
Sellers' books and records referred to in Section 1.01(m) hereof and all of the
Sellers' minute books, stock books, tax returns and books and records directly
relating to the Excluded Assets and the Excluded Obligations, all personnel,
labor relations and workers' compensation records relating to the Sellers'
employees who are not hired by the Buyer;

(b) Claims Against Third Parties. Any claim of the
Sellers against any Person unless such claim is a Purchased Asset under Section
1.01(n) hereof;

(c) Prepaid Expenses. Prepaid expenses not assignable to
Buyer, prepaid insurance premiums, and any claim for refund of prepaid
insurance premiums, it being understood and agreed that the Sellers may cancel
all policies insuring the Purchased Assets as of the Effective Time upon the
first to occur of (i) three (3) business days after the Closing or (ii)
notification that Buyer's insurance has become effective;

(d) Rights Hereunder. All rights and claims of the
Sellers under this Agreement;

(e) Certain Intangible Assets. The capitalized costs, as
reflected in the Closing Date Balance Sheet, for goodwill, non-compete,
deferred organization costs, deferred legal and commitment fees, deferred
income taxes and memberships and the capital stock of Southwind Steel
Corporation, an Alabama corporation;

(f) Contracts not Assigned. All rights of the Sellers
in, to and under those leases, purchase orders, contracts and other

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agreements not being assigned to the Buyer pursuant to Section 1.01; and

(g) Other Excluded Assets. Notwithstanding anything to
the contrary contained herein, the Sellers shall retain all intercompany
accounts or notes receivable due from any Seller or from any Affiliate of
Sellers (except those arising out of the rental of real estate), federal and
state income tax credits and tax refund claims.

ARTICLE II

PURCHASE PRICE; POST-CLOSING ADJUSTMENT; ESCROW;
CONSIGNMENT; ALLOCATIONS

Section 2.01 Purchase Price and Payment. In consideration of the
sale and purchase contemplated herein, the Buyer shall assume or pay the
Assumed Obligations as herein provided and the Sellers shall receive the
Adjusted Purchase Price (as defined in Section 2.01(iv)) which shall be
determined and paid as follows:

(i) Base Price. At Closing, the Buyer shall pay Sellers
the aggregate sum of Ninety Three Million Dollars ($93,000,000) (the "Base
Price"), payable as follows: (a) Seventy-Four Million Four Hundred Thousand
Dollars ($74,400,000) in cash, payable by a wire transfer of immediately
available funds to a bank account to be designated in writing by Sellers prior
to Closing; provided, however, that if Buyer has not closed the SunTrust
Financing (defined in Section 2.01(ii) below) and has not received at least
Thirty Million Dollars ($30,000,000) of proceeds from the sale of Securities
(defined in 2.01(ii) below) prior to the Closing Date, the Buyer may elect to
deliver to Sellers at the Closing the Buyer's promissory note (the "Promissory
Note") payable to Sellers in the principal amount of Thirty Million Dollars
($30,000,000) in the form attached hereto as Exhibit 2.01(i) and Forty-Four
Million Four Hundred Thousand Dollars ($44,400,000) in cash payable by a wire
transfer of immediately available funds to said bank account designated by
Sellers, and (b) 669,956.42 shares of Common Stock, at an agreed value of
$27.763 per share, being an aggregate agreed value of Eighteen Million Six
Hundred Thousand Dollars ($18,600,000), 334,978 shares of which (the "Escrowed
Shares") shall be delivered to the Escrow Agent (defined in Section 2.02). The
Base Price shall be increased or decreased to the extent necessary for the
determination of the Adjusted Purchase Price, as hereinafter provided.

(ii) Sale of Securities; Approval of Promissory Note.
Buyer shall use its best efforts to sell $30,000,000 or more of Common Stock
(the "Securities") and to consummate the SunTrust Capital Markets, Inc.
financing on substantially the terms set forth in Exhibit 2.01(ii) hereto (the
"SunTrust Financing"), as

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<PAGE> 16

promptly as practicable after the date of this Agreement. The Promissory Note,
if issued to Sellers at Closing, shall be paid in full immediately after Buyer
receives $30,000,000 of proceeds from the sale of the Securities or the
SunTrust Financing. If Securities sufficient to pay off the Promissory Note
are not sold by Buyer, of if the SunTrust Financing is not closed, then Buyer
shall use its best efforts to obtain financing from other sources to pay off
the Promissory Note as promptly as practicable after Closing. Execution and
delivery of the Promissory Note by Buyer is subject to prior approval by the
lenders under that certain Revolving Credit and Line of Credit Agreement dated
May 28, 1993, as amended ("Credit Agreement"), and the provisions of the
Promissory Note providing for its subordination to the indebtedness under the
Credit Agreement shall be subject to the mutual agreement of Sellers and the
lenders under the Credit Agreement prior to Closing, and if such approval or
mutual agreement is not obtained or reached prior to Closing, the Buyer shall
pay Sellers $30,000,000 cash in lieu of the Promissory Note.

(iii) Closing Date Financial Statements. Jemison will
cause PVF to prepare consolidated financial statements (consisting of a balance
sheet, a statement of income and retained earnings, and a statement of cash
flows, but excluding footnotes) of PVF and Sellers as of the Closing Date and
have such financial statements (the "Closing Date Financial Statements")
subjected to the procedures described in Exhibit 2.01(iii) hereto attached to
be performed by Deloitte & Touche LLP (the "Sellers' Accountants") and with
Price Waterhouse LLP (the "Buyer's Accountants"). The Closing Date Financial
Statements shall be prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied in the preparation of the Financial
Statements referred to in Section 5.12, except to the extent qualified by the
procedures referred to above. The consolidated balance sheet ("Closing Date
Balance Sheet") included in the Closing Date Financial Statements, after
adjustments for balance sheet Excluded Assets and balance sheet Excluded
Obligations as contemplated by Section 2.01(v), shall be used as the basis from
which to determine the Adjusted Purchase Price pursuant to Section 2.01(iv).
The costs associated with the procedures performed by Sellers' Accountants
shall be borne by Sellers and such costs referable to Buyer's Accountants shall
be borne by Buyer. Sellers shall use reasonable efforts to complete and
deliver to Buyer the Closing Date Financial Statements no later than sixty (60)
days after the Closing Date. If Buyer, within ten (10) days after its receipt
of the Closing Date Financial Statements, disagrees with such financial
statements, Buyer shall notify Sellers in writing of the details of such
disagreement. If Buyer and Sellers are unable to resolve such disagreement
within ten (10) days after such notice to Sellers, the Buyer's Accountants and
the Sellers' Accountants shall choose an unrelated firm of independent
certified public accountants of recognized national standing within ten (10)
days thereafter to resolve such dispute. Such unrelated firm shall resolve any
such

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<PAGE> 17

dispute within thirty (30) days after its engagement and its decision shall be
final and binding on all parties. The fees and expenses of any such unrelated
firm of accountants shall be shared equally by Sellers and Buyer.

(iv) Adjusted Purchase Price. The Base Price shall be
increased or decreased, thus resulting in the "Adjusted Purchase Price", as
follows: If the Net Assets Amount (defined in Section 2.01(v)) is less than
$32,425,000, there shall be a corresponding decrease in the Base Price by such
difference. If the Net Assets Amount is greater than $32,425,000, there shall
be a corresponding increase in the Base Price by such difference.

(v) Net Assets Amount. The amount of the Net Assets
(hereinafter defined) shall be determined as of the Closing Date (the "Net
Assets Amount"). The Net Assets Amount shall be the difference between
Purchased Assets and Assumed Obligations to the extent reflected in the Closing
Date Balance Sheet (which shall not include or take into account any Excluded
Assets or Excluded Obligations reflected in the Closing Date Balance Sheet),
and after further adjustments pursuant to (a), (b) and (c) below. Such further
adjustments shall take into account:

(a) a reduction by the book value, as reflected on
the Closing Date Balance Sheet, of any Non-Qualifying Inventory which Buyer
elects not to retain and which Buyer resells and reassigns to Sellers pursuant
to Section 2.03;

(b) a reduction by the amount, if any, by which
Non-Qualifying Accounts Receivable as of the Non-Qualifying Receivables
Determination Date exceeds the allowance for doubtful accounts reflected in the
Closing Date Balance Sheet; and

(c) an increase by the amount, if any, by which the
allowance for doubtful accounts reflected in the Closing Date Balance Sheet
exceeds the amount of Non-Qualifying Accounts Receivable as of the
Non-Qualifying Receivables Determination Date.

(vi) Non-Qualifying Inventory and Non-Qualifying Accounts
and Notes Receivable.

(a) "Non-Qualifying Inventory" shall be (x) those
items of Inventory as of the Closing Date which have had no unit sales for the
twelve (12) month period preceding the Closing Date; and (y) those items of
Inventory as of the Closing Date in excess of two (2) times the number of items
of such Inventory as were sold by the Sellers in the twelve (12) month period
immediately preceding the Closing Date, provided all of such items, and not
merely those items in excess of two (2) times twelve (12) months' sales of such
items, shall be considered "Non-Qualifying Inventory," all of which are
identified by Buyer to Sellers in accordance with Section 2.03. Items of Non-
Qualifying Inventory to

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be resold and reassigned to Sellers pursuant to Section 2.03 shall be dealt
with pursuant to the terms of the Consignment Agreement.

(b) "Non-Qualifying Accounts and Notes
Receivable" shall be (A) any accounts and notes receivable which are ninety
(90) days or more past due on the date which is ninety (90) days after the
Closing Date (the "Non-Qualifying Receivables Determination Date") and which
the Buyer elects to reassign and does reassign to the Sellers within ten (10)
days after the Non-Qualifying Receivables Determination Date, and (B) any
service charges or unissued credits for items included as Accounts Receivable
on the Closing Date but which remain uncollected on the Non-Qualifying
Receivables Determination Date, which the Buyer elects to reassign to the
Sellers.

(vii) Final Determination of Adjusted Purchase Price.
Within fifteen (15) days after the later of (i) the Non-Qualifying Receivables
Determination Date, (ii) the determination of the Non-Qualifying Inventory to
be resold and reassigned to Sellers, or (iii) the final resolution of any
dispute between Buyer and Sellers concerning the Net Assets Amount, the Sellers
shall determine, and give written notice to the Buyer of, the Adjusted Purchase
Price. If Buyer disagrees with the determination by Sellers of the Adjusted
Purchase Price, Buyer shall give Sellers written notice within ten (10) days
after Buyer's receipt of Sellers' notice of the details of such disagreement,
and such dispute will be resolved in the manner provided for in the last three
sentences of Section 2.01(iii). Upon final determination of the Adjusted
Purchase Price as herein provided, Sellers and Buyer shall give written notice
thereof to the Escrow Agent.

(viii) Adjusted Purchase Price Settlement. Within ten (10)
days after final determination of the Adjusted Purchase Price as provided in
Section 2.01(vii), either Buyer or Sellers, as the case may be, shall make the
following payments and deliveries:

(a) To the extent that the Adjusted Purchase
Price exceeds the Base Price, the Buyer shall pay and deliver to the Sellers, in
the form of 80% cash and 20% Common Stock at $27.763 per share, the excess of
the Adjusted Purchase Price over the Base Price; provided, however, that to the
extent that Common Stock issued to Sellers pursuant to Section 2.01(i) and this
paragraph (a) would exceed in the aggregate 9.9% of the total outstanding shares
of Common Stock in Buyer, such excess number of shares shall be settled by
payment in cash of an amount equal to $27.763 times said number of excess
shares.

(b) To the extent that the Base Price exceeds the
Adjusted Purchase Price, the Sellers shall pay and surrender to the Buyer, in
the form of 80% cash and 20% Common Stock at $27.763 per share, the excess of
the Base Price over the Adjusted Purchase Price.

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<PAGE> 19

(c) The cash portion of the adjustment amount
under either (a) or (b) above shall bear interest at 6% per annum from the
Closing Date to date of payment, and the total cash payment shall be by wire
transfer of immediately available funds to an account designated prior to the
post-Closing settlement date by either Buyer or Sellers, as the case may be.

(ix) Concerning Indemnification Under Article XI. All
cash and Common Stock required to be paid and surrendered by Sellers to Buyer
under Section 2.01(viii) shall not be subject to the indemnity limitations of
Sellers, PVF and Jemison set forth in Section 11.05 and represent an additional
obligation of the Sellers, PVF and Jemison under this Agreement.

Section 2.02 Escrowed Shares. The Escrowed Shares shall be
delivered at Closing to Maguire, Voorhis & Wells, P.A., as escrow agent (the
"Escrow Agent"), under the Escrow Agreement referred to in Section 8.12. The
Escrowed Shares shall be held as security for Sellers obligations under Section
2.01(viii)(b) above.

Section 2.03 Consignment of Non-Qualifying Inventory. Within five
(5) days after the later of the date on which the Buyer and Sellers have agreed
upon and accepted the Closing Date Financial Statements, or the final
resolution of any dispute between the parties with respect thereto, as provided
in Section 2.01(iii), the Buyer shall notify Sellers of the items, if any, of
Non-Qualifying Inventory which Buyer elects to retain and treat as Inventory
and those items it has elected to treat as Non-Qualifying Inventory for
purposes of this Agreement, whereupon the Buyer shall resell and reassign to
Sellers such Non-Qualifying Inventory (the "Resold Inventory"). At the
post-Closing settlement referable to the Adjusted Purchase Price pursuant to
Section 2.01(viii), Buyer shall execute and deliver an appropriate bill of sale
(transferring only that title received by Buyer from Sellers) reselling and
reassigning the Resold Inventory to Sellers and the Resold Inventory shall be
dealt with pursuant to the terms and provisions of the Consignment Agreement
attached hereto as EXHIBIT 2.03, which Buyer and Sellers shall execute and
deliver.

Section 2.04 Allocation of Purchase Price. Each party agrees to
report the purchase and sale contemplated herein on Internal Revenue Service
Form 8594 and to mutually agree on the allocation of the consideration being
paid by the Buyer for the Purchased Assets and for all other federal and state
tax purposes in accordance with such allocation and within the applicable time
periods required for such reporting. The written instrument of this allocation
will be attached at Closing. In the event that Sellers and the Buyer shall be
unable to agree on the allocation of such consideration, then such dispute will
be resolved in the same manner as disputes concerning the Closing Date
Financial Statements will be resolved in Section 2.01(iii).

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Section 2.05 No Fractional Shares; Fractional Cents. No
fractional shares of Common Stock will be issued to Sellers hereunder. The
number of shares of Common Stock which would otherwise have been made in a
fractional share interest will be paid in cash by the Buyer based upon $27.763
per share of Common Stock. In computing the amount of any payment to the
Sellers under the terms of this Agreement, any fractional cents will be
disregarded.

ARTICLE III

CLOSING; DOCUMENTS OF CONVEYANCE

Section 3.01 Closing. Subject to the satisfaction of the
conditions set forth in Articles VIII and IX, the purchase and sale
contemplated hereby shall be consummated at a closing (referred to herein as
the "Closing") to be held at the offices of Johnston, Barton, Proctor & Powell,
2900 AmSouth/Harbert Plaza, 1901 Sixth Avenue North, Birmingham, Alabama,
starting at 10:00 a.m. local time on May 13, 1996, or at such other location,
or such earlier or later date or time as the parties may mutually agree. The
date the Closing occurs is referred to herein as the "Closing Date". The
purchase and sale shall be deemed effective for all purposes as of the opening
of business on the Closing Date (the "Effective Time").

Section 3.02 Assignment and Assumption Agreements. At the
Closing, the Buyer and the Sellers shall execute and deliver to each other
instruments of assignment and assumption, in form and content reasonably
acceptable to counsel for the Buyer and the Sellers, pursuant to which the
Sellers shall assign to Buyer its rights in certain of the Purchased Assets (to
the extent legally transferable to Buyer) and the Buyer shall assume all
Assumed Obligations. The instruments of assignment and assumption are
hereafter collectively referred to as the "Assignment and Assumption
Agreements," one of which shall be in the form of EXHIBIT 3.02 attached hereto.

With respect to the Real Estate Leases, the Sellers shall also use
reasonable efforts to deliver to the Buyer copies of the landlord consents to
the assignment of such leases to the Buyer and such landlord estoppel
certificates and non-disturbance agreements as the Buyer or the Buyer's lenders
may reasonably request, and Buyer shall reasonably cooperate with Sellers and
such landlords in obtaining such consents and other documents. If any
landlord's consent is only obtainable upon Buyer's agreement to rental or other
financial concessions, Sellers shall have the option to make a reimbursement
payment to Buyer as an adjustment to the Base Price in an amount equal to the
present value of such financial

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<PAGE> 21

concessions discounted at a rate equal to the Prime Rate published daily in The
Wall Street Journal. If Sellers do not elect to make such reimbursement
payment to Buyer, or if the consents cannot be obtained for reasons unrelated
to a lessor's demand for rental or other financial concessions, then Sellers
shall cause the operations of Sellers at that location to be transferred to
another facility of comparable size and suitability and equivalent rental for
lease by Buyer, and Sellers shall bear all expenses related to such relocation
and to the renovation of the new leased premises. Such relocation shall be
completed not later than ninety (90) days following the Closing Date.

With respect to the Assumed Contracts, the Sellers shall also use
reasonable efforts to deliver to the Buyer copies of the consents by the other
parties thereto to the assignment of the Assumed Contracts. The Buyer shall
reasonably cooperate with Sellers in obtaining all such consents and other
documents.

Section 3.03 Other Instruments of Conveyance. At the Closing, the
Sellers shall execute and/or deliver to the Buyer the following instruments of
conveyance (hereafter referred to as the "Other Instruments of Conveyance"):

(a) A bill of sale conveying the Purchased Assets
(including all assignable manufacturers' and other warranties relating thereto)
(the "Bill of Sale") to the Buyer, in the form attached hereto as EXHIBIT
3.03(A).

(b) Certificates of title relating to the titled Rolling
Stock, duly endorsed for transfer to the Buyer;

(c) General Warranty Deeds conveying good and marketable
record title to the Real Property and improvements thereon at each of the
Locations, together with Title Insurance thereon;

(d) An assignment of all other Purchased Assets
(including, without limitation, the Sellers' Prepayments); and

(e) Such other instruments as may be reasonably requested
by the Buyer to convey the Purchased Assets or any part thereto to the Buyer or
to transfer any transferable Permits to the Buyer.

All Other Instruments of Conveyance shall be in form and content reasonably
acceptable to counsel for the Buyer and the Sellers.

Section 3.04 Other Deliveries at Closing. At the Closing, in
addition to the instruments described in Sections 3.02 and 3.03, the following
documents shall be executed and the following deliveries shall be made:

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(a) The Sellers shall use reasonable efforts to deliver
to Buyer (i) a sales tax status certificate issued by the appropriate
regulatory authorities in each state where Sellers file sales tax returns,
dated not less than five (5) days prior to the Closing Date, indicating that
all sales taxes required to be paid by the Sellers as of such date have been
paid (provided, however, that if the Sellers cannot or do not deliver said
certificate, the Sellers shall indemnify the Buyer for any sales tax matters
pursuant to a separate indemnification agreement), (ii) the Noncompetition
Agreements in the form attached hereto as EXHIBIT 3.04(A), and (iii) all
certificates and opinions required by Article VIII, except such as may be
expressly waived in writing by the Buyer;

(b) The Buyer shall deliver to the Sellers (1) the Base
Price in the manner and form described in Section 2.01(i); (2) a copy of the
Buyer's blanket certificate of resale; and (3) all certificates required by
Article IX, except such as may be expressly waived in writing by Sellers.

(d) The Buyer shall enter into and execute lease
agreements, as lessee, in the form attached hereto as EXHIBITS 3.04(D)(1-5)
with certain Affiliates of Sellers identified in EXHIBITS 3.04(D)(1-5) covering
five (5) parcels of real estate and improvements thereon owned by such
Affiliates and used by Sellers in the operation of the Business (the "Affiliate
Leases").

(e) Buyer and Michael L. Stanwood shall execute and
deliver an Employment Agreement in substantially the form attached hereto as
EXHIBIT 3.04(E).

Section 3.05 Allocation of Closing Costs. At or promptly after
the Closing, (a) the Buyer shall pay in a timely manner all documentary stamp
taxes, if any, on the shares of Common Stock and the Promissory Note, (b) the
Sellers shall pay all sales taxes and transfer fees relating to the Purchased
Assets (including transfer fees, title insurance and recording costs related to
the Real Property), and the transfer of the certificates of title described in
Section 3.03(b), and (c) Buyer shall pay for the issuance of new license tags
for the Rolling Stock. Except as otherwise provided in this Agreement, each
party shall be responsible for and bear all of its own transactional costs and
charges relating to the purchase and sale contemplated herein.

Section 3.06 Prorations at Closing. All ad valorem taxes, general
and special real property taxes, and special district levies and assessments,
if any, relating to the Purchased Assets and the property covered by the
Affiliate Leases for the 1996 calendar year (or current fiscal year, as
applicable) shall be

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allocated as of the Closing Date based on the Sellers' 1995 tax bills (with any
subsequent adjustment to be paid by the appropriate party once the 1996 tax
bills are delivered).

Section 3.07 Transfer of Possession. Simultaneously with the
Effective Time, the Sellers shall give the Buyer full possession and enjoyment
of the Purchased Assets and all risk of loss with respect thereto.

Section 3.08 Termination and Related Employee Matters. On the
Closing Date as of the Effective Time, Buyer shall employ all of the employees
of Sellers at substantially the same salary or wage levels in effect as of the
Effective Time (except for key employees who are parties to employment
agreements with Buyer). Buyer shall be solely responsible for, and shall
indemnify Sellers with respect to, (i) payroll, vacation pay, sick leave and
severance payments, if any, to be paid to such employees for any period prior
to the Effective Time to the extent accrued for on the Closing Date Balance
Sheet, and (ii) any liability to such employees under the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. Section 2101, et seq., or other
applicable laws or regulations for any period prior to the Effective Time.
Nothing herein constitutes a promise or agreement by Buyer to provide
employment for any employees of Sellers for any period of time after the
Effective Time. Buyer shall give each employee of Sellers that it hires credit
for past years of service with the Sellers for purposes of calculating such
employee's ability to participate in, and benefits under, the Buyer's pension
and welfare plans.

Section 3.09 Utility Services. On the Closing Date or as soon
thereafter as practicable, the Sellers and the Buyer will cooperate with each
other to arrange to obtain final readings with respect to all electricity,
water, telephone, and other utilities serving the Real Property being purchased
hereunder and the Leased Real Estate that is the subject of the Assumed Leases
and the Affiliate Leases, and to have such services transferred to the Buyer's
name immediately thereafter. All unpaid utility charges accrued through the
Effective Time shall be paid by the Sellers or accrued for on the Closing Date
Financial Statements.

Section 3.10 Procedure Relating to Motor Vehicles. At the
Closing, the Buyer and the Sellers shall execute an affidavit prepared by the
Sellers, together with all other documentation required in transferring the
certificates of title to the titled motor vehicles (and trailers) included in
the Purchased Assets. The affidavit shall identify each such motor vehicle by
year, make, model and vehicle identification number and shall set forth the
current odometer readings and the purchase price that the parties have mutually
agreed to allocate to each such motor vehicle.

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Section 3.11 Other Actions and Instruments. The Buyer and the
Sellers shall take such other actions and shall execute and deliver such other
instruments, documents and certificates at the Closing as are required by the
terms of this Agreement or as may be reasonably requested by the Buyer or the
Sellers in connection with the Closing of the transactions contemplated by this
Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

The Buyer makes the following representations and warranties to the
Sellers, PVF and Jemison, each of which shall be deemed material (and the
Sellers, Jemison and PVF, in executing, delivering and consummating this
Agreement, have relied and will rely upon the correctness and completeness of
each of such representations and warranties):

Section 4.01 Organization, Good Standing and Qualification. The
Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Florida. The Buyer is duly qualified to do
business and is in good standing in each and every jurisdiction where the
failure to qualify or to be in good standing would have a material adverse
effect on the consolidated assets, liabilities, financial condition or results
of operations of the Buyer (the "Buyer's Material Adverse Effect").

Section 4.02 Corporate Power and Authority. The Buyer has the
requisite corporate power and authority to execute, deliver and perform its
obligations under and pursuant to this Agreement, and all documents executed
and delivered by Buyer in connection herewith, including, without limitation,
the requisite corporate power and authority to acquire the Purchased Assets and
assume the Assumed Obligations upon the terms and conditions set forth herein.
The execution and delivery of this Agreement and all documents executed and
delivered by Buyer in connection herewith and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Buyer. This Agreement and all documents
required under the terms of this Agreement to be executed and delivered by
Buyer in connection herewith will be duly executed and upon the execution and
delivery thereof will be the legal, valid and binding obligations of the Buyer,
enforceable against the Buyer in accordance with their respective terms, except
as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.

Section 4.03 Validity of Contemplated Transactions. The
execution, delivery and performance of this Agreement and all

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<PAGE> 25

documents executed and delivered in connection herewith, and the consummation
of the transactions contemplated hereby, do not and will not (a) contravene any
provision of the Articles of Incorporation or the Bylaws of the Buyer, (b)
violate, be in conflict with, constitute a default under, result in the
termination of, cause the acceleration of any payments pursuant to, or
otherwise impair the good standing, validity, and effectiveness of any
agreement, contract, commitment, indenture, lease or mortgage applicable to the
Buyer, (c) violate any provision of law, rule, regulation, order, license,
permit, authorization, or approval to which the Buyer is subject, or (d)
violate any judgment, order, writ, prohibition, injunction or decree of any
court, governmental body or arbitrator by which the Buyer is bound, except
where such contravention, violation, breach or conflict would not, individually
or in the aggregate, have a Buyer's Material Adverse Effect.

Section 4.04 Capitalization. The authorized capital stock of the
Buyer consists of 20,000,000 shares of Common Stock, of which 6,817,115 shares
of Common Stock were issued and outstanding as of March 27, 1996, and
10,000,000 shares of Preferred Stock, no par value, none of which were
outstanding on March 27, 1996. All of such shares of outstanding Common Stock
are duly authorized and validly issued, fully paid and nonassessable. The
Common Stock to be issued to Sellers under this Agreement shall be duly
authorized, and when issued shall be fully paid, non-assessable and free from
preemptive rights, options, warrants and rights of others (other than the
rights of Sellers or any of their Affiliates).

Section 4.05 Regulatory Approvals. All consents, waivers,
approvals, authorizations and exemptions from governmental entities and other
third parties and other requirements prescribed by any law, rule or regulation
which must be obtained or satisfied by the Buyer in order to permit the
consummation of the transactions contemplated by this Agreement have been
obtained and satisfied or will be obtained and satisfied prior to the Closing.

Section 4.06 Copies of Articles and Bylaws. The copy of the
Buyer's Articles of Incorporation and Bylaws (the completeness and accuracy of
which will be certified by an authorized officer of the Buyer at Closing) which
have been delivered to the Sellers are true, complete and correct and in full
force and effect as of the date hereof.

Section 4.07 Inventory Held for Resale. The Buyer intends to hold
the Inventory for resale to customers and for no other purpose.

Section 4.08 Litigation; Compliance with Laws. (a) To Buyer's
knowledge, there is no suit, action, claim, investigation, arbitration,
administrative or legal or other proceeding or governmental investigation
pending or threatened against the Buyer,

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<PAGE> 26

which may adversely affect the Buyer in an amount in excess of Five Hundred
Thousand Dollars ($500,000), nor (b) to Buyer's knowledge, has the Buyer failed
to comply with any law, including without limitation, any ordinance,
requirement, regulation, or order applicable to the Buyer, nor (c) to Buyer's
knowledge, has the Buyer violated any order, writ, injunction, judgment, or
decree of any court or federal, state or local department, official,
commission, authority, board, bureau, agency, or other instrumentality which
was issued against or is pending against the Buyer, which violation might have
a Buyer's Material Adverse Effect.

Section 4.09 Brokers' or Finders' Fees. No broker, Person or firm
acting on behalf of the Buyer or under its authority is or will be entitled to
any commission, broker's or finder's fee or financial advisory fee from the
Buyer in connection with any of the transactions contemplated herein. The
Buyer agrees to indemnify the Sellers, PVF and Jemison against, and to hold
them harmless from, any claim for brokerage or similar commission or other
compensation which may be made against the Sellers, PVF or Jemison by any third
party in connection with the transactions contemplated hereby, which claim is
based upon any action by the Buyer.

Section 4.10 Completeness of Disclosure. To Buyer's knowledge, no
representation or warranty by the Buyer in this Agreement contains any false or
misleading statement of material fact or omits a fact necessary to make the
statements made, in light of the circumstances under which they were made, not
misleading.

Section 4.11 Buyer's Filings with SEC.

(a) The Buyer is current with all its filings with the
Securities and Exchange Commission (the "SEC") and any other securities
regulatory agency or governmental body required by the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"), and the regulations promulgated
thereunder or any other applicable securities laws, and has complied with all
requirements of the New York Stock Exchange and any listing agreement
therewith.

(b) Buyer has heretofore delivered to the Seller: (i) the
annual reports on Form 10-K for its fiscal year ended January 26, 1996 and
January 27, 1995; and (ii) all of its other reports, statements, schedules, and
registration statements (including exhibits and schedules thereto) filed with
the SEC since January 28, 1994 and through the date of this Agreement (the "SEC
Filings").

(c) As of their respective filing dates, each such report
or statement filed pursuant to the Act and the Exchange Act complied with the
requirements of the Act and the Exchange Act and did not contain any untrue
statement of a material fact or omit to

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<PAGE> 27

state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.

Section 4.12 Financial Statements. The Buyer's financial
statements which consist of audited balance sheets, statements of income and
retained earnings, and statements of cash flows, and the footnotes thereto, for
the years ended January 26, 1996 and January 27, 1995, accompanied by the
opinion of the Buyer's independent accountants, are attached hereto as SCHEDULE
4.12 and incorporated by reference herein (such financial statements being
referred to herein collectively as the "Buyer's Financial Statements"), and to
the Buyer's knowledge, the Buyer's Financial Statements present fairly in all
material respects the financial condition of the Buyer on the last day of and
the results of operations for the respective periods ended on such dates. To
Buyer's knowledge, there are no liabilities or obligations, absolute, fixed or
contingent, known or unknown, of the Buyer that are relevant to the Buyer and/or
that are required to be disclosed on financial statements prepared in accordance
with GAAP, except (x) those reflected in or otherwise provided for in the
Buyer's Financial Statements, and (y) those arising in the ordinary course of
business since the fiscal year end for the period noted, except as set forth on
SCHEDULE 4.12 attached hereto, none of which either individually or in the
aggregate are materially adverse. To Buyer's knowledge, since January 26, 1996,
there has been no Buyer's Material Adverse Effect, except for such change as may
be caused by completing the transactions contemplated by this Agreement.

Section 4.13 No Changes. Except as set forth in SCHEDULE 4.13,
since January 26, 1996, Buyer has conducted its business only in the ordinary
course, and except as specifically contemplated by this Agreement, there has
not been:

(a) to Buyer's knowledge, any Buyer's Material Adverse
Effect;

(b) any transaction or commitment made, or any contract
or agreement entered into, by Buyer or any of its subsidiaries relating to its
assets or business (including the lease, acquisition or other disposition of
any assets or capital stock of Buyer or other third parties) or any
relinquishment by Buyer or any of its subsidiaries of any contract or other
right, in either case, material to Buyer and its subsidiaries, taken as a
whole, other than transactions and commitments in the ordinary course of
business consistent with past practice;

(c) any amendment of or change in any material term of
the Articles of Incorporation or Bylaws, or in any rights with respect to the
Common Stock or any other security or class of capital stock of Buyer; or

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<PAGE> 28

(d) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock of
Buyer, other than usual quarterly dividends consistent with past practices;

(e) any repurchase, redemption or other acquisition by
Buyer or any of its subsidiaries of any outstanding shares of capital stock or
other securities of, or other ownership interests in, Buyer or any of its
subsidiaries;

(f) any material change in Buyer's accounting principles,
practices or methods;

(g) any issuance of any shares, or rights with respect
thereto, of its capital stock, any stock split, recapitalization,
reorganization or other change in its capitalization, except pursuant to the
exercise of options, warrants, conversion rights or other contractual rights
existing as of January 26, 1996; or

(h) any grant or award of any option, warrant, conversion
right or other right not existing on January 26, 1996 to acquire any shares of
the capital stock of Buyer, other than employee stock options, stock benefits
and stock purchases under any stock option, stock benefit or stock purchase
plan existing on January 26, 1996;

(i) any merger, consolidation or reorganization involving
Buyer or any of its subsidiaries, or any material acquisition or agreement to
acquire or be acquired by any Person or other entity that involves Buyer or any
of its subsidiaries, or any actual, pending or threatened "change in control"
of Buyer, which shall be defined as the acquisition or beneficial ownership by
any Person or "group" of Persons (all within the meaning of Section 13(d) of
the Exchange Act and the rules and regulations promulgated thereunder) of
twenty percent (20%) or more of any class of Buyer's capital stock; or

(j) any agreement by Buyer to do any of the things
described in this Section 4.13.

Section 4.14 Financial Position and Information. At the Closing,
Buyer will have the funds necessary to (i) purchase the Purchased Assets
pursuant to the terms of this Agreement, (ii) provide for the payment, when
due, of the debts and liabilities of the Business in the ordinary course of
business (except those to be paid, by the terms of this Agreement, by Sellers),
and (iii) satisfy all the other obligations of Buyer under this Agreement.
Prior to the execution of this Agreement, Buyer has delivered to Sellers
evidence that Buyer has commitments, subject to reasonable conditions that may
be specified therein, to borrow or otherwise obtain such funds. At the Closing
on the Closing Date, Buyer will deliver to Sellers evidence satisfactory to
Sellers that Buyer has

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<PAGE> 29

such commitments and has complied with all the terms and conditions thereof.

Section 4.15 Reliance. Buyer acknowledges and agrees that it has
the capacity, and has taken all steps necessary, to protect its interest in the
transactions contemplated by this Agreement, including, without limitation, by
investigating and inquiring into the financial position, results of operations,
properties, assets, contractual relationships, prospects and all other matters
relating to the Business; provided, however, that such investigation shall not
relieve Sellers from any liability to Buyer in accordance with the terms and
conditions of this Agreement on account of the representations and warranties of
Sellers, PVF or Jemison that are expressly set forth herein. Buyer further
acknowledges and agrees that there are no other representations, warranties or
covenants being made by or on behalf of any of the Sellers, PVF or Jemison in
connection with the transactions contemplated by this Agreement, except as
expressly set forth herein, and that nothing in this Agreement shall be deemed
to constitute a representation by any of the Sellers, PVF or Jemison as to any
projections or forecasts regarding any of the Sellers' or the Business'
revenues, earnings, business or prospects.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF
SELLERS, PVF AND JEMISON

The Sellers, PVF and Jemison, jointly and severally, each make
the following representations and warranties to the Buyer, each of which shall
be deemed material (and the Buyer, in executing, delivering and consummating
this Agreement, has relied and will rely upon the correctness and completeness
of each of such representations and warranties):

Section 5.01 Organization, Good Standing and Qualification. Each
of the Sellers, PVF and Jemison is a corporation duly organized, validly
existing, and in good standing under the laws of its state of incorporation.
The Sellers are duly qualified to do business and are in good standing in each
and every jurisdiction where the failure to qualify or to be in good standing
would have a material adverse effect on the consolidated assets, liabilities,
financial condition or results of operations of PVF and the Sellers (the
"Sellers' Material Adverse Effect").

Section 5.02 Corporate Power and Authority. The Sellers, PVF and
Jemison have the requisite corporate power and authority to execute, deliver
and perform their obligations under and pursuant to this Agreement, and all
documents required under the terms of this Agreement to be executed and
delivered by them in connection herewith, including, without limitation, the
requisite corporate

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power and authority to sell the Purchased Assets and transfer the Assumed
Obligations upon the terms and conditions set forth herein. The execution and
delivery of this Agreement, all documents required by the terms of this
Agreement to be executed and delivered by Sellers, PVF and Jemison in
connection herewith, and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of the Sellers, PVF and Jemison. This Agreement and all documents
required under the terms of this Agreement to be executed and delivered by
Sellers, PVF and Jemison in connection herewith have been or will be duly
executed and upon the execution and delivery thereof will be legal, valid and
binding obligations of the Sellers, PVF and Jemison, enforceable against them
in accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
other laws affecting the enforcement of creditors' rights generally and by
general equitable principles.

Section 5.03 Validity of Contemplated Transactions. Except as set
forth on SCHEDULE 5.03 attached hereto, the execution, delivery and performance
of this Agreement and all documents executed and delivered in connection
herewith, and the consummation of the transactions contemplated hereby do not
and will not (a) contravene any provision of the Articles of Incorporation or
Bylaws of the Sellers, PVF or Jemison, (b) to Sellers' knowledge, violate,
conflict with, or constitute a default under, any agreement, contract,
commitment, indenture, lease or mortgage, to which the Sellers, PVF or Jemison
are a party or by which the Sellers, PVF or Jemison or the Purchased Assets are
bound, except where such violation, conflict or default would not result in a
Sellers' Material Adverse Effect, (c) to Sellers', PVF's or Jemison's
knowledge, violate any material provision of any law, rule or regulation of any
governmental authority, administrative body or agency applicable to the
Sellers, PVF or Jemison, or (d) violate any judgment, order, writ, prohibition,
injunction or decree specifically applicable to the Sellers, PVF or Jemison or
the Purchased Assets of which the Sellers, PVF or Jemison have knowledge.

Section 5.04 Regulatory Approvals. All consents, waivers,
approvals, authorizations and exemptions from governmental entities and other
material requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by the Sellers in order to permit the consummation of the
transactions contemplated by this Agreement have been obtained or satisfied or
will be obtained or satisfied prior to the Closing, except where the failure to
obtain or satisfy the same would not have a Sellers' Material Adverse Effect
prior to the Closing, or, following the Closing, a Buyer's Material Adverse
Effect.

Section 5.05 Copies of Articles of Incorporation and Bylaws. A
copy of the Sellers', PVF's and Jemison's Articles of

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Incorporation and Bylaws (the completeness and accuracy of which will be
certified by an authorized officer of each corporation at Closing) which have
been delivered to the Buyer are true, complete and correct and in full force
and effect.

Section 5.06 Liabilities and Obligations of Sellers. The Sellers
understand and acknowledge that the Buyer is not assuming any liabilities or
obligations of the Sellers other than the Assumed Obligations. All such
liabilities or obligations other than the Assumed Obligations shall continue to
be the obligation of the Sellers.

Section 5.07 Condition of and Title to Purchased Assets. Except
as set forth on SCHEDULE 5.07 attached hereto or Section 6.08, (a) all of the
Purchased Assets (other than the Real Property), taken as a whole, are in good
condition and repair, ordinary wear and tear excepted, and (b) the Sellers have
good title to all of the Purchased Assets, free and clear of any and all
Encumbrances and restrictions of any nature whatsoever, other than the
restrictions affecting the Real Property approved in writing by the Buyer
pursuant to Section 6.08, and other than (i) those, if any, which are not
substantial in character, amount or extent and do not, severally or in the
aggregate, materially detract from the value of such Purchased Assets, (ii)
liens securing liabilities which will be reflected in the Closing Date Balance
Sheet, and (iii) liens for current taxes, assessments or governmental charges
or levies on property not yet due and delinquent. In the case of leased assets
which are included in the Purchased Assets, to Sellers' knowledge, all such
assets have been maintained in a condition required by their respective leases
in all material respects, none of which will result in material charges to
Buyer for excess wear and tear on or to such items.

Section 5.08 Material Contracts. SCHEDULE 5.08 attached hereto
contains a true and complete copy (or description if not in writing) of the
following oral and written contracts (and all amendments, supplements, and
modifications thereto) to which the Sellers are a party: (a) any contract or
agreement relating to capital expenditures in excess of $25,000; (b) all
current or pending contracts or agreements between the Sellers and any other
party which involve, in the aggregate, the payment or receipt by the Sellers of
more than $25,000, which cannot be cancelled by the Sellers without penalty
upon thirty (30) days notice; (c) any loan or advance to, or investment in, any
Person or any contract or agreement relating to the making of any such loan,
advance, or investment in excess of $25,000; (d) any guarantee or other
contingent liability in respect of any indebtedness or obligation of any
Person; (e) any management, consulting, employment, severance, union,
termination or other agreement or similar contract or agreement; (f) any
contract or agreement limiting the freedom of Sellers or their successors from
engaging in any line of business, soliciting employees or customers, competing
with any

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<PAGE> 32

person and any contract or agreement where any Person has agreed not to compete
with Sellers or their Affiliates; (g) any contract, agreement or obligation to
complete an existing customer's job or purchase order which, to Sellers'
knowledge, may reasonably be expected to have a Sellers' Material Adverse
Effect prior to Closing or a Buyer's Material Adverse Effect after Closing; (h)
any contract, commitment, or agreement between (1) Sellers and (2) any
shareholder, officer, employee or Director (or any of their Affiliates) of
Sellers; and (i) all concession agreements; and material contracts not being
assumed by Buyer are noted in SCHEDULE 5.08.

Section 5.09 Assumed Leases and Contracts. Subject to receipt of
all necessary third party and lessor consents, at the Closing, the Buyer will
receive the Sellers' entire right, title and interest in the Assumed Leases and
the Assumed Contracts, free and clear of all Encumbrances, except as approved
by Buyer pursuant to Section 6.08 and as set forth on SCHEDULE 5.09 attached
hereto. To Sellers' knowledge, each of the Assumed Leases and Assumed
Contracts is valid, binding, in full force and effect, and enforceable by or
against Sellers in accordance with their respective terms and conditions, and
to Sellers' knowledge, upon assignment to and assumption by Buyer, will be
enforceable by Buyer in accordance with their respective terms, subject to
bankruptcy, insolvency and laws affecting the rights of creditors generally.
To Sellers' knowledge, there is no existing material default thereunder or
material breach thereof or condition which, with the passage of time or notice
or both, might constitute a default thereunder. There has been no written
termination or, to Sellers' knowledge, threatened termination or notice of
default (not heretofore cured) relating to any such lease or contract. Prior
to the Closing, the Sellers will employ their reasonable best efforts to obtain
all necessary consents to the assignment of the Assumed Leases and Assumed
Contracts to the Buyer at the Closing. Except as set forth on SCHEDULE 5.09
attached hereto and except for the Assumed Leases and the Affiliate Leases to
be entered into at Closing, there are no leases, agreements or commitments,
written or oral, pursuant to which the Sellers use or occupy or have the right
to occupy, any real property now or in the future in connection with the
Business.

Section 5.10 Concerning the Leased Real Estate, the Affiliate Real
Estate and the Real Property. The Sellers do not own, lease or use any real
estate other than the real estate subject to the Real Estate Leases (the
"Leased Real Estate"), the real estate subject to the Affiliate Leases (the
"Affiliate Real Estate") and the Real Property (the Leased Real Estate, the
Affiliate Real Estate, and the Real Property may be collectively referred to
herein as the "Property"). Further representations and warranties as to the
Property are as follows, and are subject to the disclosures set forth on
SCHEDULE 5.10 attached hereto:

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<PAGE> 33

(a) The only person in occupancy of the Property are the
Sellers. The Property is not homestead property, and no other person resides
at the Property.

(b) The Property is zoned to permit the operations of the
Sellers which are being conducted on the Property as of the date of this
Agreement. To Sellers' knowledge, there are no planned or threatened changes
to the current zoning or land use designations of the Property.

(c) The Sellers have not received any notice or
communication from any governmental entity indicating that any condition exists
with respect to the Property or with respect to the improvements thereon that
violates any city, county, state or federal law, ordinance, regulation, ruling
or code, including, without limitation, the Environmental Laws (as defined in
Section 5.25). The Sellers have not received from any insurance carrier
insuring or proposing to insure the Property or any other person any notice or
other communication noting any dangerous or illegal condition at the Property
or any other condition at the Property otherwise requiring material corrective
action;

(d) The Real Property is not subject to any outstanding
lease, agreement of sale (except for this Agreement), option or other right of
a third party to acquire any interest therein.

(e) To Sellers' knowledge, the Property is not subject to
any outstanding lease (other than the Real Estate Leases and the Affiliate
Leases to be entered into at Closing), agreement of sale (except for this
Agreement), option or other right of a third party to acquire any interest
therein.

(f) To Sellers' knowledge, there is ingress and egress to
and from the Property of record adequate for the use of the Property as
currently operated by the Sellers. To Sellers' knowledge, and except as set
forth on either SCHEDULE 5.08 or SCHEDULE 5.09, the Sellers have made no
material off-record agreements affecting the ownership, use or operation of the
Property.

(g) All public utilities, including, without limitation,
sewers, water, electric, gas, and telephone, required for the operation of the
Property as presently operated are installed and operating, and all
installation and connection charges therefor have been paid in full. The
Sellers have not received any notice stating that the Sellers will not be able
to obtain adequate supplies of water and other utilities to operate the
Business on the Property as presently conducted, or that the provision of
utilities violates any public or private easement.

(h) The Sellers have received no notice that any part of
any improvements on the Property encroaches upon any property

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<PAGE> 34

adjacent thereto or upon any easement, nor is there, to Sellers' knowledge, any
encroachment or overlap upon the Property.

(i) To Sellers' knowledge, there is no underground or
buried storage tank or drum located on the Property, except for any underground
storage tanks described in SCHEDULE 5.10. Any underground storage tank on the
Property described in SCHEDULE 5.10 is in material compliance with all
applicable requirements of law in all material respects, has been duly
permitted and inspected in accordance with all applicable requirements of law,
and no deficiencies have been noted in any inspections thereof. No law (i)
that is presently in effect, (ii) that has been passed prior to the date hereof
but with a delayed effective date, or (iii) that, to the Sellers' knowledge,
has been proposed, would require any of such underground storage tanks to be
relocated above ground within five (5) years from the date of this Agreement.

(j) To Sellers' knowledge, except as set forth on
SCHEDULE 5.10 attached hereto, (1) the Sellers have no Hazardous Materials
Liabilities (as hereinafter defined), and (2) neither the Purchased Assets, the
operations of the Sellers nor the operations of its predecessors in interest on
the Property will carry with them any Hazardous Materials Liabilities (x) for
which the Buyer could be responsible, or (y) that would adversely affect the
ability of the Buyer to use the Property in the manner heretofore used by the
Sellers.

Section 5.11 Buildings, Structures and Other Improvements. Except
as set forth on SCHEDULE 5.11 attached hereto, to Sellers' knowledge: (a) the
buildings, structures and other improvements constituting part of the Real
Property, Leased Real Estate and the Affiliate Real Estate (collectively the
"Structures"), taken as a whole, are in a good state of repair and operating
condition, reasonable wear and tear and normal usage excepted; (b) the
Structures do not contain any material latent defects; (c) all of the
Structures comply in all material respects with all applicable building, fire,
and other applicable laws, rules, codes and regulations; and (d) the Fixed
Assets include all fixed assets of any material value used in the business
operations of the Sellers. The Sellers are not leasing or holding for
consignment any of its Fixed Assets or Inventory except as set forth on
SCHEDULE 5.11. Sellers have received no notice that there are any outstanding
special tax assessments against any of the Purchased Assets.

Section 5.12 Financial Statements. PVF's and the Sellers'
consolidated financial statements, consisting of audited balance sheets,
statements of income and stockholders' equity, and statements of cash flows,
and the footnotes thereto, for the years ended June 30, 1995, 1994 and 1993,
accompanied by the opinions of the Sellers' Accountants, and the unaudited
consolidated balance sheet and income statement (without footnotes) of PVF and
the Sellers for the six (6) month period ended December 31, 1995, are

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attached hereto as SCHEDULE 5.12 and incorporated by reference herein (such
financial statements being referred to herein collectively as the "Financial
Statements"). December 31, 1995 is hereafter referred to as the "Financial
Statement Date." To Sellers' knowledge, the Financial Statements were prepared
in accordance with GAAP consistently applied throughout the periods noted,
except for normal year-end adjustments and the absence of footnotes for the
interim period, and present fairly in all material respects the consolidated
financial condition of PVF and the Sellers on the last day of and the results
of operations for the respective periods ended on such dates, subject in the
case of the interim financial statements to the absence of footnotes and to
normal year-end adjustments. To Sellers' knowledge, there are no liabilities
or obligations, absolute, fixed or contingent, known or unknown, of the
Sellers, Jemison or PVF that are relevant to the Sellers and that are required
to be disclosed on financial statements prepared in accordance with GAAP,
except (x) those reflected in or otherwise provided for in the Financial
Statements, and (y) those arising in the ordinary course of business since the
Financial Statement Date, except as set forth on SCHEDULE 5.12 attached hereto.
To Sellers', PVF's and Jemison's knowledge, since the Financial Statement Date,
there has been no material adverse change in the financial condition of the
Sellers, PVF or Jemison.

Section 5.13 Certain Tax Matters. The Sellers have duly filed all
federal, state, and local tax returns and reports required to be filed by them
and all taxes shown as being payable on such reports or returns either have
been paid, withheld or reserved. The Sellers' income tax returns have not been
audited except as noted on SCHEDULE 5.13 attached hereto, and to the knowledge
of Jemison, PVF and Sellers, all such returns have been properly completed and
filed on a timely basis and such returns are true and correct in all material
respects. To the knowledge of Jemison, PVF and Sellers, as of the time of
filing, all such returns correctly reflected in all material respects the facts
regarding the income, business, assets, operations, activities, status or other
matters of the Sellers or any information required to be shown thereon. Except
as set forth on SCHEDULE 5.13 attached hereto, the Sellers have not (i) entered
into any agreements for the extension of time or for the assessment of any tax
or tax delinquency which would adversely affect the Buyer or the Purchased
Assets or (ii) received any outstanding or unresolved notices from the Internal
Revenue Service or any taxing body of any proposed deficiency or assessment.
To Sellers' knowledge, the Sellers have properly paid all sales and use taxes
due with respect to their business operations and withheld all amounts, if any,
required by law to be withheld for income taxes and unemployment taxes,
including, without limitation, social security and unemployment compensation,
relating to their employees, and remitted such withheld amounts to the
appropriate taxing authority.

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Section 5.14 Ad Valorem, Real Property Tax Matters. There are no
taxes, fees, or assessments of any kind or nature whatsoever which are
presently due or, to Sellers' knowledge, which will or may become due with
respect to the Purchased Assets, except for ad valorem personal property taxes,
general and special real property taxes and special district levies and
assessments, if any, for the current calendar year (or current fiscal year, as
applicable), which have been prorated and accrued for in accordance with
Section 3.06.

Section 5.15 Litigation: Compliance with Laws. (a) The Sellers
have not been served with any notice of any legal proceeding, and to the
knowledge of Sellers, PVF and Jemison, there is no material suit, action,
claim, investigation, arbitration, administrative or legal or other proceeding
or governmental investigation pending or threatened against the Sellers or PVF,
or the Purchased Assets, or Jemison to the extent the same affects the
Purchased Assets, except as disclosed on SCHEDULE 5.15 nor (b) to the knowledge
of Sellers, PVF and Jemison, have the Sellers failed to comply with any law,
ordinance, requirement, regulation, or order applicable to the Sellers if the
failure to comply would have a Sellers' Material Adverse Effect prior to
Closing, or a Buyer's Material Adverse Effect following the Closing, nor (c)
have the Sellers violated any order, writ, injunction, judgment, or decree of
any court or federal, state or local department, official, commission,
authority, board, bureau, agency, or other instrumentality which was issued
against or is pending against the Sellers, PVF or Jemison, which violation
might have a Sellers' Material Adverse Effect prior to the Closing or a Buyer's
Material Adverse Effect after the Closing.

Section 5.16 Permits and Licenses. To Sellers' knowledge, the
only permits, licenses, approvals or other authorizations (hereafter referred
to as the "Permits") necessary for the operation of the Business as it is
presently operated have been obtained, are in full force and effect, and are
listed on SCHEDULE 5.16 hereto, except where the failure to obtain the same
would not have a Sellers' Material Adverse Effect prior to the Closing or a
Buyer's Material Adverse Effect following the Closing. To Sellers' knowledge,
all such Permits are currently valid, and no revocation, cancellation or
withdrawal thereof has been effected or, to Sellers' knowledge, threatened.

Section 5.17 Intellectual Properties. To Sellers' knowledge,
except as set forth on SCHEDULE 5.17 attached hereto, the Sellers own no
trademarks, service marks, trade names, copyrights, patents or applications for
any of the foregoing and none are used in connection with the Business. To
Sellers' knowledge, there is no claim or reason to believe that the Sellers are
or may be infringing on or otherwise acting adversely to the rights of any
person under or in respect of any proprietary rights. The Sellers are not
obligated to make any payments by way of

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royalties, fees, or otherwise to any owner or franchisor, licensor, permitter,
or grantor of, or other claimant to, any trademark, service mark, trade name,
trade secret, copyright, or patent with respect to the use thereof, in
connection with the conduct of its business operations, except to sanctioning
bodies whose name it uses on its products.

Section 5.18 All Necessary Assets. The Purchased Assets
constitute all of the assets, contracts and leases necessary for the conduct of
the Business as it is presently being conducted by Sellers, other than the
Excluded Assets.

Section 5.19 Labor or Employee Disputes; Employment Matters.
Except as set forth on SCHEDULE 5.19 attached hereto, the Sellers are not
parties to any contract or other agreement with any labor union and are not
experiencing or the subject of, or to Sellers' knowledge, threatened by, any
union organization campaign or any strike, slowdown, picketing, work stoppage,
or other labor disturbance by any labor union or group of employees, and there
have not been any, strikes, walkouts, work stoppages, or slowdowns affecting
the Sellers. To Sellers' knowledge, no Person (including, but not limited to,
any federal, state, county or local government or other governmental,
regulatory or administrative agency or authority) has filed any claim or basis
for any suit, action, proceeding or investigation against the Sellers regarding
their operations arising out of any statute, law, ordinance, code, rule or
regulation relating to discrimination in employment or employment practices or
occupational safety and health standards (including, without limitation, The
Fair Labor Standards Act, as amended, Title VII of the Civil Rights Act of
1964, as amended, 42 U.S.C. Section 1981, the Rehabilitation Act of 1973, as
amended, the Age Discrimination in Employment Act of 1967, as amended, or the
Americans with Disabilities Act of 1990) which, if upheld, would have a
Sellers' Material Adverse Effect prior to the Closing or a Buyer's Material
Adverse Effect following the Closing. To Sellers' knowledge, the employment or
termination of any of the Sellers' employees within the past five (5) years has
been in material compliance with all applicable laws, rules and regulations.

Section 5.20 Inventory. To Sellers' knowledge, the Inventory is
merchantable and in salable condition in all material respects, as measured
consistently with prior periods, and no portion of the Inventory is obsolete or
unusable, as measured consistently with prior periods, except as set forth in
the Financial Statements and except with respect to Non-Qualifying Inventory
(whether or not such inventory is resold and reassigned to Sellers).

Section 5.21 Employee Compensation. SCHEDULE 5.21 hereto is a
list of all employees of the Sellers, their dates of hire, positions, base
salaries and commissions or bonus schedules, and a list of all employment
contracts with the Sellers' employees, and

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all employee manuals which have been distributed to or otherwise apply to the
Sellers' employees.

Section 5.22 No Changes. Except as set forth in SCHEDULE 5.22,
since the Financial Statement Date, (i) to Sellers', PVF's or Jemison's
knowledge, there has not been any Sellers' Material Adverse Effect, and (ii)
there has not been:

(a) any waiver by the Sellers of a valuable right or of a
material debt owed to them;

(b) any satisfaction or discharge of any material lien,
claim or encumbrance or payment of any material obligation by the Sellers,
except in the ordinary course of business consistent with past practices and
that is not material to the Purchased Assets, financial condition, operating
results or business of the Sellers;

(c) to the knowledge of Sellers, PVF and Jemison, any
material default (including, without limitation, any event that with the giving
of notice or the passage of time, or both, would constitute such a default),
termination or threatened termination under or amendment to any material
agreement, arrangement, contract, lease or license that constitutes a portion
of the Purchased Assets or any other material contract or agreement relating to
the Sellers or the Purchased Assets;

(d) any material change in any compensation arrangement
or agreement with any employee (including, without limitation, any increase in
the rate of wages, salaries, bonuses or other remuneration of any employee of
the Sellers), except in the ordinary course of business and consistent with the
ordinary cycles of employee review and past practices;

(e) any sale, assignment or transfer of any material
assets of the Sellers, except in the ordinary course of business consistent
with past practices;

(f) to Sellers' knowledge, any material adverse change in
their relations with the Sellers' employees or independent contractors taken as
a whole;

(g) any receipt of notice that there has been a loss of
any major customer or supplier (identified in SCHEDULE 5.22(G)) of the Sellers;

(h) any mortgage, pledge, encumbrance, restriction,
security interest, transfer of a security interest in, or lien created by the
Sellers with respect to any of the Purchased Assets, except liens for taxes not
yet due or payable and except as approved by Buyer pursuant to Section 6.08 or
as set forth on SCHEDULE 5.07 attached hereto;

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<PAGE> 39

(i) any bonuses or profit sharing distribution of any
kind or any loans or guarantees made by the Sellers, PVF or Jemison relating to
the Sellers or their operations, to or for the benefit of any of their
employees, officers or directors, or any members of their immediate families,
other than travel advances and other business-related advances made in the
ordinary course of business consistent with past practices;

(j) any declaration, setting aside, or payment of any
dividend or other distribution in respect of any of Sellers' capital stock, or
any direct or indirect redemption, purchase or other acquisition of any of such
stock or any option, warrant, or other right to purchase or acquire any such
stock by Sellers;

(k) any material capital expenditure or commitment
therefor, except in the ordinary course of business consistent with past
practices;

(l) any incurrence of material indebtedness or guaranty
of indebtedness, liability or obligation by Sellers, except for the obligations
incurred in the ordinary course of business consistent with past practices;

(m) any change in the method of accounting or auditing
practices;

(n) any write-off as uncollectible of any notes or
accounts receivable, except write-offs in the ordinary course of business
charged to applicable reserves consistent with past practices, none of which
individually or in the aggregate is material to the Sellers;

(o) any business conducted by Sellers, or any transaction
entered into by Sellers, except in the ordinary course of business consistent
with past practices; or

(p) any agreement or commitment by the Sellers to do any
of the things described in this Section 5.22.

Section 5.23 No Affiliates' Assets, Leases or Contracts. (a) None
of the Purchased Assets are owned by any person other than the Sellers, and (b)
all of the Assumed Contracts and Assumed Leases are with Persons who are not
Affiliates of the Sellers and were negotiated at arms' length, except for the
Affiliate Leases and except as listed in SCHEDULE 5.23 attached hereto.

Section 5.24 Insurance Coverages. SCHEDULE 5.24 attached hereto
contains a true, complete and correct listing of all policies of fire,
liability, and other forms of insurance, including the amounts and types of
coverages pursuant to which the Sellers and the Purchased Assets are insured.
All of such insurance policies shall be kept in full force and effect until the

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first to occur of (a) three (3) business days after the Closing or (b)
notification that the Buyer's insurance has become effective. All of such
insurance policies provide that a third party, such as the Buyer, may be
subrogated to the rights of Sellers, with respect to all claims concerning the
Purchased Assets which might be asserted against the Buyer for occurrences
occurring prior to Closing.

Section 5.25 Environmental Matters. To Sellers' knowledge, and
except as set forth on SCHEDULE 5.25 attached hereto, Sellers have not, during
their ownership of the Purchased Assets, or ownership or use of the Property,
generated, processed, distributed, transported, used, treated, stored, handled,
emitted, discharged, released or disposed of (or caused any person or entity to
do any of the foregoing or assisted any person or entity in doing any of the
foregoing) any Hazardous Materials, or any product which may give rise to
Hazardous Materials Liabilities, except in accordance with applicable
Environmental Laws. For purposes of this Section 5.25, the following terms
shall have the following meanings:

(i) The term "Hazardous Materials" shall mean (a)
pollutants, hazardous materials, contaminants, constituents, medical wastes,
hazardous or infectious wastes and hazardous substances as those terms are
defined in any Environmental Laws, including without limitation the following
statutes and their implementing regulations: the Hazardous Materials
Transportation Authorization Act of 1994, 49 U.S.C. Section 5101, et seq. (the
"HMTA"), the Comprehensive Environmental Response, Compensation and Liability
Act, as amended by the Superfund Amendments and Reauthorization Act, 42 U.S.C.
Section 9601 et seq. (as so amended, "CERCLA"), the Clean Water Act, 33 U.S.C.
Section 1251 et seq. (the "CWA"), and the Clean Air Act, 42 U.S.C. Section
7401 et seq. (the "CAA"); (b) petroleum, including crude oil and any fractions
thereof; (c) natural gas, synthetic gas and any mixtures thereof; (d) asbestos
and/or asbestos-containing materials; (e) polychlorinated biphenyl ("PCBs") or
materials or fluids containing PCBs in excess of 50 parts per million (ppm);
(f) urea formaldehyde; and (g) any product which may give rise to Hazardous
Materials Liabilities; provided, however, that components, materials or
substances which are properly used, handled, stored in appropriate containers
and disposed of in accordance with applicable Environmental Laws shall not be
deemed a Hazardous Material for the purpose of this Section 5.25;

(ii) The term "Hazardous Materials Liabilities" shall mean
any and all direct out-of-pocket damages, losses, liabilities, disabilities,
fines, penalties, costs or expenses (including reasonable attorneys' fees)
incurred or to be incurred, whether absolute, fixed or contingent, civil or
criminal, and whether arising under federal law or state law, incurred or to be
incurred

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in connection with the handling, storage, transportation, or disposal of any
Hazardous Materials; and

(iii) The Term "Environmental Laws" shall mean any statute,
law, ordinance, code, rule, regulation, written guideline, policy, permit,
consent, approval, license, judgment, order, writ, decree or authorization,
including the requirement to register storage tanks, established or enacted
for, or relating to, the protection of the environment or the health and safety
of any Person, including, without limitation, those relating to (a) the HMTA,
CERCLA, the CWA, the CAA or the Resource Conservation and Recovery Act, 42
U.S.C. Section 6903 et seq.; (b) emissions, discharges, releases or threatened
releases of Hazardous Materials into the environment, including, without
limitation, into ambient air, soil, sediments, land surface or subsurface,
buildings or facilities, surface water, groundwater, publicly-owned treatment
works, septic systems or land; or (c) the generation, treatment, storage,
disposal, use, handling, manufacturing, transportation or shipment of Hazardous
Materials.

Section 5.26 Customers and Sales. SCHEDULE 5.26 attached hereto
and incorporated herein by reference, is a true and accurate list of the top
twenty (20) customers of, and suppliers for, Sellers for the fiscal year ended
June 30, 1995 and the six (6) month period ended December 31, 1995. Except as
set forth on SCHEDULE 5.26 attached hereto, the officers and directors of
Sellers do not possess, directly or indirectly, any financial interest in, nor
do they act as a director, officer or employee of, any Person that is a
supplier, customer, lessor (except for the property covered by the Affiliate
Leases), lessee, or competitor of the Sellers. To the Sellers' knowledge,
except as set forth in SCHEDULE 5.26, no customer or supplier of the Sellers
listed in Schedule 5.26 have advised the Sellers that they intend to cease
doing business with the Sellers or the Buyer after the Closing.

Section 5.27 Benefit Plans. To Sellers' knowledge:

(a) The Sellers neither sponsor nor otherwise participate
in, nor have Sellers previously sponsored or otherwise participated in, any
Employee Pension Benefit Plan (as defined in Section 3(2) of ERISA) that is
subject to the minimum funding standards of Section 412 of the Internal Revenue
Code of 1986, as amended (the "Code"), or Section 301, et seq. of ERISA.

(b) No Non-Exempted Prohibited Transaction (as defined in
Section 406 of ERISA or Section 4975 of the Code) has occurred with respect to
any Employee Benefit Plan (as defined in Section 3(3) of ERISA) sponsored by
the Sellers and covered by Part 4 of Subtitle B of Title I of ERISA.

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fully funded on a present value actuarial basis, except as set forth on
SCHEDULE 5.27 attached hereto.

(d) Except as otherwise set forth in SCHEDULE 5.27
hereto, the Sellers are not now, nor have they been during the preceding five
(5) years, a contributing employer to a Multiemployer Plan (as defined in
Section 4001(a)(3) of ERISA).

(e) There are no actions, suits or claims pending (other
than routine claims for benefits) or that could reasonably be expected to be
asserted against any Employee Pension Benefit Plan or Employee Welfare Benefit
Plan, or the assets of any such plans. To Sellers' knowledge, no civil or
criminal action brought pursuant to the provisions of Title I, Subtitle B, Part
5 of ERISA or any other federal or state law is pending or threatened against
any fiduciary of any such plans. No Employee Pension Benefit Plan or Employee
Welfare Benefit Plan, or any fiduciary thereof, has been, or is currently, the
direct or indirect subject of an audit, investigation or examination by any
governmental or quasi-governmental agency.

(f) All of the Employee Pension Benefit Plans and
Employee Welfare Benefit Plans maintained by the Sellers comply currently, and
have complied in the past, both as to form and operation, in all material
respects with their terms and with the provisions of ERISA and the Code, and
all other applicable laws, rules and regulations. All necessary governmental
approvals and determinations for the Employee Pension Benefit Plans have been
obtained, including where applicable, a favorable determination (covering all
changes or amendments required by TEFRA, DEFRA and REA) as to the qualification
of such plans under Sections 401(a) and 501(a) of the Code. Each of the
Employee Pension Benefit Plans maintained by the Sellers have either obtained a
favorable determination (covering all changes or amendments required by TRA '86
and subsequent pension legislation, regulations or rulings) from the Internal
Revenue Service as to its qualification under Sections 401(a) and 501(a) of the
Code or is within the remedial amendment period (as provided in Section 401(b)
of the Code) for making any required changes or amendments, and nothing has
occurred since the date of each such determination or recognition letter that
would adversely affect such qualification.

(g) Except as otherwise set forth in SCHEDULE 5.27
hereto, the Sellers are not a party to, nor do they have any liability under,
any nonqualified plan of deferred compensation (whether funded or unfunded).

(h) Except as otherwise set forth in SCHEDULE 5.27
hereto, all discretionary, employer contributions that have been declared by
the Sellers have been contributed to the Jemison Multicompany (401(k)) Plan
(the "Plan"), and all employer matching

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contributions for employee 401(k) contributions made to the Plan prior to
Closing, have been made and contributed to the Plan.

(i) For purposes of all Sections of this Agreement
dealing with ERISA, the term "Sellers" shall mean the Sellers and each trade or
business (whether or not incorporated) that together with the Sellers would be
treated as a single employer under the provisions of Titles I or IV of ERISA.

(j) To Sellers' knowledge, the Sellers have complied in
all material respects with all provisions of the health care continuation
coverage requirements of Code Section 4980B, the Family and Medical Leave Act
of 1993, and the regulations thereunder.

(k) Except as set forth on SCHEDULE 5.27 hereto, the
Sellers do not have in effect any Employee Benefit Plans or employee health
insurance plans. The Plan permits, or prior to Closing shall be amended to
permit, employees of Sellers hired by the Buyer to roll or directly transfer
their vested account balances to a qualified Employee Pension Plan at no cost
to Buyer.
(l) The Sellers agree that the employment of Sellers'
employees by Buyer as provided in Section 3.08 of this Agreement shall
constitute a partial termination of the Plan, and accordingly all such
employees shall be one hundred percent (100%) vested in all their accounts in
the Plan.

Section 5.28 Brokers' or Finders' Fees. PVF has employed the
services of The Beacon Group, which will be entitled to a commission, payable
by PVF upon the Closing of the transactions contemplated by this Agreement. No
other broker, Person or firm acting on behalf of the Sellers, PVF or Jemison or
under the authority of either the Sellers, PVF or Jemison is or will be
entitled to any commission, broker's or finder's fee or financial advisory fee
from the Sellers, PVF or Jemison in connection with any of the transactions
contemplated herein, and the Sellers, PVF and Jemison agree to indemnify the
Buyer against, and to hold it harmless from, any claim for brokerage or similar
commission or other compensation which may be made against the Buyer by any
third party in connection with the transactions contemplated hereby, which
claim is based upon any action by PVF, Jemison or the Sellers.

Section 5.29 Investment Information. Sellers, PVF and Jemison
represent that they have been furnished with or have had access to the
information such parties have requested from the Buyer and have had an
opportunity to ask questions and receive answers from management of Buyer. The
Sellers, PVF and Jemison acknowledge that they have received and reviewed
copies of the SEC Filings. Sellers, PVF and Jemison further represent that
they are either (i) an "accredited investor" (as that term is defined in

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Rule 501(a) promulgated pursuant to the Securities Act of 1933, as amended (the
"Act")), or (ii) alone, or together with a "purchaser representative" (as that
term is defined in Rule 501(h) promulgated pursuant to the Securities Act),
have such knowledge, experience and skill in business and financial matters and
with respect to investments in securities so as to enable them to understand
and evaluate the merits and risks of the acquisition of the shares of Common
Stock and to form an investment decision with respect to such investment. The
Sellers, PVF and Jemison hereby represent that they understand that the
transaction contemplated by this Agreement is to be carried out as a
transaction exempt from registration under the Act and, accordingly, the shares
of Common Stock will not have been registered under the Act. The Sellers, PVF
and Jemison hereby further represent that they will be acquiring the shares of
Common Stock for investment purposes only and not with a view to or for resale
in connection with any distribution of the Common Stock, nor with any intention
of distribution of the Common Stock or of selling the Common Stock, except as
described on SCHEDULE 5.29 attached hereto. The Sellers, PVF and Jemison
understand that because the shares of Common Stock will not have been
registered under the Act, the Buyer will not permit the transfer of such shares
without registration under the Act, or upon the issuance to the Buyer of a
favorable opinion of counsel or of the submission to the Buyer of such other
evidence as may be reasonably satisfactory to counsel for the Buyer, in either
case, to the effect that any such transfer, whether pursuant to Rule 144 of the
Act or otherwise, shall not be in violation of the Act, and any applicable
state securities laws, and that the share certificates representing such shares
will be issued with a restrictive legend providing notice of such restriction.

Section 5.30 Sellers Not a Foreign Person. The Sellers are not a
"foreign person" within the meaning of Section 1445, et seq., of the Code.

Section 5.31 Completeness of Disclosure. To Sellers', PVF's and
Jemison's knowledge, no representation or warranty by the Sellers, PVF or
Jemison in this Agreement contains any false or misleading statement of
material fact or omits a material fact necessary to make the statements made,
in light of the circumstances under which they were made, not misleading.

Section 5.32 Accounts Receivable. Except as set forth on SCHEDULE
5.32 all of the Accounts Receivable reflected in the books of account of the
Sellers arose in the ordinary course of its business, from the sale of services
or goods, and neither Sellers, PVF or Jemison know, or have a reason to know,
of any valid defense or right of set-off to the rights of the Sellers to
collect such Accounts Receivable in the full amounts shown on such books of
account, subject, however, to a reasonable reserve for bad debts.

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ARTICLE VI

ACTIVITIES PRIOR TO THE CLOSING

Section 6.01 Activities by Sellers, PVF and Jemison Prior to
Closing. The Sellers, PVF and Jemison hereby covenant and agree that from and
after the date hereof to the Closing Date, the Sellers will, in all material
respects, except as set forth in SCHEDULE 6.01 hereto, conduct Business solely
in the ordinary course consistent with past practices and the Sellers will;

(a) Engage in no material transaction out of the ordinary
course of business except as contemplated herein and will operate the Business
in the ordinary course of business except as contemplated herein;

(b) Not merge or consolidate the Sellers with any other
corporation or allow any of them to acquire or agree to acquire or be acquired
by any corporation, association, partnership, joint venture, or other entity;

(c) Not sell, assign, lease, transfer, or otherwise
dispose of any of the Purchased Assets without the prior written consent of the
Buyer except in the ordinary course of business;

(d) Not create or suffer to exist any Encumbrance on any
of the Purchased Assets, except as approved by Buyer pursuant to Section 6.08
or as set forth on SCHEDULE 5.07, and shall maintain and keep the Purchased
Assets, taken as a whole, in good repair and condition, ordinary wear and tear
excepted;

(e) Not commit to make any capital expenditure or major
repair in excess of Ten Thousand Dollars ($10,000) in the aggregate without the
prior written consent of the Buyer, which consent shall not be unreasonably
withheld;

(f) Not waive any material rights or material claims of
the Sellers related to the Purchased Assets without first having notified the
Buyer and received the Buyer's written consent thereto;

(g) Use reasonable efforts to preserve, in accordance
with past practices, the goodwill and the existing business organization of
Sellers and the relations of Sellers with their employees that Buyer expects to
hire and with Sellers' customers, suppliers, and others with whom Sellers have
a business relationship;

(h) Use reasonable efforts to maintain in full force and
effect, subject to the terms and conditions thereof, all material agreements,
contracts, leases, Permits, authorizations, and approvals necessary for or
related to the business operations of

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the Sellers as such operations are now conducted, except for changes made in
the ordinary course of business, and use reasonable efforts to comply in all
material respects with all laws, rules and regulations applicable to the
business operations of the Sellers as now conducted; and

(i) Promptly advise Buyer in writing of any change or
inaccuracy in any document, Schedule, Exhibit or other written information
given to the Buyer by Sellers, PVF or Jemison pursuant to the terms and
conditions of this Agreement;

(j) Cause a physical inventory to be conducted as close
to the Closing Date as practicable, employing the following procedures and
methods:

(i) The inventory date will be the Closing Date;

(ii) The inventory will be conducted by authorized
personnel or representatives of Sellers and observed by authorized personnel
and representatives of the Buyer;

(iii) The inventory taking, cutoff, and costing
shall be completed in accordance with GAAP consistently applied, with the
existing policies of Sellers and with the methods and principles utilized in
the preparation of the Financial Statements, valuing the Inventory at the lower
of average cost, using the weighted average method, or market for determining
cost; and

(iv) Authorized personnel and representatives of
Buyer will be allowed to review the results of the inventory and of the costing
thereof;

(k) Grant Buyer the right to review the credit history of
customers of the Sellers;

(l) Use their reasonable efforts to perform or fulfill
all of their covenants and conditions to be performed or fulfilled by them
under the terms of this Agreement; and

(m) Keep Buyer reasonably informed concerning material
events relating to the conduct of the Business.

Section 6.02 Reports; Taxes. Between the date hereof and the
Closing Date, the Sellers will duly and timely file all reports or returns
required to be filed with federal, state, local and foreign authorities, will
promptly pay when due all federal, state, local and foreign taxes, assessments
and governmental charges levied or assessed upon them or any of their
properties (unless the Sellers are contesting the same in good faith and
adequate provision has been made therefor), and will use reasonable efforts to
duly observe and conform in all material respects to any lawful requirements of
any governmental authority relating to any of the

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Purchased Assets or to the operation and conduct of the Business and all
covenants, terms and conditions upon or under which any of their Purchased
Assets are held.

Section 6.03 Access; Confidentiality. (a) Between the date
hereof and the Closing Date, the Sellers will give to authorized
representatives of the Buyer (including, without limitation, attorneys,
accountants, agents, appraisers, environmental experts, and equipment experts)
(collectively, the "Representatives"), the right to make complete and thorough
inspections of and have access to, during normal business hours, in such manner
as not to unduly disrupt normal business activities:

(i) the Sellers and all of their assets, including, but
not limited to, physical inspections of the Purchased Assets; and

(ii) the businesses of the Sellers, including, but not
limited to (A) all premises and properties associated therewith, including any
Property, or (B) the jobs in progress and all related work in progress data,
including information as to the amount billed and unbilled, and revenues to be
recognized, on each such job as compared with the percentage of completion of
each such job, (C) the bid and contract documents relating to other jobs
included in backlog or pending bids prior to Closing, (D) employee records,
including compensation and fringe benefits, (E) agreements for the procurement
of inventory, (F) all leases and options, (G) copies of any existing
environmental studies or any files (including alleged violations of
Environmental Laws, if any) relating thereto, (H) environmental permits and
records, (I) copies of operating and similar permits, (J) any matters of
pending or overtly threatened litigation (subject to the parties making
reasonable efforts to preserve the work product doctrine and attorney-client
privilege), and (K) all other books, records and files of the Sellers. In
addition, the Sellers will cause their officers and employees to furnish any
and all financial, technical and operating data and other information as the
Buyer will from time to time reasonably request. The Buyer and the
Representatives shall have the right to make extracts from all documents so
reviewed.

(b) Between the date hereof and the Closing Date, the
Buyer shall promptly select an environmental consultant to perform a Phase I
environmental assessment of the Property; provided, however, that the Buyer's
environmental consultants shall not conduct any soil or groundwater assessments
without the consent of Sellers, nor shall they contact any governmental
agencies or third parties without the consent of Sellers, which consent shall
not be unreasonably withheld or delayed. Buyer shall bear all costs associated
with the environmental assessment of the Property. Sellers shall cooperate and
provide access to any party who performs an independent environmental
assessment of the Property.

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(c) The due diligence review conducted by Buyer and/or
its Representatives shall not relieve the Sellers, PVF or Jemison of any duty
concerning their representations, warranties, covenants or agreements contained
in this Agreement.

(d) Between the date hereof and the Closing Date, the
Sellers shall make arrangements reasonably satisfactory to the Buyer for the
Representatives to meet the Sellers' employees, vendors and customers. Sellers
will be permitted to have a representative at each such meeting.

(e) The Buyer and its Representatives will hold in
confidence all information obtained in any such review and will use such
information only for the purpose of considering the transactions contemplated
hereby. The Buyer further agrees that it will not otherwise disclose any such
information to any third party, other than its attorneys, financial advisors
and financing sources, who shall be informed of and shall agree to comply with
the restrictions of this Section 6.03, it being understood that Buyer shall be
responsible for any failure of such persons to comply with this Section, except
upon the written consent of the Sellers or except as required by law. In the
event disclosure is required by law, Buyer shall give Sellers advance notice
thereof and the ability to obtain a protective order regarding such information
prior to disclosing the same. If the transactions contemplated hereby are not
consummated as contemplated herein, the Buyer will promptly return all data
furnished to it to the Sellers and copies and summaries thereof. In such
event, Buyer also shall destroy any internal compilations, memoranda, reports,
analyses or other information derived from such information, and shall confirm
such destruction to Sellers upon Seller's request therefor. Such obligation of
confidentiality will not extend to any information which is shown to be or to
have been generally known to others engaged in the same trade or business as
the furnishing party, or that is or will be public knowledge through no act or
omission by the Buyer or any of its directors, officers, employees,
professional advisors or other representatives.

Section 6.04 Consents.

(a) Between the date hereof and the Closing Date, the
Sellers will in good faith request and use all reasonable efforts to obtain all
necessary consents, waivers, approvals, or authorizations from third parties
(collectively the "Consents") which are necessary in connection with the
assignment of the Assumed Leases, the Assumed Contracts and the Assumed
Purchase Orders as contemplated herein (including pursuant to Sections 3.02 and
5.09 hereof), and the Buyer will in good faith request and use all reasonable
efforts to assist Sellers in obtaining consents to the assignment of the
Assumed Leases, Assumed Contracts and Assumed Purchase Orders and to obtain all
Consents which are necessary in connection with the assignment of the Permits
that are transferable

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as contemplated herein. Each party will cooperate with the other party in such
efforts. However, it is understood and agreed that although obtaining such
Consents shall be a condition to the Buyer's obligation to close the
transactions contemplated herein, the failure to obtain the Consents shall not
give rise to any action by any party for breach of this Agreement or any
provision hereof, notwithstanding any language contained in this Agreement to
the contrary.

(b) Assumed Obligations. To the extent that the assignment and
assumption of any Assumed Obligation, or any leases, contracts or agreements
referable thereto, requires the consent of a third party, this Agreement shall
not constitute an agreement by Sellers to assign the same if an attempted
assignment or sublease thereof, without the consent of the third party thereto,
would constitute a breach thereof, but Sellers shall use their reasonable
efforts to obtain the consents of such other parties to all such Assumed
Obligations, and such leases, contracts and agreements, to the assignment or
sublease thereof to Buyer prior to the Closing Date. If any such consent is
not obtained or is obtainable only upon payment by Buyer of amounts not
otherwise required to be paid under the terms of such Assumed Obligations, and
such leases, contracts and agreements, Sellers will cooperate with Buyer in any
reasonable arrangement, which does not impose any additional expense to
Sellers, which is designed to provide for Buyer the benefits under any such
Assumed Obligations, including enforcement for the benefit of Buyer, at the
expense of Buyer, of any and all rights of Sellers against any third party
thereto arising out of the failure or refusal of such third party to consent to
such assignment or sublease. The inability of Sellers to obtain one or more
consents to the assignment or sublease of any Assumed Obligation, and such
leases, contracts and agreements, to Buyer shall not constitute grounds for the
termination of this Agreement by Buyer, unless the same shall be material to
the transactions contemplated hereby or to the continued operation of the
Business (with materiality for such purpose being defined by the exceptions
referenced in the last sentence of Section 8.07), in which event, subject to
applicable limitation hereunder, Buyer may terminate this Agreement, but in no
event shall Sellers be liable to Buyer for damages by reason of inability to
obtain any such consents. The Buyer reserves the right, at any time, to waive
its right to receive a consent hereunder.

Section 6.05 Public Announcements. Except as otherwise required
by law, neither party shall make any public announcements regarding the
transactions contemplated herein without the prior written consent of the other
party, including its approval of the content thereof. Any public announcement
which is required to be made by any party hereto will be made only after
providing the other party as much notice as is reasonably practicable and after
giving consideration to the reasonable comments of such party.

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Section 6.06 Hart-Scott-Rodino. Between the date hereof and the
Closing, the Sellers, PVF, Jemison and Buyer shall cooperate fully to timely
file all documents required by the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 ("H-S-R"), as amended. Each party shall bear its own costs in
complying with this provision; provided, however, that the filing fee required
by the Federal Trade Commission shall be paid by the Buyer.

Section 6.07 Filings with SEC. Between the date hereof and
Closing, the Buyer may have to make certain filings with the SEC, to meet its
reporting obligations under the Exchange Act. Copies of all such filings will
be provided to the Sellers in a fashion to allow Sellers to provide comments to
Buyer, and Buyer shall give good faith consideration to Sellers' comments. To
the extent that information concerning the Sellers, PVF or Jemison is required
to be included in such filings, the Sellers, PVF and Jemison will use
reasonable efforts to supply such information, in the manner and form
reasonably requested by Buyer, and the party supplying such information shall
bear the cost of complying with such request.

Section 6.08 Condition of Title; Title Insurance.

(a) As soon as practicable after execution of this
Agreement, Sellers shall obtain, at Sellers' expense, commitments of title
insurance (the "Commitments") issued by a title insurance company reasonably
acceptable to Buyer (the "Title Company"), in which the Title Company agrees,
following the recording of a deed in the name of the Buyer, to issue a Standard
Owner's Policy of Title Insurance (ALTA Form B) (the "Title Insurance") in the
amount of the purchase price for that Location (as hereinafter defined) showing
record title to be in Buyer, and covering the Real Property and improvements at
each of the locations owned by the Sellers (the "Locations"), and containing
such endorsements as Buyer shall reasonably request, at Sellers' expense. The
Commitments shall show the state of the title of the real property owned by
Sellers on which each of the Locations is located. As soon as practicable
after the execution of this Agreement, Buyer shall also cause the Title Company
to provide Buyer with a copy of each instrument of record constituting a lien
or encumbrance on each of the Locations or an exception or qualification to
title in the Commitments.

(b) Within ten (10) days after receipt of any Commitment,
Buyer shall deliver written notice to Sellers and Escrow Agent of any
objections that Buyer has to the state of title, and exceptions to coverage
shown in the Commitments or in copies of instruments of record. The failure of
Buyer to disapprove in writing, at or prior to that time, a particular
exception or exceptions shown in any Commitment shall be deemed to be approval
by Buyer of the exception or exceptions not disapproved or objected to by
Buyer.

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(c) If Buyer disapproves of any exception from coverage
shown on any Commitment, Sellers shall use their best efforts to cure the
matter(s) causing Buyer's objections by taking all reasonable action to cure
the objections. If Sellers are unable to cure the matter(s) within fifteen
(15) days after receipt from Buyer of the notice of disapproval of or objection
to any Commitment, Sellers shall notify Buyer of their inability to cure, and
Buyer and Sellers shall enter into a lease, with an option to purchase such
property, on terms consistent with those contained in the Affiliate Leases and
mutually acceptable to the parties hereto, at a rental rate and purchase option
price tied to the book value thereof.

(d) Buyer's interest in the Locations shall be insured by
a Standard Owner's Policy with fee simple title to the Real Property vested in
Buyer, together with such endorsements as Buyer may reasonably require, subject
only to:

(i) nondelinquent state, county, city and special
district taxes and assessments, if any;

(ii) standard printed exceptions and exclusions set
forth in the title policy;

(iii) the covenants, conditions, restrictions,
reservations, rights of way, easements, encumbrances, and other matters
of record approved by Buyer under this Agreement; and

(iv) encumbrances made or created by Buyer under
this Agreement.

The Escrow Agent shall hold the title policies as a condition precedent to
Closing.

Section 6.09 Surveys. Prior to Closing, the Sellers shall obtain,
at Sellers' expense, a survey of the Locations being conveyed hereunder,
showing any and all improvements, easements, rights, reservations and
restrictions thereon, and all roads, streets or highways adjacent to said
Locations. If the survey shows any material encroachments, overlaps, or
boundary line disputes, the same shall be treated as title defects hereunder.

Section 6.10 Exclusivity. Except as provided in Schedule 6.10
attached hereto, except as may be necessary to comply with any fiduciary duty,
from the date hereof until such date as this Agreement is terminated, the
Sellers, PVF and Jemison shall negotiate with the Buyer with respect to the
acquisition of the Purchased Assets and shall not directly or indirectly: (a)
solicit any other buyers for all or any part of the capital stock of the
Sellers, PVF or Jemison or any of the Purchased Assets; (b) encourage any third
parties to bid for any of the Purchased Assets

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or to purchase shares of the capital stock of Sellers, PVF or Jemison or
participate in any negotiations or discussions with any such third parties with
respect thereto; (c) provide business or financial information (not otherwise
publicly available) concerning Sellers to any third parties; or (d) assist or
cooperate with any third party to make any proposal to purchase all or any part
of the capital stock or assets of Sellers, PVF or Jemison. Sellers, PVF and
Jemison will immediately notify Buyer if they becomes aware of any efforts by
any Person to, directly or indirectly, in any manner whatsoever, acquire
Sellers, PVF or the Purchased Assets and will cooperate with Buyer by
furnishing any information that they may reasonably request in contesting any
such efforts. In addition, Sellers, PVF and Jemison shall direct their
financial and other advisors and representatives to comply with each of the
foregoing covenants.

Section 6.11 Insurance Policies. All insurance policies of
Sellers in effect as of the date hereof shall be kept in full force and effect
until the first to occur of (a) three (3) business days after the Closing or
(b) notification that the Buyer's insurance has become effective.

Section 6.12 Activities by Buyer Prior to Closing. Buyer agrees
that from and after the date hereof to the Closing Date, Buyer will, in all
material respects, conduct its business only in the ordinary course consistent
with past practices and will not take any action or commit to take any action,
or permit any action to occur, and Buyer covenants that no such action shall
occur, that would be of a nature that would require disclosure as an exception
to the representation and warranty made by Buyer in Section 4.13 of this
Agreement. Buyer will also promptly advise Sellers, PVF and Jemison in writing
of any change or inaccuracy in any document, Schedule, Exhibit or other
information given to Sellers, PVF or Jemison by Buyer pursuant to the terms and
conditions of this Agreement. Buyer further shall use its reasonable efforts
to perform or fulfill all of its covenants and conditions to be performed or
fulfilled by it under this Agreement and shall keep Sellers, PVF and Jemison
reasonably informed concerning material events relating to the conduct of its
business.

ARTICLE VII

CASUALTY AND CONDEMNATION

Section 7.01 Casualty. If prior to the Effective Time, any
material portion of the Purchased Assets are damaged or destroyed by fire or
any other casualty, the Sellers will promptly give notice of the same to the
Buyer. In such event, if the amount of loss from such fire or casualty exceeds
One Hundred Thousand Dollars ($100,000), at the Buyer's option, the Buyer will
have the right to terminate this Agreement by giving notice thereof to the

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Sellers. If the Buyer terminates this Agreement pursuant to this Section 7.01,
or if the loss from such casualty does not exceed such amount, this Agreement
will become null and void, and the Sellers and the Buyer will thereupon have no
further liabilities or obligations under this Agreement or otherwise hereunder,
except as specifically provided in Sections 6.03(e), 6.05 and 13.01. If the
Buyer elects not to terminate this Agreement pursuant to this Section 7.01, or
if the loss from such casualty does not exceed such amount, and the
transactions contemplated by this Agreement are consummated, the Buyer will be
entitled to the benefits of all insurance proceeds and claims relating to any
such fire or casualty loss (except business interruption insurance), and the
Sellers will at or prior to Closing assign to the Buyer all such insurance
proceeds and claims, provided that such insurance shall be considered a
Purchased Asset for purposes of Article II of this Agreement. The Sellers will
inform the Buyer of any negotiations with respect to insurance claims involving
any damaged Purchased Assets, will permit the Buyer to take part therein, and
will not settle any such claims without the Buyer's prior written consent,
which consent shall not be unreasonably withheld.

Section 7.02 Condemnation. If any authority having the right of
eminent domain commences legal action for the damaging, taking or acquiring of
any of the Purchased Assets or the real property subject to the Assumed Leases,
either temporarily or permanently, by condemnation or by exercise of the right
of eminent domain (a "Taking"), the Sellers will promptly give notice of the
same to the Buyer. In the event of a Taking in which the amount of loss
therefrom exceeds One Hundred Thousand Dollars ($100,000), at the Buyer's
option, the Buyer will have the right to terminate this Agreement by giving
notice thereof to the Sellers. If the Buyer terminates this Agreement pursuant
to this Section, this Agreement will become null and void, and none of the
parties hereto will thereupon have any further liabilities or obligations under
this Agreement or otherwise hereunder, except as specifically provided in
Sections 6.03(e), 6.05 and 13.01. If the Buyer elects not to terminate this
Agreement pursuant to this Section 7.02 or if the loss from such Taking does
not exceed such amount, and the transactions contemplated by this Agreement are
consummated, the Buyer will be entitled to the benefits of all awards, claims,
settlement proceeds, and other proceeds payable by reason of any such Taking,
and the Sellers will assign to the Buyer all awards, claims, settlement
proceeds, or other proceeds payable by reason of any such Taking; provided that
all property subject to such Taking and all awards, claims, settlement
proceeds, and other proceeds payable by reason of any such Taking shall be
considered a Purchased Asset for purposes of Article II of this Agreement. In
the event of any negotiations with respect to any of the Purchased Assets with
any authority regarding settlement on account of any Taking, the Sellers will
inform the Buyer of all such negotiations, will permit the Buyer to take part
therein, and will not enter into

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any settlements thereof without the Buyer's prior written consent, which
consent shall not be unreasonably withheld.

ARTICLE VIII

CONDITIONS TO OBLIGATIONS OF BUYER

The obligations of the Buyer to consummate the transactions
contemplated hereby will be subject to the satisfaction or the waiver by the
Buyer, at or prior to the Closing Date, of each of the following conditions
precedent (Buyer hereby acknowledges that all conditions precedent to the
Closing of the transactions contemplated by this Agreement which have not been
performed by Sellers prior to Closing shall, subject to the last sentence of
Section 8.03, be deemed to be waived by the Buyer as of the Closing):

Section 8.01 Representations and Warranties. The representations
and warranties of the Sellers, PVF and Jemison contained in this Agreement, the
Exhibits hereto, or in any other document expressly required to be delivered by
Sellers, PVF or Jemison pursuant to this Agreement, shall have been true and
correct in all material respects on the date such representations and
warranties were made, and at the Closing, as though made on and as of the
Closing Date; provided, however, that the foregoing condition shall be deemed
to be satisfied except where the failure to be so true and correct shall
reasonably be expected to result in a material adverse change in the
consolidated financial condition or results of operation of PVF and Sellers or,
following the Effective Time, of Buyer, in excess of an aggregate amount of
$2,500,000.

Section 8.02 Performance of Covenants, Agreements and Obligations.
Each covenant, agreement and obligation of the Sellers, PVF or Jemison to be
performed on or before the Closing Date pursuant to the terms and provisions of
this Agreement will have been duly performed and complied with in all material
respects on or before the Closing Date, and at the Closing.

Section 8.03 Certificate. The Buyer shall have received a
certificate in the form annexed hereto as EXHIBIT 8.03 dated the Closing Date,
signed by the appropriate officers of the Sellers, PVF and Jemison as to the
satisfaction of the conditions contained in Sections 8.01 and 8.02, with such
additional disclosures as shall be required to make such certificate true and
accurate in all material respects. Disclosures in such certificates shall be
deemed to be disclosures hereunder for all purposes of this Agreement, in which
event the Buyer may refuse to close the transactions contemplated hereby if any
such additional disclosures are not acceptable to the Buyer and they result in
the threshold referenced in the last clause of Section 8.01 being exceeded, but

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such additional disclosures shall not be deemed a breach of a representation or
warranty by the Sellers, Jemison or PVF prior to or after Closing, and the sole
remedy by Buyer on account thereof shall be termination of this Agreement. In
the event that such additional disclosures are not reasonably acceptable to
Buyer and they do not result in the threshold referenced in the last sentence
of Section 8.01 being exceeded, and the transactions contemplated by this
Agreement are consummated on the Closing Date, then Buyer shall be entitled to
preserve, by notice in writing given to Sellers at the Closing, a claim for
indemnification under Article XI against Sellers, PVF and Jemison on account of
the inaccuracy of any representations and warranties made as of the date hereof
resulting from such additional disclosures, subject to the limitations with
respect to indemnification set forth in Article XI, including, without
limitation, Section 11.05, and provided that the loss arising out of such claim
has not otherwise been accrued for in accordance with GAAP on the Closing Date
Balance Sheet.

Section 8.04 Prohibitions. No claim, action, suit, investigation,
arbitration or legal or other proceeding or governmental investigation will be
pending or threatened in writing before any court or governmental agency which
(i) presents a substantial risk of the restraint or prohibition of the
transactions contemplated by this Agreement or (ii) could materially adversely
affect the right of the Buyer to acquire or utilize the Purchased Assets.

Section 8.05 Opinion of Sellers' Counsel. At the Closing, the
Buyer will have been furnished the written opinions of Johnston, Barton,
Proctor, & Powell (as to Sellers and PVF), and Bradley, Arant, Rose & White (as
to Jemison), all dated the Closing Date, in form and substance satisfactory to
such counsel and reasonably satisfactory to the Buyer and its counsel.

Section 8.06 Authority. All actions required to be taken by, or
on the part of, the Sellers, PVF and Jemison to authorize the execution,
delivery and performance of this Agreement and all agreements required to be
executed and delivered under the terms of this Agreement, and the consummation
of the transactions contemplated hereby and thereby will have been duly and
validly taken by the Boards of Directors and the shareholders of the Sellers,
PVF and Jemison, if necessary, and the Buyer shall have received copies of all
such resolutions certified by the Secretary of the Sellers, PVF and Jemison.

Section 8.07 Required Consents. On the Closing Date, the parties
(other than the Sellers, PVF or Jemison) to all of the Assumed Leases and the
Assumed Contracts, any governmental agency or body or any other person, firm or
corporation which owns or has authority to grant any franchise, license,
permit, easement, right or other authorization necessary for the business or
operations of the Sellers or the Purchased Assets which will be transferred by

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the Sellers to the Buyer pursuant to this Agreement, and any governmental body
or regulatory agency having jurisdiction over the Buyer, the Sellers, PVF or
Jemison, to the extent that their consent or approval is required under the
pertinent debt, lease, contract, commitment or agreement or other document or
instrument or under applicable laws, rules or regulations for the consummation
of the transactions contemplated hereby (including receipt of all consents
required by H-S-R and the expiration of all applicable writing periods required
by H-S-R), and for the continued operation by the Buyer of Sellers' business in
the same manner which the Sellers operated their business prior to the Closing,
will have granted such consent or approval, except where the failure to grant
such consent or approval would not have a Sellers' Material Adverse Effect or,
following the Closing, a Buyer's Material Adverse Effect, and except where the
failure to grant such consent or approval would not result in the threshold
referenced in the last clause of Section 8.01 being exceeded.

Section 8.08 UCC Search Report. Prior to the Closing, the Buyer
shall have received UCC search reports dated as of a date not more than five
(5) days before the Closing Date issued by the appropriate governmental bodies
indicating that there are no filings under the Uniform Commercial Code on file
with such governmental bodies which indicate any Encumbrances on the Purchased
Assets, other than those Encumbrances which will be released at Closing, or
except as approved by Buyer pursuant to Section 6.08 or as set forth on
Schedule 5.07 attached hereto, or except those Encumbrances which would not
have a Sellers' Material Adverse Effect or, following the Closing, a Buyer's
Material Adverse Effect.

Section 8.09 Noncompetition Agreements. PVF and Jemison shall
have entered into, and shall have caused each of the Sellers, H. Corbin Day,
James D. Davis, J. D. Brown, Jr., and J. David Brown III, to enter into, the
Noncompetition Agreements attached hereto as EXHIBIT 3.04(A).

Section 8.10 Employment Agreements. The Buyer and Michael L.
Stanwood shall have entered into an Employment Agreement in the form of EXHIBIT
3.04(E) hereto.

Section 8.11 Environmental Matters. In the event that between the
date hereof and the Closing, Hazardous Materials are discovered on any of the
Property, which Hazardous Materials are reasonably likely to give rise to
Hazardous Materials Liabilities to Buyer after Closing in an amount in excess
of Two Hundred and Fifty Thousand Dollars ($250,000), then either (i) Buyer,
Sellers or PVF and Jemison shall have entered into arrangements satisfactory to
Buyer in its sole discretion for the remediation or satisfaction by Sellers,
PVF and Jemison of such Hazardous Materials Liabilities, or (ii) Sellers, PVF
and Jemison shall have made arrangements for the transfer of the operations
conducted at

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the site from which such Hazardous Materials Liabilities arise to a new
location in a manner that cannot reasonably be expected to cause Buyer to have
any responsibility following the Closing for such Hazardous Materials
Liabilities or to result in a material disruption of the conduct of the
Business by Buyer following the Closing. It is understood that if Hazardous
Materials are discovered on any of the Property between the date hereof and the
Closing Date, which Hazardous Materials are reasonably likely to give rise to
Hazardous Materials Liabilities to Buyer following the Closing in an amount
less than Two Hundred Fifty Thousand Dollars ($250,000), then such liabilities
shall be the responsibility of Sellers, PVF, and Jemison, without regards to
the Threshold Amount. This Section 8.11 is not limited by any disclosure made
under Section 5.25 or the Schedule referenced therein.

Section 8.12 Escrow Agreement. At the Closing, Buyer, Sellers,
PVF, Jemison and Maguire, Voorhis & Wells, P.A. (the "Escrow Agent"), shall
have entered into an escrow agreement (the "Escrow Agreement") substantially in
the form annexed hereto as EXHIBIT 8.12, and pursuant thereto, Buyer shall have
deposited the Escrowed Shares (as determined in accordance with Section 2.01(i)
of this Agreement). The Escrowed Shares shall be held by the Escrow Agent and
shall be held for disbursement in accordance with the terms of such Escrow
Agreement.

Section 8.13 Approval of Counsel. All actions, proceedings,
instruments and documents required to carry out this Agreement, or incidental
thereto, and all other related legal matters, shall have been approved as to
form and substance by counsel to the Buyer, which approval shall not be
unreasonably withheld or delayed.

Section 8.14 Other Documents. On the Closing Date, the Buyer will
have been provided with such other documents as it may have reasonably
requested from the Sellers, PVF or Jemison that are consistent with the terms
and conditions of this Agreement and are customary in transactions of this
nature.

ARTICLE IX

CONDITIONS TO OBLIGATIONS OF SELLERS

The obligations of the Sellers, PVF and Jemison to effect the
transactions contemplated hereby will be subject to the satisfaction or the
waiver by the Sellers, PVF and Jemison at or prior to the Closing Date, of the
following conditions precedent (Sellers hereby acknowledge that all conditions
precedent to the Closing of the transactions contemplated by this Agreement
which have not been performed by Buyer prior to Closing, subject to the last
sentence of Section 9.03, shall be deemed to be waived by the Sellers, PVF and
Jemison as of the Closing):

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Section 9.01 Representations and Warranties. The representations
and warranties of the Buyer contained in this Agreement, the Exhibits hereto,
or in any other document expressly required to be delivered by the Buyer
pursuant to this Agreement, shall have been true and correct in all material
respects on the date such representations and warranties were made, and at the
Closing, as though made on and as of the Closing Date; provided, however, that
the foregoing condition shall be deemed to be satisfied except where the
failure to be so true and correct shall reasonably be expected to result in a
material adverse change in the consolidated financial condition or results of
operations of Buyer following the Effective Time in an aggregate amount in
excess of $5,000,000.

Section 9.02 Performance of Covenants, Agreements and Obligations.
Each covenant, agreement and obligation of the Buyer to be performed by it on
or before the Closing Date pursuant to the terms and provisions of this
Agreement will have been duly performed and complied with in all material
respects on or before the Closing Date, and at the Closing.

Section 9.03 Certificate. The Sellers shall have received a
certificate in the form annexed hereto as EXHIBIT 9.03 dated the Closing Date,
signed by the authorized officer of the Buyer as to the satisfaction of the
conditions contained in Sections 9.01 and 9.02, with such additional
disclosures as shall be required to make such certificate true and accurate in
all material respects. Disclosures in such certificates shall be deemed to be
disclosures hereunder for all purposes of this Agreement, but the Sellers, PVF
and Jemison shall nevertheless retain the right to refuse to close the
transactions contemplated hereby if any such additional disclosure is not
acceptable to the Sellers, PVF and Jemison and they result in the threshold
referenced in the last clause of Section 9.01 being exceeded, but such
additional disclosures shall not be deemed a breach of a representation or
warranty by Buyer prior or after Closing, and the sole remedy by Sellers, PVF
and Jemison on account thereof shall be termination of this Agreement. In the
event that such additional disclosures are not reasonably acceptable to
Sellers, PVF and Jemison and they do not result in the threshold referenced in
the last sentence of Section 9.01 being exceeded, and the transactions
contemplated by this Agreement are consummated on the Closing Date, then
Sellers, PVF and Jemison shall be entitled to preserve, by notice in writing
given to Buyer at the Closing, a claim for indemnification against Buyer under
Article XI on account of the inaccuracy of any representations and warranties
made as of the date hereof resulting from such additional disclosures, subject
to the limitations with respect to indemnification set forth in Article XI,
including, without limitation, Section 11.05.

Section 9.04 Prohibitions. No claim, action, suit, investigation,
arbitration or legal or other proceeding or

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governmental investigation will be pending or threatened in writing before any
court or governmental agency which presents a substantial risk of the restraint
or prohibition of the transactions contemplated by this Agreement.

Section 9.05 Authority. All actions required to be taken by, or
on the part of, the Buyer to authorize the execution, delivery and performance
of this Agreement and all agreements required to be executed and delivered
under the terms of this Agreement, and the consummation of the transactions
contemplated hereby and thereby will have been duly and validly taken by the
Board of Directors of Buyer (and the Stockholders if required), and the
Sellers, PVF and Jemison shall have received copies of all such resolutions
certified by the Secretary of the Buyer.

Section 9.06 Opinions of Buyer's Counsel. At the Closing,
Sellers, PVF and Jemison will have been furnished the written opinions of
Benjamin P. Butterfield, Esq., and Maguire, Voorhis & Wells, P.A., counsel for
Buyer, all dated the Closing Date, in form and substance reasonably
satisfactory to Sellers, PVF and Jemison and their counsel, and reasonably
satisfactory to Buyer and its counsel.

Section 9.07 H-S-R. The applicable waiting period, together with
any extension thereof, under H-S-R shall have expired or been terminated, and
the other consents referenced in Section 8.07 shall have been obtained.

Section 9.08 Employment Agreements. The Buyer and Michael L.
Stanwood shall have entered into the Employment Agreement in the form of
EXHIBIT 3.04(E) hereto.

Section 9.09 Environmental Matters. Between the date hereof and
the Closing Date, there shall not have been discovered on any of the Property
any Hazardous Materials that are reasonably likely to give rise to Hazardous
Materials Liabilities to PVF, Sellers or Jemison, or to Buyer after Closing for
which PVF,Sellers or Jemison will be responsible, in an amount in excess of Two
Hundred Fifty Thousand Dollars ($250,000).

Section 9.10 Approval of Counsel to the Sellers, PVF and Jemison.
All actions, proceedings, instruments and documents required to carry out this
Agreement or incidental thereto, and all other related legal matters shall have
been approved as to form and substance by Johnston, Barton, Proctor & Powell
(as to Sellers and PVF), and by Bradley, Arant, Rose & White (as to Jemison),
which approvals shall not be unreasonably withheld or delayed.

Section 9.11 Other Documents. On the Closing Date, the Sellers,
PVF and Jemison will have been provided with such other documents as they may
have reasonably requested from the Buyer that are consistent with the terms and
conditions of this Agreement.

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ARTICLE X

TRANSFERS OF BUYER'S COMMON STOCK; REGISTRATION RIGHTS;
RULE 144 AND RULE 144(k)

Section 10.1 Transfers of Buyer Shares. The Sellers and the
Stockholders (as hereinafter defined) shall not sell or otherwise transfer any
of the Buyer's Common Stock delivered to Sellers under this Agreement (the
"Buyer Shares"), for a period of ninety (90) days after the Closing Date, or
such longer period, not to exceed one hundred eighty (180) days following the
Closing Date, as the Buyer and its executive officers may be obligated under
the underwriting agreement executed in connection with the sale of the
Securities referred to in Article II hereof not to sell shares of the Buyer
Common Stock; provided, however, that following the Closing, it is contemplated
that Sellers may liquidate or dissolve and that the Buyer Shares will be
transferred to the direct and indirect stockholders of Sellers, including
without limitation, Jemison; and provided, further, that immediately prior to
or following the Closing, it is contemplated that certain members of the
management of PVF and Sellers (the "Management Stockholders") will sell their
interest in PVF to Jemison in exchange for a promissory note and the right to
receive some of the Buyer Shares. Such transferees of Sellers and the
Management Stockholders are hereinafter referred to as the "Stockholders." The
parties hereto expressly acknowledge and agree that such transfers shall be
permitted and that both the Sellers and the Stockholders, and their respective
successors and permitted assigns, shall be deemed "Holders" for purposes of,
and shall otherwise be entitled to the benefits of, this Article X.

Section 10.2 Registration for Resale. As soon as practicable
following the Closing Date, but in no event more than ninety (90) days
following the Closing Date, the Buyer will file a registration statement with
the SEC to register the Buyer Shares under the Securities Act for resale by the
Holders from time to time in transactions on the New York Stock Exchange, in
negotiated transactions, or in a combination of such methods of sale (the
"Initial Registration"), and shall use its best efforts to cause such
registration statement to become effective under the Act as soon as practicable
thereafter. For so long as such registration statement is required to be kept
effective, such registration statement shall be in form and substance
reasonably satisfactory to Sellers and their counsel and shall be amended or
supplemented (or a new registration statement filed) from time to time as may
be necessary to add additional Holders, to change the method of distribution of
the shares (including, without limitation, to distribute such shares in an
underwritten public offering) and otherwise to accomplish any sales of Buyer
Shares by the Holders. Buyer shall keep such registration statement effective
for a period of not less than three (3) years after the Closing Date, three (3)
years after the liquidation or dissolution of Sellers, three (3)

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years following the receipt by the Management Stockholders of Buyer Shares, or
three (3) years after delivery of Common Stock to Sellers by Buyer pursuant to
Section 2.01(viii)(a), whichever is longer, but in no event more than four (4)
years after the Closing Date (the "Initial Registration Period").

Section 10.3 Demand Registration.

(a) In addition to and not in lieu of the rights granted
in Section 10.2 above, during the period of three (3) years after the Initial
Registration Period, any Holder or Holders who are "Affiliates" of Buyer within
the meaning of the Securities Act and applicable regulations thereunder may make
a written request to Buyer for registration under the Securities Act of Buyer
Shares, subject to the conditions hereinafter set forth (the "Demand
Registration"). Such request will specify the number of Buyer Shares proposed
to be sold and will also specify the intended method of disposition thereof.
Following such request, Buyer will use its best efforts to effect, as
expeditiously as possible, the registration under the Securities Act of the
Buyer Shares which Buyer has been so requested to register by such Holder or
Holders so as to permit the disposition (in accordance with the intended methods
thereof as aforesaid) of such Buyer Shares and Buyer shall keep such
registration statement effective for a period of not less than 270 days.

(b) The obligations of Buyer to take the actions
contemplated by Section 10.3(a) with respect to an offering of Buyer Shares
shall be subject to the following conditions:

(i) the Buyer Shares requested to be registered
shall not constitute more than 50% of the Buyer Shares then held by Holders;
and

(ii) the Buyer shall not be obligated to make more
than one Demand Registration during the period set forth in Section 10.3(a).

Section 10.4 Piggyback Registration. During the Initial
Registration Period and the period during which a Holder is entitled to effect a
demand registration under Section 10.3 above, any Holder shall have the right to
include Buyer Shares as part of any other applicable registration statement
filed by the Buyer (a "Piggyback Registration"); provided, however, that if, in
the written opinion of the Buyer's managing underwriter or underwriters, if any,
for such offering, the inclusion of the Buyer Shares, when added to the
securities being registered by the Buyer or other selling shareholder(s), will
exceed the maximum amount of the Buyer's securities which can be marketed (i) at
a price reasonably related to their then current market value; or (ii) without
materially and adversely affecting the entire offering, then the Buyer may
exclude from such offering that number of shares

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of Common Stock requested to be so registered as exceeds such maximum amount;
but provided, further, that if any such Common Stock is so excluded, then the
number of securities to be sold by all shareholders in such public offering
shall be apportioned pro rata among all such selling shareholders, including
such Holder, according to the total amount of securities of the Buyer owned by
said selling shareholders, including such Holder. The Buyer shall cause any
registration statement filed pursuant to these "piggyback" rights to remain
effective for at least ninety (90) days from the date that such Holder is first
given the opportunity to sell any part of the Buyer Shares registered under
this Section 10.4.

Section 10.5 Filings; Registration Procedures. In connection with
the Initial Registration, the Demand Registration or any Piggyback Registration
of Buyer Shares, and any registration statement filed in connection therewith:

(a) Holders shall cooperate with Buyer and its
representatives and upon request shall promptly furnish such information
regarding the Holders and the distribution proposed by such Holders as is
reasonably requested by Buyer for inclusion in the registration statement, or
any amendment or supplement thereto.

(b) Holders and Buyer agree in connection with any
underwritten registration of Buyer Shares to enter into an appropriate
underwriting agreement containing terms and provisions (including reasonable
provisions as to opinions of counsel, comfort letters, covenants,
representations and warranties and indemnification and contribution) customary
in such agreements.

(c) Buyer shall use its best efforts to cause the
registration statement to become effective as soon as possible and to prepare
and file with the SEC, as expeditiously as possible, any amendments and
supplements to the registration statement as may be necessary.

(d) Buyer shall, as expeditiously as possible, use its
best efforts to register or qualify the Buyer Shares covered by the
registration statement under the securities or Blue Sky laws of those states
set forth on schedules to be furnished to the Buyer by Holders listing those
states in which it is reasonable that registration or qualification will be
required to enable Holders to consummate the sale or other disposition of the
Buyer Shares by Holders, and do any and all other acts and things that may be
necessary or desirable to enable Holders to consummate the sale or other
disposition of the Buyer Shares owned by them; provided, however, that Holders
holding Buyer Shares included in any such registration statement shall furnish
in writing to the Buyer such information regarding such Holders and the
distribution proposed by such Holders as the Buyer may reasonably request in
writing and as shall be required in connection with any registration,
qualification or compliance under such state securities or Blue Sky

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laws; and, provided, further, that Buyer shall not be obligated to qualify as a
foreign corporation to do business under the laws of any jurisdiction in which
it is not then qualified or to file any general consent to service of process.

(e) Buyer shall, as expeditiously as possible, use its
best efforts to list or register the Buyer Shares on the New York Stock
Exchange and to maintain such listing in such manner as may be necessary to
permit sales of such shares under this Article X.

(f) Buyer shall pay all expenses incurred by Buyer in
complying with this Article X, including, without limitation, registration
fees, exchange listing fees, printing expenses, fees and disbursements of
counsel for the Buyer, state Blue Sky fees and expenses, and the expense of any
special audits incident to or required by any such registration, and the
Holders shall pay all underwriting discounts and selling commissions, if any,
and the fees and expenses of their legal counsel and accountants.

(g) Buyer will, if requested prior to filing such
registration statement or any amendment or supplement thereto, furnish to
Holders and each underwriter, if any, copies thereof, and thereafter furnish to
Holders and each such underwriter such number of copies of such registration
statement, amendment and supplement thereto (in each case including all
exhibits thereto and documents incorporated by reference therein) and the
prospectus included in such registration statement (including each preliminary
prospectus), as Holders or each such underwriter may reasonably request in
order to facilitate the sale of the Buyer Shares, each of which registration
statement, amendment and supplement shall be in form and substance reasonably
satisfactory to such Holders and underwriters.

(h) Buyer will, as promptly as is practicable, notify
Holders at any time when a prospectus relating to the sale of the Buyer Shares
is required by law to be delivered in connection with sales by a Holder,
underwriter or dealer, of the occurrence of any event requiring the preparation
of a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Buyer Shares, such prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
and shall promptly make available to Holders and to the underwriters any such
supplement or amendment, which shall be subject to the reasonable prior approval
of Holders and the underwriters. Holders will, upon receipt of any notice from
Buyer of the occurrence of any event of the kind described in the preceding
sentence, discontinue the offer and sale of Buyer Shares pursuant to the
registration statement covering such Buyer Shares until receipt by Holders and
the underwriters, if any, of the copies of such supplemented or amended
prospectus and, if so

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directed by Buyer, Holders will deliver to Buyer all copies, other than
permanent file copies then in Holders' possession, of the most recent
prospectus covering such Buyer Shares at the time of receipt of such notice.
In the event Buyer shall give such notice, Buyer shall extend the period during
which such registration statement shall be maintained effective by the number
of days during the period from and including the date of the giving of such
notice to the date when the Buyer shall make available to Holders such
supplemented or amended prospectus.

(i) Buyer shall make available for inspection by Holders,
any underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by Holders or
any such underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of Buyer (collectively,
the "Records") as shall be reasonably necessary to enable them to exercise their
due diligence responsibility, and shall cause the officers, directors and
employees of Buyer to supply all information reasonably requested by any such
Inspector in connection with such registration, provided that (i) records and
information obtained hereunder shall be used by such persons only to exercise
their due diligence responsibility and (ii) records or information which Buyer
determines in good faith to be confidential shall not be disclosed by the
Inspectors unless (x) the disclosure of such records or information is necessary
to avoid or correct or to make the Inspectors aware of a misstatement or
omission in the registration statement or (y) the release of such records or
information is ordered pursuant to a subpoena or other order from a court or
governmental authority of competent jurisdiction. Upon learning that disclosure
of such records or information is sought by a court or governmental authority,
Holders shall give notice to Buyer and allow Buyer, at the expense of Buyer, to
undertake appropriate action to prevent disclosure of the records or information
deemed confidential. Information obtained by Holders as a result of such
inspections shall be deemed confidential and shall not be used by any Holder as
the basis for any market transactions in the securities of Buyer or its
affiliates unless and until such information is made generally available to the
public.

(j) Buyer will furnish to Holders and to each underwriter,
if any, a signed counterpart, addressed to Holders and such underwriter, if any,
of (i) an opinion or opinions of counsel to Buyer and (ii) a comfort letter or
comfort letters from Buyer's independent public accountants, each in customary
form and covering such matters of the type customarily covered by opinions or
comfort letters, as the case may be, as Holders or the underwriter reasonably
requests.

(k) Holders shall conform to all applicable requirements
of the Securities Act and the Exchange Act with respect to the

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offering and sale of securities, and, if applicable, shall advise each
underwriter, broker or dealer through which any of the Buyer Shares are offered
that the Buyer Shares are part of a distribution that is subject to the
prospectus delivery requirements of the Securities Act.

(l) With respect to any registration statement effected
pursuant to this Article X, Buyer agrees to indemnify and hold harmless Holders,
and their respective successors, assigns, heirs, estates, and representatives,
officers and directors and each person, if any, who controls any Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, against any and all losses, claims, damages, or liabilities to which
Holders or any such persons or entities may become subject under the Act or any
other statute or common law, and to reimburse Holders and such persons for any
reasonable legal or other expenses actually and reasonably incurred by any of
them in connection with investigating any claims and defending any actions,
insofar as such losses, claims, damages, liabilities, or actions arise out of or
are based upon any untrue statement, or alleged untrue statement, of a material
fact contained in or incorporated by reference in any preliminary prospectus
included in the registration statement or filed with the SEC pursuant to Rule
424(a) under the Securities Act (the "Preliminary Prospectus"), the registration
statement or the final prospectus filed pursuant to Rule 424(b) under the
Securities Act (the "Prospectus"), or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the indemnification provisions contained in
this Section 10.5 shall not apply to such losses, claims, damages, liabilities,
or actions arising out of, or based upon any untrue statement or alleged untrue
statement, or any omission or alleged omission, if such statement or omission
was made in reliance upon and in conformity with written information furnished
by Holders specifically for inclusion in the registration statement or such
Preliminary Prospectus or Prospectus or any such amendments thereof or
supplement thereto.

(m) With respect to any registration statement effected
pursuant to this Article X, Holders, jointly and severally, agree to indemnify
and hold harmless Buyer and each Person, if any, who controls Buyer within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
its directors and those officers of Buyer who shall have signed the
registration statement or any post-effective amendment thereof against any and
all losses, claims, damages or liabilities to which Buyer or any such person
may become subject under the Act or any other statute or common law, and to
reimburse Buyer and such persons for any reasonable legal or other expenses
actually and reasonably incurred by any of them in connection with
investigating any claims and defending any actions, insofar as such losses,
claims, damages, liabilities or

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actions arise out of or are based upon any untrue statement, or alleged untrue
statement, of a material fact contained in or incorporated by reference in the
Preliminary Prospectus, the registration statement or the Prospectus or any
amendment thereof or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent that
such untrue statement or alleged untrue statement or alleged omission was made
in any Preliminary Prospectus, the registration statement or the Prospectus or
any amendment thereof or supplement thereto in reliance upon and in conformity
with any written information furnished to Buyer by Holders specifically for
inclusion in the registration statement or such Preliminary Prospectus or
Prospectus or any such amendments thereof or supplements thereto.
Notwithstanding the foregoing, in no event shall any such Holder be liable to
the Buyer or any such person under this Section 10.5(m) in an aggregate amount
in excess of the net proceeds received by such Holder from the offering and
sale of Buyer Shares owned by such Holder.

(n) Each indemnified party under this Article X shall,
promptly after the receipt of notice of the commencement of any action against
such indemnified party in respect of which indemnity may be sought from an
indemnifying party on account of an indemnity agreement contained in this
Section 10.5, notify the indemnifying party in writing of the commencement
thereof; provided, however, that the omission to so notify the indemnifying
party shall not relieve the indemnifying party from any liability which it may
otherwise have to such indemnified party except to the extent that the
indemnified party's failure to notify the indemnifying party caused additional
damages to be sustained by such party or materially prejudiced the ability of
such party to defend against or prevent any loss, damage, or liability. If any
such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it elects by delivering
written notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, provided that such
counsel shall not be deemed unsatisfactory solely because it will also assume
the defense of one or more other indemnified parties. After notice from the
indemnifying party to such indemnified party of its election to assume the
defense thereof, the indemnifying party shall not be responsible to such
indemnified party under this Section 10.5 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof except as provided below. The indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such

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indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (3) a
conflict or potential conflict of interest exists (based on advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party or (4) the indemnifying party has not in fact employed counsel to assume
the defense of such action within a reasonable time after receiving notice of
the commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of such counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm admitted to practice in such
jurisdiction at any one time for all such indemnified parties. An indemnifying
party will not be liable for any settlement of any action or claim effected
without its written consent, which consent will not be unreasonably withheld.

(o) If the indemnification provided for in this Section
10.5 from the indemnifying party is unavailable to an indemnified party for any
loss, claim, damage, liability, or expense covered thereby, then the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage, liability, or expense. The contribution of such
indemnifying party shall be limited to the proportionate share of the amount
paid or payable that reflects the relative fault of the indemnifying party with
respect to such loss, claim, damage, liability, or expense, and, in the case of
a Holder, shall further be limited as provided in the last sentence of Section
10.5(m). The relative fault shall be determined by reference to, among other
things, whether any untrue or alleged untrue statement of material fact or any
omission or alleged omission of a material fact was made by or relates to
information supplied by the indemnifying party. The parties to this Agreement
agree that it would not be just and equitable to determine contribution under
this Section 10.5 by pro-rata allocation or by any other method which does not
take into account the equitable considerations referred to above.
Notwithstanding anything to the contrary in this Section 10.5, no Person found
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not found guilty of fraudulent misrepresentation.

Section 10.6 Rule 144; Removal of Legends. Buyer covenants that it
will file on a timely basis the reports required to be filed by it under the
Securities Act and the Exchange Act and the

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rules and regulations adopted by the SEC thereunder, and it will take such
further action as any Holder may reasonably request, all to the extent required
from time to time to enable Holders to sell Buyer Shares without registration
under the Securities Act within the limitation of the exemptions provided by
(i) Rule 144 and Rule 144A under the Securities Act, as such rules may be
amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of any Holder, Buyer will deliver to
Holders a written statement as to whether it has complied with such reporting
requirements. Whenever a Holder has met the requirements for transfer of any
of the Buyer Shares pursuant to subparagraph (k) of Rule 144 (as amended from
time to time), or pursuant to any successor provision thereof, Buyer shall
cause to be issued upon request to such Holder a new certificate representing
such shares that does not bear a restrictive legend regarding transferability
under applicable federal or state securities laws.

Section 10.7 Remedies. In case any one or more of the covenants
and/or agreements set forth in this Article X shall have been breached by
either party, the other party may proceed to protect and enforce its rights
either by suit in equity and/or by action at law, including, but not limited
to, an action for damages as a result of any such breach and/or an action for
specific performance of any such covenant or agreement contained in this
Article X, and such remedies shall lie and be enforceable without regard to any
set-off, claim or defense that the breaching party may have or assert against
such other party, other than claims or defenses arising solely and exclusively
under this Article X.

Section 10.8 Cooperation of Sellers, PVF and Jemison. The
Sellers, PVF and Jemison agree: (i) that they will reasonably cooperate with
the Buyer and the underwriter in connection with the delivery of information
concerning the Sellers, PVF and Jemison which is included in Buyer's
Registration Statement which is being prepared by Buyer for the sale of the
Securities (the "Offering"), which information relates to those transactions
described in this Agreement; (ii) that they will use reasonable efforts to
cause Sellers' Accountants to deliver comfort letters reasonably acceptable to
Sellers' Accountants to the underwriters in the Offering with respect to
audited historical financial information concerning the Sellers and PVF, which
information is included in such Offering documentation; and (iii) that they
will use reasonable efforts to cause their attorneys to permit the underwriters
in the Offering to rely upon those opinions which Buyer receives pursuant to
Section 8.05 of this Agreement.

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ARTICLE XI

INDEMNIFICATION

Section 11.01 Indemnification by the Sellers. The Sellers, PVF and
Jemison, regardless of any prior knowledge, inspection or investigation on the
part of the Buyer, hereby agree to indemnify and hold harmless the Buyer
against and in respect of any direct out-of-pocket loss, damage or expense
arising out of:

(a) Any claim, liability, or obligation suffered or
incurred by the Buyer resulting from or arising out of any misrepresentation,
breach, or non-fulfillment of any representation, warranty, covenant or
agreement on the part of the Sellers, PVF or Jemison contained in this
Agreement;

(b) Any liability or claim which may be asserted against
the Buyer arising at any time following the Effective Time in connection with
the Sellers' ownership or operation of the Business or Purchased Assets prior
to the Effective Time, including, without limitation, any liability incurred by
Buyer for sums accrued for on the Closing Date Financial Statements but which
later prove to be inadequate, other than with respect to Assumed Obligations
and matters with respect to which the Buyer has agreed to indemnify Sellers,
PVF or Jemison under this Agreement;

(c) All liabilities and obligations of the Sellers, PVF
or Jemison arising prior to the Effective Time of every kind and description,
regardless of how or when the same may have arisen, including the Excluded
Obligations, except with respect to the Assumed Obligations and matters with
respect to which Buyer has agreed to indemnify Sellers, PVF or Jemison under
this Agreement;

(d) All claims against, or claims of any interest in, or
of a lien upon, any or all of the Purchased Assets, which arise in connection
with events, acts, omissions, or circumstances occurring or existing on or
prior to the Effective Time, except as approved by Buyer pursuant to Section
6.08 and as set forth on Schedule 5.07 attached hereto, except with respect to
the Assumed Obligations and matters with respect to which Buyer has agreed to
indemnify Sellers, PVF or Jemison under this Agreement;

(e) Any liability or claim based on product liability,
including property damage or personal injury or death referable thereto, with
respect to an occurrence prior to the Effective Time involving products
delivered by Sellers prior to the Effective Time; and

(f) All actions, suits, investigations, proceedings,
demands, assessments, judgments, reasonable attorneys' fees, direct
out-of-pocket costs and expenses incident to the foregoing,

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including, but not limited to, any audit or investigation by any governmental
entity.

Section 11.02 Indemnification by the Buyer. The Buyer, regardless
of any prior knowledge, inspection or investigation on the part of the Sellers,
PVF or Jemison, hereby agrees to indemnify and hold harmless the Sellers, PVF
and Jemison against and in respect of any direct out-of-pocket loss, damage or
expense arising out of:

(a) Any claim, liability, or obligation suffered or
incurred by the Sellers, PVF or Jemison resulting from or arising out of any
misrepresentation, breach, or non-fulfillment of any representation, warranty,
covenant or agreement on the part of the Buyer contained in this Agreement;

(b) Any liability or claim asserted against the Sellers,
PVF or Jemison arising in connection with the Buyer's failure to pay or perform
any of its obligations with respect to the Assumed Obligations;

(c) Any liability or claim which may be asserted against
the Sellers, PVF or Jemison arising at any time following the Effective Time in
connection with the Buyer's ownership or operation of the Purchased Assets
subsequent to the Effective Time;
(d) Any liability or claim based on product liability or
warranty, including property damage and personal injury or death referable
thereto, with respect to an occurrence after the Effective Time involving
products delivered either by Sellers prior to the Effective Time or by Buyer
following the Effective Time; and

(e) All actions, suits, investigations, proceedings,
demands, assessments, judgments, reasonable attorneys' fees, direct
out-of-pocket costs and expenses incident to the foregoing, including, but not
limited to, any audit or investigation by any governmental entity.

Section 11.03 Survival of Obligation to Indemnify. The obligation
of each party hereto to indemnify the other party hereto shall survive the
Closing, the transfer of the Purchased Assets and the payment of the
consideration therefor until three (3) years following the Closing Date (the
"Indemnification Period"), and shall continue thereafter only with respect to
matters which the party seeking indemnity hereunder shall have given the other
party written notice of as provided herein prior to the expiration of the
Indemnification Period; provided, however, that the foregoing time limitation
shall not apply with respect to claims by Sellers, PVF or Jemison against Buyer
under Section 11.02(b) above. The Buyer shall be entitled to set-off against
the Promissory Note, if applicable, any loss, damage or expense with respect to
any indemnity claims which may arise under this Agreement.

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Section 11.04 Notice and Procedure. Any party claiming indemnity
hereunder (hereinafter referred to as the "Indemnified Party") shall give the
party against whom indemnity is sought (hereinafter referred to as the
"Indemnifying Party") prompt written notice after obtaining knowledge of any
claim or the existence of facts as to which recovery may be sought against the
Indemnifying Party because of the indemnity provisions set forth in this
Article XI. If such claim for indemnity arises in connection with a legal
action instituted by, or a claim made by, a third party (hereinafter a "Third
Party Claim"), the Indemnified Party hereby agrees that, within ten (10)
business days after it is served with notice of the assertion of any Third
Party Claim for which it may seek indemnity hereunder, the Indemnified Party
will notify the Indemnifying Party in writing of such Third Party Claim.

If the claim for indemnity arises in connection with a Third Party
Claim, the Indemnifying Party shall have the right at any time after receipt of
notice of such claim from the Indemnified Party to assume the defense (which
assumption may be made under a reservation of rights) and to control the
settlement and compromise of such action or claim at its sole expense. The
Indemnified Party shall cooperate in such defense as reasonably necessary to
enable the Indemnifying Party to conduct its defense, including providing the
Indemnifying Party with reasonable access to such records as may be relevant to
its defense. The Indemnifying Party shall be entitled to settle any such Third
Party Claim without the prior written consent of the Indemnified Party provided
that the Indemnifying Party provides the Indemnified Party with reasonable
assurances that the Indemnified Party will be fully indemnified by the
Indemnifying Party in connection with any such Third Party Claim. The
Indemnified Party shall be entitled to retain its own counsel at its own
expense in connection with any Third Party Claim that the Indemnifying Party
has elected to defend. If the Indemnifying Party elects not to conduct the
defense of a Third Party Claim, the Indemnified Party may defend and/or settle
such Third Party Claim; provided, however, that the Indemnifying Party shall
not be liable for any costs, damages or expenses arising out of any settlement
effected without its prior written consent, unless at the time of such
settlement the Indemnifying Party, upon being fully informed regarding the
terms of such settlement and the facts and circumstances regarding the Third
Party Claim, denies liability to the Indemnified Party for indemnification
under this Agreement. The Indemnified Party and the Indemnifying Party agree
to keep each other reasonably informed as to the progress of any matter that is
the subject of an indemnity claim under this Agreement. The Indemnified Party
further agrees to take any and all reasonable steps, including, without
limitation, those steps reasonably requested by the Indemnifying Party, to
mitigate any losses, damages or expenses with respect to any indemnity claim
under this Agreement and to cooperate with the defense thereof. In the event
it is ultimately determined that the Indemnified Party was not entitled to
indemnification under this Agreement, and the

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Indemnifying Party has nonetheless assumed the defense of such asserted
liability, then the Indemnified Party shall, at such time as it is ultimately
determined that the Indemnified Party was not entitled to indemnification,
reimburse the Indemnifying Party for the costs and expenses, including
reasonable attorney's fees, incurred by the Indemnified Party in connection
with such assumption.

Section 11.05 Limitation on Indemnification Obligations. An
Indemnified Party shall not be entitled to recover any amounts under this
Agreement until the total amount for which the Indemnified Party would seek a
recovery exceeds the sum of Five Hundred Thousand Dollars ($500,000) (the
"Threshold Amount"), and then the Indemnified Party may recover only such sums
which are in excess of the Threshold Amount, but in no event may the
Indemnified Party be entitled to recover an amount under this Agreement in
excess of Fifty Million Dollars ($50,000,000) (the "Indemnity Amount"), except
such limitation shall not apply with respect to matters excluded in Section
11.06 from the exclusivity provisions of such Section, to the failure of the
Buyer to pay the Adjusted Purchase Price under Article II of this Agreement, to
deliver or register duly authorized, fully paid and nonassessable Common Stock
to Sellers pursuant to Article II, or to any claim by Sellers, PVF or Jemison
under Section 11.02(b) hereof. Notwithstanding anything to the contrary
contained herein, the Buyer shall not be entitled to recovery under this
Article XI if the subject matter of the claim is recovered from title or other
insurance.

Section 11.06 Indemnification Exclusive Remedy. Except with
respect to intentional misrepresentation, indemnity obligations set forth in
Article X of this Agreement, and indemnity obligations set forth in Section
11.08 of this Agreement, indemnification pursuant to the provisions of this
Article XI shall be the sole and exclusive remedy of the parties hereto for any
misrepresentation or breach of any warranty, covenant or agreement contained in
this Agreement or in any closing document executed and delivered pursuant to
the provisions hereof, or any other claim arising out of the transactions
contemplated by this Agreement.

Section 11.07 Nature of Liability of Sellers, PVF and Jemison.
Each of the indemnity obligations of the Sellers, PVF and Jemison contained in
this Article XI are joint and several.

Section 11.08 Waiver of Bulk Sales and Indemnity. The parties
hereby waive compliance with all applicable bulk sales laws. The Sellers, PVF
and Jemison, however, agree to indemnify the Buyer and hold the Buyer harmless
from and against any and all loss, cost or expense in connection with any claim
(other than in respect of the Assumed Obligations or matters with respect to
which Buyer has agreed to indemnify Sellers, PVF or Jemison under this
Agreement) that would have been barred by the proper implementation

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of the practices and procedures called for under any applicable bulk sales
laws. The indemnity provided by the Sellers, PVF and Jemison under this
Section 11.08 (i) shall be in addition to and not in lieu of any indemnity
provided to the Buyer under Section 11.01, but the Buyer shall not be entitled
to collect from the Sellers, PVF and Jemison more than once for the same loss,
cost or expense, and (ii) shall not be subject to (x) the time limitations set
forth in Section 11.03 or (y) the limitation amount which is equal to the
Indemnity Amount set forth in Section 11.05.

Section 11.09 No Consequential Damages. With respect to any claim
for indemnity under this Agreement or any dispute between Buyer and Sellers,
PVF or Jemison arising out of this Agreement, no party shall be entitled to
recover from any other party or parties any consequential damages, any damages
for lost or future profits, or any punitive damages, except that such
limitation shall not apply in the case of intentional misrepresentation or
intentional fraud on the part of a party.

Section 11.10 Right of Set-Off. Upon the occurrence or failure of
an Indemnified Party to pay when due any amount required to be paid to an
Indemnifying Party, or on upon the occurrence or failure of an Indemnified
Party to satisfy any other liability or obligation from an Indemnified Party to
the Indemnifying Party, including, without limiting the generality of the
foregoing, any liability or obligation incurred under this Agreement, such
Indemnifying Party is authorized, but shall not be obligated, at any time and
from time to time, to set-off and apply such amount, liability or obligation
against any and all payments required to be paid or satisfied by such
Indemnifying Party under the terms of this Agreement, including, without
limitation, pursuant to the indemnification provisions of this Article XI.

ARTICLE XII

CONDUCT OF THE PARTIES AFTER CLOSING

Section 12.01 Cooperation. The Buyer, Sellers, PVF and Jemison
will cooperate upon and after the Closing Date in effecting the orderly
transfer of the Purchased Assets to the Buyer. Without limiting the generality
of the foregoing, the Sellers, PVF and Jemison at the request of the Buyer and
at the expense of Sellers, PVF and Jemison, but without additional
consideration, and without regard to any indemnity limitation, will execute and
deliver from time to time such further instruments of assignment, conveyance
and transfer, will sign any documents necessary or useful to ensure that all of
the right, title and interest in and to the Purchased Assets, the Assumed
Leases and the Assumed Contracts vests in the Buyer, will cooperate in the
conduct of litigation and the processing and collection of insurance claims
(subject to the rights and obligations of the parties regarding indemnification

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under this Agreement), and will take such other actions as may reasonably be
required to convey and deliver more effectively to the Buyer the Purchased
Assets, the Assumed Leases and the Assumed Contracts or to confirm and perfect
the Buyer's title thereto, as contemplated by this Agreement. PVF and Jemison
shall use reasonable efforts to cause the Sellers to take all actions to cause
the Buyer to be subrogated to any rights the Sellers may have under the
insurance policies of Sellers which cover the Purchased Assets prior to
Closing.

Section 12.02 Access to Books and Records. As long as the Buyer
retains the books and records of the Sellers acquired by the Buyer hereunder,
it will provide the Sellers with reasonable access during customary business
hours to such books and records for any legitimate business purpose and as long
as the Sellers retain the books and records retained by the Sellers hereunder,
they will provide the Buyer with reasonable access during customary business
hours to such books and records for any legitimate business purpose. All such
books and records shall be maintained in accordance with all applicable laws,
rules and regulations and for a period of not less than six (6) years
commencing on the Effective Time. Prior to the disposal of any such books and
records by any party hereto, such party shall provide sixty (60) days' prior
written notice to the other party and shall relinquish possession of such books
and records to such other party upon receipt of a written request therefor
within the sixty (60) day time period.

Section 12.03 Manufacturers' and Suppliers' Warranties. After the
Closing, the Sellers, PVF and Jemison will cooperate with and assist the Buyer,
but without liability or undue expense to Sellers, PVF or Jemison, and subject
to the rights of the parties to indemnification under this Agreement (but
without regard to the Threshold Amount), to pursue any manufacturers' and
suppliers' warranty claims pending as of the Closing Date or that may arise
thereafter with respect to the Purchased Assets.

Section 12.04 Use of License Tags. After the Closing, the Buyer
will use its reasonable best efforts to obtain new license tags at the earliest
practicable date for all of the Rolling Stock included in the Purchased Assets
that require license tags. Until the earlier of (a) the date the new license
tags are issued or (b) five (5) Business Days after the Closing Date, the Buyer
shall be entitled to operate the Rolling Stock included in the Purchased Assets
using the Sellers' license tags. The Buyer covenants and agrees that as long
as the Buyer operates using the Sellers' license tags it shall have insurance
policies in place, including umbrella policies providing motor vehicle
liability coverage for all owned, non-owned and hired vehicles operated by the
Buyer in an amount not less than One Million Dollars ($1,000,000) with
deductibles aggregating not more than One Thousand Dollars ($1,000) per
vehicle. The Buyer covenants and agrees to indemnify and hold harmless the
Sellers from and against all loss, cost or expense,

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including reasonable attorneys' fees, by reason of any suit, claim or demand
arising out of or resulting from the Buyer's operation of the Rolling Stock
after the Effective Time using the Sellers' license tags.

Section 12.05 Use of Name. The Sellers shall permanently
discontinue the use of the Sellers' corporate names or any name derived
therefrom or similar thereto effective upon the Closing Date. Within five (5)
Business Days after the Closing Date, the Sellers shall amend their Articles of
Incorporation to change their corporate names to names other than the corporate
names as set forth in the preamble hereto or any name derived therefrom or
similar thereto, which new names shall be approved in advance by the Buyer, and
shall provide proof of such name changes to the Buyer no later than fifteen
(15) days after the Closing Date.

Section 12.06 Collection and Disposition of Accounts and Notes
Receivable. All accounts and notes receivables transferred to Buyer hereunder
as part of the Purchased Assets and which have prior to Closing been written
off as uncollectible, but which are later collected by Buyer, shall remain the
property of the Buyer.

Section 12.07 Maintenance of Insurance. Buyer will maintain for a
period of five (5) years after the Closing Date general liability insurance,
including coverage for products liability, with coverage equal to or greater
than present levels currently maintained by the Sellers, and will name the
Sellers, PVF and Jemison as additional insureds under said insurance policies.

ARTICLE XIII

EXPENSES

Section 13.01 Transactional Expenses. Except as otherwise
expressly provided in this Agreement, the parties agree to bear their fees and
expenses incident to the negotiation, preparation, execution, delivery and
performance hereof, including without limitation, the fees and expenses of
their counsel, accountants and other experts.

ARTICLE XIV

TERMINATION

Section 14.01 Termination by Mutual Consent. On or prior to the
Closing Date, the Buyer, Sellers, PVF and Jemison may terminate this Agreement
by joint execution of an instrument to such effect. Subject to the provisions
of any such instrument terminating this Agreement, no party will have any
liability to the other party hereunder in the event of any termination of this
Agreement

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pursuant to this Section, except that the parties will continue to be subject
to the provisions of Sections 6.03(e), 6.05 and 13.01 of this Agreement
relating to confidentiality, publicity and the allocation of transaction
expenses.

Section 14.02 Termination Due to Casualty or Condemnation. The
Buyer may terminate this Agreement by reason of casualty or condemnation but
only in accordance with the provisions of Sections 7.01 and 7.02, respectively,
by giving written notice to the Sellers, PVF and Jemison of such termination.
In the event of a termination of this Agreement pursuant to this Section, no
party will have any liability to the other party hereunder, except that the
parties will continue to be subject to the provisions of Sections 6.03(e), 6.05
and 13.01 of this Agreement relating to confidentiality, publicity and the
allocation of transaction expenses.

Section 14.03 Termination Attributable to Default. If either the
Buyer, on the one hand, or any Seller, PVF or Jemison on the other hand, make
any misrepresentation, breach any warranties or default in the due and timely
performance of any covenants or agreements under this Agreement in any material
respect, the non-defaulting party may give notice of termination to the
defaulting party in the manner provided in Section 15.01; provided, however
that with respect to breaches or misrepresentations of representations and
warranties by a party or parties hereto, the other party or parties hereto
shall only be entitled to terminate this Agreement in the event such
misrepresentation or breach would result in the failure of the condition
precedent set forth in Section 8.01 (with respect to Buyer's right to
terminate) or Section 9.01 (with respect to Sellers' PVF's, and Jemison's right
to terminate). The notice shall specify with particularity the default(s) on
which this notice is based. The termination shall be effective five (5)
Business Days after service unless the specified default(s) have been cured on
or before the effective date of termination. Subject to Sections 8.03 and
9.03, termination pursuant to this Section 14.03 shall relieve the
non-defaulting party from any obligations under this Agreement, but shall not
relieve the defaulting party from liability for damages or other available
remedies by reason of the breach of this Agreement prior to termination.

Section 14.04 Termination Due to Failure to Satisfy Conditions.
Either party hereto may terminate this Agreement in the event that the
conditions precedent to such party's obligation to effect the transactions
contemplated hereby which are contained in this Agreement are not satisfied on
or before the Closing Date.

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ARTICLE XV

MISCELLANEOUS

Section 15.01 Notices. All notices, consents, waivers, demands and
other communications under this Agreement must be in writing and will be deemed
to have been duly given when (a) delivered by hand (with written confirmation
of receipt), (b) sent by telecopier (with written confirmation of receipt),
provided that a copy is mailed by registered or certified mail, return receipt
requested, or (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate by notice to the
other parties:

Buyer: Hughes Supply, Inc.
20 North Orange Avenue
Orlando, Florida 32801
Attention: David H. Hughes
Telecopier: (407) 649-1670

Sellers, PVF Jemison Investment Co., Inc.
or Jemison: 320 Park Place Tower
2001 Park Place North
Birmingham, Alabama 35203
Attention: James D. Davis
Telecopier: (205) 324-7684

With copies to: Johnston, Barton, Proctor & Powell
2900 AmSouth/Harbert Plaza
1901 Sixth Avenue North
Birmingham, Alabama 35203-2618
Attention: G. Burns Proctor, Jr.
Telecopier: (205) 458-9500

and

Bradley, Arant, Rose & White
1400 Park Place Tower
2001 Park Place North
Birmingham, Alabama 35203
Attention: John B. Grenier
Telecopier: (205) 252-0264

Section 15.02 Assignability and Parties in Interest. No party may
assign any of its rights or delegate any of its obligations hereunder without
the prior written consent of the other party. Notwithstanding the foregoing,
however, this Agreement, and the rights of Buyer to acquire the Purchased
Assets hereunder, and any covenants and agreements of the Buyer hereunder,

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or any of the other agreements contemplated to be delivered by the Buyer at
Closing, may be assigned by Buyer, in whole or in part, to a wholly owned
subsidiary or Affiliate of Buyer, in which event such subsidiary or Affiliate
shall assume the obligations of Buyer under this Agreement or such agreement,
the Buyer shall remain liable to Sellers under this Agreement and the Buyer
shall unconditionally guarantee the payment and performance when due of each of
the obligations of such subsidiary or Affiliate; provided, however, that the
documentation regarding such assignment and guarantee by Buyer shall be in form
and substance reasonably satisfactory to Sellers, PVF and Jemison and their
respective counsel; and provided, further, that the Buyer may not deliver to
the Sellers any common stock other than the Common Stock of the Buyer;
provided, further, that any of the Sellers and PVF may assign to, and have
assumed by, any one or more of Sellers, PVF or Jemison, all or any portion of
its rights, duties and obligations under this Agreement (provided that the
documentation in respect thereof is reasonably satisfactory to Buyer); and
provided, further, that the Sellers and the Stockholders shall be entitled to
assign their rights under Article X of this Agreement to any of their
respective transferees of Buyer Shares so long as such transfer is effected in
compliance with applicable federal and state securities laws and any
contractual restrictions on transfer. This Agreement shall bind, inure to the
benefit of and be enforceable by the respective successors and permitted
assigns of the parties and it does not confer any rights on any other persons
or entities.

Section 15.03 Governing Law. This Agreement shall be construed and
enforced in accordance with the local laws of the State of Florida applicable
to agreements to be executed and performed wholly within said state without
giving effect to its conflicts of laws provisions.

Section 15.04 Counterparts. This Agreement may be executed in any
number of counterparts and any party hereto may execute any such counterpart,
each of which when executed and delivered will be deemed to be an original and
all of which counterparts taken together will constitute but one and the same
instrument. The execution of this Agreement by any party hereto will not
become effective until counterparts hereof have been executed by all the
parties hereto. It will not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for any of the other counterparts.

Section 15.05 Waiver. The failure of any party to insist upon
strict performance of any of the terms or conditions of this Agreement will not
constitute a waiver of any of its rights hereunder.

Section 15.06 Complete Agreement. This Agreement, the Exhibits
hereto and the Schedules hereto delivered pursuant to this

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Agreement contain the entire agreement between the parties hereto with respect
to the transactions contemplated herein and, except as provided herein,
supersede all previous oral and written and all contemporaneous oral
negotiations, representations, commitments, writings and understandings
relating to the subject matter hereof.

Section 15.07 Modifications, Amendments and Waivers. At any time
prior to the Closing Date or termination of this Agreement, the Buyer, on the
one hand, and the Sellers, PVF and Jemison on the other hand, may, by written
agreement:

(a) extend the time for the performance of any of the
obligations or other acts of the other party hereto;

(b) waive any inaccuracies in the representations and
warranties made by the other party contained in this Agreement or in the
Schedules hereto or any other document delivered pursuant to this Agreement;
and

Section 15.08 Interpretation. The headings contained in this
Agreement are for reference purposes only and will not affect in any way the
meaning or interpretation of this Agreement.

Section 15.09 Severability. If any provision of this Agreement is
held illegal, invalid, or unenforceable, such illegality, invalidity, or
unenforceability will not affect any other provision hereof. This Agreement
will, in such circumstances, be deemed modified to the extent necessary to
render enforceable the provisions hereof.

Section 15.10 Time of Essence. The parties to this Agreement
acknowledge and agree that time is of the essence with respect to the
consummation of the transactions contemplated by this Agreement.

Section 15.11 Gender, Number. Words of gender may be read as
masculine, feminine, or neuter, as required by context. Words of number may be
read as singular or plural, as required by context. All terms such as "herein,"
"hereby" or "hereunder" refer to this Agreement as a whole.

Section 15.12 Exhibits and Schedules. All exhibits or schedules
annexed hereto and the documents and instruments referred to herein or required
to be delivered simultaneously herewith or at the Closing (the "Exhibits") are
expressly made a part of this Agreement as fully as though completely set forth
herein, and all references to this Agreement herein or in any of such Exhibits,
schedules, documents or instruments shall be deemed to refer to and include all
such Exhibits, schedules, documents and instruments.

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Section 15.13 Definition of Sellers', PVF's and Jemison's
Knowledge. For the purposes of this Agreement, the knowledge of Sellers, PVF
and Jemison shall be deemed to be limited to the actual knowledge of the
individuals identified on Schedule 15.13 attached hereto.

Section 15.14 Definition of Buyer's Knowledge. For the purposes of
this Agreement, the knowledge of the Buyer shall be deemed to be limited to
those individuals who hold the office of Chairman of the Board, President,
Chief Financial Officer and General Counsel for the Buyer.

Section 15.15 No Benefit to Others. The representations,
warranties, covenants and agreements contained in this Agreement are for the
sole benefit of the parties hereto and their respective successors and
permitted assigns, and they will not be construed as conferring and are not
intended to confer any rights on any other Persons.

Section 15.16 Attorneys' Fees. In the event any party hereto
institutes litigation to enforce its rights or remedies under this Agreement,
the party prevailing in such litigation shall be entitled to receive an award
from the non-prevailing party of the prevailing party's reasonable attorneys'
fees and costs incurred in connection with such litigation. The foregoing
shall include reasonable attorneys' fees and costs (including paralegals' fees)
incurred at trial, on any appeal and in any proceeding in bankruptcy.

Section 15.17 Certain Defined Terms. Except as otherwise defined
in this Agreement, the following defined terms whether used in upper or lower
case shall have the respective meanings set forth below:

(a) The term "Affiliate" shall mean any controlled groups
(within the meaning of Section 414(b) of the Internal Revenue Code of 1986, as
amended (the "Code")) of which any party to this Agreement is a member, all
trades or businesses, whether or not incorporated, under common control (within
the meaning of Section 414(c) of the Code) and of which any party to this
Agreement is a member, and all affiliated service groups (within the meaning of
Section 414(m) of the Code of which any party to this Agreement is a member).

(b) The term "Business Days" shall mean any day which is
not a Saturday, Sunday or a permitted or required bank holiday in the States of
Florida or Alabama.

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(d) The term "Executive Officers" shall mean those
officers holding the office of Chairman of the Board, President, Vice
President, Secretary and Treasurer.

(e) The term "material" when referring to representations
or warranties with respect to the Financial Statements, Sellers' Material
Adverse Effect, Buyer's Material Adverse Effect, or a "material adverse
change", shall be deemed to mean an effect or variance with respect to the
Buyers or Sellers, as appropriate, the magnitude of which would result in an
after tax net effect or variance of One Hundred Thousand Dollars ($100,000) or
more, whether individually or in the aggregate, or when related to any other
representation, warranty, covenant or agreement, shall be deemed to mean any
effect or variance which results in an after tax net effect of Fifteen Thousand
Dollars ($15,000) or more, whether individually or in the aggregate.

(f) The term "Person" shall mean an individual,
partnership, corporation, trust, unincorporated organization, or a federal,
state, local or foreign governmental body or agency.

(g) The term "Records" shall mean any paper, document,
file or record of any kind, whether recorded in writing or on magnetic,
optical, or any other storage medium, and including without limitation all
computer records in whatever form.

(h) The term "Rolling Stock" shall mean automobiles,
trucks, trailers, forklifts, loaders, tractors and other motorized vehicles of
every type and nature.

Section 15.18 Survival of Agreement. This Agreement and the
representations, warranties, covenants and agreements contained herein shall
survive the Closing of the transactions contemplated hereby.

Section 15.19 Recitals. The recitals set forth at the beginning of
this Agreement, as well as the definitions contained therein, are by this
reference incorporated herein and made a part of this Agreement.

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[Page 74 intentionally left blank]

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<PAGE> 83

IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed as of the date first above written.

"BUYER"

HUGHES SUPPLY, INC., a Florida
corporation

Attest: By: /s/ David H. Hughes
-------------------------- ------------------------------
J. Stephen Zepf David H. Hughes
CFO and Treasurer Chairman of the Board

"SELLERS"

SOUTHWEST STAINLESS, INC., a
Texas corporation

Attest: By: /s/ Michael L. Stanwood
-------------------------- ------------------------------
Michael L. Stanwood
President

MULTALLOY, INC., a New Jersey
corporation

Attest: By: /s/ Michael L. Stanwood
-------------------------- ------------------------------
Michael L. Stanwood
President

MULTALLOY, INC., a Texas
corporation

Attest: By: /s/ Michael L. Stanwood
-------------------------- ------------------------------
Michael L. Stanwood
President

HOUSTON PRODUCTS & MACHINE, INC.,
a Texas corporation

Attest: By: /s/ Michael L. Stanwood
-------------------------- ------------------------------
Michael L. Stanwood
President

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<PAGE> 84

"PVF"

PVF HOLDINGS, INC., a Delaware
corporation

Attest: By: /s/ HCL Day
---------------------- ----------------------------
HCL Day
Chairman

"JEMISON"

JEMISON INVESTMENT CO., INC., a
Delaware corporation

Attest: By: /s/ HCL Day
---------------------- ----------------------------
HCL Day
Chairman

Schedules and Exhibits Omitted from Asset Purchase Agreement
Filed as Exhibit 2 to the Registration Statement of Hughes
Supply, Inc. on Form S-3.

All of the Schedules and Exhibits listed under "Schedules and
Exhibits" on pages VI and VII of this Asset Purchase Agreement filed as Exhibit
2 to the Registration Statement of Hughes Supply, Inc. on Form S-3 have been
omitted pursuant to Item 601(b)(2) of Regulation S-K as the Registrant does
not deem any of such omitted Schedules or Exhibits material to a decision to
invest in the Common Stock offered in connection with the aforementioned
registration statement. The Registrant agrees to furnish supplementally a
copy of any such omitted Schedule or Exhibit to the Securities and Exchange
Commission upon request.

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<PAGE> 1

EXHIBIT 11

HUGHES SUPPLY, INC.

SUMMARY SCHEDULE OF EARNINGS PER SHARE CALCULATIONS

Potentially dilutive securities:

a) Options for common stock, issued under stock option plan.

b) 7% Convertible subordinated debentures, due May 1, 2011.

<TABLE>
<CAPTION>
FISCAL YEARS ENDED
---------------------------
LINE 1/29/94 1/28/95 1/27/96
---- ------- ------- -------
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<C> <S> <C> <C> <C>
SHARES
1 Average shares outstanding.................................. 5,047 6,117 6,725
2 Incremental shares (options) --
Assuming options outstanding at end of period were
exercised at beginning of period (or time of issuance, if
later) and proceeds were used to purchase shares at
average market price during the period.................... 96 142 130
------- ------- -------
3 Shares used in calculating Earnings Per Common and Common
Equivalent Share.......................................... 5,143 6,259 6,855
4 Incremental shares (options) --
Assuming options outstanding at end of period were
exercised at beginning of period (or time of issuance, if
later) and proceeds were used to purchase shares at the
higher of the average market price during the period or
the market price at the end of the period; and that
options exercised during the period were exercised at the
beginning of the period (or time of issuance, if later)
and the proceeds were used to purchase shares at the
market price at the date of exercise...................... 85 4 80
5 Incremental shares (debentures) --
Assuming debentures were converted at beginning of period
(or time of issuance, if later) at most advantageous (for
security holder) conversion rate that becomes effective
within 10 years........................................... 1,085 180 --
------- ------- -------
6 Shares used in calculating Earnings Per Common
Share -- Assuming Full Dilution........................... 6,313 6,443 6,935
====== ======= =======
EARNINGS
7 Net income per financial statements, used in calculating
Earnings Per Common Share and Earnings Per Common and
Common Equivalent Share................................... $6,524 $11,485 $16,050
8 Incremental earnings (debentures) --
Assuming interest charges applicable to convertible
debentures (and nondiscretionary adjustments that would
have been made based on net income) are taken into account
in determining balance of income applicable to common
stock..................................................... 996 166 --
------- ------- -------
9 Earnings used in calculating Earnings Per Common Share --
Assuming Full Dilution.................................... $7,520 $11,651 $16,050
====== ======= =======
</TABLE>
<PAGE> 2

<TABLE>
<CAPTION>
FISCAL YEARS ENDED
---------------------------
LINE 1/29/94 1/28/95 1/27/96
---- ------- ------- -------
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<C> <S> <C> <C> <C>
RESULTING PER SHARE DATA
10 Earnings per common share (Line 7/Line 1)................... $ 1.29 $ 1.88 $ 2.39
====== ======= =======
11 Earnings per common share and common equivalent share (Line
7/ Line 3)................................................ $ 1.27 $ 1.83 $ 2.34
====== ======= =======
12 Dilution.................................................... 1.6 % 2.7% 2.1%
====== ======= =======
13 Earnings per common share -- assuming full dilution (Line 9/
Line 6)................................................... $ 1.19 $ 1.81 $ 2.31
====== ======= =======
14 Dilution.................................................... 7.8 % 3.7% 3.3%
====== ======= =======
15 Used in statements of income:
[ ] Line 10, if dilution less than 3%, or antidilution, exists for all periods.
[X] Lines 11 and 13, if dilution > = 3% for any period.
</TABLE>

<PAGE> 1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion and incorporation by reference in this
registration statement on Form S-3 of Coopers & Lybrand's report, dated March
17, 1994, on Coopers & Lybrand's audit of the consolidated statements of income,
shareholders' equity, and cash flows of Hughes Supply, Inc. and subsidiaries,
for the fiscal year ended January 28, 1994 which report is included in this
Prospectus and incorporated by reference in the Company's Annual Report on Form
10-K for the fiscal year ended January 26, 1996. We also consent to the
reference to Coopers & Lybrand under the caption "Experts."

COOPERS & LYBRAND L.L.P.

Orlando, Florida
April 1, 1996

<PAGE> 1

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of Hughes Supply, Inc.
on Form S-3 of our report dated September 25, 1995 (October 25, 1995 and March
27, 1996 as to Note 9) on the consolidated financial statements of PVF Holdings,
Inc. and subsidiaries, appearing in the Prospectus, which is part of this
Registration Statement. We also consent to the reference to us under the heading
"Experts" in such Prospectus.

Deloitte & Touche, LLP

Birmingham, Alabama
April 1, 1996

<PAGE> 1

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the inclusion and incorporation by reference in the
Prospectus constituting part of the Registration Statement on Form S-3 of our
report dated March 14, 1996 relating to the consolidated financial statements of
Hughes Supply, Inc., which appears in such Prospectus. We also consent to the
references to us under the heading "Experts" in such Prospectus.

Price Waterhouse LLP

Orlando, Florida
April 2, 1996