SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended January 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________________to_________________
Commission File No. 001-08772
HUGHES SUPPLY, INC.
(Exact name of registrant as specified in its charter)
Florida 59-0559446
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 North Orange Avenue, Suite 200, Orlando, Florida 32801
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 407/841-4755
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock ($1.00 Par Value) New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($1.00 Par Value)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES [X] NO [ ]
Page 1
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by non-
affiliates of the Registrant: $818,804,735 as of April 17, 1998.
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest practicable
date: 22,817,872 shares of Common Stock ($1.00 par value) as of
April 17, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference
and the Part of the Form 10-K into which the document is
incorporated:
Part I - Annual Report to Shareholders for the fiscal
year ended January 30, 1998 (designated
portions).
Part II - Annual Report to Shareholders for the fiscal
year ended January 30, 1998 (designated
portions).
Part III- Definitive Proxy Statement for the 1998 Annual
Meeting of Shareholders (designated portions).
Part IV - Annual Report to Shareholders for the fiscal
year ended January 30, 1998 (designated
portions).
Page 2
TABLE OF CONTENTS
Page
PART I
Item 1. Business ............................................. 4
Item 2. Properties ........................................... 14
Item 3. Legal Proceedings .................................... 14
Item 4. Submission of Matters to a Vote of Security Holders .. 14
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters .................................. 15
Item 6. Selected Financial Data .............................. 15
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations .................. 15
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk ................................................. 15
Item 8. Financial Statements and Supplementary Data .......... 15
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure .................. 16
PART III
Item 10. Directors and Executive Officers of the Registrant ... 17
Item 11. Executive Compensation ............................... 17
Item 12. Security Ownership of Certain Beneficial Owners and
Management ........................................... 17
Item 13. Certain Relationships and Related Transactions ....... 17
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K .......................................... 18
Signatures ........................................... 23
Index to Consolidated Financial Statements and
Schedules ............................................ 24
Index of Exhibits Filed with This Report ............. 25
Page 3
PART I
ITEM 1. BUSINESS
GENERAL
Hughes Supply, Inc. was founded as a general partnership in
Orlando, Florida in 1928 and was incorporated as a Florida corporation
in 1947. As used throughout this Report, the terms "Company" and
"Registrant" shall be deemed to mean Hughes Supply, Inc. and its
subsidiaries, except where the context otherwise indicates.
The Company is one of the largest diversified wholesale
distributors of materials, equipment and supplies for the construction
and industrial markets operating primarily in the southeastern,
southwestern and midwestern United States. The Company distributes more
than 210,000 products through 404 branches located in 27 states, Mexico
and Puerto Rico. The Company's principal customers are electrical,
plumbing and mechanical contractors, electric utility companies,
property management companies, municipal and industrial accounts.
Industrial accounts include companies in the petrochemical, food and
beverage, pulp and paper, mining, pharmaceutical and marine industries.
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, southwestern and
midwestern United States. The Company's largest geographic market is
Florida (representing approximately 34% of fiscal 1998 net sales), which
is one of the largest commercial and residential construction markets in
the United States. The following table presents the locations of the
Company's branches:
Location Number of Branches
Florida 100
Texas 71
Georgia 39
North Carolina 37
Alabama 21
South Carolina 21
Ohio 19
Tennessee 18
Arizona 10
Mississippi 10
Virginia 9
Kentucky 6
Indiana 5
Louisiana 5
Illinois 4
Oklahoma 4
West Virginia 4
Missouri 3
New Jersey 3
Pennsylvania 3
Arkansas 2
Maryland 2
Page 4
Location Number of Branches
Michigan 2
California 1
Mexico 1
New York 1
Puerto Rico 1
Utah 1
Washington 1
A current listing of the locations of the wholesale branches and
distribution centers of the Company is set forth as Exhibit 99.1 to this
Report.
The products which the Company distributes are used in new
construction for commercial, residential, utility and industrial
applications and for maintenance, 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, plate,
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 53 new branches (exclusive of new branches
acquired through acquisitions). 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 51 acquisitions representing 216 branches. 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 in the first full year
subsequent to the transaction.
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
1997, and no wholesale distributor of these products accounted for more
Page 5
than 5% 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 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.
The Company 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.
ACQUISITION STRATEGY
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 49
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, residential and
industrial product categories, or the entry into new geographic
Page 6
markets, or both. During the last five 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) Sunbelt Supply Company, resulting
in a significant increase in the Company's valve and fitting business in
new geographic markets; (ii) Metals, Incorporated, Stainless Tubular
Products, Inc., and Metals, Inc. - Gulf Coast Division, resulting in a
significant increase in the Company's specialty pipe, valve and fitting
business as well as the metal fabrication business in new geographic
markets; (iii) Mountain Country Supply, Inc., resulting in a significant
increase in the Company's plumbing, water and sewer, and air
conditioning and heating business in new geographic markets; (iv)
International Supply Company, Inc. and its affiliated operations,
resulting in a significant increase in the Company's water and sewer and
plumbing business in new geographic markets; (v) Merex Corporation,
resulting in an increased presence in export markets; and (vi) Chad
Supply, Inc., the Company's initial entry into the distribution of
repair and maintenance products to the multi-family housing industry.
The following table summarizes the fill-in and new market
acquisitions completed by the Company since January 29, 1993:
<TABLE>
<CAPTION>
Type of Date of Number of Location of
Acquisition Acquisition Acquisition Branches Operation Major Product Groups
- ----------- ----------- ----------- -------- --------- --------------------
<S> <C> <C> <C> <C> <C>
Virginia branch Fill-in June, 1993 1 VA Plumbing
Florida and Georgia Fill-in June, 1993 2 FL,GA Electrical, electric
branches utilities
Electrical New market June, 1993 1 GA Electrical
Distributors, Inc.*
Alabama Water Works New market July, 1993 3 AL Water and sewer
Supply, Inc.
Florida branches Fill-in December, 1993 2 FL Building materials
Swaim Supply New market January, 1994 8 NC,VA Plumbing, air conditioning
Company* and heating
Florida and Georgia Fill-in February, 1994- 4 FL,GA Water and sewer, plumbing,
branches (1) September, 1994 electrical
Treaty Distribution New market January, 1995 16 IN,OH Water and sewer, plumbing,
Group branches air conditioning and heating
Olander & Brophy, Inc. New market March, 1995 4 OH,PA Pool equipment and supplies,
water systems
Port City Electrical Fill-in March, 1995 2 GA,SC Electrical
Supply, Inc.
Elec-Tel Supply Fill-in April, 1995 1 GA Electric utilities
Company
Page 7
<CAPTION>
Type of Date of Number of Location of
Acquisition Acquisition Acquisition Branches Operation Major Product Groups
- ----------- ----------- ----------- -------- --------- --------------------
<S> <C> <C> <C> <C> <C>
Various branches (2) Fill-in June, 1995- 7 AL,FL,KY,NC, Electrical, pool equipment
February, 1996 NJ,SC,TN,VA and supplies, plumbing
Moore Electric New market August, 1995 5 NC,SC Electrical
Supply, Inc.*
Atlantic Pump & Fill-in September, 1995 4 FL,PR Pool equipment and supplies
Equipment Companies
Florida Pipe & New market December, 1995 1 FL Industrial pipe, plate,
Supply Company* valves and fittings
Waldorf Supply, Inc. Fill-in February, 1996 1 MD Plumbing
West Virginia Water and New market March, 1996 2 WV Water and sewer
Waste Supply Co., Inc.
Electric Laboratories New market April, 1996 3 IL,OH Electric utilities
and Sales Corporation*
PVF Holdings, Inc. New market May, 1996 16 GA,IL,LA,MO,NC, Industrial pipe, plate,
NJ,TN,TX,UT,WA valves and fittings
Gayle Supply Fill-in May, 1996 3 AL Plumbing
Company, Inc.*
R & G Plumbing Fill-in May, 1996 2 AL Plumbing
Supply, Inc.
JuNo Industries, Inc. New market September, 1996 5 FL,GA Industrial pipe, plate,
and J.I. Services valves and fittings
Corporation*
Palm Pool New market September, 1996 2 MI,OH Pool equipment and supplies,
Products, Inc.* water systems
Coastal Wholesale, Fill-in November, 1996 1 FL Pool equipment and supplies,
Inc. water systems
J & J, Inc. Fill-in November, 1996 2 GA,TX Industrial pipe, plate,
valves and fittings
Wholesale Electric New market November, 1996 2 NC,NY Electrical
Supply Corporation
Panhandle Pipe & Fill-in December, 1996 1 WV Water and sewer
Supply Co., Inc.*
Sunbelt Supply Company* New market December, 1996 9 FL,LA,TX,VA Industrial pipe, plate,
valves and fittings
Metals, Incorporated, New market January, 1997 3 AL,MO,OK Industrial pipe, plate,
Stainless Tubular valves and fittings
Products, Inc., and
Metals, Inc. - Gulf
Coast Division*
Dixie Forming & New market February, 1997 5 NC,SC,VA Building materials
Building Specialties
Incorporated
Gulf Pool Equipment New market February, 1997 3 GA,OK,TX Pool equipment and supplies,
Company water systems
Dominion Pipe and Supply New market May, 1997 1 VA Water and sewer
Company and Dominion
Pipe Fabricators, Inc.*
Page 8
<CAPTION>
Type of Date of Number of Location of
Acquisition Acquisition Acquisition Branches Operation Major Product Groups
- ----------- ----------- ----------- -------- --------- --------------------
<S> <C> <C> <C> <C> <C>
Gilleland Concrete New market June, 1997 1 GA Water and sewer
Products, Inc.
Shrader Holding Co., New market August, 1997 5 AR,OK,TX Water and sewer
Inc.*
Workman Developments, New market August, 1997 1 WV Industrial pipe, plate,
Inc. valves and fittings
Supply One Fill-in September, 1997 1 OH Plumbing
Allied Metals, Inc. New market October, 1997 1 TX Industrial pipe, plate,
valves and fittings
Virginia Water Fill-in November, 1997 1 VA Water and sewer
& Waste Supply
Company, Inc.*
Superior Concrete Fill-in December, 1997 - FL Building materials
Products
APPCO Process Equipment New market December, 1997 1 NC Industrial pipe, plate,
Company valves and fittings
Mountain Country New market January, 1998 10 AZ Plumbing, water and sewer,
Supply, Inc. air conditioning and heating
International Supply New market January, 1998 38 TX Water and sewer, plumbing,
Company, Inc. and industrial, pipe, plate,
affiliated operations valves and fittings
Merex Corporation New market January, 1998 2 TX,MX Industrial pipe, plate,
valves and fittings
Chad Supply, Inc.* New market January, 1998 18 AL,FL,GA,KY,LA Building materials, plumbing,
NC,OH,SC,TN electrical, air conditioning
and heating, pool equipment
and supplies
San Antonio Plumbing Fill-in March, 1998 14 TX Plumbing, water and sewer
Distributors, Inc.*
United Supply Agencies New market March, 1998 1 TX Air conditioning and heating,
plumbing, building materials,
electrical
---
TOTAL 216
===
* Accounted for as pooling of interests.
(1) Facilities acquired in purchases of assets from four entities.
(2) Facilities acquired in purchases of assets from three entities.
</TABLE>
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, legal and management information systems. Key elements of
the Company's operating strategy include:
Page 9
Comprehensive and Diversified Product Groups. As part of its
emphasis on superior customer service, the Company offers more than
210,000 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 generally permits 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 product groups or any single
sector of the construction industry. Further, the Company's product
diversification permits 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 management
believes 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.
Page 10
The Company generally 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, legal 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 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 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, drain waste, vent, natural gas
and potable water piping, and plumbing accessories and supplies.
Water and Sewer: Water works and industrial supplies, including
large diameter plastic (PVC) and ductile iron pipe, fire hydrants, water
meters, valves, backflow prevention devices, storm drain, pre-cast
concrete tested utility and fire line vaults, fire protection
fabrication and supply, and related hardware and accessories.
Page 11
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, Plate, Valves and Fittings: Mechanical and weld
pipe, valves and related fittings, fire protection systems and supplies,
high performance valves, specialty pipe, high density polyethylene pipe
and fittings, stainless steel and other high alloy pipe, plate, 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, hardware, appliances, paint, flooring, janitorial
products and equipment.
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.
SALES AND PURCHASING
The Company employs approximately 780 outside sales representatives
who call on customers and who also work with architects, engineers,
manufacturers' representatives, purchasing agents, and plant
superintendents and foremen for major construction projects.
Approximately 720 inside account executives 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 and Forest Park, Georgia provide purchasing
assistance as well as a broad stock of inventory which supplements the
inventory of the branches. In addition, the Company uses several of its
larger branches in other parts of the country as distribution points for
certain product lines.
Page 12
CUSTOMERS AND SUPPLIERS
The Company currently serves over 80,000 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 8,500 manufacturers and
suppliers, of which approximately 675 are currently part of the
Company's Preferred Vendor Program. No single supplier accounted for
more than 5% of the Company's total purchases during fiscal 1998.
INVENTORIES
The Company is a wholesale distributor of construction and
industrial materials and maintains significant inventories to meet rapid
delivery requirements and to assure itself of a continuous allotment of
goods from suppliers. As of January 30, 1998, inventories constituted
approximately 37% of the Company's total assets.
COMPETITION
Management believes that the Company is one of the largest
wholesale distributors of its range of products in the southeastern,
southwestern 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 30, 1998, the Company had approximately 6,000
employees consisting of approximately 16 executives, 1,440 managers,
1,500 sales personnel and 3,044 other employees, including truck
drivers, warehouse personnel, office and clerical workers. Over the
last year, the Company's work force has increased by approximately 36%
compared to the prior year as a result of increased sales volume and
business acquisitions. The Company considers its relationship with its
employees to be good.
Page 13
ITEM 2. PROPERTIES
The Company leases approximately 40,000 square feet of an office
building in Orlando, Florida for its headquarters. In addition, the
Company owns or leases 404 facilities in 27 states, Mexico and Puerto
Rico. The typical sales branch consists of a combined office and
warehouse facility ranging in size from 3,000 to 50,000 square feet,
with paved parking and storage areas. The Company also operates a
computer center, two central distribution warehouses, and a garage and
trucking terminal.
Additional information regarding owned and leased properties of the
Company is set forth as Exhibit 99.1 to this Report and in Note 7 of the
Notes to Consolidated Financial Statements of the Annual Report to
Shareholders for the fiscal year ended January 30, 1998, a copy of which
is filed as an exhibit to this Report and the cited portion of which is
incorporated herein by reference.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings arising in the
normal course 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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the Company's security holders
during the fourth quarter of the fiscal year ended January 30, 1998.
Page 14
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information with respect to the principal market for the Company's
common stock, stock prices and dividend information is set forth under
the caption "Corporate and Shareholder Information" and in Note 11 of
the Notes to Consolidated Financial Statements of the Company's Annual
Report to Shareholders for the fiscal year ended January 30, 1998, a
copy of which is filed as an exhibit to this Report and the cited
portion of which is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Information with respect to selected financial data of the Company
is set forth under the caption "Selected Financial Data" of the
Company's Annual Report to Shareholders for the fiscal year ended
January 30, 1998, a copy of which is filed as an exhibit to this Report
and the cited portion of which is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Information with respect to the Company's financial condition,
changes in financial condition and results of operations is set forth
under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" of the Company's Annual Report to
Shareholders for the fiscal year ended January 30, 1998, a copy of which
is filed as an exhibit to this Report and the cited portion of which is
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
NOT APPLICABLE.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a) Financial Statements
The financial statements filed with this report are set forth in
the "Index to Consolidated Financial Statements and Schedules" following
Part IV hereof.
Page 15
(b) Selected Quarterly Financial Data
Information with respect to selected quarterly financial data of
the Company is set forth in Note 11 of the Notes to Consolidated
Financial Statements of the Company's Annual Report to Shareholders for
the fiscal year ended January 30, 1998, a copy of which is filed as an
exhibit to this Report and the cited portion of which is incorporated
herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
The Company has not had any change in, or disagreement with its
accountants or reportable event which is required to be reported in
response to this item.
Page 16
PART III
All information required by Part III (Items 10, 11, 12 and 13) is
incorporated by reference to the Company's Definitive Proxy Statement
for the 1998 Annual Meeting of Shareholders.
Page 17
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) Financial Statements and Financial Statement Schedules
Financial statements and financial statement schedules required to
be filed by item 8 of this Report are listed in a separately designated
section submitted below. Exhibits are listed in subparagraph (c) below.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended
January 30, 1998.
(c) Exhibits Filed
A substantial number of the exhibits referred to below are
indicated as having been previously filed as exhibits to other reports
under the Securities Exchange Act of 1934, as amended, or as exhibits to
registration statements under the Securities Act of 1933, as amended.
Such previously filed exhibits are incorporated by reference in this
Form 10-K. Exhibits not incorporated by reference herein are filed with
this report.
(2) Plan of acquisition, reorganization, arrangement, liquidation
or succession. Not applicable.
(3) Articles of incorporation and by-laws.
3.1 Restated Articles of Incorporation, as amended, filed as
Exhibit 3.1 to Form 10-Q for the quarter ended April 30,
1997 (Commission File No. 001-08772).
3.2 Composite By-Laws, as amended.
(4) Instruments defining the rights of security holders, including
indentures.
4.1 Form of Common Stock Certificate representing shares of
the Registrant's common stock, $1.00 par value, filed as
Exhibit 4.1 to Form 10-Q for the quarter ended July 31,
1997 (Commission File No. 001-08772).
4.2 Resolution Approving and Implementing Shareholder Rights
Plan filed as Exhibit 4.4 to Form 8-K dated May 17, 1988
(Commission File No. 0-5235).
Page 18
(9) Voting trust agreement. Not applicable.
(10) Material contracts.
10.1 Lease Agreements with Hughes, Inc.
(a) Orlando Trucking, Garage and Maintenance Operations
dated December 1, 1971, filed as Exhibit 13(n) to
Registration No. 2-43900 (Commission File No. 0-
5235). Letter dated April 15, 1992 extending lease
from month to month, filed as Exhibit 10.1(a) to
Form 10-K for the fiscal year ended January 31,
1992 (Commission File No. 0-5235).
(b) Leases effective March 31, 1988, filed as Exhibit
10.1(c) to Form 10-K for the fiscal year ended
January 27, 1989 (Commission File No. 0-5235).
Sub-Item Property
(1) Clearwater
(2) Daytona Beach
(3) Fort Pierce
(4) Lakeland
(6) Leesburg
(7) Orlando Electrical Operation
(8) Orlando Plumbing Operation
(9) Orlando Utility Warehouse
(11) Sarasota
(12) Venice
(13) Winter Haven
(c) Lease amendment letter between Hughes, Inc. and the
Registrant, dated December 1, 1986, amending
Orlando Truck Operations Center and Maintenance
Garage lease, filed as Exhibit 10.1(i) to Form 10-K
for the fiscal year ended January 30, 1987
(Commission File No. 0-5235).
(d) Lease agreement dated June 1, 1987, between Hughes,
Inc. and the Registrant, for additional Sarasota
property, filed as Exhibit 10.1(j) to Form 10-K for
the fiscal year ended January 29, 1988 (Commission
File No. 0-5235).
(e) Lease dated March 11, 1992, filed as Exhibit
10.1(e) to Form 10-K for the fiscal year ended
January 31, 1992 (Commission File No. 0-5235).
Sub-Item Property
(2) Gainesville Electrical Operation
Page 19
(f) Amendments to leases between Hughes, Inc. and
Hughes Supply, Inc., dated April 1, 1998, amending
the leases for the thirteen properties listed in
Exhibit 10.1(b), (d) and (e).
10.2 Hughes Supply, Inc. 1988 Stock Option Plan as amended
March 12, 1996 filed as Exhibit 10.2 to Form 10-K for the
fiscal year ended January 26, 1996 (Commission File No.
001-08772).
10.3 Form of Supplemental Executive Retirement Plan Agreement
entered into between the Registrant and eight of its
executive officers, filed as Exhibit 10.6 to Form 10-K
for fiscal year ended January 30, 1987 (Commission File
No. 0-5235).
10.4 Directors' Stock Option Plan, as amended.
10.5 Lease Agreement dated June 30, 1993 between Donald C.
Martin and Electrical Distributors, Inc., filed as
Exhibit 10.6 to Form 10-K for fiscal year ended January
28, 1994 (Commission File No. 001-08772).
10.6 Consulting Agreement dated June 30, 1993 between Hughes
Supply, Inc. and Donald C. Martin, filed as Exhibit 10.7
to Form 10-K for fiscal year ended January 28, 1994
(Commission File No. 001-08772).
10.7 Written description of senior executives' long-term
incentive bonus plan for fiscal year 1996 incorporated by
reference to the description of the bonus plan set forth
under the caption "Approval of the Stock Award Provisions
of the Senior Executives' Long-Term Incentive Bonus Plan
for Fiscal Year 1996" on pages 26 and 27 of the
Registrant's Proxy Statement for the Annual Meeting of
Shareholders To Be Held May 24, 1994 (Commission File No.
001-08772).
10.8 Hughes Supply, Inc. Amended Senior Executives' Long-Term
Incentive Bonus Plan, adopted January 25, 1996, filed as
Exhibit 10.9 to Form 10-K for the fiscal year ended
January 26, 1996 (Commission File No. 001-08772).
10.9 Lease Agreement dated June 24, 1996 between Donald C.
Martin and Hughes Supply, Inc., filed as Exhibit 10.10 to
Form 10-Q for the quarter ended October 31, 1996
(Commission File No. 001-08772).
Page 20
10.10 Amended and Restated Revolving Credit Agreement and Line
of Credit Agreement, dated as of August 18, 1997, by and
among the Company, SunTrust, SouthTrust, NationsBank,
First Union, Barnett and PNC, filed as Exhibit 10.14 to
Form 10-Q for the quarter ended July 31, 1997 (Commission
File No. 001-08772). The Amended Credit Agreement
contains a table of contents identifying the contents of
Schedules and Exhibits, all of which have been omitted.
The Company agrees to furnish a supplemental copy of any
omitted Schedule or Exhibit to the Commission upon
request.
10.11 Note Purchase Agreement, dated as of August 28, 1997, by
and among the Company and certain purchasers identified
in Schedule A of the Note Purchase Agreement, filed as
Exhibit 10.15 to Form 10-Q for the quarter ended July 31,
1997 (Commission File No. 001-08772).
10.12 Hughes Supply, Inc. 1997 Executive Stock Plan (the
"Plan") incorporated by reference to the description
of the Plan set forth under Exhibit A of the
Registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held May 20, 1997 (Commission
File No. 001-08772).
10.13 Note Purchase Agreement, dated as of May 29, 1996,
by and among the Company and certain purchasers
identified in Schedule A of the Note Purchase
Agreement.
(11) Statement re computation of per share earnings. Not
applicable.
(12) Statements re computation of ratios. Not applicable.
(13) Annual report to security holders, Form 10-Q or quarterly
report to security holders.
13.1 Information incorporated by reference into Form 10-K from
the Annual Report to Shareholders for the fiscal year
ended January 30, 1998.
(16) Letter re change in certifying accountant. Not applicable.
(18) Letter re change in accounting principles. Not applicable.
(21) Subsidiaries of the Registrant.
21.1 Subsidiaries of the Registrant.
(22) Published report regarding matters submitted to vote of
security holders. Not applicable.
Page 21
(23) Consents of experts and counsel.
23.1 Consent of Price Waterhouse LLP.
(24) Power of attorney. Not applicable.
(27) Financial Data Schedule.
27.1 Financial Data Schedule (filed electronically only).
27.2 Restated Financial Data Schedule (filed electronically
only).
27.3 Restated Financial Data Schedule (filed electronically
only).
(99) Additional exhibits.
99.1 Location of facilities.
(d) Financial Statement Schedules
Financial statements and financial statement schedules
required by Regulation S-X which are excluded from the annual
report to shareholders by Rule 14a-3(b). Not applicable.
Page 22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
HUGHES SUPPLY, INC.
By: /s/ David H. Hughes
David H. Hughes, Chairman of
the Board and Chief Executive
Officer
/s/ J. Stephen Zepf
J. Stephen Zepf, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
Date: April 20, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
/s/ David H. Hughes /s/ A. Stewart Hall, Jr.
David H. Hughes A. Stewart Hall, Jr.
April 20, 1998 April 20, 1998
(Director) (Director)
/s/ John D. Baker, II
John D. Baker, II Clifford M. Hames
April 20, 1998 April 20, 1998
(Director) (Director)
/s/ Robert N. Blackford /s/ Vincent S. Hughes
Robert N. Blackford Vincent S. Hughes
April 20, 1998 April 20, 1998
(Director) (Director)
/s/ H. Corbin Day /s/ Herman B. McManaway
H. Corbin Day Herman B. McManaway
April 20, 1998 April 20, 1998
(Director) (Director)
/s/ John B. Ellis /s/ Donald C. Martin
John B. Ellis Donald C. Martin
April 20, 1998 April 20, 1998
(Director) (Director)
Page 23
HUGHES SUPPLY, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
The following consolidated financial statements of the Registrant and
its subsidiaries included in the Registrant's Annual Report to
Shareholders for the fiscal year ended January 30, 1998, are
incorporated by reference:
Annual
Report
Page
Consolidated Statements of Income
for the years ended January 30, 1998,
January 31, 1997 and January 26, 1996 13
Consolidated Balance Sheets as of
January 30, 1998 and January 31, 1997 14
Consolidated Statements of Shareholders'
Equity for the years ended January 30,
1998, January 31, 1997 and January 26, 1996 15
Consolidated Statements of Cash Flows for
the years ended January 30, 1998,
January 31, 1997 and January 26, 1996 16
Notes to Consolidated Financial Statements 17
Report of Independent Certified
Public Accountants 26
All other schedules have been omitted as they are either not applicable,
not required or the information is given in the financial statements or
related notes thereto.
Page 24
INDEX OF EXHIBITS FILED WITH THIS REPORT
3.2 Composite By-Laws, as amended.
10.1 Amendments to leases between Hughes, Inc. and Hughes
Supply, Inc., dated April 1, 1998, amending the leases
for the thirteen properties listed in Exhibit 10.1(b),
(d) and (e).
10.4 Director's Stock Option Plan, as amended.
10.13 Note Purchase Agreement, dated as of May 29, 1996, by and
among the Company and certain purchasers identified in
Schedule A of the Note Purchase Agreement.
13.1 Information incorporated by reference into Form 10-K from
the Annual Report to Shareholders for the fiscal year
ended January 30, 1998.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Price Waterhouse LLP.
27.1 Financial data schedule (filed electronically only).
27.2 Restated financial data schedule (filed electronically
only).
27.3 Restated financial data schedule (filed electronically
only).
99.1 Location of facilities.
Page 25
Exhibit 3.2
COMPOSITE BY-LAWS
-of-
HUGHES SUPPLY, INC.
(As Amended May 24, 1994)
ARTICLE I
Stock
1. Certificates of Stock shall be issued in numerical order
from the stock certificate book, and be signed by the President or
the Vice-president, and the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary, and sealed with the seal
of the Corporation. The seal may be facsimile, engraved or
printed. If such certificate is signed by (a) a transfer agent or
an assistant transfer agent, other than the Corporation itself, or
by (b) a transfer clerk acting on behalf of the Corporation and a
registrar, the signature of any of those officers named herein may
be facsimile. In case any officer who signed, or whose facsimile
signature has been used on any certificate shall cease to be such
officer for any reason before the certificate has been delivered by
the Corporation, such certificate may nevertheless be adopted by
the Corporation and issued and delivered as though the person who
signed it or whose facsimile signature has been used thereon had
not ceased to be such officer. Subscription warrants, scrip for
fractional shares and similar certificates may be issued from time
to time and be signed by the President, a Vice President or the
Treasurer, and, where otherwise required, sealed with the seal of
the Corporation. The signature of the signing officer, and the
seal may be facsimile, engraved or printed.
2. Transfer of Stock shall be made only on the books of the
Corporation, in person or by attorney, upon surrender of the
certificate evidencing the stock sought to be transferred, properly
endorsed or assigned; the certificate so surrendered shall be
cancelled as and when a new certificate or certificates are issued.
3. Lost Certificates. The Board of Directors may direct a
new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation
alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of
stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof,
require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in
such manner as it shall require and/or to give the Corporation a
bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed.
4. Record Date, Subsequent Transfers. The Board of
Directors shall have power to fix in advance a date, not exceeding
sixty days preceding the date of any meeting of stockholders or the
date for the payment of any dividends or the date for the allotment
of any rights or the date when any change or conversion or exchange
of stock shall go into effect or a date in connection with the
obtaining of any consent of stockholders for any purpose, as a
record date for the determination of the stockholders entitled to
notice of, and to vote at, any such meeting and any adjournment
thereof or to receive payment of any such dividend or to any such
allotment of rights or to exercise rights in respect of any such
change, conversion or exchange of stock or to give any such
consent, and, in such case, such stockholders, and only such
stockholders, as shall be stockholders on the record date so fixed
shall be entitled to notice of, and vote at, such meeting and any
adjournment thereof or to receive payment of any such dividend or
to receive such allotment of rights or to exercise such rights or
to give such consent, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after any
such record date, fixed as aforesaid.
ARTICLE II
Stockholders
1. The Annual Meeting of this corporation shall be held at
ten o'clock a.m. on the third Tuesday of May of each year, if not
a legal holiday, and if a legal holiday, then the day following,
commencing with the year A.D. 1970. Each Annual Meeting shall be
held at the principal office of the Corporation unless some other
place in or out of the State of Florida is designated by the Board
of Directors three weeks or more before the day of such Meeting.
2. Special Meetings of the stockholders may be called at any
time by resolution of the Board of Directors or by the President
and may be called at any time by a request in writing submitted by
the holder or holders of at least 801 of the out-standing shares of
stock entitled to vote. Such request must state the purpose of the
meeting.
3. Written Consents. The stockholders of the Corporation
shall not be permitted to take action by means of written
consents.
4. Notice of Stockholders' Meetings of the Corporation shall
be given by mailing a written notice of such meeting, signed by the
President, or a Vice President or the Secretary or an Assistant
Secretary, of the Corporation, to each stockholder of record
entitled to vote at such meeting at his address as it appears on
the records of the Corporation not less than ten (10) nor more than
sixty (60) days before the date set for such meeting. The notice
shall state the purpose of the meeting and the time and place it is
to be held. Notice mailed to a stockholder in accordance with the
provisions of this By-Law shall be deemed sufficient for said
meeting and if any stockholder shall transfer any of his stock
after notice, it shall not be necessary to notify the transferee.
Any meeting of stockholders may be held either within or without
the State of Florida. Any stockholder may waive notice of any
meeting either before, or at, or after, the meeting. When
stockholders who hold four-fifths (4/5) of the voting stock of the
Corporation having the right and entitled to vote at any meeting,
shall be present in person, or by proxy, at any meeting, however
called or notified, and shall sign a written consent thereto on the
record of the meeting, the acts of such meeting shall be as valid
as if legally called and notified.
5. A Quorum at any meeting of the stockholders shall consist
of a majority of the stock of the Corporation entitled to vote
thereat represented in person or by proxy, and a majority of such
quorum shall decide any question that may come before the meeting;
provided, however, that:
(i) No plan of consolidation or merger under which the
Corporation is not the surviving constituent corporation shall be
deemed approved by the stockholders unless such plan of
consolidation or merger shall be approved by the affirmative vote
of two-thirds of the total number of shares of stock outstanding
and entitled to vote; and
(ii) No amendment to the Articles of Incorporation may
amend or delete the requirement that two-thirds of the total number
of shares of stock outstanding and entitled to vote approve any
plan of consolidation or merger under which the Corporation is not
the surviving constituent corporation, unless at a meeting duly
called two-thirds of the total number of shares of stock
outstanding and entitled to vote shall approve such amendment or
deletion of such requirement; and
(iii) In addition to any affirmative vote required by
law or the Articles of Incorporation, and except as expressly
provided in Section 8 of Article XIII of the Articles of
Incorporation ("Article XIII"), the affirmative vote of, the
holders of two-thirds of the then outstanding shares of capital
stock of the Corporation entitled to vote generally in the election
of directors shall be required for the approval or authorization of
any Business Combination (as defined in Article XIII). The
provisions of Section A of Article XIII shall not be applicable to
any particular Business Combination, and such Business Combination
shall require only such affirmative vote as is required by law or
any other Article of the Articles of Incorporation, if the Business
Combination shall have been approved by a majority of the directors
who are Disinterested Directors (as defined in Article XIII), or if
all of the conditions of Section B of Article XIII are met; and
(iv) Notwithstanding any other provision of the By-Laws
of the Corporation or applicable law, the affirmative vote of two-
thirds of the votes of the then outstanding Voting Stock (as
defined in the Articles of Incorporation), voting together as a
single class, shall be required (1) to amend, modify or repeal
Article XIII of the Articles of Incorporation ("Article XIII"), (2)
adopt any provision of the Articles of Incorporation or By-Laws
which is inconsistent with Article XIII, or (3) prior to the fixing
by the Board of Directors of any right or preference of any series
of Preferred Stock which is inconsistent with the provisions of
Article XIII; and
(v) In the event the number of directors of the
Corporation shall be fixed by the stockholders in accordance with
Section A of Article XII of the Articles of Incorporation, such
number shall be the number fixed by the holders of record of at
least 80% of the outstanding shares of stock entitled to vote; and
(vi) Notwithstanding any other provision of the By-Laws
of the Corporation or applicable law, the affirmative vote of the
holders of record of at least 80% of the outstanding shares of
stock entitled to vote shall be required to remove directors of the
Corporation without cause; and
(vii) Notwithstanding any other provision of the By-Laws
of the Corporation or applicable law, the affirmative vote of the
holders of record of at least 80% of the outstanding shares of
stock entitled to vote shall be required (1) to amend, modify or
repeal Article VII or Article XIV of the Articles of Incorporation
("Article VII or XIV"), (2) adopt any provision of the Articles of
Incorporation or the By-Laws of the Corporation which is
inconsistent with Article VII or XIV, or (3) prior to the fixing by
the Board of Directors of any right or preference of any series of
Preferred Stock which is inconsistent with the provisions of
Article XII or XIV.
In the absence of a quorum, a majority of the shares present
in person or by proxy and entitled to vote may adjourn any meeting
from time to time until a quorum shall be present, any business may
be transacted which might have been transacted at the meeting as
originally called unless otherwise provided by statute, and no
notice of an adjourned meeting need be given.
6. Judges. At every meeting of stockholders the vote shall
be conducted by two or more judges appointed for that purpose by
the Board of Directors; and all questions respecting the
qualification of voters, the validity of the proxies and the
acceptance and rejection of votes shall be decided by such judges.
Before acting at any meeting, the judges shall be sworn faithfully
to execute their duties, with strict impartiality and according to
the best of their ability. If fewer than two judges appointed by
the Board of Directors to act at any meeting shall be present and
willing to act at such meeting, the stockholders present at the
meeting in person or by proxy may, by a per capita vote, appoint
one or more judges so to act.
ARTICLE III
Directors
1. Powers. The business and property of the Corporation
shall be managed by a Board of Directors, all of whom shall be of
full age and at least one of whom shall be a citizen of the United
States, and such Board of Directors shall have full control over
the affairs of the Corporation and shall be authorized to exercise
all of its corporate powers unless otherwise provided in these By-
Laws.
2. Number and Term of Directors. The Board of Directors
shall consist of three or more directors, the exact number to be
fixed and determined from time to time by resolution of a majority
of the full Board of Directors or by holders of record of at least
80% of the outstanding shares of stock entitled to vote at any
meeting thereof. The directors shall be classified with respect to
the time for which they shall severally hold office by dividing
them into three classes, each consisting of as near one-third of
the whole number of Directors as practicable, and all directors of
the Corporation shall hold office until their successors are
elected and qualified. The first such classification shall be made
at the Annual fleeting of the Stockholders to be held in the year
1975. At that Annual Meeting, the directors shall be classified
for staggered terms of 1, 2 and 3 years, respectively, and at each
successive Annual Meeting the successors to the class of directors
whose terms expire that year shall be elected to hold office for
the term of 3 years, so that the term of office of one class of
directors shall expire in each year. Any vacancy which shall occur
in a class of directors prior to the expiration of the term of such
class may be filled by the Board of Directors. A director elected
to fill a vacancy shall hold office only until the next election of
directors by the stockholders. An increase in the number of
directors shall be deemed to create vacancies for the purpose of
this section.
3. Election of Directors. At the Annual Meeting of
Stockholders, directors shall be elected by a plurality of the
votes cast at such election. At the election of directors, each
shareholder shall have the right to vote the number of shares owned
by him for as many persons as there are directors to be elected.
There shall be no cumulative voting. Nominations for election of
the Board of Directors may be made by the Board of Directors, or by
any stockholder of any outstanding class of capital stock of the
Corporation entitled to vote for the election of directors.
Nominations, other than those made by the existing Board of
Directors, shall be made in writing and shall be delivered or
mailed to the President of the Corporation not less than 14 days
nor more than 50 days prior to any meeting of stockholders called
for the election of directors; provided, however, that if less than
twenty-one days' (21) notice of the meeting is given to
stockholders such nomination shall be mailed or delivered to the
President of the Corporation not later than the close of business
on the 7th day following the day on which the notice of meeting was
mailed. Such nomination and notification shall contain the
following information to the extent known to the notifying
stockholder:
(i) The names and addresses of the proposed nominee or
nominees;
(ii) The principal occupation of each proposed nominees;
(iii) The total number of shares that to the knowledge of
the notifying or nominating shareholders will be voted for each of
the proposed nominees;
(iv) The name and residence address of each notifying or
nominating shareholder; and
(v) The number of shares owned by the notifying or
nominating shareholder.
Nominations not made in accordance herewith may, in his discretion
be disregarded by the chairman of the meeting, and upon his
instructions, the judges of election may disregard all votes cast
for each such nomination.
4. Place of Meeting. Meetings of the Board of Directors or
of any committee thereof may be held either within or without the
State of Florida.
5. Organization Meetings of the Board of Directors shall be
held as soon as practicable each year after the annual election of
directors for the purpose of organization, election of officers and
the transaction of other business. No notice of such meeting shall
be required. Such organization meeting may, however, be held at
any other time or place which shall be specified in a notice given,
as hereinafter provided, for special meetings of the Board, or in
a consent and waiver of notice thereof signed by all of the
directors.
6. Regular Meetings. The Board of Directors may from tine
to time, by resolution, appoint the time and place for holding
regular meetings of the Board, if by it deemed advisable, and such
regular meetings shall thereupon be held at the time and place so
appointed, without the giving of any notice with regard thereto.
In case the day appointed for a regular meeting shall fall upon a
Saturday or legal holiday in the State of Florida, such meeting
shall be held on the next succeeding day not a Saturday or legal
holiday in Florida, at the regularly appointed hour. Except as
otherwise provided in the By-Laws, any and all business may be
transacted at any regular meeting.
7. Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the Chairman, the
President, or by any two of the directors. Notice to a director of
any such meeting may be given in writing, by mailing the same to
the residence or place of business of the director as shown on the
books of the Corporation not later than two days before the day on
which the meeting is to be held, or may be given by sending the
same to him at such place by telegraph or by delivering the same to
him personally or leaving the same for him at his place of business
or by giving the same to him personally or by telephone, not later
than the day before such day of meeting. Notice of any meeting of
the Board need not, however, be given to any director, if waived by
him in writing (including telegram, cablegram or radiogram) or if
he shall be present at the meeting; and any meeting of the Board of
Directors shall be a legal meeting without any notice thereof
having been given, if all members shall be present thereat. Except
as otherwise provided in the By-Laws or as may be indicated in the
notice thereof, any and all business may be transacted at any
special meeting.
8. Quorum and Manner of Acting. Except as otherwise
provided in the By-Laws, a majority of the directors in office at
the time of any meeting of the Board of Directors, but not less
than two directors, shall constitute a quorum for the transaction
of business; and, except as otherwise required by statute or by the
Certificate of Incorporation or any amendment thereto, or by the
By-Laws, the act of a majority of the directors present at any such
meeting at which a quorum is present shall be the act of the Board
of Directors. In the absence of a quorum, a majority of the
directors present may adjourn any meeting, from time to time, until
a quorum is present. No notice of any adjourned meeting need be
given.
9. Business Combination. The Board of Directors acting by
a majority of the directors who are Disinterested Directors (as
defined in Article XIII of the Articles of Incorporation) ("Article
XIII") shall have the power and duty to determine for the purpose
of Article XIII on the basis of information known to them after
reasonable inquiry, all facts necessary to determine the
applicability of the various provisions of Article XIII, including
(1) whether a person is an Interested Shareholder (as defined in
Article XIII), (2) the number of shares of Voting Stock (as defined
in Article XIII) beneficially owned by any person, (3) whether a
person is an Affiliate or Associate (as defined in Article XIII) of
another, and (4) whether the requirements of Section 8 of Article
XIII have been met with respect to any Business Combination (as
defined in Article XIII), and the good faith determination of a
majority of the directors who are Disinterested Directors shall be
conclusive and binding for all purposes of Article XIII.
10. Directors' Compensation. The Board of Directors shall
have authority to determine from time to time the amount, if any,
of compensation and expenses which shall be paid to its members for
attendance at meetings of the Board or of any committee of the
Board. The Board of Directors shall also have power, in its
discretion, to provide for and to pay to directors rendering
services to the Corporation not ordinarily rendered by directors,
as such, special compensation appropriate to the value of such
services, as determined by the Board from time to time.
11. Resignations. Any director of the Corporation may resign
at any time either by oral tender of resignation at any meeting of
the Board or by giving written notice thereof to the Chairman, the
President, or the Secretary. Such resignation shall take effect at
the time specified therefor; and, unless otherwise specified with
respect thereto, the acceptance of such resignation shall not be
necessary to make it effective.
12. Removal of Directors. Any director may be removed at any
time for cause by the affirmative vote of the holders of record of
a majority of the outstanding shares of stock entitled to vote, or
without cause by the affirmative vote of the holders of record of
at least 80% of the outstanding shares of stock entitled to vote,
at a meeting of the stockholders called for the purpose; and the
vacancy in the Board caused by such removal may be filled by the
stockholders or, if the stockholders shall have failed to do so,
such vacancy may be filled by the Board of Directors at any meeting
by the affirmative vote of a majority of the remaining directors.
ARTICLE IV
Officers, Employees and Agents
1. Officers, Term of Office, Vacancies, Removal. The Board
of Directors shall elect a President, one or more Vice Presidents
of such precedence, rank or additional designation, if any, among
the same as the Board of Directors may provide, a Secretary and a
Treasurer, such election to take place, if practicable, at the
Organization Meeting of the Board of Directors each year, and such
officers shall hold office, subject to removal by the Board, until
the Organization Meeting of the Board of Directors in the next
subsequent year and until their respective successors are elected
and qualified. In addition, the Board of Directors in its
discretion may provide for and elect a Chairman of the Board of
Directors, who may also hold the office of President, and a Vice
Chairman of the Board, who may also hold the office of Vice
President or President. The Board of Directors may appoint a
successor to fill a vacancy in any office for the remainder of the
term. The Board of Directors or the Executive Committee may, from
time to time, appoint any one or more Assistant Vice Presidents,
one or more Assistant Secretaries, one or more Assistant
Treasurers, and such other officers and agents as may appear to be
necessary or advisable in the conduct or affairs of the
Corporation; and all such officers shall hold office during the
pleasure of the Board. Any officers and agents may be removed at
any time, for or without cause, by the Board of Directors, or, in
case any such officer or agent may be appointed pursuant to these
By-Laws by the Executive Committee, he may be removed by the
Executive Committee.
2. Chairman. The Chairman shall be the chief executive
officer of the Corporation and, under the direction of the Board of
Directors, shall have general executive powers in the management
and direction of the business and affairs of the Corporation, as
well as the specific powers conferred by these By-Laws or by the
Board of Directors. The Chairman shall preside, when present, at
all meetings of the stockholders, the Board of Directors and the
Executive Committee.
3. President. The President shall be the chief operating
and administrative officer of the Corporation and, under the
direction of the Board of Directors, shall, subject to the
Chairman, have direct general supervision over the management,
business, properties and affairs of the Corporation. In the
absence of the Chairman, he shall preside at all meetings of the
stockholders, the Board of Directors and the Executive Committee.
He shall have general executive powers, including all powers
required by law to be exercised by a president of a corporation as
such, as well as the specific powers conferred by these By-Laws or
by the Board of Directors.
4. Vice President. Each Vice President shall have general
executive powers as well as the specific powers conferred by these
By-Laws. He shall also have such further powers and duties as may
from time to time be conferred upon, or assigned to, him by the
Board of Directors, the Chairman or the President.
5. Secretary. The Secretary shall attend to the giving of
notice of all meetings of stockholders and of the Board of
Directors required by these By-Laws to be given, and shall keep
true records of all proceedings thereat. Be shall have charge of
the corporate seal and shall keep and account for all books,
documents, papers and records of the Corporation, except those for
which some other officer or agent is properly accountable, and
shall generally perform all the duties usually appertaining to the
office of secretary of a corporation. In the absence of the
Secretary, an Assistant Secretary or Secretary pro tempore shall
perform his duties.
6. Treasurer. The Treasurer shall have the care and custody
of all moneys, funds and securities of the Corporation. He shall
disburse the funds of the Corporation in the manner ordered by the
Board of Directors and shall keep full and accurate accounts of
receipts and disbursements of the Corporation. He shall, whenever
required to do so, render an account of all his transactions as
Treasurer to the Board of Directors. He shall perform such other
duties as shall be assigned to him by the Board of Directors, the
Chairman or the President. In the absence of the Treasurer, his
duties shall be performed by an Assistant Treasurer or by another
officer thereunto designated by the Board of Directors, the
Chairman or the President.
7. Additional Officers; Duties and Powers. In addition to
the foregoing especially enumerated duties and powers the several
officers and agents of the Corporation, whether or not specifically
referred to in these By-Laws, shall perform such duties and
exercise such powers, in addition to those for which provision is
made in these By-Laws, as the Board of Directors or Executive
Committee may from time to time determine or as may be assigned to
them by any competent superior officer.
8. Compensation. The Board of Directors shall fix the
compensation of the Chairman and the President and of the senior
and executive Vice Presidents, if any; the compensation of all
other officers of the Corporation shall be fixed by the Board of
Directors, the Executive Committee, or the President.
ARTICLE V
Committees of the Board
1. Executive Committee; Constitution, Powers, Vacancies. The
Board of Directors may, resolution adopted by affirmative vote of
a majority of the whole Board, appoint an Executive Committee, to
consist of the Chairman and the President, ex officio, and one or
more other directors (with such alternates, if any, as may be
deemed desirable), which Executive Committee shall have and may
exercise, when the Board is not in session, all the powers of the
Board of Directors in the management of the business and affairs of
the Corporation, including the power to authorize the seal of the
Corporation to be affixed to all papers which may require it, and
also including the power, from time to time, to appoint one or more
attorneys-in-fact to act for and in representation of the
Corporation, either generally or specially, judicially or extra-
judicially, and to delegate to any such attorney or attorneys-in-
fact all or any of the powers which, in the judgment of the
Executive Committee, may be necessary, convenient or suitable for
exercise in any country or jurisdiction in the transaction of the
business of the Corporation or the defense or enforcement of its
rights, even though such powers be herein provided or directed to
be exercised by a designated officer of the Corporation; provided,
that the foregoing shall not be construed as authorizing action by
the Executive Committee with respect to any action which by these
By-Laws or by the Certificate of Incorporation or any amendment
thereto, or by statute, is required to be taken by the Board of
Directors, as such. As far as practicable, members of the
Executive Committee and their alternates (if any) shall be
appointed at the Organization Meeting of the Board in the next
subsequent year and until their respective successors are
appointed. Any vacancy in the Executive Committee may be filled by
affirmative vote of a majority of the whole Board of Directors.
2. Executive Committee; Meetings. Stated meetings of the
Executive Committee, of which no notice shall be necessary, shall
be held at such times and at such places as shall be fixed, from
time to time, by resolution adopted by the Executive Committee.
Special meetings of the Executive Committee may be called by the
Chairman or the President, or by the Chairman of the Executive
Committee (if he be a person other than the Chairman or the
President) or by any other two members of the Executive Committee,
at any time. Notice of any special meeting of the Executive
Committee may be given in the manner provided in the By-Laws for
giving notice of a special meeting of the Board of Directors, but
notice of any such meeting need not be given to any member of the
Executive Committee if waived by him in writing (including
telegram, cablegram or radiogram) or if he shall be present at the
meeting; and any meeting of the Executive Committee shall be a
legal meeting, without any notice thereof having been given, if all
the members shall be present thereat. A majority of the Executive
Committee shall constitute a quorum for the transaction of
business; and the act of a majority of those present at any meeting
at which a quorum is present shall be the act of the Executive
Committee.
3. Executive Committee; Records. The Executive Committee
shall keep a record of its acts and proceedings and shall report
the same, from time to time, to the Board of Directors. The
Secretary of the Corporation, or in his absence, an Assistant
Secretary, shall act as secretary to the Executive Committee; or
the Committee may, in its discretion, appoint its own secretary.
4. Other Committees. The Board of Directors may from time
to time, by resolution passed by a majority of the whole Board,
designate one or more other committees for any purpose, each
consisting of two or more Directors, and may delegate to any such
committee such powers of the Board of Directors in the management
of the business and affairs of the Corporation as the Board may
deem expedient, subject to the provisions of these By-Laws, with
power to sub-delegate such powers, if by the Board deemed
desirable.
ARTICLE VI
Miscellaneous
1. Fiscal Year. The fiscal year of the corporation shall
end on Friday of the last weekend in January of each year,
effecting a 52-53 week fiscal year basis.
2. Corporate Seal. The Secretary or any Assistant
Secretary, or other officer thereunto designated by the Secretary,
shall have authority to affix the corporate seal to any document
requiring such seal and to attest the same.
3. Execution of Instruments. The bills, notes, checks, and
other instruments for the payment of money, all agreements,
indentures, mortgages, deeds, conveyances, transfers, certificates,
declarations, receipts, discharges, releases, satisfactions,
settlements, petitions, schedules, accounts, affidavits, bonds,
undertakings, proxies and other instruments or documents may be
signed, executed, acknowledged, verified, delivered, or accepted on
behalf of the corporation by the Chairman, the President, any Vice
President, the Secretary or the Treasurer. Any such instruments
may also be signed, executed, acknowledged, verified, delivered or
accepted on behalf of the corporation in such other manner and by
such other officers, employees or agents of the corporation as the
Board of Directors or Executive Committee may from time to time
direct.
4. Dividends. Dividends shall be declared only at such times
and in such amounts as the Board of Directors shall direct.
ARTICLE VII
Amendments
Except as otherwise provided herein or in the Articles of
Incorporation, these By-Laws or any provisions thereof may be
amended, altered, or repealed, in any particulars and new By-Laws
or provisions, not inconsistent with any provision of the
Certificate of Incorporation or any provision of law, may be
adopted by the Board of Directors, at any meeting thereof, by the
by the affirmative vote of a majority of the whole number of
Directors, or by the stockholders of the Corporation, at any
meeting of the stockholders, provided, however, that the power of
the Directors to make and alter By-Laws shall be subject to such
restrictions upon the exercise of such power as may be expressly
imposed by the stockholders in any By-Laws adopted by them from
time to time.
________________________
Adopted by the Board of Directors of Hughes Supply, Inc. on
November 18, 1986.
AMENDMENT TO
ARTICLE II, SECTION 1 AND ARTICLE VII
OF THE
HUGHES SUPPLY, INC.
BYLAWS
Pursuant to the Resolutions of the Board of Directors, dated
as of November 21, 1997 (a copy of which is attached hereto),
Article II, Section 1 of the Bylaws of Hughes Supply, Inc. is
amended to read in its entirety as follows:
"1. The Annual Meeting of the stockholders shall be
held at ten o'clock on the third Wednesday of May of
each year, if not a legal holiday, and if a legal
holiday, then the day following, commencing with the
year A.D. 1998. Each Annual Meeting shall be held at
the principal office of the Corporation unless some
other place in or out of the State of Florida is
designated by the Board of Directors three weeks or
more before the day of such Annual Meeting."; and
Reference to the "Certificate of Incorporation" in Article
VII of the Hughes Supply, Inc. Bylaws shall be deleted and in its
stead shall be inserted "Articles of Incorporation."
Exhibit 10.1
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (this "Amendment") is made and entered into as
of the 1st day of April, 1998, by and between Hughes, Inc., a Florida
corporation (hereinafter referred to as the "Lessor"), and Hughes Supply,
Inc., a Florida corporation (hereinafter referred to as the "Lessee").
W I T N E S S E T H:
WHEREAS, the Lessor and Lessee are parties to that certain Lease, a copy of
which is attached hereto as Exhibit "A" (the "Lease"), which provides for
the lease of certain real property located in the City of Clearwater,
County of Pinellas, State of Florida;
WHEREAS, unless otherwise defined herein, all capitalized terms shall
have the same meanings ascribed to them as are set forth in the Lease;
WHEREAS, Lessor and Lessee desire to amend the terms of the Lease as
provided in this Amendment.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Amendment. This Amendment shall only amend those terms of the
Lease specifically amended hereby, and all other terms of the Lease shall
remain in full force and effect. This Amendment shall control over any
conflicting terms set forth in the Lease.
2. Term. The "term" of the lease shall be for a period of five
(5) years commencing as of April 1, 1998 and terminating on March 31, 2003;
provided, however, that the Lessee shall have the option of extending the
term for an additional term of five (5) years following the expiration of
the lease term on March 31, 2003, by providing to the Lessor at least
ninety (90) days notice of its intention to renew the Lease.
3. Rent. The monthly rent for the term of the Lease, as amended
hereby, shall be increased by the amount which is equal to the result of
dividing the monthly rent charged for the Premises on March 31, 1998 by the
amount of 0.90 (i.e. monthly rent/0.90 = new monthly rental amount).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
"Lessor" "Lessee"
HUGHES, INC. HUGHES SUPPLY, INC.
By: /s/ Russell V. Hughes By: /s/ A. Stewart Hall, Jr.
Russell V. Hughes, President A. Stewart Hall, Jr., President
J:\docs\HI\Lease Amendment 3.doc
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (this "Amendment") is made and entered into as
of the 1st day of April, 1998, by and between Hughes, Inc., a Florida
corporation (hereinafter referred to as the "Lessor"), and Hughes Supply,
Inc., a Florida corporation (hereinafter referred to as the "Lessee").
W I T N E S S E T H:
WHEREAS, the Lessor and Lessee are parties to that certain Lease, a
copy of which is attached hereto as Exhibit "A" (the "Lease"), which
provides for the lease of certain real property located in the City of
Daytona Beach, County of Volusia, State of Florida;
WHEREAS, unless otherwise defined herein, all capitalized terms shall
have the same meanings ascribed to them as are set forth in the Lease;
WHEREAS, Lessor and Lessee desire to amend the terms of the Lease as
provided in this Amendment.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Amendment. This Amendment shall only amend those terms of the
Lease specifically amended hereby, and all other terms of the Lease shall
remain in full force and effect. This Amendment shall control over any
conflicting terms set forth in the Lease.
2. Term. The "term" of the lease shall be for a period of five
(5) years commencing as of April 1, 1998 and terminating on March 31, 2003;
provided, however, that the Lessee shall have the option of extending the
term for an additional term of five (5) years following the expiration of
the lease term on March 31, 2003, by providing to the Lessor at least
ninety (90) days notice of its intention to renew the Lease.
3. Rent. The monthly rent for the term of the Lease, as amended
hereby, shall be increased by the amount which is equal to the result of
dividing the monthly rent charged for the Premises on March 31, 1998 by the
amount of 0.90 (i.e. monthly rent/0.90 = new monthly rental amount).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
"Lessor" "Lessee"
HUGHES, INC. HUGHES SUPPLY, INC.
By: /s/ Russell V. Hughes By: /s/ A. Stewart Hall, Jr.
Russell V. Hughes, President A. Stewart Hall, Jr., President
J:\docs\HI\Lease Amendment 7.doc
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (this "Amendment") is made and entered into as
of the 1st day of April, 1998, by and between Hughes, Inc., a Florida
corporation (hereinafter referred to as the "Lessor"), and Hughes Supply,
Inc., a Florida corporation (hereinafter referred to as the "Lessee").
W I T N E S S E T H:
WHEREAS, the Lessor and Lessee are parties to that certain Lease, a
copy of which is attached hereto as Exhibit "A" (the "Lease"), which
provides for the lease of certain real property located in the City of Ft.
Pierce, County of St. Lucie, State of Florida;
WHEREAS, unless otherwise defined herein, all capitalized terms shall
have the same meanings ascribed to them as are set forth in the Lease;
WHEREAS, Lessor and Lessee desire to amend the terms of the Lease as
provided in this Amendment.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Amendment. This Amendment shall only amend those terms of the
Lease specifically amended hereby, and all other terms of the Lease shall
remain in full force and effect. This Amendment shall control over any
conflicting terms set forth in the Lease.
2. Term. The "term" of the lease shall be for a period of five
(5) years commencing as of April 1, 1998 and terminating on March 31, 2003;
provided, however, that the Lessee shall have the option of extending the
term for an additional term of five (5) years following the expiration of
the lease term on March 31, 2003, by providing to the Lessor at least
ninety (90) days notice of its intention to renew the Lease.
3. Rent. The monthly rent for the term of the Lease, as amended
hereby, shall be increased by the amount which is equal to the result of
dividing the monthly rent charged for the Premises on March 31, 1998 by the
amount of 0.90 (i.e. monthly rent/0.90 = new monthly rental amount).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
"Lessor" "Lessee"
HUGHES, INC. HUGHES SUPPLY, INC.
By: /s/ Russell V. Hughes By: /s/ A. Stewart Hall, Jr.
Russell V. Hughes, President A. Stewart Hall, Jr., President
J:\docs\HI\Lease Amendment 10.doc
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (this "Amendment") is made and entered into as
of the 1st day of April, 1998, by and between Hughes, Inc., a Florida
corporation (hereinafter referred to as the "Lessor"), and Hughes Supply,
Inc., a Florida corporation (hereinafter referred to as the "Lessee").
W I T N E S S E T H:
WHEREAS, the Lessor and Lessee are parties to that certain Lease, a
copy of which is attached hereto as Exhibit "A" (the "Lease"), which
provides for the lease of certain real property located in the City of
Lakeland, County of Polk, State of Florida;
WHEREAS, unless otherwise defined herein, all capitalized terms shall
have the same meanings ascribed to them as are set forth in the Lease;
WHEREAS, Lessor and Lessee desire to amend the terms of the Lease as
provided in this Amendment.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Amendment. This Amendment shall only amend those terms of the
Lease specifically amended hereby, and all other terms of the Lease shall
remain in full force and effect. This Amendment shall control over any
conflicting terms set forth in the Lease.
2. Term. The "term" of the lease shall be for a period of five
(5) years commencing as of April 1, 1998 and terminating on March 31, 2003;
provided, however, that the Lessee shall have the option of extending the
term for an additional term of five (5) years following the expiration of
the lease term on March 31, 2003, by providing to the Lessor at least
ninety (90) days notice of its intention to renew the Lease.
3. Rent. The monthly rent for the term of the Lease, as amended
hereby, shall be increased by the amount which is equal to the result of
dividing the monthly rent charged for the Premises on March 31, 1998 by the
amount of 0.90 (i.e. monthly rent/0.90 = new monthly rental amount).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
"Lessor" "Lessee"
HUGHES, INC. HUGHES SUPPLY, INC.
By: /s/ Russell V. Hughes By: /s/ A. Stewart Hall, Jr.
Russell V. Hughes, President A. Stewart Hall, Jr., President
J:\docs\HI\Lease Amendment 8.doc
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (this "Amendment") is made and entered into as
of the 1st day of April, 1998, by and between Hughes, Inc., a Florida
corporation (hereinafter referred to as the "Lessor"), and Hughes Supply,
Inc., a Florida corporation (hereinafter referred to as the "Lessee").
W I T N E S S E T H:
WHEREAS, the Lessor and Lessee are parties to that certain Lease, a
copy of which is attached hereto as Exhibit "A" (the "Lease"), which
provides for the lease of certain real property located in the City of
Leesburg, County of Lake, State of Florida;
WHEREAS, unless otherwise defined herein, all capitalized terms shall
have the same meanings ascribed to them as are set forth in the Lease;
WHEREAS, Lessor and Lessee desire to amend the terms of the Lease as
provided in this Amendment.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Amendment. This Amendment shall only amend those terms of the
Lease specifically amended hereby, and all other terms of the Lease shall
remain in full force and effect. This Amendment shall control over any
conflicting terms set forth in the Lease.
2. Term. The "term" of the lease shall be for a period of five
(5) years commencing as of April 1, 1998 and terminating on March 31, 2003;
provided, however, that the Lessee shall have the option of extending the
term for an additional term of five (5) years following the expiration of
the lease term on March 31, 2003, by providing to the Lessor at least
ninety (90) days notice of its intention to renew the Lease.
3. Rent. The monthly rent for the term of the Lease, as amended
hereby, shall be increased by the amount which is equal to the result of
dividing the monthly rent charged for the Premises on March 31, 1998 by the
amount of 0.90 (i.e. monthly rent/0.90 = new monthly rental amount).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
"Lessor" "Lessee"
HUGHES, INC. HUGHES SUPPLY, INC.
By: /s/ Russell V. Hughes By: /s/ A. Stewart Hall, Jr.
Russell V. Hughes, President A. Stewart Hall, Jr., President
J:\docs\HI\Lease Amendment 9.doc
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (this "Amendment") is made and entered into as
of the 1st day of April, 1998, by and between Hughes, Inc., a Florida
corporation (hereinafter referred to as the "Lessor"), and Hughes Supply,
Inc., a Florida corporation (hereinafter referred to as the "Lessee").
W I T N E S S E T H:
WHEREAS, the Lessor and Lessee are parties to that certain Lease, a copy of
which is attached hereto as Exhibit "A" (the "Lease"), which provides for
the lease of certain real property located in the City of Orlando, County
of Orange, State of Florida;
WHEREAS, unless otherwise defined herein, all capitalized terms shall
have the same meanings ascribed to them as are set forth in the Lease;
WHEREAS, Lessor and Lessee desire to amend the terms of the Lease as
provided in this Amendment.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Amendment. This Amendment shall only amend those terms of the
Lease specifically amended hereby, and all other terms of the Lease shall
remain in full force and effect. This Amendment shall control over any
conflicting terms set forth in the Lease.
2. Term. The "term" of the lease shall be for a period of five
(5) years commencing as of April 1, 1998 and terminating on March 31, 2003;
provided, however, that the Lessee shall have the option of extending the
term for an additional term of five (5) years following the expiration of
the lease term on March 31, 2003, by providing to the Lessor at least
ninety (90) days notice of its intention to renew the Lease.
3. Rent. The monthly rent for the term of the Lease, as amended
hereby, shall be increased by the amount which is equal to the result of
dividing the monthly rent charged for the Premises on March 31, 1998 by the
amount of 0.90 (i.e. monthly rent/0.90 = new monthly rental amount).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
"Lessor" "Lessee"
HUGHES, INC. HUGHES SUPPLY, INC.
By: /s/ Russell V. Hughes By: /s/ A. Stewart Hall, Jr.
Russell V. Hughes, President A. Stewart Hall, Jr., President
J:\docs\HI\Lease Amendment 2.doc
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (this "Amendment") is made and entered into as
of the 1st day of April, 1998, by and between Hughes, Inc., a Florida
corporation (hereinafter referred to as the "Lessor"), and Hughes Supply,
Inc., a Florida corporation (hereinafter referred to as the "Lessee").
W I T N E S S E T H:
WHEREAS, the Lessor and Lessee are parties to that certain Lease, a
copy of which is attached hereto as Exhibit "A" (the "Lease"), which
provides for the lease of certain real property located in the City of
Orlando, County of Orange, State of Florida;
WHEREAS, unless otherwise defined herein, all capitalized terms shall
have the same meanings ascribed to them as are set forth in the Lease;
WHEREAS, Lessor and Lessee desire to amend the terms of the Lease as
provided in this Amendment.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Amendment. This Amendment shall only amend those terms of the
Lease specifically amended hereby, and all other terms of the Lease shall
remain in full force and effect. This Amendment shall control over any
conflicting terms set forth in the Lease.
2. Term. The "term" of the lease shall be for a period of five
(5) years commencing as of April 1, 1998 and terminating on March 31, 2003;
provided, however, that the Lessee shall have the option of extending the
term for an additional term of five (5) years following the expiration of
the lease term on March 31, 2003, by providing to the Lessor at least
ninety (90) days notice of its intention to renew the Lease.
3. Rent. The monthly rent for the term of the Lease, as amended
hereby, shall be increased by the amount which is equal to the result of
dividing the monthly rent charged for the Premises on March 31, 1998 by the
amount of 0.90 (i.e. monthly rent/0.90 = new monthly rental amount).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
"Lessor" "Lessee"
HUGHES, INC. HUGHES SUPPLY, INC.
By: /s/ Russell V. Hughes By: /s/ A. Stewart Hall, Jr.
Russell V. Hughes, President A. Stewart Hall, Jr., President
J:\docs\HI\Lease Amendment 4.doc
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (this "Amendment") is made and entered into as
of the 1st day of April, 1998, by and between Hughes, Inc., a Florida
corporation (hereinafter referred to as the "Lessor"), and Hughes Supply,
Inc., a Florida corporation (hereinafter referred to as the "Lessee").
W I T N E S S E T H:
WHEREAS, the Lessor and Lessee are parties to that certain Lease, a
copy of which is attached hereto as Exhibit "A" (the "Lease"), which
provides for the lease of certain real property located in the City of
Orlando, County of Orange, State of Florida;
WHEREAS, unless otherwise defined herein, all capitalized terms shall
have the same meanings ascribed to them as are set forth in the Lease;
WHEREAS, Lessor and Lessee desire to amend the terms of the Lease as
provided in this Amendment.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Amendment. This Amendment shall only amend those terms of the
Lease specifically amended hereby, and all other terms of the Lease shall
remain in full force and effect. This Amendment shall control over any
conflicting terms set forth in the Lease.
2. Term. The "term" of the lease shall be for a period of five
(5) years commencing as of April 1, 1998 and terminating on March 31, 2003;
provided, however, that the Lessee shall have the option of extending the
term for an additional term of five (5) years following the expiration of
the lease term on March 31, 2003, by providing to the Lessor at least
ninety (90) days notice of its intention to renew the Lease.
3. Rent. The monthly rent for the term of the Lease, as amended
hereby, shall be increased by the amount which is equal to the result of
dividing the monthly rent charged for the Premises on March 31, 1998 by the
amount of 0.90 (i.e. monthly rent/0.90 = new monthly rental amount).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
"Lessor" "Lessee"
HUGHES, INC. HUGHES SUPPLY, INC.
By: /s/ Russell V. Hughes By: /s/ A. Stewart Hall, Jr.
Russell V. Hughes, President A. Stewart Hall, Jr., President
J:\docs\HI\Lease Amendment 5.doc
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (this "Amendment") is made and entered into as
of the 1st day of April, 1998, by and between Hughes, Inc., a Florida
corporation (hereinafter referred to as the "Lessor"), and Hughes Supply,
Inc., a Florida corporation (hereinafter referred to as the "Lessee").
W I T N E S S E T H:
WHEREAS, the Lessor and Lessee are parties to that certain Lease, a
copy of which is attached hereto as Exhibit "A" (the "Lease"), which
provides for the lease of certain real property located in the City of
Sarasota, County of Sarasota, State of Florida;
WHEREAS, unless otherwise defined herein, all capitalized terms shall
have the same meanings ascribed to them as are set forth in the Lease;
WHEREAS, Lessor and Lessee desire to amend the terms of the Lease as
provided in this Amendment.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Amendment. This Amendment shall only amend those terms of the
Lease specifically amended hereby, and all other terms of the Lease shall
remain in full force and effect. This Amendment shall control over any
conflicting terms set forth in the Lease.
2. Term. The "term" of the lease shall be for a period of five
(5) years commencing as of April 1, 1998 and terminating on March 31, 2003;
provided, however, that the Lessee shall have the option of extending the
term for an additional term of five (5) years following the expiration of
the lease term on March 31, 2003, by providing to the Lessor at least
ninety (90) days notice of its intention to renew the Lease.
3. Rent. The monthly rent for the term of the Lease, as amended
hereby, shall be increased by the amount which is equal to the result of
dividing the monthly rent charged for the Premises on March 31, 1998 by the
amount of 0.90 (i.e. monthly rent/0.90 = new monthly rental amount).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
"Lessor" "Lessee"
HUGHES, INC. HUGHES SUPPLY, INC.
By: /s/ Russell V. Hughes By: /s/ A. Stewart Hall, Jr.
Russell V. Hughes, President A. Stewart Hall, Jr., President
J:\docs\HI\Lease Amendment 11.doc
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (this "Amendment") is made and entered into as
of the 1st day of April, 1998, by and between Hughes, Inc., a Florida
corporation (hereinafter referred to as the "Lessor"), and Hughes Supply,
Inc., a Florida corporation (hereinafter referred to as the "Lessee").
W I T N E S S E T H:
WHEREAS, the Lessor and Lessee are parties to that certain Lease, a
copy of which is attached hereto as Exhibit "A" (the "Lease"), which
provides for the lease of certain real property located in the City of
Venice, County of Sarasota, State of Florida;
WHEREAS, unless otherwise defined herein, all capitalized terms shall
have the same meanings ascribed to them as are set forth in the Lease;
WHEREAS, Lessor and Lessee desire to amend the terms of the Lease as
provided in this Amendment.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Amendment. This Amendment shall only amend those terms of the
Lease specifically amended hereby, and all other terms of the Lease shall
remain in full force and effect. This Amendment shall control over any
conflicting terms set forth in the Lease.
2. Term. The "term" of the lease shall be for a period of five
(5) years commencing as of April 1, 1998 and terminating on March 31, 2003;
provided, however, that the Lessee shall have the option of extending the
term for an additional term of five (5) years following the expiration of
the lease term on March 31, 2003, by providing to the Lessor at least
ninety (90) days notice of its intention to renew the Lease.
3. Rent. The monthly rent for the term of the Lease, as amended
hereby, shall be increased by the amount which is equal to the result of
dividing the monthly rent charged for the Premises on March 31, 1998 by the
amount of 0.90 (i.e. monthly rent/0.90 = new monthly rental amount).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
"Lessor" "Lessee"
HUGHES, INC. HUGHES SUPPLY, INC.
By: /s/ Russell V. Hughes By: /s/ A. Stewart Hall, Jr.
Russell V. Hughes, President A. Stewart Hall, Jr., President
J:\docs\HI\Lease Amendment 12.doc
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (this "Amendment") is made and entered into as
of the 1st day of April, 1998, by and between Hughes, Inc., a Florida
corporation (hereinafter referred to as the "Lessor"), and Hughes Supply,
Inc., a Florida corporation (hereinafter referred to as the "Lessee").
W I T N E S S E T H:
WHEREAS, the Lessor and Lessee are parties to that certain Lease, a
copy of which is attached hereto as Exhibit "A" (the "Lease"), which
provides for the lease of certain real property located in the City of
Winter Haven, County of Polk, State of Florida;
WHEREAS, unless otherwise defined herein, all capitalized terms shall
have the same meanings ascribed to them as are set forth in the Lease;
WHEREAS, Lessor and Lessee desire to amend the terms of the Lease as
provided in this Amendment.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Amendment. This Amendment shall only amend those terms of the
Lease specifically amended hereby, and all other terms of the Lease shall
remain in full force and effect. This Amendment shall control over any
conflicting terms set forth in the Lease.
2. Term. The "term" of the lease shall be for a period of five
(5) years commencing as of April 1, 1998 and terminating on March 31, 2003;
provided, however, that the Lessee shall have the option of extending the
term for an additional term of five (5) years following the expiration of
the lease term on March 31, 2003, by providing to the Lessor at least
ninety (90) days notice of its intention to renew the Lease.
3. Rent. The monthly rent for the term of the Lease, as amended
hereby, shall be increased by the amount which is equal to the result of
dividing the monthly rent charged for the Premises on March 31, 1998 by the
amount of 0.90 (i.e. monthly rent/0.90 = new monthly rental amount).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
"Lessor" "Lessee"
HUGHES, INC. HUGHES SUPPLY, INC.
By: /s/ Russell V. Hughes By: /s/ A. Stewart Hall, Jr.
Russell V. Hughes, President A. Stewart Hall, Jr., President
J:\docs\HI\Lease Amendment 6.doc
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (this "Amendment") is made and entered into as
of the 1st day of April, 1998, by and between Hughes, Inc., a Florida
corporation (hereinafter referred to as the "Lessor"), and Hughes Supply,
Inc., a Florida corporation (hereinafter referred to as the "Lessee").
W I T N E S S E T H:
WHEREAS, the Lessor and Lessee are parties to that certain Lease, a
copy of which is attached hereto as Exhibit "A" (the "Lease"), which
provides for the lease of certain real property located in the City of
Sarasota, County of Sarasota, State of Florida;
WHEREAS, unless otherwise defined herein, all capitalized terms shall
have the same meanings ascribed to them as are set forth in the Lease;
WHEREAS, Lessor and Lessee desire to amend the terms of the Lease as
provided in this Amendment.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Amendment. This Amendment shall only amend those terms of the
Lease specifically amended hereby, and all other terms of the Lease shall
remain in full force and effect. This Amendment shall control over any
conflicting terms set forth in the Lease.
2. Term. The "term" of the lease shall be for a period of five
(5) years commencing as of April 1, 1998 and terminating on March 31, 2003;
provided, however, that the Lessee shall have the option of extending the
term for an additional term of five (5) years following the expiration of
the lease term on March 31, 2003, by providing to the Lessor at least
ninety (90) days notice of its intention to renew the Lease.
3. Rent. The monthly rent for the term of the Lease, as amended
hereby, shall be increased by the amount which is equal to the result of
dividing the monthly rent charged for the Premises on March 31, 1998 by the
amount of 0.90 (i.e. monthly rent/0.90 = new monthly rental amount).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
"Lessor" "Lessee"
HUGHES, INC. HUGHES SUPPLY, INC.
By: /s/ Russell V. Hughes By: /s/ A. Stewart Hall, Jr.
Russell V. Hughes, President A. Stewart Hall, Jr., President
J:\docs\HI\Lease Amendment 13.doc
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE (this "Amendment") is made and entered into as
of the 1st day of April, 1998, by and between Hughes, Inc., a Florida
corporation (hereinafter referred to as the "Lessor"), and Hughes Supply,
Inc., a Florida corporation (hereinafter referred to as the "Lessee").
W I T N E S S E T H:
WHEREAS, the Lessor and Lessee are parties to that certain Lease, a copy of
which is attached hereto as Exhibit "A" (the "Lease"), which provides for
the lease of certain real property located in the City of Gainesville,
County of Alachua, State of Florida;
WHEREAS, unless otherwise defined herein, all capitalized terms shall
have the same meanings ascribed to them as are set forth in the Lease;
WHEREAS, Lessor and Lessee desire to amend the terms of the Lease as
provided in this Amendment.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Amendment. This Amendment shall only amend those terms of the
Lease specifically amended hereby, and all other terms of the Lease shall
remain in full force and effect. This Amendment shall control over any
conflicting terms set forth in the Lease.
2. Term. The "term" of the lease shall be for a period of five
(5) years commencing as of April 1, 1998 and terminating on March 31, 2003;
provided, however, that the Lessee shall have the option of extending the
term for an additional term of five (5) years following the expiration of
the lease term on March 31, 2003, by providing to the Lessor at least
ninety (90) days notice of its intention to renew the Lease.
3. Rent. The monthly rent for the term of the Lease, as amended
hereby, shall be increased by the amount which is equal to the result of
dividing the monthly rent charged for the Premises on March 31, 1998 by the
amount of 0.90 (i.e. monthly rent/0.90 = new monthly rental amount).
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
"Lessor" "Lessee"
HUGHES, INC. HUGHES SUPPLY, INC.
By: /s/ Russell V. Hughes By: /s/ A. Stewart Hall, Jr.
Russell V. Hughes, President A. Stewart Hall, Jr., President
J:\docs\HI\Lease Amendment 1.doc
Exhibit 10.4
RESOLUTIONS ADOPTED
BY THE
BOARD OF DIRECTORS
OF
HUGHES SUPPLY, INC.
On March 18, 1998
WHEREAS, the Hughes Supply, Inc. Directors' Stock Option Plan
(the "Directors' Stock Option Plan") provides that in the event
that an optionee ceases to be a Director for any reason other than
death or disability, such optionee may exercise any option at any
time within three months after the date on which the optionee
ceases to be a Director; and
WHEREAS, the Company's Board of Directors deems it to be in
the best interest of the Company to extend the three month period
referenced above to one year.
NOW, THEREFORE, BE IT HEREBY RESOLVED, that the time period
within which an optionee who ceases to be a Director, for any
reason other than death or disability, may exercise his options
under the Directors' Stock Option Plan shall be extended from three
months to one year.
AMENDMENT NO. 1 TO
HUGHES SUPPLY, INC.
DIRECTORS' STOCK OPTION PLAN
WHEREAS, the Board of Directors of Hughes Supply, Inc. (the
"Corporation") approved the Directors' Stock Option Plan (the
"Plan") on January 24, 1989 in the form attached hereto as Appendix
"A";
WHEREAS, the letter from the staff of the Securities and
Exchange Commission referred to in Section 14 of the Plan was
issued by the Commission Staff on April 6, 1989 satisfying the
conditions of Section 14;
WHEREAS, the shareholders of the Corporation approved the Plan
at the Annual Meeting of Shareholders held on May 30, 1989;
WHEREAS, in accordance with the terms of Sections 3 and 4 of
the Plan, options with respect to all of the stock authorized for
options under the Plan have been granted and no additional options
under the Plan may be granted in the absence of the expiration or
termination of presently outstanding options or an amendment to the
Plan increasing a number of shares as to which options may be
granted; and
WHEREAS, the Board of Directors of the Corporation on March
24, 1994 approved and recommended shareholder approval of an
amendment to the Plan to increase by 75,000 the number of shares as
to which options may be granted under the Plan; and
WHEREAS, the shareholders approved the recommended amendment
at Annual Meeting of Shareholders held on May 24, 1994 increasing
from 60,000 to 135,000 the number of shares with respect to which
options may be granted under the Plan from 60,000 shares to 135,000
shares;
NOW, THEREFORE, IN WITNESS THEREOF, the following provisions
of the Plan are hereby amended and modified as follows:
Section 3.
Section 3. Participants and Options is hereby amended and
modified to amend and modify subparagraph (ii) thereof and to add
a new subparagraph (iii) as follows:
3. PARTICIPANTS AND OPTIONS
(ii) In addition to the options referred to in
subparagraph (i) above, during the term of the Plan
until, but not including, the date of the 1994 annual
meeting of shareholders a subsequent grant of options for
an aggregate of 12,000 shares, or such lesser number of
shares as shall then constitute all of the remaining
shares which are authorized for options under the Plan
but which are not then subject to options under the Plan,
within the limitation set forth in Section 4 hereof,
divided equally (rounded, if necessary, down to the
nearest whole number of shares) among the Participants
under the Plan, will be made at the meeting of the Board
of Directors of the Corporation immediately following the
1990 annual meeting of stockholders of the Corporation
and at each Board meeting immediately following each
annual meeting of stockholders thereafter during the term
of the Plan and prior to the 1994 annual meeting of
shareholders.
(iii) In addition to the options referred to in
subparagraphs (i) and (ii) above, during the term of the
Plan beginning with the date of the 1994 annual meeting
of shareholders a subsequent grant of options for an
aggregate of 15,000 shares or such lesser number of
shares as shall then constitute all of the remaining
shares which are authorized for options under the Plan
but which are not then subject to options under the Plan,
within the limitations set forth in Section 4 hereof,
divided equally (rounded, if necessary, down to the
nearest whole number of shares) among the Participants
under the Plan, will be made at the meeting of the Board
of Directors of the Corporation immediately following the
1994 annual meeting of stockholders of the Corporation at
each Board meeting immediately following each annual
meeting of stockholders thereafter during the term of the
Plan.
Section 4.
Section 4. Stock is hereby amended and modified to read in its
entirety as follows:
4. STOCK
The stock which may be subject to options under the
Plan shall be 135,000 shares of the Corporation's
authorized but unissued or reacquired $1.00 par value
common stock hereafter sometimes called capital stock.
The aggregate number of shares of capital stock which are
subject to outstanding options and which will be subject
to options to be granted under the Plan shall be subject
to adjustment in accordance with the provisions of
subsection (h) of Section 5 hereof.
In the event that any outstanding option under the
Plan for any reason expires or is terminated, the shares
of capital stock allocable to the unexercised portion of
such option may again be subject to an option under the
Plan.
Of the stock which may be subject to options under
the Plan, 75,000 of such shares have been added by an
amendment to the Plan approved by the stockholders on May
24, 1994 and such additional shares constitute shares as
to which "Amendment Options" within the meaning of
Section 6 hereof may be granted and approval by the
stockholders of such amendment extends the term of the
Plan in accordance with Section 6 hereof.
Except as hereinbefore set forth, the Plan shall remain
unchanged and in full force and effect.
The amendments and modifications set forth in this Amendment
No. 1 to Hughes Supply, Inc. Directors' Stock Option Plan were
approved and adopted by the Board of Directors and the stockholders
on the dates hereinabove set forth.
Witness my hand and the seal of the Corporation this 24th day
of May, 1994.
s/Robert N. Blackford
Robert N. Blackford, Secretary
Hughes Supply, Inc.
HUGHES SUPPLY, INC.
Directors' Stock Option Plan
1. PURPOSE
This Directors Stock Option Plan (the "Plan") is intended
as an incentive and to encourage Directors of Hughes Supply, Inc.
(the "Corporation") who are not, and for the previous twelve (12)
months have not been, employees of the Corporation eligible to
participate in the Hughes Supply, Inc. 1988 Stock Option Plan (the
"Employee Plan") to increase their stock ownership and proprietary
interest in the success of the Corporation, to encourage them to
continue as Directors of the Corporation and as an incentive to
work to increase the value of the stock of the Corporation. The
options to be issued pursuant to this Plan shall not constitute
incentive stock options within the meaning of Section 422A of the 1986
Internal Revenue Code, as amended (the "Code").
2. ADMINISTRATION
The Plan shall be administered by a Directors' Stock
Option Plan committee appointed by the Board of Directors of the
Corporation (the "Committee"). The Committee shall consist of not
less than three (3) members of the Corporation's Board of Directors
who are not,,employees of the Corporation and who are
"disinterested persons as that term is defined in Rule 16b-3(d)
under the Securities Exchange Act of 1934 (the "Exchange Act") or
any successor statute or regulation regarding the same subject
matter. The Board of Directors may from time to time remove
members from, or add members to, the Committee. Vacancies on the
Committee, howsoever caused, shall be filled by the Board of
Directors. The Committee shall elect one of its members as
Chairman, and shall hold meetings at such times and places as it
may determine. Acts of the Committee taken by a majority of the
Committee at a meeting at which a quorum is present, or acts
reduced to or approved in writing by a majority of the members of
the Committee, shall be the valid acts of the Committee. A
nonemployee Director shall receive options under the Plan whether
or not such Director also serves as a member of the Committee.
Subject to the provisions of the Plan the Committee may from time
to time adopt such rules for administration of the Plan as it deems
appropriate.
The interpretation and construction by the Committee of
any provisions of the Plan or of any option granted under it shall
be final unless otherwise determined by the Board of Directors. No
member of the Board of Directors or the Committee shall be liable
for any action or determination made in good faith with respect to
the Plan or any option granted under it.
<PAGE>
3. PARTICIPANTS AND OPTIONS
The persons who shall be participants under the Plan (the
"Participants") shall be all such Directors of the Corporation as
are not on the date of the grant of an option under the Plan, and
for a period of at least twelve (12) months prior to the grant of
such option have not been, employees of the Corporation. Options
are granted and shall be granted to Participants under the Plan as
follows:
(i) Subject to approval of the Plan by the
stockholders in accordance with Section 13 hereof and to the
receipt by the Corporation of the letter from the staff of the
Securities and Exchange Commission referred to in Section 14
hereof, an initial grant of an aggregate of 12,000 shares divided
equally (rounded, if necessary, down to the nearest whole number of
shares) among the Participants is made effective as of January 24,
1989 to the Participants on that date.
(ii) In addition to the options referred to in
subparagraph (i) above, during the term of the Plan a subsequent
grant of options for an aggregate of 12,000 shares or such lesser
number of shares as shall then constitute all of the remaining
shares which are not then, but which may be subject to options
under the Plan within the limitation set forth in Section 4 hereof,
divided equally (rounded, if necessary, down to the nearest whole
number of shares) among the then Participants under the Plan, will
be made at the meeting of the Board of Directors of the Corporation
immediately following the 1990 annual meeting of stockholders of
the Corporation and at each Board meeting immediately following
each annual meeting of stockholders of the Corporation thereafter
during the term of the Plan.
4. STOCK
The stock which may be subject to the options under the
Plan shall be 60,000 shares of the Corporations authorized but
unissued or reacquired $1.00 par value common stock hereafter
sometimes called capital stock. The aggregate number of shares of
capital stock which are subject to outstanding options and which
will be subject to options to be granted under the Plan shall be
subject to adjustment in accordance with the provisions of
subsection (h) of Section 5 hereof.
In the event that any outstanding option under the Plan
for any reason expires or is terminated, the shares of capital
stock allocable to the unexercised portion of such option may again
be subjected to an option under the Plan.
5. TERMS AND CONDITIONS OF OPTIONS: STOCK OPTION AGREEMENTS
Stock options granted pursuant to the Plan shall be
evidenced by stock option agreements in such form as the Committee
shall from time to time recommend and the Board of Directors shall
from time to time approve, which agreements shall comply with and
be subject to the following terms and conditions:
(a) Optionee's Agreement
Each optionee shall agree to remain as a Director of
the Corporation but such agreement shall not impose upon the
Corporation any obligation to retain the optionee as a Director for
any period.
(b) Number of Shares
Each option shall state the number of shares to
which it pertains.
(c) Option Price
Each option shall state the option price, which
shall be not less than one hundred percent (100%) of the fair
market value of the shares of capital stock of the Corporation on
the date of the granting of the option. During such time as such
stock is not listed upon an established stock exchange the fair
market value per share shall be the mean between dealer "bid" and
"ask" prices of the capital stock in over-the-counter market
applicable to transactions effected in Orlando, Florida on the day
the option is granted, as reported by the National Association of
Securities Dealers, Inc. If the stock is listed upon an
established stock exchange or exchanges such fair market value
shall be deemed to be the highest closing price of the capital
stock on such stock exchange or exchanges on the day the option is
granted or if no sale of the Corporation's capital stock shall have
been made on any stock exchange on that day, on the next preceding
day on which there was a sale of such stock. Subject to the
foregoing, the Board of Directors and the Committee in fixing the
option price shall have full authority and discretion and be fully
protected in doing so.
(d) Medium and Time of Payment
The option price shall be payable in United States
dollars upon the exercise of the option and may be paid in cash, by
check or with shares of capital stock of the Corporation valued at
their fair market value, as that term is defined in the preceding
paragraph.
(e) Term and Exercise of Options
An option shall be exercisable either in whole or in
part at any time after the date on which it is granted and prior to
its expiration date which, unless sooner terminated under
subsections (f) or (g) of this Section 5 hereof, shall be ten (10)
years from the date on which it is granted. The procedure for
exercise of an option shall be as set forth in the Plan and in the
stock option agreement evidencing the grant of the option. In the
event of any conflict between the language of the stock option
agreement and the language of the Plan, the language of the Plan
shall govern. No option shall be exercisable after its expiration
date. Not less than ten (10) shares may be purchased at any one
time unless the number purchased is the total number at the time
purchasable under the option. During the lifetime of the optionee,
the option shall be exercisable only by him and shall not be
assignable or transferable by him and no other person shall acquire
any rights therein.
(f) Termination of Service as a Director Except Death
In the event that an optionee shall cease to be a
Director of the Corporation for any reason other than his death,
subject to the condition that no option shall be exercisable after
its expiration date, such optionee shall have the right to exercise
the option at any time within three (3) months after such
termination as a Director to the extent his right to exercise such
option has not previously been exercised at the date of such
termination. For purposes of this paragraph, in the case of an
optionee who becomes disabled within the meaning of Section 22(3)(e) of
the Code, the words "three months" shall be replaced by the words
"one year".
(g) Death of Optionee and Transfer of Option
If the optionee shall die while a Director of the
Corporation or within a period of three (3) months after the
termination of his service as a Director of the Corporation and
shall not have fully exercised the option, an option may be
exercised at any time within one (1) year after the optionee's
death, subject to the condition that no option shall be exercisable
after its expiration date, to the extent that the optionee's right
to exercise such option at the time of his death had not been
previously exercised, by the executors or administrators of the
optionee or by any person or persons who shall have acquired the
option directly from the optionee by bequest or inheritance or by
reason of the death of the decedent.
No option shall be transferable by the optionee
otherwise than by Will or the laws of descent and distribution.
(h) Recapitalization
Subject to any required action by the stockholders,
the number of shares of capital stock which are subject to each
outstanding option or which will be subject to each option to be
granted under the Plan, and the price per share thereof in each
such option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of capital stock of the
Corporation resulting from a subdivision or consolidation of shares
or the payment of a stock dividend (but only on the capital stock)
or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Corporation.
Subject to any required action by the stockholders
if the Corporation shall be the surviving corporation in any
merger or consolidation, each outstanding option shall pertain to
and apply to the securities to which a holder of the number of
shares of capital stock subject to the option would have been
entitled. A dissolution or liquidation of the Corporation or a
merger or consolidation in which the Corporation is not the
surviving corporation, shall cause each outstanding option to
terminate provided that each optionee shall, in such event, have
the right immediately prior to such dissolution or liquidation, or
merger or consolidation in which the Corporation is not the
surviving corporation, to exercise his option in whole or in part.
In the event of a change in the capital stock of the
Corporation as presently constituted, which is limited to a change
of all of its authorized shares with par value into the same number
of shares with a different par value or without par value, the
shares resulting from any such change shall be deemed to be the
capital stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate
to stock or securities of the Corporation, such adjustments shall
be made by the Committee, whose determination in that respect shall
be final, binding and conclusive.
Except as hereinbefore expressly provided in this
subsection 5(h), the optionee shall have no rights by reason of any
subdivision or consolidation of shares of stock of any class or the
payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class or by reason of any
dissolution, liquidation, merger, or consolidation or spin-off of
assets or stock of another corporation, and any issue by the
Corporation of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect,
and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of capital stock subject to the
option.
The grant of an option pursuant to the Plan shall
not affect in any way the right or power of the Corporation to make
adjustments, reclassifications, reorganizations or changes of its
capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of its
business or assets.
(i) Rights as a Stockholder
An optionee or a transferee of an option shall have
no rights as a stockholder with respect to any shares covered by
his option until the date of the issuance of a stock certificate to
him for such shares. No adjustments shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record
date is prior to the date such stock certificate is issued, except
as provided in subsection 5(h) hereof.
(j) Modification, Extension and Renewal of Options
Subject to the terms and conditions and within the
limitations of the Plan, the Board of Directors may modify, extend
or renew outstanding options granted under the Plan, or accept the
surrender of outstanding options (to the extent not theretofore
exercised) and authorize the granting of new options in
substitution therefor (to the extent not theretofore exercised).
Notwithstanding the foregoing, however, no modification of an
option shall, without consent of the optionee, alter or impair any
rights of obligations under any option theretofore granted under
the Plan.
(k) Investment Purpose
Each option under the Plan shall be granted on the
condition that the purchases of stock thereunder shall be for
investment purposes, and not with a view to resale or distribution
except that in the event the stock subject to such option is
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or in the event a resale of such stock without
such registration would otherwise be permissible, such condition
shall be inoperative if in the opinion of counsel for the
Corporation such condition is not required under the Securities
Act, or any other applicable law, regulation, or rule of any
governmental agency.
(I) Other Provisions
The option agreements authorized under the Plan
shall contain such other provisions, including, without limitation,
restrictions upon the exercise of the option, as the Committee and
the Board of Directors of the Corporation shall deem advisable.
6. EFFECTIVE DATE AND TERM OF PLAN
Subject to approval by the stockholders as required by
Section 13 hereof and to the receipt by the Corporation of the
letter from the staff of the Securities and Exchange Commission
referred to in Section 14 hereof, the Plan shall become effective
as of January 24, 1989, the date of its adoption by the Board of
Directors of the Corporation and, subject to such stockholder
approval and the receipt of such letter, the initial grant of
options hereunder as provided in subsection 3(i) shall be effective
as of the effective date of the Plan. This Plan shall remain in
effect and options shall be granted hereunder from time to time
until ten (10) years from the date the Plan is approved by the
stockholders or until terminated by the Board of Directors in
accordance with Section 8 hereof, whichever is earlier.
Notwithstanding the foregoing part of this Section 6, with respect
to any amendment to this Plan adopted for the purpose of increasing
the number of shares as to which options ("Amendment Options") may
be granted hereunder, the Plan shall remain in effect as to
Amendment Options and Amendment Options may be granted hereunder
from time to time until ten (10) years from the date such amendment
is adopted or the date such amendment is approved by the
stockholders if such approval is required or until the Plan, as
amended, is terminated by the Board of Directors in accordance with
Section 8 hereof, whichever is earlier. For purposes of options
outstanding under the Plan the Plan shall continue in effect until
all outstanding options have been exercised in full or are no
longer exercisable.
7. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as
they may have as Directors or as members of the Committee, the
members of the Committee shall be indemnified by the Corporation
against the reasonable expenses, including attorneys fees, actually
and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of
any action taken or failure to act under or in connection with the
Plan or any option granted thereunder, and against all amounts paid
by them in settlement thereof, not to exceed, in the judgment of
the Board of Directors, the estimated expense of litigating the
proceeding to conclusion (provided such settlement is approved by
independent legal counsel selected by the Corporation) or paid by
them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that the member of the
Committee is liable. A Committee member shall in writing offer the
Corporation the opportunity, at its own expense, to handle and
defend the same.
8. AMENDMENT OF THE PLAN
The Board of Directors of the Corporation may, insofar as
permitted by law, from time to time, with respect to any shares at
the time not subject to options, suspend or discontinue the Plan or
revise or amend it in any respect whatsoever except that, without
approval of the stockholders, no such revision or amendment shall
change the number of shares subject to the Plan, extend the term of
the Plan or the term of any option which may be granted under the
Plan, change the designation of the Participants or the manner in
which options are granted under the Plan or materially increase the
benefits accruing under the Plan (materially, within the meaning of
Rule 16b-3 implementing the Exchange Act), decrease the price at
which options may be granted or remove the administration of the
Plan from the Committee (except as may be required by the staff of
the Commission to provide the letter described in Section 13
hereof).
9. APPLICATION OF FUNDS
The proceeds received by the Corporation from the sale of
capital stock pursuant to options will be used for general
corporate purposes.
10. NO OBLIGATION TO EXERCISE OPTION
The granting of an option shall impose no obligation upon
the optionee to exercise such option.
11. WITHHOLDING
The exercise of any option granted under the Plan shall
constitute an optionee's full and complete consent to whatever
action the Committee directs to satisfy the federal and state
withholding requirements, if any, which the Committee in its
discretion deems applicable to such exercise or surrender.
12. CONSTRUCTION
The Plan shall be construed under the laws of the State
of Florida.
13. APPROVAL OF STOCKHOLDERS
The Plan shall be submitted for approval by the
stockholders of the Corporation within twelve (12) months from the
date the Plan is adopted by the Board of Directors. Any amendment
to the Plan requiring approval by the stockholders of the
Corporation shall be submitted for approval by the stockholders
within twelve (12) months from the date the amendment is adopted by
the Board of Directors.
The initial options granted under the Plan, as set forth
in subsection 3(i) hereof are granted as of the date set forth
therein; provided, however, that such options shall not be
exercisable until after the date on which the Plan shall have
approved by a vote of the stockholders. Options may be granted
pursuant to any amendment to this Plan adopted for the purpose of
increasing the number of shares as to which options may be granted,
the types of options which may be granted or the rights applicable
to options which may be granted hereunder, commencing with the date
of adoption of such amendment by the Board of Directors of the
Corporation; provided, however, that options granted in reliance
upon any such amendment shall not be exercisable until the date on
which such amendment shall have been submitted for approval of the
stockholders.
14. LETTER FROM COMMISSION STAFF
The Corporation will request a letter from the staff of
the Securities and Exchange Commission (the "Commission")
concurring with the opinion of legal counsel to the Corporation
that the Plan complies with the requirements set forth in Rule 16b-
3 promulgated by the Commission to provide exemptive relief from
certain aspects of Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). If, as a condition of
providing its concurring letter, the staff of the Commission
requires modifications to the Plan which are not material and such
modifications are approved by the Board of Directors, the Plan
shall be so modified and amended under the provisions of Section 8
hereof. In the event the Corporation is unable to obtain the
aforementioned concurring letter from the staff of the Commission
as required by this Section 14 or the Plan is not approved by the
stockholders as required by Section 13 hereof, the Plan shall be
deemed null and void ab initio.
Exhibit 10.13
7.96% Senior Notes due May 30, 2011
May 29, 1996
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
Hughes Supply, Inc., a Florida corporation (the "Company"),
agrees with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of Ninety-Eight Million
Dollars ($98,000,000) aggregate principal amount of its 7.96% Senior Notes
due May 30, 2011 (the "Notes", such term to include any such notes issued
in substitution therefor pursuant to Section 13 of this Agreement or the
Other Agreements (as hereinafter defined)). The Notes shall be
substantially in the form set out in Exhibit 1, with such changes
therefrom, if any, as may be approved by you and the Company. Certain
capitalized terms used in this Agreement are defined in Schedule B;
references to a "Schedule" or an "Exhibit" are, unless otherwise specified,
to a Schedule or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you and you will purchase from the Company, at the
Closing provided for in Section 3, Notes in the principal amounts specified
opposite your respective names in Schedule A at the purchase price of 100%
of the principal amount thereof. Contemporaneously with entering into this
Agreement, the Company is entering into separate Note Purchase Agreements
(the "Other Agreements") identical with this Agreement with each of the
other purchasers named in Schedule A (the "Other Purchasers"), providing
for the sale at such Closing to each of the Other Purchasers of Notes in
the principal amount specified opposite its name in Schedule A. Your
respective obligations hereunder and the obligations of the Other
Purchasers under the Other Agreements are several and not joint obligations
and you shall have no obligation under any Other Agreement and no liability
to any Person for the performance or non-performance by any Other Purchaser
thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Alston & Bird, 1201 West
Peachtree Street, Atlanta, Georgia, at 10:00 a.m., Atlanta time, at a
closing (the "Closing") on May 29, 1996 or on such other Business Day
thereafter as may be agreed upon by the Company and you and the Other
Purchasers. At the Closing the Company will deliver to you the Notes to be
purchased by you in the form of a single Note (or such greater number of
Notes in denominations of at least $500,000 as you may request) dated the
date of the Closing and registered in your name (or in the name of your
nominee), against delivery by you to the Company or its order of
immediately available funds in the amount of the purchase price therefor by
wire transfer of immediately available funds for the account of the Company
to account number 880-119-6331, Account Name: "Hughes Supply, Inc.", at
SunTrust Bank, Atlanta, Atlanta, Georgia, ABA #061000104. If at the
Closing the Company shall fail to tender such Notes to you as provided
above in this Section 3, or any of the conditions specified in Section 4
shall not have been fulfilled to your satisfaction, you shall, at your
election, be relieved of all further obligations under this Agreement,
without thereby waiving any rights you may have by reason of such failure
or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to
you at the Closing is subject to the fulfillment to your satisfaction,
prior to or at the Closing, of the following conditions:
4.1 Representations and Warranties.
The representations and warranties of the Company in this
Agreement shall be correct when made and at the time of the Closing.
4.2 Performance; No Default.
The Company shall have performed and complied with all agreements
and conditions contained in this Agreement required to be performed or
complied with by it prior to or at the Closing and after giving effect to
the issue and sale of the Notes (and the application of the proceeds
thereof as contemplated by Schedule 5.14) no Default or Event of Default
shall have occurred and be continuing. Neither the Company nor any
Subsidiary shall have entered into any transaction since the date of the
Memorandum that would have been prohibited by Sections 10.1 through 10.10
hereof had such Sections applied since such date.
4.3 Compliance Certificates.
(a) Officer's Certificate. The Company shall have delivered to
you an Officer's Certificate, dated the date of the Closing, certifying
that the conditions specified in Sections 4.1, 4.2 and 4.9 have been
fulfilled.
(b) Secretary's Certificates. The Company and each Subsidiary
executing the Guarantee referenced in Section 4.11 shall have delivered to
you a certificate from the Secretary or an Assistant Secretary certifying
as to the resolutions attached thereto and other corporate proceedings
relating to the authorization, execution and delivery of, in the case of
the Company, the Notes and the Agreements and, in the case of such
Subsidiaries, the Guarantee and Contribution Agreement referenced in
Section 4.11.
4.4 Opinions of Counsel.
You shall have received opinions in form and substance
satisfactory to you, dated the date of the Closing (a) from Benjamin P.
Butterfield, General Counsel for the Company, covering the matters set
forth in Exhibit 4.4(a) and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably
request and (b) from Alston & Bird, your special counsel in connection with
such transactions, substantially in the form set forth in Exhibit 4.4(b)
and covering such other matters incident to such transactions as you may
reasonably request.
4.5 Purchase Permitted by Applicable Law, etc.
On the date of the Closing your purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as Section 1405(a)(8) of the
New York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular
investment, (ii) not violate any applicable law or regulation (including,
without limitation, Regulation G, T or X of the Board of Governors of the
Federal Reserve System) and (iii) not subject you to any tax, penalty or
liability under or pursuant to any applicable law or regulation, which law
or regulation was not in effect on the date hereof. If requested by you,
you shall have received an Officer's Certificate certifying as to such
matters of fact as you may reasonably specify to enable you to determine
whether such purchase is so permitted.
4.6 Sale of Other Notes.
Contemporaneously with the Closing the Company shall sell to the
Other Purchasers and the Other Purchasers shall purchase the Notes to be
purchased by them at the Closing as specified in Schedule A.
4.7 Payment of Special Counsel Fees.
Without limiting the provisions of Section 15.1, the Company
shall have paid on or before the Closing the reasonable fees, charges and
disbursements of your special counsel referred to in Section 4.4 to the
extent reflected in a statement of such counsel rendered to the Company at
least one Business Day prior to the Closing.
4.8 Private Placement Number.
A Private Placement number issued by Standard & Poor's CUSIP
Service Bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained
for the Notes.
4.9 Changes in Corporate Structure.
Except as specified in Schedule 4.9, the Company shall not have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part
of the liabilities of any other entity, at any time following the date of
the most recent financial statements referred to in Schedule 5.5.
4.10 Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be satisfactory to you and
your special counsel, and you and your special counsel shall have received
all such counterpart originals or certified or other copies of such
documents as you or they may reasonably request.
4.11 Guarantees of Subsidiaries.
Each of the Material Subsidiaries specified in Schedule 4.11
shall have executed and delivered a Guarantee in the form set forth in
Exhibit 4.11(a) and the Company and each such Material Subsidiary shall
have executed and delivered a Contribution Agreement in the form set forth
in Exhibit 4.11(b).
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1 Organization; Power and Authority.
The Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation, and
is duly qualified as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company has the corporate
power and authority to own or hold under lease the properties it purports
to own or hold under lease, to transact the business it transacts and
proposes to transact, to execute and deliver this Agreement and the Other
Agreements and the Notes and to perform the provisions hereof and thereof.
5.2 Authorization, etc.
This Agreement and the Other Agreements and the Notes have been
duly authorized by all necessary corporate action on the part of the
Company, and this Agreement constitutes, and upon execution and delivery
thereof each Note will constitute, a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
5.3 Disclosure.
The Company, through its agent, SunTrust Capital Markets, Inc.,
has delivered to you and each Other Purchaser a copy of a Private Placement
Memorandum, dated April 24, 1996 (the "Memorandum"), relating to the
transactions contemplated hereby. The Memorandum fairly describes, in all
material respects, the general nature of the business and principal
properties of the Company and its Subsidiaries. Except as disclosed in
Schedule 5.3, this Agreement, the Memorandum, the documents, certificates
or other writings delivered to you by or on behalf of the Company in
connection with the transactions contemplated hereby and the financial
statements listed in Schedule 5.5, taken as a whole, do not contain any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. Except as disclosed in the
Memorandum or as expressly described in Schedule 5.3, or in one of the
documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since January 26, 1996, there
has been no change in the financial condition, operations, business,
properties or prospects of the Company or any Subsidiary except changes
that individually or in the aggregate could not reasonably be expected to
have a Material Adverse Effect. There is no fact known to the Company that
could reasonably be expected to have a Material Adverse Effect that has not
been set forth herein or in the Memorandum or in the other documents,
certificates and other writings delivered to you by or on behalf of the
Company specifically for use in connection with the transactions
contemplated hereby.
5.4 Organization and Ownership of Shares of Subsidiaries; Affiliates.
(a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (i) of the Company's Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its organization,
and the percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Company and each other
Subsidiary, (ii) of the Company's Affiliates and (iii) of the Company's
directors and senior officers.
(b) All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary shown in Schedule 5.4 as being owned by
the Company and its Subsidiaries have been validly issued, are fully paid
and nonassessable and are owned by the Company or another Subsidiary free
and clear of any Lien (except as otherwise disclosed in Schedule 5.4). All
of the entities set forth in Schedule 5.4 are Consolidated. Schedule 4.11
sets forth all Material Subsidiaries of the Company as of the date hereof.
(c) Each Subsidiary identified in Schedule 5.4 is a corporation
or other legal entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and is duly qualified
as a foreign corporation or other legal entity and is in good standing in
each jurisdiction in which such qualification is required by law, other
than those jurisdictions as to which the failure to be so qualified or in
good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Subsidiary has the
corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the
business it transacts and proposes to transact. The Guarantee and
Contribution Agreement to be executed and delivered by each Material
Subsidiary referenced in Section 4.11 have been duly authorized by all
necessary corporate action on the part of each such Material Subsidiary and
such Guarantee and Contribution Agreement will constitute a legal, valid
and binding obligation of such Material Subsidiary enforceable against such
Material Subsidiary except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
(ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) No Subsidiary is a party to, or otherwise subject to any
legal restriction or any agreement (other than this Agreement, the
agreements listed on Schedule 5.4 and customary limitations imposed by
corporate law statutes) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of profits
to the Company or any of its Subsidiaries that owns outstanding shares of
capital stock or similar equity interests of such Subsidiary.
5.5 Financial Statements.
The Company has delivered to each Purchaser copies of the
financial statements of the Company and its Subsidiaries listed on Schedule
5.5. All of said financial statements (including in each case the related
schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of
the respective dates specified in such Schedule and the consolidated
results of their operations and cash flows for the respective periods so
specified and have been prepared in accordance with GAAP consistently
applied throughout the periods involved except as set forth in the notes
thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments).
5.6 Compliance With Laws, Other Instruments, etc.
The execution, delivery and performance by the Company of this
Agreement and the Notes and by the Material Subsidiaries referenced in
Section 4.11 of the Guarantee and Contribution Agreement referenced therein
will not (i) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of
the Company or any Subsidiary under, any indenture, mortgage, deed of
trust, loan, purchase or credit agreement, lease, corporate charter or by-
laws, or any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or any of
their respective properties may be bound or affected, (ii) conflict with or
result in a breach of any of the terms, conditions or provisions of any
order, judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Company or any Subsidiary or (iii) violate any
provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Company or any Subsidiary.
5.7 Governmental Authorizations, etc.
No consent, approval or authorization of, or registration, filing
or declaration with, any Governmental Authority is required in connection
with the execution, delivery or performance by the Company of this
Agreement or the Notes or of the Guarantee and the Contribution Agreement
referenced in Section 4.11 by the Material Subsidiaries referenced therein.
5.8 Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 5.8, there are no actions,
suits or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or any
property of the Company or any Subsidiary in any court or before any
arbitrator of any kind or before or by any Governmental Authority that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under
any term of any agreement or instrument to which it is a party or by which
it is bound, or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of any applicable
law, ordinance, rule or regulation (including without limitation
Environmental Laws) of any Governmental Authority, which default or
violation, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
5.9 Taxes.
The Company and its Subsidiaries have filed all tax returns that
are required to have been filed in any jurisdiction, and have paid or
reflected appropriate reserves and/or accruals on it balance sheets for,
all taxes, including federal, state, local, sales, use, VAT, customs,
excise, franchise, assets, ad valorem withholding taxes, duties or levies
(collectively "Taxes"), except for any taxes and assessments (i) the amount
of which is not individually or in the aggregate Material or (ii) the
amount, applicability or validity of which is currently being contested in
good faith by appropriate proceedings and with respect to which the Company
or a Subsidiary, as the case may be, has established adequate reserves in
accordance with GAAP. The Company knows of no basis for any other tax or
assessment that could reasonably be expected to have a Material Adverse
Effect. The charges, accruals and reserves on the books of the Company and
its Subsidiaries in respect of federal, state or other Taxes for all fiscal
periods are adequate. The federal income tax returns liabilities of the
Company and its Subsidiaries have been audited by the Internal Revenue
Service for all fiscal years up to and including the fiscal year ended 1989
and any resulting deficiencies, additional assessments, fines, penalties,
interest or other charge have either been paid for or adequately reserved
for in the financial statements. Other than certain ordinary course audits
of state sales and income tax returns, neither the Company nor any
Subsidiary is presently under, nor has any of them received notice of, any
investigation or audit by any national, regional, provincial, local or
other agency concerning any fiscal year or period ended prior to the date
hereof. All taxes required to be withheld from employees of the Company
and its Subsidiaries for income and social security taxes have been
properly withheld.
5.10 Title to Property; Leases.
The Company and its Subsidiaries have good and sufficient title
to their respective owned properties that individually or in the aggregate
are Material, including all such properties reflected in the most recent
audited balance sheet referred to in Section 5.5 or purported to have been
acquired by the Company or any Subsidiary after said date (except as sold
or otherwise disposed of in the ordinary course of business), in each case
free and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are Material are valid and subsisting and
are in full force and effect in all material respects.
5.11 Licenses, Permits, etc.
Except as disclosed in Schedule 5.11,
(a) the Company and its Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights,
service marks, trademarks and trade names, or rights thereto, that
individually or in the aggregate are Material, without known conflict
with the rights of others;
(b) to the best knowledge of the Company, no product of the
Company infringes in any material respect any license, permit,
franchise, authorization, patent, copyright, service mark, trademark,
trade name or other right owned by any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service mark,
trademark, trade name or other right owned or used by the Company or
any of its Subsidiaries.
5.12 Compliance With ERISA.
(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for
such instances of noncompliance as have not resulted in and could not
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any ERISA Affiliate has incurred any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in Section 3 of ERISA), and
no event, transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such liability by
the Company or any ERISA Affiliate, or in the imposition of any Lien on any
of the rights, properties or assets of the Company or any ERISA Affiliate,
in either case pursuant to Title I or IV of ERISA or to such penalty or
excise tax provisions or to Section 401(a)(29) or 412 of the Code, other
than such liabilities or Liens as would not be individually or in the
aggregate Material.
(b) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are Material.
(c) The expected postretirement benefit obligation (determined
as of the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of the Company and its Subsidiaries
is not Material.
(d) The execution and delivery of this Agreement and the
issuance and sale of the Notes hereunder will not involve any transaction
that is subject to the prohibitions of section 406 of ERISA or in
connection with which a tax could be imposed pursuant to
section 4975(c)(1)(A)-(D) of the Code. The representation by the Company
in the first sentence of this Section 5.12(d) is made in reliance upon and
subject to (i) the accuracy of your representation in Section 6.2 as to the
sources of the funds used to pay the purchase price of the Notes to be
purchased by you and (ii) the assumption, made solely for the purpose of
making such representation, that Department of Labor Interpretive Bulletin
75-2 with respect to prohibited transactions remains valid in the
circumstances of the transactions contemplated herein.
5.13 Private Offering by the Company.
Neither the Company nor anyone acting on its behalf has offered
the Notes or any similar securities for sale to, or solicited any offer to
buy any of the same from, or otherwise approached or negotiated in respect
thereof with, any person other than you, the Other Purchasers and not more
than 50 other Institutional Investors, each of which has been offered the
Notes at a private sale for investment. Neither the Company, nor, to the
best knowledge of the Company, anyone acting on its behalf has taken, or
will take, any action that would subject the issuance or sale of the Notes
to the registration requirements of Section 5 of the Securities Act.
5.14 Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the sale of the Notes as
set forth in Schedule 5.14. No part of the proceeds from the sale of the
Notes hereunder will be used, directly or indirectly, for the purpose of
buying or carrying any margin stock within the meaning of Regulation G of
the Board of Governors of the Federal Reserve System (12 CFR 207), or for
the purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of
said Board (12 CFR 224) or to involve any broker or dealer in a violation
of Regulation T of said Board (12 CFR 220). Margin stock does not
constitute more than 5% of the value of the Consolidated Assets of the
Company and its Subsidiaries and the Company does not have any present
intention that margin stock will constitute more than 5% of the value of
such assets. As used in this Section, the terms "margin stock" and
"purpose of buying or carrying" shall have the meanings assigned to them in
said Regulation G.
5.15 Existing Debt; Future Liens.
(a) Except as described therein, Schedule 5.15 sets forth a
complete and correct list of all outstanding Debt of the Company and its
Subsidiaries as of March 31, 1996, since which date there has been no
Material change in the amounts, interest rates, sinking funds, installment
payments or maturities of the Debt of the Company or its Subsidiaries.
Neither the Company nor any Subsidiary is in default and no waiver of
default is currently in effect, in the payment of any principal or interest
on any Debt of the Company or such Subsidiary and no event or condition
exists with respect to any Debt of the Company or any Subsidiary that would
permit (or that with notice or the lapse of time, or both, would permit)
one or more Persons to cause such Debt to become due and payable before its
stated maturity or before its regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the Company
nor any Subsidiary has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property,
whether now owned or hereafter acquired, to be subject to a Lien not
permitted by Section 10.5.
5.16 Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Company hereunder nor its
use of the proceeds thereof will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or
any enabling legislation or executive order relating thereto.
5.17 Status Under Certain Statutes.
Neither the Company nor any Subsidiary is subject to regulation
under the Investment Company Act of 1940, as amended, the Public Utility
Holding Company Act of 1935, as amended, the Interstate Commerce Act, as
amended, or the Federal Power Act, as amended.
5.18 Environmental Matters.
Neither the Company nor any Subsidiary has knowledge of any claim
or has received any notice of any claim, and no proceeding has been
instituted raising any claim against the Company or any of its Subsidiaries
or any of their respective real properties now or formerly owned, leased or
operated by any of them or other assets, alleging any damage to the
environment or violation of any Environmental Laws, except, in each case,
such as could not reasonably be expected to result in a Material Adverse
Effect. Except as otherwise disclosed to you in writing,
(a) neither the Company nor any Subsidiary has knowledge of
any facts which would give rise to any claim, public or private,
of violation of Environmental Laws or damage to the environment
emanating from, occurring on or in any way related to real
properties now or formerly owned, leased or operated by any of
them or to other assets or their use, except, in each case, such
as could not reasonably be expected to result in a Material
Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has
stored any Hazardous Materials on real properties now or formerly
owned, leased or operated by any of them and has not disposed of
any Hazardous Materials in a manner contrary to any Environmental
Laws in each case in any manner that could reasonably be expected
to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased
or operated by the Company or any of its Subsidiaries are in
compliance with applicable Environmental Laws, except where
failure to comply could not reasonably be expected to result in a
Material Adverse Effect.
6. REPRESENTATIONS OF THE PURCHASER.
6.1 Purchase for Investment.
You represent that you are purchasing the Notes for your own
account or for one or more separate accounts maintained by you or for the
account of one or more pension or trust funds and not with a view to the
distribution thereof, provided that the disposition of your or their
property shall at all times be within your or their control. You
understand that the Notes have not been registered under the Securities Act
and may be resold only if registered pursuant to the provisions of the
Securities Act or if an exemption from registration is available, except
under circumstances where neither such registration nor such an exemption
is required by law, and that the Company is not required to register the
Notes.
6.2 Source of Funds.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used
by you to pay the purchase price of the Notes to be purchased by you
hereunder:
(a) if you are an insurance company, the Source does not include
assets allocated to any separate account maintained by you in which
any employee benefit plan (or its related trust) has any interest,
other than a separate account that is maintained solely in connection
with your fixed contractual obligations under which the amounts
payable, or credited, to such plan and to any participant or
beneficiary of such plan (including any annuitant) are not affected in
any manner by the investment performance of the separate account; or
(b) the Source is either (i) an insurance company pooled
separate account, within the meaning of Prohibited Transaction
Exemption ("PTE") 90-1 (issued January 29, 1990), or (ii) a bank
collective investment fund, within the meaning of the PTE 91-38
(issued July 12, 1991) and, except as you have disclosed to the
Company in writing pursuant to this paragraph (b), no employee benefit
plan or group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets allocated
to such pooled separate account or collective investment fund; or
(c) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning
of Part V of the QPAM Exemption), no employee benefit plan's assets
that are included in such investment fund, when combined with the
assets of all other employee benefit plans established or maintained
by the same employer or by an affiliate (within the meaning of Section
V(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of Part I(c)
and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a
person controlling or controlled by the QPAM (applying the definition
of "control" in Section V(e) of the QPAM Exemption) owns a 5% or more
interest in the Company and (i) the identity of such QPAM and (ii) the
names of all employee benefit plans whose assets are included in such
investment fund have been disclosed to the Company in writing pursuant
to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this paragraph (e); or
(f) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall have
the respective meanings assigned to such terms in Section 3 of ERISA.
7. INFORMATION AS TO COMPANY.
7.1 Financial and Business Information.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a) Quarterly Statements -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than
the last quarterly fiscal period of each such fiscal year), duplicate
copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries, for such quarter and (in the case of the second and
third quarters) for the portion of the fiscal year ending with
such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments;
provided that delivery within the time period specified above of
copies of the Company's Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(a) so long as such requirements of
the Securities and Exchange Commission continue to require that Form
10-Q include the financial statements described in subparagraphs (i)
and (ii) above;
(b) Annual Statements -- within 105 days after the end of each
fiscal year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied by:
(A) an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall state
that such financial statements present fairly, in all material
respects, the financial position of the companies being reported upon
and their results of operations and cash flows and have been prepared
in conformity with GAAP, and that the examination of such accountants
in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such
audit provides a reasonable basis for such opinion in the
circumstances;
(B) a certificate of such accountants stating that
they have reviewed this Agreement and stating further whether, in
making their audit, they have become aware of any condition or event
that then constitutes a Default or an Event of Default, and, if they
are aware that any such condition or event then exists, specifying the
nature and period of the existence thereof (it being understood that
such accountants shall not be liable, directly or indirectly, for any
failure to obtain knowledge of any Default or Event of Default unless
such accountants should have obtained knowledge thereof in making an
audit in accordance with generally accepted auditing standards or did
not make such an audit);
provided, that the delivery within the time period specified above of
the Company's Annual Report on Form 10-K for such fiscal year
(together with the Company's annual report to shareholders, if any,
prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in
accordance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(b) so long as such requirements of
the Securities and Exchange Commission continue to require that Form
10-K include the financial statements described in subparagraphs (i)
and (ii) above.
(c) SEC and Other Reports -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or
proxy statement sent by the Company or any Subsidiary to public
securities holders generally, and (ii) each regular or periodic
report, each registration statement (without exhibits except as
expressly requested by such holder), and each prospectus and all
amendments thereto filed by the Company or any Subsidiary with the
Securities and Exchange Commission and of all press releases and other
statements made available generally by the Company or any Subsidiary
to the public concerning developments that are Material;
(d) Notice of Default or Event of Default -- promptly, and in
any event within five days after a Responsible Officer becoming aware
of the existence of any Default or Event of Default or that any Person
has given any notice or taken any action with respect to a claimed
default hereunder or that any Person has given any notice or taken any
action with respect to a claimed default of the type referred to in
Section 11(f), a written notice specifying the nature and period of
existence thereof and what action the Company is taking or proposes to
take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five days
after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if
any, that the Company or an ERISA Affiliate proposes to take with
respect thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043(b) of ERISA and the regulations
thereunder, for which notice thereof has not been waived pursuant
to such regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, or the receipt by the
Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan; or
(iii) any event, transaction or condition that could
result in the incurrence of any liability by the Company or any
ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty
or excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any
other such liabilities or Liens then existing, could reasonably
be expected to have a Material Adverse Effect; or
(iv) if at any time the aggregate "amount of unfunded
benefit liabilities" (within the meaning of section 4001(a)(18)
of ERISA) under all Plans, determined in accordance with Title IV
of ERISA, shall exceed $1,000,000;
(f) Notices From Governmental Authority -- promptly, and in any
event within 30 days of receipt thereof, copies of any notice to the
Company or any Subsidiary from any Federal or state Governmental
Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material
Adverse Effect;
(g) New Material Subsidiaries -- within 30 days after the
formation or acquisition of any Material Subsidiary, or any other
event resulting in the creation of a new Material Subsidiary, notice
of the formation or acquisition of such Material Subsidiary or such
occurrence, including a description of the assets of such entity, the
activities in which it will be engaged, and such other information as
an Institutional Investor may request; and
(h) Requested Information -- with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Company or
any of its Subsidiaries or relating to the ability of the Company to
perform its obligations hereunder and under the Notes as from time to
time may be reasonably requested by any such holder of Notes.
7.2 Officer's Certificate.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a
certificate of a Senior Financial Officer setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Company was
in compliance with the requirements of Sections 10.1, 10.2, 10.3,
10.4, 10.5, 10.6 and 10.8 inclusive, during the quarterly or annual
period covered by the statements then being furnished (including with
respect to each such Section, where applicable, the calculations of
the maximum or minimum amount, ratio or percentage, as the case may
be, permissible under the terms of such Sections, and the calculation
of the amount, ratio or percentage then in existence); and
(b) Event of Default -- a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be made,
under his or her supervision, a review of the transactions and
conditions of the Company and its Subsidiaries from the beginning of
the quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review shall
not have disclosed the existence during such period of any condition
or event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists, specifying the nature and
period of existence thereof and what action the Company shall have
taken or proposes to take with respect thereto.
7.3 Inspection.
The Company shall permit the representatives of each holder of
Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists,
at the expense of such holder and upon reasonable prior notice to the
Company, to visit the principal executive office of the Company, to
discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its
independent public accountants, and (with the consent of the Company,
which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in
writing; and
(b) Default -- if a Default or Event of Default then exists, at
the expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to
make copies and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers and
independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and
accounts of the Company and its Subsidiaries), all at such times and
as often as may be requested.
8. PREPAYMENT OF THE NOTES.
8.1 Required Prepayments.
On May 30, 2001 and on each November 30 and May 30 thereafter to
and including November 30, 2010, the Company will prepay $4,666,760 and on
May 30, 2011 the Company will make a final payment of $4,664,800 of
principal amount (or such amount as shall be the remaining outstanding
principal amount) of the Notes at par and without payment of the Make-Whole
Amount or any premium, provided that upon any partial prepayment of the
Notes pursuant to Section 8.2 or purchase of the Notes permitted by
Section 8.5 the principal amount of each required prepayment of the Notes
becoming due under this Section 8.1 on and after the date of such
prepayment or purchase shall be reduced in the same proportion as the
aggregate unpaid principal amount of the Notes is reduced as a result of
such prepayment or purchase.
8.2 Optional Prepayments With Make-Whole Amount.
The Company may, at its option, upon notice as provided below,
prepay the Notes in whole at any time, or from time to time in part in an
amount not less than $5,000,000, at 100% of the principal amount so prepaid
plus all accrued interest on the principal amount of Notes so prepaid, plus
the Make-Whole Amount determined for the prepayment date with respect to
such principal amount. Any such optional payment shall be on a Business
Day and the Company will give each holder of Notes written notice of each
optional prepayment under this Section 8.2 not less than 30 days and not
more than 60 days prior to the Business Day fixed for such prepayment.
Each such notice shall specify such date, the aggregate principal amount of
the Notes to be prepaid on such date, the principal amount of each Note
held by such holder to be prepaid (determined in accordance with Section
8.3), and the interest to be paid on the prepayment date with respect to
such principal amount being prepaid, and shall be accompanied by a
certificate of a Senior Financial Officer as to the estimated Make-Whole
Amount due in connection with such prepayment (calculated as if the date of
such notice were the date of the prepayment), setting forth the details of
such computation. Two Business Days prior to such prepayment, the Company
shall deliver to each holder of Notes a certificate via facsimile
transmission of a Senior Financial Officer specifying the calculation of
such Make-Whole Amount as of the specified prepayment date.
8.3 Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes, the
principal amount of the Notes to be prepaid shall be allocated among all of
the Notes at the time outstanding in proportion, as nearly as practicable,
to the respective unpaid principal amounts thereof not theretofore called
for prepayment.
8.4 Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section
8, the principal amount of each Note to be prepaid shall mature and become
due and payable on the date fixed for such prepayment, together with
interest on such principal amount accrued to such date and the applicable
Make-Whole Amount, if any. From and after such date, unless the Company
shall fail to pay such principal amount when so due and payable, together
with the interest and Make-Whole Amount, if any, as aforesaid, interest on
such principal amount shall cease to accrue. Any Note paid or prepaid in
full shall be surrendered to the Company and cancelled and shall not be
reissued, and no Note shall be issued in lieu of any prepaid principal
amount of any Note.
8.5 Purchase of Notes.
The Company will not and will not permit any Affiliate to
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any
of the outstanding Notes except upon the payment or prepayment of the Notes
in accordance with the terms of this Agreement and the Notes. The Company
will promptly cancel all Notes acquired by it or any Affiliate pursuant to
any payment, prepayment or purchase of Notes pursuant to any provision of
this Agreement and no Notes may be issued in substitution or exchange for
any such Notes.
8.6 Make-Whole Amount.
The term "Make-Whole Amount" means, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the
Remaining Scheduled Payments with respect to the Called Principal of such
Note over the amount of such Called Principal, provided that the Make-Whole
Amount may in no event be less than zero. For the purposes of determining
the Make-Whole Amount, the following terms have the following meanings:
"Called Principal" means, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to Section 8.2 or has
become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
"Discounted Value" means, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal
of any Note, 0.50% plus the yield to maturity implied by (i) the
yields reported (offer side), as of 10:00 A.M. (New York City time) on
the second Business Day preceding the Settlement Date with respect to
such Called Principal, on the display designated as "Page 500" on the
Telerate Access Service (or such other display as may replace Page 500
on Telerate Access Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or (ii) if such
yields are not reported as of such time or the yields reported as of
such time are not ascertainable, the Treasury Constant Maturity Series
Yields reported, for the latest day for which such yields have been so
reported as of the second Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical
Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity
equal to the Remaining Average Life of such Called Principal as of
such Settlement Date. Such implied yield in (i) and (ii) above will
be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with the maturity closest to
and greater than the Remaining Average Life and (2) the actively
traded U.S. Treasury security with the maturity closest to and less
than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth
year) that will elapse between the Settlement Date with respect to
such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date, provided that if
such Settlement Date is not a date on which interest payments are due
to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or 12.1.
"Settlement Date" means, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
9.1 Compliance With Law.
The Company shall and shall cause each of its Subsidiaries to
comply with all laws, ordinances or governmental rules or regulations to
which each of them is subject, including, without limitation, Environmental
Laws, and shall obtain and maintain in effect all licenses, certificates,
permits, franchises and other governmental authorizations necessary to the
ownership of their respective properties or to the conduct of their
respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or
regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations
could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
9.2 Insurance.
The Company shall and shall cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers, insurance with
respect to their respective properties and businesses against such
casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary in
the case of entities of established reputations engaged in the same or a
similar business and similarly situated.
9.3 Maintenance of Properties.
The Company shall and shall cause each of its Subsidiaries to
maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary
wear and tear), so that the business carried on in connection therewith may
be properly conducted at all times, provided that this Section shall not
prevent the Company or any Subsidiary from discontinuing the operation and
the maintenance of any of its properties if such discontinuance is
desirable in the conduct of its business and the Company has concluded that
such discontinuance could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
9.4 Payment of Taxes and Claims.
The Company shall and shall cause each of its Subsidiaries to
file all tax returns required to be filed in any jurisdiction and to pay
and discharge all taxes shown to be due and payable on such returns and all
other taxes, assessments, governmental charges, or levies imposed on them
or any of their properties, assets, income or franchises, to the extent
such taxes and assessments have become due and payable and before they have
become delinquent and all claims for which sums have become due and payable
that have or might become a Lien on properties or assets of the Company or
any Subsidiary, provided that neither the Company nor any Subsidiary need
pay any such tax or assessment or claims if (i) the amount, applicability
or validity thereof is contested by the Company or such Subsidiary on a
timely basis in good faith and in appropriate proceedings, and the Company
or a Subsidiary has established adequate reserves therefor in accordance
with GAAP on the books of the Company or such Subsidiary or (ii) the
nonpayment of all such taxes and assessments in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
9.5 Corporate Existence, etc.
The Company shall at all times preserve and keep in full force
and effect its corporate existence. Subject to Sections 10.7 and 10.8, the
Company shall at all times preserve and keep in full force and effect the
corporate existence of each of its Subsidiaries (unless merged into the
Company or a Subsidiary) and all rights and franchises of the Company and
its Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect
such corporate existence, right or franchise could not, individually or in
the aggregate, have a Material Adverse Effect.
9.6 Covenant To Secure Notes Equally.
The Company covenants that, if it or any Subsidiary shall create
or assume any Lien upon any of its property or assets, whether now owned or
hereafter acquired, other than Liens permitted by the provisions of Section
10.5 and 10.6 hereof (unless prior written consent to the creation or
assumption thereof shall have been obtained pursuant to Section 17), the
Company will make or cause to be made effective provision whereby the Notes
will be secured by such Lien equally and ratably with any and all other
Debt thereby secured so long as any such other Debt shall be so secured.
This Section 9.6 shall not be deemed a consent to any Lien or Liens not
otherwise permitted by Section 10.5 or Section 10.6.
9.7 Covenant Relating to Subsidiary Guarantees.
Promptly after: (i) the formation or acquisition of any Material
Subsidiary not listed on Schedule 4.11; (ii) the transfer of assets from
the Company or any Subsidiary to another Subsidiary and as a result thereof
the recipient of such assets becomes a Material Subsidiary; or (iii) the
occurrence of any other event creating a new Material Subsidiary, the
Company shall cause to be executed and delivered a guarantee of the
obligations of the Company hereunder and under the Notes from such Material
Subsidiary in substantially the form of Exhibit 4.11(a) and a Contribution
Agreement from such Material Subsidiary in substantially the form of
Exhibit 4.11(b), together with related documents of the kind described in
Section 5.4(c), all in form and substance satisfactory to your special
counsel.
9.8 Ownership of Subsidiary Guarantors.
The Company shall maintain its percentage of ownership existing
as of the date hereof of all Material Subsidiaries that execute the
Guarantee referenced in Section 4.11, and shall not decrease its ownership
percentage in each Material Subsidiary that executes a Guarantee pursuant
to Section 9.7 after the date hereof, as such ownership exists at the time
such Subsidiary so executes such Guarantee.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
10.1 Funded Debt.
The Company shall not, and shall not permit any Subsidiary to,
directly or indirectly, create, incur, assume, guarantee, or otherwise
become directly or indirectly liable with respect to any Funded Debt
unless, on the date the Company or such Subsidiary becomes liable with
respect to such Debt and immediately after giving effect thereto and the
concurrent retirement of any other Debt, (i) no Default or Event of Default
exists and (ii) Consolidated Funded Debt outstanding at such time does not
exceed 60% of Consolidated Total Capitalization at such time. For purposes
of this Section 10.1, any Person becoming a Subsidiary after the date
hereof shall be deemed, at the time it becomes a Subsidiary, to have
incurred all of its then outstanding Debt, and any Person extending,
renewing or refunding any Debt shall be deemed to have incurred such Debt
at the time of such extension, renewal or refunding.
10.2 Current Debt.
Neither the Company nor any Subsidiary shall at any time have or
suffer to exist Current Debt unless, during the preceding 365-day period,
there shall be at least 45 consecutive days on each of which there shall
have been no Consolidated Current Debt outstanding in excess of the amount
of additional Funded Debt that the Company would have been permitted to
incur on each such day under Section 10.1.
10.3 Minimum Net Worth.
The Company shall not permit Consolidated Net Worth to be less
than $170,000,000 at any time.
10.4 Restricted Payments.
The Company shall not:
(i) pay or declare any cash dividend on account of or with
respect to any Capital Stock or make any other cash distribution on
account of or with respect to any class of its Capital Stock; or
(ii) redeem, purchase or otherwise acquire, directly or
indirectly, any shares of the Company's Capital Stock
(all of the foregoing described in these subparagraphs (i) and (ii) hereof
being herein called "Restricted Payments") unless (A) the aggregate amount
of all Restricted Payments made since January 26, 1996 would not exceed the
sum of (x) $40,000,000 plus (y) 60% of cumulative Consolidated Net Income
since January 26, 1996 (less 100% of cumulative Consolidated Net Income
incurred for such period if such Consolidated Net Income for such period is
a loss) plus (z) the aggregate net cash proceeds of any issuance or sale of
the Company's Capital Stock (other than the PVF Stock Offering) and (B) no
Default or Event of Default shall have occurred and be continuing, or a
Default or Event of Default would occur, as a result of such Restricted
Payment.
10.5 Liens.
The Company shall not, and shall not permit any Subsidiary to,
create, assume or suffer to exist any Lien upon any of its property or
assets, whether now owned or hereafter acquired except:
(i) Liens existing on the Date of Closing and specified on
Schedule 10.5;
(ii) any Lien on property acquired, constructed or improved by
the Company after the date hereof to secure or provide for all or a
portion of the purchase price of such property or a portion of the
indebtedness of such property provided (A) any such Lien shall extend
solely to the item or items of such property so acquired or
constructed and, if required by the terms of the instrument originally
creating such Lien, other property which is an improvement to or is
acquired for specific use in connection with such acquired or
constructed property or which is real property being improved by such
acquired or constructed property, (B) the principal amount of the Debt
secured by any such Lien shall at no time exceed an amount equal to
the lesser of (1) the cost to the Company or such Subsidiary of the
property so acquired or constructed and (2) the Fair Market Value of
such property at the time of such acquisition or construction and (C)
any such Lien shall be created contemporaneously with, or within 180
days after, the acquisition or construction of such property;
(iii) Liens (A) for taxes (including and valorem and property
taxes) and assessments or governmental charges or levies not yet due
or (B) for taxes due or (C) resulting from any judgment or award, and
in the case of clause (B) and (C), are being actively contested in
good faith by appropriate proceedings and with respect to which
adequate reserves are being maintained;
(iv) landlord liens and statutory liens of carriers,
warehousemen, mechanics, material men and other liens imposed by law,
created in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate proceedings or
with respect to which adequate reserves are being maintained, and
which were not incurred in connection with the borrowing of money;
(v) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security or to secure the
performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return of
money bonds and similar obligations;
(vi) easements, rights-of-way, zoning and similar restrictions
and other similar charges or encumbrances not materially interfering
with the ordinary conduct of the business of the Company or any of its
Subsidiaries;
(vii) other Liens incidental to the conduct of its business
or the ownership of its property and assets which were not incurred in
connection with the borrowing of money, and which do not in the
aggregate materially detract from the value of property or assets of
the Company and its Subsidiaries taken as a whole or materially impair
the use of such property or assets in the operation of the business of
the Company or any of its Subsidiaries;
(viii) Liens provided for in equipment leases that are not
Capitalized Lease Obligations (including financing statements and
undertakings to file financing statements); provided that they are
limited to the equipment subject to such leases and the proceeds
thereof;
(ix) leases, subleases, licenses and sublicenses granted to third
parties not interfering in any material respect with the business of
the Company or any of its Subsidiaries;
(x) any lien renewing, extending, or refunding any Lien
described in subparagraphs (i) through (ix) above, provided that the
principal amount secured is not increased and that such lien is not
extended to other property (other than pursuant to its original
terms);
(xi) Liens on property or assets of a Subsidiary of the Company
to secure obligations of such Subsidiary to the Company or another
Wholly-Owned Subsidiary;
(xii) any right of set off or banker's lien (whether by
common law, statute, contract or otherwise) in favor of any bank
(other than Liens securing Debt); and
(xiii) Liens of any Subsidiary that arose prior to the time
that such Subsidiary became a Subsidiary of the Company, provided that
(A) any such Lien was not incurred in anticipation of such
acquisition, (B) the assets of such acquired Subsidiary subject to
such Lien shall only be those assets subject to such Lien at the time
of the closing of the acquisition of such Subsidiary and (C) the
principal amount of Debt secured by such Lien shall not exceed the
amount of Debt so secured by such Lien at the time of the closing of
the acquisition of such Subsidiary; and
(xiv) Liens securing Priority Debt described in clause (ii)
of the definition of Priority Debt; provided, however, that after
giving effect to the Debt secured by such Liens, Priority Debt shall
not exceed 20% of Consolidated Net Worth at any time.
10.6 Priority Debt.
The Company will not at any time permit Priority Debt to exceed
20% of Consolidated Net Worth.
10.7 Merger or Consolidation.
The Company shall not, and shall not permit any Subsidiary to,
merge consolidate or exchange shares with any other Person, except that:
(i) any Subsidiary may merge or consolidate with and into the
Company or with a Subsidiary that is a Wholly-Owned Subsidiary or if
not a Wholly-Owned Subsidiary in which the ownership interest of the
Company is not reduced or diluted in connection with or as a result of
such merger or consolidation; and
(ii) the Company may merge or consolidate with any other
corporation so long as:
(A) the surviving corporation shall be the Company or
another corporation organized under the laws of the United States or a
State thereof or the District of Columbia;
(B) the surviving corporation (if not the Company) shall
assume the obligations of the Company hereunder pursuant to an
agreement reasonably acceptable to the Required Holders;
(C) immediately after giving effect to such merger or
consolidation, no Default or Event of Default shall have occurred or
exist; and
(D) immediately after giving effect to such merger or
consolidation, the Company (or the surviving corporation, if not the
Company) could incur at least $1 of Funded Debt under Section 10.1;
and
(iii) the Company and any Subsidiary or Affiliate may acquire
any other Person provided such acquisition does not otherwise result
in an Event of Default hereunder.
10.8 Sale of Assets.
The Company will not, and will not permit any Subsidiary to,
Dispose of any property or assets (other than marketable securities),
except, so long as no Default or Event of Default shall exist and be
continuing:
(i) any Subsidiary (the "Transferor Subsidiary") may Dispose of
its assets to the Company or another Subsidiary (the "Transferee
Subsidiary") so long as, in the case of a Disposition to another
Subsidiary, the ownership interest of the Company in the Transferee
Subsidiary is at least equal to, or greater than, the Company's
ownership interest in the Transferor Subsidiary;
(ii) the Company or any Subsidiary may Dispose of any equipment
that it in its good faith opinion determines to be obsolete, wornout
or no longer useful in its business, as determined in good faith by
the Company;
(iii) the Company or any Subsidiary may Dispose of inventory
in the ordinary course of business;
(iv) the Company or any Subsidiary may Dispose of any other of
its assets so long as immediately after giving effect to such proposed
Disposition;
(A) the consideration for such assets represents the Fair
Market Value of such assets at the time of such Disposition; and
(B) the cumulative net book value of all assets Disposed of
by the Company and its Subsidiaries during any period of 12
consecutive calendar months does not exceed 15% of Consolidated
Assets determined as of the most recently completed fiscal year.
For purposes of this Section 10.8:
(1) "Disposition" means the sale, lease, transfer or other
disposition of property but shall not include any public taking or
condemnation, and "Dispose of" and "Disposed of" shall have a
corresponding meaning to Disposition. The term "Disposition" shall
not include an exchange of assets, provided that the assets involved
in such exchange are similar in function in that after giving effect
to such exchange there has not been (A) a Materially Adverse Effect
upon the Company and its Subsidiaries taken as a whole, (B) any
material deterioration of cash flow generation from or in connection
with such assets, or (C) any material deterioration in the overall
quality of plant, property and equipment of the Company and its
Subsidiaries taken as a whole. An "exchange" shall be deemed to have
occurred if each of the transactions involved shall have been
consummated within a six month period.
(2) Calculation of net book value. The net book value of any
assets shall be determined as of the respective date of Disposition of
those assets.
10.9 Transactions With Related Party.
The Company shall not, and shall not permit any Subsidiary to,
effect or permit to exist any transaction with any Affiliate by which any
asset or services of the Company or a Subsidiary is transferred to such
Affiliate, or enter into any other transaction with an Affiliate on terms
more favorable than would be reasonably expected in a similar transaction
with an unrelated entity.
10.10 Nature of Business.
Neither the Company nor any Subsidiary shall engage in any
business, if as a result, when taken as a whole, the general nature of the
business then engaged in by the Company and its Subsidiaries would be
substantially changed from the nature of the business of the Company and
its Subsidiaries on the date hereof.
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following
conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-
Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any
Note for more than five Business Days after the same becomes due and
payable; or
(c) the Company defaults in the performance of or compliance
with any term contained in Sections 10.1, 10.2, 10.3, 10.4, 10.5,
10.6, 10.7, 10.8 or 10.9; or
(d) the Company defaults in the performance of or compliance
with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 11) and such default is
not remedied within 30 days after the earlier of (i) a Responsible
Officer obtaining actual knowledge of such default and (ii) the
Company receiving written notice of such default from any holder of a
Note (any such written notice to be identified as a "notice of
default" and to refer specifically to this paragraph (d) of
Section 11); or
(e) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company in this
Agreement or in any writing furnished in connection with the
transactions contemplated hereby proves to have been false or
incorrect in any material respect on the date as of which made; or
(f) (i) the Company or any Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any
principal of or premium or make-whole amount or interest on any Debt
that is outstanding in an aggregate principal amount of at least
$5,000,000 beyond any period of grace provided with respect thereto,
or (ii) the Company or any Subsidiary is in default in the performance
of or compliance with any term of any evidence of any Debt in an
aggregate outstanding principal amount of at least $5,000,000 or of
any mortgage, indenture or other agreement relating thereto or any
other condition exists, and as a consequence of such default or
condition such Debt has become, or has been declared (or one or more
Persons are entitled to declare such Debt to be), due and payable
before its stated maturity or before its regularly scheduled dates of
payment, or (iii) as a consequence of the occurrence or continuation
of any event or condition (other than the passage of time or the right
of the holder of Debt to convert such Debt into equity interests), (x)
the Company or any Subsidiary has become obligated to purchase or
repay Debt before its regular maturity or before its regularly
scheduled dates of payment in an aggregate outstanding principal
amount of at least $5,000,000, or (y) one or more Persons have the
right to require the Company or any Subsidiary so to purchase or repay
such Debt; or
(g) the Company or any Subsidiary (i) is generally not paying,
or admits in writing its inability to pay, its debts as they become
due, (ii) files, or consents by answer or otherwise to the filing
against it of, a petition for relief or reorganization or arrangement
or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency, reorganization, moratorium or
other similar law of any jurisdiction, (iii) makes an assignment for
the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property,
(v) is adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any of
its Subsidiaries, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or approving
a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy
or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any of its Subsidiaries,
or any such petition shall be filed against the Company or any of its
Subsidiaries and such petition shall not be dismissed within 60 days;
or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $5,000,000 are rendered against one or more
of the Company and its Subsidiaries and which judgments are not,
within 60 days after entry thereof, bonded, discharged or stayed
pending appeal, or are not discharged within 60 days after the
expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA section 4042 to terminate or appoint a trustee
to administer any Plan or the PBGC shall have notified the Company or
any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, (iv) the Company or any ERISA
Affiliate withdraws from any Multiemployer Plan, (v) the Company or
any Subsidiary establishes or amends any employee welfare benefit plan
that provides post-employment welfare benefits in a manner that would
increase the liability of the Company or any Subsidiary thereunder, or
(vi) the aggregate "amount of unfunded benefit liabilities" (within
the meaning of section 4001(a)(18) of ERISA) under all Plans,
determined in accordance with Title IV of ERISA, shall at any time
exceed $5,000,000; and any such event or events described in clauses
(i) through (v) above, either individually or together with any other
such event or events, could reasonably be expected to have a Material
Adverse Effect.
As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1 Acceleration.
(a) If an Event of Default with respect to the Company described
in paragraph (g) or (h) of Section 11 (other than an Event of Default
described in clause (i) of paragraph (g) or described in clause (vi) of
paragraph (g) by virtue of the fact that such clause encompasses clause (i)
of paragraph (g)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is
continuing, any holder or holders of more than 51% in principal amount of
the Notes at the time outstanding may at any time at its or their option,
by notice or notices to the Company, declare all the Notes then outstanding
to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes
at the time outstanding affected by such Event of Default may at any time,
at its or their option, by notice or notices to the Company, declare all
the Notes held by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature
and the entire unpaid principal amount of such Notes, plus (x) all accrued
and unpaid interest thereon and (y) the Make-Whole Amount determined in
respect of such principal amount (to the full extent permitted by
applicable law), shall all be immediately due and payable, in each and
every case without presentment, demand, protest or further notice, all of
which are hereby waived. The Company acknowledges, and the parties hereto
agree, that each holder of a Note has the right to maintain its investment
in the Notes free from repayment by the Company (except as herein
specifically provided for) and that the provision for payment of a Make-
Whole Amount by the Company in the event that the Notes are prepaid or are
accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
12.2 Other Remedies.
If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have been
declared immediately due and payable under Section 12.1, the holder of any
Note at the time outstanding may proceed to protect and enforce the rights
of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of
the terms hereof or thereof, or in aid of the exercise of any power granted
hereby or thereby or by law or otherwise.
12.3 Rescission.
At any time after any Notes have been declared due and payable
pursuant to clause (b) or (c) of Section 12.1, the holders of not less than
51% in principal amount of the Notes then outstanding, by written notice to
the Company, may rescind and annul any such declaration and its
consequences if (a) the Company has paid all overdue interest on the Notes,
all principal of and Make-Whole Amount, if any, on any Notes that are due
and payable and are unpaid other than by reason of such declaration, and
all interest on such overdue principal and Make-Whole Amount, if any, and
(to the extent permitted by applicable law) any overdue interest in respect
of the Notes, at the Default Rate, (b) all Events of Default and Defaults,
other than non-payment of amounts that have become due solely by reason of
such declaration, have been cured or have been waived pursuant to
Section 17, and (c) no judgment or decree has been entered for the payment
of any monies due pursuant hereto or to the Notes. No rescission and
annulment under this Section 12.3 will extend to or affect any subsequent
Event of Default or Default or impair any right consequent thereon.
12.4 No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of
any Note in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such holder's rights, powers or remedies.
No right, power or remedy conferred by this Agreement or by any Note upon
any holder thereof shall be exclusive of any other right, power or remedy
referred to herein or therein or now or hereafter available at law, in
equity, by statute or otherwise. Without limiting the obligations of the
Company under Section 15, the Company will pay to the holder of each Note
on demand such further amount as shall be sufficient to cover all
reasonable costs and expenses of such holder incurred in any enforcement or
collection under this Section 12, including, without limitation, reasonable
attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1 Registration of Notes.
The Company shall keep at its principal executive office a
register for the registration and registration of transfers of Notes. The
name and address of each holder of one or more Notes, each transfer thereof
and the name and address of each transferee of one or more Notes shall be
registered in such register. Prior to due presentment for registration of
transfer, the Person in whose name any Note shall be registered shall be
deemed and treated as the owner and holder thereof for all purposes hereof,
and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and
correct copy of the names and addresses of all registered holders of Notes.
13.2 Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of
the Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of
such Note or his attorney duly authorized in writing and accompanied by the
address for notices of each transferee of such Note or part thereof), the
Company shall execute and deliver, at the Company's expense (except as
provided below), one or more new Notes (as requested by the holder thereof)
in exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be
substantially in the form of Exhibit 1. Each such new Note shall be dated
and bear interest from the date to which interest shall have been paid on
the surrendered Note or dated the date of the surrendered Note if no
interest shall have been paid thereon. The Company may require payment of
a sum sufficient to cover any stamp tax or governmental charge imposed in
respect of any such transfer of Notes. Notes shall not be transferred in
denominations of less than $500,000, provided that if necessary to enable
the registration of transfer by a holder of its entire holding of Notes,
one Note may be in a denomination of less than $500,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its
nominee), shall be deemed to have made the representation set forth in
Sections 6.1 and 6.2. Transfers hereunder shall only be made by the
Company to the extent such transfers are permitted by applicable law.
13.3 Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory
to it of the ownership of and the loss, theft, destruction or mutilation of
any Note (which evidence shall be, in the case of an Institutional
Investor, notice from such Institutional Investor of such ownership and
such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such
Note is, or is a nominee for, an original Purchaser or another holder
of a Note with a minimum net worth of at least $100,000,000, such
Person's own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof, the Company at its own expense shall execute and deliver, in
lieu thereof, a new Note, dated and bearing interest from the date to
which interest shall have been paid on such lost, stolen, destroyed or
mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.
14. PAYMENTS ON NOTES.
14.1 Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole
Amount, if any, and interest becoming due and payable on the Notes shall be
made in New York, New York, at the principal office of The Chase Manhattan
Bank, N.A. in such jurisdiction. The Company may at any time, by notice to
each holder of a Note, change the place of payment of the Notes so long as
such place of payment shall be either the principal office of the Company
in such jurisdiction or the principal office of a bank or trust company in
such jurisdiction.
14.2 Home Office Payment.
So long as you or your nominee shall be the holder of any Note,
and notwithstanding anything contained in Section 14.1 or in such Note to
the contrary, the Company will pay all sums becoming due on such Note for
principal, Make-Whole Amount, if any, and interest by the method and at the
address specified for such purpose below your name in Schedule A, or by
such other method or at such other address as you shall have from time to
time specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made concurrently
with or reasonably promptly after payment or prepayment in full of any
Note, you shall surrender such Note for cancellation, reasonably promptly
after any such request, to the Company at its principal executive office or
at the place of payment most recently designated by the Company pursuant to
Section 14.1. Prior to any sale or other disposition of any Note held by
you or your nominee you will, at your election, either endorse thereon the
amount of principal paid thereon and the last date to which interest has
been paid thereon or surrender such Note to the Company in exchange for a
new Note or Notes pursuant to Section 13.2. The Company will afford the
benefits of this Section 14.2 to any Institutional Investor that is the
direct or indirect transferee of any Note purchased by you under this
Agreement and that has made the same agreement relating to such Note as you
have made in this Section 14.2.
15. EXPENSES, ETC.
15.1 Transaction Expenses.
Whether or not the transactions contemplated hereby are
consummated, the Company will pay all reasonable costs and expenses
(including reasonable attorneys' fees of a special counsel and, if
reasonably required, local or other counsel) incurred by you and each Other
Purchaser or holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of
this Agreement or the Notes (whether or not such amendment, waiver or
consent becomes effective), including, without limitation: (a) the
reasonable costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this
Agreement or the Notes or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement or the Notes, or by reason of being a holder of any Note, and (b)
the reasonable costs and expenses, including financial advisors' fees,
incurred in connection with the insolvency or bankruptcy of the Company or
any Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes. The Company will pay,
and will save you and each other holder of a Note harmless from, all claims
in respect of any fees, costs or expenses if any, of brokers and finders
(other than those retained by you).
15.2 Survival.
The obligations of the Company under Section 15.1 shall survive
the payment or transfer permitted pursuant to Section 13.2 of any Note, the
enforcement, amendment or waiver of any provision of this Agreement or the
Notes, and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the Notes, the purchase or
transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a
Note, regardless of any investigation made at any time by or on behalf of
you or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement shall be deemed representations and warranties
of the Company under this Agreement. Subject to the preceding sentence,
this Agreement and the Notes embody the entire agreement and understanding
between you and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1 Requirements.
This Agreement and the Notes may be amended, and the observance
of any term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and
the Required Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term
(as it is used therein), will be effective as to you unless consented to by
you in writing, and (b) no such amendment or waiver may, without the
written consent of the holder of each Note at the time outstanding affected
thereby, (i) subject to the provisions of Section 12 relating to
acceleration or rescission, change the amount or time of any prepayment or
payment of principal of, or reduce the rate or change the time of payment
or method of computation of interest or of the Make-Whole Amount on, the
Notes, (ii) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver,
or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.
17.2 Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it) with
sufficient information, sufficiently far in advance of the date a decision
is required, to enable such holder to make an informed and considered
decision with respect to any proposed amendment, waiver or consent in
respect of any of the provisions hereof or of the Notes. The Company will
deliver executed or true and correct copies of each amendment, waiver or
consent effected pursuant to the provisions of this Section 17 to each
holder of outstanding Notes promptly following the date on which it is
executed and delivered by, or receives the consent or approval of, the
requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any holder
of Notes as consideration for or as an inducement to the entering into by
any holder of Notes or any waiver or amendment of any of the terms and
provisions hereof unless such remuneration is concurrently paid, or
security is concurrently granted, on the same terms, ratably to each holder
of Notes then outstanding even if such holder did not consent to such
waiver or amendment.
17.3 Binding Effect, etc.
Any amendment or waiver consented to as provided in this
Section 17 applies equally to all holders of Notes and is binding upon them
and upon each future holder of any Note and upon the Company without regard
to whether such Note has been marked to indicate such amendment or waiver.
No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or
waived or impair any right consequent thereon. No course of dealing
between the Company and the holder of any Note nor any delay in exercising
any rights hereunder or under any Note shall operate as a waiver of any
rights of any holder of such Note. As used herein, the term "this
Agreement" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
17.4 Notes Held by Company, etc.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement or the Notes, or have directed the taking of any
action provided herein or in the Notes to be taken upon the direction of
the holders of a specified percentage of the aggregate principal amount of
Notes then outstanding, Notes directly or indirectly owned by the Company
or any of its Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return
receipt requested (postage prepaid), or (c) by a recognized overnight
delivery service (with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of J. Stephen Zepf,
Treasurer and Chief Financial Officer of the Company, or at such other
address as the Company shall have specified to the holder of each Note
in writing.
Notices under this Section 18 will be deemed given only when actually
received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may
hereafter be executed, (b) documents received by you at the Closing (except
the Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to you, may be reproduced by
you by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and you may destroy any original
document so reproduced. The Company agrees and stipulates that, to the
extent permitted by applicable law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by you in the regular course of
business) and any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting
any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any
such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information"
means information delivered to you by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was
clearly marked or labeled or otherwise adequately identified when received
by you as being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was publicly
known or otherwise known to you prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission by you
or any person acting on your behalf, (c) otherwise becomes known to you
other than through disclosure by the Company or any Subsidiary or (d)
constitutes financial statements delivered to you under Section 7.1 that
are otherwise publicly available. You will maintain the confidentiality of
such Confidential Information in accordance with procedures adopted by you
in good faith to protect confidential information of third parties
delivered to you, provided that you may deliver or disclose Confidential
Information to (i) your directors, officers, employees, agents, attorneys
and affiliates (to the extent such disclosure reasonably relates to the
administration of the investment represented by your Notes), (ii) your
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with
the terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any
part thereof or any participation therein (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound
by the provisions of this Section 20), (v) any Person from which you offer
to purchase any security of the Company (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound
by the provisions of this Section 20), (vi) any federal or state regulatory
authority having jurisdiction over you, (vii) the National Association of
Insurance Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information about your
investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with
any law, rule, regulation or order applicable to you, (x) in response to
any subpoena or other legal process, (y) in connection with any litigation
to which you are a party or (z) if an Event of Default has occurred and is
continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement.
Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 20
as though it were a party to this Agreement. On reasonable request by the
Company in connection with the delivery to any holder of a Note of
information required to be delivered to such holder under this Agreement or
requested by such holder (other than a holder that is a party to this
Agreement or its nominee), such holder will enter into an agreement with
the Company embodying the provisions of this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates
or Subsidiaries (a "Permitted Purchaser") as the purchaser of the Notes
that you have agreed to purchase hereunder, by written notice to the
Company, which notice shall be signed by both you and such Permitted
Purchaser, shall contain such Permitted Purchaser's agreement to be bound
by this Agreement and shall contain a confirmation by such Permitted
Purchaser of the accuracy with respect to it of the representations set
forth in Section 6. Upon receipt of such notice, wherever the word "you"
is used in this Agreement (other than in this Section 21), such word shall
be deemed to refer to such Permitted Purchaser in lieu of you. In the
event that such Permitted Purchaser is so substituted as a purchaser
hereunder and such Permitted Purchaser thereafter transfers to you all of
the Notes then held by such Permitted Purchaser, upon receipt by the
Company of notice of such transfer, wherever the word "you" is used in this
Agreement (other than in this Section 21), such word shall no longer be
deemed to refer to such Permitted Purchaser, but shall refer to you, and
you shall have all the rights of an original holder of the Notes under this
Agreement.
22. MISCELLANEOUS.
22.1 Successors and Assigns.
All covenants and other agreements contained in this Agreement by
or on behalf of any of the parties hereto bind and inure to the benefit of
their respective successors and assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not.
22.2 Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole Amount or
interest on any Note that is due on a date other than a Business Day shall
be made on the next succeeding Business Day without including the
additional days elapsed in the computation of the interest payable on such
next succeeding Business Day.
22.3 Severability.
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by
law) not invalidate or render unenforceable such provision in any other
jurisdiction.
22.4 Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance
with any other covenant. Where any provision herein refers to action to be
taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
22.5 Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of
the parties hereto.
22.6 Governing Law.
This Agreement shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the
State of New York excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction
other than such State.
[Signatures on Following Pages]
If you are in agreement with the foregoing, please sign the form
of agreement on the accompanying counterpart of this Agreement and return
it to the Company, whereupon the foregoing shall become a binding agreement
between you and the Company.
Very truly yours,
HUGHES SUPPLY, INC.
By:
J. Stephen Zepf
Treasurer and Chief Financial Officer
The foregoing is hereby
agreed to as of the
date hereof.
METROPOLITAN LIFE INSURANCE
COMPANY
By:
Title:
CM LIFE INSURANCE COMPANY
By:
Title:
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By:
Title:
[Signature Page to Hughes Supply, Inc. Note Purchase Agreement]
AMERICAN GENERAL LIFE INSURANCE
COMPANY OF NEW YORK
AMERICAN GENERAL LIFE AND ACCIDENT
INSURANCE COMPANY
INDEPENDENT LIFE AND ACCIDENT
INSURANCE COMPANY
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY
By:
Title:
SCHEDULE A TO NOTE PURCHASE AGREEMENT
Information Relating To Purchasers
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
METROPOLITAN LIFE INSURANCE COMPANY $40,000,000
(1) All payments by wire transfer of immediately
available funds to:
The Chase Manhattan Bank, N.A.
33 East 23rd Street
New York, NY 10010
ABA No. 021000021
Account No. 002-2-410591
with sufficient information to identify the source
and application of such funds (including the PPN
of the Notes)
(2) All notices of payments and written confirmation
of such wire transfer:
Metropolitan Life Insurance Company
One Madison Avenue
New York, NY 10010
Attention: Private Placement Unit
with a copy to:
Metropolitan Life Insurance Company
334 Madison Avenue
Convent Station, NJ 07936
Attention: Private Placement Unit
Telephone: (201) 254-3222
(3) All other communications:
Metropolitan Life Insurance Company
334 Madison Avenue
Convent Station, NJ 07936
Attention: Private Placement Unit
Telephone: (201) 254-3222
Tax Identification Number: 13-5581829
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
CM LIFE INSURANCE COMPANY $1,000,000
c/o MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
(1) All payments by wire transfer of immediately
available funds to:
Citibank, N.A.
111 Wall Street
New York, New York 10043
ABA No. 021000089
For Segment 43- Universal Life
Account No. 4068-6561
Re: Description of security, principal and interest split
With telephone advice of payment to the
Securities Custody and Collection Department
of Massachusetts Mutual Life Insurance Company
at (413) 744-3878
(2) All notices of payments and written confirmations
of such wire transfers:
Massachusetts Mutual Life Insurance Company
Securities Custody and Collection Department, F 381
1295 State Street
Springfield, Massachusetts 01111
Attn: Securities Investment Division
(3) All other communications:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attn: Securities Investment Division
Tax Identification No. 06-1041383
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
MASSACHUSETTS MUTUAL LIFE $23,000,000
INSURANCE COMPANY
(1) All payments by wire transfer of immediately
available funds to:
Citibank, N.A.
111 Wall Street
New York, New York 10043
ABA No. 021000089
For MassMutual Long Term Pool
Account No. 4067-3488
Re: Description of security, principal and interest split
With telephone advice of payment to the
Securities Custody and Collection Department
of Massachusetts Mutual Life Insurance Company
at (413) 744-3878
(2) All notices of payments and written confirmations
of such wire transfers:
Massachusetts Mutual Life Insurance Company
Securities Custody and Collection Department, F 381
1295 State Street
Springfield, Massachusetts 01111
Attn: Securities Investment Division
(3) All other communications:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attn: Securities Investment Division
Tax Identification No. 04-1590850
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
MASSACHUSETTS MUTUAL LIFE $6,000,000
INSURANCE COMPANY
(1) All payments by wire transfer of immediately
available funds to:
Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
New York, New York 10081
ABA No. 021000021
For MassMutual Pension Management
Account No. 910-2594018
Re: Description of security, principal and interest split
With telephone advice of payment to the
Securities Custody and Collection Department
of Massachusetts Mutual Life Insurance Company
at (413) 744-3878
(2) All notices of payments and written confirmations
of such wire transfers:
Massachusetts Mutual Life Insurance Company
Securities Custody and Collection Department, F 381
1295 State Street
Springfield, Massachusetts 01111
Attn: Securities Investment Division
(3) All other communications:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attn: Securities Investment Division
Tax Identification No. 04-1590850
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
MASSACHUSETTS MUTUAL LIFE $3,000,000
INSURANCE COMPANY
(1) All payments by wire transfer of immediately
available funds to:
Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
New York, New York 10081
ABA No. 021000021
For MassMutual IFM Non-Traditional
Account No. 910-2509073
Re: Description of security, principal and interest split
With telephone advice of payment to the
Securities Custody and Collection Department
of Massachusetts Mutual Life Insurance Company
at (413) 744-3878
(2) All notices of payments and written confirmations
of such wire transfers:
Massachusetts Mutual Life Insurance Company
Securities Custody and Collection Department, F 381
1295 State Street
Springfield, Massachusetts 01111
Attn: Securities Investment Division
(3) All other communications:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Attn: Securities Investment Division
Tax Identification No. 04-1590850
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
AMERICAN GENERAL LIFE INSURANCE COMPANY $3,000,000
OF NEW YORK
(1) All payments by wire transfer of immediately
available funds, with sufficient information (including PPN #,
interest rate, maturity date, interest amount, principal amount
and premium amount, if applicable) to identify the source and
application of such funds, to:
ABA No. 011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: American General Life Insurance Company of New York
AC - 0125-942-3
OBI=PPN # and description of payment
Fund Number PA 45
(2) All notices of payments and written confirmation of such wire
transfers:
American General Life Insurance Company of New York 45
% State Street Bank and Trust Company
Insurance Services Custody (AH2)
1776 Heritage Drive
North Quincy, MA 02171
Fax: (617) 985-4923
(3) Duplicate payment notices and all other correspondences to:
American General Life Insurance Company of New York
% American General Corporation
Attention: Investment Research Department, A37-01
P. O. Box 3247
Houston, TX 77253-3247
Overnight Mail Address: 2929 Allen Parkway
Houston, TX 77019-2155
Fax: (713) 831-1366
Tax Identification No. 13-1853201
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
AMERICAN GENERAL LIFE AND ACCIDENT $7,000,000
INSURANCE COMPANY
(1) All payments by wire transfer of immediately
available funds, with sufficient information (including PPN #,
interest rate, maturity date, interest amount, principal amount
and premium amount, if applicable) to identify the source and
application of such funds, to:
ABA No. 011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: American General Life and Accident Insurance Company
AC - 0125-934-0
OBI=PPN # and description of payment
Fund Number PA 10
(2) All notices of payments and written confirmation of such wire
transfers:
American General Life and Accident Insurance Company and PA 10
% State Street Bank and Trust Company
Insurance Services Custody (AH2)
1776 Heritage Drive
North Quincy, MA 02171
Fax: (617) 985-4923
(3) Duplicate payment notices and all other correspondences to:
American General Life and Accident Insurance Company
% American General Corporation
Attention: Investment Research Department, A37-01
P. O. Box 3247
Houston, TX 77253-3247
Overnight Mail Address: 2929 Allen Parkway
Houston, TX 77019-2155
Fax: (713) 831-1366
Tax Identification No. 62-0306330
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
INDEPENDENT LIFE AND ACCIDENT INSURANCE COMPANY $3,000,000
(1) All payments by wire transfer of immediately
available funds to, with sufficient information (including PPN #,
interest rate, maturity date, interest amount, principal amount
and premium amount, if applicable) to identify the source and
application of such funds, to:
ABA No. 011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: Independent Life and Accident Insurance Company
AC - 34817924
OBI=PPN # and description of payment
Fund Number PA 88
(2) All notices of payments and written confirmation of such wire
transfers:
Independent Life and Accident Insurance Company and PA 88
% State Street Bank and Trust Company
Insurance Services Custody (AH2)
1776 Heritage Drive
North Quincy, MA 02171
Fax: (617) 985-4923
(3) Duplicate payment notices and all other correspondences to:
Independent Life and Accident Insurance Company
% American General Corporation
Attention: Investment Research Department, A37-01
P. O. Box 3247
Houston, TX 77253-3247
Overnight Mail Address: 2929 Allen Parkway
Houston, TX 77019-2155
Fax: (713) 831-1366
Tax Identification No. 59-0302660
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY $12,000,000
(1) All payments by wire transfer of immediately
available funds to, with sufficient information (including PPN #,
interest rate, maturity date, interest amount, principal amount
and premium amount, if applicable) to identify the source and
application of such funds, to:
ABA No. 011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: The Variable Annuity Life Insurance Company
AC - 0125-821-9
OBI=PPN # and description of payment
Fund Number PA 54
(2) All notices of payments and written confirmation of such wire
transfers:
The Variable Annuity Life Insurance Company and PA 54
% State Street Bank and Trust Company
Insurance Services Custody (AH2)
1776 Heritage Drive
North Quincy, MA 02171
Fax: (617) 985-4923
(3) Duplicate payment notices and all other correspondences to:
The Variable Annuity Life Insurance Company
% American General Corporation
Attention: Investment Research Department, A37-01
P. O. Box 3247
Houston, TX 77253-3247
Overnight Mail Address: 2929 Allen Parkway
Houston, TX 77019-2155
Fax: (713) 831-1366
Tax Identification No. 74-1625348
SCHEDULE B TO NOTE PURCHASE AGREEMENT
Defined Terms
As used herein, the following terms have the respective meanings
set forth below or set forth in the Section hereof following such term:
"Affiliate" shall mean any Person directly or indirectly
controlling, controlled by, or under direct or indirect common control
with, the Company, except a Subsidiary, or any officer or Person holding
10% or more of the capital stock of the Company. A Person shall be deemed
to control a corporation if such Person possesses, directly or indirectly,
the power to direct or cause the direction of the management and policies
of such corporations, whether through the ownership of voting securities,
by contract or otherwise.
"Bank Credit Agreement" shall mean (i) that certain Revolving
Credit and Line of Credit Agreement dated as of May 28, 1993 by and among
the Company, the Lenders named therein and SunTrust Bank, Atlanta (f/k/a
Trust Company Bank), as Agent, as amended by a First Amendment dated as of
December 30, 1993, a Second Amendment dated as of October 31, 1994, a Third
Amendment dated July 31, 1995 and a Fourth Amendment dated May 13, 1996 and
as the same may be further modified, amended, renewed, extended or
supplemented from time to time and (ii) all replacements, substitutions,
refinancings and refundings thereof.
"Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which commercial banks in New York City are required or
authorized to be closed.
"Capital Lease" means a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Stock" shall mean, with respect to any Person, the
outstanding capital stock (including all common, preferred or other equity
securities and any options or warrants to purchase capital stock or other
securities exchangeable for or convertible into capital stock) of such
Person.
"Capitalized Lease Obligation" shall mean, with respect to any
Person, any rental obligation which, under GAAP, is or will be required to
be indebtedness (net of interest expense) in accordance with such
principles.
"Closing" is defined in Section 3.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated thereunder
from time to time.
"Company" shall mean Hughes Supply, Inc., a Florida corporation.
"Confidential Information" is defined in Section 20.
"Consolidated" shall mean the consolidated financial information
of the Company and its Subsidiaries under generally accepted accounting
principles.
"Consolidated Assets" shall mean, at any time, the total assets
of the Company and its Subsidiaries on a Consolidated basis under GAAP.
"Consolidated Current Debt" shall mean, at any time, the amount
of Current Debt of the Company and its Subsidiaries on a Consolidated basis
under GAAP at such time.
"Consolidated EBITR" shall mean, for any period, an amount equal
to, the sum of its Consolidated Net Income plus, to the extent deducted in
determining Consolidated Net Income (i) provisions for taxes based on
income, (ii) Consolidated Interest Expense, and (iii) Consolidated Rental
Expense.
"Consolidated Funded Debt" shall mean, at any time but without
duplication, the amount of Funded Debt of the Company and its Subsidiaries
on a Consolidated basis under GAAP at such time.
"Consolidated Interest Expense" shall mean, for any period, total
interest expense (including without limitation, interest expense
attributable to capitalized leases in accordance with generally accepted
accounting principles) of the Company and its Subsidiaries on a
Consolidated basis under GAAP.
"Consolidated Net Income" shall mean, for any period, the
consolidated net income (or loss) of the Company and its Subsidiaries for
such period (taken as a single accounting period) determined in conformity
with GAAP, but excluding therefrom (to the extent otherwise included
therein) (i) any extraordinary gains or losses, together with any related
provision for taxes, realized upon any sale of assets outside the ordinary
course of business, and (ii) undistributed net income of a Subsidiary to
the extent that such distribution is prohibited by agreement, judgment or
regulation; provided, however, that all earnings from acquisitions will
accrue to the benefit of the Company in accordance with GAAP.
"Consolidated Net Worth" shall mean, at any time, on a
Consolidated basis, shareholders' equity of the Company and its
Subsidiaries at such time determined in accordance with GAAP.
"Consolidated Rental Expense" shall mean, for any period, total
operating lease expense of the Company and its Subsidiaries on a
Consolidated basis under GAAP.
"Consolidated Total Capitalization" shall mean, at any time, the
sum of Consolidated Net Worth and Consolidated Funded Debt.
"Current Debt" shall mean all Debt with an original maturity of
one year or less. For the avoidance of doubt, Debt incurred underBank
Credit Agreement shall not constitute "Current Debt".
"Debt" shall mean, without duplication, with respect to any
Person, as at any date of determination:
(i) all indebtedness for borrowed money which such Person has
directly or indirectly created, incurred or assumed (including,
without limitation, all Capitalized Lease Obligations);
(ii) all indebtedness, whether or not for borrowed money, secured
by any Lien on any property or asset owned or held by such Person
subject thereto, whether or not the indebtedness secured thereby shall
have been assumed by such Person;
(iii) any indebtedness, whether or not for borrowed money,
with respect to which such Person has become directly or indirectly
liable and which represents or has been incurred to finance the
purchase price (or a portion thereof) of any property or services or
business acquired by such Person, whether by purchase, consolidation,
merger or otherwise other than any payables and accrued expenses in
the ordinary course of business that are current liabilities under
GAAP; and
(iv) any indebtedness of any other Person of the character
referred to in clauses (i), (ii), or (iii) of this definition with
respect to which the Person whose Debt is being determined has become
liable by way of a Guarantee;
all as determined in accordance with GAAP; provided, however, Debt shall
not include endorsement of negotiable instruments for collection in the
ordinary course of business.
"Default" shall mean an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of notice or
both, become an Event of Default.
"Default Rate" shall mean that rate of interest that is the
greater of (i) 2% per annum above the rate of interest stated in clause (a)
of the first paragraph of the Notes or (ii) 2% over the rate of interest
publicly announced by The Chase Manhattan Bank, N.A. as its "base" or
"prime" rate.
"Environmental Laws" shall mean any and all Federal, state,
local, and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements or governmental restrictions relating to pollution and
the protection of the environment or the release of any materials into the
environment, including but not limited to those related to hazardous
substances or wastes, air emissions and discharges to waste or public
systems.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations
promulgated thereunder from time to time in effect.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that is treated as a single employer together with the
Company under section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean, at any time, the sale value of
property that would be realized in an arm's length sale at such time
between an informed and willing buyer, and an informed and willing seller,
under no compulsion to buy or sell, respectively.
"Funded Debt" shall mean (i) all Debt with an original maturity
of greater than one year (including Debt incurred under the Bank Credit
Agreement), including current maturities of such Debt, and all Debt which
is renewable solely at the option of the Company or a Subsidiary, (ii) all
Debt with an original maturity of less than one year, including commercial
paper issued by the Company, if a direct or secondary source of repayment
of such Debt is, or such Debt is credit enhanced by, a line of credit or
other financial accommodation having a maturity of greater than one year
and (iii) all other Debt that is now or hereafter characterized by the
Company or any Subsidiary in its financial statements as "Funded Debt".
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time in the United States of America.
"Governmental Authority" shall mean
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any
Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guarantee" shall mean, with respect to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to
any Debt, lease, dividend or other obligation of another, including,
without limitation, any such obligation directly or indirectly guaranteed,
endorsed (otherwise than for collection or deposit in the ordinary course
of business) or discounted or sold with recourse by such Person, or in
respect of which such Person is otherwise directly or indirectly liable,
including, without limitation, any such obligation in effect guaranteed by
such Person through any agreement (contingent or otherwise) to purchase,
repurchase or otherwise acquire such obligation or any security therefor,
or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital
contributions or otherwise) in any such case if the purpose or intent of
such agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with,
or that the holders of such obligation will be protected against loss in
respect thereof. The amount of any Guarantee shall be equal to the
outstanding principal amount of the obligation guaranteed or such lesser
amount to which the maximum exposure of the guarantor shall have been
specifically limited.
"Hazardous Material" shall mean any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health
or safety, the removal of which may be required or the generation,
manufacture, refining, production, processing, treatment, storage,
handling, transportation, transfer, use, disposal, release, discharge,
spillage, seepage, or filtration of which is or shall be restricted,
prohibited or penalized by any applicable law (including, without
limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"holder" shall mean, with respect to any Note, the Person in
whose name such Note is registered in the register maintained by the
Company pursuant to Section 13.1.
"Institutional Investor" shall mean (a) any original purchaser of
a Note, (b) any holder of a Note holding more than 5% of the aggregate
principal amount of the Notes then outstanding, and (c) any bank, trust
company, savings and loan association or other financial institution, any
pension plan, any investment company, any insurance company, any broker or
dealer, or any other similar financial institution or entity, regardless of
legal form.
"Lien" shall mean, with respect to any Person, any mortgage,
lien, pledge, charge, security interest or other encumbrance, or any
interest or title of any vendor, lessor, lender or other secured party to
or of such Person under any conditional sale or other title retention
agreement or Capital Lease, upon or with respect to any property or asset
of such Person (including in the case of stock, stockholder agreements,
voting trust agreements and all similar arrangements).
"Make-Whole Amount" is defined in Section 8.6.
"Material" shall mean material in relation to the business,
operations, affairs, financial condition, assets, properties, or prospects
of the Company and its Subsidiaries taken as a whole.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the business, operations, affairs, financial condition, assets or
properties of the Company and its Subsidiaries taken as a whole, or (b) the
ability of the Company to perform its obligations under this Agreement and
the Notes, or (c) the validity or enforceability of this Agreement or the
Notes.
"Material Subsidiary" shall mean (i) each Subsidiary set forth on
Schedule 4.11 and (ii) each other Subsidiary of the Company, now existing
or hereinafter established or acquired, that has or acquires total assets
in excess of $1,000,000 or that accounted for or produced more than 5% of
the Consolidated EBITR of the Company on a Consolidated basis during any of
the three most recently completed fiscal years of the Company.
"Memorandum" is defined in Section 5.3.
"Multiemployer Plan" shall mean any Plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"Notes" is defined in Section 1.
"Officer's Certificate" shall mean a certificate of a Senior
Financial Officer or of any other officer of the Company whose
responsibilities extend to the subject matter of such certificate.
"Other Agreements" is defined in Section 2.
"Other Purchasers" is defined in Section 2.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA or any successor thereto.
"Person" shall mean an individual, corporation, company, limited
liability company, voluntary association, partnership, limited liability
partnership, trust, unincorporated organization or joint venture or a
government or any agency, instrumentality or political subdivision thereof,
and for the purpose of the definition of "ERISA Affiliate", a trade or
business.
"Plan" shall mean an "employee benefit plan" (as defined in
section 3(3) of ERISA) that is or, within the preceding five years, has
been established or maintained, or to which contributions are or, within
the preceding five years, have been made or required to be made, by the
Company or any ERISA Affiliate or with respect to which the Company or any
ERISA Affiliate may have any liability.
"Preferred Stock" shall mean any class of Capital Stock of a
corporation that is preferred over any other class of Capital Stock of such
corporation as to the payment of dividends or the payment of any amount
upon liquidation or dissolution of such corporation.
"Priority Debt" shall mean with respect to any Person, at any
time, without duplication, the sum of:
(i) Unsecured Debt of each Subsidiary (other than such Debt held
by the Company or a Wholly-Owned Subsidiary thereof);
(ii) Debt of the Company and any Subsidiary secured by any Lien
unless such Lien is otherwise permitted by subparagraphs (i)
through (xiii) of Section 10.5 (other than such Debt held by
the Company or a Wholly-Owned Subsidiary thereof); and
(iii) All Preferred Stock of Subsidiaries owned by a Person
other than the Company or a Wholly-Owned Subsidiary thereof.
"property" or "properties" shall mean, unless otherwise
specifically limited, real or personal property of any kind, tangible or
intangible, choate or inchoate.
"PVF Stock Offering" shall mean the common stock offering being
conducted by the Company in connection with the acquisition by the Company
of substantially all of the assets and business of PVF Holdings, Inc., a
Delaware corporation, pursuant to the terms of that certain Asset Purchase
Agreement dated March 27, 1996.
"QPAM Exemption" shall mean Prohibited Transaction Class
Exemption 84-14 issued by the United States Department of Labor.
"Required Holders" shall mean the holders of at least 51% in the
principal amount of the Notes at the time outstanding.
"Responsible Officer" shall mean any Senior Financial Officer and
any other officer of the Company with responsibility for the administration
of the relevant portion of this agreement.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
"Senior Financial Officer" shall mean the chief financial
officer, principal accounting officer, treasurer or comptroller of the
Company.
"Subsidiary" means, as to any Person, any corporation,
association or other business entity in which such Person or one or more of
its Subsidiaries or such Person and one or more of its Subsidiaries owns
sufficient equity or voting interests to enable it or them (as a group)
ordinarily, in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such entity, and any
partnership or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries (unless such partnership
can and does ordinarily take major business actions without the prior
approval of such Person or one or more of its Subsidiaries). Unless the
context otherwise clearly requires, any reference to a "Subsidiary" is a
reference to a Subsidiary of the Company.
"Subsidiary Debt" shall mean all Debt of which the direct obligor
is a subsidiary of the Company.
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary one
hundred percent (100%) of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or
more of the Company and the Company's other Wholly-Owned Subsidiaries at
such time.
SCHEDULE 4.9 TO NOTE PURCHASE AGREEMENT
Changes in Corporate Structure
(i) Closed Acquisitions:
(a) Waldorf Supply, Inc. - Closed in February 1996
(b) West Virginia Water & Waste Supply Co. - Closed in March 1996
(c) Electric Laboratories and Sales Corporation - Closed in April
1996
(d) Elasco Agency Sales, Inc. - Closed in April 1996
(e) PVF Acquisition (acquisition of substantially all of the assets
of PVF Holdings, Inc.) - Closed in May 1996
(ii) Pending Acquisitions:
(a) Gayle Supply Company, Inc. - Scheduled to close on May 31, 1996
(b) R&G Plumbing Supply, Inc. - Scheduled to close on May 31, 1996
SCHEDULE 4.11 TO NOTE PURCHASE AGREEMENT
Material Subsidiaries Executing and Delivering Guarantees
on Date of Closing
Each of the following is a Material Subsidiary of the Company:
(i) Atlantic Pump & Equipment Company of Miami, Inc., a Florida
corporation
(ii) Carolina Pump & Supply Corp. d/b/a Pump & Lighting Company, a
Rhode Island corporation
(iii) Elasco Agency Sales, Inc., an Illinois corporation
(iv) Elec-Tel Supply Company, a Georgia corporation
(v) Electric Laboratories and Sales Corporation, a Delaware
corporation
(vi) Florida Pipe & Supply Company, a Florida corporation
(vii) Hughes Acquisition Corp., a West Virginia corporation
(viii) Mills & Lupton Supply Company, a Tennessee corporation
(ix) One Stop Supply, Inc., a Tennessee corporation
(x) USCO Incorporated, a North Carolina corporation
(xi) Paine Supply of Jackson, Inc., d/b/a Paine Supply Company, a
Mississippi corporation
(xii) Port City Electrical Supply, Inc., a Georgia corporation
(xiii) HHH, Inc., a Delaware corporation
(xiv) H Venture Corp., a Florida corporation
(xv) Southwest Stainless, L.P., a Delaware limited partnership
(xvi) Moore Electric Supply, Inc., a North Carolina corporation
(xvii) Olander & Brophy, Incorporated, a Pennsylvania corporation
SCHEDULE 5.3 TO NOTE PURCHASE AGREEMENT
Disclosure Materials
No Exceptions.
SCHEDULE 5.4 TO NOTE PURCHASE AGREEMENT
Subsidiaries of the Company
and Ownership of Subsidiary Stock; Company's
Affiliates; Company's Directors and Senior Officers
(i) Subsidiaries of the Company:
State of
Incorporation/ Entity's
Legal Entities Organization Ownership
Atlantic Pump and Equipment Company of Florida 100%
Miami, Inc.
Atlantic Pump and Equipment Company of Puerto 100
Puerto Rico, Inc. Rico
Atlantic Pump and Equipment Company of Florida 100
West Palm Beach, Inc.
Carolina Pump and Supply Corp. Rhode 100
Island
Elasco Agency Sales, Inc. Illinois 100
Elec-Tel Supply Company Georgia 100
Electric Laboratories and Sales Delaware 100
Corporation
Florida Pipe and Supply Company Florida 100
H Venture Corp. Florida 100
HHH, Inc. Delaware 100
HSI Corp. Delaware 100
Hughes Acquisition Corporation West 100
Virginia
Hughes Aviation, Inc. Florida 100
Mills and Lupton Supply Company Tennessee 100
Moore Electric Supply, Inc. North 100
Carolina
Olander & Brophy, Inc. Pennsylvania 100
One Stop Supply, Inc. Tennessee 100
Paine Supply of Jackson, Inc. Mississippi 100
Port City Electrical Supply, Inc. Georgia 100
Southwest Stainless, L.P. Delaware 100
USCO Incorporated North 100
Carolina
Z&L Acquisition Corp.1 Delaware 100
Z&L Acquisition Corp. of Delaware, Inc.2 Delaware 100
(ii) Affiliates of the Company:
(a) No person holds 10% or more of the Company's common stock as of
the date of this Agreement.
(b) Except for the Subsidiaries of the Company, there are no other
Affiliates of the Company, except that the Company's wholly-owned
Subsidiary, H Venture Corp., owns a 20% equity interest in Accord
Industries Company, a Florida general partnership. Accord Industries
Company is not a consolidated entity.
(iii) Directors and Senior Officers of the Company:
Directors:
David H. Hughes
John D. Baker II
Robert N. Blackford
John B. Ellis
A. Stewart Hall, Jr.
Clifford M. Hames
Russell V. Hughes
Vincent S. Hughes
Herman B. McManaway
Donald C. Martin
Officers:
David H. Hughes, Chairman of the Board and Chief Executive
Officer
A. Stewart Hall, Jr., President
Russell V. Hughes, Vice President
Vincent S. Hughes, Vice President
Sidney J. Strickland, Vice President
Robert N. Blackford, Secretary
J. Stephen Zepf, Treasurer, Chief Financial Officer and
Assistant Secretary
Jay Clark, Assistant Treasurer
Benjamin P. Butterfield, Assistant Secretary
SCHEDULE 5.5 TO NOTE PURCHASE AGREEMENT
Financial Statements
(i) The Company's Annual Reports to Shareholders for the Years Ended
January 28, 1994, January 27, 1995, and January 26, 1996.
(ii) The Company's Annual Reports on Form 10-K for the fiscal years
ended January 28, 1994, January 27, 1995, and January 26, 1996.
SCHEDULE 5.8 TO NOTE PURCHASE AGREEMENT
Certain Litigation
None.
SCHEDULE 5.11 TO NOTE PURCHASE AGREEMENT
Patents, Etc.
No Exceptions.
SCHEDULE 5.14 TO NOTE PURCHASE AGREEMENT
Use of Proceeds
The proceeds received by the Company shall be used (i) to satisfy in
full the obligations of the Company under that certain Bridge Revolving
Credit Agreement, dated as of May 13, 1996, by and among the Company,
SunTrust Bank, Atlanta, SunTrust Bank, Central Florida, National
Association and SouthTrust Bank of Alabama, National Association, as
lenders, and SunTrust Bank, Atlanta, as agent for such lenders, and
(ii) for general corporate purposes.
SCHEDULE 5.15 TO NOTE PURCHASE AGREEMENT
Existing Debt; Unpermitted Liens
(i) Existing Debt:
Maximum Current
Principal Principal
Amount Amount
Outstanding
as of May
22, 1996
Bank Credit Agreement *$160,000,000
First Union $20,150,000
NationsBank --
SouthTrust 25,000,000
Sun Bank 23,437,500
SunTrust 23,437,500
Commercial Paper *35,000,000 34,865,000
SunTrust Cash Management Line 6,000,000 80,000
Bridge Loan 55,000,000 32,335,000
Mortgages:
Barnett Bank 31,095
Darrell and Betty Jo Canady 62,394
J. Reed and Associates 242,339
___________________
*As amended on May 13, 1996, by the Fourth Amendment.
Guarantee of Affiliated Debt: A wholly-owned subsidiary of the
Company, H Venture Corp. , owns a 20% interest in Accord Industries Company
("Accord"), a joint venture formed from the Company's sale of its
manufacturing operations in 1990. In connection with the investment in
Accord, the Company guaranteed $500,000 of Accord's indebtedness to a bank
and H Venture Corp., as a joint venturer, is contingently liable for the
remaining bank debt.
See also "Schedule 10.5 to Note Purchase Agreement - Liens."
(ii) Unpermitted Liens:
None.
SCHEDULE 10.5 TO NOTE PURCHASE AGREEMENT
Liens
Future Minimum
Lease Lease Payments
(Annual)
Orlando-Exec., Electric $585,000
Orlando-Plumbing 840,000
Orlando - Maint. Garage 245,000
Orlando - Utilities 551,250
Daytona Beach 221,375
Fort Pierce 146,250
Sarasota 287,950
Leesburg 105,300
St. Petersburg 209,625
Clearwater 102,375
Lakeland 131,625
Venice 213,750
Winter Haven 144,000
Total $3,783,500
Mortgage Notes as described in "Schedule 5.15 to Note Purchase
Agreement - Existing Debt; Unpermitted Liens" under item (i) thereto are
secured by the real property acquired using the loan proceeds evidenced by
such Mortgage Notes.
EXHIBIT 1 TO NOTE PURCHASE AGREEMENT
Form of 7.96% Senior Note due May 30, 2011
HUGHES SUPPLY, INC.
7.96% SENIOR NOTE DUE MAY 30, 2011
No. [R-_____] [Date]
$[_______] PPN 444482 B@1
FOR VALUE RECEIVED, the undersigned, HUGHES SUPPLY, INC. (herein
called the "Company"), a corporation organized and existing under the laws
of the State of Florida, hereby promises to pay to [
], or registered assigns, the principal sum of [
] DOLLARS on May 30, 2011, with interest (computed on the basis of a 360-
day year of twelve 30-day months) (a) on the unpaid balance thereof at the
rate of 7.96% per annum from the date hereof, payable semiannually, on the
30th day of May and November in each year, commencing with the November 30
next succeeding the date hereof, until the principal hereof shall have
become due and payable, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any
overdue payment of interest and any overdue payment of any Make-Whole
Amount (as defined in the Note Purchase Agreements referred to below),
payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate per annum from time to time equal to
the greater of (i) 9.96% or (ii) 2% over the rate of interest publicly
announced by The Chase Manhattan Bank, N.A. from time to time in New York,
New York as its "base" or "prime" rate.
Subject to Section 14.2 of each Note Purchase Agreement (as
defined below), payments of principal of, interest on and any Make-Whole
Amount with respect to this Note are to be made in lawful money of the
United States of America at The Chase Manhattan Bank, N.A., or at such
other place as the Company shall have designated by written notice to the
holder of this Note as provided in the Note Purchase Agreements.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to separate Note Purchase Agreements, dated as of
May 29, 1996 (as from time to time amended, the "Note Purchase
Agreements"), between the Company and the respective Purchasers named
therein and is entitled to the benefits thereof. Each holder of this Note
will be deemed, by its acceptance hereof, (i) to have agreed to the
confidentiality provisions set forth in Section 20 of the Note Purchase
Agreements and (ii) to have made the representation set forth in Sections
6.1 and 6.2 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note
Purchase Agreements, upon surrender of this Note for registration of
transfer, duly endorsed, or accompanied by a written instrument of transfer
duly executed, by the registered holder hereof or such holder's attorney
duly authorized in writing, a new Note for a like principal amount will be
issued to, and registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat the person
in whose name this Note is registered as the owner hereof for the purpose
of receiving payment and for all other purposes, and the Company will not
be affected by any notice to the contrary.
The Company will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreements. This
Note is also subject to optional prepayment, in whole or from time to time
in part, at the times and on the terms specified in the Note Purchase
Agreements, but not otherwise.
If an Event of Default occurs and is continuing, the principal of
this Note may be declared or otherwise become due and payable in the
manner, at the price (including any applicable Make-Whole Amount) and with
the effect provided in the Note Purchase Agreements.
This Note is governed by and is to be construed in accordance
with the terms of the Note Purchase Agreement, the terms of which are
incorporated herein by reference. All capitalized terms not otherwise
defined herein shall have the same meanings attributed to them as are set
forth in the Note Purchase Agreement.
HUGHES SUPPLY, INC.
By:_________________________
J. Stephen Zepf
Treasurer and Chief Financial Officer
EXHIBIT 4.4(a) TO NOTE PURCHASE AGREEMENT
Matters To Be Covered by Opinion of General Counsel for the Company
1. Each of the Company and its Subsidiaries being duly
incorporated, validly existing and in good standing and having requisite
corporate power and authority to issue and sell the Notes and to execute
and deliver the documents.
2. Each of the Company and its Subsidiaries being duly
qualified and in good standing as a foreign corporation in appropriate
jurisdictions.
3. Due authorization and execution of the documents and, if
governed by the laws of the State of Florida, such documents would be
legal, valid, binding and enforceable.
4. No conflicts with charter documents, laws or other
agreements.
5. All consents required to issue and sell the Notes and to
execute and deliver the documents having been obtained.
6. No litigation questioning validity of documents.
7. The Notes not requiring registration under the Securities
Act of 1933, as amended; no need to qualify an indenture under the Trust
Indenture Act of 1939, as amended.
8. No violation of Regulations G, T or X of the Federal Reserve
Board.
9. Company not an "investment company", or a company
"controlled" by an "investment company", under the Investment Company Act
of 1940, as amended.
10. A Florida state court, or a federal court sitting in
Florida, would, under Florida conflict of laws principles, recognize the
choice of New York law to govern the Note Purchase Agreement and the Notes.
The opinion shall be subject to standard and customary
qualification of counsel with respect to transactions of this nature.
EXHIBIT 4.4(b) TO NOTE PURCHASE AGREEMENT
Matters To Be Covered by Opinion of Special Counsel to the Purchasers
1. Note Purchase Agreement in commercially acceptable legal form.
2. The Note Purchase Agreement and the Notes would be legal, valid and
binding obligations, enforceable against the Company in accordance
with their respective terms.
3. The Notes not requiring registration under the Securities Act of 1933,
as amended; no need to qualify an indenture under the Trust Indenture
Act of 1939, as amended.
Opinions subject to standard and customary qualifications and exceptions.
EXHIBIT 4.11(a) TO NOTE PURCHASE AGREEMENT
Form of Guarantee
SUBSIDIARY GUARANTEE AGREEMENT
This SUBSIDIARY GUARANTEE AGREEMENT, dated as of May 29, 1996 (this
"Guarantee"), made by CAROLINA PUMP & SUPPLY CORP., d/b/a Pump & Lighting
Company and a corporation organized and existing under the laws of the
State of Rhode Island, ONE STOP SUPPLY, INC., a corporation organized and
existing under the laws of the State of Tennessee, USCO INCORPORATED, a
corporation organized and existing under the laws of the State of North
Carolina, MILLS & LUPTON SUPPLY COMPANY, a corporation organized and
existing under the laws of the State of Tennessee, PAINE SUPPLY OF JACKSON,
INC., d/b/a Paine Supply Company and a corporation organized and existing
under the laws of the State of Mississippi, HHH, INC., a corporation
organized and existing under the laws of the State of Delaware, H VENTURE
CORP., a corporation organized and existing under the laws of the State of
Florida, PORT CITY ELECTRICAL SUPPLY, INC., a corporation organized and
existing under the laws of the State of Georgia, ELEC-TEL SUPPLY COMPANY, a
corporation organized and existing under the laws of the State of Georgia,
ATLANTIC PUMP & SUPPLY COMPANY OF MIAMI, INC., a corporation organized and
existing under the laws of the State of Florida, FLORIDA PIPE & SUPPLY
COMPANY, a corporation organized and existing under the laws of the State
of Florida, HUGHES ACQUISITION CORP., a corporation organized and existing
under the laws of the State of West Virginia, ELECTRIC LABORATORIES AND
SALES CORP., a corporation organized and existing under the laws of the
State of Delaware, ELASCO AGENCY SALES, INC., a corporation organized and
existing under the laws of the State of Illinois, SOUTHWEST STAINLESS,
L.P., a limited partnership formed under the laws of the State of Delaware,
MOORE ELECTRIC SUPPLY, INC.. a corporation organized and existing under the
laws of the State of North Carolina, and OLANDER & BROPHY, INCORPORATED, a
corporation organized and existing under the laws of the Commonwealth of
Pennsylvania (the foregoing entities individually a "Guarantor" and
collectively the "Guarantors"), in favor of METROPOLITAN LIFE INSURANCE
COMPANY, CM LIFE INSURANCE COMPANY, MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY, AMERICAN GENERAL LIFE INSURANCE COMPANY OF NEW YORK, AMERICAN
GENERAL LIFE AND ACCIDENT INSURANCE COMPANY, INDEPENDENT LIFE AND ACCIDENT
INSURANCE COMPANY, THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, the
foregoing, together with their successors and assigns, individually a
"Guaranteed Party" and collectively the "Guaranteed Parties");
W I T N E S S E T H:
WHEREAS, Hughes Supply, Inc., a corporation organized and existing
under the laws of the State of Florida ("Hughes") and the Guaranteed
Parties have entered into those certain identical (except for the names of
the purchasers and the amounts of Notes, as defined below, to be purchased)
Note Purchase Agreements dated as of May 29, 1996 (together the
"Agreements" and separately each an "Agreement"), pursuant to which Hughes
has issued to the Guaranteed Parties its 7.96% Senior Notes due May 30,
2011 (the "Notes"), in the aggregate principal amount of $98,000,000;
WHEREAS, Hughes owns, directly or indirectly, all or a majority of the
outstanding capital stock of each of the Guarantors;
WHEREAS, Hughes and Guarantors share an identity of interest as
members of a consolidated group of companies engaged in substantially
similar businesses with Hughes providing certain centralized financial,
accounting and management services to each of the Guarantors by virtue of
intercompany advances and loans such that financial accommodations extended
to Hughes shall inure to the direct and material benefit of Guarantors; and
WHEREAS, consummation of the transactions pursuant to the Agreements
will facilitate expansion and enhance the overall financial strength and
stability of Hughes's entire corporate group, including the Guarantors; and
WHEREAS, it is a condition precedent to the Guaranteed Parties'
obligations to enter into the Agreements and to purchase the Notes
thereunder that Guarantors execute and deliver this Guarantee, and
Guarantors desire to execute and deliver this Guarantee to satisfy such
condition precedent;
NOW, THEREFORE, in consideration of the premises and in order to
induce the Guaranteed Parties to enter into and perform their obligations
under the Agreements, the Guarantors hereby jointly and severally agree as
follows:
SECTION 1. Guarantee. The Guarantors hereby, jointly and severally,
irrevocably, absolutely and unconditionally guarantee the due and punctual
payment of all principal of, premium, if any, and interest on, the Notes
and all other obligations owing by Hughes to the Guaranteed Parties, or any
of them, jointly or severally under the Agreements, the Notes and the other
documents, instruments and agreements relating to the transactions
contemplated by the Agreements, and all renewals, extensions, modifications
and refinancings thereof, now or hereafter owing, whether for principal,
interest, make-whole or yield maintenance premium or other fees, expenses
or otherwise, and any and all reasonable out-of-pocket expenses (including
reasonable attorneys' fees and expenses actually incurred) incurred by the
Guaranteed Parties in enforcing any rights under this Guarantee
(collectively, the "Guaranteed Obligations") including, without limitation,
all interest which, but for the filing of a petition in bankruptcy with
respect to Hughes, would accrue on any principal portion of the Guaranteed
Obligations. Any and all payments by the Guarantors hereunder shall be
made free and clear of and without deduction for any set-off, counterclaim,
or withholding so that, in each case, each Guaranteed Party will receive,
after giving effect to any Taxes (as such term is defined in the
Agreements, but excluding Taxes imposed on overall net income of any
Guaranteed Party), the full amount that it would otherwise be entitled to
receive with respect to the Guaranteed Obligations (but without duplication
of amounts for Taxes already included in the Guaranteed Obligations). The
Guarantors acknowledge and agree that this is a guarantee of payment when
due, and not of collection, and that, subject to Section 13 hereof, this
Guarantee may be enforced up to the full amount of the Guaranteed
Obligations without proceeding against Hughes, against any security for the
Guaranteed Obligations, against any other Guarantor or under any other
guaranty covering any portion of the Guaranteed Obligations.
SECTION 2. Guarantee Absolute. The Guarantors guarantee that the
Guaranteed Obligations will be paid strictly in accordance with the terms
of the documents, instruments and agreements evidencing any Guaranteed
Obligations, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Guaranteed Party with respect thereto. The liability of each Guarantor
under this Guarantee shall be absolute and unconditional in accordance with
its terms and shall remain in full force and effect without regard to, and
shall not be released, suspended, discharged, terminated or otherwise
affected by, any circumstance or occurrence whatsoever, including, without
limitation, the following (whether or not such Guarantor consents thereto
or has notice thereof):
(a) any change in the time, place or manner of payment of,
or in any other term of, all or any of the Guaranteed
Obligations, any waiver, indulgence, renewal, extension,
amendment or modification of or addition, consent or supplement
to or deletion from or any other action or inaction under or in
respect of the Agreements, or any other documents, instruments or
agreements relating to the Guaranteed Obligations or any other
instrument or agreement referred to therein or any assignment or
transfer of any thereof;
(b) any lack of validity or enforceability of the
Agreements or any other document, instrument or agreement
referred to therein or any assignment or transfer of any thereof;
(c) any furnishing to the Guaranteed Parties of any
additional security for the Guaranteed Obligations, or any sale,
exchange, release or surrender of, or realization on, any
security for the Guaranteed Obligations;
(d) any settlement or compromise of any of the Guaranteed
Obligations, any security therefor, or any liability of any other
party with respect to the Guaranteed Obligations, or any
subordination of the payment of the Guaranteed Obligations to the
payment of any other liability of Hughes;
(e) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like
proceeding relating to any Guarantor or Hughes, or any action
taken with respect to this Guarantee by any trustee or receiver,
or by any court, in any such proceeding;
(f) any nonperfection of any security interest or lien on
any collateral, or any amendment or waiver of or consent to
departure from any guaranty or security, for all or any of the
Guaranteed Obligations;
(g) any application of sums paid by Hughes or any other
Person with respect to the liabilities of Hughes to the
Guaranteed Parties, regardless of what liabilities of Hughes
remain unpaid;
(h) any act or failure to act by any Guaranteed Party which
may adversely affect a Guarantor's subrogation rights, if any,
against Hughes to recover payments made under this Guarantee; and
(i) any other circumstance which might otherwise constitute
a defense available to, or a discharge of, any Guarantor.
If claim is ever made upon any Guaranteed Party for repayment or recovery
of any amount or amounts received in payment or on account of any of the
Guaranteed Obligations, and any Guaranteed Party repays all or part of said
amount by reason of (a) any judgment, decree or order of any court or
administrative body having jurisdiction over the Guaranteed Party or any of
its property, or (b) any settlement or compromise of any such claim
effected by the Guaranteed Party with any such claimant (including Hughes
or a trustee in bankruptcy for Hughes), then and in such event the
Guarantors agree that any such judgment, decree, order, settlement or
compromise shall be binding on it, notwithstanding any revocation hereof or
the cancellation of the Agreements or the other documents, instruments and
agreements evidencing any Guaranteed Obligations, and the Guarantors shall
be and remain liable to the Guaranteed Party for the amounts so repaid or
recovered to the same extent as if such amount had never originally been
paid to the Guaranteed Party.
The obligations of each Guarantor shall be joint and several and the
release or discharge of the obligations of one Guarantor shall not modify,
affect, release or discharge the obligations of the other Guarantors
hereunder.
SECTION 3. Waiver. The Guarantors hereby waive notice of acceptance
of this Guarantee, notice of any liability to which it may apply, and
further waive presentment, demand of payment, protest, notice of dishonor
or nonpayment of any such liabilities, suit or taking of other action by
the Guaranteed Parties against, and any other notice to, Hughes or any
other party liable with respect to the Guaranteed Obligations (including
the Guarantors or any other Person executing a guaranty of the obligations
of Hughes).
SECTION 4. Waiver of Subrogation. No Guarantor will exercise any
rights against Hughes which it may acquire by way of subrogation or
contribution, by any payment made hereunder or otherwise. Each Guarantor
hereby expressly waives any claim, right or remedy which such Guarantor may
now have or hereafter acquire against Hughes that arises hereunder and/or
from the performance by any Guarantor hereunder, including, without
limitation, any claim, right or remedy of the Guaranteed Parties against
Hughes or any security which the Guaranteed Parties now have or hereafter
acquire, whether or not such claim, right or remedy arises in equity, under
contract, by statute, under color of law or otherwise.
SECTION 5. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 6. Amendments, Etc. No amendment or waiver of any provision
of this Guarantee nor consent to any departure by a Guarantor therefrom
shall in any event be effective unless the same shall be in writing
executed by the Guaranteed Parties.
SECTION 7. Notices. All notices and other communications provided
for hereunder shall be given in the manner specified in the Agreements (i)
in the case of the Guaranteed Parties, at the address specified for the
Guaranteed Parties in the Agreements, and (ii) in the case of the
Guarantors, at the respective addresses specified for such Guarantors in
this Guarantee.
SECTION 8. No Waiver; Remedies. No failure on the part of the
Guaranteed Parties to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. No notice to or
demand on any Guarantor in any case shall entitle such Guarantor to any
other further notice or demand in any similar or other circumstances or
constitute a waiver of the rights of the Guaranteed Parties to any other or
further action in any circumstances without notice or demand. The remedies
herein provided are cumulative and not exclusive of any remedies provided
by law.
SECTION 9. Right of Set-Off. In addition to and not in limitation of
all rights of offset that the Guaranteed Parties may have under applicable
law, the Guaranteed Parties shall, upon the occurrence of any Event of
Default and whether or not the Guaranteed Parties have made any demand or
the Guaranteed Obligations are matured, have the right to appropriate and
apply to the payment of the Guaranteed Obligations, all indebtedness or
property then or thereafter owing by the Guaranteed Parties to any
Guarantor, whether or not related to this Guarantee or any transaction
hereunder. The Guaranteed Parties shall promptly notify the relevant
Guarantor of any offset hereunder.
SECTION 10. Continuing Guarantee; Transfer of Obligations. This
Guarantee is a continuing guaranty and shall (i) remain in full force and
effect until payment in full of the Guaranteed Obligations and all other
amounts payable under this Guarantee and the termination of the Agreements,
(ii) be binding upon each Guarantor, its successors and assigns, and (iii)
inure to the benefit of and be enforceable by the Guaranteed Parties.
SECTION 11. Governing Law. THIS GUARANTEE AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN ACCORDANCE WITH
AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAW PRINCIPLES THEREOF).
SECTION 12. Subordination of Hughes's Obligations to the Guarantors.
As an independent covenant, each Guarantor hereby expressly covenants and
agrees for the benefit of the Guaranteed Parties that all obligations and
liabilities of Hughes to such Guarantor of whatsoever description
including, without limitation, all intercompany receivables of such
Guarantor from Hughes ("Junior Claims") shall be subordinate and junior in
right of payment to all obligations of Hughes to the Guaranteed Parties
under the terms of the Agreements and the other documents, instruments and
agreements evidencing any Guaranteed Obligations ("Senior Claims").
If an Event of Default shall occur, then, unless and until such Event
of Default shall have been cured, waived, or shall have ceased to exist, no
direct or indirect payment (in cash, property, securities by setoff or
otherwise) shall be made by Hughes to any Guarantor on account of or in any
manner in respect of any Junior Claim except such payments and
distributions the proceeds of which shall be applied to the payment of
Senior Claims.
In the event of a Proceeding (as hereinafter defined), all Senior
Claims shall first be paid in full before any direct or indirect payment or
distribution (in cash, property, securities by setoff or otherwise) shall
be made to any Guarantor on account of or in any manner in respect of any
Junior Claim except such payments and distributions the proceeds of which
shall be applied to the payment of Senior Claims. For the purposes of the
previous sentence, "Proceeding" means Hughes or any Guarantor shall
commence a voluntary case concerning itself under the Bankruptcy Code of
1978, as amended (the "Bankruptcy Code"), or any other applicable
bankruptcy laws; or any involuntary case is commenced against Hughes or any
Guarantor; or a custodian (as defined in the Bankruptcy Code or any other
applicable bankruptcy laws) is appointed for, or takes charge of, all or
any substantial part of the property of Hughes or any Guarantor, or Hughes
or any Guarantor commences any other proceedings under any reorganization
arrangement, adjustment of debt, relief of debtor, dissolution, insolvency
or liquidation or similar law of any jurisdiction whether now or hereafter
in effect relating to Hughes or any Guarantor, or any such proceeding is
commenced against Hughes or any Guarantor, or Hughes or any Guarantor is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or Hughes or any
Guarantor suffers any appointment of any custodian or the like for it or
any substantial part of its property; or Hughes or any Guarantor makes a
general assignment for the benefit of creditors; or Hughes or any Guarantor
shall fail to pay, or shall state that it is unable to pay, or shall be
unable to pay, its debts generally as they become due; or Hughes or any
Guarantor shall call a meeting of its creditors with a view to arranging a
composition or adjustment of its debts; or Hughes or any Guarantor shall by
any act or failure to act indicate its consent to, approval of or
acquiescence in any of the foregoing; or any corporate action shall be
taken by Hughes or any Guarantor for the purpose of effecting any of the
foregoing.
In the event any direct or indirect payment or distribution is made to
a Guarantor in contravention of this Section 12, such payment or
distribution shall be deemed received in trust for the benefit of the
Guaranteed Parties and shall be immediately paid over to the Guaranteed
Parties for application against the Guaranteed Obligations in accordance
with the terms of the Agreements.
Each Guarantor agrees to execute such additional documents as the
Guaranteed Parties may reasonably request to evidence the subordination
provided for in this Section 12.
SECTION 13. Savings Clause. (a) It is the intent of each Guarantor
and the Guaranteed Parties that each Guarantor's maximum obligations
hereunder shall be, but not in excess of:
(i) in a case or proceeding commenced by or against such
Guarantor under the Bankruptcy Code on or within one year from
the date on which any of the Guaranteed Obligations are incurred,
the maximum amount which would not otherwise cause the Guaranteed
Obligations (or any other obligations of such Guarantor to the
Guaranteed Parties) to be avoidable or unenforceable against such
Guarantor under (A) Section 548 of the Bankruptcy Code or (B) any
state fraudulent transfer or fraudulent conveyance act or statute
applied in such case or proceeding by virtue of Section 544 of
the Bankruptcy Code; or
(ii) in a case or proceeding commenced by or against such
Guarantor under the Bankruptcy Code subsequent to one year from
the date on which any of the Guaranteed Obligations are incurred,
the maximum amount which would not otherwise cause the Guaranteed
Obligations (or any other obligations of the Guarantor to the
Guaranteed Parties) to be avoidable or unenforceable against such
Guarantor under any state fraudulent transfer or fraudulent
conveyance act or statute applied in any such case or proceeding
by virtue of Section 544 of the Bankruptcy Code; or
(iii) in a case or proceeding commenced by or against
such Guarantor under any law, statute or regulation other than
the Bankruptcy Code (including, without limitation, any other
bankruptcy, reorganization, arrangement, moratorium, readjustment
of debt, dissolution, liquidation or similar debtor relief laws),
the maximum amount which would not otherwise cause the Guaranteed
Obligations (or any other obligations of such Guarantor to the
Guaranteed Parties) to be avoidable or unenforceable against such
Guarantor under such law, statute or regulation including,
without limitation, any state fraudulent transfer or fraudulent
conveyance act or statute applied in any such case or proceeding.
(The substantive laws under which the possible avoidance or
unenforceability of the Guaranteed Obligations (or any other obligations of
such Guarantor to the Guaranteed Parties) shall be determined in any such
case or proceeding shall hereinafter be referred to as the "Avoidance
Provisions").
(b) To the end set forth in Section 13(a), but only to the
extent that the Guaranteed Obligations would otherwise be subject
to avoidance under the Avoidance Provisions if such Guarantor is
not deemed to have received valuable consideration, fair value or
reasonably equivalent value for the Guaranteed Obligations, or if
the Guaranteed Obligations would render the Guarantor insolvent,
or leave the Guarantor with an unreasonably small capital to
conduct its business, or cause the Guarantor to have incurred
debts (or to have intended to have incurred debts) beyond its
ability to pay such debts as they mature, in each case as of the
time any of the Guaranteed Obligations are deemed to have been
incurred under the Avoidance Provisions and after giving effect
to contribution as among Guarantors, the maximum Guaranteed
obligations for which such Guarantor shall be liable hereunder
shall be reduced to that amount which, after giving effect
thereto, would not cause the Guaranteed Obligations (or any other
obligations of such Guarantor to the Guaranteed Parties), as so
reduced, to be subject to avoidance under the Avoidance
Provisions. This Section 13(b) is intended solely to preserve
the rights of the Guaranteed Parties hereunder to the maximum
extent that would not cause the Guaranteed Obligations of any
Guarantor to be subject to avoidance under the Avoidance
Provisions, and neither such Guarantor nor any other Person shall
have any right or claim under this Section 13 as against the
Guaranteed Parties that would not otherwise be available to such
Person under the Avoidance Provisions.
SECTION 14. Information. Each of the Guarantors assumes all
responsibility for being and keeping itself informed of Hughes' financial
condition and assets, and of all other circumstances bearing upon the risk
of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks that such Guarantor assumes and incurs hereunder, and
agrees that none of the Guaranteed Parties will have any duty to advise any
of the Guarantors of information known to it or any of them regarding such
circumstances or risks.
SECTION 15. Survival of Agreement. All agreements, representations
and warranties made herein shall survive the execution and delivery of this
Guarantee.
SECTION 16. Counterparts. This Guarantee and any amendments,
waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same
instrument.
SECTION 17. Additional Guarantors. Upon execution and delivery by
any Material Subsidiary of Hughes of an instrument in the form of this
Guarantee, such Material Subsidiary of Hughes shall become a Guarantor
hereunder with the same force and effect as if originally named a Guarantor
herein (each an "Additional Guarantor"). The execution and delivery of any
such instrument shall not require the consent of any Guarantor hereunder.
The rights and obligations of each Guarantor hereunder shall remain in full
force and effect notwithstanding the addition of any Additional Guarantor
as a party to this Guarantee.
SECTION 18. Successors and Assigns. This Guarantee shall be binding
upon the successors and assigns of the Guarantors. This Guarantee shall
inure to the benefit of the successors and assigns of the Guaranteed
Parties including any subsequent holder of any Notes. No Guarantor may
assign its obligations hereunder to any other Person.
SECTION 19. Defined Terms. All capitalized terms used herein and not
otherwise defined herein shall have their respective defined meanings as
set forth in the Agreements.
[Signatures on Following Page]
IN WITNESS WHEREOF, each Guarantor and Hughes caused this Guarantee to
be duly executed and delivered by their respective duly authorized officers
as of the date first above written.
CAROLINA PUMP & SUPPLY CORP.
ONE STOP SUPPLY, INC.
USCO INCORPORATED
MILLS & LUPTON SUPPLY COMPANY
PAINE SUPPLY OF JACKSON, INC.
H VENTURE CORP.
PORT CITY ELECTRICAL SUPPLY, INC.
ELEC-TEL SUPPLY COMPANY
ATLANTIC PUMP & EQUIPMENT
COMPANY OF MIAMI, INC.
FLORIDA PIPE & SUPPLY COMPANY
HUGHES ACQUISITION CORP.
ELASCO AGENCY SALES, INC.
MOORE ELECTRIC SUPPLY, INC.
OLANDER & BROPHY, INCORPORATED
ELECTRIC LABORATORIES AND SALES
CORP.
By:
Title:
Address for Notices:
[Insert Guarantor]
c/o Hughes Supply, Inc.
20 North Orange Avenue
Orlando, Florida 32801
Attention: General Counsel
[Signatures Continued on Following Page]
[Signature Page to Subsidiary Guarantee Agreement]
HHH, INC.
By:
Title:
Address for Notices:
[Insert Guarantor]
c/o Hughes Supply, Inc.
20 North Orange Avenue
Orlando, Florida 32801
Attention: General Counsel
[Signatures Continued on Following Page]
[Signature Page to Subsidiary Guarantee Agreement]
SOUTHWEST STAINLESS, L.P.
By:Z&L Acquisition Corp., its general
partner
By:
Title:
Address for Notices:
Southwest Stainless, L.P.
c/o Hughes Supply, Inc.
20 North Orange Avenue
Orlando, Florida 32801
Attention: General Counsel
[Signatures Continued on Following Page]
[Signatures Page to Subsidiary Guarantee Agreement]
SECTION 12 OF THE
FOREGOING GUARANTEE
ACKNOWLEDGED AND
AGREED TO:
HUGHES SUPPLY, INC.
By:
Name: J. Stephen Zepf
Title: Treasurer and Chief Financial Officer
EXHIBIT 4.11(b) TO NOTE PURCHASE AGREEMENT
Form of Contribution Agreement
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT, dated as of May 29, 1996 (this
"Contribution Agreement"), by and among HUGHES SUPPLY, INC. ("Hughes"), a
corporation organized and existing under the laws of the State of Florida,
each of the subsidiaries of Hughes, namely CAROLINA PUMP & SUPPLY CORP.,
d/b/a Pump & Lighting Company and a corporation organized and existing
under the laws of the State of Rhode Island, ONE STOP SUPPLY, INC., a
corporation organized and existing under the laws of the State of
Tennessee, USCO INCORPORATED, a corporation organized and existing under
the laws of the State of North Carolina, MILLS & LUPTON SUPPLY COMPANY, a
corporation organized and existing under the laws of the State of
Tennessee, PAINE SUPPLY OF JACKSON, INC., d/b/a Paine Supply Company and a
corporation organized and existing under the laws of the State of
Mississippi, HHH, INC., a corporation organized and existing under the laws
of the State of Delaware, H VENTURE CORP., a corporation organized and
existing under the laws of the State of Florida, PORT CITY ELECTRICAL
SUPPLY, INC., a corporation organized and existing under the laws of the
State of Georgia, ELEC-TEL SUPPLY COMPANY, a corporation organized and
existing under the laws of the State of Georgia, ATLANTIC PUMP & SUPPLY
COMPANY OF MIAMI, INC., a corporation organized and existing under the laws
of the State of Florida, FLORIDA PIPE & SUPPLY COMPANY, a corporation
organized and existing under the laws of the State of Florida, HUGHES
ACQUISITION CORP., a corporation organized and existing under the laws of
the State of West Virginia, ELECTRIC LABORATORIES AND SALES CORP., a
corporation organized and existing under the laws of the State of Delaware,
ELASCO AGENCY SALES, INC., a corporation organized and existing under the
laws of the State of Illinois, SOUTHWEST STAINLESS, L.P., a limited
partnership formed under the laws of the State of Delaware, MOORE ELECTRIC
SUPPLY, INC.. a corporation organized and existing under the laws of the
State of North Carolina, and OLANDER & BROPHY, INCORPORATED, a corporation
organized and existing under the laws of the Commonwealth of Pennsylvania
(the foregoing entities individually a "Guarantor" and collectively the
"Guarantors") for the purpose of establishing rights and obligations of
contribution among the Guarantors in connection with the Guarantee
Agreement (as such term is defined below).
R E C I T A L S
WHEREAS, Hughes Supply, Inc., a corporation organized and
existing under the laws of the State of Florida ("Hughes"), and
Metropolitan Life Insurance Company, The Variable Annuity Life Insurance
Company, Independent Life And Accident Insurance Company, American General
Life And Accident Insurance Company, American General Life Insurance
Company of New York, Massachusetts Mutual Life Insurance Company, CM Life
Insurance Company, the foregoing corporations, together with their
successors and assigns, individually a "Guaranteed Party" and collectively
the "Guaranteed Parties") have entered into those certain identical (except
for the names of the purchasers and the amounts of Notes, as defined below,
to be purchased) Note Purchase Agreements dated as of May 29, 1996
(together the "Agreements" and separately each an "Agreement"), pursuant to
which Hughes has issued to the Guaranteed Parties its 7.96% Senior Notes
due May 30, 2011 (the "Notes"), in the aggregate principal amount of
$98,000,000;
WHEREAS, the obligation of Guaranteed Parties to purchase the
Notes under the Agreements is conditioned on, among other things, the
provision of a Contribution Agreement in the form hereof;
WHEREAS, the Guarantors have entered into the Subsidiary
Guarantee Agreement dated as of even date herewith (the "Guarantee
Agreement") pursuant to which such Guarantors have agreed to guarantee all
the obligations of Hughes pursuant to the Agreements and all other
Guaranteed Obligations;
WHEREAS, as a result of transactions contemplated by the
Agreements, Guarantors will benefit from the Guaranteed Obligations and in
consideration thereof desire to enter into this Contribution Agreement to
provide a fair and equitable arrangement to make contributions in the event
payments are made under the Guarantee Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Hughes, each Guarantor hereby agrees as
follows:
SECTION 1. Indemnity and Subrogation. In addition to all
such rights of indemnity and subrogation as the Guarantors may have under
applicable law (but subject to Section 3), Hughes agrees that in the event
a payment shall be made by any Guarantor under the Guarantee Agreement in
respect of any Guaranteed Obligations, Hughes shall indemnify such
Guarantor for the full amount of such payment. Each Guarantor has waived
its rights to subrogation, pursuant to Section 4 of the Guarantee
Agreement.
SECTION 2. Contribution and Subrogation. Each Guarantor
agrees (subject to Section 3) that in the event a payment shall be made by
any Guarantor under the Guarantee Agreement or assets of any Guarantor
shall be sold to satisfy a claim of any Guaranteed Party, and such
Guarantor (the "Claiming Guarantor") shall not have been indemnified by
Hughes as provided in Section 1, each other Guarantor (a "Contributing
Guarantor") shall indemnify the Claiming Guarantor in an amount equal to
the amount of such payment or the greater of the book value or the fair
market value of such assets, as the case may be, multiplied by a fraction,
the numerator of which shall be the net worth of the Contributing Guarantor
on the date hereof, and the denominator of which shall be the sum of the
net worth of all the Guarantors on the date hereof. Any Contributing
Guarantor making any payment to a Claiming Guarantor pursuant to this
Section 2 shall be subrogated to the rights of such Claiming Guarantor
under Section 1 to the extent of such payment.
SECTION 3. Subordination. Notwithstanding any provision of
this Agreement to the contrary, (i) all rights of the Guarantors under
Sections 1 and 2 and all other rights of indemnity or contribution under
applicable law or otherwise shall be fully subordinated to the indefeasible
payment in full in cash of the Guaranteed Obligations, and (ii) no such
rights shall be exercised until all of the Guaranteed Obligations shall
have been irrevocably paid in full in cash and the Agreements shall have
been irrevocably terminated. If any amount shall be paid to any Guarantor
on account of such indemnity or contribution rights at any time when all of
the Guaranteed Obligations shall not have been paid in full in cash, such
amount shall be held in trust for the benefit of the Guaranteed Parties and
shall forthwith be paid to the Guaranteed Parties to be credited and
applied upon the Guaranteed Obligations in accordance with the terms of the
Agreements. No failure on the part of Hughes or any Guarantor to make the
payments required by Sections 1 and 2 (or any other payments required under
applicable law or otherwise) shall in any respect limit the obligations and
liabilities of any Guarantor with respect to the Guarantee Agreement, and
each Guarantor shall remain liable for the full amount of the obligations
of such Guarantor under such Guarantee Agreement.
SECTION 4. Allocation. If at any time there exists more than
one Claiming Guarantor with respect to the Guarantee Agreement, then
payment from other Guarantors pursuant to this Contribution Agreement shall
be allocated among such Claiming Guarantors in proportion to the total
amount of money paid for or on account of the Guaranteed Obligations by
each such Claiming Guarantor pursuant to the Guarantee Agreement.
SECTION 5. Preservation of Rights. This Contribution
Agreement shall not limit or affect any right which any Guarantor may have
against any other Person that is not a party hereto.
SECTION 6. Subsidiary Payment. The amount of contribution
payable under this Contribution Agreement by any Guarantor with respect to
the Guarantee Agreement shall be reduced by the amount of any contribution
paid hereunder by a Subsidiary of such Guarantor with respect to the
Guarantee Agreement.
SECTION 7. Asset Sale. If all of the stock of any Guarantor
shall be sold or otherwise disposed of (including by merger or
consolidation) in an asset sale not prohibited by the Agreements or
otherwise consented to by the Guaranteed Parties under the Agreements, the
agreements of such Guarantor hereunder shall automatically be discharged
and released without any further action by such Guarantor and shall be
assumed in full by the corporation which prior to such asset sale or
consent owned the stock of such Guarantor, effective as of the time of such
asset sale or consent. Hughes shall cause any such corporation which is
not a Guarantor to become a party to this Contribution Agreement and the
Guarantee Agreement unless otherwise agreed in writing by the Guaranteed
Parties.
SECTION 8. Equitable Allocation. If as a result of any
reorganization, recapitalization or other corporate change in Hughes or any
of its Subsidiaries, or as a result of any amendment, waiver or
modification of the terms and conditions governing the Guarantee Agreement
or any of the Guaranteed Obligations, or for any other reason, the
contributions under this Contribution Agreement become inequitable, the
parties hereto shall promptly modify and amend this Contribution Agreement
to provide for an equitable allocation of contributions. All such
modifications and amendments shall be in writing and signed by all parties
hereto.
SECTION 9. Asset of Party to Which Contribution and
Indemnification Are Owing. The parties hereto acknowledge that the right
to contribution and indemnification hereunder shall each constitute an
asset in favor of the party to which such contribution or indemnification
is owing.
SECTION 10. Successors and Assigns; Amendments. This
Contribution Agreement shall be binding upon each party hereto and its
respective successors and assigns and shall inure to the benefit of the
parties hereto and their respective successors and assigns. None of any
Guarantor's rights or any interest therein under this Contribution
Agreement may be assigned or transferred without the written consent of the
Guaranteed Parties. In the event of any such transfer or assignment of
rights by any Guarantor, the rights and privileges herein conferred upon
that Guarantor shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions hereof.
This Contribution Agreement shall not be amended without the prior written
consent of the Guaranteed Parties.
SECTION 11. Termination. This Contribution Agreement, as it
may be modified or amended from time to time, shall remain in effect, and
shall not be terminated as to the Guarantee Agreement, until the Guarantee
Agreement has been discharged or otherwise satisfied in accordance with its
terms.
SECTION 12. CHOICE OF LAW. THIS CONTRIBUTION AGREEMENT SHALL
BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF.
SECTION 13. Counterparts. This Contribution Agreement and any
amendments, waivers, consents or supplements may be executed in any number
of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed
an original, but all such counterparts shall constitute but one and the
same instrument.
SECTION 14. Additional Guarantors. Upon execution and
delivery, after the date hereof, by a Material Subsidiary of Hughes of an
instrument in the form of this Contribution Agreement, such Material
Subsidiary of Hughes shall become a Guarantor hereunder with the same force
and effect as if originally named as a Guarantor hereunder. The rights and
obligations of each Guarantor hereunder shall remain in full force and
effect notwithstanding the addition of any new Guarantor as a party to this
Contribution Agreement.
SECTION 15. Severability. In case any provision in or
obligation under this Contribution Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality or enforceability
of the remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
SECTION 16. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic or telecopy communication) and mailed, telegraphed, telecopied
or delivered, if to any Guarantor, addressed to it at the address set forth
for such party in the Guarantee Agreement, and if to any other party, at
the address set forth for such party in the Agreements. All such notices
and other communications shall be given and deemed to have been received as
provided by the terms of the Agreements.
SECTION 17. Defined Terms. All capitalized terms used herein
and not defined herein shall have their respective defined meanings as set
forth or used in the Guarantee Agreement.
[Signatures on Following Page]
IN WITNESS WHEREOF, Hughes and the Guarantors have duly executed
this Contribution Agreement as of the day and year first above written.
CAROLINA PUMP & SUPPLY CORP.
ONE STOP SUPPLY, INC.
USCO INCORPORATED
MILLS & LUPTON SUPPLY COMPANY
PAINE SUPPLY OF JACKSON, INC.
H VENTURE CORP.
PORT CITY ELECTRICAL SUPPLY, INC.
ELEC-TEL SUPPLY COMPANY
ATLANTIC PUMP & EQUIPMENT
COMPANY OF MIAMI, INC.
FLORIDA PIPE & SUPPLY COMPANY
HUGHES ACQUISITION CORP.
ELASCO AGENCY SALES, INC.
MOORE ELECTRIC SUPPLY, INC.
OLANDER & BROPHY, INCORPORATED
ELECTRIC LABORATORIES AND SALES
CORP.
By:
Title:
Address for Notices:
[Insert Guarantor]
c/o Hughes Supply, Inc.
20 North Orange Avenue
Orlando, Florida 32801
Attention: General Counsel
[Signatures Continued on Following Page]
[Signature Page to Contribution Agreement]
HHH, INC.
By:
Title:
Address for Notices:
[Insert Guarantor]
c/o Hughes Supply, Inc.
20 North Orange Avenue
Orlando, Florida 32801
Attention: General Counsel
[Signatures on Continued on Following Page]
[Signature Page to Contribution Agreement]
SOUTHWEST STAINLESS, L.P.
By:Z&L Acquisition Corp., its general
partner
By:
Title:
Address for Notices:
Southwest Stainless, L.P.
c/o Hughes Supply, Inc.
20 North Orange Avenue
Orlando, Florida 32801
Attention: General Counsel
==========================================================
HUGHES SUPPLY, INC.
$98,000,000
7.96% Senior Notes due May 30, 2011
NOTE PURCHASE AGREEMENT
Dated May 29, 1996
==========================================================
TABLE OF CONTENTS
1. AUTHORIZATION OF NOTES 1
2. SALE AND PURCHASE OF NOTES 1
3. CLOSING 1
4. CONDITIONS TO CLOSING 2
4.1 Representations and Warranties 2
4.2 Performance; No Default 2
4.3 Compliance Certificates 2
4.4 Opinions of Counsel 3
4.5 Purchase Permitted by Applicable Law, etc. 3
4.6 Sale of Other Notes 3
4.7 Payment of Special Counsel Fees 3
4.8 Private Placement Number 4
4.9 Changes in Corporate Structure 4
4.10 Proceedings and Documents 4
4.11 Guarantees of Subsidiaries 4
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 4
5.1 Organization; Power and Authority 4
5.2 Authorization, etc. 5
5.3 Disclosure 5
5.4 Organization and Ownership of Shares of Subsidiaries;
Affiliates 5
5.5 Financial Statements 6
5.6 Compliance With Laws, Other Instruments, etc. 7
5.7 Governmental Authorizations, etc. 7
5.8 Litigation; Observance of Agreements, Statutes and
Orders 7
5.9 Taxes 7
5.10 Title to Property; Leases 8
5.11 Licenses, Permits, etc 8
5.12 Compliance With ERISA 9
5.13 Private Offering by the Company 10
5.14 Use of Proceeds; Margin Regulations 10
5.15 Existing Debt; Future Liens 10
5.16 Foreign Assets Control Regulations, etc. 11
5.17 Status Under Certain Statutes 11
5.18 Environmental Matters 11
6. REPRESENTATIONS OF THE PURCHASER 12
6.1 Purchase for Investment 12
6.2 Source of Funds 12
7. INFORMATION AS TO COMPANY 13
7.1 Financial and Business Information 13
7.2 Officer's Certificate 16
7.3 Inspection 17
8. PREPAYMENT OF THE NOTES 17
8.1 Required Prepayments 17
8.2 Optional Prepayments With Make-Whole Amount 18
8.3 Allocation of Partial Prepayments 18
8.4 Maturity; Surrender, etc. 18
8.5 Purchase of Notes 19
8.6 Make-Whole Amount 19
9. AFFIRMATIVE COVENANTS 20
9.1 Compliance With Law 20
9.2 Insurance 21
9.3 Maintenance of Properties 21
9.4 Payment of Taxes and Claims 21
9.5 Corporate Existence, etc. 22
9.6 Covenant To Secure Notes Equally. 22
9.7 Covenant Relating to Subsidiary Guarantees. 22
9.8 Ownership of Subsidiary Guarantors. 22
10. NEGATIVE COVENANTS 23
10.1 Funded Debt. 23
10.2 Current Debt. 23
10.3 Minimum Net Worth. 23
10.4 Restricted Payments. 23
10.5 Liens. 24
10.6 Priority Debt. 26
10.7 Merger or Consolidation. 26
10.8 Sale of Assets. 27
10.9 Transactions With Related Party. 28
10.10 Nature of Business. 28
11. EVENTS OF DEFAULT 28
12. REMEDIES ON DEFAULT, ETC. 30
12.1 Acceleration 30
12.2 Other Remedies 31
12.3 Rescission 31
12.4 No Waivers or Election of Remedies, Expenses, etc. 32
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES 32
13.1 Registration of Notes 32
13.2 Transfer and Exchange of Notes 32
13.3 Replacement of Notes 33
14. PAYMENTS ON NOTES 33
14.1 Place of Payment 33
14.2 Home Office Payment 34
15. EXPENSES, ETC 34
15.1 Transaction Expenses 34
15.2 Survival 35
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE AGREEMENT 35
17. AMENDMENT AND WAIVER 35
17.1 Requirements 35
17.2 Solicitation of Holders of Notes 35
17.3 Binding Effect, etc. 36
17.4 Notes Held by Company, etc. 36
18. NOTICES 36
19. REPRODUCTION OF DOCUMENTS 37
20. CONFIDENTIAL INFORMATION 37
21. SUBSTITUTION OF PURCHASER 38
22. MISCELLANEOUS 39
22.1 Successors and Assigns 39
22.2 Payments Due on Non-Business Days 39
22.3 Severability 39
22.4 Construction 39
22.5 Counterparts 39
22.6 Governing Law 40
SCHEDULE A -- Information Relating to Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE 4.9 -- Changes in Corporate Structure
SCHEDULE 4.11 -- Subsidiaries Executing and Delivering Guarantees
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of
Subsidiary Stock; Company's Affiliates; Company's
Directors and Senior Officers
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Certain Litigation
SCHEDULE 5.11 -- Patents, etc.
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Debt
SCHEDULE 10.5 -- Liens
EXHIBIT 1 -- Form of 7.96% Senior Note due May 30, 2011
EXHIBIT 4.4(a) -- Matters To Be Covered by Opinion of General
Counsel for the Company
EXHIBIT 4.4(b) -- Matters To Be Covered by Opinion of Special
Counsel to the Purchasers
EXHIBIT 4.11(a) -- Form of Guarantee
EXHIBIT 4.11(b) -- Form of Contribution Agreement
_______________________________
1 is a 1% general partner of Southwest Stainless, L.P.
2 is a 99% general partner of Southwest Stainless, L.P.
Exhibit 13.1
Hughes Supply, Inc.
Consolidated Statements of Income
(in thousands, except per share data)
Fiscal Years Ended
----------------------------------------
January 30, January 31, January 26,
1998 1997 1996
- --------------------------------------------------------------------------------
Net Sales ........................... $1,878,739 $1,567,571 $1,285,328
Cost of Sales ....................... 1,466,764 1,235,099 1,018,804
----------------------------------------
Gross Profit ........................ 411,975 332,472 266,524
----------------------------------------
Operating Expenses:
Selling, general and administrative 308,872 253,756 211,805
Depreciation and amortization ..... 18,432 15,349 11,707
Provision for doubtful accounts ... 1,001 850 2,073
----------------------------------------
Total operating expenses ........ 328,305 269,955 225,585
----------------------------------------
Operating Income .................... 83,670 62,517 40,939
----------------------------------------
Non-Operating Income and (Expenses):
Interest and other income ......... 5,791 6,207 5,092
Interest expense .................. (18,544) (14,232) (9,917)
----------------------------------------
(12,753) (8,025) (4,825)
Income Before Income Taxes .......... 70,917 54,492 36,114
Income Taxes ........................ 26,093 19,178 11,661
----------------------------------------
Net Income .......................... $ 44,824 $ 35,314 $ 24,453
========================================
Earnings Per Share:
Basic ............................. $ 2.34 $ 2.14 $ 1.80
========================================
Diluted ........................... $ 2.30 $ 2.09 $ 1.77
========================================
Average Shares Outstanding:
Basic ............................. 19,194 16,537 13,575
========================================
Diluted ........................... 19,518 16,872 13,804
========================================
The accompanying notes are an integral part of these consolidated financial
statements.
13
<PAGE>
Hughes Supply, Inc.
Consolidated Balance Sheets
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
January 30, January 31,
1998 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents ......................................... $ 7,661 $ 6,329
Accounts receivable, less allowance for losses of $3,136 and $3,809 282,880 201,480
Inventories ....................................................... 346,312 258,111
Deferred income taxes ............................................. 9,708 12,761
Other current assets .............................................. 17,600 12,412
----------------------
Total current assets ............................................ 664,161 491,093
Property and Equipment, Net ......................................... 105,421 76,044
Excess of Cost over Net Assets Acquired ............................. 153,052 89,755
Deferred Income Taxes ............................................... 3,438 2,204
Other Assets ........................................................ 15,957 8,143
----------------------
$ 942,029 $ 667,239
======================
Liabilities and Shareholders' Equity
Current Liabilities:
Current portion of long-term debt ................................. $ 603 $ 3,108
Accounts payable .................................................. 150,042 113,503
Accrued compensation and benefits ................................. 20,602 16,847
Other current liabilities ......................................... 18,571 15,126
----------------------
Total current liabilities ....................................... 189,818 148,584
Long-Term Debt ...................................................... 335,207 222,451
Other Noncurrent Liabilities ........................................ 2,662 2,199
----------------------
Total liabilities ............................................... 527,687 373,234
----------------------
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; 100,000,000 shares
authorized; 22,500,135 and 18,685,699 shares issued ............. 22,500 18,686
Capital in excess of par value .................................... 203,006 111,146
Retained earnings ................................................. 190,078 164,173
Unearned compensation related to outstanding restricted stock ..... (1,242) --
----------------------
Total shareholders' equity ...................................... 414,342 294,005
----------------------
$ 942,029 $ 667,239
======================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
14
<PAGE>
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 27, 1995, as
previously reported .................... 8,280,957 $ 8,281 $ 36,952 $ 105,144 108,988 $ (1,688)
Adjustment for three-for-two
stock split .......................... 4,140,201 4,140 (4,147) -- 54,494 --
Adjustment for pooling of interests .... 1,408,530 1,409 1,984 9,943 -- --
--------------------------------------------------------------------------------------
Balance, January 27, 1995 as restated .... 13,829,688 13,830 34,789 115,087 163,482 (1,688)
Net Income ............................. -- -- -- 24,453 -- --
Cash dividends--
$.20 per share ....................... -- -- -- (1,971) -- --
Pooled companies ..................... -- -- -- (3,641) -- --
Stock dividend by pooled company ....... 43,065 43 246 (289) -- --
Shares issued under
stock option plans ................... 9,985 10 267 (154) (130,476) 1,347
Purchase and retirement
of common shares ..................... (29,463) (29) (137) (354) -- --
Other acquisitions ..................... 253,470 253 2,628 -- (33,006) 341
--------------------------------------------------------------------------------------
Balance, January 26, 1996 ................ 14,106,745 14,107 37,793 133,131 -- --
Net Income ............................. -- -- -- 35,314 -- --
Cash dividends--
$.25 per share ....................... -- -- -- (3,712) -- --
Pooled companies ..................... -- -- -- (4,899) -- --
Shares issued under stock option
and bonus plans ...................... 99,471 99 954 -- -- --
Issuance of shares in public offering .. 2,230,483 2,231 45,962 -- -- --
Purchase and retirement of
common shares ........................ (21,948) (22) (202) (329) -- --
Other acquisitions ..................... 2,270,948 2,271 26,639 4,668 -- --
--------------------------------------------------------------------------------------
Balance, January 31, 1997 ................ 18,685,699 18,686 111,146 164,173 -- --
Net Income ............................. -- -- -- 44,824 -- --
Cash dividends--
$.31 per share ....................... -- -- -- (5,966) -- --
Pooled companies ..................... -- -- -- (2,178) -- --
Shares issued under stock option
and bonus plans ...................... 125,576 125 1,472 -- -- --
Purchase and retirement
of common shares ..................... (19,476) (19) (234) (325) -- --
Issuance of restricted stock ........... 50,000 50 1,250 -- -- --
Capitalization of undistributed earnings
of Subchapter S corporation .......... -- -- 12,999 (12,999) -- --
Other acquisitions ..................... 3,658,336 3,658 76,373 2,549 -- --
--------------------------------------------------------------------------------------
Balance, January 30, 1998 ................ 22,500,135 $ 22,500 $ 203,006 $ 190,078 -- $ --
======================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
15
<PAGE>
Hughes Supply, Inc.
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Fiscal Years Ended
-----------------------------------------
January 30, January 31, January 26,
1998 1997 1996
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents:
Cash flows from operating activities:
Cash received from customers ........................ $ 1,852,201 $ 1,556,090 $ 1,272,511
Cash paid to suppliers and employees ................ (1,821,592) (1,518,453) (1,232,689)
Interest received ................................... 4,007 3,905 3,685
Interest paid ....................................... (17,462) (13,601) (9,570)
Income taxes paid ................................... (22,993) (22,676) (15,729)
-----------------------------------------
Net cash provided by (used in) operating activities (5,839) 5,265 18,208
-----------------------------------------
Cash flows from investing activities:
Capital expenditures ................................ (27,733) (16,793) (13,690)
Proceeds from sale of property and equipment ........ 1,184 1,838 1,292
Business acquisitions, net of cash .................. (46,067) (100,078) (10,009)
-----------------------------------------
Net cash used in investing activities ............. (72,616) (115,033) (22,407)
-----------------------------------------
Cash flows from financing activities:
Net borrowings (payments) under short-term
debt arrangements ................................. 35,060 (5,407) 15,418
Principal payments on:
Long-term notes ................................... (27,481) (19,985) (6,038)
Capital lease obligations ......................... (1,022) (777) (844)
Proceeds from issuance of long-term debt ............ 80,000 98,000 --
Net proceeds from sale of common stock .............. -- 48,193 --
Proceeds from stock options exercised ............... 1,305 1,053 1,470
Purchase of common shares ........................... (578) (553) (520)
Dividends paid ...................................... (7,497) (8,071) (5,417)
-----------------------------------------
Net cash provided by financing activities ......... 79,787 112,453 4,069
-----------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents .... 1,332 2,685 (130)
Cash and Cash Equivalents, beginning of year ............ 6,329 3,644 3,774
-----------------------------------------
Cash and Cash Equivalents, end of year .................. $ 7,661 $ 6,329 $ 3,644
=========================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
16
<PAGE>
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 and industrial markets. Major product lines
distributed by the Company include electrical; plumbing; water and sewer; air
conditioning and heating; industrial pipe, plate, valves and fittings; building
materials; electric utilities; water systems; and pool equipment and supplies.
The Company's principal customers are electrical, plumbing and mechanical
contractors, electric utility companies, municipal and industrial accounts.
Industrial accounts include companies in the petrochemical, food and beverage,
pulp and paper, pharmaceutical and marine industries.
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 a company acquired and accounted for as a pooling of interests.
Results of operations of companies acquired and accounted for as purchases and
immaterial poolings are included from their respective dates of acquisition.
Fiscal Year
The Company's fiscal year ends on the last Friday in January. Fiscal 1998, 1997
and 1996 contained 52 weeks, 53 weeks and 52 weeks, respectively.
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 recorded at cost and depreciated using both
straight-line and declining-balance methods based on the following estimated
useful lives:
Buildings and improvements ............................... 5-40 years
Transportation equipment ................................. 2-7 years
Furniture, fixtures and equipment ........................ 2-12 years
Property under capital leases ............................ 20-40 years
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.
Excess of Cost over Net Assets Acquired
The excess of cost over the fair value of net assets of purchased companies
(goodwill) is being amortized by the straight-line method over 15 to 40 years.
At January 30, 1998 and January 31, 1997, goodwill was $153,052 and $89,755,
respectively, net of accumulated amortization of $11,040 and $6,029,
respectively.
Other Assets
The Company capitalizes certain internal software development costs which are
amortized by the straight-line method over the estimated useful lives of the
software, not to exceed five years. At January 30, 1998 and January 31, 1997,
unamortized software development costs were $8,357 and $1,500, respectively, net
of accumulated amortization of $394 and $78, respectively. Amortization of
capitalized internal software development costs was $316 and $78 in fiscal 1998
and 1997, respectively. In fiscal 1996, internal software development costs were
not material.
Impairment of Long-Lived Assets
In the event that facts and circumstances indicate that the carrying value of a
long-lived asset, including associated intangibles, may be impaired, an
evaluation of recoverability is performed by comparing the estimated future
undiscounted cash flows associated with the asset to the asset's carrying amount
to determine if a write-down to market value or discounted cash flow is
required. Statement of Financial Accounting Standards No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
("SFAS 121"), was issued in March 1995 and was implemented by the Company in
fiscal 1997. However, as the Company's previous accounting policy was consistent
with the provisions of SFAS 121, there was no impact as a result of adopting the
new standard.
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
17
<PAGE>
Hughes Supply, Inc.
Notes to Consolidated Financial Statements (continued)
(dollars in thousands, except per share data)
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.
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 No. 25, Accounting for Stock
Issued to Employees ("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. SFAS 123 allows an entity to continue to measure
compensation cost using the principles of APB 25 if certain pro forma
disclosures are made. SFAS 123 was effective for fiscal years beginning after
December 15, 1995. The Company adopted the provisions for the pro forma
disclosure requirements of SFAS 123 in fiscal 1997.
Earnings Per Common Share
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share ("SFAS 128"). SFAS
128 became effective for reporting periods ending after December 15, 1997 and,
accordingly, was adopted by the Company commencing in the period ended January
30, 1998. Under the provisions of SFAS 128, primary and fully diluted earnings
per share were replaced with basic and diluted earnings per share. Basic
earnings per share is calculated by dividing net income by the weighted-average
number of shares outstanding. Diluted earnings per share is calculated by
dividing net income by the weighted-average number of shares outstanding,
adjusted for dilutive potential common shares. The weighted-average number of
shares used in calculating basic earnings per share were 19,194,000, 16,537,000
and 13,575,000 for fiscal 1998, 1997 and 1996, respectively. In calculating
diluted earnings per share, these amounts were adjusted to include 324,000,
335,000 and 229,000 of dilutive potential common shares for fiscal 1998, 1997
and 1996, respectively. The Company's dilutive potential common shares consist
of stock options and restricted stock. Earnings per share data for prior periods
was restated to give effect to the Company's adoption of SFAS 128 and the stock
split described in Note 8.
Fair Value of Financial Instruments
The carrying values of cash and cash equivalents, accounts receivable, accounts
payable and accrued liabilities approximate their fair values because of the
short maturity of these instruments. The fair value of the Company's long-term
debt is estimated based on quoted market prices for the same or similar issues
or on current rates offered to the Company for debt of the same remaining
maturities. The fair value of long-term debt, excluding capital lease
obligations, approximated $338,259 at January 30, 1998 and the related carrying
value was $334,568.
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 January 30, 1998, the Company exchanged 1,408,530 shares of the Company's
common stock for all of the common stock of Chad Supply, Inc. ("Chad"). Chad is
a wholesale distributor of repair and maintenance products to the multi-housing
industry with 18 outlets in nine states. Chad was a Subchapter S corporation for
federal income tax purposes and accordingly, did not pay U.S. federal income
taxes. Chad will be included in the Company's U.S. federal income tax return
effective January 30, 1998.
The above transaction has been accounted for as a pooling of interests and,
accordingly, the consolidated financial statements for the periods presented
have been restated to include the accounts of Chad. Chad's fiscal year end has
been changed to the last Friday in January to conform to the Company's fiscal
year end.
18
<PAGE>
Net sales and net income of the separate companies for the periods preceding the
Chad merger were as follows:
<TABLE>
<CAPTION>
Unaudited
Pro Forma
Net Net Net
Sales Income Income
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nine months ended October 31, 1997 (unaudited):
Hughes, as
previously
reported ................................ $1,369,125 $ 33,198 $ 33,198
Chad ...................................... 49,124 2,715 1,643
------------------------------------
Combined .................................. $1,418,249 $ 35,913 $ 34,841
====================================
Fiscal year ended January 31, 1997:
Hughes, as
previously
reported ................................ $1,516,088 $ 32,528 $ 31,747
Chad ...................................... 51,483 2,786 1,711
------------------------------------
Combined .................................. $1,567,571 $ 35,314 $ 33,458
====================================
Fiscal year ended January 26, 1996:
Hughes, as
previously
reported ................................ $1,242,446 $ 23,206 $ 20,749
Chad ...................................... 42,882 1,247 741
------------------------------------
Combined .................................. $1,285,328 $ 24,453 $ 21,490
====================================
</TABLE>
Unaudited pro forma net income reflects adjustments to net income to record an
estimated provision for income taxes for each period presented assuming Chad was
a tax paying entity. Additionally, in fiscal 1997, the Company merged with
certain other Subchapter S corporations, including Electric Laboratories and
Sales Corporation and ELASCO Agency Sales, Inc. (collectively, "ELASCO") and
Metals, Incorporated and Stainless Tubular Products, Inc. (the "Metals Group").
As Subchapter S corporations, ELASCO and the Metals Group did not pay U.S.
federal income taxes in periods prior to the mergers. ELASCO and the Metals
Group were included in the Company's U.S. federal income tax return effective
with their mergers with the Company on April 26, 1996 and January 24, 1997,
respectively. For purposes of calculating unaudited pro forma net income, ELASCO
and the Metals Group were also assumed to be tax paying entities.
On January 8, 1998, the Company acquired all of the common stock of Mountain
Country Supply ("Mountain Country"). Mountain Country is a wholesale distributor
of plumbing supplies; water and sewer equipment and supplies; and air
conditioning and heating equipment and supplies with 10 locations in Arizona. On
January 13, 1998, the Company acquired all of the common stock of International
Supply Company, Inc. and all of its affiliated operations ("International").
International is a wholesale distributor of water and sewer equipment and
supplies, plumbing supplies and industrial pipe, valves and fittings with 38
locations in Texas. The aggregate consideration paid for the Mountain Country
and International acquisitions was $96,000, consisting of cash in the amount of
$36,870 and the issuance of 2,111,789 shares of common stock. These transactions
were accounted for as purchases and the results of operations of Mountain
Country and International from their respective dates of acquisition are
included in the consolidated financial statements. The excess of cost over net
assets acquired for Mountain Country and International is being amortized over
40 years by the straight-line method.
On May 13, 1996, the Company acquired substantially all of the assets,
properties and business of PVF Holdings, Inc. and its subsidiaries ("PVF"), a
wholesale distributor of stainless steel pipe, valves and fittings with 16
locations nationwide. The aggregate consideration paid was $108,984, consisting
of cash in the amount of $82,069, the issuance of 1,106,468 shares of common
stock and the assumption of $6,436 of bank debt. The transaction was accounted
for as a purchase and the results of operations of PVF from the date of
acquisition are included in the consolidated financial statements. The excess of
cost over net assets acquired is being amortized over 40 years by the
straight-line method.
The following table reflects the unaudited pro forma combined results of
operations, assuming the Mountain Country, International and PVF acquisitions
had occurred at the beginning of each year presented:
Fiscal Years Ended
-----------------------------------
1998 1997
- --------------------------------------------------------------------------------
Net sales .......................... $ 2,113,520 $ 1,840,580
Net income ......................... 50,467 43,060
Earnings per share:
Basic ............................ 2.38 2.27
Diluted .......................... 2.35 2.23
The past and future financial performance of PVF will be directly influenced by
the cost of stainless steel and nickel alloy which as a commodity item can and
does fluctuate. As a result of these commodity price fluctuations and the fact
that significant price fluctuations could continue to create cyclicality in
PVF's future operating performance, management believes that the pro forma
information is not necessarily indicative of future performance.
During fiscal 1998, 1997 and 1996, the Company acquired several other wholesale
distributors of materials to the construction and industrial markets that were
accounted for as purchases or immaterial poolings. These acquisitions,
individually or in the aggregate, did
19
<PAGE>
Hughes Supply, Inc.
Notes to Consolidated Financial Statements (continued)
(dollars in thousands, except per share data)
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.
Note 3--Property and Equipment
Property and equipment consist of the following:
1998 1997
- --------------------------------------------------------------------------------
Land ......................................... $ 19,367 $ 16,224
Buildings and improvements ................... 83,256 59,532
Transportation equipment ..................... 28,484 25,023
Furniture, fixtures and equipment ............ 42,941 34,589
Assets under capital leases .................. 9,407 9,696
--------------------------
183,455 145,064
Less accumulated depreciation
and amortization ........................... (78,034) (69,020)
--------------------------
$ 105,421 $ 76,044
==========================
Note 4--Long-Term Debt
Long-term debt consists of the following:
1998 1997
- --------------------------------------------------------------------------------
7.96% Senior notes, due 2011 ................... $ 98,000 $ 98,000
7.14% Senior notes, due 2012 ................... 40,000 --
7.19% Senior notes, due 2012 ................... 40,000 --
Unsecured revolving bank notes under
$180,000 credit agreement, payable
August 17, 2000, fluctuating interest
(5.9% to 6.1% at January 30, 1998) ........... 105,900 80,000
Short-term instruments classified as
long-term debt ............................... 50,000 40,921
Other notes payable ............................ 668 4,374
Capital lease obligations ...................... 1,242 2,264
--------------------------
335,810 225,559
Less current portion ........................... (603) (3,108)
--------------------------
$ 335,207 $ 222,451
==========================
On May 29, 1996, the Company issued $98,000 of senior notes in a private
placement in connection with the acquisition of PVF. The notes mature in 2011,
bear interest at 7.96% and will be payable in 20 equal semi-annual payments
beginning in 2001. Proceeds received by the Company in the private placement of
the senior notes were used to partially fund the PVF acquisition and to reduce
indebtedness outstanding under the Company's revolving credit facility and line
of credit agreement (the "credit agreement").
On August 28, 1997, the Company issued $80,000 of senior notes due 2012 in a
private placement. The notes, of which $40,000 bear interest at 7.14% and
$40,000 bear interest at 7.19%, will be payable in 21 and 13 equal semi-annual
payments beginning in 2002 and 2006, respectively. Proceeds received by the
Company from the sale of the notes were used to reduce indebtedness outstanding
under the Company's credit agreement.
On August 27, 1997, in connection with the issuance of the $80,000 of senior
notes, the Company entered into an interest rate swap agreement (the "swap
agreement"). The swap agreement effectively converts the Company's $40,000 of
7.19% senior notes due 2012 from fixed-rate debt to floating-rate debt based on
six-month London Interbank Offered Rates (LIBOR) less a predetermined spread of
.05% (5.86% as of January 30, 1998). The differential is accrued as interest
rates change and is recorded as an adjustment to interest expense. As a result
of the swap agreement, interest expense decreased by $219 in fiscal 1998. The
swap agreement matures in 2012, however, the counterparty has the option to
terminate the agreement at any time from May 30, 2000 through November 30, 2011.
The estimated fair value of the swap agreement, based on a valuation from an
investment bank, approximated $1,091 at January 30, 1998.
On August 18, 1997, the Company's credit agreement with a group of banks was
amended. The credit agreement, as amended, now permits the Company to borrow up
to $180,000 (subject to borrowing limitations under the credit agreement)
- --$130,000 of which is long-term debt due August 17, 2000, and $50,000 of which
is a line of credit convertible to a term note due two years from conversion
date. The $50,000 line of credit backs commercial paper. Under the credit
agreement, interest is payable at market rates plus applicable margins.
Commitment fees of .225% 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 .60 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 $38,970 is
available at January 30, 1998 for payment of dividends.
The Company has a commercial paper program backed by its revolving credit
facility. The weighted average interest rate on outstanding commercial paper
borrowings of $50,000 and $36,521 as of January 30, 1998 and January 31, 1997
was 6.1% and 5.5%, respectively. In addition, the Company had short-term bank
borrowings of $4,400 at a weighted average interest rate of 6.0% as of January
31, 1997.
The Company's credit agreement enables the Company to refinance short-term
borrowings on a long-term basis
20
<PAGE>
to the extent that the credit facility is unused. Accordingly, $50,000 and
$40,921 of short-term borrowings at January 30, 1998 and January 31, 1997,
respectively, have been classified as long-term debt.
Maturities of long-term debt, excluding capital lease obligations, for each of
the five years subsequent to January 30, 1998 and in the aggregate are as
follows:
Fiscal Years Ending
- --------------------------------------------------------------------------------
1999 .............................................................. $ 160
2000 .............................................................. 427
2001 .............................................................. 155,900
2002 .............................................................. 9,334
2003 .............................................................. 13,143
Later years ....................................................... 155,604
--------
$334,568
========
Note 5--Income Taxes
The components of deferred tax assets and liabilities at January 30, 1998 and
January 31, 1997 are as follows:
1998 1997
- --------------------------------------------------------------------------------
Deferred tax assets:
Allowance for doubtful accounts .............. $ 1,286 $ 1,513
Inventories .................................. 1,445 3,461
Property and equipment ....................... 3,184 1,241
Accrued vacation ............................. 2,252 1,588
Deferred compensation ........................ 1,092 832
Other accrued liabilities .................... 3,596 5,253
Other ........................................ 1,129 1,083
-----------------------
Total deferred tax assets .................. 13,984 14,971
-----------------------
Deferred tax liabilities:
Intangible assets ............................ 838 6
-----------------------
Net deferred tax assets ........................ $13,146 $14,965
=======================
No valuation allowance has been provided for these deferred tax assets at
January 30, 1998 and January 31, 1997 as full realization of these assets is
expected.
The consolidated provision for income taxes consists of the following:
Fiscal Years Ended
-----------------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------
Currently payable:
Federal ...................... $ 21,058 $ 18,399 $ 11,676
State ........................ 3,216 2,807 1,796
-----------------------------------------
24,274 21,206 13,472
-----------------------------------------
Deferred:
Federal ...................... 1,500 (1,739) (1,555)
State ........................ 319 (289) (256)
-----------------------------------------
1,819 (2,028) (1,811)
-----------------------------------------
$ 26,093 $ 19,178 $ 11,661
=========================================
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
--------------------------------------------------------
1998 1997 1996
Amount % Amount % Amount %
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax computed at
statutory Federal rate .... $ 24,821 35.0 $ 19,072 35.0 $ 12,640 35.0
Effect of:
State income tax, net
of Federal income
tax benefit ............. 2,298 3.2 1,637 3.0 991 2.7
Subchapter S
corporation
earnings ................ (1,298) (1.8) (1,714) (3.1) (2,603) (7.2)
Nondeductible
purchase
adjustments ............. 288 .4 123 .2 43 .1
Nondeductible
expenses ................ 886 1.3 637 1.2 396 1.1
Other, net ................ (902) (1.3) (577) (1.1) 194 .6
--------------------------------------------------------
Income tax expense .......... $ 26,093 36.8 $ 19,178 35.2 $ 11,661 32.3
========================================================
</TABLE>
Prior to their merger with the Company, ELASCO, the Metals Group and Chad were
Subchapter S corporations and were not subject to corporate income tax.
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 30, 1998 and
January 31, 1997, the plan owned approximately 259,000 and 258,000 shares,
respectively, of the Company's common stock, all of which were allocated to
participants.
21
<PAGE>
Hughes Supply, Inc.
Notes to Consolidated Financial Statements (continued)
(dollars in thousands, except per share data)
Amounts charged to expense for these and other similar plans during fiscal 1998,
1997 and 1996 were $1,581, $2,088 and $2,322, respectively.
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 $1,539, $1,544 and $1,354 for fiscal 1998, 1997 and
1996, respectively.
Stock Plans
The Company's stock plans provide for the granting of stock options, restricted
stock awards and stock appreciation rights ("SARs"). The stock option plans
authorize the granting of both incentive and non-incentive stock options for an
aggregate of 2,452,500 shares of common stock to key employees and, with respect
to 202,500 of these shares, to directors. Under the plans, options are granted
at prices not less than the 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 December 2006, 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.
Under one of its stock plans, the Company can grant up to 375,000 shares of the
authorized options as restricted stock to certain key employees. These shares
are subject to certain transfer restrictions, and vesting may be dependent upon
continued employment, the satisfaction of performance objectives, or both.
During fiscal 1998, the Company granted certain employees 50,000 shares of
restricted stock with a market value of $1,300 at the date of grant. The market
value of the restricted stock was recorded as unearned compensation, a component
of shareholders' equity, and is being charged to expense over the shorter of the
10-year vesting period, or the period of time from the date of grant through the
date when the employee will reach age 65. In fiscal 1998, this expense amounted
to $58.
The employee plans permit the granting of 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
30, 1998.
A summary of option transactions during each of the three fiscal years in the
period ended January 30, 1998 is shown below:
Number of Weighted-Average
Shares Option Price
- --------------------------------------------------------------------------------
Under option, January 27, 1995
(509,015 shares exercisable) ................ 705,516 $ 9.89
Granted ................................... 22,500 12.83
Exercised ................................. (140,311) 8.94
Cancelled ................................. (2,791) 7.36
-------
Under option, January 26, 1996
(494,912 shares exercisable) ................ 584,914 10.24
Granted ................................... 172,500 19.58
Exercised ................................. (85,100) 9.05
Cancelled ................................. (6,000) 13.50
-------
Under option, January 31, 1997
(492,312 shares exercisable) ................ 666,314 12.78
Granted ................................... 271,991 33.23
Exercised ................................. (112,908) 11.53
Cancelled ................................. (6,000) 13.50
-------
Under option, January 30, 1998
(455,897 shares exercisable) ................ 819,397 19.74
=======
There were 1,208,788 shares available for the granting of options at January 30,
1998.
The following table summarizes the stock options outstanding at January 30,
1998:
Number Weighted-Average
Range of Outstanding at Remaining Weighted-Average
Exercise Prices Jan. 30, 1998 Contractual Life Exercise Price
- --------------------------------------------------------------------------------
$ 8.00 - $11.75 260,594 3 Years $ 8.68
12.08 - 16.92 126,000 7 Years 13.96
18.67 - 25.67 183,303 8 Years 20.03
33.00 - 34.00 249,500 10 Years 33.99
The Company has adopted the disclosure-only provisions of SFAS 123. Accordingly,
no compensation expense has been recognized for its stock option plans. If the
fair value estimates had been used to record compensation expense, pro forma net
income would have been $44,394, $35,007, and $24,368 in fiscal 1998, 1997 and
1996, respectively, with an immaterial effect on earnings per share. The fair
value of each option is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions: dividend
yields of 1.3% for fiscal 1998, 1997 and 1996; expected volatility of 32% for
fiscal 1998 and 33% for fiscal 1997 and 1996;
22
<PAGE>
risk-free interest rates of 5.72%, 6.47%, and 6.44% for fiscal 1998, 1997 and
1996, respectively; and expected lives of 8 years for fiscal 1998, 1997 and
1996. The weighted-average fair value of options granted during the year was
$13.92, $8.76 and $5.70 for fiscal 1998, 1997 and 1996, respectively. The pro
forma calculations only include the effects of fiscal 1998, 1997 and 1996
grants. As such, the impact is not necessarily indicative of the effects on
reported net income in future years.
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
$445, $421 and $238 in fiscal 1998, 1997 and 1996, respectively.
Note 7--Commitments and Contingencies
Lease Commitments
The Company leases certain facilities under agreements which are classified as
capital leases. The building leases are with a corporation which is owned by two
directors and one executive officer of Hughes Supply, Inc. These 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 $1,044, $1,092
and $1,149 for fiscal 1998, 1997 and 1996, respectively. Assets under capital
leases are included in the consolidated balance sheets as follows:
1998 1997
- --------------------------------------------------------------------------------
Property (land and buildings) ................ $ 9,407 $ 9,407
Equipment .................................... -- 289
-------------------------
9,407 9,696
Accumulated amortization ..................... (8,866) (8,492)
-------------------------
$ 541 $ 1,204
=========================
In addition, rents under operating leases paid to the related corporation were
$96, $220 and $358 in fiscal 1998, 1997 and 1996, respectively.
Future minimum payments, by year and in the aggregate, under the aforementioned
leases and other noncancelable operating leases with initial or remaining terms
in excess of one year as of January 30, 1998, are as follows:
Capital Operating
Fiscal Years Ending Leases Leases
- --------------------------------------------------------------------------------
1999 ............................................ $ 565 $20,404
2000 ............................................ 377 17,203
2001 ............................................ 331 14,539
2002 ............................................ 148 10,968
2003 ............................................ 74 6,448
Later years ..................................... 37 10,499
-----------------------
Total minimum lease payments .................... 1,532 $80,061
=======
Less amount representing interest ............... (290)
-------
Present value of net minimum
lease payments ................................ 1,242
Less current portion ............................ (443)
-----
$ 799
======
Lease-related expenses are as follows:
Fiscal Years Ended
-----------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------
Capital lease amortization ........... $ 518 $ 552 $ 584
Capital lease
interest expense ................... 199 290 364
Operating lease rentals
(excluding month-to-
month rents) ....................... 22,229 16,471 13,183
Legal Matters
The Company is involved in various legal proceedings arising in the normal
course 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
In May 1996, the Company sold 2,230,483 shares of its common stock in a public
offering which generated net proceeds of $48,193. Proceeds received by the
Company from the sale of the common stock were used to partially fund the PVF
acquisition and to reduce indebtedness outstanding under the Company's credit
agreement.
On May 20, 1997, the Company's Board of Directors declared a three-for-two stock
split to shareholders of record as of July 10, 1997. The date of issuance for
the additional shares was July 17, 1997. Accordingly, all share and per share
data have been restated for periods prior to the stock split.
On May 20, 1997, the shareholders approved an amendment to the Restated Articles
of Incorporation of the Company increasing the number of authorized shares of
common stock from 20,000,000 to 100,000,000 shares.
23
<PAGE>
Hughes Supply, Inc.
Notes to Consolidated Financial Statements (continued)
(dollars in thousands, except per share data)
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 terminated earlier in
accordance with the rights plan.
Note 9--Concentration of Credit Risk
The Company sells its products in the major areas of construction and industrial
markets in certain states primarily in the southeast, southwest and midwest
United States. Approximately 90% of the Company's sales are credit sales which
are made 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.
Note 10--Supplemental Cash Flows Information
The following is a reconciliation of net income to net cash provided by (used
in) operating activities:
Fiscal Years Ended
-----------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------
Net income .............................. $ 44,824 $ 35,314 $ 24,453
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation .......................... 12,534 9,953 9,777
Amortization .......................... 5,898 5,396 1,930
Provision for doubtful accounts ....... 1,001 850 2,073
Other, net ............................ (626) (708) (474)
Changes in assets and liabilities,
net of effects of business
acquisitions:
(Increase) decrease in--
Accounts receivable ............... (27,638) (13,075) (13,750)
Inventories ....................... (37,825) (24,270) (9,847)
Other current assets .............. (3,900) 5,129 (3,628)
Other assets ...................... (8,848) (77) (807)
Increase (decrease) in--
Accounts payable and
accrued expenses ................ 4,151 (10,801) 11,977
Accrued interest and
income taxes .................... 1,757 (879) (1,878)
Other noncurrent liabilities ...... 408 421 225
(Increase) decrease in deferred
income taxes ...................... 2,425 (1,988) (1,843)
-----------------------------------
Net cash provided by (used in)
operating activities .................. $ (5,839) $ 5,265 $ 18,208
===================================
Noncash Investing and Financing Activities
The net assets acquired and consideration for acquisitions accounted for as
purchases are summarized below:
Fiscal Years Ended
-----------------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------
Fair value of:
Assets acquired .............. $ 170,126 $ 161,198 $ 22,600
Liabilities assumed .......... (45,054) (32,958) (9,369)
-----------------------------------------
Purchase price ................. $ 125,072 $ 128,240 $ 13,231
=========================================
Consideration in fiscal 1998, 1997 and 1996 included 2,850,526, 1,420,154 and
286,476 shares of common stock, with fair values of $78,768, $28,162 and $3,222,
respectively.
<PAGE>
Note 11--Quarterly Results of Operations (Unaudited)
<TABLE>
<CAPTION>
Quarter
---------------------------------------------------------------------
First Second Third Fourth
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fiscal 1998
Net sales .............................................. $ 434,526 $ 478,160 $ 505,563 $ 460,490
Gross profit ........................................... $ 93,894 $ 105,086 $ 111,152 $ 101,843
Net income ............................................. $ 8,663 $ 13,563 $ 13,687 $ 8,911
Earnings per share:
Basic ................................................ $ .47 $ .73 $ .71 $ .44
Diluted .............................................. $ .46 $ .71 $ .69 $ .43
Average shares outstanding (in thousands):
Basic ................................................ 18,365 18,687 19,381 20,329
Diluted .............................................. 18,662 19,062 19,710 20,687
Market price per share:
High ................................................. $ 24.00 $ 26.83 $ 35.69 $ 36.13
Low .................................................. $ 20.33 $ 22.00 $ 25.56 $ 31.38
Dividends per share .................................... $ .073 $ .075 $ .080 $ .080
- ------------------------------------------------------------------------------------------------------------------------------------
Fiscal 1997
Net sales .............................................. $ 361,049 $ 409,773 $ 419,687 $ 377,062
Gross profit ........................................... $ 72,705 $ 86,895 $ 89,664 $ 83,208
Net income ............................................. $ 5,604 $ 11,171 $ 10,817 $ 7,722
Earnings per share:
Basic ................................................ $ .41 $ .67 $ .61 $ .42
Diluted .............................................. $ .40 $ .66 $ .60 $ .42
Average shares outstanding (in thousands):
Basic ................................................ 13,812 16,618 17,616 18,191
Diluted .............................................. 14,085 16,962 17,961 18,555
Market price per share:
High ................................................. $ 23.00 $ 27.33 $ 27.25 $ 29.75
Low .................................................. $ 17.75 $ 21.08 $ 21.42 $ 21.33
Dividends per share .................................... $ .060 $ .060 $ .067 $ .067
====================================================================================================================================
</TABLE>
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.
The Company historically performs a detailed analysis of its accounts receivable
in the fourth quarter for purposes of determining and recording the write-off of
doubtful accounts. In fiscal 1998 and 1997, the Company's collection experience
was better than anticipated, resulting in credits of $(104) and $(1,941) in the
provision for doubtful accounts for the fourth quarter of the respective years.
25
<PAGE>
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 30, 1998 and January 31, 1997, and
the results of their operations and their cash flows for the years ended January
30, 1998, January 31, 1997 and January 26, 1996, 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.
/s/ Price Waterhouse LLP
Orlando, Florida
March 27, 1998
Management's Responsibility
for Financial Statements
The consolidated financial statements and related information included in this
annual report were prepared in conformity with generally accepted accounting
principles. Management is responsible for the integrity of the financial
statements and for the related information. Management has included in the
Company's financial statements amounts that are based on estimates and
judgements which it believes are reasonable under the circumstances.
The responsibility of the Company's independent accountants is to express an
opinion on the fairness of the financial statements. Their opinion is based on
an audit conducted in accordance with generally accepted auditing standards as
further described in their report.
The Audit Committee of the Board of Directors is composed of three
non-management directors. The Committee meets periodically with financial
management, internal auditors, and the independent accountants to review
internal accounting control, auditing, and financial reporting matters.
26
<PAGE>
Hughes Supply, Inc.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
As described in Note 2 of the Notes to Consolidated Financial Statements, in
fiscal 1998 the Company entered into a business combination with Chad which was
accounted for as a pooling of interests. Accordingly, all financial data in
Management's Discussion and Analysis of Financial Condition and Results of
Operations is reported as though the companies have always been one entity.
As described in Note 8 of the Notes to Consolidated Financial Statements, on May
20, 1997 the Company's Board of Directors declared a three-for-two stock split
to shareholders of record as of July 10, 1997. Accordingly, all share and per
share data have been restated for periods prior to the stock split.
Certain statements set forth in Management's Discussion and Analysis of
Financial Condition and Results of Operations constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and
are subject to the safe harbor created by such sections. When used in this
report, the words "believe," "anticipate," "estimate," "expect," and similar
expressions are intended to identify forward-looking statements. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to be correct. The Company's actual results may differ significantly from
the results discussed in such forward-looking statements. When appropriate,
certain factors that could cause results to differ materially from those
projected in the forward-looking statements are enumerated. This Management's
Discussion and Analysis of Financial Condition and Results of Operations should
be read in conjunction with the Company's consolidated financial statements and
the notes thereto.
Results of Operations
Net Sales
In fiscal 1998, the Company generated net sales of $1.88 billion, a 20% increase
over fiscal 1997 net sales of $1.57 billion. Fiscal 1997 net sales of $1.57
billion increased 22% over fiscal 1996 net sales of $1.29 billion. On a basis
comparable to the prior year, the Company experienced same-store sales increases
of 6% and 8% for fiscal 1998 and 1997, respectively. The remaining increase in
net sales is attributable to newly-opened and acquired wholesale outlets.
The same-store sales increase of 6% for fiscal 1998 was below the high
single-digit increases the Company has achieved in recent years. This was
primarily due to the adverse impact that mild and wet weather had on air
conditioning and pool product sales, partially offset by double-digit same-store
sales increases in two of the Company's newest product groups, water and sewer
and industrial pipe, plate, valves and fittings.
Management expects market activity to continue at current levels. These
favorable conditions coupled with the Company's acquisition program should
result in continued sales growth.
Gross Margin
Gross margins have been improving steadily over the past three years. Gross
margins were 21.9%, 21.2% and 20.7% for fiscal 1998, 1997 and 1996,
respectively. The improvement has resulted from several factors, including
expansion of product offerings to lines with better margins, efficiencies
created with central distribution centers, increased volume and concentration of
supply sources as part of the Company's preferred vendor program.
Operating Expenses
Operating expenses in fiscal 1998 were $328 million (or 17.5% of net sales), a
22% increase over fiscal 1997 operating expenses of $270 million (or 17.2% of
net sales). Newly-opened wholesale outlets and recent acquisitions accounted for
approximately 19 percentage points of the 22% increase. The remainder of the
increase is primarily due to higher personnel expenses, including health care
costs, and higher transportation costs associated with the same-store sales
growth. The increase in operating expenses as a percentage of sales from 17.2%
in fiscal 1997 to 17.5% in fiscal 1998 is primarily the result of unrealized
synergies associated with acquisitions completed in the fourth quarter of fiscal
1998.
Similarly, approximately 80% of the $44 million increase in fiscal 1997 compared
to fiscal 1996, which had operating expenses of $226 million (or 17.6% of net
sales), is attributed to newly-opened wholesale outlets and acquisitions. The
remainder of the increase is primarily due to personnel and transportation costs
associated with same-store sales growth.
Non-Operating Income and Expenses
Interest and other income was $5.8 million in fiscal 1998 compared to $6.2
million in fiscal 1997 and $5.1 million in fiscal 1996. This decrease of $.4
million in fiscal 1998 is primarily due to non-recurring gains recognized on the
sale of property and equipment in fiscal 1997. The increase of $1.1 million from
fiscal 1996 to fiscal 1997 is primarily the result of improved collection of
service charge income on delinquent accounts receivable.
27
<PAGE>
Hughes Supply, Inc.
Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Interest expense for fiscal 1998, 1997 and 1996 was $18.5 million, $14.2 million
and $9.9 million, respectively. The $4.3 million increase in fiscal 1998 is
primarily the result of higher borrowing levels, partially offset by lower
interest rates, as expansion through business acquisitions has been partially
funded by debt financing. Higher borrowing levels were primarily responsible for
the $4.3 million increase in interest expense from fiscal 1996 to 1997. Interest
rates were relatively stable in fiscal 1997.
Income Taxes
The effective tax rates for fiscal 1998, 1997 and 1996 were 36.8%, 35.2% and
32.3%, respectively. Prior to the mergers with ELASCO on April 26, 1996, with
the Metals Group on January 24, 1997 and with Chad on January 30, 1998, all of
these entities were Subchapter S corporations and, therefore, not subject to
corporate income tax. Each entity's Subchapter S corporation status terminated
upon the merger with the Company. As a result, the Company's effective tax rate
is higher for fiscal 1998 and 1997 than for fiscal 1996. The Company's effective
tax rate for fiscal 1998, 1997 and 1996 would have been approximately 40%
assuming ELASCO, the Metals Group and Chad were tax paying entities.
Net Income
Net income in fiscal 1998 increased 27% to $44.8 million from $35.3 million in
fiscal 1997. Diluted earnings per share increased 10% to $2.30 in fiscal 1998
compared to $2.09 in fiscal 1997 on 16% more average shares outstanding. These
results followed fiscal 1997 increases of 44% and 18% in net income and diluted
earnings per share, respectively. Net income and diluted earnings per share in
fiscal 1996 were $24.5 million and $1.77, respectively.
These improved results reflect operating leverage that has been achieved through
the Company's acquisition program and the resulting purchasing and
administrative synergies, as well as through internal growth. Operating margins
(operating income as a percentage of net sales) have steadily improved to 4.5%
in fiscal 1998, compared to 4.0% and 3.2% in fiscal 1997 and 1996, respectively.
Liquidity and Capital Resources
Working capital in fiscal 1998 amounted to $474 million compared to $343 million
and $227 million in fiscal 1997 and 1996, respectively. The working capital
ratio was 3.5 to 1, 3.3 to 1 and 2.6 to 1 for fiscal 1998, 1997 and 1996,
respectively. During expansionary periods when sales volumes are increasing, the
Company is required to carry higher levels of inventories and receivables to
support the growth. The Company strives to maintain inventories at levels that
support current sales activity but that are not at excessive levels. The Company
believes this is accomplished through increased use of central distribution
facilities and by investing in resources to improve the efficiency and service
capability of its facilities.
Net cash used in operations was $5.8 million in fiscal 1998 compared to net cash
provided by operations of $5.3 million in fiscal 1997 and $18.2 million in
fiscal 1996. These changes are primarily due to increases in accounts receivable
and inventories resulting from the Company's growth.
The Company's expenditures for property and equipment were $27.7 million in
fiscal 1998, including approximately $11 million for upgrades and enhancements
to its information system and approximately $7 million for new warehouse
facilities to support its internal growth. Capital expenditures for property and
equipment, not including amounts for business acquisitions, are expected to be
approximately $24 million in fiscal 1999.
Principal reductions on long-term debt were $27.5 million for fiscal 1998
compared to $20.0 million and $6.0 million for fiscal 1997 and 1996,
respectively. These amounts are attributed primarily to the repayment of debt
assumed as a result of certain business acquisitions. Dividend payments of $7.5
million, $8.1 million and $5.4 million during fiscal 1998, 1997 and 1996
included cash dividends of pooled companies totaling $2.2 million, $4.9 million
and $3.6 million, respectively.
As discussed in Note 4 of the Notes to Consolidated Financial Statements, in
August 1997 the Company issued $80 million of senior notes in a private
placement. The proceeds of this offering were used to reduce indebtedness
outstanding under the Company's credit agreement.
In August 1997, the Company amended its credit agreement with a group of banks.
The credit agreement now permits the Company to borrow up to $180 million ($150
million previously). Management believes that the Company has sufficient
borrowing capacity, with approximately $30 million available under its existing
credit facilities (subject to borrowing limitations under long-term debt
covenants) as of January 30, 1998, to fund ongoing operating requirements and
anticipated capital expenditures. Future growth and business acquisition
opportunities will continue to be financed on a project-by-project basis through
additional borrowing or, as circumstances allow, through the issuance of common
stock.
Business Acquisitions
In addition to the business combination with Chad accounted for as a pooling of
interests, during fiscal 1998 the Company acquired several wholesale
distributors for approximately $142 million ($46 million in cash and
28
<PAGE>
$96 million in stock). In fiscal 1997, consideration paid by the Company for
acquisitions (excluding poolings of interests) was approximately $144 million
($100 million in cash and $44 million in stock). Outlays for acquisitions of
wholesale distributors in fiscal 1996 (excluding poolings of interests) totaled
$13 million ($10 million in cash and $3 million in stock). These acquisitions
were accounted for as either purchases or immaterial poolings and the results of
operations of these businesses from their respective dates of acquisition are
included in the Company's consolidated financial statements. These acquisitions,
along with Chad, were primarily responsible for the Company's increase in the
number of its facilities to 384 branches in 27 states as of the end of fiscal
1998, compared to 272 branches in 25 states as of the end of fiscal 1997.
Inflation and Changing Prices
The Company is aware of the potentially unfavorable effects inflationary
pressures may create through higher asset replacement costs and related
depreciation, higher interest rates and higher material costs. In addition, the
Company's operating performance is impacted by price fluctuations in the cost of
stainless steel and nickel alloy. These commodity price fluctuations have
historically created cyclicality in the financial performance of the Company's
industrial pipe, plate, valves and fittings product group, and could continue to
do so in the future.
The Company seeks to minimize the effects of inflation and changing prices
through economies of purchasing and inventory management resulting in cost
reductions and productivity improvements as well as price increases 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 operating results or markets in the three
most recent fiscal years.
Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS
130"). SFAS 130 established standards for reporting and display of comprehensive
income and its components in the financial statements. SFAS 130 is effective for
fiscal years beginning after December 15, 1997. The adoption of this standard is
not expected to have a material impact on the Company's financial reporting.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information ("SFAS 131"). SFAS 131 established standards
for the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders. It also established standards for related
disclosures about products and services, geographic areas and major customers.
SFAS 131 is effective for financial statements for periods beginning after
December 15, 1997; however, it is not required to be applied for interim
reporting in the initial year of application. The Company is currently
evaluating the impact of this statement on the disclosures included in its
annual and interim period financial statements.
Year 2000 Issue
Many existing computer programs use only two digits to identify a year in the
date field. As the century date change occurs, these programs may recognize the
year 2000 as 1900, or not at all. If not corrected, many computer systems and
applications could fail or create erroneous results by or at the year 2000 (the
"Year 2000 Issue").
The Company has completed certain modifications to its central operating and
accounting systems. Utilizing internal resources, initial testing of these
modifications to ensure year 2000 compliance was completed, and final testing is
scheduled for completion in fiscal 1999. Based on the results of its initial
testing, with respect to these two systems, the Company does not anticipate that
the Year 2000 Issue will materially impact operations or operating results.
An assessment of the Company's other remote systems, which have resulted from
the Company's acquisition program, was completed in fiscal 1998. Several of
these systems are not year 2000 compliant. The majority of the non-compliant
systems, however, are expected to convert to the Company's central operating and
accounting systems in fiscal 1999 as part of the Company's normal integration
activities. The remaining non-compliant systems will be brought into compliance
using vendor-supplied software. Management believes that the incremental costs
associated with achieving year 2000 compliance for its remote systems will not
be material to the Company's operating results.
While the Company believes its planning efforts are adequate to address the Year
2000 Issue, there can be no guarantee that the systems of other unrelated
entities on which its systems and operations rely will be corrected on a timely
basis and will not have a material effect on the Company. The Company is in the
preliminary stages of assessing the impact on its operations should these other
entities fail to properly remediate their computer systems.
29
<PAGE>
Hughes Supply, Inc.
Selected Financial Data
(in thousands, except per share data and ratios)
<TABLE>
<CAPTION>
Fiscal Years Ended(1)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Statements of Income Data:
Net sales .................................................. $1,878,739 $1,567,571 $1,285,328 $1,027,919
Cost of sales .............................................. $1,466,764 $1,235,099 $1,018,804 $ 818,611
Gross margin ............................................... 21.9% 21.2% 20.7% 20.4%
- ------------------------------------------------------------------------------------------------------------------------------------
Selling, general and administrative expenses ............... $ 308,872 $ 253,756 $ 211,805 $ 167,404
As a percentage of net sales ............................. 16.4% 16.2% 16.5% 16.3%
Depreciation and amortization .............................. $ 18,432 $ 15,349 $ 11,707 $ 10,003
Provision for doubtful accounts ............................ $ 1,001 $ 850 $ 2,073 $ 1,435
Operating income ........................................... $ 83,670 $ 62,517 $ 40,939 $ 30,466
Operating margin ........................................... 4.5% 4.0% 3.2% 3.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Interest and other income .................................. $ 5,791 $ 6,207 $ 5,092 $ 3,202
Interest expense ........................................... $ 18,544 $ 14,232 $ 9,917 $ 6,564
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes .......................... $ 70,917 $ 54,492 $ 36,114 $ 27,104
As a percentage of net sales ............................. 3.8% 3.5% 2.8% 2.6%
Income taxes (benefits) .................................... $ 26,093 $ 19,178 $ 11,661 $ 7,979
Net income ................................................. $ 44,824 $ 35,314 $ 24,453 $ 19,125
As a percentage of net sales ............................. 2.4% 2.3% 1.9% 1.9%
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings per share:
Basic .................................................... $ 2.34 $ 2.14 $ 1.80 $ 1.51
Diluted .................................................. $ 2.30 $ 2.09 $ 1.77 $ 1.47
- ------------------------------------------------------------------------------------------------------------------------------------
Average shares outstanding:
Basic .................................................... 19,194 16,537 13,575 12,661
Diluted .................................................. 19,518 16,872 13,804 13,149
Balance Sheet Data:
Working capital ............................................ $ 474,343 $ 342,509 $ 226,701 $ 205,401
Total assets ............................................... $ 942,029 $ 667,239 $ 457,953 $ 406,516
Long-term debt, less current portion ....................... $ 335,207 $ 222,451 $ 131,864 $ 121,915
Shareholders' equity ....................................... $ 414,342 $ 294,005 $ 185,031 $ 162,018
- ------------------------------------------------------------------------------------------------------------------------------------
Current ratio .............................................. 3.5 to 1 3.3 to 1 2.6 to 1 2.7 to 1
Ratio of long-term debt to
total capital employed ................................... .45 to 1 .43 to 1 .42 to 1 .43 to 1
Leverage (total assets/shareholders' equity) ............... 2.27 2.27 2.48 2.51
Other Data:
Cash dividends per share ................................... $ .31 $ .25 $ .20 $ .15
Shareholders' equity per share ............................. $ 18.42 $ 15.73 $ 13.12 $ 11.86
Return on assets(3) ........................................ 6.7% 7.7% 6.0% 5.9%
Return on equity(3) ........................................ 15.2% 19.1% 15.1% 16.6%
Capital expenditures(4) .................................... $ 27,733 $ 16,793 $ 13,690 $ 14,570
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company's fiscal year ends on the last Friday in January.
(2) All data adjusted for poolings of interests and three-for-two stock splits
declared in fiscal 1998 and 1989.
(3) Ratios based on balance sheet at beginning of year.
(4) Excludes capital leases.
30
<PAGE>
<TABLE>
<CAPTION>
Fiscal Years Ended(1)(2)
- -----------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 851,691 $ 695,733 $ 666,094 $ 735,505 $ 688,289 $ 638,139 $ 540,173
$ 681,100 $ 560,185 $ 537,717 $ 593,970 $ 549,791 $ 506,114 $ 428,467
20.0% 19.5% 19.3% 19.2% 20.1% 20.7% 20.7%
- -----------------------------------------------------------------------------------------------------------------------
$ 141,125 $ 115,575 $ 112,871 $ 115,141 $ 105,362 $ 95,382 $ 80,808
16.6% 16.6% 16.9% 15.7% 15.3% 14.9% 15.0%
$ 8,572 $ 7,324 $ 7,945 $ 9,901 $ 9,712 $ 9,258 $ 7,159
$ 2,229 $ 1,942 $ 2,882 $ 3,026 $ 2,796 $ 1,542 $ 1,842
$ 18,665 $ 10,707 $ 4,679 $ 13,467 $ 20,628 $ 25,843 $ 21,897
2.2% 1.5% .7% 1.8% 3.0% 4.0% 4.1%
- -----------------------------------------------------------------------------------------------------------------------
$ 3,679 $ 4,072 $ 2,703 $ 4,730 $ 3,348 $ 4,116 $ 2,977
$ 6,284 $ 5,877 $ 7,481 $ 9,680 $ 8,701 $ 7,511 $ 4,829
- -----------------------------------------------------------------------------------------------------------------------
$ 16,060 $ 8,902 $ (99) $ 8,517 $ 15,275 $ 22,448 $ 20,045
1.9% 1.3% .0% 1.2% 2.2% 3.5% 3.7%
$ 4,710 $ 1,734 $ (1,359) $ 2,058 $ 4,914 $ 7,592 $ 7,897
$ 11,350 $ 7,168 $ 1,260 $ 6,459 $ 10,361 $ 14,856 $ 12,148
1.3% 1.0% .2% 0.9% 1.5% 2.3% 2.2%
- -----------------------------------------------------------------------------------------------------------------------
$ 1.03 $ .65 $ .11 $ .57 $ .87 $ 1.23 $ .99
$ .96 $ .65 $ .11 $ .57 $ .83 $ 1.15 $ .94
- -----------------------------------------------------------------------------------------------------------------------
11,057 11,056 11,056 11,324 11,952 12,077 12,238
12,832 11,074 11,056 11,324 13,640 13,760 13,928
$ 167,215 $ 144,759 $ 131,960 $ 141,029 $ 138,304 $ 128,043 $ 111,138
$ 322,547 $ 287,837 $ 270,526 $ 268,803 $ 281,084 $ 259,233 $ 230,535
$ 118,224 $ 101,028 $ 87,922 $ 98,054 $ 93,002 $ 84,989 $ 66,324
$ 115,194 $ 105,087 $ 98,545 $ 101,213 $ 106,528 $ 102,511 $ 95,265
- -----------------------------------------------------------------------------------------------------------------------
2.9 to 1 2.8 to 1 2.6 to 1 3.1 to 1 2.7 to 1 2.9 to 1 2.7 to 1
.51 to 1 .49 to 1 .47 to 1 .49 to 1 .47 to 1 .45 to 1 .41 to 1
2.80 2.74 2.75 2.66 2.64 2.53 2.42
$ .11 $ .08 $ .16 $ .24 $ .23 $ .21 $ .18
$ 9.97 $ 9.22 $ 8.65 $ 8.88 $ 8.79 $ 8.28 $ 7.67
3.9% 2.6% .5% 2.3% 4.0% 6.4% 6.6%
10.8% 7.3% 1.2% 6.1% 10.1% 15.6% 13.9%
$ 9,808 $ 10,186 $ 6,035 $ 8,812 $ 11,828 $ 10,235 $ 15,991
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
Corporate and Shareholder Information
Directors
David H. Hughes
Chairman of the Board
John D. Baker, II
President and Chief Executive Officer,
Florida Rock Industries, Inc.
Robert N. Blackford
Attorney, Maguire, Voorhis &
Wells, P.A.
H. Corbin Day
Chairman, Jemison
Investment Co., Inc.
John B. Ellis
Former Senior Vice President-
Finance and Treasurer,
Genuine Parts Company
A. Stewart Hall, Jr.
Clifford M. Hames
Former Vice Chairman of the Board,
SunTrust Bank, N.A.
Vincent S. Hughes
Herman B. McManaway
Former Vice President, Ruddick
Corporation and President, Ruddick
Investment Co.
Donald C. Martin
Former President, Electrical Distributors, Inc.
Executive Officers
and Management
David H. Hughes
Chairman of the Board and Chief
Executive Officer
A. Stewart Hall, Jr.
President and Chief Operating Officer
Robert N. Blackford
Assistant Secretary
Benjamin P. Butterfield
Secretary and General Counsel
Jacquel K. Clark
Assistant Secretary and Assistant
Treasurer
Jasper L. Holland, Jr.
Regional Vice President
Clyde E. Hughes
Regional Vice President
Russell V. Hughes
Vice President
Vincent S. Hughes
Vice President
James C. Plyler, Jr.
Regional Vice President
Kenneth H. Stephens
Regional Vice President
Sidney J. Strickland, Jr.
Vice President, Administration
Gradie E. Winstead, Jr.
Regional Vice President
J. Stephen Zepf
Treasurer and Chief Financial Officer
Transfer Agent and
Registrar
American Stock Transfer
& Trust Company
40 Wall Street
New York, New York 10005
Annual Meeting
Wednesday, May 20, 1998,
at 10:00 AM
Hughes Supply, Inc.
Suite 200
20 North Orange Avenue
Orlando, Florida 32801
Independent Accountants
Price Waterhouse LLP
Orlando, Florida
Corporate Headquarters
Hughes Supply, Inc.
20 North Orange Avenue
Orlando, Florida 32801
Telephone: 407-841-4755
- --------------------------------------------------------------------------------
The shares of Hughes Supply, Inc. common stock are traded on the New York Stock
Exchange under the symbol "HUG." The approximate number of shareholders of
record as of February 20, 1998 was 1,179. A COPY OF THE HUGHES SUPPLY, INC.
ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
WILL BE MADE AVAILABLE WITHOUT CHARGE, UPON WRITTEN REQUEST. REQUESTS SHOULD BE
DIRECTED TO:
J. Stephen Zepf
Treasurer and Chief Financial Officer
Hughes Supply, Inc.
Post Office Box 2273
Orlando, Florida 32802
32
<PAGE>
Exhibit 21.1
Subsidiaries of the Registrant
------------------------------
Set forth below is a listing, by name and state of incorporation, of
each corporation which is, as of the date of this Report, or was, at any
time since the first day of the fiscal year ended January 30, 1998, a
subsidiary of the Registrant. Unless otherwise indicated, each such
corporation was a 100% owned subsidiary during such fiscal year and
continues in existence as a 100% owned subsidiary of the Registrant as of
the date of this Report.
1) Allied Metals, Inc., a Texas corporation.
2) APPCO Process Equipment Company, a North Carolina corporation.
3) Aspen Water Products, Inc., a Texas corporation.
4) Atlantic Pump & Equipment Company of Miami, Inc., a Florida
corporation.
5) Atlantic Pump and Equipment Co. of Puerto Rico, a Florida
corporation.
6) Atlantic Pump & Equipment Company of West Palm Beach, Inc., a
Florida corporation.
7) Carolina Pump & Supply Corp., a Rhode Island corporation.
8) Chad Supply, Inc., a Florida corporation.
9) Coastal Wholesale, Inc., a Florida corporation.
10) Dominion Pipe & Supply Co., a Virginia corporation.
11) Dominion Pipe Fabricators, Incorporated, a Virginia corporation.
12) ELASCO Agency Sales, Inc., an Illinois corporation.
13) Elec-Tel Supply Company, a Georgia corporation.
14) Electric Laboratories and Sales Corporation, a Delaware
corporation, acquired by the Registrant April 30, 1996.
15) Florida Pipe & Supply Company, a Florida corporation.
16) Full Circle Transport, Inc., a Florida corporation.
17) Gayle Supply Company, Inc., an Alabama corporation.
18) Gilleland Concrete Products, Inc., a Georgia corporation.
19) GPEC, Inc., a Texas corporation.
20) H Venture Corp., a Florida corporation.
21) HHH, Inc., a Delaware corporation.
22) HSI Acquisition Corporation, an Ohio corporation.
23) HSI Corp., a Delaware corporation.
24) Hughes Acquisition Corp., a West Virginia corporation.
25) Hughes Supply FSC, Inc., a Barbados corporation.
26) International Supply Company, Inc., a Texas corporation.
27) J.I. Services Corporation, a Florida corporation.
28) J & J, Inc., a Georgia corporation.
29) JuNo Industries, Inc., a Florida corporation.
30) Merex Corporation, a Texas corporation.
31) Metals Incorporated, an Oklahoma corporation.
32) Metals, Inc. - Gulf Coast Division, an Oklahoma corporation.
33) Mills & Lupton Supply Company, a Tennessee corporation.
34) Moore Electric Supply, Inc., a North Carolina corporation.
35) Mountain Country Supply, Inc., an Arizona corporation.
36) Olander & Brophy, Inc., a Pennsylvania corporation.
37) One Stop Supply, Inc., a Tennessee corporation.
38) Paine Supply of Jackson, Inc., a Mississippi corporation.
39) Palm Pool Products, Inc., a Michigan corporation.
40) Panhandle Pipe & Supply Co., Inc., a West Virginia corporation.
41) Port City Electrical Supply, Inc., a Georgia corporation.
42) R & G Plumbing Supply, Inc., an Alabama corporation.
43) San Antonio Plumbing Distributors, Inc., a Texas corporation.
44) Shrader Holding Company, Inc., an Arkansas corporation.
45) Southwest Stainless, L.P., a Delaware corporation.
46) Stainless Tubular Products, Inc., an Oklahoma corporation.
47) Sunbelt Supply Company, a Texas corporation.
48) USCO Incorporated, a North Carolina corporation.
49) Virginia Water & Waste Supply Company, Inc., a Virginia corporation.
50) Wholesale Electric Supply Corporation, a New York
corporation.
51) Z&L Acquisition Corp., a Delaware corporation.
52) Z&L Acquisition Corp. Of Delaware, Inc., a Delaware corporation.
Exhibit 23.1
Consent of Independent Certified Public Accountants
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (Nos. 2-78323, 33-9082, 33-
26468, 33-33701, 333-19007, 333-27935 and 333-35059) and in the
Prospectus constituting part of the Registration Statement on Form
S-3 (Nos. 333-15675, 333-21953, 333-27937, 333-31523 and 333-41699)
of Hughes Supply, Inc. of our report dated March 27, 1998,
appearing on page 26 of the Annual Report to Shareholders which is
incorporated in this Annual Report on Form 10-K.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Orlando, Florida
April 17, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF HUGHES SUPPLY, INC. AS OF JANUARY 30, 1998, AND
THE RELATED STATEMENT OF INCOME FOR THE YEAR THEN ENDED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000049029
<NAME> HUGHES SUPPLY, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-30-1998
<PERIOD-END> JAN-30-1998
<CASH> 7,661
<SECURITIES> 0
<RECEIVABLES> 286,016
<ALLOWANCES> 3,136
<INVENTORY> 346,312
<CURRENT-ASSETS> 664,161
<PP&E> 183,455
<DEPRECIATION> 78,034
<TOTAL-ASSETS> 942,029
<CURRENT-LIABILITIES> 189,818
<BONDS> 335,207
0
0
<COMMON> 22,500
<OTHER-SE> 391,842
<TOTAL-LIABILITY-AND-EQUITY> 942,029
<SALES> 1,878,739
<TOTAL-REVENUES> 1,878,739
<CGS> 1,466,764
<TOTAL-COSTS> 1,466,764
<OTHER-EXPENSES> 327,304
<LOSS-PROVISION> 1,001
<INTEREST-EXPENSE> 18,544
<INCOME-PRETAX> 70,917
<INCOME-TAX> 26,093
<INCOME-CONTINUING> 44,824
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,824
<EPS-PRIMARY> 2.34
<EPS-DILUTED> 2.30
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS OF HUGHES SUPPLY, INC. AND RELATED STATEMENTS OF
INCOME AS OF AND FOR THE PERIODS ENDED OCTOBER 31, 1997, JULY 31, 1997,
APRIL 30, 1997, JANUARY 31, 1997, AND OCTOBER 31, 1996. THIS SCHEDULE IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000049029
<NAME> HUGHES SUPPLY, INC.
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> 9-MOS 6-MOS 3-MOS YEAR 9-MOS
<FISCAL-YEAR-END> JAN-30-1998 JAN-30-1998 JAN-30-1998 JAN-31-1997 JAN-31-1997
<PERIOD-END> OCT-31-1997 JUL-31-1997 APR-30-1997 JAN-31-1997 OCT-31-1996
<CASH> 10,132 11,055 11,110 6,329 4,414
<SECURITIES> 0 0 0 0 0
<RECEIVABLES> 283,861 259,546 241,031 205,289 230,303
<ALLOWANCES> 6,271 5,401 4,708 3,809 8,593
<INVENTORY> 279,114 274,533 275,929 258,111 232,061
<CURRENT-ASSETS> 593,821 565,902 544,140 491,093 481,476
<PP&E> 179,691 163,910 150,875 145,064 145,314
<DEPRECIATION> 79,749 73,322 69,041 69,020 72,641
<TOTAL-ASSETS> 809,896 769,107 731,332 667,239 645,695
<CURRENT-LIABILITIES> 189,939 180,083 194,988 148,584 166,210
<BONDS> 271,657 262,553 230,889 222,451 195,218
0 0 0 0 0
0 0 0 0 0
<COMMON> 19,994 19,325 18,826 18,686 18,360
<OTHER-SE> 325,694 304,666 284,301 275,319 263,788
<TOTAL-LIABILITY-AND-EQUITY> 809,896 769,107 731,332 667,239 645,695
<SALES> 1,418,249 912,686 434,526 1,567,571 1,190,509
<TOTAL-REVENUES> 1,418,249 912,686 434,526 1,567,571 1,190,509
<CGS> 1,108,117 713,706 340,632 1,235,099 941,245
<TOTAL-COSTS> 1,108,117 713,706 340,632 1,235,099 941,245
<OTHER-EXPENSES> 241,463 156,847 76,877 269,105 198,347
<LOSS-PROVISION> 1,105 614 394 850 2,791
<INTEREST-EXPENSE> 13,873 8,766 4,160 14,232 10,104
<INCOME-PRETAX> 57,592 35,325 13,742 54,492 42,885
<INCOME-TAX> 21,679 13,099 5,079 19,178 15,293
<INCOME-CONTINUING> 35,913 22,226 8,663 35,314 27,592
<DISCONTINUED> 0 0 0 0 0
<EXTRAORDINARY> 0 0 0 0 0
<CHANGES> 0 0 0 0 0
<NET-INCOME> 35,913 22,226 8,663 35,314 27,592
<EPS-PRIMARY> 1.91 1.20 .47 2.14 1.73
<EPS-DILUTED> 1.87 1.17 .46 2.09 1.69
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS OF HUGHES SUPPLY, INC. AND RELATED STATEMENTS OF
INCOME AS OF AND FOR THE PERIODS ENDED JULY 31, 1996, APRIL 30, 1996, AND
JANUARY 26, 1996. THIS SCHEDULE IS QUIALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000049029
<NAME> HUGHES SUPPLY, INC.
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS YEAR
<FISCAL-YEAR-END> JAN-31-1997 JAN-31-1997 JAN-26-1996
<PERIOD-END> JUL-31-1996 APR-30-1996 JAN-26-1996
<CASH> 652 3,286 3,644
<SECURITIES> 0 0 0
<RECEIVABLES> 219,165 191,697 165,566
<ALLOWANCES> 7,427 6,127 4,976
<INVENTORY> 209,800 179,435 174,498
<CURRENT-ASSETS> 444,385 389,387 365,988
<PP&E> 139,908 134,220 127,490
<DEPRECIATION> 69,340 65,844 61,947
<TOTAL-ASSETS> 607,985 488,975 457,953
<CURRENT-LIABILITIES> 153,135 156,192 139,287
<BONDS> 185,303 141,420 131,864
0 0 0
0 0 0
<COMMON> 17,769 14,250 14,107
<OTHER-SE> 249,759 175,214 170,924
<TOTAL-LIABILITY-AND-EQUITY> 607,985 488,975 457,953
<SALES> 770,822 361,049 1,285,328
<TOTAL-REVENUES> 770,822 361,049 1,285,328
<CGS> 611,222 288,344 1,018,804
<TOTAL-COSTS> 611,222 288,344 1,018,804
<OTHER-EXPENSES> 129,518 62,113 223,512
<LOSS-PROVISION> 1,761 900 2,073
<INTEREST-EXPENSE> 6,256 2,624 9,917
<INCOME-PRETAX> 25,799 8,725 36,114
<INCOME-TAX> 9,024 3,121 11,661
<INCOME-CONTINUING> 16,775 5,604 24,453
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 16,775 5,604 24,453
<EPS-PRIMARY> 1.10 .41 1.80
<EPS-DILUTED> 1.08 .40 1.77
</TABLE>
HUGHES SUPPLY, INC. Exhibit 99.1
LOCATION OF FACILITIES
AS OF APRIL 1, 1998
NUMBER OF
STATE/TERRITORY/COUNTRY CITY BRANCHES
- -------------------------------------------------------------------------------
BRANCHES
- --------
ALABAMA Anniston 1
Birmingham 5
Cullman 1
Dothan 2
Huntsville 4
Mobile 4
Montgomery 3
Pelham 1
---
21
ARKANSAS Little Rock 1
Tontitown 1
---
2
ARIZONA Cottonwood 1
Flagstaff 1
Gilbert 1
Kingman 1
Lake Havasu 1
Lakeside 1
Phoenix 1
Prescott 1
Scottsdale 1
Tucson 1
---
10
CALIFORNIA Artesia 1
---
1
FLORIDA Auburndale 1
Bradenton 1
Bunnell 1
Cape Coral 2
Clearwater 3
Clermont 1
Daytona 1
Eaton Park 2
Ft. Lauderdale 1
Ft. Myers 3
Ft. Pierce 1
Gainesville 3
Holly Hill 1
Inverness 1
Jacksonville 7
Kissimmee 1
Lady Lake 1
Lakeland 3
Leesburg 1
Longwood 1
Marianna 1
Melbourne 2
Miami 4
Mulberry 1
Naples 1
Ocala 4
Orange City 1
Orlando 9
Orlando (Distribution Center) 1
Panama City 3
Pembroke Park 1
Pensacola 1
Perry 1
Pompano Beach 4
Port Richey 1
Riviera Beach 1
Port St. Lucie 1
St. Petersburg 1
Sarasota 3
Sebring 1
Tallahassee 5
Tampa 5
Tavares 1
Thonotosassa 2
Venice 1
West Palm Beach 5
Winter Haven 2
Winter Park 1
---
100
GEORGIA Albany 1
Alpharetta 1
Athens 3
Atlanta 1
Augusta 1
Austell 1
Brunswick 1
Buford 1
Chamblee 1
Columbus 1
Conyers 1
Dalton 1
Doraville 3
Forest Park (Distribution Center) 1
Hampton 1
Lithonia 1
Macon 4
Marietta 2
McDonough 1
Norcross 2
Oakwood 1
Savannah 3
Thomasville 1
Tifton 2
Valdosta 2
Woodstock 1
---
39
ILLINOIS Decatur 1
Mattoon 2
Romeoville 1
---
4
INDIANA Fort Wayne 1
Indianapolis 3
Muncie 1
---
5
KENTUCKY Bowling Green 1
Glasgow 1
Louisville 4
---
6
LOUISIANA Baton Rouge 1
Kenner 1
Luling 1
Port Allen 1
Sulphur 1
---
5
MARYLAND Capitol Heights 1
Waldorf 1
---
2
MICHIGAN Detroit 1
Holt 1
---
2
MISSOURI Bridgeton 1
Springfield 1
St. Charles 1
---
3
MISSISSIPPI Biloxi 1
Greenville 1
Greenwood 1
Gulfport 1
Hattiesburg 1
Jackson 1
Laurel 1
Meridian 1
Pascagoula 1
Tupelo 1
---
10
MEXICO Tampico 1
---
1
NEW JERSEY Blackwood 1
Hopelawn 1
Piscataway 1
---
3
NEW YORK Vestal 1
---
1
NORTH CAROLINA Albemarle 1
Asheville 1
Charlotte 10
Durham 1
Elizabeth City 1
Fayetteville 1
Goldsboro 1
Greensboro 1
Henderson 2
Hickory 1
High Point 1
Kinston 1
Leland 1
Monroe 2
Pinehurst 1
Pineville 1
Raleigh 4
Rocky Mount 1
Salisbury 1
Statesville 1
Wilmington 2
Zebulon 1
---
37
OHIO Batavia 1
Brimfield 1
Cincinnati 1
Cleveland 1
Columbus 3
Dayton 2
Elyria 1
Fairfield 1
Greenville 1
Hartville 1
Lima 1
Marion 1
Monroe 1
Perrysburg 1
Van Wert 1
West Chester 1
---
19
OKLAHOMA Oklahoma City 1
Tulsa 3
---
4
PENNSYLVANIA Bedford 1
Monroeville 1
Shippenville 1
---
3
PUERTO RICO Carolina 1
---
1
SOUTH CAROLINA Aiken 1
Anderson 1
Bluffton 1
Charleston 2
Cheraw 1
Columbia 2
Florence 1
Greenville 3
Greer 2
Hilton Head 1
Lancaster 1
Myrtle Beach 1
North Charleston 2
West Columbia 2
---
21
TENNESSEE Alcoa 1
Chattanooga 2
Clarksville 1
Cleveland 1
Cookeville 1
Jackson 1
Knoxville 2
Memphis 4
Nashville 5
---
18
TEXAS Alief 1
Allen 1
Arlington 1
Austin 6
Beaumont 2
Boerne 1
College Station 1
Corpus Christi 4
Dallas 3
Denton 1
DeSoto 1
Fort Worth 1
Freeport 1
Friendswood 2
Garland 2
Grapevine 1
Haltom City 1
Harlingen 1
Helotes 1
Houston 10
Humble 1
Jasper 1
Kerrville 1
La Porte 1
Laredo 1
Longview 2
Lufkin 1
Marshall 1
McAllen 1
Mesquite 1
Mt. Pleasant 1
Pharr 1
Richardson 1
Richland Hills 1
Round Rock 1
San Antonio 9
Sherman 2
Southlake 1
Texas City 1
---
71
UTAH Salt Lake City 1
---
1
VIRGINIA Arlington 1
Colonial Heights 1
Herndon 1
La Crosse 1
Lynchburg 1
Manassas 1
Richmond 1
Roanoke 1
Virginia Beach 1
---
9
WASHINGTON Kent 1
---
1
WEST VIRGINIA Alum Creek 1
Fairmont 1
Martinsburg 1
South Charleston 1
---
4
TOTAL BRANCHES 404
===
