FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 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 offices) (Zip Code)
Registrant's telephone number, including area code: 407/841-4755
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock Outstanding as of May 26, 1998
$1 Par Value 23,033,664
Page 1
HUGHES SUPPLY, INC.
FORM 10-Q
Index
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of
April 30, 1998 and January 30, 1998 ........... 3 - 4
Consolidated Statements of Income for the
Three Months Ended April 30, 1998 and 1997 .... 5
Consolidated Statements of Cash Flows for the
Three Months Ended April 30, 1998 and 1997 .... 6
Notes to Consolidated Financial Statements .... 7 - 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results
of Operations ................................. 10 - 13
Part II. Other Information
Item 2. Changes in Securities and Use of Proceeds ..... 14
Item 5. Other Information ............................. 14
Item 6. Exhibits and Reports on Form 8-K .............. 14 - 18
Signatures .................................... 19
Index of Exhibits Filed with This Report ...... 20
Page 2
HUGHES SUPPLY, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited)
(in thousands, except share data)
April 30, January 30,
1998 1998
---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $ 9,255 $ 7,661
Accounts receivable, less allowance for
losses of $5,353 and $3,136 329,809 282,880
Inventories 364,802 346,312
Deferred income taxes 10,798 9,708
Other current assets 17,024 17,600
---------- ----------
Total current assets 731,688 664,161
Property and Equipment, Net 116,634 105,421
Excess of Cost over Net Assets Acquired 155,944 153,052
Deferred Income Taxes - 3,438
Other Assets 16,736 15,957
---------- ----------
$1,021,002 $ 942,029
========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
Page 3
HUGHES SUPPLY, INC.
Consolidated Balance Sheets (unaudited) - continued
(in thousands, except share data)
April 30, January 30,
1998 1998
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 515 $ 603
Accounts payable 180,155 150,042
Accrued compensation and benefits 19,152 20,602
Other current liabilities 29,649 18,571
---------- ----------
Total current liabilities 229,471 189,818
Long-Term Debt 357,268 335,207
Other Noncurrent Liabilities 2,786 2,662
---------- ----------
Total liabilities 589,525 527,687
---------- ----------
Commitments and Contingencies
Shareholders' Equity:
Preferred stock - -
Common stock-23,033,664 and
22,500,135 shares issued and outstanding 23,034 22,500
Capital in excess of par value 209,620 203,006
Retained earnings 200,069 190,078
Unearned compensation related to
outstanding restricted stock (1,246) (1,242)
---------- ----------
Total shareholders' equity 431,477 414,342
---------- ----------
$1,021,002 $ 942,029
========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
Page 4
HUGHES SUPPLY, INC.
Consolidated Statements of Income (unaudited)
(in thousands, except per share data)
Three months ended April 30,
1998 1997
---------- ----------
Net Sales $ 582,042 $ 434,526
Cost of Sales 456,764 340,632
---------- ----------
Gross Profit 125,278 93,894
---------- ----------
Operating Expenses:
Selling, general and administrative 96,790 72,222
Depreciation and amortization 5,645 4,655
Provision for doubtful accounts 523 394
---------- ----------
Total operating expenses 102,958 77,271
---------- ----------
Operating Income 22,320 16,623
---------- ----------
Non-Operating Income and (Expenses):
Interest and other income 1,527 1,279
Interest expense (6,086) (4,160)
---------- ----------
(4,559) (2,881)
---------- ----------
Income Before Income Taxes 17,761 13,742
Income Taxes 7,015 5,079
---------- ----------
Net Income $ 10,746 $ 8,663
========== ==========
Earnings Per Share:
Basic $ .47 $ .47
========== ==========
Diluted $ .47 $ .46
========== ==========
Average Shares Outstanding:
Basic 22,664 18,365
========== ==========
Diluted 22,937 18,662
========== ==========
Dividends Per Share $ .080 $ .073
========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
Page 5
HUGHES SUPPLY, INC.
Consolidated Statements of Cash Flows (unaudited)
(in thousands)
Three months ended April 30,
1998 1997
---------- ----------
Increase (Decrease) in Cash and Cash
Equivalents:
Cash flows from operating activities:
Cash received from customers $ 541,242 $ 402,472
Cash paid to suppliers and employees (541,259) (388,738)
Interest received 1,278 895
Interest paid (2,596) (2,097)
Income taxes paid (1,697) (567)
---------- ----------
Net cash provided by (used in)
operating activities (3,032) 11,965
---------- ----------
Cash flows from investing activities:
Capital expenditures (6,125) (6,279)
Proceeds from sale of
property and equipment 243 135
Business acquisitions, net of cash (627) (8,683)
---------- ----------
Net cash used in
investing activities (6,509) (14,827)
---------- ----------
Cash flows from financing activities:
Net borrowings under short-term
debt arrangements 22,495 11,903
Principal payments on:
Long-term notes (9,383) (2,407)
Capital lease obligations (177) (246)
Proceeds from stock options exercised 175 200
Purchase of common shares (175) (76)
Dividends paid (1,800) (1,731)
---------- ----------
Net cash provided by
financing activities 11,135 7,643
---------- ----------
Net Increase in Cash and
Cash Equivalents 1,594 4,781
Cash and Cash Equivalents:
Beginning of period 7,661 6,329
---------- ----------
End of period $ 9,255 $ 11,110
========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
Page 6
HUGHES SUPPLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited) (dollars in thousands, except per share data)
1. In the opinion of Hughes Supply, Inc. (the "Company"), the
accompanying unaudited consolidated financial statements contain
all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the financial position as of April 30,
1998, and the results of operations and cash flows for the three
months ended April 30, 1998 and 1997. The results of operations
for the three months ended April 30, 1998 are not necessarily
indicative of the results that may be expected for the full year.
The fiscal year of the Company is a 52-week period ending on the
last Friday in January. The quarters ended April 30, 1998 and 1997
each contained 13 weeks.
The Company adopted Statement of Financial Accounting Standards No.
128, Earnings per Share ("SFAS 128") commencing in the period ended
January 30, 1998. Accordingly, these financial statements include
the presentation of both 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 22,664,000
and 18,365,000 for the three months ended April 30, 1998 and 1997,
respectively. In calculating diluted earnings per share, these
amounts were adjusted to include 273,000 and 297,000 of dilutive
potential common shares for the three months ended April 30, 1998
and 1997, 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.
Effective February 1, 1998, the Company adopted 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. The adoption of this standard had no impact
on the Company's financial reporting.
2. During the three months ended April 30, 1998, the Company acquired
three wholesale distributors of materials to the construction
industry for cash and stock. These acquisitions have been
accounted for as purchases or immaterial poolings and did not have
a material effect on the consolidated financial statements of the
Company. Results of operations of these companies from their
respective dates of acquisition have been included in the
consolidated financial statements.
Page 7
HUGHES SUPPLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited) (dollars in thousands, except per share data)
3. The following is a reconciliation of net income to net cash
provided by (used in) operating activities:
Three months ended April 30,
1998 1997
---------- ----------
Net income $ 10,746 $ 8,663
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Depreciation and amortization 5,645 4,655
Provision for doubtful accounts 523 394
Other, net (60) (185)
Changes in assets and liabilities,
net of effects of business
acquisitions:
(Increase) decrease in:
Accounts receivable (40,954) (32,253)
Inventories (10,950) (14,519)
Other current assets 715 5,870
Other assets (3,598) (1,178)
Increase (decrease) in:
Accounts payable and accrued
expenses 26,011 33,814
Accrued interest and income
taxes 8,173 7,506
Other noncurrent liabilities 124 129
(Increase) decrease in deferred
income taxes 593 (931)
---------- ----------
Net cash provided by (used in)
operating activities $ (3,032) $ 11,965
========== ==========
Page 8
HUGHES SUPPLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
(unaudited) (dollars in thousands, except per share data)
4. Subsequent events:
On May 5, 1998, the Company issued $50,000 of senior notes due 2013
in a private placement. The notes bear interest at 6.74% and will
be payable in 21 equal semi-annual payments beginning in 2003.
Proceeds received by the Company from the sale of the notes were
used to reduce indebtedness outstanding under the Company's
revolving credit facility and line of credit agreement (the "credit
agreement").
Page 9
HUGHES SUPPLY, INC.
PART I. FINANCIAL INFORMATION - Continued
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following is management's discussion and analysis of certain
significant factors which have affected the financial condition of the
Company as of April 30, 1998, and the results of operations for the
three months then ended.
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
contained herein and in the Company's Form 10-K for the fiscal year
ended January 30, 1998.
Material Changes in Results of Operations
Net Sales
Net sales were $582 million for the quarter ended April 30, 1998, a 34%
increase over the prior year's first quarter. Newly-acquired and opened
wholesale branches provided 28 percentage points of the 34% increase.
The remainder of the increase is attributable to same-store sales, which
increased 6% over the prior year's first quarter.
Page 10
Gross Profit
Gross profit and gross margin for the three months ended April 30, 1998
and 1997 were as follows (dollars in thousands):
1998 1997 Variance
Gross profit $125,278 $ 93,894 $ 31,384 33%
Gross margin 21.5% 21.6%
During the first quarter ended April 30, 1998, the Company experienced
weaker stainless steel pricing in its industrial pipe, plate, valves and
fittings product group related to declining stainless steel prices in
Asian markets, currency fluctuations and the resulting impact of these
factors on domestic stainless steel pricing. This decline was partially
offset by an overall increase in gross margin in the Company's other
product groups which primarily resulted from expansion of product
offerings to lines with better margins, efficiencies created with
central distribution centers, increased volume, enhanced purchasing
power and concentration of supply sources as part of the Company's
preferred vendor program.
Operating Expenses
Operating expenses for the three months ended April 30, 1998 and 1997
were as follows (dollars in thousands):
1998 1997 Variance
Operating expenses $102,958 $ 77,271 $ 25,687 33%
Percentage of net sales 17.7% 17.8%
Newly-opened wholesale branches and recent acquisitions accounted for
approximately 27 percentage points of the 33% increase. 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 $1.5 million and $1.3 million for the
quarters ended April 30, 1998 and 1997, respectively, a 19% increase.
The increase is primarily the result of higher levels of accounts
receivable and the related collection of service charge income on
delinquent accounts receivable.
Interest expense was $6.1 million and $4.2 million for the quarters
ended April 30, 1998 and 1997, respectively, a 46% increase. The
increase is primarily the result of higher borrowing levels as interest
rates remained relatively stable. Expansion through business
acquisitions has been partially funded by debt financing.
Page 11
Income Taxes
The effective income tax rates for the three months ended April 30, 1998
and 1997 were 39.5% and 37.0%, respectively. On January 30, 1998, Chad
Supply, Inc. ("Chad") merged its operations with the Company in a
transaction that was accounted for as a pooling of interests. Prior to
its merger with the Company, Chad was a Subchapter S corporation and,
therefore, not subject to corporate income tax. Chad's Subchapter S
corporation status terminated upon the merger with the Company. As a
result, the Company's effective tax rate is higher for the current
quarter compared to the prior year's first quarter. The Company's
effective tax rate in the prior year's first quarter would have been
approximately 39.5% assuming Chad was a tax paying entity.
Net Income
Net income was $10.7 million for the first quarter compared to $8.7
million for the prior year's first quarter, a 24% increase. Diluted
earnings per share for the first quarter were $.47 compared to $.46 in
the prior year's first quarter on 23% more shares outstanding. These
improved results reflect operating leverage that has been achieved
through the Company's acquisition and internal growth programs, and the
resulting purchasing and administrative synergies.
Liquidity and Capital Resources
Working capital at April 30, 1998 totaled $502 million compared to $474
million at January 30, 1998. The working capital ratio was 3.2 to 1 and
3.5 to 1 as of April 30, 1998 and January 30, 1998, respectively. The
Company typically becomes more leveraged in expansionary periods.
Consequently, higher levels of inventories and receivables, trade
payables and debt are required to support the growth.
Net cash used in operations was $3.0 million for the three months ended
April 30, 1998 compared to net cash provided by operations of $12.0
million for the three months ended April 30, 1997. This change is
primarily due to increases in accounts receivable and inventories
resulting from the Company's growth.
Expenditures for property and equipment were $6.1 million for the three
months ended April 30, 1998 compared to $6.3 million for the three
months ended April 30, 1997. Capital expenditures for property and
equipment, not including amounts for business acquisitions, are expected
to be approximately $24 million for fiscal year 1999.
Cash payments for business acquisitions accounted for as purchases
totaled $.6 million for the three months ended April 30, 1998. In
addition, the Company issued approximately 189,000 shares of its common
stock valued at approximately $4.9 million for such purchases.
Page 12
Principal reductions on long-term debt were $9.4 million for the three
months ended April 30, 1998 compared to $2.4 million for the same period
in the prior year. These amounts are primarily attributable to the
repayment of debt assumed as a result of certain business acquisitions.
Dividend payments were $1.8 million and $1.7 million during the three
months ended April 30, 1998 and 1997, respectively.
As discussed in Note 4 of the Notes to Consolidated Financial
Statements, in May 1998 the Company issued $50 million of 6.74% senior
notes due 2013 in a private placement. The proceeds of this private
placement were used to reduce indebtedness outstanding under the
Company's credit agreement.
After giving effect to the issuance of the $50 million of senior notes
as set forth above, the Company would have had approximately $58 million
of unused borrowing capacity (subject to borrowing limitations under
long-term debt covenants) as of April 30, 1998. With this facility,
management believes that the Company has sufficient borrowing capacity
to fund ongoing operating requirements and anticipated capital
expenditures. The Company expects to continue to finance future
expansion on a project-by-project basis through additional borrowing or
through the issuance of common stock.
Page 13
HUGHES SUPPLY, INC.
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
(c) On March 2, 1998, the Company issued 272,678 shares of common
stock in connection with the acquisition of San Antonio
Plumbing Distributors, Inc. On April 23, 1998, the Company
issued 188,709 shares of common stock in connection with the
acquisition of Union Warehouse and Realty Company. The
issuance of these shares was not registered under the
Securities Act of 1933, as amended, in reliance on the
exemption provided by Section 4(2) thereunder for transactions
not involving a public offering.
Item 5. Other Information
Pursuant to the Note Purchase Agreement, dated as of May 5, 1998 (the
"Note Purchase Agreement"), by and among the Company and certain
purchasers identified in Schedule A of the Note Purchase Agreement, the
Company issued $50 million of its 6.74% senior notes due 2013.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Filed
(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,
incorporated by reference to 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, incorporated by reference
to Exhibit 3.2 to Form 10-K for the fiscal year ended
January 30, 1998 (Commission File No. 001-08772).
(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,
incorporated by reference to Exhibit 4.1 to Form 10-Q for
the quarter ended July 31, 1997 (Commission File No. 001-
08772).
Page 14
4.2 Resolution Approving and Implementing Shareholder Rights
Plan incorporated by reference to Exhibit 4.4 to Form 8-K
dated May 17, 1988 (Commission File No. 0-5235).
4.3 Rights Agreement dated as of May 20, 1998 between Hughes
Supply, Inc. and American Stock Transfer & Trust Company,
incorporated by reference to Exhibit 99.2 to Form 8-A
dated May 22, 1998 (Commission File No. 001-08772).
(10) Material contracts.
10.1 Lease Agreements with Hughes, Inc.
(a) Orlando Trucking, Garage and Maintenance Operations
dated December 1, 1971, incorporated by reference
to 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, incorporated by
reference to 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, incorporated by reference to Exhibit
10.1(i) to Form 10-K for the fiscal year ended
January 30, 1987 (Commission File No. 0-5235).
Page 15
(d) Lease agreement dated June 1, 1987, between Hughes,
Inc. and the Registrant, for additional Sarasota
property, incorporated by reference to 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, incorporated by
reference to 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
(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), incorporated by
reference to Exhibit 10.1 to Form 10-K for the
fiscal year ended January 30, 1998 (Commission File
No. 001-08772).
10.2 Hughes Supply, Inc. 1988 Stock Option Plan as amended
March 12, 1996 incorporated by reference to 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, incorporated by reference to Exhibit
10.6 to Form 10-K for the fiscal year ended January 30,
1987 (Commission File No. 0-5235).
10.4 Directors' Stock Option Plan, as amended, incorporated by
reference to Exhibit 10.4 to Form 10-K for the fiscal
year ended January 30, 1998 (Commission File No. 001-
08772).
10.5 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).
Page 16
10.6 Hughes Supply, Inc. Amended Senior Executives' Long-Term
Incentive Bonus Plan, adopted January 25, 1996,
incorporated by reference to Exhibit 10.9 to Form 10-K
for the fiscal year ended January 26, 1996 (Commission
File No. 001-08772).
10.7 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, incorporated by reference
to 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.
10.8 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,
incorporated by reference to Exhibit 10.15 to Form 10-Q
for the quarter ended July 31, 1997 (Commission File No.
001-08772).
10.9 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).
10.10 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, incorporated
by reference to Exhibit 10.13 to Form 10-K for the fiscal
year ended January 30, 1998 (Commission File No. 001-
08772).
10.11 Note Purchase Agreement, dated as of May 5, 1998, 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.
(15) Letter re unaudited interim financial information. Not
applicable.
(18) Letter re change in accounting principles. Not applicable.
(19) Report furnished to security holders. Not applicable.
Page 17
(22) Published report regarding matters submitted to vote of
security holders. Not applicable.
(23) Consents of experts and counsel. Not applicable.
(24) Power of attorney. Not applicable.
(27) Financial data schedule.
27.1 Financial data schedule (filed electronically only).
(99) Additional exhibits. Not applicable.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter
ended April 30, 1998.
Page 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HUGHES SUPPLY, INC.
Date: May 26, 1998 By: /s/ David H. Hughes
David H. Hughes, Chairman of
the Board and Chief Executive
Officer
Date: May 26, 1998 By: /s/ J. Stephen Zepf
J. Stephen Zepf, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
Page 19
INDEX OF EXHIBITS FILED WITH THIS REPORT
10.11 Note Purchase Agreement, dated as of May 5, 1998, by and among
the Company and certain purchasers identified in Schedule A of
the Note Purchase Agreement.
27.1 Financial data schedule (filed electronically only).
Page 20
May 5, 1998
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 Fifty Million Dollars
($50,000,000) aggregate principal amount of its 6.74% Senior Notes due
May 1, 2013 (the "Notes") and the term "Note" shall 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 LLP, 1201 West
Peachtree Street, Atlanta, Georgia, at 10:00 a.m., Atlanta time, at a
closing (the "Closing") on May 6, 1998, 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 LLP, your special counsel in connection
with such transactions, covering the matters 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).
4.12 Copy of Bank Credit Agreement.
The Company shall have delivered to each Purchaser a copy of the
Bank Credit Agreement, including all amendments thereto, certified as true
and correct by a Senior Financial Officer.
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 Equitable Securities
Corporation, has delivered to you and each Other Purchaser a copy of a
Private Placement Memorandum, dated July 24, 1997, which has been updated
to include certain financial information and statements of the Company
through January 30, 1998 (the "Memorandum"), relating to the issuance of
certain senior notes of the Company issued on August 28, 1997. 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 30, 1998, 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 U 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 U.
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 April 27, 1998, 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.
5.19 Year 2000 Compliant
The Company and its Material Subsidiaries' internal computer
systems will be in a timely manner year 2000 compliant and the advent of
the year 2000 and its impact on said internal computer systems is not
expected to have 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) the Source is an "insurance company general account" as
defined in Department of Labor Prohibited Transaction Exemption
("PTE") 95-60 (60 FR 35925, July 12, 1995) and in respect thereof you
represent that there is no "employee benefit plan" (as defined in
Section 3(3) of ERISA and Section 4975(e)(1) of the Code, treating as
a single plan all plans maintained by the same employer or employee
organization or affiliate thereof) with respect to which the amount of
the general account reserves and liabilities of all contracts held by
or on behalf of such plan exceed ten percent (10%) of the total
reserves and liabilities of such general account (exclusive of
separate account liabilities) plus surplus, as set forth in the NAIC
Annual Statement filed with your state of domicile and that such
acquisition is eligible for and satisfies the other requirements of
such exemption; or
(b) the Source is either (i) an insurance company pooled
separate account, within the meaning of 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 is an insurance company separate account
maintained solely in connection with fixed contractual obligations of
the insurance company under which the amounts payable, or credited, to
any employee benefit plan (or its related trust) 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
(g) 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 60 days after the end of
each quarterly fiscal period in each fiscal year of the Company in
which a Material Subsidiary has been formed or acquired, 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;
(h) Bank Credit Agreement -- promptly, and in any event within
30 days after the execution thereof, a copy of each amendment of,
other modification to, or waiver granted under, the Bank Credit
Agreement.
(i) 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 1, 2003 and on each November 1 and May 1 thereafter to and
including November 1, 2012, the Company will prepay $2,380,952 of principal
amount of Notes, and on May 1, 2013 the Company will make a final payment
of $2,380,960 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 Notes pursuant to Section 8.2 or purchase of Notes permitted
by Section 8.5 the principal amount of each required prepayment of 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 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 any partial prepayment of the Notes, the principal
amount of the Notes to be prepaid shall be allocated among all Notes then
outstanding in proportion, as nearly as practicable, to the respective
unpaid principal amounts of all such Notes 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.
Within 60 days after the end of each quarterly fiscal period in
each fiscal year of the Company 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 an opinion of counsel of the
General Counsel to the Company covering the matters described in
Section 5.4(c), and copies of any accompanying resolutions of the board of
directors of such Material Subsidiaries, good standing certificates and the
like, 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 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 ad 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
no less favorable to the Company or such Subsidiary 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 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 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:
Purchasers of Notes:
NEW YORK LIFE INSURANCE COMPANY
By:
Title:
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION
By: New York Life Insurance Company
By:
Title:
ALLSTATE LIFE INSURANCE COMPANY
By:
Title:
By:
Title:
[Signatures Continued on Next Page]
[Signature Page to Hughes 6.74% Senior Note Purchase Agreement]
JEFFERSON-PILOT 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
New York Life Insurance Company $22,500,000
(1) All payments by wire or intrabank
transfer of immediately available
funds to:
Chase Manhattan Bank
New York, New York 10019
ABA No. 021-000-021
For the account of New York Life
Insurance Company
General Account No. 008-9-00687
with sufficient information (including
issuer, PPN number, interest rate,
maturity and whether payment is of
principal, premium, or interest) to
identify the source and application of
such funds.
with advice of such payments to:
New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attention: Treasury Department
Securities Income Section
Room 209
Fax #: (212) 447-4160
(2) All other communications:
New York Life Insurance Company
51 Madison Avenue
New York, New York 10010
Attention: Investment Department
Private Finance Group
Room 206
Fax #: (212) 447-4122
with a copy of any notices regarding
defaults or Events of Default under
the operative documents to:
Attention: Office of General Counsel
Investment Section, Room 1104
Fax #: (212) 576-8340
Tax Identification No. 13-5582869
New York Life Insurance and Annuity $7,500,000
Corporation
(1) All payments by wire or intrabank
transfer of immediately available
funds to:
Chase Manhattan Bank
New York, New York 10019
ABA No. 021-000-021
For the account of New York Life
Insurance and Annuity Corporation
General Account No. 008-0-57001
with sufficient information (including
issuer, PPN number, interest rate,
maturity and whether payment is of
principal, premium, or interest) to
identify the source and application of
such funds.
with advice of such payments to:
New York Life Insurance and Annuity
Corporation
c/o New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attention: Treasury Department
Securities Income Section
Room 209
Fax #: (212) 447-4160
(2) All other communications:
New York Life Insurance and Annuity
Corporation
c/o New York Life Insurance Company
51 Madison Avenue
New York, New York 10010
Attention: Investment Department
Private Finance Group
Room 206
Fax #: (212) 447-4122
with a copy of any notices regarding
defaults or Events of Default under
the operative documents to:
Attention: Office of General Counsel
Investment Section, Room 1104
Fax #: (212) 576-8340
Tax Identification No. 13-3044743
Allstate Life Insurance Company $10,000,000
(1) All payments by wire transfer of
immediately available funds to:
BBK = Harris Trust and Savings Bank
ABA #071000288
BNF = Allstate Life Insurance Company
Collection Account #168-117-0
ORG = Hughes Supply Company
OBI = DPP (444482 O@ O Sr. Nt.)
(Enter Lease Number, if any)-
Payment Due Date (MM/DD/YY)
P__________(Enter "P" and amount
of principal being remitted,
for example, P500,000.00)
I__________(Enter "I" and amount
of interest being remitted,
for example, I225,000.00)
(2) All notices of payments and written
confirmations of such wire transfers:
Allstate Insurance Company
Investment Operations - Private Placements
3075 Sanders Road, STE G4A
Northbrook, Illinois 60062-7127
Telephone: (847) 402-2769
Telecopy: (847) 326-5040
(3) Securities to be delivered to:
Citibank, Federal Savings Bank
Citicorp Center
200 S. Wacker, 32nd Floor, Zone 5
Chicago, Illinois 60606
Attention: Ellen Lorden
For Allstate Life Insurance
Company/Safekeeping Acct. No. 846627
(4) All financial reports, compliance
certificates and all other written
communications, including notice of
prepayments, to be sent to:
Allstate Life Insurance Company
Private Placements Department
3075 Sanders Road, STE G3A
Northbrook, Illinois 60062-7127
Telephone: (847) 402-4394
Telecopy: (847) 402-3092
Tax Identification No. 36-2554642
Jefferson-Pilot Life Insurance Company $10,000,000
(1) All payments by wire transfer of
immediately available funds to:
Jefferson-Pilot Life Insurance Company
c/o The Bank of New York
ABA #021 000 018 BNF: IOC566
Attention: P&I Department
Reference: Hughes Supply, Inc.
(identify amount of principal,
interest and premium)
(2) All notices of payments and written
confirmations of such payments and
transfers to:
Jefferson-Pilot Life Insurance Company
c/o The Bank of New York
Attention: P&I Department
P.O. Box 19266
Newark, New Jersey 07195
with a copy to:
Jefferson-Pilot Life Insurance Company
P.O. Box 21008
Greensboro, North Carolina 27420
Attention: Securities Administration - 3630
Fax: (336) 691-3025
(For hand delivery: 100 North Greene
Street, Zip Code 27401)
(3) All other communications:
Jefferson-Pilot Life Insurance Company
P.O. Box 21008
Greensboro, North Carolina 27420
Attention: Securities Administration - 3630
Fax: (336) 691-3025
(For hand delivery: 100 North Greene
Street, Zip Code 27401)
Tax Identification No. 56-0359860
-----------
Total $50,000,000
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 Amended and
Restated Revolving Credit and Line of Credit Agreement dated as of August
18, 1997 by and among the Company, the Lenders named therein and SunTrust
Bank, Central Florida, National Association, as Agent, 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 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 polychlorinated
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.
"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:
(ii) Pending Acquisitions:
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:
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
100%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
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
H. Corbin Day
John B. Ellis
A. Stewart Hall, Jr.
Clifford M. Hames
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
J. Stephen Zepf, Treasurer and Chief Financial Officer
Benjamin P. Butterfield, Secretary
Jay Clark, Assistant Treasurer
Robert N. Blackford, Assistant Secretary
SCHEDULE 5.5 TO NOTE PURCHASE AGREEMENT
Financial Statements
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 for general
corporate purposes.
SCHEDULE 5.15 TO NOTE PURCHASE AGREEMENT
Existing Debt; Unpermitted Liens
(i) Existing Debt:
Maximum Current Principal
Principal Amount Outstanding
Amount as of July ___, 1997
--------- --------------------
___________________
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)
----------------------- -----------------------------
EXHIBIT 1 TO NOTE PURCHASE AGREEMENT
Form of Senior Note due May 1, 2013
HUGHES SUPPLY, INC.
6.74% SENIOR NOTE DUE MAY 1,2013
No. [R-_____]
$[_______] May 6, 1998
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 1, 2013, 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 6.74% per annum from the date hereof, payable semiannually, on the 1st
day of May and November in each year, commencing with the November 1 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) 8.74% or (ii) 2% over the rate of interest publicly
announced by The Chase Manhattan Bank 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, 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 the Senior Notes (herein called the "Notes")
issued pursuant to separate Note Purchase Agreements, dated as of May 5,
1998 (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 5, 1998 (this
"Guarantee"), made by the undersigned signatories hereto as Guarantors
(each of the undersigned individually a "Guarantor" and collectively the
"Guarantors"), in favor of NEW YORK LIFE INSURANCE COMPANY, NEW YORK LIFE
INSURANCE AND ANNUITY CORPORATION, ALLSTATE LIFE INSURANCE COMPANY AND
JEFFERSON-PILOT 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 5, 1998 (together the "Agreements"
and separately each an "Agreement"), pursuant to which Hughes has issued to
the Guaranteed Parties its 6.74% Senior Notes due May 1, 2013 (the
"Notes"), in the aggregate principal amount of $50,000,000;
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.
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.
ALLIED METALS, INC.
APPCO PROCESS EQUIPMENT CO.
ATLANTIC PUMP & EQUIPMENT COMPANY
OF MIAMI, INC.
CAROLINA PUMP AND SUPPLY CORP.
CHAD SUPPLY, INC.
COASTAL WHOLESALE, INC.
DOMINION PIPE & SUPPLY, CO.
ELASCO AGENCY SALES, INC.
ELEC-TEL SUPPLY COMPANY
ELECTRIC LABORATORIES AND SALES
CORPORATION
FLORIDA PIPE & SUPPLY COMPANY
GPEC, INC.
GAYLE SUPPLY COMPANY, INC.
GILLELAND CONCRETE PRODUCTS, INC.
H VENTURE CORP.
HHH, INC.
HUGHES WATER & SEWER COMPANY
f/k/a Hughes Acquisition Corp.
HUGHES SUPPLY FSC, INC.
INTERNATIONAL SUPPLY, INC.
JI SERVICES CORPORATION
J & J, INC.
JUNO INDUSTRIES, INC.
MEREX CORPORATION
METALS, INC. - GULF COAST DIVISION
METALS, INCORPORATED
MILLS & LUPTON SUPPLY COMPANY
MOORE ELECTRIC SUPPLY, INC.
MOUNTAIN COUNTRY SUPPLY, INC.
[Guarantor Subsidiaries continued on next page]
[Page 2 of Guarantee Signature Page]
OLANDER & BROPHY, INCORPORATED
ONE STOP SUPPLY, INC.
PALM POOL PRODUCTS, INC.
PAINE SUPPLY OF JACKSON, INC.
PANHANDLE PIPE & SUPPLY CO., INC.
PORT CITY ELECTRICAL SUPPLY, INC.
R & G PLUMBING SUPPLY, INC.
SAN ANTONIO PLUMBING
DISTRIBUTORS, INC.
SHRADER HOLDING COMPANY, INC.
SOUTHWEST STAINLESS, L.P.
STAINLESS TUBULAR PRODUCTS, INC.
SUNBELT SUPPLY COMPANY
USCO INCORPORATED
VIRGINIA WATER & WASTE SUPPLY
COMPANY, INC.
WHOLESALE ELECTRIC SUPPLY
CORPORATION
By:
Title:
Address for Notices:
[Insert Guarantor]
c/o Hughes Supply, Inc.
20 North Orange Avenue
Orlando, Florida 32801
Attention: General Counsel
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 5, 1998 (this
"Contribution Agreement"), by and among HUGHES SUPPLY, INC. ("Hughes"), a
corporation organized and existing under the laws of the State of Florida
and each of the undersigned signatories hereto as Guarantors (each of such
undersigned referred to herein as 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 New York
Life Insurance Company, New York Life Insurance and Annuity Corporation,
Allstate Life Insurance Company and Jefferson-Pilot 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 5, 1998 (together the
"Agreements" and separately each an "Agreement"), pursuant to which Hughes
has issued to the Guaranteed Parties its 6.74% Senior Notes due May 1, 2013
(the "Notes"), in the aggregate principal amount of $50,000,000;
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 and each Guarantor hereby agree 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.
IN WITNESS WHEREOF, Hughes and the Guarantors have duly executed
this Contribution Agreement as of the day and year first above written.
HUGHES SUPPLY, INC.
By:
Title:
THE GUARANTORS:
ALLIED METALS, INC.
APPCO PROCESS EQUIPMENT CO.
ATLANTIC PUMP & EQUIPMENT COMPANY
OF MIAMI, INC.
CAROLINA PUMP AND SUPPLY CORP.
CHAD SUPPLY, INC.
COASTAL WHOLESALE, INC.
DOMINION PIPE & SUPPLY, CO.
ELASCO AGENCY SALES, INC.
ELEC-TEL SUPPLY COMPANY
ELECTRIC LABORATORIES AND SALES
CORPORATION
FLORIDA PIPE & SUPPLY COMPANY
GPEC, INC.
GAYLE SUPPLY COMPANY, INC.
GILLELAND CONCRETE PRODUCTS, INC.
H VENTURE CORP.
HHH, INC.
HUGHES WATER & SEWER COMPANY
f/k/a Hughes Acquisition Corp.
HUGHES SUPPLY FSC, INC.
INTERNATIONAL SUPPLY, INC.0
JI SERVICES CORPORATION
J & J, INC.
JUNO INDUSTRIES, INC.
MEREX CORPORATION
METALS, INC. - GULF COAST DIVISION
METALS, INCORPORATED
MILLS & LUPTON SUPPLY COMPANY
[Guarantors continued on next page]
[Page 2 of Contribution Agreement Signature Page]
MOORE ELECTRIC SUPPLY, INC.
MOUNTAIN COUNTRY SUPPLY, INC.
OLANDER & BROPHY, INCORPORATED
ONE STOP SUPPLY, INC.
PALM POOL PRODUCTS, INC.
PAINE SUPPLY OF JACKSON, INC.
PANHANDLE PIPE & SUPPLY CO., INC.
PORT CITY ELECTRICAL SUPPLY, INC.
R & G PLUMBING SUPPLY, INC.
SAN ANTONIO PLUMBING
DISTRIBUTORS, INC.
SHRADER HOLDING COMPANY, INC.
SOUTHWEST STAINLESS, L.P.
STAINLESS TUBULAR PRODUCTS, INC.
SUNBELT SUPPLY COMPANY
USCO INCORPORATED
VIRGINIA WATER & WASTE SUPPLY
COMPANY, INC.
WHOLESALE ELECTRIC SUPPLY
CORPORATION
By:
Title:
Address for Notices:
[Insert Guarantor]
c/o Hughes Supply, Inc.
20 North Orange Avenue
Orlando, Florida 32801
Attention: General Counsel
==========================================================
HUGHES SUPPLY, INC.
$50,000,000 6.74% Senior Notes Due May 1, 2013
NOTE PURCHASE AGREEMENT
May 5, 1998
==========================================================
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
4.12 Copy of Bank Credit Agreement 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 6
5.5 Financial Statements 7
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 8
5.10 Title to Property; Leases 8
5.11 Licenses, Permits, etc 9
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 14
7.1 Financial and Business Information 14
7.2 Officer's Certificate 17
7.3 Inspection 18
8. PREPAYMENT OF THE NOTES 18
8.1(A) Series A Required Prepayments 18
8.2 Optional Prepayments With Make-Whole Amount 19
8.3 Allocation of Partial Prepayments 19
8.4 Maturity; Surrender, etc. 19
8.5 Purchase of Notes 19
8.6 Make-Whole Amount 20
9. AFFIRMATIVE COVENANTS 21
9.1 Compliance With Law 21
9.2 Insurance 22
9.3 Maintenance of Properties 22
9.4 Payment of Taxes and Claims 22
9.5 Corporate Existence, etc. 22
9.6 Covenant To Secure Notes Equally. 23
9.7 Covenant Relating to Subsidiary Guarantees. 23
9.8 Ownership of Subsidiary Guarantors. 23
10. NEGATIVE COVENANTS 23
10.1 Funded Debt. 24
10.2 Current Debt. 24
10.3 Minimum Net Worth. 24
10.4 Restricted Payments. 24
10.5 Liens. 25
10.6 Priority Debt. 27
10.7 Merger or Consolidation. 27
10.8 Sale of Assets. 28
10.9 Transactions With Related Party. 29
10.10 Nature of Business. 29
11. EVENTS OF DEFAULT 29
12. REMEDIES ON DEFAULT, ETC. 31
12.1 Acceleration 31
12.2 Other Remedies 32
12.3 Rescission 32
12.4 No Waivers or Election of Remedies, Expenses, etc. 33
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES 33
13.1 Registration of Notes 33
13.2 Transfer and Exchange of Notes 33
13.3 Replacement of Notes 34
14. PAYMENTS ON NOTES 34
14.1 Place of Payment 34
14.2 Home Office Payment 34
15. EXPENSES, ETC 35
15.1 Transaction Expenses 35
15.2 Survival 36
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT 36
17. AMENDMENT AND WAIVER 36
17.1 Requirements 36
17.2 Solicitation of Holders of Notes 36
17.3 Binding Effect, etc. 37
17.4 Notes Held by Company, etc. 37
18. NOTICES 37
19. REPRODUCTION OF DOCUMENTS 38
20. CONFIDENTIAL INFORMATION 38
21. SUBSTITUTION OF PURCHASER 39
22. MISCELLANEOUS 40
22.1 Successors and Assigns 40
22.2 Payments Due on Non-Business Days 40
22.3 Severability 40
22.4 Construction 40
22.5 Counterparts 40
22.6 Governing Law 41
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 Senior Note
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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF HUGHES SUPPLY, INC. AS OF APRIL 30, 1998, AND THE
RELATED STATEMENT OF INCOME FOR THE THREE MONTHS 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> 3-MOS
<FISCAL-YEAR-END> JAN-29-1999
<PERIOD-END> APR-30-1998
<CASH> 9,255
<SECURITIES> 0
<RECEIVABLES> 335,162
<ALLOWANCES> 5,353
<INVENTORY> 364,802
<CURRENT-ASSETS> 731,688
<PP&E> 195,414
<DEPRECIATION> 78,780
<TOTAL-ASSETS> 1,021,002
<CURRENT-LIABILITIES> 229,471
<BONDS> 357,268
0
0
<COMMON> 23,034
<OTHER-SE> 408,443
<TOTAL-LIABILITY-AND-EQUITY> 1,021,002
<SALES> 582,042
<TOTAL-REVENUES> 582,042
<CGS> 456,764
<TOTAL-COSTS> 456,764
<OTHER-EXPENSES> 102,435
<LOSS-PROVISION> 523
<INTEREST-EXPENSE> 6,086
<INCOME-PRETAX> 17,761
<INCOME-TAX> 7,015
<INCOME-CONTINUING> 10,746
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,746
<EPS-PRIMARY> .47
<EPS-DILUTED> .47
</TABLE>
