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                               HUGHES SUPPLY, INC.


          $19,000,000 8.27% Series A Senior Notes due November 30, 2003

          $28,000,000 8.27% Series B Senior Notes due November 30, 2005

         $103,000,000 8.42% Series C Senior Notes due November 30, 2007


                             NOTE PURCHASE AGREEMENT

                             Dated December 21, 2000










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                                TABLE OF CONTENTS

1.   AUTHORIZATION OF NOTES....................................................1

2.   SALE AND PURCHASE OF NOTES................................................1

3.   CLOSING...................................................................2

4.   CONDITIONS TO CLOSING.....................................................2

     4.1      Representations and Warranties...................................2

     4.2      Performance; No Default..........................................2

     4.3      Compliance Certificates..........................................3

     4.4      Opinions of Counsel..............................................3

     4.5      Purchase Permitted by Applicable Law, etc........................3

     4.6      Sale of Other Notes..............................................4

     4.7      Payment of Special Counsel Fees..................................4

     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 Agreements...................................5

     4.13     Dismissal of Case/Affirmative Coverage Response..................5

5.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................5

     5.1      Organization; Power and Authority................................5

     5.2      Authorization, etc...............................................5

     5.3      Disclosure.......................................................6

     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.................................8

     5.8      Litigation; Observance of Agreements, Statutes and Orders........8

     5.9      Taxes............................................................8

     5.10     Title to Property; Leases........................................9

     5.11     Licenses, Permits, etc...........................................9


<PAGE>


     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.....................................11

     5.16     Foreign Assets Control Regulations, etc.........................11

     5.17     Status Under Certain Statutes...................................11

     5.18     Environmental Matters...........................................12

     5.19     Certain Matters.................................................12

6.   REPRESENTATIONS OF THE PURCHASER.........................................13

     6.1      Purchase for Investment.........................................13

     6.2      Source of Funds.................................................13

7.   INFORMATION AS TO COMPANY................................................15

     7.1      Financial and Business Information..............................15

     7.2      Officer's Certificate...........................................18

     7.3      Inspection......................................................19

8.   PREPAYMENT OF THE NOTES..................................................19

     8.1(A)   Series A Required Payments......................................19

     8.1(B)   Series B Required Prepayments...................................20

     8.1(C)   Series C Required Prepayments...................................20

     8.2      Optional Prepayments With Make-Whole Amount.....................20

     8.3      Allocation of Partial Prepayments...............................21

     8.4      Maturity; Surrender, etc........................................21

     8.5      Mandatory Offer to Prepay Upon Change of Control................21

     8.6      Make-Whole Amount...............................................23

     8.7      Purchase of Notes...............................................24

9.   AFFIRMATIVE COVENANTS....................................................24

     9.1      Compliance With Law.............................................25

     9.2      Insurance.......................................................25

     9.3      Maintenance of Properties.......................................25

     9.4      Payment of Taxes and Claims.....................................25


                                       ii

<PAGE>


     9.5      Corporate Existence, etc........................................26

     9.6      Covenant To Secure Notes Equally................................26

     9.7      Covenant Relating to Subsidiary Guarantees......................26

     9.8      Ownership of Subsidiary Guarantors..............................27

10.  NEGATIVE COVENANTS.......................................................27

     10.1     Funded Debt.....................................................27

     10.2     Current Debt....................................................27

     10.3(A)  Minimum Net Worth...............................................28

     10.3(B)  Adjusted Interest Coverage Ratio................................28

     10.4     Restricted Payments.............................................28

     10.5     Liens...........................................................28

     10.6     Priority Debt...................................................30

     10.7     Merger or Consolidation.........................................30

     10.8     Sale of Assets..................................................31

     10.9     Transactions With Related Party.................................35

     10.10    Nature of Business..............................................35

     10.11    Limitation on Dividend and Other Payment Restrictions Affecting
              Subsidiaries....................................................35

11.  EVENTS OF DEFAULT........................................................36

12.  REMEDIES ON DEFAULT, ETC.................................................38

     12.1     Acceleration....................................................38

     12.2     Other Remedies..................................................39

     12.3     Rescission......................................................39

     12.4     No Waivers or Election of Remedies, Expenses, etc...............40

13.  REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES............................40

     13.1     Registration of Notes...........................................40

     13.2     Transfer and Exchange of Notes..................................40

     13.3     Replacement of Notes............................................41

14.  PAYMENTS ON NOTES........................................................41

     14.1     Place of Payment................................................41

     14.2     Home Office Payment.............................................41


                                      iii

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15.  EXPENSES, ETC............................................................42

     15.1     Transaction Expenses............................................42

     15.2     Survival........................................................42

16.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.............43

17.  AMENDMENT AND WAIVER.....................................................43

     17.1     Requirements....................................................43

     17.2     Solicitation of Holders of Notes................................43

     17.3     Binding Effect, etc.............................................44

     17.4     Notes Held by Company, etc......................................44

18.  NOTICES..................................................................44

19.  REPRODUCTION OF DOCUMENTS................................................45

20.  CONFIDENTIAL INFORMATION.................................................45

21.  SUBSTITUTION OF PURCHASER................................................47

22.  MISCELLANEOUS............................................................47

     22.1     Successors and Assigns..........................................47

     22.2     Payments Due on Non-Business Days...............................47

     22.3     Severability....................................................47

     22.4     Construction....................................................48

     22.5     Counterparts....................................................48

     22.6     Governing Law...................................................48



SCHEDULE A    --   Information Relating to Purchasers

SCHEDULE B    --   Defined Terms

SCHEDULE 4.9  --   Changes in Corporate Structure

SCHEDULE 4.11 --   Material  Subsidiaries  Executing and Delivering  Guarantees
                   on Date of closing

SCHEDULE 5.3  --   Disclosure Materials


                                       iv

<PAGE>


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


                                       v

<PAGE>


          $19,000,000 8.27% Series A Senior Notes due November 30, 2003

         $28,000,000 8.27% Series B Senior Notes due November 30, 2005

         $103,000,000 8.42% Series C Senior Notes due November 30, 2007

                                                               December 21, 2000

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 (i) Nineteen  Million
Dollars  ($19,000,000)  aggregate principal amount of its 8.27% Senior Notes due
November  30, 2003 (the "Series A Notes"),  (ii)  Twenty-Eight  Million  Dollars
($28,000,000)  aggregate principal amount of its 8.27% Senior Notes due November
30, 2005 (the "Series B Notes"),  and (iii) One  Hundred-Three  Million  Dollars
($103,000,000) aggregate principal amount of its 8.42% Senior Notes due November
30, 2007 (the "Series C Notes";  the Series A Notes,  the Series B Notes and the
Series C Notes shall be collectively  referred to herein as the "Notes" and each
referred to herein as a "Note" 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 of a given  Series 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

<PAGE>


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 9:00  a.m.,  Atlanta  time,  at a  closing  (the
"Closing") on December 21, 2000, 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 for each series (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 Wachovia Bank, N.A., ABA Number 061000010, Account
Number  13028327,   Account  Name  "Hughes  Supply,  Inc.,"  Atlanta,   Georgia,
Reference:  Private Placement Disbursement . 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


                                       2

<PAGE>

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  T, U 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.


                                       3

<PAGE>

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 each Series
of 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

<PAGE>

4.12    Copy of Bank Credit Agreements.

         The  Company  shall have  delivered  to each  Purchaser  a copy of each
existing Bank Credit Agreement,  including all amendments thereto,  certified as
true and correct by a Senior Financial Officer.

4.13    Dismissal of Case/Affirmative Coverage Response

         The Company shall have delivered to counsel to the Purchasers a copy of
the Order dated December 14, 2000 issued by the Superior Court of Washington for
King County by which the Company is  dismissed,  with  prejudice,  from the Case
referred to in Section 5.19 hereof.  The Company shall have delivered to counsel
to  the  Purchasers  a  copy  of  the  affirmative   coverage  response  of  the
CNA-affiliated insurance companies referred to in Section 5.19 hereof.

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

<PAGE>


5.3     Disclosure.

         The Company,  through its agent,  Banc of America  Securities  LLC, has
delivered  to you  and  each  Other  Purchaser  a copy  of a  Private  Placement
Memorandum, dated October 2000 (the "Memorandum"),  relating to the transactions
contemplated hereby. The Memorandum fairly describes,  in all material respects,
the general  nature of the business and principal  properties of the Company and
its  Subsidiaries.  Except as disclosed in Schedule  5.3,  this  Agreement,  the
Memorandum, the documents, certificates or other writings delivered to you by or
on behalf of the Company in connection with the transactions contemplated hereby
and the financial  statements  listed in Schedule 5.5, taken as a whole,  do not
contain any untrue  statement  of a material  fact or omit to state any material
fact  necessary to make the  statements  therein not  misleading in light of the
circumstances  under which they were made. Except as disclosed in the Memorandum
or as  expressly  described  in  Schedule  5.3,  or in  one  of  the  documents,
certificates  or  other  writings   identified  therein,  or  in  the  financial
statements  listed in Schedule 5.5, since July 31,  2000January 28, 2000,  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  (other than  Subsidiaries) 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


                                       6

<PAGE>


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


                                       7

<PAGE>


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 all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties,  assets,  income or franchises to the extent such
taxes and  assessments  have  become due and payable and before they have become
delinquent,  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 certain fiscal years up to and including the fiscal
year

                                       8

<PAGE>


ended  1996  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

                                       9

<PAGE>


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  post-retirement  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 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.

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


                                       10

<PAGE>


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 November 30, 2000,  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.


                                       11

<PAGE>


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    Certain Matters.

         Pursuant to an Asset Purchase  Agreement  dated as of November 30, 1999
(the  "Asset  Purchase  Agreement")  by and  between  the  Company  and  Western
Utilities Supply Co. (the "Seller"),  the Company purchased substantially all of
the assets of the Seller on February 1, 2000.  The asset purchase was negotiated
at arm's  length  and the  Company  paid the  Seller  fair  value for the assets
purchased.  The Asset Purchase  Agreement sets forth  substantially all material
terms of the asset  purchase and neither the Company nor any  Subsidiary has any
continuing  obligation to purchase  products or services from, or otherwise deal
with, the Seller.

         Pursuant to Section 2(b) of the Asset Purchase  Agreement,  the Company
assumed no liabilities (including any tort liabilities) of the Seller other than
certain  ledger  accounts.  Pursuant to Section  7(b)(iv) of the Asset  Purchase
Agreement,  the Seller has agreed to  indemnify  the  Company for all Losses (as
defined in the Asset Purchase


                                       12

<PAGE>


Agreement)  suffered or  incurred by the Company by reason of, or in  connection
with,  any claim or cause of action of any third party to the extent arising out
of any action, inaction, event, condition, liability or obligation of the Seller
occurring  prior  to the  consummation  of the  acquisition  including,  but not
limited to, any Loss arising out of a cause of action entitled  Miller,  et. ux.
v.  Hughes  Supply,  Inc.,  King  County,  Washington,  Superior  Court Case No.
00-2-20913-4SEA (the "Case") or any similar claim or cause of action;  provided,
however,   that  such  indemnification   obligation   terminates  on  the  first
anniversary date of the closing.

         The Company further  represents that neither the Company nor any of its
Subsidiaries  has,  at any  time,  distributed  or  sold  to,  or  manufactured,
warehoused  or  otherwise  dealt with any of the products or materials on behalf
of, Persons engaged in the  shipbuilding  industry in the State of Washington or
any other  jurisdiction  other  than  certain  high-alloy  and  stainless  steel
products. The Seller's insurance companies, certain insurance company affiliates
of CNA Financial  Corporation,  have issued an affirmative  coverage response to
the Seller indicating that coverage would be afforded to the Seller with respect
to the Case  within  the  limits  and other  terms of the  applicable  policies;
provided,  however,  that the  coverage  would not extend to the Company as such
Persons  are not  insureds  under  such  policies.  However,  and in any  event,
pursuant to an Order issued by the Superior  Court of Washington for King County
dated  December  21,  2000,  the Company has been  dismissed  from the Case with
prejudice.

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


                                       13

<PAGE>


     "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

                                       14

<PAGE>


     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;


                                       15

<PAGE>


          (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


                                       16

<PAGE>


      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)


                                       17

<PAGE>


          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  Agreements -- promptly,  and in any event within
          30 days after the execution thereof, a copy of a Bank Credit Agreement
          entered  into after the date hereof by the  Company or any  Subsidiary
          and of each  amendment of, other  modification  to, or waiver  granted
          under, a 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


                                       18

<PAGE>


               (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(A)  Series A Required Payments.

         There shall be no required  prepayment  of Series A Notes.  The Company
shall repay the entire outstanding principal amount of all Series A Notes at par
and  without  payment  of the  Make-Whole  Amount  or any  premium  in a  single
installment on November 30, 2003,  together with all accrued but unpaid interest
thereon.


                                       19

<PAGE>


8.1(B)  Series B Required Prepayments.

         The  Company  shall  prepay,  and there shall  become due and  payable,
$5,600,000  in  aggregate  principal  amount of Series B Notes on November 30 of
each year  commencing  on November  30, 2001 and ending on  November  30,  2004,
inclusive.  The Company shall make a final  payment of the  remaining  principal
amount  of the  Series B Notes of  $5,600,000  (or such  amount  as shall be the
remaining  principal amount of Series B Notes outstanding) on November 30, 2005.
Each such payment  shall be  accompanied  by all accrued but unpaid  interest to
date and each such payment of the Series B Notes pursuant to this Section 8.1(B)
shall be at par and without  payment of the  Make-Whole  Amount or any  premium,
provided that, upon any partial prepayment of Series B Notes pursuant to Section
8.2 or purchase of Series B Notes permitted by Section 8.7, the principal amount
of each required  prepayment  of Series B Notes  becoming due under this Section
8.1(B) on and after the date of such  prepayment or purchase shall be reduced in
the same proportion as the aggregate  unpaid  principal amount of Series B Notes
is reduced as a result of such prepayment or purchase.

8.1(C)  Series C Required Prepayments

         The  Company  shall  prepay,  and there shall  become due and  payable,
$20,600,000  in aggregate  principal  amount of Series C Notes on November 30 of
each year  commencing  on November  30, 2003 and ending on  November  30,  2006,
inclusive.  The Company shall make a final  payment of the  remaining  principal
amount  of the  Series C Notes of  $20,600,000  (or such  amount as shall be the
remaining  principal amount of Series C Notes outstanding) on November 30, 2007.
Each such payment  shall be  accompanied  by all accrued but unpaid  interest to
date and each such payment of the Series C Notes pursuant to this Section 8.1(C)
shall be at par and without  payment of the  Make-Whole  Amount or any  premium,
provided that, upon any partial prepayment of Series C Notes pursuant to Section
8.2 or purchase of Series C Notes permitted by Section 8.7, the principal amount
of each required  prepayment  of Series C Notes  becoming due under this Section
8.1(C) on and after the date of such  prepayment or purchase shall be reduced in
the same proportion as the aggregate  unpaid  principal amount of Series C 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,

                                       20

<PAGE>


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 of all
Series  then  outstanding  in  proportion,  as  nearly  as  practicable,  to the
respective  unpaid  principal  amounts of all 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     Mandatory Offer to Prepay upon Change of Control.

         (a) Notice and Offer. In the event of either:

               (i) a Change of Control, or

               (ii) the obtaining of knowledge of a Control Event by any officer
          of the  Company  (including,  without  limitation,  via the receipt of
          notice of a Control Event from any holder of Notes),

the Company will, within three Business Days of the occurrence of either of such
events  (or,  in  the  case  of any  Change  of  Control,  the  consummation  or
finalization  of which would involve any action of the Company,  at least thirty
days prior to such Change of  Control),  give  written  notice of such Change of
Control or Control Event to each holder of outstanding  Notes by registered mail
and,  simultaneously with the sending of such outstanding written notice, send a
copy of such  notice to each such  holder via an


                                       21

<PAGE>


overnight courier of national reputation. Such written notice shall contain, and
such written notice shall  constitute,  an irrevocable  offer to prepay all, but
not less than all,  the Notes held by such  holder on a date  specified  in such
notice  (the  "Control  Prepayment  Date") that is not less than 30 days and not
more than 60 days after the date of such notice. If the Control  Prepayment Date
shall not be specified in such notice,  the Control Prepayment Date shall be the
30th day after the date of such holder's  first  receipt of such notice.  If the
Company  shall not have  received a written  response  to such  notice from each
holder of Notes  within 10 days after the date of posting of such notice to such
holder of Notes, then the Company shall immediately send a second written notice
via an overnight courier of national reputation to each such holder of Notes who
shall have not previously responded to the Company. In no event will the Company
take  any  action  to  consummate  or  finalize  a  Change  of  Control   unless
contemporaneously  with such action the Company prepays all Notes required to be
prepaid in accordance with Section 8.5(b) hereof.

         (b) Acceptance and Payment. To accept such offered prepayment, a holder
of Notes shall cause a notice of such  acceptance to be delivered to the Company
not later than 15 days  after the date of  receipt by such  holder of the latest
written  offer of such  prepayment  (it being  understood  that the failure by a
holder to respond to such written offer of  prepayment  within such period of 15
days shall be deemed to  constitute a rejection of such offer).  If so accepted,
such offered prepayment shall be due and payable on the Control Prepayment Date.
Such  offered  prepayment  shall be made at one  hundred  percent  (100%) of the
principal  amount of such Notes,  together with interest on the Notes then being
prepaid  accrued  to the  Control  Prepayment  Date.  The  Company  shall not be
required to pay any  Make-Whole  Amount upon any prepayment of Notes pursuant to
this Section 8.5.

         (c) Officer's  Certificate.  Each offer to prepay the Notes pursuant to
this Section 8.5 shall be  accompanied  by a  certificate,  executed by a Senior
Financial Officer of the Company and dated the date of such offer, specifying:

               (i) the Control Prepayment Date;

               (ii) the Section hereof under which such offer is made;

               (iii) the principal amount of each Note offered to be prepaid;

               (iv) the interest  that would be due on each such Note offered to
          be prepaid, accrued to the Control Prepayment Date;

               (v) that the conditions of this Section 8.5 have been  fulfilled;
          and

               (vi) in reasonable  detail,  the nature and date or proposed date
          of the Change of Control.


                                       22

<PAGE>


         (d) Notice Concerning  Status of Holders of Notes.  Promptly after each
Control  Prepayment Date and the making of all prepayments  contemplated on such
Control Prepayment Date under this Section 8.5 (and, in any event, within thirty
days thereafter),  the Company shall deliver to each remaining holder of Notes a
certificate  signed by a Senior  Financial  Officer of the Company  containing a
list of the then current  holders of Notes  (together with their  addresses) and
setting forth as to each such holder the outstanding  principal  amount of Notes
held by each such holder at such time.

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) based on 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, as set forth on page "USD" of the Bloomberg
         Financial Markets Service (or, if not available, any other nationally
         recognized trading screen reporting on-line intraday trading in United
         States Treasury fixed interest rate securities) 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.


                                       23

<PAGE>


         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.

8.7     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.

9.      AFFIRMATIVE COVENANTS.

         The Company covenants that so long as any of the Notes are outstanding:


                                       24

<PAGE>


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


                                       25

<PAGE>


or assessment or claims if (i) the amount,  applicability or validity thereof is
contested  bythe 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 of any
Subsidiary, 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; (iii) the occurrence
of any other event creating a new Material Subsidiary; or (iv) the execution and
delivery  by a  Subsidiary  (a "Bank  Guaranty  Subsidiary")  (whether  or not a
Material  Subsidiary) of a guaranty of the  indebtedness  and obligations of the
Company under a Bank Credit Agreement 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 or Bank Guaranty Subsidiary (as the case may
be) in  substantially  the form of Exhibit 4.11(a) and a Contribution  Agreement
from such Material  Subsidiary or Bank Guaranty  Subsidiary (as the case may be)
in  substantially  the form of  Exhibit  4.11(b),  together  with an  opinion of
counsel of the General Counsel to


                                       26

<PAGE>


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  Subsidiary
or Bank Guaranty Subsidiary (as the case may be), 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. Further,
it is hereby  understood that the restrictions  against the incurrence of Funded
Debt by Subsidiaries contained in this Section 10.1 shall be in addition to, and
not in derogation of, the restrictions contained in Section 10.6 hereof.

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.


                                       27


<PAGE>


10.3(A) Minimum Net Worth

         The  Company  shall not permit  Consolidated  Net Worth to be less than
$445,000,000 at any time.

10.3(B) Adjusted Interest Coverage Ratio

         The Company shall not permit,  as at the end of each fiscal  quarter of
the Company, the Adjusted Interest Coverage Ratio to be less than 1.50 to 1.00.

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  July 31,  2000 would not exceed the sum of (x)
$40,000,000  plus (y) 60% of cumulative  Consolidated  Net Income since July 31,
2000 (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 tangible fixed assets  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 assets or a portion of
          the  indebtedness  of such  assets  provided  (A) any such Lien  shall
          extend  solely  to the item or items of


                                       28

<PAGE>


          such assets so acquired or  constructed  and, if required by the terms
          of the instrument  originally  creating such Lien,  other assets which
          constitute  an  improvement  to or is  acquired  for  specific  use in
          connection  with such acquired or constructed  assets or which is real
          property being improved by such acquired or  constructed  assets,  (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 assets so acquired or  constructed
          and (2) the  Fair  Market  Value  of such  assets  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 assets;

               (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;


                                       29

<PAGE>


               (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

                                       30

<PAGE>


          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 or any  Subsidiary may acquire any other Person
          provided such  acquisition  does not  otherwise  result in an Event of
          Default hereunder.

               (iv) Any assumption  agreement executed and delivered pursuant to
          subparagraph (B) hereof shall be accompanied by a favorable opinion of
          counsel to such  surviving  corporation  stating that such  assumption
          agreement  has been duly  authorized,  executed and  delivered by such
          surviving  corporation,  that  the  execution  and  delivery  of  such
          assumption  agreement  does not violate or contravene any agreement or
          instrument to which such surviving corporation is a party and covering
          the other  matters  described in Exhibit  4.4(a) hereto and such other
          matters as counsel to the Required Holders shall  reasonably  request,
          together with copies of accompanying board resolutions,  good standing
          certificates  and the like as counsel to the  Required  Holders  shall
          reasonably request.

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

                                       31

<PAGE>


          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,  worn out
          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;

                    (B) at least 85% of the  consideration  therefor received by
               the Company or such Subsidiary is in the form of cash; and

                    (C) the cumulative net book value of all assets  Disposed of
               by the Company and its  Subsidiaries  during any period of twelve
               consecutive  calendar  months does not exceed 15% of Consolidated
               Assets determined as of the most recently  completed fiscal year;
               provided,  however,  that the Company or a Subsidiary may Dispose
               of  assets in excess of 15% of  Consolidated  Assets  during  any
               consecutive  twelve-month  period  if,  within 180 days after the
               receipt by the Company or such  Subsidiary of any Net Proceeds of
               any  Disposition  in excess of 15% of  Consolidated  Assets (such
               excess  Net  Proceeds  referred  to as  "Excess  Proceeds"),  the
               Company applies such Excess Proceeds at its option:

                         (x) to make a  capital  expenditure  or  acquire  other
                    long-term  assets  that are used or useful in a business  or
                    businesses  conducted  by the  Company  on the  date of such
                    application or otherwise  permitted by Section 10.10 hereof;
                    or

                         (y) to  consummate  an Asset  Sale  Offer  (as  defined
                    below) with  respect to all Holders of Notes and all holders
                    of  other  Debt  that  is  pari  passu  with  the  Notes  as
                    contemplated in paragraph (3) below; or

                         (z) a combination of (x) and (y).

               Pending  final  application  of any Excess  Proceeds  as required
         above,  the Company  shall invest such Excess  Proceeds in cash or cash
         equivalents.


                                       32



<PAGE>


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.

               (3) Asset Sale  Offer.  On the 180th day after a  Disposition  of
         assets giving rise to Excess Proceeds, or such earlier date, if any, as
         the Board of Directors of the Company or of such Subsidiary  determines
         not  to  apply  the  Excess  Proceeds   relating  to  such  Disposition
         exclusively  as set forth in  subparagraph  (x) of Section  10.8(iv)(C)
         above (each, an "Asset Sale Offer Trigger Date"), such aggregate amount
         of Excess  Proceeds which have not been applied on or before such Asset
         Sale Offer  Trigger  Date as set forth in  subparagraph  (x) of Section
         10.8(iv)(C)  above (each,  an "Excess  Proceeds Offer Amount") shall be
         applied by the Company or such  Subsidiary to make an offer to purchase
         (the  "Asset  Sale  Offer") on a date (the  "Asset  Sale Offer  Payment
         Date") not less than 30 nor more than 45 days  following the applicable
         Asset  Sale  Offer  Trigger  Date,  from all  Holders  of Notes and all
         holders  of other Debt that is pari passu with the Notes (the Notes and
         such other Debt referred to herein  collectively as "Senior Debt") on a
         pro rata basis that amount of Senior Debt equal to the Excess  Proceeds
         Offer Amount at a price equal to 100% of the principal amount of Senior
         Debt to be purchased, plus accrued and unpaid interest thereon, if any,
         to the date of  purchase;  provided,  however,  that if at any time any
         non-cash consideration received by the Company or any Subsidiary of the
         Company,  as the case may be, in  connection  with any  Disposition  is
         converted  into or  sold  or  otherwise  disposed  of for  cash or cash
         equivalents  (other than  interest  received  with  respect to any such
         non-cash  consideration),  then such conversion or disposition shall be
         deemed to  constitute a Disposition  hereunder and the Excess  Proceeds
         thereof shall be applied in accordance with this Section 10.8.


                                       33

<PAGE>

               Each Asset Sale  Offer  shall be mailed to the  holders of Senior
         Debt within 10 days  following the Asset Sale Offer  Trigger Date.  The
         notice  shall be  executed  by a Senior  Financial  Officer  and  shall
         contain all instructions and materials necessary to enable such holders


         to elect that Senior Debt held by them may be purchased pursuant to the
         Asset Sale Offer and shall state the following terms:

                    (A) that the Asset Sale Offer is being made pursuant to this
               Section 10.8 and that all Senior Debt  tendered  will be accepted
               for payment;

                    (B) the  purchase  price  (including  the  amount of accrued
               interest)  and the Asset Sale Offer  Payment Date (which shall be
               20  Business  Days from the date such  notice is mailed,  or such
               longer period as may be required by law);

                    (C) that any Senior  Debt not elected to be  purchased  will
               continue to accrue interest if interest is then accruing;

                    (D) that,  unless the  Company  defaults  in making  payment
               therefor,  any Senior Debt  accepted for payment  pursuant to the
               Asset Sale Offer shall cease to accrue  interest  after the Asset
               Sale Offer Payment Date;

                    (E) that  Holders  may elect to have the Senior Debt held by
               them  purchased  pursuant  to an Asset Sale  Offer by  delivering
               written  notice of such  election  to the  Company at the address
               specified in the Asset Sale Offer  setting  forth the name of the
               holder and the  principal  amount of Senior Debt that such holder
               elects to be so  purchased  and that  holders  must  deliver such
               election  notice within two Business Days prior to the Asset Sale
               Offer  Payment  Date (it being  understood  that the failure by a
               holder to respond to an Asset Sale Offer within such period shall
               be deemed to  constitute  a rejection  of such Asset Sale Offer);
               and

                    (F) that holders of Senior Debt will be entitled to withdraw
               their election if the Company  receives,  not later than the date
               two Business  Days prior to the Asset Sale Offer  Payment Date, a
               written  notice  setting  forth  the  name  of  the  holder,  the
               principal amount of Senior Debt the holder thereof has elected to
               have  purchased,  and a statement that such holder is withdrawing
               its election to have such Senior Debt purchased.

         On the Asset Sale Offer Payment Date, the Company shall deliver to such
holder via wire  transfer in  immediately  available  funds the amount of Senior
Debt so elected to be  repurchased,  plus accrued but unpaid  interest  thereon,
subject to adjustment as contemplated by subparagraph (A) above.


                                       34

<PAGE>



         To the extent that the  aggregate  amount of Senior Debt  elected to be
repurchased  pursuant  to an Asset Sale  Offer is less than the Excess  Proceeds
Offer Amount, the Company shall commence a second Asset Sale Offer to holders of
Senior Debt that elected to have the Senior Debt held by them purchased pursuant
to the first Asset Sale Offer but whose Senior Debt was not purchased in full by
reason of the pro rata nature of such first Asset Sale Offer.  Such second Asset
Sale Offer shall be conducted on substantially the same terms as the first Asset
Sale Offer.  To the extent that Excess  Proceeds are not used to purchase Senior
Debt after  conducting  the second  Asset Sale  Offer,  the  Company may use any
remaining Excess Proceeds for general corporate purposes.

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 less  favorable to
the Company or such Subsidiaries 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.

10.11   Limitation on Dividend and Other Payment Restrictions Affecting
        Subsidiaries.

         The  Company  shall  not,  and shall  not  cause or  permit  any of its
Subsidiaries to, directly or indirectly,  create or otherwise cause or permit to
exist or become  effective any  encumbrance or restriction on the ability of any
Subsidiary of the Company to: (i) pay dividends or make any other  distributions
on or in respect of its Capital Stock;  (ii) make loans or advances or to pay or
guarantee  any  Debt or  other  obligation  owed  to the  Company  or any  other
Subsidiary  of the Company;  or (iii)  transfer any of its property or assets to
the Company or any other Subsidiary of the Company, except for such encumbrances
or  restrictions  existing  under or by reason of (1)  applicable  law; (2) this
Agreement  or a Bank  Credit  Agreement  as in  effect on the date  hereof;  (3)
customary  non-assignment  provisions  of any contract or any lease  governing a
leasehold  interest  of  any  Subsidiary  of the  Company;  (4)  any  instrument
governing  Acquired Debt, which  encumbrance or restriction is not applicable to
any Person,  or the properties or assets of any Subsidiary  thereof,  other than
the Person  (or the  properties  or assets of the  Person)  so  acquired  or any
Subsidiary  thereof;  (5) purchase money  obligations for property acquired that
impose  restrictions of the nature described in clause (4) above on the property
so acquired;  (6) an agreement  governing  Debt incurred to refinance or replace
the Debt

                                       35

<PAGE>


issued,  assumed or incurred pursuant to an agreement referred to in clause (2),
(4) or (5)  above;  provided,  however,  that the  provisions  relating  to such
encumbrance or restriction contained in any such refinancing or replacement Debt
are no less favorable to the Company in any material respect than the provisions
relating to such encumbrance or restriction  contained in agreements referred to
in such clause (2), (4) or (5); or (7) restrictions contained in any purchase or
sale agreement  relating to the purchase or sale of a Subsidiary,  provided that
such  restriction  does not extend to any assets other than those being acquired
or sold.

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

                                       36

<PAGE>


     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

                                       37

<PAGE>


     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.


                                       38

<PAGE>


         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.


                                       39

<PAGE>


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 and the fees
and  disbursements  of any  financial  advisor  retained by the holders of Notes
after the occurrence of an Event of Default.

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 of Notes 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


                                       40

<PAGE>


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 (or
successor entity) 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

                                       41

<PAGE>


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,


                                       42

<PAGE>



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

                                       43

<PAGE>


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) via fax 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,


                                       44

<PAGE>

          (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,  (d) constitutes financial statements delivered to you under Section
7.1 that are otherwise publicly available,  or (e) is independently developed by
you,  your  Affiliates  or  your  professional   advisors  without  the  use  of
Confidential  Information.   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


                                       45

<PAGE>


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.


                                       46

<PAGE>

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.


                                       47

<PAGE>


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.


                                       47

<PAGE>


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]


                                       48

<PAGE>


         [Hughes Supply Note Purchase Agreement dated December 21, 2000]

         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 Series A Notes:

PACIFIC LIFE INSURANCE COMPANY


By: _______________________
    Name:__________________
    Title:_________________


By: _______________________
    Name:__________________
    Title:_________________


PACIFIC LIFE AND ANNUITY COMPANY

By: _______________________
    Name:__________________
    Title:_________________


By: _______________________
    Name:__________________
    Title:_________________


                                       49

<PAGE>


Purchasers of Series B Notes:

GENERAL ELECTRIC CAPITAL
    ASSURANCE COMPANY


By: _______________________
    Name:__________________
    Title:_________________


GE LIFE AND ANNUITY ASSURANCE COMPANY


By: _______________________
    Name:__________________
    Title:_________________


GE CAPITAL LIFE ASSURANCE COMPANY
    OF NEW YORK


By: _______________________
    Name:__________________
    Title:_________________


ALLSTATE LIFE INSURANCE COMPANY


By: _______________________
    Name:__________________
    Title:_________________

By: _______________________
    Name:__________________
    Title:_________________
          (Authorized Signatories)


                                       50

<PAGE>

AMERICAN UNITED LIFE INSURANCE COMPANY


By: _______________________
    Name:__________________
    Title:_________________


PIONEER MUTUAL LIFE INSURANCE COMPANY


By: _______________________
    Name:__________________
    Title:_________________


Purchasers of Series C Notes:

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

     By: CIGNA Investments, Inc.

         By: _______________________
             Name:__________________
             Title:_________________


LIFE INSURANCE COMPANY OF NORTH AMERICA


     By: CIGNA Investments, Inc.

         By: _______________________
             Name:__________________
             Title:_________________


JEFFERSON-PILOT LIFE INSURANCE COMPANY


By: _______________________
    Name:__________________
    Title:_________________


                                       51

<PAGE>


TEACHERS INSURANCE AND ANNUITY ASSOCIATION
    OF AMERICA


By: _______________________
    Name:__________________
    Title:_________________


SUNAMERICA LIFE INSURANCE COMPANY


By: _______________________
    Name:__________________
    Title:_________________


AMERICAN GENERAL LIFE INSURANCE COMPANY
and
AMERICAN GENERAL ANNUITY INSURANCE COMPANY


By: _______________________
    Name:__________________
    Title:_________________


NATIONWIDE LIFE INSURANCE COMPANY


By: _______________________
    Name:__________________
    Title:_________________


NATIONWIDE LIFE AND ANNUITY INSURANCE
    COMPANY


By: _______________________
    Name:__________________
    Title:_________________


NEW YORK LIFE INSURANCE COMPANY


By: _______________________
    Name:__________________
    Title:_________________




                                       52

<PAGE>


NEW YORK LIFE INSURANCE AND
     ANNUITY CORPORATION

   By:   New York Life Investment Management, LLC,
          its Investment Manager

         By: _______________________
             Name:__________________
             Title:_________________


THE CANADA LIFE ASSURANCE COMPANY


By: _______________________
    Name:__________________
    Title:_________________


THE OHIO NATIONAL LIFE INSURANCE COMPANY


By: _______________________
    Name:__________________
    Title:_________________


MODERN WOODMEN OF AMERICA


By: _______________________
    Name:__________________
    Title:_________________


                                       53
<PAGE>


                      SCHEDULE A TO NOTE PURCHASE AGREEMENT

                          Information as to Purchasers


--------------------------------------------------------------------------------
         PURCHASER NAME                          PACIFIC LIFE
                                              INSURANCE COMPANY
--------------------------------------------------------------------------------
Taxpayer Identification Number                    95-1079000
--------------------------------------------------------------------------------
Name in which to register Note(s)                 Mac & Co.
--------------------------------------------------------------------------------
Series                                             Series A
--------------------------------------------------------------------------------
Note registration number                              R-1
--------------------------------------------------------------------------------
Amount                                           $9,000,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

   Method                                   Immediately available funds, via
                                            federal funds wire transfer

   Account Information                      Federal Reserve Bank of Boston
                                            ABA# 0110-0123-4/BOS SAFE DEP
                                            DDA 125261
                                            Attn:  MBS Income CC: 1253
                                            A/C Name: Pacific Life General
                                                      Account
                                                     PLCF1810132
                                            Re:      Security Description & PPN
--------------------------------------------------------------------------------
Accompanying Information                    Hughes Supply, Inc.; 8.27% Series A
                                            Senior Notes due November 30, 2003;
                                            CUSIP 44482 C# 8

                                            [insert due date and application as
                                            among principal, premium and
                                            interest]
--------------------------------------------------------------------------------
Address for notices related to payments     Mellon Trust
                                            Attn: Pacific Life Accounting Team
                                            One Mellon Bank Center
                                            Room 0930
                                            Pittsburgh, PA 15258-0001
                                                AND
                                            Pacific Life Insurance Company
                                            Attn: Securities Administration-Cash
                                            Team
                                            700 Newport Center Drive
                                            Newport Beach, CA 92660-6397
--------------------------------------------------------------------------------
Address for all other communications        Pacific Life Insurance Company
and notices                                 Attn:  Securities Department
                                            700 Newport Center Drive
                                            Newport Beach, CA 92660-6397
--------------------------------------------------------------------------------


<PAGE>

--------------------------------------------------------------------------------
         PURCHASER NAME                           PACIFIC LIFE
                                              AND ANNUITY COMPANY
--------------------------------------------------------------------------------
Taxpayer Identification Number                    95-3760914
--------------------------------------------------------------------------------
Name in which to register Note(s)                 Mac & Co.
--------------------------------------------------------------------------------
Series                                             Series A
--------------------------------------------------------------------------------
Note registration number                           R-2; R-3
--------------------------------------------------------------------------------
Amount                                       R-2 = $5,000,000.00
                                             R-3 = $5.000,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

   Method                                   Immediately available funds, via
                                            federal funds wire transfer

   Account Information                      Federal Reserve Bank of Boston
                                            ABA# 0110-0123-4/BOS SAFE DEP
                                            DDA 12561
                                            Attn:  MBS Income CC: 1253
                                            A/C Name: Pacific Life General
                                                      Account
                                                      PLCF1811612
                                            Re:       Security Description & PPN
--------------------------------------------------------------------------------
Accompanying Information                    Hughes Supply, Inc.; 8.27% Series A
                                            Senior Notes due November 30, 2003;
                                            CUSIP 44482 C# 8

                                            [insert due date and application as
                                            among principal, premium and
                                            interest]
--------------------------------------------------------------------------------
Address for notices related to payments     Mellon Trust
                                            Attn: Pacific Life Accounting Team
                                            One Mellon Bank Center
                                            Room 0930
                                            Pittsburgh, PA 15258-0001
                                                AND
                                            Pacific Life Insurance Company
                                            Attn: Securities Administration-Cash
                                            Team
                                            700 Newport Center Drive
                                            Newport Beach, CA 92660-6397
--------------------------------------------------------------------------------
Address for all other communications        Pacific Life Insurance Company
and notices                                 Attn:  Securities Department
                                            700 Newport Center Drive
                                            Newport Beach, CA 92660-6397
--------------------------------------------------------------------------------

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                     GENERAL ELECTRIC CAPITAL
                                                ASSURANCE COMPANY
--------------------------------------------------------------------------------
Taxpayer Identification Number                    91-6027719
--------------------------------------------------------------------------------
Name in which to register Note(s)               SALKELD & CO.
--------------------------------------------------------------------------------
Series                                             Series B
--------------------------------------------------------------------------------
Note registration number                              R-1
--------------------------------------------------------------------------------
Amount                                          $12,000,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

   Method                                   Immediately available funds, via
                                            federal funds wire transfer

   Account Information                      Bankers Trust Company
                                            14 Wall Street
                                            New York, NY 10005
                                            SWIFT Code: BKTR US 33
                                            ABA #021-001-033
                                            Account Number 99-911-145
                                            FCC #097833
--------------------------------------------------------------------------------
Accompanying Information                    Hughes Supply, Inc.; 8.27% Series B
                                            Senior Notes due November 30, 2005;
                                            CUSIP 444482 D* 1

                                            [insert due date and application as
                                            among principal, premium and
                                            interest]
--------------------------------------------------------------------------------
Address for notices related to payments     GE Financial Assurance
                                            Account: General Electric Capital
                                                     Assurance Company
                                            Two Union Square, 601 Union Street
                                            Seattle, WA 98101
                                            Attn: Investment Accounting
                                                  Tel.: (206) 516-2871
                                                  Fax: (206) 516-4740
--------------------------------------------------------------------------------
Address for all other communications        GE Financial Assurance
and notices                                 Account:  General Electric Capital
                                                      Assurance Company
                                            Two Union Square, 601 Union Street
                                            Seattle, WA 98101
                                            Attn: Investment Dept., Private
                                                  Placements
                                                  Tel: (206) 516-4954
                                                  Fax: (206) 516-4863
--------------------------------------------------------------------------------

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                       GE LIFE AND ANNUITY
                                               ASSURANCE COMPANY
--------------------------------------------------------------------------------
Taxpayer Identification Number                    54---0283385
--------------------------------------------------------------------------------
Name in which to register Note(s)               SALKELD & CO.
--------------------------------------------------------------------------------
Series                                             Series B
--------------------------------------------------------------------------------
Note registration number                              R-2
--------------------------------------------------------------------------------
Amount                                           $2,000,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

   Method                                   Immediately available funds, via
                                            federal funds wire transfer

   Account Information                      Bankers Trust Company
                                            14 Wall Street
                                            New York, NY 10005
                                            SWIFT Code: BKTR US 33
                                            ABA #021-001-033
                                            Account Number 99-911-145
                                            FCC #097828
--------------------------------------------------------------------------------
Accompanying Information                    Hughes Supply, Inc.; 8.27% Series B
                                            Senior Notes due November 30, 2005;
                                            CUSIP 444482 D* 1

                                            [insert due date and application as
                                            among principal, premium and
                                            interest]
--------------------------------------------------------------------------------
Address for notices related to payments     GE Financial Assurance
                                            Account: General Electric Capital
                                                     Assurance Company
                                            Two Union Square, 601 Union Street
                                            Seattle, WA 98101
                                            Attn: Investment Accounting
                                                  Tel.: (206) 516-2871
                                                  Fax: (206) 516-4740
--------------------------------------------------------------------------------
Address for all other communications        GE Financial Assurance
and notices                                 Account:  General Electric Capital
                                                      Assurance Company
                                            Two Union Square, 601 Union Street
                                            Seattle, WA 98101
                                            Attn: Investment Dept., Private
                                                  Placements
                                                  Tel: (206) 516-4954
                                                  Fax: (206) 516-4863
--------------------------------------------------------------------------------

<PAGE>

--------------------------------------------------------------------------------
         PURCHASER NAME                     GE CAPITAL LIFE ASSURANCE
                                               COMPANY OF NEW YORK
--------------------------------------------------------------------------------
Taxpayer Identification Number                    22-2882416
--------------------------------------------------------------------------------
Name in which to register Note(s)               SALKELD & CO.
--------------------------------------------------------------------------------
Series                                             Series B
--------------------------------------------------------------------------------
Note registration number                              R-3
--------------------------------------------------------------------------------
Amount                                           $2,000,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

   Method                                   Immediately available funds, via
                                            federal funds wire transfer

   Account Information                      Bankers Trust Company
                                            14 Wall Street
                                            New York, NY 10005
                                            SWIFT Code: BKTR US 33
                                            ABA #021-001-033
                                            Account Number 99-911-145
                                            FCC #097836
--------------------------------------------------------------------------------
Accompanying Information                    Hughes Supply, Inc.; 8.27% Series B
                                            Senior Notes due November 30, 2005;
                                            CUSIP 444482 D* 1

                                            [insert due date and application as
                                            among principal, premium and
                                            interest]
--------------------------------------------------------------------------------
Address for notices related to payments     GE Financial Assurance
                                            Account: General Electric Capital
                                                     Assurance Company
                                            Two Union Square, 601 Union Street
                                            Seattle, WA 98101
                                            Attn: Investment Accounting
                                                  Tel: (206) 516-2871
                                                  Fax: (206) 516-4740
--------------------------------------------------------------------------------
Address for all other communications        GE Financial Assurance
and notices                                 Account:  General Electric Capital
                                                      Assurance Company
                                            Two Union Square, 601 Union Street
                                            Seattle, WA 98101
                                            Attn: Investment Dept., Private
                                                  Placements
                                                  Tel: (206) 516-4954
                                                  Fax: (206) 516-4863
--------------------------------------------------------------------------------

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                          ALLSTATE LIFE
                                               INSURANCE COMPANY
--------------------------------------------------------------------------------
Taxpayer Identification Number                    36-2554642
--------------------------------------------------------------------------------
Name in which to register Note(s)         Allstate Life Insurance Company
--------------------------------------------------------------------------------
Series                                             Series B
--------------------------------------------------------------------------------
Note registration number                              R-4
--------------------------------------------------------------------------------
Amount                                          $8,000,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

   Method                                   Immediately available funds, via
                                            federal funds wire transfer

   Account Information                      Harris Trust and Savings Bank
                                            ABA #071000288

                                            BNF   Allstate Life Insurance
                                                  Company Collection Account
                                                  #168-117-0
                                            ORG   (Enter Issuer Name)
                                            OBI   DPP - (Enter Private Placement
                                                   No., if available
                                                  Payment Due Date (MM/DD/YY)
                                                    P_____ (Enter "P"
                                                    and amount of principal
                                                    being remitted; for example,
                                                    P5000000.00) I_____
                                                    (Enter "I" and amount of
                                                    interest being remitted; for
                                                    example, I225000.00)
--------------------------------------------------------------------------------
Accompanying Information                    Hughes Supply, Inc.; 8.27% Series B
                                            Senior Notes due November 30, 2005;
                                            CUSIP 444482 D* 1

                                            [insert due date and application as
                                            among principal, premium and
                                            interest]
--------------------------------------------------------------------------------
Address for notices related to payments     Allstate Insurance Company
                                            Investment Operations - Private
                                            Placements
                                            3075 Sanders Road, Suite G4A
                                            Northbrook, IL 60062-7127
                                            Telephone: (847) 402-2769
                                            Fax:       (847) 326-5040
--------------------------------------------------------------------------------
Address for all other communications        Allstate Insurance Company
and notices                                 Private Placements Department
                                            3075 Sanders Road, Suite G3A
                                            Northbrook, IL 60062-7127
                                            Telephone: (847) 402-8922
                                            Fax:       (847) 402-3092
--------------------------------------------------------------------------------

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                      AMERICAN UNITED LIFE
                                               INSURANCE COMPANY
--------------------------------------------------------------------------------
Taxpayer Identification Number                    35-0145825
--------------------------------------------------------------------------------
Name in which to register Note(s)      American United Life Insurance Company
--------------------------------------------------------------------------------
Series                                             Series B
--------------------------------------------------------------------------------
Note registration numbers                          R-5; R-6
--------------------------------------------------------------------------------
Amount                                       R-5 = $2,000,000.00
                                             R-6 = $1,500,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

   Method                                   Immediately available funds, via
                                            federal funds wire transfer

   Account Information                      Bank of New York
                                            Attn:  P&I Department
                                            One Wall Street, 3rd Floor
                                            Window A
                                            New York, NY 10286
                                            ABA #021000018, BNF:IOC566
--------------------------------------------------------------------------------
Accompanying Information                    Hughes Supply, Inc.; 8.27% Series B
                                            Senior Notes due November 30, 2005;
                                            CUSIP 444482 D* 1

                                            [insert due date and application as
                                            among principal, premium and
                                            interest]
--------------------------------------------------------------------------------
Address for notices related to payments     American United Life Insurance
                                            Company
                                            Attn: Christopher D. Palke,
                                                  Securities Department
                                            Post Office Box 368
                                            Indianapolis, IN 46206-0368
--------------------------------------------------------------------------------
Address for all other communications        American United Life Insurance
and notices                                 Company
                                            Attn: Christopher D. Palke,
                                                  Securities Department
                                            Post Office Box 368
                                            Indianapolis, IN 46206-0368
--------------------------------------------------------------------------------

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                    PIONEER MUTUAL LIFE INSURANCE
                                                      COMPANY
--------------------------------------------------------------------------------
Taxpayer Identification Number                      45-0220640
--------------------------------------------------------------------------------
Name in which to register Note(s)      Pioneer Mutual Life Insurance Company
--------------------------------------------------------------------------------
Series                                               Series B
--------------------------------------------------------------------------------
Note registration numbers                              R-7
--------------------------------------------------------------------------------
Amount                                            $500,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

   Method                                   Immediately available funds, via
                                            federal funds wire transfer

   Account Information                      Bank of New York
                                            Attn:  P&I Department
                                            One Wall Street, 3rd Floor
                                            Window A
                                            New York, NY 10286
                                            ABA #021000018, BNF:IOC566
                                            Pioneer Mutual, c/o American United
                                            Life
--------------------------------------------------------------------------------
Accompanying Information                    Hughes Supply, Inc.; 8.27% Series B
                                            Senior Notes due November 30, 2005;
                                            CUSIP 444482 D* 1

                                            [insert due date and application as
                                            among principal, premium and
                                            interest]
--------------------------------------------------------------------------------
Address for notices related to payments     American United Life Insurance
                                            Company
                                            Attn: Christopher D. Palke,
                                                  Securities Department
                                            Post Office Box 368
                                            Indianapolis, IN 46206-0368
--------------------------------------------------------------------------------
Address for all other communications        American United Life Insurance
and notices                                 Company
                                            Attn: Christopher D. Palke,
                                                  Securities Department
                                            Post Office Box 368
                                            Indianapolis, IN 46206-0368
--------------------------------------------------------------------------------

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                    CONNECTICUT GENERAL LIFE INSURANCE
                                                       COMPANY
--------------------------------------------------------------------------------
Taxpayer Identification Number                        13-3574027
--------------------------------------------------------------------------------
Name in which to register Notes                        CIG & Co.
--------------------------------------------------------------------------------
Series                                                 Series C
--------------------------------------------------------------------------------
Note registration numbers                          R-1 through R-5
--------------------------------------------------------------------------------
Amount                                           R-1 = $3,200,000.00
                                                 R-2 = $5,000,000.00
                                                 R-3 = $3,800,000.00
                                                 R-4 = $3,000,000.00
                                                 R-5 = $4,000,000.00
--------------------------------------------------------------------------------
Payment on account of Notes

      Method                               Immediately available funds, via
                                           federal funds wire transfer

      Account Information                  Chase NYC/CTR
                                           BNF=CIGNA Private Placements
                                           AC=9009001802
                                           ABA#021000021
--------------------------------------------------------------------------------
Accompanying Information                   Hughes Supply, Inc.; 8.42% Series C
                                           Senior Notes due November 30, 2007
                                           CUSIP 444482 D@ 9

                                           [insert due date and application as
                                           among principal, premium and
                                           interest]
--------------------------------------------------------------------------------
 Address for notices related to payments   CIG & Co.
                                           c/o CIGNA Investments, Inc.
                                           Attn: Securities Processing S-309
                                           900 Cottage Grove Road
                                           Hartford, CT 06152-2309

                                           CIG & Co.
                                           c/o CIGNA Investments, Inc.
                                           Attn:  Private Securities -S307
                                           Operations Group
                                           900 Cottage Grove Road
                                           Hartford, CT 06152-2307
                                           Fax:  860-726-7203
                                               with a copy to:
                                               Chase Manhattan Bank
                                               Private Placement Servicing
                                               P.O. Box 1508
                                               Bowling Green Station
                                               New York, NY 10081
                                               Attn:  CIGNA Private Placements
                                               Fax:  212-552-3107/1005
--------------------------------------------------------------------------------
Address for all other communications      CIG & Co., c/o CIGNA Investments, Inc.
and notices                               Attention: Private Securities
                                          Division - S-307
                                          900 Cottage Grove Road
                                          Hartford, CT 06152-2307
                                          Fax:  860-726-7203
--------------------------------------------------------------------------------

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                          LIFE INSURANCE COMPANY
                                                    OF NORTH AMERICA
--------------------------------------------------------------------------------
Taxpayer Identification Number                         13-3574027
--------------------------------------------------------------------------------
Name in which to register Note(s)                       CIG & Co.
--------------------------------------------------------------------------------
Series                                                  Series C
--------------------------------------------------------------------------------
Note registration number                                   R-6
--------------------------------------------------------------------------------
Amount                                               $3,000,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

       Method                             Immediately available funds, via
                                          federal funds wire transfer

       Account Information                Chase NYC/CTR
                                          BNF=CIGNA Private Placements
                                          AC=9009001802
                                          ABA#021000021
--------------------------------------------------------------------------------
Accompanying Information                  Hughes Supply, Inc.; 8.42% Series C
                                          Senior Notes due November 30, 2007;
                                          CUSIP 444482 D@ 9

                                          [insert due date and application as
                                          among principal, premium and interest]
--------------------------------------------------------------------------------
Address for notices related to payments   CIG & Co.
                                          c/o CIGNA Investments, Inc.
                                          Attn: Securities Processing S-309
                                          900 Cottage Grove Road
                                          Hartford, CT 06152-2309

                                          CIG & Co.
                                          c/o CIGNA Investments, Inc.
                                          Attn:  Private Securities -S307
                                          Operations Group
                                          900 Cottage Grove Road
                                          Hartford, CT 06152-2307
                                          Fax:  860-726-7203
                                              with a copy to:
                                              Chase Manhattan Bank
                                              Private Placement Servicing
                                              P.O. Box 1508
                                              Bowling Green Station
                                              New York, NY 10081
                                              Attn:  CIGNA Private Placements
                                              Fax:  212-552-3107/1005
--------------------------------------------------------------------------------
Address for all other communications     CIG & Co., c/o CIGNA Investments, Inc.
and notices                              Attention: Private Securities- S-307
                                         900 Cottage Grove Road
                                         Hartford, CT 06152-2307
                                         Fax:  860-726-7203
--------------------------------------------------------------------------------

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                          JEFFERSON-PILOT LIFE
                                                   INSURANCE COMPANY

--------------------------------------------------------------------------------
Taxpayer Identification Number                         56-0359860
--------------------------------------------------------------------------------
Name in which to register Note(s)         Jefferson-Pilot Life Insurance Company
--------------------------------------------------------------------------------
Series                                                  Series C
--------------------------------------------------------------------------------
Note registration number                                   R-7
--------------------------------------------------------------------------------
Amount                                              $17,000,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

        Method                             Immediately available funds, via
                                           federal funds wire transfer

        Account Information                Jefferson-Pilot Life Insurance
                                           Company
                                           c/o The Bank of New York
                                           ABA#021 000 018  BNF: IOC566
                                           Attn:  P&I Department
--------------------------------------------------------------------------------
Accompanying Information                   Hughes Supply, Inc.; 8.42% Series C
                                           Senior Notes due November 30, 2007;
                                           CUSIP 444482 D@ 9

                                           [insert due date and application as
                                           among principal, premium and
                                           interest]
--------------------------------------------------------------------------------
Address for notices related to payments    Jefferson-Pilot Life Insurance
                                           Company
                                           c/o The Bank of New York
                                           Attention:  P&I Department
                                           P.O. Box 19266
                                           Newark, NJ 07195
--------------------------------------------------------------------------------
Address for all other communications       Jefferson-Pilot Life Insurance
and notices                                Company
                                           P.O. Box 21008
                                           Greensboro, NC 27420
                                           Attn:  Securities Administration -
                                                  3630
                                           Fax:  336-691-3717
                                               For hand delivery:
                                               100 North Greene Street
                                               (ZIP 27401)

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

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                        TEACHERS INSURANCE AND ANNUITY
                                                   ASSOCIATION OF AMERICA

--------------------------------------------------------------------------------
Taxpayer Identification Number                           13-1624203
--------------------------------------------------------------------------------
Name in which to register Note(s)             Teachers Insurance and Annuity
                                                  Association of America
--------------------------------------------------------------------------------
Series                                                   Series C
--------------------------------------------------------------------------------
Note registration number                                    R-8
--------------------------------------------------------------------------------
Amount                                                $17,000,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

        Method                             Immediately available funds, via
                                           federal funds wire transfer

        Account Information                Chase Manhattan Bank
                                           ABA #021-000-021
                                           Account of Teachers Insurance and
                                           Annuity Association of America
                                           Account No. 900-9-000200
                                           For further credit to the TIAA
                                           Account Number G07040
--------------------------------------------------------------------------------
Accompanying Information                   Hughes Supply, Inc.; 8.42% Series C
                                           Senior Notes due November 30, 2007;
                                           CUSIP 444482 D@ 9

                                           [insert due date and application as
                                           among principal, premium and
                                           interest; identify name of bank from
                                           which payment was sent]
--------------------------------------------------------------------------------
Address for notices related to payments    Teachers Insurance and Annuity
                                           Association of America
                                           730 Third Avenue
                                           New York, NY 10017-3206
                                           Attn: Securities Accounting Division
                                           212-916-6004 Phone
                                           212-916-6955 Fax
--------------------------------------------------------------------------------
Address for all other communications       Teachers Insurance and Annuity
and notices                                Association of America
                                           730 Third Avenue
                                           New York, NY 10017-3206
                                           Attn:  Securities Accounting Division
                                           212-916-5695  Greg MacCordy
                                           212-916-6329  Margie Ello-Satin
                                           212-490-9000  (General Number)
                                           212-916-6583  (Team Fax Number)
--------------------------------------------------------------------------------

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                        SUNAMERICA LIFE INSURANCE COMPANY
--------------------------------------------------------------------------------
Taxpayer Identification Number                            52-0502540
--------------------------------------------------------------------------------
Name in which to register Note(s)                         OKGBD & Co.
--------------------------------------------------------------------------------
Series                                                      Series C
--------------------------------------------------------------------------------
Note registration number                                       R-9
--------------------------------------------------------------------------------
Amount                                                  $12,000,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

       Method                             Immediately available funds, via
                                          federal funds wire transfer

       Account Information                 Bankers Trust Company
                                           ABA #021-001-033
                                           Account #99-911-145
                                           For further credit to Account #099530
                                           Ref:  Hughes Supply
--------------------------------------------------------------------------------
Accompanying Information                   Hughes Supply, Inc.; 8.42% Series C
                                           Senior Notes due November 30, 2007;
                                           CUSIP 444482 D@ 9

                                           [insert due date and application as
                                           among principal, premium and
                                           interest]
--------------------------------------------------------------------------------
Address for notices related to payments    SunAmerica Financial
                                           Attn: Investment Accounting
                                           - 36th Floor
                                           1 SunAmerica Center
                                           Los Angeles, CA 90067-6022
                                           310-772-6486 Phone
                                           310-772-6596 Fax
--------------------------------------------------------------------------------
Address for all other communications       SunAmerica Investments
and notices                                c/o AIG Global Investment Corp.
                                           175 Water Street - 25th Floor
                                           New York, NY 10038
                                           Attn: Private Placements/G. Herman
--------------------------------------------------------------------------------

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                                NATIONWIDE LIFE
                                                      INSURANCE COMPANY
--------------------------------------------------------------------------------
Taxpayer Identification Number                            31-4156830
--------------------------------------------------------------------------------
Name in which to register Note(s)             Nationwide Life Insurance Company
--------------------------------------------------------------------------------
Series                                                     Series C
--------------------------------------------------------------------------------
Note registration number                                     R-10
--------------------------------------------------------------------------------
Amount                                                  $7,500,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

       Method                             Immediately available funds, via
                                          federal funds wire transfer

       Account Information                The Bank of New York
                                          ABA #021-000-108
                                          BNF: IOC566
                                          F/A/O Nationwide Life Insurance
                                          Company
                                          Attn:  P & I Department
--------------------------------------------------------------------------------
Accompanying Information                  Hughes Supply, Inc.; 8.42% Series C
                                          Senior Notes due November 30, 2007;
                                          CUSIP 444482 D@ 9

                                          [insert due date and application as
                                          among principal, premium and interest]
--------------------------------------------------------------------------------
Address for notices related to payments   Nationwide Life Insurance Company
                                          c/o The Bank of New York
                                          P.O. Box 19266
                                          Attn:  P & I Department
                                          Newark, NJ 07195
                                          with a copy to:
                                          Nationwide Life Insurance Company
                                          Attn:  Investment Accounting
                                          One Nationwide Plaza (1-32-05)
                                          Columbus, OH 43215-2220
--------------------------------------------------------------------------------
Address for all other communications      Nationwide Life Insurance Company
and notices                               One Nationwide Plaza (1-33-07)
                                          Columbus, OH 43215-2220
                                          Attn: Corporate Fixed-Income
                                          Securities
--------------------------------------------------------------------------------

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                          NATIONWIDE LIFE AND ANNUITY
                                                      INSURANCE COMPANY
--------------------------------------------------------------------------------
Taxpayer Identification Number                            31-1000740
--------------------------------------------------------------------------------
Name in which to register Note(s)               Nationwide Life and Annuity
                                                      Insurance Company
--------------------------------------------------------------------------------
Series                                                     Series C
--------------------------------------------------------------------------------
Note registration number                                     R-11
--------------------------------------------------------------------------------
Amount                                                  $2,000,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

       Method                             Immediately available funds, via
                                          federal funds wire transfer

       Account Information                The Bank of New York
                                          ABA #021-000-018
                                          BNF: IOC566
                                          F/A/O Nationwide Life and Annuity
                                          Insurance Company
                                          Attn: P & I Department
--------------------------------------------------------------------------------
Accompanying Information                  Hughes Supply, Inc.; 8.42% Series C
                                          Senior Notes due November 30, 2007;
                                          CUSIP 444482 D@ 9

                                          [insert due date and application as
                                          among principal, premium and interest]
--------------------------------------------------------------------------------
Address for notices related to payments   Nationwide Life and Annuity Insurance
                                          Company
                                          c/o The Bank of New York
                                          P. O. Box 19266
                                          Attn:  P & I Department
                                          Newark, NJ 07195
                                          with a copy to:
                                          Nationwide Life and Annuity Insurance
                                          Company
                                          Attn:  Investment Accounting
                                          One Nationwide Plaza (1-32-05)
                                          Columbus, OH 43215-2220
--------------------------------------------------------------------------------
Address for all other communications      Nationwide Life and Annuity Insurance
and notices                               Company
                                          One Nationwide Plaza (1-33-07)
                                          Columbus, OH 43215-2220
                                          Attn: Corporate Fixed-Income
                                          Securities
--------------------------------------------------------------------------------

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                        THE CANADA LIFE ASSURANCE COMPANY
--------------------------------------------------------------------------------
Taxpayer Identification Number                             38-0397420
--------------------------------------------------------------------------------
Name in which to register Note(s)                        J. Romeo & Co.
--------------------------------------------------------------------------------
Series                                                       Series C
--------------------------------------------------------------------------------
Note registration number                                        R-12
--------------------------------------------------------------------------------
Amount                                                    $9,500,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)
       Method                             Immediately available funds, via
                                          federal funds wire transfer

       Account Information                Chase Manhattan Bank
                                          ABA 021-000-021
                                          A/C 900-9-000200
                                          Trust Account No. G52708
--------------------------------------------------------------------------------
Accompanying Information                  Hughes Supply, Inc.; 8.42% Series C
                                          Senior Notes due November 30, 2007;
                                          CUSIP 444482 D@ 9

                                          [insert due date and application as
                                          among principal, premium and interest]
--------------------------------------------------------------------------------
Address for notices related to payments   Chase Manhattan Bank
                                          North American Insurance
                                          3 Chase MetroTech Centre, 6th Floor
                                          Brooklyn, NY 11245
                                          Attn: Doll Balbadar
                                             with a copy to:
                                             The Canada Life Assurance Company
                                             330 University Avenue, SP-12
                                             Securities Accounting
                                             Toronto, ON M5G 1R8
--------------------------------------------------------------------------------
Address for all other communications      Canada Life Assurance Company
and notices                               330 University Avenue, SP-11
                                          Toronto, ON M5G 1R8
                                          Attn:  Paul English, US Investments
                                          Division
--------------------------------------------------------------------------------

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                        NEW YORK LIFE INSURANCE COMPANY
--------------------------------------------------------------------------------
Taxpayer Identification Number                            13-5582869
--------------------------------------------------------------------------------
Name in which to register Note(s)              New York Life Insurance Company
--------------------------------------------------------------------------------
Series                                                     Series C
--------------------------------------------------------------------------------
Note registration number                                     R-13
--------------------------------------------------------------------------------
Amount                                                   $2,500,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

       Method                             Immediately available funds, via
                                          federal funds wire transfer

       Account Information                Chase Manhattan Bank
                                          New York, NY 10019
                                          ABA #021-000-021
                                          Credit:  New York Life Insurance
                                          Company
                                          General Account No. 008-9-00687
--------------------------------------------------------------------------------
Accompanying Information                  Hughes Supply, Inc.; 8.42% Series C
                                          Senior Notes due November 30, 2007;
                                          CUSIP 444482 D@ 9

                                          [insert due date and application as
                                          among principal, premium and interest]
--------------------------------------------------------------------------------
Address for notices related to payments   New York Life Insurance Company
                                          51 Madison Avenue
                                          New York, NY 10010-1603
                                          Attn: Treasury Department
                                                Securities Income Section
                                                Room 209
                                                Fax: 212-447-4160
--------------------------------------------------------------------------------
Address for all other communications      New York Life Insurance Company
and notices                               51 Madison Avenue
                                          New York, NY 10010-1603
                                          Attn: 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:
                                                Attn: Office of General Counsel
                                                Investment Section, Room 1107
                                                Fax: 212-576-8340
--------------------------------------------------------------------------------

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                        NEW YORK LIFE INSURANCE AND
                                                   ANNUITY CORPORATION
--------------------------------------------------------------------------------
Taxpayer Identification Number                           13-3044743
--------------------------------------------------------------------------------
Name in which to register Note(s)              New York Life Insurance and
                                                   Annuity Corporation
--------------------------------------------------------------------------------
Series                                                    Series C
--------------------------------------------------------------------------------
Note registration number                                     R-14
--------------------------------------------------------------------------------
Amount                                                  $5,000,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)
       Method                             Immediately available funds, via
                                          federal funds wire transfer

       Account Information                Chase Manhattan Bank
                                          New York, NY 10019
                                          ABA #021-000-021
                                          Credit:  New York Life Insurance
                                          and Annuity Corporation
                                          General Account No. 323-8-47382
--------------------------------------------------------------------------------
Accompanying Information                  Hughes Supply, Inc.; 8.42% Series C
                                          Senior Notes due November 30, 2007;
                                          CUSIP 444482 D@ 9

                                          [insert due date and application as
                                          among principal, premium and interest]
--------------------------------------------------------------------------------
Address for notices related to payments   New York Life Insurance and
                                          Annuity Corporation
                                          51 Madison Avenue
                                          New York, NY 10010-1603
                                          Attn: Treasury Department
                                                Securities Income Section
                                                Room 209
                                                Fax: 212-447-4160
--------------------------------------------------------------------------------
Address for all other communications      New York Life Insurance Company
and notices                               51 Madison Avenue
                                          New York, NY 10010-1603
                                          Attn: 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:
                                                Attn: Office of General Counsel
                                                Investment Section, Room 1107
                                                Fax: 212-576-8340
--------------------------------------------------------------------------------

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                 THE OHIO NATIONAL LIFE INSURANCE COMPANY
--------------------------------------------------------------------------------
Taxpayer Identification Number                          31-0397080
--------------------------------------------------------------------------------
Name in which to register Note(s)       The Ohio National Life Insurance Company
--------------------------------------------------------------------------------
Series                                                   Series C
--------------------------------------------------------------------------------
Note registration number                                   R-15
--------------------------------------------------------------------------------
Amount                                                $4,500,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

       Method                             Immediately available funds, via
                                          federal funds wire transfer

       Account Information                Firstar Bank, N.A.
                                          ABA #042-000013
                                          5th & Walnut Streets
                                          Cincinnati, OH 45202
                                          For credit to The Ohio National Life
                                          Insurance
                                          Company:  Account No. 910-275-7
--------------------------------------------------------------------------------
Accompanying Information                  Hughes Supply, Inc.; 8.42% Series C
                                          Senior Notes due November 3, 2007;
                                          CUSIP 444482 D@ 9

                                          [insert due date and application as
                                          among principal, premium and interest]
--------------------------------------------------------------------------------
Address for notices related to payments   The Ohio National Life Insurance
                                          Company
                                          P.O. Box 237
                                          Cincinnati, OH 45201
                                          Attn:  Investment Department
--------------------------------------------------------------------------------
Address for all other communications      The Ohio National Life Insurance
and notices                               Company
                                          One Financial Way
                                          Cincinnati, OH 45242
                                          Attn:  Investment Department
                                          Fax:   513-794-4506
--------------------------------------------------------------------------------

<PAGE>


--------------------------------------------------------------------------------
         PURCHASER NAME                       MODERN WOODMEN OF AMERICA
--------------------------------------------------------------------------------
Taxpayer Identification Number                         36-1493430
--------------------------------------------------------------------------------
Name in which to register Note(s)             Modern Woodmen of America
--------------------------------------------------------------------------------
Series                                                  Series C
--------------------------------------------------------------------------------
Note registration number                                  R-16
--------------------------------------------------------------------------------
Amount                                                $4,000,000.00
--------------------------------------------------------------------------------
Payment on account of Note(s)

       Method                             Immediately available funds, via
                                          federal funds wire transfer

       Account Information                The Northern Trust Company
                                          50 South LaSalle Street
                                          Chicago, IL 60675
                                          ABA #071-000-152
                                          Account Name: Modern Woodmen
                                                        of America
                                                        Account No. 84352
--------------------------------------------------------------------------------
Accompanying Information                  Hughes Supply, Inc.; 8.42% Series C
                                          Senior Notes due November 30, 2007;
                                          CUSIP 444482 D@ 9

                                          [insert due date and application as
                                          among principal, premium and interest]
--------------------------------------------------------------------------------
Address for notices related to payments   Modern Woodmen of America
                                          Attn: Investment Accounting Department
                                          1701 First Avenue
                                          Rock Island, IL 61201
--------------------------------------------------------------------------------
Address for all other communications      Modern Woodmen of America
and notices                               Attn:  Investment Department
                                          1701 First Avenue
                                          Rock Island, IL 61201
--------------------------------------------------------------------------------

<PAGE>


                      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:

         "Acquired Debt" shall mean, with respect to any specified  Person:  (i)
Debt of any other  Person  existing at the time such other Person is merged with
or into, or became a Subsidiary of, such specified  Person,  whether or not such
Debt is incurred in connection with, or in  contemplation  of, such other Person
merging with or into, or becoming a Subsidiary  of, such specified  Person;  and
(ii) Debt secured by a Lien  encumbering  any asset  acquired by such  specified
Person.

         "Adjusted  Interest  Coverage  Ratio"  shall mean,  with respect to the
Company  and its  Subsidiaries  on a  Consolidated  basis,  the  ratio  of:  (i)
Consolidated  EBITDAR  for  the  Four-Quarter  Period  ending  on  the  date  of
computation  thereof to (ii) the sum of: (a)  Consolidated  Interest Expense for
such  Four-Quarter   Period  plus  (b)  Consolidated  Rental  Expense  for  such
Four-Quarter Period.

         "Affiliate" means, at any time, and with respect to any Person, (a) any
other  Person  that at such time  directly  or  indirectly  through  one or more
intermediaries  Controls,  or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially  owning or holding,  directly
or  indirectly,  10% or more of any class of voting or equity  interests  of the
Company  or any  Subsidiary  or any  corporation  of which the  Company  and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or  more  of any  class  of  voting  or  equity  interests.  As used in this
definition, "Control" means the possession, directly or indirectly, of the power
to direct or cause the  direction  of the  management  and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.

         "Bank  Credit  Agreement"  shall mean (i) that  certain  Line of Credit
Agreement  dated as of January  26, 1999 by and among the  Company,  the Lenders
named therein and SunTrust  Bank,  Central  Florida,  National  Association,  as
Administrative  Agent,  as  amended  and as the  same may be  further  modified,
amended,  renewed, extended or supplemented from time to time, (ii) that certain
Revolving  Credit  Agreement  dated as of  January  26,  1999 by and  among  the
Company, the Lenders named therein and SunTrust Bank, Central Florida,  national
Association,  as Administrative  Agent, and as the same may be further modified,
amended,  renewed,  extended or supplemented  from time to time, (iii) any other
committed  revolving  and/or  term credit  facility,  note  purchase  agreement,
indenture  or other  instrument  or line of credit  having a maturity of greater
than one year and evidencing  Funded Debt equal to or in excess of  $25,000,000,
and  (iv)  all  replacements,   extensions,   substitutions,   refinancings  and
refundings thereof.

         "Beneficial Owner" shall have the meaning assigned to such term in Rule
13d-3 and Rule 13d-5 under the  Exchange  Act,  except that in  calculating  the
beneficial ownership of any particular "person" (as such term is used in Section
13(d)(3) of the

<PAGE>


Exchange Act), such "person" shall be deemed to have beneficial ownership of all
securities  that such  "person" has the right to acquire,  whether such right is
currently exercisable or is exercisable only upon the occurrence of a subsequent
condition.

         "Board of  Directors"  means the board of  directors of the Company (or
such other group of individuals designated to perform a similar function).

         "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.

         "Change of Control" means the occurrence of any of the following:

               (i) the sale,  transfer,  conveyance or other disposition  (other
          than by way of merger or consolidation), in one or a series of related
          transactions, of all or substantially all of the assets of the Company
          and its Subsidiaries,  taken as a whole, to any "person" (as such term
          is used in Section 13(d)(3) of the Exchange Act);

               (ii)  the  adoption  of a plan  relating  to the  liquidation  or
          dissolution of the Company;

               (iii) the  consummation  of any transaction  (including,  without
          limitation,  any merger or consolidation)  the result of which is that
          any "person" (as defined above) becomes the Beneficial Owner, directly
          or  indirectly,  of more than 30% of the Voting  Stock of the Company,
          measured by voting power rather than number of shares;

               (iv) the  first day on which a  majority  of the  members  of the
          Board of Directors of the Company are not Continuing Directors; or

               (v) the Company  consolidates  with, or merges with or into,  any
          Person, or any Person  consolidates  with, or merges with or into, the
          Company,  in any  such  event  pursuant  to a  transaction  in which a
          majority  of the  Voting  Stock of the  Company is  converted  into or
          exchanged for cash, securities or other property.


<PAGE>


         "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, or any
successor  thereto  that shall have  become  such in the  manner  prescribed  in
Section 10.7.

         "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  Consolidated  Net Income for such period plus, to the extent deducted in
determining Consolidated Net Income (i) provisions for taxes based on income for
such period,  (ii)  Consolidated  Interest  Expense for such  period,  and (iii)
Consolidated Rental Expense for such period.

         "Consolidated  EBITDAR" shall mean, for any period,  an amount equal to
the sum of  Consolidated  EBITR for such period plus, to the extent  deducted in
determining  Consolidated Net Income,  depreciation and amortization  expense of
the Company and its  Subsidiaries  on a  Consolidated  basis (as  determined  in
accordance with GAAP) for such period.

         "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


<PAGE>


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.

         "Continuing  Director"  means,  as of any  date of  determination,  any
member of the Board of Directors of the Company who:

               (i) was a member of such Board of  Directors  on the date hereof;
          or

               (ii) was  nominated  for  election  or  elected  to such Board of
          Directors with the approval of a majority of the Continuing  Directors
          who were  members  of such  Board at the  time of such  nomination  or
          election.

         "Control Event" means the execution of any written agreement that, when
fully performed by the parties thereto, would result in a Change of Control.

         "Current  Debt"  shall mean all Debt with an  original  maturity of one
year or less.  For the  avoidance of doubt,  Debt  incurred  under a Bank 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


<PAGE>


               (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.

         "Four-Quarter Period" shall mean the rolling, previous consecutive four
fiscal-quarter  period  ending  on the  date  of any  computation  of any  ratio
contained herein.

         "Funded  Debt"  shall mean (i) all Debt with an  original  maturity  of
greater than one year (including  Debt incurred under a 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

<PAGE>


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).


<PAGE>


         "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).

         "Net Proceeds"  shall mean the aggregate cash proceeds  received by the
Company or any of its  Subsidiaries  in respect of any  Disposition  (including,
without limitation,  any cash received upon the sale or other disposition of any
non-cash  consideration  received in any  Disposition),  net of the direct costs
relating to such Disposition,  including, without limitation,  legal, accounting
and investment banking fees, and sales commissions,  and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof, in each
case after taking into account any available  tax credits or deductions  and any
tax-sharing arrangements.


<PAGE>


         "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.


<PAGE>


         "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.

         "Series A Notes,"  "Series B Notes" and "Series C Notes" shall have the
meaning set forth in Section 1 and any reference to a particular  "Series" shall
be a reference to either the Series A Notes, Series B Notes or Series C Notes.

         "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 or joint venture 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.

         "Voting  Stock" of any  Person as of any date  shall  mean the  Capital
Stock of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person.

         "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.


<PAGE>


                     SCHEDULE 4.9 TO NOTE PURCHASE AGREEMENT

                         Changes in Corporate Structure


         (i) Closed Acquisitions:

             -   bestroute.com,  LLC,  a New York  limited  liability  company -
                 closed September 27, 2000

             -   Kingston Pipe  Industries,  Inc., a Rhode Island  corporation -
                 closed  August  30,  2000  Does  not  include  asset   purchase
                 acquisitions   where  the  acquiring   entity  is  an  existing
                 subsidiary of the Company

         (ii) Pending Acquisitions:

              None


<PAGE>


                    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:

Atlantic Pump & Equipment Company of Miami, Inc., a Florida corp.
Atlantic Pump & Equipment Company of West Palm Beach, Inc., a Florida corp.
Bestroute.com, LLC, a New York limited liability company (99% owned subsidiary)
Carolina Pump & Supply Corp., a Rhode Island corp.
Cayesteel, Inc., a Georgia corp. (100% owned by WCC Merger Corporation)
Chad Supply, Inc., a Florida corp.
Coastal Wholesale, Inc., a Florida corp.
Dominion Pipe Fabricators, Incorporated, a Virginia corp.
Dominion Pipe & Supply Co., a Virginia corp.
Douglas Leonhardt & Associates, a North Carolina corp.
Elasco Agency Sales, Inc., an Illinois corp.
Elec-Tel Supply Company, a Georgia corp.
Electric Laboratories and Sales Corporation, a Delaware corp.
FES Merger Corp., Inc., a Florida corp.
Gayle Supply Company, an Alabama corp.
Gilleland Concrete Products, Inc., a Georgia corp.
HSI Acquisition Corporation, an Ohio corp.
HSI Bestroute Investment, Inc., a Florida corp.
HSI Fusion Services, Inc., a Florida corp.
Hughes Supply Management Services, Inc., a Delaware corporation
Hughes Water & Sewer Company, a West Virginia corp.
H Venture Corporation, a Florida corp.
Juno Industries, Inc., a Florida corp.
Kamen Supply Company, Inc., a Kansas corp.
Kingston Pipe Industries, Inc., a Rhode Island corp.
Merex Corporation, a Texas corp.
Metals Incorporated, an Oklahoma corp.
Metals, Inc. - Gulf Coast Division, an Oklahoma corp.
Mills & Lupton Supply Company, a Tennessee corp.
Moore Electric Supply, Inc., a North Carolina corp.
Mountain Country Supply, Inc., an Arizona corp.
Olander & Brophy, Incorporated, a Pennsylvania corp.
One Stop Supply, Inc., a Tennessee corp.
Paine Supply of Jackson, Inc., a Mississippi corp.

[Listing of Material Subsidiaries Continued on Next Page]


<PAGE>


[Continuation of Listing of Material Subsidiaries]

Palm Pool Products, Inc., a Michigan corp.
Panhandle Pipe & Supply Co., Inc., a West Virginia corp.
Port City Electrical Supply, Inc., a Georgia corp.
R & G Plumbing Supply, Inc., an Alabama corp.
Reaction Supply Corporation, a California corp.
Shrader Holding Company, Inc., an Arkansas corp.
Southwest Stainless, L. P., a Delaware limited partnership
Stainless Tubular Products, Inc., an Oklahoma corp.
USCO Incorporated, a North Carolina corp.
Union Merger Corporation, a North Carolina corp.
U.S. Fusion Services, Inc., a Louisiana corp.
Virginia Water & Waste Supply Company, Inc., a Virginia corp.
WCC Merger Corporation, a Georgia corp.
Wholesale Electric Supply Corporation, a New York corp.
Z&L Acquisition Corp., a Delaware corp.


<PAGE>


                     SCHEDULE 5.3 TO NOTE PURCHASE AGREEMENT

                              Disclosure Materials


                                 No Exceptions.


<PAGE>


                     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


                                 Legal Entities

SUBSIDIARIES:
(updated as of April 23, 2001)

Atlantic Pump & Equipment Company of Miami, Inc., a Florida corp.
Atlantic Pump & Equipment Company of West Palm Beach, Inc., a Florida corp.
Bestroute.com, LLC, a New York limited liability company (99%) owned)
Carolina Pump & Supply Corp., a Rhode Island corp.
Cayesteel, Inc., a Georgia corp. (100% owned by WCC Merger Corporation)
CF Fluid Controls, Inc., a Texas corp.
Chad Supply, Inc., a Florida corp.
Coastal Wholesale, Inc., a Florida corp.
Dominion Pipe Fabricators, Incorporated, a Virginia corp.
Dominion Pipe & Supply Co., a Virginia corp.
Douglas Leonhardt & Associates, a North Carolina corp.
Elasco Agency Sales, Inc., an Illinois corp.
Elec-Tel Supply Company, a Georgia corp.
Electric Laboratories and Sales Corporation, a Delaware corp.
FES Merger Corp., Inc., a Florida corp.
Gayle Supply Company, an Alabama corp.
Gilleland Concrete Products, Inc., a Georgia corp.
HHH, Inc., a Delaware corp.
HSI Acquisition Corporation, an Ohio corp.
HSI Bestroute Investment, Inc., a Florida corp.
HSI Corp., a Delaware corp.
HSI Fusion Services, Inc., a Florida corp.
Hughes Supply Foundation, Inc., a Florida not-for-profit corporation
Hughes Supply Management Services, Inc., a Delaware corporation
Hughes Water & Sewer Company, a West Virginia corp.
H Venture Corporation, a Florida corp.
Juno Industries, Inc., a Florida corp.
Kamen Supply Company, Inc., a Kansas corp.

[Listing of Subsidiaries Continued on Next Page]


<PAGE>


[Listing of Subsidiaries Continued]

Kingston Pipe Industries, Inc., a Rhode Island corp.
L&T of Delaware, Inc., a Delaware corp.
Merex Corporation, a Texas corp.
Merex de Mexico, S.A. De C.V., a Mexican corp. (75% owned)
Merex Diesel Power, S.A. De C.V., a Mexican corp. (75% owned)
Metals Incorporated, an Oklahoma corp.
Metals, Inc. - Gulf Coast Division, an Oklahoma corp.
Mills & Lupton Supply Company, a Tennessee corp.
Moore Electric Supply, Inc., a North Carolina corp.
Mountain Country Supply, Inc., an Arizona corp.
Olander & Brophy, Incorporated, a Pennsylvania corp.
One Stop Supply, Inc., a Tennessee corp.
Paine Supply of Jackson, Inc., a Mississippi corp.
Palm Pool Products, Inc., a Michigan corp.
Panhandle Pipe & Supply Co., Inc., a West Virginia corp.
Port City Electrical Supply, Inc., a Georgia corp.
R & G Plumbing Supply, Inc., an Alabama corp.
Reaction Supply Corporation, a California corp.
Shrader Holding Company, Inc., an Arkansas corp.
Southwest Stainless, L. P., a Delaware limited partnership
Stainless Tubular Products, Inc., an Oklahoma corp.
USCO Incorporated, a North Carolina corp.
Union Merger Corporation, a North Carolina corp.
U.S. Fusion Services, Inc., a Louisiana corp.
Virginia Water & Waste Supply Company, Inc., a Virginia corp.
WCC Merger Corporation, a Georgia corp.
Wholesale Electric Supply Corporation, a New York corp.
Z&L Acquisition Corp., a Delaware corp.


         Except as noted above, all Subsidiaries are Wholly-Owned Subsidiaries

         (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.


<PAGE>


     (iii)  Directors and Senior Officers of the Company:

            Directors:

              David H. Hughes
              Vincent S. Hughes
              A. Stewart Hall, Jr.
              John D. Baker II
              Robert N. Blackford
              H. Corbin Day
              William P. Kennedy

            Officers:

              David H. Hughes, Chairman of the Board and Chief Executive Officer
              A. Stewart Hall, Jr., President
              Vincent S. Hughes, Vice President
              Sidney J. Strickland, Vice President
              Gradie Winstead, Group President
              Jim Holland, Group President
              Skip Hughes, Group President
              Mike Stanwood, Group President
              Bob Machaby, Group President
              Tom Ward, Vice President - Chief Technology Officer
              Jack Clark, Vice President - Corporate Credit Manager
              Jim Plyler, Vice President
              Kenny Stephens, Vice President
              J. Stephen Zepf, Treasurer and Chief Financial Officer
              Benjamin P. Butterfield, Secretary
              Jay Clark, Assistant Secretary and Treasurer


<PAGE>


                     SCHEDULE 5.5 TO NOTE PURCHASE AGREEMENT

                              Financial Statements


         (i) The Company's  Annual Reports to Shareholders  for the Fiscal Years
1996, 1997, 1998 and 1999.

         (ii) The  Company's  Annual  Reports on Form 10-K for the fiscal  years
ended January 30, 1998 and January 29, 1999.

         (iii)  The  Company's  Quarterly  Report  on Form  10-Q for the  fiscal
quarter ending July 31, 2000.


<PAGE>


                     SCHEDULE 5.8 TO NOTE PURCHASE AGREEMENT

                               Certain Litigation


                                      None.


<PAGE>


                    SCHEDULE 5.11 TO NOTE PURCHASE AGREEMENT

                                  Patents, Etc.


                                 No Exceptions.


<PAGE>


                    SCHEDULE 5.14 TO NOTE PURCHASE AGREEMENT

                                 Use of Proceeds


         The proceeds received by the Company shall be used for the repayment of
existing  indebtedness of the Company and its Subsidiaries and general corporate
purposes.


<PAGE>


                    SCHEDULE 5.15 TO NOTE PURCHASE AGREEMENT

                        Existing Debt; Unpermitted Liens

         (i)      Existing Debt:
<TABLE>
<CAPTION>
                                                                  Maximum             Current Principal
                                                                 Principal        Amount Outstanding as of
                                                                   Amount              November 30, 2000
<S>                                                             <C>                       <C>

7.96% Senior Notes due May 30, 2011
        Metropolitan Life Insurance Company                     $40,000,000               $40,000,000
        CM Life Insurance Company                                $1,000,000                $1,000,000
        Massachusetts Mutual Life Insurance Company             $23,000,000               $23,000,000
        Massachusetts Mutual Life Insurance Company              $6,000,000                $6,000,000
        Massachusetts Mutual Life Insurance Company              $3,000,000                $3,000,000
        American General Life and Accident Insurance             $3,000,000                $3,000,000
        Company
        American General Life and Accident Insurance             $7,000,000                $7,000,000
        Company
        Independent Life and Accident Insurance Company          $3,000,000                $3,000,000
        The Variable Annuity Life Insurance Company             $12,000,000               $12,000,000

7.19% Senior Notes Due May 30, 2012
        Nationwide Mutual Insurance Co. SAOH                     $1,500,000                $1,500,000
        Nationwide Mutual Insurance Co.                          $8,500,000                $8,500,000
        Anchor National Life Insurance Company                   $5,000,000                $5,000,000
        SunAmerican Life Insurance Company                      $10,000,000               $10,000,000
        Hartford Life Insurance Company                          $7,000,000                $7,000,000
        Hartford Life Insurance Company                          $8,000,000                $8,000,000

7.19% Senior Notes Due May 30, 2012
        Allstate Life Insurance Company                         $20,000,000               $20,000,000
        The Mutual Life Insurance Company of NY                 $20,000,000               $20,000,000

6.74% Senior Notes Due May 1, 2013
        New York Life Insurance Company                         $22,500,000               $22,500,000
        New York Life Insurance and Annuity Corporation          $7,500,000                $7,500,000
        Allstate Life Insurance Company                         $10,000,000               $10,000,000
        Jefferson-Pilot Life Insurance Company                  $10,000,000               $10,000,000

Bank Revolving Credit Agreement
        First Union                                             $45,833,333               $44,166,667
        Bank of America                                         $50,833,333               $48,984,849
        SouthTrust bank                                         $30,000,000               $28,909,091
        SunTrust Bank                                           $58,750,000               $56,613,636
        PNC Bank                                                $18,750,000               $18,068,182

</TABLE>


<PAGE>


<TABLE>
<CAPTION>
<S>                                                             <C>                       <C>
        ABN AMRO Bank                                           $22,916,667               $22,083,333
        The Fifth Third Bank                                    $13,750,000               $13,250,000
        Hibernia National Bank                                  $11,250,000               $10,840,909
        Wachovia Bank                                           $22,916,667               $22,083,333

Bank Line of Credit Agreement
        First Union                                             $12,500,000                     $0.00
        Bank of America                                         $12,500,000                     $0.00
        Southtrust Bank                                         $10,000,000                     $0.00
        SunTrust Bank                                           $13,750,000                     $0.00
        PNC Bank                                                 $6,250,000                     $0.00
        ABN AMRO Bank                                            $6,250,000                     $0.00
        The Fifth Third Bank                                     $3,750,000                     $0.00
        Wachovia Bank                                           $10,000,000                     $0.00
        Commercial Paper                                        $75,000,000               $73,835,964

SunTrust Swing Line                                             $10,000,000                $2,674,248
SunTrust Bank Guidance Line                                     $15,000,000                     $0.00

Bank of America Short Term Credit Agreement                     $10,000,000                     $0.00

</TABLE>


The Company has a $40,000,000  interest rate hedging agreement (the "Agreement")
between First Union National Bank and Hughes Supply,  Inc.  effective August 27,
1997.  The Agreement  will mature on May 30, 2012,  however First Union National
Bank has the option to terminate the Agreement at six month intervals.

The Company entered into an eighteen month, $1.00 purchase option, capital lease
for a Kronos time  management  system on August 30,  1999.  Monthly  payments of
$58,232 per month began September 1, 1999 with the final payment due on February
1, 2001. Remaining payments due as of November 30, 2000 totaled $174,696.


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

         (ii)     Unpermitted Liens.

                  None

         See also "Schedule 10.5 to Note Purchase Agreement - Liens."


<PAGE>


                    SCHEDULE 10.5 TO NOTE PURCHASE AGREEMENT

                                      Liens

The Company entered into an eighteen month, $1.00 purchase option, capital lease
for a Kronos time  management  system on August 30,  1999.  Monthly  payments of
$58,232 per month began September 1, 1999 with the final payment due on February
1, 2001. Remaining payments due as of October 31, 2000 totaled $232,928.


<PAGE>


                      EXHIBIT 1 TO NOTE PURCHASE AGREEMENT

                               Form of Senior Note

                               HUGHES SUPPLY, INC.

           ____% SENIOR NOTE SERIES [A] [B] [C] DUE NOVEMBER 30, 200_

[Series A]
[Series B]
[Series C]
No. [R-_____]
$[_______]                                                     December 21, 2000

         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 November 30, 200[3] [5] [7],  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  [__%]  per  annum  from  the  date  hereof,  payable
semiannually,  on the 30th day of May and November in each year, commencing with
the May 30 next  succeeding  the date hereof,  until the principal  hereof shall
have  become  due and  payable,  and (b) to the extent  permitted  by law on any
overdue  payment  (including any overdue  prepayment) of principal,  any overdue
payment of interest and any overdue payment of any Make-Whole Amount (as defined
in the Note Purchase  Agreements  referred to below),  payable  semiannually  as
aforesaid (or, at the option of the registered holder hereof,  on demand),  at a
rate per annum from time to time equal to the  greater of (i) [____%] or (ii) 2%
over the rate of interest  publicly  announced by The Chase  Manhattan  Bank (or
successor  entity)  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 Series  [A][B][C]  Senior Notes (herein  called
the "Notes") issued pursuant to separate Note Purchase  Agreements,  dated as of
December  21,  2000  (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.


<PAGE>


         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


<PAGE>


                    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, in the case of the Company,  execute and deliver the Note Purchase
Agreement  and to  execute,  deliver and issue the Notes and, in the case of the
Subsidiaries,  the Subsidiary Guarantee Agreement and the Contribution Agreement
(the Note Purchase Agreement,  the Notes, the Subsidiary Guarantee Agreement and
the  Contribution   Agreement   collectively   referred  to  as  the  "Operative
Documents"),  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 by the Company and the Subsidiaries
of all Operative Documents and, if governed by the laws of the State of Florida,
all such documents would be legal, valid, binding and enforceable.

         4.  Execution and delivery of all  Operative  Documents and issuance of
Notes do not conflict with charter  documents,  laws or other  agreements of the
Company and its Subsidiaries.

         5. All consents required to issue and sell the Notes and to execute and
deliver all Operative Documents having been obtained.

         6. No litigation questioning validity of Operative Documents.

         7. No litigation  against the Company or its  Subsidiaries  or in which
the Company or any  Subsidiary is a party that could,  if adversely  determined,
reasonably be expected to have a Material Adverse Effect.

         8. 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.

         9. No violation of Regulations T, U or X of the Federal Reserve Board.

         10. Company not an "investment  company",  or a company "controlled" by
an "investment company", under the Investment Company Act of 1940, as amended.


<PAGE>


         11. 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 operative documents.

         The opinion shall be subject to standard and customary qualification of
counsel with respect to transactions of this nature.


<PAGE>


                    EXHIBIT 4.4(b) TO NOTE PURCHASE AGREEMENT

      Matters To Be Covered by Opinion of Special Counsel to the Purchasers


1.   Existence and good  standing of the Company and corporate  authority of the
     Company to execute and deliver the Note Purchase Agreement and to issue the
     Notes.

2.   Existence and good standing of the  Guarantors  and corporate  authority of
     the  Guarantors to execute and deliver the Subsidiary  Guarantee  Agreement
     and the Contribution Agreement (the Note Purchase Agreement, the Notes, the
     Subsidiary Guarantee Agreement and the Contribution  Agreement collectively
     referred to as the "Operative Documents").

3.   The Operative Documents are in commercially acceptable legal form.

4.   Due authorization and execution of all Operative Documents.

5.   The  Operative   Documents   constitute   the  legal,   valid  and  binding
     obligations,  enforceable  against  the  Company  and  the  Guarantors,  as
     applicable, in accordance with their respective terms.

6.   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.


<PAGE>


                   EXHIBIT 4.11(a) TO NOTE PURCHASE AGREEMENT

                                Form of Guarantee


                         SUBSIDIARY GUARANTEE AGREEMENT


         This  SUBSIDIARY  GUARANTEE  AGREEMENT,  dated as of December  21, 2000
(this  "Guarantee"),  made by the undersigned  signatories  hereto as Guarantors
(each  of the  undersigned  individually  a  "Guarantor"  and  collectively  the
"Guarantors"),  in favor of PACIFIC  LIFE  INSURANCE  COMPANY,  PACIFIC LIFE AND
ANNUITY COMPANY, GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY, GE LIFE AND ANNUITY
ASSURANCE COMPANY,  GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK, ALLSTATE LIFE
INSURANCE COMPANY,  AMERICAN UNITED LIFE INSURANCE COMPANY,  PIONEER MUTUAL LIFE
INSURANCE COMPANY,  CONNECTICUT  GENERAL LIFE INSURANCE COMPANY,  LIFE INSURANCE
COMPANY OF NORTH  AMERICA,  JEFFERSON-PILOT  LIFE  INSURANCE  COMPANY,  TEACHERS
INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, SUNAMERICA LIFE INSURANCE COMPANY,
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY,  NEW YORK LIFE INSURANCE COMPANY,
NEW YORK LIFE  INSURANCE  AND ANNUITY  CORPORATION,  THE CANADA  LIFE  ASSURANCE
COMPANY, THE OHIO NATIONAL LIFE INSURANCE COMPANY and MODERN WOODMEN OF AMERICA,
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 December 21, 2000 (together the "Agreements" and
separately  each an  "Agreement"),  pursuant  to which  Hughes has issued to the
Guaranteed  Parties its 8.27% Series A Senior  Notes due November 30, 2003,  its
8.27% Series B Senior Notes due November 30, 2005, and its 8.42% Series C Senior
Notes due November 30, 2007;

         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

<PAGE>


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  withholding  or other tax,  assessment or
charge of any kind or nature imposed by an governmental agency or authority, but
excluding taxes imposed on overall net income of any Guaranteed Party ("Taxes"),
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.


<PAGE>


         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
          Agreement or the Notes or any illegality or impossibility of
          performance  of the  Agreements  or the  Notes 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;


<PAGE>


               (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.


<PAGE>


         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


<PAGE>


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.


<PAGE>


         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.


<PAGE>

(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

<PAGE>


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.

                                        THE GUARANTORS

                                        ATLANTIC PUMP & EQUIPMENT SUPPLY COMPANY
                                          OF MIAMI, INC.
                                        ATLANTIC PUMP & EQUIPMENT SUPPLY COMPANY
                                          OF WEST PALM BEACH, INC.
                                        BESTROUTE.COM, LLC (99% OWNED)
                                        CAROLINA PUMP & SUPPLY CORP.
                                        CAYESTEEL, INC.
                                        CHAD SUPPLY, INC.
                                        COASTAL WHOLESALE, INC.
                                        DOMINION PIPE & SUPPLY CO.
                                        DOMINION PIPE FABRICATORS, INCORPORATED
                                        DOUGLAS LEONHARDT & Associates, Inc.

                                        [Continuation of Guarantors on next
                                        page]

<PAGE>


                                        [Continuation of Listing of Guarantors]

                                        ELASCO AGENCY SALES, INC.
                                        ELEC-TEL SUPPLY COMPANY
                                        ELECTRIC LABORATORIES AND SALES
                                          CORPORATION
                                        FES MERGER CORP., INC.
                                        GAYLE SUPPLY COMPANY, INC.
                                        GILLELAND CONCRETE PRODUCTS, INC.
                                        HSI ACQUISITION CORPORATION
                                        HSI BESTROUTE INVESTMENT, INC.
                                        HSI FUSION SERVICES, INC.
                                        HUGHES SUPPLY MANAGEMENT SERVICES
                                        HUGHES WATER & SEWER COMPANY
                                        H VENTURE CORP.
                                        JUNO INDUSTRIES, INC.
                                        KAMEN SUPPLY COMPANY, INC.
                                        KINGSTON PIPE INDUSTRIES, INC.
                                        MEREX CORPORATION
                                        METALS INCORPORATED
                                        METALS, INC. - GULF COAST DIVISION
                                        MILLS & LUPTON SUPPLY COMPANY
                                        MOORE ELECTRIC SUPPLY, INC.
                                        MOUNTAIN COUNTRY SUPPLY, INC.
                                        OLANDER & BROPHY, INCORPORATED
                                        ONE STOP SUPPLY, INC.
                                        PAINE SUPPLY OF JACKSON, INC.
                                        PALM POOL PRODUCTS, INC.
                                        PANHANDLE PIPE & SUPPLY CO., INC.
                                        PORT CITY ELECTRICAL SUPPLY, INC.
                                        R&G PLUMBING SUPPLY, INC.
                                        REACTION SUPPLY CORPORATION
                                        SHRADER HOLDING COMPANY, INC.
                                        STAINLESS TUBULAR PRODUCTS, INC.
                                        USCO INCORPORATED
                                        UNION MERGER CORPORATION
                                        U.S. FUSION SERVICES, INC.
                                        VIRGINIA WATER & WASTE SUPPLY
                                          COMPANY, INC.

                 [Listing of Guarantors Continued on Next Page]


<PAGE>


                                     [Continuation of Listing of Guarantors]

                                         WCC MERGER CORPORATION
                                         WHOLESALE ELECTRIC SUPPLY CORPORATION

                                         By: _________________________
                                         Title: ______________________


                                         SOUTHWEST STAINLESS, L.P.

                                         By:  Z&L Acquisition Corp.,
                                                 as General Partner

                                              By: _________________________
                                                  Title: ______________________

                                         Z&L ACQUISITION CORP., IN ITS
                                            INDIVIDUAL CAPACITY

                                         By: _________________________
                                         Title: ______________________

                                         Address for Notices for all Guarantors:
                                         [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


<PAGE>


                   EXHIBIT 4.11(b) TO NOTE PURCHASE AGREEMENT

                         Form of Contribution Agreement


                             CONTRIBUTION AGREEMENT

         THIS  CONTRIBUTION  AGREEMENT,  dated as of  December  21,  2000  (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 PACIFIC LIFE  INSURANCE
COMPANY,  PACIFIC LIFE AND ANNUITY COMPANY,  GENERAL ELECTRIC CAPITAL  ASSURANCE
COMPANY,  GE LIFE AND  ANNUITY  ASSURANCE  COMPANY,  GE CAPITAL  LIFE  ASSURANCE
COMPANY OF NEW YORK,  ALLSTATE  LIFE  INSURANCE  COMPANY,  AMERICAN  UNITED LIFE
INSURANCE COMPANY,  PIONEER MUTUAL LIFE INSURANCE COMPANY,  CONNECTICUT  GENERAL
LIFE INSURANCE COMPANY, LIFE INSURANCE COMPANY OF NORTH AMERICA, JEFFERSON-PILOT
LIFE INSURANCE COMPANY,  TEACHERS INSURANCE AND ANNUITY  ASSOCIATION OF AMERICA,
SUNAMERICA LIFE INSURANCE COMPANY, NATIONWIDE LIFE INSURANCE COMPANY, NATIONWIDE
LIFE AND ANNUITY INSURANCE COMPANY,  NEW YORK LIFE INSURANCE  COMPANY,  NEW YORK
LIFE INSURANCE AND ANNUITY  CORPORATION,  THE CANADA LIFE ASSURANCE COMPANY, THE
OHIO  NATIONAL  LIFE  INSURANCE  COMPANY  and  MODERN  WOODMEN OF  AMERICA,  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 December 21, 2000 (together the  "Agreements" and separately each an
"Agreement"),  pursuant to which Hughes has issued to the Guaranteed Parties its
8.27% Series A Senior  Notes due  November  30, 2003,  its 8.27% Series B Senior
Notes due November 30, 2005 and its 8.42% Series C Senior Notes due November 30,
2007;


<PAGE>


         WHEREAS,  the  obligation of  Guaranteed  Parties to purchase the Notes
under the Agreements is conditioned  on, among other things,  the provision of a
Contribution Agreement in the form hereof;

         WHEREAS,  the  Guarantors  have entered into the  Subsidiary  Guarantee
Agreement dated as of even date herewith (the "Guarantee Agreement") pursuant to
which such  Guarantors  have agreed to guarantee all the  obligations  of Hughes
pursuant to the Agreements and all other Guaranteed Obligations;

         WHEREAS,  as a result of  transactions  contemplated by the Agreements,
Guarantors  will benefit from the Guaranteed  Obligations  and in  consideration
thereof desire to enter into this  Contribution  Agreement to provide a fair and
equitable arrangement to make contributions in the event payments are made under
the Guarantee Agreement.

         NOW,  THEREFORE,  in  consideration  of the foregoing  premises and for
other good and valuable consideration,  the receipt and sufficiency of which are
hereby acknowledged, Hughes, each Guarantor hereby agrees as follows:

         SECTION 1. Indemnity and Subrogation. In addition to all such rights of
indemnity and  subrogation as the Guarantors may have under  applicable law (but
subject to Section 3),  Hughes  agrees that in the event a payment shall be made
by any  Guarantor  under the  Guarantee  Agreement in respect of any  Guaranteed
Obligations,  Hughes shall  indemnify such Guarantor for the full amount of such
payment.  Each  Guarantor  has  waived its rights to  subrogation,  pursuant  to
Section 4 of the Guarantee Agreement.

         SECTION 2. Contribution and Subrogation. Each Guarantor agrees (subject
to Section 3) that in the event a payment shall be made by any  Guarantor  under
the Guarantee  Agreement or assets of any  Guarantor  shall be sold to satisfy a
claim of any Guaranteed  Party,  and such  Guarantor (the "Claiming  Guarantor")
shall not have been  indemnified  by Hughes as provided in Section 1, each other
Guarantor (a "Contributing Guarantor") shall indemnify the Claiming Guarantor in
an amount  equal to the amount of such  payment or the greater of the book value
or the fair market value of such  assets,  as the case may be,  multiplied  by a
fraction,  the  numerator  of which  shall be the net worth of the  Contributing
Guarantor on the date hereof,  and the  denominator of which shall be the sum of
the net  worth  of all the  Guarantors  on the  date  hereof.  Any  Contributing
Guarantor making any payment to a Claiming  Guarantor pursuant to this Section 2
shall be subrogated to the rights of such Claiming  Guarantor under Section 1 to
the extent of such payment.

         SECTION  3.  Subordination.   Notwithstanding  any  provision  of  this
Agreement to the contrary, (i) all rights of the Guarantors under Sections 1 and
2 and all other rights of  indemnity or  contribution  under  applicable  law or
otherwise  shall be fully  subordinated to the  indefeasible  payment in full in
cash of the Guaranteed  Obligations,  and (ii) no such rights shall be exercised
until all of the Guaranteed Obligations shall

<PAGE>

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


<PAGE>


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.


<PAGE>


         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:

                                     ATLANTIC PUMP & Equipment SUPPLY COMPANY OF
                                       MIAMI, INC.
                                     ATLANTIC PUMP & EQUIPMENT SUPPLY COMPANY OF
                                       WEST PALM BEACH, INC.
                                     BESTROUTE.COM, LLC (99% OWNED)
                                     CAROLINA PUMP & SUPPLY CORP.
                                     CAYESTEEL, INC.
                                     CHAD SUPPLY, INC.
                                     COASTAL WHOLESALE, INC.
                                     DOMINION PIPE & SUPPLY CO.
                                     DOMINION PIPE FABRICATORS, INCORPORATED
                                     DOUGLAS LEONHARDT & ASSOCIATES, INC.
                                     ELASCO AGENCY SALES, INC.
                                     ELEC-TEL SUPPLY COMPANY

                 [Listing of Guarantors Continued on Next Page]


<PAGE>

                     [Continuation of Listing of Guarantors]

                                     ELECTRIC LABORATORIES AND SALES CORPORATION
                                     FES MERGER CORP., INC.
                                     GAYLE SUPPLY COMPANY, INC.
                                     GILLELAND CONCRETE PRODUCTS, INC.
                                     HSI ACQUISITION CORPORATION
                                     HSI BESTROUTE INVESTMENT, INC.
                                     HSI FUSION SERVICES, INC.
                                     HUGHES SUPPLY MANAGEMENT SERVICES
                                     HUGHES WATER & SEWER COMPANY
                                     H VENTURE CORP.
                                     JUNO INDUSTRIES, INC.
                                     KAMEN SUPPLY COMPANY, INC.
                                     KINGSTON PIPE INDUSTRIES, INC.
                                     MEREX CORPORATION
                                     METALS INCORPORATED
                                     METALS, INC. - GULF COAST DIVISION
                                     MILLS & LUPTON SUPPLY COMPANY
                                     MOORE ELECTRIC SUPPLY, INC.
                                     MOUNTAIN COUNTRY SUPPLY, INC.
                                     OLANDER & BROPHY, INCORPORATED
                                     ONE STOP SUPPLY, INC.
                                     PAINE SUPPLY OF JACKSON, INC.
                                     PALM POOL PRODUCTS, INC.
                                     PANHANDLE PIPE & SUPPLY CO., INC.
                                     PORT CITY ELECTRICAL SUPPLY, INC.
                                     R&G PLUMBING SUPPLY, INC.
                                     REACTION SUPPLY CORPORATION
                                     SHRADER HOLDING COMPANY, INC.
                                     STAINLESS STEEL TUBULAR PRODUCTS, INC.
                                     USCO INCORPORATED
                                     UNION MERGER CORPORATION
                                     U.S. FUSION SERVICES, INC.
                                     VIRGINIA WATER & WASTE SUPPLY COMPANY, INC.
                                     WCC MERGER CORPORATION

                 [Listing of Guarantors Continued on Next Page]


<PAGE>


                     [Continuation of Listing of Guarantors]

                                            WHOLESALE ELECTRIC SUPPLY
                                              CORPORATION

                                            By: _____________________________
                                            Title: __________________________


                                            SOUTHWEST STAINLESS, L.P.

                                            By:  Z&L Acquisition Corp.,
                                                    as General Partner

                                            By: _____________________________
                                                Title: ______________________


                                            Z&L ACQUISITION CORP., in its
                                               individual capacity

                                            By: _____________________________
                                                Title: ______________________


                                                Address for Notices for all
                                                Guarantors:
                                                [Insert Guarantor]
                                                c/o Hughes Supply, Inc.
                                                20 North Orange Avenue
                                                Orlando, Florida 32801
                                                Attention: General Counsel


<PAGE>


                   FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT


         THIS FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT dated as of January 19,
2001 by and among HUGHES  SUPPLY,  INC. (the  "Company")  and the Purchasers set
forth on the signature  pages below (each a  "Purchaser"  and  collectively  the
"Purchasers").

         WHEREAS,  the Company and each  Purchaser  entered into a Note Purchase
Agreement dated as of December 21, 2000 (each a "Note Purchase Agreement"; terms
used herein and not defined herein have their  respective  meanings as set forth
in the Note Purchase Agreement);

         WHEREAS,  the  Company  and each  Purchaser  desires  to amend the Note
Purchase  Agreement  to which they are a party on the terms and  conditions  set
forth herein;

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

         Section 1. Specific Amendments to Note Purchase Agreement

         (a) Section 10.8(iv) of each Note Purchase  Agreement is hereby amended
by deleting subparagraph (B) thereof in its entirety.

         (b)  Subparagraph  (C)  of  Section  10.8(iv)  of  each  Note  Purchase
Agreement is hereby  amended by inserting  the following  immediately  after the
word "if," appearing therein:

               "(1) at least 85% of the consideration received by the Company or
          such  Subsidiary in connection  with  Dispositions in excess of 15% of
          Consolidated Assets is in the form of cash and (2)".

         Section 2. Full Force and Effect.  Except as modified hereby, each Note
Purchase  Agreement  remains  in full  force and  effect  without  modification.
Section  references  in the  Note  Purchase  Agreement  shall  remain  the  same
notwithstanding  the  deletion  of a  subparagraph  in its  entirety.  Upon  the
effectiveness  of  this  First  Amendment,  all  references  to a Note  Purchase
Agreement  shall be deemed to be references  to each Note Purchase  Agreement as
amended by this First Amendment.

         Section 3.  Effectiveness  of Amendment.  This First Amendment shall be
effective upon the execution and delivery of this First Amendment by the Company
and the Required Holders.


<PAGE>


         Section 4. Fees and  Expenses.  Pursuant  to Section  15.1 of each Note
Purchase  Agreement,  the  Company  shall pay all fees and  expenses  of special
counsel to the  Purchasers in  connection  with the  preparation,  execution and
delivery of this First Amendment.

         Section 5.  Governing Law. This First  Amendment  shall be governed by,
and construed in accordance  with, 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.

         Section 6.  Headings.  Headings of sections are for the  convenience of
the  parties  and shall not be used to  interpret  or affect the  meaning of any
provision contained herein.

         Section 7.  Counterparts.  This First  Amendment 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.  Any  signature  hereto  may be  transmitted  via
facsimilie  transmission  and such  signature  shall  have the  same  effect  as
original signature thereof.

                         [Signatures on Following Pages]


<PAGE>


  [Signature Page to First Amendment to Hughes Supply Note Purchase Agreement]

         IN WITNESS  WHEREOF,  this First  Amendment is hereby duly executed and
delivered by the parties hereto as of the date and year first written above.

                                        THE COMPANY:

                                        HUGHES SUPPLY, INC.


                                        By: ___________________________
                                        Title: ________________________


                                        Purchasers of Series A Notes:


                                        PACIFIC LIFE INSURANCE COMPANY


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                                        PACIFIC LIFE AND ANNUITY COMPANY


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                    Signatures Continued on Following Pages]


<PAGE>


  [Signature Page to First Amendment to Hughes Supply Note Purchase Agreement]

                                        Purchasers of Series B Notes:


                                        GENERAL ELECTRIC CAPITAL
                                         ASSURANCE COMPANY


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                                        GE LIFE AND ANNUITY ASSURANCE COMPANY


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                                        GE CAPITAL LIFE ASSURANCE COMPANY OF
                                          NEW YORK


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                                        ALLSTATE LIFE INSURANCE COMPANY


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________
                                        (Authorized Signatories)

                    [Signatures Continued on Following Pages]


<PAGE>


  [Signature Page to First Amendment to Hughes Supply Note Purchase Agreement]

                                        AMERICAN UNITED LIFE INSURANCE
                                          COMPANY


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                                        PIONEER MUTUAL LIFE INSURANCE COMPANY


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                                       Purchasers of Series C Notes:

                                       CONNECTICUT GENERAL LIFE INSURANCE
                                         COMPANY

                                       By: CIGNA Investments, Inc.


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                                        LIFE INSURANCE COMPANY OF NORTH AMERICA

                                        By: CIGNA Investments, Inc.


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                    [Signatures Continued on Following Pages]


<PAGE>


  [Signature Page to First Amendment to Hughes Supply Note Purchase Agreement]

                                        JEFFERSON-PILOT LIFE INSURANCE COMPANY


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                                        TEACHERS INSURANCE AND ANNUITY
                                          ASSOCIATION OF AMERICA


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                                        SUNAMERICA LIFE INSURANCE COMPANY


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                                        NATIONWIDE LIFE INSURANCE COMPANY


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________

                    [Signatures Continued on Following Pages]


<PAGE>


  [Signature Page to First Amendment to Hughes Supply Note Purchase Agreement]


                                        NATIONWIDE LIFE AND ANNUITY INSURANCE
                                          COMPANY


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                                        NEW YORK LIFE INSURANCE COMPANY


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                                        NEW YORK LIFE INSURANCE AND
                                          ANNUITY CORPORATION

                                        By:  New York Life Investment
                                             Management, LLC,
                                             its Investment Manager

                                             By: ___________________________
                                                 Name: _____________________
                                                 Title: ____________________


                                        THE CANADA LIFE ASSURANCE COMPANY,
                                          as beneficial owner


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________

                    [Signatures Continued on Following Pages]


<PAGE>


  [Signature Page to First Amendment to Hughes Supply Note Purchase Agreement]

                                        THE OHIO NATIONAL LIFE  INSURANCE
                                          COMPANY


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________


                                        MODERN WOODMEN OF AMERICA


                                        By: ___________________________
                                            Name: _____________________
                                            Title: ____________________