Houston Wire & Cable CO (Form: S-1, Received: 03/24/2006 16:51:24)

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As filed with the Securities and Exchange Commission on March 24, 2006

Registration No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

HOUSTON WIRE & CABLE COMPANY
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

5063
(Primary Standard Industrial Classification Code Number)

36-4151663
(I.R.S. Employer Identification No.)

10201 North Loop East
Houston, TX 77029
(713) 609-2100
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

Charles A. Sorrentino
President and Chief Executive Officer
Houston Wire & Cable Company
10201 North Loop East
Houston, TX 77029
(713) 609-2100
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

Copies to:
Robert J. Minkus Richard T. Miller Schiff Hardin LLP 6600 Sears Tower Chicago, Illinois 60606		Larry A. Barden Sidley Austin LLP 1 S. Dearborn Street Chicago, Illinois 60603

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)	Amount of Registration Fee(2)


Common Stock, par value $.001 per share	$112,700,000	$12,059

(1): Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(o) under the Securities Act.
(2): Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price and includes the offering price of shares that the underwriters have the option to purchase to cover over-allotments, if any.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), shall determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell, and we are not soliciting an offer to buy, these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED , 2006

Prospectus

Shares

Common Stock

This is the initial public offering of common stock of Houston Wire & Cable Company. We are selling shares of common stock, and the selling stockholders identified in this prospectus are selling an additional shares. We will not receive any of the proceeds from the sale of the shares by the selling stockholders. The estimated initial public offering price is between $ and $ per share.

Prior to this offering, there has been no public market for our common stock. We intend to have our common stock listed for quotation on The Nasdaq National Market under the symbol "HWCC."

Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 9 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

	Per Share	Total
Public offering price	$	$
Underwriting discount	$	$
Offering proceeds to us, before expenses	$	$
Offering proceeds to selling stockholders, before expenses	$	$

Certain of the selling stockholders have granted the underwriters an option for a period of 30 days to purchase up to additional shares of our common stock on the same terms and conditions set forth above to cover over-allotments, if any.

The underwriters expect to deliver the shares of common stock to purchasers on or about , 2006.

William Blair & Company		Robert W. Baird & Co.
BB&T Capital Markets

The date of this prospectus is , 2006.

Table of Contents

		Page
Prospectus Summary		1
Risk Factors		9
Forward-Looking Statements		15
Use of Proceeds		16
Dividend Policy		16
Capitalization		17
Dilution		18
Selected Consolidated Financial Data		19
Management's Discussion and Analysis of Financial Condition and Results of Operations		21
Business		32
Management		48
Principal and Selling Stockholders		58
Relationships and Transactions with Related Parties		59
Description of Capital Stock, Certificate of Incorporation and By-laws		61
Shares Eligible for Future Sale		64
Underwriting		66
Legal Matters		68
Experts		68
Where You Can Find More Information		69
Index to Consolidated Financial Statements		F-1

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. Offers to sell, and solicitations of offers to buy, shares of our common stock are being made only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, especially "Risk Factors" beginning on page 9 and our consolidated financial statements and related notes, before making an investment decision.

Our Business

We are one of the largest distributors of specialty wire and cable and related services to the U.S. electrical distribution market. During 2005, we served approximately 2,600 customers, including each of the top 200 electrical distributors in the U.S. We have strong relationships with leading wire and cable manufacturers and provide them with efficient access to the fragmented electrical distribution market. During 2005, we distributed approximately 20,000 SKUs (stock-keeping units) to over 8,300 customer locations nationwide from eleven strategically located distribution centers in ten states. We are focused on providing our electrical distributor customers with a single-source solution for specialty wire and cable and related services by offering a large selection of in-stock items, exceptional customer service and high levels of product expertise.

We offer products in most categories of specialty wire and cable, including: continuous and interlocked armor cable; control and power cable; electronic wire and cable; flexible and portable cords; instrumentation and thermocouple cable; lead and high temperature cable; medium voltage cable; and premise and category wire and cable. We also offer private branded products, including our LifeGuard™ low-smoke, zero-halogen cable. In addition to our product offerings, we provide comprehensive value-added services including: standard same day shipment from our extensive inventory and distribution network; application engineering support through our knowledgeable sales and technical support staff; custom cutting of wire and cable to exact specifications; inventory management programs that provide job-specific asset management and just-in-time delivery; job-site delivery and logistics support; 24/7/365 customer service provided by our own employees; and customized internet-based ordering capabilities.

We were founded in 1975 and have a long history of reliable customer service, broad product selection and strong product expertise. In 1987, we completed an initial public offering and were subsequently purchased in 1989 by ALLTEL Corporation. In 1997, we were purchased by an investment fund affiliated with Code Hennessy & Simmons LLC. During our 31 year history, we have successfully expanded our business from one original location in Houston, Texas to eleven strategic locations nationwide.

In 2000, we acquired our largest direct competitor, the Futronix division of Kent Electronics Corporation. In 2003, we implemented a new sales and marketing strategy to expand our sales force, introduce new private branded products and work in concert with our distributor customers to generate demand from end-users in our targeted markets, including the utility, industrial and infrastructure markets. As part of this initiative, we are partnering with our distributor customers and strengthening our relationships with project and specifying engineers to stimulate demand for our specialty wire and cable. With this sales and marketing strategy, we have achieved strong financial and operating growth. Our revenue has increased from $149.1 million in 2003 to $214.0 million in 2005, a compound annual growth rate (CAGR) of 19.8%. During the same period, our operating income increased from $4.7 million to $22.1 million, a CAGR of 116.9%.

Industry Overview

We operate within the U.S. electrical distribution market, which Electrical Wholesaling Magazine estimates had industry-wide sales of $74.3 billion in 2005 and will grow 7.9% to $80.2 billion in 2006. Electrical distribution has historically been a growing segment of the industrial distribution industry, with a CAGR of 5.1% over the last 20 years.

In certain circumstances, manufacturers of specialty wire and cable sell their products directly to the end-user. These transactions typically consist of a bulk volume of wire and cable, involve little or no customized services and may require long lead times between order and delivery. More frequently, an electrical distributor serves as the sales channel directly between the manufacturer and the contractor or end-user. The typical sale by an electrical distributor may involve a commonly purchased item that is specifically designated by the end-user and shipped from stock along with a variety of other electrical products. For customers requiring highly specialized wire and cable, custom cut lengths, technical expertise, short lead times or additional services, electrical distributors will generally source products from a specialty wire and cable distributor. We believe that the increasing complexity of specialty wire and cable specifications and the growing need for just-in-time delivery and logistics support will spur further growth in purchases through specialty wire and cable distributors.

Our business is driven, in part, by the strength, growth prospects and activity in the end-markets in which our products are used. We have targeted three of these markets—the utility, industrial and infrastructure markets—in our recent sales and marketing initiatives.

Utility Market. The utility market includes large investor-owned utilities, rural cooperatives and municipal power authorities. We are positioned to benefit from expenditures for new power generation needed to satisfy a growing population with increasing energy demands and to comply with federal mandates to reduce toxic outputs from power generating facilities.

Infrastructure Market. We believe that significant infrastructure improvements and additions will be needed over the next several years. According to the Industrial Information Resources report, engineering and construction firms oversee $106.0 billion of annual expenditures on capital projects. We are assisting our customers to further penetrate the engineering and construction market by working with application engineers to drive specialty wire and cable specifications in large construction projects.

Beginning in 2003, we led the development and marketing of select private label products, including LifeGuard™, a low-smoke, zero-halogen cable product line. We sell our LifeGuard™ product across all of our end-markets.

LifeGuard™ Market Opportunity. We believe that the market for low-smoke, zero-halogen products is in its infancy in the U.S. and represents a significant market opportunity. Low-smoke, zero-halogen cables, which have been used extensively in Europe and Asia for many years, provide significant flame resistance, minimal smoke production and substantially reduced toxicity and corrosiveness when burned, as compared to traditional wire and cable. Our LifeGuard™ cable is designed for applications where a high degree of equipment protection and safety and environmental protection is required. Since its introduction in 2003, our LifeGuard™ line of cable has shown strong early signs of acceptance.

Competitive Strengths

We are a nationally recognized, full-service distributor of specialty wire and cable and related services. Through eleven strategic locations across the United States with over 450,000 square feet of warehouse space, we provide same day shipment to a broad customer base including, among others, Border States Electric Supply, Consolidated Electrical Distributors, Inc., GE Supply Company, Graybar Electric Company, Inc., Hughes Supply, Inc., Mayer Electric Supply Company, Inc., Rexel, Inc., The Reynolds Company, Sonepar USA and WESCO Distribution, Inc. We operate in a highly fragmented market, and we believe that the following competitive strengths have helped us achieve our leading position in the market and a strong reputation among manufacturers and customers:

•: Comprehensive Value-Added Services and Product Expertise. Our business model focuses on providing our customers with comprehensive value-added services and high levels of expertise across a broad range of our suppliers' products. Our services are designed to provide maximum efficiency and flexibility for our customers and include extensive product knowledge and application engineering support, inventory management, custom cut capabilities and 24/7/365 customer service. We help our customers achieve efficient and effective procurement of specialty wire and cable on terms that typically include short lead times, fast delivery and high fill rates.
•: Strength and Tenure of Specialized Sales Force. We have invested in developing a sales force of highly knowledgeable professionals with considerable industry expertise. As of December 31, 2005, our sales force consisted of 40 field sales personnel and 84 inside sales and technical support personnel. The size of our field sales force has increased significantly since 2003. We have an experienced sales force that has substantial expertise and is aligned according to targeted industries, geography and select customer relationships.
•: First-Mover Advantage with LifeGuard™ Cable. We believe we have established a first-mover advantage in the U.S. with our LifeGuard™ line of low-smoke, zero-halogen cable products. We led the development and marketing of low-smoke, zero-halogen cable in the U.S. Since its introduction in 2003, our LifeGuard™ line of cable has shown strong early signs of acceptance and has been accepted for use by over 300 end-users, including leading engineering and construction firms and is increasingly included in specifications for utility, data center and industrial related projects.
•: Operating Leverage. Our ability to offer a high level of customer service is due in part to our highly efficient and effective operations that leverage centralized back-office administration and purchasing, a scalable information technology platform, automated warehouse operations and electronic product tracking. Efficient purchasing and management of our products have helped us increase our average inventory turns from 3.18 in 2001 to 4.63 in 2005 and improved our gross margin during the same period from 22.8% to 26.0%. In addition, by leveraging our national infrastructure and implementing back-office initiatives, we have decreased our operating expenses as a percentage of revenue from 17.9% in 2001 to 15.7% in 2005.
•: Extensive Product Offering and Strong Supplier Relationships. In 2005, we sold over 20,000 SKUs, representing a broad and deep selection of high-quality specialty wire and cable. Our strategy is to maintain a wide breadth and depth of inventory and provide our customers with high fill rates and quick order turnaround. We believe that our vast product offering and value-added services are significant factors in attracting and retaining many of our customers. In addition, we have strong, often decades-long, relationships with large wire and cable manufacturers such as Belden CDT, General Cable Corp., Nexans, Service Wire Company and Southwire Company.
•: Strong and Diversified Customer Base. During 2005, we served approximately 2,600 customers, including each of the top 200 electrical distributors in the U.S. We have experienced exceptional customer retention, and we believe that we are the primary supplier of specialty wire and cable to a

majority of our customers. Each of our top ten customers in 2005 has purchased products from us every year over the last decade.

•: Experienced Management Team. Our highly experienced team of executive officers and key management has an average tenure with us of over 13 years. This continuity strengthens our relationships with our customers and suppliers and enables us to provide our customers with a high level of product and industry expertise. Following this offering, our management team will own % of our outstanding shares and will hold options to purchase an additional shares.

Risk Factors

An investment in our common stock involves risks. For a discussion of factors you should consider before deciding to invest in our common stock, we refer you to "Risk Factors" and the following summary:

•: Downturns in capital spending and cyclicality in certain of the markets we serve could have a material adverse effect on our financial condition and results of operations;
•: We have risks associated with inventory, and our operating results may be affected by fluctuations in commodity prices;
•: If we are unable to maintain our relationships with the electrical distributors who purchase and distribute our products, it could have a material adverse effect on our financial results;
•: An inability to obtain the products that we distribute could result in lost revenues and reduced margins and damage our relationships with customers; and
•: We have had limited experience with our private branded products and cannot guarantee that our private branded products will continue to gain market acceptance.

Growth Strategies

Since implementing our new sales and marketing strategy in 2003, our revenue has increased from $149.1 million in 2003 to $214.0 million in 2005, and our operating income has increased from $4.7 million to $22.1 million. We intend to continue to leverage our competitive strengths and pursue select strategic initiatives to drive growth in revenue and profit.

•: Generate Increased Demand from Targeted Markets. During 2003, we realigned our sales efforts to work in concert with our distributor customers to generate demand directly from end-users in our targeted markets, including the utility, industrial and infrastructure markets. We believe that our sales and marketing programs and product application expertise can help our distributor customers drive demand from their customers. In select target markets, we are assisting our customers in forming relationships with project and specifying engineers to create demand for our specialty wire and cable.
•: Expand Our Sales Force. As part of our ongoing strategy to penetrate new markets, we expect to continue to expand our sales force and further focus our sales and marketing efforts on supporting our distributor customers in these markets. We typically hire experienced personnel for our sales force, and since 2003 we have significantly increased the number of our field sales personnel.
•: Increase Sales of Private Branded Products. Beginning in 2003, we spearheaded the development and marketing of select private branded products, including LifeGuard™, a low-smoke, zero-halogen line of cable; Houwire®, a low-cost sound and security wire; and DataGuard™, a high-end electronic cable product line. While we are still in the early stages of selling these product lines, we believe the potential markets for these products are significant.
•: Focus on Efficient Operations and Cost Control. We continuously seek ways to reduce costs, increase efficiency and ultimately enhance our ability to serve our customers. We have invested in highly

flexible and scalable information systems, which have been instrumental to the efficient integration of our sales, distribution and logistics capabilities. Improvements in our inventory management have created capacity in our warehouses that can be used to support our continued growth.

•: Selectively Pursue Acquisition Opportunities. Our senior management team has experience in identifying and integrating acquisition targets. In 2000, we acquired our largest direct competitor, Futronix, from Kent Electronics. While we are not dependent on acquisitions to achieve our growth plan, we will selectively pursue acquisitions that leverage our established infrastructure and allow us to strategically address select target markets, grow our product and service offering, expand geographically and leverage our efficient distribution and operations platform.

Our Corporate Information

We were incorporated in Delaware in 1997 under the name "HWC Holding Corporation" to acquire our operating subsidiary, then named Houston Wire & Cable Company, which was founded in 1975 and incorporated in Delaware in 1985. In 2006, we changed the name of our operating subsidiary and adopted the Houston Wire & Cable Company name for ourselves. Our corporate and executive offices are located at 10201 North Loop East, Houston, Texas 77029, and our telephone number at that address is (713) 609-2100. We maintain a website at www.houwire.com. The information contained in our website is not a part of, and is not incorporated by reference into, this prospectus.

This Offering

Common stock offered by us		shares
Common stock offered by the selling stockholders		shares
Common stock to be outstanding after this offering		shares
Use of proceeds		We intend to use the net proceeds from this offering to repay a portion of our outstanding debt. We will not receive any of the proceeds from the sale of common stock by the selling stockholders. See "Use of Proceeds."
Proposed Nasdaq National Market symbol		"HWCC"

The number of shares of common stock to be outstanding after this offering is based on 8,862,492 shares outstanding as of March 15, 2006 and excludes:

•: 130,700 shares of common stock issuable upon the exercise of outstanding options at a weighted average exercise price of $2.50 per share; and
•: additional shares of common stock that are reserved for future grants, awards or sale under our stock plans.

Unless otherwise indicated, all information contained in this prospectus:

•: assumes an initial public offering price of $ per share, which is the mid-point of the range set forth on the front cover of this prospectus;
•: assumes the underwriters' over-allotment option will not be exercised; and
•: gives effect to a -for- stock split in connection with this offering.

Summary Consolidated Financial and Other Data

The following table presents a summary of our historical financial information. When you read this summary consolidated financial data, it is important that you read along with it the historical financial statements and related notes, as well as the sections titled "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," included elsewhere in this prospectus.

		Year Ended December 31,
		2003		2004			2005
		(Dollars in thousands, except per share data)
CONSOLIDATED STATEMENT OF INCOME DATA:
Sales		$	149,084	$	172,723		$	213,957
Cost of sales			113,959		131,419			158,240

Gross profit			35,125		41,304			55,717
Operating expenses:
	Salaries and commissions		14,588		16,665			18,707
	Other operating expenses		13,857		12,392			14,016
	Management fee ⁽¹⁾		502		501			500
	Depreciation and amortization		1,481		876			398

Total operating expenses			30,428		30,434			33,621

Operating income			4,697		10,870			22,096
Interest expense			4,186		3,544			2,955
Litigation settlement			—		(650	)		(672	)

Income before income taxes			511		7,976			19,813
Income tax provision			295		3,167			7,299

Net income		$	216	$	4,809		$	12,514

Net income per share:
	Basic	$	0.02	$	0.55		$	1.41
	Diluted	$	0.02	$	0.55		$	1.40
Weighted average shares outstanding:
	Basic		8,711,509		8,720,248			8,856,892
	Diluted		8,802,248		8,810,987			8,937,228
PRO FORMA STATEMENT OF INCOME DATA ⁽²⁾ :
Pro forma operating income							$
Pro forma net income							$
Pro forma net income per share:
	Basic						$
	Diluted						$
Pro forma weighted average shares outstanding:
	Basic
	Diluted
ADDITIONAL DATA:
Capital expenditures		$	290	$	208		$	329
Average number of employees			266		267			274

	As of December 31, 2005
	Actual		As adjusted ⁽³⁾
	(Dollars in thousands)
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents	$	—
Accounts receivable, net		41,778
Inventories, net		31,306
Total assets		81,710
Book overdraft ⁽⁴⁾		2,119
Total debt		61,406
Stockholders' equity ⁽⁵⁾		742

(1): The management fee arrangement will be terminated as of completion of this offering.
(2): The pro forma income statement data assumes that we issued shares of our common stock at a price of $ per share, and used the proceeds as set forth under "Use of Proceeds," as of January 1, 2005. In addition, the data assumes that the management fee was terminated as of January 1, 2005.
(3): As adjusted to reflect the impact of the offering and the application of the net proceeds.
(4): Our book overdraft of $2,119 is funded by our revolving credit facility as soon as the related checks clear our disbursement account.
(5): On December 30, 2005, we paid a special dividend of $20.0 million to our common stockholders and funded the payment by borrowing under our existing credit facilities.

RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the following factors, as well as other information contained in this prospectus, before deciding to invest in shares of our common stock. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment in our common stock.

Risks Relating to Our Business and Industry

Downturns in capital spending and cyclicality in certain of the markets we serve could have a material adverse effect on our financial condition and results of operations.

The majority of our products are used in the construction, maintenance and operation of facilities, plants and projects in the communications, energy, engineering and construction, general manufacturing, infrastructure, petrochemical, transportation, utility and wastewater treatment industries. The demand for our products and services depends to a large degree on the capital spending levels of end-users in these markets. Many of these end-users defer capital expenditures or cancel projects during economic downturns. In addition, certain of the markets we serve are cyclical, which affects capital spending by end-users in these industries. A downturn in the general economy, or in one or more of the end-markets for our specialty wire and cable, could have a material adverse effect on our financial condition and results of operations.

We have risks associated with inventory.

Our business requires us to maintain substantial levels of inventory. We must identify the right mix and quantity of products to keep in our inventory to meet customer orders. Failure to do so could adversely affect our sales and earnings. However, if our inventory levels are too high, we are at risk that an unexpected change in circumstances, such as a shift in market demand, drop in prices, or default or loss of a customer, could have a material adverse impact on the net realizable value of our inventory.

Our operating results may be affected by fluctuations in commodity prices.

Copper and petrochemical products are components of the wire and cable we sell. Fluctuations in the costs of these and other commodities have historically affected our operating results. To the extent higher commodity prices result in increases in the costs we pay for our products, we attempt to reflect the increase in the prices we charge our customers. While we historically have been able to pass most of these cost increases on to our customers, to the extent we are unable to do so in the future, it could have a material adverse effect on our operating results. In addition, as commodity costs increase, our customers may delay or decrease their purchases of our wire and cable, which could adversely affect the demand for our products. To the extent commodity prices decline, the net realizable value of our existing inventory could be reduced, and our gross profits could be adversely affected.

If we are unable to maintain our relationships with our electrical distributor customers, it could have a material adverse effect on our financial results.

We rely primarily on electrical distributors to purchase our wire and cable. The number, size, business strategy and operations of these electrical distributors vary widely from market to market. The success of our sales and distribution channels depends heavily on our successful cooperation with these electrical distributors in each of our various markets.

In 2005, our ten largest customers accounted for approximately 44% of our sales, and our largest customer accounted for approximately 11% of our sales. If we were to lose one or more of our large electrical distributor customers, or if one or more of our large electrical distributor customers were to significantly reduce the amount of specialty wire and cable they purchase from us, and we were unable to replace the lost sales on similar terms, we could experience a significant loss of revenue and profits. In

addition, if one or more of our key electrical distributor customers failed or were unable to pay, we could experience a write-off or write-down of the related receivables, which could adversely affect our earnings. We participate in a number of national marketing groups and engage in joint promotional sales activities with the electrical distributor members of those groups. Any permanent exclusion of us from, or refusal to allow us to participate in, such national marketing groups could have a material adverse effect on our sales and our results of operations.

An inability to obtain the products that we distribute could result in lost revenues and reduced profits and damage our relationships with customers.

We currently source products from approximately 150 suppliers. However, we have adopted a strategy to concentrate our purchases with a small number of suppliers in order to maximize product quality, delivery dependability, purchasing efficiencies and supplier incentives. As a result, in 2005 over 55% of our annual purchases came from three suppliers. If any of these suppliers changed its sales strategy to reduce its reliance on distributors, or decided to terminate its business relationship with us, our sales and earnings would be adversely affected unless and until we were able to establish relationships with suppliers of comparable products. In addition, if we are not able to obtain the products we distribute from either our current suppliers or other competitive sources, we could experience a loss of revenues, reduction in margins and damage to our relationships with our customers. Supply shortages may occur as a result of unanticipated demand or production cutbacks, shortages of raw materials, labor disputes or weather conditions affecting products or shipments, transportation disruptions or other reasons beyond our control. When shortages occur, specialty wire and cable suppliers often allocate products among distributors, and our allocations might not be adequate to meet our customers' needs.

Loss of key personnel or our inability to attract and retain new qualified personnel could hurt our ability to operate and grow successfully.

Our success is highly dependent upon the services of Charles Sorrentino, our President and Chief Executive Officer, Nicol Graham, our Chief Financial Officer, and James Pokluda, our Vice President of Marketing and Merchandising. Our success will continue to depend to a significant extent on our executive officers and key management and sales personnel. We do not have key man life insurance covering any of our executive officers. We may not be able to retain our executive officers and key personnel or attract additional qualified management and sales personnel. The loss of any of our executive officers or our other key management and sales personnel or our inability to recruit and retain qualified personnel could hurt our ability to operate and make it difficult to execute our growth strategies.

A change in vendor rebate programs could adversely affect our gross margins and results of operations.

The terms on which we purchase products from many of our suppliers entitle us to receive a rebate based on the volume of our purchases. These rebates effectively reduce our costs for products. If market conditions change, suppliers may adversely change the terms of some or all of these programs. These changes may lower our gross margins on products we sell and may have an adverse effect on our operating income.

We have had limited experience with our private branded products and cannot guarantee that our private branded products will continue to gain market acceptance.

An important element of our growth strategy is the continued development and market acceptance of our LifeGuard™ line of low-smoke, zero-halogen cable and other products sold under our private brands. Our success with our private branded products, however, depends on our ability to market these products in the appropriate channels and, ultimately, on the acceptance of these products in the markets we serve. We have only been selling LifeGuard™ cable since 2003, and our efforts to develop and market new private branded products might not be successful. Further demand for our products could diminish as a result of a competitor's introduction of higher quality, better performing or lower cost products in the marketplace. In

addition, the low-smoke, zero-halogen properties of our LifeGuard™ line of cable products depend on a highly-engineered petrochemical material. If there is not an adequate supply of this material, we may be unable to have our LifeGuard™ products manufactured, or our LifeGuard™ products may be available only at a higher cost or after a long delay. If we cannot sustain the growth in demand for our LifeGuard™ products, if we cannot have those products manufactured on acceptable terms or if we do not develop additional private branded products, we will be unable to realize fully our growth strategy.

If we encounter difficulties with our management information systems, we would experience problems managing our business.

We believe our management information systems are a competitive advantage in maintaining our leadership position in the specialty wire and cable distribution industry. We rely upon our management information systems to manage and replenish inventory, fill and ship orders on a timely basis and coordinate our sales and marketing activities. If we experience problems with our management information systems, we could experience product shortages, diminished inventory control or an increase in accounts receivable. Any failure by us to maintain our management information systems could adversely impact our ability to attract and serve customers and would cause us to incur higher operating costs and experience reduced profitability.

An increase in competition could decrease sales or earnings.

We operate in a highly competitive industry. We compete directly with national, regional and local providers of specialty wire and cable. Competition is primarily focused in the local service area and is generally based on product line breadth, product availability, service capabilities and price. Some of our existing competitors have, and new market entrants may have, greater financial and marketing resources than we do. To the extent existing or future competitors seek to gain or retain market share by reducing prices, we may be required to lower our prices, thereby adversely affecting our financial results. Existing or future competitors also may seek to compete with us for acquisitions, which could have the effect of increasing the price and reducing the number of suitable acquisitions. Other companies, including our current electrical distributor customers, could seek to compete directly with our private branded products, which could adversely affect our sales of those products and ultimately our financial results. Our existing electrical distributor customers, as well as suppliers, could seek to compete with us by offering services similar to ours, which could adversely affect our market share and our financial results. In addition, competitive pressures resulting from the industry trend toward consolidation could adversely affect our growth and profit margins.

We may be subject to product liability claims that could be costly and time consuming.

We sell specialty wire and cable that has been manufactured by third parties. As a result, from time to time we have been named as defendants in lawsuits alleging that these products caused physical injury or injury to property. We rely on product warranties and indemnities from the product manufacturers, as well as insurance that we maintain, to protect us from these claims. However, manufacturers' warranties and indemnities are typically limited in duration and scope and may not cover all claims that might be asserted. Moreover, our insurance coverage may not be available or may not be adequate to cover every claim asserted or the entire amount of every claim.

Being a public company will increase our administrative costs and divert management time and attention, particularly to comply with regulatory requirements implemented by the Securities and Exchange Commission and The Nasdaq National Market.

As a public company, we will incur significant legal, accounting and other costs that we did not incur as a private company. We will incur all of the internal and external costs of preparing and distributing periodic public reports required under the securities laws and to comply with the Sarbanes-Oxley Act of 2002 and other rules and regulations that the Securities and Exchange Commission, or the SEC, and The Nasdaq National Market, or Nasdaq, have adopted. We expect these additional costs to be in the range of

$ million to $ million per year. In addition to increasing costs, we expect our compliance efforts will make some activities more time-consuming and divert management time and attention away from our core business. We will need to expand our operational and financial systems and controls as part of our compliance efforts. We also expect that being a public company will make it more difficult and more expensive for us to obtain director and officer liability insurance and may require us to accept reduced coverage or incur substantially higher costs to maintain our current level of coverage.

We intend to take advantage of "grace periods" for newly public companies under certain SEC and Nasdaq rules and regulations, which grace periods will provide us a short period of time after we become a public company before we are required to be in full compliance with these rules and regulations. For example, upon the consummation of this offering, we will not be in full compliance with the SEC and Nasdaq requirements that a majority of our board members and all of our audit committee members be "independent." Our ability to satisfy the various requirements before the expiration of the applicable grace periods will depend largely on our ability to attract and retain qualified independent members of our board of directors, particularly to serve on our audit committee. If we fail to satisfy these requirements before the expiration of the applicable grace periods, our common stock may be delisted from Nasdaq, which would cause a decline in the trading price of our common stock and impair the ability of the holders of our common stock to sell and buy our common stock in a public market.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm the trading price of our stock.

Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. Inadequate internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

We may not be able to successfully identify acquisition candidates, effectively integrate newly acquired businesses into our operations or achieve expected profitability from our acquisitions.

To supplement our growth, we intend to selectively pursue acquisition opportunities. If we are not successful in finding attractive acquisition candidates that we can acquire on satisfactory terms, or if we cannot complete those acquisitions that we identify, we will not be able to realize the benefit of this growth strategy.

Acquisitions involve numerous possible risks, including unforeseen difficulties in integrating operations, technologies, services, accounting and personnel; the diversion of financial and management resources from existing operations; unforeseen difficulties related to entering geographic regions or target markets where we do not have prior experience; the potential loss of key employees; and the inability to generate sufficient profits to offset acquisition or investment-related expenses. If we finance acquisitions by issuing equity securities or securities convertible into equity securities, our existing stockholders could be diluted, which, in turn, could adversely affect the market price of our stock. If we finance an acquisition with debt, it could result in higher leverage and interest costs. As a result, if we fail to evaluate and execute acquisitions properly, we might not achieve the anticipated benefits of these acquisitions, and we may incur costs in excess of what we anticipate.

Risks Relating to this Offering

Our common stock has no prior public market, and our stock price may decline after this offering.

Prior to this offering, there has been no public market for our common stock. We cannot assure you that an active trading market for our common stock will develop or be sustained after this offering. The initial

public offering price for our common stock will be determined by negotiations between the representatives of the underwriters, the selling stockholders and us. The initial public offering price may not correspond to the price at which our common stock will trade in the public market subsequent to this offering, and the price of our common stock available in the public market may not reflect our actual financial performance.

The market price of our common stock could be subject to significant fluctuations after this offering. Among the factors that could affect our stock price are:

•: variations in our operating results;
•: announcements by us, our competitors or others of significant business developments, changes in customer relationships, acquisitions or expansion plans;
•: analysts' earnings estimates, ratings and research reports;
•: the depth and liquidity of the market for our common stock;
•: speculation in the press;
•: strategic actions by us or our competitors, such as sales promotions or acquisitions;
•: actions by institutional and other stockholders;
•: conditions in the specialty wire and cable industry as a whole and in the markets where our products are used; and
•: domestic and international economic factors unrelated to our performance.

The stock markets, in general, periodically experience volatility that is sometimes unrelated to the operating performance of particular companies. These broad market fluctuations may cause the trading price of our common stock to decline. In particular, you may not be able to resell your shares at or above the initial public offering price.

If securities or industry analysts do not publish research or reports about our business or publish negative research, or our results are below analysts' estimates, our stock price and trading volume could decline.

The trading market for our common stock may depend on the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our stock or our results are below analysts' estimates, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Our current principal stockholder will continue to have significant influence over us after this offering, and they could delay, deter or prevent a change of control or other business combination or otherwise cause us to take actions with which you may disagree.

Upon the closing of this offering, Code, Hennessy & Simmons II, L.P. will beneficially own approximately % of our outstanding common stock. In addition, two members of our board may be considered affiliates of Code, Hennessy & Simmons. As a result, Code, Hennessy & Simmons and its affiliates will have significant influence over our decision to enter into any corporate transaction and may have the ability to prevent any transaction that requires the approval of stockholders, regardless of whether other stockholders believe that the transaction is in their own best interests. This concentration of voting power could have the effect of delaying, deterring or preventing a change of control or other business combination that might otherwise be beneficial to our stockholders.

Shares eligible for public sale after this offering could adversely affect our stock price.

The shares of our common stock outstanding prior to this offering will be eligible for sale in the public market at various times in the future. The shares of our common stock sold in this offering will be available for resale immediately. Sales of a substantial number of shares of our common stock in the public market following this offering, or the perception that these sales could occur, could cause the market price of our common stock to decline. We, all of our officers and directors and our stockholders have agreed, subject to limited exceptions, not to sell any shares of our common stock for a period of 180 days after the date of this prospectus without the prior written consent of William Blair & Company, L.L.C. Upon expiration of the lock-up period described above, and subject to the provisions of Rule 144, an additional restricted shares will be available for sale in the public market.

Your percentage ownership in us may be diluted by future issuances of capital stock, which could reduce your influence over matters on which stockholders vote and be dilutive to earnings.

Following the closing of this offering, our board of directors has the authority, without action or vote of our stockholders, except as required by Nasdaq, to issue all or any part of our authorized but unissued shares of common or preferred stock, including shares issuable upon the exercise of options. Issuances of common or preferred stock would reduce your influence over matters on which our stockholders vote and could be dilutive to earnings.

As a new investor, you will experience immediate and substantial dilution.

The initial public offering price of the common stock being sold in this offering is considerably more than the net tangible book value per share of our outstanding common stock. Accordingly, investors purchasing shares of common stock in this offering will pay a price per share that substantially exceeds, on a per share basis, the value of our tangible assets after subtracting liabilities. Investors will suffer additional dilution to the extent outstanding stock options are exercised and to the extent we issue any stock or options to our employees under our 2006 stock plan.

We might need to raise capital, which might not be available.

We may require additional equity or debt financing for additional working capital for expansion, to consummate an acquisition or if we suffer losses. In the event additional financing is unavailable to us, we may be unable to expand or make acquisitions and our stock price may decline. If we need additional capital as a result of significant losses and additional financing is unavailable to us, we may default under covenants contained in our loan agreements and we may need to sell assets.

Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable.

Provisions in our certificate of incorporation and by-laws may have the effect of delaying or preventing a change of control or changes in our management. In addition, as a Delaware corporation, we are subject to certain Delaware anti-takeover provisions, including restrictions on our ability to engage in a business combination with any holder of 15% or more of our capital stock. Our board of directors could rely on Delaware law to prevent or delay an acquisition of us.

FORWARD-LOOKING STATEMENTS

The matters discussed in this prospectus that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties, which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as "aim," "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "project," "should," "will be," "will continue," "will likely result," "would" and other words and terms of similar meaning in conjunction with a discussion of future operating or financial performance. You should read statements that contain these words carefully, because they discuss our future expectations, contain projections of our future results of operations or of our financial position or state other "forward-looking" information.

The factors listed under "Risk Factors," as well as any cautionary language in this prospectus, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Although we believe that our expectations are based on reasonable assumptions, actual results may differ materially from those in the forward looking statements as a result of various factors, including, but not limited to, those described above under the heading "Risk Factors" and elsewhere in this prospectus. Before you invest in our common stock, you should read this prospectus completely and with the understanding that our actual future results may be materially different from what we expect.

Forward-looking statements speak only as of the date of this prospectus. Except as required under federal securities laws and the rules and regulations of the SEC, we do not have any intention, and do not undertake, to update any forward-looking statements to reflect events or circumstances arising after the date of this prospectus, whether as a result of new information, future events or otherwise. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on the forward-looking statements included in this prospectus or that may be made elsewhere from time to time by, or on behalf of, us. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

USE OF PROCEEDS

We estimate that our net proceeds from the sale of shares by us in this offering will be approximately $ million, based on the assumed initial public offering price of $ per share, the mid-point of the range on the cover of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us. We will not receive any proceeds from the sale of shares by the selling stockholders.

We intend to use the net proceeds we receive from this offering to reduce existing indebtedness under our current credit facility, including repaying $ of the Term A Note due May 1, 2007, $ of the Term B Note due May 1, 2007 and paying down $ of the outstanding balance under our revolving facility, which expires May 1, 2007. The Term B Note bears interest at 1.25% over the lender's base rate, and the Term A Note and the revolving loan bear interest at 0.25% over the lender's base rate. In accordance with our credit agreement, we have converted a portion of these borrowings to LIBOR loans, which bear interest, in the case of the Term B Note, at 2.75% over LIBOR and, in the case of the Term A Note and our revolving facility, at 1.75% over LIBOR. Amounts repaid under the revolving credit facility may be redrawn from time to time for general corporate purposes, including acquisitions. In the last 12 months, we borrowed under our revolving credit facility to pay a $20.0 million special dividend and to fund working capital.

DIVIDEND POLICY

We paid a special dividend aggregating $20.0 million on our common stock on December 30, 2005. However, we do not anticipate paying dividends after the closing of this offering, and our board of directors currently intends to retain any future earnings for reinvestment in our business. In any event, any determination to pay dividends will be at the discretion of our board of directors and will be dependent upon our results of operations and cash flows, our financial position and capital requirements, general business conditions, legal, tax, regulatory and any contractual restrictions on the payment of dividends, including the restrictions contained in the agreements governing our outstanding indebtedness and any other factors our board of directors deems relevant.

As a holding company, our only source of funds to pay dividends is distributions from our operating subsidiary. Under our credit facility, our operating subsidiary may only pay us dividends for specified purposes, which do not include enabling us to pay dividends on our common stock.

CAPITALIZATION

The following table sets forth our book overdraft, current portion of long-term obligations and consolidated capitalization as of December 31, 2005:

•: on an actual basis; and
•: on an as adjusted basis to reflect this offering and the application of the net proceeds.

You should read the data set forth below in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and accompanying notes included elsewhere in this prospectus.

		As of December 31, 2005
		Actual			As Adjusted ⁽¹⁾
		(In thousands, except share data)
Book overdraft		$	2,119		$

Current portion of long-term obligations		$	3,468		$

Long-term obligations:
	Revolving loan	$	46,906
	Term A loan		4,088
	Term B loan		6,944

			57,938
Stockholders' equity:
	Common stock, par value .001 per share, 10,000,000 shares authorized; 8,856,892 shares issued and outstanding; shares issued and outstanding, as adjusted		9
	Additional paid-in-capital		1,310
	Unearned compensation		(559	)
	Retained earnings		—
	Treasury shares, at cost		(18	)

Total stockholders' equity			742

Total capitalization		$	58,680		$

(1): Upon the completion of this offering and as presented on an as adjusted basis, approximately $ million outstanding under our Term A loan, $ million outstanding under our Term B loan and $ million outstanding under our revolving loan will be immediately repaid.

DILUTION

Our net tangible book value as of December 31, 2005 was ($2.3) million, or ($0.25) per share of common stock. Net tangible book value per share is determined by dividing our net tangible book value, which is total tangible assets less total liabilities, by the aggregate number of shares of common stock outstanding. Tangible assets represent total assets excluding goodwill and other intangible assets. Dilution in net tangible book value per share represents the difference between the amount per share paid by purchasers of shares of our common stock in this offering and the as adjusted net tangible book value per share of our common stock immediately afterwards. After giving effect to our sale of shares of common stock in this offering at an assumed initial public offering price of $ per share, our as adjusted net tangible book value at December 31, 2005 would have been $ million, or $ per share. This represents an immediate increase in net tangible book value of $ per share to our existing stockholders and an immediate dilution of $ per share to new investors purchasing shares of common stock in this offering. The following table illustrates this dilution per share:

Assumed initial public offering price per share of common stock			$
	Net tangible book value per share as of December 31, 2005	$
	Per share increase attributable to new investors	$
As adjusted net tangible book value per share after the offering			$
Dilution per share to new investors

The following table summarizes, as of December 31, 2005, on an as adjusted basis, the number of shares of common stock purchased or to be purchased from us, the total consideration paid or to be paid to us and the average price per share paid or to be paid by existing stockholders and by new investors purchasing shares of common stock in this offering, before deducting the underwriting discount and estimated offering expenses payable by us.

	Shares Purchased			Total Consideration
	Shares Purchased			Total Consideration			Average Price Per Share
	Number	Percentage		Amount	Percentage		Average Price Per Share
Existing stockholders			%	$		%	$
New investors ⁽¹⁾							$

Total ⁽²⁾			%	$		%

(1): The number of shares disclosed for the existing stockholders includes shares being sold by the selling stockholders in this offering. The number of shares disclosed for the new investors does not include those shares.
(2): If the underwriters' overallotment option is exercised in full, the number of shares held by existing stockholders will be reduced to , or approximately % of the shares of common stock outstanding after this offering, and the number of shares held by the new investors will be increased to , or approximately % of the total number of shares of our common stock outstanding after this offering.

The above discussion and table assume no exercise of stock options after December 31, 2005. As of December 31, 2005, we had outstanding options to purchase a total of shares of common stock at a weighted average price of $ a share. If all such options had been exercised as of December 31, 2005, adjusted net tangible book value per share would be $ and dilution to new investors would be $ per share. To the extent any additional options are granted and exercised, there may be additional economic dilution to new investors.

In addition, we may choose to raise additional capital due to market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

SELECTED CONSOLIDATED FINANCIAL DATA

You should read the following selected financial information together with our financial statements and the related notes appearing at the end of this prospectus and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of this prospectus. We have derived the statement of income data for each of the years ended December 31, 2003, 2004 and 2005, and the balance sheet information at December 31, 2004 and December 31, 2005 from our audited financial statements, which are included in this prospectus. We have derived the statements of income data for the years ended December 31, 2001 and December 31, 2002, and the balance sheet data at December 31, 2001, 2002 and 2003 from our audited financial statements, which are not included in this prospectus.

		Year Ended December 31,
		2001		2002		2003		2004			2005
		(Dollars in thousands, except per share data)
CONSOLIDATED STATEMENT OF INCOME DATA:
Sales		$	189,688	$	158,230	$	149,084	$	172,723		$	213,957
Cost of sales			146,430		120,839		113,959		131,419			158,240

Gross profit			43,258		37,391		35,125		41,304			55,717
Operating expenses:
	Salaries and commissions		17,786		15,190		14,588		16,665			18,707
	Other operating expenses		13,800		12,846		13,857		12,392			14,016
	Management fee ⁽¹⁾		507		504		502		501			500
	Depreciation and amortization		1,889		1,688		1,481		876			398

Total operating expenses			33,982		30,228		30,428		30,434			33,621

Operating income			9,276		7,163		4,697		10,870			22,096
Litigation settlements			124		49		—		(650	)		(672	)
Interest expense			5,965		4,360		4,186		3,544			2,955

Income before income taxes			3,187		2,754		511		7,976			19,813
Income tax provision			130		290		295		3,167			7,299

Net income		$	3,057	$	2,464	$	216	$	4,809		$	12,514

Net income per share:
	Basic	$	0.36	$	0.28	$	0.02	$	0.55		$	1.41

	Diluted	$	0.36	$	0.28	$	0.02	$	0.55		$	1.40

Weighted average shares outstanding:
	Basic		8,590,877		8,711,400		8,711,509		8,720,248			8,856,892

	Diluted		8,590,877		8,802,139		8,802,248		8,810,987			8,937,228

PRO FORMA STATEMENT OF INCOME DATA ⁽²⁾ :
Pro forma operating income											$
Pro forma net income											$
Pro forma net income per share:
	Basic										$
	Diluted										$
Pro forma weighted average shares outstanding:
	Basic
	Diluted
ADDITIONAL DATA:
Capital expenditures (excluding acquisitions)		$	727	$	377	$	290	$	208		$	329
Average number of employees			320		291		266		267			274

	As of December 31,										As of December 31, 2005, as adjusted ⁽³⁾
	2001		2002		2003		2004		2005		As of December 31, 2005, as adjusted ⁽³⁾
	(Dollars in thousands)
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents	$	—	$	—	$	—	$	—	$	—
Accounts receivable, net		24,662		20,923		21,644		27,541		41,778
Inventories, net		38,186		34,726		26,905		29,836		31,306
Total assets		75,931		66,927		58,455		66,193		81,710
Book overdraft ⁽⁴⁾		1,247		389		174		1,341		2,119
Total debt		59,389		55,668		46,548		43,752		61,406
Stockholders' equity ⁽⁵⁾		684		3,148		3,364		8,228		742

(1): The management fee arrangement will be terminated as of completion of this offering.
(2): The pro forma income statement data assumes that we issued shares of our common stock at a price of $ per share, and used the proceeds as set forth under "Use of Proceeds," as of January 1, 2005. In addition, the data assumes that the management fee was terminated as of January 1, 2005.
(3): As adjusted to reflect the impact of the offering and the application of the net proceeds.
(4): Our book overdraft is funded by our revolving credit facility as soon as the related checks clear our disbursement account.
(5): On December 30, 2005, we paid a special dividend of $20.0 million to our common stockholders and funded the payment by borrowing under our existing credit facilities.

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

You should read the following discussion in conjunction with our consolidated financial statements and related notes appearing elsewhere in this prospectus. The following discussion of our historical consolidated financial statements covers periods before consummation of this offering and the application of the proceeds. Accordingly, the discussion does not reflect the impact that this offering will have on us. See the information provided in "Risk Factors," "Capitalization," "—Liquidity and Capital Resources" and elsewhere in this prospectus for further discussion relating to the impact of this offering on us. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from our expectations. Factors that could cause such differences include those described in "Risk Factors" and elsewhere in this prospectus. Certain tabular information will not foot due to rounding.

Overview

Since our founding over 30 years ago, we have grown to be one of the largest distributors of specialty wire and cable and related services to the U.S. electrical distribution market. Today, we serve over 2,600 customers, including each of the top 200 electrical distributors in the U.S. Our specialty wire and cable is primarily used in maintenance, repair and operations ("MRO") related projects and is increasingly purchased for larger scale projects in the communications, energy, engineering and construction, general manufacturing, infrastructure, petrochemical, transportation, utility and wastewater treatment industries.

In 2000, we acquired our largest competitor, the Futronix division of Kent Electronics Corporation. Since that time, we have pursued a number of initiatives designed to improve our operating efficiencies and increase our share of the fragmented market for specialty wire and cable. We integrated the Futronix business into our own and rationalized inventory, facilities and low-margin customer relationships. We have made substantial investments in warehouse facilities and information systems in order to enhance our ability to provide customers with comprehensive value-added services, including application engineering support, inventory management, custom cut capabilities and 24/7/365 customer service, order fulfillment and shipping. During the years 2001 through 2003, the U.S. electrical distribution market was adversely affected by the general slowdown of the economy. In response to these economic conditions, we increased our focus on achieving operating efficiencies by leveraging our investments in our centralized back-office administration and purchasing, investing in a scalable information technology platform and implementing automated warehouse operations and electronic product tracking. This focus has assisted us in increasing our operating income margin from 4.9% in 2001 to 10.3% in 2005.

Since 2003, the U.S. electrical distribution market has experienced increased demand, as large industrial and commercial companies have increased capital spending to "catch-up" on deferred maintenance and upgrade and expand infrastructure. According to Electrical Wholesaling Magazine , the U.S. electrical distribution market is estimated to have grown from approximately $60.6 billion of industry-wide sales in 2003 to $74.3 billion in 2005, and is expected to grow 7.9% to $80.2 billion in 2006. At the same time as the electrical distribution market began to recover, we implemented a new sales and marketing strategy that focuses on working in concert with our distributor customers to generate demand from end-users in our targeted markets and to strengthen relationships with project and specifying engineers to stimulate demand for our specialty wire and cable. In addition, we have significantly increased the size of our sales force since 2003, and as of March 1, 2006 we had 139 sales employees. In 2003, we introduced our LifeGuard™ line of low-smoke, zero-halogen cable products which, due to their highly engineered specifications and safety benefits, generate higher margins for us than traditional cable products. As a result of our new sales and marketing initiatives, as well as general market growth, our revenue has increased at a CAGR of 19.8% over the past three years, from $149.1 million in 2003 to $214.0 million in 2005.

Our revenue is driven in part by the level of capital spending within the end-markets we serve. Because many of these end-markets defer capital expenditures during periods of economic downturns, our business has experienced cyclicality from time to time. We believe that our revenues will continue to be impacted by fluctuations in capital spending and by our ability to drive demand through our sales and marketing initiatives and the continued development and marketing of our private branded products, such as LifeGuard™.

Our direct costs will continue to be influenced significantly by the prices we pay our suppliers to procure the products we distribute to our customers. Changes in these costs may result, for example, from increases or decreases in raw material costs, changes in our relationships with suppliers or changes in vendor rebates. Our operating expenses will continue to be affected by our investment in sales, marketing and customer support personnel and commissions paid to our sales force for revenue generated. Some of our operating expenses are related to our fixed infrastructure, including rent, utilities, administrative salaries, maintenance, insurance and supplies. To meet our customers' needs for an extensive product offering and short delivery times, we will need to continue to maintain adequate inventory levels. Our ability to obtain this inventory will depend, in part, on our relationships with suppliers.

Changes in Connection with Becoming a Public Company

As a public company, we expect that we will incur significant additional operating expenses such as increased audit fees, professional fees, directors' and officers' insurance costs, compensation for our board of directors, and expenses related to hiring additional personnel and expanding our administrative functions. Many of these expenses were not incurred or were incurred at a lower level by us as a private company and are not included in our prior results of operations. We began to incur certain of these expenses during 2006, and we expect that these expenses will continue to increase. We expect these additional expenses to be in the range of $ million to $ million per year.

Following the offering, we will no longer be subject to the annual $500,000 management fee that we pay to an affiliate of Code, Hennessy & Simmons.

On December 30, 2005, we paid a special dividend of $20.0 million to our common stockholders and funded the payment by borrowing under our existing credit facilities. Due to the interest payable on these borrowings, our net earnings, and earnings per share, in 2006 will be lower than they would have been had we not paid the special dividend. We intend to use our net proceeds from this offering to repay a portion of our outstanding indebtedness.

Critical Accounting Policies

Critical accounting policies are those that both are important to the accurate portrayal of a company's financial condition and results, and require subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

In order to prepare financial statements that conform to accounting principles generally accepted in the United States, commonly referred to as GAAP, we make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Certain estimates are particularly sensitive due to their significance to the financial statements and the possibility that future events may be significantly different from our expectations.

We have identified the following accounting policies as those that require us to make the most subjective or complex judgments in order to fairly present our consolidated financial position and results of operations. Actual results in these areas could differ materially from management's estimates under different assumptions and conditions.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts receivable for estimated losses resulting from the inability of our customers to make required payments. We perform periodic credit evaluations of our customers and typically do not require collateral. Consistent with industry practices, we require payment from most customers within 30 days of invoice date. We have an estimation procedure, based on historical data and recent changes in the aging of these receivables, that we use to record reserves throughout the year. In the last five years, write-offs against our allowance for doubtful accounts have averaged approximately $165,000 per year. A 20% change in our estimate at December 31, 2005 would have resulted in a change in income before income taxes of $89,000 for the year ended December 31, 2005.

Inventory Obsolescence

We continually monitor our inventory levels at each of our distribution locations. Our reserve for inventory obsolescence is based on the age of the inventory, movements of our inventory over the prior eighteen months and the experience of our purchasing and sales departments in estimating demand for the product in the succeeding year . Our inventories are generally not susceptible to technological obsolescence. A 20% change in our estimate at December 31, 2005 would have resulted in a change in income before income taxes of $382,000 for the year ended December 31, 2005.

Goodwill

Goodwill represents the excess of the amount we paid to acquire businesses over the estimated fair value of tangible assets and identifiable intangible assets acquired, less liabilities assumed. At December 31, 2005, our net goodwill balance was $3.0 million, representing 3.7% of our total assets.

In 2002, we adopted the provisions of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets ("SFAS 142"). Under SFAS 142, we test goodwill for impairment annually, or more frequently if indications of possible impairment exist, by applying a fair value-based test.

In October 2005, we performed our annual goodwill impairment tests for goodwill and other indefinite-lived intangible assets, and, as a result of this test, we believe the goodwill on our balance sheet is not impaired.

If circumstances change or events occur to indicate that our fair market value has fallen below book value, we will compare the estimated fair value of the goodwill to its carrying value. If the carrying value of goodwill exceeds the estimated fair value of goodwill, we will recognize the difference as an impairment loss in operating income.

Vendor Rebates

Many of our arrangements with our vendors entitle us to receive a rebate of a specified amount when we achieve any of a number of measures, generally related to the volume of purchases from the vendor. We account for these rebates as a reduction of the prices of the vendor's products, which reduces inventory until we sell the product, at which time these rebates reduce cost of sales. Throughout the year, we estimate the amount of rebates earned based on our purchases to date and our estimate of purchases to be made for the remainder of the year relative to the purchase levels that mark our progress toward earning the rebates. We continually revise these estimates to reflect actual purchase levels. A 20% change in our estimate of total rebates earned during 2005 would have resulted in a change in income before income taxes of $580,000 for the year ended December 31, 2005.

New Accounting Pronouncements

On December 16, 2004, the Financial Accounting Standards Board ("FASB") issued FASB Statement No. 123 (revised 2004) ("FAS 123(R)"), Share-Based Payment , which is a revision of SFAS 123, Accounting

for Stock-Based Compensation. Generally, the approach to accounting for share-based payments in FAS 123(R) is similar to the approach described in SFAS 123. However, FAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. As such, pro forma disclosure is no longer an alternative to financial statement recognition. We adopted FAS 123(R) effective January 1, 2006. The adoption of FAS 123(R) is not expected to have a material effect on our consolidated financial position, cash flows or results of operations.

Sales

We generate most of our sales by providing specialty wire and cable to our customers. We also collect sales through freight charges and by providing value-added services. We recognize revenue upon shipment of our products to customers. Sales incentives earned by customers are accrued in the same month as the shipment is invoiced.

Cost of Sales

Cost of sales consists primarily of the average cost of the specialty wire and cable that we sell. We also incur shipping and handling costs in the normal course of business. Cost of sales also reflects cash discounts for prompt payment to vendors and vendor rebates generally related to annual purchase targets.

Operating Expenses

Operating expenses include all expenses incurred to receive, sell and ship product and administer the operations of our company.

Salaries and Commissions. Salary expense includes the base compensation, and any overtime earned by hourly personnel, for all sales, administrative and warehouse employees. Commission expense is earned by inside sales personnel based on gross profit dollars generated, by field sales personnel from generating sales and meeting various personal objectives, by sales, national and project managers for driving the sales process, by regional managers based on the profitability of their branches and by corporate managers based on the profitability of the company.

Other Operating Expenses. Other operating expenses include all other expenses, except for salaries and commissions, management fees and depreciation and amortization. This includes all payroll taxes, health insurance, traveling expenses, advertising, management information system expenses, facility rent and maintenance and all distribution expenses such as packaging, reels, and repair and maintenance of equipment and facilities.

Management Fee. The management fee consists of expenses that we pay to CHS Management II, L.P. for certain management and advisory services. This management fee arrangement will be cancelled upon the completion of the offering.

Depreciation and Amortization. We incur depreciation and amortization expenses for costs related to the capitalization of property and equipment on a straight-line basis over the estimated useful lives of the assets, which range from three to 30 years. We amortize leasehold improvements over the lease term. A non-compete agreement arising from the 2000 acquisition of Futronix was amortized over its four-year term.

Litigation Settlements

Litigation settlements reflect the funds received from the settlement of a lawsuit against two vendors in 2004 and from a court award in 2005 related to a claim for breach of contract that occurred under the previous ownership.

Interest Expense

Interest expense consists primarily of interest we pay on our debt. The decrease in interest expense in 2005 resulted from payments made in 2004 and 2005 on our junior subordinated promissory notes, which bore interest at a rate of 14.0% per annum. Interest expense will increase in the first half of 2006 due to the additional debt incurred to finance the payment of the special dividend in December 2005. See "Use of Proceeds."

Results of Operations

The following discussion compares our results of operations for the years ended December 31, 2005, 2004 and 2003.

The following table shows, for the periods indicated, information derived from our consolidated statements of income, expressed as a percentage of sales for the period presented.

			Year Ended December 31,
			2003		2004		2005
Sales			100.0	%	100.0	%	100.0	%
Cost of sales			76.4	%	76.1	%	74.0	%

Gross profit			23.6	%	23.9	%	26.0	%
Operating expenses:
	Salaries and commissions		9.8	%	9.6	%	8.7	%
	Other operating expenses		9.3	%	7.2	%	6.6	%
	Management fee		0.3	%	0.3	%	0.2	%
	Depreciation and amortization		1.0	%	0.5	%	0.2	%

		Total operating expenses	20.4	%	17.6	%	15.7	%

Operating income			3.2	%	6.3	%	10.3	%
Litigation settlements			0.0	%	(0.4	%)	(0.3	%)
Interest expense			2.8	%	2.1	%	1.4	%

Income before income taxes			0.3	%	4.6	%	9.3	%
Income tax provision			0.2	%	1.8	%	3.4	%

Net income			0.1	%	2.8	%	5.8	%

Comparison of Years Ended December 31, 2005 and 2004

Sales

Our sales were $214.0 million in 2005, an increase of $41.2 million, or 23.9%, compared to sales of $172.7 million in 2004. The increase is the result of greater demand for our products, spurred by a higher level of capital spending in a number of end-markets, including investments by utilities in new power generation projects and facility upgrades, increased MRO spending and increased sales of our LifeGuard™ product. We estimate that we benefited by approximately $4.0 million in sales as a result of the Gulf Coast hurricanes in the second half of 2005.

Cost of Sales

Cost of sales was $158.2 million in 2005, an increase of $26.8 million, or 20.4%, compared to cost of sales of $131.4 million in 2004. The increase was primarily due to the increase in demand for our products mentioned above. Partially offsetting this increase were vendor rebates and discounts for prompt payment totaling $1.6 million more in 2005 than in 2004.

Gross Profit

Gross profit increased $14.4 million, or 34.9%, to $55.7 million in 2005 from $41.3 million in 2004, due primarily to increased sales. Gross profit as a percentage of net sales, commonly referred to as gross margin, increased to 26.0% in 2005 compared to 23.9% for 2004. This increase was due mainly to a more favorable product mix, including a greater proportion of higher margin items, increased vendor rebates and a lower charge for inventory obsolescence as older, fully reserved inventory was sold.

Operating Expenses

Operating expenses were $33.6 million in 2005, an increase of $3.2 million, or 10.5%, compared to operating expenses of $30.4 million in 2004. This increase was attributable to the specific factors discussed below.

Salaries and Commissions. Salaries and commissions increased $2.0 million, or 12.3%, to $18.7 million in 2005 from $16.7 million in 2004. This increase consists of a $0.7 million increase in salaries due to pay increases and additional personnel and a $1.3 million increase in commission expense, reflecting the higher level of sales. Salaries and commissions as a percentage of net sales decreased to 8.7% in 2005 from 9.6% in 2004, as sales increased at a faster rate than personnel additions and commission payments.

Other Operating Expenses. Other operating expenses increased $1.6 million, or 13.1%, to $14.0 million in 2005 from $12.4 million in 2004. The increase in other operating expenses is due to expenditures for advertising to support the growth in the sales volume, administrative costs, including payroll taxes and medical and dental costs, and warehousing costs, including supplies and equipment. While other operating expenses increased in 2005 from 2004, other operating expenses as a percentage of net sales decreased to 6.6% in 2005 from 7.2% in 2004 due to our ability to leverage infrastructure costs.

Management Fee. Management fee expenses were consistent at $0.5 million in 2005 and 2004. Following this offering, we will no longer pay an annual management fee to CHS Management II, L.P.

Depreciation and Amortization. Depreciation and amortization expense was $0.4 million in 2005, a decrease of $0.5 million, or 54.6%, compared to $0.9 million in 2004. This decrease was primarily due to the charge in 2004 of $0.3 million for the unamortized balance of a non-compete agreement (relating to the 2000 Futronix acquisition) that was fully amortized in 2004.

Litigation Settlement

We realized a litigation settlement benefit of $0.7 million in 2005, an increase of $22,000 or 3.4% compared to the benefit received in 2004. The 2005 litigation settlement resulted from a court award involving the seller indemnification provisions of the 1997 purchase agreement by which our current owners acquired us.

Interest Expense

Interest expense decreased $0.6 million, or 16.6%, to $3.0 million in 2005 from $3.5 million in 2004. An increase in our average debt outstanding was more than offset by the effect of a decrease in our effective interest rate to 7.2% in 2005 from 7.9% in 2004. The decrease in the effective interest rate was primarily due to a reduction in the outstanding amount of the junior subordinated notes, which had a 14.0% interest rate.

Income Tax Expense

Our effective income tax rate decreased from 39.7% in 2004 to 36.8% in 2005 primarily due to an increase in deferred tax assets as a result of an increase in the federal rate from 34% to 35% and the non-taxable nature of the litigation settlement.

Comparison of Years Ended December 31, 2004 and 2003

Sales. Sales were $172.7 million in 2004, an increase of $23.6 million, or 15.9%, compared to sales of $149.1 million in 2003. The increase was primarily due to the general increase in demand throughout the electrical distribution market, increased spending in the utility markets for new power generation projects and facility upgrades, increased MRO work and increased sales of our LifeGuard™ product.

Cost of Sales. Cost of sales was $131.4 million in 2004, an increase of $17.5 million, or 15.3%, compared to cost of sales of $114.0 million in 2003. The increase was primarily due to the increase in sales volume. The provision for inventory obsolescence and freight costs increased but were offset by additional discounts for prompt payment and higher levels of vendor rebates.

Gross Profit. Gross profit increased $6.2 million, or 17.6%, to $41.3 million in 2004 from $35.1 million in 2003, due to increased sales. Gross margin increased slightly to 23.9% in 2004 compared to 23.6% for 2003.

Operating Expenses. Overall operating expenses held flat at $30.4 million in both 2004 and 2003. Specific changes in the major components are discussed below.

Salaries and Commissions. Salaries and commissions increased $2.1 million, or 14.2%, to $16.7 million in 2004 from $14.6 million in 2003. This increase reflects a $0.6 million rise in salaries due to rate changes for existing employees, overtime and additional personnel and additional commission expense of $1.5 million as sales and gross profit increased. Salaries and commissions as a percentage of net sales decreased to 9.6% in 2004 from 9.8% in 2003 as sales increased at a faster rate than personnel additions and commission payments.

Other Operating Expenses. Other operating expenses decreased $1.5 million, or 10.6%, to $12.4 million in 2004 from $13.9 million in 2003. The decrease in other operating expenses is due primarily to a reduction of $1.2 million in legal and professional fees, reflecting reduced litigation activity in 2004, and a $0.3 million decrease in other administrative, sales and warehouse expenses. Other operating expenses as a percentage of net sales decreased to 7.2% in 2004 from 9.3% in 2003, reflecting strict cost controls, the decrease in legal and professional fees and the increase in sales.

Management Fee. Management fee expenses were consistent at $0.5 million in 2004 and 2003.

Depreciation and Amortization. Depreciation and amortization expense was $0.9 million in 2004, a decrease of $0.6 million, or 40.9%, compared to $1.5 million in 2003. This decrease was primarily due to a $0.4 million decrease in the amortization of a non-compete agreement, which was fully amortized in the second quarter of 2004.

Interest Expense

Interest expense decreased $0.6 million, or 15.3%, to $3.5 million in 2004 from $4.2 million in 2003. This decrease reflects a reduction in our average debt outstanding, as our effective interest rates were flat from 2003 to 2004. Average debt decreased, as we used cash generated from operations to pay down debt.

Litigation Settlements

We realized a litigation settlement benefit of $0.7 million in 2004, compared to no litigation settlement benefit in 2003. The litigation settlement was received from two vendors against which we had filed suit.

Income Tax Expense

Our effective income tax rate decreased substantially from 57.7% in 2003 to 39.7% in 2004 primarily due to the substantially lower income before taxes in 2003 in relation to the level of state income taxes and non-deductible items.

Quarterly Results

The following table presents our unaudited quarterly results of operations for each of our last eight quarters ended December 31, 2005. You should read the following table in conjunction with the consolidated financial statements and related notes contained elsewhere in this prospectus. We have prepared the unaudited information on the same basis as our audited consolidated financial statements. Results of operations for any quarter are not necessarily indicative of results for any future quarters or for a full year. Hurricane activities in the summer and fall of 2005 resulted in increased sales of approximately $4.0 million in the third and fourth quarters of 2005. We do not anticipate that hurricanes will have a similar impact during the same periods in 2006.

			Quarter Ended
			March 31, 2004			June 30, 2004			September 30, 2004		December 31, 2004		March 31, 2005			June 30, 2005		September 30, 2005		December 31, 2005
			(In thousands)
CONSOLIDATED STATEMENT OF INCOME:
Sales			$	42,708		$	41,825		$	44,515	$	43,675	$	43,106		$	46,652	$	58,321	$	65,878
Cost of sales				32,673			31,668			33,404		33,674		31,949			34,599		43,185		48,507

Gross profit				10,035			10,157			11,111		10,001		11,157			12,053		15,136		17,371
Operating expenses:
	Salaries and commissions			3,996			3,960			4,171		4,538		4,289			4,413		4,761		5,244
	Other operating expenses			3,262			3,385			3,120		2,625		3,408			3,133		3,250		4,225
	Management fee			125			125			126		125		125			125		125		125
	Depreciation and amortization			357			294			169		56		110			111		111		66

		Total operating expenses		7,740			7,764			7,586		7,344		7,932			7,782		8,247		9,660

Operating income				2,295			2,393			3,525		2,657		3,225			4,271		6,889		7,711
Litigation settlements				(450	)		(200	)		—		—		(672	)		—		—		—
Interest expense				919			864			866		895		713			724		708		810

Income before income taxes				1,826			1,729			2,659		1,762		3,184			3,547		6,181		6,901
Income tax provision				717			697			1,034		719		1,173			1,307		2,277		2,542

Net income			$	1,109		$	1,032		$	1,625	$	1,043	$	2,011		$	2,240	$	3,904	$	4,359

Impact of Inflation and Commodity Prices

Our results of operations are affected by changes in the inflation rate and commodity prices. Moreover, because copper and petrochemical products are components of the wire and cable we sell, fluctuations in the costs of these and other commodities have historically affected our operating results. To the extent we are unable to pass on to our customers cost increases due to inflation or rising commodity prices, it could adversely affect our operating results.

Liquidity and Capital Resources

Our primary capital needs are for working capital obligations and other general corporate purposes, including acquisitions and capital expenditures. Our primary sources of working capital are cash from operations supplemented by bank borrowings. We have funded our capital expenditures through cash from operations. Our working capital amounted to $51.4 million at December 31, 2005, compared to working capital of $44.9 million at December 31, 2004.

Liquidity is defined as the ability to generate adequate amounts of cash to meet the current need for cash. We assess our liquidity in terms of our ability to generate cash to fund our operating activities. Significant factors which could affect liquidity include the following:

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

Comparison of Years Ended December 31, 2005 and 2004

Our net cash used by operating activities was $3.8 million for 2005 compared to net cash provided of $12.0 million for 2004. The cash used in operations in 2005 was primarily due to the decrease in the book overdraft of $5.9 million, an increase in accounts receivable of $14.3 million and an increase in inventory of $1.3 million. This was offset in 2005 by net income of $12.5 million and increases in accounts payable and income taxes payable of $3.2 million and $0.8 million, respectively. These changes were primarily due to the increase in sales in 2005 over 2004 levels. Depreciation and amortization decreased by $0.5 million, including a decrease of $0.3 million due to the absence in 2005 of a charge for a non-compete agreement that was fully amortized in 2004.

Net cash used in investing activities for 2005 was $0.3 million compared to $0.2 million for 2004. The investing activities were for capital expenditures, which have remained relatively constant over the past three years.

Net cash provided by financing activities for 2005 was $4.1 million compared to net cash used of $11.8 million for 2004. The difference was primarily due to the borrowing of additional funds in 2005 to finance a $20.0 million special dividend payment, while in 2004, we repaid $14.0 million of our junior subordinated promissory notes.

Comparison of Years Ended December 31, 2004 and 2003

Our net cash provided by operating activities remained relatively constant at $12.0 million from 2003 to 2004, even though operating income improved by $6.2 million, from $4.7 million in 2003 to $10.9 million in 2004, reflecting our revenue growth and improved operating expense margins. Additional cash was needed to fund accounts receivable and inventory, up $6.2 million and $3.6 million, respectively, in 2004 from 2003, due to the increased sales volume. The additional cash requirements in 2004 were funded by an increase in book overdraft of $7.9 million, an increase in trade accounts payable of $1.7 million and an increase in accrued and other current liabilities of $2.8 million. Depreciation and amortization decreased $0.6 million to $0.9 million in 2004 from $1.5 million in 2003. Most of this decrease can be attributed to the reduction of the amortization of the non-compete agreement from $0.8 million in 2003 to $0.3 million in 2004 which became fully amortized in the second quarter of 2004.

Net cash used in investing activities for 2004 was $0.2 million compared to $0.3 million for 2003.

Net cash used in financing activities for 2004 was $11.8 million compared to $12.0 million for 2003. In 2004 we made repayments on our junior subordinated promissory notes of $14.0 million and had net borrowings of $2.1 million, while in 2003 we made net payments on our revolving loan of $8.0 million and repaid a Term A loan of $3.8 million.

Indebtedness

Our principal source of liquidity at December 31, 2005 was working capital of $51.4 million compared to $44.9 million at December 31, 2004. We also had available borrowing capacity in the amount of $1.5 million at December 31, 2005 and $11.1 million at December 31, 2004 under our loan and security agreement with Bank of America and another syndication lender. Upon the completion of this offering, we will repay approximately $ of our outstanding debt, providing us with $ of available commitment under our exiting revolving credit facility.

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

Loan and Security Agreement

We have a loan and security agreement with Bank of America and another lender. The lenders have a security interest in all of our assets, including accounts receivable and inventory. The Agreement matures on May 1, 2007 and consists of:

•: a $4.5 million term loan commitment ("Term A") with scheduled monthly principal installments and interest at the lender's base interest rate plus 0.25%;
•: a $10.0 million term loan commitment ("Term B") with scheduled monthly principal installments and interest at the lender's base interest rate plus 1.25%; and
•: a $55.0 million revolving loan with interest at the lender's base interest rate plus 0.25%.

Portions of the outstanding loans may be converted to LIBOR loans in minimum amounts ranging between $100,000 to $1 million and integral multiples of $100,000. Upon such conversion, interest is payable at LIBOR plus 1.75% for the revolving and the Term A loans and at LIBOR plus 2.75% for the Term B loan. We have entered into a series of one-month LIBOR loans, which, upon maturity, are either rolled back into the revolving loan or renewed under a new LIBOR contract.

Covenants in the loan agreement require us to maintain certain minimum financial ratios, restrict our ability to pay dividends and make capital expenditures and require us to use 75% of our excess cash flow to reduce outstanding borrowings. Additionally, we are obligated to pay an unused facility fee on the unused portion of the loan commitment. As of December 31, 2005, we were in compliance with all financial covenants and paid approximately $69,000 for the unused facility for the year ended December 31, 2005.

Junior Subordinated Promissory Notes

In 1997, we issued approximately $9.0 million of junior subordinated promissory notes, which bore interest at a rate of 14.0% per annum. On May 22 of each year, accrued interest was rolled into the principal amount of the notes. The principal amount of the notes, together with all unpaid accrued interest, was due and payable on May 22, 2007. On May 13, 2004 and December 30, 2004, we made equal payments of $7.0 million to reduce the borrowings under the notes. On June 1, 2005, we paid an additional $6.0 million to reduce the borrowings, and we paid the remaining balance of all principal and interest due of $4.3 million on November 10, 2005.

Contractual Obligations

The following table describes our cash commitments to settle contractual obligations as of December 31, 2005.

		Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
		(In thousands)
Term loans and loans payable		$	61,406	$	3,468	$	57,938		—		—
Operating lease obligations			10,410		1,759		3,338	$	2,704	$	2,609
Non-cancellable purchase obligations ⁽¹⁾			31,686		31,686		—		—		—

	Total	$	103,502	$	36,913	$	61,276	$	2,704	$	2,609

(1): These obligations reflect purchase orders outstanding with manufacturers as of December 31, 2005 and include orders which we believe we may cancel without penalty.

Capital Expenditures

We have made capital expenditures of $0.3 million, $0.2 million and $0.3 million in the years ended December 31, 2005, 2004 and 2003, respectively.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Financial Derivatives

We have no financial derivatives.

Market Risk Management

We are exposed to market risks arising from changes in market prices, including movements in interest rates and commodity prices.

Interest Rate Risk

Our variable interest rate debt is sensitive to changes in the general level of interest rates. At December 31, 2005, the weighted average interest rate on our $61.4 million of variable interest debt was approximately 7.2%.

While our variable rate debt obligations expose us to the risk of rising interest rates, management does not believe that the potential exposure is material to our overall financial performance or results of operations. Based on December 31, 2005 borrowing levels, a 1.0% increase or decrease in current market interest rates would have a $0.6 million effect on our statements of operations.

Foreign Currency Exchange Rate Risk

Our product is all invoiced in U.S. dollars. Accordingly, we do not believe we are exposed to foreign exchange rate risk.

BUSINESS

Overview

We are one of the largest distributors of specialty wire and cable and related services to the U.S. electrical distribution market. During 2005, we served approximately 2,600 customers, including each of the top 200 electrical distributors in the U.S. We have strong relationships with leading wire and cable manufacturers and provide them with efficient access to the fragmented electrical distribution market. During 2005, we distributed approximately 20,000 SKUs (stock-keeping units) to over 8,300 customer locations nationwide from eleven strategically located distribution centers in ten states. We are focused on providing our electrical distributor customers with a single-source solution for specialty wire and cable by offering a large selection of in-stock items, exceptional customer service and high levels of product expertise.

We offer products in most categories of specialty wire and cable, including: continuous and interlocked armor cable; control and power cable; electronic wire and cable; flexible and portable cords; instrumentation and thermocouple cable; lead and high temperature cable; medium voltage cable; and premise and category wire and cable. We also offer private branded products, including our LifeGuard™ low-smoke, zero-halogen cable. Our specialty wire and cable is primarily used in maintenance, repair and operations ("MRO") related projects and is increasingly purchased for larger-scale projects in the utility, industrial and infrastructure markets. Our specialty wire and cable is used within a diverse range of industries, including the communications, energy, engineering and construction, general manufacturing, infrastructure, petrochemical, transportation, utility and wastewater treatment industries.

Our value-added services include:

•: Standard same day shipment from our extensive inventory and distribution network
•: Application engineering support through our knowledgeable sales and technical support staff
•: Custom cutting of wire and cable to exact specifications at no additional charge
•: Inventory management programs that provide job-specific asset management and just-in-time delivery
•: Job-site delivery and logistics support
•: 24/7/365 customer service provided by our own employees
•: Customized internet-based ordering capabilities

Our wide product selection and specialized services support our position in the supply chain between wire and cable manufacturers and electrical distributors and their customers. Offering the breadth and depth of specialty wire and cable that we do requires significant warehousing resources and a large number of SKUs. An electrical distributor, however, typically sells a wide variety of electrical products ranging from lighting to MRO supplies, and only a small percentage of these items represent specialty wire and cable. In addition, given their bulk and weight, specialty wire and cable require a disproportionately high percentage of warehouse space and materials handling capabilities compared to the sales volume they generate for an electrical distributor. Instead of dedicating larger amounts of warehouse and other resources to specialty wire and cable, our distributor customers rely on us to supply much of their specialty wire and cable. At the other end of the supply chain, while manufacturers may have the space and capabilities to maintain a large supply of inventory, we do not believe that any single manufacturer has the breadth of product that we offer. More importantly, manufacturers historically have not offered the services that our customers need, such as complementary custom cutting and same day shipment, and do not have multiple distribution locations across the nation. As a result, we believe that we serve an important role in the supply chain for specialty wire and cable and that it would be uneconomical for manufacturers or electrical distributors to compete with us, given our nationwide product and service capabilities.

We were founded in 1975 and have a long history of reliable customer service, broad product selection and strong product expertise. In 1987, we completed an initial public offering and were subsequently purchased in 1989 by ALLTEL Corporation. In 1997, we were purchased by investment funds affiliated with Code, Hennessy & Simmons. During our 31 year history, we have successfully expanded our business from one original location in Houston, Texas to eleven strategic locations nationwide.

In 2000, we acquired our largest direct competitor, the Futronix division of Kent Electronics Corporation. In 2003, we implemented a new sales and marketing strategy to expand our sales force, to introduce new private branded products and to work in concert with our distributor customers to generate demand from end-users in our targeted markets, including the utility, industrial and infrastructure markets. As part of this initiative, we are partnering with our distributor customers and strengthening our relationships with project and specifying engineers to generate demand for our specialty wire and cable. For example, in the utility markets, we seek to capitalize on increased spending on new power generation assets and environmental compliance initiatives. In addition, in the engineering and construction market we work with specifying engineers to drive specialty wire and cable specifications in large capital projects and market our cable management program as a tool to manage wire and cable at those projects.

Based on the new sales and marketing strategy that we implemented in 2003, we have achieved strong financial and operating growth. Our revenue has increased from $149.1 million in 2003 to $214.0 million in 2005, a compound annual growth rate (CAGR) of 19.8%. During the same period, our operating income increased from $4.7 million to $22.1 million, a CAGR of 116.9%. We have improved operating leverage in our business, with operating expenses as a percentage of sales decreasing from 20.4% in 2003 to 15.7% in 2005. In 2004, our employees outperformed industry averages, as reported by the National Association of Electrical Distributors ("NAED"), with sales per employee of $647,000 compared to the industry average of $378,000. We believe our success is tied, in part, to our high levels of customer satisfaction, service and retention. A customer survey conducted in 2003 showed our customer satisfaction rating to be 94.0%. In 2005, we achieved on-time shipment rates and order accuracy of 99.9%. We intend to continue to leverage our strengths to pursue our strategic growth initiatives.

Industry Overview

Within the electrical distribution industry, our business focuses on specialty wire and cable. According to the U.S. Census Bureau, the total value of manufacturers' shipments of specialty wire and cable totaled approximately $7.0 billion in 2004. The specialty wire and cable we sell generally consists of continuous and interlocked armor cable; control and power cable; electronic wire and cable; flexible and portable cords; instrumentation and thermocouple cable; lead and high temperature cable; medium voltage cable; and premise and category wire and cable. These products are often highly engineered and require sophisticated knowledge to insure proper application. Examples of primary end-markets for specialty wire and cable include the communications, energy, engineering and construction, general manufacturing, infrastructure, petrochemical, transportation, utility and wastewater treatment industries.

The sales channel for specialty wire and cable depends on a number of factors, including order type, product selection, service level expectations, inventory management and delivery requirements. The greater the need for customization and high service levels (represented by the right side of the following diagram), the more likely the transaction will involve a specialty wire and cable distributor such as us.

In certain circumstances, manufacturers of specialty wire and cable sell their products directly to the end-user. These transactions typically consist of a bulk volume of wire and cable, involve little or no customized services and may require long lead times between order and delivery. An example of this type of transaction would be the purchase of full reels of cable with manufacturing lead times ranging from 8 to 16 weeks after receipt of the order. More frequently, an electrical distributor serves as the sales channel directly between the manufacturer and the contractor or end-user. The typical sale by an electrical distributor may involve a commonly purchased item that is specifically designated by the end-user and shipped from stock along with a variety of other electrical products. It is generally most economical for electrical distributors to carry in their inventories only those wire and cable SKUs that are commonly ordered and do not require high levels of specialized knowledge or services.

For customers requiring highly specialized wire and cable, custom cut lengths, technical expertise, short lead times or additional services, electrical distributors will generally source products from a specialty wire and cable distributor. We believe that the increasing complexity of specialty wire and cable specifications and the growing need for just-in-time delivery and logistics support will drive further growth in purchases through specialty wire and cable distributors.

Because sales of specialty wire and cable typically represent a relatively small portion of the revenue generated by our electrical distribution customers, our customers often rely on us to make the investments needed to support their specialty wire and cable sales. Given the bulk and weight of specialty wire and cable, stocking a comprehensive offering of specialty wire and cable to meet diverse product demand requires a disproportionately high percentage of warehouse space and materials handling capabilities for our customers, compared to the sales volume that they generate from these products. Electrical distributors typically do not have a high enough demand for specialty wire and cable to turn inventory cost-effectively. Instead of dedicating a larger amount of warehouse space to inventory and making the investments in employee training, same day shipment capabilities for specialty wire and cable, end-user support, and information technology needed to maintain industry leading levels of service, our electrical distribution customers rely on us to play this important role in the supply chain and to be a single source solution.

Targeted Markets

Utility Market. The utility market includes large investor-owned utilities, rural cooperatives and municipal power authorities. While we do not distribute the power lines used for the transmission of electricity, we sell many products used in a power plant and in the related pollution control equipment. As such we are positioned to benefit from expenditures for new power generation needed to satisfy a growing population with increasing energy demands and to comply with federal mandates to reduce toxic outputs from power generating facilities. We expect to benefit from this trend as our customers utilize our cable management services to support the distribution of specialty wire and cable required for the construction of new power plants and upgrading of existing power plants. For example, large coal-fired utility plants across the U.S. may be retrofitted with flue gas desulphurization systems (commonly referred to as scrubbers) to comply with pollution-control initiatives. This type of project requires the specialty instrumentation, power and control products that we distribute.

Industrial Market. The industrial market is one of the largest segments of the U.S. economy, comprised of a diverse base of manufacturing and production companies. We help our electrical distributor customers provide specialty wire and cable to industrial companies with large, complex plant maintenance, repair and operations requirements and for new capital projects. We offer specialty wire and cable that is specifically designed for a variety of industrial applications, and we are benefiting from accelerated capital spending due to economic expansion and a catch-up of deferred maintenance. For example, in petrochemical and other harsh-environment operations, we distribute specialty cables specifically designed to endure exposure to caustic materials or extreme temperatures.

Infrastructure Market. We believe that significant infrastructure improvements and additions will be needed over the next several years. For example, the Congressional Budget Office ("CBO") anticipates an increase in spending over the next two decades in the U.S. for drinking water systems and wastewater infrastructure and estimates that for the years 2000 to 2019, annual costs for investment will average between $25.0 billion and $41.0 billion. We expect to benefit from this trend given that the specialty wire and cable we distribute are used in the construction of wastewater treatment facilities. According to the Industrial Information Resources report, engineering and construction firms oversee $106.0 billion of annual expenditures on capital projects. We are assisting our customers to further penetrate the engineering and construction market by working with application engineers to drive specialty wire and cable specifications in large construction projects.

LifeGuard™ Market Opportunity

We believe that the market for low-smoke, zero-halogen products is in its infancy in the U.S. and represents a significant market opportunity across our targeted markets. Low-smoke, zero-halogen cables have been used extensively in Europe and Asia for many years. We led the development and marketing of low-smoke, zero-halogen cable in the U.S., and since its introduction in 2003, our LifeGuard™ line of cable has shown strong early signs of acceptance. In addition to other threats, when traditional cable burns, the acid gases produced are particularly destructive to electronic equipment, which represents a significant investment for many businesses. In contrast, low-smoke, zero-halogen compounds provide significant flame resistance, minimal smoke production and substantially reduced toxicity and corrosiveness when burned, as compared to traditional wire and cable.

Our LifeGuard™ cable has been accepted for use by over 300 end-users, including leading engineering and construction firms, and is increasingly included in specifications for utility, data center and industrial related projects. LifeGuard™ can be used in harsh environments for power, control and lighting circuits in a broad range of commercial, industrial and utility applications. We are currently marketing LifeGuard™ to the utility industry for use in power generation and co-generation; to industrial plants for petrochemical, pharmaceutical and wastewater treatment related uses; to general industry for use in data centers, such as computer rooms, switching centers and central offices; and to the engineering and construction market for use in highly populated facilities such as multi-story buildings, schools, hotels, hospitals, sports centers, airports and mass transit stations.

Competitive Strengths

We are a nationally recognized, full-service distributor of specialty wire and cable and related services. Through eleven strategic locations across the United States and over 450,000 square feet of warehouse space, we provide same-day shipment to a broad customer base including, among others, Border States Electric Supply, Consolidated Electrical Distributors, Inc., GE Supply Company, Graybar Electric Company, Inc., Hughes Supply, Inc., Mayer Electric Supply Company Inc., Rexel, Inc., The Reynolds Company, Sonepar USA and WESCO Distribution, Inc. We operate in a highly fragmented market, and we believe that the following competitive strengths have helped us achieve our leading position in the market and a strong reputation among manufacturers and customers.

Comprehensive Value-Added Services and Product Expertise

Our business model focuses on providing our customers with comprehensive value-added services and high levels of expertise across a broad range of our suppliers' products. Our services are designed to provide maximum efficiency and flexibility for our customers and include extensive product knowledge and application engineering support, inventory management, custom cut capabilities and 24/7/365 customer service. We help our customers achieve efficient and effective procurement of specialty wire and cable on terms that typically include short lead times, fast delivery and high fill rates. Critical to our success is our application engineering support, in which our knowledgeable sales people help customers match products based on intended use, cost and performance specifications. We have developed the expertise, infrastructure and relationships to provide extensive customer service that we believe would be costly to build and support without the scale we have achieved.

Strength and Tenure of Specialized Sales Force

We have invested in developing a sales force of highly knowledgeable professionals with considerable industry expertise. As of December 31, 2005, our sales force consisted of 40 field sales personnel and 84 inside sales and technical support personnel. The size of our field sales force has increased significantly since 2003. We have an experienced sales force that is aligned according to targeted industries, geography and select customer relationships. Our sales personnel receive ongoing, comprehensive training about innovations in specialty wire and cable as well as changes affecting our targeted markets. We use a consultative selling approach that leverages our extensive product expertise and knowledge of our customers' needs in the markets in which the products are used. Our sales effort is designed to augment the sales efforts of manufacturers as well as those of our distributor customers. We believe that our sales approach results in increased demand for the products we distribute and maximizes our reputation as a highly knowledgeable source of specialty wire and cable information.

First-Mover Advantage with LifeGuard™ Cable

We believe we have established a first-mover advantage in the U.S. with our LifeGuard™ line of low-smoke, zero-halogen cable products. We led the development and marketing of low-smoke, zero-halogen cable in the U.S., and since its introduction in 2003, our LifeGuard™ line of cable has shown strong early signs of acceptance. We believe our LifeGuard line of cable has the potential to become the industry standard in the U.S. for low-smoke, zero-halogen cable needs. Our LifeGuard™ line of cable has been accepted for use by over 300 end-users, including leading engineering and construction firms, and is increasingly included in specifications for utility, data center and industrial related projects. We have identified a substantial potential market for these products and believe that our early entrance into the market provides us with a significant competitive advantage.

Operating Leverage

Our ability to offer a high level of customer service is due in part to our highly efficient and effective operations that leverage centralized back-office administration and purchasing, a scalable information technology platform, automated warehouse operations and electronic product tracking. The products we carry are bar-coded with exact product specifications and length and tracked on a real-time basis in our system, which allows us to cost-effectively route orders to our warehouses across the country based on delivery distance, availability and quantity of product. Our process minimizes waste by targeting specific locations and reels for optimal custom cut orders. Efficient purchasing and management of our products have helped us increase our average inventory turns from 3.18 in 2001 to 4.63 in 2005 and improved our gross margin during the same period from 22.8% to 26.0%. In addition, by leveraging our national infrastructure and implementing back-office initiatives, we have decreased our operating expenses as a percentage of revenue from 17.9% in 2001 to 15.7% in 2005. Notably, we achieved much of this improvement during a period of general economic slowdown from 2001 to 2003. Based on data for 2004 reflected in the 2005 Performance Analysis Report (PAR) published by the NAED, we compare favorably to the electrical distribution industry averages across several metrics, including average sales per employee of $647,000 versus $378,000 for the industry.

Extensive Product Offering and Strong Supplier Relationships

In 2005, we sold over 20,000 SKUs, representing a broad and deep selection of high-quality specialty wire and cable. Our products include national brands of continuous and interlocked armor cable; control and power cable; electronic wire and cable; flexible and portable cords; instrumentation and thermocouple cable; lead and high temperature cable; medium voltage cable; and premise and category wire and cable. We also offer several products under our private brands, including our LifeGuard™ line of low-smoke, zero-halogen cable. Our strategy is to maintain a wide breadth and depth of inventory and provide our customers with high fill rates and quick order turnaround. We believe that our vast product offering and value-added services are significant factors in attracting and retaining many of our customers. In addition, we have strong, often decades-long, relationships with large wire and cable manufacturers such as Belden CDT, General Cable Corp., Nexans, Service Wire Company and Southwire Company. Because of our national scale, market leadership position and specialized services, we believe we provide an important function in the supply chain and are critical to our suppliers' sales efforts. We also believe that our strategic decision to concentrate our purchases with our top suppliers allows us to solidify our relationships with these vendors while optimizing our vendor rebates.

Strong and Diversified Customer Base

During 2005, we served approximately 2,600 customers, including each of the top 200 electrical distributors in the U.S. We have experienced exceptional customer retention, and we believe that we are the primary supplier of specialty wire and cable to a majority of our customers. Each of our top ten customers in 2005 has purchased products from us every year over the last decade. Our direct customers are electrical distributors, and our products are used within a diverse range of industries including, the communications, energy, engineering and construction, general manufacturing, infrastructure, petrochemical, transportation, utility and wastewater treatment industries. We believe that the strength of our broad customer relationships provides us with a significant competitive advantage.

Experienced Management Team

Our highly experienced team of executive officers and key management has an average tenure with us of over 13 years. This continuity strengthens our relationships with our customers and suppliers and enables us to provide our customers with a high level of product and industry expertise. Our management team is led by our President and Chief Executive Officer, Charles Sorrentino, who joined us in 1998. Working with Mr. Sorrentino is a team of industry veterans who have been instrumental to our strong growth and success to

date and will enable us to leverage our competitive strengths and pursue further strategic growth opportunities. Following this offering, our management team will own % of our outstanding shares and will hold options to purchase additional shares.

Growth Strategies

Generate Demand from Targeted Markets

During 2003, we realigned our sales efforts to work in concert with our distributor customers to generate demand directly from end-users in our targeted markets, including the utility, industrial and infrastructure markets. We believe that our sales and marketing programs and product application expertise can help our distributor customers drive demand from their customers. In select target markets, we are assisting our customers in forming relationships with project and specifying engineers to create demand for our specialty wire and cable. For example, in the utility market, we are positioned to capitalize on the increased spending on new power generation assets and environmental compliance initiatives. Additionally, we are marketing our cable management program to the engineering and construction market as a tool to manage supplies at large capital projects. We also believe that many of these new relationships have been awarded to us based on the range of value added services that we are able to provide. We believe that our ability to help generate demand and manage the logistics of delivering our specialty wire and cable increases the value we bring to our customers and suppliers alike. We believe that the relationships we have developed with specifying engineers enhance our role in the sales and marketing process and established a platform to accelerate sales of our private branded products through our distribution channels.

Expand Our Sales Force

As part of our ongoing strategy to penetrate new markets, we expect to continue to expand our sales force and further focus our sales and marketing efforts on supporting our distributor customers in our targeted markets. We typically hire experienced personnel for our sales force, and since 2003 we have significantly increased the number of our field sales personnel. Based on industry data from the NAED's PAR Report, our sales personnel outperformed industry averages in 2004 with average sales per sales employee of $1.5 million versus $836,000 for the industry. We believe we are in the early stages of penetrating additional sales channel opportunities in targeted markets and will continue to add specialized sales personnel to generate demand for our products.

Increase Sales of Private Branded Products

Beginning in 2003, we spearheaded the development and marketing of select private branded products, including LifeGuard™, a low-smoke, zero-halogen line of cable; Houwire®, a low-cost sound and security wire; and DataGuard™, a high-end electronic cable product line. Low-smoke, zero-halogen cables have been used extensively in Europe and Asia for many years. While we are still in the early stages of selling these product lines, we believe the possible markets for these products are significant. Since its introduction in 2003, our LifeGuard™ line of cable has shown strong early signs of acceptance and has been accepted for use by over 300 end-users, including leading engineering and construction firms, and is increasingly included in specifications for utility, data center and industrial related projects.

Focus on Efficient Operations and Cost Control

We seek ways to reduce costs, increase efficiency and ultimately enhance our ability to serve our customers. For example, we continuously measure our performance and implement best practices across our organization to improve our operations. We tie a portion of our manager compensation to profitable growth. In addition, we have invested in highly flexible and scalable information systems, which have been instrumental to the efficient integration of our sales, distribution and logistics capabilities. Improvements in our inventory management have created capacity in our warehouses that can be used to support our continued growth. We believe that our dedicated focus on efficient operations and scalable technology will help us drive productivity improvements and cost savings in the future.

Selectively Pursue Acquisition Opportunities

Our senior management team has experience in identifying and integrating acquisition targets. In 2000, we acquired our largest direct competitor, Futronix, from Kent Electronics. Following the acquisition we successfully integrated operations, including the elimination of seven of the Futronix warehouses. While we are not dependent on acquisitions to achieve our growth plan, we will selectively pursue acquisitions that leverage our established infrastructure and allow us to strategically address select target markets, grow our product and service offering, expand geographically and leverage our efficient distribution and operations platform. Given the fragmented nature of our industry, we believe that we will have compelling acquisition opportunities in the future.

Products

Through our relationships with many of the large wire and cable manufacturers, we have access to a full spectrum of specialty wire and cable, allowing us to consistently meet the needs of our customers. Our focus is on specialty wire and cable that is engineered for specific usage and supplies critical power and data to end-users across diverse markets. We custom cut our wire and cable to exact specifications so that they can be installed as soon as they arrive at the destination. Our product strategy is to carry an extensive array of specialty wire and cable to meet the diverse, dynamic and time-sensitive needs of our customers. In addition, our infrastructure is designed to respond to short lead times with high levels of product availability and same day shipment.

Product Categories. We distribute a wide array of wire and cable types for a host of applications, including:

•: Continuous Armor. Continuous armor cable is available in low voltage and medium voltage constructions and is used in harsh environments where maximum conductor protection is required. The corrugated seamless aluminum armor prevents the entrance of water, gas and corrosive elements into the electrical core of the cable. Continuous armor cable is used in a wide variety of applications including industrial power distribution, pulp and paper, utility and petrochemical operations. This product can be used indoors and outdoors, aerially, in conduits, ducts, cable trays and direct burial applications.
•: Control & Power. Control and power cable is 600 volt single or multiple conductor cable used in a broad range of commercial, industrial and utility applications. Applications include lighting, control and power circuits in wet and dry locations in conduits, ducts and raceways. Control and power cable is chemical, gasoline and oil resistant, and may be directly buried or installed in cable trays.
•: Electronic. Electronic cable is primarily used in audio, control, instrumentation and computer applications. It is highly engineered cable that provides specific electrical performance characteristics for a broad range of data, communications and industrial applications.
•: Flexible & Portable Cord . Flexible and portable cord is a highly flexible and durable single or multiple conductor cable used in heavy-duty industrial applications. These cables are commonly used

for energizing mobile mining equipment, diesel electric locomotives, lifting magnets, cranes and loaders, as well as for portable power distribution for tools, equipment, small motors and machinery.

•: Instrumentation & Thermocouple. Instrumentation and thermocouple cable is 300 volt or 600 volt, twisted pair or triad cable used to transmit signals for instrument, process and control, or heat sensing instruments. It may be used in wet and dry locations, indoors or outdoors, aerially, in conduits, ducts, cable trays or 600 volt direct burial applications.
•: Interlocked Armor. Interlocked armor cable is available in low voltage and medium voltage constructions and is used in harsh environments where maximum conductor protection is required. The protective sheath is made from a thick corrugated metal tape that locks together as it is wrapped around the cable core. It is used in a wide variety of applications including industrial power distribution, pulp and paper, utility and petrochemical operations. This product can be used indoors and outdoors, aerially, in conduits, ducts, cable trays and direct burial applications.
•: Lead & High Temperature. Lead and high temperature cable is 600 volt single conductor cable used to create or complete electrical circuits. Many of these cables are capable of withstanding flame temperatures in excess of 2,000°C or higher. This product is commonly used for power, control, and instrumentation circuits in iron, steel, glass, aluminum and refining applications, and in industrial heating and cooking equipment.
•: Medium Voltage. Medium Voltage cable is a single or multi-conductor cable that is rated for 2,001 volts to 35,000 volts. This power cable can be used in open air, conduit, duct, cable tray (when CT rated), wet and dry locations or be directly buried in earth. It is commonly used in chemical plants, refineries, steel mills, industrial plants, commercial buildings, utility substations and generating stations.
•: Premise & Category Wiring. Premise wiring is used for general purpose remote control signaling and voice and data applications. Category cables are used for high speed data transmission of voice, data and telephony information.

Our Private Branded Products. We also sell our own private branded products, LifeGuard™, DataGuard™ and Houwire®, across many of the product categories identified above.

•: LifeGuard ™. LifeGuard™ cable is a low-smoke, zero-halogen cable constructed with highly engineered polymers. LifeGuard's™ properties exceed those of standard cable construction, and it has excellent electrical and mechanical characteristics. The jacket on LifeGuard™ cable is highly flame-retardant, produces very small amounts of smoke when burned and contains no halogens. LifeGuard™ is used in harsh environments for power, control and lighting circuits in a broad range of commercial, industrial and utility applications. LifeGuard™ cable is ideal for applications where a high degree of safety and equipment protection is required. We are currently marketing LifeGuard™ to the utility industry for use in power generation; to industrial plants for petrochemical, pharmaceutical and wastewater treatment related uses; to general industry for use in data centers, such as computer rooms, switching centers and central offices; and to the engineering and construction market for use in highly populated facilities, such as multi-story buildings, schools, hotels, hospitals, sports centers, airports and mass transit stations.
•: DataGuard ™. We introduced our DataGuard™ product line in 2005 to address the data and communications wire and cable market. These expansive and performance driven markets require cables with exacting electrical characteristics. Our DataGuard™ products are premium quality, highly engineered cables specifically designed to meet these demanding requirements and are used in a broad range of audio, control, instrumentation and computer applications.
•: Houwire ®. Our Houwire® product line has been custom tailored for the sound, security and fire alarm market. Houwire® products are low-voltage cables that have been value engineered for multiple

applications in both industrial plants and commercial facilities. These competitively priced items have helped to position us for additional penetration into the broad and expanding sound and security market.

Services

In addition to the broad selection of specialty wire and cable that we distribute, we offer a wide array of value-added services to our customers to assist them with their wire and cable requirements. These services allow customers to use our industry expertise to efficiently manage their wire and cable requirements with improved service and minimal waste and expense.

We believe our inventory depth and breadth, distribution capabilities and value-added services are critical to our customers' wire and cable procurement needs and significantly reduce their cost by:

•: eliminating long lead times typically required by manufacturers;
•: reducing on-site labor costs;
•: fulfilling small orders without subjecting customers to purchase order minimums and price premiums;
•: reducing waste through our cut-to-length service offering;
•: moderating inventory carrying costs by offering next-day delivery for thousands of SKUs which take up substantial warehouse space;
•: providing access to restricted and exclusive brands;
•: offering technical resource capabilities through our product specialists' 24 hours a day, seven days a week, 365 days a year service; and
•: managing large, intermittent product orders through our cable management program.

Our value-added services include the following:

•: Application Engineering Support. Our sales personnel have significant technical knowledge of the wire and cable we distribute and their applications and specifications. Our sales staff assists customers with selecting the appropriate wire and cable products based on the intended use, cost and performance specifications.
•: Standard Same Day Shipment from Our Extensive Inventory. Through our nine distribution facilities and two third-party logistics providers, it is our standard practice to ship product the day it is ordered and, in many circumstances, we have it delivered by ground the next business day.
•: 24-Hours, 7-Days-a-Week, 365-Days-a-Year Service Anywhere in the United States. Our sales offices provide customers with around-the-clock customer support and can deliver customized orders on short notice from any of our locations.
•: Custom Color Striping. We provide custom striping services, including color-coding products for circuit design applications.
•: Cut-to-Length Capabilities at No Additional Charge. Approximately 90% of our stock orders are cut-to-length, which eliminates excess labor costs and remnants for our customers.
•: Wire & Cable Training Programs. We are actively engaged in wire and cable training both for our distributor customers and for their end-user customers. Typical training activities include wire schools at both supplier facilities and our own, plant and site tours at our facilities and our suppliers' facilities and on-site product training with cable engineers.
•: Full Extranet Capabilities. We give our customers internet-based, password protected access to select areas of our real-time ERP system, which allows them to check product availability, obtain pricing, and confirm order status—including detailed shipping information identifying the carrier used and shipment tracking number.

•: Cable Selection System. Our cable selection system is an internet-accessible order release site that allows installers to self-manage their cable requirements such that they arrive just-in-time at the job site and allows customers to initiate release of wire and cable via our website. With our cable selection system, the customer can request the exact circuit lengths to which cable is cut, project inventory status is available for review at any time, and the project engineer or field manager can submit changes to their orders from the field.
•: Cable Management Program. Our cable management program is an inventory system that pre-allocates specialty wire and cable for a customer's specific project and includes a custom program designed to manage all of the wire and cable requirements for a customer's project. The major benefits of our cable management program include guaranteed availability of materials, plus safety stock; immediate shipment of material upon field release; firm pricing and a dedicated project manager. As part of the program, wire and cable stock is reserved in the warehouse and identified with a special bar coding and tagging to ensure it is available for sale when requested by the customer. In addition, customers can review a project's inventory 24 hours a day via a secure internet site and can obtain details on items such as individual circuit cut history, shipment and order tracking information. Our cable management program allows customers to better manage their large projects and helps to eliminate job site theft, expenses associated with delayed shipments of materials and surplus materials.

Customers

During 2005, we served approximately 2,600 customers, including each of the top 200 U.S. electrical distributors, representing over 8,300 customer locations nationwide. All of our top ten customers have been customers for more than a decade.

Our top 10 customers in 2005 were:

Border States Electric Supply		Mayer Electric Supply Company, Inc.
Consolidated Electrical Distributors, Inc.		Rexel, Inc.
GE Supply Company		The Reynolds Company
Graybar Electric Company, Inc.		Sonepar USA
Hughes Supply, Inc.		WESCO Distribution, Inc.

Our customers' primary end-markets include the communications, energy, engineering and construction, general manufacturing, infrastructure, petrochemical, transportation, utility and wastewater treatment industries. While downturns or cyclicality in the markets our distributor customers serve could affect our business, we believe that the market and geographic diversity of our end-users helps to mitigate risks associated with regional or sector-specific cycles. In 2005, our largest customer, WESCO Distribution, represented approximately 11% of our sales.

Suppliers

We obtain products from most of the leading wire and cable suppliers. We believe we have strong relationships with our top suppliers. Although we believe that alternative sources are available for the majority of our wire and cable products, we have strategically concentrated our purchases with three leading suppliers in order to maximize product quality, delivery dependability, purchasing efficiencies, and supplier incentives. As a result, in 2005 approximately 55% of our annual purchases came from three suppliers. We do not believe we are dependent on any one supplier for any of our wire and cable products.

Our top five suppliers in 2005 were Belden CDT, General Cable Corp., Nexans, Service Wire Company and Southwire Company. We believe that our national distribution presence and value-added services make us

an essential partner in the supply chain for our suppliers. In addition, we believe our role in the supply chain, through our national distribution channel and value-added services, provides our suppliers cost savings by:

•: eliminating the need to maintain their own asset intensive distribution system across the U.S.;
•: placing large orders, which allow suppliers to have efficient and cost-effective production planning;
•: reducing their marketing and sales functions and expenses; and
•: allowing them to rely on our technical specialists to provide technical support to our customers and end-users.

Sales and Marketing

Sales Strategy

The primary objectives of our sales process are (i) to continue to generate market awareness, (ii) to identify profitable specialty wire and cable markets and (iii) to penetrate targeted markets through cost benefit analyses and customized service offerings. Our sales force is trained to identify the needs of our customers and develop a single-source wire and cable solution that meets their needs while creating a competitive advantage for us.

Sales Organization

In order to meet our growth initiatives and manage the corresponding increased contact with customers, we invested heavily in sales resources (including significantly increasing the size of our field sales force from 2003 to 2005). We have also transformed our compensation programs to drive a more proactive sales process. For example, we have realigned the incentives for our field sales force by tying more than 50% of commissions to sales to new customers. Our inside sales force compensation structure focuses on monthly adjusted gross profit dollars and margin percentage targets.

We have expanded our sales channels to support our electrical distributor customers as "channel partners" to penetrate our targeted markets, including the utility, industrial and infrastructure markets. In cooperation with these distributors, we are implementing a "pull-through" sales strategy to increase demand for our products and services among selected end-users.

As of March 1, 2006, our sales and marketing staff consisted of approximately 139 employees. We market our specialty wire and cable through an inside sales force located throughout our regional offices and a field sales force located in key geographic markets throughout the U.S. By operating under a decentralized process, regional managers are able to adapt quickly to market-specific occurrences, allowing us to compete effectively with local competitors. We believe the breadth and depth of our sales force is critical to serving our fragmented and diverse customer and end-user base.

Our field sales force focuses on developing demand for our products. In addition to adding field sales resources, since 2003 we have reorganized our sales organization to service our customer base more effectively and to penetrate new and larger end-markets. Our sales force optimization plan has involved:

•: driving the specification of our private branded products such as LifeGuard™;
•: developing targeted account lists within regional sales territories;
•: adding sales managers in larger regions to assist regional managers;
•: adding support personnel for the development of our targeted markets;
•: partnering with leading electrical distributor marketing groups to target Fortune 100 companies;
•: revising the sales commission plan to motivate and compensate personnel for profitable incremental growth;

•: adding national account managers to service our largest customers; and
•: implementing a customer relationship management platform to help target and develop new accounts.

Our inside sales force's primary objective is to maintain, service and develop existing accounts. Our inside sales personnel assist customers and end-users with selecting the appropriate wire and cable products based on intended use, cost and performance specifications. With our national presence, the inside sales force also has the ability to designate the distribution facility that will process a customer's order, which helps to reduce freight charges and transportation time. In addition to assisting customers with proper product selection, our inside sales personnel facilitate the designation of our products in project specifications, increasing the utilization of our products. Part of our inside sales force consists of our National Service Center, or NSC, an outbound call center located in Houston, Texas, that is focused on developing smaller or less active accounts. The NSC cultivates our customers using a cost effective and consistently applied sales and marketing process. We believe the NSC represents a valuable, hands-on and profitable training ground for the development of our current and future sales force.

Through the NSC, we offer continuous in-depth training for our entry-level sales personnel. In addition to our NSC training, we offer our sales force extensive training and education, including training on ISO 9001:2000 standard sales-related procedures, a "hands on" multi-department orientation, an in-house wire school facilitated by in-house experts and factory engineers, and attendance at the "Belden College of Wire Knowledge" at Belden CDT's manufacturing facility. All sales professionals are educated on our regimented sales process with complete protocols, requirements and controls.

Marketing

As a result of the initiatives we adopted in 2003, we have augmented our marketing activities and functions by:

•: creating an executive marketing position responsible for continual strategic analysis of our marketing channels, customers, products, and brand awareness;
•: implementing a sales and marketing organizational infrastructure driven by corporate market managers and segmented by targeted markets;
•: introducing a marketing services manager to handle customer-specific marketing programs;
•: adopting pricing matrices and controls;
•: developing marketing plans to target new markets and customers; and
•: developing new private branded products, such as LifeGuard™, DataGuard™ and Houwire®.

Our marketing materials include a master catalog, targeted mini-catalogs, product brochures, direct mail and an online presence that includes an e-catalog, company overview and LifeGuard™ cable informational videos. The extranet access we provide allows customers to obtain custom pricing, inventory availability and information on shipping and order-tracking. We also regularly participate in trade shows.

We employ database mining techniques to identify new business development opportunities and customers. We utilize our own data as well as third-party provided data. Our database contains over 18,000 contacts from 8,300 local accounts at electrical distributors nationwide and an additional 5,000 plus contacts of engineering and procurement professionals. We believe we possess one of the largest databases of contact information for electrical distributors of specialty wire and cable in the U.S.

We, like many of our customers, are members of various industry marketing groups that represent hundreds of electrical distributors across the U.S. As a supplier member of these groups, we are recognized as a preferred supplier to these customers. We believe that our relationships with these groups are strong. We also maintain direct relationships with all of our customers who are distributor members of these groups.

Operations & Facilities

Purchasing

To maximize purchasing efficiencies, we utilize a centralized purchasing function located at our corporate headquarters in Houston, Texas, which manages each distribution facility's unique product profile and inventory levels. The purchasing department is led by the Vice President of Marketing and Merchandising, who oversees a Director of Purchasing, senior buyers who are responsible for purchasing specific product groups, length allocation specialists, who are responsible for efficient reel selection, and a logistics and product analyst, who is responsible for inventory optimization initiatives. Additionally, the corporate market managers and sales personnel provide feedback on product lines to the Vice President of Marketing and Merchandising and the Director of Purchasing. Our ability to consolidate demand and purchase large quantities of wire and cable provides substantial manufacturing scale for our suppliers and results in competitive prices including attractive rebate programs.

Our centralized purchasing function is supported by our ERP system, which notifies the senior buyers of required inventory purchases through the use of a real-time inventory forecasting system. Under this system all inventory items have a classification based on sales frequency, which is customized for every SKU. Based on a particular item's classification, demand analysis is developed from usage history, minimum acceptable safety stock and projected manufacturing lead times.

Logistics

Our logistics process is highly automated through an ERP system that enables the seamless integration of operating functions. In 1999, we implemented a radio frequency bar-coded inventory system. This bar-coding system has facilitated our length allocation process, which audits all customers' orders prior to their release into the distribution facilities and subsequently directs warehouse personnel to particular reels for cut-to-length orders. This process reduces wire and cable remnants, ensures accuracy and maintains our real-time inventory system for sales personnel.

We process customers' orders the same day they are received. Our strategically located distribution centers generally allow for ground delivery nationwide within 24 hours of shipment. Orders are delivered through a variety of distribution methods, including less-than-truck-load, truck-load, air or parcel service providers, direct from supplier and cross-dock shipments. Freight costs are typically borne by our customers. Due to our shipment volume, we have preferred pricing relationships with most carriers.

Facilities

Combined, our nine company-operated facilities have approximately 500,000 square feet of total space and approximately 450,000 square feet of warehouse space. Our Houston, Texas facility is certified to ISO 9001:2000 standards and our eight other facilities follow these certified ISO procedures. Our facilities have capacity to accommodate substantial additional sales volume.

The following table sets forth information about our executive offices and our warehouse facilities as of March 1, 2006.

Location	Total Square Feet	Warehouse Square Feet	Owned/Leased	Lease Expiration Date
Houston, TX	166,720	136,720	Owned	n/a
Chicago, IL	67,448	62,378	Leased	August 8, 2013
Philadelphia, PA	60,000	54,500	Leased	December 31, 2011
Los Angeles, CA	52,901	47,036	Leased	November 14, 2009
Atlanta, GA	50,733	47,483	Leased	September 30, 2009
Charlotte, NC	44,159	38,892	Leased	June 30, 2015
Tampa, FL	36,991	32,589	Leased	March 31, 2013
Baton Rouge, LA	22,200	19,700	Leased	September 30, 2009
Seattle, WA	15,240	13,740	Leased	March 31, 2007

Total	516,392	453,038

We own our Houston, Texas facility, which serves as a regional distribution center as well as our corporate headquarters. Constructed in 1995 on 11.5 acres, the facility houses all centralized and back office functions such as finance, marketing, purchasing, human resources and information technology. Our Houston headquarters is pledged as collateral to our senior lenders. We believe that our properties are in good operating condition and adequately serve our current business operations.

As a test of potential new markets and to augment our distribution network, we contract with two third party logistics firms. The location of and services provided by these third party logistics firms are as follows:

•: Denver, Colorado —Inventory and ship pre-packaged and cut-to-order lengths of electrical and electronic cable for a monthly service fee for an unlimited number of transactions; and
•: San Francisco, California —Inventory and ship pre-packaged and cut-to-order lengths of electrical and electronic cable on a per-transaction fee basis.

Information Systems and Technology

We utilize scalable information systems and technology to provide support for all of our operations. We utilize a proprietary state-of-the-industry ERP system. Over the years, the system has been upgraded and customized for our operations and allows for the seamless integration of financial, operational and administrative functions. Each of our locations is connected to our computer networks through dedicated data lines. These systems are protected by the support of recognized security systems, and we maintain a disaster recovery system that provides for the back-up of our data.

Our automated bar-coded inventory system allows us to track and manage our inventory on a real-time basis. With more than 45,000 reels across eleven distribution facilities, our information technology systems allow complete traceability of our products through the entire supply chain from our suppliers to delivery to our customers. We also developed a proprietary cable management system that allows our customers to review online the wire and cable products designated for specific projects, release orders for shipment and review previous shipments.

In 2004, we augmented our ERP system with the implementation of a CRM platform for customer relationship and sales force management, which allows for advanced customer management in a secure environment.

We have an experienced and dedicated information technology department, including on-site programmers and other network professionals.

Employees

As of March 1, 2006, we had 269 employees, the majority of whom are sales or warehouse personnel.

None of our employees is represented by a labor union or covered by a collective bargaining agreement. We believe that our employee relations are good.

Competition

Like the general U.S. electrical distribution market, the specialty wire and cable market is highly competitive and fragmented, with over 200 specialty wire and cable distributors serving this market. The product offerings and levels of service provided by the other specialty wire and cable distributors with which we compete vary widely. We primarily compete with other wire and cable distributors on a regional and local basis. Most of our direct competitors are smaller companies that focus on a specific geographical area or feature a select product offering, such as surplus wire. In addition to the direct competition with other specialty wire and cable distributors, we also face, on a much more limited basis, competition with the hundreds of electrical distributors and manufacturers that sell products directly or through multiple distribution channels to end-users or other resellers. In the markets that we serve, competition is primarily based on product line breadth, quality, product availability, service capabilities and price.

Government Regulations

We are subject to regulation by various federal, state and local agencies. These agencies include the Environmental Protection Agency, Department of Transportation, Interstate Commerce Commission, Occupational Safety and Health Administration, Department of Labor and Equal Employment Opportunity Commission. We believe we are in compliance in all material respects with existing applicable statutes and regulations affecting environmental issues and our employment, workplace health and workplace safety practices.

Litigation

From time to time, we are involved in lawsuits that are brought against us in the normal course of business. We are not currently a party to any legal proceedings that we expect, either individually or in the aggregate, to have a material adverse effect on our business or financial condition. We, along with many other defendants, have been named in a number of class action lawsuits in the state courts of North Dakota alleging that certain wire and cable which may have contained asbestos caused injury to the plaintiffs who were exposed to this wire and cable. It is not clear whether the alleged injuries occurred as a result of the wire and cable in question or whether we, in fact, distributed the wire and cable alleged to have caused any injuries. In addition, we did not manufacture any of the wire and cable at issue, and we would rely on any warranties from the manufacturers of such cable if it were determined that any of the wire or cable that we distributed contained asbestos which caused injury to any of these plaintiffs. In connection with ALLTEL's sale of our company in 1997, ALLTEL provided indemnities with respect to costs and damages associated with these claims that we believe we could enforce if our insurance coverage proves inadequate. In addition, we maintain general liability insurance that has applied to these claims. To date, all costs associated with these claims have been covered by the applicable insurance policies and all defense of these claims has been handled by the applicable insurance companies.

MANAGEMENT

Executive Officers and Directors

The following table sets forth information about our executive officers and directors and their ages as of March 24, 2006.

Name	Age	Title
Charles A. Sorrentino	61	President, Chief Executive Officer and Director
Nicol G. Graham	53	Chief Financial Officer, Treasurer and Secretary
Peter M. Gotsch	41	Chairman of the Board of Directors
Robert G. Hogan	38	Director

We expect to appoint additional directors who are not affiliated with us or any of our stockholders to our board of directors within twelve months of the closing of this offering, so that a majority of our board will be independent directors.

Charles A. Sorrentino
President, Chief Executive Officer and Director

Mr. Sorrentino joined us as President and Chief Executive Officer in 1998. Prior to joining us, Mr. Sorrentino served as President of Pameco Corporation, a national heating, ventilation, air conditioning and refrigeration distributor, from 1994 to 1998. Pameco was a $600 million distributor that was listed on the New York Stock Exchange following an initial public offering in 1997 and was later merged into a larger company. Prior to working with Pameco, Mr. Sorrentino served with PepsiCo, Inc. for nine years. During this time, he held a variety of positions, including Subsidiary President, Division Vice President and Region Vice President. After completing college, Mr. Sorrentino served twelve years with United Technologies (Sundstrand Corporation), a NYSE-listed manufacturer of industrial, heating and air conditioning components in a variety of engineering, sales, marketing and executive management functions. Mr. Sorrentino earned a M.B.A. from the University of Chicago and a B.S. in Mechanical Engineering from Southern Illinois University. He also served in the United States Marine Corps.

Nicol G. Graham
Chief Financial Officer, Treasurer and Secretary

Mr. Graham has served as our Chief Financial Officer since 1997. He oversees our financial reporting and analysis, accounting, tax, risk management, compliance, and administration functions. He joined us in 1984 as Controller and has held various financial management positions. He is a registered CPA in the U.S. and a Chartered Accountant in his native Scotland.

Peter M. Gotsch
Chairman of the Board of Directors

Mr. Gotsch has served as a member of our Board of Directors since 1997. He has been a member of Code Hennessy & Simmons LLC since 1997 and employed by its affiliates since 1989. He holds a B.A. degree from St. Olaf College and an M.B.A. from Northwestern University. He currently serves as the Chairman of the Board of The Hillman Companies, Inc. and on the Board of Directors of Beacon Roofing Supply, Inc.

Robert G. Hogan
Director

Mr. Hogan has served as a member of our Board of Directors since 2005. He joined Code Hennessy & Simmons LLC in 2000 and has been a Vice President since 2003. He holds a B.A. degree from the University of Notre Dame and an M.B.A. from Northwestern University.

Other Key Management

Name	Age	Title
James L. Pokluda III	41	Vice President, Marketing and Merchandising
Christopher R. McLeod	44	Vice President, Logistics
Marcus L. Jones	51	Vice President, Southeast Region
Gregory J. Donato	41	Vice President, Northeast Region
Eric S. Blankenship	54	Vice President, National Business Development
Eric W. Davis	44	Vice President and Controller
Carol M. Sims	46	Director, Human Resources
Marilyn J. McMahon	58	Director, Information Services

James L. Pokluda III
Vice President, Marketing and Merchandising

Mr. Pokluda assumed his current role in 2003 and is responsible for all marketing, merchandising, and purchasing activities. Mr. Pokluda joined us in 1987 as an Account Manager and was our leading salesperson for the three consecutive years prior to his promotion to General Manager of the Southern Region in 1995. In 2000, Mr. Pokluda assumed the role of Regional Vice President and between 1995 and 2001 his profit and loss responsibility was expanded to include our Western and South-Central regions. In 2001, he became our Vice President of Marketing. Mr. Pokluda is a graduate of the College of Engineering at Texas A&M University and regularly participates in executive education at the Graduate Schools of Business at the University of Chicago, Rice University, and MIT.

Christopher R. McLeod
Vice President, Logistics

Mr. McLeod joined us in 2001 as Director of Logistics and was promoted to Vice President of Logistics in December 2001. He is responsible for our nine distribution facilities and our arrangements with our two third-party logistics providers, transportation management, safety programs and ISO practices. Prior to joining us, Mr. McLeod was a Managing Director at FedEx Logistics where he managed the Dell Computer account. Additionally he has held several logistics positions at Kimberly Clark-Tecnol, Tandy Corporation, and Pier 1 Imports. Mr. McLeod is a graduate of Sam Houston State University and received an MBA with honors from Regis University. He has also completed an executive training program at Texas Christian University—M.J. Neely School of Business.

Marcus L. Jones
Vice President, Southeast Region

Mr. Jones joined us in 1999 as the Regional Manager of our Charlotte, North Carolina facility. In 2000, he was promoted to Regional Vice President and effectively managed the integration of Futronix's Southern Region. Prior to joining us, Mr. Jones worked ten years for Rockwell Automation Allen-Bradley. At Rockwell, he had a variety of responsibilities including area management, product development, mergers and acquisitions, and market channel development. He has also served as a national distribution manager for Texas Instruments Inc. Mr. Jones is a graduate of the University of North Carolina at Charlotte.

Gregory J. Donato
Vice President, Northeast Region

Mr. Donato joined us as a District Sales Manager in 1993. In 2000, he assumed the responsibility of Regional Vice President with profit and loss accountability for 23 states covering the Northeast and Midwest regions. Prior to joining us, Mr. Donato served as electrical sales manager for Fairmont Supply Company, then a wholly-owned subsidiary of E.I. DuPont de Nemours & Company. Mr. Donato worked at Fairmont Supply for six years. Mr. Donato is a graduate of Widener University. He has completed additional executive training programs at the University of Michigan, MIT Sloan School of Management and Villanova University.

Eric S. Blankenship
Vice President, National Business Development

Mr. Blankenship has served as our Vice President, National Business Development since 1999. He began his career with us as an inside sales professional in our Charlotte, North Carolina facility in 1980, and was later promoted to inside sales manager in 1989. He achieved Salesperson of the Year honors from 1986 through 1988. From 1989 to 1993, he served as the general manager for the Charlotte, North Carolina and Baton Rouge, Louisiana facilities. Immediately prior to his current position, Mr. Blankenship was Vice President, Sales and Marketing from 1993 to 1999. Mr. Blankenship is a graduate of the University of South Alabama.

Eric W. Davis
Vice President and Controller

Mr. Davis has served as our Vice President and Controller since 2002. Mr. Davis joined us in 1993 and has held several accounting and management positions. From 1990 to 1993, Mr. Davis was employed by American Exploration Company as a Senior Internal Auditor. From 1988 to 1990, Mr. Davis was employed by Arthur Andersen. Mr. Davis became a CPA in 1991. Mr. Davis received his BS and MBA from the University of Houston—Clear Lake, and served in the U.S. Army.

Carol M. Sims
Director, Human Resources

Ms. Sims has served as our Director of Human Resources since 1994. In this position she is responsible for all personnel-related activities. Ms. Sims joined us in 1984 as an Executive Secretary. Ms. Sims received her Professional Human Resources certification in 1993.

Marilyn J. McMahon
Director, Information Services

Ms. McMahon joined us as our Data Processing Manager in 1994, and was promoted to Director, Information Services in 1999. In her current position, she is responsible for our information and communication systems. Prior to joining us, Ms. McMahon was an information technology consultant, managing software and programming projects from 1989 to 1994. From 1980 to 1989, she was a Programmer Analyst and Project Leader at the Richmond Tank Car Company and Igloo Corporation. Ms. McMahon attended Loyola University and has participated in three years of technical training at IBM Corporation. She recently attended the Leadership Training program at Rice University.

Board Composition

Our board of directors currently consists of three directors. We intend to elect a fourth director, who will be independent, to the board of directors prior to the closing of this offering. Each director is elected for a term of one year and serves until a successor is duly elected and qualified or until his or her death,

resignation or removal. There are no family relationships between any of our directors or executive officers. Our executive officers are elected by and serve at the discretion of the board of directors.

Committees of Board of Directors

Prior to the closing of this offering, the board of directors will establish three committees, the audit committee, compensation committee and nominating and corporate governance committee. In the future, the board may also establish other committees to assist in the discharge of its responsibilities.

The audit committee will select the independent auditors to be nominated for election by the stockholders and review the independence of these auditors, approve the scope of the annual audit activities of the independent auditors, approve the audit fee payable to the independent auditors and review these audit results with the independent auditors. The audit committee is comprised of . Within a year following this offering, subject to Nasdaq's applicable transition rules, the audit committee will be comprised solely of directors who meet the independence requirements established by Nasdaq and applicable law. Ernst & Young LLP currently serves as our independent registered public accounting firm.

The duties of the compensation committee will be to provide a general review of our compensation and benefit plans to ensure that they meet our objectives. In addition, the compensation committee will review the chief executive officer's recommendations on compensation of our executive officers and make recommendations for adopting and changing major compensation policies and practices. The compensation committee will report its recommendations to the full board of directors for approval and authorization. It will also fix the annual compensation of the chief executive officer and administer our stock plans. The compensation committee is expected, after additional independent board members are identified and elected, to be comprised of at least three independent directors who are also non-employee directors (as defined in Rule 16b-3 under the Securities Exchange Act) and outside directors (as defined in Section 162(m) of the Internal Revenue Code) who do not have "interlocking" or other relationships with us that would detract from their independence as committee members. The members of the compensation committee are .

The nominating and corporate governance committee will be responsible for identifying and recommending potential candidates qualified to become board members, recommending directors for appointment to board committees and developing and recommending to the board a set of corporate governance principles. The nominating and corporate governance committee is comprised of .

Director Compensation

Independent members of the board of directors receive an annual retainer of $30,000. All directors are also entitled to receive $1,500 for each board meeting attended and $1,000 for each committee meeting. The chairman of each of the audit committee and compensation committee will be entitled to receive an additional $5,000 per year. All fees may be paid in cash or shares of our common stock, at the choice of the director.

In addition, upon election to the board, each independent director will receive a one-time grant of an option exercisable for shares of our common stock. Upon reelection, independent directors will also receive an annual grant of an option exercisable for shares. All options become exercisable one year after the date of grant. Exercise prices will be set at fair market value at the date of grant.

We reimburse members of our board of directors for any out-of-pocket expenses they incur in connection with services provided as directors.

Executive Compensation

The following table sets forth information concerning the compensation for 2005 of our Chief Executive Officer and our other most highly compensated executive officer who was serving at the end of our last fiscal year. For ease of reference, we collectively refer to these executive officers throughout this section as our "named executive officers."

Summary Compensation Table

		Annual Compensation						Long Term Compensation Awards
Name and Principal Position as of December 31, 2005	Year	Salary ($)		Bonus ($)		Other Annual Compensation ($)		Restricted Stock Awards ($)	Securities Underlying Options (#)	All Other Compensation ($)
Charles A. Sorrentino, President and Chief Executive Officer	2005	$	300,000	$	200,000	$	6,550	—	—	$	7,668	⁽¹⁾
Nicol G. Graham, Chief Financial Officer	2005	$	159,000	$	47,700	$	1,698	—	5,000	$	3,221	⁽²⁾

(1): All Other Compensation reported for Mr. Sorrentino represents a $4,200 matching contribution by the company to our 401(k) Plan and $3,468 for supplemental and long-term disability insurance premiums.
(2): All Other Compensation reported for Mr. Graham represents a $3,055 matching contribution by the company to our 401(k) Plan and $166 for supplemental and long-term disability insurance premiums.

Option Grants

The following table sets forth information regarding stock options we granted to our named executive officers during our last fiscal year.

Option Grants in 2005

							Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term ⁽¹⁾
			Percent of Total Options Granted to Employees in Fiscal Year
	Number of Securities Underlying Options Granted
Name					Exercise Price ($/Share)	Expiration Date
Name					Exercise Price ($/Share)	Expiration Date	5%	10%
Charles A. Sorrentino	—		—		—	—	—	—
Nicol G. Graham	5,000	⁽²⁾	10.2	%	5.00	12/30/15

(1): The amounts shown on this table represent hypothetical gains that could be achieved for the respective options if exercised at the end of the option term. These gains are based on assumed rates of stock appreciation of 5% and 10% compounded annually from the date the respective options were granted to their expiration date. The gains shown are net of the option exercise price, but do not include deductions for taxes or other expenses associated with the exercise. Actual gains, if any, on stock option exercises will depend on the future performance of our common stock, the optionholder's continued employment through the option period and the date on which the options are exercised.

(2): The options were granted at $5.00 per share, the estimated fair market value of these securities on the date of the grant as determined by our board of directors, and vest in equal amounts on each of the first through fifth anniversaries of the date of grant.

Option Exercises and Fiscal Year-End Option Values

The following table sets forth information for the named executive officers concerning stock option exercises during our last fiscal year and options outstanding at the end of our last fiscal year. None of the named executive officers acquired any shares upon the exercise of outstanding options in 2005.

Aggregate Option Exercises in Fiscal 2005 and
Fiscal Year-End Option Values

			Number of Securities Underlying Unexercised Options at Fiscal Year End
					Value of Unexercised In-the-Money Options at Fiscal Year End ⁽¹⁾
Name	Shares Acquired on Exercise	Value Realized
Name	Shares Acquired on Exercise	Value Realized	Exercisable	Unexercisable	Exercisable	Unexercisable
Charles A. Sorrentino	—	—	—	—	—		—
Nicol G. Graham	—	—	—	6,200	—	$	4,800

(1): There was no public trading market for our common stock as of December 30, 2005. Accordingly, these values have been calculated on the basis of the estimated fair market value of these securities on December 30, 2005, as determined by our board of directors, less the applicable exercise price.

Employment Arrangements

We expect to enter into an employment agreement with Mr. Sorrentino, our President and Chief Executive Officer, prior to the offering.

Each of our other executive officers is elected by and serves at the discretion of the board of directors.

Compensation Committee Interlocks and Insider Participation

We will establish a compensation committee, and we expect that, after additional independent board members are identified and elected, the compensation committee will consist of at least three independent directors who are also non-employee directors (as defined in Rule 16b-3 under the Securities Exchange Act) and outside directors (as defined in Rule 162(m) of the Internal Revenue Code) who do not have "interlocking" or other relationships with us that would detract from their independence as committee members.

Stock Plans

Equity Compensation Plan Information

	(a)	(b)	(c)
Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights	Weighted-Average Price of Outstanding Options, Warrants and Rights	Number of Securities Remaining Available for Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders

2000 Stock Plan

Our 2000 Stock Plan was established by the board of directors, effective February 17, 2000, in order to provide for grants of stock options and awards to our key employees and directors. The purpose of the grants and awards is to provide incentives for increased profitability and to provide key employees and directors with a greater interest in our business. We will make any future stock-based awards under our new 2006 Stock Plan.

Plan Administration. The 2000 plan is administered by our board, which has delegated administration to the compensation committee. The committee has full authority to select the key employees and directors who receive option grants and stock awards, and to determine the amount and the terms and conditions of each grant or award.

Number of Shares of Common Stock. The number of shares of our common stock that may be issued under the 2000 plan is 100,000. The maximum number of shares issuable as incentives to any employee or director in any calendar year is 25,000. Shares issuable under the 2000 plan may be authorized but unissued shares or treasury shares. If any grant or award expires, terminates or is forfeited, the shares subject to the grant or award will again be available for issuance. No grant or award may be granted after February 17, 2010. We will not make any further grants under the 2000 plan following this offering.

Grants of Stock Options. The committee is authorized to grant non-qualified or incentive stock options to selected key employees and non-qualified stock options to non-employee directors. The committee sets the terms and conditions applicable to the options, including the exercise price, type of option, and the number of shares subject to the option. The duration of any option may not exceed 10 years from the grant date. In addition, an incentive stock option is subject to the following rules: (i) the aggregate fair market value (determined at the time the option is granted) of the shares of common stock with respect to which incentive stock options are exercisable for the first time by an employee during any calendar year (under all of our stock option plans) cannot exceed $100,000; and (ii) if an incentive stock option is granted to an employee who owns stock possessing more than 10% of the total combined voting power of all classes of our stock, the exercise price will be at least 110% of the closing price of our stock on the grant date and the option will expire no later than five years from the grant date. Without the board's approval, no shares acquired upon the exercise of an incentive stock option may be sold or otherwise disposed of by the employee within two years from the grant date of the option and within one year from the exercise date.

Grants of Stock Awards. The committee is authorized to grant stock awards to key employees and directors. The award granted to any employee or director shall be for the number of shares, and subject to such vesting requirements, restrictions and other terms and conditions, as the committee shall determine in its discretion.

Payment of Option Exercise Price and Withholding Taxes. The committee may permit an option holder to pay the exercise price of an option by one or more of the following methods: cash; delivery of previously-acquired shares of our stock; retention by the company of shares that would have otherwise been issued upon the option's exercise; such other methods as deemed appropriate by the committee (such as a loan from the company); or a combination of the foregoing as approved by the committee. The committee may permit an employee to pay the minimum amount of any required withholding tax arising in connection with any stock award or option exercise by delivery of previously-acquired shares of our stock or retention by the company of shares that would have otherwise been acquired pursuant to the stock award or upon option exercise.

Extraordinary Transactions. If we merge or consolidate with another corporation, or if another entity acquirers our property or stock, or in the event of a reorganization or liquidation, or in the event of any other extraordinary transaction, the committee or the board of the surviving entity may provide for the continuation of any award previously granted under the 2000 plan or for any other adjustments. These other adjustments include, but are not limited to, requiring (i) that cash be paid in lieu of an option in an amount equal to the difference between the fair market value of the shares covered by the option and the option exercise price; (ii) that an option be converted into other property; or (iii) that an option must be exercised within a specified period following written notice.

Amendment or Termination of the Plan. The board may amend or terminate the 2000 plan at any time as long as the amendment or termination does not adversely affect the rights of any employee or director under any option or award agreement without his or her written consent.

2006 Stock Plan

Our stockholders recently approved our 2006 Stock Plan. We intend to make awards of stock options and restricted stock under the 2006 plan to key employees and directors. We want to recognize the contributions made by our key employees, provide them with additional incentives to devote themselves to our future success and improve our ability to attract and retain employees. We also want to provide additional incentives to members of our board of directors to serve on the board and dedicate themselves to our future success.

Plan Administration. The 2006 plan will be administered by our board, which has authority to delegate administration to the compensation committee so long as the committee is comprised of two or more directors who satisfy the "non-employee director" definition under Rule 16b-3 of the Securities Exchange Act and the "outside director" definition under Section 162(m) of the Internal Revenue Code. Until such time as the board has two members who are both non-employee directors and outside directors, the committee may be composed otherwise. The board or committee, as applicable, has full authority to select the individuals who will receive awards under the 2006 plan, determine the form and amount of each of the awards to be granted, and establish the terms and conditions of awards. To the extent the board delegates its authority, references in this summary to the board mean the committee. The board has delegated its authority under the 2006 plan to the compensation committee.

Number of Shares of Common Stock. The number of shares of our common stock that may be issued under the 2006 plan is . Of these shares: (i) the maximum number issuable as stock options to any employee in any calendar year is , (ii) the maximum number issuable as incentive stock options is , and (iii) the maximum number that may be used for restricted stock awards is .

Shares issuable under the 2006 plan may be authorized but unissued shares or treasury shares. If any award expires, terminates or is forfeited or cancelled for any reason, the shares subject to the award will again be available for issuance. In addition, any shares subject to an award that are delivered to or withheld by us as payment for an award or for withholding taxes due in connection with an award will again be available for issuance, and only the net number of shares delivered to the participant will count toward the

number of shares issued under the 2006 plan. The number of shares issuable under the 2006 plan is subject to adjustment in the event of any reorganization, recapitalization, stock split or dividend, merger, consolidation, split-up, spin-off, combination, subdivision or any similar corporate transaction. In each case, the board has the discretion to make adjustments it deems necessary to preserve the intended benefits under the 2006 plan.

Term of Plan. Our board can grant awards under the 2006 plan for 10 years following its adoption, or until March 23, 2016. Awards outstanding on that date will continue to be subject to the terms of the plan.

Awards to Employees. The 2006 plan provides for discretionary awards of stock options and restricted stock to selected employees and directors.

Stock Options. Our board may grant non-qualified or incentive stock options to selected employees and non-qualified stock options to non-employee directors. The board may set the terms and conditions applicable to the options, including the exercise price of the option, type of option and the number of shares subject to the option. In any event, each option will expire 10 years from the date of grant.

In addition, an incentive stock option is subject to the following rules: (i) the aggregate fair market value (determined at the time the option is granted) of the shares of common stock with respect to which incentive stock options are exercisable for the first time by an employee during any calendar year (under all of our stock option plans) cannot exceed $100,000, and, if this limitation is exceeded, the portion of the incentive stock option that does not exceed this dollar limit will be an incentive stock option and the remainder will be a non-qualified stock option; and (ii) if an incentive stock option is granted to an employee who owns stock possessing more than 10% of the total combined voting power of all classes of our stock, the exercise price will be 110% of the closing price of our stock on the date of grant and the incentive stock option will expire no later than five years from the date of grant.

Restricted Stock. Our board may grant restricted stock awards to directors and selected employees, either for no consideration or for such appropriate consideration as the board determines. The board has the discretion to determine the number of shares awarded and the restrictions, terms and conditions of the award. Subject to the restrictions, the recipient of an award will be a stockholder with respect to the shares awarded to him or her and will have the rights of a stockholder with respect to the shares, including the right to vote the shares and receive dividends, if any, on the shares.

Our board may establish, as restrictions on the stock, performance goals and targets for participants, which lapse if we achieve the performance goals and targets for the designated performance period. The performance goals may be based on one or more business criteria. Performance goals may be absolute in their terms or measured against or in relationship to the performance of other companies or indices selected by the board.

Payment of Stock Options and Withholding Taxes. Our board may permit a participant to pay the exercise price of an option or pay for restricted stock by one or more of the following methods: cash; cash received from a broker dealer to whom the employee has submitted an exercise notice and irrevocable instructions to deliver to us the sales proceeds from the sale of the shares subject to the award to pay the exercise price; delivery of previously acquired shares of stock that are acceptable to the board; or certification of ownership by attestation of these previously acquired shares. Our board may permit an employee to pay the minimum amount of any required withholding tax by using one or more of the payment methods described above, and/or by directing us to withhold shares otherwise issuable in connection with the award.

Provisions Relating to a Change in Control. If there is a change in control (as defined in the 2006 plan), all outstanding awards will become fully exercisable and all restrictions applicable to any awards will terminate or lapse. In addition, our board has sole discretion to provide for the purchase of outstanding stock options for cash equal to the difference between the exercise price and the then fair market value of the common stock subject to the option, make adjustments to any outstanding awards as the board deems

appropriate to reflect the change in control, and cause any awards to be assumed by the acquiring or surviving corporation.

Amendment of Award Agreements; Amendment and Termination of the Plan. Our board may amend any award agreement, and may amend or terminate the 2006 plan, at any time, as long as the amendment or termination does not adversely affect the rights of any participant under any agreement in any material way without the written consent of the participant, unless the amendment or termination is required by law, regulation or stock exchange rule. No amendment to the 2006 plan or any award agreement will permit the repricing of stock options.

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information regarding the beneficial ownership of our common stock as of March 15, 2006, and as adjusted to reflect the sale of the shares of common stock offered in this offering for:

•: each person or entity who is known by us to own beneficially more than 5% of any class of outstanding voting securities;
•: each named executive officer and each director;
•: all of our executive officers and directors as a group; and
•: each other stockholder selling shares in this offering.

Unless otherwise indicated below, to our knowledge, all persons listed below have sole voting and investment power with respect to their shares of common stock, except to the extent authority is shared by spouses under applicable law. Unless otherwise indicated below, each entity or person listed below maintains an address c/o Houston Wire & Cable Company, 10201 North Loop East, Houston, Texas 77029.

The number of shares beneficially owned by each stockholder is determined under rules promulgated by the SEC. The information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting or investment power and any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days after March 15, 2006 through the exercise of any stock option, warrant or other right. The inclusion in the following table of those shares, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner.

	Beneficial Ownership Prior to Offering				Beneficial Ownership After Offering
	Common Stock				Common Stock
Beneficial Owners	Number of Shares	Percentage		Shares Offered Hereby ⁽⁵⁾	Number of Shares	Percentage
Code, Hennessy & Simmons II, L.P. ⁽¹⁾	6,773,774	76.4	%
Charles A. Sorrentino	855,700	9.7	%
Nicol G. Graham ⁽²⁾	113,080	1.3	%
Peter M. Gotsch ⁽³⁾	6,773,774	76.4	%
Robert G. Hogan	—
All directors and executive officers as a group (4 persons)	7,742,554	87.4	%
Other selling stockholders ⁽⁴⁾

(1): Code, Hennessy & Simmons, Inc. is the general partner of CHS Management II, L.P., which in turn is the general partner of Code, Hennessy & Simmons II, L.P., all of which are located at 10 South Wacker Drive, Chicago, Illinois 60606. Code, Hennessy & Simmons, Inc. and CHS Management II, L.P. may be deemed to beneficially own these shares, but disclaim beneficial ownership of shares in which they do not have a pecuniary interest. The shareholders and officers of Code, Hennessy & Simmons, Inc. are Andrew W. Code, Daniel J. Hennessy and Brian P. Simmons. Messrs. Code, Hennessy and Simmons may be deemed to beneficially own these shares due to the fact that they share investment and voting control over shares held by Code, Hennessy & Simmons II, L.P., but disclaim beneficial ownership of shares in which they do not have a pecuniary interest.
(2): Includes 55,345 shares owned by the Nicol Gordon Graham IRA—Chase Bank.
(3): Mr. Gotsch is a limited partner of CHS Management II, L.P., which is the general partner of Code, Hennessy & Simmons II, L.P., and he disclaims beneficial ownership of the shares in which he does not have a pecuniary interest.

(4): Total of persons. Each of these persons is selling or fewer shares of common stock and owns less than 1% of our outstanding common stock.
(5): If the over-allotment option is exercised in full, the following shareholders shall sell the additional shares set forth after their names: Shares in excess of will be sold pro rata among all stockholders participating in the over-allotment option, based on their remaining shares to be sold in the over-allotment option.

RELATIONSHIPS AND TRANSACTIONS WITH RELATED PARTIES

Executive Officers and Directors

We have entered into restricted securities agreements with 8 current employees, including Charles A. Sorrentino and Nicol G. Graham. The agreements apply to any shares of our stock that the employees own or acquire, including shares issued upon the exercise of options. We have entered into various restricted securities agreements with eight current employees, including Charles A. Sorrentino and Nicol G. Graham. The agreements apply to any shares of our stock that the employees own or acquire, including shares issued upon exercise of options. Although a number of the provisions of these agreements will terminate upon completion of this offering, other provisions will remain in effect, including certain limitations on the employees' right to sell shares in the open market and, in some of the agreements, rights to include their shares of our common stock in future registration statements that we file. Our agreement with Mr. Graham contains registration rights, but our agreement with Mr. Sorrentino does not. The limitations on sales of shares and registration rights include rights in favor of us and Code, Hennessy & Simmons II, L.P. to repurchase shares held by these employees upon termination of employment and are otherwise similar to provisions contained in our Investor Securities Agreement and are summarized under "—Investor Securities Agreement" below.

Peter M. Gotsch is a limited partner of CHS Management II, L.P., which receives a management fee from one of our subsidiaries, as described below. This fee is being paid pursuant to a management agreement, which is being terminated in connection with this offering.

Relationship with Code, Hennessy & Simmons II, L.P.

We entered into a management agreement in 1997 with CHS Management II, L.P., which is an affiliate of Code, Hennessy & Simmons II, L.P., our largest stockholder. The management agreement provides for CHS Management II to provide us with management services, for which we pay to CHS Management II an annual management fee of $500,000 in monthly installments. The management agreement also provides for us to reimburse CHS Management II for reasonable direct expenses incurred in providing management services to us. The management agreement is being terminated in connection with this offering.

In connection with this offering, we will enter into a registration rights agreement with Code, Hennessy & Simmons II, L.P. The agreement will provide that, at the request of Code, Hennessy & Simmons II, L.P., we will register under the Securities Act any shares of common stock currently held or later acquired by Code, Hennessy & Simmons II, L.P. for sale in accordance with its intended method of disposition. Code, Hennessy & Simmons II, L.P. also will have the right to include the shares of our common stock that it holds in registrations of common stock that we initiate on our own behalf or on behalf of other stockholders. See "Description of Capital Stock, Certificate of Incorporation and By-Laws—Registration Rights."

Investor Securities Agreement

In 1997, we entered into an Investor Securities Agreement with Code, Hennessy & Simmons II, L.P. and all of our non-employee stockholders to provide for certain restrictions on the disposition of our common stock and to agree to other matters regarding the ownership and transfer of our shares, including rights of

first refusal in favor of us and Code, Hennessy & Simmons II, L.P. and restrictions on transfer without board approval or to a competitor. Although a number of the provisions in the Investor Securities Agreement will terminate upon completion of this offering, other provisions will remain in effect.

The stockholders who are parties to the Investor Securities Agreement have registration rights similar to those we granted to Mr. Graham and to certain other current and former employees under their restricted securities agreements. These rights provide that, if we propose to file a registration statement with the SEC registering shares of our common stock, then the stockholders having registration rights may require us to include shares owned by them in the registration. If the registration includes shares offered by Code, Hennessy & Simmons II, L.P., then each stockholder may include the same percentage of his or her shares as Code Hennessy & Simmons is including of its shares. Our obligation to register shares is subject to certain limitations. Among other things, if any stockholder exercises this registration right, then we may elect not to proceed with the registration. If any underwriter advises us that the number of shares requested to be included in the registration would adversely affect the offering, then we may reduce the number of shares offered by stockholders that are included in the registration. We must pay all expenses incurred in connection with the registration, except that the selling stockholders must bear the underwriting and brokerage discounts and commissions on the sale of their shares and the fees of their own lawyers, accountants and other advisers.

The parties to the Investor Securities Agreement, as well as all employees having restricted securities agreements, have agreed to limit their sales of our stock in the open market for as long as Code, Hennessy & Simmons II, L.P. continues to own more than 30% of our outstanding stock. These limitations apply to any calendar quarter during which we are subject to a standstill agreement with underwriters, and to the immediately following calendar quarter. A standstill agreement is an agreement we enter into in connection with any public offering or other public sale of our stock that limits our right to offer or sell our stock except in such offering or sale. The provisions of the Investor Securities Agreements and restricted securities agreements effectively limit the aggregate number of shares of our stock that may be sold during the relevant calendar quarters by all current stockholders to 1% of our outstanding common stock.

Indebtedness to Related Parties

In 1997, we issued approximately $9.0 million of 14.0% junior subordinated promissory notes due 2007 to certain of our stockholders and officers, including Code, Hennessy & Simmons II, L.P. and Nicol G. Graham. We repaid a portion of these notes in 2004 and the balance in 2005. In 2005 we paid interest on these notes to Code, Hennessy & Simmons II, L.P. and Mr. Graham in the amounts of $5,570,000 and $88,000, respectively. There is currently no indebtedness to related parties.

We declared a $20.0 million special dividend to our stockholders in December 2005. We borrowed substantially all of the funds needed to pay the dividend under our revolving credit facility, which is with lenders that are not related to us.

DESCRIPTION OF CAPITAL STOCK,
CERTIFICATE OF INCORPORATION AND BY-LAWS

General Matters

Effective March 23, 2006, our authorized capital stock consists of 100,000,000 shares of common stock and 5,000,000 shares of undesignated preferred stock. Prior to this offering, we had outstanding 8,862,492 shares of common stock and approximately 25 stockholders of record.

Upon closing of this offering, we will have shares of common stock, options to purchase shares of common stock and no shares of preferred stock outstanding. The following summary describes all material provisions of our capital stock. We urge you to read our certificate of incorporation and our by-laws, which are included as exhibits to the registration statement of which this prospectus forms a part.

Our certificate of incorporation and by-laws contain provisions that are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and which may have the effect of delaying, deferring or preventing a future takeover or change in control of our company unless the takeover or change in control is approved by our board of directors.

These provisions include elimination of stockholder action by written consents, elimination of the ability of stockholders to call special meetings and advance notice procedures for stockholder proposals.

Common Stock

Shares of our common stock have the following rights, preferences and privileges:

•: Voting Rights . Each outstanding share of common stock entitles its holder to one vote on all matters submitted to a vote of our stockholders, including the election of directors. There are no cumulative voting rights. Generally, all matters to be voted on by stockholders must be approved by a majority of the votes entitled to be cast by all shares of common stock present or represented by proxy.
•: Dividends . Subject to the rights of the holders of any preferred stock which may be outstanding from time to time, the holders of common stock are entitled to receive dividends as, when and if dividends are declared by our board of directors out of assets legally available for the payment of dividends. We do not expect to pay cash dividends in the foreseeable future. Our board of directors currently intends to retain any future earnings for reinvestment in our business. In any event, any determination to pay dividends will be at the discretion of our board of directors and will be dependent upon our results of operations and cash flows, our financial position and capital requirements, general business conditions, legal, tax, regulatory and any contractual restrictions on the payment of dividends, including the restrictions contained in the agreements governing our outstanding indebtedness and any other factors our board of directors deems relevant.
•: Liquidation . In the event of a liquidation, dissolution or winding up of our affairs, whether voluntary or involuntary, after payment of our liabilities and obligations to creditors and any holders of preferred stock, our remaining assets will be distributed ratably among the holders of shares of common stock on a per share basis.
•: Rights and Preferences . Our common stock has no preemptive, redemption, conversion or subscription rights. The rights, powers, preferences and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.
•: Merger . In the event we merge or consolidate with or into another entity, holders of each share of common stock will be entitled to receive the same per share consideration.

We intend to list our common stock for quotation on The Nasdaq National Market under the symbol "HWCC".

Preferred Stock

Our amended and restated certificate of incorporation provides that the board of directors has the authority, without action by the stockholders, to designate and issue up to 5,000,000 shares of preferred stock in one or more classes or series and to fix for each class or series the powers, rights, preferences and privileges of each series of preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and the number of shares constituting any class or series, which may be greater than the rights of the holders of the common stock. There will be no shares of preferred stock outstanding immediately after the closing of this offering. Any issuance of shares of preferred stock could adversely affect the voting power of holders of common stock, and the likelihood that the holders will receive dividend payments and payments upon liquidation could have the effect of delaying, deferring or preventing a change in control. We have no present plans to issue any shares of preferred stock.

Registration Rights

In connection with this offering, we will enter into a registration rights agreement with Code, Hennessy & Simmons II, L.P. The agreement will provide that, upon the request of Code, Hennessy & Simmons, we will register under the Securities Act any of the shares of our common stock held by Code, Hennessy & Simmons for sale in accordance with Code, Hennessy & Simmons' intended method of disposition, and will take other actions as are necessary to permit the sale of the shares in various jurisdictions. Our obligation to register the shares and take other actions is subject to certain restrictions on, among other things, the frequency of requested registrations, the number of shares to be registered and the duration of these rights. For a period of seven years following completion of this offering, Code, Hennessy & Simmons may demand registration not more than twice in any twelve-month period, as long as the demand covers a specified minimum number of shares and Code, Hennessy & Simmons (along with its transferees) owns at least 5% of our common stock. Code, Hennessy & Simmons' right to demand registration is subject to certain conditions, including the release from or expiration of the 180-day lockup agreement with our underwriters. Code, Hennessy & Simmons also has the right, for a period of seven years following completion of this offering, to include any or all of the shares of our common stock it owns in other registrations of our common stock (whether those registrations are initiated by us or by other stockholders). We will pay all expenses in connection with a registration made on Code, Hennessy & Simmons' demand or if Code, Hennessy & Simmons exercises its rights to include shares in a registration statement initiated by us or a third party, except that Code, Hennessy & Simmons will pay the underwriting discount. Upon notice, Code, Hennessy & Simmons may transfer its rights under the registration rights agreement to purchasers or transferees of at least (i) 20% or more of the initial shares of common stock owned by Code, Hennessy & Simmons or (ii) if less, all of the remaining shares owned by Code, Hennessy & Simmons under certain circumstances. The registration rights agreement will contain indemnification and contribution provisions (i) by Code, Hennessy & Simmons for our benefit and the benefit of related persons and (ii) by us for the benefit of Code, Hennessy & Simmons and related persons, as well as any underwriter.

Our Investor Securities Agreement and restricted securities agreements with current and former employees give some of our existing stockholders the right to include their shares of common stock in any registration we file with the SEC. See "Relationships and Transactions with Related Parties."

Other Provisions of Our Certificate of Incorporation and By-Laws

Elimination of Stockholder Action through Written Consent. Our certificate of incorporation and by-laws provide that stockholder action can be taken only at an annual or special meeting of stockholders and cannot be taken by written consent in lieu of a meeting.

Elimination of the Ability to Call Special Meetings. Our certificate of incorporation and by-laws provide that, except as otherwise required by law, special meetings of our stockholders can only be called pursuant to a resolution adopted by a majority of our board of directors or by our chief executive officer or the chairman of our board of directors. Stockholders are not permitted to call a special meeting or to require our board to call a special meeting.

Advance Notice Procedures for Stockholder Proposals. Our by-laws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board. Stockholders at our annual meeting may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of our board or by a stockholder who was a stockholder of record on the record date for the meeting and upon giving of notice and provided that the stockholder has given to our secretary timely written notice, in proper form, of the stockholder's intention to bring that business before the meeting. Although our by-laws do not give our board the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting, our by-laws may have the effect of precluding the conduct of some business at a meeting if the proper procedures are not followed or may discourage or defer a potential acquirer from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of us.

Anti-Takeover Effects of Delaware Law

Following the completion of this offering, we will be subject to provisions of the Delaware General Corporation Law that prohibit a publicly-held Delaware corporation from engaging in any "business combination" transaction with any "interested stockholder" for a period of three years after the date on which the person became an "interested stockholder," unless:

•: prior to this date, the board of directors approved either the "business combination" or the transaction which resulted in the "interested stockholder" obtaining this status;
•: upon consummation of the transaction which resulted in the stockholder becoming an "interested stockholder," the "interested stockholder" owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the "interested stockholder") those shares owned by (a) persons who are directors and also officers and (b) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
•: at or subsequent to this time the "business combination" is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 ² / 3 % of the outstanding voting stock which is not owned by the "interested stockholder."

A "business combination" is defined to include mergers, asset sales and other transactions resulting in financial benefit to a stockholder. In general, an "interested stockholder" is a person who, together with affiliates and associates, owns 15% or more of a corporation's voting stock or within the past three years owned 15% or more of a corporation's voting stock. However, in the case of our company, Code, Hennessy & Simmons and its affiliates will not be deemed to be "interested stockholders" regardless of the percentage of our voting stock owned by them. The statute could prohibit or delay mergers or other takeover or change in control attempts with respect to us and, accordingly, may discourage attempts to acquire us.

Limitations on Liability and Indemnification of Officers and Directors

Our certificate of incorporation and by-laws limit the liability of our directors to the fullest extent permitted by the Delaware General Corporation Law and provide that we will indemnify our officers and

directors to the fullest extent permitted by this law. We expect to increase our directors' and officers' liability insurance coverage prior to the completion of this offering.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is and its telephone number is .

SHARES ELIGIBLE FOR FUTURE SALE

The sale of a substantial amount of our common stock in the public market after this offering could adversely affect the prevailing market price of our common stock. Furthermore, because all of our common stock outstanding prior to the consummation of this offering will be subject to the contractual and legal restrictions on resale described below, the sale of a substantial amount of common stock in the public market after these restrictions lapse could adversely affect the prevailing market price of our common stock and our ability to raise equity capital in the future.

Upon completion of this offering, we expect to have outstanding an aggregate of shares of common stock, assuming no exercise of outstanding options. Of these shares, all of the shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, unless the shares are purchased by "affiliates" as that term is defined in Rule 144 under the Securities Act. Any shares purchased by an affiliate may not be resold except pursuant to an effective registration statement or an applicable exemption from registration, including an exemption under Rule 144 of the Securities Act. The remaining shares of common stock held by existing stockholders are "restricted securities" as that term is defined in Rule 144 under the Securities Act. These restricted securities may be sold in the public market only if they are registered or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act. These rules are summarized below.

Upon the expiration of the lock-up agreements described below 180 days after the date of this prospectus, and subject to the provisions of Rule 144, an additional restricted shares will be available for sale in the public market. The sale of these restricted securities is subject, in the case of shares held by affiliates, to the volume restrictions contained in Rule 144.

Lock-Up Agreements

We, our directors and executive officers and our stockholders are subject to lock-up agreements with the underwriters. Under these agreements, subject to limited exceptions, neither we nor any of our directors or executive officers or these stockholders may dispose of, hedge or otherwise transfer the economic consequences of ownership of any shares of common stock or securities convertible into or exchangeable or exercisable for shares of common stock. These restrictions will be in effect for a period of 180 days after the date of this prospectus. At any time and without notice, William Blair & Company, L.L.C. may, in its sole discretion, release all or some of the securities from these lock-up agreements. Certain transfers or dispositions can be made sooner, provided the transferee becomes bound to the terms of the lock-up.

In addition, following this offering, some of our stockholders will be subject to restrictions on transfer of their shares under our Investor Securities Agreement and restricted securities agreements. See "Relationships and Transactions with Related Parties."

Rule 144

In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus, a person who has beneficially owned shares of our common stock for at least one year from the later of the

date those shares of common stock were acquired from us or from an affiliate of ours would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:

•: one percent of the number of shares of common stock then outstanding, which will equal approximately shares of common stock immediately after this offering; or
•: the average weekly trading volume of the common stock on Nasdaq during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale of any shares of common stock.

Sales of shares of common stock under Rule 144 may also be subject to manner of sale provisions and notice requirements and will be subject to the availability of current public information about us.

Rule 144(k)

Under Rule 144(k), a person who is not one of our affiliates at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years from the later of the date these shares of common stock were acquired from us or from an affiliate of ours, including the holding period of any prior owner other than an affiliate, is entitled to sell those shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144. Therefore, upon expiration of the lock-up agreements, those shares may be sold immediately.

Rule 701

In general, under Rule 701 of the Securities Act, each of our employees, consultants or advisors who purchased shares from us in connection with a compensatory stock plan or other written agreement is eligible to resell those shares 90 days after the effective date of this offering in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144.

No precise prediction can be made as to the effect, if any, that market sales of shares or the availability of shares for sale will have on the market price of our common stock prevailing from time to time. We are unable to estimate the number of our shares that may be sold in the public market pursuant to Rule 144 or Rule 701 because this will depend on the market price of our common stock, the personal circumstances of the sellers and other factors. Nevertheless, sales of significant amounts of our common stock in the public market could adversely affect the market price of our common stock.

Stock Plans

We intend to file a registration statement or statements on Form S-8 under the Securities Act covering shares of common stock reserved for issuance under our 2006 stock plan and pursuant to all option grants made prior to this offering under the 2000 stock plan. Subject to lock-up arrangements, these registration statements are expected to be filed as soon as practicable after the closing date of this offering. Shares issued upon the exercise of stock options after the effective date of the applicable Form S-8 registration statement will be eligible for resale in the public market without restriction, subject to Rule 144 limitations applicable to affiliates and the lock-up agreements described above.

Registration Rights

Following this offering, some of our stockholders will, under some circumstances, have the right to require us to register their shares for future sale. See "Description of Capital Stock, Certificate of Incorporation and By-Laws—Registration Rights."

UNDERWRITING

The underwriters named below have severally agreed, subject to the terms and conditions set forth in the underwriting agreement by and among the underwriters, the selling stockholders and us, to purchase from us and the selling stockholders the respective number of shares of common stock set forth opposite each underwriter's name in the table below. William Blair & Company, L.L.C. is acting as Sole Book-Running Manager, Robert W. Baird & Co. Incorporated is acting as Co-Lead Manager and BB&T Capital Markets, a division of Scott & Stringfellow, Inc., is acting as Co-Manager for this offering.

Underwriter			Number of Shares
William Blair & Company, L.L.C.
Robert W. Baird & Co. Incorporated
BB&T Capital Markets, a division of Scott & Stringfellow, Inc.

	Total

This offering will be underwritten on a firm commitment basis. In the underwriting agreement, the underwriters have agreed, subject to the terms and conditions set forth therein, to purchase the shares of common stock being sold pursuant to this prospectus at a price per share equal to the public offering price less the underwriting discount specified on the cover page of this prospectus. According to the terms of the underwriting agreement, the underwriters either will purchase all of the shares or none of them. In the event of default by any underwriter, in certain circumstances, the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated.

The representative of the underwriters has advised us that the underwriters propose to offer the common stock to the public initially at the public offering price set forth on the cover page of this prospectus and to selected dealers at such price less a concession of not more than $ per share. The underwriters may allow, and such dealers may re-allow, a concession not in excess of $ per share to certain other dealers. The underwriters will offer the shares subject to prior sale and subject to receipt and acceptance of the shares by the underwriters. The underwriters may reject any order to purchase shares in whole or in part. The underwriters expect that we will deliver the shares to the underwriters through the facilities of The Depository Trust Company in New York, New York on or about , 2006. At that time, the underwriters will pay us for the shares in immediately available funds. After commencement of the public offering, the representative may change the public offering price and other selling terms.

Certain of the selling stockholders have granted the underwriters an option, exercisable within 30 days after the date of this prospectus, to purchase up to an aggregate of additional shares of common stock at the same price per share to be paid by the underwriters for the other shares offered hereby solely for the purpose of covering over-allotments, if any. If the underwriters purchase any such additional shares pursuant to this option, each of the underwriters will be committed to purchase such additional shares in approximately the same proportion as set forth in the table above. The underwriters may exercise the option only for the purpose of covering excess sales, if any, made in connection with the distribution of the shares of common stock offered hereby. The underwriters will offer any additional shares that they purchase on the terms described in the preceding paragraph.

The underwriters have reserved for sale, at the initial public offering price, up to shares of common stock in this offering for our employees. Those receiving these reserved shares will not be subject to lock-up agreements by virtue of their having purchased such shares (though an officer or employee could otherwise be subject to a lock-up agreement as an executive officer or optionholder). Purchases of the reserved shares would reduce the number of shares available for sale to the general public. The underwriters will offer any reserved shares which are not so purchased to the general public on the same terms as the other shares being sold in this offering.

The following table summarizes the compensation to be paid by us and the selling stockholders to the underwriters. This information assumes either no exercise or full exercise by the underwriters of their over-allotment option:

	Per Share	Without Over-Allotment	With Over-Allotment
Public Offering Price	$	$	$
Underwriting discount paid by us	$	$	$
Underwriting discount paid by selling stockholders	$	$	$
Proceeds, before expenses, to us	$	$	$
Proceeds to selling stockholders	$	$	$

We estimate that our total expenses for this offering, excluding the underwriting discount, will be approximately $ million.

We and each of our directors, executive officers and our stockholders have agreed, subject to limited exceptions described below, for a period of 180 days after the date of this prospectus, not to, without the prior written consent of William Blair & Company, L.L.C.:

•: directly or indirectly, offer, sell (including "short" selling), assign, transfer, encumber, pledge, contract to sell, grant an option to purchase, establish an open "put equivalent position" within the meaning of Rule 16a-1(h) under the Securities Exchange Act, or otherwise dispose of any shares of common stock or securities convertible or exchangeable into, or exercisable for, common stock held of record or beneficially owned (within the meaning of Rule 13d-3 under the Securities Exchange Act); or
•: enter any swap or other arrangement that transfers all or a portion of the economic consequences associated with the ownership of any common stock.

The 180-day lock-up period will be extended if (1) we release earnings results or material news or a material event relating to our company occurs during the last 17 days of the lock-up period, or (2) prior to the expiration of the lock-up period, we announce that we will release earnings results during the 16-day period beginning on the last day of the lock-up period. In either case, the lock-up period will be extended for 18 days after the date of the release of the earnings results or the occurrence of the material news or material event.

This agreement does not extend to transfers or dispositions (i) by gift, (ii) by will or intestate succession to immediate family members, or (iii) to any trust for the direct or indirect benefit of the transferor or his or her immediate family, provided in each case that the recipient of those shares agrees to be bound by the foregoing restrictions for the duration of the 180 days. In determining whether to consent to a transaction prohibited by these restrictions, William Blair & Company, L.L.C. will take into account various factors, including the number of shares requested to be sold, the anticipated manner and timing of sale, the potential impact of the sale on the market for the common stock, the restrictions on publication of research reports that would be imposed by the rules of the National Association of Securities Dealers, Inc. and market conditions generally. We may grant options and issue common stock under existing stock option plans and issue unregistered shares in connection with any outstanding convertible securities or options during the lock-up period. For more information, see "Shares Eligible for Future Sale."

We and certain of the selling stockholders have agreed to indemnify the underwriters and their controlling persons against certain liabilities for misstatements in the registration statement of which this prospectus forms a part, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect thereof.

The representative has informed us that the underwriters will not confirm, without client authorization, sales to their client accounts as to which they have discretionary authority. The representative has also

informed us that the underwriters intend to deliver all copies of this prospectus via electronic means, via hand delivery or through mail or courier services and only printed forms of the prospectus are intended to be used.

In connection with this offering, the underwriters and other persons participating in this offering may engage in transactions which affect the market price of the common stock. These may include stabilizing and over-allotment transactions and purchases to cover syndicate short positions. Stabilizing transactions consist of bids or purchases for the purpose of pegging, fixing or maintaining the price of the common stock. An over-allotment involves selling more shares of common stock in this offering than are specified on the cover page of this prospectus, which results in a syndicate short position. The underwriters may cover this short position by purchasing common stock in the open market or by exercising all or part of their over-allotment option. In addition, the representative may impose a penalty bid. This allows the representative to reclaim the selling concession allowed to an underwriter or selling group member if common stock sold by such underwriter or selling group member in this offering are repurchased by the representative in stabilizing or syndicate short covering transactions. These transactions, which may be effected on the Nasdaq National Market or otherwise, may stabilize, maintain or otherwise affect the market price of the common stock and could cause the price to be higher than it would be without these transactions. The underwriters and other participants in this offering are not required to engage in any of these activities and may discontinue any of these activities at any time without notice. We and the underwriters make no representation or prediction as to whether the underwriters will engage in such transactions or choose to discontinue any transactions engaged in or as to the direction or magnitude of any effect that these transactions may have on the price of the common stock.

Prior to this offering, there has been no public market for our common stock. Consequently, we, the selling stockholders and the representative of the underwriters have negotiated to determine the initial public offering price. We and they have considered current market conditions, our operating results in recent periods, the market capitalization of other companies in our industry and estimates of our potential.

We will apply to have our common stock approved for quotation on the Nasdaq National Market and have reserved the ticker symbol "HWCC."

In the ordinary course of business, some of the underwriters and their affiliates may in the future provide investment banking, commercial banking and other services to us for which they may receive customary fees or other compensation.

LEGAL MATTERS

The validity of the issuance of the shares of common stock offered hereby has been passed upon for us by Schiff Hardin LLP, Chicago, Illinois. Four partners of Schiff Hardin LLP are partners in a general partnership that is a limited partner in Code, Hennessy & Simmons II, L.P. and may be deemed to have an economic interest in our shares having an aggregate value $ , assuming an initial public offering price of $ per share. In addition, two of these partners are partners in a general partnership that owns shares of our common stock. Legal matters in connection with this offering will be passed upon for the underwriters by Sidley Austin LLP, Chicago, Illinois.

EXPERTS

Ernst & Young LLP, independent registered public accounting firm, has audited our consolidated financial statements and schedule at December 31, 2005 and December 31, 2004 and for each of the three years in the period ended December 31, 2005, as set forth in their reports. We have included our financial statements and schedule in the prospectus and elsewhere in the registration statement in reliance on Ernst & Young LLP's reports, given on their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1, including exhibits and schedules, under the Securities Act with respect to the common stock to be sold in this offering. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules that are part of the registration statement. For further information about us and our common stock, you should refer to the registration statement.

You may read, without charge, and copy, at prescribed rates, all or any portion of the registration statement or any reports, statements or other information in the files at the public reference room at the SEC's principal office at 100 F Street, N.E., Washington, D.C., 20549. You can request copies of these documents upon payment of a duplicating fee by writing to the SEC. You may call the SEC at 1-800-SEC-0330 for further information on the operation of its public reference room. Our filings, including the registration statement, will also be available to you on the internet website maintained by the SEC at http://www.sec.gov.

As a result of this offering, we will become subject to the information and reporting requirements of the Securities Exchange Act and will file annual, quarterly and current reports, proxy statements and other information with the SEC. You can request copies of these documents, for a copying fee, by writing to the SEC. We intend to furnish our stockholders with annual reports containing financial statements audited by our independent auditors.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2005, and December 31, 2004		F-3
Consolidated Statements of Income for the years ended December 31, 2005, December 31, 2004 and December 31, 2003		F-4
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2005, December 31, 2004 and December 31, 2003		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2005, December 31, 2004 and December 31, 2003		F-6
Notes to Consolidated Financial Statements		F-7

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Houston Wire & Cable Company

We have audited the accompanying consolidated balance sheets of Houston Wire & Cable Company (formerly HWC Holding Corporation) as of December 31, 2005 and 2004, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Houston Wire & Cable Company at December 31, 2005 and 2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Houston, Texas
March 23, 2006

F-2

Houston Wire & Cable Company

Consolidated Balance Sheets

		December 31,
		2005			2004
		(In thousands, except share data)
Assets
Current assets:
	Accounts receivable, net	$	41,778		$	27,541
	Inventories, net		31,306			29,836
	Deferred income taxes		826			1,343
	Prepaid expenses		490			416

Total current assets			74,400			59,136
Property and equipment, net			2,733			2,803
Goodwill			2,996			2,996
Deferred income taxes			1,146			927
Other assets			435			331

Total assets		$	81,710		$	66,193

Liabilities and stockholders' equity
Current liabilities:
	Book overdraft	$	2,119		$	1,341
	Trade accounts payable		8,268			5,115
	Accrued and other current liabilities		8,351			7,686
	Income taxes payable		824			71
	Current portion of long-term obligations		3,468			—

Total current liabilities			23,030			14,213
Long-term obligations			57,938			34,193
Junior Subordinated Promissory Notes			—			9,559
Stockholders' equity:
	Common stock, $.01 par value; 10,000,000 shares authorized; 8,856,892 issued and outstanding at December 31, 2005 and 2004		9			9
	Additional paid-in capital		1,310			5,101
	Unearned compensation		(559	)		—
	Retained earnings		—			3,136
	Treasury shares, at cost		(18	)		(18	)

Total stockholders' equity			742			8,228

Total liabilities and stockholders' equity		$	81,710		$	66,193

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

F-3

Houston Wire & Cable Company

Consolidated Statements of Income

		Year ended December 31,
		2005			2004			2003
		(In thousands, except per share data)
Sales		$	213,957		$	172,723		$	149,084
Cost of sales			158,240			131,419			113,959

Gross profit			55,717			41,304			35,125
Operating expenses:
	Salaries and commissions		18,707			16,665			14,588
	Other operating expenses		14,016			12,392			13,857
	Management fee to stockholder		500			501			502
	Depreciation and amortization		398			876			1,481

			33,621			30,434			30,428

Operating income			22,096			10,870			4,697
Litigation settlements			672			650			—
Interest expense			(2,955	)		(3,544	)		(4,186	)

Income before income taxes			19,813			7,976			511
Income tax provision			7,299			3,167			295

Net income		$	12,514		$	4,809		$	216

Earnings per share:
	Basic	$	1.41		$	0.55		$	0.02

	Diluted	$	1.40		$	0.55		$	0.02

Weighted average common shares outstanding:
	Basic		8,856,892			8,720,248			8,711,509

	Diluted		8,937,228			8,810,987			8,802,248

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

F-4

Houston Wire & Cable Company

Consolidated Statements of Stockholders' Equity

		Common Stock												Treasury Stock
		Common Stock			Additional Paid-In Capital			Unearned Compensation			Retained Earnings (Deficit)			Treasury Stock				Total Stockholders' Equity
		Shares	Amount		Additional Paid-In Capital			Unearned Compensation			Retained Earnings (Deficit)			Shares	Amount			Total Stockholders' Equity
		(In thousands, except per share data)
Balance at December 31, 2002		8,716,309	$	9		5,046			—		$	(1,889	)	4,800	$	18	)	$	3,148
	Net income	—		—		—			—			216		—		—			216

Balance at December 31, 2003		8,716,309		9		5,046			—			(1,673	)	4,800		(18	)		3,364
	Exercise of stock options	145,383		—		55			—			—		—		—			55
	Net income	—		—		—			—			4,809		—		—			4,809

Balance at December 31, 2004		8,861,692		9		5,101			—			3,136		4,800		(18	)		8,228
	Net income	—		—		—			—			12,514		—		—			12,514
	Issuance of stock options	—		—		559			(559	)		—		—		—			—
	Dividend paid	—		—		(4,350	)		—			(15,650	)	—		—			(20,000	)

Balance at December 31, 2005		8,861,692	$	9	$	1,310		$	(559	)	$	—		4,800	$	(18	)	$	742

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

F-5

Houston Wire & Cable Company

Consolidated Statements of Cash Flows

			Year ended December 31,
			2005			2004			2003
			(In thousands)
Operating activities
Net income			$	12,514		$	4,809		$	216
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
	Depreciation and amortization			398			876			1,481
	Amortization of capitalized loan costs			124			125			286
	Deferred interest			—			2,344			2,605
	Provision for doubtful accounts			13			304			171
	Provision for inventory obsolescence			(196	)		696			173
	(Gain) loss on disposals of property and equipment			(11	)		2			4
	Deferred income taxes			298			387			218
	Changes in operating assets and liabilities:
		Accounts receivable		(14,250	)		(6,201	)		(892	)
		Inventories		(1,274	)		(3,627	)		7,648
		Prepaid expenses		(74	)		(63	)		(55	)
		Other assets		10			(30	)		(1	)
		Book overdraft		(5,944	)		7,889			(215	)
		Trade accounts payable		3,153			1,671			310
		Accrued and other current liabilities		665			2,761			337
		Income taxes payable		753			71			—

Net cash provided by (used in) operating activities				(3,821	)		12,014			12,286
Investing activities
	Expenditures for property, plant, and equipment			(329	)		(208	)		(290	)
	Proceeds from disposals of property and equipment			12			1			4

	Net cash used in investing activities			(317	)		(207	)		(286	)
Financing activities
	Borrowings on revolver			225,022			177,428			142,555
	Payments on revolver			(205,587	)		(175,290	)		(150,530	)
	Borrowings on long-term obligations			14,500			—			—
	Payments on long-term obligations			—			—			(3,750	)
	Payments on junior subordinated debt			(9,559	)		(14,000	)		—
	Payments for financing costs			(238	)		—			(275	)
	Proceeds from exercise of stock options			—			55			—
	Dividends paid			(20,000	)		—			—

Net cash provided by (used in) financing activities				4,138			(11,807	)		(12,000	)

Net change in cash				—			—			—
Cash at beginning of year				—			—			—

Cash at end of year			$	—		$	—		$	—
Supplemental disclosures
	Cash paid during the year for interest		$	1,910		$	1,044		$	1,358

	Cash paid during the year for taxes		$	6,356		$	2,637		$	101

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

F-6

Notes to Consolidated Financial Statements

(in thousands, except per share data)

1. Organization and Summary of Significant Accounting Policies

Description of Business

Houston Wire & Cable Company ("HWC" or the "Company") through its wholly owned subsidiaries, HWC Wire & Cable Company, Advantage Wire & Cable and Cable Management Services Inc., distributes specialty electrical wire and cable to the U.S. electrical distribution market through eleven locations in ten states throughout the United States. The Company has no other business activity.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries and have been prepared following accounting principles generally accepted in the United States ("GAAP") and the requirements of the Securities and Exchange Commission ("SEC"). The financial statements include all normal and recurring adjustments that are necessary for a fair presentation of the Company's financial position and operating results. All significant inter-company balances and transactions have been eliminated.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The most significant estimates are those relating to the allowance for doubtful accounts, the inventory obsolescence reserve and the reserve for returns and allowances. These estimates are continually reviewed and adjusted as necessary, but actual results could differ from those estimates.

Earnings Per Share

In accordance with Statement of Financial Accounting Standards ("SFAS") 128, Earnings per Share , basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share include the dilutive effects of stock option awards.

The following reconciles the numerator and denominator used in the calculation of earnings per share:

		Year ended December 31
		2005		2004		2003
Numerator:
	Net income	$	12,514	$	4,809	$	216
	Effect of dilutive securities		—		—		—

Numerator for net income		$	12,514	$	4,809	$	216

Denominator:
	Weighted average common shares		8,857		8,720		8,712
	Effect of dilutive securities		80		91		90

Denominator for net income			8,937		8,811		8,802

F-7

Accounts Receivable

Accounts receivable consists primarily of receivables from customers, less an allowance for doubtful accounts of $447 and $475 at December 31, 2005 and 2004, respectively.

Inventories

Inventories consist of goods purchased for resale and are carried at the lower of cost, using the average cost method, or market and consist primarily of goods purchased for resale, less a reserve for obsolescence and unusable items. The reserve for inventory is based upon a number of factors, including the experience of the purchasing and sales departments, age of the inventory, new product offerings, and other factors. Management believes that the reserve for inventory may periodically require adjustment as the factors identified above change. The inventory reserve was $1,908 and $2,374 at December 31, 2005 and 2004, respectively.

Vendor Rebates

We account for vendor rebates in accordance with the Emerging Issues Task Force Issue 02-16, Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor. Many of our arrangements with our vendors provide for us to receive a rebate of a specified amount of consideration, payable to us when we achieve any of a number of measures, generally related to the volume level of purchases from our vendors. We account for such rebates as a reduction of the prices of the vendor's products and therefore as a reduction of inventory until we sell the product, at which time such rebates reduce cost of sales in the income statement. Throughout the year, we estimate the amount of the rebate earned based on our estimate of purchases to date relative to the purchase levels that mark our progress toward earning the rebates. We continually revise these estimates to reflect actual rebates earned based on actual purchase levels.

Other Assets

Other assets include deferred financing costs of approximately $1,716. The capitalized loan costs are amortized on a straight-line basis over the contractual life of the related debt agreement, which approximates the effective interest method. Accumulated amortization at December 31, 2005 and 2004, was approximately $1,313 and $1,189, respectively.

Estimated future amortization expense for capitalized loan costs through the maturity of the agreement in 2007 are $303 in 2006 and $100 in 2007.

A $3,000 non-compete agreement is also included in other assets. The non-compete agreement was amortized on a straight-line basis over its four-year term through 2004 when it was fully amortized. Amortization expense was $312 for the year ended December 31, 2004 and $750 for the year ended December 31, 2003.

F-8

Property and Equipment

The Company provides for depreciation on a straight-line method over the following estimated useful lives:

Buildings		30 years
Machinery and equipment		3 to 5 years

Leasehold improvements are depreciated over their estimated life or the term of the lease, whichever is shorter. Depreciation expense was approximately $398, $564 and $731 for the years ended December 31, 2005, 2004 and 2003, respectively.

Goodwill

The Company accounts for goodwill under the provisions of SFAS No. 142, Goodwill and Other Intangible Assets ("SFAS 142"). Under SFAS 142, goodwill is not amortized but is reviewed annually for impairment, or more frequently if indications of possible impairment exist, by applying a fair value-based test. The Company completes the required annual assessment as of October 1 of each year. The Company has performed the requisite impairment tests for goodwill and other indefinite-lived intangible assets and has determined that goodwill was not impaired.

Self Insurance

The Company retains certain self-insurance risks for both health benefits and property and casualty insurance programs. The Company limits its exposure to these self insurance risks by maintaining excess and aggregate liability coverage. Self insurance reserves are established based on claims filed and estimates of claims incurred but not reported. The estimates are based on information provided to the Company by its claims administrators.

Advertising Costs

Advertising costs are expensed when incurred. Advertising expenses were $610, $319 and $310 for the years ended December 31, 2005, 2004, and 2003, respectively.

Revenue Recognition

The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin ("SAB") 104, Revenue Recognition in Financial Statements, and the appropriate amendments. SAB 104 requires that four basic criteria must be met before we can recognize revenue:

1.: Persuasive evidence of an arrangement exists;
2.: Delivery has occurred or services have been rendered;
3.: The seller's price to the buyer is fixed or determinable; and
4.: Collectibility is reasonably assured.

The Company records revenue when customers take delivery of products. Customers may pick up products at any warehouse location, or products may be delivered via third party carriers. Products shipped

F-9

via third party carriers are considered delivered based on the shipping terms, which are generally FOB shipping point.

The Company may offer volume rebates, which are accrued monthly as an adjustment to net sales. Customer returns are recorded as an adjustment to net sales. In the past, customer returns have not been material.

Shipping and Handling

The Company incurs shipping and handling costs in the normal course of business. Freight amounts invoiced to customers are included as sales and freight charges are included as a component of cost of sales.

Credit Risk

The Company's customers are located primarily throughout the United States. One customer accounted for approximately 11%, 10% and 9% of the Company's sales in 2005, 2004 and 2003, respectively. The Company performs periodic credit evaluations of its customers and generally does not require collateral. Credit losses have been within management's expectations.

Financial Instruments

The carrying values of the accounts receivable, trade accounts payable and accrued and other current liabilities approximate fair value, due to the short maturity of these instruments. The carrying amount of long term debt approximates fair value as it bears interest at variable rates.

Stock-Based Compensation

Under the provisions of SFAS 123, Accounting for Stock-Based Compensation , companies may account for employee stock options using either (i) SFAS 123's fair value method or (ii) the intrinsic value method provided by Accounting Principles Board Opinion 25, Accounting for Stock Issued to Employees ("APB 25"). Under the SFAS 123 fair value method, companies recognize compensation expense related to employee stock options based on the fair value of the options on the grant date as estimated by an option pricing model. The intrinsic value method prescribed by APB 25 requires recognition of compensation expense over the option vesting period when the exercise price of the granted options is less than the stock's fair market price on the grant date.

The Company accounts for its employee stock options under the intrinsic value method described by APB 25. Accordingly, the Company does not record compensation expense for options issued with an exercise price equal to the stock's fair market price on the grant date. Additionally, the stock compensation expense recorded in 2005 for the stock options granted below the Company's estimate of its stock's fair market value was less than $1, as those options were granted on December 30, 2005. As a result of this grant, the Company recorded $559 of unearned compensation that will be amortized over the vesting period of five years.

F-10

If the Company had accounted for stock-based compensation using the fair value method described in SFAS 123, the Company's net income and earnings per share would have been reduced to the pro-forma amounts below:

		Year Ended December 31,
		2005			2004			2003
Reported net income		$	12,514		$	4,809		$	216
Deduct: Stock-based employee compensation expense determined under fair value method for all awards, net of tax effect			(1	)		(1	)		—

Pro-forma net income		$	12,513		$	4,808		$	216

Basic earnings per share:
	As reported	$	1.41		$	0.55		$	0.02
	Pro-forma	$	1.41		$	0.55		$	0.02
Diluted earnings per share:
	As reported	$	1.40		$	0.55		$	0.02
	Pro-forma	$	1.40		$	0.55		$	0.02

For purposes of pro-forma disclosures, the estimated fair value of employee options is ratably expensed over the options' vesting period. We estimated the fair value of these options at the grant date using the minimum value option pricing model with the following weighted average assumptions:

	December 31,
	2005		2004
Risk-free interest rate	4.33	%	3.13	%
Expected dividend yield	0.0	%	0.0	%
Weighted average expected life	5.0 years		5.0 years

In December 2004, the FASB issued SFAS 123(R), Share-Based Payment. This new standard will require companies to recognize compensation cost for stock options and other stock-based awards based on their value as measured on the grant date. The new standard prohibits companies from accounting for stock-based compensation under the provisions of APB 25.

The Company adopted SFAS 123(R) effective January 1, 2006 and is currently in the process of implementing the provisions of the statement. The Company is required to use the prospective transition method and, therefore, the impact on the Company's net income will include the remaining amortization of the intrinsic value of existing stock-based awards discussed above, plus the fair value of any future grants. The Company expects such expense to total approximately $112 for the year ending December 31, 2006 if no additional grants are issued.

Income Taxes

Deferred income taxes are determined by the liability method in accordance with SFAS No. 109, Accounting for Income Taxes . Under this method, deferred tax assets and liabilities are determined based on differences between the carrying amounts of assets and liabilities for financial reporting purposes and the

F-11

amounts used for income tax purposes and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

2. Detail of Selected Balance Sheet Accounts

The following selected financial data as of December 31, 2005 and 2004 has been derived from our audited financial statements.

Property and Equipment

Property and equipment are stated at cost and consist of the following at:

	December 31,
	2005		2004
Land	$	617	$	617
Buildings		2,057		2,057
Machinery and equipment		4,613		4,316

		7,287		6,990
Less accumulated depreciation		4,554		4,187

	$	2,733	$	2,803

Accrued and Other Current Liabilities

	December 31,
	2005		2004
Customer rebates	$	2,292	$	1,656
Payroll, commissions, and bonuses		2,096		1,508
Accrued inventory purchases		900		910
Other		3,063		3,612

	$	8,351	$	7,686

3. Long-Term Obligations

HWC has a loan and security agreement ("Agreement") with Bank of America and one other syndication bank ("Lender"). The Agreement is guaranteed by HWC through the pledging of its interest in the capital stock of HWC Wire & Cable Company. Additionally, the Company has provided to the Lender a security interest in all of its assets, including accounts receivable, inventory, and all assets owned by the Company and HWC Wire & Cable Company. The Agreement, which matures May 1, 2007, consists of a $4,500 term loan A commitment ("Term A") and a $10,000 term loan B commitment ("Term B") with scheduled principal installments and interest at the Lender's base interest rate plus 0.25% and 1.25% respectively, and a $55,000 revolving loan ("Revolver") with interest at the Lender's base interest rate plus 0.25%.

F-12

Portions of the outstanding loans under the Agreement may be converted to LIBOR loans in minimum amounts of $1,000 and integral multiples of $100. Upon such conversion, interest is payable at LIBOR plus 1.75% for the Revolver and the Term A loan and at LIBOR plus 2.75% for the Term B loan. The Company has entered into a series of one-month LIBOR loans, which upon maturity are either rolled back into the Revolver or renewed under a new LIBOR contract.

The Agreement includes, among other things, covenants that require the Company to maintain certain minimum financial ratios. Additionally, the Agreement allows the Company to pay dividends not to exceed $20,000, limits capital expenditures and requires that 75% of the Excess Cash Flow (as defined) commencing with the fiscal year ending December 31, 2006, be paid to the Lender. In addition, monthly principal repayments effective February 1, 2006 through the maturity date are required for the Term A and Term B loans in the amounts of $38 and $278, respectively. The Company is in compliance with the financial covenants governing its indebtedness.

In 1997, the Company issued approximately $9,000 of Junior Subordinated Promissory Notes (the "Notes"), which bore interest at a rate of 14% per annum to certain stockholders and officers of the Company. On May 22 of each year, accrued interest was rolled into the principal amount of the Notes. The principal amount of the Notes, together with all unpaid interest accrued was due and payable on May 22, 2007.

On May 13, 2004, and on December 30, 2004, the Company made equal payments of $7,000 to reduce the borrowings under the Notes. Substantially all of the December 30, 2004 $7,000 payment had not cleared the Company's operating bank account at December 31, 2004, which resulted in an increase in the Company's book overdraft of approximately $6,722. Since the book overdraft was funded by the Company's Revolver in January 2005, this book overdraft has been included in long-term obligations in the accompanying consolidated balance sheet at December 31, 2004.

On June 1, 2005 the Company made an additional payment of $6,000 and paid, on November 10, 2005 the remaining balance of all principal and interest due in the amount of approximately $4,319.

The Company's borrowings and related weighted average interest rates consisted of the following:

			December 31,
	Weighted Average Interest Rate		December 31,
	Weighted Average Interest Rate		2005		2004
Revolver loan	7.06	%	$	46,906	$	27,471
Note payment book overdraft				—		6,722
Term A loan	7.50	%		4,500		—
Term B loan	8.50	%		10,000		—

				61,406		34,193
Junior subordinated notes	14.00	%		—		9,559

				61,406		43,752
Less current portion				3,468		—

Long term obligations			$	57,938	$	43,752

During 2005, the Company had an average available borrowing capacity of approximately $9,290. This average was computed from the monthly borrowing base certificates prepared for the Company's Lender. At

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December 31, 2005 the Company had available borrowing capacity of approximately $1,459 under the terms of the Agreement. Under the Agreement, the Company is obligated to pay an unused facility fee of 0.5% computed on a daily basis. During the years ended December 31, 2005, 2004 and 2003, the Company incurred and paid approximately $69, $91, and $130, respectively, for the unused facility.

Principal repayment obligations for succeeding fiscal years are as follows:

2006	$	3,468
2007		57,938

Total	$	61,406

4. Income Taxes

The provision (benefit) for income taxes consists of:

	Year Ended December 31,
	2005		2004			2003
Current:
Federal	$	6,070	$	2,420		$	—
State		931		360			77

Total		7,001		2,780			77

Deferred:
Federal		294		392			225
State		4		(5	)		(7	)

		298		387			218

Total	$	7,299	$	3,167		$	295

A reconciliation of the U.S. Federal statutory tax rate to the effective tax rate on income before taxes is as follows:

	Year ended December 31,
	2005		2004		2003
Federal statutory rate	35.0	%	34.0	%	34.0	%
State taxes, net of federal benefit	3.6	%	3.9	%	7.8	%
Non-deductible items	0.5	%	1.8	%	15.9	%
Litigation settlement	(1.2	)%	—		—
Other	(1.1	)%	—		—

Total effective tax rate	36.8	%	39.7	%	57.7	%

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Significant components of the Company's deferred tax assets were as follows:

		Year Ended December 31,
		2005		2004
Deferred tax assets:
	Property and equipment	$	584	$	600
	Goodwill		242		327
	Uniform capitalization adjustment		390		406
	Inventory reserve		523		675
	Capital loss carryover		48		48
	Allowance for doubtful accounts		172		176
	Other		61		86

Total deferred tax assets			2,020		2,318
Less valuation allowance			48		48

Net deferred tax assets		$	1,972	$	2,270

The Company has a U.S. capital loss carryover of approximately $130 at December 31, 2005, that, if not utilized, will expire beginning 2007. The Company has provided a valuation allowance against this U.S capital loss carryover since it does not believe that it is more likely than not that this deferred tax asset will be realized prior to its expiration.

5. Related-Party Transactions

HWC has a management services agreement with an affiliate of the majority stockholder of the Company that provides for the payment of monthly management fees of approximately $42 and the reimbursement of certain expenses. Management fees and expenses of $500, $501, and $502, were incurred and paid under this agreement for the years ended December 31, 2005, 2004 and 2003, respectively.

As discussed in Note 3 above, the Company issued Junior Subordinated Promissory Notes in 1997. These Notes were held by the majority stockholder and certain other stockholders and officers of the Company.

6. Employee Benefit Plans

A combination profit-sharing plan and salary deferral plan (the "Plan") is provided for the benefit of HWC's employees. Employees who are eligible to participate in the Plan can contribute a percentage of their base compensation, up to the maximum percentage allowable not to exceed the limits of Internal Revenue Code Sections 401(k), 404, and 415, subject to the IRS-imposed dollar limit. Employee contributions are invested in certain equity and fixed-income securities, based on employee elections. Effective January 1, 2005, the Board of Directors approved a Company match of an employee's contributions up to a maximum of 50% of the employee's first 4% of contributions. During 2005 the Company's match was $238. Effective January 1, 2006, the Company's match increased to 50% of the employee's first 5% of contributions.

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7. Stock Option Plan and Dividends

Stock options represent the right to purchase shares of common stock at a price that is fixed on the day the options are granted (the grant date). The table below summarizes the stock option activity for the past three years:

	2005			Weighted Average Exercise Price		2004			Weighted Average Exercise Price		2003	Weighted Average Exercise Price
Outstanding—Beginning of year		89,300		$	1.00		211,683		$	0.57	211,683	$	0.57
Granted		49,000			5.00		32,000			1.00	—		—
Exercised		—			—		(145,383	)		0.38	—		—
Forfeitures		(2,000	)		1.00		(9,000	)		1.00	—		—

Outstanding—End of year		136,300		$	2.44		89,300		$	1.00	211,683	$	0.57

Exercisable—End of year		52,300					35,300				165,283

Weighted average fair value of options granted during the year	$	12.37				$	0.12				—

The table below summarizes information about stock options outstanding and exercisable at December 31, 2005:

		Outstanding Stock Options		Exercisable Stock Options
Exercise Prices		Shares	Weighted Average Remaining Contractual Life (years)	Shares
$	1.00	87,300	6.99	52,300
$	5.00	49,000	10.00	—

$	2.44	136,300	8.07	52,300

In 2000, the Company adopted a stock option plan (the "2000 Plan") to provide incentives for certain key employees and directors through awards and the exercise of options. The 2000 Plan provides for options to be granted at the fair market value of the Company's common stock at the date of the grant and may be either nonqualified stock options or incentive stock options as defined by Section 422 of the Internal Revenue Code of 1986 (the "Code"), as amended.

The 2000 Plan was amended on December 30, 2005, increasing the maximum number of shares available to be issued to designated participants from 100,000 shares to 250,000 shares. The maximum number of shares available to any one participant is 25,000 shares in any one calendar year.

In 1998, the Company adopted a stock option plan (the "1998 Plan") to provide incentives for certain key employees and directors through awards and the exercise of options. The 1998 Plan provides for options to be granted at the fair market value of the Company's common stock on the date of grant and may be either nonqualified stock options or incentive stock options as defined by Section 422 of the Code, as amended. On October 29, 2000, the 1998 Plan was amended to increase the number of shares available to be issued from 106,667 shares to 451,850 shares. The maximum number of shares available to any one participant increased from 96,000 shares to 150,000 shares in any one calendar year.

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On December 29, 2005, the Directors of the Company declared a dividend on the Company's shares of common stock in the amount of approximately $2.26 per share for an aggregate dividend of $20 million. This dividend was paid to the holders of record of its common stock on December 30, 2005.

8. Commitments and Contingencies

The Company has entered into operating leases, primarily for warehouse and office facilities. These operating leases frequently include renewal options at the fair rental value at that time. For leases with step rent provisions, whereby the rental payments increase incrementally over the life of the lease, we recognize the total minimum lease payments on a straight line basis over the minimum lease term. Rent expense was approximately $1,611 in 2005, $1,632 in 2004 and $1,638 in 2003. Future minimum lease payments under non-cancelable operating leases with initial terms of one year or more consisted of the following at December 31, 2005:

2006	$	1,759
2007		1,668
2008		1,670
2009		1,591
2010		1,113
Thereafter		2,609

Total minimum lease payments	$	10,410

The Company had aggregate purchase commitments for inventory of approximately $31,686 at December 31, 2005.

During 2004, HWC settled a lawsuit with a vendor, in regards to a prior inventory purchase, which resulted in the receipt of $650, which is included in litigation settlements in the accompanying 2004 statement of income.

In September 2000, HWC lost a court case brought by a vendor for alleged breach of contract. The jury found in favor of the vendor and awarded the vendor the sum of $1,300 plus accrued interest, which totaled approximately $1,600. The breach of contract occurred prior to the acquisition of the Company from its previous owner ("ALLTEL"). HWC contends that this liability should be borne by ALLTEL. In 2001, HWC filed suit against ALLTEL under the terms of the purchase agreement, in which HWC is to be indemnified by ALLTEL, for any liability either disclosed or undisclosed in the agreement of sale. In October 2004, the court rendered its verdict on the suit. HWC was awarded approximately $672 for ALLTEL's breach under one portion of the suit which amount was received in January 2005 and included in litigation settlements in the accompanying 2005 statement of income, while the court found in favor of ALLTEL on the second portion of the suit. HWC has filed an appeal on the second portion of the court's finding. Should HWC be successful in its appeal and assuming the appeals court verdict is ultimately withheld, HWC should receive approximately $1,000. HWC's only exposure is the cost of ongoing legal fees, which are estimated to be no more than $50.

HWC, along with many other defendants, have been named in a number of class action lawsuits in the state courts of North Dakota alleging that certain wire and cable which may have contained asbestos caused injury to the plaintiffs who were exposed to this wire and cable. It is not clear whether the alleged injuries occurred as a result of the wire and cable in question or whether HWC, in fact, distributed the wire and cable alleged to have caused any injuries. In addition, HWC did not manufacture any of the wire and cable at issue,

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and HWC would rely on any warranties from the manufacturers of such cable if it were determined that any of the wire or cable that HWC distributed contained asbestos which caused injury to any of these plaintiffs. In connection with ALLTEL's sale of the company in 1997, ALLTEL provided indemnities with respect to costs and damages associated with these claims that HWC believes it could enforce if its insurance coverage proves inadequate. In addition, HWC maintains general liability insurance that has applied to these claims. To date, all costs associated with these claims have been covered by the applicable insurance policies and all defense of these claims has been handled by the applicable insurance companies.

In addition to the foregoing cases, there are no legal proceedings pending against or involving the Company that, in management's opinion, based on the current known facts and circumstances, are expected to have a material adverse effect on the Company's consolidated financial position, cash flows, or results from operations.

9. Subsequent Event

On March 23, 2006, HWC Holding Corporation changed its name to Houston Wire & Cable Company and the Company's operating subsidiary, Houston Wire & Cable Company, changed its name to HWC Wire & Cable Company.

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Shares

Common Stock

PROSPECTUS

, 2006

William Blair & Company		Robert W. Baird & Co.
BB&T Capital Markets

Until , 2006, all dealers that buy, sell or trade in our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth all the costs and expenses, other than underwriting discounts, payable in connection with the issuance and distribution of the common stock being registered. Except as otherwise noted, the registrant will pay all of those amounts. All amounts shown below are estimates, except the registration fee:

Registration fee of Securities and Exchange Commission	$	12,059
NASD filing fee		11,770
Accountants' fees and expenses		*
Legal fees and expenses		*
Printing expenses		*
Transfer agent fees and expenses		*
Nasdaq National Market fee		*
Blue sky fees, expenses and legal fees		*
Miscellaneous		*
TOTAL	$	*

*: To be filed by amendment.

Item 14. Indemnification of Directors and Officers

Section 102 of the Delaware General Corporation Law allows a corporation to eliminate the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except in cases where the director breached his or her duty of loyalty to the corporation or its stockholders, failed to act in good faith, engaged in intentional misconduct or a knowing violation of the law, willfully or negligently authorized the unlawful payment of a dividend or approved an unlawful stock redemption or repurchase or obtained an improper personal benefit. The registrant's certificate of incorporation contains a provision which eliminates directors' personal liability as set forth above.

The registrant's certificate of incorporation and bylaws provide in effect that the registrant shall indemnify its directors and officers to the full extent permitted by the Delaware law. Section 145 of the Delaware law provides that a Delaware corporation has the power to indemnify its directors, officers, employees and agents in certain circumstances. Subsection (a) of Section 145 of the Delaware law empowers a corporation to indemnify any director, officer, employee or agent, or former director, officer, employee or agent, who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding provided that such director, officer, employee or agent acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, provided that such director, officer, employee or agent had no reasonable cause to believe that his or her conduct was unlawful.

Subsection (b) of Section 145 of the Delaware law empowers a corporation to indemnify any director, officer, employee or agent, or former director, officer, employee or agent, who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses (including attorneys' fees) actually and reasonably incurred in

II-1

connection with the defense or settlement of such action or suit provided that such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification may be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery shall determine that despite the adjudication of liability such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.

Section 145 further provides that to the extent that a director or officer or employee of a corporation has been successful in the defense of any action, suit or proceeding referred to in subsections (a) and (b) or in the defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection therewith; that indemnification provided by Section 145 shall not be deemed exclusive of any other rights to which the party seeking indemnification may be entitled; and the corporation is empowered to purchase and maintain insurance on behalf of a director, officer, employee or agent of the corporation against any liability asserted against him or her or incurred by him or her in any such capacity or arising out of his or her status as such whether or not the corporation would have the power to indemnify him or her against such liabilities under Section 145; and that, unless indemnification is ordered by a court, the determination that indemnification under subsections (a) and (b) of Section 145 is proper because the director, officer, employee or agent has met the applicable standard of conduct under such subsections shall be made by (1) a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (3) by the stockholders.

The registrant has in effect insurance policies for general officers' and directors' liability insurance covering all of its officers and directors.

Item 15. Recent Sales of Unregistered Securities

During the three years preceding the filing of this registration statement, the only securities we issued were stock options granted to our employees under our stock option plans and shares of our common stock upon the exercise of outstanding options. None of these transactions was registered under the Securities Act, as amended.

The following represents the common stock we issued in the three years preceding the filing of this registration statement upon the exercise of outstanding options (all share numbers before the proposed split):

Buyer	Date of Sale	Amount of Securities Sold	Consideration
Charles A. Sorrentino	12/10/04	145,183	$	54,443.63
David M. Cathcart	12/14/04	200		200.00
Jeffrey Fisher	1/27/06	1,400		1,400.00
Nicol G. Graham	1/31/06	2,800		2,800.00
Terry Smith-Stallard	2/3/06	1,400		1,400.00

On January 1, 2004, we granted certain of our employees options to purchase an aggregate of 32,000 shares of our common stock with an aggregate exercise price of $32,000. On December 31, 2005, we granted certain of our employees options to purchase an aggregate of 49,000 shares of our common stock with an aggregate exercise price of $245,000.

None of these transactions involved any underwriters, underwriting discounts or commissions, or any public offering, and the registrant believes that each transaction was exempt from the registration requirements of the Securities Act by virtue of Rule 701 pursuant to compensatory benefit plans and contracts relating to compensation.

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Item 16. Exhibits and Financial Statement Schedules

(a) The Exhibits filed herewith are set forth on the Index to Exhibits filed as a part of this Registration Statement on page II-5 hereof.

(b): Financial Statement Schedules:
Report of Independent Registered Public Accountants
Schedule II—Valuation and Qualifying Accounts

Item 17. Undertakings

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 14 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and, therefore, unenforceable. In the event a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes:

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

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

II-3

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on this 24th day of March, 2006.

	HOUSTON WIRE & CABLE COMPANY (Registrant)
	By:		/s/ NICOL G. GRAHAM
			Nicol G. Graham Chief Financial Officer, Treasurer and Secretary

Each person whose signature appears below constitutes and appoints Charles A. Sorrentino and Nicol G. Graham, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any related Registration Statements filed pursuant to Rule 462(b) promulgated under the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

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

SIGNATURE	TITLE	DATE

/s/ CHARLES A. SORRENTINO Charles A. Sorrentino	President, Chief Executive Officer and Director	March 24, 2006
/s/ NICOL G. GRAHAM Nicol G. Graham	Chief Financial Officer, Treasurer and Secretary (Chief Accounting Officer)	March 24, 2006
/s/ PETER M. GOTSCH Peter M. Gotsch	Director	March 24, 2006
/s/ ROBERT G. HOGAN Robert G. Hogan	Director	March 24, 2006

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INDEX TO EXHIBITS

	EXHIBIT NUMBER		EXHIBIT
	1.1		Form of Underwriting Agreement*
	3.1		Amended and Restated Certificate of Incorporation of Houston Wire & Cable Company
	3.2		By-Laws of Houston Wire & Cable Company
	4.1		Form of Specimen Common Stock Certificate of Houston Wire & Cable Company*
	5.1		Opinion of Schiff Hardin LLP*
	10.1		Form of Registration Rights Agreement by and between Houston Wire & Cable Company and Code, Hennessy & Simmons II, L.P.
	10.2		Houston Wire & Cable Company 2000 Stock Plan
	10.3		Form of Houston Wire & Cable Company 2006 Stock Plan
	10.4		Amended and Restated Loan and Security Agreement dated as of May 22, 2000, by and among various specified lenders, Fleet Capital Corporation (now Bank of America, Inc.) and HWC Holding Company (now Houston Wire & Cable Company)
	10.5		First Amendment to Amended and Restated Loan Agreement, dated as of July 13, 2000
	10.6		Second Amendment to Amended and Restated Loan Agreement, dated as of May 30, 2001
	10.7		Third Amendment to Amended and Restated Loan Agreement, dated as of October 22, 2001
	10.8		Fourth Amendment to Amended and Restated Loan Agreement, dated as of December 31, 2002
	10.9		Fifth Amendment to Amended and Restated Loan Agreement, dated as of November 19, 2003
	10.10		Sixth Amendment to Amended and Restated Loan Agreement, dated as of May 26, 2005
	10.11		Seventh Amendment to Amended and Restated Loan Agreement, dated as of December 14, 2005
	10.12		Eighth Amendment to Amended and Restated Loan Agreement, dated as of December 30, 2005
	10.13		Termination Agreement, dated as of March 23, 2006, by and between HWC Wire & Cable Company and CHS Management II, L.P.
	10.14		Employment Agreement by and between Charles A. Sorrentino and Houston Wire & Cable Company*
	10.15		Form of Executive Securities Agreement by and among Code, Hennessy & Simmons II, L.P., HWC Holding Corporation (now Houston Wire & Cable Company) and Executive (referred to herein as the "restricted securities agreement")
	10.16		Investor Securities Agreement, dated as of May 22, 1997, by and among Code, Hennessy & Simmons, L.P., HWC Holding Corporation (now Houston Wire & Cable Company) and various specified investors*
	21.1		Subsidiaries of Houston Wire & Cable Company
	23.1		Consent of Ernst & Young LLP, Independent Registered Public Accountants
	23.2		Consent of Schiff Hardin LLP (contained in their opinion filed as Exhibit 5.1)
	24.1		Powers of Attorney for Messrs. Sorrentino, Graham, Gotsch and Hogan (contained on the signature page)

*: To be filed by amendment

II-5

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Table of Contents
PROSPECTUS SUMMARY
This Offering
Summary Consolidated Financial and Other Data
RISK FACTORS
FORWARD-LOOKING STATEMENTS
USE OF PROCEEDS
DIVIDEND POLICY
CAPITALIZATION
DILUTION
SELECTED CONSOLIDATED FINANCIAL DATA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS
MANAGEMENT
Aggregate Option Exercises in Fiscal 2005 and Fiscal Year-End Option Values
Equity Compensation Plan Information
PRINCIPAL AND SELLING STOCKHOLDERS
RELATIONSHIPS AND TRANSACTIONS WITH RELATED PARTIES
DESCRIPTION OF CAPITAL STOCK, CERTIFICATE OF INCORPORATION AND BY-LAWS
SHARES ELIGIBLE FOR FUTURE SALE
UNDERWRITING
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Houston Wire & Cable Company Consolidated Balance Sheets
Houston Wire & Cable Company Consolidated Statements of Income
Houston Wire & Cable Company Consolidated Statements of Stockholders' Equity
Houston Wire & Cable Company Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements (in thousands, except per share data)
Shares
PART II INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

Item 14. Indemnification of Directors and Officers

Item 15. Recent Sales of Unregistered Securities

Item 16. Exhibits and Financial Statement Schedules

Item 17. Undertakings

SIGNATURES
INDEX TO EXHIBITS

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Exhibit 3.1

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION

HOUSTON WIRE & CABLE COMPANY

ARTICLE I

The name of the Corporation is Houston Wire & Cable Company (the " Corporation ").

ARTICLE II

The address of the Corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, 19805-1297. The name of the Corporation's registered agent at that address is The Corporation Trust Company.

ARTICLE III

The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware (the " GCL ").

ARTICLE IV

(a) The total number of shares of stock which the Corporation shall have authority to issue is One Hundred Five Million (105,000,000), consisting of One Hundred Million (100,000,000) shares of Common Stock, having a par value of $.001 per share (the " Common Stock "), and Five Million (5,000,000) shares of Preferred Stock, having a par value of $.001 per share (the " Preferred Stock ").

(b) Each holder of record of shares of Common Stock shall be entitled to vote at all meetings of the stockholders and shall have one (1) vote for each share held of record.

(c) Subject to all of the rights of the holders of all classes or series of stock at the time outstanding having prior rights as to dividends, the holders of the Common Stock shall be entitled to receive dividends at such times and in such amounts as may be determined by the Board of Directors of the Corporation.

(d) The Board of Directors is expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such distinctive designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series and as may be permitted by the GCL.

ARTICLE V

The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

(a) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

(b) The directors shall have concurrent power with the stockholders to make, alter, amend, change, add to or repeal the By-Laws of the Corporation.

(c) The number of directors of the Corporation shall be fixed in accordance with the By-Laws of the Corporation. Election of directors need not be by written ballot unless the By-Laws so provide.

(d) Subject to the right, if any, of holders of any series of the Preferred Stock then outstanding, any vacancy on the Board of Directors, including a vacancy that results from an increase in the number of directors, may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.

(e) No director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director; provided , however , that this provision shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the GCL, or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.

ARTICLE VI

(a) Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter, a " Proceeding "), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, manager, officer or trustee of another corporation or of a partnership, limited liability company, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such Proceeding is alleged action or inaction in an official capacity as a director, manager, officer or trustee or in any other capacity while serving as a director, manager, officer or trustee, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the GCL, as the same exists as of the date hereof or as may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than the GCL permitted the Corporation to provide both prior to such amendment and as of the date hereof), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person in connection therewith, and such indemnification shall continue as to a person who has ceased to be a director, manager, officer or trustee and shall inure to the benefit of his or her heirs, executors and administrators; provided , however , that, except as provided in paragraph (b) hereof, the Corporation shall indemnify any such person seeking indemnification in connection with a Proceeding (or part thereof) initiated by such person only if such Proceeding (or part thereof) was authorized by the Board of Directors. The right to indemnification conferred in this Article VI shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in connection with any such Proceeding in advance of its final disposition; provided , however , that, if the GCL requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation service to an employee benefit plan) in advance of the final disposition of a Proceeding shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Article VI or otherwise. The Corporation may, by action of the Board of Directors, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors, managers, officers and trustees.

(b) If a claim under paragraph (a) of this Article VI is not paid in full by the Corporation within 30 days after written notice thereof has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in connection with any Proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the GCL for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including the Board, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct under the GCL, nor an actual determination by the Corporation (including the Board, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(c) The rights to indemnification and the payment of expenses incurred in connection with a Proceeding in advance of its final disposition conferred in this Article VI shall not be (and shall not be deemed to be) exclusive of any other right which any person may have or hereafter acquire under any statute, provision of this Amended and Restated Certificate of Incorporation, By-Law, agreement, vote of stockholders or disinterested directors or otherwise.

(d) The Corporation may purchase and maintain insurance, at its expense, to protect itself and any director, manager, officer, trustee, employee or agent of the Corporation or another corporation, or of a partnership, limited liability company, joint venture, trust or other enterprise against any expense, liability or loss (as such terms are used in this Article VI), whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the GCL.

(e) Any repeal or modification of this Article VI shall not impair or otherwise affect any rights, or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought based in whole or in part upon any such state of facts.

(f) This Article VI shall be liberally construed in favor of indemnification and the payment of expenses incurred in connection with a Proceeding in advance of its final disposition. There shall be a rebuttable presumption that a claimant under this Article VI is entitled to such indemnification, and the Corporation shall bear the burden of proving by a preponderance of the evidence that such claimant is not so entitled to indemnification.

(g) If any provision of this Article VI shall be deemed invalid or unenforceable, the Corporation shall remain obligated to indemnify and advance expenses subject to all those provisions of this Article VI which are not invalid or unenforceable.

ARTICLE VII

Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained in the GCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation. The authority contemplated by Section 228 of the GCL which permits stockholders to act by written consent is expressly denied to the stockholders of the Corporation. Accordingly, the stockholders have no ability to take any action unless such action is taken at an annual or special meeting of the stockholders.

ARTICLE VIII

Special meetings of stockholders may be called at any time by only the Chairman of the Board of Directors, the Chief Executive Officer (or if there is no Chief Executive Officer, the President) or the Board of Directors of the Corporation pursuant to a resolution adopted by the affirmative vote of a majority of the total number of directors then in office. Any business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting.

ARTICLE IX

Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as consequence of such compromise or arrangement, said compromise or arrangement and said reorganization shall, if sanctioned by the court to which said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation.

ARTICLE X

The Corporation expressly elects to be governed by Section 203 of the GCL. Notwithstanding the terms of Section 203 of the GCL, none of Code, Hennessy & Simmons II, L.P., CHS Management II, L.P. or Code, Hennessy & Simmons, Inc. or any of their affiliates shall be deemed to be an "interested stockholder," as such term is defined in Section 203(c)(5) of the GCL, regardless of the percentage of voting stock of the Corporation owned by them.

ARTICLE XI

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

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Exhibit 3.1

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Exhibit 3.2

AMENDED AND RESTATED
BY-LAWS
OF HOUSTON WIRE & CABLE COMPANY

TABLE OF CONTENTS

			Page
ARTICLE 1—OFFICES			1
	1.1	Registered Offices	1
	1.2	Other Offices	1
	1.3	Books	1
ARTICLE 2—STOCKHOLDERS			1
	2.1	Place of Meetings	1
	2.2	Annual Meeting	1
	2.3	Special Meeting	1
	2.4	Notice of Meetings	2
	2.5	Voting List	2
	2.6	Quorum	2
	2.7	Adjournments	2
	2.8	Voting and Proxies	2
	2.9	Proxy Representation	3
	2.10	Action at Meeting	3
	2.11	Nomination of Directors	3
	2.12	Notice of Business at Annual Meetings	4
	2.13	Action without Meeting	5
	2.14	Organization	5
ARTICLE 3—DIRECTORS			5
	3.1	General Powers	5
	3.2	Number; Election and Qualification	5
	3.3	Chairman of the Board	5
	3.4	Vacancies	5
	3.5	Resignation	5
	3.6	Regular Meetings	6
	3.7	Special Meetings	6
	3.8	Notice of Special Meetings	6
	3.9	Meetings by Telephone Conference Calls	6
	3.10	Quorum	6
	3.11	Action at Meeting	6
	3.12	Action by Consent	6

	3.13	Committees	7
	3.14	Compensation of Directors	7
ARTICLE 4—OFFICERS			7
	4.1	Enumeration	7
	4.2	Election	7
	4.3	Qualification	7
	4.4	Tenure	7
	4.5	Resignation and Removal	7
	4.6	Vacancies	8
	4.7	Chief Executive Officer	8
	4.8	President	8
	4.9	Chief Financial Officer	8
	4.10	Vice Presidents	8
	4.11	Controllers	8
	4.12	Secretary	9
	4.13	Treasurer	9
	4.14	Other Officers, Assistant Officers and Agents	9
	4.15	Salaries	9
ARTICLE 5—CAPITAL STOCK			9
	5.1	Issuance of Stock	9
	5.2	Certificates of Stock	10
	5.3	Transfers	10
	5.4	Lost, Stolen or Destroyed Certificates	10
	5.5	Record Date	10
	5.6	Dividends	10
ARTICLE 6—INDEMNIFICATION AND INSURANCE			11
	6.1	Indemnification	11
	6.2	Determination; Claims	11
	6.3	Non-Exclusivity of Rights	12
	6.4	Insurance	12
	6.5	Amendment or Repeal	12
	6.6	Rebuttable Presumption	12
	6.7	Severability	12

ARTICLE 7—GENERAL PROVISIONS			13
	7.1	Fiscal Year	13
	7.2	Corporate Seal	13
	7.3	Form of Notice	13
	7.4	Waiver of Notice	13
	7.5	Voting of Securities	13
	7.6	Evidence of Authority	13
	7.7	Certificate of Incorporation	13
	7.8	Transactions with Interested Parties	13
	7.9	Severability	14
	7.10	Pronouns	14
	7.11	Contracts	14
	7.12	Loans	14
	7.13	Inspection of Books and Records	15
	7.14	Section Headlines	15
	7.15	Inconsistent Provisions	15
ARTICLE 8—AMENDMENTS			15
	8.1	By the Board of Directors	15
	8.2	By the Stockholders	15

iii

Amended and Restated
By-laws
of
Houston Wire & Cable Company

ARTICLE 1—OFFICES

1.1 Registered Offices. The registered office of Houston Wire & Cable Company (the "Corporation") in the State of Delaware shall be located at Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19805-1297. The name of the Corporation's registered agent at such address shall be The Corporation Trust Company. The registered office and/or registered agent of the Corporation may be changed from time to time by action of the Board of Directors.

1.2 Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.

1.3 Books. The books of the Corporation may be kept within or without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE 2—STOCKHOLDERS

2.1 Place of Meetings. All meetings of stockholders shall be held at such place within or without the State of Delaware as may be designated from time to time by the Board of Directors or the Chief Executive Officer (or, if there is no Chief Executive Officer, the President) or, if not so designated, at the registered office of the Corporation.

2.2 Annual Meeting. The annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly be brought before the meeting shall be held on such date and at such time and at such place within or without the State of Delaware as shall be fixed by the Board of Directors, pursuant to a resolution adopted by the affirmative vote of a majority of the total number of directors then in office, or the Chief Executive Officer (or, if there is no Chief Executive Officer, the President) and stated in the notice of the meeting. If no annual meeting is held in accordance with the foregoing provisions, the Board of Directors shall cause the meeting to be held as soon thereafter as convenient. If no annual meeting is held in accordance with the foregoing provisions, a special meeting may be held in lieu of the annual meeting, and any action taken at that special meeting shall have the same effect as if it had been taken at the annual meeting, and in such case all references in these By-Laws to the annual meeting of stockholders shall be deemed to refer to such special meeting.

2.3 Special Meeting. Special meetings of stockholders may be called at any time by only the Chairman of the Board of Directors, the Chief Executive Officer (or, if there is no Chief Executive Officer, the President) or the Board of Directors pursuant to a resolution adopted by the affirmative vote of a majority of the total number of directors then in office. Any business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting.

2.4 Notice of Meetings. Except as otherwise provided by law, written notice of each meeting of stockholders, whether annual or special, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notices of all meetings shall state the place, date and hour of the meeting. The notice of a special meeting shall state, in addition, the purpose or purposes for which the meeting is called. If mailed,

notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his or her address as it appears on the records of the Corporation.

2.5 Voting List. The officer who has charge of the stock ledger of the Corporation shall prepare, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, at the principal place of business of the Corporation. The list shall also be produced and kept at the time and place of the meeting during the whole time of the meeting, and may be inspected by any stockholder who is present.

2.6 Quorum. Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, the holders of a majority of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business.

2.7 Adjournments. Any meeting of stockholders may be adjourned to any other time and to any other place at which a meeting of stockholders may be held under these By-Laws by a majority of the stockholders present or represented at the meeting and entitled to vote, although less than a quorum, or, if no stockholder is present, by any officer entitled to preside at or to act as Secretary of such meeting. It shall not be necessary to notify any stockholder of any adjournment of less than thirty (30) days if the time and place of the adjourned meeting are announced at the meeting at which adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting. At the adjourned meeting, the Corporation may transact any business that might have been transacted at the original meeting.

2.8 Voting and Proxies. Except as otherwise provided by the General Corporation Law of the State of Delaware, the Certificate of Incorporation or these By-Laws, each stockholder shall have one vote for each share of capital stock entitled to vote and held of record by such stockholder. To the extent permitted by law, each stockholder of record entitled to vote at a meeting of stockholders may vote in person or may authorize another person or persons to vote or act for him or her by proxy, which proxy may be authorized in writing, by telephone or by electronic means by the stockholder or his or her authorized agent. No such proxy shall be voted or acted upon after three years from the date of its execution, unless the proxy expressly provides for a longer period.

2.9 Proxy Representation. Every stockholder may authorize another person or persons to act for him or her by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, objecting to or voting or participating at a meeting. The delivery of a proxy on behalf of a stockholder consistent with telephonic or electronically transmitted instructions obtained pursuant to procedures of the Corporation reasonably designed to verify that such stockholder has authorized such instructions shall constitute execution and delivery of the proxy by or on behalf of the stockholder. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. The authorization of a proxy may but need not be limited to specified action, provided, however, that if a proxy limits its authorization to a meeting or meetings of stockholders, unless otherwise specifically provided such proxy shall entitle the holder thereof to vote at any adjourned session but shall not be valid after the final adjournment thereof. A proxy purporting to be authorized by or on behalf of a stockholder, if accepted by the Corporation in its discretion, shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger.

2.10 Action at Meeting. When a quorum is present at any meeting, a plurality of the votes properly cast for election to any office shall elect to such office, and a majority of the votes properly cast upon any question other than an election to an office shall decide the question, except when a larger vote is required by law, by the Certificate of Incorporation or by these By-Laws. No ballot shall be required for any election unless requested by a stockholder present or represented at the meeting and entitled to vote in the election.

2.11 Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors. The nomination for election to the Board of Directors of the Corporation at a meeting of stockholders may be made by the Board of Directors or by any stockholder (i) who is a stockholder of record on the date of the giving of notice provided for in this Section 2.11 and on the record date for the determination of stockholders entitled to vote at the Corporation's annual meeting and (ii) who complies with the notice procedures set forth in this Section 2.11 . Such nominations, other than those made by or on behalf of the Board of Directors, shall be made by notice in writing delivered or mailed by first class United States mail, postage prepaid, to the Secretary and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided , however , that if the annual meeting is not held within thirty (30) days before or after such anniversary date, then such nomination shall have been delivered to or mailed and received by the Secretary not later than the close of business on the 10th day following the date on which the notice of the meeting was mailed or public disclosure of the annual meeting date was made, whichever occurs first. Such notice shall set forth (a) as to each proposed nominee (i) the name, age, business address and, if known, residence address of such nominee, (ii) the principal occupation or employment of such nominee, (iii) the number of shares of stock of the Corporation which are beneficially owned by such nominee, and (iv) any other information concerning the nominee that must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, including such person's written consent to be named as a nominee and to serve as a director if elected; and (b) as to the stockholder giving the notice (i) the name and address, as they appear on the Corporation's books, of such stockholder and (ii) the class and number of shares of the Corporation which are beneficially owned by such stockholder. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation.

The chairman of the meeting may, if the facts warrant, determine that a nomination was not made in accordance with the foregoing procedure, and, if he or she should so determine, he or she shall so declare to the meeting, and the defective nomination shall be disregarded.

2.12 Notice of Business at Annual Meetings. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before an annual meeting by a stockholder (i) who is a stockholder of record on the date of the giving of notice provided for in this Section 2.12 and on the record date for the determination of stockholders entitled to vote at such annual meeting, and (ii) who complies with the notice procedures set forth in this Section 2.12 . For business to be properly brought before an annual meeting by a stockholder, if such business relates to the election of directors of the Corporation, the procedures in Section 2.11 must be complied with. If such business relates to any other matter, the stockholder must have given timely notice thereof in writing to the Secretary. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of

the immediately preceding annual meeting of stockholders; provided , however , that if the annual meeting is not held within thirty (30) days before or after such anniversary date, then for the notice by the stockholder to be timely it must be so received not later than the close of business on the 10th day following the date on which the notice of the meeting was mailed or public disclosure of the annual meeting date was made, whichever occurs first. To be in proper written form, a stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (c) the class and number of shares of the Corporation's capital stock that are beneficially owned by the stockholder, (d) any material interest of the stockholder in such business and (e) a representation that the stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. Notwithstanding anything in these By-Laws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in Section 2.11 or this Section 2.12 , except that any stockholder proposal which complies with Rule 14a-8 of the proxy rules, or any successor provision, promulgated under the Securities Exchange Act of 1934, as amended, and is to be included in the Corporation's proxy statement for an annual meeting of stockholders shall be deemed to comply with the requirements of this Section 2.12 .

The chairman of the meeting shall, if the facts warrant, determine that business was not properly brought before the meeting in accordance with the provisions of this Section 2.12 , and, if he or she should so determine, the chairman shall so declare to the meeting, and any such business not properly brought before the meeting shall not be transacted.

2.13 Action without Meeting. Stockholders may not take any action by written consent in lieu of a meeting.

2.14 Organization. The Chairman of the Board, or in his or her absence the President, shall call meetings of the stockholders to order and act as chairman of such meeting; provided , however , that the Board of Directors may appoint any stockholder to act as chairman of any meeting in the absence of the Chairman of the Board. The Secretary of the Corporation shall act as secretary at all meetings of the stockholders; provided , however , that in the absence of the Secretary at any meeting of the stockholders, the acting chairman may appoint any person to act as secretary of the meeting.

ARTICLE 3—DIRECTORS

3.1 General Powers. The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors, who may exercise all of the powers of the Corporation except as otherwise provided by law, the Certificate of Incorporation or these By-Laws. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law, may exercise the powers of the full Board of Directors until the vacancy is filled.

3.2 Number; Election and Qualification. The number of directors that shall constitute the whole Board of Directors shall be determined by resolution of the Board of Directors, but in no event shall be less than three. The directors shall be elected at the annual meeting of stockholders by such stockholders as have the right to vote on such election. The directors need not be stockholders of the Corporation.

3.3 Chairman of the Board. The Board of Directors may appoint one of the directors to serve as Chairman of the Board, but such appointment shall not result in any director becoming an officer of the Corporation. If the Board of Directors appoints a Chairman of the Board, he or she shall perform such duties and possess such powers as are assigned to him or her by the Board of Directors.

3.4 Vacancies. Any vacancy in the Board of Directors, however occurring, including a vacancy resulting from an increase in the number of the directors, may be filled by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director. A director elected to fill a vacancy shall hold office until the next annual meeting of stockholders, subject to the election and qualification of his or her successor and to his or her earlier death, resignation or removal.

3.5 Resignation. Any director may resign by delivering his or her written resignation to the Corporation at its principal office or to the President or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.

3.6 Regular Meetings. The regular meetings of the Board of Directors may be held without notice at such time and place, either within or without the State of Delaware, as shall be determined from time to time by the Board of Directors; provided , that any director who is absent when such a determination is made shall be given notice of the determination. A regular meeting of the Board of Directors may be held without notice immediately after and at the same place as the annual meeting of stockholders.

3.7 Special Meetings. Special meetings of the Board of Directors may be held at any time and place, within or without the State of Delaware, designated in a call by the Chairman of the Board of Directors, the Chief Executive Officer (or if there is no Chief Executive Officer, the President), two or more directors or by one director in the event that there is only a single director in office.

3.8 Notice of Special Meetings. Notice of any special meeting of the Board of Directors, unless waived, shall be given to each director by the Secretary or by the officer or one of the directors calling the meeting. The notice shall be duly given to each director (i) by giving notice to such director in person or by telephone at least twenty-four (24) hours in advance of the meeting, (ii) by sending a facsimile, or delivering written notice by hand, to his or her last known business or home address at least twenty-four (24) hours in advance of the meeting, or (iii) by mailing written notice to his or her last known business or home address at least seventy-two (72) hours in advance of the meeting. A notice or waiver of notice of a special meeting of the Board of Directors need not specify the purposes of the meeting.

3.9 Meetings by Telephone Conference Calls. The Board of Directors or any members of any committee of the Board of Directors designated by the directors may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation by such means shall constitute presence in person at such meeting.

3.10 Quorum. A majority of the total number of directors shall constitute a quorum at all meetings of the Board of Directors. In the event one or more of the directors shall be disqualified to vote at any meeting, then the required quorum shall be reduced by one for each such director so disqualified; provided , however , that in no case shall less than one-third (1/3) of the total number of directors constitute a quorum. In the absence of a quorum at any such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, other than announcement at the meeting, until a quorum shall be present.

3.11 Action at Meeting. At any meeting of the Board of Directors at which a quorum is present, the vote of a majority of the directors present shall be sufficient to take any action, unless a different vote is specified by law, the Certificate of Incorporation or these By-Laws.

3.12 Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee of the Board of Directors may be taken without a meeting, if all members of the Board or committee, as the case may be, consent to the action in writing, and the

written consents are filed with the minutes of proceedings of the Board of Directors or committee of the Board of Directors, as applicable.

3.13 Committees. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation appointed by the Board of Directors. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution of the Board of Directors and subject to the provisions of the General Corporation Law of the State of Delaware, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers which may require it. Each such committee shall keep minutes and make such reports as the Board of Directors may from time to time request. Except as the Board of Directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the directors or in such rules, its business shall be conducted as nearly as possible in the same manner as is provided in these By-Laws for the Board of Directors.

3.14 Compensation of Directors. The directors may be paid such compensation for their services and such reimbursement for expenses of attendance at meetings as the Board of Directors may from time to time determine. No such payment shall preclude any director from serving the Corporation or any of its parent or subsidiary corporations in any other capacity and receiving compensation for such service.

ARTICLE 4—OFFICERS

4.1 Enumeration. The officers of the Corporation shall consist of a Chief Executive Officer, a President, a Chief Financial Officer, a Secretary and a Treasurer. The Board of Directors may appoint other officers with such titles and powers as it may deem appropriate, including, without limitation, one or more Vice Presidents and one or more Controllers.

4.2 Election. The Chief Executive Officer, President, Chief Financial Officer, Secretary and Treasurer shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders. Other officers may be appointed by the Board of Directors at such meeting or at any other meeting.

4.3 Qualification. No officer need be a stockholder of the Corporation. Any two or more offices may be held by the same person.

4.4 Tenure. Except as otherwise provided by law, by the Certificate of Incorporation or by these By-Laws, each officer shall hold office until his or her successor is elected and qualified, unless a different term is specified in the vote choosing or appointing him or her, or until his or her earlier death, resignation or removal.

4.5 Resignation and Removal. Any officer may resign by delivering his or her written resignation to the Corporation at its principal office or to the Chief Executive Officer or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. Any officer may be removed at any time, with or without cause, by vote of a majority of the entire number of directors then in office.

Except as the Board of Directors may otherwise determine, no officer who resigns or is removed shall have any right to any compensation as an officer for any period following his or her resignation or removal, or any right to damages on account of such removal, whether his of her compensation be by the month or by the year or otherwise, unless such compensation is expressly provided in a duly authorized written agreement with the Corporation.

4.6 Vacancies. The Board of Directors may fill any vacancy occurring in any office for any reason and may, in its discretion, leave unfilled for such period as it may determine any offices other than those of Chief Executive Officer, President, Chief Financial Officer, Secretary and Treasurer. Each such successor shall hold office for the unexpired term of his or her predecessor and until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal.

4.7 Chief Executive Officer. The Chief Executive Officer shall, subject to the direction of the Board of Directors, have general charge and supervision of the business of the Corporation. Unless otherwise provided by the Board of Directors, he or she shall preside at all meetings of the stockholders and, if he or she is a director, at all meetings of the Board of Directors. The Chief Executive Officer shall perform such other duties and possess such other powers as the Board of Directors may from time to time prescribe.

4.8 President. The President shall perform such duties and possess such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Chief Executive Officer, the President shall perform the duties of the Chief Executive Officer and, when so performing, shall have all the powers of and be subject to all the restrictions upon the office of Chief Executive Officer.

4.9 Chief Financial Officer. The Chief Financial Officer shall perform such duties and possess such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe. The Chief Financial Officer shall have the custody of the corporate funds and securities; shall keep full and accurate all books and accounts of the Corporation as shall be necessary or desirable in accordance with applicable law or generally accepted accounting principles; shall deposit all monies and other valuable effects in the name and to the credit of the Corporation as may be ordered by the Chairman of the Board or the Board of Directors; shall cause the funds of the Corporation to be disbursed when such disbursements have been duly authorized, taking proper vouchers for such disbursements; and shall render to the Board of Directors, at its regular meeting or when the Board of Directors so requires, an account of the Corporation.

4.10 Vice Presidents. Any Vice President shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the President may from time to time prescribe. The Board of Directors may assign to any Vice President the title of Executive Vice President, Senior Vice President or any other such title.

4.11 Controllers. Any Controller shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or any Vice President may from time to time prescribe.

4.12 Secretary. The Secretary shall perform such duties and possess such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe. In addition, the Secretary shall perform such duties and have such powers as are incident to the office of the Secretary, including without limitation the duty and power to give notices of all meetings of stockholders and special meetings of the Board of Directors, to attend all meetings of stockholders and the Board of Directors and keep a record of the proceedings, to maintain a stock ledger and prepare lists of stockholders and their addresses as required, to be custodian of corporate records and the corporate seal and to affix and attest to the same on documents.

In the event of the absence, inability or refusal to act of the Secretary at any meeting of stockholders or directors, the person presiding at the meeting shall designate a temporary secretary to keep a record of the meeting.

4.13 Treasurer. The Treasurer shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the Chief Financial Officer may from time to time prescribe. In addition, the Treasurer shall perform such duties and have such powers as are incident to the office of Treasurer, including without limitation the duty and power to keep and be responsible for all funds

and securities of the Corporation, to deposit funds of the Corporation in depositories selected in accordance with these By-Laws, to disburse such funds as ordered by the Board of Directors, to make proper accounts of such funds, and to render as required by the Board of Directors statements of all such transactions and of the financial condition of the Corporation. Unless the Board of Directors has designated another officer as Chief Financial Officer, the Treasurer shall be the Chief Financial Officer of the Corporation.

In the event of the absence, inability or refusal to act of the Treasurer, the Board of Directors shall appoint a temporary treasurer, who shall perform the duties and exercise the powers of the Treasurer.

4.14 Other Officers, Assistant Officers and Agents. Officers, assistant officers and agents, if any, other than those whose duties are provided for in these By-laws, shall have such authority and perform such duties as may from time to time be prescribed by resolution of the Board of Directors.

4.15 Salaries. Officers of the Corporation shall be entitled to such salaries, compensation or reimbursement as shall be fixed or allowed from time to time by the Board of Directors. No officer shall be prevented from receiving such salary by reason of the fact that the officer is also a director of the Corporation.

ARTICLE 5—CAPITAL STOCK

5.1 Issuance of Stock. Unless otherwise voted by the stockholders and subject to the provisions of the Certificate of Incorporation, the whole or any part of any unissued balance of the authorized capital stock of the Corporation or the whole or any part of any unissued balance of the authorized capital stock of the Corporation held in its treasury may be issued, sold, transferred or otherwise disposed of by vote of the Board of Directors in such manner, for such consideration and on such terms as the Board of Directors may determine.

5.2 Certificates of Stock. Every holder of stock of the Corporation shall be entitled to have a certificate, in such form as may be prescribed by law and by the Board of Directors, certifying the number and class of shares owned by him or her in the Corporation. Each such certificate shall be signed by, or in the name of the Corporation by, the Chairman of the Board, the Chief Executive Officer or the President, and the Treasurer or the Secretary, of the Corporation. Any or all of the signatures on the certificate may be a facsimile.

Each certificate for shares of stock which are subject to any restriction on transfer pursuant to the Certificate of Incorporation, the By-Laws, applicable securities laws or any agreement among any number of stockholders or among such holders and the Corporation shall have conspicuously noted on the face or back of the certificate either the full text of the restriction or a statement of the existence of such restriction.

5.3 Transfers. Except as otherwise established by rules and regulations adopted by the Board of Directors, and subject to applicable law, shares of stock may be transferred on the books of the Corporation by the surrender to the Corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment or power of attorney properly executed, and with such proof of authority or the authenticity of signature as the Corporation or its transfer agent may reasonably require. Except as may be otherwise required by law, by the Certificate of Incorporation or by these By-Laws, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect to such stock, regardless of any transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the Corporation in accordance with the requirements of these By-Laws.

5.4 Lost, Stolen or Destroyed Certificates. The Corporation may issue a new certificate of stock in place of any previously issued certificate alleged to have been lost, stolen or destroyed, upon such terms and conditions as the Board of Directors may prescribe, including the presentation of reasonable evidence of such loss, theft or destruction and the giving of such indemnity as the Board of Directors may require for the protection of the Corporation or any transfer agent or registrar.

5.5 Record Date. The Board of Directors may fix in advance a date as a record date for the determination of the stockholders entitled to notice of or to vote at any meeting of stockholders, or entitled to receive payment of any dividend or other distribution or allotment of any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action. Such record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action to which such record date relates.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided , however , that the Board of Directors may fix a new record date for the adjourned meeting.

5.6 Dividends. Subject to limitations contained in the General Corporation Law of the State of Delaware, the Certificate of Incorporation and these By-Laws, the Board of Directors may declare and pay dividends upon the shares of capital stock of the Corporation, which dividends may be paid either in cash, in property or in shares of the capital stock of the Corporation.

ARTICLE 6—INDEMNIFICATION AND INSURANCE

6.1 Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter, a "Proceeding"), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, manager, officer or trustee of another corporation or of a partnership, limited liability company, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such Proceeding is alleged action or inaction in an official capacity as a director, manager, officer or trustee or in any other capacity while serving as a director, manager, officer or trustee, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the General Corporation Law, as the same exists as of the date hereof or as may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide both prior to such amendment and as of the date hereof), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person in connection therewith, and such indemnification shall continue as to a person who has ceased to be a director, manager, officer or trustee and shall inure to the benefit of his or her heirs, executors and administrators; provided , however , that, except as provided in Section 6.2 , the Corporation shall indemnify any such person seeking indemnification in connection with a Proceeding (or part thereof) initiated by such person only if such Proceeding (or part thereof) was authorized by the Board of Directors. The right to indemnification conferred in this Article 6 shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in connection with any such Proceeding in advance of its final disposition; provided , however , that, if the General Corporation Law requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation service to an employee benefit plan) in advance of the final disposition of a Proceeding shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such

director or officer is not entitled to be indemnified under this Article 6 or otherwise. The Corporation may, by action of the Board of Directors, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors, officers and trustees.

6.2 Determination; Claims. If a claim under Section 6.1 of this Article 6 is not paid in full by the Corporation within thirty (30) days after written notice thereof has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in connection with any Proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the General Corporation Law for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including the Board, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct under the General Corporation Law, nor an actual determination by the Corporation (including the Board, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

6.3 Non-Exclusivity of Rights. The rights to indemnification and the payment of expenses incurred in connection with a Proceeding in advance of its final disposition conferred in this Article 6 shall not be (and they shall not be deemed to be) exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these By-Laws, agreement, vote of stockholders or disinterested directors or otherwise.

6.4 Insurance. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any director, manager, officer, trustee, employee or agent of the Corporation or another corporation, or of a partnership, limited liability company, joint venture, trust or other enterprise against any expense, liability or loss (as such terms are used in this Article 6), whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law.

6.5 Amendment or Repeal. Any repeal or modification of this Article 6 shall not impair or otherwise affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought based in whole or in part upon any such state of facts.

6.6 Rebuttable Presumption. This Article 6 shall be liberally construed in favor of indemnification and the payment of expenses incurred in connection with a Proceeding in advance of its final disposition. There shall be a rebuttable presumption that a claimant under this Article 6 is entitled to such indemnification, and the Corporation shall bear the burden of proving by a preponderance of the evidence that such claimant is not so entitled to indemnification.

6.7 Severability. If any provision of this Article 6 shall be deemed invalid or unenforceable, the Corporation shall remain obligated to indemnify and advance expenses subject to all those provisions of this Article 6 which are not invalid or unenforceable.

ARTICLE 7—GENERAL PROVISIONS

7.1 Fiscal Year. Except as from time to time otherwise designated by the Board of Directors, the fiscal year of the Corporation ends on the close of business on December 31 of each year.

7.2 Corporate Seal. The corporate seal shall be in such form as shall be approved by the Board of Directors.

7.3 Form of Notice. Whenever any notice whatsoever is required to be given in writing to any stockholder by law, by the Certificate of Incorporation or by these By-Laws, such notice may be given by a form of electronic transmission if the stockholder to whom such notice is given has previously consented to the receipt of notice by electronic transmission.

7.4 Waiver of Notice. Whenever any notice whatsoever is required to be given by law, by the Certificate of Incorporation or by these By-Laws, a waiver of such notice either in writing signed by the person entitled to such notice or such person's duly authorized attorney, or by facsimile or any other available method, whether before, at or after the time stated in such waiver, or by the appearance of such person at such meeting in person or by proxy, shall be deemed equivalent to such notice. Any member of the Board of Directors or any committee thereof who is present at a meeting shall be conclusively presumed to have waived notice of such meeting, except when such member attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Such member shall be conclusively presumed to have assented to any action taken unless his or her dissent shall be entered in the minutes of the meeting or unless his or her written dissent to such action shall be filed with the person acting as the secretary of the meeting before the adjournment thereof or shall be forwarded by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to any member who voted in favor of such action.

7.5 Voting of Securities. Except as the directors may otherwise designate, the Chief Executive Officer or Treasurer may waive notice of, and act as, or appoint any person or persons to act as, proxy or attorney-in-fact for the Corporation (with or without power of substitution) at, any meeting of stockholders or shareholders of any other corporation or organization, the securities of which may be held by this Corporation.

7.6 Evidence of Authority. A certificate by the Secretary, or a temporary secretary, as to any action taken by the stockholders, directors, a committee or any officer or representative of the Corporation shall, as to all persons who rely on the certificate in good faith, be conclusive evidence of such action.

7.7 Certificate of Incorporation. All references in these By-Laws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the Corporation, as amended or restated and in effect from time to time.

7.8 Transactions with Interested Parties. No contract or transaction between the Corporation and one or more of the directors or officers, or between the Corporation and any other corporation, limited liability company, partnership, association or other organization in which one or more of the directors or officers are directors, managers or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director, manager or officer is present at or participates in the meeting of the Board of Directors or a committee of the Board of Directors which authorizes the contract or transaction or solely because his, her or their votes are counted for such purpose, if:

(1) The material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative

votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum;

(2) The material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or

(3) The contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee of the Board of Directors or the stockholders.

Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee at which the contract or transaction is authorized.

7.9 Severability. Any determination that any provision of these By-Laws is for any reason inapplicable, illegal or ineffective shall not affect or invalidate any other provision of these By-Laws.

7.10 Pronouns. All pronouns used in these By-Laws shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require.

7.11 Contracts. In addition to the powers otherwise granted to officers pursuant to Article 4 hereof, the Board of Directors may authorize any officer or officers, or any agent or agents, of the Corporation to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances.

7.12 Loans. The Corporation may, to the extent permitted by applicable law, lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the Corporation or of its subsidiaries, including any officer or employee who is a director of the Corporation or its subsidiaries, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the Corporation. The loan, guaranty or other assistance may be with or without interest, and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the Corporation. Nothing in this Section 7.12 shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the Corporation at common law or under any statute.

7.13 Inspection of Books and Records. The Board of Directors shall have power from time to time to determine to what extent and at what times and places and under what conditions and regulations the accounts and books of the Corporation, or any of them, shall be open to the inspection of the stockholders; and no stockholder shall have any right to inspect any account or book or document of the Corporation, except as conferred by the laws of the State of Delaware, unless and until authorized so to do by resolution of the Board of Directors or of the stockholders of the Corporation.

7.14 Section Headings. Section headings in these By-Laws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.

7.15 Inconsistent Provisions. In the event that any provision of these By-Laws is or becomes inconsistent with any provision of the Certificate of Incorporation, the General Corporation Law of the State of Delaware or any other applicable law, the provision of these By-Laws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.

ARTICLE 8—AMENDMENTS

8.1 By the Board of Directors. These By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the affirmative vote of a majority of the directors present at any regular or special meeting of the Board of Directors at which a quorum is present.

8.2 By the Stockholders. Subject to the advance notice requirements set forth in Section 2.12 , these By-Laws may be altered, amended or repealed or new By-Laws may be adopted by the affirmative vote of the majority of the stockholders present at any annual meeting of the stockholders at which a quorum is present.

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Exhibit 10.1

REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of , 2006, between CODE, HENNESSY & SIMMONS II, L.P., a Delaware limited partnership ("Code"), and HOUSTON WIRE & CABLE COMPANY, a Delaware corporation (the "Company").

WHEREAS, Code is the owner of shares of the Company's issued and outstanding shares of common stock, par value $0.001 per share ("Common Stock"), and the Company, Code and certain other selling stockholders have determined to offer to the public up to shares of the Common Stock, in a primary and secondary offering (the "Public Offering").

WHEREAS, Code and the Company are parties to an Investors Securities Agreement with certain investors and Executive Securities Agreements with certain employees and former employees of the Company, pursuant to which such investors and certain of such employees and former employees (collectively, the "Pre-IPO Stockholders") have certain piggyback registration rights applicable to the shares of Common Stock owned by them.

WHEREAS, the parties hereto desire to enter into this Agreement, which sets forth the terms of certain registration rights applicable to the Registrable Securities (as defined below).

NOW, THEREFORE, in consideration of the premises and the mutual promises herein contained, and for other good and valuable consideration, the receipt and adequacy of which are acknowledged, the parties agree as follows:

1. Certain Definitions. As used in this Agreement, the following initially capitalized terms shall have the following meanings:

(a) "Affiliate" means, with respect to any person, any other person who, directly or indirectly, is in control of, is controlled by or is under common control with the former person.

(b) "Holder" means Code and any "transferee" (as such term is defined in Section 11) which is the beneficial owner of Registrable Securities.

(c) "Offered Registrable Securities" means, with respect to any registration pursuant to Section 2 or 3, the Registrable Securities proposed to be disposed of by any Holder in the offering that is the subject of such registration.

(d) "Registrable Securities" means the Common Stock as presently constituted, any stock or other securities into which or for which such Common Stock may hereafter be changed, converted or exchanged, and any other securities issued to holders of such Common Stock (or shares into which or for which such shares are so changed, converted or exchanged) upon any reclassification, share combination, share subdivision, share dividend, merger, consolidation or similar transaction or event, provided that such securities shall cease to be Registrable Securities (i) if a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with the plan of distribution set forth in such registration statement, (ii) such securities shall have been distributed pursuant to Rule 144, or (iii) subsequent to the seventh anniversary of the closing of the Public Offering (subject to the specific extensions specified herein).

(e) "Registration Expenses" means the following reasonable expenses in connection with any registration of securities pursuant to this Agreement: (i) SEC filing fees; (ii) the fees, disbursements and expenses of the Company's counsel and accountants in connection with the registration of the Offered Registrable Securities under the Securities Act; (iii) all expenses in connection with the preparation, printing and filing of the registration statement, all preliminary and final prospectuses and all amendments and supplements thereto, the mailing and delivering of copies thereof to any Holders, underwriters and dealers and all expenses incidental to delivery of

the Offered Registrable Securities; (iv) the cost of producing blue sky or legal investment memoranda; (v) all expenses in connection with the qualification of the Offered Registrable Securities for offering and sale under state securities laws, including the fees and disbursements of counsel for the underwriters or Holders in connection with such qualification and any blue sky and legal investment memoranda; (vi) any fees payable to the National Association of Securities Dealers, Inc. in connection with its review of the terms of the sale of the Offered Registrable Securities; (vii) transfer agents', depositaries' and registrars' fees and the fees of any other agent appointed in connection with such registration; (viii) all security engraving and security printing expenses; (ix) all fees and expenses payable in connection with the listing of the Registrable Securities on each securities exchange or quotation system on which the Common Stock is then listed; and (x) any one time payment for directors and officers insurance directly related to such offering, provided the insurer provides a separate statement for such payment.

(f) "Rule 144" means Rule 144 promulgated under the Securities Act, or any successor rule to similar effect.

(g) "SEC" means the United States Securities and Exchange Commission.

(h) "Securities Act" means the Securities Act of 1933, as amended, or any successor statute.

2. Demand Registration.

(a) At any time and from time to time prior to the seventh anniversary of the closing of the Public Offering, upon written notice from a Holder in the manner set forth in Section 12(h) requesting that the Company effect the registration under the Securities Act of any or all of such Holder's Registrable Securities, which notice shall specify the intended method or methods of disposition of such Registrable Securities, the Company shall use its best efforts to effect, in the manner set forth in Section 5, the registration under the Securities Act of such Registrable Securities for disposition in accordance with the intended method or methods of disposition stated in such request, provided that:

(i) if (A) prior to receipt of a request for registration pursuant to this Section 2(a), the Company was planning an immediate offering of securities by the Company and (B) within five business days after receipt of such request, the managing underwriter of such planned offering advises the Company in writing (with a copy to the Holder requesting registration) that, in such firm's good faith opinion, a registration at the time and on the terms requested would materially and adversely affect the previously planned offering, then the Company shall not be required to effect a registration pursuant to this Section 2(a) until the earliest of (1) the abandonment of such planned offering, (2) 90 days after the completion of such offering, (3) the termination of any "hold back" period obtained by the underwriter(s) of such offering from any person in connection therewith or (4) 180 days after receipt by the Holder requesting registration of the managing underwriter's written opinion referred to above in this subsection (i);

(ii) if, while a registration request is pending pursuant to this Section 2(a), the Company determines in good faith that (A) the filing of a registration statement would require the disclosure of material information that the Company has a bona fide business purpose for preserving as confidential or (B) the Company then is unable to comply with SEC requirements applicable to the requested registration, the Company may delay effecting a registration pursuant to this Section 2(a) until the earlier of (1) the date upon which such material information is otherwise disclosed to the public or ceases to be material, or the Company is able to comply with applicable SEC requirements, as the case may be, and (2) 45 days after the Company makes such good faith determination, provided that the

Company shall not be permitted to delay a requested registration in reliance on this clause (ii) more than once in any 24-month period; and

(iii) the Company shall not be obligated to file a registration statement relating to a registration requested pursuant to this Section 2(a): (A) within six months after the effective date of any other registration statement filed in response to a request pursuant to this Section 2(a); (B) if such registration request is for a number of Registrable Securities representing less than 7.5% of the then issued and outstanding common equity of the Company (unless the Holders making the demand own at least 5% of the issued and outstanding common equity of the Company and the demand is for all their Registrable Securities) or (C) if the aggregate number of Registrable Securities owned by all Holders represents less than 5% of the issued and outstanding common equity of the Company.

(b) Notwithstanding any other provision of this Agreement to the contrary:

(i) a registration requested by a Holder pursuant to Section 2(a) shall not be deemed to have been effected (and, therefore, not requested) (A) unless the registration statement filed in connection therewith has become effective, (B) if, after such registration statement has become effective, it is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court for any reason other than a misrepresentation or an omission by such Holder and, as a result thereof, 90% or more of the Registrable Securities requested to be registered cannot be completely distributed in accordance with the plan of distribution set forth therein or (C) if the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied (other than by reason of an act or omission by such Holder) or waived by the underwriters;

(ii) a registration requested by a Holder pursuant to Section 2(a) and later withdrawn at the request of such Holder, whether prior to or after the effectiveness of the related registration statement, shall be deemed to have been effected (and, therefore, requested), provided that, where a request is withdrawn prior to the filing of a registration statement with the SEC, such Holder can require the Company to disregard for purposes of Section 2(a)(iii) one such requested registration in any six month period; and

(iii) nothing herein shall modify the obligation of a Holder (other than Code) to pay the Registration Expenses incurred in connection with any withdrawn registration.

(c) In the event that any registration requested pursuant to Section 2(a) shall involve, in whole or in part, an underwritten offering, the requesting Holder shall have the right to designate an underwriter reasonably satisfactory to the Company as the lead managing underwriter, and the Company shall have the right to designate one underwriter reasonably satisfactory to the Holder as a co-manager of such underwritten offering.

(d) The Company shall have the right to include additional securities offered for the account of any person (including the Company) in any registration of Registrable Securities requested by a Holder pursuant to Section 2(a); provided that the Company shall not have the right to include such additional securities to the extent the managing underwriter of the offering advises such Holder in writing (with a copy to the Company) that, in such firm's good faith opinion, registration of such additional securities would materially and adversely affect the offering and sale of the Offered Registrable Securities then contemplated by such Holder, except that Code shall be required to include Registrable Securities owned by the Pre-IPO Stockholders to the extent required by the Investors Securities Agreement and Executive Securities Agreements, in each case as in effect on the date hereof.

3. Piggyback Registration. At any time prior to the seventh anniversary of the closing of the Public Offering, if the Company proposes to register any shares of Common Stock or any other of its common equity securities (collectively, "Other Securities") under the Securities Act (other than a registration on Form S-4 or Form S-8 or any successor form thereto), whether or not for sale for its own account, in a manner which would permit registration of Registrable Securities for sale for cash to the public under the Securities Act, it will give prompt written notice to each Holder of its intention to do so at least ten business days prior to the anticipated filing date of the registration statement relating to such registration. Such notice shall offer each Holder the opportunity to include in such registration statement such number of Registrable Securities as such Holder may request. Upon the written request of any Holder made within five business days after the receipt of the Company's notice (which request shall specify the number of Registrable Securities proposed to be disposed of and the intended method of disposition), the Company shall effect, in connection with the registration of the Other Securities and in the manner set forth in Section 5, the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register, to the extent required to permit the disposition of such Registrable Securities in accordance with the intended method of disposition, provided that:

(a) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the related registration statement, the Company shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, so notify the Holder in writing, whereupon (i) in the case of a determination not to register, the Company shall be relieved of its obligation to register any Registrable Securities in connection with such registration, and (ii) in the case of a determination to delay registration, the Company shall be permitted to delay registration of any Registrable Securities requested to be included in such registration for the same period as the delay in registering such Other Securities.

(b) (i) if the registration referred to in the first sentence of this Section 3 is to be an underwritten primary registration on behalf of the Company, and the managing underwriter advises the Company in writing that, in the good faith opinion of such managing underwriter, such offering would be materially and adversely affected by the inclusion therein of the Registrable Securities requested to be included, the Company shall include in such registration: (A) first, all securities the Company proposes to sell for its own account ("Company Securities"), (B) second, up to the full number of Registrable Securities held by Code and the Pre-IPO Stockholders ("Code/Management Securities") in excess of the number or dollar amount of securities the Company proposes to sell that, in the good faith opinion of such managing underwriter, can be sold without materially and adversely affecting such offering (and, if less than the full number of Code/Management Securities, allocated among Code and the Pre-IPO Stockholders in accordance with the terms of the Investors Securities Agreement and Executive Securities Agreements, in each case as in effect on the date hereof), (C) third, up to the full number of Registrable Securities (other than Code/Management Securities) in excess of the number or dollar amount of Company Securities and Code/Management Securities that, in the good faith opinion of such managing underwriter, can be sold without materially and adversely affecting such offering (and, if less than the full number of such Registrable Securities, allocated pro rata among the Holders of such Registrable Securities (other than Code/Management Securities) on the basis of the number of securities requested to be included therein by each such Holder) and (D) fourth, an amount of other securities, if any, requested to be included therein in excess of the number or dollar amount of Company Securities, Code/Management Securities and other Registrable Securities that, in the good faith opinion of such managing underwriter, can be sold without materially and adversely affecting such offering (allocated among the holders of such other securities in such proportions as such holders and the Company may agree); and (ii) if the registration referred to in the first sentence of this Section 3 is to be an underwritten secondary registration on behalf of holders of securities of the Company other than Registrable Securities (the "Other Holders"), and the

managing underwriter advises the Company in writing that, the good faith opinion of such managing underwriter, such offering would be materially and adversely affected by the inclusion therein of the Registrable Securities requested to be included, the Company shall include in such registration the amount of securities (including Registrable Securities) that such managing underwriter advises, allocated pro rata among the Other Holders and the Holders on the basis of the number of securities (including Registrable Securities) requested to be included therein by each Other Holder and each Holder, subject to the rights of the Pre-IPO Stockholders under the Investors Securities Agreement and Executive Securities Agreements, in each case as in effect on the date hereof;

(c) the Company shall not be required to effect any registration of Registrable Securities under this Section 3 incidental to the registration of any of its securities in connection with any merger, acquisition, exchange offer, subscription offer, dividend reinvestment plan or stock option or other executive or employee benefit or compensation plan; and

(d) no registration of Registrable Securities effected under this Section 3 shall relieve the Company of its obligation to effect a registration of Registrable Securities pursuant to Section 2.

4. Expenses. The Company shall pay all Registration Expenses, including the fees, disbursements and expenses of Code's counsel, with respect to any offering by Code pursuant to Section 2. Each Holder (other than Code), by accepting Registrable Securities, agrees to pay all Registration Expenses with respect to an offering pursuant to Section 2, pro rata based on the number of Registrable Securities included in such offering by each Holder (excluding Code), except to the extent the Company causes shares to be registered for itself or another party pursuant to Section 2(d), in which event the Company or such other party shall pay the incremental expenses of including such shares in the offering. The Company agrees to pay all Registration Expenses with respect to an offering pursuant to Section 3, except for the incremental expenses of including Registrable Securities of a Holder (other than Code) in such offering, which incremental expenses shall be paid by such Holder. All Registration Expenses to be paid by a Holder shall be paid within 30 days of the delivery of a statement from the Company, such statements to be delivered not more frequently than once every 60 days. In an underwritten offering, each party (including Code) shall be responsible for underwriting discounts and commissions payable with respect to the securities sold by such party.

5. Registration and Qualification. If and whenever the Company is required to use its best efforts to effect the registration of any Registrable Securities under the Securities Act as provided in Section 2 or 3, the Company shall:

(a) prepare and file a registration statement under the Securities Act relating to the Offered Registrable Securities as soon as practicable, but in no event later than 45 days (60 days if the applicable registration form is other than Form S-3) after the date notice is given, and use its best efforts to cause the same to become effective within 90 days after the date notice is given (120 days if the applicable registration form is other than Form S-3);

(b) prepare and file with the SEC such amendments to the registration statement, such preliminary and final prospectuses and such amendments and supplements thereto as may be necessary to keep such registration statement effective for 60 days (or, in the case of an underwritten offering, such shorter time period as the underwriters may require);

(c) furnish to the Holders and to any underwriter of such Offered Registrable Securities such number of conformed copies of such registration statement and of each amendment thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus) and any supplements thereto, and such other documents as the Holders or such underwriter may reasonably request in order to facilitate the public sale of the Offered Registrable Securities, and a

copy of any and all transmittal letters or other correspondence to, or received from, the SEC or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering;

(d) use its best efforts to register or qualify all Offered Registrable Securities under the securities or blue sky laws of such jurisdictions as the Holders or any underwriter of such Offered Registrable Securities shall request, and use its best efforts to obtain all appropriate registrations, permits and consents required in connection therewith, and do any and all other acts and things which may be necessary or advisable to enable the Holders or any such underwriter to consummate the disposition in such jurisdictions of the Offered Registrable Securities; provided that the Company shall not for any such purpose be required to register or qualify generally to do business as a foreign corporation in any jurisdiction where it is not so qualified, to subject itself to taxation in any jurisdiction where it is not so subject, or to consent to general service of process in any jurisdiction;

(e) (i) use its best efforts to furnish an opinion of counsel for the Company addressed to the underwriters and dated the date of the closing under the underwriting agreement (if any), and (ii) use its best efforts to furnish a "comfort" letter addressed to the underwriters, and signed by the independent public accountants who have audited the Company's financial statements included in such registration statement, in each such case covering substantially the same matters with respect to such registration statement (and the prospectus included therein) as are customarily covered in opinions of issuer's counsel and in accountants' letters delivered to underwriters in underwritten public offerings of securities;

(f) immediately notify each Holder of Offered Registrable Securities (each a "Selling Holder") in writing (i) at any time when a prospectus relating to a registration pursuant to Section 2 or 3 is required to be delivered under the Securities Act of the happening of any event, as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (ii) of any request by the SEC or any other regulatory body having jurisdiction for any amendment of or supplement to any registration statement or other document relating to such offering, and in either such case (i) or (ii) at the request of the Selling Holders, prepare and furnish to the Selling Holders a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of the Offered Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading;

(g) use its best efforts to list all Offered Registrable Securities on each securities exchange and quotation system on which the Common Stock is then listed; and

(h) furnish unlegended certificates representing ownership of the Registrable Securities being sold in such denominations as shall be requested by the Selling Holders or the underwriters.

6. Conversion of Other Securities, etc. If Code offers any options, rights, warrants or other securities issued by it or any other person that are offered with, convertible into or exercisable or exchangeable for any Registrable Securities, the Registrable Securities underlying such options, rights, warrants or other securities shall be eligible for registration pursuant to Section 2 and Section 3.

7. Underwriting; Due Diligence.

(a) If requested by the underwriters for any underwritten offering of Registrable Securities pursuant to a registration requested under this Agreement, the Company shall enter into an

underwriting agreement with such underwriters that contains such representations and warranties by the Company, and such other terms and provisions, as are customarily contained in underwriting agreements with respect to secondary distributions, including, without limitation, indemnities and contribution substantially to the effect and to the extent provided in Section 8 and agreements to provide opinions of counsel and accountants' letters to the effect and to the extent provided in Section 5(e). The Selling Holders shall be parties to any such underwriting agreement. Such underwriting agreement shall also contain such representations and warranties by the Selling Holders as are customarily contained in underwriting agreements with respect to secondary distributions. The Selling Holders may require that any additional securities included in an offering proposed by a Holder be included on the same terms and conditions as the Offered Registrable Securities included therein.

(b) In the event that any registration pursuant to Section 3 shall involve, in whole or in part, an underwritten offering, the Company may require the Offered Registrable Securities included in such registration to be included in such underwritten offering on the same terms and conditions as shall be applicable to the other securities being sold through underwriters under such registration. If requested by the underwriters for such underwritten offering, the Selling Holders shall enter into an underwriting agreement with such underwriters that contains such representations and warranties by the Selling Holders, and such other terms and provisions, as are customarily contained in underwriting agreements with respect to secondary distributions, including, without limitation, indemnities and contribution substantially to the effect and to the extent provided in Section 8. Such underwriting agreement shall also contain such representations and warranties by the Company and such other person or entity for whose account securities are being sold as are customarily contained in underwriting agreements with respect to secondary distributions.

(c) In connection with the preparation and filing of each registration statement registering Registrable Securities under the Securities Act, the Company shall give the Holders of such Registrable Securities and the underwriters, if any, and their respective counsel and accountants, such reasonable and customary access to its books and records, and such opportunities to discuss the business of the Company with its officers and the independent public accountants who have certified the Company's financial statements, as shall be necessary, in the opinion of such Holder and such underwriters or their respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act.

8. Indemnification and Contribution.

(a) In the case of each offering of Registrable Securities made pursuant to this Agreement, the Company agrees to indemnify and hold harmless each Holder, its officers and directors, each underwriter of Registrable Securities so offered and each person, if any, who controls any of the foregoing persons within the meaning of the Securities Act, from and against any and all claims, liabilities, losses, damages, expenses and judgments, joint or several, to which they or any of them may become subject, under the Securities Act or otherwise, including any amount paid in settlement of any litigation commenced or threatened, and shall promptly reimburse them, as and when incurred, for any reasonable legal or other expenses incurred by them in connection with investigating any claims and defending any actions, insofar as such losses, claims, damages, liabilities or actions shall arise out of, or shall be based upon, any untrue statement or alleged untrue statement of a material fact contained in the registration statement (or in any preliminary or final prospectus included therein) or any amendment thereof or supplement thereto, or in any document incorporated by reference therein, or any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Company shall not be liable to a particular Holder in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement, or any omission, if such statement

or omission shall have been made in reliance upon and in conformity with information relating to such Holder furnished to the Company in writing by or on behalf of such Holder specifically for use in the preparation of the registration statement (or in any preliminary or final prospectus included therein) or any amendment thereof or supplement thereto. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of a Holder and shall survive the transfer of such securities. The foregoing indemnity agreement is in addition to any liability which the Company may otherwise have to each Holder, its officers and directors, underwriters of the Registrable Securities or any controlling person of the foregoing; provided further, that, as to any underwriter or any person controlling any underwriter, this indemnity does not apply to any loss, liability, claim, damage or expense arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission in any preliminary prospectus if a copy of a prospectus was not sent or given by or on behalf of an underwriter to such person asserting such loss, claim, damage, liability or action at or prior to the written confirmation of the sale of the Registrable Securities as required by the Securities Act and such untrue statement or omission had been corrected in such prospectus.

(b) In the case of each offering made pursuant to this Agreement, each Holder of Registrable Securities included in such offering, by exercising its registration rights hereunder, agrees to indemnify and hold harmless the Company, its officers and directors and each person, if any, who controls any of the foregoing within the meaning of the Securities Act (and if requested by the underwriters, each underwriter who participates in the offering and each person, if any, who controls any such underwriter within the meaning of the Securities Act), from and against any and all claims, liabilities, losses, damages, expenses and judgments, joint or several, to which they or any of them may become subject, under the Securities Act or otherwise, including any amount paid in settlement of any litigation commenced or threatened, and shall promptly reimburse them, as and when incurred, for any legal or other expenses incurred by them in connection with investigating any claims and defending any actions, insofar as any such losses, claims, damages, liabilities or actions shall arise out of, or shall be based upon, any untrue statement or alleged untrue statement of a material fact contained in the registration statement (or in any preliminary or final prospectus included therein) or any amendment thereof or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that such untrue statement of a material fact is contained in, or such material fact is omitted from, information relating to such Holder furnished in writing to the Company by or on behalf of such Holder specifically for use in the preparation of such registration statement (or in any preliminary or final prospectus included therein). The foregoing indemnity is in addition to any liability which such Holder may otherwise have to the Company, or any of its directors, officers or controlling persons; provided, however, that, as to any underwriter or any person controlling any underwriter, this indemnity does not apply to any loss, liability, claim, damage or expense arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission in any preliminary prospectus if a copy of a prospectus was not sent or given by or on behalf of an underwriter to such person asserting such loss, claim, damage, liability or action at or prior to the written confirmation of the sale of the Registrable Securities as required by the Securities Act and such untrue statement or omission had been corrected in such prospectus.

(c) Each party indemnified under paragraph (a) or (b) of this Section 8 shall, promptly after receipt of notice of any claim or the commencement of any action against such indemnified party in respect of which indemnity may be sought, notify the indemnifying party in writing of the claim or the commencement thereof; provided that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party on account of the indemnity agreement contained in paragraph (a) or (b) of this Section 8, except to the extent the indemnifying party was prejudiced by such failure, and in no event shall relieve the indemnifying

party from any other liability which it may have to such indemnified party. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof, other than reasonable costs of investigation; provided that each indemnified party, its officers and directors, if any, and each person, if any, who controls such indemnified party within the meaning of the Securities Act shall have the right to employ separate counsel reasonably approved by the indemnifying party to represent them, if the named parties to any action (including any impleaded parties) include both such indemnified party and an indemnifying party or an affiliate of an indemnifying party, and such indemnified party shall have been advised by counsel either (i) that there may be one or more legal defenses available to such indemnified party that are different from or additional to those available to such indemnifying party or such affiliate or (ii) that a conflict may exist between such indemnified party and such indemnifying party or such affiliate, and in that event the fees and expenses of one such separate counsel for all such indemnified parties shall be paid by the indemnifying party. An indemnified party will not enter into any settlement agreement that is not approved by the indemnifying party, such approval not to be unreasonably withheld. The indemnifying party may not agree to any settlement of any such claim or action that provides for any remedy or relief other than monetary damages for which the indemnifying party shall be responsible hereunder without the prior written consent of the indemnified party, which consent shall not be unreasonably withheld. In any action hereunder as to which the indemnifying party has assumed the defense with counsel reasonably satisfactory to the indemnified party, the indemnified party shall continue to be entitled to participate in the defense thereof, with counsel of its own choice, but, except as set forth above, the indemnifying party shall not be obligated hereunder to reimburse the indemnified party for the costs thereof. In all instances, the indemnified party shall cooperate fully with the indemnifying party or its counsel in the defense of each claim or action.

If the indemnification provided for in this Section 8 shall for any reason be unavailable to an indemnified party in respect of any loss, claim, damage or liability referred to herein, or any action in respect thereof, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, in such proportion as shall be appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the indemnifying party on the one hand or the indemnified party on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission, but not by reference to any indemnified party's stock ownership in the Company. In no event, however, shall a Holder be required to contribute in excess of the amount of the net proceeds received by such Holder in connection with the sale of Registrable Securities in the offering which is the subject of such loss, claim, damage or liability. For purposes of this paragraph, the amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent

misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

9. Rule 144. Following the closing of the Public Offering, the Company shall take such measures and file such information, documents and reports as shall be required by the SEC as a condition to the availability of Rule 144 (or any successor provision.)

10. Holdback.

(a) Each Holder agrees by acquisition of Registrable Securities, if so required by the managing underwriter, not to sell, make any short sale of, loan, grant any option for the purchase of, effect any public sale or distribution of or otherwise dispose of any securities of the Company during the 30 days prior to and the 90 days after the effective date of any underwritten registration pursuant to Section 2 or 3 (or such shorter period as may be required by the underwriter), except as part of such underwritten registration or pursuant to a private sale. The Company may place a legend and impose stop transfer instructions on any certificate evidencing Registrable Securities relating to the restrictions provided for in this Section 10.

(b) The Company agrees, if so required by the managing underwriter, not to sell, make any short sale of, loan, grant any option for the purchase of (other than pursuant to employee benefit plans), effect any public sale or distribution of or otherwise dispose of its equity securities or securities convertible into or exchangeable or exercisable for any such securities during the 30 days prior to and the 90 days after the effective date of any underwritten registration pursuant to Section 2 or 3, except as part of such underwritten registration and except pursuant to registrations on Form S-4, Form S-8 or any successor or similar forms thereto.

11. Transfer of Registration Rights.

(a) On not less than 15 days prior written notice to the Company, Code may transfer all or any portion of its rights under this Agreement to any transferee of Registrable Securities representing (i) at least 20% of the number of Registrable Securities held by Code as of the date of this Agreement and (ii) if Code than owns less than 20% of its initial holdings, all of Code's remaining Registrable Securities (each, a "transferee"). The notice to the Company need not contain the names of the proposed transferee. On or before the later of the transfer of the registration rights and the transfer of the underlying Registrable Securities, the Company shall receive a written notice stating (to the extent not included in the notice of transfer of registration rights) the name and address of any transferee of the registration rights and identifying the number of Registrable Securities with respect to which the rights under this Agreement are being transferred and the nature of the rights so transferred. Following any such transfer, the term "Code," as used in this Agreement (other than in this Section 11, Section 3(b)(i)(2), Section 4 and Section 1(c)(iii)), shall be deemed to include the transferee of such Registrable Securities, where appropriate to assign the rights and obligations of Code hereunder. Code and such transferees may exercise the registration rights hereunder in such proportion and upon the demand of such Holders as they shall agree among themselves, provided that in no event shall the Company be required to effect more than one registration pursuant to Section 2 in any six-month period, regardless of the number of Holders making a request.

(b) After any such transfer, Code shall retain its rights under this Agreement with respect to all Registrable Securities retained by Code.

(c) Upon the request of Code, the Company shall execute a Registration Rights Agreement substantially similar to this Agreement with each transferee or proposed transferee, and any demand registrations granted to such transferee shall limit the demand registrations to which Code is entitled under Section 2(a).

12. Miscellaneous.

(a) Injunctions. Each party acknowledges and agrees that irreparable damage would occur in the event that any of the provisions of this Agreement was not performed in accordance with its specific terms or was otherwise breached. Therefore, each party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court having jurisdiction, such remedy being in addition to any other remedy to which such party may be entitled at law or in equity.

(b) Severability. If any term or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms and provisions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and each of the parties shall use its best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term or provision.

(c) Further Assurances. Subject to the specific terms of this Agreement, each of the parties hereto shall make, execute, acknowledge and deliver such other instruments and documents, and take all such other actions, as may be reasonably required in order to effectuate the purposes of this Agreement and to consummate the transactions contemplated hereby.

(d) Waivers, etc. No failure or delay on the part of either party (or the intended third-party beneficiaries referred to herein) in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. No modification or waiver of any provision of this Agreement nor consent to any departure therefrom shall in any event be effective unless the same shall be in writing and signed by an authorized officer of each of the parties, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.

(e) Entire Agreement. This Agreement contains the final and complete understanding of the parties with respect to its subject matter. This Agreement supersedes all prior agreements and understandings between the parties, whether written or oral, with respect to the subject matter hereof. The paragraph headings contained in this Agreement are for reference purposes only, and shall not affect in any manner the meaning or interpretation of this Agreement.

(f) Counterparts. For the convenience of the parties, this Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original but all of which together shall be one and the same instrument.

(g) Amendment. This Agreement may be amended only by a written instrument duly executed by an authorized officer of each of the parties.

(h) Notices. Unless expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given (i) when personally delivered, (ii) if mailed registered or certified mail, postage prepaid, return receipt requested, on the date the return receipt is executed or the letter refused by the addressee or its agent or (iii) if sent by overnight courier which delivers upon the signed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent:

(iv): if to Code, to

Code, Hennessy & Simmons II, L.P.
c/o Code Hennessy & Simmons LLC
10 South Wacker Drive
Chicago, Illinois 60606
Attention: Peter Gotsch

(v): if to the Company, to

Houston Wire & Cable Company
10201 North Loop East
Houston, Texas 77029
Attention: Chief Financial Officer

(vi): if to a Holder of Registrable Securities, to the name and address as the same appear in the security transfer books of the Company or such other address as either party (or other Holders of Registrable Securities) may, from time to time, designate in a written notice in a like manner.

(i) Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS.

(j) Assignment. Except as provided herein, the parties may not assign their rights under this Agreement. The Company may not delegate its obligations under this Agreement.

IN WITNESS WHEREOF, Code and the Company have caused this Agreement to be duly executed by their authorized representative as of the date first above written.

CODE, HENNESSY & SIMMONS II, L.P.
By:	CHS Management II, L.P., General Partner
	By:	Code, Hennessy & Simmons, Inc., General Partner
		By:
HOUSTON WIRE & CABLE COMPANY
By:

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Exhibit 10.1

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Exhibit 10.2

HWC HOLDING CORPORATION 2000 STOCK PLAN

1.: Purpose . The purpose of this HWC Holding Corporation 2000 Stock Plan ("Plan") is to attract and retain outstanding individuals as key employees and directors of Houston Wire & Cable Company ("HWC") a Delaware corporation and a subsidiary of HWC Holding Corporation ("Holding"), and its subsidiaries and affiliates (Holding and its subsidiaries, collectively or individually, "Employer"), and to provide incentives for such key employees and directors to expand and improve the profits and achieve the objectives of the Employer by providing to such individuals opportunities to acquire shares of Common Stock ($.001 par value as of the date hereof) of Holding ("Shares") through awards and the exercise of options and thereby provide such individuals with a greater proprietary interest in and closer identity with Holding and its financial success (awards of Shares under the Plan, collectively or individually, "Awards"). Options granted under this Plan may be either nonqualified stock options or incentive stock options ("Incentive Options") (nonqualified stock options and Incentive Options being referred to herein, collectively or individually, as "Options"). Options granted under this Plan and designated as Inventive Options by the Committee (as herein defined) are intended to be "incentive stock options" within the meaning of that term in section 422 of the Internal Revenue Code of 1986, as amended ("Code"). The provisions of this Plan with respect to Incentive Options and the terms and conditions of each Incentive Option granted hereunder shall be interpreted in a manner consistent with Code Section 422 and all valid regulations issued thereunder. Incentive Options may be granted under the Plan to directors, except to those directors who are also employees of the Employer at the time of the grant.
2.: Administration . This Plan will be administered by the Board of Directors of Holding (the "Board") or a committee thereof designated by the Board (the Board or such committee hereinafter referred to as the "Committee"). The Committee shall interpret the Plan and shall prescribe, amend and rescind rules and regulations relating thereto and make all other determinations necessary or advisable for the administration of the Plan. Any such action shall be final and conclusive on all persons having any interest in the Awards, Options or Shares to which such action relates. A majority of the members of the Committee shall constitute a quorum and all determinations of the Committee shall be made by a majority of its members. Any determination of the Committee under this Plan may be made without notice of meeting of the Committee by a unanimous written consent of the Committee. The Committee shall determine, within the limits of the express provisions of this Plan, those key employees and directors to whom, and the time or times at which, Awards and Options shall be granted to such key employees or directors. The Committee shall determine the number of Shares to be subject to each Award and Option, whether an Option will be a nonqualified stock option or an Incentive Option, the duration of each Option, the time or times within which (during the term of the Option) all or portions of each Option may be exercised, the restrictions applicable to each Award and Option, and whether cash, Shares or other property may be accepted in full or partial payment upon exercise of an Option. In making such determinations, the Committee may take into account the nature of the services rendered by the Participants (as herein defined), their present and potential contributions to the Employer's success and such other factors as the Committee in its discretion shall deem relevant.
3.: Participants . The "Participants" in the Plan will consist of such key employees and directors of the Employer as the Committee in its sole discretion from time to time designates within the limits of this Plan. The Committee's designation of a Participant at any time shall not require the Committee to designate such person at any other time. The Committee shall consider such factors as it deems pertinent in selecting Participants and in determining the terms of their respective Awards and Options, including without limitation: (i) the financial condition of the Employer, (ii) the anticipated profits of the current or future years, (iii) the contributions of Participants to the profitability and the development of the Employer, both present and future and (iv) other compensation provided to Participants.

4.

Terms and Conditions of Awards . Awards granted under this Plan shall be in such form and upon such terms and conditions as the Committee shall from time to time determine, subject to the provisions of this Plan. Awards may be subject to other provisions (whether or not applicable to the Awards granted to any other Participant) as the Committee, in its sole discretion determines appropriate, including, without limitation, restrictions on resale or other disposition, vesting schedules with respect to the ownership of Shares, such provisions as may be appropriate to comply with federal or state securities laws and stock exchange requirements and undertakings or conditions as to the Participant's employment, in addition to those specifically provided for under this Plan.

5.

Terms and Conditions of Options . The Options granted under this Plan shall be in such form and upon such terms and conditions as the Committee shall from time to time determine, subject to the provisions of this Plan, including the following:

a.: Option Price

The Option price shall be established by the Committee at the time such Option is granted. In the case of an Incentive Option granted to a Participant who at the time of grant owns (directly or indirectly) stock of Holding or of its parent or its subsidiaries possessing more than Ten Percent (10%) of the total combined voting power of all classes of stock of such corporations ("10% Owner"), the Option price shall be at least One Hundred Ten Percent (110%) of such fair market value of the Shares subject to such Incentive Option at the time such Incentive Option is granted.

b.: Option Term

Each Option granted under this Plan shall be for such period as the Committee shall determine, which period may include, without limitation, early termination of the Option upon consummation of a merger involving Holding or a sale of a substantial portion of Holding's Common Stock, or the Participant's termination of employment or cessation as a director. No Incentive Option, however, may be for a period more than ten (10) years from the date the Incentive Option is granted; provided, however, for a 10% Owner, no Incentive Option may be for a period more than five (5) years from the date the Incentive Option is granted. Notwithstanding anything herein to the contrary, in no event will a Participant who ceases to be employed by the Employer for any reason have the right to exercise his or her Options at any time following the date which is thirty (30) days after the date of termination of such Participant's employment with Employer, provided, however, that a Participant who ceases to be employed by the Employer because of death or disability shall have ninety (90) days after the date of such termination of employment with the Employer to exercise his or her Options. Options which are not exercised by a Participant (or his representative) on or before the date which is thirty (30) days after the date of termination of Participant's employment with Employer (or the date which is ninety (90) days following the date of termination of such Participant's employment because of death or disability) shall automatically expire and be null and void as of the close of regular business hours at Holding's principal office on such thirtieth (30 ^th ) or ninetieth (90 ^th ) day following such termination, as the case may be.

c.: Method of Exercise

Options may be exercised by giving written notice to the Treasurer of Holding, stating the number of Shares with respect to which the Option is being exercised and tendering payment therefor. In the discretion of the Committee, payment for Shares may be made in cash, other Shares, retention of Shares which would otherwise be issued upon Option exercise, a combination of the foregoing or by any other means which the Committee

determines. Upon receipt of the payment, Holding shall deliver to the person exercising such Option a certificate or certificates for such Shares. It shall be a condition to the performance of Holding's obligation to issue or transfer Shares upon exercise of an Option that the person exercising the Option pay, or make provision satisfactory to the Employer for the payment of, any taxes (other than stock transfer taxes) which the Employer is obligated to withhold or collect with respect to the issue or transfer of Shares upon such exercise.

The Committee may establish a program through which Participants in the Plan may borrow funds with which to purchase Shares pursuant to the exercise of an Option. Eligibility of any Participant for such borrowing will be determined solely at the discretion of the Committee. Any such loan shall bear interest at a rate determined by the Committee.

The Committee may determine to grant additional options to those Participants in the Plan who exercise their Options with Shares.

d.: Value of Shares

The aggregate fair market value (determined at the time the Incentive Options are granted) of the Shares with respect to which Incentive Options are exercisable for the first time by a Participant during any calendar year shall not exceed one hundred thousand dollars ($100,000).

Options may be subject to other provisions (whether or not applicable to the Options granted to any other Participant) as the Committee, in its sole discretion determines appropriate, including, without limitation, restrictions on resale or other disposition, installment exercise limitations, such provisions as may be appropriate to comply with federal or state securities laws and stock exchange requirements and undertakings or conditions as to the Participant's employment, in addition to those specifically provided for under this Plan.

6.

Shares . The total number of Shares allocated to this Plan and available to designated Participants under this Plan is ONE HUNDRED THOUSAND (100,000) Shares, except as such number of Shares shall be adjusted in accordance with the provisions of Section 9. The maximum number of Shares available to any one Participant under this Plan through Awards and Options is TWENTY-FIVE THOUSAND (25,000) Shares in any one calendar year. Each Award and Option when granted shall state the number of Shares to which it pertains. Such Shares may be either authorized but unissued Shares or treasury Shares. If any Option granted under this Plan expires unexercised, or is terminated or ceases to be exercisable for any other reason without having been fully exercised prior to the end of the period during which Options may be granted under this Plan, or if any Option is canceled, the Shares theretofore subject to such Option or to the unexercised portion of such Option shall again become available for new Awards and Options to be granted under this Plan to any eligible person (including the holder of such former Option). Shares reacquired or Shares which were never issued due to a forfeiture under any Award shall again become available for new Awards and Options to be granted under this Plan to any eligible person (including the holder of each former Award) to the extent permitted by Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of 1934, as amended ("Exchange Act") or any successor provision ("Rule 16b-3").

7.

Notices .

a.: Awards

Awards granted pursuant to this Plan shall be authorized by the Committee and shall be evidenced by notices ("Award Notices") in such form as the Committee shall from

time to time determine. Such Award Notices shall state: (i) the number of Shares awarded, (ii) the restrictions applicable to the Shares awarded and (iii) such other information as the Committee deems appropriate or necessary. The terms and conditions of each Award Notice must be consistent with the provisions of this Plan and will be applicable only to the Award that it announces.

b.: Options

Options granted pursuant to this Plan shall be authorized by the Committee and shall be evidenced by notices ("Option Notices") in such form as the Committee shall from time to time determine. Such Option Notices shall state: (i) the number of Shares with respect to which the Option is granted, (ii) the type of Option—nonqualified stock option or Incentive Option, (iii) the Option price, (iv) the Option exercise and vesting schedule, (v) the Option term, (vi) the method of exercising such Option and (vii) such other information as the Committee deems appropriate or necessary. The terms and conditions of each Option Notice must be consistent with the provisions of this Plan and will be applicable only to the grant that it announces.

8.

Non-Assignability of Options . Options granted to a Participant pursuant to this Plan shall be exercisable during the lifetime of a Participant only by the Participant provided, however, that the Committee in its discretion may permit Participants in the Plan to transfer nonqualified stock options to (i) family members, (ii) custodianships under the Uniform Transfers to Minors Act or any similar statute, (iii) trusts for the benefit of any family member, (iv) trusts by such Participant for the Participant's primary benefit and (v) upon termination of a custodianship under the Uniform Transfers to Minors Act or similar statute or the termination of a trust, by the custodian or trustee thereof, to the person or persons who, in accordance with the terms of such custodianship or trust are entitled to receive Options held in custody or trust.

9.

Adjustments .

a.: Capital Adjustments

If the Shares should, as a result of any stock dividend, stock split, other subdivision or combination of Shares, or any reclassification, recapitalization or otherwise, be increased or decreased, the number of Shares covered by each outstanding Award and Option, the Option price under each outstanding Option and the total number of Shares reserved for issuance under this Plan may be adjusted to prevent the dilution or enlargement of rights in the manner as determined by the Committee in its sole discretion to reflect such action. Any new Shares or other securities issued with respect to Shares shall be deemed Shares.

b.: Sale or Reorganization

In the event Holding is merged or consolidated with another corporation, or in the event the property or stock of Holding is acquired by another corporation or entity, or in the event of a reorganization or liquidation of Holding, or in the event of any extraordinary transaction (including a sale of assets or stock) involving the Company, its subsidiaries, or their respective assets (each of the above being an "Extraordinary Transaction"), the board of directors of any corporation assuming the obligations of Holding hereunder or the Committee, as applicable, shall have the right to provide for the continuation of Awards or Options granted under the Plan or for other adjustments as determined by the board of directors of such corporation assuming the obligations of Holding hereunder or the Committee, as applicable, in its sole discretion. Without limiting the foregoing, in the event of an Extraordinary Transaction, the board of directors of any corporation assuming the obligations of Holding hereunder or the Committee, as applicable, shall have the right

to require (i) that a cash payment in lieu of the Option be paid in an amount equal to the difference between the fair market value of the Shares, as determined by the board of directors of any corporation assuming the obligations of Holding hereunder or the Committee, as applicable, and the Option price described in the Option grant; (ii) that the Option be converted into other property or (iii) the exercise of the Option within a specified period following written notice and if the Option is not exercised in accordance therewith, such Option will be terminated without any further rights thereunder.

10.: Legal and Other Requirements . Each Award and Option granted under this Plan shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the Shares issuable or transferable upon the Award or exercise of the Option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with the granting of such Award or Option, or the issuance, transfer or purchase of Shares thereunder, such Award shall not be made and such Option may not be exercised in whole or in part unless such listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. Holding shall not be obligated to sell or issue any Shares in any manner in contravention of the Securities Act of 1933, as amended, or any state securities law. Each Participant shall agree to such terms and conditions in connection with an Award or the exercise of an Option, including restrictions on the disposition of Shares acquired pursuant to the Award or upon exercise of the Option, as the Committee may deem appropriate. Shares acquired pursuant to an Award or upon exercise of an Option may be legended as the Committee shall deem appropriate to reflect the restrictions imposed by the Committee, this Plan or by securities laws generally. A Participant shall have no rights as a stockholder with respect to any Shares covered by Options granted to or Options exercised by the Participant until the date of delivery of a stock certificate to the Participant for such Shares. No adjustment with respect to any Shares covered by Options other than pursuant to Section 9 hereof shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is delivered. To the extent deemed appropriate by the Committee, this Plan is intended to comply with Rule 16b-3 with respect to persons subject to Section 16 of the Exchange Act and any provision which would prevent compliance with Rule 16b-3 shall be deemed invalid to the extent permitted by law and deemed appropriate by the Committee.
11.: Restriction on Sale or Shares . Without prior written notice to Holding, no Shares acquired by a Participant upon exercise of an Incentive Option granted hereunder shall be disposed of by the Participant within two (2) years from the date such Incentive Option was granted, nor within one (1) year after the transfer of such Shares to the Participant; provided, however, that a transfer to a trustee, receiver, or other fiduciary in any insolvency proceeding, as described in section 422(c)(3) of the Code, shall not be deemed to be such a disposition.
12.: Tax Withholding . The Employer shall comply with the obligations imposed on the Employer under applicable tax withholding laws, if any, with respect to Awards and Options granted hereunder, and shall be entitled to do any act or thing to effectuate any such required compliance, including, without limitation, withholding from amounts payable by the Employer to a Participant and including making demand on a Participant for the amounts required to be withheld. If the Committee so permits, a Participant, or upon the Participant's death, the Participant's beneficiary, may satisfy, in whole or in part, the obligation to pay the Employer any amount required to be withheld under the applicable federal, state and local income tax laws in connection with an Award or exercise of an Option under this Plan by either: (a) having the Employer withhold from the Shares to be acquired pursuant to the Award or upon the exercise of the Option, or (b) delivering to the Employer either previously acquired Shares or Shares acquired pursuant to the Award or

upon the exercise of the Option which the Participant or beneficiary was unconditionally obligated to deliver to the Employer. The Shares withheld or delivered shall be valued at their fair market value as of the date the amount of tax to be withheld is determined. The fair market value of Shares shall be determined in accordance with procedures established by the Committee. Any amounts required to be withheld in excess of the value of Shares withheld or delivered shall be paid in cash or withheld from other compensation paid by Employer.

13.: No Contract of Employment . Neither the adoption of this Plan nor the grant of any Awards or Options, nor ownership of Shares shall be deemed to obligate the Employer to continue the appointment, employment or engagement of any eligible person for any particular period.
14.: Indemnification of Committee . The members of the Committee shall be indemnified by Holding to the fullest extent permitted by Delaware law, Holding's certificate of incorporation and Holding's by-laws.
15.: Amendment and Termination of Plan . Holding may amend this Plan from time to time or terminate this Plan at any time, but no such action shall reduce the number of Shares subject to the then outstanding Awards or Options granted to any Participant or adversely to the Participant change the terms and conditions of outstanding Awards or Options without the Participant's consent; provided, however, that, to the extent deemed appropriate by the Committee, shareholder approval shall be necessary to adopt any amendment if the adoption of such amendment without shareholder approval would cause this Plan to no longer comply with Rule 16b-3 or any successor rule or regulatory requirement. No Award or Option may be granted after ten (10) years from the original effective date of adoption of this Plan.
16.: Delaware Law to Govern . This Plan shall be governed by and construed in accordance with the laws of the State of Delaware.
17.: Effective Date of Plan . The Plan is effective on February 17, 2000.

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Exhibit 10.2

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Exhibit 10.3

HOUSTON WIRE & CABLE COMPANY

2006 STOCK PLAN

Section 1. Purpose.

The purpose of the Houston Wire & Cable Company 2006 Stock Plan (the "Plan") is to attract and retain outstanding individuals as Key Employees and Directors of Houston Wire & Cable Company ("HWC") and its Subsidiaries (collectively, the "Company"), and to provide such Key Employees and Directors with additional incentive to expand and improve the Company's profits by giving them the opportunity to acquire or increase their proprietary interest in the Company.

Section 2. Definitions.

As used in the Plan, the following terms shall have the meanings set forth below:

2.1 " Award " means any award or benefit granted under the Plan, which shall be either a Stock Option or a Stock Award.

2.2 " Award Agreement " means, as applicable, a Stock Option Agreement or Stock Award Agreement evidencing an Award granted under the Plan.

2.3 " Board " means HWC's Board of Directors.

2.4 " Change in Control " has the meaning set forth in Section 7.2 hereof.

2.5 " Code " means the Internal Revenue Code of 1986, as amended from time to time.

2.6 " Committee " means the Compensation Committee of the Board or such other committee as may be designated by the Board from time to time to administer the Plan.

2.7 " Common Stock " means the Common Stock, par value [$.001] per share, of HWC.

2.8 " Director " means a director of HWC.

2.9 " Exchange Act " means the Securities Exchange Act of 1934, as amended from time to time.

2.10 " Fair Market Value " means the closing price of the Common Stock on the Nasdaq National Market (as reported in The Wall Street Journal , Midwest Edition).

2.11 " Incentive Stock Option " or " ISO " means a Stock Option granted under Section 5 hereof that meets the requirements of Code Section 422(b) or any successor provision.

2.12 " Key Employee " means an employee of the Company selected to participate in the Plan in accordance with Section 3. A Key Employee may also include a person who is granted an Award (other than an Incentive Stock Option) in connection with the hiring of the person prior to the date the person becomes an employee of the Company, provided that such Award shall not vest prior to the commencement of employment.

2.13 " Non-Qualified Stock Option " or " NSO " means a Stock Option granted under Section 5 that is not an Incentive Stock Option.

2.14 " Participant " means a Key Employee or Director selected to receive an Award under the Plan.

2.15 " Plan " means the Houston Wire & Cable Company 2006 Stock Plan.

2.16 " Stock Award " means a grant of shares of Common Stock under Section 6 hereof.

2.17 " Stock Option " means an Incentive Stock Option or a Non-Qualified Stock Option granted under Section 5.

2.18 " Subsidiary " means an entity of which HWC is the direct or indirect beneficial owner of not less than 50% of all issued and outstanding equity interest of such entity.

Section 3. Administration.

3.1 Committee.

The Plan shall be administered by the Committee, provided that the Committee must be comprised of at least two members of the Board who satisfy the "non-employee director" definition set forth in Rule 16b-3 under the Exchange Act and the "outside director" definition under Code Section 162(m) and the regulations thereunder, and provided further that the Board shall administer the Plan until such time as the Board has two members who are both such non-employee directors and outside directors.

3.2 Authority of the Committee.

(a) The Committee, in its sole discretion, shall determine the Key Employees and Directors to whom, and the time or times at which Awards will be granted, the form and amount of each Award, the expiration date of each Award, the time or times within which the Awards may be exercised, the cancellation of the Awards and the other limitations, restrictions, terms and conditions applicable to the grant of the Awards. The terms and conditions of the Awards need not be the same with respect to each Participant or with respect to each Award.

(b) The Committee may delegate its authority to grant Awards to Key Employees and to determine the terms and conditions thereof to such officers of HWC as it may determine in its discretion, on such terms and conditions as it may impose, except with respect to Awards to officers subject to Section 16 of the Exchange Act or officers who are or may be "covered employees" as defined in Code Section 162(m), or to the extent prohibited by applicable law, regulation or rule of a stock exchange on which the Common Stock is listed.

(c) The Committee may, subject to the provisions of the Plan, establish such rules and regulations as it deems necessary or advisable for the proper administration of the Plan, and may make determinations and may take such other action in connection with or in relation to the Plan as it deems necessary or advisable. Each determination or other action made or taken pursuant to the Plan, including interpretation of the Plan and the specific terms and conditions of the Awards granted hereunder, shall be final and conclusive for all purposes and upon all persons.

(d) No member of the Committee shall be liable for any action taken or determination made hereunder in good faith. Service on the Committee shall constitute service as a Director so that the members of the Committee shall be entitled to indemnification and reimbursement as Directors of HWC pursuant to HWC's Certificate of Incorporation and By-Laws.

3.3 Award Agreements.

Each Award shall be evidenced by a written Award Agreement specifying the terms and conditions of the Award. In the sole discretion of the Committee, the Award Agreement may condition the grant of an Award upon the Participant's entering into one or more of the following agreements with HWC: (a) an agreement not to compete with the Company which shall become effective as of the date of the grant of the Award and remain in effect for a specified period of time following termination of the Participant's employment with the Company; (b) an agreement to cancel any employment agreement, fringe benefit or compensation arrangement in effect between the Company and the Participant; and (c) an agreement to retain the confidentiality of certain information. Such agreements may contain such other terms and conditions as the Committee shall determine. If the Participant shall fail to enter into any such agreement at the request of the Committee, then the Award granted or to be granted to such Participant shall be forfeited and cancelled.

Section 4. Shares of Common Stock Subject to Plan.

4.1 Total Number of Shares.

The total number of shares of Common Stock that may be issued under the Plan shall be . Such shares may be either authorized but unissued shares or treasury shares, and shall be adjusted in accordance with the provisions of Section 4.3 below. The number of shares of Common Stock delivered by a Participant or withheld by HWC on behalf of any such Participant as full or partial payment of an Award, including the exercise price of a Stock Option or of any required withholding taxes, shall once again be available for issuance pursuant to subsequent Awards, and shall not count towards the aggregate number of shares of Common Stock that may be issued under the Plan. Any shares of Common Stock subject to an Award may thereafter be available for issuance pursuant to subsequent Awards, and shall not count towards the aggregate number of shares of Common Stock that may be issued under the Plan, if there is a lapse, forfeiture, expiration, termination or cancellation of any such prior Award for any reason (including for reasons described in Section 3.3), or if shares of Common Stock are issued under such Award and thereafter are reacquired by HWC pursuant to rights reserved by HWC upon issuance thereof.

4.2 Shares Under Awards.

Of the shares of Common Stock authorized for issuance under the Plan pursuant to Section 4.1:

(a) The maximum number of shares of Common Stock as to which a Key Employee may receive Stock Options in any calendar year is 500,000.

(b) The maximum number of shares of Common Stock that may be subject to Incentive Stock Options is .

The numbers of shares described herein shall be as adjusted in accordance with Section 4.3.

4.3 Adjustment.

In the event of any reorganization, recapitalization, stock split, stock distribution, merger, consolidation, split-up, spin-off, combination, subdivision, consolidation or exchange of shares, any change in the capital structure of HWC or any similar corporate transaction, the Committee shall make such adjustments as it deems appropriate, in its sole discretion, to preserve the benefits or intended benefits of the Plan and Awards granted under the Plan. Such adjustments may include: (a) adjustment in the number and kind of shares reserved for issuance under the Plan; (b) adjustment in the number and kind of shares covered by outstanding Awards; (c) adjustment in the exercise price of outstanding Stock Options or the price of other Awards under the Plan; (d) adjustments to any of the shares limitations set forth in Section 4.1 or 4.2; and (e) any other changes that the Committee determines to be equitable under the circumstances.

Section 5. Grants of Stock Options.

5.1 Grant.

Subject to the terms of the Plan, the Committee may from time to time grant Stock Options to Participants, provided that only NSOs may be granted to Directors who are not employees of the Company.

5.2 Stock Option Agreement.

The grant of each Stock Option shall be evidenced by a written Stock Option Agreement specifying the type of Stock Option granted, the exercise period, the exercise price, the terms for payment of the exercise price, the expiration date of the Stock Option, the number of shares of Common Stock to be subject to each Stock Option and such other terms and conditions established by the Committee, in its sole discretion, not inconsistent with the Plan.

5.3 Exercise Price and Exercise Period.

With respect to each Stock Option granted to a Participant:

(a) Except as provided in the Stock Option Agreement, the per share exercise price of each Stock Option shall be the Fair Market Value on the date on which the Stock Option is granted.

(b) Each Stock Option shall become exercisable as provided in the Stock Option Agreement; provided that the Committee shall have the discretion to accelerate the date as of which any Stock Option shall become exercisable in the event of the Participant's termination of employment with the Company, or service on the Board, without cause (as determined by the Committee in its sole discretion).

(c) Except as provided in the Stock Option Agreement, each Stock Option shall expire, and all rights to purchase shares of Common Stock thereunder shall expire, on the date that is ten years after the grant date.

5.4 Required Terms and Conditions of ISOs.

In addition to the foregoing, each ISO granted to a Key Employee shall be subject to the following specific rules:

(a) The aggregate exercise price of a Key Employee's ISOs that become exercisable for the first time during a particular calendar year shall not exceed $100,000. If this dollar limit is exceeded, the portion of the ISO that does not exceed the applicable limit shall be an ISO and the remainder shall be a NSO; but in all other respects, the original Stock Option Agreement shall remain in full force and effect.

(b) Notwithstanding anything herein to the contrary, if an ISO is granted to a Key Employee who owns more than 10% of the Common Stock (or stock possessing more than 10% of the total combined voting power of all classes of stock of HWC and its Subsidiaries): (i) the exercise price of the ISO shall be not less than 110% of the Fair Market Value on the ISO's grant date; and (ii) the ISO shall expire, and all rights to purchase Common Stock thereunder shall expire, no later than the fifth anniversary of the ISO's grant date.

(c) No ISOs shall be granted under the Plan after ten years from the earlier of the date the Plan is adopted or approved by stockholders of HWC.

5.5: Exercise of Stock Options.

(a) A Participant entitled to exercise a Stock Option may do so by delivering written notice to that effect specifying the number of shares of Common Stock with respect to which the Stock Option is being exercised and any other information the Committee may prescribe. All notices or requests provided for herein shall be delivered to the Secretary of HWC.

(b) The Committee in its sole discretion may make available one or more of the following alternatives for the payment of the Stock Option exercise price:

(i) in cash;

(ii) in cash received from a broker-dealer to whom the Participant has submitted an exercise notice together with irrevocable instructions to deliver promptly to HWC the amount

of sales proceeds from the sale of the shares subject to the Stock Option to pay the exercise price;

(iii) by directing HWC to withhold such number of shares of Common Stock otherwise issuable in connection with the Award having an aggregate Fair Market Value equal to the Stock Option exercise price; or

(iv) by delivering previously acquired shares of Common Stock that are acceptable to the Committee and that have an aggregate Fair Market Value on the date of exercise equal to the Stock Option exercise price.

The Committee shall have the sole discretion to establish the terms and conditions applicable to any alternative made available for payment of the Stock Option exercise price.

(c) HWC shall issue, in the name of the Participant, stock certificates representing the total number of shares of Common Stock issuable pursuant to the exercise of any Stock Option as soon as reasonably practicable after such exercise.

Section 6. Stock Awards.

6.1 Grant.

The Committee may, in its discretion, (a) grant shares of Common Stock under the Plan to any Participant without consideration from such Participant or (b) sell shares of Common Stock under the Plan to any Participant for such amount of cash, Common Stock or other consideration as the Committee deems appropriate.

6.2 Stock Award Agreement.

Each share of Common Stock granted or sold hereunder shall be subject to such restrictions, conditions and other terms as the Committee may determine at the time of grant or sale, the general provisions of the Plan, the restrictions, terms and conditions of the related Stock Award Agreement, and the following specific rules:

(a) Shares of Common Stock issued to a Participant under the Plan shall be evidenced by a Stock Award Agreement, which shall specify whether the shares of Common Stock are granted or sold to the Participant and such other provisions, not inconsistent with the terms and conditions of the Plan, as the Committee shall determine.

(b) The restrictions to which the shares of Common Stock awarded hereunder are subject shall lapse as provided in Stock Award Agreement; provided that the Committee shall have the discretion to accelerate the date as of which the restrictions lapse with respect to any Award held by a Participant in the event of the Participant's termination of employment with the Company, or service on the Board, without cause (as determined by the Committee in its sole discretion).

(c) The Committee may, in its discretion, establish as restrictions on the shares of Common Stock performance goals that qualify the Stock Award as "performance-based compensation" within the meaning of Code Section 162(m). Performance goals may be based on one or more business criteria, including, but not limited to: (i) return on equity; (ii) earnings or earnings per share; (iii) Common Stock price; (iv) return on assets; (v) return on investment; (vi) cash flow; (vii) net income; (viii) expense management; or (ix) revenue growth. Performance goals may be absolute in their terms or measured against or in relationship to the performance of other companies or indices selected by the Committee. In addition, performance goals may be adjusted for any events or occurrences (including acquisition expenses, extraordinary charges, losses from discontinued operations, restatements and accounting charges and restructuring expenses), as may be determined by the Committee. With respect to each performance period, the Committee shall

establish such performance goals relating to one or more of the business criteria identified above, and shall establish targets for Participants for achievement of performance goals. Following the completion of each performance period, the Committee shall determine the extent to which performance goals for that performance period have been achieved and the related performance-based restrictions shall lapse in accordance with the terms of the applicable Stock Award Agreement.

(d) HWC shall issue, in the name of the Participant, stock certificates representing the total number of shares of Common Stock granted or sold to the Participant, as soon as may be reasonably practicable after such grant or sale, which shall be held by the Secretary of HWC until such time as the Common Stock is forfeited, resold to HWC, or the restrictions lapse. Notwithstanding the foregoing, HWC, in lieu of issuing stock certificates, may reflect the issuance of shares of Common Stock to a Participant on a non-certificated basis, with the ownership of such shares by the Participant evidenced solely by book entry in the records of HWC's transfer agent; provided, however that following the lapse of all restrictions with respect to the shares granted or sold to a Participant, HWC, upon the written request of the Participant, shall issue, in the name of the Participant, stock certificates representing such shares.

(e) Subject to the provisions of subsection (b) hereof and the restrictions set forth in the related Stock Award Agreement, the Participant receiving a grant of or purchasing Common Stock shall thereupon be a stockholder with respect to all of the shares represented by such certificate or certificates and shall have the rights of a stockholder with respect to such shares, including the right to vote such shares and to receive dividends and other distributions paid with respect to such shares.

Section 7. Change in Control.

7.1 Effect of Change in Control.

(a) Notwithstanding any of the provisions of the Plan or any outstanding Award Agreement, upon a Change in Control of HWC (as defined in Section 7.2): (i) all outstanding Awards shall become fully exercisable; (ii) all restrictions applicable to all Awards shall terminate or lapse; and (iii) performance goals applicable to any Stock Awards shall be deemed satisfied at the highest target level, as applicable, in order that Participants may fully realize the benefits thereunder.

(b) In addition to the Committee's authority set forth in Section 3, upon such Change in Control of HWC, the Committee is authorized, and has sole discretion, as to any Award, either at the time such Award is granted hereunder or any time thereafter, to take any one or more of the following actions: (i) provide for the purchase of any outstanding Stock Option, for an amount of cash equal to the difference between the exercise price and the then Fair Market Value of the Common Stock covered thereby had such Stock Option been currently exercisable; (ii) make such adjustment to any such Award then outstanding as the Committee deems appropriate to reflect such Change in Control; and (iii) cause any such Award then outstanding to be assumed, by the acquiring or surviving corporation, after such Change in Control.

7.2 Definition of Change in Control.

"Change in Control" shall mean the occurrence, at any time during the specified term of an Award granted under the Plan, of any of the following events subsequent to , 2006:

(a) Any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity (other than HWC or a trustee or other fiduciary holding securities under an employee benefit plan of the Company), or any syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange Act, becomes the "beneficial owner" (as defined in Rule 13d-3 of the General Rules and Regulations under the Exchange Act),

directly or indirectly, of securities of HWC representing 25% or more of the combined voting power of HWC's then outstanding securities entitled to vote generally in the election of directors;

(b) HWC is party to a merger, consolidation, reorganization or other similar transaction with another corporation or other legal person unless, following such transaction, more than 50% of the combined voting power of the outstanding securities of the surviving, resulting or acquiring corporation or person or its parent entity entitled to vote generally in the election of directors (or persons performing similar functions) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners of HWC's outstanding securities entitled to vote generally in the election of directors immediately prior to such transaction, in substantially the same proportions as their ownership, immediately prior to such transaction, of HWC's outstanding securities entitled to vote generally in the election of directors;

(c) HWC sells all or substantially all of its business and/or assets to another corporation or other legal person unless, following such sale, more than 50% of the combined voting power of the outstanding securities of the acquiring corporation or person or its parent entity entitled to vote generally in the election of directors (or persons performing similar functions) is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners of HWC's outstanding securities entitled to vote generally in the election of directors immediately prior to such sale, in substantially the same proportions as their ownership, immediately prior to such sale, of HWC's outstanding securities entitled to vote generally in the election of directors; or

(d) During any period of two consecutive years or less (not including any period prior to the approval of the Plan by the Board), individuals who at the beginning of such period constituted the Board (and any new Directors, whose appointment or election by the Board or nomination for election by HWC's stockholders was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors at the beginning of the period or whose appointment, election or nomination for election was so approved) cease for any reason to constitute a majority of the Board.

Section 8. Payment of Taxes.

In connection with any Award, and as a condition to the issuance or delivery of any shares of Common Stock to the Participant in connection therewith, HWC may require the Participant to pay HWC an amount equal to the minimum amount of the tax that the Company may be required to withhold to obtain a deduction for federal, state or local income tax purposes as a result of such Award or to comply with applicable law. The Committee in its sole discretion may make available one or more of the following alternatives for the payment of such taxes:

(a) in cash;

(b) in cash received from a broker-dealer to whom the Participant has submitted notice together with irrevocable instructions to deliver promptly to HWC the amount of sales proceeds from the sale of the shares subject to the Award to pay the withholding taxes;

(c) by directing HWC to withhold such number of shares of Common Stock otherwise issuable in connection with the Award having an aggregate Fair Market Value equal to the minimum amount of tax required to be withheld; or

(d) by delivering previously acquired shares of Common Stock that are acceptable to the Committee that have an aggregate Fair Market Value equal to the minimum amount required to be withheld.

The Committee shall have the sole discretion to establish the terms and conditions applicable to any alternative made available for payment of the required withholding taxes.

Section 9. Postponement.

The Committee may postpone any grant or settlement of an Award or exercise of a Stock Option for such time as the Committee in its sole discretion may deem necessary in order to permit HWC:

(a) to effect, amend or maintain any necessary registration of the Plan or the shares of Common Stock issuable pursuant to an Award, including upon the exercise of an Option, under the Securities Act of 1933, as amended, or the securities laws of any applicable jurisdiction;

(b) to permit any action to be taken in order to (i) list such shares of Common Stock on a stock exchange if shares of Common Stock are then listed on such exchange or (ii) comply with restrictions or regulations incident to the maintenance of a public market for its shares of Common Stock, including any rules or regulations of any stock exchange on which the shares of Common Stock are listed; or

(c) to determine that such shares of Common Stock and the Plan are exempt from such registration or that no action of the kind referred to in (b)(ii) above needs to be taken; and HWC shall not be obligated by virtue of any terms and conditions of any Award or any provision of the Plan to sell or issue shares of Common Stock in violation of the Securities Act of 1933 or the law of any government having jurisdiction thereof.

Any such postponement shall not extend the term of an Award and neither HWC nor its Directors or officers shall have any obligation or liability to a Participant, the Participant's successor or any other person with respect to any shares of Common Stock as to which the Award shall lapse because of such postponement.

Section 10. Nontransferability.

Awards granted under the Plan, and any rights and privileges pertaining thereto, may not be transferred, assigned, pledged or hypothecated in any manner, or be subject to execution, attachment or similar process, by operation of law or otherwise, other than:

(a) by will or by the laws of descent and distribution;

(b) pursuant to the terms of a qualified domestic relations order to which the Participant is a party that meets the requirements of any relevant provisions of the Code; or

In each case, the terms and conditions applicable to the transferability of the Award shall be established by the Committee.

Section 11. Termination or Amendment of Plan and Award Agreements.

11.1 Termination or Amendment of Plan.

(a) Except as described in (b) below, the Board may terminate, suspend, or amend the Plan, in whole or in part, from time to time, without the approval of the stockholders of HWC, unless such approval is required by applicable law, regulation or rule of any stock exchange on which the shares of Common Stock are listed. No amendment or termination of the Plan shall adversely affect the right of any Participant under any outstanding Award in any material way without the written consent of the Participant, unless such amendment or termination is required by applicable law, regulation or rule of any stock exchange on which the shares of Common Stock are listed.

Subject to the foregoing, the Board may correct any defect or supply an omission or reconcile any inconsistency in the Plan or in any Award granted hereunder in the manner and to the extent it shall deem desirable, in its sole discretion, to effectuate the Plan.

(b) Notwithstanding the foregoing, there shall be no amendment to the Plan or any outstanding Stock Option Agreement that results in the repricing of Stock Options.

(c) The Board shall have the authority to amend the Plan to the extent necessary or appropriate to comply with applicable law, regulation or accounting rules in order to permit Participants who are located outside of the United States to participate in the Plan.

11.2 Amendment of Award Agreements.

The Board shall have the authority to amend any Award Agreement at any time; provided however, that no such amendment shall adversely affect the right of any Participant under any outstanding Award Agreement in any material way without the written consent of the Participant, unless such amendment is required by applicable law, regulation or rule of any stock exchange on which the shares of Common Stock are listed.

Section 12. No Contract of Employment.

Neither the adoption of the Plan nor the grant of any Award under the Plan shall be deemed to obligate the Company to continue the employment of any Participant for any particular period, nor shall the granting of an Award constitute a request or consent to postpone the retirement date of any Participant.

Section 13. Applicable Law.

All questions pertaining to the validity, construction and administration of the Plan and all Awards granted under the Plan shall be determined in conformity with the laws of the State of Delaware, without regard to the conflict of law provisions of any state, and, in the case of Incentive Stock Options, Code Section 422 and regulations issued thereunder.

Section 14. Effective Date and Term of Plan.

14.1 Effective Date.

The Plan has been adopted and authorized by the Board for submission to HWC's stockholders. The Plan shall become effective as of the date the Plan is approved by HWC's stockholders.

14.2 Term of Plan.

Notwithstanding anything to the contrary contained herein, no Awards shall be granted on or after the 10 ^th anniversary of the Plan's effective date as determined in Section 14.1 above.

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Exhibit 10.3

HOUSTON WIRE & CABLE COMPANY 2006 STOCK PLAN

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Exhibit 10.4

05/22/00

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Dated as of May 22, 2000

$65,000,000

THE LENDERS NAMED HEREIN,

as Lenders

and

FLEET CAPITAL CORPORATION,

as Agent and Lender

and

HWC HOLDING CORPORATION,

as Guarantor

and

HOUSTON WIRE & CABLE COMPANY,

as Borrower

TABLE OF CONTENTS

		PAGE
1.1	Revolving Credit Loans	4
1.2	Term Loans	6
1.3	Letters of Credit; LC Guaranties	7
2.1	Interest	8
2.2	Computation of Interest and Fees	9
2.3	LIBOR Option	9
2.4	Letter of Credit and LC Guaranty Fees	10
2.5	Unused Line Fee	10
2.6	Collection Charges	10
2.7	Audit and Appraisal Fees	11
2.8	Reimbursement of Expenses	11
2.9	Bank Charges	11
2.10	Capital Adequacy Charge	11
2.11	Payment of Charges	12
3.1	Manner of Borrowing Revolving Credit Loans	12
3.2	Payments	14
3.3	Mandatory and Voluntary Prepayments	15
3.4	Application of Payments and Collections	15
3.5	All Loans to Constitute One Obligation	16
3.6	Loan Account	16
3.7	Statements of Account	16
4.1	Term of Agreement	16
4.2	Termination	16
5.1	Security Interest in Collateral	17
5.2	Lien Perfection; Further Assurances	18
5.3	Safekeeping of Collateral	18
5.4	Lien on Realty	18
6.1	General	18
6.2	Administration of Accounts	19
6.3	Administration of Inventory	20
6.4	Administration of Equipment	21
6.5	Payment of Charges	21
7.1	General Representations and Warranties	21
7.2	Continuous Nature of Representations and Warranties	26
7.3	Survival of Representations and Warranties	26
8.1	Affirmative Covenants	26
8.2	Negative Covenants	28
8.3	Specific Financial Covenants	31
9.1	Documentation	31
9.2	No Default	31
9.3	Other Loan Documents	31
9.4	Availability	31
9.5	No Litigation	31
9.6	Acquisition	32
9.7	Environmental Surveys	32
9.8	Equity	32
9.9	Other Lender Commitments	32
10.1	Events of Default	32

10.2	Acceleration of the Obligations	34
10.3	Other Remedies	34
10.4	Remedies Cumulative; No Waiver	35
11.1	Power of Attorney; Authorization and Action	36
11.2	Agent's Reliance, Etc	36
11.3	FCC and Affiliates	36
11.4	Lender Credit Decision	36
11.5	Indemnification	37
11.6	Successor Agent	37
12.1	Power of Attorney	37
12.2	Indemnity	38
12.3	Modification of Agreement; Sale of Interest	38
12.4	Severability	41
12.5	Successors and Assigns	41
12.6	Cumulative Effect; Conflict of Terms	41
12.7	Execution in Counterparts	41
12.8	Notice	41
12.9	Credit Inquiries	42
12.10	Time of Essence	42
12.11	Entire Agreement	42
12.12	Interpretation	43
12.13	Confidentiality	43
12.14	GOVERNING LAW; CONSENT TO FORUM	43
12.15	WAIVERS BY BORROWER	44
12.16	Publicity	44

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS AMENDED LOAN AND SECURITY AGREEMENT is made as of this 22nd day of May, 2000, by and among HOUSTON WIRE & CABLE COMPANY , a Delaware corporation ("Borrower"), with its chief executive office and principal place of business at 10201 N. Loop East, Houston, Texas 77029; the lenders who are signatories hereto ("Lenders") and FLEET CAPITAL CORPORATION ("FCC"), a Rhode Island corporation with an office at One South Wacker Drive, Suite 1400, Chicago, Illinois 60606, as agent for Lenders hereunder ("FCC", in such capacity, being "Agent"). Capitalized terms used in this Agreement have the meanings assigned to them in Appendix A, General Definitions. Accounting terms not otherwise specifically defined herein shall be construed in accordance with GAAP consistently applied.

WHEREAS , Borrower, certain financial institutions (including certain Lenders) and Heller Financial, Inc., a Delaware corporation ("Heller") as agent for said financial institutions entered into a certain Loan and Security Agreement dated May 22, 1997 (said Loan and Security Agreement as amended from time to time, the "1997 Loan Agreement"); and

WHEREAS , Borrower, Lenders and Agent desire to amend and restate the 1997 Loan Agreement pursuant to the terms and conditions hereof.

1. CREDIT FACILITY

Subject to the terms and conditions of, and in reliance upon the representations and warranties made in, this Agreement and the other Loan Documents, Lenders agree to make a credit facility of up to Sixty-Five Million Dollars ($65,000,000) available upon Borrower's request therefor, as follows:

1.1 Revolving Credit Loans.

1.1.1 Loans and Reserves . (A) Loans and Reserves . The aggregate amount of the Revolving Credit Loans to be made by each Lender (such Lender's "Revolving Credit Loan Commitment"), pursuant to the terms hereof, shall be the amount set below such Lender's name on the signature pages hereof. The aggregate principal amount of the Revolving Credit Loan Commitments is Fifty-Five Million Dollars ($55,000,000). The percentage equal to the quotient of (x) each Lender's Revolving Credit Loan Commitment, divided by (y) the aggregate of all Revolving Credit Loan Commitments, is that Lender's "Revolving Credit Percentage". Subject to all of the terms and conditions of this Agreement, each Lender agrees, for so long as no Default or Event of Default exists, to make Revolving Credit Loans to Borrower from time to time, as requested by Borrower in accordance with the terms of Section 3.1 hereof, up to a maximum principal amount at any time outstanding equal to the product of (A) the Borrowing Base at such time multiplied by (B) such Lender's Revolving Credit Percentage. It is expressly understood and agreed that Agent and Lenders may use the Borrowing Base as a maximum ceiling on Revolving Credit Loans outstanding to Borrower at any time. If the unpaid balance of the Revolving Credit Loans should exceed the ceiling so determined or any other limitation set forth in this Agreement, such Revolving Credit Loans shall nevertheless constitute Obligations that are secured by the Collateral and entitled to all the benefits thereof. In no event shall Lenders be required to make a Revolving Credit Loan at any time that there exists a Default or an Event of Default. Agent shall have the right to establish reserves in such amounts, and with respect to such matters, as Agent shall deem necessary or appropriate in the reasonable exercise of Agent's credit judgment, against the amount of Revolving Credit Loans which Borrower may otherwise request under this Section 1.1.1., including, without limitation, with respect to (i) price adjustments, damages, unearned discounts, returned products or other matters for which credit memoranda are issued in the ordinary course of Borrower's business; (ii) shrinkage, spoilage and obsolescence of Inventory; (iii) slow moving Inventory; (iv) other sums chargeable against Borrower's Loan Account as Revolving Credit Loans under any section of this Agreement; (v) amounts owing by Borrower to any Person to the extent

secured by a Lien on, or trust over, any Property of Borrower; and (vi) such other matters, events, conditions or contingencies from time to time hereunder as to which Agent, in its reasonable credit judgment, determines reserves should be established from time to time hereunder. In addition to the foregoing, Borrower consents to the establishment by Agent on the Closing Date of reserves against the amount of Revolving Credit Loans, which Borrower may otherwise request pursuant to this Section 1.1.1, (x) in the amount of $2,500,000 which reserve shall remain in place until the earlier of the date on which the Term Loans B are repaid in full and there are no existing and continuing Defaults or Events of Default or such date on which Required Lenders deem it appropriate for such $2,500,000 reserve to be reduced or eliminated; and (y) in the amount of $250,000, which amount represents Agent's estimate of the amount of unissued debit memos.

(B) The Revolving Credit Loans shall be evidenced by promissory notes to be executed and delivered by Borrower at the time of the initial Revolving Credit Loan, the form of which is attached hereto and made a part hereof as Exhibit A (the "Revolving Credit Notes"). Each Revolving Credit Note shall be payable to the order of a Lender and shall represent the obligation of Borrower to pay the amount of such Lender's Revolving Credit Loan Commitment or, if less, the aggregate unpaid principal amount of all Revolving Credit Loans made by such Lender to Borrower with interest thereon as prescribed in Section 2.1.1.

(C) Insofar as Borrower may request and Lenders may be willing in their sole and absolute discretion to make Revolving Credit Loans to Borrower at a time when the unpaid balance of Revolving Credit Loans exceeds, or would exceed with the making of any such Revolving Credit Loan, the Borrowing Base (any such Loan or Loans being herein referred to individually as an "Overadvance" and collectively as "Overadvances"), Agent shall enter such Overadvances as debits in the Loan Account. All Overadvances shall be repaid on demand, shall be secured by the Collateral and shall bear interest as provided in this Agreement for Revolving Credit Loans generally. Any Overadvance to be made by Lenders pursuant to the terms hereof shall be made by Lenders ratably in accordance with their Revolving Credit Percentages. Overadvances in the aggregate amount of Five Hundred Thousand Dollars ($500,000) or less may, unless a Default or Event of Default has occurred and is continuing, be made in the sole and absolute discretion of Agent. Overadvances in an aggregate amount of more than Five Hundred Thousand Dollars ($500,000) but less than One Million Dollars ($1,000,000) may, unless a Default or an Event of Default has occurred and is continuing, be made in the sole and absolute discretion of Required Lenders. Overadvances in an aggregate amount of One Million Dollars ($1,000,000) or more and Overadvances to be made after the occurrence and during the continuation of a Default or an Event of Default shall require the consent of all Lenders. The forgoing notwithstanding, in no event, unless otherwise consented to by all Lenders, (x) shall any Overadvances be outstanding for more than sixty (60) consecutive days, (y) after all outstanding Overadvances have been repaid, shall Agent or Lenders make any additional Overadvances unless sixty (60) days or more have expired since the last date on which any Overadvances were outstanding or (z) shall Overadvances be outstanding on more than ninety (90) days within any one hundred eighty day (180) period.

1.1.2 Swingline Loans . In order to reduce the frequency of transfers from Lenders to Agent, Agent, in its sole discretion, may, from its own funds, make Revolving Credit Loans on behalf of Lenders; provided that the aggregate amount of any such Revolving Credit Loans so made by Agent shall not at anytime exceed Three Million Dollars ($3,000,000). Any such Revolving Credit Loan made by Agent on behalf of Lenders is sometimes hereinafter referred to as a "Swingline Loan." In such event, the Lenders on behalf of whom Agent made the Revolving Credit Loan shall reimburse Agent for the amount of Revolving Credit Loan so made on its behalf, on a weekly (or more frequent basis as determined by Agent, in its sole discretion) basis and the entire amount of interest attributable to such Revolving Credit Loan for the period from the date on which said Revolving Credit Loan was made by Agent on such Lender's behalf until Agent is

reimbursed by such Lender, shall be paid to Agent. All Swingline Loans shall be included in the Base Rate Revolving Portion of the Loans and shall bear interest as provided in Section 2.1.1 thereof.

1.1.3 Use of Proceeds . The Revolving Credit Loans shall be used solely for the payment of a portion of the purchase price due under the Purchase Documents and for Borrower's general operating and capital needs and for other corporate purposes in a manner consistent with the provisions of this Agreement and all applicable laws.

1.2 Term Loans .

1.2.1 Term Loan A . On the Closing Date, subject to the fulfillment or waiver of all conditions precedent to the effectiveness of this Agreement, each Lender shall make term loans A (collectively "Term Loan A") to Borrower in the aggregate principal amount equal to the amount set forth below such Lender's name on the signature pages hereof (such Lender's "Term Loan A Commitment"). The percentage equal to the quotient of (x) each Lender's Term Loan A Commitment, divided by (y) the aggregate of all Term Loan A Commitments, is that Lender's "Term Loan A Percentage." The aggregate amount of the Term Loan A Commitments is Five Million Dollars ($5,000,000). Term Loan A shall be evidenced by promissory notes to be executed and delivered by Borrower to Lenders on the Closing Date, the form of which is attached hereto and made a part hereof as Exhibit A-1 (the "Term Note(s) A"), shall bear interest as specified in Section 2.1 and shall be repayable in accordance with the terms of the Term Notes A. Term Loan A shall be funded upon the effectiveness of this Agreement. The proceeds of Term Loan A shall be used by Borrower solely for purposes for which the proceeds of the Revolving Credit Loans are authorized to be used.

1.2.2 Term Loans B . During the period between the date which is ninety (90) days after the Closing Date and the date which is one hundred eighty (180) days after the Closing Date, each Lender agrees, for so long as no Default or Event of Default exists, to make Term Loans B (collectively "Term Loans B"), in the aggregate principal amount equal to the amount set forth below such Lender's name on the signature pages hereof (such Lender's "Term Loan B Commitment"). The percentage equal to the quotient of (x) each Lender's Term Loan B Commitment, divided by (y) the aggregate of all Term Loan B Commitments is that Lender's "Term Loans B Percentage". The aggregate amount of the Term Loan B Commitments shall be Five Million Dollars ($5,000,000); provided , however , that, if the final principal balance of the Seller Note as adjusted pursuant to the terms of the Purchase Documents is reduced below $8,939,000 for reasons other than the indemnification provisions of Article V of the Purchase Agreement, then the aggregate amount of the Term Loan B Commitments shall be reduced on a dollar for dollar basis by the amount of such reduction and each Lender's Term Loan B Commitment shall correspondingly be reduced on a pro rata basis. In no event (x) shall any one request by Borrower for Term Loans B be in an aggregate amount of less than One Million Dollars ($1,000,000) or an integral multiple of One Million Dollars ($1,000,000) in excess thereof, (y) shall Borrower request Lenders to make Term Loans B more than once within any fiscal month of Borrower or (z) shall Borrower request Lenders to make Term B Loans, if after giving effect to the making of any such requested Term Loan B, the aggregate amount of undrawn Term Loan B Commitments would be less than the remaining outstanding principal balance of the Seller Note. Term Loans B shall be secured by the Collateral and shall also be secured by the CHS Guarantee to the extent provided therein. The principal amount of Term Loans B shall be amortized on the basis of eighteen monthly payments, commencing on December 1, 2000 (the first day of the seventh calendar month after the Closing Date). Each such installment payment shall be equal to one eighteenth ( ¹ / 18 ) of the aggregate amount of all Term Loans B made to date by Lenders; provided that the entire remaining principal balance of Term Loans B shall be due on the date which is the second anniversary of the Closing Date. Each Term Loans B shall be evidenced by promissory notes to be

executed and delivered by Borrower to Lenders on the Closing Date, the form of which is attached hereto and made a part hereof as Exhibit A-2 (the "Term Note(s) B"), shall bear interest as specified in Section 2.1 and shall be repayable in accordance with the terms of the Term Notes B. The proceeds of Term Loans B shall be used by Borrower solely for the purposes for which the proceeds of the Revolving Credit Loans are authorized to be used and for repayment of the Seller Note.

1.3 Letters of Credit; LC Guaranties.

(A) Subject to all of the terms and conditions of this Agreement, if requested to do so by Borrower, Agent shall, on behalf of Lenders, issue its, or cause to be issued Bank's, Letters of Credit for the account of Borrower or shall execute LC Guaranties by which Lenders shall guaranty the payment or performance by Borrower of its reimbursement obligation with respect to Letters of Credit issued for Borrower's account by Bank or Agent; provided that the aggregate face amount of all Letters of Credit and LC Guaranties outstanding at any time shall not exceed Five Million Dollars ($5,000,000) and no Letter of Credit may have an expiration date that is after sixty days prior to the Commitment Termination Date, unless Borrower provides, on or prior to the Commitment Termination Date, Agent with cash collateral for said Letter of Credit or LC Guaranty, in a manner and amount acceptable to Agent. Further, the expiration date of any Trade Letter of Credit shall be not more than 180 days after the issuance thereof and the expiration date of any Standby Letter of Credit shall not be more than one year after the date of issuance thereof (although any such Standby Letter of Credit shall be renewable for an additional one-year period in accordance with the terms hereof). Any amounts paid by Agent or any Lender under any LC Guaranty or in connection with any Letter of Credit (i) shall become part of the Obligations, (ii) unless paid by Borrower pursuant to Section 1.3(C) below, shall be paid from the proceeds of a Revolving Credit Loan requested pursuant to Section 3.1.1 below, to the extent Lenders are required to make Revolving Credit Loans pursuant to the terms hereof and (iii) otherwise, shall be payable on demand. In no event shall Agent, Bank or Lenders be required to issue or cause to be issued Letters of Credit or LC Guaranties at any time there exists a Default or an Event of Default.

(B) Immediately upon the issuance of each Letter of Credit by Agent or Bank or LC Guaranty by Agent hereunder, each Lender shall be deemed to have automatically, irrevocably and unconditionally purchased from Agent an undivided interest and participation in and to such Letter of Credit or LC Guaranty, the obligations of Borrower in respect thereof and the liability of Agent thereunder in an amount equal to the amount available for drawing under such Letter of Credit or, in the case of a LC Guaranty, the amount guaranteed thereunder, multiplied by such Lender's Revolving Credit Percentage. Agent will notify each Lender promptly upon presentation to it of a draw under a Letter of Credit or a demand for payment under a LC Guaranty. On a weekly basis, or more frequently if requested by Agent, each Lender shall make payment to Agent in immediately available funds, of an amount equal to such Lender's pro rata share of the amount of any payment made by Agent in respect to any Letter of Credit or LC Guaranty. The obligation of each Lender to reimburse Agent under this Section 1.3 shall be unconditional, continuing, irrevocable and absolute, except in respect of indemnity claims arising out of Agent's wilful misconduct. In the event that any Lender fails to make payment to Agent of any amount due under this Section 1.3, Agent shall be entitled to receive, retain and apply against such obligation the principal and interest otherwise payable to such Lender hereunder until Agent receives such payment from such Lender or such obligation is otherwise fully satisfied; provided , however, that nothing contained in this sentence shall relieve such Lender of its obligation to reimburse the Agent for such amount in accordance with this Section 1.3(B).

(C) Borrower agrees, unconditionally, irrevocably and absolutely, to pay immediately to Agent, for the account of Lenders, the amount drawn under a Letter of Credit or paid pursuant to

a LC Guaranty. If Borrower at any time fails to make such payment in accordance with the terms of this Agreement, Borrower shall be deemed to have elected to borrow from the Lenders on such date Revolving Credit Loans equal in aggregate amount to the amount paid by Agent or the issuing Lender, as the case may be, under such Letter of Credit or LC Guaranty. The provisions of Section 1.3(A) and (B) notwithstanding, in the event that any Lender is prohibited by any Legal Requirement from issuing or participating in any LC Guaranty (or portion thereof), then Agent shall issue such LC Guaranty (or such Lender's portion thereof) in lieu of such Lender and such Lender shall not be deemed to have a participation therein. In such event, any payments received by Agent pursuant to Section 1.3(C) of the Loan Agreement which would otherwise be paid by Agent to such Lender shall be retained by Agent to reimburse Agent for any amounts paid by Agent in respect to the LC Guaranty (or portion thereof) Agent issued in lieu of such Lender.

(D) Agent shall give prompt telephone, telex or facsimile notice to each Lender of each issuance of, or amendment to, a Letter of Credit specifying the effective date of the Letter of Credit or amendment, the amount, the beneficiary, and the expiration date of the Letter of Credit, in each case as established originally or through the relevant amendment, as applicable, each Lender's pro rata participation in such Letter of Credit and whether Agent has classified the Letter of Credit as a commercial, performance, or financial letter of credit for regulatory reporting purposes.

2. INTEREST, FEES AND CHARGES

2.1 Interest .

2.1.1 Rate of Interest . Interest shall accrue on the principal amount of the Base Rate Revolving Credit Portion, the Base Rate Term A Portion and the Base Rate Term B Portion outstanding at the end of each day at a fluctuating rate per annum equal to the Base Rate plus the Applicable Margin for the Base Rate Revolving Credit Portion, the Base Rate Term A Portion and the Base Rate Term B Portion. Said rate of interest shall increase or decrease by an amount equal to any increase or decrease in the Base Rate, effective as of the opening of business on the day that such change in the Base Rate occurs. If Borrower properly exercises the LIBOR Option as provided in Section 2.3, interest shall accrue on the principal amount of the LIBOR Revolving Credit Portion, the LIBOR Term A Portion and the LIBOR Term B Portion outstanding at the end of each day at a rate per annum equal to the Applicable Margin plus the LIBOR Rate applicable to each LIBOR Revolving Credit Portion, LIBOR Term A Portion or LIBOR Term B Portion for the corresponding LIBOR Period.

2.1.2 Default Rate of Interest . At the option of Agent or Required Lenders, upon and after the occurrence of an Event of Default, and during the continuation thereof, the principal amount of all Loans shall bear interest at a rate per annum equal to 2.0% plus the interest rate otherwise applicable thereto (the "Default Rate").

2.1.3 Maximum Interest . In no event whatsoever shall the aggregate of all amounts deemed interest hereunder or under the Revolving Credit Notes, the Term Notes A or the Term Notes B and charged or collected pursuant to the terms of this Agreement or pursuant to the Term A Notes or the Term Notes B exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. If any provisions of this Agreement, the Term Notes A or the Term Notes B are in contravention of any such law, such provisions shall be deemed amended to conform thereto.

2.2 Computation of Interest and Fees . Interest, Letter of Credit and LC Guaranty fees and unused line fees hereunder shall be calculated daily and shall be computed on the actual number of days elapsed over a year of 360 days. For the purpose of computing interest hereunder, all items of payment received by Agent shall be deemed applied by Agent on account of the Obligations (subject to final payment on such items) on the first Business Day after receipt by Agent of such items in Agent's account located in Hartford, Connecticut.

2.3 LIBOR Option .

(i) Upon the conditions that: (1) Agent shall have received a LIBOR Request from Borrower at least 3 Business Days prior to the first day of the LIBOR Period requested, (2) there shall have occurred no change in applicable law which would make it unlawful for any Lender to obtain deposits of U.S. dollars in the London interbank foreign currency deposits market, (3) as of the date of the LIBOR Request and the first day of the LIBOR Period, there shall exist no Event of Default, (4) Agent is able to determine the LIBOR Rate in respect of the requested LIBOR Period or each Lender is able to obtain deposits of U.S. dollars in the London interbank foreign currency deposits market in the applicable amounts and for the requested LIBOR Period, and (5) as of the first date of the LIBOR Period, there are no more than five outstanding LIBOR Portions including the LIBOR Portion being requested; then interest on the LIBOR Portion requested during the LIBOR Period requested will be based on the applicable LIBOR Rate.

(ii) Each LIBOR Request shall be irrevocable and binding on Borrower. Borrower shall indemnify Lenders for any loss, penalty or expense incurred by Lenders due to failure on the part of Borrower to fulfill, on or before the date specified in any LIBOR Request, the applicable conditions set forth in this Agreement or due to the prepayment of the applicable LIBOR Portion prior to the last day of the applicable LIBOR Period, including, without limitation, any loss (excluding loss of anticipated profits) or expense incurred by reason of the liquidation or redeployment of deposits or other funds acquired by Lenders to fund or maintain the requested LIBOR Portion.

(iii) If any Legal Requirement shall (1) make it unlawful for any Lender to fund through the purchase of U.S. dollar deposits any LIBOR Portion or otherwise give effect to its obligations as contemplated under this Section 2.3, or (2) shall impose on any Lender any costs based on or measured by the excess above a specified level of the amount of a category of deposits or other liabilities of such Lender which includes deposits by reference to which the LIBOR Rate is determined as provided herein or a category of extensions of credit or other assets of such Lender which includes any LIBOR Portion or (3) shall impose on such Lender any restrictions (not already taken into account under statutory reserves) on the amount of such a category of liabilities or assets which such Lender may hold, then, in each such case, Agent may, by notice thereof to Borrower, terminate the LIBOR Option. Any LIBOR Portion subject thereto shall immediately bear interest thereafter at the rate and in the manner provided for Base Rate Portions pursuant to Section 2.1.1. Borrowers shall indemnify any such Lender against any loss, penalty or expense incurred by such Lender due to liquidation or redeployment of deposits or other funds acquired such Lender to fund or maintain any LIBOR Portion that is terminated under this paragraph.

(iv) Each Lender shall receive payments of amounts of principal of and interest with respect to the LIBOR Portions free and clear of, and without deduction for, any Taxes. If (1) any Lender shall be subject to any Tax in respect of any LIBOR Portion or any part thereof or (2) Borrower shall be required to withhold or deduct any Tax from any such amount, the LIBOR Rate applicable to such LIBOR Portion shall be adjusted by Agent to reflect all additional costs incurred by such Lender in connection with the payment by such

Lender or the withholding by Borrower of such Tax and such Borrower shall provide Agent with a statement detailing the amount of any such Tax actually paid by Borrower. Determination by Agent of the amount of such costs shall, in the absence of manifest error, be conclusive. If after any such adjustment any part of any Tax paid by any such Lender is subsequently recovered by such Lender, such Lender shall reimburse Borrower to the extent of the amount so recovered. A certificate of an officer of the effected Lender setting forth the amount of such recovery and the basis therefor shall, in the absence of manifest error, be conclusive.

(v) Each Lender agrees to take such actions as may be commercially reasonable to mitigate the adverse effects to Borrower as provided in clauses (iii) and (iv) of Section 2.3 above or Section 2.10 below; provided that no Lender shall be required to incur any costs or expense in respect to any such mitigation.

2.4 Letter of Credit and LC Guaranty Fees . (a) Borrower shall pay to Agent either for its own benefit or the ratable benefit of Lenders, as provided below:

(i) for Standby Letters of Credit and LC Guaranties of Standby Letters of Credit, a fee equal to the annualized LC Percent of the aggregate face amount of such Letters of Credit and LC Guaranties outstanding from time to time during the term of this Agreement, plus all normal and customary charges associated with the issuance thereof as set forth on Exhibit T hereof, payable upon the issuance of such Letter of Credit or LC Guaranty and an additional fee equal to the annualized LC Percent of the face amount of such Letter of Credit or LC Guaranty payable upon each renewal or extension thereof. All such fees and charges shall be deemed fully earned and shall be due and payable upon issuance, renewal or extension (as the case may be) of each such Letter of Credit or LC Guaranty and shall not be subject to rebate or proration upon the termination of this Agreement for any reason; and

(ii) for Trade Letters of Credit and LC Guaranties of Trade Letters of Credit, a fee equal to the annualized LC Percent of the face amount of each such Letter of Credit or LC Guaranty, plus the normal and customary charges associated with the issuance thereof as set forth on Exhibit T hereof, payable upon the issuance of such Letter of Credit or execution of such LC Guaranty and an additional fee equal to the annualized LC Percent of the face amount of such Letter of Credit or LC Guaranty payable upon each renewal or extension thereof. All of such fees and charges shall be fully earned and due and payable upon issuance, renewal or extension (as the case may be) of each such Letter of Credit or LC Guaranty, and shall not be subject to rebate or proration upon the termination of this Agreement for any reason.

(b) Charges set forth on Exhibit T shall be paid to Agent for its own benefit. All other fees payable in connection with Letters of Credit and LC Guaranties shall be paid to Agent for the ratable benefit of Lenders.

2.5 Unused Line Fee . Borrower shall pay to Agent for the ratable benefit of Lenders a fee equal to the sum of (x) one-half of one percent ( ¹ / 2 %) per annum of the average monthly amount by which the Maximum Revolving Loan exceeds the sum of the outstanding principal balance of the Revolving Credit Loans (exclusive of Swingline Loans) plus the LC Amount plus (y) one half of one percent ( ¹ / 2 %) per annum of the average monthly amount of undrawn but unexpired Term Loan B Commitments. The unused line fee shall be payable monthly in arrears on the first day of each calendar month hereafter.

2.6 Collection Charges . If items of payment are received by Agent at a time when there are no Revolving Credit Loans outstanding, such items of payment shall be subject to a collection charge equal

to one day's interest on the amount thereof at the rate then applicable to Revolving Credit Loans, which collection charges shall be payable on the first Business Day of each month.

2.7 Audit and Appraisal Fees . Borrower shall pay to Agent reasonable audit and appraisal fees in accordance with Agent's current schedule of fees in effect from time to time (at Closing Date, $750 per day per person) in connection with audits and appraisals of Borrower's books and records and such other matters as Agent shall deem reasonably appropriate, plus all out-of-pocket expenses incurred by Agent in connection with such audits and appraisals. Audit fees shall be payable on the first day of the month following the date of issuance by Agent of a request for payment thereof to Borrower.

2.8 Reimbursement of Expenses.

2.8.1 Administration and Enforcement Expenses . If, at any time or times regardless of whether or not an Event of Default then exists, Agent, any Lender (in respect to clauses (iii) and (iv) only) incurs legal or accounting expenses or any other costs or out-of-pocket expenses in connection with (i) the negotiation and preparation of this Agreement or any of the other Loan Documents, any amendment of or modification of this Agreement or any of the other Loan Documents (ii) the administration of this Agreement or any of the other Loan Documents and the transactions contemplated hereby and thereby; (iii) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Agent, any Lender, Borrower or any other Person) in any way relating to the Collateral, this Agreement or any of the other Loan Documents or Borrower's affairs; (iv) any attempt to enforce any rights of Agent or any Lender against Borrower or any other Person which may be obligated to Agent or any Lender by virtue of this Agreement or any of the other Loan Documents, including, without limitation, the Account Debtors; or (v) any attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate or otherwise dispose of or realize upon the Collateral; then all such reasonable legal and accounting expenses, other reasonable costs and out-of-pocket expenses of Agent or any Lender shall be charged to Borrower. All amounts chargeable to Borrower under this Section 2.8 shall be Obligations secured by all of the Collateral, shall be payable on demand to Agent or the applicable Lender, as the case may be, and shall bear interest from the date such demand is made until paid in full at the rate applicable to Base Rate Revolving Credit Portions from time to time. Costs and expenses charged to Borrower pursuant to this Section 2.8.1 shall not be duplicative of costs and expenses charged to Borrowers pursuant to Section 2.7 above. The foregoing notwithstanding, Borrower shall not be required to reimburse Agent or any Lender for any expenses or costs incurred by Agent or any Lender in any litigation, contest, dispute, suit, proceeding or action in which Borrower, pursuant to a final non-applicable order from a court of competent jurisdiction, are the prevailing party.

2.8.2 Collateral Protection Expenses . All expenses of protecting, storing, warehousing, insuring, handling, maintaining and shipping the Collateral, any and all excise, property, sales, and use taxes imposed by any state, federal, or local authority on any of the Collateral or in respect of the sale thereof shall be borne and paid by Borrower. If Borrower fails to promptly pay any portion thereof when due, Agent may, at its option, but shall not be required to, pay the same and charge Borrower therefor.

2.9 Bank Charges . Borrower shall pay to Agent, on demand, any and all fees, costs or expenses which Agent or any Lender pays to a bank or other similar institution arising out of or in connection with (i) the forwarding to any Borrower or any other Person on behalf of Borrower, by Agent or any Lender, of proceeds of loans made by Lenders to Borrower pursuant to this Agreement and (ii) the depositing for collection, by Agent or any Lender of any check or item of payment received or delivered to Agent or any Lender on account of the Obligations.

2.10 Capital Adequacy Charge . In the event that any Lender (an "Affected Lender") shall have determined that the adoption (effected after the date hereof) of any law, rule or regulation regarding capital adequacy, or any change therein or in the interpretation or application thereof or compliance by

any such Affected Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any central bank or governmental authority, does or shall have the effect of reducing the rate of return on such Affected Lender's capital as a consequence of its obligations hereunder to a level below that which such Affected Lender could have achieved but for such adoption, change or compliance (taking into consideration such Affected Lender's policies with respect to capital adequacy) by an amount deemed by such Affected Lender, in its reasonable discretion, to be material, then from time to time, after submission by such Affected Lender to Borrower of a written demand therefor, which demand shall be made within sixty (60) days of such reduction, Borrower shall pay to such Affected Lender such additional amount or amounts as will compensate such Affected Lender for such reduction. A certificate of such Affected Lender claiming entitlement to payment as set forth above shall be conclusive in the absence of manifest error. Such certificate shall set forth the nature of the occurrence giving rise to such payment, the additional amount or amounts to be paid to such Affected Lender, and the method by which such amounts were determined. In determining such amount, such Affected Lender may use any reasonable averaging and attribution methods. Each Lender and Agent agrees to allocate any such cost increase among its similarly situated customers in good faith and on an equitable basis; provided, however, that any such Affected Lender shall not be entitled to such amounts unless similar assessments are imposed by such Affected Lender on other comparable borrowers of such Affected Lender. In the event that the provisions of this Section 2.10 or Section 2.3(iv) result in the effective interest rates being charged to Borrower being increased, on a per annum basis, by more than one quarter percent ( ¹ / 4 %), Borrower may require any such Affected Lender (other than FCC) or any Lender (other than FCC) subject to a Tax under Section 2.3(iv) to sell and transfer all its interest in this Agreement and its Revolving Credit Note, Term A Note and Term B Note and Revolving Credit Loan Commitments and Term Loan B Commitments to a substitute Lender (who shall be reasonably acceptable to Agent and Borrower) for a price in cash equal to principal balance of such Affected or other Lender's outstanding Loans plus all accrued but unpaid interest thereon plus all accrued but unpaid fees due any such Affected or other Lender under the terms hereof. Any such sale and transfer shall be made pursuant to the terms of Section 12.3 hereof. Any Lender who becomes an Affected Lender or who incurs additional Taxes in respect to Section 2.3(iii) or 2.3(iv) above, shall give Borrower prompt written notice of such fact.

2.11 Payment of Charges . All amounts chargeable to Borrower under Section 2 and under Section 6.1.3 hereof shall be Obligations secured by all of the Collateral, shall be payable on demand and shall bear interest from the date such advance was made until paid in full at the rate applicable to Base Rate Revolving Credit Portions from time to time.

3. LOAN ADMINISTRATION.

3.1 Manner of Borrowing Revolving Credit Loans . Borrowings under the credit facility established pursuant to Section 1 hereof shall be as follows:

3.1.1 Loan Requests . A request for a Revolving Credit Loan or a Term B Loan shall be made, or shall be deemed to be made, in the following manner: (i) Borrower may give Agent a Notice of Revolving Credit Loan or Term Loans B, in which notice Borrower shall specify the amount of the proposed borrowing and the proposed borrowing date, provided , however, that no such request may be made at a time when there exists a Default or an Event of Default; and (ii) the becoming due of any amount required to be paid under this Agreement, the Term Notes A or the Term Notes B, whether as interest or for any other Obligation, shall be deemed irrevocably to be a request for a Revolving Credit Loan on the due date in the amount required to pay such interest or other Obligation. As an accommodation to Borrower, Agent may permit telephonic requests for loans and electronic transmittal of instructions, authorizations, agreements or reports to Agent by Borrower. Unless Borrower specifically directs Agent in writing not to accept or act upon telephonic or electronic communications from Borrower, Agent shall have no liability to Borrower for any loss or damage suffered by any Borrower as a result of Agent's honoring of any

requests, execution of any instructions, authorizations or agreements or reliance on any reports communicated to it telephonically or electronically and purporting to have been sent to Agent by Borrower and Agent shall have no duty to verify the origin of any such communication or the authority of the person sending it. Except as otherwise provided in Section 2.3 and subject to the provisions of Section 1.1.2, each Revolving Credit Loan and each Term Loans B shall be made on notice, given not later than 11:00 a.m. (Milwaukee time) on the Business Day of the proposed Revolving Credit Loan or Term Loans B, by Borrower to Agent, which shall give to each Lender prompt written notice thereof by telecopier, telex or cable. Each such notice (a "Notice of Revolving Credit Loan" or a "Notice of Term Loans B," as applicable) shall be in writing or by telephone to Agent at (262) 798-4800, confirmed immediately in writing, specifying therein the requested date and amount of such Revolving Credit Loan or Term Loans B. Each Lender shall, not later than 2:00 p.m. (Milwaukee time) on each requested date, wire to a bank designated by Agent the amount of that Lender's Revolving Credit Percentage of the requested Revolving Credit Loan or the amount of that Lender's Term Loan B Percentage of the requested Term Loan B. Agent shall, before 2:30 P.M. (Milwaukee time) on the date of the proposed Revolving Credit Loan or proposed Term Loans B, subject to the provisions hereof, wire to a bank designated by Borrower and reasonably acceptable to Agent, the amount of such Revolving Credit Loan or Term Loans B to the extent received from the Lenders. The failure of any Lender to make the Revolving Credit Loan or Term Loans B to be made by it shall not relieve any other Lender of its obligation hereunder to make its Revolving Credit Loan or Term Loans B. Neither Agent nor any other Lender shall be responsible for the failure of any other Lender to make the Revolving Credit Loan or Term Loans B to be made by such other Lender.

If at any time one or more Lenders refuse or fail to make a requested Revolving Credit Loan or Term Loans B when all conditions to a Revolving Credit Loan or Term Loans B have been satisfied or waived, then Agent may, at its option, but shall have no obligation whatsoever to, purchase all, but not less than all, of the Revolving Credit Note, Term Note A and Term Note B held by the Lender(s) who so fail or refuse, and to assume such Lender's commitments to make Revolving Credit Loans or Term Loans B and each such Lender shall be obligated to sell and transfer such Revolving Credit Note, Term Notes A or Term Note B to Agent for a price in cash equal to the principal balance outstanding plus all accrued but unpaid interest thereon plus all accrued but unpaid fees due any such Lender under the terms hereof, and the foregoing provisions of this Section will be applicable to Agent with respect to the Revolving Credit Note or Term Note B so purchased by it. Any such purchase, however, shall not relieve any such Lender from any breach of contract claims available to Agent and/or Borrower against such Lender as a result of its failure to make any such Revolving Credit Loan or Term Loans B.

3.1.2 Disbursement . Borrower hereby irrevocably authorizes Agent to disburse the proceeds of the Term Loan A, each Term Loans B and each Revolving Credit Loan requested, or deemed to be requested, pursuant to this Section 3.1.2 as follows: (i) the proceeds of the Term Loan A, each Term Loans B and each Revolving Credit Loan shall be disbursed by Agent in lawful money of the United States of America in immediately available funds, in the case of the Term Loan A and the initial Revolving Credit Loan, in accordance with the terms of the written disbursement letter from Borrower, and in the case of each subsequent borrowing, by wire transfer to such bank account as may be agreed upon by Borrower and Agent from time to time or elsewhere if pursuant to a written direction from Borrower; and (ii) the proceeds of each Revolving Credit Loan requested under Section 3.1.1(ii) shall be disbursed by Agent by way of direct payment of the relevant interest or other Obligation.

3.1.3 Letter of Credit and LC Guaranty Requests . A request for a Letter of Credit or LC Guaranty shall be made in the following manner: Borrower may give Agent and Bank a written notice of its request for the issuance of a Letter of Credit or LC Guaranty, not later than 11:00 a.m. Milwaukee time, one Business Day before the proposed issuance date thereof, in which

notice Borrower shall specify the proposed issuer and issuance date; provided , that no such request may be made at a time when there exists a Default or Event of Default. Such request shall be accompanied by an executed application and reimbursement agreement in form and substance satisfactory to the Person being asked to issue the Letter of Credit or LC Guaranty, as well as any required corporate resolutions.

3.2 Payments . Except where evidenced by notes or other instruments issued or made by Borrower to Lenders and accepted by Lenders specifically containing payment provisions which are in conflict with this Section 3.2 (in which event the conflicting provisions of said notes or other instruments shall govern and control), the Obligations shall be payable as follows:

3.2.1 Principal . Principal payable on account of Revolving Credit Loans shall be payable by Borrower to Agent for the ratable benefit of Lenders immediately upon the earliest of (i) the receipt by Agent or Borrower of any proceeds of any of the Collateral other than Equipment or real Property, to the extent of said proceeds, except that, so long as no Default or Event of Default exists, if, after application of the proceeds to the Base Rate Revolving Credit Portion, any remaining Loans outstanding at the time of receipt by any Borrower or Agent of any such proceeds are LIBOR Revolving Portions outstanding, then Borrower may at its option direct that such proceeds be held by Agent in a non-interest bearing cash collateral account maintained by Agent to be applied to the payment of principal on the last day of the LIBOR Period applicable to each LIBOR Portion in the order of maturity or Borrower may place such proceeds in an interest bearing account provided that such account is pledged to Agent, for its benefit and the ratable benefit of Lenders, in a manner reasonably satisfactory to Agent; (ii) the occurrence of an Event of Default in consequence of which Agent or Required Lenders elect(s) to accelerate the maturity and payment of the Obligations, or (iii) termination of this Agreement pursuant to Section 4 hereof; provided , however , that if an Overadvance shall exist at any time, Borrowers shall, on demand, repay the Overadvance.

3.2.2 Interest .

(i) Base Rate Portion . Interest accrued on Base Rate Portions shall be due and payable on the earliest of (1) the first calendar day of each month (for the immediately preceding month), computed through the last calendar day of the preceding month, (2) the occurrence of an Event of Default in consequence of which Agent or Required Lenders elect(s) to accelerate the maturity and payment of the Obligations or (3) termination of this Agreement pursuant to Section 4 hereof.

(ii) LIBOR Portion . Interest accrued on each LIBOR Portion shall be due and payable on each LIBOR Interest Payment Date and on the earliest of (1) the last day of the LIBOR Period applicable to such LIBOR Portion, (2) the occurrence of an Event of Default in consequence of which Agent or Required Lenders elect to accelerate the maturity and payment of the Obligations or (3) termination of this Agreement pursuant to Section 4 hereof.

3.2.3 Costs, Fees and Charges . Costs, fees and charges payable pursuant to this Agreement shall be payable by Borrowers as and when provided in Section 2 hereof, to Agent for its benefit and/or the ratable benefit of Lenders or to any other Person designated by Lender in writing.

3.2.4 Other Obligations . The balance of the Obligations requiring the payment of money, if any, shall be payable by Borrowers to Agent for its benefit and/or the ratable benefit of Lenders as and when provided in this Agreement, the Notes, the Other Agreements or the Security Documents, or on demand, whichever is later.

3.3 Mandatory and Voluntary Prepayments.

3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of Collateral . Except as provided below or in Section 6.4.2 hereof, if Borrower sells any of the Equipment or real Property, or if any of the Collateral is lost or destroyed or taken by condemnation, Borrower shall pay to Agent for the ratable benefit of Lenders, unless otherwise agreed by Required Lenders, as and when received by Borrower and as a mandatory prepayment of the Loans, as herein provided, a sum equal to the net cash proceeds (including insurance payments) received by Borrower from such sale, loss, destruction or condemnation. The applicable prepayment shall be applied first to the installments of principal due under the Term Notes B, pro rata , in the inverse order of their maturities until paid in full, second to the installments of principal due under the Term Notes A, pro rata , in inverse order of maturities until paid in full and third to reduce the outstanding principal balance of the Revolving Credit Loans. To the extent that the Collateral sold, lost, destroyed or condemned consists of Accounts, Inventory or other Property other than Equipment or real Property, the applicable prepayment shall be applied to reduce the outstanding principal balance of the Revolving Credit Loans. Notwithstanding the foregoing, if the proceeds of insurance with respect to any loss or destruction of Equipment, Inventory or real Property are less than $50,000, Agent and Lenders shall apply such proceeds to the outstanding principal balance of the Revolving Credit Loans and shall permit Borrower within 180 days (or such longer period as reasonably consented to by Agent) after the receipt by the Borrower of such proceeds to reborrow such proceeds in accordance with the terms of this Agreement for use in replacing or repairing the damaged or lost Collateral. If such damaged or lost Collateral is not replaced or repaired within such 180 day (or such longer period as reasonably consented to by Agent) period, all such proceeds shall be applied to installments of principal due under the Term Notes A or the Term Notes B in the manner specified in the second sentence of this Section 3.3.1 until payment thereof in full.

3.3.2 Other Mandatory Prepayments . (a) Except as provided below, if Borrower receives any proceeds from any tax refunds, indemnity payments or pension reversions, Borrower shall pay to Agent for the ratable benefit of Lenders, as and when received by Borrower and as a mandatory prepayment of the Loans, a sum equal to the proceeds of such tax refund, indemnity payment or pension reversion so received by Borrower. The foregoing notwithstanding, if Borrower receives any indemnity payment which effectively reimburses Borrower for a cost or expense incurred or to be incurred by Borrower, then the proceeds of such indemnity payment paid over to Agent pursuant to the preceding sentence shall be applied against outstanding Revolving Credit Loans.

(b) Borrower shall make a mandatory prepayment of the Loans in the amount of the net proceeds received by Borrower from any offering or sale of its debt or equity Securities.

(c) Any applicable prepayment made pursuant to Section 3.3.2 (a) or (b) above shall be applied first to the installments of principal due under Term Notes B, pro rata , in inverse order of their maturities until paid in full, second, to the installments of principal due under Term Notes A, pro rata , in inverse order of their maturities until paid in full, and third, to reduce the outstanding principal balance of the Revolving Credit Loans. [The Maximum Revolving Loan shall be permanently reduced by the amount of any such payment(s) of Revolving Credit Loans.]

(d) Any prepayments of the Term Loans, whether voluntary or involuntary, may not be reborrowed.

3.3.3 Voluntary Prepayments . Borrower may voluntarily prepay, without penalty, premium or other charge, other than LIBOR breakage fees or administrative fees, any of the Loans at any time during the Original Term.

3.4 Application of Payments and Collections . All items of payment received by Agent by 12:00 noon, Chicago time, on any Business Day shall be deemed received on that Business Day. All items of

payment received after 12:00 noon, Chicago time, on any Business Day shall be deemed received on the following Business Day. For the purpose of computing interest hereunder, all items of payment received by Agent shall be deemed applied by Agent on an account of the Obligations (subject to final payment of such items) on the first Business Day after receipt of such item in immediately good funds. Borrower irrevocably waives the right to direct the application of any and all payments and collections at any time or times hereafter received by Agent from or on behalf of Borrower, and Borrower does hereby irrevocably agree that Agent shall, after the occurrence and during the continuation of an Event of Default, have the continuing exclusive right to apply and reapply any and all such payments and collections received at any time or times hereafter by Agent or its agent against the Obligations, in such manner as Agent may deem advisable, notwithstanding any entry by Agent upon any of its books and records. If as the result of collections of Accounts as authorized by Section 6.2.6 hereof a credit balance exists in the Loan Account, such credit balance shall not accrue interest in favor of Borrower, but shall be available to Borrower at any time or times for so long as no Default or Event of Default exists. Such credit balance shall not be applied or be deemed to have been applied as a prepayment of the Term Loan A or Term Loans B, except that Agent may, at its option, offset such credit balance against any of the Obligations upon and after the occurrence of an Event of Default.

3.5 All Loans to Constitute One Obligation . The Loans shall constitute one general Obligation of Borrower, and shall be secured by Agent's Lien for its benefit and the ratable benefit of Lenders upon all of the Collateral.

3.6 Loan Account . Agent shall enter all Loans as debits to the Loan Account and shall also record in the Loan Account all payments made by Borrower on any Obligations and all proceeds of Collateral which are finally paid to Agent or any Lender, and may record therein, in accordance with customary accounting practice, other debits and credits, including interest and all charges and expenses properly chargeable to Borrower.

3.7 Statements of Account . Agent will account to Borrower monthly with a statement of Loans, charges and payments made pursuant to this Agreement, and such account rendered by Agent shall be deemed final, binding and conclusive, absent demonstrable error, upon Borrower unless Agent is notified by Borrower in writing to the contrary within 45 days of the date each accounting is mailed to Borrower. Such notice shall only be deemed an objection to those items specifically objected to therein.

4. TERM AND TERMINATION

4.1 Term of Agreement. Subject to Agent's and Lender's right to cease making Loans to Borrower upon or after the occurrence of any Default or Event of Default, this Agreement shall be in effect for a period of four years from the date hereof, through and including May 21, 2004 (the "Original Term"), unless terminated as provided in Section 4.2 hereof.

4.2 Termination.

4.2.1 Termination by Lender. Agent or Required Lenders may terminate this Agreement with notice (or in respect to Events of Default arising under Section 10.1.10 without notice) after the occurrence of an Event of Default resulting in the Obligations being declared due and payable.

4.2.2 Termination by Borrower. Upon at least 10 days prior written notice to Agent, Borrower may, at its option, terminate this Agreement; provided , however , no such termination shall be effective until Borrower have paid all of the Obligations in immediately available funds and all Letters of Credit and LC Guaranties have expired or have been cash collateralized to Agent's satisfaction. Any notice of termination given by Borrower shall be irrevocable unless Required Lenders otherwise agree in writing, and Lenders shall have no obligation to make any Loans or issue or procure any Letters of Credit or LC Guaranties on or after the termination date stated in such notice. Borrower may elect to terminate this Agreement in its entirety only. No section of this Agreement or type of Loan available hereunder may be terminated singly.

4.2.3 Effect of Termination. All of the Obligations shall be immediately due and payable upon the termination date stated in any notice of termination of this Agreement. All undertakings, agreements, covenants, warranties and representations of Borrowers contained in the Loan Documents shall survive any such termination and Agent shall retain its Liens in the Collateral and all of its rights and remedies under the Loan Documents notwithstanding such termination until Borrower has paid the Obligations to Agent and Lenders, in full, in immediately available funds. Notwithstanding the payment in full of the Obligations, Agent shall not be required to terminate its security interests in the Collateral unless, with respect to any loss or damage Agent or any Lender may incur as a result of dishonored checks or other items of payment received by Agent or any Lender from any Borrower or any Account Debtor and applied to the Obligations, Agent shall, at its option, (i) have received a customary written indemnity and release agreement, executed by Borrower and by any Person whose loans or other advances to Borrower are used in whole or in part to satisfy the Obligations, indemnifying Agent and Lenders from any such loss or damage; or (ii) have retained such monetary reserves for such period of time as Agent, in its reasonable discretion, may deem necessary to protect Agent and Lenders from any such loss or damage.

5. SECURITY INTERESTS

5.1 Security Interest in Collateral. To secure the prompt payment and performance to Agent and Lenders of the Obligations, Borrower hereby grants to Agent for its benefit and the ratable benefit of Lenders a continuing Lien upon all of Borrower's assets, including all of the following Property and interests in Property of Borrower, whether now owned or existing or hereafter created, acquired or arising and wheresoever located:

(i) Accounts;

(ii) Inventory;

(iii) Equipment;

(iv) General Intangibles;

(v) Investment Property;

(vi) All monies and other Property of any kind now or at any time or times hereafter in the possession or under the control of Agent or any Lender or a bailee or Affiliate of Agent or any Lender;

(vii) All accessions to, substitutions for and all replacements, products and cash and non-cash proceeds of (i) through (vi) above, including, without limitation, proceeds of and unearned premiums with respect to insurance policies insuring any of the Collateral; and

(viii) All books and records (including, without limitation, customer lists, credit files, computer programs, print-outs, and other computer materials and records) of Borrower pertaining to any of (i) through (vii) above.

Notwithstanding the foregoing, Collateral shall not include: (1) any licenses or permits, the encumbrance of which would violate any law, statute or regulation; or (2) any material contract rights (including, without limitation, any contracts or leases), the encumbrance of which would violate the terms of the agreements establishing such rights; provided that Borrower shall use reasonable good faith efforts to obtain any necessary consent to enable any such contract right to be included within the Collateral.

5.2 Lien Perfection; Further Assurances. Borrower shall execute such UCC financing statements as are required by the Code and such other instruments, assignments or documents as are necessary to perfect Agent's Lien upon any of the Collateral and shall take such other action as may be required to perfect or to continue the perfection of Agent's Lien upon the Collateral. Unless prohibited by applicable law, Borrower hereby authorizes Agent to execute and file any such financing statement on Borrower's behalf. The parties agree that a carbon, photographic or other reproduction of this Agreement shall be sufficient as a financing statement and may be filed in any appropriate office in lieu thereof. At Agent's request, Borrower shall also promptly execute or cause to be executed and shall deliver to Agent any and all documents, instruments and agreements deemed necessary by Agent to give effect to or carry out the terms or intent of the Loan Documents.

5.3 Safekeeping of Collateral. Agent shall not be liable or responsible in any way for the safekeeping of any of the Collateral or for any loss or damage thereto (except for reasonable care in the custody thereof while any Collateral is in Agent's actual possession) or for any diminution in the value thereof, or for any act or default of any warehouseman, carrier, forwarding agency, or other person whomsoever, but the same shall be at Borrower's sole risk.

5.4 Lien on Realty. The due and punctual payment and performance of the Obligations shall also be secured by the Lien created by the Mortgages. If Borrower shall acquire at any time or times hereafter any interest in other real Property (other than leasehold interests in sales offices), Borrower agrees promptly to execute and deliver to Agent, for its benefit and the ratable benefit of Lenders, as additional security and Collateral for the Obligations, deeds of trust, security deeds, mortgages or other collateral assignments reasonably satisfactory in form and substance to Agent and its counsel (herein collectively referred to as "New Mortgages") covering such real Property. The Mortgages and each New Mortgage shall be duly recorded (at Borrower's expense) in each office where such recording is required to constitute a valid Lien on the real Property covered thereby. In respect to each Mortgage and each New Mortgage, Borrower shall deliver to Agent, at Borrower's expense, mortgagee title insurance policies issued by a title insurance company reasonably satisfactory to Agent insuring Agent, as mortgagee; such policies shall be in form and substance reasonably satisfactory to Agent and shall insure a valid first Lien in favor of Agent for its benefit and the ratable benefit of Lenders, on the Property covered thereby, subject only to those exceptions reasonably acceptable to Agent and its counsel. Borrower shall also deliver to Agent such other documents, including, without limitation, ALTA Surveys of the real Property, as Agent and its counsel may reasonably request relating to the real Property subject to any such New Mortgage.

6. COLLATERAL ADMINISTRATION

6.1 General.

6.1.1 Location of Collateral. All Collateral, other than Inventory in transit, Equipment being repaired in the ordinary course of business consistent with past practice at outside locations and motor vehicles, will at all times be kept by Borrower and its Subsidiaries at one or more of the locations set forth in Exhibit B hereto and shall not, without the prior written approval of Agent, be moved therefrom except, prior to an Event of Default and Agent's or Required Lenders' acceleration of the maturity of the Obligations in consequence thereof, for (i) sales of Inventory in the ordinary course of business; and (ii) removals in connection with dispositions of Equipment that are authorized by Section 6.4.2 hereof.

6.1.2 Insurance of Collateral. Borrower shall maintain and pay for insurance upon all Collateral wherever located and with respect to Borrower's business, covering casualty, hazard, public liability and such other risks in such amounts and with such insurance companies as are reasonably satisfactory to Agent. Borrower shall deliver the originals (or reasonable facsimiles thereof) of such policies to Agent with satisfactory lender's loss payable endorsements, naming Agent as loss payee, assignee or additional insured, as appropriate. Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than 30 days prior written notice to Agent in the event of cancellation of the policy for any reason whatsoever and a clause specifying that the interest of Agent shall not be impaired or invalidated by any act or neglect of Borrower or the owner of the Property or by the occupation of the premises for purposes more hazardous than are permitted by said policy. If Borrower fails to provide and pay for such insurance, Agent may, at its option, but shall not be required to, procure the same and charge Borrower therefor. Borrower agrees to deliver to Agent, promptly as rendered, true copies of all reports made in any reporting forms to insurance companies.

6.1.3 Protection of Collateral. All expenses of protecting, storing, warehousing, insuring, handling, maintaining and shipping the Collateral, any and all excise, property, sales, and use taxes imposed by any state, federal, or local authority on any of the Collateral or in respect of the sale thereof shall be borne and paid by Borrower. If Borrower fails to promptly pay any portion thereof when due, Agent may, at its option, but shall not be required to, pay the same and charge Borrower therefor.

6.2 Administration of Accounts.

6.2.1 Records, Schedules and Assignments of Accounts. Borrower shall execute and deliver to Agent a Borrowing Base Certificate in the form attached hereto as Exhibit C on a weekly basis or, if as determined by Agent on a more frequent basis. Borrower shall keep accurate and complete records of its Accounts and all payments and collections thereon and shall submit to Agent on such periodic basis as Agent shall request a sales and collections report for the preceding period, in form satisfactory to Agent. On or before the fifteenth day of each month from and after the date hereof, Borrower shall deliver to Agent, in form acceptable to Agent, a detailed aged trial balance of all Accounts existing as of the last day of the preceding month, specifying the names, addresses, face value, dates of invoices and due dates for each Account Debtor obligated on an Account so listed ("Schedule of Accounts"), and, upon Agent's request therefor, copies of proof of delivery and the original copy of all documents, including, without limitation, repayment histories and present status reports relating to the Accounts so scheduled and such other matters and information relating to the status of then existing Accounts as Agent shall reasonably request. In addition, if Accounts in an aggregate fee amount in excess of $100,000 become ineligible because they fall within one of the specified categories of ineligibility set forth in the definition of Eligible Accounts or otherwise established by Agent, Borrower shall notify Agent of such occurrence on the first Business Day following such occurrence and the Borrowing Base shall be adjusted to reflect such occurrence. If requested by Agent, Borrower shall execute and deliver to Agent formal written assignments of all of its Accounts periodically, which shall include all Accounts that have been created since the date of the last assignment, together with copies of invoices or invoices registers related thereto.

6.2.2 Discounts, Allowances, Disputes. If Borrower grants any discounts, allowances or credits that are not shown on the face of the invoice for the Account involved, Borrower shall report such discounts, allowances or credits, as the case may be, to Agent as part of the next required Schedule of Accounts. If any amounts due and owing in excess of $100,000 are in dispute between Borrower and any Account Debtor, Borrower shall provide Agent with written notice thereof at the time of submission of the next Schedule of Accounts, explaining in detail the reason for the dispute, all claims related thereto and the amount in controversy. Upon and during the

continuation of an Event of Default, Agent shall have the right to settle or adjust all disputes and claims directly with the Account Debtor and to compromise the amount or extend the time for payment of the Accounts upon such terms and conditions as Agent may deem advisable, and to charge the costs and expenses thereof, including attorney's fees, to Borrower.

6.2.3 Taxes. If an Account includes a charge for any tax payable by Borrower to any governmental taxing authority, Agent is authorized, in its sole discretion, to pay the amount thereof to the proper taxing authority for the account of Borrower and to charge Borrower therefor, provided, however that Agent shall not be liable for any taxes to any governmental taxing authority that may be due by Borrower.

6.2.4 Account Verification. Whether or not a Default or an Event of Default has occurred, any of Agent's officers, employees or agents shall have the right, at any time or times hereafter, in the name of Agent, any designee of Agent or Borrower, to verify the validity, amount or any other matter relating to any Accounts by mail, telephone, telegraph or otherwise. Borrower shall cooperate fully with Agent in an effort to facilitate and promptly conclude any such verification process. Agent agrees to conduct any such verification in a commercially reasonable manner.

6.2.5 Maintenance of Dominion Account. Borrower shall maintain a Dominion Account pursuant to a lockbox or other arrangement acceptable to Agent with Bank. Borrower shall issue to any such banks an irrevocable letter of instruction directing such banks to deposit all payments or other remittances received in the lockbox to the Dominion Account for application on account of the Obligations. All funds deposited in the Dominion Account shall immediately become the property of Agent and Borrower shall obtain the agreement by such banks in favor of Agent to waive any offset rights against the funds so deposited. Agent assumes no responsibility for such lockbox arrangement, including, without limitation, any claim of accord and satisfaction or release with respect to deposits accepted by any bank thereunder.

6.2.6 Collection of Accounts, Proceeds of Collateral. To expedite collection, Borrower shall endeavor in the first instance to make collection of its Accounts for Agent. All remittances received by Borrower on account of Accounts, together with the proceeds of any other Collateral, shall be held as Agent's property by Borrower as trustee of an express trust for Agent's benefit and Borrower shall immediately deposit same in kind in the Dominion Account. Agent retains the right at all times after the occurrence of a Default or an Event of Default to notify Account Debtors that Accounts have been assigned to Agent and to collect Accounts directly in its own name and to charge the collection costs and expenses, including attorneys' fees to Borrower.

6.3 Administration of Inventory.

6.3.1 Records and Reports of Inventory. Borrower shall keep accurate and complete records of its Inventory. Borrower shall furnish to Agent Inventory reports in form and detail satisfactory to Agent at such times as Agent may request, but at least weekly, not later than the fifteenth day of such month. Said Inventory reports shall be included within the Borrowing Base Certificates. Borrower shall conduct a physical inventory no less frequently than annually and shall provide to Agent a report based on each such physical inventory promptly thereafter, together with such supporting information as Agent shall reasonably request.

6.3.2 Returns of Inventory. If at any time or times hereafter any Account Debtor returns any Inventory to Borrower the shipment of which generated an Account on which such Account Debtor is obligated in excess of $100,000, Borrower shall immediately notify Agent of the same, specifying the reason for such return and the location, condition and intended disposition of the returned Inventory.

6.4 Administration of Equipment.

6.4.1 Records and Schedules of Equipment. Borrower shall keep accurate records itemizing and describing the kind, type, quality and quantity of its Equipment and all dispositions made in accordance with Section 6.4.2 hereof, and shall furnish Agent with a current schedule containing the foregoing information on at least an annual basis and more often if requested by Agent. Immediately on request therefor by Agent, Borrower shall deliver to Agent any and all evidence of ownership, if any, of any of the Equipment.

6.4.2 Dispositions of Equipment. Borrower will not sell, lease or otherwise dispose of or transfer any of the Equipment or any part thereof without the prior written consent of Required Lenders; provided , however , that the foregoing restriction shall not apply, for so long as no Default or Event of Default exists, to (i) dispositions of Equipment which, in the aggregate during any consecutive twelve-month period, has a fair market value or book value, whichever is less, of $50,000 or less, provided that all proceeds thereof are remitted to Agent for application to the Loans as provided in Section 3.3.1 , or (ii) replacements of Equipment that is substantially worn, damaged or obsolete with Equipment of like kind, function and value or with better or more efficient Equipment, provided that the replacement Equipment shall be acquired not later than 180 days after the disposition of the Equipment that is to be replaced, the replacement Equipment shall be free and clear of Liens other than Permitted Liens that are not Purchase Money Liens, and Borrower shall have given Agent at least 5 days prior written notice of such disposition.

6.5 Payment of Charges. All amounts chargeable to Borrower under Section 6 hereof shall be Obligations secured by all of the Collateral, shall be payable on demand and shall bear interest from the date such advance was made until paid in full at the rate applicable to Revolving Credit Loans from time to time.

7. REPRESENTATIONS AND WARRANTIES

7.1 General Representations and Warranties. To induce Agent and Lenders to enter into this Agreement and to make advances hereunder, Borrower warrants, represents and covenants to Agent and Lenders that:

7.1.1 Organization and Qualification. Each of Borrower and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. Each of Borrower and its Subsidiaries is duly qualified and is authorized to do business and is in good standing as a foreign corporation in each state or jurisdiction listed on Exhibit D hereto and in all other states and jurisdictions where the character of its Properties or the nature of its activities make such qualification necessary in which the failure of Borrower or any of its Subsidiaries to be so qualified would have a material adverse effect on the financial condition, business or Properties of Borrower or any of its Subsidiaries.

7.1.2 Corporate Power and Authority. Each of Borrower and its Subsidiaries is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and each of the other Loan Documents to which it is a party. The execution, delivery and performance of this Agreement and each of the other Loan Documents have been duly authorized by all necessary corporate action and do not and will not (i) require any consent or approval of the shareholders of Borrower or any of its Subsidiaries; (ii) contravene Borrower's or any of its Subsidiaries' charter, articles or certificate of incorporation or by-laws; (iii) violate, or cause Borrower or any of its Subsidiaries to be in default under, any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award in effect having applicability to Borrower or any of its Subsidiaries; (iv) result in a breach of or constitute a default under any material indenture or loan or credit agreement or any other agreement, lease or instrument to which Borrower or any of its Subsidiaries is a party or by which it or its Properties may be bound or

affected; or (v) result in, or require, the creation or imposition of any Lien (other than Permitted Liens) upon or with respect to any of the Properties now owned or hereafter acquired by Borrower or any of its Subsidiaries.

7.1.3 Legally Enforceable Agreement. This Agreement is, and each of the other Loan Documents when delivered under this Agreement will be, a legal, valid and binding obligation of each of Borrower and its Subsidiaries enforceable against it in accordance with its respective terms except as may be provided under applicable bankruptcy, insolvency, reorganization, moratorium, equity or redemption or similar laws affecting creditors' rights generally, and the discretion of the court before which any proceeding thereof may be brought or general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), including the availability of specific equitable remedies.

7.1.4 Capital Structure. Exhibit E hereto states (i) the correct name of each of the Subsidiaries of Borrower, its jurisdiction of incorporation and the percentage of its Voting Stock owned by Borrower, (ii) the name of each of Borrower's corporate or joint venture Affiliates and the nature of the affiliation excluding Affiliates of Code, Hennessy & Simmons, Inc. that are unrelated to Borrower's business or operations, (iii) the number, nature and holder of all outstanding Securities of Borrower and each Subsidiary of Borrower and (iv) the number of authorized, issued and treasury shares of Borrower and each Subsidiary of Borrower. Borrower has good title to all of the shares it purports to own of the stock of each of its Subsidiaries, free and clear in each case of any Lien other than Permitted Liens. All such shares have been duly issued and are fully paid and non-assessable. Except as set forth on Exhibit E , there are no outstanding options to purchase, or any rights or warrants to subscribe for, or any commitments or agreements to issue or sell, or any Securities or obligations convertible into, or any powers of attorney relating to, shares of the capital stock of Borrower or any of its Subsidiaries.

7.1.5 Corporate Names. Neither Borrower nor any of its Subsidiaries has been known as or used any corporate, fictitious or trade names except those listed on Exhibit F hereto. Within the last five years, except as set forth on Exhibit F or in respect to the Acquisition, neither Borrower nor any of its Subsidiaries has been the surviving corporation of a merger or consolidation or acquired all or substantially all of the assets of any Person.

7.1.6 Business Locations; Agent for Process. Each of Borrower's and its Subsidiaries' chief executive office and other places of business are as listed on Exhibit B hereto. During the preceding one-year period, neither Borrower nor any of its Subsidiaries has had an office, place of business or agent for service of process other than as listed on Exhibit B . Except as shown on Exhibit B , no Inventory is stored with a bailee, warehouseman or similar party, nor is any Inventory consigned to any Person.

7.1.7 Title to Properties; Priority of Liens. Each of Borrower and its Subsidiaries has good, indefeasible and marketable title to and fee simple ownership of, or valid and subsisting leasehold interests in, all of its real Property, and good title to all of the Collateral and all of its other Property, in each case, free and clear of all Liens except Permitted Liens. Borrower has paid or discharged all lawful claims in accordance with good business practice which, if unpaid, might become a Lien against any of Borrower's Properties that is not a Permitted Lien. The Liens granted to Lender under Section 5 hereof are first priority Liens, subject only to Permitted Liens.

7.1.8 Accounts. Agent may rely, in determining which Accounts are Eligible Accounts, on all statements and representations made by Borrower with respect to any Account or Accounts. Unless otherwise indicated in writing to Agent, with respect to each Account:

(i) It is genuine and in all respects what it purports to be, and it is not evidenced by a judgment;

(ii) It arises out of a completed, bona fide sale and delivery of goods or rendition of services by Borrower in the ordinary course of its business and in accordance with the terms and conditions of all purchase orders, contracts or other documents relating thereto and forming a part of the contract between Borrower and the Account Debtor;

(iii) It is for a liquidated amount maturing as stated in the duplicate invoice covering such sale or rendition of services, a copy or computer disc or file of which has been furnished or is available to Agent;

(iv) Such Account, and Lender's security interest therein, is not, and will not (by voluntary act or omission of Borrower) be in the future, subject to any offset, Lien, deduction, defense, dispute, counterclaim or any other adverse condition except for disputes resulting in returned goods where the amount in controversy is deemed by Agent to be immaterial, and each such Account is absolutely owing to Borrower and is not contingent in any respect or for any reason;

(v) Borrower has made no agreement with any Account Debtor thereunder for any extension, compromise, settlement or modification of any such Account or any deduction therefrom, except discounts or allowances which are granted by Borrower in the ordinary course of its business for prompt payment and which are reflected in the calculation of the net amount of each respective invoice related thereto and are reflected in the Schedules of Accounts submitted to Agent pursuant to Section 6.2.1 hereof;

(vi) There are no facts, events or occurrences which in any way impair the validity or enforceability of any Accounts or tend to reduce the amount payable thereunder from the face amount of the invoice and statements delivered to Agent with respect thereto;

(vii) To the best of Borrower's knowledge, the Account Debtor thereunder (1) had the capacity to contract at the time any contract or other document giving rise to the Account was executed and (2) such Account Debtor is Solvent; and

(viii) To the best of Borrower's knowledge, there are no proceedings or actions which are threatened or pending against any Account Debtor thereunder which might result in any material adverse change in such Account Debtor's financial condition or the collectibility of such Account.

7.1.9 Equipment. The Equipment is in good operating condition and repair, and all necessary replacements of and repairs thereto shall be made so that the value and operating efficiency of the Equipment shall be maintained and preserved, in all material respects, reasonable wear and tear excepted. Borrower will not permit any of the Equipment to become affixed to any real Property leased to Borrower so that an interest arises therein under the real estate laws of the applicable jurisdiction unless the landlord of such real Property has executed a landlord waiver or leasehold mortgage in favor of and in form acceptable to Agent, and Borrower will not permit any of the Equipment to become an accession to any personal Property other than Equipment that is subject to first priority (except for Permitted Liens) Liens in favor of Agent for its benefit and the ratable benefit of Lenders.

7.1.10 Financial Statements; Fiscal Year. (a) The Consolidated and consolidating balance sheets of Guarantor and such other Persons described therein (including the accounts of Guarantor and all Subsidiaries of Guarantor (including Borrower) for the respective periods during which a Subsidiary relationship existed) as of December 31, 1999 and March 31, 2000, and the related statements of income, changes in stockholder's equity, and changes in financial position for the periods ended on such dates, have been prepared in accordance with GAAP, and present fairly the financial positions of Guarantor, Borrower and such Persons at such dates and the results of

Guarantor's, Borrower's and such Person's operations for such periods. The fiscal year of Guarantor and each of its Subsidiaries (including Borrower) ends on December 31 of each year.

(b) The unaudited statement of assets and liabilities (other than accounts receivable) of the Business as of April 1, 2000, and the related unaudited statement of operations for the fiscal year ended April 1, 2000, have been prepared in accordance with GAAP (other than the absence of footnotes), and present fairly, in all material respects, the assets and liabilities of the Business (on a stand-alone basis) at such date and the results of the Business' operations for such period (on a stand-alone basis), except as set forth on Schedule 7.1.10(b). Since December 31, 1999 there has been no material change in the condition, financial or otherwise, of Borrower or the Business and no change in the aggregate value of equipment and real property of Borrower or the Business, except changes in the ordinary course of business, none of which individually or in the aggregate could reasonably be expected to have a material adverse effect on Borrower or the Business assets or prospects of the Business.

7.1.11 Full Disclosure. The financial statements referred to in Section 7.1.10 hereof do not, nor does this Agreement or any other written statement of Borrower to Agent, contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein or herein not misleading. As of the Closing Date, there is no fact which Borrower has failed to disclose to Agent in writing which materially affects adversely or so far as Borrower can now reasonably foresee, will materially affect adversely the Properties, business, prospects, profits or condition (financial or otherwise) of Borrower or any of its Subsidiaries or the ability of Borrower or its Subsidiaries to perform this Agreement or the other Loan Documents.

7.1.12 Solvent Financial Condition. Each of Borrower and its Subsidiaries is now and, after giving effect to the Loans to be made, at all times will be, Solvent. The Acquisition and other transactions contemplated hereby do not constitute a "fraudulent conveyance" or other voidable transactions under any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally.

7.1.13 Surety Obligations. Neither Borrower nor any of its Subsidiaries is obligated as surety or indemnitor under any surety or similar bond or other contract issued or entered into any agreement to assure payment, performance or completion of performance of any undertaking or obligation of any Person.

7.1.14 Taxes. Borrower's federal tax identification number is 74-2400498. The federal tax identification number of each of Borrower's Subsidiaries is shown on Exhibit G hereto. Borrower and each of its Subsidiaries has filed all federal, state and local tax returns and other reports it is required by law to file and has paid, or made provision for the payment of, all taxes, assessments, fees, levies and other governmental charges upon it, its income and Properties as and when such taxes, assessments, fees, levies and charges that are due and payable, unless and to the extent any thereof are being actively contested in good faith and by appropriate proceedings and Borrower maintains reasonable reserves on its books therefor. The provision for taxes on the books of Borrower and its Subsidiaries are adequate for all years not closed by applicable statutes, and for its current fiscal year.

7.1.15 Brokers. There are no claims for brokerage commissions, finder's fees or investment banking fees in connection with the transactions contemplated by this Agreement, except for the fee payable to Code, Hennessy & Simmons, Inc.

7.1.16 Patents, Trademarks, Copyrights and Licenses. Each of Borrower and its Subsidiaries owns or possesses all the patents, trademarks, service marks, trade names, copyrights and licenses necessary for the present and planned future conduct of its business without any known conflict

with the rights of others. All such patents, trademarks, service marks, trade names, registered copyrights and licenses are listed on Exhibit H hereto.

7.1.17 Governmental Consents. Each of Borrower and its Subsidiaries has, and is in good standing with respect to, all governmental consents, approvals, licenses, authorizations, permits, certificates, inspections and franchises necessary to continue to conduct its business as heretofore or proposed to be conducted by it and to own or lease and operate its Properties as now owned or leased by it.

7.1.18 Compliance with Laws. Each of Borrower and its Subsidiaries has duly complied with and its Properties, business operations and leaseholds are in compliance with, the provisions of all federal, state and local laws, rules and regulations applicable to Borrower or such Subsidiary, as applicable, its Properties or the conduct of its business except where the failure to so comply would not reasonably be expected to have a material adverse effect on Borrower's business, assets or prospects, and there have been no citations, notices or orders of noncompliance issued to Borrower or any of its Subsidiaries under any such law, rule or regulation, which in any case would reasonably be expected to have a material adverse effect on Borrower's business, assets or prospects. Each of Borrower and its Subsidiaries has established and maintains an adequate monitoring system to insure that it remains in compliance with all federal, state and local laws, rules and regulations applicable to it. No Inventory has been produced in violation of the Fair Labor Standards Act (29 U.S.C. §201 et seq .) as amended.

7.1.19 Restrictions. To the best of Borrower's knowledge, neither Borrower nor any of its Subsidiaries is a party or subject to any contract, agreement, or charter or other corporate restriction, which materially and adversely affects its business or the use or ownership of any of its Properties. Neither Borrower nor any of its Subsidiaries is a party or subject to any contract or agreement which restricts its right or ability to incur Indebtedness, other than as set forth on Exhibit I hereto, none of which prohibit the execution of or compliance with this Agreement or the other Loan Documents by Borrower or any of its Subsidiaries, as applicable.

7.1.20 Litigation. Except as set forth on Exhibit J hereto, there are no actions, suits, proceedings or investigations pending, or to the knowledge of Borrower, threatened, against or affecting Borrower or any of its Subsidiaries, or the business, operations, Properties, prospects, profits or condition of Borrower or any of its Subsidiaries, which could reasonably be expected to have a material adverse effect on Borrower's business, assets or prospects. Neither Borrower nor any of its Subsidiaries is in default with respect to any order, writ, injunction, judgment, decree or rule of any court, governmental authority or arbitration board or tribunal, which default could reasonably be expected to have a material adverse effect on Borrower's business, assets or prospects.

7.1.21 No Defaults. No event has occurred which would constitute a Default or an Event of Default. Neither Borrower nor any of its Subsidiaries is in default, and no event has occurred and no condition exists which constitutes, or which with the passage of time or the giving of notice or both would constitute, a default in the payment of any Indebtedness to any Person for Money Borrowed having a principal amount of $150,000 or more.

7.1.22 Leases. Exhibit K hereto is a complete listing of all capitalized leases of Borrower and its Subsidiaries and Exhibit L hereto is a complete listing of all operating leases of Borrower and its Subsidiaries. Each of Borrower and its Subsidiaries is in full compliance with all of the terms of each of its respective capitalized and operating leases, except where the failure to so comply would not reasonably be expected to have a material adverse effect on Borrower's business, assets or prospects.

7.1.23 Pension Plans. Except as disclosed on Exhibit M hereto, neither Borrower nor any of its Subsidiaries has any Plan. Borrower and each of its Subsidiaries is in full compliance, in all material respects, with the requirements of ERISA and the regulations promulgated thereunder with respect to each Plan. No fact or situation that could result in a material adverse change in the financial condition of Borrower or any of its Subsidiaries exists in connection with any Plan. Neither Borrower nor any of its Subsidiaries has any material withdrawal liability in connection with a Multiemployer Plan.

7.1.24 Trade Relations. There exists no actual or threatened termination, cancellation or limitation of, or any modification or change in, the business relationship between Borrower or any of its Subsidiaries and any customer or any group of customers whose purchases individually or in the aggregate are material to the business of Borrower or any of its Subsidiaries, or with any material supplier, and there exists no present condition or state of facts or circumstances which would materially affect adversely Borrower or any of its Subsidiaries or prevent Borrower or any of its Subsidiaries from conducting such business after the consummation of the transaction contemplated by this Agreement in substantially the same manner in which it has heretofore been conducted.

7.1.25 Labor Relations. Except as described on Exhibit N hereto, neither Borrower nor any of its Subsidiaries is a party to any collective bargaining agreement. There are no grievances, disputes or controversies with any union or any other organization of Borrower's or any of its Subsidiaries' employees, or threats of strikes, work stoppages or any asserted pending demands for collective bargaining by any union or organization which, in any case, would reasonably be expected to have a material adverse affect on Borrower's business, assets or prospects.

7.2 Continuous Nature of Representations and Warranties . Each representation and warranty contained in this Agreement and the other Loan Documents, unless made solely as of a specific date, shall be continuous in nature and shall remain accurate, complete and not misleading at all times during the term of this Agreement, except for changes in the nature of Borrower's or its Subsidiaries' business or operations that would render the information in any Exhibit attached hereto either inaccurate, incomplete or misleading, so long as Agent has consented to such changes or such changes are expressly permitted by this Agreement or such changes could not reasonably be expected to have a material adverse effect on Borrower's business, assets or prospects. Further, Borrower shall have the right to amend and update the Exhibits attached hereto so long as any such amendment or modification does not disclose any fact or circumstance that would reasonably be expected to have a material adverse effect on Borrower's business, assets or prospects.

7.3 Survival of Representations and Warranties . All representations and warranties of Borrower contained in this Agreement or any of the other Loan Documents shall survive the execution, delivery and acceptance thereof by Agent and the parties thereto and the closing of the transactions described therein or related thereto.

8. COVENANTS AND CONTINUING AGREEMENTS

8.1 Affirmative Covenants . During the term of this Agreement, and thereafter for so long as there are any Obligations owing to Agent or any Lender, Borrower covenants that, unless otherwise consented to by Required Lenders in writing, it shall:

8.1.1 Visits and Inspections . Permit representatives of Agent or any Lender, from time to time, as often as may be reasonably requested, but only during normal business hours, to visit and inspect the Properties of Borrower and each of its Subsidiaries, inspect, audit and make extracts from its books and records, and discuss with its officers, its employees and its independent accountants, Borrower's and each of its Subsidiaries' business, assets, liabilities, financial condition, business prospects and results of operations. So long as no Default or Event of Default has

occurred and is continuing, Agent and Lenders agree to give Borrower reasonable notice of any such visit or inspection. Cooperate with Agent so that Agent is able to complete an audit and appraisal of the Collateral not later than sixty days after the Closing Date.

8.1.2 Notices . Promptly notify Agent in writing of the occurrence of any event or the existence of any fact which renders any representation or warranty in this Agreement or any of the other Loan Documents inaccurate, incomplete or misleading.

8.1.3 Financial Statements . Keep, and cause each Subsidiary to keep, adequate records and books of account with respect to its business activities in which proper entries are made in accordance with good business practice and, to the extent applicable, GAAP reflecting all its financial transactions; and cause to be prepared and furnished to Agent and Lenders the following (all to be prepared in accordance with GAAP applied on a consistent basis, unless Guarantor's certified public accountants concur in any change therein and such change is disclosed to Agent and Lenders and is consistent with GAAP):

(i) not later than 120 days after the close of each fiscal year of Guarantor, unqualified audited (in respect to the Consolidated financial statements only) financial statements of Guarantor and its Subsidiaries (including Borrower) as of the end of such year, on a Consolidated and consolidating basis, certified by a firm of independent certified (in respect to the Consolidated financial statements only) public accountants of recognized standing selected by Guarantor but acceptable to Agent (except for a qualification for a change in accounting principles with which the accountant concurs);

(ii) not later than 30 days after the end of each month hereafter, including the last month of Guarantor's fiscal year, unaudited interim financial statements of Guarantor and its Subsidiaries (including Borrower) as of the end of such month and of the portion of Borrower's financial year then elapsed, on a Consolidated and consolidating basis, certified by the principal financial officer of Guarantor as prepared in accordance with GAAP and fairly presenting the Consolidated financial position and results of operations of Guarantor and its Subsidiaries (including Borrower) for such month and period subject only to changes from audit and year-end adjustments and except that such statements need not contain notes;

(iii) promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports which Borrower or Guarantor has made available to its shareholders and copies of any regular, periodic and special reports or registration statements which Borrower files with the Securities and Exchange Commission or any governmental authority which may be substituted therefor, or any national securities exchange;

(iv) promptly after the filing thereof, copies of any annual report to be filed with ERISA in connection with each Plan; and

(v) such other data and information (financial and otherwise) as Agent, from time to time, may reasonably request, bearing upon or related to the Collateral or Guarantor's, Borrower's and each of their Subsidiaries' financial condition or results of operations.

Concurrently with the delivery of the financial statements described in clause (i) of this Section 8.1.3, Borrower shall forward to Agent a copy of the accountants' letter to Borrower's management that is prepared in connection with such financial statements and also shall cause to be prepared and shall furnish to Agent a certificate of the aforesaid certified public accountants certifying to Agent that, based upon their examination of the financial statements of Borrower and its Subsidiaries performed in connection with their examination of said financial statements, they, as of the date of such financial statements, are not aware of any Default or Event of Default in respect to the covenants contained in Section 8.2.8 or 8.3, or, if they are aware of such Default or Event of Default, specifying the nature thereof. Concurrently with the delivery of the financial statements described in

clauses (i) and (ii) of this Section 8.1.3, or more frequently if requested by Agent or Required Lenders, Borrower shall cause to be prepared and furnished to Agent a Compliance Certificate in the form of Exhibit O hereto executed on behalf of Borrower by the Chief Financial Officer of Borrower.

Borrower authorizes Agent or its designated representatives to communicate directly with its independent certified public accountants and authorizes those accountants to disclose to Agent any and all financial statements and other supporting financial documents and schedules. At or before the initial Closing Date, Borrower shall deliver a letter addressed to such accountants instructing them to comply with the provisions of this Section 8.1.3. Further within five (5) days after the earlier of the last day of each fiscal year of Borrower and the date Borrower engaged independent certified public accountants to audit Borrower's financial statements, Borrower shall deliver to such independent certified public accountants a letter from Borrower addressed to such independent certified public accountants indicating that it is a primary intention of Borrower in engaging such accountants that Agent relies upon such financial statements of Borrower and its Subsidiaries.

8.1.4 Landlord and Storage Agreements . Provide Agent with copies of all agreements between Borrower or any of its Subsidiaries and any landlord or warehouseman which owns any premises at which any Inventory may, from time to time, be kept. In respect to any lease entered into after the Closing Date (other than leases for sales offices) or leases entered into by Borrower prior to the closing of the Acquisition, Borrower shall provide Agent with landlord waivers or bailee letters with respect to such leased premises. Such landlord waivers or bailee letters shall be in a form supplied by Agent to Borrower with such reasonable revisions as are customarily accepted by Agent or by similar financial institutions in similar financial transactions.

8.1.5 Projections . No later than the first day of each fiscal year of Borrower, deliver to Agent and Lenders Projections of Borrower for the forthcoming 3 years, year by year, and for the forthcoming fiscal year, month by month.

8.2 Negative Covenants . During the term of this Agreement, and thereafter for so long as there are any Obligations to Lender, Borrower covenants that, unless Required Lenders has first consented thereto in writing, it will not:

8.2.1 Mergers; Consolidations; Acquisitions . Except in respect to the Acquisition, merge or consolidate, or permit any Subsidiary of Borrower to merge or consolidate, with any Person; nor acquire, nor permit any of its Subsidiaries to acquire, all or any substantial part of the Properties of any Person.

8.2.2 Loans . Make, or permit any Subsidiary of Borrower to make, any loans or other advances of money (other than for salary, travel advances, advances against commissions and other similar advances in the ordinary course of business) to any Person.

8.2.3 Total Indebtedness . Create, incur, assume, or suffer to exist, or permit any Subsidiary of Borrower to create, incur or suffer to exist, any Indebtedness, except:

(i) Obligations owing to Agent and Lenders;

(ii) the Seller Subordinated Debt;

(iii) Indebtedness of any Subsidiary of Borrower to Borrower;

(iv) accounts payable to trade creditors and current operating expenses (other than for Money Borrowed) which are not aged more than 120 days from billing date or more than 60 days from the due date, in each case incurred in the ordinary course of business and paid within such time period, unless the same are being actively contested in good faith and by appropriate and lawful proceedings; and Borrower or such Subsidiary shall have set aside such

reserves, if any, with respect thereto as are required by GAAP and deemed adequate by Borrower or such Subsidiary and its independent accountants;

(v) Obligations to pay Rentals permitted by Section 8.2.13;

(vi) Permitted Purchase Money Indebtedness;

(vii) contingent liabilities arising out of endorsements of checks and other negotiable instruments for deposit or collection in the ordinary course of business;

(viii) Capital Lease Obligations to the extent permitted by Section 8.2.8 in an aggregate principal amount of not more than $750,000;

(ix) Indebtedness in respect to deferred taxes;

(x) Indebtedness relating to compensation owed to Borrower's employees for services rendered in the ordinary course of business;

(xi) all unfunded pension and other employee benefit plan obligations and liabilities but only to the extent they are permitted to remain unfunded under applicable law;

(xii) insurance reserves created in the ordinary course of business; and

(xiii) Indebtedness not included in paragraphs (i) through (xii) above which does not exceed at any time, in the aggregate, the sum of $500,000.

8.2.4 Affiliate Transactions . Except as disclosed on Schedule 8.2.2 in respect to the Management Agreement with Code Hennessy & Simmons, Inc. and the closing fee payable to Code, Hennessy & Simmon, Inc. in connection with the transactions contemplated hereby, enter into, or be a party to, or permit any Subsidiary of Borrower to enter into or be a party to, any transaction with any Affiliate of Borrower or stockholder, except in the ordinary course of and pursuant to the reasonable requirements of Borrower's or such Subsidiary's business and upon fair and reasonable terms which are fully disclosed to Agent and are no less favorable to Borrower than would obtain in a comparable arm's length transaction with a Person not an Affiliate or stockholder of Borrower or such Subsidiary.

8.2.5 Limitation on Liens . Create or suffer to exist, or permit any Subsidiary of Borrower to create or suffer to exist, any Lien upon any of its Property, income or profits, whether now owned or hereafter acquired, except:

(i) Liens at any time granted in favor of Agent for its benefit and the ratable benefit of Lenders;

(ii) Liens for taxes (excluding any Lien imposed pursuant to any of the provisions of ERISA) not yet due, or being contested in the manner described in Section 7.1.14 hereto, but only if in Agent's judgment such Lien does not adversely affect Agent's rights or the priority of Agent's Lien in the Collateral;

(iii) Liens arising in the ordinary course of Borrower's business by operation of law or regulation, but only if payment in respect of any such Lien is not at the time required and such Liens do not, in the aggregate, materially detract from the value of the Property of Borrower or materially impair the use thereof in the operation of Borrower's business;

(iv) Purchase Money Liens securing Permitted Purchase Money Indebtedness;

(v) Liens securing Indebtedness of one of Borrower's Subsidiaries to Borrower or another such Subsidiary;

(vi) Liens securing Capital Lease Obligations to the extent the underlying Capital Lease Obligation is permitted by the terms of this Agreement;

(vii) such other Liens as appear on Exhibit P hereto; and

(viii) such other Liens as Required Lenders may hereafter approve in writing.

8.2.6 Changes Related to Guarantor Subordinated Debt and Seller Subordinated Debt . Change or amend or permit to be changed or to be amended the terms of the Guarantor Subordinated Debt or Seller Subordinated Debt if the effect of such amendment is to: (a) increase the interest rate on such Indebtedness; (b) change the dates upon which payments of principal or interest are due on such Indebtedness; (c) change any event of default or add any covenant with respect to such Indebtedness; (d) change the payment provisions of such Indebtedness; (e) change the subordination provisions thereof; or (f) change or amend any other term if such change or amendment would materially increase the obligations of the obligor or confer additional material rights on the holder of such Indebtedness in a manner adverse to Borrower, any of its Subsidiaries, Agent or any Lender.

8.2.7 Distributions . Declare or make, or permit any Subsidiary of Borrower to declare or make, any Distributions, except that: (a) Subsidiaries of Borrower may make Distributions to Borrower with respect to their common Stock, (b) Borrower may pay dividends to Guarantor in an amount sufficient to maintain the corporate existence of Guarantor, to pay income taxes and to pay the reasonable out-of-pocket expenses of Guarantor and audit fees and expenses, not to exceed $100,000 per annum in the aggregate; (c) Borrower may pay dividends to Guarantor for further distribution to its stockholders in an amount not to exceed the lesser of (x) income taxes on phantom income incurred on the issuance of payment-in-kind notes with respect to the Guarantor Subordinated Debt or (y) $125,000 per year; (d) dividends to Guarantor of up to $100,000 in each Fiscal Year to repurchase the capital stock of employees who die or terminate their employment with Borrower; and (e) Borrower may pay management fees to Code, Hennessy & Simmons, Inc. in an amount not to exceed $500,000 per annum so long as no Event of Default under Section 10.1.1 shall have occurred and be continuing or so long as any other Event of Default shall have occurred and be continuing for sixty (60) days or more. If an Event of Default shall have occurred and be continuing, such management fees shall be accrued and may be paid when such Event of Default is cured or waived.

8.2.8 Capital Expenditures . Make Capital Expenditures (including, without limitation, by way of capitalized leases) which, in the aggregate, as to Borrower and its Subsidiaries, exceed during any fiscal year of Borrower the amount set forth opposite such fiscal year in the following schedule:

Fiscal Year Ending		Permitted Capital Expenditures
Closing Date to December 31, 2000		$	450,000
December 31, 2001, 2002, 2003 and 2004		$	750,000

8.2.9 Disposition of Assets . Sell, lease or otherwise dispose of any of, or permit any Subsidiary of Borrower to sell, lease or otherwise dispose any of, its Properties, including any disposition of Property as part of a sale and leaseback transaction, to or in favor of any Person, except (i) sales of Inventory in the ordinary course of business for so long as no Event of Default exists hereunder, (ii) a transfer of Property to Borrower by a Subsidiary of Borrower or (iii) dispositions expressly authorized by this Agreement, including dispositions of unneeded Property with a non-material value.

8.2.10 Stock of Subsidiaries . Permit any of its Subsidiaries to issue any additional shares of its capital stock except director's qualifying shares.

8.2.11 Bill-and-Hold Sales, Etc. Make a sale to any customer on a bill-and-hold, guaranteed sale, sale and return, sale on approval or consignment basis, or any sale on a repurchase or return basis.

8.2.12 Restricted Investment . Make or have, or permit any Subsidiary of Borrower to make or have, any Restricted Investment.

8.2.13 Leases . Become, or permit any of its Subsidiaries to become, a lessee under any operating lease (other than a lease under which Borrower or any of its Subsidiaries is lessor) of Property if the aggregate Rentals payable during any current or future period of 12 consecutive months under the lease in question and all other leases under which Borrower or any of its Subsidiaries is then lessee would exceed Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000). The term "Rentals" means, as of the date of determination, all payments which the lessee is required to make by the terms of any lease.

8.2.14 Tax Consolidation . File or consent to the filing of any consolidated income tax return with any Person other than Guarantor or Subsidiary of Borrower.

8.3 Specific Financial Covenants . During the term of this Agreement, and thereafter for so long as there are any Obligations to Agent and/or Lenders, Borrower covenants that they will be in full compliance with each of the financial covenants set forth on Exhibit Q hereto. If GAAP changes from the basis used in preparing the audited financial statements delivered to Agent by Borrower on or before the Closing Date, Borrower will provide Agent with certificates demonstrating compliance with such financial covenants and will include, at the election of Borrower or upon the request of Agent, calculations setting forth the adjustments necessary to demonstrate how Borrower is in compliance with such financial covenants based upon GAAP as in effect on the Closing Date.

9. CONDITIONS PRECEDENT

Notwithstanding any other provision of this Agreement or any of the other Loan Documents, and without affecting in any manner the rights of Agent or Lenders under the other sections of this Agreement, neither any Lender nor Agent shall not be required to make the Loans contemplated to be made on the Closing Date under this Agreement unless and until each of the following conditions has been and continues to be satisfied:

9.1 Documentation . Agent shall have received, in form and substance satisfactory to Agent and its counsel, a duly executed copy of this Agreement and the other Loan Documents, together with such additional documents, instruments and certificates as Agent and its counsel shall reasonably require in connection therewith, including all documents, instruments, agreements and schedules listed in the Schedule of Documents attached hereto and incorporated herein as Exhibit R , all in form and substance satisfactory to Agent and its counsel.

9.2 No Default . No Default or Event of Default shall exist.

9.3 Other Loan Documents . Each of the conditions precedent set forth in the other Loan Documents shall have been satisfied or waived by Required Lenders in their sole discretion.

9.4 Availability . Agent shall have determined that immediately after Lenders have made the initial Loans contemplated hereby, and paid all closing costs incurred in connection with the transactions contemplated hereby, Availability shall not be less than Five Million Dollars ($5,000,000), after giving effect to the reserve(s) created pursuant to Section 1.1.1.

9.5 No Litigation . No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or legislative body to enjoin, restrain or prohibit, or to obtain damages in respect of, or which is related to or arises out of this Agreement or the consummation of the transactions contemplated hereby.

9.6 Acquisition . The Acquisition shall have been consummated, or will be consummated simultaneously with the closing of the transactions contemplated hereby, substantially in accordance with the terms of the Purchase Documents, the terms and conditions of which are acceptable to Agent. The Purchase Documents shall provide for at least $3,000,000 of non-competition payments, which payments shall be made not more often than annually, commencing no earlier than May 1, 2001, and in amounts of not more than $1,000,000 per annum. The Acquisition shall have been consummated in compliance with all applicable bulk sales laws.

9.7 Environmental Surveys . The results of the Phase I Environmental Survey or VISTA searches as applicable (and, if applicable Phase II Environmental Surveys) obtained in respect to the real Property to be acquired by Borrower pursuant to the Acquisition shall be acceptable to Agent.

9.8 Equity . Agent shall have received evidence satisfactory to it that not less than Three Million Dollars ($3,000,000) in cash has been contributed as equity to the capital of Borrower.

9.9 Other Lender Commitments . The aggregate amount of Revolving Credit Commitments and Term Loan A Commitments and Term Loan B Commitments of Lenders other than FCC shall equal or exceed Twenty Million Dollars ($20,000,000). There shall have occurred no material adverse change in the loan syndication or financial or capital markets from the conditions in effect on April 14, 2000.

10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT

10.1 Events of Default . The occurrence of one or more of the following events shall constitute an "Event of Default":

10.1.1 Payment of Interest, Principal and Fees . Borrower shall fail to pay any interest or principal due in respect to outstanding Revolving Credit Loans, Term Loan A, Term Loans B or any fees payable in respect to unused Revolving Credit Loans or outstanding Letters of Credit or LC Guaranties on the due date thereof (whether due at stated maturity, on demand, upon acceleration or otherwise) and such failure shall continue for five (5) days after the applicable due date. Borrower acknowledges that, to the extent of Availability, such interest, principal and fees shall be paid by advances of Revolving Credit Loans pursuant to Section 3.1.1.

10.1.2 Payment of Other Obligations . Borrower shall fail to pay any of the Obligations (other than interest and principal due in respect to outstanding Revolving Credit Loans, Term Loan A, Term Loans B or any fees payable in respect to unused Revolving Credit Loans or outstanding Letters of Credit or LC Guaranties) on or within ten (10) days after the due date for such Obligation (whether due at stated maturity, on demand, upon acceleration or otherwise).

10.1.3 Misrepresentations . Any representation, warranty or other statement made or furnished to Agent or Lenders by or on behalf of Borrower or any Subsidiary of Borrower in this Agreement, any of the other Loan Documents or any instrument, certificate or financial statement furnished in compliance with or in reference thereto proves to have been false or misleading in any material respect when made or furnished or when reaffirmed pursuant to Section 7.2 hereof.

10.1.4 Breach of Specific Covenants . Borrower shall fail or neglect to perform, keep or observe any covenant contained in Sections 5.2 (Lien Protection; Further Assurances), 5.4 (Lien on Realty), 6.1.1 (Location of Collateral), 6.2 (Administration of Accounts), 8.1.1 (Visits and Inspections), 8.1.3 (Financial Statements), 8.2 (Negative Covenants) or 8.3 (Specific Financial Covenants) hereof on the date that Borrower is required to perform, keep or observe such covenant.

10.1.5 Breach of Other Covenants . Borrower shall fail or neglect to perform, keep or observe any covenant contained in this Agreement (other than a covenant which is dealt with specifically elsewhere in Section 10.1 hereof) and the breach of such other covenant is not cured to Required Lenders' satisfaction within 15 days after the sooner to occur of Borrower's receipt of

notice of such breach from Agent or the date on which such failure or neglect first becomes known to any officer of Borrower.

10.1.6 Default Under Security Documents/Other Agreements . Any event of default shall occur under, or Borrower shall default in the performance or observance of any term, covenant, condition or agreement contained in, any of the Security Documents or the Other Agreements and such default shall continue beyond any applicable grace period.

10.1.7 Other Defaults . There shall occur any default or event of default on the part of Borrower under any agreement, document or instrument to which Borrower is a party or by which Borrower or any of its Property is bound, creating or relating to any Indebtedness (other than the Obligations) with an aggregate principal amount of $100,000 or more if the payment or maturity of such Indebtedness is accelerated in consequence of such event of default or demand for payment of such Indebtedness is made.

10.1.8 Uninsured Losses . Any loss, theft, damage or destruction of any of the Collateral in an amount in excess of $50,000 or more not fully covered (subject to such deductibles as Agent shall have permitted) by insurance.

10.1.9 Adverse Changes . There shall occur any material adverse change in the financial condition or business prospects of Borrower.

10.1.10 Insolvency and Related Proceedings . Borrower shall cease to be Solvent or shall suffer the appointment of a receiver, trustee, custodian or similar fiduciary, or shall make an assignment for the benefit of creditors, or any petition for an order for relief shall be filed by or against Borrower under the Bankruptcy Code (if against Borrower, the continuation of such proceeding for more than 60 days), or Borrower shall make any offer of settlement, extension or composition to its unsecured creditors generally.

10.1.11 Business Disruption: Condemnation . There shall occur a cessation of a substantial part of the business of Borrower or any Subsidiary of Borrower for a period which significantly affects Borrower's capacity to continue its business, on a profitable basis; or Borrower or any Subsidiary of Borrower shall suffer the loss or revocation of any license or permit now held or hereafter acquired by Borrower which is necessary to the continued or lawful operation of its business; or Borrower shall be enjoined, restrained or in any way prevented by court, governmental or administrative order from conducting all or any material part of its business affairs; or any material lease or agreement pursuant to which Borrower leases, uses or occupies any Property shall be canceled or terminated prior to the expiration of its stated term; or any material part of the Collateral shall be taken through condemnation or the value of such Property shall be impaired through condemnation, where, in each case, such event is reasonably expected to have a material adverse effect on Borrower's business, assets or prospects.

10.1.12 Change of Ownership and Liens on Stock . Guarantor shall cease, on a collective basis, to own and control, beneficially and of record, all of the issued and outstanding capital Stock of Borrower. Code, Hennessy & Simmons, Inc. shall cease, on a collective basis, to own and control, directly or indirectly, at least fifty-one percent (51%) of the issued and outstanding capital stock of Guarantor.

10.1.13 ERISA . A Reportable Event shall occur which Agent, in its sole discretion, shall determine in good faith constitutes grounds for the termination by the Pension Benefit Guaranty Corporation of any Plan or for the appointment by the appropriate United States district court of a trustee for any Plan, or if any Plan shall be terminated or any such trustee shall be requested or appointed, or if Borrower or any Subsidiary of Borrower is in "default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting from Borrower's or such Subsidiary's complete or partial withdrawal from such Plan.

10.1.14 Challenge to Agreement . Borrower, any Subsidiary of Borrower, or any Affiliate of any of them, shall challenge or contest in any action, suit or proceeding the validity or enforceability of this Agreement, or any of the other Loan Documents, the legality or enforceability of any of the Obligations or the perfection or priority of any Lien granted to Lender.

10.1.15 Judgments . Any money judgments, writ of attachment or similar processes are issued or rendered against Borrower or any Subsidiary of Borrower or any of their respective Property in an amount of $100,000 or more for any single judgment, attachment or process or $250,000 or more for all such judgments, attachments or processes in the aggregate, in each case in excess of any applicable insurance with respect to which the insurer has admitted liability and which judgment, attachment or process is not stayed, released or discharged within 30 days. Any non-money judgment (or any non-monetary portion of a judgment) shall be issued or rendered against Borrower and such judgment is reasonably expected to have a material adverse effect on Borrower's business, assets or prospects and such judgment is not stayed, released or discharged within 30 days.

10.2 Acceleration of the Obligations . Upon the occurrence of an Event of Default and during the continuance thereof, Agent may and shall, at the request of Required Lenders, (i) without notice, terminate this facility with respect to further Revolving Credit Loans, Term Loans B and Letters of Credit and LC Guaranties, whereupon no Revolving Credit Loans or Term Loans B may be made hereunder and no Letters of Credit or LC Guaranties may be issued hereunder, and/or (ii) with notice, declare all Obligations to be forthwith due and payable, whereupon all Obligations shall become and be due and payable, without presentment, demand, protest or further notice of any kind, all of which are expressly waived by Borrowers; provided , however , that upon the occurrence of an Event of Default specified in Section 10.1.10 hereof, the Obligations shall become due and payable without declaration, notice or demand by Agent.

Agent shall take such action with respect to any Default or Event of Default as shall be directed by the Required Lenders; provided that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable and in the best interests of Agent and Lenders taken as a whole, including any action (or the failure to act) pursuant to the Loan Documents.

10.3 Other Remedies. Upon and after the occurrence of an Event of Default, Agent and/or Lenders shall have and may exercise from time to time the following rights and remedies:

10.3.1 All of the rights and remedies of a secured party under the Code or under other applicable law, and all other legal and equitable rights to which Agent or Lenders may be entitled, all of which rights and remedies shall be cumulative and shall be in addition to any other rights or remedies contained in this Agreement or any of the other Loan Documents, and none of which shall be exclusive.

10.3.2 The right to take immediate possession of the Collateral, and to (i) require Borrower to assemble the Collateral, at Borrower's expense, and make it available to Agent at a place designated by Agent which is reasonably convenient to both parties, and (ii) enter any premises where any of the Collateral shall be located and to keep and store the Collateral on said premises until sold (and if said premises be the Property of Borrower, Borrower agrees not to charge Agent for storage thereof).

10.3.3 The right to sell or otherwise dispose of all or any Collateral in its then condition, or after any further manufacturing or processing thereof, at public or private sale or sales, with such notice as may be required by law, in lots or in bulk, for cash or on credit, all as Agent, in its sole

discretion, may deem advisable. Borrower agrees that 10 days written notice to Borrower of any public or private sale or other disposition of Collateral shall be reasonable notice thereof, and such sale shall be at such locations as Agent may designate in said notice. Agent shall have the right to conduct such sales on Borrower's premises, without charge therefor, and such sales may be adjourned from time to time in accordance with applicable law. Agent shall have the right to sell, lease or otherwise dispose of the Collateral, or any part thereof, for cash, credit or any combination thereof, and Agent and Lenders may purchase all or any part of the Collateral at public or, if permitted by law, private sale and, in lieu of actual payment of such purchase price, may set off the amount of such price against the Obligations. The proceeds realized from the sale of any Collateral may be applied, after allowing 2 Business Days for collection, first to the costs, expenses and attorneys' fees incurred by Agent in collecting the Obligations, in enforcing the rights of Agent under the Loan Documents and in collecting, retaking, completing, protecting, removing, storing, advertising for sale, selling and delivering any Collateral, second to the interest due upon any of the Obligations; and third, to the principal of the Obligations. If any deficiency shall arise, Borrower shall remain liable to Agent and Lenders therefor.

10.3.4 Agent is hereby granted a license or other right to use, without charge, Borrower's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks and advertising matter, or any Property of a similar nature, as it pertains to the Collateral, in advertising for sale and selling any Collateral and Borrower's rights under all licenses and all franchise agreements shall inure to Agent's and Lenders' benefit.

10.3.5 Agent or Required Lenders may, at its or their option, require Borrower to deposit with Agent funds equal to the LC Amount and, if Borrower fails to promptly make such deposit, Lenders may advance such amount as a Revolving Credit Loan (whether or not an Overadvance is created thereby). Each such Revolving Credit Loan shall be secured by all of the Collateral and shall bear interest and be payable at the same rate and in the same manner as Base Rate Revolving Credit Portions. Any such deposit or advance shall be held by Agent as a reserve to fund future payments on such LC Guaranties and future drawings against such Letters of Credit. At such time as all LC Guaranties have been paid or terminated and all Letters of Credit have been drawn upon or expired any amounts remaining in such reserve shall be applied against any outstanding Obligations, or, if all Obligations have been indefeasibly paid in full, returned to Borrowers.

10.4 Remedies Cumulative; No Waiver. All covenants, conditions, provisions, warranties, guaranties, indemnities, and other undertakings of Borrower contained in this Agreement and the other Loan Documents, or in any document referred to herein or contained in any agreement supplementary hereto or in any schedule given to Agent or any Lenders or contained in any other agreement between Agent and/or Lenders and Borrower, heretofore, concurrently, or hereafter entered into, shall be deemed cumulative to and not in derogation or substitution of any of the terms, covenants, conditions, or agreements of Borrower herein contained. The failure or delay of Agent or Lenders to require strict performance by Borrower of any provision of this Agreement or to exercise or enforce any rights, Liens, powers, or remedies hereunder or under any of the aforesaid agreements or other documents or security or Collateral shall not operate as a waiver of such performance, Liens, rights, powers and remedies, but all such requirements, Liens, rights, powers, and remedies shall continue in full force and effect until all Loans and all other Obligations owing or to become owing from Borrower to Agent and/or Lenders shall have been fully satisfied. None of the undertakings, agreements, warranties, covenants and representations of Borrower contained in this Agreement or any of the other Loan Documents and no Event of Default by Borrower under this Agreement or any other Loan Documents shall be deemed to have been suspended or waived by Agent or Lenders, unless such suspension or waiver is by an instrument in writing specifying such suspension or waiver and is signed by a duly

authorized representative of Agent, Lenders or Required Lenders (as applicable) and directed to Borrower.

11. AGENT

11.1 Power of Attorney; Authorization and Action. Each Lender hereby appoints and authorizes Agent to take such action on its behalf and to exercise such powers under this Agreement, and the other Loan Documents as are delegated to Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement and the other Loan Documents (including, without limitation, enforcement or collection of the Notes), Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lenders; provided , however , that Agent shall not be required to take any action which exposes Agent to personal liability or which is contrary to this Agreement or the other Loan Documents or applicable law. Agent agrees to give each Lender promptly a copy of each notice given to it by Borrower pursuant to the terms of this Agreement and the other Loan Documents.

11.2 Agent's Reliance, Etc. Neither Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the other Loan Documents, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, Agent: (i) may treat the payee of any Note as the holder thereof until Agent receives written notice of the assignment or transfer thereof signed by such payee and in form satisfactory to Agent; (ii) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representations to any Lender and shall not be responsible to any Lender for any statements, warranties or representations made in or in connection with this Agreement or the other Loan Documents; (iv) shall not have any duty beyond Agent's customary practices to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of Borrowers or to inspect the property (including the books and records) of Borrowers; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and (vi) shall incur no liability under or in respect of this Agreement or the other Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by facsimile, telegram, cable or telex) believed in good faith by it to be genuine and signed or sent by the proper party or parties.

11.3 FCC and Affiliates. With respect to its commitment hereunder to make Revolving Credit Loans, Term Loan A and Term Loans B and to issue or procure Letters of Credit and LC Guaranties, FCC shall have the same rights and powers under this Agreement and the other Loan Documents as any other Lender and may exercise the same as though it were not Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include FCC in its individual capacity. FCC and its Affiliates may lend money to, and generally engage in any kind of business with, Borrowers, any of their Subsidiaries and any Person who may do business with or own securities of any Borrower or any such Subsidiary, all as if FCC were not Agent and without any duty to account therefor to Lenders.

11.4 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon Agent or any other Lender and based on the financial statements referred to in Section 7.1.10 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon Agent or any other Lender and based on such documents and

information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement.

11.5 Indemnification. Lenders agree to indemnify Agent (to the extent not reimbursed by Borrowers), ratably according to the respective principal amounts of the Notes then held by each of them, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by Agent under this Agreement, provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent's gross negligence or wilful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse Agent promptly upon demand for its ratable shares of any out-of-pocket expenses (including reasonable counsel fees) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and each other Loan Document, to the extent that Agent is not reimbursed for such expenses by Borrower.

11.6 Successor Agent. Agent may resign at any time by giving written notice thereof to Lenders and Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Agent which shall be reasonably acceptable to Borrower. If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving notice of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a commercial bank or financial institution organized under the laws of the United States of America or of any state thereof and having a combined capital and surplus of at least Five Hundred Million Dollars ($500,000,000) and which shall be reasonably acceptable to Borrower. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 11 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the other Loan Documents.

12. MISCELLANEOUS

12.1 Power of Attorney.

Borrower hereby irrevocably designates, makes, constitutes and appoints Agent (and all Persons designated by Agent) as Borrower's true and lawful attorney (and agent-in-fact) and Agent, or Agent's agent, may, without notice to Borrower and in Borrower's or Agent's name, but at the cost and expense of Borrower:

12.1.1 At such time or times after the occurrence and during the continuance of a Default or an Event of Default as Agent or said agent, in its sole discretion, may determine, endorse any Borrower's name on any checks, notes, acceptances, drafts, money orders or any other evidence of payment or proceeds of the Collateral which come into the possession of Agent or under Agent's control.

12.1.2 At such time or times upon or after the occurrence and during the continuance of an Event of Default as Agent or its agent in its sole discretion may determine: (i) demand payment of the Accounts from the Account Debtors, enforce payment of the Accounts by legal proceedings or otherwise, and generally exercise all of Borrower's rights and remedies with respect to the collection of the Accounts; (ii) settle, adjust, compromise, discharge or release any of the Accounts

or other Collateral or any legal proceedings brought to collect any of the Accounts or other Collateral, each in a commercially reasonable manner under the circumstances; (iii) sell or assign any of the Accounts and other Collateral upon such terms, for such amounts and at such time or times as Agent deems advisable; (iv) take control, in any manner, of any item of payment or proceeds relating to any Collateral; (v) prepare, file and sign Borrower's name to a proof of claim in bankruptcy or similar document against any Account Debtor or to any notice of lien, assignment or satisfaction of lien or similar document in connection with any of the Collateral; (vi) receive, open and dispose of all mail addressed to Borrower and notify postal authorities to change the address for delivery thereof to such address as Agent may designate; (vii) endorse the name of Borrower upon any of the items of payment or proceeds relating to any Collateral and deposit the same to the account of Agent on account of the Obligations; (viii) endorse the name of Borrower upon any chattel paper, document, instrument, invoice, freight bill, bill of lading or similar document or agreement relating to the Accounts, Inventory and any other Collateral; (ix) use Borrower's stationery and sign the name of Borrower to verifications of the Accounts and notices thereof to Account Debtors; (x) use the information recorded on or contained in any data processing equipment and computer hardware and software relating to the Accounts, Inventory, Equipment and any other Collateral; (xi) make and adjust claims under policies of insurance; and (xii) do all other acts and things necessary, in Agent's determination, to fulfill Borrower's obligations under this Agreement.

The power of attorney granted hereby shall constitute a power coupled with an interest and shall be irrevocable.

12.2 Indemnity. Borrower hereby agrees to indemnify Agent and Lenders and hold Agent and Lenders harmless from and against any liability, loss, damage, suit, action or proceeding ever suffered or incurred by Agent and Lenders (including reasonable attorneys fees and legal expenses) as the result of Borrower's failure to observe, perform or discharge Borrower's duties hereunder. In addition, Borrower shall defend Agent and Lenders against and save it harmless from all claims of any Person with respect to the Collateral (except those resulting from the negligence or intentional misconduct of Agent or any Lender). Without limiting the generality of the foregoing, these indemnities shall extend to any claims asserted against Agent or any Lender by any Person under any Environmental Laws or similar laws by reason of any Borrower's or any other Person's failure to comply with laws applicable to solid or hazardous waste materials or other toxic substances. Notwithstanding any contrary provision in this Agreement, the obligation of Borrower under this Section 12.2 shall survive the payment in full of the Obligations and the termination of this Agreement.

12.3 Modification of Agreement; Sale of Interest.

(a) The Loan Documents constitute the complete agreement between the parties with respect to the subject matter hereof and may not be modified, altered or amended except by an agreement in writing signed by Borrowers, Required Lenders or all Lenders as required by the terms hereof, and, if required by the terms hereof, Agent. Borrower may not sell, assign or transfer any of the Loan Documents or any portion thereof, including without limitation, Borrower's rights, title, interests, remedies, powers and duties hereunder or thereunder. Borrower hereby consents to Agent's and any Lender's sale of participation, assignment, transfer or other disposition in accordance with the terms hereof, at any time or times, of any of the Loan Documents or of any portion thereof or interest therein, including, without limitation, Agent's and any Lender's rights, title, interests, remedies, powers or duties thereunder, whether evidenced in writing or not; Borrower agrees that it will use commercially reasonable efforts to assist and cooperate with Agent and any Lender in any manner reasonably requested by Agent or such Lender to effect the sale of participation in or assignment of any of the Loan Documents or of any portion thereof or interest therein, including, without limitation, review of appropriate disclosure documents or placement memoranda and executing appropriate amendments to the signature pages hereto to reflect the addition of any Lender and such Lender's

respective commitments. In addition, Borrower will make its management available to meet with potential Lenders or Participating Lenders from time to time as reasonably requested by Agent. The foregoing notwithstanding, except with respect to sales, assignments or transfers to Affiliates under common control pursuant to which the selling, assigning or transferring Lender retains its voting rights, no Lender shall sell participation or assign, transfer or otherwise dispose of any of the Loan Documents or any portion thereof or interest therein, without the prior written consent of Agent, which consent shall be unreasonably withheld or delayed.

(b) In respect to any assignment by a Lender of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Revolving Loan Commitment, the Revolving Credit Loans owed to it and the Revolving Credit Note held by it, its Term Loan B Loan Commitment, the Term Loans B owed to it and the Term Note B held by it and the Term Loan A owed to it and the Term Note A held by it) (i) each such assignment shall be of a uniform, and not a varying, percentage of all rights and obligations, (ii) except in the case of an assignment of all of a Lender's rights and obligations under this Agreement, (A) the aggregate amount of the Revolving Loan Commitment, undrawn Term Loan B Commitment, Term Loan A and Term Loans B of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $5,000,000, and in integral multiples of $1,000,000 thereafter, or such lesser amount as to which Borrowers and Agent may consent to and (B) after giving effect to each such assignment, the amount of the Revolving Loan Commitment, undrawn Term Loan B Commitment, Term Loan A and Term Loans B of the assigning Lender shall in no event be less than $5,000,000, (iii) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance, an Assignment and Acceptance in the form of Exhibit S hereto (an "Assignment and Acceptance"), together with any Revolving Credit Note, Term Note A and Term Note B subject to such assignment and a processing and recordation fee of $3,500, and (iv) any Lender may without the consent of Borrowers or the Agent, and without paying any fee, assign to any Affiliate of such Lender that is a bank or financial institution all of its rights and obligations under this Agreement. The foregoing notwithstanding, no Person may become a Lender or a Participating Lender hereunder, unless such Person is a financial institution having stockholders' equity (or the equivalent) of at least One Hundred Million Dollars ($100,000,000). Upon such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). If, pursuant to this Section 12.3, any interest in this Agreement or any Revolving Credit Loan, Term Loan A, Term Loans B, Letter of Credit or LC Guaranty is transferred to any transferee which is organized under the laws of any jurisdiction other than the United States or any state thereof, the transferor Lender shall cause such transferee (other than any Participating Lender), and shall cause any Participating Lender, concurrently with the effectiveness of such transfer, (a) to represent to the transferor Lender (for the benefit of the transferor Lender, Agent, and Borrower) that under applicable law and treaties no Taxes will be required to be withheld by Agent, Borrower or the transferor Lender with respect to any payments to be made to such transferee in respect of the Revolving Credit Loans, Term Loan A, Term Loans B, Notes, Letters of Credit or LC Guaranties, (b) to furnish to the transferor Lender, Agent and Borrower either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein such transferee claims entitlement to complete exemption form U.S. federal withholding tax on all interest payments hereunder), and (c) to agree (for the benefit of the transferor Lender, Agent and Borrower) to provide the transferor Lender, Agent and Borrower a new Form 4224 or Form 1001

upon the obsolescence of any previously delivered form and comparable statements in accordance with applicable U.S. laws and regulations and amendments duly executed and completed by such transferee, and to comply from time to time with all applicable U.S. laws and regulations with regard to such withholding tax exemption.

(c) In the event any Lender assigns or otherwise transfers all or any part of its Revolving Credit Note, Term Note A or Term Note B, any such Lender shall so notify Borrower and Borrower shall, upon the request of such Lender, issue a new Revolving Credit Note, Term Note A and Term Note A in exchange for the old Revolving Credit Note, Term Note A and Term Note B.

(d) Any Lender may at any time sell to one or more commercial banks, financial institutions, or other Persons not Affiliates of Borrower (a "Participating Lender") participating interests in any Loans, the commitments of that Lender and the other interests of that Lender (the "originating Lender") hereunder and under the other Loan Documents; provided , however , that (i) the originating Lender's obligations under this Agreement shall remain unchanged, (ii) the originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrower and the Agent shall continue to deal solely and directly with the originating Lender in connection with the originating Lender's rights and obligations under this Agreement and the other Loan Documents, and (iv) no Lender shall grant any participation under which the Participating Lender shall have rights to approve any amendment to or waiver of this Agreement or the Loan Documents, except to the extent such amendment or waiver would: (A) extend the final maturity date for payment of the Loans in which such Participating Lender is participating; (B) reduce the interest rate or the amount of principal or fees applicable to the Loans in which such Participating Lender is participating; or (C) release all or substantially all of the Collateral, except as expressly provided herein. In those cases in which an originating Lender grants rights to a Participating Lender to approve any amendment to or waiver of this Agreement or the other Loan Documents respecting the matters described in clauses (A) through (C) of the preceding sentence, the relevant participation agreements shall provide for a voting mechanism whereby a majority of the amount of such Lender's portion of the Loans (irrespective of whether held by such Lender or a Participating Lender) shall control the vote for all of such Lender's portion of the Loans. In the case of any participation, the Participating Lender shall not have any rights under this Agreement or any of the other Loan Documents entered into in connection herewith (the Participating Lender's right against such Lender in respect of such participation to be those set forth in the participation or other agreement executed by such Lender and the Participating Lender relating thereto). In no event shall any Participating Lender grant a participation in its participation interest in the Loans without the prior written consent of Agent, which approval shall not be unreasonably withheld or delayed. All amounts payable by the Borrower hereunder shall be determined as if the originating Lender had not sold any such participation, except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participating Lender shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement.

(e) Notwithstanding any other provision in this Agreement, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Board or U.S. Treasury Regulation 31 CFR §203.14, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law.

(f) No amendment or waiver of any provision of this Agreement or the Notes or any other Loan Document, including, without limitation, the CHS Guaranty, nor consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and

for the specific purpose for which given; provided , however : (a) that no amendment, waiver or consent shall, unless in writing and signed by each Lender affected thereby do any of the following: (i) increase the aggregate Revolving Loan Commitments, Term Loan A Commitments, Term Loan B Commitments or subject any Lender to any additional obligations, (ii) reduce the principal of, or decrease the rate of interest on, the Notes or other amount payable hereunder other than those payable only to FCC in its capacity as Agent which may be reduced by FCC unilaterally, (iii) postpone any date fixed for any payment of principal of, or interest on, the Notes or other amounts payable hereunder, other than those payable only to FCC in its capacity as Agent which may be postponed by FCC unilaterally, (iv) reduce the aggregate unpaid principal amount of the Notes, or the number of Lenders which shall be required for the Lenders or any of them to take any action hereunder, (v) release or discharge any Person liable for the performance of any obligations of Borrower hereunder or under any of the Loan Documents except in accordance with the terms of such Loan Documents or as otherwise permitted herein, (vi) increase the advance rates contained in the definition of the Borrowing Base, (vii) to the extent Agent's or Lenders' consent is required by the terms hereof, release all or substantially all of the Collateral or (viii) amend this Section 12.3; (b) that no amendment, waiver or consent shall be effective unless in writing and signed by either Required Lenders or all Lenders, as required by the terms hereof and, if such amendment, waiver or consent affects Agent or its rights hereunder, Agent.

(g) The foregoing notwithstanding, provided that no Event of Default has occurred and is continuing, no Lender shall effect any transfer, assignment or participation of its interests hereunder if the effect of any such transfer, assignment or participation is to increase, in any material amount, Borrower's costs or obligations hereunder.

12.4 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

12.5 Successors and Assigns. This Agreement, the Other Agreements and the Security Documents shall be binding upon and inure to the benefit of the successors and assigns of Borrower and Agent and Lenders permitted under Section 12.3 hereof.

12.6 Cumulative Effect; Conflict of Terms. The provisions of the Other Agreements and the Security Documents are hereby made cumulative with the provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof and except as otherwise provided in any of the other Loan Documents by specific reference to the applicable provision of this Agreement, if any provision contained in this Agreement is in direct conflict with, or inconsistent with, any provision in any of the other Loan Documents, the provision contained in this Agreement shall govern and control.

12.7 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument.

12.8 Notice. Except as otherwise provided herein, all notices, requests and demands to or upon a party hereto, to be effective, shall be in writing and shall be sent by certified or registered mail, return receipt requested, by personal delivery against receipt, by overnight courier or by facsimile and, unless otherwise expressly provided herein, shall be deemed to have been validly served, given or delivered immediately when delivered against receipt, three Business Days after deposit in the mail,

postage prepaid, one Business Day after delivery to an overnight courier or, in the case of facsimile notice, when sent, addressed as follows:

(A): If to Agent: Fleet Capital Corporation
One South Wacker Drive
Suite 1400
Chicago, Illinois 60601
Attention: Loan Administration Manager
Facsimile No.: (312) 332-6537

With a copy to: Vedder, Price, Kaufman & Kammholz

: 222 North LaSalle Street
Suite 2600
Chicago, Illinois 60601
Attention: John T. McEnroe
Facsimile No.: (312) 609-5005
(B): If to Borrower: Houston Wire & Cable Company
: 10201 N. Loop East
Houston, Texas 77029
Attention: Nicol G. Graham
Telecopier No.: (713) 609-2205

With copies to: Code Hennessy & Simmons, Inc.

: 10 South Wacker Drive
Suite 3175
Chicago, Illinois 60606
Attention: Peter W. Gotsch
Telecopier No: (312) 876-3854
: and
: Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
Attention: Nancy L. Kasko
Telecopier No.: (312) 715-4800

(C) If to any Lender, at its address indicated on the signature pages hereof or in a notice to Borrower of an assignment of a Note,

or to such other address as each party may designate for itself by notice given in accordance with this Section 12.8; provided , however , that any notice, request or demand to or upon Agent and/or Lender pursuant to Sections 3.1.1 or 4.2.2 hereof shall not be effective until received by Agent and/or Lenders.

12.9 Credit Inquiries. Borrower hereby authorizes and permits Agent to respond to usual and customary credit inquiries from third parties concerning such Borrower or any of its Subsidiaries.

12.10 Time of Essence. Time is of the essence of this Agreement, the Other Agreements and the Security Documents.

12.11 Entire Agreement. This Agreement and the other Loan Documents, together with all other instruments, agreements and certificates executed by the parties in connection therewith or with reference thereto, embody the entire understanding and agreement between the parties hereto and

thereto with respect to the subject matter hereof and thereof and supersede all prior agreements, understandings and inducements, whether express or implied, oral or written.

12.12 Interpretation. No provision of this Agreement or any of the other Loan Documents shall be construed against or interpreted to the disadvantage of any party hereto by any court or other governmental or judicial authority by reason of such party having or being deemed to have structured or dictated such provision.

12.13 Confidentiality. Agent and each Lender shall hold all nonpublic information obtained pursuant to the requirements of this Agreement (including, without limitation, Borrower's ownership structure) in accordance with Agent's and each Lenders's customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices and in any event may make disclosures reasonably required by a prospective participant or assignee in connection with the contemplated participation or assignment or as required or requested by any governmental authority or representative thereof or pursuant to legal process provided , however , that Agent or any Lender shall require any potential participant or assignee to agree, in writing, to comply with the provisions of this Section 12.13 prior to making any such disclosure to any such potential assignee or participant. Borrower acknowledges and agrees that Agent may provide lending trade organizations information necessary and customary for inclusion in league table measurements after the closing of the transactions contemplated hereby.

12.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND DELIVERED IN AND SHALL BE DEEMED TO HAVE BEEN MADE IN CHICAGO, ILLINOIS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS; PROVIDED , HOWEVER , THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN ILLINOIS, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF AGENT'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT'S OR LENDERS' OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF ILLINOIS. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER OR AGENT OR LENDERS, BORROWER HEREBY CONSENTS AND AGREES THAT THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS, OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN

THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF AGENT OR LENDERS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR LENDERS OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.

12.15 WAIVERS BY BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICH AGENT AND LENDERS HEREBY ALSO WAIVE) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (ii) EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED FOR HEREIN, PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY AGENT OR ANY LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO AGENT OR ANY LENDER TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT OR LENDERS TO EXERCISE ANY OF AGENT'S OR LENDERS' REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND (v) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE EACH MATERIAL INDUCEMENT TO AGENT'S AND LENDERS' ENTERING INTO THIS AGREEMENT AND THAT AGENT AND LENDERS ARE RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

12.16 Publicity. Borrower hereby consents to Agent's use of the name or trade style of Borrower in any announcements or advertisements relating to the completion of the transactions contemplated hereby and the role played by Agent in providing financing to Borrower hereunder in such media and in such manner as Agent, with the prior written consent of Borrower, deems appropriate.

IN WITNESS WHEREOF , this Agreement has been duly executed in Chicago, Illinois, on the day and year specified at the beginning of this Agreement.

HOUSTON WIRE & CABLE COMPANY
("Borrower")

By:	/s/ DANI CUNNINGHAM
	Name:	Dani Cunningham
	Title:	Vice President
HWC HOLDING CORPORATION ("Guarantor")
By:	/s/ DANI CUNNINGHAM
	Name:	Dani Cunningham
	Title:	Vice President
Accepted in Chicago, Illinois:
FLEET CAPITAL CORPORATION ("Agent" and "Lender")
By:	/s/ FRANK MELAZZO
	Name:	Frank Melazzo
	Title:	Senior Vice President
Address: One South Wacker Drive Suite 1400] Chicago, IL 60606 Attention: Loan Administration Manager
Telecopier No.: 312.332.6537
Revolving Loan Commitment: $38,076,923.08
Term Loan A Commitment: $3,461,538.46
Term Loan B Commitment: $3,461,538.46

THE CIT GROUP/BUSINESS CREDIT, INC.
("Lender")

By:
Name:
Title:

Address:

5420 LBJ Freeway
Suite 200
Dallas, Texas 75240
Attention: Regional Credit Manager

Telephone No.: 972.455.1600
Telecopier No.: 972.455.1690

Revolving Loan Commitment: $16,923,076.92

Term Loan A Commitment: $1,538,461.54

Term Loan B Commitment: $1,538,461.54

APPENDIX A

GENERAL DEFINITIONS

When used in the Loan and Security Agreement dated as of May 22, 2000, by and among Houston Wire & Cable Company, the lender signatories thereto ("Lenders") and Fleet Capital Corporation ("FCC") as agent for such Lenders (FCC, in such capacity "Agent"), the following terms shall have the following meanings (terms defined in the singular to have the same meaning when used in the plural and vice versa):

Account Debtor —any Person who is or may become obligated under or on account of an Account.

Accounts —all accounts, contract rights, chattel paper, instruments and documents, whether now owned or hereafter created or acquired by Borrower or in which Borrower now has or hereafter acquires any interest.

Acquisition —the purchase by Borrower of the Business pursuant to the Purchase Documents.

Affiliate —a Person (other than a Subsidiary): (i) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, a Person; (ii) which beneficially owns or holds 5% or more of any class of the Voting Stock of a Person; or (iii) 5% or more of the Voting Stock (or in the case of a Person which is not a corporation, 5% or more of the equity interest) of which is beneficially owned or held by a Person or a Subsidiary of a Person.

Agreement —the Loan and Security Agreement referred to in the first sentence of this Appendix A, all Exhibits thereto and this Appendix A.

ALTA Survey —a survey prepared in accordance with the standards adopted by the American Land Title Association and the American Congress on Surveying and Mapping in 1986, known as the "Minimum Standard Detail Requirements of Land Title Surveys". The ALTA Survey shall be in sufficient form to satisfy the requirements of Chicago Title Insurance Company to provide extended coverage over survey defects and shall also show the location of all easements, utilities, and covenants of record, dimensions of all improvements, encroachments from any adjoining property, and certify as to the location of any flood plain area affecting the subject real estate. The ALTA Survey shall contain the following certification: "To Houston Wire & Cable Company, Fleet Capital Corporation, as agent, and Chicago Title Insurance Company. This is to certify that this map of plat and the survey on which it is based were made in accordance with the "Minimum Standard Detail Requirements for Land Title Surveys" jointly established and adopted by ALTA and ACSM in 1986. (signed (SEAL) License No. ".

Apparatus Eligible Inventory —Eligible Inventory that is Apparatus Inventory.

Apparatus Inventory —that portion of Borrower's Inventory the type classified as "apparatus" inventory on the Business's financial statements consisting of Inventory used in Borrower's devices line of business.

Applicable Margin —the percentages set forth below with respect to the Base Rate Revolving Credit Portion, the Base Rate Term A Portion, the Base Rate Term B Portion, the LIBOR Revolving Credit Portion, the LIBOR Term A Portion and the LIBOR Term B Portion:

APPLICABLE MARGIN

LIBOR Revolving Credit Portion		LIBOR Term A Portion		LIBOR Term B Portion		Base Rate Revolving Credit Portion		Base Rate Term A Portion		Base Rate Term B Portion
2.75	%	3.00	%	3.50	%	1.25	%	1.50	%	2.00	%

Asset Purchase Agreement —shall have the meaning contained in the definition of Purchase Documents.

Availability —the amount of money which Borrower is entitled to borrow from time to time as Revolving Credit Loans, such amount being the difference derived when the sum of the principal amount of Revolving Credit Loans then outstanding (including any amounts which Lender may have paid for the account of Borrower pursuant to any of the Loan Documents and which have not been reimbursed by Borrower) is subtracted from the Borrowing Base. If the amount outstanding is equal to or greater than the Borrowing Base, Availability is 0.

Bank —Fleet National Bank.

Base Rate —the rate of interest announced or quoted by Bank from time to time as its prime rate for commercial loans, whether or not such rate is the lowest rate charged by Bank to its most preferred borrowers; and, if such prime rate for commercial loans is discontinued by Bank as a standard, a comparable reference rate designated by Bank as a substitute therefor shall be the Base Rate.

Base Rate Revolving Credit Portion —that portion of the Revolving Credit Loans not subject to a LIBOR Option.

Base Rate Term A Portion —that portion of Term Loan A not subject to a LIBOR Option.

Base Rate Term B Portion —that portion of the Term Loans B not subject to a LIBOR Option.

Board —the Board of Governors of the Federal Reserve System of the United States.

Borrowing Base —as at any date of determination thereof, an amount equal to the lesser of:

(i) the Maximum Revolving Loan at such date; or

(ii) an amount equal to:

(a) up to eighty-five percent (85%) of the net amount of Eligible Accounts outstanding at such date;

PLUS

(b) the lesser of (1) the Maximum Inventory Amount or (2) the sum of (A) sixty-five percent (65%) of the value of Eligible Inventory (other than Apparatus Eligible Inventory) at such date calculated on the basis of the lower of cost or market with the cost of raw materials and finished goods calculated on a first-in, first-out basis plus (B) sixty-five percent (65%) of the lesser of the Maximum Apparatus Inventory or the value of Apparatus Eligible Inventory, at such date calculated on the basis of the lower of cost or market with the cost of raw materials and finished goods calculated on a first-in, first-out basis.

MINUS (subtract from the lesser of (i) or (ii) above)

(iii) an amount equal to the sum of (a) any amount which Agent reasonably expects it may be obligated to pay in the future for the account of Borrower, plus (b) the amount of any reserve established by Agent pursuant to Section 1.1.1, plus (c) the LC Amount.

For purposes hereof, the net amount of Eligible Accounts at any time shall be the face amount of such Eligible Accounts less, to the extent not already deducted in the calculation of Eligible Accounts, any and all returns, rebates, discounts (which may, at Agent's option, be calculated on shortest terms), credits, allowances or excise taxes of any nature at any time issued, owing, claimed by Account Debtors, granted, outstanding or payable in connection with such Accounts at such time. Further, the value of Eligible Inventory and Eligible Apparatus Inventory shall be adjusted as of each date of calculation to reflect decreases in the Comex market price of copper as reported on the London Metals Exchange, but only to the extent that such decrease would result in a value less than current book value.

Business —shall mean the "Division" as such term is defined in the Asset Purchase Agreement.

Business Day —(i) when used with respect to the LIBOR Option, shall mean a day one which dealings may be effected in deposits of United States dollars in the London interbank foreign currency deposits market and on which the Agent is conducting business and on which banks may conduct business in London, England, Chicago, Illinois, and New York, New York and (ii) when used with respect to the other provisions of this Agreement, shall mean any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed either in the State of Illinois or in the State of Wisconsin.

Capital Expenditures —expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto which have a useful life of more than one year, including the total principal portion of Capitalized Lease Obligations.

Capitalized Lease Obligation —any Indebtedness represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

CHS Guarantee —that certain Guarantee (Limited Amount) executed by Code, Hennessy & Simmons, II, L.P. whereby Code, Hennessy & Simmons, II, L.P. shall guarantee a portion of the outstanding principal balance of Term Loans B. The maximum amount of the said CHS Guarantee, shall mean as of any date of calculation, the amount of Term Loans B made by Lenders under the Loan Agreement in excess of $2,500,000 which amount shall be reduced by the aggregate amount of principal payments made by Borrower in respect of Term Loans B between the Closing Date and the earlier of the applicable date of calculation or the date on which an Event of Default has occurred which Event of Default, as of the applicable date of calculation, has not been cured or waived.

Closing Date —the date on which all of the conditions precedent in Section 9 of the Agreement are satisfied and the initial Loans are made.

Code —the Uniform Commercial Code as adopted and in force in the State of Illinois, as from time to time in effect.

Collateral —all of the Property and interests in Property described in Section 5 of the Agreement, and all other Property and interests in Property that now or hereafter secure the payment and performance of any of the Obligations.

Commitment Termination Date —the earliest of: (i) May 23, 2004; (ii) the date of termination of the commitment to make further Revolving Credit Loans and/or Term Loans B pursuant to Section 4.2.1 or 4.2.2 hereof; and (iii) the date of termination of the commitment to make further Revolving Credit Loans pursuant to Section 10.2 hereof.

Consolidated —the consolidation in accordance with GAAP of the accounts or other items as to which such term applies.

Default —an event or condition the occurrence of which would, with the lapse of time or the giving of notice, or both, become an Event of Default.

Default Rate —as defined in Section 2.1.2 of the Agreement.

Distribution —in respect of any corporation means and includes: (i) the payment of any dividends or other distributions on capital stock of the corporation (except distributions in such stock) and (ii) the redemption or acquisition of Securities unless made contemporaneously from the net proceeds of the sale of Securities.

Dominion Account —a special account of Agent for its benefit and the ratable benefit of Lenders established by Borrower pursuant to the Agreement at a bank selected by Borrower, but acceptable to Agent in its reasonable discretion, and over which Agent shall have sole and exclusive access and control for withdrawal purposes.

Eligible Account —an Account arising in the ordinary course of Borrower's business from the sale of goods or rendition of services which Agent, in its reasonable credit judgment, deems to be an Eligible Account. Without limiting the generality of the foregoing, no Account shall be an Eligible Account if:

(i) it arises out of a sale made by Borrower to a Subsidiary or an Affiliate of Borrower or to a Person controlled by an Affiliate of Borrower; or

(ii) it is due or unpaid more than 90 days after the original invoice date; or

(iii) 25% or more of the Accounts from the Account Debtor are not deemed Eligible Accounts hereunder; or

(iv) the total unpaid Accounts of the Account Debtor (other than Associated Distributors) exceed 20% of the net amount of all Eligible Accounts, to the extent of such excess; or the total unpaid Accounts of Associated Distributors exceed 25% of the net amount of all Eligible Accounts, to the extent of such excess; or

(v) any covenant, representation or warranty contained in the Agreement with respect to such Account has been breached; or

(vi) the Account Debtor is also Borrower's creditor or supplier, or the Account Debtor has disputed liability with respect to such Account (to the extent of such dispute), or the Account Debtor has made any claim with respect to any other Account due from such Account Debtor to Borrower (to the extent of such claim), or the Account is subject to a debit memo or a volume rebate (to the extent of such volume rebate or debit memo) or the Account otherwise is or is reasonably expected to become subject to any right of setoff by the Account Debtor; or

(vii) the Account Debtor has commenced a voluntary case under the federal bankruptcy laws, as now constituted or hereafter amended, or made an assignment for the benefit of creditors, or a decree or order for relief has been entered by a court having jurisdiction in the premises in respect of the Account Debtor in an involuntary case under the federal bankruptcy laws, as now constituted or hereafter amended, or any other petition or other application for relief under the federal bankruptcy laws has been filed against the Account Debtor, or if the Account Debtor has failed, suspended business, ceased to be Solvent, or consented to or suffered a receiver, trustee, liquidator or custodian to be appointed for it or for all or a significant portion of its assets or affairs; or

(viii) it arises from a sale to an Account Debtor outside the United States, unless the sale is on letter of credit, guaranty or acceptance terms in each case acceptable to Agent in its sole discretion; or

(ix) it arises from a sale to the Account Debtor on a bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval, consignment or any other repurchase or return basis; or

(x) the Account Debtor is the United States of America or any department, agency or instrumentality thereof, unless Borrower assigns its right to payment of such Account to Agent, in a manner satisfactory to Agent so as to comply with the Assignment of Claims Act of 1940 (31 U.S.C. §203 et seq., as amended); or

(xi) the Account is subject to a Lien other than a Permitted Lien or the Account is not at all times subject to Agent's duly perfected, first priority security interest; or

(xii) the goods giving rise to such Account have not been delivered to and accepted by the Account Debtor or the services giving rise to such Account have not been performed by Borrower and accepted by the Account Debtor;

(xiii) the Account is evidenced by chattel paper or an instrument of any kind, or has been reduced to judgment; or

(xiv) Borrower has made any agreement with the Account Debtor for any deduction therefrom, except for discounts or allowances which are made in the ordinary course of business for prompt payment and which discounts or allowances are reflected in the calculation of the face value of each invoice related to such Account; or

(xv) Borrower has made an agreement with the Account Debtor to extend the time of payment thereof.

Eligible Inventory —such Inventory of Borrower (other than packaging materials, reels, shipping containers and manufacturing supplies) which Agent, in its reasonable credit judgment deems to be Eligible Inventory. Without limiting the generality of the foregoing, no Inventory shall be Eligible Inventory if:

(i) it is not raw materials, work-in-process or finished goods that is readily marketable;

(ii) it is not in good, new and saleable condition;

(iii) it is slow-moving, obsolete or unmerchantable;

(iv) it does not meet all standards imposed by any governmental agency or authority;

(v) it does not conform in all respects to any covenants, warranties and representations set forth in the Agreement;

(vi) it is not at all times subject to Agent's duly perfected, first priority security interest and no other Lien except a Permitted Lien;

(vii) it is not situated at a location in compliance with the Agreement and is not in transit;

(viii) it is defective Inventory;

(ix) it is Inventory located off-site and in respect to which Inventory Borrower has not obtained Lien releases and access waivers in form and substance acceptable to Agent;

(x) it is consigned Inventory;

(xi) it represents inter-company profit; or

(xii) it consists of Inventory of less than 100 foot lengths; or

(xiii) it is packaging, reels or supplies.

Environmental Laws —all federal, state and local laws, rules, regulations, ordinances, programs, permits, guidances, orders and consent decrees relating to health, safety and environmental matters.

Equipment —all machinery, apparatus, equipment, fittings, furniture, fixtures, motor vehicles and other tangible personal Property (other than Inventory) of every kind and description used in Borrower's operations or owned by Borrower or in which Borrower has an interest, whether now owned or hereafter acquired by Borrower and wherever located, and all parts, accessories and special tools and all increases and accessions thereto and substitutions and replacements therefor.

ERISA —the Employee Retirement Income Security Act of 1974, as amended, and all rules and regulations from time to time promulgated thereunder.

Event of Default —as defined in Section 10.1 of the Agreement.

GAAP —generally accepted accounting principles in the United States of America in effect from time to time.

General Intangibles —all general intangibles of Borrower, whether now owned or hereafter created or acquired by Borrower, including, without limitation, all choses in action, causes of action, corporate or other business records, deposit accounts, inventions, designs, patents, patent applications, trademarks, trade names, trade secrets, goodwill, copyrights, registrations, licenses, franchises, customer lists, tax refund claims, computer programs, all claims under guaranties, security interests or other security held by or granted to Borrower to secure payment of any of the Accounts by an Account Debtor, all rights to indemnification and all other intangible property of every kind and nature (other than Accounts).

Guarantor —HWC Holding Corporation, a Delaware corporation.

Guaranty —the Continuing Guaranty Agreement which is to be executed by Guarantor in form and substance satisfactory to Agent.

Guarantor Subordinated Debt means all Indebtedness owing by Guarantor to the stockholders of Guarantor, including subordinated debt in the principal amount of not more than $9,000,000 as of the Closing Date.

Indebtedness —as applied to a Person means, without duplication

(i) all items which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet of such Person as at the date as of which Indebtedness is to be determined, including, without limitation, Capitalized Lease Obligations,

(ii) all obligations of other Persons which such Person has guaranteed,

(iii) all reimbursement obligations in connection with letters of credit or letter of credit guaranties issued for the account of such Person, and

(iv) in the case of Borrower (without duplication), the Obligations.

Inventory —all of Borrower's inventory, whether now owned or hereafter acquired including, but not limited to, all goods intended for sale or lease by Borrower, or for display or demonstration; all work in process; all raw materials and other materials and supplies of every nature and description used or which might be used in connection with the manufacture, printing, packing, shipping, advertising, selling, leasing or furnishing of such goods or otherwise used or consumed in Borrower's business; and all documents evidencing and General Intangibles relating to any of the foregoing, whether now owned or hereafter acquired by Borrower.

Investment Property —all of Borrower's investment property, whether now owned or hereinafter acquired by Borrower, including, without limitation, all securities (certificated or uncertificated), securities accounts, securities entitlements, commodity accounts and contracts.

LC Amount —at any time, the aggregate undrawn face amount of all Letters of Credit and LC Guaranties then outstanding.

LC Guaranty —any guaranty pursuant to which Agent or Lenders or any Affiliate of Agent or Lenders shall guaranty the payment or performance by Borrower of its reimbursement obligation under any letter of credit.

LC Percent —the Applicable Margin in respect to LIBOR Revolving Credit Portions.

Legal Requirement —any requirement imposed upon any Lender or any Participating Lender by any law of the United States of America or the United Kingdom or by any regulation, order, interpretation, ruling or official directive (whether or not having the force of law) of the Board, the Bank of England or any other board, central bank or governmental or administrative agency, institution or authority of the United States of America, the United Kingdom or any political subdivision of either thereof.

Letter of Credit —any letter of credit issued by Agent or Bank for the account of any Borrower.

LIBOR Interest Payment Date —with respect to any LIBOR Portion, the first day of each calendar month during the applicable LIBOR Period.

LIBOR Option —the option granted pursuant to Section 2.3 of the Agreement to have the interest on all or any portion of the principal amount of the Revolving Credit Loans, Term Loan A or Term Loans B based on a LIBOR Rate.

LIBOR Period —any period of one month, two months, three months or six months commencing on a Business Day, selected as provided in Section 2.3(i); provided, however that no LIBOR Period shall extend beyond the last day of the Original Term, unless Borrower, Agent and Lenders have agreed to an extension of the Original Term beyond the expiration of the LIBOR Period in question and that, with respect to any LIBOR Term A Portion or LIBOR Term B Portion, no applicable LIBOR Period shall extend beyond the scheduled installment payment date for such LIBOR Term A Portion or LIBOR Term B Portion. If any LIBOR Period so selected shall end on a date that is not a Business Day, such LIBOR Period shall instead end on the next preceding or succeeding Business Day as determined by Agent in accordance with the then current banking practice in London; provided , that Borrower shall not be required to pay double interest, even though the preceding LIBOR Period ends and the new LIBOR Period begins on the same day. Each determination by Agent of the LIBOR Period shall, in the absence of manifest error, be conclusive. In addition to the foregoing, until the earlier of such time as Borrower completes initial syndication of the credit facilities contemplated herein or August 30, 2000, all LIBOR Periods shall be one week.

LIBOR Portion —a LIBOR Revolving Credit Portion, a LIBOR Term A Portion or a LIBOR Term B Portion.

LIBOR Rate —with respect to any LIBOR Portion for the related LIBOR Period, an interest rate per annum (rounded upwards, if necessary, to the next higher ¹ / 16 of 1% equal to the product of (i) the Base LIBOR Rate (as hereinafter defined) multiplied by (ii) Statutory Reserves. For purposes of this definition, the term "Base LIBOR Rate" shall mean the rate (rounded to the next higher ¹ / 16 of 1%) at which deposits of U.S. dollars approximately equal in principal amount to the LIBOR Portion specified in the applicable LIBOR Request are offered to Agent by prime banks in the London interbank foreign currency deposits market at approximately 11:00 a.m., London time, 2 Business Days prior to the commencement of such LIBOR Period, for delivery on the first day of such LIBOR Period. Each determination by Bank of any LIBOR Rate shall, in the absence of manifest error, be conclusive.

LIBOR Request —a notice in writing (or by telephone confirmed by telex, telecopy or other facsimile transmission on the same day as the telephone request) from Borrower, on behalf of all Borrowers, to Agent requesting that interest on a portion of the Revolving Credit Loan, Term Loan A or Term Loans B be based on the LIBOR Rate, specifying: (i) the first day of the LIBOR Period; (ii) the length of the LIBOR Period consistent with the definition of that term; and (iii) the dollar amount of the LIBOR Revolving Credit Portion, LIBOR Term A Portion or LIBOR Term B Portion consistent with the definition of such terms.

LIBOR Revolving Credit Portion —that portion of the Revolving Credit Loans specified in a LIBOR Request (including any portion of Revolving Credit Loans which is being borrowed by Borrower concurrently with such LIBOR Request) which is not less than $1,000,000 and is an integral multiple of $100,000, which does not exceed the outstanding balance of Revolving Credit Loans not already subject to a LIBOR Option and, which, as of the date of the LIBOR Request specifying such LIBOR Revolving Credit Portion, has met the conditions for basing interest on the LIBOR Rate in Section 2.3 of the Agreement and the LIBOR Period of which was commenced and not terminated.

LIBOR Term A Portion —that portion of the Term Loan A specified in a LIBOR Request which is not less than $1,000,000 and is an integral multiple of $100,000, which does not exceed the outstanding

balance of the Term Loan A not already subject to a LIBOR Option and, which, as of the date of the LIBOR Request specifying such LIBOR Term A Portion, has met the conditions for basing interest on the LIBOR Rate in Section 2.3 of the Agreement and the LIBOR Period of which was commenced and not terminated.

LIBOR Term B Portion —that portion of Term Loans B specified in a LIBOR Request which is not less than $1,000,000 and is an integral multiple of $100,000, which does not exceed the outstanding balance of the Term Loans B not already subject to a LIBOR Option and, which, as of the date of the LIBOR Request specifying such LIBOR Term B Portion, has met the conditions for basing interest on the LIBOR Rate in Section 2.3 of the Agreement and the LIBOR Period of which was commenced and not terminated.

Lien —any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on common law, statute or contract. The term "Lien" shall also include reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting Property. For the purpose of the Agreement, Borrower shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes.

Loan Account —the loan account established on the books of Agent pursuant to Section 3.6 of the Agreement.

Loan Documents —the Agreement, the Other Agreements and the Security Documents.

Loans —all loans and advances of any kind made by Lender pursuant to the Agreement.

Maximum Apparatus Inventory —Two Million Dollars ($2,000,000) during the period from the Closing Date until September 29, 2000, One Million Five Hundred Thousand Dollars ($1,500,000) during the period from September 30, 2000 to December 30, 2000, One Million Dollars ($1,000,000) from December 31, 2000 to March 30, 2001, Five Hundred Thousand Dollars $500,000 during the period from March 31, 2001 to June 29, 2001 and Zero Dollars ($0) from and after June 30, 2001.

Maximum Inventory Amount —Thirty-Six Million Dollars ($36,000,000) during the period from the Closing Date until June 30, 2000, Thirty-Five Million Dollars ($35,000,000) during the period from July 1, 2000 to July 31, 2000, Thirty-Four Million Dollars ($34,000,000) during the period from August 1, 2000 to August 31, 2000, Thirty-Three Million Dollars ($33,000,000) during the period from September 1, 2000 to September 30, 2000, Thirty-Two Million Dollars ($32,000,000) during the period from October 1, 2000 to October 31, 2000, Thirty-One Million Dollars ($31,000,000) during the period from November 1, 2000 to November 30, 2000, Thirty Million Dollars ($30,000,000) during the period from December 1, 2000 to December 31, 2000 and Twenty-Nine Million Dollars ($29,000,000) during the period from January 1, 2001 through the remainder of the Original Term.

Maximum Revolving Loan —Fifty-Five Million Dollars ($55,000,000).

Money Borrowed —means (i) Indebtedness arising from the lending of money by any Person to Borrower; (ii) Indebtedness, whether or not in any such case arising from the lending by any Person of money to Borrower, (A) which is represented by notes payable or drafts accepted that evidence extensions of credit, (B) which constitutes obligations evidenced by bonds, debentures, notes or similar instruments, or (C) upon which interest charges are customarily paid (other than accounts payable) or that was issued or assumed as full or partial payment for Property; (iii) Indebtedness that constitutes a Capitalized Lease Obligation; (iv) reimbursement obligations with respect to letters of credit or guaranties of letters of credit and (v) Indebtedness of Borrower under any guaranty of obligations that would constitute Indebtedness for Money Borrowed under clauses (i) through (iii) hereof, if owed directly by Borrower.

Mortgages —the mortgage executed by Borrower on or about the closing date of the 1997 in favor of Agent for its ratable benefit and the benefit of Lender, and by which such Borrower shall grant and convey to Agent for its benefit and the ratable benefit of Lenders, as security for the Obligations, a Lien upon the such Borrower's interest in the real property located in:Houston, Texas.

Multiemployer Plan —has the meaning set forth in Section 4001(a)(3) of ERISA.

New Mortgages —as defined in Section 5.3 of the Agreement.

Noncompetition Agreement —that certain Noncompetition Agreement dated on or about the Closing Note by and between Borrower and Kent Electronics Corporation.

Notes —collectively, the Revolving Credit Notes, the Term Notes A and the Term Notes B.

Notice of Revolving Credit Loan and Notice of Term Loans B —as defined in Section 3.1.1 of the Agreement.

Obligations —all Loans and all other advances, debts, liabilities, obligations, covenants and duties, together with all interest, fees and other charges thereon, owing, arising, due or payable from Borrowers or any one of them to Agent or any Lender of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other instrument, whether arising under the Agreement, or any of the other Loan Documents, any interest rate protection agreement, swaps or caps or otherwise whether direct or indirect (including those acquired by assignment), absolute or contingent, primary or secondary, due or to become due, now existing or hereafter arising and however acquired.

Original Term —as defined in Section 4.1 of the Agreement.

Other Agreements —any and all agreements, instruments and documents (other than the Agreement and the Security Documents), heretofore, now or hereafter executed by any Borrower, any Subsidiary of any Borrower or any other third party and delivered to Agent and/or Lenders in respect of the transactions contemplated by the Agreement.

Overadvance —as defined in Section 1.1.1(C) of the Agreement.

Participating Lender —each Person who shall be granted the right by any Lender to participate in any of the Loans described in the Agreement and who shall have entered into a participation agreement in form and substance satisfactory to such Lender.

Permitted Liens —any Lien of a kind specified in Section 8.2.5 of the Agreement.

Permitted Purchase Money Indebtedness —Purchase Money Indebtedness of Borrower incurred after the date hereof which is secured by a Purchase Money Lien and which, when aggregated with the principal amount of all other such Purchase Money Indebtedness and Capitalized Lease Obligations of Borrower at the time outstanding, does not exceed $750,000. For the purposes of this definition, the principal amount of any Purchase Money Indebtedness consisting of capitalized leases shall be computed as a Capitalized Lease Obligation.

Person —an individual, partnership, corporation, limited liability company, joint stock company, land trust, business trust, or unincorporated organization, or a government or agency or political subdivision thereof.

Plan —an employee benefit plan now or hereafter maintained for employees of Borrower that is covered by Title IV of ERISA.

Pledge Agreement —the Pledge Agreement to be executed by Guarantor in favor of Agent whereby Guarantor shall grant to Agent for its benefit and the ratable benefit of Lenders, a first priority security interest in all of the issued and outstanding shares of capital stock of Borrower and all other assets of Guarantor to secure Guarantor's obligations and liabilities under the Guaranty.

Projections —Borrower's forecasted (a) balance sheets, (b) profit and loss statements, (c) cash flow statements, and (d) capitalization statements, all prepared on a consistent basis with Borrower's historical financial statements, together with appropriate supporting details and a statement of underlying assumptions.

Property —any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

Purchase Documents —the Asset Purchase Agreement ("Asset Purchase Agreement") by and among Borrower and Seller pursuant to which Seller has agreed to sell its business and all or substantially all of its assets to Borrower, and all documents and instruments to be executed or delivered in connection therewith and all schedules and/or exhibits to any of the foregoing.

Purchase Money Indebtedness —means and includes (i) Indebtedness (other than the Obligations) for the payment of all or any part of the purchase price of any fixed assets, (ii) any Indebtedness (other than the Obligations) incurred at the time of or within 10 days prior to or after the acquisition of any fixed assets for the purpose of financing all or any part of the purchase price thereof, and (iii) any renewals, extensions or refinancings thereof, but not any increases in the principal amounts thereof outstanding at the time.

Purchase Money Lien —a Lien upon fixed assets which secures Purchase Money Indebtedness, but only if such Lien shall at all times be confined solely to the fixed assets the purchase price of which was financed through the incurrence of the Purchase Money Indebtedness secured by such Lien.

Rentals —as defined in Section 8.2.13 of the Agreement.

Reportable Event —any of the events set forth in Section 4043(b) of ERISA.

Required Lenders —as of any date, the Lenders with at least sixty-six and two-thirds percent (66-K%) of the aggregate principal amount of the Revolving Loan Commitments, undrawn Term Loans B Loan Commitment, Term Loan A and Term Loans B; provided , that if any time there are two or fewer Lenders, Required Lenders shall mean all Lenders.

Restricted Investment —any investment made in cash or by delivery of Property to any Person, whether by acquisition of stock, Indebtedness or other obligation or Security, or by loan, advance or capital contribution, or otherwise, or in any Property except the following:

(i) investments in one or more Subsidiaries of Borrower to the extent existing on the Closing Date;

(ii) Property to be used in the ordinary course of business;

(iii) Current assets arising from the sale of goods and services in the ordinary course of business of Borrower and its Subsidiaries;

(iv) investments in direct obligations of the United States of America, or any agency thereof or obligations guaranteed by the United States of America, provided that such obligations mature within one year from the date of acquisition thereof;

(v) investments in certificates of deposit maturing within one year from the date of acquisition issued by a bank or trust company organized under the laws of the United States or any state thereof having capital surplus and undivided profits aggregating at least $100,000,000; and

(vi) investments in commercial paper given the highest rating by a national credit rating agency and maturing not more than 270 days from the date of creation thereof.

Revolving Credit Loans —a Loan made by Lenders as provided in Section 1.1.1 of the Agreement.

Revolving Credit Loan Commitments —as defined in Section 1.1.1 of the Agreement.

Revolving Credit Note —the Revolving Credit Note(s) to be executed by Borrowers in favor of Lenders to evidence the Revolving Credit Loans, which shall be in the form of Exhibit A attached hereto.

Revolving Credit Percentage —as defined in Section 1.1.1 of the Agreement.

Schedule of Accounts —as defined in Section 6.2.1 of the Agreement.

Security —shall have the same meaning as in Section 2(1) of the Securities Act of 1933, as amended.

Security Documents —the Mortgages, any New Mortgage, the Guaranty, the Pledge Agreement and all other instruments and agreements now or at any time hereafter securing the whole or any part of the Obligations.

Seller —Collectively, Kent Electronics Corporation and T.H. Cabling, L.P.

Seller Guarantee —that certain Limited Guaranty dated as of May 22, 2000 executed by Code Hennessy & Simmons II, L.P., in favor of T.H. Cabling, L.P.

Seller Note —that certain Note dated on or about the Closing Date and delivered by Borrower to Seller pursuant to Section 1.3 of the Asset Purchase Agreement.

Seller Subordinated Debt —all Indebtedness due Seller from Borrower under the Asset Purchase Agreement, the Noncompetition Agreement and the Seller Note.

Solvent —as to any Person, such Person (i) owns Property whose fair saleable value on a going concern basis is greater than the amount required to pay all of such Person's Indebtedness (including contingent debts), (ii) is able to pay all of its Indebtedness as such Indebtedness matures and (iii) has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage.

Standby Letter of Credit —any Letter of Credit issued by Agent or Bank for the account of Borrower which is not a Trade Letter of Credit.

Statutory Reserves —a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including, without limitation, any marginal, special, emergency or supplemental reserves), expressed as a decimal, established by the Board for Eurocurrency Liabilities (as defined in Regulation D of the Board or any successor thereto) as applicable to each outstanding LIBOR Portion and the LIBOR Period applicable thereto. Such reserve percentages shall include, without limitation, those imposed under such Regulation D. LIBOR Portions shall be deemed to constitute Eurocurrency Liabilities and as such shall be deemed to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets which may be available from time to time to Bank or any Lender under such Regulation D. Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

Stock —all shares, options, warrants, interest, participations or other equivalents (regardless of how designated) of or in a corporation or equivalent entity, whether voting or nonvoting, including, without limitation, common stock, preferred stock, or any other "equity security" (as such term in defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Act of 1934, as amended).

Subordinated Debt —Indebtedness of Borrower that is subordinated to the Obligations in a manner satisfactory to Agent.

Subordination Agreement —that certain Subordination Agreement dated on or about the Closing Date by and among Kent Electronics Corporation, T.H. Cabling, L.P. and Agent, as the same may be amended from time to time.

Subsidiary —any corporation of which a Person owns, directly or indirectly through one or more intermediaries, more than 50% of the Voting Stock at the time of determination.

Tax —in relation to any LIBOR Portion and the applicable LIBOR Rate, any tax, levy, impost, duty, deduction, withholding or charges of whatever nature required by any Legal Requirement (i) to be paid by Agent or any Lender and/or (ii) to be withheld or deducted from any payment otherwise required hereby to be made by Borrowers to Agent or any Lender; provided , that the term "Tax" shall not include any taxes imposed upon the net income of Agent or any Lender.

Term Loan A —the Loans described in Section 1.2.1 of the Agreement.

Term Loan A Commitment(s) —as defined in Section 1.2.1 of the Agreement.

Term Loan A Percentage —as defined in Section 1.2.1 of the Agreement.

Term Loans —collectively, Term Loan A and Term Loans B.

Term Loan(s) B —the Loans described in Section 1.2.2 of the Agreement

Term Loan B Commitment(s) —as defined in Section 1.2.2 of the Agreement.

Term Loans B Percentage —as defined in Section 1.2.2 of the Agreement.

Term Note A —the Secured Promissory Note(s) to be executed by Borrower in favor of Lenders to evidence Term Loans B, which shall be in the form of Exhibit A-2 to the Agreement.

Term Note B —the Secured Promissory Note(s) to be executed by Borrower in favor of Lenders to evidence Term Loans A, which shall be in the form of Exhibit A-1 to the Agreement.

Total Credit Facility —Sixty-Five Million Dollars ($65,000,000).

Trade Letter of Credit —a Letter of Credit issued by Bank or Agent for the account of a Borrower in connection with the purchase of Inventory by such Borrower.

Voting Stock —Securities of any class or classes of a corporation the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors (or Persons performing similar functions).

Other Terms. All other terms contained in the Agreement shall have, when the context so indicates, the meanings provided for by the Code to the extent the same are used or defined therein.

Certain Matters of Construction. The terms "herein", "hereof" and "hereunder" and other words of similar import refer to the Agreement as a whole and not to any particular section, paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. The section titles, table of contents and list of exhibits appear as a matter of convenience only and shall not affect the interpretation of the Agreement. All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations. All references to any of the Loan Documents shall include any and all modifications thereto and any and all extensions or renewals thereof.

Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed, unless otherwise specifically provided herein, in accordance with GAAP consistently applied. That certain terms or computations are explicitly modified by the phrase "in accordance with GAAP" shall in no way be construed to limit the foregoing.

LIST OF EXHIBITS AND SCHEDULES

Exhibit A		Form of Revolving Credit Note
Exhibit A-1		Form of Term Note A
Exhibit A-2		Form of Term Note B
Exhibit B		Borrower's and each Subsidiary's Business Locations
Exhibit C		Form of Borrowing Base Certificate
Exhibit D		Jurisdictions in which Borrower and each Subsidiary is Authorized to do Business
Exhibit E		Capital Structure of Borrower
Exhibit F		Legal Names
Exhibit G		Tax Identification Numbers of Subsidiaries of Borrower
Exhibit H		Patents, Trademarks, Copyrights and Licenses
Exhibit I		Contracts Restricting Borrower's Right to Incur Debts
Exhibit J		Litigation
Exhibit K		Capitalized Leases
Exhibit L		Operating Leases
Exhibit M		Pension Plans
Exhibit N		Labor Contracts
Exhibit O		Compliance Certificate
Exhibit P		Permitted Liens
Exhibit Q		Financial Covenants
Exhibit R		Schedule of Documents
Exhibit S		Form of Assignment and Acceptance Agreement
Exhibit T		Letter of Credit Charges
Schedule 7.1.10(b) Exceptions to GAAP in the Financial Statements of the Business
Schedule 8.2.4 Affiliate Transactions

EXHIBIT A

REVOLVING CREDIT NOTE

, 2000
Chicago, Illinois

FOR VALUE RECEIVED, the undersigned, (hereinafter "Borrower"), hereby PROMISES TO PAY to the order of , a corporation ("Lender"), or its registered assigns, at the principal office of Fleet Capital Corporation, as agent for such Lender, or at such other place in the United States of America as the holder of this Note may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the principal amount of ($ ), or such lesser principal amount as may be outstanding pursuant to the Loan Agreement (as hereinafter defined) with respect to the Revolving Credit Loan, together with interest on the unpaid principal amount of this Note outstanding from time to time.

This Note is one of the Revolving Credit Notes referred to in, and issued pursuant to, that certain Amended and Restated Loan and Security Agreement dated as of May , 2000 by and among Borrower, the lender signatories thereto (including Lender) and Fleet Capital Corporation ("FCC"), as agent for such Lenders (FCC in such capacity "Agent") (hereinafter amended from time to time, the "Loan Agreement"), and is entitled to the benefit and security of the Loan Agreement. All of the terms, covenants and conditions of the Loan Agreement and the Security Documents are hereby made a part of this Note and are deemed incorporated herein in full. All capitalized terms herein, unless otherwise defined, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Loan Agreement.

The principal amount of the indebtedness evidenced hereby shall be payable in the amounts and on the dates specified in the Loan Agreement and, if not sooner paid in full, on the Commitment Termination Date, unless the term hereof is extended in accordance with the Loan Agreement. Interest thereon shall be paid until such principal amount is paid in full at such interest rates and at such times as are specified in the Loan Agreement.

Upon and after the occurrence, and during the continuation, of an Event of Default, this Note shall or may, as provided in the Loan Agreement, become or be declared immediately due and payable.

The right to receive principal of, and stated interest on, this Note may only be transferred in accordance with the provisions of the Loan Agreement.

Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower.

This Note shall be interpreted, governed by, and construed in accordance with, the internal laws of the State of Illinois.

HOUSTON WIRE & CABLE COMPANY

By:
	Name:
	Title:

EXHIBIT A-1

SECURED PROMISSORY NOTE

(Term Note A)

, 2000
Chicago, Illinois

FOR VALUE RECEIVED , the undersigned (hereinafter "Borrower"), hereby promises to pay to the order of , a corporation (hereinafter "Lender"), or its registered assigns at the office of Fleet Capital Corporation, as agent for such Lender, or at such other place in the United States of America as the holder of this Note may designate from time to time in writing, in lawful money of the United States, in immediately available funds, at the time of payment, the principal sum of ($ ), together with interest from and after the date hereof on the unpaid principal balance outstanding from time to time.

This Secured Promissory Note (the "Note") is one of the Term Notes A referred to in, and is issued pursuant to, that certain Amended and Restated Loan and Security Agreement dated as of May , 2000 by and among Borrower, the lender signatories thereto (including Lender) and Fleet Capital Corporation ("FCC") as Agent for said lenders (FCC in such capacity "Agent") (hereinafter, as amended from time to time, the "Loan Agreement"), and is entitled to all of the benefits and security of the Loan Agreement. All of the terms, covenants and conditions of the Loan Agreement and the Security Documents are hereby made a part of this Note and are deemed incorporated herein in full. All capitalized terms used herein, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Loan Agreement.

For so long as no Event of Default shall have occurred and be continuing the principal amount and accrued interest of this Note shall be due and payable on the dates and in the manner hereinafter set forth:

(a) Interest on the unpaid principal balance outstanding from time to time shall be paid at such interest rates and at such times as are specified in the Loan Agreement;

(b) Principal shall be due and payable quarterly commencing on October 1, 2000 and continuing on the first day of each January 1, April 1, July 1 and October 1 thereafter to and including April 1, 2004 in installments equal to [Two Hundred Fifty Thousand Dollars ($250,000)]; and

(c) The entire remaining principal amount then outstanding, together with any and all other amounts due hereunder, shall be due and payable on the Commitment Termination Date.

Notwithstanding the foregoing, the entire unpaid principal balance and accrued interest on this Note shall be due and payable immediately upon any termination of the Loan Agreement pursuant to Section 4 thereof.

This Note shall be subject to mandatory prepayment in accordance with the provisions of Section 3.3 of the Loan Agreement. Borrower may also prepay this Note in the manner provided in Section 4 of the Loan Agreement.

Upon the occurrence, and during the continuation, of an Event of Default, this Note shall or may, as provided in the Loan Agreement, become or be declared immediately due and payable.

The right to receive principal of, and stated interest on, this Note may only be transferred in accordance with the provisions of the Loan Agreement.

Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower.

This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois.

HOUSTON WIRE & CABLE COMPANY

By:
	Name:
	Title:

EXHIBIT A-2

SECURED PROMISSORY NOTE

(Term Note B)

,
Chicago, Illinois

FOR VALUE RECEIVED , the undersigned (hereinafter "Borrower"), hereby promises to pay to the order of , a corporation (hereinafter "Lender"), or its registered assigns at the office of Fleet Capital Corporation, as agent for such Lender, or at such other place in the United States of America as the holder of this Note may designate from time to time in writing, in lawful money of the United States, in immediately available funds, at the time of payment, the principal sum of Dollars ($ ), together with interest from and after the date hereof on the unpaid principal balance outstanding from time to time.

This Secured Promissory Note (the "Note") is one of the Term Notes B referred to in, and is issued pursuant to, that certain Amended and Restated Loan and Security Agreement dated as of May , 2000 by and among Borrower, the lender signatories thereto (including Lender) and Fleet Capital Corporation ("FCC") as Agent for said lenders (FCC in such capacity "Agent") (hereinafter, as amended from time to time, the "Loan Agreement"), and is entitled to all of the benefits and security of the Loan Agreement. All of the terms, covenants and conditions of the Loan Agreement and the Security Documents are hereby made a part of this Note and are deemed incorporated herein in full. All capitalized terms used herein, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Loan Agreement.

(a) Interest on the unpaid principal balance outstanding from time to time shall be paid at such interest rates and at such times as are specified in the Loan Agreement;

(b) Principal shall be due and payable monthly commencing on December 1, 2000, and continuing on the first day of each month thereafter in installments equal to one eighteenth ( ¹ / 18 ) of the amount of all Term Loans B made by Lender to Borrower; and

(c) The entire remaining principal amount then outstanding, together with any and all other amounts due hereunder, shall be due and payable on the earlier of the Commitment Termination Date or May , 2002.

Upon the occurrence and during the continuation of an Event of Default, this Note shall or may, as provided in the Loan Agreement, become or be declared immediately due and payable.

The right to receive principal of, and stated interest on, this Note may only be transferred in accordance with the provisions of the Loan Agreement.

Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower.

This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois.

HOUSTON WIRE & CABLE COMPANY

By:
	Name:
	Title:

EXHIBIT B

BUSINESS LOCATIONS

1.: Borrower currently has the following business locations, and no others:

Chief Executive Office:

Other Locations:

2.: Borrower maintains its books and records relating to Accounts and General Intangibles at:
3.: Borrower has had no office, place of business or agent for process located in any county other than as set forth above, except:
4.: Each Subsidiary currently has the following business locations, and no others:

Chief Executive Office:

Other Locations:

5.: Each Subsidiary maintains its books and records relating to Accounts and General Intangibles at:
6.: Each Subsidiary has had no office, place of business or agent for process located in any county other than as set forth above, except:
7.: The following bailees, warehouseman, similar parties and consignees hold inventory of Borrower or one of its Subsidiaries:

Name and Address of Party		Nature of Relationship		Amount of Inventory		Owner of Inventory

EXHIBIT C

FORM OF BORROWING BASE CERTIFICATE

EXHIBIT D

JURISDICTIONS IN WHICH BORROWER
AND ITS SUBSIDIARIES
ARE AUTHORIZED TO DO BUSINESS

Name of Entity		Jurisdiction

EXHIBIT E

CAPITAL STRUCTURE

1.: The classes and number of authorized shares of Borrower and each Subsidiary and the record owner of such shares are as follows:

Borrower:

Class of Stock		Number of Shares Issued and Outstanding		Record Owners		Number of Shares Authorized but Unissued

Subsidiaries :

Class of Stock		Number of Shares Issued and Outstanding		Record Owners		Number of Shares Authorized but Unissued

2.: The number, nature and holder of all other outstanding Securities of Borrower and each Subsidiary are as follows:
3.: The correct name and jurisdiction of incorporation of each Subsidiary of Borrower and the percentage of its issued and outstanding shares owned by Borrower are as follows:

Name		Jurisdiction of Incorporation		Percentage of Shares Owned by Borrower

4.: The name of each of Borrower's corporate or joint venture Affiliates and the nature of the affiliation are as follows:

EXHIBIT F

CORPORATE NAMES

1.: Borrower's correct corporate name, as registered with the Secretary of State of the State of , is:
2.: In the conduct of its business, Borrower has used the following names:
3.: Each Subsidiary's correct corporate name, as registered with the Secretary of State of the State of its incorporation, is:
4.: In the conduct of its business, each Subsidiary has used the following names:

EXHIBIT G

TAX IDENTIFICATION NUMBERS OF SUBSIDIARIES

Subsidiary		Number

EXHIBIT H

PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES

1.: Borrower's and its Subsidiaries' patents:

Patent		Owner		Status in Patent Office		Federal Registration Number		Registration Date

2.: Borrower's and its Subsidiaries' trademarks:

Trademark		Owner		Status in Trademark Office		Federal Registration Number		Registration Date

3.: Borrower's and its Subsidiaries' copyrights:

Copyrights		Owner		Status in Copyright Office		Federal Registration Number		Registration Date

4.: Borrower's and its Subsidiaries' licenses (other than routine business licenses, authorizing them to transact business in local jurisdictions):

Name of License		Nature of License		Licensor		Term of License

EXHIBIT I

CONTRACTS RESTRICTING BORROWER'S RIGHT TO INCUR DEBTS

Contracts that restrict the right of Borrower to incur Indebtedness:

Title of Contract		Identity of Parties		Nature of Restriction		Term of Contract

EXHIBIT J

LITIGATION

1.: Actions, suits, proceedings and investigations pending against Borrower or any Subsidiary:

Title of Action		Nature of Action		Complaining Parties		Jurisdiction or Tribunal

2.: The only threatened actions, suits, proceedings or investigations of which Borrower or any Subsidiary is aware are as follows:

EXHIBIT K

CAPITALIZED LEASES

Borrower and its Subsidiaries have the following capitalized leases:

Lessee		Lessor		Term of Lease		Property Covered

EXHIBIT L

OPERATING LEASES

Borrower and its Subsidiaries have the following operating leases:

Lessee		Lessor		Term of Lease		Property Covered

EXHIBIT M

PENSION PLANS

Borrower and its Subsidiaries have the following Plans:

Party		Type of Plan
Borrower

[Subsidiaries]

EXHIBIT N

COLLECTIVE BARGAINING AGREEMENTS; LABOR CONTROVERSIES

1.: Borrower and its Subsidiaries are parties to the following collective bargaining agreements:

Type of Agreement		Parties		Term of Agreement

2.: Material grievances, disputes or controversies with employees are as follows:

Parties Involved		Nature of Grievance, Dispute or Controversy

3.: Threatened strikes, work stoppages and asserted pending demands for collective bargaining are as follows:

Parties Involved		Nature of Matter

EXHIBIT O

COMPLIANCE CERTIFICATE

[Letterhead of Borrower]

                                , 19

The undersigned, the chief financial officer of Houston Wire & Cable Company, a Delaware corporation ("Borrower"), gives this certificate to Fleet Capital Corporation in accordance with the requirements of Section 8.1.2 of that certain Loan and Security Agreement dated May , 2000, among Borrower, the lender signatories thereto ("Lenders") and Fleet Capital Corporation ("FCC"), as agent for such Lenders ("FCC", in such capacity, "Agent"). Capitalized terms used in this Certificate, unless otherwise defined herein, shall have the meanings ascribed to them in the Loan Agreement.

1. Based upon my review of the balance sheets and statements of income of Borrower for the [fiscal year] [monthly period] ending , 19 , copies of which are attached hereto, I hereby certify that:

(a) Fixed Charge Coverage Ratio for the period between and is to 1;

(b) EBITDA for the period between and is $ ;

2. No Default exists on the date hereof, other than: [if none, so state]; and

3. No Event of Default exists on the date hereof, other than [if none, so state].

Very truly yours,

Chief Financial Officer

EXHIBIT P

PERMITTED LIENS

Secured Party		Nature of Lien

EXHIBIT R

SCHEDULE OF DOCUMENTS

(A) Certified copies of Borrower's casualty insurance policies, together with loss payable endorsements on Agent's standard form of Loss Payee Endorsement naming Agent as loss payee, and certified copies of Borrower's liability insurance policies, together with endorsements naming Lender as a co-insured;

(B) Copies of all filing receipts or acknowledgments issued by any governmental authority to evidence any filing or recordation necessary to perfect the Liens of Agent, for its benefit and the ratable benefit of Lenders in the Collateral and the assets of Guarantor and evidence in a form acceptable to Agent that such Liens constitute valid and perfected security interests and Liens, having the Lien priority specified herein;

(C) A copy of the Articles or Certificate of Incorporation of Borrower, and all amendments thereto, certified by the Secretary of State or other appropriate official of its jurisdiction of incorporation;

(D) Good standing certificates for Borrower, issued by the Secretary of State or other appropriate official of Borrower's jurisdiction of incorporation and each jurisdiction where the conduct of Borrower's business activities or the ownership of its Properties necessitates qualification;

(E) The Security Documents duly executed, accepted and acknowledged by or on behalf of each of the signatories thereto;

(F) The Other Agreements duly executed and delivered by Borrower;

(G) A Certificate of the Assistant Secretary of Borrower, together with true and correct copies of the Certificate of Incorporation and Bylaws of Borrower, and all amendments thereto, true and correct copies of the resolutions of the Board of Directors of Borrower authorizing or ratifying the execution, delivery and performance of this Agreement, the Security Documents and the Other Agreements and the names of the officer or officers of Borrower authorized to sign this Agreement, the Security Documents and the Other Agreements together with a sample of the true signature of each such officer;

(H) The favorable, written opinion of Altheimer & Gray, counsel to Borrower, as to the transactions contemplated by this Agreement and any of the other Loan Documents;

(I) Written instruction from Borrower directing the application of proceeds of the initial Loan made pursuant to this Agreement, and an initial Borrowing Base Certificate from Borrower reflecting that Borrower has Eligible Accounts and Eligible Inventory in Amounts sufficient in value and amount to support Loans in the amount requested by Borrower on the date of such certificate;

(J) Duly executed agreement establishing the Dominion Account with a financial institution acceptable to Agent for the collection or servicing of the Accounts;

(K) Pay-off statements, releases and UCC-3 Assignments from Borrower's existing senior lenders;

(L) Accountants' letter;

(M) Fully paid mortgagee title insurance policies (or binding commitments to issue title insurance policies, marked to Agent's satisfaction to evidence the form of such policies to be delivered after the Closing Date), in standard ALTA form, issued by a title insurance company satisfactory to Agent, each in an amount equal to not less than the fair market value of the real Property or leasehold interest, as the case may be, subject to the Mortgage, insuring the Mortgage to create a valid Lien on all real Property and valid Liens on the leasehold interest described therein with no exceptions which Agent shall not have approved in writing and not survey exceptions;

(N) Assignments of Mortgages;

(O) Purchase Documents;

(P) Phase I environmental assessments (and, if applicable Phase II environmental assessments) in respect to each of Borrower's plants;

(Q) The Guaranty;

(R) Stock certificates together with stock powers (assignments separate from certificate) for all issued and outstanding shares of Borrower's Stock;

(S) the Subordination Agreement;

(T) CHS Guaranty; and

(U) Such other documents, instruments and agreements as Agent shall reasonably request in connection with the foregoing matters.

EXHIBIT S

FORM OF
ASSIGNMENT AND ACCEPTANCE AGREEMENT

THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Agreement") made as of , 2000, by and between ("Assignee") and ("Assignor"). Houston Wire & Cable Company, a Delaware corporation ("Borrower"), the lenders signatory thereto ("Lenders") and Fleet Capital Corporation ("FCC") as agent for such Lenders (FCC in such capacity "Agent") entered into a certain Loan and Security Agreement dated as of May , 2000 (the "Loan Agreement") pursuant to which Lenders extended credit to Borrower in an aggregate principal amount not to exceed at any time outstanding Sixty-Five Million Dollars ($65,000,000). The parties are entering into this Agreement to provide for the transfer by Assignor of a portion of its rights and obligations under the Loan Agreement to Assignee.

Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement.

NOW THEREFORE, in consideration of the mutual agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Assignee and Assignor agree as follows:

1. Assignment.

(a) Assignor hereby sells, assigns and transfers to Assignee, and Assignee hereby purchases and assumes from the Assignor as of the Effective Date (as defined in Section 4 hereof) subject to the terms and conditions set forth in Section 11.3(b) of the Loan Agreement (x) (i) Dollars ($ ) Revolving Loan Commitment, including without limitation, an equivalent undivided interest and participation in and to all Letters of Credit and LC Guaranties, whether outstanding on the Effective Date or issued thereafter, (ii) Dollars ($ ) Term Loan A, (iii) Dollars ($ ) Term Loans B and (iv) Dollars ($ ) undrawn Term Loan B Commitment (Collectively, the "Assigned Commitment"), which shall be evidenced by a Revolving Credit Note, in the form of Exhibit A hereto (the " Revolving Credit Note"), a Term Note A, in the form of Exhibit B hereto (the " Term Note A") and a Term Note B, in the form of Exhibit C hereto (the " Term Note B") and (y) a proportional percent ( %) portion of the Revolving Credit Loans, Term Loan A and Term Loans B outstanding as of the Effective Date (the "Assigned Loans"), also evidenced by the Revolving Credit Note, the Term Note A and the Term Note B. As of the date hereof, the face amount of all outstanding Letters of Credit and LC Guaranties is ($ ).

(b) The Assignee hereby irrevocably purchases, takes and assumes, effective on the Effective Date, all duties, liabilities, obligations, rights and interests assigned and delegated to it by the Assignor (including, without limitation, the obligation to make Revolving Credit Loans, Term Loans B or to incur obligations in respect to Letters of Credit and LC Guaranties up to the amount of the Assignee's Assigned Commitment) and agrees to perform and assume all such duties, liabilities and obligations, and shall have all such rights and interests on and after the Effective Date as if it had been an original party to the Loan Agreement and each of the other Loan Documents having a Revolving Credit Loan Commitment, Term Loan A Commitment and Term Loan B Commitment equal to ( %) of the total Revolving Credit Loan Commitments, Term Loan A Commitment and Term Loan B Commitment under the Loan Agreement as is more specifically set forth in Section 1(a) hereof.

(c) Assignor makes no representation or warranty and assumes no responsibility with respect to (x) any statements, warranties or representations made in or in connection with the Loan Agreement or the other Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency

or value of the Loan Agreement and the other Loan Documents, other than that it is the legal and beneficial owner of the interests being assigned by it hereunder, that such interests are free and clear of any adverse claim, that it is legally authorized to enter into this Agreement and that this Agreement constitutes its legal, valid and binding obligations and (y) the financial condition of Borrower or the performance or observance by Borrower of any of their respective obligations under the Loan Agreement or any of the other Loan Documents.

(d) The Assignee (i) represents and warrants that it is legally authorized to enter into this Agreement, that the same constitutes its legal, valid and binding obligations and that all necessary consents, licenses, approvals, authorizations of, and all registrations or declarations with, any governmental or regulatory authority or body (collectively, the "Consents" and individually, a "Consent") presently required in connection with its execution, delivery and performance of this Agreement or for the enforcement of this Agreement against it have been obtained or made and are in full force and effect, and agrees that it shall (x) use its best efforts to obtain any additional Consents that become necessary for such execution, delivery, performance or enforcement, (y) comply in all material aspects with the terms of each such Consent and (z) notify the Agent promptly upon any such Consent being withdrawn, suspended or otherwise limited in effect or ceasing to be in full force and effect or of any such additional Consent becoming necessary; (ii) confirms that it has received a copy of the Loan Agreement and each of the other Loan Documents, together with copies of financial statements which Assignor has identified as the most recent financial statements delivered in accordance with the terms of the Loan Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (iii) agrees that it will, independently and without reliance upon Agent, Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Agreement and each of the other Loan Documents; (iv) appoints and authorizes Agent to take such action as Agent on its behalf and to exercise such powers under the Loan Agreement and each of the other Loan Documents as are delegated to Agent by the terms thereof; (v) confirms that it is purchasing and assuming the interests in the Assigned Commitment, the Assigned Loans, the Loan Agreement and each of the other Loan Documents hereunder in the course of making loans in the ordinary course of its commercial lending business and not with any present intention of distributing or selling such interests (except as permitted under the Loan Agreement); and (vi) agrees that it will perform in accordance with their terms all the Obligations which by the terms of the Loan Agreement and each of the other Loan Documents are required to be performed by it as a Lender under the Loan Agreement and each of the other Loan Documents.

(e) Assignee agrees to indemnify Assignor from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Assignor in any way relating to or arising out of Assignee's failure to perform Assignee's obligations under the Assigned Commitment on or after the Effective Date.

2. Payment for Assigned Revolving Credit Loans.

(a) On or before 11:00 a.m. on the Effective Date, Assignee shall deliver to Assignor in immediately available funds (the "Purchase Price") equal to percent ( %) of the principal amount of all of the Revolving Credit Loans, the Term Loan and Term Loans B outstanding on the Effective Date.

(b) Notwithstanding the terms of the Loan Agreement or the Revolving Credit Note, the Term Note A or the Term Note B with respect to: (a) the first interest payments due after the Effective Date on the LIBOR Portion or the Base Rate Portion, (b) the first

unused line fee due after the Effective Date and (c) fees received by Agent prior to the Effective Date in respect to Letters of Credit or LC Guaranties outstanding on the Effective Date:

(i) Whenever Agent receives a payment of such interest, Agent will promptly pay over to Assignee interest on the LIBOR Portion(s) and the Base Rate Portion at the interest rates provided for in the Loan Agreement calculated from the Effective Date;

(ii) Whenever Agent receives a payment of such unused line fee, it will promptly pay over to Assignee its proportionate share of said fee calculated from the Effective Date in accordance with the terms of the Loan Agreement; and

(iii) Whenever Agent receives a payment of such fees in respect to Letters of Credit or LC Guaranties outstanding on the Effective Date, it will promptly pay over to the Assignee its proportionate share of said fees calculated from the Effective Date in accordance with the terms of the Loan Agreement.

Agent shall pay over to Assignor (or to another applicable Lender) (x) the difference between the total amount of the first interest payments due after the Effective Date in respect to the LIBOR Portion or the Base Rate Portion and the amounts paid to Assignee pursuant to 2(b)(i) above, (y) the difference between the first payment of unused line fee due after the Effective Date and the amounts paid to Assignee pursuant to Section 2(b)(ii) above and (z) the difference between the first payment of fees in respect to Letters of Credit or LC Guaranties outstanding on the Effective Date and the amounts paid to Assignee pursuant to Section 2(b)(iii) above.

3. Delivery of Amendment.

On the Effective Date, Assignor and Assignee shall execute an amendment to the Loan Agreement in the form of Schedule I hereto (the "Amendment"). Assignor will use its best efforts to cause Borrower to promptly deliver to Assignee the Amendment and the Revolving Credit Note, the Term Note A and the Term Note B, each executed by Borrower.

4. Effective Date.

(a) This Agreement shall become effective on the first date (the "Effective Date") when each of the following conditions precedent is satisfied in full:

(i) Agent shall have received counterparts of this Agreement which, when taken together, bear the signature of all of the parties hereto;

(ii) Agent shall have received for and on behalf of Assignor and Assignee, the Amendment executed by all parties thereto, the Revolving Credit Note, the Term Note and the Term Note B, and the Notes to be delivered to Assignor pursuant to the Amendment; and

(iii) Assignee shall have delivered to the Assignor in immediately available funds the Purchase Price, and Assignor shall have delivered to Assignee in immediately available funds amounts due Assignee pursuant to Section 2 above; and

(iv) Agent shall have received the fee payable to it pursuant to Section 12.3(b) of the Loan Agreement.

(b) All notices shall be delivered to the Assignee, at the following address:

Attention:

Attention:
Telephone No.:
Telecopier No.:

5. Governing Law.

This Agreement and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws.

6. Counterparts.

This Agreement may be executed in any number of counterparts, and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.

		, as Assignee
		By:
		Name:
		Title:
		, as Assignee
		By:
		Name:
		Title:
Accepted and Agreed to as of this day of ,

SCHEDULE I

FORM OF AMENDMENT TO LOAN AND SECURITY AGREEMENT

AMENDMENT, dated as of , to the Loan and Security Agreement, dated as of May , 2000, among Houston Wire & Cable Company ("Borrower"), the lenders named therein ("Lenders") and Fleet Capital Corporation, as Agent (the "Loan Agreement"). The terms used herein and not otherwise defined shall have the meanings attributed to them in the Loan Agreement.

WHEREAS, pursuant to the Loan Agreement, inter alia , Lenders: (i) have committed to make Revolving Credit Loans to Borrower in the principal amount of up to Fifty-Five Million Dollars ($55,000,000); (ii) have committed to incur certain obligations on behalf of Borrower in respect to Letters of Credit and LC Guaranties; (iii) have made a Term Loan A to Borrower in the principal amount of Five Million Dollars ($5,000,000); and (iv) have committed to make or have made Term Loans B to Borrower in the aggregate amount of Five Million Dollars ($5,000,000);

WHEREAS, has sold, transferred and assigned the following Revolving Credit Loans, the Revolving Credit Loan Commitment, Term Loan A, Term Loans B and Term Loan B Commitment to the following parties:

(a) [LENDER NO. 1]

(i) Assigned Revolving Credit Loans: Dollars ($ );

(ii) Assigned Revolving Credit Loan Commitment: Dollars ($ );

(iii) Assigned Term Loan A: Dollars ($ );

(iv) Assigned Term Loans B: Dollars ($ ); and

(v) Assigned Term Loan B Commitment: Dollars ($ ).

(b) [LENDER NO. 2]

(i) Assigned Revolving Credit Loans: Dollars ($ );

(ii) Assigned Revolving Credit Loan Commitment: Dollars ($ );

(iii) Assigned Term Loan A: Dollars ($ );

(iv) Assigned Term Loans B: Dollars ($ ); and

(v) Assigned Term Loan B Commitment: Dollars ($ ).

WHEREAS, as a result of such sale, assignment and transfer each of LENDER NO. 1 and LENDER NO. 2 has become a Lender with a Revolving Credit Loan Commitment, Term Loan A, Term Loans B and Term Loan B Commitment under the Loan Agreement; and

WHEREAS, the parties hereto desire to amend the Loan Agreement to add LENDER NO. 1 and LENDER NO. 2 as Lenders.

NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained and contained in the Loan Agreement, the parties hereto hereby agree as follows:

1. The signature block to the Loan Agreement is hereby amended to read as the signature block to this Amendment.

2. Borrower hereby confirms that the representations and warranties of Borrower contained in the Loan Documents are correct in all material respects on the date hereof, except (i) to the extent that any such representation or warranty expressly relates to an earlier date, and (ii) for changes therein permitted or contemplated by the Loan Agreement.

3. Borrower represents and warrants that no Default or Event of Default exists as of the date hereof.

4. On the date hereof, Borrower shall issue and deliver to Agent Revolving Credit Notes, Term Note and Term Notes B to each of LENDER NO. 1, LENDER NO. 2 and [Assigning Lender] in the amount of each Lender's respective Revolving Credit Loan Commitment, outstanding Term Loan A, undrawn Term Loan B Commitment and outstanding Term Loans B. Upon the delivery to Agent of such Notes, Agent shall deliver to Borrower for cancellation the Notes previously delivered to [Assigning Lender].

5. Notices to LENDER NO. 1 and LENDER NO. 2 shall be addressed as follows:

(a) LENDER NO. 1

(b) LENDER NO. 2

6. Except as otherwise specifically set out herein, the provisions of the Loan Agreement shall remain in full force and effect.

7. This Amendment and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws.

8. This Amendment may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement.

IN WITNESS WHEREOF, this Amendment has been duly executed as of the date first written above.

HOUSTON WIRE & CABLE COMPANY				LENDER NO. 1
By:				By:
Name:				Name:
Title:				Title:
Fleet Capital Corporation, as Agent				Revolving Credit Loan Commitment: $
By:				Outstanding Term Loan A: $
Name:
Title:				Outstanding Term Loans B: $
Revolving Credit Loan Commitment: $				Undrawn Term Loan B Commitment: $
Outstanding Term Loan A: $
				LENDER NO. 2
Outstanding Term Loans B: $
				By:
Undrawn Term Loan B				Name:
Commitment: $				Title:
				Revolving Credit Loan Commitment: $
				Outstanding Term Loan A: $
				Undrawn Term Loan B Commitment: $

EXHIBIT T

LETTER OF CREDIT CHARGES

FEE SCHEDULE—TRADE LETTERS OF CREDIT

Issuance		¹ / 4 % flat (minimum $250.00)
Amendment		$85.00—a maximum of six amendments per LC will be allowed. An amendment to increase and/or extend the LC will be treated as an issuance.
LC Fee		LC Percent—as defined in the Loan Agreement (for ratable benefit of Lenders)
Negotiation / Payment		¹ / 4 flat (minimum $150.00)
Acceptance / Deferred Payment		2.75% p.a. (minimum $150.00)
Cancellation of Unused Credits		$100.00
Transfer / Assignment of LC		¹ / 4 flat (minimum $250.00)
Shipping Guaranty / Airway Release		$100.00
Wire Transfer		$35.00 per transfer

plus any and all out-of-pocket expenses such as courier, postage and telexes, etc.

FEE SCHEDULE—STANDBY LETTERS OF CREDIT

Issuance		¹ / 4 % flat (minimum $150.00)
Amendment		$150.00 inclusive of automatic renewal of LC
LC Fee		LC Percent—as defined in the Loan Agreement (for ratable benefit of Lenders)
Negotiation / Payment		¹ / 4 flat (minimum $150.00)
Transfer of LC		¹ / 4 flat (minimum $2000.00)
Wire Transfer		$35.00 per transfer

plus any and all out-of-pocket expenses such as courier, postage and telexes, etc.

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Exhibit 10.4

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Exhibit 10.5

FIRST AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

FIRST AMENDMENT, dated as of July 13, 2000 to the Amended and Restated Loan and Security Agreement, dated as of May 22, 2000, among Houston Wire & Cable Company ("Borrower"), the lenders named therein ("Lenders") and Fleet Capital Corporation, as Agent (the "Loan Agreement"). The terms used herein and not otherwise defined shall have the meanings attributed to them in the Loan Agreement.

WHEREAS, Fleet Capital Corporation ("FCC") has sold, transferred and assigned the following Revolving Credit Loans, the Revolving Credit Loan Commitment, Term Loan A, Term Loans B and Term Loan B Commitment to the following parties:

(a): Bank of America, N.A. ("B of A")

(i) Assigned Revolving Credit Loans: Eight Million Eight Hundred Eighty-Five Thousand One Hundred Six and 16/100 Dollars ($8,885,106.16);

(ii) Assigned Revolving Credit Loan Commitment: Twelve Million Six Hundred Ninety-Two Thousand Three Hundred Eight Dollars ($12,692,308);

(iii) Assigned Term Loan A: One Million One Hundred Fifty-Three Thousand Eight Hundred Forty-Six Dollars ($1,153,846);

(iv) Assigned Term Loans B: Zero Dollars ($0); and

(v) Assigned Term Loan B Commitment: One Million One Hundred Fifty-Three Thousand Eight Hundred Forty-Six Dollars ($1,153,846).

WHEREAS, as a result of such sale, assignment and transfer B of A and has become a Lender with a Revolving Credit Loan Commitment, Term Loan A, Term Loans B and Term Loan B Commitment under the Loan Agreement; and

WHEREAS, the parties hereto desire to amend the Loan Agreement to add B of A as a Lender.

NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained and contained in the Loan Agreement, the parties hereto hereby agree as follows:

1. The signature block to the Loan Agreement is hereby amended to read as the signature block to this Amendment.

3. Borrower represents and warrants that no Default or Event of Default exists as of the date hereof.

4. On the date hereof, Borrower shall issue and deliver to Agent Revolving Credit Notes, Term Note and Term Notes B to each of B of A and FCC in the amount of each Lender's respective Revolving Credit Loan Commitment, outstanding Term Loan A, undrawn Term Loan B

Commitment and outstanding Term Loans B. Upon the delivery to Agent of such Notes, Agent shall deliver to Borrower for cancellation the Notes previously delivered to FCC.

5. Notices to B of A shall be addressed as follows:

(a) Bank of America, N.A.
231 S. LaSalle Street
Chicago, IL 60697
Attention: HWC Account Executive

Telecopier No.: 312-974-8760

6. Except as otherwise specifically set out herein, the provisions of the Loan Agreement shall remain in full force and effect.

8. This Amendment may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement.

IN WITNESS WHEREOF, this Amendment has been duly executed as of the date first written above.

HOUSTON WIRE & CABLE COMPANY, as Borrower		BANK OF AMERICA, N.A.
By:	/s/ DANIELLE CUNNINGHAM	By:	/s/ BEVERLY J. GRAY
Name:	Danielle Cunningham	Name:	Beverly J. Gray
Title:	Vice President	Title:	Senior Vice President
HWC Holding Corporation, as Guarantor		Revolving Credit Loan Commitment: $12,692,308 Outstanding Term Loan A: $1,153,846.00 Outstanding Term Loans B: $0 Undrawn Term Loan B Commitment: $1,153,846.00
By:	/s/ DANIELLE CUNNINGHAM
Name:	Danielle Cunningham
Title:	Vice President
Fleet Capital Corporation, as Agent and Lender		The Cit Group/Business Credit, Inc.
By:	/s/ L. FRANK MELAZZO	By:	/s/ GRANT WEISS
Name:	L. Frank Melazzo	Name:	Grant Weiss
Title:	Senior Vice President	Title:	Assistant Vice President
Revolving Credit Loan Commitment: $25,384,615.08 Outstanding Term Loan A: $2,307,692.46 Outstanding Term Loans B: $0 Undrawn Term Loan B Commitment: $2,307,692.46		Revolving Credit Loan Commitment: $16,923,076.92 Outstanding Term Loan A: $1,538,461.54 Undrawn Term Loan B Commitment: $1,538,461.54

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Exhibit 10.5

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Exhibit 10.6

SECOND AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

SECOND AMENDMENT, dated as of May 30, 2001 to the Amended and Restated Loan and Security Agreement, dated as of May 22, 2000, among Houston Wire & Cable Company ("Borrower"), the lenders named therein ("Lenders") and Fleet Capital Corporation, as Agent. Said Amended and Restated Loan and Security Agreement, as amended by a certain First Amendment to Amended and Restated Loan and Security Agreement dated as of June 13, 2000 and as it may be further amended, is hereinafter referred to as the "Loan Agreement." The terms used herein and not otherwise defined shall have the meanings attributed to them in the Loan Agreement.

WHEREAS, Lenders, Agent and Borrower desire to make certain amendment and modifications to the Loan Agreement.

NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained and contained in the Loan Agreement, the parties hereto hereby agree as follows:

1. Amended Definitions. The definitions of "Eligible Account" and "LIBOR Term A Portion" contained in Appendix A to the Loan Agreement are hereby deleted and the following are inserted in their stead:

" Eligible Account —an Account arising in the ordinary course of Borrower's business from the sale of goods or rendition of services which Agent, in its reasonable credit judgment, deems to be an Eligible Account. Without limiting the generality of the foregoing, no Account shall be an Eligible Account if:

i. it arises out of a sale made by Borrower to a Subsidiary or an Affiliate of Borrower or to a Person controlled by an Affiliate of Borrower; or

ii. it is due or unpaid more than 90 days after the original invoice date; or

iii. 25% or more of the Accounts from the Account Debtor are not deemed Eligible Accounts hereunder; or

iv. the total unpaid Accounts of the Account Debtor (other than Affiliated Distributors) exceed 20% of the net amount of all Eligible Accounts, to the extent of such excess; or the total unpaid Accounts of Affiliated Distributors exceed 30% of the net amount of all Eligible Accounts, to the extent of such excess; or

v. any covenant, representation or warranty contained in the Agreement with respect to such Account has been breached; or

vi. the Account Debtor is also Borrower's creditor or supplier, or the Account Debtor has disputed liability with respect to such Account (to the extent of such dispute), or the Account Debtor has made any claim with respect to any other Account due from such Account Debtor to Borrower (to the extent of such claim), or the Account is subject to a debit memo or a volume rebate (to the extent of such volume rebate or debit memo) or the Account otherwise is or is reasonably expected to become subject to any right of setoff by the Account Debtor; or

vii. the Account Debtor has commenced a voluntary case under the federal bankruptcy laws, as now constituted or hereafter amended, or made an assignment for the benefit of creditors, or a decree or order for relief has been entered by a court having jurisdiction in the premises in respect of the Account Debtor in an involuntary case under the federal bankruptcy laws, as now constituted or hereafter amended, or any other petition or other application for relief under the federal bankruptcy laws has been filed against the Account Debtor, or if the Account Debtor has failed, suspended business, ceased to be Solvent, or

consented to or suffered a receiver, trustee, liquidator or custodian to be appointed for it or for all or a significant portion of its assets or affairs; or

viii. it arises from a sale to an Account Debtor outside the United States, unless the sale is on letter of credit, guaranty or acceptance terms in each case acceptable to Agent in its sole discretion; or

ix. it arises from a sale to the Account Debtor on a bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval, consignment or any other repurchase or return basis; or

x. the Account Debtor is the United States of America or any department, agency or instrumentality thereof, unless Borrower assigns its right to payment of such Account to Agent, in a manner satisfactory to Agent so as to comply with the Assignment of Claims Act of 1940 (31 U.S.C. §203 et seq., as amended); or

xi. the Account is subject to a Lien other than a Permitted Lien or the Account is not at all times subject to Agent's duly perfected, first priority security interest; or

xii. the goods giving rise to such Account have not been delivered to and accepted by the Account Debtor or the services giving rise to such Account have not been performed by Borrower and accepted by the Account Debtor; or

xiii. the Account is evidenced by chattel paper or an instrument of any kind, or has been reduced to judgment; or

xiv. Borrower has made any agreement with the Account Debtor for any deduction therefrom, except for discounts or allowances which are made in the ordinary course of business for prompt payment and which discounts or allowances are reflected in the calculation of the face value of each invoice related to such Account; or

xv. Borrower has made an agreement with the Account Debtor to extend the time of payment thereof.

* * *

LIBOR Term A Portion —that portion of the Term Loan A specified in a LIBOR Request which is not less than $1,000,000 and is an integral multiple of $250,000, which does not exceed the outstanding balance of the Term Loan A not already subject to a LIBOR Option and, which, as of the date of the LIBOR Request specifying such LIBOR Term A Portion, has met the conditions for basing interest on the LIBOR Rate in Section 2.3 of the Agreement and the LIBOR Period of which was commenced and not terminated."

2. Reserves. Agent, Lenders and Borrower agree to reduce the reserve created pursuant to clause (x) of the last sentence of Section 1.1.1.(A) of the Loan Agreement to an amount equal to the principal balance of Term Loans B outstanding from time to time.

3. Capital Expenditures. Section 8.2.8 of the Loan Agreement is hereby deleted and the following is inserted in its stead:

"8.2.8 Capital Expenditures. Make Capital Expenditures (including, without limitation, by way of capitalized leases) which, in the aggregate, as to Borrower and its Subsidiaries, exceed

during any fiscal year of Borrower the amount set forth opposite such fiscal year in the following schedule:

Fiscal Year Ending		Permitted Capital Expenditures
Closing Date to December 31, 2000		$450,000
December 31, 2001		$1,400,000
December 31, 2002		$750,000 plus the Carryover Amount
December 31, 2003 and 2004		$750,000"

The "Carryover Amount" shall mean the lesser of (x) $650,000 or (y) the excess (if any) of $1,400,000 over the actual amount of Capital Expenditures made by Borrower in the fiscal year ending December 31, 2001.

4. Continuing Effect. Except as otherwise specifically set out herein, the provisions of the Loan Agreement shall remain in full force and effect.

5. Governing Law. This Second Amendment and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws.

6. Counterparts. This Second Amendment may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement.

IN WITNESS WHEREOF, this Second Amendment has been duly executed as of the first day written above.

HOUSTON WIRE & CABLE COMPANY, as Borrower		BANK OF AMERICA, N.A., as a Lender
By:	/s/ NICOL G. GRAHAM	By:	/s/ MONIRAH SALAMA
Name:	Nicol G. Graham	Name:	Monirah Salama
Title:	Secretary and Treasurer	Title:	Assistant Vice President
HWC Holding Corporation, as Guarantor		The Cit Group/Business Credit, Inc., as a Lender
By:	/s/ CHARLES SORRENTINO	By:	/s/ GRANT WEISS
Name:	Charles Sorrentino	Name:	Grant Weiss
Title:	Chief Executive Officer	Title:	Assistant Vice President
Fleet Capital Corporation, as Agent and a Lender
By:	/s/ ARTHUR A. PESAVENTO
Name:	Arthur A. Pesavento
Title:	Vice President

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Exhibit 10.6

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Exhibit 10.7

THIRD AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

THIRD AMENDMENT, dated as of October 22, 2001 to the Amended and Restated Loan and Security Agreement, dated as of May 22, 2000, among Houston Wire & Cable Company ("Borrower"), the lenders named therein ("Lenders") and Fleet Capital Corporation ("FCC" as agent for said Lenders (FCC, in such capacity, "Agent"). Said Amended and Restated Loan and Security Agreement, as amended by a certain First Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated as of June 13, 2000, and by a certain Second Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated May 30, 2001 and as it may be further amended, is hereinafter referred to as the "Loan Agreement." The terms used herein and not otherwise defined shall have the meanings attributed to them in the Loan Agreement.

WHEREAS, Lenders, Agent and Borrower desire to make certain amendment and modifications to the Loan Agreement.

NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained and contained in the Loan Agreement, the parties hereto hereby agree as follows:

1. Additional Definition and Amended Definition. The definition of "PMC Lawsuit" set forth below is hereby inserted into Appendix A to the Loan Agreement. The definitions of "LIBOR Term B Portion" contained in Appendix A to the Loan Agreement and "EBITDA" contained in Exhibit Q to the Loan Agreement are hereby deleted and the following are inserted in their stead:

" LIBOR Term B Portion "—that portion of Term Loans B specified in a LIBOR Request which is not less than $100,000 and is an integral multiple of $100,000, which does not exceed the outstanding balance of the Term Loans B not already subject to a LIBOR Option and, which, as of the date of the LIBOR Request specifying such LIBOR Term B Portion, has met the conditions for basing interest on the LIBOR Rate in Section 2.3 of the Agreement and the LIBOR Period of which was commenced and not terminated.

" PMC Lawsuit "—that certain cause of action known as PMC Corporation v. Houston Wire & Cable Company , in the Superior Court of the State of New Hampshire, Case No. 98-C-0215 and all appellate actions resulting from such case.

" EBITDA "—with respect to any fiscal period, the sum of Guarantor's Consolidated Net Income plus amounts deducted in determining Consolidated Net Income in respect of: (a) any provision for (or less any benefit from) income taxes whether current or deferred; (b) amortization and depreciation expense; (c) interest expense for such period, all as determined in accordance with GAAP; (d) one-time consolidation expenses or charges in an amount not to exceed the reserve (in the approximate amount of $1,500,000) for such expenses or charges accrued for on or about the Closing Date in connection with the Acquisition; and (e) for periods ending on or prior to September 30, 2001, any expenses or charges (in an amount not to exceed $1,450,000) to income that, in Agent's reasonable determination, were incurred in connection with the PMC Lawsuit.

* * *

2. Reserves. Borrower acknowledges and agrees that Agent shall, on the date hereof, establish a reserve pursuant to Section 1.1.1 of the Loan Agreement in the initial amount of $83,333.33, which reserve shall increase by $83,333.33 per month on the 15 ^th day of each month, commencing November 15, 2001, until the amount of such reserve equals $500,000. Said reserve in the amount of $500,000 represents Agent's current estimate of Borrower's exposure under the PMC Lawsuit after giving effect to any indemnification claims of Borrower against Alltel Corporation or its affiliates. Agent retains the right to modify the amount of any such reserve if Agent, in the reasonable exercise of its discretion, estimates that net Borrower's exposure (after giving effect to realizable indemnity

claims) under the PMC Lawsuit may be larger than $500,000. Agent agrees that this reserve shall be terminated upon settlement in full of all claims, contingent or otherwise, asserted against Borrower in respect of the PMC Lawsuit.

3. Continuing Effect. Except as otherwise specifically set out herein, the provisions of the Loan Agreement shall remain in full force and effect.

4. Governing Law. This Third Amendment and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws.

5. Counterparts. This Third Amendment may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement.

IN WITNESS WHEREOF, this Third Amendment has been duly executed as of the first day written above.

HOUSTON WIRE & CABLE COMPANY, as Borrower		BANK OF AMERICA, N.A., as a Lender
By:	/s/ CHARLES A. SORRENTINO	By:	/s/ MONIRAH SALAMA
Name:	Charles A. Sorrentino	Name:	Monirah Salama
Title:	President and Chief Financial Officer	Title:	Assistant Vice President
HWC HOLDING CORPORATION, as Guarantor		THE CIT GROUP/BUSINESS CREDIT, INC., as a Lender
By:	/s/ NICOL G. GRAHAM	By:	/s/ GRANT WEISS
Name:	Nicol G. Graham	Name:	Grant Weiss
Title:	Secretary	Title:	Vice President
FLEET CAPITAL CORPORATION, as Agent and a Lender
By:	/s/ ARTHUR A. PESAVENTO
Name:	Arthur A. Pesavento
Title:	Vice President

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Exhibit 10.7

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Exhibit 10.8

FOURTH AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

FOURTH AMENDMENT, dated as of December 31, 2002 to the Amended and Restated Loan and Security Agreement, dated as of May 22, 2000, among Houston Wire & Cable Company ("Borrower"), the lenders named therein ("Lenders") and Fleet Capital Corporation ("FCC" as agent for said Lenders (FCC, in such capacity, "Agent"). Said Amended and Restated Loan and Security Agreement, as amended by a certain First Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated as of June 13, 2000, by a certain Second Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated May 30, 2001 and by a certain Third Amendment to Amended and Restated Loan and Security Agreement by and among Borrowers, Lenders and Agent dated October 22, 2001 and as it may be further amended, is hereinafter referred to as the "Loan Agreement." The terms used herein and not otherwise defined shall have the meanings attributed to them in the Loan Agreement.

WHEREAS, Lenders, Agent and Borrower desire to make certain amendment and modifications to the Loan Agreement.

NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained and contained in the Loan Agreement, the parties hereto hereby agree as follows:

1. 6.2.1 Records, Schedules and Assignments of Accounts. Section 6.2.1 of the Loan Agreement is hereby deleted and the following is inserted in its stead.

6.2.1 Records, Schedules and Assignments of Accounts. Borrower shall execute and deliver to Agent a Borrowing Base Certificate in the form attached hereto as Exhibit C on a weekly basis or, if as determined by Agent on a more frequent basis. Borrower shall keep accurate and complete records of its Accounts and all payments and collections thereon and shall submit to Agent on such periodic basis as Agent shall request a sales and collections report for the preceding period, in form satisfactory to Agent. On or before the 25th day of each month from and after the Closing Date, Borrower shall deliver to Agent, in form acceptable to Agent, a detailed aged trial balance of all Accounts existing as of the last day of the preceding month, specifying the names, addresses, face value, dates of invoices and due dates for each Account Debtor obligated on an Account so listed ("Schedule of Accounts"), and, upon Agent's request therefor, copies of proof of delivery and the original copy of all documents, including, without limitation, repayment histories and present status reports relating to the Accounts so scheduled and such other matters and information relating to the status of then existing Accounts as Agent shall reasonably request. The foregoing notwithstanding, Borrower shall make the deliveries required by the preceding sentence on or before the 15th day of each month, if for the immediately preceding month average Availability was less than $4,000,000 or if so requested by Agent upon reasonable notice to Borrower. In addition, if Accounts in an aggregate face amount in excess of $100,000 become ineligible because they fall within one of the specified categories of ineligibility set forth in the definition of Eligible Accounts or otherwise established by Agent, Borrower shall notify Agent of such occurrence on the first Business Day following such occurrence and the Borrowing Base shall be adjusted to reflect such occurrence. If requested by Agent, Borrower shall execute and deliver to Agent formal written assignments of all of its Accounts periodically, which shall include all Accounts that have been created since the date of the last assignment, together with copies of invoices or invoices registers related thereto."

2. Financial Covenants. Exhibit 8.3 to the Loan Agreement is hereby deleted and Exhibit 8.3 attached hereto and incorporated herein is inserted in its stead:

3. Waiver. Agent and Lenders hereby agree to waive any Events of Default resulting from Borrower failing to comply with the provisions of Section 8.3 and Exhibit Q (Minimum EBITDA) (prior to their amendment by the terms hereof) for the fiscal period ended September 30, 2002. Such waiver

shall not apply to any provision of the Loan Agreement other than Section 8.3 and Exhibit Q (Minimum EBITDA) or any fiscal period other than the period ended September 30, 2002.

4. Amendment Fee. In order to induce Agent and Lenders to enter into this Fourth Amendment, Borrower shall pay to Agent for the ratable benefit of Lenders an amendment fee equal to $25,000. Said amendment fee shall be due and payable and shall be deemed fully earned and non-refundable on the date hereof.

5. Continuing Effect. Except as otherwise specifically set out herein, the provisions of the Loan Agreement shall remain in full force and effect.

6. Governing Law. This Fourth Amendment and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws.

7. Counterparts. This Fourth Amendment may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement.

(Signature Page Follows)

(Signature Page to Fourth Amendment to Amended and Restated
Loan and Security Agreement)

IN WITNESS WHEREOF, this Fourth Amendment has been duly executed as of the first day written above.

HOUSTON WIRE & CABLE COMPANY, as Borrower		BANK OF AMERICA, N.A., as a Lender
By:	/s/ NICOL G. GRAHAM	By:	/s/ LEA KALEBICH
Name:	Nicol G. Graham	Name:	Lea Kalebich
Title:	Secretary and Treasurer	Title:	Account Executive
HWC HOLDING CORPORATION, as Guarantor		THE CIT GROUP/BUSINESS CREDIT, INC., as a Lender
By:	/s/ CHARLES SORRENTINO	By:	/s/ GRANT WEISS
Name:	Charles Sorrentino	Name:	Grant Weiss
Title:	Chief Executive Officer	Title:	Vice President
FLEET CAPITAL CORPORATION, as Agent and a Lender
By:	/s/ THOMAS F. KARLOV
Name:	Thomas F. Karlov
Title:	Senior Vice President

EXHIBIT Q
FINANCIAL COVENANTS

Consolidated Net Income —with respect to any fiscal period of Guarantor determined in accordance with GAAP on a consolidated basis; provided, however, Consolidated Net Income shall not include (a) the income (or loss) of any Person (other than a subsidiary of Guarantor) in which Guarantor or any of its respective wholly-owned subsidiaries had an ownership interest unless received in a cash distribution or requiring the payment of cash; (b) the income (or loss) of any Person accrued prior to the date it became a Subsidiary of Guarantor or is merged into or consolidated with Guarantor; (c) all amounts included in determining net income (or loss) in respect of the write-up of assets on or after the Closing Date, including the subsequent amortization or expensing of the written-up portion of the assets; (d) extraordinary gains as defined under GAAP and extraordinary non-cash losses and (e) gains (or losses) from asset dispositions (other than sales of inventory).

EBITDA —with respect to any fiscal period, the sum of Guarantor's Consolidated Net Income plus amounts deducted in determining Consolidated Net Income in respect of: (a) any provision for (or less any benefit from) income taxes whether current or deferred; (b) amortization and depreciation expense; and (c) interest expense for such period, all as determined in accordance with GAAP.

Fixed Charge Coverage Ratio —with respect to any period of determination, the ratio of (i) the remainder of EBITDA of Guarantor for such period less any provision for income taxes (plus any benefit from) included in the determination of Consolidated Net Income, but excluding changes in long-term and short-term deferred tax assets and liabilities, less non-financed Capital Expenditures to (ii) Fixed Charges.

Fixed Charges —for any period of determination, the sum of (a) scheduled principal payments on Indebtedness for Money Borrowed (excluding the Seller Note) (including the principal portion of scheduled payments of Capital Lease Obligations), (b) Interest Expense included in the determination of Consolidated Net Income, but excluding any interest paid in kind, with respect to Indebtedness for Money Borrowed and (c) payments made within the applicable period in respect of that Non-Competition Agreement dated on or about May 22, 2000 by and between Borrower and T.H. Cabling L.P., a Texas limited partnership and Kent Electronics Corporation, a Texas corporation.

Interest Expense —with respect to any fiscal period, the interest expense incurred for such period as determined in accordance with GAAP.

Q-1

COVENANTS

Fixed Charge Coverage Ratio —Borrowers shall not permit the Fixed Charge Coverage Ratio for any period set forth below to be less than the ratio set forth opposite such period below:

Period		Ratio
June 1, 2000 to September 30, 2000		.78 to 1.0
June 1, 2000 to December 31, 2000		.77 to 1.0
June 1, 2000 to March 31, 2001		.80 to 1.0
Twelve months ending June 30, 2001		.75 to 1.0
Twelve months ending September 30, 2001		.80 to 1
Twelve months ending December 31, 2001		.80 to 1
Twelve months ending March 31, 2002		.85 to 1
Twelve months ending June 30, 2002		1.00 to 1
Twelve months ending September 30, 2002		1.00 to 1
Twelve months ending December 31, 2002		1.10 to 1
Twelve months ending March 31, 2003		1.10 to 1
Twelve months ending June 30, 2003		1.10 to 1
Twelve months ending September 30, 2003		1.10 to 1
Twelve months ending December 31, 2003		1.10 to 1
Twelve months ending March 31, 2004		1.10 to 1

Minimum EBITDA —Borrowers shall achieve EBITDA for each period set forth below of not less than the amount set forth opposite such period below:

Period	Minimum EBITDA
June 1, 2000 to September 30, 2000	$	1,600,000
June 1, 2000 to December 31, 2000	$	3,200,000
June 1, 2000 to March 31, 2001	$	5,400,000
Twelve months ending June 30, 2001	$	7,400,000
Twelve months ending September 30, 2001	$	8,500,000
Twelve months ending December 31, 2001	$	9,000,000
Twelve months ending March 31, 2002	$	9,500,000
Twelve months ending June 30, 2002	$	10,000,000
Twelve months ending September 30, 2002		N/A
Twelve months ending December 31, 2002	$	6,500,000
Twelve months ending March 31, 2003	$	5,500,000
Twelve months ending June 30, 2003	$	5,750,000
Twelve months ending September 30, 2003	$	6,250,000
Twelve months ending December 31, 2003	$	6,500,000
Twelve months ending March 31, 2004	$	7,000,000

Q-2

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Exhibit 10.8

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Exhibit 10.9

FIFTH AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

FIFTH AMENDMENT, dated as of November 19, 2003 to the Amended and Restated Loan and Security Agreement, dated as of May 22, 2000, among Houston Wire & Cable Company ("Borrower"), the lenders named therein ("Lenders") and Fleet Capital Corporation ("FCC" as agent for said Lenders (FCC, in such capacity, "Agent"). Said Amended and Restated Loan and Security Agreement, as amended by a certain First Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated as of July 13, 2000, by a certain Second Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated May 30, 2001, by a certain Third Amendment to Amended and Restated Loan and Security Agreement by and among Borrowers, Lenders and Agent dated October 22, 2001 and by a certain Fourth Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated December 31, 2002 and as it may be further amended, is hereinafter referred to as the "Loan Agreement." The terms used herein and not otherwise defined shall have the meanings attributed to them in the Loan Agreement.

WHEREAS, Bank of America, N.A. has sold, transferred and assigned the following Revolving Credit Loans and the Revolving Credit Loan Commitment to the following parties:

(a) Fleet Capital Corporation

(i) Assigned Revolving Credit Loans: Four Million Nine Hundred Thirty-Three Thousand and 86/100 Dollars ($4,933,505.86);

(ii) Assigned Revolving Credit Loan Commitment: Seven Million Six Hundred Fifteen Thousand Three Hundred Eighty Four and 80/100 Dollars ($7,615,384.80);

(b) The CIT Group/Business Credit, Inc.

(i) Assigned Revolving Credit Loans: Two Million Forty-One Thousand Five Hundred Sixty-Eight and 11/100 Dollars ($2,041,568.11);

(ii) Assigned Revolving Credit Loan Commitment: Five Million Seventy Six Thousand Nine Hundred Twenty Three and 20/100 Dollars ($5,076,923.20);

WHEREAS, as a result of such sale, assignment and transfer the parties hereto desire to amend the Loan Agreement to increase the proportionate shares of such Lenders of the Revolving Credit Loans and the Revolving Credit Loan Commitment.

WHEREAS, the Lenders have, in the past, made term loans (collectively, the "Old Term Loans"), which Old Term Loans were evidenced by certain promissory notes ("Old Term Notes") and have been repaid in accordance with their respective terms;

WHEREAS, Borrower desires to borrow and Agent and the Lenders desire to make new term loans ("New Term Loans") on the terms and conditions set forth herein;

WHEREAS, Lenders, Agent and Borrower desire to make certain other amendments and modifications to the Loan Agreement.

NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained and contained in the Loan Agreement, the parties hereto hereby agree as follows:

1. Amended and Additional Definitions.

(a) The following definitions are hereby inserted in Appendix A:

Effective Inventory Advance Rate —the lesser of (1) sixty-five percent (65%) or (2) eighty-five percent (85%) of the net orderly liquidation percentage as determined by the most recent appraisal completed by an appraiser acceptable to Agent.

* * *

Fifth Amendment Effective Date —as defined in Section 11 of the Fifth Amendment.

* * *

Permitted Acquisition(s) —means any acquisition(s) by Borrower of all or substantially all of the assets or outstanding capital stock or other ownership interests of a Person, or an operating division of a Person or a merger of a Person with Borrower, which in either case, constitutes a business unit so long as each of the following conditions precedent (collectively, the "Acquisition Conditions") have been fulfilled to the satisfaction of Agent: (i) no Default or Event of Default shall have occurred and be continuing at the time of such acquisition or would occur as a result thereof; (ii) the business unit being acquired (the "Target") is primarily located in the United States of America and is in the same or related line of business as Borrower; (iii) if the acquisition in question is a stock acquisition, Borrower shall execute a pledge agreement in form and substance satisfactory to Agent and if the acquisition in question is an asset acquisition or a stock acquisition, Borrower or Target, as applicable, shall have executed such financing statements and other collateral documents as reasonably requested by the applicable Agent to grant to the Agent a perfected security interest subject only to Permitted Liens in substantially all of the acquired assets and Agent shall have received such payoff letters and Lien releases as it deems necessary; (iv) the Fixed Charge Coverage Ratio shall be greater than or equal to 1.2 to 1 (x) for the twelve-month period immediately preceding the making of such acquisition, and (y) on a pro forma basis for the twelve-month period following the making of such acquisition, after giving effect to the making of such acquisition, such pro forma calculation to be demonstrated to Agent and to be reasonably acceptable to Agent based on projections prepared using reasonable assumptions by Borrower; (v) all conditions precedent to the consummation of the transactions under such acquisition shall have been satisfied in all material respects; and (vi) Agent shall have received a copy of the purchase agreement with respect to such Permitted Acquisition, certified as true and correct by Borrower and such other agreements, documents, and instruments as Agent may reasonably request.

* * *

2. The following definitions in Appendix A are hereby amended as follows:

(a) The definition of Term Loans is amended by deleting such definition and inserting the following in its stead:

" Term Loans —the Loans described in Section 1.2, as such Section 1.2 has been amended by the Fifth Amendment."

(b) The definition of Restricted Investment is amended by adding the following subsection thereto:

"(vii) investments in Permitted Acquisitions."

Applicable Margin —the percentages set forth below with respect to the Base Rate Revolving Credit Portion, the Base Rate Term A Portion, the LIBOR Revolving Credit Portion and the LIBOR Term A Portion:

LIBOR Revolving Credit Portion		LIBOR Term A Portion		Base Rate Revolving Credit Portion		Base Rate Term A Portion
2.25	%	2.75	%	0.75	%	1.25	%

Borrowing Base —as at any date of determination thereof, an amount equal to the lesser of:

(i) the Maximum Revolving Loan at such date; or

(ii) an amount equal to:

(a) up to eighty-five percent (85%) of the net amount of Eligible Accounts outstanding at such date;

PLUS

(b) the lesser of (1) the Maximum Inventory Amount, or (2) the Effective Inventory Advance Rate multiplied by the value of Eligible Inventory (other than Apparatus Eligible Inventory) at such date calculated on the basis of the lower of cost or market with the cost of raw materials and finished goods calculated on a first-in, first-out basis;

MINUS (subtract from the lesser of (i) or (ii) above)

(iii) an amount equal to the sum of (a) any amount which Agent reasonably expects it may be obligated to pay in the future for the account of Borrower, plus (b) the amount of any reserve established by Agent pursuant to Section 1.1.1, plus (c) the LC Amount.

For purposes hereof, the net amount of Eligible Accounts at any time shall be the face amount of such Eligible Accounts less, to the extent not already deducted in the calculation of Eligible Accounts, any and all returns, rebates, discounts (which may, at Agent's option, be calculated on shortest terms), credits, allowances or excise taxes of any nature at any time issued, owing, claimed by Account Debtors, granted, outstanding or payable in connection with such Accounts at such time. Further, the value of Eligible Inventory shall be adjusted as of each date of calculation to reflect decreases in the Comex market price of copper as reported on the London Metals Exchange, but only to the extent that such decrease would result in a value less than current book value.

Commitment Termination Date the earliest of: (i) May 1, 2007; (ii) the date of termination of the commitment to make further Revolving Credit Loans and/or Term Loans pursuant to Section 4.2.1 or 4.2.2 hereof; and (iii) the date of termination of the commitment to make further Revolving Credit Loans pursuant to Section 10.2 hereof.

LC Percent —2.75%.

Maximum Inventory Amount —Twenty-Five Million Dollars ($25,000,000).

Maximum Revolving Loan —Forty-Five Million Dollars ($45,000,000).

Total Credit Facility —Fifty Million Dollars ($50,000,000)."

3. Total Credit Facility and Revolving Loans. The first paragraph of Section 1 of the Loan Agreement and Section 1.1.1(A) of the Loan Agreement is hereby deleted and the following are inserted in their stead:

"SECTION 1. CREDIT FACILITY

Subject to the terms and conditions of, and in reliance upon the representations and warranties made in, this Agreement and the other Loan Documents, Lenders agree to make a credit facility of up to Fifty Million Dollars ($50,000,000) available upon Borrower's request therefor, as follows:

1.1 Revolving Credit Loans.

1.1.1 Loans and Reserves. (A) Loans and Reserves. The aggregate amount of the Revolving Credit Loans to be made by each Lender (such Lender's "Revolving Credit Loan Commitment"), pursuant to the terms hereof, shall be the amount set below such Lender's name on the signature pages hereof. The aggregate principal amount of the Revolving Credit Loan Commitments is Forty-Five Million Dollars ($45,000,000). The percentage equal to the quotient of (x) each Lender's Revolving Credit Loan Commitment, divided by (y) the aggregate of all Revolving Credit Loan Commitments, is that Lender's "Revolving Credit Percentage". Subject to all of the terms and conditions of this Agreement, each Lender agrees, for so long as no Default or Event of Default exists, to make Revolving Credit Loans to Borrower from time to time, as requested by Borrower in accordance with the terms of Section 3.1 hereof, up to a maximum principal amount at any time outstanding equal to the product of (A) the Borrowing Base at such time multiplied by (B) such Lender's Revolving Credit Percentage. It is expressly understood and agreed that Agent and Lenders may use the Borrowing Base as a maximum ceiling on Revolving Credit Loans outstanding to Borrower at any time. If the unpaid balance of the Revolving Credit Loans should exceed the ceiling so determined or any other limitation set forth in this Agreement, such Revolving Credit Loans shall nevertheless constitute Obligations that are secured by the Collateral and entitled to all the benefits thereof. In no event shall Lenders be required to make a Revolving Credit Loan at any time that there exists a Default or an Event of Default. Agent shall have the right to establish reserves in such amounts, and with respect to such matters, as Agent shall deem necessary or appropriate in the reasonable exercise of Agent's credit judgment, against the amount of Revolving Credit Loans which Borrower may otherwise request under this Section 1.1.1., including, without limitation, with respect to (i) price adjustments, damages, unearned discounts, returned products or other matters for which credit memoranda are issued in the ordinary course of Borrower's business; (ii) shrinkage, spoilage and obsolescence of Inventory; (iii) slow moving Inventory; (iv) other sums chargeable against Borrower's Loan Account as Revolving Credit Loans under any section of this Agreement; (v) amounts owing by Borrower to any Person to the extent secured by a Lien on, or trust over, any Property of Borrower; and (vi) such other matters, events, conditions or contingencies from time to time hereunder as to which Agent, in its reasonable credit judgment, determines reserves should be established from time to time hereunder."

4. Term Loans. Section 1.2.1 of the Loan Agreement is hereby deleted in its entirety and the following is inserted in its stead:

"1.2 Term Loans.

From and after the Fifth Amendment Effective Date and until and including March 31, 2007, each Lender agrees, subject to the terms and conditions set forth in the definition of Permitted Acquisition, to make term loans from time to time (collectively "Term Loans" or synonymously "Term Loans A"), in the aggregate principal amount not to exceed the amount

set forth below such Lender's name on the signature pages hereof (such Lender's "Term Loan Commitment"). The percentage equal to the quotient of (x) each Lender's Term Loan Commitment, divided by (y) the aggregate of all Term Loan Commitments is that Lender's "Term Loans Percentage". The aggregate amount of the Term Loan Commitments shall be Five Million Dollars ($5,000,000). In no event (x) shall any one request by Borrower for Term Loans be in an aggregate amount of less than Five Hundred Thousand Dollars ($500,000) or an integral multiple of One Hundred Thousand Dollars ($100,000) in excess thereof or (y) shall any one request exceed the initial cash purchase price of any Permitted Acquisition. The principal amount of each Term Loan shall be amortized on the basis of twenty quarterly payments, commencing on the first day of the fiscal quarter following the making of any Term Loan. Each such installment payment shall be equal to one twentieth ( ¹ / 20 ) of the aggregate amount of the Term Loans made hereunder. The Term Loans shall be evidenced by promissory notes to be executed and delivered by Borrower to Lenders on the Fifth Amendment Effective Date, the form of which is attached hereto and made a part hereof as Exhibit A-2 to the Fifth Amendment (the "Term Note(s)"), shall bear interest as specified in Section 2.1 and shall be repayable in accordance with the terms of the Term Notes. The proceeds of Term Loans shall be used by Borrower solely for the purpose of paying a portion of the purchase price due in connection with any Permitted Acquisition. Once borrowed and repaid, the Term Loans may not be subsequently reborrowed.

1.2.2 Conditions to Term Loans. Notwithstanding any other provision of this Agreement or any of the other Loan Documents, neither any Lender nor Agent shall be required to make any Term Loans unless and until each of the following conditions has been satisfied:

(a) No Default or Event of Default shall exist immediately prior to, or after giving effect to the making of such Term Loans;

(b) All proceeds of such Term Loans are used to pay in whole or in part all of the purchase price payable in connection with a Permitted Acquisition;

(c) Immediately prior to the making of such Term Loan, the Fixed Charge Coverage Ratio shall be greater than or equal to 1.2 to 1 (x) for the twelve-month period immediately preceding the making of such Permitted Acquisition, and (y) on a pro forma basis for the twelve-month period following the making of such Permitted Acquisition, after giving effect to the making of such Permitted Acquisition, such pro forma calculation to be demonstrated to Agent and to be reasonably acceptable to Agent based on projections prepared using reasonable assumptions by Borrower;

(d) For the thirty (30) days immediately prior to the date on which the proposed Term Loan is to be made, average Availability for such period shall equal or exceed Four Million Dollars ($4,000,000);

(e) Agent shall have determined that Availability, immediately after the funding of the proposed Term Loan and the consummation of the proposed Permitted Acquisition, shall equal or exceed Four Million Dollars ($4,000,000);

(f) If Agent has not conducted an appraisal of Borrower's real Property subject to the Mortgage within eighteen months prior to the date of the proposed Term Loan, then Agent, at Borrower's expense, shall have conducted an appraisal of such real Property; and

(g) The amount of the proposed Term Loan does not exceed an amount equal to the appraised value of Borrower's real Property subject to the Mortgage, as determined by the most recent appraisal thereof, less the then outstanding principal balance of all other existing Term Loans.

5. Unused Line Fee and Audit and Appraisal Fees. Sections 2.5 and 2.7 of the Agreement are hereby deleted and the following are inserted in their stead:

"2.5 Unused Line Fee. Borrower shall pay to Agent for the ratable benefit of Lenders a fee equal to the sum of (x) three-eighths of one percent ( ³ / 8 %) per annum of the average monthly amount by which the Maximum Revolving Loan exceeds the sum of the outstanding principal balance of the Revolving Credit Loans (exclusive of Swingline Loans) plus the LC Amount plus (y) three-eighths of one percent ( ³ / 8 %) per annum of the average monthly amount of undrawn Term Loan Commitments. The unused line fee shall be payable monthly in arrears on the first day of each calendar month hereafter.

* * *

2.7 Audit and Appraisal Fees. Borrower shall pay to Agent reasonable audit and appraisal fees in accordance with Agent's current schedule of fees in effect from time to time (at the Fifth Amendment Effective Date, $850 per day per person) in connection with audits and appraisals of Borrower's books and records and such other matters as Agent shall deem reasonably appropriate, plus all out-of-pocket expenses incurred by Agent in connection with such audits and appraisals. Audit fees shall be payable on the first day of the month following the date of issuance by Agent of a request for payment thereof to Borrower."

6. Term. Section 4.1 of the Loan Agreement is hereby deleted and the following is inserted in its stead:

"4.1 Term of Agreement. Subject to Agent's and Lender's right to cease making Loans to Borrower upon or after the occurrence of any Default or Event of Default, this Agreement shall be in effect from the date hereof, through and including May 1, 2007 (the "Original Term"), unless terminated as provided in Section 4.2 hereof."

7. Capital Expenditures. Section 8.2.8 of the Loan Agreement is hereby deleted and the following is inserted in its stead:

"8.2.8 Capital Expenditures. Make Capital Expenditures (including, without limitation, by way of capitalized leases but excluding amounts that would be classified as Capital Expenditures as a result of a Permitted Acquisition) which, in the aggregate, as to Borrower and its Subsidiaries, exceed $750,000 during any fiscal year of Borrower; provided , however , that the unused portion of the Capital Expenditure allowance may be carried over to the immediately succeeding fiscal year only, to be used in such succeeding fiscal year but only after the entire Capital Expenditure allowance for such succeeding year has been used. No unused Capital Expenditure allowance may be carried over to any fiscal year other than the immediately succeeding fiscal year."

8. Negative Covenants. Section 8.2.1 of the Loan Agreement is hereby deleted and the following is inserted in its stead:

"8.2.1 Merger; Consolidations; Acquisitions. Except for Permitted Acquisitions, merge, or consolidate or permit any Subsidiary of Borrower to merge or consolidate with any Person; nor acquire, nor permit any Subsidiary of Borrower to acquire all or any substantial part of the Properties of any Person."

9. Exhibit Q to the Loan Agreement is hereby deleted in its entirety and replaced by Exhibit Q attached hereto.

10. Amendment Fee. In order to induce Agent and Lenders to enter into this Fifth Amendment, Borrower agrees to pay to Agent for the ratable benefit of Lenders an amendment fee in the amount of $250,000. Said amendment fee shall be deemed fully earned and non-refundable and shall be payable on the Fifth Amendment Effective Date.

11. Conditions Precedent. This Fifth Amendment shall become effective upon satisfaction of each of the following conditions precedent:

(a) Agent shall have received each of the following documents, each in form and substance acceptable to Agent:

(i) Copy of this Fifth Amendment, duly executed by Borrower and Guarantor;

(ii) Amended and Restated Revolving Credit Notes and New Term Notes in the forms attached hereto and incorporated herein as Exhibits A and A-1 attached to this Fifth Amendment executed by Borrower; and

(iii) Copies of resolutions of the Board of Directors of Borrower authorizing this Fifth Amendment certified as true and correct by Secretary or Borrower.

(b) Borrower shall have paid to Agent for the ratable benefit of Lenders the amendment fee described in Section 9 of this Fifth Amendment.

(c) Agent shall have determined that immediately after the effectiveness of this Fifth Amendment, Availability shall not be less than Five Million Dollars ($5,000,000).

The date on which all of the conditions precedent listed above are satisfied or waived is hereinafter referred to as the "Fifth Amendment Effective Date." After the Fifth Amendment Effective Date, Lenders shall deliver to Borrower the Revolving Credit Notes and Old Term Notes previously executed and delivered by Borrower to Lenders, which Notes shall be marked "Amended and Superceded."

12. Signature Block. The signature block to the Loan Agreement is hereby amended to read as the signature block to this Fifth Amendment.

13. Continuing Effect. Except as otherwise specifically set out herein, the provisions of the Loan Agreement shall remain in full force and effect.

14. Governing Law. This Fifth Amendment and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws.

15. Counterparts. This Fifth Amendment may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement.

(Signature Page Follows)

(Signature Page to Fifth Amendment to Amended and Restated
Loan and Security Agreement)

IN WITNESS WHEREOF, this Fifth Amendment has been duly executed as of the first day written above.

HOUSTON WIRE & CABLE COMPANY, as Borrower		HWC HOLDING CORPORATION, as Guaranto
By:	/s/ NICOL G. GRAHAM	By:	/s/ CHARLES SORRENTINO
Name:	Nicol G. Graham	Name:	Charles Sorrentino
Title:	Vice President and Chief Financial Officer	Title:	President and Chief Executive Officer
THE CIT GROUP/BUSINESS CREDIT, INC., as a Lender		FLEET CAPITAL CORPORATION, as Agent and a Lender
By:	/s/ GRANT WEISS	By:	/s/ THOMAS F. KARLOV
Name:	Grant Weiss	Name:	Thomas F. Karlov
Title:	Vice President	Title:	Senior Vice President
Revolving Loan Commitment: $18,000,000 Term Loan Commitment: $2,000,000		Revolving Loan Commitment: $27,000,000 Term Loan Commitment: $3,000,000

EXHIBIT A

AMENDED AND RESTATED REVOLVING CREDIT NOTE

November , 2003
Chicago, Illinois

This Note is one of the Revolving Credit Notes referred to in, and issued pursuant to, that certain Amended and Restated Loan and Security Agreement dated as of May 22, 2000 by and among Borrower, the lender signatories thereto (including Lender) and Fleet Capital Corporation ("FCC"), as agent for such Lenders (FCC in such capacity "Agent") (hereinafter amended from time to time, the "Loan Agreement"), and is entitled to the benefit and security of the Loan Agreement. All of the terms, covenants and conditions of the Loan Agreement and the Security Documents are hereby made a part of this Note and are deemed incorporated herein in full. All capitalized terms herein, unless otherwise defined, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Loan Agreement.

Upon and after the occurrence, and during the continuation, of an Event of Default, this Note shall or may, as provided in the Loan Agreement, become or be declared immediately due and payable.

The right to receive principal of, and stated interest on, this Note may only be transferred in accordance with the provisions of the Loan Agreement.

Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower.

This Note shall be interpreted, governed by, and construed in accordance with, the internal laws of the State of Illinois.

		HOUSTON WIRE & CABLE COMPANY
		By:
		Name: Title:

A-1

EXHIBIT A-1

TERM NOTE

November , 2003
Chicago, Illinois

FOR VALUE RECEIVED , the undersigned (hereinafter "Borrower"), hereby promises to pay to the order of , a corporation (hereinafter "Lender"), or its registered assigns at the office of Fleet Capital Corporation, as agent for such Lender, or at such other place in the United States as the holder of this Note may designate from time to time in writing, in lawful money of the United States, in immediately available funds, at the time of payment, the principal sum of ($ ) or such lesser principal amount as may be outstanding pursuant to the Loan Agreement, together with interest from and after the date hereof on the unpaid principal balance outstanding from time to time.

This Term Note (the "Note") is one of the Term Notes referred to in, and is issued pursuant to, that certain Amended and Restated Loan and Security Agreement dated as of May 22, 2000 by and among Borrower, the lender signatories hereto (including Lender) and Fleet Capital Corporation ("FCC") as Agent for said lenders (FCC, in such capacity, "Agent") (hereinafter, as amended from time to time, the "Loan Agreement"), and is entitled to all of the benefits and security of the Loan Agreement. All of the terms, covenants and conditions of the Loan Agreement and the Security Documents are hereby made a part of this Note and are deemed incorporated herein in full. All capitalized terms used herein, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Loan Agreement.

(a) Interest on the unpaid principal balance outstanding from time to time shall be paid at such interest rates and at such times as are specified in the Loan Agreement;

(b) Principal shall be due and payable monthly commencing on the first day of the quarter after the month in which the first Term Loan is made and continuing on the first day of each month thereafter to and including the first day of the fiscal quarter in which the Commitment Termination Date occurs, in installments each equal to one-twentieth of the outstanding principal balance hereof as of the date of payment; and

(c) The entire remaining principal amount then outstanding, together with any and all other amounts due hereunder, shall be due and payable on the Commitment Termination Date.

Upon the occurrence and during the continuation of an Event of Default, this Note shall or may, as provided in the Loan Agreement, become or be declared immediately due and payable.

The right to receive principal of, and stated interest on, this Note may only be transferred in accordance with the provisions of the Loan Agreement.

A-2

Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower.

This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois.

		HOUSTON WIRE & CABLE COMPANY
		By:
		Name: Title:

A-3

EXHIBIT Q

FINANCIAL COVENANTS

Interest Expense —with respect to any fiscal period, the interest expense incurred for such period as determined in accordance with GAAP.

Q-1

COVENANTS

Fixed Charge Coverage Ratio —Borrowers shall not permit the Fixed Charge Coverage Ratio for any period set forth below to be less than the ratio set forth opposite such period below:

Period		Ratio
Twelve months ending December 31, 2003 and each March 31, June 30, September 30 and December 31 thereafter		1.20 to 1

Q-2

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Exhibit 10.9

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Exhibit 10.10

SIXTH AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

SIXTH AMENDMENT, dated as of May 26, 2005 to the Amended and Restated Loan and Security Agreement, dated as of May 22, 2000, among Houston Wire & Cable Company ("Borrower"), the lenders named therein ("Lenders") and Fleet Capital Corporation ("FCC" as agent for said Lenders (FCC, in such capacity, "Agent"). Said Amended and Restated Loan and Security Agreement, as amended by a certain First Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated as of July 13, 2000, by a certain Second Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated May 30, 2001, by a certain Third Amendment to Amended and Restated Loan and Security Agreement by and among Borrowers, Lenders and Agent dated October 22, 2001, by a certain Fourth Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated December 31, 2002 and by a certain Fifth Amendment to Amended and Restated Loan and Security Agreement by and among Borrowers, Lenders and Agent dated November 19, 2003 and as it may be further amended, is hereinafter referred to as the "Loan Agreement." The terms used herein and not otherwise defined shall have the meanings attributed to them in the Loan Agreement.

WHEREAS, Lenders, Agent and Borrower desire to make certain amendments and modifications to the Loan Agreement.

NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained and contained in the Loan Agreement, the parties hereto hereby agree as follows:

1. Additional Definitions . The following definitions are hereby inserted in Appendix A to the Loan Agreement:

" Sixth Amendment —that certain Sixth Amendment to Amended and Restated Loan and Security Agreement dated as of May 26, 2005 by and among Borrower, Agent and Lenders.

* * *

Sixth Amendment Effective Date —the date on which the conditions precedent to the effectiveness of the Sixth Amendment are satisfied."

2. Term Loans . Sections 1.2.1 and 1.2.2 of the Loan Agreement are hereby deleted in their entirety and the following are inserted in their stead:

"1.2.1 Term Loans .

From the Sixth Amendment Effective Date to and including March 31, 2007, each Lender agrees, subject to the terms and conditions set forth in the definition of Permitted Acquisition, to make term loans from time to time (collectively "Term Loans" or synonymously "Term Loans A"), in the aggregate principal amount not to exceed the amount set forth below such Lender's name on the signature pages to the Sixth Amendment (such Lender's "Term Loan Commitment"). The percentage equal to the quotient of (x) each Lender's Term Loan Commitment, divided by (y) the aggregate of all Term Loan Commitments is that Lender's "Term Loans Percentage". The aggregate amount of the Term Loan Commitments shall be Five Million Dollars ($5,000,000). The principal amount of each Term Loan shall be amortized on the basis of twenty quarterly payments, commencing on the first day of the fiscal quarter following the making of the Term Loan. Each such installment payment shall be equal to one twentieth ( ¹ / 20 ) of the aggregate amount of the Term Loan made hereunder. The Term Loans are evidenced by promissory notes executed and delivered by Borrower to Lenders on the Fifth Amendment Effective Date, the form of which is attached hereto and made a part hereof as Exhibit A-2 to the Fifth Amendment (the "Term Note(s)"), shall bear interest as specified in Section 2.1 and shall be repayable in accordance with

the terms of the Term Notes. The proceeds of Term Loans shall be used by Borrower to make a Distribution to Guarantor to permit Guarantor to redeem, repurchase or repay certain of its Indebtedness or for the purpose of paying all or a portion of the purchase price in connection with any Permitted Acquisition. Once borrowed and repaid, the Term Loans may not be subsequently reborrowed.

1.2.2 Conditions to Term Loans . Notwithstanding any other provision of this Agreement or any of the other Loan Documents, neither any Lender nor Agent shall be required to make any Term Loans unless and until each of the following conditions has been satisfied:

(a) No Default or Event of Default shall exist immediately prior to, or after giving effect to the making of such Term Loans;

(b) All proceeds of such Term Loans are used to pay in whole or in part (x) the purchase price payable in connection with a Permitted Acquisition or (y) a Distribution permitted by Section 3 of the Sixth Amendment;

(c) Immediately prior to the making of such Term Loan, the Fixed Charge Coverage Ratio shall be greater than or equal to 1.2 to 1 (x) for the twelve-month period immediately preceding the making of such Term Loan and (y) on a pro forma basis for the twelve-month period following the making of such Term Loan, after giving effect to the making of such Term Loan, such pro forma calculation to be demonstrated to Agent and to be reasonably acceptable to Agent based on projections prepared using reasonable assumptions by Borrower;

(d) For the thirty (30) days immediately prior to the date on which the proposed Term Loan is to be made, average Availability for such period shall equal or exceed Four Million Dollars ($4,000,000);

(e) Agent shall have determined that Availability, immediately after the funding of the proposed Term Loan and the consummation of the proposed Permitted Acquisition or Distribution, shall equal or exceed Four Million Dollars ($4,000,000);

3. Distributions . Agent and Lenders consent to Borrower making Distributions to Guarantor in a cumulative amount not to exceed $10,000,000 to permit Guarantor to redeem, repurchase or repay Guarantor's Indebtedness, so long as (x) average Availability for the thirty (30) days immediately prior to the date of such proposed Distribution equals or exceeds Four Million Dollars ($4,000,000) and (y) immediately after giving effect to any such Distribution and the funding of any Term Loan drawn in connection with such Distribution, Availability shall equal or exceed Four Million Dollars ($4,000,000). Said Distributions shall be funded from the proceeds of the Term Loan and/or Revolving Credit Loans.

4. Conditions Precedent . This Sixth Amendment shall become effective upon satisfaction of each of the following conditions precedent:

(a) Agent shall have received a copy of this Sixth Amendment, duly executed by Borrower, Lenders and Agent.

5. Continuing Effect . Except as otherwise specifically set out herein, the provisions of the Loan Agreement shall remain in full force and effect.

6. Governing Law . This Sixth Amendment and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws.

7. Counterparts . This Sixth Amendment may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement.

(Signature Page Follows)

(Signature Page to Sixth Amendment to Amended and Restated Loan and Security Agreement)

IN WITNESS WHEREOF, this Sixth Amendment has been duly executed as of the first day written above.

HOUSTON WIRE & CABLE COMPANY, as Borrower		HWC HOLDING CORPORATION, as Guarantor
By:	/s/ NICOL G. GRAHAM	By:	/s/ CHARLES SORRENTINO
Name:	Nicol G. Graham	Name:	Charles Sorrentino
Title:	Vice President and Chief Financial Officer	Title:	President and Chief Executive Officer
The CIT GROUP/BUSINESS CREDIT, INC., as a Lender		FLEET CAPITAL CORPORATION, as Agent and a Lender
By:	/s/ GRANT WEISS	By:	/s/ THOMAS KARLOV
Name:	Grant Weiss	Name:	Thomas Karlov
Title:	Vice President	Title:	Senior Vice President
Term Loan Commitment: $2,000,000		Term Loan Commitment: $3,000,000

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Exhibit 10.10

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Exhibit 10.11

SEVENTH AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

SEVENTH AMENDMENT, dated as of December 14, 2005 to the Amended and Restated Loan and Security Agreement, dated as of May 22, 2000, among Houston Wire & Cable Company ("Borrower"), the lenders named therein ("Lenders") and Bank of America, N.A. ("Bank of America") as successor-in-interest to Fleet Capital Corporation, as agent for said Lenders (Bank of America, in such capacity, "Agent"). Said Amended and Restated Loan and Security Agreement, as amended by a certain First Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated as of July 13, 2000, by a certain Second Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated May 30, 2001, by a certain Third Amendment to Amended and Restated Loan and Security Agreement by and among Borrowers, Lenders and Agent dated October 22, 2001, by a certain Fourth Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated December 31, 2002, by a certain Fifth Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated November 19, 2003 and by a certain Sixth Amended to Amended and Restated Loan and Security Agreement dated as of May 26, 2005 by and among Borrower, Lenders and Agent and as it may be further amended, is hereinafter referred to as the "Loan Agreement." The terms used herein and not otherwise defined shall have the meanings attributed to them in the Loan Agreement. References to Agent and/or any Lender shall include Agent's or such Lender's predecessor(s)-in-interest.

WHEREAS, Lenders, Agent and Borrower desire to make certain amendments and modifications to the Loan Agreement.

NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained and contained in the Loan Agreement, the parties hereto hereby agree as follows:

1. Additional and Amended Definitions. The following definitions of "Overline," "Overline Commitment," "Overline Percentage," "Seventh Amendment" and "Seventh Amendment Effective Date" are hereby inserted in Appendix A to the Loan Agreement; the definition of "Borrowing Base" is hereby deleted from Appendix A and the following is inserted in its stead:

" Borrowing Base —as at any date of determination thereof, an amount equal to the lesser of:

(i) the Maximum Revolving Loan at such date; or

(ii) an amount equal to:

(a) up to eighty-five percent (85%) of the net amount of Eligible Accounts outstanding at such date;

PLUS

(b) the lesser of (1) the Maximum Inventory Amount, or (2) the Effective Inventory Advance Rate multiplied by the value of Eligible Inventory (other than Apparatus Eligible Inventory) at such date calculated on the basis of the lower of cost or market with the cost of raw materials and finished goods calculated on a first-in, first-out basis;

MINUS ( subtract from the lesser of (i) or (ii) above)

For purposes of this Agreement (x) the amount determined by subtracting (iii) from (i) above is hereinafter referred to as the "Maximum Revolving Loan Borrowing Base" and

(y) the amount determined by subtracting (iii) from (ii) above is hereinafter referred to as the "Collateral Borrowing Base."

For purposes hereof, the net amount of Eligible Accounts at any time shall be the face amount of such Eligible Accounts less, to the extent not already deducted in the calculation of Eligible Accounts, any and all returns, rebates, discounts (which may, at Agent's option, be calculated on shortest terms), credits, allowances or excise taxes of any nature at any time issued, owing, claimed by Account Debtors, granted, outstanding or payable in connection with such Accounts at such time. Further, the value of Eligible Inventory shall be adjusted as of each date of calculation to reflect decreases in the Comex market price of copper as reported on the London Metals Exchange, but only to the extent that such decrease would result in a value less than current book value.

Overline —as defined in Section 1.1.1(D) of the Loan Agreement.

Overline Commitment —the amount set forth below each Lender's name on the signature page to the Seventh Amendment.

Overline Percentage —with respect to each Lender, the percentage equal to the quotient of such Lender's Overline Commitment divided by all Lenders' Overline Commitments.

Seventh Amendment —that certain Seventh Amendment to Amended and Restated Loan and Security Agreement dated as of December 14, 2005 by and among Borrower, Agent and Lenders.

* * *

Seventh Amendment Effective Date —the date on which the conditions precedent to the effectiveness of the Seventh Amendment are satisfied."

2. Overlines. The following Section 1.1.1(D) is hereby inserted:

"1.1 Revolving Credit Loans.

1.1.1 Loans and Reserves.

* * *

(D) Subject to all of the terms and conditions of this Agreement, between the Seventh Amendment Effective Date and March 14, 2006, each Lender agrees, for so long as no Event of Default exists and is continuing, to make, upon request of Borrower, additional Revolving Credit Loans to Borrower at a time when the unpaid balance of Revolving Credit Loans exceeds, or would exceed with the making of any such Revolving Credit Loan, the Maximum Revolving Loan Borrowing Base (any such Loan or Loans being herein referred to individually as an "Overline" and collectively as "Overlines"). The maximum amount of Overlines any Lender shall be required to make shall not exceed such Lender's Overline Commitment and the total amount of all such Overline Commitments is $5,000,000. Agent shall enter such Overlines as debits in the Loan Account. At no time shall the sum of the aggregate amount of outstanding Revolving Credit Loans (excluding Overlines) plus outstanding Overlines plus the LC Amount exceed the Collateral Borrowing Base. In the event any such excess exists, Borrower shall immediately repay the amount thereof. All Overlines shall be repaid on March 14, 2006 or upon demand after the occurrence of and during the continuation of an Event of Default, shall be secured by the Collateral, shall bear interest as provided in this Agreement for Revolving Credit Loans generally and shall be deemed Revolving Credit Loans for all other purposes of this Agreement and the other Loan Documents; provided that any repayment of the Revolving Credit Loans or any payment of interest thereon made while Overlines are outstanding shall be applied first to outstanding Overlines and interest thereon in accordance with each Lender's Overline Percentages. Any

Overline to be made by Lenders pursuant to the terms hereof shall be made by Lenders ratably in accordance with their Overline Percentages."

3. Term Loans. Borrower shall not be permitted to request and Lenders shall not be required to make Term Loans during the period between the Seventh Amendment Effective Date until the latter of March 14, 2006 and the date on which all outstanding Overlines have been paid in full.

4. Fee. In order to induce Agent and Lenders to enter into this Seventh Amendment, Borrower agrees to pay to Agent, for the ratable benefit of Lenders, a fee in the amount of $25,000. Such fee shall be deemed due and payable and fully earned and non-refundable on the Seventh Amendment Effective Date. Each Lender agrees to refund to Borrower its portion of such fee if on or prior to the first anniversary of the Seventh Amendment Effective Date such Lender enters into a new or an amended and restated credit facility with Borrower.

5. Conditions Precedent. This Seventh Amendment shall become effective upon satisfaction of each of the following conditions precedent:

(a) Agent shall have received a copy of this Seventh Amendment, duly executed by Borrower, Lenders and Agent;

(b) Agent, on behalf of Lenders, shall have received Amended and Restated Revolving Credit Notes in the forms attached hereto and incorporated herein as Exhibits A and A-1 attached to this Seventh Amendment executed by Borrower; and

After the Seventh Amendment Effective Date, Lenders shall deliver to Borrower the Revolving Credit Notes previously executed and delivered by Borrower to Lenders, which Notes shall be marked "Amended and Superceded."

6. Signature Block. The signature block to the Loan Agreement is hereby amended to read as the signature block to this Seventh Amendment.

7. Continuing Effect. Except as otherwise specifically set out herein, the provisions of the Loan Agreement shall remain in full force and effect.

8. Governing Law. This Seventh Amendment and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws.

9. Counterparts. This Seventh Amendment may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement.

(Signature Page Follows)

(Signature Page to Seventh Amendment to Amended and Restated Loan and Security Agreement)

IN WITNESS WHEREOF, this Seventh Amendment has been duly executed as of the first day written above.

HOUSTON WIRE & CABLE COMPANY, as Borrower		HWC HOLDING CORPORATION, as Guarantor
By:	/s/ NICOL G. GRAHAM	By:	/s/ CHARLES SORRENTINO
Name:	Nicol G. Graham	Name:	Charles Sorrentino
Title:	Vice President and Chief Financial Officer	Title:	President and Chief Executive Officer
THE CIT GROUP/BUSINESS CREDIT, INC., as a Lender		BANK OF AMERICA, N.A., as Agent and a Lender
By:	/s/ CHAD RAMSEY	By:	/s/ THOMAS F. KARLOV
Name:	Chad Ramsey	Name:	Thomas F. Karlov
Title:	Vice President	Title:	Senior Vice President
Overline Commitment: $2,000,000 from the Seventh Amendment Effective Date until March 14, 2006 and $0 thereafter		Overline Commitment: $3,000,000 from the Seventh Amendment Effective Date until March 14, 2006 and $0 thereafter

EXHIBIT A

AMENDED AND RESTATED REVOLVING CREDIT NOTE

$30,000,000

Amended and Restated
As of December , 2005
Chicago, Illinois

FOR VALUE RECEIVED, the undersigned, (hereinafter "Borrower"), hereby PROMISES TO PAY to the order of Bank of America, N.A., a national banking association ("Lender"), or its registered assigns, at the principal office of Bank of America, N.A., as agent for such Lender, or at such other place in the United States of America as the holder of this Note may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the principal amount of Thirty Million Dollars ($30,000,000), or such lesser principal amount as may be outstanding pursuant to the Loan Agreement (as hereinafter defined) with respect to the Revolving Credit Loan, together with interest on the unpaid principal amount of this Note outstanding from time to time.

This Note is one of the Revolving Credit Notes referred to in, and issued pursuant to, that certain Amended and Restated Loan and Security Agreement dated as of May 22, 2000 by and among Borrower, the lender signatories thereto (including Lender) and Fleet Capital Corporation, the predecessor-in-interest to Bank of America, N.A. ("Bank of America"), as agent for such Lenders (Bank of America in such capacity "Agent") (hereinafter amended from time to time, the "Loan Agreement"), and is entitled to the benefit and security of the Loan Agreement. All of the terms, covenants and conditions of the Loan Agreement and the Security Documents are hereby made a part of this Note and are deemed incorporated herein in full. All capitalized terms herein, unless otherwise defined, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Loan Agreement.

Upon and after the occurrence, and during the continuation, of an Event of Default, this Note shall or may, as provided in the Loan Agreement, become or be declared immediately due and payable.

The right to receive principal of, and stated interest on, this Note may only be transferred in accordance with the provisions of the Loan Agreement.

Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower.

A-1

This Note shall be interpreted, governed by, and construed in accordance with, the internal laws of the State of Illinois.

HOUSTON WIRE & CABLE COMPANY

By:
Name:
Title:

A-2

EXHIBIT A-1

AMENDED AND RESTATED REVOLVING CREDIT NOTE

$20,000,000

Amended and Restated
As of December , 2005
Chicago, Illinois

FOR VALUE RECEIVED, the undersigned, (hereinafter "Borrower"), hereby PROMISES TO PAY to the order of The CIT Group/Business Credit, Inc., a Delaware corporation ("Lender"), or its registered assigns, at the principal office of Bank of America, N.A., as agent for such Lender, or at such other place in the United States of America as the holder of this Note may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the principal amount of Twenty Million Dollars ($20,000,000), or such lesser principal amount as may be outstanding pursuant to the Loan Agreement (as hereinafter defined) with respect to the Revolving Credit Loan, together with interest on the unpaid principal amount of this Note outstanding from time to time.

This Note is one of the Revolving Credit Notes referred to in, and issued pursuant to, that certain Amended and Restated Loan and Security Agreement dated as of May 22, 2000 by and among Borrower, the lender signatories thereto (including Lender) and Fleet Capital Corporation, the predecessor-in-interest to Bank of America, N.A. ("Bank of America"), as agent for such Lenders (Bank of America in such capacity "Agent") (hereinafter amended from time to time, the "Loan Agreement"), and is entitled to the benefit and security of the Loan Agreement. All of the terms, covenants and conditions of the Loan Agreement and the Security Documents are hereby made a part of this Note and are deemed incorporated herein in full. All capitalized terms herein, unless otherwise defined, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Loan Agreement.

Upon and after the occurrence, and during the continuation, of an Event of Default, this Note shall or may, as provided in the Loan Agreement, become or be declared immediately due and payable.

The right to receive principal of, and stated interest on, this Note may only be transferred in accordance with the provisions of the Loan Agreement.

Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower.

A-1-1

This Note shall be interpreted, governed by, and construed in accordance with, the internal laws of the State of Illinois.

HOUSTON WIRE & CABLE COMPANY

By:
Name:
Title:

A-1-2

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Exhibit 10.11

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Exhibit 10.12

EIGHTH AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

EIGHTH AMENDMENT, dated as of December 30, 2005 to the Amended and Restated Loan and Security Agreement, dated as of May 22, 2000, among Houston Wire & Cable Company ("Borrower"), the lenders named therein ("Lenders") and Bank of America, N.A. ("Bank of America") as successor-in-interest to Fleet Capital Corporation, as agent for said Lenders (Bank of America, in such capacity, "Agent"). Said Amended and Restated Loan and Security Agreement, as amended by a certain First Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated as of July 13, 2000, by a certain Second Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated May 30, 2001, by a certain Third Amendment to Amended and Restated Loan and Security Agreement by and among Borrowers, Lenders and Agent dated October 22, 2001, by a certain Fourth Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated December 31, 2002, by a certain Fifth Amendment to Amended and Restated Loan and Security Agreement by and among Borrower, Lenders and Agent dated November 19, 2003, by a certain Sixth Amended to Amended and Restated Loan and Security Agreement dated as of May 26, 2005 by and among Borrower, Lenders and Agent and by a certain Seventh Amendment to Amended and Restated Loan and Security Agreement dated December 14, 2005 by and among Borrower, Agent and Lenders and as it may be further amended, is hereinafter referred to as the "Loan Agreement." The terms used herein and not otherwise defined shall have the meanings attributed to them in the Loan Agreement. References to Agent and/or any Lender shall include Agent's or such Lender's predecessor(s)-in-interest.

WHEREAS, Lenders, Agent and Borrower desire to make certain amendments and modifications to the Loan Agreement.

NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained and contained in the Loan Agreement, the parties hereto hereby agree as follows:

1. Additional and Amended Definitions. The following definitions of "Eighth Amendment," "Eighth Amendment Effective Date" and "Excess Cash Flow" are hereby inserted in Appendix A to the Loan Agreement; the definitions of "Applicable Margin," "Maximum Revolving Loan" and "Total Credit Facility" are hereby deleted from Appendix A and the following are inserted in their stead:

"Applicable Margin —the percentages set forth below with respect to the Base Rate Revolving Credit Portion, the Base Rate Term A Portion, the Base Rate Term B Portion, the LIBOR Revolving Credit Portion, the LIBOR Term A Portion and the LIBOR Term B Portion:

APPLICABLE MARGIN

LIBOR Revolving Credit Portion		LIBOR Term A Portion		LIBOR Term B Portion		Base Rate Revolving Credit Portion		Base Rate Term A Portion		Base Rate Term B Portion
1.75	%	1.75	%	2.75	%	0.25	%	0.25	%	1.25	%

* * *

Eighth Amendment —that certain Eighth Amendment to Amended and Restated Loan and Security Agreement dated as of December 30, 2005 by and among Borrower, Agent and Lenders.

* * *

Eighth Amendment Effective Date —the date on which the conditions precedent to the effectiveness of the Eighth Amendment are satisfied.

* * *

Excess Cash Flow —with respect to any fiscal year of Borrower, commencing with the fiscal year ending December 31, 2006, 75% of the amount equal to the sum of net income plus depreciation, amortization and other non-cash charges deducted in determining net income and minus the sum of regularly scheduled payments of principal on Indebtedness for Money Borrowed, non-cash income included in determining net income and Capital Expenditures which are not financed for such fiscal year, all determined for Borrower and its Subsidiaries on a Consolidated basis in accordance with GAAP.

* * *

Maximum Revolving Loan —Fifty-Five Million Dollars ($55,000,000).

* * *

Total Credit Facility —Sixty-Nine Million Five Hundred Thousand Dollars ($69,500,000)."

2. Total Credit Facility. The first paragraph of Section 1 of the Loan Agreement is hereby deleted and the following is inserted in its stead:

"1. CREDIT FACILITY.

Subject to the terms and conditions of, and in reliance upon the representations and warranties made in, this Agreement and the other Loan Documents, Lenders agree to make a credit facility of up to Sixty-Nine Million Five Hundred Thousand Dollars ($69,500,000) available upon Borrower's request therefor, as follows:"

* * *

3. Revolving Loans. Section 1.1.1(A) of the Loan Agreement is hereby deleted and the following is inserted in its stead:

"1.1 Revolving Credit Loans.

1.1.1 Loans and Reserves. (A) Loans and Reserves. The aggregate amount of the Revolving Credit Loans to be made by each Lender (such Lender's "Revolving Credit Loan Commitment"), pursuant to the terms hereof, shall be the amount set below such Lender's name on the signature pages hereof. The aggregate principal amount of the Revolving Credit Loan Commitments is Fifty-Five Million Dollars ($55,000,000). The percentage equal to the quotient of (x) each Lender's Revolving Credit Loan Commitment, divided by (y) the aggregate of all Revolving Credit Loan Commitments, is that Lender's "Revolving Credit Percentage". Subject to all of the terms and conditions of this Agreement, each Lender agrees, for so long as no Default or Event of Default exists, to make Revolving Credit Loans to Borrower from time to time, as requested by Borrower in accordance with the terms of Section 3.1 hereof, up to a maximum principal amount at any time outstanding equal to the product of (A) the Borrowing Base at such time multiplied by (B) such Lender's Revolving Credit Percentage. It is expressly understood and agreed that Agent and Lenders may use the Borrowing Base as a maximum ceiling on Revolving Credit Loans outstanding to Borrower at any time. If the unpaid balance of the Revolving Credit Loans should exceed the ceiling so determined or any other limitation set forth in this Agreement, such Revolving Credit Loans shall nevertheless constitute Obligations that are secured by the Collateral and entitled to all the benefits thereof. In no event shall Lenders be required to make a Revolving Credit Loan at any time that there exists a Default or an Event of Default. Agent shall have the right to establish reserves in such amounts, and with respect to such matters, as Agent shall deem necessary or appropriate in the reasonable exercise of Agent's credit judgment, against the amount of Revolving Credit Loans which Borrower may otherwise request under this

Section 1.1.1., including, without limitation, with respect to (i) price adjustments, damages, unearned discounts, returned products or other matters for which credit memoranda are issued in the ordinary course of Borrower's business; (ii) shrinkage, spoilage and obsolescence of Inventory; (iii) slow moving Inventory; (iv) other sums chargeable against Borrower's Loan Account as Revolving Credit Loans under any section of this Agreement; (v) amounts owing by Borrower to any Person to the extent secured by a Lien on, or trust over, any Property of Borrower; and (vi) such other matters, events, conditions or contingencies from time to time hereunder as to which Agent, in its reasonable credit judgment, determines reserves should be established from time to time hereunder."

4. Overlines. Section 1.1.1(D) of the Loan Agreement is hereby deleted in its entirety.

5. Term Loans. Section 1.2 of the Loan Agreement is hereby deleted in its entirety and the following is inserted in its stead:

"1.2 Term Loans.

1.2.1 Term Loan A. On the Eighth Amendment Effective Date, subject to the fulfillment or waiver of all conditions precedent to the effectiveness of the Eighth Amendment, each Lender shall make term loans A (collectively "Term Loan A") to Borrower in the aggregate principal amount equal to the amount set forth below such Lender's name on the signature pages hereof (such Lender's "Term Loan A Commitment"). The percentage equal to the quotient of (x) each Lender's Term Loan A Commitment, divided by (y) the aggregate of all Term Loan A Commitments, is that Lender's "Term Loan A Percentage." The aggregate amount of the Term Loan A Commitments is Four Million Five Hundred Thousand Dollars ($4,500,000). Term Loan A shall be evidenced by promissory notes to be executed and delivered by Borrower to Lenders on the Eighth Amendment Effective Date, the form of which is attached to the Eighth Amendment and made a part hereof as Exhibit A-3 and A-4 (the "Term Note(s A"), shall bear interest as specified in Section 2.1 and shall be repayable in accordance with the terms of the Term Notes A. Term Loan A shall be funded upon the effectiveness of the Eighth Amendment. The proceeds of Term Loan A shall be used by Borrower solely for purposes for which the proceeds of the Revolving Credit Loans are authorized to be used.

1.2 Term Loans.

1.2.1 Term Loan B. On the Eighth Amendment Effective Date, subject to the fulfillment or waiver of all conditions precedent to the effectiveness of the Eighth Amendment, each Lender shall make term loans B (collectively "Term Loan B") to Borrower in the aggregate principal amount equal to the amount set forth below such Lender's name on the signature pages hereof (such Lender's "Term Loan B Commitment"). The percentage equal to the quotient of (x) each Lender's Term Loan B Commitment, divided by (y) the aggregate of all Term Loan B Commitments, is that Lender's "Term Loan B Percentage." The aggregate amount of the Term Loan B Commitments is Ten Million Dollars ($10,000,000). Term Loan B shall be evidenced by promissory notes to be executed and delivered by Borrower to Lenders on the Eighth Amendment Effective Date, the form of which is attached to the Eighth Amendment and made a part hereof as Exhibit A-5 and A-6 (the "Term Note(s) B"), shall bear interest as specified in Section 2.1 and shall be repayable in accordance with the terms of the Term Notes B. Term Loan B shall be funded upon the effectiveness of the Eighth Amendment. The proceeds of Term Loan B shall be used by Borrower solely for purposes for which the proceeds of the Revolving Credit Loans are authorized to be used."

6. Mandatory Prepayments. Subsection 3.3.2 of the Loan Agreement is hereby deleted and the following is inserted in its stead:

"3.3.2 Other Mandatory Prepayments.

(a) Except as provided below, if Borrower receives any proceeds from any tax refunds, indemnity payments or pension reversions, Borrower shall pay to Agent for the ratable benefit of Lenders, as and when received by Borrower and as a mandatory prepayment of the Loans, a sum equal to the proceeds of such tax refund, indemnity payment or pension reversion so received by Borrower. The foregoing notwithstanding, if Borrower receives any indemnity payment which effectively reimburses Borrower for a cost or expense incurred or to be incurred by Borrower, then the proceeds of such indemnity payment paid over to Agent pursuant to the preceding sentence shall be applied against outstanding Revolving Credit Loans.

(b) Borrower shall make a mandatory prepayment of the Loans in the amount of the net proceeds received by Borrower or Guarantor from any offering or sale of its debt or equity Securities.

(c) Borrower shall prepay the Loans in amounts equal to Borrower's Excess Cash Flow with respect to each fiscal year of Borrower during the Term hereof, commencing with the fiscal year ending December 31, 2006, such prepayments to be based upon, and made within 5 Business Days following the due date for delivery by Borrower to Agent of the annual financial statements required by subsection 8.1.3(i) hereof and each such prepayment shall be applied to the Loans in the manner specified in the second sentence of subsection 3.3.1 until payment thereof in full.

(d) Any applicable prepayment made pursuant to subsection 3.3.2 (a), (b) or (c) above shall be applied first to the installments of principal due under Term Notes B, pro rata, in inverse order of their maturities until paid in full, second, to the installments of principal due under Term Notes A, pro rata, in inverse order of their maturities until paid in full, and third, to reduce the outstanding principal balance of the Revolving Credit Loans.

(e) Any prepayments of the Term Loans, whether voluntary or involuntary may not be reborrowed."

7. Financial Covenants. Exhibits O and Q to the Loan Agreement are hereby deleted and Exhibits O and Q attached to this Eighth Amendment and incorporated into the Loan Agreement hereby are inserted in their stead.

8. Fee. In order to induce Agent and Lenders to enter into this Eighth Amendment, Borrower agrees to pay to Agent, for the ratable benefit of Lenders, a fee in the amount of $212,500 ($237,500 minus $25,000 fee paid pursuant to Seventh Amendment). Such fee shall be deemed due and payable and fully earned and non-refundable on the Eighth Amendment Effective Date.

9. Distributions. Agent and Lenders consent to Borrower making Distributions to Guarantor in a cumulative amount not to exceed $20,000,000 to permit Guarantor to pay dividends on or redeem or repurchase its equity Securities, so long as (x) average pro forma Availability (based on a $55,000,000 Maximum Revolving Loan) for the thirty (30) days immediately prior to the date of such proposed Distribution equals or exceeds $8,000,000 and (y) immediately after giving effect to any such Distribution and the funding of any Term Loan drawn in connection with such Distribution, Availability shall equal or exceed $5,000,000. Said Distributions shall be funded from the proceeds of the Term Loans and/or Revolving Credit Loans.

10. Conditions Precedent. This Eighth Amendment shall become effective upon satisfaction of each of the following conditions precedent:

(a) Agent shall have received each of the following documents, each in form and substance acceptable to Agent:

(i) Copy of this Eighth Amendment, duly executed by Borrower, Guarantor, Agent and each Lender;

(ii) Amended and Restated Revolving Credit Notes A and Term Notes B in the forms attached hereto and incorporated herein as Exhibits A-1 , A-2 , A-3 , A-4 , A-5 and A-6 attached to this Eighth Amendment executed by Borrower; and

(iii) Copies of resolutions of the Board of Directors of Borrower authorizing this Eighth Amendment certified as true and correct by Secretary or Borrower.

(b) Borrower shall have paid to Agent for the ratable benefit of Lenders the amendment fee described in Section 8 of this Eighth Amendment.

The date on which all of the conditions precedent listed above are satisfied or waived is hereinafter referred to as the "Eighth Amendment Effective Date." After the Eighth Amendment Effective Date, Lenders shall deliver to Borrower the Revolving Credit Notes and Term Notes previously executed and delivered by Borrower to Lenders, which Notes shall be marked "Amended and Superceded."

11. Signature Block. The signature block to the Loan Agreement is hereby amended to read as the signature block to this Eighth Amendment.

12. Continuing Effect. Except as otherwise specifically set out herein, the provisions of the Loan Agreement shall remain in full force and effect.

13. Governing Law. This Eighth Amendment and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws.

14. Counterparts. This Eighth Amendment may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement.

15. No Novation. The amended and restated Revolving Credit Notes to be delivered pursuant to this Eighth Amendment replace and supercede those certain promissory notes in the principal amount of $30,000,000 and $20,000,000, respectively, dated December 14, 2005 (the "Original Notes") and the execution and delivery of such amended and restated Revolving Credit Notes shall not constitute (a) an extinguishment of the indebtedness of Borrower to the applicable Lender evidenced by the Original Notes or (b) a novation of any such indebtedness or any of the Original Notes.

(Signature Page Follows)

(Signature Page to Eighth Amendment to Amended and Restated
Loan and Security Agreement)

IN WITNESS WHEREOF, this Eighth Amendment has been duly executed as of the first day written above.

HOUSTON WIRE & CABLE COMPANY, as Borrower		HWC HOLDING CORPORATION, as Guarantor
By:	/s/ NICOL G. GRAHAM	By:	/s/ CHARLES SORRENTINO
Name:	Nicol G. Graham	Name:	Charles Sorrentino
Title:	Vice President and Chief Financial Officer	Title:	President and Chief Executive Officer
THE CIT GROUP/BUSINESS CREDIT, INC., as a Lender		BANK OF AMERICA, N.A., as Agent and a Lender
By:	/s/ CHAD RAMSEY	By:	/s/ TOM KARLOFF
Name:	Chad Ramsey	Name:	Tom Karloff
Title:	Vice President	Title:	Senior Vice President
Revolving Loan Commitment: $27,500,000 Term Loan A Commitment: $2,250,000 Term Loan B Commitment: $5,000,000		Revolving Loan Commitment: $27,500,000 Term Loan A Commitment: $2,250,000 Term Loan B Commitment: $5,000,000

EXHIBIT A-1
AMENDED AND RESTATED REVOLVING CREDIT NOTE

$27,500,000

Amended and Restated
As of December , 2005
Chicago, Illinois

FOR VALUE RECEIVED, the undersigned, (hereinafter "Borrower"), hereby PROMISES TO PAY to the order of Bank of America, N.A., a national banking association ("Lender"), or its registered assigns, at the principal office of Bank of America, N.A., as agent for such Lender, or at such other place in the United States of America as the holder of this Note may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the principal amount of Twenty-Seven Million Five Hundred Thousand Dollars ($27,500,000), or such lesser principal amount as may be outstanding pursuant to the Loan Agreement (as hereinafter defined) with respect to the Revolving Credit Loan, together with interest on the unpaid principal amount of this Note outstanding from time to time.

This Note is one of the Revolving Credit Notes referred to in, and issued pursuant to, that certain Amended and Restated Loan and Security Agreement dated as of May 22, 2000 by and among Borrower, the lender signatories thereto (including Lender) and Fleet Capital Corporation, the predecessor-in-interest to Bank of America, N.A. ("Bank of America"), as agent for such Lenders (Bank of America in such capacity "Agent") (hereinafter amended from time to time, the "Loan Agreement"), and is entitled to the benefit and security of the Loan Agreement. All of the terms, covenants and conditions of the Loan Agreement and the Security Documents are hereby made a part of this Note and are deemed incorporated herein in full. All capitalized terms herein, unless otherwise defined, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Loan Agreement.

Upon and after the occurrence, and during the continuation, of an Event of Default, this Note shall or may, as provided in the Loan Agreement, become or be declared immediately due and payable.

The right to receive principal of, and stated interest on, this Note may only be transferred in accordance with the provisions of the Loan Agreement.

Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower.

This Note shall be interpreted, governed by, and construed in accordance with, the internal laws of the State of Illinois.

		HOUSTON WIRE & CABLE COMPANY
		By:	/s/ NICOL G. GRAHAM
		Name:	Nicol G. Graham
		Title:	Vice President and Chief Financial Officer

A-1-1

EXHIBIT A-2
AMENDED AND RESTATED REVOLVING CREDIT NOTE

$27,500,000

Amended and Restated
As of December , 2005
Chicago, Illinois

FOR VALUE RECEIVED, the undersigned, (hereinafter "Borrower"), hereby PROMISES TO PAY to the order of The CIT Group/Business Credit, Inc., a New York corporation ("Lender"), or its registered assigns, at the principal office of Bank of America, N.A., as agent for such Lender, or at such other place in the United States of America as the holder of this Note may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the principal amount of Twenty-Seven Million Five Hundred Thousand Dollars ($27,500,000), or such lesser principal amount as may be outstanding pursuant to the Loan Agreement (as hereinafter defined) with respect to the Revolving Credit Loan, together with interest on the unpaid principal amount of this Note outstanding from time to time.

This Note is one of the Revolving Credit Notes referred to in, and issued pursuant to, that certain Amended and Restated Loan and Security Agreement dated as of May 22, 2000 by and among Borrower, the lender signatories thereto (including Lender) and Fleet Capital Corporation, the predecessor-in-interest to Bank of America, N.A. ("Bank of America"), as agent for such Lenders (Bank of America in such capacity "Agent") (hereinafter amended from time to time, the "Loan Agreement"), and is entitled to the benefit and security of the Loan Agreement. All of the terms, covenants and conditions of the Loan Agreement and the Security Documents are hereby made a part of this Note and are deemed incorporated herein in full. All capitalized terms herein, unless otherwise defined, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Loan Agreement.

Upon and after the occurrence, and during the continuation, of an Event of Default, this Note shall or may, as provided in the Loan Agreement, become or be declared immediately due and payable.

The right to receive principal of, and stated interest on, this Note may only be transferred in accordance with the provisions of the Loan Agreement.

Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower.

This Note shall be interpreted, governed by, and construed in accordance with, the internal laws of the State of Illinois.

		HOUSTON WIRE & CABLE COMPANY
		By:	/s/ NICOL G. GRAHAM
		Name:	Nicol G. Graham
		Title:	Vice President and Chief Financial Officer

A-1-2

EXHIBIT A-3

TERM NOTE A

$2,250,000

Amended and Restated
as of December , 2005
Chicago, Illinois

FOR VALUE RECEIVED , the undersigned (hereinafter "Borrower"), hereby promises to pay to the order of BANK OF AMERICA, N.A., a national banking association (hereinafter "Lender"), or its registered assigns at the office of Bank of America, N.A., as agent for such Lender, or at such other place in the United States as the holder of this Note may designate from time to time in writing, in lawful money of the United States, in immediately available funds, at the time of payment, the principal sum of Two Million Two Hundred Fifty Thousand Dollars ($2,250,000) or such lesser principal amount as may be outstanding pursuant to the Loan Agreement, together with interest from and after the date hereof on the unpaid principal balance outstanding from time to time.

This Term Note A (the "Note") is one of the Term Notes A referred to in, and is issued pursuant to, that certain Amended and Restated Loan and Security Agreement dated as of May 22, 2000 by and among Borrower, the lender signatories hereto (including Lender) and Fleet Capital Corporation, the predecessor-in-interest to Bank of America, N.A. ("Bank of America") as Agent for said lenders (Bank of America, in such capacity, "Agent") (hereinafter, as amended from time to time, the "Loan Agreement"), and is entitled to all of the benefits and security of the Loan Agreement. All of the terms, covenants and conditions of the Loan Agreement and the Security Documents are hereby made a part of this Note and are deemed incorporated herein in full. All capitalized terms used herein, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Loan Agreement.

(a) Interest on the unpaid principal balance outstanding from time to time shall be paid at such interest rates and at such times as are specified in the Loan Agreement;

(b) Principal shall be due and payable monthly commencing on the first day of February, 2006 and continuing on the first day of each month thereafter to and including the first day of the month in which the Commitment Termination Date occurs, in installments each equal to $18,750; and

(c) The entire remaining principal amount then outstanding, together with any and all other amounts due hereunder, shall be due and payable on the Commitment Termination Date.

Upon the occurrence and during the continuation of an Event of Default, this Note shall or may, as provided in the Loan Agreement, become or be declared immediately due and payable.

The right to receive principal of, and stated interest on, this Note may only be transferred in accordance with the provisions of the Loan Agreement.

A-3-1

Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower.

This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois.

		HOUSTON WIRE & CABLE COMPANY
		By:	/s/ NICOL G. GRAHAM
		Name:	Nicol G. Graham
		Title:	Vice President and Chief Financial Officer

A-3-2

EXHIBIT A-4

TERM NOTE A

$2,250,000

Amended and Restated
as of December , 2005
Chicago, Illinois

FOR VALUE RECEIVED , the undersigned (hereinafter "Borrower"), hereby promises to pay to the order of THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation (hereinafter "Lender"), or its registered assigns at the office of Bank of America, N.A., as agent for such Lender, or at such other place in the United States as the holder of this Note may designate from time to time in writing, in lawful money of the United States, in immediately available funds, at the time of payment, the principal sum of Two Million Two Hundred Fifty Thousand Dollars ($2,250,000) or such lesser principal amount as may be outstanding pursuant to the Loan Agreement, together with interest from and after the date hereof on the unpaid principal balance outstanding from time to time.

(a) Interest on the unpaid principal balance outstanding from time to time shall be paid at such interest rates and at such times as are specified in the Loan Agreement;

(c) The entire remaining principal amount then outstanding, together with any and all other amounts due hereunder, shall be due and payable on the Commitment Termination Date.

Upon the occurrence and during the continuation of an Event of Default, this Note shall or may, as provided in the Loan Agreement, become or be declared immediately due and payable.

The right to receive principal of, and stated interest on, this Note may only be transferred in accordance with the provisions of the Loan Agreement.

A-3-3

Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower.

This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois.

		HOUSTON WIRE & CABLE COMPANY
		By:	/s/ NICOL G. GRAHAM
		Name:	Nicol G. Graham
		Title:	Vice President and Chief Financial Officer

A-3-4

EXHIBIT A-5

TERM NOTE B

$5,000,000

Amended and Restated
as of December , 2005
Chicago, Illinois

FOR VALUE RECEIVED , the undersigned (hereinafter "Borrower"), hereby promises to pay to the order of BANK OF AMERICA, N.A., a national banking association (hereinafter "Lender"), or its registered assigns at the office of Bank of America, N.A., as agent for such Lender, or at such other place in the United States as the holder of this Note may designate from time to time in writing, in lawful money of the United States, in immediately available funds, at the time of payment, the principal sum of Five Million Dollars ($5,000,000) or such lesser principal amount as may be outstanding pursuant to the Loan Agreement, together with interest from and after the date hereof on the unpaid principal balance outstanding from time to time.

This Term Note B (the "Note") is one of the Term Notes B referred to in, and is issued pursuant to, that certain Amended and Restated Loan and Security Agreement dated as of May 22, 2000 by and among Borrower, the lender signatories hereto (including Lender) and Fleet Capital Corporation, the predecessor-in-interest to Bank of America, N.A. ("Bank of America") as Agent for said lenders (Bank of America, in such capacity, "Agent") (hereinafter, as amended from time to time, the "Loan Agreement"), and is entitled to all of the benefits and security of the Loan Agreement. All of the terms, covenants and conditions of the Loan Agreement and the Security Documents are hereby made a part of this Note and are deemed incorporated herein in full. All capitalized terms used herein, unless otherwise specifically defined in this Note, shall have the meanings ascribed to them in the Loan Agreement.

(a) Interest on the unpaid principal balance outstanding from time to time shall be paid at such interest rates and at such times as are specified in the Loan Agreement;

(c) The entire remaining principal amount then outstanding, together with any and all other amounts due hereunder, shall be due and payable on the Commitment Termination Date.

Upon the occurrence and during the continuation of an Event of Default, this Note shall or may, as provided in the Loan Agreement, become or be declared immediately due and payable.

The right to receive principal of, and stated interest on, this Note may only be transferred in accordance with the provisions of the Loan Agreement.

A-5-1

Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower.

This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois.

		HOUSTON WIRE & CABLE COMPANY
		By:	/s/ NICOL G. GRAHAM
		Name:	Nicol G. Graham
		Title:	Vice President and Chief Financial Officer

A-5-2

EXHIBIT A-6

TERM NOTE B

$5,000,000

Amended and Restated
as of December , 2005
Chicago, Illinois

FOR VALUE RECEIVED , the undersigned (hereinafter "Borrower"), hereby promises to pay to the order of THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation (hereinafter "Lender"), or its registered assigns at the office of Bank of America, N.A., as agent for such Lender, or at such other place in the United States as the holder of this Note may designate from time to time in writing, in lawful money of the United States, in immediately available funds, at the time of payment, the principal sum of Five Million Dollars ($5,000,000) or such lesser principal amount as may be outstanding pursuant to the Loan Agreement, together with interest from and after the date hereof on the unpaid principal balance outstanding from time to time.

(a) Interest on the unpaid principal balance outstanding from time to time shall be paid at such interest rates and at such times as are specified in the Loan Agreement;

(c) The entire remaining principal amount then outstanding, together with any and all other amounts due hereunder, shall be due and payable on the Commitment Termination Date.

Upon the occurrence and during the continuation of an Event of Default, this Note shall or may, as provided in the Loan Agreement, become or be declared immediately due and payable.

The right to receive principal of, and stated interest on, this Note may only be transferred in accordance with the provisions of the Loan Agreement.

A-5-3

Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower.

This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois.

		HOUSTON WIRE & CABLE COMPANY
		By:	/s/ NICOL G. GRAHAM
		Name:	Nicol G. Graham
		Title:	Vice President and Chief Financial Officer

A-5-4

EXHIBIT O

COMPLIANCE CERTIFICATE

[Letterhead of Borrower]

, 200

The undersigned, the chief financial officer of Houston Wire & Cable Company, a Delaware corporation ("Borrower"), gives this certificate to Bank of America, N.A. in accordance with the requirements of Section 8.1.2 of that certain Loan and Security Agreement dated May 22, 2000, among Borrower, the lender signatories thereto ("Lenders") and Bank of America, N.A. ("Bank of America"), a national banking association, as successor-in-interest to Fleet Capital Corporation, as agent for such Lenders (Bank of America, in such capacity, "Agent"). Capitalized terms used in this Certificate, unless otherwise defined herein, shall have the meanings ascribed to them in the Loan Agreement.

1. Based upon my review of the balance sheets and statements of income of Borrower for the [fiscal year] [monthly period] ending , 200 , copies of which are attached hereto, I hereby certify that:

(a) Fixed Charge Coverage Ratio for the period between and is to 1;

(b) the Debt to EBITDA Ratio for the period between and is $ ;

2. No Default exists on the date hereof, other than: [if none, so state]; and

3. No Event of Default exists on the date hereof, other than [if none, so state].

		Very truly yours,
		Chief Financial Officer

O-1

EXHIBIT Q

FINANCIAL COVENANTS

Debt to EBITDA Ratio —at any date, the ratio of (i) aggregate Indebtedness for Money Borrowed as of such date to (ii) EBITDA for the most recently ended four fiscal quarters, all as determined for Borrower and its Subsidiaries on a Consolidated basis and in accordance with GAAP.

Interest Expense —with respect to any fiscal period, the interest expense incurred for such period as determined in accordance with GAAP.

O-2

COVENANTS

Debt to EBITDA Ratio —Borrower shall not, as of the last day of any fiscal quarter, permit the Debt to EBITDA Ratio to be greater than 4.0 to 1.

Fixed Charge Coverage Ratio —Borrowers shall not permit the Fixed Charge Coverage Ratio for any period set forth below to be less than the ratio set forth opposite such period below:

Period		Ratio
Twelve months ending December 31, 2005 and each March 31, June 30, September 30 and December 31 thereafter		1.20 to 1

O-3

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Exhibit 10.12

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Exhibit 10.13

TERMINATION AGREEMENT

This Termination Agreement ("Termination Agreement") is entered into on March 23, 2006 by and between HWC Wire & Cable (formerly known as Houston Wire & Cable Company), a Delaware corporation ("Company"), and CHS Management II, L.P., a Delaware limited partnership ("CHS").

RECITALS

A. Company and CHS entered into a management services agreement on May 22, 1997 (as amended, the "Management Agreement").

B. Company and CHS desire to terminate the Management Agreement on the terms set forth herein.

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

AGREEMENT

1. TERMINATION OF MANAGEMENT AGREEMENT. The Management Agreement is hereby terminated effective as of the closing date ("Effective Date") of the underwritten initial public offering of common stock of Houston Wire & Cable Company (formerly known as HWC Holding Corporation), a Delaware corporation, which is the sole stockholder of Company. Beginning on the Effective Date, neither CHS or Company shall have any further rights or obligations under the Management Agreement; provided, however, that: (i) the fees payable by the Company to CHS under the Management Agreement (the "Management Fee") shall be prorated through the Effective Date; (ii) the Company's obligation under the Management Agreement to pay to CHS the Management Fee for the period prior to the Effective Date shall survive such termination; and (iii) the Company's obligation under the Management Agreement to reimburse CHS for expenses incurred by CHS for the period prior to the Effective Date shall survive such termination.

2. ENTIRE AGREEMENT; AMENDMENT. This Termination Agreement constitutes the entire agreement between Company and CHS pertaining to the subject matter contained herein, and supersedes all prior and contemporaneous agreements, representations and undertakings of the parties. No supplement, modification or amendment of this Termination Agreement shall be binding unless executed in writing by all the parties.

3. GOVERNING LAW. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware without regard to its conflict of law rules and principles.

4. COUNTERPARTS. This Termination Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute the same agreement.

IN WITNESS WHEREOF, the parties hereby agree to each and all of the above provisions.

HWC WIRE & CABLE COMPANY, a Delaware corporation
By:	/s/ CHARLES A. SORRENTINO
Name:	Charles A. Sorrentino
Its:	President and Chief Executive Officer
CHS MANAGEMENT II, L.P., a Delaware limited partnership
	By:	Code Hennessy & Simmons LLC
	Its:	General Partner
		By:	/s/ ANDREW W. CODE
		Name:	Andrew W. Code
		Its:	Authorized Signatory

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Exhibit 10.13

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Exhibit 10.15

EXECUTIVE SECURITIES AGREEMENT

This Executive Securities Agreement (" Agreement ") is made as of March , 2006 by and among HWC Holding Corporation, a Delaware corporation (the " Company "), (" Executive ") and Code, Hennessy & Simmons II, L.P., a Delaware limited partnership (" CHS ").

R E C I T A L S:

A. Pursuant to the Company's 200 Stock Plan and Notices of Grant of Nonqualified Stock Option to Executive thereunder, the Company has issued to Executive options to purchase shares of common Stock of the Company.

B. Such Notices of Grant of Nonqualified Stock Option require Executive to enter into this Agreement as a condition to exercising all or any portion of such Options.

C. The Company, CHS and Executive desire to enter into an agreement pursuant to which (a) Executive shall purchase, and the Company shall sell shares of common stock, $0.001 par value, of the Company and (b) the manner and terms by which the Company's equity may be transferred.

A G R E E M E N T S:

The parties hereto agree as follows:

1. Definitions.

(a) For purposes of this Agreement, the following terms shall have the following meanings unless the context indicates otherwise:

" Affiliate " of a Person means any other Person controlling, controlled by or under common control with such Person and any partner of such Person if such Person is a partnership. An "Affiliate", with respect to the Company, includes Houston and each of the Company's direct or indirect subsidiaries.

" Board " means the board of directors of the Company.

" Confidential Information " has the meaning set forth in Section 13(b)(ii) of this Agreement.

" 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 ownership of voting securities, by contract or otherwise.

" Disability " means (a) Executive is unable to perform his or her duties with the Company or any Subsidiary for sixty (60) consecutive days or ninety (90) cumulative days during any six (6) month period, or (b) Executive is eligible for long-term disability benefits under the Company's or any Subsidiary's plans, programs or policies, in either case as a result of injury, mental illness or physical illness.

" Executive Securities " means (i) all Executive Shares, (ii) all Options, and (iii) all securities of the Company issued or issuable with respect to the securities referred to in clauses (i), (ii), and (iii) above by way of a stock split, stock dividend or other recapitalization. Executive Securities shall continue to be Executive Securities in the hands of any holder other than Executive (other than the Company, its Subsidiaries or CHS and except for transferees in a Public Sale or a Sale of the Company), and, except as otherwise provided in this Agreement, each such other holder of Executive Securities shall succeed to all rights and obligations attributable to Executive as a holder of Executive Securities hereunder.

" Executive Shares " means all Shares acquired by Executive pursuant to this Agreement or any other agreement, option plan or other arrangement with the Company or any Subsidiary, whether

on or following the date of this Agreement, and all Shares of the Company issued or issuable with respect to such Shares by way of a stock split, stock dividend or other recapitalization.

" Exempt Transaction " means any transfer of Executive Securities pursuant to Section 3, 4, 6(d), 7 or 8 of this Agreement.

" Fair Market Value " of any security of the Company means:

(i) the average of the closing prices of the sales of such security on all securities exchanges on which such security may at the time be listed, or, if there have been no sales on any such exchange on any particular day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such particular day, or, if on any particular day such security is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 p.m., New York time, or, if on any particular day such security is not quoted in the NASDAQ System, the average of the highest bid and lowest asked prices on such particular day in the domestic over-the-counter market as reported by the National Quotation Bureau Incorporated, or any similar successor organization, or any combination of the foregoing averages which most accurately reflects value, in each such case averaged over a period of twenty-one (21) business days ending on the day as of which the Fair Market Value is being determined; or

(ii) with respect to any security which is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market for the entire twenty-one (21) day averaging period specified above, the fair value of such security as determined in good faith by the Board.

With respect to Options, "Fair Market Value" means the amount determined pursuant to clause (i) or (ii) above less the exercise price for such Option.

" Family Group " means the spouse and descendants (whether natural or adopted) of Executive (collectively, " Relatives "), any custodian of a custodianship for and on behalf of a Relative or Executive and any trustee of a trust solely for the benefit of one or more of the foregoing.

" Fully-Diluted Basis " shall mean the number of Shares which would be outstanding, as of the date of computation, if all convertible obligations, options and warrants and like rights and instruments, to acquire Shares had been converted or exercised.

" Holder " means any holder of Executive Securities (including, without limitation, Executive and Executive's Permitted Transferees).

" Houston " means Houston Wire & Cable Company.

" Independent Third Party " means any Person who, immediately prior to the contemplated transaction, does not directly or indirectly beneficially own in excess of five percent (5%) of the Shares on a Fully-Diluted Basis, who is not an Affiliate of any five percent (5%) owner of such Shares and who is not the spouse or descendant (by birth or adoption) of any five percent (5%) owner.

" Just Cause " means any of the following, as determined by the Board in its reasonable judgment: (i) Executive's failure or refusal to perform such material duties and responsibilities as are reasonably requested by the Board or an Affiliate's Board or the President of the Company or any of its Affiliates, (ii) Executive's failure to observe all material policies generally applicable to executives of the Company or its Affiliates, (iii) Executive's gross negligence or willful misconduct in the performance of Executive's duties, (iv) the commission by Executive of any act of fraud or embezzlement against the Company or any of its Affiliates, or the commission of any felony or act involving moral turpitude, (v) Executive's unauthorized dissemination of information, observations and data concerning the business plans, financial data, referral sources, customers, suppliers, manufacturing procedures and

techniques, trade secrets or acquisition strategies of the Company or its Affiliates, or any other Confidential Information (provided that for purposes of clauses (i), (ii) and (iii) of this definition, "Just Cause" shall exist only if (A) the applicable breach impacts the financial performance of the Company and (B) the applicable breach remains uncured after the expiration of 15 days following delivery of written notice to Executive by the Company or the Board of Directors). Termination by "Disability" shall not be considered termination by "Just Cause". The mere failure to meet business goals shall not constitute "Just Cause".

" 1933 Act " means the Securities Act of 1933, as amended from time to time, or any successor thereto.

" 1934 Act " means the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto.

" Open Market Transaction " means any Transfer of Executive Securities in the open market following a Public Sale.

" Options " means (i) all warrants, options or other rights to subscribe for purchase or otherwise acquire Executive Shares and (ii) all or any securities convertible into or exchangeable for Executive Shares.

" Original Cost " means the exercise price, if any, actually paid for the Executive Shares purchased pursuant to the exercise of Options, and if such Options have not been exercised, the Original Cost of such Options shall be the greater of $0.01 per Option or the cash price actually paid therefor.

" Person " means an individual, a partnership, a corporation, a limited liability company or partnership, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or the United States of America or any other nation, any state or other political subdivision thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions of government.

" Public Offering " means a public offering of Shares (or the securities of any successor to the Company) or any shares of capital stock of a subsidiary pursuant to an effective registration statement under the 1933 Act or pursuant to the securities laws of one or more Provinces of the country of Canada.

" Public Sale " means any sale pursuant to a Public Offering or any sale to the public pursuant to Rule 144 (as defined below).

" Resignation " means termination by Executive of his or her employment with the Company or any of the Subsidiaries or successors.

" Retirement " means the voluntary termination of Executive's employment when Executive is at least 65 years old, which termination is in accordance with the Company's or any Subsidiary's established retirement policies.

" Sale of the Company " means the sale (in a single transaction or in a series of related transactions) of the Company to any Independent Third Party or group of Independent Third Parties pursuant to which such party or parties acquire (i) a majority of the then outstanding Shares (whether by merger, consolidation, sale or transfer of shares, reorganization, recapitalization or otherwise) or (ii) all or substantially all of the assets of the Company and its Subsidiaries, determined on a consolidated basis.

" SEC " means the Securities Exchange Commission.

" Shares " means shares of common stock, $0.001 par value, of the Company (now or hereafter issued), and any shares issued in respect of such shares pursuant to a dividend, stock split reclassification or like action, or pursuant to an exchange (including a merger).

" Subsidiary " means any Person of which the Company owns securities having a majority of the voting power in electing the board of directors directly or through one or more Subsidiaries (or, in the case of a partnership, limited liability company or other similar entity, securities conveying, directly or indirectly, a majority of the economic interests in such partnership or entity), including, without limitation, Houston.

" Transfer " shall mean any transfer, sale, assignment, pledge, encumbrance or other disposition (irrespective of whether any of the foregoing are effected, with or without consideration, voluntarily or involuntarily, by operation of law or otherwise, or whether inter vivos or upon death).

(b) Other Definitions. Other defined terms are contained in the body of this Agreement.

2. Purchase and Sale of Executive Shares.

(a) Closing. In connection with Executive's exercise of options issued pursuant to the Company's 200 Stock Plan and Notices of Grant of Nonqualified Stock Option to Executive thereunder, Executive hereby purchases from the Company, and the Company hereby sells to Executive, (i) Shares at a price of $ per Share, (the " Original Subscription Price "). The Company hereby acknowledges payment by Executive of the Original Subscription Price.

(b) Executive Representations and Warranties. In connection with the purchase and sale of Executive Securities pursuant to this Agreement, Executive represents and warrants to the Company, and agrees and acknowledges, that:

(i) The Executive Securities to be acquired by Executive pursuant to this Agreement are and shall be acquired for Executive's own account, for investment purposes only and not with a present view to, or intention of, distribution or resale thereof in violation of the 1933 Act or any state securities laws and that, irrespective of any other provisions of this Agreement, the Executive Securities shall be Transferred only in compliance with all applicable federal and state securities laws, including, without limitation, the 1933 Act.

(ii) The Executive Securities are not registered under the 1933 Act and must be held by Executive until such Executive Securities are registered under the 1933 Act or an exemption from such registration is available; the Company shall have no obligation to take any actions that may be necessary to make available any exemption from registration under the 1933 Act; and the Company shall place "stop transfer" restrictions on the party responsible for recording Transfers of Executive Securities in violation of the foregoing provisions of this clause (ii).

(iii) Executive is familiar with Rule 144 (" Rule 144 ") adopted by the Securities and Exchange Commission (" SEC ") which establishes guidelines governing, among other things, the resale of "restricted securities" (such as Executive Securities, which are acquired from the issuer of such securities in a transaction not involving any Public Offering).

(iv) Rule 144 is not presently available for Transfers of the Executive Securities because, among other things, the Company is not presently required to file the reports required to be filed by Section 15(d) of the 1934 Act, and does not have a class of securities registered pursuant to Section 12 of that statute; and, even if the Company were required to file reports under the 1934 Act, and had filed all reports required to be filed, reliance on Rule 144 to Transfer securities is subject to other restrictions and limitations, as set forth in Rule 144.

(v) In connection with any Transfer of Executive Securities under Rule 144 or pursuant to any other exemption, Executive may, at the option of the Company, be required to deliver to the Company an opinion from counsel for Executive (reasonably acceptable to the Company) and/or receive an opinion from counsel for the Company, to the effect that all applicable federal and state securities law requirements have been met.

(vi) Executive has been an executive employee of the Company and/or its Subsidiaries.

(vii) Executive is able to evaluate the risks and merits of the investment in the Executive Securities and of making an informed investment decision with respect thereto.

(viii) Executive is able to bear the economic risk of Executive's investment in the Executive Securities for an indefinite period of time because the Executive Securities have not been registered under the 1933 Act and, therefore, cannot be sold unless subsequently registered under the 1933 Act or unless an exemption from such registration is available.

(ix) Executive has had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of the Executive Securities and has had full access to such other information and materials concerning the Company as Executive has requested; the Company has answered all inquiries that Executive has made to the Company relating to the Company and the sale of the Executive Securities hereunder.

(x) The execution, delivery and performance of this Agreement by Executive does not and shall not conflict with, violate or cause a breach of any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to which Executive is subject.

(xi) The Executive has not granted any proxy or become party to any voting trust or other agreement which is inconsistent with, conflicts with or violates any provision of this Agreement.

(xii) Executive has the legal capacity to execute and perform this Agreement. This Agreement has been duly executed and delivered by Executive, and constitutes a valid and legally binding obligation of Executive, enforceable against him or her in accordance with its terms (except to the extent that enforcement may be affected by laws relating to bankruptcy, reorganization, insolvency and creditors' rights and by the availability of injunctive relief, specific performance and other equitable remedies).

(c) Company Representations and Warranties. In connection with the purchase and sale of Executive Securities pursuant to this Agreement, the Company represents and warrants to Executive that:

(i) The Company is duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has full power and authority to enter into and perform its obligations under this Agreement. The execution and delivery by the Company of this Agreement and the performance by the Company of its obligations hereunder have been duly authorized and approved by all requisite action. This Agreement has been duly executed and delivered by a duly authorized officer of the Company.

(ii) The execution, delivery and performance of this Agreement by the Company does not and shall not conflict with, violate or cause a breach of any of the terms or provisions of the Certificate of Incorporation of the Company or its by-laws, or of any agreement, contract or instrument to which the Company is a party, or any judgment, order or decree to which the Company is subject.

(iii) On the date of this Agreement and after giving effect to the transactions contemplated by this Agreement and the other Executive Securities Agreements dated on or about the date hereof, the number of all Shares issued and outstanding shall be 8,862,492. All Shares heretofore issued and delivered by the Company to any Holder have been, and all Shares to be issued by the Company to any Holder pursuant to this Agreement, when issued and delivered, shall be, duly authorized, validly issued, fully paid and non-assessable. The Executive Securities issued pursuant to this Agreement are subject to dilution by future

issuances of securities of the Company including by issuance of common stock to lenders pursuant to warrants.

(d) Additional Agreements and Understandings. As an additional inducement to the Company to issue Executive Shares to Executive, Executive acknowledges and agrees that:

(i) Neither the issuance of Executive Shares to Executive nor any provision contained herein shall entitle Executive to remain in the employment of the Company or any of its Subsidiaries or affect the right of the Company to terminate Executive's employment at any time for any reason.

(ii) The Company shall have no duty or obligation to disclose to Executive, and Executive shall have no right to be advised of, any material information regarding the Company and its Subsidiaries at any time prior to, upon or in connection with the repurchase of Executive Shares upon the termination of Executive's employment with the Company and its Subsidiaries or as otherwise provided under this Agreement.

(iii) Shares issued by the Company pursuant to a stock dividend, stock split, reclassification or like action, or pursuant to the exercise of a right granted by the Company to all holders of Shares to purchase Shares on a proportionate basis, shall be Transferred only, and for all purposes be treated, in the same manner as, and be subject to the same options with respect to, the Shares which were split or reclassified or with respect to which a stock dividend was paid or rights to purchase Shares on a proportionate basis were granted. In the event of a merger of the Company where this Agreement does not terminate, partnership units, membership units or shares of common stock (and/or securities convertible into such units or shares) which are issued in exchange for Shares shall thereafter be deemed to be Shares subject to the terms of this Agreement.

(iv) Any person to whom Executive Securities are to be Transferred (except pursuant to a Public Offering) shall execute and deliver, as a condition to such Transfer, whatever documents are deemed reasonably necessary by the Company, in consultation with its counsel, to evidence such party's joinder in, acceptance of, and agreement with, the obligations with respect to the Executive Securities contained in this Agreement; and

(v) Except with the prior written consent of CHS, Executive shall not grant any proxy or become party to any voting trust or other agreement with respect to the Executive Securities or any interest therein.

3. Repurchase Option.

(a) General. Upon the termination of Executive's employment with the Company or any of its Subsidiaries (including, without limitation, Houston) for any reason (" Termination "), all Executive Securities, whether held by Executive or one or more of Executive's transferees (collectively, the " Available Securities "), shall be subject to repurchase by CHS and the Company pursuant to the terms and conditions set forth in this Section 3 (the " Repurchase Option ").

(b) Company Option. The Board, acting in good faith, may elect (in its sole discretion) to cause the Company to purchase all or any portion of the Available Securities pursuant to the Repurchase Option by delivering written notice (the " Repurchase Notice ") to CHS and Executive within forty-five (45) days following Termination. The Repurchase Notice shall set forth the number and amount of Available Securities to be acquired from each Holder, the aggregate consideration to be paid for such securities and the time and place for the closing of such purchase.

(c) CHS Option. If for any reason the Company does not elect to purchase all of the Available Securities pursuant to the Repurchase Option, CHS may elect (in its sole discretion) to

exercise the Repurchase Option for all or any portion of the Available Securities which the Company has not elected to purchase (the " Securities Available for CHS "). Within sixty (60) days following Termination, CHS may elect to purchase all or any portion of the Securities Available for CHS by giving written notice to Executive as to the number and amount of securities being purchased by CHS from each Holder (the " Supplemental Repurchase Notice ").

(d) Repurchase Price. Upon exercise of the Repurchase Option, the purchase price for the Available Securities (the " Repurchase Price ") shall be as follows:

(i) if the Repurchase Option is triggered by termination of Executive's employment for any reason other than Executive's Resignation or termination of Executive's employment by the Company or any Subsidiary for Just Cause, the purchase price shall be Fair Market Value of the Available Securities as of the date of Termination; and

(ii) if the Repurchase Option is triggered by termination of Executive's employment by the Company or any Subsidiary for Just Cause or Resignation of the Executive, the purchase price of the Available Securities shall be the lesser of (A) the Original Cost and (B) the Fair Market Value of the Available Securities.

The purchase price for the Available Securities under this Section 3(d) shall be computed as of the the last day of the month immediately preceeding the date of Termination, and shall be determined by the Board within sixty (60) days after Termination and such determination shall be final and binding, absent manifest error.

(e) Repurchase Allocation. The amount of Available Securities to be purchased pursuant to the Repurchase Option shall first be satisfied to the extent possible from the Available Securities held by Executive at the time of delivery of the Repurchase Notice. If the amount of the Available Securities then held by Executive is less than the total amount of Available Securities elected to be purchased, all of the Available Securities then held by Executive shall be purchased and Available Securities shall be purchased from the other Holder(s) thereof, pro rata according to the number of Executive Securities (determined as nearly as practicable to the nearest share) held by such other Holder(s) at the time of delivery of the Repurchase Notice, as the case may be.

(f) Closing. The purchase of Available Securities pursuant to this Section 3 shall be consummated at the Company's principal office at 10:00 a.m., on the thirtieth (30th) day next following the last day of the final exercise period provided in Section 3(b) or 3(c), as applicable, or on such earlier day as designated by CHS or the Company, as the case may be, in its sole discretion, upon not less than ten (10) days prior notice to Executive. If such date is a Saturday, Sunday or legal holiday, the closing shall occur at the same time and place on the next succeeding business day. Subject to Section 5 hereof, at the option of the Company and/or CHS, the Person exercising the Repurchase Option shall pay for the Available Securities to be purchased pursuant to the Repurchase Option by, at such Person's option, (i) delivery of a cashier's check or wire transfer of immediately available funds and/or (ii) delivery of a nonnegotiable note in the form attached hereto as Exhibit A (the "Repurchase Note") with such additional terms (including subordination provisions) as shall be required by the senior lenders to the Company and the Subsidiaries, or a combination of both. The purchasers of Executive Securities to be purchased pursuant to the Repurchase Option hereunder shall be entitled to receive customary representations and warranties as to ownership, title, authority to sell and the like from the Holders regarding such sale, to require all Holders' signatures be guaranteed and to receive such other evidence, including applicable inheritance and estate tax waivers, as may reasonably be necessary to effect the purchase of the Executive Securities to be purchased pursuant to the Repurchase Option.

(g) Failure to Deliver Shares. If Executive or any other holder of Executive Securities whose Executive Securities are to be purchased pursuant to this Section 3 or Sections 4 or 6 fails to deliver them on the scheduled closing date of such purchase, the Company may elect to deposit the consideration representing the purchase price of the Executive Securities with the Company's attorney (or any other third party, including a bank or a financial institution), as escrowee. In the event of the foregoing election, the Executive Securities shall be deemed for all purposes (including the right to vote and receive payment for dividends) to have been Transferred to the purchasers thereof and the Company shall issue new certificates representing the Executive Securities to the Company, CHS or their respective designees, as the case may be, and the certificates or instruments registered in the name of the Person obligated to sell such Executive Securities shall be deemed to have been canceled and to represent solely a right to receive payment of the purchase price; without interest, from the escrow funds. If, prior to the third (3rd) anniversary of the scheduled closing date for the purchase pursuant to Sections 3, 4 or 6, the proceeds of sale have not been claimed by the Executive or other seller of the Executive Securities, the escrow deposit (and any interest earned thereon) shall be returned to the Person originally depositing the same, and the transferors whose Executive Securities were so purchased shall look solely to the purchasers thereof for payment of the purchase price. The escrowee shall not be liable for any action or inaction taken by it in good faith.

4. Put.

(a) Generally. Upon the occurrence of a termination of Executive's employment with the Company or any of its Subsidiaries as a result of Executive's death or Disability or as a result of termination by the Company without Just Cause (other than a termination which otherwise does not constitute a breach of Executive's employment arrangements) (a " Put Event "), Executive may require the Company to repurchase all or any portion of the Executive Securities owned by the Executive as of the date of such termination, pursuant to the terms and conditions in this Section 4 (the " Put ").

(b) Put Notice. Upon the occurrence of a Put Event, Executive may exercise the Put by delivering written notice (the " Put Notice ") to the Company within fifteen (15) days following the occurrence of the Put Event.

(c) Put Price. Upon the exercise of the Put, the purchase price for the Executive Securities (the " Put Price ") shall be the Fair Market Value of such securities computed as of the date of the Put Event. The Board shall determine the Put Price within sixty (60) days following delivery of a Put Notice and such determination will be final and binding absent manifest error.

(d) Manner of Payment. Subject to Section 5, the Put Price payable in connection with the exercise of a Put Option shall, at the option of the Company, be paid either (i) in full in cash on the Put Closing Date (as defined herein) and/or (ii) by delivery of a Repurchase Note in the form of Exhibit A hereto and with such additional terms (including subordination provisions) as shall be required by the senior lenders to the Company and the Subsidiaries, or a combination of both.

(e) Closing. The closing of the purchase of Executive Securities pursuant to the Put (the " Put Closing ") shall take place on the date (the " Put Closing Date designated by the Company in a written notice to Executive, which date shall be not more than sixty (60) days after the delivery of the Put Notice.

(f) Termination of Right. The right of Executive to require the Company to repurchase Executive Securities pursuant to this paragraph 4 will terminate immediately after consummation of a Sale of the Company or a Public Offering.

5. Manner of Payment and Restriction on the Company's Right to Purchase.

(a) General Restriction. Notwithstanding anything to the contrary contained in this Agreement, the Company shall not be obligated to purchase, pursuant to Section 4 or otherwise, such Executive Securities as the Company may then be prohibited by law or bona fide contract from purchasing, including, without limitation, the Delaware General Corporation Law (the " Delaware Act ") and covenants contained in any loan agreements or other bona fide agreements to which the Company or any Subsidiary is then a party. To the extent such Executive Securities cannot be repurchased pursuant to applicable contracts or law the option contained in Section 4 shall be of no force and effect and shall be null and void. For purposes of this Agreement, the Company shall not be obligated to purchase Executive Securities if any law or loan or other bona fide agreement to which any Subsidiary is a party or is bound would prohibit the Subsidiaries from paying to the Company dividends or distributions sufficient to permit the Company to pay the purchase price for such Executive Securities.

(b) Payment Limitation. Notwithstanding anything to the contrary contained in this Agreement or in any Repurchase Note delivered pursuant to the terms hereof, the Company's obligation to make a payment pursuant to a Repurchase Note delivered pursuant to Section 3(f), 4(d), 4(g) or Section 6(b) of this Agreement shall be suspended to the extent and for so long as (x) the making of such payment, together with the making of all other payments to be made during such fiscal year on account of the Company's purchases of Executive Securities pursuant to this Agreement and securities purchased pursuant to any other agreements with shareholders of the Company, would result in a violation of the Delaware Act or a breach of any covenant contained in any loan or other bona fide agreement to which the Company or any of its Subsidiaries is a party, or (y) the Company's Subsidiaries are unable to pay to the Company dividends or other distributions sufficient to permit it to pay the entire purchase price for such Executive Securities in cash as a result of applicable law or any covenant contained in any bona fide agreement to which any of such Subsidiaries are a party. If any portion of the Company's obligation to Executive or any of Executive's transferees has been tolled for a period in excess of three (3) years from the original closing date, Executive (or such transferee), by written notice delivered to the Company, may elect to rescind the sale of all Executive Securities the proceeds of sale of which are represented by unpaid notes made by the Company which are owed to Executive or such transferee. If payments are suspended pursuant to this Section 5(b), at such time as the Company is able to resume making payments without violation of the Delaware Act, applicable law or a covenant in any bona fide agreement to which the Company or any of its Subsidiaries is a party, the Company shall first make payments of arrearage owed to the former shareholders on a proportional (to the amount of arrearage) basis, and shall then make regularly scheduled payments.

6. Restrictions on Transfer of Executive Securities. This Section 6 shall apply to any proposed Transfer of Executive Securities. Notwithstanding anything to the contrary contained herein, a Transfer of Executive Securities shall not be valid or have any force or effect unless (i) such Transfer is made in accordance with the provisions of this Agreement, (ii) such Transfer would not result in a violation of any applicable federal or state securities law, and (iii) the intended transferee of such Transfer is not engaged in a Competing Business, has not been engaged in a Competing Business in the immediately preceding two years, or is not developing a Competing Business.

(a) Transfer of Executive Securities. No Holder shall Transfer any interest in any Executive Securities except pursuant to an Exempt Transaction or pursuant to this Section 6. No Holder shall consummate any such Transfer (except pursuant to an Exempt Transaction or pursuant to Section 6(c)) until sixty (60) days following the latest of the delivery to the Company and CHS of the Offer Notice (as defined below), unless all rights provided in Section 6(b) have been exercised or waived, and the parties to the Transfer have been finally determined pursuant to such exercises

or waivers prior to the expiration of such sixty (60) day period (the " Election Period "). Notwithstanding anything to the contrary herein contained, except pursuant to an Exempt Transaction, neither Executive nor any of his or her Permitted Transferees shall Transfer any interest in Executive Securities (i) unless Executive or such Permitted Transferee(s) has received a bona fide written offer to purchase such Executive Securities, and (ii) until one hundred twenty (120) days following Executive's Termination and (iii) in any event without the prior written consent of a majority of the members of the Board (which approval may be withheld for any reason or no reason).

(b) First Refusal Right. If any Holder desires to Transfer any Executive Securities other than in an Exempt Transaction or a transaction pursuant to Section 6(c), such Holder (the " Transferring Holder ") shall deliver a written notice (the " Offer Notice ") to the Company and CHS. The Offer Notice shall disclose in reasonable detail the identity of the proposed transferee(s) (including, without limitation, all parties holding controlling interests in such proposed transferee), the proposed number, amount and type of Executive Securities to be transferred and the proposed terms and conditions of the Transfer and any other material information reasonably requested by the Board or CHS and shall include a true and correct copy of the written offer to purchase Executive Securities received by him. The delivery by the Transferring Holder of the Offer Notice shall create the following two (2) options:

(i) First, the Board, acting in good faith, may elect to cause the Company to purchase all or any portion of the Executive Securities specified in the Offer Notice at the price and on the terms specified therein by delivering written notice of such election to the Transferring Holder as soon as practical, but in any event within thirty (30) days following the delivery of the Offer Notice (the " Company Offer Period ").

(ii) If the Company has not elected to purchase all of the Executive Securities within the Company Offer Period, then CHS may elect to purchase all or any portion of the Executive Securities not elected to be purchased by the Company at the price and on the terms specified in the Offer Notice by delivering written notice of such election to the Transferring Holder as soon as practical, but in any event within sixty (60) days following the delivery of the Offer Notice.

If the Company and/or CHS have elected to purchase all or any of the Executive Securities offered by the Transferring Holder, the Transfer of such Executive Securities to the Company or CHS, as the case may be, shall be consummated as soon as practical after the delivery of the election notices, but in any event within thirty (30) days following the expiration of the Election Period. Subject to Section 5 hereof, the Company and/or CHS shall pay for the Executive Securities offered by the Transferring Holder by delivery of a cashier's check or wire transfer of immediately available funds. The purchasers of Executive Securities offered in the Offer Notice hereunder shall be entitled to receive customary representations and warranties as to ownership, title, authority to sell and the like from the Holder regarding such sale, to require the Holder's signature to be guaranteed and to receive such other evidence, including applicable inheritance and estate tax waivers, as may reasonably be necessary to effect the purchase of the Executive Securities offered in the Offer Notice.

(c) Transfer Subsequent to Expiration of Election Period. If the Company and CHS have not collectively elected to purchase all Executive Securities being offered, such Transferring Holder may, within sixty (60) days following the expiration of the Election Period and subject to the provisions of this Section 6 other than Section 6(b), Transfer such Executive Securities referred to in the Offer Notice to the party or parties named therein at a price no less than the price specified in the Offer Notice and on other terms no more favorable to the transferees than offered in the Offer Notice. Executive Securities Transferred pursuant to the previous sentence shall thereafter continue to be subject to all restrictions on Transfer and other provisions of this Agreement;

including, without limitation, the provisions of this Section 6 with respect to further Transfers of the Executive Securities and a transferee, as a condition of any such Transfer, shall agree in writing to be bound by the provisions of this Agreement. Any Executive Securities not transferred within such sixty (60) day period shall be subject to the provisions of this Section 6 with respect to any subsequent Transfer.

(d) Permitted Transfers. Anything contained in this Agreement to the contrary notwithstanding (except the second sentence of Section 6, which sentence shall control), Executive Securities may be Transferred without first complying with the provisions of Section 6(a) and 6(b): (i) by Executive or a Permitted Transferee to CHS (it being agreed and understood that CHS shall not be a Holder as a result of such Transfer of Securities), (ii) by Executive to any member of such Executive's Family Group, (iii) by a Permitted Transferee to Executive who Transferred such Executive Securities to such Permitted Transferee, (iv) to the personal representative of Executive or a Permitted Transferee who is deceased or adjudicated incompetent, (v) by the personal representative of Executive or a Permitted Transferee who is deceased or adjudicated incompetent to any member of such Executive's or Permitted Transferee's Family Group, or (vi) upon termination of a trust or custodianship which is a Permitted Transferee of a Holder, by the trustee of such trust or custodian of such custodianship to the person or persons who, in accordance with the provisions of such trust or custodianship, are entitled to receive the Executive Securities held in trust or custody (collectively, the " Permitted Transferees "); provided that (A) the restrictions contained in this Agreement, including this Section 6, shall continue to be applicable to the Executive Securities after any such Transfer, and (B) the Permitted Transferees of such Executive Securities shall have agreed in writing to be bound by all of the provisions of this Agreement affecting the Executive Securities so transferred.

(e) Consideration for Transfer. Notwithstanding anything to the contrary herein contained, except as may be required by Section 5 hereof, where a Transfer is made for consideration, in no event shall any such Transfer by Executive of Executive Securities be made under Section 6(c) or offered to be made under Section 6(b) for any consideration other than United States dollars payable in full upon consummation of such Transfer.

(f) Duration of Section 6. Notwithstanding anything to the contrary contained in this Agreement, the provisions of this Section 6 shall terminate upon the consummation of a Public Offering or Sale of the Company.

7. Piggyback Registration.

(a) For purposes of this Section 7, and without implication that the contrary would otherwise be true, the term " Company " shall include any successor to the Company, the term " Shares " shall include any securities of any such successor and the term " Executive Shares " shall include securities of any such successor issued in respect of Executive Shares. If, at any time or times, the Company determines to file with the SEC a registration statement covering any Shares to be issued or sold by the Company or CHS, other than Shares or other securities of the Company which are issuable in an offering (i) to directors and employees of the Company or its Subsidiaries pursuant to an employee stock option, bonus or other employee benefit plan, (ii) in connection with the acquisition of another company's business by the Company or any of its Subsidiaries (whether by acquisition of stock or assets, or by merger, consolidation or other similar transaction) or the formation of a joint venture, (iii) pursuant to a registration statement on any form which limits the amount of securities which may be registered by the issuer and/or selling security holders or is not available for registering the Shares held by the Holders for sale to the public if and to the extent that such inclusion would make use of such form unavailable, or (iv) pursuant to which any Person selling such Shares or other securities has the contractual right to exclude "piggyback" registrations as to all holders of Shares (a " Piggyback Event "), the Company shall (at least fifteen (15) days

prior to the filing of such proposed registration statement) notify each Holder of Executive Shares in writing of the proposed registration statement, such notification to describe in detail the proposed registration (including those jurisdictions where registration is required under federal and/or state securities laws). If one or more of such Holders requests the Company in writing, within ten (10) days of the receipt of such notification from the Company, to include in such registration statement any of such Holder's Executive Shares, then, subject to the remaining provisions hereof, the Company will use reasonable efforts to include those Executive Shares in the registration statement and to have the registration statement declared effective. If CHS's Shares are included in such registration statement, each Holder of Executive Shares shall be entitled to include in such registration statement a whole number of Executive Shares up to the product of (i) the number of Executive Shares then owned by such Holder and (ii) a fraction, the numerator of which is the number of Shares held by CHS which are included in the contemplated registration, and the denominator of which is the number of Shares then owned by CHS. Each such request by a Holder of Executive Shares shall specify the number of Shares intended to be offered and sold by each such Holder, shall express each such Holder's present intent to offer such Shares for distribution, shall (subject to the provisions of Section 7(c)), if the Company or CHS has not arranged for a plan of distribution or other marketing arrangements for such distribution, describe the nature or method of the proposed offer and sale thereof and shall contain the undertaking of each such Holder to provide all such information and materials and take all such action as may be requested in order to permit the Company to comply with all applicable requirements of the SEC and to obtain acceleration of the effective date of such registration statement. The Company, at its sole option, may elect not to proceed with the registration statement which is the subject of such notice. The obligations of the Company under this Section 7(a) are subject to the limitations, conditions and qualifications set forth in Section 7(b). If a Holder of Executive Securities decides not to include (or is precluded from including) all of his or her Executive Shares in any registration statement thereafter filed by the Company, such Holder will nevertheless continue to have the right, pursuant to this Section 7, to include Executive Shares in future Piggyback Events, all upon the terms and subject to the conditions as set forth in this Agreement.

(b) The obligation of the Company to use its reasonable efforts to cause Executive Shares to be registered under the 1933 Act pursuant to Section 7(a) above are subject to each of the following limitations, conditions and qualifications:

(i) the Company shall be entitled to reduce the number of Executive Shares of any such Holder to be included in such registration if the managing underwriter(s) of a proposed public offering of the Company's securities advises the Company that, in its opinion, (or, if the offering is not underwritten, upon the Company's reasonable determination that) inclusion of all of such Holder's requested Shares would adversely affect the public offering of securities being sold by the Company.;the Company shall use reasonable efforts to cause the registration statement to remain current (including the filing of necessary supplements or post-effective amendments) during the period commencing on the initial effective date of such registration statement and ending on the date on which such registration statement shall have remained effective for ninety (90) days;

(ii) provided that the Company or CHS has not arranged for a plan of distribution and other marketing arrangements for such registration, it shall be a condition of the right of a Holder to participate that it shall have arranged for a plan of distribution of its Shares which are to be registered and trade all pertinent marketing arrangements for such Shares. Any such plan and arrangements shall contemplate (i) a firm underwriting commitment, (ii) sales through a single broker-dealer (named in the registration statement as agent for such Holder pursuant to an agreement containing, without limitation, the agreement of such Holder not to

offer or sell its Shares otherwise than through such broker-dealer unless and until such broker-dealer's authorization to sell the Shares has been terminated), or (iii) such other plan and arrangements as shall be approved by the Company. Notwithstanding the preceding sentence, if any securities to be sold by the Company or CHS pursuant to such registration statement are to be sold on a firm commitment basis through underwriters, those Holders desiring to sell their Shares in the offering shall, at the request of the Company or CHS, (i) sell their Shares on such basis through such underwriters and (ii) complete and execute all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents consistent with the terms of this Agreement and reasonably required under the terms of such underwriting arrangements;

(iii) whenever the Company is required by the provisions of this Agreement to use its reasonable efforts to register Executive Shares under the Act, the Company will furnish to each participating Holder such number of copies of any prospectus (including any preliminary or summary prospectus) as such Holder may reasonably request in order to effect the offering and sale of the Executive Shares to be offered and sold by such Holder, but only while the Company is required under the provisions hereof to cause the registration statement to remain current;

(iv) the Company's obligations to use its reasonable efforts to effect registration of Executive Shares for Holders shall include such qualification under applicable state securities laws as may be necessary to enable the Holders on whose behalf such registration is to be effected to offer and sell the Executive Shares which are the subject matter of their requests; provided, however, that the Company shall not be obligated to qualify as a foreign corporation to do business under the laws of any jurisdiction in which it is not then qualified or to file any general consent to service of process;

(v) all expenses incurred in connection with any registration or qualification pursuant to Section 7(a) above, including, without limitation, all SEC registration fees, state securities filing fees, printing expenses (excluding the printing of any agreements, memoranda or other documents pertaining solely to the sale of Executive Shares by Holders) and fees and disbursements of experts used by the Company in connection with such registration, shall, subject to requirements of any applicable regulatory agency, be borne by the Company. Each participating Holder (including CHS) shall bear the fees and disbursements of its own legal counsel, underwriting or brokerage discounts and commissions, and transfer taxes, on the sale of its Shares;

(vi) the Company may require, as a condition to fulfilling its obligations under the registration provisions of Section 7(a) of this Agreement, receipt of executed customary indemnification agreements in form reasonably satisfactory to the Company from the Holders whose Shares are to be registered, and the Holders may require, as a condition to fulfilling their obligations under the registration provisions of Section 7(a) of this Agreement, receipt of executed customary indemnification agreements from the Company and other participating holders of Shares in form reasonably satisfactory to the Holders whose Shares are to be registered;

(vii) the Company shall notify each participating Holder at any time when a prospectus relating to such Shares is required to be delivered under the Act, of the happening of any event which causes such prospectus as then in effect to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and, if necessary in the reasonable judgment of counsel for the Company, the Company will promptly prepare a supplement or amendment to such prospectus so that as thereafter delivered to the purchasers of such Shares, such

prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading;

(viii) each participating Holder, upon receipt of any notice of the happening of any event of the kind described in Section 7(b)(viii) hereof, will immediately discontinue disposition of the Shares until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 7(b)(viii) hereof or until such Holder is advised in writing by the Company that the use of the prospectus may be resumed, and, if so directed by the Company, such Holder will, or will request the managing underwriter or underwriters (if any) to, deliver to the Company all copies, other than permanent file copies then in such holder's possession, of the prospectus covering such Shares current at the time of receipt of such notice;

(ix) Executive agrees (i) to notify the Company as promptly as practicable of any inaccuracy or change in information previously furnished by such Holder to the Company or of the occurrence of any event, in either case, as a result of which any prospectus relating to such registration contains or would contain an untrue statement of a material fact regarding such Holder or omits or would omit to state any material fact regarding such Holder required to be stated therein or necessary to make the statements therein not misleading, and (ii) promptly to furnish to the Company any additional information required to correct and update any previously furnished information or required so that such prospectus shall not contain, with respect to such Holder, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; and

(x) for purposes of this Agreement, the phrases "reasonable efforts" and "reasonable efforts to cause," when used with reference to efforts to be made by a party hereto or any of its affiliates shall not require such party or any of its affiliates to pay or transfer any money, property or other thing of value, shall require such party and its affiliates to act with all reasonable promptness and dispatch with respect thereto and shall require the other party and its affiliates to act with all reasonable promptness and dispatch and to cooperate in all material respects with the first party's efforts in connection therewith.

(c) Transfer of Shares in Open Market Transactions. This Section 7(c) shall apply to any proposed Transfer of Shares by any Holder in an Open Market Transaction during all such times as CHS owns in the aggregate greater than thirty percent (30%) of the Shares. During each calendar quarter during which sales of Shares are permitted to be made in accordance with agreements (" Standstill Agreements ") with the underwriters engaged in connection with a Public Sale, and during each calendar quarter following the termination of the Standstill Agreements, any such Holder that desires to Transfer Shares may sell such number of Shares as equals his or her pro rata share of one percent (1.0%) of the then outstanding Shares (or such lesser percentage or number as may be permitted by the Standstill Agreements). Fifteen (15) business days prior to the beginning of each calendar quarter during which sales of Shares are permitted under the Standstill Agreements, and fifteen (15) days prior to each calendar quarter after the termination of the Standstill Agreements, such Holder that desires to Transfer Shares shall deliver a written notice to the Company setting forth the number of Shares that such Holder desires to sell (up to such Holder's pro rata share of the aggregate quarterly maximum specified above) in Open Market Transactions during the succeeding quarter. If such Holder that is Transferring does not elect to sell his or her pro rata share, the Company may allocate the right to sell such unused pro rata share to any Stockholder of the Company. Within three (3) business days following the beginning of each applicable quarter, the Company shall deliver a written notice to such Holder that is Transferring setting forth the amount of Shares permitted to be sold (as determined in accordance with this Section 7(c)) by such Holder during such applicable calendar quarter in Open Market

Transactions. The Company may, in its discretion, from time to time increase the aggregate amount of Shares which may be sold in any calendar quarter in Open Market Transactions. Any Shares sold in an Open Market Transaction shall cease to be bound by the terms and provisions of this Agreement.

8. Sale of the Company.

(a) If the holder(s) of a majority of the Shares then outstanding and the Board approve a Sale of the Company (an " Approved Sale "), each Holder shall consent to and raise no objections against the Approved Sale, and if the Approved Sale is structured as a sale of Shares, each Holder shall, if requested by the holder(s) of a majority of the Shares then outstanding, sell (or otherwise Transfer) that percentage of his or her Executive Securities, on terms and conditions approved by the Board and the holder(s) of a majority of the Shares then outstanding, as shall equal the percentage of Shares owned by CHS that are to be included in such transaction. Each Holder shall take all actions reasonably necessary or reasonably desirable (as determined by the holder(s) of a majority of the Shares then outstanding) in connection with the consummation of the Approved Sale. Without limiting the foregoing, (i) if the Approved Sale is structured as a merger, consolidation, joint venture or similar transaction, each Holder shall vote in favor of such transaction and waive any dissenters' rights, appraisal rights or similar rights in connection with such merger or consolidation, and (ii) if the Approved Sale is structured as a sale or exchange of Shares, each Holder shall agree to sell or exchange all of the Shares and Options held by such Holder on the terms and conditions approved by the Board and the holders of a majority of the Shares then outstanding. The Company shall use best efforts to notify Executive in writing not less than thirty (30) days prior to the proposed consummation of an Approved Sale (or, sale as described in Section 8(b) below); provided that such Executive agrees that he or she will not, directly or indirectly (without the prior written consent of the Company), disclose to any other Person (other than to such Executive's legal counsel in confidence, as otherwise necessary to protect such Executive's rights under this Agreement or as otherwise required by law) any information related to such potential Sale of the Company.

(b) If CHS proposes to sell to a purchaser or related group of purchasers such number of Shares as equals or exceeds 50% of the then outstanding Shares determined on a Fully-Diluted Basis (whether in one transaction or a series of transactions) (a " Participation Sale "), each Holder of Executive Securities may elect to participate in the contemplated transaction by delivering written notice to the Company and CHS within ten (10) days following the receipt by Executive of notice of such transaction. Executive shall be entitled to sell, at the same price and on the same terms as CHS, Shares equal to the product of (i) the quotient determined by dividing the number of Shares owned by such Holder on a Fully-Diluted basis, by the aggregate number of Shares outstanding at such time, on a Fully-Diluted basis, and (ii) the number of Shares to be sold by CHS in such transaction. Notwithstanding anything to the contrary herein contained, the provisions of this Section 8(b) shall not apply to (x) any sale to any officer, director, employee, agent or lender to the Company or any of its Subsidiaries or (y) any sale or other Transfer to any successor CHS sponsored fund or to any Affiliate of CHS.

(c) If a Holder is required or elects to participate in an Approved Sale or a Participation Sale pursuant to subsection (a) or (b) above: (i) upon the consummation of the Approved Sale or the Participation Sale, as the case may be, all of the Holders of Shares similarly situated shall receive the same form and amount of consideration per Share, or if any Holders are given an option as to the form and amount of consideration to be received; all such Holders shall be given the same option; and (ii) all Holders of then currently exercisable Options shall be given an opportunity to either (A) exercise such rights prior to the consummation of the Approved Sale or the Participation Sale, as the case may be, and participate in such sale as Holders, or (B) upon the consummation of the Approved Sale or the Participation Sale, as the case may be, receive in

exchange for such rights consideration equal to the amount determined by multiplying (1) the same amount of consideration per Share received by the Holders in connection with the Approved Sale or the Participation Sale, as the case may be, less the exercise price per share of such rights to acquire Shares, by (2) the number of Shares represented by such rights. Without limiting the foregoing, any Holder participating in a transaction pursuant to this Section 8 shall be required to make such representations, warranties and covenants, and grant such indemnification, as may be required by the purchaser of the Shares and which have been made by CHS or the holders of a majority of the outstanding Shares, as the case may be.

(d) If the Board or the holders of a majority of the outstanding Shares of the Company enter into any negotiation or transaction for which Rule 506 (or any similar rule then in effect) promulgated by the SEC under the 1933 Act may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), each Holder shall, acting together with other Holders, at the request of the Company, appoint a purchaser representative (as such term is defined in Rule 501 under the 1933 Act) reasonably acceptable to the Company. If Executive appoints a purchaser representative designated by the Company, the Company shall pay the fees of such purchaser representative, but if Executive declines to appoint the purchaser representative designated by the Company, Executive shall appoint another purchaser representative (reasonably acceptable to the Company), and Executive shall be responsible for the fees of the purchaser representative so appointed.

(e) Each Holder shall bear such Holder's pro-rata share (based upon the number of Shares sold on a Fully-Diluted Basis) of the costs of any sale of Executive Securities pursuant ^- to an Approved Sale or a Participation Sale to the extent such costs are not otherwise paid by the Company or the acquiring party; provided, however, that all Holders are treated on an equal basis. Costs incurred by a Holder on such Holder's own behalf shall not be considered costs of the transaction hereunder.

(f) Notwithstanding anything to the contrary contained in this Agreement, the provisions of Section 8 shall terminate upon the consummation of a Sale of the Company.

9. Limited Preemptive Rights.

(a) Except for the issuance of Shares or Options (A) in connection with the acquisition of another Person's business by the Company or any of its Affiliates (whether by acquisition of stock or assets, or by merger, consolidation or other similar transaction), the acquisition of any stock or assets of any Person or the formation of a joint venture, (B) pursuant to a Public Offering, (C) to current or future officers, employees, directors, agents or consultants of the Company or its Subsidiaries, to Affiliates of the Company (or any of their respective officers, directors, employees or agents) or to holders of the existing securities of the Company, (D) to the Company's or any Subsidiary's lenders in connection with the incurrence, renewal or maintenance of indebtedness (including funded indebtedness) or (E) pursuant to the exercise of any warrant, option or other right to acquire shares of Common Stock, if the Company authorizes the issuance and sale of any Shares (other than as a dividend on the outstanding Shares) or any Options (pursuant to the exercise of warrants or otherwise), the Company shall first offer to sell to Executive a portion of such Shares or Options equal to the percentage determined by dividing (1) the number of Executive Shares held by Executive immediately prior to the proposed issuance of such securities on a Fully-Diluted Basis, by (2) the aggregate number of Shares outstanding at such time, on a Fully-Diluted Basis provided that Executive, if he or she is exercising his or her pre-emptive rights pursuant to this Section 9, shall, as a condition to such exercise, also be required to purchase the same proportionate amount of any other securities that the purchasers of such Shares or Options purchase in connection with the issuance of the securities subject to the preemptive rights.

(b) Executive shall exercise Executive's pre-emptive rights hereunder within five (5) days following the receipt of written notice from the Company describing in reasonable detail the purchase price, the payment terms for the Shares or Options, the period in which the pre-emptive right hereunder is to be exercised, and Executive's percentage allotment. The Executive exercising the Executive's preemptive right shall execute all documentation, and take all actions, as may be reasonably requested by the Company in connection therewith.

(c) Upon the expiration of the offering period described above, the Company shall be entitled to sell such Shares or Options which Executive has not elected to purchase during the one hundred eighty (180) day period following such expiration, on terms and conditions no more favorable to the purchasers thereof than those offered to Executive. Any Shares or Options offered or sold by the Company following such one hundred eighty (180) day period shall be reoffered to Executive pursuant to the terms of this Section 9.

(d) The rights of the Executive under this Section 9 shall terminate upon the earlier of (i) consummation of a Sale of the Company, (ii) the consummation of a Public Offering, or (iii) termination of Executive's employment with the Company or any of its Subsidiaries.

10. Initial Public Offering. If the Board and the holder(s) of a majority of the voting Shares then outstanding approve a Public Offering pursuant to an effective registration statement under the 1933 Act, each Holder shall take all actions reasonably necessary or desirable in connection with the consummation of the Public Offering as requested by the Company (including, without limitation, the execution of lock-up, underwriting or other agreements). If such Public Offering is an underwritten offering and the managing underwriters advise the Company that in their opinion the structure of the Company would adversely affect the marketability of the offering, each Holder shall consent to and vote for a recapitalization, reorganization and/or exchange of the Company into an entity with authorized Shares that the managing underwriters, the Board and the holders of a majority of the voting Shares then outstanding find acceptable, and each Holder shall take all actions reasonably necessary or desirable in connection with the consummation of the recapitalization, reorganization and/or exchange as requested by the Board; provided that each holder of Shares receives the same type of consideration in such recapitalization, reorganization and/or exchange.

11. Additional Restrictions on Transfer.

(a) Legend. All certificates evidencing Executive Shares which are subject to this Agreement shall bear the following legend:

"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SHARES REPRESENTED HEREBY ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN AN EXECUTIVE SECURITIES AGREEMENT BETWEEN HWC HOLDING CORPORATION ("THE COMPANY"), CODE, HENNESSY & SIMMONS II, L.P. AND TERRY S. STALLARD DATED AS OF MARCH , 2006 AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF THIS SECURITY UNTIL THE CONDITIONS THEREIN HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."

If Executive Shares remain restricted following a Public Offering and the above legend thereby becomes inappropriate in whole or in part, a new, appropriate legend shall be set forth on such certificates.

(b) Opinion of Counsel. Executive may not Transfer any Executive Shares without first delivering to the Company, if reasonably requested by the Company, an opinion of counsel (reasonably acceptable in form and substance to the Company) that neither registration nor qualification under the 1933 Act and applicable state securities laws is required in connection with such Transfer.

12. Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, mailed by first class mail (postage prepaid and return receipt requested) or sent by confirmed facsimile (provided, however, that notices delivered by facsimile shall only be effective if such notice is also delivered by hand, or mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier (charges prepaid), on or before two (2) business days after its delivery by facsimile) or by reputable overnight courier service (charges prepaid) to the recipient at the address indicated below:

To the Company :

HWC Holding Corporation
10201 North Loop
East Houston, TX 77029

With a copy (which shall not constitute
notice to the Company) to :

Schiff Hardin LLP
6600 Sears Tower
Chicago, Illinois 60606
Attention: Jeffrey N. Smith

To Executive :

[NAME]
10201 North Loop
East Houston, TX 77029

To CHS :

Code, Hennessy & Simmons II, L.P.
10 South Wacker Drive
Suite 3175
Chicago, Illinois 60606
Attention: Andrew W. Code and Peter M. Gotsch

With a copy (which shall not constitute
notice to CHS) to:

Schiff Hardin LLP
6600 Sears Tower
Chicago, Illinois 60606
Attention: Jeffrey N. Smith

and/or such other address and/or to the attention of such other person as the recipient party shall have designated by notice given in accordance with this Section 12. Any notice under this Agreement shall be deemed to have been given, (a) if delivered in person or sent by confirmed facsimile or overnight

courier, one (1) business day following delivery to recipient, facsimile transmission or delivery to the courier (as the case may be), or (b) if mailed, three (3) business days following deposit in the U.S. mail.

13. Restrictive Covenants.

(a) Executive acknowledges and agrees that (i) through his or her continuing services to the Company and its Affiliates, he or she will learn valuable trade secrets and other proprietary information relating to the Company's and the Affiliates' respective businesses, (ii) Executive's services to the Company and its Affiliates are unique in nature, and (iii) the Company and its Affiliates would be irreparably damaged if Executive were to provide services to any person or entity in violation of the restrictions contained in this Agreement. Accordingly, as an inducement to the Company and CHS to enter into this Agreement, Executive agrees that at all times during which Executive is employed by the Company or any of its Affiliates and, subject to the remainder of this Section 13, continuing for a period of eighteen (18) months following termination of Executive's employment with the Company and its Affiliates (the period of Executive's employment with the Company and its Affiliates and such period thereafter being referred to herein collectively as the " Restricted Period "), neither Executive nor any Affiliate of Executive shall, directly or indirectly, without the written consent of the Company:

(i) anywhere within fifty (50) miles of where the Company or any of its Affiliates is:

(A) doing business (either within or outside of the United States) as of the time of enforcement of this Section 13 (if such enforcement occurs prior to the termination of Executive's employment) or at the time of the termination of Executive's employment (if enforcement of this Section 13 occurs at or following such termination), or

(B) planning, as of such applicable time, to do business within the following six months, of which plans Executive was aware,

engage or participate in, as an employee, owner, partner, shareholder, officer, director, member, advisor, consultant, agent or (without limitation by the specific enumeration of the foregoing) otherwise, or permit his or her name to be used by or render services of any type for, any Competing Business (as herein defined) or any person or entity developing a Competing Business; provided , however, that nothing in this Agreement shall prevent Executive from acquiring or owning, as a passive investment, up to five percent (5%) of the outstanding securities of an entity engaged in a Competing Business which are publicly traded in any recognized national securities market;

(ii) take any action which could reasonably be expected to divert from the Company or any of its Affiliates any opportunity which would be within the scope of the Company's or such Affiliate's business;

(iii) solicit or attempt to solicit any person or entity who is or has been (A) a customer of the Company or any of its Affiliates at any time within one (1) year prior to the date of termination of Executive's employment to purchase any product or service which may be provided by the Company or any of its Affiliates or (B) a customer, supplier, licensor, licensee or other business relation of the Company or any of its Affiliates conducting business with any of the Company or such Affiliates at any time within one (1) year prior to the date of termination of Executive's employment to cease doing business with, or to alter or limit its business relationship with, the Company or any such Affiliate; or

(iv) solicit, induce or encourage any officers, employees, representatives or agents of the Company or the Affiliates to terminate, limit or alter their association with the Company or any such Affiliate.

The Executive shall provide the Company with written notice identifying any person or entity which Executive proposes to directly or indirectly own, manage, control, participate in, consult with, render services for or be employed by during the Restricted Period, such notice to be provided at least thirty (30) days prior to Executive's proposed commencement of such activity. Executive shall also provide to each such person or entity notification of the provisions of this Section 13 prior to entering into any of the foregoing arrangements. Within thirty (30) days following the Company's written request, Executive shall provide to the Company detailed information regarding such person or entity as necessary to allow the Company to determine whether such person or entity is in a Competing Business and whether such Competing Business, if any, qualifies for the exception set forth in the proviso to Section 13(a)(i). To the extent that and so long as such information is not publicly available, the Company shall hold such information confidential and shall use such information solely for the purposes contemplated in the preceding sentence. As used in this Agreement, a " Competing Business " shall mean a business which is, in whole or in part, directly or indirectly, competitive with the business of the Company or any Affiliate as conducted at the time of enforcement of this Section 13 (if such enforcement occurs prior to the termination of Executive's employment) or at the time of the termination of Executive's employment (if enforcement of this Section 13 occurs at or following such time) or under development at either such time, as the case may be, and expected to be introduced or undertaken within one year following such date of enforcement. Without limiting the generality of the foregoing sentence, the term Competing Business shall include, the business of (A) distributing, marketing and selling (as a master distributor, stocking distributor, other distributor or on consignment or otherwise) specialty wire and cable products (and other wire and cable products), including without limitation, specialty wire and cable products used in (x) pulp and paper mills, petrochemical facilities, steel mills, factory automation and other industrial applications, (x) computer facilities and equipment, (y) local area networks and (z) telecommunications; and (B) providing storage, maintenance, delivery, quality control, sales and other services with respect to wire and cable products.

(b)(i) Executive understands and acknowledges, that by virtue of his or her position with the Company and its Affiliates, he or she may have access to certain Confidential Information (as defined below), the disclosure or use of which may damage the Company or its Affiliates and is or may be prohibited by applicable law.

(ii) " Confidential Information " shall mean all information, including but not limited to trade secrets, disclosed to Executive or known by Executive as a consequence of or through his or her employment by the Company and its Affiliates, concerning the products, processes or services offered by the Company or any of its Affiliates and which:

(A) has not been made generally available to the public, and is useful or of value to the Company's or its Affiliates' current or anticipated business, research or development activities; or

(B) has been identified to Executive as confidential, either orally or in writing.

Confidential Information shall include, but is not limited to: computer programs; unpatented inventions, discoveries or improvements; marketing, manufacturing, or organizational research and development, or business plans; sales forecasts; personnel information, including the identity of other employees of the Company or its Affiliates, their responsibilities, competence, abilities, and compensation; manufacturing techniques; product formulations and product constructions; pricing and financial information; current and prospective customer and supplier lists and information on customers or suppliers or their respective employees; information concerning planned or pending acquisitions or divestitures; and information concerning purchases of major equipment or property.

(iii) Confidential Information shall not include information which: (A) is in or hereafter enters the public domain through no fault of Executive; (B) is obtained by Executive from a third party having the legal right to use and disclose the same; (C) is in the possession of

Executive prior to receipt from the Company (as evidenced by Executive's written records predating the date of employment); or (D) is not unique to the Company or any of its Affiliates.

(iv) Executive agrees that all Confidential Information is and shall remain the sole property of the Company or its Affiliates. During his or her employment with the Company and its Affiliates and for the longest period thereafter permitted by applicable law, Executive shall maintain the Confidential Information in strict confidence and shall not, other than as required by law, without the prior written consent of the Company, use for his or her own benefit or that of any third party other than the Company or any of its Affiliates any Confidential Information.

(v) During the term of such employment, Executive shall not use any Confidential Information except in furtherance of his or her duties for the Company or its Affiliates, nor disclose any Confidential Information except to legal counsel for Executive, the Company or any Affiliate or to officers or other employees of the Company or its Affiliates when it is appropriate, in the ordinary course of business, to do so. During the longest period after the termination of such employment permitted by law (but not in excess of four years), Executive shall not use the Confidential Information for any reason or disclose it to any person except to legal counsel for Executive, the Company or any of its Affiliates. Executive and each Affiliate of Executive (and if deceased, his or her personal representative) shall promptly following a request therefor from the Company return to the Company, without retaining copies, all tangible items which are or which contain Confidential Information.

(c)(i) " Intellectual Property " shall mean all discoveries, inventions, improvements, computer programs, formulas, ideas, devices, writings or other intellectual property (including any notes, records, reports, sketches, plans, memoranda and other tangible information relating to such Intellectual Property), whether or not subject to protection under the patent or copyright laws, which Executive shall conceive solely or jointly with others, in the course of, or within the scope of employment, or which relates directly to the business of the Company or its Affiliates or their actual or anticipated research and development, or which was conceived or created using the Company's or its Affiliates' materials or facilities, whether during or after working hours.

(ii) All Intellectual Property developed during employment shall be the sole and exclusive property of the Company or its Affiliates, as the case may be, without further compensation. Any Intellectual Property based upon Confidential Information and developed at any time either during or following the term of employment shall be the property of the Company or its Affiliates, as the case may be. Executive agrees to promptly notify the Company or its Affiliates, as the case may be, and fully disclose to the Company or its Affiliates, as the case may be, all Intellectual Property. Executive shall take such steps as are deemed necessary to maintain complete and current records thereof.

(iii) Executive shall assign to the Company or its designees, the entire right, title and interest in said Intellectual Property. Executive shall, at the Company's request and expense, make applications for domestic or foreign patents, execute all documents necessary thereto, assist in securing, defending or enforcing any such title and right thereto, and assist the Company or its Affiliates in any other claims or litigation involving said Intellectual Property.

(iv) Consistent with applicable law, the Company acknowledges that no provision in this Agreement is intended to require assignment of any of Executive's rights in an invention if no equipment, supplies, facilities, or trade secret information of the Company was used, and the invention was developed entirely on Executive's own time, unless the invention relates to the business or industry of the Company or to the Company's current or demonstrably anticipated

business, research or development, or the invention results from any work performed by Executive for the Company.

(d) Executive agrees that any violation by him or her of this Section 13 would be highly injurious to the Company and its Affiliates and would cause irreparable harm to the Company and its Affiliates. By reason of the foregoing, Executive consents and agrees that if he or she violates any provision of this Section 13, the Company and its Affiliates shall be entitled, in addition to any other rights and remedies that it may have, to apply to any court of competent jurisdiction for specific performance and/or injunctive or other equitable relief (without the requirement of posting of a bond or other security) in order to enforce, or prevent any continuing violation of, the provisions of this Section. Executive also recognizes that the territorial, time and scope limitations set forth in Sections 13(a) and 13(b), as applicable, are reasonable and are property required for the protection of the Company and its Affiliates and in the event that any such territorial, time or scope limitation is deemed to be unreasonable by a court of competent jurisdiction, the Company and Executive agree, and Executive submits, to the reduction of any or all of said territorial, time or scope limitations to such an area, period or scope as said court shall deem reasonable under the circumstances. If such partial enforcement is not possible, the provision shall be deemed severed and the remaining provisions of this Agreement shall remain in full force and effect. Executive acknowledges that this Section 13 shall survive termination of Executive's employment to the extent expressly provided herein. If any covenant in this Section 13 is breached, then (to the extent permitted by law) such covenant shall be extended by the number of days during which such breach exists.

14. Amendment and Termination.

(a) This Agreement shall be terminated: (i) upon the mutual agreement of the Company (with the approval of the Board), CHS and holders of at least seventy percent of the Executive Securities or (ii) upon the consummation of a Sale of the Company (other than as a result of a sale in a Public Offering) provided, however, that the representations and warranties of the parties hereto contained in Section 2(b) and 2(c) of this Agreement shall survive termination of this Agreement, and the obligations of Executive set forth in Section 13 of this Agreement, shall survive termination for the periods expressly set forth therein. The rights and obligations of the parties shall survive termination of the Agreement to the extent that any performance is required after such termination.

(b) This Agreement may be amended by the Company with the written consent of holders owning in the aggregate greater than ninety percent (90%) of all Shares then owned, in the aggregate, by CHS and all Holders of Executive Securities; provided that in no event shall any such amendment materially and adversely affect the rights of any one Holder without the prior written consent of such Holder unless such amendment materially and adversely affects the rights of all holders.

15. General Provisions.

(a) Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction so as to best give effect to the intent of the parties under this Agreement.

(b) Complete Agreement. This Agreement embodies the complete agreement and understanding among the parties and supersedes and preempts any prior understandings,

agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

(c) Counterparts. This Agreement may be executed by facsimile (or other electronically transmitted) signatures and in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

(d) Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by Executive, the Company, CHS and their respective legal representatives, heirs, successors and assigns (including subsequent holders of Executive Securities); provided that the rights and obligations of Executive under this Agreement shall not be assignable except in connection with a permitted transfer of Executive Securities hereunder.

(e) Choice of Law. This Agreement shall be governed and construed in accordance with the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the Sate of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois.

(f) Consent to Jurisdiction. Executive irrevocably consents and submits to the exclusive jurisdiction of any local, state or federal court within the County of Cook in the State of Illinois for enforcement by the Company or CHS of this Agreement. The Company and CHS irrevocably consent and submit to the exclusive jurisdiction of any local, state or federal court within the County of Cook in the State of Illinois for enforcement by Executive of this Agreement. Executive, the Company and CHS irrevocably waive any objection they may have to venue in the defense of an inconvenient forum to the maintenance of such actions or proceedings to enforce this Agreement.

(g) Remedies. Each of the parties to this Agreement shall be entitled to enforce its rights under this Agreement specifically, to recover damages and costs caused by any breach of any provision of this Agreement and to exercise all other rights existing in such party's favor. In the event of a dispute hereunder, the prevailing party's reasonable attorney's fees and costs shall be reimbursed by the opposing party or parties in such dispute within fourteen days following a judgment by a court or tribunal of competent jurisdiction over such exercise or enforcement. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement.

(h) Waiver. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

(i) Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or legal holiday in the state in which the Company's chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or legal holiday.

(j) No Strict Construction. The parties hereto jointly participated in the negotiation and drafting of this Agreement. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their collective mutual intent, this Agreement shall be construed as if drafted jointly by the parties hereto, and no rule of strict construction shall be applied against any person.

(k) Gender. As used in this Agreement, the masculine, feminine or neuter gender shall be deemed to include the others whenever the context so indicates or requires.

(l) Headings. The headings contained in this Agreement are for convenience of reference only and shall not affect the meaning or interpretation of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Executive Securities Agreement on the date first written above.

		HWC HOLDING CORPORATION
		By:
		Its:
		CODE, HENNESSY & SIMMONS II. L.P.
		By:		CHS Management II, L.P. its general partner
		By:		CODE, HENNESSY & SIMMONS, INC., its general partner
				By:
				Its:
		EXECUTIVE

SPOUSAL CONSENT

I acknowledge that I have read the foregoing Executive Securities Agreement and that I know its contents. I am aware that by its provisions, my spouse agrees, among other things, to a right of first refusal, to the granting of rights to purchase and to the imposition of certain restrictions on the transfer of the shares of the Company, including my community interest therein (if any), which rights and restrictions may survive my spouse's death. I hereby consent to such rights and restrictions, approve of the provisions of the Agreement, and agree that I will bequeath any interest which I may have in said shares or any of them, including my community interest, if any, or permit any such interest to be purchased in a manner consistent with the provisions of this Agreement. I direct that any residuary clause in my will shall not be deemed to apply to my community interest (if any) in such shares except to the extent consistent with the provisions of this Agreement.

I further agree that in the event of a dissolution of the marriage between myself and my spouse, in connection with which I secure or am awarded Executive Securities of the Company, or any interest therein through property settlement agreement or otherwise, I shall receive and hold said Executive Securities subject to all the provisions and restrictions contained in the foregoing Agreement, including any option of the Company or CHS to purchase such shares or interest from me.

I also acknowledge that I have been advised to obtain independent counsel to represent my interests with respect to this Agreement but that I have declined to do so and hereby expressly waive my right to such independent counsel.

		SPOUSE

EXHIBIT A

REPURCHASE NOTE

, 20

1. The undersigned, (hereinafter, "Maker"), hereby promises to pay to (such person, together with his or her successors and permitted assigns, hereafter, "Payee"), the principal sum of Dollars ($ ), together with interest on the unpaid balance of said principal sum from the date hereof until the date of payment at the rate of 10% per annum. The principal hereunder shall be due and payable in equal quarterly payments of $ each on the day of , , and . Accrued and unpaid interest hereunder shall be due and payable on the same days as the payments of principal. All payments hereunder shall be applied first to accrued and unpaid interest and thereafter to principal.

2. Maker reserves the right to repay all or any portion of the unpaid principal sum and accrued interest on this Note, without penalty, premium or interest (other than accrued interest) of any kind whatsoever, at any time or from time to time after the date hereof.

3. (a) Each of the following shall constitute an event of default under this Note (each, a "Default"):

(i) Maker fails to pay the principal and interest due under this Note as it becomes due and such failure is not cured within five (5) business days after notice thereof; or

(ii) Maker shall (A) generally not, or be unable to, or admit in writing Maker's inability to, pay Maker's debts as such debts become due; (B) make an assignment for the benefit of creditors, or petition or apply to any tribunal for the appointment of a custodian, receiver or trustee for all or a substantial part of Maker's assets; (C) commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation; (D) have had any such petition filed, or any such proceeding shall have been commenced against Maker, in which an adjudication is made or order for relief is entered or which remains undismissed for a period of sixty (60) days; (E) have had a receiver, custodian or trustee appointed for all or a substantial part of Maker's property; or (F) take any action effectuating, approving or consenting to any of the events described in clauses (A) through (E).

(b) If a Default described in (ii) above has occurred, then the entire principal amount of this Note and all accrued and unpaid interest hereunder and all other unpaid amounts or obligations due by Maker hereunder shall become immediately due and payable without protest, demand, presentment or notice of any kind. If a Default specified in (i) above has occurred, then, upon written notice by the holder of this Note to the Maker, the entire principal amount of this Note and all accrued and unpaid interest hereunder and all other unpaid amounts or obligations due by Maker hereunder shall become immediately due and payable without protest, demand, presentment or further notice of any kind.

4. In the event of a Default, Maker shall pay to the holder hereof, in addition to such amounts due, all costs of collection, including reasonable attorneys ^, fees.

5. This Note may not be assigned or transferred (including voluntarily, involuntarily or for collateral purposes) in any way without the prior written consent of Maker.

6. Maker, or its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and nonpayment of this Note.

7. This Note shall be subject to, and governed by, a Executive Securities Agreement dated March , 2006 by and among HWC Holding Corporation, Code, Hennessy & Simmons II, L.P. and

. Unless otherwise defined herein, all capitalized terms are used as defined in such Executive Securities Agreement.

8. This Note shall be governed by and construed in accordance with the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois.

9. Any payment due on a Saturday, Sunday, or legal holiday shall be due on the next business day.

		MAKER:
		By:

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Exhibit 10.15

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Exhibit 21.1

SUBSIDIARY OF HOUSTON WIRE & CABLE COMPANY

Name		Jurisdiction of Incorporation
HWC Wire & Cable Company		Delaware

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SUBSIDIARY OF HOUSTON WIRE & CABLE COMPANY

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Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption "Experts" and to the use of our reports dated March 23, 2006, in the Registration Statement (Form S-1) and related Prospectus of Houston Wire & Cable Company dated March 24, 2006.

/s/ Ernst & Young LLP

Houston, Texas
March 23, 2006

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Houston Wire & Cable Company

We have audited the consolidated financial statements of Houston Wire & Cable Company (formerly HWC Holding Corporation) as of December 31, 2005 and 2004, and for each of the three years in the period ended December 31, 2005, and have issued our report thereon dated March 23, 2006 (included elsewhere in this Registration Statement). Our audits also included the financial statement schedule listed in Item 16(b) of this Registration Statement. This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

Houston, Texas
March 23, 2006

HOUSTON WIRE & CABLE COMPANY
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS

Allowance for Doubtful Accounts
Description	Balance at Beginning of Period		Charges to Costs, Expenses and other		Write-off of Accounts Receivable		Balance at end of Period
Year ended December 31, 2005	$	475	$	13	$	41	$	447

Year ended December 31, 2004	$	294	$	304	$	123	$	475

Year ended December 31, 2003	$	219	$	171	$	96	$	294

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Exhibit 23.1

Consent of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
HOUSTON WIRE & CABLE COMPANY SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS