THIRD AMENDMENT TO
CREDIT AGREEMENT

     This THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as of
December 23, 2002, and is entered into by and among The Hillman Group, Inc.
(“Borrower”), Heller Financial, Inc., in its capacity as Agent for the Lenders
party to the Credit Agreement described below (“Agent”), and the Lenders which
are signatories hereto.

     WHEREAS, Agent, Lenders and Borrower are parties to a certain Credit
Agreement dated as of September 28, 2001 (as such agreement has from time to
time been amended, supplemented or otherwise modified, the “Credit Agreement”);
and

     WHEREAS, Borrower has requested that Agent and Lenders amend the Credit
Agreement in certain respects, principally to (i) join Merrill Lynch Capital, a
division of Merrill Lynch Business Financial Services Inc. (“Merrill”) as a
Lender under the Credit Agreement, (ii) increase the Revolving Loan Commitment
from $60,000,000 to $64,780,000, (iii) increase the outstanding principal amount
of Term Loan A from $31,647,061 to $34,147,061, and (iii) increase the
outstanding principal amount of Term Loan B from $34,500,000 to $37,220,000; and

     WHEREAS, such increase in the Revolving Loan Commitment and such increases
of the outstanding principal amounts of Term Loan A and Term Loan B shall be
allocated to and funded solely by, Merrill, and such increases shall not affect
any other Lender’s Revolving Credit Exposure, Term Loan A Exposure or Term Loan
B Exposure.

     NOW THEREFORE, in consideration of the mutual conditions and agreements set
forth in the Credit Agreement and this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

     1.    Definitions.  Capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the meaning ascribed to such terms in the
Credit Agreement.

     2.    Amendments.  Subject to the conditions precedent set forth in
Section 4 of this Amendment, and in reliance on the representations and
warranties set forth in Section 5 of this Amendment, Borrower, Agent and Lenders
hereby agree to amend the Credit Agreement as follows:

     (a)    Agent, Lenders and Borrower hereby acknowledge and agree that from
and following the date hereof, Merrill shall be deemed to be a Lender for all
purposes under the Credit Agreement, and Merrill shall be deemed to have the
same rights and obligations of each other Lender thereunder. Merrill’s Revolving
Loan Commitment, Term Loan A

 

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Exposure and Term Loan B Exposure shall be the amounts set forth opposite its
name on Exhibit A hereto.

     (b)     On the Closing Date, Lenders made Term Loan A to Borrower in the
aggregate principal amount of $20,000,000. On the May 1, 2002, Lenders increased
the aggregate principal amount of Term Loan A to $33,500,000. As of the date of
this Amendment, but prior to the effectiveness of the terms hereof, the
outstanding principal balance of Term Loan A is $31,647,061. Borrower, Agent and
each Lender agree that, upon the effectiveness of this Amendment, Merrill will
advance $2,500,000 to Borrower, such that the outstanding principal balance of
Term Loan A shall be $34,147,061. Term Loan A, as reconstituted hereby, shall be
repayable as set forth in subsection 1.1(A) of the Credit Agreement.

     (c)     On the Closing Date, Lenders made Term Loan B to Borrower in the
aggregate principal amount of $35,000,000. As of the date of this Amendment, but
prior to the effectiveness of the terms hereof, the outstanding principal
balance of Term Loan B is $34,500,000. Borrower, Agent and each Lender agree
that, upon the effectiveness of this Amendment, Merrill will advance $2,720,000
to Borrower, such that the outstanding principal balance of Term Loan B shall be
$37,220,000. Term Loan B, as reconstituted hereby, shall be repayable as set
forth in subsection 1.1(A) of the Credit Agreement.

     (d)     The charts of Scheduled Installments for Term Loan A and Term Loan
B set forth in subsection 1.1(A) of the Credit Agreement are each hereby amended
and restated in their entirety, as follows:

     

          Term Loan A       Date   Scheduled Installment

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December 31, 2002     $1,415,441.18   March 31, 2003     $2,182,107.85  
June 30, 2003     $2,182,107.85   September 30, 2003     $2,182,107.85  
December 31, 2003     $2,182,107.85   March 31, 2004     $2,182,107.85  
June 30, 2004     $2,182,107.85   September 30, 2004     $2,182,107.85  
December 31, 2004     $2,182,107.85   March 31, 2005     $2,182,107.85  
June 30, 2005     $2,182,107.85   September 30, 2005     $2,182,107.85  
December 31, 2005     $2,182,107.85   March 31, 2006     $2,182,107.85  
June 30, 2006     $2,182,107.85  

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          Date   Scheduled Installment

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September 27, 2006, or if different, the then outstanding balance of Term Loan A
  $ 2,182,107.74  

          Term Loan B           Date   Scheduled Installment

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December 31, 2002     $125,000.00   March 31, 2003     $134,890.91   June 30,
2003     $134,890.91   September 30, 2003     $134,890.91   December 31, 2003  
  $134,890.91   March 31, 2004     $134,890.91   June 30, 2004     $134,890.91  
September 30, 2004     $134,890.91   December 31, 2004     $134,890.91  
March 31, 2005     $134,890.91   June 30, 2005     $134,890.91   September 30,
2005     $134,890.91   December 31, 2005     $134,890.91   March 31, 2006    
$134,890.91   June 30, 2006     $134,890.91   September 30, 2006     $134,890.91
  December 31, 2006     $4,383,954.55   March 31, 2007     $4,383,954.55  
June 30, 2007     $4,383,954.55   September 30, 2007     $4,383,954.55  
December 31, 2007     $4,383,954.55   March 31, 2008     $4,383,954.55  
June 30, 2008     $4,383,954.55   September 28, 2008, or if different, the then
outstanding balance of Term Loan B     $4,383,954.55  

     (e)    The first sentence of subsection 1.1(B) of the Credit Agreement is
hereby amended by deleting the “$60,000,000” dollar amount set forth therein and
replacing it with “$64,780,000”.

     (f)     Schedule 10.1(C) of the Credit Agreement is hereby amended and
restated in its entirety, as set forth on Exhibit A hereto. Upon the
effectiveness of this Amendment, Merrill will advance to Agent a Revolving Loan,
to be allocated by Agent among the Lenders having Revolving Loan Commitments,
such that after giving effect thereto the outstanding Revolving Loans of each
Lender will equal its revised Pro Rata Share thereof.

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     3.   Conditions. The effectiveness of this Amendment is subject to the
following conditions precedent (unless specifically waived in writing by Agent):

     (a)   Borrower shall have executed and delivered this Amendment and such
other documents and instruments as Agent may require shall have been executed
and/or delivered to Agent;

     (b)   Borrower shall have delivered to Merrill a Term Note A executed by
Borrower in favor of Merrill, in the amount set forth on Schedule 10.1(C) with
respect to Merrill’s Term Loan A funded amount, as revised pursuant to this
Amendment and attached as Exhibit A hereto;

     (c)     Borrower shall have delivered to Merrill a Term Note B executed by
Borrower in favor of Merrill, in the amount set forth on Schedule 10.1(C) with
respect to Merrill’s Term Loan B funded amount, as revised pursuant to this
Amendment and attached as Exhibit A hereto;

     (d)   Borrower shall have delivered to Merrill a Revolving Note executed by
Borrower in favor of Merrill, in the amount set forth on Schedule 10.1(C) with
respect to Merrill’s Revolving Loan Commitment, as revised pursuant to this
Amendment and attached as Exhibit A hereto;

     (e)   Agent shall have received a Consent and Reaffirmation of Guaranty
executed by each of First Tier Holdings and Second Tier Holdings in form and
substance satisfactory to Agent and Lenders, in their sole discretion;

     (f)   No Default or Event of Default shall have occurred and be continuing;
and

     (g)   Borrower shall have paid to Agent a fee in the amount of $157,684,
which fee shall be fully-earned and payable as of the date hereof, and shall be
allocated among the Lenders pursuant to each Lender’s Pro Rata Share before
giving effect to this Amendment.

     4.   Representations and Warranties. To induce Agent and Lenders to enter
into this Amendment, Borrower represents and warrants to Agent and Lenders:

     (a)   that the execution, delivery and performance of this Amendment has
been duly authorized by all requisite corporate action on the part of Borrower
and that this Amendment has been duly executed and delivered by Borrower; and

     (b)   that each of the representations and warranties set forth in
Section 5 of the Credit Agreement (other than those which, by their terms,
specifically are made as of a certain date prior to the date hereof) are true
and correct in all material respects as of the date hereof.

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     5.   Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

     6.   References. Any reference to the Credit Agreement contained in any
document, instrument or agreement executed in connection with the Credit
Agreement shall be deemed to be a reference to the Credit Agreement as modified
by this Amendment.

     7.   Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original, but all of which taken
together shall be one and the same instrument.

     8.   Ratification. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions of the Credit
Agreement and shall not be deemed to be a consent to the modification or waiver
of any other term or condition of the Credit Agreement. Except as expressly
modified and superseded by this Amendment, the terms and provisions of the
Credit Agreement are ratified and confirmed and shall continue in full force and
effect.

[Signature Pages Follow]

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     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal and delivered by their respective duly authorized
officers on the date first written above.

  THE HILLMAN GROUP, INC.     /s/ James P. Waters
_____________________________
By: James P. Waters
Title: Vice President-Finance

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  HELLER FINANCIAL, INC., as Agent, an Issuing
Lender and a Lender

  By:  /s/ Matthew Kirst                         
Title: Duly Authorized Signatory

 

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  ANTARES CAPITAL CORPORATION

  By:  /s/ Dan Glickman                         
Title: Director

 

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  MADISON CAPITAL FUNDING LLC

  By:  /s/ K. Thomas Klimmeck                         
Title: Managing Director

 

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  GENERAL ELECTRIC CAPITAL CORPORATION

  By:  /s/ Michael Liestbader                         
Title: Duly Authorized Signatory

 

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  PNC BANK, NATIONAL ASSOCIATION

        By:  /s/ Joni Wagner

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  Title:  Assistant Vice President

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  FIFTH THIRD BANK

        By:  /s/ K. E. Goodpaster

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  Title:  Vice President

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  JOHN HANCOCK LIFE INSURANCE COMPANY

        By:  /s/ Lorne C. Davis

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  Title:  Director

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  JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

  By: /s/ Lorne C. Davis                    
Title: Authorized Signatory

 

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  INVESTORS PARTNER LIFE INSURANCE COMPANY

  By: /s/ Lorne C. Davis                    
Title: Authorized Signatory

 

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  MARINER CDO 2002, LTD.

  By: /s/ David Mahon                    
Title: Vice President

 

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  THE PROVIDENT BANK

  By: /s/ Scott Kray                    
Title: Vice President

 

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  MERRILL LYNCH CAPITAL, a division of Merrill
Lynch Business Financial Services Inc.

  By: /s/ Jeffrey L. Jelm                    
Title: Director

 

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