Exhibit 10.1

CONSENT AND FIRST AMENDMENT TO
CREDIT AGREEMENT

     This CONSENT AND FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is
dated as of May      , 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 consent to (i) the
acquisition (the “Acquisition”) by Borrower of certain assets of RB
Distribution, Inc., a Pennsylvania corporation (“Seller”) related to Seller’s
accounts with Lowe’s Companies, Inc., pursuant to the terms of that certain
Asset Purchase Agreement dated of even date herewith among Borrower, Seller and
R&B, Inc., a Pennsylvania corporation (the “Purchase Agreement”), and (ii) the
consummation by Borrower of the first phase of its project to consolidate its
warehouse locations, as described in that certain Consolidation Plan Evaluation
attached as Exhibit A hereto, and the expenditure by Borrower of approximately
Nine Million Dollars ($9,000,000) in connection therewith (the “Distribution
Project”); and

     WHEREAS, to facilitate the payment of amounts due and owing by Borrower in
connection with the consummation of the Acquisition and the Distribution
Project, Borrower has further requested that Agent and Lenders agree to (a)
increase the Revolving Loan Commitment from $50,000,000 to $60,000,000, and (b)
increase the outstanding principal amount of Term Loan A from $18,500,000 to
$33,500,000; and

     WHEREAS Borrower has further requested that Agent and Lenders agree to
amend the Credit Agreement in certain respects.

     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.     Consent. 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

 

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5 of this Amendment, Agent and Lenders hereby consent to (i) the consummation of
the Acquisition pursuant to the terms set forth in the Purchase Agreement
attached hereto as Exhibit B, and (ii) the consummation of the Distribution
Project, including without limitation all expenditures made by the Borrower in
connection therewith. Agent and Lenders further hereby acknowledge and agree
that notwithstanding anything set forth in Section 4.1 of the Credit Agreement
or Exhibit 4.8(C) to the Credit Agreement to the contrary, up to $9,000,000 of
expenditures made by the Borrower in connection with the Distribution Project
shall not be included in the calculation of Capital Expenditures or Unfinanced
Capital Expenditures. Except as expressly provided herein, the foregoing consent
shall not constitute (a) a modification or alteration of the terms, conditions
or covenants of the Credit Agreement or any document entered into in connection
therewith, or (b) a waiver, release or limitation upon the exercise by Agent or
Lenders of any of their rights, legal or equitable, hereunder or under the
Credit Agreement or any Loan Document.

     3.     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)  To the extent necessary to make the representations and warranties
made under the Credit Agreement true, correct and complete after giving effect
to the consummation of the Acquisition, the disclosure schedules to the Credit
Agreement and the other Loan Documents identified on Exhibit C hereto are hereby
amended in the manner set forth therein.

     (b)  On the Closing Date, Lenders made Term Loan A to Borrower in the
aggregate principal amount of $20,000,000. As of the date of this Amendment, but
prior to the effectiveness of the terms hereof, the outstanding principal
balance of Term Loan A is $18,500,000. Borrower, Agent and each Lender agree
that, upon the effectiveness of this Amendment, Heller Financial, Inc., Antares
Capital Corporation, Madison Capital Funding LLC, PNC Bank, National Association
and Fifth Third Bank will advance an additional $15,000,000, in the aggregate,
to Borrower, such that the outstanding principal balance of Term Loan A shall be
$33,500,000. Term Loan A, as reconstituted hereby, shall be repayable as set
forth in subsection 1.1(A) of the Credit Agreement.

     (c)  The chart of Scheduled Installments with respect to Term Loan A set
forth in subsection 1.1(A) of the Credit Agreement is hereby amended and
restated in its entirety, as follows:

                          Term Loan A                

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                Date   Scheduled Installment        

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        June 30, 2002   $ 750,000           September 30, 2002   $ 1,102,941.18
 

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                                                              Date   Scheduled
Installment        

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December 31, 2002
  $ 1,415,441.18        
March 31, 2003
  $ 2,015,441.18          
June 30, 2003
  $ 2,015,441.18    
September 30, 2003
  $ 2,015,441.18      
December 31, 2003
  $ 2,015,441.18        
March 31, 2004
  $ 2,015,441.18          
June 30, 2004
  $ 2,015,441.18    
September 30, 2004
  $ 2,015,441.18      
December 31, 2004
  $ 2,015,441.18        
March 31, 2005
  $ 2,015,441.18          
June 30, 2005
  $ 2,015,441.18    
September 30, 2005
  $ 2,015,441.18      
December 31, 2005
  $ 2,015,441.18        
March 31, 2006
  $ 2,015,441.18          
June 30, 2006
  $ 2,015,441.18  
September 27, 2006, or if different, the then
  $ 2,015,441.18  
outstanding balance of Term Loan A
       

     (d)  The first sentence of subsection 1.1(B) of the Credit Agreement is
hereby amended by deleting the “$50,000,000” dollar amount set forth therein and
replacing it with “$60,000,000”.

     (e)  Subsection 4.3 of the Credit Agreement is hereby amended and restated
in its entirety, as follows:

     “4.3 Adjusted EBITDA.

     Borrower shall not permit Adjusted EBITDA for the twelve (12) month period
ending on the last day of any month set forth below to be less than the amount
set forth below for such month, plus for each Permitted Acquisition (exclusive
of the acquisition by Borrower of certain assets of RB Distribution, Inc., a
Pennsylvania corporation (“RB Distribution”) pursuant to the terms of that
certain Asset Purchase Agreement dated on or about April, 2002 among Borrower,
RB Distribution and R&B, Inc., a Pennsylvania corporation), 85% of the sum of
the Permitted Acquisition EBITDA and the Pro Forma Cost Reduction for the target
thereof, each calculated as of the closing date of such Permitted Acquisition;
provided that Permitted Acquisition EBITDA must be calculated by Borrower and
acceptable to Agent and Requisite Lenders prior to the closing of the Permitted
Acquisition.

          Month Ending   Amount

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April 30, 2002
  $ 38,631,171.50  
May 31, 2002
  $ 38,631,171.50  

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          Month Ending   Amount

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June 30, 2002
  $ 39,631,171.50  
July 31, 2002
  $ 40,131,171.50  
August 31, 2002
  $ 40,131,171.50  
September 30, 2002
  $ 42,631,171.50  
October 31, 2002
  $ 43,131,171.50  
November 30, 2002
  $ 43,631,171.50  
December 31, 2002
  $ 44,131,171.50  
January 31, 2003
  $ 44,131,171.50  
February 28, 2003
  $ 44,131,171.50  
March 31, 2003
  $ 44,131,171.50  
April 30, 2003
  $ 44,131,171.50  
May 31, 2003
  $ 44,131,171.50  
June 30, 2003
  $ 44,131,171.50  
July 31, 2003
  $ 44,131,171.50  
August 31, 2003
  $ 44,131,171.50  
September 30, 2003
  $ 46,131,171.50  
October 31, 2003
  $ 46,131,171.50  
November 30, 2003
  $ 46,131,171.50  
December 31, 2003
  $ 47,131,171.50  
January 31, 2004
  $ 47,131,171.50  
February 29, 2004
  $ 47,131,171.50  
March 31, 2004
  $ 48,131,171.50  
April 30, 2004
  $ 48,131,171.50  
May 31, 2004
  $ 48,131,171.50  
June 30, 2004
  $ 48,131,171.50  
July 31, 2004
  $ 48,131,171.50  
August 31, 2004
  $ 48,131,171.50  
September 30, 2004
  $ 49,131,171.50  
October 31, 2004
  $ 49,131,171.50  
November 30, 2004
  $ 49,131,171.50  
December 31, 2004
  $ 50,131,171.50  
January 31, 2005
  $ 50,131,171.50  
February 28, 2005
  $ 50,131,171.50  
March 31, 2005
  $ 50,131,171.50  
April 30, 2005
  $ 50,131,171.50  
May 31, 2005
  $ 50,131,171.50  
June 30, 2005
  $ 51,131,171.50  
July 31, 2005
  $ 51,131,171.50  
August 31, 2005
  $ 51,131,171.50  
September 30, 2005 and thereafter
  $ 52,131,171.50  

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     “Adjusted EBITDA” will be calculated as illustrated on Exhibit 4.8(C).
Notwithstanding the foregoing, at all times after the calculation of this
financial covenant as of June 30, 2002, this covenant will only be calculated as
of the last day of each calendar quarter, rather than as of the last day of each
month, until such time as Requisite Lenders provide the Borrower with a written
notice reinstituting monthly covenant testing.”

     (f)  Schedule 10.1(C) of the Credit Agreement is hereby amended and
restated in its entirety, as set forth on Exhibit D hereto. Upon the
effectiveness of this Amendment, Agent will reallocate the outstanding Loan
balances among the Lenders to give full effect to the revised Pro Rata Shares
and commitment amounts of Lenders set forth on Schedule 10.1(C) of the Credit
Agreement, as amended and restated pursuant to this Amendment.

     4.     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 each Lender with Term Loan A Exposure
an Amended and Restated Term Note A executed by Borrower in favor of such
Lender, in the amounts set forth on Schedule 10.1(C), as revised pursuant to
this Amendment and attached as Exhibit D hereto;

     (c)  Borrower shall have delivered to each Lender with Revolving Credit
Exposure an Amended and Restated Revolving Note executed by Borrower in favor of
such Lender, in the amounts set forth on Schedule 10.1(C), as revised pursuant
to this Amendment and attached as Exhibit D hereto;

     (d)  Agent shall have received (i) a fully-executed copy of the Purchase
Agreement (including all schedules and exhibits thereto) and each of the other
ancillary documents executed in connection therewith, and (ii) evidence that the
transactions contemplated thereby have been consummated, each in form and
substance satisfactory to Agent and Lenders, in their sole discretion, as
evidenced by Agent’s and Lenders’ execution of this Amendment;

     (e)  All proceedings taken in connection with the transactions contemplated
by this Amendment and all documents, instruments and other legal matters
incident thereto shall be satisfactory to Agent and its legal counsel;

     (f)  Agent shall have received the written consent of all Persons holding
Indebtedness evidenced by the Subordinated Loan Documents;

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     (g)  Borrower shall have executed and delivered to Agent, or shall have
caused to be executed and delivered to Agent, each of the documents, instruments
and agreements listed on Exhibit E attached hereto, each in form and substance
satisfactory to Agent, in Agent’s sole discretion, together with such other
documents, agreements and instruments as Agent may require or reasonably
request;

     (h)  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;

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

     (j)  Borrower shall have paid to Agent a fee in the amount of $129,062.50,
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 prior to
giving effect to this Amendment.

     5.     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;

     (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; and

     (c)  that the consummation of the Acquisition and the other transactions
contemplated thereby does not and will not violate or conflict with any laws,
rules, regulations or orders of any governmental authority or violate, conflict
with, result in a breach of, or constitute a default (with due notice or lapse
of time or both) under any Contractual Obligation (including without limitation
under the Debentures) or organizational documents of any Loan Party.

     6. 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.

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     7.     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.

     8.     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.

     9.     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

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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/ Jacqueline Lynch  

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  Title:  Vice President  

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        ANTARES CAPITAL CORPORATION       By:  /s/ Illegible  

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  Title:  Director  

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        MADISON CAPITAL FUNDING LLC       By:  K. Thomas Klimeck  

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  Title:  Managing Director  

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        GENERAL ELECTRIC CAPITAL CORPORATION       By:  /s/ Michael J. Reilly  

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  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:  VP  

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        JOHN HANCOCK LIFE INSURANCE COMPANY       By:  /s/ Lorn C. Davis  

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  Title:  Director  

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        JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY       By:  /s/ Lorn C.
Davis  

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  Title:  Director  

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        INVESTORS PARTNER LIFE INSURANCE COMPANY       By:  /s/ Lorn C. Davis  

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  Title:  Authorized Signatory  

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        SALOMON BROTHERS HOLDING COMPANY, INC.       By:  /s/ Shawn Bernet  

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  Title:  Assistant Vice President  

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