Exhibit 10.1


 


EXECUTION VERSION


       


FIRST AMENDMENT TO FOURTH AMENDED AND

RESTATED LOAN AND SECURITY AGREEMENT


 


FIRST AMENDMENT, dated
as of October 3, 2016, to the Fourth Amended and Restated Loan and Security Agreement, dated as of October 1, 2015, among
HWC Wire & Cable Company (“Borrower Agent”), Vertex Corporate Holdings, Inc. (“Vertex Holdings”),
Vertex-PFI, Inc. (“Vertex-PFI”), PFI, LLC (“PFI, LLC” and together with Borrower Agent, Vertex Holdings
and Vertex-PFI, individually a “Borrower” and collectively “Borrowers”), Houston Wire & Cable
Company (“Guarantor”), the lenders or lender named therein (“Lenders”) and Bank of America, N.A. (“Bank
of America”), as agent for said Lenders (Bank of America, in such capacity, “Agent”). Said Fourth Amended and
Restated Loan and Security Agreement, as amended and modified by this First Amendment to Fourth Amended and Restated Loan and Security
Agreement and as may be further amended and modified from time to time, 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 Borrowers 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.          Amended
and Additional Definitions. The definitions of “Accounts Formula Amount”, “Applicable Margin”, “Borrowing
Base” and “Inventory Formula Amount” contained in Section 1.1 of the Loan Agreement are hereby deleted and
the following are inserted in their stead. The new definitions of “FILO Account Percentage”, “FILO Amount”,
“FILO Applicable Manager”, “FILO Borrowing Base”, “FILO Inventory Percentage”, “First
Amendment”, “First Amendment Effective Date”, “Modified Availability”, “Vertex Acquisition”,
“Vertex Acquisition Conditions”, “Vertex Eligible Accounts”, “Vertex Eligible Foreign Accounts”,
“Vertex Eligible Inventory”, “Vertex Entities”, “Vertex Field Exam Completion Date” and “Vertex
Inventory Field Exam and Appraisal Completion Date” are hereby inserted into Section 1.1 of the Loan Agreement in appropriate
alphabetical order.


 


Accounts Formula
Amount: the sum of (x) 85% of the Value of Eligible Accounts (other than Vertex Eligible Accounts), plus (y) 85% of the Value
of Eligible Foreign Accounts (other than Vertex Eligible Foreign Accounts), provided that the aggregate Value of Eligible Foreign
Accounts and Vertex Eligible Foreign Accounts shall not exceed $1,500,000; plus (z) 80% of the Value of Vertex Eligible Accounts;
plus (aa) 80% of the Value of Vertex Eligible Foreign Accounts; provided that upon the Vertex Field Exam Completion Date, if Agent
determines in its reasonable credit judgment that the credit profiles of the Vertex Eligible Accounts and/or the Vertex Eligible
Foreign Accounts are substantially equivalent to the other Eligible Accounts and/or Eligible Foreign Accounts of Borrower Agent,
then Vertex Eligible Accounts and Vertex Eligible Foreign Accounts shall be included within clause (x) or (y) as applicable and
clauses (z) and (aa) shall be excluded from the calculation of Accounts Formula Amount.


 




     


     


    

 


Applicable
Margin: with respect to any Type of Loan, the margin set forth below, as determined by average Modified Availability for the
most recently ended Fiscal Quarter:


 


	Level	 	Modified

Availability	 	Base Rate

Revolver

Loans	 	 	LIBOR

Revolver

Loans	 
	I	 	> $40,000,000	 	 	0.00	%	 	 	1.00	%
	 	 	 	 	 	 	 	 	 	 	 
	II	 	< $40,000,000, but > $25,000,000	 	 	0.00	%	 	 	1.25	%
	 	 	 	 	 	 	 	 	 	 	 
	III	 	< $25,000,000	 	 	0.00	%	 	 	1.50	%



 


From the First Amendment Effective
Date until December 31, 2016, margins shall be determined based on Level III. Thereafter, the margins shall be subject to
increase or decrease to Levels I, II or III, as applicable, upon the first day of each Fiscal Quarter.


 


Borrowing Base:
on any date of determination, an amount equal to the lesser of (a) the aggregate amount of Revolver Commitments, minus the L/C
Reserve; or (b) sum of the Accounts Formula Amount, plus the Inventory Formula Amount, plus the FILO Borrowing Base, minus the
Availability Reserve.


 


FILO Borrowing
Base: on any date of determination, the lesser of (a) the sum of (i) the FILO Account Percentage multiplied by the Value of
Eligible Accounts, Eligible Foreign Accounts, Vertex Eligible Accounts and Vertex Eligible Foreign Accounts of Borrowers plus
(ii) the FILO Inventory Percentage multiplied by the Value of Eligible Inventory, Eligible In-transit Inventory and Vertex Eligible
Inventory and (b) the FILO Amount.


 


FILO Account Percentage:
during each applicable period set forth below, the percentage set forth opposite such period:


 


	Applicable Period	 	FILO Account
    Percentage	 
	Closing Date through March 31, 2017	 	 	5.00	%
	April 1 – June 30, 2017	 	 	4.44	%
	July 1 – September 30, 2017	 	 	3.89	%
	October 1 – December 31, 2017	 	 	3.33	%
	January 1 – March 31, 2018	 	 	2.78	%
	April 1 – June 30, 2018	 	 	2.22	%
	July 1 – September 30, 2018	 	 	1.67	%
	October 1 – December 31, 2018	 	 	1.11	%



 




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	Applicable Period	 	FILO Account Percentage	 
	January 1 – March 31, 2019	 	 	0.56	%
	From and after March 31, 2019	 	 	0.00	%





 


FILO Inventory
Percentage: during each applicable period set forth below, the percentage set forth opposite such period:


 


	Applicable Period	 	FILO Inventory
    Percentage	 
	Closing Date through March 31, 2017	 	 	3.52	%
	April 1 – June 30, 2017	 	 	3.13	%
	July 1 – September 30, 2017	 	 	2.74	%
	October 1 – December 31, 2017	 	 	2.35	%
	January 1 – March 31, 2018	 	 	1.96	%
	April 1 – June 30, 2018	 	 	1.56	%
	July 1 – September 30, 2018	 	 	1.17	%
	October 1 – December 31, 2018	 	 	0.78	%
	January 1 – March 31, 2019	 	 	0.39	%
	From and after March 31, 2019	 	 	0.00	%



 


FILO Amount:
during each applicable period set forth below, the amount set forth opposite such period:


 


	Applicable Period	 	FILO Amount	 
	Closing Date through March 31, 2017	 	$	5,000,000	 
	April 1 – June 30, 2017	 	$	4,444,444	 
	July 1 – September 30, 2017	 	$	3,888,889	 
	October 1 – December 31, 2017	 	$	3,333,333	 
	January 1 – March 31, 2018	 	$	2,777,778	 
	April 1 – June 30, 2018	 	$	2,222,222	 
	July 1 – September 30, 2018	 	$	1,666,667	 
	October 1 – December 31, 2018	 	$	1,111,111	 
	January 1 – March 31, 2019	 	$	555,556	 
	From and after March 31, 2019	 	$	0	 



 


FILO Applicable
Margin: (x) with respect to FILO Loans that are Base Rate Revolving Loans, one and one-half percent (1.5%) and (y) with respect
to FILO Loans that are LIBOR Revolving Loans, two and one-half percent (2.5%).


 


FILO Loans:
as defined in Section 2.1.8.


 


First Amendment:
that certain First Amendment to Loan and Security Agreement dated as of September __, 2016 by and among the Agent, Lenders and
Borrowers and consented to by Guarantor.


 


First Amendment
Effective Date: as defined in Section 11 of the First Amendment.


 




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Inventory
Formula Amount: the sum of (x) the lesser of (i) 70% of the Value of Eligible Inventory (other than Vertex Eligible Inventory);
or (ii) 90% of the NOLV Percentage of the Value of Eligible Inventory (other than Vertex Eligible Inventory), plus (y) the lesser
of (i) 70% of the Value of Eligible In Transit Inventory (other than Vertex Eligible Inventory) or (ii) 90% of the NOLV Percentage
of the Value of Eligible In Transit Inventory (other than Vertex Eligible Inventory) plus (z) 50% of the Value of Vertex Eligible
Inventory, provided that if Agent determines in its reasonable credit judgment that the credit profiles of the Vertex Eligible
Inventory and/or in-transit Inventory of the Vertex Entities are substantially equivalent to the other Eligible Inventory or Eligible
In-Transit Inventory of Borrower Agent, then Vertex Eligible Inventory and in-transit Inventory of the Vertex Entities shall be
included within clause (x) or (y), as applicable, and clause (z) shall be excluded from the calculation of Inventory
Formula Amount; provided, further, that in-transit Inventory of the Vertex Entities shall not be Eligible In-Transit Inventory
until the Vertex Field Exam and Appraisal Completion Date.


 


Modified
Availability: on any date: (a) Availability on such date; minus (b) the FILO Borrowing Base on such date.


 


Vertex Acquisition
Conditions: as defined in Section 4 of the First Amendment.


 


Vertex Acquisition:
the acquisition of one hundred percent (100%) of the Equity Interests of Vertex Holdings by Borrower Agent.


 


Vertex Eligible
Accounts: Accounts of Vertex Entities that satisfy the criteria for Eligible Accounts.


 


Vertex Eligible
Foreign Accounts: Eligible Foreign Accounts of Vertex Entities.


 


Vertex Eligible
Inventory: Inventory of Vertex Entities that satisfies the criteria for Eligible Inventory.


 


Vertex Entities:
individually and/or collectively, Vertex Corporate Holdings, Inc., Vertex-PFI, Inc. and PFI, LLC.


 


Vertex Field
Exam Completion Date: the date on which Agent concludes its field exam of the Vertex Entities’ books and records and
Accounts, the results of which are reasonably satisfactory to Agent.


 


Vertex Inventory
Field Exam and Appraisal Completion Date: the date on which Agent concludes its field exam and appraisal of the Vertex Entities’
books and records and Inventory, the results of which are satisfactory to Agent.


 




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2.          FILO
Loans. The following is inserted into the Loan Request as Section 2.1.8:


 


2.1.8. FILO Loans.
All Revolver Loans at any time outstanding under this Agreement, up to an aggregate principal amount equal to the FILO Amount at
such time, shall be deemed to be FILO Loans (“FILO Loans”), regardless of whether such Revolver Loans are borrowed,
repaid or reborrowed at any time and from time to time. If on any date of determination, the aggregate principal amount of Revolver
Loans outstanding is less than or equal to the aggregate principal amount equal to the FILO Amount on such date, then all Revolver
Loans outstanding on such date shall constitute FILO Loans.


 


3.          Rates
of Payment. Section 3.1.1(a) is hereby deleted and the following is inserted in its place.


 


3.1.1.      Rates
and Payment of Interest.


 


(a)    The Obligations
shall bear interest (i) (x) if a Base Rate Loan (other than a FILO Loan that is a Base Rate Loan), at the Base Rate in effect from
time to time, plus the Applicable Margin and (y) if a FILO Loan that is a Base Rate Loan at the Base Rate in effect from time to
time, plus the FILO Applicable Margin; (ii) (x) if a LIBOR Loan (other than a FILO Loan that is a LIBOR Loan), at LIBOR for the
applicable Interest Period, plus the Applicable Margin and (y) if a FILO Loan that is a LIBOR Loan at LIBOR for the Applicable
Interest Period plus the FILO Applicable Margin; and (iii) if any other Obligation (including, to the extent permitted by law,
interest not paid when due), at the Base Rate in effect from time to time, plus the Applicable Margin for Base Rate Revolver Loans.
Interest shall accrue from the date the Loan is advanced or the Obligation is incurred or payable, until paid by Borrowers. If
a Loan is repaid on the same day made, one day’s interest shall accrue.


 


4.          Consent
to Vertex Acquisition. Agent and Lenders hereby consent to Borrower Agent consummating the Vertex Acquisition so long as each
of the following conditions precedent (collectively, the “Vertex Acquisition Conditions”) have been fulfilled to the
reasonable 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) Availability immediately after the consummation of the Vertex Acquisition
will not be less than $20,000,000; (iii) all conditions precedent to the consummation of the Vertex Acquisition shall have
been satisfied in all material respects; (iv) the purchase price (subject to working capital adjustments) payable in connection
with the Vertex Acquisition shall not exceed $32,300,000 (or such greater amount as agreed to by Agent) and (v) Agent shall
have received a copy of the purchase agreement with respect to the Vertex Acquisition, certified as true and correct by Borrower
Agent, and such other agreements, documents, and instruments as Agent may reasonably request and the form and substance of such
documents shall be acceptable to Agent in its reasonable credit judgment.


 




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5.          Joinder
of Vertex Entities as Borrowers. 


 


(i)          Assumption
by Vertex Entities. (a) Each Vertex Entity hereby expressly assumes, confirms and agrees to perform and observe each and every
one of the covenants, rights, promises, agreements, terms, conditions, obligations, duties and liabilities of a Borrower under
the Loan Agreement and under any Loan Document executed and delivered or furnished, or to be executed and delivered or furnished,
by any Borrower in connection therewith, and to be bound by all waivers made by any Borrower with respect to any matter set forth
therein.


 


(b)         All references
to a Borrower in any Loan Document or any document or instrument executed and delivered or furnished, or to be executed and delivered
or furnished, in connection therewith shall be deemed to include references to each Vertex Entity, except for references to a Borrower
relating to periods prior to the date hereof.


 


(ii)         Representations
and Warranties. Each Vertex Entity hereby accepts and assumes all obligations and liabilities of Borrowers related to each
representation or warranty made by Borrowers in the Loan Agreement or any other Loan Document and hereby expressly affirms, on
the date hereof, for the benefit of Lenders and Agent, each of such representations and warranties. Each Vertex Entity hereby further
represents and warrants and reaffirms that each representation and warranty made by it as a Borrower in the Loan Agreement is true
and correct as of the date hereof. Each such representation and warranty is incorporated by reference herein in its entirety.


 


(iii)        Security
Interest. Without in any way limiting the generality of the terms and provisions of this Joinder Agreement or the provisions
of Section 7.1 of the Loan Agreement, to secure the prompt payment and performance of all Obligations, each Vertex Entity
hereby grants to Agent, for the benefit of Secured Parties, a continuing security interest in and Lien upon all Property of such
Vertex Entity, other than Real Estate, including all of the following Property, whether now owned or hereafter acquired, and wherever
locate:


 


(a)         Accounts;


 


(b)         all Chattel
Paper, including electronic chattel paper;


 


(c)         all Commercial
Tort Claims;


 


(d)         all Deposit
Accounts;


 


(e)         all Documents;


 


(f)          all General
Intangibles, including Intellectual Property;


 


(g)         all Goods,
including Inventory, Equipment and fixtures;


 


(h)         all Instruments;


 


(i)          all
Investment Property;








 




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(j)          all Letter-of-Credit
Rights;


 


(k)         all Supporting
Obligations;



 


(l)          all monies,
whether or not in the possession or under the control of Agent, a Lender, or a bailee or Affiliate of Agent or a Lender, including
any Cash Collateral;


 


(m)        all accessions
to, substitutions for, and all replacements, products, and cash and non-cash proceeds of the foregoing, including proceeds of and
unearned premiums with respect to insurance policies, and claims against any Person for loss, damage or destruction of any Collateral;
and


 


(n)         all books
and records (including customer lists, files, correspondence, tapes, computer programs, print-outs and computer records) pertaining
to the foregoing.


 


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 the applicable Vertex Entity shall use reasonable
good faith efforts to obtain any necessary consent to enable any such contract right to be included within the Collateral.


 


(iv)        Further
Assurances. At any time and from time to time, upon any Lender’s or Agent’s request and at the sole expense of
the Vertex Entities, each Vertex Entity will promptly duly execute and deliver any and all further instruments and documents (including,
without limitation, security agreements, financing statements, mortgages and the like) and will take such further action as such
Lender or Agent may reasonably deem necessary to effect the purposes of this Agreement.


 


6.          In-Eligible
Accounts of the Vertex Entities. Prior to the Vertex Field Exam Completion Date, the percentage of the Vertex Entities’
Accounts that are not Eligible Accounts shall be deemed to be 10%.


 


7.          Schedules.
Attached hereto are updated Schedules to the Loan Agreement that reflect the consummation of the Vertex Acquisition.


 


8.          Deposit
Account Control Agreement. (a) Borrowers covenant that not later than thirty (30) days after the First Amendment Effective
Date, Borrowers shall be in compliance with Sections 7.2.1 and 8.5 of the Loan Agreement with respect to all Deposit Accounts
of the Vertex Entities.


 


(b)         Depository
Bank. Within 270 days (or such longer period as agreed to by Agent) after the First Amendment Effective Date, Borrower shall
cause each of the Vertex entities to maintain Bank of America as its principal depository bank, including for the maintenance of
all operating, collection, disbursement and other deposit accounts fund for all Cash Management Services.


 




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9.          Field
Exam and Appraisals. Borrowers agree to use their commercially reasonable best efforts to enable Agent to complete its field
exam and appraisal of the Vertex Entities’ books and records and Collateral within thirty (30) days after the consummation
of the Vertex Acquisition.


 


10.         Amendment
Fee. In order to induce Agent and Lenders to enter into this First Amendment, Borrowers agree to pay to Agent for the ratable
benefit of Lenders an amendment fee of $50,000. Such fee shall be due and payable and shall be deemed fully earned and non-refundable
on the First Amendment Effective Date.


 


11.         Conditions
Precedent. This First Amendment shall become effective upon satisfaction of each of the following conditions precedent:


 


(i)          The
Vertex Acquisition Conditions have been satisfied and the Vertex Acquisition shall have been consummated;


 


(ii)         Borrowers,
Guarantor, Agent and Lenders shall have executed and delivered to each other this First Amendment;


 


(iii)        Each
Vertex Entity shall have delivered to Agent a Certificate of Secretary of such Vertex Entity, together with true and correct copies
of the Certificate of Incorporation and By-laws, or the Certificate of Formation and Operating Agreement, of such Vertex Entity,
true and correct copies of the Resolutions of the Board of Directors of such Vertex Entity authorizing or ratifying the execution,
delivery, and performance of this First Amendment, and the names of the officers of such Vertex Entity authorized to sign this
First Amendment, together with a sample of the true signature of each such officer; and


 


(iv)        Borrower
shall have paid to the Agent for the ratable benefit of Lenders the amendment fee referred to in Section 10 of this First
Amendment.


 


The date on which each
of such conditions precedent are satisfied or waived is hereinafter referred to as the First Amendment Effective Date.


 


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 First 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 First Amendment may be executed in any number of separate counterparts, each of which shall, collectively and separately,
constitute one agreement.


 


(Signature Page Follows)


 




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(Signature Page
to First Amendment to Fourth Amended

and Restated Loan and Security Agreement)


 


IN WITNESS WHEREOF, this
First Amendment has been duly executed as of the first day written above.


 


	 	HWC WIRE & CABLE COMPANY, as a Borrower
	 	 	 
	 	By:	/s/ Nicol G. Graham
	 	Name:	Nicol G. Graham
	 	Title:	Chief Financial Officer, Treasurer and Secretary
	 	 	 
	 	VERTEX CORPORATE HOLDINGS, INC., as a Borrower
	 	 	 
	 	By:	/s/ James L. Pokluda III
	 	Name:	James L. Pokluda III
	 	Title:	President and Chief Executive Officer
	 	 	 
	 	VERTEX-PFI, INC., as a Borrower
	 	 	 
	 	By:	/s/ James L. Pokluda III
	 	Name:	James L. Pokluda III
	 	Title:	President and Chief Executive Officer
	 	 	 
	 	PFI, LLC, as a Borrower
	 	 	 
	 	By:	/s/ James L. Pokluda III
	 	Name:	James L. Pokluda III
	 	Title:	President and Chief Executive Officer


 




     


     


    

 


(Signature Page to First Amendment to
Fourth Amended

and Restated Loan and Security Agreement)


 


	 	BANK OF AMERICA, N.A., as Agent and a Lender
	 	 	 
	 	By:	/s/ Philip Nomura
	 	Name:	Philip Nomura
	 	Title:	Senior Vice President


 




     


     


    

 


(Signature Page to First Amendment to
Fourth Amended

and Restated Loan and Security Agreement)


 


	ACCEPTED AND AGREED	 
	to this 3rd day of October, 2016:	 
	 	 
	HOUSTON WIRE & CABLE COMPANY, as Guarantor	 
	 	 	 
	By:	/s/ James L. Pokluda III	 
	Name:	James L. Pokluda III	 
	Title:	President and Chief Executive Officer