ANICOM INC
10-Q, 1997-11-14
ELECTRICAL APPARATUS & EQUIPMENT, WIRING SUPPLIES
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


                For the quarterly period ended September 30, 1997

                         Commission File Number 0-25364


                                  ANICOM, INC.
                (Name of registrant as specified in its charter)


           Delaware                                       36-3885212
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)


        6133 North River Road, Suite 1000, Rosemont, Illinois 60018-5171
               (Address of principal executive offices) (Zip Code)


                                 (847) 518-8700
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) filed all reports required to
be filed by  Section 13 or 15(d) of the  Securities  Exchange Act of 1934 during
the preceding  12 months  (or for such shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes x No o

The number of shares  outstanding of the  registrant's  Common Stock,  par value
$.001 per share as of November 12, 1997: 19,493,485.
<PAGE>



PART I.  --  FINANCIAL INFORMATION


Item 1.  Financial Statements

                                  ANICOM, INC.
                      Condensed Consolidated Balance Sheets
                    (In thousands, except per share amounts)

                                               September 30,      December 31,
                                                    1997              1996
                                                (Unaudited)
                            ASSETS
Current assets:
  Cash and cash equivalents                    $         1,125   $           195
  Marketable securities                                      _             4,345
  Accounts receivable, less allowance for 
     doubtful accounts of $2,303 and $980, 
     respectively                                       55,995            26,972
  Inventory, primarily finished goods                   43,448            23,453
  Deferred income taxes                                  2,059             1,557
  Other current assets                                   1,441             1,017
                                              ----------------  ----------------
      Total current assets                             104,068            57,539
                                              ----------------  ----------------

Property and equipment, net                              5,206             2,820
Goodwill, net of accumulated amortization 
     of $1,197 and $479, respectively                   53,098            26,771
Other assets, primarily notes receivable                 1,848               824
                                              ================  ================
      Total assets                             $       164,220  $         87,954
                                              ================  ================
















            See Notes to Condensed Consolidated Financial Statements
<PAGE>
                                  ANICOM, INC.
                      Condensed Consolidated Balance Sheets
                    (In thousands, except per share amounts)

                                                September 30,      December 31,
                                                     1997              1996
                                                 (Unaudited)
          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                            $         46,509  $         20,727
  Accrued expenses                                       3,473             1,818
  Long-term debt, current portion                        1,938             1,598
                                                                ----------------
                                              ----------------
      Total current liabilities                         51,920            24,143
                                                                ----------------
                                              ----------------

Long-term debt, net of current portion                  14,940             3,013
Deferred income taxes                                        _               165
Other liabilities                                        2,486               774
                                              ----------------  ----------------
      Total liabilities                                 69,346            28,095
                                              ----------------  ----------------

Commitments and Contingencies

Stockholders' Equity:
  Convertible preferred stock, Series A, 
     par value $.01 per share, liquidation            
     value $1,000 per share, 27 and 0 
     shares authorized and issued, respectively              _                 _
  Preferred stock, undesignated, par value 
     $.01 per share; 973 and 1,000 shares                             
     authorized; no shares issued and outstanding            _                 _
  Common stock, par value $.001 per share; 60,000 
     shares authorized, 19,263 and 15,560
     shares issued and outstanding, respectively            11                 7
  Additional paid-in capital                            87,971            56,465
  Retained earnings                                      6,892             3,387
                                              ----------------   ---------------
      Total stockholders' equity                        94,874            59,859
                                              ----------------   ---------------
        Total liabilities and stockholders' 
          equity                              $        164,220   $        87,954
                                              ================   ===============



            See Notes to Condensed Consolidated Financial Statements
<PAGE>

                                  ANICOM, INC.
                   Condensed Consolidated Statements of Income
                    (In thousands, except per share amounts)


<TABLE>
<CAPTION>

                                                   For the Three Months Ended             For the Nine Months Ended
                                                          September 30,                         September 30,
                                                           (unaudited)                           (unaudited)

                                               ------------------------------------  -----------------------------------
<S>                                            <C>                <C>                <C>                <C>    

                                                     1997               1996               1997              1996

Net sales                                      $         75,340   $         33,221   $        172,831   $        76,432
Cost of sales                                            57,205             24,694            132,161            57,245
                                               -----------------  -----------------  -----------------  ----------------
Gross profit                                             18,135              8,527             40,670            19,187
                                               -----------------  -----------------  -----------------  ----------------

Operating expenses and other:
  Selling                                                 8,024              3,867             18,213             8,904
  General and administrative                              6,951              3,553             16,581             7,860
  Gain on sale of assembly product line                                                          (483)
                                               -----------------  -----------------  -----------------  ----------------
      Total operating expenses and other                 14,975              7,420             34,311            16,764
                                               -----------------  -----------------  -----------------  ----------------

Income from operations                                    3,160              1,107              6,359             2,423
                                               -----------------  -----------------  -----------------  ----------------

Other income (expense):
  Interest income                                            45                111                214               462
  Interest expense                                         (245)               (86)              (440)             (197)
                                               -----------------  -----------------  -----------------  ----------------
    Total other income (expense)                           (200)                25               (226)              265
                                               -----------------  -----------------  -----------------  ----------------
                                                                                     

Income before income taxes                                2,960              1,132              6,133             2,688

Provision for income taxes                                1,124                389              2,331               921
                                               -----------------  -----------------  -----------------  ----------------

Net income                                                1,836                743              3,802             1,767

Less:  dividend on preferred stock                         (173)                                 (297)
                                               -----------------  -----------------  -----------------  ----------------

Net income available to common stockholders    $          1,663   $            743   $          3,505   $         1,767
                                               =================  =================  =================  ================

Earnings per common share and share equivalent:
    Primary and fully diluted                  $           .09    $           .06    $           .21    $          .14
                                               =================  =================  =================  ================

Weighted average common shares and share
  equivalents outstanding:
    Primary                                              18,636             13,466             17,127            12,878
                                               =================  =================  =================  ================
                                                                                       
    Fully diluted                                        20,371             13,618             18,482            13,130
                                               =================  =================  =================  ================
</TABLE>


            See Notes to Condensed Consolidated Financial Statements
<PAGE>

                                  ANICOM, INC.
                 Consolidated Statements of Stockholders' Equity
                    (In thousands, except per share amounts)
 
<TABLE>
<CAPTION>

                                          Convertible
                                        Preferred Stock           Common Stock
                                                                                     Additional                   Total
                                     --------------------    --------------------
                                                                                      Paid-In      Retained   Stockholders'
                                      Shares      Amount      Shares      Amount      Capital      Earnings       Equity
<S>                                   <C>         <C>       <C>           <C>        <C>           <C>         <C>

Balance,  January 1, 1996                                       12,213    $   6      $ 36,371      $   764     $ 37,141

Proceeds from issuance of common
  stock, net of offering costs                                   2,423        1        15,053                    15,054

Issuance of common stock for                                                                               
  acquisitions                                                     872        _         5,537                     5,537

Exercise of stock options                                            9        _            11                        11

Exercise of warrants to purchase                                                                           
  common stock                                                      98        _             _                         _

Receipt and cancellation of common                                       
  stock received in sale of a                                      (55)       _          (507)                     (507)
  business

Net income                                                                                           2,623        2,623
                                                            -----------   ------      --------     --------    ----------

Balance, December 31, 1996                                      15,560        7        56,465        3,387       59,859

Dividends issued to convertible                                                                            
  preferred stock holders in common                                 29        _           297         (297)           _
  stock

Proceeds from issuance of                                                                                  
  convertible preferred stock, net          27      26,155           _        _             _                    26,155
  of offering costs

Conversion of convertible preferred                                                                        
  stock to common stock                    (27)    (26,155)      3,130        3        26,152                         _

Issuance of common stock for                                                                               
  acquisitions                                                     544        1         5,057                     5,058

Net income                                                                                           3,802        3,802
                                    ----------- ----------- -----------   ------      --------     --------    ----------
                                                            
Balance, September 30, 1997                  _           _      19,263    $  11      $ 87,971      $ 6,892     $ 94,874
                                    =========== =========== ===========   ======     =========     ========    ==========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements

<PAGE>

                                  ANICOM, INC.
                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)


                                                    For the Nine Months Ended
                                                          September 30,
                                                           (unaudited)
                                                --------------------------------
                                                      1997              1996
Cash flows from operating activities:
    Net income                                  $        3,802     $      1,767
    Adjustments to reconcile net income
      to net cash provided by (used in)
      operating activities:
         Depreciation                                    1,544              260
         Amortization                                      719              292
         Deferred income taxes                             (92)
         Gain on sale of product line                     (483)
    Increase (decrease) in cash attributable
      to changes in assets and liabilities:
         Marketable securities                           4,345           16,525
         Accounts receivable                           (13,116)          (6,378)
         Inventory                                     (12,060)          (5,344)
         Other assets                                        6             (617)
         Accounts payable                               15,622            3,906
         Accrued expenses                               (3,319)          (1,752)
                                               ----------------  ---------------
      Net cash (used in) provided by 
          operating activities                          (3,032)           8,659
                                               ----------------  ---------------
Cash flows from investing activities:
   Purchase of property and equipment                   (2,736)            (774)
   Cash paid for acquired companies                    (28,732)         (14,436)
   Other                                                   200
                                               ----------------  ---------------
      Net cash used in investing activities            (31,268)         (15,210)
                                               ----------------  ---------------
Cash flows from financing activities:
   Payment of long-term debt and assumed 
     bank debt                                         (27,749)         (12,754)
   Proceeds from long-term debt                         36,824            4,190
   Proceeds from equity offerings, net of 
     related costs                                      26,155           15,177
   Other                                                                     11
                                               ----------------  ---------------
      Net cash provided by financing activities         35,230            6,624
                                               ----------------  ---------------
Net increase in cash and cash equivalents                  930               73
Cash and cash equivalents, beginning of period             195                3
                                               ----------------  ---------------
Cash and cash equivalents, end of period       $         1,125   $           76
                                               ================  ===============

            See Notes to Condensed Consolidated Financial Statements
<PAGE>

                                  ANICOM, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)
 
1.       Basis of Presentation

         The accompanying  condensed consolidated unaudited financial statements
         do not  include  all of  the  information  and  footnotes  required  by
         generally  accepted   accounting   principles  for  complete  financial
         statements.  In the opinion of management,  the accompanying  unaudited
         financial  statements  contain  all  adjustments  necessary  to present
         fairly  the  financial  position  of Anicom,  Inc.  (the  "Company"  or
         "Anicom") as of September 30, 1997,  the results of operations  for the
         three month and nine month  periods  ended  September 30, 1997 and 1996
         and its cash flows for the nine  months  ended  September  30, 1997 and
         1996.  Reported  interim  results of operations are based,  in part, on
         estimates  which may be subject to year-end  adjustment.  In  addition,
         these interim results of operations are not  necessarily  indicative of
         those expected for the year.

         These  financial  statements  should  be read in  conjunction  with the
         Company's audited  consolidated  financial  statements  included in the
         Company's Annual Report on Form 10-KSB as filed with the Securities and
         Exchange Commission on March 21, 1997.

2.       Nature of Business and Summary of Significant Accounting Policies

         Nature of Business

         Anicom  specializes  in the sale  and  distribution  of  communications
         related wire, cable, fiber optics and computer network and connectivity
         products.

         The Company sells to a wide array of customers,  including contractors,
         systems  integrators,  security/fire  alarm  companies,  regional  Bell
         operating companies,  distributors,  utilities,  telecommunications and
         sound  contractors,   wireless  specialists,   construction  companies,
         universities,  governmental  agencies  and  companies  involved  in the
         automotive,  mining, marine,  petro-chemical,  paper and pulp and other
         natural resource  industries.  The Company's  customers are principally
         located  throughout  the United  States of America  and other  parts of
         North  America.  The Company  generally  sells to its  customers  on an
         unsecured basis.

         In connection  with certain  acquisitions  completed  during 1996,  the
         Company acquired three assembly  operations.  These operations produced
         two lines of  connector  cable  products and a line of copper and fiber
         optic  cable  cutting  and  splicing  kits which were sold  through the
         Company's distribution channels. On December 31, 1996, the splicing kit
         line and one of the  connector  cable product lines were sold. On March
         7,  1997,  the  Company  sold its third  assembled  product  line which
         consisted of computer, robotics and power cable connectors. See Note 6.

<PAGE>
 

                                  ANICOM, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

2.       Nature of Business and Summary of Significant Accounting Policies, 
          continued

         Income Taxes

         The Company  applies an asset and liability  approach to accounting for
         income taxes.  Deferred tax assets and  liabilities are established for
         the expected future tax consequences of temporary  differences  between
         the financial statement and tax bases of assets and liabilities,  using
         enacted tax rates.

         The nature of reconciling  items between the provision for income taxes
         computed at the federal  statutory rate and that reported for the three
         and nine months ended  September 30, 1997 and 1996 are consistent  with
         those discussed in the Company's Annual Report on Form 10-KSB.

         Earnings Per Common Share 

         The   computation  of  earnings  per  common  share  and  common  share
         equivalents  is based on the weighted  average  number of common shares
         outstanding  during each period and common share  equivalents  (options
         and  warrants)  assumed to be  outstanding  based on the average  share
         price  during the  period.  Fully  diluted  earnings  per common  share
         reflects  the use of the closing  share price as of the last day in the
         period,  if it is greater  than the  average  share  price for the same
         period,  in  determining   common  share  equivalents   assumed  to  be
         outstanding  and  further  assumes  the  conversion  of  the  Company's
         Preferred Stock to Common Stock on the date of issuance.

         Recently Issued Accounting Standards

         Statement of Financial Accounting Standards No. 128, Earnings Per Share
         ("SFAS  128"),  was issued in February  1997.  SFAS 128  specifies  the
         computation, presentation, and disclosure requirements for earnings per
         share.  The Company will adopt SFAS 128 for the year ended December 31,
         1997.  Management has not determined  the impact of  implementing  this
         standard.

         Statement of Financial  Accounting  Standards  No. 129,  Disclosure  of
         Information  about Capital  Structure  ("SFAS No. 129"),  was issued in
         February  1997.  SFAS No.  129  establishes  standards  for  disclosing
         information  about an entity's  capital  structure by  superseding  and
         consolidating  previously  issued accounting  standards.  The Company's
         financial  statements are prepared in accordance with the  requirements
         of SFAS No. 129.

         Statement  of  Financial   Accounting   Standards  No.  130,  Reporting
         Comprehensive  Income ("SFAS No. 130"),  was issued in June 1997.  SFAS
         No. 130 requires the reporting of  comprehensive  income in a financial
         statement that is presented with the same prominence as other financial
         statements.  Comprehensive  income is defined by Concepts Statement No.
         6,  Elements  of  Financial  Statements,  as the  change in equity of a
         business  enterprise during a period from transactions and other events
         and circumstances  from non-owner  sources.  It includes all changes in
         equity during a period except those  resulting  from  investments by or
         distribution  to owners.  SFAS No. 130 is effective for years beginning
         after  December 15, 1997.  The Company has not determined the impact of
         implementing this standard.


<PAGE>

                                  ANICOM, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)


2.       Nature of Business and Summary of Significant Accounting Policies, 
          continued

         Statement of Financial  Accounting Standards No. 131, Disclosures about
         Segments of an Enterprise and Related Information ("SFAS No. 131"), was
         issued  in June  1997.  SFAS No.  131 is not  expected  to  impact  the
         Company's disclosure requirements.

3.       Long-Term Debt

         On July 3, 1997,  the  Company  replaced  its  previous  unsecured  $10
         million   revolving  credit  facility  with  a  $50  million  unsecured
         revolving credit facility (the "Facility") with a syndicate of lenders,
         including Harris Trust and Savings Bank,  LaSalle National Bank and The
         First National Bank of Chicago.  The Facility provides various interest
         rate options,  determined  from time to time,  based upon the Company's
         leverage  ratio,  as defined and either the agent's  Domestic Rate less
         .50% to .25% or LIBOR plus .50% to 1.00%.  The Facility  also  contains
         customary financial covenants, including minimum tangible net worth and
         current, interest coverage and debt to earnings ratios.

4.       Convertible Preferred Stock

         Pursuant to an agreement  dated May 20,  1997,  the Company sold 27,000
         shares of $.01 par value,  Series A  Convertible  Preferred  Stock (the
         "Preferred  Stock") for $27 million.  Net proceeds  after related costs
         and expenses were approximately $26.2 million.

         For the first five years after  issuance,  the Preferred  Stock pays an
         annual dividend equal to 5%. Accrued  dividends are payable  quarterly,
         in arrears.  All  dividends  are  payable in cash or, at the  Company's
         option,  shares of Common Stock  valued at the ten day average  trading
         price, as defined.

         The  Preferred  Stock is  convertible  into shares of Common Stock upon
         written notice by the holders at the then current conversion ratio. The
         initial conversion price is $8.625 per share.  Mandatory  conversion of
         the Preferred  Stock into Common Stock occurs if certain closing market
         price levels for the Company's  Common Stock are  achieved.  On July 9,
         1997,  the 10 day average  trading price of the Company's  Common Stock
         exceeded 130% of the then current conversion price and one-third of the
         then  outstanding  Preferred  Stock was converted to Common  Stock.  On
         August 25,  1997,  the 10 day average  trading  price of the  Company's
         Common Stock  exceeded  160% of the then current  conversion  price and
         two-thirds  of the then  outstanding  Preferred  Stock was converted to
         Common Stock.  On September 23, 1997, the 10 day average  trading price
         of the  Company's  Common  Stock  exceeded  190%  of the  then  current
         conversion  price and all  remaining  Preferred  Stock was converted to
         Common Stock.




<PAGE>

                                  ANICOM, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)


4.       Convertible Preferred Stock, continued

         All Common  Stock issued upon a mandatory  conversion  or in payment of
         accrued  dividends  must be  registered  and listed.  As a result,  the
         Company has filed a registration  statement on Form S-3, which includes
         the registration of approximately 3.5 million shares of Common Stock to
         be issued upon the occurrence of these events.

5.       Common Stock

         On June 10, 1997,  the number of authorized  shares of Common Stock was
         increased  from  30,000,000  to 60,000,000  following  approval of such
         action  by the  Company's  stockholders  at its  annual  meeting.  This
         increase  will provide  additional  authorized  but unissued  shares of
         Common  Stock  to  be  used  for  general  corporate  purposes,  future
         acquisitions and equity financings.

         On September 25, 1996, the number of authorized  shares of Common Stock
         was increased from 10,000,000 to 30,000,000  following approval of such
         action by the Company's  stockholders at a special  meeting.  Following
         such action, a 2-for-1 stock split effected in the form of a 100% stock
         dividend  was  declared  for  holders  of record as of October 1, 1996,
         payable October 7, 1996.

         On September  16, 1996,  the Company  completed a private  placement of
         2,423,080  shares of its Common Stock at $ 6.50 per share. Net proceeds
         to the Company  after  related  costs and expenses  were  approximately
         $15.2 million.

6.       Acquisitions and Dispositions

         The Company  acquired Energy Electric Cable, a division of Connectivity
         Products,  Inc.  ("Energy")  on July 11,  1997.  Energy  is a  national
         specialist in the sale and  distribution of multimedia  wiring products
         based in Auburn Hills,  Michigan.  During 1996, Energy had net sales of
         approximately  $61 million from its 12 locations in the United  States.
         The  purchase  price  consisted of $12 million in cash and Common Stock
         and  the  pay  down  of $17  million  of  Connectivity  Products,  Inc.
         ("Connectivity") bank debt by Anicom. In addition,  the Company entered
         into a supply agreement with Connectivity.

         Anicom  purchased  all of the issued and  outstanding  common  stock of
         Security Supply, Inc. ("Security Supply") of New Orleans,  Louisiana on
         March 21, 1997. Security Supply is a distributor of alarm, security and
         life safety products in Louisiana and surrounding  states. The purchase
         price was approximately $2 million payable in cash and common stock.




<PAGE>

                                  ANICOM, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

6.       Acquisitions and Dispositions, continued

         On February 28, 1997,  the Company  acquired  substantially  all of the
         assets and assumed  certain  liabilities of Carolina Cable & Connector,
         Inc. ("Carolina Cable") of Raleigh, North Carolina. Carolina Cable is a
         specialist in the sale and distribution of wire and cable, fiber optics
         and computer  network and  connectivity  products.  Carolina  Cable has
         seven  locations in the Carolinas  and  Tennessee.  The purchase  price
         consisted of $3.5 million in cash and common  stock.  In addition,  the
         Company   assumed   approximately   $3.5  million  of  Carolina   Cable
         indebtedness which was paid in full at closing.

         On September 3, 1996,  the Company  acquired  substantially  all of the
         assets  and  assumed  certain  liabilities  of  Western  Wire and Alarm
         Products,  Inc.  ("Western") of Denver,  Colorado,  a specialist in the
         sale and  distribution of security devices and wire. The purchase price
         was $300,000  payable in cash and common stock.  In connection with the
         acquisition,  the  Company  paid  in full  $50,000  of  Western's  bank
         indebtedness.

         On September 1, 1996, the Company  acquired Norfolk Wire & Electronics,
         Inc.  ("Norfolk"),  through the purchase of all issued and  outstanding
         shares of common stock.  Norfolk's operations consisted  principally of
         the sale and  distribution of voice and data wire,  cable and ancillary
         products.  In addition to its four  locations in the state of Virginia,
         Norfolk had  locations in Tinton  Falls,  New Jersey and  Gaithersburg,
         Maryland.  The purchase price was $8 million payable in cash and common
         stock.  At the  closing,  the Company paid in full  approximately  $2.6
         million of Norfolk bank indebtedness.

         On May 30, 1996, the Company acquired  substantially  all of the assets
         and assumed  certain  liabilities  of Southern  Alarm Supply Co.,  Inc.
         ("Southern")  of  Nashville,  Tennessee,  a specialist  in the sale and
         distribution  of security  devices  and wire.  The  purchase  price was
         $350,000 payable in cash and common stock.

         On March 12, 1996, the Company acquired substantially all of the assets
         and  assumed  certain  liabilities  of  Northern  Wire  &  Cable,  Inc.
         ("Northern"), a specialist in the sale and distribution of wire, cable,
         fiber optics and  connectivity  products for structured  wiring,  power
         cables,  cable  connector  assemblies  for  automation,  computers  and
         robotics and  value-added  services for the  industrial  management and
         technology market. Northern had branches in Troy, Michigan;  Cleveland,
         Ohio; Atlanta,  Georgia;  Tampa,  Florida;  and Las Vegas,  Nevada. The
         purchase  price was $13.3  million  payable  in cash,  notes and common
         stock.  In  connection  with  the  acquisition,   the  Company  assumed
         approximately $5.6 million of Northern bank indebtedness which was paid
         in full at closing.



<PAGE>

                                  ANICOM, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

6.       Acquisitions and Dispositions, continued

         On February 22, 1996,  the Company  acquired  substantially  all of the
         assets and assumed certain liabilities of Medisco,  Inc. ("Medisco") of
         Indianapolis,  Indiana,  a distributor of wire and cable products.  The
         purchase price was $837,000 payable in cash.

         All  acquisitions  have  been  recorded  under the  purchase  method of
         accounting.  Accordingly,  the results of  operations  of the  acquired
         businesses  are  included  in the  Company's  consolidated  results  of
         operations  from  the  date  of  acquisition.  The  purchase  price  is
         allocated  to assets  acquired  and  liabilities  assumed  based on the
         estimated fair market value on the date of the acquisition.

         The  following pro forma  condensed  consolidated  quarterly  financial
         information  assumes that the  Northern,  Norfolk,  Carolina  Cable and
         Energy  acquisitions  and the issuances of equity  discussed in Notes 3
         and 4, which were a significant  source of the funds used in certain of
         the acquisitions,  occurred on January 1, 1996. It further assumes that
         the equity transaction  discussed in Note 4 resulted in the issuance of
         common stock,  based on the conversion of the Preferred Stock to Common
         Stock approximately four months after its issuance.  The results do not
         purport  to  be   indicative  of  what  would  have  occurred  had  the
         acquisitions  been made on January 1, 1996 nor are they  indicative  of
         the results which may occur in the future.

                                                            Nine Months Ended 
                                                               September 30,
                                                          (In thousands, except 
                                                            per share amounts)

                                                             1997         1996

         Net sales                                         $211,619     $173,852
                                                           ========     ========
         Operating income                                  $  7,194     $  4,218
                                                           ========     ========
         Net income available to common stockholders       $  4,136     $  2,633
                                                           ========     ========
         Earnings per common share and share equivalent    $    .21     $    .14
                                                           ========     ========
         Pro forma weighted average common shares and 
          share equivalents                                  19,806       19,319
                                                           ========     ========

         On  October  17,  1997,   the  Company   acquired   certain  assets  of
         Zack-DataCom,  the voice and data  division of Zack  Electronics,  Inc.
         ("Zack") of San Jose, California, a leader in the sale and distribution
         of multimedia low voltage products. Zack had net sales of approximately
         $10 million in 1996.  The purchase  price was $4.7  million  payable in
         cash and stock.

         On March 7, 1997,  the Company  sold its third  assembled  product line
         which consisted of computer,  robotics and power cable  connectors.  In
         connection with the sale, the Company  entered into a supply  agreement
         to act as the  sole  and  exclusive  distributor  of  certain  products
         assembled by the acquiring  company.  The selling price of $600,000 was
         payable in cash and notes.

<PAGE>

                                  ANICOM, INC.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

7.       Commitments and Contingencies

         The  Company  has  entered  into  employment  agreements  with  certain
         officers.  In the  event  of a  change  in  control,  as  defined,  the
         employment  agreements  provide for severance payments if employment is
         terminated.  The aggregate  base salary payable to these officers under
         the  employment  agreements in 1997 is $1.3 million.  In the event of a
         change in control, the Company may become obligated to make payments to
         these officers of up to approximately $4.8 million.

         In connection with certain  acquisitions,  the Company has entered into
         employment  agreements  with  certain  former  officers of the acquired
         companies  which expire on various dates from 1999 to 2001.  Currently,
         the aggregate  base salary  payable to those  employees who have become
         officers of the Company,  two of whom are now executive officers of the
         Company, is approximately $863,000.

8.       Supplemental Cash Flow Information

         The  following is a summary of the  non-cash  investing  and  financing
         activities:


                                                              Nine Months Ended
                                                                 September 30,
                                                                (In thousands)
                                                               1997       1996
           Acquisitions:
              Fair value of assets acquired                   54,113     52,638
              Business integration liabilities established    (4,274)    (2,728)
              Liabilities assumed                            (15,781)   (26,673)
              Long-term debt issued                                _     (3,000)
              Common stock issued                             (5,058)    (5,660)
                                                            ---------  ---------
              Cash paid                                       29,000     14,577
              Less:  cash acquired                              (268)      (141)
                                                            ---------  ---------
              Net cash paid for acquisitions                $ 28,732   $ 14,436
                                                            =========  =========
           Dispositions:
              Value of assets sold, net of transaction 
               costs                                        $    117
                                                            =========
              Notes receivable accepted                     $    400
                                                            =========
           Conversion of Convertible Preferred Stock:
              Conversion to common stock                    $ 27,000
                                                            =========
              Payment of dividends in common stock          $    297
                                                            =========
 
<PAGE>


Item 2.   Management's Discussion and Analysis of Financial Condition and 
          Results of Operations

The  following  table  sets  forth  selected  income  statement  data of  Anicom
expressed as a percentage of net sales for the periods indicated:

                                     For the Three Months    For the Nine Months
                                             Ended                 Ended  
                                          September 30,        September 30,
                                          1997     1996       1997      1996

Income Statement Data:
  Net sales                               100.0%   100.0%     100.0%    100.0%
  Cost of goods sold                       75.9     74.3       76.5      74.9
                                       --------- --------   --------  --------
  Gross profit                             24.1     25.7       23.5      25.1
                                       --------- --------   --------  --------
  Operating expenses and other:
    Selling expenses                       10.7     11.6       10.5      11.6
    General and administrative expenses     9.2     10.7        9.6      10.3
     Gain on sale of product line           ---      ---        (.3)      ---
                                       --------- --------   --------  --------
  Operating income                          4.2      3.4        3.7       3.2
  Interest (expense)                        (.3)     (.3)       (.3)      (.3)
  Interest income                            .1       .3         .1        .6
                                       --------- --------   --------  --------
  Income before income taxes                3.9      3.4        3.5       3.5
  Income taxes                              1.5      1.2        1.3       1.2
                                       ========= ========   ========  ========
  Net income                                2.4%     2.2%       2.2%      2.3%
                                       ========= ========   ========  ========


__________________
Note:  Percentages may not sum due to rounding.

Results of  Operations  for the Three and Nine Months Ended  September  30, 1997
Compared to the Three and Nine Months Ended September 30, 1996

Net sales for the third quarter of 1997 increased to a record $75.3  million,  a
126.8%  increase  over net sales of $33.2  million in the third quarter of 1996.
Net sales for the first  nine  months of 1997 rose by 126.1% to a record  $172.8
million,  when compared to net sales of $76.4 million for the comparable  period
of 1996. The  significant  increase is primarily  attributable  to  acquisitions
coupled with internal growth which has lead to new customers,  increased  market
share, expanded market penetration and increased volume with existing customers.

Anicom's gross profit for the quarter ended September 30, 1997 increased by $9.6
million or 112.7% to $18.1  million  versus $8.5  million for the same period of
1996. For the first nine months of 1997, gross profit increased to $40.7 million
from $19.2  million in the first three  quarters of 1996, an increase of 112.0%.
These  increases  resulted  from  Anicom's  acquired  sales  volume and internal
growth. As a percentage of net sales,  gross profit for the three and nine month
periods ended September 30 declined from 25.7% and 25.1%, respectively,  in 1996
to 24.1% and 23.5%,  respectively,  in 1997. The gross margin  improvements that
resulted from the economic efficiencies created by Anicom's increased purchasing
volume were offset by the impact of lower  historical  gross  profit  margins of
certain of the Company's  recent  acquisitions.  The decrease in gross margin in
1997 also reflects the impact of the  Company's  efforts to open new markets and
increase existing market share.
<PAGE>

Selling expenses increased by $4.2 million and $9.3 million,  respectively,  for
the three and nine  months  ended  September  30, 1997 in  conjunction  with the
Company's  increase  in net  sales  and the  increase  in sales  headcount  that
resulted from the Company's  acquisitions and internal growth.  Selling expenses
as a  percentage  of net  sales  improved  from  11.6% of net sales in the third
quarter  of 1996 to 10.7% of net sales in the  third  quarter  of 1997.  Selling
expenses as a  percentage  of net sales  improved  from 11.6% for the first nine
months of 1997 to 10.5% for the first nine  months of 1996.  These  improvements
resulted  from the  Company  realizing  operating  leverage  from its growth and
acquisitions and conforming the selling incentive programs of companies acquired
in 1996 with  those of  Anicom.  These  improvements  were,  in part,  offset by
differences in the selling  incentive  programs in place at Energy,  acquired in
July, 1997.

General and administrative expenses increased from $3.6 million and $7.9 million
in the third  quarter  and first  nine  months  of 1996,  respectively,  to $7.0
million  and $16.6  million,  respectively,  for the same  periods in 1997.  The
Company's acquisitions in the last half of 1996 and 1997 resulted in an increase
in general and administrative  expenses.  As a percentage of net sales,  general
and  administrative  expenses improved to 9.2% in the third quarter of 1997 from
10.7% in the third quarter of 1996.  As a percentage  of net sales,  general and
administrative  expenses improved from 10.3% in the first nine months of 1996 to
9.6% in the first nine months of 1997. These  improvements  were attributable to
increases   in  net  sales   outpacing   required   expenses   for  general  and
administrative costs as the Company further realized operating leverage from its
acquisition-based, integrated growth strategy.

Interest income  decreased to $45,000 in the third quarter of 1997 from $111,000
in the third  quarter  of 1996.  On a year to date  basis,  interest  income has
decreased from $462,000 in 1996 to $214,000 in 1997.  During the first and third
quarters of 1996, the Company earned interest income on invested funds raised in
common stock  offerings.  In the second and third  quarters of 1997, the Company
earned  interest on funds  raised in its May private  placement  of  convertible
preferred  stock.  The changes  noted are a result of the amounts and periods of
time these funds were invested prior to their use.

In the third  quarter of 1997,  interest  expense  increased  to  $245,000  from
$86,000  for the third  quarter  of 1996.  The  increase  is due to the  Company
borrowing  against its credit facility for its acquisition of Energy and to fund
increases  in working  capital.  For the nine months ended  September  30, 1997,
interest  expense rose by $243,000 to $440,000.  The increase was  principally a
result of borrowings against the credit facility.

The provision for income taxes increased to $1.1 million in the third quarter of
1997 from  $389,000  in the third  quarter of 1996.  For the nine  months  ended
September 30, 1997,  the  provision  for income taxes  increased to $2.3 million
from  $921,000  for the same  period in 1996.  The  increase  is a result of the
increase in income before income taxes. For both the three and nine months ended
September  30, 1997,  the  provision  for income taxes as a percentage of income
before income taxes, increased to 38.0% from 34.4% and 34.3%, respectively,  for
the same periods in 1996.  These  changes are primarily  attributable  to income
earned on tax-exempt securities in 1996.


<PAGE>

Net income for the third  quarter of 1997  increased  147.1% to $1.8  million as
compared to $743,000  for the third  quarter of 1996.  For the nine months ended
September 30, 1997, net income  increased  115.1% to $3.8 million,  up from $1.8
million for the nine months of 1996.

Primary and fully diluted  earnings per common share and share  equivalents  for
the three month period ended  September 30, 1997 increased  50.0% to $.09 versus
$.06 for the prior year  despite a 38.4% and 49.6%  increase,  respectively,  in
primary  and  fully  diluted  weighted  average  shares  and  share  equivalents
outstanding.  Primary  earnings  per common share and share  equivalent  for the
third quarter of 1997 reflect a deduction of approximately $173,000, or $.01 per
share,  for the dividend earned during the quarter by holders of the convertible
preferred stock. As of September 23, 1997, all the remaining shares of Preferred
Stock were converted to Common Stock.

For the nine months ended September 30, 1997, primary and fully diluted earnings
per common share and share equivalents  increased by approximately 50.0% to $.21
from $.14 for the same period in 1996 while primary and fully  diluted  weighted
average   common  shares  and  share   equivalents   outstanding   increased  by
approximately 33.0% and 40.8%,  respectively.  Primary earnings per common share
and share  equivalent  for the nine months  ended  September  30, 1997 reflect a
deduction of approximately  $297,000, or $.02 per share, for the dividend earned
during  the second and third  quarter  by holders of the  convertible  preferred
stock.


Liquidity and Capital Resources

As of September  30, 1997,  Anicom had working  capital of  approximately  $52.1
million as compared to $33.4  million at December 31, 1996,  including  cash and
cash  equivalents  of $1.1 million at September 30, 1997.  Anicom also has a $50
million unsecured revolving credit facility (the "Facility") with a syndicate of
lenders,  including Harris Trust and Savings Bank, LaSalle National Bank and The
First  National Bank of Chicago.  The Facility  provides  various  interest rate
options,  determined from time to time, based upon the Company's leverage ratio,
as defined and either the agent's  Domestic Rate less .50% to .25% or LIBOR plus
 .50% to  1.00%.  The  Facility  expires  in July,  2000 and  contains  customary
financial covenants,  including minimum tangible net worth and current, interest
coverage  and debt to earnings  ratios.  The  Facility  replaces  the  Company's
previous $10 million unsecured revolving credit facility. At September 30, 1997,
the amount outstanding under the Facility was $13.2 million.

Management  believes  that  existing  cash,  cash  equivalents,  cash flows from
operations  and  draws  on the  Facility  will be  sufficient  to  fund  current
operations,  and its planned  integrated  growth strategy.  The Company does not
currently have any significant  long-term capital requirements which it believes
cannot be funded from the sources discussed above.  However,  in connection with
its  acquisition  and  integrated   growth  strategy,   the  Company's   capital
requirements  may change based upon various  factors,  primarily  related to the
timing of acquisitions  and the  consideration to be used as purchase price. The
Company  continues to examine  opportunities to raise funds through the issuance
of additional  equity or debt securities  through  private  placements or public
offerings and to increase its available lines of credit.
<PAGE>

For the nine months ended  September 30, 1997,  operating  activities  used $3.0
million of cash compared with the $8.7 million  provided  during the same period
of 1996.  The  significant  change  between years is principally a result of the
classification  of  the  Company's  net  marketable  securities  activity.  This
activity consists of investing funds raised in financing  activities until their
liquidation in connection with the Company's  acquisition and integrated  growth
strategy.  Excluding  the  impact of  marketable  securities,  Anicom  used $7.4
million of cash in operating  activities  during the nine months ended September
30, 1997 compared  with the use of $7.9 million  during the same period in 1996.
The largest use of cash in operations  resulted from funding acquisition related
activities,   including  expanding  product  offerings  at  acquired  locations.
Investments in receivables and inventory were funded, in part, by an increase in
accounts  payable in both  periods.  Additional  funding in 1997 was provided by
borrowings  against the Facility  while 1996 funding was provided by the private
placement of equity.  In  addition,  funding  working  capital  deficiencies  of
acquired companies and business integration liabilities were significant uses of
operating cash flows.

Investing  activities  utilized  approximately  $31.3 million in the nine months
ended September 30, 1997. During the first quarter of 1997, Anicom completed the
acquisition of Carolina Cable & Connector,  Inc. of Raleigh, North Carolina; and
Security  Supply,  Inc. of New Orleans,  Louisiana.  During the third quarter of
1997, the Company acquired Energy.  Cash paid for these  acquisitions  accounted
for the majority of cash used for investing activities. The remainder represents
funds used to expand the Company's facilities to accommodate growth and the cost
of a new, fully integrated  business  solution  software  platform which will be
implemented at the end of the fourth quarter of 1997.

Cash flows from  financing  activities  in the first nine months of 1997 totaled
$35.2  million.  Pursuant to an agreement  dated May 20, 1997,  the Company sold
27,000 shares of Series A Convertible  Preferred Stock (the "Preferred  Stock").
The sale of the Preferred Stock raised approximately $26.2 million after related
costs and expenses.  The Preferred Stock automatically  converted into shares of
Common Stock if certain  closing  market price levels for the  Company's  Common
Stock were  achieved.  During the third  quarter,  the market  price of Anicom's
Common Stock achieved the three thresholds required for mandatory conversions of
the Preferred  Stock.  Accordingly,  all of the outstanding  shares of Preferred
Stock  have  been  converted  to  Common  Stock.  See  Note 4 to  the  Condensed
Consolidated Financial Statements.  Additionally, the Company paid approximately
$3.5  million of bank debt  assumed in the  Carolina  Cable  acquisition  and $1
million of debt issued with a 1996 acquisition.  During this period, the Company
drew against and made repayments on its revolving credit facilities.




<PAGE>

Recently Issued Accounting Standards

In February 1997, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards No. 128,  Earnings Per Share ("SFAS 128"). SFAS
128 specifies the  computation,  presentation,  and disclosure  requirements for
earnings per share.  SFAS 128 is effective for financial  statements  issued for
periods  ending after December 15, 1997. The Company will adopt SFAS 128 for the
year ended  December 31, 1997.  Management  has not yet determined the impact of
implementing this standard.

Statement of Financial  Accounting  Standards No. 129, Disclosure of Information
about Capital  Structure ("SFAS No. 129"), was issued in February 1997. SFAS No.
129 establishes  standards for disclosing  information about an entity's capital
structure  by  superseding  and   consolidating   previously  issued  accounting
standards.  The Company's  financial  statements are prepared in accordance with
the requirements of SFAS No. 129.

Statement of Financial  Accounting  Standards No. 130,  Reporting  Comprehensive
Income  ("SFAS No.  130"),  was issued in June 1997.  SFAS No. 130  requires the
reporting of  comprehensive  income in a financial  statement  that is presented
with the same prominence as other financial statements.  Comprehensive income is
defined by Concepts  Statement No. 6, Elements of Financial  Statements,  as the
change in equity of a business  enterprise during a period from transactions and
other events and circumstances from non-owner  sources.  It includes all changes
in equity during a period except those resulting from  investments by owners and
distribution  to owners.  SFAS No. 130 is effective  for fiscal years  beginning
after  December  15,  1997.  The  Company has not yet  determined  the impact of
implementing this standard.

Statement of Financial  Accounting Standards No. 131, Disclosures about Segments
of an Enterprise and Related  Information  ("SFAS No. 131"),  was issued in June
1997.  SFAS  No.  131  is  not  expected  to  impact  the  Company's  disclosure
requirements.


<PAGE>

PART II  -- OTHER INFORMATION

Item 2.  Changes in Securities

         In July 1997, the Company  issued shares of the Company's  common stock
         ("Common  Stock")  to  Connectivity   Products,   Incorporated  ("CPI")
         pursuant to an agreement dated July 11, 1997 ("Agreement"), under which
         the Company purchased certain assets and assumed certain liabilities of
         CPI. Under the Agreement, the Company paid $2.0 million of the purchase
         price in shares of Common Stock.  The 190,476 shares issued pursuant to
         the  Agreement  were  issued  in  reliance  upon  Section  4 (2) of the
         Securities  Act  of  1933,  as  amended,   and  the  rules  promulgated
         thereunder,  as a  transaction  by an issuer not  involving  any public
         offering.  An appropriate  legend was affixed to the share  certificate
         issued to CPI.

Item 6.  Exhibits and Reports on Form 8-K

      (a)   Exhibits.

              The following exhibits are filed with this report:

                Exhibit No.    

                3.1*       Restated Certificate of Incorporation of the Company
                3.3**      Certificate of Amendment of Restated Certificate of 
                              Incorporation of the Company
                3.4***     Certificate of Designations, Preferences and Rights 
                              of the Series A Convertible Preferred Stock
                3.5****    Certificate of Amendment of Restated Certificate of 
                              Incorporation of the Company
               10.19       Supply Agreement, dated as of July 11, 1997 between 
                              the Company and Connectivity Products, 
                              Incorporated
               11            Computation of Earnings per Share
               27            Financial Data Schedule

           *      Previously filed as an Exhibit to the Company's Registration 
                  Statement on Form SB-2, as amended (Registration Statement No.
                  33-87736C) and incorporated herein by reference.
         
           **     Previously filed as an Exhibit to the Company's current report
                  on Form 10-QSB for the quarter  ended  September  30, 1996 and
                  incorporated herein by reference.

           ***    Previously filed as an Exhibit to the Company's current report
                  on Form 8-K,  dated May 22,  1997 and  incorporated  herein by
                  reference.

           ****   Previously filed as an Exhibit to the Company's Registration 
                  Statement on Form S-3, as amended (Registration  Statement No.
                  333-30791) and incorporated herein by reference.


<PAGE>

      (b)         Reports on Form 8-K.

                   The following Reports on Form 8-K were filed during the 
                    third quarter of 1997:

                   Form 8-K, dated July 25, 1997 (Energy Electric Cable)
                   Form 8-K/A, dated August 25, 1997 (Energy Electric Cable)


<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant has duly caused this  Quarterly  Report to be signed on its behalf by
the undersigned, thereunto duly authorized.



                                                              ANICOM, INC.     
                                                              Registrant
 


Dated:   November 14, 1997       By:  /S/ DONALD C. WELCHKO                    
                                      Donald C. Welchko
                                      Vice President and Chief Financial Officer



<PAGE>

                                  ANICOM, INC.
                                INDEX TO EXHIBITS



        Exhibit No.    

                3.1*       Restated Certificate of Incorporation of the Company
                3.3**      Certificate of Amendment of Restated Certificate of 
                              Incorporation of the Company
                3.4***     Certificate of Designations, Preferences and Rights 
                              of the Series A Convertible Preferred Stock
                3.5****    Certificate of Amendment of Restated Certificate of 
                              Incorporation of the Company
               10.19       Supply Agreement, dated as of July 11, 1997 between 
                              the Company and Connectivity Products, 
                              Incorporated
               11            Computation of Earnings per Share
               27            Financial Data Schedule

           *      Previously filed as an Exhibit to the Company's Registration 
                  Statement on Form SB-2, as amended (Registration Statement No.
                  33-87736C) and incorporated herein by reference.
         
           **     Previously filed as an Exhibit to the Company's current report
                  on Form 10-QSB for the quarter  ended  September  30, 1996 and
                  incorporated herein by reference.

           ***    Previously filed as an Exhibit to the Company's current report
                  on Form 8-K,  dated May 22,  1997 and  incorporated  herein by
                  reference.

           ****   Previously filed as an Exhibit to the Company's Registration 
                  Statement on Form S-3, as amended (Registration  Statement No.
                  333-30791) and incorporated herein by reference.




                                SUPPLY AGREEMENT

THIS SUPPLY  AGREEMENT  (this  "Agreement")  is made as of July 11, 1997, by and
between  Connectivity  Products  Incorporated,  a Delaware  corporation  with an
office at 680  Mechanic  Street,  Suite 1201,  Leominster,  Massachusetts  01453
("Seller"),  and Anicom,  Inc., a Delaware corporation with an office at 6133 N.
River Road, Suite 1000, Rosemont,  Illinois 60018 ("Anicom,  Inc." and, together
with Anicom's subsidiaries, "Parent").

                                   BACKGROUND

A. The parties  hereto are  executing  this  Agreement  in  connection  with the
closing of an Asset Purchase  Agreement  between Parent and Seller,  dated as of
July 11, 1997,  pursuant to which Parent is purchasing  substantially all of the
assets of the Energy Electric Cable Division of Seller (the "Business").

B. Parent is engaged in the business of distributing wire and cable products.

C. Energy Electric Cable, a division of Seller ("Seller  Division" and, together
with  Seller,  "Supplier"),  is engaged in the  business  of  manufacturing  and
supplying wire and cable products.

D. Distributor and Supplier acknowledge the importance of having both a reliable
supply and a reliable demand for wire and cable products and,  accordingly,  the
parties  are  desirous of  entering  into an  agreement  whereby  Supplier  will
manufacture  and supply to  Distributor  and  Distributor  shall  purchase  such
products on the terms and conditions set forth herein.

E.  Accordingly,  in consideration of the foregoing and the mutual covenants and
undertakings contained herein, the parties hereby agree as follows:


1.       Definitions.

1.1 "Acknowledged  Delivery Date" has the meaning given such term in Section 5.3
hereof.

1.2  "Annual  Fee  Settlement"  has the  meaning  given such term in Section 5.4
hereof.

1.3  "Annual  Order  Amount"  means the dollar  amount  that  Distributor  shall
purchase from Supplier of the Products during each Annual Period,  which amounts
are set forth in Schedule A hereto, as may be adjusted as set forth herein.

1.4 "Annual Period" means each of the twelve month periods ending July 11, 1998,
1999, 2000, 2001 and 2002.

1.5 "Base Period" has the meaning given such term in Section 3.1 hereof.


                                       -1-

<PAGE>


1.6 "Change of Control" has the meaning given such term in Section 11.2 hereof.

1.7 "Claim" has the meaning given such term in Section 14.1 hereof.

1.8 "Excess Order Amount" has the meaning given such term in Section 3.2 hereof.

1.9 "Information" has the meaning given such term in Section 10.1 hereof.

1.10 "Low Voltage  Products" means sound,  security,  IMSA cable products,  fire
alarms, plenum and non-plenum.

1.11 "Other Products" means coaxial cable,  specialty FEP products,  control and
instrumentation  cable,  and such other  industrial  products as manufactured by
Supplier other than Low Voltage Products.

1.12 "Minimum  Order  Amount"  means the minimum  dollar amount of Products that
Distributor  must purchase from Supplier in a given Annual Period,  which amount
shall be equal to ninety  percent  (90%) of the  Annual  Order  Amount  for such
Annual Period.

1.13 "Order" has the meaning given such term in Section 4.1 hereof.

1.14 "Payment Due Date" has the meaning given such term in Section 5.2 hereof.

1.15  "Products"  means,  collectively,  the  Low  Voltage  Products  and  Other
Products.

1.16 "Purchase Price" has the meaning given such term in Section 4.2 hereof.

1.17  "Qualified  Vendor"  means  those  vendors  that  supply the full range of
products  supplied by Supplier,  is of  comparable  or greater size to Supplier,
sells  comparable  or greater  quantities  of  Products  as  Supplier  and sells
products of comparable quality as Supplier's products.

1.18 "Term" has the meaning given such term in Section 2.2 hereof.

2.       Agreement and Term.

2.1 During the term of this  Agreement,  Supplier will sell to  Distributor  and
Distributor  shall  purchase from  Supplier the Products in accordance  with the
terms  and  conditions  set  forth in this  Agreement.  Supplier  agrees to fill
Distributor's  orders  for the  Products  in  accordance  with the terms of this
Agreement.
 
2.2 The term of this Agreement  shall be five (5) years,  commencing on the date
hereof,  unless  earlier  terminated  pursuant to Section 11 (the  "Term").  Any
renewal  or  extension  of this  Agreement  may only be  effected  by a  written
agreement of the parties  hereto.  Neither  party shall be obligated to renew or
extend the duration of this Agreement upon the expiration of the Term.

                                       -2-

<PAGE>

3.       Quantities.

3.1 During each Annual Period,  Distributor agrees to purchase from Supplier the
Annual  Order  Amount of  Products,  as set forth on Schedule A hereto under the
caption "Annual Order Amount";  provided, that the sole remedy for Distributor's
failure to purchase such amounts shall be as set forth in Section 3.3 below. For
purposes of this  Agreement,  Products  are deemed to be  purchased in an Annual
Period if the earlier of the following dates fall within such Annual Period: (i)
the  Acknowledged  Delivery  Date or (ii)  the date on which  the  Products  are
shipped. As an inducement to Distributor's agreement to the foregoing,  Supplier
represents and warrants that the Division  purchased at least $13 million in Low
Voltage  Products  from  Supplier  during the twelve months prior to the date of
this Agreement (the "Base Period") based upon prices  comparable to those prices
at which  Distributor  currently  purchases  comparable  products (the "Division
Purchases");  provided,  however, that the parties acknowledge that the Division
Purchases  including  amounts  attributable to sales by Signal Sales Corp. which
have  been  annualized  based on  results  realized  since  its  acquisition  by
Supplier.  If this  representation is not true, each of the Annual Order Amounts
will be adjusted by  multiplying  them by a fraction  equal to the actual dollar
amount of purchases of Low Voltage Products by the Division from Supplier during
the  Base  Period,  valued  at  prices  comparable  to those  currently  paid by
Distributor for comparable products, divided by $13 million.

3.2  Notwithstanding  anything  to  the  contrary  herein,  to the  extent  that
Distributor  purchases  from  Supplier  in any  given  Annual  Period  an amount
exceeding the Annual Order Amount (the "Excess Order Amount"), Distributor shall
be entitled to a  corresponding  dollar for dollar  reduction in the next Annual
Period's  Annual Order Amount,  such reduction to be applied against the product
category in which the Excess Order Amount occurs.

3.3 In the event that Distributor  fails to purchase the Minimum Order Amount in
any given Annual Period, as Distributor's  sole obligation,  and Supplier's sole
remedy,  for  Distributor's  failure to purchase any amount required pursuant to
Section 3.1 or 3.3 of this  Agreement,  Distributor  shall pay to Supplier a fee
equal to * .

3.4 For purposes of this Agreement,  in determining  whether Distributor has met
the Minimum Order Amount, in addition to Products purchased in an Annual Period,
Distributor  shall be credited for all Orders placed by Distributor  pursuant to
Section  4.1 during the  corresponding  Annual  Period,  but for which  Products
ordered were (i) rejected by  Distributor  pursuant to Section 6 below,  or (ii)
not  purchased  by  Distributor  because the  Purchase  Price for such  Products
ordered by  Distributor  is more than five  percent (5%) higher than the current
written  price  quote of two  separate  Qualified  Vendors  for a  substantially
identical  product in the same quantity as the amount  ordered from Supplier and
Supplier fails to lower such Purchase  Price in accordance  with Section 4.3. If
Distributor  is  credited  for an Order  pursuant  to  clause  (i) of the  first
sentence of this paragraph in a given Annual Period and such rejected Product is
delivered in the next Annual  Period,  Distributor  shall not receive credit for
such Product in the next Annual  Period.  Other than as set forth in clauses (i)
and  (ii) of the  first  sentence  of this  paragraph,  in  determining  whether
Distributor has met the Minimum Order Amount, Distributor

___________________________________
*        Confidential portions omitted and filed separately with the Commission.

                                       -3-

<PAGE>

shall not be credited for any Orders placed by Distributor within the applicable
Annual Period which are not paid by Distributor  on or before the  corresponding
Payment Due Date.

3.5 To the  extent  that any Orders  are  placed by any  subsidiaries  of Parent
pursuant to this Agreement,  Parent hereby guarantees payment by such subsidiary
in accordance with the terms of this Agreement and agrees that it will sign such
other  documentation  as may be  reasonably  requested  by  Supplier in order to
further  evidence such guarantee of payment.  In reliance on the foregoing,  the
parties  agree  that any  Orders  placed by any  subsidiary  of Parent  shall be
included  as Orders  placed  by  Distributor  for  purposes  of this  Agreement.
Notwithstanding the foregoing,  in the event that any of the companies set forth
on Schedule B to this Agreement  shall become  subsidiaries  of, or acquired by,
Distributor (in each case, an "Acquired Company"),  and such Acquired Company is
then subject to a supply  agreement with Supplier that is not terminable at will
and is not  binding on the  successor  in the case of a change of control of the
Acquired  Company,  then the Annual Order Amount for each period  following such
acquisition   or  change  of  control  shall  be  increased  by  an  amount  (an
"Acquisition  Increase") equal to 50% of the dollar amount of Products purchased
by the Acquired  Company  during the twelve months prior to the  acquisition  or
change of control; provided that any such Acquisition Increase shall take effect
90 days after the effective date of the acquisition or change of control and the
Annual  Order  Amount  shall be  increased  for the  Annual  Period in which the
acquisition  or change of control  occurs by an amount equal to the  Acquisition
Increase  multiplied by a fraction equal to the number of days remaining in such
Annual Period  following the 90th day after the acquisition or change of control
divided by 365.

4.       Orders; Price.

4.1  Distributor  may place orders for the Products  with Supplier by electronic
transmission,  by written memorandum,  by use of a written purchase order, or by
such other  method as  mutually  agreed to  between  the  parties  (collectively
referred  to herein as  "Order" or  "Orders").  Notwithstanding  the  foregoing,
Distributor will not place orders by electronic transmission if Supplier has not
set up a system to receive such orders;  provided,  however, that Supplier shall
use its  commercially  reasonable  efforts  to set up such a  system  as soon as
practicable  and in any event,  no later than the beginning of the second Annual
Period. Supplier shall accept Orders in writing or by initiation of performance.
Distributor and Supplier shall agree upon a delivery location,  a delivery date,
and any other  details  required in order to procure the  products  requested by
Distributor.  Except as otherwise  agreed upon by the parties,  Distributor  may
cancel an Order or any  portion  thereof  without  charge or  penalty  by giving
notice to Supplier of such  cancellation,  which  notice shall be given at least
five (5) business days prior to the date on which the Products requested in such
Order are packaged in the ordinary course of business;  provided,  however, that
Distributor  may not  cancel an Order for any  Products  which  consist of cable
manufactured  to  customized  specifications  provided  by  Distributor  or  are
otherwise not marketable by Supplier to other persons at comparable prices. Such
cancelled  Orders  shall not be deemed  Orders  under this  Agreement.  Supplier
agrees that,  from time to time and upon  Distributor's  request,  Supplier will
delay or hold shipments to Distributor  until  Distributor  notifies Supplier to
commence shipment, provided that Supplier will

___________________________________
*        Confidential portions omitted and filed separately with the Commission.

                                       -4-

<PAGE>


not be  obligated to delay or hold  shipments  for more than 30 days without its
prior consent, which consent Supplier agrees not to unreasonably withhold.

4.2 The  purchase  price paid by  Distributor  for any  Product  (the  "Purchase
Price") will be agreed upon by Supplier and Distributor;  provided,  however, if
Supplier generally  increases its prices,  Supplier will give Distributor ninety
(90)  days  advance  written  notice  thereof;  unless  the  price  increase  is
attributable  to a cost increase for copper,  in which case such price  increase
will be determined in accordance with ten cent increments,  or "windows",  based
on the Camden copper base.  For example,  if the Camden copper base increased by
nine cents over the present price, no increase would be applicable;  however, if
the Camden copper base then increased by an additional cent so that it increased
by ten cents or more,  the price would be  increased  to reflect the full Camden
copper base increase.  On reasonable request by Distributor,  Supplier agrees to
provide  Distributor with documentation  substantiating any such price increase.
The failure of the  parties to agree upon a Purchase  Price in  accordance  with
this  Section  4.2 shall not reduce or  eliminate  Distributor's  obligation  to
purchase  Products  hereunder  or pay the fee provided for in Section 3.3 hereof
except to the extent otherwise provided in this Agreement.

4.3  Notwithstanding  anything  to  the  contrary  herein,  in  the  event  that
Distributor  receives a written price quote from at least two Qualified  Vendors
to supply a product that is the  functional  equivalent of a Product for a price
that is at least five percent (5%) less than Supplier's then-current price quote
for that  Product,  Distributor  shall notify  Supplier of such lower price.  If
Supplier  has failed,  within  thirty (30) days from the date of the notice,  to
notify  Distributor that it has lowered its prices for the Products ordered such
that the Purchase Price in question is less than or equal to the price quoted by
such Qualified Vendors, Distributor may order such product in such quantities at
the lower price from such Qualified  Vendors,  and Distributor shall be credited
for such orders in determining the Minimum Order Amount pursuant to Section 3.4.

4.4 Within seventy-five (75) days after the end of each Annual Period,  Supplier
agrees to pay  Distributor  an amount (the "Annual  Payment")  based on payments
timely  made to  Supplier  on Orders  shipped  during  such  Annual  Period (the
"Payment Amount"), determined as follows:

                  *



The  percentages are applicable for the  corresponding  range of Payment Amount.
For example, * .

In determining the Annual Payment for a given Annual Period,  the Payment Amount
shall also include  amounts which have not been paid to Supplier if such amounts
arise from Orders  shipped  during the  applicable  Annual Period and paid after
such Annual Period but on or before the Payment Due Date for such Orders.


___________________________________
*        Confidential portions omitted and filed separately with the Commission.

                                       -5-
<PAGE>


5.       Invoice; Payment; Shipment and Delivery.

5.1 Supplier  shall invoice  Distributor  for Products on or after said Products
are shipped.  A "correct"  invoice shall contain (i) Supplier's name and invoice
date,  (ii) a reference  to the  specific  Order  number and (iii)  description,
price, and quantity of the products actually  delivered.  A correct invoice must
be submitted to the appropriate invoice address listed on the Order.

5.2 Payment for the Products purchased hereunder shall be due in full net * from
the later of the date of invoice or delivery (or, if  Distributor  has requested
that Supplier delay or hold a shipment pursuant to Section 4.1, payment shall be
due in full  net * from  the  later  of the  date  of  invoice  and the  date of
Distributor's request to delay or hold such shipment);  provided,  however, that
Distributor  shall not be in default of its  payment  obligations  hereunder  if
Distributor,  from time to time due to  unforeseen  circumstances,  remits  such
payment to Supplier no later than * after the  scheduled  due date (after giving
effect to any such grace  periods,  the  "Payment  Due  Date").  Notwithstanding
anything  to the  contrary  contained  herein,  in no event  shall  Supplier  be
required to ship Products to Distributor at any time that Distributor has a past
due balance (i.e., amounts not paid by the Payment Due Date), provided, however,
that such  unpaid  amounts  are not due to a bona fide  dispute.  The failure of
Supplier to sell or ship Products pursuant to the immediately preceding sentence
shall not  constitute  a breach  of this  Agreement  and shall in no way  reduce
Distributor's liability for failure to purchase Products pursuant to Section 3.3
hereof. Products shall be shipped via surface freight F.O.B. destination,  which
destination  shall  be  within  the  continental  United  States.   Charges  for
transportation  of the  Products,  including,  but not  limited  to,  those  for
packing, insuring and freight shipping charges, shall be paid in accordance with
Supplier's   standard  terms  and  conditions  of  sale.  Without  limiting  the
generality of the foregoing,  Supplier shall pay for all transportation  charges
for Orders having a weight greater than 2,500 pounds.

5.3  Supplier  will use all  commercially  reasonable  efforts  to  deliver  the
Products to Distributor by a delivery date mutually  agreed upon by the parties,
which date shall take into account any  concentration  of Orders in a particular
time period and  Supplier's  capacity  to fill such  Orders  (the  "Acknowledged
Delivery  Date").  In the event that Supplier fails to deliver to Distributor at
least * of the  Products  ordered  during  an Annual  Period  within * after the
Acknowledged  Delivery Date, Supplier will pay to Distributor a fee equal to * .
Without  limiting  Distributor's  other rights to cancel an Order,  in the event
that  Supplier  fails to deliver such Products  within * after the  Acknowledged
Delivery  Date,  Distributor  shall have the option to cancel such  Orders,  and
Distributor shall be credited for such Orders as part of the Annual Order Amount
for the applicable  product category but such amounts shall not be considered in
the determination of the Payment Amount.

5.4 On or before  the 75th day  following  each  Annual  Period,  Supplier  will
prepare or cause to be prepared and delivered to  Distributor  a calculation  of
any fees due and owing  pursuant  to either  Section  3.3 or Section 5.3 of this
Agreement  (the "Annual Fee  Settlement").  If  Distributor  disagrees  with the
Annual Fee  Settlement,  Distributor  shall  notify  Supplier in writing of such
disagreement within 30 days after the date on which Distributor received the

___________________________________
*        Confidential portions omitted and filed separately with the Commission.

                                       -6-


<PAGE>


Annual Fee  Settlement,  which  written  notice shall  specify the nature of the
dispute and shall provide in reasonable detail the facts upon which such dispute
is based.  Thereafter  Supplier and  Distributor  shall attempt in good faith to
resolve such disagreement with respect to the Annual Fee Settlement. If Supplier
and Distributor are unable to resolve any  disagreement  regarding an Annual Fee
Settlement   within  20  days  after  Supplier's   receipt  of  such  notice  of
disagreement,  Supplier  and  Distributor  shall  submit  such  disagreement  to
arbitration in accordance with Section 14 below.

6.       Inspection and Acceptance.

All Products  purchased  from Supplier are subject to inspection and approval by
Distributor,  notwithstanding the receipt of payment therefor. If any Product is
rejected, such Product will be held subject to Supplier's direction and expense.
Products  may be  rejected  only  for  (i)  failure  to  conform  to  Supplier's
specifications,  which specifications have been provided to Distributor,  or the
IMSA Code, or (ii) Supplier has otherwise  materially  breached any warranty set
forth in Section 7.  Upon Supplier's receipt of rejected Products,  and upon the
parties' mutual agreement: (i) Supplier shall promptly send replacement Products
to Distributor,  at no additional  cost to Distributor  (other than the Purchase
Price) or (ii) to the extent  payment  has been made,  Supplier  shall  promptly
credit Distributor for the full Purchase Price of any rejected Products.

7.       Representations, Warranties and Indemnification.

Supplier  warrants to Distributor that the Products sold hereunder and delivered
by Supplier do not  infringe  any patent  rights of third  parties when used for
their  intended  purpose and Supplier shall hold  Distributor  harmless from any
such claims;  provided Supplier is given prompt notice of any such claim and the
full right to defend any action in connection  therewith;  and provided further,
however,  that no such  warranty  is  extended  if and to the  extent  that  any
Products  are made in  accordance  with  specifications  or designs  supplied by
Distributor.  Supplier  represents  and warrants that the foregoing  warranty is
Supplier's  standard  warranty and that  Supplier  has not given more  favorable
warranty  terms to any other  party.  In the event  that  Supplier  offers  more
favorable  warranty terms for comparable  products to any other party during the
Term of this Agreement,  Supplier shall offer such warranty to Distributor  with
respect to such Products hereunder.

8.       Limited Liability.

THE WARRANTIES SET FORTH IN SECTION 7 ABOVE ARE IN LIEU OF ALL OTHER WARRANTIES,
WHETHER EXPRESSED OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTY
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NOTWITHSTANDING ANYTHING
TO THE CONTRARY  CONTAINED  HEREIN, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
SPECIAL,  INDIRECT,  INCIDENTAL OR CONSEQUENTIAL  DAMAGES,  WHETHER IN CONTRACT,
TORT,  NEGLIGENCE,  STRICT LIABILITY OR OTHERWISE,  INCLUDING BUT NOT LIMITED TO
LOSS OF PROFITS OR REVENUE.

___________________________________
*        Confidential portions omitted and filed separately with the Commission.

                                       -7-

<PAGE>


9.       Covenants of Seller.

Seller hereby  covenants that upon the commencement of the second Annual Period,
it shall  have,  or shall  cause  Seller  Division to have,  made  available  to
Distributor  for purchase  hereunder  coaxial  cable,  specialty  FEP  products,
control and instrumentation cable.

10.      Confidential Information.

10.1 To the extent that any confidential information, which might include but is
not limited to business plans, forecasts,  capacity,  pricing, inventory levels,
etc., which is marked or labeled as confidential information (collectively,  the
"Information"),  is  disclosed  in  furtherance  of this  Agreement or any Order
issued hereunder, such Information shall be so disclosed pursuant to the minimum
terms and  conditions  listed below;  provided,  however,  the minimum terms and
conditions listed below shall in no way relieve the parties from any obligations
or modify such obligations previously agreed to in other agreements.

10.2 Both parties agree that the party receiving  Information will maintain such
Information  in  confidence  for a  period  of  three  years  from  the  date of
disclosure of such Information.

10.3 Each party shall protect the other party's  Information  to the same extent
that it protects its own confidential and proprietary information and shall take
all reasonable precautions to prevent unauthorized disclosure to third parties.

10.4  The  parties   acknowledge  that  the  unauthorized   disclosure  of  such
Information will cause irreparable harm. Accordingly, the parties agree that the
injured party shall have the right to seek immediate injunctive relief enjoining
such unauthorized disclosure.

10.5 The provisions of this Section 10 shall not apply to information  (i) known
to the  receiving  party  at the time of  receipt  from the  other  party,  (ii)
generally known or available or becomes known or available to the public through
no act or  failure  to act by the  receiving  party,  (iii)  furnished  to third
parties  by  the  disclosing  party  without  restriction  on  disclosure,  (iv)
furnished  to the  receiving  party by a third  party as a matter  of right  and
without  restriction on disclosure,  (v) furnished as required by court order or
similar  governmental  authority  or by the  imminent  likelihood  thereof or by
applicable law or by order of an arbitrator or (vi) is  independently  developed
without  use or  reliance  on the  Information  and can be so proven by  written
records.

10.6  Immediately  upon  termination  of this Agreement or at the request of the
other party,  each of the parties  shall  promptly  return all  materials in its
possession containing Information of the other party, regardless of who prepared
the materials.


___________________________________
*        Confidential portions omitted and filed separately with the Commission.

                                       -8-


<PAGE>


11.      Termination.

11.1 This  Agreement may be terminated at the  discretion of either party hereto
upon the  occurrence of any one of the following  defaults by the other party by
delivery  to  the  defaulting  party  of  written  notice  of  such  termination
specifying  the  effective  date  of such  termination  therein,  which  date of
termination shall in no event be less than 60 days after the date of notice:

(a)  Failure  by any  party  hereto  to pay an amount  due  hereunder  when due,
provided,  however,  that  such  failure  shall  not  give  rise to  termination
hereunder  if (i) such party  shall have  remitted  such  amount past due within
thirty (30) days of the actual or deemed receipt of notice of failure to pay; or
(ii) such failure is due to a bona fide dispute, provided payment is made within
15 days after resolution of the dispute requiring payment; or
 
(b)  Material  breach  by  any  party  hereto  of any  material  representation,
warranty,  covenant, condition or agreement hereunder and such breach shall have
continued,  if  applicable,  for  thirty  (30) days  after the  actual or deemed
receipt of notice to cure the same.

11.2 This Agreement may be terminated by either party (the "Terminating  Party")
upon a Change of Control  of the other  party (the  "Acquired  Party")  which is
entered into without the prior consent of the Terminating  Party;  provided that
Distributor  agrees that it will not withhold such consent  unless it reasonably
believes that the surviving  entity  following the Change of Control will not be
able  to  consistently  deliver  to  Distributor  the  quality  of  Product  and
responsiveness  and service that Supplier  provided to Distributor prior to such
Change of Control,  and provided  further that Supplier  agrees that it will not
withhold such consent  unless it reasonably  believes that the surviving  entity
following  the Change of Control  poses a greater  credit risk to Supplier  than
Distributor. For purposes of this Agreement, "Change of Control" means any event
or series of events by which (i) any  person or group (as  defined in Rule 13d-1
of the  Securities  Exchange  Act of 1934,  as amended)  obtains a majority  (by
voting or otherwise) of the  securities  ordinarily  having the right to vote in
the  election  of  directors  of the  Acquired  Party or any parent  corporation
thereof; (ii) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all, or substantially all, of the assets of
any of the Acquired  Party,  any parent  corporation  thereof or, in the case of
Seller,  the Seller Division;  (iii) the merger or consolidation of the Acquired
Party or any parent corporation  thereof with or into another corporation or the
merger of another  corporation  with and into the  Acquired  Party or any parent
corporation  thereof, as the case may be, with the effect that immediately after
such  transaction any beneficial owner shall have become the beneficial owner of
such  securities of the surviving  corporation  of such merger or  consolidation
representing  a  majority  of the  combined  voting  power  of  the  outstanding
securities of the surviving  corporation  ordinarily having the right to vote in
the  election  of  directors;  or (iv) the  adoption  of a plan  leading  to the
liquidation   or  dissolution  of  either  the  Acquired  Party  or  any  parent
corporation thereof.

12.      Force Majeure.


___________________________________
*        Confidential portions omitted and filed separately with the Commission.

                                       -9-


<PAGE>


Neither  party  shall be  liable  for any  failure  to  perform  any  obligation
hereunder,  except for the payment of money,  resulting  from acts of God, fire,
flood,  tornado,  drought,  explosion or other casualty,  strikes or other labor
problems, interruptions or shortage of transport facilities, inability to obtain
raw materials or component parts, war, riot, embargo, national emergency,  legal
restrictions  or any  other  causes  beyond  its  reasonable  control,  but  due
diligence  shall be used in attempting to eliminate such cause(s) and, upon such
elimination the parties shall immediately  resume performance in accordance with
the terms of this Agreement.

13.      Survival.

All  obligations  of the  parties  incurred  under  Sections  7, 8, and 10 shall
survive upon the termination or expiration of this Agreement.

14.      Arbitration.

14.1 In the event that any  controversy or claim  ("Claim") shall arise under or
related to this  Agreement,  the  parties  agree to settle such Claim by binding
arbitration  pursuant  to the  Commercial  Arbitration  Rules  of  the  American
Arbitration  Association  (the "AAA Rules") as in effect on the date hereof.  In
all events,  however, the arbitration provisions in this Section 15 shall govern
over any  conflicting  rules which may now or  hereafter be contained in the AAA
Rules.  Any judgment upon the award rendered by the arbitrator may be entered in
any court having  jurisdiction  over the subject matter thereof.  The arbitrator
shall (i) not be bound by the rules of  evidence or civil  procedure  but rather
may consider such writings or oral presentations as a reasonable  businessperson
would use in the conduct of the day-to-day  conduct of affairs,  and may require
the  parties to submit  some or all of their  presentation  orally or in written
form as the arbitrator may deem appropriate and (ii) have the authority to grant
any  equitable  and legal  remedies  that  would be  available  in any  judicial
proceeding instituted to resolve a contested claim. As soon as an arbitrator has
been agreed upon, a hearing date shall be set as soon  thereafter  as determined
by the arbitrator.  Written  submittals shall be presented and exchanged by both
parties as determined by the AAA Rules,  including  reports  prepared by experts
upon whom  either  party  intends to rely.  At such time the  parties  will also
exchange  copies of all  documentary  evidence  upon which they will rely at the
arbitration  hearing and a list of witnesses whom they intend to call to testify
at the hearing.  Each party shall also make its respective experts available for
deposition by the other party prior to the hearing date.  The  arbitrator  shall
make his award as promptly as practicable after conclusion of the hearing.

14.2 Any such arbitration will be conducted before a single  arbitrator who will
be compensated for his or her services at a rate to be determined by the parties
or by the American Arbitration Association,  but based upon reasonable hourly or
daily  consulting rates for the arbitrator in the event the parties are not able
to agree upon his or her rate of compensation.

14.3 The American  Arbitration  Association,  in accordance  with the AAA Rules,
will have the authority to select an arbitrator  from a list of arbitrators  who
are partners in a nationally  recognized  firm of independent  certified  public
accountants  from the  management  advisory  services  department (or comparable
department or group) of such firm or are partners

___________________________________
*        Confidential portions omitted and filed separately with the Commission.

                                      -10-
<PAGE>


in a major law firm acceptable to Distributor and Supplier;  provided,  however,
that (i) such  firm  cannot be the firm of  certified  public  accountants  then
auditing  the books and  records  of either  party or  providing  management  or
advisory services for either party.

14.4 Distributor and Supplier each shall pay 50% of the initial  compensation to
be paid to the  arbitrator  in any  such  arbitration  and 50% of the  costs  of
transcripts   and  other  normal  and  regular   expenses  of  the   arbitration
proceedings.

14.5 For any Claim submitted to  arbitration,  the burden of proof will be as it
would be if the claim were litigated in a judicial proceeding.

14.6  Upon  the  conclusion  of  any  arbitration  proceedings  hereunder,   the
arbitrator  will render  findings of fact and  conclusions  of law and a written
opinion  setting  forth the basis and reasons for any decision  reached and will
deliver such documents to each party to this Agreement  along with a signed copy
of the award.

14.7 The arbitrator chosen in accordance with these provisions will not have the
power to  alter,  amend  or  otherwise  affect  the  terms of these  arbitration
provisions or the provisions of this Agreement.

14.8 Except as specifically  otherwise  provided in this Agreement,  arbitration
will be the sole and  exclusive  remedy of the parties for any Claim arising out
of this Agreement.

15.      Media Releases.

Neither party will issue any press  release  relating to this  Agreement  unless
such disclosure is required by applicable law or the rules or regulations of any
securities exchange or NASDAQ; provided,  however, that Supplier agrees that it,
or any of its  affiliates,  shall not make any such  disclosure  with NASDAQ (or
such  other  securities  exchange  or trading  market  where the  securities  of
Supplier or any of its affiliates are traded)  without using its best efforts to
first obtain Distributor's  consent thereto, and Distributor agrees that it will
promptly  respond  to  Supplier  with  respect to such  disclosure  and will not
unreasonably withhold consent hereunder.
 
16.      Miscellaneous.

16.1  Notices.  All notices and  demands of any kind which  either  party may be
required  or desire to serve  upon the other  under the terms of this  Agreement
shall be in writing,  and shall be served either by (i) personal delivery,  (ii)
overnight courier, or (iii) telecopy or facsimile, in each case at the addresses
set forth below or at such other  addresses as may be  designated by the parties
in writing or, if  applicable,  to the  telecopy or  facsimile  number set forth
below.  If by personal  delivery or overnight  courier,  service shall be deemed
complete  upon such  delivery.  If by telecopy or  facsimile,  service  shall be
deemed  complete at the end of the day upon which the  telecopy or  facsimile is
transmitted,  provided  a copy of the  notice or demand is also sent by  regular
mail.

___________________________________
*        Confidential portions omitted and filed separately with the Commission.

                                      -11-

<PAGE>



                  If to Distributor, to:

                           Anicom, Inc.
                           6133 N. River Road
                           Suite 1000
                           Rosemont, Illinois 60018
                                    Attention:           Carl E. Putnam
                                    Facsimile:           (847) 518-8777

                           with a copy to:

                                    Katten Muchin & Zavis
                                    525 W. Monroe Street
                                    Suite 1600
                                    Chicago, Illinois 60661
                                    Attention:           Jeffrey R. Patt, Esq.
                                    Facsimile:           (312) 902-1061

                           If to Supplier, to:

                                    Connectivity Products Incorporated
                                    680 Mechanic Street
                                    Suite 1201
                                    Leominster, Massachusetts 01453
                                    Attention:           James S. Harrington
                                    Facsimile:           (508) 840-3724

                           with a copy to:

                                    Zimet, Haines, Friedman & Kaplan
                                    460 Park Avenue
                                    9th Floor
                                    New York, New York 10022
                                    Attention:         Herbert M. Friedman, Esq.
                                    Facsimile:         (212) 223-1151


16.2  Entire  Agreement.  This  Agreement  is the entire  agreement  between the
parties  hereto with respect to the  Products,  there being no prior  written or
oral promises or representations not incorporated herein.

16.3 Applicable Law. This Agreement shall be governed by the law of the State of
Michigan,  applicable  to  contracts  made and to be  performed  in that  state,
exclusive of any conflicts of law principles.


___________________________________
*        Confidential portions omitted and filed separately with the Commission.

                                      -12-

<PAGE>


16.4  Amendments.  No amendment or  modification  of the terms of this Agreement
shall be  binding on either  party  unless  reduced to writing  and signed by an
authorized representative of the party to be bound.

16.5 Assignment. This Agreement shall not be assigned by either party; provided,
that Distributor may assign this Agreement in connection with any sale of all or
substantially  all of its assets;  and provided further that Supplier may assign
this Agreement in connection  with any sale of all or  substantially  all of its
assets, subject to the terms and conditions set forth in Section 11.2 above.
 
16.6 Relationship of Parties.  The relationship between Distributor and Supplier
hereunder  is that of vendor and  vendee.  Each  party  shall be  considered  an
independent  contractor,  and neither party shall have any right or authority to
assume or create  any  express  or  implied  obligation  on behalf of the other,
except as otherwise provided herein.
 
16.7 Severability.  In the event that any of the provisions of this Agreement or
the  application  of any such  provisions to the parties  hereto with respect to
their  obligations  hereunder  shall  be held by a court or  other  tribunal  of
competent jurisdiction to be unlawful or unenforceable, the remaining provisions
of this Agreement shall remain in full force and effect.

16.8 Counterparts. This Agreement may be executed in counterparts, each of which
together shall be deemed an original, but all of which together shall constitute
one and the same instrument.


___________________________________
*        Confidential portions omitted and filed separately with the Commission.

                                      -13-

<PAGE>


IN WITNESS  WHEREOF,  the parties  hereto have executed this Agreement as of the
day and year first above written.


CONNECTIVITY PRODUCTS                                         ANICOM, INC.
  INCORPORATED

By:/s/ James S. Harrington                           By:/s/  Carl Putnam  
Its:  President and CEO                              Its:  President



                                      -14-

<PAGE>


                                                    Schedule A

                                                 Purchase Amounts


Year              Product               Target Amount     Annual Order Amount

1                 Low Voltage Products     $   *                    $   *

2                 Low Voltage Products     $   *                    $   *
                  Other Products           $   *

3                 Low Voltage Products     $   *                    $   *
                  Other Products           $   *

4                 Low Voltage Products     $   *                    $   *
                  Other Products           $   *

5                 Low Voltage Products     $   *                    $   *
                  Other Products           $   *


                                           Total Amount             $   *


___________________________________
*        Confidential portions omitted and filed separately with the Commission.

                                      -15-


<PAGE>

                                                    Schedule B

                                                 Certain Customers


                 *


 

___________________________________
*        Confidential portions omitted and filed separately with the Commission.

                                      -16-


                                                                      Exhibit 11



                                  ANICOM, INC.
                        Computation of Earnings per Share
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>

                                                   For the Three Months Ended             For the Nine Months Ended
                                                          September 30,                         September 30,
                                                           (unaudited)                           (unaudited)

                                               ------------------------------------  -----------------------------------
<S>                                            <C>                <C>                <C>                <C>   

                                                     1997               1996               1997              1996
Earnings per common share
==============================================
Net income                                     $          1,834   $            743   $          3,802   $         1,767
Less:  dividend on preferred stock                         (173)               ---               (297)              ---
                                               -----------------  -----------------  -----------------  ----------------
Net income available to common stockholders    $          1,661   $            743   $          3,505   $         1,767
                                               =================  =================  =================  ================

Weighted average common shares outstanding               17,646             13,142             16,417            12,654
                                               =================  =================  =================  ================
Earnings per common share                      $            .09   $            .06   $            .21   $           .14
                                               =================  =================  =================  ================

Earnings per common share and share equivalent
  - Primary
==============================================
Weighted average common shares outstanding               17,646             13,142             16,417            12,654
Add:  common share equivalents (options                                                                  
  and warrants)  (1)                                        990                324                710               224
                                               -----------------  -----------------  -----------------  ----------------
Weighted average common share and share                                                                  
  equivalents outstanding                                18,636             13,466             17,127            12,878
                                               =================  =================  =================  ================
Earnings per common share and share equivalent                                                           
  - Primary                                    $            .09   $            .06   $            .21   $           .14
                                               =================  =================  =================  ================

Earnings per common share and share equivalent
  - Fully diluted
==============================================
Net income                                     $          1,834   $            743   $          3,802   $         1,767
                                               =================  =================  =================  ================

Weighted average common shares                                                                           
outstanding,       excluding convertible                 16,088             13,142             15,891            12,654
preferred stock
Add:  common share equivalents (options                                                                  
  and            warrants)  (1)                           1,152                476              1,152               476
Add:  convertible preferred stock (2)                     3,131                ---              1,439               ---
                                               -----------------  -----------------  -----------------  ----------------
                                                         20,371             13,618             18,482            13,130
                                               =================  =================  =================  ================
Earnings per common share and share equivalent                                                           
  - Fully diluted                              $            .09   $            .06   $            .21   $           .14
                                               =================  =================  =================  ================
</TABLE>

(1)   - Calculated using the treasury stock method.
(2)  -  Calculated using the if-converted method.







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