UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

         
 
       
UNITED STATES OF AMERICA
      No.
v.
       
LAWSON PRODUCTS, INC.
      Judge

AMENDMENT NO. 1 TO DEFERRED PROSECUTION AGREEMENT

Defendant LAWSON PRODUCTS, INC. (“LAWSON PRODUCTS”), a company headquartered in
Des Plaines, Illinois, by its undersigned attorneys, pursuant to authority
granted by its Board of Directors, and the UNITED STATES OF AMERICA, through
PATRICK J. FITZGERALD, United States Attorney for the Northern District of
Illinois, enter into this Amendment No. 1 dated July 31, 2009 to Deferred
Prosecution Agreement (this “Amendment”), which shall apply to LAWSON PRODUCTS
and all its affiliates and subsidiaries, including Drummond American Corporation
and Cronatron Welding Systems, Inc. and which amends the Deferred Prosecution
Agreement (the “Agreement”) dated as of August 11, 2008.

1. Paragraph 2 of the Agreement is hereby amended and restated to read in its
entirety as follows:

“3. LAWSON PRODUCTS agrees to place a total of $30,000,000 in an escrow account
to fund the payment of restitution and a civil forfeiture judgment as further
set forth below. LAWSON PRODUCTS shall make the first $10,000,000 payment on or
before the date that LAWSON PRODUCTS executes this Agreement. LAWSON PRODUCTS
shall make a $5,000,000 payment on or before August 15, 2009 and a further
$5,000,000 payment on or before December 31, 2009. LAWSON PRODUCTS shall make
its final $10,000,000 payment on or before August 11, 2010. At any point, should
a controlling interest in LAWSON PRODUCTS be sold, the remaining payments shall
be accelerated and due at the closing of that sale.”

2.  This Amendment shall be considered an amendment to and a part of the
Agreement.

3.  Except as specifically stated herein, all terms, covenants and conditions of
the Agreement shall remain in full force and effect.

1

AGREED:

For LAWSON PRODUCTS:

                 
 
               
/s/ Thomas J. Neri
 
THOMAS J. NERI
      /s/ William D. Heinz
 
WILLIAM D. HEINZ  

   

 
President and Chief
Executive Officer
 
   
Jenner & Block LLP  
   
 
Lawson Products, Inc.
      Counsel for Lawson Products, Inc.        
 
               
For the UNITED STATES OF
AMERICA:
 
   
   
   
 
 
               
/s/ Patrick J. Fitzgerald
 
PATRICK J. FITZGERALD
      /s/ Brandon D. Fox
 
BRANDON D. FOX  

   

 
United States Attorney
      NANCY MILLER        
 
      KRUTI TRIVEDI        
 
      Assistant United States Attorneys        

2