SIXTH AMENDMENT TO CREDIT AGREEMENT

SIXTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of December 29,
2011, is executed by and among LAWSON PRODUCTS, INC., a Delaware corporation
(“Lawson”), which has its chief executive office located at 1666 E. Touhy
Avenue, Des Plaines, Illinois 60018, various subsidiaries of Lawson listed on
the signature pages hereto (Lawson and the subsidiaries are referred to
collectively herein as the “Borrower” or the “Borrowers”), THE PRIVATEBANK AND
TRUST COMPANY both as a lender and as agent (in such capacity, the “Agent”), for
itself and all other lenders from time to time a party hereto (“Lenders”),
located at 120 South LaSalle Street, Chicago, Illinois 60603-3400, and the
Lenders.

WHEREAS, the Agent, Lawson and certain subsidiaries of Lawson (together with
Lawson, collectively, the “Original Borrowers”), entered into a Credit
Agreement, dated as of August 21, 2009, among the Original Borrowers, the Agent
and the Lenders, and on December 2, 2009, Lawson Products, Inc., an Illinois
corporation and newly-formed wholly-owned subsidiary of Lawson (“Lawson IL”),
became a party to such agreement as a Borrower (herein, as the same may be
amended, modified or supplemented from time to time, the “Credit Agreement”);
and

WHEREAS, the Borrowers consummated an internal reorganization pursuant to which
several of the Borrowers were merged into Lawson IL and assets of certain of the
Borrowers were transferred among the Borrowers; and

WHEREAS, the Borrowers, the Lenders and the Agent entered into a Consent, Waiver
and First Amendment to Credit Agreement dated as of December 31, 2009; and

WHEREAS, the Borrowers, the Lenders and the Agent entered into a Second
Amendment to Credit Agreement dated as of January 29, 2010; and

WHEREAS, the Borrowers, the Lenders and the Agent entered into a Consent Waiver
and Third Amendment to Credit Agreement dated as of September 1, 2010 with
respect to the sale of certain assets and liabilities of Assembly Component
Systems, Inc., an Illinois corporation, during the third quarter of Lawson’s
fiscal 2010; and

WHEREAS, the Borrowers, the Lenders and the Agent entered into a Consent, Waiver
and Fourth Amendment to Credit Agreement dated as of December 10, 2010 with
respect to the sale of all or substantially all of the assets of Rutland Tool
and Supply Co., a Nevada corporation; and

WHEREAS, the Borrowers, the Lenders and the Agent entered into a Fifth Amendment
to Credit Agreement dated as of September 30, 2011; and

WHEREAS, the Borrowers, the Lenders and the Agent wish to enter into this
Amendment to amend the Credit Agreement to give effect to the provisions set
forth herein.

NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained in this Amendment, the parties hereto hereby agree as
follows:

1. Incorporation of the Agreement. All capitalized terms which are not defined
hereunder shall have the same meanings as set forth in the Credit Agreement, and
the Credit Agreement, to the extent not inconsistent with this Amendment, is
incorporated herein by this reference as though the same were set forth in its
entirety. To the extent any terms and provisions of the Credit Agreement are
inconsistent with the amendments set forth in Paragraph 2 below, such terms and
provisions shall be deemed superseded hereby. Except as specifically set forth
herein, the Credit Agreement and the other Loan Documents shall remain in full
force and effect and the provisions thereof shall be binding on the parties
hereto.

2. Amendments to the Credit Agreement. The parties hereto hereby amend the
Credit Agreement, effective as of the date hereof as follows:

  (a)   The definition of “Consolidated EBITDA” stated in Section 1.1 of the
Credit Agreement is amended in its entirety to state the following:

“Consolidated EBITDA” shall mean, for any period, (a) the sum for such period of
Consolidated Net Income, plus (b) depreciation and amortization expense deducted
in the determination of such Consolidated Net Income, plus (c) Consolidated
Interest Expense deducted in the determination of such Consolidated Net Income,
plus (d) federal and state income taxes as determined in accordance with GAAP
and deducted in the determination of the amount of such Consolidated Net Income,
plus (e) non-recurring expenses related to the relocation of the corporate
headquarters and the distribution/packing centers and employee severance charges
not to exceed $8,000,000 in the aggregate for 2012, plus (f) non-cash expenses
under SFAS 123R, and less (or plus) (g) any items of gain (or loss) which are
extraordinary or non-recurring items as defined in GAAP to the extent reflected
in the determination of such Consolidated Net Income.

  (b)   Section 8.3(a) of the Credit Agreement is amended in its entirety to
state the following:

Commencing with the measurement as of December 31, 2011 Lawson and its
Subsidiaries’ Consolidated EBITDA shall not be below the following amounts
measured at the end of the period for each measurement period set forth below:

              Measured at End of Period   Minimum Consolidated
EBITDA  
Measurement Period

           
 
Fourth Quarter 2011     ($5,000,000 )  
Quarter ending on the
measurement date
           
 
First Quarter 2012     ($2,500,000 )  
Quarter ending on the
measurement date
           
 
Second Quarter 2012   $ 2,000,000    
Quarter ending on the
measurement date
           
 
Third Quarter 2012   $ 3,000,000    
Quarter ending on the
measurement date
           
 

  (c)   Section 8.3(d) of the Credit Agreement is amended in its entirety to
state the following:

Commencing at the end of Borrowers’ fiscal year 2012, the Borrowers’ trailing
four-quarter consolidated Debt Service Coverage Ratio measured quarterly shall
not be less than or equal to 1.10:1.00, and commencing as of March 31, 2013 and
at the end of each fiscal quarter thereafter, the Borrowers’ trailing four
quarter consolidated Debt Service Coverage Ratio shall not be less than or equal
to 1.20:1.00.

3. Representations and Warranties.

  (a)   The representations and warranties set forth in Section 7 of the Credit
Agreement shall be deemed remade and affirmed by the Borrowers in all material
respects, as of the date hereof; provided that representations and warranties
referencing a particular date other than a general date of execution shall be
true and correct as of such date; provided, further, that any and all references
to the Credit Agreement in such representations and warranties shall be deemed
to include this Amendment.

  (b)   The Borrowers represent and warrant that no Event of Default has
occurred and is continuing.

4. Fees and Expenses. Upon execution of this Amendment, the Borrowers shall pay
the Agent a nonrefundable amendment fee of $10,000 which shall be fully earned
by Agent as of the date of this Amendment. In addition, the Borrowers shall pay
or reimburse the Agent for all reasonable costs and expenses, including, without
limitation, legal expenses and reasonable attorneys’ fees (for outside counsel)
incurred by the Agent, or for which the Agent becomes obligated, in connection
with the negotiation, preparation, and closing of this Amendment.

5. Delivery of Documents/Information. This Amendment shall be effective on the
date hereof upon receipt by Agent of the last of the following: (i) a fully
executed copy of this Amendment, and (ii) Borrowers’ payment to Agent of the
amendment fee and all invoiced fees and expenses.

6. Continuing Effect. Except as otherwise specifically set out herein, the
provisions of the Credit Agreement and each of the Loan Documents shall remain
in full force and effect. The Borrowers have heretofore executed and delivered
to the Agent certain Loan Documents and the Borrowers hereby acknowledge and
agree that, notwithstanding the execution and delivery of this Amendment, the
Loan Documents remain in full force and effect after giving effect to the
amendments set forth in this Amendment and the rights and remedies of the Agent
and the Lenders thereunder, the obligations of each Borrower thereunder and the
liens and security interests created and provided for thereunder remain in full
force and effect and shall not be affected, impaired or discharged hereby.
Nothing herein contained shall affect or impair the priority of the liens and
security interests created and provided for in the Loan Documents as to the
indebtedness which would be secured thereby prior to giving effect to this
Amendment and which remains secured thereby after giving effect to this
Amendment. Any and all references to the Credit Agreement in each of the Loan
Documents shall be deemed to refer to and include this Amendment.

7. Headings. The headings of this Amendment are for the purposes of reference
only and shall not affect the construction of the Amendment.

8. Counterparts. This Amendment may be executed by one or more of the parties to
this Amendment on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed counterpart of this Amendment by facsimile
or electronic mail shall be equally as effective as delivery of a manually
executed counterpart of this Amendment. Any party delivering an executed
counterpart of this Amendment by facsimile or electronic mail shall also deliver
a manually executed counterpart of this Amendment, but the failure to deliver a
manually executed counterpart shall not affect the validity, enforceability, or
binding effect of this Amendment.

9. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws (as opposed to the conflict of law provisions)
of the State of Illinois.

[SIGNATURE PAGES FOLLOW]

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(Signature Page to Sixth Amendment to Credit Agreement)

IN WITNESS WHEREOF, the Borrowers, the Agent and each Lender have executed this
Amendment as of the date first above written.

      BORROWERS:  

LAWSON PRODUCTS, INC.,
a Delaware corporation
By: \Ronald J. Knutson  
LAWSON PRODUCTS, INC.,
an Illinois corporation
By: \Ronald J. Knutson
   
 
Name: Ronald J. Knutson
Its: Senior Vice President and
Chief Financial Officer  
Name: Ronald J. Knutson
Its: Senior Vice President and
Chief Financial Officer
DRUMMOND AMERICAN LLC,
an Illinois limited liability company
By: \Ronald J. Knutson  
CRONATRON WELDING SYSTEMS LLC,
a North Carolina limited liability company
By: \Ronald J. Knutson
   
 
Name: Ronald J. Knutson
Its: Senior Vice President and
Chief Financial Officer  
Name: Ronald J. Knutson
Its: Senior Vice President and
Chief Financial Officer
   
AUTOMATIC SCREW MACHINE PRODUCTS COMPANY,
INC.,
an Alabama corporation
By: \Ronald J. Knutson
   
 
   
Name: Ronald J. Knutson
Its: Senior Vice President and
Chief Financial Officer

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(Signature Page to Sixth Amendment to Credit Agreement)
AGENT:
THE PRIVATEBANK AND TRUST COMPANY
By: \Thomas G. Esky
 
Name: Thomas G. Esky
 
Its: Managing Director
 
LENDER:
THE PRIVATEBANK AND TRUST COMPANY
By: \Thomas G. Esky
 
Name: Thomas G. Esky
 
Its: Managing Director
 

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