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SIXTH
MODIFICATION OF LOAN DOCUMENTS




DATED AS OF JUNE 21, 2007




by and among




Lawson Products, Inc., a Delaware Corporation




AND




LASALLE BANK NATIONAL ASSOCIATION




 





 









 





SIXTH MODIFICATION OF LOAN DOCUMENTS




     THIS
SIXTH MODIFICATION OF LOAN DOCUMENTS (this
“Modification”) is made as of the
21st day of June, 2007, by and among Lawson Products, Inc., a Delaware Corporation
(“Lawson”), with its principal place of business and chief executive office at 1666 E. Touhy Ave.,
Des Plaines, Illinois, 60018, various Subsidiaries of Lawson listed
on Schedule 6.12 to
the Credit Agreement (Lawson and the Subsidiaries may be referred to herein collectively as the
“Borrower”) and LASALLE BANK NATIONAL ASSOCIATION, a national banking association, its successors
and assigns (“Lender”).



R
E C I T A L S:




     A. Lender
has heretofore made a loan (“Loan”) to Borrower in the principal amount of Fifty
Million and no/100 Dollars ($50,000,000) pursuant to the terms and conditions of a Credit Agreement
dated as of March 27, 2001 between Borrower and Lender, (the
“Credit Agreement”, all terms
not otherwise defined herein shall have the meanings set forth in the Credit Agreement, as amended),
and as evidenced by a Promissory Note dated March 27, 2001,in the principal amount of the Loan made
payable by Borrower to the order of Lender (“Note”).



     B. The
Credit Agreement was amended (i) as of August 12, 2002 to, among other things, add a
letter of credit subfacility; (ii) as of July 11, 2003 to,
among other things, increase the
availability under the letter of credit subfacility; (iii) as of May 31, 2005 to, among other
things, increase the Maximum Facility, (iv) as of November
___, 2006 to, among other things,
modify the interest rate to be charged on the facility; and (v) as of January 31, 2007 to, among
other things, acknowledge Lawson’s liquidation and dissolution Assembly Component Systems, Limited,
a United Kingdom corporation (“ACSL”), a Subsidiary of Lawson, and therefore release ACSL from the
facility.



     C. Borrower
has requested that the Credit Agreement be further modified in order to modify the
Fixed Charge Coverage covenant as it relates to the Borrower’s
capital improvements relating to the
Reno, Nevada location.



     D. The
Lender has agreed modify the Fixed Charge Coverage covenant upon the terms and
conditions hereinafter set forth.



AGREEMENTS:




     NOW, THEREFORE, in consideration of (i) the facts set forth hereinabove (which are
hereby incorporated into and made a part of this Modification with the intent that Lender may rely
upon the matters therein recited as representations and warranties of Borrower), (ii) the
agreements by Lender to modify the Loan Documents, as provided herein, (iii) the covenants and
agreements contained herein, and (iv) for other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:



 









 





     1. Modification to the Loan Agreement.




     (a)
Modification to Definitions. Section 1.1 of the Credit Agreement
is hereby amended as follows:




     (i) Modifications of Existing Definitions. Section 1.1 of the Credit Agreement
is hereby amended by amending and restating the definition of “Maximum Letter of
Credit Obligation”:




     “Maximum Letter of Credit Obligation” shall mean Five Million
and no/100 Dollars ($5,000,000).




     (ii) New Definitions. Section 1.1 of the Credit Agreement is hereby amended by
adding the following definition:




     “Reno Capital Expenditures” shall mean Capital Expenditures
for Borrower’s facility at 1381 Capital Blvd., Reno, NV 89502, in the
approximate amount of $14,100,000 consisting of land acquisition, a 145,000
square foot addition including a liquid storage room to house hazardous
chemicals and an increase in space of the existing aerosol storage room,
conveyors, racking and the relocation of certain materials from California
to the Reno, Nevada facility.




     (b)
Fixed Charge Coverage Covenant. Section 8.13(C) of
the Credit Agreement
is hereby amended and restated in its entirety to read as follows:




     “(C) Fixed Charge Coverage. As of the end of each of its Fiscal
Quarters calculated on a rolling four (4) Fiscal Quarter basis (i.e. the one (1)
year period encompassing such Fiscal Quarter and the previous three (3) Fiscal
Quarters then elapsed), the Borrower shall maintain a ratio of (a) the total for
such Fiscal Quarter of EBITDA minus all Capital Expenditures which are not
financed with Funded Debt (but excluding from such reduction the Reno Capital
Expenditures), to (b) the sum for such Fiscal Quarter of (i) Interest Charges, (ii)
required payments of principal of the Liabilities (iii) dividends, and (iv) the sum
of all income taxes paid in cash by the Borrower, of not less than 1.10 to 1.00;”



     2. Representations
and Warranties of Borrower. Borrower hereby represents, covenants
and warrants to Lender as follows:




     (a)
The representations and warranties in the Credit Agreement, and the other Loan
Documents are true and correct as of the date hereof.




     (b)
There is currently no Default under the Note, the Credit Agreement or the other Loan
Documents and Borrower does not know of any event or circumstance which



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would constitute an Default under the Note, the Credit Agreement or the other Loan
Documents.




     (c)
The Loan Documents are in full force and effect and, following the execution and
delivery of this Modification, they continue to be the legal, valid and binding obligations
of Borrower enforceable in accordance with their respective terms, subject to limitations
imposed by general principles of equity.




     (d)
There has been no material adverse change in the financial condition of Borrower or
any other party whose financial statement has been delivered to Lender in connection with
the Loan from the date of the most recent financial statement
received by Lender.




     (e)
As of the date hereof, Borrower has no claims, counterclaims, defenses, or set-offs
with respect to the Loan or the Loan Documents as modified herein.




     (f) Borrower is validly existing under the laws of the State of its formation
or organization and has the requisite power and authority to execute and deliver this
Modification and to perform the Loan Documents as modified herein. The execution and
delivery of this Modification and the performance of the Loan Documents as modified herein
have been duly authorized by all requisite action by or on behalf of Borrower. This
Modification has been duly executed and delivered on behalf of Borrower.



     3. Expenses. As a condition precedent to the agreements contained herein,
Borrower shall pay all out-of-pocket costs and expenses incurred by Lender in connection with this
Modification, including, without limitation, title charges, recording fees, appraisal fees and
attorneys’ fees and expenses.



     4. Miscellaneous.




     (a) This Modification shall be governed by and construed in accordance with the laws of
the State of Illinois.




     (b) This Modification shall not be construed more strictly against Lender than against
Borrower merely by virtue of the fact that the same has been prepared by counsel for Lender,
it being recognized that Borrower and Lender have contributed
substantially and materially to
the preparation of this Modification, and Borrower and Lender each acknowledges and waives
any claim contesting the existence and the adequacy of the consideration given by the other
in entering into this Modification. Each of the parties to this Modification represents that
it has been advised by its respective counsel of the legal and practical effect of this
Modification, and recognizes that it is executing and delivering this Modification,
intending thereby to be legally bound by the terms and provisions thereof, of its own free
will, without promises or threats or the exertion of duress upon it. The signatories hereto
state that they have read and understand this Modification, that they intend to be legally
bound by it and that they expressly warrant and represent that they are duly authorized and
empowered to execute it.



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     (c)
Notwithstanding the execution of this Modification by Lender, the same shall not be deemed
to constitute Lender a venturer or partner of or in any way associated with Borrower nor shall
privity of contract be presumed to have been established with any third party.




     (d) Borrower and Lender each acknowledges that there are no other understandings,
agreements or representations, either oral or written, express or implied,that are not embodied in
the Loan Documents and this Modification, which collectively represent a complete integration of
all prior and contemporaneous agreements and understandings of Borrower and Lender; and that
all such prior understandings, agreements and representations are hereby modified as set forth in
this Modification. Except as expressly modified hereby, the terms of the Loan Documents are and
remain unmodified and in full force and effect.




     (e)
This Modification shall bind and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and assigns.




     (f)
Any references to the “Note”, the “Credit Agreement,” or the “Loan Documents” contained in
any of the Loan Documents shall be deemed to refer to the Note, Credit Agreement and the other Loan
Documents as amended hereby. The paragraph and section headings used herein are for convenience
only and shall not limit the substantive provisions hereof. All words herein which are expressed in
the neuter gender shall be deemed to include the masculine, feminine and neuter genders. Any word
herein which is expressed in the singular or plural shall be deemed, whenever appropriate in the
context, to include the plural and the singular.




     (g)
This Modification may be executed in one or more counterparts, all of which, when taken
together, shall constitute one original Agreement.




     (h) Time is of the essence of each of Borrower’s obligations under this Modification.




     (i)
Customer Identification - USA Patriot Act Notice. The Lender hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56,
signed into law October 26, 2001) (the “Act”), and the Lender’s policies and practices, the Lender
is required to obtain, verify and record certain information and documentation that identifies the
Borrower, which information includes the name and address of the Borrower and such other
information that will allow the Lender to identify the Borrower in accordance with the Act.



(Signature Page Follows)




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



	 	 	 	 	 	 	 
	LASALLE BANK NATIONAL	 	LAWSON PRODUCTS, INC., a Texas
	ASSOCIATION (as Lender)	 	corporation (as Borrower)
	 
	 	 	 	 	 	 
	By:

	 	 
	 	By:
	 	/s/ Thomas Neri
	 

	 	Michael Vrchota
	 	 	 	Thomas Neri
	Its:

	 	Senior Vice President
	 	Its:
	 	Chief Executive Officer
	 
	 	 	 	 	 	 
	LAWSON PRODUCTS, INC., a Delaware	 	LAWSON PRODUCTS, INC., a Canadian
	Corporation (as Borrower)	 	Corporation (as Borrower)
	 
	 	 	 	 	 	 
	By:

	 	/s/ Thomas Neri
	 	By:
	 	/s/ Thomas Neri
	 

	 	Thomas Neri
	 	 	 	Thomas Neri
	Its:

	 	Chief Executive Officer
	 	Its:
	 	Chief Executive Officer
	 
	 	 	 	 	 	 
	LAWSON PRODUCTS, INC., a Georgia	 	LP SERVICE CO., an Illinois Corporation
	Corporation (as Borrower)	 	(as Borrower)
	 
	 	 	 	 	 	 
	By:

	 	/s/ Thomas Neri
	 	By:
	 	/s/ Thomas Neri
	 

	 	Thomas Neri
	 	 	 	Thomas Neri
	Its:

	 	Chief Executive Officer
	 	Its:
	 	Chief Executive Officer
	 
	 	 	 	 	 	 
	LAWSON PRODUCTS, INC.,
a New Jersey	 	LPI HOLDINGS, INC., an Illinois
	Corporation (as Borrower)	 	Corporation (as Borrower)
	 
	 	 	 	 	 	 
	By:

	 	/s/ Thomas Neri
	 	By:
	 	/s/ Thomas Neri
	 

	 	Thomas Neri
	 	 	 	Thomas Neri
	Its:

	 	Chief Executive Officer
	 	Its:
	 	Chief Executive Officer
	 
	 	 	 	 	 	 
	LAWSON PRODUCTS, INC., a Nevada	 	CRONATRON WELDING SYSTEMS, INC., a
	Corporation (as Borrower)	 	North Carolina
Corporation (as Borrower)
	 
	 	 	 	 	 	 
	By:

	 	/s/ Thomas Neri
	 	By:
	 	/s/ Thomas Neri
	 

	 	Thomas Neri
	 	 	 	Thomas Neri
	Its:

	 	Chief Executive Officer
	 	Its:
	 	Chief Executive Officer






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	DRUMMOND AMERICAN Corporation,	 	LAWSON PRODUCTS DE
MEXICO, S.A.
	an Illinois Corporation (as Borrower)	 	DE C.V. (as Borrower)
	 
	 	 	 	 	 	 
	By:

	 	/s/ Thomas Neri
	 	By:
	 	/s/ Thomas Neri
	 

	 	Thomas Neri
	 	 	 	Thomas Neri
	Its:

	 	Chief Executive Officer
	 	Its:
	 	Chief Executive Officer
	 
	 	 	 	 	 	 
	ASSEMBLY COMPONENT SYSTEMS,	 	 	 	 
	INC., an Illinois Corporation (as Borrower)	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Thomas Neri	 	 	 	 
	 

	 	Thomas Neri	 	 	 	 
	Its:

	 	Chief Executive Officer	 	 	 	 
	 
	 	 	 	 	 	 
	AUTOMATIC SCREW MACHINE	 	 	 	 
	PRODUCTS COMPANY, INC., an	 	 	 	 
	Alabama Corporation (as Borrower)	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Thomas Neri	 	 	 	 
	 

	 	Thomas Neri	 	 	 	 
	Its:

	 	Chief Executive Officer	 	 	 	 
	 
	 	 	 	 	 	 
	C.B. LYNN COMPANY, an Illinois	 	 	 	 
	Corporation (as Borrower)	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Thomas Neri	 	 	 	 
	 

	 	Thomas Neri	 	 	 	 
	Its:

	 	Chief Executive Officer	 	 	 	 
	 
	 	 	 	 	 	 
	LP INDUSTRIAL PRODUCTS	 	 	 	 
	COMPANY, an Illinois Corporation (as 

Borrower)	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Thomas Neri	 	 	 	 
	 

	 	Thomas Neri	 	 	 	 
	Its:

	 	Chief Executive Officer	 	 	 	 







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