FIRST AMENDMENT TO FIRST AMENDED
AND RESTATED CREDIT AGREEMENT
 Amendment Lawson Borrower Lender
 R E C I T A L S
 Credit Agreement
   A G R E E M E N T S
 RECITALS
 DEFINITIONS
 AMENDMENTS
 Amendments to Credit Agreement Exhibit A
 Amendments to Exhibit A1 to Credit Agreement Exhibit B
 Amendments to Exhibit A2 to Credit Agreement Exhibit C
 Amendments to Schedule 6.12 to Credit Agreement Exhibit D
 Amendments to Schedule 8.2 to Credit Agreement Exhibit E




---



##### 



ACKNOWLEDGMENT OF BORROWER
 REPRESENTATIONS AND WARRANTIES
 Compliance with Credit Agreement
 Representations and Warranties
 Power and Authority
 Enforceability
 CONDITIONS PRECEDENT First
Amendment Effective Date
 Amendment
 Replacement Note
 Security Documents
 -2-




---



##### 



UCC Matters
 Company Certificates
 Opinion of Counsel
 Insurance Certificates
 Other Documents
 Payment of Amendment Fee
 Payment of Legal Fees and Expenses
 GENERAL
 Post-Closing Agreements
        -3-




---



##### 



Governing Law
 Severability
 Successors and Assigns
 Continuing Force and Effect of Loan Agreement, Other Agreements, and Guaranty
 References to Loan Agreement
 Expenses
 -4-




---



##### 



Release of Claims Against Bank
 Counterparts
 -5-




---



##### 



BORROWERS:LAWSON PRODUCTS, INC., a DelawarecorporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentLAWSON PRODUCTS, INC., a GeorgiacorporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentLAWSON PRODUCTS, INC., a New JerseycorporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentLAWSON PRODUCTS, INC., a NevadacorporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentLAWSON PRODUCTS, INC., a TexascorporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    President




---



##### 



LP SERVICE CO., an Illinois corporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentLPI HOLDINGS, INC., an Illinois corporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentCRONATRON WELDING SYSTEMS, LLC, aNorth Carolina limited liability companyBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentDRUMMOND AMERICAN LLC, an Illinoislimited liability companyBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentASSEMBLY COMPONENT SYSTEMS, INC., anIllinois corporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    Chief Executive OfficerAUTOMATIC SCREW MACHINE PRODUCTSCOMPANY, INC., an Alabama corporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    Chief Executive Officer




---



##### 



C. B. LYNN COMPANY, an Illinois corporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentRUTLAND TOOL & SUPPLY CO., A NevadacorporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    Chief Executive Officer




---



##### 



LENDER:BANK OF AMERICA, N.A., a national bankingassociationBy:
    
    /s/ David BaconName:
    
    David BaconTitle:
    
    Vice President




---



##### 



(FIRST AMENDMENT CONFORMED VERSION)
 FIRST AMENDED AND RESTATED CREDIT AGREEMENT
 BY AND BETWEEN
 BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO LASALLE BANK
NATIONAL ASSOCIATION
 AND
 LAWSON PRODUCTS, INC.,
AND CERTAIN OF ITS SUBSIDIARIES




---



##### 



FIRST AMENDED AND RESTATED CREDIT AGREEMENT
 Agreement Lawson Borrower Lender
 PRELIMINARY STATEMENTS:
 Original Loan Existing Credit Agreement Existing Note
 ACSL Original Credit
Agreement.




---



##### 



AGREEMENT
  DEFINITIONS.
 General Terms
 Accounting Systems Letter subsection
7.1(G)
 Accounts
 Affiliate
 Applicable Margin
 Assets
 Authorized Officer
 7




---



##### 



BBA LIBOR Daily Floating Rate BBA
LIBOR
 BBA LIBOR Daily Floating Rate LIBOR Loan BBA LIBOR Daily Floating Rate
LIBOR Loans plus
 BBA LIBOR Rate (Adjusted Periodically) Adjustment Date
 BBA LIBOR Rate (Adjusted Periodically) LIBOR Loan BBA LIBOR Rate (Adjusted
Periodically) LIBOR Loans plus
 BBA LIBOR Request
 Bank Products
 8




---



##### 



Bank Product Agreements
 Bank Product Obligations
 Bankruptcy Code subsection 6.6
 Borrower Schedule 6.12
 Business Day
 Capital Expenditure
 Capitalized Lease
 Change in Control
 Closing Date
 Code subsection 1.3
 9




---



##### 



Collateral
 Collateral Assignment
 Commercial Card Obligations
 Contingent Liability Contingent Liabilities
 Current Assets Current Liabilities
 10




---



##### 



Debt
 Deposit Inventory System Schedule 3.4
 Default subsection 9.l
 Distribution
 EBITDA
 Environmental Lien
 11




---



##### 



ERISA
 ERISA Affiliate
 Event of Default
 Federal Settlement gifting
 Federal Settlement Amount gifting
 Financials subsection 6.4
 First Amendment
 First Amendment Effective Date
 Fiscal Quarter
 Fiscal Year
 Funded Debt
 GAAP subsection 1.2
 12




---



##### 



Good Faith
 Guaranteed Indebtedness
 Hedging Agreement
 Hedging Obligation
 Immediate Family
 Indebtedness
 13




---



##### 



Interest Charges plus
 Interest Period
 Internal Revenue Code
 Inventory
 Lawson Canada
 Legal Requirement
 14




---



##### 



Lending Affiliate
 Letter of Credit Letters of Credit Section 2.1(B)
 Letter of Credit Obligations Section
2.1(B)
 Liabilities
 Lien
 Loan(s)
 15




---



##### 



Loan Account Section 2.4
 Loan Documents
 Management Letter subsection 7.1(G)
 Maturity Date
 Maximum Facility Section 2.3
 Maximum Commercial Card Obligation
 Maximum Hedging Obligation
 Maximum Letter of Credit Obligation
 Multiemployer Plan
 Net Income
 Net Worth
 Note subsection 2.1
 PBGC
 Pension Plan
 16




---



##### 



Permitted Liens Section 8.1
 Person
 Pledge Agreement
 Property subsection 10.8(B)
 Real Property Land Exhibit A1 Exhibit
A2
 Responsible Officer Exhibit D Exhibit D Exhibit D Exhibit D
 Revolving Loan Revolving Loans Section 2.1
 Revolving Loan Availability
 Sarbanes-Oxley
 17




---



##### 



Securities Laws
 Security Agreement
 Security Documents
 Signature Authorization Certificate Exhibit B
 Subsidiary
 Term
 Termination Event subsection
6.18
 Third Party Goods
 18




---



##### 



Total Debt plus
 UFCA
 UFTA
 Upstream Payment
 Withdrawal Liability
 Accounting Terms
 Other Terms Defined in Illinois Uniform Commercial Code
 Other Definitional Provisions
 CREDIT.
 Loan, Purpose, etc
 19




---



##### 



Loan Section 4 subsection 2.1 subsection 2.1 Note subsection 9.1 subsection 2.8(A) subsection 2.8
 Letters of Credit Master Letter of Credit Agreement
 Corporate Commercial Card Facility
 20




---



##### 



Interest Rate Protection
 Purpose
 Limits
 Prepayments
 Facility Reduction Facility Reduction
Notice Maximum Facility Reduction Reduced Maximum Facility Section 3.2
 21




---



##### 



The Borrowers Loan Account Loan Account subsection 2.5
 Statements
 Interest and Fees
 Interest Section 2.6 ,
 LIBOR Loan Prepayments
 22




---



##### 



BBA LIBOR Rate (Adjusted Periodically) Unavailability
 Regulatory Change
 23




---



##### 



LIBOR Indemnity
 Default Rate of Interest subsection 2.6(E) Post Default Rate
 Maximum Interest
 Borrowing Procedures
 (i)
    
    Each Revolving Loan may be advanced either as a BBA LIBOR Daily
Floating Rate LIBOR Loan or a BBA LIBOR Rate (Adjusted Periodically) LIBOR
Loan. Each Loan shall be made available to Borrower upon any
 24




---



##### 



written, verbal, electronic, telephonic or telecopy loan request which Lender in good faith
believes to emanate from a properly authorized representative of Lawson,
whether or not that is in fact the case. Each such request shall be effective
upon receipt by Lender, shall be irrevocable, and shall specify the date,
amount and type of borrowing and, in the case of a BBA LIBOR Rate (Adjusted
Periodically) LIBOR Loan, the initial Interest Period therefor. Borrower shall
use commercially reasonable efforts to select Interest Periods so as not to
require a payment or prepayment of any BBA LIBOR Rate (Adjusted Periodically)
LIBOR Loan during an Interest Period for such BBA LIBOR Rate (Adjusted
Periodically) LIBOR Loan. The final Interest Period for any BBA LIBOR Rate
(Adjusted Periodically) LIBOR Loan must be such that its expiration occurs on
or before the Maturity Date. A request for a BBA LIBOR Daily Floating Rate
LIBOR Loan must be received by Lender no later than 11:00 a.m. Chicago,
Illinois time, on the day it is to be funded. A request for a BBA LIBOR Rate
(Adjusted Periodically) LIBOR Loan must be (i) received by Lender no later than
11:00 a.m. Chicago, Illinois time, three (3) Business Days before the day it is
to be funded, and (ii) in an amount equal to One Million and 00/100 Dollars
($1,000,000.00) or a higher integral multiple of Two Hundred Fifty Thousand and
00/100 Dollars ($250,000.00). The proceeds of each Loan shall be made
available at the office of Lender by credit to the account of Borrower or by
other means requested by Borrower and acceptable to Lender. Borrower does
hereby irrevocably confirm, ratify and approve all such advances by Lender and
does hereby indemnify Lender against losses and expenses (including court
costs, attorneys and paralegals fees) and shall hold Lender harmless with
respect thereto.
 (ii)
    
    LIBOR Conversion and Continuation Procedures. Upon
notice to Lender as set forth above, Borrower may, by written, verbal,
electronic, telephonic or telecopy notice from Lawson and subject to the terms
and conditions of this Agreement, (a) elect, as of any Business Day, to convert
any BBA LIBOR Daily Floating Rate LIBOR Loan into a BBA LIBOR Rate (Adjusted
Periodically) LIBOR Loan; or (b) elect, as of the last day of the applicable
Interest Period, to continue any BBA LIBOR Rate (Adjusted Periodically) LIBOR
Loan having an Interest Period expiring on such day for a new Interest Period,
or to convert any such BBA LIBOR Rate (Adjusted Periodically) LIBOR Loan into a
BBA LIBOR Daily Floating Rate LIBOR Loan. Such notice shall, in the case of a
conversion into a BBA LIBOR Daily Floating Rate LIBOR Loan, be given before
11:00 a.m., Chicago time, on the proposed date of such conversion, and in the
case of conversion into, or continuation of, BBA LIBOR Rate (Adjusted
Periodically) LIBOR Loans, be given before 11:00 a.m., Chicago time, at least
three (3) Business Days prior to the proposed date of such conversion or
continuation, specifying in each case: (i) the proposed date of conversion or
continuation; (ii) the aggregate amount of Loans to be converted or continued;
(iii) the type of Loans resulting from
 25




---



##### 



the proposed conversion or continuation;
and (iv) in the case of conversion into, or continuation of, BBA LIBOR Rate
(Adjusted Periodically) LIBOR Loans, the duration of the requested Interest
Period therefor. Each Interest Period occurring after the initial Interest
Period of any BBA LIBOR Rate (Adjusted Periodically) LIBOR Loan shall commence
on the day on which the preceding Interest Period for such BBA LIBOR Rate
(Adjusted Periodically) LIBOR Loan expires. Whenever the last day of any
Interest Period would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on the next
succeeding Business Day, provided, however, that if such extension would cause
the last day of such Interest Period to occur in the next following calendar
month, then the last day of such Interest Period shall occur on the immediately
preceding Business Day. Whenever an Interest Period would otherwise end on a
day of a month for which there is no numerically corresponding day in the
calendar month, such Interest Period shall end on the last Business Day of such
calendar month. If upon the expiration of any Interest Period applicable to a
BBA LIBOR Rate (Adjusted Periodically) LIBOR Loan, Borrower has failed to
select timely a new Interest Period to be applicable to such LIBOR Loan,
Borrower shall be deemed to have elected to convert such BBA LIBOR Rate
(Adjusted Periodically) LIBOR Loan to a BBA LIBOR Daily Floating Rate LIBOR
Loan effective on the last day of such Interest Period, without demand,
presentment, protest or notice of any kind, all of which are hereby waived by
Borrower. Any conversion of a BBA LIBOR Rate (Adjusted Periodically) LIBOR
Loan on a day other than the last day of an Interest Period therefor shall be
subject to Section 2.6(D).
 Number of Portions
 Intentionally Omitted
 Unused Commitment Fee Unused
Commitment Fee
 Method for Making Payments
 26




---



##### 



Maturity, Term
 Loan Maturity
 Termination however
 INTENTIONALLY OMITTED
 CONDITIONS OF ADVANCES.
  Borrowers Written Request Section 2.6(H)
 27




---



##### 



subsection 7.1
 Financial Condition subsection 7.1(B)
 No Default
 Representations and Warranties True and Correct
 Other Requirements
 Conditions as to Initial Advance Schedule 4.6
 Issuance of Letters of Credit
 28




---



##### 



INTENTIONALLY OMITTED.
 WARRANTIES ETC.
  Existence Schedule 6.12 Schedule
6.12
 Entity Authority
 Binding Effect
 Financial Data
 29




---



##### 



Financials
 Intentionally Omitted
 Solvency Bankruptcy Code UFTA UFCA
 Intentionally Omitted
 Intentionally Omitted
 Tax Liabilities
 30




---



##### 



Schedule 6.9
 Margin Security
 Survival of Warranties
 Subsidiaries Schedule 6.12
 Litigation and Proceedings Schedule 6.13 Schedule 6.13 Schedule 6.13
 Other Agreements
 Employee Controversies
 Compliance with Laws and Regulations
 31




---



##### 



General Compliance
 Environmental Compliance Schedule 6.13 Schedule 6.13
  Patents, Trademarks, Licenses, Etc
 ERISA Schedule 6.18
 32




---



##### 



Schedule
6.18 Schedule B Schedule B Schedule B
 33




---



##### 



Financial Condition
 Subordinated Debt
 Officers and Directors Schedule 6.21
 Certain Proceedings
 No Violations Schedule 6.13
 Taxes
 Utilities
 AFFIRMATIVE COVENANTS.
  34




---



##### 



Financial Statements
  Periodic Reporting
 (i)
    
    consolidated statements of income, retained
earnings and cash flow of Borrower for such calendar month and for the
period from the beginning of the then current Fiscal Year to the end of
such Fiscal Quarter, and a consolidated balance sheet of Borrower as of
the end of such Fiscal Quarter, setting forth in each case, in
comparative form, figures (1) in the case of statements, for the
corresponding periods in the preceding Fiscal Year and (2) in the case
of balance sheets, as of the last day of the preceding Fiscal Year
(unless a different period is reasonably requested by the Lender), all
in reasonable detail and certified as accurate by an Authorized Officer
pursuant to a certificate in the form of Exhibit A attached
hereto, subject to changes resulting from normal year-end adjustments;(ii)
    
    statements prepared in the ordinary course, if
any, in which income for such Fiscal Quarter and for the period from
the start of the then current Fiscal Year to the end of such Fiscal
Quarter, the cash flows for the period from the start of the then
current Fiscal Year to the end of such Fiscal Quarter, and the actual
balance sheets at the end of such Fiscal Quarter (in each case as
required to be delivered pursuant to subsection 7.1(A) (i) hereof) are
compared with the corresponding projected statements of income and cash
 35




---



##### 



flow and balance sheets for such periods and time furnished to Lender
pursuant to subsection 7.l (F) below, in each case in the same format
as the audited statements of income and cash flow and the audited
balance sheet; all in reasonable detail along with a Covenant
Compliance Certificate certified by an Authorized Officer pursuant to a
certificate in the form of Exhibit A attached hereto;
 (iii)
    
    (a) as reasonably requested by Lender, copies
of consolidated operating statements for such Fiscal Quarter prepared
by Borrower for internal use, including, without limitation, statements
of cash flow, purchases and sales of inventory and other similar data,
and (b) a comparison of actual cash flow and Capital Expenditures with
amounts budgeted for such Fiscal Quarter;(iv)
    
    calculations setting forth the compliance with
the financial covenants set forth in subsection 8.14 hereof for the
most recently completed Fiscal Quarter; and(v)
    
    in the event that any of the foregoing
statements indicate that Borrower has varied in any material respect
from any financial projections provided by Borrower to Lender, upon
Lenders reasonable request a statement of explanation of such
deviation from an Authorized Officer;
 Annual Exhibit A
 Default Notices
 Other Defaults and Material Information
 36




---



##### 



Budget
 Letters from Accountants and Consultants
 Other Information
 Covenant Compliance Certificate Section 7.1 Exhibit A Section 7.1
  37




---



##### 



Exhibit A
  Intentionally Omitted
 Conduct of Business Schedule 6.12
 38




---



##### 



Claims and Taxes
 The Lenders Costs and Expenses as Additional Liabilities
 The Borrowers Liability Insurance
 The Borrowers Property Insurance and Business Interruption Insurance
 39




---



##### 



ERISA
 (i)
    
    as soon as possible, and in any event within
twenty (20) days after Lawson or an ERISA Affiliate of Lawson knows or
has reason to know that a Termination Event has occurred, a written
statement of an Authorized Officer of Lawson describing such
Termination Event and the action, if any, which Lawson or such ERISA
Affiliate of Lawson has taken, is taking or proposes to take with
respect thereto, and when known, any action taken or threatened by the
Internal Revenue Service (IRS), the Department of Labor (DOL) or
PBGC with respect thereto;(ii)
    
    as soon as possible, and in any event within
thirty (30) days, after Lawson or an ERISA Affiliate of Lawson knows or
has reason to know that a prohibited transaction (defined in Section
406 of ERISA and Section 4975 of the Internal Revenue code) has
occurred, a statement of an Authorized Officer of Lawson describing
such transaction;(iii)
    
    promptly after the filing thereof with the
DOL, IRS or PBGC, copies of each annual report, including Schedule
B thereto, filed with respect to each Pension Plan;(iv)
    
    promptly after the filing thereof with the IRS,
a copy of each funding waiver request filed with respect to any Pension
Plan and all communications received by Lawson or any ERISA Affiliate
of Lawson with respect to such request;(v)
    
    promptly upon the occurrence thereof,
notification of any increases in the benefits of any existing Pension
Plan or the establishment of any new Pension Plan or the commencement
of contributions to any Pension Plan to which Lawson or any ERISA
Affiliate of Lawson was not previously contributing;(vi)
    
    promptly upon, and in any event within ten (10)
Business Days after, receipt by Lawson or an ERISA Affiliate of Lawson
of the PBGCs intention to terminate a Pension Plan or to have a
trustee appointed to administer a Pension Plan, copies of each such
notice;(vii)
    
    promptly upon, and in any event within ten
(10) Business Days after, receipt by Lawson or an ERISA Affiliate of
Lawson of an unfavorable determination letter from the IRS regarding the
 40




---



##### 



qualification of a Pension Plan under Section 401(a) of the
Internal Revenue Code, copies of such letter;(viii)
    
    promptly upon, and in any event within ten (10) Business Days after
receipt by Lawson or an ERISA Affiliate of Lawson of a notice from a
Multiemployer Plan regarding the imposition of withdrawal liability,
copies of such notice; and(ix)
    
    promptly upon, and in any event within twenty
(20) Business Days after either Lawson or an ERISA Affiliate of Lawson
fails to make a required installment under subsection (m) of Section
412 of the Code or any other payment required under Section 412 on or
before the due date for such installment or payment, a notification of
such failure.
  Notice of Suit or Adverse Change in Business
 Supervening Illegality
 41




---



##### 



subsection 7.10
 Environmental Laws
 Lender as Depository
 Compliance with Certain Statutes OFAC BSA
 42




---



##### 



NEGATIVE COVENANTS.
  Encumbrances Section 8.2 Schedule
8.1 Permitted Liens
 Indebtedness provided Schedule 8.2 Sections 8.4(vi) (vii)
 43




---



##### 



Consolidations, Mergers or Acquisitions
 Investments or Loans Section 8.13 Section 8.6
 Guarantees
 Compensation to Officers and Others Section 8.4
 Issuance of Stock
 44




---



##### 



Amendment of Articles of Incorporation, By-Laws; Company Name; Places of Business
 Transactions with Subsidiaries and Affiliates Section 8.4
 ERISA Violations
     45




---



##### 



Fiscal Year
 Subsidiaries Schedule 6.12
 Financial Covenants
 Intentionally Omitted
 Minimum Shareholder Equity
 Fixed Charge Coverage minus
 46




---



##### 



Minimum EBITDA
 Fiscal Quarter
    
    Minimum EBITDAFiscal Quarter ending March 31, 2009
    
    $
    -2,500,000Fiscal Quarter ending June 30, 2009
    
    $
    2,744,000Fiscal Quarter ending September 30, 2009
    
    $
    4,446,000
 Intentionally Omitted
 Total Debt to EBITDA
 Federal
Settlement Costs and Expenses
 Intentionally Omitted
 Environmental subsection 8.15 provided further
 47




---



##### 



Disposal of Property
 Distributions; Restrictions on Upstream Payments
 DEFAULT, RIGHTS AND REMEDIES OF THE LENDER.
 Defaults
   7
 provided provided further
  48




---



##### 



subsection 9.1(F)
 subsection 9.1(G)
 Loss
   49




---



##### 



provided provided further
    50




---



##### 



Rights and Remedies Generally
 51




---



##### 



Waiver of Demand
 MISCELLANEOUS
 Waiver
 Costs and Attorneys Fees provided Section 2.3 subsection 2.6(C)
 52




---



##### 



Expenditures by the Lender
 Custody and Preservation of Assets
 Reliance by the Lender
 Parties
 CHOICE OF LAW
 CONSENT TO JURISDICTION
 EXCLUSIVE JURISDICTION
 53




---



##### 



OTHER JURISDICTIONS
 SERVICE OF PROCESS SUBSECTION 10.17 SUBSECTION 10.8
 WAIVER OF JURY TRIAL AND BOND
 WAIVER OF JURY TRIAL
 54




---



##### 



SECTIONS 10.8 10.9 10.10
 WAIVER OF BOND
 ADVICE OF COUNSEL
 SEVERABILITY
 Application of Payments
 Marshalling; Payments Set Aside
 55




---



##### 



Section Titles
 Continuing Effect
 Notices
 If to the Lender at:
    
    Bank of America, N.A., successor by merger toLaSalle Bank National Association135 S. LaSalle St., Suite 713Chicago, IL 60603Attn: David Bacon, Vice PresidentPhone 312.904.4082Fax 312.904.0409With a copy to:
    
    McGuireWoods LLP77 West Wacker Drive, Suite 4100Chicago, IL 60601Attn: Donald J. Gibson, Jr.Telephone: 312/750-8918Fax: 312/920-6592If to Borrower at:
    
    LAWSON PRODUCTS, INC.1666 East Touhy AvenueDes Plaines, Illinois 60018Attn: Thomas Neri, CEOTelephone: 847/827-9666Facsimile: 847/795-9030with a copy to:
    
    JENNER & BLOCK LLP330 N. Wabash Avenue
 56




---



##### 



Chicago, Illinois 60611Attn: Elizabeth A. DavidsonTelephone: 312/840-8693Facsimile: 312/840-8793
  Equitable Relief
 Indemnification Indemnitees Indemnified
Matters subsection 10.19
 Non-Discharge
 57




---



##### 



Effective Date
 Lenders Right to Assign
 Setoff
 Construction
 Customer Identification  USA Patriot Act Notice Act
 Continuing Indebtedness
 58




---



##### 



59




---



##### 



IN WITNESS WHEREOF
  
 By:
    
    /s/ David BaconName:
    
    David BaconIts:
    
    Vice President
   By:
    
    /s/ Thomas NeriThomas NeriIts:
    
    President
 
 By:
    
    /s/ Thomas NeriThomas NeriIts:
    
    President
 
 By:
    
    /s/ Thomas NeriThomas NeriIts:
    
    President
 
 By:
    
    /s/ Thomas NeriThomas NeriIts:
    
    President
 By:
    
    /s/ Thomas NeriThomas NeriIts:
    
    President
 
 By:
    
    /s/ Thomas NeriThomas NeriIts:
    
    President
 
 By:
    
    /s/ Thomas NeriThomas NeriIts:
    
    President
 
 By:
    
    /s/ Thomas NeriThomas NeriIts:
    
    President




---



##### 



By:
    
    /s/ Thomas Neri

Thomas NeriIts:
    
    President
 
 By:
    
    /s/ Thomas NeriThomas NeriIts:
    
    Chief Executive Officer
 
 By:
    
    /s/ Thomas NeriThomas NeriIts:
    
    Chief Executive Officer
 
 By:
    
    /s/ Thomas NeriThomas NeriIts:
    
    President
 
 By:
    
    /s/ Thomas NeriThomas NeriIts:
    
    Chief Executive Officer




---



##### 



EXHIBITS AND SCHEDULES
 Grid A
    
    Pricing GridExhibit A
    
    Form of Certificate to Accompany Financial StatementsExhibit A1
    
    Real Property  OwnedExhibit A2
    
    Real Property  Leased or otherwise occupied by BorrowerExhibit B
    
    Form of Signature AuthorizationExhibit C
    
    Form of NoteExhibit D
    
    Responsible OfficersSchedule 3.4
    
    Deposit Inventory SystemSchedule 3.7
    
    Third Party GoodsSchedule 4.6
    
    Conditions PrecedentSchedule 6.5
    
    Permitted LiensSchedule 6.8
    
    Other Company Names or Fictitious NamesSchedule 6.9
    
    Tax LiabilitiesSchedule 6.12
    
    SubsidiariesSchedule 6.13
    
    LitigationSchedule 6.18
    
    ERISA PlansSchedule 6.21
    
    Officers and Directors of BorrowerSchedule 8.1
    
    Liens, Security Interests and EncumbrancesSchedule 8.2
    
    Other Indebtedness




---



##### 



Grid A
  UNUSEDTOTAL DEBT/
    
    APPLICABLE
    
    LETTER OF
    
    COMMITMENTEBITDA
    
    MARGIN
    
    CREDIT FEE
    
    FEELevel I
    
    < 2.00 to 1.00
    
    200 bps
    
    200 bps
    
    30 bpsStatusLevel II
    
    3 2.00 to 1.00 but
    
    250 bps
    
    250 bps
    
    40 bpsStatus
    
    < 2.50 to 1.0Level III
    
    3 2.50 to 1.00 but
    
    300 bps
    
    300 bps
    
    50 bpsStatus
    
    < 3.00 to 1.0Level IV
    
    33.00 to 1. 00
    
    350 bps
    
    350 bps
    
    50 bpsStatus
     greater than or equal to 2.50 to
1.00 but less than 3.00 to 1.0
 greater than or equal to 2.00 to 1.00 but
less than 2.50 to 1.0
 less than
2.00 to 1.00




---



##### 



64




---



##### 



SECURITY AGREEMENT
 THIS SECURITY AGREEMENT Security Agreement LAWSON PRODUCTS, INC. Lawson EACH OF THE
UNDERSIGNED SUBSIDIARIES OF LAWSON AND EACH OTHER PERSON WHO SHALL BECOME A PARTY HERETO BY
EXECUTION OF A SECURITY JOINDER AGREEMENT Grantor Grantors BANK OF AMERICA, N.A. Secured Party
 RECITALS :
 Credit Agreement
 First Amendment
   1. Certain Definitions . UCC
 Facility Termination Date
 65




---



##### 



Qualifying Control Agreement Schedule
1.1
 Real Estate Collateral 1.1
 Secured Obligations
 2. Grant of Security Interest .
 Accounts
 Inventory
 Equipment
 66




---



##### 



General
Intangibles
 Deposit Accounts
 Chattel Paper
 Investment
Property
 Instruments
 Documents
 Letter-of-Credit Rights Supporting Obligations
 Commercial Tort Claims
 67




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##### 



Collateral
 provided however provided however
 3. Perfection . Applicable
Date
   68




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##### 



Section 3 Perfection Documents Perfection Action
 4. Maintenance of Security Interest; Further Assurances .
  69




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##### 



5. Receipt of Payment .
 6. Preservation and Protection of Collateral .
 70




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##### 



Attorneys Costs
 7. Status of Grantors and Collateral Generally .
 71




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##### 



Section 7
     72




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##### 



Schedule 7(f) Covered Period Schedule
7(f) Schedule 7(f)
 Schedule 7(f)
  73




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##### 



Schedule
7(f)
 8. Inspection .
 9. Specific Collateral .
 Accounts.
 Account Records Schedule of Accounts provided however
 74




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##### 



Account Documents
      75




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Inventory
  76




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##### 



Equipment .
 Supporting Obligations
  77




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##### 



Investment Property
 Schedule 9(e)
 Schedule 9(e)
  78




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##### 



Deposit Accounts
 Schedule 9(f)
 Schedule 9(f)
 79




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##### 



Chattel Paper
 provided however
 [___]
  80




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##### 



Instruments
   Commercial Tort Claims
 Schedule 9(i) Grantor Claims Section 9(i) Schedule
9(i) Schedule 9(i)
 81




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##### 



Internet Property Rights Internet Property
Rights Schedule
9(j)
 Third Party Goods Schedule 9(k)
 10. Casualty and Liability Insurance Required .
    82




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##### 



83




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##### 



provided
 Section 10(d)
  11. Rights and Remedies Upon Default .
    84




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##### 



Payment Collateral Section 5
  85




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##### 



Securities Act Affected
Collateral
 86




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##### 



first second third
 12. Attorney-in-Fact . provided
      87




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##### 



13. Reinstatement . Section 13
 14. Certain Waivers by the Grantors .
  15. Continued Powers .
 16. Other Rights .
 88




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##### 



17. Anti-Marshaling Provisions .
 18. Entire Agreement .
 19. Third Party Reliance .
 20. Binding Agreement; Assignment .
 89




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##### 



21. Severability .
 22. Counterparts .
 23. Notices .
 24. Joinder . Exhibit A Section 2
 25. Rules of Interpretation . Sections
1.02, 1.03, and 1.04
 90




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##### 



26. Governing Law; Waivers .
 (a) THIS SECURITY AGREEMENT AND EACH SECURITY JOINDER AGREEMENT SHALL BE DEEMED TO BE
EXECUTED AND HAS BEEN DELIVERED AND ACCEPTED IN CHICAGO, ILLINOIS BY SIGNING AND DELIVERING
IT THERE. ANY DISPUTE BETWEEN THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH, RELATED
TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
SECURITY AGREEMENT AND EACH SECURITY JOINDER AGREEMENT, AND WHETHER ARISING IN CONTRACT,
TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS AND NOT
THE CONFLICTS OF LAW PROVISIONS OF THE STATE OF ILLINOIS; PROVIDED THAT (i) WITH RESPECT TO
THOSE INSTANCES IN WHICH THE APPLICABLE CHOICE OF LAWS RULES OF SUCH STATE, INCLUDING
SECTION 9-301 OF THE UCC, REQUIRE THAT THE MANNER OF CREATION OF A SECURITY INTEREST IN
SPECIFIC COLLATERAL OR THE MANNER OR EFFECT OF PERFECTION OR NONPERFECTION OR THE RULES
GOVERNING PRIORITY OF SECURITY INTERESTS ARE TO BE GOVERNED BY THE LAWS OF ANOTHER
JURISDICTION, THEN THE LAWS OF SUCH OTHER JURISDICTION SHALL GOVERN SUCH MATTERS, (ii) EACH
CONTROL AGREEMENT (INCLUDING EACH QUALIFYING CONTROL AGREEMENT) APPLICABLE TO ANY SECURITIES
ACCOUNT OR DEPOSIT ACCOUNT SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION SPECIFIED IN
SUCH CONTROL AGREEMENT, OR OTHERWISE BY THE LAWS OF THE JURISDICTION THAT GOVERN THE
SECURITIES ACCOUNT OR DEPOSIT ACCOUNT TO WHICH SUCH CONTROL AGREEMENT RELATES, AND (iii) IN
THOSE INSTANCES IN WHICH THE LAWS OF THE JURISDICTION IN WHICH COLLATERAL IS LOCATED GOVERN
MATTERS PERTAINING TO THE METHODS AND EFFECT OF REALIZING ON COLLATERAL, SUCH LAWS SHALL BE
GIVEN EFFECT WITH RESPECT TO SUCH MATTERS.
 (b) EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS THAT ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY SECURITY
JOINDER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN MAY BE INSTITUTED IN
ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF COOK, STATE OF ILLINOIS, UNITED STATES
OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS SECURITY AGREEMENT OR A SECURITY
JOINDER AGREEMENT, EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE
LAYING OF THE VENUE OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN
ANY SUCH SUIT, ACTION OR PROCEEDING.
 91




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##### 



(c) EACH GRANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY PERSONAL SERVICE OF A
COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR
PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH
PARTY PROVIDED IN SECTION 25 OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER
THE APPLICABLE LAWS IN EFFECT IN THE STATE OF ILLINOIS.
 (d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL PRECLUDE
THE SECURED PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS SECURITY AGREEMENT OR ANY SECURITY JOINDER AGREEMENT OR THE OTHER LOAN DOCUMENTS IN THE
COURTS OF ANY PLACE WHERE ANY OTHER PARTY OR ANY OF SUCH PARTYS PROPERTY OR ASSETS MAY BE
FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION,
EACH GRANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY
WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, THE JURISDICTION OF ANY OTHER
COURT OR COURTS WHICH NOW OR HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR
OTHERWISE, MAY BE AVAILABLE UNDER APPLICABLE LAW.
 (e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER OR
RELATED TO THIS SECURITY AGREEMENT OR ANY SECURITY JOINDER AGREEMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY AGREES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY AND HEREBY EXPRESSLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION, SUIT OR PROCEEDING.
 (f) EACH GRANTOR HEREBY EXPRESSLY WAIVES ANY OBJECTION IT MAY HAVE THAT ANY COURT TO
WHOSE JURISDICTION IT HAS SUBMITTED PURSUANT TO THE TERMS HEREOF IS AN INCONVENIENT FORUM.
 [Signature pages follow]
 92




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##### 



IN WITNESS WHEREOF
 GRANTORS:LAWSON PRODUCTS, INC., a Delaware corporationBy:
Name:
    
    /s/ Thomas Neri

Thomas NeriTitle:
    
    PresidentLAWSON PRODUCTS, INC., a Georgia corporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentLAWSON PRODUCTS, INC., a New Jersey corporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentLAWSON PRODUCTS, INC., a Nevada corporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentLAWSON PRODUCTS, INC., a Texas corporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    President




---



##### 



LP SERVICE CO., an Illinois corporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentLPI HOLDINGS, INC., an Illinois corporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentCRONATRON WELDING SYSTEMS, LLC, a North Carolina limited liability companyBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentDRUMMOND AMERICAN I LLC, an Illinoislimited liability companyBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentASSEMBLY COMPONENT SYSTEMS, INC., an IllinoiscorporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    Chief Executive OfficerAUTOMATIC SCREW MACHINE PRODUCTS COMPANY, INC., an Alabama corporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    Chief Executive Officer




---



##### 



C. B. LYNN COMPANY, an Illinois corporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    PresidentRUTLAND TOOL & SUPPLY CO., A Nevada corporationBy:
    
    /s/ Thomas NeriName:
    
    Thomas NeriTitle:
    
    Chief Executive Officer




---



##### 



SECURED PARTY:BANK OF AMERICA, N.A., as Secured PartyBy:
Name:
    
    /s/ David Bacom

David BaconTitle:
    
    Vice President




---



#####