**SIXTHMODIFICATION 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**     **THISSIXTH MODIFICATION OF LOAN DOCUMENTS**(this“Modification”) is made as of the21st 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 listedon Schedule 6.12 tothe 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 successorsand assigns (“Lender”).**RECITALS:**     A. Lenderhas heretofore made a loan (“Loan”) to Borrower in the principal amount of FiftyMillion and no/100 Dollars ($50,000,000) pursuant to the terms and conditions of a Credit Agreementdated as of March 27, 2001 between Borrower and Lender, (the“Credit Agreement”, all termsnot 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 madepayable by Borrower to the order of Lender (“Note”).     B. TheCredit Agreement was amended (i) as of August 12, 2002 to, among other things, add aletter of credit subfacility; (ii) as of July 11, 2003 to,among other things, increase theavailability under the letter of credit subfacility; (iii) as of May 31, 2005 to, among otherthings, 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, amongother 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 thefacility.     C. Borrowerhas requested that the Credit Agreement be further modified in order to modify theFixed Charge Coverage covenant as it relates to the Borrower’scapital improvements relating to theReno, Nevada location.     D. TheLender has agreed modify the Fixed Charge Coverage covenant upon the terms andconditions hereinafter set forth.**AGREEMENTS****:**     **NOW, THEREFORE,**in consideration of (i) the facts set forth hereinabove (which arehereby incorporated into and made a part of this Modification with the intent that Lender may relyupon the matters therein recited as representations and warranties of Borrower), (ii) theagreements by Lender to modify the Loan Documents, as provided herein, (iii) the covenants andagreements 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 Agreementis hereby amended as follows:     (i) Modifications of Existing Definitions. Section 1.1 of the Credit Agreementis hereby amended by amending and restating the definition of “Maximum Letter ofCredit Obligation”:     “Maximum Letter of Credit Obligation” shall mean Five Millionand no/100 Dollars ($5,000,000).     (ii) New Definitions. Section 1.1 of the Credit Agreement is hereby amended byadding the following definition:     “Reno Capital Expenditures” shall mean Capital Expendituresfor Borrower’s facility at 1381 Capital Blvd., Reno, NV 89502, in theapproximate amount of $14,100,000 consisting of land acquisition, a 145,000square foot addition including a liquid storage room to house hazardouschemicals and an increase in space of the existing aerosol storage room,conveyors, racking and the relocation of certain materials from Californiato the Reno, Nevada facility.     (b)**Fixed Charge Coverage Covenant.**Section 8.13(C) ofthe Credit Agreementis hereby amended and restated in its entirety to read as follows:     “(C) Fixed Charge Coverage. As of the end of each of its FiscalQuarters 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) FiscalQuarters then elapsed), the Borrower shall maintain a ratio of (a) the total forsuch Fiscal Quarter of EBITDA minus all Capital Expenditures which are notfinanced with Funded Debt (but excluding from such reduction the Reno CapitalExpenditures), 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 sumof all income taxes paid in cash by the Borrower, of not less than 1.10 to 1.00;”     **2.** **Representationsand Warranties of Borrower****.**Borrower hereby represents, covenantsand warrants to Lender as follows:     (a)The representations and warranties in the Credit Agreement, and the other LoanDocuments are true and correct as of the date hereof.     (b)There is currently no Default under the Note, the Credit Agreement or the other LoanDocuments and Borrower does not know of any event or circumstance which
2

 
would constitute an Default under the Note, the Credit Agreement or the other LoanDocuments.     (c)The Loan Documents are in full force and effect and, following the execution anddelivery of this Modification, they continue to be the legal, valid and binding obligationsof Borrower enforceable in accordance with their respective terms, subject to limitationsimposed by general principles of equity.     (d)There has been no material adverse change in the financial condition of Borrower orany other party whose financial statement has been delivered to Lender in connection withthe Loan from the date of the most recent financial statementreceived by Lender.     (e)As of the date hereof, Borrower has no claims, counterclaims, defenses, or set-offswith respect to the Loan or the Loan Documents as modified herein.     (f) Borrower is validly existing under the laws of the State of its formationor organization and has the requisite power and authority to execute and deliver thisModification and to perform the Loan Documents as modified herein. The execution anddelivery of this Modification and the performance of the Loan Documents as modified hereinhave been duly authorized by all requisite action by or on behalf of Borrower. ThisModification 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 thisModification, including, without limitation, title charges, recording fees, appraisal fees andattorneys’ fees and expenses.     **4. ****Miscellaneous****.**     (a) This Modification shall be governed by and construed in accordance with the laws ofthe State of Illinois.     (b) This Modification shall not be construed more strictly against Lender than againstBorrower merely by virtue of the fact that the same has been prepared by counsel for Lender,it being recognized that Borrower and Lender have contributedsubstantially and materially tothe preparation of this Modification, and Borrower and Lender each acknowledges and waivesany claim contesting the existence and the adequacy of the consideration given by the otherin entering into this Modification. Each of the parties to this Modification represents thatit has been advised by its respective counsel of the legal and practical effect of thisModification, 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 freewill, without promises or threats or the exertion of duress upon it. The signatories heretostate that they have read and understand this Modification, that they intend to be legallybound by it and that they expressly warrant and represent that they are duly authorized andempowered to execute it.
3

 
     (c)Notwithstanding the execution of this Modification by Lender, the same shall not be deemedto constitute Lender a venturer or partner of or in any way associated with Borrower nor shallprivity 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 inthe Loan Documents and this Modification, which collectively represent a complete integration ofall prior and contemporaneous agreements and understandings of Borrower and Lender; and thatall such prior understandings, agreements and representations are hereby modified as set forth inthis Modification. Except as expressly modified hereby, the terms of the Loan Documents are andremain unmodified and in full force and effect.     (e)This Modification shall bind and inure to the benefit of the parties hereto and theirrespective heirs, executors, administrators, successors and assigns.     (f)Any references to the “Note”, the “Credit Agreement,” or the “Loan Documents” contained inany of the Loan Documents shall be deemed to refer to the Note, Credit Agreement and the other LoanDocuments as amended hereby. The paragraph and section headings used herein are for convenienceonly and shall not limit the substantive provisions hereof. All words herein which are expressed inthe neuter gender shall be deemed to include the masculine, feminine and neuter genders. Any wordherein which is expressed in the singular or plural shall be deemed, whenever appropriate in thecontext, to include the plural and the singular.     (g)This Modification may be executed in one or more counterparts, all of which, when takentogether, 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 theBorrower 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 Lenderis required to obtain, verify and record certain information and documentation that identifies theBorrower, which information includes the name and address of the Borrower and such otherinformation that will allow the Lender to identify the Borrower in accordance with the Act.(Signature Page Follows)
4

 
     **IN WITNESS WHEREOF,**the parties hereto have executed this Modification dated as of the day andyear first above written       LASALLE BANK NATIONAL LAWSON PRODUCTS, INC., a TexasASSOCIATION (as Lender) corporation (as Borrower)       By:   By: /s/ Thomas Neri  Michael Vrchota   Thomas NeriIts: Senior Vice President Its: Chief Executive Officer       LAWSON PRODUCTS, INC., a Delaware LAWSON PRODUCTS, INC., a CanadianCorporation (as Borrower) Corporation (as Borrower)       By: /s/ Thomas Neri By: /s/ Thomas Neri  Thomas Neri   Thomas NeriIts: Chief Executive Officer Its: Chief Executive Officer       LAWSON PRODUCTS, INC., a Georgia LP SERVICE CO., an Illinois CorporationCorporation (as Borrower) (as Borrower)       By: /s/ Thomas Neri By: /s/ Thomas Neri  Thomas Neri   Thomas NeriIts: Chief Executive Officer Its: Chief Executive Officer       LAWSON PRODUCTS, INC.,a New Jersey LPI HOLDINGS, INC., an IllinoisCorporation (as Borrower) Corporation (as Borrower)       By: /s/ Thomas Neri By: /s/ Thomas Neri  Thomas Neri   Thomas NeriIts: Chief Executive Officer Its: Chief Executive Officer       LAWSON PRODUCTS, INC., a Nevada CRONATRON WELDING SYSTEMS, INC., aCorporation (as Borrower) North CarolinaCorporation (as Borrower)       By: /s/ Thomas Neri By: /s/ Thomas Neri  Thomas Neri   Thomas NeriIts: Chief Executive Officer Its: Chief Executive Officer
5

 
       DRUMMOND AMERICAN Corporation, LAWSON PRODUCTS DEMEXICO, S.A.an Illinois Corporation (as Borrower) DE C.V. (as Borrower)       By: /s/ Thomas Neri By: /s/ Thomas Neri  Thomas Neri   Thomas NeriIts: 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