tenthamendmentcibc






                                                                                  CONSENT AND TENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT         THIS CONSENT  AND  TENTH  AMENDMENT          TO  LOAN  AND  SECURITY  AGREEMENT (this “Amendment”) is entered into as of this 28th day of September, 2018 by  and  among CIBC  BANK  USA,  formerly  known  as  The  PrivateBank  and  Trust  Company  (“Lender”), LAWSON  PRODUCTS,  INC.,  a  Delaware  corporation  (“Lawson  Products  Delaware”), LAWSON  PRODUCTS,  INC.,  an  Illinois  corporation  (“Lawson  Products  Illinois”), BARON DIVESTITURE COMPANY, an Illinois corporation (“Baron Divestiture”),  and SANDALWOOD  DIVESTITURE  COMPANY,  INC.,  an  Alabama  corporation   (f/k/a  Automatic  Screw  Machine  Products  Company,  Inc.) (“Sandalwood  Divestiture”;  Lawson  Products Delaware, Lawson Products Illinois, Baron Divestiture and Sandalwood Divestiture are  individually referred to herein each as a “Borrower” and collectively as “Borrowers”).                                 W I T N E S S E T H:         WHEREAS, Lender, Borrowers and certain  former affiliates of Borrowers are party to  that  certain  Loan  and  Security  Agreement  dated  as  of  August 8,  2012  (as  amended,  restated,  supplemented or otherwise modified from time to time, the “Loan Agreement”);         WHEREAS,  on  September 18,  2017,  Lender  changed  its  name  from  The  PrivateBank  and Trust Company to CIBC Bank USA;         WHEREAS,  Borrowers  have informed  Lender that  Lawson Products  Illinois desires to  purchase from Screw Products, Inc., a Delaware corporation (the “Seller”), and the Seller desires  to sell to Lawson Products Illinois, pursuant to the terms and conditions of the Screw Products  Purchase Agreement (as defined in this Amendment); a true, correct and complete copy of the  draft Screw Products Purchase Agreement provided to Lender by Borrowers on September 27,  2018, together with the draft schedules provided to Lender by Borrowers on September 27, 2018  are attached hereto  as Exhibit A), the Purchased Assets  (as  such term  is  defined in  the Screw  Products Purchase Agreement (such asset acquisition by Lawson Products  Illinois, the “Screw  Products Asset Acquisition”);         WHEREAS, Borrowers have requested that Lender provide certain consents and agree to  amend the Loan Agreement in certain other respects as set forth herein; and         WHEREAS, Lender is willing to provide such consents and make such amendments, in  each case, subject to the terms, conditions and other provisions hereof.         NOW, THEREFORE, for and in  consideration of the premises  and mutual  agreements  herein  contained  and  for  the  purposes  of  setting  forth  the  terms  and  conditions  of  this  Amendment, the parties, intending to be bound, hereby agree as follows:         Section 1   Incorporation of the Loan Agreement.  All capitalized terms which are not  defined  hereunder  shall  have  the  same  meanings  as  set  forth in  the  Loan  Agreement,  and  the  Loan 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 Loan Agreement are inconsistent with the amendments set forth in Section 3  below, such terms and provisions shall be deemed superseded hereby.  Except as specifically set                                                                                     





 






forth herein, the Loan Agreement and the other Loan Documents shall remain in full force and  effect and the provisions thereof shall be binding on the parties hereto.         Section 2   Consent to the Screw Products Asset Acquisition.  Effective solely upon  satisfaction of each of the conditions precedent set forth in Section 4 below, in reliance upon the  representations and warranties of the Loan Parties set forth in this Amendment, and subject to the  other terms and conditions of this Amendment:               (a)   Notwithstanding  Sections 13.4  and  13.6  of  the  Loan  Agreement,  Lender        hereby consents to the Screw Products Asset Acquisition, provided that the effectiveness        of such consent is subject to the following conditions:                     (i)   The  Screw  Products  Asset  Acquisition  shall  be  on  terms  and              conditions substantially similar to the draft Screw Products Purchase Agreement              provided to Lender by Borrowers on September 27, 2018, together with the draft              schedules provided to Lender by Borrowers on September 27, 2018, as such terms              and conditions may be supplemented, modified or waived in any manner that is              not adverse in any material respect to the interests of Lender (it being understood              that any increase or decrease to the purchase price by an amount greater than five              percent (5.0%) is material and adverse to the interests of Lender);                     (ii)  Lender shall have received confirmation in writing on behalf of the              Borrowers from an  authorized  officer  of the  Representative  (or  an  agent  of  the              Borrowers) to  the  effect  that  the  conditions  for  closing  set  forth  in  the Screw              Products  Purchase Agreement have been satisfied or waived by  the appropriate              party (or parties), the closing deliveries set forth in the Screw Products Purchase              Agreement have been  delivered  and  that  the Screw  Products  Asset  Acquisition              has been consummated (except for receipt of the funds to pay the cash portion of              the purchase price thereunder); and                     (iii) both  before  and  immediately  after  giving  effect  to  the              consummation  of  the  Screw  Products  Asset  Acquisition  and  the  transactions              contemplated  thereby,  no  Default  or  Event  of  Default  has  occurred  and  is              continuing.               (b)   The  foregoing  consent  is  expressly  limited  to  the  specific  transactions        described  above  in  this  Section 2,  and  shall  not  be  deemed  or  otherwise  construed  to        constitute  a  consent  to  any  other  transaction,  whether  or  not  similar  to  the  transaction        described  above  in  this  Section 2.   Lender  has  granted  the  consent  set  forth  in  this        Section 2  in  this  particular  instance  and  in  light  of  the  facts  and  circumstances  that        presently exist, and the grant of such consent shall not constitute a course of dealing or        impair Lender’s right to withhold any similar consent or waiver in the future.               (c)   Lender  and  Borrowers  hereby  agree  that  the  foregoing  consent,  and  the        consummation of the Screw Products Asset Acquisition, shall not operate to reduce the        $5,000,000  and  $15,000,000  baskets  set  forth  in  the  definition  of  Permitted  Asset        Acquisition in Section 1.1 of the Loan Agreement.                                         2                                           





 






      Section 3   Amendments to the Loan Agreement.  Upon satisfaction of the conditions  precedent set forth in Section 4 of this Amendment and in reliance on the representations and  warranties made by the Loan Parties set forth herein, the Loan Agreement is hereby amended as  follows:               (a)   The following new definitions are hereby added to Section 1.1 of the Loan        Agreement in appropriate alphabetical order to read as follows:               Screw Products Asset Acquisition has the meaning ascribed to such term              in the Tenth Amendment.               Screw  Products  Purchase  Agreement shall  mean  that  certain  Asset              Purchase  Agreement  to  be  entered  into by  and  among  Lawson  Products              Illinois,  as  the  Purchaser,  Screw  Products,  Inc.,  a  Delaware  corporation              (“Seller”), and William Marthens, an individual and the sole shareholder              of Seller (“Shareholder”) and, together with Seller, the “Selling Parties”),              to effectuate the Screw Products Asset Acquisition.               Screw Products Purchase Documents shall mean, collectively, the Screw              Products  Purchase  Agreement  and  the  other  material  instruments,              documents  and  agreements  executed  and  delivered  in  connection              therewith.               Tenth Amendment shall mean that certain Consent and Tenth Amendment              to  Loan  and  Security  Agreement  dated  as  of  the  Tenth  Amendment              Effective Date by and between the Borrowers and the Lender.               Tenth Amendment Effective Date shall mean September 28, 2018.               (b)   The third sentence of Section 3.2.1 of the Credit Agreement is  amended        and restated in its entirety to read as follows:               Each  such  notice  shall  be  accompanied  by  an  L/C  Application,  duly              executed by the applicable Borrower and in all respects satisfactory to the              L/C Issuer, together with such other documentation as the L/C Issuer may              request in support thereof, it being understood that each L/C Application              shall specify, among other things, the date on which the proposed Letter of              Credit is to be issued, the expiration date of such Letter of Credit (which              shall  not  be  later  than  the thirtieth  (30th)  day  prior  to  the  Maturity  Date              (unless  such  Letter  of  Credit  is  Cash  Collateralized))  and  whether  such              Letter of Credit is to be transferable in whole or in part.               (c)   Section 12.7 of the Loan Agreement is amended and restated in its entirety        to read as follows:               12.7  Use  of  Proceeds.   All  monies  and  other  property  obtained  by              Borrowers from  Lender  pursuant  to  this  Agreement  shall  be used solely              for  working  capital  purposes  and  for  other  business  purposes  of                                         3                                           





 






            Borrowers; provided that,  (a) the Bolt Supply Acquisition Loan shall  be              used by  Lawson  Products  Ontario  to  fund  in  part  the  Bolt  Supply              Acquisition and to pay fees, costs and expenses in connection therewith;              and (b) the Loan made on or after the Tenth Amendment Effective Date in              connection  with  the  Screw  Products  Asset  Acquisition shall  be  used  by              Lawson Products Illinois to fund in part the purchase price of the Screw              Products  Asset  Acquisition  and  to  pay  fees,  costs  and  expenses  in              connection therewith.               (d)   Section 13.6(a) of the Loan Agreement is hereby amended and restated in        its entirety to read as follows:                     (a)   Loan Parties shall not, and shall not permit any Subsidiary              to,  purchase  or  otherwise  acquire,  or  contract  to  purchase  or  otherwise              acquire,  the  obligations  or  stock  of  any  Person,  other  than  (i) direct              obligations  of the  United  States,  obligations  insured  by  the  Federal              Deposit Insurance Corporation and obligations unconditionally guaranteed              by the United States, including, without limitation, the PNC Certificate of              Deposit, (ii) securities of Account Debtors received pursuant to any plan              of  reorganization  or  similar  arrangement  upon  the  bankruptcy  or              insolvency  of  such  Account  Debtor, (iii) any  in  connection  with  any              Permitted  Asset  Acquisition,  (iv) the  Bolt  Supply  Acquisition  and  (v) in              connection with the Screw Products Asset Acquisition.               (e)   Each  of  Schedule  11.2.1  (Business  and  Collateral  Locations),  Schedule        11.2.2  (Certain  Collateral)  and  Schedule  11.10  (Names  and  Tradenames)  to  the  Loan        Agreement  is  hereby  replaced  with  the  corresponding  Schedule  attached  hereto under        Exhibit B.          Section 4   Conditions Precedent.  The effectiveness of this Amendment is subject to  satisfaction of the following conditions:               (a)   Lender shall have received a fully executed copy of this Amendment;               (b)   Lender shall have received one or more counterparts of each other item,        agreement,  document  and  instrument  set  forth  on  the  Closing  Document  Checklist        attached  hereto  as Exhibit C,  each  in  form  and  substance  reasonably  satisfactory  to        Lender;               (c)   The conditions precedent set forth in Section 2(a) have been satisfied; and               (d)   The  representations  and  warranties  set  forth  in Section 6 below  shall  be        true and correct.         Section 5   Post-Closing  Obligations.   The  Loan  Parties agree  to  deliver  to Lender,  absent any changes prohibited by this Amendment, the following items, on or before the dates  specified with respect to such items, or such later dates as may be agreed to by Lender, in its sole  discretion, and the failure of the Loan Parties to make any delivery described below, within the                                         4                                           





 






specified time period indicated below with respect thereto (or such later date as may have been  agreed to by Lender in its sole discretion), shall constitute an Event of Default under the Loan  Agreement:   (a) within five  (5)  Business  Days following  the  consummation  of the  Screw  Products Asset Acquisition, the Loan Parties shall deliver to Lender fully executed copies of the  Screw Products Purchase Documents, including, without limitation, all schedules, exhibits and  other attachments related thereto.         Section 6   Representations and Warranties.  Each Loan Party hereby represents and  warrants, in each case after giving effect to this Amendment, to Lender as follows:               (a)   The  representations  and  warranties  of  each  Loan  Party  in  the  Loan        Agreement and each of the other Loan Documents to which it is a party shall be true and        correct in all material respects (provided that if any representation or warranty is by its        terms qualified by concepts of materiality, such representation or warranty shall be true        and correct in all respects) on the date hereof, except for representations and warranties        that expressly relate to an earlier date which  must be true and correct as of such earlier        date;               (b)   No Default or Event of Default exists;               (c)   Each  Loan  Party  has  the  power  and  authority  to execute,  deliver  and        perform its obligations under this Amendment and each other document, agreement and        instrument executed by such Loan Party in connection with each of the foregoing;               (d)   The  execution,  delivery  and  performance  by  each  Loan  Party  of  this        Amendment and each other document, agreement and instrument executed by such Loan        Party in connection with each of the foregoing have been duly authorized by all necessary        action; and               (e)   This  Amendment  and  each  other  document,  agreement  and  instrument        executed  by  each  Loan  Party  in  connection  with  each  of  the  foregoing  constitutes  the        legal,  valid  and  binding  obligation  of  such  Loan  Party,  enforceable  against  such  Loan        Party in accordance with its terms, except as enforceability may be limited by applicable        bankruptcy,  insolvency,  or  similar  laws  affecting  the  enforcement  of  creditor’s  rights        generally or by equitable principles relating to enforceability.         Section 7   Fees and Expenses.  Borrowers agree to pay on demand all reasonable out- of-pocket  costs  and  expenses  of  or  incurred  by  Lender,  including,  but  not  limited  to,  legal  expenses  and  reasonable  attorneys’  fees,  in  connection  with  the  evaluation,  negotiation,  preparation, execution and delivery of this Amendment.         Section 8   Entire Agreement.  This Amendment constitutes the entire agreement of  the  parties  hereto  with  respect  to  the  subject  matter  hereof  and  supersedes  all  other  understandings, oral or written, with respect to the subject matter hereof.         Section 9   No  Modification; No  Waiver.   Except  as  expressly  set  forth  herein,  nothing contained herein shall be deemed to constitute a waiver of compliance with any term or  condition contained in the Loan Agreement or any other Loan Document or constitute a course                                         5                                           





 






of conduct or dealing among the parties.  Except as expressly stated herein, Lender reserves all  rights,  privileges  and  remedies  under  the  Loan  Documents.   All  references  in  the  Loan  Documents to the Loan Agreement shall be deemed to be references to the Loan Agreement, as  amended hereby.  The execution, delivery and effectiveness of this Amendment shall not operate  as a waiver of any right, power or remedy of Lender under the Loan Agreement or any of the  Loan Documents.         Section 10  Severability.   The  illegality  or  unenforceability  of  any  provision  of this  Amendment or any instrument or agreement required hereunder shall not in any way affect or  impair  the  legality  or  enforceability  of  the  remaining  provisions  of  this  Amendment  or  any  instrument or agreement required hereunder.         Section 11  Counterparts.  This  Amendment  may  be  executed  in  two  or  more  counterparts,  each  of  which  shall  be  deemed  an  original,  and  all  of  which  together  shall  constitute one and the same instrument.  Delivery by facsimile or electronic transmission of a  portable document file (also known as a .pdf file) of an executed counterpart signature page shall  be effective as a manually executed counterpart signature hereof.         Section 12  Governing Law; Other Waivers.  This Amendment shall be governed and  construed in accordance with the internal laws of the State of Illinois.  Section 18.11 of the Loan  Agreement is incorporated herein by reference, mutatis mutandis.         Section 13  Release.   In  consideration  of  Lender’s  agreements  contained  in  this  Amendment, each Loan Party hereby irrevocably releases and forever discharges Lender and its  affiliates, subsidiaries, successors, assigns, directors, officers, employees, agents, consultants and  attorneys  (each,  a  “Released  Person”)  of  and  from  any  and  all  claims,  suits,  actions,  investigations,  proceedings  or  demands,  whether  based  in  contract,  tort,  implied  or  express  warranty, strict liability, criminal or civil statute or common law of any kind or character, known  or unknown, which such Loan Party ever had or now has against Lender or any other Released  Person  which  relates,  directly  or  indirectly,  to  any  acts  of  omissions  of  Lender  or  any  other  Released Person relating to the Loan Agreement or any other Loan Document on or prior to the  date hereof.                           [SIGNATURE PAGES FOLLOW]                                          6                                           





 






         IN WITNESS WHEREOF, the parties hereto have duly executed this Consent and Tenth  Amendment to Loan and Security Agreement as of the date first above written.   BORROWERS:                             LAWSON PRODUCTS, INC., a Delaware                                         corporation                                                                                                                           By: /s/Ronald J. Knutson                                                      Ronald J. Knutson                                            Executive Vice President and Chief                                            Financial Officer                                          LAWSON PRODUCTS, INC., an Illinois                                         corporation                                                                                                                           By: /s/Ronald J. Knutson                                                      Ronald J. Knutson                                             Executive Vice President and Chief                                            Financial Officer                                          SANDALWOOD DIVESTITURE                                         COMPANY, INC., an Alabama corporation                                                                                                                           By: /s/Ronald J. Knutson                                                      Ronald J. Knutson                                             Vice President                                          BARON DIVESTITURE COMPANY, an                                         Illinois corporation                                                                                                                           By: /s/ Ronald J. Knutson                                                     Ronald J. Knutson                                             Vice President                                          7                                           





 






   LENDER:                                   CIBC BANK USA                                                                                                                                    By: /s/Joseph G. Fudacz                                                          Joseph G. Fudacz                                               Managing Director                                                                                    8