CREDIT AGREEMENT dated as of August 21, 2009 by and among

CREDIT AGREEMENT

dated as of August 21, 2009

by and among

LAWSON PRODUCTS, INC. AND CERTAIN OF ITS SUBSIDIARIES,

as Borrower,

THE FINANCIAL INSTITUTIONS FROM TIME TO TIME A PARTY HERETO ,

as Lenders,

and

THE PRIVATEBANK AND TRUST COMPANY,

as Agent

CREDIT AGREEMENT

This CREDIT AGREEMENT dated as of August 21, 2009 (the “Agreement”), 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 Schedule 1 hereof (Lawson and the Subsidiaries are referred to collectively herein as the “Borrower” or the “Borrowers”) and THE PRIVATEBANK AND TRUST COMPANY (in its individual capacity, “PrivateBank”), both as a Lender and as agent (in such capacity, “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 all other Lenders; and

WHEREAS, Borrowers may, from time to time, request Loans (as defined below) from Agent and Lenders, and the parties wish to provide for the terms and conditions upon which such Loans or other financial accommodations shall be made.

NOW, THEREFORE, in consideration of any Loan (including any Loan by renewal or extension) hereafter made to Borrowers by Agent and Lenders, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Borrowers, the parties agree as follows:

1.

DEFINITIONS.

1.1 Defined Terms . For the purposes of this Agreement, the following capitalized words and phrases shall have the meanings set forth below.

“ Account ” shall have the meaning set forth in the Security Agreement.

“Account Debtor” shall have the meaning set forth in the Security Agreement.

" Affiliate ” shall mean any Person (a) that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with any Person or one or more Affiliates, (b) that directly or beneficially owns or holds 10% or more of any equity interest in any Person or one or more Affiliates or (c) 10% or more of whose voting stock (or in the case of a Person which is not a corporation, 10% or more of any equity interest) is owned directly or beneficially or held by any Person or one or more Affiliates. For purposes of this definition and this Agreement, the term “control” shall mean, directly or indirectly, the power to direct or cause the direction of the management or policies of a Person, whether through ownership interest or otherwise, including without limitation the power to elect or appoint, directly or indirectly, a majority of the members of its governing board or body.

“ Applicable Margin ” shall mean three percent (3%) for LIBOR Loans and zero percent (0%) for Prime Loans through December 31, 2009. Thereafter the Applicable Margin for LIBOR Loans and Prime Loans shall be adjusted as set forth on the Pricing Schedule five (5) Business Days after receipt of the consolidated quarterly financial statements of Lawson and its Subsidiaries commencing with the financial statements for the fiscal quarter ending on or about December 31, 2009 based on the Debt to EBITDA Ratio for the twelve (12) fiscal month period ending on the last day of such fiscal quarter. Provided that financial statements are delivered timely as required by this Agreement, the immediately prior Applicable Margin shall remain in effect until five (5) Business Days after delivery of the next following financial statements. If Borrower fails to deliver such financial statements within the time period required by this Agreement the Applicable Margin, in the Agent’s sole discretion, shall be equal to the highest level set forth on the Pricing Schedule, until five (5) Business Days after such statements are delivered.

" Bankruptcy Code ” shall mean the United States Bankruptcy Code, as now existing or hereafter amended.

" Bank Products ” shall mean any service or facility extended to any Borrower by any Lender or any of its Affiliates including: (i) credit cards, (ii) credit card processing services, (iii) debit cards, (iv) purchase cards, (v) ACH transactions, (v) cash management, including controlled disbursement, accounts or services (vi) hedging agreements, or (vii) foreign exchange agreements.

" Bank Products Agreements ” shall mean those certain cash management service agreements entered into from time to time by any Borrower and any Lender or any of their reimbursement obligations, fees and expenses owing by any Borrower to any Lender or any of their Affiliates pursuant to or evidenced by the Bank Product Agreements and irrespective of whether for payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all such amounts that a Borrower is obligated to reimburse Agent or any Lender or any of its Affiliates as a result of Agent or such Lender or Affiliate purchasing participations or executing indemnities or reimbursement obligations with respect to any Bank Products provided to any Borrower pursuant to Bank Products Agreements.

" Borrowing Base ” shall mean an amount equal to (a) 80% of the face amount of all existing Accounts which will be determined based upon Borrowers’ then current financial statements, plus (b) 50% of Inventory, all as determined based upon Borrowers’ then current financial statements.

" Business Day ” shall mean any day other than a Saturday, Sunday or a legal holiday on which banks are authorized or required to be closed for the conduct of commercial banking business in Chicago, Illinois and in the case of a Business Day which relates to a LIBOR Loan, on which dealings are carried on in the London Interbank Eurodollar market.

“ Capital Adequacy Charge ” shall have the meaning given to such term in Section 5.9 hereof.

“ Capital Adequacy Demand ” shall have the meaning given to such term in Section 5.9 hereof.

“ Capital Expenditures ” means, without duplication, any expenditures for any purchase or other acquisition of any asset which would be classified as a fixed or capital asset on a consolidated balance sheet of the Borrower and its Subsidiaries prepared in accordance with GAAP, but excluding (i) any such expenditures made for the replacement or restoration of assets to the extent paid for by any casualty insurance policy, third party or condemnation award with respect to the assets being replaced or restored, (ii) any such expenditures made with the proceeds from the sale or other disposition of obsolete or worn-out assets, (iii) proceeds from sales permitted by Section 8.5, and (iv) like-kind exchanges or trade-in of assets.

" Capital Lease ” shall mean, as to any Person, a lease of any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, by such Person as lessee that is, or should be; in accordance with Financial Accounting Standards Board (“FASB”) Statement No. 13, as amended from time to time, or, if such statement is not then in effect, such statement of GAAP as may be applicable, recorded as a “capital lease” on the consolidated balance sheet of Lawson and its Subsidiaries prepared in accordance with GAAP.

“ Capitalized Lease Obligations ” of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with GAAP.

" CERCLA ” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601 et seq.

" Change in Control ” shall mean the failure of Sidney L. Port or his Immediate Family to own individually, or through a trust or other entity for their benefit, including but not limited to Port Investments LLP, a Delaware Limited Liability Partnership, twenty percent (20%) or more of the shares of stock of Lawson.

" Closing Date ” shall mean August 21, 2009.

" Collateral ” shall mean property and interests in property (except real estate) and proceeds thereof now owned or hereafter acquired by the Borrowers in or upon which a Lien now or hereafter exists in favor of the Lender, under any of the Loan Documents.

“ Compliance Certificate ” shall mean a certificate signed by the controller, vice president of finance, treasurer or chief financial officer of Lawson showing the calculations necessary to determine compliance with the financial covenants set forth in Section 8.3 of this Agreement and stating that no Event of Default exists or if any Event of Default exists, stating the nature and status thereof.

" 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) reasonable costs, fees and expenses in connection with the negotiation, delivery and closing of this Agreement, the other Loan Documents and the transactions contemplated hereunder and thereunder, plus (f) costs, fees and expenses associated with the prior credit facility with Bank of America, N.A., plus (g) severance and restructuring charges of $8,313,000 in the first quarter of fiscal year 2009, plus (h) non-cash expenses under SFAS 123R, and less (or plus) (i) 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.

" Consolidated Interest Expense ” shall mean, for any period, Interest Expense of Lawson and its Subsidiaries for such period included in the determination of the Consolidated Net Income as reported for such period on the consolidated statement of net income for Lawson and its Subsidiaries in accordance with GAAP, plus interest income of Lawson and its Subsidiaries for such period included in the determination of such Consolidated Net Income.

" Consolidated Net Income ” shall mean, for any period, the net income of Lawson and its Subsidiaries on a consolidated basis in accordance with GAAP (excluding any extraordinary or non-recurring gains or losses).

“ Debt ” means Indebtedness for or with respect to borrowed money. For all purposes hereof all Loans plus all Letter of Credit Obligations shall be considered as and included in Debt.

“ Debt Service Coverage Ratio ” shall mean for any period, the ratio of (A) Consolidated EBITDA minus Capital Expenditures which are not financed with Long Term Debt (excluding Indebtedness under this Agreement)(except for information technology Capital Expenditures up to Fifteen Million Dollars ($15,000,000) in 2010 and 2011 combined for the ERP System), minus dividends to (B) the sum of (i) regularly scheduled principal and interest obligations on all bank debt (including Capitalized Lease Obligations and the Obligations), plus (ii) cash income taxes.

" Defaulting Lender ” shall have the meaning set forth in Section 2.1(e) hereof.

" Default Rate ” shall mean a per annum rate of interest equal to the Prime Rate plus two percent (2%) per annum.

" Demand Date ” shall have the meaning set forth in Section 2.1 hereof.

“ Eligible Assignee ” shall mean a bank or a trust company which maintains an office in the United States, or a commercial bank organized under the laws of the United States of America or of any State thereof, or any Affiliate of such bank or trust company, or other financial institution which is engaged in the banking business, having a combined capital and surplus of at least Five Hundred Million and No/100 Dollars ($500,000,000).

" Employee Plan ” means those pension, profit-sharing and retirement plans of the Borrowers described from time to time in the financial statements of the Borrowers.

" Environmental Laws ” shall mean all federal, state and local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating to the protection of the environment and/or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the rules, regulations, policies, guidelines, interpretations, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto.

" ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

" Event of Default ” shall mean any of the events or conditions set forth in Section 11 hereof

" FINRA ” shall mean the Financial Institutions Regulatory Authority.

" GAAP ” shall mean generally accepted accounting principles consistently applied with prior periods; provided, however, that GAAP with respect to any interim financial statements or reports shall be deemed subject to fiscal year-end adjustments and footnotes made in accordance with GAAP.

" Governmental Authority ” shall mean any nation or government, any state, province, or other political subdivision thereof, any control bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

" Guaranty ” shall mean any obligation, contingent or otherwise, of any Person guarantying or having the economic effect of guarantying any Indebtedness of any other Person in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (b) to purchase property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness, or (c) to maintain working capital, equity capital or other financial condition of the primary obligor so as to enable the primary obligor to pay such Indebtedness (including any obligation to make capital contributions, loans or other payments pursuant to a keep well guaranty or similar instrument); provided, however, that the term “Guaranty” shall not include endorsements for collection or deposit, in either case in the ordinary course of business.

" Hazardous Substance ” shall mean, without limitation, any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials Transportation Act, AS AMENDED (49 U.S.C. Sections 1801, et seq.), RCRA or any other applicable Environmental Law and in the regulations adopted pursuant thereto.

" Hazardous Wastes ” shall mean all waste material subject to regulation under CERCLA, RCRA or applicable state law, and any other applicable Federal and state laws now in force or hereafter enacted relating to hazardous waste disposal.

“ Immediate Family ” shall mean the spouse, former spouse, children, grandchildren, parents or grandparents of a Person.

" Indebtedness ” shall mean, with respect to any Person, without duplication (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person, (d) all obligations of such Person issued or assumed as the deferred purchase price of property or services (other than trade payables and accrued expenses incurred in the ordinary course of business), (e) all Indebtedness of others secured by any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, provided, that the amount of any such Indebtedness shall not exceed the greater of the book value or the fair market value of the property subject to such Lien, (f) all obligations of such Person under leases that are classified as capital leases under GAAP, (g) all Guaranties of such Person, and (h) all obligations of such Person under or with respect to letters of credit and bankers’ acceptances.

“Indemnified ” and “ Indemnified Parties ” shall mean, respectively, the Agent, each Lender and each of their respective parent corporations, affiliated corporations or subsidiaries, and each of their respective officers, directors, employees, attorneys and agents and all of such parties and entities.

“ Intangible Assets ” shall mean the amount (to the extent reflected in determining consolidated stockholders’ equity) of (i) all write-ups in the book value of any asset owned or acquired by the Borrower or a Subsidiary, (ii) all goodwill, covenants not to compete, prepayments, deferred charges, franchises, patents, trademarks, service marks, trade names, brand names, copyrights, and other intellectual property, (iii) all deferred financing costs (including, but not limited to, unamortized debt discount and expense, organization expense and experimental and development expenses), and (iv) leasehold improvements not recoverable at the expiration of a lease.

" Interest Expense ” shall mean with respect to any Person, for any period, the aggregate consolidated interest expense for such period (including without duplication, all commissions, discounts and other fees and charges owed with respect to letters of credit, the portion of any Capitalized Lease Obligations allocable to interest expense, and capitalized interest) determined in accordance with GAAP (but in any event excluding interest on tax assessments to the extent such interest is included in deferred taxes).

" Interest Period ” shall mean, with regard to any LIBOR Loan, successive one-, two- three- or six-month periods as selected from time to time by the Representative by notice given to the Agent not less than three Business Days prior to the first day of each respective Interest Period; provided, however, that: (i) each such Interest Period occurring after the initial interest Period of any LIBOR Loan shall commence on the day on which the preceding Interest Period for such LIBOR Loan expires, (ii) 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; (iii) whenever the first day of any Interest Period occurs on a day of a month for which there is no numerically corresponding day in the calendar month in which such Interest Period terminates, such Interest Period shall end on the last Business Day of such calendar month; (iv) the Borrowers may select Interest Periods so as to not require a payment or prepayment of any LIBOR Loan during an Interest Period for such Loan; and (v) the final Interest Period must be such that its expiration occurs on or before August 21, 2012.

" Interest Rate Agreements ” shall mean any interest rate protection agreement, interest rate swap or other interest rate hedge arrangement (other than any interest rate cap or other similar agreement or arrangement arising with respect to the Obligations pursuant to which the Borrowers have no credit exposure to the Agent or any Lender or any Affiliate of a Lender) to or under which any Borrower or any Subsidiary of any Borrower is a party or beneficiary.

“ Lender ” means, collectively, Agent and each of the other Lenders who are a party hereto from time to time as designated in Annex A hereto.

“ Letter of Credit ” and “ Letters of Credit ” shall mean, respectively, a letter of credit and all such letters of credit issued by a Lender, as provided in Section 2.4 of this Agreement.

“ Letter of Credit Obligations ” shall mean, at any time, an amount equal to the aggregate of the original face amounts of all Letters of Credit minus the sum of (i) the amount of any reductions in the original face amount of any Letter of Credit which did not result from a draw thereunder, (ii) the amount of any payments made by the Lender with respect to any draws made under a Letter of Credit for which the Borrower has reimbursed the Lender, (iii) the amount of any payments made by the Lender with respect to any draws made under a Letter of Credit which have been converted to a Loan as set forth in Section 2.4 , and (iv) the portion of any issued but expired Letter of Credit which has not been drawn by the beneficiary thereunder. For purposes of determining the outstanding Letter of Credit Obligations at any time, the Lender’s acceptance of a draft drawn on the Lender pursuant to a Letter of Credit shall constitute a draw on the applicable Letter of Credit at the time of such acceptance.

" LIBOR ” shall mean a rate of interest equal to (a)the per annum rate of interest at which United States dollar deposits in an amount comparable to the amount of the relevant LIBOR Loan and for a period equal to the relevant Interest Period are offered generally in the London Interbank Eurodollar market at 11 :00 a.m. (London time) two Business Days prior to the commencement of such Interest Period (or three Business Days prior to the commencement of such Interest Period if banks in London, England were not open and dealing in offshore United States dollars on such second preceding Business Day), as displayed in the Bloomberg Financial Markets system (or other authoritative source selected by the Agent in its sole discretion), divided by (b) a number determined by subtracting from 1.00 the then stated maximum reserve percentage for determining reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D), such rate to remain fixed for such Interest Period, or as LIBOR is otherwise determined by the Agent in its sole and absolute discretion. The Agent’s determination of LIBOR shall be conclusive, absent manifest error.

" LIBOR Loan ” or “ LIBOR Loans ” shall mean that portion, and collectively those portions, of the aggregate outstanding principal balance of the Loans that will bear interest at the LIBOR Rate, of which at any time and from time to time, the Borrowers may identify no more than six (6) advances of the Loans which will bear interest at the LIBOR Rate, of which each particular LIBOR Loan must be in the amount of Five Hundred Thousand Dollars ($500,000.00) or a higher integral multiple of Two Hundred Fifty Thousand Dollars ($250,000.00).

" LIBOR Rate ” shall mean a per-annum rate of interest equal to LIBOR plus the Applicable Margin for the relevant Interest Period, which LIBOR Rate shall remain fixed during such Interest Period.

" Lien ” shall mean any mortgage, pledge, hypothecation, judgment lien or similar legal process, title retention lien, or other lien or security interest, including, without limitation, the interest of a vendor under any conditional sale or other title retention agreement and the interest of a lessor under a lease of any interest any kind of property or asset, whether real, personal or mixed, or tangible or intangible, by such Person as lessee that is, or should be, a Capital Lease on the balance sheet of the Borrowers prepared in accordance with GAAP.

" Loans ” shall mean, collectively, all Revolving Loans (whether Prime Loans or LIBOR Loans) made by the Agent and the Lenders to each Borrower under and pursuant to this Agreement .

“Loan Documents ” shall mean all agreements, instruments and documents, including, without limitation, guaranties, mortgages, deeds of trust, pledges, powers of attorney, consents, assignments, contracts, notices, security agreements, leases, financing statements and all other written matter heretofore, now and/or from time to time hereafter executed by and/or on behalf of any Borrower and delivered to Agent and/or any Lender, in any case, in connection with the Loans made hereunder, including, without limitation, this Agreement, the Notes, the Security Agreement, the Interest Rate Agreements and the Bank Products Agreements.

“ Lock Box ” shall have the meaning set forth in the Security Agreement.

“Long Term Debt” shall mean Indebtedness with a term of one year or more, excluding Revolving Loans under this Agreement.

“ Lock Box Account ” shall have the meaning set forth in the Security Agreement.

" Mandatory Prepayment ” shall have the meaning set forth in Section 2.1(c) .

“ Master Letter of Credit Agreement ” shall have the meaning set forth in Section 2.4 .

" Material Adverse Change ” shall mean (a) a material adverse effect upon the business, operations, properties, or financial condition of Borrowers, taken as a whole, (b) a material impairment of the ability of the Borrowers to perform their obligations under the Loan Documents, or (c) the impairment of the validity or enforceability of, or material impairment of the rights or remedies of, or benefits to, the Agent and/or any Lender under any Loan Document, including a material impairment of the value of the Collateral.

" Maturity Date ” means August 21, 2012.

" Maximum Face Amount ” shall mean, with respect to any outstanding Letter of Credit, the face amount of such Letter of Credit including all automatic increases provided for in such Letter of Credit.

“ Maximum Letter of Credit Obligation ” means Eight Million and No/100 Dollars ($8,000,000).

" Maximum Revolving Loan Commitment ” means Fifty-Five Million and No/100 Dollars ($55,000,000).

" Note ” shall mean, respectively, each of and collectively, the Revolving Notes.

" Obligations ” shall mean the Loans, as evidenced by the Notes, all interest accrued thereon, any fees due the Agent or any Lender hereunder or any other Loan Documents, any expenses incurred by the Agent hereunder and any and all other liabilities and obligations of each Borrower to the Agent and any Lender, or in the case of Bank Products Obligations, any Affiliate of any Lender, howsoever created, arising or evidenced, and howsoever owned, held or acquired, whether now or hereafter existing, whether now due or to become due, direct or indirect, absolute or contingent, and whether several, joint or joint and several, including, but not limited to, any Interest Rate Agreements, Bank Products Obligations or under the other Loan Documents.

" Obligor ” shall mean each Borrower, any guarantor, any accommodation endorser, third party pledgor, or any other party liable with respect to the Obligations.

" Organizational Identification Number ” means, with respect to each Borrower, the organizational identification number assigned to such Borrower by the applicable governmental unit or agency of the jurisdiction of organization for such Borrower.

“ Permitted Liens ” shall mean the Liens described in Section 8.2(a) through (f) hereof.

" Person ” shall mean any natural person, individual, partnership, limited liability company, corporation, trust, joint venture, joint stock company, association, unincorporated organization, government or agency or political subdivision thereof, or other entity.

" Pre-Settlement Date ” shall have the meaning given to such term in Section 14.2 hereof.

“ Pricing Schedule ” shall mean Annex B attached hereto and identified as the “Pricing Schedule.”

" Prime Loan ” or “ Prime Loans ” shall mean that portion, and collectively, those portions of the aggregate outstanding principal balance of the Loans that will bear interest at the Prime Rate, plus the Applicable Margin.

" Prime Rate ” shall mean the floating per annum rate of interest which at any time, and from time to time, shall be most recently announced by PrivateBank as its Prime Rate, which is not intended to be PrivateBank’s lowest or most favorable rate of interest at any one time. The effective date of any change in the Prime Rate shall for purposes hereof be the date the Prime Rate is changed by PrivateBank. PrivateBank shall not be obligated to give notice of any change in the Prime Rate.

" Pro Rata Share ” shall mean any time, with respect to any Lender, a fraction (expressed as a percentage in no more than nine (9) decimal places), the numerator of which shall be the Revolving Loan Commitment of such Lender at such time and the denominator of which shall be the Maximum Revolving Loan Commitment at such time.

" RCRA ” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as same may be amended from time to time.

’’ Regulatory Change ” shall mean the introduction of, or any change in any applicable law, treaty, rule, regulation or guideline or in the interpretation or administration thereof by any Governmental Authority or any central bank or other fiscal, monetary or other authority having jurisdiction over the Agent or any Lender or its respective lending office.

" Representative ” shall have the meaning set forth in Section 5.1 (b) hereof.

" Requisite Lenders ” shall mean, at any time, Lenders having Pro Rata Shares equal to at least sixty-six and two-thirds percent of the aggregate Revolving Loan Commitment at such time.

“ Responsible Officer ” shall mean as to any Borrower, the President, Chief Executive Officer, Chief Financial Officer, Vice President Finance, Vice President – Treasurer, Vice President Controller, Treasurer and/or General Counsel.

" Revolving Interest Rate ” means Representative’s option from time to time of (i) the Prime Rate or (ii) the LIBOR Rate.

’’Revolving Loan ” and “ Revolving Loans ” shall mean, respectively, each direct advance (and the aggregate of all such direct advances, from time to time in the form of either Prime Loans and/or LIBOR Loans, made by the Agent or any Lender to the Borrowers under and pursuant to this Agreement, as set forth in Section 2.1 of this Agreement.

" Revolving Loan Commitment ” means, as to any Lender, such Lender’s commitment to make Revolving Loans under this Agreement. The initial amount of each Lender’s commitment to make Loans is set forth on Annex A attached hereto.

" Revolving Note ” shall have the meaning set forth in Section 4.1 hereof.

“ Security Agreement ” shall mean the Security Agreement and Financing Statement between each Borrower and the Agent dated as of August 21, 2009 in substantially the form of Exhibit D , as amended, restated, supplemented or otherwise modified from time to time.

" Settlement Date ” shall have the meaning given to such term in Section 14.2 hereof.

" Subordinated Debt ” shall mean that portion of the Liabilities of each Borrower which are subordinated to the Obligations in a manner satisfactory to the Requisite Lenders in their reasonable discretion, including, but not limited to, right and time of payment of principal and interest.

" Subsidiary ” and “ Subsidiaries ” shall mean, respectively, each and all such corporations, partnerships, limited partnerships, limited liability companies, limited liability partnerships or other entities of which or in which any Borrower owns directly or indirectly fifty percent (50.00%) or more of (i) the combined voting power of all classes of stock having general voting power under ordinary circumstances to elect a majority of the board of directors of such entity if a corporation, (ii) the management authority and capital interest or profits interest of such entity, if a partnership, limited partnership, limited liability company, limited liability partnership, joint venture or similar entity, or (iii) the beneficial interest of such entity, if a trust, association or other unincorporated organization.

" Tangible Net Worth ” shall mean at any time Lawson and its Subsidiaries’ consolidated (i) Total Assets, minus (ii) Total Liabilities, after subtracting therefrom (a) the aggregate amount of any Intangible Assets of the Borrower and (b) notes receivable from Affiliates and (c) “other assets” as customarily designated on the consolidated balance sheet of Lawson and its Subsidiaries. All components of Tangible Net Worth shall be computed in accordance with GAAP.

" Tax ” shall mean any tax, levy, impost, duty, deduction, withholding or charges of whatever nature required to be paid by Agent or any Lender and/or to be withheld or deducted from any payment otherwise required hereby to be made by any Obligor to Agent or any Lender; provided, that the term “Tax” shall not include (A) any taxes imposed upon the income of Agent or any Lender (including, without limitation, franchise taxes imposed in lieu of net income taxes and branch profits taxes) or (B) any withholding taxes imposed on amounts payable to a Lender at the time such Lender becomes party to this Agreement, except to the extent that such Lender’s assignor (if any) was entitled, at the time of assignment, to receive additional amounts from .Borrowers with respect to such Taxes.

" Total Assets ” shall mean, as of the date of determination, the aggregate amount of assets of Lawson and its Subsidiaries determined in accordance with GAAP.

“ Total Debt to Consolidated EBITDA Ratio ” means (A) all Debt including, but not limited to Capitalized Lease Obligations, divided by Consolidated EBITDA.

" Total Liabilities ” shall mean, as of the date of determination, the aggregate amount of liabilities of Lawson and its Subsidiaries determined in accordance with GAAP.

" Type of Organization ” means, with respect to any Borrower, the kind or type of entity of such Borrower, such as a corporation or limited liability company.

" UCC ” shall mean the Uniform Commercial Code in effect in the State of Illinois from time to time.

" Wholly-Owned Subsidiary ” shall mean any Subsidiary of which or in which any Borrower owns directly or indirectly 100% of (i) the combined voting power of all classes of stock having general voting power under ordinary circumstances to elect a majority of the board of directors of such Person, if it is a corporation, (ii) the capital interest or profits interest of such Persons if it is a partnership, joint venture or similar entity or(iii) the beneficial interest of such Persons, if it is a trust, association or other unincorporated organization.

1.2 Accounting Terms . Any accounting terms used in this Agreement which are not specifically defined herein shall have the meanings customarily given them in accordance with GAAP. Calculations and determinations of financial and accounting terms used and not otherwise specifically defined hereunder and the preparation of financial statements to be furnished to the Agent and Lenders pursuant hereto shall be made and prepared, both as to classification of items and as to amount, in accordance with GAAP as used in the preparation of the financial statements of the Borrowers on the date of this Agreement. If any changes in accounting principles or practices from those used in the preparation of the financial statements are hereafter occasioned by the promulgation of rules, regulations, pronouncements and opinions by or required by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or any successor thereto or agencies with similar functions), which results in a material change in the method of accounting in the financial statements required to be furnished to the Agent and Lenders hereunder or in the calculation of financial covenants, standards or terms contained in this Agreement, the parties hereto agree to enter into good faith negotiations to amend such provisions so as equitably to reflect such changes to the end that the criteria for evaluating the financial condition and performance of the Borrowers be the same after such changes as they were before such changes; and, if the parties fail to agree on the amendment of such provisions, the Borrowers will furnish financial statements in accordance with such changes but shall provide calculations for all financial covenants, perform all financial covenants and otherwise observe all financial standards and terms in accordance with applicable accounting principles and practices in effect immediately prior to such changes.

1.3 Other Terms Defined in UCC . All other capitalized words and phrases used herein and not otherwise specifically defined shall have the respective meanings assigned to such terms in the UCC, as amended from time to time, to the extent the same are used or defined therein.

1.4 Other Definitional Provisions; Construction . Whenever the context so requires, the neuter gender includes the masculine and feminine, the single number includes the plural, vice versa, and in particular the word “Borrower” shall be so construed. The words “hereof’, ''herein’’ and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and references to Article, Section, Subsection, Annex, Schedule, Exhibit and like references are references to this Agreement unless otherwise specified. An Event of Default shall “continue” or be “continuing” until such Event of Default has been cured or waived in accordance with Section 15.3 hereof. References in this Agreement to any party shall include such party’s successors and permitted assigns. References to any “Section” shall be a reference to such Section of this Agreement unless otherwise stated. To the extent any of the provisions of the other Loan Documents are inconsistent with the terms of this Agreement, the provisions of this Agreement shall govern.

2.

COMMITMENTS.

2.1 Revolving Loans .

(a)  Revolving Loan Commitment . Subject to the terms and conditions of this Agreement and the other Loan Documents, and in reliance upon the representations and warranties of each Borrower set forth herein and in the other Loan Documents, Agent and each Lender, severally and not jointly, agrees to make its Pro Rata Share of the Revolving Loans at such times as the Representative may from time to time request until the earlier of (x) the Maturity Date and (y) a demand for repayment is made by Agent during the existence of an Event of Default (the earlier of such dates being hereinafter referred to as the “Demand Date”), and in such amounts as the Representative may from time to time request in accordance with Section 5.1; provided, however, that the aggregate outstanding principal balance of all Revolving Loans plus the Letter of Credit Obligations at any time shall not exceed the Maximum Revolving Loan Commitment. Revolving Loans made by the Lenders may be repaid and, subject to the terms and conditions hereof, borrowed again up to, but not including the Demand Date unless the Revolving Loans are otherwise terminated or extended as provided in this Agreement. The Revolving Loans shall be used by the Borrowers solely for general working capital, capital expenditures and other general business purposes. So long as no Event of Default exists, Borrower through the Representative shall have the one-time option anytime after the Closing Date (subject to Agent’s consent) to elect by written notice to the Agent a single increase to the Maximum Revolving Loan Commitment of up to Twenty Million and 00/100 Dollars ($20,000,000.00), thus making the Maximum Revolving Loan Commitment Seventy Five Million and 00/100 Dollars ($75,000,000). Such increase shall be subject to Agent’s consent in its sole discretion, such consent not to be unreasonably withheld.

(b)  Revolving Loan Interest and Payments . Except as otherwise provided in this Section 2.1(b) , the principal amount of the Revolving Loans outstanding from time to time shall bear interest at the Revolving Interest Rate plus the Applicable Margin. Accrued and unpaid interest on the unpaid principal balance of all Revolving Loans outstanding from time to time which are Prime Loans, shall be due and payable monthly, in arrears, commencing on September 1, 2009 and continuing on the first day of each calendar month thereafter, and on the Demand Date. Accrued and unpaid interest on the unpaid principal balance of all Revolving Loans outstanding from time to time which are LIBOR Loans shall be payable on the last Business Day of each Interest Period commencing on the first such date to occur after the date hereof, on the date of any principal repayment of a LIBOR Loan and on the Demand Date. Any amount of principal or interest on the Revolving Loans which is not paid when due (after all applicable grace periods), whether at stated maturity, by acceleration or otherwise, shall, at the option of the Agent, bear interest payable on demand at the Default Rate.

(c)  Revolving Loan Principal Repayments .

(i) Mandatory Prepayments . All Revolving Loans hereunder shall be repaid by the Borrowers on the Demand Date, unless payable sooner pursuant to the provisions of this Agreement. In the event the aggregate outstanding principal balance of all Revolving Loans plus Letter of Credit Obligations exceeds the Maximum Revolving Loan Commitment, the Borrowers shall, without notice or demand of any kind, immediately make such repayments of the Revolving Loans or take such other actions as shall be necessary to eliminate such excess..

(ii) Optional Prepayments . The Borrowers may from time to time prepay the Revolving Loans which are Prime Loans, in whole or in part, without any prepayment penalty whatsoever, so long as each partial prepayment shall be in an amount equal to $100,000 or a higher integral multiple of $100,000.

(d)  Obligations of the Lenders . Neither Agent nor any Lender shall be responsible for any failure by any other Lender to perform its obligations to make Revolving Loans hereunder, and the failure of any Lender to make its Pro Rata Share of any Revolving Loan hereunder shall not relieve any other Lender of its obligation, if any, to make its Pro Rata Share of any Revolving Loans hereunder.

(e)  Other Terms . If Borrowers make a request for a Revolving Loan as provided herein, Agent, at its option and in its sole discretion subject to Section 3 and Section 5.5 hereof, shall do either of the following:

(i) Advance the amount of the proposed Revolving Loan to Borrowers disproportionately (a “Disproportionate Advance”) out of Agent’s own funds on behalf of Lenders, which advance shall be made at the same time set forth in Section 5.1 herein, and request settlement in accordance with the terms hereof such that upon such settlement each Lender’s share of the outstanding Revolving Loans (including, without limitation, the amount of any Disproportionate Advance) equals its Pro Rata Share; or

(ii) Notify each Lender by telecopy, electronic mail or other similar form of teletransmission of the proposed advance on the same day Agent is notified or deemed notified by Borrowers of Borrowers’ request for an advance hereunder. Each Lender shall remit, to the demand deposit account designated by Representative (i) with respect to Prime Loans, at or prior to 3:00 P.M., Chicago time, on the date of notification, if such notification is made before 1:00 P.M., Chicago time, or 10:00 A.M., Chicago time, on the Business Day immediately succeeding the date of such notification, if such notification is made after 1:00 P.M., Chicago time, and (ii) with respect to LIBOR Loans, at or prior to 10:00 A.M., Chicago time, on the date such LIBOR Loans are to be advanced, immediately available funds in an amount equal to such Lender’s Pro Rata Share of such proposed advance. Unless Agent receives notice from a Lender on or prior to the time set forth above for funding by such Lender, that such Lender will not make available as and when required hereunder to Agent, for the account of Borrowers, the amount of such Lender’s Pro Rata Share of the requested advance, Agent may assume that each Lender has made or will make such amount available to Agent in immediately available funds on the date of such funding and Agent may (but shall not be required), in reliance upon such assumption, make available to Borrowers on such date the corresponding amount.

If and to the extent that a Lender does not settle with Agent as required under this Agreement (a “Defaulting Lender”), Borrowers and Defaulting Lender severally agree to repay to Agent forthwith on demand such amount required to be paid by such Defaulting Lender to Agent, together with interest thereon, for each day from the date such amount is made available to Borrowers until the date such amount is repaid to Agent (x) in the case of a Defaulting Lender at the rate published the Federal Reserve Bank of New York on the next succeeding Business Day as the “Federal Funds Rate” or if no such rate is published for any Business Day, at the average rate quoted for such day for such transactions from three (3) federal funds brokers of recognized standing selected by Agent, and (y) in the case of Borrowers, at the interest rate applicable at such time for such Loans; provided, that Borrowers’ obligation to repay such advance to Agent shall not relieve such Defaulting Lender of its liability to Agent for failure to settle as provided in this Agreement.

2.2 Additional LIBOR Loan Provisions .

(a)  LIBOR Loan Prepayments . Except as provided in Section 2.2(c) , if, a LIBOR Loan is paid prior to the last Business Day of any Interest Period, the Borrowers agree to indemnify the Agent and the Lenders against any loss (including any loss on redeployment of the funds repaid), cost or expense incurred by the Agent or the Lenders as a result of such prepayment.

(b)  LIBOR Unavailability . If the Agent or any Lender determines (which determination shall be conclusive, absent manifest error) prior to the commencement of any Interest Period that (i) United States dollar deposits of sufficient amount and maturity for funding any LIBOR Loan are not available to the Agent or such Lender in the London Interbank Eurodollar market in the ordinary course of business or (ii) by reason of circumstances affecting the London Interbank Eurodollar market, adequate and fair means do not exist for ascertaining the rate of interest to be applicable to the relevant LIBOR Loan, the Agent shall promptly notify the Representative thereof and, so long as the foregoing conditions continue, Loans may not be advanced as a LIBOR Loan thereafter. In addition, at the Representative’s option, each existing LIBOR Loan shall immediately (i) be converted to a Prime Loan on the last Business Day of the then existing Interest Period or (ii) to the extent Representative has elected not to convert such existing LIBOR Loan(s) to a Prime Loan, such LIBOR Loan(s) shall be due and payable on the last Business Day of the then existing Interest Period, without further demand, presentment, protest or notice of any kind, all of which are hereby waived by the Borrowers.

(c)  Regulatory Change . In addition, if, after the date hereof, a Regulatory Change shall, in the reasonable determination of Agent or any Lender, make it unlawful for Agent or any Lender to make or maintain the LIBOR Loans, then the Agent shall promptly notify the Representative and Loans may not be advanced as LIBOR Loans thereafter. In addition, at the Representative’s option, each existing LIBOR Loan shall be immediately converted to a Prime Loan on the last Business Day of the then existing Interest Period or on such earlier date as required by law or (ii) to the extent the Representative has elected not to convert such existing LIBOR Loan(s) to a Prime Loan, such LIBOR Loan(s) shall be due and payable on the last Business Day of the then existing Interest Period or on such earlier date as required by law, all without further demand, presentment, protest or notice of any kind, all of which are hereby waived by the Borrowers.

(d)  LIBOR Loan Indemnity . If any Regulatory Change (whether or not having the force of law) shall (a) impose, modify or deem applicable any assessment, reserve, special deposit or similar requirement against assets held by, or deposits in or for the account of or loans by, or any other acquisition of funds or disbursements by, the Agent or any Lender; (b) subject the Agent or any Lender or any LIBOR Loan to any tax, duty, charge, stamp tax or fee or change the basis of taxation of payments to the Agent or any Lender of principal or interest due from any Borrower to the Agent or any Lender hereunder (other than a change in the taxation of the overall net income of the Agent or any Lender); or (c) impose on the Agent or any Lender any other condition regarding such LIBOR Loan or the Agent’s or any Lender’s funding thereof, and the Agent shall determine (which determination shall be conclusive, absent manifest error) that the result of the foregoing is to increase the cost to the Agent or any Lender of making or maintaining such LIBOR Loan or reduce the amount of principal or interest received by the Agent or any Lender hereunder, then the Borrowers shall pay to such party, within seven (7) days after receipt of notice specifying such required payment together with a certificate setting forth the calculation of such payment, such additional amounts as such party shall, from time to time, determine are sufficient to compensate and indemnify such party for such increased cost or reduced amount.

2.3 Interest and Fee Computation; Collection of Funds . Except as otherwise set forth herein, all interest on Prime Rate Loans shall be calculated on the basis of a year consisting of 365/365 days and all other interest and fees shall be calculated on the basis of a year consisting of 360 days and shall be paid for the actual number of days elapsed. Principal payments submitted in funds not immediately available shall continue to accrue interest until collected. If any payment to be made by the Borrowers hereunder or under the Notes shall become due on a day other than a Business Day, such payment be shall be made on the next succeeding Business Day and such extension of time shall be included in computing any interest in respect of such payment.

2.4 Letters of Credit . Subject to the terms and conditions of this Agreement and upon (i) the execution by the Borrower and the Agent of a Master Letter of Credit Agreement in form and substance reasonably acceptable to the Agent (together with all amendments, modifications and restatements thereof, the “Master Letter of Credit Agreement”), and (ii) the execution and delivery by the Borrower, and the acceptance by the Agent, which acceptance shall not unreasonably be withheld, of a Letter of Credit Application, the Agent agrees to issue for the account of the Borrower out of the Maximum Revolving Loan Commitment such standby and/or trade Letters of Credit in the standard form of the Agent and otherwise in form and substance reasonably acceptable to the Agent, from time to time during the term of this Agreement, provided that the Letter of Credit Obligations may not at any time exceed the Maximum Letter of Credit Obligation and provided further, that no Letter of Credit shall have an expiration date later than one year after the Maturity Date. If this Agreement and the Maximum Revolving Loan Commitment are not extended beyond the Maturity Date, upon the occurrence of the Maturity Date, Borrower shall deliver to Agent cash collateral in the amount of the then outstanding Letter of Credit Obligations. The Letter of Credit Obligations shall also be evidenced by the Note. The amount of any payments made by the Agent with respect to draws made by a beneficiary under a Letter of Credit to which the Borrower has failed to reimburse the Lender upon the earlier of (i) the Agent’s demand for repayment, or (ii) five (5) days from the date of such payment to such beneficiary by the Agent, shall be deemed to have been converted to a Prime Loan as of the date such payment was made by the Agent to such beneficiary. If there is a conflict between the terms of the Master Letter of Credit Agreement and the terms of this Agreement, the terms of this Agreement shall be controlling.

2.5 All Loans to Constitute One Obligation . Except as specifically set forth herein, the Loans shall constitute one general obligation of Borrowers, and shall be secured by Agent’s first priority security interest in and Lien upon all of the Collateral and by all other security interests, Liens, claims. and encumbrances heretofore, now or at any time or times hereafter granted by Borrowers to Agent pursuant to the Loan Documents.

3.

CONDITIONS OF INITIAL BORROWING.

The obligation of Agent and the Lenders to disburse the initial Loan or issue the initial Letter of Credit, whichever occurs first, is subject to the satisfaction (or waiver by Agent) on or before the Closing Date of the following conditions precedent:

3.1 Loan Documents . The Borrowers shall have executed and/or delivered to the Agent (for further delivery to the Lenders as applicable) the following Loan Documents and other items, all of which must be satisfactory in form and substance to the Agent and the Agent’s counsel:

(a)  Loan Agreement . This Agreement duly executed by each Borrower.

(b)  Revolving Note . The Revolving Note duly executed by each Borrower in favor of each applicable Lender, in the form attached hereto as Exhibit A .

(c)  Security Agreement . The Security Agreement executed by each Borrower in favor of Agent, for the benefit of the Lenders.

(d)  Resolutions . Resolutions of the board of directors or managers or sole member, as applicable, of each Borrower authorizing the execution of this Agreement and the Loan Documents to which such Borrower is a party.

(e)  Insurance Policies . Certificates from Borrowers’ insurance carriers evidencing that all insurance policies and coverage required herein is in effect.

(f)  Organizational Documents . A copy of each Borrower’s Articles or Certificate of Incorporation/Organization, and all amendments thereto, certified by the applicable Secretary of State or Department of Revenue, as applicable, of the state of incorporation/organization of each Borrower or in the case of the Certificate of Formation of Lawson Products, L.L.C., as filed with Department of Revenue of the State of New Jersey, and a copy of each Borrower’s By-laws or operating agreement, as applicable, certified by the Secretary (or equivalent) of each Borrower.

(g)  Good Standing Certificates . Good Standing Certificates for each Borrower from its State of incorporation or organization, as applicable, and each state in which each such Borrower is required to be qualified to transact business as a foreign corporation, or limited liability company, as applicable.

(h)  Incumbency Certificates . A certificate of the Secretary or an Assistant Secretary (or equivalent) of each Borrower certifying the names of the officer or officers of each such Borrower authorized to sign this Agreement and the other Loan Documents, together with a sample of the true signature of each such officer.

(i)  Additional Documents . Such other certificates, financial statements, schedules, resolutions, opinions of counsel, notes and other documents. which are provided for hereunder or which the Agent or the Lenders shall reasonably require.

3.2 Event of Default . No Event of Default, or any event which, with notice or lapse of time, or both would constitute an Event of Default, shall have occurred and be continuing.

3.3 Adverse Changes . No Material Adverse Change as determined in the Agent’s sole discretion shall have occurred.

3.4 Litigation . No litigation or governmental proceeding shall have been instituted against any Borrower, or any of their officers, members, managers, directors or shareholders which in the discretion of the Agent, reasonably exercised, would reasonably be expected to materially and adversely affect the financial condition or continued operation of any Borrower.

3.5 Representations and Warranties . All representations and warranties of each Borrower contained herein or in any Loan Document are true and correct.

4.

NOTES EVIDENCING LOANS.

4.1 The Revolving Loans . The Revolving Loans shall be evidenced by Revolving Notes (together with all renewals, extensions, modifications or substitutions thereof, the “Revolving Notes”) in the form of Exhibit A attached hereto, duly executed by each Borrower and payable to the order of each Lender according to such Lender’s Revolving Loan Commitment. At the time of the initial disbursement of a Revolving Loan and at each time any additional Revolving Loan shall be requested hereunder or a repayment made in whole or in part thereon, a notation thereof shall be made on the books and records of the Agent. All amounts recorded shall be, absent demonstrable error, conclusive and binding evidence of the principal amount of the Revolving Loans advanced hereunder, (ii) any unpaid interest owing on the Revolving Loans and (iii) all amounts repaid on the Revolving Loans. The failure to record any such amount or any error in recording such amounts shall not, however, limit or otherwise affect the obligations of any Borrower under the Revolving Notes to repay the principal amount of the Revolving Loans, together with all interest accruing thereon.

5.

LOANS: MANNER OF BORROWING AND GENERAL TERMS.

5.1 Borrowing Procedures .

(a) Each Loan shall be made available to the Borrowers upon Representative’s request from any Responsible Officer or any other Person designated by a Responsible Officer in writing whose authority to so act has not been revoked by the Borrowers in writing previously received by the Agent. Such request shall be in the form of Exhibit B hereto. Each Revolving Loan may be advanced either as a Prime Loan or a LIBOR Loan; provided, however, that at any time and from time to time, the Borrowers may identify no more than six (6) Loans which may be LIBOR Loans. A request for a Prime Loan must be received by no later than 1:00 p.m. Chicago, Illinois time; on the day it is to be funded and (ii) in an amount equal to One Hundred Thousand and 00/100 Dollars ($100,000.00) or a higher integral multiple of One Hundred Thousand and 00/100 Dollars ($100,000.00). A request for a LIBOR Loan must be (i) received by no later than 1:00 p.m. Chicago, Illinois time, three days before the day it is to be funded and (ii) in an amount equal to Five Hundred Thousand and 00/100 Dollars ($500,000.00) or a higher integral multiple of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00). If for any reason the Representative shall fail to select timely an Interest Period for an existing LIBOR Loan, then such LIBOR Loan shall be immediately converted to a Prime Loan on the last Business Day of the then existing Interest Period, all without demand, presentment, protest or notice of any kind, all of which are hereby waived by each Borrower. The proceeds of each Prime Loan or LIBOR Loan shall-be made available at the office of the Agent by credit to the account of the Borrowers or by other means requested by the Representative and acceptable to the Agent.

(b) The Agent is authorized to rely on any written, verbal, electronic, telephonic or telecopy loan requests which the Agent believes in its good faith judgment to emanate from a Responsible Officer of the Representative or any Person so designated by a Responsible Officer in writing, whether or not that is in fact the case. Each Borrower does hereby irrevocably confirms, ratifies and approves all such advances by the Agent and does hereby indemnify the Agent against actual losses and reasonable, out-of-pocket expenses (including court costs, and reasonable, out-of-pocket attorneys’ and paralegals’ fees) and shall hold the Agent harmless with respect thereto; provided, however, that no Borrower shall have any obligation to indemnify or hold the Agent harmless with respect to matters caused by, or arising or resulting from the willful misconduct, bad faith or gross negligence of the Agent. Notwithstanding anything contained in this Agreement to the contrary, the Borrowers hereby appoint Lawson (the “Representative”) to act as their sole and exclusive representative under this Agreement for all purposes, including without limitation, to receive funds advanced hereunder, to receive notices and other communications from the Agent hereunder, to make requests for advances of funds hereunder and to amend this Agreement. The Agent shall have (i) no obligation to communicate with any Borrower other than the Representative concerning this Agreement, any Note or any other matter related to the Obligations and (ii) no responsibility with respect to the allocation among Borrowers of the funds advanced hereunder.

5.2 Reserved .

5.3 Payments . That portion of Borrowers’ Obligations consisting of: (a) principal payable on account of the Loans made by Agent and the Lenders to Borrowers pursuant to this Agreement shall be payable by Borrowers, jointly and severally, to Agent for account of the Lenders, on the Demand Date; (b) costs, fees and expenses payable pursuant to this Agreement shall be payable by Borrowers to Agent, for the account of Lenders (as applicable) within seven days following the Representative’s receipt of an invoice for payment; (c) interest payable pursuant to this Agreement shall be payable by Borrowers to Agent, for the account of Lenders as the case may be, as provided in Section 2.1 (b), the balance of Borrowers’ Obligations, if any, shall be payable by Borrowers to Agent, for the account of Lenders or their Affiliates, as the case may be, as provided in this Agreement or the other Loan Documents.

5.4 Automatic Debit Request for a Loan . In order to cause timely payment to be made to Agent, for the benefit of Lenders, of all Borrowers’ Obligations as and when due, Borrowers hereby authorize and direct Agent, at Agent’s option and at any time, to debit the amount of such Borrowers’ Obligations to any ordinary deposit account of Borrowers or by increasing the principal balance due under the Revolving Loan, provided that for payments of items other than regularly scheduled payments of interest and fees, so long as there exists no Event of Default, Borrower will receive an invoice with seven (7) days for payment prior to any debit..

5.5 Conditions Precedent Events . Each Loan made by Agent and the Lenders to Borrowers at the request of Borrowers pursuant to this Agreement or the other Loan Documents shall in any event be subject to the following conditions precedent: (a) there shall not then exist an Event of Default or any event or condition which with notice, lapse of time and/or the making of such Loan would constitute an Event of Default; (b) the representations and warranties of each Borrower contained in this Agreement shall be true and correct in all material respects as of the date of such Loan with the same effect as though made on such date, except to the extent such representation or warranty expressly relates to an earlier date and (c) no Material Adverse Change shall have occurred. Each borrowing by the Borrowers hereunder shall be deemed a representation and warranty by Borrowers that the foregoing conditions have been fulfilled as of the date of such borrowing.

5.6 Intentionally Omitted .

5.7 Discretionary Disbursements . Agent, in its sole and absolute discretion, may after seven (7) day’s prior notice to Representative accompanied by a description of the fee, cost or expense claimed, in the event there are no funds available to automatically debit, disburse any or all proceeds of Loans made or available to Borrowers pursuant to this Agreement and/or the other Loan Documents to pay any fees, costs, expenses or other amounts required to be paid by Borrowers hereunder and not so paid. All monies so disbursed shall be a part of Borrowers’ Obligations, payable by Borrowers on demand.

5.8 Credit Termination Date; Continuance of Obligations, Etc . This Agreement, Agent’s and each Lender’s obligation to loan monies to Borrowers, and Borrowers’ ability to borrow monies from Agent and the Lenders shall be in effect until the Demand Date. Notwithstanding the foregoing and until such date when Borrowers’ Obligations shall be paid in full (other than contingent indemnification obligations not yet due and payable), Borrowers’ Obligations hereunder and under the other Loan Documents shall continue in accordance with the terms herein and therein, interest shall continue to be paid in accordance with the terms herein, Agent shall be entitled to retain its security interest in the Collateral, for the benefit of the Lenders, and Agent and the Lenders shall retain all of their rights and remedies under this Agreement, the other Loan Documents, at law, in equity and otherwise.

5.9 Capital Adequacy Charge . If Agent or any Lender shall have determined that the adoption of any law, rule or regulation regarding capital adequacy, or any change therein or in the interpretation or application thereof, or compliance by Agent or such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any central bank or Governmental Authority enacted after the date hereof, does or shall have the effect of reducing the rate of return on such party’s capital as a consequence of its obligations hereunder to a level below that which such Agent or such Lender could have achieved but for such adoption, change or compliance (taking into consideration such party’s policies with respect to capital adequacy), then from time to time, after submission by Agent to Representative of a written demand therefor (“Capital Adequacy Demand”) together with the certificate described below, Borrowers shall pay to such party such additional amount or amounts (“Capital Adequacy Charge”) as will compensate such party for such reduction, such Capital Adequacy Demand to be made with reasonable promptness following such determination. A Capital Adequacy Demand shall be conclusive in the absence of manifest error. A Capital Adequacy Demand shall set forth the nature of the occurrence giving rise to such reduction, the amount of the Capital Adequacy Charge to be paid to Agent or such Lender, and the method by which such amount was determined. In determining such amount, the applicable party may use any reasonable averaging and attribution method, applied on a non-discriminatory basis.

5.10 Taxes.

(a) Except as otherwise required by applicable law, all payments made by a Borrower hereunder or under any other Loan Document shall be made without setoff, counterclaim, or other defense. To the extent permitted by applicable law, all payments hereunder or under the Loan Documents (including any payment of principal, interest, or fees) to, or for the benefit, of any person shall be made by such Borrowers free and clear of and without deduction or withholding for, or account of, any Taxes now or hereinafter imposed by any Governmental Authority.

(b) If a Borrower makes any payment hereunder or under any other Loan Document in respect of which it is required by applicable law to deduct or withhold any Taxes, such Borrower shall increase the payment hereunder or under any such Loan Document such that after the reduction for the amount of Taxes withheld (and any taxes withheld or imposed with respect to the additional payments required under this Section 5.10 ), the amount paid to the applicable Lenders or Agent equals the amount that was payable hereunder or under any such Loan Document without regard to this Section 5.10 . To the extent a Borrower withholds any Taxes on payments hereunder or under any Loan Document, such Borrower shall pay the full amount deducted to the relevant Governmental Authority within the time allowed for payment under applicable law and shall deliver to Agent within 30 days after it has made payment to such authority receipt issued by such authority (or other evidence reasonably satisfactory to Agent) evidencing the payment of all amounts so required to be deducted or withheld from such payment.

(c) If any Lender or Agent is required by law to make any payments of any Taxes on or in relation to any amounts received or receivable hereunder or under any other Loan Document, or any Tax is assessed against a Lender or Agent with respect to amounts received or receivable hereunder or under any other Loan Document, the applicable Borrowers will indemnify such person against (i) such Tax (and any reasonable counsel fees and expenses associated with such Tax) and (ii) any taxes imposed as a result of the receipt of the payment under this Section 5.10 . A certificate prepared in good faith as to the amount of such payment by such Lender or Agent shall, absent manifest error, be final, conclusive, and binding on all parties.

(d) (i) To the extent permitted by applicable law, each Lender that is not a United States Person within the meaning of Section 7701 (a)(30) of the Internal Revenue Code of 1986, as amended (the “Code”) (a “Foreign Lender”) shall deliver to Representative and Agent on or prior to. the Closing Date (or in the case of a Foreign Lender that is an Eligible Assignee, on the date of such assignment to such Foreign Lender and in the case of a participant; to the Lender from which the related participation shall have been purchased) two accurate and complete original signed copies of IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor or other applicable form prescribed by the IRS) certifying to such Foreign Lender’s entitlement to a complete exemption from, or a reduced rate in, United States withholding tax on interest payments to be made hereunder with respect to the Obligations of Borrowers or any Loan to Borrowers. If a Foreign Lender is claiming a complete exemption from withholding on interest pursuant to Sections 87l(h) or 881(c) of the Code, such Foreign Lender shall deliver to Agent (along with two accurate and complete original signed copies of IRS Form W-8BEN) a certificate in form and substance reasonably acceptable to Agent to the effect that such Foreign Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of any Borrower within the meaning of Section 881 (c)(3)(B) of the Code or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (any such certificate, a “Withholding Certificate”). In addition, each Foreign Lender agrees that from time to time after the Closing Date, (or in the case of a Foreign Lender that is an assignee, after the date of the assignment to such Foreign Lender), when a lapse in time (or change in circumstances occurs) renders the prior certificates hereunder obsolete or inaccurate in any material respect, such Foreign Lender shall, to the extent permitted under applicable law, deliver to Representative and Agent two new and accurate and complete original signed copies of an IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor other applicable forms prescribed by the Internal Revenue Service (“IRS”), and if applicable, a new Withholding Certificate, to confirm or establish the entitlement of such Foreign Lender to an exemption from, or reduction in, United States withholding tax on interest payments to be made hereunder or any Loan to Borrowers.

(ii) Each Lender (other than any Lender which is taxed as a corporation for U.S. federal income tax purposes) shall provide two properly completed and duly executed copies of IRS Form W-9 (or any successor or other applicable form) to Representative and Agent certifying that such Lender is exempt from United States backup withholding tax. To the extent that a form provided pursuant to this subsection 5.10(d)(ii) is rendered obsolete or inaccurate in any material respects as the result of a change in circumstances with respect to the status of a Lender, such Lender shall, to the extent permitted by applicable law, deliver to Representative and Agent revised forms necessary to confirm or establish the entitlement to such Lender’s exemption from United States backup withholding tax.

(iii) Borrower shall not be required to pay additional amounts to a Lender, or indemnify any Lender, under this subsection 5.10(d) to the extent that such obligations would not have arisen but for the failure of such Lender to comply with Section 5.10 , Further, the Borrowers shall not be required to pay any additional taxes, costs or expenses hereunder caused by the addition of a Foreign Lender as a Lender hereunder.

(iv) Each Lender agrees to indemnify Agent upon demand and hold Agent harmless for the full amount of any and all present or future Taxes and related liabilities (including interest, additions to and expenses), and any Taxes imposed by any jurisdiction on amounts payable to Agent under this Section 5.10 which are imposed on or with respect to principal, interest or fees payable to such Lender hereunder and which are not paid by Borrowers pursuant to this Section 5.10 , whether or not such Taxes or related liabilities were correctly or legally asserted.

5.11 Mitigation of Circumstances . Each Lender shall promptly notify Representative of any event of which it has knowledge which will result in, and will use reasonable commercial efforts available to it (and not, in such Lender’s sole judgment, otherwise disadvantageous to such Lender) to mitigate or avoid, (i) any obligation by Borrowers to pay any amount pursuant to Section 5.9 or Section 5.10 or (ii) the occurrence of any circumstances described in Section 5.9 or Section 5.10 (and, if any Lender has given notice of any such event described in clause (i) or (ii) above and thereafter such event ceases to exist, such Lender shall promptly so notify Representative and Agent). Without limiting the foregoing, each Lender will designate a different funding office if such designation will avoid (or reduce the cost to Borrowers of) any event described in clause (i) or (ii) of Section 5.11 above and such designation will not, in such Lender’s sole judgment, be otherwise disadvantageous to such Lender.

If any Lender or Agent receives a refund or credit in respect of any Taxes as to which it has been indemnified by Borrowers or with respect to which Borrowers have paid additional amounts pursuant to this Section 5.11 , such Lender or Agent shall within 30 days from the date of such receipt pay the amount of such refund or credit to Borrowers, net of all reasonable out-of-pocket expenses of such Lender or Agent and without interest (other than interest paid by the relevant Governmental Authority with respect to such refund or credit); provided, that Borrowers, upon request of such Lender or Agent, agree to repay the amount paid over to Borrowers (plus penalties, interest or other reasonable charges) to such Lender or to Agent in the e