EIGHTH MODIFICATION OF LOAN DOCUMENTS AND COVENANT WAIVER

Exhibit 10.2

EIGHTH MODIFICATION OF LOAN DOCUMENTS AND COVENANT WAIVER

DATED AS OF AUGUST 6, 2008

by and among

Lawson Products, Inc., a Delaware Corporation

AND

BANK OF AMERICA, NATIONAL ASSOCIATION AS SUCCESSOR IN INTEREST
TO LASALLE BANK NATIONAL ASSOCIATION

EIGHTH MODIFICATION OF LOAN DOCUMENTS AND COVENANT WAIVER

      THIS EIGHTH MODIFICATION OF LOAN DOCUMENTS AND COVENANT WAIVER (this “ Modification ”) is made as of the 6 ^TH day of August, 2008, by and among Lawson Products, Inc., a Delaware Corporation (“ Lawson ”), with its principal place of business and chief executive office at 1666 E. Touhy Ave., Des Plaines, Illinois, 60018, various Subsidiaries of Lawson listed on Schedule 6.12 to the Credit Agreement (Lawson and the Subsidiaries may be referred to herein collectively as the “ Borrower ”) and BANK OF AMERICA, NATIONAL ASSOCIATION , as successor in interest to LASALLE BANK NATIONAL ASSOCIATION, a national banking association, its successors and assigns (“ Lender ”).

R   E   C I T A L   S :

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

     B. The Credit Agreement has been amended (i) as of August 12, 2002 to, among other things, add a letter of credit subfacility; (ii) as of July 11, 2003 to, among other things, increase the availability under the letter of credit subfacility; (iii) as of May 31, 2005 to, among other things, increase the Maximum Facility, (iv) as of November 30, 2006 to, among other things, modify the interest rate to be charged on the facility; (v) as of January 31, 2007 to, among other things, acknowledge Lawson’s liquidation and dissolution Assembly Component Systems, Limited, a United Kingdom corporation (“ ACSL ”), a Subsidiary of Lawson, and therefore release ACSL from the facility; (vi) as of June 21, 2007 to, among other things, increase the letter of credit subfacility and modify certain financial covenants; and (vii) as of December 26, 2007 to, among other things, increase certain subfacilities and to modify certain financial covenants.

     C. On or about July 31, 2008, the Borrower reached a settlement agreement (the “ Federal Settlement ”) with the United States of America resulting from an ongoing investigation of certain “gifting” practices of employees and sales agents of the Borrower. Pursuant to the Federal Settlement, the Borrower will pay the aggregate principal amount of $30,000,000 (“ Federal Settlement Amount ”) to settle all claims of the United States of America relating to the “gifting” practices. The Federal Settlement Amount will be payable by the Borrower in three (3) annual installments with the first payment to be made in August, 2008; notwithstanding the foregoing, the Federal Settlement Amount, and certain costs and expenses relating thereto, will be reserved for by the Borrower for accounting purposes in the Fiscal Quarter ending June 30, 2008.

     D. Borrower has requested that the Credit Agreement be further modified in order to waive certain covenant violations that will result from the accounting reserve of the Federal Settlement, to modify certain financial covenants to accommodate the payment and accounting reserve of the Federal Settlement Amount and certain other costs and expenses relating thereto, and for the other purposes hereinafter set forth, and the Lender has agreed modify those subfacilities upon the terms and conditions hereinafter set forth.

AGREEMENTS :

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

     1.  Waiver of Events of Default and Defaults . Borrower acknowledges and agrees as follows:

     (a) Acknowledgment of Events of Default . That (i) as of the Fiscal Quarter ending June 30, 2008, the Borrower has, as a result of the Federal Settlement Amount, suffered Events of Default (x) of the Fixed Charge Coverage Ratio set forth in Section 8.13(C) and (y) of the a ratio of consolidated Total Debt to consolidated EBITDA set forth in Section 8.13(G) (for purposes hereof, together, the “ Existing Default ”), and as a result Events of Default and Defaults exist and continue to exist under the Credit Agreement; (ii) all grace periods, if any, applicable to the cure of the Existing Default have expired; and (iii) Lender has not previously waived in any respect their right to demand acceleration of the Loan and/or bring remedial action against the Borrower on account of the Existing Default.

     (b) Acknowledgment of Obligations and Borrower’ Liability Thereon . That (i) Borrower is indebted to the Lender as of the effective date of this Modification as set forth in the Credit Agreement; and (ii) as a result of the Existing Default the outstanding principal balance of the Loan, if called by the Lender, would be due and payable in full, without offset, deduction or counterclaim of any kind or character whatsoever, and is subject to increase, decrease or other adjustment as the result of any and all interest, fees and other reasonable charges including, without limitation, reasonable attorneys’ fees and costs of collection, which are payable under the Loan Documents.

     (c) Acknowledgment that Obligations Continue in Full Force and Effect . That the Note and all other liabilities and obligations of Borrower to the Lender under the Note, the Credit Agreement and all of the other Loan Documents shall remain in full force and effect, and shall not be released, impaired, diminished or in any other way modified or amended as a result of the execution and delivery of this Modification except as otherwise specifically provided herein.

     (d) Waiver of Default .  The Borrower has requested that Lender waive the Existing Default, and pursuant to this Modification, Lender has agreed to waive the Existing Default. Except as and to the limited extent otherwise expressly provided herein with respect to the Existing Default, nothing in this Modification shall be construed as a waiver by the Lender of any promises, covenants, conditions or obligations of the Borrower under the Loan Documents or as a waiver by the Lender of any other past, present or future Unmatured Event of Default or Event of Default.

     (e) Release . The Borrower hereby acquits, and forever discharges the Lender and each and every past and pres