a condition to participation therein or receipt of benefits thereunder by Executive’s, executionof this Agreement, and of the mutual agreements, promises and undertakings herein set forth, andfor other good and valuable consideration, the receipt and sufficiency of which are acknowledgedby the parties hereto, Lawson and Executive mutually agree as follows:     1. **EMPLOYMENT/DUTY OF LOYALTY.**          Lawson hereby agrees to employ Executive as Senior Vice President, Construction Markets (orwith such other title as mutually agreed upon) and as a member of its Corporate ManagementCommittee, on a full-time basis, and Executive hereby accepts such employment. Executive shallreport to the Chief Operating Officer, or to such other person as designated by the ChiefExecutive Officer (the **“Reporting Person”).**          Executive hereby acknowledges that he has a fiduciary responsibility and duty of loyalty toCompany hereunder. For so long as Executive remains employed, Executive shall, on a full-timebasis, devote his best efforts and his entire business time, energy, attention, knowledge andskill solely and exclusively to advance the interests, products and goodwill of Company. Executiveshall diligently, competently and faithfully perform the duties assigned to him by Company fromtime to time.     2. **COMPENSATION AND BENEFITS.**     2.1 Executive shall receive the following compensation:          (a) An initial annual salary in the amount of $260,000 which, subject to satisfactoryperformance, will be increased to $275,000 six months after commencement of employmenthereunder, and a further increase of $12,000 if and when the executive relocates hisresidence to Chicago. In addition to these increases, this amount may be increased by theChief Executive Officer of Lawson subject to approval of the Compensation Committee of theBoard of Directors, in its sole discretion, from time to time. Executive’s salary shall bepayable in substantially equal semi-monthly installments **(“Salary”).**          (b) Commencing with the year 2006, an annual incentive bonus, if any, determined by theCompensation Committee of the Board of Directors of Lawson in its sole discretion based uponthe overall growth and profitability of the Company as compared to the prior year as morefully described on and consistent with the terms of Exhibit A attached hereto and made apart hereof (the **“Incentive Bonus”).**The Incentive Bonus, if any, shall be payable not laterthan April 15 of the following year, provided Executive’s employment hereunder has not beenterminated by Lawson for cause prior to such date. The terms, conditions and provisions ofthe Incentive Bonus shall be in conformance with the incentive bonus program applicable toexecutive officers generally and particularly to such office as is held by Executive.          2.2 Executive shall receive the following standard benefits; provided, however, Lawson maymodify or terminate such benefits from time to time to the extent and on such terms as Lawsonmodifies or terminates such benefits as provided to other officers:
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          (a) Coverage under Lawson’s group health plan on such terms as provided to Lawson’sofficers.          (b) Long-term disability insurance coverage; provided however, if Executive becomesdisabled within the meaning of any long-term disability policy then in effect, Lawson willpay to Executive the Salary which would have been due but for Executive’s disability forsix (6) months following such disability. For thirty (30) months thereafter, Lawson willpay to Executive sixty percent (60%) of the Salary of Executive which would have been duebut for Executive’s disability. While Lawson is making such payments, Lawson will beentitled to receive in money or by credit against such payments a sum equal to any Companyprovided long-term disability insurance benefits paid to or for the benefit of Executivefor such period.          (c) Group term life insurance with a death benefit amount of not less than $50,000,with additional double indemnity coverage.          (d) Accidental death insurance.          (e) Participation in Lawson’s 401(k) and profit-sharing retirement plans.          (f) Four weeks annual vacation under the terms of Lawson’s vacation policy forofficers.          (g) Participation in Employer’s Executive Deferral Plan, if any.          (h) If Executive dies while employed by Lawson under this Agreement and is not then indefault or breach of this Agreement, Lawson shall pay an additional compensation amountequal to two (2) times the annual Salary being paid to Executive at the time of his death**(“Additional Compensation Amount”).**The Additional Compensation Amount shall be payable tothe beneficiary(ies) identified in writing by Executive from time to time on forms providedby Lawson for that purpose and filed by Executive with Lawson and shall be paid inforty-eight (48) equal, semi-monthly installments made as of the 15th day and the last dayof each calendar month following Executive’s death.          (i) Reimbursement for all reasonable and approved business expenses in accordance withLawson policy, or as otherwise approved by the Reporting Person, provided Executive submitspaid receipts or other documentation acceptable to Lawson and as required by the InternalRevenue Service to qualify as ordinary and necessary business expenses under the InternalRevenue Code of 1986, as amended (the **“Code”).**          2.3 All compensation and benefits to become payable to Executive under subparagraphs 2.1 and2.2 shall be subject to applicable governmental laws and regulations regarding income taxwithholding and other payroll taxes and deductions.
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3   **TERMINATION OF EMPLOYMENT.**     3.1 Executive’s employment under this Agreement may be terminated as follows:          (a) By Lawson, without cause effective on the date that written notice of terminationis delivered to Executive or sent to him by certified or registered mail to Executive’shome address as listed on Lawson’s records (or effective on such later date as indicated insuch notice).          (b) By the Executive for Good Reason effective on the date that written notice oftermination is delivered to the Reporting Person by certified or registered mail, or handdelivery or overnight mail. “Good Reason” means, without the Executive’s consent, (i) theassignment to the Executive of duties substantially and materially inconsistent with theposition and nature of the Executive’s employment (ii) a reduction of compensation andbenefits (other than incentive compensation which, it is acknowledged, will increase ordecrease from year to year) that would diminish the aggregate value of the Executive’scompensation and benefits, or (iii) relocation of the Executive’s office outside of a35-mile radius of metropolitan Atlanta or Chicago          (c) By Lawson, for cause, effective on the date that written notice of termination isdelivered to Executive or sent to him by certified or registered mail to Executive’s homeaddress as listed on Lawson’s records. For purposes of this Agreement, cause shall mean (i)violation by Executive of any agreement between Executive and Lawson or any law relating tonon-competition, trade secrets, inventions, non-solicitation or confidentiality; (ii)material breach or default of any of Executive’s duties or other obligations or covenantsunder this Agreement; (iii) Executive’s gross negligence, dishonesty or willful misconduct;(iv) conviction of a crime by Executive (other than traffic related offenses); or (v) anact of fraud, embezzlement or the misappropriation of property by Executive.          (d) By Executive effective on the expiration of sixty (60) days following writtennotice of resignation delivered to the Reporting Person by certified or registered mail, orhand delivery or overnight mail.          (e) Automatically, upon Executive’s date of death or the date on which Executive isdetermined to be permanently “disabled” pursuant to the terms of Lawson’s long-termdisability insurance policy.          3.2 Executive shall remain employed by Lawson until the effective date of termination orresignation, as the case may be, unless the parties shall otherwise agree; provided, however,following Lawson’s notice of termination without cause or Executive’s notice of resignation inaccordance herewith, and until the effective date thereof, Executive shall perform only thoseservices specifically authorized and directed by the Reporting Person, Chief Executive Officer orthe Board of Directors and shall receive as compensation while so employed only the annual Salarythen in effect and benefits as then in effect, subject to modifications in such benefits as mayoccur in the interim pertaining to such benefit programs generally affecting officers of Lawson.
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     3.3 Upon the effective date of termination of Executive’s employment under this Agreement:          (a) Executive, upon notice of termination of his employment, shall immediately return toLawson all Company property, including without limitation the property and informationdescribed in paragraphs 4 or 5 hereof, in whatever form, together with all copies thereof inhis possession or under his control.          (b) Lawson shall pay to Executive, within thirty (30) days following the effective dateof termination of his employment, the sum of any compensation or benefits or other amounts dueto him from Lawson as may be accrued for periods prior to the effective date of terminationand not previously paid, less the sum of any payments, advances, loans and other charges dueand owing from Executive to Company.          (c) In the event of termination pursuant to paragraph 3.1(a) or 3.1(b) hereof during thefirst twelve-month period following Executive’s commencement of employment with the Lawson,Lawson shall, in return for Executive’s performance of the Consulting Services (as definedbelow), pay to Executive an amount equal to one year’s salary; otherwise, Lawson shall have noobligation to Executive. In the event of termination pursuant to paragraph 3.1(a) or 3.1(b)hereof after the first twelve-month period following Executive’s commencement of employmentwith Lawson, Lawson shall, in return for Executive’s performance of the Consulting Services (asdefined below), pay to Executive an amount equal to one year’s annual Salary plus twoadditional months’ Salary (to a maximum of twelve additional months Salary) for each completeyear Executive has been employed by Lawson after the initial twelve-month period of employmentby the Lawson. (For example, if Executive is employed for six (6) years, Executive would bepaid one year’s annual Salary plus an additional ten (10) months of that annual Salary).Amounts due to Executive under this paragraph 3.3(c) shall be paid to Executive in equal,semi-monthly installments as though Executive had continued in the employ of the Lawson for theperiod of time upon which such payment is based. (For example, if Executive is entitled to anamount equal to six months’ Salary, such amount shall be paid to Executive in equalsemi-monthly installments over the six-month period immediately following the effective date oftermination.) The period of time in which Lawson is obligated to provide salary continuationpayments to Executive pursuant to this paragraph 3.3(c) is referred to herein as the “SalaryContinuation Period”. During the Salary Continuation Period, Executive shall be entitled tocontinued health and life insurance coverage on substantially the same basis afforded to himprior to termination of Executive’s employment. During the Salary Continuation Period,Executive shall, upon request of the Company, make himself reasonably available on a limitedbasis from time to time to consult with Lawson regarding the business affairs of the Company(the **“Consulting Services”);**provided, however, Executive’s Consulting Services shall belimited to not more than twenty-four (24) hours in any calendar quarter and so that suchconsulting does not interfere with Executive’s employment time commitments with any successoremployer.          (d) Following termination of Executive’s employment with Lawson for any reason, Companyshall have no obligation to provide for post-termination compensation or benefits to Executive(except as provided by paragraph 3.3(b) and as otherwise
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provided by law) unless Executive executes and delivers to the Lawson a release, in formreasonably satisfactory to the Lawson, of all claims against the Company and its officers,directors, employees and agents.     **4. COMPANY’S PROPERTY.**          All notes, lists, reports, sketches, plans, data contained in computer hardware or software,memoranda or other documents concerning or related to Company’s or affiliates’ business which areor were created, developed, generated or held by Executive during employment, whether containingor relating to Confidential Information (as defined in paragraph 14) or not, are the property ofCompany and shall be promptly delivered to Company upon termination of Executive’s employment forany reason whatsoever. All notes, lists, reports, sketches, plans, data contained in computerhardware or software, memoranda or other documents concerning or related to Company’s oraffiliates’ business which are or were created, developed, generated or held by Executive duringthe Salary Continuation Period, whether containing or relating to Confidential Information (asdefined in paragraph 14) or not, are the property of Company and shall be promptly delivered toCompany upon termination of the Salary Continuation Period. During the course of employment andduring the Salary Continuation Period, Executive shall not remove any of the above property,including but not limited to, Confidential Information, or reproductions or copies thereof, or anyapparatus containing any such property or Confidential Information, from Company’s premiseswithout prior written authorization from Company, other than in the normal execution ofExecutive’s duties.     **5. EXECUTIVE’S OBLIGATION NOT TO USE OR DISCLOSE CONFIDENTIAL****INFORMATION.**          Executive hereby acknowledges that, during the course of Executive’s employment and duringthe Salary Continuation Period, Executive will learn or develop Confidential Information in trustand confidence. Executive agrees to use the Confidential Information solely for the purpose ofperforming his duties hereunder and not for his own private use or commercial purposes. Executiveacknowledges that unauthorized disclosure or use of Confidential Information, other than indischarge of Executive’s duties, will cause Company irreparable harm.          Executive shall maintain Confidential Information in strict confidence at all times and shallnot divulge Confidential Information to any unauthorized person or entity, or use in any manner,or knowingly allow another to use, any Confidential Information, without Lawson’s prior writtenconsent, during the term of employment, during the Salary Continuation Period or thereafter, foras long as such Confidential Information remains confidential.          Executive further acknowledges that Company and its affiliates operate and competeinternationally and that Company and/or its affiliates will be harmed by the unauthorizeddisclosure or use of Confidential Information regardless of where such disclosure or use occurs,and that therefore this confidentiality agreement is not limited to any single state or otherjurisdiction.
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     **6. EXECUTIVE’S OBLIGATION NOT TO SOLICIT OR HIRECOMPANY’S EMPLOYEES AND AGENTS.**          During the Restriction Period (as hereinafter defined), Executive shall not, directly orindirectly, for himself or on behalf of any person, firm, or other entity, solicit, induce orencourage any person to leave her/his employment, agency or office with Company or any of itsaffiliates. During the Restriction Period, Executive shall not, directly or indirectly, forhimself or on behalf of any person, firm or other entity, hire or retain or participate in hiringor retaining any person who then is an employee of or agent for Company or any person who has beenan employee of or agent for the Company at any time in the ninety (90) days prior to terminationof Executive’s employment, and, in the event Executive is providing Consulting Services followingtermination of his employment, any person who has been an employee of or agent for the Company atany time during the Salary Continuation Period, unless Lawson is informed and gives its approvalprior to the hiring or retention. The term “Restriction Period” means the period of time in whichExecutive is employed by Lawson, and the Salary Continuation Period, if any, and a period of two(2) years thereafter.     **7. NON-SOLICITATION OF CUSTOMERS.**          Given Executive’s office and his participation in the development, sales, marketing andservicing of Company’s Products, Systems and Services, Executive acknowledges that Executive willlearn or develop Confidential Information relating to the development, sales, marketing orprovision of Company’s Products, Systems and Services, and Company’s customers and prospectivecustomers. Executive further acknowledges that Company’s relationships with its customers areextremely valuable to it, are generally the result of substantial time and effort devoted byCompany, and tend to be near permanent. Therefore, during the Restriction Period, Executive shallnot, directly or indirectly, for himself or on behalf of any person, firm, or other entity, solicitor sell, attempt to sell, or supervise, participate in, or assist the sale or solicitation ofCompetitive Products and Systems (i) to any person, firm or other entity to which Company sold anyof Company’s Products, Systems or Services during the last (2) years of Executive’s employmentprior to the effective date of termination and (ii) in the event Executive is providing ConsultingServices following termination of his employment, to any person, firm or other entity to which theCompany sells any of Company’s Products, Systems or Services during the Salary Continuation Period.However, this paragraph shall not prohibit the solicitation of any actual or potential customer ofCompany which does not fall within the preceding description. This paragraph is independent of theobligations of confidentiality under paragraph 5 hereof.     **8. UNFAIR TRADE PRACTICES.**          During the term of this Agreement and at all times thereafter, Executive shall not, directlyor indirectly, engage in or assist others in engaging in any unfair trade practices with respect toCompany.     **9. REMEDIES.**          Executive acknowledges that failure to comply with the terms of this Agreement will causeirreparable loss and damage to Company. Therefore, Executive agrees that, in addition
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and cumulative to any other remedies at law or equity available to Company for Executive’s breachor threatened breach of this Agreement, Company is entitled to specific performance or injunctiverelief against Executive to prevent such damage or breach, and a temporary restraining order andpreliminary injunction may be granted to Company for this purpose immediately at its request uponcommencement of any suit, without prior notice and without posting any bond. The existence of anyclaim or cause of action Executive may have against Company will not constitute a defense thereto.     **10. SEVERABILITY.**          If any of the restrictions in this Agreement is determined by a court of competentjurisdiction to be excessively broad as to area or time or otherwise, the parties authorize thecourt to reduce such restriction to the extent necessary to make such restriction reasonable andto enforce such restriction as so reduced. Any provisions of this Agreement not so reduced shallremain in full force and effect.     **11. ASSIGNMENT.**          The terms and provisions of this Agreement shall be binding upon and inure to the benefit ofLawson, its successors and assigns and Executive and Executive’s heirs, executors, administratorsand other legal representatives. This Agreement is a personal service agreement and shall not beassignable by Executive.     **12. GOVERNING LAW.**          This Agreement shall be interpreted and enforced in accordance with the laws of the State ofIllinois, without regard to its conflict of law principles. Any action commenced to enforce or todetermine any right or obligation hereunder shall be commenced only in a federal or state courtwith jurisdiction over Cook County, Illinois. Executive consents to personal jurisdiction in anysuch court.     **13. DEFINITIONS.**          13.1 **“****Company****”**shall mean Lawson and any entity owned by Lawson or related to Lawson,directly or indirectly, in whole or in part, now or at any time during Executive’s employment withLawson and during the Salary Continuation Period, if any, including, but not limited to, AssemblyComponent Systems, Inc., Cronatron Welding Systems, Inc., Drummond American Corporation, AutomaticScrew Machine Products Company, C.B. Lynn Company, Lawson Products, Inc. (Ontario), LawsonProducts de Mexico, Assembly Component Systems Limited-UK, and any other entity in which any oneor more of them has an interest at any time during Executive’s employment with Lawson and duringthe Salary Continuation Period, if any, whether such entity is in the United States or elsewhere.          13.2**“****Competitive Products, Systems and Services****”**shall mean products, systems orservices in existence or under development which are the same as or substantially similar to orfunctional equivalents of those of Company including, without limitation, those which are or may beprovided to Company’s customers on behalf of Company by employees, agents, or sales representativesof Company.
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          13.3 **“****Confidential Information****”**shall mean all information, including, but notlimited to, trade secrets disclosed to Executive or known by Executive as a consequence of orthrough Executive’s employment by Lawson, or performance of Consulting Services to Lawson,concerning the products, services, systems, customers and Agents of Company, and specificallyincluding without limitation: computer programs and software, unpatented inventions,discoveries or improvements; marketing, organizational and product research and development;marketing techniques; promotional programs; compensation and incentive programs; customerloyalty programs; inventory systems; business plans; sales forecasts; personnel information,including but not limited to the identity of employees and Agents of Company, theirresponsibilities, competence, abilities, and compensation; pricing and financial information;customer lists and information on customers or their employees, or their needs andpreferencesfor Company’s Products, Systems or Services; information concerning planned or pendingacquisitions or divestitures; and information concerning purchases of major equipment orproperty, and which:          (a) has not been made generally available to the public; and          (b) is useful or of value to the current or anticipated business or research ordevelopment activities of Company, or of any customer or supplier of Company; and          (c) has been identified to Executive by Company as confidential, either orally or inwriting.Confidential Information shall not include information which:          (x) is in or hereafter enters the public domain through no fault of Executive;          (y) is obtained by Executive from a third party having the legal right to use and todisclose the same; or          (z) was in the possession of Executive prior to receipt from Company (as evidenced byExecutive’s written records pre-dating the first date of employment with Lawson).Confidential Information also does not include Executive’s general skills and experience as definedunder the governing law of this Agreement.          13.4 **“****Unauthorized person or entity****”**shall mean any individual or entity who orwhich has not signed an appropriate secrecy or confidentiality agreement with Company, or isnot a current or target customer with whom Confidential Information is shared in the mutualinterest of that person or entity and Company     **14. MISCELLANEOUS PROVISIONS.**          14.1 Covenants contained in this Agreement shall remain in force and effect beyond thetermination of Executive’s employment.
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          14.2 During the term hereof and for four years following the effective date of termination ofemployment for any reason, Executive shall give notice of the existence and a copy of thisAgreement to any prospective employer or business relation.          14.3 The paragraph headings set forth in this Agreement are for convenience of reference onlyand shall not affect the interpretation or meaning of any provision hereof.     **15. ENTIRE AGREEMENT.**          This Agreement constitutes the entire agreement between Company and Executive with respect tothe subject matter hereof and supersedes all previous communications and agreements betweenLawson, including its predecessor, and Executive regarding the subject matter hereof. It may notbe changed or modified except by written instrument signed by Lawson’s Chief Executive Officer andExecutive.     **16. EXECUTIVE’S ACKNOWLEDGMENT AND REPRESENTATIONS.**          Executive acknowledges and agrees that the services to be rendered by him to Company are ofextraordinary merit and constitute a necessary and valuable contribution to the general growth anddevelopment of Company that result from Executive’s unique personal talent and expertise. Inreturn for the consideration described in this Agreement, and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, and as a conditionprecedent to Company entering into this Agreement, and as an inducement to Lawson to do so,Executive hereby represents, warrants, and covenants as follows:          16.1 Executive has executed and delivered this Agreement as his free and voluntary act, afterhaving determined that the provisions contained herein are of a material benefit to him, and thatthe duties and obligations imposed on him hereunder are fair and reasonable and will not preventhim from earning a livelihood following the termination of his employment with Company. Executivehas read and fully understands the terms and conditions set forth herein, has had time to reflecton and consider the benefits and consequences of entering into this Agreement, acknowledges thatany reference in this Agreement to Company applies also to any and all subsidiaries and affiliatesof Company as defined in paragraph 14, and has had the opportunity to review the terms hereof withan attorney or other representatives, if he chose to do so.          16.2 The execution and delivery of this Agreement by Executive does not conflict with, orresult in a breach of, or constitute a default under, any agreement or contract, whether oral orwritten, to which Executive is a party or by which Executive may be bound.
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          **IN WITNESS WHEREOF,**the parties have executed this Agreement at Des Plaines, Illinois, as ofthe date first written above.       **EXECUTIVE:**   **LAWSON PRODUCTS, INC**.       /s/ Stewart Howley   By: /s/ Robert J. Washlow       Stewart Howley     Robert J. Washlow      Chief Executive Officer
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