<PAGE>   1

                                                                    Exhibit 10.3


                                    AGREEMENT


     THIS AGREEMENT is made this the 13th day of August, 1998 by and among
SETECH, INC. ("Setech"), MICHAEL S. BURNHAM, JR. ("Burnham"), THOMAS N. EISENMAN
("Eisenman") and LEWIS SUPPLY CO., INC. ("Lewis Supply").

                                    RECITALS:

     A. Setech has previously entered into a Stock Purchase Agreement dated June
26, 1997 (the "Stock Purchase Agreement") pursuant to which it purchased all the
shares of the capital stock of Lewis Supply.

     B. In connection with the Stock Purchase Agreement, Setech, Lewis Supply
and Burnham entered into that certain Employment and Non-Compete Agreement dated
June 26, 1997 (the "Employment Agreement").

     C. In connection with the Stock Purchase Agreement, Setech, Burnham and
Eisenman executed that certain Shareholders' Agreement dated June 26, 1997 (the
"Shareholders' Agreement") in order to make provision for certain matters
concerning Stock owned by Burnham and Eisenman.

     D. By mutual agreement, Burnham and Lewis Supply are desirous of
terminating his employment with Lewis Supply under the terms set forth herein,
and in connection therewith the parties to the Shareholders' Agreement are
modifying the Shareholders' Agreement as set forth herein.

     E. Terms not otherwise defined herein shall have the meanings ascribed to
such terms in the Shareholders' Agreement and the Employment Agreement.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:

1.   Termination of Employment; Independent Contractor Services. The parties
     hereto agree that the employment of Burnham pursuant to the Employment
     Agreement is terminated as of September 1, 1998. Burnham hereby resigns as
     a director of Lewis Supply effective September 1, 1998. Burnham will be
     paid on August 31, 1998 for services rendered through such date, excluding
     the Bonus under Section 4 hereof which will be paid in accordance with its
     terms. Commencing September 1, 1998, Burnham shall render services
     (devoting reasonable time at locations which are reasonable) to Lewis
     Supply as an independent contractor in order to effect the management
     transition. In exchange for such services, Lewis Supply shall pay Burnham
     commencing September 15, 1998, an amount equal to $5,458.33 on the
     fifteenth day of each calendar month and on the last day of each calendar
     month in accordance with



<PAGE>   2

     Lewis Supply's standard payroll procedures. In addition, Lewis Supply shall
     pay all reasonable out of pocket expenditures incurred by Burnham in
     rendering such services. The term of Burnham's employment as an independent
     contractor under this Agreement shall expire on December 31, 1998. The
     parties hereto agree and acknowledge that the early termination of
     employment is not governed by the provisions of Section 5A, 5B or 5C of the
     Employment Agreement.

2.   Health Insurance. Lewis Supply agrees to continue existing health insurance
     coverage through December 31, 1998 in the same manner as set forth under
     Section 5.B(4) of the Employment Agreement, which are presently paid by
     Lewis Supply.

3.   Consulting Services. Commencing January 1, 1999, Burnham shall be paid
     for consulting services (devoting reasonable time at locations which are
     reasonable) requested by Lewis Supply or Setech at a rate equal to $250 per
     hour. Consulting fees shall be invoiced by Burnham and shall be payable by
     Lewis Supply or Setech within thirty (30) days following receipt of such
     invoice. In addition, Lewis Supply and/or Setech shall pay all reasonable
     out of pocket expenditures incurred by Burnham in connection with such
     consulting services.

4.   Bonus. The parties hereto agree and acknowledge that Burnham is fully
     vested in his Bonus as set forth in Section 4.B of the Employment Agreement
     for the fiscal year ending June 30, 1998. No amounts shall accrue to
     Burnham under Section 4.B of the Employment Agreement for the period after
     June 30, 1998.

5.   Restrictive Covenants. The Employment Agreement is amended to the extent
     that Section 6.A concerning "Competition" shall be effective through
     December 31, 1998 and thereafter shall be null and void. All other
     provisions of Section 6 of the Employment Agreement shall be in full force
     and effect until September 1, 1999.

6.   Shareholders' Agreement. The parties hereto agree that the Shareholders'
     Agreement shall be modified and amended as follows:

          (a) Right of Burnham. Burnham's put option under Section 3 of the
     Shareholders' Agreement (unless exercised prior to expiration) shall expire
     in accordance with the provisions of subsection (z) of such Section.
     Notwithstanding the foregoing sentence, in the event Burnham exercises his
     rights under Section 3 of the Shareholders' Agreement for shares in excess
     of those issued to date, Setech will also repurchase those additional
     shares to be issued under the Stock Purchase Agreement.

          (b) The provisions of Sections 4(b)(v) and 5 of the Shareholders'
     Agreement concerning "Co-Sale" are hereby deleted.



                                       2
<PAGE>   3

7.   Communications and Releases. The parties hereto acknowledge that the
     termination of employment by Burnham was by mutual agreement of the parties
     hereto. Each of the parties hereto shall refrain from making any
     disparaging communications about the other to any third parties. The
     parties hereto shall use their best efforts to consult with one another in
     making any public announcements of the termination of Burnham's employment
     with Lewis Supply.

8.   Savings Clause. Except as set forth herein, the Shareholders' Agreement,
     the Stock Purchase Agreement and those provisions of the Employment
     Agreement which by their terms survive the termination of Burnham's
     employment, shall remain unamended and in full force and effect.

9.   Counterparts. This Agreement may be executed in one or more counterparts,
     each of which will be deemed an original of this Agreement and all of
     which, when taken together, will be deemed to constitute one and the same
     agreement.

     IN WITNESS WHEREOF, the undersigned hereby execute this Agreement as of the
day and date first set forth above.


                                      SETECH, INC.


                                      By: /s/ Tom Eisenman
                                         --------------------------------------

                                      Title: President & CEO
                                            -----------------------------------

                                            /s/ Michael S. Burnham
                                      -----------------------------------------
                                      MICHAEL S. BURNHAM, JR.



                                            /s/ Thomas N. Eisenman
                                      -----------------------------------------
                                      THOMAS N. EISENMAN


                                      LEWIS SUPPLY CO., INC.


                                      By: /s/ Michael S. Burnham
                                         --------------------------------------

                                      Title: President
                                            -----------------------------------







                                       3