EX-10.11







Exhibit 10.11




EXECUTIVE EMPLOYMENT AGREEMENT




          This Agreement is made and effective as of this 5th day of December
2005, between LAWSON PRODUCTS, INC., a Delaware corporation (“Lawson”), and Stewart Howley
(“Executive”).




          WHEREAS, Lawson wishes to continue to employ Executive as an officer of Lawson; and




          WHEREAS, Executive wishes to continue employment with Lawson in such position; and




          WHEREAS, Company (as defined in paragraph 14.1 below) is engaged in: (i) the acquisition for
and the distribution and sale of fasteners, parts, hardware, pneumatics, hydraulic and other
flexible hose fittings, tools, safety items and electrical and shop supplies, automotive and
vehicular products, chemical specialties, maintenance chemicals and other chemical products,
welding products and related items, all as more particularly described in Company’s sales kits and
manuals; (ii) the sale and distribution and the providing of systems and services related thereto;
and (iii) the manufacture, sale and distribution of production and specialized parts and supplies;
and (iv) the provision of just-in-time inventories of component parts to original equipment
manufacturers and of maintenance and repair parts to a wide variety of users; and (v) the
provision of in-plant inventory systems and of electronic vendor-managed, inventory systems to
various customers (collectively “Company’s Products, Systems and Services”). Company’s independent
sales agents or other representatives employed or retained by Company (“Agents”), solicit orders
for Company’s Products, Systems and Services, in the territories assigned to them and also
maintain, on behalf of Company, frequent contact for such purposes with customers; and




          WHEREAS, Lawson’s officers are responsible for duties inherent to their offices relating to
the management and operation of the Company, including but not limited to assisting Company in the
development of its product line, the marketing, sale and distribution of Company’s Products,
Systems and Services to Company’s customers, assisting in the cross-marketing and cross-selling of
products of Company, and for Company’s sales activities, including but not limited to its sales
management and management of its employees, agents and other representatives; and




          WHEREAS, Lawson’s officers interact, cooperate, assist and confer with executives, employees,
officers, directors, agents, representatives, consultants and others within the Company in the
regular course of business and regularly engage in management, sales, distribution and operational
activities, and activities relating thereto or in connection therewith; and




          WHEREAS, Lawson reposes great trust and confidence in its officers.




          NOW THEREFORE, in recognition of the needs of Company and its employees, and in consideration
of Executive’s position with and employment or continued employment by Lawson, the rights and
benefits provided hereunder and in any plan or program which requires as




 









 







a condition to participation therein or receipt of benefits thereunder by Executive’s, execution
of this Agreement, and of the mutual agreements, promises and undertakings herein set forth, and
for other good and valuable consideration, the receipt and sufficiency of which are acknowledged
by 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 (or
with such other title as mutually agreed upon) and as a member of its Corporate Management
Committee, on a full-time basis, and Executive hereby accepts such employment. Executive shall
report to the Chief Operating Officer, or to such other person as designated by the Chief
Executive Officer (the “Reporting Person”).




          Executive hereby acknowledges that he has a fiduciary responsibility and duty of loyalty to
Company hereunder. For so long as Executive remains employed, Executive shall, on a full-time
basis, devote his best efforts and his entire business time, energy, attention, knowledge and
skill solely and exclusively to advance the interests, products and goodwill of Company. Executive
shall diligently, competently and faithfully perform the duties assigned to him by Company from
time 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 satisfactory
performance, will be increased to $275,000 six months after commencement of employment
hereunder, and a further increase of $12,000 if and when the executive relocates his
residence to Chicago. In addition to these increases, this amount may be increased by the
Chief Executive Officer of Lawson subject to approval of the Compensation Committee of the
Board of Directors, in its sole discretion, from time to time. Executive’s salary shall be
payable in substantially equal semi-monthly installments (“Salary”).




          (b) Commencing with the year 2006, an annual incentive bonus, if any, determined by the
Compensation Committee of the Board of Directors of Lawson in its sole discretion based upon
the overall growth and profitability of the Company as compared to the prior year as more
fully described on and consistent with the terms of Exhibit A attached hereto and made a
part hereof (the “Incentive Bonus”). The Incentive Bonus, if any, shall be payable not later
than April 15 of the following year, provided Executive’s employment hereunder has not been
terminated by Lawson for cause prior to such date. The terms, conditions and provisions of
the Incentive Bonus shall be in conformance with the incentive bonus program applicable to
executive officers generally and particularly to such office as is held by Executive.



          2.2 Executive shall receive the following standard benefits; provided, however, Lawson may
modify or terminate such benefits from time to time to the extent and on such terms as Lawson
modifies or terminates such benefits as provided to other officers:




2









 









          (a) Coverage under Lawson’s group health plan on such terms as provided to Lawson’s
officers.




          (b) Long-term disability insurance coverage; provided however, if Executive becomes
disabled within the meaning of any long-term disability policy then in effect, Lawson will
pay to Executive the Salary which would have been due but for Executive’s disability for
six (6) months following such disability. For thirty (30) months thereafter, Lawson will
pay to Executive sixty percent (60%) of the Salary of Executive which would have been due
but for Executive’s disability. While Lawson is making such payments, Lawson will be
entitled to receive in money or by credit against such payments a sum equal to any Company
provided long-term disability insurance benefits paid to or for the benefit of Executive
for 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 for
officers.




          (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 in
default or breach of this Agreement, Lawson shall pay an additional compensation amount
equal 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 to
the beneficiary(ies) identified in writing by Executive from time to time on forms provided
by Lawson for that purpose and filed by Executive with Lawson and shall be paid in
forty-eight (48) equal, semi-monthly installments made as of the 15th day and the last day
of each calendar month following Executive’s death.




          (i) Reimbursement for all reasonable and approved business expenses in accordance with
Lawson policy, or as otherwise approved by the Reporting Person, provided Executive submits
paid receipts or other documentation acceptable to Lawson and as required by the Internal
Revenue Service to qualify as ordinary and necessary business expenses under the Internal
Revenue Code of 1986, as amended (the “Code”).



          2.3 All compensation and benefits to become payable to Executive under subparagraphs 2.1 and
2.2 shall be subject to applicable governmental laws and regulations regarding income tax
withholding and other payroll taxes and deductions.




3









 








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 termination
is delivered to Executive or sent to him by certified or registered mail to Executive’s
home address as listed on Lawson’s records (or effective on such later date as indicated in
such notice).




          (b) By the Executive for Good Reason effective on the date that written notice of
termination is delivered to the Reporting Person by certified or registered mail, or hand
delivery or overnight mail. “Good Reason” means, without the Executive’s consent, (i) the
assignment to the Executive of duties substantially and materially inconsistent with the
position and nature of the Executive’s employment (ii) a reduction of compensation and
benefits (other than incentive compensation which, it is acknowledged, will increase or
decrease from year to year) that would diminish the aggregate value of the Executive’s
compensation and benefits, or (iii) relocation of the Executive’s office outside of a
35-mile radius of metropolitan Atlanta or Chicago




          (c) By Lawson, for cause, effective on the date that written notice of termination is
delivered to Executive or sent to him by certified or registered mail to Executive’s home
address 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 to
non-competition, trade secrets, inventions, non-solicitation or confidentiality; (ii)
material breach or default of any of Executive’s duties or other obligations or covenants
under 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) an
act of fraud, embezzlement or the misappropriation of property by Executive.




          (d) By Executive effective on the expiration of sixty (60) days following written
notice of resignation delivered to the Reporting Person by certified or registered mail, or
hand delivery or overnight mail.




          (e) Automatically, upon Executive’s date of death or the date on which Executive is
determined to be permanently “disabled” pursuant to the terms of Lawson’s long-term
disability insurance policy.



          3.2 Executive shall remain employed by Lawson until the effective date of termination or
resignation, 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 in
accordance herewith, and until the effective date thereof, Executive shall perform only those
services specifically authorized and directed by the Reporting Person, Chief Executive Officer or
the Board of Directors and shall receive as compensation while so employed only the annual Salary
then in effect and benefits as then in effect, subject to modifications in such benefits as may
occur in the interim pertaining to such benefit programs generally affecting officers of Lawson.





4









 








     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 to
Lawson all Company property, including without limitation the property and information
described in paragraphs 4 or 5 hereof, in whatever form, together with all copies thereof in
his possession or under his control.




          (b) Lawson shall pay to Executive, within thirty (30) days following the effective date
of termination of his employment, the sum of any compensation or benefits or other amounts due
to him from Lawson as may be accrued for periods prior to the effective date of termination
and not previously paid, less the sum of any payments, advances, loans and other charges due
and owing from Executive to Company.




          (c) In the event of termination pursuant to paragraph 3.1(a) or 3.1(b) hereof during the
first 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 defined
below), pay to Executive an amount equal to one year’s salary; otherwise, Lawson shall have no
obligation 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 employment
with Lawson, Lawson shall, in return for Executive’s performance of the Consulting Services (as
defined below), pay to Executive an amount equal to one year’s annual Salary plus two
additional months’ Salary (to a maximum of twelve additional months Salary) for each complete
year Executive has been employed by Lawson after the initial twelve-month period of employment
by the Lawson. (For example, if Executive is employed for six (6) years, Executive would be
paid 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 the
period of time upon which such payment is based. (For example, if Executive is entitled to an
amount equal to six months’ Salary, such amount shall be paid to Executive in equal
semi-monthly installments over the six-month period immediately following the effective date of
termination.) The period of time in which Lawson is obligated to provide salary continuation
payments to Executive pursuant to this paragraph 3.3(c) is referred to herein as the “Salary
Continuation Period”. During the Salary Continuation Period, Executive shall be entitled to
continued health and life insurance coverage on substantially the same basis afforded to him
prior to termination of Executive’s employment. During the Salary Continuation Period,
Executive shall, upon request of the Company, make himself reasonably available on a limited
basis 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 be
limited to not more than twenty-four (24) hours in any calendar quarter and so that such
consulting does not interfere with Executive’s employment time commitments with any successor
employer.




          (d) Following termination of Executive’s employment with Lawson for any reason, Company
shall have no obligation to provide for post-termination compensation or benefits to Executive
(except as provided by paragraph 3.3(b) and as otherwise



5









 







provided by law) unless Executive executes and delivers to the Lawson a release, in form
reasonably 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 are
or were created, developed, generated or held by Executive during employment, whether containing
or relating to Confidential Information (as defined in paragraph 14) or not, are the property of
Company and shall be promptly delivered to Company upon termination of Executive’s employment for
any reason whatsoever. 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 are or were created, developed, generated or held by Executive during
the Salary Continuation Period, whether containing or relating to Confidential Information (as
defined in paragraph 14) or not, are the property of Company and shall be promptly delivered to
Company upon termination of the Salary Continuation Period. During the course of employment and
during 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 any
apparatus containing any such property or Confidential Information, from Company’s premises
without prior written authorization from Company, other than in the normal execution of
Executive’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 during
the Salary Continuation Period, Executive will learn or develop Confidential Information in trust
and confidence. Executive agrees to use the Confidential Information solely for the purpose of
performing his duties hereunder and not for his own private use or commercial purposes. Executive
acknowledges that unauthorized disclosure or use of Confidential Information, other than in
discharge of Executive’s duties, will cause Company irreparable harm.




          Executive shall maintain Confidential Information in strict confidence at all times and shall
not 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 written
consent, during the term of employment, during the Salary Continuation Period or thereafter, for
as long as such Confidential Information remains confidential.




          Executive further acknowledges that Company and its affiliates operate and compete
internationally and that Company and/or its affiliates will be harmed by the unauthorized
disclosure 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 other
jurisdiction.




6









 








     6. EXECUTIVE’S OBLIGATION NOT TO SOLICIT OR HIRE
COMPANY’S EMPLOYEES AND AGENTS.



          During the Restriction Period (as hereinafter defined), Executive shall not, directly or
indirectly, for himself or on behalf of any person, firm, or other entity, solicit, induce or
encourage any person to leave her/his employment, agency or office with Company or any of its
affiliates. During the Restriction Period, Executive shall not, directly or indirectly, for
himself or on behalf of any person, firm or other entity, hire or retain or participate in hiring
or retaining any person who then is an employee of or agent for Company or any person who has been
an employee of or agent for the Company at any time in the ninety (90) days prior to termination
of Executive’s employment, and, in the event Executive is providing Consulting Services following
termination of his employment, any person who has been an employee of or agent for the Company at
any time during the Salary Continuation Period, unless Lawson is informed and gives its approval
prior to the hiring or retention. The term “Restriction Period” means the period of time in which
Executive 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 and
servicing of Company’s Products, Systems and Services, Executive acknowledges that Executive will
learn or develop Confidential Information relating to the development, sales, marketing or
provision of Company’s Products, Systems and Services, and Company’s customers and prospective
customers. Executive further acknowledges that Company’s relationships with its customers are
extremely valuable to it, are generally the result of substantial time and effort devoted by
Company, and tend to be near permanent. Therefore, during the Restriction Period, Executive shall
not, directly or indirectly, for himself or on behalf of any person, firm, or other entity, solicit
or sell, attempt to sell, or supervise, participate in, or assist the sale or solicitation of
Competitive Products and Systems (i) to any person, firm or other entity to which Company sold any
of Company’s Products, Systems or Services during the last (2) years of Executive’s employment
prior to the effective date of termination and (ii) in the event Executive is providing Consulting
Services following termination of his employment, to any person, firm or other entity to which the
Company 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 of
Company which does not fall within the preceding description. This paragraph is independent of the
obligations of confidentiality under paragraph 5 hereof.




     8. UNFAIR TRADE PRACTICES.



          During the term of this Agreement and at all times thereafter, Executive shall not, directly
or indirectly, engage in or assist others in engaging in any unfair trade practices with respect to
Company.




     9. REMEDIES.



          Executive acknowledges that failure to comply with the terms of this Agreement will cause
irreparable loss and damage to Company. Therefore, Executive agrees that, in addition




7









 







and cumulative to any other remedies at law or equity available to Company for Executive’s breach
or threatened breach of this Agreement, Company is entitled to specific performance or injunctive
relief against Executive to prevent such damage or breach, and a temporary restraining order and
preliminary injunction may be granted to Company for this purpose immediately at its request upon
commencement of any suit, without prior notice and without posting any bond. The existence of any
claim 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 competent
jurisdiction to be excessively broad as to area or time or otherwise, the parties authorize the
court to reduce such restriction to the extent necessary to make such restriction reasonable and
to enforce such restriction as so reduced. Any provisions of this Agreement not so reduced shall
remain in full force and effect.




     11. ASSIGNMENT.



          The terms and provisions of this Agreement shall be binding upon and inure to the benefit of
Lawson, its successors and assigns and Executive and Executive’s heirs, executors, administrators
and other legal representatives. This Agreement is a personal service agreement and shall not be
assignable by Executive.




     12. GOVERNING LAW.



          This Agreement shall be interpreted and enforced in accordance with the laws of the State of
Illinois, without regard to its conflict of law principles. Any action commenced to enforce or to
determine any right or obligation hereunder shall be commenced only in a federal or state court
with jurisdiction over Cook County, Illinois. Executive consents to personal jurisdiction in any
such 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 with
Lawson and during the Salary Continuation Period, if any, including, but not limited to, Assembly
Component Systems, Inc., Cronatron Welding Systems, Inc., Drummond American Corporation, Automatic
Screw Machine Products Company, C.B. Lynn Company, Lawson Products, Inc. (Ontario), Lawson
Products de Mexico, Assembly Component Systems Limited-UK, and any other entity in which any one
or more of them has an interest at any time during Executive’s employment with Lawson and during
the 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 or
services in existence or under development which are the same as or substantially similar to or
functional equivalents of those of Company including, without limitation, those which are or may be
provided to Company’s customers on behalf of Company by employees, agents, or sales representatives
of Company.



8









 





          13.3 “Confidential Information” shall mean all information, including, but not
limited to, trade secrets disclosed to Executive or known by Executive as a consequence of or
through Executive’s employment by Lawson, or performance of Consulting Services to Lawson,
concerning the products, services, systems, customers and Agents of Company, and specifically
including 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; customer
loyalty programs; inventory systems; business plans; sales forecasts; personnel information,
including but not limited to the identity of employees and Agents of Company, their
responsibilities, competence, abilities, and compensation; pricing and financial information;
customer lists and information on customers or their employees, or their needs and
preferences
for Company’s Products, Systems or Services; information concerning planned or pending
acquisitions or divestitures; and information concerning purchases of major equipment or
property, 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 or
development 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 in
writing.


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 to
disclose the same; or




          (z) was in the possession of Executive prior to receipt from Company (as evidenced by
Executive’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 defined
under the governing law of this Agreement.




          13.4 “Unauthorized person or entity” shall mean any individual or entity who or
which has not signed an appropriate secrecy or confidentiality agreement with Company, or is
not a current or target customer with whom Confidential Information is shared in the mutual
interest of that person or entity and Company




     14. MISCELLANEOUS PROVISIONS.



          14.1 Covenants contained in this Agreement shall remain in force and effect beyond the
termination of Executive’s employment.




9









 








          14.2 During the term hereof and for four years following the effective date of termination of
employment for any reason, Executive shall give notice of the existence and a copy of this
Agreement to any prospective employer or business relation.




          14.3 The paragraph headings set forth in this Agreement are for convenience of reference only
and 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 to
the subject matter hereof and supersedes all previous communications and agreements between
Lawson, including its predecessor, and Executive regarding the subject matter hereof. It may not
be changed or modified except by written instrument signed by Lawson’s Chief Executive Officer and
Executive.




     16. EXECUTIVE’S ACKNOWLEDGMENT AND REPRESENTATIONS.



          Executive acknowledges and agrees that the services to be rendered by him to Company are of
extraordinary merit and constitute a necessary and valuable contribution to the general growth and
development of Company that result from Executive’s unique personal talent and expertise. In
return for the consideration described in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and as a condition
precedent 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, after
having determined that the provisions contained herein are of a material benefit to him, and that
the duties and obligations imposed on him hereunder are fair and reasonable and will not prevent
him from earning a livelihood following the termination of his employment with Company. Executive
has read and fully understands the terms and conditions set forth herein, has had time to reflect
on and consider the benefits and consequences of entering into this Agreement, acknowledges that
any reference in this Agreement to Company applies also to any and all subsidiaries and affiliates
of Company as defined in paragraph 14, and has had the opportunity to review the terms hereof with
an 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, or
result in a breach of, or constitute a default under, any agreement or contract, whether oral or
written, to which Executive is a party or by which Executive may be bound.




10









 





          IN WITNESS WHEREOF, the parties have executed this Agreement at Des Plaines, Illinois, as of
the date first written above.




	 	 	 	 	 	 	 
	EXECUTIVE:	 	 	 	LAWSON PRODUCTS, INC.
	 
	 	 	 	 	 	 
	/s/ Stewart Howley

	 	 	 	By:
	 	/s/ Robert J. Washlow
	 

	 	 	 	 	 	 
	Stewart Howley

	 	 	 	 	 	Robert J. Washlow
	 

	 	 	 	 	 	Chief Executive Officer






11