Document:

exv10w15

Exhibit 10.15

A.M. CASTLE & CO.

SUPPLEMENTAL PENSION PLAN

(As Amended and Restated Effective as of January 1, 2009)

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	SECTION 1 GENERAL
	 	 	1	 
	1.1 History, Purpose and Effective Date
	 	 	1	 
	1.2 Related Companies and Employers
	 	 	2	 
	1.3 Definitions
	 	 	2	 
	1.4 Plan Administration
	 	 	2	 
	1.5 Source of Benefit Payments
	 	 	2	 
	1.6 Applicable Laws
	 	 	3	 
	1.7 Gender and Number
	 	 	3	 
	1.8 Claims and Review Procedures
	 	 	3	 
	SECTION 2 PARTICIPATION
	 	 	3	 
	2.1 Participation
	 	 	3	 
	2.2 Plan Not Contract of Employment
	 	 	3	 
	SECTION 3 AMOUNT AND PAYMENT OF SUPPLEMENTAL PENSION
BENEFITS
	 	 	3	 
	3.1 Amount of Supplemental Pension Benefit
	 	 	3	 
	3.2 Transition Period Election of Benefit Commencement Date
	 	 	4	 
	3.3 Election to Defer Benefit Commencement Date
	 	 	4	 
	3.4 Distribution of Supplemental Pension Benefits
	 	 	5	 
	3.5 Form of Payment
	 	 	5	 
	3.6 Distribution of Small Amounts
	 	 	6	 
	3.7 Reemployment
	 	 	6	 
	3.8 Survivor Benefit
	 	 	7	 
	3.9 Time of Payment of Survivor Benefit
	 	 	7	 
	3.10 Actuarial Equivalence
	 	 	7	 
	3.11 Deferred Commencement of Payments Upon Separation From Service
	 	 	7	 
	3.12 Distributions Upon Income Inclusion Under Section 409A
	 	 	8	 
	SECTION 4 ADDITIONAL PROVISIONS
	 	 	8	 
	4.1 Payment of Benefit in the Event of Disability
	 	 	8	 
	4.2 Benefits Not Transferable
	 	 	8	 
	4.3 Tax Treatment and Withholding
	 	 	8	 

 

 

	 	 	 	 	 
	 	 	Page	 
	SECTION 5 AMENDMENT AND TERMINATION
	 	 	8	 
	5.1 Amendment.
	 	 	8	 
	5.2 Termination
	 	 	8	 
	5.3 Rights Not Limited by Section 409A
	 	 	9	 

 

 

A.M. CASTLE & CO.

SUPPLEMENTAL PENSION PLAN

(As Amended and Restated Effective as of January 1, 2009)

SECTION 1 

General

     1.1 History. Purpose and Effective Date. Effective January 1, 1987, A.M. Castle &
Co., a Delaware corporation (the “Company”), established the A.M. Castle & Co. Supplemental
Pension Plan (the “Plan”) for its employees and the employees of any affiliated corporation which,
with the consent of the Company, adopts the Plan. Effective June 5, 2001, A.M. Castle & Co. was
merged with and into its wholly owned subsidiary, Castle Merger, Inc., a Maryland corporation, and
the surviving corporation, Castle Merger, Inc. was redesignated A.M. Castle & Co. and was
substituted as the “Company” under the terms of the Plan. The initial purpose of the Plan was to
provide supplemental retirement benefits to employees whose pension benefits otherwise payable
under the A.M. Castle & Co. Salaried Employees Pension Plan (the “Qualified Plan”) were limited by
operation of section 415 of the Internal Revenue Code of 1986, as amended (the “Code”). The Plan
was amended and restated effective as of January 1, 1988 to provide supplemental retirement
benefits for employees of the Company and its affiliates whose benefits under the A.M. Castle &
Co. Employees Profit Sharing Plan were limited under the Code. Effective as of January 1, 1989,
the Company established the A.M. Castle & Co. Supplemental Profit Sharing Plan, and any
supplemental profit sharing benefits to which a Participant is entitled have since been provided
under that separate plan. Effective for Plan Years beginning on or after January 1, 1989, benefits
under the Qualified Plan are subject to limitations under section 401(a)(17) of the Code, and
since that time the Plan has been and continues to be administered to provide supplemental
retirement benefits to employees whose pension benefits under the Qualified Plan are limited by
operation of section 415 or section 401(a)(17) of the Code, or both. The provisions set forth
herein constitute an amendment, restatement and continuation of the Plan as in effect immediately
prior to January 1, 2009 (the “Effective Date”), subject to the following:

	 	(a)	 	The Plan as set forth herein shall apply to benefits under the Plan, the
payment of which commences on or after the Effective Date. Benefits for
which payments commence prior to the Effective Date shall be determined in
accordance with the provisions and administration of the Plan prior to the
Effective Date, taking into account the provisions of paragraph (b) next
below.
	 
	 	(b)	 	It is the intention that all amounts deferred under the Plan will be subject
to the provisions of section 409A of the Code and applicable guidance issued
thereunder (“Section 409A”), regardless of whether such amounts were deferred
(within the meaning of Section 409A) on, prior to, or after January 1, 2005;
provided, however, that amounts deferred as of

 

 

	 	 	 	December 31, 2004 with respect to Participants who terminated employment on
or before December 31, 2004 and for whom no amounts are deferred after
December 31, 2004 are not intended to be subject to the provisions of
Section 409A, and such amounts shall continue to be subject to the terms and
conditions of the Plan as in effect prior to January 1, 2005.

The Plan is intended to be an unfunded “excess benefit plan” within the meaning of section 3(36)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); provided, however,
that, to the extent, if any, that the Plan provides benefits which cannot be provided by an excess
benefit plan, the Plan shall constitute an unfunded plan maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly compensated employees.

     1.2 Related Companies and Employers. The term “Related Company” means any
corporation, trade or business during any period in which it is, along with the Company, a member
of a controlled group of corporations or a controlled group of trades or businesses (as described
in sections 414(b) and (c), respectively, of the Code. The Company and each Related Company which,
with the consent of the Company, adopts the Plan are referred to below collectively as the
“Employers” and individually as an “Employer.”

     1.3 Definitions. Unless the context clearly requires otherwise, or except as otherwise
provided by the Committee from time to time, any word, term or phrase used in the Plan shall have
the same meaning as is assigned to it under the terms of the Qualified Plan.

     1.4 Plan Administration. The authority to control and manage the operation and
administration of the Plan shall be vested in the Committee appointed to act under the Qualified
Plan. In controlling and managing the operation and administration of the Plan, the Committee shall
have the same rights, powers and duties as it has under the Qualified Plan.

     1.5 Source of Benefit Payments. The amount of any benefit payable with respect to
any Participant under the Plan shall be paid by each Employer, pro rata, according to the amount
such Employer contributed on behalf of the Participant under the Qualified Plan, as compared with
the amount contributed on behalf of the Participant by the Company and all other companies
participating in the Qualified Plan. An Employer shall not be required to pay benefits to a
Participant under the Plan in excess of the amount determined under the preceding sentence, and a
Participant’s entitlement to benefits under the Plan shall be limited (with any amounts in excess
of such limit forfeited) in accordance with the preceding sentence to the extent that Related
Companies which have contributed to the Qualified Plan on behalf of the Participant are not
Employers under this Plan. Benefits payable under the Plan by any Employer shall be paid from the
general revenues and assets of the Employer. An Employer’s obligation under the Plan shall be
reduced to the extent that any amounts due under the Plan are paid from one or more trusts, the
assets of which are subject to the claims of general creditors of the Employer or any affiliate
thereof; provided, however, that nothing in the Plan shall require the Company or any Employer to
establish any trust to provide benefits under the Plan, and no Participant shall have any interest
in or claim to any assets of any such trust as the Company may, from time to time, establish or
maintain for such purpose.

 

 

     1.6 Applicable Laws. The laws of Illinois shall be the controlling state law in all
matters relating to the Plan and shall be applicable to the extent that they are not preempted by
the laws of the United States of America.

     1.7 Gender and Number. Where the context admits, words in any gender shall include
each other gender, words in the plural shall include the singular and words in the singular shall
include the plural.

     1.8 Claims and Review Procedures. The claims procedure applicable to claims and
appeals of denied claims under the Qualified Plan shall apply to any claims for benefits under the
Plan and appeals of any such denied claims.

SECTION 2

Participation

     2.1 Participation. Subject to the terms and conditions of the Plan, each person who
was a “Participant” in the Plan immediately prior to the Effective Date shall continue as a
Participant in the Plan from and after the Effective Date. Subject to the terms and conditions of
the Plan, each other employee of an Employer shall become a “Participant” in the Plan as of the
first date on which his accrued benefit attributable to Employer contributions under the Qualified
Plan is limited by application of either or both of sections 415 and 401(a)(17) of the Code (the
“Code Limitations”).

     2.2 Plan Not Contract of Employment. The Plan does not constitute a contract of
employment, and participation in the Plan will not give any employee the right to be retained in
the employ of any Employer nor any right or claim to any benefit under the Plan, unless such right
or claim has specifically accrued under the terms of the Plan.

SECTION 3 

Amount and Payment of

Supplemental Pension Benefits 

     3.1 Amount of Supplemental Pension Benefit. Subject to the terms and conditions of
the Plan, each Participant whose employment with the Employers and Related Companies terminates for
reasons other than death shall be entitled to a “Supplemental Pension Benefit” under the Plan,
commencing as of his Benefit Commencement Date (as defined in subsection 3.4 below), in an amount
(expressed as a single life annuity) equal to:

	 	(a)	 	the amount of the benefit (expressed as a single life annuity), if any, which
the Participant would be entitled to receive under the Qualified Plan
commencing on such Benefit Commencement Date (whether or not benefits under
the Qualified Plan actually commence on such date), if the Qualified Plan
benefit were determined without regard to the Code Limitations;

REDUCED BY

 

 

	 	(b)	 	the amount of the benefit (expressed as a single life annuity) which the
Participant would be entitled to receive under the Qualified Plan if the
Qualified Plan benefit commenced on such Benefit Commencement Date (whether
or not benefits under the Qualified Plan actually commence on such date).

     3.2 Transition Period Election of Benefit Commencement Date. Subject to the terms
and conditions of the Plan, each individual who is a Participant in the Plan prior to the Effective
Date and who is permitted by the Company to make an election under this subsection 3.2, may elect
the time at which payment of his Plan benefit will commence by filing a written election with the
Company, no later than December 31, 2008, in a form and manner and subject to such limitations as
the Company in its sole discretion may establish, subject to the following:

	 	(a)	 	an election pursuant to this subsection 3.2 shall be available only to the
extent that payment would not otherwise commence in the year in which the
election is made;
	 
	 	(b)	 	such election shall not be effective if it would cause payment to
commence in the year in which the election is made that would not otherwise
commence in such year; and
	 
	 	(c)	 	as provided in subsection 3.11, the earliest date that benefits may
commence shall be the first day of the seventh calendar month after the
calendar month in which occurs the Participant’s “Separation from Service”
(as defined below).

A Participant will be deemed to have incurred a “Separation from Service” if he terminates
employment with the Company and any Related Company for reasons other than death. A termination of
employment will be deemed to have occurred if it is reasonably anticipated that the Participant
will not perform any services after termination of employment or it is reasonably anticipated that
the level of bona fide services the Participant will perform for the Company and any Related
Company after such date (whether as an employee or independent contractor, but not as a director)
will permanently decrease to a level that is no more than 50% of the average level of bona fide
services the Participant performed over the immediately preceding 36-month period.

Any individual who first becomes eligible to participate in the Plan on or after January 1, 2009
shall not be entitled to elect the time at which benefits will commence, except to the extent
permitted under subsection 3.3.

     3.3 Election to Defer Benefit Commencement Date. A Participant who is eligible to
retire and commence payment of an Early Retirement Income under the Qualified Plan may make a
one-time irrevocable election prior to attainment of age 59 to defer the earliest age at which
payment of his Supplemental Pension Benefit will commence pursuant to paragraph 3.4(b), subject to
the following:

	 	(a)	 	such election shall not be effective unless it is made in writing at least 12
months prior to the date on which the Participant’s benefits would have

 

 

	 	 	 	commenced had an election pursuant to this subsection 3.3 not been made; and
	 
	 	(b)	 	the election must delay the earliest age at which the Participant’s benefits
are to commence by at least five years (but not beyond age 65) from the age
at which the Participant’s benefits would have commenced in the absence of an
election under this subsection 3.3.

An election pursuant to this subsection 3.3 shall be made in such form and manner, and subject to
such rules and limitations consistent with the Plan, as may be prescribed by the Committee from
time to time.

     3.4 Distribution of Supplemental Pension Benefits. Subject to the terms and
conditions of the Plan and except as otherwise provided in subsection 3.11, payment of a
Participant’s Supplemental Pension Benefit shall commence on his “Benefit Commencement Date” which
shall be determined as follows:

	 	(a)	 	If a Participant is eligible to file, and timely does file, an election as to the
time of payment in accordance with subsection 3.2 of the Plan, the
Participant’s Benefit Commencement Date shall be the date elected by the
Participant in accordance with subsection 3.2 (but no earlier than the first
day of the calendar month following the calendar month in which the
Participant’s Separation from Service occurs).
	 
	 	(b)	 	If the Participant fails to timely file, or is not eligible to file, an election
as to the time of payment in accordance with subsection 3.2, and, on his Separation
from Service, he is eligible for an Early Retirement Income under the Qualified Plan,
the Participant’s Benefit Commencement Date shall be the later of (i) the first day
of the calendar month following the calendar month in which the Participant attains
age 60 or such later age (if any) as is elected by the Participant in accordance with
subsection 3.3; or (ii) the first day of the calendar month following the calendar
month in which the Participant’s Separation from Service occurs.
	 
	 	(c)	 	If the Participant fails to timely file, or is not eligible to file, an election
as to the time of payment in accordance with subsection 3.2, and, on his
Separation from Service, he is not eligible for an Early Retirement Income
under the Qualified Plan, the Participant’s Benefit Commencement Date shall
be the later of (i) the first day of the calendar month following the
calendar month in which the Participant attains age 65 or (ii) the first day
of the calendar month following the calendar month in which the Participant’s
Separation from Service occurs.

     3.5 Form of Payment. Subject to the terms and conditions of the Plan, a
Participant’s Supplemental Pension Benefit will be distributed in accordance with the following:

	 	(a)	 	If a Participant is not married on his Benefit Commencement Date,
payment will be made in the form of a single life annuity, unless the

 

 

	 	 	 	Participant elects, in accordance with paragraph (c) next below, to have his
benefit paid in another actuarially equivalent form of life annuity.
	 
	 	(b)	 	If a Participant is married on his Benefit Commencement Date, payment
will be made in the form of a Surviving Spouse Annuity which is actuarially
equivalent to the Participant’s single life annuity, unless the Participant
elects, in accordance with paragraph (c) next below to have his benefit paid
in another form of actuarially equivalent life annuity.
	 
	 	(c)	 	At any time before the date on which payment commences, a Participant
may

	 	(i)	 	elect that his Supplemental Pension Benefit be paid in any other
form of life annuity available under the Qualified Plan that is
actuarially equivalent to the Participant’s single life annuity; and
	 
	 	(ii)	 	choose a contingent annuitant other than his spouse for any such
form of payment that allows the Participant to designate a
contingent annuitant.

Any election made pursuant to this subsection 3.5 shall be made in writing, in such form and
manner, and subject to such rules and limitations, as may be prescribed by the Committee from time
to time consistent with the terms of the Plan. In no event shall a Participant be entitled to
change his Benefit Commencement Date, other than pursuant to an election made in accordance with
either subsection 3.2 or subsection 3.3 of the Plan.

     3.6 Distribution of Small Amounts. Notwithstanding any provision of this Section 3
to the contrary, the Committee may, in its sole discretion, direct that a Participant’s
Supplemental Pension Benefit be paid to the Participant in a lump sum at the date on which his
annuity payments otherwise would have commenced, if:

	 	(a)	 	the value (determined as of the Participant’s Benefit Commencement
Date) of the Participant’s Supplemental Pension Benefit does not exceed the
applicable dollar amount in effect under section 402(g)(l)(B) of the Code;
and
	 
	 	(b)	 	such lump sum payment results in the termination and liquidation of the
Participant’s entire interest in the Plan.

The provisions of this subsection 3.6 shall be applied by treating the Participant’s interest
under the Plan, and all plans and arrangements of the Company and all Related Companies that are
required to be aggregated with the Plan under Section 409A, as if they were a single plan. Any
exercise of Committee discretion to pay benefits in a lump sum pursuant to this subsection 3.6
shall be evidenced in writing no later than the date of payment.

     3.7 Reemployment. If a Participant is reemployed by the Company or a Related Company
after incurring a Separation from Service, any benefits accrued by the Participant prior to the
initial Separation from Service shall be distributed as if such reemployment had not

 

 

occurred. Any benefit to which the Participant becomes entitled under the Plan upon a subsequent
Separation from Service shall be actuarially adjusted, using such reasonable actuarial assumptions
and methods as the Committee shall determine for such purposes, to reflect the value of any
payments which the Participant has received and will receive under the Plan and the Qualified Plan
due to a prior Separation from Service.

     3.8 Survivor Benefit. If a Participant dies prior to his Benefit Commencement Date
and would otherwise have been eligible for a benefit under the Plan, his surviving spouse will be
entitled to a “Survivor Benefit.” The Survivor Benefit shall be a monthly payment to the surviving
spouse in an amount determined as follows:

	 	(a)	 	In the case of a Participant who dies on or after the
earliest date on which
Plan benefits would have commenced to him had he incurred a Separation from
Service, the Survivor Benefit shall be an amount equal to 50% of the monthly
Supplemental Pension Benefit to which the Participant would have been
entitled had he commenced receipt of his Supplemental Pension Benefit as of
the date as of which payment of the Survivor Benefit commences in accordance
with subsection 3.9 and had his benefits been paid in the form of a Surviving
Spouse Annuity.
	 
	 	(b)	 	In the case of a Participant who dies before the earliest date on which Plan
benefits would have commenced to him had he incurred a Separation from Service, the
Survivor Benefit shall be an amount equal to 50% of the monthly Supplemental Pension
Benefit to which the Participant would have been entitled had he terminated
employment on the date of death (or the date of his actual termination of employment,
if earlier), survived to the date that would have been his Benefit Commencement Date,
and commenced receipt of his Supplemental Pension Benefit as of that date in the form
of a Surviving Spouse Annuity (disregarding any otherwise applicable requirement to
defer commencement to the first day of the seventh month after a Separation from
Service).

     3.9 Time of Payment of Survivor Benefit. Payment of the Survivor Benefit to a
surviving spouse shall commence as of the first day of the calendar month following the later of
the Participant’s date of death or the earliest date on which benefits would have commenced to the
Participant (had he incurred a Separation from Service), and shall continue until and including the
month in which the surviving spouse dies.

     3.10 Actuarial Equivalence. Except as otherwise provided in the Plan, the
determination of the actuarial equivalence shall be made in accordance with the Qualified Plan
provisions relating to actuarial equivalence.

     3.11 Deferred Commencement of Payments Unon Separation From Service. Notwithstanding
any provision of this Plan to the contrary, benefit distributions made to a Participant upon a
Separation from Service shall commence on the first day of the seventh month following the
Participant’s Benefit Commencement Date. In the event this subsection 3.11 is applicable to a
Participant, any distribution which would otherwise be paid to the Participant

 

 

within the first six months following his Benefit Commencement Date shall be accumulated and paid
to the Participant in a lump sum on the first day of the seventh month following the Benefit
Commencement Date. All subsequent distributions shall be paid in the manner specified by the form
of distribution applicable to the Participant.

     3.12 Distributions Upon Income Inclusion Under Section 409A. Upon the inclusion of any
amount into a Participant’s income as a result of the failure of this non-qualified deferred
compensation plan to comply with the requirements of Section 409A, to the extent such tax liability
can be covered by the amount of the Participant’s Supplemental Pension Benefit, a distribution
shall be made as soon as is administratively practicable following the discovery of the plan
failure.

SECTION 4

Additional Provisions

     4.1 Payment of Benefit in the Event of Disability. In the event that a Participant
is under a legal disability or is in any way incapacitated so as to be unable to manage his financial
affairs, the Employers may make payments under this Plan to a relative or friend of the
Participant, or, if applicable, his spouse or beneficiaries, until a conservator or other person
legally charged with the care of his person or of his estate has been appointed and makes a claim
for such benefits.

     4.2 Benefits Not Transferable. Benefits payable to a Participant and, if applicable,
his surviving spouse or beneficiaries under this Plan are not subject to the claims of his
creditors, other than the Employers (the payment or offset of such Employer claims, however, being
potentially subject to Section 409A), and may not be voluntarily or involuntarily assigned,
alienated or encumbered.

     4.3 Tax Treatment and Withholding. Benefits under the Plan shall be subject to
withholding of all applicable taxes. Notwithstanding any provision of the Plan to the contrary,
neither the Company nor any Employer makes any representation or warranty regarding the tax
consequences of the Plan to Participants or other persons entitled to benefits hereunder.

SECTION 5 

Amendment and Termination

     5.1 Amendment. The Company may amend or terminate the Plan, at any time, to take
effect retroactively or otherwise, as deemed necessary or advisable for purposes of conforming the
Plan to any present or future law, regulations or rulings relating to plans of this or a similar
nature, except that no amendment or termination shall reduce a Participant’s benefits to less than
the amount he would be entitled to receive if he had incurred a Separation from Service on the date
of the amendment.

     5.2 Termination. The Plan, as applied to all Employers, will terminate on the date
it is terminated by the Company. The Plan, as applied to any Employer, will terminate on the first to
occur of the following:

 

 

	 	(a)	 	the date it is terminated by that Employer if advance written notice of the
termination is given to the other Employers;
	 
	 	(b)	 	the date the Employer is judicially declared bankrupt or insolvent; or
	 
	 	(c)	 	the dissolution, merger, consolidation or reorganization of the Employer,
or the sale by the Employer of all or substantially all of its
assets, except that, with the consent of the Company, in any such
event arrangements may be made whereby the Plan will be continued by
any successor to the Employer or any purchaser of all or
substantially all of the Employer’s assets, in which case the
successor or purchaser will be substituted for the Employer under the
Plan.

In the event of any Plan termination, each Participant’s benefits under the Plan shall
be paid at the same time and in the same form as had such termination not occurred,
except as otherwise provided by the Company, by Plan amendment or otherwise, and each
Employer’s obligation to make payment of Participants’ benefits under subsection 1.5
shall continue to the extent the benefits were accrued as of the date such termination
occurs.

     5.3 Rights Not Limited by Section 409A. The rights reserved to the Company and the
Employers under this Section 5 shall not be subject to any limitation or restriction
merely because the exercise of such rights may result in adverse tax consequences to
Participants or other persons under Section 409A or any other law.

     IN WITNESS WHEREOF, this amended and restated Plan has been executed this
12th day of November, 2008

	 	 	 	 	 	 	 
	 	 	A. M. CASTLE & CO.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Paul J. Winsauer
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Printed:
	 	Paul J. Winsauer	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	 	VP — Human ResourcesEX-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:

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          (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.

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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 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.

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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 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

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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.

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     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.

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          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.

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          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.

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          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

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