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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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
witho
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