AGREEMENT OF EARLY RETIREMENT
This Agreement made this 23rd day of December, 1998 between Peter G. Smith ("Smith") and Lawson
Products, Inc., a Delaware corporation ("Company") at Des Plaines, Illinois.
The Company has proposed and Smith desires to accept the proposal for early retirement effective with the close
of business on December 31, 1998 on the terms, conditions and in accordance with the provisions as set forth
herein. Smith has since December, 1971 served the Company in various capacities including, but not limited to,
Director, corporate officer and President and has been directly involved in the creation, acquisition and operation
of many aspects of the business of the Company and of its subsidiaries within the United States and in foreign
In consideration of the premises hereof and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged by the parties hereto, the parties hereby agree as follows:
1. Effective January 1, 1999, Smith will relinquish his duties and responsibilities and retire from the offices of
President and Chief Operating Officer of Lawson Products, Inc. (Delaware), as a member of the Executive
Committee of Lawson Products, Inc. (Delaware), and as an officer of those of its subsidiaries of which he is an
officer and as a director of those subsidiaries of which he is a director. Smith will continue to serve as a member
of the Board of Directors of Company until otherwise determined by himself, the Board of Directors or the
shareholders of Company.
2. Salary. Smith's current annualized salary of Three Hundred Seven Thousand One Hundred Nine Dollars
($307,109) per year will continue to be paid until June 30, 2003 (Salary Continuation Period).
3. During the Salary Continuation Period and at all times thereafter, Smith will not disclose to any person, firm or
entity whatsoever any information relating to the Company or its or their customers or any trade secrets of any of
them of which h