Exhibit 10.31
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), made as of June 19, 2001 by and
between United Stationers Supply Co., an Illinois corporation (the "Company"),
and R. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇") is an amendment and restatement of the agreement
made as of February 1, 1998 by and between the Company and ▇▇▇▇▇▇.
In consideration of the mutual promises and agreements contained in this
Agreement, the Company hereby continues to employ ▇▇▇▇▇▇, and ▇▇▇▇▇▇ accepts
continued employment with the Company, on the terms and conditions contained in
this Agreement.
1. TERM OF EMPLOYMENT. The term of employment shall continue as of the date
of this Agreement and until January 31, 2002, and thereafter shall be extended
automatically for additional one-year periods unless written notice is given by
either party to the other at least 60 days prior to the end of such term, or any
extension thereof.
2. POSITION AND DUTIES. During the term of employment, ▇▇▇▇▇▇ shall serve
as Executive Vice President, Human Resources and Organization Development of the
Company, and, in accordance with the authority and direction of the board of
directors of the Company (the "Board") shall render such operational,
administrative and other services to the Company as may be required of such
position or as the Board may from time to time direct. ▇▇▇▇▇▇ shall be available
at all reasonable times for consultation with the Board on matters relating to
the Company's or its affiliates' business.
▇▇▇▇▇▇ shall devote his best efforts and his full and exclusive business
time and attention (except for reasonable periods of vacation, illness or other
incapacity) to the business and affairs of the Company and its affiliates.
3. COMPENSATION. During the term of employment, ▇▇▇▇▇▇ shall be compensated
as follows:
3.1. BASE SALARY. ▇▇▇▇▇▇ shall receive a base salary of no less than Two
Hundred Eighty-five Thousand Dollars ($285,000.00) per year, payable in
accordance with the Company's normal payment schedule for management employees.
The base salary shall be reviewed by the Board annually and may, in the Board's
sole discretion, be increased when deemed appropriate.
3.2. BONUS. ▇▇▇▇▇▇ shall be eligible to participate in any bonus plans
approved by the Board and made generally available to senior management
employees of the Company, and shall be entitled to such bonus amounts as shall
be determined in accordance with such plans.. This paragraph shall not be
construed to require the Company to establish or maintain any bonus plan.
3.3. BENEFITS. ▇▇▇▇▇▇ shall be included, to the extent eligible, in all
plans, programs and policies providing general benefits for the Company's
employees or its senior management employees (as approved by the Board and in
effect from time to time). The benefit plans, programs and policies presently in
effect are listed on Exhibit A attached to this
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Agreement. This paragraph shall not be construed to require the Company to
establish or maintain any policy, plan or program.
4. CONFIDENTIAL INFORMATION AND PROPRIETARY MATERIALS.
4.1. CONFIDENTIAL INFORMATION. ▇▇▇▇▇▇ acknowledges the Company's
exclusive ownership of all information useful in the business of the Company,
its parents, subsidiaries or affiliates (collectively "United") (including its
dealings with suppliers, customers and other third parties, whether or not a
true "trade secret"), which at the time or times concerned is not generally
known to persons engaged in businesses similar to those conducted by United, and
which has been or is from time to time disclosed to, discovered by, or otherwise
known by ▇▇▇▇▇▇ as a consequence of his employment by the Company (including
information conceived, discovered or developed by ▇▇▇▇▇▇ during his employment
with the Company) (collectively, "Confidential Information"). Confidential
Information includes, but is not limited to, the following especially sensitive
types of information:
4.1.1. The identity, purchase and payment patterns of, and
special relations with, the customers of United;
4.1.2. The identity, net prices and credit terms of, and special
relations with, the suppliers of United;
4.1.3. The inventory selection and management techniques of
United;
4.1.4. The product development and marketing plans of United;
4.1.5. The strategic business plans of United; and
4.1.6. The finances of United, except to the extent publicly
disclosed.
4.2. PROPRIETARY MATERIALS. The term "Proprietary Materials" shall mean
all business records, documents, drawings, writings, software, programs and
other tangible things which were or are created or received by or for United in
furtherance of its business, including, but not limited to, those which contain
Confidential Information. For example, Proprietary Materials include, but are
not limited to, the following especially sensitive types of materials:
applications software, the data bases of Confidential Information maintained in
connection with such software, and printouts generated from such data bases;
market studies and strategic plans; customer, supplier and employee lists;
contracts and correspondence with customers and suppliers; documents evidencing
transactions with customers and suppliers; sales calls reports, appointment
books, calendars, expense statements and the like, reflecting conversations with
any company, customer or supplier; architectural plans; and purchasing, sales
and policy manuals. Proprietary Materials also include, but are not limited to,
any such things which are created by ▇▇▇▇▇▇ or with ▇▇▇▇▇▇'▇ assistance and all
notes, memoranda and the like prepared using the Proprietary Materials and/or
Confidential Information.
4.3. ACKNOWLEDGMENTS AND UNDERTAKINGS. While some of the information
contained in Proprietary Materials may have been known to ▇▇▇▇▇▇ prior to
employment with the Company, or may now or in the future be in the public
domain, ▇▇▇▇▇▇ acknowledges that the
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compilation of that information contained in the Proprietary Materials has or
will cost the Company a great effort and expense, and affords persons to whom
Proprietary Materials are disclosed, including ▇▇▇▇▇▇, a competitive advantage
over persons who do not know the information or have the compilation of the
Proprietary Materials. ▇▇▇▇▇▇ further acknowledges that Confidential Information
and Proprietary Materials include commercially valuable trade secrets and
automatically become the Company's exclusive property when they are conceived,
created or received. ▇▇▇▇▇▇ shall report to the Company fully and promptly,
orally (or, at the Company's request, in writing) all discoveries, inventions
and improvements, whether or not patentable, and all other ideas, developments,
processes, techniques, designs and other information which may be of benefit to
United, which ▇▇▇▇▇▇ conceives, makes or develops during his employment (whether
or not during working hours or with use or assistance of Company facilities,
materials or personnel, and which either (i) relate to or arise out of any part
of United's business in which ▇▇▇▇▇▇ participates, or (ii) incorporate or make
use of Confidential Information or Proprietary Materials) (all items referred to
in this Section 4.3 being sometimes collectively referred to herein as the
"Intellectual Property"). All Intellectual Property shall be deemed Confidential
Information of the Company, and any writing or other tangible things describing,
referring to, or containing Intellectual Property shall be deemed the Company's
Proprietary Materials. At the request of the Company, during or after the term
of employment, ▇▇▇▇▇▇ (or after ▇▇▇▇▇▇'▇ death, ▇▇▇▇▇▇'▇ personal
representative) shall, at the expense of the Company, make, execute and deliver
all papers, assignments, conveyances, installments or other documents, and
perform or cause to be performed such other lawful acts, and give such
testimony, as the Company deems necessary or desirable to protect United's
ownership rights and Intellectual Property.
4.4. CONFIDENTIALITY DUTIES. ▇▇▇▇▇▇ shall, except as may be required
by law, during the term of employment, and thereafter for the longest time
permitted by applicable law:
4.4.1. Comply with all of the Company's instructions (whether
oral or written) for preserving the confidentiality of Confidential
Information and Proprietary Materials.
4.4.2. Use Confidential Information and Proprietary Materials
only in furtherance of United's business, and pursuant to the Company's
directions.
4.4.3. Exercise appropriate care to advise other employees of the
Company (and, as appropriate, subcontractors) of the sensitive nature of
Confidential Information and Proprietary Materials prior to their
disclosure, and to disclose the same only on a need-to-know basis.
4.4.4. Not copy all or any part of Proprietary Materials, other
than in the course of carrying out ▇▇▇▇▇▇'▇ duties and responsibilities
under this Agreement.
4.4.5. Not sell, give, loan or otherwise transfer any copy of all
or any part of Proprietary Materials to any person who is not an employee
of the Company, other than in the course of carrying out ▇▇▇▇▇▇'▇ duties
and responsibilities under this Agreement.
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4.4.6. Not publish, lecture on or otherwise disclose to any
person who is not an employee of the Company, other than in the course of
carrying out ▇▇▇▇▇▇'▇ duties and responsibilities under this Agreement, all
or any part of Confidential Information or Proprietary Materials.
4.4.7. Not use all or any part of any Confidential Information or
Proprietary Materials for the benefit of any third party without the
Company's written consent.
Upon the termination of ▇▇▇▇▇▇'▇ employment for whatever reason, ▇▇▇▇▇▇ (or
in the event of death, ▇▇▇▇▇▇'▇ personal representative) shall promptly
surrender to the Company the original and all copies of Proprietary Materials
(including all notes, memoranda and the like concerning or derived therefrom,
whether prepared by ▇▇▇▇▇▇ or others, which are then in ▇▇▇▇▇▇'▇ possession or
control. Records of payments made by the Company to or for the benefit of
▇▇▇▇▇▇, ▇▇▇▇▇▇'▇ copy of this Agreement and other such things, lawfully
possessed by ▇▇▇▇▇▇ to the extent relating solely to taxes payable by ▇▇▇▇▇▇,
employee benefits due to ▇▇▇▇▇▇ or the terms of ▇▇▇▇▇▇'▇ employment with the
Company, shall not be deemed Proprietary Materials for purposes of this Section
4.
5. NON-COMPETITION.
5.1. NONCOMPETE. During ▇▇▇▇▇▇'▇ term of employment, and during the
two (2) year period following his term of employment, ▇▇▇▇▇▇ shall not, in any
way, directly or indirectly, manage, operate, control (or participate in any of
the foregoing), accept employment or a consulting position with or otherwise
advise or assist or be connected with or directly or indirectly own or have any
other interest in or right with respect to (other than through ownership of not
more than one percent (1%) of the outstanding shares of a corporation's stock
which is listed on a national securities exchange) any enterprise (other than
for the Company or for the benefit of the Company) which is a wholesaler or
retailer of office products having annual sales in excess of one million dollars
($1,000,000) or any other business in which United, during the term of
employment may be actively involved or have plans to become actively involved.
The Company shall not unreasonably withhold its consent to a request by ▇▇▇▇▇▇
for a waiver from the strict application of this Section 5.1 with respect to a
specific employment or engagement of, or a specific acquisition of an interest
by, ▇▇▇▇▇▇. The Company shall not be deemed to have unreasonably withheld its
consent, if the Company determines that such employment, engagement, or
acquisition would have a competitive effect on the Company.
5.2. MANUFACTURING OF OFFICE PRODUCTS. Notwithstanding Section 5.1.,
following the term of employment, ▇▇▇▇▇▇ may be engaged by any company whose
principal business is the manufacture or resale of office products.
5.3. NONSOLICITATION. During ▇▇▇▇▇▇'▇ term of employment and during
the two (2) year period following his term of employment, ▇▇▇▇▇▇ shall not at
any time, directly or indirectly, solicit (1) any client or customer of United
with whom he had contact while employed by the Company for the purpose of
causing such client or customer to change its business relationship with United;
provided, however, nothing herein is intended nor should such be construed as
precluding ▇▇▇▇▇▇ from responding to unsolicited client or customer inquiries at
any time, or (2) except for receiving and following up on publicly placed
employment
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advertisements, any employee of United for the purposes of causing such employee
to terminate employment with United.
5.4. LIMITATIONS. ▇▇▇▇▇▇ recognizes that the foregoing limitations are
reasonable and properly required for the adequate protection of the business of
the Company. If any such limitations are deemed unreasonable by a court having
jurisdiction of the matter and parties, ▇▇▇▇▇▇ hereby agrees and submits to the
reduction of any such limitations to such territory or time as to such court
shall appear reasonable.
5.5. REMEDIES. ▇▇▇▇▇▇ agrees that the remedy at law for any breach of
the provisions of Section 4 or this Section 5 shall be inadequate and that the
Company shall be entitled to injunctive relief in addition to any other remedies
it may have.
6. MUTUAL NON-DISPARAGEMENT. During and after the term of employment:
6.1. ▇▇▇▇▇▇ shall not, directly or indirectly, make or cause to be
made and shall not intentionally cause the officers, directors, employees,
agents and representatives of any entity or person controlled by ▇▇▇▇▇▇ to make
or cause to be made, any disparaging, denigrating, derogatory or other negative
or false statement orally or in writing to any person or entity about the
Company, its or their respective parents, subsidiaries or affiliates, its or
their respective executive officers or members of its or their boards of
directors, or the business strategy or plans, policies, practices or operations
of the Company, or of its or their respective parents, subsidiaries or
affiliates. ▇▇▇▇▇▇ shall not, directly or indirectly, and shall, within his
reasonable ability to control, cause the officers, directors, employees, agents
and representatives of any entity or person controlled by ▇▇▇▇▇▇ not to,
directly or indirectly, dissipate or negatively affect the goodwill, business,
prospects or reputation of United or its relationships with its employees,
customers, suppliers, competitors, vendors, stockholders, lenders, prospective
investors or prospective purchasers of any businesses or assets of United.
6.2. The Company shall not, directly or indirectly, make or cause to
be made, and shall not intentionally cause the officers, directors, employees,
agents or representatives of any entity or person controlled by the Company or
by which the Company is controlled, make or cause to be made, any disparaging,
denigrating, derogatory or other negative or false statement orally or in
writing to any person or entity about ▇▇▇▇▇▇, any entity controlled by or with
which ▇▇▇▇▇▇ is affiliated, or any business plans, policies, practices or
reputation of ▇▇▇▇▇▇ or any entity controlled by or with which he is affiliated.
The Company shall not, directly or indirectly, and shall within its reasonable
ability to control, cause the officers, directors, employees, agents and
representatives of the Company, its parent, subsidiaries, and affiliates and
their respective executive officers and members of their respective Boards of
Directors not to, directly or indirectly, dissipate or negatively affect the
goodwill, business, prospects or reputation of ▇▇▇▇▇▇ or any entity controlled
by him or with which he is affiliated.
7. TERMINATION AND SEVERANCE.
7.1. RESIGNATION. If ▇▇▇▇▇▇ resigns other than for Good Reason as
defined in Section 7.2.1, or if ▇▇▇▇▇▇ gives notice to the Company of
non-extension of the term of
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employment pursuant to Section 1, he shall be entitled to receive only the
unpaid portion of his base salary and accrued vacation attributable to and
including the date of resignation, and reimbursement for reasonable reimbursable
expenses incurred on behalf of the Company prior to the date of termination.
7.2. BY ▇▇▇▇▇▇ FOR GOOD REASON. ▇▇▇▇▇▇ may elect to terminate his
employment by written notice to the Company within sixty (60) days after the
occurrence, without ▇▇▇▇▇▇'▇ consent, of any event which constitutes "Good
Reason" as herein defined.
7.2.1. "Good Reason" shall mean the occurrence of any of the
following events:
(a) any diminution in ▇▇▇▇▇▇'▇ position (including status,
offices and titles), authority, duties or responsibilities
(including the assignment to ▇▇▇▇▇▇ of any duties
inconsistent with ▇▇▇▇▇▇'▇ position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith
and which is remedied promptly and in any event within ten
(10) business days after receipt of written notice thereof
given by ▇▇▇▇▇▇ to the Chief Executive Officer in accordance
with Section 10.1), excluding a change in the office or
officer to whom ▇▇▇▇▇▇ reports;
(b) the reduction of ▇▇▇▇▇▇'▇ base salary (as specified under
Section 3 above), bonus, or incentive opportunity, or a
substantial reduction in benefits;
(c) the exclusion of ▇▇▇▇▇▇ from, or diminution in ▇▇▇▇▇▇'▇
participation in, any pension, bonus, management incentive,
profit sharing and/or other similar incentive compensation
or deferred compensation plans made available generally to
senior management personnel of the Company, other than
exclusions, changes or diminutions applicable to all senior
management personnel;
(d) any relocation of ▇▇▇▇▇▇'▇ principal office more than fifty
(50) miles from its location on the date of this amended and
restated Agreement;
(e) any diminution in expense reimbursement benefits enjoyed by
▇▇▇▇▇▇, except pursuant to a general change in the Company's
reimbursement policies; or
(f) the breach by the Company of any of its covenants or
obligations under this Agreement which is not promptly cured
after notice from ▇▇▇▇▇▇.
7.2.2. If the employment is terminated by ▇▇▇▇▇▇ for Good Reason,
▇▇▇▇▇▇ shall be entitled to receive and the Company shall pay:
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(a) the unpaid portion of his base salary and accrued vacation
attributable to and including the date of termination;
(b) reimbursement for reasonable reimbursable expenses incurred
by him on behalf of the Company prior to the date of
termination; and
(c) a severance amount equal to two (2) years' base salary at
the level then in effect immediately prior to such
termination, plus an amount equal to his bonuses earned from
the Company for the calendar year preceding the year in
which notice is given by ▇▇▇▇▇▇ to the Company
(collectively, "Severance Benefit"), payable in equal
installments on the Company's regular pay schedule,
commencing within thirty (30) days after receipt by the
Company of written notice of termination from ▇▇▇▇▇▇
pursuant to Section 7.2 and continuing for twenty-four (24)
months; provided that in the event that ▇▇▇▇▇▇ terminates
his employment pursuant to this Section 7.2 within two (2)
years following a Change of Control (as defined in Appendix
I), then the Severance Benefit shall be equal to two (2)
years' base salary at the level then in effect immediately
prior to such termination (except that in the event ▇▇▇▇▇▇
terminates his employment for Good Reason based on a
reduction in base salary, then two (2) years' base salary as
in effect immediately prior to such reduction), plus an
amount equal to two (2) times the greater of (i) the average
of his bonuses earned from the Company for the three (3)
calendar years preceding the year in which ▇▇▇▇▇▇ terminates
his employment and (ii) the target bonus for the then
current calendar year, or the immediately preceding year if
the target bonus has not been established for the then
current calendar year (except that in the event ▇▇▇▇▇▇
terminates his employment for Good Reason based on a
reduction in ▇▇▇▇▇▇'▇ target bonus, then the target bonus
taken into account for the purpose of this Section 7.2.2(c)
shall be the target bonus immediately prior to such
reduction), payable in a lump sum payment as soon as
practicable following the termination of ▇▇▇▇▇▇'▇
employment, but in no event later than ten (10) days
following the date of such termination; and
(d) health care coverage for medical and dental benefits
comparable to that in effect for ▇▇▇▇▇▇ and his qualified
dependents immediately prior to such termination at no cost
to ▇▇▇▇▇▇ for two (2) years following such termination.
7.2.3. If the employment is terminated by ▇▇▇▇▇▇ for Good Reason
within two (2) years following a Change of Control, ▇▇▇▇▇▇ shall be entitled to
receive and the Company shall provide the following benefits in addition to the
benefits described in Section 7.2.2:
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(a) in addition to health care coverage for medical and dental
benefits pursuant to Section 7.2.2(d), all other welfare
benefits and other fringe benefits and perquisites
comparable to benefits and perquisites in effect for ▇▇▇▇▇▇
and his qualified dependents immediately prior to such
termination at no cost to ▇▇▇▇▇▇ for two (2) years following
such termination; provided that the Company will not be
obligated to provide any welfare benefits or other fringe
benefits and perquisites to the extent comparable benefits
and perquisites on a coverage-by-coverage and a
benefit-by-benefit basis are provided to ▇▇▇▇▇▇ and his
qualified dependents by any subsequent employer, but only
for the period such benefits and perquisites are actually
provided by a subsequent employer to ▇▇▇▇▇▇;
(b) a lump sum payment, with respect to each pension plan
(within the meaning of Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended, and
whether or not qualified under Section 401(a) of the
Internal Revenue Code 1986, as amended ("Code")) ("Plan")
which is a defined contribution plan ("Savings Plan"), equal
to two (2) times the aggregate for the plan year ending
immediately prior to ▇▇▇▇▇▇'▇ termination of (i) the Company
profit sharing contribution on ▇▇▇▇▇▇'▇ behalf, if any, and
(ii) the Company matching contribution that would have been
made pursuant to the terms of the Savings Plan on ▇▇▇▇▇▇'▇
behalf, if ▇▇▇▇▇▇ made the maximum elective contribution
allowed under Code Section 402(g), payable as soon as
practicable following the later of ▇▇▇▇▇▇'▇ termination of
employment and the date when the Company's contribution for
the preceding plan year is finally determined, but in no
event later than ten (10) days following the date of
▇▇▇▇▇▇'▇ termination of employment;
(c) a lump sum payment which is Actuarially Equivalent (as such
term is defined in Section 2.3(b) of the United Stationers
Pension Plan or its successor) to the additional benefits to
which ▇▇▇▇▇▇ would have been entitled if ▇▇▇▇▇▇ had
continued employment for two (2) years following the date of
▇▇▇▇▇▇'▇ termination of employment under each Plan which is
a defined benefit pension plan or a top hat defined benefit
plan ("Retirement Plan") in which ▇▇▇▇▇▇ is a participant
(including benefits under Section 8), payable as soon as
practicable following the termination of ▇▇▇▇▇▇'▇
employment, but in no event later than ten (10) days
following the date of such termination; and
(d) a lump sum payment which is Actuarially Equivalent to the
Supplemental Retirement Benefit as provided in Section 8.5.
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7.3. BY EXPIRATION OF THE TERM OF EMPLOYMENT. If the term of
employment expires and notice has been given by the Company that the term will
not be extended or further extended pursuant to Section 1 of this Agreement,
▇▇▇▇▇▇ shall be entitled to receive:
(a) the unpaid portion of his base salary and accrued vacation
pay attributable to and including the date of termination;
(b) reimbursement for reasonable reimbursable expenses incurred
on behalf of the Company prior to the date of termination;
(c) Severance Benefit in an amount equal to and on the same
basis as provided in Section 7.2.2(c);
(d) health care coverage for medical and dental benefits
comparable to that in effect for ▇▇▇▇▇▇ and his qualified
dependents immediately prior to such termination at no cost
to ▇▇▇▇▇▇ for two (2) years following such termination; and
(e) if the term of employment is terminated pursuant to this
Section 7.3 within two (2) years following a Change of
Control, ▇▇▇▇▇▇ shall be entitled to receive and the Company
shall provide the benefits set forth in Section 7.2.3 in
addition to the benefits set forth in subsections (a)
through (d) of this Section 7.3.
7.4. BY COMPANY FOR CAUSE. The Company may terminate the employment at
any time for Cause (as hereinafter defined). If ▇▇▇▇▇▇ is terminated by the
Company for Cause, ▇▇▇▇▇▇ shall be entitled to receive only the unpaid portion
of his base salary and accrued vacation attributable to all periods prior to and
including the date of his termination, and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date of his
termination.
7.4.1. "Cause" shall mean ▇▇▇▇▇▇'▇:
(a) conviction of, or plea of NOLO CONTENDERE to, a felony;
(b) theft or embezzlement, or attempted theft or embezzlement,
of money or property or assets of the Company or any of
its affiliates;
(c) use of illegal drugs;
(d) material breach of this Agreement;
(e) commission of any act or acts of moral turpitude in
violation of Company policy;
(f) gross negligence or willful misconduct in the performance
of his duties; or
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(g) breach of any fiduciary duty owed to the Company,
including, without limitation, engaging in directly
competitive acts while employed by the Company.
7.4.2. If the event constituting Cause is curable, the Company
shall notify ▇▇▇▇▇▇ in writing ("Notice of Cause") in accordance with
Section 10.1 below that it intends to terminate his employment for Cause
effective at the end of a twenty (20) day period following the date that
▇▇▇▇▇▇ receives a Notice of Cause, such Notice of Cause to state in detail
the particular event that constitutes Cause. If the event constituting
Cause is curable, as determined by the Board in good faith, ▇▇▇▇▇▇ shall
have a reasonable opportunity to cure the event constituting Cause
following his receipt of such Notice of Cause from the Company; provided,
however, if ▇▇▇▇▇▇ has not cured such event to the reasonable satisfaction
of the Company and the Company has not waived in writing ▇▇▇▇▇▇'▇ failure
to cure during the twenty (20) day period following the date of the Notice
of Cause, the Company may terminate ▇▇▇▇▇▇'▇ employment effective following
the end of such twenty (20) day period.
7.5. BY THE COMPANY OTHER THAN FOR CAUSE. The Company may terminate
▇▇▇▇▇▇'▇ employment on written notice to ▇▇▇▇▇▇ at any time.
7.5.1. If ▇▇▇▇▇▇'▇ employment is terminated by the Company, other
than for Cause, ▇▇▇▇▇▇ shall be entitled to receive and the Company shall
pay:
(a) the unpaid portion of his base salary and accrued vacation
pay attributable to and including the date of termination;
(b) reimbursement for reasonable reimbursable expenses incurred
by him on behalf of the Company prior to the date of
termination;
(c) Severance Benefit in an amount equal to and on the same
basis as provided in Section 7.2.2(c); and
(d) health care coverage for medical and dental benefits
comparable to that in effect for ▇▇▇▇▇▇ and his qualified
dependents immediately prior to such termination at no cost
to ▇▇▇▇▇▇ for two (2) years following such termination.
7.5.2. If the employment is terminated by the Company, other than
for Cause, within two (2) years following a Change of Control, ▇▇▇▇▇▇ shall
be entitled to receive and the Company shall pay the benefits set forth in
Section 7.2.3 in addition to the benefits set forth in Section 7.5.1.
7.6. BY DEATH OR DISABILITY. If ▇▇▇▇▇▇'▇ employment is terminated due
to his death or permanent disability, ▇▇▇▇▇▇ shall be entitled to severance pay
in accordance with the provisions of 7.3.1 and 7.3.2 above. In addition, if
▇▇▇▇▇▇'▇ spouse is then living, for the remainder of such spouse's life the
Company shall continue to provide health coverage for ▇▇▇▇▇▇'▇ spouse and
dependent children in accordance with the Company's health plans made generally
available to employees of the Company, without cost to ▇▇▇▇▇▇'▇ spouse. Nothing
in
10
this Agreement shall affect ▇▇▇▇▇▇'▇ right to receive death benefit payments
under any policy of insurance carried by the Company and payable to ▇▇▇▇▇▇ or
his designated beneficiary.
7.7. RETIREMENT. ▇▇▇▇▇▇ agrees that, in any event, his employment
shall terminate automatically on his sixty-fifth (65th) birthday. If his
employment is terminated pursuant to this Section 7.7., ▇▇▇▇▇▇ shall be entitled
to:
7.7.1. accrued vacation pay and reimbursement for reasonable expenses
incurred on behalf of the Company prior to the date of termination, and
7.7.2. in addition, ▇▇▇▇▇▇ shall be entitled to participate in the
Company's health plan for retirees.
8. CHANGE OF CONTROL SUPPLEMENTAL RETIREMENT BENEFIT.
8.1. SUPPLEMENTAL RETIREMENT BENEFIT. In the event a Change of Control
occurs during the term of employment, ▇▇▇▇▇▇ shall be entitled to the following
fully vested nonqualified supplemental retirement benefit (the "Supplemental
Retirement Benefit"): a life annuity, payable monthly, commencing with the first
payment on ▇▇▇▇▇▇'▇ sixty-fifth (65th) birthday in an amount equal to the excess
of (1) the product of (i) one-twelfth (1/12th) of one and sixty-seven hundredths
percent (1.67%) of ▇▇▇▇▇▇'▇ average Eligible Earnings (as defined below) for the
three (3) consecutive calendar years of his service with the Company immediately
preceding the earlier of his termination of employment or his sixty-fifth (65th)
birthday, multiplied by (ii) the number of full and partial years (not to exceed
thirty (30)) of ▇▇▇▇▇▇'▇ service with the Company, including the additional
service credit under Section 8.3, with one-twelfth (1/12th) of a year being
credited for each calendar month or part thereof during the term of employment,
over (2) the Retirement Plan Offset.
8.2. ELIGIBLE EARNINGS. "Eligible Earnings" shall mean the sum of
▇▇▇▇▇▇'▇ base salary and bonus compensation paid or deferred for a calendar
year. If the term of employment does not cover three (3) full calendar years,
▇▇▇▇▇▇'▇ Eligible Earnings will be determined on an annualized basis with
respect to the calendar years in which the term of employment commenced and
terminated.
8.3. ADDITIONAL SERVICE CREDIT. If ▇▇▇▇▇▇'▇ service with the Company
extends to ▇▇▇▇▇▇'▇ sixty-fifth (65th) birthday, then ▇▇▇▇▇▇ to the extent
▇▇▇▇▇▇'▇ actual years of service are less than thirty (30) at age sixty-five
(65), shall be credited with an additional number of years of service equal to
thirty (30) minus ▇▇▇▇▇▇'▇ actual years of service at age sixty-five (65),
provided, however, that such additional years of credited service shall not
exceed fifteen (15). If ▇▇▇▇▇▇'▇ employment is terminated before attaining age
sixty-five (65) pursuant to Sections 7.2, 7.3, 7.5 or 7.6 within two (2) years
following a Change of Control, then ▇▇▇▇▇▇, to the extent ▇▇▇▇▇▇'▇ actual years
of service would have been less than thirty (30) had ▇▇▇▇▇▇ remained employed
until age sixty-five (65), shall be credited with an additional number of years
of service equal to thirty (30) minus what ▇▇▇▇▇▇'▇ actual years of service
would have been at age sixty-five (65), provided, however, that such additional
years of credited service shall not exceed fifteen (15).
11
8.4. RETIREMENT PLAN OFFSET. The Retirement Plan Offset is the monthly
amount of a life annuity for ▇▇▇▇▇▇, payable monthly, commencing with the first
payment on ▇▇▇▇▇▇'▇ sixty-fifth (65th) birthday, which is Actuarially Equivalent
to the aggregate of the vested pension benefits accrued by ▇▇▇▇▇▇ under every
other Retirement Plan in which ▇▇▇▇▇▇ participates, and each similar plan
maintained by a predecessor or successor employer of ▇▇▇▇▇▇.
8.5. LUMP SUM PAYMENT. In the event that a Change of Control occurs and
▇▇▇▇▇▇ is entitled to receive a Supplemental Retirement Benefit, ▇▇▇▇▇▇ may, at
any time prior the end of the calendar year preceding his sixty-fifth (65th)
birthday or with the Company's consent, elect to receive a lump sum payment on
his sixty-fifth (65th) birthday, which is Actuarially Equivalent to the
Supplemental Retirement Benefit. In the event ▇▇▇▇▇▇'▇ service with the Company
is terminated pursuant to Sections 7.2, 7.3 or 7.5 within two (2) years after
the occurrence of a Change of Control and prior to his sixty-fifth (65th)
birthday, ▇▇▇▇▇▇ shall receive a lump sum payment which is Actuarially
Equivalent to the Supplemental Retirement Benefit immediately following, but in
no event later than ten (10) days after, such termination.
8.6. DEATH OR DISABILITY BENEFIT BENEFIT. In the event that ▇▇▇▇▇▇'▇
service with the Company terminates pursuant to Section 7.6 after a Change of
Control has occurred, ▇▇▇▇▇▇ or his Beneficiary (as defined below), as the case
may be, shall receive a lump sum payment which is Actuarially Equivalent to the
Supplemental Retirement Benefit accrued by ▇▇▇▇▇▇ determined as of the date
immediately preceding ▇▇▇▇▇▇'▇ termination of Service with the Company pursuant
to Section 7.6.
8.7. BENEFICIARIES. ▇▇▇▇▇▇ may designate the beneficiary or
beneficiaries ("Beneficiary") to whom the Supplemental Retirement Benefit shall
be paid or to whom any uncashed checks may be reissued by completing and signing
a beneficiary designation form in such form as the Company may prescribe. In the
event of any conflict between beneficiary designation forms, the last
beneficiary designation form received by the Company shall govern. A beneficiary
designation may be changed without the consent of any prior Beneficiary. If
▇▇▇▇▇▇ does not complete a beneficiary designation form, or no designated
Beneficiary survives ▇▇▇▇▇▇, the Beneficiary shall be determined in the same
manner as would be determined under the applicable laws of descent and
distribution with respect to ▇▇▇▇▇▇'▇ estate. If the Company shall find that
▇▇▇▇▇▇ or a Beneficiary is unable to care for his or her affairs because of
illness or accident or is unable to execute a proper receipt for the payment of
the Supplemental Retirement Benefit, the Company may make payment to a relative
or other proper person for the benefit of ▇▇▇▇▇▇ or such Beneficiary. To the
extent permitted by law, the payment to a person in accordance with this
paragraph shall fully discharge the Company's obligation to pay the Supplemental
Retirement Benefit.
9. PARACHUTE GROSS-UP. If ▇▇▇▇▇▇ becomes entitled to any payments or
benefits whether pursuant to the terms of or by reason of this Agreement or any
other plan, arrangement, agreement, policy or program (including without
limitation any deferred stock unit, restricted stock, stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on the vesting or exercisability of any of the foregoing) with the
Company, any successor to the Company or to all or a part of the business or
assets of the Company (whether direct or indirect, by purchase, merger,
consolidation, spin off, or otherwise and regardless of whether such payment is
made by or on behalf of the Company or such successor) or any person
12
whose actions result in a Change of Control or any person affiliated with the
Company or such persons (in the aggregate, "Payments" or singularly, "Payment"),
which Payments are reasonably determined by an accounting firm mutually agreed
upon by ▇▇▇▇▇▇ and the Company ("Accountant") (which agreement neither party
shall unreasonably withhold) to be subject to the tax imposed by Section 4999 or
any successor provision of the Code or any similar state or local tax, or any
interest or penalties are incurred by ▇▇▇▇▇▇ with respect to such excise tax
(such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), the Company shall pay ▇▇▇▇▇▇ an
additional amount ("Gross-Up Payment") such that the net amount retained by
▇▇▇▇▇▇, after deduction or payment of (i) any Excise Tax on Payments, (ii) any
federal, state and local income or employment tax and Excise Tax upon the
payment provided for by this Section, and (iii) any additional interest and
penalties imposed because the Excise Tax is not paid when due, shall be equal to
the full amount of the Payments. The Company and ▇▇▇▇▇▇ shall use their
reasonable efforts to cause the Accountant to complete its calculation at least
ten (10) days prior to the time any Excise Tax is due. For purposes of
determining the amount of the Gross-Up Payment, ▇▇▇▇▇▇ shall be deemed to pay
federal income taxes at the highest marginal rate of federal income taxation in
the calendar year in which the Gross-Up Payment is to be made and state and
local income and employment taxes at the highest marginal rates of taxation in
the applicable state and locality with respect to which ▇▇▇▇▇▇ is subject to tax
on the date the Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes. The Gross-Up Payment shall be paid to ▇▇▇▇▇▇ within five (5) days
from the earlier of (i) the issuance by the Internal Revenue Service of a notice
stating in effect that an Excise Tax is due with respect to the Payments or (ii)
the receipt by the Company of a written statement by the Accountant of the
amount of the Gross-Up Payments. Notwithstanding the foregoing, if the Excise
Tax is determined by the Internal Revenue Service or the Accountant subsequent
to the payment set forth in the preceding sentence to exceed the amount taken
into account in determining the Gross-Up Payment calculated at such time, the
Company shall pay within ten (10) days after the time of such determination the
amount by which the recalculated Gross-Up Payment exceeds the Gross-Up Payment
paid pursuant to the preceding sentence. Following payment to ▇▇▇▇▇▇ of any
Gross-Up Payment, including pursuant to the immediately preceding sentence,
▇▇▇▇▇▇ shall reasonably cooperate with the Company, at its sole cost and expense
and with full indemnification by the Company, as the Company shall reasonably
request in efforts to obtain a refund of any Excise Tax which the Company has a
reasonable basis to challenge. Any such refund so obtained shall be paid by
▇▇▇▇▇▇ to the Company.
10. MISCELLANEOUS.
10.1. All notices hereunder shall be given in writing and sent to the
party for whom such is intended by hand delivery or United States certified or
registered mail, return receipt requested, postage prepaid, or overnight courier
service, addressed to the party for whom intended at the following respective
addresses:
13
If to the Company: United Stationers Supply Co.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: CEO
With a copy to: Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
And a copy to:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
If to ▇▇▇▇▇▇: R. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
And a courtesy copy to:
-----------------------------
-----------------------------
-----------------------------
or to such other persons and/or at such other addresses as may be designated by
written notice served in accordance with the provisions hereof. Such notices
shall be deemed to have been served, if hand delivered, on the day delivered,
and if mailed, on the third (3rd) day following the date deposited in the mail.
Urgent notices shall be given by fax to the same addresses and confirmed by mail
as provided above. All notices sent by facsimile or cable shall be deemed to
have been served upon receipt of the fax, but only if in fact confirmed by mail
promptly after dispatch of the fax.
10.2. This Agreement and all rights and benefits hereunder are personal
to ▇▇▇▇▇▇ and neither this Agreement nor any right or interest of ▇▇▇▇▇▇ herein,
or arising hereunder, shall be voluntarily or involuntarily sold, transferred or
assigned by ▇▇▇▇▇▇. Any attempt by ▇▇▇▇▇▇ to assign, execute, attach, transfer,
pledge, hypothecate or otherwise dispose of any such benefits or amounts or any
rights or interests contrary to the foregoing provisions, or the levy or
attachment or similar process thereupon, shall be null and void and of no effect
and shall relieve the Company of all liabilities hereunder. This Agreement and
all of the Company's right and obligations hereunder may be assigned and/or
delegated, as the case may be, without ▇▇▇▇▇▇'▇ consent, to any entity which
merges with the Company or which acquires substantially all of the assets of the
Company and which agrees to be bound hereby. The enforceability of ▇▇▇▇▇▇'▇
rights under the Agreement shall not be affected by any assignment or merger.
10.3. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective heirs, personal representatives, successors and
permitted assigns.
14
10.4. This Agreement constitutes the entire agreement between the
parties and contains all the agreements between such parties with respect to the
subject matter hereof. This Agreement supersedes all other agreements, oral or
in writing, between the parties with respect to the subject matter hereof
(including, but not limited to, the agreement between the parties dated February
1, 1998, which this Agreement amends and restates).
10.5. No change or modification of this Agreement shall be valid unless
the same shall be approved by the Board and in writing and signed by ▇▇▇▇▇▇ and
an authorized representative of the Company other than ▇▇▇▇▇▇. No waiver of any
provisions of this Agreement shall be valid unless in writing and signed by the
person or party to be charged.
10.6. If any provisions of this Agreement (or portions thereof) shall,
for any reason, be invalid or unenforceable, such provisions (or portions
thereof) shall be ineffective only to the extent of such invalidity or
unenforceability, and the remaining provisions or portions shall nevertheless be
valid, enforceable and of full force and effect.
10.7. The section or paragraph headings or titles are for convenience
only and shall not be deemed a part of this Agreement.
10.8. This Agreement may be executed in multiple counterparts, each of
which shall be deemed to be an original and all of which taken together shall
constitute a single instrument.
10.9. If ▇▇▇▇▇▇ or his estate or designee prevails in any action to
enforce their rights under this Agreement, they shall be entitled to receive
their attorneys' fees, costs and expenses incurred in enforcing their rights
under this Agreement, as well as interest at the Prime Rate as publicly
announced by The Northern Trust Company from time to time on the amount of the
judgment from the date of demand for payment hereunder through the date of
receipt of the amount of the judgment.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its corporate name by an officer thereof duly authorized, and ▇▇▇▇▇▇
has hereunto set his hand, as of the day and year first above written.
UNITED STATIONERS SUPPLY CO.,
an Illinois corporation
By:
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President and
President and
Chief Executive Officer
--------------------------------------
R. ▇▇▇▇▇▇ ▇▇▇▇▇▇
15
APPENDIX I
CHANGE OF CONTROL DEFINITION
For the purposes of this Agreement, term "Change of Control" shall have the
meaning set forth below:
For the purpose of the definition of a "Change of Control" set forth below, the
term "Company" shall mean United Stationers Inc., and the term "Board" shall
mean the board of directors of the Company.
"CHANGE OF CONTROL" means:
(a) Any "Person" (having the meaning ascribed to such term in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended ("1934 Act") and used
in Sections 13(d) and 14(d) thereof, including a "group" within the meaning of
Section 13(d)(3)) has or acquires "Beneficial Ownership" (within the meaning of
Rule 13d-3 under the ▇▇▇▇ ▇▇▇) of 30% or more of the combined voting power of
the Company's then outstanding voting securities entitled to vote generally in
the election of directors ("Voting Securities"); provided, however, that in
determining whether a Change of Control has occurred, Voting Securities which
are held or acquired by (i) the Company or any of its subsidiaries or (ii) an
employee benefit plan (or a trust forming a part thereof) maintained by the
Company or any of its subsidiaries shall not constitute a Change of Control.
Notwithstanding the foregoing, a Change of Control shall not be deemed to occur
solely because any Person acquired Beneficial Ownership of more than the
permitted amount of Voting Securities as a result of the issuance of Voting
Securities by the Company in exchange for assets (including equity interests) or
funds with a fair value equal to the fair value of the Voting Securities so
issued; provided that if a Change of Control would occur (but for the operation
of this sentence) as a result of the issuance of Voting Securities by the
Company, and after such issuance of Voting Securities by the Company, such
Person becomes the Beneficial Owner of any additional Voting Securities which
increases the percentage of the Voting Securities Beneficially Owned by such
Person to more than 50% of the Voting Securities of the Company, then a Change
of Control shall occur.
(b) At any time during a period of two consecutive years, the individuals
who at the beginning of such period constituted the Board (the "Incumbent
Board") cease for any reason to constitute more than 50% of the Board; provided,
however, that if the election, or nomination for election by the Company's
stockholders, of any new director was approved by a vote of more than 50% of the
directors then comprising the Incumbent Board, such new director shall, for
purposes of this subsection (b), be considered as though such person were a
member of the Incumbent Board; provided, further, however, that no individual
shall be considered a member of the Incumbent Board if such individual initially
assumed office as a result of (i) either an actual "Election Contest" (as
described in Rule 14a-11 promulgated under the ▇▇▇▇ ▇▇▇) or other actual
solicitation of proxies or consents by or on behalf of a Person other than the
Incumbent Board (a "Proxy Contest"), or (ii) by reason of any agreement intended
to avoid or settle any actual or threatened Election Contest or Proxy Contest.
1
(c) Consummation of a merger, consolidation or reorganization or approval
by the Company's stockholders of a liquidation or dissolution of the Company or
the occurrence of a liquidation or dissolution of the Company ("Business
Combination"), unless, following such Business Combination:
(1) the Persons with Beneficial Ownership of the Company, immediately
before such Business Combination, have Beneficial Ownership of more
than 50% of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors of
the corporation (or in the election of a comparable governing body of
any other type of entity) resulting from such Business Combination
(including, without limitation, an entity which as a result of such
transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries)
(the "Surviving Company") in substantially the same proportions as
their Beneficial Ownership of the Voting Securities immediately before
such Business Combination;
(2) the individuals who were members of the Incumbent Board immediately
prior to the execution of the initial agreement providing for such
Business Combination constitute more than 50% of the members of the
board of directors (or comparable governing body of a noncorporate
entity) of the Surviving Company; and
(3) no Person (other than the Company, any of its subsidiaries or any
employee benefit plan (or any trust forming a part thereof) maintained
by the Company, the Surviving Company or any Person who immediately
prior to such Business Combination had Beneficial Ownership of 30% or
more of the then Voting Securities) has Beneficial Ownership of 30% or
more of the then combined voting power of the Surviving Company's then
outstanding voting securities. Notwithstanding this paragraph (3), a
Change of Control shall not be deemed to occur solely because any
Person acquired Beneficial Ownership of more than 30% of Voting
Securities as a result of the issuance of Voting Securities by the
Company in exchange for assets (including equity interests) or funds
with a fair value equal to the fair value of the Voting Securities so
issued.
(d) Approval by the Company's stockholders of an agreement for the
assignment, sale, conveyance, transfer, lease or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
subsidiary of the Company or other entity, the Persons with Beneficial Ownership
of which are the same Persons with Beneficial Ownership of the Company and such
Beneficial Ownership is in substantially the same proportions), or the
occurrence of the same.
Notwithstanding the foregoing, a Change of Control shall not be deemed to occur
solely because any Person acquired Beneficial Ownership of more than the
permitted amount of Voting Securities as a result of the acquisition of Voting
Securities by the Company which, by reducing the number of Voting Securities
outstanding, increases the proportional number of shares Beneficially Owned by
such Person; provided that if a Change of Control would occur (but for
-2-
the operation of this sentence) as a result of the acquisition of Voting
Securities by the Company, and after such acquisition of Voting Securities by
the Company, such Person becomes the Beneficial Owner of any additional Voting
Securities which increases the percentage of the Voting Securities Beneficially
Owned by such Person, then a Change of Control shall occur.
-3-
EXHIBIT A
TO EMPLOYMENT AGREEMENT
R. ▇▇▇▇▇▇ ▇▇▇▇▇▇
The following are benefit plans, programs and policies in which ▇▇▇▇▇▇ is
entitled to participate in addition to any benefits specified in the Employment
Agreement as of the date thereof:
United Stationers Inc. Pension Plan
United Stationers Inc. 401(k) Savings Plan
United Stationers Supply Co. Deferred Compensation Plan
Restoration Plan
United Stationers Inc. Flexible Spending Plan
United Stationers Inc. Management Equity Plan
United Stationers Management Incentive Plan
United Group Medical and Dental Benefit Plans
Officer Medical Expense Reimbursement Policy
Retiree Health Plan
Annual physical exam at Company expense
Leased auto or equivalent cash compensation in accordance with
Policy Group Term Life Insurance - 2 1/2 times base salary
Travel and Accident Insurance - $300,000
Split Dollar Life Insurance
Disability Insurance in accordance with insurance policy
Club and Association Dues - in accordance with Company Policy
Financial and Tax Consulting - and tax return preparation, in
accordance with Company Policy
Officer Indemnification and Insurance - D&O insurance is provided on a
claims-made basis; and Restated Certificate of Incorporation, and
Delaware and Illinois law provide indemnification of officers and
directors
Other - Vacations in accordance with Company Policy; other benefits
that may from time to time be made available to employees
generally
1