Exhibit 10.7
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT is made and entered into as of the ___ day
of July, 2002 (the "Agreement"), by and between United Stationers Inc., a
Delaware corporation (the "Company"), the director or executive officer of the
Company whose name appears on the signature page of this Agreement
("Indemnitee"), and for purposes of Section 9 only, United Stationers Supply
Co., an Illinois corporation and wholly-owned subsidiary of the Company
("USSCO").
WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or executive officers or in other
capacities unless they are provided with reasonable protection through insurance
or indemnification against risks of claims and actions against them arising out
of their service to and activities on behalf of the corporations.
WHEREAS, the Board of Directors of the Company (the "Board") has determined
that the Company should act to assure its directors and executive officers that
there will be increased certainty of such protection in the future.
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified.
WHEREAS, Indemnitee is willing to serve, to continue to serve and to take
on additional service for or on behalf of the Company on the condition that
Indemnitee be so indemnified.
WHEREAS, in consideration of the benefits received and to be received by
the Company in connection with actions taken and to be taken by the Board and by
the officers of the Company, the Company has determined that it is in the best
interest of the Company for the reasons set forth above to be a party to this
Agreement and to provide indemnification to the directors and executive officers
of the Company in connection with their service to and activities on behalf of
the Company and its subsidiaries.
WHEREAS, the Company acknowledges that for purposes of this Agreement the
directors and executive officers of the Company who enter into this Agreement
are serving in such capacities at the request of the Company.
WHEREAS, the Company further acknowledges that such directors and executive
officers are willing to serve, to continue to serve and to take on additional
service for or on behalf of the Company, thereby benefiting the Company and its
subsidiaries, on the condition that the Company enter into, and provide
indemnification pursuant to, this Agreement.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
1. DEFINITIONS.
(a) For purposes of this Agreement:
(i) "Affiliate" shall mean any corporation, partnership,
joint venture, trust or other enterprise in respect of which Indemnitee is or
was or will be serving directly or indirectly at the request of the Company.
(ii) "Disinterested Director" shall mean a director of the
Company who is not or was not a party to the Proceeding in respect of which
indemnification is being sought by Indemnitee.
(iii) "Expenses" shall include all reasonable attorneys'
fees and costs, retainers, court costs, transcripts, fees of experts, witness
fees, travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees and all other disbursements or expenses
incurred in connection with asserting or defending claims.
(iv) "Independent Counsel" shall mean a law firm or lawyer
that neither is presently nor in the past calendar year has been retained to
represent: (i) the Company or Indemnitee in any matter material to any such
party or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder in any matter material to such other party.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any law firm or person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing any
of the Company or Indemnitee in an action to determine Indemnitee's right to
indemnification under this Agreement. All Expenses of the Independent Counsel
incurred in connection with acting pursuant to this Agreement shall be borne by
the Company.
(v) "Losses" shall mean all liabilities, losses and
claims (including judgments, fines, penalties and amounts to be paid in
settlement) incurred in connection with any Proceeding.
(vi) "Proceeding" shall include any threatened, pending or
completed action, suit, arbitration, mediation, alternate dispute resolution
mechanism, investigation, administrative hearing or any other proceeding,
whether civil, criminal, administrative or investigative.
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2. SERVICE BY INDEMNITEE. Indemnitee agrees to begin or continue to serve
the Company or any Affiliate as a director or an executive officer.
Notwithstanding anything contained herein, this Agreement shall not create a
contract of employment between the Company and Indemnitee, and the termination
of Indemnitee's relationship with the Company or an Affiliate by either party
hereto shall not be restricted by this Agreement.
3. INDEMNIFICATION. The Company agrees to indemnify Indemnitee for, and
hold Indemnitee harmless from and against, any Losses or Expenses at any time
incurred by or assessed against Indemnitee arising out of or in connection with
the service of Indemnitee as a director or an executive officer of the Company
or in any capacity for an Affiliate at the request of the Company (collectively
referred to as a "Director or an Officer of the Company") to the fullest extent
permitted by the laws of the State of Delaware in effect on the date hereof or
as such laws may from time to time hereafter be amended to increase the scope of
such permitted indemnification. Without diminishing the scope of the
indemnification provided by this Section 3, the rights of indemnification of
Indemnitee provided hereunder shall include but shall not be limited to those
rights set forth hereinafter.
4. ACTION OR PROCEEDING OTHER THAN AN ACTION BY OR IN THE RIGHT OF THE
COMPANY. Indemnitee shall be entitled to the indemnification rights provided
herein if Indemnitee is a person who was or is made a party or is threatened to
be made a party to or is involved (including, without limitation, as a witness)
in any Proceeding, other than an action by or in the right of the Company, as
the case may be, by reason of (a) the fact that Indemnitee is or was a Director
or an Officer of the Company or (b) anything done or not done by Indemnitee in
any such capacity.
5. ACTIONS BY OR IN THE RIGHT OF THE COMPANY. Indemnitee shall be
entitled to the indemnification rights provided herein if Indemnitee is a person
who was or is a party or is threatened to be made a party to or is involved
(including, without limitation, as a witness) in any Proceeding brought by or in
the right of the Company to procure a judgment in its favor by reason of (a) the
fact that Indemnitee is or was a Director or an Officer of the Company or (b)
anything done or not done by Indemnitee in any such capacity. Pursuant to this
Section, Indemnitee shall be indemnified against Losses or Expenses incurred or
suffered by Indemnitee or on Indemnitee's behalf in connection with the defense
or settlement of any Proceeding if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company. Notwithstanding the foregoing provisions of this
Section, no such indemnification shall be made in respect of any claim, issue or
matter as to which Delaware law expressly prohibits such indemnification by
reason of an adjudication of liability of Indemnitee to the Company unless and
only to the extent that the Court of Chancery of the State of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, Indemnitee is fairly and reasonably entitled to indemnity for such
Losses and Expenses which the Court of Chancery or such other court shall deem
proper.
6. INDEMNIFICATION FOR LOSSES AND EXPENSES OF PARTY WHO IS WHOLLY OR
PARTLY SUCCESSFUL. Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee has been wholly successful on the merits or otherwise in
any Proceeding referred to in Section 3, 4 or 5 hereof on any claim, issue or
matter therein, Indemnitee shall be indemnified against all Losses and Expenses
incurred by Indemnitee or on Indemnitee's behalf in connection therewith. If
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Indemnitee is not wholly successful in such Proceeding but is successful, on the
merits or otherwise, as to one or more but less than all claims, issues or
matters in such Proceeding, the Company agrees to indemnify Indemnitee to the
maximum extent permitted by law against all Losses and Expenses incurred by
Indemnitee in connection with each successfully resolved claim, issue or matter.
In any review or Proceeding to determine the extent of indemnification, the
Company shall bear the burden of proving any lack of success and which amounts
sought in indemnity are allocable to claims, issues or matters which were not
successfully resolved. For purposes of this Section and without limitation, the
termination of any such claim, issue or matter by dismissal with or without
prejudice shall be deemed to be a successful resolution as to such claim, issue
or matter.
7. PAYMENT FOR EXPENSES OF A WITNESS. Notwithstanding any other provision
of this Agreement, to the extent that Indemnitee is, by reason of the fact that
Indemnitee is or was a Director or an Officer of the Company, a witness in any
Proceeding, the Company agrees to pay to Indemnitee all Expenses actually and
reasonably incurred by Indemnitee or on Indemnitee's behalf in connection
therewith.
8. ADVANCEMENT OF EXPENSES. All Expenses incurred by or on behalf of
Indemnitee (or reasonably expected by Indemnitee to be incurred by Indemnitee
within three months) in connection with any Proceeding shall be paid by the
Company in advance of the final disposition of such Proceeding within twenty
days after the receipt by the Company of a statement or statements from
Indemnitee requesting from time to time such advance or advances, whether or not
a determination to indemnify has been made under Section 10. Indemnitee's
entitlement to such advancement of Expenses shall include those incurred in
connection with any Proceeding by Indemnitee seeking an adjudication or award in
arbitration pursuant to this Agreement. The financial ability of Indemnitee to
repay an advance shall not be a prerequisite to the making of such advance. Such
statement or statements shall reasonably evidence such Expenses incurred (or
reasonably expected to be incurred) by Indemnitee in connection therewith and
shall include or be accompanied by a written undertaking by or on behalf of
Indemnitee to repay such amount if it shall ultimately be determined that
Indemnitee is not entitled to be indemnified therefor pursuant to the terms of
this Agreement.
9. GUARANTEE. In the event that the Company fails or is unable to perform
any of its payment obligations under the terms of this Agreement, USSCO hereby
unconditionally guarantees that it will perform the obligations of the Company
and pay Indemnitee for any Losses or Expenses for which Indemnitee is entitled
to be indemnified or for Expenses to be advanced hereunder. Such payment will be
made promptly upon request and without the necessity of a demand.
10. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
(a) When seeking indemnification under this Agreement (which shall
not include in any case the right of Indemnitee to receive payments pursuant to
Section 7 and Section 8 hereof, which shall not be subject to this Section 10),
Indemnitee shall submit a written request for indemnification to the Company.
Determination of Indemnitee's entitlement to indemnification shall be made
promptly, but in no event later than 30 days after receipt by the Company of
Indemnitee's written request for indemnification. The Secretary of the Company
shall, promptly
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upon receipt of Indemnitee's request for indemnification, advise the Board that
Indemnitee has made such request for indemnification.
(b) The entitlement of Indemnitee to indemnification under this
Agreement shall be determined in the specific case (1) by the Board by a
majority vote of the Disinterested Directors, even though less than a quorum, or
(2) if there are no Disinterested Directors, or if such Disinterested Directors
so direct, by Independent Counsel or (3) by the stockholders.
(c) In the event the determination of entitlement is to be made by
Independent Counsel, such Independent Counsel shall be selected by the
Indemnitee, subject to the approval of the Board, such approval not to be
unreasonably withheld. Upon failure of the Indemnitee to so select such
Independent Counsel or upon failure of the Board to so approve, such Independent
Counsel shall be selected by the American Arbitration Association of New York,
New York or such other person as such Association shall designate to make such
selection.
(d) If the determination made pursuant to Section 10(b) is that
Indemnitee is not entitled to indemnification to the full extent of Indemnitee's
request, Indemnitee shall have the right to seek entitlement to indemnification
in accordance with the procedures set forth in Section 11 hereof.
(e) If the person or persons empowered pursuant to Section 10(b) to
make a determination with respect to entitlement to indemnification shall have
failed to make the requested determination within 30 days after receipt by the
Company of such request, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee shall be
absolutely entitled to such indemnification, absent (i) misrepresentation by
Indemnitee of a material fact in the request for indemnification or (ii) a final
judicial determination that all or any part of such indemnification is expressly
prohibited by law.
(f) The termination of any Proceeding by judgment, order, settlement
or conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, adversely affect the rights of Indemnitee to indemnification
hereunder except as may be specifically provided herein, or create a presumption
that Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, as the case may be, or create a presumption that (with respect to any
criminal action or proceeding) Indemnitee had reasonable cause to believe that
Indemnitee's conduct was unlawful.
(g) For purposes of any determination of good faith hereunder,
Indemnitee shall be deemed to have acted in good faith if in taking such action
Indemnitee relied on the records or books of account of the Company or an
Affiliate, including financial statements, or on information supplied to
Indemnitee by the officers of the Company or an Affiliate in the course of their
duties, or on the advice of legal counsel for the Company or an Affiliate or on
information or records given or reports made to the Company or an Affiliate by
an independent certified public accountant or by an appraiser or other expert
selected with reasonable care to the Company or an Affiliate. The Company shall
have the burden of establishing the absence of good faith. The provisions of
this Section 10(g) shall not be deemed to be exclusive or to limit in any way
the other circumstances in which Indemnitee may be deemed to have met the
applicable standard of conduct set forth in this Agreement.
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(h) The knowledge and/or actions, or failure to act, of any other
director, officer, agent or employee of the Company or an Affiliate shall not be
imputed to Indemnitee for purposes of determining the right to indemnification
under this Agreement.
11. REMEDIES IN CASES OF DETERMINATION NOT TO INDEMNIFY OR TO ADVANCE
EXPENSES.
(a) In the event that (i) a determination is made that Indemnitee is
not entitled to indemnification hereunder, (ii) advances are not made pursuant
to Section 8 hereof or (iii) payment has not been timely made following a
determination of entitlement to indemnification pursuant to Section 10 hereof,
Indemnitee shall be entitled to seek a final adjudication either through an
arbitration proceeding or in an appropriate court of the State of Delaware or
any other court of competent jurisdiction of Indemnitee's entitlement to such
indemnification or advance.
(b) In the event a determination has been made in accordance with the
procedures set forth in Section 10 hereof, in whole or in part, that Indemnitee
is not entitled to indemnification, any judicial proceeding or arbitration
referred to in Section 11(a) shall be de novo and Indemnitee shall not be
prejudiced by reason of any such prior determination that Indemnitee is not
entitled to indemnification, and the Company shall bear the burdens of proof
specified in Sections 6 and 10 hereof in such proceeding.
(c) If a determination is made or deemed to have been made pursuant
to the terms of Section 10 hereof or this Section 11 that Indemnitee is entitled
to indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration in the absence of (i) a misrepresentation of
a material fact by Indemnitee or (ii) a final judicial determination that all or
any part of such indemnification is expressly prohibited by law.
(d) To the extent deemed appropriate by the court, interest shall be
paid by the Company to Indemnitee at a rate equal to the rate paid by the
Company or its subsidiaries to the principal senior secured lender thereto for
amounts which the Company indemnifies or is obliged to indemnify Indemnitee for
the period commencing with the date on which Indemnitee requested
indemnification (or reimbursement or advancement of any Expenses) and ending
with the date on which such payment is made to Indemnitee by the Company.
12. EXPENSES INCURRED BY INDEMNITEE TO ENFORCE THIS AGREEMENT. All
Expenses incurred by Indemnitee in connection with the preparation and
submission of Indemnitee's request for indemnification hereunder shall be borne
by the Company. In the event that Indemnitee is a party to or intervenes in any
proceeding in which the validity or enforceability of this Agreement is at issue
or seeks an adjudication to enforce Indemnitee's rights under, or to recover
damages for breach of, this Agreement, Indemnitee, if Indemnitee prevails in
whole in such action, shall be entitled to recover from the Company, and shall
be indemnified by the Company against, any Expenses incurred by Indemnitee. If
it is determined that Indemnitee is entitled to indemnification for part (but
not all) of the indemnification so requested, Expenses incurred in seeking
enforcement of such partial indemnification shall be reasonably prorated among
the claims, issues or matters for which Indemnitee is entitled to
indemnification and for claims, issues or matters for which Indemnitee is not so
entitled.
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13. NON-EXCLUSIVITY. The rights of indemnification and to receive advances
as provided by this Agreement shall not be deemed exclusive of any other rights
to which Indemnitee may at any time be entitled under any law, certificate of
incorporation, by-law, other agreement, vote of stockholders or resolution of
directors or otherwise, both as to action in Indemnitee's official capacity and
as to action in another capacity while holding such directorship or office. To
the extent Indemnitee would be prejudiced thereby, no amendment, alteration,
rescission or replacement of this Agreement or any provision hereof shall be
effective as to Indemnitee with respect to any action taken or omitted by such
Indemnitee in Indemnitee's position with the Company or an Affiliate or any
other entity which Indemnitee is or was serving at the request of the Company
prior to such amendment, alteration, rescission or replacement.
14. DURATION OF AGREEMENT. This Agreement shall apply to any claim
asserted and any Losses and Expenses incurred in connection with any claim
asserted on or after the effective date of this Agreement and shall continue
until and terminate upon the later of: (a) ten years after Indemnitee has ceased
to occupy any of the positions or have any of the relationships described in
Section 3, 4 or 5 hereof; or (b) one year after the final termination of all
pending or threatened Proceedings of the kind described herein with respect to
Indemnitee. This Agreement shall be binding upon the Company and its successors
and assigns and shall inure to the benefit of Indemnitee and Indemnitee's
spouse, assigns, heirs, devisee, executors, administrators or other legal
representatives.
15. MAINTENANCE OF D&O INSURANCE.
(a) The Company hereby covenants and agrees with Indemnitee that, so
long as Indemnitee shall continue to serve as a Director or an Officer of the
Company and thereafter so long as Indemnitee shall be subject to any possible
claim or threatened, pending or completed Proceeding, whether civil, criminal or
investigative, by reason of the fact that Indemnitee was a Director or an
Officer of the Company or any other entity which Indemnitee was serving at the
request of the Company, the Company shall maintain in full force and effect (i)
the directors' and officers' liability insurance issued by the insurer and
having the policy amount and deductible as currently in effect with respect to
directors and officers of the Company or any of its subsidiaries and (ii) any
replacement or substitute policies issued by one or more reputable insurers
providing in all respects coverage at least comparable to and in the same amount
as that currently provided under such existing policy (collectively, "D&O
Insurance").
(b) In all policies of D&O Insurance, Indemnitee shall be named as an
insured in such a manner as to provide Indemnitee the same rights and benefits,
subject to the same limitations, as are accorded to the Company's directors or
officers most favorably insured by such policy.
(c) Notwithstanding anything to the contrary set forth in (a) above,
the Company shall have no obligation to maintain D&O Insurance if the Company
determines in good faith that such insurance is not reasonably available, the
premium cost for such insurance is disproportionate to the amount of coverage
provided or the coverage provided by such insurance is limited by exclusions so
as to provide an insufficient benefit.
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(d) If the Company ceases to maintain D&O Insurance, the Company
shall notify Indemnitee in writing of such cessation within three (3) calendar
days of the earlier of (i) the date the Company determines to cease D&O
Insurance or (ii) the date D&O Insurance ceases.
16. SEVERABILITY. Should any part, term or condition hereof be declared
illegal or unenforceable or in conflict with any other law, the validity of the
remaining portions or provisions hereof shall not be affected thereby, and the
illegal or unenforceable portions hereof shall be and hereby are redrafted to
conform with applicable law, while leaving the remaining portions hereof intact.
17. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
18. HEADINGS. Section headings are for convenience only and do not control
or affect meaning or interpretation of any terms or provisions hereof.
19. MODIFICATION AND WAIVER. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by each of the
parties hereto.
20. NO DUPLICATIVE PAYMENT. The Company shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable hereunder if
and to the extent that Indemnitee has otherwise actually received such payment
(net of Expenses incurred in collecting such payment) under any insurance
policy, contract, agreement or otherwise.
21. NOTICES. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing (including telecopier or
similar writing) and shall be deemed to have been given at the time when mailed,
enclosed in a registered or certified postpaid envelope, in any general or
branch office of the United States Postal Service, or sent by Federal Express or
other similar overnight courier service, addressed to the address of the parties
stated below or to such changed address as such party may have fixed by notice
or, if given by telecopier, when such telecopy is transmitted and the
appropriate answer back is received.
(a) If to Indemnitee, to the address appearing on the signature page
hereof.
(b) If to the Company to:
United Stationers Inc.
0000 Xxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
22. GOVERNING LAW. The parties agree that this Agreement shall be governed
by, and construed and enforced in accordance with, the internal laws of the
State of Delaware without regard to its conflicts of law rules.
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23. CONSTRUCTION. The parties acknowledge that this Agreement is the
result of arm's-length negotiations between sophisticated parties each afforded
representation by legal counsel. Each and every provision of this Agreement
shall be construed as though both parties participated equally in the drafting
of same, and any rule of construction that a document shall be construed against
the drafting party shall not be applicable to this Agreement.
24. ENTIRE AGREEMENT. Subject to the provisions of Section 13 hereof,
this Agreement constitutes the entire understanding between the parties and
supersedes all proposals, commitments, writings, negotiations and
understandings, oral and written, and all other communications between the
parties relating to the subject matter hereof. This Agreement may not be amended
or otherwise modified except in writing duly executed by all of the parties. A
waiver by any party of any breach or violation of this Agreement shall not be
deemed or construed as a waiver of any subsequent breach or violation thereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
UNITED STATIONERS INC.
By:
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Name:
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Title:
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INDEMNITEE
By:
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Name:
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Address:
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City and State:
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For the purposes of Section 9 only,
UNITED STATIONERS SUPPLY CO.
By:
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Name:
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Title:
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