EXHIBIT 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "AGREEMENT") is made, entered
into and effective as of _________, 2003 (the "EFFECTIVE DATE") by and among
UNITED STATIONERS INC., a Delaware corporation (hereinafter, together with its
successors, referred to as "HOLDING"), UNITED STATIONERS SUPPLY CO., an Illinois
corporation (hereinafter, together with its successors, referred to as the
"COMPANY", and, together with Holding, the "COMPANIES"), and ________________
(hereinafter referred to as the "EXECUTIVE").
WHEREAS, the Companies have a need for executive management services; and
WHEREAS, the Executive is qualified and willing to render such services to
the Companies;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, the parties agree as follows:
SECTION 1. DEFINITIONS.
(a) As used in this Agreement, the following terms have the respective
meanings set forth below:
"ACCRUED BENEFITS" means (i) all salary earned or accrued through the
date the Executive's employment is terminated, (ii) reimbursement for any
and all monies advanced in connection with the Executive's employment for
reasonable and necessary expenses incurred by the Executive through the
date the Executive's employment is terminated, (iii) all accrued and unpaid
annual incentive compensation awards for the year immediately prior to the
year in which the Executive's employment is terminated, and (iv) all other
payments and benefits payable on or after termination of employment to
which the Executive is entitled at the date of termination under the terms
of any applicable compensation arrangement or benefit plan or program of
the Company. "Accrued Benefits" shall not include any entitlement to
severance pay or severance benefits under any Company severance policy or
plan generally applicable to the Company's salaried employees.
"AFFILIATE" shall have the meaning given such term in Rule 12b-2 of
the Exchange Act.
"BOARD" shall mean, so long as Holding owns all of the outstanding
Voting Securities (as hereinafter defined in the definition of Change of
Control) of the Company, the board of directors of Holding. In all other
cases, Board means the board of directors of the Company.
"CAUSE" shall mean (i) conviction of, or plea of NOLO CONTENDERE to, a
felony (excluding motor vehicle violations); (ii) theft or embezzlement, or
attempted theft or embezzlement, of money or property or assets of the
Company
or any of its Affiliates; (iii) illegal use of drugs; (iv) material breach
of this Agreement; (v) commission of any act or acts of moral turpitude;
(vi) gross negligence or willful misconduct in the performance of
Executive's duties; (vii) breach of any fiduciary duty owed to the Company,
including, without limitation, engaging in competitive acts while employed
by the Company; or (viii) the Executive's willful refusal to perform the
assigned duties for which the Executive is qualified as directed by the
Executive's Supervising Officer (as hereinafter defined) or the Board;
provided, that in the case of any event constituting Cause within clauses
(iv) through (viii) which is curable by the Executive, the Executive has
been given written notice by the Companies of such event said to constitute
Cause, describing such event in reasonable detail, and has not cured such
action within thirty (30) days of such written notice as reasonably
determined by the Chief Executive Officer. For purposes of this definition
of Cause, action or inaction by the Executive shall not be considered
"willful" unless done or omitted by the Executive (A) intentionally or not
in good faith and (B) without reasonable belief that the Executive's action
or inaction was in the best interests of the Companies, and shall not
include failure to act by reason of total or partial incapacity due to
physical or mental illness.
"CHANGE OF CONTROL" shall mean (a) Any "Person" (having the meaning
ascribed to such term in Section 3(a)(9) of the Exchange 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 Exchange Act) of 30% or more of the
combined voting power of Holding's then outstanding voting securities
entitled to vote generally in the election of directors ("VOTING
SECURITIES"); provided, however, that the acquisition or holding of Voting
Securities by (i) Holding of any of its subsidiaries, (ii) an employee
benefit plan (or a trust forming a part thereof) maintained by Holding or
any of its subsidiaries, or (iii) any Person in which the Executive has a
substantial equity interest 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 Holding 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 Holding, and after such issuance of Voting Securities by
Holding, 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 Holding, 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 Holding'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
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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 Consent" (as described in Rule 14a-11 promulgated under the
Exchange Act) 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 an agreement intended to avoid or settle any actual or
threatened Election Contest or Proxy Contest; (c) Consummation of a merger,
consolidation or reorganization or approval by Holding's stockholders of a
liquidation or dissolution of Holding or the occurrence of a liquidation or
dissolution of Holding ("BUSINESS COMBINATION"), unless, following such
Business Combination: (1) the Persons with Beneficial Ownership of Holding,
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
Holding or all or substantially all of Holding'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 Holding, any of its
subsidiaries or any employee benefit plan (or any trust forming a part
thereof) maintained by Holding, 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; provided, that notwithstanding this clause
(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 Holding 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, however that a
Business Combination with a Person in which the Executive has a substantial
equity interest shall not constitute a Change of Control, or (d) Approval
by Holding's stockholders of an agreement for the assignment, sale,
conveyance, transfer, lease or other disposition of all or substantially
all of the assets of Holding to any Person (other than a Person in which
the Executive has a substantial equity interest and other than a subsidiary
of Holding or other entity, the Persons with Beneficial Ownership of which
are the same Persons with Beneficial Ownership of Holding 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
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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 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.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"GOOD REASON" shall mean (i) any material breach by the Companies of
this Agreement, (ii) any material reduction, without the Executive's
written consent, in the Executive's title, duties, responsibilities or
authority; provided, however, that for purposes of this clause (ii),
neither (A) a change in the Executive's Supervising Officer or the number
or identity of the Executive's direct reports, nor (B) a change in the
Executive's title, duties, responsibilities or authority as a result of a
realignment or restructuring of the Companies' executive organizational
chart nor (C) a change in the Executive's title, duties, responsibilities
or authority as a result of a realignment or restructuring of the Companies
shall necessarily be deemed by itself to materially reduce Executive's
title, duties, responsibilities or authority, as long as, in the case of
either (A), (B) or (C), Executive continues to report to either the Chief
Executive Officer or Chief Operating Officer of the Companies or to the
Supervising Officer to whom he reported immediately prior to the Change of
Control or a Supervising Officer of equivalent responsibility and
authority, or (iii) without Executive's written consent: (A) a reduction in
the Executive's Base Salary or a material reduction determined on an
aggregate basis in the level of executive benefits, perquisites and
incentive opportunities, (B) the relocation of the Executive's principal
place of employment more than fifty (50) miles from its location on the
date of a Change in Control, or (C) the relocation of the Company's
corporate headquarters office outside of the metropolitan area in which it
is located on the date of a Change in Control. For purposes of this
Agreement, a Change of Control, alone, does not constitute Good Reason.
Furthermore, notwithstanding the above, the occurrence of any of the events
described above will not constitute Good Reason unless the Executive gives
the Companies written notice within thirty (30) days after the occurrence
of any of such events that the Executive believes that such event
constitutes Good Reason, and the Companies thereafter fail to cure any such
event within sixty (60) days after receipt of such notice.
"PERSON" shall mean any natural person, firm, corporation, limited
liability company, trust, partnership, limited or limited liability
partnership, business association, joint venture or other entity and, for
purposes of the definition of Change of Control herein, shall comprise any
"person", within the
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meaning of Sections 13(d) and 14(d) of the Exchange Act, including a
"group" as therein defined.
"SUBSIDIARY" shall mean, with respect to any Person, any other Person
of which such first Person owns 20% or more of the economic interest in
such Person or owns or has the power to vote, directly or indirectly,
securities representing 20%or more of the votes ordinarily entitled to be
cast for the election of directors or other governing Persons.
(b) The capitalized terms used in Section 5(j) have the respective meanings
assigned to them in such Section and the following additional terms have the
respective meanings assigned to them in the Sections hereof set forth opposite
them:
"Annual Bonus" Section 4(b)
"Base Salary" Section 4(b)
"Bonus Plan" Section 4(b)
"Confidential information or proprietary data" Section 6(a)(2)
"Customer" Section 6(d)(2)
"Disability" Section 5(c)
"Employment Period" Section 2
"Retirement" Section 5(f)
"Supervising Officer" Section 3(a)
"Term" and "Termination Date" Section 2
SECTION 2. TERM AND EMPLOYMENT PERIOD. Subject to Section 19 hereof, the
term of this Agreement ("TERM") shall commence on the Effective Date of this
Agreement and shall continue until the effective date of termination of the
Executive's employment hereunder pursuant to Section 5 of this Agreement. The
period during which the Executive is employed by the Companies pursuant to this
Agreement is referred to herein as the "EMPLOYMENT PERIOD." The date on which
termination of the Executive's employment hereunder shall become effective is
referred to herein as the "TERMINATION DATE."
SECTION 3. DUTIES.
(a) During the Employment Period, the Executive (i) shall serve as
____________________ of the Companies, (ii) shall report directly to an officer
of the Companies (the "SUPERVISING OFFICER") who shall be selected by the Board
or the Chief Executive Officer in its or his or her sole discretion, (iii)
shall, subject to and in accordance with the authority and direction of the
Board and/or the Supervising Officer have such authority and perform in a
diligent and competent manner such duties as may be assigned to the Executive
from time to time by the Board and/or the Supervising Officer and (iv) shall
devote the Executive's best efforts and such time, attention, knowledge and
skill to the operation of the business and affairs of the Companies as shall be
necessary to perform the Executive's duties. During the Employment Period, the
Executive's place of performance for the Executive's duties and responsibilities
shall be at the Companies' corporate headquarters office, unless another
principal place of performance is agreed in writing among the parties and except
for required travel by the
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Executive on the Companies' business or as may be reasonably required by
the Companies.
(b) Notwithstanding the foregoing, it is understood during the
Employment Period, subject to any conflict of interest policies of the
Companies, the Executive may (i) serve in any capacity with any civic,
charitable, educational or professional organization provided that such
service does not materially interfere with the Executive's duties and
responsibilities hereunder, (ii) make and manage personal investments of
the Executive's choice, and (iii) with the prior consent of the Companies'
Chief Executive Officer, which shall not be unreasonably withheld, serve on
the board of directors of one (1) for-profit business enterprise.
SECTION 4. COMPENSATION. During the Employment Period, the Executive shall
be compensated as follows:
(a) the Executive shall receive, at such intervals and in accordance
with such Company payroll policies as may be in effect from time to time,
an annual salary (pro rata for any partial year) equal to $_________ ("BASE
SALARY"). The Base Salary shall be reviewed by the Board from time to time
and may, in the Board's sole discretion, be increased when deemed
appropriate by the Board; if so increased, it shall not thereafter be
reduced (other than an across-the-board reduction applied in the same
percentage at the same time to all of the Companies' senior executives at
the same grade level);
(b) during the Employment Period, the Executive shall be eligible to
earn an annual incentive compensation award under the Companies' management
incentive or bonus plan, or a successor plan thereto, as shall be in effect
from time to time (the "BONUS PLAN"), subject to achievement of performance
goals determined in accordance with the terms of the Bonus Plan (such
annual incentive compensation award, the "ANNUAL BONUS"), with such Annual
Bonus to be payable in a cash lump sum at such time as bonuses are
ordinarily paid to the Companies' senior executives at the same grade
level;
(c) the Executive shall be reimbursed, at such intervals and in
accordance with such Company policies as may be in effect from time to
time, for any and all reasonable and necessary business expenses incurred
by the Executive for the benefit of the Companies, subject to documentation
in accordance with the Companies' policies;
(d) the Executive shall be entitled to participate in all incentive,
savings and retirement plans, stock option plans, practices, policies and
programs applicable generally to other senior executives of the Companies
at the same grade level and as determined by the Board from time to time;
(e) the Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs provided by the
Company to senior executives of the Companies at the same grade level
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, and accidental death and
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travel accident insurance plans and programs) to the extent applicable
generally to other executives of the Companies at the same grade level;
(f) the Executive shall be provided with an automobile allowance or a
Company-leased automobile, in either case in accordance with the Companies'
then applicable Executive Automobile Policy; the Executive shall be
entitled to not less than twenty (20) paid vacation days per calendar year
(pro rata for any partial year);
(g) the Executive shall be entitled to participate in the Company's
other executive fringe benefits and perquisites generally applicable to the
Companies' senior executives at the same grade level in accordance with the
terms and conditions of such arrangements as are in effect from time to
time; and
(h) appended hereto as APPENDIX I and made a part of this Agreement is
a description of certain modifications and clarifications to Section 4 of
this Agreement.
SECTION 5. TERMINATION OF EMPLOYMENT.
(a) All Accrued Benefits to which the Executive (or the Executive's
estate or beneficiary) is entitled shall be payable within thirty (30) days
following termination of the Employment Period, except as otherwise
specifically provided herein or under the terms of any applicable policy,
plan or program, in which case the payment terms of such policy, plan or
program shall be determinative.
(b) Any termination by the Companies, or by the Executive, of the
Employment Period shall be communicated by written notice of such
termination to the Executive, if such notice is delivered by the Companies,
and to the Companies, if such notice is delivered by the Executive, each in
compliance with the requirements of Section 13 hereof. Except in the event
of termination of the Employment Period by reason of Cause or the
Executive's death, the Termination Date shall be no earlier than thirty
(30) days following the date on which notice of termination is delivered by
one party to the other in compliance with the requirements of Section 13
hereof.
(c) If the Employment Period is terminated by the Companies for any
reason other than Cause or the Executive's permanent disability, as defined
in the Companies' Board-approved disability plan or policy as in effect
from time to time ("Disability") and other than within two (2) years
following a Change of Control, then, as the Executive's exclusive right and
remedy in respect of such termination:
(i) the Executive shall be entitled to receive from the Company
the Executive's Accrued Benefits in accordance with Section 5(a);
(ii) the Executive shall be entitled to an amount equal to one
and one-half (1-1/2) times the Executive's then existing Base Salary,
to be paid in such intervals and at such times in accordance with the
Company's payroll practices in effect from time to time over the
eighteen (18) month period following the Termination Date;
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(iii) the Executive shall be entitled to a payment in an amount
equal to one and one-half (1 1/2) times the actual incentive
compensation award which would otherwise be payable for the calendar
year during which the Termination Date occurs, to be paid at such time
as the incentive award would otherwise be paid in accordance with the
Company's policies (for purposes of determining such award, any
discretionary individual performance component shall be deemed to be
at the same achievement level as in the year preceding the Termination
Date or, if not included in the such year's incentive award
components, at target);
(iv) the Executive shall continue to be covered, upon the same
terms and conditions described in Section 4(e) hereof, by the same or
equivalent medical, dental, hospitalization, life and disability
insurance plans, programs and/or arrangements as in effect for the
Executive immediately prior to the Termination Date until the earlier
of: (A) the eighteen (18) month anniversary following the date of the
Executive's Termination Date, and (B) the date the Executive receives
substantially equivalent coverage under the plans, programs and/or
arrangements of a subsequent employer;
(v) the Executive shall be entitled to receive executive level
career transition assistance services provided by a career transition
assistance firm selected by the Executive and paid for by the
Companies in an amount not to exceed twenty percent (20%) of the sum
of (i) the Executive's then existing Base Salary and (ii) the target
incentive compensation award for the calendar year during which the
Termination Date occurs. The Executive shall not be eligible to
receive cash in lieu of executive level career transition assistance
services.
(d) If during the Employment Period, a Change of Control occurs and
the Employment Period is terminated by the Companies for any reason other
than Cause or Disability or by the Executive for Good Reason within two (2)
years from the date of such Change of Control, then:
(i) the Executive shall be entitled to receive from the Company
the Executive's Accrued Benefits in accordance with Section 5(a);
(ii) the Executive shall be entitled to a lump-sum payment in an
amount equal to two (2) times the Executive's then existing Base
Salary, to be paid within thirty (30) days following the Termination
Date;
(iii) the Executive shall be entitled to a lump-sum payment in an
amount equal to two (2) times the Executive's target incentive
compensation award for the calendar year during which the Termination
Date occurs, to be paid within thirty (30) days following the
Termination Date;
(iv) the Executive shall be entitled to a lump-sum payment to be
paid within thirty (30) days following the Termination Date in an
amount equal to the pro-rata target incentive compensation award for
the calendar year during which the Termination Date occurs. Such
pro-rata target incentive compensation award
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shall be determined by multiplying the target incentive compensation
award amount by a fraction, the numerator of which is the number of
days in the calendar year of the Termination Date elapsed prior to the
Termination Date and the denominator of which is three hundred and
sixty-five (365).
(v) the Executive shall continue to be covered, upon the same
terms and conditions described in Section 4(e) hereof, by the same or
equivalent medical, dental, hospitalization, life and disability
insurance plans, programs and/or arrangements as in effect for the
Executive immediately prior to the Change of Control until the earlier
of: (A) the second anniversary following the date of the Executive's
Termination Date, and (B) the date the Executive receives
substantially equivalent coverage under the plans, programs and/or
arrangements of a subsequent employer;
(vi) the Executive shall receive two (2) additional years of
credit for purposes of age, benefit service and vesting under the
Company's defined benefit retirement plan;
(vii) if the Executive's outstanding stock options have not by
then fully vested pursuant to the terms of the Companies' applicable
stock option plan(s) and applicable option agreement(s), then to the
extent permitted in the Companies' applicable stock option plan(s) and
as provided in the applicable stock option agreement(s), the Executive
shall continue to vest in the Executive's unvested stock options
following the Termination Date;
(viii) the Executive shall be entitled to receive executive level
career transition assistance services provided by a career transition
assistance firm selected by the Executive and paid for by the
Companies in an amount not to exceed twenty percent (20%) of the sum
of (i) the Executive's then existing Base Salary and (ii) the target
incentive compensation award for the calendar year during which the
Termination Date occurs. The Executive shall not be eligible to
receive cash in lieu of executive level career transition assistance
services; and
(ix) the Executive shall be entitled to be reimbursed by the
Companies on an as incurred basis for the Executive's reasonable
attorneys' fees, costs and expenses incurred in conjunction with any
dispute regarding Section 5(d).
(e) Any amounts payable pursuant to Sections 5(c) and 5(d) above shall
be considered severance payments and, except for the Executive's vested
benefits under the Companies' employee benefit plans (other than severance
plans), shall be in full and complete satisfaction of the obligations of
the Companies to the Executive in connection with the termination of the
Executive's employment. The Company shall deliver a Form 1099 to the
Executive reflecting such payments.
(f) If the Employment Period is terminated as a result of the
Executive's death, Disability or retirement, as defined in the Companies'
Board-approved retirement plan or policy, as in effect from time to time
("Retirement"), then the Executive shall be
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entitled to (i) the Executive's Accrued Benefits in accordance with Section
5(a), (ii) any benefits that may be payable to the Executive under any
applicable Board-approved disability, life insurance or retirement plan or
policy in accordance with the terms of such plan or policy, and (iii) a
lump sum payment to be paid within thirty (30) days following the
Termination Date in an amount equal to the pro-rata target incentive
compensation award for the calendar year during which the Termination Date
occurs by reason of the Executive's death, Disability or Retirement. Such
pro-rata target incentive compensation award shall be determined by
multiplying the target incentive compensation award amount by a fraction,
the numerator of which is the number of days in the calendar year of the
Termination Date elapsed prior to the Termination Date and the denominator
of which is three hundred and sixty-five (365).
(g) Notwithstanding anything else contained herein, if the Executive
terminates his employment for any reason other than Disability or
Retirement and, if after a Change of Control, without Good Reason, or the
Companies terminate the Executive's employment for Cause, all of the
Executive's rights to payment from the Companies (including pursuant to any
plan or policy of the Companies) shall terminate immediately, except the
right to payment for Accrued Benefits in respect of periods prior to such
termination.
(h) Notwithstanding anything to the contrary contained in this Section
5, the Executive shall be required to execute the Companies' then current
standard release agreement as a condition to receiving any of the payments
and benefits provided for in Sections 5(c) and (d), excluding the Accrued
Benefits in accordance with Section 5(a). It is acknowledged and agreed
that the then current standard release agreement shall not diminish or
terminate the Executive's rights under this Agreement.
(i) In the event of a termination of the Executive's employment
entitling the Executive to benefits under Section 5(c) above, the Executive
shall use reasonable efforts to obtain employment suitable to his
education, training and experience, and, upon obtaining any such other
employment shall promptly notify the Companies thereof. The remaining
obligation of the Companies under Section 5(c) shall be offset by any
compensation earned by the Executive from such other employment during the
eighteenth month period commencing on his Termination Date. Subject to the
preceding sentence and to the Executive's affirmative obligations pursuant
to Section 6, the Executive shall be under no obligation to seek other
employment or otherwise mitigate the obligations of the Companies under
this Agreement.
(j) If it shall be determined that any payment or distribution of any
type to or in respect of the Executive made directly or indirectly, by the
Companies or by any other party in connection with a Change of Control,
whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise (the "TOTAL PAYMENTS"), is or will be
subject to the excise tax imposed by Section 4999 of the Internal Code of
1986, as amended (the "CODE"), or any interest or penalties with respect to
such excise tax (such excise tax, together with any such interest and
penalties, are collectively referred to as the "EXCISE TAX"), then the
Executive shall be entitled to receive an additional payment (a "GROSS-UP
PAYMENT") in an amount such that after
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payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes) imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Total Payments.
(i) All computations and determinations relevant to Section 5(j)
and this subsection 5(j)(i) shall be made by a national accounting
firm selected and reimbursed by the Companies from among the ten (10)
largest accounting firms in the United States as determined by gross
revenues (the "ACCOUNTING FIRM"), subject to the Executive's consent
(not to be unreasonably withheld), which firm may be the Companies'
accountants. Such determinations shall include whether any of the
Total Payments are "parachute payments" (within the meaning of Section
280G of the Code). In making the initial determination hereunder as to
whether a Gross-Up Payment is required, the Accounting Firm shall
determine that no Gross-Up Payment is required if the Accounting Firm
is able to conclude that no "Change of Control" has occurred (within
the meaning of Section 280G of the Code). If the Accounting Firm
determines that a Gross-Up Payment is required, the Accounting Firm
shall provide its determination (the "DETERMINATION"), together with
detailed supporting calculations regarding the amount of any Gross-Up
Payment and any other relevant matter both to the Companies and the
Executive by no later than thirty (30) days following the Termination
Date, if applicable, or such earlier time as is requested by the
Companies or the Executive (if the Executive reasonably believes that
any of the Total Payments may be subject to the Excise Tax). If the
Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive and the Companies with a
written statement that such Accounting Firm has concluded that no
Excise Tax is payable (including the reasons therefor) and that the
Executive has substantial authority not to report any Excise Tax on
Executive's federal income tax return.
(ii) If a Gross-Up Payment is determined to be payable, it shall
be paid to the Executive within twenty (20) days after the
Determination (and all accompanying calculations and other material
supporting the Determination) is delivered to the Companies by the
Accounting Firm. Any determination by the Accounting Firm shall be
binding upon the Companies and the Executive, absent manifest error.
(iii) As a result of uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments not
made by the Companies should have been made ("UNDERPAYMENT"), or that
Gross-Up Payments will have been made by the Companies which should
not have been made ("OVERPAYMENTS"). In either such event, the
Accounting Firm shall determine the amount of the Underpayment or
Overpayment that has occurred. In the case of an Underpayment, the
amount of such Underpayment (together with an amount which after
payment of all taxes thereon is equal to any interest and penalties
payable by the Executive as a result
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of such Underpayment) shall be promptly paid by the Companies to or
for the benefit of the Executive.
(iv) In the case of an Overpayment, the Executive shall, at the
direction and expense of the Companies, take such steps as are
reasonably necessary (including the filing of returns and claims for
refund), follow reasonable instructions from, and procedures
established by, the Companies, and otherwise reasonably cooperate with
the Companies to correct such Overpayment, provided, however, that the
Executive shall not in any event be obligated to return to the
Companies an amount greater than the portion of the Overpayment that
Executive has retained after payment of all taxes thereon or has
recovered as a refund from the applicable taxing authorities.
(v) The Executive shall notify the Companies in writing of any
claim by the Internal Revenue Service relating to the possible
application of the Excise Tax under Section 4999 of the Code to any of
the payments and amounts referred to herein and shall afford the
Companies, at their expense, the opportunity to control the defense of
such claim (for the sake of clarity, if the Internal Revenue Service
is successful in any such claim or the Executive reaches a final
settlement with the Internal Revenue Service with respect to such
claim (after having afforded the Companies, at their expense, the
opportunity to control the defense of such claim), the amount of the
Excise Tax resulting from such successful claim or settlement shall be
determinative as to whether or not there has been an Underpayment or
an Overpayment for purposes of subsection 5(j)(iii).
(vi) Without limiting the intent of this Section 5(j) to make the
Executive whole, on an after-tax basis, from the application of the
Excise Taxes, all determinations by the Accounting Firm shall be made
with a view to minimizing the application of Sections 280G and 4999 of
the Code of any of the Total Payments, subject, however, to the
following: the Accounting Firm shall make its determination on the
basis of "substantial authority" (within the meaning of Section 6230
of the Code) and shall provide opinions to that effect to both the
Companies and the Executive upon the request of either of them.
SECTION 6. FURTHER OBLIGATIONS OF THE EXECUTIVE.
(a) (1) During and following the Executive's employment by the
Companies, the Executive shall not, directly or indirectly, disclose,
disseminate, make available or use any confidential information or
proprietary data of the Companies or any of their Subsidiaries, except as
reasonably necessary or appropriate for the Executive to perform the
Executive's duties for the Companies, or as authorized in writing by the
Board or as required by any court or administrative agency (and then only
after prompt notice to the Companies to permit the Companies to seek a
protective order).
(2) For purposes of this Agreement, "CONFIDENTIAL INFORMATION OR
PROPRIETARY DATA" means information and data prepared, compiled, or
acquired by or for the Executive during or in connection with the
Executive's employment by the
12
Companies (including, without limitation, information belonging to or
provided in confidence by any Customer, Supplier, trading partner or other
Person to which the Executive had access by reason of Executive's
employment with the Companies) which is not generally known to the public
or which could be harmful to the Companies or their Subsidiaries if
disclosed to Persons outside of the Companies. Such confidential
information or proprietary data may exist in any form, tangible or
intangible, or media (including any information technology-related or
electronic media) and includes, but is not limited to, the following
information of or relating to the Companies or any of their Subsidiaries,
Customers or Suppliers:
(i) Business, financial and strategic information, such as sales
and earnings information and trends, material, overhead and other
costs, profit margins, accounting information, banking and financing
information, pricing policies, capital expenditure/investment plans
and budgets, forecasts, strategies, plans and prospects.
(ii) Organizational and operational information, such as
personnel and salary data, information concerning the utilization or
capabilities of personnel, facilities or equipment, logistics
management techniques, methodologies and systems, methods of operation
data and facilities plans.
(iii) Advertising, marketing and sales information, such as
marketing and advertising data, plans, programs, techniques,
strategies, results and budgets, pricing and volume strategies,
catalog, licensing or other agreements or arrangements, and market
research and forecasts and marketing and sales training and
development courses, aids, techniques, instruction and materials.
(iv) Product and merchandising information, such as information
concerning offered or proposed products or services and the sourcing
of the same, product or services specifications, data, drawings,
designs, performance characteristics, features, capabilities and plans
and development and delivery schedules.
(v) Information about existing or prospective Customers or
Suppliers, such as Customer and Supplier lists and contact
information, Customer preference data, purchasing habits, authority
levels and business methodologies, sales history, pricing and rebate
levels, credit information and contracts.
(vi) Technical information, such as information regarding plant
and equipment organization, performance and design, information
technology and logistics systems and related designs, integration,
capabilities, performance and plans, computer hardware and software,
research and development objectives, budgets and results, intellectual
property applications, and other design and performance data.
(b) All records, files, documents and materials, in whatever form and
media, relating to the Companies' or any of their Subsidiaries' business
(including, but not limited to, those containing or reflecting any confidential
information or proprietary data)
13
which the Executive prepares, uses, or comes into contact with, including
the originals and all copies thereof and extracts and derivatives
therefrom, shall be and remain the sole property of the Companies or their
Subsidiaries. Upon termination of the Executive's Employment Period for any
reason, the Executive shall immediately return all such records, files,
documents, materials and other property of the Companies and their
Subsidiaries in the Executive's possession, custody or control, in good
condition, to the Companies.
(c) During (i) the Executive's employment by the Companies and (ii)
the eighteen (18) month period following the end of the Executive's
Employment Period, the Executive shall not within the United States and
Canada in any capacity (whether as an owner, employee, consultant or
otherwise) at any time perform, manage, supervise, or be responsible or
accountable for anyone else who is performing services -- which are the
same as, substantially similar or related to the services the Executive is
providing, or during the last two years of the Executive's employment by
the Companies has provided, for the Companies or their Subsidiaries -- for,
or on behalf of, any other Person who or which is (1) a wholesaler of
office products, including traditional office products, computer consumable
products, office furniture, janitorial and/or sanitation products,
audio/visual and business machines or such other products whether or not
related to the foregoing provided by the Companies or their Subsidiaries
during the last twelve (12) months of the Executive's Employment Period,
(2) a provider of services the same as or substantially similar to those
provided by the Companies or their Subsidiaries during the last twelve (12)
months of the Executive's Employment Period, or (3) engaged in a line of
business other than described in (1) or (2) hereinabove which is the same
or substantially similar to the lines of business engaged in by the
Companies or their Subsidiaries, or to any line of business which to the
Executive's knowledge is under active consideration or planning by the
Companies and their Subsidiaries, during the last twelve (12) months of the
Executive's Employment Period,.
(d) (1) During (i) the Executive's employment by the Companies and
(ii) the eighteen (18) month period following the end of the Executive's
Employment Period, the Executive shall not at any time, directly or
indirectly, solicit any Customer for or on behalf of any Person other than
the Companies or any of their Subsidiaries with respect to the purchase of
(A) office products, including traditional office products, computer
consumable products, office furniture, janitorial and/or sanitation
products, audio/visual and business machines, or such other products
whether or not related to the foregoing provided by the Companies or their
Subsidiaries to such Customer during the last twelve (12) months of the
Executive's Employment Period, (B) services the same as or substantially
similar to those provided by the Companies or their Subsidiaries to such
Customer during the last twelve (12) months of the Executive's Employment
Period or (C) products or services from a line of business other than as
described in (A) or (B) herein which are the same or substantially similar
to the products and services provided to such Customer from a line of
business engaged in by the Companies or their Subsidiaries during the last
twelve (12) months of the Executive's Employment Period. Without limiting
the foregoing, (i) during the Executive's employment by the Companies and
(ii) insofar as the Executive may be employed by, or acting for or on
behalf of, a Supplier at any time within the eighteen (18) month period
following the end of the
14
Executive's Employment Period, the Executive shall not at any time,
directly or indirectly, solicit any Customer to switch the purchase of the
products or services described hereinabove from the Companies or their
Subsidiaries to Supplier.
(2) For purposes of this Agreement, a "CUSTOMER" is any Person who or
which has ordered or purchased by or from the Companies or any of their
Subsidiaries (A) office products, including traditional office products,
computer consumable products, office furniture, janitorial and/or
sanitation products, audio/visual and business machines or such other
products whether or not related to the foregoing, (B) services provided by
or from the Companies or any of their Subsidiaries or (C) products or
services from a line of business other than as described in (A) or (B)
herein which are the same or substantially similar to the products and
services from a line of business engaged in by the Companies or their
Subsidiaries during the last twelve (12) months of the Executive's
Employment Period. For purposes of this Agreement, a "SUPPLIER" is any
Person who or which has furnished to the Companies or their Subsidiaries
for resale (A) office products, including traditional office products,
computer consumable products, office furniture, janitorial and/or
sanitation products, audio/visual and business machines or such other
products whether or nor related to the foregoing (B) services provided by
or from the Companies or any of their Subsidiaries or (C) products or
services from a line of business other than as described in (A) or (B)
herein which are the same or substantially similar to the products and
services from a line of business engaged in by the Companies or their
Subsidiaries during the last twelve (12) months of the Executive's
Employment Period.
(e) During the Executive's employment by the Companies and during the
eighteen (18) month period following the end of the Executive's Employment
Period, the Executive shall not at any time, directly or indirectly, induce
or solicit any employee of the Companies or any of their Subsidiaries for
the purpose of causing such employee to terminate his or her employment
with the Companies or such Subsidiary.
(f) The Executive shall not, directly or indirectly, make or cause to
be made (and shall prohibit the officers, directors, employees, agents and
representatives of any Person controlled by Executive not to make or cause
to be made) any disparaging, derogatory, misleading or false statement,
whether orally or in writing, to any Person, including members of the
investment community, press, and customers, competitors and advisors to the
Companies, about the Companies, their respective parents, Subsidiaries or
Affiliates, their respective officers or members of their boards of
directors, or the business strategy or plans, policies, practices or
operations of the Companies, or of their respective parents, Subsidiaries
or Affiliates.
(g) If any court determines that any portion of this Section 6 is
invalid or unenforceable, the remainder of this Section 6 shall not thereby
be affected and shall be given full effect without regard to the invalid
provision. If any court construes any of the provisions of Section 6(c),
6(d), 6(e) or 6(f) above, or any part thereof, to be unreasonable because
of the duration or scope of such provision, such court shall have the power
to reduce the duration or scope of such provision and to enforce such
provision as so reduced.
15
(h) During the Executive's Employment Period and during the eighteen
(18) month period following the end of Executive's Employment Period, the
Executive agrees that, prior to accepting employment with a Customer or
Supplier of the Companies, the Executive will give notice to the Chief
Executive Officer of the Companies. The Companies reserve the right to make
such Customer or Supplier aware of the Executive's obligations under
Section 6 of this Agreement.
(i) During and following Executive's Employment Period, the Executive
shall furnish a copy of this Section 6 in its entirety to any prospective
employer prior to accepting employment with such prospective employer.
(j) The Executive hereby acknowledges and agrees that damages will not
be an adequate remedy for the Executive's breach of any provision of this
Section 6, and further agrees that the Companies shall be entitled to
obtain appropriate injunctive and/or other equitable relief for any such
breach, without the posting of any bond or other security, in addition to
all other legal remedies to which the Companies may be entitled.
SECTION 7. SUCCESSORS. The Companies may assign their rights under this
Agreement to any successor to all or substantially all the assets of the
Companies, by merger or otherwise, and may assign or encumber this Agreement and
its rights hereunder as security for indebtedness of the Companies. Any such
assignment by the Companies shall remain subject to the Executive's rights under
Section 5 hereof. The rights of the Executive under this Agreement may not be
assigned or encumbered by the Executive, voluntarily or involuntarily, during
the Executive's lifetime, and any such purported assignment shall be void ab
initio. Notwithstanding the foregoing, all rights of the Executive under this
Agreement shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, estates, executors, administrators, heirs and
beneficiaries. All amounts payable to the Executive hereunder shall be paid, in
the event of the Executive's death, to the Executive's estate, heirs or
representatives.
SECTION 8. THIRD PARTIES. Except for the rights granted to the Companies
and their Subsidiaries pursuant hereto (including, without limitation, pursuant
to Section 6 hereof) and except as expressly set forth or referred to herein,
nothing herein expressed or implied is intended or shall be construed to confer
upon or give any person other than the parties hereto and their successors and
permitted assigns any rights or remedies under or by reason of this Agreement.
SECTION 9. ENFORCEMENT. The provisions of this Agreement shall be regarded
as divisible and, if any of said provisions or any part or application thereof
is declared invalid or unenforceable by a court of competent jurisdiction, the
same shall not affect the other provisions hereof, other parts or applications
thereof or the whole of this Agreement, but such provision shall be deemed
modified to the extent necessary to render such provision enforceable, and the
rights and obligations of the parties shall be construed and enforced
accordingly, preserving to the fullest permissible extent the intent and
agreements of the parties herein set forth.
SECTION 10. AMENDMENT. This Agreement may not be amended or modified at any
time except by a written instrument approved by the Board, and executed by the
Companies and
16
the Executive; PROVIDED, HOWEVER, that any attempted amendment or modification
without such approval and execution shall be null and void AB INITIO and of no
effect.
SECTION 11. PAYMENT AND WITHHOLDING. The Company shall be responsible as
employer for payment of all cash compensation and severance payments provided
herein and Holding shall cause the Company to make such payments. The Executive
shall not be entitled to receive any additional compensation from either of the
Companies for any services the Executive provides to Holding or the Companies'
Subsidiaries. The Company shall be entitled to withhold from any amounts to be
paid to the Executive hereunder any federal, state, local, or foreign
withholding or other taxes or charges which it is from time to time required to
withhold. The Company shall be entitled to rely on an opinion of counsel if any
question as to the amount or requirement of any such withholding shall arise.
SECTION 12. GOVERNING LAW. This Agreement and the rights and obligations
hereunder shall be governed by and construed in accordance with the laws of the
State of Illinois, without regard to principles of conflicts of law of Illinois
or any other jurisdiction.
SECTION 13. NOTICE. Notices given pursuant to this Agreement shall be in
writing and shall be deemed given when received and, if mailed, shall be mailed
by United States registered or certified mail, return receipt requested,
addressee only, postage prepaid:
If to the Companies:
United Stationers Inc.
United Stationers Supply Co.
0000 X. Xxxx Xxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: General Counsel
IF TO THE EXECUTIVE:
[Name of Executive]
[Home address of Executive]
or to such other address as the party to be notified shall have given to the
other in accordance with the notice provisions set forth in this Section 13.
SECTION 14. NO WAIVER. No waiver by either party at any time of any breach
by the other party of, or compliance with, any condition or provision of this
Agreement to be performed by the other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at any time.
SECTION 15. HEADINGS. The headings contained herein are for reference only
and shall not affect the meaning or interpretation of any provision of this
Agreement.
SECTION 16. INDEMNIFICATION. The provisions set forth in the
Indemnification Agreement appended hereto as ATTACHMENT A are hereby
incorporated into this Agreement and
17
made a part hereof. The parties shall execute the Indemnification Agreement
contemporaneously with the execution of this Agreement.
SECTION 17. EXECUTION IN COUNTERPARTS. This Agreement, including the
Indemnification Agreement, may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 18. ARBITRATION. Any dispute, controversy or question arising
under, out of, or relating to this Agreement (or the breach thereof), or, the
Executive's employment with the Companies or termination thereof, shall be
referred for arbitration in Chicago, Illinois to a neutral arbitrator selected
by the Executive and the Companies (or if the parties are unable to agree on
selection of such an arbitrator, one selected by the American Arbitration
Association pursuant to its rules referred to below) and this shall be the
exclusive and sole means for resolving such dispute. Such arbitration shall be
conducted in accordance with the National Rules for Resolution of Employment
Disputes of the American Arbitration Association. Except as provided in Section
5(d)(ix) above, the arbitrator shall have the discretion to award reasonable
attorneys' fees, costs and expenses to the prevailing party. Judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Nothing in this Section 18 shall be construed so as to deny the
Companies the right and power to seek and obtain injunctive relief in a court of
equity for any breach or threatened breach by the Executive of any of the
Executive's covenants in Section 6 hereof. Moreover, this Section 18 and Section
12 hereof shall not be applicable to any dispute, controversy or question
arising under, out of, or relating to the Indemnification Agreement.
SECTION 19. SURVIVAL. Notwithstanding the stated Term of this Agreement,
the provisions of this Agreement necessary to carry out the intention of the
parties as expressed herein, including without limitation those in Sections 5,
6, 7, 16 and 18, shall survive the termination or expiration of this Agreement.
SECTION 20. 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.
SECTION 21. FREE TO CONTRACT. The Executive represents and warrants to the
Companies that the Executive is able freely to accept employment by the
Companies as described in this Agreement and that there are no existing
agreements, arrangements or understandings, written or oral, that would prevent
the Executive from entering into this Agreement, would prevent or restrict the
Executive in any way from rendering services to the Companies as provided herein
during the Employment Period or would be breached by the future performance by
the Executive of the Executive's duties and responsibilities hereunder.
Section 22. ENTIRE AGREEMENT. This Agreement, including the Indemnification
Agreement, supersedes all other agreements, arrangements or understandings
(whether written or oral) between the Companies and the Executive with respect
to the subject matter of this Agreement and the Executive's employment
relationship with the Companies and any of their
18
Subsidiaries, and this Agreement contains the sole and entire agreement among
the parties hereto with respect to the subject matter hereof.
* * *
IN WITNESS WHEREOF, the parties have executed this Agreement in one or more
counterparts, each of which shall be deemed one and the same instrument, as of
the day and year first written above.
EXECUTED ON : UNITED STATIONERS INC.
July ____, 2004 By:______________________________
Name:
Title:
EXECUTED ON: UNITED STATIONERS SUPPLY CO.
July ___, 2004 By:______________________________
Name:
Title:
EXECUTED ON: EXECUTIVE:
June ___, 2004 _________________________________
[Name of Executive]
19
APPENDIX I
P. XXXX XXXXXX
1. The Executive shall be paid a one-time cash acceptance bonus of
$75,000, payable on or before September 1, 2003. The Executive agrees
to repay this acceptance bonus on the date of termination of employment
in the event that he voluntarily leaves the employ of the Companies for
any reason other than Disability prior to August 1, 2005.
2. The Executive shall receive a retention bonus of $50,000 payable in
August 2004 and a second retention bonus of $75,000 payable in August
2005, provided that he is an officer and employee of the Companies in
good standing at the time such bonuses become payable.
* * * * * * *
APPENDIX I
S. XXXXX XXXX
The Executive shall be paid a one-time cash acceptance bonus of $35,000, payable
within two weeks of his first day of employment.
20
