EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, made and entered into as of the 23rd day of May, 1997 by and
among United Stationers Inc., a Delaware corporation (the "Parent"), United
Stationers Supply Co., an Illinois corporation ("Supply", and together with the
Parent and their successors and assigns permitted under this Agreement, the
"Company"), and Xxxxxxx X. Xxxxxxxxx (the "Executive").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Company desires to employ the Executive and to enter into an
agreement embodying the terms of such employment (this "Agreement") and the
Executive desires to enter into this Agreement and to accept such employment,
subject to the terms and provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:
1. DEFINITIONS.
(a) "Base Salary" shall mean the Executive's base salary as specified
under Section 4 below.
(b) "Board" shall mean the Board of Directors of the Parent.
(c) "Cause" shall mean the Executive's:
(1) conviction of, or plea of NOLO CONTENDERE to, a felony;
(2) theft or embezzlement, or attempted theft or embezzlement,
of money or property or assets of the Company or any of its
affiliates;
(3) use of illegal drugs;
(4) material breach of this Agreement;
(5) commission of any act or acts of moral turpitude in
violation of Company policy;
(6) breach of Section 3 of this Agreement or gross negligence or
willful misconduct in the performance of his duties; or
(7) breach of any fiduciary duty owed to the Company, including,
without limitation, engaging in directly competitive acts
while employed by the Company.
(d) "Change in Control" shall mean the first to occur of the
following events:
(1) any "person" (as such term is used in Sections 3(a) (9) and
13(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or group of persons becomes a
"beneficial owner" (as such term is used in Rule 13d-3 of
the Exchange Act) of 40 percent or more of the Voting Stock
of the Parent;
(2) the majority of the Board consists of individuals other than
Incumbent Directors;
(3) the Parent adopts any plan of liquidation providing for the
distribution of all or substantially all of its assets, or
the Parent or Supply adopts any plan of liquidation
providing for the distribution of all or substantially all
of the assets of the Parent and its Subsidiaries taken as a
whole; PROVIDED, HOWEVER, that the adoption of such plan of
liquidation is not in conjunction with a merger of Supply
with and into the Parent;
(4) the sale or other disposition of all or substantially all of
the assets or business of the Parent and its Subsidiaries
taken as a whole; PROVIDED, HOWEVER, that the shareholders
of the Parent immediately prior to such sale or disposition,
do not beneficially own, directly or indirectly, in
substantially the same proportion as they owned the Voting
Stock of the Parent prior to the sale or disposition, all of
the Voting Stock or other ownership interests of the entity
or entities, if any, that succeed to the business of the
Parent; or
(5) the merger or consolidation of the Parent with or into
another company (the "Other Company"); PROVIDED, HOWEVER,
that immediately after the merger or consolidation, the
shareholders of the Parent immediately prior to the merger
or consolidation hold, directly or indirectly, 50 percent or
less of the Voting Stock of the surviving corporation (there
being excluded from the number of shares held by such
shareholders, but not from the Voting Stock of the surviving
corporation, any shares received by any "affiliate" (as such
term is defined under Rule 12b-2 of the Exchange Act) of the
Other Company in exchange for stock of the Other Company) -
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(f) "Common Stock" shall mean the common stock, $.10 par value per
share, of the Parent.
(g) "Disability" or "Disabled" shall mean a disability as determined
under the Company's long-term disability plan or program as in effect on the
date the disability first occurs, or if no such plan or program exists on the
date the disability first occurs, then a "disability" as defined under Code
Section 22 (e) (3).
(h) "Effective Date" shall mean May 23, 1997.
(i) "Good Reason" shall mean the occurrence of any of the
following, without the Executive's prior written consent, during the 90-day
period preceding the date on which the Executive terminates his employment with
the Company:
(1) the reduction of the Executive's Base Salary as specified
under Section 4 below;
(2) the exclusion of the Executive from, or diminution in the
Executive's participation in, any pension, bonus, management
incentive, profit sharing and 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;
(3) any diminution in expense reimbursement benefits enjoyed by
the Executive, except pursuant to a general change in the
Company's reimbursement policies;
(4) any material reduction in the Executive's title or duties
which has the effect of materially reducing the Executive's
status within the Company, including, without limitation,
removal of the Executive from the Board or the failure to
re-elect the Executive to the Board;
(5) any relocation of the Company's headquarters outside of the
Chicago metropolitan area;
(6) the breach by the Company of any of its covenants or
obligations under this Agreement; or
(7) the notification by the Company in accordance with Section 2
below that the Term of Employment will end on the 2nd
anniversary of the Section 2 Notification Date.
(j) "Incumbent Directors" shall mean the members of the Board as
of the Effective Date; PROVIDED, HOWEVER, that any person becoming a director
subsequent to such date whose election or nomination for election was supported
by 2/3rds of the directors who then comprised the Incumbent Directors shall be
considered to be an Incumbent Director.
(k) "Section 2 Notification Date" shall mean the date as specified in
Section 2.
(l) "Subsidiary" shall mean any corporation of which the Parent owns,
directly or indirectly, more than 50 percent of the Voting Stock or any other
business entity in which the Parent directly or indirectly has an ownership
interest of more than 50 percent.
(m) "Target Award" shall mean the Executive's annual incentive
compensation award opportunity as specified under Section 5 below.
(n) "Term of Employment" shall mean the period as specified under
Section 2 below.
(o) "Voting Stock" shall mean the capital stock of any class or
classes having general voting power under ordinary circumstances, in the absence
of contingencies, to elect the directors of a corporation.
2. TERM OF EMPLOYMENT.
The Company hereby employs the Executive, and the Executive hereby
accepts such employment, for the Term of Employment, which shall begin on the
Effective Date and shall end on (i) the end of the 90-day period following the
date on which the Executive notifies the Company in writing in accordance with
Section 25 below that he wants the Term of Employment to so end or (ii) the 2nd
anniversary of the date on which the Company notifies the Executive in writing
in accordance with Section 25 below that it wants the Term of Employment to so
end. The date that the Executive or the Company notifies the other Party under
this Section 2 shall be referred to herein as a "Section 2 Notification Date."
Notwithstanding anything contained herein to the contrary, the Term of
Employment is subject to earlier termination in accordance with Section 12
below.
3. POSITION, DUTIES AND RESPONSIBILITIES.
(a) On the Effective Date and continuing for the remainder of the
Term of Employment, the Executive shall be employed as the Chief Executive
Officer and President of the Company and shall be responsible for the general
management of the affairs of the Company. The Executive shall serve the Company
faithfully, conscientiously and to the best of the Executive's ability and shall
promote the interests and reputation of the Company. Unless prevented by
sickness or Disability, the Executive shall devote substantially all of the
Executive's time, attention, knowledge, energy and skills during normal working
hours and at such other times as the Executive's duties may reasonably require
to the duties of the Executive's employment. The Executive, in carrying out his
duties under this Agreement, shall report to the Board. In addition, it is the
intention of the Parties that effective on or about the Effective Date and
continuing for the remainder of the Term of Employment, the Executive shall be
elected and serve as a member of the Board.
(b) Notwithstanding anything contained herein to the contrary,
nothing shall preclude the Executive from:
(1) serving on the boards of directors of a reasonable number of
other corporations or the boards of a reasonable number of
trade associations and/or charitable organizations, subject
to the Board's prior written consent (which shall not be
unreasonably withheld);
(2) engaging in charitable activities and community affairs; and
(3) managing his personal investments and affairs;
PROVIDED, HOWEVER, that such activities do not materially interfere with the
proper performance of his duties and responsibilities as the Company's Chief
Executive Officer and President.
4. BASE SALARY
The Executive shall be paid a Base Salary at no less than an annual
rate of $495,000, payable in accordance with the regular payroll practices of
the Company. The Base Salary shall be reviewed by the Board no less frequently
than annually and may, in the Board's sole discretion, be increased when deemed
appropriate.
5. ANNUAL INCENTIVE COMPENSATION PROGRAMS.
The Executive shall participate in the Company's annual incentive
compensation plans or programs applicable to senior-level executives as
established and modified from time to time by the Board in its sole discretion.
The Executive shall have an annual incentive compensation award opportunity in
the aggregate under all such plans or programs equal to 80 percent of the Base
Salary paid during the relevant performance period ("Target Award"). The actual
annual incentive compensation award paid to the Executive under this Section 5
shall have a payout in an amount ranging from a minimum of 50 percent of the
Target Award to a maximum of 150 percent of the Target Award. The performance
targets with respect to the Target Award shall be set by the Board and shall be
consistent with the performance targets established for the Company's executive
vice presidents with respect to their annual incentive compensation award
opportunities. Payment of the annual incentive compensation award under this
Section 5 shall be made at the same time that other senior-level executives
receive their annual incentive compensation awards. Notwithstanding anything
contained herein to the contrary, with respect to the annual incentive
compensation award payable to the Executive for 1997 (the "1997 Award"), the
1997 Award shall be reduced by 40 percent to reflect the period of calendar year
1997 that the Executive was not an employee of the Company.
6. LONG-TERM INCENTIVE COMPENSATION PROGRAMS.
(a) The Executive shall be eligible to participate in the Company's
applicable long-term incentive compensation plans or programs as may be
established and modified from time to time by the Board in its sole discretion.
(b) Notwithstanding anything contained herein to the contrary, the
Company shall grant the Executive options to purchase 250,000 shares of Common
Stock (the "Options") on the Effective Date (the "Date of Grant") . The Options
shall be divided into 3 tranches ("Tranche 0," "Xxxxxxx 0," and "Tranche 3").
The Parties intend that Tranche 1 shall qualify as an "incentive stock option"
as such term is used under Code Section 422.
(1) EXERCISE PRICE. The exercise price of the Options shall be
$21.625.
(2) NUMBER OF SHARES OF COMMON STOCK UNDERLYING EACH TRANCHE.
The number of shares of Common Stock underlying Tranche 1
shall be 23,000 shares. The number of shares of Xxxxxx Stock
underlying Tranche 2 shall be 127,000 shares. The number of
shares of Common Stock underlying Tranche 3 shall be 100,000
shares -
(3) EXPIRATION OF OPTIONS. The Options shall expire on, and
shall not
be exercisable on and after the 10th anniversary of
the Date of Grant, subject to earlier expiration in
accordance with Section 12 below.
(4) EXERCISABILITY SCHEDULE OF TRANCHES 1 AND 2. No portion of
each of Tranche 1 and Tranche 2 shall be exercisable on the
Date of Grant, but 20 percent of each of Tranche 1 and
Tranche 2 shall become exercisable on, and shall remain
exercisable on and after, each of the first 5 anniversaries
of the Date of Grant, subject to the Options' expiration in
accordance with this Section 6(b) and Section 12 below.
(5) EXERCISABILITY SCHEDULE OF TRANCHE 3. No portion of Tranche
3 shall be exercisable on the Date of Grant, but 20 percent
of Tranche 3 shall become exercisable on each of the first 5
anniversaries of the date of grant; PROVIDED, HOWEVER, that
the daily closing price of the Common Stock has been equal
to or greater than $40.00 for at least 80 of 100 consecutive
trading days since the Date of Grant. Notwithstanding
anything contained herein to the contrary, even if the daily
closing price of the Common Stock has never been equal to or
greater than $40.00 for at least 80 of 100 consecutive
trading days prior to December 31, 2006, 100 percent of
Tranche 3 shall nevertheless become exercisable on December
31, 2006 and shall remain exercisable until the Options'
expiration in accordance with this Section 6(b) and Section
12 below.
(c) Notwithstanding anything contained herein to the contrary, on the
date of a Change in Control, all stock options (including all tranches of the
Options) held by the Executive on such date shall immediately become exercisable
and shall remain exercisable until the date such stock options are scheduled to
expire, subject to earlier expiration in accordance with Section 12 below.
7. EMPLOYEE BENEFIT PROGRAMS.
During the Term of Employment, the Executive shall be entitled to
participate, to the extent eligible, in all plans, programs and policies
providing general employee 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 Agreement. This Section 7 shall not be construed to
require the Company to establish or maintain any plan, program or policy. With
respect to the Executive's participation in any Company health plan, any and all
exclusions with respect to pre-existing medical conditions relating to the
Executive and his dependents shall be waived under such plans. Also, with
respect to the Executive's participation in the Company's Retiree Health Plan,
the Executive shall be deemed to have accrued 5 credited years of service. In
addition, the Executive shall be 100 percent vested in all employee
contributions and earnings thereon made to the United Stationers Inc. 401(k)
Savings Plan.
8. SUPPLEMENTAL PENSION.
The Executive shall be entitled to a supplemental pension benefit
(the
"Supplemental Pension") in addition to the pension benefit he will receive
under the United Stationers Supply Co. Pension Plan (the "Pension Plan"). The
Supplemental Pension shall be determined in accordance with the formula under
the Pension Plan as in effect on the date of this Agreement, adjusted for any
subsequent changes; PROVIDED, HOWEVER, that for purposes of the determination of
the Supplemental Pension, Credited Service (as such term is defined in Section
2.3(e) of the Pension Plan) shall be equal to 5 years regardless of the
Executive's actual Credited Service. The Supplemental Pension shall be paid at
the same time and in the same manner as when and how the pension benefit under
the Pension Plan is paid to the Executive. In addition, except as otherwise
provided in this Section 8, the Executive's entitlements to the Supplemental
Pension, including without limitation any survivor benefit, claims procedures,
methods of payment, etc. shall be determined in accordance with the provisions
of the Pension Plan.
9. REIMBURSEMENT OF BUSINESS EXPENSES
The Executive is authorized to incur reasonable business expenses
in carrying out his duties and responsibilities under this Agreement, and the
Company shall reimburse him for all such reasonable business expenses reasonably
incurred in connection with carrying out the business of the Company, subject to
documentation in accordance with the Company's policy.
10. PERQUISITES.
(a) During the Term of Employment, the Executive shall be entitled to
participate in the Company's executive fringe benefits applicable to the
Company's senior-level executives in accordance with the terms and conditions of
such arrangements as are in effect from time to time.
(b) Notwithstanding anything contained herein to the contrary,
during the Term of Employment, the Company shall:
(1) pay the dues and assessment fees and any business expenses
associated with the Executive's membership in the Indian
Hill Club (whether under the Company's Club Membership
Policy or otherwise);
(2) provide the Executive with personal financial (including
tax) counseling by a firm to be chosen by the Executive;
PROVIDED, HOWEVER, that the normal annual costs associated
with this perquisite shall not exceed $5,000 per year unless
the Company approves in writing the payment of any such
annual costs exceeding $5,000 per year due to special
situations;
(3) provide the Executive with an appropriate leased automobile
to be selected by the Executive, in accordance with the
Company's Officers' Leased Automobile Policy; and
(4) reimburse the Executive for all premium payments made by him
with respect to any individual long-term disability
insurance policy owned by him; PROVIDED, HOWEVER, that such
reimbursement shall not exceed $12,568 in any calendar year.
(c) The Parties agree that the Executive shall be liable for any and
all federal, state and local income and employment taxes resulting from the
perquisites provided under this Section 10.
11. VACATION.
The Executive shall be entitled to 20 paid vacation days per calendar
year which shall accrue and otherwise be subject to the Company's vacation
policy.
12. TERMINATION OF EMPLOYMENT.
(a) TERMINATION OF EMPLOYMENT DUE TO DEATH. In the event of the
Executive's death during the Term of Employment, the Term of Employment shall
end as of the date of the Executive's death and his estate and/or beneficiaries,
as the case may be, shall be entitled to the following:
(1) Base Salary earned but not paid prior to the date of his
death;
(2) all annual incentive compensation awards with respect to any
year prior to the year of his death which have been earned
but not paid;
(3) an amount equal to the sum of (i) the Base Salary in effect
on the date of the Executive's death and (ii) if the
Executive's death occurs (x) on or after January 1, 1998,
then the annual incentive compensation award paid or payable
with respect to the year immediately preceding the year in
which the Executive's death occurs or (y) prior to January
1, 1998, then 60 percent of the 1997 Award that would have
been paid in accordance with Section 5 above, payable over
the 12-month period following the date of the Executive's
death in equal installments in accordance with the Company's
regular payroll practice;
(4) the exercisable portion of the Options held by the Executive
as of the date of his death shall remain exercisable until
the earlier of (i) the end of the 1-year period following
the date of the Executive's death or (ii) the date the
Options would otherwise expire, and the unexercisable
portion of the Options held by the Executive as of such date
shall immediately be forfeited;
(5) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 7, 8, 9, 10 or 11 above; and
(6) such other or additional benefits, if any, as may be
provided under applicable plans, programs and/or
arrangements of the Company.
(b) TERMINATION OF EMPLOYMENT FLUE TO DISABILITY. If the
Executive's employment is terminated due to Disability during the Term of
Employment, either by the Company or by the Executive, the Term of Employment
shall end as of the date of the termination of the Executive's employment and
the Executive shall be entitled to the following:
(1) Base Salary earned but not paid prior to the date of the
termination of the Executive's employment;
(2) all annual incentive compensation awards with respect to any
year prior to the year of the termination of the Executive's
employment which have been earned but not paid;
(3) an amount equal to the sum of (i) the Base Salary in effect
on the date of the termination of the Executive's employment
and (ii) the annual incentive compensation award paid or
payable with respect to the year immediately preceding the
year in which the termination of the Executive's employment
occurs, payable over the 12-month period following the date
of the termination of the Executive's employment in equal
installments in accordance with the Company's regular
payroll practice;
(4) the exercisable portion of the Options held by the Executive
as of the date of the termination of his employment shall
remain exercisable until the earlier of (i) the end of the
1-year period following the date of the termination of his
employment or (ii) the date the Options would otherwise
expire, and the unexercisable portion of the options held by
the Executive as of such date shall immediately be
forfeited;
(5) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 7, 8, 9, 10 or 11 above; and
(6) such other or additional benefits, if any, as are provided
under applicable plans, programs and/or arrangements of the
Company
In no event shall a termination of the Executive's employment for Disability
occur unless the Party terminating the Executive's employment gives written
notice to the other Party in accordance with Section 25 below
(c) TERMINATION OF EMPLOYMENT BY THE COMPANY FOR CAUSE. If the
Company terminates the Executive's employment for Cause during the Term of
Employment, the Term of Employment shall end as of the date of the termination
of the Executive's employment for Cause and the Executive shall be entitled to
the following:
(1) Base Salary earned but not paid prior to the date of the
termination of his employment;
(2) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 7, 8, 9, 10 or 11 above; and
(3) such other or additional benefits, if any, as are provided
under applicable plans, programs and/or arrangements of the
Company.
Any termination of the Executive's employment by the Company for Cause under
this Section 12 Cc) shall be communicated by the Company to the Executive by a
written notice of termination given in accordance with Section 25 below. Such
notice shall (i) indicate the
specific termination provision of this Agreement relied upon, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (iii) if the date of the termination of the
Executive's employment is other than the date of receipt of such notice, specify
the date of termination of the Executive's employment (which date shall be not
more than 90 days after the giving of such notice). The failure by the Company
to set forth in such notice any fact or circumstance which contributes to a
showing of Cause shall not waive any right of the Company hereunder or preclude
the Company from asserting such fact or circumstance in enforcing the Company's
rights hereunder.
(d) TERMINATION OF EMPLOYMENT BY THE COMPANY WITHOUT CAUSE PRIOR TO A SECTION 2
NOTIFICATION DATE. If, prior to a Section 2 Notification Date, the
Executive's employment is terminated by the Company without Cause, other than
due to death or Disability, the Term of Employment shall end as of the date of
the termination of the Executive's employment and the Executive shall be
entitled to the following:
(1) Base Salary earned but not paid prior to the date of the
termination of his employment;
(2) all annual incentive compensation awards with respect to any
year prior to the year in which the termination of the
Executive's employment occurs which have been earned but not
paid;
(3) a pro rata Target Award for the year in which the
termination of the Executive's employment occurs; PROVIDED,
HOWEVER, that the Target Award's performance goals
established with respect to the year in which the
termination of the Executive's employment occurs are met;
(4) an amount equal to (i) 2 multiplied by (ii) the sum of (x)
the Base Salary with respect to the year in which the
termination of his employment occurs and (y) the Target
Award with respect to the year in which the termination of
his employment occurs, (the "Severance Benefit"). The
Severance Benefit shall be payable over the 24-month period
following the date of the termination of his employment (the
"Severance Period") in equal installments in accordance with
the Company's regular payroll practice;
(5) the exercisable portion of the Options held by the Executive
as of the date of the termination of his employment shall
remain exercisable until the earlier of (i) the end of the
Severance Period or (ii) the date the options would
otherwise expire;
(6) the unexercisable portion of:
(A) Tranche 1,
(B) Tranche 2, and/or
(C) provided that the daily closing price of the Common
Stock has been equal to or greater than $40.00 for at
least 80 of
100 consecutive trading days since the Date of Grant and
prior to the date of the termination of the Executive's
employment, Tranche 3,
held by the Executive as of the date of the
termination of his employment shall continue to
become exercisable until the end of the Severance
Period as if the Executive were still an employee,
and any such portion of Tranches 1, 2 and/or 3 that
becomes exercisable during the Severance period shall
remain exercisable until the earlier of (i) the end
of the Severance Period or (ii) the date the options
would otherwise expire;
(7) if (x) the termination of the Executive's employment
under this Section 12(d) occurs during any
100-consecutive-trading-day period following the date
that the daily closing price of the Common Stock is equal
to or greater than $40.00 (a "100-Day Period") and (y)
during any such 100-Day Period the daily closing price of
the Common Stock has not been equal to nor greater than
$40.00 for at least 80 of such 100 consecutive trading
days, then the unexercisable portion of Tranche 3 held by
the Executive as of the date of the termination of his
employment shall be forfeited by the Executive as of such
date; and if (A) the termination of the Executive's
employment under this Section 12(d) occurs during any
100-Day Period and (B) during such 100-Day Period the
daily closing price of the Common Stock has been equal to
or greater than $40.00 for at least 80 of such 100
consecutive trading days, then the unexercisable portion
of Tranche 3 held by the Executive as of the date of the
termination of his employment shall continue to become
exercisable as if he were still an employee of the
Company, and any such portion of Tranche 3 that becomes
exercisable during the Severance Period shall remain
exercisable until the earlier of (i) the end of the
Severance Period or (ii) the date the options would
otherwise expire;
(8) continuation of the lease with respect to the automobile
provided by the Company in accordance with Section 10(b) (3)
above until the earlier of (i) the end of the Severance
Period or (ii) the date such lease would otherwise expire;
(9) continuation of all perquisites provided by the Company to
the Executive under Section l0 above, other than
reimbursement of the club business expense portion of
Section 10(b)(1) above, until the end of the Severance
Period;
(10) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 7, 8, 9, 10 or 11 above;
(11) continued participation, as if he were still an employee, in
the Company's medical, dental, hospitalization, life and
disability insurance plans, programs and/or arrangements and
in other employee benefit plans, programs and/or
arrangements in which
he was participating on the date of the termination of his
employment until the earlier of:
(A) the end of the Severance Period; or
(B) the date, or dates, he receives equivalent coverage and
benefits under the plans, programs and/or arrangements
of a Subsequent employer (such coverage and benefits to
be determined on a coverage-by-coverage or
benefit-by-benefit basis)
PROVIDED, HOWEVER, that:
(X) if the Executive is precluded from continuing his
participation in any employee benefit plan, program or
arrangement as provided in Section 12(d)(11)(A)
above, he shall be provided with the after-tax economic
equivalent of the benefits provided under the plan,
program or arrangement in which he is unable to
participate for the period specified in this Section
12(d)(11);
(Y) the economic equivalent of any benefit foregone shall
be deemed to be the lowest cost that would be incurred
by the Executive in obtaining such benefit himself on
an individual basis; and
(Z) payment of such after-tax economic equivalent shall be
made quarterly in advance; and
(12) such other or additional benefits, if any, as are provided
under applicable plans, programs and/or arrangements of the
Company.
Notwithstanding anything contained herein to the contrary, the Board, in its
sole discretion, may accelerate the exercisability of some or all of such
unexercisable portion of Tranche 1, Tranche 2 and/or Tranche 3 on the date of
the termination of the Executive's employment or at any time during the
Severance Period.
(e) TERMINATION OF EMPLOYMENT BY THE COMPANY WITHOUT CAUSE ON OR AFTER A
SECTION 2 NOTIFICATION DATE. If, on or after a Section 2 Notification Date on
which the Company notifies the Executive that the Term of Employment will end in
accordance with Section 2 above, the Executive's employment is terminated by the
Company without Cause, other than due to death or Disability, the Term of
Employment shall end as of the date of the termination of the Executive's
employment and the Executive shall be entitled to the same payments and benefits
as provided in Section 12(d) above; PROVIDED, HOWEVER, that:
(1) for purposes of determining benefits and entitlements under
Sections 12 (d) (3) through 12 (d) (11) above, the Severance
Period shall begin on the date of the termination of the
Executive's employment and shall end on the 2nd anniversary
of the Section 2 Notification Date (the "Section 12 (e)
Severance Period"); and
(2) for purposes of determining the Severance Benefit payable
under Section 12 (d) (3) above, the Severance Benefit as
determined in accordance with Section 12 (d) (3) above shall
be multiplied by a fraction the numerator of which shall be
the number of days in the Section 12 (e) Severance Period
and the denominator of which shall be 130, and such reduced
Severance Benefit shall be payable over the Section 22 (e)
Severance Period in equal installments in accordance with
the Company's regular payroll practice.
(f} TERMINATION OF EMPLOYMENT BY THE EXECUTIVE FOR GOOD REASON. The
Executive may terminate his employment for Good Reason at the end of the 60-day
period following the date that the Executive notifies the Company in writing in
accordance with Section 25 below that he intends to terminate his employment for
Good Reason (the "Notification Date"), such notice to state in detail the
particular event that constitutes Good Reason. The Company shall have
reasonable opportunity to cure the event constituting Good Reason; PROVIDED,
HOWEVER, that if the Company has not cured such event to the reasonable
satisfaction of the Executive (and the Executive has not waived the Company's
failure to cure) during the 30-day period following the Notification Date (the
"Curing Period"), the Executive may terminate his employment following the end
of the Curing Period; PROVIDED, HOWEVER, that the Executive may not terminate
his employment for Good Reason after the end of the 90-day period following the
date the event constituting Good Reason first occurs. Upon a termination by the
Executive of his employment for Good Reason, the Term of Employment shall end as
of the date of the termination of the Executive's employment and the Executive
shall be entitled to the same payments and benefits as provided in Section 12(d)
or 12(e) above, as applicable; PROVIDED, HOWEVER, that if the Executive
terminates his employment for Good Reason based on a reduction (i) in Base
Salary under Section (1)(i)(1) above and/or (ii) in his Target Award under
Section (1)(i) (2) above, then the Base Salary and/or the Target Award to be
used in determining the Severance Benefits in accordance with Section 12 (d) (3)
or 12 (e) (2) above shall be the Base Salary and/or the Target Award in effect
immediately prior to such reduction.
(g) VOLUNTARY TERMINATION OF EMPLOYMENT BY THE EXECUTIVE WITHOUT GOOD
REASON. If the Executive voluntarily terminates his employment without Good
Reason, other than a termination of his employment due to death or Disability,
the Executive shall be entitled to the same payments and benefits as provided in
Section 12(c) above. If the Executive notifies the Company in accordance with
Section 2 above that he wants the Term of Employment to end at the end of the
90-day period following such Section 2 Notification Date, and the Executive
terminates his employment as of the end of the Term of Employment, the
termination of the Executive's employment under this Section 12(g) shall not be
deemed a breach of this Agreement.
(h) REDUCTION OF PAYMENTS FOLLOWING A CHANGE IN CONTROL.
Notwithstanding anything contained herein to the contrary, if any amounts due to
the Executive under this Agreement and any other plan or program of the Company
constitute a "parachute payment" (as such term is defined in Code Section
280G(b) (2)), and the amount of the parachute payment, reduced by all federal,
state and local taxes applicable thereto, including the excise tax imposed
pursuant to Code Section 4999, is less than the amount the Executive would
receive if he were paid 3 times his "base amount" (as such term is defined in
Code Section 280G(b) (3)) less $1.00, reduced by all federal, state and local
taxes applicable thereto, then the aggregate of the amounts constituting the
parachute payment shall be reduced to an amount that will equal 3 times the
Executive's base amount less $1.00. The determinations to be made
with respect to this Section 12(h) shall be made by an accounting firm (the
Auditor") jointly selected by the Company and the Executive and paid by the
Company. The Auditor shall be a nationally recognized United States public
accounting firm that has not during the two years preceding the date of its
selection acted, in any way, on behalf of the Company or any of its
subsidiaries. If the Executive and the Company cannot agree on the firm to
serve as the Auditor, then each shall each select one such accounting firm and
those two firms shall jointly select such an accounting firm to serve as the
Auditor. If a determination is made by the Auditor that a reduction in the
aggregate of all payments due to the Executive upon a Change in Control is
required by this Section 12 (h), the Executive shall have the right to specify
the portion of such reduction, if any, that will be made under this Agreement
and each plan or program of the Company. If the Executive does not so specify
within 60 days following the date of a determination by the Auditor pursuant to
the preceding sentence, the Company shall determine, in its sole discretion, the
portion of such reduction, if any, to be made under this Agreement and each plan
or program of the Company.
(i) CONTINUED HEALTH-CARE COVERAGE TO AGE 65. In the event of
any termination of the Executive's employment under Sections 12(b), 12(d), 12(e)
or 12 (f), the Executive shall be entitled to continued health-care coverage for
himself and his eligible dependents under the Company's "group health plan" (as
such term is defined in Code Section 4980B(g) (2)) as in effect from time to
time but subject to any limitations on coverage of nonemployees and their
dependents imposed under the terms of such group health plan or by any insurers
or partial insurers of such group health plan (other than such limitations
imposed unilaterally and in bad faith by the Company). The Executive shall be
entitled to such health-care coverage until his 65th birthday; the Executive's
spouse shall be entitled to such health-care coverage until her 65th birthday;
and each of the Executive's eligible dependents shall be entitled to such
health-care coverage until his or her 21st birthday. Unless the Company is
obligated to provide continued health-care coverage in accordance with Section
12(d) (11) above, the Executive shall pay to the Company on an annual basis in
advance the cost of such continued health-care coverage, with such cost to be
equal to the annual "applicable premium" (as such term is used under Code
Section 4980B (f) (4)) as determined in good faith by the Company.
(j) NO MITIGATION: NO OFFSET. In the event of any termination of the
Executive's employment under this Section 12, the Executive shall be under no
obligation to seek other employment and there shall be no offset against amounts
due to the Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that he may obtain except as
specifically provided in this Section 12.
13. CONFIDENTIALITY.
(a) CONFIDENTIAL INFORMATION. The Executive acknowledges the
Company's exclusive ownership of all information useful in the business of the
Company, its subsidiaries and its affiliates (as used in this Section 13 and
Section 14 below, collectively, the "COMPANY") (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 the Company, and which has
been or is from time to time disclosed to, discovered by, or otherwise known by
the Executive as a consequence of his employment by the Company (including
information conceived, discovered or developed by the Executive during his
employment with the Company) (collectively, "Confidential Information") .
Confidential Information includes, but is not limited to, the following
especially sensitive types of information:
(1) the identity, purchase and payment patterns of, and special
relations with, the Company's customers;
(2) the identity, net prices and credit terms of, and special
relations with, the Company's suppliers;
(3) the Company's inventory selection and management techniques;
(4) the Company's product development and marketing plans; and
(5) the Company's finances, except to the extent publicly
disclosed.
(b) 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 the Company 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 supplier; 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 the
Executive or with the Executive's assistance and all notes, memoranda and the
like prepared using the Proprietary Materials and/or Confidential Information.
(c) ACKNOWLEDGEMENTS BY EXECUTIVE. While some of the information
contained in Proprietary Materials may have been known to the Executive prior to
employment with the Company, or may now or in the future be in the public
domain, the Executive acknowledges that the 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 the Executive, a competitive advantage over persons who do
not know the information or have the compilation of the Proprietary Materials.
The Executive further acknowledges that Confidential Information and Proprietary
Materials include commercially valuable trade secrets and automatically become
the Company' 5 exclusive property when they are conceived, created or received.
The Executive shall report to the Company promptly, orally (or, at the Company's
request, in writing) all discoveries, inventions and improvements, whether or
not patentable, and which either (i) relate to or arise out of any part of the
Company's business in which the Executive participates, or (ii) incorporate or
make use of Confidential Information or Proprietary Materials (all items
referred to in this Section 13 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, the Executive (or after the Executive's
death, the Executive's 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 the Company's ownership rights and Intellectual
Property.
(d) CONFIDENTIALITY DUTIES OF EXECUTIVE. The Executive shall,
except as may be required by law, during the Term of Employment and during the
3-year period following the date of the termination of the Executive's
employment:
(1) comply with all of the Company's reasonable instructions
(whether oral or written) for preserving the confidentiality
of Confidential Information and Proprietary Materials;
(2) use Confidential Information and Proprietary Materials only
at places designated by the Company and in furtherance of
the Company's business;
(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) not copy all or any part of Proprietary Materials, other
than in the course of carrying out the Executive's duties
and responsibilities under this Agreement;
(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 the Executive's duties and responsibilities
under this Agreement;
(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 the Executive's duties and
responsibilities under this Agreement, all or any part of
Confidential Information or Proprietary Materials; and
(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.
(e) RETURN OF COMPANY PROPERTY. Upon the termination of the
Executive's employment under Section 12 above or upon the end of the Term of
Employment, the Executive (or in the event of death, the Executive's 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 the Executive or others,
which are then in the Executive's possession or control. Records of payments
made by the Company to or for the benefit of the Executive, the Executive's copy
of this Agreement, his rolodexes, personal diaries, personal mementos, personal
effects shall not be deemed Proprietary Materials for purposes of this Section
13, and other such things, lawfully possessed by the Executive which relate
solely to taxes payable by the Executive, employee benefits due to the Executive
or the terms of the Executive's employment with the Company, shall also not be
deemed Proprietary Materials for purposes of this Section 13.
14. NONCOMPETITION; NONSOLICITATION.
(a) The Executive covenants and agrees that during the Term of
Employment and during the 2-year period following the end of the Term of
Employment, the Executive 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 he 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 1 percent of the outstanding
shares of a corporation's stock which is listed on a national securities
exchange or the NASDAQ National Market) any enterprise (other than for the
Company or for the benefit of the Company) which is a wholesaler of office
products having annual sales in excess of $1,000,000.
(b) The Executive covenants and agrees that during the Term of
Employment and during the 2-year period following the end of the Term of
Employment, the Executive shall not at any time, directly or indirectly, solicit
(i) any client or customer of the Company or any of its subsidiaries with
respect to a competitive activity which violates Section 14 (a) above or (ii)
any employee of the Company or any of its subsidiaries for the purpose of
causing such employee to terminate his or her employment with the Company or
such subsidiary.
(c) If the Executive shall be in violation of any of the foregoing
restrictive covenants and if the Company seeks relief from such breach in any
court or other tribunal, such covenants shall be extended for a period of time
equal to the pendency of such proceedings, including all appeals.
(d) The Parties acknowledge that in the event of a breach or
threatened breach of Section 14(a) and/or Section 14 (b) above, the Company
shall not have an adequate remedy at law. Accordingly, in the event of any
breach or threatened breach of Section 14 (a) and/or Section 14(b) above, the
Company shall be entitled to such equitable and injunctive relief as may be
available to restrain the Executive and any business, firm, partnership,
individual, corporation or entity participating in the breach or threatened
breach from the violation of the provisions of Section 14 (a) and/or Section
14(b) above. Nothing in this Agreement shall be construed as prohibiting the
Company from pursuing any other remedies available at law or in equity for
breach or threatened breach of Section 14(a) and/or Section 14(b) above,
including the recovery of damages.
(e) The Executive recognizes, acknowledges and agrees 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
to be unreasonable by a court having jurisdiction of the matter and parties, the
Executive hereby agrees and submits to the reduction of any such limitations to
such territory or time as to such court shall appear reasonable.
15. ASSIGNABILITY; BINDING NATURE.
This Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors, heirs (in the case of the Executive) and assigns.
No rights or obligations of the Company under this Agreement may be assigned or
transferred by the Company except that such rights or obligations may be
assigned or transferred pursuant to a merger or consolidation in which the
Company is not the continuing entity, or the sale or liquidation of all or
substantially all of the assets of the Company; PROVIDED, HOWEVER, that the
assignee or transferee is the successor to all or substantially all of the
assets of the Company and such assignee or
transferee assumes the liabilities, obligations and duties of the Company, as
contained in this Agreement, either contractually or as a matter of law.
16. REPRESENTATION.
The Company represents and warrants that it is fully authorized and
empowered to enter into this Agreement and that the performance of its
obligations under this Agreement will not violate any agreement between it and
any other person, firm or organization. The Executive represents and warrants
that no agreement exists between him and any other person, firm or organization
that would be violated by the performance of his obligations under this
Agreement.
17. ENTIRE AGREEMENT.
This Agreement contains the entire understanding and agreement between
the Parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the Parties with respect thereto.
18. AMENDMENT OR WAIVER.
No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by the Executive and an authorized officer of
the Company. No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent time. Any waiver must be in writing and
signed by the Executive or an authorized officer of the Company, as the case may
be.
19. WITHHOLDING.
The Company shall be entitled to withhold from any and all payments
made to the Executive under this Agreement all federal, state, local and/or
other taxes or imposts which the Company determines are required to be so
withheld from such payments or by reason of any other payments made to or on
behalf of the Executive or for his benefit hereunder.
20. SEVERABILITY.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
21. SURVIVORSHIP.
The respective rights and obligations of the Parties hereunder shall
survive any termination of the Executive's employment to the extent necessary to
the intended preservation of such rights and obligations.
22. BENEFICIARIES/REFERENCES.
The Executive shall be entitled, to the extent permitted under any
applicable law, to select and change a beneficiary or beneficiaries to receive
any compensation or benefit payable hereunder following the Executive's death by
giving the Company written notice thereof. In the event of the Executive's
death or a judicial determination of his incompetence, reference in this
Agreement to the Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.
23. GOVERNING LAW/JURISDICTION.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of Illinois without reference to
principles of conflict of laws.
24. RESOLUTION OF DISPUTES.
Any disputes arising under or in connection with this Agreement may,
at the election of the Executive or the Company, be resolved by binding
arbitration, to be held in Chicago, Illinois in accordance with the rules and
procedures of the American Arbitration Association. If arbitration is elected,
the Executive and the Company shall mutually select the arbitrator. If the
Executive and the Company cannot agree on the selection of an arbitrator, each
Party shall select an arbitrator and the 2 arbitrators shall select a third
arbitrator who shall resolve the dispute. Judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof. Costs
of the arbitration shall be shared by the Parties, and all other costs, fees and
expenses, including, without limitation, attorneys' fees of each Party, shall be
borne by the Party incurring such cost, fee or expense.
25. NOTICES.
Any notice given to a Party shall be in writing and shall be deemed to
have been given when delivered personally or sent by certified or registered
mail, postage prepaid, return receipt requested, duly addressed to the Party
concerned at the address indicated below or to such changed address as such
Party may subsequently give such notice of:
If to the Company: United Stationers Inc.
United Stationers Supply Co.
0000 Xxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxx 00000
Attention: Chairman of the Board
with a copy to: United Stationers Supply Co.
0000 Xxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
and a copy to: Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
and a copy to: Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
If to the Executive: Xx. Xxxxxxx X. Xxxxxxxxx
000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
and a copy to: XxXxxxx Xxxxx & Xxxxx
000 X. Xxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
26. HEADINGS.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or of
any provision of this Agreement.
27. COUNTERPARTS.
This Agreement may be executed in 2 or more counterparts.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
UNITED STATIONERS INC.
By:
Xxxxxxxxx X. Xxxx, Xx.
Chairman of the Board
UNITED STATIONERS SUPPLY CO.
By:
Xxxxxxxxx X. Xxxx, Xx.
Chairman of the Board
Xxxxxxx X. Xxxxxxxxx
EXHIBIT A
TO EMPLOYMENT AGREEMENT
______________________
The following are benefit plans, programs and policies in which the
Executive is entitled to participate as of the Effective Date:
1. United Stationers Management Incentive Plan
2. United Stationers Inc. Management Equity Plan
3. United Stationers Supply Co. Pension Plan
4. United Stationers Inc. 401(k) Savings Plan
5. United Stationers Supply Co. Deferred Compensation Plan
6. United Stationers Inc. Flexible Spending Plan
7. United Group Medical and Dental Benefit Plans
8. Officer Medical Expense Reimbursement Policy
9. Retiree Health Plan
10. Annual physical exam at Company expense
11. Group Term Life Insurance - 2 1/2 times base salary
12. Travel and Accident Insurance - $300,000
13. Split Dollar Life Insurance
14. Club and Association Dues - in accordance with Company Policy
15. 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
