EMPLOYMENT AGREEMENT
AGREEMENT (this "Agreement"), made and entered into as of the 1st day of
June, 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 Xxxxxx X. Xxxxxxx (the "Executive").
W I T N E S S E T H
WHEREAS, Supply and the Executive have entered into an employment agreement
dated October 1, 1995 and which is still in effect as of the date written above
(the "Old Agreement");
WHEREAS, the Supply and the Executive desire to hereby amend and restate
the Old Agreement in its entirety; and
WHEREAS, the Parent desires to be a party to 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 annual Base Salary as
defined in 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) 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 of Supply" 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 (i) 40 percent or more of the Voting
Stock of the Parent or (ii) 60 percent or more of the Voting
Stock of Supply;
(2) the majority of the Board consists of individuals other than
Incumbent Directors;
(3) Supply adopts any plan of liquidation providing for the
distribution of all or substantially all of the assets of
Supply 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 Supply 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 Supply; or
(5) the merger or consolidation of Supply 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 United Stationers Inc.
(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
2
exists on the date the disability first occurs, then a "disability" as defined
under Code Section 22(e)(3).
(h) "Effective Date" shall mean June 1, 1997.
(i) "Good Reason" shall mean the occurrence of any of the following
without the Executive's prior written consent:
(1) the reduction of the Executive's Base Salary as determined
in accordance with 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/or other similar incentive,
compensation or deferred compensation plans made available
generally to senior management personnel of the Company,
other than exclusions, changes or diminutions applicable to
all senior management personnel;
(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 -- PROVIDED, HOWEVER, that any
change in the office or officer to whom the Executive
reports, or in the Executive's duties or title which does
not diminish the Executive's status within the Company,
shall not be deemed "Good Reason";
(5) any relocation of the Company's headquarters or the
Executive's principal place of employment outside of the
Chicago metropolitan area; or
(6) the breach by the Company of any of its covenants or
obligations under this Agreement.
(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" shall mean a notification as specified
in Section 2.
(l) "Section 2 Notification Date" shall mean the date of a Section 2
Notification as specified in Section 2.
(m) "Subsidiary" shall mean any corporation of which the Company
owns, directly or indirectly, more than 50 percent of the Voting Stock or any
other business entity in which the Company directly or indirectly has an
ownership interest of more than 50 percent.
(n) "Term of Employment" shall mean the period as specified under
Section 2 below.
3
(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.
(a) The Company hereby continues to employ the Executive, and the
Executive hereby accepts such continued employment, for the Term of Employment,
which shall begin on the Effective Date and shall end following the giving of a
notice by the Executive or the Company pursuant to Section 24 below. If the
Executive gives such notice, the Term of Employment shall end at the end of the
90-day period following the date on which the Executive notifies the Company in
writing in accordance with Section 24 below that he wants the Term of Employment
to so end. If the Company gives such notice, the Term of Employment shall end
on the later of (i) the 2nd anniversary of the date on which the Company
notifies the Executive in writing in accordance with Section 24 below that it
wants the Term of Employment to so end or (ii) the 3rd anniversary of the
Effective Date. A notification by the Executive or the Company to the other
Party under this Section 2 shall be referred to herein as a "Section 2
Notification," and the date that the Section 2 Notification occurs shall be
referred to herein as a "Section 2 Notification Date."
(b) Notwithstanding anything contained herein to the contrary,
following the date that a Change in Control of Supply occurs:
(1) if the Executive makes a Section 2 Notification during the
period beginning on the date of such Change in Control of
Supply and ending on the 3rd anniversary of the date of such
Change in Control of Supply, the Term of Employment shall
end at the end of the 15-day period following such Section 2
Notification Date (in lieu of the 90-day period provided in
Section 2(a) above);
(2) if the Executive makes a Section 2 Notification on or after
the 3rd anniversary of the date of such Change in Control of
Supply, the Term of Employment shall end at the end of the
90-day period (in accordance with Section 2(a) above)
following such Section 2 Notification Date; and
(3) if the Company makes a Section 2 Notification at any time
following the date of such Change in Control of Supply, the
Term of Employment shall end on the later of (i) the 2nd
anniversary of such Section 2 Notification Date or (y) the
3rd anniversary of the date of the Change in Control of
Supply.
(c) Notwithstanding anything contained herein to the contrary, the
Term of Employment is subject to earlier termination in accordance with Section
11 below.
3. POSITION, DUTIES AND RESPONSIBILITIES.
On the Effective Date and continuing for the remainder of the Term of
Employment, the Executive shall be employed as an Executive Vice President and
Chief Financial Officer of the Company and in accordance with the authority and
direction of the Board shall render such administrative, financial and other
related services to the Company and its Subsidiaries and affiliates as may be
required, or as the Board may from time to time direct,
4
commensurate with such position and title. 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
reasonably prevented by sickness, accident 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 Chief Executive Officer of the Company.
4. BASE SALARY.
The Executive shall be paid an annual base salary at no less than an
annual rate of $265,000 (the "Base Salary"), 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 as determined by the Company in
its sole discretion.
6. LONG-TERM INCENTIVE COMPENSATION PROGRAMS.
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.
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.
8. 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.
9. PERQUISITES.
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.
5
10. VACATION.
The Executive shall be entitled to at least 20 paid vacation days
(being at least 4 weeks) per calendar year which shall accrue and otherwise be
subject to the Company's vacation policy.
11. 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 the Company shall pay or
provide, as applicable, or shall cause to be paid or to be provided, as
applicable, to the Executive's estate and/or his beneficiaries, as the case may
be, the following:
(1) Base Salary earned but not paid prior to the date of the
Executive's death;
(2) all annual incentive compensation awards which have been
earned but not paid in accordance with the terms of the
applicable annual incentive compensation plan, program or
arrangement;
(3) an additional amount equal to the sum of (i) the Base Salary
in effect on the date of the Executive's death and (ii) the
annual incentive compensation award paid or payable with
respect to the year immediately preceding the year in which
the Executive's death occurs, 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) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 6, 7, 8, 9 and/or 10 above in
accordance with the terms of the applicable plan, program or
arrangement; and
(5) 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 DUE 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 Company shall pay
or provide, as applicable, or shall cause to be paid or provided, as applicable,
to the Executive 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 which have been
earned but not paid in accordance with the terms of the
applicable annual incentive compensation plan, program or
arrangement;
(3) an additional 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
6
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) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 6, 7, 8, 9 and/or 10 above in
accordance with the terms of the applicable plan, program or
arrangement; and
(5) 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 24 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 Company shall pay or provide, as
applicable, or shall cause to be paid or provided, as applicable, to the
Executive 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 which have been
earned but not paid in accordance with the terms of the
applicable annual incentive compensation plan, program or
arrangement;
(3) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 6, 7, 8, 9 and/or 10 above in
accordance with the terms of the applicable plan, program or
arrangement; and
(4) such other or additional benefits, if any, as are provided
under applicable plans, programs and/or arrangements of the
Company.
If the event constituting Cause is not curable by the Executive, the Company may
terminate the Executive's employment for Cause effective on the date that the
Company notifies the Executive in writing in accordance with Section 24 below
that his employment is so terminated. If the event constituting Cause is
curable, the Company shall notify the Executive in writing in accordance with
Section 24 below that it intends to terminate his employment for Cause effective
at the end of the 60-day period following the date that the Company so notifies
the Executive (the "Cause Notification Date"), such notice to state in detail
the particular event that constitutes Cause. If the event constituting Cause is
curable, the Executive shall have a reasonable opportunity to cure the event
constituting Cause following the Cause Notification Date; PROVIDED, HOWEVER,
that if the Executive has not cured such event to the reasonable satisfaction of
the Company (and the Company has not waived in writing the Executive's failure
to cure) during the 30-day period following the Cause Notification Date (the
"Cause Curing Period"), the Company
7
may terminate the Executive's employment effective following the end of the
Cause Curing Period; PROVIDED FURTHER, HOWEVER, that the Company may not
terminate the Executive's employment for Cause after the end of the 90-day
period following the date the Board first learns that the event constituting
Cause has occurred.
(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 Company shall pay or
provide, as applicable, or shall cause to be paid or provided, as applicable, to
the Executive 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 which have been
earned but not paid in accordance with the terms of the
applicable annual incentive compensation plan, program or
arrangement;
(3) an additional amount equal to (x) the sum of (i) the Base
Salary with respect to the year in which the termination of
the Executive's employment occurs 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, multiplied
by (y) a fraction the numerator of which is the number of
full months that would have been remaining in the Term of
Employment assuming for this purpose that the Company had
made a Section 2 Notification on the date of the termination
of the Executive's employment and the denominator of which
is 12 (the "Section 11(d) Severance Benefit"). The Section
11(d) Severance Benefit shall be payable over a period of
time beginning on the date of the termination of the
Executive's employment and ending on the date that the Term
of Employment would have ended assuming for this purpose
that the Company had made a Section 2 Notification on the
date of the termination of the Executive's employment (the
"Section 11(d) Severance Period") in equal installments in
accordance with the Company's regular payroll practice;
(4) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 6, 7, 8, 9 and/or 10 above in
accordance with the terms of the applicable plan, program or
arrangement;
(5) continued participation for the Executive, his spouse and
his eligible dependents, as if the Executive were still an
employee, in the Company's medical, dental, hospitalization
and life insurance plans, programs and/or arrangements in
which he was participating on the date of the termination of
his employment until the earlier of:
8
(A) the end of the Section 11(d) Severance Period; or
(B) the date, or dates, the Executive receives equivalent
medical, dental, hospitalization and life insurance
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 11(d)(5)(A) above,
or if the Executive's spouse and/or eligible dependents
are precluded from coverage under any employee benefit
plan, program or arrangement as provided in Section
11(d)(5)(A) above due to the fact that the Executive is
no longer an employee of the Company, he shall be
provided with the after-tax economic equivalent of the
benefits to be provided under the plan, program or
arrangement in which he, his spouse and/or his eligible
dependents are unable to participate for the period
specified in this Section 11(d)(5);
(Y) the economic equivalent of any benefit not provided
shall be deemed to be the lowest cost that would be
incurred by the Executive in obtaining a comparable
benefit himself on a non-group basis; and
(Z) payment of such after-tax economic equivalent shall be
made quarterly in advance; and
(6) such other or additional benefits, if any, as are provided
under applicable plans, programs and/or arrangements of the
Company.
(e) TERMINATION OF EMPLOYMENT BY THE COMPANY WITHOUT CAUSE ON OR
AFTER A SECTION 2 NOTIFICATION DATE. If, on or after the date on which the
Company has made a Section 2 Notification, 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 Company shall pay or provide, as applicable, or
shall cause to be paid or provided, as applicable, to the Executive 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 which have been
earned but not paid in accordance with the terms of the
applicable annual incentive compensation plan, program or
arrangement;
9
(3) an additional amount equal to (x) the sum of (i) the Base
Salary with respect to the year in which the termination of
the Executive's employment occurs 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, multiplied
by (y) a fraction the numerator of which is the number of
full months remaining in the Term of Employment and the
denominator of which is 12 (the "Section 11(e) Severance
Benefit"). The Section 11(e) Severance Benefit shall be
payable over a period of time beginning on the date of the
termination of the Executive's employment and ending on the
date that the Term of Employment was otherwise scheduled to
end (the "Section 11(e) Severance Period") in equal
installments in accordance with the Company's regular
payroll practice;
(4) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 6, 7, 8, 9 and/or 10 above in
accordance with the terms of the applicable plan, program or
arrangement;
(5) continued participation for the Executive, his spouse and
his eligible dependents, as if the Executive were still an
employee, in the Company's medical, dental, hospitalization
and life insurance 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 Section 11(e) Severance Period; or
(B) the date, or dates, the Executive receives equivalent
medical, dental, hospitalization and life insurance
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 11(e)(5)(A) above,
or if the Executive's spouse and/or eligible dependents
are precluded from coverage under any employee benefit
plan, program or arrangement as provided in Section
11(e)(5)(A) above due to the fact that the Executive is
no longer an employee of the Company, he shall be
provided with the after-tax economic equivalent of the
benefits to be provided under the plan, program or
arrangement in which he, his spouse and/or his eligible
dependents are unable to participate for the period
specified in this Section 11(e)(5);
10
(Y) the economic equivalent of any benefit not provided
shall be deemed to be the lowest cost that would be
incurred by the Executive in obtaining a comparable
benefit himself on a non-group basis; and
(Z) payment of such after-tax economic equivalent shall be
made quarterly in advance; and
(6) such other or additional benefits, if any, as are provided
under applicable plans, programs and/or arrangements of the
Company.
(f) TERMINATION OF EMPLOYMENT BY THE EXECUTIVE FOR GOOD REASON. The
Executive may terminate his employment for Good Reason effective at the end of
the 60-day period following the date that the Executive notifies the Company in
writing in accordance with Section 24 below that he intends to terminate his
employment for Good Reason (the "Good Reason 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 Executive (and the Executive has not waived the
Company's failure to cure) during the 30-day period following the Good Reason
Notification Date (the "Good Reason Curing Period"), the Executive may terminate
his employment effective following the end of the Good Reason Curing Period;
PROVIDED FURTHER, HOWEVER, that the Executive may not terminate his employment
for Good Reason after the end of the 90-day period following the date the
Executive first learns that the event constituting Good Reason has occurred.
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 11(d) ("Termination of Employment by the Company Without
Cause Prior to a Section 2 Notification Date") above or Section 11(e)
("Termination of Employment by the Company Without Cause On or After a Section 2
Notification Date") above, as the case may be; PROVIDED, HOWEVER, that if the
Executive terminates his employment for Good Reason based on a reduction in Base
Salary under Section 1(i)(1) above, then the Base Salary to be used in
determining the amount payable in accordance with Section 11(d)(3) or 11(e)(3)
above, as the case may be, shall be the Base Salary in effect immediately prior
to such reduction.
(g) VOLUNTARY TERMINATION OF EMPLOYMENT BY THE EXECUTIVE WITHOUT GOOD
REASON OR FOLLOWING A CHANGE IN CONTROL OF SUPPLY. 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 11(c) ("Termination of
Employment by the Company for Cause") above. If the Executive makes a Section 2
Notification, and the Executive terminates his employment as of the end of the
Term of Employment (as determined in accordance with Section 2 above), the
termination of the Executive's employment under this Section 11(g) shall not be
deemed a breach of this Agreement by the Executive. Notwithstanding anything
contained herein to the contrary, if the Executive voluntarily terminates his
employment without Good Reason, other than a termination of his employment due
to death or Disability, during the period beginning on the 180th day following
the date of a Change in Control of Supply and ending on the 3rd anniversary of
the date of such Change in Control of Supply, the Executive shall be entitled to
the same payments and benefits as provided in Section 11(f) ("Termination of
Employment by the Executive for Good Reason") above.
11
(h) RETIREMENT. The Executive agrees that, in any event, his
employment hereunder shall terminate automatically on his 65th birthday. If his
employment is terminated pursuant to this Section 11(h), the Executive shall be
entitled to any amounts earned, accrued or owing to the Executive but not yet
paid under Section 4, 5, 6, 7, 8, 9 and/or 10 above in accordance with the terms
of the applicable plan, program or arrangement. In addition, the Executive, his
spouse and his eligible dependents shall be entitled to participate in any
Company health plan then in effect for retirees in accordance with the terms of
such plan.
(i) REDUCTION OF PARACHUTE PAYMENTS TO ACHIEVE MAXIMUM PAYMENT TO
EXECUTIVE. 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, would be 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. For example, assume the
Executive's "base amount" was $100 and the aggregate payment to be made was
$301. If the resulting after-tax payment would be (i) $110 treating the $301
payment as a "parachute payment" and (ii) $150 if the $301 payment were reduced
to $299, then the $301 payment would be reduced to $299. On the other hand,
assuming the Executive's "base amount" was $100 and the aggregate payment to be
made was $400, if the resulting after-tax payment would be (x) $160 treating the
$400 payment as a "parachute payment" and (y) $150 if the $400 payment were
reduced to $299, then the $400 payment would NOT be reduced to $299. The
determinations to be made with respect to this Section 11(i) 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 2 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 select 1 such accounting firm and those 2
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 of Supply is required by
this Section 11(i), 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.
(j) CONTINUED HEALTH-CARE COVERAGE TO AGE 65. In the event of any
termination of the Executive's employment under Sections 11(a), 11(b), 11(d),
11(e) or 11(f), or if the Executive voluntarily terminates his employment
without Good Reason, other than a termination of his employment due to death or
Disability, during the period beginning on the 180th day following the date of a
Change in Control of Supply and ending on the 3rd anniversary of the date of
such Change in Control of Supply, the Company shall provide continued coverage
for the Executive and/or 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
12
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 11(d)(5) or 11(e)(5) above, the Executive,
his spouse or his eligible dependents, as applicable, 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.
(k) NO MITIGATION; NO OFFSET. In the event of any termination of the
Executive's employment under this Section 11, the Executive shall be under no
obligation to seek other employment; PROVIDED, HOWEVER, that there shall be an
offset against the benefit payable under Section 11(b)(3) above, the Section
11(d) Severance Benefit payable under Section 11(d)(3) above or the Section
11(e) Severance Benefit payable under Section 11(e)(3) above (collectively, the
"Benefits Subject To Offset") by the amount of any remuneration (whether in
cash, property, services or otherwise) paid or provided to or on behalf of the
Executive with respect to any services performed by the Executive (whether as an
employee, a consultant or otherwise) for a party other than the Company or any
of its Subsidiaries during the period that the Benefits Subject To Offset are
payable ("Services"). The Executive agrees that if he performs or will perform
Services then he shall promptly notify the Company in accordance with Section 24
below that he has or will perform such Services. The Company agrees that it
shall not offset any other payments or benefits it is obligated to make or
provide under this Agreement other than the Benefits Subject To Offset specified
in this Section 11(k).
12. 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 12 and
Section 13 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 or with Associated Stationers, Inc.) (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;
13
(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 (other than application software which is
generally commercially available), 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's 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 all other ideas, developments, processes, techniques,
designs and other information which may be of benefit to the Company, which the
Executive conceives, makes or develops during his employment with the Company
(whether or not during working hours or with use or assistance of Company
facilities, materials or personnel, and which either (i) relate to or arise out
of any part of 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 12 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, instruments 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.
14
(d) CONFIDENTIALITY DUTIES OF EXECUTIVE. The Executive shall, except
as may be required by law, during the Term of Employment and thereafter for the
longest time period permitted by applicable law:
(1) comply with all of the Company's instructions (whether oral
or written) for preserving the confidentiality of
Confidential Information and Proprietary Materials;
(2) use Confidential Information and Proprietary Materials only
in furtherance of the Company's business, and pursuant to
the Company's directions;
(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, except as
the Company directs;
(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, except as the Company
directs;
(6) not publish, lecture on or otherwise disclose to any person
who is not an employee of the Company, except as the Company
directs, 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 11 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 all Company property,
including but not limited to, 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 and
other such things, lawfully possessed by the Executive which relate solely to
taxes payable by the Executive, rights or benefits due to the Executive or the
terms of the Executive's employment with the Company, shall not be deemed
Company property or Proprietary Materials for purposes of this Section 12.
13. NONCOMPETITION; NONSOLICITATION.
(a) The Executive covenants and agrees that during the Term of
Employment and during the longer of (i) the 2-year period following the end of
the Term of Employment, (ii) the Section 11(d) Severance Period, or (iii) the
Section 11(e) Severance Period, 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
be connected with or directly or indirectly own or have any other interest in or
right with respect to (other than through ownership
15
of not more than 1 percent of the outstanding shares of a corporation's stock
which is listed on a national securities exchange) any enterprise (other than
for the Company or for the benefit of the Company) which is a wholesale
distributor of office products (whether or not such enterprise is a wholesale
distributor of other products) and has annual sales with respect to the
wholesale distribution of office products in excess of $1,000,000.
(b) Notwithstanding Section 13(a) above, if the Executive's
employment hereunder is terminated during the Term of Employment, the Executive
may be engaged in the business of selling office products at retail and the
Executive may be engaged by any company whose principal business is the
manufacture of office products; PROVIDED, HOWEVER, that the Executive shall
comply in all other respects with Section 13(a) above.
(c) The Executive covenants and agrees that during the Term of
Employment and during the longer of (i) the 2-year period following the end of
the Term of Employment, (ii) the Section 11(d) Severance Period, or (iii) the
Section 11(e) Severance Period, the Executive shall not at any time, directly or
indirectly, solicit (x) any client or customer of the Company or any of its
subsidiaries with respect to a competitive activity which violates Section 13(a)
above or (y) 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.
(d) 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.
(e) The Parties acknowledge that in the event of a breach or
threatened breach of Section 13(a) and/or Section 13(c) above, the Company shall
not have an adequate remedy at law. Accordingly, in the event of any breach or
threatened breach of Section 13(a) and/or Section 13(c) 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 13(a) and/or Section 13(c) 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 13(a) and/or Section 13(c) above, including the
recovery of damages.
(f) 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.
14. 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;
16
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.
15. 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.
16. 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, including but not
limited to the employment agreement between the Executive and Associated
Stationers, Inc. dated January 31, 1992 and the Old Agreement.
17. 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.
18. 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.
19. 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.
20. 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.
17
21. 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.
22. 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.
23. 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, and all other costs, fees and expenses, including, without
limitation, attorneys' fees of each Party, shall be assessed and awarded by the
arbitrator in favor of the Party prevailing as to such dispute and against the
other Party.
24. 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 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.
18
If to the Executive: Xx. Xxxxxx X. Xxxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
and a copy to: Xxxxx & Xxxxxxxx Ltd.
000 Xxxxx XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq. (#328001)
25. 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
construction of any provision of this Agreement.
26. 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:/s/ Xxxxxxxxx X. Xxxx, Xx.
---------------------------
Xxxxxxxxx X. Xxxx, Xx.
Chairman of the Board
UNITED STATIONERS SUPPLY CO.
By:/s/ Xxxxxxx X. Xxxxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
/s/ Xxxxxx X. Xxxxxxx
---------------------------
Xxxxxx X. Xxxxxxx
19
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. Disability Insurance in accordance with insurance policy
15. Club and Association Dues - in accordance with Company Policy
16. Financial and Tax Consulting - and tax return preparations, in
accordance with Company Policy
17. 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
18. Other - Vacations in accordance with Company Policy; other benefits
that may from time to time be made available to employees generally
20
EMPLOYMENT AGREEMENT
AGREEMENT (this "Agreement"), made and entered into as of the 1st day of
June, 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 Xxxxxx X. Xxxxxxx (the "Executive").
W I T N E S S E T H
WHEREAS, Supply and the Executive have entered into an employment agreement
dated October 1, 1995 and which is still in effect as of the date written above
(the "Old Agreement");
WHEREAS, the Supply and the Executive desire to hereby amend and restate
the Old Agreement in its entirety; and
WHEREAS, the Parent desires to be a party to 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 annual Base Salary as
defined in 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) 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 of Supply" 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 (i) 40 percent or more of the Voting
Stock of the Parent or (ii) 60 percent or more of the Voting
Stock of Supply;
(2) the majority of the Board consists of individuals other than
Incumbent Directors;
(3) Supply adopts any plan of liquidation providing for the
distribution of all or substantially all of the assets of
Supply 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 Supply 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 Supply; or
(5) the merger or consolidation of Supply 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 United Stationers Inc.
(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
2
exists on the date the disability first occurs, then a "disability" as defined
under Code Section 22(e)(3).
(h) "Effective Date" shall mean June 1, 1997.
(i) "Good Reason" shall mean the occurrence of any of the following
without the Executive's prior written consent:
(1) the reduction of the Executive's Base Salary as determined
in accordance with 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/or other similar incentive,
compensation or deferred compensation plans made available
generally to senior management personnel of the Company,
other than exclusions, changes or diminutions applicable to
all senior management personnel;
(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 -- PROVIDED, HOWEVER, that any
change in the office or officer to whom the Executive
reports, or in the Executive's duties or title which does
not diminish the Executive's status within the Company,
shall not be deemed "Good Reason";
(5) any relocation of the Company's headquarters or the
Executive's principal place of employment outside of the
Chicago metropolitan area; or
(6) the breach by the Company of any of its covenants or
obligations under this Agreement.
(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" shall mean a notification as specified
in Section 2.
(l) "Section 2 Notification Date" shall mean the date of a Section 2
Notification as specified in Section 2.
(m) "Subsidiary" shall mean any corporation of which the Company
owns, directly or indirectly, more than 50 percent of the Voting Stock or any
other business entity in which the Company directly or indirectly has an
ownership interest of more than 50 percent.
(n) "Term of Employment" shall mean the period as specified under
Section 2 below.
3
(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.
(a) The Company hereby continues to employ the Executive, and the
Executive hereby accepts such continued employment, for the Term of Employment,
which shall begin on the Effective Date and shall end following the giving of a
notice by the Executive or the Company pursuant to Section 24 below. If the
Executive gives such notice, the Term of Employment shall end at the end of the
90-day period following the date on which the Executive notifies the Company in
writing in accordance with Section 24 below that he wants the Term of Employment
to so end. If the Company gives such notice, the Term of Employment shall end
on the later of (i) the 2nd anniversary of the date on which the Company
notifies the Executive in writing in accordance with Section 24 below that it
wants the Term of Employment to so end or (ii) the 3rd anniversary of the
Effective Date. A notification by the Executive or the Company to the other
Party under this Section 2 shall be referred to herein as a "Section 2
Notification," and the date that the Section 2 Notification occurs shall be
referred to herein as a "Section 2 Notification Date."
(b) Notwithstanding anything contained herein to the contrary,
following the date that a Change in Control of Supply occurs:
(1) if the Executive makes a Section 2 Notification during the
period beginning on the date of such Change in Control of
Supply and ending on the 3rd anniversary of the date of such
Change in Control of Supply, the Term of Employment shall
end at the end of the 15-day period following such Section 2
Notification Date (in lieu of the 90-day period provided in
Section 2(a) above);
(2) if the Executive makes a Section 2 Notification on or after
the 3rd anniversary of the date of such Change in Control of
Supply, the Term of Employment shall end at the end of the
90-day period (in accordance with Section 2(a) above)
following such Section 2 Notification Date; and
(3) if the Company makes a Section 2 Notification at any time
following the date of such Change in Control of Supply, the
Term of Employment shall end on the later of (i) the 2nd
anniversary of such Section 2 Notification Date or (y) the
3rd anniversary of the date of the Change in Control of
Supply.
(c) Notwithstanding anything contained herein to the contrary, the
Term of Employment is subject to earlier termination in accordance with Section
11 below.
3. POSITION, DUTIES AND RESPONSIBILITIES.
On the Effective Date and continuing for the remainder of the Term of
Employment, the Executive shall be employed as an Executive Vice President of
the Company and in accordance with the authority and direction of the Board
shall render such administrative, sales, marketing and other related services to
the Company and its Subsidiaries and affiliates as may be required, or as the
Board may from time to time direct, commensurate with such position and
4
title. 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 reasonably prevented by sickness, accident 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 Chief Executive Officer of the Company.
4. BASE SALARY.
The Executive shall be paid an annual base salary at no less than an
annual rate of $265,000 (the "Base Salary"), 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 as determined by the Company in
its sole discretion.
6. LONG-TERM INCENTIVE COMPENSATION PROGRAMS.
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.
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.
8. 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.
9. PERQUISITES.
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.
5
10. VACATION.
The Executive shall be entitled to at least 20 paid vacation days
(being at least 4 weeks) per calendar year which shall accrue and otherwise be
subject to the Company's vacation policy.
11. 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 the Company shall pay or
provide, as applicable, or shall cause to be paid or to be provided, as
applicable, to the Executive's estate and/or his beneficiaries, as the case may
be, the following:
(1) Base Salary earned but not paid prior to the date of the
Executive's death;
(2) all annual incentive compensation awards which have been
earned but not paid in accordance with the terms of the
applicable annual incentive compensation plan, program or
arrangement;
(3) an additional amount equal to the sum of (i) the Base Salary
in effect on the date of the Executive's death and (ii) the
annual incentive compensation award paid or payable with
respect to the year immediately preceding the year in which
the Executive's death occurs, 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) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 6, 7, 8, 9 and/or 10 above in
accordance with the terms of the applicable plan, program or
arrangement; and
(5) 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 DUE 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 Company shall pay
or provide, as applicable, or shall cause to be paid or provided, as applicable,
to the Executive 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 which have been
earned but not paid in accordance with the terms of the
applicable annual incentive compensation plan, program or
arrangement;
(3) an additional 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
6
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) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 6, 7, 8, 9 and/or 10 above in
accordance with the terms of the applicable plan, program or
arrangement; and
(5) 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 24 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 Company shall pay or provide, as
applicable, or shall cause to be paid or provided, as applicable, to the
Executive 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 which have been
earned but not paid in accordance with the terms of the
applicable annual incentive compensation plan, program or
arrangement;
(3) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 6, 7, 8, 9 and/or 10 above in
accordance with the terms of the applicable plan, program or
arrangement; and
(4) such other or additional benefits, if any, as are provided
under applicable plans, programs and/or arrangements of the
Company.
If the event constituting Cause is not curable by the Executive, the Company may
terminate the Executive's employment for Cause effective on the date that the
Company notifies the Executive in writing in accordance with Section 24 below
that his employment is so terminated. If the event constituting Cause is
curable, the Company shall notify the Executive in writing in accordance with
Section 24 below that it intends to terminate his employment for Cause effective
at the end of the 60-day period following the date that the Company so notifies
the Executive (the "Cause Notification Date"), such notice to state in detail
the particular event that constitutes Cause. If the event constituting Cause is
curable, the Executive shall have a reasonable opportunity to cure the event
constituting Cause following the Cause Notification Date; PROVIDED, HOWEVER,
that if the Executive has not cured such event to the reasonable satisfaction of
the Company (and the Company has not waived in writing the Executive's failure
to cure) during the 30-day period following the Cause Notification Date (the
"Cause Curing Period"), the Company
7
may terminate the Executive's employment effective following the end of the
Cause Curing Period; PROVIDED FURTHER, HOWEVER, that the Company may not
terminate the Executive's employment for Cause after the end of the 90-day
period following the date the Board first learns that the event constituting
Cause has occurred.
(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 Company shall pay or
provide, as applicable, or shall cause to be paid or provided, as applicable, to
the Executive 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 which have been
earned but not paid in accordance with the terms of the
applicable annual incentive compensation plan, program or
arrangement;
(3) an additional amount equal to (x) the sum of (i) the Base
Salary with respect to the year in which the termination of
the Executive's employment occurs 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, multiplied
by (y) a fraction the numerator of which is the number of
full months that would have been remaining in the Term of
Employment assuming for this purpose that the Company had
made a Section 2 Notification on the date of the termination
of the Executive's employment and the denominator of which
is 12 (the "Section 11(d) Severance Benefit"). The Section
11(d) Severance Benefit shall be payable over a period of
time beginning on the date of the termination of the
Executive's employment and ending on the date that the Term
of Employment would have ended assuming for this purpose
that the Company had made a Section 2 Notification on the
date of the termination of the Executive's employment (the
"Section 11(d) Severance Period") in equal installments in
accordance with the Company's regular payroll practice;
(4) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 6, 7, 8, 9 and/or 10 above in
accordance with the terms of the applicable plan, program or
arrangement;
(5) continued participation for the Executive, his spouse and
his eligible dependents, as if the Executive were still an
employee, in the Company's medical, dental, hospitalization
and life insurance plans, programs and/or arrangements in
which he was participating on the date of the termination of
his employment until the earlier of:
8
(A) the end of the Section 11(d) Severance Period; or
(B) the date, or dates, the Executive receives equivalent
medical, dental, hospitalization and life insurance
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 11(d)(5)(A) above,
or if the Executive's spouse and/or eligible dependents
are precluded from coverage under any employee benefit
plan, program or arrangement as provided in Section
11(d)(5)(A) above due to the fact that the Executive is
no longer an employee of the Company, he shall be
provided with the after-tax economic equivalent of the
benefits to be provided under the plan, program or
arrangement in which he, his spouse and/or his eligible
dependents are unable to participate for the period
specified in this Section 11(d)(5);
(Y) the economic equivalent of any benefit not provided
shall be deemed to be the lowest cost that would be
incurred by the Executive in obtaining a comparable
benefit himself on a non-group basis; and
(Z) payment of such after-tax economic equivalent shall be
made quarterly in advance; and
(6) such other or additional benefits, if any, as are provided
under applicable plans, programs and/or arrangements of the
Company.
(e) TERMINATION OF EMPLOYMENT BY THE COMPANY WITHOUT CAUSE ON OR
AFTER A SECTION 2 NOTIFICATION DATE. If, on or after the date on which the
Company has made a Section 2 Notification, 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 Company shall pay or provide, as applicable, or
shall cause to be paid or provided, as applicable, to the Executive 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 which have been
earned but not paid in accordance with the terms of the
applicable annual incentive compensation plan, program or
arrangement;
9
(3) an additional amount equal to (x) the sum of (i) the Base
Salary with respect to the year in which the termination of
the Executive's employment occurs 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, multiplied
by (y) a fraction the numerator of which is the number of
full months remaining in the Term of Employment and the
denominator of which is 12 (the "Section 11(e) Severance
Benefit"). The Section 11(e) Severance Benefit shall be
payable over a period of time beginning on the date of the
termination of the Executive's employment and ending on the
date that the Term of Employment was otherwise scheduled to
end (the "Section 11(e) Severance Period") in equal
installments in accordance with the Company's regular
payroll practice;
(4) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 6, 7, 8, 9 and/or 10 above in
accordance with the terms of the applicable plan, program or
arrangement;
(5) continued participation for the Executive, his spouse and
his eligible dependents, as if the Executive were still an
employee, in the Company's medical, dental, hospitalization
and life insurance 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 Section 11(e) Severance Period; or
(B) the date, or dates, the Executive receives equivalent
medical, dental, hospitalization and life insurance
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 11(e)(5)(A) above,
or if the Executive's spouse and/or eligible dependents
are precluded from coverage under any employee benefit
plan, program or arrangement as provided in Section
11(e)(5)(A) above due to the fact that the Executive is
no longer an employee of the Company, he shall be
provided with the after-tax economic equivalent of the
benefits to be provided under the plan, program or
arrangement in which he, his spouse and/or his eligible
dependents are unable to participate for the period
specified in this Section 11(e)(5);
10
(Y) the economic equivalent of any benefit not provided
shall be deemed to be the lowest cost that would be
incurred by the Executive in obtaining a comparable
benefit himself on a non-group basis; and
(Z) payment of such after-tax economic equivalent shall be
made quarterly in advance; and
(6) such other or additional benefits, if any, as are provided
under applicable plans, programs and/or arrangements of the
Company.
(f) TERMINATION OF EMPLOYMENT BY THE EXECUTIVE FOR GOOD REASON. The
Executive may terminate his employment for Good Reason effective at the end of
the 60-day period following the date that the Executive notifies the Company in
writing in accordance with Section 24 below that he intends to terminate his
employment for Good Reason (the "Good Reason 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 Executive (and the Executive has not waived the
Company's failure to cure) during the 30-day period following the Good Reason
Notification Date (the "Good Reason Curing Period"), the Executive may terminate
his employment effective following the end of the Good Reason Curing Period;
PROVIDED FURTHER, HOWEVER, that the Executive may not terminate his employment
for Good Reason after the end of the 90-day period following the date the
Executive first learns that the event constituting Good Reason has occurred.
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 11(d) ("Termination of Employment by the Company Without
Cause Prior to a Section 2 Notification Date") above or Section 11(e)
("Termination of Employment by the Company Without Cause On or After a Section 2
Notification Date") above, as the case may be; PROVIDED, HOWEVER, that if the
Executive terminates his employment for Good Reason based on a reduction in Base
Salary under Section 1(i)(1) above, then the Base Salary to be used in
determining the amount payable in accordance with Section 11(d)(3) or 11(e)(3)
above, as the case may be, shall be the Base Salary in effect immediately prior
to such reduction.
(g) VOLUNTARY TERMINATION OF EMPLOYMENT BY THE EXECUTIVE WITHOUT GOOD
REASON OR FOLLOWING A CHANGE IN CONTROL OF SUPPLY. 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 11(c) ("Termination of
Employment by the Company for Cause") above. If the Executive makes a Section 2
Notification, and the Executive terminates his employment as of the end of the
Term of Employment (as determined in accordance with Section 2 above), the
termination of the Executive's employment under this Section 11(g) shall not be
deemed a breach of this Agreement by the Executive. Notwithstanding anything
contained herein to the contrary, if the Executive voluntarily terminates his
employment without Good Reason, other than a termination of his employment due
to death or Disability, during the period beginning on the 180th day following
the date of a Change in Control of Supply and ending on the 3rd anniversary of
the date of such Change in Control of Supply, the Executive shall be entitled to
the same payments and benefits as provided in Section 11(f) ("Termination of
Employment by the Executive for Good Reason") above.
11
(h) RETIREMENT. The Executive agrees that, in any event, his
employment hereunder shall terminate automatically on his 65th birthday. If his
employment is terminated pursuant to this Section 11(h), the Executive shall be
entitled to any amounts earned, accrued or owing to the Executive but not yet
paid under Section 4, 5, 6, 7, 8, 9 and/or 10 above in accordance with the terms
of the applicable plan, program or arrangement. In addition, the Executive, his
spouse and his eligible dependents shall be entitled to participate in any
Company health plan then in effect for retirees in accordance with the terms of
such plan.
(i) REDUCTION OF PARACHUTE PAYMENTS TO ACHIEVE MAXIMUM PAYMENT TO
EXECUTIVE. 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, would be 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. For example, assume the
Executive's "base amount" was $100 and the aggregate payment to be made was
$301. If the resulting after-tax payment would be (i) $110 treating the $301
payment as a "parachute payment" and (ii) $150 if the $301 payment were reduced
to $299, then the $301 payment would be reduced to $299. On the other hand,
assuming the Executive's "base amount" was $100 and the aggregate payment to be
made was $400, if the resulting after-tax payment would be (x) $160 treating the
$400 payment as a "parachute payment" and (y) $150 if the $400 payment were
reduced to $299, then the $400 payment would NOT be reduced to $299. The
determinations to be made with respect to this Section 11(i) 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 2 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 select 1 such accounting firm and those 2
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 of Supply is required by
this Section 11(i), 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.
(j) CONTINUED HEALTH-CARE COVERAGE TO AGE 65. In the event of any
termination of the Executive's employment under Sections 11(a), 11(b), 11(d),
11(e) or 11(f), or if the Executive voluntarily terminates his employment
without Good Reason, other than a termination of his employment due to death or
Disability, during the period beginning on the 180th day following the date of a
Change in Control of Supply and ending on the 3rd anniversary of the date of
such Change in Control of Supply, the Company shall provide continued coverage
for the Executive and/or 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
12
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 11(d)(5) or 11(e)(5) above, the Executive,
his spouse or his eligible dependents, as applicable, 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.
(k) NO MITIGATION; NO OFFSET. In the event of any termination of the
Executive's employment under this Section 11, the Executive shall be under no
obligation to seek other employment; PROVIDED, HOWEVER, that there shall be an
offset against the benefit payable under Section 11(b)(3) above, the Section
11(d) Severance Benefit payable under Section 11(d)(3) above or the Section
11(e) Severance Benefit payable under Section 11(e)(3) above (collectively, the
"Benefits Subject To Offset") by the amount of any remuneration (whether in
cash, property, services or otherwise) paid or provided to or on behalf of the
Executive with respect to any services performed by the Executive (whether as an
employee, a consultant or otherwise) for a party other than the Company or any
of its Subsidiaries during the period that the Benefits Subject To Offset are
payable ("Services"). The Executive agrees that if he performs or will perform
Services then he shall promptly notify the Company in accordance with Section 24
below that he has or will perform such Services. The Company agrees that it
shall not offset any other payments or benefits it is obligated to make or
provide under this Agreement other than the Benefits Subject To Offset specified
in this Section 11(k).
12. 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 12 and
Section 13 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 or with Associated Stationers, Inc.) (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;
13
(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 (other than application software which is
generally commercially available), 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's 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 all other ideas, developments, processes, techniques,
designs and other information which may be of benefit to the Company, which the
Executive conceives, makes or develops during his employment with the Company
(whether or not during working hours or with use or assistance of Company
facilities, materials or personnel, and which either (i) relate to or arise out
of any part of 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 12 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, instruments 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.
14
(d) CONFIDENTIALITY DUTIES OF EXECUTIVE. The Executive shall, except
as may be required by law, during the Term of Employment and thereafter for the
longest time period permitted by applicable law:
(1) comply with all of the Company's instructions (whether oral
or written) for preserving the confidentiality of
Confidential Information and Proprietary Materials;
(2) use Confidential Information and Proprietary Materials only
in furtherance of the Company's business, and pursuant to
the Company's directions;
(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, except as
the Company directs;
(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, except as the Company
directs;
(6) not publish, lecture on or otherwise disclose to any person
who is not an employee of the Company, except as the Company
directs, 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 11 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 all Company property,
including but not limited to, 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 and
other such things, lawfully possessed by the Executive which relate solely to
taxes payable by the Executive, rights or benefits due to the Executive or the
terms of the Executive's employment with the Company, shall not be deemed
Company property or Proprietary Materials for purposes of this Section 12.
13. NONCOMPETITION; NONSOLICITATION.
(a) The Executive covenants and agrees that during the Term of
Employment and during the longer of (i) the 2-year period following the end of
the Term of Employment, (ii) the Section 11(d) Severance Period, or (iii) the
Section 11(e) Severance Period, 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
be connected with or directly or indirectly own or have any other interest in or
right with respect to (other than through ownership
15
of not more than 1 percent of the outstanding shares of a corporation's stock
which is listed on a national securities exchange) any enterprise (other than
for the Company or for the benefit of the Company) which is a wholesale
distributor of office products (whether or not such enterprise is a wholesale
distributor of other products) and has annual sales with respect to the
wholesale distribution of office products in excess of $1,000,000.
(b) Notwithstanding Section 13(a) above, if the Executive's
employment hereunder is terminated during the Term of Employment, the Executive
may be engaged in the business of selling office products at retail and the
Executive may be engaged by any company whose principal business is the
manufacture of office products; PROVIDED, HOWEVER, that the Executive shall
comply in all other respects with Section 13(a) above.
(c) The Executive covenants and agrees that during the Term of
Employment and during the longer of (i) the 2-year period following the end of
the Term of Employment, (ii) the Section 11(d) Severance Period, or (iii) the
Section 11(e) Severance Period, the Executive shall not at any time, directly or
indirectly, solicit (x) any client or customer of the Company or any of its
subsidiaries with respect to a competitive activity which violates Section 13(a)
above or (y) 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.
(d) 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.
(e) The Parties acknowledge that in the event of a breach or
threatened breach of Section 13(a) and/or Section 13(c) above, the Company shall
not have an adequate remedy at law. Accordingly, in the event of any breach or
threatened breach of Section 13(a) and/or Section 13(c) 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 13(a) and/or Section 13(c) 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 13(a) and/or Section 13(c) above, including the
recovery of damages.
(f) 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.
14. 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;
16
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.
15. 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.
16. 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, including but not
limited to the employment agreement between the Executive and Associated
Stationers, Inc. dated January 31, 1992 and the Old Agreement.
17. 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.
18. 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.
19. 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.
20. 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.
17
21. 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.
22. 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.
23. 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, and all other costs, fees and expenses, including, without
limitation, attorneys' fees of each Party, shall be assessed and awarded by the
arbitrator in favor of the Party prevailing as to such dispute and against the
other Party.
24. 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 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.
18
If to the Executive: Xx. Xxxxxx X. Xxxxxxx
000 Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
and a copy to: Xxxxx & Xxxxxxxx Ltd.
000 Xxxxx XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq. (#328001)
25. 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
construction of any provision of this Agreement.
26. 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:/s/ Xxxxxxxxx X. Xxxx, Xx.
---------------------------
Xxxxxxxxx X. Xxxx, Xx.
Chairman of the Board
UNITED STATIONERS SUPPLY CO.
By:/s/ Xxxxxxx X. Xxxxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
/s/ Xxxxxx X. Xxxxxxx
---------------------------
Xxxxxx X. Xxxxxxx
19
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. Disability Insurance in accordance with insurance policy
15. Club and Association Dues - in accordance with Company Policy
16. Financial and Tax Consulting - and tax return preparations, in
accordance with Company Policy
17. 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
18. Other - Vacations in accordance with Company Policy; other benefits
that may from time to time be made available to employees generally
20
EMPLOYMENT AGREEMENT
AGREEMENT (this "Agreement"), made and entered into as of the 1st day of
June, 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. Xxxxxx (the "Executive").
W I T N E S S E T H
WHEREAS, Supply and the Executive have entered into an employment agreement
dated October 1, 1995 and which is still in effect as of the date written above
(the "Old Agreement");
WHEREAS, the Supply and the Executive desire to hereby amend and restate
the Old Agreement in its entirety; and
WHEREAS, the Parent desires to be a party to 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 annual Base Salary as
defined in 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) 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 of Supply" 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 (i) 40 percent or more of the Voting
Stock of the Parent or (ii) 60 percent or more of the Voting
Stock of Supply;
(2) the majority of the Board consists of individuals other than
Incumbent Directors;
(3) Supply adopts any plan of liquidation providing for the
distribution of all or substantially all of the assets of
Supply 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 Supply 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 Supply; or
(5) the merger or consolidation of Supply 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 United Stationers Inc.
(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
2
exists on the date the disability first occurs, then a "disability" as defined
under Code Section 22(e)(3).
(h) "Effective Date" shall mean June 1, 1997.
(i) "Good Reason" shall mean the occurrence of any of the following
without the Executive's prior written consent:
(1) the reduction of the Executive's Base Salary as determined
in accordance with 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/or other similar incentive,
compensation or deferred compensation plans made available
generally to senior management personnel of the Company,
other than exclusions, changes or diminutions applicable to
all senior management personnel;
(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 -- PROVIDED, HOWEVER, that any
change in the office or officer to whom the Executive
reports, or in the Executive's duties or title which does
not diminish the Executive's status within the Company,
shall not be deemed "Good Reason";
(5) any relocation of the Company's headquarters or the
Executive's principal place of employment outside of the
Chicago metropolitan area; or
(6) the breach by the Company of any of its covenants or
obligations under this Agreement.
(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" shall mean a notification as specified
in Section 2.
(l) "Section 2 Notification Date" shall mean the date of a Section 2
Notification as specified in Section 2.
(m) "Subsidiary" shall mean any corporation of which the Company
owns, directly or indirectly, more than 50 percent of the Voting Stock or any
other business entity in which the Company directly or indirectly has an
ownership interest of more than 50 percent.
(n) "Term of Employment" shall mean the period as specified under
Section 2 below.
3
(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.
(a) The Company hereby continues to employ the Executive, and the
Executive hereby accepts such continued employment, for the Term of Employment,
which shall begin on the Effective Date and shall end following the giving of a
notice by the Executive or the Company pursuant to Section 24 below. If the
Executive gives such notice, the Term of Employment shall end at the end of the
90-day period following the date on which the Executive notifies the Company in
writing in accordance with Section 24 below that he wants the Term of Employment
to so end. If the Company gives such notice, the Term of Employment shall end
on the later of (i) the 2nd anniversary of the date on which the Company
notifies the Executive in writing in accordance with Section 24 below that it
wants the Term of Employment to so end or (ii) the 3rd anniversary of the
Effective Date. A notification by the Executive or the Company to the other
Party under this Section 2 shall be referred to herein as a "Section 2
Notification," and the date that the Section 2 Notification occurs shall be
referred to herein as a "Section 2 Notification Date."
(b) Notwithstanding anything contained herein to the contrary,
following the date that a Change in Control of Supply occurs:
(1) if the Executive makes a Section 2 Notification during the
period beginning on the date of such Change in Control of
Supply and ending on the 3rd anniversary of the date of such
Change in Control of Supply, the Term of Employment shall
end at the end of the 15-day period following such Section 2
Notification Date (in lieu of the 90-day period provided in
Section 2(a) above);
(2) if the Executive makes a Section 2 Notification on or after
the 3rd anniversary of the date of such Change in Control of
Supply, the Term of Employment shall end at the end of the
90-day period (in accordance with Section 2(a) above)
following such Section 2 Notification Date; and
(3) if the Company makes a Section 2 Notification at any time
following the date of such Change in Control of Supply, the
Term of Employment shall end on the later of (i) the 2nd
anniversary of such Section 2 Notification Date or (y) the
3rd anniversary of the date of the Change in Control of
Supply.
(c) Notwithstanding anything contained herein to the contrary, the
Term of Employment is subject to earlier termination in accordance with Section
11 below.
3. POSITION, DUTIES AND RESPONSIBILITIES.
On the Effective Date and continuing for the remainder of the Term of
Employment, the Executive shall be employed as an Executive Vice President of
the Company and in accordance with the authority and direction of the Board
shall render such administrative, sales and other related services to the
Company and its Subsidiaries and affiliates as may be required, or as the Board
may from time to time direct, commensurate with such position and title.
4
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 reasonably prevented by sickness, accident 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 Chief Executive Officer of the Company.
4. BASE SALARY.
The Executive shall be paid an annual base salary at no less than an
annual rate of $265,000 (the "Base Salary"), 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 as determined by the Company in
its sole discretion.
6. LONG-TERM INCENTIVE COMPENSATION PROGRAMS.
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.
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.
8. 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.
9. PERQUISITES.
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.
5
10. VACATION.
The Executive shall be entitled to at least 20 paid vacation days
(being at least 4 weeks) per calendar year which shall accrue and otherwise be
subject to the Company's vacation policy.
11. 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 the Company shall pay or
provide, as applicable, or shall cause to be paid or to be provided, as
applicable, to the Executive's estate and/or his beneficiaries, as the case may
be, the following:
(1) Base Salary earned but not paid prior to the date of the
Executive's death;
(2) all annual incentive compensation awards which have been
earned but not paid in accordance with the terms of the
applicable annual incentive compensation plan, program or
arrangement;
(3) an additional amount equal to the sum of (i) the Base Salary
in effect on the date of the Executive's death and (ii) the
annual incentive compensation award paid or payable with
respect to the year immediately preceding the year in which
the Executive's death occurs, 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) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 6, 7, 8, 9 and/or 10 above in
accordance with the terms of the applicable plan, program or
arrangement; and
(5) 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 DUE 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 Company shall pay
or provide, as applicable, or shall cause to be paid or provided, as applicable,
to the Executive 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 which have been
earned but not paid in accordance with the terms of the
applicable annual incentive compensation plan, program or
arrangement;
(3) an additional 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
6
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) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 6, 7, 8, 9 and/or 10 above in
accordance with the terms of the applicable plan, program or
arrangement; and
(5) 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 24 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 Company shall pay or provide, as
applicable, or shall cause to be paid or provided, as applicable, to the
Executive 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 which have been
earned but not paid in accordance with the terms of the
applicable annual incentive compensation plan, program or
arrangement;
(3) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 6, 7, 8, 9 and/or 10 above in
accordance with the terms of the applicable plan, program or
arrangement; and
(4) such other or additional benefits, if any, as are provided
under applicable plans, programs and/or arrangements of the
Company.
If the event constituting Cause is not curable by the Executive, the Company may
terminate the Executive's employment for Cause effective on the date that the
Company notifies the Executive in writing in accordance with Section 24 below
that his employment is so terminated. If the event constituting Cause is
curable, the Company shall notify the Executive in writing in accordance with
Section 24 below that it intends to terminate his employment for Cause effective
at the end of the 60-day period following the date that the Company so notifies
the Executive (the "Cause Notification Date"), such notice to state in detail
the particular event that constitutes Cause. If the event constituting Cause is
curable, the Executive shall have a reasonable opportunity to cure the event
constituting Cause following the Cause Notification Date; PROVIDED, HOWEVER,
that if the Executive has not cured such event to the reasonable satisfaction of
the Company (and the Company has not waived in writing the Executive's failure
to cure) during the 30-day period following the Cause Notification Date (the
"Cause Curing Period"), the Company
7
may terminate the Executive's employment effective following the end of the
Cause Curing Period; PROVIDED FURTHER, HOWEVER, that the Company may not
terminate the Executive's employment for Cause after the end of the 90-day
period following the date the Board first learns that the event constituting
Cause has occurred.
(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 Company shall pay or
provide, as applicable, or shall cause to be paid or provided, as applicable, to
the Executive 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 which have been
earned but not paid in accordance with the terms of the
applicable annual incentive compensation plan, program or
arrangement;
(3) an additional amount equal to (x) the sum of (i) the Base
Salary with respect to the year in which the termination of
the Executive's employment occurs 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, multiplied
by (y) a fraction the numerator of which is the number of
full months that would have been remaining in the Term of
Employment assuming for this purpose that the Company had
made a Section 2 Notification on the date of the termination
of the Executive's employment and the denominator of which
is 12 (the "Section 11(d) Severance Benefit"). The Section
11(d) Severance Benefit shall be payable over a period of
time beginning on the date of the termination of the
Executive's employment and ending on the date that the Term
of Employment would have ended assuming for this purpose
that the Company had made a Section 2 Notification on the
date of the termination of the Executive's employment (the
"Section 11(d) Severance Period") in equal installments in
accordance with the Company's regular payroll practice;
(4) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 6, 7, 8, 9 and/or 10 above in
accordance with the terms of the applicable plan, program or
arrangement;
(5) continued participation for the Executive, his spouse and
his eligible dependents, as if the Executive were still an
employee, in the Company's medical, dental, hospitalization
and life insurance plans, programs and/or arrangements in
which he was participating on the date of the termination of
his employment until the earlier of:
8
(A) the end of the Section 11(d) Severance Period; or
(B) the date, or dates, the Executive receives equivalent
medical, dental, hospitalization and life insurance
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 11(d)(5)(A) above,
or if the Executive's spouse and/or eligible dependents
are precluded from coverage under any employee benefit
plan, program or arrangement as provided in Section
11(d)(5)(A) above due to the fact that the Executive is
no longer an employee of the Company, he shall be
provided with the after-tax economic equivalent of the
benefits to be provided under the plan, program or
arrangement in which he, his spouse and/or his eligible
dependents are unable to participate for the period
specified in this Section 11(d)(5);
(Y) the economic equivalent of any benefit not provided
shall be deemed to be the lowest cost that would be
incurred by the Executive in obtaining a comparable
benefit himself on a non-group basis; and
(Z) payment of such after-tax economic equivalent shall be
made quarterly in advance; and
(6) such other or additional benefits, if any, as are provided
under applicable plans, programs and/or arrangements of the
Company.
(e) TERMINATION OF EMPLOYMENT BY THE COMPANY WITHOUT CAUSE ON OR
AFTER A SECTION 2 NOTIFICATION DATE. If, on or after the date on which the
Company has made a Section 2 Notification, 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 Company shall pay or provide, as applicable, or
shall cause to be paid or provided, as applicable, to the Executive 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 which have been
earned but not paid in accordance with the terms of the
applicable annual incentive compensation plan, program or
arrangement;
9
(3) an additional amount equal to (x) the sum of (i) the Base
Salary with respect to the year in which the termination of
the Executive's employment occurs 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, multiplied
by (y) a fraction the numerator of which is the number of
full months remaining in the Term of Employment and the
denominator of which is 12 (the "Section 11(e) Severance
Benefit"). The Section 11(e) Severance Benefit shall be
payable over a period of time beginning on the date of the
termination of the Executive's employment and ending on the
date that the Term of Employment was otherwise scheduled to
end (the "Section 11(e) Severance Period") in equal
installments in accordance with the Company's regular
payroll practice;
(4) any amounts earned, accrued or owing to the Executive but
not yet paid under Section 6, 7, 8, 9 and/or 10 above in
accordance with the terms of the applicable plan, program or
arrangement;
(5) continued participation for the Executive, his spouse and
his eligible dependents, as if the Executive were still an
employee, in the Company's medical, dental, hospitalization
and life insurance 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 Section 11(e) Severance Period; or
(B) the date, or dates, the Executive receives equivalent
medical, dental, hospitalization and life insurance
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 11(e)(5)(A) above,
or if the Executive's spouse and/or eligible dependents
are precluded from coverage under any employee benefit
plan, program or arrangement as provided in Section
11(e)(5)(A) above due to the fact that the Executive is
no longer an employee of the Company, he shall be
provided with the after-tax economic equivalent of the
benefits to be provided under the plan, program or
arrangement in which he, his spouse and/or his eligible
dependents are unable to participate for the period
specified in this Section 11(e)(5);
10
(Y) the economic equivalent of any benefit not provided
shall be deemed to be the lowest cost that would be
incurred by the Executive in obtaining a comparable
benefit himself on a non-group basis; and
(Z) payment of such after-tax economic equivalent shall be
made quarterly in advance; and
(6) such other or additional benefits, if any, as are provided
under applicable plans, programs and/or arrangements of the
Company.
(f) TERMINATION OF EMPLOYMENT BY THE EXECUTIVE FOR GOOD REASON. The
Executive may terminate his employment for Good Reason effective at the end of
the 60-day period following the date that the Executive notifies the Company in
writing in accordance with Section 24 below that he intends to terminate his
employment for Good Reason (the "Good Reason 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 Executive (and the Executive has not waived the
Company's failure to cure) during the 30-day period following the Good Reason
Notification Date (the "Good Reason Curing Period"), the Executive may terminate
his employment effective following the end of the Good Reason Curing Period;
PROVIDED FURTHER, HOWEVER, that the Executive may not terminate his employment
for Good Reason after the end of the 90-day period following the date the
Executive first learns that the event constituting Good Reason has occurred.
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 11(d) ("Termination of Employment by the Company Without
Cause Prior to a Section 2 Notification Date") above or Section 11(e)
("Termination of Employment by the Company Without Cause On or After a Section 2
Notification Date") above, as the case may be; PROVIDED, HOWEVER, that if the
Executive terminates his employment for Good Reason based on a reduction in Base
Salary under Section 1(i)(1) above, then the Base Salary to be used in
determining the amount payable in accordance with Section 11(d)(3) or 11(e)(3)
above, as the case may be, shall be the Base Salary in effect immediately prior
to such reduction.
(g) VOLUNTARY TERMINATION OF EMPLOYMENT BY THE EXECUTIVE WITHOUT GOOD
REASON OR FOLLOWING A CHANGE IN CONTROL OF SUPPLY. 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 11(c) ("Termination of
Employment by the Company for Cause") above. If the Executive makes a Section 2
Notification, and the Executive terminates his employment as of the end of the
Term of Employment (as determined in accordance with Section 2 above), the
termination of the Executive's employment under this Section 11(g) shall not be
deemed a breach of this Agreement by the Executive. Notwithstanding anything
contained herein to the contrary, if the Executive voluntarily terminates his
employment without Good Reason, other than a termination of his employment due
to death or Disability, during the period beginning on the 180th day following
the date of a Change in Control of Supply and ending on the 3rd anniversary of
the date of such Change in Control of Supply, the Executive shall be entitled to
the same payments and benefits as provided in Section 11(f) ("Termination of
Employment by the Executive for Good Reason") above.
11
(h) RETIREMENT. The Executive agrees that, in any event, his
employment hereunder shall terminate automatically on his 65th birthday. If his
employment is terminated pursuant to this Section 11(h), the Executive shall be
entitled to any amounts earned, accrued or owing to the Executive but not yet
paid under Section 4, 5, 6, 7, 8, 9 and/or 10 above in accordance with the terms
of the applicable plan, program or arrangement. In addition, the Executive, his
spouse and his eligible dependents shall be entitled to participate in any
Company health plan then in effect for retirees in accordance with the terms of
such plan.
(i) REDUCTION OF PARACHUTE PAYMENTS TO ACHIEVE MAXIMUM PAYMENT TO
EXECUTIVE. 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, would be 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. For example, assume the
Executive's "base amount" was $100 and the aggregate payment to be made was
$301. If the resulting after-tax payment would be (i) $110 treating the $301
payment as a "parachute payment" and (ii) $150 if the $301 payment were reduced
to $299, then the $301 payment would be reduced to $299. On the other hand,
assuming the Executive's "base amount" was $100 and the aggregate payment to be
made was $400, if the resulting after-tax payment would be (x) $160 treating the
$400 payment as a "parachute payment" and (y) $150 if the $400 payment were
reduced to $299, then the $400 payment would NOT be reduced to $299. The
determinations to be made with respect to this Section 11(i) 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 2 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 select 1 such accounting firm and those 2
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 of Supply is required by
this Section 11(i), 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.
(j) CONTINUED HEALTH-CARE COVERAGE TO AGE 65. In the event of any
termination of the Executive's employment under Sections 11(a), 11(b), 11(d),
11(e) or 11(f), or if the Executive voluntarily terminates his employment
without Good Reason, other than a termination of his employment due to death or
Disability, during the period beginning on the 180th day following the date of a
Change in Control of Supply and ending on the 3rd anniversary of the date of
such Change in Control of Supply, the Company shall provide continued coverage
for the Executive and/or 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
12
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 11(d)(5) or 11(e)(5) above, the Executive,
his spouse or his eligible dependents, as applicable, 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.
(k) NO MITIGATION; NO OFFSET. In the event of any termination of the
Executive's employment under this Section 11, the Executive shall be under no
obligation to seek other employment; PROVIDED, HOWEVER, that there shall be an
offset against the benefit payable under Section 11(b)(3) above, the Section
11(d) Severance Benefit payable under Section 11(d)(3) above or the Section
11(e) Severance Benefit payable under Section 11(e)(3) above (collectively, the
"Benefits Subject To Offset") by the amount of any remuneration (whether in
cash, property, services or otherwise) paid or provided to or on behalf of the
Executive with respect to any services performed by the Executive (whether as an
employee, a consultant or otherwise) for a party other than the Company or any
of its Subsidiaries during the period that the Benefits Subject To Offset are
payable ("Services"). The Executive agrees that if he performs or will perform
Services then he shall promptly notify the Company in accordance with Section 24
below that he has or will perform such Services. The Company agrees that it
shall not offset any other payments or benefits it is obligated to make or
provide under this Agreement other than the Benefits Subject To Offset specified
in this Section 11(k).
12. 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 12 and
Section 13 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 or with Associated Stationers, Inc.) (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;
13
(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 (other than application software which is
generally commercially available), 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's 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 all other ideas, developments, processes, techniques,
designs and other information which may be of benefit to the Company, which the
Executive conceives, makes or develops during his employment with the Company
(whether or not during working hours or with use or assistance of Company
facilities, materials or personnel, and which either (i) relate to or arise out
of any part of 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 12 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, instruments 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.
14
(d) CONFIDENTIALITY DUTIES OF EXECUTIVE. The Executive shall, except
as may be required by law, during the Term of Employment and thereafter for the
longest time period permitted by applicable law:
(1) comply with all of the Company's instructions (whether oral
or written) for preserving the confidentiality of
Confidential Information and Proprietary Materials;
(2) use Confidential Information and Proprietary Materials only
in furtherance of the Company's business, and pursuant to
the Company's directions;
(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, except as
the Company directs;
(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, except as the Company
directs;
(6) not publish, lecture on or otherwise disclose to any person
who is not an employee of the Company, except as the Company
directs, 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 11 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 all Company property,
including but not limited to, 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 and
other such things, lawfully possessed by the Executive which relate solely to
taxes payable by the Executive, rights or benefits due to the Executive or the
terms of the Executive's employment with the Company, shall not be deemed
Company property or Proprietary Materials for purposes of this Section 12.
13. NONCOMPETITION; NONSOLICITATION.
(a) The Executive covenants and agrees that during the Term of
Employment and during the longer of (i) the 2-year period following the end of
the Term of Employment, (ii) the Section 11(d) Severance Period, or (iii) the
Section 11(e) Severance Period, 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
be connected with or directly or indirectly own or have any other interest in or
right with respect to (other than through ownership
15
of not more than 1 percent of the outstanding shares of a corporation's stock
which is listed on a national securities exchange) any enterprise (other than
for the Company or for the benefit of the Company) which is a wholesale
distributor of office products (whether or not such enterprise is a wholesale
distributor of other products) and has annual sales with respect to the
wholesale distribution of office products in excess of $1,000,000.
(b) Notwithstanding Section 13(a) above, if the Executive's
employment hereunder is terminated during the Term of Employment, the Executive
may be engaged in the business of selling office products at retail and the
Executive may be engaged by any company whose principal business is the
manufacture of office products; PROVIDED, HOWEVER, that the Executive shall
comply in all other respects with Section 13(a) above.
(c) The Executive covenants and agrees that during the Term of
Employment and during the longer of (i) the 2-year period following the end of
the Term of Employment, (ii) the Section 11(d) Severance Period, or (iii) the
Section 11(e) Severance Period, the Executive shall not at any time, directly or
indirectly, solicit (x) any client or customer of the Company or any of its
subsidiaries with respect to a competitive activity which violates Section 13(a)
above or (y) 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.
(d) 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.
(e) The Parties acknowledge that in the event of a breach or
threatened breach of Section 13(a) and/or Section 13(c) above, the Company shall
not have an adequate remedy at law. Accordingly, in the event of any breach or
threatened breach of Section 13(a) and/or Section 13(c) 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 13(a) and/or Section 13(c) 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 13(a) and/or Section 13(c) above, including the
recovery of damages.
(f) 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.
14. 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;
16
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.
15. 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.
16. 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, including but not
limited to the employment agreement between the Executive and Associated
Stationers, Inc. dated January 31, 1992 and the Old Agreement.
17. 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.
18. 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.
19. 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.
20. 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.
17
21. 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.
22. 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.
23. 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, and all other costs, fees and expenses, including, without
limitation, attorneys' fees of each Party, shall be assessed and awarded by the
arbitrator in favor of the Party prevailing as to such dispute and against the
other Party.
24. 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 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.
18
If to the Executive: Xx. Xxxxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
and a copy to: Xxxxx & Xxxxxxxx Ltd.
000 Xxxxx XxXxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq. (#328001)
25. 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
construction of any provision of this Agreement.
26. 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:/s/ Xxxxxxxxx X. Xxxx, Xx.
---------------------------
Xxxxxxxxx X. Xxxx, Xx.
Chairman of the Board
UNITED STATIONERS SUPPLY CO.
By:/s/ Xxxxxxx X. Xxxxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
/s/ Xxxxxxx X. Xxxxxx
---------------------------
Xxxxxxx X. Xxxxxx
19
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. Disability Insurance in accordance with insurance policy
15. Club and Association Dues - in accordance with Company Policy
16. Financial and Tax Consulting - and tax return preparations, in
accordance with Company Policy
17. 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
18. Other - Vacations in accordance with Company Policy; other benefits
that may from time to time be made available to employees generally
20
