EXHIBIT 10.67
EMPLOYMENT AGREEMENT
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This Employment Agreement ("Agreement") is made as of October 1, 1995
by and between United Stationers Supply Co., an Illinois corporation (the
"Company") and Xxxxxx X. Xxxxxxx ("Xxxxxxx").
In consideration of the mutual promises and agreements contained in
this Agreement, the Company hereby employs Xxxxxxx, and Xxxxxxx accepts
employment with the Company on the terms and conditions contained in this
Agreement.
1. Term of Employment. The term of employment shall commence as of
the date of this Agreement and shall continue until September 30, 1997, and
thereafter shall be extended automatically for additional one-year periods
unless written notice is given by either party to the other at least 60 days
prior to the end of such term, or any extension thereof.
2. Position and Duties. During the term of employment, Xxxxxxx shall
serve as an Executive Vice President and Chief Financial Officer of the Company,
and, in accordance with the authority and direction of the board of directors of
the Company (the "Board") shall render such administrative, financial and other
services to the Company as may be required of such position or as the Board may
from time to time direct. Xxxxxxx shall be available at all reasonable times
for consultation with the Board on matters relating to the Company's, or its
affiliates' business.
Xxxxxxx shall devote his best efforts and his full and exclusive
business time and attention (except for reasonable periods of vacation, illness
or other incapacity) to the business and affairs of the Company and its
affiliates.
3. Compensation. During the term of employment, Xxxxxxx shall be
compensated as follows:
3.1. Base Salary. Xxxxxxx shall receive a base salary of no less
than $225,000.00 per year, payable in accordance with the Company's normal
payment schedule for management employees. The base salary shall be
reviewed by the Board annually and may, in the Board's sole discretion, be
increased when deemed appropriate.
3.2. Bonus. Xxxxxxx shall be eligible to participate in any bonus
plans approved by the Board and made generally available to senior
management employees of the Company, and shall be entitled to such bonus
amounts as shall be determined in accordance with such plans.
3.3. Benefits. Xxxxxxx shall be included, 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 paragraph shall not be construed to
require the Company to establish or maintain any policy, plan or program.
4. Confidential Information.
4.1. Xxxxxxx acknowledges the Company's exclusive ownership of all
information useful in the Company's business (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
Xxxxxxx as a consequence of his employment by the Company (including information
conceived, discovered or developed by Xxxxxxx 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:
(i) The identity, purchase and payment patterns of, and special
relations with, the Company's customers;
(ii) The identity, net prices and credit terms of, and special
relations with, the Company's suppliers;
(iii) The Company's inventory selection and management techniques;
(iv) The Company's product development and marketing plans; and
(v) The Company's finances, except to the extent publicly
disclosed.
4.2. 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, by or but not limited to, those which contain
Confidential Information. For example, Proprietary Materials include, but are
not limited to, the following especially sensitive types of materials:
applications software, the data bases of Confidential Information maintained in
connection with such software, and printouts generated from such data bases;
market studies and strategic plans; customer, supplier and employee lists;
contracts and correspondence with customers and suppliers; documents evidencing
transactions with customers and supplier; sales calls reports, appointment
books, calendars, expense statements and the like, reflecting conversations with
any company, customer or supplier; architectural plans; and purchasing, sales
and policy manuals. Proprietary Materials also include, but are not limited to,
any such things which are created by Xxxxxxx or with Xxxxxxx'x assistance and
all notes, memoranda and the like prepared using the Proprietary Materials
and/or Confidential Information.
4.3. While some of the information contained in Proprietary Materials may
have been known to Xxxxxxx prior to employment with the Company, or may now or
in the future be in the public domain, Xxxxxxx acknowledges that the compilation
of that information contained in the
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Proprietary Materials has or will cost the Company a great effort and expense,
and affords persons to whom Proprietary Materials are disclosed, including
Xxxxxxx, a competitive advantage over persons who do not know the information or
have the compilation of the Proprietary Materials. Xxxxxxx 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. Xxxxxxx shall report to the
Company fully and promptly, orally (or, at the Company's request, in writing)
all discoveries, inventions and improvements, whether or not patentable, and all
other ideas, developments, processes, techniques, designs and other information
which may be of benefit to the Company, which Xxxxxxx conceives, makes or
develops during his employment (whether or not during working hours or with use
or assistance of Company facilities, materials or personnel, and which either
(i) relate to or arise out of any part of the Company's business in which
Xxxxxxx participates, or (ii) incorporate or make use of Confidential
Information or Proprietary Materials) (all items referred to in this Section 4.3
being sometimes collectively referred to herein as the "Intellectual Property").
All Intellectual property shall be deemed Confidential Information of the
Company, and any writing or other tangible things describing, referring to, or
containing Intellectual Property shall be deemed the Company's Proprietary
Materials. At the request of the Company, during or after the term of
employment, Xxxxxxx (or after Xxxxxxx'x death, Xxxxxxx'x personal
representative) shall, at the expense of the Company, make, execute and deliver
all papers, assignments, conveyances, installments or other documents, and
perform or cause to be performed such other lawful acts, and give such
testimony, as the Company deems necessary or desirable to protect the Company's
ownership rights and Intellectual Property.
4.4. Confidentiality Duties. Xxxxxxx shall, except as may be required by
law, during the term of employment, and thereafter for the longest time
permitted by applicable law:
4.4.1. Comply with all of the Company's instructions (whether oral or
written) for preserving the confidentiality of Confidential Information and
Proprietary Materials.
4.4.2. Use Confidential Information and Proprietary Materials only at
places designated by the Company, in furtherance of the Company's business,
and pursuant to the Company's directions.
4.4.3. Exercise appropriate care to advise other employees of the
Company (and, as appropriate, subcontractors) of the sensitive nature of
Confidential Information and Proprietary materials prior to their
disclosure, and to disclose the same only on a need-to-know basis.
4.4.4. Not copy all or any part of Proprietary Materials, except as
the Company directs.
4.4.5. Not sell, give, loan or otherwise transfer any copy of all or
any part of Proprietary Materials to any person who is not an employee of
the Company, except as the Company directs.
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4.4.6. Not publish, lecture on or otherwise disclose to any person
who is not an employee of the Company, except as the Company directs, all
or any part of Confidential Information or Proprietary Materials.
4.4.7. Not use all or any part of any Confidential Information or
Proprietary Materials for the benefit of any third party without the
Company's written consent.
Upon the termination of Xxxxxxx'x employment for whatever reason, Xxxxxxx
(or in the event of death, Xxxxxxx'x personal representative) shall promptly
surrender to the Company the original and all copies of Proprietary Materials
(including all notes, memoranda and the like concerning or derived therefrom),
whether prepared by Xxxxxxx or others, which are then in Xxxxxxx'x possession or
control. Records of payments made by the Company to or for the benefit of
Xxxxxxx, Bushell's copy of this Agreement and other such things, lawfully
possessed by Xxxxxxx which relate solely to taxes payable by Xxxxxxx, employee
benefits due to Xxxxxxx or the terms of Xxxxxxx'x employment with the Company,
shall not be deemed Proprietary Materials for purposes of this Section 4.
5. Non-competition.
5.1. During Xxxxxxx'x employment, and during the two year period following
his employment), Xxxxxxx shall not, in any way, directly or indirectly, manage,
operate, control (or participate in any of the foregoing), accept employment or
a consulting position with or otherwise advise or assist or be connected with or
directly or indirectly own or have any other interest in or right with respect
to (other than through ownership of not more than 1% of the outstanding shares
of a corporation's stock which is listed on a national securities exchange) any
enterprise (other than for the Company or for the benefit of the Company) which
is a wholesaler of office products having annual sales in excess of $1,000,000.
5.2. Notwithstanding Section 5.1., following the term of employment,
Xxxxxxx may be engaged in the business of selling office products at retail and
Xxxxxxx may be engaged by any company whose principal business is the
manufacture of office products.
5.3. Xxxxxxx recognizes that the foregoing limitations are reasonable and
properly required for the adequate protection of the business of the Company.
If any such limitations are deemed to be unreasonable by a court having
jurisdiction of the matter and parties, Xxxxxxx hereby agrees and submits to the
reduction of any such limitations to such territory or time as to such court
shall appear reasonable.
5.4. If Xxxxxxx 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.
5.5. Xxxxxxx agrees that the remedy at law for any breach of the
provisions of Section 4 or this Section 5 shall be inadequate and that the
Company shall be entitled to injunctive relief in addition to any other remedies
it may have.
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6. Termination and Severance.
6.1. Resignation. If Xxxxxxx resigns on or before March 30, 1996, he shall
be entitled to receive:
6.1.1. the unpaid portion of his base salary and accrued vacation pay
attributable to all periods prior to and including the date of his
resignation, and reimbursement for reasonable reimbursable expenses
incurred on behalf of the Company prior to the date of his resignation;
plus
6.1.2. a severance amount equal to two times his current base salary
plus two times the amount of his bonuses earned from the Company for the
year 1995, payable in equal installments on the Company's regular pay
schedule commencing within 30 days from the date of resignation and
continuing for 24 months (the "Severance Period"); provided, however, such
amount shall be reduced by the amount of compensation earned by Xxxxxxx
from any other employment or consulting arrangement during the Severance
Period; and
6.1.3. in addition, Xxxxxxx shall be entitled to participate in the
Company's health plan for the Severance Period, as if he were an employee.
If Xxxxxxx resigns on or after March 31, 1996, or if Xxxxxxx gives notice
to the Company of non-extension of the term of employment pursuant to Paragraph
1, he shall be entitled to receive only the unpaid portion of his base salary
and accrued vacation attributable to and including the date of resignation, and
reimbursement for reasonable reimbursable expenses incurred on behalf of the
Company prior to the date of termination.
6.2. By Xxxxxxx For Good Reason. Xxxxxxx may elect to terminate his
employment by written notice to the Company within 60 days after the occurrence
of any of the following events without Xxxxxxx'x consent, any of which shall be
deemed "Good Reason":
(a) the reduction of Xxxxxxx'x base salary;
(b) the exclusion of Xxxxxxx from, or diminution in Xxxxxxx'x
participation in, any pension, bonus, management incentive, profit sharing
and other similar incentive, compensation or deferred compensation plans
made available to employees of the Company, officers or senior management
personnel of the Company, other than exclusions, changes or diminutions
applicable to all employees, officers or senior management personnel; or
(c) any diminution in expense reimbursement benefits enjoyed by
Xxxxxxx, except pursuant to a general change in the Company's reimbursement
policies; or
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(d) any material reduction in Xxxxxxx'x title or duties which has the
effect of materially reducing Xxxxxxx'x status within the Company;
provided, however, that any change in the office or officer to whom Xxxxxxx
reports, or in Xxxxxxx'x duties or title which does not diminish Xxxxxxx'x
status within the Company, shall not be deemed "Good Reason"; or
(e) any relocation of the Company's headquarters outside of the
Chicago metropolitan area; or
(f) the breach by the Company of any of its covenants or obligations
under this Agreement.
If the employment is terminated by Xxxxxxx for Good Reason, Xxxxxxx shall
be entitled to receive:
6.2.1. the unpaid portion of his base salary for the remainder of his
term of employment, payable on the Company's regular pay schedule; and
6.2.2. reimbursement for reasonable reimbursable expenses incurred
on behalf of the Company prior to the termination; and
6.2.3. a severance amount equal to two times his base salary, plus
two times his bonuses earned from the Company for the calendar year
preceding the year in which notice is given by Xxxxxxx to the Company,
payable in equal installments on the Company's regular pay schedule,
commencing within 30 days after receipt by the Company of written notice
from Xxxxxxx and continuing for 24 months; and
6.2.4. Xxxxxxx shall be entitled to continue to participate in the
Company's health plan for a period of two years following the date of the
notice from Xxxxxxx, as if he were an employee.
6.3. By Expiration of the Term of Employment. If the term of employment
expires and notice has been given by the Company that the term will not be
extended or further extended pursuant to Paragraph 1 of this Agreement, Xxxxxxx
shall be entitled to receive:
6.3.1 Accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the
expiration of the Term of Employment; and
6.3.2 A severance amount equal to his base salary plus his bonus
earned for the calendar year preceding the date of expiration, payable in
equal installments on the Company's regular pay schedule commencing within
30 days and continuing for 12 months; and
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6.3.3 in addition, Xxxxxxx shall be entitled to participate in the
Company's health plan for a period of 12 months following the expiration of
the term as if he were an employee.
6.4. By Company For Cause. "Cause" means Xxxxxxx'x (a) conviction of,
or plea of nolo contendere to a felony; (b) theft or embezzlement, or attempted
theft or embezzlement, of money or property or assets of the Company or any of
its affiliates; (c) use of illegal drugs; (d) material breach of this
Agreement; (e) commission of any act or acts of moral turpitude in violation of
Company policy; (f) gross negligence or willful misconduct in the performance of
his duties; or (g) breach of any fiduciary duty owed to the Company, including,
without limitation, engaging in directly competitive acts while employed by the
Company.
6.4.1 The Company may terminate the employment at any time for Cause (as
hereinafter defined). If Xxxxxxx is terminated by the Company for
Cause, Xxxxxxx shall be entitled to receive only the unpaid portion
of his base salary and accrued vacation attributable to all periods
prior to and including the date of his termination, and
reimbursement for reasonable reimbursable expenses incurred on
behalf of the Company prior to the date of his termination.
6.4.2 In addition, if Xxxxxxx is terminated by the Company for Cause (but
not otherwise), the Company and/or its designee(s) shall have the
option ("Option") to purchase all or any portion of the shares of
common stock of United Stationers Inc. held by Xxxxxxx. If the
Company exercises such Option, Xxxxxxx agrees to sell said shares to
the Company or its designee(s).
The Company shall give written notice to Xxxxxxx of its election
to exercise the Option within one year from the date of termination
of Xxxxxxx'x employment for Cause. If no notice is given within the
time specified, the Option shall terminate.
The purchase price to be paid for the shares purchased pursuant
to the Option shall be the closing sale price of the common stock
for the day preceding the date the Option is exercised, as reported
on a national stock exchange or on the NASDAQ National Market
System, or if there were no sales on such date, the next preceding
day on which there were sales, or if the common stock is not listed
for quotation on the NASDAQ National Market System or on a national
stock exchange, the value of such common stock on such date as
determined by the Board of Directors of United Stationers Inc. in
good faith.
The purchase price shall be paid in cash. The closing of the
purchase shall take place at the Company's principal executive
offices within 10 days after the purchase price has been determined,
at which time Xxxxxxx shall deliver to the purchaser the
certificates evidencing the common shares being purchased, duly
endorsed.
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To ensure the enforeceability of the Company's right under this
Section, each certificate representing common stock of United
Stationers Inc. held by Xxxxxxx shall bear a conspicuous legend in
form acceptable to the Company.
6.5. By the Company. The Company may terminate Xxxxxxx'x employment on
written notice to Xxxxxxx at any time. If Xxxxxxx'x employment is terminated by
the Company, other than for Cause, Xxxxxxx shall be entitled to receive only:
6.5.1. the unpaid portion of his base salary for the remaining
portion of the term of employment, payable on the Company's regular pay
schedule; and
6.5.2. accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date
of termination; and
6.5.3. either:
6.5.3.1. if the termination is prior to the first anniversary of
this Agreement, severance pay equal to two times his base salary plus
two times his bonuses earned from the Company for 1995, payable in
equal installments on the Company's regular pay schedule commencing
within 30 days after Xxxxxxx'x receipt of the notice from the Company
and continuing for 24 months; provided however, such amount shall be
reduced by the amount of compensation earned by Xxxxxxx from any other
employment or consulting arrangement during the severance period; or
6.5.3.2. if the termination is on or after the first anniversary
of this Agreement, but before the second anniversary, severance pay
equal to two times his base salary plus two times his bonuses earned
from the Company for 1995, reduced (a) by 1/24th for each full month
of employment after the first anniversary of this Agreement and, (b)
by the amount of compensation earned by Xxxxxxx from any other
employment or consulting arrangement during the severance period; or
6.5.3.3. if the termination is on or after the second
anniversary of this Agreement, severance pay equal to his base pay
plus his bonuses for the year preceding the year of termination; and
6.5.4. in addition, Xxxxxxx shall be entitled to participate in the
Company's health plan for a period equal to the applicable severance
period, as if he were an employee.
6.6. By Death or Disability. If Xxxxxxx'x employment is terminated due to
his death or permanent disability, Xxxxxxx shall be entitled to severance pay in
accordance with the provisions of 6.5.2 and 6.5.3 above. In addition, if
Xxxxxxx'x spouse is then living, for the remainder of such spouse's life the
Company shall continue to provide health coverage for
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Xxxxxxx'x spouse and dependent children in accordance with the Company's health
plans made generally available to employees of the Company, without cost to the
Xxxxxxx'x spouse. Nothing in this Agreement shall affect Xxxxxxx'x right to
receive death benefit payments under any policy of insurance carried by the
Company and payable to Xxxxxxx or his designated beneficiary.
6.7. Retirement. Xxxxxxx agrees that, in any event, his employment shall
terminate automatically on his sixty-fifth birthday. If his employment is
terminated pursuant to this Section 6.7., Xxxxxxx shall be entitled to:
6.7.1. accrued vacation pay and reimbursement for reasonable expenses
incurred on behalf of the Company prior to the date of termination, and
6.7.2. in addition, Xxxxxxx shall be entitled to participate in the
Company's health plan for retirees.
7. Change in Control. In the event of a Change in Control, provided
Xxxxxxx is either (a) still employed by the Company 6 months after the date of
the Change in Control, or (b) has been terminated by the Company during that
6-month period other than for Cause, Xxxxxxx shall be entitled to resign before
the first anniversary of the Change in Control. Upon termination of his
employment after a Change in Control, except by Xxxxxxx'x resignation within six
months after the Change in Control or by the Company for Cause, Xxxxxxx shall be
entitled to:
7.1. accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date
of termination; and
7.2. severance pay equal to two times his base salary plus two times
his bonuses earned from the Company for 1995, payable in equal installments
on the Company's regular pay schedule commencing within 30 days after
termination of Xxxxxxx'x employment and continuing for 24 months; provided
however, such amount shall be reduced by the amount of compensation earned
by Xxxxxxx from any other employment or consulting arrangement during the
severance period.
"Change in Control" shall mean a change in control of a nature that would
be required to be reported in responses to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
and presently in force (the "Exchange Act"); provided that, without limitation,
a Change in Control shall be deemed to have occurred if (a) any Person becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of United Stationers Inc. representing
thirty percent (30%) or more of the combined voting power of United Stationers
Inc.'s then outstanding equity having the power to seat the Board generally, or
(b) during any period of two consecutive years, individuals who at the beginning
of such period constitute the Board cease for any reason to constitute at least
a majority thereof, unless the election, or the nomination for election by
United Stationers Inc.'s stockholders, of any new director was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who were
directors at the beginning of the period.
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8. Medical Benefits. The Company makes the following covenants to Xxxxxxx
with respect to Xxxxxxx'x medical benefits ("Medical Benefits"):
8.1 In the event the United Stationers Medical Plan ("Plan") remains
in effect and Xxxxxxx'x employment with the Company terminates for any
reason, Xxxxxxx (and Bushell's covered dependents at the time of such
termination of employment) shall be entitled to continue to participate in
the Plan until Xxxxxxx attains age sixty-five (65), and Xxxxxxx'x spouse
shall be entitled to continue to participate, in her own right, in the Plan
until Xxxxxxx'x spouse attains age sixty-five (65), but not for a period in
excess of ten (10) years following Xxxxxxx'x termination of employment with
the Company; provided that, in the event Xxxxxxx terminates employment
with the Company prior to attaining age fifty-five (55) Xxxxxxx (and
Bushell's covered dependents at the time of such termination of employment)
shall have the right to participate in the Plan for a period of ten (10)
years, such period to commence on either Xxxxxxx'x termination of
employment with the Company or the date Xxxxxxx attains age fifty-five (55)
as Xxxxxxx shall elect in writing at the time of his termination of
employment, under the same terms and conditions applicable to persons who
are provided coverage as active employees under the Plan; provided,
however, that a minimum $1,000,000 Comprehensive Medical Lifetime Maximum
Payment shall remain applicable to Xxxxxxx (and Bushell's covered
dependents at the time of the termination of employment).
8.2 In the event of the termination of the Plan or any cessation of
coverage under the Plan not occurring in accordance with the terms of the
Plan as in effect on September 1, 1995 (the date any such event first
occurs being referred to as the 'Coverage Cessation Date'), Xxxxxxx shall
be entitled to and the Company shall pay to Xxxxxxx THREE THOUSAND SEVENTY
DOLLARS ($3,070.00) per month for the period commencing on the first day of
the month following the month in which the Coverage Cessation Date occurs
and ending on the first to occur of:
(i) the later of the date Xxxxxxx or Xxxxxxx'x spouse attains
age sixty-five (65);
(ii) in the event of the death of Xxxxxxx, the date the spouse
of Xxxxxxx attains age sixty-five (65);
(iii) the end of the eighteen (18) month period commencing on
the Coverage Cessation Date; or
(iv) March 30, 1998.
8.3 After the Coverage Cessation Date, the Company shall pay claims
or reimburse expenses for those medical expenses which are considered
deductible under section 213 of the Code or any successor provision,
(without regard to any applicable threshold for deductibility) to Xxxxxxx,
subject to the following terms and conditions:
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(i) Xxxxxxx (or any of Xxxxxxx'x covered dependents as of the
Coverage Cessation Date) if covered by a medical plan maintained by
Xxxxxxx'x then current employer or a medical plan maintained by the
employer of the spouse of Xxxxxxx, has exceeded the lifetime maximum
benefit provided in such plan;
(ii) payment of medical expenses or reimbursement for such
claims under this subsection 8.3 shall not in the aggregate exceed
the lesser of the following amounts:
(a) a maximum of $300,000 for Xxxxxxx and all dependents
(on an aggregate basis) of Xxxxxxx as of the Coverage Cessation
Date; or
(b) the amount by which $700,000 exceeds the aggregate
amount of all medical claims under this subsection 8.3 for the
group of employees referred to as "Contract Officers" under the
Plan (including all covered dependents of such Contract
Officers as of the Coverage Cessation Date) prior to the date of
the requested payment by the Contract Officer; and
(iii) reimbursement for such claims under this subsection 8.3
shall be made for the period commencing on the Coverage Cessation Date
and ending on the first to occur of:
(a) the later of the date Xxxxxxx or Xxxxxxx'x spouse
attains age sixty-five;
(b) in the event of the death of Xxxxxxx, the date the
spouse of Xxxxxxx attains age sixty-five (65);
(c) the end of the eighteen (18) month period
commencing on the Coverage Cessation Date; or
(d) March 30, 1998.
The coverage provided under this Section 8.3 shall be separate and in
addition to the coverage provided under Section 8.2 above.
8.4 In addition, if Xxxxxxx is or becomes an eligible retired officer
in accordance with the definition of a "retired officer" contained in the
Company's Officer Medical Expense Reimbursement Policy (presently LD-3)
("Policy"), or a similar policy, Xxxxxxx shall be entitled to the medical
expense reimbursement benefits thereof whether or not the Policy is later
modified or revoked.
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9. Miscellaneous.
9.1. All notices hereunder shall be given in writing and sent to the
party for whom such is intended by hand delivery or United States certified
or registered mail, return receipt requested, postage prepaid, or overnight
courier service, addressed to the party for whom intended at the following
respective addresses:
If to the Company: United Stationers Supply Co.
0000 X. Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Attn: President
If to Xxxxxxx: 0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
or to such other persons and/or at such other addresses as may be
designated by written notice served in accordance with the provisions
hereof. Such notices shall be deemed to have been served, if hand
delivered, on the day delivered, and if mailed, on the third day following
the date deposited in the mail. Urgent notices shall be given by Telex or
cable to the same addresses and confirmed by mail as provided above. All
notices sent by Telex or cable shall be deemed to have been served upon
receipt of the Telex or cable, but only if in fact confirmed by mail
promptly after dispatch of the Telex or cable.
9.2 This Agreement and all rights and benefits hereunder are personal
to Xxxxxxx and neither this Agreement nor any right or interest of Xxxxxxx
herein, or arising hereunder, shall be voluntarily or involuntarily sold,
transferred or assigned by Xxxxxxx. Any attempt by Xxxxxxx to assign,
execute, attach, transfer, pledge, hypothecate or otherwise dispose of any
such benefits or amounts or any rights or interests contrary to the
foregoing provisions, or the levy or attachment or similar process
thereupon, shall be null and void and of no effect and shall relieve the
Company of all liabilities hereunder. This Agreement and all of the
Company's right and obligations hereunder may be assigned and/or delegated,
as the case may be, without Xxxxxxx'x consent, to any entity which merges
with the Company or which acquires substantially all of the assets of the
Company and which agrees to be bound hereby. The enforceability of
Xxxxxxx'x rights under the Agreement shall not be affected by any
assignment or merger.
9.3 This Agreement shall be binding upon and inure to the benefit of
the parties and their respective heirs, personal representatives,
successors and permitted assigns.
9.4 This Agreement constitutes the entire agreement between the
parties and contains all the agreements between such parties with respect
to the subject matter hereof. This Agreement supersedes all other
agreements, oral or in writing, between the parties with respect to the
subject matter hereof, including but not limited to the Employment
Agreement between Xxxxxxx and Associated Stationers, Inc. dated January 31,
1992.
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9.5 No change or modification of this Agreement shall be valid unless
the same shall be approved by the Board and in writing and signed by
Xxxxxxx and an authorized representative of the Company other than Xxxxxxx.
No waiver of any provisions of this Agreement shall be valid unless in
writing and signed by the person or party to be charged.
9.6 If any provisions of this Agreement (or portions thereof) shall,
for any reason, be invalid or unenforceable, such provisions (or portions
thereof) shall be ineffective only to the extent of such invalidity or
unenforceability, and the remaining provisions or portions shall
nevertheless be valid, enforceable and of full force and effect.
9.7 The Section or paragraph headings or titles are for convenience
only and shall not be deemed a part of this Agreement.
9.8 This Agreement may be executed in multiple counterparts, each of
which shall be deemed to be an original and all of which taken together
shall constitute a single instrument.
9.9 If Xxxxxxx or his estate or designee prevails in any action to
enforce their rights under this Agreement, they shall be entitled to
receive their attorneys' fees, costs and expenses incurred in enforcing
their rights under this Agreement, as well as interest at the Prime Rate as
publicly announced by The Northern Trust Company from time to time on the
amount of the judgment from the date of demand for payment hereunder
through the date of receipt of the amount of the judgment.
10. Arbitration. Each of the undersigned hereby agrees that any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, including but not limited to any claims of discrimination and wrongful
termination, will be submitted for arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the Arbitrator(s) may be entered in any
court having jurisdiction thereof.
UNITED STATIONERS SUPPLY CO.,
an Illinois corporation
ATTEST:_______________________ By:__________________________
Xxx X. Xxxxxxxx Xxx Xxxxxxxx
Assistant Secretary Chairman of the Board and
Chief Executive Officer
_____________________________________
Xxxxxx X. Xxxxxxx
13
EXHIBIT A
TO EMPLOYMENT AGREEMENT
XXXXXX X. XXXXXXX
The following are benefit plans, programs and policies in which Xxxxxxx is
entitled to participate as of October 1, 1995:
United Stationers Supply Co. Pension Plan
Associated Stationers/United Stationers Inc. Profit Sharing PluSavings
Plan
United Stationers Inc. Flexible Spending Plan
United Stationers Management Incentive Plan
United Stationers Inc. Management Equity Plan
United Group Medical and Dental Benefit Plans
Officer Medical Expense Reimbursement Policy
Retiree Health Plan
Annual physical exam at Company expense
Leased auto or equivalent cash compensation in accordance with Policy
Group Term Life Insurance - 2 1/2 times base salary
Travel and Accident Insurance - $300,000
Split Dollar Life Insurance
Disability Insurance in accordance with insurance policy
Club and Association Dues - in accordance with Company Policy
Financial and Tax Consulting - and tax return preparation, in
accordance with Company Policy
Officer Indemnification and Insurance - D&O insurance is provided on a
claims-made basis; and Restated Certificate of Incorporation, and
Delaware and Illinois law provide indemnification of officers and
directors
Other - Vacations in accordance with Company Policy; other benefits
that may from time to time be made available to employees generally
14
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement ("Agreement") is made as of October 1, 1995
by and between United Stationers Supply Co., an Illinois corporation (the
"Company") and Xxxxxxx X. Xxxxxx ("Xxxxxx").
In consideration of the mutual promises and agreements contained in
this Agreement, the Company hereby employs Xxxxxx, and Xxxxxx accepts employment
with the Company on the terms and conditions contained in this Agreement.
1. Term of Employment. The term of employment shall commence as of
the date of this Agreement and shall continue until September 30, 1997, and
thereafter shall be extended automatically for additional one-year periods
unless written notice is given by either party to the other at least 60 days
prior to the end of such term, or any extension thereof.
2. Position and Duties. During the term of employment, Xxxxxx shall
serve as an Executive Vice President of the Company, and, in accordance with the
authority and direction of the board of directors of the Company (the "Board")
shall render such administrative, sales and other services to the Company as may
be required of such position or as the Board may from time to time direct.
Xxxxxx shall be available at all reasonable times for consultation with the
Board on matters relating to the Company's, or its affiliates' business.
Xxxxxx shall devote his best efforts and his full and exclusive
business time and attention (except for reasonable periods of vacation, illness
or other incapacity) to the business and affairs of the Company and its
affiliates.
3. Compensation. During the term of employment, Xxxxxx shall be
compensated as follows:
3.1. Base Salary. Xxxxxx shall receive a base salary of no less than
$255,000.00 per year, payable in accordance with the Company's normal
payment schedule for management employees. The base salary shall be
reviewed by the Board annually and may, in the Board's sole discretion, be
increased when deemed appropriate.
3.2. Bonus. Xxxxxx shall be eligible to participate in any bonus
plans approved by the Board and made generally available to senior
management employees of the Company, and shall be entitled to such bonus
amounts as shall be determined in accordance with such plans.
3.3. Benefits. Xxxxxx shall be included, 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 paragraph shall not be construed to
require the Company to establish or maintain any policy, plan or program.
4. Confidential Information.
4.1. Xxxxxx acknowledges the Company's exclusive ownership of all
information useful in the Company's business (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
Xxxxxx as a consequence of his employment by the Company (including information
conceived, discovered or developed by Xxxxxx 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:
(i) The identity, purchase and payment patterns of, and special
relations with, the Company's customers;
(ii) The identity, net prices and credit terms of, and special
relations with, the Company's suppliers;
(iii) The Company's inventory selection and management techniques;
(iv) The Company's product development and marketing plans; and
(v) The Company's finances, except to the extent publicly
disclosed.
4.2. 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, by or but not limited to, those which contain
Confidential Information. For example, Proprietary Materials include, but are
not limited to, the following especially sensitive types of materials:
applications software, the data bases of Confidential Information maintained in
connection with such software, and printouts generated from such data bases;
market studies and strategic plans; customer, supplier and employee lists;
contracts and correspondence with customers and suppliers; documents evidencing
transactions with customers and supplier; sales calls reports, appointment
books, calendars, expense statements and the like, reflecting conversations with
any company, customer or supplier; architectural plans; and purchasing, sales
and policy manuals. Proprietary Materials also include, but are not limited to,
any such things which are created by Xxxxxx or with Xxxxxx'x assistance and all
notes, memoranda and the like prepared using the Proprietary Materials and/or
Confidential Information.
4.3. While some of the information contained in Proprietary Materials may
have been known to Xxxxxx prior to employment with the Company, or may now or in
the future be in the public domain, Xxxxxx acknowledges that the compilation of
that information contained in the
2
Proprietary Materials has or will cost the Company a great effort and expense,
and affords persons to whom Proprietary Materials are disclosed, including
Xxxxxx, a competitive advantage over persons who do not know the information or
have the compilation of the Proprietary Materials. Xxxxxx 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. Xxxxxx shall report to the Company
fully and promptly, orally (or, at the Company's request, in writing) all
discoveries, inventions and improvements, whether or not patentable, and all
other ideas, developments, processes, techniques, designs and other information
which may be of benefit to the Company, which Xxxxxx conceives, makes or
develops during his employment (whether or not during working hours or with use
or assistance of Company facilities, materials or personnel, and which either
(i) relate to or arise out of any part of the Company's business in which Xxxxxx
participates, or (ii) incorporate or make use of Confidential Information or
Proprietary Materials) (all items referred to in this Section 4.3 being
sometimes collectively referred to herein as the "Intellectual Property"). All
Intellectual property shall be deemed Confidential Information of the Company,
and any writing or other tangible things describing, referring to, or containing
Intellectual Property shall be deemed the Company's Proprietary Materials. At
the request of the Company, during or after the term of employment, Xxxxxx (or
after Xxxxxx'x death, Xxxxxx'x personal representative) shall, at the expense of
the Company, make, execute and deliver all papers, assignments, conveyances,
installments or other documents, and perform or cause to be performed such other
lawful acts, and give such testimony, as the Company deems necessary or
desirable to protect the Company's ownership rights and Intellectual Property.
4.4. Confidentiality Duties. Xxxxxx shall, except as may be required by
law, during the term of employment, and thereafter for the longest time
permitted by applicable law:
4.4.1. Comply with all of the Company's instructions (whether oral or
written) for preserving the confidentiality of Confidential Information and
Proprietary Materials.
4.4.2. Use Confidential Information and Proprietary Materials only at
places designated by the Company, in furtherance of the Company's business,
and pursuant to the Company's directions.
4.4.3. Exercise appropriate care to advise other employees of the
Company (and, as appropriate, subcontractors) of the sensitive nature of
Confidential Information and Proprietary materials prior to their
disclosure, and to disclose the same only on a need-to-know basis.
4.4.4. Not copy all or any part of Proprietary Materials, except as
the Company directs.
4.4.5. Not sell, give, loan or otherwise transfer any copy of all or
any part of Proprietary Materials to any person who is not an employee of
the Company, except as the Company directs.
3
4.4.6. 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.
4.4.7. Not use all or any part of any Confidential Information or
Proprietary Materials for the benefit of any third party without the
Company's written consent.
Upon the termination of Xxxxxx'x employment for whatever reason, Xxxxxx
(or in the event of death, Xxxxxx'x personal representative) shall promptly
surrender to the Company the original and all copies of Proprietary Materials
(including all notes, memoranda and the like concerning or derived therefrom),
whether prepared by Xxxxxx or others, which are then in Xxxxxx'x possession or
control. Records of payments made by the Company to or for the benefit of
Xxxxxx, Xxxxxx'x copy of this Agreement and other such things, lawfully
possessed by Xxxxxx which relate solely to taxes payable by Xxxxxx, employee
benefits due to Xxxxxx or the terms of Xxxxxx'x employment with the Company,
shall not be deemed Proprietary Materials for purposes of this Section 4.
5. Non-competition.
5.1. During Xxxxxx'x employment, and during the two year period following
his employment), Xxxxxx shall not, in any way, directly or indirectly, manage,
operate, control (or participate in any of the foregoing), accept employment or
a consulting position with or otherwise advise or assist or be connected with or
directly or indirectly own or have any other interest in or right with respect
to (other than through ownership of not more than 1% of the outstanding shares
of a corporation's stock which is listed on a national securities exchange) any
enterprise (other than for the Company or for the benefit of the Company) which
is a wholesaler of office products having annual sales in excess of $1,000,000.
5.2. Notwithstanding Section 5.1., following the term of employment,
Xxxxxx may be engaged in the business of selling office products at retail and
Xxxxxx may be engaged by any company whose principal business is the manufacture
of office products.
5.3. Xxxxxx recognizes that the foregoing limitations are reasonable and
properly required for the adequate protection of the business of the Company.
If any such limitations are deemed to be unreasonable by a court having
jurisdiction of the matter and parties, Xxxxxx hereby agrees and submits to the
reduction of any such limitations to such territory or time as to such court
shall appear reasonable.
5.4. If Xxxxxx 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.
5.5. Xxxxxx agrees that the remedy at law for any breach of the provisions
of Section 4 or this Section 5 shall be inadequate and that the Company shall be
entitled to injunctive relief in addition to any other remedies it may have.
4
6. Termination and Severance.
6.1. Resignation. If Xxxxxx resigns on or before March 30, 1996, he shall
be entitled to receive:
6.1.1. the unpaid portion of his base salary and accrued vacation pay
attributable to all periods prior to and including the date of his
resignation, and reimbursement for reasonable reimbursable expenses
incurred on behalf of the Company prior to the date of his resignation;
plus
6.1.2. a severance amount equal to two times his current base salary
plus two times the amount of his bonuses earned from the Company for the
year 1995, payable in equal installments on the Company's regular pay
schedule commencing within 30 days from the date of resignation and
continuing for 24 months (the "Severance Period"); provided, however, such
amount shall be reduced by the amount of compensation earned by Xxxxxx from
any other employment or consulting arrangement during the Severance Period;
and
6.1.3. in addition, Xxxxxx shall be entitled to participate in the
Company's health plan for the Severance Period, as if he were an employee.
If Xxxxxx resigns on or after March 31, 1996, or if Xxxxxx gives notice to
the Company of non-extension of the term of employment pursuant to Paragraph 1,
he shall be entitled to receive only the unpaid portion of his base salary and
accrued vacation attributable to and including the date of resignation, and
reimbursement for reasonable reimbursable expenses incurred on behalf of the
Company prior to the date of termination.
6.2. By Xxxxxx For Good Reason. Xxxxxx may elect to terminate his
employment by written notice to the Company within 60 days after the occurrence
of any of the following events without Xxxxxx'x consent, any of which shall be
deemed "Good Reason":
(a) the reduction of Xxxxxx'x base salary;
(b) the exclusion of Xxxxxx from, or diminution in Xxxxxx'x
participation in, any pension, bonus, management incentive, profit sharing
and other similar incentive, compensation or deferred compensation plans
made available to employees of the Company, officers or senior management
personnel of the Company, other than exclusions, changes or diminutions
applicable to all employees, officers or senior management personnel; or
(c) any diminution in expense reimbursement benefits enjoyed by
Xxxxxx, except pursuant to a general change in the Company's reimbursement
policies; or
5
(d) any material reduction in Xxxxxx'x title or duties which has the
effect of materially reducing Xxxxxx'x status within the Company; provided,
however, that any change in the office or officer to whom Xxxxxx reports,
or in Xxxxxx'x duties or title which does not diminish Xxxxxx'x status
within the Company, shall not be deemed "Good Reason"; or
(e) any relocation of the Company's headquarters outside of the
Chicago metropolitan area; or
(f) the breach by the Company of any of its covenants or obligations
under this Agreement.
If the employment is terminated by Xxxxxx for Good Reason, Xxxxxx shall be
entitled to receive:
6.2.1. the unpaid portion of his base salary for the remainder of his
term of employment, payable on the Company's regular pay schedule; and
6.2.2. reimbursement for reasonable reimbursable expenses incurred on
behalf of the Company prior to the termination; and
6.2.3. a severance amount equal to two times his base salary, plus
two times his bonuses earned from the Company for the calendar year
preceding the year in which notice is given by Xxxxxx to the Company,
payable in equal installments on the Company's regular pay schedule,
commencing within 30 days after receipt by the Company of written notice
from Xxxxxx and continuing for 24 months; and
6.2.4. Xxxxxx shall be entitled to continue to participate in the
Company's health plan for a period of two years following the date of the
notice from Xxxxxx, as if he were an employee.
6.3. By Expiration of the Term of Employment. If the term of employment
expires and notice has been given by the Company that the term will not be
extended or further extended pursuant to Paragraph 1 of this Agreement, Xxxxxx
shall be entitled to receive:
6.3.1 Accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the
expiration of the Term of Employment; and
6.3.2 A severance amount equal to his base salary plus his bonus
earned for the calendar year preceding the date of expiration, payable in
equal installments on the Company's regular pay schedule commencing within
30 days and continuing for 12 months; and
6
6.3.3 in addition, Xxxxxx shall be entitled to participate in the
Company's health plan for a period of 12 months following the expiration of
the term as if he were an employee.
6.4. By Company For Cause. "Cause" means Xxxxxx'x (a) conviction of, or
plea of nolo contendere to a felony; (b) theft or embezzlement, or attempted
theft or embezzlement, of money or property or assets of the Company or any of
its affiliates; (c) use of illegal drugs; (d) material breach of this
Agreement; (e) commission of any act or acts of moral turpitude in violation of
Company policy; (f) gross negligence or willful misconduct in the performance of
his duties; or (g) breach of any fiduciary duty owed to the Company, including,
without limitation, engaging in directly competitive acts while employed by the
Company.
6.4.1 The Company may terminate the employment at any time for Cause (as
hereinafter defined). If Xxxxxx is terminated by the Company for
Cause, Xxxxxx shall be entitled to receive only the unpaid portion
of his base salary and accrued vacation attributable to all periods
prior to and including the date of his termination, and
reimbursement for reasonable reimbursable expenses incurred on
behalf of the Company prior to the date of his termination.
6.4.2 In addition, if Xxxxxx is terminated by the Company for Cause (but
not otherwise), the Company and/or its designee(s) shall have the
option ("Option") to purchase all or any portion of the shares of
common stock of United Stationers Inc. held by Xxxxxx. If the
Company exercises such Option, Xxxxxx agrees to sell said shares to
the Company or its designee(s).
The Company shall give written notice to Xxxxxx of its election
to exercise the Option within one year from the date of termination
of Xxxxxx'x employment for Cause. If no notice is given within the
time specified, the Option shall terminate.
The purchase price to be paid for the shares purchased pursuant
to the Option shall be the closing sale price of the common stock
for the day preceding the dat the Option is exercised, as reported
on a national stock exchange or on the NASDAQ National Market
System, or if there were no sales on such date, the next preceding
day on which there were sales, or if the common stock is not listed
for quotation on the NASDAQ National Market System or on a national
stock exchange, the value of such common stock on such date as
determined by the Board of Directors of United Stationers Inc. in
good faith.
The purchase price shall be paid in cash. The closing of the
purchase shall take place at the Company's principal executive
offices within 10 days after the purchase price has been determined,
at which time Xxxxxx shall deliver to the purchaser the certificates
evidencing the common shares being purchased, duly endorsed.
7
To ensure the enforeceability of the Company's right under this
Section, each certificate representing common stock of United
Stationers Inc. held by Xxxxxx shall bear a conspicuous legend in form
acceptable to the Company.
6.5. By the Company. The Company may terminate Xxxxxx'x employment on
written notice to Xxxxxx at any time. If Xxxxxx'x employment is terminated by
the Company, other than for Cause, Xxxxxx shall be entitled to receive only:
6.5.1. the unpaid portion of his base salary for the remaining
portion of the term of employment, payable on the Company's regular pay
schedule; and
6.5.2. accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date
of termination; and
6.5.3. either:
6.5.3.1. if the termination is prior to the first anniversary of
this Agreement, severance pay equal to two times his base salary plus
two times his bonuses earned from the Company for 1995, payable in
equal installments on the Company's regular pay schedule commencing
within 30 days after Xxxxxx'x receipt of the notice from the Company
and continuing for 24 months; provided however, such amount shall be
reduced by the amount of compensation earned by Xxxxxx from any other
employment or consulting arrangement during the severance period; or
6.5.3.2. if the termination is on or after the first anniversary
of this Agreement, but before the second anniversary, severance pay
equal to two times his base salary plus two times his bonuses earned
from the Company for 1995, reduced (a) by 1/24th for each full month
of employment after the first anniversary of this Agreement and, (b)
by the amount of compensation earned by Xxxxxx from any other
employment or consulting arrangement during the severance period; or
6.5.3.3. if the termination is on or after the second
anniversary of this Agreement, severance pay equal to his base pay
plus his bonuses for the year preceding the year of termination; and
6.5.4. in addition, Xxxxxx shall be entitled to participate in the
Company's health plan for a period equal to the applicable severance
period, as if he were an employee.
6.6. By Death or Disability. If Xxxxxx'x employment is terminated due to
his death or permanent disability, Xxxxxx shall be entitled to severance pay in
accordance with the provisions of 6.5.2 and 6.5.3 above. In addition, if
Xxxxxx'x spouse is then living, for the
8
remainder of such spouse's life the Company shall continue to provide health
coverage for Xxxxxx'x spouse and dependent children in accordance with the
Company's health plans made generally available to employees of the Company,
without cost to the Xxxxxx'x spouse. Nothing in this Agreement shall affect
Xxxxxx'x right to receive death benefit payments under any policy of insurance
carried by the Company and payable to Xxxxxx or his designated beneficiary.
6.7. Retirement. Xxxxxx agrees that, in any event, his employment shall
terminate automatically on his sixty-fifth birthday. If his employment is
terminated pursuant to this Section 6.7., Xxxxxx shall be entitled to:
6.7.1. accrued vacation pay and reimbursement for reasonable expenses
incurred on behalf of the Company prior to the date of termination, and
6.7.2. in addition, Xxxxxx shall be entitled to participate in the
Company's health plan for retirees.
7. Change in Control. In the event of a Change in Control, provided Xxxxxx
is either (a) still employed by the Company 6 months after the date of the
Change in Control, or (b) has been terminated by the Company during that 6-month
period other than for Cause, Xxxxxx shall be entitled to resign before the first
anniversary of the Change in Control. Upon termination of his employment after
a Change in Control, except by Xxxxxx'x resignation within six months after the
Change in Control or by the Company for Cause, Xxxxxx shall be entitled to:
7.1. accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date
of termination; and
7.2. severance pay equal to two times his base salary plus two times
his bonuses earned from the Company for 1995, payable in equal installments
on the Company's regular pay schedule commencing within 30 days after
termination of Xxxxxx'x employment and continuing for 24 months; provided
however, such amount shall be reduced by the amount of compensation earned
by Xxxxxx from any other employment or consulting arrangement during the
severance period.
"Change in Control" shall mean a change in control of a nature that would
be required to be reported in responses to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
and presently in force (the "Exchange Act"); provided that, without limitation,
a Change in Control shall be deemed to have occurred if (a) any Person becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of United Stationers Inc. representing
thirty percent (30%) or more of the combined voting power of United Stationers
Inc.'s then outstanding equity having the power to seat the Board generally, or
(b) during any period of two consecutive years, individuals who at the beginning
of such period constitute the Board cease for any reason to constitute at least
a majority thereof, unless the election, or the nomination for election by
United Stationers Inc.'s stockholders, of any new director was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who were
directors at the beginning of the period.
9
8. Medical Benefits. The Company makes the following covenants to Xxxxxx
with respect to Xxxxxx'x medical benefits ("Medical Benefits"):
8.1 In the event the United Stationers Medical Plan ("Plan") remains
in effect and Xxxxxx'x employment with the Company terminates for any
reason, Xxxxxx (and Xxxxxx'x covered dependents at the time of such
termination of employment) shall be entitled to continue to participate in
the Plan until Xxxxxx attains age sixty-five (65), and Xxxxxx'x spouse
shall be entitled to continue to participate, in her own right, in the Plan
until Xxxxxx'x spouse attains age sixty-five (65), but not for a period in
excess of ten (10) years following Xxxxxx'x termination of employment with
the Company; provided that, in the event Xxxxxx terminates employment with
the Company prior to attaining age fifty-five (55) Xxxxxx (and Xxxxxx'x
covered dependents at the time of such termination of employment) shall
have the right to participate in the Plan for a period of ten (10) years,
such period to commence on either Xxxxxx'x termination of employment with
the Company or the date Xxxxxx attains age fifty-five (55) as Xxxxxx shall
elect in writing at the time of his termination of employment, under the
same terms and conditions applicable to persons who are provided coverage
as active employees under the Plan; provided, however, that a minimum
$1,000,000 Comprehensive Medical Lifetime Maximum Payment shall remain
applicable to Xxxxxx (and Xxxxxx'x covered dependents at the time of the
termination of employment).
8.2 In the event of the termination of the Plan or any cessation of
coverage under the Plan not occurring in accordance with the terms of the
Plan as in effect on September 1, 1995 (the date any such event first
occurs being referred to as the 'Coverage Cessation Date'), Xxxxxx shall be
entitled to and the Company shall pay to Xxxxxx THREE THOUSAND SEVENTY
DOLLARS ($3,070.00) per month for the period commencing on the first day of
the month following the month in which the Coverage Cessation Date occurs
and ending on the first to occur of:
(i) the later of the date Xxxxxx or Xxxxxx'x spouse attains
age sixty-five (65);
(ii) in the event of the death of Xxxxxx, the date the spouse
of Xxxxxx attains age sixty-five (65);
(iii) the end of the eighteen (18) month period commencing on
the Coverage Cessation Date; or
(iv) March 30, 1998.
8.3 After the Coverage Cessation Date, the Company shall pay claims
or reimburse expenses for those medical expenses which are considered
deductible under section 213 of the Code or any successor provision,
(without regard to any applicable threshold for deductibility) to Xxxxxx,
subject to the following terms and conditions:
10
(i) Xxxxxx (or any of Xxxxxx'x covered dependents as of the
Coverage Cessation Date) if covered by a medical plan maintained by
Xxxxxx'x then current employer or a medical plan maintained by the
employer of the spouse of Xxxxxx, has exceeded the lifetime maximum
benefit provided in such plan;
(ii) payment of medical expenses or reimbursement for such
claims under this subsection 8.3 shall not in the aggregate exceed
the lesser of the following amounts:
(a) a maximum of $300,000 for Xxxxxx and all dependents
(on an aggregate basis) of Xxxxxx as of the Coverage Cessation
Date; or
(b) the amount by which $700,000 exceeds the aggregate
amount of all medical claims under this subsection 8.3 for the
group of employees referred to as "Contract Officers" under the
Plan (including all covered dependents of such Contract Officers
as of the Coverage Cessation Date) prior to the date of the
requested payment by the Contract Officer; and
(iii) reimbursement for such claims under this subsection 8.3
shall be made for the period commencing on the Coverage Cessation Date
and ending on the first to occur of:
(a) the later of the date Xxxxxx or Xxxxxx'x spouse
attains age sixty-five;
(b) in the event of the death of Xxxxxx, the date the
spouse of Xxxxxx attains age sixty-five (65);
(c) the end of the eighteen (18) month period
commencing on the Coverage Cessation Date; or
(d) March 30, 1998.
The coverage provided under this Section 8.3 shall be separate and in
addition to the coverage provided under Section 8.2 above.
8.4 In addition, if Xxxxxx is or becomes an eligible retired officer
in accordance with the definition of a "retired officer" contained in the
Company's Officer Medical Expense Reimbursement Policy (presently LD-3)
("Policy"), or a similar policy, Xxxxxx shall be entitled to the medical
expense reimbursement benefits thereof whether or not the Policy is later
modified or revoked.
11
9. Miscellaneous.
9.1. All notices hereunder shall be given in writing and sent to the
party for whom such is intended by hand delivery or United States certified
or registered mail, return receipt requested, postage prepaid, or overnight
courier service, addressed to the party for whom intended at the following
respective addresses:
If to the Company: United Stationers Supply Co.
0000 X. Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Attn: President
If to Xxxxxx: 0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
or to such other persons and/or at such other addresses as may be
designated by written notice served in accordance with the provisions
hereof. Such notices shall be deemed to have been served, if hand
delivered, on the day delivered, and if mailed, on the third day following
the date deposited in the mail. Urgent notices shall be given by Telex or
cable to the same addresses and confirmed by mail as provided above. All
notices sent by Telex or cable shall be deemed to have been served upon
receipt of the Telex or cable, but only if in fact confirmed by mail
promptly after dispatch of the Telex or cable.
9.2 This Agreement and all rights and benefits hereunder are personal
to Xxxxxx and neither this Agreement nor any right or interest of Xxxxxx
herein, or arising hereunder, shall be voluntarily or involuntarily sold,
transferred or assigned by Xxxxxx. Any attempt by Xxxxxx to assign,
execute, attach, transfer, pledge, hypothecate or otherwise dispose of any
such benefits or amounts or any rights or interests contrary to the
foregoing provisions, or the levy or attachment or similar process
thereupon, shall be null and void and of no effect and shall relieve the
Company of all liabilities hereunder. This Agreement and all of the
Company's right and obligations hereunder may be assigned and/or delegated,
as the case may be, without Xxxxxx'x consent, to any entity which merges
with the Company or which acquires substantially all of the assets of the
Company and which agrees to be bound hereby. The enforceability of
Xxxxxx'x rights under the Agreement shall not be affected by any assignment
or merger.
9.3 This Agreement shall be binding upon and inure to the benefit of
the parties and their respective heirs, personal representatives,
successors and permitted assigns.
9.4 This Agreement constitutes the entire agreement between the
parties and contains all the agreements between such parties with respect
to the subject matter hereof. This Agreement supersedes all other
agreements, oral or in writing, between the parties with respect to the
subject matter hereof, including but not limited to the Employment
Agreement between Xxxxxx and Associated Stationers, Inc. dated January 31,
1992.
12
9.5 No change or modification of this Agreement shall be valid unless
the same shall be approved by the Board and in writing and signed by Xxxxxx
and an authorized representative of the Company other than Xxxxxx. No
waiver of any provisions of this Agreement shall be valid unless in writing
and signed by the person or party to be charged.
9.6 If any provisions of this Agreement (or portions thereof) shall,
for any reason, be invalid or unenforceable, such provisions (or portions
thereof) shall be ineffective only to the extent of such invalidity or
unenforceability, and the remaining provisions or portions shall
nevertheless be valid, enforceable and of full force and effect.
9.7 The Section or paragraph headings or titles are for convenience
only and shall not be deemed a part of this Agreement.
9.8 This Agreement may be executed in multiple counterparts, each of
which shall be deemed to be an original and all of which taken together
shall constitute a single instrument.
9.9 If Xxxxxx or his estate or designee prevails in any action to
enforce their rights under this Agreement, they shall be entitled to
receive their attorneys' fees, costs and expenses incurred in enforcing
their rights under this Agreement, as well as interest at the Prime Rate as
publicly announced by The Northern Trust Company from time to time on the
amount of the judgment from the date of demand for payment hereunder
through the date of receipt of the amount of the judgment.
10. Arbitration. Each of the undersigned hereby agrees that any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, including but not limited to any claims of discrimination and wrongful
termination, will be submitted for arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the Arbitrator(s) may be entered in any
court having jurisdiction thereof.
UNITED STATIONERS SUPPLY CO.,
an Illinois corporation
ATTEST:_______________________ By:_______________________
Xxxxxx Xxxxxxx Xxx Xxxxxxxx
Secretary Chairman of the Board and
Chief Executive Officer
_____________________________________
Xxxxxxx X. Xxxxxx
13
EXHIBIT A
TO EMPLOYMENT AGREEMENT
XXXXXXX X. XXXXXX
The following are benefit plans, programs and policies in which Xxxxxx is
entitled to participate as of October 1, 1995:
United Stationers Supply Co. Pension Plan
Associated Stationers/United Stationers Inc. Profit Sharing PluSavings
Plan
United Stationers Inc. Flexible Spending Plan
United Stationers Management Incentive Plan
United Stationers Inc. Management Equity Plan
` United Group Medical and Dental Benefit Plans
Officer Medical Expense Reimbursement Policy
Retiree Health Plan
Annual physical exam at Company expense
Leased auto or equivalent cash compensation in accordance with Policy
Group Term Life Insurance - 2 1/2 times base salary
Travel and Accident Insurance - $300,000
Split Dollar Life Insurance
Disability Insurance in accordance with insurance policy
Club and Association Dues - in accordance with Company Policy
Financial and Tax Consulting - and tax return preparation, in
accordance with Company Policy
Officer Indemnification and Insurance - D&O insurance is provided on a
claims-made basis; and Restated Certificate of Incorporation, and
Delaware and Illinois law provide indemnification of officers and
directors
Other - Vacations in accordance with Company Policy; other benefits
that may from time to time be made available to employees generally
14
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement ("Agreement") is made as of October 1, 1995 by
and between United Stationers Supply Co., an Illinois corporation (the
"Company") and Xxxxxx X. Xxxxxxx ("Xxxxxxx").
In consideration of the mutual promises and agreements contained in this
Agreement, the Company hereby employs Xxxxxxx, and Xxxxxxx accepts employment
with the Company on the terms and conditions contained in this Agreement.
1. Term of Employment. The term of employment shall commence as of the date
of this Agreement and shall continue until September 30, 1997, and thereafter
shall be extended automatically for additional one-year periods unless written
notice is given by either party to the other at least 60 days prior to the end
of such term, or any extension thereof.
2. Position and Duties. During the term of employment, Xxxxxxx shall serve
as an Executive Vice President of the Company, and, in accordance with the
authority and direction of the board of directors of the Company (the "Board")
shall render such administrative, sales, marketing and other services to the
Company as may be required of such position or as the Board may from time to
time direct. Xxxxxxx shall be available at all reasonable times for consultation
with the Board on matters relating to the Company's, or its affiliates'
business.
Xxxxxxx shall devote his best efforts and his full and exclusive business
time and attention (except for reasonable periods of vacation, illness or other
incapacity) to the business and affairs of the Company and its affiliates.
3. Compensation. During the term of employment, Xxxxxxx shall be
compensated as follows:
3.1. Base Salary. Xxxxxxx shall receive a base salary of no less
than $225,000.00 per year, payable in accordance with the Company's normal
payment schedule for management employees. The base salary shall be
reviewed by the Board annually and may, in the Board's sole discretion, be
increased when deemed appropriate.
3.2. Bonus. Xxxxxxx shall be eligible to participate in any bonus
plans approved by the Board and made generally available to senior
management employees of the Company, and shall be entitled to such bonus
amounts as shall be determined in accordance with such plans.
3.3. Benefits. Xxxxxxx shall be included, to the extent eligible, in
all plans, programs and policies providing general benefits for the
Company's employees or its senior management employees (as approved by the
Board and in effect from time to time). The benefit plans, programs and
policies presently in effect are listed on Exhibit A
attached to this Agreement. This paragraph shall not be construed to
require the Company to establish or maintain any policy, plan or program.
4. Confidential Information.
4.1. Xxxxxxx acknowledges the Company's exclusive ownership of all
information useful in the Company's business (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
Xxxxxxx as a consequence of his employment by the Company (including information
conceived, discovered or developed by Xxxxxxx during his employment with the
Company) (collectively, "Confidential Information"). Confidential Information
includes, but is not limited to the following especially sensitive types of
information:
(i) The identity, purchase and payment patterns of, and special
relations with, the Company's customers;
(ii) The identity, net prices and credit terms of, and special
relations with, the Company's suppliers;
(iii) The Company's inventory selection and management techniques;
(iv) The Company's product development and marketing plans; and
(v) The Company's finances, except to the extent publicly
disclosed.
4.2. 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, by or but not limited to, those which contain
Confidential Information. For example, Proprietary Materials include, but are
not limited to, the following especially sensitive types of materials:
applications software, the data bases of Confidential Information maintained in
connection with such software, and printouts generated from such data bases;
market studies and strategic plans; customer, supplier and employee lists;
contracts and correspondence with customers and suppliers; documents evidencing
transactions with customers and supplier; sales calls reports, appointment
books, calendars, expense statements and the like, reflecting conversations with
any company, customer or supplier; architectural plans; and purchasing, sales
and policy manuals. Proprietary Materials also include, but are not limited to,
any such things which are created by Xxxxxxx or with Xxxxxxx'x assistance and
all notes, memoranda and the like prepared using the Proprietary Materials
and/or Confidential Information.
4.3. While some of the information contained in Proprietary Materials may
have been known to Xxxxxxx prior to employment with the Company, or may now or
in the future be in the public domain, Xxxxxxx acknowledges that the compilation
of that information contained in the
2
Proprietary Materials has or will cost the Company a great effort and expense,
and affords persons to whom Proprietary Materials are disclosed, including
Xxxxxxx, a competitive advantage over persons who do not know the information or
have the compilation of the Proprietary Materials. Xxxxxxx 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. Xxxxxxx shall report to the
Company fully and promptly, orally (or, at the Company's request, in writing)
all discoveries, inventions and improvements, whether or not patentable, and all
other ideas, developments, processes, techniques, designs and other information
which may be of benefit to the Company, which Xxxxxxx conceives, makes or
develops during his employment (whether or not during working hours or with use
or assistance of Company facilities, materials or personnel, and which either
(i) relate to or arise out of any part of the Company's business in which
Xxxxxxx participates, or (ii) incorporate or make use of Confidential
Information or Proprietary Materials) (all items referred to in this Section 4.3
being sometimes collectively referred to herein as the "Intellectual Property").
All Intellectual property shall be deemed Confidential Information of the
Company, and any writing or other tangible things describing, referring to, or
containing Intellectual Property shall be deemed the Company's Proprietary
Materials. At the request of the Company, during or after the term of
employment, Xxxxxxx (or after Xxxxxxx'x death, Xxxxxxx'x personal
representative) shall, at the expense of the Company, make, execute and deliver
all papers, assignments, conveyances, installments or other documents, and
perform or cause to be performed such other lawful acts, and give such
testimony, as the Company deems necessary or desirable to protect the Company's
ownership rights and Intellectual Property.
4.4. Confidentiality Duties. Xxxxxxx shall, except as may be required
by law, during the term of employment, and thereafter for the longest time
permitted by applicable law:
4.4.1. Comply with all of the Company's instructions (whether oral or
written) for preserving the confidentiality of Confidential Information and
Proprietary Materials.
4.4.2. Use Confidential Information and Proprietary Materials only at
places designated by the Company, in furtherance of the Company's business,
and pursuant to the Company's directions.
4.4.3. Exercise appropriate care to advise other employees of the
Company (and, as appropriate, subcontractors) of the sensitive nature of
Confidential Information and Proprietary materials prior to their
disclosure, and to disclose the same only on a need-to-know basis.
4.4.4. Not copy all or any part of Proprietary Materials, except as
the Company directs.
4.4.5. Not sell, give, loan or otherwise transfer any copy of all or
any part of Proprietary Materials to any person who is not an employee of
the Company, except as the Company directs.
3
4.4.6. 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.
4.4.7. Not use all or any part of any Confidential Information or
Proprietary Materials for the benefit of any third party without the
Company's written consent.
Upon the termination of Xxxxxxx'x employment for whatever reason, Xxxxxxx
(or in the event of death, Xxxxxxx'x personal representative) shall promptly
surrender to the Company the original and all copies of Proprietary Materials
(including all notes, memoranda and the like concerning or derived therefrom),
whether prepared by Xxxxxxx or others, which are then in Xxxxxxx'x possession or
control. Records of payments made by the Company to or for the benefit of
Xxxxxxx, Xxxxxxx'x copy of this Agreement and other such things, lawfully
possessed by Xxxxxxx which relate solely to taxes payable by Schwarz, employee
benefits due to Xxxxxxx or the terms of Xxxxxxx'x employment with the Company,
shall not be deemed Proprietary Materials for purposes of this Section 4.
5. Non-competition.
5.1. During Xxxxxxx'x employment, and during the two year period following
his employment), Xxxxxxx shall not, in any way, directly or indirectly, manage,
operate, control (or participate in any of the foregoing), accept employment or
a consulting position with or otherwise advise or assist or be connected with or
directly or indirectly own or have any other interest in or right with respect
to (other than through ownership of not more than 1% of the outstanding shares
of a corporation's stock which is listed on a national securities exchange) any
enterprise (other than for the Company or for the benefit of the Company) which
is a wholesaler of office products having annual sales in excess of $1,000,000.
5.2. Notwithstanding Section 5.1., following the term of employment,
Xxxxxxx may be engaged in the business of selling office products at retail and
Xxxxxxx may be engaged by any company whose principal business is the
manufacture of office products.
5.3. Xxxxxxx recognizes that the foregoing limitations are reasonable and
properly required for the adequate protection of the business of the Company.
If any such limitations are deemed to be unreasonable by a court having
jurisdiction of the matter and parties, Xxxxxxx hereby agrees and submits to the
reduction of any such limitations to such territory or time as to such court
shall appear reasonable.
5.4. If Xxxxxxx 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.
5.5. Xxxxxxx agrees that the remedy at law for any breach of the provisions
of Section 4 or this Section 5 shall be inadequate and that the Company shall be
entitled to injunctive relief in addition to any other remedies it may have.
4
6. Termination and Severance.
6.1. Resignation. If Xxxxxxx resigns, or if Xxxxxxx gives notice to the
Company of non-extension of the term of employment pursuant to Paragraph 1, he
shall be entitled to receive only the unpaid portion of his base salary and
accrued vacation attributable to and including the date of resignation, and
reimbursement for reasonable reimbursable expenses incurred on behalf of the
Company prior to the date of termination.
6.2. By Xxxxxxx For Good Reason. Xxxxxxx may elect to terminate his
employment by written notice to the Company within 60 days after the occurrence
of any of the following events without Xxxxxxx'x consent, any of which shall be
deemed "Good Reason":
(a) the reduction of Xxxxxxx'x base salary;
(b) the exclusion of Xxxxxxx from, or diminution in Xxxxxxx'x
participation in, any pension, bonus, management incentive, profit sharing
and other similar incentive, compensation or deferred compensation plans
made available to employees of the Company, officers or senior management
personnel of the Company, other than exclusions, changes or diminutions
applicable to all employees, officers or senior management personnel; or
(c) any diminution in expense reimbursement benefits enjoyed by
Xxxxxxx, except pursuant to a general change in the Company's reimbursement
policies; or
(d) any material reduction in Xxxxxxx'x title or duties which has the
effect of materially reducing Xxxxxxx'x status within the Company;
provided, however, that any change in the office or officer to whom Xxxxxxx
reports, or in Xxxxxxx'x duties or title which does not diminish Xxxxxxx'x
status within the Company, shall not be deemed "Good Reason"; or
(e) any relocation of the Company's headquarters outside of the
Chicago metropolitan area; or
(f) the breach by the Company of any of its covenants or obligations
under this Agreement.
If the employment is terminated by Xxxxxxx for Good Reason, Xxxxxxx shall
be entitled to receive:
6.2.1. the unpaid portion of his base salary for the remainder of
his term of employment (but not for more than a 12 month period), payable
on the Company's regular pay schedule; and
5
6.2.2. reimbursement for reasonable reimbursable expenses incurred
on behalf of the Company prior to the termination; and
6.2.3. a severance amount equal to two times his base salary, plus
two times his bonuses earned from the Company for the calendar year
preceding the year in which notice is given by Xxxxxxx to the Company,
payable in equal installments on the Company's regular pay schedule,
commencing within 30 days after receipt by the Company of written notice
from Xxxxxxx and continuing for 24 months.
6.3. By Expiration of the Term of Employment. If the term of employment
expires and notice has been given by the Company that the term will not be
extended or further extended pursuant to Paragraph 1 of this Agreement, Xxxxxxx
shall be entitled to receive:
6.3.1. Accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the
expiration of the Term of Employment; and
6.3.2. A severance amount equal to his base salary plus his bonus
earned for the calendar year preceding the date of expiration, payable in
equal installments on the Company's regular pay schedule commencing within
30 days and continuing for 12 months.
6.4. By Company For Cause. The Company may terminate the employment at
any time for Cause (as hereinafter defined). If Xxxxxxx is terminated by the
Company for Cause, Xxxxxxx shall be entitled to receive only the unpaid portion
of his base salary and accrued vacation attributable to all periods prior to and
including the date of his termination, and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date of his
termination.
"Cause" means Xxxxxxx'x (a) conviction of , or plea of nolo contendere to
a felony; (b) theft or embezzlement, or attempted theft or embezzlement, of
money or property or assets of the Company or any of its affiliates; (c) use of
illegal drugs; (d) material breach of this Agreement; (e) commission of any act
or acts of moral turpitude in violation of Company policy; (f) gross negligence
or willful misconduct in the performance of his duties; or (g) breach of any
fiduciary duty owed to the Company, including, without limitation, engaging in
directly competitive acts while employed by the Company.
6.5. By the Company. The Company may terminate Xxxxxxx'x employment on
written notice to Xxxxxxx at any time. If Xxxxxxx'x employment is terminated by
the Company, other than for Cause, Xxxxxxx shall be entitled to receive:
6.5.1. the unpaid portion of his base salary for the remaining
portion of the term of employment (but not for more than 12 months),
payable on the Company's regular pay schedule; and
6
6.5.2. accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date
of termination; and
6.5.3. either:
6.5.3.1. if the termination is prior to the first anniversary of
this Agreement, severance pay equal to two times his base salary plus
two times his bonuses earned from the Company for 1995, payable in
equal installments on the Company's regular pay schedule commencing
within 30 days after Xxxxxxx'x receipt of the notice from the Company
and continuing for 24 months; provided however, such amount shall be
reduced by the amount of compensation earned by Xxxxxxx from any
other employment or consulting arrangement during the severance
period; or
6.5.3.2. if the termination is on or after the first anniversary
of this Agreement, but before the second anniversary, severance pay
equal to two times his base salary plus two times his bonuses earned
from the Company for 1995, reduced (a) by 1/24th for each full month
of employment after the first anniversary of this Agreement and, (b)
by the amount of compensation earned by Schwarz from any other
employment or consulting arrangement during the severance period; or
6.5.3.3. if the termination is on or after the second
anniversary of this Agreement, severance pay equal to his base pay
plus his bonuses for the year preceding the year of termination.
6.6. By Death or Disability. If Xxxxxxx'x employment is terminated due to
his death or permanent disability, Xxxxxxx shall be entitled to severance pay in
accordance with the provisions of 6.5.2 and 6.5.3 above. In addition, if
Xxxxxxx'x spouse is then living, for the remainder of such spouse's life the
Company shall continue to provide health coverage for Xxxxxxx'x spouse and
dependent children in accordance with the Company's health plans made generally
available to employees of the Company, without cost to Xxxxxxx'x spouse.
Nothing in this Agreement shall affect Xxxxxxx'x right to receive death benefit
payments under any policy of insurance carried by the Company and payable to
Xxxxxxx or his designated beneficiary.
6.7. Retirement. Xxxxxxx agrees that, in any event, his employment shall
terminate automatically on his sixty-fifth birthday. If his employment is
terminated pursuant to this Section 6.7., Xxxxxxx shall be entitled to:
6.7.1. accrued vacation pay and reimbursement for reasonable expenses
incurred on behalf of the Company prior to the date of termination, and
6.7.2. in addition, Xxxxxxx shall be entitled to participate in the
Company's health plan for retirees.
7
7. Change in Control. In the event of a Change in Control, provided
Xxxxxxx is either (a) still employed by the Company 6 months after the date of
the Change in Control, or (b) has been terminated by the Company during that 6-
month period other than for Cause, Xxxxxxx shall be entitled to resign before
the first anniversary of the Change in Control. Upon termination of his
employment after a Change in Control, except by Xxxxxxx'x resignation within six
months after the Change in Control or by the Company for Cause, Xxxxxxx shall be
entitled to:
7.1. accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date
of termination; and
7.2. severance pay equal to two times his base salary plus two times
his bonuses earned from the Company for 1995, payable in equal installments
on the Company's regular pay schedule commencing within 30 days after
termination of Xxxxxxx'x employment and continuing for 24 months; provided
however, such amount shall be reduced by the amount of compensation earned
by Xxxxxxx from any other employment or consulting arrangement during the
severance period.
"Change in Control" shall mean a change in control of a nature that would
be required to be reported in responses to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
and presently in force (the "Exchange Act"); provided that, without limitation,
a Change in Control shall be deemed to have occurred if (a) any Person becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of United Stationers Inc. representing
thirty percent (30%) or more of the combined voting power of United Stationers
Inc.'s then outstanding equity having the power to seat the Board generally, or
(b) during any period of two consecutive years, individuals who at the beginning
of such period constitute the Board cease for any reason to constitute at least
a majority thereof, unless the election, or the nomination for election by
United Stationers Inc.'s stockholders, of any new director was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who were
directors at the beginning of the period.
8. Stay Bonus. In addition to the payments to which Xxxxxxx may be
entitled pursuant to Section 6 above, unless Xxxxxxx resigns prior to March 30,
1996, effective March 30, 1996, Xxxxxxx shall also be entitled to receive the
Stay Bonus, medical and other benefits to which he is entitled under the United
Stationers Inc. Employee Benefits Trust dated March 22, 1995.
9. Medical Benefits. The Company makes the following covenants to
Xxxxxxx with respect to Xxxxxxx'x medical benefits ("Medical Benefits"):
9.1 In the event the United Stationers Medical Plan ("Plan") remains
in effect and Xxxxxxx'x employment with the Company terminates for any
reason, Xxxxxxx (and Xxxxxxx'x covered dependents at the time of such
termination of employment) shall be entitled to continue to participate in
the Plan until Xxxxxxx attains age sixty-five (65), and Xxxxxxx'x spouse
shall be entitled to continue to participate, in her own right, in the Plan
8
until Xxxxxxx'x spouse attains age sixty-five (65), but not for a period in
excess of ten (10) years following Xxxxxxx'x termination of employment with
the Company; provided that, in the event Xxxxxxx terminates employment
with the Company prior to attaining age fifty-five (55) Xxxxxxx (and
Xxxxxxx'x covered dependents at the time of such termination of employment)
shall have the right to participate in the Plan for a period of ten (10)
years, such period to commence on either Xxxxxxx'x termination of
employment with the Company or the date Schwarz attains age fifty-five (55)
as Xxxxxxx shall elect in writing at the time of his termination of
employment, under the same terms and conditions applicable to persons who
are provided coverage as active employees under the Plan; provided,
however, that a minimum $1,000,000 Comprehensive Medical Lifetime Maximum
Payment shall remain applicable to Xxxxxxx (and Xxxxxxx'x covered
dependents at the time of the termination of employment).
9.2 In the event of the termination of the Plan or any cessation of
coverage under the Plan not occurring in accordance with the terms of the
Plan as in effect on September 1, 1995 (the date any such event first
occurs being referred to as the 'Coverage Cessation Date'), Xxxxxxx shall
be entitled to and the Company shall pay to Xxxxxxx TWO THOUSAND SEVEN
HUNDRED DOLLARS ($2,700.00) per month for the period commencing on the
first day of the month following the month in which the Coverage Cessation
Date occurs and ending on the first to occur of:
(i) the later of the date Xxxxxxx or Xxxxxxx'x spouse attains
age sixty-five (65);
(ii) in the event of the death of Xxxxxxx, the date the spouse
of Schwarz attains age sixty-five (65);
(iii) the end of the eighteen (18) month period commencing on
the Coverage Cessation Date; or
(iv) March 30, 1998.
9.3 After the Coverage Cessation Date, the Company shall pay claims
or reimburse expenses for those medical expenses which are considered
deductible under section 213 of the Code or any successor provision,
(without regard to any applicable threshold for deductibility) to Xxxxxxx,
subject to the following terms and conditions:
(i) Xxxxxxx (or any of Xxxxxxx'x covered dependents as of the
Coverage Cessation Date) if covered by a medical plan maintained by
Xxxxxxx'x then current employer or a medical plan maintained by the
employer of the spouse of Xxxxxxx, has exceeded the lifetime maximum
benefit provided in such plan;
(ii) payment of medical expenses or reimbursement for such
claims under this subsection 9.3 shall not in the aggregate exceed
the lesser of the following amounts:
9
(a) a maximum of $300,000 for Xxxxxxx and all dependents
(on an aggregate basis) of Xxxxxxx as of the Coverage Cessation
Date; or
(b) the amount by which $700,000 exceeds the aggregate
amount of all medical claims under this subsection 9.3 for the
group of employees referred to as "Contract Officers" under the
Plan (including all covered dependents of such Contract
Officers as of the Coverage Cessation Date) prior to the date of
the requested payment by the Contract Officer; and
(iii) reimbursement for such claims under this subsection 9.3
shall be made for the period commencing on the Coverage Cessation Date
and ending on the first to occur of:
(a) the later of the date Xxxxxxx or Xxxxxxx'x spouse
attains age sixty-five;
(b) in the event of the death of Xxxxxxx, the date the
spouse of Schwarz attains age sixty-five (65);
(c) the end of the eighteen (18) month period commencing on
the Coverage Cessation Date; or
(d) March 30, 1998.
The coverage provided under this Section 9.3 shall be separate and in
addition to the coverage provided under Section 9.2 above.
9.4 In addition, if Xxxxxxx is or becomes an eligible retired officer
in accordance with the definition of a "retired officer" contained in the
Company's Officer Medical Expense Reimbursement Policy (presently LD-
3)("Policy"), or a similar policy, Xxxxxxx shall be entitled to the medical
expense reimbursement benefits thereof whether or not the Policy is later
modified or revoked.
10. Miscellaneous.
10.1. All notices hereunder shall be given in writing and sent to the
party for whom such is intended by hand delivery or United States certified
or registered mail, return receipt requested, postage prepaid, or overnight
courier service, addressed to the party for whom intended at the following
respective addresses:
10
If to the Company:
United Stationers Supply Co.
0000 X. Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Attn: President
If to Xxxxxxx: 000 Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
or to such other persons and/or at such other addresses as may be
designated by written notice served in accordance with the provisions
hereof. Such notices shall be deemed to have been served, if hand
delivered, on the day delivered, and if mailed, on the third day following
the date deposited in the mail. Urgent notices shall be given by Telex or
cable to the same addresses and confirmed by mail as provided above. All
notices sent by Telex or cable shall be deemed to have been served upon
receipt of the Telex or cable, but only if in fact confirmed by mail
promptly after dispatch of the Telex or cable.
10.2. This Agreement and all rights and benefits hereunder are
personal to Xxxxxxx and neither this Agreement nor any right or interest of
Schwarz herein, or arising hereunder, shall be voluntarily or involuntarily
sold, transferred or assigned by Schwarz. Any attempt by Schwarz to
assign, execute, attach, transfer, pledge, hypothecate or otherwise dispose
of any such benefits or amounts or any rights or interests contrary to the
foregoing provisions, or the levy or attachment or similar process
thereupon, shall be null and void and of no effect and shall relieve the
Company of all liabilities hereunder. This Agreement and all of the
Company's right and obligations hereunder may be assigned and/or delegated,
as the case may be, without Xxxxxxx'x consent, to any entity which merges
with the Company or which acquires substantially all of the assets of the
Company and which agrees to be bound hereby. The enforceability of
Xxxxxxx'x rights under the Agreement shall not be affected by any
assignment or merger.
10.3. This Agreement shall be binding upon and inure to the benefit
of the parties and their respective heirs, personal representatives,
successors and permitted assigns.
10.4. This Agreement constitutes the entire agreement between the
parties and contains all the agreements between such parties with respect
to the subject matter hereof. This Agreement supersedes all other
agreements, oral or in writing, between the parties with respect to the
subject matter hereof, including but not limited to the Employment and
Consulting Agreement between Xxxxxxx and United Stationers Inc. and United
Stationers Supply Co. dated September 1, 1989, as amended February 13, 1995
and August 30, 1995.
10.5. No change or modification of this Agreement shall be valid
unless the same shall be approved by the Board and in writing and signed by
Xxxxxxx and an
11
authorized representative of the Company other than Xxxxxxx. No waiver of
any provisions of this Agreement shall be valid unless in writing and
signed by the person or party to be charged.
10.6. If any provisions of this Agreement (or portions thereof)
shall, for any reason, be invalid or unenforceable, such provisions (or
portions thereof) shall be ineffective only to the extent of such
invalidity or unenforceability, and the remaining provisions or portions
shall nevertheless be valid, enforceable and of full force and effect.
10.7 The Section or paragraph headings or titles are for convenience
only and shall not be deemed a part of this Agreement.
10.8 This Agreement may be executed in multiple counterparts, each of
which shall be deemed to be an original and all of which taken together
shall constitute a single instrument.
10.9 If Xxxxxxx or his estate or designee prevails in any action to
enforce their rights under this Agreement, they shall be entitled to
receive their attorneys' fees, costs and expenses incurred in enforcing
their rights under this Agreement, as well as interest at the Prime Rate as
publicly announced by The Northern Trust Company from time to time on the
amount of the judgment from the date of demand for payment hereunder
through the date of receipt of the amount of the judgment.
11. Arbitration. Each of the undersigned hereby agrees that any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, including but not limited to any claims of discrimination and wrongful
termination, will be submitted for arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the Arbitrator(s) may be entered in any
court having jurisdiction thereof.
UNITED STATIONERS SUPPLY CO.,
an Illinois corporation
ATTEST:_______________________ By:_______________________
Xxxxxx X. Xxxxxxx Xxx Xxxxxxxx
Secretary Chairman of the Board and
Chief Executive Officer
_____________________________________
Xxxxxx X. Xxxxxxx
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EXHIBIT A
TO EMPLOYMENT AGREEMENT
XXXXXX X. XXXXXXX
The following are benefit plans, programs and policies in which Xxxxxxx is
entitled to participate as of October 1, 1995:
United Stationers Supply Co. Pension Plan
United Stationers Inc. Profit Sharing PluSavings Plan
United Stationers Inc. Flexible Spending Plan
United Stationers Management Incentive Plan
United Stationers Inc. Management Equity Plan
United Group Medical and Dental Benefit Plans
Officer Medical Expense Reimbursement Policy
Retiree Health Plan
Annual physical exam at Company expense
Leased auto or equivalent cash compensation in accordance with Policy
Group Term Life Insurance - 2 1/2 times base salary
Travel and Accident Insurance - $300,000
Split Dollar Life Insurance
Disability Insurance in accordance with insurance policy
Club and Association Dues - in accordance with Company Policy
Financial and Tax Consulting - and tax return preparation, in
accordance with Company Policy
Officer Indemnification and Insurance - D&O insurance is provided on a
claims-made basis; and Restated Certificate of Incorporation, and
Delaware and Illinois law provide indemnification of officers and
directors
Other - Vacations in accordance with Company Policy; other benefits
that may from time to time be made available to employees generally
13
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement ("Agreement") is made as of October 1, 1995 by
and between United Stationers Supply Co., an Illinois corporation (the
"Company") and Xxxxxx X. Xxxxxxx ("Cornell").
In consideration of the mutual promises and agreements contained in this
Agreement, the Company hereby employs Cornell, and Cornell accepts employment
with the Company on the terms and conditions contained in this Agreement.
1. Term of Employment. The term of employment shall commence as of the date
of this Agreement and shall continue until September 30, 1996, and thereafter
shall be extended automatically for additional one-year periods unless written
notice is given by either party to the other at least 60 days prior to the end
of such term, or any extension thereof.
2. Position and Duties. During the term of employment, Cornell shall serve
as Vice President, Human Resources of the Company, and, in accordance with the
authority and direction of the board of directors of the Company (the "Board")
shall render such administrative and other services to the Company as may be
required of such position or as the Board may from time to time direct. Cornell
shall be available at all reasonable times for consultation with the Board on
matters relating to the Company's, or its affiliates' business.
Cornell shall devote his best efforts and his full and exclusive business
time and attention (except for reasonable periods of vacation, illness or other
incapacity) to the business and affairs of the Company and its affiliates.
3. Compensation. During the term of employment, Cornell shall be
compensated as follows:
3.1. Base Salary. Cornell shall receive a base salary of no less
than $169,520.00 per year, payable in accordance with the Company's normal
payment schedule for management employees. The base salary shall be
reviewed by the Board annually and may, in the Board's sole discretion, be
increased when deemed appropriate.
3.2. Bonus. Cornell shall be eligible to participate in any
bonus plans approved by the Board and made generally available to senior
management employees of the Company, and shall be entitled to such bonus
amounts as shall be determined in accordance with such plans.
3.3. Benefits. Cornell shall be included, to the extent eligible, in
all plans, programs and policies providing general benefits for the
Company's employees or its senior management employees (as approved by the
Board and in effect from time to time). The benefit plans, programs and
policies presently in effect are listed on Exhibit A
attached to this Agreement. This paragraph shall not be construed to
require the Company to establish or maintain any policy, plan or program.
4. Confidential Information.
4.1. Cornell acknowledges the Company's exclusive ownership of all
information useful in the Company's business (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
Cornell as a consequence of his employment by the Company (including information
conceived, discovered or developed by Cornell during his employment with the
Company) (collectively, "Confidential Information"). Confidential Information
includes, but is not limited to the following especially sensitive types of
information:
(i) The identity, purchase and payment patterns of, and special
relations with, the Company's customers;
(ii) The identity, net prices and credit terms of, and special
relations with, the Company's suppliers;
(iii) The Company's inventory selection and management techniques;
(iv) The Company's product development and marketing plans; and
(v) The Company's finances, except to the extent publicly
disclosed.
4.2. 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, by or but not limited to, those which contain
Confidential Information. For example, Proprietary Materials include, but are
not limited to, the following especially sensitive types of materials:
applications software, the data bases of Confidential Information maintained in
connection with such software, and printouts generated from such data bases;
market studies and strategic plans; customer, supplier and employee lists;
contracts and correspondence with customers and suppliers; documents evidencing
transactions with customers and supplier; sales calls reports, appointment
books, calendars, expense statements and the like, reflecting conversations with
any company, customer or supplier; architectural plans; and purchasing, sales
and policy manuals. Proprietary Materials also include, but are not limited to,
any such things which are created by Cornell or with Cornell's assistance and
all notes, memoranda and the like prepared using the Proprietary Materials
and/or Confidential Information.
4.3. While some of the information contained in Proprietary Materials may
have been known to Cornell prior to employment with the Company, or may now or
in the future be in the public domain, Cornell acknowledges that the compilation
of that information contained in the
2
Proprietary Materials has or will cost the Company a great effort and expense,
and affords persons to whom Proprietary Materials are disclosed, including
Cornell, a competitive advantage over persons who do not know the information or
have the compilation of the Proprietary Materials. Cornell 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. Cornell shall report to the
Company fully and promptly, orally (or, at the Company's request, in writing)
all discoveries, inventions and improvements, whether or not patentable, and all
other ideas, developments, processes, techniques, designs and other information
which may be of benefit to the Company, which Cornell conceives, makes or
develops during his employment (whether or not during working hours or with use
or assistance of Company facilities, materials or personnel, and which either
(i) relate to or arise out of any part of the Company's business in which
Cornell participates, or (ii) incorporate or make use of Confidential
Information or Proprietary Materials) (all items referred to in this Section 4.3
being sometimes collectively referred to herein as the "Intellectual Property").
All Intellectual property shall be deemed Confidential Information of the
Company, and any writing or other tangible things describing, referring to, or
containing Intellectual Property shall be deemed the Company's Proprietary
Materials. At the request of the Company, during or after the term of
employment, Cornell (or after Cornell's death, Cornell's personal
representative) shall, at the expense of the Company, make, execute and deliver
all papers, assignments, conveyances, installments or other documents, and
perform or cause to be performed such other lawful acts, and give such
testimony, as the Company deems necessary or desirable to protect the Company's
ownership rights and Intellectual Property.
4.4. Confidentiality Duties. Cornell shall, except as may be required
by law, during the term of employment, and thereafter for the longest time
permitted by applicable law:
4.4.1. Comply with all of the Company's instructions (whether oral or
written) for preserving the confidentiality of Confidential Information and
Proprietary Materials.
4.4.2. Use Confidential Information and Proprietary Materials only at
places designated by the Company, in furtherance of the Company's business,
and pursuant to the Company's directions.
4.4.3. Exercise appropriate care to advise other employees of the
Company (and, as appropriate, subcontractors) of the sensitive nature of
Confidential Information and Proprietary materials prior to their
disclosure, and to disclose the same only on a need-to-know basis.
4.4.4. Not copy all or any part of Proprietary Materials, except as
the Company directs.
4.4.5. Not sell, give, loan or otherwise transfer any copy of all or
any part of Proprietary Materials to any person who is not an employee of
the Company, except as the Company directs.
3
4.4.6. 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.
4.4.7. Not use all or any part of any Confidential Information or
Proprietary Materials for the benefit of any third party without the
Company's written consent.
Upon the termination of Cornell's employment for whatever reason, Cornell
(or in the event of death, Cornell's personal representative) shall promptly
surrender to the Company the original and all copies of Proprietary Materials
(including all notes, memoranda and the like concerning or derived therefrom),
whether prepared by Cornell or others, which are then in Cornell's possession or
control. Records of payments made by the Company to or for the benefit of
Cornell, Cornell's copy of this Agreement and other such things, lawfully
possessed by Cornell which relate solely to taxes payable by Cornell, employee
benefits due to Cornell or the terms of Cornell's employment with the Company,
shall not be deemed Proprietary Materials for purposes of this Section 4.
5. Non-competition.
5.1. During Cornell's employment, and during the two year period following
his employment), Cornell shall not, in any way, directly or indirectly, manage,
operate, control (or participate in any of the foregoing), accept employment or
a consulting position with or otherwise advise or assist or be connected with or
directly or indirectly own or have any other interest in or right with respect
to (other than through ownership of not more than 1% of the outstanding shares
of a corporation's stock which is listed on a national securities exchange) any
enterprise (other than for the Company or for the benefit of the Company) which
is a wholesaler of office products having annual sales in excess of $1,000,000.
5.2. Notwithstanding Section 5.1., following the term of employment,
Cornell may be engaged in the business of selling office products at retail and
Cornell may be engaged by any company whose principal business is the
manufacture of office products.
5.3. Cornell recognizes that the foregoing limitations are reasonable and
properly required for the adequate protection of the business of the Company.
If any such limitations are deemed to be unreasonable by a court having
jurisdiction of the matter and parties, Cornell hereby agrees and submits to the
reduction of any such limitations to such territory or time as to such court
shall appear reasonable.
5.4. If Cornell 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.
5.5. Cornell agrees that the remedy at law for any breach of the
provisions of Section 4 or this Section 5 shall be inadequate and that the
Company shall be entitled to injunctive relief in addition to any other
remedies it may have.
4
6. Termination and Severance.
6.1. Resignation. If Cornell resigns, or if Cornell gives notice to the
Company of non-extension of the term of employment pursuant to Paragraph 1, he
shall be entitled to receive only the unpaid portion of his base salary and
accrued vacation attributable to and including the date of resignation, and
reimbursement for reasonable reimbursable expenses incurred on behalf of the
Company prior to the date of termination.
6.2. By Cornell For Good Reason. Cornell may elect to terminate his
employment by written notice to the Company within 60 days after the occurrence
of any of the following events without Cornell's consent, any of which shall be
deemed "Good Reason":
(a) the reduction of Cornell's base salary;
(b) the exclusion of Cornell from, or diminution in Cornell's
participation in, any pension, bonus, management incentive, profit sharing
and other similar incentive, compensation or deferred compensation plans
made available to employees of the Company or to officers or management
personnel of the Company at the level of vice president or lower, other
than exclusions, changes or diminutions applicable to all employees or such
management personnel or officers; or
(c) any diminution in expense reimbursement benefits enjoyed by
Cornell, except pursuant to a general change in the Company's reimbursement
policies; or
(d) any material reduction in Cornell's title or duties which has the
effect of materially reducing Cornell's status within the Company;
provided, however, that any change in the office or officer to whom Cornell
reports, or in Cornell's duties or title which does not diminish Cornell's
status within the Company, shall not be deemed "Good Reason"; or
(e) any relocation of the Company's headquarters outside of the
Chicago metropolitan area; or
(f) the breach by the Company of any of its covenants or obligations
under this Agreement.
If the employment is terminated by Cornell for Good Reason, Cornell shall
be entitled to receive:
6.2.1. the unpaid portion of his base salary for the remainder of
his term of employment (but not for more than a 12 month period), payable
on the Company's regular pay schedule; and
5
6.2.2. reimbursement for reasonable reimbursable expenses incurred
on behalf of the Company prior to the termination; and
6.2.3. a severance amount equal to his base salary, plus his bonuses
earned from the Company for the calendar year preceding the year in which
notice is given by Cornell to the Company, payable in equal installments on
the Company's regular pay schedule, commencing within 30 days after receipt
by the Company of written notice from Cornell and continuing for 12 months.
6.3. By Expiration of the Term of Employment. If the term of employment
expires and notice has been given by the Company that the term will not be
extended or further extended pursuant to Paragraph 1 of this Agreement, Cornell
shall be entitled to receive:
6.3.1. Accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the
expiration of the Term of Employment; and
6.3.2. A severance amount equal to his base salary plus his bonuses
earned for the calendar year preceding the date of expiration, payable in
equal installments on the Company's regular pay schedule commencing within
30 days and continuing for 12 months.
6.4. By Company For Cause. The Company may terminate the employment at
any time for Cause (as hereinafter defined). If Cornell is terminated by the
Company for Cause, Cornell shall be entitled to receive only the unpaid portion
of his base salary and accrued vacation attributable to all periods prior to and
including the date of his termination, and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date of his
termination.
"Cause" means Cornell's (a) conviction of, or plea of nolo contendere to
a felony; (b) theft or embezzlement, or attempted theft or embezzlement, of
money or property or assets of the Company or any of its affiliates; (c) use of
illegal drugs; (d) material breach of this Agreement; (e) commission of any act
or acts of moral turpitude in violation of Company policy; (f) gross negligence
or willful misconduct in the performance of his duties; or (g) breach of any
fiduciary duty owed to the Company, including, without limitation, engaging in
directly competitive acts while employed by the Company.
6.5. By the Company. The Company may terminate Cornell's employment on
written notice to Cornell at any time. If Cornell's employment is terminated by
the Company, other than for Cause, Cornell shall be entitled to receive:
6.5.1. the unpaid portion of his base salary for the remaining
portion of the term of employment (but not for more than 12 months),
payable on the Company's regular pay schedule; and
6
6.5.2. accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date
of termination; and
6.5.3. severance pay equal to his base salary plus his bonuses earned
from the Company for the year preceding the year of termination.
6.6. By Death or Disability. If Cornell's employment is terminated due to
his death or permanent disability, Cornell shall be entitled to severance pay in
accordance with the provisions of 6.5.2 and 6.5.3 above. In addition, if
Cornell's spouse is then living, for the remainder of such spouse's life the
Company shall continue to provide health coverage for Cornell's spouse and
dependent children in accordance with the Company's health plans made generally
available to employees of the Company, without cost to Cornell's spouse.
Nothing in this Agreement shall affect Cornell's right to receive death benefit
payments under any policy of insurance carried by the Company and payable to
Cornell or his designated beneficiary.
6.7. Retirement. Cornell agrees that, in any event, his employment shall
terminate automatically on his sixty-fifth birthday. If his employment is
terminated pursuant to this Section 6.7., Cornell shall be entitled to:
6.7.1. accrued vacation pay and reimbursement for reasonable expenses
incurred on behalf of the Company prior to the date of termination, and
6.7.2. in addition, Cornell shall be entitled to participate in the
Company's health plan for retirees.
7. Change in Control. In the event of a Change in Control, provided Cornell is
either (a) still employed by the Company 6 months after the date of the Change
in Control, or (b) has been terminated by the Company during that 6-month period
other than for Cause, Cornell shall be entitled to resign before the first
anniversary of the Change in Control. Upon termination of his employment after a
Change in Control, except by Cornell's resignation within six months after the
Change in Control or by the Company for Cause, Cornell shall be entitled to:
7.1. accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date
of termination; and
7.2. severance pay equal to his base salary plus his bonuses earned
from the Company for the year preceding the year in which the Change in
Control occurs, payable in equal installments on the Company's regular pay
schedule commencing within 30 days after termination of Cornell's
employment and continuing for 12 months.
"Change in Control" shall mean a change in control of a nature that would
be required to be reported in responses to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
and presently in force (the "Exchange Act"); provided that, without limitation,
a Change in Control shall be deemed to have occurred if (a) any
7
Person becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of United Stationers Inc.
representing thirty percent (30%) or more of the combined voting power of United
Stationers Inc.'s then outstanding equity having the power to seat the Board
generally, or (b) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by United Stationers Inc.'s stockholders, of any new director was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who were directors at the beginning of the period.
8. Stay Bonus. In addition to the payments to which Cornell may be
entitled pursuant to Section 6 or 7 above, unless Cornell resigns prior to March
30, 1996, effective March 30, 1996, Cornell shall also be entitled to receive
the Stay Bonus and medical benefits to which he is entitled under the United
Stationers Inc. Employee Benefits Trust dated March 22, 1995.
9. Medical Benefits. The Company makes the following covenants to
Cornell with respect to Cornell's medical benefits ("Medical Benefits"):
9.1 In the event the United Stationers Medical Plan ("Plan") remains
in effect and Cornell's employment with the Company terminates for any
reason, Cornell (and Cornell's covered dependents at the time of such
termination of employment) shall be entitled to continue to participate in
the Plan until Cornell attains age sixty-five (65), and Cornell's spouse
shall be entitled to continue to participate, in her own right, in the Plan
until Cornell's spouse attains age sixty-five (65), under the same terms
and conditions applicable to persons who are provided coverage as active
employees under the Plan; provided, however, that a minimum $1,000,000
Comprehensive Medical Lifetime Maximum Payment shall remain applicable to
Cornell (and Cornell's covered dependents at the time of the termination of
employment).
9.2 In the event of the termination of the Plan or any cessation of
coverage under the Plan not occurring in accordance with the terms of the
Plan as in effect on September 1, 1995 (the date any such event first
occurs being referred to as the 'Coverage Cessation Date'), Cornell shall
be entitled to and the Company shall pay to Cornell THREE THOUSAND SEVENTY
DOLLARS ($3,070.00) per month for the period commencing on the first day of
the month following the month in which the Coverage Cessation Date occurs
and ending on the first to occur of:
(i) the later of the date Cornell or Cornell's spouse attains
age sixty-five (65);
(ii) in the event of the death of Cornell, the date the spouse
of Cornell attains age sixty-five (65);
(iii) the end of the eighteen (18) month period commencing on
the Coverage Cessation Date; or
8
(iv) March 30, 1998.
9.3 After the Coverage Cessation Date, the Company shall pay claims
or reimburse expenses for those medical expenses which are considered
deductible under section 213 of the Code or any successor provision,
(without regard to any applicable threshold for deductibility) to Cornell,
subject to the following terms and conditions:
(i) Cornell (or any of Cornell's covered dependents as of the
Coverage Cessation Date) if covered by a medical plan maintained by
Cornell's then current employer or a medical plan maintained by the
employer of the spouse of Cornell, has exceeded the lifetime maximum
benefit provided in such plan;
(ii) payment of medical expenses or reimbursement for such
claims under this subsection 9.3 shall not in the aggregate exceed
the lesser of the following amounts:
(a) a maximum of $300,000 for Cornell and all dependents
(on an aggregate basis) of Cornell as of the Coverage Cessation
Date; or
(b) the amount by which $700,000 exceeds the aggregate
amount of all medical claims under this subsection 9.3 for the
group of employees referred to as "Contract Officers" under the
Plan (including all covered dependents of such Contract
Officers as of the Coverage Cessation Date) prior to the date of
the requested payment by the Contract Officer; and
(iii) reimbursement for such claims under this subsection 9.3
shall be made for the period commencing on the Coverage Cessation Date
and ending on the first to occur of:
(a) the later of the date Cornell or Cornell's spouse
attains age sixty-five;
(b) in the event of the death of Cornell, the date the
spouse of Cornell attains age sixty-five (65);
(c) the end of the eighteen (18) month period
commencing on the Coverage Cessation Date; or
(d) March 30, 1998.
The coverage provided under this Section 9.3 shall be separate and in
addition to the coverage provided under Section 9.2 above.
9
9.4 In addition, if Cornell is or becomes an eligible retired officer
in accordance with the definition of a "retired officer" contained in the
Company's Officer Medical Expense Reimbursement Policy (presently LD-
3)("Policy"), or a similar policy, Cornell shall be entitled to the medical
expense reimbursement benefits thereof whether or not the Policy is later
modified or revoked.
10. Miscellaneous.
10.1. All notices hereunder shall be given in writing and sent to the
party for whom such is intended by hand delivery or United States certified
or registered mail, return receipt requested, postage prepaid, or overnight
courier service, addressed to the party for whom intended at the following
respective addresses:
If to the Company:
United Stationers Supply Co.
0000 X. Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Attn: President
If to Cornell: 000 Xxxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
or to such other persons and/or at such other addresses as may be
designated by written notice served in accordance with the provisions
hereof. Such notices shall be deemed to have been served, if hand
delivered, on the day delivered, and if mailed, on the third day following
the date deposited in the mail. Urgent notices shall be given by Telex or
cable to the same addresses and confirmed by mail as provided above. All
notices sent by Telex or cable shall be deemed to have been served upon
receipt of the Telex or cable, but only if in fact confirmed by mail
promptly after dispatch of the Telex or cable.
10.2. This Agreement and all rights and benefits hereunder are
personal to Cornell and neither this Agreement nor any right or interest of
Cornell herein, or arising hereunder, shall be voluntarily or involuntarily
sold, transferred or assigned by Cornell. Any attempt by Cornell to
assign, execute, attach, transfer, pledge, hypothecate or otherwise dispose
of any such benefits or amounts or any rights or interests contrary to the
foregoing provisions, or the levy or attachment or similar process
thereupon, shall be null and void and of no effect and shall relieve the
Company of all liabilities hereunder. This Agreement and all of the
Company's right and obligations hereunder may be assigned and/or delegated,
as the case may be, without Cornell's consent, to any entity which merges
with the Company or which acquires substantially all of the assets of the
Company and which agrees to be bound hereby. The enforceability of
Cornell's rights under the Agreement shall not be affected by any
assignment or merger.
10
10.3. This Agreement shall be binding upon and inure to the benefit
of the parties and their respective heirs, personal representatives,
successors and permitted assigns.
10.4. This Agreement constitutes the entire agreement between the
parties and contains all the agreements between such parties with respect
to the subject matter hereof. This Agreement supersedes all other
agreements, oral or in writing, between the parties with respect to the
subject matter hereof, including but not limited to the Employment and
Consulting Agreement between Cornell and United Stationers Inc. and United
Stationers Supply Co. dated February 1, 1988, as amended on August 23,
1989, September 1, 1994 and February 13, 1995.
10.5. No change or modification of this Agreement shall be valid
unless the same shall be approved by the Board and in writing and signed by
Cornell and an authorized representative of the Company other than Cornell.
No waiver of any provisions of this Agreement shall be valid unless in
writing and signed by the person or party to be charged.
10.6. If any provisions of this Agreement (or portions thereof)
shall, for any reason, be invalid or unenforceable, such provisions (or
portions thereof) shall be ineffective only to the extent of such
invalidity or unenforceability, and the remaining provisions or portions
shall nevertheless be valid, enforceable and of full force and effect.
10.7 The Section or paragraph headings or titles are for convenience
only and shall not be deemed a part of this Agreement.
10.8 This Agreement may be executed in multiple counterparts, each of
which shall be deemed to be an original and all of which taken together
shall constitute a single instrument.
10.9 If Cornell or his estate or designee prevails in any action to
enforce their rights under this Agreement, they shall be entitled to
receive their attorneys' fees, costs and expenses incurred in enforcing
their rights under this Agreement, as well as interest at the Prime Rate as
publicly announced by The Northern Trust Company from time to time on the
amount of the judgment from the date of demand for payment hereunder
through the date of receipt of the amount of the judgment.
11. Arbitration. Each of the undersigned hereby agrees that any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, including but not limited to any claims of discrimination and wrongful
termination, will be submitted for arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the Arbitrator(s) may be entered in any
court having jurisdiction thereof.
11
UNITED STATIONERS SUPPLY CO.,
an Illinois corporation
ATTEST: By:
---------------------- ----------------------------
Xxxxxx X. Xxxxxxx Xxx Xxxxxxxx
Secretary Chairman of the Board and
Chief Executive Officer
-------------------------------
Xxxxxx X. Xxxxxxx
12
EXHIBIT A
TO EMPLOYMENT AGREEMENT
XXXXXX X. XXXXXXX
The following are benefit plans, programs and policies in which Cornell is
entitled to participate as of October 1, 1995:
United Stationers Supply Co. Pension Plan
United Stationers Inc. Profit Sharing PluSavings Plan
United Stationers Inc. Flexible Spending Plan
United Stationers Management Incentive Plan
United Stationers Inc. Management Equity Plan
United Group Medical and Dental Benefit Plans
Officer Medical Expense Reimbursement Policy
Retiree Health Plan
Annual physical exam at Company expense
Leased autoor equivalent cash compensation in accordance with Policy
Group Term Life Insurance - 2 1/2 times base salary
Travel and Accident Insurance - $300,000
Split Dollar Life Insurance
Disability Insurance in accordance with insurance policy
Club and Association Dues - in accordance with Company Policy
Financial and Tax Consulting - and tax return preparation, in
accordance with Company Policy
Officer Indemnification and Insurance - D&O insurance is provided on a
claims-made basis; and Restated Certificate of Incorporation, and
Delaware and Illinois law provide indemnification of officers and
directors
Other - Vacations in accordance with Company Policy; other benefits
that may from time to time be made available to employees generally
13
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement ("Agreement") is made as of October 1, 1995
by and between United Stationers Supply Co., an Illinois corporation (the
"Company") and Xxx X. Xxxxxxxx ("Rzeszuto").
In consideration of the mutual promises and agreements contained in
this Agreement, the Company hereby employs Rzeszuto, and Rzeszuto accepts
employment with the Company on the terms and conditions contained in this
Agreement.
1. Term of Employment. The term of employment shall commence as of
the date of this Agreement and shall continue until September 30, 1996, and
thereafter shall be extended automatically for additional one-year periods
unless written notice is given by either party to the other at least 60 days
prior to the end of such term, or any extension thereof.
2. Position and Duties. During the term of employment, Rzeszuto
shall serve as Vice President and Controller of the Company, and, in accordance
with the authority and direction of the board of directors of the Company (the
"Board") shall render such administrative, financial and other services to the
Company as may be required of such position or as the Board may from time to
time direct. Rzeszuto shall be available at all reasonable times for
consultation with the Board on matters relating to the Company's, or its
affiliates' business.
Rzeszuto shall devote his best efforts and his full and exclusive
business time and attention (except for reasonable periods of vacation, illness
or other incapacity) to the business and affairs of the Company and its
affiliates.
3. Compensation. During the term of employment, Rzeszuto shall be
compensated as follows:
3.1. Base Salary. Rzeszuto shall receive a base salary of no less
than $140,400.00 per year, payable in accordance with the Company's normal
payment schedule for management employees. The base salary shall be
reviewed by the Board annually and may, in the Board's sole discretion, be
increased when deemed appropriate.
3.2. Bonus. Rzeszuto shall be eligible to participate in any
bonus plans approved by the Board and made generally available to senior
management employees of the Company, and shall be entitled to such bonus
amounts as shall be determined in accordance with such plans.
3.3. Benefits. Rzeszuto shall be included, to the extent eligible,
in all plans, programs and policies providing general benefits for the
Company's employees or its senior management employees (as approved by the
Board and in effect from time to time). The benefit plans, programs and
policies presently in effect are listed on Exhibit A
attached to this Agreement. This paragraph shall not be construed to
require the Company to establish or maintain any policy, plan or program.
4. Confidential Information.
4.1. Rzeszuto acknowledges the Company's exclusive ownership of all
information useful in the Company's business (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
Rzeszuto as a consequence of his employment by the Company (including
information conceived, discovered or developed by Rzeszuto during his employment
with the Company) (collectively, "Confidential Information"). Confidential
Information includes, but is not limited to the following especially sensitive
types of information:
(i) The identity, purchase and payment patterns of, and special
relations with, the Company's customers;
(ii) The identity, net prices and credit terms of, and special
relations with, the Company's suppliers;
(iii) The Company's inventory selection and management techniques;
(iv) The Company's product development and marketing plans; and
(v) The Company's finances, except to the extent publicly disclosed.
4.2. 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, by or but not limited to, those which contain
Confidential Information. For example, Proprietary Materials include, but are
not limited to, the following especially sensitive types of materials:
applications software, the data bases of Confidential Information maintained in
connection with such software, and printouts generated from such data bases;
market studies and strategic plans; customer, supplier and employee lists;
contracts and correspondence with customers and suppliers; documents evidencing
transactions with customers and supplier; sales calls reports, appointment
books, calendars, expense statements and the like, reflecting conversations with
any company, customer or supplier; architectural plans; and purchasing, sales
and policy manuals. Proprietary Materials also include, but are not limited to,
any such things which are created by Rzeszuto or with Rzeszuto's assistance and
all notes, memoranda and the like prepared using the Proprietary Materials
and/or Confidential Information.
4.3. While some of the information contained in Proprietary Materials may
have been known to Rzeszuto prior to employment with the Company, or may now or
in the future be in the public domain, Rzeszuto acknowledges that the
compilation of that information contained in the
2
Proprietary Materials has or will cost the Company a great effort and expense,
and affords persons to whom Proprietary Materials are disclosed, including
Rzeszuto, a competitive advantage over persons who do not know the information
or have the compilation of the Proprietary Materials. Rzeszuto 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. Rzeszuto shall
report to the Company fully and promptly, orally (or, at the Company's request,
in writing) all discoveries, inventions and improvements, whether or not
patentable, and all other ideas, developments, processes, techniques, designs
and other information which may be of benefit to the Company, which Rzeszuto
conceives, makes or develops during his employment (whether or not during
working hours or with use or assistance of Company facilities, materials or
personnel, and which either (i) relate to or arise out of any part of the
Company's business in which Rzeszuto participates, or (ii) incorporate or make
use of Confidential Information or Proprietary Materials) (all items referred to
in this Section 4.3 being sometimes collectively referred to herein as the
"Intellectual Property"). All Intellectual property shall be deemed Confidential
Information of the Company, and any writing or other tangible things describing,
referring to, or containing Intellectual Property shall be deemed the Company's
Proprietary Materials. At the request of the Company, during or after the term
of employment, Rzeszuto (or after Rzeszuto's death, Rzeszuto's personal
representative) shall, at the expense of the Company, make, execute and deliver
all papers, assignments, conveyances, installments or other documents, and
perform or cause to be performed such other lawful acts, and give such
testimony, as the Company deems necessary or desirable to protect the Company's
ownership rights and Intellectual Property.
4.4. Confidentiality Duties. Rzeszuto shall, except as may be required
by law, during the term of employment, and thereafter for the longest time
permitted by applicable law:
4.4.1. Comply with all of the Company's instructions (whether oral or
written) for preserving the confidentiality of Confidential Information and
Proprietary Materials.
4.4.2. Use Confidential Information and Proprietary Materials only at
places designated by the Company, in furtherance of the Company's business,
and pursuant to the Company's directions.
4.4.3. Exercise appropriate care to advise other employees of the
Company (and, as appropriate, subcontractors) of the sensitive nature of
Confidential Information and Proprietary materials prior to their
disclosure, and to disclose the same only on a need-to-know basis.
4.4.4. Not copy all or any part of Proprietary Materials, except as
the Company directs.
4.4.5. Not sell, give, loan or otherwise transfer any copy of all or
any part of Proprietary Materials to any person who is not an employee of
the Company, except as the Company directs.
3
4.4.6. 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.
4.4.7. Not use all or any part of any Confidential Information or
Proprietary Materials for the benefit of any third party without the
Company's written consent.
Upon the termination of Rzeszuto's employment for whatever reason,
Rzeszuto (or in the event of death, Rzeszuto's personal representative) shall
promptly surrender to the Company the original and all copies of Proprietary
Materials (including all notes, memoranda and the like concerning or derived
therefrom), whether prepared by Rzeszuto or others, which are then in Rzeszuto's
possession or control. Records of payments made by the Company to or for the
benefit of Rzeszuto, Rzeszuto's copy of this Agreement and other such things,
lawfully possessed by Rzeszuto which relate solely to taxes payable by Rzeszuto,
employee benefits due to Rzeszuto or the terms of Rzeszuto's employment with the
Company, shall not be deemed Proprietary Materials for purposes of this Section
4.
5. Non-competition.
5.1. During Rzeszuto's employment, and during the two year period
following his employment), Rzeszuto shall not, in any way, directly or
indirectly, manage, operate, control (or participate in any of the foregoing),
accept employment or a consulting position with or otherwise advise or assist or
be connected with or directly or indirectly own or have any other interest in or
right with respect to (other than through ownership of not more than 1% of the
outstanding shares of a corporation's stock which is listed on a national
securities exchange) any enterprise (other than for the Company or for the
benefit of the Company) which is a wholesaler of office products having annual
sales in excess of $1,000,000.
5.2. Notwithstanding Section 5.1., following the term of employment,
Rzeszuto may be engaged in the business of selling office products at retail and
Rzeszuto may be engaged by any company whose principal business is the
manufacture of office products.
5.3. Rzeszuto recognizes that the foregoing limitations are reasonable and
properly required for the adequate protection of the business of the Company.
If any such limitations are deemed to be unreasonable by a court having
jurisdiction of the matter and parties, Rzeszuto hereby agrees and submits to
the reduction of any such limitations to such territory or time as to such court
shall appear reasonable.
5.4. If Rzeszuto 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.
5.5. Rzeszuto agrees that the remedy at law for any breach of the
provisions of Section 4 or this Section 5 shall be inadequate and that the
Company shall be entitled to injunctive relief in addition to any other remedies
it may have.
4
6. Termination and Severance.
6.1. Resignation. If Rzeszuto resigns, or if Rzeszuto gives notice to the
Company of non-extension of the term of employment pursuant to Paragraph 1, he
shall be entitled to receive only the unpaid portion of his base salary and
accrued vacation attributable to and including the date of resignation, and
reimbursement for reasonable reimbursable expenses incurred on behalf of the
Company prior to the date of termination.
6.2. By Rzeszuto For Good Reason. Rzeszuto may elect to terminate his
employment by written notice to the Company within 60 days after the occurrence
of any of the following events without Rzeszuto's consent, any of which shall be
deemed "Good Reason":
(a) the reduction of Rzeszuto's base salary;
(b) the exclusion of Rzeszuto from, or diminution in Rzeszuto's
participation in, any pension, bonus, management incentive, profit sharing
and other similar incentive, compensation or deferred compensation plans
made available to employees of the Company or to officers or management
personnel of the Company at the level of vice president or lower, other
than exclusions, changes or diminutions applicable to all employees or such
management personnel or officers; or
(c) any diminution in expense reimbursement benefits enjoyed by
Rzeszuto, except pursuant to a general change in the Company's
reimbursement policies; or
(d) any material reduction in Rzeszuto's title or duties which has the
effect of materially reducing Rzeszuto's status within the Company;
provided, however, that any change in the office or officer to whom
Rzeszuto reports, or in Rzeszuto's duties or title which does not diminish
Rzeszuto's status within the Company, shall not be deemed "Good Reason"; or
(e) any relocation of the Company's headquarters outside of the
Chicago metropolitan area; or
(f) the breach by the Company of any of its covenants or obligations
under this Agreement.
If the employment is terminated by Rzeszuto for Good Reason, Rzeszuto shall
be entitled to receive:
6.2.1. the unpaid portion of his base salary for the remainder of
his term of employment (but not for more than a 12 month period), payable
on the Company's regular pay schedule; and
5
6.2.2. reimbursement for reasonable reimbursable expenses incurred
on behalf of the Company prior to the termination; and
6.2.3. a severance amount equal to his base salary, plus his
bonuses earned from the Company for the calendar year preceding the year in
which notice is given by Rzeszuto to the Company, payable in equal
installments on the Company's regular pay schedule, commencing within 30
days after receipt by the Company of written notice from Rzeszuto and
continuing for 12 months.
6.3. By Expiration of the Term of Employment. If the term of employment
expires and notice has been given by the Company that the term will not be
extended or further extended pursuant to Paragraph 1 of this Agreement, Rzeszuto
shall be entitled to receive:
6.3.1. Accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the
expiration of the Term of Employment; and
6.3.2. A severance amount equal to his base salary plus his bonuses
earned for the calendar year preceding the date of expiration, payable in
equal installments on the Company's regular pay schedule commencing within
30 days and continuing for 12 months.
6.4. By Company For Cause. The Company may terminate the employment at
any time for Cause (as hereinafter defined). If Rzeszuto is terminated by the
Company for Cause, Rzeszuto shall be entitled to receive only the unpaid portion
of his base salary and accrued vacation attributable to all periods prior to and
including the date of his termination, and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date of his
termination.
"Cause" means Rzeszuto's (a) conviction of , or plea of nolo contendere to
a felony; (b) theft or embezzlement, or attempted theft or embezzlement, of
money or property or assets of the Company or any of its affiliates; (c) use of
illegal drugs; (d) material breach of this Agreement; (e) commission of any act
or acts of moral turpitude in violation of Company policy; (f) gross negligence
or willful misconduct in the performance of his duties; or (g) breach of any
fiduciary duty owed to the Company, including, without limitation, engaging in
directly competitive acts while employed by the Company.
6.5. By the Company. The Company may terminate Rzeszuto's employment on
written notice to Rzeszuto at any time. If Rzeszuto's employment is terminated
by the Company, other than for Cause, Rzeszuto shall be entitled to receive:
6.5.1. the unpaid portion of his base salary for the remaining
portion of the term of employment, payable on the Company's regular pay
schedule; and
6
6.5.2. accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date
of termination; and
6.5.3. severance pay equal to his base salary plus his bonuses earned
from the Company for the year preceding the year of termination.
6.6. By Death or Disability. If Rzeszuto's employment is terminated due to
his death or permanent disability, Rzeszuto shall be entitled to severance pay
in accordance with the provisions of 6.5.2 and 6.5.3 above. In addition, if
Rzeszuto's spouse is then living, for the remainder of such spouse's life the
Company shall continue to provide health coverage for Rzeszuto's spouse and
dependent children in accordance with the Company's health plans made generally
available to employees of the Company, without cost to Rzeszuto's spouse.
Nothing in this Agreement shall affect Rzeszuto's right to receive death benefit
payments under any policy of insurance carried by the Company and payable to
Rzeszuto or his designated beneficiary.
6.7. Retirement. Rzeszuto agrees that, in any event, his employment
shall terminate automatically on his sixty-fifth birthday. If his employment is
terminated pursuant to this Section 6.7., Rzeszuto shall be entitled to:
6.7.1. accrued vacation pay and reimbursement for reasonable expenses
incurred on behalf of the Company prior to the date of termination, and
6.7.2. in addition, Rzeszuto shall be entitled to participate in the
Company's health plan for retirees.
7. Change in Control. In the event of a Change in Control, provided
Rzeszuto is either (a) still employed by the Company 6 months after the date of
the Change in Control, or (b) has been terminated by the Company during that 6-
month period other than for Cause, Rzeszuto shall be entitled to resign before
the first anniversary of the Change in Control. Upon termination of his
employment after a Change in Control, except by Rzeszuto's resignation within
six months after the Change in Control or by the Company for Cause, Rzeszuto
shall be entitled to:
7.1. accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date
of termination; and
7.2. severance pay equal to his base salary plus his bonuses earned
from the Company for the year preceding the year in which the Change in
Control occurs, payable in equal installments on the Company's regular pay
schedule commencing within 30 days after termination of Rzeszuto's
employment and continuing for 12 months.
"Change in Control" shall mean a change in control of a nature that would
be required to be reported in responses to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
and presently in force (the "Exchange Act"); provided that, without limitation,
a Change in Control shall be deemed to have occurred if (a) any
7
Person becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of United Stationers Inc.
representing thirty percent (30%) or more of the combined voting power of United
Stationers Inc.'s then outstanding equity having the power to seat the Board
generally, or (b) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by United Stationers Inc.'s stockholders, of any new director was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who were directors at the beginning of the period.
8. Stay Bonus. In addition to the payments to which Rzeszuto may be
entitled pursuant to Section 6 or 7 above, unless Rzeszuto resigns prior to
March 30, 1996, effective March 30, 1996, Rzeszuto shall also be entitled to
receive the Stay Bonus and medical benefits to which he is entitled under the
United Stationers Inc. Employee Benefits Trust dated March 22, 1995.
9. Medical Benefits. The Company makes the following covenants to
Rzeszuto with respect to Rzeszuto's medical benefits ("Medical Benefits"):
9.1 In the event the United Stationers Medical Plan ("Plan") remains
in effect and Rzeszuto's employment with the Company terminates for any
reason, Rzeszuto (and Rzeszuto's covered dependents at the time of such
termination of employment) shall be entitled to continue to participate in
the Plan until Rzeszuto attains age sixty-five (65), and Rzeszuto's spouse
shall be entitled to continue to participate, in her own right, in the Plan
until Rzeszuto's spouse attains age sixty-five (65), but not for a period
in excess of ten (10) years following Rzeszuto's termination of employment
with the Company; provided that, in the event Rzeszuto terminates
employment with the Company prior to attaining age fifty-five (55) Rzeszuto
(and Rzeszuto's covered dependents at the time of such termination of
employment) shall have the right to participate in the Plan for a period of
ten (10) years, such period to commence on either Rzeszuto's termination of
employment with the Company or the date Rzeszuto attains age fifty-five
(55) as Rzeszuto shall elect in writing at the time of his termination of
employment, under the same terms and conditions applicable to persons who
are provided coverage as active employees under the Plan; provided,
however, that a minimum $1,000,000 Comprehensive Medical Lifetime Maximum
Payment shall remain applicable to Rzeszuto (and Rzeszuto's covered
dependents at the time of the termination of employment).
9.2 In the event of the termination of the Plan or any cessation of
coverage under the Plan not occurring in accordance with the terms of the
Plan as in effect on September 1, 1995 (the date any such event first
occurs being referred to as the 'Coverage Cessation Date'), Rzeszuto shall
be entitled to and the Company shall pay to Rzeszuto TWO THOUSAND SEVEN
HUNDRED DOLLARS ($2,700.00) per month for the period commencing on the
first day of the month following the month in which the Coverage Cessation
Date occurs and ending on the first to occur of:
8
(i) the later of the date Rzeszuto or Rzeszuto's spouse attains
age sixty-five (65);
(ii) in the event of the death of Rzeszuto, the date the spouse
of Rzeszuto attains age sixty-five (65);
(iii) the end of the eighteen (18) month period commencing on
the Coverage Cessation Date; or
(iv) March 30, 1998.
9.3 After the Coverage Cessation Date, the Company shall pay claims
or reimburse expenses for those medical expenses which are considered
deductible under section 213 of the Code or any successor provision,
(without regard to any applicable threshold for deductibility) to Rzeszuto,
subject to the following terms and conditions:
(i) Rzeszuto (or any of Rzeszuto's covered dependents as of the
Coverage Cessation Date) if covered by a medical plan maintained by
Rzeszuto's then current employer or a medical plan maintained by the
employer of the spouse of Rzeszuto, has exceeded the lifetime maximum
benefit provided in such plan;
(ii) payment of medical expenses or reimbursement for such
claims under this subsection 9.3 shall not in the aggregate exceed
the lesser of the following amounts:
(a) a maximum of $300,000 for Rzeszuto and all dependents
(on an aggregate basis) of Rzeszuto as of the Coverage Cessation
Date; or
(b) the amount by which $700,000 exceeds the aggregate
amount of all medical claims under this subsection 9.3 for the
group of employees referred to as "Contract Officers" under the
Plan (including all covered dependents of such Contract
Officers as of the Coverage Cessation Date) prior to the date of
the requested payment by the Contract Officer; and
(iii) reimbursement for such claims under this subsection 9.3
shall be made for the period commencing on the Coverage Cessation Date
and ending on the first to occur of:
(a) the later of the date Rzeszuto or Rzeszuto's spouse
attains age sixty-five;
(b) in the event of the death of Rzeszuto, the date the
spouse of Rzeszuto attains age sixty-five (65);
9
(c) the end of the eighteen (18) month period
commencing on the Coverage Cessation Date; or
(d) March 30, 1998.
The coverage provided under this Section 9.3 shall be separate and in
addition to the coverage provided under Section 9.2 above.
9.4 In addition, if Rzeszuto is or becomes an eligible retired
officer in accordance with the definition of a "retired officer" contained
in the Company's Officer Medical Expense Reimbursement Policy (presently
LD-3)("Policy"), or a similar policy, Rzeszuto shall be entitled to the
medical expense reimbursement benefits thereof whether or not the Policy is
later modified or revoked.
10. Miscellaneous.
10.1. All notices hereunder shall be given in writing and sent to the
party for whom such is intended by hand delivery or United States certified
or registered mail, return receipt requested, postage prepaid, or overnight
courier service, addressed to the party for whom intended at the following
respective addresses:
If to the Company:
United Stationers Supply Co.
0000 X. Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Attn: President
If to Rzeszuto: 9 S. 000 Xxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
or to such other persons and/or at such other addresses as may be
designated by written notice served in accordance with the provisions
hereof. Such notices shall be deemed to have been served, if hand
delivered, on the day delivered, and if mailed, on the third day following
the date deposited in the mail. Urgent notices shall be given by Telex or
cable to the same addresses and confirmed by mail as provided above. All
notices sent by Telex or cable shall be deemed to have been served upon
receipt of the Telex or cable, but only if in fact confirmed by mail
promptly after dispatch of the Telex or cable.
10.2. This Agreement and all rights and benefits hereunder are
personal to Rzeszuto and neither this Agreement nor any right or interest
of Rzeszuto herein, or
10
arising hereunder, shall be voluntarily or involuntarily sold, transferred
or assigned by Rzeszuto. Any attempt by Rzeszuto to assign, execute,
attach, transfer, pledge, hypothecate or otherwise dispose of any such
benefits or amounts or any rights or interests contrary to the foregoing
provisions, or the levy or attachment or similar process thereupon, shall
be null and void and of no effect and shall relieve the Company of all
liabilities hereunder. This Agreement and all of the Company's right and
obligations hereunder may be assigned and/or delegated, as the case may be,
without Rzeszuto's consent, to any entity which merges with the Company or
which acquires substantially all of the assets of the Company and which
agrees to be bound hereby. The enforceability of Rzeszuto's rights under
the Agreement shall not be affected by any assignment or merger.
10.3. This Agreement shall be binding upon and inure to the benefit
of the parties and their respective heirs, personal representatives,
successors and permitted assigns.
10.4. This Agreement constitutes the entire agreement between the
parties and contains all the agreements between such parties with respect
to the subject matter hereof. This Agreement supersedes all other
agreements, oral or in writing, between the parties with respect to the
subject matter hereof, including but not limited to the Employment and
Consulting Agreement between Rzeszuto and United Stationers Inc. and United
Stationers Supply Co. dated April 3, 1987, as amended February 13, 1995
and August 30, 1995.
10.5. No change or modification of this Agreement shall be valid
unless the same shall be approved by the Board and in writing and signed by
Rzeszuto and an authorized representative of the Company other than
Rzeszuto. No waiver of any provisions of this Agreement shall be valid
unless in writing and signed by the person or party to be charged.
10.6. If any provisions of this Agreement (or portions thereof)
shall, for any reason, be invalid or unenforceable, such provisions (or
portions thereof) shall be ineffective only to the extent of such
invalidity or unenforceability, and the remaining provisions or portions
shall nevertheless be valid, enforceable and of full force and effect.
10.7 The Section or paragraph headings or titles are for convenience
only and shall not be deemed a part of this Agreement.
10.8 This Agreement may be executed in multiple counterparts, each of
which shall be deemed to be an original and all of which taken together
shall constitute a single instrument.
10.9 If Rzeszuto or his estate or designee prevails in any action to
enforce their rights under this Agreement, they shall be entitled to
receive their attorneys' fees, costs and expenses incurred in enforcing
their rights under this Agreement, as well as interest at the Prime Rate as
publicly announced by The Northern Trust Company from time to time
11
on the amount of the judgment from the date of demand for payment hereunder
through the date of receipt of the amount of the judgment.
11. Arbitration. Each of the undersigned hereby agrees that any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, including but not limited to any claims of discrimination and wrongful
termination, will be submitted for arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the Arbitrator(s) may be entered in any
court having jurisdiction thereof.
UNITED STATIONERS SUPPLY CO.,
an Illinois corporation
ATTEST: By:
----------------------- ----------------------------
Xxxxxx X. Xxxxxxx Xxx Xxxxxxxx
Secretary Chairman of the Board and
Chief Executive Officer
-------------------------------
Xxx X. Xxxxxxxx
12
EXHIBIT A
TO EMPLOYMENT AGREEMENT
XXX X. XXXXXXXX
The following are benefit plans, programs and policies in which Rzeszuto is
entitled to participate as of September 1, 1995:
United Stationers Supply Co. Pension Plan
United Stationers Inc. Profit Sharing PluSavings Plan
United Stationers Inc. Flexible Spending Plan
United Stationers Management Incentive Plan
United Group Medical and Dental Benefit Plans
Officer Medical Expense Reimbursement Policy
Retiree Health Plan
Annual physical exam at Company expense
Leased auto or equivalent cash compensation in accordance with Policy
Group Term Life Insurance - 2-1/2 times base salary
Travel and Accident Insurance - $300,000
Split Dollar Life Insurance
Disability Insurance in accordance with insurance policy
Club and Association Dues - in accordance with Company Policy
Financial and Tax Consulting - and tax return preparation, in
accordance with Company Policy
Officer Indemnification and Insurance - D&O insurance is provided on a
claims-made basis; and Restated Certificate of Incorporation, and
Delaware and Illinois law provide indemnification of officers and
directors
Other - Vacations in accordance with Company Policy; other benefits
that may from time to time be made available to employees
generally
13
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement ("Agreement") is made as of October 1, 1995 by
and between United Stationers Supply Co., an Illinois corporation (the
"Company") and Xxxxxx Xxxx ("Xxxx").
In consideration of the mutual promises and agreements contained in this
Agreement, the Company hereby employs Xxxx, and Xxxx accepts employment with the
Company on the terms and conditions contained in this Agreement.
1. Term of Employment. The term of employment shall commence as of the
date of this Agreement and shall continue until September 30, 1996, and
thereafter shall be extended automatically for additional one-year periods
unless written notice is given by either party to the other at least 60 days
prior to the end of such term, or any extension thereof.
2. Position and Duties. During the term of employment, Xxxx shall serve
as Vice President, Operations of the Company, and, in accordance with the
authority and direction of the board of directors of the Company (the "Board")
shall render such operational, administrative and other services to the Company
as may be required of such position or as the Board may from time to time
direct. Xxxx shall be available at all reasonable times for consultation with
the Board on matters relating to the Company's, or its affiliates' business.
Xxxx shall devote his best efforts and his full and exclusive business time
and attention (except for reasonable periods of vacation, illness or other
incapacity) to the business and affairs of the Company and its affiliates.
3. Compensation. During the term of employment, Xxxx shall be compensated
as follows:
3.1. Base Salary. Xxxx shall receive a base salary of no less than
$155,000.00 per year, payable in accordance with the Company's normal
payment schedule for management employees. The base salary shall be
reviewed by the Board annually and may, in the Board's sole discretion, be
increased when deemed appropriate.
3.2. Bonus. Xxxx shall be eligible to participate in any bonus
plans approved by the Board and made generally available to senior
management employees of the Company, and shall be entitled to such bonus
amounts as shall be determined in accordance with such plans.
3.3. Benefits. Xxxx shall be included, to the extent eligible, in
all plans, programs and policies providing general benefits for the
Company's employees or its senior management employees (as approved by the
Board and in effect from time to time). The benefit plans, programs and
policies presently in effect are listed on Exhibit A
attached to this Agreement. This paragraph shall not be construed to
require the Company to establish or maintain any policy, plan or program.
4. Confidential Information.
4.1. Xxxx acknowledges the Company's exclusive ownership of all
information useful in the Company's business (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
Xxxx as a consequence of his employment by the Company (including information
conceived, discovered or developed by Xxxx during his employment with the
Company) (collectively, "Confidential Information"). Confidential Information
includes, but is not limited to the following especially sensitive types of
information:
(i) The identity, purchase and payment patterns of, and special
relations with, the Company's customers;
(ii) The identity, net prices and credit terms of, and special
relations with, the Company's suppliers;
(iii) The Company's inventory selection and management techniques;
(iv) The Company's product development and marketing plans; and
(v) The Company's finances, except to the extent publicly disclosed.
4.2. 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, by or but not limited to, those which contain
Confidential Information. For example, Proprietary Materials include, but are
not limited to, the following especially sensitive types of materials:
applications software, the data bases of Confidential Information maintained in
connection with such software, and printouts generated from such data bases;
market studies and strategic plans; customer, supplier and employee lists;
contracts and correspondence with customers and suppliers; documents evidencing
transactions with customers and supplier; sales calls reports, appointment
books, calendars, expense statements and the like, reflecting conversations with
any company, customer or supplier; architectural plans; and purchasing, sales
and policy manuals. Proprietary Materials also include, but are not limited to,
any such things which are created by Xxxx or with Xxxx'x assistance and all
notes, memoranda and the like prepared using the Proprietary Materials and/or
Confidential Information.
4.3. While some of the information contained in Proprietary Materials may
have been known to Xxxx prior to employment with the Company, or may now or in
the future be in the public domain, Xxxx acknowledges that the compilation of
that information contained in the
2
Proprietary Materials has or will cost the Company a great effort and expense,
and affords persons to whom Proprietary Materials are disclosed, including Xxxx,
a competitive advantage over persons who do not know the information or have the
compilation of the Proprietary Materials. Xxxx 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. Xxxx shall report to the Company fully
and promptly, orally (or, at the Company's request, in writing) all discoveries,
inventions and improvements, whether or not patentable, and all other ideas,
developments, processes, techniques, designs and other information which may be
of benefit to the Company, which Xxxx conceives, makes or develops during his
employment (whether or not during working hours or with use or assistance of
Company facilities, materials or personnel, and which either (i) relate to or
arise out of any part of the Company's business in which Xxxx participates, or
(ii) incorporate or make use of Confidential Information or Proprietary
Materials) (all items referred to in this Section 4.3 being sometimes
collectively referred to herein as the "Intellectual Property"). All
Intellectual property shall be deemed Confidential Information of the Company,
and any writing or other tangible things describing, referring to, or containing
Intellectual Property shall be deemed the Company's Proprietary Materials. At
the request of the Company, during or after the term of employment, Xxxx (or
after Xxxx'x death, Xxxx'x personal representative) shall, at the expense of the
Company, make, execute and deliver all papers, assignments, conveyances,
installments or other documents, and perform or cause to be performed such other
lawful acts, and give such testimony, as the Company deems necessary or
desirable to protect the Company's ownership rights and Intellectual Property.
4.4. Confidentiality Duties. Xxxx shall, except as may be required by
law, during the term of employment, and thereafter for the longest time
permitted by applicable law:
4.4.1. Comply with all of the Company's instructions (whether oral or
written) for preserving the confidentiality of Confidential Information and
Proprietary Materials.
4.4.2. Use Confidential Information and Proprietary Materials only at
places designated by the Company, in furtherance of the Company's business,
and pursuant to the Company's directions.
4.4.3. Exercise appropriate care to advise other employees of the
Company (and, as appropriate, subcontractors) of the sensitive nature of
Confidential Information and Proprietary materials prior to their
disclosure, and to disclose the same only on a need-to-know basis.
4.4.4. Not copy all or any part of Proprietary Materials, except as
the Company directs.
4.4.5. Not sell, give, loan or otherwise transfer any copy of all or
any part of Proprietary Materials to any person who is not an employee of
the Company, except as the Company directs.
3
4.4.6. 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.
4.4.7. Not use all or any part of any Confidential Information or
Proprietary Materials for the benefit of any third party without the
Company's written consent.
Upon the termination of Xxxx'x employment for whatever reason, Xxxx (or in
the event of death, Xxxx'x personal representative) shall promptly surrender to
the Company the original and all copies of Proprietary Materials (including all
notes, memoranda and the like concerning or derived therefrom), whether prepared
by Xxxx or others, which are then in Xxxx'x possession or control. Records of
payments made by the Company to or for the benefit of Xxxx, Xxxx'x copy of this
Agreement and other such things, lawfully possessed by Xxxx which relate solely
to taxes payable by Xxxx, employee benefits due to Xxxx or the terms of Xxxx'x
employment with the Company, shall not be deemed Proprietary Materials for
purposes of this Section 4.
5. Non-competition.
5.1. During Xxxx'x employment, and during the two year period following
his employment), Xxxx shall not, in any way, directly or indirectly, manage,
operate, control (or participate in any of the foregoing), accept employment or
a consulting position with or otherwise advise or assist or be connected with or
directly or indirectly own or have any other interest in or right with respect
to (other than through ownership of not more than 1% of the outstanding shares
of a corporation's stock which is listed on a national securities exchange) any
enterprise (other than for the Company or for the benefit of the Company) which
is a wholesaler of office products having annual sales in excess of $1,000,000.
5.2. Notwithstanding Section 5.1., following the term of employment, Xxxx
may be engaged in the business of selling office products at retail and Xxxx may
be engaged by any company whose principal business is the manufacture of office
products.
5.3. Xxxx recognizes that the foregoing limitations are reasonable and
properly required for the adequate protection of the business of the Company.
If any such limitations are deemed to be unreasonable by a court having
jurisdiction of the matter and parties, Xxxx hereby agrees and submits to the
reduction of any such limitations to such territory or time as to such court
shall appear reasonable.
5.4. If Xxxx 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.
5.5. Xxxx agrees that the remedy at law for any breach of the provisions of
Section 4 or this Section 5 shall be inadequate and that the Company shall be
entitled to injunctive relief in addition to any other remedies it may have.
4
6. Termination and Severance.
6.1. Resignation. If Xxxx resigns, or if Xxxx gives notice to the Company
of non-extension of the term of employment pursuant to Paragraph 1, he shall be
entitled to receive only the unpaid portion of his base salary and accrued
vacation attributable to and including the date of resignation, and
reimbursement for reasonable reimbursable expenses incurred on behalf of the
Company prior to the date of termination.
6.2. By Xxxx For Good Reason. Xxxx may elect to terminate his employment
by written notice to the Company within 60 days after the occurrence of any of
the following events without Xxxx'x consent, any of which shall be deemed "Good
Reason":
(a) the reduction of Xxxx'x base salary;
(b) the exclusion of Xxxx from, or diminution in Xxxx'x participation
in, any pension, bonus, management incentive, profit sharing and other
similar incentive, compensation or deferred compensation plans made
available to employees of the Company or to officers or management
personnel of the Company at the level of vice president or lower, other
than exclusions, changes or diminutions applicable to all employees or such
management personnel or officers; or
(c) any diminution in expense reimbursement benefits enjoyed by Xxxx,
except pursuant to a general change in the Company's reimbursement
policies; or
(d) any material reduction in Xxxx'x title or duties which has the
effect of materially reducing Xxxx'x status within the Company; provided,
however, that any change in the office or officer to whom Xxxx reports, or
in Xxxx'x duties or title which does not diminish Xxxx'x status within the
Company, shall not be deemed "Good Reason"; or
(e) any relocation of the Company's headquarters outside of the
Chicago metropolitan area; or
(f) the breach by the Company of any of its covenants or obligations
under this Agreement.
If the employment is terminated by Xxxx for Good Reason, Xxxx shall be
entitled to receive:
6.2.1. the unpaid portion of his base salary for the remainder of his
term of employment (but not for more than a 12 month period), payable on
the Company's regular pay schedule; and
6.2.2. reimbursement for reasonable reimbursable expenses incurred on
behalf of the Company prior to the termination; and
5
6.2.3. a severance amount equal to his base salary, plus his bonuses
earned from the Company for the calendar year preceding the year in which
notice is given by Xxxx to the Company, payable in equal installments on
the Company's regular pay schedule, commencing within 30 days after receipt
by the Company of written notice from Xxxx and continuing for 12 months.
6.3. By Expiration of the Term of Employment. If the term of employment
expires and notice has been given by the Company that the term will not be
extended or further extended pursuant to Paragraph 1 of this Agreement, Xxxx
shall be entitled to receive:
6.3.1. Accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the
expiration of the Term of Employment; and
6.3.2. A severance amount equal to his base salary plus his bonuses
earned for the calendar year preceding the date of expiration, payable in
equal installments on the Company's regular pay schedule commencing within
30 days and continuing for 12 months.
6.4. By Company For Cause. The Company may terminate the employment at
any time for Cause (as hereinafter defined). If Xxxx is terminated by the
Company for Cause, Xxxx shall be entitled to receive only the unpaid portion of
his base salary and accrued vacation attributable to all periods prior to and
including the date of his termination, and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date of his
termination.
"Cause" means Xxxx'x (a) conviction of , or plea of nolo contendere to a
felony; (b) theft or embezzlement, or attempted theft or embezzlement, of money
or property or assets of the Company or any of its affiliates; (c) use of
illegal drugs; (d) material breach of this Agreement; (e) commission of any act
or acts of moral turpitude in violation of Company policy; (f) gross negligence
or willful misconduct in the performance of his duties; or (g) breach of any
fiduciary duty owed to the Company, including, without limitation, engaging in
directly competitive acts while employed by the Company.
6.5. By the Company. The Company may terminate Xxxx'x employment on
written notice to Xxxx at any time. If Xxxx'x employment is terminated by the
Company, other than for Cause, Xxxx shall be entitled to receive:
6.5.1. the unpaid portion of his base salary for the remaining
portion of the term of employment (but not for more than 12 months),
payable on the Company's regular pay schedule; and
6
6.5.2. accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date
of termination; and
6.5.3. severance pay equal to his base salary plus his bonuses earned
from the Company for the year preceding the year of termination.
6.6. By Death or Disability. If Xxxx'x employment is terminated due to his
death or permanent disability, Xxxx shall be entitled to severance pay in
accordance with the provisions of 6.5.2 and 6.5.3 above. In addition, if Xxxx'x
spouse is then living, for the remainder of such spouse's life the Company shall
continue to provide health coverage for Xxxx'x spouse and dependent children in
accordance with the Company's health plans made generally available to employees
of the Company, without cost to Xxxx'x spouse. Nothing in this Agreement shall
affect Xxxx'x right to receive death benefit payments under any policy of
insurance carried by the Company and payable to Xxxx or his designated
beneficiary.
6.7. Retirement. Xxxx agrees that, in any event, his employment shall
terminate automatically on his sixty-fifth birthday. If his employment is
terminated pursuant to this Section 6.7., Xxxx shall be entitled to:
6.7.1. accrued vacation pay and reimbursement for reasonable expenses
incurred on behalf of the Company prior to the date of termination, and
6.7.2. in addition, Xxxx shall be entitled to participate in the
Company's health plan for retirees.
7. Change in Control. In the event of a Change in Control, provided Xxxx is
either (a) still employed by the Company 6 months after the date of the Change
in Control, or (b) has been terminated by the Company during that 6-month period
other than for Cause, Xxxx shall be entitled to resign before the first
anniversary of the Change in Control. Upon termination of his employment after a
Change in Control, except by Xxxx'x resignation within six months after the
Change in Control or by the Company for Cause, Xxxx shall be entitled to:
7.1. accrued vacation pay and reimbursement for reasonable
reimbursable expenses incurred on behalf of the Company prior to the date
of termination; and
7.2. severance pay equal to his base salary plus his bonuses earned
from the Company for the year preceding the year in which the Change in
Control occurs, payable in equal installments on the Company's regular pay
schedule commencing within 30 days after termination of Xxxx'x employment
and continuing for 12 months.
"Change in Control" shall mean a change in control of a nature that would
be required to be reported in responses to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
and presently in force (the "Exchange Act"); provided that, without limitation,
a Change in Control shall be deemed to have occurred if (a) any
7
Person becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of United Stationers Inc.
representing thirty percent (30%) or more of the combined voting power of United
Stationers Inc.'s then outstanding equity having the power to seat the Board
generally, or (b) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by United Stationers Inc.'s stockholders, of any new director was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who were directors at the beginning of the period.
8. Medical Benefits. The Company makes the following covenants to Xxxx
with respect to Xxxx'x medical benefits ("Medical Benefits"):
8.1 In the event the United Stationers Medical Plan ("Plan") remains
in effect and Xxxx'x employment with the Company terminates for any reason,
Xxxx (and Xxxx'x covered dependents at the time of such termination of
employment) shall be entitled to continue to participate in the Plan until
Xxxx attains age sixty-five (65), and Xxxx'x spouse shall be entitled to
continue to participate, in her own right, in the Plan until Xxxx'x spouse
attains age sixty-five (65), but not for a period in excess of ten (10)
years following Xxxx'x termination of employment with the Company; provided
that, in the event Xxxx terminates employment with the Company prior to
attaining age fifty-five (55) Xxxx (and Xxxx'x covered dependents at the
time of such termination of employment) shall have the right to participate
in the Plan for a period of ten (10) years, such period to commence on
either Xxxx'x termination of employment with the Company or the date Xxxx
attains age fifty-five (55) as Xxxx shall elect in writing at the time of
his termination of employment, under the same terms and conditions
applicable to persons who are provided coverage as active employees under
the Plan; provided, however, that a minimum $1,000,000 Comprehensive
Medical Lifetime Maximum Payment shall remain applicable to Xxxx (and
Xxxx'x covered dependents at the time of the termination of employment).
8.2 In the event of the termination of the Plan or any cessation of
coverage under the Plan not occurring in accordance with the terms of the
Plan as in effect on October 1, 1995 (the date any such event first occurs
being referred to as the 'Coverage Cessation Date'), Xxxx shall be entitled
to and the Company shall pay to Xxxx THREE THOUSAND SEVENTY DOLLARS
($3,070.00) per month for the period commencing on the first day of the
month following the month in which the Coverage Cessation Date occurs and
ending on the first to occur of:
(i) the later of the date Xxxx or Xxxx'x spouse attains age
sixty-five (65);
(ii) in the event of the death of Xxxx, the date the spouse of
Xxxx attains age sixty-five (65);
8
(iii) the end of the eighteen (18) month period commencing on
the Coverage Cessation Date; or
(iv) March 30, 1998.
8.3 After the Coverage Cessation Date, the Company shall pay claims
or reimburse expenses for those medical expenses which are considered
deductible under section 213 of the Code or any successor provision,
(without regard to any applicable threshold for deductibility) to Xxxx,
subject to the following terms and conditions:
(i) Xxxx (or any of Xxxx'x covered dependents as of the
Coverage Cessation Date) if covered by a medical plan maintained by
Xxxx'x then current employer or a medical plan maintained by the
employer of the spouse of Xxxx, has exceeded the lifetime maximum
benefit provided in such plan;
(ii) Payment of medical expenses or reimbursement for such
claims under this subsection 8.3 shall not in the aggregate exceed
the lesser of the following amounts:
(a) a maximum of $300,000 for Xxxx and all dependents (on
an aggregate basis) of Xxxx as of the Coverage Cessation Date; or
(b) the amount by which $700,000 exceeds the aggregate
amount of all medical claims under this subsection 8.3 for the
group of employees referred to as "Contract Officers" under the
Plan (including all covered dependents of such Contract Officers
as of the Coverage Cessation Date) prior to the date of the
requested payment by the Contract Officer; and
(iii) reimbursement for such claims under this subsection 8.3
shall be made for the period commencing on the Coverage Cessation Date
and ending on the first to occur of:
(a) the later of the date Xxxx or Xxxx'x spouse attains
age sixty-five;
(b) in the event of the death of Xxxx, the date the spouse
of Xxxx attains age sixty-five (65);
(c) the end of the eighteen (18) month period
commencing on the Coverage Cessation Date; or
(d) March 30, 1998.
9
The coverage provided under this Section 8.3 shall be separate and in
addition to the coverage provided under Section 8.2 above.
8.4 In addition, if Xxxx is or becomes an eligible retired officer in
accordance with the definition of a "retired officer" contained in the
Company's Officer Medical Expense Reimbursement Policy (presently LD-
3)("Policy"), or a similar policy, Xxxx shall be entitled to the medical
expense reimbursement benefits thereof whether or not the Policy is later
modified or revoked.
9. Miscellaneous.
9.1. All notices hereunder shall be given in writing and sent to the
party for whom such is intended by hand delivery or United States certified
or registered mail, return receipt requested, postage prepaid, or overnight
courier service, addressed to the party for whom intended at the following
respective addresses:
If to the Company: United Stationers Supply Co.
0000 X. Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Attn: President
If to Xxxx: 0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
or to such other persons and/or at such other addresses as may be
designated by written notice served in accordance with the provisions
hereof. Such notices shall be deemed to have been served, if hand
delivered, on the day delivered, and if mailed, on the third day following
the date deposited in the mail. Urgent notices shall be given by Telex or
cable to the same addresses and confirmed by mail as provided above. All
notices sent by Telex or cable shall be deemed to have been served upon
receipt of the Telex or cable, but only if in fact confirmed by mail
promptly after dispatch of the Telex or cable.
9.2. This Agreement and all rights and benefits hereunder are
personal to Xxxx and neither this Agreement nor any right or interest of
Xxxx herein, or arising hereunder, shall be voluntarily or involuntarily
sold, transferred or assigned by Xxxx. Any attempt by Xxxx to assign,
execute, attach, transfer, pledge, hypothecate or otherwise dispose of any
such benefits or amounts or any rights or interests contrary to the
foregoing provisions, or the levy or attachment or similar process
thereupon, shall be null and void and of no effect and shall relieve the
Company of all liabilities hereunder. This Agreement and all of the
Company's right and obligations hereunder may be assigned and/or delegated,
as the case may be, without Xxxx'x consent, to any entity which merges with
the Company or which acquires substantially all of the assets of the
Company and which
10
agrees to be bound hereby. The enforceability of Xxxx'x rights under the
Agreement shall not be affected by any assignment or merger.
9.3. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective heirs, personal representatives,
successors and permitted assigns.
9.4. This Agreement constitutes the entire agreement between the
parties and contains all the agreements between such parties with respect
to the subject matter hereof. This Agreement supersedes all other
agreements, oral or in writing, between the parties with respect to the
subject matter hereof.
9.5. No change or modification of this Agreement shall be valid
unless the same shall be approved by the Board and in writing and signed by
Xxxx and an authorized representative of the Company other than Xxxx. No
waiver of any provisions of this Agreement shall be valid unless in writing
and signed by the person or party to be charged.
9.6. If any provisions of this Agreement (or portions thereof) shall,
for any reason, be invalid or unenforceable, such provisions (or portions
thereof) shall be ineffective only to the extent of such invalidity or
unenforceability, and the remaining provisions or portions shall
nevertheless be valid, enforceable and of full force and effect.
9.7 The Section or paragraph headings or titles are for convenience
only and shall not be deemed a part of this Agreement.
9.8 This Agreement may be executed in multiple counterparts, each of
which shall be deemed to be an original and all of which taken together
shall constitute a single instrument.
9.9 If Xxxx or his estate or designee prevails in any action to
enforce their rights under this Agreement, they shall be entitled to
receive their attorneys' fees, costs and expenses incurred in enforcing
their rights under this Agreement, as well as interest at the Prime Rate as
publicly announced by The Northern Trust Company from time to time on the
amount of the judgment from the date of demand for payment hereunder
through the date of receipt of the amount of the judgment.
10. Arbitration. Each of the undersigned hereby agrees that any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, including but not limited to any claims of discrimination and wrongful
termination, will be submitted for arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the Arbitrator(s) may be entered in any
court having jurisdiction thereof.
11
UNITED STATIONERS SUPPLY CO.,
an Illinois corporation
ATTEST: By:
----------------------- -----------------------------
Xxxxxx X. Xxxxxxx Xxx Xxxxxxxx
Secretary Chairman of the Board and
Chief Executive Officer
--------------------------------
Xxxxxx Xxxx
12
EXHIBIT A
TO EMPLOYMENT AGREEMENT
XXXXXX XXXX
The following are benefit plans, programs and policies in which Xxxx is
entitled to participate as of October 1, 1995:
United Stationers Supply Co. Pension Plan
United Stationers Inc. Profit Sharing PluSavings Plan
United Stationers Inc. Flexible Spending Plan
United Stationers Inc. Management Equity Plan
United Stationers Management Incentive Plan
United Group Medical and Dental Benefit Plans
Officer Medical Expense Reimbursement Policy
Retiree Health Plan
Annual physical exam at Company expense
Leased auto or equivalent cash compensation in accordance with Policy
Group Term Life Insurance - 2 1/2 times base salary
Travel and Accident Insurance - $300,000
Split Dollar Life Insurance
Disability Insurance in accordance with insurance policy
Club and Association Dues - in accordance with Company Policy
Financial and Tax Consulting - and tax return preparation, in
accordance with Company Policy
Officer Indemnification and Insurance - D&O insurance is provided on a
claims-made basis; and Restated Certificate of Incorporation, and
Delaware and Illinois law provide indemnification of officers and
directors
Other - Vacations in accordance with Company Policy; other benefits
that may from time to time be made available to employees generally
13
