Exhibit 10.37
EXECUTIVE EMPLOYMENT
AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT
(this “
Agreement”),
is made, entered into and effective
as of December 31, 2008 (the “Effective
Date”) by and among UNITED STATIONERS INC., a Delaware
corporation (hereinafter, together with its successors, referred to
as “Holding”), UNITED STATIONERS SUPPLY CO., an
Illinois corporation (hereinafter, together with its successors,
referred to as the “ Company”, and, together with Holding, the
“ Companies”), and Stephen A. Schultz (hereinafter referred to
as the “Executive”) and specifically, supersedes
the Executive Employment Agreement Executive entered into with the
Companies on July 1, 2002.
WHEREAS, the Companies and Executive
are parties to an Executive Employment Agreement dated May 18,
2005 (the “Prior Agreement” ), which the parties
desire to amend and restate in its entirety as set forth in this
Agreement; and
WHEREAS, in October 2004, the
American Jobs Creation Act of 2004 (the “Act” )
was enacted, Section 885 of which Act added new provisions to
the Internal Revenue Code pertaining to deferred compensation and
for which the Treasury Department has issued final regulations and
guidance regarding the deferred compensation provisions of the Act
permitting service providers and service recipients a transition
period to modify existing deferred compensation arrangements to
bring them into compliance with the Act; and
WHEREAS, the parties agree that it
is in their mutual best interests to modify, amend and clarify the
terms and conditions of the Prior Agreement, as set forth in this
Agreement, with the full intention of complying with the Act so as
to avoid the additional taxes and penalties imposed under the Act;
and
WHEREAS, Executive is a key member
of the management of the Companies and is expected to devote
substantial skill and effort to the affairs of the Companies, and
the Companies desire to recognize the significant personal
contribution that Executive makes and is expected to continue to
make to further the best interests of the Companies and their
shareholders; and
WHEREAS, it is desirable and in the
best interests of the Companies and its shareholders to continue to
obtain the benefits of Executive’s services and attention to
the affairs of the Companies, and to provide inducement for
Executive (1) to remain in the service of the Companies in the
event of any proposed or anticipated Change of Control and
(2) to remain in the service of the Companies in order to
facilitate an orderly transition in the event of a Change of
Control; and
WHEREAS, it is desirable and in the
best interests of the Companies and their shareholders that
Executive be in a position to make judgments and advise the
Companies with respect to any proposed Change of Control without
regard to the possibility that
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Executive’s employment may be
terminated without compensation in the event of a Change of
Control; and
WHEREAS, Executive will have access
to confidential, proprietary and trade secret information of the
Companies and their subsidiaries, and it is desirable and in the
best interests of the Companies and their shareholders to protect
confidential, proprietary and trade secret information of the
Companies and their subsidiaries, to prevent unfair competition by
former executives of the Companies following separation of their
employment with the Company and to secure cooperation from former
executives with respect to matters related to their employment with
the Company; and
WHEREAS, it is desirable and in the
best interests of the Companies and their shareholders to obtain
commitments from Executive with respect to Executive’s
service with the Company, and to facilitate a smooth transition
upon separation from service for former executives,
NOW, THEREFORE in consideration of
the premises and the mutual covenants and agreements contained
herein, the parties agree as follows:
Section 1.
Definitions.
(a)
As used in this Agreement, the
following terms have the respective meanings set forth
below:
“Accrued
Benefits” means
(i) all salary earned or accrued through the date the
Executive’s employment is terminated, (ii) reimbursement for
any and all monies expended by Executive in connection with the
Executive’s employment for reasonable and necessary
out-of-pocket business expenses incurred by the Executive in
performance of services for the Company through the date the
Executive’s employment is terminated. (iii) all accrued
and unpaid annul incentive compensation awards for the year
immediately prior to the year in which the Executive’s
employment is terminated, and (iv) all other payments and
benefits payable on or after termination of employment to which the
Executive is entitled at the date of termination under the terms of
any applicable compensation arrangement or benefit plan or program
of the Company. “Accrued Benefits” shall not include
any entitlement to severance pay or severance benefits under any
Company severance policy or plan generally applicable to the
Company’s salaried employees.
“ Affiliate ”
shall have the meaning given such term in Rule 12b-2
of the Exchange Act.
“Board”
shall mean, so long as Holding owns
all of the outstanding Voting Securities (as hereinafter defined in
the definition of Change of Control) of the Company, the board of
directors of Holding. In all other cases, Board means the board of
directors of the Company.
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“Cause
” shall mean
(i) conviction of, or plea of nolo
contendere to, a felony (excluding motor vehicle
violations); (ii) theft or embezzlement, or attempted theft or
embezzlement, of money or property or assets of the Company or any
of its Affiliates: (iii) illegal use of drugs;
(iv) material breach of this Agreement or any
employment-related undertakings provided in a writing signed by the
Executive prior to or concurrently with this Agreement;
(v) gross negligence or willful misconduct in the performance
of Executive’s duties; (vi) breach of any fiduciary duty
owed to the Company, including, without limitation, engaging in
competitive acts while employed by the Company; or (vii) the
Executive’s willful refusal to perform the assigned duties
for which the Executive is qualified as directed by the
Executive’s Supervising Officer (as hereinafter defined) or
the Board; provided, that in the case of any event constituting
Cause within clauses (iv) through (vii) which is curable
by the Executive, the Executive has been given written notice by
the Companies of such event said to institute Cause, describing
such event in reasonable detail, and has not cured such action
within thirty (30) days of such written notice as reasonably
determined by the Chief Executive Officer. For purposes of this
definition of Cause, action or inaction by the Executive shall not
be considered “willful” unless done or omitted by the
Executive (A) intentionally or not in good faith and
(B) without reasonable belief that the Executive’s
action or inaction was in the best interests of the Companies, an
shall not include failure to act by reason of total air partial
incapacity due to physical or mental illness.
“Change of
Control” shall
meant (a) Any “Person” (having the meaning
ascribed to such term in Section 3(a)(9) of the Exchange
Act and used in Sections 13(d) and 14(d) thereof,
including a “group ” within the meaning of
Section 13(d)(3)) has or acquires “ Beneficial Ownership” (within the meaning
of Rule 13d-3 under the Exchange Act) of 30% or more of the
combined voting power of Holding’s then outstanding voting
securities entitled to vote generally in the election of directors
(“Voting Securities”); provided, however, that
the acquisition or holding of Voting Securities by (i) Holding
of any of its subsidiaries, (ii) an employee benefit plan (or
a trust forming a part thereof) maintained by Holding or any of its
subsidiaries, or (iii) any Person in which the Executive has a
substantial equity interest shall not constitute a Change of
Control. Notwithstanding the foregoing, a Change of Control shall
not be deemed to occur solely because any Person acquired
Beneficial Ownership of more than the permitted amount of Voting
Securities as a result of the issuance of Voting Securities by
Holding in exchange for assets (including equity interests) or
funds with a fair value equal to the fair value of the Voting
Securities so issued.; provided that if a Change of Control would
occur (but for the operation of this sentence) as a result of the
issuance of Voting Securities by Holding, and after such issuance
of Voting Securities by Holding, such Person becomes the Beneficial
Owner of any additional Voting Securities which increases the
percentage of the Voting Securities Beneficially Owned by such
Person to more than 50% of the Voting Securities of Holding
; then a Chang: of Control shall occur;
(b) At any time during a period of two consecutive years, the
individuals who at the beginning of such period reinstituted the
Board (the “Incumbent Board”) cease for any
reason to constitute more than 50% of the Board;
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provided, however, that if the
election. or nomination for election by Holding’s
stockholders, of any new director was approved by a vote of more
than 50% of the directors then comprising the Incumbent Board, such
new director shall, for purposes of this subsection (b), be
considered as though such person were a member of the, incumbent
Board; provided, further, however, that no individual shall be
considered a member of the Incumbent Board if such individual
initially assumed office as a result of (i) either an actual
“Election Consent” (as described in
Rule 14a-11 promulgated unde(r) the Exchange Act)
or other actual solicitation of proxies or consents by or on behalf
of a Person other than the Incumbent Board (a “Proxy
Contest”), or (ii) by reason of an agreement
intended to avoid or settle any actual or threatened Election
Contest or Proxy Contest: (c) Consummation of a merger,
consolidation or reorganizations or approval by Holding’s
stockholders of a liquidation or dissolution of Holding or the
occurrence of a liquidation or dissolution of Holding
(“Business Combination”), unless, following such
Business Combination: (I) the Persons with Beneficial
Ownership of Holding, immediately before such Business Combination,
have Beneficial Ownership of more than 50% of the combined voting
power of the then outstanding voting securities entitled to vote
generally in the election of directors of the corporation (or in
the election of a comparable governing body of any other type of
entity) resulting from such Business Combination (including,
without limitation, an entity which as a result of such transaction
owns Holding or all or substantially all of Holding’s assets
either directly or through one or more subsidiaries) (the
“Surviving Company”) in substantially the same
proportions as their Beneficial Ownership of the Voting Securities
immediately before such Business Combination, (2) the
individuals who were members of the Incumbent Board immediately
prior to the execution of the initial agreement providing for such
Business Combination constitute more than 50% of the members of the
board of directors (or comparable governing by of a noncorporate
entity) of the Surviving Company; and (3) no Person (other
than Holding, any of its subsidiaries or any employee benefit plan
(Or any trust forming a part thereof) maintained by Holding, the
Surviving Company or any Person who immediately prior to such
Business Combination had Beneficial Ownership of 30% or more of the
then Voting Securities) has Beneficial Ownership of 30% or more of
the then combined voting power of the Surviving Company’s
then outstanding voting securities; provided, that notwithstanding
this clause (3), a Change of Control shall not be deemed to occur
solely because any Person acquirer. Beneficial Ownership of more
than 30% of Voting Securities as a result of the issuance of Voting
Securities by Holding in exchange for assets (including equity
interests) or funds with a fair value equal to the fair value of
the Voting Security so issued; provided, however that a Business
Combination with a Person in which the Executive has a substantial
equity interest shall not constitute a Change of Control, or
(d) Approval by Holding’s stockholders of an agreement
for the assignment, sale, conveyance, transfer, !case or other
disposition of all or substantially all of the assets of Holding to
any Person (other than a Person in which the Executive has a
substantial equity interest and other than a subsidiary of Holding
or other entity, the Persons with Beneficial Ownership of which are
the same Persons with Beneficial Ownership of Holding and such
Beneficial. Ownership is in substantially the same proportions), or
the occurrence of the same. Notwithstanding the foregoing, a Change
of Control shall not be deemed to occur solely
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because any Person acquired
Beneficial Ownership of more than the permitted amount of Voting
Securities as a result of the acquisition of Voting Securities by
the Company which, by reducing the number of Voting Securities
outstanding, increases the proportional number of shares
Beneficially Owned by such Person; provided that if a Change of
Control would occur but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and
after such acquisition of Voting Securities by the Company, such
Person becomes the Beneficial Owner of any additional Voting
Securities which increases the percentage of the Voting Securities
Beneficially Owned by such Person, then a Change of Control shall
occur.
“Exchange
Act” shall mean the
Securities Exchange Act of 1934, as amended.
“Good
Reason” shall mean
(i) any material breach by the Companies of this Agreement
without Executive’s written consent, (ii) any material
reduction, without the Executive’s written consent, in the
Executive’s duties, responsibilities or authority; provided,
however, that for purposes of this clause (ii), neither (A) a
change in the Executive’s Supervising Officer or the number
or identity of the Executive’s direct reports, nor (B) a
change in the Executive’s title, duties. responsibilities or
authority was result of a realignment or restructuring of the
Companies’ executive organizational chart nor (C) a
change in the Executive’s title, duties, responsibilities or
authority as a result of a realignment or restructuring of the
Companies shall necessarily be deemed by itself to materially
reduce Executive’s duties, responsibilities or authority, as
long as, in the case of either (A), (B) or (C), Executive
continues to report to either the Chief Executive Officer or Chief
Operating Officer of the Companies or to the Supervising Officer to
whom he reported immediately prior to the Change of Control or a
Supervising Officer of equivalent responsibility and authority, or
(iii) without Executive’s written consent: (A) a
material reduction in the Executive’s Base Salary,
(B) the relocation of the Executive’s principal place of
employment more than fife (50) miles from its location on the date
of a Change in Control, or (C) the relocation of the
Company’s corporate headquarters office outside of the
metropolitan area in which it is located on the date of a Change in
Control. For purposes of this Agreement, a Change of Control,
atone, does not constitute Good Reason. Furthermore,
notwithstanding the above, the occurrence of any of the events
described above will not constitute Good Reason unless the
Executive gives the Companies written notice within thirty (30)
days after the initial occurrence of any of such events that the
Executive believes that such event constitutes Good Reason, and the
Companies thereafter fail to cure any such event within sixty (60)
days after receipt of such notice.
“Person”
shall mean any natural person, firm,
corporation, limited liability company, trust, partnership, limited
or limited liability partnership, business association, joint
venture or other entity and, for purposes of the definition of
Change of Control herein, shall comprise any “person”
within the meaning of Sections 13(d) and 14(d) of the
Exchange Act, including a “ group” as therein defined.
“ Subsidiary” shall mean, with respect to any Person, any
other Person of which such
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first Person owns 20% or more of the
economic interest in such Person or owns or has the power to vote,
directly or indirectly, securities representing 20% or more of the
votes ordinarily entitled to be cast for the election of directors
car other governing Persons.
(h) The capitalized terms used
in Section 5(j) have the respective meanings assigned to
them in such Section and the fallowing additional terms have
the respective meanings assigned to them in the Sections hereof set
forth opposite them:
|
Annual Bonus”
|
Section 4(b)
|
|
“Base Salary”
|
Section 4(a)
|
|
“Bonus Plan”
|
Section 4(b)
|
|
“Confidential information or
proprietary data”
|
Section 6(a)(2)
|
|
“Customer”
|
Section 6(d)(2)
|
|
“Disability”
|
Section 5(c)
|
|
“Employment
Period”
|
Section 2
|
|
“Retirement”
|
Section 5(f)
|
|
“Supervising
Officer”
|
Section 3(a)
|
|
“Term” and
“Termination Date”
|
Section 2
|
Section 2
.
Term and Employment
Period. Subject to
Section 19 hereof, the term of this Agreement
(“Term”) shall commence on the Effective Date of this
Agreement and shall continue until the effective date of
termination of the Executive’s employment hereunder pursuant
to Section 5 of this Agreement. The period during which the
Executive is employed by the Companies pursuant to this Agreement
is referred to herein as the “Employment
Period.” The date on which termination of the
Executive’s employment hereunder shall become effective is
referred to herein as the “ Termination Date.” For purposes of Section 5 of this Agreement
only, the Termination Date shall mean the date on which a
“separation from service” has occurred for purposes of
Section 409A of the Internal Revenue Code and the regulations
and guidance thereunder (the “ Code
”).
Section 3,
Duties.
(a)
During the Employment Period, the
Executive (1) shall serve as Group President,
Lagasse, Inc. and ORS Nasco, Inc., a subsidiary of the
Companies, (ii) shall report directly to an officer of the
Companies (the “Supervising Officer”) who shall
be selected by the Board or the Chief Executive Officer in its or
his or her sole discretion, (iii) shall. subject to and in
accordance with the authority and direction of the Board and/or the
Supervising Officer have such authority and perform in a diligent
and competent manner- such duties as may be assigned to the
Executive from time to time by the Board and/or the Supervising
Officer and (iv) shall devote the Executive’s best
efforts and such time, attention, knowledge and skill to the
operation of the business and affairs of the Companies as shall be
necessary to perform the Executive’s duties. During the
Employment Period, the Executive’s place of performance for
the Executive’s duties and responsibilities shall be
at
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the Companies’ corporate
headquarters office, unless another principal place of performance
is a(g)reed in writing among the parties and except for required
travel by the Executive on the Companies’ business or as may
be reasonably required by the Companies.
(b)
Notwithstanding the foregoing, it is
understood during the Employment Period. subject to any conflict of
interest policies of the Companies, the Executive may
(i) serve in any capacity with any civic, charitable,
educational or professional organization provided that such service
does not materially interfere with the Executive’s duties and
responsibilities hereunder, (ii) make arid manage personal
investments of the Executive’s choice, and (iii) with
the or consent of the Companies’ Chief Executive Officer,
which shall not be unreasonably withheld, serve on the board of
directors of one (1) far-profit business
enterprise.
Section 4.
Compensation.
During the Employment Period, the
Executive shall be compensated as follows:
(a)
the Executive shall receive, at such
intervals and in accordance with such Company payroll policies as
may be in effect from time to time, an annual salary (pro rata for
any partial year) equal to $380,000.16 (
. ”Base Salary”).
The Base Salary shall be reviewed by
the Board from time to time and may, in the Board’s sole
discretion, be increased when deemed appropriate by the Board; if
so increased, it shall not thereafter be reduced (other than an
across-the-board reduction applied in the same percentage at the
same time to all of the Companies’ senior executives at the
same grade level);
(b)
during the Employment Period, the
Executive shall be eligible to earn an annual incentive
compensation award under the Companies’ management incentive
or bonus plan, or a successor plan thereto, as shall be in effect
from time to time (the “Bonus Plan”), subject to
achievement of performance goals determined in accordance with the
terms of the Bonus Plan (such annual incentive compensation award,
the “Annual Bonus”), with such Annual Bonus to
be payable in a cash lump sum at such time as bonuses are
ordinarily paid to the Companies’ senior executives at the
same grade level;
(c)
the Executive shall he reimbursed,
at such intervals anti in accordance with such Company policies as
may be in effect from time to time, for any and all reasonable and
necessary out-of-pocket business expenses incurred by the Executive
during the Employment Period for the benefit of the Companies,
subject to documentation in accordance with the Companies’
policies;
(d)
the Executive shall be entitled to
participate in all (i)ncentive, savings and retirement plans, stock
option plans, practices, policies and programs applicable generally
to other senior executives of the Companies at the same grade level
and as determined by the Board from time to time;
(e)
the Executive and/or the
Executive’s family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare
benefit plans.
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practices, policies and programs
provided by the Company to senior executives of the Companies; at
the same grade level (including, without limitation. medical,
prescription. dental, disability, salary continuance, employee
life, group life, and accidental death and travel accident
insurance plans and programs) to the extent applicable generally to
other executives of the Companies at the same grade
level;
(f)
the Executive shall be entitled to
not less than twenty (20) paid vacation days per calendar year (pro
rata for any partial year); and
(g)
the Executive shall be entitled to
participate in the Company’s other executive fringe benefits
and perquisites generally applicable to the Companies’ senior
executives at the same grade level in accordance with the terms and
conditions of such arrangements as are in effect from time to
time.
Section 5.
Termination of
Employment.
(a)
All Accrued Benefits to which the
Executive (or the Executive’s estate or beneficiary) is
entitled shall be payable within thirty (30) days following the
Termination Date, except as otherwise specifically provided herein
or under the terms of any applicable policy, plan or program, in
which case the payment terms of such policy, plan or program shall
be determinative,
(b)
Any termination by the Companies, or
by the Executive, of the Employment Period shall he communicated by
written notice of such termination to the Executive, if such notice
is delivered by the Companies, and to the Companies, if such notice
is delivered by the Executive, each in compliance with the
requirements of Section 13 hereof. Except in the event of
termination of the Employment Period by reason of Cause or the
Executive’s death, the effective date of the termination of
Executive’s employment shall be no earlier than thirty (30)
days following the date on which notice: of termination is
delivered by one party to the other in compliance with the
requirements of Section 13 hereof.
(c)
If the Employment Period, is
terminated prior to the expiration of the Term by the Companies for
any reason other than Cause or the Executive’s permanent
disability, as defined in the Companies’ Board-approved
disability plan or policy as in effect from time to time
(“Disability”) and other than within two (2) years
following a Change of Control, then, as the Executive’s
exclusive right and remedy in respect of such
termination:
(i)
the Executive shall be entitled to
receive from the Company the Executive’s Accrued Benefits in
accordance with Section 5(a);
(ii)
the Executive shall be entitled to
an amount equal to one and one-half (1 1 /
2 )
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times the Executive’s then
existing Base Salary, to be paid in such intervals and at such
times in accordance with the Company’s payroll practices in
effect from time to time over the eighteen (18) month period
following the Termination Date; but in no event shall such amount
paid under this Section 5(c)(ii) exceed the lesser of
(A) $460,000.00 or (B) two (2) times
Executive’s annualized compensation based upon the annual
rate of pay for services to the Companies for the calendar year
prior to the calendar year in which the Termination Date occurs
(adjusted for any increase during that year that was expected to
continue indefinitely if the Executive had not separated from
service), consistent with the parties’ intention that the
payments under this Section 5(c)(ii) constitute a
“separation pay plan due to involuntary separation from
service” under Treas. Reg. §
1.409A-1(b)(9)(iii);
(iii)
in the event that an amount equal to
one and one-half times (1½) the Executive’s
then-existing Base Salary exceeds the limitations of Subsections
5(c)(ii)(A) or (B) above, then the Executive shall be
entitled to an additional lump sum payment equal to the difference
between (x) one and one-half (1½) times the
Executive’s then-existing Base Salary and (y) the amount
payable to Executive under Subsection 5(c)(ii), such lump sum
payable to Executive on the first regular payroll date of the
Company to occur following the date that is six months after the
Termination Date;
(iv)
the Executive shall be entitled to a
payment in an amount equal to one and one-half (1½) times
the actual Annual Bonus award which would otherwise be payable for
the calendar year during which the Termination Date occurs, as if
the Executive had been employed for all of such calendar year based
on actual performance, to be paid at such time as the Annual Bonus
award would otherwise be paid in accordance with the
Company’s policies;
(v)
the Executive shall continue to be
covered, upon the same terms and conditions described in
Section 4(e) hereof, by the same or equivalent medical
and/or dental insurance plans, programs and/or arrangements as in
effect for the Executive immediately prior to the Termination Date,
beginning on the Termination Date and continuing until the earlier
of (A) the eighteen (18) month anniversary following the date
of the Executive’s Termination Date, and (B) the date
the Executive receives substantially equivalent coverage under the
plans, programs and/or arrangements of a subsequent employer;
provided that Executive timely pays the Executive’s portion
of such coverage, and provided further that if the Company
determines that the coverage to be provided under this
Section 5(c)(v) would cause a self-insured plan
maintained by the Company to be in violation of the
nondiscrimination requirements of Section 105(h) of the
Code, then such coverage will be paid for by the Executive by means
of the Company reporting imputed income to Executive on a monthly
basis for the fair market value of such coverage plus additional
imputed amounts to pay any income tax at source on resulting wages
subject to FICA or the income tax withholding provisions of federal
or state tax law, including pyramiding wages and taxes (and the
Company shall be responsible for depositing all applicable
withholding amounts in a timely manner with the appropriate tax
authority), with the intent that any amounts payable under this
Section 5(c)(v) that are not otherwise excluded from
deferred compensation under Code Section 409A shall be
excluded from
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deferred compensation pursuant to a
“separation pay plan due to involuntary separation from
service” under Treas. Reg. §
1.409A-1(b)(9)(iii);
(vi)
the Executive shall receive a lump
sum payment in an amount equal to the amount the Company would
otherwise expend for 18 month’s coverage for its share of the
premiums for life and disability insurance plans or programs as in
effect for Executive immediately prior to the Termination Date,
payable to Executive within thirty (30) days following the
Termination Date; and
(vii)
for the period commencing on the
Termination Date and ending not later than the last day of the
second calendar year after the Termination Date, the Executive
shall be entitled to receive executive level career transition
assistance services provided by a career transition assistance firm
selected by the Executive and paid for by the Companies in an
amount not to exceed ten percent (10%) of the sum of the
Executive’s then existing Base Salary. T
