Exhibit 10.39
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
Patrick T. Collins (hereinafter referred to as the
“Executive”).
WHEREAS, the Companies and Executive
are parties to an Executive Employment Agreement dated
October 19, 2004 (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 Executive’s employment may be
terminated without compensation in the event of a Change of
Control; and
WHEREAS, Executive will continue to
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
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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 annual incentive compensation awards for the year
immediately prior to the year in which the Executive’s
employment is terminated, and (iv) all other payments and
benefits payable on or after termination of employment to which the
Executive is entitled at the date of termination under the terms of
any applicable compensation arrangement or benefit plan or program
of the Company. “Accrued Benefits” shall not include
any entitlement to severance pay or severance benefits under any
Company severance policy or plan generally applicable to the
Company’s salaried employees.
“Affiliate” shall have the meaning given such term in
Rule 12b-2 of the Exchange Act.
“Board”
shall mean, so long as Holding owns
all of the outstanding Voting Securities (as hereinafter defined in
the definition of Change of Control) of the Company, the board of
directors of Holding. In all other cases, Board means the board of
directors of the Company.
“Cause”
shall mean (i) conviction of or
plea of nolo contendere to, a felony
(excluding motor vehicle violations); (ii) theft or
embezzlement, or attempted theft or embezzlement, of money or
property or assets of the Company or any of its Affiliates;
(iii) illegal use of drugs; (iv) material breach of this
Agreement 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 constitute
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Cause, describing such event in
reasonable detail, and has not cured such action within thirty (30)
days of such written notice as reasonably determined by the Chief
Executive Officer. For purposes of this definition of Cause, action
or inaction by the Executive shall not be considered
“willful” unless done or omitted by the Executive
(A) intentionally or not in good faith and (B) without
reasonable belief that the Executive’s action or inaction was
in the best interests of the Companies, and shall not include
failure to act by reason of total or partial incapacity due to
physical or mental illness.
“ Change of
Control” shall mean (a) Any “Person”
(having the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections
13(d) and 14(d) thereof, including a “group”
within the meaning of Section 13(d)(3)) has or acquires
“Beneficial Ownership” (within the meaning of
Rule 13d-3 under the Exchange Act) of 30% or more of the
combined voting power of Holding’s then outstanding voting
securities entitled to vote generally in the election of directors
(“Voting Securities”); provided, however, that
the acquisition or holding of Voting Securities by (i) Holding
of any of its subsidiaries, (ii) an employee benefit plan (or
a trust forming a part thereof) maintained by Holding or any of its
subsidiaries, or (iii) any Person in which the Executive has a
substantial equity interest shall not constitute a Change of
Control. Notwithstanding the foregoing, a Change of Control shall
not be deemed to occur solely because any Person acquired
Beneficial Ownership of more than the permitted amount of Voting
Securities as a result of the issuance of Voting Securities by
Holding in exchange for assets (including equity interests) or
funds with a fair value equal to the fair value of the Voting
Securities so issued; provided that if a Change of Control would
occur (but for the operation of this sentence) as a result of the
issuance of Voting Securities by Holding, and after such issuance
of Voting Securities by Holding, such Person becomes the Beneficial
Owner of any additional Voting Securities which increases the
percentage of the Voting Securities Beneficially Owned by such
Person to more than 50% of the Voting Securities of Holding, then a
Change of Control shall occur; (b) At any time during a period
of two consecutive years, the individuals who at the beginning of
such period constituted the Board (the “Incumbent
Board”) cease for any reason to constitute more than 50%
of the Board; provided, however, that if the election, or
nomination for election by Holding’s stockholders, of any new
director was approved by a vote of more than 50% of the directors
then comprising the Incumbent Board, such new director shall, for
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-l I promulgated under the Exchange
Act) or other actual solicitation of proxies or consents by or on
behalf of a Person other than the Incumbent Board (a
“Proxy Contest”), or (ii) by reason of an
agreement intended to avoid or settle any actual or threatened
Election Contest or Proxy Contest; (c) Consummation of a
merger, consolidation or reorganization or approval by
Holding’s stockholders of a liquidation or dissolution of
Holding or the occurrence of a liquidation or dissolution of
Holding (“Business Combination”), unless,
following such Business Combination: (1) the Persons with
Beneficial Ownership of Holding, immediately before such Business
Combination, have Beneficial Ownership of more than 50% of the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the
corporation (or in the election of a comparable governing body of
any other type of entity) resulting from such Business Combination
(including, without limitation, an entity which as a result of such
transaction owns Holding or all or substantially all of
Holding’s assets either directly or through one or more
subsidiaries) (the “Surviving Company”) in
substantially the same proportions as their Beneficial Ownership of
the Voting Securities
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immediately before such Business
Combination, (2) the individuals who were members of the
Incumbent Board immediately prior to the execution of the initial
agreement providing for such Business Combination constitute more
than 50% of the members of the board of directors (or comparable
governing body of a noncorporate entity) of the Surviving Company;
and (3) no Person (other than Holding, any of its subsidiaries
or any employee benefit plan (or any trust forming a part thereof)
maintained by Holding, the Surviving Company or any Person who
immediately prior to such Business Combination had Beneficial
Ownership of 30% or more of the then Voting Securities) has
Beneficial Ownership of 30% or more of the then combined voting
power of the Surviving Company’s then outstanding voting
securities; provided, that notwithstanding this clause (3), a
Change of Control shall notbe deemed to occur solely because any
Person acquired Beneficial Ownership of more than 30% of Voting
Securities as a result of the issuance of Voting Securities by
Holding in exchange for assets (including equity interests) or
funds with a fair value equal to the fair value of the Voting
Securities so issued; provided, however that a Business Combination
with a Person in which the Executive has a substantial equity
interest shall not constitute a Change of Control, or
(d) Approval by Holding’s stockholders of an agreement
for the assignment, sale, conveyance, transfer, lease or other
disposition of all or substantially all of the assets of Holding to
any Person (other than a Person in which the Executive has a
substantial equity interest and other than a subsidiary of Holding
or other entity, the Persons with Beneficial Ownership of which are
the same Persons with Beneficial Ownership of Holding and such
Beneficial Ownership is in substantially the same proportions), or
the occurrence of the same. Notwithstanding the foregoing, a Change
of Control shall not be deemed to occur solely because any Person
acquired Beneficial Ownership of more than the permitted amount of
Voting Securities as a result of the acquisition of Voting
Securities by the Company which, by reducing the number of Voting
Securities outstanding, increases the proportional number of shares
Beneficially Owned by such Person; provided that if a Change of
Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and
after such acquisition of Voting Securities by the Company, such
Person becomes the Beneficial Owner of any additional Voting
Securities which increases the percentage of the Voting Securities
Beneficially Owned by such Person, then a Change of Control shall
occur.
“Exchange
Act” shall mean the
Securities Exchange Act of 1934, as amended.
“Good
Reason” shall mean
(i) any material breach by the Companies of this Agreement
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 as a result of a realignment or restructuring of the
Companies’ executive organizational chart nor (C) a
change in the Executive’s title, duties, responsibilities or
authority as a result of a realignment or restructuring of the
Companies shall necessarily be deemed by itself to materially
reduce Executive’s 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 fifty (50) miles from its location on the date
of a Change in Control, or (C) the relocation of
the
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Company’s corporate
headquarters office outside of the metropolitan area in which it is
located on the date of a Change in Control. For purposes of this
Agreement, a Change of Control, alone, does not constitute Good
Reason. Furthermore, notwithstanding the above, the occurrence of
any of the events described above will not constitute Good Reason
unless the Executive gives the Companies written notice within
thirty (30) days after the 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 first Person owns 20% or more of the
economic interest in such Person or owns or has the power to vote,
directly or indirectly, securities representing 20% or more of the
votes ordinarily entitled to be cast for the election of directors
or other governing Persons.
(b)
The capitalized terms used in
Section 5(j) have the respective meanings assigned to
them in such Section and the following additional terms have
the respective meanings assigned to them in the Sections hereof set
forth opposite them:
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“Annual
Bonus”
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Section 4(b)
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“Base Salary”
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Section 4(a)
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“Bonus Plan”
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Section 4(b)
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“Code”
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Section 2
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“Confidential information or
proprietary data”
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Section 6(a)(2)
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“Customer”
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Section 6(d)(2)
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“Disability”
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Section 5(c)
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“Employment
Period”
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Section 2
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“Retirement”
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Section 5(f)
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“Supervising
Officer”
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Section 3(a)
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“Supplier”
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Section 6(d)(2)
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“Term” and
“Termination Date”
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Section 2
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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
”).
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Section 3.
Duties.
(a)
During the Employment Period, the
Executive (i) shall serve as Senior Vice President, Sales, of
the Companies, (ii) shall report directly to an officer of the
Companies (the “Supervising Officer”) who shall
he selected by the Board or the Chief Executive Officer in its or
his or her sole discretion, (iii) shall, subject to and in
accordance with the authority and direction of the Board and/or the
Supervising Officer have such authority and perform in a diligent
and competent manner such duties as may be assigned to the
Executive from time to time by the Board and/or the Supervising
Officer and (iv) shall devote the Executive’s best
efforts and such time, attention, knowledge and skill to the
operation of the business and affairs of the Companies as shall be
necessary to perform the Executive’s duties. During the
Employment Period, the Executive’s place of performance for
the Executive’s duties and responsibilities shall be at the
Companies’ corporate headquarters office, unless another
principal place of performance is agreed in writing among the
parties and except for required travel by the Executive on the
Companies’ business or as may be reasonably required by the
Companies.
(b)
Notwithstanding the foregoing, it is
understood during the Employment Period, subject to any conflict of
interest policies of the Companies, the Executive may
(i) serve in any capacity with any civic, charitable,
educational or professional organization provided that such service
does not materially interfere with the Executive’s duties and
responsibilities hereunder, (ii) make and manage personal
investments of the Executive’s choice, and (iii) with
the prior consent of the Companies’ Chief Executive Officer,
which shall not be unreasonably withheld, serve on the board of
directors of one (1) for-profit business
enterprise.
Section 4.
Compensation.
During the Employment Period, the
Executive shall be compensated as follows:
(a)
the Executive shall receive, at such
intervals and in accordance with such Company payroll policies as
may be in effect from time to time, an annual salary (pro rata for
any partial year) equal to $337,394.16 (“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 be reimbursed,
at such intervals and in accordance with such Company policies as
may be in effect from time to time, for any and all reasonable and
necessary out-of-pocket business expenses incurred by the Executive
during the Employment Period for the benefit of the Companies,
subject to documentation in
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accordance with the Companies’
policies;
(d)
the Executive shall be entitled to
participate in all incentive, savings and retirement plans, stock
option plans, practices, policies and programs applicable generally
to other senior executives of the Companies at the same grade level
and as determined by the Board from time to time;
(e)
the Executive and/or the
Executive’s family, as the case may be, shall he eligible for
participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the
Company to senior executives of the Companies at the same grade
level (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life,
and accidental death and 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 be communicated by
written notice of such termination to the Executive, if such notice
is delivered by the Companies, and to the Companies, if such notice
is delivered by the Executive, each in compliance with the
requirements of Section 13 hereof. Except in the event of
termination of the Employment Period by reason of Cause or the
Executive’s death, the 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
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time (“ Disability
”) and other than within two (2) years following a
Change of Control, then, as the Executive’s exclusive right
and remedy in respect of such termination:
(i)
the Executive shall be entitled to
receive from the Company the Executive’s Accrued Benefits in
accordance with Section 5(a);
(ii)
the Executive shall be entitled to
an amount equal to one and one-half (1-1/2) times the
Executive’s then existing Base Salary, to be paid in such
intervals and at such times in accordance with the Company’s
payroll practices in effect from time to time over the eighteen
(18) month period following the Termination Date; 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 anchor 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
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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 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 twenty
