Exhibit 10.36
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 RICHARD W.
GOCHNAUER, currently a resident of Winnetka, IL (hereinafter
referred to as the “Executive”).
WHEREAS, the Companies and Executive
are parties to an Executive Employment Agreement dated
July 22, 2002 and amended as of January 1, 2003 and
December 31, 2003 (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 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 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 I.
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 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; (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 Board (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 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,
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that in determining whether a Change
of Control has occurred, Voting Securities which are held or
acquired by (i) Holding of any of its subsidiaries or
(ii) an employee benefit plan (or a trust forming a part
thereof) maintained by Holding or any of its subsidiaries 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-11
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 immediately before such Business Combination,
(2) the individuals who were members of the Incumbent Baud
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 not be
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; 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 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
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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), a change in the
number or identity of the Executive’s direct reports shall
not be deemed by itself to materially reduce Executive’s
duties, responsibilities or authority as long as Executive
continues to report to either the Chief Executive Officer or Board
of the Companies prior to the end of the first quarter of the
calendar year 2003 and thereafter or such earlier date as the
Executive begins serving as President and Chief Executive Officer
of the Companies solely to the Board of the Companies, 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 Effective Date of this Agreement, or (C) the relocation of
the Company’s corporate headquarters office outside of the
Chicago, IL metropolitan area. 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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“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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“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 ”).
Section 3.
Duties.
(a)
During the Employment Period, the
Executive (i) shall serve as the President and Chief Executive
Officer of the Companies, (ii) shall report directly to the
Board, (iii) shall, subject to and in accordance with the
authority and direction of the Board, 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
(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’ Board, 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 $900,000.00 (“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
senior grade level;
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(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 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 senior 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, practices, policies and programs provided by the
Company to senior executives of the Companies at the senior 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 senior grade level;
(f)
the Executive shall be entitled to
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 senior 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, Good
Reason 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 Executive for
Good Reason or 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 two (2) times the Executive’s then
existing Base Salary, to be paid in such intervals and at such
times in accordance with the
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Company’s payroll practices in
effect from time to time over the twenty-four (24) 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
two (2) times 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) two (2) 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 two (2) 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 be entitled to a
lump-sum payment in an amount equal to the pro-rata actual Annual
Bonus award which would otherwise be payable for the calendar year
during which the Termination Date occurs, with such pro-rata actual
Annual Bonus award determined by multiplying the Annual Bonus award
amount by a fraction, the numerator of which is the number of days
in the calendar year of the Termination Date elapsed prior to the
Termination Date and the denominator of which is three hundred and
sixty-five (365); such lump sum payment to be made on the later of
the date that Annual Bonus payments are made to other participants
in the plan or the first regular payroll date of the Company to
occur following the date that is six months after the Termination
Date;
(vi)
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 twenty-four (24) 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)
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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);
(vii)
the Executive shall receive a lump
sum payment in an amount equal to the amount the Company would
otherwise expend for 24 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;
(viii)
if the Executive’s outstanding
stock options have not by then fully vested pursuant to the terms
of the Companies’ applicable stock option plan(s) and
applicable stock option agreement(s), then to the extent permitted
in the Companies’ applicable stock option plan(s) and as
provided in the applicable option agreement(s), the Executive shall
continue to vest in Executive’s unvested stock options
following the Termination Date;
(ix)
the Executive shall receive a lump
sum cash payment, payable to Executive within thirty (30) days
following the Termination Date, in an amount equal to the
additional benefit value (on a present value, differential basis)
that would be payable to Executive under the Company’s
defined benefit retirement plan if he had five (5) additional
years of credit for purposes of age, benefit service and
vesting;
(x)
for purposes of any outstanding
equity-based compensation award agreement with the Companies to
which the Executive is a party as of the Termination Date,
Executive shall be credited with five (5) additional years of
service for purposes of determining whether the definit
