Exhibit 10.1

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made,  entered into
and effective as of October 19, 2004 (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 have a need for executive management services; and

 

WHEREAS, the Executive is qualified and willing to render such services to the
Companies;

 

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
advanced in connection with the Executive’s employment for reasonable and
necessary expenses incurred by the Executive 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

 

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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)
commission of any act or acts of moral turpitude; (vi) gross negligence or
willful misconduct in the performance of Executive’s duties; (vii) breach of any
fiduciary duty owed to the Company, including, without limitation, engaging in
competitive acts while employed by the Company; or (viii) 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 (viii) 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, 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

 

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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 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 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; 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

 

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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, (ii) any material reduction, without the Executive’s written consent,
in the Executive’s title, 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 title, 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 reduction in the Executive’s Base Salary or a material reduction
determined on an aggregate basis in the level of executive benefits, perquisites
and incentive opportunities, (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 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 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,

 

 

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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:

 

“Annual Bonus”

Section 4(b)

“Base Salary”

Section 4(b)

“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.”

 

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 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

 

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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 $300,000 (“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 business expenses
incurred by the Executive 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 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, practices, policies and
programs provided by the Company to senior executives of the

 

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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 provided with an
automobile allowance or a Company-leased automobile, in either case in
accordance with the Companies’ then applicable Executive Automobile Policy; the
Executive shall be entitled to not less than twenty (20) paid vacation days per
calendar year (pro rata for any partial year);

 

(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; and

 

(h)                                 appended hereto as Appendix I and made a
part of this Agreement is a description of certain modifications and
clarifications to Section 4 of this Agreement.

 

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 termination of the Employment Period, 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 Termination Date 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 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) 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

 

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effect from time to time over the eighteen (18) month period following the
Termination Date;

 

(iii)                               the Executive shall be entitled to a payment
in an amount equal to one and one-half (1½) times the actual incentive
compensation award which would otherwise be payable for the calendar year during
which the Termination Date occurs, to be paid at such time as the incentive
award would otherwise be paid in accordance with the Company’s policies (for
purposes of determining such award, any discretionary individual performance
component shall be deemed to be at the same achievement level as in the year
preceding the Termination Date or, if not included in the such year’s incentive
award components, at target);

 

(iv)                              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, dental, hospitalization, life and disability insurance
plans, programs and/or arrangements as in effect for the Executive immediately
prior to the Termination Date 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;

 

(v)                                 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 percent (20%) of the sum of (i) the
Executive’s then existing Base Salary and (ii) the target incentive compensation
award for the calendar year during which the Termination Date occurs.  The
Executive shall not be eligible to receive cash in lieu of executive level
career transition assistance services.

 

(d)                                 If during the Employment Period, a Change of
Control occurs and the Employment Period is terminated by the Companies for any
reason other than Cause or Disability or by the Executive for Good Reason within
two (2) years from the date of such Change of Control, then:

 

(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 a
lump-sum payment in an amount equal to two (2) times the Executive’s then
existing Base Salary, to be paid within thirty (30) days following the
Termination Date;

 

(iii)                               the Executive shall be entitled to a
lump-sum payment in an amount equal to two (2) times the Executive’s target
incentive compensation award for the calendar year during which the Termination
Date occurs, to be paid within thirty (30) days following the Termination Date;

 

(iv)                              the Executive shall be entitled to a lump-sum
payment to be paid within thirty (30) days following the Termination Date in an
amount equal to the

 

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pro-rata target incentive compensation award for the calendar year during which
the Termination Date occurs.  Such pro-rata target incentive compensation award
shall be determined by multiplying the target incentive compensation 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).

 

(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, dental, hospitalization, life and disability insurance
plans, programs and/or arrangements as in effect for the Executive immediately
prior to the Change of Control until the earlier of: (A) the second 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;

 

(vi)                              the Executive shall receive two (2) additional
years of credit for purposes of age, benefit service and vesting under the
Company’s defined benefit retirement plan;

 

(vii)                           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 option agreement(s), then to the extent
permitted in the Companies’ applicable stock option plan(s) and as provided in
the applicable stock option agreement(s), the Executive shall continue to vest
in the Executive’s unvested stock options following the Termination Date;

 

(viii)                        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 percent (20%) of the sum of (i) the
Executive’s then existing Base Salary and (ii) the target incentive compensation
award for the calendar year during which the Termination Date occurs.  The
Executive shall not be eligible to receive cash in lieu of executive level
career transition assistance services; and

 

(ix)                                the Executive shall be entitled to be
reimbursed by the Companies on an as incurred basis for the Executive’s
reasonable attorneys’ fees, costs and expenses incurred in conjunction with any
dispute regarding Section 5(d).

 

(e)                                  Any amounts payable pursuant to Sections
5(c) and 5(d) above shall be considered severance payments and, except for the
Executive’s vested benefits under the Companies’ employee benefit plans (other
than severance plans), shall be in full and complete satisfaction of the
obligations of the Companies to the Executive in connection with the termination
of the Executive’s employment.  The Company shall deliver a Form 1099 to the
Executive reflecting such payments.

 

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(f)                                    If the Employment Period is terminated as
a result of the Executive’s death, Disability or retirement, as defined in the
Companies’ Board-approved retirement plan or policy, as in effect from time to
time (“Retirement”), then the Executive shall be entitled to (i) the Executive’s
Accrued Benefits in accordance with Section 5(a), (ii) any benefits that may be
payable to the Executive under any applicable Board-approved disability, life
insurance or retirement plan or policy in accordance with the terms of such plan
or policy, and (iii) a lump sum payment to be paid within thirty (30) days
following the Termination Date in an amount equal to the pro-rata target
incentive compensation award for the calendar year during which the Termination
Date occurs by reason of the Executive’s death, Disability or Retirement.  Such
pro-rata target incentive compensation award shall be determined by multiplying
the target incentive compensation 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).

 

(g)                                 Notwithstanding anything else contained
herein, if the Executive terminates his employment for any reason other than
Disability or Retirement and, if after a Change of Control, without Good Reason,
or the Companies terminate the Executive’s employment for Cause, all of the
Executive’s rights to payment from the Companies (including pursuant to any plan
or policy of the Companies) shall terminate immediately, except the right to
payment for Accrued Benefits in respect of periods prior to such termination.

 

(h)                                 Notwithstanding anything to the contrary
contained in this Section 5, the Executive shall be required to execute the
Companies’ then current standard release agreement as a condition to receiving
any of the payments and benefits provided for in Sections 5(c) and (d),
excluding the Accrued Benefits in accordance with Section 5(a).  It is
acknowledged and agreed that the then current standard release agreement shall
not diminish or terminate the Executive’s rights under this Agreement.

 

(i)                                     In the event of a termination of the
Executive’s employment entitling the Executive to benefits under Section 5(c)
above, the Executive shall use reasonable efforts to obtain employment suitable
to his education, training and experience, and, upon obtaining any such other
employment shall promptly notify the Companies thereof.  The remaining
obligation of the Companies under Section 5(c) shall be offset by any
compensation earned by the Executive from such other employment during the
eighteenth month period commencing on his Termination Date.  Except as set forth
in the first sentence of this Section 5(i) and subject to the Executive’s
affirmative obligations pursuant to Section 6, the Executive shall be under no
obligation to seek other employment or otherwise mitigate the obligations of the
Companies under this Agreement.

 

(j)                                     If it shall be determined that any
payment or distribution of any type to or in respect of the Executive made
directly or indirectly, by the Companies or by any other party in connection
with a Change of Control, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (the “Total
Payments”), is or will be subject to the excise tax imposed by Section 4999 of
the

 

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Internal Code of 1986, as amended (the “Code”), or any interest or penalties
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are collectively referred to as the “Excise Tax”), then
the Executive shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes) imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Total Payments.

 

(i)                                     All computations and determinations
relevant to Section 5(j) and this subsection 5(j)(i) shall be made by a national
accounting firm selected and reimbursed by the Companies from among the ten (10)
largest accounting firms in the United States as determined by gross revenues
(the “Accounting Firm”), subject to the Executive’s consent (not to be
unreasonably withheld), which firm may be the Companies’ accountants.  Such
determinations shall include whether any of the Total Payments are “parachute
payments” (within the meaning of Section 280G of the Code).  In making the
initial determination hereunder as to whether a Gross-Up Payment is required,
the Accounting Firm shall determine that no Gross-Up Payment is required if the
Accounting Firm is able to conclude that no “Change of Control” has occurred
(within the meaning of Section 280G of the Code).  If the Accounting Firm
determines that a Gross-Up Payment is required, the Accounting Firm shall
provide its determination (the “Determination”), together with detailed
supporting calculations regarding the amount of any Gross-Up Payment and any
other relevant matter both to the Companies and the Executive by no later than
thirty (30) days following the Termination Date, if applicable, or such earlier
time as is requested by the Companies or the Executive (if the Executive
reasonably believes that any of the Total Payments may be subject to the Excise
Tax).  If the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive and the Companies with a written
statement that such Accounting Firm has concluded that no Excise Tax is payable
(including the reasons therefor) and that the Executive has substantial
authority not to report any Excise Tax on Executive’s federal income tax return.

 

(ii)                                  If a Gross-Up Payment is determined to be
payable, it shall be paid to the Executive within twenty (20) days after the
Determination (and all accompanying calculations and other material supporting
the Determination) is delivered to the Companies by the Accounting Firm.  Any
determination by the Accounting Firm shall be binding upon the Companies and the
Executive, absent manifest error.

 

(iii)                               As a result of uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments not made
by the Companies should have been made (“Underpayment”), or that Gross-Up
Payments will have been made by the Companies which should not have been made
(“Overpayments”).  In either such event, the Accounting Firm shall determine the
amount of the Underpayment or

 

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Overpayment that has occurred.  In the case of an Underpayment, the amount of
such Underpayment (together with an amount which after payment of all taxes
thereon is equal to any interest and penalties payable by the Executive as a
result of such Underpayment) shall be promptly paid by the Companies to or for
the benefit of the Executive.

 

(iv)                              In the case of an Overpayment, the Executive
shall, at the direction and expense of the Companies, take such steps as are
reasonably necessary (including the filing of returns and claims for refund),
follow reasonable instructions from, and procedures established by, the
Companies, and otherwise reasonably cooperate with the Companies to correct such
Overpayment, provided, however, that the Executive shall not in any event be
obligated to return to the Companies an amount greater than the portion of the
Overpayment that Executive has retained after payment of all taxes thereon or
has recovered as a refund from the applicable taxing authorities.

 

(v)                                 The Executive shall notify the Companies in
writing of any claim by the Internal Revenue Service relating to the possible
application of the Excise Tax under Section 4999 of the Code to any of the
payments and amounts referred to herein and shall afford the Companies, at their
expense, the opportunity to control the defense of such claim (for the sake of
clarity, if the Internal Revenue Service is successful in any such claim or the
Executive reaches a final settlement with the Internal Revenue Service with
respect to such claim (after having afforded the Companies, at their expense,
the opportunity to control the defense of such claim), the amount of the Excise
Tax resulting from such successful claim or settlement shall be determinative as
to whether or not there has been an Underpayment or an Overpayment for purposes
of subsection 5(j)(iii).

 

(vi)                              Without limiting the intent of this
Section 5(j) to make the Executive whole, on an after-tax basis, from the
application of the Excise Taxes, all determinations by the Accounting Firm shall
be made with a view to minimizing the application of Sections 280G and 4999 of
the Code of any of the Total Payments, subject, however, to the following:  the
Accounting Firm shall make its determination on the basis of “substantial
authority” (within the meaning of Section 6230 of the Code) and shall provide
opinions to that effect to both the Companies and the Executive upon the request
of either of them.

 

Section 6.                                          Further Obligations of the
Executive.

 

(a)                                  (1)                                  During
and following the Executive’s employment by the Companies, the Executive shall
not, directly or indirectly, disclose, disseminate, make available or use any
confidential information or proprietary data of the Companies or any of their
Subsidiaries, except as reasonably necessary or appropriate for the Executive to
perform the Executive’s duties for the Companies, or as authorized in writing by
the Board or as required by any court or administrative agency (and then only
after prompt notice to the Companies to permit the Companies to seek a
protective order).

 

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(2)                                  For purposes of this Agreement,
“confidential information or proprietary data” means information and data
prepared, compiled, or acquired by or for the Executive during or in connection
with the Executive’s employment by the Companies (including, without limitation,
information belonging to or provided in confidence by any Customer, Supplier,
trading partner or other Person to which the Executive had access by reason of
Executive’s employment with the Companies) which is not generally known to the
public or which could be harmful  to the Companies or their Subsidiaries if
disclosed to Persons outside of the Companies.  Such confidential information or
proprietary data may exist in any form, tangible or intangible, or media
(including any information technology-related or electronic media) and includes,
but is not limited to, the following information of or relating to the Companies
or any of their Subsidiaries, Customers or Suppliers:

 

(i)                                     Business, financial and strategic
information, such as sales and earnings information and trends, material,
overhead and other costs, profit margins, accounting information, banking and
financing information, pricing policies, capital expenditure/investment plans
and budgets, forecasts, strategies, plans and prospects.

 

(ii)                                  Organizational and operational
information, such as personnel and salary data, information concerning the
utilization or capabilities of personnel, facilities or equipment, logistics
management techniques, methodologies and systems, methods of operation data and
facilities plans.

 

(iii)                               Advertising, marketing and sales
information, such as marketing and advertising data, plans, programs,
techniques, strategies, results and budgets, pricing and volume strategies,
catalog, licensing or other agreements or arrangements, and market research and
forecasts and marketing and sales training and development courses, aids,
techniques, instruction and materials.

 

(iv)                              Product and merchandising information, such as
information concerning offered or proposed products or services and the sourcing
of the same, product or services specifications, data, drawings, designs,
performance characteristics, features, capabilities and plans and development
and delivery schedules.

 

(v)                                 Information about existing or prospective
Customers or Suppliers, such as Customer and Supplier lists and contact
information, Customer preference data, purchasing habits, authority levels and
business methodologies, sales history, pricing and rebate levels, credit
information and contracts.

 

(vi)                              Technical information, such as information
regarding plant and equipment organization, performance and design, information
technology and logistics systems and related designs, integration, capabilities,
performance and plans, computer hardware and software, research and development
objectives, budgets and results, intellectual property applications, and other
design and performance data.

 

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(b)                                 All records, files, documents and materials,
in whatever form and media, relating to the Companies’ or any of their
Subsidiaries’ business (including, but not limited to, those containing or
reflecting any confidential information or proprietary data) which the Executive
prepares, uses, or comes into contact with, including the originals and all
copies thereof and extracts and derivatives therefrom, shall be and remain the
sole property of the Companies or their Subsidiaries.  Upon termination of the
Executive’s Employment Period for any reason, the Executive shall immediately
return all such records, files, documents, materials and other property of the
Companies and their Subsidiaries in the Executive’s possession, custody or
control, in good condition, to the Companies.

 

(c)                                  During (i) the Executive’s employment by
the Companies and (ii) the eighteen (18) month period following the end of the
Executive’s Employment Period, the Executive shall not within the United States
and Canada in any capacity (whether as an owner, employee, consultant or
otherwise) at any time perform, manage, supervise, or be responsible or
accountable for anyone else who is performing services — which are the same as,
substantially similar or related to the services the Executive is providing, or
during the last two years of the Executive’s employment by the Companies has
provided, for the Companies or their Subsidiaries — for, or on behalf of, any
other Person who or which is (1) a wholesaler of office products, including
traditional office products, computer consumable products, office furniture,
janitorial and/or sanitation products, audio/visual and business machines or
such other products whether or not related to the foregoing provided by the
Companies or their Subsidiaries during the last twelve (12) months of the
Executive’s Employment Period, (2) a provider of services the same as or
substantially similar to those provided by the Companies or their Subsidiaries
during the last twelve (12) months of the Executive’s Employment Period, or (3)
engaged in a line of business other than described in (1) or (2) hereinabove
which is the same or substantially similar to the lines of business engaged in
by the Companies or their Subsidiaries, or to any line of business which to the
Executive’s knowledge is under active consideration or planning by the Companies
and their Subsidiaries, during the last twelve (12) months of the Executive’s
Employment Period,.

 

(d)                                 (1)                                  During
(i) the Executive’s employment by the Companies and (ii) the eighteen (18) month
period following the end of the Executive’s Employment Period, the Executive
shall not at any time, directly or indirectly, solicit any Customer for or on
behalf of any Person other than the Companies or any of their Subsidiaries with
respect to the purchase of (A) office products, including traditional office
products, computer consumable products, office furniture, janitorial and/or
sanitation products, audio/visual and business machines, or such other products
whether or not related to the foregoing provided by the Companies or their
Subsidiaries to such Customer during the last twelve (12) months of the
Executive’s Employment Period, (B) services the same as or substantially similar
to those provided by the Companies or their Subsidiaries to such Customer during
the last twelve (12) months of the Executive’s Employment Period or (C) products
or services from a line of business other than as described in (A) or (B) herein
which are the same or substantially similar to the products and services
provided to such Customer from a line of business engaged in by the Companies or
their Subsidiaries during the last twelve (12) months of the Executive’s
Employment Period.

 

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Without limiting the foregoing, (i) during the Executive’s employment by the
Companies and (ii) insofar as the Executive may be employed by, or acting for or
on behalf of, a Supplier at any time within the eighteen (18) month period
following the end of the Executive’s Employment Period, the Executive shall not
at any time, directly or indirectly, solicit any Customer to switch the purchase
of the products or services described hereinabove from the Companies or their
Subsidiaries to Supplier.

 

(2)                                  For purposes of this Agreement, a
“Customer” is any Person who or which has ordered or purchased by or from the
Companies or any of their Subsidiaries (A) office products, including
traditional office products, computer consumable products, office furniture,
janitorial and/or sanitation products, audio/visual and business machines or
such other products whether or not related to the foregoing, (B) services
provided by or from the Companies or any of their Subsidiaries or (C) products
or services from a line of business other than as described in (A) or (B) herein
which are the same or substantially similar to the products and services from a
line of business engaged in by the Companies or their Subsidiaries during the
last twelve (12) months of the Executive’s Employment Period.  For purposes of
this Agreement, a “Supplier” is any Person who or which has furnished to the
Companies or their Subsidiaries for resale (A) office products, including
traditional office products, computer consumable products, office furniture,
janitorial and/or sanitation products, audio/visual and business machines or
such other products whether or nor related to the foregoing (B) services
provided by or from the Companies or any of their Subsidiaries or (C) products
or services from a line of business other than as described in (A) or (B) herein
which are the same or substantially similar to the products and services from a
line of business engaged in by the Companies or their Subsidiaries during the
last twelve (12) months of the Executive’s Employment Period.

 

(e)                                  During the Executive’s employment by the
Companies and during the eighteen (18) month period following the end of the
Executive’s Employment Period, the Executive shall not at any time, directly or
indirectly, induce or solicit any employee of the Companies or any of their
Subsidiaries for the purpose of causing such employee to terminate his or her
employment with the Companies or such Subsidiary.

 

(f)                                    The Executive shall not, directly or
indirectly, make or cause to be made (and shall prohibit the officers,
directors, employees, agents and representatives of any Person controlled by
Executive not to make or cause to be made) any disparaging, derogatory,
misleading or false statement, whether orally or in writing, to any Person,
including members of the investment community, press, and customers, competitors
and advisors to the Companies, about the Companies, their respective parents,
Subsidiaries or Affiliates, their respective officers or members of their boards
of directors, or the business strategy or plans, policies, practices or
operations of the Companies, or of their respective parents, Subsidiaries or
Affiliates.

 

(g)                                 If any court determines that any portion of
this Section 6 is invalid or unenforceable, the remainder of this Section 6
shall not thereby be affected and shall be given full effect without regard to
the invalid provision.  If any court construes any of the provisions of
Section 6(c), 6(d), 6(e) or 6(f) above, or any part thereof, to be unreasonable
because of the duration or scope of such provision, such court shall have

 

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the power to reduce the duration or scope of such provision and to enforce such
provision as so reduced.

 

(h)                                 During the Executive’s Employment Period and
during the eighteen (18) month period following the end of Executive’s
Employment Period, the Executive agrees that, prior to accepting employment with
a Customer or Supplier of the Companies, the Executive will give notice to the
Chief Executive Officer of the Companies.  The Companies reserve the right to
make such Customer or Supplier aware of the Executive’s obligations under
Section 6 of this Agreement.

 

(i)                                     During and following Executive’s
Employment Period, the Executive shall furnish a copy of this Section 6 in its
entirety to any prospective employer prior to accepting employment with such
prospective employer.

 

(j)                                     The Executive hereby acknowledges and
agrees that damages will not be an adequate remedy for the Executive’s breach of
any provision of this Section 6, and further agrees that the Companies shall be
entitled to obtain appropriate injunctive and/or other equitable relief for any
such breach, without the posting of any bond or other security, in addition to
all other legal remedies to which the Companies may be entitled.

 

Section 7.                                          Successors.  The Companies
may assign their rights under this Agreement to any successor to all or
substantially all the assets of the Companies, by merger or otherwise, and may
assign or encumber this Agreement and its rights hereunder as security for
indebtedness of the Companies.  Any such assignment by the Companies shall
remain subject to the Executive’s rights under Section 5 hereof.  The rights of
the Executive under this Agreement may not be assigned or encumbered by the
Executive, voluntarily or involuntarily, during the Executive’s lifetime, and
any such purported assignment shall be void ab initio.  Notwithstanding the
foregoing, all rights of the Executive under this Agreement shall inure to the
benefit of and be enforceable by the Executive’s personal or legal
representatives, estates, executors, administrators, heirs and beneficiaries. 
All amounts payable to the Executive hereunder shall be paid, in the event of
the Executive’s death, to the Executive’s estate, heirs or representatives.

 

Section 8.                                          Third Parties.  Except for
the rights granted to the Companies and their Subsidiaries pursuant hereto
(including, without limitation, pursuant to Section 6 hereof) and except as
expressly set forth or referred to herein, nothing herein expressed or implied
is intended or shall be construed to confer upon or give any person other than
the parties hereto and their successors and permitted assigns any rights or
remedies under or by reason of this Agreement.

 

Section 9.                                          Enforcement.  The provisions
of this Agreement shall be regarded as divisible and, if any of said provisions
or any part or application thereof is declared invalid or unenforceable by a
court of competent jurisdiction, the same shall not affect the other provisions
hereof, other parts or applications thereof or the whole of this Agreement, but
such provision shall be deemed modified to the extent necessary to render such
provision enforceable, and the rights and obligations of the parties shall be
construed and enforced accordingly, preserving to the fullest permissible extent
the intent and agreements of the parties herein set forth.

 

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Section 10.                                   Amendment.  This Agreement may not
be amended or modified at any time except by a written instrument approved by
the Board, and executed by the Companies and the Executive; provided, however,
that any attempted amendment or modification without such approval and execution
shall be null and void ab initio and of no effect.

 

Section 11.                                   Payment and Withholding.  The
Company shall be responsible as employer for payment of all cash compensation
and severance payments provided herein and Holding shall cause the Company to
make such payments.  The Executive shall not be entitled to receive any
additional compensation from either of the Companies for any services the
Executive provides to Holding or the Companies’ Subsidiaries.  The Company shall
be entitled to withhold from any amounts to be paid to the Executive hereunder
any federal, state, local, or foreign withholding or other taxes or charges
which it is from time to time required to withhold.  The Company shall be
entitled to rely on an opinion of counsel if any question as to the amount or
requirement of any such withholding shall arise.

 

Section 12.                                   Governing Law.  This Agreement and
the rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Illinois, without regard to principles
of conflicts of law of Illinois or any other jurisdiction.

 

Section 13.                                   Notice.  Notices given pursuant to
this Agreement shall be in writing and shall be deemed given when received and,
if mailed, shall be mailed by United States registered or certified mail, return
receipt requested, addressee only, postage prepaid:

 

If to the Companies:

 

United Stationers Inc.

United Stationers Supply Co.

2200 E. Golf Road

Des Plaines, IL  60016-1267

Attention:  General Counsel

 

If to the Executive:

 

Patrick T. Collins

17 Rue Cezanne

Coto de Caza, CA  92679

 

or to such other address as the party to be notified shall have given to the
other in accordance with the notice provisions set forth in this Section 13.

 

Section 14.                                   No Waiver.  No waiver by either
party at any time of any breach by the other party of, or compliance with, any
condition or provision of this Agreement to be performed by the other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
any time.

 

Section 15.                                   Headings.  The headings contained
herein are for reference only and shall not affect the meaning or interpretation
of any provision of this Agreement.

 

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Section 16.                                   Indemnification.  The provisions
set forth in the Indemnification Agreement appended hereto as Attachment A are
hereby incorporated into this Agreement and made a part hereof.  The parties
shall execute the Indemnification Agreement contemporaneously with the execution
of this Agreement.

 

Section 17.                                   Execution in Counterparts.  This
Agreement, including the Indemnification Agreement, may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

 

Section 18.                                   Arbitration.  Any dispute,
controversy or question arising under, out of, or relating to this Agreement (or
the breach thereof), or, the Executive’s employment with the Companies or
termination thereof, shall be referred for arbitration in Chicago, Illinois to a
neutral arbitrator selected by the Executive and the Companies (or if the
parties are unable to agree on selection of such an arbitrator, one selected by
the American Arbitration Association pursuant to its rules referred to below)
and this shall be the exclusive and sole means for resolving such dispute.  Such
arbitration shall be conducted in accordance with the National Rules for
Resolution of Employment Disputes of the American Arbitration Association. 
Except as provided in Section 5(d)(ix) above, the arbitrator shall have the
discretion to award reasonable attorneys’ fees, costs and expenses to the
prevailing party.  Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.  Nothing in this Section 18
shall be construed so as to deny the Companies the right and power to seek and
obtain injunctive relief in a court of equity for any breach or threatened
breach by the Executive of any of the Executive’s covenants in Section 6
hereof.  Moreover, this Section 18 and Section 12 hereof shall not be applicable
to any dispute, controversy or question arising under, out of, or relating to
the Indemnification Agreement.

 

Section 19.                                   Survival.  Notwithstanding the
stated Term of this Agreement, the provisions of this Agreement necessary to
carry out the intention of the parties as expressed herein, including without
limitation those in Sections 5, 6, 7, 16 and 18, shall survive the termination
or expiration of this Agreement.

 

Section 20.                                   Construction.  The parties
acknowledge that this Agreement is the result of arm’s-length negotiations
between sophisticated parties each afforded representation by legal counsel. 
Each and every provision of this Agreement shall be construed as though both
parties participated equally in the drafting of same, and any rule of
construction that a document shall be construed against the drafting party shall
not be applicable to this Agreement.

 

Section 21.                                   Free to Contract.  The Executive
represents and warrants to the Companies that the Executive is able freely to
accept employment by the Companies as described in this Agreement and that there
are no existing agreements, arrangements or understandings, written or oral,
that would prevent the Executive from entering into this Agreement, would
prevent or restrict the Executive in any way from rendering services to the
Companies as provided herein during the Employment Period or would be breached
by the future performance by the Executive of the Executive’s duties and
responsibilities hereunder.

 

Section 22.                                   Entire Agreement.  This Agreement,
including the Indemnification Agreement and any other written undertakings by
the Executive referred to herein, supersedes all

 

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other agreements, arrangements or understandings (whether written or oral)
between the Companies and the Executive with respect to the subject matter of
this Agreement and the Executive’s employment relationship with the Companies
and any of their Subsidiaries, and this Agreement contains the sole and entire
agreement among the parties hereto with respect to the subject matter hereof.

 

*                                        
*                                         *

 

IN WITNESS WHEREOF, the parties have executed this Agreement in one or more
counterparts, each of which shall be deemed one and the same instrument, as of
the day and year first written above.

 

EXECUTED ON:

 

 

 

 

UNITED STATIONERS INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 21, 2004

 

 

 

By:

/s/ Richard W. Gochnauer

 

 

 

 

 

 

Name: Richard W. Gochnauer

 

 

 

 

 

 

Title: President and Chief Executive Officer

 

 

 

 

 

 

 

EXECUTED ON:

 

 

 

 

UNITED STATIONERS SUPPLY CO.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 21, 2004

 

 

 

By:

/s/ Richard W. Gochnauer

 

 

 

 

 

 

Name: Richard W. Gochnauer

 

 

 

 

 

 

Title: President and Chief Executive Officer

 

 

 

 

 

 

 

EXECUTED ON:

 

 

 

 

EXECUTIVE:

 

 

 

 

 

 

 

October 21, 2004

 

 

 

/s/ Patrick T. Collins

 

 

 

 

 

 

Patrick T. Collins

 

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APPENDIX I

 

Patrick T. Collins

 

1.               The Executive will be paid a one-time cash acceptance bonus of
$150,000, less applicable tax withholdings, payable within thirty (30) days
after his employment commencement date, provided that he is an officer and
employee of the Companies in good standing at such time.  The Executive agrees
to repay this acceptance bonus in full on the date of termination of employment
in the event that he voluntarily leaves the employ of the Companies for any
reason other than Disability prior to October 1, 2006.

 

2.               Upon and subject to approval of and grant by the Human
Resources Committee of Holding’s Board of Directors when such Committee first
meets after the Executive’s employment commencement date (the effective date of
such grant referred to as the “Grant Date”), Holding will grant to the Executive
a non-qualified option to purchase 50,000 shares of Holding’s Common Stock (the
“Option”) on the following terms:  The Option will become exercisable with
respect to 16,666 shares on the first anniversary of the Grant Date and 16,667
on each of the second and third anniversaries of the Grant Date, provided in
each case that the Executive is still then in the employ of the Companies. The
Option will expire not later than the tenth anniversary of the Grant Date.  The
Option will be subject to all of the terms, conditions and limitations of the
United Stationers Inc. 2004 Long-Term Incentive Plan and the approved form of
option grant agreement thereunder.

 

3.               The Executive’s target annual cash bonus for 2004 under the
Company’s Management Incentive Plan (“MIP”) will be 50% of his base salary for
the year, prorated in accordance with the MIP to reflect his proportionate
employment period during 2004.  Any amount earned under the MIP in respect of
2004 will become payable in the first quarter of 2005, provided that the
Executive remains an employee in good standing at the time such payment is made.

 

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