Exhibit 10.2


 


EXECUTIVE EMPLOYMENT AGREEMENT


 


THIS EXECUTIVE EMPLOYMENT
AGREEMENT (this “Agreement”), is made, entered into
and effective as of May     , 2005 (the “Effective Date”) by and among UNITED STATIONERS INC., a
Delaware corporation (hereinafter, together with its successors, referred to as
“Holding”), UNITED STATIONERS SUPPLY
CO., an Illinois corporation (hereinafter, together with its successors,
referred to as the “Company”, and,
together with Holding, the “Companies”),
and Stephen A. Schultz (hereinafter referred to as the “Executive”)
and specifically, supersedes the Executive Employment Agreement Executive
entered into with the Companies on July 1, 2002.


 


WHEREAS, the Companies 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 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 


 


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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 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


 


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which the Executive has a
substantial equity interest and other than a subsidiary of Holding or other
entity, the Persons with Beneficial Ownership of which are the same Persons
with Beneficial Ownership of Holding and such Beneficial Ownership is in
substantially the same proportions), or the occurrence of the same.  Notwithstanding the foregoing, a Change of
Control shall not be deemed to occur solely because any Person acquired
Beneficial Ownership of more than the permitted amount of Voting Securities as
a result of the acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by such Person; provided that
if a Change of Control would occur (but for the operation of this sentence) as
a result of the acquisition of Voting Securities by the Company, and after such
acquisition of Voting Securities by the Company, such Person becomes the
Beneficial Owner of any additional Voting Securities which increases the
percentage of the Voting Securities Beneficially Owned by such Person, then a
Change of Control shall occur.


 


“Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.


 


“Good Reason” shall mean (i) any
material breach by the Companies of this Agreement, (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.


 


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 “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:


 


	
  “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 & President, Lagasse, Inc., a subsidiary of the
Companies, (ii) shall report directly to an officer of the Companies (the “Supervising Officer”) who shall be selected by the Board or
the Chief Executive Officer in its or his or her sole discretion, (iii) shall,
subject to and in accordance with the authority and direction of the Board
and/or the Supervising Officer have such authority and perform in a diligent
and competent manner such duties as may be assigned to the Executive from time
to time by the Board and/or the Supervising Officer and (iv) shall devote
the Executive’s best efforts and such time, attention, knowledge and skill to
the operation of the business and


 


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affairs of the Companies as shall be necessary to
perform the Executive’s duties.  During
the Employment Period, the Executive’s place of performance for the Executive’s
duties and responsibilities shall be at the Companies’ corporate headquarters
office, unless another principal place of performance is agreed in writing
among the parties and except for required travel by the Executive on the
Companies’ business or as may be reasonably required by the Companies.


 


(b)                         Notwithstanding
the foregoing, it is understood during the Employment Period, subject to any
conflict of interest policies of the Companies, the Executive may (i) serve
in any capacity with any civic, charitable, educational or professional
organization provided that such service does not materially interfere with the
Executive’s duties and responsibilities hereunder, (ii) make and manage
personal investments of the Executive’s choice, and (iii) with the prior
consent of the Companies’ Chief Executive Officer, which shall not be
unreasonably withheld, serve on the board of directors of one (1) for-profit
business enterprise.


 


Section 4.                                          Compensation.  During the Employment Period, the Executive
shall be compensated as follows:


 


(a)                          the
Executive shall receive, at such intervals and in accordance with such Company
payroll policies as may be in effect from time to time, an annual salary (pro
rata for any partial year) equal to $280,000 (“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;


 


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(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 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);


 


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(ii)                                  the
Executive shall be entitled to an amount equal to one and one-half (1-1/2)
times the Executive’s then existing Base Salary, to be paid in such intervals
and at such times in accordance with the Company’s payroll practices in effect
from time to time over the eighteen (18) month period following the Termination
Date;


 


(iii)                               the
Executive shall be entitled to a payment in an amount equal to one and one-half
(11⁄2) 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 ten percent
(10%) of the sum of the Executive’s then existing Base Salary.  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;


 


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(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 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 ten percent
(10%) of the sum of the Executive’s then existing Base Salary.  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


 


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the 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


 


11





















 


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)                          The
Companies maintain, and Executive acknowledges and agrees, the Companies have
and will entrust Executive with proprietary information, strategies, knowledge,
customer relationships and know-how which would be detrimental to the Companies’
interest in protecting relationships with Customers and/or Suppliers if Executive
were to provide services or otherwise participate in the operation of a
competitor of the Company.  Therefore, 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 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, food service paper/non-food
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, food service paper/non-food
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 and/or Vendor during the last twelve (12) months of the


 


14





















 


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.  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, food service paper/non-food 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, food service paper/non-food 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 twenty-four (24)
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


 


15





















 


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 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


 


16





















 


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.


 


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:


 


Stephen A. Schultz


34 Kettering Court


North Barrington, IL 60010


 


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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.


 


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.


 


18





















 


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 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, including but not limited to the Executive Employment Agreement
between Executive and the Companies effective July 1, 2002, 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.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
                                              ,
  2005

  	
   

  	
   

  	
  Name: Richard W. Gochnauer

  
	
   

  	
   

  	
   

  	
  Title: President and Chief Executive
  Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  EXECUTED ON:

  	
   

  	
  UNITED STATIONERS SUPPLY CO.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
                                              ,
  2005

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Richard W. Gochnauer

  
	
   

  	
   

  	
   

  	
  Title: President and Chief Executive
  Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  EXECUTED ON:

  	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
                                              ,
  2005

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Stephen A.
  Schultz

  



 


19





















 


APPENDIX
I


 


Stephen A. Schultz


 


1.               The Executive’s
target annual cash bonus for 2005 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 in his new position
during 2005.  Any amount earned under the
MIP in respect of 2005 will become payable in the first quarter of 2006,
provided that the Executive remains an employee in good standing at the time
such payment is made.


 


20