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 


 





















 


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 (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 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 


 


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)                                  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 


 


15





















 


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 


 


18





















 


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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