Document:

Exhibit 10.2

 

United
Stationers Inc.

Executive Summary of Board of Directors Compensation

(approved as of 7/31/08 with an effective date of 9/1/08)

 

During
2008 the Board of Directors of United Stationers Inc., upon recommendation by
the Governance Committee, approved certain adjustments to the overall
compensation paid to Board members. Following is a summary of the forms and
levels of compensation to be provided to Directors from September 1, 2008.

 

	
  Director Compensation Component

  	
   

  	
  2008 Amount

  	
   

  	
  Comment

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annual Retainer

  	
   

  	
  $60,000 annual rate

  	
   

  	
  Unchanged from 2005

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Board Meeting Fees

  	
   

  	
   

  	
   

  	
   

  
	
  · In person

  	
   

  	
  $4,000 per meeting

  	
   

  	
  Unchanged from 2005

  
	
  · Telephonic

  	
   

  	
  $1,000 per meeting

  	
   

  	
  Unchanged from 2004.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Committee Meeting Fees

  	
   

  	
   

  	
   

  	
   

  
	
  · Held in connection
  with a Board meeting

  	
   

  	
   

  	
   

  	
   

  
	
  · Held by
  teleconference

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  —  Audit Committee
  Chairman

  	
   

  	
  $2,500 per meeting

  	
   

  	
  Unchanged from 2005

  
	
  — Other
  Committee Chairmen

  	
   

  	
  $2,000 per meeting

  	
   

  	
  Unchanged from 2006

  
	
  — Other
  non-employee members

  	
   

  	
  $500 per meeting

  	
   

  	
  Unchanged from 2004

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  · In-person meeting not held in connection with a Board
  meeting

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  — Audit
  Committee Chairman

  	
   

  	
  $2,500

  	
   

  	
  Unchanged from 2005

  
	
  — Other
  Committee Chairmen

  	
   

  	
  $2,000 per meeting

  	
   

  	
  Unchanged from 2006

  
	
  — Other
  non-employee members

  	
   

  	
  $1,000 per meeting

  	
   

  	
  Unchanged from 2004

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Deferred Compensation

  	
   

  	
  N/A

  	
   

  	
  Allows for deferrals of
  all or a portion (but not less than 50%) of the annual retainer and meeting
  fees into stock units. Such stock units are paid out after cessation of
  service as a Director.

  

 

1

 

	
  Director Compensation Component

  	
   

  	
  2008 Amount

  	
   

  	
  Comment

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equity Compensation

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  · Chairman of the
  Board

  	
   

  	
  Approximately $120,000

  	
   

  	
  Increased in 2008 from
  $100,000 to $120,000. 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Restricted stock to be
  granted on September 1, 2008 will be for the number of shares having an
  economic value of $120,000 based upon the closing price of the Company’s
  Common Stock on August 29, 2008. The restricted stock will vest in
  substantially equal installments over 3 years.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  · Other
  non-employee directors

  	
   

  	
  Approximately $110,000

  	
   

  	
  Increased in 2008 from
  $90,000 to $110,000. 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Restricted stock to be
  granted on September 1, 2008 will be for the number of shares having an
  economic value of $110,000 based upon the closing price of the Company’s
  Common Stock on August 29, 2008. The restricted stock will vest in
  substantially equal installments over 3 years.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reimbursement

  	
   

  	
  Reasonable
  travel-related expenses

  	
   

  	
  Directors are
  reimbursed for reasonable travel-related expenses incurred in connection with
  their attendance at Board meetings, Committee meetings, and certain Company
  events. In addition, the Company encourages their periodic attendance at
  accredited “Directors’ Colleges” at Company expense.

  

 

2Exhibit 10.3

 

EXECUTIVE
EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made, entered into and effective as of August 13,
2008 (the “Effective Date”) by and among
UNITED STATIONERS INC., a Delaware corporation (hereinafter, together with its
successors, referred to as “Holding”),
UNITED STATIONERS SUPPLY CO., an Illinois corporation (hereinafter, together
with its successors, referred to as the “Company”, and,
together with Holding, the “Companies”),
and Barbara J. Kennedy (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; and

 

WHEREAS, Executive
will be a key member of the management of the Companies and is expected to
devote substantial skill and effort to the affairs of the Companies, and the
Companies desire to recognize the significant personal contribution that
Executive makes and is expected to continue to make to further the best
interests of the Companies and their shareholders; and

 

WHEREAS, it is desirable and in the best interests of
the Companies and its shareholders to obtain the benefits of Executive’s
services and attention to the affairs of the Companies, and to provide
inducement for Executive (1) to remain in the service of the Companies in
the event of any proposed or anticipated Change of Control and (2) to
remain in the service of the Companies in order to facilitate an orderly
transition in the event of a Change of Control; and

 

WHEREAS,
it is desirable and in the best interests of the Companies and their
shareholders that Executive be in a position to make judgments and advise the
Companies with respect to any proposed Change of Control without regard to the
possibility that Executive’s employment may be terminated without compensation
in the event of a Change of Control; and

 

WHEREAS,
Executive will have access to confidential, proprietary and trade secret
information of the Companies and their subsidiaries, and it is desirable and in
the best interests of the Companies and their shareholders to protect
confidential, proprietary and trade secret information of the Companies and
their subsidiaries, to prevent unfair competition by former executives of the
Companies following separation of their employment with the Company and to
secure cooperation from former executives with respect to matters related to
their employment with the Company; and

 

WHEREAS, it is desirable and in the best interests of the Companies and
their shareholders to obtain commitments from Executive with respect to
Executive’s service with the Company, and to facilitate a smooth transition
upon separation from service for former executives,

 

NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties agree as follows:

 

 

Section 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 

 

2

 

or inaction was in the best interests of the
Companies, and shall not include failure to act by reason of total or partial
incapacity due to physical or mental illness.

 

“Change of Control” shall mean (a) Any
“Person” (having the meaning ascribed to such term in Section 3(a)(9) of
the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a “group” within the meaning of Section 13(d)(3)) has or
acquires “Beneficial Ownership” (within the meaning of Rule 13d-3 under
the Exchange Act) of 30% or more of the combined voting power of Holding’s then
outstanding voting securities entitled to vote generally in the election of
directors (“Voting Securities”); provided,
however, that the acquisition or holding of Voting Securities by (i) Holding
of any of its subsidiaries, (ii) an employee benefit plan (or a trust
forming a part thereof) maintained by Holding or any of its subsidiaries, or (iii) any
Person in which the Executive has a substantial equity interest shall not
constitute a Change of Control. 
Notwithstanding the foregoing, a Change of Control shall not be deemed
to occur solely because any Person acquired Beneficial Ownership of more than
the permitted amount of Voting Securities as a result of the issuance of Voting
Securities by Holding in exchange for assets (including equity interests) or
funds with a fair value equal to the fair value of the Voting Securities so
issued; provided that if a Change of Control would occur (but for the operation
of this sentence) as a result of the issuance of Voting Securities by Holding,
and after such issuance of Voting Securities by Holding, such Person becomes
the Beneficial Owner of any additional Voting Securities which increases the
percentage of the Voting Securities Beneficially Owned by such Person to more
than 50% of the Voting Securities of Holding, then a Change of Control shall
occur; (b) At any time during a period of two consecutive years, the
individuals who at the beginning of such period constituted the Board (the “Incumbent Board”) cease for any reason to constitute more
than 50% of the Board; provided, however, that if the election, or nomination
for election by Holding’s stockholders, of any new director was approved by a
vote of more than 50% of the directors then comprising the Incumbent Board,
such new director shall, for purposes of this subsection (b), be considered as
though such person were a member of the Incumbent Board; provided, further,
however, that no individual shall be considered a member of the Incumbent Board
if such individual initially assumed office as a result of (i) either an
actual “Election Consent” (as described in Rule 14a-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 

 

3

 

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

 

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

 

“Good Reason” shall mean:  (i) any material breach by the Companies
of this Agreement without Executive’s written consent, (ii) any material
reduction, 

 

4

 

without the Executive’s written consent, in the
Executive’s duties, responsibilities or authority; provided, however, that for
purposes of this clause (ii), neither (A) a change in the Executive’s
Supervising Officer or the number or identity of the Executive’s direct
reports, nor (B) a change in the Executive’s title, duties,
responsibilities or authority as a result of a realignment or restructuring of
the Companies’ executive organizational chart nor (C) a change in the
Executive’s title, duties, responsibilities or authority as a result of a realignment
or restructuring of the Companies shall be deemed by itself to materially
reduce Executive’s duties, responsibilities or authority, as long as, in the
case of either (B) or (C), Executive continues to report to either the
Chief Executive Officer or Chief Operating Officer of the Companies or to the
Supervising Officer to whom he reported immediately prior to the Change of
Control or a Supervising Officer of equivalent responsibility and authority, or
(iii) without Executive’s written consent: 
(A) a material reduction in the Executive’s Base Salary, (B) the
relocation of the Executive’s principal place of employment more than fifty
(50) miles from its location on the date of a Change in Control, or (C) the
relocation of the Company’s corporate headquarters office outside of the
metropolitan area in which it is located on the date of a Change in
Control.  For purposes of this Agreement,
a Change of Control, alone, does not constitute Good Reason.  Furthermore, notwithstanding the above, the
occurrence of any of the events described above will not constitute Good Reason
unless the Executive gives the Companies written notice within thirty (30) days
after the initial occurrence of any of such events that the Executive believes
that such event constitutes Good Reason, and the Companies thereafter fail to
cure any such event within sixty (60) days after receipt of such notice.

 

“Person” shall mean any natural
person, firm, corporation, limited liability company, trust, partnership,
limited or limited liability partnership, business association, joint venture
or other entity and, for purposes of the definition of Change of Control
herein, shall comprise any “person”, within the meaning of Sections 13(d) and
14(d) of the Exchange Act, including a “group” as therein defined.

 

“Subsidiary” shall mean, with
respect to any Person, any other Person of which such first Person owns 20% or
more of the economic interest in such Person or owns or has the power to vote,
directly or indirectly, securities representing 20%or more of the votes
ordinarily entitled to be cast for the election of directors or other governing
Persons.

 

(b)           The capitalized
terms used in Section 5(j) have the respective meanings assigned to
them in such Section and the following additional terms have the
respective meanings assigned to them in the Sections hereof set forth opposite
them:

 

	
  “Annual Bonus”

  	
   

  	
  Section 4(b)

  
	
  “Base Salary”

  	
   

  	
  Section 4(b)

  
	
  “Bonus Plan”

  	
   

  	
  Section 4(b)

  
	
  “Code”

  	
   

  	
  Section 2

  

 

5

 

	
  “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)

  
	
  “Supplier”

  	
   

  	
  Section 6(d)(2)

  
	
  “Term” and “Termination Date”

  	
   

  	
  Section 2

  

 

Section 2.              Term
and Employment Period.  Subject
to Section 19 hereof, the term of this Agreement (the “Term”)
shall commence on the Effective Date of this Agreement and shall continue until
(A) December 31, 2011, provided that such period shall be
automatically extended for one year, and from year to year thereafter, until
written notice of termination of this Agreement is given by the Companies or
Executive to the other party hereto at least 60 days prior to December 31,
2011 or the extension year then in effect, or (B) if a Change of Control
occurs prior to December 31, 2011 (or prior to the end of the extension
year then in effect), the second anniversary of the occurrence of the Change of
Control.  The period during which the
Executive is employed by the Companies during the Term and ending on the
effective date of termination of the Executive’s employment hereunder pursuant
to Section 5 of this Agreement is referred to herein as the “Employment Period.” 
The date on which termination of the Executive’s employment hereunder
shall become effective is referred to herein as the “Termination
Date.”  For purposes of Section 5
of this Agreement only, the Termination Date shall mean the date on which a
“separation from service” has occurred for purposes of Section 409A of the
Internal Revenue Code and the regulations and guidance thereunder (the “Code”).

 

Section 3.              Duties.

 

(a)           During the Employment
Period, the Executive (i) shall serve as Senior Vice President , Human
Resources, (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
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 

 

6

 

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 $285,000 (“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)           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 during the Employment Period for
the benefit of the Companies, subject to documentation in accordance with the
Companies’ policies;

 

(d)           the Executive shall be
entitled to participate in all incentive, savings and retirement plans, stock
option plans, practices, policies and programs applicable generally to other
senior executives of the Companies at the 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
Companies at the same grade level (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group life,
and accidental death and travel accident insurance plans and programs) to the
extent applicable generally to other executives of the Companies at the same
grade level;

 

(f)            the Executive shall be
entitled to not less than twenty (20) paid vacation days per calendar year (pro
rata for any partial year); and

 

(g)           the Executive shall be
entitled to participate in the Company’s other executive fringe benefits and
perquisites generally applicable to the Companies’ senior 

 

7

 

executives at the
same grade level in accordance with the terms and conditions of such
arrangements as are in effect from time to time.

 

Section 5.              Termination of Employment.

 

(a)           All Accrued Benefits to
which the Executive (or the Executive’s estate or beneficiary) is entitled
shall be payable within thirty (30) days following the Termination Date, except
as otherwise specifically provided herein or under the terms of any applicable
policy, plan or program, in which case the payment terms of such policy, plan
or program shall be determinative.

 

(b)           Any termination by the
Companies, or by the Executive, of the Employment Period shall be communicated
by written notice of such termination to the Executive, if such notice is
delivered by the Companies, and to the Companies, if such notice is delivered
by the Executive, each in compliance with the requirements of Section 13
hereof.  Except in the event of
termination of the Employment Period by reason of Cause or the Executive’s
death, the effective date of the termination of Executive’s employment shall be
no earlier than thirty (30) days following the date on which notice of
termination is delivered by one party to the other in compliance with the
requirements of Section 13 hereof.

 

(c)           If the Employment
Period is terminated prior to the expiration of the Term by the Companies for
any reason other than Cause or the Executive’s permanent disability, as defined
in the Companies’ Board-approved disability plan or policy as in effect from
time to 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 (11⁄2) times the Executive’s then
existing Base Salary, to be paid in such intervals and at such times in
accordance with the Company’s payroll practices in effect from time to time
over the eighteen (18) month period following the Termination Date, but in no
event shall such amount paid under this Section 5(c)(ii) exceed the
lesser of (A) $460,000.00 or (B) two (2) times Executive’s
annualized compensation based upon the annual rate of pay for services to the
Companies for the calendar year prior to the calendar year in which the
Termination Date occurs (adjusted for any increase during that year that was
expected to continue indefinitely if the Executive had not separated from
service), consistent with the parties’ intention that the payments under this Section 5(c)(ii) constitute
a “separation pay plan due to involuntary separation from service” under Treas.
Reg. § 1.409A-1(b)(9)(iii);

 

(iii)          in
the event that an amount equal to one and one-half times (11⁄2) the Executive’s
then-existing Base Salary exceeds the limitations of Subsections 

 

8

 

5(c)(ii)(A) or (B) above,
then the Executive shall be entitled to an additional lump sum payment equal to
the difference between (x) one and one-half (11⁄2) times the Executive’s
then-existing Base Salary and (y) the amount payable to Executive under
Subsection 5(c)(ii), such lump sum payable to Executive on the first regular
payroll date of the Company to occur following the date that is six months
after the Termination Date;

 

(iv)          the
Executive shall be entitled to a payment in an amount equal to one and one-half
(11⁄2) times the actual Annual Bonus award which would otherwise be payable for
the calendar year during which the Termination Date occurs, as if the Executive
had been employed for all of such calendar year based on actual performance, to
be paid at such time as the Annual Bonus award would otherwise be paid in
accordance with the Company’s policies;

 

(v)           the
Executive shall continue to be covered, upon the same terms and conditions
described in Section 4(e) hereof, by the same or equivalent medical
and/or dental insurance plans, programs and/or arrangements as in effect for
the Executive immediately prior to the Termination Date until the earlier
of:  (A) the eighteen (18) month
anniversary following the date of the Executive’s Termination Date, and (B) the
date the Executive receives substantially equivalent coverage under the plans,
programs and/or arrangements of a subsequent employer, provided that Executive
timely pays the Executive’s portion of such coverage;

 

 (vi)         the
Executive shall receive a lump sum payment in an amount equal to the amount the
Company would otherwise expend for 18 month’s coverage for its share of the
premiums for life and disability insurance plans or programs as in effect for
Executive immediately prior to the Termination Date, payable to Executive
within thirty (30) days following the Termination Date; and

 

(vii)         for
the period commencing on the Termination Date and ending not later than the
last day of the second calendar year after the Termination Date, the Executive
shall be entitled to receive executive level career transition assistance
services provided by a career transition assistance firm selected by the
Executive and paid for by the Companies in an amount not to exceed ten percent
(10%) 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, each within two (2) years from the date of
such Change of Control, and, in the case of Executive’s resignation for Good
Reason, the Executive’s separation from service occurs within two years
following the initial existence of the condition giving rise to Good Reason,
then:

 

9

 

(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 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 and/or dental 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, provided that Executive
timely pays the Executive’s portion of such coverage.  The Executive shall not be eligible to
receive cash in lieu of medical and/or dental coverage hereunder;

 

                                                                                                                (vi)          the Executive shall receive a lump sum payment in an amount
equal to the amount the Company would otherwise expend for 24-month’s coverage
for its share of the premiums for life and disability insurance plans or
programs as in effect for Executive immediately prior to the Termination Date,
payable to Executive within thirty (30) days following the Termination Date;

 

(vii)         the Executive shall receive a lump sum
cash payment, payable to Executive with thirty (30) days following the
Termination Date, in an amount equal to the additional benefit value (on a
present value, differential basis) that would be payable to Executive under the
Company’s defined benefit retirement plan if he had two (2) additional
years of credit for purposes of age, benefit service and vesting;

 

(viii)        if the Executive’s outstanding stock
options have not by then fully vested pursuant to the terms of the Companies’
applicable stock option plan(s) and applicable option agreement(s), then
to the extent permitted in the 

 

10

 

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;

 

(ix)           for the period commencing on the
Termination Date and ending not later than the last day of the second calendar
year after the Termination Date, the Executive shall be entitled to receive
executive level career transition assistance services provided by a career
transition assistance firm selected by the Executive and paid for by the
Companies in an amount not to exceed ten percent (10%) 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

 

(x)            the Executive shall be entitled to
be reimbursed by the Company for the Executive’s reasonable attorneys’ fees,
costs and expenses incurred in conjunction with any dispute regarding Section 5(d) if
Executive prevails in any material respect in such dispute, provided that (A) the
applicable statutes of limitations shall not have expired for any claim arising
from the dispute that could be raised in a court of law; (B) Executive
shall submit to the Company verification of legal expenses for reimbursement
within 60 days from the date the expense was incurred; (C) the Company
shall reimburse Executive for eligible expenses promptly thereafter, but in any
event not earlier than the first day of the seventh month following the
Termination Date and not later than December 31 of the calendar year
following the calendar year in which the expense was incurred; (D) the
expenses eligible for reimbursement during any given calendar year shall not
affect the expenses eligible for reimbursement in any other calendar year; and (E) the
right to reimbursement hereunder may not be liquidated or exchanged for cash or
any other benefit.

 

(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.

 

(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 in an amount equal to
the pro-rata target Annual Bonus award for the calendar year during which the
Termination Date occurs by reason of the Executive’s death, Disability or
Retirement.  Such lump sum payment shall
be determined by multiplying the target Annual Bonus award amount by a
fraction, the numerator of which is the number of days in the calendar year of
the Termination Date elapsed prior to the Termination Date and the denominator
of which is three hundred and 

 

11

 

sixty-five
(365).  Such lump sum payment shall be
made within thirty (30) days following the Termination Date in the event the
Employment Period is terminated as a result of Executive’s death, or, in the
event the Employment Period is terminated as a result of Executive’s Disability
or Retirement, such lump sum payment shall be made on the first regular payroll
date of the Company to occur following the date that is six months after the
Termination Date.

 

(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),
and no payments and benefits provided for in Sections 5(c) and (d) other
than the Accrued Benefits in accordance with Section 5(a) shall be
payable to Executive unless and until all applicable consideration and
rescission periods for the release agreement have expired, Executive has not
rescinded the release agreement and Executive is in compliance with each of the
terms and conditions of such release agreement and this Agreement as of the
date of such payments and benefits.  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 eighteen-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)            Notwithstanding any provision to the contrary
contained in this Agreement, if the cash payments due and the other benefits to
which Executive shall become entitled under Section 5(d), either alone or
together with other payments in the nature of compensation to Executive which
are contingent on a change in the ownership or effective control of the Company
or in the ownership of a substantial portion of the assets of the Company or
otherwise, would constitute a “parachute payment” (as defined in Section 280G
of the Code or any successor provision thereto), such payments or 

 

12

 

benefits shall be reduced (but not below zero) to the largest aggregate
amount as will result in no portion thereof being subject to the excise tax
imposed under Section 4999 of the Code (or any successor provision
thereto) or being non-deductible to the Company for Federal Income Tax purposes
pursuant to Section 280G of the Code (or any successor provision thereto),
provided, however, that no such reduction shall occur, and this Section 5(j) shall
not apply, in the event that the amount of such reduction would be more than
10% of the aggregate value of such payments and benefits.  The Companies shall in good faith determine
the amount of any reduction to be made pursuant to this Section 5(j), and
the Executive shall select from among the foregoing benefits and payments those
which shall be reduced. No modification of, or successor provision to, Section 280G
or Section 4999 subsequent to the date of this Agreement shall, however,
reduce the benefits to which the Executive would be entitled under this Agreement
in the absence of this Section 5(j) to a greater extent than they
would have been reduced if Section 280G and Section 4999 had not been
modified or superseded subsequent to the date of this Agreement,
notwithstanding anything to the contrary provided in the first sentence of this
Section 5(j).

 

(k)           Anything
in this Agreement to the contrary notwithstanding, in the event it shall be
determined that Section 5(j) above
does not apply and 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 Internal Revenue
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(k) and this subsection 5(k)(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 

 

13

 

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 it is more likely than not that no
Excise Tax is payable (including the reasons therefor) and the Executive is not
required 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 (“Overpayment”).  In either such event, the Accounting Firm
shall determine the amount of the Underpayment or 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 

 

14

 

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.

 

(vii)         Notwithstanding any provision above to the
contrary, any Gross-Up Payment payable under this Section 5(k) shall
be made by the end of the calendar year following the calendar year in which
the Executive remits the taxes.  Further,
notwithstanding any provision above to the contrary, any right to reimbursement
under this Section 5(k) of expenses incurred by Executive due to a
tax audit or litigation addressing the existence or amount of a tax liability
shall be made by the end of the calendar year following the calendar year in
which the taxes that are the subject of the audit or litigation are remitted,
or where as a result of the audit or litigation no taxes are remitted, the end
of the calendar year following the calendar year in which the audit is
completed or there is a final and non-appealable settlement or other resolution
of the litigation.  Any Gross-Up Payment
and any reimbursement of expenses payable under this Section 5(k) shall
not be made before the date that is six months after the Termination Date.

 

Section 6.              Further Obligations of the Executive.

 

(a)           (1)           During
the Executive’s employment by the Companies, whether before or after the
Employment Period, and after the termination of 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).

 

                                (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 

 

15

 

(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.

 

(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 for any reason, whether during or after the Employment Period, the
Executive shall immediately return all such records, files, documents,
materials and other 

 

16

 

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 Companies. 
Therefore, during (i) the Executive’s employment by the Companies,
whether during or after the Employment Period, and (ii) the eighteen (18)
month period following the end of Executive’s employment with the Companies,
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 with the Companies, whether during or after the 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 with the Companies, whether during or after 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 with the Companies, whether during or
after Employment Period.

 

(d)           (1)           During (i) the Executive’s
employment by the Companies, whether during or after the Employment Period, and
(ii) the eighteen (18) month period following the end of the
Executive’s  employment with the
Companies, 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 during the last twelve (12) months of the Executive’s employment
with the Companies, whether during or after Employment Period, (B) services
the same as or substantially similar to those provided by the Companies or
their Subsidiaries to such Customer and/or Supplier during the last twelve (12)
months of the Executive’s  employment
with the Companies, whether during or after 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 

 

17

 

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 with the
Companies, whether during or after Employment Period.  Without limiting the foregoing, (i) during
the Executive’s employment by the Companies, whether during or after the
Employment Period, 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 with the
Companies, 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 with the Companies,
whether during or after 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 with the Companies,
whether during or after Employment Period.

 

(e)           During the Executive’s
employment by the Companies, whether during or after the Employment Period, and
during the twenty-four (24) month period following the end of the Executive’s
employment with the Companies, 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 

 

18

 

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 with the Companies, whether during or after Employment Period, and
during the eighteen (18) month period following the end of Executive’s
employment with the Companies, 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 

 

19

 

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;
Taxes 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.  This Agreement
is intended to satisfy the requirements of Section 409A(a)(2), (3) and
(4) of the Code, including current and future guidance and regulations
interpreting such provisions, and should be interpreted accordingly

 

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.

One Parkway North Blvd.

Suite 100

Deerfield, Illinois  60015-2559

Attention: 
General Counsel

 

20

 

If to the Executive:

 

Barbara J. Kennedy

 

 

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)(x) 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 

 

21

 

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 other
agreements, arrangements or understandings (whether written or oral) between
the Companies and the Executive with respect to the subject matter of this
Agreement, including without limitation the Prior 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.

  
	
   

  	
   

  
	
   

  	
   

  
	
                                                        ,
  2008

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard W. Gochnauer

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  

 

22

 

	
  EXECUTED ON:

  	
  UNITED STATIONERS SUPPLY CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
                                                        ,
  2008

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard W. Gochnauer

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  EXECUTED ON:

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
                                                        ,
  2008

  	
   

  
	
   

  	
   

  	
  Barbara J. Kennedy

  
					

 

23

 

ATTACHMENT
A

 

24

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