EXHIBIT 12
SEVERANCE AGREEMENT
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This Agreement made as of this 13th day of February, 1995 between UNITED
STATIONERS INC. ("USI"), UNITED STATIONERS SUPPLY CO. ("Supply Co.") (USI and
Supply Co. are collectively referred to herein as the "Company"), and JAMES A.
PRIBEL ("Employee").
WHEREAS, USI is contemplating a transaction which would result in a Change
in Control of USI. For purposes of this Agreement, "Change in Control" means a
change in control resulting from an acquisition of USI, whether by amalgamation,
consolidation, merger or acquisition of stock, pursuant to which any person or
firm, or its or their affiliates (as defined in Rule 12b-2 under the Securities
Exchange Act of 1934) becomes the owner of more than fifty percent (50%) of the
outstanding stock of USI either in value or voting power.
WHEREAS, the Board of Directors of USI believes that it is in the best
interests of the Company to provide the Employee with an incentive to encourage
the Employee to maintain the current employment relationship with the Company
through the date of the Change in Control and for a period of up to one hundred
eighty days following the Change in Control, thereby promoting the Company's
stability both before and after the Change in Control and enhancing the
Company's ability to consummate the transaction resulting in the Change in
Control.
THEREFORE, for valuable considerations which the parties acknowledge,
Employee and the Company agree as follows:
1. Effective Date. This Agreement shall became effective on the date the
Change in Control occurs.
2. Amount of Severance Benefit. If Employee meets the conditions set
forth in Section 3 of this Agreement, Employee shall be entitled to receive an
amount equal to $132,540.00 ("Severance Benefit"). The Employee's Severance
Benefit shall be payable in 12 equal monthly installments ("Severance Payments")
commencing within one month after the Employee's termination of employment with
the Company.
3. Conditions on Right to Severance Benefit.
(A) To be entitled to the Severance Benefit under this Agreement,
Employee:
(i) must be employed by the Company on date of the Change in Control,
and remain in a "Responsible Position" with the Company for a
period of at least 180 days if so requested by the Company within
30 days after the Change in Control, until the date requested by
the Company; and
(ii) either:
(a) Employee must not have been requested to serve in a
Responsible Position with the Company; or
(b) Employee's service in a Responsible Position has expired or
been terminated for any reason other than a voluntary
termination by Employee or by the Company for cause (as
defined in subsection (C) below) on or before the 180th day
following the Change in Control; or
(c) Employee's employment has expired or been terminated more
than 180 days but not more than one year after the Change in
Control for any reason other than a voluntary termination by
Employee or a termination by the Company for cause (unless
at the time of such termination the Company has another
severance plan providing benefits for Employee at least
equal to those provided under this Agreement); and
(iii) must execute and deliver to the Company the Release and
Agreement, in the form attached as Exhibit A ("Release and
Agreement").
(B) The term "Responsible Position" shall mean an employment, consulting
or similar position with the Company after the Change in Control
provided that:
(i) the responsibilities of, and duties to be performed by
Employee are of a level commensurate with his qualifications
and with his responsibilities before the Change in Control;
(ii) Employee's base compensation is not less than the base
compensation being received by Employee immediately prior to
the Change in Control;
(iii) Employee is not excluded from, or his participation is not
diminished in, any fringe benefits, or any pension, profit
sharing, management incentive, executive bonus, or similar
incentive, compensation or deferred compensation plans to the
extent Employee participated in such plans immediately prior
to the Change in Control, other than an exclusion from or
diminution of participation in any such plans applicable to
similarly situated employees generally;
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(iv) the Responsible Position does not require a relocation of
Employee's present work location which would reasonably
require a relocation of Employee's home.
(C) The Employee will be deemed to have been terminated "for cause" if
Employee's service is terminated by the Company by reason of
Employee's insubordination, theft, dishonesty, gross misconduct,
physical assault of another employee, falsification of Company records
or reports, damage or destruction of Company property, reporting to
work under the influence of alcohol or drugs, activity competitive
with Company or an affiliated entity, willful breach of Company
policy, or commission of any act that is materially adverse to the
interests of the Company or an affiliated entity.
4. Timing of and Conditions for Severance Payment.
(A) Severance Payments payable to Employee under this Agreement will
commence no later than the first day of the month following: (i) the
date on which Employee's employment with the Company is terminated and
(ii) the expiration of the seven day rescission period following the
execution and delivery of the Release and Agreement.
(B) The Company shall not be obligated to make any Severance Payment to
Employee after Employee breaches any of the covenants or undertakings
under the Release Agreement or shall otherwise act in a manner
materially adverse to the interests of the Company or any affiliated
entity, which would have entitled the Company to terminate the
employment of Employee for cause if Employee were still employed;
other than by Employee's prosecution or defense, or assistance in the
prosecution or defense, of any claim arising out of, or in connection
with, the instruments relating to the Change in Control or taking any
action as may be required by law.
(C) The Company shall comply with applicable tax withholding laws, if any,
with respect to all Severance Payments under this Agreement and shall
be entitled to do any act or thing to effectuate any such required
compliance, including, without limitation, withholding from amounts
payable to Employee.
5. Medical Benefits. The Company makes the following covenants to the
Employee with respect to the Employee's medical benefits ("Medical Benefits"):
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(A) In the event the United Stationer's Medical Plan ("Plan") remains
in effect and the Employee's employment with the Company terminates, the
Employee (and the Employee's covered dependents at the time of such
termination of employment) shall be entitled to continue to participate in
the Plan until the Employee attains age sixty-five (65), and the Employee's
spouse shall be entitled to continue to participate in her own right, in
the Plan until the Employee's spouse attains age sixty-five (65), under the
same terms and conditions applicable to persons who are provided coverage
as active employees under the Plan; provided, however, that a minimum
$1,000,000 Comprehensive Medical Lifetime Maximum Payment shall remain
applicable to the Employee (and the Employee's covered dependents at the
time of the termination of employment).
(B) If the Employee dies prior to age sixty-five (65) while the Plan
remains in effect, and if the Employee's spouse is then living, the
Employee's spouse (and the Employee's covered dependents at the time of the
Employee's death) shall be entitled to continue participation in the Plan
until the Employee's spouse attains age sixty-five (65) or dies, under the
same terms and conditions applicable to persons who are provided coverage
as active employees under the Plan; provided, however, that a minimum
$1,000,000 Comprehensive Medical Lifetime Maximum Payment shall remain
applicable to such spouse (and the Employee's covered dependents at the
time of the Employee's death).
(C) In the event of the termination of the Plan or discontinuance of
coverage under the Plan for any reason, the Employee shall be entitled to
and the Company shall pay to the Employee THREE THOUSAND SEVENTY DOLLARS
($3,070.00) per month for the period commencing on the date the Plan
terminates or Plan coverage ceases and ending on the first to occur of:
(i) the later of the date the Employee or the Employee's
spouse attains age sixty-five (65);
(ii) in the event of the death of the Employee, the date the
spouse of the Employee attains age sixty-five (65);
(iii) the end of the eighteen (18) month period commencing on
the Plan termination date or the date on which the Plan coverage
ceases; or
(iv) December 31, 1998.
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(D) In the event of the termination of the Plan or the discontinuance
of coverage under the Plan for any reason, the Company shall pay claims or
reimburse expenses for those medical expenses which are considered
deductible under section 213 of the Code or any successor provision,
(without regard to any applicable threshold for deductibility) to the
Employee, subject to the following terms and conditions:
(i) the Employee (or any of the Employee's covered dependents at
the time the Plan terminates or coverage under the Plan ceases) if
covered by a medical plan maintained by the Employee's then current
employer or a medical plan maintained by the employer of the spouse of
the Employee, has exceeded the lifetime maximum benefit provided in
such plan;
(ii) payment of medical expenses or reimbursement for such claims
under this subsection (D) shall not exceed the lesser of the following
amounts:
(a) a maximum of $300,000 for the Employee and all
dependents (on an aggregate basis) of the Employee as of the date
of Plan termination or the date coverage under the Plan ceases;
or
(b) an amount which exceeds $700,000 (on an aggregate basis)
for the group of Employees referred to as "Contract Officers"
under the Plan (including all dependents of such Contract
Officers as of the date of Plan termination or the date coverage
under the Plan ceases); and
(iii) reimbursement for such claims under this subsection (D)
shall be made for the period commencing on the date the Plan
terminates and ending on the first to occur of:
(a) the later of the date the Employee or the Employee's
spouse attains age sixty-five (65);
(b) in the event of the death of the Employee, the date the
spouse of the Employee attains age sixty-five (65);
(c) the end of the eighteen (18) month period commencing on
the Plan termination date or the date on which Plan coverage
ceases; or
(d) December 31, 1998.
The coverage provided under this Section 15(D) shall be separate and in addition
to the coverage provided under Section 15(C) above.
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6. Claim for Benefits. It is not necessary that Employee apply for the
benefits payable under this Agreement. However, if Employee wishes to file a
claim for benefits under this Agreement, such claim must be in writing and filed
with the Company. If a claim is denied, the Company, within ninety (90) days
after it receives the claim, will furnish Employee with written notice of its
decision, setting forth the specific reasons for the denial, references to the
Agreement provisions on which the denial is based, additional information
necessary to perfect the claim, if any, and a description of the procedure for
review of the denial. If the Company determines that special circumstances
require an extension of time for processing the claim, the Company may extend
the time for processing the claim for an additional ninety (90) days by
furnishing written notice of the extension to Employee prior to the end of the
initial 90-day period setting forth the special circumstances requiring the
extension of time and the date by which a final decision is expected to be
rendered. Employee may request a review of the denial of a claim for benefits by
filing a written application with the Company within sixty (60) days after the
Employee receives notice of the denial. Employee is entitled to review all
pertinent documents and submit written issues and comments to the Company. The
Company, within sixty (60) days after receiving a request for review, will
furnish Employee with written notice of the Company's decision, setting forth
the specific reasons for the decision and references to the pertinent provisions
of this Agreement on which the decision is based. If special circumstances
require an extension of time for processing a request for review, the decision
shall be rendered as soon as possible, but not later than one hundred twenty
(120) days after the receipt of the request for review.
7. Not an Employment Contract. Nothing set forth in this Agreement shall
confer upon Employee any right to continue in the employ of the Company or
interfere in any way with the right of the Company at any time to terminate or
modify the terms and conditions of the employment or other relationship of
Employee.
8. Administration. This Agreement is administered by the Company. The
Company, or whomever the Company shall in writing designate, is the named
fiduciary, within the meaning of the Employee Retirement Income Security Act of
1974, as amended. The Company, from time to time, may adopt such rules as may
be necessary or desirable for the proper and efficient administration of the
Agreement. The Company shall have discretionary authority to determine
eligibility for benefits and to construe the terms of the Agreement. The
Company's determinations regarding eligibility for benefits and construction of
the terms of this Agreement shall be binding on the Company and the Employee.
The Company may also appoint such other individuals to act as the Company's
representatives as the
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Company considers necessary or desirable for the effective administration of
this Agreement.
9. Assignment. This Agreement and all rights and benefits hereunder are
personal to Employee and neither this Agreement nor any right or interest of
Employee herein, or arising hereunder, shall be voluntarily or involuntarily
sold, transferred or assigned by Employee. Any attempt by Employee to assign,
execute, attach, transfer, pledge, hypothecate or otherwise dispose of any such
benefits or amounts or any rights or interests contrary to the foregoing
provisions, or the levy or attachment or similar process thereupon, shall be
null and void and of no effect and shall relieve the Company of all liabilities
hereunder. This Agreement shall be binding upon and inure to the benefit of the
parties and their respective heirs, personal representatives, successors and
permitted assigns.
10. Payment to Others. Benefits payable to Employee unable to execute a
proper receipt for payment may be paid to a relative or other proper person
selected by the Company, to use for the benefit of Employee. Benefits payable
to a deceased Employee shall be paid to Employee's surviving spouse, or if no
surviving spouse is living at the time any benefit remains to be paid, then the
sum owing shall be paid, to the executor or administrator of the former
Employee's estate. In acting hereunder the Company may rely, and shall be
protected in such reliance, upon any certificate, affidavit or other document or
evidence deemed by the Company, or any individual acting for the Company, to be
genuine and sufficient. To the extent permitted by law the payment to a person
in accordance with this Section shall fully discharge the Company's obligation
to make such payments. The decision of the Company pursuant to this Section
shall in each case be binding upon all persons in interest, and neither the
Company nor any individual acting for the Company shall be under any duty to see
to the proper application of such funds.
11. No Right to Company Assets. With respect to Severance Payments
payable under this Agreement, neither the Employee nor any other person shall
acquire by reason of this Agreement any right in or title to any assets, funds
or property of the Company. Any and all Severance Payments which become payable
hereunder shall be unfunded obligations of the Company and shall be paid from
the general assets of the Company.
12. Amendment, Modification, and Waiver. No change or modification of
this Agreement shall be valid unless the same shall be in writing and signed by
Employee and an authorized representative of the Company. No waiver of any of
the provisions of this Agreement shall be valid unless in writing and signed by
the person or parties to be changed.
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13. Severability. In the event any provision of this Agreement shall be
held to be illegal or invalid for any reason, such illegality or invalidity
shall not affect the remaining parts of this Agreement and this Agreement shall
be construed and enforced as if such illegal or invalid provisions had never
been contained in this Agreement.
14. Controlling Laws. To the extent not preempted by the Employee
Retirement Income Security Act of 1974, the laws of Illinois shall govern,
control and determine all questions arising with respect to this Agreement and
the Release Agreement and the interpretation and validity of their provisions.
UNITED STATIONERS INC.
EMPLOYEE
By: __________________________________
__________________________
James A. Pribel UNITED STATIONERS SUPPLY CO.
By: __________________________________
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Exhibit A
[DATE]
Mr. James A. Pribel
[STREET ADDRESS]
[CITY, STATE, ZIP CODE]
Dear Jim:
This sets forth the severance benefit you are entitled to under the terms of
your severance agreement as a result of your termination of employment on
__________________________________.
1. After you sign and return this Agreement to me, United Stationers Supply
Co. ("Company") will pay you a severance benefit of $132,540.00 payable in
12 equal monthly installments commencing on the first day of the month
following the expiration of the seven day rescission period described in
paragraph 8.
2. In return for the Company's providing the severance payment, you agree as
follows:
A. RELEASE. You WAIVE and RELEASE the Company, its parent and any
related or affiliated entities, and any predecessor entities to such
entities and each of their officers, directors, employees,
shareholders, agents, successors and assigns (collectively, "Released
Parties") from any claim, liability, cause of action, damage or charge
you have or may have against any of them which is related to or arises
out of anything occurring before you sign this Agreement, even those
which you do not know about, or suspect that you may have. This
includes, but is not limited to, anything related to your employment
or your separation from employment, and extends to all possible
claims, under federal, state or local law, including, without
limitation, any claims under the Age Discrimination in Employment Act
of 1967, Title VII of the Civil Rights Act of 1964, the Civil Rights
Acts of 1966 and of 1991, the Employment Retirement Income Security
Act of 1974, the Americans with Disabilities Act of 1990. (Of course,
this Waiver and Release does not waive your right to receive the
severance payment described in Paragraph 1 above, accrued vacation
pay, or reimbursement for pending medical or workers' compensation
claims or travel expenses.)
B. CONFIDENTIALITY. You agree that you will not, except with the
Company's prior written consent, use or
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disclose any "Confidential Information", which shall mean all
information proprietary to the Company or any affiliate thereof, which
is not generally known to others and was disclosed to you or developed
by you while employed with the Company. This includes, but is not
limited to, the following types of information about the Company:
(i) marketing programs and strategies;
(ii) finances, commission, systems and pricing programs;
(iii) the identity, needs, purchase and payment patterns,
special credit and/or pricing terms, and special
relations with, customers;
(iv) the identity, net prices and credit terms of, and
special relations with suppliers;
(v) proprietary software and business records; and
(vi) any other information or documents which you have been
told or reasonably ought to know that any of the
Released Parties regard as confidential.
C. NON-COMPETITION. You agree that you will not, directly or indirectly,
except with the Company's prior written consent, be employed by,
consult with, act as an agent for, or own any interest in (other than
a passive investment interest of not more than 1% of the stock of a
publicly traded company), any "Competitor" (defined as any person or
entity which engages or is preparing to engage in the sale and/or
distribution of office products to resellers, whether as a wholesaler,
buying group, cooperative or otherwise) to perform any function for
which you had direct or supervisory responsibility during the two
years immediately preceding your termination. "Competitor" shall not
include persons or entities engaged primarily in the manufacture or
retail sale of office products whether or not such manufacturer or
retailer is a member of a buying group or cooperative.
3. The covenants in Paragraph 2B shall apply to items of Confidential
Information for the lesser of three years or until the information becomes
generally known to the public, other than by an unauthorized disclosure of
the information by you. The covenants in Paragraph 2C shall apply for two
years from the date of termination as specified herein.
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Nothing in Paragraph 2 shall prevent you from making such disclosures as
may be required by law or taking any action in connection with any claim
arising under the Plan.
4. Should you violate any of the provisions of Paragraph 2, in addition to its
other remedies, the Company will be released from any obligation to make
the severance payments under Paragraph 1, and you shall repay any such
severance payments previously made to you.
5. Should it be necessary for either party to sue to enforce any rights
hereunder, the party that does not prevail shall pay the prevailing party's
expenses, including attorneys' fees, in such litigation.
6. This Agreement takes the place of any oral or written promises, agreements
or understandings between the Company and you about any of the subjects of
this Agreement. This Agreement cannot be altered or amended except by
written agreements signed by both you and an officer of the Company.
7. This Agreement shall be governed by Illinois law.
8. You acknowledge that you have had ample opportunity to consider all of the
terms of this Agreement and to receive independent legal counsel; that you
have read and understand this Agreement and its legal effect; that no
promise or inducement was made to cause you to make this Agreement other
than considerations contained in your Severance Agreement; and that you
sign this Agreement of your own free will based on your own decision. You
also acknowledge that you have been given 45 days to consider the terms of
this Agreement before signing it, and you understand that you may revoke it
by providing me with written notice no later than seven days after you have
signed it.
9. This Release and Waiver of claims is being sought in connection with your
receipt of a severance payment under your severance agreement with the
Company. Your severance agreement mirrors the terms of the United
Stationers Severance Plan ("Plan"), except that the your severance, benefit
under the severance agreement is equal to your highest compensation for one
year rather than your annual salary. All staff officers of United Stations
as of the Change of Control are covered by the Plan. The eligibility
factors and time limits applicable to the Plan are that the employee must
be employed as a staff officer of United Stationers as of the Change of
Control. Under your severance agreement, as is the case with the employees
covered by the Plan, you must be willing to remain, upon United Stationers'
request, in a responsible position for a period of up to one year after the
Change of Control; you
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must either have not been requested to serve in a Responsible Position or
been terminated from such a position within a year of the Change of Control
other than voluntarily or for cause; and you must have executed this or a
similar Release. Exhibit I lists the job titles and ages of all
individuals eligible for benefits under the Plan. There are no individuals
in the same job classifications who are not eligible for the Plan.
Please consider all of the above very carefully, and contact me if you have any
questions or comments. If you agree with the terms of this letter, please sign
below and return this Agreement to me.
Sincerely,
UNITED STATIONERS SUPPLY CO. Agreed to and signed this ___ day of
_____________, 199_.
_______________________________ ____________________________________
Vice President, Human Resources James A. Pribel
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