EXHIBIT 16
UNITED STATIONERS SEVERANCE PLAN
--------------------------------
1. Statement of Policy: Effective Date. United Stationers Inc.
("USI") is contemplating entering into a transaction which would result in a
Change in Control of USI. (Such transaction is hereinafter referred to as the
"Change in Control".) The Board of Directors of USI believes that by adopting
this Severance Plan ("Plan"), participating employees will be encouraged to
maintain their current employment relationship with United Stationers Supply Co.
(the "Company") through the date that the Change in Control is consummated and
for a period of up to 180 days following the Change in Control, thereby
promoting the Company's stability both before and after the Change in Control
and enhancing USI's ability to consummate the transaction resulting in the
Change in Control. This Plan shall become effective on the date the Change in
Control occurs ("Change in Control Date").
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.
2. Participants. The individuals eligible to participate in this
Plan ("Participants") are those employees of the Company listed in Annex 1. The
list of Participants provided in Annex 1 may be amended by the Board at any time
prior to the Change in Control Date. Only individuals that are included on the
list provided in Annex 1 may become a Participant under this Plan.
3. Amount of Severance Benefit. Any Participant who meets the
conditions set forth in Section 4 of this Plan shall be entitled to receive an
amount equal to 100% of the Participant's annual base salary in effect
immediately prior to the Change in Control Date ("Severance Benefit"), payable
monthly in 12 equal monthly installments ("Severance Payments") commencing
within one month after the Participant's termination of employment with the
Company.
4. Conditions on Right to Severance Benefit. (A) To be entitled to
the Severance Benefit under this Plan, the Participant:
(i) must be employed by the Company on the Change in Control Date, 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) the Participant must not have been requested to serve in a
Responsible Position with the Company, or
(b) the Participant's service in a Responsible Position has expired
or been terminated for any reason other than a voluntary
termination by the Participant or for cause (as defined in
subsection (C) below) on or before the 180th day following the
Change in Control; or
(c) the Participant'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 the
Participant, or for cause (unless at the time of such termination
the Company has another severance plan providing benefits for the
Participant at least equal to those provided under this Plan);
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 Date provided
that:
(i) the responsibilities of, and duties to be performed by the
Participant are of a level commensurate with the qualifications of
the Participant and with the Participant's responsibilities before
the Change in Control;
(ii) the Participant's base compensation is not less than the base
compensation being received by the Participant immediately prior
to the Change in Control;
(iii) the Participant is not excluded from, or the Participant's
Participation is not diminished in, any fringe benefits, or any
pension, bonus, management incentive, special bonus, profit
sharing or similar incentive, compensation or deferred
compensation plans to the extent Participant 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;
2
(iv) the Responsible Position does not require a relocation of the
Participant's present work location which would reasonably require
a relocation of the Participant's home.
(C) A Participant will have been deemed to have been terminated "for
cause" if the Participant's employment is terminated by the Company, by reason
of Participant's insubordination, theft, dishonesty, gross misconduct, excessive
tardiness or absenteeism, 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.
5. Timing of and Conditions for Payments. (A) Severance Payments
payable to a Participant under this Plan will commence no later than the first
day of the month following: (i) the date on which the Participant's employment
with the Company is terminated and (ii) the expiration of the seven day
rescission period following the execution and delivery by the Participant of the
Release and Agreement.
(B) The Company shall not be obligated to make any Severance Payment to
any Participant after the Participant shall breach any of the covenants or
undertakings pursuant to the Release and 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 the
Participant for cause if the Participant were still employed; other than by the
Participant'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 such other action as may be required by law.
(C) The Company shall comply with applicable tax withholding laws, if
any, with respect to Severance Payments under this Plan and shall be entitled to
do any act or thing to effectuate any such required compliance, including,
without limitation withholding from amounts payable to a Participant.
6. Claim for Severance Benefit. It is not necessary that a Participant
apply for the Severance Benefit payable under this Plan. However, if a
Participant wishes to file a claim for a Severance Benefit under this Plan, 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 the
claimant with written notice of its decision, setting forth the specific reasons
for the denial, references to the Plan
3
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 the claimant 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. A claimant
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 claimant receives
notice of the denial. Such a claimant is entitled to review pertinent Plan
documents and submit written issues and comments to the Company. The Company,
within sixty (60) days after receiving a request for review, will furnish the
claimant with written notice of the Company's decision, setting forth the
specific reasons for the decision and references to the pertinent Plan
provisions 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 Plan shall
confer on any Participant or any employee or other individual 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 any Participant.
8. Administration. The Plan is administered by the Company. The
Company, or whomever the Company shall in writing designate, is the named
fiduciary of the Plan, 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 Plan. The Company shall have discretionary authority to
determine eligibility for benefits and to construe the terms of the Plan. The
Company's determinations regarding eligibility for benefits and construction of
the terms of this Plan shall be binding on the Company and all employees,
Participants and other individuals. The Company may also appoint such other
individuals to act as the Company's representatives as the Company considers
necessary or desirable for the effective administration of the Plan.
9. Assignment. This Plan and all rights and benefits hereunder are
personal to the Participant and neither the Plan nor any right or interest of
the Participant herein, or arising hereunder, shall be voluntarily or
involuntarily sold, transferred or assigned by the Participant. Any attempt by
the
4
Participant 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. The Plan 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. Severance Payments payable to a Participant
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 the
Participant. Severance Payments payable to a deceased Participant shall be paid
to the Participant'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 Participant'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 Severance 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. Amendment or Termination. If this Plan becomes effective pursuant
to Section 1, this Plan will terminate without further action immediately
following the first anniversary of the Change in Control, and the Company shall
not amend or terminate this Plan once it becomes effective pursuant to Section 1
on or before such first anniversary, if such amendment or termination would
reduce or eliminate the Severance Benefits to which Participants may or have
become entitled under the terms of this Plan. The automatic termination of this
Plan shall not impair the Participant's right to any Severance Benefits to which
Participants have become entitled prior to such termination, and all Severance
Payments to be made with respect to such Severance Benefits shall be paid in
accordance with Section 5 Timing of and Conditions for Payments as if this Plan
were still in effect.
12. No Right to Company Assets. Neither a Participant nor any other
person shall acquire by reason of this Plan 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.
5
13. Severability. In the event any provision of this Plan shall be
held to be illegal or invalid for any reason, such illegality or invalidity
shall not affect the remaining parts of the Plan, and the Plan shall be
construed and enforced as if such illegal or invalid provisions had never been
contained in this Plan.
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 the Plan and the
Release and Agreement and the interpretation and validity of their provisions.
6
ANNEX I
-------
UNITED STATIONERS SEVERANCE PLAN
PARTICIPANT LIST
Employee Name Position
- ------------- --------
James J. Conners Vice President, Credit
Michael J. Cooke Vice President, Taxes
James K. Fahey Vice President, Merchandising
Stanley Feldman Vice President, Southwest Region
Gregory Giorgio Vice President, East Region
Wallace H. Gustafson Vice President, Engineering
Mark C. Hampton Vice President, Marketing
Arthur E. Hiatt Vice President, West Region
Jeffrey G. Howard Vice President, National Accounts
Randy C. Kravitz Vice President, Universal Products
Linda Micallef Vice President, Customer Service
Al Shaw Vice President, Midwest Region
Joseph R. Templet Vice President, Southeast Region
Gordon Zdeblick Vice President and General Manager,
United Brands
7
Exhibit A
[DATE]
[NON CONTRACT OFFICER]
[STREET ADDRESS]
[CITY, STATE, ZIP CODE]
DEAR
This sets forth the severance benefit you are entitled to under the United
Stationers Severance Plan 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 equal to
______________________ payable in 12 equal monthly installments commencing
on the first day of the month following the expiration of the seven day
rescission period 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 disclose any "Confidential
Information", which shall
8
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. Nothing in
Paragraph 2 shall prevent you from making such
9
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 payment 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 consider all of the
terms of this Agreement and to receive independent legal counsel; that you
have read and understand the Agreement and its legal effect; that no
promise or inducement was made to cause you to make this Agreement other
than considerations contained in the United Stationers Officers Severance
Plan; 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
participation in the United Stationers Severance Plan. All staff officers
of the Company as of the Change of Control are covered by the Plan. The
eligibility factors and time limits applicable to the Plan are the employee
must be employed as a staff officer of the Company as of the Change of
Control; the employee must be willing to remain, upon the Company's
request, in a responsible position for a period of up to one year after the
Change of Control; the Employee 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 the employee must have executed this Release. Exhibit I lists the job
titles and ages of all individuals eligible
10
for 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 the Agreement to me.
Sincerely,
UNITED STATIONERS SUPPLY CO. Agreed to and signed this ____ day of
_________________, 199_.
______________________________ _____________________________________
Vice President, Human Resources Employee
11