EXHIBIT 18
TRUST AGREEMENT
between
UNITED STATIONERS INC.,
as settlor,
AND
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
not in its individual capacity but solely as Trustee of
USI EMPLOYEE BENEFITS TRUST,
Dated as of __________, 1995
THIS TRUST AGREEMENT ("Agreement") is made as of the ____ day of _____,
1995 between United Stationers Inc., a Delaware corporation (the "Company"), as
settlor, and American National Bank and Trust Company of Chicago, not in its
individual capacity but solely as trustee (herein, together with its permitted
successors in the trusts hereunder, called the "Trustee").
WHEREAS, Associated Holdings, Inc., a Delaware corporation, and the Company
have entered into an Agreement and Plan of Merger dated as of February 13, 1995
(the "Agreement and Plan of Merger"); and
WHEREAS, the Board of Directors of the Company has approved the merger of
Associated Holdings, Inc. into the Company (the "Merger"), pursuant to which the
Company will be the surviving corporation; and
WHEREAS, at the effective time of the Merger, certain of the officers,
other employees and retirees of the Company may have certain "Contract Rights"
(as hereinafter defined) with respect to severance payments, executive
compensation, indemnities, life insurance policies, payments for medical
insurance and expenses, fringe benefits and other employee benefits; and
WHEREAS, to secure the provision to such employees of their respective
employee benefits the Company has caused the LOC (hereinafter defined) to be
issued to the Trustee; and
WHEREAS, the Company and the Trustee desire to specify the terms and
conditions pursuant to which the Trustee shall hold the LOC and manage other
security from time to time comprising the Trust Estate;
NOW THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, the Company and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
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SECTION 1.1 General.
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For the purpose of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires, the terms defined in this Agreement
include the plural as well as the singular, the words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision, and Section
references refer to Sections and subsections of this Agreement. Other terms not
defined in this Article are defined elsewhere in this Agreement.
SECTION 1.2 Specific Terms.
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"Accountant" means, for any Beneficiary, any firm of independent public
accountants of national reputation retained by such Beneficiary to certify as to
certain matters specified in this Agreement. For purposes hereof, firms of
independent public accountants of national reputation
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means Price Waterhouse, Ernst & Young, Arthur Andersen LLP, KPMG Peat Marwick,
Coopers & Lybrand and Deloitte Touche LLP.
"Agreement" means this Trust Agreement as originally executed and, if from
time to time supplemented or amended by one or more amendments entered into
pursuant to the applicable provisions hereof, as so supplemented or amended.
"Arbitrator" means the Person selected under the terms and provisions of
any Officer Beneficiary's Employment Agreement to arbitrate disputes concerning
the Company's obligation to provide Stay Bonus Benefits to such Officer
Beneficiary.
"Base Salary Payment" means, for each Officer Beneficiary, the amount so
identified on the Schedule of Benefits.
"Beneficiary" means an individual listed in the Schedule of Benefits,
except as expressly herein otherwise provided.
"Business Day" means any day other than (a) a Saturday or a Sunday, or (b)
another day on which banking institutions in Chicago, Illinois, or New York, New
York, are authorized or obligated by law, executive order, or governmental
decree to be closed.
"Closing Date" means the closing date as defined in the Agreement and Plan
of Merger.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means United Stationers Inc., a Delaware corporation, its
successors and assigns.
"Company Medical Plan" means the Medical Plan Document For United
Stationers Inc. (Plan Document No. 30401A), as may be amended from time to time
by the Company.
"Consulting Benefits" means, for Spungin, the base salary and consulting
compensation amounts set forth on the Schedule of Benefits.
"Contract Benefits" means, for any Beneficiary, such Beneficiary's right,
title and interest in and to all amounts, contingent or vested, which have or
may become payable as Consulting Benefits, Severance Benefits, Stay Bonus
Benefits, Transition Services Payment, Transition Benefits, Parachute Indemnity
Benefits, Life Insurance Benefits or Medical Benefits to such Beneficiary.
"Covered Medical Expenses" means those medical expenses which are
considered deductible under section 213 or any successor provision of the Code
(without regard to any applicable threshold for deductibility).
"Dependent" means those persons considered to be covered dependents under
the Company Medical Plan.
"Designated Beneficiaries" means the following Beneficiaries: Joel D.
Spungin and Melvin L. Hecktman. After the resignation, disability or death of
any Designated Beneficiary, such
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Designated Beneficiary's legal representative shall succeed him as one of the
Designated Beneficiaries upon furnishing notice of his legal status to the
Trustee; and if no legal representative of the original Designated Beneficiaries
is willing to serve as a Designated Beneficiary, then 51% or more of all of the
Beneficiaries with surviving Contract Rights shall appoint the Designated
Beneficiaries from time to time by notice to the Trustee.
"Eligible Investments" means any of the following obligations or
securities, to the extent permitted by law, on which neither the Company nor any
of its affiliates is an obligor: (a) Government Obligations with a maturity of
not more than 360 days; (b) interest bearing deposit accounts (which may be
represented by certificates of deposit or time deposits) constituting direct
obligations of any Qualifying Institution, which obligations are fully insured
as to principal by either the Bank Insurance Fund or the Savings Association
Insurance Fund, each administered by the Federal Deposit Insurance Corporation
or, if not so insured, are fully collateralized with Government Obligations
(provided, any such Government Obligations must be held by a trustee who is not
the provider of the collateral or by any Federal Reserve Bank or Depositary as
custodian for the institution issuing such deposits, and such trustee shall have
a perfected lien in the Government Obligations serving as collateral, and such
collateral shall be free of all third party liens); and (c) interests in any
money market fund or trust, the investments of which are restricted to
obligations described in clauses (a) or (b) of this definition, provided that
such trust or money market fund is rated at the time of purchase in any of the
two highest rating categories for unit investment trusts or money market funds
by at least two Rating Agencies and may hold a de minimis amount of investments
which are not described in clause (a) or (b) above.
"Eligible Issuer" means The Chase Manhattan Bank, National Association,
and, if not such bank, then any other depositary institution or trust company
organized under the laws of the United States or any one of the states thereof,
which may include the Trustee and its affiliates, and which at all times has a
rating for investment purposes of not less than "A" or "P-1" by Moody's or "A"
or "A-1" by S&P or "A" or "F-1" by Fitch or a comparable rating by another
Rating Agency, meeting the following criteria: (a) its capital and surplus are
in excess of $200,000,000, (b) its deposits are insured to the full extent
permitted by law by the Federal Deposit Insurance Corporation and (c) it is
subject to supervision and examination by Federal or state authorities. If such
depository institution publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.
"Eligible Trustee" means American National Bank and Trust Company of
Chicago, any institution capable of serving as an Eligible Issuer or any trustee
selected by the Company with the approval of the Designated Beneficiaries.
"Employment Agreements" means, for any Officer Beneficiary, the employment
agreements, termination agreements and other written agreements between such
Officer Beneficiary and the Company in effect as of February 13, 1995, including
amendments to such agreements, if any, after the consummation of the
contemplated transactions on the Closing Date.
"Evidence of Payment" means, for purposes of evidencing to the Trustee the
payment or other satisfaction of Contract Benefits, (a) a copy of the Company's
or Beneficiary's cancelled check
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or other form of verifiable payment in respect of the benefits in question, or
(B) any written waiver signed by a Beneficiary and the Company relating to the
Contract Benefits in dispute.
"Excise Tax" means the tax imposed by section 4999 or any successor
provision of the Code.
"Expiration Date" means, for each Officer Beneficiary, the date of
expiration of his Term of Employment, either the date disclosed by the Company
to the Trustee within thirty (30) days after the date of this Agreement, or, if
the Trustee fails to receive such notice, the date which is one (1) year after
the date of this Agreement.
"Final Determination" means a written binding decision or finding by the
Arbitrator resolving factual or legal disputes concerning an Officer
Beneficiary's entitlement to Stay Bonus Benefits.
"Fitch" means Fitch Investors Service, a corporation organized and existing
under the laws of the State of Delaware, its successors and their assigns.
"Government Obligations" means the direct obligations of, or obligations
the principal of and interest on which are unconditionally guaranteed as to full
and timely payment by the full faith and credit of, the United States of
America.
"Gross-up Payment" means the gross-up payment as defined in Section 16 of
the Spungin Agreement.
"Hewson" means Mr. Jeffrey K. Hewson.
"Life Insurance Benefits" means, for any Beneficiary entitled thereto, the
aggregate amount which such Beneficiary may obtain from the Trustee to pay
premiums required from time to time to be paid to keep the Life Insurance
Policies in full force and effect, as set forth on the Schedule of Benefits.
"Life Insurance Policies" means, for Spungin and Allen B. Kravis, their
respective split dollar life insurance policies, identified on the Schedule of
Benefits, and the individual conversion policies they may hereafter obtain under
the group term life insurance policy maintained from time to time by the
Company. For Spungin, Life Insurance Policies shall also mean that certain life
insurance policy, insuring Spungin's life and naming the Company as a
beneficiary, which is intended to fund the survivor benefits to Spungin's spouse
required under section 14(c) of the Spungin Agreement.
"LOC" means an irrevocable, unconditional letter of credit issued by an
Eligible Issuer, substantially in the form of Schedule 1 hereto, in an amount
equal to the LOC Amount.
"LOC Amount" means initially $24 million and thereafter the outstanding
amount under the LOC from time to time after giving effect to the provisions of
Sections 3.5 and 3.6.
"LOC Draw Event" means (a) the Trustee receives written notice or an
opinion of counsel to the effect that there is a threat of a failure of the LOC
Issuer to honor drafts on the LOC presented by the Trustee arising from the
purported subjection of LOC Proceeds to the jurisdiction of any bankruptcy
trustee in proceedings involving the Company or the pending or threatened
insolvency or failure of the LOC Issuer, (b) the occurrence of a Non-Renewal
Event or (c) the
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Trustee receives written notice or an opinion of counsel to the effect that a
Sale or Merger Transaction has occurred.
"LOC Issuer" means the depository institution or trust company issuing the
LOC from time to time held by the Trustee pursuant to this Agreement.
"LOC Proceeds" means the amounts from time to time paid to the Trustee by
the LOC Issuer as a result of draws made on the LOC.
"LOC Termination Date" means the earliest of (a) the date on which all
Beneficiaries (or the executor, administrator or legal representative of a
Beneficiary who has become incompetent, disabled or died) with surviving
Contract Rights have delivered to the Trustee waivers of their rights as
Beneficiaries in the form of Schedule 2 hereto, or (b) the date which is thirty
(30) days after the Company's Accountant delivers an audited consolidated
balance sheet (as filed with the Securities and Exchange Commission or as
otherwise distributed to the stockholders of the Company) to the Trustee for the
Company's two (2) most recent fiscal years, prepared in accordance with
generally accepted accounting principles consistently applied with past
practices of the Company, showing that the stockholders' equity of the Company
(excluding the value of any preferred stock or treasury shares) in each of such
years was at least $250 million, (c) the date, occurring after the date of death
of the last surviving Beneficiary known to the Trustee, on which no notice of
any Unpaid Claim has been submitted to the Trustee by any Beneficiary then
entitled to request a draw on the LOC in respect of such Unpaid Claim or (d) the
date which is thirty (30) years after the date of this Agreement.
"Managing Beneficiaries" shall have the meaning set forth in Section
3.8(b).
"Marilyn" means Marilyn G. Spungin.
"Medical Benefits" means the benefits to be provided to the Officer
Beneficiaries pursuant to Section 3.1(f) hereof and to Spungin, Marilyn and/or
Barbara Savage pursuant to Section 3.1(g) hereof.
"Moody's" shall mean Moody's Investors Service, Inc., a corporation
organized and existing under the laws of the State of Delaware, its successors
and their assigns.
"Non-Renewal Event" means, in the event that the LOC Issuer gives notice
that it is unwilling to permit the automatic, annual renewal of the LOC at the
LOC Amount then required by the Trustee pursuant to Section 3.5 hereof or is
otherwise intending to terminate its obligations under the LOC, or in the event
that the LOC Issuer fails to remain qualified as an Eligible Issuer, the failure
of the Company to provide to the Trustee a new LOC issued by an Eligible Issuer,
substantially in the form of the old LOC at the LOC Amount then required by the
Trustee pursuant to Section 3.5 hereof, at least thirty (30) days prior to the
stated expiration date of the old LOC (in case of threatened non-renewal) or
within sixty (60) days after the LOC Issuer fails to qualify as an Eligible
Issuer.
"Officer Beneficiaries" means the Beneficiaries identified as such on the
Schedule of Benefits.
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"Officer Medical Beneficiaries" means the Beneficiaries identified as such
on the Schedule of Benefits.
"Parachute Indemnity Benefits" means the payment of the Gross-Up Payment to
Spungin and, if pursuant to the Spungin Agreement the Company undertakes the
defense or settlement of any assessment or threatened assessment by the Internal
Revenue Service of the Excise Tax, the indemnification and hold harmless of
Spungin against all liabilities and other amounts as set forth in Section 16 of
the Spungin Agreement sustained by Spungin as a result of or arising out of or
by virtue of the Company's undertaking.
"Parachute Reservation" means the sum of Two Million Nine Hundred Seven
Thousand Dollars ($2,907,000) reserved in the LOC Amount to ensure payment of
Parachute Indemnity Benefits.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust or
unincorporated organization.
"Plan of Liquidation" means a plan (including by operation of law) that
provides for, contemplates or the effectuation of which is preceded or
accompanied by (whether or not substantially contemporaneously) (a) the sale,
lease, conveyance or other disposition of all or substantially all of the assets
of the referent Person otherwise than as an entirety or substantially as an
entirety and (b) the distribution of all or substantially all of the proceeds of
such sale, lease, conveyance or other disposition and all or substantially all
of the remaining assets of the referent Person to the holders of the capital
stock, shares, interests, participations, rights in or other equivalents of the
referent Person.
"Rating Agency" shall mean Fitch or Moody's or S&P, or any other recognized
national credit rating agency of comparable standing, which provides a rating
for any specified Investment Securities or Qualifying Institution.
"Register" means the list to be maintained by the Trustee containing the
names, mailing addresses and telephone numbers of the Beneficiaries, their
spouses and dependents.
"Reinvestment Income" means any interest or other earnings earned on all or
part of the Trust Estate.
"Retiree Beneficiaries" means the Beneficiaries identified as such on the
Schedule of Benefits.
"Retiree Medical Beneficiaries" means the Beneficiaries identified as such
on the Schedule of Benefits.
"Sale or Merger Transaction" means a single transaction or series of
transactions pursuant to which the Company consolidates or merges with or into
any Person, or sells, assign, transfers, leases, conveys or otherwise disposes
of (or causes or permits any of the Company's Subsidiaries to sell, assign,
transfer, lease, convey or otherwise dispose of) all or substantially all of the
Company's and its Subsidiaries' assets (determined on a consolidated basis) to
any Person, or adopts a Plan of Liquidation and, as a result of such transaction
or series of transactions: (a) the
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Company is not the surviving or continuing corporation or (b) the Person (if
other than the Company) formed by such consolidation or into which the Company
is merged or the Person who acquires by conveyance, transfer or lease the
properties of the Company substantially as an entity or, in the case of a Plan
of Liquidation, or Person to which assets of the Company have been transferred,
is not a corporation organized and validly existing under the laws of the United
States of America or any State thereof and/or fails to expressly assume, by
written instrument (in form and substance satisfactory to the Designated
Beneficiaries), executed and delivered to the Trustee, the due and punctual
payment of all obligations and performance of all covenants under the Spungin
Agreement, the Employment Agreements, the Company Medical Plan and this Trust
Agreement on the part of the Company to be performed and observed. For purposes
of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a
single transaction or series of transactions) of all or substantially all of the
assets of one or more of the Subsidiaries of the Company, the capital stock of
which constitutes all or substantially all of the assets of the Company, shall
be deemed to be a transfer of all or substantially all of the assets of the
Company.
"S&P" shall mean Standard & Poor's Corporation, a corporation organized and
existing under the laws of the State of New York, its successors and their
assigns.
"Schedule of Benefits" means the schedule attached as Schedule 3 hereto.
"Severance Benefits" means, for each Retiree Beneficiary, those amounts
which are due and owing from the Company to such Retiree Beneficiary, as set
forth on the Schedule of Benefits.
"Stay Bonus Benefits" means, for each Officer Beneficiary, those amounts
which may become due and owing from the Company to such Officer Beneficiary,
as set forth on the Schedule of Benefits.
"Stay Bonus Start Date" means, for each Officer Beneficiary, the earlier of
(a) the Expiration Date or (b) the date on which an Officer Beneficiary gives
notice to the Trustee in the form of Schedule 4 (or Schedule 4A in the case of
Hewson) hereto, unless such date is contested by the Company, as provided in
Section 3.1(b) and (c) hereof, in which event the Stay Bonus Start Date shall be
determined as provided by the Final Determination, except that Hewson may
advance his Stay Bonus Start Date by giving notice to the Trustee as provided in
Section 3.1(c)(v).
"Spungin" means Mr. Joel D. Spungin.
"Spungin Agreement" means the Amended and Restated Employment and
Consulting Agreement dated as of April 15, 1993 by and among the Company, United
Stationers Supply Co. and Spungin, as further amended as of February 13, 1995.
"Subsidiary" of any Person means (a) a corporation a majority of whose
Voting Stock is at the time, directly or indirectly, owned by such Person, by
one or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person or (b) any other Person (other than a corporation)
in which such Person, a Subsidiary of such Person or such Person and one or more
Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, have at least a majority ownership interest.
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"Term of Employment" has the meaning, for each Officer Beneficiary, set
forth in his respective Employment Agreement.
"Transition Benefits" means the benefits to be provided to Retiree Medical
Beneficiaries and Officer Medical Beneficiaries pursuant to Section 3.1(e)
hereof, as set forth on the Schedule of Benefits.
"Transition Services Payment" means, for Hewson, the payment identified as
such on the Schedule of Benefits.
"Trust" means the USI Employee Benefits Trust established pursuant to the
terms of this Agreement.
"Trust Account" means the trust account established by the Trustee pursuant
to Section 2.4(a) hereof.
"Trust Funds" means, at any time, the amount of funds in the Trust Account
including any Reinvestment Income thereon.
"Unpaid Claim" means, for any Beneficiary, a Contract Benefit which has
become due and owing to such Beneficiary.
"Voting Stock" means, with respect to any Person, securities of any class
or classes of capital stock in such Person entitling the holders thereof
(whether at all times or only so long as no senior class of stock has voting
power by reason of any contingency) to vote in the election of members of the
board of directors of other governing body of such Person.
ARTICLE II
TRUST ESTATE; BANK ACCOUNTS
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SECTION 2.1 Declaration of Irrevocable Trust.
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The Trust created hereby is irrevocable. The Company hereby waives,
releases and discharges all right, power and authority to revoke this Agreement
and the Trust hereby created, or to amend or supplement its terms, except as
expressly provided for in Section 6.4 hereof. The Trustee hereby declares that,
in accordance with the provisions hereof, the Trustee shall hold, manage, invest
and distribute all of the assets now or hereafter constituting the Trust Estate
in trust for the benefit of the Beneficiaries and shall perform the duties
herein required to the best of its ability to the end that the interests of the
Beneficiaries may be adequately and effectively protected.
SECTION 2.2 The LOC.
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The Trustee acknowledges its acceptance, simultaneously with the execution
and delivery of this Agreement, of the LOC and declares that it will hold the
LOC and the balance of the Trust Estate for the benefit of the Beneficiaries in
accordance with the provisions hereof. The Trust Estate shall consist of all of
the following: (a) all rights and benefits accruing to the Trust under this
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Agreement and the LOC; (b) all amounts from time to time on deposit in the Trust
Account and Payment Accounts (as defined in Section 2.4(a) below); (c) all
Reinvestment Income; and (d) all proceeds of the foregoing.
SECTION 2.3 Conservation of Trust Estate.
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The Trustee shall have no power to vary or sell the rights, privileges and
assets constituting the Trust Estate or to carry on any business involving such
assets. The rights and duties specified for the Trustee herein are granted
solely for the purpose of protecting and conserving the assets constituting the
Trust Estate.
SECTION 2.4 Trust Account and Payment Accounts.
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(a) On or before the Closing Date, the Trustee shall open and maintain a
trust account for the receipt of LOC Proceeds and Reinvestment Income (the
"Trust Account"). On or before the date that funds will be deposited in, and
for as long as funds remain in, the Trust Account, the Trustee shall open and
maintain separate trust accounts, each designated to a particular Beneficiary
(individually, a "Payment Account" and collectively, the "Payment Accounts").
(b) The Trust Account and Payment Accounts shall be maintained in the name
of, and at the sole control of, the Trustee for the benefit of the
Beneficiaries. The Trustee shall hold all amounts deposited into the Trust
Account and Payment Accounts under this Agreement for the benefit of the
Beneficiaries until distribution of any such amounts is accomplished under this
Agreement. The amounts on deposit in the Trust Account and Payment Accounts (i)
may be maintained as subaccounts of a single master or concentration account if
required or deemed appropriate by the Trustee for investment, administrative or
settlement purposes and (ii) may be commingled for investment, administrative or
settlement purposes so long as the amounts required to be on deposit in such
subaccounts are credited to the proper subaccounts.
ARTICLE III
DRAWS ON LOC AND DISTRIBUTIONS
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SECTION 3.1 Benefits Directly Paid by the Trustee.
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(a) With respect to the Severance Benefits payable to Retiree
Beneficiaries, the Trustee shall draw on the LOC, five (5) Business Days prior
to the first day of _____, 1995 [insert first day of month following the Closing
Date] and the first day of each month thereafter, in an amount sufficient to pay
the Severance Benefits due to such Beneficiaries on the first day of each
ensuing month until all such Severance Benefits are made. After drawing on the
LOC to accomplish such payments, the Trustee shall immediately deposit the LOC
Proceeds in the Trust Account, transfer the sums due to each Retiree Beneficiary
to such Beneficiary's Payment Account and then distribute to the Retiree
Beneficiaries the amounts in their respective Payment Accounts.
(b) (i) The Company shall deliver to the Trustee, within thirty (30) days
after the date of this Agreement, a notice listing all of the Officer
Beneficiaries and their respective Expiration Dates. If, for any Officer
Beneficiary, such Expiration Date is not designated by the
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Company within thirty (30) days after the date of this Agreement, then the
Expiration Date for such Officer Beneficiary shall be date which is the first
anniversary of the date of this Agreement.
(ii) Any Officer Beneficiary may submit a notice in the form of
Schedule 4 hereto, except that Hewson shall submit his notice in the form of
Schedule 4A hereto (in each case, the "Start Notice") to the Trustee either
claiming the commencement of his Stay Bonus Benefits or seeking his Base Salary
Payment. Within ten (10) days after the receipt thereof, the Trustee shall
furnish a copy thereof to the Company.
(iii) If the Start Notice seeks payment of the Base Salary Payment,
the Trustee shall draw on the LOC in an amount equal to three times the Base
Salary Payment set forth on the Schedule of Benefits for such Officer
Beneficiary (other than Hewson). After drawing on the LOC to accomplish such
payment, the Trustee shall promptly deposit the LOC Proceeds in the Trust
Account, transfer the sums due to the Officer Beneficiary to his Payment Account
and then distribute to the Officer Beneficiary the amount in his Payment
Account.
(c) (i) If the Start Notice of any Officer Beneficiary seeks payment of
Stay Bonus Benefits, then the Company, within ten (10) days after service of
such notice, may deliver a notice to the Trustee in the form of Schedule 5
hereto ("Dispute Notice") disputing that the Stay Bonus Start Date should be the
date set forth in the Start Notice.
(ii) If the Trustee receives a Dispute Notice for any Officer
Beneficiary other than Hewson, the Trustee shall promptly draw on the LOC in an
amount equal to the three times the Base Salary Payment set forth on the
Schedule of Benefits for such Officer Beneficiary. After drawing on the LOC to
accomplish such payment, the Trustee shall promptly deposit the LOC Proceeds in
the Trust Account, transfer the sums due to the Officer Beneficiary to his
Payment Account and then distribute to the Officer Beneficiary the amount in his
Payment Account.
(iii) If, after delivering a Dispute Notice for any Officer
Beneficiary other than Hewson, the Company does not deliver a Final
Determination to the Trustee within ninety (90) days after the date of
termination of the Officer's Term of Employment specified in the Start Notice,
then as to any Officer Beneficiary except Hewson, on the first day of the month
following the month in which such 90th day occurs, the Trustee shall draw on the
LOC in an amount equal to the portion of the Officer Beneficiary's Stay Bonus
Benefits which would have been paid from the date of termination of the Term of
Employment through such 90th day (assuming that the Stay Bonus Start Date had
been advanced to the date of termination of the Term of Employment), reduced by
the amount, if any, by which three times the Base Salary Payment exceeds the
amount of salary (based on one month's salary being equal to the Base Salary
Payment) which the Officer Beneficiary would have received after the date of
termination of the Term of Employment, if the Term of Employment had not been
terminated prior to its expiration. Thereafter, the Trustee shall draw on the
LOC five (5) Business Days prior to the first day of each ensuing month in an
amount sufficient to pay the Stay Bonus Benefits due to such Officer Beneficiary
on the first day of the month after each such draw until all such Stay Bonus
Benefits are made; provided, however, if the Company shall deliver to the
Trustee a Final Determination that the termination of the Term of Employment was
without good reason or for cause, as the case may be applicable, the Trustee
shall promptly refrain, as directed by the Final Determination, from making all
or any portion of the remaining payments of Stay Bonus Benefits shown to be due
to such Officer Beneficiary in the Schedule of Benefits.
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(iv) If the Trustee receives a Dispute Notice concerning Hewson, the
Trustee shall draw on the LOC, in an amount equal to the Base Salary Payment set
forth on the Schedule of Benefits for Hewson, five (5) Business Days prior to
(a) the first day of the month after the month in which the Dispute Notice is
received and (b) the first day of each ensuing month, until a Final
Determination is delivered to the Trustee. After drawing on the LOC to
accomplish such payment, the Trustee shall promptly deposit the LOC Proceeds in
the Trust Account, transfer the sums due to Hewson to his Payment Account and
then distribute to Hewson the amount in his Payment Account.
(v) If, however, Hewson gives notice to the Trustee in the form of
Schedule 6 hereto of his termination of the Term of Employment prior to the date
that the dispute is finally determined, then, on the first day of the month
following the month in which Hewson gives his notice, the Trustee shall draw on
the LOC, in an amount equal to Hewson's Stay Bonus Benefits which would have
been paid from the date of termination of the Term of Employment through the
date of his notice to the Trustee (assuming that his Stay Bonus Start Date had
been advanced to the date of termination of the Term of Employment). Thereafter,
the Trustee shall draw on the LOC five (5) Business Days prior to the first day
of each ensuing month in an amount sufficient to pay the Stay Bonus Benefits due
to Hewson on the first day of the month after each such draw until all such Stay
Bonus Benefits are made; provided, however, if the Company shall deliver to the
Trustee a Final Determination that the termination of the Term of Employment was
without good reason or for cause, as the case may be applicable, the Trustee
shall promptly refrain, as directed by the Final Determination, from making all
or any portion of the remaining payments of Stay Bonus Benefits shown to be due
to Hewson in the Schedule of Benefits.
(vi) If Hewson shall deliver to the Trustee an estimate from his
Accountant concerning an acceleration of Hewson's Stay Bonus Benefits in order
to offset a proposed assessment from the Internal Revenue Service for the Excise
Tax on account of any payments made to Hewson under his Employment Agreement,
then the Trustee shall restate the schedule of Hewson's Stay Bonus Benefits in
accordance with the instruction of Hewson's Accountant and thereafter draw on
the LOC to make distributions of Stay Bonus Benefits to Hewson in accordance
with such revised schedule.
(d) (i) The Trustee shall draw on the LOC, five (5) Business Days prior
to the date which is one hundred eighty (180) days after the date of this
Agreement in an amount equal to the Transition Services Payment. The Trustee
shall promptly deposit the LOC Proceeds in the Trust Account, transfer such
amount to Hewson's Payment Account and then distribute the funds in Hewson's
Payment Account to Hewson.
(ii) Subject to the provisions of Section 3.1(b) and (c), the Trustee
shall draw on the LOC, five (5) Business Days prior to the Stay Bonus Start Date
and the first day of each ensuing month, in an amount sufficient to pay the Stay
Bonus Benefits due to each Officer Beneficiary on the first day of the month
after each such draw until all such Stay Bonus Benefits are made. After drawing
on the LOC to accomplish such payments, the Trustee shall promptly deposit the
LOC Proceeds in the Trust Account, transfer the sums due to each Officer
Beneficiary to such Officer Beneficiary's Payment Account and then distribute to
each Officer Beneficiary the amount in his respective Payment Account. If the
Company and the Officer Beneficiary shall amend the amount or timing of payments
in respect of Stay Bonus Benefits under such Officer
11
Beneficiary's Employment Agreement, they may jointly so advise the Trustee, in
which event the Trustee shall make the corresponding changes on the Schedule of
Benefits.
(e) If the Designated Beneficiaries give written notice to the Trustee that
the Company Medical Plan has been terminated, or coverage for Retiree Medical
Beneficiaries or Officer Medical Beneficiaries has ceased, then the Trustee
shall draw on the LOC five (5) Business Days prior to the first day of the month
following the month in which the Company Medical Plan terminates or coverage
ceased (the "Plan Termination Date") and the first day of each ensuing month in
an amount sufficient to pay to the Beneficiaries, listed on the Schedule of
Benefits as entitled to Transition Benefits, the monthly Transition Benefits up
to the applicable amount shown in the Schedule of Benefits for each such
Beneficiary, for the period commencing on the Plan Termination Date and ending:
in the case of Retiree Medical Beneficiaries, on the first to occur of (i) the
later of the date such Beneficiary or spouse of such Beneficiary attains age
sixty-five (65), or (ii) in the event of the death of such Retiree Medical
Beneficiary, the date the spouse of such Retiree Medical Beneficiary attains age
sixty-five (65), or (iii) the end of the eighteen (18) month period commencing
on the Plan Termination Date, and, in the case of Officer Medical Beneficiaries,
on the first to occur of (i) the later of the date such Officer Medical
Beneficiary or spouse of such Officer Medical Beneficiary attains age sixty-five
(65), or (ii) in the event of the death of such Beneficiary, the date the spouse
of such Officer Medical Beneficiary attains age sixty-five (65), or (iii) the
end of the eighteen (18) month period commencing on the Plan Termination Date,
or (iv) December 31, 1998.
(f) If the Company Medical Plan has been terminated or coverage for any
Officer Medical Beneficiary has ceased, any Officer Medical Beneficiary may
submit medical bills or seek to be reimbursed for Covered Medical Benefits, by
delivery of copies of the medical bills or Evidence of Payment to the Trustee,
subject to the following terms and conditions:
(i) such Officer Medical Beneficiary (or any of his covered Dependents
as of the termination of the Company Medical Plan), whichever is seeking
reimbursement for Covered Medical Expenses, if covered by a medical plan
maintained by the then current employer of such Officer Medical Beneficiary
or a medical plan maintained by the employer of the spouse of such Officer
Medical Beneficiary, has exceeded the lifetime maximum benefit provided in
such plan;
(ii) payment or reimbursement for such claims submitted by the Officer
Medical Beneficiary shall not exceed the lesser of the following amounts:
a. a maximum of $300,000 for the Officer Medical Beneficiary
(and all covered Dependents of such Officer Medical
Beneficiary as of the termination of the Company Medical
Plan or the date of cessation of coverage under the Company
Medical Plan); or
b. an amount which exceeds $700,000 (on an aggregate basis) for
the entire Officer Medical Beneficiary group (including all
covered Dependents of such Officer Medical Beneficiary group
as of the termination of the Company Medical Plan or date of
cessation of coverage); and
12
(iii) payment or reimbursement for such claims by the Officer Medical
Beneficiaries shall be made for the period commencing on the date the
Company Medical Plan terminates and ending on the first to occur of:
a. the later of the date such Officer Medical Beneficiary or
spouse of such Officer Medical Beneficiary attains age
sixty-five (65);
b. in the event of the death of the Officer Medical
Beneficiary, the date the spouse of such Officer Medical
Beneficiary attains age sixty-five (65);
c. the end of the eighteen (18) month period commencing on the
Plan Termination Date or date of cessation of coverage; or
d. December 31, 1998.
(g) The Trustee shall draw on the LOC from time to time in such amount as
will pay the cost of premiums for primary medical insurance policies for Barbara
Savage, Spungin and Marilyn, in case the Company Medical Plan has been
terminated or any of them cease to be eligible under the Company Medical Plan,
until each such Beneficiary shall have become eligible for Medicare, and
thereafter the Trustee shall draw on the LOC from time to time in such amount as
will pay the premiums on any medical insurance policies which are supplemental
to Medicare for the rest of their respective lives, up to maximum benefit for
such premiums as set forth on the Schedule of Benefits; provided, however, if
prior to Marilyn's or Spungin's becoming eligible for Medicare, the Company has
not maintained a health insurance conversion policy, then the Trustee, upon
request therefor by Spungin or Marilyn, shall draw on the LOC in the amount of
$242,701 (in the aggregate for Spungin and Marilyn and without regard to the
payment of premiums), deposit the LOC Proceeds in the Trust Account, transfer
funds in such amount to the Payment Account of Spungin or Marilyn, as
applicable, and distribute the funds in such Payment Account to Spungin or
Marilyn, as applicable, and, this payment shall be separate and in addition to
any amounts distributable to them in the remaining provisions of this Section
3.1(g). The Trustee shall also draw on the LOC from time to time in such amount
as will pay the premiums on any medical insurance policies for Thelma Hecktman
which are supplemental to Medicare for the rest of her life, up to maximum
benefit for such premiums as set forth on the Schedule of Benefits. After
drawing on the LOC to accomplish such payments, the Trustee shall immediately
deposit the LOC Proceeds in the Trust Account, transfer the sums due to these
Beneficiaries to their respective Payment Accounts and then distribute to these
Beneficiaries the amount in their respective Payment Accounts. In addition, if
the Company Medical Plan has been terminated, Barbara Savage, Spungin and
Marilyn may submit invoices or seek to be reimbursed for Covered Medical
Benefits, by delivery of copies of the invoices or Evidence of Payment to the
Trustee, subject to the following terms and conditions:
(i) Barbara Savage, Spungin or Marilyn, as the case may be, whichever
is seeking reimbursement for Covered Medical Expenses, if covered by a
medical insurance policy, has exceeded the lifetime maximum benefit
provided in such policy;
(ii) reimbursement for such claims shall not exceed (A) in the case of
Barbara Savage, a lifetime maximum of $1 million and (B) in the case of
Spungin and Marilyn, a lifetime maximum of $1 million each.
(h) The Designated Beneficiaries shall identify to the Trustee the names of
all Dependents following a termination of the Company Medical Plan in order that
the Trustee may apply the foregoing provisions of Sections 3.1(f) and (g). To
demonstrate eligibility for distributions under Sections 3.1(f) or (g), a
Beneficiary may be required to certify to the Trustee whether such Beneficiary
is covered by a medical insurance plan or policy and has exceeded a lifetime
maximum benefit thereunder. The Company and/or the Designated Beneficiaries
shall advise the Trustee of
13
the Plan Termination Date. The Trustee shall be entitled to rely on such
certification but shall request such additional confirmation as the Designated
Beneficiaries shall deem appropriate and communicate to the Trustee in writing.
Any Beneficiary desiring to submit medical bills or Evidence of Payment to the
Trustee shall attach such items to a notice in the form of Schedule 7 hereto.
Upon receipt of any notice accompanied by medical bills or Evidence of Payment
in respect of Covered Medical Expenses for which the terms and conditions stated
in Section 3.1(f) or (g) above are satisfied, the Trustee shall promptly draw on
the LOC in an amount sufficient to pay the amount of the Covered Medical
Expenses set forth in the Beneficiary's claim. After drawing on the LOC to
accomplish such payment, the Trustee shall promptly deposit the LOC Proceeds in
the Trust Account, transfer the sums due to the Beneficiary to his Payment
Account and then distribute to the Beneficiary the amount in his Payment
Account.
SECTION 3.2 Parachute Indemnity Benefits.
----------------------------
(a) If Spungin shall receive notice of a proposed assessment from the
Internal Revenue Service for the Excise Tax, he shall deliver a notice to the
Trustee, in the form of Schedule 8 hereto, accompanied by a schedule prepared by
Spungin's Accountant estimating the amount of the Gross-Up Payment. The
Trustee, within ten (10) days after receipt of such notice and schedule
(collectively, the "Request for Indemnity"), shall furnish a copy thereof to the
Company.
(b) If, within thirty (30) days after service of the Request for Indemnity,
the Company deposits with the Trustee a fully executed, original indemnity
agreement between the Company and Spungin in the form of Schedule 9 hereto (the
"Spungin Indemnity Agreement"), then the Parachute Reservation shall limit
reductions in the LOC Amount pursuant to Section 3.5(b) hereof. If Spungin at
any time thereafter shall tender a notice to the Trustee in the form of Schedule
10 hereto (the "Parachute Notice"), then the Trustee, within ten (10) days after
service of such notice, shall furnish a copy thereof to the Company. Unless the
Company, within thirty (30) days after service of the Trustee's notice, has
delivered to the Trustee a signed release from Spungin in the form of Schedule
11 hereto, then on the thirty-first (31st) day after service of the Trustee's
notice (or the first Business Day thereafter if such day is not a Business Day),
the Trustee shall draw on the LOC (if the LOC has not previously been drawn in
full) in the amount requested by Spungin in the Parachute Notice up to the
Parachute Reservation and deposit the LOC Proceeds in the Trust Account. The
Trustee shall promptly transfer funds in such amount from the Trust Fund to
Spungin's Payment Account and distribute the funds in Spungin's Payment Account
to Spungin. Upon such distribution to Spungin, the Parachute Reservation shall
cease to limit reductions in the LOC Amount.
(c) If, within thirty (30) days after service of the Request for Indemnity,
the Company fails to deposit with the Trustee a fully executed, original
counterpart of the Spungin Indemnity Agreement, then, on the thirty-first (31st)
day after service of the Request for Indemnity (or the first Business Day
thereafter if such day is not a Business Day), the Trustee shall draw on the LOC
(if the LOC has not previously been drawn in full) in an amount equal to the
estimated Gross-Up Payment shown in the Request for Indemnity and deposit the
LOC Proceeds into the Trust Account, but in no event shall the Trustee draw on
the LOC, in respect of the Gross-Up Payment, a sum greater than the Parachute
Reservation. The Trustee shall promptly transfer funds, equal in amount to the
amount of LOC Proceeds drawn in respect of the Gross-up Payment, from the Trust
Account to the Spungin's Payment Account and distribute the funds in Spungin's
Payment
14
Account to Spungin. Upon such distribution to Spungin, the Parachute Reservation
shall cease to limit reductions in the LOC Amount.
SECTION 3.3 Spungin's Consulting Benefits.
-----------------------------
The Trustee shall draw on the LOC, five (5) Business Days prior to the
first day of _____, 1995 [insert first day of month following Closing Date] and
the first day of each month thereafter, in an amount sufficient to pay the
Consulting Benefits due to Spungin on the first day of each ensuing month until
all such Consulting Benefits are made. After drawing on the LOC to accomplish
such payments, the Trustee shall promptly deposit the LOC Proceeds in the Trust
Account, transfer the sums due to Spungin to his Payment Account and then
distribute to Spungin the amounts in his Payment Account. If the Company and
Spungin amend the payment schedule for his Consulting Benefits and jointly
notify the Trustee, the Trustee shall make corresponding changes to the Schedule
of Benefits and adjust the draws made on the LOC to pay Consulting Benefits in
accordance with such changes.
SECTION 3.4 Life Insurance Benefits.
-----------------------
The Trustee shall draw on the LOC in a timely manner and in an amount
sufficient to pay the premiums on each Life Insurance Policy before the same
become delinquent. After such draw on the LOC, the Trustee shall deposit the
LOC Proceeds in the Trust Account of Spungin or Kravis, as applicable, and then
transfer from the Trust Account to their respective Payment Accounts the amounts
each requires to pay the premiums on their respective Life Insurance Policies,
up to the maximum amount set forth on the Schedule of Benefits, and, in the case
of Kravis, limited to the period ending on the fourth anniversary of the Closing
Date.
SECTION 3.5 Reductions to the LOC Amount.
----------------------------
(a) The initial amount of the LOC shall be $24 million and shall reduce by
the amount of any draws on the LOC.
(b) Effective as of ____________________[insert date which is the first
Business Day after the third anniversary of the date of this Agreement], the
Trustee shall instruct the LOC Issuer to reduce the LOC Amount by the amount
which (a) the total Stay Bonus Benefits shown on the Schedule of Benefits for
Officer Beneficiaries other than Hewson exceed (b) the actual amount of Stay
Bonus Benefits previously distributed by the Trustee to Officer Beneficiaries
other than Hewson pursuant to the terms of this Agreement.
(c) Effective as of ____________________[insert date which is the first
Business Day after the fourth anniversary of the date of this Agreement], the
Trustee shall instruct the LOC Issuer to reduce the LOC Amount by the amount
which (a) the total Stay Bonus Benefits shown on the Schedule of Benefits for
all Officer Beneficiaries exceed (b) the actual amount of Stay Bonus Benefits
previously distributed by the Trustee to all Officer Beneficiaries pursuant to
the terms of this Agreement.
15
(d) Effective as of ____________________[insert date which is beyond any
applicable liability for the Excise Tax], provided no defense of a proposed
assessment of liability for the Excise Tax is then pending, the Trustee shall
instruct the LOC Issuer to reduce the LOC Amount by the amount of the Parachute
Reservation (unless still required under Section 3.2 hereof), as set forth on
the Schedule of Benefits.
(e) Notwithstanding the provisions of Sections 3.5(b), (c) and (d), at such
time as a reduction in the LOC is otherwise permitted, if the Designated
Beneficiaries have given notice to the Trustee on or before such date under
Section 5.10(f) hereof, or if the Trustee shall have drawn on the LOC to obtain
payment of its fees and expenses, then the Trustee shall offset the reduction
otherwise permitted in Sections 3.5(b), (c) and (d) by the amount claimed by the
Designated Beneficiaries in such Section 5.10(f) notice and by the amount of the
Trustee's draws on the LOC for payment of the Trustee's fees and expenses.
(f) Effective as of the LOC Termination Date, the Trustee shall instruct
the LOC Issuer to reduce the LOC Amount to zero and shall cancel the LOC and
return it to the LOC Issuer.
SECTION 3.6 LOC Draw Event.
--------------
If an LOC Draw Event shall occur, the Trustee shall draw on the LOC prior
to its stated expiration date and as soon as possible if the Trustee has been
notified there is a reasonable basis to conclude that a delay in drawing on the
LOC might result in the draw being dishonored by the LOC Issuer. After a draw
of the outstanding LOC Amount, the Trustee shall deposit the LOC Proceeds in the
Trust Account. The Trustee shall allocate the LOC Proceeds among all
Beneficiaries entitled to receive distributions in accordance with the
provisions of Section 3.7 hereof, except that for purposes of applying Section
3.7, all Severance Benefits, Transition Services Payment, Stay Bonus Benefits
and Consulting Benefits which could become due and payable shall be deemed
immediately due and payable, and the amount of the estimated Gross-up Payment
for Spungin shall also be deemed due and payable if the Internal Revenue Service
has asserted that all or a portion of the Consulting Benefits are subject to the
Excise Tax. The Trustee shall then transfer funds from the Trust Account to
each Beneficiary's Payment Account in an amount equal to such Beneficiary's
share determined in the foregoing manner and then distribute the funds in the
Payment Accounts to the Beneficiaries thereof. Any Trust Funds remaining after
the distributions in respect of the foregoing Contract Benefits and which are
not then distributable to Beneficiaries for contingent Contract Benefits (i.e.,
Parachute Indemnity Benefits (if no proposed assessment is pending), Transition
Benefits and Medical Benefits) shall remain in the Trust Account, invested in
Eligible Investments, until otherwise disposed of in accordance with the terms
hereof.
SECTION 3.7 Insufficiency of Trust Estate.
-----------------------------
(a) The Trustee shall attempt to make all distributions of Trust Funds in
accordance with the procedures set forth in this Agreement. If at any time the
Trustee, after making all permitted draws on the LOC, is unable to pay from
Trust Funds all amounts which have become payable to Beneficiaries or other
parties (by decision of the Arbitrator or otherwise as herein provided), then
the remaining Trust Funds shall be paid in the following order of priority:
(i) first, in respect of Consulting Benefits, Parachute Indemnity
Benefits, Severance Benefits, Transition Services Payment and Stay Bonus
Benefits, to the
16
Beneficiaries entitled to payment, pro rata among such Beneficiaries in
proportion to their respective Unpaid Claims;
(ii) second, in respect of Life Insurance Benefits, to Spungin;
(iii) third, in respect of Life Insurance Benefits, to Allen B.
Kravis;
(iv) fourth, in respect of Medical Benefits and Transition Benefits,
to all Beneficiaries then entitled to payment, pro rata among such
Beneficiaries in proportion to their respective Unpaid Claims.
(b) Notwithstanding anything to the contrary which may be inferred from the
terms of this Agreement, no draw on the LOC shall be required as a condition for
the transfer of funds from the Trust Account to the Payment Account of any
Beneficiary, if the entire LOC Amount has previously been drawn; and, in such
event, the Trustee shall make transfers of Trust Funds already in the Trust
Account to any Payment Account to pay Contract Benefits which have become due
and payable.
SECTION 3.8 Remedies If Draw is Dishonored.
------------------------------
(a) In case any draw on the LOC is dishonored, the Trustee, after being
indemnified as provided in subparagraph (b) below, shall proceed to protect and
enforce its rights and the rights of the Beneficiaries under this Agreement by a
suit, action or proceeding in equity or at law or otherwise, whether for the
specific performance of any covenant or agreement contained in this Agreement or
in aid of the execution of any power granted in this Agreement or for the
enforcement of any other legal, equitable or other remedy, as the Trustee, being
advised by counsel, shall deem most effectual to protect and enforce any of the
rights of the Trustee or the Beneficiaries.
(b) In case any draw on the LOC is dishonored, those Beneficiaries desiring
the Trustee to take action to enforce and conserve the Trust Estate, shall offer
to provide the Trustee such reasonable indemnity as the Trustee may require
against the costs, expenses, and liabilities to be incurred (as estimated by the
Trustee) by instituting any suit, action, or proceeding in equity or at law upon
or under or with respect to the LOC. Each such Beneficiary shall subscribe for
the estimated costs, expenses and liabilities likely to be incurred by the
Trustee in the ratio which its share of any expected recovery bears to the
entire recovery, as agreed among such Beneficiaries, or in the absence of such
agreement, as decided by the Trustee in its discretion without liability of any
kind to the Beneficiaries for such decision. Upon establishing the pro rata
shares for the Trustee's indemnity and the payment of any amounts or furnishing
of such security as may be required by the Trustee, such Beneficiaries shall
constitute the "Managing Beneficiaries", each with a vote in proportion to its
subscribed share of the Trustee's indemnity (all votes totalling 100%). Actions
of the Trustee authorized by the Managing Beneficiaries shall require a 51% vote
of the Managing Beneficiaries.
(c) In case any draw on the LOC is dishonored, the Managing Beneficiaries
with aggregate votes of 51% or more shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee; provided,
however, that, subject to Section 5.1, the Trustee shall have the
17
right to decline to follow any direction if the Trustee, being advised by
counsel, determines that the action so directed may not lawfully be taken, or if
the Trustee in good faith determines that the action so directed would be
illegal or involve it in personal liability or be unduly prejudicial to the
rights of Beneficiaries not parties to such direction; and provided further that
nothing in this Agreement shall impair the right of the Trustee to take any
action deemed proper by the Trustee and which is not inconsistent with such
direction by the Managing Beneficiaries.
ARTICLE IV
ACCOUNTING AND REPORTS
----------------------
SECTION 4.1 Investment of Trust Funds.
-------------------------
The Trustee shall invest any funds deposited in the Trust Account in
Eligible Investments in such manner as will most conveniently ensure access to
Trust Funds when needed for distributions, as directed in writing by the
Designated Beneficiaries. The Trustee shall have no duty to maximize investment
returns.
SECTION 4.2 Trustee's Reports to Designated Beneficiaries.
---------------------------------------------
Within thirty (30) days after the end of each calendar year, the Trustee
shall render to each Designated Beneficiary an accounting of:
(a) the aggregate amount of Trust Funds remaining in the Trust Account
as of the last day of the year after (A) distributions to Beneficiaries
during such year and (B) payments of all other amounts paid from the Trust
Account pursuant to this Agreement;
(b) the amount of Trust Funds distributed to the Beneficiaries during
the year; and
(c) the LOC Amount, adjusted for draws and other reductions made
during the preceding year.
With respect to the value remaining in accounts which are invested in
Eligible Investments, the Trustee provide information with respect to the cost
or market value of such investments.
SECTION 4.3 Manner of Making Distributions.
------------------------------
All distributions to Beneficiaries shall be made by checks sent by first
class United States mail, postage prepaid, to the addresses appearing on the
Register.
18
SECTION 4.4 Tax Returns.
-----------
The Trustee shall prepare or shall cause to be prepared any tax returns
required to be filed by the Trust and such returns shall be filed by the
Trustee. The Trustee shall draw on the LOC or use Trust Funds to pay any
Federal, state or local income or excise taxes which the Trust shall become
obligated to pay. In no event shall the Trustee be liable for any liabilities,
costs or expenses of the Trust or the Beneficiaries under any tax law, including
without limitation Federal, state or local income or excise taxes or any other
tax imposed on or measured by income (or any interest or penalty with respect
thereto or arising from a failure to comply therewith).
ARTlCLE V
THE TRUSTEE
-----------
SECTION 5.1 Duties of Trustee; Standard of Care.
-----------------------------------
The Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. The Trustee shall exercise such of
the rights and powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise, as a prudent corporate trustee under a trust
indenture. No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own gross negligent action, its own gross
negligent failure to act or its own wilful misconduct; provided, however, that:
(1) The duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or obligations
shall be read into this Agreement against the Trustee and, in the absence of bad
faith on the part of the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(2) The Trustee shall not be personally liable for an error of
judgment made in good faith by the Trustee, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts or in performing its
duties;
(3) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in accordance
with the direction, as provided under the terms of this Agreement, of the
Designated Beneficiaries relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Agreement, except that the
enforcement of remedies pursuant to Section 3.8 shall be directed by the
Managing Beneficiaries as therein provided; and
(4) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
hereunder, or in the
19
exercise of any of its rights or powers, if there is reasonable ground for
believing that the repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
SECTION 5.2 Certain Matters Affecting the Trustee.
-------------------------------------
(a) The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform as to form to the requirements of this Agreement. The Trustee may rely
and shall be protected in acting or refraining from acting upon any resolution,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal bond or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(b) The Trustee may consult with counsel and any opinion of counsel for the
Trustee shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith and in
accordance with such opinion of counsel.
(c) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement, or to institute, conduct or defend any
litigation hereunder or in relation hereto, at the request, order or direction
of any of the Beneficiaries, pursuant to the provisions of this Agreement,
unless the Designated Beneficiaries concur in such request, order or direction
and shall have offered to the Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may he incurred therein or thereby.
(d) The Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing so to do by the Designated
Beneficiaries; provided, however, that if the payment within a reasonable time
to the Trustee of the costs, expenses or liabilities likely to be incurred by it
in the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against such cost,
expense or liability as a condition to so proceeding.
(e) The Trustee may execute any of the trusts or powers hereunder or
perform any duties as Trustee hereunder either directly or by or through agents
or attorneys or a custodian and shall not be liable for any acts or omissions of
such agents, attorneys or custodians if appointed by it with due care hereunder.
SECTION 5.3 Trustee Not Liable for Unpaid Claims.
------------------------------------
The Trustee makes no representations as to the validity or sufficiency of
the Trust Estate to satisfy any Unpaid Claims. No recourse shall be had for any
claim based on any provision of this Agreement, including the LOC, against the
Trustee in its individual capacity, and the Trustee shall not have any personal
obligation, liability or duty whatsoever to any Beneficiary or any other person
with respect to any such claim, and any such claim shall be asserted solely
against the Trust, except for such liability as is finally determined to have
resulted from its own gross negligence or willful misconduct.
20
SECTION 5.4 Trustees' Compensation.
----------------------
(a) As compensation for its services hereunder, the Company shall pay to
the Trustee an annual fee of $______________ as well as the following fees and
expenses of the Trustee (in addition to the annual fee):
(i) except as otherwise expressly provided herein, all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and counsel)
except any such expense, disbursement or advance as may be attributable to
its gross negligence or wilful misconduct;
(ii) any loss, liability or expense incurred by Trustee without gross
negligence or wilful misconduct on its part, arising out of or in
connection with the acceptance or administration of this Trust and its
duties hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
(b) If the annual fee and other fees and expenses of the Trustee herein
provided to be paid by the Company are not so paid, they shall be payable out of
the Trust Estate, and if Trust Funds are insufficient to pay amounts then due
the Trustee, the Trustee shall draw on the LOC in an amount sufficient to pay
amounts then due and permitted to be reimbursed from the Trust Estate.
SECTION 5.5 Eligibility Requirements for Trustee.
------------------------------------
The Trustee hereunder shall at all times be an Eligible Trustee. In case
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 5.5, the Trustee shall resign immediately in the
manner and with the effect specified in Section 5.6.
SECTION 5.6 Resignation or Removal of Trustee.
---------------------------------
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Designated Beneficiaries and the
Company. Upon receiving such notice of resignation, the Designated
Beneficiaries shall promptly appoint a successor Trustee by written instrument.
If no successor Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 5.5 and shall fail to resign after written request
therefor by the Designated Beneficiaries, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Trustee or any Beneficiary on behalf of itself and all others similarly situated
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
21
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 5.6 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 5.7.
SECTION 5.7 Successor Trustee.
-----------------
Any successor Trustee appointed as provided in Section 5.6 shall execute,
acknowledge and deliver to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee. The predecessor Trustee shall deliver
or cause to be delivered to the successor Trustee the LOC and any related
documents and statements held by it hereunder; and the successor Trustee and
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certain vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.
No successor Trustee shall accept appointment as provided in this Section
5.7 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions the provisions of Section 5.5.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 5.7, the successor Trustee shall mail notice of such succession to the
Beneficiaries at their addresses as shown in the Register.
SECTION 5.8 Merger or Consolidation of Trustee.
----------------------------------
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided such corporation shall be
eligible under the provisions of Section 5.5, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
SECTION 5.9 Claims Under the Agreement.
--------------------------
All rights of action and claims under this Agreement instituted,
prosecuted, enforced or defended by the Trustee shall be conducted in its own
name or in its capacity as Trustee. Any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
common benefit of the Beneficiaries in respect of which such judgment has been
recovered, subject to the provisions of Section 3.7 hereof.
SECTION 5.10 Designated Beneficiaries.
------------------------
(a) Except as specifically provided in this Agreement, no Beneficiary shall
have any right to vote or in any manner otherwise control the operation and
management of the Trust or the obligations of the parties hereto, such right
being herein reserved solely to the Designated Beneficiaries or, in the limited
circumstances under Section 3.8, to the Managing Beneficiaries.
22
(b) The Designated Beneficiaries shall have no right by virtue of any
provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement, unless they
previously shall have given to the Trustee a written notice of the action
desired to be taken and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses, and liabilities to be
incurred therein or thereby, and the Trustee, for 30 days after its receipt of
such notice, request, and offer of indemnity, shall have neglected or refused to
institute any such actions, suit, or proceeding. It is understood and intended,
and expressly covenanted by each Beneficiary with every other Beneficiary and
the Trustee, that no one or more Beneficiaries shall have any right in any
manner whatever by availing itself or themselves of any provisions of this
Agreement to affect, disturb, or prejudice the rights of any other
Beneficiaries, or to obtain or seek to obtain priority over or preference to any
other such Beneficiary, or to enforce any right under this Agreement, except in
the manner herein provided and for the common benefit of all Beneficiaries,
subject to the provisions of Section 3.7 hereof. For the protection and
enforcement of the provisions of this Section, each and every Beneficiary and
the Trustee shall be entitled to such relief as can be given either at law or in
equity.
(c) The Designated Beneficiaries make no representations as to the validity
or sufficiency of the Trust Estate to satisfy any Unpaid Claims. No recourse
shall be had by any Beneficiary or his or her successors and assigns for any
claim based on any provision of this Agreement, including the LOC, against any
of the Designated Beneficiaries in their individual capacity, and the Designated
Beneficiaries shall not have any personal obligation, liability or duty
whatsoever to any Beneficiary or his or her successors or assigns with respect
to any such claim, and any such claim shall be asserted solely against the
Trust.
(d) The Designated Beneficiaries shall be under no obligation to exercise
any of the rights or powers vested in them by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of any of the Beneficiaries, pursuant to the
provisions of this Agreement, unless the Designated Beneficiaries concur in such
request, order or direction and the remaining Beneficiaries shall have offered
to the Designated Beneficiaries reasonable security or indemnity against the
costs, expenses and liabilities which may he incurred therein or thereby.
(e) The Designated Beneficiaries, in their representative capacity and not
in their capacity as Beneficiaries, shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document given to them pursuant to this Agreement. The
Designated Beneficiaries may consult with counsel and any opinion of counsel for
the Designated Beneficiaries shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by them
hereunder in good faith and in accordance with such opinion of counsel.
(f) The Company shall protect, defend, indemnify and hold the Designated
Beneficiaries forever harmless from and against any and all liabilities,
demands, claims, actions, causes of action, assessments, losses, costs, damages
or expenses, including attorneys' and accountants' fees in connection with any
of their acts or omissions, in their representative capacity and not in their
capacity as Beneficiaries, arising from or in connection with their exercise of,
or failure to exercise, any of the rights and powers granted to them under this
Agreement or as a result of or arising out of or by virtue of their status as
Designated Beneficiaries; provided, however, the foregoing
23
indemnity obligation of the Company shall not extend to actions brought,
threatened or asserted against the Company by the Designated Beneficiaries in
connection with the Trust or any other matter (other than actions brought solely
to enforce the obligations of the Company under this indemnity). If the Company
shall fail to keep and perform its indemnity obligations hereunder, the
Designated Beneficiaries may give notice to the Trustee, in the form of Schedule
12 hereto, to indicate that the Company is in breach of its obligations under
this Section 5.10 and requesting a draw on the LOC in the amount required to be
reimbursed for any liabilities arising from such breach, the Trustee shall
deliver a copy of such notice to the Company. Unless the Company, within thirty
(30) days after service of such notice, has delivered to the Trustee a signed
release from the Designated Beneficiaries rescinding their earlier notice, then,
on the thirty-first (31st) day after service of such notice, or the next
Business Day if such day is not a Business Day, the Trustee shall draw on the
LOC (if the LOC has not previously been drawn in full) in the amount of the
notice from the Designated Beneficiaries and deposit the LOC Proceeds into the
Trust Account. The Trustee shall promptly transfer funds in such amount from the
Trust Account to the Payment Accounts of the Designated Beneficiaries as they
shall jointly direct and distribute the funds in the Payment Accounts to the
respective Designated Beneficiaries.
ARTICLE VI
MISCELLANEOUS
-------------
SECTION 6.1 Maintenance of Office or Agency.
-------------------------------
The Trustee will maintain or cause to be maintained, in the City of
Chicago, Illinois, an office or offices or agency or agencies where notices and
demands to or upon the Trustee in respect of this Agreement may be served.
SECTION 6.2 Death or Disability of a Beneficiary.
------------------------------------
The executor, administrator or legal representative of a Beneficiary, upon
furnishing evidence of such authorized status to the Trustee, may give notices
provided herein to the Trustee for the benefit of a Beneficiary who has become
incompetent or disabled or for the benefit of a Beneficiary's estate within 180
days after the date of death of the Beneficiary. To establish the death of any
Beneficiary, the Trustee shall rely on certified copies of death certificates or
other official records.
SECTION 6.3 Termination.
-----------
The Trustee shall wind up the affairs of the Trust promptly after the LOC
Termination Date and, at such time, the Trustee shall return the LOC to the LOC
Issuer. The Trustee shall pay to the LOC Issuer any money held by it in the
Trust Account that remains unclaimed at the time of termination of the Trust;
after such amount is paid to the LOC Issuer, neither the Beneficiaries nor the
Company shall be entitled to assert any claim against the Trust whatsoever for
such money; and, at such time, the obligations and responsibilities created by
the Agreement and the Trust created thereby shall terminate.
24
SECTION 6.4 Amendment.
---------
(a) This Agreement may be amended from time to time by the Company with the
prior written consent of the Designated Beneficiaries, to cure any ambiguity or
correct or supplement any provisions herein or therein which may be inconsistent
with any other provisions herein or therein, as the case may be, or to add any
other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement
in any material respect; provided, however, that such action shall not, as
evidenced by an opinion of counsel for the Trustee, adversely affect the
interests of any Beneficiary.
(b) Promptly after the execution of any amendment or consent pursuant to
this Section 6.4, the Trustee shall furnish written notification of the
substance of such amendment to each Beneficiary.
(c) The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
(d) Upon the execution of any amendment to this Agreement, this Agreement
shall be modified in accordance therewith, and such amendment shall form a part
of this Agreement for all purposes; and every Beneficiary shall be bound
thereby.
SECTION 6.5 Voting by Beneficiaries.
-----------------------
Beneficiaries with surviving Contract Rights (a) may vote for replacements
of Designated Beneficiaries, if after the death or disability of the last
surviving Designated Beneficiary, no legal representative of such Designated
Beneficiary is willing to serve as the Designated Beneficiary and (b) may tender
written waivers of their rights for the purpose of determining the LOC
Termination Date. For purposes of the Trust: Contract Rights with respect to
Transition Benefits shall survive until the first Business Day after December
31, 1998; Contract Rights with respect to Stay Bonus Benefits shall terminate,
with respect to each Beneficiary, on the date the Company furnishes Evidence of
Payment to the Trustee of all Stay Bonus Benefits due to such Beneficiary
according to the Schedule of Benefits or other written agreement between the
Company and such Beneficiary furnished to the Trustee waiving such rights;
Contract Rights with respect to Parachute Indemnity Benefits, Consulting
Benefits and Life Insurance Benefits shall terminate solely at such time as all
Beneficiaries entitled to the particular class of benefit have delivered a
written waiver of such rights to the Trustee. For purposes of establishing the
number of Beneficiaries voting on any matter, the original number of
Beneficiaries listed on the Schedule of Benefits hereto shall constitute the
total maximum number of votes. All legal heirs, representatives, successors and
assigns of any Beneficiary shall in the aggregate be considered as a single
vote. All Beneficiaries (other than Designated Beneficiaries acting in such
capacity) without any remaining vested or contingent interest in Contract
Benefits of any kind shall cease, as of such time, to be Beneficiaries of the
Trust and shall not be entitled to vote on matters affecting the Trust.
SECTION 6.6 Notices.
-------
All communications and notices hereunder shall be in writing and shall be
deemed given if delivered personally or mailed by registered or certified mail
(return receipt requested), to the parties at the following address:
25
If to the Trustee:
33 N. LaSalle Street, 13th Floor
Chicago, Illinois 60690
Attention: Corporate Trust Department
If to the Company:
------------------------------
------------------------------
or at such other address for a party as specified by like notice, which shall be
effective when sent as described above. All communications and notices pursuant
hereto to a Beneficiary shall be in writing and delivered or mailed to the
address shown in the Register.
SECTION 6.7 Merger and Integration.
----------------------
Except as specifically stated otherwise herein, this Agreement sets forth
the entire understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by this Agreement.
This Agreement may not be modified, amended, waived, or supplemented except as
provided herein.
SECTION 6.8 Headings.
--------
The headings herein are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
SECTION 6.9 Governing Law.
-------------
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Illinois.
SECTION 6.10 Counterparts.
------------
This Agreement may be executed in two or more counterparts (and by
different parties on separate counterparts), each of which shall be an original,
but all of which together shall constitute one and the same instrument.
SECTION 6.11 Examination of Trust Records.
----------------------------
The Company and any Beneficiary may examine the books and records
maintained by the Trustee during normal business hours at the office of the
Trustee upon compliance with the reasonable requirements of the Trustee.
SECTION 6.12 Court Orders and Litigation.
---------------------------
In case any part of the Trust property shall be attached, garnished, or
levied upon any court order, or the delivery thereof shall be stayed or enjoined
by an order of court, or any order,
26
judgment or decree shall be made or entered by any court order affecting the
property deposited under this Agreement, or any part thereof, the Trustee is
hereby expressly authorized in its sole discretion, to obey and comply with all
writs, orders or decrees so entered or issued, which it is advised by legal
counsel of its own choosing is binding upon it, whether with or without
jurisdiction, and in case the Trustee obeys or complies with any such writ,
order or decree it shall not be liable to any of the parties thereto or to any
other person, firm or corporation, by reason of such compliance notwithstanding
such writ, order or decree be subsequently reversed, modified, annulled, set
aside or vacated. In the event that the Trustee becomes involved in litigation
on account of the Trust property or this Agreement, it shall have the right to
retain counsel and shall have a lien on the property deposited hereunder for the
costs, attorneys' and solicitors' fees, charges, disbursements, and expenses in
connection with such litigation; and shall be entitled to reimburse itself
therefor out of the property deposited hereunder, and if it shall be unable to
reimburse itself from the property deposited hereunder, the Company agrees to
pay to the Trustee on demand, its reasonable charges, counsel and attorneys'
fees, disbursements, and expenses in connection with such litigation.
SECTION 6.13 Conflicting Demands,
-------------------
In the event that conflicting demands are made upon the Trustee for any
situation not addressed in this Agreement, the Trustee may withhold performance
of this Agreement until such time as said conflicting demands shall have been
withdrawn or the rights of the respective parties shall have been settled by
court adjudication, arbitration, joint order or otherwise. The Trustee may
accept notices substantially in the form of the schedules attached hereto and
shall not require strict compliance with the forms of such notices as long as
the interests of the Beneficiaries are adequately and effectively protected.
IN WITNESS WHEREOF, the Company and Trustee have caused this Agreement to
be executed by their respective officers thereunto duly authorized this ____ day
of ______________________, 1995.
TRUSTEE:
By: __________________________________________
[Name]
[Title]
Attest: __________________________________________
[Name]
[Title]
COMPANY:
By: __________________________________________
[Name]
[Title]
Attest: __________________________________________
[Name]
[Title]
27
SCHEDULE 1
----------
THE LOC
-------
Date:
Number:
Amount: $U.S.:
Beneficiary: On Behalf of:
Trustee United Stationers Inc.
____________ _____________________
__________, Illinois _____________________, IL _____
Stated Expiry
[Insert Evergreen provisions]
Re: USI EMPLOYEE BENEFITS TRUST
---------------------------
1. We hereby establish our irrevocable Letter of Credit in favor of
____________________________________, not in its individual capacity, but
solely as Trustee of the USI Employee Benefits Trust (the "Trustee")
created under the provisions of a Trust Agreement dated as of _____ __,
1995 between United Stationers Inc., a Delaware corporation (the "Company")
and the Trustee (the "Trust Agreement"), for the account of the Company in
the amount of ____________________________________ U.S. Dollars ($ )
available by your draft(s) on us at sight. Each draft shall be
substantially in the form of Exhibit "A" hereto. Partial drawings are
permitted.
2. Partial Reductions
------------------
This Letter of Credit shall be reduced only when and to the extent of each
draw by the Trustee and by amounts which we are instructed in writing by
the Trustee to reduce this Letter of Credit.
3. No right of set-off
-------------------
This Letter of Credit shall remain in effect without regard to any default
in payments of sums owed us by the Company and without regard to any claims
or right of set off which we may have against the Company.
4. Expiration Notice
-----------------
This irrevocable Letter of Credit shall be automatically renewed without
amendment for one year from the present or any future expiration date
hereof unless at least sixty (60) days prior to such date we shall notify
the Trustee by certified mail, return receipt requested, delivered to
addressee only, that we are not renewing this Letter of Credit for any such
additional period. Upon receipt by the Trustee of such notice that we are
not renewing this
Letter of Credit, the Trustee may continue to draw hereunder at any time
before the expiration date up to an amount not exceeding the available
amount of this Letter of Credit by means of your drafts on us in
substantially the form of Exhibit "A" hereto.
This Letter of Credit expires on ____________________, 1996, unless renewed
as provided above.
5. This Letter of Credit shall remain in full force and effect notwithstanding
any amendment to such Trust Agreement, and the Trustee is not required to
furnish notice of any such amendment.
6. In the event the Trustee draws on this Letter of Credit in accordance with
the terms hereof and we fail to honor said draft for any reason, we shall
be liable for all of the Trustee's costs and expenses in enforcing this
Letter of Credit including the Trustee's reasonable attorneys' fees.
This Irrevocable Letter of Credit is subject to the "Uniform Customs and
Practice for Documentary Credit, the International Chamber of Commerce
Publication #500 (Latest Revision)", except as herein and above modified.
EXHIBIT A
___________ Bank
Letter of Credit No. ______
DRAFT
PAY $_________________________ TO _________________________________, AS
TRUSTEE OF THE USI EMPLOYEE BENEFITS TRUST.
_____________________________ (the "Trustee") hereby certifies as follows:
That this Draft is executed by:
_____________________________________________________________, whose title is
______________________ and who has full authority to execute this Draft; that it
is made and delivered to obtain payment against ___________________ Bank, Letter
of Credit Number ______________ dated _________________________________ for
purposes of that certain trust (known as the USI Employee Benefits Trust)
created under the provisions of a trust agreement dated as of _________, 1995
between United Stationers Inc., as settlor, and the Trustee.
_________________________________________
BY: _____________________________________
ITS:_____________________________________
Dated: _________________________________
SCHEDULE 2
----------
WAIVER OF TRUST RIGHTS
----------------------
Date
Trustee
__________________
__________________
Re: USI EMPLOYEE BENEFITS TRUST
WAIVER OF TRUST RIGHTS
Beneficiary: ___________________________
Ladies and Gentlemen:
The undersigned is the above named Beneficiary (or his authorized legal
representative or the administrator or executor for the deceased Beneficiary
named above) of the USI Employee Benefits Trust created by that certain Trust
Agreement dated as of __________, 1995, between United Stationers Inc. (the
"Company") and ______________________ as Trustee.
This notice constitutes the undersigned's express agreement to the
termination of the trust created under the Trust Agreement and the release of
the LOC. The undersigned hereby represents to the Trustee that it shall make no
further claim for payment of any Contract Benefits against either the Company or
the Trustee. The undersigned acknowledges that you will be relying on this
waiver in order to release the LOC and terminate the trusts created under the
Trust Agreement.
Very Truly Yours,
_______________________________________
Print Name or Title:________________________
If signing for a Beneficiary, indicate the nature of your legal authority:
SCHEDULE 3
----------
SCHEDULE OF BENEFITS
--------------------
I. STAY BONUS BENEFITS
-------------------
Total
Officer Beneficiary: Start Date: Amount:
-------------------- ----------- -------
Jeffrey K. Hewson: $1,575,000
Jerold A. Hecktman: $ 492,050
Steven R. Schwarz: $ 678,227
Robert H. Cornell: $ 602,985
Otis H. Halleen: $ 589,210
Ted A. Rzeszuto: $ 511,297
Ergin Uskup: $ 350,000
----------
Total: $4,798,769
Note: Stay Bonus Benefits are to be paid in accordance with the attached
Exhibit A and Section 3.1(d).
II. BASE SALARY PAYMENTS:
---------------------
(payable in accordance with Sections 3.1(b) and (c))
Officer Beneficiary: Base Salary:
-------------------- ------------
Jeffrey K. Hewson: $26,666.68
Jerold A. Hecktman: $11,083.33
Steven R. Schwarz: $15,416.66
Robert H. Cornell: $13,833.33
Otis H. Halleen: $12,416.66
Ted A. Rzeszuto: $11,250.00
Ergin Uskup: $14,583.34
SCHEDULE 3
----------
SCHEDULE OF BENEFITS
--------------------
III. TRANSITION SERVICES PAYMENT:
----------------------------
(payable in connection with Section 3.1(d)
Beneficiary:
------------
Jeffrey K. Hewson: $ 875,000.00
IV. SEVERANCE BENEFITS
------------------
Beneficiary: Monthly Amount: Maximum Amount:
------------ --------------- ---------------
Allen B. Kravis*: $ 4,866.42 $1,002,900
Ronald W. Weissman: $32,640.00 $ 163,200
Patrick Murray: $15,120.00 $ 75,600
Boyd E. Rice: $ 7,292.31 $ 94,800
Donald Bolke: $ 4,363.64 $ 144,000
Doyle Driskill: $ 7,792.00 $ 39,600
Clarence R. Martin: $12,000.00 $ 12,000
Peter E. McKinnon: $ 4,984.62 $ 64,800
----------
Total: $1,596,900
Note: Maximum amount is computed assuming payments commence in April, 1995
and will be adjusted if the Closing Date occurs in April or May, 1995.
*Allen B. Kravis's initial severance payment will be $774,268.42, with 47
monthly payments of $4,866.42 thereafter.
JOEL SPUNGIN
V. CONSULTING BENEFITS Amount:
--------------------------- -------
Closing Date - August, 1995 $ 183,333
payable in equal monthly installments
during such period
September 1, 1995 $2,276,209
payable in one lump sum
The remaining annual amounts are each
payable in equal monthly installments from Annual
September through August of each year Amount
------------------------------------------ ------
September 1, 1996 533,495
September 1, 1997 450,609
September 1, 1998 450,609
September 1, 1999 450,609
September 1, 2000 450,609
September 1, 2001 450,609
September 1, 2002 429,828
September 1, 2003 422,902
September 1, 2004 422,902
September 1, 2005 422,902
TOTAL CONSULTING BENEFITS $6,944,616
----------
SCHEDULE 3
----------
SCHEDULE OF BENEFITS
--------------------
VI. LIFE INSURANCE BENEFITS
-----------------------
Beneficiary:
------------
Joel D. Spungin:
Split-Dollar Life Insurance: $ 166,550
Group-Term Life Insurance (Conversion): $ 615,000
Survivor's Benefit: $ 400,000
Allen B. Kravis:
Split-Dollar Life Insurance: $ 60,448
Group-Term Life Insurance (Conversion): $ 80,000
----------
Total: $1,321,998
VII. TRANSITION BENEFITS
-------------------
A. Monthly Transition Benefits for the following Officer Medical
Beneficiaries and Retiree Medical Beneficiaries and their covered
Dependents:
Officer Medical Date of
Beneficiaries: Birth Transition Benefits
--------------- -------- -------------------
Monthly: Maximum:
-------- --------
Robert H. Cornell: $2,700 $48,600
Otis H. Halleen: $3,070 $55,260
Jerold A. Hecktman: $2,700 $48,600
Melvin L. Hecktman: $2,700 $48,600
Jeffrey K. Hewson: $3,070 $55,260
Allen B. Kravis: $3,070 $55,260
James Pribel: $3,070 $55,260
Steven R. Schwarz: $3,070 $55,260
Ted A. Rzeszuto: $2,700 $48,600
Ergin Uskup: $2,700 $48,600
SCHEDULE 3
----------
SCHEDULE OF BENEFITS
--------------------
Retiree Medical Date of
Beneficiary: Birth Transition Benefits
--------------- -------- -------------------
Monthly: Maximum:
-------- --------
Donald Bolke: $2,700 $ 48,600
Doyle Driskill: $2,700 $ 48,600
Patricia A. Beckman: 6/27/38 $2,310 $ 41,580
John V. Brandemarte: 1/15/36 $2,800 $ 50,400
Michael Collins: 4/11/32 $2,310 $ 41,580
John V. Dektas: 1/24/32 $2,310 $ 41,580
Ronald Gray: 5/6/32 $2,800 $ 50,400
Thomas E. Joyce: 2/3/31 $2,800 $ 50,400
Irene Kreishan: 8/31/36 $2,310 $ 41,580
Tobie E. Kuppe: 10/3/38 $2,310 $ 41,580
Paul Leimbeck: 6/26/35 $2,800 $ 50,400
Virginia Locascio: 5/31/32 $2,800 $ 50,400
George Martel: 11/21/31 $2,310 $ 41,580
Edwin Paulson: 6/1/32 $2,800 $ 50,400
Theodore R. Peterson: 5/12/39 $2,800 $ 50,400
Phyllis E. Walden: 5/22/33 $2,310 $ 41,580
Ronald W. Weissman: 7/31/37 $2,310 $ 41,580
Jean M. Wolf: 11/12/34 $2,800 $ 50,400
----------
Total: $1,352,340
SCHEDULE 3
----------
SCHEDULE OF BENEFITS
--------------------
Exhibit A
===============================================================================
Schedule of Stay Bonus Benefits
===============================================================================
Total
Officer Stay Bonus Initial Subsequent No. of
Beneficiary Payment Payment Payments Payments
- -------------------------------------------------------------------------------
Hewson $1,575,000 $647,150.00 $26,510.00 36
- -------------------------------------------------------------------------------
Hecktman 492,050 219,681.13 11,842.13 24
- -------------------------------------------------------------------------------
Schwarz 678,227 302,801.84 16,322.84 24
- -------------------------------------------------------------------------------
Cornell 602,985 269,209.00 14,512.00 24
- -------------------------------------------------------------------------------
Halleen 589,210 263,059.46 14,180.46 24
- -------------------------------------------------------------------------------
Rzeszuto 511,297 228,274.34 12,305.34 24
- -------------------------------------------------------------------------------
Uskup* 350,000 151,820.73 8.616.49 24
===============================================================================
*Ergin Uskup's Total Stay Bonus Benefits, Initial Payment and Subsequent
Payments shall be proportionately reduced by the amount of payments made to him
during his initial Term of Employment.
SCHEDULE 4
----------
START NOTICE
------------
Date
Trustee
__________________
__________________
Re: USI EMPLOYEE BENEFITS TRUST
START NOTICE
Beneficiary: ___________________________
Ladies and Gentlemen:
The undersigned is the above named Beneficiary (or his authorized legal
representative or the administrator or executor for the deceased Beneficiary
named above) of the USI Employee Benefits Trust created by that certain Trust
Agreement dated as of ________, 1995, between United Stationers Inc. (the
"Company") and American National Bank and Trust Company of Chicago, as Trustee.
Capitalized terms used but not defined in this Notice shall have the meaning
ascribed to such terms in the Beneficiary's Employment Agreement with the
Company.
_____[check one] The undersigned hereby represents and warrants that his Term
of Employment with the Company has terminated under such circumstances as
entitle him to commence receiving Stay Bonus Benefits. The Stay Bonus Start
Date is ___________________. Please commence distributions to me of my Stay
Bonus Benefits.
OR:
_____[check one] The undersigned hereby represents and warrants that either his
Term of Employment has been terminated for cause by the Company and he has
delivered his Notice Denying Cause or, after his having delivered a Notice of
Good Reason to the Company, he has voluntarily terminated the Term of Employment
either (i) before 30 days has elapsed following his delivery of such notice or
(ii) after a Notice Denying Good Reason has been delivered to him by the
Company. Enclosed are true and correct copies of my Notice Denying Cause or the
Company's Notice Denying Good Reason, as applicable.
As required by the Trust Agreement, please forward this Start Notice to the
Company.
Very Truly Yours,
________________________________________
Print Name or Title:________________________
If signing for a Beneficiary, indicate the nature of your legal authority:
SCHEDULE 4A
-----------
HEWSON START NOTICE
-------------------
Date
Trustee
__________________
__________________
Re: USI EMPLOYEE BENEFITS TRUST
START NOTICE
Beneficiary: Jeffrey K. Hewson
Ladies and Gentlemen:
The undersigned is the above named Beneficiary (or his authorized legal
representative or the administrator or executor for the deceased Beneficiary
named above) of the USI Employee Benefits Trust created by that certain Trust
Agreement dated as of ________, 1995, between United Stationers Inc. (the
"Company") and American National Bank and Trust Company of Chicago, as Trustee.
Capitalized terms used but not defined in this Notice shall have the meaning
ascribed to such terms in the Beneficiary's Employment Agreement with the
Company.
The undersigned hereby represents and warrants that all of the conditions
precedent to his eligibility for receipt of Stay Bonus Benefits have been met
and that he is entitled to receive his Stay Bonus Benefits. The Stay Bonus
Start Date is ___________________.
As required by the Trust Agreement, please forward this Start Notice to the
Company.
Very Truly Yours,
_______________________________________
Print Name or Title:________________________
If signing for a Beneficiary, indicate the nature of your legal authority:
SCHEDULE 5
----------
DISPUTE NOTICE
--------------
Date
Trustee
__________________
__________________
Re: USI EMPLOYEE BENEFITS TRUST
DISPUTE NOTICE
Beneficiary: ___________________________
Ladies and Gentlemen:
Reference is made to the USI Employee Benefits Trust created by that
certain Trust Agreement dated as of ________, 1995, between United Stationers
Inc. (the "Company") and American National Bank and Trust Company of Chicago, as
Trustee.
The Beneficiary named above has submitted a start notice to set the date
for commencing the distribution of Stay Bonus Benefits. The Company disputes
that such Beneficiary is entitled to receive Stay Bonus Benefits. Pursuant to
Section 3.1(c) of the Trust Agreement, please distribute three times the Base
Salary Payment to such Beneficiary pending settlement of this dispute [NOT
APPLICABLE TO HEWSON].
UNITED STATIONERS INC.
By:________________________________
SCHEDULE 6
----------
HEWSON STAY BONUS NOTICE
------------------------
Date
Trustee
__________________
__________________
Re: USI EMPLOYEE BENEFITS TRUST
MEDICAL CLAIM NOTICE
Beneficiary: Jeffrey K. Hewson
Ladies and Gentlemen:
The undersigned is the above named Beneficiary (or his authorized legal
representative or the administrator or executor for the deceased Beneficiary
named above) of the USI Employee Benefits Trust created by that certain Trust
Agreement dated as __________, 1995, between United Stationers Inc. (the
"Company") and ______________________ as Trustee.
This notice is submitted pursuant to Section 3.1(c)(v) of the Trust
Agreement.
Notwithstanding that the Company has submitted a Dispute Notice regarding
my claim for Stay Bonus Benefits, you are hereby notified that ny Stay Bonus
Start Date shall be ________________. Please make distributions to me of my
Stay Bonus Benefits commencing on the first day of the month following the month
in which this notice is served in accordance with such Section 3.1(c)(v).
Very Truly Yours,
________________________________________
Print Name or Title:________________________
If signing for a Beneficiary, indicate the nature of your legal authority:
SCHEDULE 7
----------
MEDICAL CLAIM NOTICE
--------------------
Date
Trustee
__________________
__________________
Re: USI EMPLOYEE BENEFITS TRUST
MEDICAL CLAIM NOTICE
Beneficiary: ___________________________
Ladies and Gentlemen:
The undersigned is the above named Beneficiary (or his authorized legal
representative or the administrator or executor for the deceased Beneficiary
named above) of the USI Employee Benefits Trust created by that certain Trust
Agreement dated as __________, 1995, between United Stationers Inc. and
______________________ as Trustee.
This notice is submitted pursuant to Section [3.1(f)] or [3.1(g)] of the
Trust Agreement.
[Attached are medical bills for which a distribution is requested to permit
the undersigned to make payment.]
[Attached is Evidence of Payment concerning Covered Medical Expenses for
which a distribution is requested to reimburse the undersigned].
The total amount of such medical bills or covered in the Evidence of
Payment is $_____________. Accordingly, please draw on the LOC in the such
amount and make a distribution to the undersigned in such amount.
Very Truly Yours,
________________________________________
Print Name or Title:________________________
If signing for a Beneficiary, indicate the nature of your legal authority:
SCHEDULE 8
----------
REQUEST FOR INDEMNITY
---------------------
Date
Trustee
__________________
__________________
Re: USI EMPLOYEE BENEFITS TRUST
REQUEST FOR INDEMNITY
Beneficiary: Joel D. Spungin
Ladies and Gentlemen:
The undersigned is the above named Beneficiary (or his authorized legal
representative or the administrator or executor for the deceased Beneficiary
named above) of the USI Employee Benefits Trust created by that certain Trust
Agreement dated as _________, 1995, between United Stationers Inc. and
______________________ as Trustee.
This notice and the accompanying tax opinion from _______________________,
serving as my accountant in this matter, constitutes the undersigned's Request
for Indemnity described in Section 3.2(a) of the Trust Agreement.
As required by the Trust Agreement, please forward a copy of the Request
for Indemnity to the Company.
Very Truly Yours,
________________________________________
Print Name or Title:________________________
If signing for a Beneficiary, indicate the nature of your legal authority:
SCHEDULE 9
----------
SPUNGIN INDEMNITY AGREEMENT
---------------------------
This Indemnity Agreement ("Agreement") is made this __ day of ___________,
______ between United Stationers Inc., a Delaware corporation [or its legal
successor] and United Stationers Supply Co., an Illinois corporation [or its
legal successor] (collectively, the "Company") and Joel D. Spungin ("Spungin"),
a resident of 2050 Partridge Lane, Highland Park, Illinois.
RECITALS
--------
A. Spungin was employed by the Company pursuant to a certain Amended and
Restated Employment and Consulting Agreement dated as of April 15, 1993 (the
"Spungin Agreement"). Spungin has become entitled to certain payments or
benefits pursuant to the terms of the Spungin Agreement or other plan,
arrangement or agreement with the Company, as set forth on Exhibit "A" hereto
(the "Payments"). The Internal Revenue Service has asserted that all or a
portion of the Payments are subject to the tax (the "Excise Tax") imposed by
Section 4999 [or any successor provision of the Internal Revenue Code of 1986,
as amended], as appears from a proposed assessment by the Internal Revenue
Service of the Excise Tax on part or all of the Payments, as described in the
notice attached as Exhibit "B" hereto.
B. The Company has agreed, pursuant to Section 16(b) of the Employment
Agreement, that if the Payments become subject to the Excise Tax, then the
Company shall pay to Spungin the "Gross-Up Payment" (as defined in Section 16(b)
of the Spungin Agreement) with respect to the Excise Tax.
C. The Company has elected under Section 16(d) of the Spungin Agreement
to undertake, at its sole expense, the defense and settlement of any proposed
assessment by the Internal Revenue Service of the Excise Tax on such Payments.
NOW THEREFORE, in consideration of the mutual covenants herein contained
and for other good and valuable consideration, the receipt and adequacy of which
are herein acknowledged by the parties hereto, Spungin and the Company agree as
follows:
1. Undertaking to Defend. The Company hereby undertakes in accordance
with Section 16(d) of the Spungin Agreement, the defense and settlement of the
proposed assessment by the Internal Revenue Service of the Excise Tax on the
Payments (the "Assessment"). The Company shall retain attorneys, accountants
and other professionals, at its sole cost and expense. At its sole cost and
expense, and in good faith and upon the advice of counsel and such other
professionals as the Company shall retain, the Company shall contest, defend,
litigate and settle the Assessment, either before or after the initiation of
litigation, at such time and upon such terms as it deems fair and reasonable,
provided that at least ten (10) days prior to any settlement, it gives written
notice to Spungin of its intention to settle. The Company shall reimburse
Spungin for the attorneys' fees and other expenses he incurs from time to time
in coordinating with the Company the defense of the proposed Assessment,
forthwith following presentation to the Company of itemized bills for said
attorneys' fees and other expenses.
2. Indemnification. The Company, pursuant to Section 16(d) of the
Spungin Agreement, shall protect, defend, indemnify and hold Spungin forever
harmless from and against
the Excise Tax on the Payments and the payments pursuant to this Agreement and
any federal, state and local income taxes (determined pursuant to the last
sentence of Recital paragraph B. upon payments pursuant to this Agreement and
any and all liabilities, demands, claims, actions, causes of action,
assessments, losses, costs, damages or expenses, including attorneys' and
accountants' fees in connection with any thereof, and any interest and penalties
sustained by Spungin as a result of or arising out of or by virtue of the
Company's undertaking.
3. Security. The Company has established with American National Bank and
Trust Company of Chicago, as trustee, the USI Employee Benefits Trust (the
"Trust") pursuant to a Trust Agreement dated as __________, 1995 (the "Trust
Agreement"). The Company acknowledges that in the event it shall fail to keep
and perform all of the obligations and duties set forth herein including,
without limitation, the indemnification and hold harmless and diligent legal
defense of Spungin as called for herein, then Spungin at any time thereafter
shall have the right to require the trustee of the Trust to draw on the letter
of credit held by such trustee pursuant to the provisions of the Trust Agreement
up to the amount of Four Million Dollars ($4,000,000) and to pay such amount to
Spungin.
4. Miscellaneous.
-------------
(a) This Agreement, the Spungin Agreement, as amended, and the Exhibits
attached hereto, contains the entire agreement between the parties in connection
with these transactions, and there are no oral or parol agreements,
representations or inducements existing between the parties relating to these
transactions which are not expressly set forth herein and covered hereby. This
Agreement may not be modified except by written agreement signed by all of the
parties hereto.
(b) This Agreement shall be binding upon and inure to the benefit of the
parties hereto, their respective heirs, legal representatives, administrators,
successors, successors in interest and assigns.
(c) This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois.
IN WITNESS WHEREOF, the Company and Spungin have executed this Indemnity
Agreement as of the date first above written.
------------------------------------
------------------------------------
SCHEDULE 10
-----------
NOTICE OF BREACH OF SPUNGIN INDEMNITY AGREEMENT
-----------------------------------------------
Date
Trustee
__________________
__________________
Re: USI EMPLOYEE BENEFITS TRUST
NOTICE OF BREACH
Beneficiary: Joel D. Spungin
Ladies and Gentlemen:
The undersigned is the above named Beneficiary (or his authorized legal
representative or the administrator or executor for the deceased Beneficiary
named above) of the USI Employee Benefits Trust created by that certain Trust
Agreement dated as ________, 1995, between United Stationers Inc. (the
"Company") and American National Bank and Trust Company of Chicago, as Trustee.
This constitutes the undersigned's notice permitted under Section 3.2(b) of
the Trust Agreement. The Internal Revenue Service has issued a notice stating
in effect that an Excise Tax is due and payable. Either (a) the Company has
declined to continue the defense of the assessment of the Excise Tax pursuant to
the Spungin Indemnity Agreement or (b) a final order by a court of competent
jurisdiction has been entered confirming the assessment (the time for appeal
therefrom having expired and no appeal having been perfected). Following the
occurrence of the events described above, the Company has failed to pay amounts
due under the Spungin Indemnity Agreement to the undersigned.
The undersigned states that the total amount due him in respect of
Parachute Indemnity Benefits is $______________________ and requests the Trustee
to draw on the LOC in such amount.
As required by the Trust Agreement, please forward this Notice to the
Company.
Very Truly Yours,
________________________________________
Print Name or Title:________________________
If signing for a Beneficiary, indicate the nature of your legal authority:
SCHEDULE 11
-----------
RESCISSION OF BREACH NOTICE RE SPUNGIN INDEMNITY AGREEMENT
----------------------------------------------------------
Date
Trustee
__________________
__________________
Re: USI EMPLOYEE BENEFITS TRUST
RESCISSION OF NOTICE OF BREACH
Beneficiary: Joel D. Spungin
Ladies and Gentlemen:
The undersigned is the above named Beneficiary (or his authorized legal
representative or the administrator or executor for the deceased Beneficiary
named above) of the USI Employee Benefits Trust created by that certain Trust
Agreement dated as of_______, 1995, between United Stationers Inc. (the
"Company") and American National Bank and Trust Company of Chicago, as Trustee.
This notice constitutes the undersigned's rescission of its notice dated
_______________ notifying you that the Company was in breach of its obligations
arising under the Spungin Indemnity Agreement.
As required by the Trust Agreement, please forward this Notice to the
Company.
Very Truly Yours,
________________________________________
Print Name or Title:________________________
If signing for a Beneficiary, indicate the nature of your legal authority:
SCHEDULE 12
-----------
REQUEST FOR INDEMNIFICATION OF DESIGNATED BENEFICIARIES
-------------------------------------------------------
Date
Trustee
__________________
__________________
Re: USI EMPLOYEE BENEFITS TRUST
REQUEST FOR INDEMNIFICATION OF DESIGNATED BENEFICIARIES
-------------------------------------------------------
Ladies and Gentlemen:
The undersigned are the Designated Beneficiaries of the USI Employee
Benefits Trust created by that certain Trust Agreement dated as _________, 1995,
between United Stationers Inc. (the "Company") and American National Bank and
Trust Company of Chicago, as Trustee.
This notice constitutes the notice permitted under Section 5.10(f) of the
Trust Agreement to advise you that the undersigned have incurred or are about to
incur liabilities concerning which the Company has failed to reimburse the
undersigned or provide indemnities with respect thereto in form and substance
acceptable to the undersigned. Accordingly, subject to the conditions set forth
below, the undersigned hereby instruct you to draw on the LOC or pay from
existing Trust Funds held by you the sum of $________________ to the undersigned
in the following manner:
Please immediately deliver this notice to the Company and, unless you are
in receipt of a signed waiver from the undersigned rescinding this notice within
thirty (30) days after the date hereof, you are to proceed to carry out the draw
on the LOC and/or payout from Trust Funds authorized above without further
notice or delay.
Very Truly Yours,
Designated Beneficiary: ____________________________
Designated Beneficiary: ____________________________
Designated Beneficiary: ____________________________