<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
UNITED STATIONERS INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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<PAGE>
UNITED STATIONERS INC.
2200 EAST GOLF ROAD [LOGO]
DES PLAINES, ILLINOIS 60016-1267
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
MAY 14, 1997
- ----------------------------
The regular Annual Meeting of Stockholders of United Stationers Inc. will be
held on Wednesday, May 14, 1997 at 2:00 p.m., Chicago time, at the offices of
the Company, 2200 East Golf Road, Des Plaines, Illinois, for the following
purposes:
1. To elect three directors to serve for a three-year term expiring in 2000;
2. To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on March 17, 1997 are entitled
to notice of, and to vote at this meeting, and at any adjournment thereof.
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1996 is enclosed.
WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE MEETING, PLEASE MARK,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors,
[PASTEUP SIG]
OTIS H. HALLEEN
SECRETARY
April 4, 1997
Des Plaines, Illinois
<PAGE>
UNITED STATIONERS INC.
Executive Offices [LOGO]
2200 EAST GOLF ROAD
DES PLAINES, ILLINOIS 60016-1267
- ---------------------------------------------------------
April 4, 1997
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 1997
- --------------------------
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of United Stationers Inc. (the "Company") for use at
the Annual Meeting of Stockholders to be held on May 14, 1997. This statement
and the accompanying form of proxy are being mailed to stockholders commencing
on or about April 4, 1997.
If the enclosed proxy is properly executed and returned to the Company in time
for the annual meeting, the shares represented thereby will be voted in
accordance with the instructions of the stockholder giving the proxy. A
stockholder giving a proxy may revoke it at any time prior to its exercise by
written notice of revocation to the Secretary of the Company or by the execution
of a proxy bearing a later date or by attending the meeting and voting in
person.
The cost of this solicitation of proxies will be paid by the Company. In
addition to the use of the mail, proxies may be solicited by personal interview,
telephone or telegram by directors, officers and employees of the Company,
without special compensation therefor. The Company will also reimburse banks,
brokers and other persons holding stock in their names, or in the names of their
nominees, for their expenses in sending proxy materials to their principals.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The close of business on March 17, 1997 has been fixed by the Board of Directors
as the record date for determining the stockholders entitled to vote at the
annual meeting. As of that date, there were 11,446,306 shares of the Company's
Common Stock, $0.10 par value, issued and outstanding (the "Common Stock"). Each
share of Common Stock is entitled to one vote. A majority of the outstanding
shares of Common Stock must be represented in person or by proxy.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information concerning the Common Stock
ownership as of March 17, 1997 of each person who is known to the Company to be
the beneficial owner of more than five percent of the Company's Common Stock:
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership Percent
- --------------------------------------------------------------------------------------------------- -------------------- -------
<S> <C> <C>
Wingate Partners, L.P. 6,045,823(1) 50.3%
750 N. St. Paul Street, Suite 1200
Dallas, Texas 75201
ASI Partners, L.P./Cumberland Capital Corporation 1,799,588(2) 15.7%
9441 LBJ Freeway, Suite 300
Ft. Worth, Texas 75243
Chase Manhattan Investment Holdings, L.P. 1,235,061(3) 9.7%
380 Madison Avenue
New York, NY 10017
Farallon Partners, LLC 817,508(4) 7.1%
One Maritime Plaza, Suite 1325
San Francisco, CA 94111
</TABLE>
- --------
(1) Includes (i) 4,268,577 shares owned by Wingate Partners, L.P. ("Wingate
Partners"), (ii) 1,117,374 shares owned by Wingate Partners II, L.P.
("Wingate II"), (iii) 74,094 shares owned by Wingate Affiliates, L.P.
("Affiliates") and (iv) 19,634 shares owned by Wingate Affiliates II, L.P.
("Affiliates II") (collectively, "Wingate"). Also includes warrants which
are exercisable for an aggregate of 566,144 shares of Common Stock (or
shares of non-voting common stock) at the holder's option. Edward Easterling
is a general partner of Wingate II and Affiliates II and thus may be deemed
the beneficial owner of 1,479,087 shares, or 12.5%. Other general partners
including Thomas W. Sturgess, James T. Callier, Jr., Frederick B. Hegi, Jr.
and James A. Johnson, and their beneficial interests, are shown on page 3 of
this Proxy Statement.
(2) Includes (i) 1,430,401 shares owned by ASI Partners, L.P. (ii) 156,304
shares owned by ASI Partners II, L.P. (iii) 40,084 shares owned by ASI
Partners III, L.P. (collectively, "ASI Partners"), and (iv) 154,125 shares
owned by Cumberland Capital Corporation ("Cumberland"). Cumberland serves as
the general partner of ASI Partners. Also includes warrants exercisable for
an aggregate of 18,674 shares, at the holder's option.
(3) As of March 17, 1997, no Common Stock is owned by such holder. Includes (i)
758,994 shares of nonvoting common stock and (ii) warrants exercisable for
an aggregate of 476,067 shares of Common Stock (or shares of nonvoting
common stock) at the holder's option. Subject to certain restrictions, the
nonvoting common stock is convertible at any time at the option of the
holder into shares of Common Stock.
(4) Includes 163,413 shares owned indirectly by Farallon Capital Management, LLC
as investment advisor to certain discretionary accounts and 654,095 shares
owned indirectly by Farallon Partners, LLC as general partner of the
following partnerships: (i) 294,428 shares owned by Farallon Capital
Partners, L.P., (ii) 223,366 shares owned by Farallon Capital Institutional
2
<PAGE>
Partners, L.P., (iii) 70,232 shares owned by Farallon Capital Institutional
Partners II, L.P., (iv) 26,502 shares owned by Farallon Capital
Institutional Partners III, L.P., and (v) 39,567 shares owned by Tinicum
Partners, L.P.
VOTING TRUST
A total of 8,478,927 shares of the Common Stock, including the shares owned by
Wingate, ASI Partners/Cumberland, Good Capital Co., Inc. and other shares, are
held in a voting trust (the "Voting Trust"), pursuant to a Voting Trust
Agreement dated as of January 31, 1992, as amended March 30, 1995, the trustees
of which are Thomas W. Sturgess, Frederick B. Hegi, Jr., James A. Johnson,
Daniel J. Good and Gary G. Miller. The trustees of the Voting Trust hold all
voting power to vote the shares held in the Voting Trust and may act by a
majority vote of the trustees. The trustees agree to vote all shares in trust to
elect a board of directors of the Company with (1) at least one representative
designated by Good Capital Co., Inc., (2) at least one representative designated
by ASI Partners, (3) at least one representative designated by Messrs. Michael
D. Rowsey, Robert D. Eberspacher, Daniel J. Schleppe and Lawrence E. Miller
(each of whom is an employee of the Company's subsidiary), and (4) such number
of directors designated by Wingate Partners as will represent a majority of the
total number of directors.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the Company's Common
Stock by each of the directors and nominees, each of the executive officers
named in the Summary Compensation Table, and all of the Company's directors and
executive officers as a group as of March 17, 1997:
<TABLE>
<CAPTION>
Percent of
Common Stock
Common Stock Exercisable Exercisable Outstanding
Name Beneficially Owned Options (1) Warrants (1) (2)
- ---------------------------------------- ------------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
James T. Callier, Jr. 4,342,671(3) -- 226,450(3) 39.1%
Daniel J. Good 198,287(4) -- 59,656(4) 2.2%
Frederick B. Hegi, Jr. 5,479,679(5) -- 566,144(5) 50.3%
Jeffrey K. Hewson 2,076 9,765(6) -- *
James A. Johnson(9) 1,156,180(7) -- 339,694(7) 12.7%
Gary G. Miller(8) -- -- -- --
Michael D. Rowsey(9) 84,557 214,506 -- 2.6%
Joel D. Spungin 20,320 -- -- *
Thomas W. Sturgess 4,342,671(3) 160,000 226,450(3) 40.0%
Daniel H. Bushell 19,538 209,199 -- 2.0%
Steven R. Schwarz 628 120,000 -- 1.0%
Ergin Uskup 126 60,000 -- *
All current directors and executive
officers as a group (16 persons) 5,825,420(10) 943,470 625,800 56.8%
</TABLE>
- --------
*Less than 1%
3
<PAGE>
(1) Options and warrants exercisable within 60 days of the date of this Proxy
Statement. Except for Mr. Hewson's options, exercisability of options is
subject to certain conditions, the occurrence of which is assumed for this
purpose, including the occurrence of an Event - as described on page 11 of
this Proxy Statement, although no such Event is certain to occur within said
60 days.
(2) For purposes of calculating the beneficial ownership percentage of each such
stockholder, it was assumed that such stockholder exercised all options,
conversion rights and warrants by which the stockholder had the right to
acquire shares of Common Stock, within 60 days of the date of this Proxy
Statement.
(3) Includes 4,268,577 shares owned by Wingate Partners, 74,094 shares owned by
Affiliates, 222,587 warrants held by Wingate Partners and 3,863 warrants
held by Affiliates.
(4) Includes 36,173 shares of Common Stock and 16,852 warrants held by trusts
for which Mr. Good serves as trustee. Does not include 363,899 shares owned
by Good Capital Co., Inc., of which Mr. Good is Chairman and a controlling
stockholder; accordingly Mr. Good may be deemed to beneficially own the
shares owned of record by Good Capital Co., Inc.
(5) Includes all 5,479,679 shares beneficially owned by Wingate and 566,144
warrants held by Wingate. Messrs. Callier, Hegi, and Sturgess serve as
general partners of Wingate Partners and various Wingate entities. Does not
include any of the 8,478,927 shares held in the Voting Trust, of which
Messrs. Sturgess, Hegi and Johnson are trustees, other than the 5,479,679
shares beneficially owned by Wingate.
(6) Does not include 4,883 shares issuable upon exercise of options that are not
exercisable within 60 days.
(7) Includes 1,117,375 shares owned by Wingate II, 19,634 shares owned by
Affiliates II, and 19,171 shares owned by Mr. Johnson. Warrants include
333,779 owned by Wingate II and 5,915 owned by Affiliates II.
(8) Does not include shares owned by ASI Partners or Cumberland. Mr. Miller is
President and a stockholder of Cumberland and, accordingly, may be deemed to
beneficially own the shares owned of record by ASI Partners and Cumberland.
(9) Includes shares owned directly and by an individual retirement account for
the sole benefit of such individual.
(10) Of the 5,825,420 shares shown as owned by all current directors and
officers as a group, 19,550 shares are held with sole voting and investment
power and 5,805,870 shares are held with shared voting and investment power,
including 5,801,232 of the shares in the Voting Trust. Does not include any
of the 2,677,695 shares in the Voting Trust held for the benefit of persons
other than current directors and executive officers. Does not include shares
owned by ASI Partners/Cumberland, or Good Capital Co., Inc.
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation provides that the Board of
Directors shall be divided into three classes, each class as nearly equal in
number as possible, and each term consisting of three years.
4
<PAGE>
The Board of Directors presently consists of nine members, in three classes. Mr.
Thomas W. Sturgess has been a Class II Director, but is not a candidate for
re-election at the Annual Meeting. Therefore, Mr. Gary G. Miller, who had been a
Class III Director, resigned his position as a Class III Director and was
reappointed as a Class II Director. The three Class II Directors have terms
expiring at, and are nominees for election, at the May 14, 1997 Annual Meeting
of Stockholders. The persons named as proxies intend to vote for the election of
the nominees as directors, unless such authority is withheld by the stockholder
giving the proxy. If any nominee becomes unavailable for election for any
reason, the shares represented by the proxies will be voted for any substitute
nominee designated by the Board of Directors. The nominees and certain
information furnished or confirmed by them are as follows:
FREDERICK B. HEGI, JR. (53)
Since November 18, 1996, Mr. Hegi has served as interim Chairman of the Board,
President and Chief Executive Officer of the Company. He became a director of
the Company on March 30, 1995, upon consummation of the merger (the "Merger")
between the Company and Associated Holdings, Inc. ("Associated"). Mr. Hegi is a
general partner of various Wingate entities, including the indirect general
partner of each of Wingate Partners and Wingate II. He is President of Valley
View Capital Corporation, a private investment firm. He also serves as Chairman
of the Executive Committee of the Board of LoomisFargo & Company ("Loomis"), an
armored car service company, Chairman of ITCO Holding Company, Inc., the parent
corporation of ITCO Tire Company, Chairman of Tahoka First Bancorp, Inc. a bank
holding company, and Cedar Creek Bancshares, Inc., a bank holding company, and a
director of Lone Star Technologies, Inc., a diversified company engaged in the
manufacture of steel pipe, Cattle Resources, Inc., a manufacturer of animal
feeds and operator of commercial cattle feedlots, Redman Building Products,
Inc., ("Redman"), a manufacturer and distributor of aluminum and vinyl windows.
GARY G. MILLER (46)
Mr. Miller is President of Cumberland Capital Corporation, a private investment
firm. He became a director upon consummation of the Merger on March 30, 1995.
Mr. Miller is also Chairman of the Board of CFData Corp., a nationwide provider
of check collection and check verification services, and Fore Star Golf, Inc.,
which was formed in 1993 to own and operate golf course facilities.
MICHAEL D. ROWSEY (44)
Mr. Rowsey is Executive Vice President of the Company since the Merger in 1995.
Prior to 1995 he was President and a director of Associated Stationers, Inc.
since 1992. From 1979 to January 1992, Mr. Rowsey served in various capacities
with Boise Cascade Office Products Corporation, most recently as the North
Regional Manager.
5
<PAGE>
OTHER DIRECTORS
The other directors, whose terms of office as a director will continue after the
Annual Meeting, and certain information concerning them are as follows:
CLASS III DIRECTORS -- CONTINUING IN OFFICE UNTIL MAY 1998*
JAMES T. CALLIER, JR. (62), director since 1995, is a general partner of Callier
Interests, an investment firm, and is President of Callier Consulting, Inc., an
operating management firm. He is an indirect general partner of Wingate
Partners, and an advisory director of Wingate II. He serves as Chairman of the
Board of Century Products Company ("Century Products"), a manufacturer and
distributor of baby seats and other juvenile products, and as a director of
Redman and of Loomis.
JOEL D. SPUNGIN (59), director since 1981, was Chairman of the Board of
Directors and Chief Executive Officer of the Company since 1988 until March
1995, and from October 1989 until April 1991, he was also President of the
Company. Mr. Spungin serves as a general partner of DMS Enterprises, L.P., a
management advisory and investment partnership, and as a director of AAR Corp.,
an aviation and aerospace company, and Home Products International, Inc., a
manufacturer of home improvement products.
- --------
* The vacancy in Class III resulting from the reassignment of Mr. Miller to
Class II is intended to be filled by appointment of the Directors when an
appropriate candidate is selected.
CLASS I DIRECTORS -- CONTINUING IN OFFICE UNTIL MAY 1999
DANIEL J. GOOD (57), director since 1995, is Chairman of Good Capital Co., Inc.,
an investment firm in Lake Forest, Illinois. Until June 1995, Mr. Good was Vice
Chairman of Golden Cat Corp., the largest producer of cat litter in the United
States, and prior thereto he was Managing Director of Merchant Banking for
Shearson Lehman Bros. and President of A.G. Becker Paribas, Inc.
JEFFREY K. HEWSON (53), has been a director since 1991. Mr. Hewson is President
and Chief Executive Officer of Beckley Cardy Group, a distributor of school
supplies to the educational market. Mr. Hewson served as President and Chief
Executive Officer of the Company from consummation of the Merger until May 31,
1995, and as an executive consultant through August 31, 1995. Prior thereto, he
was President and Chief Operating Officer of the Company since April 1991. He
had been Executive Vice President of the Company since March 1990. Prior to that
he had been President of ACCO International's U.S. Division since 1989 and
President of its Canadian Division since 1987. ACCO International is a
manufacturer of traditional office products and a subsidiary of American Brands,
Inc., which is a global consumer products holding company.
JAMES A. JOHNSON (43), director since 1995, is a general partner of various
Wingate entities, including the indirect general partner of Wingate II. From
1980 until he joined Wingate Partners in 1990, Mr. Johnson served as a Principal
of Booz-Allen & Hamilton, an international management consulting firm. Mr.
Johnson currently serves as a director of Century Products and as Chairman of
Redman.
CONCERNING THE BOARD OF DIRECTORS AND BOARD COMMITTEES
During the fiscal year ended December 31, 1996, the Board of Directors held nine
meetings and took action by unanimous written consent in lieu of meeting on nine
occasions. Each director
6
<PAGE>
attended more than 75% of all of (1) the meetings of the Board of Directors held
during the last full fiscal year and (2) the meetings held by all committees of
the board on which he served (during the periods that he served) during the last
fiscal year.
Except for Messrs. Hewson and Spungin, directors who are not officers or
employees of the Company received no additional compensation for their services
as a director. On November 29, 1995 the Company granted options exercisable for
an aggregate of 14,648 shares of Common Stock at an exercise price of $5.12 per
share to Jeffrey K. Hewson, and a restricted stock award of 9,678 shares of
Common Stock (which will vest on November 29, 1997) to Joel D. Spungin, in
consideration for their services on the Board of Directors in lieu of directors'
compensation for a three-year period. Two-thirds of Mr. Hewson's options are
currently exercisable, and the remainder will become exercisable on November 29,
1997. Directors are reimbursed for travel expenses incurred in attending
meetings.
The Board of Directors has an Executive Committee, an Audit Committee, a
Compensation Committee and a Nominating Committee.
The Executive Committee was established by the directors on November 13, 1996.
Its members are Frederick B. Hegi, Jr. (Chairman), Daniel J. Good, Gary G.
Miller and Joel D. Spungin. The Executive Committee has the authority to act
upon most corporate matters that require Board approval, except that the
Committee shall not exercise any of the functions performed by the Audit
Committee or the Compensation Committee. The Committee met two times during the
year 1996.
During the fiscal year ended December 31, 1996, the Audit Committee consisted of
Daniel J. Good (Chairman) and Gary G. Miller. The Audit Committee met three
times during the last fiscal year. The functions of the Audit Committee are to
recommend the independent auditors to the Board of Directors; review the scope
of the independent auditors' examination; review the compensation of the
independent auditors; consider the results of the independent auditors' review
of internal accounting controls and suggestions for improvements; discuss
matters of concern to the independent auditors resulting from the audit; review
changes in accounting principles in the financial statements; and review
nonauditing services performed for the Company by the independent auditors.
During the period from January through November 1996, the Compensation Committee
consisted of James T. Callier, Jr. and Gary G. Miller. As of December 17, 1996
the Compensation Committee was changed to consist of Gary G. Miller (Chairman),
Frederick B. Hegi, Jr., James A. Johnson and Jeffrey K. Hewson. The Compensation
Committee met four times during the last fiscal year and took action two times
by written consents of the members in lieu of meeting. The Compensation
Committee reviews and makes recommendations upon proposals by management as to
compensation, bonuses, employment agreements and other benefits, and policies
respecting such matters, for the officers of the Company and its subsidiaries.
The members of the Compensation Committee also serve as the Administrative
Committee for the Company's Management Equity Plan (the "MEP Plan"), and as the
Administrative Committee for the Management Incentive Plan.
7
<PAGE>
The Nominating Committee was established on January 18, 1997. The committee
makes recommendations to the Board regarding nominees for election as members of
the Board of Directors of the Company. The Committee will consider written
recommendations from stockholders regarding potential nominees for election as
directors. Any stockholder wishing to submit recommendations for directors of
the Company for the next annual meeting in 1998 should send a signed letter of
recommendation to United Stationers Inc., 2200 East Golf Road, Des Plaines, IL
60016-1267, Attention: Otis H. Halleen, Secretary. Recommendation letters should
state the full name and address of each proposed nominee, a brief resume, a
brief biographical history including past and current directorships and
employment, and the reasons for recommendation. Nominations for election at the
Company's Annual Meeting to be held in May 1998 must be submitted no later than
January 15, 1998. The members of the Nominating Committee are Frederick B. Hegi,
Jr. (Chairman), Daniel J. Good and Gary G. Miller.
EXECUTIVE COMPENSATION
The table and notes below show the compensation paid to each person who has
served as the Chief Executive Officer of the Company during 1996 and the four
other highest-paid officers of the Company who were serving as executive
officers on December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term Compensation
Annual Compensation Awards
Fiscal Other Restricted
Year annual stock LTIP All other
Name and principal ended Salary (1) Bonus compensation Award(s) Options payouts compensation
position 12/31 ($) ($) ($)(2) ($) (#) ($) (3) ($) (4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Frederick B. Hegi, 1996 (5)
Jr.
CHAIRMAN OF THE 1995 (8)
BOARD,
PRESIDENT AND CEO 1994 (8)
Thomas W. Sturgess 1996 (7) 495,000 376,200 240,000 10) 6,324
CHAIRMAN OF THE 1995 (6) 0
BOARD,
PRESIDENT AND CEO 1994 (8) 0
Daniel H. Bushell 1996 255,000 142,620 51,343 3,677
EXEC. VICE PRESIDENT 1995 213,076 249,569 120,000 2,579
AND CFO 1994 (8) 0
Michael D. Rowsey 1996 255,000 142,620 50,000 4,034
EXEC. VICE PRESIDENT 1995 243,502 264,197 120,000 2,945
1994 (8) 0
Steven R. Schwarz 1996 255,000 745,605 (9) 0 4,108
EXEC. VICE PRESIDENT 1995 205,608 205,536 120,000 54,525 164,921
1994 185,000 15,818 14,000 9,677 945
Ergin Uskup 1996 188,370 275,688 (9) 0 8,007
VICE PRESIDENT, MIS 1995 173,542 127,880 60,000 24,500 124,648
AND
CIO 1994 153,574 27,500 16,000 4,194
</TABLE>
8
<PAGE>
- ---------
(1) Includes compensation amounts earned during the fiscal year but deferred
pursuant to Section 401(k) of the Internal Revenue Code under the Company's
401(k) Savings Plan.
(2) No amounts of "Other annual compensation" were paid to any named executive
officer except for perquisites and other personal benefits which for each
executive officer did not exceed the lesser of $50,000 or 10% of such
individual's salary plus bonus.
(3) Includes payments from the Company's former Executive Bonus Plan of awards
earned in 1995 and prior years payable in annual installments. The 1995
distribution was a final distribution as the Plan was terminated just prior
to the Merger.
(4) Includes:
(a) Company contributions to the Company's 401(k) Savings Plan for Mr.
Sturgess ($2,375); Mr. Bushell ($2,375); Mr. Rowsey ($2,375); Mr. Schwarz
($2,368) and Mr. Uskup ($2,375);
(b) Premiums paid during 1996 for Split Dollar Life, Group Life and
Accidental Death insurance policies for Mr. Sturgess ($3,949); Mr.
Bushell ($1,302); Mr. Rowsey ($1,659) Mr. Schwarz ($1,740) and Mr. Uskup
($5,632);
(5) Mr. Hegi became Chairman, President and CEO on November 18, 1996, Mr. Hegi
receives compensation from Wingate Partners, but no compensation from the
Company.
(6) Mr. Sturgess became Chairman of the Board on March 30, 1995, and President
and CEO on May 31, 1995. For calendar year 1995, Mr. Sturgess received fees
from Wingate Partners, but no compensation from the Company.
(7) Mr. Sturgess resigned his position as Chairman, President and CEO effective
November 18, 1996; he continues as a director until the Annual Meeting but
is not a candidate for re-election.
(8) Not employed by or an officer of the Company during the indicated year.
(9) Includes special stay bonuses earned during 1996 by Messrs. Schwarz
($602,985) and Uskup ($175,000) pursuant to employment agreements.
(10) Options for 360,000 shares were granted to Mr. Sturgess on January 1, 1996.
Effective November 18, 1996, options for 120,000 shares were canceled.
9
<PAGE>
OPTION GRANTS DURING LAST FISCAL YEAR
Options were granted to certain of the executives named in the Summary
Compensation Table on October 2, 1995, subject to stockholder approval of
certain amendments to the Management Equity Plan ("MEP Plan".) The Plan
amendments were approved by the stockholders on May 8, 1996. Options were
granted during the year ended December 31, 1996 to certain of the officers named
in the Summary Compensation Table. The following table contains information
concerning such grants.
OPTION GRANTS DURING LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value at Assumed
Options Percent of Total Annual Rates of Stock Price Appreciation
Granted Options Granted Exercise or for Option Term (1)(6)
(Number of to Employees in Base Price Expiration -------------------------------------------
Name Shares) fiscal year (3) (per Share) Date (7) 0% (5) 5% 10%
- ------------------ ----------- ----------------- ------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas W.
Sturgess(1) 360,000 55.3% $ 14.375(4) 9/26/02 $ 2,440,000 $ 1,567,868 $ 3,838,108
Michael D.
Rowsey(2) 50,000 7.7% 1.45 1/31/02 1,077,500 1,468,610 1,964,795
Daniel H.
Bushell(2) 51,343 7.9% 1.45 1/31/02 1,106,442 1,508,057 2,017,570
</TABLE>
- --------
(1) Options for 360,000 shares were granted to Mr. Sturgess on January 1, 1996.
Effective November 18, 1996 options for 120,000 shares exercisable at $5.12
per share were canceled, and as of March 31, 1997 options for 80,000 shares
expired. Accordingly, the potential value realizable for Mr. Sturgess'
options has been calculated based on only the remaining 160,000 options.
(2) Options were granted under the MEP Plan pursuant to an Executive Stock
Purchase Agreement dated January 31, 1992, as amended March 30, 1995 between
the officer and the Company.
(3) Based on 650,772 options granted to employees during the year.
(4) Exercise price increases $0.625 per quarter on the first day of each
calendar quarter. Exercise price is shown as of December 31, 1996. Exercise
price as of April 1, 1997 is $15.625 per share.
(5) The amounts under the column labeled "0%" reflect the difference between the
exercise price and the market price at the date of grant. The amounts are
included pursuant to certain rules of the Securities and Exchange
Commission. Because the options were not then exercisable, the amounts shown
were not in fact realizable.
(6) The amounts under the columns labeled "5%" and "10%" are included pursuant
to certain rules of the Securities and Exchange Commission, and are not
intended to forecast future appreciation, if any, in the price of the
shares. The amounts are calculated assuming the options will expire at their
final expiration date rather than earlier, and assumes in the case of
Sturgess' options an exercise price of $28.75, the exercise price at the
expiration date. The actual value of the options, as well as the expiration
date, will vary in accordance with the market price of the shares and the
occurrence of an Event.
(7) The expiration date is the earlier of three years after an Event (as defined
on page 11) or the date shown.
10
<PAGE>
The following table contains information concerning option exercises during the
Company's year ended December 31, 1996 by each of the named executive officers
and the fiscal year end values:
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised in-the-money Options at
Shares Options at Fiscal Year End Fiscal Year End (1)
Acquired on Value --------------------------- -------------------------
Name Exercise Realized Exercisable (2) Unexercisable Exercisable (2) Unexercisable
- --------------------------------- --------------- -------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Thomas W. Sturgess 0 $0 0 160,000 0 $ 819,200
Michael D. Rowsey 0 0 0 214,506 0 2,459,133
Daniel H. Bushell 0 0 0 209,199 0 2,363,342
Steven R. Schwarz 0 0 0 120,000 0 753,300
Ergin Uskup 0 0 0 60,000 0 376,650
</TABLE>
- --------
(1) The values given are based on the closing price of the Shares on December
31, 1996, which was $19.50, less the applicable exercise price, before
payment of applicable taxes.
(2) DEFINITION OF AN "EVENT." Options granted under the MEP Plan are not
exercisable until after the occurrence of a transaction or group of
transactions (an "Event") that causes Wingate and its affiliates to realize
a return of liquid proceeds at least equal to their common stock investment
in the Company. No shares acquired pursuant to exercise of such options may
be sold prior to six months after the Event. An Event has not occurred as of
the date of this Proxy Statement.
ONE-TIME MERGER INTEGRATION BONUS PLAN. A special incentive plan was adopted to
reward key management personnel for accomplishing specific integration
objectives of the Merger. The objectives included achieving, by September 30,
1996, specified annualized earnings before interest, taxes, depreciation and
amortization ("EBITDA") and specified debt reduction goals. Based on the
Company's performance, a pool of $3.9 million was shared among 175 eligible
participants. The following executives named in the Summary Compensation Table
on page 8 each received $60,000: Messrs. Bushell, Rowsey, Schwarz and Uskup,
which amounts are included in the bonuses shown in the Summary Compensation
Table on page 8.
MANAGEMENT INCENTIVE PLAN FOR 1996. The Management Incentive Plan for 1996
provided incentive compensation opportunities based on attainment of
pre-approved Company, region and division goals, all measured by EBITDA
performance. Participants, which include key management employees, may be given
incentive awards stated as a percentage of base salary and the attainment of
predetermined goals. Participants included, among others, Messrs. Sturgess,
Bushell, Rowsey, Schwarz and Uskup. The bonuses received by each of the named
officers are reflected in the Summary Compensation Table on page 8.
MANAGEMENT INCENTIVE PLAN FOR 1997. The Management Incentive Plan for 1997
provides incentive opportunities based on attainment of pre-approved Company,
region and division goals, all measured by earnings per share performance.
Participants, which include key management employees, may earn incentive awards
stated as a percentage of base salary and the attainment of predetermined goals.
Participants include, among others, Messrs. Bushell, Rowsey, Schwarz and Uskup.
11
<PAGE>
SPECIAL BONUS PLAN. In December 1996, the Board of Directors adopted a Special
Bonus Plan to encourage and reward key management participants for creating the
operational foundation that will result in an Event. There are 177 individuals
participating in the Plan. Specified cash awards will be paid on the first and
second anniversaries of an Event to participants who are full-time employees of
the Company at the time the awards are paid.
EMPLOYMENT AGREEMENTS
Prior to the Merger, the Company, as settlor, entered into an irrevocable trust
agreement (the "Benefits Trust Agreement") with American National Bank and Trust
Company of Chicago, as trustee (the "Benefits Trustee"). The Benefits Trust
Agreement secures the payment of all amounts owed to certain employees under
their then existing employment contracts, certain obligations of the Company to
provide post-employment medical benefits, certain severance benefits to former
employees, and related costs. Under the terms of the Benefits Trust Agreement
and the Merger Agreement, the Company has caused an irrevocable letter of credit
in the initial amount of $24.0 million to be furnished to the Benefits Trustee
by The Chase Manhattan Bank. Each compensation or benefit payment by the
Benefits Trustee reduces the amount of the letter of credit. To the extent that
the Company makes payments of compensation and benefits covered by the Benefits
Trust Agreement or otherwise satisfies its obligation to these current and
former employees (or, in some cases, their eligible dependents or surviving
beneficiaries) and obtains a waiver from such persons, the letter of credit is
being and will be reduced as provided in such waiver.
Payments from the Benefits Trust have been and/or are being made to the
following beneficiaries thereof, among others: Joel D. Spungin, the Chairman and
Chief Executive Officer of the Company prior to the Merger; Jeffrey K. Hewson,
the President and Chief Operating Officer of the Company prior to the Merger,
and the Chief Executive Officer from the time of the Merger until May 1995;
Steven R. Schwarz, Ergin Uskup and two other current executive officers of the
Company.
STURGESS EMPLOYMENT AGREEMENT. Effective January 1, 1996, an employment
agreement was entered into between the Company and Thomas W. Sturgess, to serve
as Chairman of the Board, President and Chief Executive Officer. The agreement
provides for a base salary of $495,000, plus participation in all bonus, stock
option and other benefit plans generally available to executive officers of the
Company. The agreement is for a three-year term, until December 31, 1998, and
was renewable for one-year terms thereafter unless terminated by either party.
Upon termination of the agreement, unless for cause or voluntarily by Sturgess,
Sturgess shall be entitled to receive an amount equal to two times his base
salary plus bonuses. The agreement also provides for the grant of options to
purchase 360,000 shares of Common Stock which options were granted effective as
of January 1, 1996, and are described more fully on page 10 of this Proxy
Statement.
Pursuant to an agreement dated November 18, 1996 between Mr. Sturgess and the
Company, Mr. Sturgess resigned his positions with the Company and subsidiaries
(except for his position as a director of the Company), his salary and bonus
participation continued through December 31, 1996, and he continues in the
Company's medical plan until December 31, 1999. Options for Mr. Sturgess to
purchase 120,000 shares of common stock were canceled effective November 18,
1996, and options to purchase an additional 80,000 shares terminated effective
March 31, 1997. Options to purchase 160,000 shares, at an exercise price which
is currently $15.625 per share, and which increases by $0.625 per share each
quarter, become exercisable upon the occurrence of an "Event" as described on
page 11, and will expire, if not sooner exercised, on the earlier of three years
after an Event or September 26, 2002.
12
<PAGE>
OTHER EXECUTIVE EMPLOYMENT CONTRACTS. Effective October 1, 1995, new employment
agreements were made with each of Messrs. Rowsey, Bushell, Schwarz, Robert H.
Cornell and Albert Shaw. Effective November 1, 1995 a new employment agreement
was made with Otis H. Halleen. Each of the agreements with Rowsey, Bushell and
Schwarz provides for a two-year term of employment, until September 30, 1997;
the agreements with Cornell, Shaw and Halleen provide for a one-year term of
employment. Each agreement is renewable for additional one-year terms unless
terminated by either party. The agreements provide for a base salary of not less
than the amounts specified in each agreement, plus participation in all bonus,
stock option and other benefit plans generally available to executive officers
of the Company. The officer may terminate employment for good reason (reduction
of salary, exclusion from benefit plans, material reduction in title or duties,
relocation outside the Chicago metropolitan area, or breach by the Company of
any provisions of the agreement). In the event of termination for good reason,
Bushell, Rowsey and Schwarz shall be entitled to two times their respective base
salary plus bonuses; and Cornell, Shaw and Halleen shall be entitled to an
amount equal to their respective base salary plus bonuses. If the agreement is
not renewed by the Company upon its expiration, the officer shall be entitled to
a severance amount equal to his base salary plus bonuses. Each agreement also
contains provisions restricting the disclosure of proprietary materials and
confidential information, and restricts the officer from being employed by or
consulting with any competing firm during the employment term and for two years
thereafter. Because Schwarz and Cornell remained employed through March 30, 1996
they became entitled to receive certain stay bonuses provided in their prior
employment agreements.
Ergin Uskup has an employment agreement dated as of February 13, 1995 which was
intended, among other things, to encourage Mr. Uskup not to resign for the
one-year period following the Merger. Upon completion of the one-year period
following the Merger, Mr. Uskup became entitled to payment of a stay bonus in
the amount of $175,000, payable in 12 monthly installments. Upon completion of
his employment, Mr. Uskup will be entitled to a severance payment equal to one
year's salary, payable in 12 monthly installments.
Shortly before the Merger, the Company adopted a severance plan for officers of
the Company or its subsidiary who do not have employment contracts. The
severance plan provides a severance payment of one year's base salary if an
officer is terminated without cause.
401(K) SAVINGS PLAN
The Company has a 401(k) Savings Plan (the "Profit Sharing Plan") in which all
salaried employees and certain hourly paid employees of the Company and its
subsidiaries are eligible to participate following completion of six consecutive
months of employment. The Profit Sharing Plan permits employees to have
contributions made as 401(k) salary deferrals on their behalf, or as voluntary
after-tax contributions, or contributions matching employee salary deferral
contributions at the discretion of the Board of Directors. The Company has no
present intention to make Company contributions other than matching
contributions. The Company is currently contributing $0.25 for each $1.00 of
employee salary deferral contributions up to 6% of eligible wages. For the year
ended December 31, 1996, the Company paid $923,034 in matching contributions.
PENSION PLANS
The Company and its subsidiary maintain noncontributory pension plans covering
substantially all employees. Employees are eligible to participate following the
conclusion of twelve consecutive months of employment and the attainment of age
21. Prior to the Merger, Associated did not have a pension plan. Former
Associated employees entered the Pension Plan on July 1, 1996. The
13
<PAGE>
Pension Plan provides for annual retirement benefits at age 65 equal to 1%
percent of an employee's career-average annual compensation (as reported to the
Internal Revenue Service) multiplied by the number of years of credited service
up to a maximum of 40 years; however, an employee's annual compensation for each
year of service prior to September 1989, is deemed to be the compensation earned
by such employee during the twelve month period ending on August 31, 1989.
Employees' pension rights fully vest after five years of service. These benefits
are in addition to normal Social Security retirement benefits. Alternative
benefit options of early retirement, joint and survivor annuity, and disability
are also available. All such options are of actuarially equivalent value to the
basic pension. The normal retirement age under this plan is 65. The Pension Plan
contribution accrued for the fiscal year ended August 31, 1996 was $301,172.
In connection with the Merger, the Pension Plan was amended to provide that the
actuarial factors employed by the plan may not be adjusted in a manner that
would reduce lump sum benefits payable under the Pension Plan. The Company's
operating subsidiary also maintains a number of retirement benefit plans for its
employees who are covered under collective bargaining agreements.
The following table sets forth the estimated annual benefits upon retirement at
age 65 under the pension plan to the executive officers individually named in
the Summary Compensation Table on page 8 (calculated on the basis of estimated
years of service at retirement age and current levels of compensation, assuming
5.5% compounded annual increases):
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION
NAME OF PARTICIPANT AT RETIREMENT
- ------------------------------------------------------------------ --------------------------
<S> <C>
Frederick B. Hegi, Jr.* 0
Thomas W. Sturgess* 0
Daniel H. Bushell** $ 50,352
Michael D. Rowsey** $ 53,675
Steven R. Schwarz $ 78,953
Ergin Uskup $ 13,964
</TABLE>
- --------
*Messrs. Hegi and Sturgess are not eligible to participate in the Pension Plan.
**Messrs. Bushell and Rowsey became eligible effective July 1, 1996, but
received credited years of service back to the date of the Merger.
As of December 31, 1996, the credited years of service under the Pension Plan
for the individuals named were as follows: Mr. Bushell, 2 years; Mr. Rowsey, 2
years; Mr. Schwarz, 19 years; and Mr. Uskup, 3 years.
The Company's contributions to the Pension Plan are not allocated to the
accounts of the individual participants.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is appointed by the Board
from its membership. The Committee is responsible for recommending to the Board
of Directors annual competitive base compensation structures, and appropriate
performance criteria for bonus payouts for officers and senior management, and
grants under the Company's Management Equity Plan to align long-term executive
compensation with the interests of stockholders.
14
<PAGE>
PHILOSOPHY
The Compensation Committee is guided by the following principles:
- Compensation programs are designed to provide average base
salaries, and better than average annual incentives, and other
long-term rewards when the Company's maximum objectives are met
or exceeded.
- Compensation programs are designed simply, whenever possible.
Participants are fully informed about what the possible rewards
are, and what they must do to earn them.
COMPONENTS OF OVERALL COMPENSATION
The Compensation Committee considers several factors when determining
compensation of executives, other officers, and senior managers.
- Company Performance -- The Committee sets, in conjunction with
the Board of Directors, annual earnings targets, which are used
in determining the level of incentive awards.
- Competitive Practice --The Committee periodically receives
reports from Hewitt Associates, a nationally recognized
compensation practice consulting firm, which summarize and
evaluate United Stationers' compensation practices against a
group of approximately forty comparative companies extracted
from the Hewitt Total Compensation Data Base and from recent
proxy statements. Comparative companies are for the most part,
from the office products and wholesale trade industries. The
comparative companies include: (1) companies included in the
Value Line Peer Group Index shown in the Comparative Five-Year
Total Returns graph shown in the Company's Proxy Statement; (2)
selected Chicago area and wholesale non-durable goods companies
and (3) companies with market capitalizations comparable to the
Company's. The companies in the sample are representative of
companies with which United Stationers generally competes for
management and executive talent.
TARGETED COMPENSATION
Total compensation for officers and management individuals is targeted above the
median compensation of comparable companies when the Company's targeted
objectives are attained.
SALARY
A salary range for each position is developed based on average base pay for
similar positions at Hewitt's comparative companies. The salaries of executives,
officers, and senior managers are reviewed annually against these ranges with
adjustments in base compensation normally becoming effective on January 1.
The Compensation Committee generally considers levels of responsibility,
performance, internal equity, and competitive base compensation practices when
determining salary adjustments.
BONUS PLANS
A Management Incentive Plan provides annual incentive compensation opportunities
to officers and other upper management level participants based on the Company
achieving its performance goals established by the Compensation Committee and
approved by the Board of Directors. Under this
15
<PAGE>
Plan, annual targets are set by the Compensation Committee and approved by the
Board of Directors and bonuses are awarded under a formula based on percentage
attainment of the targets. The incentive awards for 1997 are based solely on the
earnings performance of the Company. If the Company fails to produce minimum
targeted results, no incentives are paid to participants at any level.
In December 1996, a Special Bonus Plan was adopted by the Board of Directors for
key members of the United Stationers management team. The purpose of the Plan is
to encourage and reward management participants for creating the operational
foundation throughout the organization that ultimately results in a liquidity
Event. Approximately 177 management individuals are participants in the Special
Bonus Plan. Specified awards will be made in cash in equal amounts on the first
and second anniversaries subsequent to an Event to individuals who are regular
full-time employees of the Company at the time such awards are to be paid.
LONG-TERM INCENTIVE COMPENSATION
The Committee believes that grants of stock options linked directly to Company
performance provide significant incentive opportunity to senior executives and
key employees who are responsible for the management, growth and financial
success of the Company. Options granted to management under the Company's MEP
Plan, were priced partly at a price comparable to the investment costs of the
sponsor investors; the majority of the options were priced at the approximate
market value at the time of grant. Pursuant to the grants, the economic value of
the options to recipients depends upon the amount by which the price of the
Company's stock exceeds the grant price, at the time they become exercisable,
which will not be until the Company's non-public investors have realized a full
return of their investment (an "Event"). In this way, the participants are
motivated to manage the business in ways that over the long term will benefit
stockholders through increases in the stock price.
As a general rule, the Compensation Committee considers the level of job
responsibility and the participant's potential impact on the Company's
performance in arriving at the number of shares to be granted under the MEP
Plan.
POLICY ON DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code limits the Company's tax deduction
to $1 million for compensation paid to the chief executive officer and certain
other executive officers, unless certain requirements are met. The limit does
not apply to performance-based compensation paid under a plan which meets the
requirements of the Code. The Company's MEP Plan and other incentive
compensation plans are designed to meet Code requirements and the Committee
intends to continue to use performance-based compensation to the extent that
compliance with Code requirements does not conflict with the Company's
compensation strategy. The deductibility of some of the compensation will
depend, among other things, on the composition of the Committee, whether or not
an Event occurs making the MEP Plan options exercisable, when those options will
in fact be exercised, and the market value of the Common Stock at the time of
such exercises.
16
<PAGE>
Based on the current composition of the Compensation Committee,
performance-based compensation may not fall within the exception, and may be
subject to the $1 million limit on deductible compensation. Some compensation
expense resulting from option exercises by certain of the named executive
officers may not be deductible by the Company.
Respectfully submitted:
COMPENSATION COMMITTEE
Gary G. Miller, Chairman
Jeffrey K. Hewson
Frederick B. Hegi, Jr.
James A. Johnson
17
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph sets forth the annual percentage change in the cumulative
total shareholder return on the Company's Common Stock during the preceding five
years, compared with the cumulative total returns of the NASDAQ Stock market
(U.S. Companies) and a peer group comprised of companies included within the
Value Line's Office Equipment and Supplies Industry. The comparison assumes $100
was invested on December 31, 1991 in the Company's Common Stock and in each of
the foregoing indices and assumes reinvestment of dividends. Because of the
substantial changes in the capitalization of the Company at the time of the
Merger, the Company believes that the comparisons in the graph for the periods
preceding the Merger are not meaningful.
COMPARATIVE FIVE-YEAR TOTAL RETURNS
UNITED STATIONERS (USTR), NASDAQ* AND VALUE LINE PEER GROUP** INDEX
(PERFORMANCE RESULTS THROUGH 12/31/96)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
UNITED STATIONERS (USTR) *NASDAQ (U.S. COMPANIES) **VALUE LINE OFFICE EQPT/SUPPLIES
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 197.23 116.38 118.51
1993 181.68 133.60 130.82
1994 163.57 130.59 129.45
1995 690.11 184.67 185.74
1996 484.94 227.16 224.59
*Peer Group data and NASDAQ
data are so similar they are
indistinguishable.
</TABLE>
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
United Stationers (USTR)........................... 100.00 197.23 181.68 163.57 690.11 484.94
*NASDAQ (U.S. Companies)........................... 100.00 116.38 133.60 130.59 184.67 227.16
**Value Line Office Eqpt/Supplies.................. 100.00 118.51 130.82 129.45 185.74 224.59
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has management advisory services agreements with three investor
groups. These investor groups provide certain advisory services to the Company.
Pursuant to an agreement, Wingate Partners has agreed to provide certain
oversight and monitoring services to the Company in exchange for an annual fee
of up to $725,000, payment (but not accrual) of which is subject to restrictions
under the Company's Credit Agreement. At the Merger, the Company paid aggregate
fees to Wingate Partners of $2.3 million for services rendered in connection
with the Merger. Wingate Partners earned an aggregate of $350,000, $603,000 and
$725,000 with respect to each of the fiscal years ended 1994, 1995 and 1996,
respectively, for such oversight and monitoring services. Under the agreement,
the Company is obligated to reimburse Wingate Partners for its out-of-pocket
expenses and indemnify Wingate Partners and its affiliates from loss in
connection with these services. The agreement expires on January 31, 2002,
provided
18
<PAGE>
that the agreement continues in effect on a year-to-year basis thereafter unless
terminated in writing by one of the parties at least 180 days before the
expiration of the primary term or any subsequent yearly term.
Pursuant to an agreement, Cumberland has agreed to provide certain oversight and
monitoring services to the Company in exchange for (i) an annual fee up to
$137,500, payment (but not accrual) of which is subject to restrictions under
the Company's Credit Agreement related to certain Company performance criteria
and (ii)previously issued shares of Associated common stock that converted in
the Merger into 154,126 shares of common stock. Subject to certain exceptions,
the issuance of such shares is subject to recision if the agreement is
terminated before January 31, 2002. At the Merger, the Company paid aggregate
fees to Cumberland of $100,000 for services rendered in connection with the
Merger. Pursuant to the agreement, Cumberland earned $75,000, $129,000 and
$137,500 with respect to the fiscal years ended 1994, 1995 and 1996,
respectively, for such oversight and monitoring services. The Company is also
obligated to reimburse Cumberland for its out-of-pocket expenses and indemnify
Cumberland and its affiliates from loss in connection with these services. The
agreement expires on January 31, 2002, provided that the agreement continues in
effect on a year-to-year basis thereafter unless terminated in writing by one of
the parties at least 180 days before the expiration of the primary term for any
subsequent yearly term.
Pursuant to an agreement, Good Capital has agreed to provide certain oversight
and monitoring services to the Company in exchange for (i) an annual fee of up
to $137,500, payment (but not accrual) of which is subject to restrictions under
the Company's Credit Agreement and (ii) previously issued shares of Associated
Common Stock that converted in the Merger into 154,126 shares of Common Stock.
Subject to certain exceptions, the issuance of such shares is subject to
recision if the agreement is terminated before January 31, 2002. At the Merger,
the Company paid aggregate fees to Good Capital of $100,000 for services
rendered in connection with the Acquisition. Pursuant to the agreement, Good
Capital earned an aggregate of $75,000, $129,000 and $137,500 in each of the
fiscal years ended 1994, 1995 and 1996, respectively, for such oversight and
monitoring services. The Company is also obligated to reimburse Good Capital for
its out-of-pocket expenses and indemnify Good Capital and its affiliates from
loss in connection with these services. The agreement expires on January 31,
2002, provided that the agreement continues in effect thereafter on a
year-to-year basis unless terminated in writing by one of the parties at least
180 days before the expiration of the primary term or any subsequent yearly
term.
FILINGS UNDER SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934 requires the Company's
directors and officers to file reports of holdings and transactions in the
Company's Common Stock with the Securities and Exchange Commission. Based on
Company records and other information, the Company believes that with respect to
the fiscal year ended December 31, 1996 all Section 16(a) filing requirements
applicable to its directors and officers were in compliance.
INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Ernst & Young LLP as
independent auditors for the Company for the fiscal year ending December 31,
1997. Ernst & Young LLP has served as the Company's independent auditors since
the Merger in March 1995.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting and are expected to be available to respond to appropriate questions.
19
<PAGE>
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders to be held in May 1998, must be received by the Company no later
than December 5, 1997 in order to be considered for inclusion in the Company's
Proxy Statement and form of proxy relating to such meeting.
OTHER MATTERS
Management does not know of any other matter to be presented for action by the
stockholders at the Annual Meeting. The persons named in the accompanying proxy
will vote such proxy as determined by a majority of the Board of Directors with
respect to any other matter not now known which is properly brought before the
meeting.
By Order of the Board of Directors
PASTEUP SIG
OTIS H. HALLEEN
SECRETARY
Des Plaines, Illinois
20
<PAGE>
PROXY
UNITED STATIONERS INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - MAY 14, 1997
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints DANIEL J. GOOD, JAMES A. JOHNSON AND DANIEL
H. BUSHELL, or any of them, proxies, with full power of substitution, to vote
all the shares of common stock of UNITED STATIONERS INC. which the undersigned
is entitled to vote at the Annual Meeting of Stockholders to be held at United
Stationers Inc., 2200 East Golf Road, Des Plaines, Illinois on Wednesday, May
14, 1997 at 2:00 p.m., local time, and at any adjournment thereof, with all
powers the undersigned would possess if present.
THIS PROXY IS TO BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE DIRECTOR NOMINEES LISTED ON THE REVERSE
SIDE, AND IN THEIR DISCRETION THE PROXIES MAY VOTE UPON ANY OTHER BUSINESS THAT
PROPERLY COMES BEFORE THE MEETING.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE (SEE REVERSE SIDE)
<PAGE>
[LOGO]
April 4, 1997
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held at 2:00 p.m., local time, Wednesday, May 14, 1997, at the corporate
headquarters of United Stationers Inc., 2200 East Golf Road, Des Plaines,
Illinois. Detailed information about the meeting is contained in the
accompanying Notice of Annual Meeting and Proxy Statement.
Regardless of whether you plan to attend the meeting, it is important that your
shares be voted. Accordingly, we ask that you sign and return your proxy as
soon as possible in the envelope provided.
Sincerely,
/s/ Frederick B. Hegi, Jr.
Frederick B. Hegi, Jr.
Chairman of the Board, President and
Chief Executive Officer
/X/ Please mark
votes as in
this example
1. Election of three directors to serve for a three-year term expiring in
the year 2000.
Nominees: Frederick B. Hegi, Jr., Gary G. Miller,
Michael D. Rowsey
FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
/ / / /
For all except the following nominee(s):
<TABLE>
<CAPTION>
<S><C>
---------------------------
Instructions: to withhold authority to vote for any MARK HERE / / MARK HERE / /
individual nominee, write that nominee's name on FOR ADDRESS IF YOU PLAN
the line provided above. CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
NOTE: Please date and sign as your name appears hereon.
Joint owners should all sign. When signing as attorney,
executor, administrator, trustee, guardian or corporate
officer, please give full title as such.
Signature: Date: Signature: Date:
------------------------ ------------------- ------------------------ -------------------
</TABLE>
