<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.
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(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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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<TABLE>
<S> <C>
UNITED STATIONERS INC. [LOGO]
2200 East Golf Road
Des Plaines, Illinois 60016-1267
</TABLE>
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Dear Stockholder:
On behalf of United Stationers Inc., I cordially invite you to attend the Annual
Meeting of Stockholders on Wednesday, May 10, 2000, at 2:00 p.m. Central Time,
at the Company's offices located at 2200 East Golf Road, Des Plaines, Illinois.
The record date for determining Stockholders who are eligible to vote at the
Annual Meeting of Stockholders has been established by the Board of Directors as
of the close of business on March 16, 2000. The matters to be considered by
Stockholders at the Annual Meeting are: to elect three directors to serve for a
three-year term expiring in 2003, to approve the 2000 Management Equity Plan, to
approve the Management Incentive Plan and to transact such other business as may
properly come before the meeting. The Board of Directors of the Company has
determined that the approval of these matters is in the best interests of the
Company and its Stockholders, and has unanimously recommended a vote "FOR" the
election of directors; "FOR" the approval of the 2000 Management Equity Plan;
and "FOR" the approval of the Management Incentive Plan.
Please read these materials so that you will know what matters we plan to vote
on at the meeting. During the meeting, we will also report on the current
activities of the Company, and you will have an opportunity to ask questions.
Because the vote of each Stockholder is important, please sign and return the
enclosed proxy card in the envelope provided. This way, your shares will be
voted even if you can't attend the meeting. This will not, of course, limit your
right to attend the meeting or prevent you from voting in person at the meeting
if you wish to do so.
Your directors and management look forward to personally meeting those of you
who are able to attend. To assist us in preparation for the meeting, please
return your proxy card at your earliest convenience.
Sincerely yours,
[SIGNATURE]
FREDERICK B. HEGI, JR.
CHAIRMAN OF THE BOARD
Des Plaines, Illinois
March 31, 2000
<PAGE>
<TABLE>
<S> <C>
UNITED STATIONERS INC. [LOGO]
2200 EAST GOLF ROAD
DES PLAINES, ILLINOIS 60016-1267
</TABLE>
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
MAY 10, 2000
- ----------------------------
The Annual Meeting of Stockholders of United Stationers Inc. will be held on
Wednesday, May 10, 2000 at 2:00 p.m. Central Time, at the Company's offices
located at 2200 East Golf Road, Des Plaines, Illinois. The purpose of the
meeting is:
1. to elect three directors to serve for a three-year term expiring in 2003;
2. to approve the 2000 Management Equity Plan (see Appendix A);
3. to approve the Management Incentive Plan (see Appendix B); and
4. to transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on March 16, 2000 are entitled
to vote at the meeting.
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1999 is enclosed.
WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE MEETING, PLEASE MARK,
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors,
[SIGNATURE]
Susan Maloney Meyer
SECRETARY
March 31, 2000
<PAGE>
UNITED STATIONERS INC.
2200 East Golf Road
Des Plaines, Illinois 60016-1267
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PROXY STATEMENT
MARCH 31, 2000
- ------------------------
GENERAL INFORMATION
This Proxy Statement has been prepared on behalf of the Board of Directors of
United Stationers Inc. (the "Company"), and is being furnished to Stockholders
in connection with the Annual Meeting of Stockholders of United Stationers Inc.
(the "Annual Meeting").
This Proxy Statement and the enclosed proxy are first being sent to Stockholders
on or about March 31, 2000.
The matters that are being submitted for approval are to be acted upon at the
Annual Meeting of Stockholders of United Stationers Inc. The record date for
determining Stockholders who are eligible to vote at the Annual Meeting of
Stockholders has been established by the Board of Directors as March 16, 2000
(the "Record Date"). The holders of the Company's Common Stock at the close of
business on the Record Date are entitled to vote on these matters. Each
outstanding share of Common Stock is entitled to one vote.
The Company's principal executive offices are located at 2200 East Golf Road,
Des Plaines, Illinois 60016-1267.
WHO CAN VOTE
Holders of record of Common Stock at the close of business on March 16, 2000 may
vote at the meeting.
On March 16, 2000, there were 34,033,650 shares of the Company's Common Stock
issued and outstanding. A majority of the outstanding shares of Common Stock
must be represented in person or by proxy in order to constitute a quorum at the
Annual Meeting.
HOW YOU CAN VOTE
If you sign your proxy and return it to the Company in time for the Annual
Meeting, your shares will be voted as you direct. You can specify on your proxy
whether your shares should be voted to approve, disapprove or abstain from
voting.
If you return your signed proxy to the Company but do not specify on your proxy
card how you want to vote your shares, they will be voted "FOR" the election of
all three nominees for directors as set forth under "Election of Directors";
"FOR" the approval of the 2000 Management Equity Plan; and "FOR" the approval of
the Management Incentive Plan.
<PAGE>
REVOCATION OF PROXIES
If you vote by proxy, you may revoke it in three ways at any time before it is
exercised:
(1) by submitting written notice of revocation to the Secretary of the
Company;
(2) by submitting another proxy that is properly signed and later dated; or
(3) by attending the meeting and voting in person.
REQUIRED VOTES
The Company's Bylaws provide that the holders of a majority of the stock issued
and outstanding and present in person or represented by proxy, shall constitute
a quorum at all stockholders' meetings. When a quorum is present, the vote of
the holders of a majority of the Common Stock present in person or represented
by proxy decides any question brought before the meeting.
Under Delaware law, broker non-votes (as explained below) will have no effect on
the outcome of the election of directors. In general, a broker who holds
securities in street name has limited authority to vote on matters submitted at
a stockholders' meeting in the absence of specific instructions from the
beneficial owner. In the absence of instructions from the beneficial owner or
authorization from the National Association of Securities Dealers, Inc. (the
"NASD") to vote on specific matters without the necessity of obtaining
instructions from the beneficial owner, a broker will specify a "non-vote" on
particular matters. For purposes of Delaware law, a broker non-vote is counted
as present for quorum purposes, but is generally excluded entirely from
determining whether a particular matter has been approved. Typically, however,
brokers are permitted by the NASD to vote for the election of directors without
instructions from the beneficial owner.
OTHER MATTERS TO BE ACTED UPON AT THE MEETING
We do not know of any other matters to be presented or acted on at the meeting.
If any matter is presented at the meeting on which a vote may properly be taken,
the shares represented by the proxies will be voted in accordance with the
judgment of the persons voting those shares.
EXPENSES OF SOLICITATION
The costs of soliciting the enclosed proxies will be paid by the Company. In
addition to the use of the mail, proxies may be solicited in person or by
telephone, facsimile transmission or other means of electronic communications by
directors, officers and employees of the Company. The Company does not expect to
pay any fees for this solicitation, but will 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.
Attached to this Proxy Statement, as Appendix A and Appendix B, are the texts of
the 2000 Management Equity Plan and the Management Incentive Plan, respectively,
being submitted for Stockholder approval. The Plans are described under the
caption "THE PROPOSALS".
2
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VOTING SECURITIES AND PRINCIPAL HOLDERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS (1):
The following table sets forth information as of March 16, 2000 with respect to
the beneficial ownership of Common Stock by each person who is known by the
Company to own beneficially more than five percent of the Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT
- ------------------------------------ -------------------- --------
<S> <C> <C>
Private Capital Management, Inc. (2)........................ 2,368,930 7.0%
3003 Tamiami Trail North
Naples, Florida 34103
SAFECO Asset Management Company/SAFECO Corporation (3)...... 2,329,000 6.81%
SAFECO Plaza
Seattle, Washington 98185
Neuberger Berman, LLC/Neuberger Berman Management Company %
(4)....................................................... 1,747,586 5.14
605 Third Avenue, 41st Floor
New York, New York 10158
T. Rowe Price Associates, Inc. (5).......................... 1,731,100 5.0%
100 East Pratt Street
Baltimore, Maryland 21202
</TABLE>
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(1) To the knowledge of the Company, no other person was the beneficial owner of
5% or more of the outstanding shares of Common Stock.
(2) Private Capital Management, Inc.'s ("PCM") shares are owned by its clients
individually. PCM shares dispositive power and has no voting power for the
shares listed above.
(3) Includes shares for which SAFECO Corporation and SAFECO Asset Management
Company may be deemed to be the indirect beneficial owners based upon their
respective ownership or control of one or more investment companies which
directly own such shares and for which SAFECO Asset Management serves as
adviser and shares directly owned by an employee savings plan, of which
SAFECO Corporation is the plan sponsor. SAFECO Corporation is treated as
having or is deemed to have shared voting power and shared dispositive power
for the shares listed above, by virtue of its ownership and control of
SAFECO Asset Management.
(4) Neuberger Berman, LLC ("Neuberger") is a registered investment adviser. In
its capacity as investment adviser, Neuberger may have discretionary
authority to dispose of or to vote shares that are under its management. As
a result, Neuberger may be deemed to have beneficial ownership of such
shares. Neuberger does not, however, have any economic interest in the
shares. The clients are the actual owners of the shares and have the sole
right to receive and the power to direct the receipt of dividends from or
proceeds from the sale of such shares. Neuberger Berman Inc. is the parent
holding company and owns 100% of Neuberger Berman, LLC and Neuberger Berman
Management, Inc. As of March 16, 2000, of the shares set forth above,
Neuberger had shared dispositive power with respect to 1,747,586 shares,
sole voting power with respect to 762,186 shares and shared voting power on
985,400 shares. With regard to the shared voting power, Neuberger Berman
Management, Inc. and Neuberger
3
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Berman Funds are deemed to be beneficial owners for purpose of Rule 13(d)
since they have shared power to make decisions whether to retain or dispose
of the securities. Neuberger is the sub-adviser to the above referenced
Funds. It should be further noted that the above mentioned shares are also
included with the shared power to dispose calculation.
(5) These shares are owned by various individual and institutional investors for
which T. Rowe Price Associates, Inc. ("Price Associates") serves as
investment adviser with sole power to direct investments. As to 128,000
shares, Price Associates has sole voting power. It has no voting power over
the remaining shares. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, as amended, Price Associates is deemed to
be a beneficial owner of such securities; however, Price Associates
expressly disclaims that it is, in fact, the beneficial owner of such
securities.
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows how much Common Stock is beneficially owned by each
director and 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 16, 2000. The Company believes that, unless otherwise noted, each person
shown in the following table has sole voting and sole investment power with
respect to the shares indicated.
<TABLE>
<CAPTION>
PERCENT OF
COMMON STOCK EXERCISABLE COMMON STOCK
NAME BENEFICIALLY OWNED OPTIONS (1) OUTSTANDING (2)
- ---- ------------------ ----------- ---------------
<S> <C> <C> <C>
Daniel J. Good................................... 152,360(3) 12,000 *
Ilene S. Gordon.................................. -- -- --
Roy W. Haley..................................... -- 12,000 *
Frederick B. Hegi, Jr............................ 532,827(4) 12,000 1.6%
Max D. Hopper.................................... 1,763(5) 6,000 *
James A. Johnson................................. 56,432(6) 12,000 *
Randall W. Larrimore............................. 10,000 248,000 *
Benson P. Shapiro................................ 2,784(7) 12,000 *
Steven R. Schwarz................................ 11,368(8) 20,000 *
Daniel H. Bushell (9)............................ -- 190,000 *
Ergin Uskup...................................... 10,909(10) 7,600 *
Tom Helton....................................... -- 27,200 *
All Officers and Directors as a Group
(14 persons)................................... 795,438(11) 381,800 3.4%
</TABLE>
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* Represents less than 1%
(1) Options exercisable within 60 days of the date of this Proxy Statement.
(2) Including the beneficial ownership of each stockholder, (in accordance with
the Securities and Exchange Commission's definition of "beneficial
ownership") and any securities convertible into Common Stock within 60 days
of the date of this Proxy.
(3) Does not include 110,798 shares owned by Good Capital & Co., Inc. ("Good
Capital"). Mr. Good is Chairman and a controlling stockholder of Good
Capital and, accordingly, may be deemed to beneficially own the shares held
of record by Good Capital.
4
<PAGE>
(4) Includes (i) 318,358 shares held of record by Mr. Hegi, (ii) 42,312 shares
held of record by a family company of which he is managing partner,
(iii) 169,311 shares held in trust for his benefit and for which he serves
as trustee, (iv) 2,846 shares issuable in satisfaction of accrued deferred
equity compensation under the Company's Nonemployee Directors' Deferred
Stock Compensation Plan. Does not include (i) 20,818 shares held by Wingate
Management Corporation and (ii) 23,555 shares held by Wingate Management
Limited, L.L.C. Mr. Hegi is President of Wingate Management Corporation and
a manager of Wingate Management Limited, L.L.C. and accordingly, may be
deemed to beneficially own the shares owned of record by these entities.
(5) Consists of 1,763 shares issuable in satisfaction of accrued deferred equity
compensation under the Company's Nonemployee Directors' Stock Deferred Stock
Compensation Plan.
(6) Includes (i) 43,664 shares held in a self-directed individual retirement
account for the benefit of Mr. Johnson and (ii) 2,778 shares issuable in
satisfaction of accrued deferred equity compensation under the Company's
Nonemployee Directors' Deferred Stock Compensation Plan. Does not include
23,555 shares held by Wingate Management Limited, L.L.C. Mr. Johnson is a
Manager of Wingate Management, L.L.C., and accordingly, may be deemed to
beneficially own the shares owned of record by these entities.
(7) Includes 2,784 shares issuable in satisfaction of accrued deferred equity
compensation under the Company's Nonemployee Directors' Deferred Stock
Compensation Plan.
(8) Includes (i) 11,268 shares owned of record by Mr. Schwarz and (ii) 100
shares held in an individual retirement account for the benefit of
Mr. Schwarz's wife.
(9) Mr. Bushell resigned as an officer of the Company on March 4, 2000 and,
therefore, is listed in the Security Ownership Table but not in the entry
"Officers as a Group" as of March 16, 2000.
(10) Includes 252 shares held in a trust for which Mr. Uskup serves as trustee.
(11) Includes 10,172 shares issuable in satisfaction of accrued deferred equity
compensation under the Company's Nonemployee Directors' Deferred Stock
Compensation Plan.
ELECTION OF DIRECTORS
The Board of Directors currently consists of eight members, divided into three
classes. Each class is elected for a three-year term. The terms of the three
Class II Directors will expire in 2000 and each Class II Director is a nominee
for election at this Annual Meeting. If elected, the terms of the following
Class II Directors will expire in 2003.
We will vote your shares as you designate on your proxy form. If you sign, date
and return the proxy form but don't indicate how you want your shares voted, WE
WILL VOTE THEM FOR THE ELECTION OF ALL OF THE NOMINEES LISTED BELOW. The
nominees have indicated that they are willing and able to serve. 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.
5
<PAGE>
The nominees are as follows:
FREDERICK B. HEGI, JR. (56)
Mr. Hegi was elected to the Board of Directors of the Company in 1995 and served
as Chairman, interim President and Chief Executive Officer until Randall
Larrimore became President and Chief Executive Officer in May 1997. Mr. Hegi is
founding partner of Wingate Partners, including the indirect general partner of
each of Wingate Partners L.P. and Wingate Partners II, L.P.. Since May 1982,
Mr. Hegi has served as President of Valley View Capital Corporation, a private
investment firm. Mr. Hegi also currently serves as Chairman of the Board of
Loomis, Fargo & Co., an armored car service company; Chairman of Tahoka First
Bancorp, Inc., a bank holding company; and Chairman of Cedar Creek
Bancshares, Inc., a bank holding company. Additionally, he is a director of
Texas Capital Bancshares, Inc., a bank holding company, Lone Star
Technologies, Inc., a diversified company engaged in the manufacture of tubular
products, and Pro Parts Xpress, Inc., a wholesale distributor of automotive
parts. Mr. Hegi is also Chairman, President and Chief Executive Officer of
Kevco, Inc., a publicly held distributor of building products to the
manufactured housing and recreational vehicle industries.
RANDALL W. LARRIMORE (52)
Mr. Larrimore was elected to the Board of Directors of the Company and became
President and Chief Executive Officer of the Company on May 23, 1997. On
March 6, 2000, Mr. Larrimore was elected to the additional office of Interim
Chief Financial Officer. From February 1988 to May 1997, Mr. Larrimore had been
President and Chief Executive Officer of MasterBrand Industries, Inc., a
manufacturer of leading brands including Master Lock-Registered Trademark-
padlocks and Moen-Registered Trademark- faucets, and a subsidiary of Fortune
Brands (formerly American Brands). Prior to that time, Mr. Larrimore was
President and Chief Executive Officer of Twentieth Century Companies, a
manufacturer of plumbing repair parts and a division of Beatrice Foods. Prior
thereto, he was Vice President of Marketing for Beatrice Home Specialties, the
operating parent of Twentieth Century. Fortune Brands acquired Twentieth Century
Companies and other Beatrice Divisions and subsidiaries in 1988. Before joining
Beatrice in 1983, Mr. Larrimore was with Richardson-Vicks, McKinsey & Company
and then with PepsiCo International. Mr. Larrimore serves as a director of Olin
Corporation, a diversified manufacturer of chemicals, metals, and sporting
ammunition. He also serves as a director of Evanston Northwestern Healthcare and
S.I.F.E., Students in Free Enterprise.
ILENE S. GORDON (46)
Ms. Gordon was elected to the Board of Directors of the Company in
January 2000. She currently serves as Senior Vice President of Pechiney Group
and President of Pechiney Plastic Packaging, overseeing all aspects of
Pechiney's worldwide flexible films and laminations, and plastic bottles
activities, including manufacturing, sales and marketing operations. Prior to
joining Pechiney in 1999, Ms. Gordon spent 17 years with Tenneco Inc., where she
most recently headed the folding-carton business. She currently serves as a
director of A.J. Gallagher & Co., an international company in the insurance
brokerage and risk management business, and Evanston Northwestern Healthcare.
Your Board unanimously recommends a vote FOR the election of the three persons
nominated to serve as Class II directors.
6
<PAGE>
OTHER DIRECTORS
The other directors, whose terms will continue after the Annual Meeting, are as
follows:
CLASS III DIRECTORS--CONTINUING IN OFFICE UNTIL MAY 2001
ROY W. HALEY (52) was elected to the Board of Directors of the Company in
March 1998. Mr. Haley currently serves as Chairman and Chief Executive Officer
of WESCO International Inc. ("WESCO"). Prior to joining WESCO in 1994, he served
as President and Chief Operating Officer of American General Corporation, one of
the nation's largest consumer financial services organizations. Mr. Haley also
serves as a director for Cambrex, Corp., Development Dimensions, Inc., and The
National Association of Electrical Distribution Education Foundation.
BENSON P. SHAPIRO (57) was elected to the Board of Directors of the Company in
November 1997. Professor Shapiro has served on the faculty of Harvard University
for 30 years and until July 1997 was THE MALCOLM P. MCNAIR PROFESSOR OF
MARKETING at the Harvard Business School. He continues to teach a variety of
Harvard's executive programs on a part-time basis and spends much of his time
engaged in consulting, public speaking, and writing. He serves as a director of
Indus River Networks, Inc., Caswell-Massey Co. LLP and serves on several
advisory boards for private companies.
CLASS I DIRECTORS--CONTINUING IN OFFICE UNTIL MAY 2002
DANIEL J. GOOD (60) was elected to the Board of Directors of the Company in
1995. Mr. Good is Chairman of Good Capital Co., Inc. ("Good Capital"), an
investment firm in Lake Forest, Illinois and Chairman of COM2001.com, a computer
telephony business in San Diego, California. 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 of
Shearson Lehman Bros. and President of A.G. Becker Paribas, Inc. Mr. Good serves
as a director of Tibersoft, Inc. and Mindbuilder Group, Inc. and as an advisory
director of AON Risk Services, Inc., and as Chairman of the Advisory Board of
Brown Simpson Asset Management LLC.
MAX D. HOPPER (65) was elected to the Board of Directors of the Company in
August 1998. In 1995, he founded Max D. Hopper Associates, Inc., a consulting
firm specializing in creating benefits from the strategic use of advanced
information systems. He is the retired chairman of the SABRE Technology Group
and served as Senior Vice President for American Airlines, both units of AMR
Corporation. Mr. Hopper currently serves as a director of Gartner Group, Inc.,
Metrocall, Inc., USDATA Corporation, Inc., Payless Cashways, Inc., Accrue
Software, Inc. and Exodus Communications, Inc.
JAMES A. JOHNSON (46) was elected to the Board of Directors of the Company in
1995. Mr. Johnson is a general partner of various Wingate entities, including
the indirect general partner of Wingate Partners II, L.P.. 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 Kevco, Inc., a publicly held distributor of
building products to the manufactured housing and recreational vehicle
industries and Pro Parts Xpress, Inc., a wholesale distributor of automotive
parts.
7
<PAGE>
CONCERNING THE BOARD OF DIRECTORS AND BOARD COMMITTEES
The Board of Directors met ten times during 1999. Each current director, with
the exception of Ilene Gordon who joined the Board of Directors in January 2000,
attended more than 75% of all of (1) the meetings of the Board of Directors held
during 1999 and (2) the meetings held by all committees of the board on which he
served (during the periods that he served) during 1999.
The Board of Directors has an Executive Committee, an Audit Committee, a Human
Resources Committee and a Governance Committee.
The Executive Committee members are Frederick B. Hegi, Jr. (Chairman), Randall
W. Larrimore and Benson P. Shapiro. The Executive Committee has the authority to
act upon most corporate matters that require Board approval, except any of the
functions of the Audit Committee or the Human Resources Committee. The Executive
Committee did not meet during 1999.
The Audit Committee consists of Roy W. Haley (Chairman), Max D. Hopper, and,
since January 18, 2000, Ilene S. Gordon. The Audit Committee met three times
during 1999. 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; discuss matters of concern to the independent auditors;
review changes in accounting principles; and review non-auditing services
performed for the Company by the independent auditors.
The Human Resources Committee (until November 16, 1999 known as the Compensation
Committee) met seven times during 1999 and consisted of James A. Johnson
(Chairman), Roy W. Haley, and Benson P. Shapiro. The Human Resources Committee
fulfills the functions of the formerly named Compensation Committee in that it
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.
On February 23, 2000, Benson P. Shapiro resigned from the Human Resources
Committee and Ilene S. Gordon was elected. The members of the Human Resources
Committee also serve as the Committee for the Company's Management Equity Plan
and Management Incentive Plan.
The Governance Committee consists of Daniel J. Good (Chairman), Frederick B.
Hegi, Jr., Benson P. Shapiro, and Randall W. Larrimore and Susan Maloney Meyer,
EX OFFICIO. The Governance Committee met five times in 1999. This Committee sets
the principles for and oversees the governance of the company, including the
evaluation of management and the Board of Directors. It also serves as the
Nominating Committee of the Board of Directors.
Directors who are not employees are entitled to fees for their services as
directors. The fees include a retainer of $25,000 per year and a fee of $1,000
for each Board or Committee meeting attended. (If a Committee meeting is held on
the same day as a Board meeting, or if held by telephone, a $500 fee is paid for
attendance.) Committee Chairs are entitled to a fee of $1,500 ($750 if held on
the same day as a Board meeting) for each Committee meeting attended. Board
members are reimbursed for reasonable expenses incurred in connection with
meetings. Pursuant to the Nonemployee Directors' Deferred Stock Compensation
Plan ("Directors' Plan"), nonemployee directors may defer their fees. Fees
deferred are credited to the director's Stock Unit Account under the Directors'
Plan based on the fair market value of the Common Stock on the day of the
deferral. Each Stock Unit will give the director the right to one share of
Common Stock when the Stock Unit
8
<PAGE>
Account is distributed. Ordinarily, distribution of the Stock Unit Account will
begin after the director no longer serves. Distribution may either be in a lump
sum or in substantially equal installments over a period of not more than five
years, as the director has directed.
Additionally, the Company has granted options for 30,000 shares to each
nonemployee director. The Company expects to continue this practice at
three-year intervals. The options vest at the rate of 20% per year with the
possibility of acceleration based on stock performance.
THE PROPOSALS
PROPOSAL TO APPROVE THE 2000 MANAGEMENT EQUITY PLAN
The Board of Directors has adopted the 2000 Management Equity Plan (the "2000
MEP"), subject to approval by the Stockholders, and submits to the Stockholders
a proposal to approve the 2000 MEP.
The 2000 MEP (attached hereto as Appendix A) provides for the issuance of shares
of Common Stock through the exercise of options, to key employees and to
directors of the Company or its subsidiaries or other affiliates. Approximately
200 employees and all directors would be eligible to participate in the 2000
MEP.
The number of shares of Common Stock which currently could be issued upon
exercise of options which could be granted under the existing Management Equity
Plan assuming all outstanding options are exercised is only 786,427. Therefore,
the Board of Directors approved the 2000 MEP, subject to approval by the
Stockholders of the Company, anticipating the need for additional options in
connection with (1) the expected recruitment and hiring of additional management
personnel, (2) the recruitment of additional or replacement directors, and
(3) the need to provide additional incentives to current employees.
DESCRIPTION OF THE 2000 MEP
The 2000 MEP provides for the issuance of up to 3,700,000 shares of Common Stock
through the exercise of options. Shares of Common Stock with respect to no
longer outstanding options (because of forfeiture, cancellation or otherwise)
and shares of Common Stock with respect to options used to satisfy minimum
statutory tax withholding obligations upon the exercise of options do not
deplete the number of shares of Common Stock reserved for issuance upon the
exercise of options. In addition, to the extent shares of Common Stock are
tendered (other than through cashless exercise through a broker) to satisfy the
option exercise price, only the net additional shares of Common Stock delivered
to the optionee are counted against the number of shares of Common Stock
available for issuance under the 2000 MEP. The maximum number of shares of
Common Stock for which options may be granted in any year to any individual is
800,000. No options have yet been granted under the 2000 MEP and the number of
options which will be granted to particular participants is not yet
determinable.
The Board of Directors may at any time amend or terminate the 2000 MEP, without
the approval of the Stockholders, except that no such action by the Board of
Directors may adversely affect any option previously granted without the consent
of the optionee.
The number of shares of Common Stock available for issuance under the 2000 MEP,
the number of shares of Common Stock subject to outstanding options and the
exercise price per share are
9
<PAGE>
subject to adjustment in the event of certain stock dividends, recapitalizations
or other similar changes affecting the number of outstanding shares of Common
Stock. Either authorized and unissued shares or issued shares held in the
Company's treasury may be used to fulfill options granted under the 2000 MEP.
The Human Resources Committee or any successor entity has the right in a merger,
reorganization or other extraordinary transaction to provide for the
continuation of the options or other equitable adjustments.
The purpose of the 2000 MEP is to attract and retain outstanding individuals as
key employees and directors and to provide incentives for such key employees and
directors to achieve the objectives and promote the business success of the
Company by providing to such individuals opportunities to acquire shares of
Common Stock through the exercise of options and thereby provide such
individuals with a greater proprietary interest in and closer identity with the
Company and its financial success.
ADMINISTRATION
The 2000 MEP will be administered by the Human Resources Committee, the Board of
Directors or such other committee appointed by the Board of Directors
("Committee"). The Board of Directors has designated the Human Resources
Committee as the Committee under the 2000 MEP.
Subject to the provisions of the 2000 MEP, the Human Resources Committee
determines the optionees, whether the option will be an ISO (as defined below)
or a nonqualified stock option, option exercise prices, dates of option grants,
number of options, option duration, method of exercise, vesting periods and
conditions, and conditions on transfers of non-qualified stock options. In
addition, the Human Resources Committee is authorized to interpret the 2000 MEP,
to adopt rules relating thereto, to determine the terms and provisions of the
participants' options, and procedures for exercise of options (which need not be
identical for all participants).
GRANT OF OPTIONS
Options may be granted under the 2000 MEP to such eligible employees or
directors as may from time to time be determined by the Human Resources
Committee. Options may be granted either as Incentive Stock Options ("ISOs"),
that is options which qualify as incentive stock options under Section 422 of
the Internal Revenue Code of 1986, as amended ("the Code") or as nonqualified
stock options. Nonemployee directors are eligible to receive only nonqualified
stock options. There are additional limitations on the grant of ISOs. The
exercise price of each option granted under the 2000 MEP is set by the Human
Resources Committee, and will not be less than 100% of the fair market value of
the applicable share of Common Stock on the date of grant. As of March 16, 2000,
the price of a share of Common Stock was $30.125.
EXERCISE OF OPTIONS
Options granted under the 2000 MEP are exercisable at such times and/or in such
number of cumulative installments as the Human Resources Committee may
establish. Options will expire at such times, and on such conditions as the
Human Resources Committee shall determine at the time of grant, but in any event
no option may be exercised more than 10 years following the date of grant.
Upon a Change in Control, all outstanding options become immediately
exercisable. Change of Control is defined generally to include: (1) acquisition
of 30% of the voting shares of the Company; (2) change in at least 50% of the
Board in any two year period unless the new directors are
10
<PAGE>
approved by more than 50% of the old directors; (3) a merger, reorganization or
liquidation unless: (i) persons before such event own more than 50% of the
voting shares after the event in substantially the same proportions as before
the event; (ii) Board members before the event constitute more than 50% of the
Board members after the event; and (iii) no person who did not own 30% before
the event owns 30% of the voting shares after the event; or (4) a sale of
substantially all the assets. However, if the incumbent Human Resources
Committee in good faith determines that an event which would otherwise
constitute a Change of Control is not a change of effective control of the
Company, there is no Change of Control for purposes of the 2000 MEP and the
outstanding options do not become immediately exercisable.
Options may be exercised by delivering written notice to the Treasurer of the
Company accompanied by payment for the shares being purchased. Payment may be
made in cash or in shares of Common Stock held at least six months, or,
"cashless exercise," or such other means determined by the Human Resources
Committee. To satisfy minimum statutory withholding tax obligations, shares of
Common Stock may be withheld or delivered.
FEDERAL INCOME TAX ASPECTS
INCENTIVE STOCK OPTIONS
Neither the grant nor lapse of an ISO is a taxable event to either the Company
or the optionee. Under the Code, if the optionee holds the shares of Common
Stock acquired upon exercise of the option for more than one year after transfer
of the shares of Common Stock to the optionee and more than two years from the
date of the grant of the option, and if certain other conditions are met:
(a) no regular income tax is imposed on the optionee at the time of exercise of
the option; (b) the difference between the option exercise price and the amount
realized upon disposition of the shares of Common Stock is treated as long-term
capital gain or loss; and (c) the Company is not allowed an income tax deduction
in connection with the grant or exercise of the option. In addition, depending
on the optionee's overall tax situation, the optionee may be subject to the
alternative minimum tax at the applicable rate, on the amount which would be
realized as compensation pursuant to the rules applicable to nonqualified
options, discussed immediately below. If the one year/two year holding period
requirements discussed above are not met, then, generally, taxable income will
result in an amount equal to the excess, at the time of exercise, of the value
of the shares of Common Stock over the exercise price. This amount will be
includable as ordinary income to the optionee and is deductible by the Company
at the time of the disposition.
NONQUALIFIED OPTIONS
A participant who receives an option under the 2000 MEP is not in receipt of
taxable income upon the grant thereof, but will realize ordinary income upon
exercise equal to the difference between the exercise price and the fair market
value of the shares of Common Stock on the date of exercise.
The Company is entitled to a corresponding deduction in the taxable year during
which the optionee realizes compensation income. The Company will comply with
the obligations imposed upon it under applicable tax withholding laws, if any,
with respect to options granted, and is entitled to do anything to effectuate
such compliance, including, without limitation, withholding from the optionee at
the time of exercise a number of shares of Common Stock to be issued upon
exercise to meet the minimum statutory tax withholding obligation.
11
<PAGE>
RESTRICTIONS ON RESALE OF SHARES
Shares of Common Stock acquired under the Plan, upon exercise of options, will
be subject to any condition restricting transfer then required by state or
federal securities laws. The Human Resources Committee may impose additional
restrictions on resale or disposition of such shares.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 2000 MANAGEMENT
EQUITY PLAN.
PROPOSAL TO APPROVE THE MANAGEMENT INCENTIVE PLAN
The Board of Directors has adopted the Management Incentive Plan (the "MIP")
effective as of January 1, 2000, subject to approval by the Stockholders, and
submits to the Stockholders a proposal to approve the MIP.
The MIP (attached hereto as Appendix B) provides annual incentive compensation
opportunities to key employees other than those who participate in a sales
incentive, commission arrangement or who are currently receiving consulting
payments from the Company. Approximately 200 employees are eligible to
participate in the MIP.
Under the MIP, the Human Resources Committee determines the performance levels
for target incentive awards as well as maximum and minimum incentive awards and
may change the criteria from time to time. The Company performance levels are
currently expected to be based on earnings per share with regional, area or
division performance levels based on earnings before interest and taxes and
certain manager awards to include safety goal performance as one measure of
performance.
The Human Resources Committee determines the participation, the target incentive
awards and final awards for officers of United Stationers Inc. and presidents of
subsidiaries of United Stationers Supply Co. The Chief Executive Officer of
United Stationers Supply Co. determines the participation, target incentive
awards and final awards for other employees. Target incentive awards are
expressed as a percentage of base salary. Final awards are determined based on a
review of the performance levels against performance goals and adjustments to
award amounts may be made prior to year end based on Company performance results
and individual participant performance. The MIP specifically prohibits upward
adjustment of the final awards to those reasonably likely to be among the five
highest paid named executive officers and limits their maximum award to 200% of
the target incentive award. The maximum dollar amount payable as an award to a
named executive officer is $2,000,000. The Board of Directors has the authority
to change the committee or person determining the participation, target
incentive awards and final awards.
Bonuses earned under the MIP are payable in cash following the end of the year
but are a liability of the Company as of the end of the year. The MIP
specifically provides for a prorated award on behalf of a participant who dies
during the year but makes it discretionary as to whether to grant an award and
the amount of any such award to anyone who terminates employment during the year
for a reason other than cause or death.
If the MIP terminates upon or after a Change of Control (as defined under the
2000 MEP) during a year in which the Change of Control occurs, participants are
entitled to their full target incentive award for such year.
12
<PAGE>
The Company, without Stockholder approval, may amend or terminate the MIP at any
time but would need the consent of a participant to an amendment or termination
if such amendment or termination would reduce the participant's award after the
end of the year or change potential participant rights with respect to a Change
of Control.
The benefits to be paid under the MIP are not yet determinable. The following
chart sets forth the amounts paid under the performance measures of the prior
Management Incentive Plan for the 1999 year.
PLAN BENEFITS
<TABLE>
<CAPTION>
NAME AND POSITION 1999 AWARDS UNDER MIP ($)
- ----------------- -------------------------
<S> <C>
Randall W. Larrimore................................ 511,056
Steven R. Schwarz................................... 237,783
Daniel H. Bushell (1)............................... 237,783
Ergin Uskup......................................... 101,738
Tom Helton.......................................... 121,318
Executive Group..................................... 1,437,666
Non-Executive Director Group........................ 0
All Employees....................................... 6,066,781
</TABLE>
- ------------------------
(1) Mr. Bushell resigned as an officer of the Company on March 4, 2000.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE MANAGEMENT
INCENTIVE PLAN.
13
<PAGE>
EXECUTIVE COMPENSATION
The table and notes below show the compensation paid to the Chief Executive
Officer of the Company during 1999 and the four other highest-paid officers of
the Company who were serving as executive officers on December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
Annual Compensation Long-term Compensation
Fiscal Other
Year Special Annual All other
Name and Ended Salary Bonus Bonus compensation Options compensation
Principal position 12/31 ($)(1) ($)(2) ($)(3) ($)(4) (#) ($)(5)
<S> <C> <C> <C> <C> <C> <C> <C>
Randall W. Larrimore...... 1999(6) 540,000 511,056 150,000 22,520
PRESIDENT AND CHIEF 1998 506,667 608,000 70,000 23,971
EXECUTIVE OFFICER 1997 300,173 356,400 500,000 23,080
Steven R. Schwarz(7)...... 1999 335,000 237,783 65,000 70,000 5,403 4,027
EXECUTIVE VICE PRESIDENT 1998 275,000 247,950 65,000 30,000 3,431
AND PRESIDENT, SUPPLY 1997 265,000 238,500
DIVISION
Daniel H. Bushell(8)...... 1999 335,000 237,783 65,000 60,000 4,813 4,236
EXECUTIVE VICE PRESIDENT, 1998 275,500 247,950 65,000 30,000 4,682
CHIEF DEVELOPMENT OFFICER 1997 265,000 238,500
AND CHIEF FINANCIAL
OFFICER
Ergin Uskup............... 1999 215,000 101,738 32,500 20,000 10,121 9,029
VICE PRESIDENT, MANAGEMENT 1998 205,500 123,300 32,500 12,000 10,733
INFORMATION SYSTEMS AND 1997 197,500 118,500
CHIEF INFORMATION OFFICER
Tom Helton (9)............ 1999 212,000 121,318 20,000 5,415 4,523
VICE PRESIDENT, HUMAN 1998 183,333 110,000 62,000
RESOURCES 1997(10)
</TABLE>
- ------------------------
(1) Includes compensation amounts earned during the fiscal year but deferred
pursuant to Section 401(k) of the Code under the Company's 401(k) Savings
Plan.
(2) Bonus earned in during the year indicated but paid in the next.
(3) 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 would result in a public offering
of the Company's stock. The public stock offering occurred on October 10,
1997. Specified cash awards were to be paid on the first and second
anniversaries of the public stock offering to participants who were
full-time employees of the
14
<PAGE>
Company at the time the awards were paid. In 1999 under the Plan,
Messrs. Bushell and Schwarz each received $65,000, and Mr. Uskup received
$32,500 respectively, which represented the final payments due under the
Special Bonus Plan.
(4) 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.
(5) Includes:
(a) Company contributions to the Company's 401(k) Savings Plan for 1999 for
Mr. Larrimore ($2,500), Mr. Bushell ($2,500), Mr. Schwarz ($2,500),
Mr. Helton ($2,500) and Mr. Uskup ($2,500);
(b) Premiums paid during 1999 for Split Dollar Life, Group Life and
Accidental Death insurance policies for Mr. Larrimore ($6,539);
Mr. Bushell ($2,313); Mr. Schwarz ($2,903); Mr. Helton, ($2,915) and
Mr. Uskup ($7,621); and for disability insurance for Mr. Larrimore
($13,481).
(6) Mr. Larrimore became President and Chief Executive Officer on May 23, 1997.
(7) Title of President, Supply Division as of January 1, 1999.
(8) Title of Chief Development Officer as of January 1, 1999. Mr. Bushell
resigned as an officer of the Company on March 4, 2000.
(9) Mr. Helton became Vice President, Human Resources on January 28, 1998.
(10) Not employed by, or an officer of, the Company during the year indicated.
STOCK OPTIONS
The United Stationers Inc. Management Equity Plan allows grants of stock options
and other rights relating to common stock. Grants may be made to nonemployee
directors and to key management employees.
The following two tables provide information on stock options granted by the
Company to the executive officers named in the Summary Compensation table during
the 1999 fiscal year. No such executive officers exercised stock options during
the 1999 fiscal year.
15
<PAGE>
OPTION GRANTS DURING LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price
Percent of Total Appreciation for Option
Options Options Granted Exercise or Term($)(1)
Granted to Employees in Base Price ($ Expiration ---------------------------
NAME (# of Shares) Fiscal Year Per Share) Date 5% 10%
- -------------------------- ------------- ---------------- ------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Randall W. Larrimore...... 50,000 3.9% 22.000 23.375 6/30/09 691,784 1,753,117
100,000 7.7% 2/11/09 1,470,041 3,725,373
Steven R. Schwarz......... 30,000 40,000 2.3% 22.000 23.375 6/30/09 415,070 1,051,870
3.1% 2/11/09 588,016 1,490,149
Daniel H. Bushell(2)...... 20,000 40,000 1.6% 22.000 23.375 6/30/09 276,714 701,247
3.1% 2/11/09 588,016 1,490,149
Ergin Uskup............... 6,000 14,000 0.5% 22.000 23.375 6/30/09 83,014 210,374
1.1% 2/11/09 205,806 521,552
Tom Helton................ 8,000 12,000 0.6% 22.000 23.375 6/30/09 110,685 280,499
0.9% 2/11/09 176,405 447,045
</TABLE>
- ------------------------
(1) The amounts under the columns labeled "5%" and "10%" are included pursuant
to certain rules of the Securities and Exchange Commission. Those amounts
are not intended to forecast future appreciation, if any, in the price of
the shares. The actual value of the options will vary in accordance with the
market price of the shares.
(2) Mr. Bushell resigned as an officer of the Company on March 4, 2000.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR END FISCAL YEAR END (1)
--------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) (#) ($) ($)
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Randall W. Larrimore....................... 214,000 506,000 3,622,518 6,462,122
Steven R. Schwarz.......................... 6,000 94,000 31,122 528,828
Daniel H. Bushell (2)...................... 176,000 84,000 3,452,287 463,208
Ergin Uskup................................ 2,400 29,600 12,449 161,785
Tom Helton................................. 12,400 69,600 55,019 334,815
</TABLE>
- ------------------------
(1) The values given are based on the closing price of the Shares on
December 31, 1999, which was $28.562, less the applicable exercise price,
before payment of applicable taxes.
(2) Mr. Bushell resigned as an officer of the Company on March 4, 2000.
16
<PAGE>
EMPLOYMENT CONTRACTS
LARRIMORE EMPLOYMENT CONTRACT. Randall W. Larrimore entered into an Employment
Contract with the Company as of May 23, 1997 to serve as President and Chief
Executive Officer. Pursuant to the contract agreement, Mr. Larrimore's
employment began May 23, 1997 and continues until Mr. Larrimore or the Company
notifies the other party. If Mr. Larrimore notifies the Company, the term of
employment ends 90 days after such notification, and if the Company notifies
Mr. Larrimore, the term of employment ends two years after such notification.
The term of employment also may be terminated earlier under certain
circumstances.
The contract agreement provides for an annual base salary of at least $495,000,
plus participation in all bonus, stock option and other benefit plans generally
available to executive officers of the Company. The contract agreement also
provides for a supplemental pension benefit that will provide Mr. Larrimore with
an amount equivalent to five additional credited years of service under the
Company's pension plan.
If Mr. Larrimore's employment is terminated by the Company (other than for
Cause, as defined in the contract) without the specified notice, or by
Mr. Larrimore for Good Reason (as defined in the contract) he will be entitled
to specified benefits plus his salary and bonuses earned to the date of
termination plus an amount equal to two times his base pay plus bonuses, and his
stock options will continue to be or become exercisable during the 24 months
following such termination. If his employment terminates due to his death or
disability, he, or his beneficiary, will receive an amount equal to his annual
salary plus bonus, his unexercisable options will be forfeited, and his
exercisable options will remain exercisable for up to one year following such
termination. If there is a change in control, all stock options held by
Mr. Larrimore will become exercisable.
OTHER EXECUTIVE EMPLOYMENT CONTRACTS. The Company entered into a Employment
Contract effective as of June 1, 1997 with Mr. Schwarz. The term of employment
began on June 1, 1997 and continues until Mr. Schwarz or the Company notifies
the other party. If Mr. Schwarz notifies the Company, the term of employment
ends 90 days after such notification, and if the Company notifies Mr. Schwarz,
the term of employment ends two years after such notification. The term of
employment may also be terminated earlier by either Mr. Schwarz or the Company.
The contract provides for an annual base salary of at least $265,000, plus
participation in all bonus, stock option and other benefit plans generally
available to executive officers of the Company.
If Mr. Schwarz's employment is terminated by the Company (other than for Cause,
as defined in the contract) without the specified notice, or by the executive
for Good Reason (as defined in the contract), he will be entitled to a severance
amount (subject to mitigation) equal to the sum of his base salary and bonuses
for the months remaining in the term of employment (or which would have been
remaining if the Company had given notice on the termination date) payable over
the severance period. If his employment terminates due to his death or
disability, he, or his beneficiary, will receive an amount equal to the sum of
his annual salary and his previous year's bonuses, payable over a 12-month
period.
Effective as of February 1, 1998, the Company entered into an Employment
Contract with Mr. Helton. The term of employment automatically renews for one
year periods unless specified notice is provided. The Contract provides for an
annual base salary of at least $200,000 plus participation in the bonus, stock
option, and other benefit plans generally available to executive officers of the
Company. If Mr. Helton is terminated by the Company (other than for Cause as
17
<PAGE>
defined in the Contract) without the specified notice, or by Mr. Helton for Good
Reason (as defined in the Contract), he will be entitled to a severance amount
equal to the unpaid portion of his base salary for the remainder of the contract
year, not to exceed twelve (12) months and a severance amount equal to his base
salary and the prior year's bonus payable over a 12-month period. If his
employment terminates due to his death or disability, he, or his beneficiary,
will receive an amount equal to the sum of his base salary and his previous
year's bonus and his spouse and dependent children will be entitled to health
coverage for the remainder of his spouse's life.
Ergin Uskup has an Employment Contract dated as of February 13, 1995. Upon
termination, Mr. Uskup will be entitled to specified benefits and a severance
payment equal to one year's salary, payable in 12 monthly installments.
The Company has a severance program for officers of the Company or its
subsidiaries who do not have employment contracts. The severance program
provides a severance payment of one year's base salary if an officer is
terminated without cause.
Mr. Bushell resigned as an officer of the Company on March 4, 2000. He had an
Employment Contract substanially the same as that of Mr. Schwarz. The Company
and Mr. Bushell are currently negotiating a separation contract. Mr. Bushell and
the Company have agreed that, in the event that they cannot reach an agreement
by a date certain, he will be entitled to severance (subject to mitigation) over
a two-year period ("Severance Period") in the amount of two times the sum of his
2000 base salary plus 1999 bonus and specified benefits through the Severance
Period.
PENSION PLANS
United Stationers Supply Co. maintains noncontributory pension plans covering
substantially all employees. Employees who are at least 21 years old are
eligible to participate after twelve months of employment. The Pension Plan
provides a benefit at age 65 equal to 1% percent of an employee's career-average
annual compensation, 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 months 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, 1999 was $1,855,024.
The Company's operating subsidiary also maintains a number of retirement benefit
plans for its employees who are covered under collective bargaining contracts.
The following table shows the annual retirement benefits that would be payable
at normal retirement (age 65) under the Pension Plan to the executive officers
individually named in the
18
<PAGE>
Summary Compensation Table on page 14. (The benefits are calculated on the basis
of estimated years of service at retirement age and current levels of
compensation, assuming 5.5% compounded annual increases):
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION
NAME OF PARTICIPANT AT RETIREMENT ($)
- ------------------- ------------------------
<S> <C>
Randall W. Larrimore................................. 32,372
Steven R. Schwarz.................................... 79,318
Daniel H. Bushell (1)................................ 50,676
Ergin Uskup.......................................... 14,084
Tom Helton........................................... 32,980
</TABLE>
As of December 31, 1999, the credited years of service under the Pension Plan
for the persons named were: Mr. Larrimore, 3 years; Mr. Schwarz, 21 years;
Mr. Bushell, 5 years; Mr. Helton, 2 years; and Mr. Uskup, 6 years.
The Company's contributions to the Pension Plan are not allocated to the
accounts of the individual participants.
(1) Mr. Bushell resigned as an officer of the Company on March 4, 2000.
REPORT OF THE HUMAN RESOURCES COMMITTEE ON EXECUTIVE COMPENSATION
The Human Resources Committee of the Board of Directors, formerly known as the
Compensation Committee, is appointed by the Board of Directors (the "Board")
from its membership. As related to executive compensation, the Human Resources
Committee recommends to the Board annual competitive base compensation
structures and determines appropriate bonus criteria and stock option grants to
officers under the Company's Management Incentive Plan and Management Equity
Plan.
PHILOSOPHY
The Human Resources Committee is guided by the following principles on executive
compensation:
- Compensation programs are designed to provide average base salaries and
better-than-average annual incentives and other rewards when the Company's
maximum objectives are met or exceeded.
- Participants are informed about the possible rewards and what they must do
to earn them.
- Compensation programs are designed to align long-term compensation with
the interests of stockholders.
19
<PAGE>
COMPONENTS OF OVERALL COMPENSATION
The Human Resources Committee considers several factors when determining
compensation of executives.
- Company Performance--The Human Resources Committee sets, in conjunction
with the Board, annual earnings targets, which are used in determining the
level of incentive awards.
- Competitive Practice--The Human Resources Committee has engaged an
independent consulting firm to advise it and provide information regarding
competitive executive compensation practices. This data is abstracted from
general industry survey sources and from proxy statements of publicly
traded organizations. In 1999, a group of companies (consisting of
wholesalers and distributors and service and manufacturing firms) was
examined for this purpose. These are companies for which data was
available to the consultant and which were felt to be representative
competitors of the Company for executive talent. This group is not the
same peer group used for the Stock Performance Graph and is subject to
change in future years if information about any company included in a
group is not available, if it is determined that any companies are no
longer competitors for executive talent, or if different organizations are
determined to be competitors.
- The Human Resources Committee considers the data provided by the
consultant in determining the executive pay package, in particular base
salary, incentive bonus, and long-term stock-based compensation. The Human
Resources Committee's philosophy is to set conservative base salaries and
benefits at or near the median of similarly-sized comparator companies,
while providing performance-based variable compensation to allow total
compensation to fluctuate according to the Company's financial
performance. Long-term incentive awards are stock-based (i.e., stock
options) to emphasize long-term stock price appreciation. In 1999, total
compensation of the executive officers, including the Chief Executive
Officer, was targeted between the 50(th) and 75(th) percentile of the
comparator group. Total compensation would reach this level only if the
Company met its performance targets.
20
<PAGE>
There are three basic components of the Company's compensation program: base
salary, short-term awards through bonus plans, and long-term incentives through
stock options.
BASE SALARY
A competitive base salary is essential. A salary range for positions is
developed based on average base pay for similar positions at comparative
companies described above under Competitive Practice. The salaries of executives
are reviewed annually against these ranges with adjustments in base compensation
normally becoming effective on January 1.
The Committee generally considers levels of responsibility, performance,
internal equity, and competitive base compensation practices when determining
salary adjustments.
The CEO's base salary is determined based on the above principles.
Mr. Larrimore's base salary was increased from $515,000 to $540,000 effective
January 1, 1999, a salary the Committee believed appropriate to retain an
executive of Mr. Larrimore's experience and abilities and to reflect the
Company's performance (including a substantial increase in EPS) over the
previous year. Other executive officers generally received a merit base salary
increase of approximately 5% while some officers received a greater percentage
increase based on promotions and market adjustments.
BONUS PLANS
The Company's Management Incentive Plan provides annual incentive compensation
opportunities to executives based on the Company's achieving performance goals
established by the Committee. Target bonuses are established as a percentage of
base salary. For 1999, the target bonuses for Mr. Larrimore, executive vice
presidents and other executive officers were 80%, 60% and 40%, respectively, of
base salary. Bonuses are awarded under a formula based on percentage attainment
of targets set annually. The incentive awards for 1999 were based primarily on
the earnings performance of the Company. The target level for 1999 was set at a
15% increase in earnings per share (EPS) over the EPS for 1998. If the Company
failed to produce minimum targeted results (at least a 10% increase in EPS), no
bonuses would have been paid. Since the Company produced over an 18% increase in
EPS for 1999, bonuses of 118.3% of the target bonuses were paid.
Mr. Larrimore's 1999 bonus was $511,056.
In December 1996, a Special Bonus Plan was adopted by the Board for key members
of the United Stationers management team. The performance standards set forth in
the Special Bonus Plan were met as the result of the Company's public offering
on October 10, 1997. The second half of the specified awards was made on
October 10, 1999 to individuals who were regular full-time employees of the
Company on that date. Mr. Larrimore did not participate in the Special Bonus
Plan since he was not employed by the Company in 1996.
LONG-TERM INCENTIVE COMPENSATION
Stock options are an important part of the Company's compensation program. The
Human Resources Committee believes that a significant amount of executive
compensation should be dependent on value created for stockholders. With
options, management gains only when stockholders gain--when the Company's Common
Stock value goes up.
As a general rule, the Human Resources Committee considers the level of job
responsibility and the participant's contribution and potential positive impact
on the Company's performance in arriving at the number of shares to be granted
under the Management Equity Plan.
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The Human Resources Committee made option grants with an exercise price equal to
fair market value on the date of grant to officers in February and June of 1999.
The Human Resources Committee had traditionally granted options in January or
February of each year and decided to shift the cycle for awarding annual grants
from January or February to the summer. To transition from the early year to
summer grant date, a smaller option grant was made in June. In the future, the
Human Resources Committee expects to consider awarding option grants each summer
rather than at the beginning of the year. In 1999, options were granted to
Mr. Larrimore for 100,000 shares with an exercise price of $23.375 and for
50,000 shares with an exercise price of $22.00. The other executive officers in
the aggregate were granted options for 135,000 shares with an exercise price of
$23.375 and options for 80,500 shares with an exercise price of $22.00. These
options vest in 20% annual increments on each anniversary of the grant with
acceleration of vesting on the third or fourth anniversary of the grant if the
stock price reaches a certain level. Other officers received options with the
same vesting terms.
POLICY ON DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Code limits the deductibility of certain compensation paid
to the CEO and the four other most highly compensated executives to $1 million
annually, unless certain requirements are met. The limit does not apply to
performance-based compensation paid under a plan that meets the requirements of
the Code.
The Human Resources Committee, currently consisting exclusively of directors who
qualify as independent under Section 162(m), determined matters involving
performance-based compensation in connection with the Chief Executive Officer
and the other four most highly compensated officers.
The Company intends to use performance-based compensation to minimize the effect
of the limits imposed by Section 162(m) to the extent that compliance with Code
requirements does not conflict with the Company's compensation strategy.
Respectfully submitted:
HUMAN RESOURCES COMMITTEE
James A. Johnson, Chairman
Roy W. Haley, Member
Benson P. Shapiro, Member (through February 23, 2000)
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STOCK PERFORMANCE GRAPH
The following graph compares the performance of our Common Stock over a
five-year period with (1) the total returns of the NASDAQ Stock market (U.S.
Companies) and (2) a peer group comprised of companies included within Value
Line's Office Equipment Industry. The graph assumes $100 was invested on
December 31, 1994 in the Company's Common Stock and in each of the indices and
assumes reinvestment of all dividends.
COMPARATIVE FIVE-YEAR TOTAL RETURNS
UNITED STATIONERS (USTR), NASDAQ* AND VALUE LINE PEER GROUP** INDEX
(PERFORMANCE RESULTS THROUGH 12/31/99)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
United Stationers (USTR)........................ 100.00 421.90 296.47 731.68 790.59 868.53
*NASDAQ (U.S. Companies)........................ 100.00 141.33 173.89 213.07 300.25 542.43
**Value Line Office Equipment................... 100.00 146.39 185.63 265.06 360.30 384.22
</TABLE>
Assumes $100 invested at the close of trading 12/94 in United Stationers (USTR)
common stock, *NASDAQ (U.S. Companies), and ** Value Line Office Equipment.
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. To the
Company's knowledge, based solely on Company records, the Company believes that
for the year ended December 31, 1999 all Section 16(a) filing requirements
applicable to its directors and officers were in compliance.
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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,
2000. Ernst & Young LLP has served as the Company's independent auditors since
March 1995. Ernst & Young LLP are independent certified public accountants with
respect to the Company within the meaning of the applicable published rules and
regulations of the Securities and Exchange Commission, the pronouncements of the
Independence Standards Board, and Rule 101 of the American Institute of
Certified Public Accountants' Code of Professional Conduct, its interpretations
and rulings.
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.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders to be held in May 2001, must be received by the Company no later
than December 1, 2000 in order to be considered for inclusion in the Company's
Proxy Statement and form of proxy relating to such meeting. In accordance with
the rules and regulations of the Securities and Exchange Commission, the
Company's management will have discretionary authority to vote on any proposal
raised by a Stockholder of the Company at the 2001 Annual Meeting if such
Stockholder fails to notify the Company on or before February 14, 2001.
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
[SIGNATURE]
SUSAN MALONEY MEYER
SECRETARY
Des Plaines, Illinois
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APPENDIX A
UNITED STATIONERS INC.
2000 MANAGEMENT EQUITY PLAN
1. PURPOSE
United Stationers Inc., a Delaware corporation (the "Company"), by means of this
Management Equity Plan (the "Plan") desires to attract and retain outstanding
individuals as key employees and members of the Board of Directors ("Directors")
of United Stationers Inc. (the "Company") and its affiliates (the Company and
its affiliates, collectively or individually, "Employer"), and to provide
incentives for such key employees and Directors to achieve the objectives and
promote the business success of Employer by providing to such individuals
opportunities to acquire common shares of the Company ("Shares") through the
exercise of stock options and thereby provide such individuals with a greater
proprietary interest in and closer identity with Employer and its financial
success.
Options granted under this Plan may be either nonqualified stock options or
incentive stock options ("Incentive Options"). (Nonqualified stock options and
Incentive Options, collectively or individually, "Options"). Options granted
under this Plan and designated as Incentive Options by the Committee (as herein
defined) are intended to be "incentive stock options" within the meaning of that
term in section 422 of the Internal Revenue Code of 1986, as amended ("Code").
To the extent deemed appropriate by the Committee (as herein defined), the
provisions of this Plan with respect to Incentive Options and of each Incentive
Option granted hereunder shall be interpreted in a manner consistent with that
section and all valid regulations issued thereunder. Incentive Options may not
be granted under this Plan to Directors, except to those Directors who are also
employees of Employer at the time of the Option grant.
2. ADMINISTRATION
The Plan shall be administered by the Human Resources Committee, or any
successor thereto, of the Board of Directors of the Company or by the Board of
Directors or by such other committee, as determined by the Board of Directors of
the Company (the "Committee"). The Committee shall interpret the Plan and shall
prescribe, amend and rescind rules and regulations relating thereto and make all
other determinations necessary, advisable or desirable for the administration of
the Plan. Any such action by the Committee shall be final and conclusive on all
persons having any interest in the Options or Shares to which such action
relates. A majority of the Committee shall constitute a quorum and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee, shall be the acts of
the Committee.
Without limitation on the foregoing, the Committee shall determine, within the
limits of the express provisions of this Plan, those key employees and Directors
to whom, and the time or times at which, Options shall be granted to such key
employees or Directors. The Committee shall determine the number of Shares to be
subject to each Option, whether an Option will be a
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nonqualified stock option or an Incentive Option, the duration and exercise
price of each Option, the time or times within which (during the term of the
Option) all or portions of each Option may be exercised, whether or not the
exercise schedule will be accelerated, the restrictions applicable to each
Option, and whether cash, Shares, or other property may be accepted in full or
partial payment upon exercise of an Option. In making such determinations, the
Committee may take into account the nature of the services rendered by the
Participants (as herein defined), their present and potential contributions to
the Employer's success and such other factors as the Committee in its discretion
shall deem relevant.
The Committee may delegate to one or more of its members, or to one or more
agents, such administrative duties as it may deem advisable, and the Committee
or any person to whom it has delegated duties as aforesaid may employ one or
more persons to render advice with respect to any responsibility the Committee
or such person may have under the Plan.
3. SHARES AVAILABLE
Subject to the adjustments provided in Section 6, the maximum aggregate number
of Shares which may be delivered for all purposes under the Plan shall be three
million seven hundred thousand (3,700,000) Shares. Subject to the adjustments
provided in Section 6, the maximum number of Shares available to any one
Participant under this Plan through Options granted in any one calendar year is
eight hundred thousand (800,000) Shares. Each Option when granted shall state
the number of Shares to which it pertains. If, for any reason, any Shares as to
which Options have been granted cease to be subject to purchase thereunder,
including, without limitation, the expiration of such Option, the termination of
such Option prior to exercise or the forfeiture of such Option, such Shares
shall thereafter be available for grants to such individual or other individuals
under the Plan. To the extent any Shares are not delivered to a Participant
because they are used to satisfy the applicable tax withholding obligations,
such Shares shall not be deemed to have been delivered for purposes of
determining the maximum number of Shares available for delivery under the Plan.
If the exercise price of any Option is satisfied by tendering Shares (by either
actual delivery or by attestation), only the number of Shares issued net of the
Shares tendered shall be deemed delivered for purposes of determining the
maximum number of Shares available for delivery. Options granted under the Plan
may be fulfilled in accordance with the terms of the Plan with either authorized
and unissued shares of the common stock of the Company or issued shares of such
common stock held in the Company's treasury.
4. ELIGIBILITY AND BASIS OF PARTICIPATION
The "Participants" in the Plan will consist of such key employees and Directors
of Employer as the Committee in its sole discretion from time to time designates
within the limits of the express provisions of this Plan. The Committee's
designation of a Participant at any time shall not require the Committee to
designate such person at any other time.
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5. GRANTS OF STOCK OPTIONS
The Options granted under this Plan shall be in such number and form and upon
such terms and conditions as the Committee shall from time to time determine,
subject to the provisions of this Plan, including the following:
a. OPTION PRICE. The Option exercise price for each Option shall be
established by the Committee; provided that the Option exercise price shall
in no event be less than 100% of the fair market value of the Shares subject
to such Option at the time such Option is granted. In the case of an
Incentive Option granted to a Participant who at the time of grant owns
(directly or indirectly) shares aggregating more than 10% of the total
combined voting power of all classes of shares of the Company or any parent
or subsidiary corporation (within the meaning of section 424 of the Code) of
the Company ("10% Owner"), the Option exercise price shall be at least 110%
of such fair market value of the Shares subject to such Incentive Option at
the time such Incentive Option is granted.
b. EXERCISABILITY OF STOCK OPTION. No Option by its terms shall be
exercisable after the expiration of ten (10) years from the date of the
grant of the Option; provided, however, an Incentive Option granted to a 10%
Owner shall not be exercisable after the expiration of five (5) years from
the date such Option is granted. Subject to the preceding sentence, each
Option granted under this Plan shall be for such period as the Committee
shall determine, which period may include, without limitation, early
termination of the Option upon the Participant's termination of employment
or cessation as a Director. Each Option shall be exercisable in such
installments as may be determined by the Committee at the time of the grant.
c. METHOD OF EXERCISE. Options may be exercised by giving written notice to
the Treasurer of the Company, stating the number of Shares with respect to
which the Option is being exercised and tendering payment therefor. In the
discretion of the Committee, payment for Shares may be made in cash, other
Shares (by either actual delivery of Shares or by attestation) held for at
least six months or such other period deemed appropriate by the Committee,
"cashless exercise" through a third party, a combination of the foregoing,
or by any other means which the Committee determines. It shall be a
condition to the performance of the Company's obligation to issue or
transfer Shares upon exercise of an Option that the person exercising the
Option pay, or make provision satisfactory to Employer for the payment of,
any taxes which Employer is obligated to collect with respect to the issue
or transfer of Shares upon such exercise.
d. MAXIMUM INCENTIVE OPTION EXERCISE. The aggregate fair market value
(determined at the time Incentive Options are granted) of the Shares with
respect to which Incentive Options are exercisable for the first time by a
Participant during any calendar year under all plans of the Company, or any
parent corporation or subsidiary corporation (within the meaning of
section 424 of the Code) thereof, shall not exceed one hundred thousand
dollars ($100,000).
e. LIMITATION FOR INCENTIVE OPTION TREATMENT. To the extent required by law,
but subject to any earlier cancellation and termination of the Option as
provided in this Plan or the Option, a Participant who ceases to be employed
by Employer for any reason other than death or disability shall not have the
right to exercise his or her Incentive Options at any time after
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three (3) months after such cessation of employment and continue to have
such Options treated as Incentive Options. To the extent required by law, a
Participant who ceases to be employed by Employer because of disability
shall have no more than one (1) year after such cessation of employment to
exercise his or her Incentive Options and continue to have such Options
treated as Incentive Options. To the extent a Director more than three
(3) months after the Director ceased to be an employee of the Employer
exercises Options granted as Incentive Options and to the extent required by
law, such Options granted as Incentive Options shall be treated as
nonqualified stock options.
f. LIMIT ON INDIVIDUAL GRANTS. In any calendar year, the maximum number of
Shares with respect to which Options may be granted under the Plan to any
one Participant is eight hundred thousand (800,000) Shares (subject to
adjustment in accordance with Section 6 of the Plan).
Without limitation on the foregoing, the award of any Options may be subject to
other provisions (whether or not applicable to the Option awarded to any other
Participant) as the Committee, in its sole discretion determines appropriate,
including, without limitation, restrictions on resale or other disposition,
installment exercise limitations, noncompete restrictions, such provisions as
may be appropriate to comply with federal or state securities laws and stock
exchange requirements, and undertakings or conditions as to the Participant's
employment in addition to those specifically provided for under this Plan.
6. ADJUSTMENT OF SHARES
a. CAPITAL ADJUSTMENTS. If the Shares should, as a result of any stock
dividend, stock split, other subdivision or combination of Shares, or any
reclassification, recapitalization or otherwise, be increased or decreased,
the number of Shares covered by each outstanding Option, the Option exercise
price under each outstanding Option, and the total number of Shares reserved
for issuance under this Plan shall be adjusted as determined by the
Committee to reflect such action. Any new Shares or other securities issued
with respect to Shares shall be deemed Shares.
b. SALE OR REORGANIZATION. Subject to Section 7, in the event the Company is
merged or consolidated with another entity, or in the event the property or
Shares of the Company are acquired by another entity, or in the event of a
reorganization or liquidation of Employer, or in the event of any
extraordinary transaction, the Committee or the board of directors of any
corporation or comparable governing body of any other type of entity,
assuming the obligations of the Company hereunder or the Committee, as
applicable, shall have the right to provide for the continuation of Options
granted under the Plan or for other equitable adjustments as determined by
the board of directors of such corporation or comparable governing body of
any other type of entity, assuming the obligations of the Company hereunder
or the Committee, as applicable (by means, such as, for example, cash
payment in an amount equal to the difference between the Share price and the
Option price, conversion into other property or securities, or giving
written notice to holders of Options that their Options will become
immediately exercisable, notwithstanding any waiting period otherwise
prescribed by the Committee, as applicable, and that such Options must be
exercised within a specified period of days of such notice or they will be
terminated).
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7. CHANGE OF CONTROL
Notwithstanding anything herein or in the Option grant to the contrary, upon a
Change of Control, all outstanding Options shall become immediately exercisable
in full. For the purposes of this Plan, a Change of Control means any one or
more of the following:
a. Any "Person" (having the meaning ascribed to such term in
Section 3(a)(9) of the Securities Exchange Act of 1934, as amended ("1934
Act") and used in Sections 13(d) and 14(d) thereof, including a "group"
within the meaning of Section 13(d)(3)) has or acquires "Beneficial
Ownership" (within the meaning of Rule 13d-3 under the 1934 Act) of 30% or
more of the combined voting power of the Company's then outstanding voting
securities entitled to vote generally in the election of directors ("Voting
Securities"); provided, however, that in determining whether a Change of
Control has occurred, Voting Securities which are held or acquired by
(i) the Company or any of its subsidiaries or (ii) an employee benefit plan
(or a trust forming a part thereof) maintained by the Company or any of its
subsidiaries shall not constitute a Change of Control. Notwithstanding the
foregoing, a Change of Control shall not be deemed to occur solely because
any Person acquired Beneficial Ownership of more than the permitted amount
of Voting Securities as a result of the issuance of Voting Securities by the
Company in exchange for assets (including equity interests) or funds with a
fair value equal to the fair value of the Voting Securities so issued;
provided that if a Change of Control would occur (but for the operation of
this sentence) as a result of the issuance of Voting Securities by the
Company, and after such issuance of Voting Securities by the Company, such
Person becomes the Beneficial Owner of any additional Voting Securities
which increases the percentage of the Voting Securities Beneficially Owned
by such Person to more than 50% of the Voting Securities of the Company,
then a Change of Control shall occur.
b. At any time during a period of two consecutive years, the individuals who
at the beginning of such period constituted the Board (the "Incumbent
Board") cease for any reason to constitute more than 50% of the Board;
provided, however, that if the election, or nomination for election by the
Company's stockholders, of any new director was approved by a vote of more
than 50% of the directors then comprising the Incumbent Board, such new
director shall, for purposes of this subsection (b), be considered as though
such person were a member of the Incumbent Board; provided, further,
however, that no individual shall be considered a member of the Incumbent
Board if such individual initially assumed office as a result of (i) either
an actual "Election Contest" (as described in Rule 14a-11 promulgated under
the 1934 Act) or other actual solicitation of proxies or consents by or on
behalf of a Person other than the Incumbent Board (a "Proxy Contest"), or
(ii) by reason of any agreement intended to avoid or settle any actual or
threatened Election Contest or Proxy Contest.
c. Consummation of a merger, consolidation or reorganization or approval by
the Company's stockholders of a liquidation or dissolution of the Company or
the occurrence of a liquidation or dissolution of the Company ("Business
Combination"), unless, following such Business Combination:
(i) the Persons with Beneficial Ownership of the Company, immediately
before such Business Combination, have Beneficial Ownership of more than
50% of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors of the
corporation (or in the election of a comparable governing body
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of any other type of entity) resulting from such Business Combination
(including, without limitation, an entity which as a result of such
transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) (the
"Surviving Company") in substantially the same proportions as their
Beneficial Ownership of the Voting Securities immediately before such
Business Combination;
(ii) the individuals who were members of the Incumbent Board immediately
prior to the execution of the initial agreement providing for such
Business Combination constitute more than 50% of the members of the board
of directors (or comparable governing body of a noncorporate entity) of
the Surviving Company; and
(iii) no Person (other than the Company, any of its subsidiaries or any
employee benefit plan (or any trust forming a part thereof) maintained by
the Company, the Surviving Company or any Person who immediately prior to
such Business Combination had Beneficial Ownership of 30% or more of the
then Voting Securities) has Beneficial Ownership of 30% or more of the
then combined voting power of the Surviving Company's then outstanding
voting securities. Notwithstanding this subsection (iii), a Change of
Control shall not be deemed to occur solely because any Person acquired
Beneficial Ownership of more than 30% of Voting Securities as a result of
the issuance of Voting Securities by the Company in exchange for assets
(including equity interests) or funds with a fair value equal to the fair
value of the Voting Securities so issued.
d. Approval by the Company's stockholders of an agreement for the
assignment, sale, conveyance, transfer, lease or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
subsidiary of the Company or other entity, the Persons with Beneficial
Ownership of which are the same Persons with Beneficial Ownership of the
Company and such Beneficial Ownership is in substantially the same
proportions), or the occurrence of the same.
Notwithstanding the foregoing, a Change of Control shall not be deemed to occur
solely because any Person acquired Beneficial Ownership of more than the
permitted amount of Voting Securities as a result of the acquisition of Voting
Securities by the Company which, by reducing the number of Voting Securities
outstanding, increases the proportional number of shares Beneficially Owned by
such Person; provided that if a Change of Control would occur (but for the
operation of this sentence) as a result of the acquisition of Voting Securities
by the Company, and after such acquisition of Voting Securities by the Company,
such Person becomes the Beneficial Owner of any additional Voting Securities
which increases the percentage of the Voting Securities Beneficially Owned by
such Person, then a Change of Control shall occur.
Notwithstanding anything to the contrary herein, provided the Committee
(constituted of members of the Incumbent Board) in good faith determines that an
event which would otherwise be a Change of Control is not a change of effective
control of the Company, a Change of Control shall not be deemed to have
occurred.
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8. LIMITATIONS ON TRANSFERABILITY
No Incentive Option granted to a Participant shall be transferable by the
Participant except by will or by the laws of descent and distribution. The
Committee in its sole discretion may permit a Participant to transfer Options,
other than Incentive Options, subject to any conditions or limitations specified
by the Committee including without limitation, classifications or categories of
permissible transferees.
9. LEGAL AND OTHER REQUIREMENTS
Each Option granted under this Plan shall be subject to the requirement that if
at any time the Committee shall determine, in its discretion, that the listing,
registration or qualification of the Shares issuable or transferable upon the
exercise of the Option upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with the granting of
such Option, or the issuance, transfer or purchase of Shares thereunder, such
Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee. The Company
shall not be obligated to sell or issue any Shares in any manner in
contravention of the Securities Act of 1933, as amended ("Securities Act"), or
any state securities law. No adjustment with respect to any Shares covered by
Options other than pursuant to Section 6 hereof shall be made for dividends or
other rights for which the record date is prior to the date such stock
certificate is delivered.
If a registration statement under the Securities Act, with respect to Shares
issuable upon exercise of an Option, is not in effect at the time such Option is
exercised, the Company may require, for the sole purpose of complying with the
Securities Act, that prior to delivering such common stock to the exercising
Participant, such Participant must deliver to the Secretary of the Company a
written statement (i) representing and warranting that such Shares are being
acquired for investment only and not with a view to the resale or distribution
thereof, (ii) acknowledging and confirming that such Shares may not be sold
unless registered for sale under the Securities Act or pursuant to an exemption
from such registration and (iii) agreeing that the certificates representing
such Shares shall bear a legend to the effect of the foregoing.
10. WITHHOLDING TAXES
Employer shall comply with the obligations imposed on Employer under applicable
tax withholding laws, if any, with respect to Options granted hereunder, Shares
transferred upon exercise thereof, and the disposition of such Shares
thereafter, and shall be entitled to do any act or thing to effectuate any such
required compliance, including, without limitation, withholding from amounts
payable by Employer to a Participant and making demand on a Participant for the
amounts required to be withheld. By acceptance of the Option, the Participant
will be deemed to (i) agree to reimburse the Employer for any taxes required to
be withheld or otherwise deducted with respect to the Participant's exercise of
all or any portion of the Option; (ii) authorize the Employer to withhold from
any cash compensation paid to the Participant or on the Participant's behalf, an
amount sufficient to discharge any taxes imposed on the Employer and which
otherwise has not been reimbursed by the Participant with respect to the
Participant's exercise of all or any portion of the
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Option; and (iii) agree that the Employer, may in its discretion, hold the stock
certificate to which the Participant otherwise would be entitled upon exercise
of the Option as security for the payment of the aforementioned tax liability,
until cash sufficient to pay that liability has been accumulated, and may, in
its discretion, effect such withholding by retaining Shares issuable upon the
exercise of the Option having a fair market value on the date of exercise equal
to the amount to be withheld.
If the Committee so permits, a Participant, or upon the Participant's death, the
Participant's beneficiary, may satisfy, in whole or in part, the obligation to
pay Employer any amount required to be withheld under the applicable federal,
state and local or foreign tax laws in connection with exercise of an Option
under this Plan by: (i) having Employer withhold from the Shares to be acquired
upon the exercise of the Option, (ii) delivering to Employer either previously
acquired Shares or Shares acquired upon the exercise of the Option which the
Participant or beneficiary was unconditionally obligated to deliver to Employer
or (iii) any other means which the Committee determines. The fair market value
of Shares shall be determined in accordance with procedures established by the
Committee. Any amounts required to be withheld in excess of the value of Shares
withheld or delivered shall be paid in cash or withheld from other compensation
paid by Employer.
11. EFFECT ON EMPLOYMENT, COMPENSATION AND STOCKHOLDER STATUS
Neither the adoption of this Plan nor the grant of any Options, nor ownership of
Options or Shares shall be deemed or construed to obligate Employer to continue
the employment, appointment or engagement of any Participant for any particular
period. The Options and the Shares acquired pursuant to the exercise of such
Options are a matter of separate inducement and are not in lieu of any salary or
other compensation for services. No Option confers upon any Participant any
rights as a stockholder of the Company prior to the date on which the
Participant fulfills all conditions for receipt of such rights.
12. NOTICE OF SALE OF SHARES
A Participant shall provide prompt notice of the disposition of any Shares
acquired by the Participant upon exercise of an Incentive Option granted
hereunder within two years from the date such Incentive Option was granted or
within one year after the transfer of such Shares to the Participant; provided,
however, that a transfer to a trustee, receiver, or other fiduciary in any
insolvency proceeding, as described in section 422(c)(3) of the Code, shall not
be deemed to be such a disposition.
13. INDEMNIFICATION OF COMMITTEE
No member or agent of the Committee shall be personally liable for any action,
determination or interpretation made with respect to the Plan and each member of
the Committee shall be indemnified by the Company to the fullest extent
permitted by Delaware law and the governing instruments of the Company.
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14. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors of the Company may amend or terminate this Plan at any
time, but no such action shall reduce the number of Shares subject to the then
outstanding Options granted to any Participant or adversely to the Participant
change the terms and conditions of outstanding Options without the Participant's
consent (or if the Participant is not alive, the consent of the affected
beneficiary of the Participant); provided that adjustments pursuant to
Section 6b. shall not be subject to the foregoing limitations of this
Section 15. No Incentive Option may be granted after ten (10) years from the
original effective date of adoption of this Plan.
15. EFFECTIVE DATE
Subject to the approval by a vote of the stockholders of the Company by May 10,
2000, the Plan shall become effective as of May 10, 2000 (the "Effective Date");
provided, however, that any Options granted under the Plan prior to its approval
by stockholders shall be contingent on such stockholder approval.
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APPENDIX B
UNITED STATIONERS INC.
AND SUBSIDIARY COMPANIES
MANAGEMENT INCENTIVE PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE
1.1 ESTABLISHMENT OF THE PLAN. United Stationers Inc. herewith establishes
as of January 1, 2000 the Management Incentive Plan, an annual incentive
compensation plan for key Employees. The Plan shall be known as the "Management
Incentive Plan" (herein referred to as the "Plan").
1.2 PURPOSE. The purpose of the Plan is to motivate and reward
Participants for the achievement of operational individual goals.
SECTION 2. DEFINITIONS
2.1 DEFINITIONS. Whenever used herein, the following terms shall have the
meanings set forth below, unless otherwise expressly provided. When the defined
meaning is intended, the term is capitalized.
(a) "Base Salary" shall mean the regular salary, before any salary reduction
contributions made to the Company's 401(k) or Section 125 plans or other
deferred compensation plans, but not including any awards under this Plan
and not including any other bonuses, incentive pay, or special awards,
earned by a Participant.
(b) "Board" shall mean the Board of Directors of United Stationers Inc.
(c) "Cause" shall mean failure to follow Company directives and policies,
insubordination, willful malfeasance, gross negligence, or acts of
dishonesty.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Committee" shall mean (i) the Human Resources Committee with respect to
Employees who are reasonably likely to be treated as "covered employees"
for the Plan Year under section 162(m) of the Code, officers of United
Stationers Inc. and presidents of subsidiaries of United Stationers
Supply Co.; (ii) the Chief Executive Officer of United Stationers Supply
Co. with respect to Employees who are not reasonably likely to be treated
as "covered employees" for the Plan Year under section 162(m) of the Code
and who are not officers of United Stationers Inc. or presidents of
subsidiaries of United Stationers Supply Co.; or (iii) such other
officer, committee or committees appointed by the Board to serve as the
administering committee for any group of Employees under the Plan.
(f) "Company" shall mean United Stationers Inc., a Delaware corporation and
its direct and indirect subsidiaries.
(g) "Employee" shall mean an employee of the Company who is in a position
meeting the defined eligibility criteria for participation in the Plan,
as stated in Subsection 3.1.
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(h) "Final Award" shall mean the award earned by a Participant based on a
comparison of actual year-end results against the performance goals
established at the beginning of the Plan Year.
(i) "Human Resources Committee" shall mean the Human Resources Committee of
the Board of Directors of United Stationers Inc.
(j) "Participant" shall mean an Employee who is approved by the Committee
for participation in the Plan for a specified Plan Year.
(k) "Plan Year" shall mean the Company's fiscal year.
(l) "Target Incentive Award" shall mean the award to be paid to a
Participant for meeting planned performance results. Such Target
Incentive Awards shall be expressed as a percentage of a Participant's
actual Base Salary on January 1st of the Plan Year, with promotional
adjustments or other Base Salary changes that occur during the Plan Year
made on a pro-rata basis, using whole months.
(m) "Top 5 Employees" shall mean Employees who are reasonably likely to be
treated as "covered employees" for the Plan Year under section 162(m) of
the Code.
2.2 GENDER AND NUMBER. Except when otherwise indicated by the context, any
masculine terminology used herein also shall include the feminine, and the
definition of any term in the singular shall include the plural.
SECTION 3. ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY. Eligibility for participation in the Plan will be limited
to those key Employees who, by the nature and scope of their position, regularly
and directly make or influence policy or operating decisions which impact the
profitability and earnings results of the Company. However, any Employee
participating in a sales incentive, commission arrangement, or who is currently
receiving consulting payments pursuant to a consulting agreement shall be
excluded from participation in this Plan.
3.2 PARTICIPATION. Participation in the Plan shall be determined annually
by the Committee. Employees approved for participation shall be notified of
their selection.
3.3 PARTIAL PLAN YEAR PARTICIPATION. The Committee may allow an individual
who becomes eligible during the Plan Year to participate in the Plan. In such
case, the Participant's Final Award shall be prorated based on the number of
full months of participation during the pertinent Plan Year.
A participant whose incentive category level is changed during the Plan Year
shall be eligible for a bonus based on the number of months spent in each
incentive category during the Plan Year. The proration shall be determined by
multiplying the Final Award for a full year of participation at each incentive
category level by a fraction; the numerator of which shall be the number of
months spent at the incentive category level and the denominator of which shall
be twelve (12). The Participant's Final Award shall be the sum of the prorated
awards calculated for the time spent at each incentive category level, with
consideration to changes in Base Salary, when appropriate.
3.4 NO RIGHT TO PARTICIPATE. Participation by an Employee in a prior year
does not provide a right or entitlement to be selected for participation in a
current or future Plan Year.
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SECTION 4. AWARD DETERMINATION
4.1 PERFORMANCE GOALS. The Human Resources Committee shall establish for
each Plan Year a level of performance at which one hundred percent (100%) of the
Target Incentive Award shall be earned. The Human Resources Committee also shall
establish a range of performance levels above and below this target performance
level at which the maximum and minimum incentive awards shall be earned. The
Committee will establish the Target Incentive Awards and their related maximum
and minimum award levels for each Participant taking into consideration each
Participant's duties and responsibilities. At least initially, the Committee
intends to set earnings per share performance criteria for the Top 5 Employees.
4.2 ADJUSTMENT OF PERFORMANCE TARGETS. The Human Resources Committee shall
have the right to adjust the performance goals (either up or down) during the
Plan Year if it determines that external changes or other unanticipated business
conditions have materially affected the fairness of the goals and unduly
influenced the Company's ability to meet them. Further, the Human Resources
Committee shall have the right to adjust the performance goals and the Final
Award amounts in the event of a Plan Year consisting of less than twelve
(12) months.
4.3 FINAL AWARD DETERMINATIONS. At the end of each Plan Year, the
Committee shall review performance against goals and compute Final Awards for
each Participant. Participants must be actively employed by the Company on the
last day of the Plan Year, except as provided in Subsections 6.1 and 6.3, to
receive an award for that Plan Year. Final Award amounts, may be adjusted
(either up or down) based on the Committee's assessment of Company performance
results and Participant performance. Notwithstanding anything herein to the
contrary, the Committee shall not make any adjustments after the last day of the
Plan Year with respect to Final Awards for such Plan Year. In addition,
notwithstanding anything herein to the contrary, the Committee with respect to
the Top 5 Employees may only make adjustments which would reduce Final Awards to
the Top 5 Employees and may not make adjustments which would increase Final
Awards to the Top 5 Employees.
4.4 MAXIMUM FINAL AWARD. For any Top 5 Employee, the maximum Final Award
for any Plan Year shall not exceed two hundred percent (200%) of the
Participant's Target Incentive Award or two million dollars ($2,000,000).
SECTION 5. PAYMENT OF FINAL AWARDS
5.1 FORM AND TIMING OF PAYMENT. Payment of Final Awards shall be made in
cash following the end of the Plan Year as soon as practicable thereafter as the
Committee shall determine. The Final Awards shall be a liability of the Company
when the Plan Year concludes.
SECTION 6. TERMINATION OF EMPLOYMENT
6.1 TERMINATION OF EMPLOYMENT DUE TO DEATH. In the event a Participant's
employment is terminated by reason of death, the Final Award shall be reduced to
reflect participation prior to termination. This reduction shall be determined
by multiplying the Final Award for a full year of participation by a fraction;
the numerator of which shall be the number of full months of participation
through the date of termination and the denominator of which shall be twelve
(12). The prorated Final Award thus determined shall be paid as soon as
practicable following the end of the Plan Year.
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6.2 TERMINATION FOR CAUSE. In the event a Participant's employment is
terminated for Cause prior to the end of the Plan Year, the Participant shall
not be entitled to an award for the Plan Year in which the termination occurs.
6.3 TERMINATION FOR OTHER THAN CAUSE OR DEATH. In the event a
Participant's employment is terminated for reasons other than Cause, a full or
prorated Final Award may be paid at the Committee's discretion.
SECTION 7. RIGHTS OF PARTICIPANTS
7.1 EMPLOYMENT. Nothing in this Plan shall interfere with or limit in any
way the right of the Company to terminate or change a Participant's employment
at any time, nor confer upon any Participant any right to continue in the employ
of the Company. Nothing herein contained shall limit or affect in any manner or
degree the normal and usual powers of management, exercised by the officers and
the Board to change the duties or the character of employment of any employee of
the Company or to remove the individual from the employment of the Company at
any time, all of which rights and powers are expressly reserved.
7.2 NONTRANSFERABILITY. No right or interest of any Participant in this
Plan shall be assignable or transferable or subject to any lien, directly, by
operation of law or otherwise, including execution, levy, garnishment,
attachment, pledge, and bankruptcy.
SECTION 8. ADMINISTRATION
8.1 ADMINISTRATION. This Plan shall be administered by the Human Resources
Committee in accordance with the provisions contained herein.
8.2 QUESTIONS OF CONSTRUCTION AND INTERPRETATION. The determination of the
Human Resources Committee in construing or interpreting this Plan or making any
decision with respect to the Plan shall be final, binding, and conclusive upon
all persons. The Human Resources Committee's interpretative responsibility shall
include any and all definitions in the Plan, including, but not limited to,
interpretations of Cause.
8.3 LIABILITY. The Board, the Human Resources Committee, the Committee, or
any other person acting under the direction of either, shall not be liable and
shall be held harmless for any act or failure to act hereunder.
SECTION 9. AMENDMENTS
9.1 AMENDMENTS. United Stationers Inc., in its absolute discretion,
without notice, at any time and from time to time, may modify or amend, in whole
or in part, any or all of the provisions of this Plan, or suspend or terminate
it entirely; provided, that no such modification, amendment, suspension, or
termination, may without the consent of the Participant (or his beneficiary in
the case of death of the Participant) reduce after the end of the Plan Year the
right of a Participant (or the Participant's beneficiary as the case may be) to
a payment or distribution in accordance with the provisions contained in this
Plan or change to the detriment of a Participant any potential rights in that
Plan Year pursuant to Section 11 of this Plan.
SECTION 10. REQUIREMENTS OF LAW
10.1 GOVERNING LAW. The Plan shall be construed in accordance with and
governed by the laws of the State of Illinois.
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10.2 WITHHOLDING TAXES. The Company shall have the right to deduct from
all payments under this Plan any Federal, state or other taxes required by law
to be withheld with respect to such payments.
SECTION 11. MERGER, CONSIDERATION, OR ACQUISITION
11.1 PAYMENT UPON CHANGE OF CONTROL. If the Plan terminates upon or after
a Change of Control of United Stationers Inc. during the Plan Year in which the
Change of Control of United Stationers Inc. occurs, a Participant in the Plan
for the Plan Year during which a Change of Control occurs shall be entitled to
an amount equal to the Participant's Target Incentive Award for such Plan Year.
Such amount shall be paid in cash to the Participant after the termination of
the Plan.
11.2 DEFINITION OF CHANGE OF CONTROL. The term "Change of Control" shall
mean any one or more of the following events:
(a) Any "Person" (having the meaning ascribed to such term in Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended ("1934 Act") and used in
Sections 13(d) and 14(d) thereof, including a "group" within the meaning of
Section 13(d)(3)) has or acquires "Beneficial Ownership" (within the meaning of
Rule 13d-3 under the 1934 Act) of 30% or more of the combined voting power of
United Stationers Inc.'s then outstanding voting securities entitled to vote
generally in the election of directors ("Voting Securities"); provided, however,
that in determining whether a Change of Control has occurred, Voting Securities
which are held or acquired by (i) United Stationers Inc. or any of its
subsidiaries or (ii) an employee benefit plan (or a trust forming a part
thereof) maintained by United Stationers Inc. or any of its subsidiaries shall
not constitute a Change of Control. Notwithstanding the foregoing, a Change of
Control shall not be deemed to occur solely because any Person acquired
Beneficial Ownership of more than the permitted amount of Voting Securities as a
result of the issuance of Voting Securities by United Stationers Inc. in
exchange for assets (including equity interests) or funds with a fair value
equal to the fair value of the Voting Securities so issued; provided that if a
Change of Control would occur (but for the operation of this sentence) as a
result of the issuance of Voting Securities by United Stationers Inc., and after
such issuance of Voting Securities by United Stationers Inc., such Person
becomes the Beneficial Owner of any additional Voting Securities which increases
the percentage of the Voting Securities Beneficially Owned by such Person to
more than 50% of the Voting Securities of United Stationers Inc., then a Change
of Control shall occur.
(b) At any time during a period of two consecutive years, the individuals who at
the beginning of such period constituted the Board (the "Incumbent Board") cease
for any reason to constitute more than 50% of the Board; provided, however, that
if the election, or nomination for election by United Stationers Inc.'s
stockholders, of any new director was approved by a vote of more than 50% of the
directors then comprising the Incumbent Board, such new director shall, for
purposes of this Subsection (b), be considered as though such person were a
member of the Incumbent Board; provided, further, however, that no individual
shall be considered a member of the Incumbent Board if such individual initially
assumed office as a result of (i) either an actual "Election Contest" (as
described in Rule 14a-11 promulgated under the 1934 Act) or other actual
solicitation of proxies or consents by or on behalf of a Person other than the
Incumbent Board (a "Proxy Contest"), or (ii) by reason of any agreement intended
to avoid or settle any actual or threatened Election Contest or Proxy Contest.
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(c) Consummation of a merger, consolidation or reorganization or approval by
United Stationers Inc.'s stockholders of a liquidation or dissolution of United
Stationers Inc. or the occurrence of a liquidation or dissolution of United
Stationers Inc. ("Business Combination"), unless, following such Business
Combination:
(i) the Persons with Beneficial Ownership of United Stationers Inc.,
immediately before such Business Combination, have Beneficial Ownership of
more than 50% of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors of the
corporation (or in the election of a comparable governing body of any other
type of entity) resulting from such Business Combination (including, without
limitation, an entity which as a result of such transaction owns United
Stationers Inc. or all or substantially all of United Stationers Inc.'s
assets either directly or through one or more subsidiaries) (the "Surviving
Company") in substantially the same proportions as their Beneficial
Ownership of the Voting Securities immediately before such Business
Combination;
(ii) the individuals who were members of the Incumbent Board immediately
prior to the execution of the initial agreement providing for such Business
Combination constitute more than 50% of the members of the board of
directors (or comparable governing body of a noncorporate entity) of the
Surviving Company; and
(iii) no Person (other than United Stationers Inc., any of its
subsidiaries or any employee benefit plan (or any trust forming a part
thereof) maintained by the Company, the Surviving Company or any Person who
immediately prior to such Business Combination had Beneficial Ownership of
30% or more of the then Voting Securities) has Beneficial Ownership of 30%
or more of the then combined voting power of the Surviving Company's then
outstanding voting securities. Notwithstanding this subsection (iii), a
Change of Control shall not be deemed to occur solely because any Person
acquired Beneficial Ownership of more than 30% of Voting Securities as a
result of the issuance of Voting Securities by United Stationers Inc. in
exchange for assets (including equity interests) or funds with a fair value
equal to the fair value of the Voting Securities so issued.
(d) Approval by United Stationers Inc.'s stockholders of an agreement for the
assignment, sale, conveyance, transfer, lease or other disposition of all or
substantially all of the assets of United Stationers Inc. to any Person (other
than a subsidiary of United Stationers Inc. or other entity, the Persons with
Beneficial Ownership of which are the same Persons with Beneficial Ownership of
United Stationers Inc. and such Beneficial Ownership is in substantially the
same proportions), or the occurrence of the same.
Notwithstanding the foregoing, a Change of Control shall not be deemed to occur
solely because any Person acquired Beneficial Ownership of more than the
permitted amount of Voting Securities as a result of the acquisition of Voting
Securities by United Stationers Inc. which, by reducing the number of Voting
Securities outstanding, increases the proportional number of shares Beneficially
Owned by such Person; provided that if a Change of Control would occur (but for
the operation of this sentence) as a result of the acquisition of Voting
Securities by United Stationers Inc., and after such acquisition of Voting
Securities by United Stationers Inc., such Person becomes the Beneficial Owner
of any additional Voting Securities which increases the percentage of the Voting
Securities Beneficially Owned by such Person, then a Change of Control shall
occur.
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Notwithstanding anything to the contrary herein, provided the Committee
(constituted of members of the Incumbent Board) in good faith determines that an
event which would otherwise be a Change of Control is not a change of effective
control of United Stationers Inc., a Change of Control shall not be deemed to
have occurred.
SECTION 12. INDEMNIFICATION
12.1 INDEMNIFICATION. Each person who is or shall have been a member of
the Human Resources Committee, the Committee or the Board or who is or shall
have been an Employee of the Company shall be indemnified and held harmless by
the Company from any loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by him in connection with any claim, action, suit, or
proceeding to which he may be a party by reason of any action taken or failure
to act under the Plan. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Certificate of Incorporation or By-Laws, as a
matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.
SECTION 13. EXPENSES OF THE PLAN
13.1 EXPENSES OF THE PLAN. The expenses of administering the Plan shall be
borne by the Company.
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DETACH HERE
PROXY
UNITED STATIONERS INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - MAY 10, 2000
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints KATHLEEN S. DVORAK, STEVEN R. SCHWARZ AND
ERGIN USKUP, 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 the Company's offices located at 2200 East Golf Road, Des Plaines,
Illinois on Wednesday, May 10, 2000, at 2:00 p.m., central 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, FOR the approval of the 2000 Management Equity Plan and FOR the
approval of the Management Incentive Plan, and in their discretion the proxies
may vote upon any other business that properly comes before the meeting.
- ----------- -----------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ----------- -----------
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DETACH HERE
PLEASE MARK
/X/ VOTES AS IN
THIS EXAMPLE
1. Election of three directors to serve for a three-year term expiring in
2003.
NOMINEES: (01) Frederick B. Hegl, Jr., (02) Randall Lattimore,
(03) Ilene S. Gordon
FOR WITHHELD
ALL / / / / FROM ALL
NOMINEES NOMINEES
/ /
--------------------------------------
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. Proposal to approve the 2000 / / / / / /
Management Equity Plan.
3. Proposal to approve the
Management Incentive Plan. / / / / / /
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
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:
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