UNITED STATIONERS INC (Form: 10-K, Received: 02/19/2014 16:42:47)

United States

Securities and Exchange Commission

Washington, DC 20549


(Mark one)		FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 0-10653

UNITED STATIONERS INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware		36-3141189
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

One Parkway North Boulevard

Suite 100

Deerfield, Illinois 60015-2559

(847) 627-7000

(Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant’s

Principal Executive Offices)


(Title of Class)		Name of Exchange on which registered:
Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.10 par value per share		NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 and Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See the definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):


Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The aggregate market value of the common stock of United Stationers Inc. held by non-affiliates as of June 30, 2013 was approximately $1.337 billion.

On February 14, 2014, United Stationers Inc. had 39,620,287 shares of common stock outstanding.

Documents Incorporated by Reference:

Certain portions of United Stationers Inc.’s definitive Proxy Statement relating to its 2014 Annual Meeting of Stockholders, to be filed within 120 days after the end of United Stationers Inc.’s fiscal year, are incorporated by reference into Part III.

UNITED STATIONERS INC.

FORM 10-K

For The Year Ended December 31, 2013

TABLE OF CONTENTS


		Page No.
Part I
Item 1.	Business		1
	Executive Officers of the Registrant		4
Item 1A.	Risk Factors		6
Item 1B.	Unresolved Comment Letters		10
Item 2.	Properties		10
Item 3.	Legal Proceedings		10
Item 4.	Mine Safety Disclosure		10

Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		11
Item 6.	Selected Financial Data		14
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		29
Item 8.	Financial Statements and Supplementary Data		31
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		68
Item 9A.	Controls and Procedures		68

Part III
Item 10.	Directors, Executive Officers and Corporate Governance		69
Item 11.	Executive Compensation		69
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		69
Item 13.	Certain Relationships and Related Transactions, and Director Independence		69
Item 14.	Principal Accounting Fees and Services		69

Part IV
Item 15.	Exhibits and Financial Statement Schedules		70
	Signatures		75
	Schedule II—Valuation and Qualifying Accounts		76

PART I

ITEM 1. BUSINESS.

General

United Stationers Inc. is a leading national wholesale distributor of business products, with consolidated net sales of $5.1 billion. United stocks a broad assortment of over 140,000 products, including technology products, traditional office products, office furniture, janitorial and breakroom supplies, and industrial supplies. The Company’s network of 64 distribution centers allows it to ship products to approximately 25,000 reseller customers, enabling the Company to ship most products overnight to more than 90% of the U.S. and next day delivery to major cities in Mexico and Canada. The Company also has operations in Dubai, United Arab Emirates (UAE).

Except where otherwise noted, the terms “United” and “the Company” refer to United Stationers Inc. and its consolidated subsidiaries. The parent holding company, United Stationers Inc. (USI), was incorporated in 1981 in Delaware. USI’s only direct wholly owned subsidiary—and its principal operating company—is United Stationers Supply Co. (USSC), incorporated in 1922 in Illinois.

Products

United stocks over 140,000 products in these categories:

Technology Products. The Company is a leading national wholesale distributor of computer supplies and peripherals. It stocks approximately 10,000 items, including imaging supplies, data storage, digital cameras, computer accessories and computer hardware items such as printers and other peripherals. United provides these products to value-added computer resellers, office products dealers, drug stores, grocery chains and e-commerce merchants. Technology products generated about 28.8% of the Company’s 2013 consolidated net sales.

Traditional Office Products. The Company is one of the largest national wholesale distributors of a broad range of office supplies. It carries over 23,000 brand-name and private label products, such as filing and record storage products, business machines, presentation products, writing instruments, paper products, shipping and mailing supplies, calendars and general office accessories. These products contributed approximately 25.8% of net sales during the year.

Janitorial and Breakroom Supplies. United is a leading wholesaler of janitorial and breakroom supplies throughout the nation. The Company holds over 20,000 items in these lines: janitorial and breakroom supplies (cleaners and cleaning accessories), foodservice consumables (such as disposable cups, plates and utensils), safety and security items, and paper and packaging supplies. This product category provided about 26.3% of the latest year’s net sales primarily from Lagasse, LLC. (Lagasse), a wholly owned subsidiary of USSC.

Industrial Supplies. With the acquisition of O.K.I. Supply Co. (OKI) in 2012, United increased its industrial supplies stock to over 83,000 items including hand and power tools, safety and security supplies, janitorial equipment and supplies, other various industrial MRO (maintenance, repair and operations) items and oil field and welding supplies. In 2013, this product category accounted for roughly 10.2% of the Company’s net sales.

Office Furniture. United is one of the largest office furniture wholesaler distributors in the nation. It stocks approximately 4,000 products including desks, filing and storage solutions, seating and systems furniture, along with a variety of products for niche markets such as education, government, healthcare and professional services. Innovative marketing programs and related services help drive this business across multiple customer channels. This product category represented approximately 6.1% of net sales for the year.

The remainder of the Company’s consolidated net sales came from freight, advertising and software related revenue.

United offers private brand products within each of its product categories to help resellers provide quality value-priced items to their customers. These include Innovera ^® technology products, Universal ^® office products, Windsoft ^® paper products, Boardwalk ^® and UniSan ^® janitorial and sanitation products, Alera ^® office furniture, and Anchor Brand ^® and Best Welds ^® welding, industrial, safety and oil field pipeline products.

During 2013, private brand products accounted for approximately 16% of United’s net sales.

Customers

United serves a diverse group of approximately 25,000 customers. They include independent office products dealers; contract stationers; office products superstores; computer products resellers; office furniture dealers; mass merchandisers; mail order companies; sanitary supply, paper and foodservice distributors; drug and grocery store chains; healthcare distributors; e-commerce merchants; oil field, welding supply and industrial/MRO distributors; and other independent distributors. The Company had one customer, W.B. Mason Co., Inc., which constituted approximately 11.0% of its 2013 consolidated net sales. No other single customer accounted for more than 10% of 2013 consolidated net sales.

Sales to independent resellers—which include United Stationers Supply, Lagasse and ORS Nasco resellers—contributed 88% of consolidated net sales. The Company provides these customers with value-added services designed to help them market their products and services while improving operating efficiencies and reducing costs. National accounts comprised 12% of the Company’s 2013 consolidated net sales.

Marketing and Customer Support

United’s marketing and customer care capabilities differentiate the Company from its competitors by providing exceptional value-added services to resellers. The Company provides comprehensive printed materials, from full source product catalogs for easy shopping and reference guides to more inspirational and promotional materials. Comprehensive digital content and capabilities are provided to better position resellers on the internet. This ranges from an extensive, full source content database to advanced eBusiness capabilities, website development, analytics and digital promotional campaigns. An important component of the value proposition is that the Company produces the printed and digital items on behalf of the resellers and collects dollars and/or advertising revenue from the reseller in return.

United also provides specific services that enable the resellers to improve their business model. This includes such things as primary research efforts, brand strategy and development, campaign development, customer segmentation and cost management and finally training programs designed to help resellers improve their sales and marketing techniques.

Resellers can place orders with the Company through a variety of electronic order entry systems or by phone, fax and e-mail. Electronic order entry systems allow resellers to forward their customers’ orders directly to United, resulting in the delivery of pre-sold products to the reseller. In 2013, United received approximately 93% of its orders electronically.

Distribution

The Company uses a network of 64 distribution centers to provide over 140,000 items on a national basis to approximately 25,000 reseller customers. This network, combined with the Company’s broad assortment of inventory in technology products, traditional office products, office furniture, janitorial and breakroom supplies, and industrial supplies, enables the Company to ship most products on an overnight basis to more than 90% of the U.S. and next day delivery to major cities in Mexico and Canada, with an average line fill rate of approximately 97%. United’s domestic operations generated approximately $5.0 billion of its approximately $5.1 billion in 2013 consolidated net sales, with its international operations contributing another $0.1 billion to 2013 net sales. Additionally, efficient order processing resulted in a 99.7% order accuracy rate for the year.

Distribution centers are supplemented with 46 re-distribution points across the nation to facilitate delivery. United has a dedicated fleet of approximately 500 trucks, most of which are under contract to the Company. This enables United to make direct deliveries to resellers from regional distribution centers and local distribution points.

The “Wrap and Label” program is another important service for resellers. It gives resellers the option to receive individually packaged orders ready to be delivered to their end consumers. For example, when a reseller places orders for several individual consumers, United can pick and pack the items separately, placing a label on each

package with the consumer’s name, ready for delivery to the end consumer by the reseller. Resellers benefit from the “Wrap and Label” program because it eliminates the need to break down bulk shipments and repackage orders before delivering them to consumers.

In addition to providing value-adding programs for resellers, United also remains committed to reducing its operating costs. The Company continues to target the removal of costs through a combination of new and continuing activities. These activities include process improvement and work simplification activities that help increase efficiency throughout the business and improve customer satisfaction.

Purchasing and Merchandising

As a leading wholesale distributor of business essentials, United leverages its broad product selection as a key merchandising strategy. The Company orders products from approximately 1,600 manufacturers. Based on United’s purchasing volume it receives substantial supplier allowances and can realize significant economies of scale in its logistics and distribution activities. In 2013, the Company’s largest two suppliers were Hewlett-Packard Company and Lexmark International, Inc, which represented approximately 24% and 7%, respectively, of its total purchases.

The Company’s merchandising department is responsible for selecting merchandise and for managing the entire supplier relationship. Product selection is based on three factors: end-consumer acceptance; anticipated demand for the product; and the manufacturer’s total service, price and product quality. As part of its effort to create an integrated supplier approach, United introduced the “Preferred Supplier Program.” In exchange for working closely with United to maximize a combined market strategy and operating contribution, as well as demonstrating compliance with United’s supply requirements and a proven track record of successful partnership, participating suppliers’ products are treated as preferred brands in the Company’s marketing efforts.

Competition

The markets in which the Company competes are highly competitive. The Company competes with other wholesale distributors of business products and with the manufacturers of the products the company sells. In addition, the Company competes with warehouse clubs and the business-to-business sales divisions of national business products resellers. United competes primarily on the basis of breadth of product lines, availability of products, speed of delivery, order fill rates, net pricing to customers, and the quality of marketing and other value-added services.

Seasonality

United’s sales generally are relatively steady throughout the year. However, sales also reflect seasonal buying patterns for consumers of traditional office products. In particular, the Company’s sales of traditional office products usually are higher than average during January, when many businesses begin operating under new annual budgets and release previously deferred purchase orders. Janitorial and breakroom supplies and industrial supplies sales are somewhat higher in the summer months.

Employees

As of February 14, 2014, United employed approximately 6,100 people.

Management believes it has good relations with its associates. Approximately 590 of the shipping, warehouse and maintenance associates at certain of the Company’s Baltimore, Los Angeles and New Jersey distribution centers are covered by collective bargaining agreements. The bargaining agreements in the Los Angeles and New Jersey distribution centers were successfully renegotiated in 2011 and are set to expire in 2014. The bargaining agreement in Baltimore was renegotiated in 2012 and is scheduled to expire in 2015. The Company has not experienced any work stoppages during the past five years.

Executive Officers Of The Registrant

The executive officers of the Company are as follows:


Name, Age and Position with the Company		Business Experience
P. Cody Phipps 52, President and Chief Executive Officer		P. Cody Phipps was promoted to Chief Executive Officer in May 2011. Prior to that time he served as the Company’s President and Chief Operating Officer from September 2010 and as the Company’s President, United Stationers Supply from October 2006 to September 2010. He joined the Company in August 2003 as its Senior Vice President, Operations. Prior to joining the Company, Mr. Phipps was a partner at McKinsey & Company, Inc., a global management consulting firm where he led the firm’s North American Operations Effectiveness Practice and co-founded and led its Service Strategy and Operations Initiative. Prior to joining McKinsey, Mr. Phipps worked as a consultant with The Information Consulting Group, a systems consulting firm, and as an IBM account marketing representative.

Todd A. Shelton 47, Senior Vice President and Chief Financial Officer		Todd A. Shelton was appointed Senior Vice President and Chief Financial Officer on August 16, 2013. Prior to that, Todd served as President, United Stationers Supply from September 1, 2010 and President of Lagasse, Inc., a wholly-owned subsidiary of United Stationers Supply Co. Mr. Shelton previously held the position of Chief Operating Officer of Lagasse after joining in 2001 as Vice President, Finance and has held various leadership roles in sales, customer service, operations, and procurement. Before joining Lagasse, Mr. Shelton was a Partner and Vice President at a privately-held manufacturer of retail and medical products. He began his career at Baxter Healthcare with roles in finance, IT, sales and marketing.

Eric A. Blanchard 57, Senior Vice President, General Counsel and Secretary		Eric A. Blanchard has served as the Company’s Senior Vice President, General Counsel and Secretary since January 2006. From November 2002 until December 2006 he served as the Vice President, General Counsel and Secretary at Tennant Company. Previously Mr. Blanchard was with Dean Foods Company where he held the positions of Chief Operating Officer, Dairy Division from January 2002 to October 2002, Vice President and President, Dairy Division from 1999 to 2002 and General Counsel and Secretary from 1988 to 1999.

Timothy P. Connolly 50, President, Business Transformation and Supply Chain		Timothy P. Connolly was named as the Company’s President, Business Transformation and Supply Chain in October 2013. Prior to this position he served as President, Operations and Logistics Services from January 2011 until his new appointment in October 2013. He also previously served as Senior Vice President, Operations from December 2006 until January 2011. From February 2006 to December 2006, Mr. Connolly was Vice President, Field Operations Support and Facility Engineering at the Field Support Center. He joined the Company in August 2003 as Region Vice President Operations, Midwest. Before joining the Company, Mr. Connolly was the Regional Vice President, Midwest Region for Cardinal Health where he directed operations, sales, human resources, finance and customer service for one of Cardinal’s largest pharmaceutical distribution centers.

Barbara J. Kennedy 47, Senior Vice President, Human Resources		Barbara J. Kennedy has been United Stationers’ Senior Vice President, Human Resources since August 2008. Before she joined the Company, Ms. Kennedy held various human resources management positions, serving most recently as Executive Vice President, Human Resources, Safety, Recruiting and Driver Services for Swift Transportation. Prior to joining Swift, she served as Vice President, Human Resources at Barr-Nunn Transportation.


Name, Age and Position with the Company		Business Experience
Larry D. Davis 48, President, ORS Nasco		Larry D. Davis was appointed President of ORS Nasco on July 23, 2010. Since joining ORS Nasco in 1999, Mr. Davis has served in numerous senior capacities including General Manager, Vice President of Marketing and Vice President of Information Systems. Prior to joining ORS Nasco, Mr. Davis worked for NxTrend Technology as the Manager of Project Management leading merger and acquisition integrations. Previous to NxTrend, Mr. Davis was General Manager of a regional wholesale distribution organization.

Joseph G. Hartsig 50, Senior Vice President, Merchandising		Joseph G. Hartsig joined United Stationers on November 25, 2013 as Senior Vice President, Merchandising. Prior to joining United Stationers, he was GMM at Sam’s Club, the wholesale club division of Wal-mart, Inc. Prior to joining Sam’s Club, Mr. Hartsig was a Vice President at Motorola, where he spent eight years in consumer technology product management and sales capacities in Illinois and overseas. Previous to Motorola, Mr. Hartsig held various management and marketing positions with Viacom, Inc., Conagra Foods, Inc., Pillsbury, and S.C. Johnson.

Richard D. Phillips, 43, President, Online and New Channels		Richard D. Phillips joined United Stationers in January 2013 as President, Online and New Channels. Prior to joining United Stationers, Mr. Phillips spent 14 years at McKinsey & Company, where he was elected Partner in 2005. Prior to joining McKinsey, he spent six years at Baxter Healthcare in finance and sales.

Executive officers are elected by the Board of Directors. Except as required by individual employment agreements between executive officers and the Company, there exists no arrangement or understanding between any executive officer and any other person pursuant to which such executive officer was elected. Each executive officer serves until his or her successor is appointed and qualified or until his or her earlier removal or resignation.

Availability of the Company’s Reports

The Company’s principal Web site address is www.unitedstationers.com . This site provides United’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K—as well as amendments and exhibits to those reports filed or furnished under Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) for free as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission (SEC). In addition, copies of these filings (excluding exhibits) may be requested at no cost by contacting the Investor Relations Department:

United Stationers Inc.

Attn: Investor Relations Department

One Parkway North Boulevard

Suite 100

Deerfield, IL 60015-2559

Telephone: (847) 627-7000

E-mail: IR@ussco.com

ITEM 1A. RISK FACTORS.

Any of the risks described below could have a material adverse effect on the Company’s business, financial condition or results of operations. These risks are not the only risks facing United; the Company’s business operations could also be materially adversely affected by risks and uncertainties that are not presently known to United or that United currently deems immaterial.

The loss of one or more significant customers could significantly reduce United’s revenues and profitability.

In 2013 United’s largest customer accounted for approximately 11.0% of net sales and United’s top five customers accounted for approximately 26.0% of net sales. A number of United’s current and potential customers were involved in business combinations in 2013, including one of the Company’s five largest customers. Following such transactions, the surviving companies often conduct “requests for proposal” or engage in other supplier reviews, which can result in the companies altering their sourcing relationships. Increasing direct purchases by major customers from manufacturers, as well as the loss of one or more key customers, changes in the sales mix or sales volume to key customers, or a significant downturn in the business or financial condition of any of them could significantly reduce United’s sales and profitability.

Demand for products in the office, technology and furniture product categories may continue to decline.

The overall demand for certain products in the office, technology and furniture product categories may continue to weaken as consumers increasingly create, share, and store documents electronically, without printing or filing them. If demand continues to decline and United is unable to offset lower aggregate demand by increasing market share in these categories or increasing sales of products in other categories, the Company’s results of operations and financial condition may be adversely affected.

United’s operating results depend on employment rates and the strength of the general economy.

The customers that United serves are affected by changes in economic conditions outside the Company’s control, including national, regional, and local slowdowns in general economic activity and job markets. Demand for the products and services the Company offers, particularly in the office product, technology, and furniture categories, is affected by the number of white collar and other workers employed by the businesses United’s customers serve. The persistent high unemployment rates in recent years have adversely affected United’s results of operations. If employment continues to grow at a slow rate, demand for the products the Company sells could be adversely affected.

United may not achieve its growth, cost-reduction, and margin enhancement goals.

United has set goals to improve its profitability over time by reducing expenses, growing sales to existing and new customers, and increasing sales of higher margin products as a percentage of total sales. There can be no assurance that United will achieve its enhanced profitability goals. Factors that could have a significant effect on the Company’s efforts to achieve these goals include the following:

•

Failure to achieve the Company’s revenue and margin growth objectives in its sales channels and product categories;

•

Impact on gross margin from competitive pricing pressures;

•

Disruptions to United’s customer and supplier engagements as the Company implements changes to its organization, business processes, and technology systems to address evolving customer and end-user preferences and needs;

•

Failure to maintain or improve the Company’s sales mix between lower margin and higher margin products;

•

Inability to pass along cost increases from United’s suppliers to its customers;

•

Failure to increase sales of United’s private brand products; and

•

Failure of customers to adopt the Company’s product pricing and marketing programs.

United’s reliance on supplier allowances and promotional incentives could impact profitability.

Supplier allowances and promotional incentives that are often based on volume contribute significantly to United’s profitability. If United does not comply with suppliers’ terms and conditions, or does not make requisite purchases to achieve certain volume hurdles, United may not earn certain allowances and promotional incentives. Additionally, suppliers may reduce the allowances they pay United if they conclude that the value United creates does not justify the allowances. If United’s suppliers reduce or otherwise alter their allowances or promotional incentives, United’s

profit margin for the sale of the products it purchases from those suppliers may decline. The loss or diminution of supplier allowances and promotional support could have an adverse effect on the Company’s results of operation.

United relies on independent resellers for a significant percentage of its net sales.

Sales to independent resellers account for a significant portion of United’s net sales. Independent resellers compete with national distributors and retailers that have substantially greater financial resources and technical and marketing capabilities.

Over the years, several of the Company’s independent reseller customers have been acquired by competitors or have ceased operation. If United’s customer base of independent resellers declines, the Company’s business and results of operations may be adversely affected.

United operates in a competitive environment.

The Company operates in a competitive environment. The Company competes with other wholesale distributors of business products and with the manufacturers of the products the Company sells. In addition, the Company competes with warehouse clubs and the business-to-business sales divisions of national business products resellers. Competition is based largely upon service capabilities and price, as the Company’s competitors generally offer products that are the same as or similar to the products the Company offers to the same customers or potential customers. These competitive pressures are exacerbated by the ongoing decline in the overall demand for office products, driven in part by changes in technology that alter the types of office products consumers’ use and the quantities of those products they consume. The competitive arena is also increasingly shifting online. The Company’s financial condition and results of operations depend on its ability to compete effectively on price, product selection and availability, marketing support, logistics, and other ancillary services; diversify its product offering; and provide services and capabilities that enable its customers to succeed online.

Supply chain disruptions or changes in key suppliers’ distribution strategies could decrease United’s revenues and profitability.

United believes its ability to offer a combination of well-known brand name products, competitively priced private brand products, and support services is an important factor in attracting and retaining customers. The Company’s ability to offer a wide range of products and services is dependent on obtaining adequate product supply and services from manufacturers or other suppliers. United’s agreements with its suppliers are generally terminable by either party on limited notice. The loss of, or a substantial decrease in the availability of products or services from key suppliers at competitive prices could cause the Company’s revenues and profitability to decrease. In addition, supply interruptions could arise due to transportation disruptions, labor disputes or other factors beyond United’s control. Disruptions in United’s supply chain could result in a decrease in revenues and profitability.

Some manufacturers refuse to sell their products to wholesalers like United. Other manufacturers only allow United to sell their products to specified customers. If changes in key suppliers’ distribution strategies or practices reduce the breadth of products the Company is able to purchase or the number of customers to whom United can sell key products, the Company’s results of operation and financial condition could be adversely affected.

Many of the Company’s independent resellers use third party technology vendors (“3PVs”) to automate their business operations. The 3PVs play an important role in the independent dealer channel, as most purchase orders, order confirmations, stock availability checks, invoices, and advanced ship notices are exchanged between United and its independent resellers over 3PV networks. The 3PVs also provide e-commerce portals that United’s customers use to transact online business with their customers. If United is unable to obtain services from one or more 3PVs on terms that are acceptable to United, or if a 3PV fails to provide quality services to United’s customers, United’s business, financial condition, and results of operations could be adversely affected.

A significant disruption or failure of the Company’s information technology systems or in its design, implementation or support of the information technology systems and e-commerce services it provides to customers could disrupt United’s business, result in increased costs and decreased revenues, harm the Company’s reputation, and expose the Company to liability.

The Company relies on information technology in all aspects of its business, including managing and replenishing inventory, filling and shipping customer orders, and coordinating sales and marketing activities. Several of the

Company’s software applications are legacy systems which the Company must periodically update, enhance, and replace. A significant disruption or failure of the Company’s existing information technology systems or in the Company’s development and implementation of new systems could put it at a competitive disadvantage and could adversely affect its results of operations.

The Company also develops, licenses, and implements business management software and e-commerce services for customers. Defects or errors in the software or e-commerce services the Company provides to customers or failure to adequately protect customer information could result in increased costs, litigation, customer attrition, reduced market acceptance of the Company’s goods and services and damage to the Company’s reputation.

United is exposed to the credit risk of its customers.

United extends credit to its customers. The failure of a significant customer or a significant group of customers to timely pay all amounts due United could have a material adverse effect on the Company’s financial condition and results of operations. The Company’s trade receivables are generally unsecured or subordinated to other lenders, and many of the Company’s customers are thinly capitalized. The extension of credit involves considerable judgment and is based on management’s evaluation of a variety of factors, including customers’ financial condition and payment history, the availability of collateral to secure customers’ receivables, and customers’ prospects for maintaining or increasing their sales revenues. There can be no assurance that United has assessed and will continue to assess the creditworthiness of its existing or future customers accurately.

United must manage inventory effectively in order to maximize supplier allowances while minimizing excess and obsolete inventory.

To maximize supplier allowances and minimize excess and obsolete inventory, United must project end-consumer demand for over 140,000 items in stock. If United underestimates demand for a particular manufacturer’s products, the Company will lose sales, reduce customer satisfaction, and earn a lower level of allowances from that manufacturer. If United overestimates demand, it may have to liquidate excess or obsolete inventory at a loss.

United is focusing on increasing its sales of private brand products. These products can present unique inventory challenges. United sources some of its private brand products overseas, resulting in longer order-lead times than for comparable products sourced domestically. These longer lead-times make it more difficult to forecast demand accurately and require larger inventory investments to support high service levels.

United may not be successful in identifying, consummating, and integrating future acquisitions.

Historically, part of United’s growth and expansion into new product categories or markets has come from targeted acquisitions. Going forward, United may not be able to identify attractive acquisition candidates or complete the acquisition of any identified candidates at favorable prices and upon advantageous terms. Furthermore, competition for attractive acquisition candidates may limit the number of acquisition candidates or increase the overall costs of making acquisitions. Acquisitions involve significant risks and uncertainties, including difficulties integrating acquired business systems and personnel with United’s business; the potential loss of key employees, customers or suppliers; the assumption of liabilities and exposure to unforeseen liabilities of acquired companies; the difficulties in achieving target synergies; and the diversion of management attention and resources from existing operations. Difficulties in identifying, completing or integrating acquisitions could impede United’s revenues, profitability, and net worth. In addition, some of the Company’s acquisitions have included foreign operations, and future acquisitions may increase United’s international presence. International operations present a variety of unique risks, including the costs and difficulties of managing foreign enterprises, limitations on the repatriation and investment of funds, currency fluctuations, cultural differences that affect customer preferences and business practices, and unstable political or economic conditions. There can be no assurance that United will manage these risks effectively.

The security of private information United’s customers provide to the Company could be compromised.

Through United’s sales, marketing, and e-commerce activities, the Company collects and stores personally identifiable information and credit card data that customers provide when they buy products or services, enroll in promotional programs, or otherwise communicate with United. United also gathers and retains information about its employees in the normal course of business. United uses vendors to assist with certain aspects of United’s business and, to enable the vendors to perform services for United, the Company shares some of the information provided by customers and employees. Similarly, to enable United to provide goods and services to its customers, United’s customers share with United information their customers provide to them. Loss or disclosure of customer or

business information by United or its vendors could disrupt the Company’s operations and expose United to claims from customers, financial institutions, regulators, payment card associations, and other persons, any of which could have an adverse effect on the Company’s business, financial condition, and results of operations. In addition, compliance with more stringent privacy and information security laws and standards may result in significant expense due to increased investment in technology and the development of new operational processes.

The Company is subject to costs and risks associated with laws, regulations, and industry standards affecting United’s business.

United is subject to a wide range of state, federal, and foreign laws and industry standards, including laws and standards regarding labor and employment, government contracting, product liability, the storage and transportation of hazardous materials, privacy and data security, imports and exports, and intellectual property, as well as laws relating to the Company’s international operations, including the Foreign Corrupt Practices Act and foreign tax laws. These laws, regulations, and standards may change, sometimes significantly, as a result of political or economic events. The complex legal and regulatory environment exposes United to compliance and litigation costs and risks that could materially affect United’s operations and financial results.

United’s financial condition and results of operation depend on the availability of financing sources to meet its business needs.

The Company depends on various external financing sources to fund its operating, investing, and financing activities. The Company’s financing agreements include covenants by the Company to maintain certain financial ratios and comply with other obligations. If the Company violates a covenant or otherwise defaults on its obligations under a financing agreement, the Company’s lenders may refuse to extend additional credit, demand repayment of outstanding indebtedness, and terminate the financing agreements. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” included below under Item 7.

The Company’s primary external financing sources terminate or mature in one to three years. If the Company defaults on its obligations under a financing agreement or is unable to obtain or renew financing sources on commercially reasonable terms, its business and financial condition could be materially adversely affected.

The Company relies heavily on the ability to recruit, retain, and develop high-performing managers and the lack of execution in these areas could harm the Company’s ability to carry out its business strategy.

United’s ability to implement its business strategy depends largely on the efforts, skills, abilities, and judgment of the Company’s executive management team. United’s success also depends to a significant degree on its ability to recruit and retain sales and marketing, operations, and other senior managers. The Company may not be successful in attracting and retaining these employees, which may in turn have an adverse effect on the Company’s results of operations and financial condition.

Unexpected events could disrupt normal business operations, which might result in increased costs and decreased revenues.

Unexpected events, such as hurricanes, fire, war, terrorism, and other natural or man-made disruptions, may increase the cost of doing business or otherwise impact United’s financial performance. In addition, damage to or loss of use of significant aspects of the Company’s infrastructure due to such events could have an adverse affect on the Company’s operating results and financial condition.

ITEM 1B. UNRESOLVED COMMENT LETTERS.

None.

ITEM 2. PROPERTIES.

The Company considers its properties to be suitable with adequate capacity for their intended uses. The Company evaluates its properties on an ongoing basis to improve efficiency and customer service and leverage potential economies of scale. As of December 31, 2013, the Company’s properties consisted of the following:

Offices. The Company leases approximately 205,000 square feet for its corporate headquarters in Deerfield, Illinois. Additionally the Company owns 49,000 square feet of office space in Orchard Park, New York and leases 39,000 square feet of office space in Tulsa, Oklahoma, 20,000 square feet in Muskogee, Oklahoma and 16,300 square feet in Denver, Colorado.

Distribution Centers. The Company utilizes 64 distribution centers totaling approximately 12.2 million square feet of warehouse space. Of the 12.2 million square feet of distribution center space, 2.1 million square feet are owned and 10.1 million square feet are leased.

ITEM 3. LEGAL PROCEEDINGS.

The Company is involved in legal proceedings arising in the ordinary course of or incidental to its business. The Company has established reserves, which are not material, for potential losses that are probable and reasonably estimable that may result from those proceedings. In many cases, however, it is difficult to determine whether a loss is probable or even possible or to estimate the amount or range of potential loss, particularly where proceedings may be in relatively early stages or where plaintiffs are seeking substantial or indeterminate damages. Matters frequently need to be more developed before a loss or range of loss can reasonably be estimated. The Company believes that pending legal proceedings will be resolved with no material adverse effect upon its financial condition or results of operations.

ITEM 4. MINE SAFETY DISCLOSURE.

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Common Stock Information

USI’s common stock is quoted through the NASDAQ Global Select Market (“NASDAQ”) under the symbol USTR. The following table shows the high and low closing sale prices per share for USI’s common stock as reported by NASDAQ:


	High		Low
2013
First Quarter	$	39.15	$	31.86
Second Quarter		38.74		31.50
Third Quarter		43.90		34.50
Fourth Quarter		46.02		42.24
2012
First Quarter	$	34.73	$	28.81
Second Quarter		30.83		24.64
Third Quarter		27.79		24.19
Fourth Quarter		31.39		26.09

On February 14, 2014, the closing sale price of Company’s common stock as reported by NASDAQ was $41.47 per share. On February 14, 2014, there were approximately 487 holders of record of common stock. A greater number of holders of USI common stock are “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions.

Stock Performance Graph

The following graph compares the performance of the Company’s common stock over a five-year period with the cumulative total returns of (1) The NASDAQ Stock Market Index (U.S. companies), and (2) a group of companies included within Value Line’s Office Equipment Industry Index. The graph assumes $100 was invested on December 31, 2008 in the Company’s common stock and in each of the indices and assumes reinvestment of all dividends (if any) at the date of payment. The following stock price performance graph is presented pursuant to SEC rules and is not meant to be an indication of future performance.

LOGO


	2008		2009		2010		2011		2012		2013
United Stationers (USTR)	$	100.00	$	169.84	$	190.53	$	197.66	$	191.73	$	288.09
NASDAQ (U.S. Companies)	$	100.00	$	143.74	$	170.20	$	171.10	$	202.41	$	281.94
Value Line Office Equipment	$	100.00	$	138.18	$	160.49	$	120.80	$	113.98	$	193.50

Common Stock Repurchases

During 2013, the Company repurchased 1.7 million shares of common stock at an aggregate cost of $62.1 million. During 2012, the Company repurchased 2.5 million shares of common stock at an aggregate cost of $69.9 million. As of February 14, 2014, the Company had approximately $87.9 million remaining under share repurchase authorizations from its Board of Directors.

Purchases may be made from time to time in the open market or in privately negotiated transactions. Depending on market and business conditions and other factors, the Company may continue or suspend purchasing its common stock at any time without notice.

Acquired shares are included in the issued shares of the Company and treasury stock, but are not included in average shares outstanding when calculating earnings per share data.

The following table reports purchases of equity securities during the fourth quarter of fiscal year 2013 by the Company and any affiliated purchasers pursuant to SEC rules, including any treasury shares withheld to satisfy employee withholding obligations upon vesting of restricted stock and the execution of stock option exercises.


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
October 1, 2013 to October 31, 2013		102,388	$	43.44		102,388	$	103,127,487
November 1, 2013 to November 30, 2013		151,466		44.13		151,466		96,443,378
December 1, 2013 to December 31, 2013		77,491		43.96		77,491		93,036,790

Total Fourth Quarter		331,345	$	43.88		331,345	$	93,036,790

Stock and Cash Dividends

On March 1, 2011, the Company’s Board of Directors approved a two-for-one stock split of the Company’s issued common shares, which was paid in the form of a 100% stock dividend. All stockholders received one additional share on May 31, 2011 for each share owned at the close of business on the record date of May 16, 2011. This did not change the proportionate interest that a stockholder maintains in the Company. All shares and per share amounts in this report reflect the two-for-one stock split.

The following table sets forth the quarterly dividends paid by the Company over the past two years.


Board Approval	Record Date	Payment Date	Dividend Per Share
February 24, 2012	March 15, 2012	April 13, 2012	$0.13
May 16, 2012	June 15, 2012	July 13, 2012	$0.13
July 12, 2012	September 14, 2012	October 15, 2012	$0.13
October 17, 2012	December 14, 2012	January 15, 2013	$0.14
February 20, 2013	March 15, 2013	April 15, 2013	$0.14
May 15, 2013	June 14, 2013	July 15, 2013	$0.14
July 18, 2013	September 13, 2013	October 15, 2013	$0.14
October 16,2013	December 13, 2013	January 15, 2014	$0.14

Securities Authorized for Issuance under Equity Compensation Plans

The information required by Item 201(d) of Regulation S-K (Securities Authorized for Issuance under Equity Compensation Plans) is included in Item 12 of this Annual Report.

ITEM 6. SELECTED FINANCIAL DATA.

The selected consolidated financial data of the Company for the years ended December 31, 2009 through 2013 have been derived from the Consolidated Financial Statements of the Company, which have been audited by Ernst & Young LLP, an independent registered public accounting firm. The adoption of new accounting pronouncements, changes in certain accounting policies, and reclassifications are reflected in the financial information presented below. The selected consolidated financial data below should be read in conjunction with, and is qualified in its entirety by, Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements of the Company included in Items 7 and 8, respectively, of this Annual Report. Except for per share data, all amounts presented are in thousands:


	Years Ended December 31,
	2013			2012			2011			2010			2009
Income Statement Data:
Net sales	$	5,085,293		$	5,080,106		$	5,005,501		$	4,832,237		$	4,710,291
Cost of goods sold		4,295,715			4,305,502			4,265,422			4,101,682			4,019,650

Gross profit		789,578			774,604			740,079			730,555			690,641
Operating expenses ⁽¹⁾
Warehousing, marketing and administrative expenses		580,428			573,693			541,752			520,754			503,013

Operating income		209,150			200,911			198,327			209,801			187,628
Interest expense		12,233			23,619			27,592			26,229			27,797
Interest income		(593	)		(343	)		(223	)		(237	)		(474	)
Other (income) expense, net ⁽²⁾		—			—			(1,918	)		809			204

Income from continuing operations before income taxes		197,510			177,635			172,876			183,000			160,101
Income tax expense		74,340			65,805			63,880			70,243			59,116

Net income	$	123,170		$	111,830		$	108,996		$	112,757		$	100,985

Net income per share—basic:
Net income per common share—basic	$	3.11		$	2.77		$	2.49		$	2.43		$	2.16

Net income per share—diluted:
Net income per common share—diluted	$	3.06		$	2.73		$	2.42		$	2.34		$	2.10

Cash dividends declared per share	$	0.56		$	0.53		$	0.52		$	—		$	—

Balance Sheet Data:
Working capital	$	835,285		$	755,578		$	767,761		$	750,653		$	721,503
Total assets		2,116,194			2,075,204			1,994,882			1,908,663			1,808,516
Total debt ⁽³⁾		533,697			524,376			496,757			441,800			441,800
Total stockholders’ equity		825,514			738,092			704,679			759,598			706,713

Statement of Cash Flows Data:
Net cash provided by operating activities	$	74,737		$	189,814		$	130,363		$	114,823		$	239,395
Net cash used in investing activities		(30,273	)		(107,266	)		(27,918	)		(42,745	)		(14,829	)
Net cash used in provided by financing activities		(53,060	)		(63,457	)		(111,929	)		(69,355	)		(216,667	)

(1)

Includes severance and other charges/reversals and gains in the following years: 2013 —$13.0 million charge for a workforce reduction and facility closures and a $1.2 million asset impairment charge. 2012 —$6.2 million charge for a distribution network optimization and cost reduction program. 2011 —$0.7 million reversal of a charge for early retirement/workforce realignment, $4.4 million charge for a transition agreement with the company’s former Chief Executive Officer, and a $1.6 million asset impairment charge. 2010 —$11.9 million liability reversal for vacation pay policy change, $8.8 million liability reversal for Retiree Medical Plan termination, and $9.1 million charge for early retirement/workforce realignment. 2009 —$3.4 million severance charge.

(2)

Primarily represents items in the following years: 2011 —a reversal of prior acquisition earn-out and deferred payment liabilities. 2010 —an accounting charge to bring prior acquisition earn-out liabilities to fair value. 2009 —a loss on the sale of certain trade accounts receivable through the Company’s Prior Receivables Securitization Program.

(3)	Total debt includes current maturities where applicable.

FORWARD LOOKING INFORMATION

This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. Forward-looking statements often contain words such as “expects”, “anticipates”, “estimates”, “intends”, “plans”, “believes”, “seeks”, “will”, “is likely”, “scheduled”, “positioned to”, “continue”, “forecast”, “predicting”, “projection”, “potential” or similar expressions. Forward-looking statements include references to goals, plans, strategies, objectives, projected costs or savings, anticipated future performance, results or events and other statements that are not strictly historical in nature. These forward-looking statements are based on management’s current expectations, forecasts and assumptions. This means they involve a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied here. These risks and uncertainties include, without limitation, those set forth above under the heading “Risk Factors.”

Readers should not place undue reliance on forward-looking statements contained in this Annual Report on Form 10-K. The forward-looking information herein is given as of this date only, and the Company undertakes no obligation to revise or update it.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with both the information at the end of Item 6 of this Annual Report on Form 10-K appearing under the caption, “Forward Looking Information”, and the Company’s Consolidated Financial Statements and related notes contained in Item 8 of this Annual Report.

Company Overview

The Company is a leading wholesale distributor of business products, with 2013 net sales of approximately $5.1 billion. The Company sells its products through a national distribution network of 64 distribution centers to over 25,000 resellers, who in turn sell directly to end consumers.

Key Trends and Recent Results

The following is a summary of selected trends, events or uncertainties that the Company believes may have a significant impact on its future performance.

•

Our strategy has two main components: 1) strengthen our core business and 2) diversify our offering of business essentials to drive profitable growth. We have seen long-term declining trends in certain office products categories as a result of the digitization of the workplace and online sales continuing to gain a larger share of the market. We are well positioned to capture the growth created by the changing market and to help our supply chain partners win in the migration to conducting business online. We continue to invest in digital and online capabilities and are working with leading online resellers to help accelerate their growth in the categories we offer. Strengthening the core business also means driving efficiency and cost improvements. In addition, many distributors are broadening their categories and diversifying their businesses. Our business model allows these resellers to quickly enter new categories and scale their offerings. United’s product offering continues to expand into a broader product assortment of janitorial/breakroom and industrial products.

•

To support our strategy, we launched an initiative in 2013 to establish common processes, platforms, and systems within our company. The first step in the plan is to unite our office products and janitorial/

breakroom information technology platforms. We are striving to create a superior customer experience through one order, one invoice, multiple delivery options, and customized services. We are in the early stages of this multi-year initiative. We believe this initiative will help us become the fastest, most convenient source for our customers’ business essentials through our nationwide distribution network and logistics capabilities, order efficiency with enhanced ebusiness capabilities, broad product portfolio, and superior product category knowledge and commercial expertise.

•

Diluted earnings per share for 2013 were $3.06 compared to $2.73 in 2012. Adjusted earnings per share in 2013 grew 17% to $3.29 from an adjusted $2.82 in 2012. Refer to the Adjusted Operating Income, Adjusted Net Income and Adjusted Earnings Per Share table included later in this section for more detail on the adjustments. Adjusted earnings per share growth was primarily achieved through higher operating income and lower interest expense.

•

Sales were even with the prior year at $5.1 billion. This included 26% growth in the industrial supplies product category. The acquisition of OKI in the fourth quarter of 2012 was the primary driver of this growth. The janitorial and breakroom supplies category sales also grew by over 4% versus 2012. These results were impacted by softening market conditions but aided by continued implementation of strategic initiatives including expanding market coverage and growing wholesale penetration in these categories. This growth was partially offset by a decline in technology products of 6%. Office products and furniture category sales were down a total of approximately 4% compared with the prior year as well.

•

Gross margin as a percent of sales for 2013 was 15.5% versus 15.2% in 2012. The gross margin rate increased due to favorable product category mix and margin improvement initiatives, including higher inventory purchase-related supplier allowances, and cost savings initiatives. These improvements were partially offset by lower product cost inflation and increased freight costs.

•

Operating expenses in 2013 totaled $580.4 million or 11.4% of sales compared with $573.7 or 11.3% of sales in 2012. Adjusted operating expenses in 2013 were $566.3 million or 11.1% of sales, excluding the effects of a $13.0 million charge related to workforce reduction and facility closures, and a $1.2 million non-tax deductible asset impairment charge. Adjusted operating expenses in 2012 were $567.4 million or 11.2% of sales, which excluded the previously reported $6.2 million charge for the distribution network optimization and targeted cost reduction program. The $1.1 million reduction in adjusted operating expenses was driven by our restructuring taken earlier in 2013 as well as strong cost management.

•

Operating income in 2013 was $209.1 million or 4.1% of sales, compared with $200.9 million or 4.0% of sales in the prior year. Adjusted operating income was $223.3 million or 4.4% of sales, compared with $207.2 million or 4.1% of sales in 2012.

•

Operating cash flows for 2013 were $74.7 million versus $189.8 million in 2012. The decline in 2013 operating cash flows was mainly due to the timing of increased inventory levels and its effect on accounts payable. Cash flow used in investing activities, including net capital expenditures and acquisitions, totaled $30.3 million in 2013 compared with $107.3 million in 2012. Included in 2012 was $75.3 million for the acquisition of OKI.

•

During 2013, the Company repurchased 1.7 million shares for $62.1 million and also paid $22.3 million in dividends during the year.

•

The Company had approximately $1.0 billion of total committed debt capacity at December 31, 2013. Outstanding debt at December 31, 2013 and 2012 was $533.7 million and $524.4 million, respectively. Debt-to-total capitalization at the end of 2013 decreased to 39.3% from 41.5% for the prior year.

Critical Accounting Policies, Judgments and Estimates

The Company’s significant accounting policies are more fully described in Note 2 of the Consolidated Financial Statements. As described in Note 2, the preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results may differ from those estimates. The Company believes that such differences would have to vary significantly from historical trends to have a material impact on the Company’s financial results.

The Company’s critical accounting policies are most significant to the Company’s financial condition and results of operations and require especially difficult, subjective or complex judgments or estimates by management. In most cases, critical accounting policies require management to make estimates on matters that are uncertain at the time

the estimate is made. The basis for the estimates is historical experience, terms of existing contracts, observance of industry trends, information provided by customers or vendors, and information available from other outside sources, as appropriate. These critical accounting policies include the following:

Supplier Allowances

Supplier allowances (fixed or variable) are common practice in the business products industry and have a significant impact on the Company’s overall gross margin. Gross margin is determined by, among other items, file margin (determined by reference to invoiced price), as reduced by customer discounts and rebates as discussed below, and increased by supplier allowances and promotional incentives. Receivables related to supplier allowances totaled $103.2 million and $96.9 million as of December 31, 2013 and 2012, respectively. These receivables are included in “Accounts receivable” in the Consolidated Balance Sheets.

The majority of the Company’s annual supplier allowances and incentives are variable, based solely on the volume and mix of the Company’s product purchases from suppliers. These variable allowances are recorded based on the Company’s annual inventory purchase volumes and product mix and are included in the Company’s Consolidated Financial Statements as a reduction to cost of goods sold, thereby reflecting the net inventory purchase cost. The remaining portion of the Company’s annual supplier allowances and incentives are fixed and are earned based primarily on supplier participation in specific Company advertising and marketing publications. Fixed allowances and incentives are taken to income through lower cost of goods sold as inventory is sold.

Supplier allowances and incentives attributable to unsold inventory are carried as a component of net inventory cost. The potential amount of variable supplier allowances often differs based on purchase volumes by supplier and product category. As a result, changes in the Company’s sales volume (which can increase or reduce inventory purchase requirements) and changes in product sales mix (especially because higher-margin products often benefit from higher supplier allowance rates) can create fluctuations in variable supplier allowances.

Customer Rebates

Customer rebates and discounts are common practice in the business products industry and have a significant impact on the Company’s overall sales and gross margin. Such rebates are reported in the Consolidated Financial Statements as a reduction of sales. Accrued customer rebates of $52.6 million and $56.3 million as of December 31, 2013 and 2012, respectively, are primarily included as a component of “Accrued liabilities” in the Consolidated Balance Sheets.

Revenue Recognition

Revenue is recognized when a service is rendered or when title to the product has transferred to the customer. Management records an estimate for future product returns related to revenue recognized in the current period. This estimate is based on historical product return trends and the gross margin associated with those returns. Management also records customer rebates that are based on annual sales volume to the Company’s customers. Annual rebates earned by customers include growth components, volume hurdle components, and advertising allowances.

Shipping and handling costs billed to customers are treated as revenues and recognized at the time title to the product has transferred to the customer. Freight costs are included in the Company’s Consolidated Financial Statements as a component of cost of goods sold and not netted against shipping and handling revenues. Net sales do not include sales tax charged to customers.

collection is considered probable. If collection is not considered probable, the Company recognizes revenue when the fees are collected. If fees are not fixed and determinable, the Company recognizes revenues when the fees become due from the customer.

Accounts Receivable

In the normal course of business, the Company extends credit to customers. Accounts receivable, as shown in the Consolidated Balance Sheets, include such trade accounts receivable and are net of allowances for doubtful accounts and anticipated discounts. The Company makes judgments as to the collectability of trade accounts receivable based on historical trends and future expectations. Management estimates an allowance for doubtful accounts, which addresses the collectability of trade accounts receivable. This allowance adjusts gross trade accounts receivable downward to its estimated collectible or net realizable value. To determine the allowance for doubtful accounts, management reviews specific customer risks and the Company’s trade accounts receivable aging. Uncollectible trade receivable balances are written off against the allowance for doubtful accounts when it is determined that the trade receivable balance is uncollectible.

Goodwill and Intangible Assets

During the quarter ended September 30, 2011, the Company voluntarily changed the date of its annual goodwill and indefinite-lived intangible asset impairment test from the last day of the fourth quarter (December 31) to the first day of the fourth quarter (October 1). This change is preferable under the circumstances as it (1) results in better alignment with the Company’s annual strategic planning and forecasting process and (2) provides the Company with additional time in a given fiscal reporting period to accurately assess the recoverability of goodwill and indefinite-lived intangible assets and to measure any indicated impairment. The Company believes that the change in accounting principle related to the annual testing date will not delay, accelerate, or avoid an impairment charge. In accordance with Accounting Standards Codification (“ASC”) Topic 350 “Intangibles—Goodwill and other”, if indicators of impairment are deemed to be present, the Company would perform an interim impairment test and any resulting impairment loss would be charged to expense in the period identified. This change is not applied retrospectively as it is impracticable to do so because retrospective application would require the application of significant estimates and assumptions with the use of hindsight. Accordingly, the change was applied prospectively.

Goodwill is initially recorded based on the premium paid for acquisitions and is subsequently tested for impairment. The Company tests goodwill for impairment annually as mentioned and whenever events or circumstances indicate that an impairment may have occurred, such as a significant adverse change in the business climate, loss of key personnel or a decision to sell or dispose of a reporting unit. Determining whether an impairment has occurred requires valuation of the respective reporting unit, which the Company estimates using a discounted cash flow method. When available and as appropriate, comparative market multiples are used to corroborate discounted cash flow results. If this analysis indicates goodwill is impaired, an impairment charge would be taken based on the amount of goodwill recorded versus the implied fair value of goodwill computed by independent appraisals. The Company also adopted Accounting Standards Update (“ASU”) 2011-08 which allows for the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The Company applied this qualitative approach to two of its four reporting units. The other two reporting units were evaluated for impairment using the discounted cash flow and market based approach to determine fair value as mentioned. At the annual impairment test date of October 1, 2013, the Company’s reporting units passed the first step of the goodwill impairment test prescribed by related accounting guidance.

Intangible assets are initially recorded at their fair market values determined on quoted market prices in active markets, if available, or recognized valuation models. Intangible assets that have finite useful lives are amortized on a straight-line basis over their useful lives. Intangible assets that have indefinite useful lives are not amortized but are tested at least annually for impairment or whenever events or circumstances indicate impairment may have occurred. See Note 4 to the Consolidated Financial Statements.

Insured Loss Liability Estimates

has an annual per-person maximum cap, provided by a third-party insurance company, on certain employee medical benefits. In addition, the Company has a per-occurrence maximum on workers’ compensation and auto claims.

Inventories

Approximately 76% and 77% of total inventory as of December 31, 2013 and 2012, respectively has been valued under the last-in, first-out (“LIFO”) accounting method. LIFO results in a better matching of costs and revenues. The remaining inventory is valued under the first-in, first-out (“FIFO”) accounting method. Inventory valued under the FIFO and LIFO accounting methods is recorded at the lower of cost or market. If the Company had valued its entire inventory under the lower of FIFO cost or market, inventory would have been $112.4 million and $107.8 million higher than reported as of December 31, 2013 and 2012, respectively. The annual change in the LIFO reserve as of December 31, 2013, 2012 and 2011 resulted in a $4.6 million increase, an $11.7 million increase and an $11.4 million increase, respectively, in cost of sales. The change in the LIFO reserve in 2013 resulted in a $4.6 million increase in cost of goods sold which included a LIFO liquidation relating to a decrement in the Company’s technology LIFO pool. This decrement resulted in liquidation of LIFO inventory quantities carried at lower costs in prior years as compared with the cost of current year purchases. This liquidation resulted in LIFO income of $0.6 million which was more than offset by LIFO expense of $5.2 million related to current inflation for an overall net increase in cost of sales of $4.6 million as referenced above.

The $11.7 million change in the LIFO reserve for 2012 includes the LIFO liquidation impact relating to decrements in the Company’s office products and technology LIFO pools. These decrements resulted in the liquidation of LIFO inventory quantities carried at lower costs in prior years as compared with the cost of current year purchases. These liquidations resulted in LIFO income of $3.3 million which was more than offset by LIFO expense of $15.0 million related to current inflation or a net increase in cost of sales of $11.7 million referenced above.

The $11.4 million change in the LIFO reserve for 2011 includes the LIFO liquidation impact relating to a decrement in the Company’s furniture LIFO pool. This decrement resulted in the liquidation of LIFO inventory quantities carried at lower costs in prior years as compared with the cost of current year purchases. This liquidation resulted in LIFO income of $4.2 million which was more than offset by LIFO expense of $15.6 million related to current inflation or a net increase in cost of sales of $11.4 million referenced above.

The Company also records adjustments to inventory for shrinkage. Inventory that is obsolete, damaged, defective or slow moving is recorded at the lower of cost or market. These adjustments are determined using historical trends and are adjusted, if necessary, as new information becomes available. The Company charges certain warehousing and administrative expenses to inventory each period with $38.0 million and $33.3 million remaining in inventory as of December 31, 2013 and December 31, 2012, respectively.

Derivative Financial Instruments

The Company’s risk management policies allow for the use of derivative financial instruments to prudently manage foreign currency exchange rate and interest rate exposure. The policies do not allow such derivative financial instruments to be used for speculative purposes. At this time, the Company uses interest rate swaps which are subject to the management, direction and control of its financial officers. Risk management practices, including the use of all derivative financial instruments, are presented to the Board of Directors for approval.

All derivatives are recognized on the balance sheet date at their fair value. The derivative is currently in a net asset position and is included in “Other long-term Assets” on the Consolidated Balance Sheets. The interest rate swaps that the Company has entered into are classified as cash flow hedges in accordance with accounting guidance on derivative instruments and hedging activities as they are hedging a forecasted transaction or the variability of cash flow to be paid by the Company. Changes in the fair value of a derivative that is qualified, designated and highly effective as a cash flow hedge are recorded in other comprehensive income, net of tax, until earnings are affected by the forecasted transaction or the variability of cash flow, and then are reported in current earnings.

The Company formally documents all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives designated as cash flow hedges to specific forecasted transactions or variability of cash flow.

The Company formally assesses, at both the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting changes in cash flow of hedged items. When it is determined that a derivative is not highly effective as a hedge then hedge accounting is discontinued prospectively in accordance with accounting guidance on derivative instruments and hedging activities. This has not occurred as all cash flow hedges contain no ineffectiveness. See Note 18, “Derivative Financial Instruments”, for further detail.

Income Taxes

The Company accounts for income taxes using the liability method in accordance with the accounting guidance for income taxes. The Company estimates actual current tax expense and assesses temporary differences that exist due to differing treatments of items for tax and financial statement purposes. These temporary differences result in the recognition of deferred tax assets and liabilities. A provision has not been made for deferred U.S. income taxes on the undistributed earnings of the Company’s foreign subsidiaries as these earnings have historically been permanently invested except to the extent a liability was recorded in purchase accounting for the undistributed earnings of the foreign subsidiaries of OKI as of the date of the acquisition. It is not practicable to determine the amount of unrecognized deferred tax liability for such unremitted foreign earnings. The Company accounts for interest and penalties related to uncertain tax positions as a component of income tax expense.

Pension Benefits

To select the appropriate actuarial assumptions, management relied on current market conditions, historical information and consultation with and input from the Company’s outside actuaries. The expected long-term rate of return on plan assets assumption is based on historical returns and the future expectation of returns for each asset category, as well as the target asset allocation of the asset portfolio. There was no rate of compensation increase in each of the past three fiscal years.

The following tables summarize the Company’s actuarial assumptions for discount rates, expected long-term rates of return on plan assets, and rates of increase in compensation for the years ended December 31, 2013, 2012 and 2011.


	2013			2012			2011
Pension plan assumptions :
Assumed discount rate, general		4.95	%		4.30	%		5.00	%
Assumed discount rate, union		5.10	%		4.45	%		5.00	%
Expected long-term rate of return on plan assets, general		7.30	%		7.75	%		7.75	%
Expected long-term rate of return on plan assets, union		7.75	%		7.75	%		7.75	%

Calculating the Company’s obligations and expenses related to its pension requires using certain actuarial assumptions. As more fully discussed in Note 11 to the Consolidated Financial Statements included in Item 8 of this Annual Report, these actuarial assumptions include discount rates, expected long-term rates of return on plan assets, and rates of increase in compensation and healthcare costs. To select the appropriate actuarial assumptions, management relies on current market trends and historical information. The expected long-term rate of return on plan assets assumption is based on historical returns and the future expectation of returns for each asset category, as well as the target asset allocation of the asset portfolio. Pension expense for 2013 was $4.5 million, compared to $5.7 million in 2012 and $1.6 million in 2011. A one percentage point decrease in the assumed discount rate would have resulted in an increase in pension expense for 2013 of approximately $2.0 million and increased the year-end projected benefit obligation by $28.8 million. Additionally, a one percentage point decrease in the expected rate of return assumption would have resulted in an increase in the net periodic benefit cost for 2013 of approximately $1.5 million.

Results for the Years Ended December 31, 2013, 2012 and 2011

The following table presents the Consolidated Statements of Income as a percentage of net sales:


	Years Ended December 31,
	2013			2012			2011
Net sales		100.00	%		100.00	%		100.00	%
Cost of goods sold		84.48			84.76			85.22

Gross margin		15.52			15.24			14.78
Operating expenses:
Warehousing, marketing and administrative expenses		11.41			11.28			10.82

Operating income		4.11			3.96			3.96
Interest expense, net		0.23			0.46			0.55
Other (income) expense, net		—			—			(0.04	)

Income from continuing operations before income taxes		3.88			3.50			3.45
Income tax expense		1.46			1.30			1.27

Net income		2.42	%		2.20	%		2.18	%

Adjusted Operating Income and Diluted Earnings Per Share

The following table presents Adjusted Operating Income, Adjusted Net Income and Adjusted Diluted Earnings Per Share for the years ended December 31, 2013 and 2012 (in thousands, except share data). The 2013 results exclude the effects of a $13.0 million charge related to workforce reductions and facility closures and a $1.2 million non-tax deductible asset impairment charge. The 2012 results exclude the effect of a $6.2 million charge related to workforce reductions and facility closures. See “Comparison of Results for the Years Ended December 31, 2013 and 2012” below for more detail. Generally Accepted Accounting Principles require that the effects of these items be included in the Consolidated Statements of Income. The Company believes that excluding these items is an appropriate comparison of its ongoing operating results to last year and that it is helpful to provide readers of its financial statements with a reconciliation of these items to its Consolidated Statements of Income reported in accordance with Generally Accepted Accounting Principles.


	For the Years Ended December 31,
	2013						2012
	Amount			% to Net Sales			Amount			% to Net Sales
Sales	$	5,085,293			100.00	%	$	5,080,106			100.00	%

Gross profit	$	789,578			15.52	%	$	774,604			15.24	%

Operating expenses	$	580,428			11.41	%	$	573,693			11.28	%
Net workforce reduction and facility closure charge		(12,975	)		(0.26	)%		(6,247	)		(0.12	)%
Asset impairment charge		(1,183	)		(0.02	)%		—			—

Adjusted operating expenses	$	566,270			11.13	%	$	567,446			11.16	%

Operating income	$	209,150			4.11	%	$	200,911			3.96	%
Operating expense items noted above		14,158			0.28	%		6,247			0.12	%

Adjusted operating income	$	223,308			4.39	%	$	207,158			4.08	%

Net Income	$	123,170					$	111,830
Operating expense items noted above, net of tax		9,227						3,873

Adjusted net income	$	132,397					$	115,703

Net income per share—diluted	$	3.06					$	2.73
Per share operating expense items noted above		0.23						0.09

Adjusted net income per share—diluted	$	3.29					$	2.82

Adjusted net income per diluted share—growth rate over the prior year period		17	%
Weighted average number of common shares—diluted		40,236						40,991

Comparison of Results for the Years Ended December 31, 2013 and 2012

Net Sales. Net sales for the year ended December 31, 2013 were approximately $5.1 billion, even with 2012 sales. The following table shows net sales by product category for 2013 and 2012 (in thousands):


	Years Ended December 31,
	2013		2012 ⁽¹⁾
Technology products	$	1,466,499	$	1,563,757
Janitorial and breakroom supplies		1,335,414		1,282,370
Traditional office products (including cut-sheet paper)		1,310,571		1,366,368
Industrial supplies		517,826		409,266
Office furniture		312,298		324,668
Freight revenue		105,567		99,319
Other		37,118		34,358

Total net sales	$	5,085,293	$	5,080,106

(1)

Certain prior period amounts have been reclassified to conform to the current presentation. Such reclassifications include changes between several product categories due to several specific products being reclassified to different categories. These changes did not impact the Consolidated Statements of Income.

Sales in the technology products category decreased in 2013 by 6.2% versus 2012. This category continues to represent the largest percentage of the Company’s consolidated net sales, accounting for 28.8% of net sales of 2013. Sales declines in this category reflect the de-emphasis in sales of certain low profit portions of our business as we execute our margin improvement initiatives. Additionally, early in the fourth quarter of 2013 our largest product line manufacturer adopted a new distribution policy that allows wholesalers like us to re-sell its products only to certain authorized resellers. This new distribution policy resulted in lower sales of the manufacturer’s products.

Sales in the janitorial and breakroom supplies product category increased 4.1% in 2013 compared with 2012. This category accounted for 26.3% of the Company’s 2013 consolidated net sales. This growth was driven by increased sales of janitorial and breakroom products in nearly all channels as existing customers leverage the Company’s broader offerings to expand their business.

Sales of traditional office products declined in 2013 by 4.1% versus 2012. Traditional office supplies represented 25.8% of the Company’s consolidated net sales in 2013. Within this category, ongoing workplace digitization, slow job growth, a conservative outlook by small business owners, and softer demand from the government and public sector negatively impacted consumption.

Industrial supplies sales in 2013 increased 26.5% compared with the prior year. Sales of industrial supplies accounted for 10.2% of the Company’s net sales in 2013. Sales growth in industrial supplies was largely driven by the acquisition of OKI in November of 2012.

Office furniture sales in 2013 declined 3.8% compared with 2012. Office furniture accounted for 6.1% of the Company’s 2013 consolidated net sales. Sales declines in this category were driven by lower sales to the independent dealer channel and certain national accounts.

The remainder of the Company’s consolidated 2013 net sales was composed of freight and other revenues.

Gross Profit and Gross Margin Rate. Gross profit for 2013 was $789.6 million, compared with $774.6 million in 2012. Gross profit as a percentage of net sales (the gross margin rate) for 2013 was 15.5%, as compared with 15.2% for 2012. The gross margin rate increased due to favorable product category mix and margin improvement initiatives (70 bps), including inventory-related supplier allowances, and cost saving initiatives executed in the year. These improvements were partially offset by lower product cost inflation (30 bps) and increased freight costs

(20 bps).

Operating Expenses. Operating expenses in 2013 were $580.4 million or 11.4% as a percent of sales for the year, compared with $573.7 million or 11.3% in 2012. Excluding the non-operating items previously mentioned, adjusted operating expenses were $566.3 million or 11.1% of sales in 2013, compared with $567.4 million or 11.2% of sales in the prior year. This favorability was driven by our restructuring taken in the first quarter of 2013 as well as our continued focus on cost saving initiatives.

Interest Expense, net. Net interest expense for 2013 was $11.6 million, compared with $23.3 million in 2012. This decline was primarily due to the maturing of interest rate swaps since the prior year.

Income Taxes. Income tax expense was $74.3 million in 2013, compared with $65.8 million in 2012. The Company’s effective tax rate was 37.6% and 37.0% in 2013 and 2012, respectively. This increase was driven by the non-deductible asset impairment charge and a reduction of income tax valuation allowances on deferred tax assets in 2012 which did not reoccur in 2013.

Net Income. Net income for 2013 was $123.2 million and diluted earnings per share were $3.06, compared to 2012 net income of $111.8 million and diluted earnings per share of $2.73. Included in the 2013 results are a $13.0 million pre-tax charge related to a workforce reduction and facility closure program and $1.2 million non-tax deductable asset impairment charge. Excluding this non-operating items, adjusted net income for 2013 was $132.4 million and adjusted diluted earnings per share were $3.29. Included in the 2012 results is a $6.2 million pre-tax charge related to distribution network optimization and cost reduction program. Excluding this charge, adjusted net income was $115.7 million and adjusted diluted earnings per share were $2.82 in 2012. Earnings per share growth was driven by higher operating income and a reduction in interest expense.

Comparison of Results for the Years Ended December 31, 2012 and 2011

Net Sales. Net sales for the year ended December 31, 2012 were approximately $5.1 billion, up 1.9%, workday adjusted, compared with $5.0 billion in 2011. The following table shows net sales by product category for 2012 and 2011 (in thousands):


	Years Ended December 31,
	2012 ⁽¹⁾		2011 ⁽¹⁾
Technology products	$	1,563,757	$	1,626,030
Traditional office products (including cut-sheet paper)		1,366,368		1,360,702
Janitorial and breakroom supplies		1,282,370		1,222,225
Industrial supplies		409,266		349,370
Office furniture		324,668		324,974
Freight revenue		99,319		88,893
Other		34,358		33,307

Total net sales	$	5,080,106	$	5,005,501

(1)

Sales in the technology products category decreased 2.1%, workday adjusted, in 2012 compared to 2011. This category represented the largest percentage of the Company’s consolidated net sales in 2012, accounting for 32.5% of sales. Technology sales declined mainly due to the loss of some business from a key national account customer.

Sales of traditional office products in 2012 rose 1.6%, workday adjusted, versus 2011. Traditional office supplies represented 27.2% of the Company’s consolidated net sales for 2012. While the demand for office products remained challenging, cut-sheet paper, private brands, public sector and new channels growth helped drive a slight increase in 2012. These improvements were partially offset by declines in national accounts.

Sales of janitorial and breakroom supplies increased 10.1%, workday adjusted, in 2012 as compared to 2011. This category accounted for 24.4% of the Company’s 2012 consolidated net sales. The Company has continued to outperform the market in this category, despite a slowing demand pattern. The Company is increasing share with

current customers by cross-selling into new and other categories as well as by increasing its presence in the ecommerce arena. Some new national account business that was attained in 2012 also more than offset the shift of other national account business to direct purchases from manufacturers.

Sales of industrial supplies increased 23.3%, workday adjusted, accounting for 7.0% of the Company’s net sales in 2012. Excluding OKI sales, this category increased nearly 12% and was driven by strong execution of strategic growth initiatives despite a moderation in the underlying demand for industrial products. Growth in this category remains above market growth rates.

Office furniture sales in 2012 were down 6.6%, workday adjusted, compared to 2011. Office furniture accounted for approximately 6.5% of the Company’s 2012 consolidated net sales. These flat year-over-year sales continued to be negatively impacted by a challenging transactional market and a sourcing shift in some national account business.

The remainder of the Company’s consolidated net sales came from freight, advertising and software related revenue.

Gross Profit and Gross Margin Rate. Gross profit for 2012 was $774.6 million, compared to $740.1 million in 2011. Gross profit as a percentage of net sales (the gross margin rate) for 2012 was 15.2%, as compared to 14.8% for 2011. Gross margin was positively affected by lower cost of goods sold, primarily driven by inventory purchase-related supplier allowances (50 bps), and WOW initiative savings (15 bps), particularly in occupancy and freight costs. These improvements were partially offset by competitive pricing pressures and a less favorable margin mix of product sales (30 bps).

Operating Expenses. Operating expenses in 2012 were $573.7 million or 11.3% as a percent of sales for the year, compared to $541.8 million or 10.8% in 2011. Excluding the non-operating items previously mentioned, adjusted operating expenses were $567.4 million or 11.2% of sales in 2012, compared to $536.4 million or 10.7% of sales in the prior year. Other expenses increased 20 bps, mainly due to favorable adjustments in 2011 related to the amount of inventory capitalized out of operating expenses in 2011. Employee-related expenses also increased 30 bps. These items were partially offset by lower bad debt expense (10 bps).

Interest Expense, net. Net interest expense for 2012 was $23.3 million, compared with $27.4 million in 2011. Interest expense decreased as two interest rate swaps matured in early 2012.

Other (Income) Expense, net. There was no Other Income for 2012, compared with $1.9 million of Other Expense in 2011. Net Other Income for 2011 reflected a reversal of prior acquisition earn-out and deferred payment liabilities related to a 2010 acquisition.

Income Taxes. Income tax expense was $65.8 million in 2012, compared with $63.9 million in 2011. The Company’s effective tax rate was 37.0% in 2012 and 2011. The effective tax rate was impacted by several items in both years including a reduction in income tax valuation allowances on deferred tax assets.

Net Income. Net income for 2012 was $111.8 million and diluted earnings per share were $2.73, compared to 2011 net income of $109.0 million and diluted earnings per share of $2.42. Included in the 2012 results is a $6.2 million pre-tax charge related to a distribution network optimization and cost reduction program. Excluding this non-operating item, adjusted net income for 2012 was $115.7 million and adjusted diluted earnings per share were $2.82. Included in the 2011 results are a favorable $0.7 million (pre-tax) reversal of a charge taken in the fourth quarter of 2010 related to a voluntary early retirement and workforce realignment program, a $4.4 million (pre-tax) compensation charge related to a transition agreement with the Company’s former Chief Executive Officer, and a $1.6 million asset impairment charge related to an equity investment. Excluding these non-operating items, adjusted net income for 2011 was $112.9 million and adjusted diluted earnings per share were $2.51. Adjusted diluted earnings per share in 2012 was $2.82, up 12.0% versus the adjusted 2011 amount. Earnings per share growth was driven by higher operating income, the impact of 2012 share repurchases, which contributed approximately $0.25 per share and a reduction in interest expense, which contributed $0.06 per share. 2012 was also favorably impacted by a $1.2 million or $0.03 per share benefit and 2011 was favorably impacted by a $1.4 million or $0.03 per share benefit related to reduction in income tax valuation allowances on deferred tax assets. Prior year diluted earnings per share were also positively impacted by the renegotiation of acquisition related earn-out.

Liquidity and Capital Resources

Debt

The Company’s outstanding debt consisted of the following amounts (in millions):


	As of December 31, 2013			As of December 31, 2012
2013 Credit Agreement	$	206.8		$	238.1
2007 Master Note Purchase Agreement (Private Placement)		135.0			135.0
Receivables Securitization Program		190.7			150.0
Mortgage & Capital Lease		1.2			1.3

Debt		533.7			524.4
Stockholders’ equity		825.5			738.1

Total capitalization	$	1,359.2		$	1,262.5

Adjusted debt-to-total capitalization ratio		39.3	%		41.5	%

Operating cash requirements and capital expenditures are funded from operating cash flow and available financing. Financing available from debt and the sale of accounts receivable as of December 31, 2013, is summarized below (in millions):

Availability


Maximum financing available under:
2013 Credit Agreement	$	700.0
2007 Master Note Purchase Agreement		135.0
Receivables Securitization Program ⁽¹⁾		190.7

Maximum financing available			$	1,025.7

Amounts utilized:
2013 Credit Agreement		206.8
2007 Master Note Purchase Agreement		135.0
Receivables Securitization Program ⁽¹⁾		190.7
Outstanding letters of credit		11.1

Total financing utilized				543.6

Available financing, before restrictions				482.1
Restrictive covenant limitation				89.8

Available financing as of December 31, 2013			$	392.3

(1)	The Receivables Securitization Program provides for maximum funding available of the lesser of $200.0 million or the total amount of eligible receivables less excess concentrations and applicable reserves.

The Company believes that its operating cash flow and financing capacity, as described, provide adequate liquidity for operating the business for the foreseeable future.

Disclosures About Contractual Obligations

The following table aggregates all contractual obligations that affect financial condition and liquidity as of December 31, 2013 (in millions):


	Payment due by period
Contractual obligations	2014		2015 & 2016		2017 & 2018		Thereafter		Total
Debt ⁽¹⁾	$	135.3	$	191.6	$	206.8		—	$	533.7
Fixed interest payments on long-term debt ⁽²⁾		0.8		3.2		0.8		—		4.8
Operating leases		46.9		78.3		45.7		35.5		206.4
Purchase obligations		3.9		2.2		0.6		—		6.7

Total contractual cash obligations	$	186.9	$	275.3	$	253.9	$	35.5	$	751.6

(1)	The debt issued under the 2007 Note Purchase Agreement was repaid in January 2014 with a portion of the proceeds from the 2013 Note Purchase Agreement.

(2)

The Company has entered into several interest rate swap transactions on a portion of its long-term debt. The fixed interest payments noted in the table are based on the notional amounts and fixed rates inherent in the swap transactions and related debt instruments. For more detail see Note 18, “Derivative Financial Instruments,” in the Notes to the Consolidated Financial Statements.

On December 11, 2013, the Company’s Board of Directors approved a $2.0 million cash contribution to the Company’s Union pension plan which was funded in January 2014. Additional fundings, if any, for 2014 have not yet been determined.

At December 31, 2013, the Company had a liability for unrecognized tax benefits of $3.1 million as discussed in Note 13, “Income Taxes”, and an accrual for the related interest, that are excluded from the Contractual Obligations table. Due to the uncertainties related to these tax matters, the Company is unable to make a reasonably reliable estimate when cash settlement with a taxing authority may occur.

Credit Agreement and Other Debt

On July 8, 2013, the Company and USSC entered into a Fourth Amended and Restated Five-Year Revolving Credit Agreement (the “2013 Credit Agreement”) with JPMorgan Chase Bank, National Association, as Agent, and the lenders identified therein. The 2013 Credit Agreement amended and restated the prior five-year revolving credit agreement among the Company, USSC and certain lenders. The 2013 Credit Agreement provides for a revolving credit facility with an aggregate committed principal amount of $700 million and provides for the issuance of letters of credit. Subject to the terms and conditions of the 2013 Credit Agreement, USSC may seek additional commitments to increase the aggregate committed principal amount to a total amount of $1.05 billion. The 2013 Credit Agreement expires on July 6, 2018.

Borrowings under the 2013 Credit Agreement bear interest at LIBOR for specified interest periods or at the Alternate Base Rate (as defined in the 2013 Credit Agreement), plus, in each case, a margin determined based on the Company’s permitted debt to EBITDA ratio calculated as provided in Section 6.20 of the 2013 Credit Agreement (the “Leverage Ratio”). Depending on the Company’s Leverage Ratio, the margin on LIBOR-based loans ranges from 1.00% to 2.00% and on Alternate Base Rate loans ranges from 0.00% to 1.00%. As of December 31, 2013, the applicable margin for LIBOR-based loans was 1.25% and for Alternate Base Rate loans was 0.25%. In addition, USSC is required to pay the lenders a fee on the unutilized portion of the commitments under the 2013 Credit Agreement at a rate per annum between 0.15% and 0.35%, depending on the Company’s Leverage Ratio.

Subject to the terms and conditions of the 2013 Credit Agreement, USSC is permitted to incur up to $300 million of indebtedness in addition to borrowings under the 2013 Credit Agreement ($15 million of which the Company utilized in connection with the sale of the 2014 Notes described below), plus up to $200 million under the Company’s Receivables Securitization Program, and up to $135 million in replacement or refinancing of the 2014 Notes described below.

On November 25, 2013, USI and USSC, entered into a note purchase agreement (the “2013 Note Purchase Agreement”) with the note purchasers identified therein (collectively, the “Note Purchasers”). As contemplated by the 2013 Note Purchase Agreement, on January 15, 2014, USSC sold $150 million of senior secured notes due January 15, 2021 (the “2014 Notes”) to the Note Purchasers. USSC used the proceeds from the sale of the 2014 Notes to repay $135 million of floating rate senior secured notes due October 15, 2014 and to reduce borrowings under the 2013 Credit Agreement.

Interest on the 2014 Notes is payable semi-annually at a rate per annum equal to 3.75%. At the time USSC priced the notes, USSC terminated the June 2013 Swap Transaction (as described in Note 18 “Derivative Financial Instruments”). After giving effect to the impact of terminating the June 2013 Swap Transaction, the effective per annum interest rate on the Notes is 3.66%. The full principal amount of the 2014 Notes matures on January 15, 2021. If USSC elects to prepay some or all of the Notes prior to January 15, 2021, USSC will be obligated to pay a Make-Whole Amount calculated as set forth in the Agreement.

Obligations of USSC under the 2013 Credit Agreement are guaranteed by USI and certain of USSC’s domestic subsidiaries. USSC’s obligations under these agreements and the guarantors’ obligations under the guaranties are secured by liens on substantially all Company assets other than real property and certain accounts receivable already collateralized as part of the Receivables Securitization Program.

USSC has entered into several interest rate swap transactions to mitigate its floating rate risk on a portion of its total long-term debt. See Note 18, “Derivative Financial Instruments”, for further details on these swap transactions and their accounting treatment.

The Company maintains an accounts receivable securitization program (“Receivables Securitization Program” or the “Program”) with a term through January 18, 2016. The parties to the Program are USI, USSC, United Stationers Financial Services (“USFS”), United Stationers Receivables, LLC (“USR”), and PNC Bank, National Association and the Bank of Tokyo—Mitsubishi UFJ, Ltd New York Branch (the “Investors”). The Program is governed by the following agreements:

•

The Amended and Restated Transfer and Administration Agreement among USSC, USFS, USR, and the Investors;

•

The Receivables Sale Agreement between USSC and USFS;

•

The Receivables Purchase Agreement between USFS and USR; and

•

The Performance Guaranty executed by USI in favor of USR.

Pursuant to the Receivables Sale Agreement, USSC sells to USFS, on an on-going basis, all the customer accounts receivable and related rights originated by USSC. Pursuant to the Receivables Purchase Agreement, USFS sells to USR, on an on-going basis, all the accounts receivable and related rights purchased from USSC. Pursuant to the Amended and Restated Transfer and Administration Agreement, USR then sells the receivables and related rights to the Investors. The Program provides for maximum funding available of the lesser of $200 million or the total amount of eligible receivables less excess concentrations and applicable reserves. USFS retains servicing responsibility over the receivables. USR is a wholly-owned, bankruptcy remote special purpose subsidiary of USFS. The assets of USR are not available to satisfy the creditors of any other person, including USFS, USSC or USI, until all amounts outstanding under the Program are repaid and the Program has been terminated.

The receivables sold to the Investors remain on USI’s Consolidated Balance Sheets, and amounts advanced to USR by the Investors or any successor Investors are recorded as debt on USI’s Consolidated Balance Sheets. The cost of such debt is recorded as interest expense on USI’s Consolidated Statements of Income. As of December 31, 2013 and December 31, 2012, $355.4 million and $400.2 million, respectively, of receivables had been sold to the Investors. As of December 31, 2013, USR had $190.7 million outstanding under the Program. As of December 31, 2012, USR had $150.0 million outstanding under the Program.

The 2013 Credit Agreement, the 2013 Note Purchase Agreement and the Amended and Restated Transfer and Administration Agreement prohibit the Company from exceeding a Leverage Ratio of 3.50 to 1.00 (4.00 to 1.00 for the first four fiscal quarters following certain acquisitions). The 2013 Credit Agreement and the 2013 Note Purchase Agreement also impose limits on the Company’s ability to repurchase stock and issue dividends when the Leverage Ratio is greater than 3.00 to 1.00. The 2013 Credit Agreement, the 2013 Note Purchase Agreement and the

Amended and Restated Transfer and Administration Agreement contain additional representations and warranties, covenants and events of default that are customary for facilities of these types of agreements. The 2013 Credit Agreement, 2013 Note Purchase Agreement, and the Transfer and Administration Agreement all contain cross-default provisions. As a result, if a termination event occurs under any of those agreements, the lenders under all of the agreements may cease to make additional loans, accelerate any loans then outstanding and/or terminate the agreements to which they are party.

At December 31, 2013 funding levels (including amounts sold under the Receivables Securitization Program), a 50 basis point movement in interest rates would result in a $2.7 million increase or decrease in annualized interest expense on a pre-tax basis, and upon cash flows from operations. At December 31, 2012 funding levels (including amounts sold under the Receivables Securitization Program), a 50 basis point movement in interest rates would not result in a material increase or decrease in annualized interest expense on a pre-tax basis, nor upon cash flows from operations.

Refer to Note 9, “Long-Term Debt”, for further descriptions of the provisions of 2011 Credit Agreement and the 2007 Note Purchase Agreement.

Cash Flows

Cash flows for the Company for the years ended December 31, 2013, 2012 and 2011 are summarized below (in thousands):


	Years Ended December 31,
	2013			2012			2011
Net cash provided by operating activities	$	74,737		$	189,814		$	130,363
Net cash used in investing activities		(30,273	)		(107,266	)		(27,918	)
Net cash used in financing activities		(53,060	)		(63,457	)		(111,929	)

Cash Flows From Operations

Net cash provided by operating activities for 2013 totaled $74.7 million versus $189.8 million in 2012. The decline in operating cash flows was attributable primarily to the timing of higher inventory levels related to opportunistic inventory purchases, as well as its effect on accounts payable.

Cash Flows From Investing Activities

Net cash used in investing activities for the years ended December 31, 2013, 2012 and 2011 was $30.3 million, $107.3 million, and $27.9 million, respectively. Gross capital spending for 2013, 2012 and 2011 was $33.8 million, $32.8 million and $28.0 million, respectively, which was used for various investments in fleet equipment, information technology systems, technology hardware, and distribution center equipment including several facility projects. Additionally, cash used in 2012 included $75.3 million for the acquisition of OKI.

Cash Flows From Financing Activities

The Company’s cash flow from financing activities is largely dependent on levels of borrowing under the Company’s credit agreements, the acquisition of businesses, the acquisition or issuance of treasury stock, and quarterly dividend payments that were initiated in 2011.

Net cash used in financing activities for 2013, 2012 and 2011 totaled $53.1 million, $63.5 million, and $111.9 million, respectively. Cash outflows from financing activities in 2013 included the repurchase of shares at a cost of $62.1 million and the payment of cash dividends of $22.3 million.

Seasonality

The Company experiences seasonality in its working capital needs, with highest requirements in December through February, reflecting a build-up in inventory prior to and during the peak January sales period. See the information under the heading “Seasonality” in Part I, Item 1 of this Annual Report on Form 10-K. The Company believes that its current financing availability is sufficient to satisfy the seasonal working capital needs for the foreseeable future.

Inflation/Deflation and Changing Prices

The Company maintains substantial inventories to accommodate the prompt service and delivery requirements of its customers. Accordingly, the Company purchases its products on a regular basis in an effort to maintain its inventory at levels that it believes are sufficient to satisfy the anticipated needs of its customers, based upon historical buying practices and market conditions. Although the Company historically has been able to pass through manufacturers’ price increases to its customers on a timely basis, competitive conditions will influence how much of future price increases can be passed on to the Company’s customers. Conversely, when manufacturers’ prices decline, lower sales prices could result in lower margins as the Company sells existing inventory. As a result, changes in the prices paid by the Company for its products could have a material effect on the Company’s net sales, gross margins and net income. See the information under the heading “Comparison of Results for the Years Ended December 31, 2013 and 2012” in Part I, Item 7 of this Annual Report on Form 10-K for further analysis on these changes in prices in 2013.

New Accounting Pronouncements

On January 1, 2013 the Company adopted ASU No. 2012-02, Intangibles—Goodwill and Other (Topic 350)—Testing Indefinite-Lived Intangible Assets for Impairment (ASU 2012-02), which was issued by the FASB in July 2012. Under the guidance, testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other than goodwill has been simplified. The guidance allows an organization the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. An organization electing to perform a qualitative assessment is no longer required to calculate the fair value of an indefinite-lived intangible asset unless the organization determines, based on a qualitative assessment, that it is “more likely than not” that the asset is impaired. Upon adoption of this guidance on January 1, 2013, there was no impact on the Company’s financial condition or results of operations.

In February 2013, the FASB issued Accounting Standards Update No. 2013-02, Comprehensive Income (Topic 220) — Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 2013-02), to improve the reporting of reclassifications out of accumulated other comprehensive income. ASU 2013-02 requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety from accumulated other comprehensive income to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. The Company has adopted the guidance for the reporting period ending September 30, 2013. There was no impact on the Company’s financial condition or results of operations due to the adoption.

In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Income Taxes (Topic 740)—Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (ASU 2013-11). This ASU requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, be presented in the financial statements as either a reduction to a deferred tax asset or separately as a liability depending on the existence, availability and/or use of an operating loss carry forward, a similar tax loss, or a tax credit carry forward. This ASU will be effective for the Company beginning the first quarter of 2014. United is currently evaluating the impact of the new guidance on the Company’s financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is subject to market risk associated principally with changes in interest rates and foreign currency exchange rates.

Interest Rate Risk

The Company’s exposure to interest rate risk is principally limited to the Company’s outstanding debt at December 31, 2013 and 2012 of $533.7 million and $524.4 million respectively. As of December 31, 2013 and 2012, the Company had $532.5 and $523.1 million of outstanding debt with interest based on variable market rates. See Note 2, “Summary of Significant Accounting Policies”, and Note 18, “Derivative Financial Instruments”, to the

Consolidated Financial Statements. As of December 31, 2013 and 2012, the overall weighted average effective borrowing rate of the Company’s debt was 1.3% and 2.5%, respectively. A 50 basis point movement in interest rates would result in a $2.7 million increase or decrease in annualized interest expense, on a pre-tax basis, nor upon cash flows from operations.

Foreign Currency Exchange Rate Risk

The Company’s foreign currency exchange rate risk is limited principally to the Mexican Peso, the Canadian Dollar, the Arab Emirate Dirham, as well as product purchases from Asian countries valued and paid in U.S. Dollars. Many of the products the Company sells in Mexico are purchased in U.S. dollars, while the sale is invoiced in the local currency. The Company’s foreign currency exchange rate risk is not material to its financial position, results of operations and cash flows. The Company has not previously hedged these transactions, but it may enter into hedging transactions in the future.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act to mean a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Consolidated Financial Statements.

Any system of internal control, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and misstatements due to error or fraud may occur and not be detected. Also, because of changes in conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013 in relation to the criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included an evaluation of elements such as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies and the Company’s overall control environment. That assessment was supported by testing and monitoring performed both by the Company’s Internal Audit organization and its Finance organization.

Based on that assessment, management concluded that as of December 31, 2013, the Company’s internal control over financial reporting was effective. Management reviewed the results of its assessment with the Audit Committee of the Company’s Board of Directors.

Ernst & Young LLP, an independent registered public accounting firm, who audited and reported on the Consolidated Financial Statements included in this Annual Report on Form 10-K, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as stated in their report which appears on page 32 of this Annual Report on Form 10-K.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of United Stationers Inc.

We have audited United Stationers Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) (the COSO criteria). United Stationers Inc. and subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying report, Management Report of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, United Stationers Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of United Stationers Inc. and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2013, and our report dated February 19, 2014, expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Chicago, Illinois

February 19, 2014

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of United Stationers Inc.

We have audited the accompanying consolidated balance sheets of United Stationers Inc. and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2013. Our audits also included the financial statement schedule listed in the index at Item 15(a). These consolidated financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of United Stationers Inc. and subsidiaries at December 31, 2013 and 2012, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), United Stationers Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) and our report dated February 19, 2014 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Chicago, Illinois

February 19, 2014

UNITED STATIONERS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)


	Years Ended December 31,
	2013			2012			2011
Net sales	$	5,085,293		$	5,080,106		$	5,005,501
Cost of goods sold		4,295,715			4,305,502			4,265,422

Gross profit		789,578			774,604			740,079
Operating expenses:
Warehousing, marketing and administrative expenses		580,428			573,693			541,752

Operating income		209,150			200,911			198,327
Interest expense		12,233			23,619			27,592
Interest income		(593	)		(343	)		(223	)
Other (income) expense, net		—			—			(1,918	)

Income before income taxes		197,510			177,635			172,876
Income tax expense		74,340			65,805			63,880

Net income	$	123,170		$	111,830		$	108,996

Net income per share—basic:
Net income per share—basic	$	3.11		$	2.77		$	2.49

Average number of common shares outstanding—basic		39,650			40,337			43,822
Net income per share—diluted:
Net income per share—diluted	$	3.06		$	2.73		$	2.42

Average number of common shares outstanding—diluted		40,236			40,991			45,014

See notes to Consolidated Financial Statements.

UNITED STATIONERS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollars in thousands)


	Years Ended December 31,
	2013			2012			2011
Net income	$	123,170		$	111,830		$	108,996
Other comprehensive income (loss), net of tax:
Unrealized translation adjustment		(901	)		1,567			(2,143	)
Minimum pension liability adjustments		13,194			(4,645	)		(20,285	)
Unrealized interest rate swap adjustments		1,584			5,719			9,189

Total other comprehensive income (loss), net of tax		13,877			2,641			(13,239	)

Comprehensive income	$	137,047		$	114,471		$	95,757

See notes to Consolidated Financial Statements.

UNITED STATIONERS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share data)


	As of December 31,
	2013			2012
ASSETS
Current assets:
Cash and cash equivalents	$	22,326		$	30,919
Accounts receivable, less allowance for doubtful accounts of $20,608 in 2013 and $22,716 in 2012		643,379			658,760
Inventories		830,295			767,206
Other current assets		29,255			30,118

Total current assets		1,525,255			1,487,003
Property, plant and equipment, at cost:
Land		13,185			13,250
Buildings		62,235			61,722
Fixtures and equipment		318,013			301,444
Leasehold improvements		28,860			28,762
Capitalized software costs		83,026			77,308

Total property, plant and equipment		505,319			482,486
Less—accumulated depreciation and amortization		362,269			338,963

Net property, plant and equipment		143,050			143,523
Intangible assets, net		65,502			67,192
Goodwill		356,811			357,226
Other long-term assets		25,576			20,260

Total assets	$	2,116,194		$	2,075,204

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	476,113		$	495,278
Accrued liabilities		191,531			205,228
Current maturities of long-term debt		373			—

Total current liabilities		668,017			700,506
Deferred income taxes		29,552			18,054
Long-term debt		533,324			524,376
Other long-term liabilities		59,787			94,176

Total liabilities		1,290,680			1,337,112
Stockholders’ equity:
Common stock, $0.10 par value; authorized—100,000,000 shares, issued—74,435,628 shares at December 31, 2013 and 2012		7,444			7,444
Additional paid-in capital		411,954			404,196
Treasury stock, at cost—34,714,083 and 34,116,220 shares at December 31, 2013 and 2012, respectively		(998,234	)		(963,220	)
Retained earnings		1,444,238			1,343,437
Accumulated other comprehensive loss		(39,888	)		(53,765	)

Total stockholders’ equity		825,514			738,092

Total liabilities and stockholders’ equity	$	2,116,194		$	2,075,204

See notes to Consolidated Financial Statements.

UNITED STATIONERS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(dollars in thousands, except share data)


	Common Stock				Treasury Stock						Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Stockholders’ Equity
	Shares		Amount		Shares			Amount			Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Stockholders’ Equity
As of December 31, 2010		74,435,628	$	7,444		(28,247,906	)	$	(772,698	)	$	400,910		$	(43,167	)	$	1,167,109		$	759,598

Net income		—		—		—			—			—			—			108,996			108,996
Unrealized translation adjustments		—		—		—			—			—			(2,143	)		—			(2,143	)
Minimum pension liability adjustments, net of tax benefit of $12,644		—		—		—			—			—			(20,285	)		—			(20,285	)
Unrealized benefit on interest rate swaps, net of tax loss of $5,728		—		—		—			—			—			9,189			—			9,189

Other comprehensive (loss) income		—		—		—			—			—			(13,239	)		108,996			95,757
Cash dividend declared,$0.52 per share		—		—		—			—			—			—			(22,987	)		(22,987	)
Acquisition of treasury stock		—		—		(5,004,690	)		(159,547	)		—			—			—			(159,547	)
Stock compensation		—		—		970,749			23,578			8,280			—			—			31,858

As of December 31, 2011		74,435,628	$	7,444		(32,281,847	)	$	(908,667	)	$	409,190		$	(56,406	)	$	1,253,118		$	704,679

Net income		—		—		—			—			—			—			111,830			111,830
Unrealized translation adjustments		—		—		—			—			—			1,567			—			1,567
Minimum pension liability adjustments, net of tax benefit of $2,847		—		—		—			—			—			(4,645	)		—			(4,645	)
Unrealized benefit on interest rate swaps, net of tax loss of $3,505		—		—		—			—			—			5,719			—			5,719

Other comprehensive income		—		—		—			—			—			2,641			111,830			114,471
Cash dividend declared,$0.53 per share		—		—		—			—			—			—			(21,511	)		(21,511	)
Acquisition of treasury stock		—		—		(2,454,037	)		(69,908	)		—			—			—			(69,908	)
Stock compensation		—		—		619,664			15,355			(4,994	)		—			—			10,361

As of December 31, 2012		74,435,628	$	7,444		(34,116,220	)	$	(963,220	)	$	404,196		$	(53,765	)	$	1,343,437		$	738,092

Net income		—		—		—			—			—			—			123,170			123,170
Unrealized translation adjustments		—		—		—			—			—			(901	)		—			(901	)
Minimum pension liability adjustments, net of tax loss of $8,397		—		—		—			—			—			13,194			—			13,194
Unrealized benefit on interest rate swaps, net of tax loss of $1,008		—		—		—			—			—			1,584			—			1,584

Other comprehensive income		—		—		—			—			—			13,877			123,170			137,047
Cash dividend declared,$0.56 per share		—		—		—			—			—			—			(22,369	)		(22,369	)
Acquisition of treasury stock		—		—		(1,684,365	)		(62,056	)		—			—			—			(62,056	)
Stock compensation		—		—		1,086,502			27,042			7,758			—			—			34,800

As of December 31, 2013		74,435,628	$	7,444		(34,714,083	)	$	(998,234	)	$	411,954		$	(39,888	)	$	1,444,238		$	825,514

See notes to Consolidated Financial Statements.

UNITED STATIONERS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)


	Years Ended December 31,
	2013			2012			2011
Cash Flows From Operating Activities:
Net income	$	123,170		$	111,830		$	108,996
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		32,153			29,994			28,927
Amortization of intangible assets		6,985			6,083			5,126
Share-based compensation		10,808			8,746			15,734
Amortization of capitalized financing costs		1,021			995			974
Excess tax benefits related to share-based compensation		(3,977	)		(648	)		(6,858	)
(Gain) loss on the disposition of property, plant and equipment		(57	)		122			59
Asset impairment charge		1,183			—			1,635
Deferred income taxes		(3,921	)		(6,713	)		20,914
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Decrease (increase) in accounts receivable		14,735			21,820			(31,686	)
(Increase) decrease in inventories		(66,627	)		10,374			(58,376	)
(Increase) decrease in other assets		(4,224	)		21,105			(18,656	)
(Decrease) increase in accounts payable		(40,634	)		16,264			89,195
Increase (decrease) in checks in-transit		21,348			(32,008	)		(11,803	)
(Decrease) increase in accrued liabilities		(3,648	)		276			(1,228	)
(Decrease) increase in other liabilities		(13,578	)		1,574			(12,590	)

Net cash provided by operating activities		74,737			189,814			130,363
Cash Flows From Investing Activities:
Capital expenditures		(33,789	)		(32,787	)		(27,981	)
Proceeds from the disposition of property, plant and equipment		3,516			775			63
Acquisitions and investment, net of cash acquired		—			(75,254	)		—

Net cash used in investing activities		(30,273	)		(107,266	)		(27,918	)
Cash Flows From Financing Activities:
Net (repayments) borrowings under Revolving Credit Facility		(31,378	)		(123,633	)		91,757
Borrowings under Receivables Securitization Program		40,700			150,000			—
Repayments of debt		—			—			(376,800	)
Proceeds from the issuance of debt		—			—			340,000
Net proceeds from the exercise of stock options		19,895			864			9,264
Acquisition of treasury stock, at cost		(62,056	)		(69,908	)		(162,674	)
Payment of cash dividends		(22,309	)		(21,285	)		(17,517	)
Excess tax benefits related to share-based compensation		3,977			648			6,858
Payment of debt issuance costs		(1,889	)		(143	)		(2,817	)

Net cash used in financing activities		(53,060	)		(63,457	)		(111,929	)
Effect of exchange rate changes on cash and cash equivalents		3			45			(34	)

Net change in cash and cash equivalents		(8,593	)		19,136			(9,518	)
Cash and cash equivalents, beginning of period		30,919			11,783			21,301

Cash and cash equivalents, end of period	$	22,326		$	30,919		$	11,783

See notes to Consolidated Financial Statements.

UNITED STATIONERS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The accompanying Consolidated Financial Statements represent United Stationers Inc. (“USI”) with its wholly owned subsidiary United Stationers Supply Co. (“USSC”), and USSC’s subsidiaries (collectively, “United” or the “Company”). The Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States and include the accounts of USI and its subsidiaries. All intercompany transactions and balances have been eliminated. The Company operates in a single reportable segment as a leading national wholesale distributor of business products, with net sales of approximately $5.1 billion for the year ended December 31, 2013. The Company stocks over 140,000 items on a national basis from over 1,600 manufacturers. These items include a broad spectrum of technology products, traditional office products, office furniture, janitorial and breakroom supplies, and industrial supplies. In addition, the Company also offers private brand products. The Company sells its products through a national distribution network of 64 distribution centers to its approximately 25,000 reseller customers, who in turn sell directly to end-consumers. The Company’s customers include independent office products dealers; contract stationers; office products superstores; computer products resellers; office furniture dealers; mass merchandisers; mail order companies; sanitary supply, paper and foodservice distributors; drug and grocery store chains; healthcare distributors; e-commerce merchants; oil field, welding supply and industrial/MRO distributors; and other independent distributors.

Acquisition of MBS Dev, Inc.

During the first quarter of 2010, the Company completed the acquisition of all of the capital stock of MBS Dev, Inc. (“MBS Dev”), a software solutions provider to business products resellers. MBS Dev’s solutions allow the Company to accelerate e-business development and enable customers and suppliers to implement more effectively their e-marketing and e-merchandising programs, as well as enhance their back office operations. The purchase price included $12.0 million plus $3.0 million in deferred payments and an additional potential $3.0 million earn-out based upon the achievement of certain financial goals by December 31, 2014. During the first quarter of 2011, the Company paid $1.0 million related to the deferred payments. Subsequently, in the fourth quarter of 2011 the Company agreed to accelerate payment of the $2.0 million remaining in deferred payments in consideration for termination of its obligation to pay the earn-out component. As a result, the remaining $2.0 million was paid in the first quarter of 2012.

Acquisition of O.K.I. Supply Co.

During the fourth quarter of 2012, USSC completed the acquisition of all of the capital stock of O.K.I. Supply Co. (OKI), a welding, safety and industrial products wholesaler. This acquisition was completed with a purchase price of $90.0 million. The purchase price includes approximately $4.5 million reserved for as a payable upon completion of a two year indemnification period. In total, the purchase price, net of cash acquired, was $79.8 million. The acquisition extends the Company’s position as the leading pure-wholesale industrial distributor in the United States and brings expanded categories and services to customers. The purchase was financed through the Company’s existing debt agreements.

The acquisition was accounted for under the purchase method of accounting in accordance with ASC 805, Business Combinations, with the excess purchase price over the fair market value of the assets acquired and liabilities assumed allocated to goodwill. Based on the final purchase price allocation, the purchase price of $79.8 million, net of cash received, has resulted in goodwill of $28.7 million. As of December 31, 2012, goodwill was preliminarily valued at $29.2 million. The change in the purchase price allocation was due to the finalization of certain estimates used in the valuation. The purchase price allocation was completed in the fourth quarter of 2013.

The purchase included $22.3 million of intangible assets with definite lives related to trademarks and trade names, content and customer lists, and certain non-compete agreements with the values of $2.9 million, $18.6 million, and $0.8 million, respectively. The weighted average useful lives related to the acquired trademarks and trade names, content and customer lists, and certain non-compete agreements are expected to be approximately 5, 23, and 4 years, respectively. The overall weighted average useful life of these amortizable intangible assets is expected to be 23 years. Neither the goodwill nor the intangible assets are expected to generate a tax deduction. For financial

accounting purposes, there were certain items including amortizable intangible assets, the excess of fair value of assets over tax basis, and the undistributed earnings of acquired foreign subsidiaries that were treated as temporary differences. A deferred tax liability of $13.9 million was recorded through purchase accounting for these temporary differences. Additionally, included within other current assets as of December 31, 2012 were $3.2 million of held-for-sale assets which the Company sold in 2013. These assets were valued at their fair-value at the date of acquisition less the estimated cost to sell these assets.

Final Purchase Price Allocation

(dollars in thousands)


Purchase Price, net of cash acquired				$	79,754

Final Allocation of Purchase Price:
Accounts receivable	$	(20,517	)
Inventories		(32,170	)
Other current assets		(3,671	)
Property, plant and equipment		(7,859	)
Intangible assets		(22,250	)

Total assets acquired					(86,467	)
Trade accounts payable		11,975
Accrued liabilities		7,683
Deferred taxes		13,911
Debt		1,254
Long-term liabilities		639

Total liabilities assumed					35,462

Goodwill				$	28,749

OKI contributed $20.5 million to the Company’s 2012 net financial sales after its acquisition on November 1, 2012. Had the OKI acquisition been completed as of the beginning of 2011, the Company’s unaudited pro forma net sales for the years ended December 31, 2012 and 2011 would have been $5.2 billion and $5.2 billion, respectively. Had the OKI acquisition been completed as of the beginning of 2011, the Company’s unaudited pro forma net income for the years ended December 31, 2012 and 2011 would have been $112.6 million and $113.6 million, respectively.

Investments

During the second quarter of 2010, the Company invested $5.0 million to acquire a minority interest in the capital stock of a managed print services and technology solution business. During the first quarter of 2011, a non-deductible asset impairment charge of $1.6 million was taken based on an independent third-party valuation analysis with respect to the fair value of this investment. Additionally in the fourth quarter of 2013, the Company impaired the remaining investment of $1.2 million in the entity. These charges and the Company’s share of the earnings and losses of this investment are included in the Operating Expenses section of the Consolidated Statements of Income.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current presentation. Such reclassifications were limited to the Consolidated Balance Sheets and did not impact the Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, or Consolidated Statements of Cash Flows.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation. For all acquisitions, account balances and results of operations are included in the Consolidated Financial Statements as of the date acquired.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results could differ from these estimates.

Various assumptions and other factors underlie the determination of significant accounting estimates. The process of determining significant estimates is fact specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and in some cases, actuarial techniques. The Company periodically reevaluates these significant factors and makes adjustments where facts and circumstances dictate.

Supplier Allowances

Customer Rebates

Customer rebates and discounts are common practice in the business products industry and have a significant impact on the Company’s overall sales and gross margin. Such rebates are reported in the Consolidated Financial Statements as a reduction of sales. Customer rebates of $52.6 million and $56.3 million as of December 31, 2013 and 2012, respectively, are included as a component of “Accrued liabilities” in the Consolidated Balance Sheets.

Customer rebates include volume rebates, sales growth incentives, advertising allowances, participation in promotions and other miscellaneous discount programs. These rebates are paid to customers monthly, quarterly and/or annually. Estimates for volume rebates and growth incentives are based on estimated annual sales volume to the Company’s customers. The aggregate amount of customer rebates depends on product sales mix and customer mix changes. Reported results reflect management’s current estimate of such rebates. Changes in estimates of sales volumes, product mix, customer mix or sales patterns, or actual results that vary from such estimates may impact future results.

Revenue Recognition

Additional revenue is generated from the sale of software licenses, delivery of subscription services (including the right to use software and software maintenance services), and professional services. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fees are fixed and determinable, and collection is considered probable. If collection is not considered probable, the Company recognizes revenue when the fees are collected. If fees are not fixed and determinable, the Company recognizes revenues when the fees become due from the customer.

Share-Based Compensation

At December 31, 2013, the Company had two active share-based employee compensation plans covering key associates and/or non-employee directors of the Company. See Note 3 to the Consolidated Financial Statements.

Accounts Receivable

Generally, the Company extends credit to customers. Accounts receivable, as shown in the Consolidated Balance Sheets, include such trade accounts receivable and are net of allowances for doubtful accounts and anticipated discounts. The Company makes judgments as to the collectability of trade accounts receivable based on historical trends and future expectations. Management estimates an allowance for doubtful accounts, which addresses the collectability of trade accounts receivable. This allowance adjusts gross trade accounts receivable downward to its estimated collectible or net realizable value. To determine the allowance for doubtful accounts, management reviews specific customer risks and the Company’s trade accounts receivable aging. Uncollectible trade receivable balances are written off against the allowance for doubtful accounts when it is determined that the trade receivable balance is uncollectible.

Goodwill and Intangible Assets

Goodwill is initially recorded based on the premium paid for acquisitions and is subsequently tested for impairment. See Note 4 to the Consolidated Financial Statements.

Insured Loss Liability Estimates

The Company is primarily responsible for retained liabilities related to workers’ compensation, vehicle, and certain employee health benefits. The Company records expense for paid and open claims and an expense for claims incurred but not reported based upon historical trends and certain assumptions about future events. The Company has an annual per-person maximum cap, provided by a third-party insurance company, on certain employee medical benefits. In addition, the Company has a per-occurrence maximum on workers’ compensation and auto claims.

Leases

The Company leases real estate and personal property under operating leases. Certain operating leases include incentives from landlords including, landlord “build-out” allowances, rent escalation clauses and rent holidays or periods in which rent is not payable for a certain amount of time. The Company accounts for landlord “build-out” allowances as deferred rent at the time of possession and amortizes this deferred rent on a straight-line basis over the term of the lease.

The Company also recognizes leasehold improvements associated with the “build-out” allowances and amortizes these improvements over the shorter of (1) the term of the lease or (2) the expected life of the respective improvements. The Company accounts for rent escalation and rent holidays as deferred rent at the time of possession and amortizes this deferred rent on a straight-line basis over the term of the lease. As of December 31, 2013, any capital leases to which the Company is a party are immaterial to the Company’s financial statements.

Inventories

FIFO and LIFO accounting methods is recorded at the lower of cost or market. If the Company had valued its entire inventory under the lower of FIFO cost or market, inventory would have been $112.4 million and $107.8 million higher than reported as of December 31, 2013 and 2012, respectively. The annual change in the LIFO reserve as of December 31, 2013, 2012 and 2011 resulted in a $4.6 million increase, an $11.7 million increase and an $11.4 million increase, respectively, in cost of sales. The change in the LIFO reserve in 2013 resulted in a $4.6 million increase in cost of goods sold which included a LIFO liquidation relating to a decrement in the Company’s technology LIFO pool. This decrement resulted in liquidation of LIFO inventory quantities carried at lower costs in prior years as compared with the cost of current year purchases. This liquidation resulted in LIFO income of $0.6 million which was more than offset by LIFO expense of $5.2 million related to current inflation for an overall net increase in cost of sales of $4.6 million as referenced above.

Pension Benefits

Calculating the Company’s obligations and expenses related to its pension requires selection and use of certain actuarial assumptions. As more fully discussed in Note 11 to the Consolidated Financial Statements, these actuarial assumptions include discount rates, expected long-term rates of return on plan assets, and rates of increase in compensation and healthcare costs. To select the appropriate actuarial assumptions, management relies on current market conditions and historical information. Pension expense for 2013 was $4.5 million, compared to $5.7 million and $1.6 million in 2012 and 2011, respectively.

Cash Equivalents

An unfunded check balance (payments in-transit) exists for the Company’s primary disbursement accounts. Under the Company’s cash management system, the Company utilizes available borrowings, on an as-needed basis, to fund the clearing of checks as they are presented for payment. As of December 31, 2013, and 2012, outstanding checks totaling $60.8 million and $39.4 million, respectively, were included in “Accounts payable” in the Consolidated Balance Sheets.

All highly liquid debt instruments with an original maturity of three months or less are considered cash equivalents. Cash equivalents are stated at cost, which approximates market value. There were no short term investments as of December 31, 2013 and December 31, 2012.

Property, Plant and Equipment

Property, plant and equipment is recorded at cost. Depreciation and amortization are determined by using the straight-line method over the estimated useful lives of the assets. The estimated useful life assigned to fixtures and equipment is from two to ten years; the estimated useful life assigned to buildings does not exceed forty years; leasehold improvements are amortized over the lesser of their useful lives or the term of the applicable lease. Repair and maintenance costs are charged to expense as incurred.

Software Capitalization

The Company capitalizes internal use software development costs in accordance with accounting guidance on accounting for costs of computer software developed or obtained for internal use. Amortization is recorded on a straight-line basis over the estimated useful life of the software, generally not to exceed ten years. Capitalized software is included in “Property, plant and equipment” on the Consolidated Balance Sheets. The total costs are as follows (in thousands):


	As of December 31,
	2013			2012
Capitalized software development costs	$	83,026		$	77,308
Accumulated amortization		(59,257	)		(53,943	)

Net capitalized software development costs	$	23,769		$	23,365

Derivative Financial Instruments

All derivatives are recognized on the balance sheet date at their fair value. The Company’s outstanding derivative at December 31, 2013 was in a net asset position and is included in “Other Long-Term Assets” on the Consolidated Balance Sheet. As of December 31, 2012 all derivatives were in a net liability position and were included in “Accrued liabilities” and “Other Long-Term Liabilities” on the Consolidated Balance Sheet. The interest rate swaps that the Company has entered into are classified as cash flow hedges in accordance with accounting guidance on derivative instruments and hedging activities as they are hedging a forecasted transaction or the variability of cash flow to be paid by the Company. Changes in the fair value of a derivative that is qualified, designated and highly effective as a cash flow hedge are recorded in other comprehensive income, net of tax, until earnings are affected by the forecasted transaction or the variability of cash flow, and then are reported in current earnings.

Income Taxes

The current and deferred tax balances and income tax expense recognized by the Company are based on management’s interpretation of the tax laws of multiple jurisdictions. Income tax expense also reflects the Company’s best estimates and assumptions regarding, among other things, the level of future taxable income, interpretation of tax laws, and tax planning. Future changes in tax laws, changes in projected levels of taxable income, and tax planning could impact the effective tax rate and current and deferred tax balances recorded by the

Company. Management’s estimates as of the date of the Consolidated Financial Statements reflect its best judgment giving consideration to all currently available facts and circumstances. As such, these estimates may require adjustment in the future, as additional facts become known or as circumstances change. Further, in accordance with the accounting guidance on income taxes, the tax effects from uncertain tax positions are recognized in the Consolidated Financial Statements, only if it is more likely than not that the position will be sustained upon examination, based on the technical merits of the position. The Company accounts for interest and penalties related to uncertain tax positions as a component of income tax expense.

Foreign Currency Translation

The functional currency for the Company’s foreign operations is the local currency. Assets and liabilities of these operations are translated into U.S. currency at the rates of exchange at the balance sheet date. The resulting translation adjustments are included in other comprehensive income (loss) in the Consolidated Statements of Comprehensive Income, a separate component of stockholders’ equity. Income and expense items are translated at average monthly rates of exchange. Realized gains and losses from foreign currency transactions were not material.

New Accounting Pronouncements

3. Share-Based Compensation

Overview

As of December 31, 2013, the Company has two active equity compensation plans. A description of these plans is as follows:

Nonemployee Directors’ Deferred Stock Compensation Plan

Pursuant to the United Stationers Inc. Nonemployee Directors’ Deferred Stock Compensation Plan, non-employee directors may defer receipt of all or a portion of their retainer and meeting fees. Fees deferred are credited quarterly to each participating director in the form of stock units, based on the fair market value of the Company’s common stock on the quarterly deferral date. Each stock unit account generally is distributed and settled in whole shares of

the Company’s common stock on a one-for-one basis, with a cash-out of any fractional stock unit interests, after the participant ceases to serve as a Company director. For the years ended December 31, 2013, 2012 and 2011, the Company recorded compensation expense of $0.1 million, $0.2 million, and $0.2 million, respectively. As of December 31, 2013, 2012 and 2011, the accumulated number of stock units outstanding under this plan was 56,737; 62,421; and 89,285; respectively.

Amended and Restated 2004 Long-Term Incentive Plan (“LTIP”)

In May 2011, the Company’s shareholders approved the LTIP to, among other things, attract and retain managerial talent, further align the interest of key associates to those of the Company’s stockholders and provide competitive compensation to key associates. Award vehicles include stock options, stock appreciation rights, full value awards, cash incentive awards and performance-based awards. Key associates and non-employee directors of the Company are eligible to become participants in the LTIP, except that non-employee directors may not be granted incentive stock options.

Accounting For Share-Based Compensation

The following table summarizes the share-based compensation expense (in thousands):


	Year Ended December 31,
	2013			2012			2011
Numerator:
Pre-tax expense	$	10,808		$	8,746		$	15,734
Tax effect		(4,108	)		(3,323	)		(5,977	)

After tax expense	$	6,700		$	5,423		$	9,757

Denominator:
Denominator for basic shares—Weighted average shares		39,650			40,337			43,822
Denominator for diluted shares—Adjusted weighted average shares and the effect of dilutive securities		40,236			40,991			45,014
Net expense per share:
Net expense per share—basic	$	0.17		$	0.13		$	0.22

Net expense per share—diluted	$	0.17		$	0.13		$	0.22

The following tables summarize the intrinsic value of options outstanding, exercisable, and exercised for the applicable periods listed below:

Intrinsic Value of Options

(in thousands of dollars)


	Outstanding		Exercisable
As of December 31, 2013	$	9,897	$	6,262
As of December 31, 2012		8,420		8,420
As of December 31, 2011		13,668		13,668

Intrinsic Value of Options Exercised

(in thousands of dollars)


For the year ended
December 31, 2013	$	13,676
December 31, 2012		2,380
December 31, 2011		8,911

The following tables summarize the intrinsic value of restricted shares outstanding and vested for the applicable periods listed below:

Intrinsic Value of Restricted Shares

(in thousands of dollars)


Outstanding
As of December 31, 2013	$	47,780
As of December 31, 2012		40,222
As of December 31, 2011		32,634

Intrinsic Value of Restricted Shares Vested

(in thousands of dollars)


For the year ended
December 31, 2013	$	12,414
December 31, 2012		8,812
December 31, 2011		27,576

The aggregate intrinsic values summarized in the tables above are based on the closing sale price per share for the Company’s Common Stock on the last day of trading in each respective fiscal period which was $45.89, $30.99, and $32.56 per share for the 2013, 2012 and 2011 periods ended. Additionally, the aggregate intrinsic value of options exercisable does not include the value of options for which the exercise price exceeds the stock price as of the last day of trading in each respective fiscal period.

Stock Options

The fair value of option awards and modifications to option awards is estimated on the date of grant or modification using a Black-Scholes option valuation model that uses various assumptions including the expected stock price volatility, risk-free interest rate, and expected life of the option. The expected term of options granted is derived from the historical forfeiture and exercise behavior and represents the period of time that options granted are expected to be outstanding. The expected volatility of the price of the underlying shares is implied based on historical volatility of the Company’s common stock. The expected dividends were based on the current dividend yield of the Company’s stock as of the date of the grant. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The assumptions used are shown in the following table.


	2013
Weighted average expected term		5.6
Expected volatility		40.01—40.49	%
Weighted average volatility		40.48	%
Weighted average expected dividends		1.46	%
Risk-free rate		0.76—1.62	%

Stock options granted in 2013 vest at the end of three years and have a term of 10 years. Previously issued stock options generally vested in annual increments over three years and have a term of 10 years. Compensation costs for all stock options are recognized, net of estimated forfeitures, on a straight-line basis over the vesting period. As of December 31, 2013, there was $4.7 million of unrecognized compensation cost related to stock option awards granted. The cost is expected to be recognized over a weighted-average period of 2.25 years. In 2013, there were 585,189 stock options granted. There were no stock options granted during 2012 or 2011.

The following table summarizes the transactions, excluding restricted stock, under the Company’s equity compensation plans for the last three years:


	2013			Weighted Average Exercise Price		2012			Weighted Average Exercise Price		2011			Weighted Average Exercise Price
Options outstanding—January 1		1,371,850		$	24.86		1,715,380		$	24.62		2,563,708		$	24.18
Granted		585,189			38.71		—			—		—			—
Exercised		(1,065,920	)		24.69		(217,634	)		18.69		(847,528	)		23.26
Cancelled		(78,959	)		38.69		(125,896	)		32.35		(800	)		29.51

Options outstanding—December 31		812,160		$	33.70		1,371,850		$	24.86		1,715,380		$	24.62

Number of options exercisable		305,930		$	25.42		1,371,850		$	24.86		1,715,380		$	24.62

The following table summarizes outstanding and exercisable options granted under the Company’s equity compensation plans as of December 31, 2013:


Exercise Prices	Outstanding		Remaining Contractual Life (Years)		Exercisable
20.00—25.00		201,684		2.3		201,684
25.01—30.00		102,000		3.7		102,000
30.01—35.00		2,246		3.4		2,246
35.01—40.00		506,230		9.3		—

Total		812,160		6.8		305,930

Restricted Stock and Restricted Stock Units

The Company granted 181,916 shares of restricted stock and 166,348 restricted stock units (“RSU”s) during 2013. During 2012, the Company granted 461,512 shares of restricted stock and 245,737 RSUs. During 2011, the Company granted 30,097 shares of restricted stock and 332,888 RSUs. The restricted stock granted in each period generally vests in three equal annual installments on the anniversaries of the date of the grant. The majority of the RSUs granted in 2013, 2012 and 2011 vest in three annual installments based on the terms of the agreements, to the extent earned based on the Company’s cumulative economic profit performance against target economic profit goals. The performance-based RSUs granted in 2011 and 2012 have a minimum and maximum payout of zero to 150%. The performance-based RSUs granted in 2013 have a minimum and maximum payout of zero to 200%. Included in the 2013, 2012 and 2011 grants were 194,517; 426,064; and 147,843 shares of restricted stock and RSUs granted to employees who were not executive officers, as of December 31, 2013, 2012 and 2011, respectively. In addition, there were 23,898; 41,051; and 39,314 shares of restricted stock and RSUs granted to non-employee directors during the years ended December 31, 2013, 2012 and 2011, respectively. For the years ended December 31, 2013, 2012 and 2011, respectively, there were also 129,849; 240,134; and 175,828 shares of restricted stock and RSUs granted to executive officers. The restricted stock granted to executive officers vests with respect to each officer in annual increments over three years provided that the following conditions are satisfied: (1) the officer is still employed as of the anniversary date of the grant; and (2) the Company’s cumulative diluted earnings per share for the four calendar quarters immediately preceding the vesting date exceed $0.50 per diluted share as defined in the officers’ restricted stock agreement. As of December 31, 2013, there was $14.2 million of total unrecognized compensation cost related to non-vested restricted stock and RSUs granted. The cost is expected to be recognized over a weighted-average period of 1.9 years. A rollforward of the Company’s restricted stock and RSU grants during the last three years is as follows:


Restricted Stock and RSUs	2013			Weighted Average Grant Date Fair Value		2012			Weighted Average Grant Date Fair Value		2011			Weighted Average Grant Date Fair Value
Nonvested—January 1		1,297,906		$	28.61		1,002,125		$	26.42		1,562,626		$	20.13
Granted		348,264			38.28		707,249			27.84		362,985			30.81
Vested		(323,159	)		37.02		(324,345	)		22.00		(853,384	)		17.14
Cancelled		(281,822	)		30.04		(87,123	)		28.16		(70,102	)		21.97

Nonvested—December 31		1,041,189		$	31.24		1,297,906		$	28.61		1,002,125		$	26.42

4. Goodwill and Intangible Assets

During 2011, the Company voluntarily changed the date of its annual goodwill and indefinite-lived intangible asset impairment test from the last day of the fourth quarter (December 31) to the first day of the fourth quarter (October 1). This change is preferable under the circumstances as it (1) results in better alignment with the Company’s annual strategic planning and forecasting process and (2) provides the Company with additional time in a given fiscal reporting period to accurately assess the recoverability of goodwill and indefinite-lived intangible assets and to measure any indicated impairment. The Company believes that the change in accounting principle related to the annual testing date will not delay, accelerate, or avoid an impairment charge. In accordance with Accounting Standards Codification (“ASC”) Topic 350 “Intangibles—Goodwill and other”, if indicators of impairment are deemed to be present, the Company would perform an interim impairment test and any resulting impairment loss would be charged to expense in the period identified. This change is not applied retrospectively as it is impracticable to do so because retrospective application would require the application of significant estimates and assumptions with the use of hindsight. Accordingly, the change was applied prospectively.

Accounting guidance on goodwill and intangible assets requires that goodwill be tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. Based on the test completed in 2013, the Company concluded that the fair value of each of the reporting units was in excess of the carrying value. The Company also adopted Accounting Standards Update (“ASU”) 2011-08 which allows for the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The Company applied this qualitative approach to two of its four reporting

units. The other two reporting units were evaluated for impairment using the discounted cash flow and market based approaches to determine fair value. At the Company’s annual impairment test date of October 1, 2013, the Company’s reporting units passed the first step of the goodwill impairment test prescribed by related accounting guidance.

Indefinite lived intangible assets are tested for impairment annually or more frequently if events or changes in circumstances indicate that the assets might be impaired. The Company does not believe any triggering event occurred during the three-month period ended December 31, 2013 that would require an interim impairment assessment on the indefinite lived intangibles. As a result, none of the goodwill or intangible assets with indefinite lives were tested for impairment during the three-month period ended December 31, 2013. In the fourth quarter of 2012, it was determined that a trade name acquired in a past acquisition was no longer in use and therefore was fully impaired. The Company wrote off the value of this indefinite lived intangible, $0.7 million, in the fourth quarter of 2012 and included this amount within operating expenses in the Consolidated Statement of Income and within depreciation and amortization in the Consolidated Statement of Cash Flows.

As of December 31, 2013 and 2012, the Company’s Consolidated Balance Sheets reflected $356.8 million and $357.2 million of goodwill, and $65.5 million and $67.2 million in net intangible assets, respectively.

Net intangible assets consist primarily of customer lists, trademarks, and non-compete agreements purchased as part of past acquisitions. The Company has no intention to renew or extend the terms of acquired intangible assets and accordingly, did not incur any related costs during 2013 or 2012. Amortization of intangible assets purchased as part of these acquisitions totaled $7.0 million, $6.1 million, and $5.2 million for the years ended December 31, 2013, 2012 and 2011, respectively. Accumulated amortization of intangible assets as of December 31, 2013 and 2012 totaled $38.8 million and $32.1 million, respectively.

The following table summarizes the intangible assets of the Company by major class of intangible assets and the cost, accumulated amortization, net carrying amount, and weighted average life, if applicable (in thousands):


	December 31, 2013									December 31, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Useful Life (years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Useful Life (years)
Intangible assets subject to amortization
Customer relationships and other intangibles	$	84,470	$	(36,232	)	$	48,238		17	$	79,170	$	(30,369	)	$	48,801		14
Non-compete agreements		4,700		(1,952	)		2,748		4		4,740		(1,588	)		3,152		4
Trademarks		2,890		(674	)		2,216		5		3,040		(101	)		2,939		5

Total	$	92,060	$	(38,858	)	$	53,202			$	86,950	$	(32,058	)	$	54,892
Intangible assets not subject to amortization
Trademarks		12,300		—			12,300		n/a		12,300		—			12,300		n/a

Total	$	104,360	$	(38,858	)	$	65,502			$	99,250	$	(32,058	)	$	67,192

The following table summarizes the amortization expense expected to be incurred over the next five years on intangible assets (in thousands):


Year	Amounts
2014	$	6,486
2015		6,371
2016		6,273
2017		6,176
2018		3,969

5. Severance and Restructuring Charges

During the first quarter of 2013, the Company recorded a $14.4 million pre-tax charge related to a workforce reduction and facility closures. These actions were substantially completed in 2013. The pre-tax charge is comprised of certain OKI facility closure expenses of $1.2 million and severance and workforce reduction-related expenses of $13.2 million which were included in operating expenses. Cash outflows for these actions will occur primarily during 2013 and 2014. Cash outlays associated with these charges in 2013 were $8.6 million. During 2013, the Company reversed a portion of these charges totaling $1.4 million. As of December 31, 2013, the Company had accrued liabilities for these actions of $4.4 million.

On February 13, 2012, the Company approved a distribution network optimization and cost reduction program. This program was substantially completed in the first quarter of 2012 and the Company recorded a $6.2 million pre-tax charge in that period in connection with these actions. The pre-tax charge is comprised of facility closure expenses of $2.6 million and severance and related expense of $3.6 million which were included in operating expenses. Cash outlays associated with facility closures and severance in 2013 were $0.6 million and $1.1 million, respectively. Cash outlays associated with facility closures and severance in 2013 and 2012 were $2.1 and $1.9 million, respectively. During 2012, the Company reversed a portion of these severance charges totaling $0.3 million. As of December 31, 2013 and 2012, the Company had accrued liabilities for these actions of $0.2 million and $1.9 million, respectively.

6. Accumulated Other Comprehensive Loss

The change in Accumulated Other Comprehensive Income (Loss) (“AOCI”) by component, net of tax, for the year ended December 31, 2013 is as follows:


(amounts in thousands)	Foreign Currency Translation			Cash Flow Hedges			Defined Benefit Pension Plans			Total
AOCI, balance as of December 31, 2012	$	(5,760	)	$	(713	)	$	(47,292	)	$	(53,765	)
Other comprehensive (loss) income before reclassifications		(901	)		1,443			9,515			10,057
Amounts reclassified from AOCI		—			141			3,679			3,820

Net other comprehensive (loss) income		(901	)		1,584			13,194			13,877

AOCI, balance as of December 31, 2013	$	(6,661	)	$	871		$	(34,098	)	$	(39,888	)

The following table details the amounts reclassified out of AOCI into the income statement during the twelve-month period ending December 31, 2013 respectively:


Details About AOCI Components	Amount Reclassified From AOCI			Affected Line Item In The Statement Where Net Income Is Presented
Details About AOCI Components	For the Twelve Months Ended December 31, 2013
Losses on interest rate swap cash flow hedges, before tax	$	228		Interest expense, net
		(87	)	Tax provision

	$	141		Net of tax

Amortization of defined benefit pension plan items:
Prior service cost and unrecognized loss	$	5,933		Warehousing, marketing and administrative expenses
		(2,254	)	Tax provision

		3,679		Net of tax

Total reclassifications for the period	$	3,820		Net of tax

7. Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if dilutive securities

were exercised into common stock. Stock options, restricted stock and deferred stock units are considered dilutive securities. Stock options to purchase 0.5 million, 0.5 million, and 0.1 million shares of common stock were outstanding at December 31, 2013, 2012, and 2011, respectively, but were not included in the computation of diluted earnings per share because the options’ exercise prices were greater than the average market price of the common shares and, therefore, the effect would be antidilutive. The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):


	Years Ended December 31,
	2013		2012		2011
Numerator:
Net income	$	123,170	$	111,830	$	108,996
Denominator:
Denominator for basic earnings per share: Weighted average shares		39,650		40,337		43,822
Effect of dilutive securities:
Employee stock options and restricted units		586		654		1,192

Denominator for diluted earnings per share:
Adjusted weighted average shares and the effect of dilutive securities		40,236		40,991		45,014

Net income per common share:
Net income per share—basic	$	3.11	$	2.77	$	2.49
Net income per share—diluted	$	3.06	$	2.73	$	2.42

Common Stock Repurchases

As of December 31, 2013 the Company had Board authorization to repurchase $93.0 million of USI common stock. In 2013 and 2012, the Company repurchased 1,684,365 and 2,454,037 shares of USI’s common stock at an aggregate cost of $62.1 million and $69.9 million, respectively. Depending on market and business conditions and other factors, the Company may continue or suspend purchasing its common stock at any time without notice. Acquired shares are included in the issued shares of the Company and treasury stock, but are not included in average shares outstanding when calculating earnings per share data. During 2013, 2012 and 2011, the Company reissued 1,086,502, 619,664 and 970,749 shares, respectively, of treasury stock to fulfill its obligations under its equity incentive plans.

8. Segment Information

Accounting guidance on segments of an enterprise requires companies to report financial and descriptive information about their reportable operating segments, including segment profit or loss, certain specific revenue and expense items, and segment assets, as well as information about the revenues derived from the Company’s products and services, the countries in which the Company earns revenues and holds assets, and major customers. This statement also requires companies that have a single reportable segment to disclose information about products and services, information about geographic areas, and information about major customers. This statement requires the use of the management approach to determine the information to be reported. The management approach is based on the way management organizes the enterprise to assess performance and make operating decisions regarding the allocation of resources. The accounting guidance on segments of an enterprise permits the aggregation, based on specific criteria, of several operating segments into one reportable operating segment. Management has chosen to aggregate its operating segments and report segment information as one reportable segment. A discussion of the factors relied upon and processes undertaken by management in determining that the Company meets the aggregation criteria is provided below, followed by the required disclosure regarding the Company’s single reportable segment.

Management defines operating segments as individual operations that the Chief Operating Decision Maker (“CODM”) (in the Company’s case, the Chief Executive Officer) reviews for the purpose of assessing performance and making operating decisions. When evaluating operating segments, management considers whether:

•

The component engages in business activities from which it may earn revenues and incur expenses;

•

The operating results of the component are regularly reviewed by the enterprise’s CODM;

•

Discrete financial information is available about the component; and

•

Other factors are present, such as management structure, presentation of information to the Board of Directors and the nature of the business activity of each component.

Based on the factors referenced above, management has determined that the Company has four operating segments, USSC (referred to by the Company as “Supply”), the first-tier operating subsidiary of USI; Lagasse, ORS Nasco, and MBS Dev. Supply also includes operations in Mexico conducted through a USSC subsidiary, as well as Azerty, which has been consolidated into Supply. O.K.I. Supply Co., which was acquired in 2012, has operations in Canada and Dubai which are immaterial to 2013 financial results.

Management has also concluded that three of the Company’s operating segments (Supply, Lagasse, and ORS Nasco) meet all of the aggregation criteria required by the accounting guidance. Such determination is based on company-wide similarities in (1) the nature of products and/or services provided, (2) customers served, (3) production processes and/or distribution methods used, (4) economic characteristics including gross margins and operating expenses and (5) regulatory environment. MBS Dev does not meet the materiality thresholds for reporting individual segments and has therefore been combined with the other operating segments. Management further believes aggregate presentation provides more useful information to the financial statement user and is, therefore, consistent with the principles and objectives of the FASB-issued accounting guidance.

The following discussion sets forth the required disclosure regarding single reportable segment information:

The Company operates as a single reportable segment as a leading wholesale distributor of business products, with 2013 net sales of $5.1 billion—including foreign operations in Mexico, Canada, and the U.A.E. For the years ended December 31, 2013, 2012 and 2011, the Company’s net sales from these foreign operations totaled $138.2 million, $112.5 million and $111.7 million, respectively. As of December 31, 2013, 2012, and 2011, long-lived assets of the Company’s foreign operations totaled $13.8 million, $13.1 million, and $4.7 million, respectively.

The Company’s product offerings may be divided into the following primary categories: (i) traditional office products, which include writing instruments, paper products, organizers and calendars and various office accessories; (ii) technology products such as computer supplies and peripherals; (iii) office furniture, such as desks, filing and storage solutions, seating and systems furniture, along with a variety of products for niche markets such as education government, healthcare and professional services; (iv) janitorial and breakroom supplies, which includes janitorial and breakroom supplies, foodservice consumables, safety and security items, and paper and packaging supplies; and (v) industrial supplies which includes hand and power tools, safety and security supplies, janitorial equipment and supplies and welding products. In 2013, the Company’s largest two suppliers were Hewlett-Packard Company and Lexmark International, Inc, which represented approximately 24% and 7%, respectively, of its total purchases. No other supplier accounted for more than 5% of the Company’s total purchases.

The Company’s customers include independent office products dealers and contract stationers, office products mega-dealers, office products superstores, computer products resellers, office furniture dealers, mass merchandisers, mail order companies, sanitary supply distributors, drug and grocery store chains, e-commerce dealers and other independent distributors. The Company had one customer, W.B. Mason Co., Inc., which constituted approximately 11% of its 2013 consolidated net sales. No other single customer accounted for more than 10% of the 2013 consolidated net sales. The following table shows net sales by product category for 2013, 2012 and 2011 (in millions):


	Years Ended December 31,
	2013		2012 ⁽¹⁾		2011 ⁽¹⁾
Technology products	$	1,466,499	$	1,563,757	$	1,626,030
Janitorial and breakroom supplies		1,335,414		1,282,370		1,222,225
Traditional office products		1,310,571		1,366,368		1,360,702
Industrial supplies		517,826		409,266		349,370
Office furniture		312,298		324,668		324,974
Freight revenue		105,567		99,319		88,893
Other		37,118		34,358		33,307

Total net sales	$	5,085,293	$	5,080,106	$	5,005,501

(1)

9. Debt

USI is a holding company and, as a result, its primary sources of funds are cash generated from operating activities of its direct operating subsidiary, USSC, and from borrowings by USSC. The 2013 Credit Agreement (as defined below), the 2013 Note Purchase Agreement (as defined below), the 2007 Credit Agreement (as defined below), the 2007 Note Purchase Agreement (as defined below) and the Receivables Securitization Program (as defined below) contain restrictions on the use of cash transferred from USSC to USI.

Debt consisted of the following amounts (in millions):


	As of December 31, 2013		As of December 31, 2012
2013 Credit Agreement	$	206.8	$	238.1
2007 Master Note Purchase Agreement (Private Placement)		135.0		135.0
Receivables Securitization Program		190.7		150.0
Mortgage & Capital Lease		1.2		1.3

Total	$	533.7	$	524.4

As part of the acquisition of OKI in 2012 the Company acquired a capital lease related to a computer server which terminates in 2015, as well as a mortgage on the headquarters of the Canadian subsidiary which matures in 2015 as it was renewed in January 2014. As of December 31, 2013, 100% of the Company’s outstanding debt, excluding capital leases, is priced at variable interest rates based primarily on the applicable bank prime rate or London InterBank Offered Rate (“LIBOR”). As of December 31, 2013 the overall weighted average effective borrowing rate of the Company’s debt was 1.3%. At December 31, 2013 all of the Company’s debt was unhedged and a 50 basis point movement in interest rates would result in a $2.7 million change in annualized interest expense, on a pre-tax basis, and upon cash flows from operations.

Receivables Securitization Program

On January 18, 2013, the Company’s accounts receivable securitization program (“Receivables Securitization Program” or the “Program”) was amended and restated to increase the maximum amount of financing from $150 million to $200 million and to extend the term of the Program through January 18, 2016. The parties to the Program are USI, USSC, United Stationers Financial Services (“USFS”), United Stationers Receivables, LLC (“USR”), and PNC Bank, National Association and the Bank of Toyko—Mitsubishi UFJ, Ltd New York Branch (the “Investors”). The Program is governed by the following agreements:

•

The Amended and Restated Transfer and Administration Agreement among USSC, USFS, USR, and the Investors;

•

The Receivables Sale Agreement between USSC and USFS;

•

The Receivables Purchase Agreement between USFS and USR; and

•

The Performance Guaranty executed by USI in favor of USR.

The receivables sold to the Investors remain on USI’s Consolidated Balance Sheets, and amounts advanced to USR by the Investor or any successor Investors are recorded as debt on USI’s Consolidated Balance Sheets. The cost of such debt is recorded as interest expense on USI’s Consolidated Statements of Income. As of December 31, 2013 and December 31, 2012, $355.4 million and $400.2 million, respectively, of receivables had been sold to the Investors. As of December 31, 2013, USR had $190.7 million outstanding under the Program. As of December 31, 2012, USR had $150.0 million outstanding under the Program.

Credit Agreement and Other Debt

On October 15, 2007, USI and USSC entered into a Master Note Purchase Agreement (the “2007 Note Purchase Agreement”) with several purchasers. The 2007 Note Purchase Agreement allows USSC to issue up to $1 billion of senior secured notes, subject to certain debt restrictions. Pursuant to the 2007 Note Purchase Agreement, USSC issued and sold $135 million of floating rate senior secured notes due October 15, 2014 at par in a private placement (the “Series 2007-A Notes”). Interest on the Series 2007-A Notes is payable quarterly in arrears at a rate per annum equal to three-month LIBOR plus 1.30%, beginning January 15, 2008. USSC may issue additional series of senior secured notes from time to time under the 2007 Note Purchase Agreement but has no specific plans to do so at this time.

On November 25, 2013, USI and USSC, entered into a Note Purchase Agreement (the “2013 Note Purchase Agreement”) with the note purchasers identified therein (collectively, the “Note Purchasers”). Pursuant to the 2013 Note Purchase Agreement, USSC will issue and the Note Purchasers will purchase an aggregate of $150 million of senior secured notes due January 15, 2021 (the “2014 Notes”). The issuance of the 2014 Notes occurred on January 15, 2014, subject to customary closing conditions. USSC used the proceeds from the sale of the 2014 Notes to repay the Series 2007-A Notes and to reduce borrowings under the 2013 Credit Agreement. Interest on the 2014 Notes will be payable semi-annually at a rate per annum equal to 3.75%. At the time USSC priced the 2014 Notes, USSC terminated the June 2013 Swap Transaction (as described in Note 18 “Derivative Financial Instruments”). After giving effect to the impact of terminating the June 2013 Swap Transaction, the effective per annum interest rate on the 2014 Notes will be 3.66%. The full principal amount of the 2014 Notes matures on January 15, 2021. If USSC elects to prepay some or all of the 2014 Notes prior to January 15, 2021, USSC will be obligated to pay a Make-Whole Amount calculated as set forth in the Agreement.

On September 21, 2011, USI and USSC entered into a Third Amended and Restated Five-Year Revolving Credit Agreement (the “2011 Credit Agreement”) with U.S. Bank National Association and Wells Fargo Bank, National Association as Syndication Agents; Bank of America, N.A. and PNC Bank, National Association, as Documentation Agents; JPMorgan Chase Bank, National Association, as Administrative Agent, and the lenders identified therein. The 2011 Credit Agreement amends and restates the Second Amended and Restated Five-Year Revolving Credit Agreement with PNC Bank, National Association and U.S. Bank National Association, as Syndication Agents, KeyBank National Association and LaSalle Bank, National Association, as Documentation Agents, and JPMorgan Chase Bank, National Association, as Agent (as amended on December 21, 2007, the “2007 Credit Agreement”). On July 8, 2013, the Company and USSC entered into a Fourth Amended and Restated Five-Year Revolving Credit Agreement (the “2013 Credit Agreement”) with JPMorgan Chase Bank, National Association, as Agent, and the lenders identified therein. The 2013 Credit Agreement amended and restated the 2011 Credit Agreement and extended the maturity date of the loan agreement to July 6, 2018.

The 2013 Credit Agreement provides for a revolving credit facility with an aggregate committed principal amount of $700 million. The 2013 Credit Agreement also provides for the issuance of letters of credit. The Company had outstanding letters of credit of $11.1 million under the 2013 Credit Agreement as of December 31, 2013 and $9.4 million under the 2011 Credit Agreement as of December 31, 2012. Subject to the terms and conditions of the 2013 Credit Agreement, USSC may seek additional commitments to increase the aggregate committed principal amount to a total amount of $1.05 billion.

Borrowings under the 2013 Credit Agreement will bear interest at LIBOR for specified interest periods or at the Alternate Base Rate (as defined in the 2013 Credit Agreement), plus, in each case, a margin determined based on the Company’s permitted debt to EBITDA ratio calculated as provided in Section 6.20 of the 2013 Credit Agreement (the “Leverage Ratio”). Depending on the Company’s Leverage Ratio, the margin on LIBOR-based loans ranges from 1.00% to 2.00% and on Alternate Base Rate loans ranges from 0.00% to 1.00%. As of December 31, 2013, the applicable margin for LIBOR-based loans was 1.25% and for Alternate Base Rate loans was 0.25%. In addition, USSC is required to pay the lenders a fee on the unutilized portion of the commitments under the 2013 Credit Agreement at a rate per annum between 0.15% and 0.35%, depending on the Company’s Leverage Ratio.

Subject to the terms and conditions of the 2013 Credit Agreement, USSC is permitted to incur up to $300 million of indebtedness in addition to borrowings under the 2013 Credit Agreement ($15 million of which the Company intends to utilize in connection with the sale of the 2014 Notes described above), plus up to $200 million under the Company’s Receivables Securitization Program and up to $135 million in replacement or refinancing of the 2013 Note Purchase Agreement.

Obligations of USSC under the 2013 Credit Agreement and the 2007 Note Purchase Agreement are guaranteed by USI and certain of USSC’s domestic subsidiaries. USSC’s obligations under these agreements and the guarantors’ obligations under the guaranties are secured by liens on substantially all Company assets other than real property and certain accounts receivable already collateralized as part of the Receivables Securitization Program.

The 2013 Credit Agreement, the 2013 Note Purchase Agreement and the Amended and Restated Transfer and Administration Agreement contain additional representations and warranties, covenants and events of default that are customary for facilities of these types of agreements. The 2013 Credit Agreement, 2007 Note Purchase Agreement, and the Transfer and Administration Agreement all contain cross-default provisions. As a result, if a termination event occurs under any of those agreements, the lenders under all of the agreements may cease to make additional loans, accelerate any loans then outstanding and/or terminate the agreements to which they are party. Debt maturities as of December 31, 2013, were as follows (in millions):


Year	Amount
2014 ⁽¹⁾	$	135.3
2015		0.9
2016		190.7
2017		—
Thereafter		206.8

Total	$	533.7

(1)	The 2007 Note Purchase Agreement was repaid in January 2014 with a portion of the proceeds from the 2014 Notes.

10. Leases, Contractual Obligations and Contingencies

The Company has entered into non-cancelable long-term leases for certain property and equipment. Future minimum lease payments under operating leases in effect as of December 31, 2013 having initial or remaining non-cancelable lease terms in excess of one year are as follows (in thousands):


Year	Operating Leases
2014	$	46,885
2015		43,095
2016		35,167
2017		26,187
2018		19,517
Thereafter		35,498

Total required lease payments	$	206,349

Operating lease expense was approximately $46.3 million, $48.5 million, and $50.1 million in 2013, 2012 and 2011, respectively.

11. Pension Plans and Defined Contribution Plan

Pension Plans

As of December 31, 2013, the Company has pension plans covering approximately 2,800 of its active associates. Non-contributory plans covering non-union associates provide pension benefits that are based on years of credited service and a percentage of annual compensation. Non-contributory plans covering union members generally provide benefits of stated amounts based on years of service. The Company funds the plans in accordance with all applicable laws and regulations. The Company uses December 31 as its measurement date to determine its pension obligations.

Change in Projected Benefit Obligation

The following table sets forth the plans’ changes in Projected Benefit Obligation for the years ended December 31, 2013 and 2012 (in thousands):


	2013			2012
Benefit obligation at beginning of year	$	196,521		$	171,022
Service cost—benefit earned during the period		1,479			962
Interest cost on projected benefit obligation		8,379			8,417
Union plan amendments		—			309
Actuarial (gain) loss		(16,373	)		19,432
Benefits paid		(6,937	)		(3,622	)

Benefit obligation at end of year	$	183,069		$	196,520

The accumulated benefit obligation for the plan as of December 31, 2013 and 2012 totaled $183.1 million and $196.5 million, respectively.

Plan Assets and Investment Policies and Strategies

The following table sets forth the change in the plans’ assets for the years ended December 31, 2013 and 2012 (in thousands):


	2013			2012
Fair value of plan assets at beginning of year	$	145,563		$	120,295
Actual return on plan assets		10,624			15,883
Company contributions		13,000			13,007
Benefits paid		(6,937	)		(3,622	)

Fair value of plan assets at end of year	$	162,250		$	145,563

The Company’s pension plan investment allocations, as a percentage of the fair value of total plan assets, as of December 31, 2013 and 2012, by asset category are as follows:


Asset Category	2013			2012
Cash		1.2	%		1.1	%
Equity securities		29.2	%		69.4	%
Fixed income		42.5	%		17.7	%
Real assets		16.6	%		11.8	%
Hedge funds		10.5	%		—

Total		100.0	%		100.0	%

The investment policies and strategies for the Company’s pension plan assets are established with the goals of generating above-average investment returns over time, while containing risks within acceptable levels and

providing adequate liquidity for the payment of plan obligations. The Company recognizes that there typically are tradeoffs among these objectives, and strives to minimize risk associated with a given expected return.

The Company’s defined benefit plan assets are measured at fair value on a recurring basis and are invested primarily in a diversified mix of fixed income investments and equity securities. The Company establishes target ranges for investment allocation and sets specific allocations. The target allocations for the General Plan assets are 50.0% fixed income, 23.0% equity securities, 17.0% real assets, and 10.0% hedge funds. The target allocations for the Union Plan assets are 20.0% fixed income, 50.0% equity securities, 20.0% real assets and 10.0% hedge funds. Equity securities include investments in large cap and small cap corporations located in the U.S. and a mix of both international and emerging market corporations. Fixed Income securities include investment grade bonds and U.S. treasuries. Other types of investments include commodity futures, Real Estate Investment Trusts (REITs) and hedge funds.

The accounting guidance on fair value measurements specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques (Level 1, 2 and 3). See Note 19 for a discussion of the fair value hierarchy.

Fair values for equity and fixed income securities are primarily based on valuations for identical instruments in active markets.

The fair values of the Company’s pension plan assets at December 31, 2013 and 2012 by asset category are as follows:

Fair Value Measurements at

December 31, 2013 (in thousands)


Asset Category			Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash			$	1,888	$	1,888
Equity Securities
U.S. Large Cap	^(a	⁾		17,380		17,380
International Large Core	^(b	⁾		7,650		7,650
International Large Value	^(j	⁾		7,598		7,598
Emerging Markets	^(c	⁾		8,502		8,502
U.S. Small Value Fund	^(d	⁾		5,058		5,058
U.S. Small Growth Fund	^(e	⁾		1,211		1,211
Fixed Income
U.S. Fixed Income	^(g	⁾		69,070		69,070
Real Assets
Domestic Real Estate	^(f	⁾		11,638		11,638
Commodities	^(h	⁾		15,246		15,246
Hedge Funds
Hedge Funds	⁽ⁱ	⁾		17,009			$	17,009

Total			$	162,250	$	145,241	$	17,009	$	—

Fair Value Measurements at

December 31, 2012 (in thousands)


Asset Category			Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash			$	1,537	$	1,537
Equity Securities
U.S. Large Cap	^(a	⁾		41,669		41,669
International Large Core	^(b	⁾		33,673		33,673
Emerging Markets	^(c	⁾		11,314		11,314
U.S. Small Value Fund	^(k	⁾		7,255			$	7,255
U.S. Small Growth Fund	^(e	⁾		7,182		7,182
Fixed Income
U.S. Fixed Income	^(g	⁾		25,720		25,720
Real Assets
Domestic Real Estate	^(f	⁾		5,954		5,954
Commodities	^(h	⁾		11,259		11,259

Total			$	145,563	$	138,308	$	7,255	$	—

(a)	A separately managed, diversified portfolio consisting of publically traded large cap stocks. The portfolio is predominately comprised of U.S. companies but may also hold international company stock.

(b)	A daily valued mutual fund investment. The fund invests in publically traded companies domiciled outside the U.S. and includes companies located in emerging market countries.

(c)	A daily valued mutual fund investment. The fund invests in publically traded companies domiciled in emerging market countries.

(d)	A daily valued mutual fund investment. The fund invests in publically traded, small capitalization companies that are considered value in style. The majority of holdings are domiciled in the U.S. though the fund may hold international stocks.

(e)	A daily valued mutual fund investment. The fund invests in publically traded, small capitalization companies that are considered growth in style. The majority of holdings are domiciled in the U.S. though the fund may hold international stocks.

(f)	A daily valued mutual fund investment. The fund invests in publically traded Real Estate Investment Trusts. This is an index mutual fund that tracks the Morgan Stanley REIT Index. The fund normally invests at least 98% of assets that are included in the Morgan Stanley REIT Index.

(g)	A separately managed fixed income portfolio utilized to match the duration of the Plan’s liabilities. This liability driven investment portfolio is comprised of Treasury securities including STRIPS and zero coupon bonds as well as high quality corporate bonds.

(h)	A daily valued mutual fund investment. This fund combines a commodities position, typically through swap agreements, with a portfolio of inflation indexed bonds and other fixed income securities. The commodities position is constructed to track the performance of the Dow Jones UBS Commodity Index.

(i)

A separately managed fund of hedge funds. This fund seeks attractive risk-adjusted returns through investments in a well-diversified group of managers that employ a variety of unique investment strategies. It targets low volatility and low correlation to traditional asset classes. This fund may allocate its assets among a select group of non-traditional portfolio managers that invest or trade in a wide range of securities and other instruments, including, but not limited to: equities and fixed income securities, currencies, commodities, futures contracts, options and other derivative instruments.

(j)	A daily valued open-ended mutual fund. This fund invests in common stocks of companies domiciled in countries outside of the U.S.

(k)	A daily valued commingled fund investment. The fund invests in publically traded, small capitalization companies that are considered value in style. The majority of holdings are domiciled in the U.S. though the fund may hold international stocks. The fund allows for monthly liquidity.

Plan Funded Status

The following table sets forth the plans’ funded status as of December 31, 2013 and 2012 (in thousands):


	2013			2012
Funded status of the plan	$	(20,820	)	$	(50,957	)
Unrecognized prior service cost		1,613			1,804
Unrecognized net actuarial loss		53,158			74,557

Net amount recognized	$	33,951		$	25,404

Amounts Recognized in Consolidated Balance Sheets


	2013			2012
Accrued benefit liability	$	(20,820	)	$	(50,957	)
Accumulated other comprehensive income		54,771			76,361

Net amount recognized	$	33,951		$	25,404

Components of Net Periodic Benefit Cost

Net periodic pension cost for the years ended December 31, 2013, 2012 and 2011 for pension and supplemental benefit plans includes the following components (in thousands):


	2013			2012			2011
Service cost—benefit earned during the period	$	1,479		$	962		$	769
Interest cost on projected benefit obligation		8,379			8,417			8,482
Expected return on plan assets		(11,338	)		(10,005	)		(9,715	)
Amortization of prior service cost		192			176			135
Amortization of actuarial loss		5,741			6,194			1,940

Net periodic pension cost	$	4,453		$	5,744		$	1,611

The estimated net actuarial loss and prior service cost that will be amortized from accumulated other comprehensive loss into the net periodic benefit cost during 2014 are approximately $3.8 million and $0.2 million, respectively.

Assumptions Used


	2013			2012			2011
Pension plan assumptions :
Assumed discount rate, general		4.95	%		4.30	%		5.00	%
Assumed discount rate, union		5.10	%		4.45	%		5.00	%
Expected long-term rate of return on plan assets, general		7.30	%		7.75	%		7.75	%
Expected long-term rate of return on plan assets, union		7.75	%		7.75	%		7.75	%

Contributions

On December 11, 2013 the Company’s Board of Directors approved a $2.0 million cash contribution to the Company’s Union pension plan which was funded in January 2014. Additional fundings, if any, for 2014 have not yet been determined.

Estimated Future Benefit Payments

The estimated future benefit payments under the Company’s pension plans are as follows (in thousands):


	Amounts
2014	$	6,189
2015		6,959
2016		7,822
2017		8,312
2018		8,315
2019-2023		53,095

Defined Contribution Plan

The Company has a defined contribution plan. Salaried associates and non-union hourly paid associates are eligible to participate after completing six consecutive months of employment. The plan permits associates to have contributions made as 401(k) salary deferrals on their behalf, or as voluntary after-tax contributions, and provides for Company contributions, or contributions matching associates’ salary deferral contributions, at the discretion of the Board of Directors. Company contributions to match associates’ contributions were approximately $5.3 million, $5.3 million and $5.1 million in 2013, 2012 and 2011, respectively.

12. Preferred Stock

USI’s authorized capital shares include 15 million shares of preferred stock. The rights and preferences of preferred stock are established by USI’s Board of Directors upon issuance. As of December 31, 2013 and 2012, USI had no preferred stock outstanding and all 15 million shares are classified as undesignated preferred stock.

13. Income Taxes

The provision for income taxes consisted of the following (in thousands):


	Years Ended December 31,
	2013			2012			2011
Currently Payable
Federal	$	70,234		$	65,835		$	40,268
State		8,027			6,683			2,698

Total currently payable		78,261			72,518			42,966
Deferred, net—
Federal		(3,891	)		(5,790	)		18,950
State		(30	)		(923	)		1,964

Total deferred, net		(3,921	)		(6,713	)		20,914

Provision for income taxes	$	74,340		$	65,805		$	63,880

The Company’s effective income tax rates for the years ended December 31, 2013, 2012 and 2011 varied from the statutory federal income tax rate as set forth in the following table (in thousands):


	Years Ended December 31,
	2013						2012						2011
	Amount			% of Pre-tax Income			Amount			% of Pre-tax Income			Amount			% of Pre-tax Income
Tax provision based on the federal statutory rate	$	69,128			35.0	%	$	62,172			35.0	%	$	60,507			35.0	%
State and local income taxes—net of federal income tax benefit		5,292			2.6	%		3,464			2.0	%		3,935			2.3	%
Change in tax reserves and accrual adjustments		(69	)		(0.0	)%		(521	)		(0.4	)%		(924	)		(0.5	)%
Non-deductible and other		(11	)		(0.0	)%		690			0.4	%		362			0.2	%

Provision for income taxes	$	74,340			37.6	%	$	65,805			37.0	%	$	63,880			37.0	%

The deferred tax assets and liabilities resulted from temporary differences in the recognition of certain items for financial and tax accounting purposes. The sources of these differences and the related tax effects were as follows (in thousands):


	As of December 31,
	2013					2012
	Assets			Liabilities		Assets ⁽¹⁾			Liabilities
Accrued expenses	$	14,615		$	—	$	13,790		$	—
Allowance for doubtful accounts		7,815			—		9,202			—
Depreciation and amortization		—			28,282		—			28,707
Intangibles arising from acquisitions		—			23,689		—			23,264
Inventory reserves and adjustments		—			28,783		—			28,366
Pension and post-retirement		7,319			—		15,485			—
Interest rate swap		—			591		406			—
Share-based compensation		5,750			—		7,148			—
State income tax credits and net operating losses		5,539			—		5,007
Restructuring costs		1,930			—		698			—
Other		376			—		340			—

Total Deferred		43,344			81,345		52,076			80,337

Valuation Allowance		(2,791	)		—		(2,136	)		—

Net Deferred	$	40,553		$	81,345	$	49,940		$	80,337

(1)	Certain prior period amounts have been reclassified to conform to the current presentation. These changes did not impact the Consolidated Statements of Income.

In the Consolidated Balance Sheets, these deferred assets and liabilities were classified on a net basis as current and non-current, based on the classification of the related asset or liability or the expected reversal date of the temporary difference.

Valuation allowances principally relate to state tax credits and net operating losses which may be carried forward to future tax years until their expiration in the years ending December 31, 2018 and December 31, 2033, respectively.

Accounting for Uncertainty in Income Taxes

At December 31, 2013, the gross unrecognized tax benefits were unchanged at $3.1 million. At December 31, 2012 and 2011, the Company had $3.1 million and $3.4 million, respectively, in gross unrecognized tax benefits. The following table shows the changes in gross unrecognized tax benefits, for the years ended December 31, 2013, 2012 and 2011 (in thousands):


	2013			2012			2011
Beginning Balance, January 1	$	3,134		$	3,374		$	4,500
Additions based on tax positions taken during a prior period		169			308			61
Reductions based on tax positions taken during a prior period		(5	)		(11	)		(23	)
Additions based on tax positions taken during the current period		389			451			291
Reductions related to settlement of tax matters		(184	)		(490	)		(894	)
Reductions related to lapses of applicable statutes of limitation		(395	)		(498	)		(561	)

Ending Balance, December 31	$	3,108		$	3,134		$	3,374

At December 31, 2013, 2012 and 2011, $3.1 million, $3.1 million and $3.4 million, respectively, of these gross unrecognized tax benefits would, if recognized, decrease the Company’s effective tax rate.

The Company recognizes net interest and penalties related to unrecognized tax benefits in income tax expense. The gross amount of interest and penalties reflected in the Consolidated Statements of Income for the years ended December 31, 2013, 2012 and 2011 were zero, and income of $0.1 million and $0.3 million, respectively. The Consolidated Balance Sheets at December 31, 2013 and 2012 include $0.6 and $0.6 million, respectively, accrued for the potential payment of interest and penalties.

As of December 31, 2013, the Company’s U.S. Federal income tax returns for 2010 and subsequent years remain subject to examination by tax authorities. In addition, the Company’s state income tax returns for the 2006 and subsequent tax years remain subject to examinations by state and local income tax authorities. Although the Company is not currently under examination by the IRS, a number of state and local examinations are currently ongoing. Due to the potential for resolution of ongoing examinations and the expiration of various statutes of limitation, it is reasonably possible that the Company’s gross unrecognized tax benefits balance may change within the next twelve months by a range of zero to $1.2 million.

14. Supplemental Cash Flow Information

In addition to the information provided in the Consolidated Statements of Cash Flows, the following are supplemental disclosures of cash flow information for the years ended December 31, 2013, 2012 and 2011 (in thousands):


	Years Ended December 31,
	2013		2012		2011
Cash Paid During the Year For:
Interest	$	12,385	$	22,563	$	26,463
Income taxes, net		79,526		53,053		50,921

15. Other (Income) Expense, Net

In 2011, the Company had a $1.9 million reversal of prior acquisition earn-out and deferred payment liabilities related to the 2010 acquisition of MBS Dev. This gain relates to the renegotiated agreement to accelerate payment on the remaining deferred payments in consideration for termination of the Company’s obligation to pay the earn-out component.

16. Fair Value of Financial Instruments

The estimated fair value of the Company’s financial instruments approximates their net carrying values. The estimated fair values of the Company’s financial instruments are as follows (in thousands):


	As of December 31,
	2013				2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	22,326	$	22,326	$	30,919	$	30,919
Accounts receivable, net		643,379		643,379		658,760		658,760
Accounts payable		476,113		476,113		495,278		495,278
Short-term interest rate swap liability		—		—		227		227
Debt		533,697		533,697		524,376		524,376
Long-term interest rate swap liability		—		—		846		846
Long-term interest rate swap asset		599		599		—		—

The fair value of the interest rate swaps is estimated based upon the amount that the Company would receive or pay to terminate the agreements as of December 31 of each year. See Note 18, “Derivative Financial Instruments”, for further information.

17. Other Assets and Liabilities

Other assets and liabilities as of December 31, 2013 and 2012 were as follows (in thousands):


	As of December 31,
	2013		2012 ⁽¹⁾
Other Long-Term Assets, net:
Investment in deferred compensation	$	4,408	$	4,528
Long-term notes receivable		14,063		10,368
Equity investment		—		1,518
Capitalized financing costs		3,391		2,523
Long-term swap asset		599		—
Other		3,115		1,323

Total other long-term assets, net	$	25,576	$	20,260

Other Long-Term Liabilities:
Accrued pension obligation	$	20,820	$	50,957
Deferred rent		18,654		18,606
Deferred directors compensation		4,412		5,030
Long-term swap liability		—		846
Long-term income tax liability		3,482		3,700
Long-term merger expenses		198		4,720
Long-term workers compensation liability		6,876		5,591
Other		5,345		4,726

Total other long-term liabilities	$	59,787	$	94,176

(1)	Certain prior period amounts have been reclassified to conform to the current presentation. These changes did not impact the Consolidated Balance Sheets.

18. Derivative Financial Instruments

Interest rate movements create a degree of risk to the Company’s operations by affecting the amount of interest payments. Interest rate swap agreements are used to manage the Company’s exposure to interest rate changes. The Company designates its floating-to-fixed interest rate swaps as cash flow hedges of the variability of future cash flows at the inception of the swap contract to support hedge accounting.

USSC has entered into five separate swap transactions to mitigate USSC’s floating rate risk on the noted aggregate notional amount of LIBOR-based interest rate risk noted in the table below. These swap transactions occurred as follows:

•

On November 6, 2007, USSC entered into an interest rate swap transaction (the “November 2007 Swap Transaction”) with U.S. Bank National Association as the counterparty. This swap transaction matured on January 15, 2013.

•

On December 20, 2007, USSC entered into another interest rate swap transaction (the “December 2007 Swap Transaction”) with Key Bank National Association as the counterparty. This swap transaction matured on June 21, 2012.

•

On March 13, 2008, USSC entered into an interest rate swap transaction (the “March 2008 Swap Transaction”) with U.S. Bank National Association as the counterparty. This swap transaction matured on June 29, 2012.

•

On July 18, 2012, USSC entered into a two-year forward, three-year interest rate swap transaction (the “July 2012 Swap Transaction”) with U.S. Bank National Association as the counterparty. The swap transaction has an effective date of July 18, 2014 and a maturity date of July 18, 2017.

•

On June 11, 2013, USSC entered into a seven-month forward, seven-year interest rate swap transaction (the “June 2013 Swap Transaction”) with J.P. Morgan Chase Bank as the counterparty. The swap transaction has an effective date of January 15, 2014 and a maturity date of January 15, 2021. This swap was terminated in October 2013.

None of the Company’s current outstanding debt had its interest payments designated as the hedged forecasted transactions to any of the Company’s swap transactions at December 31, 2013.

The Company’s outstanding swap transaction is accounted for as cash flow hedge and is recorded at fair value on the statement of financial position as of December 31, 2013 and December 31, 2012. This hedge was as follows (in thousands):


As of December 31, 2013	Notional Amount		Receive		Pay			Maturity Date		Fair Value Net Asset ⁽¹⁾
July 2012 Swap Transaction	$	150,000		Floating 1-month LIBOR		1.054	%		July 18, 2017	$	599

(1)

This interest rate derivative qualify for hedge accounting and is in a net asset position. Therefore, the fair value of the interest rate derivative is included in the Company’s Consolidated Balance Sheets as a component of “Other Long-Term Assets”, with an offsetting component in “Stockholders’ Equity” as part of “Accumulated Other Comprehensive Loss”.


As of December 31, 2012	Notional Amount		Receive		Pay			Maturity Date		Fair Value Net Liability ⁽²⁾
November 2007 Swap Transaction	$	135,000		Floating 3-month LIBOR		4.674	%		January 15, 2013	$	227
July 2012 Swap Transaction	$	150,000		Floating 1-month LIBOR		1.054	%		July 18, 2017	$	846

(2)

These interest rate derivatives qualify for hedge accounting and is in a net liability position. Therefore, the fair value of the interest rate derivatives are included in the Company’s Consolidated Balance Sheets as a component of “Accrued liabilities” or “Other Long-Term Liabilities” depending on the maturity date of the instrument, with an offsetting component in “Stockholders’ Equity” as part of “Accumulated Other Comprehensive Loss”.

Under the terms of the July 2012 Swap Transaction, USSC will be required to make monthly fixed rate payments to the counterparty calculated based on the notional amounts noted in the table above at a fixed rate also noted in the table above, while the counterparty will be obligated to make monthly floating rate payments to USSC based on the one-month LIBOR on the same referenced notional amount.

The hedged transactions described above qualify as cash flow hedges in accordance with accounting guidance on derivative instruments. This guidance requires companies to recognize all of their derivative instruments as either assets or liabilities in the statement of financial position at fair value. The Company does not offset fair value amounts recognized for interest rate swaps executed with the same counterparty.

For derivative instruments that are designated and qualify as a cash flow hedge (for example, hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction in the same period or periods during which the hedged transaction affects earnings (for example, in “interest expense” when the hedged transactions are interest cash flows associated with floating-rate debt).

In connection with the pricing of the 2013 Note Purchase Agreement, discussed in Note 9 “Debt”, the Company terminated the June 2013 Swap Transaction. The gain of $0.9 million realized by the Company on the termination has been recorded as a component of Other Comprehensive Income on the Company’s consolidated balance sheet as of December 31, 2013 and will be reclassified into earnings over the term of the 2014 Notes. Within the next 12 months, $0.1M will be recognized in earnings. This swap reduced the exposure to variability in interest rates between the date the Company entered into the hedge and the pricing of the 2014 Notes by the Company.

The July 2012 Swap Transaction effectively converts a portion of the Company’s future floating-rate debt to a fixed-rate basis. This swap transaction reduces the impact of interest rate changes on future interest expense. By using such derivative financial instruments, the Company exposes itself to credit risk and market risk. Credit risk is the risk that the counterparty to the interest rate swap (as noted above) will fail to perform under the terms of the agreement. The Company attempts to minimize the credit risk in these agreements by only entering into transactions with

counterparties the Company determines are creditworthy. The market risk is the adverse effect on the value of a derivative financial instrument that results from a change in interest rates.

The Company’s agreement with its derivative counterparty provide that if an event of default occurs on any Company debt of $25 million or more, the counterparty can terminate the swap agreement. If an event of default had occurred and the counterparty had exercised their early termination right under the outstanding swap transaction as of December 31, 2013, the Company would have been entitled to receive the aggregate fair value net asset of $0.6 million plus accrued interest from the counterparty.

The swap transaction that was in effect as of December 31, 2013 and the swap transactions that were in effect as of December 31, 2012 contained no ineffectiveness; therefore, all gains or losses on those derivative instruments were reported as a component of other comprehensive income (“OCI”) and reclassified into earnings as “interest expense” in the same period or periods during which they affected earnings. The following table depicts the effect of these derivative instruments on the statements of income and comprehensive income for years ended December 31, 2013 and 2012.


	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)						Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
	2013			2012				2013			2012
November 2007 Swap Transaction	$	(77	)	$	(2,376	)	Interest expense, net	$	(228	)	$	(5,783	)
December 2007 Swap Transaction		—			(1,335	)	Interest expense, net		—			(3,400	)
March 2008 Swap Transaction		—			(535	)	Interest expense, net		—			(1,344	)
July 2012 Swap Transaction		864			(562	)	Interest expense, net		—			—
June 2013 Swap Transaction		569			—		Interest expense, net		—			—

19. Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including interest rate swap liabilities related to interest rate swap derivatives based on the mark-to-market position of the Company’s interest rate swap positions and other observable interest rates (see Note 18, “Derivative Financial Instruments”, for more information on these interest rate swaps).

FASB accounting guidance on fair value establishes a hierarchy for those instruments measured at fair value which distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

•

Level 1—Quoted market prices in active markets for identical assets or liabilities;

•

Level 2—Inputs other than Level 1 inputs that are either directly or indirectly observable; and

•

Level 3—Unobservable inputs developed using estimates and assumptions developed by the Company which reflect those that a market participant would use.

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The following table summarizes the financial instruments measured at fair value in the accompanying Consolidated Balance Sheets as of December 31, 2013 and 2012 (in thousands):


	Fair Value Measurements as of December 31, 2013
			Quoted Market Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	Total		Level 1		Level 2		Level 3
Assets
Interest rate swap asset	$	599	$	—	$	599	$	—


	Fair Value Measurements as of December 31, 2012
			Quoted Market Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	Total		Level 1		Level 2		Level 3
Liabilities
Interest rate swap liability	$	1,073	$	—	$	1,073	$	—

The carrying amount of accounts receivable at December 31, 2013 and 2012, including $355.4 million and $400.2 million, respectively, of receivables sold under the Current Receivables Securitization Program, approximates fair value because of the short-term nature of this item.

FASB accounting guidance on fair value measurements requires separate disclosure of assets and liabilities measured at fair value on a recurring basis, as noted above, from those measured at fair value on a nonrecurring basis. As of December 31, 2013, no assets or liabilities are measured at fair value on a nonrecurring basis.

20. Quarterly Financial Data—Unaudited


	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total ⁽¹⁾
	(dollars in thousands, except per share data)
Year Ended December 31, 2013:
Net sales	$	1,250,485	$	1,274,494	$	1,336,676	$	1,223,638	$	5,085,293

Gross profit		188,525		201,936		203,661		195,456		789,578

Net income ⁽²⁾		13,874		34,670		40,501		34,125		123,170

Net income per share—basic	$	0.35	$	0.87	$	1.03	$	0.86	$	3.11

Net income per share—diluted	$	0.34	$	0.86	$	1.01	$	0.85	$	3.06

Year Ended December 31, 2012:
Net sales	$	1,271,647	$	1,275,710	$	1,288,675	$	1,244,074	$	5,080,106

Gross profit		180,929		188,259		203,758		201,658		774,604

Net income ⁽³⁾		15,112		27,029		36,764		32,925		111,830

Net income per share—basic	$	0.36	$	0.67	$	0.92	$	0.83	$	2.77

Net income per share—diluted	$	0.36	$	0.66	$	0.91	$	0.81	$	2.73

(1)	As a result of changes in the number of common and common equivalent shares during the year, the sum of quarterly earnings per share will not necessarily equal earnings per share for the total year.

(2)	2013 results were impacted by the effects of a $13.0 million or $0.20 per diluted share workforce reduction and facility closure charge, and a non-tax deductible $1.2 million or $0.03 per diluted share asset impairment charge in the fourth quarter.

(3)	2012 results were impacted by a $6.2 million or $0.09 per diluted share network optimization and cost reduction charge in the first quarter.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

The Registrant had no disagreements on accounting and financial disclosure of the type referred to in Item 304 of Regulation S-K.

ITEM 9A. CONTROLS AND PROCEDURES.

Attached as exhibits to this Annual Report are certifications of the Company’s Chief Executive Officer (“CEO”) and Senior Vice President and Chief Financial Officer (“CFO”), which are required in accordance with Rule 13a-14 under the Exchange Act. This “Controls and Procedures” section includes information concerning the controls and controls evaluation referred to in such certifications. It should be read in conjunction with the reports of the Company’s management on the Company’s internal control over financial reporting and the report thereon of Ernst & Young LLP referred to below.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. This evaluation was based on the framework in Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based upon our evaluation, the principal executive officer and the principal financial officer concluded that our disclosure controls and procedures are effective in providing reasonable assurance that material information required to be disclosed in our reports filed with or submitted to the Securities and Exchange Commission under the Securities Exchange Act is made known to management, including the principal executive officer and the principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the final quarter of 2013, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting and Related Report of Independent Registered Public Accounting Firm

Management’s report on internal control over financial reporting and the report of Ernst & Young LLP, the Company’s independent registered public accounting firm, regarding its audit of the Company’s internal control over financial reporting are included in Item 8 of this Annual Report on Form 10-K.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

For information about the Company’s executive officers, see “Executive Officers of the Registrant” included as Item 4A of this Annual Report on Form 10-K. In addition, the information contained under the captions “Proposal 1: Election of Directors” and “Voting Securities and Principal Holders—Section 16(a) Beneficial Ownership Reporting Compliance” in USI’s Proxy Statement for its 2014 Annual Meeting of Stockholders (“2014 Proxy Statement”) is incorporated herein by reference.

The information required by Item 10 regarding the Audit Committee’s composition and the presence of an “audit committee financial expert” is incorporated herein by reference to the information under the captions “Governance and Board Matters—Board Committees—General” and “—Audit Committee” in USI’s 2013 Proxy Statement. In addition, information regarding delinquent filers pursuant to Item 405 of Regulation S-K is incorporated by reference to the information under the captions “Section 16(a) Beneficial Ownership Reporting Compliance” in USI’s 2014 Proxy Statement.

The Company has adopted a code of ethics (its “Code of Business Conduct”) that applies to all directors, officers and associates, including the Company’s CEO, CFO and Controller, and other executive officers identified pursuant to this Item 10. A copy of this Code of Business Conduct is available on the Company’s Web site at www.unitedstationers.com . The Company intends to disclose any significant amendments to and waivers of its Code of Conduct by posting the required information at this Web site within the required time periods.

ITEM 11. EXECUTIVE COMPENSATION.

The information required to be furnished pursuant to this Item is incorporated herein by reference to the information under the captions “Director Compensation”, “Executive Compensation” and “Compensation Committee Interlocks and Insider Participation” in USI’s 2014 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The beneficial ownership information required to be furnished pursuant to this Item is incorporated herein by reference to the information under the captions “Voting Securities and Principal Holders—Security Ownership of Certain Beneficial Owners” and “Voting Securities and Principal Holders—Security Ownership of Management” in USI’s 2013 Proxy Statement. Information relating to securities authorized for issuance under United’s equity plans is incorporated herein by reference to the information under the caption “Equity Compensation Plan Information” in USI’s 2014 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The information required to be furnished pursuant to this Item is incorporated herein by reference to the information under the caption “Certain Relationships and Related Transactions” in USI’s 2014 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information required to be furnished pursuant to this Item is incorporated herein by reference to the information under the captions “Proposal 2: Ratification of Selection of Independent Registered Public Accountants—Fee Information” and “—Audit Committee Pre-Approval Policy” in USI’s 2014 Proxy Statement.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a)	The following financial statements, schedules and exhibits are filed as part of this report:


		Page No.
(1)	Financial Statements of the Company:
	Management Report on Internal Control Over Financial Reporting		31
	Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting		32
	Report of Independent Registered Public Accounting Firm		33
	Consolidated Statements of Income for the years ended December 31, 2013, 2012 and 2011		34
	Consolidated Statements of Comprehensive Income for the year years ended December 31, 2013, 2012 and 2011		35
	Consolidated Balance Sheets as of December 31, 2013 and 2012		36
	Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2013, 2012 and 2011		37
	Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011		38
	Notes to Consolidated Financial Statements		39
(2)	Financial Statement Schedule:
	Schedule II—Valuation and Qualifying Accounts		76
	All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.
(3)	Exhibits (numbered in accordance with Item 601 of Regulation S-K):

The Company is including as exhibits to this Annual Report certain documents that it has previously filed with the SEC as exhibits, and it is incorporating such documents as exhibits herein by reference from the respective filings identified in parentheses at the end of the exhibit descriptions. Except where otherwise indicated, the identified SEC filings from which such exhibits are incorporated by reference were made by the Company (under USI’s file number of 0-10653). The management contracts and compensatory plans or arrangements required to be included as exhibits to this Annual Report pursuant to Item 15(b) are listed below as Exhibits 10.10 through 10.18, Exhibits 10.21 through 10.34, and Exhibits 10.39 through 10.40, inclusive, and each of them is marked with a double asterisk at the end of the related exhibit description.


Exhibit Number		Description
2.1		Stock Purchase Agreement dated as of October 22, 2012, among the Stockholders of O.K.I. Supply Co. and United Stationers Supply Co. (“USSC”) (Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on October 25, 2012)

3.1*		Second Restated Certificate of Incorporation of United Stationers, Inc. (“USI” or the “Company”), dated as of March 19, 2002 ⁽¹⁾

3.2		Amended and Restated Bylaws of United Stationers Inc., dated as of July 16, 2009 (Exhibit 3.2 to the Form 10-Q for the quarter ended September 30, 2009, filed on November 5, 2009)

4.1		Master Note Purchase Agreement, dated as of October 15, 2007, among USI, USSC, and the note purchasers identified therein (the “2007 Note Purchase Agreement”) (Exhibit 4.1 to the Company’s Form 10-Q for the quarter ended June 30, 2010, filed on August 6, 2010 (the “Form 10-Q filed on August 6, 2010”))

4.2		Parent Guaranty, dated as of October 15, 2007, by USI in favor of holders of the promissory notes identified therein (Exhibit 4.4 to the Company’s Form 10-Q for the quarter ended September 30, 2007, filed on November 7, 2007 (the “Form 10-Q filed on November 7, 2007”))

4.3		Subsidiary Guaranty, dated as of October 15, 2007, by Lagasse, Inc., United Stationers Technology Services LLC (“USTS”) and United Stationers Financial Services LLC (“USFS”) in favor of the holders of the promissory notes identified therein (Exhibit 4.5 to the Form 10-Q filed on November 7, 2007)


Exhibit Number		Description
4.4*		Note Purchase Agreement, dated as of November 25, 2013, among USI, USSC, and the note purchasers identified therein (the “2013 Note Purchase Agreement”)

4.5*		Parent Guaranty, dated as of November 25, 2013, by USI in favor of the holders of the promissory notes identified therein

4.6*		Subsidiary Guaranty, dated as of November 25, 2013, by all of the domestic subsidiaries of USSC

10.1		Guaranty, dated as of March 21, 2003, by USSC, as borrower, USI, Azerty Incorporated, Lagasse, Inc., USFS, and USTS in favor of Bank One, NA as administrative agent (Exhibit 4.10 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002, filed on March 31, 2003 (the “2002 Form 10-K”)

10.2		Amended and Restated Guaranty, dated as of July 8, 2013, executed by USI and its subsidiaries United Stationers Management Services LLC (“USMS”), United Stationers Financial Services LLC (“USFS”), Lagasse, LLC (“Lagasse”), ORS Nasco, LLC (“ORS”), MBS Dev, Inc. (“MBS”), Oklahoma Rig, Inc. (“Rig”), Oklahoma Rig & Supply Co. Trans., Inc. (“Trans”), O.K.I. Supply, LLC (“OKI Supply”), O.K.I. Data, Inc. (“OKI Data”), and OKI Middle East Holding Co. (“OKI Holding”) in favor of JPMorgan Chase Bank, National Association, as Administrative Agent for the benefit of the Holders of Secured Obligations (as defined in the Intercreditor Agreement listed in Exhibit 10.3 (Exhibit 10.3 to the Company’ Form 10-Q filed on October 28, 2013)

10.3		Intercreditor Agreement, dated as of October 15, 2007, by and among JPMorgan Chase Bank, NA, in its capacity as agent and contractual representative, and the holders of the notes issued pursuant to the 2007 Note Purchase Agreement (Exhibit 10.6 to the Form 10-Q filed on November 7, 2007)

10.4*		Joinder, dated as of January 15, 2014, to the Intercreditor Agreement dated as of October 15, 2007, by and between JPMorgan Chase Bank, N.A., as collateral agent, and the holders of the notes issued pursuant to the 2013 Note Purchase Agreement

10.5		Amended and Restated Pledge and Security Agreement dated as of October 15, 2007, among United Stationers Inc., USSC, Lagasse, Inc., USTS and USFS and JPMorgan Chase Bank, N.A. as collateral agent (Exhibit 10.1 to the Form 10-Q filed on August 6, 2010)

10.6		Receivables Sale Agreement, dated as of March 3, 2009, by and between USSC, as Originator, and USFS, as Purchaser (Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended March 31, 2009, filed on May 8, 2009 (the “Form 10-Q filed on May 8, 2009”))

10.7		Receivables Purchase Agreement, dated as of March 3, 2009, by and between USFS, as Seller, and USR, as Purchaser (Exhibit 10.5 to the Form 10-Q filed on August 6, 2010)

10.8		Performance Guarantee, dated as of March 3, 2009, among USI, as Performance Guarantee, and USR, as Recipient (Exhibit 10.4 to the Form 10-Q filed on May 8, 2009)

10.9†		Transfer and Administration Agreement, dated as of March 3, 2009, by and among United Stationers Receivables, LLC, (“USR”), USSCO as Originator, USFS, as Seller and Servicer, Enterprise Funding Company LLC, as a Conduit Investor, Market Street Funding LLC, as a Conduit Investor, Bank of America, National Association, as Agent, as a Class Agent and as an Alternate Investor, PNC Bank, National Association, as a Class Agent and as an Alternate Investor, and the other alternate investors from time to time parties thereto (Exhibit 10.35 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, filed on February 25, 2011 (the “2010 Form 10-K”))

10.10		First Amendment to the Transfer and Administration Agreement, dated as of May 14, 2009, among, USSC, USFS, USR, Enterprise Funding Company LLC, Market Street Funding LLC, Bank of America, National Association, and PNC Bank, National Association (Exhibit 10.43 to the 2009 Form 10-K)

10.11		Second Amendment to the Transfer and Administration Agreement, dated as of November 20, 2009, among, USSC, USFS, USR, Enterprise Funding Company LLC, Market Street Funding LLC, Bank of America, National Association, and PNC Bank, National Association (Exhibit 10.44 to the 2009 Form 10-K)

10.12		Third Amendment to the Transfer and Administration Agreement, dated as of January 22, 2010, among, USSC, USFS, USR, Enterprise Funding Company LLC, and Bank of America, National Association (Exhibit 10.45 to the 2009 Form 10-K)


Exhibit Number		Description
10.13		Fourth Amendment to the Transfer and Administration Agreement, dated as of March 30, 2010, among, USSC, USFS, USR, Enterprise Funding Company LLC, and Bank of America, National Association (Exhibit 10.44 to the 2010 Form 10-K)

10.14		Fifth Amendment to the Transfer and Administration Agreement, dated as of June 30, 2010, among, USSC, USFS, USR, Enterprise Funding Company LLC, and Bank of America, National Association (Exhibit 10.45 to the 2010 Form 10-K)

10.15†		Sixth Amendment to the Transfer and Administration Agreement, dated as of January 21, 2011, among, USSC, USFS, USR, Enterprise Funding Company LLC, and Bank of America, National Association (Exhibit 10.46 to the 2010 Form 10-K)

10.16		Reaffirmation, dated September 21, 2011, among USI, USSC, Lagasse, USTS, USFS, ORS Nasco, Inc., Oklahoma Rig, Inc., Oklahoma Rig & Supply Co. Trans, Inc., and MBS Dev, Inc. (Exhibit 10.5 to the Company’s Form 10-Q for the quarter ended September 30, 2011, filed on November 2, 1011)

10.17		Reaffirmation, dated as of July 8, 2013, executed by USI, USSC, USMS, USFS, Lagasse, ORS, MBS, Rig, Trans, OKI Supply, OKI Data and OKI Holding (Exhibit 10.4 to the Company’ Form 10-Q filed on October 28, 2013)

10.18†		Third Amended and Restated Five-Year Revolving Credit Agreement, dated September 21, 2011, among USSC, as borrower, USI, as a credit party, JPMorgan Chase Bank, National Association , as Administrative Agent, and the financial institutions listed on the signature pages thereof (Exhibit 10.4 to the Company’s Form 10-Q for the quarter ended September 30, 2011, filed on November 2, 1011)

10.19		Fourth Amended and Restated Five-Year Revolving Credit Agreement, dated as of July 8, 2013, among USSC, as borrower, USI, as a loan party, JPMorgan Chase Bank, National Association , as Agent, and the financial institutions listed on the signature pages thereto (the “Credit Agreement”) (Exhibit 10.2 to the Company’ Form 10-Q filed on October 28, 2013)

10.20†		First Omnibus Amendment to Receivables Sale Agreement, Receivables Purchase Agreement and Transfer and Administration Agreement, dated as of January 20, 2012, between USSC, USR, USFS, and Bank of America, National Association (Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on January 26, 2012)

10.21		Second Omnibus Amendment to Transaction Documents, dated as of January 18, 2013, between USSC., United Stationers Receivables, LLC, USFS, Bank of America, National Association, and PNC Bank, National Association (Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on January 25, 2013)

10.22		Seventh amendment to the Transfer and Administration Agreement, dated as of July 18, 2012, among USSC, USFS, USR, Enterprise Funding Company LLC, and Bank of America, National Association (Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on July 23, 2012)

10.23		Industrial/Commercial Single Tenant Lease—Net, dated November 4, 2004, between Cransud One, L.L.C. and USSC (Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, filed March 16, 2005)

10.24		Lease, dated July 25, 2005, among United, USSC and Carr Parkway North I, LLC (Exhibit 10.1 to the Company’s Form 10-Q filed on August 9, 2005)

10.25		Form of Indemnification Agreement entered into between USI and (for purposes of one provision) USSC with directors and various executive officers of USI (Exhibit 10.36 to the Company’s 2001 Form 10-K)**

10.26		United Stationers Inc. 1992 Management Equity Plan (as amended and restated as of July 31, 2002) (Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002, filed on November 14, 2002 (“Form 10-Q filed on November 14, 2002”))**

10.27		United Stationers Inc. 2000 Management Equity Plan (as amended and restated as of July 31, 2002) (Exhibit 10.1 to the Company’s Form 10-Q filed on November 14, 2002)**

10.28		Form of Indemnification Agreement entered into by USI and (for purposes of one provision) USSC with directors and executive officers of USI (Exhibit 10.7 to the Company’s Form 10-Q filed on November 14, 2002)**


Exhibit Number		Description
10.29		Form of Indemnification Agreement entered into by USI and (for purposes of one provision) USSC with P. Cody Phipps, and other executive officers of USI (Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended June 30, 2004, filed on August 6, 2004)**

10.30		Form of grant letter used for grants of non-qualified options to non-employee directors under the 2004 Long-Term Incentive Plan (Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on September 3, 2004 (the “September 3, 2004 Form 8-K”))**

10.31		Form of grant letter used for grants of non-qualified stock options to employees under the 2004 Long-Term Incentive Plan (Exhibit 10.2 to the September 3, 2004 Form 8-K)**

10.32		United Stationers Inc. Nonemployee Directors’ Deferred Stock Compensation Plan effective January 1, 2009 (Exhibit 10.33 to the 2008 Form 10-K)**

10.33		Form of Restricted Stock Award Agreement for Non-Employee Directors (Exhibit 10.4 to the Company’s Form 10-Q for the quarter ended September 30, 2008, filed on November 7, 2008 (the “Form 10-Q filed on November 7, 2008”))**

10.34		Form of Restricted Stock Unit Award Agreement for Non-Employee Directors (Exhibit 10.5 to the Form 10-Q filed on November 7, 2008)**

10.35		United Stationers Supply Co. Amended and Restated Deferred Compensation Plan, effective as of January 1, 2009 (Exhibit 10.26 to the 2009 Form 10-K)**

10.36		Form of Performance Based Restricted Stock Unit Award Agreement under the 2004 Long-Term Incentive Plan (Exhibit 10.1 to the Form 10-Q filed on May 6, 2010)**

10.37†		Performance Based Restricted Stock Unit Award Agreement between USI and Stephen Schultz, effective March 17, 2011 (Exhibit 10.1 to the Form 10-Q filed on May 4, 2011)**

10.38†		Form of Performance Based Restricted Stock Unit Award Agreement under the 2004 Long-Term Incentive Plan (Exhibit 10.2 to the Form 10-Q filed on May 4, 2011)**

10.39		United Stationers Inc. Amended and Restated 2004 Long-Term Incentive Plan (the “2004 Long-Term Incentive Plan”) effective as of May 11, 2011 (Appendix A to the 2011 DEF 14-A Proxy Statement)**

10.40†		Performance-Based Restricted Stock Unit Award Agreement, dated August 29, 2011, between the Registrant and P. Cody Phipps (Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 25, 2011)**

10.41		Form of Restricted Stock Award Agreement under the 2004 Long-Term Incentive Plan (Exhibit 10.1 to the Company’s Form 10-Q filed on May 3, 2012)**

10.42		Form of Performance Based Restricted Stock Unit Award Agreement under the 2004 Long-Term Incentive Plan (Exhibit 10.3 to the Company’s Form 10-Q filed on May 3, 2012)**

10.43		Form of Restricted Stock Award Agreement with EPS Minimum under the 2004 Long-Term Incentive Plan (Exhibit 10.2 to the Company’s Form 10-Q filed on October 30, 2012)**

10.44		Form of Executive Employment Agreement, effective as of December 31, 2012**

10.45		Executive Employment Agreement, dated December 31, 2012 by and among USI, USSC and Paul Cody Phipps**

10.46		Form of Restricted Stock Unit Award Agreement under the Amended and Restated 2004 Long-Term Incentive Plan (Exhibit 10.2 to the Company’s Form 10-Q for the quarter filed on April 30, 2013)**

10.47		Form of Restricted Stock Award Agreement with EPS Minimum under the 2004 Long-Term Incentive Plan (Exhibit 10.1 to the Company’ Form 10-Q filed on October 28, 2013)**

21*		Subsidiaries of USI

23*		Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm

31.1*		Certification of Chief Executive Officer, dated as of February 14, 2014, as Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 by P. Cody Phipps


Exhibit Number		Description
31.2*		Certification of Chief Financial Officer, dated as of February 14, 2014, as Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 by Todd A. Shelton

32.1*		Certification Pursuant to 18 U.S.C. Section 1350, dated February 14, 2014, as Adopted Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002 by P. Cody Phipps and Todd A. Shelton

101*		The following financial information from United Stationers Inc.’s Annual Report on Form 10-K for the period ended December 31, 2013, filed with the SEC on February 14, 2014, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Income for the years ended December 31, 2013, 2012 and 2011, (ii) the Consolidated Statements of Comprehensive Income at December 31, 2013 and 2012, (iii) the Consolidated Balance Sheets at December 31, 2013 and 2012, (iv) the Consolidated Statements of Changes in Stockholder’s Equity for the years ended December 31, 2013, 2012 and 2011, (v) the Consolidated Statement of Cash Flows for the years ended December 31, 2013, 2012 and 2011, and (vi) Notes to Consolidated Financial Statements.

Filed herewith.

Represents a management contract or compensatory plan or arrangement.

†

Confidential treatment has been requested for a portion of this document. Confidential portions have been omitted and filed separately with the Securities and Exchange Commission.

(1)

Refiled to correct formatting error.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


UNITED STATIONERS INC.

BY:		/s/ P. C ODY P HIPPS
		P. Cody Phipps
		President and Chief Executive Officer
		(Principal Executive Officer)

Dated: February 19, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:


Signature	Capacity	Date

/s/ P. C ODY P HIPPS P. Cody Phipps	President and Chief Executive Officer (Principal Executive Officer) and a Director	February 19, 2014

/s/ T ODD A. S HELTON Todd A. Shelton	Senior Vice President and Chief Financial Officer (Principal Financial Officer)	February 19, 2014

/s/ K ENNETH M. N ICKEL Kenneth M. Nickel	Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer)	February 19, 2014

/s/ C HARLES K. C ROVITZ Charles K. Crovitz	Chairman of the Board of Directors	February 19, 2014

/s/ R OBERT B. A IKEN , J R . Robert B. Aiken, Jr.	Director	February 19, 2014

/s/ J EAN S. B LACKWELL Jean S. Blackwell	Director	February 19, 2014

/s/ R OY W. H ALEY Roy W. Haley	Director	February 19, 2014

/s/ S USAN J. R ILEY Susan J. Riley	Director	February 19, 2014

/s/ A LEX M. S CHMELKIN Alex M. Schmelkin	Director	February 19, 2014

/s/ S TUART A. T AYLOR , II Stuart A. Taylor, II	Director	February 19, 2014

/s/ A LEX D. Z OGHLIN Alex D. Zoghlin	Director	February 19, 2014

SCHEDULE II

UNITED STATIONERS INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS

YEARS ENDED DECEMBER 31, 2013, 2012 and 2011


Description (in thousands)	Balance at Beginning of Period		Additions Charged to Costs and Expenses		Deductions ⁽¹⁾			Reclassifications ⁽²⁾			Balance at End of Period
Allowance for doubtful accounts ⁽³⁾ :
2013	$	22,716	$	4,888	$	(6,504	)	$	(492	)	$	20,608
2012		28,323		5,232		(8,490	)		(2,349	)		22,716
2011		29,079		9,359		(10,115	)		—			28,323

(1)—net

of any recoveries.

(2)—represents

the reclassification of a valuation allowance for customer deductions which also offsets accounts receivable.

(3)—represents

allowance for doubtful accounts related to the retained interest in receivables sold and accounts receivable, net.

Exhibit 3.1

SECOND RESTATED CERTIFICATE OF INCORPORATION

UNITED STATIONERS INC.

United Stationers Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify as follows:

A. The Corporation’s original certificate of incorporation was filed under the name United Stationers Inc. in the office of the Secretary of State of Delaware on August 18, 1981.

B. This Second Restated Certificate of Incorporation restates and integrates and does not further amend the Certificate of Incorporation of the Corporation as heretofore amended and supplemented, and there is no discrepancy between those provisions and the provisions of this Second Restated Certificate of Incorporation.

C. This Second Restated Certificate of Incorporation was duly adopted by the Board of Directors of the Corporation in accordance with Section 245 of the General Corporation Law of the State of Delaware.

D. The text of the Second Restated Certificate of Incorporation is as follows:

FIRST: The name of the corporation is:

UNITED STATIONERS INC.

SECOND: The address of its registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington 19801, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.

THIRD: The nature of the business or purposes to be conducted or promoted by the Corporation are:

1. To acquire by purchase, subscription or otherwise, and to own, hold, sell, negotiate, assign, hypothecate, deal in, exchange, transfer, mortgage, pledge or otherwise dispose of, alone or in syndicate or otherwise in conjunction with others, any shares of the capital stock, scrip, rights, participating certificates, certificates of interest, or any voting trust certificates in respect of the shares of capital stock of, or any bonds, mortgages, securities, evidences of indebtedness, acceptances, commercial paper, choses in action, and obligations of every kind and description (all of the foregoing being hereinafter sometimes called “securities”) issued or created by any public, quasi-public or private corporation, joint stock company, association, partnership, common law trust, firm or individual, or of any combinations, organizations or entities whatsoever, irrespective of their forms or the names by which they may be described, or of the Government of the United States of America, or any foreign government, or of any state, territory, municipality or other political subdivision, or of any government agency; and to issue in exchange therefor, in the manner permitted by law, shares of the capital stock, bonds or other

Exhibit 3.1

obligations of the Corporation; and while the holder or owner of any such securities, to possess and exercise in respect thereof any and all rights, powers and privileges of ownership, including the right to vote thereon; and, to the extent now or hereafter permitted by law, to aid by loan, guarantee or otherwise those issuing, creating or responsible for any such securities; and to do any and all lawful things designed to protect, preserve, improve or enhance the value of any such securities.

2. To carry on and conduct any and every kind of manufacturing, distribution and service business; to manufacture, process, fabricate, rebuild, service, purchase or otherwise acquire, to design, invent or develop, to import or export, and to distribute, lease, sell, assign or otherwise dispose of and generally deal in and with raw materials, products, goods, wares, merchandise and real and personal property of every kind and character; and to provide services of every kind and character.

3. To conduct any lawful business, to exercise any lawful purpose and power, and to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

4. In general, to possess and exercise all the powers and privileges granted by the General Corporation Law of the State of Delaware or by any other law of Delaware or by this certificate of incorporation together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the Corporation.

FOURTH: The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 120,000,000 shares, consisting of (a) 15,000,000 shares of a class designated as Preferred Stock, par value $0.01 per share (the “Preferred Stock”), (b) 100,000,000 shares of a class designated as Common Stock, par value $0.10 per share (the “Common Stock”), and (c) 5,000,000 shares of a class designated as Nonvoting Common Stock, par value $0.01 per share (the “Nonvoting Common Stock”).

The designations and the powers, preferences, rights, qualifications, limitations, and restrictions of the Preferred Stock, Common Stock and Nonvoting Common Stock are as follows:

1. Provisions Relating to the Preferred Stock .

(a) The Preferred Stock may be issued from time to time in one or more classes or series, the shares of each class or series to have such designations and powers, preferences, and rights, and qualifications, limitations, and restrictions thereof, as are stated and expressed herein and in the resolution or resolutions providing for the issue of such class or series adopted by the board of directors of the Corporation as hereafter prescribed.

(b) Authority is hereby expressly granted to and vested in the board of

Exhibit 3.1

directors of the Corporation to authorize the issuance of the Preferred Stock from time to time in one or more classes or series, and with respect to each class or series of the Preferred Stock to fix and state by the resolution or resolutions from time to time adopted providing for the issuance thereof the following:

(i) whether or not the class or series is to have voting rights, full, special, or limited, or is to be without voting rights, and whether or not such class or series is to be entitled to vote as a separate class either alone or together with the holders of one or more other classes or series of stock;

(ii) the number of shares to constitute the class or series and the designations thereof;

(iii) the preferences, and relative, participating, optional, or other special rights, if any, and the qualifications, limitations, or restrictions thereof, if any, with respect to any class or series;

(iv) whether or not the shares of any class or series shall be redeemable at the option of the Corporation or the holders thereof or upon the happening of any specified event, and, if redeemable, the redemption price or prices (which may be payable in the form of cash, notes, securities, or other property), and the time or times at which, and the terms and conditions upon which, such shares shall be redeemable and the manner of redemption;

(v) whether or not the shares of a class or series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement, and, if such retirement or sinking fund or funds are to be established, the annual amount thereof, and the terms and provisions relative to the operation thereof;

(vi) the dividend rate, whether dividends are payable in cash, stock of the Corporation, or other property, conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or classes or series of stock, whether or not such dividends shall be cumulative or noncumulative, and if cumulative, the date or dates from which such dividends shall accumulate;

(vii) the preferences, if any, and the amounts thereof which the holders of any class or series thereof shall be entitled to receive upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the Corporation;

(viii) whether or not the shares of any class or series, at the option of the Corporation or the holder thereof or upon the happening of any specified event, shall be convertible into or exchangeable for, the shares of any other class or classes or of any other series of the same or any other class or classes of stock, securities, or other property of the Corporation and the conversion price or prices

Exhibit 3.1

or ratio or ratios or the rate or rates at which such exchange may be made, with such adjustments, if any, as shall be stated and expressed or provided for in such resolution or resolutions; and

(ix) such other special rights and protective provisions with respect to any class or series as may to the board of directors of the Corporation seem advisable.

(c) The shares of each class or series of the Preferred Stock may vary from the shares of any other class or series thereof in any or all of the foregoing respects. The board of directors of the Corporation may increase the number of shares of the Preferred Stock designated for any existing class or series by a resolution adding to such class or series authorized and unissued shares of the preferred Stock not designated for any other class or series. The board of directors of the Corporation may decrease the number of shares of the Preferred Stock designated for any existing class or series by a resolution subtracting from such class or series authorized and unissued shares of the preferred Stock designated for such existing class or series, and the shares so subtracted shall become authorized, unissued, and undesignated shares of the Preferred Stock.

2. Provisions Relating to the Common Stock and Nonvoting Common Stock .

(a) Identical Rights . Except as otherwise provided in this Article FOURTH, all shares of Common Stock and Nonvoting Common Stock shall be identical and shall entitle the holder thereof to the same rights and privileges.

(b) Dividends . From and after the date of issuance, the holders of outstanding shares of Common Stock and Nonvoting Common Stock shall be entitled to receive dividends on the shares of Common Stock and Nonvoting Common Stock when, as, and if declared by the board of directors, out of funds legally available for such purpose. All holders of shares of Common Stock and Nonvoting Common Stock shall share ratably, in accordance with the numbers of shares held by each such holder, in all dividends or distributions on shares of Common Stock payable in cash, in property or in securities of the Corporation (other than shares of Common Stock). All dividends or distributions declared on shares of Common Stock and Nonvoting Common Stock which are payable in shares of Common Stock or Nonvoting Common Stock shall be declared on both classes of shares at the same rate, provided that any such dividend or distribution shall be payable in shares of the class of Common Stock or Nonvoting Common Stock held by the stockholder to whom the dividend or distribution is payable.

(c) Stock Splits, Etc . The Corporation shall not in any manner subdivide (by stock split, stock dividend, or otherwise), or combine (by reverse stock split, or otherwise) the outstanding shares of Common Stock or Nonvoting Common Stock unless the outstanding shares of the other class shall be proportionately subdivided or combined. No reclassification or any other adjustment or modification of the rights or preferences shall be effected (including without limitation pursuant to a merger, consolidation or liquidation involving the Corporation) with respect to either the Common Stock or the Nonvoting Common Stock unless both the Common Stock and Nonvoting Common Stock are reclassified or the rights or preferences are adjusted or modified in exactly the

Exhibit 3.1

same manner and at the same time. In this regard, and without limiting the generality of the foregoing, in the case of any consolidation or merger of the Corporation with or into any other entity (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of the Common Stock), or in case of any sale or transfer of all or substantially all the assets of the Corporation, or the reclassification of the Common Stock into any other form of capital stock of the Corporation, whether in whole or in part, each share of Nonvoting Common Stock shall, after such consolidation, merger, sale, or transfer or reclassification, be converted into the kind and amount of shares of stock and other securities and property which such holder would have been entitled to receive upon such consolidation, merger, sale, or transfer or reclassification if such holder had held such Common Stock issuable upon the conversion of such share of Nonvoting Common Stock immediately prior to such consolidation, merger, sale, or transfer or reclassification; provided, however, that no such shares of stock or other securities into which shares of Nonvoting Common Stock are so converted shall have any voting rights whatsoever.

(d) Liquidation . In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the affairs of the Corporation, the holders of shares of Common Stock and Nonvoting Common Stock shall be entitled to share ratably, in accordance with the number of shares held by each such holder, in all of the assets of the Corporation available for distribution to the holders of shares of Common Stock.

(e) Voting Rights . Except as otherwise provided herein or by law, the entire voting power of the Corporation shall be vested in the holders of shares of Common Stock and each holder of shares of Common Stock shall be entitled to one vote for each share of Common Stock held of record by such holder; provided that, without the consent of the holders of record of at least 5l% of Nonvoting Common Stock at the time outstanding (assuming, for the purposes of this provision, that the holders of rights to acquire shares of Nonvoting Common Stock shall be deemed to be the holders of the shares of Nonvoting Common Stock which are at the time issuable upon the full exercise thereof whether or not such holders are then entitled to exercise such rights pursuant to the terms thereof), given in writing or by the vote at any regular or special meeting of stockholders of the Corporation, the Corporation shall not:

(i) amend, alter, modify, or repeal any provision of this certificate of incorporation or the by-laws of the Corporation in any manner which adversely affects the relative rights, preferences, qualifications, powers, limitations or restrictions of the Nonvoting Common Stock, or amend, alter, modify, or repeal this Section 2(e);

(ii) increase or decrease the authorized number of shares of any class of capital stock of the Corporation or authorize, issue, or otherwise create securities convertible into or exercisable for any shares of capital stock of the Corporation other than the shares of Common Stock and Nonvoting Common Stock authorized hereunder and the shares of Series A, Series B, and Series C Preferred Stock designated in that certain Certificate of the Powers, Designations, Preferences, and Rights of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock dated March 30, 1995;

Exhibit 3.1

(iii) voluntarily effect an exchange or reclassification of shares of Nonvoting Common Stock into shares of another class of capital stock of the Corporation, or

(iv) effect a merger or consolidation of the Corporation with another corporation, unless the certificate or articles of incorporation of the surviving corporation shall provide that the shares of the capital stock of such surviving corporation into which the shares of Nonvoting Common Stock hereunder shall be converted shall have the identical rights and privileges as the shares of capital stock of such surviving corporation into which the shares of Common Stock hereunder shall be converted, other than the voting rights in this Section 2(e) and the conversion and other rights in Section 3 below which shall not be adversely affected by such merger or consolidation.

3. Conversion .

(a) Right to Conversion . Subject to and upon compliance with the provisions of this Section 3, any holder of shares of Nonvoting Common Stock shall be entitled at any time and from time to time to convert each share of Nonvoting Common Stock held by such holder into a share of Common Stock at the conversion rate of one share of Common Stock for one share of Nonvoting Common Stock.

(b) Procedure . The conversion of any shares of Nonvoting Common Stock into shares of Common Stock shall be effected by the holder of the shares of Nonvoting Common Stock to be converted surrendering the certificate therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the shares of Common Stock or at such other place as the Corporation is willing to accept such surrender accompanied by written notice to the Corporation at such office or other place that it elects to so convert and stating the number of shares of Nonvoting Common Stock being converted. Thereupon the Corporation shall promptly issue and deliver at such office or other place to such holder a certificate or certificates for the number of shares of Common Stock to which such holder is entitled, registered in the name of such holder or a designee of such holder as specified in such notice. Such conversion shall be deemed to have been made at the close of business on the date of such surrender of the shares to be converted in accordance with the procedure set forth in the first sentence of this Section 3 (b) and the Person entitled to receive the shares issuable upon such conversion shall be treated for all purposes as having become the record holder of such shares at such time. In the event of the conversion of less than all of the shares of Nonvoting Common Stock into shares of Common Stock evidenced by the certificate so surrendered, the Corporation shall execute and deliver to or upon the written order of such holder, without charge to such holder, a new certificate evidencing the shares of Nonvoting Common Stock not converted.

(c) Reservation . The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, or any shares of Common Stock held in its treasury, solely for the purpose of issue upon conversion of the shares of

Exhibit 3.1

Nonvoting Common Stock as provided herein, such number of shares of Common Stock as shall then be issuable upon the conversion of all outstanding shares of Nonvoting Common Stock. The shares of Common Stock so issuable shall when so issued be duly and validly issued, fully paid, and nonassessable.

(d) Certain Legal Requirements . No person subject to the provisions of Regulation Y shall, and no such Person shall permit any of its Bank Holding Company Affiliates to, convert any shares of Nonvoting Common Stock held by it into shares of Common Stock, and the Corporation shall not be required to convert any such shares of Nonvoting Common Stock, if after giving effect to such conversion, (i) such Person and its Bank Holding company Affiliates would own more than 5% of the total issued and outstanding shares of Common Stock or (ii) such Person would Control the Corporation (and, for purposes of this clause (ii), a reasoned opinion of counsel to such Person (which is based on facts and circumstances deemed appropriate by such counsel) to the effect that such Person does not control the Corporation shall be conclusive).

4. Definitions .

As used in this Article FOURTH, the terms indicated below shall have the following respective meanings:

(a) “ Bank Holding Company Affiliate ” shall mean, with respect to any person subject to the provisions of Regulation Y, (i) if such Person is a bank holding company, any company directly or indirectly controlled by such bank holding company, and (ii) otherwise, the bank holding company that controls such Person and any company (other than such Person) directly or indirectly controlled by such bank holding company.

(b) “ Control ” (including, with its correlative meanings, “ controlled by ” and “ under common control with ”) shall mean, with respect to any Person, the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise.

(c) “ Person ” means an individual, partnership, association, joint venture, corporation, business, trust, estate, unincorporated organization, or government or any department, agency or subdivision thereof.

(d) “ Regulation Y ” shall mean Regulation Y promulgated by the Board of Governors of the Federal Reserve System (12 C.F.R. § 225) or any successor regulation.

FIFTH: In furtherance and not in limitation of the power conferred by statute, the board of directors is expressly authorized:

1. To make, alter or repeal the by-laws of the Corporation.

2. To authorize and cause the mortgage or pledge of the property and assets of the Corporation.

Exhibit 3.1

3. To set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created.

SIXTH: All power of the Corporation shall be exercised by or under the direction of the board of directors except as otherwise provided herein or required by law. For the management of the business and for the conduct of the affairs of the Corporation, and in further creation, definition, limitation and regulation of the power of the Corporation and of its directors and of its stockholders, it is further provided as follows:

1. Election of Directors . Election of directors need not be by written ballot unless the by-laws of the Corporation shall so provide.

2. Number Tenure and Qualifications . The total number of directors which shall constitute the whole board shall be nine (9), but this number may be increased or decreased from time to time by amendment of the by-laws by the directors or the stockholders from time to time, provided that in no case shall the number of directors constituting the whole board be less than three (3). The directors shall be divided into three (3) classes with respect to their term of office, class I, class II, and class III, as nearly equal in number as possible, to be determined by the board of directors. The directors shall be elected at the annual meetings of the stockholders, except as provided in Section 4 of this Article SIXTH. At the 1987 annual meeting of stockholders, the class I directors shall be elected to a term of office expiring at the 1988 annual meeting of stockholders, the class II directors shall be elected to a term of office expiring at the 1989 annual meeting of stockholders and the class III directors shall be elected to a term of office expiring at the 1990 annual meeting of stockholders; and, in each case, each director shall hold office until his respective successor shall have been elected and qualified. At each annual election of directors held after the 1987 annual meeting of stockholders, the directors elected to succeed those directors whose terms then expire shall be elected to a term of office expiring at the third succeeding annual meeting of stockholders and shall hold office until their respective successors are elected and qualified. In the event of any change in the number of directors, any resultant increase or decrease in the number of directorships shall be apportioned among the three classes of directors so as to maintain all classes as nearly equal in number of directors as possible, as shall be determined by the whole board of directors at the time of such increase or decrease. Directors need not be stockholders or residents of Delaware.

3. Business at Annual Meetings; Nominations to Board of Directors .

(a) At any annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be: (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors; (ii) otherwise properly brought before the meeting by or at the direction of the board of directors; or (iii) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the secretary of the Corporation. To be timely, a stockholder’s notice must be delivered to or

Exhibit 3.1

mailed and received at the principal executive offices of the corporation not later than the close of business on the tenth (10th) day following the date on which notice of such annual meeting is first given to stockholders. A stockholder’s notice to the secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (A) a brief description of the business desired to be brought before the annual meeting; (B) the name and address (which shall be the same as they appear in the Corporation’s records if the stockholder is a record holder) of the stockholder proposing such business; (C) the class and number of shares of the Corporation which are beneficially owned by the stockholder; and (D) any material interest of the stockholder in such business. The presiding officer of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 3(a), and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

(b) Nominations. Subject to the rights of holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, nominations for the election of directors may be made by the board of directors or a committee appointed by the board of directors or by any stockholder entitled to vote in the election of directors generally. However, any stockholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors at a meeting only if written notice of such stockholder’s intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the secretary of the Corporation not later than (i) with respect to an election to be held at an annual meeting of stockholders, ninety (90) days prior to the anniversary date of the immediately preceding annual meeting, and (ii) with respect to an election to be held at a special meeting of stockholders for the election of directors, the close of business on the seventh (7th) day following the date on which notice of such meeting is first given to stockholders. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a record owner of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the United States Securities and Exchange Commission; and (e) the consent of each such nominee to serve as a director of the Corporation if so elected. The presiding officer of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure.

4. Newly Created Directorships and Vacancies . Except as otherwise fixed pursuant to the provisions of Article FOURTH hereof relating to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation or the right to elect directors under specified circumstances, newly created directorships resulting

Exhibit 3.1

from any increase in the number of directors and any vacancies on the board of directors resulting from death, resignation, disqualification, removal or other cause shall be filled solely by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the board of directors. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such director’s successor shall have been elected and qualified. No decrease in the number of directors constituting the board of directors shall shorten the term of any incumbent director.

5. Removal of Directors . Subject to the rights of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation or the right to elect directors under specified circumstances, any director may be removed by the holders of a majority of the voting power of the then outstanding shares of the “Voting Stock” (defined in Article SEVENTH), voting together as a single class, but only for cause. Except as may otherwise be provided by law, cause for removal shall be construed to exist only if:

(a) the director whose removal is proposed has been convicted of a felony by a court of competent jurisdiction and such conviction is no longer subject to direct appeal, or

(b) the director whose removal is proposed has been adjudged by a court of competent jurisdiction to be liable for (i) any breach of the director’s duty of loyalty to the Corporation or its stockholders or (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law.

6. Stockholder Action . Except as otherwise required by law and subject to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation:

(a) special meetings of stockholders of the Corporation may be called only by the chairman of the board, the president, the board of directors pursuant to a resolution approved by a majority of the entire board of directors, or at the written request of the holders of at least eighty percent (80%) of the voting power of the then outstanding Voting Stock acting together as a single class. Such request shall state the purpose or purposes of the proposed meeting. The notice of any such special meeting shall be issued within sixty (60) days after the Corporation’s receipt of such request. Written notice of a special meeting stating the time, place and object thereof shall be given to each stockholder entitled to vote thereat, at least fifty (50) days before the date fixed for the meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice; and

(b) any action required or permitted to be taken at any annual or special meeting of the stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote, only if a consent in writing setting forth the actions so taken shall be signed by the holders of at least eighty percent (80%) of the voting power of the then outstanding Voting Stock acting together as a single class. All such consents must be executed and delivered to the secretary of the corporation not less than thirty (30) days nor more than sixty (60) days prior to the action to be taken pursuant to such consent.

Exhibit 3.1

7. By-Law Amendments . The board of directors shall have power to make, alter, amend and repeal the by-laws (except to the extent that any by-laws adopted by the stockholders may expressly prohibit amendment by the board of directors). Any by-laws made by the directors under the powers conferred hereby may be altered, amended or repealed by the directors or by the stockholders. Anything to the contrary herein contained notwithstanding, no by-law shall be adopted or amended by the board of directors or the stockholders which shall be inconsistent with any of the terms and provisions of this certificate of incorporation

8. Additional Powers of Directors . In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the corporation; subject, nevertheless, to the provisions of the statutes of Delaware, of this certificate of incorporation, and to any by-laws from time to time made by the stockholders; provided, however, that no by-laws so made shall invalidate any prior act of the directors which would have been valid if such by-laws had not been made.

SEVENTH: Vote Required for Certain Business Combinations.

1. Higher Vote for Certain Business Combinations .

(a) In addition to any affirmative vote required by law or this certificate of incorporation, and except as otherwise expressly provided in Section 2 of this Article SEVENTH:

(i) any merger or consolidation of the Corporation or any “Subsidiary” (as herein defined) with (a) any “Interested Stockholder” (as herein defined) or (b) any other corporation (whether or not itself an Interested Stockholder) which is, or after such merger or consolidation would be, an “Affiliate” (as herein defined) of an Interested Stockholder; or

(ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder of the assets of the Corporation or any Subsidiary having a Fair Market Value equal to ten percent (10%) or more of the total assets reflected on the Corporation’s most recently published consolidated balance sheet; or

(iii) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of transactions) of any securities of the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of any Interested Stockholder in exchange for securities or other property (or a combination thereof), other than solely cash, having a Fair Market Value equal to ten percent (10%) or more of the total assets reflected on the corporation’s most recently published consolidated balance sheet; or

Exhibit 3.1

(iv) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of an Interested Stockholder or any Affiliate of any Interested Stockholder; or

(v) any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any Interested Stockholder or any Affiliate of any Interested Stockholder;

shall, in the case of each of clauses (i) through (v) above, require the affirmative vote of the holders of at least eighty percent (80%) of the voting power of the then outstanding shares of “Voting Stock” (as herein defined) of the Corporation voting together as a single class (it being understood that for purposes of this Article SEVENTH, each share of the Voting Stock shall have the number of votes granted to it pursuant to Article FOURTH of this certificate of incorporation)

(b) Other Vote Requirements Not Controlling . Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise.

2. When Higher Vote is Not Required . The provisions of Section 1 of this Article SEVENTH shall not be applicable to any particular “Business Combination” (as herein defined), and such Business Combination shall require only such affirmative vote as is required by law and any other provision of this certificate of incorporation, if all of the conditions specified in either of the following paragraphs (a) and (b) are met:

(a) Approval by Disinterested Directors . The Business Combination shall have been approved by a majority of the “Disinterested Directors” (as herein defined); or

(b) Price and Procedural Requirements . All of the following conditions shall have been met:

(i) The aggregate amount of the cash and the “Fair Market Value” (as hereinafter defined) as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of Common Stock in such Business Combination shall be at least equal to the higher of the following:

Exhibit 3.1

(1) within the two-year period immediately prior to the first public announcement of the proposal of the Business Combination (the “Announcement Date”) or (2) in the transaction in which it became an Interested Stockholder, whichever is higher; and

(B) the Fair Market Value per share of Common Stock on the Announcement Date or on the date on which the Interested Stockholder became an Interested Stockholder (such latter date being referred to in this Article SEVENTH as the “Determination Date”), whichever is higher.

(ii) The aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of shares of any other class of outstanding Voting Stock shall be at least equal to the highest of the following (it being intended that the requirements of this paragraph (b)(ii) shall be required to be met with respect to every class of outstanding Voting Stock, whether or not the Interested Stockholder has previously acquired any shares of a particular class of Voting Stock);

(A) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by the Interested Stockholder for any shares of such class of Voting Stock acquired by it (1) within the two-year period immediately prior to the Announcement Date or (2) in the transaction in which it became an Interested Stockholder, whichever is higher;

(B) (if applicable) the highest preferential amount per share to which the holders of shares of such class of Voting Stock are entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the corporation; and

(C) the Fair Market Value per share of such class of Voting Stock on the Announcement Date or on the Determination Date, whichever is higher.

(iii) The consideration to be received by holders of a particular class of outstanding Voting Stock (including Common Stock) shall be in cash or in the same form as the Interested Stockholder has previously paid for shares of such class of Voting Stock. If the Interested Stockholder has paid for shares of any class of Voting Stock with varying forms of consideration, the form of consideration for such class of Voting Stock shall be either cash or the form used to acquire the largest number of shares of such class of Voting Stock previously acquired by it. The price determined in accordance with paragraphs (b)(i) and (b)(ii) of this Section 2 shall be subject to appropriate adjustment in the event of any stock dividend, stock split, combination of shares or similar event.

(iv) After such Interested Stockholder has become an Interested

Exhibit 3.1

Stockholder and prior to the consummation of such Business Combination: (a) except as approved by a majority of the Disinterested Directors, there shall have been no failure to declare and pay at the regular date therefor any full quarterly dividends (whether or not cumulative) on the outstanding Preferred Stock; (b) there shall have been (1) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock), except as approved by a majority of the Disinterested Directors, and (2) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of the Common Stock, unless the failure so to increase such annual rate is approved by a majority of the Disinterested Directors; and (c) such Interested Stockholder shall have not become the beneficial owner of any additional shares of Voting Stock except as part of the transaction which results in such Interested Stockholder becoming an Interested Stockholder.

(v) After such Interested Stockholder has become an Interested Stockholder, such Interested Stockholder shall not have received the benefit, directly or indirectly (except proportionately as a stockholder), of any loans, advances guarantees pledges or other financial assistance or any tax credits or other tax advantages provided by the Corporation, whether in anticipation of or in connection with such Business Combination or otherwise.

(vi) A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to public stockholders of the Corporation at least thirty (30) days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions).

3. Certain Definitions . For the purposes of this Article SEVENTH:

(a) The term “ Person ” means any individual, firm, corporation or other entity.

(b) The term “ Interested Stockholder ” means any person (other than the Corporation or any Subsidiary) who or which:

(i) is the beneficial owner, directly or indirectly, of twenty percent (20%) or more of the voting power of the outstanding Voting Stock; or

(ii) is an Affiliate of the Corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of twenty percent (20%) or more of the voting power of the then outstanding Voting Stock; or

Exhibit 3.1

(iii) is an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Interested Stockholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933.

Anything in this Section 3(b) to the contrary notwithstanding, the term “Interested Stockholder” shall not include (A) the Corporation, or (B) any person or entity which, at the date of adoption of this certificate of incorporation by the board of directors (the “Adoption Date”) and at all times (except during one or more periods not exceeding seven (7) days in length) between the Adoption Date and the date of the proposed Business Combination, holds at least one of the capacities listed below:

(1) is a Subsidiary;

(2) is an employee benefit plan of the Corporation or any Subsidiary;

(3) is a member of the Executive Committee of the board of directors of the Corporation;

(4) is a beneficial owner of fifteen percent (15%) or more of the outstanding common stock of the Corporation; or

(5) is any entity in which one or more of the persons or entities referred to in clauses (B)(1), (B)(2), (B)(3) or (B)(4) of this Section 3(b) owns or holds more than fifty percent (50%) of the equity interest or voting power.

(c) The term “ Business Combination ” as used in this Article SEVENTH means any transaction which is referred to in any one or more of clauses (i) through (v) of paragraph (a) of Section 1 of this Article SEVENTH.

(d) A person shall be a “ Beneficial Owner ” of any Voting Stock:

(i) which such person or any of its “Affiliates” or “Associates” (as herein defined) beneficially owns, directly or indirectly; or

(ii) which such person or any of its Affiliates or Associates has (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (b) the right to vote pursuant to any agreement, arrangement or understanding; or

(iii) which is beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Voting Stock.

(e) For the purposes of determining whether a person is an Interested Stockholder pursuant to paragraph (b) of this Section 3, the number of shares of Voting

Exhibit 3.1

Stock deemed to be outstanding shall include shares deemed owned through application of Paragraph (d) of this Section 3 but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options or otherwise.

(f) The term “ Affiliate ” of, or a person “ Affiliated ” with, a specific person, means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.

(g) The term “ Associate ” used to indicate a relationship with any person, means (1) any corporation or organization (other than this Corporation or a majority-owned subsidiary of this Corporation) of which such person is an officer or partner or is, directly or indirectly, the beneficial owner of ten percent (10%) or more of any class of equity securities, (2) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity, (3) any relative or spouse of such person, or any relative of such spouse, who has the same home as such person, or (4) any investment company registered under the Investment Company Act of 1940 for which such person or any affiliate of such person serves as investment adviser.

(h) The term “ Subsidiary ” means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definitions of Interested Stockholder set forth in paragraph (b) of this Section 3, the term “Subsidiary” shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation.

(i) The term “ Disinterested Director ” means any member of the board of directors who is unaffiliated with the Interested Stockholder and was a member of the board of directors prior to the time that the Interested Stockholder became an Interested Stockholder, and any successor of a Disinterested Director who is unaffiliated with the Interested Stockholder and is recommended to succeed a Disinterested Director by a majority of Disinterested Directors then on the board of directors.

(j) The term “ Fair Market Value ” means: (i) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape, on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing last sale price or closing bid quotation with respect to a share of such stock during the 3-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by the board of directors in good faith; and (ii) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by the board of directors in good faith.

Exhibit 3.1

(k) The term “ Voting Stock ” means all outstanding shares of capital stock of the Corporation or another corporation entitled to vote generally in the election of directors, and each reference to a proportion of shares of Voting Stock shall refer to such proportion of the votes entitled to be cast by such shares.

(l) In the event of any Business Combination in which the Corporation survives, the phrase “consideration other than cash to be received” as used in paragraphs (b)(i) and (b)(ii) of Section 2 of this Article SEVENTH shall include the shares of Common Stock and/or the shares of any other class of outstanding Voting Stock retained by the holders of such shares.

(m) The term “ Announcement Date ” shall have the meaning specified in Section 2(b)(i)(A).

(n) The term “ Determination Date ” shall have the meaning specified in Section 2(b)(i)(B).

4. Powers of the Board of Directors . A majority of the Directors shall have the power and duty to determine for the purposes of this Article SEVENTH, on the basis of information known to them after reasonable inquiry: (a) whether a person is an Interested Stockholder, (b) the number of shares of Voting Stock beneficially owned by any person, (c) whether a person is an Affiliate or Associate of another, and (d) the Fair Market Value of any assets which are the subject of any Business Combination. A majority of the Directors shall have the further power to interpret all of the terms and provisions of this Article SEVENTH.

5. No Effect on Fiduciary Obligations of Interested Stockholders . Nothing contained in this Article SEVENTH shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law.

EIGHTH: The Corporation shall indemnify any person who was, is, or is threatened to be made a party to a proceeding (as hereinafter defined) by reason of the fact that he or she (i) is or was a director or officer of the Corporation or (ii) while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another foreign or domestic corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan, or other enterprise, to the fullest extent permitted under the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended. Such right shall be a contract right and as such shall run to the benefit of any director or officer who is elected and accepts the position of director or officer of the Corporation or elects to continue to serve as a director or officer of the Corporation while this Article EIGHTH is in effect. Any repeal or amendment of this Article EIGHTH shall be prospective only and shall not limit the rights of any such director or officer or the obligations of the Corporation with respect to any claim arising from or related to the services of such director or officer in any of the foregoing capacities prior to any such repeal or amendment to this Article EIGHTH. Such right shall include the right to be paid by the Corporation expenses incurred in investigating or defending any such proceeding in advance of

Exhibit 3.1

its final disposition to the maximum extent permitted under the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended. If a claim for indemnification or advancement of expenses hereunder is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim, and if successful in whole or in part, the claimant shall also be entitled to be paid the expenses of prosecuting such claim. It shall be a defense to any such action that such indemnification or advancement of costs of defense is not permitted under the General Corporation Law of the State of Delaware, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its board of directors or any committee thereof, independent legal counsel, or stockholders) to have made its determination prior to the commencement of such action that indemnification of, or advancement of costs of defense to, the claimant is permissible in the circumstances nor an actual determination by the Corporation (including its board of directors or any committee thereof, independent legal counsel, or stockholders) that such indemnification or advancement is not permissible shall be a defense to the action or create a presumption that such indemnification or advancement is not permissible. In the event of the death of any person having a right of indemnification under the foregoing provisions, such right shall inure to the benefit of his or her heirs, executors, administrators, and personal representatives. The rights conferred above shall not be exclusive of any other right which any person may have or hereafter acquire under any statute by-law, resolution of stockholders or directors, agreement, or otherwise.

The Corporation may additionally indemnify any employee or agent of the Corporation to the fullest extent permitted by law.

Without limiting the generality of the foregoing, to the extent permitted by then applicable law, the grant of mandatory indemnification pursuant to this Article EIGHTH shall extend to proceedings involving the negligence of such person.

As used herein, the term “proceeding” means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative, or investigative, any appeal in such an action, suit, or proceeding, and any inquiry or investigation that could lead to such an action, suit, or proceeding.

NINTH: A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, (iii) under section 174 of the General Corporation Law of the State of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit. Any repeal or amendment of this Article NINTH by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation arising from an act or omission occurring prior to the time of such repeal or amendment. In addition to the circumstances in which a director of the Corporation is not personally liable as set forth in the foregoing provisions of this Article NINTH, a director shall not be liable to the Corporation or its stockholders to such further extent as permitted by any law hereafter enacted, including without limitation any subsequent amendment to the General Corporation Law of the State of Delaware.

Exhibit 3.1

TENTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation.

ELEVENTH: Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the Corporation.

TWELFTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. The foregoing and anything contained elsewhere in this certificate of incorporation to the contrary notwithstanding, the affirmative vote of the holders of at least eighty percent (80%) of the voting power of the then outstanding Voting Stock, voting together as a single class, shall be required to alter, amend, repeal, or adopt any provision inconsistent with Article SIXTH, Section 2; Article SIXTH, Section 3; Article SIXTH, Section 4; Article SIXTH, Section 6; and Article SEVENTH.

Exhibit 4.4

Execution Copy

U NITED S TATIONERS S UPPLY C O .

U NITED S TATIONERS I NC .

N OTE P URCHASE A GREEMENT

Dated as of November 25, 2013

$150,000,000 3.75% Secured Senior Notes

due January 15, 2021

PPN: 913008 A@7

T ABLE OF C ONTENTS


S ECTION	H EADING	P AGE

S ECTION 1.	A UTHORIZATION OF N OTES ; S ECURITY FOR THE N OTES ; I NCREASE IN I NTEREST R ATE		1

Section 1.1.	Authorization of the Notes		1
Section 1.2.	Security for the Notes		1
Section 1.3.	Increase in Interest Rate		2

S ECTION 2.	S ALE AND P URCHASE OF N OTES		2

S ECTION 3.	C LOSING		3

S ECTION 4.	C ONDITIONS TO C LOSING		3

Section 4.1.	Representations and Warranties		3
Section 4.2.	Performance; No Default		3
Section 4.3.	Compliance Certificates		4
Section 4.4.	Opinions of Counsel		4
Section 4.5.	Purchase Permitted By Applicable Law, Etc		4
Section 4.6.	Sale of Other Notes		4
Section 4.7.	Payment of Special Counsel Fees		4
Section 4.8.	Private Placement Number		5
Section 4.9.	Changes in Corporate Structure		5
Section 4.10.	Parent Guaranty		5
Section 4.11.	Subsidiary Guaranty		5
Section 4.12.	Collateral Documents		5
Section 4.13.	Joinder to Intercreditor Agreement		5
Section 4.14.	Funding Instructions		5
Section 4.15.	Proceedings and Documents		5

S ECTION 5.	R EPRESENTATIONS A ND W ARRANTIES OF THE C OMPANY		5

Section 5.1.	Organization; Power and Authority		6
Section 5.2.	Authorization, Etc		6
Section 5.3.	Disclosure		7
Section 5.4.	Organization and Ownership of Shares of Subsidiaries		7
Section 5.5.	Financial Statements; Material Liabilities		8
Section 5.6.	Compliance with Laws, Other Instruments, Etc		8
Section 5.7.	Governmental Authorizations, Etc		9
Section 5.8.	Litigation; Observance of Statutes and Orders		9
Section 5.9.	Taxes		9
Section 5.10.	Title to Property; Leases		10
Section 5.11.	Licenses, Permits, Etc		10
Section 5.12.	Compliance with ERISA		10
Section 5.13.	Private Offering by the Company		11

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Section 5.14.	Use of Proceeds; Margin Regulations	11
Section 5.15.	Existing Indebtedness; Future Liens	12
Section 5.16.	Foreign Assets Control Regulations, Etc	12
Section 5.17.	Status under Certain Statutes	14
Section 5.18.	Environmental Matters	14

S ECTION 6.	R EPRESENTATIONS OF THE P URCHASERS	15

Section 6.1.	Purchase for Investment	15
Section 6.2.	Accredited Investor	15
Section 6.3.	Source of Funds	15

S ECTION 7.	I NFORMATION AS TO P ARENT	17

Section 7.1.	Financial and Business Information	17
Section 7.2.	Officer’s Certificate	19
Section 7.3.	Electronic Delivery	20
Section 7.4.	Visitation	20

S ECTION 8.	P REPAYMENT OF THE N OTES	21

Section 8.1.	Required Prepayments	21
Section 8.2.	Optional Prepayments with Make-Whole Amount	21
Section 8.3.	Mandatory Offer to Prepay Upon Change of Control	21
Section 8.4.	Allocation of Partial Prepayments	23
Section 8.5.	Maturity; Surrender, Etc	23
Section 8.6.	Purchase of Notes	23
Section 8.7.	Make-Whole Amount	23
Section 8.8.	Payments Due on Non-Business Days	25

S ECTION 9.	A FFIRMATIVE C OVENANTS	25

Section 9.1.	Compliance with Law	25
Section 9.2.	Insurance	25
Section 9.3.	Maintenance of Properties	26
Section 9.4.	Payment of Taxes and Claims	26
Section 9.5.	Corporate Existence, Etc	26
Section 9.6.	Books and Records	26
Section 9.7.	Subsidiary Guaranty; Release of Subsidiary Guarantors; Release of Collateral	27
Section 9.8.	Pari Passu Ranking	28

S ECTION 10.	N EGATIVE C OVENANTS	28

Section 10.1.	Leverage Ratio	28
Section 10.2.	Minimum Consolidated Net Worth	29
Section 10.3.	Priority Debt	29
Section 10.4.	Liens	29
Section 10.5.	Subsidiary Indebtedness	32

- ii -


Section 10.6.	Mergers, Consolidations, Etc	33
Section 10.7.	Sale of Assets	34
Section 10.8.	Restriction on Dividends and Other Distributions	35
Section 10.9.	Nature of Business	36
Section 10.10.	Transactions with Affiliates	36
Section 10.11.	Terrorism Sanctions Regulations	36

S ECTION 11.	E VENTS OF D EFAULT	36

S ECTION 12.	R EMEDIES ON D EFAULT , E TC	39

Section 12.1.	Acceleration	39
Section 12.2.	Other Remedies	40
Section 12.3.	Rescission	40
Section 12.4.	No Waivers or Election of Remedies, Expenses, Etc	40

S ECTION 13.	R EGISTRATION ; E XCHANGE ; S UBSTITUTION OF N OTES	40

Section 13.1.	Registration of Notes	40
Section 13.2.	Transfer and Exchange of Notes	41
Section 13.3.	Replacement of Notes	41

S ECTION 14.	P AYMENTS ON N OTES	42

Section 14.1.	Place of Payment	42
Section 14.2.	Home Office Payment	42

S ECTION 15.	E XPENSES , E TC	42

Section 15.1.	Transaction Expenses	42
Section 15.2.	Survival	43

S ECTION 16.	S URVIVAL OF R EPRESENTATIONS AND W ARRANTIES ; E NTIRE A GREEMENT	43

S ECTION 17.	A MENDMENT AND W AIVER	43

Section 17.1.	Requirements	43
Section 17.2	Solicitation of Holders of Notes	44
Section 17.3.	Binding Effect, Etc	44
Section 17.4.	Notes Held by Company, Etc	45

S ECTION 18.	N OTICES	45

S ECTION 19.	R EPRODUCTION OF D OCUMENTS	45

S ECTION 20.	C ONFIDENTIAL I NFORMATION	46

S ECTION 21.	S UBSTITUTION OF P URCHASER	47

- iii -


S ECTION 22.	M ISCELLANEOUS	47

Section 22.1.	Successors and Assigns	47
Section 22.2.	Accounting Terms	47
Section 22.3.	Severability	48
Section 22.4.	Construction	48
Section 22.5.	Counterparts	48
Section 22.6.	Governing Law	48
Section 22.7.	Jurisdiction and Process; Waiver of Jury Trial	48
Section 22.8.	Holders of Notes to be Bound by Intercreditor Agreement	49

Signature		50

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S CHEDULE A	–	Information Relating to Purchasers
S CHEDULE B	–	Defined Terms

S CHEDULE 5.3	–	Disclosure
S CHEDULE 5.4	–	Organization and Ownership of Shares of Subsidiaries
S CHEDULE 5.5	–	Financial Statements
S CHEDULE 5.14	–	Use of Proceeds
S CHEDULE 5.15	–	Existing Indebtedness
S CHEDULE 10.4	–	Liens
S CHEDULE 10.5	–	Subsidiary Indebtedness
S CHEDULE 10.6	–	Form of Affirmation of Subsidiary Guaranty

E XHIBIT 1.1	–	Form of Secured Senior Note
E XHIBIT 1.2(a)(i)	–	Form of Parent Guaranty
E XHIBIT 1.2(a)(ii)	–	Form of Subsidiary Guaranty
E XHIBIT 4.4(a)	–	Form of Opinion of Special Counsel for the Company
E XHIBIT 4.4(b)	–	Form of Opinion of Special Counsel to the Purchasers

- v -

U NITED S TATIONERS S UPPLY C O .

U NITED S TATIONERS I NC .

One Parkway North Blvd., Suite 100

Deerfield, IL 60015

Phone: 847-627-7000

Fax: 847-627-7001

$150,000,000 3.75% Secured Senior Notes

due January 15, 2021

Dated as of November 25, 2013

T O E ACH OF T HE P URCHASERS L ISTED I N

T HE A TTACHED S CHEDULE A:

Ladies and Gentlemen:

U NITED S TATIONERS I NC ., a Delaware corporation (the “Parent” ), and U NITED S TATIONERS S UPPLY C O ., an Illinois corporation and a Subsidiary of the Parent (the “Company” ), jointly and severally agree with you as follows:

S ECTION 1. A UTHORIZATION OF THE N OTES ; S ECURITY FOR THE N OTES ; I NCREASE IN I NTEREST R ATE .

Section 1.1. Authorization of the Notes . The Company will authorize the issue and sale of $150,000,000 aggregate principal amount of its 3.75% Secured Senior Notes due January 15, 2021 (as amended, restated or otherwise modified from time to time pursuant to Section 17 and including any such notes issued in substitution therefor pursuant to Section 13, the “ Notes ”). The Notes shall be substantially in the form set out in Exhibit 1.1. Certain capitalized and other terms used in this Agreement are defined in Schedule B. References to a “Schedule” are references to a Schedule attached to this Agreement unless otherwise specified. References to a “Section” are references to a Section of this Agreement unless otherwise specified.

Section 1.2. Security for the Notes .

(a) Guarantees . The payment by the Company of all amounts due with respect to the Notes and the performance by the Company of its obligations under this Agreement will be guaranteed by (i) the Parent pursuant to the Parent Guaranty in substantially the form of the attached Exhibit 1.2(a)(i), as it hereafter may be amended or supplemented from time to time (the “ Parent Guaranty ”) and (ii) all current Domestic Subsidiaries of the Parent and any Domestic Subsidiary that in the future becomes a borrower or guarantor of Indebtedness in respect of the Credit Agreement (each, a “ Subsidiary Guarantor ”), other than, in each case, the Company and any existing or future SPV, pursuant to the Subsidiary Guaranty in substantially the form of the attached Exhibit 1.2(a)(ii), as it hereafter may be amended or supplemented from time to time (the “ Subsidiary Guaranty ”).


U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

(b) Collateral . The Notes and Indebtedness under the Credit Agreement and any other Indebtedness permitted to be secured by the collateral under the Intercreditor Agreement will be ratably secured by a Lien on certain assets of the Company and the Subsidiary Guarantors pursuant to the Collateral Documents.

(c) Intercreditor Agreement . The rights of the holders of the Notes and the banks that are parties to the Credit Agreement to proceeds of collateral will be governed by the Intercreditor Agreement.

Section 1.3. Increase in Interest Rate . (a) If, during a Transition Period, the Leverage Ratio exceeds 3.50 to 1.00 and does not exceed 3.75 to 1.00, as evidenced by an Officer’s Certificate delivered pursuant to Section 7.2(a), the applicable per annum interest rate payable on the Notes shall be increased by 0.625%, commencing on the first day of the first fiscal quarter following the fiscal quarter in respect of which such Officer’s Certificate was delivered and continuing until the Company has provided an Officer’s Certificate pursuant to Section 7.2(a) demonstrating that, as of the end of the fiscal quarter in respect of which such Officer’s Certificate is delivered, the Leverage Ratio is not more than 3.50 to 1.0. Following delivery of an Officer’s Certificate demonstrating that the Leverage Ratio did not exceed 3.50 to 1.0, the additional 0.625% interest shall cease to accrue or be payable for any fiscal quarter subsequent to the fiscal quarter in respect of which such Officer’s Certificate is delivered.

(b) If, during a Transition Period, the Leverage Ratio exceeds 3.75 to 1.00 and does not exceed 4.00 to 1.00, as evidenced by an Officer’s Certificate delivered pursuant to Section 7.2(a), the applicable per annum interest rate payable on the Notes shall be increased by an additional 0.125% (in addition to the increase determined in Section 1.3(a) above), commencing on the first day of the first fiscal quarter following the fiscal quarter in respect of which such Officer’s Certificate was delivered and continuing until the Company has provided an Officer’s Certificate pursuant to Section 7.2(a) demonstrating that, as of the end of the fiscal quarter in respect of which such Officer’s Certificate is delivered, the Leverage Ratio is not more than 3.75 to 1.0. Following delivery of an Officer’s Certificate demonstrating that the Leverage Ratio did not exceed 3.75 to 1.0, the additional 0.125% interest shall cease to accrue or be payable for any fiscal quarter subsequent to the fiscal quarter in respect of which such Officer’s Certificate is delivered.

S ECTION 2. S ALE AND P URCHASE OF N OTES .

Subject to the terms and conditions of this Agreement, the Company will issue and sell to each Purchaser and each Purchaser will purchase from the Company, at the Closing provided for in Section 3, Notes in the principal amount specified opposite such Purchaser’s name in Schedule A at the purchase price of 100% of the principal amount thereof. The Purchasers’ obligations hereunder are several and not joint obligations and no Purchaser shall have any liability to any Person for the performance or non-performance of any obligation by any other Purchaser hereunder.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

S ECTION 3. C LOSING .

The execution and delivery of this Agreement will be made at the offices of Chapman and Cutler LLP, 111 West Monroe Street, Chicago, Illinois 60603 on November 25, 2013. The sale and purchase of the Notes to be purchased by each Purchaser shall occur at the offices of Chapman and Cutler LLP, 111 West Monroe Street, Chicago, Illinois 60603, at 9:00 a.m., Chicago time, at a closing (the “Closing” ) on January 15, 2014 or on such other Business Day thereafter on or prior to January 31, 2014 as may be agreed upon by the Company and the Purchasers. At the Closing the Company will deliver to each Purchaser the Notes to be purchased by such Purchaser in the form of a single Note (or such greater number of Notes in denominations of at least $500,000 as such Purchaser may request) dated the date of the Closing and registered in such Purchaser’s name (or in the name of its nominee), against delivery by such Purchaser to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Company to account number 30290298 at Northern Trust Co., 50 S. LaSalle Street, Chicago, Illinois 60675, ABA number 071000152. If at the Closing the Company fails to tender such Notes to any Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to such Purchaser’s reasonable satisfaction, such Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of any of the conditions specified in Section 4 not having been fulfilled to such Purchaser’s satisfaction or such failure by the Company to tender such Notes.

S ECTION 4. C ONDITIONS TO C LOSING .

Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such Purchaser at the Closing is subject to the fulfillment to such Purchaser’s reasonable satisfaction, prior to or at the Closing, of the following conditions:

Section 4.1. Representations and Warranties . The representations and warranties of the Parent and the Company in this Agreement shall be correct in all material respects (except those representations and warranties that are qualified by materiality, which will be correct in all respects) when made and at the time of the Closing (it being understood that representations and warranties that speak as of a specific date or time need only be correct as of such date or time). It is understood and agreed that the Company may deliver a supplemental schedule to Schedule 5.4 at the Closing to account for changes in the information therein between November 15, 2013 and at the time of the Closing, provided that no such supplemental schedule could reasonably be expected to have a Material Adverse Effect.

Section 4.2. Performance; No Default . The Parent and the Company shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by them prior to or at the Closing. From the date of this Agreement to the Closing, before and after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by Section 5.14), no Default or Event of Default shall have occurred and be continuing and no Change of Control or Control Event shall have occurred. Neither the Parent nor any Subsidiary shall have entered into any transaction since the date of the Memorandum that would have been prohibited by Section 10 had such Section applied since such date.

- 3 -


U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

Section 4.3. Compliance Certificates .

(a) Officer’s Certificate . Each of the Parent and the Company shall have delivered to such Purchaser an Officer’s Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.

(b) Secretary’s Certificates . Each of the Parent, the Company and each Subsidiary Guarantor shall have delivered to such Purchaser a certificate of its Secretary or an Assistant Secretary, dated the date of the Closing, certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Notes and this Agreement.

Section 4.4. Opinions of Counsel . Each Purchaser shall have received opinions in form and substance reasonably satisfactory to such Purchaser, dated the date of the Closing (a) from Mayer Brown LLP and Eric A. Blanchard, general counsel for the Parent and the Company, covering the matters set forth in Exhibit 4.4(a) and covering such other matters incident to the transactions contemplated hereby as such Purchaser or such Purchaser’s counsel may reasonably request (and the Company instructs its counsel to deliver such opinion to such Purchaser), and (b) from Chapman and Cutler LLP, such Purchaser’s special counsel in connection with such transactions, substantially in the form set forth in Exhibit 4.4(b) and covering such other matters incident to such transactions as such Purchaser may reasonably request.

Section 4.5. Purchase Permitted By Applicable Law, Etc . On the date of the Closing, such Purchaser’s purchase of Notes shall (i) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (ii) not violate any applicable law or regulation (including, without limitation, Regulation U, T or X of the Board of Governors of the Federal Reserve System) and (iii) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof. If requested by such Purchaser, such Purchaser shall have received an Officer’s Certificate certifying as to such matters of fact as such Purchaser may reasonably specify to enable such Purchaser to determine whether such purchase is so permitted.

Section 4.6. Sale of Other Notes . Contemporaneously with the Closing, the Company shall sell to each other Purchaser and each other Purchaser shall purchase the Notes to be purchased by it at the Closing as specified in Schedule A.

Section 4.7. Payment of Special Counsel Fees . Without limiting the provisions of Section 15.1, the Company shall have paid on or before the Closing the reasonable and properly documented fees, charges and disbursements of such Purchaser’s special counsel referred to in Section 4.4 to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to the Closing.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

Section 4.8. Private Placement Number . Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have been obtained by Chapman and Cutler LLP for the Notes.

Section 4.9. Changes in Corporate Structure . Neither the Parent nor the Company shall have changed its jurisdiction of incorporation or been a party to any merger or consolidation (except for mergers of a Subsidiary Guarantor into (i) the Company, provided the Company shall be the continuing or surviving corporation, or (ii) another Subsidiary Guarantor) or succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 5.5.

Section 4.10. Parent Guaranty . The Parent shall have executed and delivered the Parent Guaranty and such Purchaser shall have received an executed counterpart thereof.

Section 4.11. Subsidiary Guaranty . Each Subsidiary Guarantor shall have executed and delivered the Subsidiary Guaranty and such Purchaser shall have received an executed counterpart thereof.

Section 4.12. Collateral Documents . Each of the Parent, the Company, and each Subsidiary Guarantor shall have executed and delivered to the Collateral Agent each Collateral Document to which it is a party and such Purchaser shall have received copies of the fully executed counterparts thereof.

Section 4.13. Joinder to Intercreditor Agreement . Each Purchaser shall have executed and delivered to the Collateral Agent a joinder to the Intercreditor Agreement, dated as of the date of the Closing and the Intercreditor Agreement and such joinder shall constitute legal, valid and binding contracts and agreements and such Purchaser shall have received a true, correct and complete copy thereof.

Section 4.14. Funding Instructions . At least three Business Days prior to the date of the Closing, such Purchaser shall have received written instructions signed by a Senior Financial Officer on letterhead of the Company confirming the information specified in Section 3 including (i) the name and address of the transferee bank, (ii) such transferee bank’s ABA number and (iii) the account name and number into which the purchase price for the Notes is to be deposited.

Section 4.15. Proceedings and Documents . All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be reasonably satisfactory to such Purchaser and such Purchaser’s special counsel, and such Purchaser and such Purchaser’s special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or they may reasonably request.

S ECTION 5. R EPRESENTATIONS A ND W ARRANTIES OF THE C OMPANY .

As of the date of this Agreement and the date of the Closing, the Parent and the Company (jointly and severally) represent and warrant to each Purchaser that:

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

Section 5.1. Organization; Power and Authority . Each of the Parent and the Company is a corporation duly incorporated and validly existing and in good standing under the laws of its jurisdiction of incorporation, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Parent and the Company has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement, and the Notes (in the case of the Company) and the Parent Guaranty (in the case of the Parent) and to perform the provisions hereof and thereof.

Each Subsidiary Guarantor is duly organized and validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign organization and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Subsidiary Guarantor has the corporate or limited liability company power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver the Subsidiary Guaranty and to perform the provisions hereof and thereof.

Section 5.2. Authorization, Etc . This Agreement, the Collateral Documents to which the Company is a party and the Notes have been duly authorized by all necessary corporate action on the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent transfer, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

This Agreement and the Parent Guaranty have been duly authorized by all necessary corporate action on the part of the Parent, and this Agreement constitutes, and upon execution and delivery thereof the Parent Guaranty will constitute the legal, valid and binding obligation of the Parent, enforceable against the Parent in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent transfer, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

The Subsidiary Guaranty has been duly authorized by all necessary corporate or limited liability company action on the part of each Subsidiary Guarantor and upon execution and delivery thereof will constitute the legal, valid and binding obligation of each Subsidiary Guarantor, enforceable against each Subsidiary Guarantor in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent transfer, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

- 6 -


U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

Section 5.3. Disclosure . The Parent and the Company, through their agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities LLC, have delivered to the Purchasers a copy of a Private Placement Memorandum, dated October 3, 2013 (the “Memorandum” ), relating to the transactions contemplated hereby. The Memorandum fairly describes, in all material respects, the general nature of the business and principal properties of the Parent and its Subsidiaries. This Agreement, the Memorandum (including the Parent’s SEC filings incorporated by reference therein), the documents, certificates or other writings identified in Schedule 5.3 by or on behalf of the Parent in connection with the transactions contemplated hereby and the financial statements listed in Schedule 5.5, in each case, delivered to the Purchasers prior to October 17, 2013 (this Agreement, the Memorandum and such documents, certificates or other writings and such financial statements being referred to, collectively, as the “Disclosure Documents” ), taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made. Except as disclosed in the Disclosure Documents, since December 31, 2012, there has been no change in the financial condition, operations, business or properties of the Parent or any Subsidiary except changes that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. There is no fact known to the Parent or the Company that would reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the Disclosure Documents.

Section 5.4. Organization and Ownership of Shares of Subsidiaries . (a) Schedule 5.4 contains (except as noted therein) complete and correct lists of the Parent’s Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Parent and each other Subsidiary.

(b) All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the Parent and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Parent or another Subsidiary (except as otherwise disclosed in Schedule 5.4) free and clear of any Lien, except Liens under the Collateral Documents.

(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity duly organized, validly existing and in good standing or equivalent status under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(d) No Subsidiary, other than an SPV, is a party to, or otherwise subject to any legal, regulatory, contractual or other restriction (other than this Agreement, the Credit Agreement, the agreements listed on Schedule 5.4 and customary limitations imposed by corporate or limited liability law or similar statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Parent or any of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

Section 5.5. Financial Statements; Material Liabilities . The Parent has delivered to each Purchaser copies of the financial statements of the Parent and its Subsidiaries listed on Schedule 5.5. All of said financial statements (including in each case the related schedules and notes) fairly present in all material respects the consolidated financial position of the Parent and its Subsidiaries as of the respective dates specified in such Schedule and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments). The Parent and its Subsidiaries do not have any Material liabilities that are not disclosed on such financial statements or otherwise disclosed in the Disclosure Documents or incurred in the ordinary course of business.

Section 5.6. Compliance with Laws, Other Instruments, Etc . The execution, delivery and performance by the Company of this Agreement, the Collateral Documents to which it is a party and the Notes will not (i) contravene, result in any breach of, or constitute a default under, or, except for the Liens under the Collateral Documents, result in the creation of any Lien in respect of any property of the Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, shareholders agreement or any other agreement or instrument to which the Company or any Subsidiary is bound or by which the Company or any Subsidiary or any of their respective properties may be bound, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary.

The execution, delivery and performance by the Parent of this Agreement, the Collateral Documents to which it is a party and the Parent Guaranty will not (i) contravene, result in any breach of, or constitute a default under, or, except for the Liens under the Collateral Documents, result in the creation of any Lien in respect of any property of the Parent or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, shareholders agreement or any other agreement or instrument to which the Parent or any Subsidiary is bound or by which the Parent or any Subsidiary or any of their respective properties may be bound, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Parent or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Parent or any Subsidiary.

The execution, delivery and performance by each Subsidiary Guarantor of the Subsidiary Guaranty and the Collateral Documents to which it is a party will not (i) contravene, result in any breach of, or constitute a default under, or, except for the Liens under the Collateral Documents, result in the creation of any Lien in respect of any property of such Subsidiary Guarantor under, any agreement, or corporate charter or by-laws or shareholders agreement, to which such Subsidiary Guarantor is bound or by which such Subsidiary Guarantor or any of its properties may

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to such Subsidiary Guarantor or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to such Subsidiary Guarantor.

Section 5.7. Governmental Authorizations, Etc . No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with: (i) the execution, delivery or performance by the Company of this Agreement, the Collateral Documents or the Notes, (ii) the execution, delivery or performance by the Parent of this Agreement, the Parent Guaranty or the Collateral Documents to which it is a party, or (iii) the execution, delivery or performance by each Subsidiary Guarantor of the Subsidiary Guaranty or the Collateral Documents to which it is a party, except for the filing of a Form 8-K with the SEC, any state blue sky laws, and any filings required in connection with the perfection of security interests.

Section 5.8. Litigation; Observance of Statutes and Orders . (a) There are no actions, suits, investigations or proceedings pending or, to the knowledge of the Parent threatened against or affecting the Parent or any Subsidiary or any property of the Parent or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

(b) Neither the Parent nor any Subsidiary is (i) in default under any agreement or instrument to which it is a party or by which it is bound, (ii) in violation of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or (iii) in violation of any applicable law, ordinance, rule or regulation of any Governmental Authority (including, without limitation, Environmental Laws, the USA PATRIOT Act or any of the other laws and regulations that are referred to in Section 5.16), which default or violation would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 5.9. Taxes . The Parent and its Subsidiaries have filed all Federal and other Material tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (i) the amount of which is not, individually or in the aggregate, Material or (ii) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. Neither the Parent nor the Company knows of any basis for any other tax or assessment that would reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Parent and its Subsidiaries in respect of Federal, state or other taxes for all fiscal periods are adequate and determined in accordance with GAAP. The Federal income tax liabilities of the Parent and its Subsidiaries have been finally determined (whether by reason of completed audits or the statute of limitations having run) for all Fiscal Years up to and including the Fiscal Year ended December 31, 2009.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

Section 5.10. Title to Property; Leases . The Parent and its Subsidiaries have good and sufficient title to their respective properties that individually or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheet referred to in Section 5.5 or purported to have been acquired by the Parent or any Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business and except for minor defects in title that do not interfere with their ability to conduct their business as currently conducted), in each case free and clear of Liens prohibited by this Agreement. All leases that individually or in the aggregate are Material are valid and subsisting and are in full force and effect in all material respects.

Section 5.11. Licenses, Permits, Etc . (a) The Parent and its Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, service marks, trademarks and trade names, or rights thereto, that individually or in the aggregate are Material, without known conflict with the rights of others, except for those conflicts that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

(b) To the best knowledge of the Parent, no product of the Parent or any of its Subsidiaries infringes in any material respect any license, permit, franchise, authorization, patent, copyright, service mark, trademark, trade name or other right owned by any other Person.

(c) To the best knowledge of the Parent, there is no Material violation by any Person of any right of the Parent or any of its Subsidiaries with respect to any patent, copyright, service mark, trademark, trade name or other right owned or used by the Parent or any of its Subsidiaries.

Section 5.12. Compliance with ERISA . (a) The Parent and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Neither the Parent nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in section 3 of ERISA), and no event, transaction or condition has occurred or exists that would, individually or in the aggregate, reasonably be expected to result in the incurrence of any such liability by the Parent or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Parent or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to section 430(k) of the Code or to any such penalty or excise tax provisions under the Code or federal law or section 4068 of ERISA or by the granting of a security interest in connection with the amendment of a Plan, other than such liabilities or Liens as would not be individually or in the aggregate Material.

(b) The present value of the aggregate benefit liabilities under each of the Plans (other than Multiemployer Plans), determined as of the valuation date for each such Plan’s most recently ended plan year for which a Form 5500 annual report is available and reported as the funding target in such Plan’s actuarial valuation report for such year, did not exceed the market value of the assets of such Plan (also determined as of the valuation date for each such Plan’s most recently ended plan year for which a Form 5500 annual report is available and as reported in the Plan’s actuarial valuation report) allocable to such benefit liabilities by more than $21,740,763 in the case of any single Plan and by more than $26,693,256 in the aggregate for all such Plans. The term “ benefit liabilities ” has the meaning specified in section 4001 of ERISA and the term “ present value ” has the meaning specified in section 3 of ERISA.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

(c) The Parent and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material.

(d) The expected postretirement healthcare benefit obligation (determined as of the last day of the Parent’s most recently ended fiscal year in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 715-60, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of the Parent and its Subsidiaries is not Material.

(e) The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that constitutes a non-exempt prohibited transaction under section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by the Parent and the Company to each Purchaser in the first sentence of this Section 5.12(e) is made in reliance upon and subject to the accuracy of such Purchaser’s representation in Section 6.3 as to the sources of the funds to be used to pay the purchase price of the Notes to be purchased by such Purchaser.

Section 5.13. Private Offering by the Company . None of the Parent, the Company or anyone acting on their behalf has offered the Notes, the Parent Guaranty, the Subsidiary Guaranty or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person other than the Purchasers and not more than 55 other Institutional Investors as defined in clause (c) of the definition of such term, each of which has been offered the Notes, the Parent Guaranty and the Subsidiary Guaranty at a private sale for investment. None of the Parent, the Company or anyone acting on their behalf has taken, or will take, any action that would subject the issuance or sale of the Notes, the Parent Guaranty or the Subsidiary Guaranty to the registration requirements of Section 5 of the Securities Act or to the registration requirements of any Securities or blue sky laws of any applicable jurisdiction.

Section 5.14. Use of Proceeds; Margin Regulations . Net proceeds from the sale of the Notes will be used to refinance existing Indebtedness as set forth in Schedule 5.14, and for general corporate purposes. No part of the proceeds from the sale of the Notes will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company or the Parent in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock does not constitute more than 10% of the value of the consolidated assets of the Parent and its Subsidiaries and the Parent does not have any present intention that margin stock will constitute more than 10% of the value of such assets. As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

Section 5.15. Existing Indebtedness; Future Liens . (a) Except as described therein, Schedule 5.15 sets forth a complete and correct list of all outstanding Indebtedness of the Parent and its Subsidiaries as of October 31, 2013. Neither the Parent nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness under clause (a), (f), or (i) of the definition of Indebtedness or any Material Indebtedness of the Parent or any Subsidiary and no event or condition exists with respect to any Material Indebtedness of the Parent or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons (other than the Parent or any Subsidiary) to cause such Material Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment.

(b) Except as disclosed in Schedule 5.15, neither the Parent nor any Subsidiary has agreed or consented to cause or permit any of its property, whether now owned or hereafter acquired, to be subject to a Lien that secures Indebtedness or to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 10.4.

(c) Neither the Parent nor any Subsidiary is a party to, or otherwise subject to any provision contained in, any instrument evidencing Indebtedness of the Parent or such Subsidiary, any agreement relating thereto or any other agreement (including, but not limited to, its charter or any other organizational document) which limits the amount of, or otherwise imposes restrictions on the incurring of, Indebtedness of the Parent, except as disclosed in Schedule 5.15.

Section 5.16. Foreign Assets Control Regulations, Etc . (a) Neither the Parent nor any of its Subsidiaries nor, to the actual knowledge of the Parent’s Chief Financial Officer, General Counsel or Treasurer, any of the Parent’s or its Subsidiaries’ directors or officers is (i) a Person whose name appears on the list of Specially Designated Nationals and Blocked Persons published by the Office of Foreign Assets Control, United States Department of the Treasury (“ OFAC ”) (an “ OFAC Listed Person ”) (ii) beneficially majority owned or controlled by, directly or indirectly, (x) any OFAC Listed Person or (y) any Person, entity, organization, foreign country or regime that is penalized under any OFAC Sanctions Program, or (iii) otherwise blocked or being sanctioned under, or engaged in any activity in violation of, United States economic sanctions, including but not limited to, the Trading with the Enemy Act, the International Emergency Economic Powers Act, the Comprehensive Iran Sanctions, Accountability and Divestment Act (“ CISADA ”) or any similar law or regulation with respect to Iran or any other country, the Sudan Accountability and Divestment Act, any OFAC Sanctions Program, or any economic sanctions regulations administered and enforced by the United States or any enabling legislation or executive order relating to any of the foregoing (collectively, “ U.S. Economic Sanctions ”) (each OFAC Listed Person and each other Person, entity, organization and government listed, penalized, or otherwise blocked under clause (i), clause (ii) or clause (iii), respectively, a “ Blocked Person ”), except, in the case of clause (iii), where being blocked or sanctioned under or engaging in any activity in violation of U.S. Economic Sanctions, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. To the actual knowledge of the Parent’s Chief Financial Officer, General Counsel and Treasurer, neither the Parent nor any of its Subsidiaries nor any of their respective directors or officers has been notified that its name appears or may in the future appear on a state list of Persons that engage in investment or other commercial activities in Iran or any other country that is subject to U.S. Economic Sanctions.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

(b) Neither the Parent nor any of its Subsidiaries nor, to the actual knowledge of the Parent’s Chief Financial Officer, General Counsel or Treasurer, any of the Parent’s or its Subsidiaries’ directors or officers is being or has been penalized under economic sanctions imposed by the United Nations or the European Union.

(c) No part of the proceeds from the sale of the Notes hereunder constitutes or will constitute funds obtained on behalf of any Blocked Person or will otherwise be used directly by the Parent or any Subsidiary (i) in connection with any investment in, or any transactions or dealings with any Blocked Person, or (ii) otherwise in violation of U.S. Economic Sanctions.

(d) Neither the Parent nor any of its Subsidiaries nor, to the actual knowledge of the Parent’s Chief Financial Officer, General Counsel and Treasurer, any of the Parent’s or its Subsidiaries’ directors or officers (i) has been found in violation of, charged with, or convicted of, money laundering, drug trafficking, terrorist-related activities or other money laundering predicate crimes under the Currency and Foreign Transactions Reporting Act of 1970 (otherwise known as the Bank Secrecy Act), the USA PATRIOT Act or any other United States law or regulation governing such activities (collectively, “Anti-Money Laundering Laws” ) or any U.S. Economic Sanctions violations, (ii) has been assessed civil penalties under any Anti-Money Laundering Laws or any U.S. Economic Sanctions, or (iii) has had any of its funds seized or forfeited in an action under any Anti-Money Laundering Laws. The Parent has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that the Parent and each of its Subsidiaries is and will continue to be in compliance respects with all applicable current and future Anti-Money Laundering Laws and U.S. Economic Sanctions, except where the failure to comply would not reasonably be expected to result in a Material Adverse Effect.

(e) To the actual knowledge of the Parent’s Chief Financial Officer, General Counsel and Treasurer, neither the Parent nor any of its Subsidiaries nor any of their respective directors or officers is under investigation by any Governmental Authority for possible violation of Anti-Money Laundering Laws or any U.S. Economic Sanctions violations.

(f) Neither the Parent nor any of its Subsidiaries nor, to the actual knowledge of the Parent’s Chief Financial Officer, General Counsel or Treasurer, any of the Parent’s or its Subsidiaries’ directors or officers (i) has been charged with, or convicted of bribery or any other anti-corruption related activity under any applicable law or regulation in a U.S. or any non-U.S. country or jurisdiction, including but not limited to, the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010 (collectively, “Anti-Corruption Laws” ), or (ii) has been assessed civil or criminal penalties under any Anti-Corruption Laws.

(g) (1) To the actual knowledge of the Parent’s Chief Financial Officer, General Counsel and Treasurer, neither the Parent nor any of its Subsidiaries nor any of their respective directors or officers is under investigation by any U.S. or non-U.S. Governmental Authority for possible violation of Anti-Corruption Laws;

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

(2) To the actual knowledge of the Parent’s Chief Financial Officer, General Counsel and Treasurer, neither the Parent nor any of its Subsidiaries nor any of their respective directors or officers has, within the last five years, directly or indirectly offered, promised, given, paid or authorized the offer, promise, giving or payment of anything of value to a Governmental Official or a commercial counterparty for the purposes of: (i) influencing any act, decision or failure to act by such Government Official in his or her official capacity or such commercial counterparty, (ii) inducing a Governmental Official to do or omit to do any act in violation of the Governmental Official’s lawful duty, or (iii) inducing a Governmental Official or a commercial counterparty to use his or her influence with a government or instrumentality to affect any act or decision of such government or entity; in each case in order to obtain, retain or direct business or to otherwise secure an improper advantage in violation of any applicable law or regulation or which would cause any holder to be in violation of any law or regulation applicable to such holder, except where any such offer, promise, gift, payment or authorization, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect; and

(3) No part of the proceeds from the sale of the Notes hereunder will be used directly for any improper payments, including bribes, to any Governmental Official or commercial counterparty in order to obtain, retain or direct business or obtain any improper advantage. The Parent and the Company have established procedures and controls which they reasonably believe are adequate (and otherwise comply with applicable law) to ensure that the Parent and each of its Subsidiaries is and will continue to be in compliance with all applicable current and future Anti-Corruption Laws except where the failure to comply would not reasonably be expected to result in a Material Adverse Effect.

Section 5.17. Status under Certain Statutes . Neither the Parent nor any Subsidiary is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 2005, as amended, the ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended.

Section 5.18. Environmental Matters . (a) Neither the Parent nor any Subsidiary has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted asserting any claim against the Parent or any of its Subsidiaries or any of their respective real properties now owned, leased or operated by any of them or, to Parent’s knowledge, against any real properties formerly owned, leased or operated by any of them, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as would not reasonably be expected to result in a Material Adverse Effect.

(b) Neither the Parent nor any Subsidiary has knowledge of any facts that would give rise to any claim, public or private, of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any of them or to other assets or their use, except, in each case, such as would not reasonably be expected to result in a Material Adverse Effect.

(c) Neither the Parent nor any Subsidiary has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them in a manner contrary to any Environmental Laws in each case in any manner that would reasonably be expected to result in a Material Adverse Effect.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

(d) Neither the Parent nor any Subsidiary has disposed of any Hazardous Materials in a manner which is contrary to any Environmental Law that would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(e) All buildings on all real properties now owned, leased or operated by the Parent or any Subsidiary are in compliance with applicable Environmental Laws, except where failure to comply would not reasonably be expected to result in a Material Adverse Effect.

S ECTION 6. R EPRESENTATIONS OF THE P URCHASERS .

Section 6.1. Purchase for Investment. Each Purchaser severally represents that it is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of such Purchaser’s property or the property of such accounts or funds shall at all times be within such Purchaser’s control or the control of such accounts or funds, as applicable.

Section 6.2. Accredited Investor . Each Purchaser represents that it is an “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act acting for its own account (and not for the account of others) or as a fiduciary or agent for others (which others are also “accredited investors”). Each Purchaser understands that the Notes have not been registered under the Securities Act and may be resold or otherwise transferred only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Company is not required to register the Notes.

Section 6.3. Source of Funds . Each Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a “Source” ) to be used by such Purchaser to pay the purchase price of the Notes to be purchased by such Purchaser hereunder:

(a) the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the NAIC (the “ NAIC Annual Statement ”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

(b) the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or

(c) the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the Company in writing pursuant to this clause (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or

(d) the Source constitutes assets of an “investment fund” (within the meaning of Part VI of PTE 84-14 (the “ QPAM Exemption ”)) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM Exemption), no employee benefit plan’s assets that are managed by the QPAM in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, represent more than 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM maintains an ownership interest in the Parent or the Company that would cause the QPAM and the Parent or the Company to be “related” within the meaning of Part VI(h) of the QPAM Exemption and (i) the identity of such QPAM and (ii) the names of any employee benefit plans whose assets in the investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization, represent 10% or more of the assets of such investment fund, have been disclosed to the Company in writing pursuant to this clause (d);or

(e) the Source constitutes assets of a “plan(s)” (within the meaning of Part IV(h) of PTE 96-23 (the “ INHAM Exemption ”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Part IV(d)(3) of the INHAM Exemption) owns a 10% or more interest in the Parent or the Company and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (e); or

(f) the Source is a governmental plan; or

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

(g) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this clause (g); or

(h) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA and section 4975 of the Code.

As used in this Section 6.3, unless otherwise defined in this Section 6.3, the terms “ employee benefit plan ,” “ governmental plan ,” and “ separate account ” shall have the respective meanings assigned to such terms in section 3 of ERISA.

S ECTION 7. I NFORMATION AS TO P ARENT .

Section 7.1. Financial and Business Information . The Parent will deliver to each Purchaser and each holder of Notes that is an Institutional Investor:

(a) Quarterly Statements — within 60 days (or such shorter period as is 15 days greater than the period applicable to the filing of the Parent’s Quarterly Report on Form 10-Q (“ Form 10-Q ”) with the SEC regardless of whether the Parent is subject to the filing requirements thereof) after the end of each quarterly fiscal period in each fiscal year of the Parent (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of,

(i) a consolidated unaudited balance sheet, to include the Parent and its Subsidiaries, as at the end of such quarter,

(ii) consolidated statements of income, to include the Parent and its Subsidiaries, for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter, and

(iii) consolidated statements of cash flows, to include the Parent and its Subsidiaries, for such quarter or (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter,

setting forth, in case of clauses (ii) and (iii), in comparative form the figures for the corresponding periods in the previous fiscal year, and in each case in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments and the absence of footnotes, provided that delivery within the time period specified above of copies of the Parent’s Form 10-Q prepared in compliance with the requirements therefor and filed with the SEC shall be deemed to satisfy the requirements of this Section 7.1(a);

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(b) Annual Statements — within 120 days (or such shorter period as is 15 days greater than the period applicable to the filing of the Parent’s Annual Report on Form 10-K (the “ Form 10-K ”) with the SEC regardless of whether the Parent is subject to the filing requirements thereof) after the end of each fiscal year of the Parent, duplicate copies of

(i) a consolidated balance sheet, to include the Parent and its Subsidiaries, as at the end of such year, and

(ii) consolidated statements of income and cash flows, to include the Parent and its Subsidiaries, for such year,

setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion thereon (without a “going concern” or similar qualification or exception and without any qualification or exception as to the scope of the audit on which such opinion was based) of independent certified public accountants of recognized national standing or other independent public accountants reasonably acceptable to the Required Holders, which opinion shall be to the effect that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the audit has been conducted in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances, provided that the delivery within the time period specified above of the Parent’s Form 10-K for such fiscal year (together with the Parent’s annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements therefor and filed with the SEC, shall be deemed to satisfy the requirements of this Section 7.1(b);

(c) SEC and Other Reports — promptly upon their becoming available, one copy of (i) each financial statement, report, notice or proxy statement sent by the Parent or any Subsidiary to its public securities holders generally and (ii) each regular or periodic report, each registration statement (without exhibits except as expressly requested by such holder), and each prospectus and all amendments thereto filed by the Parent or any Subsidiary with the SEC;

(d) Notice of Default or Event of Default — promptly, and in any event within five Business Days after a Responsible Officer obtains actual knowledge of the existence of any Default or Event of Default or that any Person has given any notice or taken any action with respect to a claimed default hereunder or that any Person has given any notice or taken any action with respect to a claimed default of the type referred to in Section 11(f), a written notice specifying the nature and period of existence thereof and what action the Parent is taking or proposes to take with respect thereto;

(e) ERISA Matters — promptly, and in any event within five Business Days after a Responsible Officer obtains actual knowledge of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Parent or an ERISA Affiliate proposes to take with respect thereto:

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

(i) the taking by the PBGC of steps to proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan; or

(ii) any event, transaction or condition that would result in the incurrence of any liability by the Parent or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Parent or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, would reasonably be expected to have a Material Adverse Effect;

(f) Amendments of Credit Agreement – promptly and in any event within 10 Business Days after the execution and delivery of any amendment or other modification of the Credit Agreement (including termination thereof) that affects Section 10.1, 10.2 or 10.8, including any defined term used therein, a copy thereof; and

(g) Requested Information — with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Parent or any of its Subsidiaries (including actual copies of the Parent’s Forms 10-Q and Forms 10-K) or relating to the ability of the Company to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by a Purchaser or any such holder of Notes.

Section 7.2. Officer’s Certificate . Each set of financial statements delivered to a Purchaser or a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b) will be accompanied by a certificate of a Senior Financial Officer setting forth:

(a) Covenant Compliance — the information (including supporting calculations) required in order to establish whether the Parent was in compliance with the requirements of Section 10.1 through Section 10.8, inclusive, during the quarterly or annual period covered by the statements then being furnished, including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence. In the event that the Parent or any Subsidiary has made an election to measure any financial liability using fair value (which election is being disregarded for purposes of determining compliance with this Agreement pursuant to Section 22.2) as to the period covered by any such financial statement, such Senior Financial Officer’s certificate as to such period shall include a reconciliation from GAAP with respect to such election; and; and

(b) Event of Default — a statement that such Senior Financial Officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Parent and its Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including any such event or condition resulting from the failure of the Parent or any Subsidiary to comply with any Environmental Law), specifying the nature and status thereof and what action the Parent shall have taken or proposes to take with respect thereto.

Section 7.3. Electronic Delivery . Financial statements, opinions of independent certified public accountants, other information and officers’ certificates required to be delivered by the Parent pursuant to Section 7.1(a), (b) or (c) and Section 7.2 shall be deemed to have been delivered if (i) such financial statements satisfying the requirements of Section 7.1(a) or (b) and related certificate satisfying the requirements of Section 7.2 are delivered to you and each other holder of Notes by e-mail, (ii) the Parent shall have timely filed such Form 10-Q or Form 10-K, satisfying the requirements of Section 7.1(a) or (b) as the case may be, with the SEC on “EDGAR” and shall have made such Form and the related certificate satisfying the requirements of Section 7.2 available on its home page on the worldwide web (at the date of this Agreement located at http://www.unitedstationers.com), (iii) such financial statements satisfying the requirements of Section 7.1(a) or (b) and related certificate satisfying the requirements of Section 7.2 are timely posted by or on behalf of the Parent on IntraLinks or on any other similar website to which each holder of Notes has free access or (iv) the Parent shall have filed any of the items referred to in Section 7.1(c) with the SEC on “EDGAR” and shall have made such items available on its home page on the worldwide web or if any of such items are timely posted by or on behalf of the Parent on IntraLinks or on any other similar website to which each holder of Notes has free access; provided however , that in the case of any of clause (i), (ii), (iii) or (iv), upon request of any holder, the Parent will thereafter deliver written copies of such forms, financial statements and certificates to such holder.

Section 7.4. Visitation . The Parent shall permit the representatives of each Purchaser and each holder of Notes that is an Institutional Investor:

(a) No Default — if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Parent, to visit the principal executive office of the Parent and the Company during normal business hours not more than one time per calendar year, to discuss the affairs, finances and accounts of the Parent and its Subsidiaries with the Parent’s officers, and (with the consent of the Parent, which consent will not be unreasonably withheld) to visit the other offices and properties of the Parent and each Subsidiary; and

(b) Default — if a Default or Event of Default then exists, at the expense of the Parent or the Company, to visit and inspect any of the offices or properties of the Parent or any Subsidiary during normal business hours, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent public accountants (and by this provision the Parent authorizes said accountants to discuss the affairs, finances and accounts of the Parent and its Subsidiaries provided the Parent is given an opportunity to be present for such discussions), all at such times and as often as may be requested.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

S ECTION 8. P REPAYMENT OF THE N OTES .

Section 8.1. Required Prepayments . No regularly scheduled prepayments are due on the Notes prior to their stated Maturity Date. As provided therein, the entire unpaid principal balance of each Note shall be due and payable on the Maturity Date thereof.

Section 8.2. Optional Prepayments with Make-Whole Amount . The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes, in an amount not less than 10% of the aggregate principal amount of the Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, and the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Company will give each holder of Notes written notice of each optional prepayment under this Section 8.2 not less than ten days and not more than 60 days prior to the date fixed for such prepayment unless the Company and the Required Holders agree to another time period pursuant to Section 17. Each such notice shall specify such date (which shall be a Business Day), the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with Section 8.4), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Company shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date.

Section 8.3. Mandatory Offer to Prepay Upon Change of Control .

(a) Notice of Change of Control or Control Event — The Company will, within five Business Days after any Responsible Officer obtains actual knowledge of the occurrence of any Change of Control or Control Event, give notice of such Change of Control or Control Event to each holder of Notes unless notice in respect of such Change of Control (or the Change of Control contemplated by such Control Event) shall have been given pursuant to paragraph (b) of this Section 8.3. If a Change of Control has occurred, such notice shall contain and constitute an offer to prepay Notes as described in paragraph (c) of this Section 8.3 and shall be accompanied by the certificate described in paragraph (g) of this Section 8.3.

(b) Condition to Company Action — The Company will not take any action that consummates or finalizes a Change of Control unless (i) at least 15 Business Days prior to such action it shall have given to each holder of Notes written notice containing and constituting an offer to prepay Notes accompanied by the certificate described in paragraph (g) of this Section 8.3, and (ii) subject to the provisions of paragraph (d) below, contemporaneously with such action, it prepays all Notes required to be prepaid in accordance with this Section 8.3.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

(c) Offer to Prepay Notes — The offer to prepay Notes contemplated by paragraphs (a) and (b) of this Section 8.3 shall be an offer to prepay, in accordance with and subject to this Section 8.3, all, but not less than all, of the Notes held by each holder (in this case only, “holder” in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the “Proposed Prepayment Date”). If such Proposed Prepayment Date is in connection with an offer contemplated by paragraph (a) of this Section 8.3, such date shall be not less than 30 days and not more than 60 days after the date of such offer.

(d) Acceptance; Rejection — A holder of Notes may accept the offer to prepay made pursuant to this Section 8.3 by causing a notice of such acceptance to be delivered to the Company on or before the date specified in the certificate described in paragraph (g) of this Section 8.3. A failure by a holder of Notes to respond to an offer to prepay made pursuant to this Section 8.3, or to accept an offer as to all of the Notes held by the holder, within such time period shall be deemed to constitute rejection of such offer by such holder.

(e) Prepayment — Prepayment of the Notes to be prepaid pursuant to this Section 8.3 shall be at 100% of the principal amount of such Notes, together with interest on such Notes accrued to but excluding the date of prepayment and shall not require the payment of any Make-Whole Amount. The prepayment shall be made on the Proposed Prepayment Date except as provided in paragraph (f) of this Section 8.3.

(f) Deferral Pending Change of Control — The obligation of the Company to prepay Notes pursuant to the offers required by paragraphs (a) and (b) and accepted in accordance with paragraph (d) of this Section 8.3 is subject to the occurrence of the Change of Control in respect of which such offers and acceptances shall have been made. In the event that such Change of Control does not occur on or prior to the Proposed Prepayment Date in respect thereof, the prepayment shall be deferred until and shall be made on the date on which such Change of Control occurs. The Company shall keep each holder of Notes reasonably and timely informed of (i) any such deferral of the date of prepayment, (ii) the date on which such Change of Control and the prepayment are expected to occur, and (iii) any determination by the Company that efforts to effect such Change of Control have ceased or been abandoned (in which case the offers and acceptances made pursuant to this Section 8.3 in respect of such Change of Control shall be deemed rescinded). Notwithstanding the foregoing, in the event that the prepayment has not been made within 90 days after such Proposed Prepayment Date by virtue of the deferral provided for in this Section 8.3(f), the Company shall make a new offer to prepay in accordance with paragraph (c) of this Section 8.3.

(g) Officer’s Certificate — Each offer to prepay the Notes pursuant to this Section 8.3 shall be accompanied by a certificate, executed by a Senior Financial Officer of the Company and dated the date of such offer, specifying: (i) the Proposed Prepayment Date, (ii) that such offer is made pursuant to this Section 8.3, (iii) the principal amount of each Note offered to be prepaid, (iv) the interest that would be due on each Note offered to be prepaid, accrued to but excluding the Proposed Prepayment Date, (v) that the conditions of this Section 8.3 have been fulfilled, (vi) in reasonable detail, the nature and date or proposed date of the Change of Control, and (vii) the date by which any holder of a Note that wishes to accept such offer must deliver notice thereof to the Company, which date shall not be earlier than three Business Days prior to the Proposed Prepayment Date or, in the case of a prepayment pursuant to Section 8.3(b), the date of the action referred to in Section 8.3(b)(i).

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

Section 8.4. Allocation of Partial Prepayments . In the case of each partial prepayment of the Notes pursuant to Section 8.2, the principal amount of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.

Section 8.5. Maturity; Surrender , Etc . In the case of each optional prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment (subject to Section 8.3(f)), together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.

Section 8.6. Purchase of Notes . The Company will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except (a) upon the payment or prepayment of the Notes in accordance with this Agreement and the Notes or (b) pursuant to an offer to purchase made by the Company or an Affiliate pro rata to the holders of all Notes at the time outstanding upon the same terms and conditions. Any such offer shall provide each holder with sufficient information to enable it to make an informed decision with respect to such offer, and shall remain open for at least 15 Business Days. If the holders of more than 35% of the principal amount of the Notes then outstanding accept such offer, the Company shall promptly notify the remaining holders of such fact and the expiration date for the acceptance by holders of Notes of such offer shall be extended by the number of days necessary to give each such remaining holder at least 7 Business Days from its receipt of such notice to accept such offer. The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to this Agreement and no Notes may be issued in substitution or exchange for any such Notes.

Section 8.7. Make-Whole Amount .

“Make-Whole Amount” means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

“ Called Principal ” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

“ Discounted Value ” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.

“ Reinvestment Yield ” means, with respect to the Called Principal of any Note, 0.50% over the yield to maturity implied by the yield(s) reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on-the-run U.S. Treasury securities (“ Reported ”) having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there are no such U.S. Treasury securities Reported having a maturity equal to such Remaining Average Life, then such implied yield to maturity will be determined by (a) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between the yields Reported for the applicable most recently issued actively traded on-the-run U.S. Treasury securities with the maturities (1) closest to and greater than such Remaining Average Life and (2) closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.

If such yields are not Reported or the yields Reported as of such time are not ascertainable (including by way of interpolation), then “ Reinvestment Yield ” means, with respect to the Called Principal of any Note, 0.50% over the yield to maturity implied by the U.S. Treasury constant maturity yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for the U.S. Treasury constant maturity having a term equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there is no such U.S. Treasury constant maturity having a term equal to such Remaining Average Life, such implied yield to maturity will be determined by interpolating linearly between (1) the U.S. Treasury constant maturity so reported with the term closest to and greater than such Remaining Average Life and (2) the U.S. Treasury constant maturity so reported with the term closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.

“ Remaining Average Life ” means, with respect to any Called Principal, the number of years obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years, computed on the basis of a 360-day year composed of twelve 30-day months and calculated to two decimal places, that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

“ Remaining Scheduled Payments ” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2 or Section 12.1.

“ Settlement Date ” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.

Section 8.8. Payments Due on Non-Business Days . Anything in this Agreement or the Notes to the contrary notwithstanding, (x) subject to clause (y), any payment of interest on any Note that is due on a date that is not a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day; and (y) any payment of principal of or Make-Whole Amount on any Note (including principal due on the Maturity Date of such Note) that is due on a date that is not a Business Day shall be made on the next succeeding Business Day and shall include the additional days elapsed in the computation of interest payable on such next succeeding Business Day.

S ECTION 9. A FFIRMATIVE C OVENANTS .

From the date of this Agreement until the Closing and thereafter, each of the Parent and the Company (jointly and severally) covenant that so long as any of the Notes are outstanding:

Section 9.1. Compliance with Law . Without limiting Section 10.11, the Parent and the Company will, and the Parent will cause each Subsidiary to, comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including without limitation, ERISA, Environmental Laws, the USA PATRIOT Act and the other laws and regulations that are referred to in Section 5.16, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company will defend, indemnify and hold harmless each holder, and each holder’s directors, officers, agents and employees, successors and assigns (each, an “ Indemnitee ”) from and against any and all losses, liabilities, reasonable costs or expenses (including reasonable attorneys’ fees) which such Indemnitee may incur as a result of a violation of any U.S. Economic Sanctions or Anti-Corruption Laws by the Parent or any of its Subsidiaries.

Section 9.2. Insurance . The Parent and the Company will, and the Parent will cause each Subsidiary to, maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if appropriate reserves are maintained with respect thereto) as is reasonably prudent in light of the businesses in which the Parent and the Subsidiaries are engaged.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

Section 9.3. Maintenance of Properties . The Parent and the Company will, and the Parent will cause each Subsidiary to, maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section shall not prevent the Parent or any Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Parent has concluded that such discontinuance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 9.4. Payment of Taxes and Claims . The Parent and the Company will, and the Parent will cause each Subsidiary to, file all Federal and other Material tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent the same have become due and payable and before they have become delinquent and all claims for which sums have become due and payable that have or might become a Lien on properties or assets of the Parent or any Subsidiary, provided that neither the Parent nor any Subsidiary need pay any such tax or assessment, charge or levy or claims if (i) the amount, applicability or validity thereof is contested by the Parent or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Parent or such Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Parent or such Subsidiary or (ii) the nonpayment of all such taxes, or assessments, charges, levies and claims in the aggregate would not reasonably be expected to have a Material Adverse Effect.

Section 9.5. Corporate Existence , Etc . Subject to Section 10.6, each of the Parent and the Company will at all times preserve and keep in full force and effect its corporate existence. Subject, as to any Subsidiary other than the Company, to Section 10.6 and 10.7, the Parent will at all times preserve and keep in full force and effect the corporate (or, as applicable, limited liability company) existence of each Subsidiary (unless merged into the Parent or a Wholly Owned Subsidiary) and all rights and franchises of the Parent and its Subsidiaries unless, in the good faith judgment of the Parent, the termination of or failure to preserve and keep in full force and effect such corporate existence, right or franchise would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 9.6. Books and Records . The Parent and the Company will, and the Parent will cause each Subsidiary to, maintain proper books of record and account in conformity in all material respects with GAAP and all applicable requirements of any Governmental Authority having legal or regulatory jurisdiction over the Company or such Subsidiary, as the case may be. The Parent will, and will cause each of its Subsidiaries to, keep books, records and accounts that, in reasonable detail, accurately reflect all transactions and dispositions of assets. The Parent and its Subsidiaries have devised a system of internal accounting controls sufficient to provide reasonable assurances that their respective books, records, and accounts accurately reflect all transactions and dispositions of assets and the Parent will, and will cause each of its Subsidiaries to, continue to maintain such system.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

Section 9.7. Subsidiary Guaranty; Release of Subsidiary Guarantors; Release of Collateral .

(a) Subsidiary Guarantors . The Parent will cause each Domestic Subsidiary other than the Company that, on or after the date of the Closing, is or becomes a borrower or guarantor of Indebtedness in respect of any Material Credit Facility, on the date of the Closing or within 10 Business Days of its thereafter becoming a co-obligor, borrower or a guarantor of Indebtedness in respect of any Material Credit Facility, to execute and deliver or become a party to the Subsidiary Guaranty, and shall deliver to each holder of Notes:

(i) an executed counterpart of the Subsidiary Guaranty, or, if the Subsidiary Guaranty has been previously executed and delivered, an executed counterpart of a Joinder thereto;

(ii) copies of such directors’ or other authorizing resolutions, charter, bylaws and other constitutive documents of such Subsidiary as the Required Holders may reasonably request; and

(iii) an opinion of counsel reasonably satisfactory to the Required Holders covering the authorization, execution, delivery, compliance with law, no conflict with other documents, no consents and enforceability of the Subsidiary Guaranty against such Subsidiary in form and substance reasonably satisfactory to the Required Holders.

(b) Release of Subsidiary Guaranto r. Each holder of a Note fully releases and discharges from the Subsidiary Guaranty each Subsidiary Guarantor, immediately and without any further act, upon such Subsidiary Guarantor being released and discharged as a co-obligor, borrower or guarantor under and in respect of each Material Credit Facility; provided that (i) no Default or Event of Default exists or will exist immediately following such release and discharge; and (ii) at the time of such release and discharge, the Company delivers to each holder of Notes a certificate of a Responsible Officer certifying (x) that such Subsidiary Guarantor has been or is being released and discharged as a co-obligor, borrower or guarantor under and in respect of each Material Credit Facility, and (y) as to the matters set forth in clause (i). Any outstanding Indebtedness of a Subsidiary Guarantor shall be deemed to have been incurred by such Subsidiary Guarantor as of the date it is released and discharged from the Subsidiary Guaranty.

(c) Release of Collateral . Each holder of Notes fully releases the interest of the holders in any collateral under the Collateral Documents upon the release of such collateral by the holders of Indebtedness under each Material Credit Facility and any other parties to the Intercreditor Agreement; provided that (i) no Default or Event of Default exists or will exist immediately following such release; (ii) if any fee or other consideration is paid or given to any holder of Indebtedness under each Material Credit Facility as consideration for such release, other than the repayment of all or a portion of such Indebtedness under such Credit Agreement, together with accrued interest thereon and other amounts with respect to such Indebtedness, each holder of a Note

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receives equivalent consideration on a pro rata basis; and (iii) at the time of such release and discharge, the Company delivers to each holder of Notes a certificate of a Responsible Officer certifying (x) that such collateral has been or is being released by the holders of Indebtedness under each Material Credit Facility and any other parties to the Intercreditor Agreement and (y) as to the matters set forth in clause (i). Each of the Parent and the Company agrees that it will not request that the Agent or the Lenders (each as defined in the Intercreditor Agreement) release the Collateral (as defined in the Intercreditor Agreement) pursuant to Sections 19 or 20(b) of the Intercreditor Agreement if the Company is not in compliance with the provisions of this Section 9.7(c)(i)-(iii).

Section 9.8. Pari Passu Ranking . (a) The Indebtedness evidenced by the Notes will, upon issuance of the Notes, and will continue to, at all times until payment in full of the Notes, rank at least pari passu in right of payment, without preference or priority, with all of the Company’s other outstanding secured and unsubordinated obligations, except for those obligations that are mandatorily afforded priority by operation of law (and not by contract).

(b) The Indebtedness of the Parent and the Subsidiary Guarantors in respect of the Parent Guaranty and the Subsidiary Guaranty will, upon the execution and delivery of thereof, and will continue to, at all times until the termination thereof, rank at least pari passu in right of payment, without preference or priority, with all of the Parent’s and the Subsidiary Guarantors’ other outstanding unsubordinated obligations, respectively, except for those obligations that are mandatorily afforded priority by operation of law (and not by contract).

S ECTION 10. N EGATIVE C OVENANTS .

From the date of this Agreement until the Closing and thereafter, each of the Parent and the Company (jointly and severally) covenant that so long as any of the Notes are outstanding:

Section 10.1. Leverage Ratio . The Parent and the Company will not permit the ratio (the “Leverage Ratio” ), determined as of the end of each of its Fiscal Quarters, of (i) Consolidated Funded Indebtedness of the Parent and its Subsidiaries to (ii) Consolidated EBITDA for the then most recently completed four Fiscal Quarters to be greater than 3.50 to 1.00; provided, however, that the maximum Leverage Ratio permitted under this Section 10.1 shall be increased, in the case of (x) one or more Qualifying Permitted Acquisitions in which the cash portion of the Purchase Price for all such Qualifying Permitted Acquisitions consummated in the trailing twelve month period is in excess of $150,000,000, to 4.00 to 1.00, and (y) unless and to the extent that clause (x) above does not apply, one or more Qualifying Permitted Acquisitions in which the cash portion of the Purchase Price for all such Qualifying Permitted Acquisitions consummated in the trailing twelve month period is in excess of $75,000,000, to 3.75 to 1.00 (any such increase pursuant to clause (x) or clause (y), a “Covenant Holiday” ), in each case, for the first four Fiscal Quarters immediately following the Qualifying Permitted Acquisition giving rise to the Covenant Holiday (inclusive of the fiscal quarter in which such Qualifying Permitted Acquisition occurs); provided, further, that (A) at the time of any Qualifying Permitted Acquisition giving rise to any proposed Covenant Holiday arising pursuant to clause (x) above, the Leverage Ratio, calculated on a pro forma basis based on the Parent’s most recent financial statements delivered pursuant to Section 7.1 and giving effect to such Qualifying Permitted Acquisition (including any incurrence of Indebtedness in connection therewith) and any Acquisition (including any incurrence of

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Indebtedness in connection therewith) and Material Disposition (including any reduction of Indebtedness in connection therewith) since the date of such financial statements as if such Qualifying Permitted Acquisition and any such Acquisition and Material Disposition (and any incurrence or reduction of Indebtedness in connection with any of the foregoing) had occurred as of the first day of the four quarter period set forth in such financial statements, shall not exceed 3.75 to 1.00, (B) the Leverage Ratio shall have been less than 3.50 to 1.00 for at least two consecutive Fiscal Quarters immediately proceeding the commencement of such proposed Covenant Holiday, and (C) the Company shall have paid the additional interest as provided in Section 1.3. The Leverage Ratio shall be calculated as of the last day of each Fiscal Quarter of the Parent based upon (a) for Consolidated Funded Indebtedness, Consolidated Funded Indebtedness as of the last day of each such Fiscal Quarter, and (b) for Consolidated EBITDA, the actual amount as of the last day of each Fiscal Quarter for the most recently ended four consecutive Fiscal Quarters.

Section 10.2. Minimum Consolidated Net Worth . The Parent and the Company will not, at any time, permit Consolidated Net Worth to be less than (i) $550,000,000 minus (ii) write-downs of goodwill and intangibles, non-cash pension adjustments, and dividends or repurchases or redemptions of its Capital Stock, all to the extent deducted from Consolidated Net Worth on or after January 1, 2013, plus (iii) 50% of Consolidated Net Income (if positive) earned in each Fiscal Quarter beginning with the Fiscal Quarter ending March 31, 2013, plus (iv) 50% of the net cash proceeds resulting from issuances of the Parent’s or any Subsidiary’s Capital Stock from and after July 8, 2013.

Section 10.3. Priority Debt . The Parent will not at any time permit Priority Debt to exceed 15% of Consolidated Total Assets as of the end of the most recently completed Fiscal Quarter.

Section 10.4. Liens . The Parent and Company will not, and the Parent will not permit any Subsidiary to, create, incur or suffer to exist any Lien on its properties or assets, including capital stock, whether now owned or hereafter acquired, except:

(a) Liens under the Collateral Documents;

(b) Liens for taxes, assessments or governmental charges or levies not then due and delinquent or the nonpayment of which is permitted by Section 9.4;

(c) Liens imposed by law, such as landlords’, wage earners’, carriers’, warehousemen’s and mechanics’ liens and other similar liens arising in the ordinary course of business which secure payment of obligations not more than 45 days past due or which are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books;

(d) Liens (i) arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation and (ii) arising pursuant to healthcare benefit programs in the ordinary course of business; provided that the aggregate amount of deposits encumbered by Liens permitted under this Section 10.4(d)(ii) shall not exceed $3,000,000 at any time;

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(e) Liens existing as of the Closing of the sale of the Notes and reflected on Schedule 10.4;

(f) Deposits securing liability to insurance carriers under insurance or self-insurance arrangements;

(g) Deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, utility contracts, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(h) Easements, reservations, rights-of-way, restrictions, survey exceptions and other similar encumbrances and minor title imperfections as to real property of the Parent, the Company and the Subsidiaries which, in the aggregate, are not Material in amount and that do not materially interfere with the ordinary conduct of the business of the Parent, the Company or such Subsidiary conducted at the property subject thereto;

(i) Liens arising by reason of any judgment, decree or order of any court or other governmental authority, but only to the extent and for an amount and for a period not resulting in an Event of Default under Section 11(i);

(j) Liens arising in connection with a Receivables Purchase Facility;

(k) Liens existing on any specific fixed asset of any Subsidiary of the Company at the time such Subsidiary becomes a Subsidiary and not created in contemplation of such event;

(l) Liens on any specific fixed asset securing Indebtedness incurred or assumed for the purpose of financing or refinancing all or any part of the cost of acquiring or constructing such asset; provided that such Lien attaches to such asset concurrently with or within six (6) months after the acquisition or completion or construction thereof;

(m) Liens existing on any specific fixed asset of any Subsidiary of the Company at the time such Subsidiary is merged or consolidated with or into the Company or any other Subsidiary and not created in contemplation of such event;

(n) Liens existing on any specific fixed asset prior to the acquisition thereof by the Company or any Subsidiary and not created in contemplation thereof; provided that such Liens do not encumber any other property or assets, other than improvements thereon and proceeds thereof;

(o) Liens arising out of the refinancing, extension, renewal or refunding of any Indebtedness secured by any Lien permitted under paragraphs (e) and (k) through (n) of this Section 10.4; provided that (i) such Indebtedness is not secured by any additional assets, other than improvements thereon and proceeds thereof, and (ii) the amount of such Indebtedness secured by any such Lien is not increased;

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(p) Liens securing Permitted Purchase Money Indebtedness; provided that such Liens shall not apply to any property of the Parent, the Company or any Subsidiary other than that purchased with the proceeds of such Permitted Purchase Money Indebtedness other than improvements thereon and proceeds thereof;

(q) Liens in respect of Capital Lease Obligations and Liens arising under any equipment, furniture or fixtures leases or property consignments to the Parent, the Company or any Subsidiary for which the filing of a precautionary financing statement is permitted under the Collateral Documents;

(r) Licenses, leases or subleases granted to others in the ordinary course of business that do not materially interfere with the conduct of the business of the Parent, the Company and the Subsidiaries taken as a whole;

(s) Statutory and contractual landlords’ Liens under leases to which the Parent, the Company or any Subsidiary is a party;

(t) Liens in favor of a banking institution or securities intermediary arising as a matter of applicable law or customary contractual rights encumbering deposits (including the right of set-off) or financial assets held by such banking institutions or securities intermediaries incurred in the ordinary course of business and which are within the general parameters customary in the banking industry or securities industry or customary Liens in favor of providers of credit card processing services that arise by contract in the ordinary course of business;

(u) Liens in favor of customs and revenue authorities arising as a matter of applicable law to secure the payment of customs’ duties in connection with the importation of goods;

(v) Any interest or title of a lessor, sublessor, licensee or licensor under any lease or license agreement not prohibited by this Agreement;

(w) Liens encumbering cash deposits in an amount not to exceed the greater of (i) $30,000,000 or (ii) 2% of Consolidated Total Assets to secure Permitted Customer Financing Guarantees;

(x) Liens on shares of the Parent’s Capital Stock that have been repurchased by the Parent and held in treasury;

(y) Liens securing Indebtedness permitted under Section 10.5(a);

(z) Liens securing Indebtedness not otherwise permitted by paragraphs (a) through (y) of this Section 10.4, provided that the Notes (and any guaranty delivered in connection therewith) shall concurrently be secured equally and ratably with such Indebtedness pursuant to documentation reasonably acceptable to the Required Holders in substance and in form, including, without limitation, an intercreditor agreement and opinions of counsel to the Parent, the Company and/or any such Subsidiary, as the case may be, from counsel that is reasonably acceptable to the Required Holders; and

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(aa) Liens securing Indebtedness not otherwise permitted by paragraphs (a) through (z) of this Section 10.4, provided that Priority Debt does not when incurred exceed 15% of Consolidated Total Assets as of the end of the most recently completed Fiscal Quarter, provided, further, that notwithstanding the foregoing, neither the Parent nor the Company shall, and shall not permit any of its Subsidiaries to, secure pursuant to this Section 10.4(aa) any Indebtedness outstanding under or pursuant to any Material Credit Facility unless and until the Notes (and any guaranty delivered in connection therewith) shall concurrently be secured equally and ratably with such Indebtedness pursuant to documentation reasonably acceptable to the Required Holders in substance and in form, including, without limitation, an intercreditor agreement and opinions of counsel to the Parent, the Company and/or any such Subsidiary, as the case may be, from counsel that is reasonably acceptable to the Required Holders.

The holders hereby agree that if any documentation is required to be delivered pursuant to Section 10.4(z) or Section 10.4(aa), so long as no Default or Event of Default exists, documentation in substance and in form the same as the intercreditor agreement and Collateral Agreements in existence on the date of this Agreement and the opinions delivered in connection with this Agreement and the Collateral Agreements will be sufficient to satisfy the requirements of Section 10.4 (z) and Section 10.4(aa).

Section 10.5. Subsidiary Indebtedness. The Parent will not at any time permit any Subsidiary, other than the Company or an SPV, to, directly or indirectly, create, incur, assume, guarantee, have outstanding, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness other than:

(a) Indebtedness of a Subsidiary that is a Guarantor of the Notes under the Subsidiary Guaranty;

(b) Indebtedness of a Subsidiary outstanding on the date of the Closing that is listed and described in Schedule 10.5 and any extension, refinancing, renewal or refunding thereof; provided that there is no increase in the principal amount of such Indebtedness (plus accrued interest and any applicable premium and associated fees and expenses);

(d) Indebtedness of a Person outstanding at the time such Person becomes a Subsidiary, provided that (i) such Indebtedness shall not have been incurred in contemplation of such Person becoming a Subsidiary and (ii) immediately after such Person becomes a Subsidiary, no Default or Event of Default shall exist, and any extension, refinancing, renewal or refunding thereof; provided that there is no increase in the principal amount of such Indebtedness (plus accrued interest and any applicable premium and associated fees and expenses);

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(e) Indebtedness arising under Rate Management Transactions;

(f) Amounts owing under Receivables Purchase Facilities; and

(g) Indebtedness of a Subsidiary not otherwise permitted by paragraphs (a) through (f) of this Section 10.5, provided that immediately before and after giving effect thereto and to the application of the proceeds thereof and the concurrent retirement of any other Indebtedness,

(i) no Default or Event of Default exists, and

(ii) Priority Debt does not exceed 15% of Consolidated Total Assets as of the end of the most recently completed Fiscal Quarter.

Section 10.6. Mergers, Consolidations, Etc . The Parent and the Company will not consolidate with or merge with any other Person or convey, transfer, sell or lease all or substantially all of its assets in a single transaction or series of transactions to any Person except that:

(a) the Company may consolidate or merge with the Parent or convey, transfer, sell or lease all or substantially all of its assets in a single transaction or series of transactions to the Parent, provided that the Parent is the successor or survivor;

(b) each of the Parent and the Company may consolidate or merge with any other Person or convey, transfer, sell or lease all or substantially all of its assets in a single transaction or series of transactions to any Person, provided that

(i) the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer, sale or lease all or substantially all of the assets of the Parent or the Company as an entirety, as the case may be, is a solvent corporation or limited liability company organized and existing under the laws of the United States or any state thereof (including the District of Columbia), and, if the Parent or the Company is not such successor or survivor, such corporation or limited liability company (1) shall have executed and delivered to each holder of any Notes its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement and, in the case of the Parent, the Parent Guaranty and, in the case of the Company, the Notes, and (2) shall have caused to be delivered to each holder of any Notes an opinion of nationally recognized counsel or other counsel reasonably satisfactory to the Required Holders, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof;

(ii) each Subsidiary Guarantor under any Subsidiary Guaranty that is outstanding at the time such transaction or each transaction in such a series of transactions occurs reaffirms, at such time, its obligations under such Subsidiary Guaranty in writing, in the form attached hereto as Schedule 10.6; and

(iii) after giving effect to such transaction, no Default or Event of Default shall exist.

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No such conveyance, transfer, sale or lease of all or substantially all of the assets of the Parent or the Company shall have the effect of releasing the Parent or the Company or any successor corporation or limited liability company that shall theretofore have become such in the manner prescribed in this Section 10.6 from its liability under this Agreement, the Collateral Documents, the Parent Guaranty, in the case of the Parent, or the Notes, in the case of the Company.

Section 10.7. Sale of Assets. Except as permitted by Section 10.6, the Parent will not, and will not permit any Subsidiary to, sell, lease, transfer or otherwise dispose of, including by way of merger (collectively a “ Disposition ”), any assets, in one or a series of transactions, to any Person, other than:

(a) Dispositions in the ordinary course of business;

(b) Dispositions by a Subsidiary to the Parent or a Wholly Owned Subsidiary or by the Parent to a Wholly Owned Subsidiary;

(d) Dispositions of cash equivalent investments;

(e) Dispositions not otherwise permitted by paragraphs (a) through (d) of this Section 10.7 provided that:

(i) in the good faith opinion of the Parent, the Disposition is in exchange for consideration having a fair market value at least equal to that of the property exchanged and is in the best interest of the Parent or such Subsidiary;

(ii) immediately after giving effect to the Disposition, no Default or Event of Default shall exist; and

(iii) immediately after giving effect to the Disposition, the aggregate net book value of all assets that were the subject of any Disposition pursuant to this paragraph (e) occurring in the then current Fiscal Year would not exceed 15% of Consolidated Total Assets as of the last day of the most recently ended Fiscal Year of the Parent.

Notwithstanding the foregoing, the Parent may, or may permit a Subsidiary to, make a Disposition and the assets subject to such Disposition shall not be subject to or included in the foregoing limitation and computation contained in paragraph (e)(iii) of the preceding sentence if, within 365 days of such Disposition, an amount equal to the net proceeds from such Disposition is:

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

(A) reinvested in assets used or useful in the existing business of the Parent or a Subsidiary; or

(B) the net proceeds from such Disposition are applied to the payment or prepayment of Senior Indebtedness of the Parent and/or its Subsidiaries (other than intercompany Indebtedness or Indebtedness in respect of any revolving credit or similar credit facility providing the Company or any Subsidiary with the right to obtain loans or other extensions of credit from time to time, except to the extent that in connection with such payment of Indebtedness the availability of credit under such credit facility is reduced by an amount not less than the amount of such proceeds applied to the payment of such Indebtedness), provided that the Company shall offer to prepay each outstanding Note in a principal amount which equals the Ratable Portion for such Note.

For purposes of foregoing clause (B), the Company shall offer to prepay (on a Business Day not less than 30 or more than 60 days following such offer) the Notes (in a principal amount which equals the Ratable Portion for such Note as provided above) at a price of 100% of the principal amount of the Notes to be prepaid (without any Make-Whole Amount) together with interest accrued to but excluding the date of prepayment; provided that if any holder of the Notes declines or rejects such offer, the proceeds that would have been paid to such holder shall be offered pro rata to the other holders of the Notes that have accepted the offer. A failure by a holder of Notes to respond in writing not later than 10 Business Days prior to the proposed prepayment date to an offer to prepay made pursuant to this Section 10.7 shall be deemed to constitute a rejection of such offer by such holder. Solely for the purposes of foregoing clause (B), whether or not such offers are accepted by the holders, the entire principal amount of the Notes subject to such offer to prepay shall be deemed to have been prepaid.

Section 10.8. Restriction on Dividends and Other Distributions . The Parent and the Company will not, nor will they permit any Subsidiary to, declare or pay any dividend or make any distribution on its Capital Stock (other than dividends payable in its own Capital Stock) or redeem, repurchase or otherwise acquire or retire any of its Capital Stock at any time outstanding, except that (i) any Subsidiary of the Company may declare and pay dividends and make distributions to the Company or to any other Subsidiary of the Company, (ii) any Subsidiary of the Company which is not a Wholly Owned Subsidiary may pay dividends to its shareholders generally so long as the Company or its respective Subsidiary which owns the equity interest or interests in the Subsidiary paying such dividends receives at least its proportionate share thereof, (iii) the Company may declare and pay dividends and make distributions to the Parent to enable the Parent to, and the Parent may, (a) pay any income, franchise or like taxes, (b) pay its operating expenses (including, without limitation, legal, accounting, reporting, listing and similar expenses) in an aggregate amount not exceeding $10,000,000 in any Fiscal Year (excluding in any event non-cash charges related to employee compensation or compensation to non-executive members of the Parent’s board of directors) and (c) so long as no Default or Event of Default shall be continuing or result therefrom, repurchase its common stock and warrants and/or redeem or repurchase vested management options, in each case, from directors, officers and employees of the Parent and its Subsidiaries, and (iv) so long as no Default or Event of Default shall be continuing or result therefrom, the Company may make distributions to the Parent and the Parent may redeem, repurchase, acquire or retire an amount of its Capital Stock or warrants or options therefor, or

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declare and pay any dividend or make any distribution on its Capital Stock (all such actions under this clause (iv) collectively, “Distributions” ) if, at the time of making such Distribution, the Leverage Ratio (calculated on a pro forma basis based on the Parent’s most recent financial statements delivered pursuant to Section 7.1 and giving effect to such Distribution and any Indebtedness incurred in connection therewith and any Acquisition (including any incurrence of Indebtedness in connection therewith) and Material Disposition (including any reduction of Indebtedness in connection therewith) since the date of such financial statements, as if such Distribution and any such Acquisition and Material Disposition (and any incurrence or reduction of Indebtedness in connection with any of the foregoing) had occurred as of the first day of the four Fiscal Quarter period set forth in such financial statements) is (a) less than to 3.00 to 1.00, on an unlimited basis, and (b) greater than or equal to 3.00 to 1.00, in an amount not greater than the Maximum Payment Amount.

Notwithstanding the foregoing, (i) if at any time the restriction on dividends covenant in the Credit Agreement is amended, replaced or removed, this Section 10.8 shall automatically be amended, replaced or removed so that it shall be identical to the Credit Agreement and (ii) if the Credit Agreement is terminated and not replaced by a successor Credit Agreement, this Section 10.8 shall terminate and be of no further force or effect.

Section 10.9. Nature of Business. The Parent will not, and will not permit any Subsidiary to, engage in any business if, as a result, the Parent and its Subsidiaries, taken as a whole, would cease to be engaged primarily in the Distribution Business.

Section 10.10. Transactions with Affiliates. The Parent will not, and will not permit any Subsidiary to, enter into directly or indirectly any Material transaction or Material group of related transactions (including the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate (other than the Parent or another Subsidiary), except in the ordinary course and pursuant to the reasonable requirements of the Parent’s or such Subsidiary’s business and upon fair and reasonable terms no less favorable to the Parent or such Subsidiary than would be obtainable in a comparable arm’s-length transaction with a Person not an Affiliate.

Section 10.11. Terrorism Sanctions Regulations . The Parent will and will cause each Subsidiary to comply with all sanctions, prohibitions or requirements imposed by any executive order or by any sanctions program administered by the U.S. Department of the Treasury Office of Foreign Assets Control applicable to such Person, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

S ECTION 11. E VENTS OF D EFAULT .

An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:

(a) the Company defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or

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(b) the Company defaults in the payment of any interest on any Note for more than five Business Days after the same becomes due and payable; or

(c) the Parent or the Company defaults in the performance of or compliance with any term contained in Section 7.1(d) or Section 10.1 through 10.7; or

(d) the Parent, the Company or any Subsidiary Guarantor defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) and (c) of this Section 11) or contained in any Financing Document and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Parent, the Company or any Subsidiary Guarantor receiving written notice of such default from any holder of a Note (any such written notice to be identified as a “notice of default” and to refer specifically to this paragraph (d) of Section 11); or

(e) any representation or warranty made in writing furnished pursuant to this Agreement by or on behalf of the Parent or the Company or by any officer of the Parent or the Company in this Agreement or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made, or (ii) any representation or warranty made in writing by or on behalf of any Subsidiary Guarantor or by any officer of such Subsidiary Guarantor in any Subsidiary Guaranty or any writing furnished in connection with such Subsidiary Guaranty proves to have been false or incorrect in any material respect on the date as of which made; or

(f) (i) the Parent or any Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount, or interest on any Indebtedness that is outstanding in an aggregate principal amount of at least $25,000,000 beyond any period of grace provided with respect thereto, or (ii) the Parent or any Subsidiary is in default in the performance of or compliance with any term of any evidence of any Indebtedness that is outstanding in an aggregate principal amount of at least $25,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Indebtedness has become, or has been declared (or one or more Persons are entitled to declare such Indebtedness to be), due and payable before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Indebtedness to convert such Indebtedness into equity interests), (x) the Parent or any Subsidiary has become obligated to purchase or repay Indebtedness before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least $25,000,000, or (y) one or more Persons have the right to require the Parent or any Subsidiary so to purchase or repay such Indebtedness; or

(g) the Parent, the Company, any Guarantor or any Significant Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or

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reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or

(h) a court or Governmental Authority of competent jurisdiction enters an order appointing, without consent by the Parent, the Company, any Guarantor or any Significant Subsidiary, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of the Company’s property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Parent, the Company, any Guarantor or any Significant Subsidiary, or any such petition shall be filed against the Parent, the Company, any Guarantor or any Significant Subsidiary and such petition shall not be dismissed within 60 days; or

(i) a final judgment or judgments for the payment of money aggregating in excess of $25,000,000 are rendered against one or more of the Parent, the Company, any Guarantor or any Significant Subsidiary, which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; or

(j) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan, other than a standard termination under Section 4041(b) of ERISA, shall have been filed with the PBGC, or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Parent or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the Parent or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (iv) the Parent or any ERISA Affiliate withdraws from any Multiemployer Plan, or (v) the Parent or any Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Parent or any Subsidiary thereunder; and any such event or events described in clauses (i) through (v) above, either individually or together with any other such event or events, would reasonably be expected to have a Material Adverse Effect; or

(k) the Parent Guaranty ceases to be in full force and effect or is declared to be null and void in whole or in material part by a court or other governmental or regulatory authority having jurisdiction or the validity or enforceability thereof shall be contested by the Parent or it renounces any of the same or denies that it has any or further liability thereunder; or

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(l) the Subsidiary Guaranty ceases to be in full force and effect (except in accordance with the provisions of Section 9.7(b)) or is declared to be null and void in whole or in material part by a court or other governmental or regulatory authority having jurisdiction or the validity or enforceability thereof shall be contested by any Person or any of them renounces any of the same or denies that it has any or further liability thereunder; or

(m) any of the Collateral Documents at any time for any reason ceases to be in full force and effect (except in accordance with the provisions of Section 9.7(c)) or shall be declared null and void in whole or in material part by a court or other governmental or regulatory authority having jurisdiction or the validity or enforceability thereof shall be contested by the Parent or any Subsidiary or any of them shall renounce any of the same or deny that it has any or further liability thereunder

As used in Section 11(j), the terms “employee benefit plan” and “employee welfare benefit plan” shall have the respective meanings assigned to such terms in section 3 of ERISA.

S ECTION 12. R EMEDIES ON D EFAULT , E TC .

Section 12.1. Acceleration . (a) If an Event of Default with respect to the Parent or the Company described in paragraph (g) or (h) of Section 11 (other than an Event of Default described in clause (i) of paragraph (g) or described in clause (vi) of paragraph (g) by virtue of the fact that such clause encompasses clause (i) of paragraph (g)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable.

(b) If any other Event of Default has occurred and is continuing, the Required Holders may at any time at its or their option, by notice or notices to the Company, declare all the Notes then outstanding to be immediately due and payable.

(c) If any Event of Default described in paragraph (a) or (b) of Section 11 has occurred and is continuing, any holder or holders of Notes at the time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Company, declare all the Notes held by it or them to be immediately due and payable.

Upon any Notes becoming due and payable under this Section 12.1, whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest thereon (including, but not limited to, interest accrued thereon at the Default Rate, to the extent permitted by applicable law), and (y) any applicable Make-Whole Amount determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived. The Company acknowledges, and the parties hereto agree, that each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Company (except as herein specifically provided for) and that the provision for payment of a Make-Whole Amount by the Company, if any, in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

Section 12.2. Other Remedies . If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under Section 12.1, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein, in any Note or in any other Financing Document, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.

Section 12.3. Rescission . At any time after any Notes have been declared due and payable pursuant to clause (b) or (c) of Section 12.1, the holder or holders of at least 51% in principal amount of the Notes then outstanding, by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and any applicable Make-Whole Amount on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and any Make-Whole Amount and (to the extent permitted by applicable law) any overdue interest in respect of the Notes, at the Default Rate, (b) neither the Company nor any other Person shall have paid any amounts that have become due solely by reason of such declaration, (c) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 17, and (d) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this Section 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon.

Section 12.4. No Waivers or Election of Remedies, Expenses, Etc . No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note or by any other Financing Document upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Company under Section 15, the Company will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement or collection under this Section 12, including reasonable attorneys’ fees, expenses and disbursements.

S ECTION 13. R EGISTRATION ; E XCHANGE ; S UBSTITUTION OF N OTES .

Section 13.1. Registration of Notes . The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. If any holder of one or more Notes is a nominee, then (a) the name and address of the beneficial owner of such Note or Notes shall also be

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

registered in such register as an owner and holder thereof and (b) at any such beneficial owner’s option, either such beneficial owner or its nominee may execute any amendment, waiver or consent pursuant to this Agreement. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Note that is an Institutional Investor, promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes.

Section 13.2. Transfer and Exchange of Notes . Upon surrender of any Note to the Company at the address and to the attention of the designated officer (all as specified in Section 18(iii)), for registration of transfer or exchange (and in the case of a surrender for registration of transfer accompanied by a written instrument of transfer duly executed by the registered holder of such Note or such holder’s attorney duly authorized in writing and accompanied by the relevant name, address and other information for notices of each transferee of such Note or part thereof), the Company shall execute and deliver within 10 Business Days, at the Company’s expense (except as provided below), one or more new Notes (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Exhibit 1.1. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than $500,000, provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than $500,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representations set forth in Sections 6.1, 6.2 and 6.3.

Section 13.3. Replacement of Notes. Upon receipt by the Company at the address and to the attention of the designated officer (all as specified in Section 18(iii)) of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and

(a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it ( provided that if the holder of such Note is, or is a nominee for, an original Purchaser or another holder of a Note with a minimum net worth of at least $50,000,000 or a Qualified Institutional Buyer, such Person’s own unsecured agreement of indemnity shall be deemed to be satisfactory), or

(b) in the case of mutilation, upon surrender and cancellation thereof,

the Company at its own expense shall execute and deliver within 10 Business Days, in lieu thereof, a new Note, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

S ECTION 14. P AYMENTS ON N OTES .

Section 14.1. Place of Payment . Subject to Section 14.2, payments of principal, Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in New York, New York at the principal office of Bank of America, N.A. in such jurisdiction. The Company may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Company in such jurisdiction or the principal office of a bank or trust company in such jurisdiction.

Section 14.2. Home Office Payment . So long as any Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything contained in Section 14.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, interest and all other amounts becoming due hereunder by the method and at the address specified for such purpose below such Purchaser’s name in Schedule A, or by such other method or at such other address as such Purchaser shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to Section 14.1. Prior to any sale or other disposition of any Note held by a Purchaser or its nominee, such Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes pursuant to Section 13.2. The Company will afford the benefits of this Section 14.2 to any Institutional Investor that is the direct or indirect transferee of any Note purchased by a Purchaser under this Agreement and that has made the same agreement relating to such Note as the Purchasers have made in this Section 14.2.

S ECTION 15. E XPENSES , E TC .

Section 15.1. Transaction Expenses . Whether or not the transactions contemplated hereby are consummated, the Parent or the Company will pay all reasonable and properly documented out-of-pocket costs and expenses (including reasonable and properly documented attorneys’ fees of one special counsel) incurred by each Purchaser or holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of any Financing Document (whether or not such amendment, waiver or consent becomes effective), including, without limitation: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under any Financing Document or in responding to any subpoena or other legal process or informal investigative demand issued in connection with any Financing Document, or by reason of being a holder of any Note, (b) the costs and expenses, including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the Parent or any Subsidiary or in connection with any work-out or restructuring of

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

the transactions contemplated hereby, by the Notes, by the Parent Guaranty, the Subsidiary Guaranty, the Intercreditor Agreement and the Collateral Documents and (c) the costs and expenses, not in excess of $3,000, incurred in connection with the initial filing of this Agreement and all related documents and financial information with the SVO. The Company will pay, and will save each Purchaser or holder of a Note harmless from, all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than those, if any, retained by a Purchaser or other holder in connection with its purchase of the Notes).

Section 15.2. Survival . The obligations of the Company under this Section 15 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement, the Parent Guarantor, the Subsidiary Guaranty or the Notes, and the termination of this Agreement.

S ECTION 16. S URVIVAL OF R EPRESENTATIONS AND W ARRANTIES ; E NTIRE A GREEMENT .

All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by any Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of any Purchaser or any other holder of a Note; provided, however that all representations and warranties contained herein shall expire upon the indefeasible payment in full of all amounts due in connection with this Agreement. All statements contained in any certificate or other instrument delivered by or on behalf of the Parent or the Company pursuant to this Agreement shall be deemed representations and warranties of the Parent and the Company under this Agreement. Subject to the preceding sentence, this Agreement, the Notes, the Parent Guaranty, the Subsidiary Guaranty and the Collateral Documents embody the entire agreement and understanding between each Purchaser and the Parent and the Company and supersede all prior agreements and understandings relating to the subject matter hereof.

S ECTION 17. A MENDMENT AND W AIVER .

Section 17.1. Requirements . This Agreement, the Notes, the Parent Guaranty and the Subsidiary Guaranty may be amended, and the observance of any term hereof or thereof may be waived (either retroactively or prospectively), with (and only with) the written consent of the Company and the Required Holders, except that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used therein), will be effective as to any Purchaser unless consented to by such Purchaser in writing, and (b) no such amendment or waiver may, without the written consent of each Purchaser and each holder of each Note at the time outstanding affected thereby, (i) subject to the provisions of Section 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of interest or of the Make-Whole Amount on the Notes, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver or the principal amount of the Notes that the Purchasers are to purchase pursuant to Section 2 upon satisfaction of the conditions to the Closing that appear in Section 4, or (iii) amend any of Section 8 ( except as set forth in the second sentence of Section 8.2 ) , 11(a), 11(b), 12, 17 or 20. The Collateral Documents may be amended, and the observance of any term thereof may be waived (either retroactively or prospectively) in accordance with the provisions of such Collateral Documents or the Intercreditor Agreement, as applicable.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

Section 17.2 Solicitation of Holders of Notes .

(a) Solicitation . The Parent and the Company will provide each Purchaser and each holder of the Notes (irrespective of the amount of Notes then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such Purchaser and holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes. The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 17 to each Purchaser and each holder of outstanding Notes promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite Purchasers or holders of Notes.

(b) Payment . The Parent and the Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security, to any Purchaser or holder of Notes as consideration for or as an inducement to the entering into by any Purchaser or holder of Notes of any waiver or amendment of any of the terms and provisions hereof or any Financing Document unless such remuneration is concurrently paid, or security is concurrently granted, on the same terms, ratably to each Purchaser and each holder of Notes then outstanding that also enters into any waiver or amendment of any of the terms and provisions hereto. If any such remuneration is paid to any Purchaser or any holder of Notes that for any reason does not enter into any waiver or amendment of any of the terms and provisions hereof, such remuneration shall also be paid to all other non-consenting Purchasers and holders.

(c) Consent in Contemplation of Transfer . Any consent made pursuant to this Section 17 by a holder of Notes that has transferred or has agreed to transfer its Notes to either the Parent, the Company or any Subsidiary or any Affiliate of the Parent and has provided or has agreed to provide such written consent as a condition to such transfer shall be void and of no force or effect except solely as to such holder, and any amendments effected or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent (and the consents of all other holders of Notes that were acquired under the same or similar conditions) shall be void and of no force or effect except solely as to such holder.

Section 17.3. Binding Effect, Etc. Any amendment or waiver consented to as provided in this Section 17 applies equally to all Purchasers and holders of Notes and is binding upon them and upon each future holder of any Note and upon the Parent and the Company without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between the Parent or the Company and any Purchaser or holder of any Note nor any delay in exercising any rights hereunder or under any Note or any other Financing Document shall operate as a waiver of any rights of any Purchaser or holder of such Note. As used herein, the term “this Agreement” or “the Agreement” and references thereto shall mean this Note Purchase Agreement as it may from time to time be amended or supplemented.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

Section 17.4. Notes Held by Company, Etc . Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement, the Notes or any other Financing Document, or have directed the taking of any action provided herein or in the Notes or any other Financing Document to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding.

S ECTION 18. N OTICES .

All notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid). Any such notice must be sent:

(i) if to any Purchaser or its nominee, to such Purchaser or nominee at the address specified for such communications in Schedule A, or at such other address as you or it shall have specified to the Company in writing,

(ii) if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, or

(iii) if to the Company, the Parent or any Subsidiary Guarantor, to the Company at its address set forth at the beginning hereof to the attention of the Treasurer, with a copy to the General Counsel, or at such other address as the Company shall have specified to the holder of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

S ECTION 19. R EPRODUCTION OF D OCUMENTS .

This Agreement and all documents relating hereto, including (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by any Purchaser at the Closing (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to such Purchaser, may be reproduced by such Purchaser by any photographic, photostatic, electronic, digital or other similar process and such Purchaser may destroy any original document so reproduced. The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by any Purchaser in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 19 shall not prohibit the Company or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

S ECTION 20. C ONFIDENTIAL I NFORMATION .

For the purposes of this Section 20, “Confidential Information” means information delivered to any Purchaser by or on behalf of the Parent or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by such Purchaser as being confidential information of the Parent or such Subsidiary, provided that such term does not include information that (a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Purchaser or any Person acting on such Purchaser’s behalf, (c) otherwise becomes known to such Purchaser other than through disclosure by or on behalf of the Parent or any Subsidiary, or (d) constitutes financial statements delivered to such Purchaser under Section 7.1 that are otherwise publicly available. Each Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Purchaser in good faith to protect confidential information of third parties delivered to such Purchaser, provided that such Purchaser may deliver or disclose Confidential Information to (i) its directors, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by its Notes), (ii) its financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor to which such Purchaser sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (v) any Person from which such Purchaser offers to purchase any security of the Parent or the Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (vi) any federal or state regulatory authority having jurisdiction over such Purchaser, (vii) the NAIC or the SVO or, in each case, any similar organization, or any nationally recognized rating agency that requires access to information about such Purchaser’s investment portfolio or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to such Purchaser, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which such Purchaser are a party or (z) if an Event of Default has occurred and is continuing, to the extent such Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such Purchaser’s Notes and this Agreement or any other Financing Document. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 20 as though it were a party to this Agreement. On reasonable request by the Company in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Company embodying the provisions of this Section 20.

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

In the event that as a condition to receiving access to information relating to the Parent or its Subsidiaries in connection with the transactions contemplated by or otherwise pursuant to this Agreement, any Purchaser or holder of a Note is required to agree to a confidentiality undertaking (whether through IntraLinks, another secure website, a secure virtual workspace or otherwise) which is different from this Section 20, this Section 20 shall not be amended thereby and, as between such Purchaser or such holder and the Parent and the Company, this Section 20 shall supersede any such other confidentiality undertaking.

S ECTION 21. S UBSTITUTION OF P URCHASER .

Each Purchaser shall have the right to substitute any one of its Affiliates or another Purchaser or any one of such other Purchaser’s Affiliates (a “Substitute Purchaser” ) as the purchaser of the Notes that it has agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both such Purchaser and such Substitute Purchaser, shall contain such Substitute Purchaser’s agreement to be bound by this Agreement, the Collateral Documents and the Intercreditor Agreement and shall contain a confirmation by such Substitute Purchaser of the accuracy with respect to it of the representations set forth in Section 6. Upon receipt of such notice, any reference to such Purchaser in this Agreement (other than in this Section 21), shall be deemed to refer to such Substitute Purchaser in lieu of such original Purchaser. In the event that such Substitute Purchaser is so substituted as a Purchaser hereunder and such Substitute Purchaser thereafter transfers to such original Purchaser all of the Notes then held by such Substitute Purchaser, upon receipt by the Company of notice of such transfer, any reference to such Substitute Purchaser as a “Purchaser” in this Agreement (other than in this Section 21), shall no longer be deemed to refer to such Substitute Purchaser, but shall refer to such original Purchaser, and such original Purchaser shall again have all the rights of an original holder of the Notes under this Agreement.

S ECTION 22. M ISCELLANEOUS .

Section 22.1. Successors and Assigns. All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including any subsequent holder of a Note) whether so expressed or not.

Section 22.2. Accounting Terms . All accounting terms used herein which are not expressly defined in this Agreement have the meanings respectively given to them in accordance with GAAP. Except as otherwise specifically provided herein, (i) all computations made pursuant to this Agreement shall be made in accordance with GAAP, and (ii) all financial statements shall be prepared in accordance with GAAP. For purposes of determining compliance with this Agreement (including, without limitation, Section 9, Section 10 and the definition of “Indebtedness” ), any election by the Company to measure any financial liability using fair value (as permitted by Financial Accounting Standards Board Accounting Standards Codification Topic No. 825-10-25 – Fair Value Option , International Accounting Standard 39 – Financial Instruments: Recognition and Measurement or any similar accounting standard) shall be disregarded and such determination shall be made as if such election had not been made. Notwithstanding any other provision of this Agreement to the contrary, the determination of whether a lease constitutes a capital lease or an

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

operating lease, and whether obligations arising under a lease are required to be capitalized on the balance sheet of the lessee thereunder and/or recognized as interest expense, shall be determined by reference to GAAP as in effect on the date of this Agreement.

Section 22.3. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the fullest extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.

Section 22.4. Construction. Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.

For the avoidance of doubt, all Schedules and Exhibits attached to this Agreement shall be deemed to be a part hereof.

Section 22.5. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.

Section 22.6. Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the state of New York excluding choice of law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state.

Section 22.7. Jurisdiction and Process; Waiver of Jury Trial . (a) Each of the Parent and the Company irrevocably submits to the non-exclusive jurisdiction of any New York state or federal court sitting in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising out of or relating to this Agreement, the Parent Guaranty, the Subsidiary Guaranty or the Notes. To the fullest extent permitted by applicable law, each of the Parent and the Company irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

(b) Each of the Parent and the Company consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding of the nature referred to in Section 22.7(a) by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested, to it at its address specified in Section 18 or at such other address of which such holder shall then have been notified pursuant to said Section. Each of the

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

Parent and the Company agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.

(c) Nothing in this Section 22.7 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

(d) T HE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS A GREEMENT , THE N OTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH .

Section 22.8. Holders of Notes to be Bound by Intercreditor Agreement. Each holder of a Note, other than holders of the Notes that are direct parties to the Intercreditor Agreement, by its acceptance of a Note issued pursuant to this Agreement (whether pursuant to Section 13.2 or 13.3) agrees to be bound by all of terms and provisions of the Intercreditor Agreement and, upon request of the Collateral Agent, agrees to provide written confirmation of its agreement to be so bound.

I NTENTIONALLY L EFT B LANK

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

If you are in agreement with the foregoing, please sign the form of agreement on a counterpart of this Agreement and return it to the Company, whereupon this Agreement shall become a binding agreement between you, the Company and the Parent.


Very truly yours,

U NITED S TATIONERS S UPPLY C O .

By:
Name:

U NITED S TATIONERS I NC .

By:
Name:

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U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

This Agreement is accepted and

agreed to as of the date thereof.


T HE P RUDENTIAL I NSURANCE C OMPANY OF A MERICA

By:
		Vice President

P RUDENTIAL R ETIREMENT I NSURANCE AND A NNUITY C OMPANY

By: Prudential Investment Management, Inc.
		(as Investment Manager)

		By:
		Vice President

T HE P RUDENTIAL L IFE I NSURANCE C OMPANY , L TD .

By: Prudential Investment Management (Japan),
		Inc. (as Investment Manager)

By: Prudential Investment Management,
		Inc. (as Sub-Adviser)

		By:
		Vice President

- 51 -


U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

This Agreement is accepted and

agreed to as of the date thereof.


F ARMERS I NSURANCE E XCHANGE
M ID C ENTURY I NSURANCE C OMPANY
F ARMERS N EW W ORLD L IFE I NSURANCE C OMPANY
P HYSICIANS M UTUAL I NSURANCE C OMPANY

By:	Prudential Private Placement Investors,
	L.P. (as Investment Advisor)

By:	Prudential Private Placement Investors, Inc.
	(as its General Partner)

	By:
		Vice President

- 52 -


U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

This Agreement is accepted and

agreed to as of the date thereof.


M ET L IFE I NSURANCE C OMPANY OF C ONNECTICUT
by Metropolitan Life Insurance Company, its Investment Manager

M ETROPOLITAN L IFE I NSURANCE C OMPANY

By:
		Name:
		Title:

- 53 -


U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

This Agreement is accepted and

agreed to as of the date thereof.


M ASSACHUSETTS M UTUAL L IFE I NSURANCE C OMPANY

By:		Babson Capital Management LLC as Investment Adviser

By:
		Name:
		Title:

M ASS M UTUAL A SIA L IMITED

By:		Babson Capital Management LLC as Investment Adviser

By:
		Name:
		Title:

- 54 -


U NITED S TATIONERS S UPPLY C O .		Note Purchase Agreement

This Agreement is accepted and

agreed to as of the date thereof.


W OODMEN OF THE W ORLD L IFE I NSURANCE S OCIETY

By:
		Name:
		Title:

By:
		Name:
		Title:

- 55 -

I NFORMATION R ELATING TO P URCHASERS


N AME OF AND A DDRESS OF P URCHASER		P RINCIPAL A MOUNT OF N OTES TO BE P URCHASED

T HE P RUDENTIAL I NSURANCE C OMPANY OF A MERICA c/o Prudential Capital Group Two Prudential Plaza 180 N. Stetson Avenue, Suite 5600 Chicago, IL 60601 Attention: Managing Director, Corporate Finance		$9,350,000 $7,690,000

Payments

All payments on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds for credit to:

JPMorgan Chase Bank

New York, New York

ABA No.: 021-000-021

Account Name: Prudential Managed Portfolio

Account No.: P86188 (please do not include spaces) (in the case of payments on account of the Note originally issued in the principal amount of $7,690,000.00)

Account Name: The Prudential – Privest Portfolio

Account No.: P86189 (please do not include spaces) (in the case of payments on account of the Note originally issued in the principal amount of $9,350,000.00)

Each such wire transfer shall set forth the name of the Company, a reference to “3.75% Secured Senior Notes due 15 January 2021, Security No. INV11715, PPN 913008 A@7” and the due date and application (as among principal, interest and Make-Whole Amount) of the payment being made.

Notices

Address for all notices relating to payments:

The Prudential Insurance Company of America

c/o Investment Operations Group

Gateway Center Two, 10th Floor

100 Mulberry Street

Newark, NJ 07102-4007

Attention: Manager, Billings and Collections

S CHEDULE A

(to Note Purchase Agreement)

Receipt of telephonic prepayment notices:

Manager, Trade Management Group

Telephone: (973) 367-3141

Facsimile: (888) 889-3832

All other notices and communications to be addressed as first provided above.

Physical Delivery of Notes

Send physical security by nationwide overnight delivery service to:

Prudential Capital Group

Two Prudential Plaza

180 N. Stetson Avenue, Suite 5600

Chicago, IL 60601

Attention: Armando M. Gamboa

Telephone: (312) 540-4203

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 22-1211670

A-2


N AME OF AND A DDRESS OF P URCHASER		P RINCIPAL A MOUNT OF N OTES TO BE P URCHASED

T HE P RUDENTIAL L IFE I NSURANCE C OMPANY , L TD . c/o Prudential Capital Group Two Prudential Plaza 180 N. Stetson Avenue, Suite 5600 Chicago, IL 60601 Attention: Managing Director, Corporate Finance		$15,000,000

Payments

All payments on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds for credit to:

JPMorgan Chase Bank

New York, NY

ABA No.: 021-000-021

Account No.: P86291 (please do not include spaces)

All payments, other than principal, interest or Make-Whole Amount, on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds for credit to:

JPMorgan Chase Bank

New York, NY

ABA No. 021-000-021

Account No. 304199036

Account Name: Prudential International Insurance Service Co.

A-3

Notices

Address for all notices relating to payments:

The Prudential Life Insurance Company, Ltd.

2-13-10, Nagatacho

Chiyoda-ku, Tokyo 100-0014, Japan

Telephone: 81-3-5501-5190

Facsimile: 81-03-5501-5037

E-mail: osamu.egi@prudential.com

Attention: Osamu Egi, Team Leader of Financial Reporting Team

And email copy to:

Ito_Yuko@gib-life.co.jp

Maki.Ichihari@gib-life.co.jp

Kenji.Inoue@gib-life.co.jp

Address for all other communications and notices:

Prudential Private Placement Investors, L.P.

c/o Prudential Capital Group

Two Prudential Plaza

180 N. Stetson Avenue

Suite 5600

Chicago, IL 60601

Attention: Managing Director, Corporate Finance

Physical Delivery of Notes

Send physical security by nationwide overnight delivery service to:

Prudential Capital Group

Two Prudential Plaza

180 N. Stetson Avenue, Suite 5600

Chicago, IL 60601

Attention: Armando M. Gamboa

Telephone: (312) 540-4203

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 98-0433392

A-4


N AME OF AND A DDRESS OF P URCHASER		P RINCIPAL A MOUNT OF N OTES TO BE P URCHASED

P RUDENTIAL R ETIREMENT I NSURANCE AND A NNUITY C OMPANY c/o Prudential Capital Group Two Prudential Plaza 180 N. Stetson Avenue, Suite 5600 Chicago, IL 60601 Attention: Managing Director, Corporate Finance		$4,970,000 $3,350,000 $1,770,000 $1,070,000

Payments

All payments on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds for credit to:

JPMorgan Chase Bank

New York, New York

ABA No.: 021-000-021

Account Name: PRIAC—SA—New York Carpenters—Privates

Account No. P86337 (please do not include spaces) (in the case of payments on account of the Note originally issued in the principal amount of $4,970,000.00 )

Account Name: PRIAC—SA—Private Placement Fund—Priv—Privates

Account No. P86353 (please do not include spaces) (in the case of payments on account of the Note originally issued in the principal amount of $3,350,000.00 )

Account Name: PRIAC—SA—Health Care Service Corp—Privates

Account No. P86341 (please do not include spaces) (in the case of payments on account of the Note originally issued in the principal amount of $1,770,000.00 )

Account Name: PRIAC—SA—Fuji Stable Value Fund—Privates

Account No. P86355 (please do not include spaces) (in the case of payments on account of the Note originally issued in the principal amount of $1,070,000.00 )

A-5

Notices

Address for all notices relating to payments:

Prudential Retirement Insurance and Annuity Company

c/o Prudential Investment Management, Inc.

Private Placement Trade Management

PRIAC Administration

Gateway Center Four, 7th Floor

100 Mulberry Street

Newark, NJ 07102

Telephone: (973) 802-8107

Facsimile: (888) 889-3832

All other notices and communications to be addressed as first provided above.

Physical Delivery of Notes

Send physical security by nationwide overnight delivery service to:

Prudential Capital Group

Two Prudential Plaza

180 N. Stetson Avenue, Suite 5600

Chicago, IL 60601

Attention: Armando M. Gamboa

Telephone: (312) 540-4203

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 06-1050034

A-6


N AME OF AND A DDRESS OF P URCHASER		P RINCIPAL A MOUNT OF N OTES TO BE P URCHASED

F ARMERS I NSURANCE E XCHANGE c/o Prudential Capital Group Two Prudential Plaza 180 N. Stetson Avenue, Suite 5600 Chicago, IL 60601 Attention: Managing Director, Corporate Finance		$8,225,000

Payments

All payments on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds for credit to:

JPMorgan Chase Bank

ABA: 021000021

Beneficiary Account No: 9009000200

Beneficiary Account Name: JPMorgan Income

Ultimate Beneficiary: P13939 Farmers Insurance Exchange

Each such wire transfer shall set forth the name of the Company, a reference to “3.75% Secured Senior Notes due 15 January 2021, PPN 913008 A@7” and the due date and application (as among principal, interest and Make-Whole Amount) of the payment being made.

Notices

Address for all notices relating to payments:

Farmers

4680 Wilshire Blvd.

Los Angeles, CA 90010

Attention: Treasury

Treasury:

Treasury Manager

323-932-3450

usw.treasury.farmers@farmersinsurance.com

Address for all other communications and notices:

Prudential Private Placement Investors, L.P.

c/o Prudential Capital Group

Two Prudential Plaza

180 N. Stetson Avenue

Suite 5600

Chicago, IL 60601

Attention: Managing Director, Corporate Finance

A-7

Physical Delivery of Notes

Send physical security by nationwide overnight delivery service to:

Mailing Address (for overnight mail)

JPMorgan Chase Bank, N.A.

Physical Receive Department

4 Chase Metrotech Center

3rd Floor

Brooklyn, NY 11245-0001

Attention: Brian Cavanaugh, Tel. 718-242-0264

Please include in the cover letter accompanying the Notes a reference to the Purchaser’s account number (“P13939—Farmers Insurance Exchange”) and CUSIP information.

Send copy by nationwide overnight delivery service to:

Prudential Capital Group

Gateway Center 2, 10th Floor

100 Mulberry

Newark, NJ 07102

Attention: Trade Management, Manager

Telephone: (973) 367-3141

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 95-2575893

A-8


N AME OF AND A DDRESS OF P URCHASER		P RINCIPAL A MOUNT OF N OTES TO BE P URCHASED

F ARMERS N EW W ORLD L IFE I NSURANCE C OMPANY c/o Prudential Capital Group Two Prudential Plaza 180 N. Stetson Avenue, Suite 5600 Chicago, IL 60601 Attention: Managing Director, Corporate Finance		$4,650,000

Payments

All payments on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds for credit to:

JPMorgan Chase Bank

New York, NY

ABA No.: 021000021

Account No.: 9009000200

Account Name: SSG Private Income Processing

For further credit to Account P58834 Farmers NWL

Notices

All notices of payments and written confirmations of such wire transfers:

investment.accounting@farmersinsurance.com

Farmers Insurance Company

Attention: Investment Accounting Team

4680 Wilshire Blvd., 4th Floor

Los Angeles, CA 90010

and

investments.operations@farmersinsurance.com

Farmers New World Life Insurance Company

Attention: Investment Operations Team

3003 77th Avenue Southeast, 5th Floor

Mercer Island, WA 98040-2837

Address for all other communications and notices:

A-9

Prudential Private Placement Investors, L.P.

c/o Prudential Capital Group

Two Prudential Plaza

180 N. Stetson Avenue

Suite 5600

Chicago, IL 60601

Attention: Managing Director, Corporate Finance

Physical Delivery of Notes

Send physical security by nationwide overnight delivery service to:

Overnight delivery

JPMorgan Chase Bank, N.A.

4 Chase Metrotech Center, 3rd Floor

Brooklyn, NY 11245-0001

Attention: Physical Receive Department

Brian Cavanaugh

Telephone: (718) 242-0264

Please include in the cover letter accompanying the Notes a reference to the Purchaser’s account number (“P58834 – Farmers New World Life Private Placement”) and CUSIP information.

Send copy by nationwide overnight delivery service to:

Prudential Capital Group

Gateway Center 2, 10th Floor

100 Mulberry

Newark, NJ 07102

Attention: Trade Management, Manager

Telephone: (973) 367-3141

Name of Nominee in which Notes are to be issued: None

Tax Identification No.: 91-0335750

A-10


N AME OF AND A DDRESS OF P URCHASER		P RINCIPAL A MOUNT OF N OTES TO BE P URCHASED

M ID C ENTURY I NSURANCE C OMPANY c/o Prudential Capital Group Two Prudential Plaza 180 N. Stetson Avenue, Suite 5600 Chicago, IL 60601 Attention: Managing Director, Corporate Finance		$3,525,000

Payments

All payments on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds for credit to:

JPMorgan Chase Bank

ABA: 021000021

Beneficiary Account No: 9009000200

Beneficiary Account Name: JPMorgan Income

Ultimate Beneficiary: G23628 Mid Century Insurance Company

Notices

Address for all notices relating to payments:

Farmers

4680 Wilshire Blvd.

Los Angeles, CA 90010

Attention: Treasury

Treasury:

Treasury Manager

323-932-3450

usw.treasury.farmers@farmersinsurance.com

Address for all other communications and notices:

Prudential Private Placement Investors, L.P.

c/o Prudential Capital Group

Two Prudential Plaza

180 N. Stetson Avenue

Suite 5600

Chicago, IL 60601

Attention: Managing Director, Corporate Finance

A-11

Physical Delivery of Notes

Send physical security by nationwide overnight delivery service to:

Mailing Address (for overnight mail)

JPMorgan Chase Bank, N.A.

Physical Receive Department

4 Chase Metrotech Center

3rd Floor

Brooklyn, NY 11245-0001

Attention: Brian Cavanaugh, Tel. 718-242-0264

Please include in the cover letter accompanying the Notes a reference to the Purchaser’s account number (“G23628—Mid Century Insurance Company “) and CUSIP information

Send copy by nationwide overnight delivery service to:

Prudential Capital Group

Gateway Center 2, 10th Floor

100 Mulberry

Newark, NJ 07102

Attention: Trade Management, Manager

Telephone: (973) 367-3141

Name of Nominee in which Notes are to be issued: None

Tax Identification No.: 95-6016640

A-12


N AME OF AND A DDRESS OF P URCHASER		P RINCIPAL A MOUNT OF N OTES TO BE P URCHASED

P HYSICIANS M UTUAL I NSURANCE C OMPANY c/o Prudential Capital Group Two Prudential Plaza 180 N. Stetson Avenue, Suite 5600 Chicago, IL 60601 Attention: Managing Director, Corporate Finance		$1,400,000

Payments

All payments on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds for credit to:

The Northern Trust Company

Chicago, IL

ABA No.: 071000152

Account Name: Physicians Mutual Insurance Company

Account No.: 26-27099

Notices

All notices of payments and written confirmations of such wire transfers:

Physicians Mutual Insurance Company

2600 Dodge Street

Omaha, NE 68131

Attention: Steve Scanlan

Facsimile: (402) 633-1096

Address for all other communications and notices:

Prudential Private Placement Investors, L.P.

c/o Prudential Capital Group

Two Prudential Plaza

180 N. Stetson Avenue

Suite 5600

Chicago, IL 60601

Attention: Managing Director, Corporate Finance

A-13

Physical Delivery of Notes

Send physical security by nationwide overnight delivery service to:

Northern Trust Co

Trade Securities Processing

801 South Canal Street

C1N

Chicago, IL 60607

Please include in the cover letter accompanying the Notes a reference to the Purchaser’s account number (Physicians Mutual Insurance Company-Prudential; 26-27099).

Send copy by nationwide overnight delivery service to:

Prudential Capital Group

Gateway Center 2, 10th Floor

100 Mulberry

Newark, NJ 07102

Attention: Trade Management, Manager

Telephone: (973) 367-3141

Name of Nominee in which Notes are to be issued: How & Co.

Tax Identification No.: 47-0270450

A-14


N AME OF AND A DDRESS OF P URCHASER		P RINCIPAL A MOUNT OF N OTES TO BE P URCHASED

M ETROPOLITAN L IFE I NSURANCE C OMPANY 1095 Avenue of the Americas New York, New York 10036		$53,000,000

Payments

All scheduled payments of principal and interest by wire transfer of immediately available funds to:


		Bank Name:		JPMorgan Chase Bank
		ABA Routing #:		021-000-021
		Account No.:		002-2-410591
		Account Name:		Metropolitan Life Insurance Company
		Ref:		United Stationers Supply Co. 3.75% due 1/15/2021

with sufficient information to identify the source and application of such funds, including issuer, PPN#, interest rate, maturity and whether payment is of principal, interest, make whole amount or otherwise.

For all payments other than scheduled payments of principal and interest, the Company shall seek instructions from the holder, and in the absence of instructions to the contrary, will make such payments to the account and in the manner set forth above.

Notices

All notices and communications:

Metropolitan Life Insurance Company

Investments, Private Placements

P.O. Box 1902

10 Park Avenue

Morristown, New Jersey 07962-1902

Attention: Director

Facsimile (973) 355-4250

With a copy OTHER than with respect to deliveries of financial statements to:

Metropolitan Life Insurance Company

P.O. Box 1902

10 Park Avenue

Morristown, New Jersey 07962-1902

Attention: Chief Counsel-Securities Investments (PRIV)

Email: sec_invest_law@metlife.com

A-15

Physical Delivery of Notes

Original notes delivered to:

Metropolitan Life Insurance Company

Securities Investments, Law Department

P.O. Box 1902

10 Park Avenue

Morristown, New Jersey 07962-1902

Attention: Nicolette Lopez, Esq.

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 13-5581829

A-16


N AME OF AND A DDRESS OF P URCHASER		P RINCIPAL A MOUNT OF N OTES TO BE P URCHASED

M ETROPOLITAN L IFE I NSURANCE C OMPANY 1095 Avenue of the Americas New York, New York 10036		$7,000,000

Payments

All scheduled payments of principal and interest by wire transfer of immediately available funds to:


		Bank Name:		JPMorgan Chase Bank
		ABA Routing #:		021-000-021
		Account No.:		477931070
		Account Name:		Metropolitan Life Insurance Company-Separate Account 714
		Ref:		United Stationers Supply Co. 3.75% due 1/15/2021

Notices

All notices and communications:

Metropolitan Life Insurance Company

Investments, Private Placements

P.O. Box 1902

10 Park Avenue

Morristown, New Jersey 07962-1902

Attention: Director

Facsimile (973) 355-4250

With a copy OTHER than with respect to deliveries of financial statements to:

Metropolitan Life Insurance Company

P.O. Box 1902

10 Park Avenue

Morristown, New Jersey 07962-1902

Attention: Chief Counsel-Securities Investments (PRIV)

Email: sec_invest_law@metlife.com

A-17

Physical Delivery of Notes

Original notes delivered to:

Metropolitan Life Insurance Company

Securities Investments, Law Department

P.O. Box 1902

10 Park Avenue

Morristown, New Jersey 07962-1902

Attention: Nicolette Lopez, Esq.

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 13-5581829

A-18


N AME OF AND A DDRESS OF P URCHASER		P RINCIPAL A MOUNT OF N OTES TO BE P URCHASED

M ET L IFE I NSURANCE C OMPANY OF C ONNECTICUT c/o Metropolitan Life Insurance Company 1095 Avenue of the Americas New York, New York 10036		$1,000,000

Payments

All scheduled payments of principal and interest by wire transfer of immediately available funds to:


		Bank Name:		JPMorgan Chase Bank
		ABA Routing #:		021-000-021
		Account No.:		496559365
		Account Name:		MetLife Insurance Company of Connecticut, Separate Account SA (Structured Annuity)
		Ref:		United Stationers Supply Co. 3.75% due 1/15/2021

Notices

All notices and communications:

MetLife Insurance Company of Connecticut

c/o Metropolitan Life Insurance Company

Investments, Private Placements

P.O. Box 1902

10 Park Avenue

Morristown, New Jersey 07962-1902

Attention: Director

Facsimile (973) 355-4250

With a copy OTHER than with respect to deliveries of financial statements to:

MetLife Insurance Company of Connecticut

c/o Metropolitan Life Insurance Company

P.O. Box 1902

10 Park Avenue

Morristown, New Jersey 07962-1902

Attention: Chief Counsel-Securities Investments (PRIV)

Email: sec_invest_law@metlife.com

A-19

Physical Delivery of Notes

Original notes delivered to:

MetLife Insurance Company of Connecticut

c/o Metropolitan Life Insurance Company

Securities Investments, Law Department

P.O. Box 1902

10 Park Avenue

Morristown, New Jersey 07962-1902

Attention: Nicolette Lopez, Esq.

Name of Nominee in which Notes are to be issued: MetLife Insurance Company of Connecticut, on behalf of its Separate Account SA (Structured Annuity)

Taxpayer I.D. Number: 06-0566090

A-20


N AME OF AND A DDRESS OF P URCHASER		P RINCIPAL A MOUNT OF N OTES TO BE P URCHASED

M ASSACHUSETTS M UTUAL L IFE I NSURANCE C OMPANY c/o Babson Capital Management LLC 1500 Main Street – Suite 2200 PO Box 15189 Springfield, MA 01115-5189 Attn: Securities Investment Division		$17,900,000

Payments

All payments on account of the Note shall be made by crediting in the form of bank wire transfer of Federal or other immediately available funds, (identifying each payment as “United Stationers Supply Co., 3.75% Secured Senior Notes due January 15, 2021, PPN 913008 A@7” interest and principal), to:

MassMutual Co-Owned Account

Citibank

New York, New York

ABA # 021000089

Acct # 30510685

RE: Description of security, cusip, principal and interest split

With advice of payment to the Treasury Operations Liquidity Management Department at Massachusetts Mutual Life Insurance Company at mmincometeam@massmutual.com or (413) 226-4295 (facsimile).

Notices


Send Communications and Notices to:		Send Notices on Payments to:

Massachusetts Mutual Life Insurance Company c/o Babson Capital Management LLC 1500 Main Street, Suite 2200 PO Box 15189 Springfield, MA 01115-5189 Attention: Securities Investment Division		Massachusetts Mutual Life Insurance Company 1295 State Street Springfield, MA 01111 Attn: Marie McCormick, Treasury Operations Liquidity Management

		With a copy to: Massachusetts Mutual Life Insurance Company c/o Babson Capital Management LLC 1500 Main Street, Suite 2200 Springfield, MA 01115 Attn: Securities Investment Division

A-21

Electronic delivery of financials and other information to:

Massachusetts Mutual Life Insurance Company

c/o Babson Capital Management LLC

1500 Main Street, Suite 2200

Springfield, MA 01115

Attn: Securities Investment Division

With email notification to:

1. privateplacements@babsoncapital.com

2. jwheeler@babsoncapital.com

Physical Delivery of Notes

All securities should be registered to Massachusetts Mutual Life Insurance Company and sent via overnight mail to:

Steven Katz, Counsel

Babson Capital Management LLC

1500 Main Street, Suite 2800

Springfield, MA 01115-5189

Telephone: 413-226-1059

Facsimile: 413-226-2059

E-mail: skatz@babsoncapital.com

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 04-1590850

A-22


N AME OF AND A DDRESS OF P URCHASER		P RINCIPAL A MOUNT OF N OTES TO BE P URCHASED

M ASS M UTUAL A SIA L IMITED c/o Babson Capital Management LLC 1500 Main Street – Suite 2200 PO Box 15189 Springfield, MA 01115-5189 Attn: Securities Investment Division		$1,650,000

Payments

Gerlach & Co.

c/o Citibank, N.A.

ABA Number 021000089

Concentration Account 36112805

Attn: Judy Rock

FFC: MassMutual Asia 849195

Name of Security/CUSIP Number

With advice of payment to the Treasury Operations Liquidity Management Department at Massachusetts Mutual Life Insurance Company at mmincometeam@massmutual.com or (413) 226-4295 (facsimile).

Notices


Send Communications and Notices to:		Send Notices on Payments to:

MassMutual Asia Limited c/o Babson Capital Management LLC 1500 Main Street, Suite 2200 PO Box 15189 Springfield, MA 01115-5189 Attention: Securities Investment Division		MassMutual Asia Limited c/o Massachusetts Mutual Life Insurance Company 1295 State Street Springfield, MA 01111 Attn: Marie McCormick, Treasury Operations Liquidity Management

		With a copy to: MassMutual Asia Limited c/o Massachusetts Mutual Life Insurance Company 1500 Main Street, Suite 2200 Springfield, MA 01115 Attn: Securities Investment Division

A-23

Electronic delivery of financials and other information to:

Massachusetts Mutual Life Insurance Company

c/o Babson Capital Management LLC

1500 Main Street, Suite 2200

Springfield, MA 01115

Attn: Securities Investment Division

With email notification to:

1. privateplacements@babsoncapital.com

2. jwheeler@babsoncapital.com

Send Corporate Action Notification to:

Citigroup Global Securities Services

Attn: Corporate Action Dept

3800 Citibank Center Tampa

Building B Floor 3

Tampa, FL 33610-9122

Physical Delivery of Notes

All securities should be registered in Citibank’s nominee name of Gerlach & Co. and sent via overnight mail to:

Citibank NA

399 Park Avenue

Level B Vault

New York, NY 10022

Acct. # 849195

With a copy to:

Steven Katz, Counsel

Babson Capital Management LLC

1500 Main Street, Suite 2800

Springfield, MA 01115-5189

Telephone: 413-226-1059

Facsimile: 413-226-2059

E-mail: skatz@babsoncapital.com

Name of Nominee in which Notes are to be issued: Gerlach & Co.

A-24


N AME OF AND A DDRESS OF P URCHASER		P RINCIPAL A MOUNT OF N OTES TO BE P URCHASED

M ASSACHUSETTS M UTUAL L IFE I NSURANCE C OMPANY c/o Babson Capital Management LLC 1500 Main Street – Suite 2200 PO Box 15189 Springfield, MA 01115-5189 Attn: Securities Investment Division		$1,450,000

Payments

MASSMUTUAL TRUST RPG (MMTRRPG)

Citibank, N.A

New York, New York

ABA # 021000089

Acct Name Concentration Account

Acct # 36112805

FCC: MassMutual Trust Account #240146

RE: Description of security, cusip, principal and interest split

With advice of payment to the Treasury Operations Liquidity Management Department at Massachusetts Mutual Life Insurance Company at mmincometeam@massmutual.com or (413) 226-4295 (facsimile).

Notices


Send Communications and Notices to:		Send Notices on Payments to:

Massachusetts Mutual Life Insurance Company c/o Babson Capital Management LLC 1500 Main Street, Suite 2200 PO Box 15189 Springfield, MA 01115-5189 Attention: Securities Investment Division		Massachusetts Mutual Life Insurance Company 1295 State Street Springfield, MA 01111 Attn: Marie McCormick, Treasury Operations Liquidity Management

		With a copy to: Massachusetts Mutual Life Insurance Company c/o Babson Capital Management LLC 1500 Main Street, Suite 2200 Springfield, MA 01115 Attn: Securities Investment Division

A-25

Electronic delivery of financials and other information to:

Massachusetts Mutual Life Insurance Company

c/o Babson Capital Management LLC

1500 Main Street, Suite 2200

Springfield, MA 01115

Attn: Securities Investment Division

With email notification to:

1. privateplacements@babsoncapital.com

2. jwheeler@babsoncapital.com

Physical Delivery of Notes

All securities should be registered to Massachusetts Mutual Life Insurance Company and sent via overnight mail to:

Citibank NA

399 Park Avenue

Level B Vault

New York, NY 10022

Acct. #240146

With a copy to:

Steven Katz, Counsel

Babson Capital Management LLC

1500 Main Street, Suite 2800

Springfield, MA 01115-5189

Telephone: 413-226-1059

Facsimile: 413-226-2059

E-mail: skatz@babsoncapital.com

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 04-1590850

A-26


N AME OF AND A DDRESS OF P URCHASER		P RINCIPAL A MOUNT OF N OTES TO BE P URCHASED

W OODMEN OF THE W ORLD L IFE I NSURANCE S OCIETY 1700 Farnam Street Omaha, Nebraska 68102 Attention: Kim Parrott kparrott@woodmen.org		$7,000,000

Payments

Northern CHGO/Trust

ABA # 071000152

Credit Wire Account #5186041000

Account #26-58056

Account Name: Woodmen of the World Life Insurance Society-General

Swift# CNORUS44

RE: Wire must identify payment by PPN#, with breakdown of principal/interest amounts.

Notices

All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above.

Physical Delivery of Notes

Woodmen of the World Life Insurance Society

Attention: Kim Parrott

1700 Farnam Street

Omaha, Nebraska 68102

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 47-0339250

A-27

D EFINED T ERMS

As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:

“ Acquisition ” means any transaction, or any series of related transactions, consummated on or after July 8, 2013, by which the Parent or any of its Subsidiaries (i) acquires any going concern business or all or substantially all of the assets of any Person, or division thereof, whether through purchase of assets, merger or otherwise, or (ii) directly or indirectly acquires from one or more Persons (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage of voting power) of the outstanding ownership interests of any Person.

“ Affiliate ” means, at any time, and with respect to any Person, any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person. As used in this definition, “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires, any reference to an “Affiliate” is a reference to an Affiliate of the Parent.

“ Agreement ” means this Agreement, including all Schedules attached to this Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time.

“ Anti-Corruption Laws ” is defined in Section 5.16(e).

“ Anti-Money Laundering Laws ” is defined in Section 5.16(c).

“ Blocked Person ” is defined in Section 5.16(a).

“ Business Day ” means any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed.

“ Capital Lease ” means, with respect to any Person, any lease of (or other agreement conveying the right to use) any real or personal property by such Person that shall have been or should be recorded as a capitalized lease in accordance with GAAP.

“ Capital Lease Obligation ” means, with respect to any Person, the amount of the obligations of such Person under Capital Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with GAAP.

“ Capital Stock ” means (a) in the case of a corporation, capital stock, (b) in the case of a partnership, partnership interests (whether general or limited), (c) in the case of a limited liability company, membership interests and (d) any other interest or participation in a Person that confers on the holder the right to receive a share of the profits and losses of, or distributions of assets of, such Person.

S CHEDULE B

(to Note Purchase Agreement)

“Cash Equivalent Investments” means (i) obligations of, or fully guaranteed by, the United States of America having maturities of not more than one year from the date of acquisition thereof, (ii) commercial paper rated A-1 or better by S&P or P-1 or better by Moody’s, (iii) demand deposit accounts maintained in the ordinary course of business, (iv) certificates of deposit issued by and time deposits with commercial banks (whether domestic or foreign) having capital and surplus in excess of $100,000,000, (v) money market funds that (a) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, (b) are rated AA by S&P or Aa by Moody’s and (c) have portfolio assets of at least $5,000,000,000, (vi) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof having maturities of not more than 90 days from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody’s and (vii) repurchase obligations with a term of not more than 30 days underlying securities of the types described in clause (i) above entered into with any commercial bank meeting the qualifications specified in clause (iv) above.

“Change of Control” means (i) the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the SEC under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock of the Parent having ordinary voting power for the election of directors; (ii) the Parent shall cease to own, directly or indirectly and free and clear of all Liens or other encumbrances (other than Liens in favor of the Collateral Agent), all of the outstanding shares of voting stock of the Company and, other than pursuant to a transaction otherwise permitted under this Agreement, the Subsidiary Guarantors, on a fully diluted basis; or (iii) the majority of the board of directors of the Parent fails to consist of Continuing Directors.

“CISADA” is defined in Section 5.16(a).

“Closing” is defined in Section 3.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.

“Collateral Agent” means JPMorgan Chase Bank, N.A., in its capacity as collateral agent under the Intercreditor Agreement and its successors and assigns in such capacity.

“Collateral Documents” means all agreements, instruments or documents entered into by the Parent or a Subsidiary creating Liens securing the Notes and other obligations payable by the Parent or any Subsidiary pursuant to this Agreement, the Subsidiary Guaranty, the Parent Guaranty or the Credit Agreement, including those specifically referenced in the Intercreditor Agreement, as such agreements or documents may hereafter be amended, modified or restated.

“Company” means United Stationers Supply Co., an Illinois corporation.

B-2

“Confidential Information” is defined in Section 20.

“Consolidated EBITDA” means, with respect to any period, (A) Consolidated Net Income for such period, plus (B) to the extent deducted from revenues in determining Consolidated Net Income for such period, (i) Consolidated Interest Expense, (ii) expense for taxes paid or accrued, (iii) depreciation, (iv) amortization, (v) losses attributable to equity in Affiliates, (vi) non-cash charges related to employee compensation, (vii) any extraordinary non-cash or nonrecurring non-cash charges or losses, (viii) fees, costs and expenses incurred in connection with Acquisitions in an aggregate amount not to exceed $10,000,000 in any fiscal year and (ix) in connection with any Qualifying Permitted Acquisition or Material Disposition, calculated on a pro forma basis based on the Parent’s most recent financial statements delivered pursuant to Section 7.1 (1) any cost savings and expenses that relate to such Qualifying Permitted Acquisition or Material Disposition in accordance with Article 11 of Regulation S-X under the Securities Act, and (2) any demonstrable cost-savings and operating expense reductions (net of continuing associated expenses) that relate to such Qualifying Permitted Acquisition or Material Disposition or are reasonably anticipated by the Company to be achieved in connection with such Qualifying Permitted Acquisition or Material Disposition within the 12-month period following the consummation thereof, which the Company determines in good faith are reasonable and which are so set forth in a certificate of a financial officer of the Company delivered to the holders of Notes; provided that amounts added back pursuant to this subclause (2) shall be permitted only to the extent to the aggregate additions under subclauses (1) and (2) for such period do not exceed 10% of the amount which could have been included in Consolidated EBITDA in the absence of the adjustment under this clause (ix), minus (C) to the extent included in Consolidated Net Income for such period, any extraordinary non-cash or nonrecurring non-cash gains, all calculated for the Parent and its Subsidiaries on a consolidated basis.

Solely for the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period” ), if at any time during such Reference Period, the Parent or any of its Subsidiaries shall have made any Material Disposition, Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period, in each case, calculated on a pro forma basis based on the Parent’s most recent financial statements delivered pursuant to Section 7.1

“ Consolidated Funded Indebtedness ” means, at any time, with respect to any Person, without duplication, the sum of (i) the aggregate dollar amount of Consolidated Indebtedness for borrowed money owing by such Person or for which such Person is liable which has actually been funded and is outstanding at such time, whether or not such amount is due or payable at such time (other than obligations in respect of Rate Management Transactions), plus (ii) the aggregate undrawn amount of all standby Letters of Credit at such time for which such Person or any of its Subsidiaries is the account party or is otherwise liable (other than standby Letters of Credit in an amount up to $10,000,000 issued to support worker’s compensation obligations of the Parent, the Company or any Subsidiary Guarantor and other than Letters of Credit supporting any other component of this definition), plus (iii) the aggregate principal component of Capital Lease Obligations owing by such Person and its Subsidiaries on a consolidated basis or for which such Person or any of its Subsidiaries is otherwise liable, plus (iv) all Off-Balance Sheet Liabilities of such Person and its Subsidiaries on a consolidated basis, plus (v) all Disqualified Stock of such Person and its Subsidiaries on a consolidated basis.

B-3

“Consolidated Indebtedness” means, at any time, with respect to any Person, the Indebtedness of such Person and its Subsidiaries, calculated on a consolidated basis as of such time in accordance with GAAP.

“Consolidated Interest Expense” means, with reference to any period, the interest expense of the Parent and its Subsidiaries calculated on a consolidated basis in accordance with GAAP for such period (net of interest income), including yield or any other financing costs resembling interest that are payable under any Receivables Purchase Facility.

“Consolidated Net Income” means, for any period, the net income (or loss) of the Parent and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP and on a first in first out basis of inventory valuation.

“Consolidated Net Worth” means, as of any date, the consolidated stockholders’ equity of the Parent and its Subsidiaries, determined on a consolidated basis in accordance with GAAP and on a first in first out basis of inventory valuation.

“Consolidated Total Assets” means, as of any date, the assets and properties of the Parent and its Subsidiaries as of such date, determined on a consolidated basis in accordance with GAAP.

“Contingent Obligation” means, with respect to any Person, any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or the obligations of any such Person as general partner of a partnership with respect to the liabilities of the partnership unless the underlying obligation is expressly made non-recourse to such general partner; provided, however, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the lesser of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Contingent Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of the Contingent Obligation shall be such guaranteeing person’s reasonably anticipated liability in respect thereof as determined by such Person in good faith.

B-4

“Continuing Director ” means, with respect to any Person as of any date of determination, any member of the board of directors of such Person who (i) was a member of such board of directors on the date of this Agreement, or (ii) was nominated for election or elected to such board of directors with the approval of the required majority of the Continuing Directors who were members of such board at the time of such nomination or election; provided that if any individual who is so elected or nominated in connection with a merger, consolidation, acquisition or similar transaction and who was not a Continuing Director prior thereto, together with all other individuals so elected or nominated in connection with such merger, consolidation, acquisition or similar transaction who were not Continuing Directors prior thereto, constitute a majority of the members of the board of directors of such Person, such individual shall not be a Continuing Director.

“Control Event” means the execution of any written agreement that, when fully performed in accordance with the terms thereof by the parties thereto, would result in a Change of Control and shall not include letters of intent or similar arrangements or understandings.

“ Covenant Holiday ” is defined in Section 10.1.

“Credit Agreement” means the Fourth Amended and Restated Five-Year Revolving Credit Agreement dated as of July 8, 2013 among the Company, as borrower, the Parent, as credit party, U.S. Bank, National Association and Wells Fargo Bank, National Association, as Syndication Agents, Bank of America, N.A. and PNC Bank, National Association as Documentation Agents, and JPMorgan Chase Bank, National Association, as Administrative Agent, and the other lenders party thereto, as such agreement may be hereafter amended, modified, restated, supplemented, replaced, refinanced, increased or reduced from time to time, and any successor credit agreement or similar facility.

“Default” means an event or condition the occurrence or existence of which if it continues uncured would, with the lapse of time or the giving of notice or both, become an Event of Default.

“Default Rate” means, with respect to any Note, that rate of interest that is the greater of (i) 2% per annum above the rate of interest stated in clause (a) of the first paragraph of such Note or (ii) 2% over the rate of interest publicly announced by Bank of America, N.A. as its “base” or “prime” rate.

“ Disclosure Documents ” is defined in Section 5.3.

“ Disposition ” is defined in Section 10.7.

“Disqualified Stock” means any preferred or other capital stock that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is ninety-one (91) days after the scheduled maturity date of the Notes.

“ Distribution Business ” means (i) the distribution of products, including but not limited to, technology products, office products, janitorial/sanitation products, foodservice consumables, office furniture, and safety products, (ii) any activity necessary, appropriate or incidental to the activities described in the preceding clause (i) of this definition, including but not limited to delivering, installing and servicing the products the Company or any Subsidiary sells; and (iii) any business related, ancillary or complementary to or arising from the foregoing.

B-5

“Domestic Subsidiary” means any Subsidiary of any Person that is not a Foreign Subsidiary.

“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to Hazardous Materials.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that is treated as a single employer together with the Parent under section 414 of the Code.

“Event of Default” is defined in Section 11.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Financing Documents” means this Agreement, the Notes, the Parent Guaranty, the Subsidiary Guaranties, the Collateral Documents and the Intercreditor Agreement.

“Fiscal Quarter” means each fiscal quarter of the Parent and its Subsidiaries.

“Fiscal Year” means each fiscal year of the Parent and its Subsidiaries.

“Foreign Subsidiary” means (i) any Subsidiary of any Person that is not organized under the laws of a jurisdiction located in the United States of America and (ii) any Subsidiary of a Person described in clause (i) hereof that is organized under the laws of a jurisdiction located in the United States of America.

“Form 10-K” is defined in Section 7.1(b).

“Form 10-Q” is defined in Section 7.1(a).

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America.

“Governmental Authority” means

(a) the government of

B-6

(i) the United States of America or any state or other political subdivision thereof, or

(ii) any jurisdiction in which the Parent or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Parent or any Subsidiary, or

(b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.

“Governmental Official” means any governmental official or employee, employee of any government-owned or government-controlled entity, political party, any official of a political party, candidate for political office, official of any public international organization or anyone else acting in an official capacity.

“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or other substances that might pose a hazard to health and safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage or filtration of which is or shall be restricted, prohibited or penalized by any applicable law including, but not limited to, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar restricted, prohibited or penalized substances.

“holder” means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant to Section 13.1, provided, however, that if such Person is a nominee, then for the purposes of Sections 7, 12, 17.2 and 18 and any related definitions in this Schedule B, “holder” shall mean the beneficial owner of such Note whose name and address appears in such register.

“INHAM Exemption” is defined in Section 6.3(e).

“Indebtedness” with respect to any Person means, at any time, without duplication,

(a) obligations for borrowed money which in accordance with GAAP would be shown as a liability on the consolidated balance sheet of such Person;

(b) obligations representing the deferred purchase price of property or services (other than current accounts payable arising in the ordinary course of such Person’s business payable on terms customary in the trade and accrued expenses in connection with the provision of services incurred in the ordinary course of such Person’s business);

(c) Indebtedness of others, whether or not assumed, secured by Liens or payable out of the proceeds or production from property now or hereafter owned or acquired by such Person ( provided that the amount of any such Indebtedness at any time shall be deemed to be the lesser of (i) such Indebtedness at such time and (ii) the fair market value of such property, as determined by such Person in good faith at such time);

B-7

(d) financial obligations which are evidenced by notes, bonds, debentures, acceptances, or other instruments;

(e) obligations to purchase securities or other property arising out of or in connection with the sale of the same or substantially similar securities or property;

(f) Capital Lease Obligations;

(g) Contingent Obligations of such Person in respect of any Indebtedness,

(h) reimbursement obligations under Letters of Credit, bankers’ acceptances, surety bonds and similar instruments;

(i) Off-Balance Sheet Liabilities;

(j) Net Mark-to-Market Exposure under Rate Management Transactions; and

(k) Disqualified Stock.

“Institutional Investor” means (a) any original purchaser of a Note, (b) any holder of $5,000,000 or more in aggregate principal amount of the Notes (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form, and (d) any Related Fund of any holder of any Note.

“Intercreditor Agreement” means the Intercreditor Agreement dated as of October 15, 2007 among the Collateral Agent, JPMorgan Chase Bank, N.A., as agent for the lenders under the Credit Agreement, the holders of certain notes and any other holder of Eligible Additional Senior Secured Indebtedness (as defined therein), as such agreement may be hereafter amended, modified, restated, supplemented or replaced.

“Letter of Credit” in respect of any Person means, a letter of credit or similar instrument which is issued upon the application of such Person or upon which such Person is an account party or, without duplication, for which such Person has a reimbursement obligation.

“Leverage Ratio” is defined in Section 10.1.

“Lien” means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capital Lease or other title retention agreement).

“Make-Whole Amount” is defined in Section 8.7.

B-8

“Material” means material in relation to the business, operations, financial condition, assets or properties of the Parent and its Subsidiaries taken as a whole.

“Material Adverse Effect” means a material adverse effect on (a) the business, operations, financial condition, assets or properties of the Parent and its Subsidiaries taken as a whole, (b) the ability of the Company to perform its obligations under this Agreement or the Notes, (c) the ability of the Parent to perform its obligations under this Agreement or the Parent Guaranty, or (d) the validity or enforceability of this Agreement, the Notes, the Parent Guaranty, the Subsidiary Guaranty or any Collateral Document.

“Material Credit Facility” means, as to the Company and its Subsidiaries,

(a) the Credit Agreement (including any renewals, extensions, amendments, supplements, restatements, replacements or refinancing thereof referred to in the definition of “Credit Agreement”); and

(b) any other agreement(s) creating or evidencing indebtedness for borrowed money entered into on or after the date of Closing by the Parent or any Subsidiary, or in respect of which the Parent or any Subsidiary is an obligor or otherwise provides a guarantee or other credit support (“Credit Facility”), in a principal amount outstanding or available for borrowing equal to or greater than $75,000,000 (or the equivalent of such amount in the relevant currency of payment, determined as of the date of the closing of such facility based on the exchange rate of such other currency); and if no Credit Facility or Credit Facilities equal or exceed such amounts, then the largest Credit Facility shall be deemed to be a Material Credit Facility;

provided that in no event shall any Receivables Purchase Facility constitute a Material Credit Facility hereunder.

“Material Disposition” means any sale or other disposition or series of related sales or dispositions by the Parent or any Subsidiary of (1) any equity interests of a Subsidiary (other than directors’ qualifying shares or shares required by applicable law to be held by a Person other than the Parent or a Subsidiary), or (2) all or substantially all of the assets of any division or line of business of the Parent or any Subsidiary, in each case, that yields gross proceeds to the Parent or any of its Subsidiaries in excess of $25,000,000 and excluding, in each case, (x) a sale or other disposition by a Subsidiary to the Parent or the Parent or a Subsidiary to a Subsidiary, and (y) dispositions of cash or Cash Equivalent Investments in the ordinary course of business.

“Material Indebtedness” means any Indebtedness in an outstanding principal amount of $25,000,000 or more in the aggregate.

“Maturity Date” is defined in the first paragraph of each Note.

“ Maximum Payment Amount ” means, in any Fiscal Quarter, an amount equal to the greater of (i) 105% of the amount of cash dividends issued by the Parent in the Parent’s immediately preceding Fiscal Quarter and (b) 20% of the Parent’s Consolidated Net Income (if positive) for the immediately preceding Fiscal Quarter.

B-9

“Memorandum” is defined in Section 5.3.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

“Multiemployer Plan” means a “multiemployer plan” (as such term is defined in section 4001(a)(3) of ERISA) that is covered by Title IV of ERISA and to which the Parent or any ERISA Affiliate is obligated to contribute.

“NAIC” means the National Association of Insurance Commissioners or any successor thereto.

“NAIC Annual Statement” is defined in Section 6.3(a).

“Net Mark-to Market Exposure” means, with respect to any Person, as of any date of determination, the excess (if any) of all unrealized losses over all unrealized profits of such Person arising from Rate Management Transactions. “Unrealized losses” shall mean the fair market value of the cost to such Person of replacing such Rate Management Transaction as of the date of determination (assuming the Rate Management Transaction were to be terminated as of that date), and “unrealized profits” means the fair market value of the gain to such Person of replacing such Rate Management Transaction as of the date of determination (assuming such Rate Management Transaction were to be terminated as of that date).

“Notes” is defined in Section 1.

“OFAC” is defined in Section 5.16(a).

“OFAC Listed Person” is defined in Section 5.16(a).

“OFAC Sanctions Program” means any economic or trade sanction that OFAC is responsible for administering and enforcing. A list of OFAC Sanctions Programs may be found at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.

“ Off-Balance Sheet Liabilities ” means, with respect to a Person, without duplication, the principal component of (i) any Receivables Purchase Facility or any other repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person (other than the sale or disposition in the ordinary course of business of accounts or notes receivable in connection with the compromise or collection thereof consistent with customary industry practice (and not as part of any bulk sale or financing of receivables)) or (ii) any liability under any so-called “synthetic lease” or “tax ownership operating lease” transaction entered into by such Person; provided that “Off-Balance Sheet Liabilities” shall not include the principal component of the foregoing if such principal component (a) is otherwise reflected as a liability on such Person’s consolidated balance sheet or (b) is deducted from revenues in determining such Person’s consolidated net income but is not thereafter added back in calculating such Person’s Consolidated EBITDA.

B-10

“Officer’s Certificate” means a certificate of a Senior Financial Officer or of any other officer of the Parent whose responsibilities extend to the subject matter of such certificate.

“Parent” means United Stationers Inc., a Delaware corporation.

“Parent Guaranty” is defined in Section 1.2(a)(i).

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto.

“Permitted Customer Financing Guarantees” means any guaranty or repurchase or recourse obligations of the Company or any Subsidiary, incurred in the ordinary course of business, in respect of Indebtedness incurred by a customer of the Company or any Subsidiary.

“Permitted Purchase Money Indebtedness” means secured or unsecured purchase money Indebtedness (including Capital Leases) incurred by the Parent, the Company or any Subsidiary after the date of the Closing to finance the acquisition of assets used in its business.

“Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, business entity or Governmental Authority.

“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA), other than a Multiemployer Plan, subject to Title IV of ERISA as to which the Parent or any ERISA Affiliate may have reasonably be expected to have any liability.

“Priority Debt” means, as of any date, the sum (without duplication) of (a) Indebtedness of the Parent and the Company secured by Liens not otherwise permitted by Section 10.4(a) through (z) and (b) Indebtedness (other than Indebtedness in respect of receivables securitizations) of Subsidiaries other than the Company not otherwise permitted by Section 10.5(a) through (e).

“property” or “properties” means, unless otherwise specifically limited, real or personal property of any kind, tangible, intangible, or mixed, or other assets owned, leased or operated by such Person.

“Proposed Prepayment Date” is defined in Section 8.3(c).

“PTE” is defined in Section 6.3(a).

“Purchaser” or “Purchasers” means each of the purchasers that has executed and delivered this Agreement to the Company and the Parent and such Purchaser’s successors and assigns (so long as any such assignment complies with Section 13.2), provided, however, that any Purchaser of a Note that ceases to be the registered holder or a beneficial owner (through a nominee) of such Note as the result of a transfer thereof pursuant to Section 13.2 shall cease to be included within the meaning of “Purchaser” of such Note for the purposes of this Agreement upon such transfer.

B-11

“Purchase Price” means the total consideration and other amounts payable in connection with any Acquisition, including, without limitation, any portion of the consideration payable in cash, all Indebtedness incurred or assumed in connection with such Acquisition, but exclusive of the value of any capital stock or other equity interests of the Parent, the Company or any Subsidiary issued as consideration for such Acquisition.

“QPAM Exemption” is defined in Section 6.3(d).

“Qualified Institutional Buyer” means any Person that is a “qualified institutional buyer” within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act.

“Qualifying Permitted Acquisition” means an Acquisition in which the cash portion of the Purchase Price is greater that $25,000,000.

“Ratable Portion” means, with respect to any Disposition and any Note, an amount equal to the product of (x) the amount equal to the net proceeds being so applied to the prepayment of Senior Indebtedness in accordance with Section 10.7(e)(B) as a result of such Disposition, multiplied by (y) a fraction the numerator of which is the outstanding principal amount of such Note and the denominator of which is the aggregate principal amount of Senior Indebtedness of the Company and its Subsidiaries then outstanding that by its terms then requires the Company to prepay (or to offer to prepay) such Indebtedness as a result of such Disposition.

“Rate Management Transaction” means any transaction (including an agreement with respect thereto) now existing or hereafter entered into by the Parent, the Company or a Subsidiary which is a rate swap, basis swap, forward rate transaction, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices or equity prices.

“Receivables Purchase Documents” means any series of receivables purchase or sale agreements, servicing agreements and other related agreements generally consistent with terms contained in comparable structured finance transactions pursuant to which the Parent, the Company or any of its Subsidiaries, in their respective capacities as sellers or transferors of any receivables, sell or transfer, directly or indirectly, to SPVs all of their respective right, title and interest in and to (but not their obligations under) certain receivables for further sale or transfer (or granting of Liens to other purchasers of or investors in such assets or interests therein (and the other documents, instruments and agreements executed in connection therewith)), as any such agreements may be amended, restated, supplemented or otherwise modified from time to time, or any replacement or substitution therefor.

B-12

“Receivables Purchase Facility” means any securitization facility made available to the Parent, the Company or any of its Subsidiaries, pursuant to which receivables of the Parent, the Company or any of its Subsidiaries are transferred, directly or indirectly, to one or more SPVs, and thereafter to certain investors, pursuant to the terms and conditions of the Receivables Purchase Documents.

“Related Fund” means, with respect to any holder of any Note, any fund or entity that (i) invests in Securities or bank loans, and (ii) is advised or managed by such holder, the same investment advisor as such holder or by an affiliate of such holder or such investment advisor.

“Required Holders” means at any time (i) prior to the Closing, the Purchasers, and (ii) on or after the Closing, at least two of the holders of more than 50% in aggregate principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates).

“Responsible Officer” means any Senior Financial Officer and any other officer of the Parent with responsibility for the administration of the relevant portion of this Agreement.

“SEC” shall mean the Securities and Exchange Commission of the United States, or any successor thereto.

“Securities” or “Security” shall have the meaning specified in section 2(1) of the Securities Act.

“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

“Senior Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of the Parent.

“Senior Indebtedness” means, as of the date of any determination thereof, all Indebtedness ranking pari passu in right of payment with the Notes.

“Significant Subsidiary” means any Subsidiary of the Parent that is a “significant subsidiary” as such term is defined in Rule 1-02(w) of Regulation S-X of the Securities and Exchange Commission.

“Source” is defined in Section 6.3.

“S&P” means Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies Inc., and any successor thereto.

“SPV” means any special purpose entity established for the purpose of purchasing receivables in connection with any one or more transactions involving the securitization of such receivables permitted under the terms of this Agreement.

B-13

“Subsidiary” means, with respect to any Person, any corporation, association or other business entity in which such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such entity, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the Parent.

“Subsidiary Guarantor” is defined in Section 1.2(a)(ii).

“Subsidiary Guaranty” is defined in Section 1.2(a)(ii).

“Substitute Purchaser” is defined in Section 21.

“SVO” means the Securities Valuation Office of the NAIC or any successor to such Office.

“Transition Period” means the period commencing on the date the Parent or any Subsidiary makes a Qualified Permitted Acquisition of any Person or line of business and ending on the last day of the fourth full fiscal quarter following the date of the consummation of such Qualified Permitted Acquisition.

“USA Patriot Act” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

“U.S. Economic Sanctions” is defined in Section 5.16(a).

“Voting Stock” means, with respect to any Person, any class of shares of stock or other equity interests of such Person having general voting power under ordinary circumstances to elect a majority of the board of directors or other managing entities, as appropriate, of such Person (irrespective of whether or not at the time stock of any other class or classes or other equity interests of such Person shall have or might have voting power by reason of the happening of any contingency).

“Wholly Owned Subsidiary” means, at any time, any Subsidiary 100% of all of the Voting Stock (except directors’ qualifying shares and other minority shares held solely to satisfy organization requirements of the applicable jurisdiction) and voting interests of which are owned by any one or more of the Parent and its Wholly Owned Subsidiaries at such time.

B-14

D ISCLOSURE

None.

S CHEDULE 5.3

(to Note Purchase Agreement)

O RGANIZATION AND O WNERSHIP OF S HARES OF S UBSIDIARIES


Subsidiary	Jurisdiction of Organization	Owner	Percentage
United Stationers Supply Co.	Illinois	United Stationers Inc.		100	%
Lagasse, LLC	Illinois	United Stationers Supply Co.		100	%
MBS Dev, Inc.	Colorado	United Stationers Supply Co.		100	%
ORS Nasco, LLC	Illinois	United Stationers Supply Co.		100	%
Oklahoma Rig, Inc.	Oklahoma	ORS Nasco, LLC		100	%
Oklahoma Rig & Supply Co. Trans., Inc.	Oklahoma	ORS Nasco, LLC		100	%
United Stationers Financial Services LLC	Illinois	United Stationers Supply Co.		100	%
United Stationers Receivables, LLC	Illinois	United Stationers Financial Services LLC		100	%
United Stationers Management Services LLC	Illinois	United Stationers Supply Co.		100	%
Azerty de Mexico, S.A. de C.V.	Mexico	United Stationers Supply Co.		100	%
United Stationers Hong Kong Limited	Hong Kong	United Stationers Supply Co.		100	%
United Worldwide Limited	Hong Kong	United Stationers Hong Kong Limited		100	%
O.K.I. SUPPLY, LLC	Illinois	ORS Nasco, LLC		100	%
O.K.I. DATA, INC.	Ohio	O.K.I. SUPPLY, LLC		100	%
OKI MIDDLE EAST HOLDING CO.	Ohio	O.K.I. SUPPLY, LLC		100	%
OKI BERING CANADA INC.	Ontario	O.K.I. SUPPLY, LLC		100	%
OKI Bering Middle East FZE	Jebel Ali Free Zone Authority	OKI MIDDLE EAST HOLDING CO.		100	%

S CHEDULE 5.4

(to Note Purchase Agreement)

F INANCIAL S TATEMENTS

The Financial Statements filed with the Parent’s Annual Report on Form 10-K for the fiscal years ended December 31, 2011 through 2012, inclusive.

The Financial Statements filed with the Parent’s Form 10-Q for the quarterly period ended June 30, 2013.

S CHEDULE 5.5

(to Note Purchase Agreement)

U SE OF P ROCEEDS

$135 million of the proceeds from the sale of the Notes will be used to repay the floating rate senior secured notes due October 15, 2014 issued by United Stationers Supply Co. The remaining net proceeds will be used to reduce borrowings under the Fourth Amended and Restated Five-Year Revolving Credit Agreement referenced on Schedule 5.15.

S CHEDULE 5.14

(to Note Purchase Agreement)

E XISTING I NDEBTEDNESS

Existing Indebtedness ¹ as of October 31, 2013 (unless otherwise noted)

Fourth Amended and Restated Five-Year Revolving Credit Agreement dated as of July 8, 2013 between United Stationers Supply Co., as the borrower, United Stationers Inc., as a credit party, and certain listed financial institutions and JPMorgan Chase Bank, N.A. for an aggregate committed principal availability amount of $700,000,000. The outstanding principal amount owed as of October 31, 2013 was $195,000,000.

2.	$135,000,000 of floating rate senior secured notes due October 15, 2014 issued by the Company.

3.	Guaranty (as amended May 25, 2011) by the Company of the trade credit obligations owed by Azerty de Mexico S.A. de CV to the Hewlett Packard Company, its affiliates, subsidiaries and associated companies.

Receivables securitization program among the Company, United Stationers Financial Services LLC, United Stationers Receivables, LLC, PNC Bank, National Association and Bank of Tokyo-Mitsubishi UFJ, Ltd. The maximum available funding amount under the securitization program is $200,000,000. The outstanding principal amount owed as of October 31, 2013 was $200,000,000.

5.	Intercompany indebtedness owed by Azerty de Mexico S.A. de C.V. to the Company of $7,802,000 as of October 31, 2013.

6.	Intercompany indebtedness owed by OKI Bering Canada, Inc. to ORS Nasco, LLC of $26,000 as of October 31, 2013.

7.	Intercompany indebtedness owed by United Stationers Hong Kong Limited to United Stationers Management Services LLC of $55,000 as of October 31, 2013.

8.	Credit facilities provided by the Royal Bank of Canada to OKI Bering Canada, Inc. pursuant to agreement dated July 18, 2011 as follows:

a. Revolving demand facility up to a maximum of C$3,500,000.

b. Fixed rate term loan maturing January 31, 2004 with a balance outstanding of C$853,777.23 as of October 31, 2013.

c. Visa business line maximum of $280,000 in Canadian or U.S. Currency.

9.	Indebtedness consisting of reimbursement obligations under the letters of credit described on the following page.

¹	Note that intercompany indebtedness among the Parent, the Company and the Subsidiary Guarantors is not reflected on this schedule.

S CHEDULE 5.15

(to Note Purchase Agreement)

OUTSTANDING LETTERS OF CREDIT

AS OF NOVEMBER 15, 2013

Issue

Expiration

Letter of Credit #

Issuer

Applicant

Beneficiary

Amount

Date

NZS634211

Wells Fargo
Bank N.A.

United Stationers
Supply Co.

Sentry Insurance

1,000,000.00

1/9/2009

1/6/2014

NZS634262

Wells Fargo
Bank N.A.

United Stationers
Supply Co.

Lumbermens Mutual Casualty Company for and on behalf of American Manufacturers Mutual Insurance Company, American Motorists Insurance Company, American Protection Insurance Company

714,000.00

1/12/2009

1/6/2014

NZS634212

Wells Fargo
Bank, N.A.

United Stationers
Supply Co.

Travelers Indemnity Co.

9,425,000.00

1/9/2009

1/6/2014

TOTAL LETTERS OF CREDIT

11,139,000.00

5.15-2

L IENS

Liens securing the senior secured notes described on Schedule 5.15.

Liens securing the credit facilities provided by the Royal Bank of Canada described on Schedule 5.15.

United Stationers Supply Co.

Lien in favor of US Express Leasing related to specific equipment.

Lien in favor of US Bancorp related to specific equipment.

Lien in favor of NER Data Products, Inc. on all of the Company’s interest in shares of common stock of NER Data Corporation.

Lien in favor of Raymond Leasing Corporation related to leased equipment.

MBS DEV, Inc.

Lien in favor of Webbank related to leased equipment.

S CHEDULE 10.4

(to Note Purchase Agreement)

S UBSIDIARY I NDEBTEDNESS

Any subsidiary Indebtedness is shown on S CHEDULE 5.15 – I NDEBTEDNESS .

S CHEDULE 10.5

(to Note Purchase Agreement)

F ORM OF

A FFIRMATION OF S UBSIDIARY G UARANTY

Each of the undersigned hereby ratifies and confirms, in all respects, each and every obligation and covenant made by it in the [Guaranty dated as of ] (the “Subsidiary Guaranty” ) executed by each of the undersigned in favor of the holders of Notes issued under the Note Purchase Agreement and that the Subsidiary Guaranty remains the legal, valid and binding obligation of the undersigned, enforceable against the undersigned in accordance with its terms. Capitalized terms not otherwise herein defined shall have the meanings attributed to them in the Subsidiary Guaranty.

Date: [ ]


[N AME OF G UARANTOR ]

By
		Name:
		Title:

S CHEDULE 10.6

(to Note Purchase Agreement)

[F ORM OF S ECURED S ENIOR N OTE ]

T HE S ECURITY EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER S ECTION 5 OF THE U NITED S TATES S ECURITIES A CT OF 1933, AS AMENDED , AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED , SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM .

U NITED S TATIONERS S UPPLY C O .

3.75% Secured Senior Note due January 15, 2021


No. R-[ ]		[Date]

$[ ]		PPN: 913008 A@7

F OR V ALUE R ECEIVED , the undersigned, U NITED S TATIONERS S UPPLY C O . (herein called the “Company” ), a corporation organized and existing under the laws of the State of Illinois and a wholly owned Subsidiary of the Parent (as such term is defined below), promises to pay to [ ], or registered assigns, the principal sum of [ ] D OLLARS (or so much thereof as shall not have been prepaid) on January 15, 2021 (the “Maturity Date”), with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance hereof at the rate of 3.75% per annum from the date hereof, payable semiannually, on the 15 ^th day of January 15 and July 15 in each year, commencing with the January 15 and July 15 next succeeding the date hereof, and on the Maturity Date, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, (x) on any overdue payment of interest and (y) during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make-Whole Amount, at a rate per annum from time to time equal to the greater of (i) 5.75% or (ii) 2% over the rate of interest publicly announced by Bank of America, N.A. from time to time in New York as its “base” or “prime” rate, payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand); provided that the rate of interest on this Note is subject to increase pursuant to Section 1.3 of the Note Purchase Agreement (as defined below).

Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at the principal office of Bank of America, N.A. in New York, New York as or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.

This Note is one of a series of Senior Notes (herein called the “ Notes ”) issued pursuant to the Note Purchase Agreement, dated as of November 25, 2013 (as from time to time amended, the “ Note Purchase Agreement ”), between the Company, United Stationers Inc. (the “ Parent ”), and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) made the representation set forth in Sections 6.1, 6.2 and 6.3 of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.

This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.

If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.

Payment of the principal of, and interest and Make-Whole Amount, if any, on this Note, and all other amounts due under the Note Purchase Agreement, is guaranteed pursuant to the terms of Guaranties dated as of November 25, 2013 of the Parent and of certain Subsidiaries of the Parent. The Notes also are secured by a pledge of collateral under the Collateral Documents. Reference is made to the Collateral Documents for a description of the property pledged and the rights of holders of the Notes in respect of such property.

An incorporator, director, officer, employee or stockholder, as such, of the Company, the Parent or any Subsidiary Guarantor shall not have any liability for any obligations of the Company, the Parent or a Subsidiary Guarantor under the Notes, the Parent Guaranty or the Subsidiary Guaranty or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Note, each holder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Notes.

This Note shall be construed and enforced in accordance with, and the rights of the issuer and holder hereof shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.


U NITED S TATIONERS S UPPLY C O .

By:
		Name:
		Title:

1.2-2

P ARENT G UARANTY

T HIS G UARANTY (this “Guaranty” ) dated as of November 25, 2013 is made by U NITED S TATIONERS I NC ., a Delaware corporation (the “Guarantor” ), in favor of the holders from time to time of the Notes hereinafter referred to, including each purchaser named in the Note Purchase Agreement hereinafter referred to, and their respective successors and assigns (collectively, the “Holders” and each individually, a “Holder” ).

W ITNESSET H :

W HEREAS , U NITED S TATIONERS S UPPLY C O ., an Illinois corporation (the “Company” ), the Guarantor and the initial Holders have entered into a Note Purchase Agreement dated as of November 25, 2013 (the Note Purchase Agreement as amended, supplemented, restated or otherwise modified from time to time in accordance with its terms and in effect, the “Note Purchase Agreement” );

W HEREAS , the Note Purchase Agreement contemplates the issuance by the Company of Notes (as defined in the Note Purchase Agreement);

W HEREAS , the Company is a wholly owned Subsidiary of the Guarantor and the Guarantor will derive substantial benefits from the purchase by the Holders of the Notes;

W HEREAS , it is a condition precedent to the obligation of the Holders to purchase the Notes that the Guarantor shall have executed and delivered this Guaranty to the Holders; and

W HEREAS , the Guarantor desires to execute and deliver this Guaranty to satisfy the conditions described in the preceding paragraph;

N OW , T HEREFORE , in consideration of the premises and other benefits to the Guarantor, and of the purchase of the Notes by the Holders, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Guarantor makes this Guaranty as follows:

S ECTION 1. D EFINITIONS .

Any capitalized terms not otherwise herein defined shall have the meanings ascribed to them in the Note Purchase Agreement.

S ECTION 2. G UARANTY .

The Guarantor unconditionally and irrevocably guarantees to the Holders the due, prompt and complete payment by the Company of the principal of, Make-Whole Amount and interest on (including interest accruing or becoming owing subsequent to the commencement of any bankruptcy, reorganization or similar proceeding involving the Company), and each other amount due under, the Notes and the Note Purchase Agreement, when and as the same shall become due and payable (whether at stated maturity or by required or optional prepayment or by declaration or

E XHIBIT 1.2(a)(i)

(to Note Purchase Agreement)

otherwise) in accordance with the terms of the Notes and the Note Purchase Agreement (the Notes and the Note Purchase Agreement being sometimes hereinafter collectively referred to as the “ Note Documents ” and the amounts payable by the Company under the Note Documents, and all other monetary obligations of the Company thereunder (including any reasonable attorneys’ fees and expenses), being sometimes collectively hereinafter referred to as the “ Obligations ”). This Guaranty is a guaranty of payment and not just of collectibility and is in no way conditioned or contingent upon any attempt to collect from the Company or upon any other event, contingency or circumstance whatsoever. If for any reason whatsoever the Company shall fail or be unable duly, punctually and fully to pay such amounts as and when the same shall become due and payable, the Guarantor, without demand, presentment, protest or notice of any kind, will forthwith pay or cause to be paid such amounts to the Holders under the terms of such Note Documents, in lawful money of the United States, at the place specified in the Note Purchase Agreement, or perform or comply with the same or cause the same to be performed or complied with, together with interest (to the extent provided for under such Note Documents) on any amount due and owing from the Company. The Guarantor, promptly after demand, will pay to the Holders the reasonable costs and expenses of collecting such amounts or otherwise enforcing this Guaranty, including, without limitation, the reasonable fees and expenses of counsel.

S ECTION 3. G UARANTOR ’ S O BLIGATIONS U NCONDITIONAL .

The obligations of the Guarantor under this Guaranty shall be primary, absolute and unconditional obligations of the Guarantor, shall not be subject to any counterclaim, set-off, deduction, diminution, abatement, recoupment, suspension, deferment, reduction or defense based upon any claim the Guarantor or any other person may have against the Company or any other person, and to the full extent permitted by applicable law shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected by, any circumstance or condition whatsoever other than the indefeasible payment in full of the Obligations (whether or not the Guarantor or the Company shall have any knowledge or notice thereof), including:

(a) any termination, amendment or modification of or deletion from or addition or supplement to or other change in any of the Note Documents or any other instrument or agreement applicable to any of the parties to any of the Note Documents;

(b) any furnishing or acceptance of any security, or any release of any security, for the Obligations, or the failure of any security or the failure of any person to perfect any interest in any collateral;

(c) any failure, omission or delay on the part of the Company to conform or comply with any term of any of the Note Documents or any other instrument or agreement referred to in paragraph (a) above, including, without limitation, failure to give notice to the Guarantor of the occurrence of a “Default” or an “Event of Default” under any Note Document;

1-2(a)(i)-2

action or inaction under or in respect of any of the Note Documents or any other instrument or agreement referred to in paragraph (a) above or any obligation or liability of the Company, or any exercise or non-exercise of any right, remedy, power or privilege under or in respect of any such instrument or agreement or any such obligation or liability;

(e) any failure, omission or delay on the part of any of the Holders to enforce, assert or exercise any right, power or remedy conferred on such Holder in this Guaranty, or any such failure, omission or delay on the part of such Holder in connection with any Note Document, or any other action on the part of such Holder;

(f) any voluntary or involuntary bankruptcy, insolvency, reorganization, arrangement, readjustment, assignment for the benefit of creditors, composition, receivership, conservatorship, custodianship, liquidation, marshaling of assets and liabilities or similar proceedings with respect to the Company, the Guarantor or to any other person or any of their respective properties or creditors, or any action taken by any trustee or receiver or by any court in any such proceeding;

(g) any discharge, termination, cancellation, frustration, irregularity, invalidity or unenforceability, in whole or in part, of any of the Note Documents or any other agreement or instrument referred to in paragraph (a) above or any term hereof;

(h) any merger or consolidation of the Company or the Guarantor into or with any other corporation, or any sale, lease or transfer of any of the assets of the Company or the Guarantor to any other person;

(i) any change in the ownership of any shares of capital stock of the Company or any change in the corporate relationship between the Company and the Guarantor, or any termination of such relationship;

(j) any release or discharge, by operation of law, of any other guarantor from the performance or observance of any obligation, covenant or agreement contained in any other guarantee of the Note Documents or the Obligations; or

(k) any other occurrence, circumstance, happening or event whatsoever, whether similar or dissimilar to the foregoing, whether foreseen or unforeseen, and any other circumstance which might otherwise constitute a legal or equitable defense or discharge of the liabilities of a guarantor or surety or which might otherwise limit recourse against the Guarantor.

S ECTION 4. F ULL R ECOURSE O BLIGATIONS .

The obligations of the Guarantor set forth herein constitute the full recourse obligations of the Guarantor enforceable against it to the full extent of all its assets and properties.

1-2(a)(i)-3

S ECTION 5. W AIVER .

The Guarantor unconditionally waives, to the extent permitted by applicable law, (a) notice of any of the matters referred to in Section 3, (b) notice to the Guarantor of the incurrence of any of the Obligations, notice to the Guarantor or the Company of any breach or default by the Company with respect to any of the Obligations or any other notice that may be required, by statute, rule of law or otherwise, to preserve any rights of the Holders against the Guarantor, (c) presentment to or demand of payment from the Company or the Guarantor with respect to any amount due under any Note Document or protest for nonpayment or dishonor, (d) any right to the enforcement, assertion or exercise by any of the Holders of any right, power, privilege or remedy conferred in the Note Purchase Agreement or any other Note Document or otherwise, (e) any requirement of diligence on the part of any of the Holders, (f) any requirement to exhaust any remedies or to mitigate the damages resulting from any default under any Note Document, (g) any notice of any sale, transfer or other disposition by any of the Holders of any right, title to or interest in the Note Purchase Agreement or in any other Note Document and (h) any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge, release or defense of a guarantor or surety or which might otherwise limit recourse against the Guarantor.

S ECTION 6. S UBROGATION , C ONTRIBUTION , R EIMBURSEMENT OR I NDEMNITY .

Until all Obligations have been indefeasibly paid in full, the Guarantor agrees not to take any action pursuant to any rights which may have arisen in connection with this Guaranty to be subrogated to any of the rights (whether contractual, under the United States Bankruptcy Code, as amended, including section 509 thereof, under common law or otherwise) of any of the Holders against the Company or against any collateral security or guaranty or right of offset held by the Holders for the payment of the Obligations. Until all Obligations have been indefeasibly paid in full, the Guarantor agrees not to take any action pursuant to any contractual, common law, statutory or other rights of reimbursement, contribution, exoneration or indemnity (or any similar right) from or against the Company which may have arisen in connection with this Guaranty. So long as the Obligations remain, if any amount shall be paid by or on behalf of the Company to the Guarantor on account of any of the rights waived in this paragraph, such amount shall be held by the Guarantor in trust, segregated from other funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to the Holders (duly endorsed by the Guarantor to the Holders, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Holders may determine.

S ECTION 7. E FFECT OF B ANKRUPTCY P ROCEEDINGS , ETC .

1-2(a)(i)-4

amount of the Notes shall at any time have occurred and be continuing and one or more Holders shall have attempted to accelerate the maturity of the principal amount of the Notes pursuant to and in compliance with Section 12.1 of the Note Purchase Agreement, or an event shall have occurred that pursuant to Section 12.1 of the Note Purchase Agreement purportedly results in the automatic acceleration of the maturity of the principal amount of the Notes, and in either such case such acceleration shall at such time be prevented by reason of the pendency against the Company or any other Person of a case or proceeding under a bankruptcy or insolvency law, the Guarantor agrees that, for purposes of this Guaranty and its obligations hereunder, the maturity of the principal amount of the Notes and all other Obligations shall be deemed to have been accelerated with the same effect as if any Holder had accelerated the same in accordance with the terms of the Note Purchase Agreement or other applicable Note Document, and the Guarantor shall forthwith pay such principal amount, Make-Whole Amount, if any, and interest thereon and any other amounts guaranteed hereunder without further notice or demand.

S ECTION 8. T ERM OF A GREEMENT .

This Guaranty and all guaranties, covenants and agreements of the Guarantor contained herein shall continue in full force and effect and shall not be discharged until such time as all of the Obligations shall be paid and performed in full and all of the agreements of the Guarantor hereunder shall be duly paid and performed in full.

S ECTION 9. N OTICES .

All notices and communications provided for hereunder shall be in writing and sent by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or by registered or certified mail with return receipt requested (postage prepaid), or by a recognized overnight delivery service (with charges prepaid) (a) if to the Company or any Holder at the address set forth in the Note Purchase Agreement or (b) if to the Guarantor, in care of the Company at the Company’s address set forth in the Note Purchase Agreement, or in each case at such other address as the Company, any Holder or such Guarantor shall from time to time designate in writing to the other parties. Any notice so addressed shall be deemed to be given when actually received.

S ECTION 10. S URVIVAL .

All warranties, representations and covenants made by the Guarantor herein or in any certificate or other instrument delivered by it or on its behalf hereunder shall be considered to have been relied upon by the Holders and shall survive the execution and delivery of this Guaranty, regardless of any investigation made by any of the Holders. All statements in any such certificate or other instrument shall constitute warranties and representations by such Guarantor hereunder.

1-2(a)(i)-5

S ECTION 11. J URISDICTION AND P ROCESS ; W AIVER OF J URY T RIAL .

(a) The Guarantor irrevocably submits to the non-exclusive jurisdiction of any New York state or federal court sitting in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising out of or relating to this Parent Guaranty, the Note Purchase Agreement or the Notes. To the fullest extent permitted by applicable law, the Guarantor irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

(b) The Guarantor consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding solely of the nature referred to in Section 11(a) by mailing a copy thereof by registered, certified or priority mail, postage prepaid, return receipt requested, or delivering a copy thereof in the manner for delivery of notices specified in Section 9, to it. The Guarantor agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.

(c) Nothing in this Section 11 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Guarantor in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

(d) The Guarantor waives trial by jury in any action brought on or with respect to this Agreement, the notes or any other document executed in connection herewith or therewith.

S ECTION 12. M ISCELLANEOUS .

Any provision of this Guaranty that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the Guarantor hereby waives any provision of law that renders any provisions hereof prohibited or unenforceable in any respect. The terms of this Guaranty shall be binding upon, and inure to the benefit of, the Guarantor and the Holders and their respective successors and assigns. No term or provision of this Guaranty may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Guarantor and the Required Holders. The section and paragraph headings in this Guaranty are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof, and all references herein to numbered sections, unless otherwise indicated, are to sections in this Guaranty. This Guaranty shall in all respects be governed by, and construed in accordance with, the laws of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.

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I N W ITNESS W HEREOF , the Guarantor has caused this Guaranty to be duly executed as of the day and year first above written.


U NITED S TATIONERS I NC .

By:
		Name:
		Title:

1-2(a)(i)-7

S UBSIDIARY G UARANTY

T HIS G UARANTY (this “Guaranty” ) dated as of November 25, 2013 is made by each of the undersigned (each being a “Guarantor” ), in favor of the holders from time to time of the Notes hereinafter referred to and their respective successors and assigns (collectively, the “Holders” and each individually, a “Holder” ).

W ITNESSETH :

W HEREAS , U NITED S TATIONERS S UPPLY C O ., an Illinois corporation (the “Company” ), U NITED S TATIONERS I NC ., a Delaware corporation and the owner of all of the issued and outstanding stock of the Company (the “Parent” ), and the initial Holders have entered into a Note Purchase Agreement dated as of November 25, 2013 (the Note Purchase Agreement as amended, supplemented, restated or otherwise modified from time to time in accordance with its terms and in effect, the “Note Purchase Agreement” );

W HEREAS , the Note Purchase Agreement contemplates the issuance by the Company of Notes (as defined in the Note Purchase Agreement);

W HEREAS , the Parent or Company directly or indirectly owns all of the issued and outstanding capital stock of each Guarantor and, by virtue of such ownership and otherwise, such Guarantor has derived or will derive substantial benefits from the purchase by the Holders of the Notes;

W HEREAS , it is a requirement of the Note Purchase Agreement that each Guarantor execute and deliver this Guaranty to the Holders; and

W HEREAS , each Guarantor desires to execute and deliver this Guaranty to satisfy the requirement described in the preceding paragraph;

Now, T HEREFORE , in consideration of the premises and other benefits to each Guarantor, and of the purchase of the Notes by the Holders, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, each Guarantor makes this Guaranty as follows:

S ECTION 1. D EFINITIONS .

Any capitalized terms not otherwise herein defined shall have the meanings attributed to them in the Note Purchase Agreement.

S ECTION 2. G UARANTY .

Each Guarantor, jointly and severally with each other Guarantor, unconditionally and irrevocably guarantees to the Holders the due, prompt and complete payment by the Company of the principal of, Make-Whole Amount, if any, and interest on (including interest accruing or

E XHIBIT 1.2(a)(ii)

(to Note Purchase Agreement)

becoming owing subsequent to the commencement of any bankruptcy, reorganization or similar proceeding involving the Company), and each other amount due under, the Notes and the Note Purchase Agreement, when and as the same shall become due and payable (whether at stated maturity or by required or optional prepayment or by declaration or otherwise) in accordance with the terms of the Notes and the Note Purchase Agreement (the Notes and the Note Purchase Agreement being sometimes hereinafter collectively referred to as the “Note Documents” and the amounts payable by the Company under the Note Documents (including any reasonable attorneys’ fees and expenses), being sometimes collectively hereinafter referred to as the “ Obligations ”). This Guaranty is a guaranty of payment and not just of collectibility and is in no way conditioned or contingent upon any attempt to collect from the Company or upon any other event, contingency or circumstance whatsoever. If for any reason whatsoever the Company shall fail or be unable duly, punctually and fully to pay such amounts as and when the same shall become due and payable, each Guarantor, without demand, presentment, notice of acceleration, notice of intent to accelerate, protest or notice of any kind, will forthwith pay or cause to be paid such amounts to the Holders under the terms of such Note Documents, in lawful money of the United States, at the place specified in the Note Purchase Agreement, or perform or comply with the same or cause the same to be performed or complied with, together with interest (to the extent provided for under such Note Documents) on any amount due and owing from the Company. Each Guarantor, promptly after demand, will pay to the Holders the reasonable costs and expenses of collecting such amounts or otherwise enforcing this Guaranty, including, without limitation, the reasonable fees and expenses of counsel. Notwithstanding the foregoing, the right of recovery against each Guarantor under this Guaranty is limited to the extent it is judicially determined with respect to any Guarantor that entering into this Guaranty would violate Section 548 of the United States Bankruptcy Code or any comparable provisions of any state law, in which case such Guarantor shall be liable under this Guaranty only for amounts aggregating up to the largest amount that would not render such Guarantor’s obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provisions of any state law.

S ECTION 3. G UARANTOR ’ S O BLIGATIONS U NCONDITIONAL .

The obligations of each Guarantor under this Guaranty shall be primary, absolute and unconditional obligations of each Guarantor, shall not be subject to any counterclaim, set-off, deduction, diminution, abatement, recoupment, suspension, deferment, reduction or defense based upon any claim each Guarantor or any other Person may have against the Company or any other Person, and to the full extent permitted by applicable law shall remain in full force and effect without regard to, and except as provided in Section 9.7(b) of the Note Purchase Agreement, shall not be released, discharged or in any way affected by, any circumstance or condition whatsoever other than indefeasible payment in full of the Obligations (whether or not each Guarantor or the Company shall have any knowledge or notice thereof), including:

1-2(a)(ii)-2

(b) any furnishing or acceptance of any security, or any release of any security, for the Obligations, or the failure of any security or the failure of any Person to perfect any interest in any collateral;

(c) any failure, omission or delay on the part of the Company to conform or comply with any term of any of the Note Documents or any other instrument or agreement referred to in paragraph (a) above, including, without limitation, failure to give notice to any Guarantor of the occurrence of a “Default” or an “Event of Default” under any Note Document;

(d) any waiver of the payment, performance or observance of any of the obligations, conditions, covenants or agreements contained in any Note Document, or any other waiver, consent, extension, indulgence, compromise, settlement, release or other action or inaction under or in respect of any of the Note Documents or any other instrument or agreement referred to in paragraph (a) above or any obligation or liability of the Company, or any exercise or non-exercise of any right, remedy, power or privilege under or in respect of any such instrument or agreement or any such obligation or liability;

(f) any voluntary or involuntary bankruptcy, insolvency, reorganization, arrangement, readjustment, assignment for the benefit of creditors, composition, receivership, conservatorship, custodianship, liquidation, marshaling of assets and liabilities or similar proceedings with respect to the Company, any Guarantor or to any other Person or any of their respective properties or creditors, or any action taken by any trustee or receiver or by any court in any such proceeding;

(h) any merger or consolidation of the Company or any Guarantor into or with any other corporation, or any sale, lease or transfer of any of the assets of the Company or any Guarantor to any other Person;

(i) any change in the ownership of any shares of capital stock of the Company or any change in the corporate relationship between the Company and any Guarantor, or any termination of such relationship;

(j) any release or discharge, by operation of law, of any Guarantor from the performance or observance of any obligation, covenant or agreement contained in this Guaranty; or

1-2(a)(ii)-3

S ECTION 4. F ULL R ECOURSE O BLIGATIONS .

The obligations of each Guarantor set forth herein constitute the full recourse obligations of such Guarantor enforceable against it to the full extent of all its assets and properties.

S ECTION 5. W AIVER .

Each Guarantor unconditionally waives, to the extent permitted by applicable law, (a) notice of any of the matters referred to in Section 3, (b) notice to such Guarantor of the incurrence of any of the Obligations, notice to such Guarantor or the Company of any breach or default by such Company with respect to any of the Obligations or any other notice that may be required, by statute, rule of law or otherwise, to preserve any rights of the Holders against such Guarantor, (c) presentment to, notice of acceleration of, notice of intent to accelerate or demand of payment from the Company or the Guarantor with respect to any amount due under any Note Document or protest for nonpayment or dishonor, (d) any right to the enforcement, assertion or exercise by any of the Holders of any right, power, privilege or remedy conferred in the Note Purchase Agreement or any other Note Document or otherwise, (e) any requirement of diligence on the part of any of the Holders, (f) any requirement to exhaust any remedies or to mitigate the damages resulting from any default under any Note Document, (g) any notice of any sale, transfer or other disposition by any of the Holders of any right, title to or interest in the Note Purchase Agreement or in any other Note Document and (h) any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge, release or defense of a guarantor or surety or which might otherwise limit recourse against such Guarantor.

S ECTION 6. S UBROGATION , C ONTRIBUTION , R EIMBURSEMENT OR I NDEMNITY .

Until all Obligations have been indefeasibly paid in full, each Guarantor agrees not to take any action pursuant to any rights which may have arisen in connection with this Guaranty to be subrogated to any of the rights (whether contractual, under the United States Bankruptcy Code, as amended, including Section 509 thereof, under common law or otherwise) of any of the Holders against the Company or against any collateral security or guaranty or right of offset held by the Holders for the payment of the Obligations. Until all Obligations have been indefeasibly paid in full, each Guarantor agrees not to take any action pursuant to any contractual, common law, statutory or other rights of reimbursement, contribution, exoneration or indemnity (or any similar right) from or against the Company which may have arisen in connection with this Guaranty. So long as the Obligations remain, if any amount shall be paid by or on behalf of the Company to any Guarantor on account of any of the rights waived in this paragraph, such amount shall be held by such Guarantor in trust, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Holders (duly endorsed by such Guarantor to the Holders, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Holders may determine.

1-2(a)(ii)-4

S ECTION 7. E FFECT OF B ANKRUPTCY P ROCEEDINGS , ETC .

This Guaranty shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the sums due to any of the Holders pursuant to the terms of the Note Purchase Agreement or any other Note Document is rescinded or must otherwise be restored or returned by such Holder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company or any other Person, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to the Company or other person or any substantial part of its property, or otherwise, all as though such payment had not been made. If an event permitting the acceleration of the maturity of the principal amount of the Notes shall at any time have occurred and be continuing and one or more Holders shall have attempted to accelerate the maturity of the principal amount of the Notes pursuant to and in compliance with Section 12.1 of the Note Purchase Agreement, or an event shall have occurred that pursuant to Section 12.1 of the Note Purchase Agreement purportedly results in the automatic acceleration of the maturity of the principal amount of the Notes, and in either such case such acceleration shall at such time be prevented by reason of the pendency against the Company or any other Person of a case or proceeding under a bankruptcy or insolvency law, each Guarantor agrees that, for purposes of this Guaranty and its obligations hereunder, the maturity of the principal amount of the Notes and all other Obligations shall be deemed to have been accelerated with the same effect as if any Holder had accelerated the same in accordance with the terms of the Note Purchase Agreement or other applicable Note Document, and such Guarantor shall forthwith pay such principal amount, Make-Whole Amount, if any, and interest thereon and any other amounts guaranteed hereunder without further notice or demand.

S ECTION 8. T ERM OF A GREEMENT .

Subject to Section 9.7(b) of the Note Purchase Agreement, this Guaranty and all guaranties, covenants and agreements of each Guarantor contained herein shall continue in full force and effect and shall not be discharged until such time as all of the Obligations shall be irrevocably paid and performed in full in cash and all of the agreements of such Guarantor hereunder shall be irrevocably duly paid and performed in full in cash.

S ECTION 9. R EPRESENTATIONS AND W ARRANTIES .

Each Guarantor represents and warrants to each Holder that:

(a) such Guarantor is a corporation or other legal entity validly existing and in good standing or equivalent status under the laws of its jurisdiction of organization and has the corporate or other power and authority to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged;

1-2(a)(ii)-5

(b) such Guarantor has the corporate or other power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guaranty, and has taken all necessary corporate or other action to authorize its execution, delivery and performance of this Guaranty;

(c) this Guaranty constitutes a legal, valid and binding obligation of such Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent transfer, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law);

(d) the execution, delivery and performance of this Guaranty will not violate any requirement of law applicable to such Guarantor or material contractual obligation of such Guarantor and, except as provided in the Note Purchase Agreement, will not result in or require the creation or imposition of any Lien on any of the properties, revenues or assets of the Guarantor pursuant to the provisions of any material contractual obligation of such Guarantor or any requirement of law;

(e) except as provided in the Note Purchase Agreement, no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority is required in connection with the execution, delivery or performance of this Guaranty;

(f) except as provided in the Note Purchase Agreement, no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of such Guarantor, threatened by or against such Guarantor or any of its properties (i) with respect to this Guaranty or any of the transactions contemplated hereby or (ii) which would reasonably be expected to have a Material Adverse Effect;

(g) the execution, delivery and performance of this Guaranty will not violate any provision of any order, judgment, writ, award or decree of any court, arbitrator or Governmental Authority, domestic or foreign, or of the charter or by-laws of such Guarantor or of any securities issued by such Guarantor; and

(h) after giving effect to the transactions contemplated herein and after giving due consideration to any rights of contribution, (i) the present fair salable value of the assets of such Guarantor is in excess of the amount that will be required to pay its probable liability on its existing debts as said debts become absolute and matured, (ii) such Guarantor has received reasonably equivalent value for executing and delivering this Guaranty, (iii) the property remaining in the hands of such Guarantor is not an unreasonably small capital, and (iv) such Guarantor is able to pay its debts as they mature.

1-2(a)(ii)-6

S ECTION 10. N OTICES .

All notices and communications provided for hereunder shall be in writing and sent by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or by registered or certified mail with return receipt requested (postage prepaid), or by a recognized overnight delivery service (with charges prepaid) (a) if to the Company or any Holder at the address set forth in, the Note Purchase Agreement or (b) if to a Guarantor, in care of the Company at the Company’s address set forth in the Note Purchase Agreement, or in each case at such other address as the Company, any Holder or such Guarantor shall from time to time designate in writing to the other parties. Any notice so addressed shall be deemed to be given when actually received.

S ECTION 11. J URISDICTION AND P ROCESS ; W AIVER OF J URY T RIAL .

(a) Each Guarantor irrevocably submits to the non-exclusive jurisdiction of any New York state or federal court sitting in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising out of or relating to this Guaranty, the Note Purchase Agreement or the Notes. To the fullest extent permitted by applicable law, each Guarantor irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

(b) Each Guarantor consents to process being served in any suit, action or proceeding solely of the nature referred to in Section 11(a) by mailing a copy thereof by registered or certified or priority mail, postage prepaid, return receipt requested, or delivering a copy thereof in the manner for delivery of notices specified in Section 10, to it. Each Guarantor agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.

(c) Nothing in this Section 11 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

(d) E ACH G UARANTOR WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS A GREEMENT , THE N OTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH .

1-2(a)(ii)-7

S ECTION 12. M ISCELLANEOUS .

Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, each Guarantor hereby waives any provision of law that renders any provisions hereof prohibited or unenforceable in any respect. The terms of this Guaranty shall be binding upon, and inure to the benefit of, each Guarantor and the Holders and their respective successors and assigns. It is agreed and understood that any Subsidiary of the Company or of any Guarantor may become a Guarantor hereunder by executing a Joinder substantially in the form of Exhibit A attached hereto and delivering the same to the Holders. Any such Person shall thereafter be a “Guarantor” for all purposes under this Guaranty. No term or provision of this Guaranty may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by each Guarantor and the Holders; provided, however , that a Guarantor may be fully released and discharged from this Guaranty pursuant to the terms of Section 9.7(b) of the Note Purchase Agreement. The section and paragraph headings in this Guaranty are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof, and all references herein to numbered sections, unless otherwise indicated, are to sections in this Guaranty. This Guaranty shall in all respects be governed by, and construed in accordance with, the laws of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.

1-2(a)(ii)-8

I N W ITNESS W HEREOF , each Guarantor has caused this Guaranty to be duly executed as of the day and year first above written.


U NITED S TATIONERS F INANCIAL S ERVICES LLC

By:
		Name:
		Title:

U NITED S TATIONERS T ECHNOLOGY S ERVICES LLC

By:
		Name:
		Title:

L AGASSE , I NC .

By:
		Name:
		Title:

1-2(a)(ii)-9

F ORM OF J OINDER TO S UBSIDIARY G UARANTY

The undersigned (the “ Guarantor ”), joins in the Subsidiary Guaranty dated as of November 25, 2013 from the Guarantors named therein in favor of the Holders, as defined therein, and (i) jointly and severally with the other Guarantors under the Subsidiary Guaranty, guarantees to the Holders from time to time of the Notes the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) and the full and prompt performance and observance of all Obligations (as defined in Section 2 of the Subsidiary Guaranty), (ii) accepts and agrees to perform and observe all of the covenants set forth therein, (iii) waives the rights set forth in Section 5 of the Subsidiary Guaranty, (iv) waives the rights, submits to jurisdiction, and waives service of process as described in Section 11 of the Subsidiary Guaranty and (v) agrees to be bound by all of the terms thereof and represents and warrants to the Holders that:

(a) the Guarantor is validly existing and in good standing or equivalent status under the laws of its jurisdiction of organization and has the requisite power and authority to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged;

(b) the Guarantor has the requisite power and authority and the legal right to execute and deliver this Joinder to Subsidiary Guaranty (“ Joinder ”) and to perform its obligations hereunder and under the Subsidiary Guaranty and has taken all necessary action to authorize its execution and delivery of this Joinder and its performance of the Subsidiary Guaranty; and

(c) the Subsidiary Guaranty constitutes a legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent transfer, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).

I N W ITNESS W HEREOF , the undersigned has caused this Joinder to Subsidiary Guaranty to be duly executed as of , .


[N AME OF G UARANTOR ]

By:
		Name:
		Title:

1-2(a)(ii)-10

F ORM OF O PINION OF C OUNSEL

FOR THE C OMPANY

The opinion of Mayer Brown LLP, counsel for the Company, shall be to the effect that:

1. The Company is a corporation validly existing and in good standing under the laws of Illinois, and has all requisite corporate power and authority to enter into and perform the Agreement and the Collateral Documents to which it is a party and to issue and sell the Notes.

2. The Parent is a corporation validly existing and in good standing under the laws of Delaware, and has all requisite corporate power and authority to enter into and perform the Agreement and to execute, deliver and perform the Parent Guaranty and the Collateral Documents to which it is a party.

3. Each of the Illinois Subsidiary Guarantors is a limited liability company validly existing and in good standing under the laws of Illinois, and has all requisite limited liability company power and authority to execute, deliver and perform the Subsidiary Guaranty and the Collateral Documents to which it is a party.

4. The Agreement, the Covered Collateral Documents to which it is a party and the Notes have been duly authorized by proper corporate action on the part of the Company, have been duly executed and delivered by an authorized officer of the Company, and constitute valid and binding agreements of the Company, enforceable in accordance with their terms, except to the extent that enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent transfer, moratorium or similar laws of general application now or hereafter in effect relating to or affecting the enforcement of the rights of creditors or other obligees generally or by general equitable principles, regardless of whether enforcement is sought in a proceeding in equity or at law.

5. The Agreement, the Covered Collateral Documents to which it is a party and the Parent Guaranty have been duly authorized by proper corporate action on part of the Parent, have been duly executed and delivered by an authorized officer of the Parent, and constitute valid and binding agreements of the Parent, enforceable in accordance with their terms, except to the except to the extent that enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent transfer, moratorium or similar laws of general application now or hereafter in effect relating to or affecting the enforcement of the rights of creditors or other obligees generally or by general equitable principles, regardless of whether enforcement is sought in a proceeding in equity or at law.

6. The Subsidiary Guaranty and the Covered Collateral Documents to which it is a party have been duly authorized by proper limited liability company action on the part of the Illinois Subsidiary Guarantors and have been duly executed and delivered by authorized officers of the Illinois Subsidiary Guarantors.

E XHIBIT 4.4(a)

(to Note Purchase Agreement)

7. The Subsidiary Guaranty and the Covered Collateral Documents to which it is a party and constitute valid and binding agreements of the Subsidiary Guarantors, enforceable in accordance with their terms, except to the extent that enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent transfer, moratorium or similar laws of general application now or hereafter in effect relating to or affecting the enforcement of the rights of creditors or other obligees generally or by general equitable principles, regardless of whether enforcement is sought in a proceeding in equity or at law.

8. Assuming the accuracy of the representations and warranties of all parties set forth in the Agreement and the representations of Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, set forth in a letter or letters to the Company dated as of the approximate date hereof regarding the offering of the Notes, the offer, sale and delivery of the Notes by the Company, the delivery of the Parent Guaranty by the Parent and the delivery of the Subsidiary Guaranty by the Subsidiary Guarantors do not require registration under the Securities Act of 1933, as amended, or the qualification of an indenture under the Trust Indenture Act of 1939, as amended.

9. No authorization, approval or consent of, and no registration or qualification with, any U.S. Federal or Illinois state Governmental Authority is required in connection with the execution, delivery and performance by (i) the Company or the Parent of the Agreement and each Collateral Document to which it is a party or the offering, issuance and sale by the Company of the Notes, (ii) the Parent of the Parent Guaranty, or (iii) any Subsidiary Guarantor of the Subsidiary Guaranty and each Collateral Document to which it is a party.

10. The issuance and sale of the Notes by the Company, the performance by the Company of its obligations under the Notes, the Agreement and the Covered Collateral Documents to which it is a party and the execution and delivery of the Agreement and the Covered Collateral Documents to which it is a party by the Company does not (i) violate any Applicable Law or any provision of the articles of incorporation or bylaws of the Company, or (ii) conflict with, or result in any breach or default under, or, except as contemplated by the Collateral Documents, result in the creation or imposition of any lien, charge or encumbrance on, the property of the Company pursuant to the provisions of any agreement or instrument listed on Schedule I hereto.

11. The execution and delivery of the Agreement, the Parent Guaranty and the Covered Collateral Documents to which it is a party by the Parent and the performance of its obligations thereunder does not (i) violate any Applicable Law or any provision of the certificate of incorporation or bylaws of the Parent, or (ii) conflict with, or result in any breach or default under, or, except as contemplated by the Collateral Documents, result in the creation or imposition of any lien, charge or encumbrance on, the property of the Parent pursuant to the provisions of any agreement or instrument listed on Schedule I hereto.

4.4(a)-2

12. The execution and delivery of the Subsidiary Guaranty and the Covered Collateral Documents to which it is a party by each Subsidiary Guarantor and the performance of their respective obligations thereunder does not violate any Applicable Law.

13. The execution and delivery of the Subsidiary Guaranty and the Covered Collateral Documents to which it is a party by each Illinois Subsidiary Guarantor and the performance of their respective obligations thereunder does not violate any provision of the organizational documents of such Illinois Subsidiary Guarantor.

14. The execution and delivery of the Subsidiary Guaranty and the Covered Collateral Documents to which it is a party by each Subsidiary Guarantor and the performance of its obligations thereunder does not conflict with, or result in any breach or default under, or, except as contemplated by the Collateral Documents, result in the creation or imposition of any lien, charge or encumbrance on, the property of such Subsidiary Guarantor pursuant to the provisions of any agreement or instrument listed on Schedule I hereto.

15. None of the Company, the Parent, any Subsidiary Guarantor or any Subsidiary is an “investment company,” as such term is defined in the Investment Company Act of 1940, as amended.

16. Based on the representations and warranties set forth in the Agreement, the issuance of the Notes and the intended use of the proceeds of the sale of the Notes do not violate Regulation T, U or X of the Board of Governors of the Federal Reserve System.

17. The provisions of the Security Agreement are effective under the New York UCC to create in favor of the Collateral Agent a security interest in the rights of the Company, the Parent and each Subsidiary Guarantor in that portion of the collateral of the Company, the Parent and each Subsidiary Guarantor, as applicable, in which a security interest was purported to be granted under the Security Agreement and in which a security interest may be created under Article 9 of the New York UCC (the “ Article 9 Collateral ”).

18. As evidenced by the time-stamped copies of the Financing Statements naming the Company, the Parent and each Illinois Subsidiary Guarantor as debtors attached as exhibits to such opinion, such financing statements were filed and accordingly the Collateral Agent’s security interest in the Article 9 Collateral of the Company, the Parent and each Illinois Subsidiary Guarantor in which a security interest may be perfected by filing a financing statement under the UCC as in effect in the state of filing has been perfected.

19. Assuming the Collateral Agent takes delivery and retains possession in the State of Illinois of certificates in registered form representing the securities pledged to the Collateral Agent pursuant to the Security Agreement (the “ Pledged Securities ”), and further assuming the Pledged Securities are each duly indorsed to the Collateral Agent or in blank by an effective endorsement or are accompanied by undated stock powers with respect thereto duly indorsed to the Collateral Agent or in blank by an effective endorsement, the Collateral Agent’s security interest in the rights of the Company or the Parent, as applicable, in the Pledged Securities will be perfected.

4.4(a)-3

The opinion of Mayer Brown LLP shall cover such other matters relating to the sale of the Notes as the Purchasers may reasonably request. With respect to matters of fact on which such opinion is based, such counsel shall be entitled to rely on appropriate certificates of public officials and officers of the Company. The opinion of Mayer Brown LLP may be limited to matters governed by the laws of the United States of America, the laws of the states of New York and Illinois, the Delaware General Corporation Law and the Delaware UCC. The opinion shall also, to the extent reliance is reasonable, state that subsequent permitted transferees and assignees of the Notes may rely thereon.

4.4(a)-4

F ORM OF O PINION OF S PECIAL C OUNSEL

TO THE PURCHASERS

To be provided to the Purchasers only.

E XHIBIT 4.4(a)

(to Note Purchase Agreement)

Exhibit 4.5

P ARENT G UARANTY

W ITNESSET H :

W HEREAS , the Note Purchase Agreement contemplates the issuance by the Company of Notes (as defined in the Note Purchase Agreement);

W HEREAS , the Company is a wholly owned Subsidiary of the Guarantor and the Guarantor will derive substantial benefits from the purchase by the Holders of the Notes;

W HEREAS , it is a condition precedent to the obligation of the Holders to purchase the Notes that the Guarantor shall have executed and delivered this Guaranty to the Holders; and

W HEREAS , the Guarantor desires to execute and deliver this Guaranty to satisfy the conditions described in the preceding paragraph;

S ECTION 1. D EFINITIONS .

Any capitalized terms not otherwise herein defined shall have the meanings ascribed to them in the Note Purchase Agreement.

S ECTION 2. G UARANTY .

become due and payable (whether at stated maturity or by required or optional prepayment or by declaration or otherwise) in accordance with the terms of the Notes and the Note Purchase Agreement (the Notes and the Note Purchase Agreement being sometimes hereinafter collectively referred to as the “ Note Documents ” and the amounts payable by the Company under the Note Documents, and all other monetary obligations of the Company thereunder (including any reasonable attorneys’ fees and expenses), being sometimes collectively hereinafter referred to as the “ Obligations ”). This Guaranty is a guaranty of payment and not just of collectibility and is in no way conditioned or contingent upon any attempt to collect from the Company or upon any other event, contingency or circumstance whatsoever. If for any reason whatsoever the Company shall fail or be unable duly, punctually and fully to pay such amounts as and when the same shall become due and payable, the Guarantor, without demand, presentment, protest or notice of any kind, will forthwith pay or cause to be paid such amounts to the Holders under the terms of such Note Documents, in lawful money of the United States, at the place specified in the Note Purchase Agreement, or perform or comply with the same or cause the same to be performed or complied with, together with interest (to the extent provided for under such Note Documents) on any amount due and owing from the Company. The Guarantor, promptly after demand, will pay to the Holders the reasonable costs and expenses of collecting such amounts or otherwise enforcing this Guaranty, including, without limitation, the reasonable fees and expenses of counsel.

S ECTION 3. G UARANTOR ’ S O BLIGATIONS U NCONDITIONAL .

- 2 -

- 3 -

S ECTION 4. F ULL R ECOURSE O BLIGATIONS .

The obligations of the Guarantor set forth herein constitute the full recourse obligations of the Guarantor enforceable against it to the full extent of all its assets and properties.

S ECTION 5. W AIVER .

S ECTION 6. S UBROGATION , C ONTRIBUTION , R EIMBURSEMENT OR I NDEMNITY .

- 4 -

S ECTION 7. E FFECT OF B ANKRUPTCY P ROCEEDINGS , ETC .

This Guaranty shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the sums due to any of the Holders pursuant to the terms of the Note Purchase Agreement or any other Note Document is rescinded or must otherwise be restored or returned by the Holder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company or any other person, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to the Company or other person or any substantial part of its property, or otherwise, all as though such payment had not been made. If an event permitting the acceleration of the maturity of the principal amount of the Notes shall at any time have occurred and be continuing and one or more Holders shall have attempted to accelerate the maturity of the principal amount of the Notes pursuant to and in compliance with Section 12.1 of the Note Purchase Agreement, or an event shall have occurred that pursuant to Section 12.1 of the Note Purchase Agreement purportedly results in the automatic acceleration of the maturity of the principal amount of the Notes, and in either such case such acceleration shall at such time be prevented by reason of the pendency against the Company or any other Person of a case or proceeding under a bankruptcy or insolvency law, the Guarantor agrees that, for purposes of this Guaranty and its obligations hereunder, the maturity of the principal amount of the Notes and all other Obligations shall be deemed to have been accelerated with the same effect as if any Holder had accelerated the same in accordance with the terms of the Note Purchase Agreement or other applicable Note Document, and the Guarantor shall forthwith pay such principal amount, Make-Whole Amount, if any, and interest thereon and any other amounts guaranteed hereunder without further notice or demand.

S ECTION 8. T ERM OF A GREEMENT .

S ECTION 9. N OTICES .

- 5 -

S ECTION 10. S URVIVAL .

S ECTION 11. J URISDICTION AND P ROCESS ; W AIVER OF J URY T RIAL .

(d) The Guarantor waives trial by jury in any action brought on or with respect to this Agreement, the notes or any other document executed in connection herewith or therewith.

- 6 -

S ECTION 12. M ISCELLANEOUS .

- 7 -

I N W ITNESS W HEREOF , the Guarantor has caused this Guaranty to be duly executed as of the day and year first above written.


U NITED S TATIONERS I NC .

By:
		Name:
		Title:

Exhibit 4.6

S UBSIDIARY G UARANTY

W I T N E S S E T H :

W HEREAS , the Note Purchase Agreement contemplates the issuance by the Company of Notes (as defined in the Note Purchase Agreement);

W HEREAS , it is a requirement of the Note Purchase Agreement that each Guarantor execute and deliver this Guaranty to the Holders; and

W HEREAS , each Guarantor desires to execute and deliver this Guaranty to satisfy the requirement described in the preceding paragraph;

N OW , T HEREFORE , in consideration of the premises and other benefits to each Guarantor, and of the purchase of the Notes by the Holders, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, each Guarantor makes this Guaranty as follows:

S ECTION 1. D EFINITIONS .

Any capitalized terms not otherwise herein defined shall have the meanings attributed to them in the Note Purchase Agreement.

S ECTION 2. G UARANTY .

- 1 -

becoming owing subsequent to the commencement of any bankruptcy, reorganization or similar proceeding involving the Company), and each other amount due under, the Notes and the Note Purchase Agreement, when and as the same shall become due and payable (whether at stated maturity or by required or optional prepayment or by declaration or otherwise) in accordance with the terms of the Notes and the Note Purchase Agreement (the Notes and the Note Purchase Agreement being sometimes hereinafter collectively referred to as the “Note Documents” and the amounts payable by the Company under the Note Documents (including any reasonable attorneys’ fees and expenses), being sometimes collectively hereinafter referred to as the “Obligations” ). This Guaranty is a guaranty of payment and not just of collectibility and is in no way conditioned or contingent upon any attempt to collect from the Company or upon any other event, contingency or circumstance whatsoever. If for any reason whatsoever the Company shall fail or be unable duly, punctually and fully to pay such amounts as and when the same shall become due and payable, each Guarantor, without demand, presentment, notice of acceleration, notice of intent to accelerate, protest or notice of any kind, will forthwith pay or cause to be paid such amounts to the Holders under the terms of such Note Documents, in lawful money of the United States, at the place specified in the Note Purchase Agreement, or perform or comply with the same or cause the same to be performed or complied with, together with interest (to the extent provided for under such Note Documents) on any amount due and owing from the Company. Each Guarantor, promptly after demand, will pay to the Holders the reasonable costs and expenses of collecting such amounts or otherwise enforcing this Guaranty, including, without limitation, the reasonable fees and expenses of counsel. Notwithstanding the foregoing, the right of recovery against each Guarantor under this Guaranty is limited to the extent it is judicially determined with respect to any Guarantor that entering into this Guaranty would violate Section 548 of the United States Bankruptcy Code or any comparable provisions of any state law, in which case such Guarantor shall be liable under this Guaranty only for amounts aggregating up to the largest amount that would not render such Guarantor’s obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provisions of any state law.

S ECTION 3. G UARANTOR ’ S O BLIGATIONS U NCONDITIONAL .

- 2 -

(c) any failure, omission or delay on the part of the Company to conform or comply with any term of any of the Note Documents or any other instrument or agreement referred to in paragraph (a) above, including, without limitation, failure to give notice to any Guarantor of the occurrence of a “Default” or an “Event of Default” under any Note Document;

(f) any voluntary or involuntary bankruptcy, insolvency, reorganization, arrangement, readjustment, assignment for the benefit of creditors, composition, receivership, conservatorship, custodianship, liquidation, marshaling of assets and liabilities or similar proceedings with respect to the Company, any Guarantor or to any other Person or any of their respective properties or creditors, or any action taken by any trustee or receiver or by any court in any such proceeding;

(j) any release or discharge, by operation of law, of any Guarantor from the performance or observance of any obligation, covenant or agreement contained in this Guaranty; or

- 3 -

S ECTION 4. F ULL R ECOURSE O BLIGATIONS .

The obligations of each Guarantor set forth herein constitute the full recourse obligations of such Guarantor enforceable against it to the full extent of all its assets and properties.

S ECTION 5. W AIVER .

S ECTION 6. S UBROGATION , C ONTRIBUTION , R EIMBURSEMENT OR I NDEMNITY .

- 4 -

S ECTION 7. E FFECT OF B ANKRUPTCY P ROCEEDINGS , ETC .

S ECTION 8. T ERM OF A GREEMENT .

S ECTION 9. R EPRESENTATIONS AND W ARRANTIES .

Each Guarantor represents and warrants to each Holder that:

- 5 -

- 6 -

S ECTION 10. N OTICES .

All notices and communications provided for hereunder shall be in writing and sent by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or by registered or certified mail with return receipt requested (postage prepaid), or by a recognized overnight delivery service (with charges prepaid) (a) if to the Company or any Holder at the address set forth in, the Note Purchase Agreement or (b) if to a Guarantor, in care of the Company at the Company’s address set forth in the Note Purchase Agreement, or in each case at such other address as the Company, any Holder or such Guarantor shall from time to time designate in writing to the other parties. Any notice so addressed shall be deemed to be given when actually received.

S ECTION 11. J URISDICTION AND P ROCESS ; W AIVER OF J URY T RIAL .

(c) Nothing in this Section 11 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

(d) E ACH G UARANTOR WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS A GREEMENT , THE N OTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH .

- 7 -

S ECTION 12. M ISCELLANEOUS .

Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, each Guarantor hereby waives any provision of law that renders any provisions hereof prohibited or unenforceable in any respect. The terms of this Guaranty shall be binding upon, and inure to the benefit of, each Guarantor and the Holders and their respective successors and assigns. It is agreed and understood that any Subsidiary of the Company or of any Guarantor may become a Guarantor hereunder by executing a Joinder substantially in the form of Exhibit A attached hereto and delivering the same to the Holders. Any such Person shall thereafter be a “Guarantor” for all purposes under this Guaranty. No term or provision of this Guaranty may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by each Guarantor and the Holders; provided, however, that a Guarantor may be fully released and discharged from this Guaranty pursuant to the terms of Section 9.7(b) of the Note Purchase Agreement. The section and paragraph headings in this Guaranty are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof, and all references herein to numbered sections, unless otherwise indicated, are to sections in this Guaranty. This Guaranty shall in all respects be governed by, and construed in accordance with, the laws of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.

- 8 -

In W ITNESS W HEREOF , each Guarantor has caused this Guaranty to be duly executed as of the day and year first above written.


U NITED S TATIONERS F INANCIAL S ERVICES LLC

By:
		Name:
		Title:


U NITED S TATIONERS M ANAGEMENT S ERVICES LLC

By:
		Name:
		Title:


L AGASSE , LLC

By:
		Name:
		Title:


ORS N ASCO , LLC

By:
		Name:
		Title:


MBS D EV , I NC .

By:
		Name:
		Title:

[Signature Page to Subsidiary Guaranty]


O KLAHOMA R IG , I NC .

By:
		Name:
		Title:


O KLAHOMA R IG & S UPPLY C O . T RANS ., I NC .

By:
		Name:
		Title:


O.K.I. S UPPLY , LLC

By:
		Name:
		Title:


O.K.I. D ATA , I NC .

By:
		Name:
		Title:


OKI M IDDLE E AST H OLDING C O .

By:
		Name:
		Title:

[Signature Page to Subsidiary Guaranty]

F ORM OF J OINDER TO S UBSIDIARY G UARANTY

The undersigned (the “Guarantor” ), joins in the Subsidiary Guaranty dated as of November 25, 2013 from the Guarantors named therein in favor of the Holders, as defined therein, and (i) jointly and severally with the other Guarantors under the Subsidiary Guaranty, guarantees to the Holders from time to time of the Notes the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) and the full and prompt performance and observance of all Obligations (as defined in Section 2 of the Subsidiary Guaranty), (ii) accepts and agrees to perform and observe all of the covenants set forth therein, (iii) waives the rights set forth in Section 5 of the Subsidiary Guaranty, (iv) waives the rights, submits to jurisdiction, and waives service of process as described in Section 11 of the Subsidiary Guaranty and (v) agrees to be bound by all of the terms thereof and represents and warrants to the Holders that:

(b) the Guarantor has the requisite power and authority and the legal right to execute and deliver this Joinder to Subsidiary Guaranty ( “Joinder” ) and to perform its obligations hereunder and under the Subsidiary Guaranty and has taken all necessary action to authorize its execution and delivery of this Joinder and its performance of the Subsidiary Guaranty; and

I N W ITNESS W HEREOF , the undersigned has caused this Joinder to Subsidiary Guaranty to be duly executed as of , .


[N AME OF G UARANTOR ]

By:
		Name:
		Title:

Exhibit 10.4

J OINDER

I NTERCREDITOR A GREEMENT

T HIS J OINDER (this “Joinder” ), dated as of January 15, 2014, to the Intercreditor Agreement dated as of October 15, 2007 attached hereto as Exhibit A (the “Agreement” ), is made by and between JPMorgan Chase Bank, N.A., as collateral agent (the “Collateral Agent” ), and each of the undersigned holders of the 2014 Notes (as defined below) (collectively, the “2014 Noteholders” ). Capitalized terms used herein but not defined herein shall have the meanings set forth in the Agreement.

W HEREAS , pursuant to that certain Note Purchase Agreement dated as of November 25, 2013 among the Company, the Parent and the purchasers named therein (the “2013 Note Agreement” ), the Company has issued and sold, on the date hereof, its 3.75% Senior Secured Notes due January 15, 2021 in the aggregate principal amount of $150,000,000 (the “2014 Notes” ), which 2014 Notes are guaranteed pursuant to (a) that certain Parent Guaranty dated as of November 15, 2013 by the Parent, as guarantor, in favor of the holders from time to time of the 2014 Notes and (b) that certain Subsidiary Guaranty dated as of November 15, 2013 by the Subsidiaries named therein, each as a guarantor, in favor of the holders from time to time of the 2014 Notes; and

W HEREAS , the 2014 Noteholders desire to join the Agreement as a “Secured Party” thereunder and, upon the execution and delivery of this Joinder, the 2014 Holders shall be “Additional Holders” and “Secured Parties” under the Agreement, (b) the 2013 Note Agreement shall be an “Eligible Additional Senior Secured Document” under the Agreement and (c) the 2014 Notes shall be “Eligible Additional Senior Secured Indebtedness” under the Agreement.

N OW , T HEREFORE , in consideration of the premises and the mutual agreements herein contained, the Collateral Agent and the 2014 Noteholders hereby agree as follows:

1. Each 2014 Noteholder hereby acknowledges that it has received and reviewed a copy of the Agreement and agrees that it shall be fully bound by, and subject to, all of the provisions of the Agreement with all the rights, benefits and obligations of a Secured Party thereunder.

2. This Joinder may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute one contract.

3. This Joinder shall be governed by and construed in accordance with the laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of laws of any other jurisdiction.

[ Signature Pages to Follow ]

I N W ITNESS W HEREOF , the Collateral Agent and each 2014 Noteholder has caused this Joinder to be duly executed by its authorized officers as of the day and year first above written.


Collateral Agent :

JPM ORGAN C HASE B ANK , N.A., as Collateral Agent

By
		Name:
		Title:

[Signature page to Joinder to Intercreditor Agreement]


2014 Noteholders:

T HE P RUDENTIAL I NSURANCE C OMPANY OF A MERICA

By:
	Vice President

P RUDENTIAL R ETIREMENT I NSURANCE AND A NNUITY C OMPANY

By:	Prudential Investment Management, Inc.
	(as Investment Manager)

	By:
		Vice President

T HE P RUDENTIAL L IFE I NSURANCE C OMPANY , L TD .

By:	Prudential Investment Management (Japan), Inc.
	(as Investment Manager)

By:	Prudential Investment Management, Inc.
	(as Sub-Adviser)

	By:
		Vice President

[Signature page to Joinder to Intercreditor Agreement]


F ARMERS I NSURANCE E XCHANGE M ID C ENTURY I NSURANCE C OMPANY F ARMERS N EW W ORLD L IFE I NSURANCE C OMPANY P HYSICIANS M UTUAL I NSURANCE C OMPANY

By:	Prudential Private Placement Investors, L.P.
	(as Investment Advisor)

By:	Prudential Private Placement Investors, Inc.
	(as its General Partner)

	By:
		Vice President

[Signature page to Joinder to Intercreditor Agreement]


M ET L IFE I NSURANCE C OMPANY OF C ONNECTICUT
by Metropolitan Life Insurance Company, its Investment Manager

M ETROPOLITAN L IFE I NSURANCE C OMPANY

By:
		Name:
		Title:

[Signature page to Joinder to Intercreditor Agreement]


M ASSACHUSETTS M UTUAL L IFE I NSURANCE C OMPANY

By:		Babson Capital Management LLC as Investment Adviser

By:
		Name:
		Title:

M ASS M UTUAL A SIA L IMITED

By:		Babson Capital Management LLC as Investment Adviser

By:
		Name:
		Title:

[Signature page to Joinder to Intercreditor Agreement]


W OODMEN OF THE W ORLD L IFE I NSURANCE S OCIETY

By:
		Name:
		Title:

By:
		Name:
		Title:

[Signature page to Joinder to Intercreditor Agreement]


Acknowledged by:

U NITED S TATIONERS S UPPLY C O .

By
		Name: Robert J. Kelderhouse
		Title: Vice President and Treasurer

U NITED S TATIONERS I NC .

By
		Name: Robert J. Kelderhouse
		Title: Vice President and Treasurer

[Signature page to Joinder to Intercreditor Agreement]

E XHIBIT A

I NTERCREDITOR A GREEMENT

UNITED STATIONERS INC.

CORPORATE ENTITY CHART

AS OF DECEMBER 2013

Exhibit 21

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (Form S-8 No. 333-66352, No. 333-37665, No. 333-134058 and No. 333-120563) pertaining to the Company’s various employee benefit plans of our reports dated February 19, 2014, with respect to the consolidated financial statements and schedule of United Stationers Inc. and the effectiveness of internal control over financial reporting of United Stationers Inc. included in its Annual Report (Form 10-K) for the year ended December 31, 2013, filed with the Securities and Exchange Commission.

/s/ Ernst & Young LLP

Chicago, Illinois

February 19, 2014

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

AS ADOPTED PURSUANT TO

SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, P. Cody Phipps, certify that:

1.	I have reviewed this annual report on Form 10-K of United Stationers Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and

5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 19, 2014

/s/ P. C ODY P HIPPS

P. Cody Phipps

President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

AS ADOPTED PURSUANT TO

SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Todd A. Shelton, certify that:

1.	I have reviewed this annual report on Form 10-K of United Stationers Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 19, 2014

/s/ T ODD A. S HELTON

Todd A. Shelton

Senior Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of United Stationers Inc. (the “Company”) on Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), P. Cody Phipps, Chief Executive Officer of the Company, and Todd A. Shelton, Senior Vice President and Chief Financial Officer of the Company, each hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ P. C ODY P HIPPS

P. Cody Phipps

President and Chief Executive Officer

February 19, 2014

/s/ T ODD A. S HELTON

Todd A. Shelton

Senior Vice President and Chief Financial Officer

February 19, 2014