EXHIBIT 10.1


 


  


MSC EXECUTIVE SEVERANCE PLAN 


 


Effective October 27, 2016


 


 




     

     


    

 


MSC EXECUTIVE SEVERANCE PLAN 


 


This document sets
forth the terms and conditions of the MSC Executive Severance Plan (the “Plan”), which is hereby adopted by MSC Industrial
Direct Co., Inc. (“MSC”) for the benefit of the eligible employees of MSC and its designated subsidiaries listed on
Appendix A to this document. MSC and all such designated subsidiaries hereinafter are referred to, individually and collectively,
as the “Company.” This document sets forth the terms of the Plan and is applicable to such eligible employees of the
Company who participate in the Plan in accordance with Sections 2 and 3 below.


 


Section 1.           Effective Date and Plan
Year.    The “Effective Date” of the Plan shall be October 27, 2016. The “Plan Year” shall be the 12-consecutive
month period beginning on January 1 and ending on December 31; provided, however, that, the first Plan Year shall be a short Plan
Year beginning on the Effective Date and ending on December 31, 2016.


 


Section 2.           Eligibility for Participation.   
Each person who is customarily employed by the Company as a Vice President, Senior Vice President or Executive Vice President (an
“Eligible Associate”) who experiences a “Qualifying Termination” (as defined below) shall be a participant
in the Plan, other than any person who is covered by an employment, severance or similar agreement with the Company that provides
for payment of severance pay under specified circumstances; provided, however, that for purposes of this Section 2, any agreement,
plan or award or similar instrument providing for benefits upon a change in control of the Company shall not be deemed to be such
an agreement; provided, further, that there shall be no duplication of comparable benefits under the Plan and any such agreement,
plan or award or similar instrument. Notwithstanding the foregoing, any person classified by the Company as an independent consultant,
contractor, or temporary worker to the Company will not be eligible for this severance program, even if it is later determined
by a court or governmental agency that such person was or is an employee of the Company.


 


Section 3.           Participation.    Each
Eligible Associate shall become a participant (a “Participant”) in the Plan on the later of the Effective Date, or
the date on which he or she has a Qualifying Termination. A Participant’s participation in the Plan shall cease as of the
date the Participant is no longer an Eligible Associate and is not entitled to any benefit provided under this Plan.


 


Section 4.           Entitlement to a Severance
Benefit.


 


(a)       Subject
to the provisions of this Section 4, each Participant who incurs a Qualifying Termination (as hereinafter defined) shall be eligible
to receive a “Severance Benefit” under the Plan that is determined in accordance with Section 5 below. For purposes
of the Plan, a “Qualifying Termination” means the occurrence of one of the following:


 


(i)       The
involuntary termination of the Participant’s employment by the Company as a result of the elimination of such Participant’s
job or position with the Company because of reorganization, job elimination, or site closure;


 






    	 	 	 



     


    

 


(ii)       The
termination of the Participant’s employment with the Company upon the Participant’s failure to accept a material change
in the geographic location where such Participant is required to primarily perform his or her services for the Company, such that
the distance between the previous geographic location and the new geographic location exceeds 50 miles (one way); or


 


(iii)       The
termination of the Participant’s employment with the Company upon the Participant’s failure to accept a reduction in
such Participant’s base salary of 20 percent or more.


 


(b)       As
a condition of receiving any Severance Benefit under the Plan, each Participant shall be required to execute a separation agreement
and general release (the “Agreement”) in favor of the Company in such form and of such content as the Plan Administrator,
in its sole discretion, may require and such Participant does not revoke the Agreement, to the extent the Agreement permits revocation.
The Agreement shall not be executed prior to the date of the Participant’s Qualifying Termination (the “Termination
Date”). Notwithstanding any provision in the Plan to the contrary, if such required Agreement is not so executed by the terminated
Participant or revoked, the Participant shall not be entitled to any payments or benefits under the Plan.


 


(c)       Participants
who are notified of their Qualifying Termination during what the Plan Administrator determines is a Company-approved leave of absence
of less than six months will be eligible for a Severance Benefit under the Plan. In the event that such Company-approved leave
(i) is for six months or longer or, (ii) as of the Termination Date, more than six months has elapsed since the beginning of such
Company-approved leave and the Participant did not resume continuous active employment with the Company prior to the end of such
six-month period, no Severance Benefit shall be payable to such Participant.


 


(d)       In
the event that a Participant dies after receipt of notification of a Qualifying Termination but prior to the Termination Date or
prior to the full payment of any Severance Benefit to which the Participant is entitled, (i) any Severance Allowance that would
have been paid to such Participant under the Plan shall be paid to his or her estate, (ii) any Benefits Credit payment due under
Section 6 below shall be made on behalf of the Participant’s qualified beneficiaries (within the meaning of COBRA), and (iii)
any Outplacement Services that are unused as of the date of a Participant’s death shall be immediately forfeited.


 


(e)       Notwithstanding
anything in the Plan to the contrary, no Eligible Associate or Participant shall be entitled to receive a Severance Benefit in
the event that the Plan Administrator determines, in its sole discretion, that (i) at the time of the Participant’s Qualifying
Termination, the Company had cause to terminate the Participant’s employment for failure to meet Company-established performance
criteria, the Participant’s misconduct, or the Participant’s violation of any applicable Company policy; (ii) the Participant
resigned from employment with the Company prior to the date the Participant’s employment is scheduled to terminate, or (iii)
prior to the Termination Date, the Participant received an offer of employment from the Company or any affiliate thereof on terms
that are comparable in the aggregate to those of the position held by the Participant with the Company prior to the Termination
Date. Notwithstanding anything in the Plan to the contrary, payment and provision of any Severance Benefit shall cease and be forfeited,
to the extent not previously paid or provided, immediately upon the Participant’s acceptance of any offer of employment with
the Company or any of its affiliates.


 






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(f)       In
addition, if a Participant incurs a Qualifying Termination, and the Plan Administrator determines, in its sole discretion, that
thereafter (i) the Participant breached any provision(s) of the Agreement described in Section 4(b) above, or (ii) the Participant
breached any provision(s) of any confidentiality, non-compete, non-solicitation, non-disparagement or other restrictive covenant
or similar agreement with the Company, any unpaid or unused Severance Benefit shall be immediately forfeited (including, without
limitation, any Benefits Credit payment and any outplacement services) and the Participant shall
immediately repay to the Company any amount(s) of Severance Allowance previously paid to such Participant on account of such Qualifying
Termination.


 


Section 5.           Determination of Severance
Benefit.    Subject to the provisions of Section 4 above and this Section 5, if a Participant incurs a Qualifying Termination,
the Participant shall be entitled to a “Severance Benefit.” A “Severance Benefit” shall consist of a “Severance
Allowance” determined in accordance with this Section 5, subject to the Participant’s eligibility (and eligibility
of members of the Participant’s family), a Benefits Credit payment, determined in accordance with Section 6 below, the Vesting
Acceleration Benefit described in Section 7 below and, at the discretion of the Plan Administrator, “Outplacement Services”
described in Section 8 below.


 


(a)       The
amount of a Participant’s Severance Allowance shall be determined as of the Termination Date and shall equal the amount determined
in accordance with Section 5(a), plus the amount determined in accordance with Section 5(b). The amount determined in accordance
with this Section 5(a) shall be based on the Participant’s level of employment with the Company at the time of the Qualifying
Termination, and shall be determined in accordance with the following chart:


 


	Participant’s Level of Employment With the Company	Aggregate Amount of Severance Allowance Under Section 5(a)
	Executive Vice President	18 months of Base Pay
	Senior Vice President	15 months of Base Pay
	Vice President	12 months of Base Pay


 


Notwithstanding the foregoing or anything
in the Plan to the contrary, the amount of any Severance Allowance payable to any Participant under the Plan shall be reduced,
dollar-for-dollar, but not below $0.00, by the amount of any payments made by the Company or any affiliates thereof, to such Participant
under the Worker Adjustment and Retraining Notification Act, as amended (the “WARN Act”) or any similar state law.


 


For purposes hereof:


 


		(i)	“Base Pay” means such Participant’s monthly base rate of salary on the Termination
Date, prorated to the extent necessary to take into account any reduced schedule of employment, but excluding all other forms of
compensation such as bonuses.



 






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		(ii)	A Participant’s level of employment with the Company shall be determined by the Plan Administrator,
in its sole discretion.



 


The portion
of the Severance Allowance determined in accordance with this Section 5(a) shall be paid in equal installments in accordance
with the normal payroll practices of the Company in effect on the date of the Qualifying Termination over the 12, 15 or 18 month
period, as the case may be, commencing on the Company payroll payday specified in the Participant’s Agreement, provided
that MSC had previously received from such Participant a fully executed Agreement.


 


(b)       The
amount determined in accordance with this Section 5(b) shall equal the average annual bonus paid by the Company to the Participant
for the three fiscal years of the Company (“Fiscal Years”) for which annual bonuses have been determined, or such fewer
number of Fiscal Years during which the Participant was employed by the Company, immediately preceding the Fiscal Year in which
the Qualifying Termination occurs (the “Termination Year”), as determined by the Plan Administrator, in its sole discretion,
multiplied by the number of days in the Termination Year prior to the date of the Qualifying Termination and divided by the number
of days in the Termination Year. Payment of the portion of the Severance Allowance determined in accordance with this Section 5(b),
if any, shall be made to a Participant in a single lump sum payment on the first payroll payday (determined in accordance with
the payroll schedule of the Company) following the later of (i) the date that the executed Agreement is returned to the Company,
or (ii) the expiration of the revocation period of the Agreement (“Payment Date”), provided that MSC has received from
such Participant a fully executed Agreement at least eight (8) days prior to the Payment Date and such Agreement has not been revoked
by the Participant prior to the Payment Date.


 


(c)       All
payments of any Severance Allowance shall be net of any required withholding, any employment taxes and other required taxes and
deductions with respect to the Severance Benefit.


 


Section
6.           Benefits Credit Payment.           In the event a Participant who is covered under the Company’s Healthcare
Exchange (the “Exchange”) incurs a Qualifying Termination, and such Participant is eligible to continue health plan
coverage through the Exchange under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”)
for periods after the date coverage would otherwise terminate on account
of such Qualifying Termination, the Company shall pay to the Participant
an amount equal to the credit provided by the Company toward the cost of the Participant’s coverage under the Exchange (determined
based on the Participant’s salary band, geographic region and coverage tier under the Exchange immediately prior to the Qualifying
Termination) for the period determined in accordance with the following chart (the “Benefits Credit”):


  






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	Participant’s Level of Employment With the Company	Aggregate Amount of Company Benefits Credit
	Executive Vice President	18 months of Benefits Credit
	Senior Vice President	15 months of Benefits Credit
	Vice President	12 months of Benefits Credit


 


The Benefits
Credit will be paid to the Participant in equal installments, concurrent with the portion of the Severance Allowance described
in Section 5(a) above, over the 12, 15 or 18 month period, as the case may be, commencing on the Company payday specified
in the Participant’s Agreement, provided that MSC had previously received from such Participant
a fully executed Agreement.


 


Section 7.           Vesting Acceleration Benefit.           
In the event a Participant incurs a Qualifying Termination, subject to the provisions of Section 4 above, as of the Termination
Date, any unvested Awards under the MSC Industrial Direct, Co. Inc. 2005 Omnibus Incentive Plan or the MSC Industrial Direct, Co.
Inc. 2015 Omnibus Incentive Plan (collectively, the “Omnibus Plans”) held by a Participant on the Termination Date
shall be deemed to be vested as follows:


 


(a)       For
any unvested Options or Stock Appreciation Rights (including any assumed or substituted options or stock appreciation rights) held
by the Participant that have an exercise price that is no greater than the Fair Market Value
of a Share of the underlying MSC stock on the Termination Date, each such Award will become vested and exercisable with respect
to the number of Options or Stock Appreciation Rights that would have vested on the next scheduled vesting date for such Award
in accordance with terms of the applicable Award Agreement and Omnibus Plan.


 


(b)       For
Restricted Stock Awards, Restricted Stock Unit Awards, Performance Share Awards and other share-based Awards (including assumed
or substituted restricted stock, restricted stock units, performance shares and other share-based awards) held by the Participant,
any restrictions applicable to each such Award will lapse with respect to the number of Shares
that would have vested on the next scheduled vesting date for such Award and any performance conditions imposed with respect to
such Shares shall be deemed to be achieved at target performance levels or as otherwise provided in the applicable Award Agreement.


 


For purposes of this Section 7, capitalized
terms not otherwise defined in the Plan shall have the meanings prescribed under the applicable Omnibus Plan. Except as provided
in this Section 7, the terms of the Omnibus Plans and the applicable Award Agreements will continue to apply.


 


Section 8.           Outplacement Services.
   The Plan Administrator may determine, in its sole discretion, to provide outplacement services as part of any Severance Benefit
of any Participant (“Outplacement Services”). Any such outplacement services shall be of such nature and such duration
as the Plan Administrator shall determine, in its discretion, and shall be described in the applicable Participant’s Agreement.
A Participant must commence usage of any Outplacement Services provided in a Severance Benefit no later than ninety (90) days after
the Participant’s Termination Date. Outplacement Services not commenced by the end of such ninety (90)-day period shall be
immediately forfeited.


 






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Section 9.           Administration.    The
Severance Committee of MSC, shall be the plan administrator (the “Plan Administrator”). The Plan Administrator shall
be responsible for the overall operation and administration of the Plan. The Plan Administrator may appoint or employ such persons
as it, he or she may deem necessary to render advice with respect to any responsibility of the Company or the Plan Administrator
under the Plan. The Plan Administrator shall have the exclusive discretionary power and authority to interpret the terms of the
Plan and to decide all questions concerning the operation and administration of the Plan including, without limitation, the eligibility
of any person to participate in the Plan, the determination whether a Qualifying Termination under the Plan has occurred, the right
to and amount of any benefit payable under the Plan to any individual
and the date on which any individual ceases to be a Plan Participant. The Plan Administrator’s decisions hereunder shall
be final and binding on all Participants and all other persons interested or claiming any interest under the Plan. The Plan Administrator
may allocate to any one or more of the Company’s associates any responsibility it may have under the Plan and may designate
any other person or persons to carry out any of its responsibilities under the Plan; provided, however, that the Plan Administrator
shall not allocate or designate any responsibility with respect to a Participant who is an “officer” of the Company,
within the meaning of Section 16(a)(1) of the Securities Exchange Act of 1934 (“Section 16”), who is subject to the
filing requirements of Section 16.


 


Section 10.           Funding.    The Plan
shall not be funded through a trust, an insurance contract or otherwise, and all benefit payments under the Plan shall be made
from the general assets of the Company. Accordingly, a Participant shall not have any claim against specific assets of Company,
and shall be only a general creditor, with respect to any rights the Participant may have under the Plan. All expenses and costs
in connection with the operation of the Plan shall be borne by Company.


 


Section 11.           Amendment and Termination.
   The Plan may be amended or terminated, in whole or in part, at any time by the Plan Administrator, subject to approval, as appropriate,
by the Company’s Board of Directors. Except as provided below, any such Plan amendment or termination may apply to all, or
any designated class or classes of employees (including, without limitation, former employees). Except as provided below, upon
termination of the Plan, the Company shall have no further obligations or liabilities hereunder, and all Plan benefits and all
Company and Plan Administrator obligations under the Plan shall cease. Notwithstanding the above, except with a Participant’s
consent, no such amendment or termination shall impair the rights of a Participant with respect to benefits payable hereunder if
such Participant ceased to be an Eligible Associate and became entitled to payment of a Severance Benefit under Sections 4,
5, 6, 7 and 8 hereof prior to the date such amendment or termination was adopted.


 


Section 12.           No Employment Contract.   
This Plan is not a contract of employment, and the terms of employment of an associate with the Company shall not be affected in
any way by this Plan except as specifically provided herein. The adoption of this Plan shall not be construed as conferring any
legal rights upon any employee for the continuation of an employment relationship with the Company, nor shall it interfere with
the right of the Company to discharge the associate.


 






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Section
13.           Miscellaneous.


 


		(a)	The payment of a severance pay allowance under the Plan shall not be taken into account for any
purpose under any other plan or policy of the Company, except as otherwise specifically provided in the Plan or in such other plan
or policy.



 


		(b)	No benefit payable under this Plan may be assigned, transferred, pledged as a security for indebtedness
or otherwise encumbered, or subjected to any legal process for the payment of any claim against a Participant and any attempt to
cause the same to be so subjected shall be null and void and without effect.



 


		(c)	Whenever appropriate in the Plan, words used in the singular may be read in the plural; words used
in the plural may be read in the singular; and words importing the masculine gender shall be deemed equally to refer to the feminine
or be neutral. Any reference to a Section shall refer to a Section of this Plan, unless otherwise indicated.



 


		(d)	The headings of Sections are included solely for convenience of reference, and if there is any
conflict between such headings and the text of the Plan, the text shall control.



 


		(e)	In the event that the terms of the Plan conflict with the terms of any summary or other description
of the Plan, the terms of the Plan shall govern.



 


		(f)	Except to the extent preempted by federal law, the Plan shall be construed, administered and enforced
in accordance with the laws of the State of New York, without giving effect to the principles thereof relating to the conflict
of laws.



 




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APPENDIX A


 


DESIGNATED SUBSIDIARIES