Exhibit 10.47


 


CHANGE
IN CONTROL



AGREEMENT


 


AGREEMENT made and entered into as of this 16th day of
October, 2008 by and between MSC INDUSTRIAL DIRECT CO., INC., a New York
corporation (the “Corporation”), and Steven Armstrong having an address at 133
Water Street #11B, Brooklyn, New York, 11201 (the “Associate”).


 


W I T N E S S E T H:


 


WHEREAS, the Associate has been employed by the Corporation in a senior
Associate capacity and desires to remain in the employ of the Corporation in
such capacity; and


 


WHEREAS, the Corporation desires to induce the Associate to so remain
in the employ of the Corporation.


 


NOW, THEREFORE, the parties hereto hereby agree as follows:


 


FIRST:  Inducement
Payments.


 


A.            If,
within two (2) years after a Change in Control, the Associate’s “Circumstances
of Employment” (as hereinafter defined) shall have changed, the Associate may
terminate his employment by written notice to the Corporation given no later
than ninety (90) days following such change in the Associate’s Circumstances of
Employment.  In the event of such
termination by the Associate of his employment or if, within two (2) years
after a Change in Control, the Corporation shall terminate the Associate’s
employment other than for “Cause” (as hereinafter defined), the Corporation
shall pay to the Associate, subject to the provisions of paragraph F of this Article FIRST
and compliance by Associate with Article THIRD hereof, in cash, the “Special
Severance Payment” (as hereinafter defined) as provided in Section E
below.


 

















 


B.            Change
in Control shall be deemed to occur upon:


 


(a)           a change in ownership of the Corporation, which shall
occur on the date that any one person, or more than one person acting as a “Group”
(as defined under Section 409A of the Code (as defined hereunder)), other
than Mitchell Jacobson or Marjorie Gershwind or a member of the Jacobson or
Gershwind families or any trust established principally for members of the
Jacobson or Gershwind families or an executor, administrator or personal
representative of an estate of a member of the Jacobson or Gershwind families
and/or their respective affiliates, acquires ownership of stock of the
Corporation that, together with stock held by such person or Group, constitutes
more than 50% of the total fair market value or total voting power of the stock
of the Corporation; provided, however, that, if any one person or more than one
person acting as a Group, is considered to own more than 50% of the total fair
market value or total voting power of the stock of the Corporation, the
acquisition of additional stock by the same person or persons is not considered
to cause a change in the ownership of the Corporation;


 


(b)           a change in the effective control of the Corporation,
which shall occur on the date that (1) any one person, or more than one
person acting as a Group, other than Mitchell Jacobson or Marjorie Gershwind or
a member of the Jacobson or Gershwind families or any trust established
principally for members of the Jacobson or Gershwind families or an executor,
administrator or personal representative of an estate of a member of the
Jacobson or Gershwind families and/or their respective affiliates, acquires (or
has acquired during the 12-month 


 


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period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the Corporation
possessing 50% or more of the total voting power of the stock of the
Corporation; or (2) a majority of the members of the Board is replaced
during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Board prior to the date of the
appointment or election; provided, however, that, if one person, or more than
one person acting as a Group, is considered to effectively control the
Corporation, the acquisition of additional control of the Corporation by the
same person or persons is not considered a change in the effective control of
the Corporation; or


 


(c)           a change in the ownership of a substantial portion of the
Corporation’s assets, which shall occur on the date that any one person, or
more than one person acting as a Group, acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition by such
person or persons) assets from the Corporation that have a total Gross Fair
Market Value (as defined hereunder) equal to or more than 80% of the total
Gross Fair Market Value of all of the assets of the Corporation immediately
prior to such acquisition or acquisitions; provided, however, that, a transfer
of assets by the Corporation is not treated as a change in the ownership of
such assets if the assets are transferred to (1) a shareholder of the
Corporation (immediately before the asset transfer) in exchange for or with
respect to its stock; (2) an entity, 50% or more of the total value or
voting power of which is owned, directly or indirectly, by the Corporation; (3) a
person, or more than one person acting as a Group, that owns, 


 


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directly or indirectly, 50% or more of the
total value or voting power of all the outstanding stock of the Corporation; or
(4) an entity, at least 50% of the total value or voting power of which is
owned, directly or indirectly, by a person described in Article FIRST
B(c)(3).


 


For purposes of this Article FIRST B, “Gross Fair Market Value”
means the value of the assets of the Corporation, or the value of the assets
being disposed of, determined without regard to any liabilities associated with
such assets.  For purposes of this Article FIRST
B, stock ownership is determined under Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”).


 


C.            The
Associate’s “Circumstances of Employment” shall have changed if there shall
have occurred any of the following events: (a) a material reduction or
change in the Associate’s employment duties or reporting responsibilities; (b) a
reduction in the annual base salary made available by the Corporation to the
Associate from the annual base salary in effect immediately prior to a Change
in Control; or (c) a material diminution in the Associate’s status,
working conditions or other economic benefits from those in effect immediately
prior to a Change in Control.


 


D.            “Cause”
shall mean (i) the commission by the Associate of any act or omission that
would constitute a felony or any crime of moral turpitude under Federal law or
the law of the state or foreign law in which such action occurred, (ii) dishonesty,
disloyalty, fraud, embezzlement, theft, disclosure of trade secrets or
confidential information or other acts or omissions that result in a breach of
fiduciary or other material duty to the Corporation and/or a subsidiary; or (iii) continued
reporting to work or working under the influence of alcohol, an 


 


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illegal drug, an intoxicant or a controlled substance which renders the
Associate incapable of performing his or her material duties to the
satisfaction of the Corporation and/or its subsidiaries.


 


E.             The
“Special Severance Payment” shall mean: (X) payment equal to the sum of (i) the
product of one and one-half (1.5) and the annual base salary in effect
immediately prior to a change in the Associate’s Circumstances of Employment or
the termination other than for Cause of the Associate’s employment by the
Corporation, as the case may be, and (ii) the product of one and one half
(1.5) and the targeted bonus for the Associate in effect immediately prior to a
change in Associate Circumstances of Employment or termination other than for
Cause, as the case may be, such payment to be made in equal installments in
accordance with the Corporation’s regular payroll policies (but not less
frequently than biweekly) for a period of eighteen months, with the first such
installment being made on the fifth (5th) business day following the
six-month anniversary of Associate’s termination of employment; (Y) payment
of a pro rata portion of the Associate’s targeted bonus in effect immediately
prior to the date such change in Associate’s Circumstances of Employment or
termination of employment other than for Cause occurs (the “In Year Bonus”),
calculated as the product of (a) the In Year Bonus multiplied by
(b) a fraction the numerator of which is the number of whole months elapsed
in the fiscal year up to the date such change in Associate’s Circumstances of
Employment or termination occurs, and the denominator of which is twelve (12),
such payment to be made on the fifth (5th) business day following
the six (6) months’ anniversary of termination of employment; and (Z) for
the two (2) year period or the remaining term of the automobile lease at
issue, whichever is less following Associate’s date of termination of
employment (other than termination for Cause), the Corporation shall, at
Associate’s option, (a) pay Associate a monthly automobile allowance in
amounts equal to those in effect immediately prior to such termination, 


 


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if applicable, or (b) continue to make the monthly lease payments
under the automobile lease in effect for the benefit of Associate immediately
prior to such termination, provided that if any payment (or portion thereof)
otherwise due under this clause (Z) during the first six (6) months
following the Associate’s termination of employment is not exempt from the
application of section 409A of the Code under applicable Treasury regulations,
the amount subject to section 409A that would otherwise be paid during such
first six months shall be held (without adjustment for earnings and losses) and
paid on the fifth (5th) business day following the six-month
anniversary of such termination date.


 


F.             As
a condition to receiving the Special Severance Payment, (x) concurrently
with entering into this Agreement, Associate shall execute the Associate
Confidentiality, Non-Solicitation and Non-Competition Agreement referred to in Article THIRD
hereof and attached as Exhibit B hereto and (y) shall execute and
return the General Release in the form attached as Exhibit A hereto no
later than 60 days following the Associate’s termination of employment, and
Associate shall at all times be in compliance with such Agreement and Release.


 


G.            For
purposes of this Agreement, “affiliate” shall have the meaning ascribed thereto
under the Securities Act of 1933.


 


H.            For
purposes of this Agreement, “termination of employment” means cessation of full
or part time employment with the Company and any of its subsidiaries.


 


SECOND:  Tax
Indemnification.


 


A.            In
the event that, as a result of any of the payments or other consideration
provided for or contemplated by Article FIRST of this Agreement or
otherwise, a tax (an “Excise 


 


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Tax”) shall be imposed upon the Associate or threatened to be imposed
upon the Associate by virtue of the application of Section 4999(a) of
the Code, as now in effect or as the same may at any time or from time to time
be amended, or the application of any similar provisions of state or local tax
law, the Corporation shall indemnify and hold the Associate harmless from and
against all such taxes (including additions to tax, penalties and interest and
additional Excise Taxes, whether applicable to payments pursuant to the
provisions of this Agreement or otherwise) incurred by, or imposed upon, the
Associate and all expenses arising therefrom.


 


B.            Each
indemnity payment to be made by the Corporation pursuant to Part A of this
Article SECOND shall be increased by the amount of all Federal, state and
local tax liabilities (including additions to tax, payroll taxes, penalties and
interest and Excise Tax) incurred by, or imposed upon, the Associate so that
the effect of receiving all such indemnity payments will be that the Associate
shall be held harmless on an after-tax basis from the amount of all Excise
Taxes imposed upon payments made to the Associate by the Corporation pursuant
to this Agreement, it being the intent of the parties that the Associate shall
not incur any out-of-pocket costs or expenses of any kind or nature on account
of the Excise Tax and the receipt of the indemnity payments to be made by the
Corporation pursuant hereto.


 


C.            Each
indemnity payment to be made to the Associate pursuant to this Article SECOND
shall be payable within fifteen (15) business days of delivery of a written
request (a “Request”) for such payment to the Corporation (which request may be
made prior to the time the Associate is required to file a tax return showing a
liability for an Excise Tax or other tax) but, in any event, such Request shall
be made at least 15 days prior to (i) the end of the Associate’s taxable
year following the Associate’s taxable year in which an Excise Tax is remitted
to a taxing authority, or (ii) in the event that no Excise Tax is
remitted, the end of the 


 


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Associate’s taxable year following the Associate’s taxable year in
which an audit is completed or there is a final and non-appealable settlement
or other resolution of the litigation.  A
Request shall set forth the amount of the indemnity payment due to the
Associate and the manner in which such amount was calculated, and the Associate
shall thereafter submit such other evidence of the indemnity to which the
Associate is entitled as the Corporation shall reasonably request.  All such information shall, if the
Corporation shall request, be set forth in a statement signed by a nationally
recognized accounting firm or a partner thereof and the Corporation shall pay
all fees and expenses of such accounting firm incurred in the preparation
thereof.


 


D.            The
Associate agrees to notify the Corporation (a) within fifteen (15)
business days of being informed by a representative of the Internal Revenue
Service (the “Service”) or any state or local taxing authority that the Service
or such authority intends to assert that an Excise Tax is or may be payable, (b) within
fifteen (15) business days of the Associate’s receipt of a revenue agent’s
report (or similar document) notifying the Associate that an Excise Tax may be
imposed and (c) within fifteen (15) business days of the Associate’s
receipt of a Notice of Deficiency under Section 6212 of the Code or
similar provision under state or local law which is based in whole or in part
upon an Excise Tax and/or a payment made to the Associate pursuant to this Article SECOND.


 


E.             After
receiving any of the aforementioned notices, and subject to the Associate’s
right to control any and all administrative and judicial proceedings with
respect to, or arising out of, the examination or the Associate’s tax returns,
except as such proceedings relate to an Excise Tax, the Corporation shall have
the right (a) to examine all records, files and other information and
documentation in the Associate’s possession or under the Associate’s control, (b) to
be present and to participate, to the extent desired, in all administrative and
judicial 


 


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proceedings with respect to an Excise Tax, including the right to
appear and act for the Associate at such proceedings in resisting any
contentions made by the Service or a state or local taxing authority with
respect to an Excise Tax and to file any and all written responses in
connection therewith, (c) to forego any and all administrative appeals,
proceedings, hearings and conferences with the Service or a state or local
taxing authority with respect to an Excise Tax on the Associate’s behalf, and (d) to
pay any tax increase on the Associate’s behalf and to control all
administrative and judicial proceedings with respect to a claim for refund from
the Service or state or local taxing authority with respect to such tax
increase, provided that all such payments shall be paid (i) by the end of
the Associate’s taxable year following the Associate’s taxable year in which
such tax increase is remitted to a taxing authority, or (ii) in the event
that no such tax increase is remitted, by the end of the Associate’s taxable
year following the Associate’s taxable year in which an audit is completed or
there is a final and non-appealable settlement or other resolution of the
litigation.


 


F.             The
Corporation shall be solely responsible for all reasonable legal and accounting
or other expenses (whether of the Associate’s representative or the
representative of the Corporation) incurred in connection with any such
administrative or judicial proceedings insofar as they relate to an Excise Tax
or other tax increases resulting therefrom and the Associate agrees to execute
and file, or cause to be executed and filed, such instruments and documents,
including, without limitation, waivers, consents and Powers of Attorneys, as
the Corporation shall reasonably deem necessary or desirable in order to enable
it to exercise the rights granted to it pursuant to part E of this Article SECOND,
provided that all such payments shall be paid (i) by the end of the
Associate’s taxable year following the Associate’s taxable year in which such
tax increase is remitted to a taxing authority, or (ii) in the event that
no such tax 


 


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increase is remitted, by the end of the Associate’s taxable year
following the Associate’s taxable year in which an audit is completed or there
is a final and non-appealable settlement or other resolution of the litigation.


 


G.            The
liability of the Corporation shall not be affected by the Associate’s failure
to give any notice provided for in this Article SECOND unless such failure
materially prejudices the Corporation’s ability to effectively resist any
contentions made by the Service or a state or local taxing authority.  The Associate may not compromise or settle a
claim which he is indemnified against hereunder without the consent of the
Corporation, unless the Associate can establish by a preponderance of the
evidence that the decision of the Corporation was not made in the good faith
belief that a materially more favorable result could be obtained by continuing
to defend against the claim (or prosecute a claim for refund).


 


THIRD:  Associate
Confidentiality, Non-Solicitation and Non-Competition Agreement.  In consideration of the Associate’s
employment and continued employment, the payment of Associate’s compensation by
the Corporation, the Corporation entrusting Associate with Confidential
Information (as defined below), and the benefits provided hereunder, including
without limitation the Special Severance Payment, the parties have entered into
the Associate Confidentiality, Non-Solicitation and Non-Competition Agreement
attached as Exhibit B hereto, which is hereby incorporated by reference
herein and make a part hereof as if set forth in full herein.


 


FOURTH:  Continued
Medical Coverage.  If Associate’s
employment is terminated in either of the circumstances described in Article FIRST,
Part A hereof, in the event Associate timely elects under the provisions
of COBRA to continue his group health plan coverage that was in effect prior to
the date of the termination of Associate’s employment with 


 


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the Corporation, Associate will be entitled to continuation of such
coverage, at the Corporation’s expense, for a period of eighteen (18) months
from the date of termination, provided that Associate continues to be eligible
for COBRA coverage.


 


FIFTH:  Outplacement.  If Associate’s employment is terminated in
either of the circumstances described in Article FIRST, Part A
hereof, Associate shall be eligible for outplacement services, at the
Corporation’s expense and with a service selected by the Corporation in its
reasonable discretion, for up to six (6) months from the date of the
termination of Associate’s employment with the Corporation.


 


SIXTH:  At
Will Employment.  Nothing in this
Agreement shall confer upon the Associate the right to remain in the employ of
the Corporation, it being understood and agreed that (a) the Associate is
an employee at will and serves at the pleasure of the Corporation at such
compensation as the Corporation shall determine from time to time and (b) the
Corporation shall have the right to terminate the Associate’s employment at any
time, with or without Cause.  In the
event of any such termination prior to the occurrence of a Change in Control,
no amount shall be payable by the Corporation to the Associate pursuant to Article FIRST
hereof.


 


SEVENTH:  Costs
of Enforcement.  In the event that
the Associate incurs any costs or expenses, including attorney’s fees, in the
enforcement of his rights under this Agreement then, unless the Corporation is
wholly successful in defending against the enforcement of such rights, the
Corporation shall pay to the Associate all such costs and expenses sixty (60)
days following a final decision.


 


EIGHTH:  Term.  The initial term of this Agreement shall be
for three (3) years from the date hereof, and this Agreement shall automatically
renew for successive three (3) year terms unless terminated by the
Corporation, in its sole discretion, by delivering to Associate 


 


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written notice thereof provided to Associate at least 18 months prior
to the end of the initial term or such successive terms, as applicable.


 


NINTH:  Notices.  All notices hereunder shall be in writing and
shall be sent by registered or certified mail, return receipt requested, if
intended for the Corporation shall be addressed to it, attention of its
President, 75 Maxess Road, Melville, New York 11747 or at such other address of
which the Corporation shall have given notice to the Associate in the manner
herein provided; and if intended for the Associate, shall be mailed to him at
the address of the Associate first set forth above or at such other address of
which the Associate shall have given notice to the Corporation in the manner
herein provided.


 


TENTH:  Entire
Agreement. This Agreement constitutes the entire understanding between the
parties with respect to the matters referred to herein, and no waiver of or
modification to the terms hereof shall be valid unless in writing signed by the
party to be charged and only to the extent therein set forth.  All prior and contemporaneous agreements and
understandings with respect to the subject matter of this Agreement are hereby
terminated and superseded by this Agreement.


 


ELEVENTH:  Withholding.  The Corporation shall be entitled to withhold
from amounts payable to the Associate hereunder such amounts as may be required
by applicable law.


 


TWELFTH:  Binding
Nature.  This Agreement shall be
binding upon and inure to the benefit of the parties hereto, their respective
heirs, administrators, executors, personal representatives, successors and
assigns.


 


THIRTEENTH:  Governing
Law.  This Agreement shall be
governed by and construed and enforced in accordance with the law of the State
of New York.  Notwithstanding 


 


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the foregoing, it is the intent of the parties hereto that the
Agreement, as amended herewith, conform in form and operation with the
requirements of section 409A of the Code to the extent subject to section 409A,
and that the Agreement as amended herewith be interpreted to the extent
possible to so conform.


 


[signature page to
follow]


 


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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.


 


 


	
   

  	
  MSC INDUSTRIAL
  DIRECT CO., INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David
  Sandler

  
	
   

  	
   

  	
  Name: David
  Sandler

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Steven
  Armstrong

  
	
   

  	
   

  	
  Steven Armstrong

  
				



 


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