Document:

Exhibit
10.01

     

     

    MSC
INDUSTRIAL DIRECT CO., INC.

    2005
OMNIBUS EQUITY PLAN

     

    RESTRICTED
STOCK UNIT AGREEMENT

     

    This
RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is
entered into on this 19th day of  October, 2010, by and between MSC
Industrial Direct Co., Inc. (the “Company”) and David
Sandler (the “Participant”).  The
Company and the Participant may hereinafter each be referred to as a “Party” and
collectively as the “Parties.”  Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Company’s 2005
Omnibus Equity Plan (the “Plan”).

     

    WHEREAS, the Company’s Board
of Directors has developed a plan to provide for an orderly succession upon the
Participant’s departure from his position as the Company’s Chief Executive
Officer (the “Succession
Plan”);

     

    WHEREAS, the Succession Plan
is designed to ensure that the Participant shall: (i) continue to serve as Chief
Executive Officer through December 31, 2012, or such other date (to be no later
than December 31, 2013) determined by the Board of Directors, and serve as Vice
Chairman of the Board of Directors of the Company for four years thereafter;
(ii) actively support and assist his successor in his or her transition to the
position of Chief Executive Officer; and (iii) serve as interim Chief Executive
Officer if his successor, at any time within two years of becoming Chief
Executive Officer, is no longer serving in that capacity for any
reason;

     

    WHEREAS, in connection with
the Succession Plan, and conditioned upon the amendment and restatement of the
Participant’s current Change in Control Agreement, the Compensation Committee of
the Board of Directors (the “Committee”) has
authorized a grant of restricted stock units to the Participant that will vest
upon the satisfaction of certain performance and service conditions established
by the Committee; and

     

    WHEREAS, the Parties desire to
enter into this Agreement for the purpose of establishing the terms and
conditions of restricted stock units that have been granted to the
Participant.

     

    NOW, THEREFORE, in
consideration of the foregoing premises and the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:

     

     

    1.    
Grant of
Award.   The Participant is hereby awarded (the “Award”) 183,418
restricted stock units (“RSUs”) issued under
the Plan, evidencing the grant thereof by the Committee on the date hereof (the
“Grant Date”),
and the Participant hereby accepts the Award, in each case, on the terms and
subject to the conditions set forth in this Agreement.

     

    2.    
Vesting.  The RSUs
shall vest on the dates that both the Performance Condition (as described in
clause (a) below) and the Service Conditions (as described in clause (b) below)
have been satisfied as follows: (A) upon satisfaction of the Performance
Condition and the Service Conditions described in subclauses (b)(i) through
(b)(iii), two-thirds (2/3) of the RSUs shall vest; and (B) upon satisfaction of
the Performance Condition and the Service Conditions described in subclauses
(b)(i) through (b)(iv), the remaining one-third (1/3) balance of the RSUs shall
vest.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (a)           Performance Condition − The
net income of the Company and its consolidated subsidiaries for either (i) the
four consecutive fiscal quarters that begin on August 29, 2010 (the “First Measurement
Period”), or (ii) the four consecutive fiscal quarters immediately
following the First Measurement Period, shall have equaled or exceeded $125
million, as certified by the Committee in accordance with Section 162(m) of the
Code (the “Performance
Condition”).  "Net Income" shall mean the consolidated net
income of the Company, determined in accordance with U.S. generally accepted
accounting principles, consistently applied, excluding, however, (i) any
extraordinary gains or losses and (ii) any acquisition-related costs incurred to
effect business combinations and required to be expensed in accordance with FASB
ASC Topic 805, formerly SFAS No. 141(R), in each case together with any related
provision for taxes.  Such determinations shall be made by reference
to the Company’s financial statements.

     

    (b)           Service Condition − Subject to
subsections (c) and (d) below, the Participant shall have served (the “Service
Conditions”):

     

    (i)           as
Chief Executive Officer of the Company from the Grant Date through December 31,
2012 (as such date may be accelerated or extended, the “Succession Date”);
provided that
the Board of Directors may, in its sole discretion: (A) accelerate the
Succession Date in order to achieve its succession objectives, or (B) extend the
Succession Date through December 31, 2013;

     

    (ii)          at
the Board’s request, as Chief Executive Officer of the Company at any time
during the two-year period commencing on the Succession Date (the “Transition Period”)
that the Participant’s successor as Chief Executive Officer is no longer serving
in that capacity for any reason; provided that the
Participant receives compensation for serving as Chief Executive Officer that is
appropriate and includes base salary and annual incentive bonus opportunities
that are substantially comparable to his current base salary and annual
incentive bonus opportunities,  all as determined in good faith by the
Committee on a basis consistent with the practices of the
Committee.  For the avoidance of doubt and subject to subsections (c)
and (d) of this Section 2, it is understood that no portion of the RSUs shall
vest prior to the end of the Transition Period;

     

    (iii)         as
Vice Chairman of the Company for the period commencing on the Succession Date
through the earlier of: (A) the two-year anniversary of the Succession Date, and
(B) the date the Participant fails to be nominated, appointed or re-elected to
the Company’s Board of Directors through no fault of the Participant;
and

     

    
      
         

      

      
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    (iv)        as
Vice Chairman of the Company for the period commencing on the two-year
anniversary of the Succession Date through the earlier of: (A) the four-year
anniversary of the Succession Date, and (B) the date the Participant fails to be
nominated, appointed or re-elected to the Company’s Board of Directors through
no fault of the Participant.

     

    (c)           Death or Disability − If the
Participant dies or suffers a Disability while serving as Chief Executive
Officer or Vice Chairman of the Company: (i) after the Performance Condition has
been satisfied, the RSUs shall fully vest on the date of Participant’s death or
Disability, or (ii) before the Performance Condition has been satisfied, the
RSUs shall fully vest upon the date the Committee certifies that the Performance
Condition has been satisfied, and if the Performance Condition is not satisfied,
the RSUs shall terminate.

     

    (d)           Change in Control − Upon a
Change in Control (as defined in the Second Amended and Restated Agreement
between the Company and the Participant dated of even date herewith (the “Amended Change in Control
Agreement”)), the Performance Condition shall be waived and the shares of
the Company’s Class A Common Stock (“Shares”) issuable
upon vesting of the Award shall be converted into the right to receive an amount
of cash equal to the Change in Control Price for such Shares, plus interest at
the Applicable Federal Rate from the date of such Change in Control to the date
such amount is paid to the Participant (the “Settlement
Amount”).  For purposes of this Agreement, “Applicable Federal
Rate” shall mean the rate of interest determined under Section 1274(d) of the
Code.  Following a Change in Control, the RSUs shall vest, and the
Settlement Amount shall be paid to the Participant, upon the earlier of: (i) the
Participant’s satisfaction of the Service Conditions (i.e., two-thirds upon
satisfaction of subclauses (b)(i) through (b)(iii) of Section 2 and one-third
upon satisfaction of subclauses (b)(i) through (b)(iv)), (ii) upon the
termination by the Company without Cause (as defined in the Amended Change in
Control Agreement) of the Participant’s employment with and/or service to the
Company, (iii) upon the death or Disability of the Participant while serving as
Chief Executive Officer or Vice Chairman of the Company, and (iv) upon the date
Participant terminates his employment due to a change in his Circumstances of
Employment (as defined in the Amended Change in Control
Agreement).  Immediately prior to or concurrent with the occurrence of
a Change in Control, the Company shall establish and fund an irrevocable "rabbi"
trust, in form and substance reasonably satisfactory to the Participant, to
secure the payment of the Settlement Amount.

     

    3.   
Settlement; Rights as
Shareholder.  Upon vesting, and subject to Section 2(d) above,
each RSU shall be converted into the right to receive one Share upon
settlement.  Settlement of vested RSUs shall be made promptly
following the date such RSUs shall have vested.  Any fractional RSU
shall be disregarded.  Unless and until such time as Shares are issued
in settlement of vested RSUs, the Participant shall have no ownership of the
Shares allocated to the RSUs and, subject to the provisions of Section 4, shall
have no rights as a shareholder with respect to such Shares.  Subject
to Section 2(d) above, upon settlement, the Company shall cause the Company’s
transfer agent to issue a certificate or certificates for the Shares in the name
of the Participant, or to make a book entry record of such issuance, and the
Participant shall thereupon have all rights as a shareholder with respect to
such Shares, including the right to vote such Shares and to receive all
dividends and other distributions paid with respect to such Shares.

     

    
      
         

      

      
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    4.   
Dividend
Equivalents.  Any dividends paid in cash on Shares prior to
vesting of the RSUs shall be credited to the Participant as additional RSUs (or
shall be added to the Settlement Amount provided in Section 2(d) above), as if
the RSUs then held by the Participant had been converted to
Shares.  The amount of such credit, which may be in whole and/or
fractional RSUs (carried to three decimals), shall be determined based on the
Fair Market Value of Shares on the date of payment of such
dividend.  All such additional RSUs credited to the Participant shall
be subject to the same vesting requirements applicable to the RSUs underlying
the Award and shall be settled in accordance with, and at the time of,
settlement of vested RSUs pursuant to this Agreement.

     

    5.   
Forfeiture.  Subject
to subsections (c) and (d) of Section 2 of this Agreement, in the event that
either the Performance Condition or the Service Condition is not satisfied, this
Award and the RSUs represented by this Award (or, if only the Service Condition
in subclause (b)(iv) of Section 2 is not satisfied, the applicable one-third
portion of the RSUs represented by this Award) shall be forfeited to the Company
forthwith and all rights of the Participant under this Award and the RSUs
represented by this Award shall immediately terminate.

     

    6.   
No
Transfer.  The Award and the RSUs are non-transferable and may
not be assigned, pledged or hypothecated and shall not be subject to execution,
attachment or similar process.  Upon any attempt to effect any such
disposition, or upon the levy of any such process, the Award shall immediately
become null and void and the RSUs shall be forfeited.

     

    7.   
Withholding
Taxes.  No later than the date as of which an amount first
becomes includible in the gross income of the Participant for Federal income tax
purposes with respect to the Award, the Participant shall make arrangements
satisfactory to the Company regarding the payment of, Federal, state, local or
foreign taxes of any kind required by law to be withheld by the Company with
respect to such amount.  Unless the Participant elects to satisfy his
withholding obligation with a cash payment in accordance with rules established
by the Administrator, the Participant shall be deemed to have, and by his
signature hereto hereby does, instruct the Company to satisfy the Company’s
minimum statutory withholding requirements  with Shares that are to be
delivered upon settlement of the RSUs (or in the case of vesting pursuant to
Section 2(d), with cash).  Changes to this instruction to pay
withholding obligations in Shares (i.e., to make arrangements to pay withholding
obligations in cash) can only be made during the “trading window” prior to the
vesting event under the Company’s Insider Trading Policy.  The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements, and the Company, its Subsidiaries and its Affiliates shall, to
the extent permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the Participant.  The Administrator may at
any time establish such procedures as it deems appropriate for the settlement of
withholding obligations with Shares or cash.  The Participant should consult his
own tax advisor for more information concerning the tax consequences of the
grant and settlement of RSUs under this Agreement.

     

    
      
         

      

      
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    8.   
Successors and
Assigns.  The Company may assign any of its rights under this
Agreement.  This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company.  Subject to the
restrictions on transfer herein set forth, this Agreement will be binding upon
Participant and Participant’s heirs, executors, administrators, legal
representatives, successors and assigns.

     

    9.   
Governing Law;
Severability.  This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York as such
laws are applied to agreements between New York residents entered into and to be
performed entirely within New York, excluding that body of laws pertaining to
conflict of laws.  If any provision of this Agreement is determined by
a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.

     

    10.   
Effect of Amendment of
Plan.  No discontinuation, modification, or amendment of the
Plan may, without the express written consent of the Participant, adversely
affect the rights of the Participant under this Award, except as expressly
provided under the Plan. This Agreement may be amended as provided under the
Plan, but except as provided thereunder, any such amendment shall not adversely
affect Participant’s rights hereunder without Participant’s
consent.

     

    11.   
No Limitation on Rights
of the Company.  The grant of this Award shall not in any way
affect the right or power of the Company to make adjustments, reclassifications,
or changes in its capital or business structure or to merge, consolidate,
dissolve, liquidate, sell, or transfer all or any part of its business or
assets.

     

    12.   
Compliance with
Applicable Law.  Notwithstanding anything herein to the
contrary, the Company shall not be obligated to cause to be issued or delivered
any Shares, unless and until the Company is advised by its counsel that the
issuance and delivery of such Shares is in compliance with all applicable laws,
regulations of governmental authority, and the requirements of any exchange upon
which Shares are traded.  The Company shall in no event be obligated
to register any securities pursuant to the Securities Act of 1933 (as now in
effect or as hereafter amended) or to take any other action in order to cause
the issuance and delivery of such Shares to comply with any such law, regulation
or requirement.  The Company may require, as a condition of the
issuance and delivery of such Shares and in order to ensure compliance with such
laws, regulations, and requirements, that the Participant make such covenants,
agreements, and representations as the Company, in its sole discretion,
considers necessary or desirable.

     

    13.   
Agreement Not a Contract
of Employment or Other Relationship; Participation in the Plan.    This
Agreement is not a contract of employment, and the terms of employment of the
Participant or other relationship of the Participant with the Company or any of
its subsidiaries or affiliates shall not be affected in any way by this
Agreement except as specifically provided herein.  The execution of
this Agreement shall not be construed as conferring any legal rights upon the
Participant for a continuation of an employment or other relationship with the
Company or any of its subsidiaries or affiliates, nor shall it interfere with
the right of the Company or any of its subsidiaries or affiliates to discharge
the Participant and to treat him or her without regard to the effect which such
treatment might have upon him or her as a Participant.  Participation
in the Plan with respect to this Award shall not entitle the Participant to
participate with respect to any other award.  Any payment or benefit
paid to the Participant with respect to this Award shall not be considered to be
part of the Participant’s “salary,” and thus, shall not be taken into account
for purposes of determining the Participant’s termination indemnity, severance
pay, retirement or pension payment, or any other employee benefits, except to
the extent required under applicable law.

     

    
      
         

      

      
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    14.   
Notices.  Any notice
or other communication required or permitted hereunder shall be in writing and
shall be delivered personally or sent by certified, registered, or express mail,
postage prepaid, return receipt requested, or by a reputable overnight delivery
service.  Any such notice shall be deemed given when received by the
intended recipient.

     

    15.   
Receipt of
Plan.  The Participant acknowledges receipt of a copy of the
Plan, and represents that the Participant is familiar with the terms and
provisions thereof, and hereby accepts the Award subject to all the terms and
provisions of this Agreement and of the Plan.  The Participant hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator with respect to any questions arising under
this Agreement or the Plan.

     

    16.   
Entire
Agreement.  The Plan and this Agreement constitute the entire
agreement and understanding of the parties with respect to the subject matter
herein and supersede all prior understandings and agreements, whether oral or
written, between the parties hereto with respect to the specific subject matter
hereof.

    

     

    [Remainder of this page is left
intentionally blank]

     

     

     

     

     

     

     

     

     

    
      
         

      

      
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    IN
WITNESS WHEREOF, this Agreement has been duly executed on the date first written
above.

     

    
      	 
      	
              MSC
      INDUSTRIAL DIRECT CO., INC.

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              /s/
      Eileen McGuire

            
	 
      	
              Name:
      Eileen McGuire

            
	 
      	
              Title:
      Sr. V.P. Human Resources

            
	 
      	 
      
	 
      	 
      
	 
      	
              PARTICIPANT

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              /s/
      David Sandler

            
	 
      	
              Name:
      David Sandler

            

    

     

    I have
read, understand and agree to abide by the terms of this Agreement, the Plan and
the Associate Confidentiality, Non-Solicitation and Non-Competition Agreement
that I entered into with the Company dated as of October 19, 2010 (the
“Associate Agreement”).  I hereby acknowledge that the grant of the
Award pursuant to this Agreement is consideration for my entering into and
complying with the Associate Agreement.  I understand this Agreement,
the Plan and the Associate Agreement control in all respects the terms and
conditions of the Award granted to me.

     

    In
addition, in accordance with the Company’s Executive Incentive Compensation
Recoupment Policy (the “Policy”), a copy of which I acknowledge having received
and which I have reviewed and understand, I agree to the following:

     

    (i)        
   I agree, upon demand by the Company, to forfeit, return or
repay to the Company any or all of the “Award Benefits and Proceeds” if the
Company determines that I engaged in Misconduct that caused or partially caused
the need for a significant restatement of financial results, other than as a
result of a change in accounting principles (a
“Restatement”).  “Misconduct” shall mean a knowing violation of SEC
rules and regulations or Company policy, as determined by the Board or the
Compensation Committee of the Board in its sole and absolute
discretion.

     

    (ii)           I
agree, upon demand by the Company, to forfeit, return or repay to the Company
any or all of the “Award Benefits and Proceeds” if I breach or violate any of
the terms of the Associate Agreement (which also shall mean any future Associate
Agreement) following the termination of my employment with the
Company.

     

    
      
         

      

      
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    “Award
Benefits and Proceeds” shall mean (a) to the extent that the Award has not fully
vested, all of my remaining rights under the Award, (b) to the extent that all
or any part of the Award has vested and I continue to hold shares that vested,
any such shares, and (c) to the extent that all or any part of the Award has
vested and I have disposed of shares that vested under the Award, any net
proceeds realized from such disposition (or, in the case of a gift, the fair
market value of the shares so gifted at the time of the gift); provided, that
for purposes of clause (ii) above, clauses (b) and (c) of this definition of
“Award Benefits and Proceeds” only shall apply with respect to shares that
vested during the period beginning two years before and ending two years after
the termination of my employment.

     

    These
provisions are subject to the limitations on the period for recoupment set forth
in the Policy and shall terminate in the event of a Change in
Control.

     

    
      
        
          
            
              	
                      October 19, 2010

                    	 
      	
                            
                        /s/
      David Sandler

                      

                    
	
                      Date

                    	 
      	
                      Associate
      Signature

                    

            

          

        

      

    

     

    FOR MSC INDUSTRIAL DIRECT
CO., INC. USE ONLY

     

    ACCEPTED
BY MSC INDUSTRIAL DIRECT CO., INC.

     

     

    
      
        
          
            
              
                	
                        By:

                      	      
                        /s/
      Eileen McGuire

                      	 
	 
      	
                              
                          Name:
      Eileen McGuire

                        

                      	 
	 
      	
                              
                          Title:
      Sr. V.P. Human Resources

                        

                      	 
	 	 	 
	 	 	 
	
                        Date:

                      	      
                        October 19, 2010

                      	 

              

            

          

        

      

    

     

    

     

    

     

    

     

    

    

    

    
      
         

      

      
        -8-Exhibit
10.02

     

     

    SECOND AMENDED AND RESTATED AGREEMENT made and entered into as of
this 19th day of October, 2010 by and between MSC INDUSTRIAL DIRECT CO., INC., a
New York corporation (the “Corporation”), and DAVID SANDLER having an address at
22 James Millen Road, North Reading, MA 01864 (the “Executive”).

     

    WITNESSETH:

     

     

    WHEREAS,
the Corporation and the Executive are parties to an Amended and Restated
Agreement, dated as of December 27, 2005, as amended by an Amendment to Change
in Control Agreement dated December 19, 2007, which provides the Executive with
certain compensation and benefits in the event of certain terminations of
employment following a Change in Control (as defined below) of the Corporation
(the “Existing Agreement”);

     

    WHEREAS,
the Board of Directors of the Corporation continues to believe that it is in the
best interests of the Corporation and its shareholders to assure the continued
dedication of the Executive, notwithstanding the possibility, threat or
occurrence of a Change in Control of the Corporation; and that it is appropriate
to provide arrangements for the Executive’s compensation and benefits in the
event of certain terminations of employment following a Change in Control;
and

     

    WHEREAS,
the Corporation and the Executive wish to amend and restate the Existing
Agreement to make certain changes.

     

    NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:

     

    FIRST.   Severance
Payments:

     

    A.           If,
within two (2) years after a Change in Control, the Executive’s “Circumstances
of Employment” (as hereinafter defined) shall have changed, the Executive may
terminate his employment by written notice to the Corporation given no later
than ninety (90) days following such change in the Executive’s Circumstances of
Employment.  In the event of such termination by the Executive of his
employment or if, within two (2) years after a Change in Control, the
Corporation shall terminate the Executive’s employment other than for “Cause”
(as hereinafter defined), the Corporation shall pay to the Executive, subject to
the provisions of paragraph F of this Article FIRST, on the fifth (5th) business
day following the six months’ anniversary of the date of such termination (or
the date of Executive’s death, if earlier), in cash, the Severance Payment
provided in paragraph E of this Article FIRST.

     

    B.           A
Change in Control shall be deemed to occur if:

     

    (a)           any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a
“Person”), 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, becomes the beneficial owner, directly or
indirectly, of thirty percent (30%) or more of the combined voting power of the
Corporation’s outstanding voting securities ordinarily having the right to vote
for the election of directors of the Corporation; provided, however, that for
purposes of this subparagraph (a), the following acquisitions shall not
constitute a Change in Control: any acquisition by any corporation pursuant to a
transaction which complies with clauses (1), (2) and (3) of subparagraph (c) of
this paragraph B;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)           during
any two consecutive years, individuals who, at the beginning of such period,
constitute the Board of Directors of the Corporation, together with any new
director(s) (other than a director designated by a Person who shall have entered
into an agreement with the Corporation to effect a transaction described in
subparagraphs (a) or (c) of this paragraph B) whose election by the Board or
nomination for election by the Corporation’s shareholders was approved by a vote
of at least two-thirds of the directors then still in office who either were
directors at the beginning of the two-year period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof;

     

    (c)           there
is a reorganization, merger or consolidation of the Corporation (a “Business
Combination”), in each case, unless, following such Business Combination, (1)
all or substantially all of the individuals and entities who were beneficial
owners of the Corporation’s outstanding voting securities ordinarily having the
right to vote for the election of directors of the Corporation immediately prior
to such Business Combination beneficially own, directly or indirectly, more than
fifty percent (50%) of the combined  voting power of the then
outstanding voting securities ordinarily having the right to vote for the
election of directors of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the Corporation or all or substantially all of the
Corporation’s assets either directly or through one or more subsidiaries) in
substantially the same proportion as their ownership, immediately prior to such
Business Combination, of the Corporation’s outstanding voting securities, (2) no
Person (excluding any corporation resulting from such Business Combination)
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, beneficially owns, directly or indirectly,
30% or more of the combined voting power of the then outstanding voting
securities of the corporation resulting from such Business Combination, and (3)
at least a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the incumbent Board of
Directors of the Corporation at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination;

     

    (d)           there
is a liquidation or dissolution of the Corporation approved by the shareholders;
or

     

    (e)           there
is a sale of all or substantially all of the assets of the
Corporation.

     

    
      
         

      

      
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    Notwithstanding
the foregoing, a Change in Control shall only be deemed to occur if such
transactions or events would give rise to a “change in ownership or effective
control” under Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) and applicable Treasury regulations (“Regulations”)
thereunder.

     

    C.           The
Executive’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
Executive’s employment duties or reporting responsibilities; (b) a reduction in
the annual base salary made available by the Corporation to the Executive from
the annual base salary in effect immediately prior to a Change in Control; or
(c) a material diminution in the Executive’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 willful and continued failure by the Executive to
substantially perform his duties with the Corporation and its subsidiaries
(other than any such failure resulting from his incapacity due to physical or
mental illness, or any such actual or anticipated  failure after
issuance of a notice of termination by the Executive due to a change in the
Executive’s Circumstances of Employment) after a written demand for substantial
performance is delivered to the Executive by the Corporation which demand
specifically identifies the manner in which the Corporation believes that the
Executive has not substantially performed his duties, (ii) the willful engaging
by the Executive in conduct which is demonstrably and materially injurious to
the Corporation or its subsidiaries, monetarily or otherwise, or (iii) the
Executive’s conviction of, or entering a plea of nolo contendere to, a
felony.  For purposes of clauses (i) and (ii), no act or failure to
act on the Executive’s part shall be deemed “willful” unless done, or omitted to
be done, by the Executive not in good faith or without reasonable belief that
his action or omission was in the best interest of the Corporation and its
subsidiaries.

     

    E.           The
“Severance Payment” to be paid as provided in paragraph A of this Article FIRST
shall be a lump sum payment equal to the sum of (i) the product of three and the
annual base salary in effect immediately prior to a change in the Executive’s
Circumstances of Employment or the termination other than for Cause of the
Executive’s employment by the Corporation, as the case may be, and (ii) the
product of three and the largest annual bonus paid to or accrued with respect to
the Executive by the Corporation during the three fiscal years immediately
preceding the termination of the Executive’s employment.

     

    F.           As
a condition to receiving the Severance Payment, no later than 60 days following
the Executive’s termination of employment (x) Executive shall have executed a
Confidentiality, Non-Solicitation and Non-Competition Agreement in a form
reasonably satisfactory to the Corporation and in substantially the same form as
previously executed and (y) shall execute and return the General Release in the
form attached as Exhibit A hereto, and Executive 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 Corporation and any of its
subsidiaries.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    SECOND.   Payment
Adjustment.  Payments under Article FIRST A. shall be made
without regard to whether the deductibility of such payments (or any other
payments or benefits to or for the benefit of Executive) would be limited or
precluded by Section 280G of the Code  and without regard to
whether such payments (or any other payments or benefits) would subject
Executive to the federal excise tax levied on certain “excess parachute
payments” under Section 4999 of the Code; provided, that if the total of
all payments to or for the benefit of Executive, after reduction for all
federal, state and local taxes (including the excise tax under Section 4999
of the Code) with respect to such payments (“Executive’s total after-tax
payments”), would be increased by the limitation or elimination of any payment
under Article FIRST A., or by an adjustment to the vesting of any equity-based
awards that would otherwise vest on an accelerated basis in connection with the
Change in Control (and the termination of employment), amounts payable under
Article FIRST A. shall be reduced and the vesting of equity-based awards shall
be adjusted to the extent, and only to the extent, necessary to maximize
Executive’s total after-tax payments.  Any reduction in payments or
adjustment of vesting required by the preceding sentence shall be applied,
first, against any benefits payable under Article FIRST A., then against the
vesting of any performance-based restricted stock awards that would otherwise
have vested in connection with the Change in Control (and the termination of
employment), and then against the vesting of any other equity-based awards, if
any, that would otherwise have vested in connection with the Change in Control
(and the termination of employment).  The determination as to whether
Executive’s payments and benefits include “excess parachute payments” and, if
so, the amount and ordering of any reductions in payment required by the
provisions of this Article SECOND shall be made at the Corporation’s expense by
Ernst & Young LLP or by such other certified public accounting firm as the
Compensation Committee of the Board of Directors of the Corporation may
designate prior to a Change in Control (the “accounting firm”).  In
the event of any underpayment or overpayment hereunder, as determined by the
accounting firm, the amount of such underpayment or overpayment shall forthwith
and in all events within thirty (30) days of such determination be paid to
Executive or refunded to the Corporation, as the case may be, with interest at
the applicable Federal rate provided for in Section 7872(f)(2) of the
Code.

     

    THIRD.   At Will
Employment.  Nothing in this Agreement shall confer upon the
Executive the right to remain in the employ of the Corporation, it being
understood and agreed that (a) the Executive 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 Executive’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
Executive pursuant to Article FIRST hereof.

     

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

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    FIFTH.   Term.  This
Agreement shall terminate upon the Succession Date (as such term is defined in
the Restricted Stock Unit Agreement of even date) and following the Succession
Date, no Severance Payment shall be payable under this Agreement.

     

    SIXTH.   Notices.  All
notices hereunder shall be in writing and shall be sent by registered or
certified mail, return receipt requested, and 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 Executive in the manner herein provided; and if intended for
the Executive, shall be mailed to him at the address of the Executive first set
forth above or at such other address of which the Executive shall have given
notice to the Corporation in the manner herein provided.

     

    SEVENTH.   Entire
Agreement.  This Agreement (and the Restricted Stock Unit
Agreement of even date) 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, including without limitation the Existing Agreement, are
hereby terminated and superseded by this Agreement.

     

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

     

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

     

    TENTH.   Governing
Law.  This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New
York.  Notwithstanding 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 (and Regulations thereunder)
to the extent subject to Section 409A (and Regulations thereunder), and that the
Agreement as amended herewith be interpreted to the extent possible to so
conform.

     

    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/
      Eileen McGuire

                            	 
	 
      	
                               

                            	
                              Name:
      Eileen McGuire

                            	 
	 
      	
                               

                            	
                              Title:
      Sr. V.P., Human Resources

                            	 
	 	 	 	 
	
                               

                            	
                              By:

                            	      
                              /s/
      David Sandler

                            	 
	 
      	
                               

                            	
                              Name:
      David Sandler

                            	 

                    

                  

                

              

            

          

        

      

      

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

      Exhibit
A

       

      RELEASE

       

      WHEREAS,
David Sandler (the “Executive”) was a party to a Second Amended and Restated
Agreement dated as of October 19, 2010 (the “Agreement”) by and between the
Executive and MSC INDUSTRIAL DIRECT CO., INC., a New York corporation (the
“Corporation”), and the employment of the Executive with the Corporation has
been terminated; and

       

      WHEREAS,
it is a condition to the Corporation’s obligations to make the severance
payments and benefits available to the Executive pursuant to the Agreement that
the Executive execute and deliver this Release to the Corporation.

       

      NOW,
THEREFORE, in consideration of the receipt by the Executive of the benefits
under the Agreement, which constitute a material inducement to enter into this
Release, the Executive intending to be legally bound hereby agrees as
follows:

       

      Subject
to the next succeeding paragraph, effective upon the expiration of the 7-day
revocation period following execution hereof as provided below, the Executive
irrevocably and unconditionally releases the Corporation and its owners,
stockholders, predecessors, successors, assigns, affiliates, control persons,
agents, directors, officers, employees, representatives, divisions and
subdivisions (collectively, the “Related Persons”) from any and all causes of
action, charges, complaints, liabilities, obligations, promises, agreements,
controversies and claims (a) arising out of the Executive’s employment with the
Corporation and the conclusion thereof, including, without limitation, any
federal, state, local or other statutes, orders, laws, ordinances, regulations
or the like that relate to the employment relationship and/or specifically that
prohibit discrimination based upon age, race, religion, sex, national origin,
disability, sexual orientation or any other unlawful bases, including, without
limitation, as amended, Title VII of the Civil Rights Act of 1964, the Civil
Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Civil
Rights Acts of 1866 and 1871, the Americans With Disabilities Act of 1990, the
New York City and State Human Rights Laws, and any applicable rules and
regulations promulgated pursuant to or concerning any of the foregoing statutes;
(b) for tort, tortious or harassing conduct, infliction of emotional distress,
interference with contract, fraud, libel or slander; and (c) for breach of
contract or for damages, including, without limitation, punitive or compensatory
damages or for attorneys’ fees, expenses, costs, salary, severance pay,
vacation, injunctive or equitable relief, whether, known or unknown, suspected
or unsuspected, foreseen or unforeseen, matured or unmatured, which, from the
beginning of the world up to and including the date hereof, exists, have
existed, or may arise, which the Executive, or any of his heirs, executors,
administrators, successors and assigns ever had, now has or at any time
hereafter may have, own or hold against the Corporation and/or any Related
Person.

       

      Notwithstanding
anything contained herein to the contrary, the Executive is not releasing the
Corporation from any of the Corporation’s obligations (a) under the Agreement,
(b) to provide the Executive with insurance coverage defense and/or
indemnification as an officer or director of the Corporation to the extent
generally made available at the date of termination to the Corporation’s
officers and directors in respect of facts and circumstances existing or arising
on or prior to the date hereof, or (c) in respect of the Executive’s rights
under the Corporation’s Associate Stock Purchase Plan, 1995 Stock Option Plan,
1998 Stock Option Plan, 2001 Stock Option Plan, 1995 Restricted Stock Plan or
the 2005 Omnibus Equity Plan, as applicable.

       

      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

       

      The
Corporation has advised the Executive in writing to consult with an attorney of
his choosing prior to the signing of this Release and the Executive hereby
represents to the Corporation that he has in fact consulted with such an
attorney prior to the execution of this Release.  The Executive
acknowledges that he has had at least twenty-one days to consider the waiver of
his rights under the ADEA.  Upon execution of this Release, the
Executive shall have seven additional days from such date of execution to revoke
his consent to the waiver of his rights under the ADEA.  If no such
revocation occurs, the Executive’s waiver of rights under the ADEA shall become
effective seven days from the date the Executive executes this
Release.

       

      IN
WITNESS WHEREOF, the undersigned has executed this Release on the ____ day of
__________, 20__.

       

      
        
          
            	 
      	   
      	 
	 
      	
                    DAVID
      SANDLER

                  	 

          

        

      

      

       

      

       

      

       

      
        
           

        

        
          -7-

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