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Exhibit 10.18  

[*] Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4) and 230.406  

  
 

    Agreement Addendum    
    

        This addendum pertains to the agreement originally dated October 27, 2003 between Mark K Dambro, MD, PA a Texas Corporation, and Epocrates, Inc.
(Licensee). 

        The
following addendum is Made and entered into this January 31, 2007 and outlines the following Changes: 

 
 

Amendments to Contract for 5MCC Originally Dated 10/27/03    
    

Change In—Ownership of Licensing Agreement  

        The above referenced contract is now amended to be between Wolters Kluwer Health, Inc., Lippincott Williams and Wilkins, a Delaware Corporation, with
offices at 351 West Camden St., Baltimore, MD 21201 ("Editor") and Epocrates, Inc. ("Licensee"). 

Change In—Section 1: License Granted  

        The original agreement shall be amended to clarify the license granted as follows: 

        Editor
hereby grants to Epocrates on the terms and conditions set forth herein, during the term of this Agreement a non-exclusive, non-transferable, worldwide,
royalty bearing right and license to market, display, demonstrate, use and support the Data (hereto the "Data"), in electronic format for use on Personal Digital Assistants (PDA's). All other
platforms will be considered and agreed upon on a case by case basis. Publisher retains all rights in and to the Data and Epocrates shall have no rights thereto except as expressly granted herein.
Epocrates license to modify the Data shall be limited to modifying the Data for such coding purposes as may be reasonably necessary for the fulfillment of the Agreement and to fit the format and look
and feel of the Epocrates Product and to promote the Epocrates Product, provided that Epocrates does not modify or edit the text of the Data by addition, deletion, or other modification that would
alter its substance or meaning, without Publisher's prior written consent. In no event shall Epocrates have the right to (a) publish the Data in printed format, or
(b) sub-license the Data to third-parties of any kind except in connection with a license to the Epocrates Product as allowed under this Agreement. 

Change In—Section 8: Term  

        The term of this renewal shall be for two (2) years commencing on the effective date of 10/28/2007 through 10/27/2009, unless terminated in the manner
provided for in the original agreement. 

[*] Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4) and 230.406  

Change In—Addendum A: Compensation & Royalties  

        The following changes will be made to the Compensation and Royalty structure of the original agreement to be effective for sales made as of 11/1/2007: 

	•
	For
each product (containing all or any part of the Clinical Data) sold or licensed to an end-user, the Licensee shall pay the Editor a royalty of
[*]% of the selling price. For bulk sales (sale executed to a single customer—not including any subsidiary or other entity owned or managed by the Licensee) the
following discount structure shall apply: 

	Bulk Units Sold
	 	Royalty Payment (per unit)

	1-399	 	[*]%
	400-899	 	[*]%
	900+	 	[*]%

        The
following clarifications to the Compensation and Royalty structure of the original agreement are hereby added to the agreement: 

	•
	Royalties
shall be due and payable to Editor upon activation of subscription by customers. If the content is purchased as part of an off-line license (defined as
a sponsored subscription or sale of gift certificate) then royalty shall be due and payable to Editor when the license code is activated.

	•
	Royalties
due to Editor shall be net of returns and cancellations made within a 30 day period after activation, and net of sales, use, value-added or similar taxes. 

        All
other terms for this addendum are as per the original agreement dated 10/27/2003 and the amendment to the original agreement dated 11/10/2005. 

        AS
WITNESS AND SEAL OF THE PARTIES HERETO: 

	Epocrates, Inc.	 	Wolters Kluwer Health, Inc.

Lippincott Williams & Wilkins
	

/s/  JEFF TANGNEY      
 SIGNATURE	
 	

/s/  HEIDI ALEXANDER      
 SIGNATURE
	

Jeff Tangney
 Printed Name	
 	

Heidi Alexander
 Printed Name
	

EVP
 Title	
 	

Dir. Corporate & Internet Sales
 Title
	

2/7/07
 Date	
 	

1/31/07
 Date

[*] Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4) and 230.406  

  
 

    AMENDMENT
  TO LICENSE AGREEMENT    
    

        This Amendment, effective as of November 10, 2005, amends the license agreement ("Agreement") dated as of October 27, 2003, entered into by and
between Epocrates, Inc., a California Corporation, with offices located at 1800 Gateway Drive, Suite 300, San Mateo, California 94404 ("Epocrates") and Mistletoe Health Partners, PA
(previously Mark R. Dambro, MD, PA), a Texas corporation, with offices located at 1350 S. Main St., Suite 1400, Fort Worth, Texas 76104 ("Editor'). 

 
 

AMENDMENT    
    

        In consideration of the mutual representations and covenants set forth below, and other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Epocrates and Editor agree to amend the Agreement by adding the following paragraphs to the end of Addendum A: 

Editor
acknowledges that the computer application marketed by Epocrates under the Epocrates SxTM brand ("Sx") is a separate product from the computer application containing the Clinical
Data and marketed by Epocrates under the Epocrates DxTM brand ("Dx"), and that Sx is not a product containing Clinical Data for which Editor is to be paid Royalties under the Agreement.
Consequently, when Epocrates licenses both Sx and Dx to an end user, the Royalties payable to Editor shall be based on the portion of the license fees paid by the end user attributable to Dx. By way
of example, if Epocrates is licensing Dx alone to end users for a license fee of [*] dollars ($[*]) per year and concurrently licenses a package of Sx
and Dx together ("Package License") for an annual license fee of [*] dollars ($[*]) per year, then Epocrates would owe Editor Royalties under the
Agreement on [*] ($[*]) of the fees for the Package License. 

If
Epocrates elects to offer the Package License and cease offering a license to Dx alone, then the portion of the license fees received by Epocrates from an end user will be allocated between Dx and
Sx in the same proportion determined in previous paragraph at the time Dx ceases to be licensed alone. By way of example, if the license fees for Dx and the Package License at the time Epocrates stops
licensing Dx alone are as set forth in the example in the previous paragraph and Epocrates
subsequently licenses the Package License for a fee of [*] dollars ($[*]), then the portion of the [*] dollar license fee
attributable to Dx would be calculated as follows: 

	•
	Portion
of fee attributable to Dx at the time it is no longer licensed alone = $[*]/$[*] =
[*]

	•
	Portion
of Package License fee attributable to Dx after increase = [*] × $[*] =
$[*]. 

        All
capitalized terms used, but not defined, in this Amendment shall have the meanings attributed to such terms in the Agreement. 

        Except
as specifically modified by this Amendment, all terms and conditions of the Agreement shall remain in full force and effect. 

[*] Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4) and 230.406  

        IN WITNESS WHEREOF, the Epocrates and Editor have caused this Amendment to be executed by their duly authorized representatives as of the date first set forth
above. 

	EPOCRATES, INC.	 	MISTLETOE HEALTH PARTNERS, PA
	

By:	

/s/  ROBERT MCCULLOCH      
	
 	

By:	

/s/  MARK DAMBRO      

	

Name:	

R. McCulloch
	
 	

Name:	

Mark R. Dambro

	

Title:	

CFO
	
 	

Title:	

President

	

Date:	

11/30/05
	
 	

Date:	

11/18/2005

[*] Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4) and 230.406  

 
 

License Agreement    
    

        This Agreement is made this 27th day of October, 2003 ("Effective Date") between Mark R Dambro, MD, PA a Texas Corporation ("Editor"), and
ePocrates, Inc. ("Licensee"). 

        Whereas, the Editor has developed and maintains a copyrighted database of medical information ("Clinical Data" or "Data") as published in
the book known as Griffith's: 5-Minute Clinical Consult; and 

 
 

Description of Clinical Data  

The
Clinical Data consists of approximately 1200 medical topics in a standard format suitable for many computer-related projects. The Clinical Data is updated annually by contributing authors who
follow a standard outline format to produce a succinct overview of their topic(s). 

        Whereas, the Editor desires to make the clinical Data available for use in clinical software systems; and 

        Whereas, the Licensee develops and maintains a proprietary software system; 

        Now
therefore, the parties agree as follows: 

	1.
	License Granted 

This
Agreement grants to Licensee the non-exclusive use of the Clinical Data, for the Term of this Agreement, for the purpose of augmenting their electronic information system. Editor
understand that the Licensee will advertise and promote, reproduce, distribute, and sell the Clinical Data in association with its proprietary system(s). In order to accomplish its goals the Licensee
may convert or reformat the Clinical Data as needed. 

	2.
	License Exclusions 

This
license excludes publishing any printed form of the Clinical Data, although single copies for an end user's immediate and sole use is not intended to be restricted. The Licensee may not
sublicense the Clinical Data to other software vendors or developers, nor to end user's except as a part of the Licensee's proprietary information system. 

The
Licensee may not substantially alter the content or meaning of the original work in a way which makes the Data erroneous or misleading. Licensee acknowledges that the order and presentation of the
Data is important to maintaining its integrity and alteration of the content must be reviewed by the Editor. Review of such alterations must be obtained prior to public offer of the Licensee product
containing any or all of the Data. Written confirmation of approval for public offer of the altered Data by the Editor must be obtained by the Licensee. This section is not meant to hinder Licensee's
development nor sales and generally does not apply to change such as font usage, character size or user interface issues. Any submission to the Editor for such review will be acted upon urgently and a
response will be made within seven (7) working days after receipt of an operational unit containing the Data within the Licensee's system or by a suitable, agreed upon, system which enables the
Editor's review. See also, Section 8, Term. 

[*] Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4) and 230.406  

Notwithstanding
the foregoing, the Editor acknowledges that the Licensee maintains an integrated, continuously updated clinical reference suite. Accordingly, the Licensee may display electronic links
by underlining existing text in the Data or by inserting text describing these links ("Link Text") within the Data. The Licensee will clearly distinguish any Link Text from Data. Licensee may also
omit portions or rearrange sections of the Data to improve accessibility and utility of the information. 

The
Licensee or its affiliate author(s) may periodically contribute new content to the Data. All content additions will be subject to Editor's approval and will be structured and edited through the
Editor's normal processes. Editor will employ best efforts to respond in a timely fashion to such updates and new content. Editor shall maintain the right, in Editor's sole discretion, to include or
exclude any new content in the Data. The Editor will incorporate acceptable new topics or other content changes into the Data ("Periodic Updates"). All Periodic Updates may be made available,
according to the Editor's discretion, to other Licensees on an annual basis (October timeframe). 

	3.
	Delivery 

Editor
shall deliver to Licensee the Clinical Data on CD-ROM or other media suitable to both parties within two (2) weeks of the date of this Agreement. The CD-ROM
contains: 

	•
	An
XML file in a simple ASCII format (see http://www.5mcc.com/developer for this file's current structure)

	•
	Approximately
540 illustrations (in JPEG format) with links from the topics to the illustration file names. 

In
consideration for the one-time fee, the Editor is available for telephone consultation regarding the delivered data. Questions regarding formats, XML tags, conversion plans and all
other operational details are sought and will be answered to the best of the Editor's ability. Requests for database changes to ease translation to the Licensee's Product(s) will be entertained. No
guarantee can be made regarding the ultimate implementation of such changes because of potential negative impacts on the database or on other developers. Every effort will be made to help a new
developer produce an accurate, quality reflection of the Clinical Data in their Product(s). 

An
updated dataset, including all changes incorporated into the Clinical Data by Editor, will be delivered to Licensee in a timely fashion [*]. 

The
Licensee may obtain annual updates per Section 5; delivery will be similar to that outlined above with delivery within two (2) weeks after the Annual Fee is received. 

	4.
	Limited Warranty 

The
Licensee acknowledges that the Clinical Data may not meet all of their requirements. The Clinical Data is supplied "as is" and the Editor only warrants that the distribution media is free of
defects. The Clinical Data is not warranted against mistakes or omissions or any other error (although Editor does warrant that all best efforts have been made to ensure that the Clinical Data is
accurate). The Licensee agrees to hold harmless the Editor and the contributing authors. 

Editor
represents that it is the owner of the Clinical Data and has the right to enter into this Agreement. 

[*] Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4) and 230.406  

	5.
	Revisions 

Annual
Update. During the term of this Agreement, Editor will make periodic updates to the Clinical Data in accordance with current practices. Revisions to the Clinical Data become available on or
about October 15 of each year and the Licensee may obtain a copy of the entire Clinical Data after this time by submitting the Annual Fee (see Section 6) to the Editor. Updates (other
than those described in Section 2) are occasionally produced at various intervals during the year and all Licensees receive these updates as a part of their license. The Editor reserves the
right to change the Clinical Data and it's format at any time. The Editor recognizes that the Licensee has time constraints with regard to reformatting the Clinical Data for its product and hence, any
format change will be communicated and coordinated with the Licensee as to avoid delays. 

	6.
	Compensation and Royalties 

The
Licensee shall compensate the Editor as set forth in Addendum A. Royalties shall be payable quarterly, in arrears and Licensee shall provide a statement, signed by an officer of the Licensee,
within 30 days of the end of each calendar quarter beginning after the Effective Date of this Agreement (March 31st, June 30th, September 30th, December 31st). The
statement must indicate the term of any subscriptions claimed, units sold, and list price of units. All amounts herein refer to U.S. dollars. For bulk sales, a company name and sales contact shall be
provided to enable the Editor to verify that the stated bulk sale was execute with the third party. Editor or their independent auditor will have the right to audit the relevant records of the
Licensee. 

	7.
	Copyright 

The
Clinical Data contains copyrighted material and is supplied to the Licensee for their sole use in developing or augmenting a product. The copyright for the Clinical Data shall remain with the
Editor. The Licensee shall protect the copyright with appropriate notifications in any product, including the Editor, the name "Griffith's: 5-Minute Clinical Consult", database version (as
indicated in the supplied Clinical Data) and the date of publication. The Licensee shall further protect the Clinical Data from being easily copied by designing software that does not include a
feature to copy a substantial portion of the Clinical Data to another medium, except for the purposes of local backup by the end user. 

	8.
	Term 

The
term of this Agreement shall be for four (4) years, commencing on the date of the Agreement, unless terminated sooner as provided herein. This Agreement will self-renew, at the
end
of the initial four years, unless either or both parties agree to its termination. Written intention to terminate must be received, by the other party, at least 3 months before the end of the
Agreement Term. 

[*] Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4) and 230.406  

Editor
shall be entitled to terminate this Agreement in the event of bankruptcy or insolvency of the Licensee, when the Licensee fails to obtain an Annual Update within 4 months of its
availability (see Section 5), or on Licensee's failure to perform or observe any terms hereof. 

Licensee
may terminate this Agreement at any time by providing a 30 day notice of intention to terminate to the Editor. 

Upon
termination, Clinical Data shall be returned to the Editor and removed from any system, including Licensee's product(s), known to contain all or any portion of the Clinical Data. The Clinical
Data is not for sale and because of its constantly changing nature, it is not expected that a static copy would be a part of a quality clinical information system. 

The
Editor retains the right to review products containing the Clinical Data for accuracy. If, in the Editor's opinion, the Clinical Data is not for sale and because of its constantly changing nature,
it is not expected that a static copy would be a part of a quality clinical information system. 

The
Editor retains the right to review products containing the Clinical Data for accuracy. If, in the Editor's opinion, the Clinical Data is not portrayed in the Licensee's product(s) in an accurate
fashion, subsequent Annual Updates may be refused and this Agreement may terminate, unless a suitable remedy can be found. See also, Section 2, License Exclusions. 

	9.
	Miscellaneous 

General.
This Agreement represents the entire contract made by the parties. This Agreement shall be binding upon the parties hereto, their heirs, successors, and personal representatives. This
Agreement shall be construed and enforced in accordance with the Laws of the State of Texas. The terms of this Agreement may be changed or modified provided both parties agree in writing. 

Export
Law. The Licensee agrees to not export the Clinical Data or any product containing the Clinical Data, directly or indirectly, to any country prohibited by the United States Export
Administration Act and the regulations thereunder. 

Assignment.
This Agreement may be assigned by either party to any affiliate or successor. 

Confidentiality.
In performing its obligations under this Agreement, Editor or Licensee may receive or be exposed to confidential information, including business plans, trade secrets, software, and
other information reasonably designated as such. During the term of this agreement and for one (1) year thereafter, each shall protect such confidential information from disclosure to others
and shall limit use thereof solely to further the specific purposes provided for under this Agreement. 

[*] Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4) and 230.406  

In
Witness Thereof, the Licensee and Editor have hereunto set their hand by duly authorized officers of their respective Corporations and have caused this Agreement to be executed. 

	 
	 	 

	/s/  MARK DAMBRO      
 Editor: Mark R. Dambro, MD

President

Mark R. Dambro, MD, PA

160 W. Rosedale Street

Suite 307

Fort Worth, TX 76104-7400	 	10/[illegible]/03
 Date
	

/s/  JEFF TANGNEY      
 Licensee	
 	

10/27/03
 Date

[*] Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4) and 230.406  

 Addendum A  

Compensation and Royalties  

        As consideration for the rights and licenses granted herein, Licensee shall pay the Editor a one-time non-refundable (except as noted in
Section 3) payment of [*]. 

        The
Annual Fee is [*] and is payable on or about October 15 of each year after this agreement is executed. 

        For
each product (containing all or any part of the Clinical Data) sold or licensed to an end-user, the Licensee shall pay the Editor a royalty of
[*]% of the selling price. For bulk sales (sale executed to a single customer—not including any subsidiary or other entity owned or managed by the Licensee) the
following discounted structure shall apply: 

	Bulk units sold
 
	 	Royalty payment (per unit)

	1-399	 	[*]%
	400-899	 	[*]%
	900+	 	[*]%

        Sales
in this section are for fully operational units; promotional and/or complimentary copies are not included. The Licensee and Editor have hereunto set their hand by duly authorized
officers of their respective Corporations and have caused this Addendum to be executed. 

	/s/  MARK DAMBRO      
 Editor: Mark R. Dambro, MD

President

Mark R. Dambro, MD, PA

160 W. Rosedale Street

Suite 307

Fort Worth, TX 76104-7400	 	10/28/03
 Date
	

/s/  JEFF TANGNEY      
 Licensee	
 	

10/27/03
 Date

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Agreement Addendum

Amendments to Contract for 5MCC Originally Dated 10/27/03

AMENDMENT TO LICENSE AGREEMENT

AMENDMENT

License Agreement

Description of Clinical DataExhibit 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 

 

2

 

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, 

 

3

 

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 

 

4

 

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, 

 

5

 

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 

 

6

 

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 

 

7

 

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 

 

8

 

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 

 

9

 

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 

 

10

 

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 

 

11

 

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 

 

12

 

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]

 

13

 

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

  
				

 

14

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