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,...
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 XXXXX XXXXXXX having an address at
00 Xxxxx Xxxxxx Xxxx, Xxxxx Xxxxxxx, XX 00000 (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 Xxxxxxxx Xxxxxxxx or Xxxxxxxx Xxxxxxxxx or a member of the
Xxxxxxxx or Gershwind families or any trust established principally for members
of the Xxxxxxxx or Gershwind families or an executor, administrator or personal
representative of an estate of a member of the Xxxxxxxx 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 Xxxxxxxx Xxxxxxxx or Xxxxxxxx Xxxxxxxxx or a member of the Xxxxxxxx
or Gershwind families or any trust established principally for members of the
Xxxxxxxx or Gershwind families or an executor, administrator or personal
representative of an estate of a member of the Xxxxxxxx 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.
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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.
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.
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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, 00 Xxxxxx Xxxx, Xxxxxxxx,
Xxx Xxxx 00000 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.
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MSC
INDUSTRIAL DIRECT CO., INC.
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By:
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/s/
Xxxxxx XxXxxxx
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Name:
Xxxxxx XxXxxxx
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Title:
Sr. V.P., Human Resources
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By:
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/s/
Xxxxx Xxxxxxx
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Name:
Xxxxx Xxxxxxx
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Exhibit
A
RELEASE
WHEREAS,
Xxxxx Xxxxxxx (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.
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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__.
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XXXXX
XXXXXXX
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