Contract

Exhibit 10.2

AMENDED AND RESTATED AGREEMENT (this “Agreement”), dated as of December 27, 2005, by and between MSC INDUSTRIAL DIRECT CO., INC., a New York corporation with its principal office at 00 Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (the “Corporation”), and XXXXXXX X. XXXXXXX, XX. having an address at (the “Executive”).

W I T N E S S E T H:

WHEREAS, the Corporation desires to employ the Executive, and the Executive desires to be employed by the Corporation, upon the terms and conditions hereinafter set forth;

WHEREAS, the Executive and the Corporation are parties to an Agreement dated June 19, 2000 (the “Prior Agreement”), providing the Executive with, among other things, certain benefits on and in connection with a “Change in Control” as defined therein;

WHEREAS, due to certain recent legislation known as the American Job Creations Act of 2004 and certain regulations promulgated or proposed thereunder, including regulations under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) regarding deferred compensation plans and other arrangements (the “Regulations”), the benefits under the Prior Agreement are in certain respects not in compliance with the Regulations, and such lack of compliance could have a material adverse affect on the tax treatment of such benefits to the Executive; and

WHEREAS, the Corporation desires to induce the Executive to remain in the employ of the Corporation and the Executive desires the Corporation to effect certain changes to the Prior Agreement so that such benefits are in compliance with the Regulations.

NOW, THEREFORE, the parties hereto covenant and agree as follows:

1. Employment. The Corporation continues to employ the Executive as Executive Vice President and Chief Financial Officer of the Corporation (“CFO”) commencing on December 27, 2005. If the Corporation shall so request, the Executive shall become and shall, during such portion or portions of the Executive’s employment with the Corporation hereunder as the Corporation shall request, act as a director and/or officer of the Corporation and/or any of its subsidiaries without any compensation in addition to that provided in Section 2 hereof. The Executive accepts such employment, agrees to serve as the Executive Vice President and CFO of the Corporation, agrees to perform such other services or act in such other capacities as shall from time to time be assigned to him by the Chief Executive Officer, President or by the Chief Operating Officer of the Corporation or pursuant to the authorization of the Board of Directors of the Corporation (the “Board of Directors”) and agrees diligently and competently to devote his entire business time, skill and attention to such services.

2. Compensation. The Corporation shall pay to the Executive, and the Executive shall accept from the Corporation, for the Executive’s services hereunder, base compensation at the rate of $ per annum (the “Annual Base Compensation”), payable in accordance with the Corporation’s customary payroll policy; provided, however, that the Board of Directors of the Corporation may from time to time increase such rate of compensation to such amount as it shall determine. The Executive will be eligible (a) for additional bonus compensation at such time at which other executive employees of the Corporation are considered for annual bonus awards, and (b) to receive additional stock options and/or other equity based compensation awards as determined in the sole and absolute discretion of the Board of Directors based upon the performance of the Corporation and the individual performance of the Executive. The

amount of such bonus award, if any, shall be determined in the sole and absolute discretion of the Corporation and is anticipated to be in the range between 25% and 60% of Annual Base Compensation, none of which is guaranteed. The number of additional stock options, if any, which may be granted is anticipated to be in the range of 40,000 to 60,000 shares, none of which stock options is guaranteed. The Executive acknowledges that, in entering into this Agreement, he has not relied on any estimates with respect to the amount of any future bonus award or the number of additional stock options and agrees that no amounts have been promised or assured.

3. Expenses. During the Executive’s employment hereunder, the Corporation shall pay or reimburse the Executive for all reasonable and itemized business expenses, including, but not limited to, an allowance in an amount of $900 per month for all automobile related expenses, incurred by the Executive while conducting or furthering the business of the Corporation, including without limitation maintenance, insurance and gasoline. Such allowance will be paid in accordance with the Corporation’s customary payroll policy. The Executive shall keep appropriate records of such expenses and shall submit receipts or other evidence relating to them in accordance with the Corporation’s policy. Reimbursement for such expenses shall be subject to such regulations and procedures as the Corporation may determine from time to time.

4. Vacation. During the Executive’s employment hereunder, the Executive shall be entitled to four (4) weeks of paid vacation leave. The time at which the Executive will be absent from the office shall be at the Executive’s sole discretion, provided such time is compatible with the vacation and work schedule of other executive employees.

5. Benefits. During the Executive’s employment hereunder, the Executive shall be entitled to participate in such fringe benefits as generally are made available by the Corporation to

executive employees from time to time, including, but not limited to, medical, disability, retirement and insurance plans; provided, however, that the Executive’s right to participate in any plan shall be subject to the applicable eligibility requirements of particular benefit plans and, in the case of benefit plans providing for discretionary grants or awards, to the discretion of the person or entity vested with such discretion.

6. Severance. Except as provided in Section 7 hereof:

(a) In the event of the termination of the Executive’s employment hereunder other than for Cause (as such term is hereinafter defined), the Executive shall be entitled to a severance payment in an amount equal only to the highest Annual Base Compensation of the Executive received at any time during the period of his employment (which Annual Base Compensation shall not include any amount for any bonus), and the Executive shall continue to receive, at the Corporation’s expense, the automobile allowance and medical insurance benefits referred to above for a period of one year following such termination. The severance payment shall be payable in accordance with the Corporation’s customary payroll policy during the one-year period following such termination.

(b) In addition, upon the termination of the Executive’s employment hereunder other than for Cause, the Corporation shall retain the Executive as a consultant to the Corporation for a one-year period commencing on the date of such termination. The Executive agrees to accept such retention and to provide consulting services to the Corporation with respect to financial matters; provided, however, that the Executive shall not be required to devote more than

ten (10) hours in any calendar quarter to such services. For such consulting services, the Corporation shall pay to the Executive compensation at the rate of $2,500 per annum. All stock options, stock appreciation rights, restricted stock, and other equity based compensation awards theretofore vested but not yet exercised will expire thirty (30) days after the termination of such consultancy in accordance with the terms of the applicable Corporation equity compensation plan.

(c) In the event of the termination of the Executive’s employment hereunder for Cause, the Executive shall be entitled only to receive any accrued but unpaid base compensation hereunder through the date of such termination, and all other benefits hereunder shall be terminated as of the date of such termination.

7. Change in Control.

(a) If, within two years following a Change in Control, the Executive’s Circumstances of Employment (as such term is hereinafter defined) shall have changed, the Executive may terminate his employment hereunder 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 following a Change in Control, the Corporation shall terminate the Executive’s employment other than for Cause, the Corporation shall, subject to Sections 12 and 13 hereof, pay to the Executive, (the “Special Severance Amount”) (X) an amount equal to the sum of (i) the product of two (2) 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 two (2) and the targeted bonus for the Executive in effect immediately prior to a change in Executive Circumstances of Employment or termination other than for Cause, as the case may be, such payment to be made in accordance with the Corporation’s regular payroll policies, the first installment being made on the fifth (5th) business day following the six (6) months’ anniversary thereof, and then the balance being paid in equal installments over the remainder of the two year period contemplated by the Executive Confidentiality, Non-Solicitation and Non-Competition Agreement referred in Section 13 hereof; (Y) payment of a pro rata portion of the Executive’s targeted bonus in effect immediately prior to the date such change in Executive’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 Executive’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 Executive’s date of termination of employment (other than termination for Cause), the Corporation shall, at Executive’s option, (A) pay Executive a monthly automobile allowance

in amounts equal to those in effect immediately prior to such termination, if applicable, or (B) continue to make the monthly lease payments under the automobile lease in effect for the benefit of Executive immediately prior to such termination.

(b) A Change in Control shall be deemed to occur upon:

(1) 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 the Regulations), 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, 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;

(2) a change in the effective control of the Corporation, which shall occur on the date that (A) any one person, or more than one person acting as a Group, 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, acquires (or has acquired during the 12-month 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 (B) 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

(3) 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 (A) a shareholder of the Corporation (immediately before the asset transfer) in exchange for or with respect to its stock; (B) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Corporation; (C) a person, or more than one person acting as a Group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Corporation; or (D) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in Section 7(b)(3)(C).

For purposes of this Section 7(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 Section 7(b), stock ownership is determined under the Regulations.

(c) The Executive’s “Circumstances of Employment” shall have changed if there shall have occurred any of the following events: (1) a material reduction or change in the Executive’s employment duties or reporting responsibilities; (2) 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 (3) 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 commission by the Executive 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 illegal drug, an intoxicant or a controlled substance which renders the Executive incapable of performing his or her material duties to the satisfaction of the Corporation and/or its subsidiaries.

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

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

8. Continued Medical Coverage. If Executive’s employment is terminated in either of the circumstances described in Section 7(a) hereof, in the event Executive 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 Executive’s employment with the Corporation, Executive will be entitled to continuation of such coverage, at the Corporation’s expense, for a period of eighteen (18) months, provided that Executive continues to be eligible for COBRA coverage.

9. Outplacement. If Executive’s employment is terminated in either of the circumstances described in Section 7(a) hereof, Executive 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 Executive’s employment with the Corporation.

10. Tax Indemnification.

(a) In the event that, as a result of any of the payments or other consideration provided for or contemplated by this Agreement or otherwise, a tax (an “Excise Tax”) shall be imposed upon the Executive or threatened to be imposed upon the Executive 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 Executive 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 Executive and all expenses arising therefrom.

(b) Each indemnity payment to be made by the Corporation pursuant to Part (a) of this Section 10 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 Executive so that the effect of receiving all such indemnity payments will be that the Executive shall be held harmless on an after-tax basis from the amount of all Excise Taxes imposed upon payments made to the Executive by the Corporation pursuant to this Agreement, it being the intent of the parties that the Executive 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 Executive pursuant to this Section 10 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 Executive is required to file a tax return showing a liability for an Excise Tax or other tax). A Request shall set

forth the amount of the indemnity payment due to the Executive and the manner in which such amount was calculated, and the Executive shall thereafter submit such other evidence of the indemnity to which the Executive 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 Executive agrees to notify the Corporation (1) 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, (2) within fifteen (15) business days of the Executive’s receipt of a revenue agent’s report (or similar document) notifying the Executive that an Excise Tax may be imposed and (3) within fifteen (15) business days of the Executive’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 Executive pursuant to this Section 10.

(e) After receiving any of the aforementioned notices, and subject to the Executive’s right to control any and all administrative and judicial proceedings with respect to, or arising out of, the examination or the Executive’s tax returns, except as such proceedings relate to an Excise Tax, the Corporation shall have the right (1) to examine all records, files and other information and documentation in the Executive’s possession or under the Executive’s control,

(2) to be present and to participate, to the extent desired, in all administrative and judicial proceedings with respect to an Excise Tax, including the right to appear and act for the Executive 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, (3) 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 Executive’s behalf, and (4) to pay any tax increase on the Executive’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.

(f) The Corporation shall be solely responsible for all reasonable legal and accounting or other expenses (whether of the Executive’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 Executive 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 Section 10.

(g) The liability of the Corporation shall not be affected by the Executive’s failure to give any notice provided for in this Section 10 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 Executive may not compromise or settle a claim which he is indemnified against hereunder without the consent of the Corporation, unless the Executive 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).

11. 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.

12. Release; Confidentiality. As a condition to receiving the Special Severance Payment, Executive shall execute the General Release in the form attached as Exhibit A hereto.

13. Executive Confidentiality, Non-Solicitation and Non-Competition Agreement. In consideration of the Executive’s employment and continued employment, the payment of Executive’s compensation by the Corporation, the Corporation entrusting Executive with Confidential Information (as defined below), and the benefits provided hereunder, including without limitation the Special Severance Payment and the changes effected hereunder by the Corporation so as to make the benefits to Executive provided under the Prior Agreement and hereunder in compliance with the Regulations, the parties have entered into the Executive

Confidentiality, Non-Solicitation and Non-Competition Agreement as Exhibit B hereto, which is hereby incorporated by reference herein and made a part hereof as if set forth in full herein.

14. Miscellaneous.

(a) This Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of New York.

(b) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

(c) The provisions of this Agreement shall be severable, and the illegality, unenforceability or invalidity of any provision of this Agreement shall not affect or impair the remaining provisions hereof, and each provision of this Agreement shall be construed to be valid and enforceable to the full extent permitted by law.

(d) This Agreement cannot be amended orally, or by any course of conduct or dealing, but only by a written agreement signed by the party to be charged therewith.

(e) All notices required and allowed hereunder shall be in writing, and shall be deemed given if delivered personally or sent by certified mail, return receipt requested, first-class postage and registration fees prepaid, and addressed to the party for whom intended at the address set forth on the first page or to such other address as has been most recently specified for a party by notice to the other party.

(f) The waiver by either party of a breach or violation of any provision of this Agreement shall not operate as or be construed to be a waiver of any subsequent breach or violation.

15. Term. The initial term of sections 7, 8 , 9 and 12 of this Agreement (the “Change in Control Provisions”) shall be three (3) years from the date hereof, and the Change in Control Provisions shall automatically renew for successive three (3) year terms unless terminated by the Corporation, in its sole discretion, by delivering to Executive written notice thereof provided to Executive at least eighteen (18) months prior to the end of the initial term or such successive terms, as applicable.

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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement the day and year first above written.

MSC INDUSTRIAL DIRECT CO., INC.


By:	/s/ Xxxxx Xxxxxxx
Name:		Xxxxx Xxxxxxx
Title:		President


EXECUTIVE


/s/ Xxxxxxx X. Xxxxxxx, Xx.
Xxxxxxx X. Xxxxxxx, Xx.

Exhibit A

RELEASE

WHEREAS, Xxxxxxx X. Xxxxxxx, Xx. (the “Executive”) was a party to an Agreement dated as of December , 2005 (the “Agreement”) by and between the Executive and MSC INDUSTRIAL DIRECT CO., INC., a New York corporation (the “Corporation”), pursuant to which the Executive served as the of 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.

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 December, 2005.


	Xxxxxxx X. Xxxxxxx, Xx.

Exhibit B

ASSOCIATE CONFIDENTIALITY, NON-SOLICITATION
AND NON-COMPETITION AGREEMENT

ASSOCIATE CONFIDENTIALITY, NON-SOLICITATION AND NON- COMPETITION AGREEMENT dated as of December 27, 2005, between MSC Industrial Direct Co., Inc., on behalf of itself and its subsidiaries (collectively, “Employer” or “Corporation”), and Xxxxxxx X. Xxxxxxx, Xx. (“Associate”).

In consideration of Associate’s employment and continued employment, the payment of Associate’s compensation by Employer, and Employer entrusting Associate with Confidential Information (as defined below), and the benefits provided in the Agreement between Employer and Associate dated as of even date herewith (the “Agreement”), including without limitation the changes effected in the Agreement by the Corporation so as to make the benefits to Associate provided under the Prior Agreement and in the Agreement in compliance with the Regulations, it being acknowledged and agreed by Associate that his receipt of such benefits is expressly conditioned on his continued compliance with the terms hereof, the parties have entered into this Associate Confidentiality, Non-Solicitation and Non-Competition Agreement.

1 Confidentiality.

(a) During the term of Associate’s employment with Employer, Associate will not use or disclose to any individual or entity any Confidential Information (as defined below) except (i) in the performance of Associate’s duties for Employer, (ii) as authorized in writing by Employer, or (iii) as required by law or legal process,

provided that, prior written notice of such required disclosure is provided to Employer and, provided further that all reasonable efforts to preserve the confidentiality of such information shall be made.

(b) As used in this Agreement, “Confidential Information” shall mean information that (i) is used or potentially useful in Employer’s business, (ii) Employer treats as proprietary, private or confidential, and (iii) is not generally known to the public. “Confidential Information” includes, without limitation, information relating to Employer’s products or services, processing, manufacturing, marketing, selling, customer lists, call lists, customer data, memoranda, notes, records, technical data, sketches, plans, drawings, chemical formulae, trade secrets, composition of products, research and development data, sources of supply and material, operating and cost data, financial information, personal information and information contained in manuals or memoranda. “Confidential Information” also includes proprietary and/or confidential information of Employer’s customers, suppliers and trading partners who may share such information with Employer pursuant to a confidentiality agreement or otherwise. The Associate agrees to treat all such customer, supplier or trading partner information as “Confidential Information” hereunder. The foregoing restrictions on the use or disclosure of confidential information shall continue after Associate’s employment terminates for any reason for so long as the information is not generally known to the public.

2 Non-competition.

(a) Associate recognizes that the Corporation’s relationship and goodwill with its customers have been established at substantial cost and effort by the Corporation.

(b) Therefore, associate shall not enter into competition (as defined below) with Employer during the term of Associate’s employment with Employer, and for a period of two (2) years following cessation of Associate’s employment with the Corporation for any reason, Associate will not, in any capacity, accept employment with the employer with whom Associate was employed immediately preceding the commencement of Associate’s employment with the Corporation, nor will Associate, in any capacity, accept employment with the following business entities, including any parent or subsidiary entities or other affiliated organizations: X.X. Xxxxxxxx, Inc.; J&L Industrial Supply; Fastenal Corporation; The Home Depot, Inc. and McMaster Xxxx Supply.

3 Non-Solicitation.

(a) Associate recognizes that the Corporation’s relationship and goodwill with its customers have been established at substantial cost and effort by the Corporation.

(b) Therefore, while employed by the Corporation, and for an additional period of two (2) years after the termination of employment, Associate shall not in any capacity employ or solicit for employment, or recommend that another person employ or solicit for employment, any person who is then, or was at any time during the

six (6) months immediately preceding the termination of Associate’s employment, an Associate, sales representative or agent of Employer or any present or future subsidiary or affiliate of Employer.

(c) Further, Associate agrees that while employed by the Corporation, and for a period of two (2) years after his/her employment with the Corporation ends, s/he will not, on behalf of himself/herself, or any other person, firm or corporation, solicit any of the Corporation’s or its Affiliate’s customers with whom s/he has had contact while working for the Corporation; nor will Associate in any way, directly or indirectly, for himself/herself, or any other person, firm, corporation or entity, divert, or take away any customers of the Corporation or its Affiliates with whom Associate has had contact. For purposes of this paragraph, the term “contact” shall mean engaging in any communication, whether written or oral, with the customer or a representative of the customer, or obtaining any information with respect to such customer or customer representative.

4 Employment At-Will. Associate acknowledges that his or her employment by Employer is not for any specified period of time and that it can be terminated by either Associate or Employer at any time for any lawful reason. This is an “employment at will.”

5 Termination of Employment. In the event of termination of employment by either party, this Agreement will remain in effect. Upon termination, Associate will immediately deliver to Employer all property belonging to Employer then in the Associate’s possession or control, including all Documents (as defined herein) embodying Confidential Information. As used herein, “Documents” shall mean originals or copies of files, memoranda,

correspondence, notes, manuals, photographs, slides, overheads, audio or video tapes, cassettes, or disks, and records maintained on computer or other electronic media.

6 Notice to Future Employers. For the period of two (2) years immediately following the end of Associate’s employment with the Corporation, Associate will inform each new employer, in writing, prior to accepting employment, of the existence and details of this Agreement and will provide that employer with a copy of this Agreement. Associate will send a copy of each such writing to the Corporation at the time the Associate informs each new employer of the Agreement.

7 Remedies. Associate acknowledges that this Agreement, its terms and his/her compliance is necessary to protect the Corporation’s confidential and proprietary information, its business and its goodwill; and that a breach of any of Associate’s promises contained in this Agreement will irreparably and continually damage the Corporation to an extent that money damages may not be adequate. For these reasons, Associate agrees that in the event of a breach or threatened breach by the Associate of this Agreement, the Corporation shall be entitled to a temporary restraining order and preliminary injunction restraining Associate from such breach. Nothing contained in this provision shall be construed as prohibiting the Corporation from pursuing any other remedies available for such breach or threatened breach or any other breach of this Agreement. If Associate violates this Agreement, then the duration of the restrictions contained in paragraphs 2 and 3 shall be extended for an amount of time equal to the period of time during which Associate was in violation of the Agreement.

8 Entire Agreement. This Agreement embodies the entire agreement and understanding between the Parties with regard to the subject matter of this Agreement, is binding upon and inures to the benefit of the Parties, and it supersedes any and all prior agreements or understandings between the Corporation and Associate.

9 Modification. This Agreement may be modified or amended only by an instrument in writing executed by the Parties hereto, or in accordance with paragraph 15 herein.

10 Governing Law and Venue. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of New York, and may be enforced in any court of competent jurisdiction.

11 Waiver. If in one or more instances either party fails to insist that the other party perform any of this Agreement’s terms, this failure shall not be construed as a waiver by the party of any past, present, or future right granted under this Agreement; the obligations of both Parties under this Agreement shall continue in full force and effect.

12 Assignment. This Agreement may not be assigned by Associate. The Corporation shall have the right to assign its rights and obligations hereunder without the consent of the Associate.

13 Arbitration. Except as otherwise provided in this Agreement, any controversy or claim arising out of Associate’s employment with Employer or the termination thereof, including without limitation any claim related to this Agreement or the breach thereof shall be resolved by binding arbitration in accordance with the rules then in effect of the American Arbitration Association, at the office of the American Arbitration Association nearest

to where the Associate performed the Associate’s principal duties for the Employer. Nothing in this paragraph shall prevent the parties from seeking injunctive relief from the courts pending arbitration. Each party shall be permitted to engage in arbitral discovery in the form of document production, information requests, interrogatories, depositions and subpoenas. The parties shall share equally the fee of the arbitration panel.

To the extent that an arbitrator or court shall find that any dispute between the parties, including any claim made under or relating to this Agreement, is not subject to arbitration, such claim shall be decided by the courts of the State and the County, in which this agreement was executed, in a proceeding held before a Judge of the Trial Court of the State and County in which this agreement was executed or in the United States District Court in and for the District Court of covering the County in which this agreement was executed. Any trial of such a claim shall be heard by the Judge of such Court, sitting without a jury at a bench trial, to ensure more rapid adjudication of that claim and application of existing law.

14 Attorneys’ Fees. If any party to this Agreement breaches any of this Agreement’s terms, then that party shall pay to the non-defaulting party all of the non-defaulting party’s costs and expenses, including reasonable attorneys’ fees, incurred by that party in enforcing this Agreement.

15 Severability. If any one or more of the provisions contained in this Agreement is held illegal or unenforceable by an arbitrator or court and cannot be modified to be enforceable (which the parties expressly authorize such court, arbitrator, or other forum to do), no other provisions shall be affected by this holding.

16 Acknowledgment. I have read this agreement, have had an opportunity to ask Employer’s representatives questions about it, and understand that my signing this agreement is a condition of employment.

17 Section Headings. Section headings are used herein for convenience of reference only and shall not affect the meaning of any provision of this Agreement.

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THUS, the parties knowingly and voluntarily execute this Agreement as of the dates set forth below.

MSC INDUSTRIAL DIRECT CO., INC.:		ASSOCIATE:


By:	/s/ Xxxxx Xxxxxxx	By:	/s/ Xxxxxxx X. Xxxxxxx, Xx.

Title:		Printed Name: Xxxxxxx X. Xxxxxxx, Xx.

Date: December 27, 2005		Date: December 27, 2005

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