MSC INDUSTRIAL DIRECT CO., INC. RESTRICTED STOCK UNIT AGREEMENT
Exhibit
10.01
MSC
INDUSTRIAL DIRECT CO., INC.
2005
OMNIBUS EQUITY PLAN
This
RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is
entered into on this 19th day of October, 2010, by and between MSC
Industrial Direct Co., Inc. (the “Company”) and Xxxxx
Xxxxxxx (the “Participant”). The
Company and the Participant may hereinafter each be referred to as a “Party” and
collectively as the “Parties.” Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Company’s 2005
Omnibus Equity Plan (the “Plan”).
WHEREAS, the Company’s Board
of Directors has developed a plan to provide for an orderly succession upon the
Participant’s departure from his position as the Company’s Chief Executive
Officer (the “Succession
Plan”);
WHEREAS, the Succession Plan
is designed to ensure that the Participant shall: (i) continue to serve as Chief
Executive Officer through December 31, 2012, or such other date (to be no later
than December 31, 2013) determined by the Board of Directors, and serve as Vice
Chairman of the Board of Directors of the Company for four years thereafter;
(ii) actively support and assist his successor in his or her transition to the
position of Chief Executive Officer; and (iii) serve as interim Chief Executive
Officer if his successor, at any time within two years of becoming Chief
Executive Officer, is no longer serving in that capacity for any
reason;
WHEREAS, in connection with
the Succession Plan, and conditioned upon the amendment and restatement of the
Participant’s current Change in Control Agreement, the Compensation Committee of
the Board of Directors (the “Committee”) has
authorized a grant of restricted stock units to the Participant that will vest
upon the satisfaction of certain performance and service conditions established
by the Committee; and
WHEREAS, the Parties desire to
enter into this Agreement for the purpose of establishing the terms and
conditions of restricted stock units that have been granted to the
Participant.
NOW, THEREFORE, in
consideration of the foregoing premises and the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
1.
Grant of
Award. The Participant is hereby awarded (the “Award”) 183,418
restricted stock units (“RSUs”) issued under
the Plan, evidencing the grant thereof by the Committee on the date hereof (the
“Grant Date”),
and the Participant hereby accepts the Award, in each case, on the terms and
subject to the conditions set forth in this Agreement.
2.
Vesting. The RSUs
shall vest on the dates that both the Performance Condition (as described in
clause (a) below) and the Service Conditions (as described in clause (b) below)
have been satisfied as follows: (A) upon satisfaction of the Performance
Condition and the Service Conditions described in subclauses (b)(i) through
(b)(iii), two-thirds (2/3) of the RSUs shall vest; and (B) upon satisfaction of
the Performance Condition and the Service Conditions described in subclauses
(b)(i) through (b)(iv), the remaining one-third (1/3) balance of the RSUs shall
vest.
(a) Performance Condition − The
net income of the Company and its consolidated subsidiaries for either (i) the
four consecutive fiscal quarters that begin on August 29, 2010 (the “First Measurement
Period”), or (ii) the four consecutive fiscal quarters immediately
following the First Measurement Period, shall have equaled or exceeded $125
million, as certified by the Committee in accordance with Section 162(m) of the
Code (the “Performance
Condition”). "Net Income" shall mean the consolidated net
income of the Company, determined in accordance with U.S. generally accepted
accounting principles, consistently applied, excluding, however, (i) any
extraordinary gains or losses and (ii) any acquisition-related costs incurred to
effect business combinations and required to be expensed in accordance with FASB
ASC Topic 805, formerly SFAS No. 141(R), in each case together with any related
provision for taxes. Such determinations shall be made by reference
to the Company’s financial statements.
(b) Service Condition − Subject to
subsections (c) and (d) below, the Participant shall have served (the “Service
Conditions”):
(i) as
Chief Executive Officer of the Company from the Grant Date through December 31,
2012 (as such date may be accelerated or extended, the “Succession Date”);
provided that
the Board of Directors may, in its sole discretion: (A) accelerate the
Succession Date in order to achieve its succession objectives, or (B) extend the
Succession Date through December 31, 2013;
(ii) at
the Board’s request, as Chief Executive Officer of the Company at any time
during the two-year period commencing on the Succession Date (the “Transition Period”)
that the Participant’s successor as Chief Executive Officer is no longer serving
in that capacity for any reason; provided that the
Participant receives compensation for serving as Chief Executive Officer that is
appropriate and includes base salary and annual incentive bonus opportunities
that are substantially comparable to his current base salary and annual
incentive bonus opportunities, all as determined in good faith by the
Committee on a basis consistent with the practices of the
Committee. For the avoidance of doubt and subject to subsections (c)
and (d) of this Section 2, it is understood that no portion of the RSUs shall
vest prior to the end of the Transition Period;
(iii) as
Vice Chairman of the Company for the period commencing on the Succession Date
through the earlier of: (A) the two-year anniversary of the Succession Date, and
(B) the date the Participant fails to be nominated, appointed or re-elected to
the Company’s Board of Directors through no fault of the Participant;
and
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(iv) as
Vice Chairman of the Company for the period commencing on the two-year
anniversary of the Succession Date through the earlier of: (A) the four-year
anniversary of the Succession Date, and (B) the date the Participant fails to be
nominated, appointed or re-elected to the Company’s Board of Directors through
no fault of the Participant.
(c) Death or Disability − If the
Participant dies or suffers a Disability while serving as Chief Executive
Officer or Vice Chairman of the Company: (i) after the Performance Condition has
been satisfied, the RSUs shall fully vest on the date of Participant’s death or
Disability, or (ii) before the Performance Condition has been satisfied, the
RSUs shall fully vest upon the date the Committee certifies that the Performance
Condition has been satisfied, and if the Performance Condition is not satisfied,
the RSUs shall terminate.
(d) Change in Control − Upon a
Change in Control (as defined in the Second Amended and Restated Agreement
between the Company and the Participant dated of even date herewith (the “Amended Change in Control
Agreement”)), the Performance Condition shall be waived and the shares of
the Company’s Class A Common Stock (“Shares”) issuable
upon vesting of the Award shall be converted into the right to receive an amount
of cash equal to the Change in Control Price for such Shares, plus interest at
the Applicable Federal Rate from the date of such Change in Control to the date
such amount is paid to the Participant (the “Settlement
Amount”). For purposes of this Agreement, “Applicable Federal
Rate” shall mean the rate of interest determined under Section 1274(d) of the
Code. Following a Change in Control, the RSUs shall vest, and the
Settlement Amount shall be paid to the Participant, upon the earlier of: (i) the
Participant’s satisfaction of the Service Conditions (i.e., two-thirds upon
satisfaction of subclauses (b)(i) through (b)(iii) of Section 2 and one-third
upon satisfaction of subclauses (b)(i) through (b)(iv)), (ii) upon the
termination by the Company without Cause (as defined in the Amended Change in
Control Agreement) of the Participant’s employment with and/or service to the
Company, (iii) upon the death or Disability of the Participant while serving as
Chief Executive Officer or Vice Chairman of the Company, and (iv) upon the date
Participant terminates his employment due to a change in his Circumstances of
Employment (as defined in the Amended Change in Control
Agreement). Immediately prior to or concurrent with the occurrence of
a Change in Control, the Company shall establish and fund an irrevocable "rabbi"
trust, in form and substance reasonably satisfactory to the Participant, to
secure the payment of the Settlement Amount.
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4.
Dividend
Equivalents. Any dividends paid in cash on Shares prior to
vesting of the RSUs shall be credited to the Participant as additional RSUs (or
shall be added to the Settlement Amount provided in Section 2(d) above), as if
the RSUs then held by the Participant had been converted to
Shares. The amount of such credit, which may be in whole and/or
fractional RSUs (carried to three decimals), shall be determined based on the
Fair Market Value of Shares on the date of payment of such
dividend. All such additional RSUs credited to the Participant shall
be subject to the same vesting requirements applicable to the RSUs underlying
the Award and shall be settled in accordance with, and at the time of,
settlement of vested RSUs pursuant to this Agreement.
5.
Forfeiture. Subject
to subsections (c) and (d) of Section 2 of this Agreement, in the event that
either the Performance Condition or the Service Condition is not satisfied, this
Award and the RSUs represented by this Award (or, if only the Service Condition
in subclause (b)(iv) of Section 2 is not satisfied, the applicable one-third
portion of the RSUs represented by this Award) shall be forfeited to the Company
forthwith and all rights of the Participant under this Award and the RSUs
represented by this Award shall immediately terminate.
6.
No
Transfer. The Award and the RSUs are non-transferable and may
not be assigned, pledged or hypothecated and shall not be subject to execution,
attachment or similar process. Upon any attempt to effect any such
disposition, or upon the levy of any such process, the Award shall immediately
become null and void and the RSUs shall be forfeited.
7.
Withholding
Taxes. No later than the date as of which an amount first
becomes includible in the gross income of the Participant for Federal income tax
purposes with respect to the Award, the Participant shall make arrangements
satisfactory to the Company regarding the payment of, Federal, state, local or
foreign taxes of any kind required by law to be withheld by the Company with
respect to such amount. Unless the Participant elects to satisfy his
withholding obligation with a cash payment in accordance with rules established
by the Administrator, the Participant shall be deemed to have, and by his
signature hereto hereby does, instruct the Company to satisfy the Company’s
minimum statutory withholding requirements with Shares that are to be
delivered upon settlement of the RSUs (or in the case of vesting pursuant to
Section 2(d), with cash). Changes to this instruction to pay
withholding obligations in Shares (i.e., to make arrangements to pay withholding
obligations in cash) can only be made during the “trading window” prior to the
vesting event under the Company’s Xxxxxxx Xxxxxxx Policy. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements, and the Company, its Subsidiaries and its Affiliates shall, to
the extent permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the Participant. The Administrator may at
any time establish such procedures as it deems appropriate for the settlement of
withholding obligations with Shares or cash. The Participant should consult his
own tax advisor for more information concerning the tax consequences of the
grant and settlement of RSUs under this Agreement.
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8.
Successors and
Assigns. The Company may assign any of its rights under this
Agreement. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement will be binding upon
Participant and Participant’s heirs, executors, administrators, legal
representatives, successors and assigns.
9.
Governing Law;
Severability. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York as such
laws are applied to agreements between New York residents entered into and to be
performed entirely within New York, excluding that body of laws pertaining to
conflict of laws. If any provision of this Agreement is determined by
a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.
10.
Effect of Amendment of
Plan. No discontinuation, modification, or amendment of the
Plan may, without the express written consent of the Participant, adversely
affect the rights of the Participant under this Award, except as expressly
provided under the Plan. This Agreement may be amended as provided under the
Plan, but except as provided thereunder, any such amendment shall not adversely
affect Participant’s rights hereunder without Participant’s
consent.
11.
No Limitation on Rights
of the Company. The grant of this Award shall not in any way
affect the right or power of the Company to make adjustments, reclassifications,
or changes in its capital or business structure or to merge, consolidate,
dissolve, liquidate, sell, or transfer all or any part of its business or
assets.
12.
Compliance with
Applicable Law. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to cause to be issued or delivered
any Shares, unless and until the Company is advised by its counsel that the
issuance and delivery of such Shares is in compliance with all applicable laws,
regulations of governmental authority, and the requirements of any exchange upon
which Shares are traded. The Company shall in no event be obligated
to register any securities pursuant to the Securities Act of 1933 (as now in
effect or as hereafter amended) or to take any other action in order to cause
the issuance and delivery of such Shares to comply with any such law, regulation
or requirement. The Company may require, as a condition of the
issuance and delivery of such Shares and in order to ensure compliance with such
laws, regulations, and requirements, that the Participant make such covenants,
agreements, and representations as the Company, in its sole discretion,
considers necessary or desirable.
13.
Agreement Not a Contract
of Employment or Other Relationship; Participation in the Plan. This
Agreement is not a contract of employment, and the terms of employment of the
Participant or other relationship of the Participant with the Company or any of
its subsidiaries or affiliates shall not be affected in any way by this
Agreement except as specifically provided herein. The execution of
this Agreement shall not be construed as conferring any legal rights upon the
Participant for a continuation of an employment or other relationship with the
Company or any of its subsidiaries or affiliates, nor shall it interfere with
the right of the Company or any of its subsidiaries or affiliates to discharge
the Participant and to treat him or her without regard to the effect which such
treatment might have upon him or her as a Participant. Participation
in the Plan with respect to this Award shall not entitle the Participant to
participate with respect to any other award. Any payment or benefit
paid to the Participant with respect to this Award shall not be considered to be
part of the Participant’s “salary,” and thus, shall not be taken into account
for purposes of determining the Participant’s termination indemnity, severance
pay, retirement or pension payment, or any other employee benefits, except to
the extent required under applicable law.
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14.
Notices. Any notice
or other communication required or permitted hereunder shall be in writing and
shall be delivered personally or sent by certified, registered, or express mail,
postage prepaid, return receipt requested, or by a reputable overnight delivery
service. Any such notice shall be deemed given when received by the
intended recipient.
15.
Receipt of
Plan. The Participant acknowledges receipt of a copy of the
Plan, and represents that the Participant is familiar with the terms and
provisions thereof, and hereby accepts the Award subject to all the terms and
provisions of this Agreement and of the Plan. The Participant hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator with respect to any questions arising under
this Agreement or the Plan.
16.
Entire
Agreement. The Plan and this Agreement constitute the entire
agreement and understanding of the parties with respect to the subject matter
herein and supersede all prior understandings and agreements, whether oral or
written, between the parties hereto with respect to the specific subject matter
hereof.
[Remainder of this page is left
intentionally blank]
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IN
WITNESS WHEREOF, this Agreement has been duly executed on the date first written
above.
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MSC
INDUSTRIAL DIRECT CO., INC.
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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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PARTICIPANT
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/s/
Xxxxx Xxxxxxx
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Name:
Xxxxx Xxxxxxx
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I have
read, understand and agree to abide by the terms of this Agreement, the Plan and
the Associate Confidentiality, Non-Solicitation and Non-Competition Agreement
that I entered into with the Company dated as of October 19, 2010 (the
“Associate Agreement”). I hereby acknowledge that the grant of the
Award pursuant to this Agreement is consideration for my entering into and
complying with the Associate Agreement. I understand this Agreement,
the Plan and the Associate Agreement control in all respects the terms and
conditions of the Award granted to me.
In
addition, in accordance with the Company’s Executive Incentive Compensation
Recoupment Policy (the “Policy”), a copy of which I acknowledge having received
and which I have reviewed and understand, I agree to the following:
(i)
I agree, upon demand by the Company, to forfeit, return or
repay to the Company any or all of the “Award Benefits and Proceeds” if the
Company determines that I engaged in Misconduct that caused or partially caused
the need for a significant restatement of financial results, other than as a
result of a change in accounting principles (a
“Restatement”). “Misconduct” shall mean a knowing violation of SEC
rules and regulations or Company policy, as determined by the Board or the
Compensation Committee of the Board in its sole and absolute
discretion.
(ii) I
agree, upon demand by the Company, to forfeit, return or repay to the Company
any or all of the “Award Benefits and Proceeds” if I breach or violate any of
the terms of the Associate Agreement (which also shall mean any future Associate
Agreement) following the termination of my employment with the
Company.
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“Award
Benefits and Proceeds” shall mean (a) to the extent that the Award has not fully
vested, all of my remaining rights under the Award, (b) to the extent that all
or any part of the Award has vested and I continue to hold shares that vested,
any such shares, and (c) to the extent that all or any part of the Award has
vested and I have disposed of shares that vested under the Award, any net
proceeds realized from such disposition (or, in the case of a gift, the fair
market value of the shares so gifted at the time of the gift); provided, that
for purposes of clause (ii) above, clauses (b) and (c) of this definition of
“Award Benefits and Proceeds” only shall apply with respect to shares that
vested during the period beginning two years before and ending two years after
the termination of my employment.
These
provisions are subject to the limitations on the period for recoupment set forth
in the Policy and shall terminate in the event of a Change in
Control.
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/s/
Xxxxx Xxxxxxx
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Date
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Associate
Signature
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FOR MSC INDUSTRIAL DIRECT
CO., INC. USE ONLY
ACCEPTED
BY 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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Date:
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