Exhibit 10.4
AMENDED AND RESTATED AGREEMENT made
and entered into as of this 27th day of December, 2005 by and
between MSC INDUSTRIAL DIRECT CO., INC., a New York
corporation (the “Corporation”), and SHELLEY BOXER
having an address at
,
(the “Executive”).
W I T N E S
S E T H:
WHEREAS, the Executive has been
employed by the Corporation in a senior executive capacity and
desires to remain in the employ of the Corporation in such
capacity; and
WHEREAS, the Executive and the
Corporation are parties to an Agreement dated January 8, 1999
(the “Prior Agreement”), providing the Executive with
certain benefits on and in connection with a “Change in
Control” as defined therein; and
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
hereby agree as follows:
FIRST:
Inducement Payments :
A.
Subject to the
provisions of paragraph G of this Article FIRST, if a
“Change in Control” (as hereinafter defined) shall
occur, the Corporation shall pay to the Executive, in cash, the
amount of $800,000, which amount shall be due and payable thirty
(30) days after the occurrence of a Change in Control.
B.
If, within five
(5) 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 five (5) 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 G of this
Article FIRST, on the fifth (5 th ) 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 “Special Severance Payment” (as
hereinafter defined).
C.
A 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), 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
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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 familiesand/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 (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
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(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
below) 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, 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 C.(c)(3).
For purposes of
this Article FIRST C., “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 C., stock ownership is determined under the
Regulations.
D.
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
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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.
E.
“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.
F.
The
“Special Severance Payment” shall mean a lump sum
payment equal to the difference between (a) the sum of
(i) the product of five 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 five 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 and (b) the
aggregate of all base salary and bonus amounts paid to the
Executive by the Corporation during the period commencing upon a
Change in Control and ending on the date of termination of the
Executive’s employment.
G.
As a condition to
receiving the Special Severance Payment, the Executive shall
execute the General Release in the form attached as Exhibit A
hereto.
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H.
For purposes of
this Agreement, “affiliate” shall have the meaning
ascribed thereto under the Securities Act of 1933.
I.
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 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
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 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
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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
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 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 (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 Executive’s receipt of a
revenue agent’s report (or similar document) notifying the
Executive that an Excise Tax may be imposed and (c) 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 Article SECOND.
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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 (a) to examine all records, files and other information
and documentation in the Executive’s possession or under the
Executive’s control, (b) 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, (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 Executive’s behalf, and
(d) 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
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