Exhibit 10.06
AGREEMENT (this "Agreement"), dated as of June 19, 2000, 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 "Company"),
and XXXXXXX X. XXXXXXX, XX. (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive, and the
Executive desires to be employed by the Company, upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, the parties hereto covenant and agree as follows:
1. Employment. The Company employs the Executive as Senior Vice President
and Chief Financial Officer of the Company ("CFO") commencing on June 19, 2000.
If the Company shall so request, the Executive shall become and shall, during
such portion or portions of the Executive's employment with the Company
hereunder as the Company shall request, act as a director and/or officer of the
Company 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 Senior Vice President and CFO of the Company, agrees to perform
such other services or act in such other capacities as shall from time to time
be assigned to him by the President or by the Chief Operating Officer of the
Company or pursuant to the authorization of the Board of Directors of the
Company (the "Board of Directors") and agrees diligently and competently to
devote his entire business time, skill and attention to such services.
2. Compensation. The Company shall pay to the Executive, and the Executive
shall accept from the Company, for the Executive's services hereunder, base
compensation at the rate of $275,000 per annum (the "Annual Base Compensation"),
payable in accordance with the Company's customary payroll policy; provided,
however, that the Board of Directors of the Company may from time to time
increase such rate of compensation to such amount as it shall determine. The
Company also shall (i) pay to the Executive a one time signing bonus in the
amount of $100,000 upon the completion by the Executive of six (6) months of
employment hereunder and (ii) grant to the Executive an option to purchase
125,000 shares of the Company's Class A common stock, par value $.001 per share,
in accordance with the terms of the Company's 1998 Stock Option Plan, such grant
to be effective as of the commencement of employment by the Executive and to
provide for the vesting of all such options upon a Change of Control (as such
term is hereinafter defined). The Executive will be eligible (i) for additional
bonus compensation in November 2001, the time at which other executive employees
of the Company are considered for annual bonus awards, and (ii) to receive
additional stock options as determined in the sole and absolute discretion of
the Board of Directors based upon the performance of the Company 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 Company and is
anticipated to be in the range of 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 Company
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 Company, including without limitation maintenance, insurance and
gasoline. Such allowance will be paid in accordance with the Company'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 Company's policy. Reimbursement for such expenses shall be subject to such
regulations and procedures as the Company 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 Company 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.
(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 Company'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 Company'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 Company shall retain the Executive as a
consultant to the Company 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 Company 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 Company shall pay to the Executive compensation at the rate of $2,500 per
annum. All stock options theretofore vested but not yet exercised will expire
thirty (30) days after the termination of such consultancy in accordance with
the terms of the Company's 1998 Stock Option Plan.
(c) In the event of the termination of the Executive's employment
hereunder for Cause, the Employee 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.
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7. Change of Control.
(a) If, within two years following a Change of 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 Company 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 years following a Change in
Control, the Company shall terminate the Executive's employment other than for
Cause, the Company shall pay to the Executive, within thirty (30) days of such
termination, an amount equal to the Annual Base Compensation of the Executive at
the time of such termination plus the amount of any bonus paid to him with
respect to the fiscal year ending immediately prior to such termination.
(b) A "Change in Control" shall be deemed to occur upon (i) the sale by
the Company of all or substantially all of its assets to any "person" (as
hereinafter defined); (ii) the consolidation of the Company with any person or
the merger of the Company with any person as a result of which merger the
Company is not the surviving entity as a publicly held corporation; or (iii) the
sale or issuance by the Company and/or the sale by any one or more of its
stockholders in one or more transactions, related or unrelated, of the Company's
voting securities to one or more persons (other than Xxxxxxxx Xxxxxxxx or
Xxxxxxxx Xxxxxxxxx) as a result of which any such person and its "affiliates"
(as hereinafter defined) shall possess more than fifty percent (50%) of the
combined voting power of the Company's then outstanding securities. As used
herein, a "person" shall mean any individual, partnership, firm, trust,
corporation or similar entity, and an "affiliate", when used with respect to any
person, shall mean any other person that, directly or indirectly, through one or
more intermediaries, controls, is controlled by or is under common control with,
such first-mentioned person.
(c) The Executive's "Circumstances of Employment" shall have changed if
there shall have occurred any of the following events: (i) a material reduction
or change in the Executive's employment duties or reporting responsibilities;
(ii) a reduction in the annual base compensation made available by the Company
to the Executive; or (iii) 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 a good faith determination by the Board of
Directors that the termination of the employment by the Company of the Executive
is necessary by reason of (i) the commission by the Executive of any act which,
if successfully prosecuted by the appropriate authorities, would constitute a
felony under Federal or state law, unless the Executive performed the acts
underlying such felony in good faith and in a manner the Executive reasonably
believed to be in or not opposed to the best interests of the Company; (ii) the
Executive's embezzlement or intentional misappropriation of any property of the
Company; or (iii) the Executive's having divulged, furnished or made accessible
to anyone other than the Company, its directors, officers, employees, auditors
and legal advisors, otherwise than in the regular course of business of the
Company, any Confidential Information (as such term is hereinafter defined)
relating to the customers, employees, operations, financial condition, revenues
or projections of the Company, other than any such Confidential Information
already in the public domain.
(e) Notwithstanding any other provision of this Section 7, the Executive
agrees that no amount shall be payable by the Company to the Executive pursuant
to Section 7(a) if the payment of all or any part of such amount shall restrict
or otherwise impair, as determined by the
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Company in its sole discretion, the ability of the Company to utilize the
"pooling of interests" method of accounting, as such term is used under
generally accepted accounting principles.
8. At Will Employment. Nothing in this Agreement shall confer upon the
Executive the right to remain in the employ of the Company, it being understood
and agreed that (a) the Executive is an employee at will and serves at the
pleasure of the Company at such compensation as the Company shall determine from
time to time, and (b) the Company shall have the right to terminate the
Executive's employment at any time, with or without Cause.
9. Employment Inducement. The Executive shall not, during his employment
hereunder and for a period of two (2) years thereafter, in any manner, directly
or indirectly, induce or attempt to influence any present or future employee of
the Company or any affiliate of the Company to leave the employ of the Company
or such affiliate.
10. Confidentiality. The Executive's duties hereunder will give the
Executive access to trade secrets and other confidential or proprietary
information of the Company of a special and unique nature and value to the
Company, including but not limited to the nature and material terms of business
proposals available to the Company, financial records of the Company and other
information relating to the Company's present or future operations (all of the
foregoing, whether or not it qualifies as a "trade secret" under applicable law,
is collectively called "Confidential Information"). The Executive recognizes
that the Confidential Information is proprietary to the Company and gives it a
significant competitive advantage in its industry. Accordingly, the Executive
shall not use or disclose any of the Confidential Information during or after
the termination for any reason of his employment hereunder, except for the sole
and exclusive benefit of the Company. Upon any termination of the Executive's
employment hereunder, the Executive will return to the Company's principal
office all documents, computer tapes and other tangible embodiments of any
Confidential Information. The Executive agrees that the Company would be
irreparably injured by any breach of the foregoing provisions, that such injury
would not be adequately compensable by monetary damages, and that accordingly,
the Company may specifically enforce the provisions of this paragraph by
injunction, without affecting any claim for damages. For purposes of this
Section 10, the "Company" shall mean the Company and/or its affiliates.
11. 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
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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.
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
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Name: Xxxxx Xxxxxxx
Title: Executive Vice President
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx, Xx.
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