8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 19, 2010

MSC Industrial Direct Co., Inc.

(Exact Name of Registrant as Specified in Its Charter)

New York	1-14130	11-3289165
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

75 Maxess Road, Melville, New York	11747
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code: (516) 812-2000
Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

(d) and (e)  On October 21, 2010, MSC Industrial Direct Co., Inc. (the "Company") announced a management succession plan pursuant to which Mr. David Sandler, the Company's President and Chief Executive Officer, will continue in his current role through December 31, 2012, or no later than December 31, 2013 as determined by the Company's Board of Directors, and then serve as Vice Chairman of the Board for four years.  Mr. Erik Gershwind, Executive Vice President and Chief Operating Officer, has been identified by the Board as the successor to Mr. Sandler as the Company's Chief Executive Officer.  The Company also announced that Mr. Gershwind has been elected to the Board.  The election was made on October 19, 2010 with the size of the Board being increased from 8 to 9 members.

In fiscal year 2010, Mr. Gershwind was compensated with a base salary of $294,356.  In addition, on October 13, 2009, as part of the Company's annual equity award grants for fiscal 2009, Mr. Gershwind received a stock award of 3,192 restricted shares of the Company’s Class A common stock, with an aggregate fair market value of $140,991 on the date of grant, and a grant of 18,928 options to purchase shares of the Company’s Class A common stock at an exercise price of $44.17 per share, and a Black-Scholes value of $12.49 per share.  No incentive bonus was awarded for fiscal 2009.  Mr. Gershwind also received $4,928 as part of a special payment in the amount of one week’s base salary, which was made to all Company employees, in recognition of the collective efforts of the Company’s employees on behalf of the Company in the difficult economic environment during fiscal 2009.  Mr. Gershwind's current annual base salary is $307,000 per annum.  On October 19, 2010, as part of the Company's annual equity award grants for fiscal 2010, Mr. Gershwind received a stock award of 4,768 restricted shares of the Company’s Class A common stock, with an aggregate fair market value of $260,000 on the date of grant, and a grant of 32,743 options to purchase shares of the Company’s Class A common stock at an exercise price of $54.52 per share, and an estimated Black-Scholes value of $14.44 per share.  Mr. Gershwind also received $300,000 as compensation for fiscal year 2010 under the Company’s annual incentive bonus program and an additional bonus of $25,000 for fiscal 2010 (which was generally paid to participants under the annual incentive bonus program in recognition that the maximum payout levels under the 2010 plan did not appropriately account for a range of EPS performance in excess of the target performance level).  In addition, Mr. Gershwind will participate in the Company’s annual cash incentive bonus program for fiscal year 2011 and is entitled to participate in all of the employee benefit plans available to executives.

Mr. Gershwind is the nephew of Mitchell Jacobson, the Company’s Chairman of the Board, and the son of Marjorie Gershwind, Mr. Jacobson's sister.  Mr. Jacobson and Ms. Gershwind are also principal shareholders of the Company.

Grant of Restricted Stock Units to David Sandler, Chief Executive Officer

On October 19, 2010, the Compensation Committee of the Board of Directors of the Company approved the grant of a Restricted Stock Unit Agreement (the “RSU Agreement”) to Mr. David Sandler, the Company’s Chief Executive Officer.  The RSU Agreement covers 183,418 shares and provides for vesting in two installments, contingent on the Company having at least $125 million of net income during either fiscal 2011 or fiscal 2012 and Mr. Sandler satisfying the service conditions of the RSU Agreement.  Assuming satisfaction of the performance condition, two-thirds of the award will vest if Mr. Sandler continues to serve as Chief Executive Officer through December 31, 2012, as such date may be accelerated or extended by the Board of Directors, provided that such date may not be extended beyond December 31, 2013 (such date, as accelerated or extended, the “Succession Date”).  In addition, vesting is conditioned on Mr. Sandler serving as Vice Chairman of the Board for a period of two years commencing on the Succession Date and serving as interim Chief Executive Officer at the request of the Board at any time during the two-year period commencing on the Succession Date in the event that Mr. Sandler’s successor is no longer serving as Chief Executive Officer for any reason.  Assuming satisfaction of the performance condition, the remaining one-third of the award will vest if Mr. Sandler satisfies the aforementioned service conditions and continues to serve as Vice Chairman of the Board for an additional period of two years.  In the event of a change in control of the Company, the performance condition shall be waived and the award will settle in cash and vest upon the earlier of the satisfaction of the service conditions or the termination of Mr. Sandler without cause (as defined in the Second Amended CIC discussed below) or the termination by Mr. Sandler of his employment due to a change in the circumstances of employment (as defined in the Second Amended CIC discussed below).

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The value of each restricted stock unit is equal to the fair market value of one share of the Company’s Class A Common Stock on the date of the grant and will change as the value of the Company’s shares change.  All restricted stock units that vest, including dividend equivalents on the vested portion of the grant, will be settled in shares of the Company.

The Committee approved the RSU Agreement as part of the Company’s long-term succession planning, as well as to retain and incentivize Mr. Sandler to provide succession services.  In determining the amount and form of the RSU Agreement, the Committee also determined that Mr. Sandler would not receive annual equity incentive awards that Mr. Sandler otherwise would have been eligible to receive in October 2010 and October 2011, and structured the RSU Agreement, in part, to replace these annual equity incentive awards.  The RSU Agreement is subject to the clawback provisions of the Company’s Executive Incentive Compensation Recoupment Policy, which is described in the Company’s definitive proxy statement filed on December 4, 2009.

The description of the RSU Agreement herein is subject to and qualified by reference to the terms of the RSU Agreement, which is filed as exhibit to this Form 8-K and incorporated by reference herein.

Amendment to Mr. Sandler’s Change in Control Agreement

Also on October 19, 2010 and in connection with the RSU Agreement, the Company entered into a Second Amended and Restated Agreement (the “Second Amended CIC”) with Mr. Sandler, which amends and restates Mr. Sandler’s change in control severance agreement.  The Second Amended CIC effects a number of changes in Mr. Sandler’s change in control severance agreement.  Among the changes made are: (i) the lump sum payment of $1.2 million previously payable in the event of a change in control is eliminated; (ii) the severance payment due following a termination without cause or a termination by Mr. Sandler due to a change in the circumstances of employment is reduced from five times to three times base salary and annual bonus; (iii) the period following a change in control within which a termination of employment must occur in order to entitle Mr. Sandler to a severance payment is reduced from five years to two years; (iv) any severance benefits will no longer be grossed up, but rather will be subject to reduction to the extent that the after-tax payments to Mr. Sandler would be increased; and (v) the Second Amended CIC will terminate upon the Succession Date.

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The description of the Second Amended CIC herein is subject to and qualified by reference to the terms of the Second Amended CIC, which is filed as exhibit to this Form 8-K and incorporated by reference herein.

On October 21, 2010, the Company issued a press release announcing its management succession plan and the election of Mr. Gershwind to the Board.  The entire text of the press release is attached as Exhibit 99.1 and is incorporated by reference herein.

Item 9.01       Financial Statements and Exhibits.

(d) Exhibits

Exhibit
10.01	Restricted Stock Unit Agreement awarded to David Sandler, dated October 19, 2010
10.02	Second Amended and Restated Agreement dated October 19, 2010 between the Company and David Sandler
99.1	Press Release announcing management succession plan, dated October 21, 2010, issued by MSC Industrial Direct Co., Inc.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MSC INDUSTRIAL DIRECT CO., INC.
Date: October 21, 2010	By:	/s/ Shelley M. Boxer
		Name:	Shelley M. Boxer
		Title:	Vice President, Finance

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EXHIBIT INDEX

Exhibit Number	Description
10.01	Restricted Stock Unit Agreement awarded to David Sandler, dated October 19, 2010
10.02	Second Amended and Restated Agreement dated October 19, 2010 between the Company and David Sandler
99.1	Press Release announcing management succession plan, dated October 21, 2010, issued by MSC Industrial Direct Co., Inc.

EX-10.01

Exhibit 10.01

MSC INDUSTRIAL DIRECT CO., INC.

2005 OMNIBUS EQUITY PLAN

RESTRICTED STOCK UNIT AGREEMENT

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 David Sandler (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.

3.    Settlement; Rights as Shareholder.  Upon vesting, and subject to Section 2(d) above, each RSU shall be converted into the right to receive one Share upon settlement.  Settlement of vested RSUs shall be made promptly following the date such RSUs shall have vested.  Any fractional RSU shall be disregarded.  Unless and until such time as Shares are issued in settlement of vested RSUs, the Participant shall have no ownership of the Shares allocated to the RSUs and, subject to the provisions of Section 4, shall have no rights as a shareholder with respect to such Shares.  Subject to Section 2(d) above, upon settlement, the Company shall cause the Company’s transfer agent to issue a certificate or certificates for the Shares in the name of the Participant, or to make a book entry record of such issuance, and the Participant shall thereupon have all rights as a shareholder with respect to such Shares, including the right to vote such Shares and to receive all dividends and other distributions paid with respect to such Shares.

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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 Insider Trading 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.

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IN WITNESS WHEREOF, this Agreement has been duly executed on the date first written above.

MSC INDUSTRIAL DIRECT CO., INC.

/s/ Eileen McGuire

Name: Eileen McGuire

Title: Sr. V.P. Human Resources

PARTICIPANT

/s/ David Sandler

Name: David Sandler

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.

October 19, 2010	/s/ David Sandler
Date	Associate Signature

FOR MSC INDUSTRIAL DIRECT CO., INC. USE ONLY

ACCEPTED BY MSC INDUSTRIAL DIRECT CO., INC.

By:	/s/ Eileen McGuire
	Name: Eileen McGuire
	Title: Sr. V.P. Human Resources
Date:	October 19, 2010

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EX-10.02

Exhibit 10.02

SECOND AMENDED AND RESTATED AGREEMENT made and entered into as of this 19th day of October, 2010 by and between MSC INDUSTRIAL DIRECT CO., INC., a New York corporation (the “Corporation”), and DAVID SANDLER having an address at 22 James Millen Road, North Reading, MA 01864 (the “Executive”).

WITNESSETH:

WHEREAS, the Corporation and the Executive are parties to an Amended and Restated Agreement, dated as of December 27, 2005, as amended by an Amendment to Change in Control Agreement dated December 19, 2007, which provides the Executive with certain compensation and benefits in the event of certain terminations of employment following a Change in Control (as defined below) of the Corporation (the “Existing Agreement”);

WHEREAS, the Board of Directors of the Corporation continues to believe that it is in the best interests of the Corporation and its shareholders to assure the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change in Control of the Corporation; and that it is appropriate to provide arrangements for the Executive’s compensation and benefits in the event of certain terminations of employment following a Change in Control; and

WHEREAS, the Corporation and the Executive wish to amend and restate the Existing Agreement to make certain changes.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

FIRST.   Severance Payments:

A.           If, within two (2) years after a Change in Control, the Executive’s “Circumstances of Employment” (as hereinafter defined) shall have changed, the Executive may terminate his employment by written notice to the Corporation given no later than ninety (90) days following such change in the Executive’s Circumstances of Employment.  In the event of such termination by the Executive of his employment or if, within two (2) years after a Change in Control, the Corporation shall terminate the Executive’s employment other than for “Cause” (as hereinafter defined), the Corporation shall pay to the Executive, subject to the provisions of paragraph F of this Article FIRST, on the fifth (5th) business day following the six months’ anniversary of the date of such termination (or the date of Executive’s death, if earlier), in cash, the Severance Payment provided in paragraph E of this Article FIRST.

B.           A Change in Control shall be deemed to occur if:

(a)           any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”), other than 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 their respective affiliates, becomes the beneficial owner, directly or indirectly, of thirty percent (30%) or more of the combined voting power of the Corporation’s outstanding voting securities ordinarily having the right to vote for the election of directors of the Corporation; provided, however, that for purposes of this subparagraph (a), the following acquisitions shall not constitute a Change in Control: any acquisition by any corporation pursuant to a transaction which complies with clauses (1), (2) and (3) of subparagraph (c) of this paragraph B;

(b)           during any two consecutive years, individuals who, at the beginning of such period, constitute the Board of Directors of the Corporation, together with any new director(s) (other than a director designated by a Person who shall have entered into an agreement with the Corporation to effect a transaction described in subparagraphs (a) or (c) of this paragraph B) whose election by the Board or nomination for election by the Corporation’s shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof;

(c)           there is a reorganization, merger or consolidation of the Corporation (a “Business Combination”), in each case, unless, following such Business Combination, (1) all or substantially all of the individuals and entities who were beneficial owners of the Corporation’s outstanding voting securities ordinarily having the right to vote for the election of directors of the Corporation immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the combined  voting power of the then outstanding voting securities ordinarily having the right to vote for the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation or all or substantially all of the Corporation’s assets either directly or through one or more subsidiaries) in substantially the same proportion as their ownership, immediately prior to such Business Combination, of the Corporation’s outstanding voting securities, (2) no Person (excluding any corporation resulting from such Business Combination) other than 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 their respective affiliates, beneficially owns, directly or indirectly, 30% or more of the combined voting power of the then outstanding voting securities of the corporation resulting from such Business Combination, and (3) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the incumbent Board of Directors of the Corporation at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination;

(d)           there is a liquidation or dissolution of the Corporation approved by the shareholders; or

(e)           there is a sale of all or substantially all of the assets of the Corporation.

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Notwithstanding the foregoing, a Change in Control shall only be deemed to occur if such transactions or events would give rise to a “change in ownership or effective control” under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and applicable Treasury regulations (“Regulations”) thereunder.

C.           The Executive’s “Circumstances of Employment” shall have changed if there shall have occurred any of the following events: (a) a material reduction or change in the Executive’s employment duties or reporting responsibilities; (b) a reduction in the annual base salary made available by the Corporation to the Executive from the annual base salary in effect immediately prior to a Change in Control; or (c) a material diminution in the Executive’s status, working conditions or other economic benefits from those in effect immediately prior to a Change in Control.

D.           “Cause” shall mean (i) the willful and continued failure by the Executive to substantially perform his duties with the Corporation and its subsidiaries (other than any such failure resulting from his incapacity due to physical or mental illness, or any such actual or anticipated  failure after issuance of a notice of termination by the Executive due to a change in the Executive’s Circumstances of Employment) after a written demand for substantial performance is delivered to the Executive by the Corporation which demand specifically identifies the manner in which the Corporation believes that the Executive has not substantially performed his duties, (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Corporation or its subsidiaries, monetarily or otherwise, or (iii) the Executive’s conviction of, or entering a plea of nolo contendere to, a felony.  For purposes of clauses (i) and (ii), no act or failure to act on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith or without reasonable belief that his action or omission was in the best interest of the Corporation and its subsidiaries.

E.           The “Severance Payment” to be paid as provided in paragraph A of this Article FIRST shall be a lump sum payment equal to the sum of (i) the product of three and the annual base salary in effect immediately prior to a change in the Executive’s Circumstances of Employment or the termination other than for Cause of the Executive’s employment by the Corporation, as the case may be, and (ii) the product of three and the largest annual bonus paid to or accrued with respect to the Executive by the Corporation during the three fiscal years immediately preceding the termination of the Executive’s employment.

F.           As a condition to receiving the Severance Payment, no later than 60 days following the Executive’s termination of employment (x) Executive shall have executed a Confidentiality, Non-Solicitation and Non-Competition Agreement in a form reasonably satisfactory to the Corporation and in substantially the same form as previously executed and (y) shall execute and return the General Release in the form attached as Exhibit A hereto, and Executive shall at all times be in compliance with such Agreement and Release.

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

H.           For purposes of this Agreement, “termination of employment” means cessation of full or part time employment with the Corporation and any of its subsidiaries.

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SECOND.   Payment Adjustment.  Payments under Article FIRST A. shall be made without regard to whether the deductibility of such payments (or any other payments or benefits to or for the benefit of Executive) would be limited or precluded by Section 280G of the Code  and without regard to whether such payments (or any other payments or benefits) would subject Executive to the federal excise tax levied on certain “excess parachute payments” under Section 4999 of the Code; provided, that if the total of all payments to or for the benefit of Executive, after reduction for all federal, state and local taxes (including the excise tax under Section 4999 of the Code) with respect to such payments (“Executive’s total after-tax payments”), would be increased by the limitation or elimination of any payment under Article FIRST A., or by an adjustment to the vesting of any equity-based awards that would otherwise vest on an accelerated basis in connection with the Change in Control (and the termination of employment), amounts payable under Article FIRST A. shall be reduced and the vesting of equity-based awards shall be adjusted to the extent, and only to the extent, necessary to maximize Executive’s total after-tax payments.  Any reduction in payments or adjustment of vesting required by the preceding sentence shall be applied, first, against any benefits payable under Article FIRST A., then against the vesting of any performance-based restricted stock awards that would otherwise have vested in connection with the Change in Control (and the termination of employment), and then against the vesting of any other equity-based awards, if any, that would otherwise have vested in connection with the Change in Control (and the termination of employment).  The determination as to whether Executive’s payments and benefits include “excess parachute payments” and, if so, the amount and ordering of any reductions in payment required by the provisions of this Article SECOND shall be made at the Corporation’s expense by Ernst & Young LLP or by such other certified public accounting firm as the Compensation Committee of the Board of Directors of the Corporation may designate prior to a Change in Control (the “accounting firm”).  In the event of any underpayment or overpayment hereunder, as determined by the accounting firm, the amount of such underpayment or overpayment shall forthwith and in all events within thirty (30) days of such determination be paid to Executive or refunded to the Corporation, as the case may be, with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code.

THIRD.   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.  In the event of any such termination prior to the occurrence of a Change in Control, no amount shall be payable by the Corporation to the Executive pursuant to Article FIRST hereof.

FOURTH.   Costs of Enforcement.  In the event that the Executive incurs any costs or expenses, including attorneys’ fees, in the enforcement of his rights under this Agreement then, unless the Corporation is wholly successful in defending against the enforcement of such rights, the Corporation shall pay to the Executive all such costs and expenses sixty (60) days following a final decision.  In the event that the Corporation incurs any costs or expenses, including attorneys’ fees, in the enforcement of its rights under this Agreement then, unless the Executive is wholly successful in defending against the enforcement of such rights, the Executive shall promptly pay to the Corporation all such costs and expenses.

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FIFTH.   Term.  This Agreement shall terminate upon the Succession Date (as such term is defined in the Restricted Stock Unit Agreement of even date) and following the Succession Date, no Severance Payment shall be payable under this Agreement.

SIXTH.   Notices.  All notices hereunder shall be in writing and shall be sent by registered or certified mail, return receipt requested, and if intended for the Corporation shall be addressed to it, attention of its President, 75 Maxess Road, Melville, New York 11747 or at such other address of which the Corporation shall have given notice to the Executive in the manner herein provided; and if intended for the Executive, shall be mailed to him at the address of the Executive first set forth above or at such other address of which the Executive shall have given notice to the Corporation in the manner herein provided.

SEVENTH.   Entire Agreement.  This Agreement (and the Restricted Stock Unit Agreement of even date) constitutes the entire understanding between the parties with respect to the matters referred to herein, and no waiver of or modification to the terms hereof shall be valid unless in writing signed by the party to be charged and only to the extent therein set forth.  All prior and contemporaneous agreements and understandings with respect to the subject matter of this Agreement, including without limitation the Existing Agreement, are hereby terminated and superseded by this Agreement.

EIGHTH.   Withholding.  The Corporation shall be entitled to withhold from amounts payable to the Executive hereunder such amounts as may be required by applicable law.

NINTH.   Binding Nature.  This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective heirs, administrators, executors, personal representatives, successors and assigns.

TENTH.   Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York.  Notwithstanding the foregoing, it is the intent of the parties hereto that the Agreement, as amended herewith, conform in form and operation with the requirements of Section 409A of the Code (and Regulations thereunder) to the extent subject to Section 409A (and Regulations thereunder), and that the Agreement as amended herewith be interpreted to the extent possible to so conform.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

MSC INDUSTRIAL DIRECT CO., INC.
By:	/s/ Eileen McGuire
	Name: Eileen McGuire
	Title: Sr. V.P., Human Resources
By:	/s/ David Sandler
	Name: David Sandler

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Exhibit A

RELEASE

WHEREAS, David Sandler (the “Executive”) was a party to a Second Amended and Restated Agreement dated as of October 19, 2010 (the “Agreement”) by and between the Executive and MSC INDUSTRIAL DIRECT CO., INC., a New York corporation (the “Corporation”), and the employment of the Executive with the Corporation has been terminated; and

WHEREAS, it is a condition to the Corporation’s obligations to make the severance payments and benefits available to the Executive pursuant to the Agreement that the Executive execute and deliver this Release to the Corporation.

NOW, THEREFORE, in consideration of the receipt by the Executive of the benefits under the Agreement, which constitute a material inducement to enter into this Release, the Executive intending to be legally bound hereby agrees as follows:

Subject to the next succeeding paragraph, effective upon the expiration of the 7-day revocation period following execution hereof as provided below, the Executive irrevocably and unconditionally releases the Corporation and its owners, stockholders, predecessors, successors, assigns, affiliates, control persons, agents, directors, officers, employees, representatives, divisions and subdivisions (collectively, the “Related Persons”) from any and all causes of action, charges, complaints, liabilities, obligations, promises, agreements, controversies and claims (a) arising out of the Executive’s employment with the Corporation and the conclusion thereof, including, without limitation, any federal, state, local or other statutes, orders, laws, ordinances, regulations or the like that relate to the employment relationship and/or specifically that prohibit discrimination based upon age, race, religion, sex, national origin, disability, sexual orientation or any other unlawful bases, including, without limitation, as amended, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Civil Rights Acts of 1866 and 1871, the Americans With Disabilities Act of 1990, the New York City and State Human Rights Laws, and any applicable rules and regulations promulgated pursuant to or concerning any of the foregoing statutes; (b) for tort, tortious or harassing conduct, infliction of emotional distress, interference with contract, fraud, libel or slander; and (c) for breach of contract or for damages, including, without limitation, punitive or compensatory damages or for attorneys’ fees, expenses, costs, salary, severance pay, vacation, injunctive or equitable relief, whether, known or unknown, suspected or unsuspected, foreseen or unforeseen, matured or unmatured, which, from the beginning of the world up to and including the date hereof, exists, have existed, or may arise, which the Executive, or any of his heirs, executors, administrators, successors and assigns ever had, now has or at any time hereafter may have, own or hold against the Corporation and/or any Related Person.

Notwithstanding anything contained herein to the contrary, the Executive is not releasing the Corporation from any of the Corporation’s obligations (a) under the Agreement, (b) to provide the Executive with insurance coverage defense and/or indemnification as an officer or director of the Corporation to the extent generally made available at the date of termination to the Corporation’s officers and directors in respect of facts and circumstances existing or arising on or prior to the date hereof, or (c) in respect of the Executive’s rights under the Corporation’s Associate Stock Purchase Plan, 1995 Stock Option Plan, 1998 Stock Option Plan, 2001 Stock Option Plan, 1995 Restricted Stock Plan or the 2005 Omnibus Equity Plan, as applicable.

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The Corporation has advised the Executive in writing to consult with an attorney of his choosing prior to the signing of this Release and the Executive hereby represents to the Corporation that he has in fact consulted with such an attorney prior to the execution of this Release.  The Executive acknowledges that he has had at least twenty-one days to consider the waiver of his rights under the ADEA.  Upon execution of this Release, the Executive shall have seven additional days from such date of execution to revoke his consent to the waiver of his rights under the ADEA.  If no such revocation occurs, the Executive’s waiver of rights under the ADEA shall become effective seven days from the date the Executive executes this Release.

IN WITNESS WHEREOF, the undersigned has executed this Release on the ____ day of __________, 20__.

DAVID SANDLER

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EX-99.1

Exhibit 99.1

Contact:

Shelley Boxer

V.P. Finance

MSC Industrial Direct Co., Inc.

(516) 812-1216

Investors/Media:

Eric Boyriven/ Jeannine Dowling

FD

(212) 850-5600

For Immediate Release

MSC INDUSTRIAL DIRECT CO., INC. ANNOUNCES MANAGEMENT SUCCESSION PLAN

- Erik Gershwind, Executive Vice President and Chief Operating Officer, Appointed to Board of Directors - -

- David Sandler continues as CEO for 2-3 years, will transition to Vice Chairman of Board thereafter - -

Melville, NY, October 21, 2010 - MSC INDUSTRIAL DIRECT CO., INC. (NYSE: MSM), “MSC” or the “Company,” one of the largest direct marketers and premier distributors of Metalworking and Maintenance, Repair and Operations (“MRO”) supplies to industrial customers throughout the United States, today announced its management succession plan for the position of Chief Executive Officer.

Under the succession plan, David Sandler, President and Chief Executive Officer, will continue in his current role through December 31, 2012, or no later than December 31, 2013 as determined by the Company’s Board of Directors.  Erik Gershwind, Executive Vice President and Chief Operating Officer, has been identified by the Company’s Board of Directors as the successor to Mr. Sandler as the Company’s Chief Executive Officer.

Upon his transition from the position of Chief Executive Officer, Mr. Sandler will serve as Vice Chairman of the Company’s Board of Directors until at least the end of calendar 2016 or potentially longer. The Company has entered into a long term succession agreement to retain and incentivize Mr. Sandler. The terms and details of the agreement are available in an 8-K which was filed today.

There are no changes to management roles or responsibilities and no other executive leadership changes at this time.

Mr. Sandler commented, “I am gratified and humbled to continue to have the Board’s confidence in affirming my long term leadership role at MSC. While my desire in the coming years will be to eventually spend more time with my family, MSC has not only represented a career to which I remain deeply committed but an important part of my life as well. Our effective succession management process, commitment to strong corporate governance and track record of successfully transitioning leadership seamlessly makes MSC a company that is built to last.”

MSC INDUSTRIAL DIRECT CO., INC. ANNOUNCES MANAGEMENT SUCCESSION PLAN        Page - 2 -

The Company also announced that Mr. Gershwind has been elected to the Company’s Board of Directors. This election brings the number of Directors on the Company’s Board to nine, of which five are independent directors.

Philip Peller, Lead Director of the Board of Directors, said, “Over his 14-year career at MSC, Erik has worked through positions of increasing responsibility, and is a key contributor to our current strategy and success. Our Board of Directors has complete confidence in Erik and we are delighted to welcome him as our newest member of the Board.”

Mr. Sandler concluded, “I’d like to congratulate Erik on his appointment to the Board and look forward to continuing to work closely with him in the years to come as he continues to grow in his role and builds upon his track record of leadership and key successes. Our shared vision and values provide a solid foundation from which we will continue to execute on our growth strategy and drive towards long term value creation for all stakeholders.”

David Sandler, age 53, was appointed President and Chief Executive Officer in November 2005. He previously served as Chief Operating Officer from November 2000 to November 2005 and was promoted from Executive Vice President to President in November 2003. In June 1999, he was appointed as a member of the Company’s Board of Directors. Mr. Sandler previously served as Senior Vice President, Administration and from 1989 to 1998 held various positions of increasing responsibility throughout the Company. Mr. Sandler joined MSC in 1989 as a result of the acquisition of Dancorp Inc., a New England-based industrial supply distributor, where he was a founder and served as President and Chief Executive Officer.

Erik Gershwind, age 39, was appointed Executive Vice President and Chief Operating Officer in October 2009. Prior to that, he was Senior Vice President, Product Management and Marketing since December 2005.  Prior to this appointment, he held various positions of increasing responsibility in business development, sales management, branch integration, and eCommerce at the Company. Mr. Gershwind joined MSC in 1996 as manager of the Company’s acquisition integration initiative, and in 1999 established MSC’s highly successful Internet business as Director of eCommerce.

Mr. Gershwind graduated summa cum laude with a B.S. in Economics from the Wharton School of Business, University of Pennsylvania and magna cum laude with a J.D. from Harvard Law School. He also serves on the board of directors for the Gershwind and Jacobson charitable foundations and on the board of overseers for the University of Pennsylvania Libraries.

About MSC Industrial Direct Co., Inc.

MSC Industrial Direct Co., Inc. is one of the largest direct marketers and premier distributors of Metalworking and Maintenance, Repair and Operations (“MRO”) supplies to industrial customers throughout the United States. MSC distributes approximately 600,000 industrial products from approximately 3,000 suppliers to approximately 320,000 customers. In-stock availability is approximately 99%, with next day standard delivery to the contiguous United States on qualifying orders up until 8:00 p.m. Eastern Time. MSC reaches its customers through a combination of approximately 22 million direct-mail catalogs, 96 branch sales offices, 973 sales people, the Internet and associations with some of the world's most prominent B2B ecommerce portals. For more information, visit the Company's website at http://www.mscdirect.com.

CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.Statements in this Press Release may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statements contained herein which are not statements of historical facts and that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future shall be deemed to be forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events, actual results and performance, financial and otherwise, could differ materially from those set forth in or contemplated by the forward-looking statements herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The inclusion of any statement in this release does not constitute an admission by MSC or any other person that the events or circumstances described in such statement are material. Factors that could cause actual results to differ materially from those in forward-looking statements include, without limitation, the success of the Company's management succession plan.  Additional information concerning other risks is described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's reports on Forms 10-K, 10-Q and 8-K that the Company files with the U.S. Securities and Exchange Commission.  The forward-looking statements in this press release are based on current expectations and the Company assumes no obligation to update these forward-looking statements.

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