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Exhibit 10b (ix)

CHANGE IN CONTROL EMPLOYMENT AGREEMENT
(Senior Executive)

AGREEMENT by and between W.W. Grainger, Inc., an Illinois corporation (the
“Company”), and INSERT NAME (“Executive”), dated as _____________________(the
“Agreement Date”).

Recitals

A.  The Board of Directors of the Company (the “Board”) has determined that it
is in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication of Executive, notwithstanding the
possibility, threat, or occurrence of a Change in Control (as defined below) of
the Company.

B.  The Board believes it is imperative to diminish the inevitable distraction
of Executive by virtue of the personal uncertainties and risks created by a
pending or threatened Change in Control, to encourage Executive's full attention
and dedication to the Company, and to provide Executive with compensation and
benefits arrangements upon a Change in Control which (i) will satisfy
Executive's compensation and benefits expectations and (ii) are competitive with
those of other major corporations.

Agreement

In consideration of the mutual agreements contained herein, and of certain other
commitments separately made by the Executive to the Company concerning the
Company's competitors, the protection of the Company's confidential information,
and the non-solicitation of the Company's customers and employees, the Company
and Executive hereby agree as follows:

1.  Certain Definitions.  The terms set forth below in alphabetical order have
the following meanings (such meanings to be applicable to both the singular and
plural forms):

“Accrued Annual Bonus” means the amount of any annual bonus accrued but not yet
paid with respect to each fiscal year of the Company ended prior to the Date of
Termination.

“Accrued Base Salary” means the amount of Executive's Annual Base Salary which
is accrued but not yet paid as of the Date of Termination.

“Accrued Obligations” -- see Section 4(a)(i)(A).

 
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“Agreement Term” means the period commencing on the Agreement Date and ending on
the third anniversary of such date or, if later, such later date to which the
Agreement Term is extended pursuant to the following sentence.  On each day
after the second anniversary of the Agreement Date, the Agreement Term shall be
automatically extended by one day to create a new one-year term until, at any
time on or after the second anniversary of the Agreement Date, the Company
delivers a written notice (an “Expiration Notice”) to Executive stating that
this Agreement shall expire on a date specified in the Expiration Notice (the
“Expiration Date”) that is at least 12 months after the date the Expiration
Notice is delivered to Executive; provided, however, that if a Change in Control
occurs before the Expiration Date specified in an Expiration Notice, then
(a) such Expiration Notice shall automatically be cancelled and of no further
effect and (b) the Company shall not give Executive any additional Expiration
Notice prior to the date which is 24 months after the Effective Date.

“Annual Base Salary” -- see Section 2(b)(i).

“Annual Bonus” -- see Section 2(b)(ii).

“Average Profit Sharing Plan Contribution” -- see Section 2(b)(iii).

“Cause” -- see Section 3(b).

“Change in Control” means any one or more of the following events:

(a)  the consummation of:

 
(i) any merger, reorganization or consolidation of the Company or any Subsidiary
with or into any corporation or other Person if Persons who were the beneficial
owners (as such term is used in Rule 13d-3 under the Act) of the Company’s
Common Stock and securities of the Company entitled to vote generally in the
election of directors (“Voting Securities”) immediately before such merger,
reorganization or consolidation are not, immediately thereafter, the
beneficially owners, directly or indirectly, of at least 60% of the
then-outstanding common shares and the combined voting power of the
then-outstanding Voting Securities (“Voting Power”) of the corporation or other
Person surviving or resulting from such merger, reorganization or consolidation
(or the parent corporation thereof) in substantially the same respective
proportions as their beneficial ownership, immediately before the consummation
of such merger, reorganization or consolidation, of the then-outstanding Common
Stock and Voting Power of the Company; or

 
(ii)  the sale or other disposition of all or substantially all of the
consolidated assets of the Company, other than a sale or other disposition by
the Company of all or substantially all of its consolidated assets to an entity
of which at least 60% of the common shares and the Voting Power outstanding

 
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immediately after such sale or other disposition are then beneficially owned (as
such term is used in Rule 13d-3 under the Act) by shareholders of the Company in
substantially the same respective proportions as their beneficial ownership of
Common Stock and Voting Power of the Company immediately before the consummation
of such sale or other disposition; or

(b)  approval by the shareholders of the Company of a liquidation or dissolution
of the Company; or

(c)  the following individuals cease for any reason to constitute a majority of
the directors of the Company then serving: individuals who, on the Agreement
Date, constitute the Board and any subsequently-appointed or elected director of
the Company whose appointment or election by the Board or nomination for
election by the Company's shareholders was approved or recommended by a vote of
at least two-thirds of the Company’s directors then in office whose appointment,
election or nomination for election was previously so approved or recommended or
who were directors on the Agreement Date; or

(d)  the acquisition or holding by any person, entity or “group” (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Act), other than by any Exempt
Person, the Company, any Subsidiary, any employee benefit plan of the Company or
a Subsidiary, of beneficial ownership (as such term is used in Rule 13d-3 under
the Act) of 20% or more of either the Company’s then-outstanding Common Stock or
Voting Power; provided that:

 
(i)  no such person, entity or group shall be deemed to own beneficially any
securities held by the Company or a Subsidiary or any employee benefit plan (or
any related trust) of the Company or a Subsidiary;

 
(ii)  no Change in Control shall be deemed to have occurred solely by reason of
any such acquisition if both (x) after giving effect to acquisition, such
person, entity or group has beneficial ownership of less than 30% of the
then-outstanding Common Stock and Voting Power of the Company and (y) prior to
such acquisition, at least two-thirds of the directors described in paragraph
(c) of this definition vote to adopt a resolution of the Board to the specific
effect that such acquisition shall not be deemed a Change in Control; and

 
(iii)  no Change in Control shall be deemed to have occurred solely by reason
any such acquisition or holding in connection with any merger, reorganization or
consolidation of the Company or any Subsidiary which is not a Change in Control
within the meaning of paragraph (a)(i) of this definition.

Notwithstanding the occurrence of any of the foregoing events, no Change in
Control shall occur with respect to Executive if (i) the event which otherwise
would be a

 
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Change in Control (or the transaction which resulted in such event) was
initiated by Executive or was discussed by him with any third party, in either
case without the approval of the Board with respect to Executive’s initiation or
discussion, as applicable, or (ii) Executive is, by written agreement, a
participant on his own behalf in a transaction in which the persons (or their
affiliates) with whom Executive has the written agreement cause the Change in
Control to occur and, pursuant to the written agreement, Executive has an equity
interest (or a right to acquire such equity interest) in the resulting entity.

“Code” means the Internal Revenue Code of 1986, as amended.

“Date of Termination” means the effective date of any termination of Executive's
employment for any or no reason, whether by the Company or by Executive, as
specified in the Notice of Termination; provided, however, that if Executive's
employment is terminated by reason of his death or Disability, the Date of
Termination shall be the date of death or the Disability Effective Date, as the
case may be.

“Effective Date” means the first date during the Agreement Term on which a
Change in Control occurs.  Anything in this Agreement to the contrary
notwithstanding, if Executive's employment with the Company is terminated prior
to the date on which a Change in Control occurs, and Executive reasonably
demonstrates that such termination of employment (i) was requested by a third
party who has taken steps reasonably calculated to effect the Change in Control
or (ii) otherwise arose in connection with or anticipation of the Change in
Control, then for all purposes of this Agreement the Effective Date shall be the
date immediately prior to the Date of Termination.

“Employment Period” means the period commencing on the Effective Date and ending
on the second anniversary of such date.

“Exempt Person” means any one or more of the following:

(a)  any descendant of W.W. Grainger, or any spouse, widow or widower of W.W.
Grainger or any such descendant (any such descendants, spouses, widows and
widowers collectively defined as the “Grainger Family Members”);

(b)  any descendant of E.O. Slavik, or any spouse, widow or widower of E.O.
Slavik or any such descendant (any such descendants, spouses, widows and
widowers collectively defined as the “Slavik Family Members” and with the
Grainger Family Members collectively defined as the “Family Members”);

(c)  any trust which is in existence on the Agreement Date and which has been
established by one or more Grainger Family Members, any estate of a Grainger
Family Member who died on or before the Agreement Date, and The

 
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Grainger Foundation (such trusts, estates and named entity collectively defined
as the “Grainger Family Entities”);

(d)  any trust which is in existence on the Agreement Date and which has been
established by one or more Slavik Family Members, any estate of a Slavik Family
Member who died on or before the Agreement Date and Mark IV Capital, Inc. (such
trusts, estates and named entities collectively defined as the “Slavik Family
Entities” and with the Grainger Family Entities collectively defined as the
“Existing Family Entities”);

(e)  any estate of a Family Member who dies after the Agreement Date or any
trust established after the Agreement Date by one or more Family Members or
Existing Family Entities; provided that one or more Family Members, Existing
Family Entities or charitable organizations which qualify as exempt
organizations under Section 501(c) of the Code (“Charitable Organizations”),
collectively are the beneficiaries of at least 50% of the actuarially-determined
beneficial interests in such estate or trust;

(f)  any Charitable Organization which is established by one or more Family
Members or Existing Family Entities (a “Family Charitable Organization”);

(g)  any corporation of which a majority of the voting power and a majority of
the equity interest is held, directly or indirectly, by or for the benefit of
one or more Family Members, Existing Family Entities, estates or trusts
described in clause (e) above, or Family Charitable Organizations; or

(h)  any partnership or other entity or arrangement of which a majority of the
voting interest and a majority of the economic interest is held, directly or
indirectly, by or for the benefit of one or more Family Members, Existing Family
Entities, estates or trusts described in clause (e) above, or Family Charitable
Organizations.

“Good Reason” -- see Section 3(c).

“including” means including without limitation.

“Non-Employee Director” means a director of the Company who is not an employee
of (i) the Company, (ii) any Subsidiary or (iii) any Person who beneficially
owns more than 30% of the Common Stock then outstanding.

“Person” means any individual, corporation, partnership, limited liability
company, sole proprietorship, trust or other entity.

“Policies” means policies, practices and programs.

 
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“Prorated Annual Bonus” means the product of (i) the amount of the annual bonus
to which Executive would have been entitled (based on target-level performance)
if he had been employed by the Company on the last day of the Company's fiscal
year that includes the Date of Termination and if performance were achieved at
the target level for such fiscal year, multiplied by (ii) a fraction of which
the numerator is the numbers of days that have elapsed in such fiscal year
through the Date of Termination and the denominator is 365.

“Subsidiary” means corporation, limited liability company, partnership or other
business entity in which the Company, directly or indirectly, holds a majority
of the voting power of the outstanding securities.

“Target Bonus”  means the amount of the annual bonus which Executive was, as of
the Date of Termination, eligible to receive in respect of the fiscal year of
the Date of Termination, assuming for purposes of this paragraph (i) that
target-level performance had been achieved for such fiscal year, (ii) that
Executive's employment would have continued until the first date on which such
annual bonus would have been payable, and (iii) if the amount of such annual
bonus that Executive was eligible to receive was reduced after the Effective
Date (whether or not such reduction qualified as Good Reason), that such
reduction had not occurred.

“Taxes” means the incremental United States federal, state and local income,
excise and other taxes payable by Executive with respect to any applicable item
of income.

2.  Terms of Employment.  The Company shall continue Executive in its employ
during the Employment Period on the following terms and conditions:

(a)  Position and Duties.

 
(i)  During the Employment Period, (A) Executive's position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the 90-day period immediately preceding the Effective Date and (B) Executive's
services shall be performed at the location where Executive was employed
immediately preceding the Effective Date or any office or location less than 50
miles from such location.

 
(ii)  During the Employment Period, and excluding any periods of vacation, sick
leave and disability to which Executive is entitled, Executive shall devote
reasonable attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to Executive thereunder, use Executive's reasonable
best efforts to perform faithfully and efficiently such

 
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responsibilities.  During the Employment Period, Executive may (A) serve on
corporate, civic or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities are consistent with the
policies of the Company at the Effective Date and do not significantly interfere
with the performance of Executive's responsibilities (as set forth in this
Agreement) as an employee of the Company.  To the extent that any such
activities have been conducted by Executive prior to the Effective Date and were
consistent with the policies of the Company at the Effective Date, the continued
conduct of such activities (or the conduct of activities similar in nature and
scope thereto) subsequent to the Effective Date shall not thereafter be deemed
to interfere with the performance of Executive's responsibilities to the
Company.

 
(b)  Compensation.

 
(i)  Base Salary.  During the Employment Period, Executive shall receive an
annual base salary in cash (“Annual Base Salary”), which shall be paid in a
manner consistent with the Company's payroll practices immediately preceding the
Effective Date at a rate at least equal to 12 times the highest monthly base
salary (unreduced by any salary reductions or deferrals pursuant to a plan
maintained under Section 401(k) of the Code or any similar plan) paid or payable
to Executive by the Company in respect of the 12-month period immediately
preceding the month in which the Effective Date occurs.  During the Employment
Period, the Company shall review the Annual Base Salary at least annually and
may increase Annual Base Salary at any time and from time to time based on the
performance of the Executive and the Company.  Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to Executive
under this Agreement.  Annual Base Salary shall not be reduced after any such
increase and the term “Annual Base Salary” shall refer to Annual Base Salary as
so increased.

 
(ii)  Annual Bonus.  In addition to Annual Base Salary, during the Employment
Period Executive shall be entitled to participate in the Management Incentive
Program or other annual bonus program maintained by the Company for peer
executives, and the Executive's target bonus thereunder shall be not be less
than the Target Bonus.  Any annual bonus due to Executive under such program
(the "Annual Bonus") shall be paid in cash no later than 90 days after the end
of the fiscal year for which the Annual Bonus is awarded, unless Executive shall
elect to defer the receipt of such Annual Bonus.

 
(iii)  Incentive, Savings and Retirement Plans.  In addition to Annual Base
Salary and Annual Bonus payable as hereinabove provided, Executive shall be
entitled to participate during the Employment Period in all incentive, savings
and retirement plans and Policies applicable to peer

 
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executives of the Company, but in no event shall such plans and Policies provide
Executive with incentive, savings and retirement benefits opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company for Executive under such plans and Policies as in effect
at any time during the 90-day period immediately preceding the Effective
Date.  Benefits to which this paragraph shall apply include, but are not limited
to, a contribution (“Average Profit Sharing Plan Contribution”) for each
calendar year of Executive's employment during the Employment Period, on
Executive's behalf to the W.W. Grainger, Inc. Profit Sharing Plan (the “PST”)
and, if applicable, a credit under the W.W. Grainger, Inc. Supplemental Profit
Sharing Plan (the “Supplemental Plan” and with the PST, collectively referred to
as the “Profit Sharing Plans”) equal to not less than the product of (A) the
average percentage of the sum of Executive's base salary and annual bonus paid
or payable as a contribution to or credit under the Profit Sharing Plans, as
applicable, for the three fiscal years preceding the Effective Date, and (B) the
sum of Executive's Annual Base Salary and annual bonus, each as of the first day
of such calendar year.  In the event that a contribution or credit, as
applicable, of less than the Average Profit Sharing Plan Contribution is made to
the Profit Sharing Plans on Executive's behalf for any calendar year of
Executive's employment during the Employment Period, Executive shall be entitled
to a cash payment equal to the difference between the Average Profit Sharing
Plan Contribution and the amount of the Company's contribution or credit, as
applicable, to the Profit Sharing Plans on Executive's behalf for such year,
payable at the time that the Company's contribution is made to the PST, but in
no event later than the date prescribed by law, including extensions of time,
for the filing of the Company's federal income tax return for such year.

 
(iv)  Welfare Benefit Plans.  During the Employment Period, Executive and/or
Executive's family, as the case may be, shall be eligible to participate in and
shall receive all benefits under welfare benefit plans and Policies provided by
the Company (including medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and travel accident
insurance plans and programs) and applicable to peer executives of the Company,
but in no event shall such plans and Policies provide benefits which are less
favorable, in the aggregate, than the most favorable of such plans and Policies
in effect at any time during the 90-day period immediately preceding the
Effective Date.

 
(v)  Expenses.  During the Employment Period, Executive shall be entitled to
prompt reimbursement for all reasonable expenses incurred by Executive in
accordance with the most favorable Policies of the Company in effect at any time
during the 90-day period immediately preceding the Effective Date or, if more
favorable to Executive, as in effect at any time thereafter with respect to peer
executives of the Company.

 
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(vi)  Fringe Benefits.  During the Employment Period, Executive shall be
entitled to fringe benefits in accordance with the most favorable plans and
Policies of the Company in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to Executive, as
in effect at any time thereafter with respect to peer executives of the Company.

 
(vii)  Office; Support Staff.  During the Employment Period, Executive shall be
entitled to an office or offices of a size and with furnishings and other
appointments, and to personal secretarial and other assistance, at least equal
to the most favorable of the foregoing provided to Executive by the Company at
any time during the 90-day period immediately preceding the Effective Date or,
if more favorable to Executive, as provided at any time thereafter with respect
to peer executives of the Company.

 
(viii)  Vacation.  During the Employment Period, Executive shall be entitled to
paid vacation in accordance with the most favorable plans and Policies of the
Company as in effect at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to Executive, as in effect at any time
thereafter with respect to peer executives of the Company.

 
(ix)  Subsidiaries.  To the extent that, immediately prior to the Effective
Date, Executive has been on the payroll of, and participated in the bonus,
incentive or employee benefit plans of, a Subsidiary, the references to the
Company contained in Sections 2(b)(i) through 2(b)(viii) and elsewhere in this
Agreement referring to benefits to which Executive may be entitled shall also
refer to such Subsidiary.

3.  Termination of Employment.

(a)  Death or Disability.  Executive's employment shall terminate automatically
upon Executive's death during the Employment Period.  If the Company determines
in good faith that the Disability of Executive has occurred during the
Employment Period, it may give to Executive written notice of its intention to
terminate Executive's employment.  In such event, Executive's employment with
the Company shall terminate as of the 30th day after Executive’s receipt of such
notice (the “Disability Effective Date”); provided that, within the 30 days
after such receipt, Executive shall not have returned to full-time performance
of his duties.  “Disability” means the absence of Executive from Executive's
duties with the Company on a full-time basis for a period of time equal to the
Waiting Period as a result of incapacity due to mental or physical illness that
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to Executive or Executive's legal representative
(such agreement as to acceptability not to be unreasonably withheld or
delayed).  “Waiting Period” means the waiting period under

 
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a long-term disability plan of the Company that is applicable to Executive and
satisfies the requirements of Section 2(b)(iv).

(b)  Cause.  The Company may terminate Executive's employment during the
Employment Period for Cause.  “Cause” means the occurrence of any one or more of
the following actions or failures to act as determined by the Board in its
reasonable judgment and in good faith:

 
(i)  embezzlement, fraud or theft with respect to the property of the Company or
a conviction for any felony involving moral turpitude or causing material harm,
financial or otherwise, to the Company;

 
(ii)  habitual neglect in the performance of Executive's significant duties
(other than on account of incapacity due to physical or mental illness or
Disability); or

 
(iii)  a demonstrably deliberate act or failure to act, including a violation of
the rules or policies of the Company, which causes a material financial or other
loss, damage or injury to the property, reputation or employees of the Company;
provided, however, that, unless such an act or a failure to act was done by
Executive in bad faith or without a reasonable belief that Executive's act or
failure to act, as the case may be, was in the best interest of the Company or
was required by applicable law, such act or failure to act shall not constitute
Cause if, within 20 days after the Board or the Chief Executive Officer of the
Company gives Executive written notice of such act or failure to act that
specifically refers to this Section, Executive cures such act or failure to act
to the fullest extent that it is curable.

“Cause” shall not mean (x) bad judgment or negligence other than habitual
neglect of significant duties or (y) any act or omission in respect of which the
Board could have properly determined that Executive met the applicable standard
of conduct for the indemnification or reimbursement under the by-laws of the
Company or applicable law, in each case as in effect at the time of such act or
omission.  In addition, a termination of Executive's employment shall not be
deemed to be for Cause unless each of the following conditions is satisfied:

 
(v)  The Company provides Executive a written notice (a “Notice of Intent to
Terminate”) not less than 30 days prior to the Date of Termination setting forth
the Company's intention to consider terminating Executive’s employment.  Such
Notice shall include a statement of the intended Date of Termination and a
detailed description of the specific facts that the Company believes to
constitute Cause.

 
(w)  No act or omission of Executive shall constitute Cause if such act or
omission occurred more than 12 months before the earliest date on which any
member of the Board who is not a party to the act or omission

 
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knew or in the reasonable exercise of his or her duties as a director should
have known of such act or omission.

 
(x)  Executive is offered an opportunity to respond to such Notice of Intent to
Terminate by appearing in person, together with Executive's legal counsel,
before the Board on a date specified in the Notice of Intent to Terminate, which
date shall be at least 25 days after Executive’s receipt of the Notice of Intent
to Terminate and, in any event, at least five days prior to the Date of
Termination proposed in such Notice.

 
(y)  By a vote of the Board that includes the affirmative vote of at least 75%
of the Non-Employee Directors, the Board determines that the actions of
Executive specified in the Notice of Intent to Terminate constitute Cause and
that Executive's employment should accordingly be terminated for Cause.

 
(z)  The Company provides Executive a copy of the Board's written determination
setting forth in detail (I) the specific basis for such termination for Cause
and (II) if the Date of Termination is other than the date of Executive’s
receipt of such determination, the Date of Termination (which date shall be not
more than 15 days after the giving of such notice).

By determination of the Board, the Company may suspend Executive from his duties
for a period of up to 30 days with full pay and benefits thereunder during the
period of time in which the Board is determining whether to terminate Executive
for Cause. Any purported termination for Cause by the Company that does not
satisfy each substantive and procedural requirement of this Section 3(b) shall
be treated for all purposes under this Agreement as a termination by the Company
without Cause.

(c)  Good Reason.  Executive may terminate his employment at any time during the
Employment Period for Good Reason.  “Good Reason” means any one or more of the
following:

 
(i)  the assignment to Executive of any duties inconsistent in any material
respect with Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 2(a), or any other action by the Company which results in a material
adverse change in such position, authority, duties or responsibilities,
excluding an isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company promptly after receipt of notice
thereof given by Executive  (it being understood that, without limiting the
generality of the foregoing, if a substantial portion of Executive's duties
prior to the Change in Control related to the Company's status as a public
company and such activities no longer constitute a substantial portion of
Executive's duties during the Employment Period, then Executive shall be deemed
to have "Good Reason");

 
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(ii)  any reduction by the Company in the base salary, annual bonus opportunity
or long-term incentive opportunity provided to the Executive under Section 2(b),
or any material reduction by the Company in the aggregate benefits (other than
base salary, annual bonus opportunity or long-term incentive opportunity)
provided to the Executive under such section;

 
(iii)  any requirement that Executive be based at any office or location other
than the location specified in Section 2(a)(i)(B);

 
(iv)  any purported termination by the Company of Executive's employment
otherwise than as expressly permitted by this Agreement (it being understood
that any such purported termination shall not be effective for any other purpose
of this Agreement); or

 
(v)  any failure by the Company to comply with Section 10(c).

Any good faith determination of Good Reason made by Executive shall be
conclusive.

(d)  Notice of Termination.  Any termination of Executive’s employment by the
Company or by Executive shall be communicated by Notice of Termination to the
other party hereto.  “Notice of Termination” means a written notice which
(i) indicates the specific termination provision in this Agreement relied upon,
(ii) sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated and (iii) if the Date of Termination is other than the date of receipt
of such notice, specifies the Date of Termination (which date shall be not more
than 15 days after the giving of such notice).  The failure by Executive to set
forth in the Notice of Termination any fact or circumstance which contributes to
a showing of Good Reason shall not waive any right of Executive thereunder or
preclude Executive from asserting such fact or circumstance in enforcing
Executive's rights thereunder.

(e)  Transitional Assistance.  If the Company shall so request, Executive shall
provide reasonable assistance to the Company to help ensure an orderly
transition of Executive's duties and responsibilities to such individual(s) as
the Company may designate, provided that the period during which Executive shall
provide such assistance shall not exceed ninety (90) days and that during such
period Executive's employment with the Company shall continue and the Company
shall compensate Executive as described in Section 2(b) above.  Any such
transitional assistance and continuation of employment shall not waive, release
or otherwise affect any of the Executive's rights or the Company's obligations
hereunder, including without limitation those set forth in Section 4 below.

 
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4.  Obligations of the Company upon Termination.

(a)  Good Reason; Other Than for Cause or Disability.  If, during the Employment
Period, Executive's employment shall be terminated by the Company other than for
Cause, death or Disability, or by Executive for Good Reason, then the Company
shall have all of the following obligations:

 
(i)  The Company shall pay to Executive the following amounts in a lump sum in
cash within 10 days after Executive's Date of Termination:

 
(A)  an amount equal to the sum of Executive's Accrued Base Salary, Accrued
Annual Bonus and accrued but unpaid vacation pay (collectively, the “Accrued
Obligations”),

 
(B)  the Prorated Annual Bonus,

 
(C)  the product of three (3.0) (such number, the “Severance Multiple”) times
the sum of Executive's (I) Annual Base Salary, (II) Target Bonus and
(III) Average Profit Sharing Plan Contribution; and

 
(D)  an amount equal to the value of the unvested portion of Executive's
accounts under the Profit Sharing Plans as of the Date of Termination.

 
(ii)
(A)  During the period commencing on the Date of Termination and continuing
thereafter for a number of years equal to the Severance Multiple, or such longer
period as any plan or Policy in which Executive is a participant as of the Date
of Termination (such eligibility to be determined based on the terms of such
plan or Policy as in effect on the Effective Date or, if more favorable to
Executive, the terms of such plan or Policy as in effect on the Date of
Termination), the Company shall continue to provide medical (including
post-retirement medical benefits to the extent that Executive is or becomes
eligible for such benefits as of the Date of Termination after giving effect to
paragraph (C) of this Section 4(a)(ii)), prescription, dental and similar health
care benefits (or, if such benefits are not available, the after-tax economic
value thereof determined pursuant to paragraph (D) of this Section 4(a)(ii)) to
Executive and his family.

 
(B)  The terms of such benefits shall be at least as favorable to Executive as
the terms of the most favorable plans or Policies of the Company applicable to
peer executives at Executive's Date of Termination, but in no event less
favorable to Executive than the most favorable plans or Policies of the Company
applicable to peer

 
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executives during the 90-day period immediately preceding the Effective Date.

 
(C)  Such benefits shall be provided at no cost to Executive and his family,
except that Executive shall be responsible for the payment of premiums,
co-payments, deductibles and similar charges based on the terms of the most
favorable plans or Policies of the Company applicable to peer executives at
Executive's Date of Termination, but in no event less favorable to Executive
than the most favorable plans or Policies of the Company applicable to peer
executives during the 90-day period immediately preceding the Effective Date.

 
(D)  For purposes of determining whether, and on what terms and conditions,
Executive is eligible to receive the post-retirement medical benefits specified
in paragraph (A) above, Executive shall on the Date of Termination be credited
with three (3.0) additional years for purposes of attained age and years of
service.

 
(E)  The after-tax economic value of any benefit to be provided pursuant to
paragraph (A) above shall be deemed to be the present value of the premiums
expected to be paid for all such benefits that are to be provided on an insured
basis.  The after-tax economic value of all other benefits shall be deemed to be
the present value of the expected net cost to the Company of providing such
benefits.

 
(iii)  The Company shall cause Executive to receive, at the Company's expense,
standard outplacement services from a nationally-recognized firm selected by
Executive; provided that the cost of such services to the Company shall not
exceed 15% of Executive's Annual Base Salary in effect on the Date of
Termination.

 
(iv)  If on the Date of Termination the Executive is a “specified employee” of
the Company (as defined in Treasury Regulation Section 1.409A-1(i)), and if
amounts payable under this Section 4(a) (other than Accrued Obligations) are not
on account of an “involuntary separation from service” (as defined in Treasury
Regulation Section 1.409A – 1(n)), amounts that would otherwise have been paid
during the 6-month period immediately following the Date of Termination shall be
paid on the first regular payroll date immediately following the 6-month
anniversary of the Date of Termination.

 
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(b)  Cause; Other than for Good Reason.  If, during the Employment Period,
Executive's employment is terminated by the Company for Cause or by Executive
other than for Good Reason, the Company shall pay to Executive in a lump sum in
cash within no more than 10 days after the Date of Termination, any Accrued
Obligations.

(c)  Death or Disability.  If, during the Employment Period, Executive's
employment is terminated by reason of Executive's death or Disability, the
Company shall pay to Executive in cash a lump sum amount equal to all Accrued
Obligations within no more than 10 days after the Date of Termination.

5.  Non-exclusivity of Rights.  If Executive receives payments pursuant to
Section 4(a), Executive hereby waives the right to receive severance payments
under any other plan, policy or agreement of the Company.  Except as provided in
the previous sentence, nothing in this Agreement shall prevent or limit
Executive's continuing or future participation in any benefit, bonus, incentive
or other plans or Policies provided by the Company or any of its Subsidiaries
and for which Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as Executive may have under any other agreements
with the Company or any of its Subsidiaries.

6.  Full Settlement.  The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any circumstances, including set-off, counterclaim, recoupment,
defense or other claim, right or action that the Company may have against
Executive or others.

7.  No Duty to Mitigate.  Executive shall not be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to Executive under any of the provisions of this Agreement, nor shall the amount
of any payment hereunder be reduced by any compensation earned by Executive as
result of employment by another employer or by any retirement benefits which may
be paid or payable to Executive; provided, however, that any continued welfare
benefits provided for pursuant to Section 4(a)(ii) shall not duplicate any
benefits that are provided to Executive and his family by such other employer
and shall be secondary to any coverage provided by such other employer.

8.  Enforcement.

(a)  If Executive incurs legal, accounting, expert witness or other fees and
expenses in an effort to establish entitlement to compensation and benefits
under this Agreement, the Company shall, regardless of the outcome of such
effort, pay or reimburse Executive for such fees and expenses.  The Company
shall reimburse Executive for such fees and expenses on a monthly basis within
10 days after its receipt of his request for reimbursement accompanied by
reasonable evidence that the fees and expenses were incurred.

 
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(b)  If Executive does not prevail (after exhaustion of all available judicial
remedies), and the Company establishes before a court of competent jurisdiction
that Executive had no reasonable basis for bringing an action hereunder and
acted in bad faith in doing so, no further reimbursement for legal fees and
expenses shall be due to Executive and Executive shall refund any amounts
previously reimbursed hereunder with respect to such action.

(c)  If the Company fails to pay any amount provided under this Agreement when
due, the Company shall pay interest on such amount at a rate equal to 200 basis
points over the prime commercial lending rate published from time to time in The
Wall Street Journal; provided, however, that if the interest rate determined in
accordance with this Section shall in no event exceed the highest
legally-permissible interest rate.

             9.  Better After Tax Approach.

             (a)  Excise Taxes.  In the event that any monetary or other benefit
received or deemed received by Executive from the Company or any Subsidiary or
affiliate pursuant to this Agreement or otherwise (“Change in Control
Benefits”): (i) constitutes or may constitute “Parachute Payments” within the
meaning of Section 280G of the Code, and (ii) but for this Section 9, would be
subject to any excise tax under Section 4999 of the Code or any similar tax
under any United States federal, state, local or other law (such excise tax and
all such similar taxes individually and collectively, “Excise Taxes”), then, at
the option of Executive, such Change in Control Benefits shall be either: (x)
delivered in full, or (y) delivered as to such lesser extent which would result
in no portion of such Change in Control Benefits being subject to Excise Taxes;
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income and employment taxes and the Excise Taxes results in the
receipt by the Executive on an after-tax basis, of the greatest amount of Change
in Control Benefits, notwithstanding that all or some portion of such Change in
Control Benefits may be taxable under Section 4999 of the Code. For the
avoidance of doubt, this Section 9 provides Executive with the option to reduce
the amount of any such Change in Control Benefits payable to such Executive, if
doing so would place the Executive in a better net after-tax economic position
as compared with not doing so (taking into account the applicable federal, state
and local income and employment taxes and the Excise Taxes).

             (b)  Reduction.  Any reduction in Change in Control Benefits
allowed by Section 9(a) shall occur in the following order: (i) reduction of
cash payments; (ii) reduction of vesting acceleration of equity awards; and
(iii) reduction of other benefits paid or provided to the Executive. In the
event that acceleration of vesting of equity awards is to be reduced, such
acceleration of vesting shall be canceled in the reverse order of the date of
grant for the Executive's equity awards. If two or more equity awards are
granted on the same date, each award will be reduced on a pro-rata basis.  In
the event that the other benefits paid or provided to the Executive are
    
 
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to be reduced the reduction in the specific benefit or amount of benefit shall
be determined by the Company in its sole discretion.

             (c)  Tax Advisor.  Unless the Company and the Executive otherwise
agree in writing, the determinations set forth in Section 9(a) will be made in
writing by an independent tax advisor selected by the Company (the “Tax
Advisor”). For purposes of making the calculations required by this Section 9,
the Tax Advisor may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. The Company
and the Executive agree to furnish to the Tax Advisor such information and
documents as the Tax Advisor may reasonably request in order to make a
determination under this provision. The Company will bear all costs the Tax
Advisor may reasonably incur in connection with any calculations contemplated by
this provision. Further, the Company shall, in addition to complying with this
Section 9(c), cause all determinations under Section 9(a) to be made as soon as
reasonably possible after the announcement of the Change in Control and in
adequate time to permit Executive to determine which election to make under
Section 9(a) and to prepare and file Executive’s individual tax returns on a
timely basis.

10.  Successors.

(a)  This Agreement is personal to Executive and without the prior written
consent of the Company shall not be assignable by Executive otherwise than by
will or the laws of descent and distribution.  This Agreement shall inure to the
benefit of and be enforceable by Executive's legal representatives.

(b)  The Company may not assign its rights and obligations under this Agreement
without the prior written consent of Executive except to a successor which has
satisfied the provisions of Section 10(c).  This Agreement shall inure to the
benefit of the Company and such permitted assigns.

(c)  The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.  All references
to the Company shall also refer to any such successor, and the Company and such
successor shall be jointly and severally liable for all obligations of the
Company under this Agreement.

11.  Miscellaneous.

(a)  Applicable Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, without reference to such
State's principles of conflict of laws.

 
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(b)  Notices.  All notices hereunder shall be in writing and shall be given by
hand delivery, nationally-recognized courier service that provides overnight
delivery, or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

If to Executive, at his most recent home address on file with the Company.

               
       If to the Company, to:  
W.W. Grainger, Inc.
 
100 Grainger Parkway
 
Lake Forest, Illinois  60045
 
Attention:  General Counsel
   

or to such other address as either party shall have furnished to the other in
writing in accordance herewith.  Notice shall be effective when actually
received by the addressee.

(c)  Severability.  If any part of this Agreement is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any part of this Agreement not declared
to be unlawful or invalid.  Any paragraph or part of a paragraph so declared to
be unlawful or invalid shall, if possible, be construed in a manner which will
give effect to the terms of such paragraph or part of a paragraph to the fullest
extent possible while remaining lawful and valid.

(d)  Tax Withholding.  The Company may withhold from any amounts payable under
this Agreement such federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

(e)  Amendments; Waiver.  This Agreement may not be amended or modified
otherwise than by a written agreement executed by the Company and Executive.  A
waiver of any term, covenant or condition contained in this Agreement shall not
result in a waiver of any other term, covenant or condition, and any waiver of
any default shall not result in a waiver of any later default.

(f)  Entire Agreement.  This Agreement contains the entire understanding of the
Company and Executive with respect to the subject matter hereof, and shall
supersede all prior agreements, promises and representations of the parties
regarding employment or severance, whether in writing or otherwise.  Without
limiting the generality of the foregoing, this Agreement expressly terminates,
with immediate effect, any Change in Control Employment Agreement which may
previously have been entered into between the Company and Executive.

(g)  No Right to Employment.  Except as may be provided under any other
agreement between Executive and the Company, the employment of Executive by the
Company is at will, and, prior to the Effective Date, may be terminated by
either Executive or the Company at any time.  Upon a termination of Executive's

 
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employment prior to the Effective Date, there shall be no further rights under
this Agreement.

(h)  Sections.  Except where otherwise indicated by the context, any reference
to a “Section” shall be to a section of this Agreement.

(i)  Survival of Executive's Rights.  All of Executive's rights hereunder shall
survive the termination of Executive's employment.

(j)  Number and Gender.  Wherever appropriate, the singular shall include the
plural, the plural shall include the singular, and the masculine shall include
the feminine.

(k)  Counterparts.  This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.

(l)  Section 409A Compliance.  To the extent applicable, it is intended that
this Agreement shall comply with the provisions of Section 409A of the Code, and
this Agreement shall be construed and applied in a manner consistent with this
intent.  In the event that any payment or benefit under this Agreement is
determined by the Company to be in the nature of a deferral of compensation, the
Company and the Executive hereby agree to take such actions, not otherwise
provided herein, as may be mutually agreed between the parties to ensure that
such payments comply with the applicable provisions of Section 409A of the Code
and the Treasury Regulations thereunder.  To the extent that any payment or
benefit under this Agreement is modified by reason of this Section 11(l), it
shall be modified in a manner that complies with Section 409A of the Code and
preserves to the maximum possible extent the economic costs or value thereof (as
applies) to the respective parties (determined on a pre-tax basis).

IN WITNESS WHEREOF, Executive and the Company have executed this Agreement as of
the date first above written.
 

 
W.W. GRAINGER, INC.
 
By:________________________________________________  
James T. Ryan
Chairman, President and Chief Executive Officer
     
EXECUTIVE:
  ___________________________________________________  
INSERT NAME

 

 
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