Exhibit 10(xi)

 

 

 

 

W.W. GRAINGER, INC.

VOLUNTARY SALARY AND INCENTIVE DEFERRAL PLAN

 

 

Effective January 1, 2004,

and as amended and restated effective January 1, 2008

 

 

TABLE OF CONTENTS

 

 

 

 

Page

ARTICLE 1

DEFINITIONS

 

1

 

 

 

 

ARTICLE 2

SELECTION, ENROLLMENT, ELIGIBILITY

 

5

 

 

 

 

2.1

Selection by Committee

 

5

 

 

 

 

2.2

Enrollment Requirements

 

5

 

 

 

 

2.3

Eligibility; Commencement of Participation

 

5

 

 

 

 

2.4

Termination of Participation and/or Deferrals

 

5

 

 

 

 

ARTICLE 3

CONTRIBUTIONS/CREDITING/TAXES

 

6

 

 

 

 

3.1

Minimum and Maximum Deferrals

 

6

 

 

 

 

3.2

Election Form

 

6

 

 

 

 

3.3

Withholding of Annual Deferral Amounts

 

7

 

 

 

 

3.4

Profit Sharing Allocation

 

7

 

 

 

 

3.5

Vesting

 

7

 

 

 

 

3.6

Allocation of Funds

 

7

 

 

 

 

3.7

FICA and Other Taxes

 

8

 

 

 

 

3.8

Distributions

 

8

 

 

 

 

ARTICLE 4

HARDSHIP WITHDRAWAL

 

8

 

 

 

 

ARTICLE 5

DISTRIBUTION OF BENEFITS

 

9

 

 

 

 

5.1

Distribution Election

 

9

 

 

 

 

5.2

Retirement/Disability Distributions

 

9

 

 

 

 

5.3

Date Certain Distributions

 

10

 

 

 

 

5.4

Death Before Commencement of Distributions

 

11

 

 

 

 

5.5

Death After Commencement of Distributions

 

11

 

 

 

 

5.6

Other Terminations of Employment

 

11

 

 

 

 

5.7

Hardship Withdrawals

 

11

 

 

 

 

ARTICLE 6

DISABILITY WAIVER AND BENEFIT

 

11

 

 

 

 

6.1

Disability Waiver

 

11

 

 

 

 

ARTICLE 7

BENEFICIARY DESIGNATION

 

12

 

 

 

 

7.1

Beneficiary

 

12

 

 

 

 

7.2

Beneficiary Designation and Change of Beneficiary

 

12

 

 

 

 

7.3

Acknowledgment

 

12

 

 

i

 

 

 

 

TABLE OF CONTENTS

(continued)

 

 

 

 

Page

7.4

No Beneficiary Designation

 

12

 

 

 

 

7.5

Doubt as to Beneficiary

 

12

 

 

 

 

ARTICLE 8

LEAVE OF ABSENCE

 

12

 

 

 

 

8.1

Paid Leave of Absence

 

13

 

 

 

 

8.2

Unpaid Leave of Absence

 

13

 

 

 

 

ARTICLE 9

TERMINATION, AMENDMENT OR MODIFICATION

 

13

 

 

 

 

9.1

Termination

 

13

 

 

 

 

9.2

Amendment

 

13

 

 

 

 

ARTICLE 10

ADMINISTRATION

 

13

 

 

 

 

10.1

Committee Duties

 

13

 

 

 

 

10.2

Administration Upon Change In Control

 

14

 

 

 

 

10.3

Agents

 

14

 

 

 

 

10.4

Binding Effect of Decisions

 

14

 

 

 

 

10.5

Indemnity of Committee

 

14

 

 

 

 

10.6

Employer Information

 

14

 

 

 

 

ARTICLE 11

OTHER BENEFITS AND AGREEMENTS

 

15

 

 

 

 

11.1

Coordination with Other Benefits

 

15

 

 

 

 

ARTICLE 12

CLAIMS PROCEDURES

 

15

 

 

 

 

12.1

Presentation of Claim

 

15

 

 

 

 

12.2

Notification of Decision

 

15

 

 

 

 

12.3

Review of a Denied Claim

 

15

 

 

 

 

12.4

Decision on Review

 

16

 

 

 

 

12.5

Legal Action

 

16

 

 

 

 

ARTICLE 13

STATUS OF THE PLAN

 

16

 

 

 

 

13.1

Plan To Be Unfunded

 

16

 

 

 

 

13.2

Unsecured General Creditor

 

16

 

 

 

 

ARTICLE 14

MISCELLANEOUS

 

16

 

 

 

 

14.1

Employer’s Liability

 

16

 

 

 

 

14.2

Nonassignability

 

17

 

 

 

 

14.3

Not a Contract of Employment

 

17

 

 

ii

 

 

 

 

TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

 

 

 

 

 

 

 

14.4

Furnishing Information

 

17

 

 

 

 

14.5

Terms

 

17

 

 

 

 

14.6

Captions

 

17

 

 

 

 

14.7

Governing Law

 

17

 

 

 

 

14.8

Notice

 

17

 

 

 

 

14.9

Successors

 

18

 

 

 

 

14.10

Validity

 

18

 

 

 

 

14.11

Incompetent

 

18

 

 

 

 

14.12

Court Order

 

18

 

 

 

 

14.13

Distribution in the Event of Taxation under Code Section 409A

 

18

 

 

 

 

14.14

Discharge of Obligations

 

19

 

 

 

 

14.15

Legal Fees to Enforce Rights After Change in Control

 

19

 

 

 

iii

 

 

W.W. GRAINGER, INC.

VOLUNTARY SALARY AND INCENTIVE DEFERRAL PLAN

Effective January 1, 2004,

and as amended and restated effective January 1, 2008

Purpose

The purpose of the Plan is to provide specified benefits to a select group of
management and highly compensated Employees who contribute materially to the
continued growth, development and future business success of W.W. Grainger,
Inc., an Illinois corporation. The Plan shall be unfunded for tax purposes and
for purposes of Title I of ERISA. The Plan and all benefits hereunder are also
intended to comply with the requirements of Code Section 409A.

 

ARTICLE 1

DEFINITIONS

For purposes of the Plan, unless otherwise clearly apparent from the context,
the following phrases or terms shall have the following indicated meanings:

1.1  “Administrator” shall mean the Committee at all times prior to the
occurrence of a Change in Control. Upon and after the occurrence of a Change in
Control, the “Administrator” shall be an independent third party approved by the
individual who, immediately prior to such event, was the Company’s Chief
Executive Officer or, if not so identified, the Company’s highest ranking
officer.

1.2  “Affiliate” shall mean any corporation or enterprise, other than the
Company, which, as of a given date, is a member of the same controlled group of
corporations, the same group of trades or businesses under common control, or
the same affiliated service group, determined in accordance with Code Sections
414(b), (c), (m) and (o), as is the Company.

1.3  “Annual Account Balance” shall mean, with respect to a Participant, a
credit on the records of the Employer equal to the sum of the Annual Deferral
Account balance and the Annual Profit Sharing Account balance. The Annual
Account Balance, and each other specified account balance, shall be a
bookkeeping entry only and shall be utilized solely as a device for the
measurement and determination of the amounts to be paid to a Participant, or his
or her designated Beneficiary, pursuant to the Plan.

1.4  “Annual Base Salary” shall mean the annual cash compensation relating to
services performed during any Plan Year, whether or not paid in such Plan Year
or included on the Federal Income Tax Form W-2 for such Plan Year, excluding
bonuses, commissions, royalties, overtime, fringe benefits, relocation expenses,
incentive payments, non-monetary awards, directors fees and other fees, and
automobile and other allowances paid to a Participant for employment services
rendered (whether or not such allowances are included in the Employee’s gross
income). Annual Base Salary shall be calculated before reduction for
compensation voluntarily deferred or contributed by the Participant pursuant to
all qualified or

 

 

1

 

 

non-qualified plans of any Employer and shall be calculated to include amounts
not otherwise included in the Participant’s gross income under Code Sections
125, 402(e)(3), 402(h), 403(b) or any other Code Sections which allow pre-tax
contributions pursuant to plans established by the Employer; provided, however,
that all such amounts will be included in compensation only to the extent that,
had there been no such plan, the amount would have been payable in cash to the
Employee.

1.5  “Annual Deferral Account” shall mean (i) the sum of all of a Participant’s
Annual Deferral Amounts, plus (ii) amounts credited in accordance with all the
applicable crediting provisions of the Plan that relate to the Participant’s
Annual Deferral Account, less (iii) all distributions made to the Participant or
his or her Beneficiary pursuant to the Plan that relate to his or her Annual
Deferral Account.

1.6  “Annual Deferral Amount” shall mean that portion of a Participant’s Annual
Base Salary and Bonus that a Participant elects to have, and is deferred, in
accordance with Article 3, for any one Plan Year. In the event of a
Participant’s Retirement, Disability (if deferrals cease in accordance with
Section 6.1), death or other termination of employment prior to the end of a
Plan Year, such year’s Annual Deferral Amount shall be the actual amount
withheld prior to such event.

1.7  “Annual Profit Sharing Account” shall mean (i) the sum of all of a
Participant’s Annual Profit Sharing Allocations, plus (ii) amounts credited in
accordance with all the applicable crediting provisions of the Plan that relate
to the Participant’s Annual Profit Sharing Account, less (iii) all distributions
made to the Participant or his or her Beneficiary pursuant to the Plan that
relate to the Participant’s Annual Profit Sharing Account.

1.8  “Annual Profit Sharing Allocation” for a Plan Year shall be the amount
determined in accordance with Section 3.4.

1.9  “Beneficiary” shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 7, that are entitled to receive
benefits under the Plan upon the death of a Participant.

1.10  “Beneficiary Designation Form” shall mean the form, established from time
to time by the Committee, that a Participant completes, signs and returns to the
Committee to designate one or more Beneficiaries.

 

1.11  “Board” shall mean the Board of Directors of the Company.

 

1.12  “Bonus” shall mean any cash compensation, in addition to Annual Base
Salary relating to services performed during any Plan Year, whether or not paid
in such Plan Year or included on the Federal Income Tax Form W-2, payable to a
Participant as an Employee under the Employer’s annual incentive plans.

1.13  “Change in Control” shall have the meaning set forth in Section 2.8 of the
W.W. Grainger, Inc. 2005 Incentive Plan, as may be amended from time to time.

 

1.14  “Claimant” shall have the meaning set forth in Section 12.1.

 

 

2

 

 

1.15  “Code” shall mean the Internal Revenue Code of 1986, as it may be amended
from time to time.

 

1.16  “Committee” shall mean the committee described in Article 10.

 

1.17  “Company” shall mean W.W. Grainger, Inc., an Illinois corporation and any
successor to such corporation that adopts the Plan.

1.18  “Date Certain Distribution” shall mean a distribution from the Plan of the
vested Annual Account Balance elected by the Participant to be paid in a
single-sum or installments pursuant to Section 5.3 of the Plan at a date
specified in the Deferral Election Form other than as a result of the
Participant’s Retirement or Disability.

1.19  “Deduction Limitation” shall mean the following described limitation on a
benefit that may otherwise be distributable pursuant to the provisions of the
Plan. Except as otherwise provided, this limitation shall be applied to all
distributions that are “subject to the Deduction Limitation” under the Plan. If
the Company determines in good faith prior to a Change in Control that there is
a reasonable likelihood that any compensation paid to a Participant for a
taxable year of the Company would not be deductible by the Company solely by
reason of the limitation under Code Section 162(m), then to the extent deemed
necessary by the Company to ensure that the entire amount of any distribution to
the Participant pursuant to the Plan prior to the Change in Control is
deductible, the Company shall defer all or any portion of a distribution under
the Plan. Any amounts deferred pursuant to this limitation shall continue to be
credited/debited with additional amounts in accordance with Section 3.6(a)
below. The amounts so deferred and amounts credited/debited thereon shall be
distributed to the Participant or his or her Beneficiary (in the event of the
Participant’s death) at the earliest possible date, as determined by the Company
in good faith, on which the deductibility of compensation paid or payable to the
Participant for the taxable year of the Company during which the distribution is
made will not be limited by Section 162(m), or if earlier, the effective date of
a Change in Control that is also a change in the ownership or effective control
of the Company (as defined in Treasury Regulation § 1.409A-3(i)(5)).
Notwithstanding anything to the contrary in the Plan, the Deduction Limitation
shall not apply to any distributions made after a Change in Control.

1.20  “Deferral Election Form” shall mean the form established by the Committee
that a Participant completes, signs and returns to the Committee to make his or
her deferral election under the Plan in accordance with Section 3.2 of the Plan.

 

1.21  “Disability” shall mean:

 

(a)  The Participant is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months; or

(b)  The Participant is, by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months, receiving
income replacement

 

 

3

 

 

benefits for a period of not less than three (3) months under the Company’s
short term or long term disability plan; or

(c)  The Participant is determined to be totally disabled by the Social Security
Administration; or

(d)  The Participant is determined to be “disabled” under the Company’s long
term disability plan, provided that the definition of “disabled” under such long
term disability plan complies with the requirements of subsections (a) and (b)
above.

 

1.22  “Disability Benefit” shall mean the benefit set forth in Article 6.

 

1.23  “Employee” shall mean an individual whose relationship with an Employer
is, under common law, that of an employee.

1.24  “Employer” shall mean the Company and/or any Affiliate selected by the
Committee to participate in the Plan and any successor. If any such entity
withdraws, is excluded from participation in the Plan or terminates its
participation in the Plan, such entity shall thereupon cease to be an Employer.

1.25  “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time.

1.26  “Hardship” shall mean an unforeseeable emergency that is a severe
financial hardship of the Participant resulting from (A) an illness or accident
of the Participant, the Participant’s spouse or the Participant’s dependent (as
defined in Code Section 152(a); (B) loss of the Participant’s property due to
casualty (including the need to rebuild a home following damage to a home not
otherwise covered by insurance, for example, as a result of a nature disaster);
or (C) other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant. An occurrence or event
will not be determined to be a Hardship to the extent that such hardship is or
may be relieved: (i) through reimbursement or compensation by insurance or
otherwise, or (ii) by liquidation of the Participant’s assets, to the extent
liquidation of such assets would not itself cause severe financial hardship.

1.27  “Participant” shall mean (i) any individual selected by the Committee to
participate in the Plan, (ii) who elects to participate in the Plan, (iii) who
properly completes and submits a Deferral Election Form, (iv) who commences
participation in the Plan, and (v) whose participation has not terminated.

1.28  “Plan” shall mean the W.W. Grainger, Inc. Voluntary Salary and Incentive
Deferral Plan, which shall be evidenced by this instrument, as may be amended
from time to time.

 

1.29  “Plan Year” shall mean the 12-month period commencing January 1.

 

1.30  “Profit Sharing Plan” shall mean the W.W. Grainger, Inc. Employees Profit
Sharing Plan or a comparable plan which covers Employees of an Affiliate.

 

 

4

 

 

1.31  “Retirement” shall mean the voluntary Separation from Service with the
Employer as a retirement as such term, or comparable applicable term, is defined
under the Profit Sharing Plan.

1.32  “Separation from Service” means the Participant’s death, retirement or
other termination of employment with the Company and all Affiliates. For
purposes of this definition, a “termination of employment” shall occur when the
facts and circumstances indicate that the Company and the employee reasonably
anticipate that no further services would be performed by the employee for the
Company and any Affiliate after a certain date or that the level of bona fide
services the employee would perform after such date (whether as an employee or
as an independent contractor), would permanently decrease to no more than 20% of
the average level of bona fide services performed (whether as an employee or as
an independent contractor) over the immediately preceding thirty-six (36)-month
period (or full period of services to the Company and all Affiliates if the
employee has been providing services to the Company less than thirty-six (36)
months).

1.33  “Year of Service” shall have the same meaning as the term Vesting Service
under the Profit Sharing Plan.

ARTICLE 2

SELECTION, ENROLLMENT, ELIGIBILITY

2.1  Selection by Committee. Participation in the Plan shall be limited to a
select group of management and highly compensated Employees of the Company who
are situated in the United States, as determined by the Committee in its sole
discretion. From that group, the Committee shall select, in its sole discretion,
Employees to participate in the Plan.

2.2  Enrollment Requirements. As a condition to participation, each selected
Employee shall complete, execute and return to the Committee a Deferral Election
Form within the time prescribed by the Committee. The Committee may establish
from time to time such other enrollment requirements as it determines in its
sole discretion are necessary.

2.3  Eligibility; Commencement of Participation. Provided an Employee selected
to participate in the Plan has met all enrollment requirements set forth in the
Plan and required by the Committee, including returning all required documents
to the Committee within the specified time period, that Employee shall commence
participation in the Plan on the first day of the month following the month in
which the Employee completes all enrollment requirements. If an Employee fails
to meet all such requirements within the period required, in accordance with
Section 2.2, that Employee shall not be eligible to participate in the Plan
until the first day of the Plan Year following the proper completion and
delivery to the Committee of the required documents.

2.4  Termination of Participation and/or Deferrals. If the Committee determines
in good faith that a Participant no longer qualifies as a member of a select
group of management or highly compensated employees, the Committee shall have
the right, in its sole discretion and consistent with Code Section 409A, to
(i) terminate any deferral election for both Annual Base Salary and/or Bonus
which the Participant has made for the remainder of the Plan Year in which

 

 

5

 

 

the Participant’s membership status changes, (ii) prevent the Participant from
making future deferral elections and/or (iii) immediately distribute the total
vested portion of the Participant’s Annual Account Balances and terminate the
Participant’s participation in the Plan. If a Participant terminates employment
after the end of a Plan Year but prior to the payment of a bonus for such Plan
Year, the deferral election will be terminated.

 

 

6

 

 

ARTICLE 3

CONTRIBUTIONS/CREDITING/TAXES

 

3.1  Minimum and Maximum Deferrals.

 

(a)  Annual Deferral Amount, Annual Base Salary, and Bonus. For each Plan Year,
a Participant may elect to defer, as his or her Annual Deferral Amount, Annual
Base Salary and/or Bonus multiplied by percentages which are not less than the
following minimum percentages or more than the following maximum percentages.

 

Minimum

Maximum

Annual Base Salary

5%

50%

Bonus

10%

85%

 

If an election is made for less than the stated minimum, or if no election is
made, the amount deferred shall be zero. If an election is made for more than
the stated maximum, then the election shall be for the maximum amount.

(b)  Short Plan Year. Notwithstanding the foregoing, if a Participant first
becomes a Participant after the first day of a Plan Year, the minimum and
maximum percentage of Annual Base Salary and/or Bonus shall be applied to the
amount of Annual Base Salary and/or the amount of Bonus not yet earned for such
Plan Year by the Participant as of the effective date of the Participant’s
Deferral Election Form which is submitted to the Committee.

 

3.2  Election Form.

 

(a)  Filing of Election Forms. In connection with a Participant’s commencement
of participation in the Plan, the Participant shall make an irrevocable deferral
election for the Plan Year in which the Participant commences participation in
the Plan, along with such other elections as the Committee deems necessary or
desirable under the Plan. For these elections to be valid, the Deferral Election
Form must be properly completed and signed by the Participant and delivered to
the Committee (in accordance with Section 2.2 above).

(b)  Effect of Election Forms. A Participant’s Deferral Election Form shall only
be effective for the Plan Year for which it is submitted and shall not continue
in effect for subsequent Plan Years. The Committee shall maintain an open
enrollment period preceding each Plan Year in order to allow Participants to
submit new Deferral Election Forms.

(c)  Timing of Election Forms. To be effective for any Plan Year, a Deferral
Election Form must be received by the Committee prior to January 1 of the Plan
Year to which it relates. However, if an individual first becomes eligible to
participate in the Plan on a date other than January 1, the individual may
submit a Deferral Election Form for the remainder of the Plan Year in which he
or she becomes a Participant if the Deferral Election Form is submitted within
30 days after the individual first becomes eligible to participate in the Plan;
provided, however, that the Deferral Election Form

 

 

7

 

 

shall apply only to Annual Base Salary and/or Bonus not yet earned, in
accordance with Section 3.1(b).

3.3  Withholding of Annual Deferral Amounts. For each Plan Year, the Annual Base
Salary portion of the Annual Deferral Amount shall be withheld from each
regularly scheduled payroll in equal amounts, as adjusted from time to time for
increases and decreases in Annual Base Salary. The Bonus portion of the Annual
Deferral Amount shall be withheld at the time the Bonus is or otherwise would be
paid to the Participant, whether or not this occurs during the Plan Year itself.

3.4  Profit Sharing Allocation. For any Participant, the Annual Profit Sharing
Allocation for a Plan Year will be limited to the amount that is the excess of
(i) the amount, but for the Annual Deferral Amounts, that would have been
allocable to such Participant’s profit sharing account under the Profit Sharing
Plan for the Plan Year, and without regard to any limitations on such profit
sharing contributions contained in the Code or in the Profit Sharing Plan in
furtherance of such Code limitations, over (ii) the actual profit sharing
contribution allocated to such Participant’s Profit Sharing Plan profit sharing
account for the Plan Year; provided, however, that the amount determined by the
application of clauses (i) and (ii) of this sentence shall be further reduced by
the amount of any profit sharing contributions, if any, allocated for such Plan
Year to the Participant’s account under the W.W. Grainger, Inc. Supplemental
Profit Sharing Plan or a comparable supplemental profit sharing plan which
covers Employees of an Affiliate.

3.5  Vesting. A Participant shall at all times be 100% vested in his or her
Annual Deferral Account. A Participant shall be vested in his or her Annual
Profit Sharing Account in accordance with the vesting provisions of the Profit
Sharing Plan.

 

3.6  Allocation of Funds

 

(a)  Crediting/Debiting of Account Balances. In accordance with, and subject to,
the rules and procedures that are established from time to time by the
Committee, in its sole discretion, amounts shall be credited or debited to a
Participant’s Annual Account Balance.

(b)  Election of Investment Options. A Participant, in connection with his or
her Deferral Election Form in accordance with Section 2 above, shall elect one
or more investment funds (the “Investment Option(s)”) to be used to determine
the additional amounts to be credited to his or her Annual Account Balance.
Participants will be permitted to modify their elected Investment Options in a
manner prescribed by the Committee.

(c)  Proportionate Allocation. In making any election described in Section
3.6(b) above, the Participant shall specify in increments of one percentage
point (1%), the percentage of his or her Annual Account Balance to be allocated
to an Investment Option (as if the Participant was making an investment in that
Investment Option with that portion of his or her Annual Account Balance).

 

 

8

 

 

(d)  No Actual Investment. Notwithstanding any other provision of the Plan that
may be interpreted to the contrary, the Investment Options are to be used for
measurement purposes only, and a Participant’s election of any Investment
Option(s), the allocation to his or her Annual Account Balance thereto, the
calculation of additional amounts and the crediting or debiting of such amounts
to a Participant’s Annual Account Balance shall not be considered or construed
in any manner as an actual investment of his or her Annual Account Balance in
any such Investment Option. In the event that the Company, in its own
discretion, decides to invest funds in any or all of the Investment Options, no
Participant shall have any rights in or to such investment themselves. Without
limiting the foregoing, a Participant’s Annual Account Balance shall at all
times be a bookkeeping entry only and shall not represent any investment made on
his or her behalf by the Company, and the Participant shall at all times remain
an unsecured creditor of the Company.

3.7  FICA and Other Taxes.

 

(a)  Annual Deferral Amounts. For each Plan Year in which an Annual Deferral
Amount is being withheld from a Participant, the Participant’s Employer(s) shall
withhold from that portion of the Participant’s Annual Base Salary and/or Bonus
that is not being deferred, in a manner determined by the Employer, the
Participant’s share of contributions under the Federal Insurance Contributions
Act (“FICA”) and other employment taxes on such Annual Deferral Amount. If
necessary, the Committee may reduce the Annual Deferral Account in order to
comply with this Section 3.7.

(b)  Profit Sharing Account. When a Participant becomes vested in a portion of
his or her Annual Profit Sharing Account, the Employer shall withhold from the
Participant’s Annual Base Salary and/or Bonus that is not deferred, in a manner
determined by the Employer, the Participant’s share of FICA and other employment
taxes on such vested portions of his or her Annual Profit Sharing Account. If
necessary, the Committee may reduce the vested portion of the Participant’s
Annual Profit Sharing Account, as the case may be, in order to comply with this
Section 3.7.

3.8  Distributions. The Employer shall withhold from any distributions made to a
Participant under the Plan all federal, state and local income, employment and
other taxes required to be withheld by the Employer in connection with such
distributions, in amounts and in a manner to be determined in the sole
discretion of the Employer.

ARTICLE 4

HARDSHIP WITHDRAWAL

If the Participant experiences a Hardship, the Participant may petition the
Committee to (i) suspend any deferrals required to be made by a Participant
and/or (ii) receive a partial or full payout from the Plan as permitted by law
(“Hardship Withdrawal”). The Hardship Withdrawal shall not exceed the lesser of
the total of the Participant’s Annual Account Balances, calculated as if such
Participant were receiving a single-sum distribution upon termination of
employment, or the amount reasonably needed to satisfy the Hardship plus amounts
necessary to pay taxes reasonably anticipated as a result of a Hardship
distribution. If, subject to the sole discretion of

 

 

9

 

 

the Committee, the petition for a suspension is approved, suspension shall take
effect upon the date of approval. If a Hardship Withdrawal is approved any
distribution shall be made within 60 days of the date of approval. The payment
of any amount under this Article 4 shall not be subject to the Deduction
Limitation. Any suspension of deferrals pursuant to this Article 4 shall
continue for the remainder of the Plan Year in which the suspension is approved.

ARTICLE 5

DISTRIBUTION OF BENEFITS

5.1  Distribution Election.

 

(a)  A Participant may elect to receive a distribution of the vested portion of
his or her Annual Account Balance which will commence upon one of the following
events: (i) the Participant’s Retirement or Disability and/or (ii) a date or
dates certain.

 

5.2  Retirement/Disability Distributions.

 

(a)  A Participant may elect one or more of the following forms of distribution
for the vested portion of his or her Annual Account Balance distributable by
reason of the Participant’s Retirement or Disability: (i) a single-sum
distribution, (ii) a distribution in annual installments payable over a period
of up to 15 years; provided, however, that if the total of the Participant’s
Annual Account Balances as of the Participant’s Retirement or Disability are
less than $50,000, such amount shall be paid in a single-sum; and/or (iii) a
single-sum distribution followed by a distribution in annual installments
payable over a period of up to 15 years; provided, however, that if the total
vested portion of the Participant’s Annual Account Balances is less than
$50,000, such amount shall be paid in a single-sum. The decision of the
Committee that a single-sum payment is required shall be final on all parties.

(b)  A Participant may change his or her distribution election for a
distribution of a Participant Annual Account Balance if such change is made in
writing at least one year prior to the Participant’s Retirement or Disability,
whichever applies, and so long as such change is not prohibited by law;
provided, however, that for any change made on or after January 1, 2009, the
initial distribution (or single-sum payment) may not be made before the date
that is at least 5 years later than when benefits would otherwise commence (or
be paid). In the event that the Participant’s most recent form of distribution
election was made within one year of the Participant’s Retirement or Disability
(whichever applies), the next most recent election made at least one year prior
to the Participant’s Retirement or Disability (or if none, the Participant’s
initial election) shall be used.

(c)  A distribution payable by reason of the Participant’s Retirement or
Disability shall be paid (in the case of a single-sum) or commence to be paid
(in the case of annual installments) within 90 days after the end of the second
calendar quarter in which Retirement or Disability occurs; provided that such
payment shall not be made earlier than 6 months and 1 day after such Retirement
or Disability.

 

 

10

 

 

5.3  Date Certain Distributions.

 

(a)  A Participant may elect one of the following forms of distribution for all
or a portion of the vested portion of his or her Annual Account Balances
distributable as a Date Certain Distribution: (i) a single-sum distribution, or
(ii) a distribution in annual installments payable over a period of up to 15
years; provided, however, that if the total vested portion of the Participant’s
distributable Annual Account Balances is less than $50,000, such amount shall be
paid in a single-sum. For purposes of determining whether a single-sum payment
shall be required, the Committee may select a valuation date that occurs no
earlier than 90 days prior to the date distributions are to otherwise commence.
The decision of the Committee that a single-sum payment is required shall be
final on all parties.

(b)  A Participant may change his or her distribution election if such change is
made in writing at least one year prior to the Participant’s Date Certain
Distribution and so long as such change is not prohibited by law; provided,
however, that for any change made on or after January 1, 2009, the initial
distribution (or single-sum payment) may not be made before the date that is at
least 5 years later than when benefits would otherwise commence (or be paid). In
the event that the Participant’s most recent form of distribution election was
made within one year of the Participant’s Date Certain Distribution, the next
most recent election made at least one year prior to the Date Certain
Distribution (or if none, the Participant’s initial election) shall be used.

(c)  A Date Certain Distribution shall be paid (in the case of a single-sum) or
commence to be paid (in the case of annual installments) in the January of the
year elected by the Participant to receive or begin receiving such Date Certain
Distribution.

(d)  If a Participant has elected a Date Certain Distribution for all or a
portion of the vested portion of his or her Annual Account Balances, but
terminates employment by reason of Retirement or Disability prior to the year
specified by the Participant for such Date Certain Distribution to commence, the
vested portion of the Participant’s Annual Account Balances which would have
been distributable shall instead be paid to him or her in the same manner that
the Participant elected to receive the Date Certain Distribution but beginning
as of the date of Retirement or Disability; provided, however, that if the
vested portion of such Participant’s distributable Annual Account Balances as of
such Retirement or Disability is less than $50,000, such amount shall be paid in
a single-sum. The decision of the Committee that a single-sum payment is
required shall be final on all parties.

(e)  If a Participant terminates employment by reason of Retirement or
Disability while receiving installment distributions of a Date Certain
Distribution, the remaining portion of the Date Certain Distribution shall
continue to be distributed as elected by the Participant.

5.4  Death Before Commencement of Distributions. If a Participant dies before a
distribution of the vested portion of his or her Annual Account Balance under
the Plan has begun, the vested portion of the Participant’s Annual Account
Balance shall be distributed to his

 

 

11

 

 

or her Beneficiary in a single-sum as soon as administratively practicable
following receipt by the Committee of satisfactory notice and confirmation of
the Participant’s death.

5.5  Death After Commencement of Distributions. If a Participant dies after a
distribution of the vested portion of his or her Annual Account Balance under
the Plan has begun, the vested portion of the Participant’s Annual Account
Balance, including those amounts not yet distributable, shall be distributed to
his or her Beneficiary in a single-sum as soon as administratively practicable
following receipt by the Committee of satisfactory notice and confirmation of
the Participant’s death.

5.6  Other Separations from Service. If a Participant incurs a Separation from
Service for any reason other than Retirement, Disability, or death, the vested
portion of the Participant’s Annual Account Balance shall be distributed to such
Participant as soon as administratively practicable after the 6 month
anniversary of such Separation from Service.

5.7  Hardship Withdrawals. Upon petition to and approval by the Committee in
accordance with Article 4, a Participant shall be permitted a Hardship
Withdrawal, if permitted by law. A Hardship Withdrawal shall be distributed in a
single-sum as soon as administratively practicable after the Committee has
determined the amount of the Hardship Withdrawal.

ARTICLE 6

DISABILITY WAIVER AND BENEFIT

6.1  Disability Waiver.

 

(a)  Waiver of Deferral. A Participant who is determined by the Committee to be
suffering from a Disability shall be excused from fulfilling that portion of the
Annual Deferral Amount commitment that would otherwise have been withheld from a
Participant’s Annual Base Salary or Bonus for the Plan Year during which the
Participant first suffers a Disability. During the period of Disability, the
Participant shall not be allowed to make any additional deferral elections, but
will continue to be considered a Participant for all other purposes of the Plan.

(b)  Return to Work. If a Participant returns to employment with the Employer
after a Disability ceases, the Participant may elect to defer an Annual Deferral
Amount for the Plan Year following his or her return to employment or service
and for every Plan Year thereafter while a Participant in the Plan; provided
such deferral elections are otherwise allowed and a Deferral Election Form is
delivered to the Committee for each such election in accordance with Section 3.2
above.

(c)  Continued Eligibility; Disability Benefit. A Participant suffering a
Disability shall, for benefit purposes under the Plan, be considered to have
incurred a Separation from Service, and such Participant shall receive a payment
of his or her Annual Account Balance in accordance with Section 5.2.

 

 

12

 

 

ARTICLE 7

BENEFICIARY DESIGNATION

 

7.1  Beneficiary. Each Participant shall have the right, at any time, to
designate his or her Beneficiary (both primary as well as contingent) to receive
any benefits payable under the Plan upon the death of the Participant. The
Beneficiary designated under the Plan may be the same as or different from the
Beneficiary designated under any other plan of an Employer in which the
Participant participates.

7.2  Beneficiary Designation and Change of Beneficiary. A Participant shall
designate his or her Beneficiary by completing and signing the Beneficiary
Designation Form, and returning it to the Committee. A Participant shall have
the right to change a Beneficiary by completing, signing and otherwise complying
with the terms of the Beneficiary Designation Form and the Committee’s rules and
procedures, as in effect from time to time. Upon the acceptance by the Committee
of a new Beneficiary Designation Form, all Beneficiary designations previously
filed shall be canceled. The Committee shall be entitled to rely on the last
Beneficiary Designation Form filed by the Participant and accepted by the
Committee prior to his or her death.

7.3  Acknowledgment. No designation or change in designation of a Beneficiary
shall be effective until received and acknowledged in writing by the Committee.

7.4  No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided in Sections 7.1, 7.2 and 7.3 above, the Beneficiary
shall first be deemed to be his or her spouse if his or her spouse resides with
the Participant at the time of such Participant’s death. If a Participant fails
to designate a Beneficiary as provided in Sections 7.1, 7.2 and 7.3 above and
such spouse has predeceased the Participant or if all designated Beneficiaries
predecease the Participant or die prior to complete distribution of the
Participant’s benefits, then the Participant’s designated Beneficiary shall be
deemed to be his or her estate.

7.5  Doubt as to Beneficiary. If the Committee has any doubt as to the proper
Beneficiary to receive payments pursuant to the Plan, the Committee shall have
the right, exercisable in its discretion, to cause the Employer to withhold such
payments until this matter is resolved to the Committee’s satisfaction.

ARTICLE 8

LEAVE OF ABSENCE

8.1  Paid Leave of Absence. If a Participant is authorized by the Employer for
any reason to take a paid leave of absence from the employment of the Employer
that does not constitute a Separation from Service, the Participant shall
continue to be considered employed by the Employer and the Annual Deferral
Amount shall continue to be withheld during such paid leave of absence in
accordance with Section 3.2.

8.2  Unpaid Leave of Absence. If a Participant is authorized by the Employer for
any reason to take an unpaid leave of absence from the employment of the
Employer that does not constitute a Separation from Service, the Participant
shall continue to be considered employed by the Employer and the Participant
shall be excused from making deferrals until the earlier of the

 

 

13

 

 

date the leave of absence expires or the Participant returns to a paid
employment status. Upon such expiration or return, deferrals shall resume for
the remaining portion of the Plan Year in which the expiration or return occurs,
based on the deferral election applicable for that Plan Year.

ARTICLE 9

TERMINATION, AMENDMENT OR MODIFICATION

9.1  Termination. Although the Company anticipates that it will continue the
Plan for an indefinite period of time, there is no guarantee that the Company
will continue the Plan or will not terminate the Plan at any time in the future.
Accordingly, the Company reserves the right to discontinue its sponsorship of
the Plan and/or to terminate the Plan at any time with respect to any or all of
its participating Employees, by action of its Board; provided, however, that
distributions upon termination may only occur in accordance with Treasury
Regulation §1.409A-3. Upon a Change in Control, the Annual Account Balances of
all participants shall be administered in accordance with Section 10.2 of the
Plan.

9.2  Amendment. The Company may, at any time, amend or modify the Plan in whole
or in part by the action of the Board; provided, however, that: (i) no amendment
or modification shall be effective to decrease or restrict the value of a
Participant’s vested Annual Account Balance in existence at the time the
amendment or modification is made, as of the effective date of the amendment or
modification, and (ii) no amendment or modification of this Section 9.2 or
Section 10.2 of the Plan shall be effective. The amendment or modification of
the Plan shall not affect any Participant or Beneficiary who has become entitled
to the payment of benefits under the Plan as of the date of the amendment or
modification.

ARTICLE 10

ADMINISTRATION

10.1  Committee Duties. Except as otherwise provided in this Article 10, the
Plan shall be administered by a Committee which shall be the Compensation
Committee of Management, or such other committee as the Board shall appoint.
Members of the Committee may be Participants in the Plan. The Committee shall
have the discretion and authority to (i) make, amend, interpret, and enforce all
appropriate rules and regulations for the administration of the Plan and
(ii) decide or resolve any and all questions including interpretations of the
Plan, as may arise in connection with the Plan. Any individual serving on the
Committee who is a Participant shall not vote or act on any matter relating
solely to himself or herself. When making a determination or calculation, the
Committee shall be entitled to rely on information furnished by a Participant or
the Employer.

10.2  Administration Upon Change In Control. The Administrator shall have the
discretionary power to determine all questions arising in connection with the
administration of the Plan and the interpretation of the Plan including, but not
limited to, benefit entitlement determinations. Upon and after the occurrence of
a Change in Control, the Company must: (i) pay all reasonable administrative
expenses and fees of the Administrator; (ii) indemnify the Administrator against
any costs, expenses and liabilities including, without limitation, attorney’s
fees and expenses arising in connection with the performance of the
Administrator hereunder,

 

 

14

 

 

except with respect to matters resulting from the gross negligence or willful
misconduct of the Administrator or its employees or agents; (iii) supply full
and timely information to the Administrator on all matters relating to the Plan,
the Participants and their Beneficiaries, the Annual Account Balances of the
Participants, the date of the Retirement, Disability, death or other termination
of employment of the Participants, and such other pertinent information as the
Administrator may reasonably require; and (iv) fully vest all Annual Account
Balances of the Participants and pay such benefits in a lump sum within five (5)
business days of such Change in Control. Upon and after a Change in Control, the
Administrator may be terminated (and a replacement appointed) only with the
Administrator’s approval.

10.3  Agents. In the administration of the Plan, the Committee may, from time to
time, employ agents and delegate to them such administrative duties as it sees
fit (including acting through a duly appointed representative) and may from time
to time consult with counsel who may be counsel to any Employer.

10.4  Binding Effect of Decisions. The decision or action of the Administrator
with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules and
regulations promulgated hereunder shall be final and conclusive and binding upon
all persons having any interest in the Plan.

10.5  Indemnity of Committee. The Company shall indemnify and hold harmless the
members of the Committee, and any Employee to whom the duties of the Committee
may be delegated, against any and all claims, losses, damages, expenses or
liabilities including, without limitation, attorney’s fees and expenses arising
from any action or failure to act with respect to the Plan, except in the case
of gross negligence or willful misconduct by the Committee, any of its members,
and any such Employee.

10.6  Employer Information. To enable the Committee and/or Administrator to
perform its functions, the Employer shall supply full and timely information to
the Committee and/or Administrator, as the case may be, on all matters relating
to the compensation of its Participants, the date and circumstances of the
Retirement, Disability, death or other termination of employment of its
Participants, and such other pertinent information as the Committee or
Administrator may reasonably require.

ARTICLE 11

OTHER BENEFITS AND AGREEMENTS

11.1  Coordination with Other Benefits. The benefits provided for a Participant
and Participant’s Beneficiary under the Plan are in addition to any other
benefits available to such Participant under any other plan or program for
employees of the Employer. The Plan shall supplement and shall not supersede,
modify or amend any other such plan or program except as may otherwise be
expressly provided.

ARTICLE 12

CLAIMS PROCEDURES

12.1  Presentation of Claim. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as a
“Claimant”) may deliver to the

 

 

15

 

 

Committee a written claim for a determination with respect to the amounts
distributable to such Claimant from the Plan. If such a claim relates to the
contents of a notice received by the Claimant, the claim must be made within
60 days after such notice was received by the Claimant. All other claims must be
made within 180 days of the date on which the event that caused the claim to
arise occurred. The claim must state with particularity the determination
desired by the Claimant.

12.2  Notification of Decision. The Committee shall consider a Claimant’s claim
within a reasonable time, and shall notify the Claimant in writing:

(a)  that the Claimant’s requested determination has been made, and that the
claim has been allowed in full; or

(b)  that the Committee has reached a conclusion contrary, in whole or in part,
to the Claimant’s requested determination, and such notice must set forth in a
manner calculated to be understood by the Claimant:

 

(i)  the specific reason(s) for the denial of the claim, or any part of it;

 

(ii)  specific reference(s) to pertinent provisions of the Plan upon which such
denial was based;

 

(iii) a description of any additional material or information necessary for the
Claimant to perfect the claim, and an explanation of why such material or
information is necessary; and

 

(iv)  an explanation of the claim review procedure set forth in Section 12.3
below.

 

12.3  Review of a Denied Claim. Within 60 days after receiving a notice from the
Committee that a claim has been denied, in whole or in part, a Claimant (or the
Claimant’s duly authorized representative) may file with the Committee a written
request for a review of the denial of the claim. Thereafter, but not later than
30 days after the review procedure began, the Claimant (or the Claimant’s duly
authorized representative):

 

(a)  may review pertinent documents;

 

(b)  may submit written comments or other documents; and/or

 

(c)  may request a hearing, which the Committee, in its sole discretion, may
grant.

 

12.4  Decision on Review. The Committee shall render its decision on review
promptly, and not later than 60 days after the filing of a written request for
review of the denial, unless a hearing is held or other special circumstances
require additional time, in which case the Committee’s decision must be rendered
within 120 days after such date. Such decision must be written in a manner
calculated to be understood by the Claimant, and it must contain:

 

 

16

 

 

(a)  specific reasons for the decision;

 

(b)  specific reference(s) to the pertinent Plan provisions upon which the
decision was based; and

 

(c)  such other matters as the Committee deems relevant.

 

12.3  Legal Action. A Claimant’s compliance with the foregoing provisions of
this Article 12 is a mandatory prerequisite to a Claimant’s right to commence
any legal action with respect to any claim for benefits under the Plan.

 

ARTICLE 13

STATUS OF THE PLAN

13.1  Plan To Be Unfunded. The Plan is intended to be a plan that is not
qualified within the meaning of Code Section 401(a) and that is unfunded and is
maintained by an employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). The Plan
shall be administered and interpreted to the extent possible in a manner
consistent with that intent.

13.2  Unsecured General Creditor. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests or
claims in any property or assets of the Employer. For purposes of the payment of
benefits under the Plan, any and all of the Employer’s assets shall be, and
remain, the general, unpledged unrestricted assets of the Employer. The
Employer’s obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.

ARTICLE 14

MISCELLANEOUS

14.1  Employer’s Liability. The Employer shall have no obligation to a
Participant under the Plan except as expressly provided in the Plan.

14.2  Nonassignability. A Participant shall not have any right to commute, sell,
assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate, alienate or convey in advance of actual receipt, the amounts, if
any, payable hereunder, or any part thereof, which are, and all rights to which
are expressly declared to be, unassignable and non-transferable. No part of the
amounts payable shall, prior to actual payment, be subject to seizure,
attachment, garnishment or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant directly or
indirectly, be transferable by operation of law in the event of a Participant’s
bankruptcy or insolvency or be transferable to a spouse as a result of a
property settlement or otherwise.

14.3  Not a Contract of Employment. The terms and conditions of the Plan shall
not be deemed to constitute a contract of employment between the Employer and
the Participant. Such employment is hereby acknowledged to be an “at will”
employment relationship that can be terminated at any time for any reason, or no
reason, with or without cause, and with or

 

 

17

 

 

without notice, unless expressly otherwise provided in a written employment
agreement. Nothing in the Plan shall be deemed to give a Participant the right
to be retained in the service of the Employer, either as an Employee or a
director, or to interfere with the right of the Employer to discipline or
discharge the Participant at any time.

14.4  Furnishing Information. A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information requested by
the Committee and take such other actions as may be requested in order to
facilitate the administration of the Plan and the payments of benefits
hereunder, including but not limited to taking such physical examinations as the
Committee may deem necessary.

14.5  Terms. Whenever any words are used herein in the masculine, they shall be
construed as though they were in the feminine in all cases where they would so
apply; and whenever any words are used herein in the singular or in the plural,
they shall be construed as though they were used in the plural or the singular,
as the case may be, in all cases where they would so apply.

14.6  Captions. The captions of the articles, sections and paragraphs of the
Plan are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.

14.7  Governing Law. Subject to ERISA, the provisions of the Plan shall be
construed and interpreted according to the internal laws of the State of
Illinois.

14.8  Notice. Any notice or filing required or permitted to be given to the
Committee under the Plan shall be sufficient if in writing and hand-delivered,
or sent by registered or certified mail, to the address below:

W.W. Grainger, Inc.

Attn: Corporate Secretary

100 Grainger Parkway

Lake Forest, IL 60045-5201

 

Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification.

Any notice or filing required or permitted to be given to a Participant under
the Plan shall be sufficient if in writing and hand-delivered, or sent by mail,
to the last known address of the Participant.

14.9  Successors. The provisions of the Plan shall bind and inure to the benefit
of the Company and its successors and assigns and the Participant and the
Participant's designated Beneficiaries.

14.10  Validity. In case any provision of the Plan shall be illegal or invalid
for any reason, said illegality or invalidity shall not affect the remaining
parts hereof, but the Plan shall be construed and enforced as if such illegal or
invalid provision had never been inserted herein.

 

 

18

 

 

14.11  Incompetent. If the Committee determines in its discretion that a benefit
under the Plan is to be paid to a minor, a person declared incompetent or to a
person incapable of handling the disposition of that person’s property, the
Committee may direct payment of such benefit to the guardian, legal
representative or person having the care and custody of such minor, incompetent
or incapable person. The Committee may require proof of minority, incompetence,
incapacity or guardianship, as it may deem appropriate prior to distribution of
the benefit. Any payment of a benefit shall be a payment for the account of the
Participant and the Participant’s Beneficiary, as the case may be, and shall be
a complete discharge of any liability under the Plan for such payment amount.

14.12  Court Order. The Committee is authorized to make any payments when due as
directed by court order in any action in which the Employer, Plan or the
Committee has been named as a party. In addition, if a court determines that a
spouse or former spouse of a Participant has an interest in the Participant’s
benefits under the Plan in connection with a property settlement or otherwise,
and pursuant to a domestic relations order (as defined in Code Section
414(p)(1)(B)), the Committee shall, notwithstanding any election made by a
Participant, distribute the spouse’s or former spouse’s interest in the
Participant’s benefits under the Plan to that spouse or former spouse in
accordance with such domestic relations order.

14.13  Distribution in the Event of Taxation under Code Section 409A. If, for
any reason, all or any portion of a Participant’s benefits under the Plan
becomes taxable to the Participant under Code Section 409A prior to receipt, a
Participant may petition the Committee before a Change in Control, or the
Administrator after a Change in Control, for a distribution of that portion of
his or her benefit that has become taxable. Upon the grant of such a petition,
which grant shall not be unreasonably withheld (and, after a Change in Control,
shall be granted), the Company shall distribute to the Participant immediately
available funds in an amount equal to the taxable portion of his or her benefit
(which amount shall not exceed the vested portion of a Participant’s Annual
Account Balance under the Plan). If the petition is granted, the tax liability
distribution shall be made within 90 days of the date when the Participant’s
petition is granted. Such a distribution shall affect and reduce the benefits to
be paid under the Plan.

14.14  Discharge of Obligations. The full payment of the applicable benefit
under Articles 4, 5 or 6 of the Plan to a Participant or Beneficiary shall fully
and completely discharge all obligations to a Participant and his or her
designated Beneficiaries under the Plan and the Participant’s participation in
the Plan shall terminate.

14.15  Legal Fees to Enforce Rights After Change in Control. The Company is
aware that upon the occurrence of a Change in Control, the Board (which might
then be composed of new members), a shareholder of the Company or of any
successor might then cause or attempt to cause the Company or such successor to
refuse to comply with its obligations under the Plan and might cause or attempt
to cause the Company to institute, or may institute, litigation seeking to deny
Participants the benefits intended under the Plan. In these circumstances, the
purpose of the Plan could be frustrated. Accordingly, if, following a Change in
Control, it should appear to any Participant that the Company or its successor
has failed to comply with any of its obligations under the Plan or any agreement
thereunder or, if the Company, its successor, or any other person takes any
action to declare the Plan void or unenforceable or institutes any litigation or

 

 

19

 

 

other legal action designed to deny, diminish or to recover from any Participant
the benefits intended to be provided, then the Company or its successor
irrevocably authorizes such Participant to retain counsel of his or her choice
at the expense of the Company or its successor to represent such Participant in
connection with the initiation or defense of any litigation or other legal
action, whether by or against the Company, its successor, or any director,
officer, shareholder or other person affiliated with the Company or its
successor thereto in any jurisdiction.

 

 

 

20