Exhibit 10 (c) (iii) to the
Annual Report on Form 10-K
of W.W. Grainger, Inc. for the
year ended December 31, 1995
W.W. GRAINGER, INC.
EXECUTIVE DEATH BENEFIT PLAN
ARTICLE I
PURPOSE
1.1 Purpose. The purpose of this W.W. GRAINGER, INC. EXECUTIVE DEATH
BENEFIT PLAN (the "Plan") is to improve and maintain relations with a select
group of management employees (the "key employees"), to induce them to remain
employed by W.W. Grainger, Inc., and to provide an incentive to them to not
enter into competitive employment or engage in a competitive business by
providing supplemental survivor security benefits. All benefits hereunder shall
be paid solely from the general assets of the Company, and the right of any
Participant or Beneficiary to receive payments under this Plan shall be as an
unsecured general creditor of the Company.
1.2 Construction. In construing the terms of the Plan, the primary
consideration shall be the Plan's stated purpose, i.e., to provide certain
disability and survivors' benefits and to supplement certain benefits from the
Company's Group Insurance Plans.
ARTICLE II
DEFINITIONS AND DESIGNATIONS
2.1 "Annual Compensation" shall mean the sum of:
(a) the annual salary of the Participant determined by the Board
of Directors of the Company in effect on the Date Creating
an Entitlement, and
(b) the Participant's target bonus under the Company's
Management Incentive Program for the calendar year in which
the Date Creating an Entitlement occurs.
2.2 "Average Monthly Earnings" shall mean Annual Compensation divided by
twelve (12).
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2.3 "Committee" shall mean the Compensation Committee of Management
described in Article VII hereof.
2.4 "Company" shall mean W.W. Grainger, Inc., an Illinois corporation, and
its divisions and subsidiaries.
2.5 "Date Creating an Entitlement" shall mean the Participant's date of
death for benefits described in Section 4.1 or date of Termination of Service
for benefits described in Section 4.3.
2.6 "Disability" means a condition that totally and continuously prevents
the Participant, for at least six (6) consecutive months, from engaging in an
"occupation" for Compensation or profit. During the first twenty-four (24)
months of total disability, "occupation" means the Participant's occupation at
the time the disability began. After that period, "occupation" means any
occupation for which the Participant is or becomes reasonably fitted by
education, training or experience. Notwithstanding the foregoing, a disability
shall not exist for purposes of this Plan if the Participant fails to qualify
for disability benefits under the Social Security Act, unless the Committee
determines, in its sole discretion, that a disability exists.
2.7 "Early Retirement Date" shall mean the earliest of the date on which
the Participant:
(a) attains age sixty (60),
(b) attains age fifty-five (55) or older after completing ten
(10) Years of Service,
(c) completes twenty-five (25) Years of Service, or
(d) incurs a Disability.
2.8 "Forfeiting Act" shall mean the Participant's fraud, dishonesty,
willful destruction of Company property, revealing Company trade secrets, acts
of competition against the Company or acts in aid of a competitor of the
Company.
2.9 "Group Life Insurance Plan" shall mean the Company's Group Term Life
and Accidental Death and Dismemberment Insurance Plan, as amended from time to
time.
2.10 "Normal Retirement Date" shall mean the date on which the Participant
attains age sixty-five (65).
2.11 "Participant" shall mean a person designated as such under Article III
of the Plan.
2.12 "Plan" shall mean the W.W. Grainger, Inc. Executive Death Benefit
Plan.
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2.13 "Termination of Service" shall mean the Participant's ceasing his
Service with the Company for any reason whatsoever, whether voluntarily or
involuntarily, including by reason of death or disability.
2.14 "Years of Service" shall mean a year that a Participant hereunder is
"Eligible" under the W.W. Grainger, Inc. Employees Profit Sharing Plan.
ARTICLE III
PARTICIPATION
3.1 Eligibility to Participate. An Employee of the Company shall become
eligible to be a Participant in the Plan by designation of the Committee. The
Committee shall make such designation, specifying the effective date of the
Participant's eligibility. The Committee shall notify each Participant of his
eligibility date. Each designated Employee shall furnish such information and
perform such acts as the Committee may require prior to becoming a Participant.
3.2 Re-Employment. Any Participant who terminates employment shall not be
eligible to participate in the Plan on re-employment unless the Committee so
determines. In such event, the Committee shall specify the effective date of the
Participant's renewed eligibility. The Committee shall notify each re-employed
former Participant of his eligibility, of the effective date and of the
conditions of participation.
ARTICLE IV
DEATH BENEFITS
4.1 Death During Employment. If a Participant's death occurs while he is in
the employ of the Company, his Beneficiary shall receive a monthly payment in an
amount equal to:
(a) fifty percent (50%) of the Participant's Average Monthly
Earnings in effect on his date of death, which payments
shall commence on the first day of the month following the
Participant's death and end as of the date on which the
120th monthly payment is made; or
(b) for a Participant who was a Participant on the effective
date of the First Amendment of the Plan [May 8, 1995], and
notwithstanding anything to the contrary in Section 8.2:
(i) fifty percent (50%) of the Participant's Average Monthly Earnings in
effect on his date of death, determined without regard to Section
2.1(b),
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(ii) which payment shall commence on the first day of the month following
the Participant's death and end as of the later of the date the
Participant would have attained age 65 or the date on which the 120th
monthly payment is made,if the benefit so calculated would have a
greater present value on the date of the Participant's death than the
benefit calculated under paragraph (a) next above. The Committee shall
use reasonable and consistent assumptions to determine present values.
4.2 Additional Death Benefit. The Company will maintain death benefit
coverage for each Participant in the amount of fifty thousand dollars ($50,000)
under the Company's Group Life Insurance Plan. Payment of such benefit shall be
made in accordance with the provisions of the Group Life Insurance Plan.
4.3 Death After Retirement. If a Participant incurs Termination of Service
on or after an Early Retirement Date, or on or after his Normal Retirement Date,
and dies after such Termination of Service, the Company will pay to his
Beneficiary a lump sum death benefit equal to one hundred percent (100%) of his
Annual Compensation as defined under the Plan on the Date Creating an
Entitlement. Such death benefit amount shall be increased to reflect estimated
federal income tax payable on such death benefit, based on the then maximum tax
rate, determined in accordance with rules established from time to time by the
Committee, provided that in no event shall the death benefit exceed two hundred
percent (200%) of Annual Compensation.
4.4 Death After Termination of Employment. Except as provided in Section
4.3, no benefits shall be payable to or on behalf of a Participant whose death
occurs subsequent to his Termination of Employment.
ARTICLE V
BENEFICIARIES
5.1 Designation by Participant. Each Participant may designate a
Beneficiary or Beneficiaries who shall, upon his death, receive the death
benefits, if any, payable pursuant to Sections 4.1 and 4.3. The Participant's
Beneficiary under this Plan shall be the Beneficiary designated by the
Participant in the Special Beneficiary Designation filed under the Company's
Group Life Insurance Plan unless the Participant files a written notice of a
different Beneficiary Designation in such form as the Committee requires. The
form may include contingent Beneficiaries. A Beneficiary Designation shall be
effective when filed with the Committee during the Participant's life and shall
cancel and revoke all prior designations.
5.2 Payment of Benefits Upon Death - Other Beneficiary. If no primary or
contingent Beneficiary survives a Participant or if no Beneficiary Designation
is in effect upon his death, then the payments shall be made to the deceased
Participant's spouse. If his spouse does not survive him, then payments shall be
made to the Participant's descendants who survive him by right of
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representation; or if no descendants of the Participant survive him, then to his
estate. In the event any person entitled to receive benefits in accordance with
this Section dies prior to his receipt of all of the benefits to which he is
entitled, the balance of such benefits, if any, shall be payable to the next
class of recipients.
5.3 Minors and Persons Under Legal Disability. Benefits payable to a minor
or a person under a legal disability shall be paid in a manner determined
appropriate by the Committee.
ARTICLE VI
CLAIMS PROCEDURE
6.1 Claim for Benefits. Any claim for benefits under the Plan shall be made
in writing to any member of the Committee. If such claim for benefits is wholly
or partially denied by the Committee Members, the Committee Members shall,
within a reasonable period of time, but not later than sixty (60) days after
receipt of the claim, notify the claimant of the denial of the claim. Such
notice of denial shall be in writing and shall contain:
(a) the specific reason or reasons for denial of the claim,
(b) a reference to the relevant Plan provisions upon which the denial
is based,
(c) a description of any additional material or information necessary
for the claimant to perfect the claim, together with an
explanation of why such material or information is necessary, and
(d) an explanation of the Plan's claim review procedure.
6.2 Request for Review of a Denial of a Claim for Benefits. Upon the
receipt by the claimant of written notice of denial of the claim, the claimant
may within ninety (90) days file a written request to the full Committee,
requesting a review of the denial of the claim, which review shall include a
hearing if deemed necessary by the Committee. In connection with the claimant's
appeal of the denial of his claim, he may review relevant documents and may
submit issues and comments in writing.
6.3 Decision Upon Review of Denial of Claim for Benefits. The Committee
shall render a decision on the claim review promptly, but no more than sixty
(60) days after the receipt of the claimant's request for review, unless special
circumstances (such as the need to hold a hearing) require an extension of time,
in which case the sixty (60)-day period shall be extended to one hundred twenty
(120) days. Such decision shall:
(a) include specific reasons for the decision.
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(b) be written in a manner calculated to be understood by the
claimant, and
(c) contain specific references to the relevant Plan provisions upon
which the decision is based.
ARTICLE VII
COMMITTEE
7.1 General Rights, Powers and Duties of the Committee. The Compensation
Committee of Management shall be the Named Fiduciary and Committee responsible
for the management, operation and administration of the Plan. In addition to any
powers, rights and duties set forth elsewhere in the Plan, it shall have the
following powers and duties:
(a) to adopt such rules and regulations consistent with the
provisions of the Plan as it deems necessary for the proper and
efficient administration of the Plan;
(b) to enforce the Plan in accordance with its terms and any rules
and regulations it establishes;
(c) to maintain records concerning the Plan sufficient to prepare
reports, returns and other information required by the Plan or by
law;
(d) to construe and interpret the Plan and to resolve all questions
arising under the Plan;
(e) to direct the Company to pay benefits under the Plan, and to give
such other directions and instructions as may be necessary for
the proper administration of the Plan;
(f) to employ or retain agents, attorneys, actuaries, accountants or
other persons, who may also be employed by or represent the
Company; and
(g) to be responsible for the preparation, filing and disclosure on
behalf of the Plan of such documents and reports as are required
by any applicable federal or state law.
7.2 Information to be Furnished to Committee. The Company shall furnish the
Committee such data and information as it may require. The records of the
Company shall be determinative of each Participant's period of employment,
termination of employment and the reason therefor, leave of absence,
re-employment, Years of Service, personal data, and Compensation or bonus
reductions. Participants and their Beneficiaries shall furnish to the
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Committee such evidence, data or information, and execute such documents as the
Committee requests.
7.3 Responsibility. No member of the Committee or of the Board of Directors
of the Company shall be liable to any person for any action taken or omitted in
connection with the administration of this Plan unless attributable to his own
fraud or willful misconduct; nor shall the Company be liable to any person for
any such action unless attributable to fraud or willful misconduct on the part
of a director, officer or employee of the Company.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 Amendment. The Plan may be amended in whole or in part by the Company
at any time by a resolution of the Board of Directors delivered to the
Committee.
8.2 Right to Terminate Plan. The Company reserves the right to reduce or
terminate benefits under the Plan with regard to any or all Participants at any
time by a resolution of its Board of Directors delivered to the Committee;
provided however, that a Beneficiary receiving benefits payable by the Plan
shall continue to receive such benefits, and further provided, that the Company
may not terminate its obligation to pay the death benefit to the Beneficiary of
a Participant who:
(a) already has incurred a Termination of Service after his Early or
Normal Retirement Date, or
(b) is still an active Employee but has attained an Early Retirement
Date.
The amount of the benefit payable in the event clause (b) above is applicable
shall be determined as if the date of the reduction in benefits or termination
of the Plan is a Date Creating an Entitlement. The Committee shall notify any
Participant affected by such reduction or termination of such action and its
effective date within thirty (30) days after it receives notice from the
Company.
ARTICLE IX
MISCELLANEOUS
9.1 No Funding nor Guarantee. This Plan is unfunded. Nothing contained in
the Plan shall be deemed to create a trust or fiduciary relationship of any
kind. The rights of Participants and of any Beneficiary shall be no greater than
the rights of unsecured general creditors of the Company. Nothing contained in
the Plan constitutes a guarantee by the Company that the assets of the Company
will be sufficient to pay any benefit to any person.
9.2 Inalienability of Benefits. The right of any Participant or Beneficiary
to any benefit or payment under the Plan shall not be subject to voluntary or
involuntary transfer, alienation,
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pledge, assignment, garnishment, sequestration or other legal or equitable
process. Any attempt to transfer, alienate, pledge, assign or otherwise dispose
of such right or any attempt to subject such right to attachment, execution,
garnishment, sequestration or other legal or equitable process shall be null and
void.
9.3 No Implied Rights. Neither the establishment of the Plan nor any
modification thereof shall be construed as giving any Participant, Beneficiary
or other person any legal or equitable right unless such right shall be
specifically provided for in the Plan or conferred by affirmative action of the
Company in accordance with the terms and provisions of the Plan.
9.4 Forfeiture for Cause. Notwithstanding any other provisions of this Plan
to the contrary, if the Participant commits one or more Forfeiting Acts during
his employment with the Company, all benefits due the Participant or his
Beneficiary shall be forfeited. This provision shall apply regardless of the
date the Company first learns of the occurrence of a Forfeiting Act.
9.5 Binding Effect. The provisions of the Plan shall be binding on the
Company, the Committee and all persons entitled to benefits under the Plan,
together with their respective heirs, legal representatives and successors in
interest.
9.6 Governing Laws. The Plan shall be construed and administered according
to the laws of the State of Illinois.
9.7 Number and Gender. Wherever appropriate, the singular shall include the
plural, the plural shall include the singular, and the masculine shall include
the feminine or neuter.
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