Exhibit 10(d)(v) to the Annual Report
on Form 10-K of W.W. Grainger, Inc.
for the year ended December 31, 1998
W.W. GRAINGER, INC.
EXECUTIVE DEATH BENEFIT PLAN
(Conformed Copy Including Amendments Effective May 8, 1995, December 9, 1998
and March 3, 1999)
ARTICLE 1
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 (which term shall be
deemed to include such equivalent incentive bonus programs as
the Committee may recognize for purposes of this Plan) 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).
2.3 "Committee" shall mean the Compensation Committee of
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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.
Notwithstanding, if a Participant's annual salary and/or target bonus
under the Company's Management Incentive Program is significantly
decreased while such Participant continues to be employed in good
standing by the Company, the Committee may, in its sole discretion,
define Date Creating an Entitlement for that Participant as the day
immediately prior to the effective date of such decrease.
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).
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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.
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 as defined under the Plan on the Date
Creating an Entitlement, 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
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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 as defined under the Plan on
the Date Creating an Entitlement, determined without
regard to Section 2.1(b)."
(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.
4.5 Benefit Upon Change in Control. Upon a Change in Control
(as defined in Section 2.1(e) of the W.W. Grainger, Inc. 1990 Long Term
Stock Incentive Plan, as may be amended from time to time), for each
Participant who then has reached his Early Retirement Date or Normal
Retirement Date, the Company immediately will pay to such Participant a
lump sum benefit equal to the present value (determined using 120% of
the applicable federal rate as defined under Section 1274 of the
Internal Revenue Code and published periodically by the Internal
Revenue Service) of the death benefit that would have been payable on
behalf of such Participant under Section 4.3 if such Participant had
died at age eighty (80). In determining whether a Participant has
reached his Early Re-
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tirement Date or Normal Retirement Date for purposes of this Section
4.5, the Participant's age and Years of Service each shall be deemed
increased by three (3) years. Following payment of a benefit under this
Section 4.5, no additional benefits shall be payable to or on behalf of
a Participant under this Plan.
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 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,
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(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,
(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;
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(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 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; provided, however, that no amendment of the
Plan adopted on or after the date of a Change in Control shall (i)
adversely affect the eligibility of any Participant to continue
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to qualify as a Participant or (ii) eliminate, reduce or otherwise
adversely affect the amount or terms of benefits payable to or on
behalf of any Participant.
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 before the date of a Change in Control by a
resolution of the Board of Directors delivered to the Committee;
provided however, that both before and after a Change in Control, a
Beneficiary receiving benefits payable by the Plan shall continue to
receive such benefits, and further provided, that at any time before
the date of a Change in Control, 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
of termination or such action and its effective date within thirty (30)
days after it receives notice from the Company. Notwithstanding the
foregoing, on and after the date of a Change in Control, the provisions
of Section 4.5 shall be applicable, rather than the foregoing
provisions of this Section 8.2, with respect to participants who are
then living.
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, 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
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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. Whenever 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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