GRAINGER W W INC (Form: 10-K, Received: 02/25/2010 11:10:28)

Exhibit 10b (ix)

CHANGE IN CONTROL EMPLOYMENT AGREEMENT

(Senior Executive)

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

Recitals

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

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

Agreement

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

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

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

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

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

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

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

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

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

“ Cause ” -- see Section 3(b).

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

(a) the consummation of:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“ Good Reason ” -- see Section 3(c).

“ including ” means including without limitation.

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

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

“ Policies ” means policies, practices and programs.

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

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

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

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

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

(a) Position and Duties .

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

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

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

(b) Compensation .

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

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

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

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

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

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

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

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

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

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

3. Termination of Employment .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

4. Obligations of the Company upon Termination .

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

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

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

(B) the Prorated Annual Bonus,

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

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

(ii)

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

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

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

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

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

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

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

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

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

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

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

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

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

8. Enforcement .

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

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

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

9. Better After Tax Approach .

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

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

to be reduced the reduction in the specific benefit or amount of benefit shall be determined by the Company in its sole discretion.

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

10. Successors .

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

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

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

11. Miscellaneous .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

	EXECUTIVE:
	___________________________________________________
	INSERT NAME

Exhibit 10b(xvii)

W.W. GRAINGER, INC.

2010 Incentive Plan

Stock Option and Restricted Stock Unit Agreement

This Stock Option and Restricted Stock Unit Agreement (the “Agreement”) is dated as of ____________________ (the “Effective Date”) and is entered into between W.W. Grainger, Inc., an Illinois corporation (the “Company”), and _______________ (the “Executive”).

Pursuant to the W.W. Grainger, Inc. 2010 Incentive Plan (the "Plan") and in consideration of the Executive's agreement to enter into an Unfair Competition Agreement between the Company and the Executive concurrently with this Agreement (the “Unfair Competition Agreement”), the Company desires to grant to the Executive (i) the right and option (“Option”) to purchase shares of the Company’s common stock (“Common Stock”) and (ii) restricted stock units (referred to herein as “RSUs”), and the Executive desires to enter into the Unfair Competition Agreement and accept such Option and RSUs (the “Awards”), on the terms and conditions set forth in this Agreement, the Plan and the Unfair Competition Agreement.

Capitalized terms used but not defined in this Agreement shall have the meanings specified in the Plan.

In consideration of the mutual promises set forth below and in the Unfair Competition Agreement, the parties hereto agree as follows:

ARTICLE I

Grants

Subject to the terms and conditions of this Agreement, the Plan and the Unfair Competition Agreement (the terms of which are hereby incorporated herein by reference) and effective as of the Effective Date, the Company hereby grants to the Executive ______ RSUs and the Option to purchase all or part of _________ shares of Common Stock.

ARTICLE II

Provisions Relating to Option

2.01 Term of Option . The Option shall expire ten years from the Effective Date (e.g., a grant on January 31, 2000 would expire on January 30, 2010), subject to the terms and conditions set forth in this Agreement, the Plan and the Unfair Competition Agreement.

2.02 Exercise Date . Unless otherwise provided in the Plan, the Option shall not be exercisable in whole or in part until the third (3 rd ) anniversary of the Effective Date (such date, the “Option Vesting Date”), provided, however, that the Option shall become immediately exercisable in the event of the death or disability or the retirement of the Executive on or after January 1 of the calendar year immediately following the Effective Date in accordance with the provisions of the applicable retirement plan and Section 2.03 herein. For purposes of this

Agreement, the term “disability” means the Executive’s inability 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 that has lasted for a continuous period of not less than twelve (12) months.

2.03 Retirement . If the retirement of the Executive occurs after the Effective Date but during the same calendar year as the Effective Date then the number of options shall be determined as follows:

(a) a portion of the Option shall become immediately exercisable equal to the product of (x) the number of shares subject to the Option, multiplied by (y) a fraction, the numerator of which is the number of months during the calendar year in which the Effective Date occurs that the Executive was employed by the company and the denominator of which is 12; and

(b) the balance of the Option not immediately exercisable pursuant to subsection (a) above, will be forfeited in full and the Executive shall have no further rights with respect to the Option hereunder.

For purposes of the foregoing calculation, the Executive will be deemed to have been employed by the Company during the month that his employment terminates if, and only if, such termination occurs on or after the fifteenth (15 th ) calendar day of that month.

2.04 Notice . The Executive may exercise the Option by giving appropriate notice of the Executive’s desire to exercise the Option. The notice shall specify the number of shares to be acquired.

2.05 Payment of Purchase Price . The Executive shall at the time of exercise of the Option (except in the case of a cashless exercise) tender to the Company the full purchase price. At the discretion of the Compensation Committee of the Board (the “Committee”), and subject to such rules and regulations as it may adopt, the purchase price may be paid (i) in full in cash, (ii) in Common Stock already owned by the Executive for at least six months and having a fair market value on the date of exercise equal to the full purchase price, (iii) through a combination of cash and Common Stock, or (iv) through a cashless exercise through a broker-dealer approved for this purpose by the Company.

2.06 Minimum Exercise . An Option of 200 shares or less must be exercised in its entirety. An Option for more than 200 shares may be exercised in part for no fewer than 200 shares, or 100-share multiples in excess thereof, unless the remaining shares subject to the Option are less than 200 shares, in which case if any are exercised, the entire balance must be exercised.

ARTICLE III

Provisions Relating to RSUs

3.01 Vesting. If the Executive remains continuously employed by the Company or a Subsidiary until the third (3 rd ) anniversary of the Effective Date (such date, the “RSU Vesting Date”), then 100 percent of the RSUs shall vest on such date, but no such vesting shall occur

before the RSU Vesting Date unless otherwise provided or permitted by the Plan or this Agreement. Vesting of the RSUs means that the RSUs shall be converted into shares of Common Stock (“settled”) on the RSU Vesting Date, unless such settlement is deferred by the Executive as described in Section 3.04 below.

3.02 Effect of Termination of Employment . If the Executive’s employment is terminated by the Executive or by the Company or a Subsidiary prior to the third anniversary of the Effective Date for any reason other than the Executive’s retirement, death or disability, all of the RSUs shall be forfeited. The RSUs shall immediately vest in the event of the death, disability or retirement of the Executive in accordance with the provisions of the applicable retirement plan, and the date of such vesting shall be the RSU Vesting Date for all purposes hereunder. For purposes of this Agreement, the term “disability” means the Executive’s inability 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 that has lasted for a continuous period of not less than twelve (12) months.

3.03 Settlement . Upon the settlement of the RSUs on the RSU Vesting Date and subject to Section 4.02 of this Agreement, shares evidencing the conversion of the RSUs into Common Stock shall, as soon as practicable, be issued electronically and registered in the Executive’s name and in the Executive’s electronic stock plan account which is administered by the Company through a third party provider. If, however, the Executive elects to defer settlement of the RSUs as provided in Section 3.04 of this Agreement, the shares of Common Stock shall be issued as set forth in the Deferral Election Agreement entered into between the Company and the Executive.

3.04 Deferral Election . With the prior approval of the Committee, the Executive may elect to defer to a later date the settlement of the RSUs that would otherwise occur on the RSU Vesting Date. The Committee shall, in its sole discretion, establish the rules and procedures for such settlement deferrals.

3.05 Dividends and Other Distributions . The Executive shall be entitled to receive cash payments equal to any cash dividends and other distributions paid with respect to a number of shares of Common Stock corresponding to the number of RSUs held by the Executive, provided that if any such dividends or distributions are paid in shares, the fair market value of such shares shall be converted into RSUs, and further provided that such RSUs shall be subject to the same forfeiture restrictions and restrictions on transferability as apply to the RSUs with respect to which they relate.

ARTICLE IV

General

4.01 Recoupment of Incentive-Based Compensation . If the Board of Directors determines that the Executive has committed fraud against the Company or has been engaged in any criminal conduct that involves or is related to the Company and such Executive is entitled to receive performance shares, stock options, restricted stock units or cash incentive compensation (“Incentive Compensation”) then the Company shall recover from the Executive such Incentive

Compensation, in whole or in part, for any period of time, as it deems appropriate under the circumstances. The Board shall have sole discretion in determining whether the Executive’s conduct was in compliance with the law or Company policy and the extent to which the Company will seek recovery of the Incentive Compensation notwithstanding any other remedies available to the Company.

4.02 Tax Withholding Obligations . The Executive shall be responsible for any required withholding including, but without limitation, taxes, FICA contributions, or the like under any federal, state or applicable statute, rule, or regulation in connection with the award, deferral, vesting, exercise or settlement (as the case may be) of the Awards. The Company may withhold a number of shares of Common Stock having a fair market value on the date that the amount is to be withheld equal to the amount determined by the Company to be the required statutory minimum withholding; this amount may or may not satisfy the Executive’s calendar year withholding obligation. The Company shall not issue and shall not deliver any of its Common Stock until and unless the proper provision for minimum required withholding has been made.

4.03 Restriction on Transferability . Except to the extent otherwise provided in the Plan, the Awards may not be sold, transferred, pledged, assigned, or otherwise alienated at any time. Any attempt to do so contrary to the provisions hereof shall be null and void.

4.04 Rights as Shareholder . The Executive shall not have voting or any other rights as a shareholder of the Company with respect to the Awards. Upon exercise of the Option and settlement of the RSUs, the Executive will obtain, with respect to the shares of Common Stock received in such exercise or settlement, full voting and other rights as a shareholder of the Company.

4.05 Administration . The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation, and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Executive, the Company, and all other interested persons. No member of the Committee shall be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan or this Agreement.

4.06 Effect on Other Employee Benefit Plans . The value of the Awards granted pursuant to this Agreement and the value of shares of Common Stock received in exercise or settlement (as the case may be) of such Awards shall not be included as compensation, earnings, salaries, or other similar terms used when calculating the Executive’s benefits under any employee benefit plan sponsored by the Company or any Subsidiary except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company’s or any Subsidiary’s employee benefit plans.

4.07 No Employment Rights . The Awards granted pursuant to this Agreement shall not give the Executive any right to remain employed by the Company or a Subsidiary.

4.08 Amendment . This Agreement may be amended only by a writing executed by the Company and the Executive which specifically states that it is amending this Agreement. Notwithstanding the foregoing, this Agreement may be amended solely by the Committee by a writing which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to the Executive, and provided that no such amendment adversely affecting the rights of the Executive hereunder may be made without the Executive’s written consent. Without limiting the foregoing, the Committee reserves the right to change, by written notice to the Executive, the provisions of the Awards or this Agreement in any way it may deem necessary or advisable to carry out the purpose of the grant as a result of any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision, provided that any such change shall be applicable only to Awards which are then subject to restrictions as provided herein.

4.09 Notices . Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its Secretary. Any notice to be given to Executive shall be addressed to Executive at the address listed in the employer’s records or to the Executive’s electronic stock plan account held at the Company’s third party provider. By a notice given pursuant to this Section 4.09, either party may designate a different address for notices. Any notice shall have been deemed given when actually delivered.

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

4.11 Construction . The Options are being issued pursuant to Article 6 (Stock Options) of the Plan and the RSUs are being issued pursuant to Article 8 (Restricted Stock and Restricted Stock Units) of the Plan. Both Awards are subject to the terms of the Plan. The Executive acknowledges receipt of the Plan booklet which contains the entire Plan, and the Executive represents and warrants that he has read the Plan. Additional copies of the Plan are available upon request during normal business hours at the principal executive offices of the Company. To the extent that any provision of this Agreement violates or is inconsistent with an express provision of the Plan, the Plan provision shall govern and any inconsistent provision in this Agreement shall be of no force or effect.

4.12 Miscellaneous .

(a) The Board may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification of the Plan may in any way adversely affect the Executive’s rights under this Agreement without the Executive’s written approval.

(b) This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

(c) All obligations of the Company under the Plan and this Agreement, with respect to the Awards, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

(d) To the extent not preempted by federal law, this Agreement shall be governed by, and construed in accordance with, the laws of the Province of Ontario.

4.13 French Language . The present agreement has been drafted in English at the express wish of the parties. Le présent contrat a été rédigé en anglais à la demande expresse des parties.

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

EXECUTIVE:		W.W. GRAINGER, INC.

___________________________________		By:_______________________________________________
		James T. Ryan Chairman, President and Chief Executive Officer


Date:______________________________		Date:______________________________________________

Illinois		36-1150280
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
100 Grainger Parkway, Lake Forest, Illinois		60045-5201
(Address of principal executive offices)		(Zip Code)
(847) 535-1000
(Registrant’s telephone number including area code)

Page(s)
PART I
Item 1:	BUSINESS		3
		THE COMPANY	3
		UNITED STATES	3-4
		CANADA	4
		OTHER BUSINESSES	4-5
		SEASONALITY	5
		COMPETITION	5
		EMPLOYEES	5
		WEB SITE ACCESS TO COMPANY REPORTS	5
Item 1A :	RISK FACTORS		5-6
Item 1B :	UNRESOLVED STAFF COMMENTS		6
Item 2:	PROPERTIES		6-7
Item 3:	LEGAL PROCEEDINGS		7-8
Item 4:	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		8
Executive Officers			8

PART II
Item 5:	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER
		MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	9-10
Item 6:	SELECTED FINANCIAL DATA		10
Item 7:	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
		CONDITION AND RESULTS OF OPERATIONS	11-21
Item 7A:	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		22
Item 8:	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA		22
Item 9:	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
		ON ACCOUNTING AND FINANCIAL DISCLOSURE	22
Item 9A:	CONTROLS AND PROCEDURES		22
Item 9B:	OTHER INFORMATION		22

PART III
Item 10:	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE		23
Item 11:	EXECUTIVE COMPENSATION		23
Item 12:	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		23
Item 13:	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE		23
Item 14:	PRINCIPAL ACCOUNTING FEES AND SERVICES		23

PART IV
Item 15:	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES		24-25
Signatures			63
Certifications			65-68

Location	Facility and Use (6)	Size in Square Feet (in 000’s)
United States (1)	423 United States branch locations	9,371
United States (2)	14 Distribution Centers	5,821
United States (3)	Other facilities	2,028
Canada (4)	173 Acklands – Grainger facilities	2,401
Other Businesses (5)	Other facilities	1,409
Chicago Area	Headquarters and General Offices	1,327
	Total Square Feet	22,357

Name and Age		Positions and Offices Held and Principal Occupation and Employment During the Past Five Years
Court D. Carruthers (37)		President, Grainger International, a position assumed in 2009, and Senior Vice President of Grainger, a position assumed in 2007. Previously, Mr. Carruthers served as President of Acklands – Grainger Inc., a position assumed in 2006. Prior to assuming the last-mentioned position, he served as Vice President, National Accounts and Sales of Acklands – Grainger Inc., a position assumed in 2002 when he joined that company.
Nancy A. Hobor (63)		Senior Vice President, Communications and Investor Relations, a position assumed in 1999.
John L. Howard (52)		Senior Vice President and General Counsel, a position assumed in 2000.
Gregory S. Irving (51)		Vice President and Controller, a position assumed in 2008. Previously, Mr. Irving served as Vice President, Finance, for Acklands – Grainger Inc. since 2004. After joining Grainger in 1999 he served in various management positions including Vice President, Financial Services and Director, Internal Audit.
Ronald L. Jadin (49)		Senior Vice President and Chief Financial Officer, a position assumed in 2008. Previously, Mr. Jadin served as Vice President and Controller, a position assumed in 2006 after serving as Vice President, Finance. Upon joining Grainger in 1998, he served as Director, Financial Planning and Analysis.
Donald G. Macpherson (42)		Senior Vice President, Global Supply Chain, a position assumed in 2008. Mr. Macpherson joined Grainger in 2008 as Senior Vice President, Supply Chain. Before joining Grainger, he was Partner and Managing Director of the Boston Consulting Group, a global management consulting firm and advisor on business strategy.
Michael A. Pulick (45)		Senior Vice President and President, Grainger U.S., a position assumed in 2008 after serving as Senior Vice President of Customer Service, a position assumed in 2006. After joining Grainger in 1999, Mr. Pulick has held a number of increasingly responsible positions in Grainger’s supplier and product management areas including Vice President, Product Management and Vice President, Merchandising.
James T. Ryan (51)		Chairman of the Board, President, and Chief Executive Officer, positions assumed in 2009, 2006, and 2008, respectively. Mr. Ryan became Chief Operating Officer and was appointed to Grainger’s Board of Directors in 2007. Prior to that, Mr. Ryan served as Group President, a position assumed in 2004. He has served Grainger in increasingly responsible roles since 1980, including Executive Vice President, Marketing, Sales and Service; Vice President, Information Services; President, grainger.com; and President, Grainger Parts.

		Prices
	Quarters	High		Low		Dividends
2009	First	$	81.18	$	59.95	$	0.40
	Second		86.36		68.61		0.46
	Third		91.55		77.67		0.46
	Fourth		102.54		85.24		0.46
	Year	$	102.54	$	59.95	$	1.78
2008	First	$	87.92	$	69.00	$	0.35
	Second		93.12		75.94		0.40
	Third		93.99		79.66		0.40
	Fourth		86.90		58.86		0.40
	Year	$	93.99	$	58.86	$	1.55

Period	Total Number of Shares Purchased (A)		Average Price Paid per Share (B)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (C)		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
Oct. 1 – Oct. 31		747,603	$	95.19		747,603		4,935,977	shares

Nov. 1 – Nov. 30		1,085,665	$	95.49		1,085,665		3,850,312	shares

Dec. 1 – Dec. 31		769,840	$	98.04		769,840		3,080,472	shares
Total		2,603,108	$	96.58		2,603,108

	December 31,
	2004		2005		2006		2007		2008		2009
W.W. Grainger, Inc.	$	100	$	108	$	108	$	138	$	126	$	159
Dow Jones US Industrial Suppliers Total Stock Market Index		100		113		117		134		104		131
S&P 500 Stock Index		100		105		121		128		81		102

	For the Years Ended December 31,
	As a Percent of Net Sales									Percent Increase/(Decrease) from Prior Year
	2009			2008			2007			2009			2008
Net sales		100.0	%		100.0	%		100.0	%		(9.2	)%		6.7	%
Cost of merchandise sold		58.2			59.0			59.4			(10.4	)		6.0
Gross profit		41.8			41.0			40.6			(7.5	)		7.9
Operating expenses		31.1			29.6			30.1			(4.6	)		4.8
Operating earnings		10.7			11.4			10.5			(15.0	)		16.7
Other income (expense)		0.7			(0.1	)		0.2			(545.5	)		(184.3	)
Income taxes		4.5			4.4			4.1			(7.2	)		13.8
Noncontrolling interest		0.0			0.0			0.0			–			–
Net earnings attributable to W.W. Grainger, Inc.		6.9	%		6.9	%		6.6	%		(9.4	)%		13.1	%

		Daily Sales Increase 2008 vs. 2007
Phase 1 (Atlanta, Denver, Seattle)		7%
Phase 2 (Four markets in Southern California)		5%
Phase 3 (Houston, St. Louis, Tampa)		10%
Phase 4 (Baltimore, Cincinnati, Kansas City, Miami, Philadelphia, Washington, D.C.)		2%
Phase 5 (Dallas, Detroit, New York, Phoenix)		3%
Phase 6 (Chicago, Minneapolis, Pittsburgh, San Francisco)		6%

	Payments Due by Period
	Total Amounts Committed		Less than 1 Year		1 – 3 Years		4 – 5 Years		More than 5 Years
Long-term debt obligations	$	490,628	$	53,128	$	437,500	$	–	$	–
Interest on long-term debt		10,214		4,668		5,453		93		–
Operating lease obligations		216,924		42,832		69,741		52,900		51,451
Purchase obligations:
Uncompleted additions to property, buildings and equipment		42,025		24,215		17,810		–		–
Commitments to purchase inventory		212,700		212,694		6		–		–
Other purchase obligations		135,694		64,836		35,659		31,146		4,053
Other liabilities		191,346		10,726		17,264		20,343		143,013
Total	$	1,299,531	$	413,099	$	583,433	$	104,482	$	198,517

	1 Percentage Point
	Increase		(Decrease)
Effect on total of service and interest cost	$	5,278	$	(4,100	)
Effect on accumulated postretirement benefit obligation		44,290		(34,925	)

Page(s)
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING	27

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	28-29

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF EARNINGS	30

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS	31

CONSOLIDATED BALANCE SHEETS	32-33

CONSOLIDATED STATEMENTS OF CASH FLOWS	34-35

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY	36-37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	38-62

EXHIBIT 23 – CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	64

	As of December 31,
	2009		2008		2007
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	459,871	$	396,290	$	113,437
Marketable securities at cost, which approximates market value		–		–		20,074
Accounts receivable (less allowances for doubtful accounts of $25,850, $26,481 and $25,830, respectively)		624,910		589,416		602,650
Inventories		889,679		1,009,932		946,327
Prepaid expenses and other assets		88,364		73,359		61,666
Deferred income taxes		42,023		52,556		56,663
Prepaid income taxes		26,668		22,556		–
Total current assets		2,131,515		2,144,109		1,800,817

PROPERTY, BUILDINGS AND EQUIPMENT
Land		237,867		192,916		178,321
Buildings, structures and improvements		1,078,439		1,048,440		977,837
Furniture, fixtures, machinery and equipment		950,187		890,507		848,118
		2,266,493		2,131,863		2,004,276
Less accumulated depreciation and amortization		1,313,222		1,201,552		1,125,931
Property, buildings and equipment – net		953,271		930,311		878,345

DEFERRED INCOME TAXES		79,472		97,442		54,658

INVESTMENTS IN UNCONSOLIDATED ENTITIES		3,508		20,830		14,759

GOODWILL		351,182		213,159		233,028

OTHER ASSETS AND INTANGIBLES – NET		207,384		109,566		112,421

TOTAL ASSETS	$	3,726,332	$	3,515,417	$	3,094,028

	W.W. Grainger, Inc. Shareholders’ Equity
	Common Stock		Additional Contributed Capital			Retained Earnings			Accumulated Other Comprehensive Earnings (Losses)			Treasury Stock			Noncontrolling Interest
Balance at December 31, 2008	$	54,830	$	564,728		$	3,670,726		$	(38,525	)	$	(2,217,954	)	$	–
Exercise of stock options		–		(15,614	)		–			–			106,255			96
Tax benefits on stock-based compensation awards		–		21,924			–			–			–			–
Stock option expense		–		16,100			–			–			–			98
Amortization of other stock- based compensation awards		–		24,307			–			–			–			–
Vesting of restricted stock		–		–			–			–			(926	)		–
Settlement of other stock-based compensation awards		–		(15,087	)		–			–			8,525			–
Purchase of treasury stock		–		–			–			–			(362,250	)		–
Net earnings		–		–			430,466			–			–			306
Other comprehensive earnings		–		–			–			50,899			–			(1,457	)
Cash dividends paid ($1.78 per share)		–		–			(134,684	)		–			–			–
Change in subsidiary ownership		–		–			–			–			–			64,436
Balance at December 31, 2009	$	54,830	$	596,358		$	3,966,508		$	12,374		$	(2,466,350	)	$	63,479

Buildings, structures and improvements	10 to 30 years
Furniture, fixtures, machinery and equipment	3 to 10 years

	2009		2008		2007		2006		2005
	(In thousands of dollars, except for per share amounts)
Net sales	$	6,221,991	$	6,850,032	$	6,418,014	$	5,883,654	$	5,526,636
Net earnings attributable to W.W. Grainger, Inc.		430,466		475,355		420,120		383,399		346,324
Net earnings per basic share*		5.70		6.07		5.01		4.36		3.87
Net earnings per diluted share*		5.62		5.97		4.91		4.24		3.78
Total assets		3,726,332		3,515,417		3,094,028		3,046,088		3,107,921
Long-term debt (less current maturities)		437,500		488,228		4,895		4,895		4,895
Cash dividends paid per share	$	1.780	$	1.550	$	1.340	$	1.110	$	0.920

	For the Years Ended December 31,
	2009		2008		2007
Land, buildings, structures and improvements	$	67,917	$	107,688	$	100,380
Furniture, fixtures, machinery and equipment		63,667		76,163		87,389
Subtotal		131,584		183,851		187,769
Capitalized software		8,367		12,297		8,556
Total	$	139,951	$	196,148	$	196,325

	For the years ended December 31,
	2009			2008			2007
Risk-free interest rate		2.4	%		3.2	%		4.6	%
Expected life	6 years			6 years			6 years
Expected volatility		28.8	%		25.2	%		24.3	%
Expected dividend yield		2.3	%		1.8	%		1.7	%


							Grainger
							Industrial
							Supply
	MonotaRO			MRO Korea			India
	Co., Ltd.			Co., Ltd.			Private Ltd.			Total
Balance at December 31, 2006	$	8,492		$	–		$	–		$	8,492
Cash investments		–			2,138			–			2,138
Equity earnings		1,401			615			–			2,016
Reinstatement to equity method of accounting		–			1,372			–			1,372
Foreign currency gain		620			121			–			741
Balance at December 31, 2007		10,513			4,246			–			14,759
Cash investments		–			–			6,487			6,487
Equity earnings (losses)		4,303			(205	)		(456	)		3,642
Write-off		–			–			(6,031	)		(6,031	)
Foreign currency gain (loss)		3,008			(1,035	)		–			1,973
Balance at December 31, 2008		17,824			3,006			–			20,830
Cash investments		4,013			–			1,194			5,207
Equity earnings		1,249			248			–			1,497
Dividends		(878	)		–			–			(878	)
Foreign currency (loss) gain		(468	)		254			–			(214	)
Gain (loss) on previously held equity interest		44,275			–			(77	)		44,198
Investment eliminated in consolidation		(66,015	)		–			(1,117	)		(67,132	)
Balance at December 31, 2009	$	–		$	3,508		$	–		$	3,508

Ownership interest at December 31, 200 9		52.9	%		49.0	%		100.0	%

Year	Payment Amount
2010	$	50,728
2011		50,900
2012		387,500
2013		-
2014 and after		1,500

	2010
Amortization of prior service credit	$	(494	)
Amortization of transition asset		(143	)
Amortization of unrecognized losses		3,954
Estimated amount to be amortized from AOCE into net periodic postretirement benefit costs	$	3,317

	Level 1		Level 2		Level 3		Total
Fair value of invested assets
Registered investment companies
Fidelity Spartan U.S. Equity Index Fund	$	37,624	$	–	$	–	$	37,624
Vanguard 500 Index Fund		37,691		–		–		37,691
Total Assets	$	75,315	$	–	$	–	$	75,315

	Estimated gross benefit payments		Estimated Medicare subsidy receipts
2010	$	4,182	$	(338	)
2011		4,928		(402	)
2012		5,749		(480	)
2013		6,798		(565	)
2014		8,012		(666	)
2015 – 2019		63,983		(5,596	)

	Benefit Payments
2010	$	3,081
2011		648
2012		855
2013		1,204
2014		1,068
2015 – 2019		5,254

	Benefit Payments
2010	$	1,196
2011		1,161
2012		1,154
2013		1,154
2014		1,075
2015 – 2019		4,444

	Future Minimum Lease Payments
2010	$	42,832
2011		37,187
2012		32,554
2013		28,640
2014		24,260
Thereafter		51,451
Total minimum payments required		216,924
Less amounts representing sublease income		(568	)
	$	216,356

	Shares Subject to Option			Weighted Average Price Per Share		Options Exercisable
Outstanding at January 1, 2007		8,454,869		$	53.00		4,627,249
Granted		740,220		$	82.21
Exercised		(2,430,523	)	$	47.74
Canceled or expired		(236,580	)	$	67.29
Outstanding at December 31, 2007		6,527,986		$	58.19		3,447,856
Granted		883,000		$	84.58
Exercised		(953,199	)	$	50.07
Canceled or expired		(103,920	)	$	73.14
Outstanding at December 31, 2008		6,353,867		$	62.95		3,633,612
Granted		944,470		$	79.69
Exercised		(1,689,581	)	$	57.18
Canceled or expired		(134,160	)	$	78.98
Outstanding at December 31, 2009		5,474,596		$	68.07		3,141,996

		Options Outstanding							Options Exercisable
				Weighted Average							Weighted Average
Range of Exercise Prices		Number		Remaining Contractual Life	Exercise Price		Intrinsic Value (000’s)		Number		Remaining Contractual Life	Exercise Price		Intrinsic Value (000’s)
	$37.50 - $44.05		361,165	1.14 Years	$	40.25	$	20,434		361,165	1.14 Years	$	40.25	$	20,434
	$45.50 - $54.85		1,763,239	3.91 Years	$	51.05		80,720		1,762,179	3.91 Years	$	51.05		80,669
	$56.03 - $70.67		88,422	5.11 Years	$	61.77		3,101		88,422	5.11 Years	$	61.77		3,101
	$71.21 - $93.05		3,261,770	7.85 Years	$	80.52		53,199		930,230	6.48 Years	$	76.56		18,656
			5,474,596	6.09 Years	$	68.07	$	157,454		3,141,996	4.39 Years	$	57.66	$	122,860

	2009
	Segment Totals		Unallocated		Consolidated Total
Other significant items:
Depreciation and amortization	$	135,183	$	12,348	$	147,531
Additions to long-lived assets	$	369,723	$	2,618	$	372,341

			Revenues		Long-lived Assets
Geographic information:
United States			$	5,362,729	$	1,080,053
Canada				653,984		213,962
Other foreign countries				205,278		177,503
			$	6,221,991	$	1,471,518

	2009 Quarter Ended
	March 31		June 30		September 30		December 31		Total
Net sales	$	1,465,248	$	1,533,263	$	1,589,665	$	1,633,815	$	6,221,991
Cost of merchandise sold		835,833		908,295		929,720		949,617		3,623,465
Gross profit		629,415		624,968		659,945		684,198		2,598,526
Warehousing, marketing and administrative expenses		470,201		471,039		473,225		518,837		1,933,302
Operating earnings		159,214		153,929		186,720		165,361		665,224
Net earnings attributable to W.W. Grainger, Inc.		96,378		92,466		144,564		97,058		430,466
Earnings per share - basic		1.27		1.23		1.91		1.29		5.70
Earnings per share - diluted	$	1.25	$	1.21	$	1.88	$	1.27	$	5.62

	2008 Quarter Ended
	March 31		June 30		September 30		December 31		Total
Net sales	$	1,661,046	$	1,756,856	$	1,839,475	$	1,592,655	$	6,850,032
Cost of merchandise sold		981,112		1,050,979		1,097,127		912,592		4,041,810
Gross profit		679,934		705,877		742,348		680,063		2,808,222
Warehousing, marketing and administrative expenses		494,111		521,042		510,891		499,506		2,025,550
Operating earnings		185,823		184,835		231,457		180,557		782,672
Net earnings attributable to W.W. Grainger, Inc.		114,238		113,179		140,023		107,915		475,355
Earnings per share - basic		1.44		1.44		1.80		1.39		6.07
Earnings per share - diluted	$	1.41	$	1.42	$	1.77	$	1.37	$	5.97

W.W. GRAINGER, INC.

By:	/s/ James T. Ryan
	James T. Ryan Chairman, President and Chief Executive Officer


/s/ James T. Ryan		/s/ William K. Hall
James T. Ryan		William K. Hall
Chairman, President and Chief Executive Officer		Director
(Principal Executive Officer and Director)
		/s/ Stuart L. Levenick
/s/ Ronald L. Jadin		Stuart L. Levenick
Ronald L. Jadin		Director
Senior Vice President
and Chief Financial Officer		/s/ John W. McCarter, Jr.
(Principal Financial Officer)		John W. McCarter, Jr.
		Director
/s/ Gregory S. Irving
Gregory S. Irving		/s/ Neil S. Novich
Vice President and Controller		Neil S. Novich
(Principal Accounting Officer)		Director

/s/ Richard L. Keyser		/s/ Michael J. Roberts
Richard L. Keyser		Michael J. Roberts
Chairman Emeritus		Director


/s/ Brian P. Anderson		/s/ Gary L. Rogers
Brian P. Anderson		Gary L. Rogers
Director		Director

/s/ Wilbur H. Gantz		/s/ James D. Slavik
Wilbur H. Gantz		James D. Slavik
Director		Director

/s/ V. Ann Hailey		/s/ Harold B. Smith
V. Ann Hailey		Harold B. Smith
Director		Director

1.	I have reviewed this Annual Report on Form 10-K of W.W. Grainger, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ J. T. Ryan
Name:	J. T. Ryan
Title:	Chairman, President and Chief Executive Officer

By:	/s/ R. L. Jadin
Name:	R. L. Jadin
Title:	Senior Vice President and Chief Financial Officer

/s/ J. T. Ryan
J. T. Ryan
Chairman, President and Chief Executive Oficer

February 25, 2010

/s/ R. L. Jadin
R. L. Jadin
Senior Vice President and Chief Financial Officer

February 25, 2010