Exhibit 10b
(i)
Indemnification
Agreement
Indemnification
Agreement (this “ Agreement ”), dated as of
__________, 2009 (the “ Agreement Date ”),
between W.W. Grainger, Inc., an Illinois corporation (the “
Company ”), and ____________________
(“ Indemnitee ”).
WHEREAS,
Indemnitee is a [director and/or officer] of the
Company;
WHEREAS, both
the Company and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors and
officers of public companies in today’s
environment;
WHEREAS, the
Illinois Business Corporation Act of 1983, as amended (the “
Illinois Business Corporation Act ”) and the By-Laws
of the Company (the “ By-Laws ”) expressly
provide that the indemnification and advancement of expenses
provisions set forth therein are not exclusive of any other rights
to which those seeking indemnification or advancement of expenses
may be entitled under, among other things, any
agreement;
WHEREAS, the
Company, consistent with the practice of many other public
companies, is desirous of entering into individual agreements to
provide its directors and officers with contractual rights to
indemnity and advancement of expenses;
WHEREAS, the
Board of Directors of the Company has determined that the inability
of the Company to retain and attract the most capable persons as
directors and officers would be detrimental to the interests of the
Company and that the Company therefore should seek to assure such
persons that indemnification and insurance coverage will be
available in the future; and
WHEREAS, in
recognition of Indemnitee’s need for substantial protection
against personal liability in order to enhance Indemnitee’s
continued service to the Company in an effective manner, and to
provide Indemnitee with specific contractual assurances that
indemnification and advancement of expenses will be available to
Indemnitee (regardless of, among other things, any amendment to or
revocation of the By-Laws or any change in the composition of the
Company’s Board of Directors or acquisition transaction
relating to the Company), the Company wishes to provide in this
Agreement for the indemnification of and the advancing of expenses
to Indemnitee to the fullest extent permitted by law and as set
forth in this Agreement, and, to the extent insurance is
maintained, for the continued coverage of Indemnitee under the
Company’s directors’ and officers’ liability
insurance policies.
NOW,
THEREFORE, in consideration of the premises and of Indemnitee
agreeing to or continuing to serve the Company directly or, at its
request, another enterprise, and intending to be legally bound
hereby, the parties hereto agree as follows:
1.
Certain Definitions . In addition to terms
defined elsewhere herein, the following terms have the following
meanings when used in this Agreement:
(a)
Change in Control : any one or more of the
following events: (i) the consummation of: (1) 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
Securities Exchange Act of 1934, as amended (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 beneficial 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 (2) 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 (ii) approval by
the shareholders of the Company of a liquidation or dissolution of
the Company; or (iii) 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 (iv) 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: (1) 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; (2) 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 (iii) 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 (3) 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
(i)(1) of this definition.
(b)
Claim : any threatened, asserted, pending or
completed civil, criminal, administrative, investigative or other
action, suit, proceeding or inquiry, including any arbitration or
other alternative dispute resolution mechanism, or appeal thereof,
whether instituted by the Company, any governmental agency or any
other party.
(c)
Exempt Person : any one or more of the following: (i)
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 ”); (ii) 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 ”); (iii) 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
”); (iv) 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
”); (v) 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 Internal Revenue Code of
1986, as amended (“ Charitable Organizations ”),
collectively are the beneficiaries of at least 50% of the
actuarially-determined beneficial interests in such estate or
trust; (vi) any Charitable Organization which is established by one
or more Family Members or Existing Family Entities (a “
Family Charitable Organization ”); (vii) 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 (viii) 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 (v)
above, or Family Charitable Organizations.
(d)
Expenses : attorneys’ fees and all other
costs, expenses and obligations (including, without limitation,
experts’ fees, court costs, retainers, transcript fees,
duplicating, printing and binding costs, telecommunications,
postage and courier charges and travel expenses) paid or incurred
in connection with investigating, defending, being a witness in or
participating in (including on appeal), or preparing to
investigate, defend, be a witness in or participate in, any Claim
relating to any Indemnifiable Event.
(e)
Indemnifiable
Amounts : any
and all Expenses, damages, judgments, fines, penalties, excise
taxes assessed with respect to an employee benefit plan and amounts
paid in settlement (including all interest, assessments and other
charges paid or payable in connection with or in respect of such
Expenses, judgments, fines, penalties, excise taxes assessed with
respect to an employee benefit plan or amounts paid in settlement)
arising out of or resulting from any Claim relating to an
Indemnifiable Event.
(f)
Indemnifiable Event : any event, occurrence or
omission, whether taking place before, on or after the date of this
Agreement, related to the fact that Indemnitee is or was a director
and/or officer or fiduciary of the Company, or is or was serving at
the request of the Company as a director, officer, employee,
trustee, agent or fiduciary of another corporation, limited
liability company, partnership, joint venture, employee benefit
plan, trust or other entity or enterprise, or by reason of
anything done or not done by Indemnitee in any such
capacity.
(g)
Independent Legal Counsel : an attorney or firm
of attorneys, selected by Indemnitee and approved by the Company
(which approval shall not be unreasonably delayed, conditioned or
withheld), who is experienced in matters of corporate law and who
shall not have otherwise performed a material amount of
services for the Company or Indemnitee within the last five
years (other than with respect to (i) matters concerning the rights
of Indemnitee under this Agreement, or of other indemnitees under
similar indemnity agreements or (ii) matters for which counsel may
have been retained in the past by the independent directors of the
Company’s Board of Directors).
(h)
Person : any individual, corporation,
partnership, limited liability company, sole proprietorship, trust
or other entity.
(i)
Reviewing Party : any appropriate person or body
consisting of a member or members of the Company’s Board of
Directors or any other person or body appointed by the Board who is
not a party to the particular Claim for which Indemnitee is seeking
indemnification, or Independent Legal Counsel.
(j)
Subsidiary : a 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.
2.
Basic Indemnification Arrangement; Advancement of Expenses
.
(a)
In
the event Indemnitee was, is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim by reason of (or arising
in part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee, or cause Indemnitee to be indemnified, to the fullest
extent permitted by law as soon a
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