W.W. Grainger (GWW)

Provisions Relating to Both Awards

4.01     Agreement to Serve. The Employee agrees to remain in the employ of the Company or its subsidiaries for a period of at least one year from the Effective Date, subject to the right of the Company to terminate such employment, and except in the case of an event which, under the provisions of the Plan, accelerates vesting of the Awards.

4.02       Tax Withholding Obligations. The Employee shall be required to deposit with the Company an amount of cash equal to the amount determined by the Company to be required with respect to any withholding taxes, FICA contributions, or the like under any federal, state, or local statute, ordinance, rule, or regulation in connection with the award, deferral, vesting, exercise or settlement (as the case may be) of the Awards. Alternatively, the Company may, at its sole election, withhold the required amounts from the Employee’s pay during the pay periods next following the date on which any such applicable tax liability otherwise arises. The Company may withhold, and the Committee may in its discretion permit the Employee to elect (subject to such conditions as the Committee shall require) to have the Company withhold, a number of shares of Common Stock otherwise deliverable having a fair market value sufficient to satisfy the required statutory minimum withholding. The Company shall not deliver any of the shares of Common Stock until and unless the Employee has made the deposit required herein or proper provision for required withholding has been made.

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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 Employee 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 Employee 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 Employee, 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 Employee’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 Employee 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 Employee 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 Employee, and provided that no such amendment adversely affecting the rights of the Employee hereunder may be made without the Employee’s written consent. Without limiting the foregoing, the Committee reserves the right to change, by written notice to the Employee, 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 Employee shall be addressed to Employee at the address listed in the employer’s records. 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.

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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 Employee acknowledges receipt of the Plan booklet which contains the entire Plan, and the Employee 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.

(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 Employee’s rights under this Agreement without the Employee’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 State of Illinois.

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

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