Ehibit 10(a) of Form 10Q W.W. Grainger, Inc. 03/31/2001

EX-10 3 exhibit10b.htm EXHIBIT 10(B) 1990 L-T STOCK INCENTIVE PLAN Ehibit 10(a) of Form 10Q W.W. Grainger, Inc. 03/31/2001 - www.grainger.com


                                           Exhibit 10(b) to the quarterly report
                                           on Form 10-Q of W.W. Grainger, Inc.
                                           for the quarter ended March 31, 2001




                               W.W. GRAINGER, INC.




                       1990 LONG TERM STOCK INCENTIVE PLAN

                            AS AMENDED APRIL 25, 2001



















                               W.W. Grainger, Inc.
                              100 Grainger Parkway
                        Lake Forest, Illinois 60045-5201
                                 (847) 535-1000

                               W.W. GRAINGER, INC.
                       1990 LONG TERM STOCK INCENTIVE PLAN
                            AS AMENDED APRIL 25, 2001


Section 1.  Objective.

The objective of the W.W. Grainger, Inc. 1990 Long Term Stock Incentive Plan
(the "Plan") is to attract and retain the best available executive personnel and
other key employees to be responsible for the management, growth and success of
the business, and to provide an incentive for such employees to exert their best
efforts on behalf of the Company and its shareholders.

Section 2.  Definitions.

     2.1. General Definitions. The following words and phrases, when used
     herein, shall have the following meanings:

          (a) "Act" - The Securities Exchange Act of 1934, as amended.

          (b) "Agreement" - The document which evidences the grant of any Award
          under the Plan and which sets forth the terms, conditions, and
          limitations relating to such Award.

          (c) "Award" - The grant of any stock option, stock appreciation right,
          share of restricted stock, share of phantom stock, other stock-based
          award, or any combination thereof.

          (d) "Board" - The Board of Directors of W.W. Grainger, Inc.

          (e) "Change in Control" means any one or more of the following events:

               (i) approval by the shareholders of the Company of:

                    (A) 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 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;

                    (B) 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

                    (C) a liquidation or dissolution of the Company;

               provided, however, that if the consummation of an event described
               in this paragraph (i) (a "Transaction") is subject to an Other
               Party Approval Requirement (as defined below), the approval of
               such Transaction by the shareholders of the Company shall not be
               deemed a Change in Control until the first date on which such
               Other Party Approval Requirement has been satisfied. For this
               purpose, "Other Party Approval Requirement" means a requirement
               expressly set forth in a Transaction Agreement (as defined below)
               between the Company and another Person to the effect that such
               Person shall obtain the approval of one or more elements of the
               Transaction by the stockholders, members, partners, or other
               holders of equity interests of such Person (or of a parent of
               such Person) prior to the consummation of such Transaction in
               order to comply with the mandatory provisions of (x) the law of
               the jurisdiction of the incorporation or organization of such
               Person (or its parent) or (y) the articles of incorporation or
               other charter or organizational documents of such Person (or its
               parent) that are applicable to such Transaction. For this
               purpose, "Transaction Agreement" means a written agreement that
               sets forth the terms and conditions of the Transaction;

               (ii) the following individuals cease for any reason to constitute
               a majority of the directors of the Company then serving:
               individuals who, on the Effective Date, constitute the Board and
               any subsequently appointed or elected director of the Company
               (other than a director whose initial assumption of office is in
               connection with an actual or threatened election contest,
               including a consent solicitation, relating to the election or
               removal of one or more directors 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 Effective
               Date; or

               (iii) 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 (as such term is defined below),
               the Company, any Subsidiary, any employee benefit plan of the
               Company or a Subsidiary) of beneficial ownership (within the
               meaning of Rule 13d-3 under the Act) of 20% or more of either the
               Company's then-outstanding Common Stock or Voting Power; provided
               that:

                    (A) 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;

                    (B) no Change in Control shall be deemed to have occurred
                    solely by reason of any such acquisition if both (x) after
                    giving effect to such 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 (and not excluded
                    from) paragraph (ii) 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

                    (C) no Change in Control shall be deemed to have occurred
                    solely by reason of 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)(A) above.

          Notwithstanding the occurrence of any of the events specified in
          paragraphs (i), (ii) or (iii) of this definition, no Change in Control
          shall occur with respect to any Participant if (x) the event which
          otherwise would be a Change in Control (or the transaction which
          resulted in such event) was initiated by such Participant, or was
          discussed by him with any third party, without the approval of the
          Board with respect to such Participant's initiation or discussion, as
          applicable, or (y) such Participant is, by written agreement, a
          participant on his own behalf in a transaction in which the persons
          (or their affiliates) with whom such Participant has the written
          agreement cause the Change in Control to occur and, pursuant to the
          written agreement, such Participant has an equity interest (or a right
          to acquire such equity interest) in the resulting entity.

          (f) "Code" - The Internal Revenue Code of 1986, as amended, including
          the regulations promulgated pursuant thereto.

          (g) "Committee" - The Compensation Committee of the Board, which shall
          consist of two or more members. The members of the Committee shall be
          "non-employee directors" within the meaning of Rule 16b-3, as the same
          may be amended or supplemented from time to time, as promulgated under
          the Act.

          (h) "Common Stock" - The present shares of common stock of the
          Company, and any shares into which such shares are converted, changed
          or reclassified.

         (i)  "Company" - W.W. Grainger, Inc., an Illinois corporation.

         (j)  "Effective Date" - December 9, 1998.

         (k)  "Employee" - Any person designated as an employee of the Company
               or a Subsidiary on the payroll records thereof.

         (l)  "Exempt Person" means any one or more of the following:

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

               (ii) any descendant of E.O. Slavik (deceased) or any spouse,
               widow or widower of 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 Effective 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 Effective 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 Effective 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
               Effective Date, Mark IV Capital, Inc., and Mountain Capital
               Corporation (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 Effective
               Date or any trust established after the Effective 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;

               (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
               (v) 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.

          (m) "Fair Market Value" - The fair market value of Common Stock on a
          particular day shall be the closing price of the Common Stock on the
          New York Stock Exchange, or any other national stock exchange on which
          the Common Stock is traded, on the last preceding trading day on which
          such Common Stock was traded.

          (n) "Option" - The right to purchase Common Stock at a stated price
          for a specified period of time. For purposes of the Plan, the option
          is a non-qualified stock option.

          (o) "Other Stock Based Award" - An award under Section 9 that is
          valued in whole or in part by reference to, or is otherwise based on,
          the Common Stock.

          (p) "Participant" - Any Employee designated by the Committee to
          participate in the Plan.

          (q) "Person" - Any individual, corporation, partnership, limited
          liability company, sole proprietorship, trust or other entity.

          (r) "Period of Restriction" - The period during which Shares of
          Restricted Stock or Phantom Stock rights are subject to forfeiture or
          restrictions on transfer pursuant to Section 8 of the Plan.

          (s) "Phantom Stock" - A right to receive payment from the Company in
          cash, stock, or in combination thereof, in an amount determined by the
          Fair Market Value.

          (t) "Restricted Stock" - Shares granted to a Participant which are
          subject to restrictions on transferability pursuant to Section 8 of
          the Plan.

          (u) "Shares" - Shares of Common Stock.

          (v) "Stock Appreciation Right" or "SAR" - The right to receive a
          payment from the Company in cash, Common Stock, or in combination
          thereof, equal to the excess of the Fair Market Value of a share of
          Common Stock on the date of exercise over a specified price fixed by
          the Committee, but subject to such maximum amounts as the Committee
          may impose.

          (w) "Subsidiary" - Any corporation, partnership, joint venture,
          limited liability company, or other entity in which the Company
          directly or indirectly owns securities representing a majority of the
          aggregate voting power.

2.2. Other Definitions. In addition to the above definitions, certain words and
phrases used in the Plan and any Agreement may be defined elsewhere in the Plan
or in such Agreement.

Section 3.  Common Stock.

3.1. Number of Shares. Subject to the provisions of Section 3.3, the number of
Shares which may be issued or sold or for which Options or Stock Appreciation
Rights may be granted under the Plan may not exceed 8,056,828 Shares.*
Notwithstanding the foregoing, the total number of Shares with respect to which
Options or Stock Appreciation Rights may be granted to any Participant shall not
exceed 800,000 Shares **(proportionately adjusted pursuant to Section 3.3)
in any calendar year.

3.2 Re-usage. If an Option or SAR expires or is terminated, surrendered, or
cancelled without having been fully exercised, if Restricted Stock is forfeited,
if Shares otherwise deliverable upon (i) exercise of Options, (ii) exercise of
SARs or (iii) vesting of Restricted Stock, regardless of when the Options, SARs
or Restricted Stock shall have been granted, are not delivered by reason of
payments of the Option exercise price pursuant to Section 6.5(b) hereunder or
withholdings of Shares in satisfaction of tax obligations pursuant Section 13.3
hereunder, or if any other grant results in Shares not being delivered, the
Shares covered by such Option, SAR, grant of Restricted Stock or other

--------

*As adjusted to reflect (i) the number of shares remaining available for grants
under the Company's Restated 1975 Non-Qualified Stock Option Plan, (ii) the
Company's 1991 two-for-one stock split and (iii) the Company's 1998 two-for-one
stock split.


**As adjusted to reflect the Company's 1998 two-for-one stock split.

grants, or not so delivered, as the case may be, shall again be available for
Awards under the Plan.

3.3. Adjustments. In the event of any change in the outstanding Common Stock by
reason of a stock split, stock dividend, combination, reclassification or
exchange of Shares, recapitalization, merger, consolidation or other similar
event, the number of SARs and the number of Shares available for Options, grants
of Restricted Stock, and Other Stock Based Awards and the number of Shares
subject to outstanding Options, SARs, grants of Restricted Stock, and Other
Stock Based Awards, and the price thereof, and the Fair Market Value, as
applicable, shall be appropriately adjusted by the Committee in its sole
discretion and any such adjustment shall be binding and conclusive on all
parties. Any fractional Shares resulting from any such adjustment shall be
disregarded.

Section 4.  Eligibility and Participation.

Participants in the Plan shall be those key employees selected by the Committee
to participate in the Plan who hold positions of responsibility and whose
participation in the Plan the Committee or management of the Company determines
to be in the best interests of the Company.

Section 5.  Administration.

5.1. Committee. The Plan shall be administered by the Committee. The members of
the Committee shall be appointed by and shall serve at the pleasure of the
Board, which may from time to time change the Committee's membership.

5.2.  Authority.  The Committee shall have the sole and complete authority to:

          (a) determine the individuals to whom Awards are granted, the type and
          amounts of awards to be granted and the time of all such grants;

          (b) determine the terms, conditions and provisions of, and
          restrictions relating to, each Award granted;

          (c) interpret and construe the Plan and all Agreements;

          (d) prescribe, amend and rescind rules and regulations relating to the
          Plan;

          (e) determine the content and form of all Agreements;

          (f) determine all questions relating to Awards under the Plan;

          (g) maintain accounts, records and ledgers relating to Awards;

          (h) maintain records concerning its decisions and proceedings;

          (i) employ agents, attorneys, accountants or other persons for such
          purposes as the Committee considers necessary or desirable;

          (j) do and perform all acts which it may deem necessary or appropriate
          for the administration of the Plan and to carry out the objectives of
          the Plan.

5.3. Determinations. All determinations, interpretations, or other actions made
or taken by the Committee pursuant to the provisions of the Plan shall be final,
binding, and conclusive for all purposes and upon all persons.

5.4. Delegation. Except as required by Rule 16b-3 promulgated under the Act (and
any successor to such Rule) with respect to the grant of Awards to Participants
who are subject to Section 16 of the Act, the Committee may delegate to
appropriate senior officers of the Company its duties under the Plan pursuant to
such conditions and limitations as the Committee may establish.

Section 6.  Stock Options.

6.1. Type of Option. It is intended that only non-qualified stock options may be
granted by the Committee under this section of the Plan.

6.2. Grant of Option. An Option may be granted to Participants at such time or
times as shall be determined by the Committee. Each Option shall be evidenced by
an Option Agreement that shall specify the exercise price, the duration of the
Option, the number of Shares to which the Option applies, and such other terms
and conditions not inconsistent with the Plan as the Committee shall determine.

6.3. Option Price. The per share option price shall be at least 100% of the Fair
Market Value at the time the Option is granted.

6.4. Exercise of Options. Options awarded under the Plan shall be exercisable at
such times and shall be subject to such restrictions and conditions, including
the performance of a minimum period of service after the grant, as the Committee
may impose, which need not be uniform for all participants; provided, however,
that no Option shall be exercisable for more than 10 years after the date on
which it is granted.

6.5. Payment. Options shall be exercised by the delivery of a written notice to
the Company, setting forth the number of Shares with respect to which the Option
is to be exercised, and accompanied by full payment for the Shares. Upon the
exercise of any Option, the exercise price shall be payable by any one or
combination of the following means:

          (a) cash or its equivalent,

          (b) with the prior approval of the Committee, delivery of Shares
          already owned by the participant and valued at the Fair Market Value
          thereof at the time of exercise,

          (c) with the prior approval of the Committee, a cashless exercise
          through a broker-dealer approved for this purpose by the Company.

6.6. Rights as a Shareholder. Until the exercise of an Option and the issuance
of the Shares in respect thereof, a Participant shall have no rights as a
Shareholder with respect to the Shares covered by such Option.

Section 7.  Stock Appreciation Rights.

7.1. Grant of Stock Appreciation Rights. Stock Appreciation Rights may be
granted to Participants at such time or times as shall be determined by the
Committee and shall be subject to such terms and conditions as the Committee may
decide. A grant of an SAR shall be made pursuant to a written Agreement
containing such provisions not inconsistent with the Plan as the Committee shall
approve.

7.2. Exercise of SARs. SARs may be exercised at such times and subject to such
conditions, including the performance of a minimum period of service, as the
Committee shall impose. SARs which are granted in tandem with an Option may only
be exercised upon the surrender of the right to exercise an equivalent number of
Shares under the related Option and may be exercised only with respect to the
Shares for which the related Option is then exercisable. Notwithstanding any
other provision of the Plan, the Committee may impose conditions on the exercise
of an SAR, including, without limitation, the right of the Committee to limit
the time of exercise to specified periods.

7.3. Payment of SAR Amount. Upon exercise of an SAR, the Participant shall be
entitled to receive payment of an amount determined by multiplying:

          (a) any increase in the Fair Market Value of a Share at the date of
          exercise over the Fair Market Value of a Share at the date of grant,
          by

          (b) the number of Shares with respect to which the SAR is exercised;

provided, however, that at the time of grant, the Committee may establish, in
its sole discretion, a maximum amount per Share which will be payable upon
exercise of an SAR.

7.4. Method of Payment. Subject to the discretion of the Committee, which may be
exercised at the time of grant, the time of payment, or any other time, payment
of an SAR may be made in cash, Shares or any combination thereof.


Section 8.  Restricted Stock or Phantom Stock.

8.1. Grant of Restricted Stock or Phantom Stock. The Committee may grant Shares
of Restricted Stock or Phantom Stock rights to such Participants at such times
and in such amounts, and subject to such other terms and conditions not
inconsistent with the Plan as it shall determine. Each grant of Restricted Stock
or Phantom Stock rights shall be evidenced by a written Agreement setting forth
the terms of such Award.

8.2. Restrictions on Transferability. Restricted Stock or Phantom Stock rights
may not be sold, transferred, pledged, assigned, or otherwise alienated until
such time, or until the satisfaction of such conditions as shall be determined
by the Committee (including without limitation, the satisfaction of performance
goals or the occurrence of such events as shall be determined by the Committee).
At the end of the period of restriction applicable to any Restricted Stock, such
Shares will be transferred to the Participant free of all restrictions.

8.3. Rights as a Shareholder. Unless otherwise determined by the Committee at
the time of grant, Participants holding Restricted Stock granted hereunder may
exercise full voting rights and other rights as a Shareholder with respect to
those Shares during the period of restriction. Holders of Phantom Stock rights
shall not be deemed Shareholders and, except to the extent provided in
accordance with the Plan, shall have no rights related to any Shares.

8.4. Dividends and Other Distributions. Unless otherwise determined by the
Committee at the time of grant, Participants holding Restricted Stock shall be
entitled to receive all dividends and other distributions paid with respect to
those Shares, provided that if any such dividends or distributions are paid in
shares of stock, such shares shall be subject to the same forfeiture
restrictions and restrictions on transferability as apply to the Restricted
Stock with respect to which they were paid. Unless otherwise determined by the
Committee at the time of grant, Participants holding Phantom Stock rights shall
be entitled to receive cash payments equal to any cash dividends and other
distributions paid with respect to a corresponding number of Shares.

8.5. Payment of Phantom Stock Rights. The Committee may, at the time of grant,
provide for other methods of payment in respect of Phantom Stock rights in cash,
Shares, partially in cash and partially in Shares, or in any other manner not
inconsistent with this Plan.

Section 9.  Other Stock Based Awards and Other Benefits.

9.1. Other Stock Based Awards. The Committee shall have the right to grant Other
Stock Based Awards which may include, without limitation, the grant of Shares
based on certain conditions, the payment of cash based on the performance of the
Common Stock, and the payment of Shares in lieu of cash under other Company
incentive bonus


programs. Payment under or settlement of any such Awards shall be made in such
manner and at such times as the Committee may determine.

9.2. Other Benefits. The Committee shall have the right to provide types of
Awards under the Plan in addition to those specifically listed utilizing shares
of stock or cash, or a combination thereof, if the Committee believes that such
Awards would further the purposes for which the Plan was established. Payment
under or settlement of any such Awards shall be made in such manner and at such
times as the Committee may determine.

Section 10.  Amendment, Modification, and Termination of Plan.

The Board at any time may terminate or suspend the Plan, and from time to time
may amend or modify the Plan. No amendment, modification, or termination of the
Plan shall in any manner adversely affect any Award theretofore granted under
the Plan to a Participant without the consent of such Participant.

Section 11.  Termination of Employment.

11.1. Termination of Employment Due to Retirement. Unless otherwise determined
by the Committee at the time of grant, in the event a Participant's employment
terminates by reason of retirement, any Option or SAR granted to such
Participant which is then outstanding may be exercised at any time prior to the
expiration of the term of the Option or SAR or within six (6) years following
the Participant's termination of employment, whichever period is shorter, and
any Restricted Stock, Phantom Stock rights, or other Award then outstanding for
which any restriction has not lapsed prior to the effective date of retirement
shall be forfeited.

11.2. Termination of Employment Due to Death or Disability. Unless otherwise
determined by the Committee at the time of grant, in the event a Participant's
employment is terminated by reason of death or disability, any Option or SAR
granted to such Participant which is then outstanding may be exercised by the
Participant or the Participant's legal representative at any time prior to the
expiration date of the term of the Option or SAR or within six (6) years
following the Participant's termination of employment, whichever period is
shorter, and any Restricted Stock, Phantom Stock rights, or other Award then
outstanding shall become nonforfeitable and shall become transferable or
payable, as the case may be, as though any restriction had expired.

11.3. Termination of Employment for Any Other Reason. Unless otherwise
determined by the Committee at the time of grant, in the event the employment of
the Participant shall terminate for any reason other than misconduct or one
described in Section 11.1 or 11.2, any Option or SAR granted to such Participant
which is then outstanding may be exercised by the Participant at any time prior
to the expiration date of the term of the Option or SAR or within three (3)
months following the Participant's termination of employment, whichever period
is shorter; any Restricted Stock, Phantom Stock rights, or other Award then
outstanding for which any restriction has not lapsed prior to the

date of termination of employment shall be forfeited upon termination of
employment. If the employment of a Participant is terminated by the Company or a
Subsidiary by reason of the Participant's misconduct, any outstanding Option or
SAR shall cease to be exercisable on the date of the Participant's termination
of employment; any Restricted Stock, Phantom Stock rights, or other Award then
outstanding for which any restriction has not lapsed prior to the date of
termination of employment shall be forfeited upon termination of employment. As
used herein, "misconduct" means that the Participant has engaged, or intends to
engage, in competition with the Company or a Subsidiary, has induced any
customer of the Company or a Subsidiary to breach any contract with the Company
or a Subsidiary, has made any unauthorized disclosure of any of the secrets or
confidential information of the Company or a Subsidiary, has committed an act of
embezzlement, fraud, or theft with respect to the property of the Company or a
Subsidiary, or has deliberately disregarded the rules of the Company or a
Subsidiary in such a manner as to cause any loss, damage, or injury to, or
otherwise endanger the property, reputation, or employees of the Company or a
Subsidiary. The Committee shall determine whether a Participant's employment is
terminated by reason of misconduct.

11.4. Accrual of Right at Date of Termination. The Participant shall have the
right to exercise an Option or SAR as indicated in Sections 11.1, 11.2, and 11.3
only to the extent the Participant's right to exercise such Option or SAR had
accrued at the date of termination of employment pursuant to the terms of the
Option or SAR Agreement and had not previously been exercised.

Section 12.  Change in Control.

Except as otherwise provided in an Agreement, if a Change in Control occurs,
then:

          (i) the Participant's Restricted Stock that was forfeitable shall
          thereupon become nonforfeitable; and

          (ii) any unexercised Option or SAR, whether or not exercisable on the
          date of such Change in Control, shall thereupon be fully exercisable
          and may be exercised, in whole or in part.

Section 13.  Effect of Disposition of Facility or Operating Unit.

In the event that the Company or any of its Subsidiaries closes or disposes of
the facility at which a Participant is located or the Company or any of its
Subsidiaries diminish or eliminate ownership interests in any operating unit of
the Company or any of its Subsidiaries so that such operating unit ceases to be
majority owned by the Company or any of its Subsidiaries, then, with respect to
Awards held by Participants who subsequent to such event will not be employees
of the Company or any of its Subsidiaries, the Committee may (i) accelerate the
exercisability of Awards to the extent not yet otherwise exercisable or remove
any restrictions applicable to any Awards and (ii) extend the period during
which Awards will be exercisable to a date subsequent to the date

when such Awards would otherwise have expired by reason of the termination of
such Participant's employment with the Company or any of its Subsidiaries (but
in no event to a date later than the expiration date of the Awards or the fifth
anniversary of the transaction in which such facility closes or operating unit
ceases). If the Committee takes no special action with respect to any
disposition of a facility or an operating unit, then any cessation of employment
resulting from such disposition will be treated as an ordinary cessation of
employment as described in Section 11.

Section 14.  Miscellaneous Provisions.

14.1. Non-transferability of Awards. Unless otherwise determined by the
Committee at the time of grant, and except as provided in Section 11, no Awards
granted under the Plan shall be assignable, transferable, or payable to or
exercisable by anyone other than the Participant to whom it was granted.

14.2. No Guarantee of Employment or Participation. Nothing in the Plan shall
interfere with or limit in any way the right of the Company or a Subsidiary to
terminate any Participant's employment at any time, nor confer upon any
Participant any right to continue in the employment of the Company or a
Subsidiary. No employee shall have a right to be selected as a Participant, or,
having been so selected, to receive any future awards.

14.3. Tax Withholding. The Company shall have the authority to withhold, or
require a Participant to remit to the Company an amount sufficient to satisfy
federal, state, and local withholding tax requirements on any Award under the
Plan, and the Company may defer payment of cash or issuance of Shares until such
requirements are satisfied. The Committee may, in its discretion, permit a
Participant to elect, subject to such conditions as the Committee shall require,
to have Shares otherwise issuable under the Plan withheld by the Company and
having a Fair Market Value sufficient to satisfy all or part of the
Participant's estimated total federal, state, and local tax obligation
associated with the transaction.

14.4. Governing Law. The Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by the Code or Act, shall
be governed by the law of the State of Illinois and construed in accordance
therewith.

14.5. Effectiveness of Plan. The Plan became effective upon its approval by the
shareholders of the Company on April 25, 1990; provided, however, that no Award
requiring the issuance of Shares shall be exercised or paid out unless at the
time of such exercise or payout (i) such Shares are covered by a currently
effective registration statement filed under the Securities Act of 1933, as
amended, if one is then required, or in the sole opinion of the Company and its
counsel such issuance of Shares is otherwise exempt from the registration
requirements of such act, and (ii) such Shares are listed on any securities
exchange upon which the Common Stock of the Company is listed.

14.6. Termination of the 1975 Plan. The Company's Restated 1975 Non-Qualified
Stock Option Plan shall be terminated as of the date of Shareholder approval of
this Plan, provided, however, that such termination shall not affect any Options
or Stock Appreciation Rights outstanding thereunder, all of which shall remain
subject to and be governed by such plan.

14.7. Unfunded Plan. Insofar as the Plan provides for Awards of cash, Shares,
rights or a combination thereof, the Plan shall be unfunded. The Company may
maintain bookkeeping accounts with respect to Participants who are entitled to
Awards under the Plan, but such accounts shall be used merely for bookkeeping
convenience. The Company shall not be required to segregate any assets that may
at any time be represented by interests in Awards nor shall the Plan be
construed as providing for any such segregation. None of the Committee, the
Company or Board shall be deemed to be a trustee of any cash, Shares or rights
to Awards granted under the Plan. Any liability of the Company to any
Participant with respect to an Award or any rights thereunder shall be based
solely upon any contractual obligations that may be created by the Plan and any
Agreement, and no obligation of the Company under the Plan shall be deemed to be
secured by any pledge or other encumbrance on any property of the Company.