Exhibit 10.9

 

 

3M NONQUALIFIED PENSION PLAN III

 

(First Effective January 1, 2009)

 

 

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TABLE OF CONTENTS

 

 

 

 

Page

ARTICLE I: INTRODUCTION

1

 

1.01

Title

1

 

1.02

Purpose

1

 

1.03

History

1

 

1.04

Effect

2

 

 

 

 

ARTICLE II: DEFINITIONS

3

 

2.01

Annuity Starting Date

3

 

2.02

Code

3

 

2.03

Compensation Committee

3

 

2.04

Discharge for Cause

3

 

2.05

ERIP

4

 

2.06

Former Member

4

 

2.07

Member

4

 

2.08

Nonqualified Plan I

4

 

2.09

Nonqualified Plan II

4

 

2.10

Nonqualified Plan III

4

 

2.11

Nonqualified Plan III Benefit

5

 

2.12

Plan Administrator

5

 

2.13

Retirement; Retire

5

 

2.14

Separation from Service

5

 

2.15

Specified Employee

6

 

2.16

Supplemental Plan

6

 

 

 

 

ARTICLE III: ELIGIBILITY AND PARTICIPATION

6

 

3.01

Eligibility

6

 

3.02

Participation

7

 

3.03

Forfeiture

7

 

 

 

 

ARTICLE IV: AMOUNT AND DISTRIBUTION OF BENEFITS

8

 

4.01

Additional Monthly Benefit

8

 

4.02

Time of Payment

8

 

4.03

Form of Payment

10

 

4.04

Pre-Commencement Death

13

 

4.05

Beneficiary

14

 

4.06

Incapacity

14

 

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ARTICLE V: UNFUNDED PLAN

15

 

5.01

No Trust

15

 

5.02

No Contributions by Members

15

 

5.03

Unsecured Creditor Status

15

 

 

 

 

ARTICLE VI: PLAN ADMINISTRATION

16

 

6.01

Powers and Duties of the Plan Administrator

16

 

6.02

Records

16

 

6.03

Advisers

16

 

6.04

Payment of Expenses

17

 

6.05

Indemnity of the Plan Administrator

17

 

6.06

Service of Process

17

 

 

 

 

ARTICLE VII: AMENDMENT AND TERMINATION

18

 

7.01

Right to Amend

18

 

7.02

Termination

18

 

 

 

 

ARTICLE VIII: MISCELLANEOUS

19

 

8.01

No Contract of Employment

19

 

8.02

No Assignment

19

 

8.03

Governing Law

19

 

8.04

Separable Provisions

20

 

 

 

 

ARTICLE IX: CHANGE IN CONTROL

20

 

9.01

Distribution Following Change in Control

20

 

9.02

Definition of Change in Control

20

 

9.03

Determination of Present Value

21

 

9.04

Tax Equalization

21

 

9.05

Fees and Expenses

21

 

 

 

 

SCHEDULE I

SI-1

 

 

 

 

APPENDIX A: CLASSES OF ELIGIBLE EMPLOYEES AND ADDITIONAL BENEFITS

A-1

 

 

 

 

APPENDIX B SUPPLEMENTAL PENSION PLAN BENEFITS FOR 3M PILOTS WHO RETIRE FROM 3M’S
RETIREMENT PORTFOLIO I AT OR AFTER AGE 60

B-1

 

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3M NONQUALIFIED PENSION PLAN III

 

ARTICLE I:  INTRODUCTION

 

1.01                        TITLE

 

This plan shall be known as the 3M Nonqualified Pension Plan III (hereinafter
the “Nonqualified Plan III”).

 

1.02                        PURPOSE

 

The purpose of this Nonqualified Plan III is to provide deferred compensation in
the form of additional retirement benefits to a select group of participants and
their beneficiaries in the 3M Employee Retirement Income Plan (hereinafter
“ERIP”) and certain other employees.  This Nonqualified Plan III is intended to
supplement the ERIP originally adopted by 3M in 1931 and as amended from time to
time thereafter.  This Nonqualified Plan III is not intended to duplicate the
retirement benefits provided under the 3M Nonqualified Pension Plans I and II,
both of which provide retirement benefits that are strictly in excess of
limitations under section 401(a)(17), 402(g) and 415 of the Code.

 

1.03                        HISTORY

 

3M originally adopted a nonqualified pension plan on November 7, 1978.  This
original plan was named the Supplemental Pension Plan of Minnesota Mining and
Manufacturing Company (hereinafter the “Supplemental Plan”).  The Supplemental
Plan was amended from time to time after its adoption.  Effective January 1,
1993, the Supplemental Plan was amended and restated as two separate plans:  the
“Nonqualified Pension Plan I of Minnesota Mining and Manufacturing Company” and
“Nonqualified Pension Plan II of Minnesota Mining and Manufacturing Company”. 
The provisions of the restatements superseded all prior versions of the
Supplemental Plan.  Such

 

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restatements have been amended from time to time since their adoption. 
Nonqualified Plan I provides supplemental benefits that are strictly in excess
of section 415 of the Code.  Nonqualified Plan II provided certain additional
supplemental retirement benefits, but effective January 1, 2009, such plan has
been amended to provide supplemental retirement benefits that are strictly in
excess of limitations under section 401(a)(17) and 402(g) of the Code.

 

1.04                        EFFECT

 

Effective January 1, 2009, this Nonqualified Plan III is hereby established to
provide retirement benefits that supplement the ERIP but which are not strictly
in excess of limitations under section 401(a)(17), 402(g) and 415 of the Code. 
Any and all deferred compensation obligations accrued under Nonqualified Plan II
prior to January 1, 2009 which were not strictly in excess of limitations under
section 401(a)(17), 402(g) and 415 of the Code shall become part of and be
governed under the terms of this Nonqualified Plan III.  The purpose of the
creation of this Plan is twofold:  (1) to provide for supplemental retirement
benefits hereunder that are not strictly in excess of the limitations under
section 401(a)(17) and section 402(g) of the Code, and (2) to bring the benefits
transferred to this Plan into compliance with section 409A of the Code by
“de-linking” the payment provisions under this Plan from the payment provisions
under the ERIP.  From October 3, 2004 (the date section 409A was added to the
Code) through December 31, 2008, the prior Nonqualified Plan II operated with
“linked” payment provisions in accordance with special transition rules issued
by the IRS and the U.S. Department of Treasury in connection with the
implementation of section 409A of the Code.  For avoidance of doubt, this
restatement is intended to apply both to deferred compensation subject to
section 409A of the Code (i.e., deferred compensation credited under the Plan
which related all or in part to services performed on or after January 1, 2005),
as well as deferred compensation credited under the Plan which relates entirely
to services performed on or before December 31, 2004 that is eligible to be
“grandfathered” from application of section 409A of the Code.  However, the
benefits payable to Members and Former Members (and their Beneficiaries) who
commenced payment of their Nonqualified Plan II Benefit

 

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under Nonqualified Plan II prior to January 1, 2009 will be determined in
accordance with the provisions of that Plan in effect at the time of their
benefit commencement and will not be adjusted or recomputed to reflect any
subsequent amendment or restatement of Nonqualified Plan II or the creation or
amendment of this Nonqualified Plan III.

 

ARTICLE II:  DEFINITIONS

 

Except where specifically defined in this Nonqualified Plan III, the words and
phrases which appear in this document shall have the meanings set forth in the
ERIP plan document.  Except for definitions and other substantive provisions of
this Nonqualified Plan III, the terms and conditions of the ERIP shall govern
the construction and administration of this Nonqualified Plan III.

 

2.01                        ANNUITY STARTING DATE

 

“Annuity Starting Date” means the benefit starting date as determined under
Section 4.02.

 

2.02                        CODE

 

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

 

2.03                        COMPENSATION COMMITTEE

 

“Compensation Committee” means the Compensation Committee of the Board of
Directors of 3M.

 

2.04                        DISCHARGE FOR CAUSE

 

“Discharge for Cause” or “Discharged for Cause” means the termination of an
employee’s employment for reasons of dishonesty, embezzlement, conviction of a
crime or a misdemeanor involving moral turpitude, willful misconduct, or
personal misconduct which is detrimental to 3M and its business, as determined
in the sole discretion of the Compensation Committee.

 

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2.05                        ERIP

 

“ERIP” means the 3M Employee Retirement Income Plan.

 

2.06                        FORMER MEMBER

 

“Former Member” means a former employee who is receiving benefit payments under
the provisions of this Nonqualified Plan III, or a former employee whose
employment with 3M has terminated for any reason other than Discharge for Cause
and who is entitled to a vested Nonqualified Plan III Benefit under the
provisions of this Nonqualified Plan III.

 

2.07                        MEMBER

 

“Member” means an employee who is a participant in the ERIP and who is accruing
an additional Nonqualified Plan III Benefit under the provisions of this
Nonqualified Plan III.

 

2.08                        NONQUALIFIED PLAN I

 

“Nonqualified Plan I” means the 3M Nonqualified Pension Plan I.

 

2.09                        NONQUALIFIED PLAN II

 

“Nonqualified Plan II” means the 3M Nonqualified Pension Plan II.

 

2.10                        NONQUALIFIED PLAN III

 

“Nonqualified Plan III” means the 3M Nonqualified Pension Plan III.

 

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2.11                        NONQUALIFIED PLAN III BENEFIT

 

“Nonqualified Plan III Benefit” means the benefit payable under this Plan
described in Section 4.01.

 

2.12                        PLAN ADMINISTRATOR

 

“Plan Administrator” means the 3M Vice President, Global Compensation and
Benefits or his or her successor.

 

2.13                        RETIREMENT; RETIRE

 

“Retirement” means a Separation from Service after the Member has both attained
age fifty five (55) and completed five (5) years of “Credited Service” (as
defined under the ERIP), or a Separation from Service after the Member has
attained age sixty five(65).

 

2.14                        SEPARATION FROM SERVICE

 

“Separation from Service” means a severance of a Member’s employment
relationship with 3M and all affiliates for any reason other than the Member’s
death or Discharge for Cause.

 

Whether a Separation from Service has occurred is determined under section 409A
of the Code and Treasury reg. section 1.409A-1(h) (i.e., whether the facts and
circumstances indicate that the employer and the employee reasonably anticipated
that no further services would be performed after a certain date or that the
level of bona fide services the employee would perform after such date (whether
as an employee or independent contractor) would permanently decrease to no more
than 20% of the average level of bona fide services performed (whether as an
employee or an independent contractor) over the immediately preceding 36 month
period (or the full period of services to the employer if the employee has been
providing services to the employer less than 36 months)).

 

5

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Separation from Service shall not be deemed to occur while the employee is on
military leave, sick leave or other bona fide leave of absence if the period
does not exceed six (6) months or, if longer, so long as the employee retains a
right to reemployment with 3M or an affiliate under an applicable statute or by
contract.  For this purpose, a leave is bona fide only if, and so long as, there
is a reasonable expectation that the employee will return to perform services
for 3M or an affiliate.  Notwithstanding the foregoing, a 29 month period of
absence will be substituted for such 6 month period if the leave is due to any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of no less
than 6 months and that causes the employee to be unable to perform the duties of
his or her position of employment.

 

2.15                        SPECIFIED EMPLOYEE

 

“Specified Employee” means a “specified employee” as defined in Treas. Reg.
section 1.409-1(i) or such other regulation or guidance issued under
section 409A of the Code.

 

2.16                        SUPPLEMENTAL PLAN

 

“Supplemental Plan” means the Supplemental Pension Plan of Minnesota Mining and
Manufacturing Company, the predecessor to Nonqualified Plans I and II.

 

ARTICLE III:  ELIGIBILITY AND PARTICIPATION

 

3.01                        ELIGIBILITY

 

Any employee of 3M or an affiliate who is a Participant in the ERIP, and who is
within a class of employees described in the Appendix A attached to this plan
document, shall be eligible to become a Member in this Nonqualified Plan III.

 

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3.02                        PARTICIPATION

 

Employees who first satisfy the conditions of Section 3.01 above shall become
Members of and begin to participate in this Nonqualified Plan III automatically
without further action by the Compensation Committee.

 

3.03                        FORFEITURE

 

A Member or Former Member shall cease to be a Member or Former Member and shall
forfeit all rights and benefits under this Nonqualified Plan III when the
Compensation Committee determines, in its sole discretion, that such Member or
Former Member is employed by, acting as a consultant for or is otherwise
directly or indirectly performing services for any person or entity engaged in
the (i) manufacture or sale of any product similar to or in competition with any
product manufactured or sold by 3M or any of its subsidiaries, or
(ii) manufacture or sale of special machinery or equipment, or furnishing of
engineering or technical services concerning such machinery or equipment, used
in the manufacture or sale of any product similar to or in competition with any
product manufactured or sold by 3M or any of its subsidiaries, without the
written consent of the Compensation Committee.  Before making a determination
that a Member or Former Member is covered by the provisions of this
Section 3.03, the Compensation Committee shall give the Member or Former Member
notice of its intention to invoke this forfeiture provision and an opportunity
to discontinue such employment or consulting relationship or the provision of
such services within a period of 90 days following the date of such notice.

 

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ARTICLE IV:  AMOUNT AND DISTRIBUTION OF BENEFITS

 

4.01                        ADDITIONAL MONTHLY BENEFIT

 

In addition to the amount of Retirement Income payable to a Member or Former
Member under the ERIP, this Nonqualified Plan III shall pay an additional
monthly benefit to such Member or Former Member equal to the amount by which
(a) exceeds (b), where:

 

                (a)  is the monthly Retirement Income that would have been
payable to such Member or Former Member by the ERIP if that plan paid the
benefits or based the amount of its benefits on the factors described in the
Appendix A attached to this plan document; and

 

                (b)  is the monthly Retirement Income actually payable to such
Member or Former Member under the ERIP.

 

Such additional benefit shall be referred to herein as the “Nonqualified
Plan III Benefit”.  The amount of the Nonqualified Plan III Benefit payable to a
person under this Nonqualified Plan III shall be reduced by the amount of the
additional monthly benefit payable to the same person under the Nonqualified
Plan I and the Nonqualified Plan II to the extent necessary to avoid duplication
of benefits.  For avoidance of doubt, a Member or Former Member who is not
entitled a vested benefit under the ERIP shall not be entitled to any
Nonqualified Plan III Benefit hereunder unless and until such benefit under the
ERIP becomes vested.

 

4.02                        TIME OF PAYMENT

 

Payment of the Nonqualified Plan III Benefit described in Section 4.01 above
will begin as of the first of the calendar month (the “Annuity Starting Date”)
coincident with or next following the Member’s  Separation from Service;
provided, however, that:

 

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                (a)           Members whose job grades were classified as CEO,
L1, L2, L3 and T7 whose planned income for 2008 was more than $230,000 were
permitted to make a one-time irrevocable election in 2008 to elect to receive
their Nonqualified Plan III Benefit in the form of an annuity in lieu of a lump
sum.  If a timely election was made in 2008, payment of such Member’s
Nonqualified Plan III Benefit shall commence as of the Annuity Starting Date
coincident with or next following the Member’s Retirement.  If such Member
Separates from Service prior to becoming eligible for Retirement, his or her
Nonqualified Plan III Benefit shall be paid in a single lump sum as of the
Annuity Starting Date coincident with or next following the Member’s Separation
from Service;

 

                (b)           One Member classified as L3 on Transitional
Retirement Leave who incurred a Separation from Service prior to 2008 was
permitted to make a one-time irrevocable election in 2008 to receive his
Nonqualified Plan III Benefit in the form of an annuity in lieu of a lump sum. 
Such Member did in fact timely elect, and accordingly, his Nonqualified Plan III
Benefit shall commence upon his scheduled date of termination given in Schedule
I attached hereto (which shall be treated as a Retirement for purposes of
Section 4.03(b));

 

                (c)           Former Members classified as L1 and L2 who
incurred a Separation from Service prior to 2009 were permitted to make a
one-time irrevocable election in 2008 to elect to receive their Nonqualified
Plan III Benefit in the form of an annuity in lieu of a lump sum.  If a timely
election was made in 2008, payment of their Nonqualified Plan III Benefit shall
commence upon the first day of the calendar month coincident with or next
following the Former Member’s attainment of age sixty five (65);

 

                (d)           All other Former Members who incurred a Separation
from Service prior to 2009 and who have not commenced payment of their
Nonqualified Plan III Benefit prior to January 1,

 

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2009 shall receive payment of their Nonqualified Plan III Benefit in January,
2009 in a single lump sum.  (For this purpose, the Member’s Annuity Starting
Date shall be January 1, 2009.)

 

Notwithstanding the foregoing, in the event that the Member is a Specified
Employee, payment on account of Separation from Service shall begin as of the
first day of the seventh month following the Member’s Separation, and the first
payment shall include all payments delayed since the Annuity Starting Date
(accordingly, if payment is in the form of an annuity, such annuity shall be
calculated based on the Annuity Starting Date without regard to the delay).

 

4.03                        FORM OF PAYMENT

 

(a)  Lump Sum.  Except as otherwise provided in this Section 4.03, the
Nonqualified Plan III Benefit payable to each Member or Former Member under this
Plan shall be paid in a single lump sum, determined by converting the monthly
Nonqualified Plan III Benefit amount in Section 4.01 into a present value lump
sum using the applicable interest rate on 30-year U.S. Treasury securities and
RP2000 3M mortality.  For purposes of this conversion, the “applicable interest
rate” shall mean the average of the daily rates on 30-year U.S. Treasury
securities in effect during the calendar quarter first preceding the calendar
quarter that ends immediately prior to the Annuity Starting Date.

 

(b)  Optional Annuity Forms for Eligible Retirees.  Members whose job grades
were classified as CEO, L1, L2, L3 and T7 whose planned income for 2008 was more
than $230,000, and one Member classified as job grade L3 on TSR (collectively,
“Annuity Eligible Members”), were permitted to make a one-time irrevocable
election in 2008 to elect to receive their Nonqualified Plan III Benefit in the
form of an annuity in lieu of a lump sum.  If a timely election was made in
2008, the rules under this Section 4.03(b) shall apply.  If an Eligible Member
dies or Separates from Service prior to becoming eligible for Retirement, his or
her Nonqualified Plan III Benefit shall be paid in a single lump sum pursuant to
Section 4.03(a).

 

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(i)  Presumed Form:  Single Life Annuity.  If an Annuity Eligible Member Retires
and is not legally married on his or her Annuity Starting Date, then the normal
form of payment of his or her Nonqualified Plan III Benefit shall be the Life
Annuity form, and his or her Nonqualified Plan III Benefit shall, unless he or
she elects to waive the Life Annuity form of payment and selects a Joint and
Nonspouse Beneficiary Survivor Annuity form, be paid in the form of a Life
Annuity. Except as otherwise specifically provided in the Plan, Nonqualified
Plan III Benefit payments will be made monthly to a Member or Former Member
commencing on his or her Annuity Starting Date and ending on the first day of
the month in which his or her death occurs.

 

(ii)  Presumed Form:  Joint and Survivor Life Annuity.  If an Annuity Eligible
Member Retires and is legally married on his or her Annuity Starting Date, then
his or her Nonqualified Plan III Benefit shall be paid in the form of a 50%
Joint and Spouse Beneficiary Survivor Annuity form, unless he or she elects to
waive the 50% Joint and Spouse Beneficiary Survivor Annuity form and selects
either the Life Annuity form, an alternative Joint and Spouse Beneficiary
Survivor Annuity form available under the ERIP (i.e., 75% or 100%) or a Joint
and Nonspouse Beneficiary Survivor Annuity form available under the ERIP (50%,
75% or 100%).

 

(c)  Optional Annuity Forms for Certain Vested Former Members.  Certain Former
Members classified as L1 or L2 who incurred a Separation from Service prior to
2009 were permitted to make a one-time irrevocable election in 2008 to elect to
receive their Nonqualified Plan III Benefit in the Life Annuity form or the
Joint and Spouse Beneficiary Survivor Annuity form (50% or 75%).  If a timely
election was made in 2008, then the Former Member’s Nonqualified Plan III
Benefit shall commence upon the first day of the calendar month coincident with
or next following attainment of age sixty five (65) in the annuity form elected
(in lieu of a single lump sum).

 

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(d)           Total Pension Value Guarantee.  To the extent that a Member’s or
Former Member’s Retirement Income is calculated pursuant to Article XIII of the
ERIP (Portfolio II), he or she shall be entitled to a Total Pension Value
Guarantee (as determined under Section 13.10 of the ERIP, as the same may be
amended from time to time) if he or she Retires and elects payment in the form
of a Life Annuity, Joint and Spouse Beneficiary Annuity or Joint and Non-Spouse
Beneficiary Annuity under Section 4.03(b) or (c) of this Plan, so long as the
Total Pension Value Guarantee with respect to the Nonqualified Plan III Benefit
qualifies as a cash refund feature under which payment is provided upon the
death of the last annuitant in an amount that is not greater than the excess of
the Total Pension Value of the Nonqualified Plan III Benefit at the Annuity
Starting Date over the total of payments before the death of the last annuitant.

 

(e)           Subsidized 50% Joint and Survivor Annuity.  If a Member or Former
Member is entitled to elect a subsidized 50% Joint and Survivor Annuity under
Section 3.10 of the ERIP (as the same may be amended from time to time), he or
she shall also be entitled to a subsidized annuity under this Plan if he or she
elects the 50% Joint and Spouse Beneficiary Annuity pursuant to
Section 4.03(b) or (c), provided that the annual lifetime annuity benefit
available to such Member is not greater than the annual lifetime annuity benefit
available under the Life Annuity form, and provided that the annual survivor
annuity benefit is not greater than the annual lifetime annuity benefit
available to such Member under the 50% Joint and Survivor Annuity form.

 

(f)  Definitions.  For purposes of this Article IV, the terms Life Annuity,
Joint and Spouse Beneficiary Survivor Annuity, Joint and Nonspouse Beneficiary
Survivor Annuity and Total Pension Value Guarantee shall have the same meanings
as under the ERIP, as the same may be amended from time to time.

 

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4.04                        PRE-COMMENCEMENT DEATH.

 

Notwithstanding any provision in this Plan to the contrary, if a Member or
Former Member dies after becoming vested under the ERIP but prior to his or her
Annuity Starting Date, the following rules shall apply:

 

(a)  To the extent that a Member’s or Former Member’s Retirement Income is
calculated pursuant to Article III of the ERIP (Portfolio I), and if the Member
or Former Member is married, his or her surviving spouse shall be entitled a
“Preretirement Survivor Annuity” determined in the same manner as provided under
Section 3.07 of the ERIP, as amended from time to time, with respect to the
Member’s or Former Member’s Nonqualified Plan III Benefit.  Such Preretirement
Survivor Annuity shall be converted into a present value lump sum, using the
interest and mortality factors in Section 4.03(a), and paid as of the first day
of the calendar month following the Member’s or Former Member’s death;

 

(b)           To the extent that a Member’s or Former Member’s Retirement Income
is calculated pursuant to Article III of the ERIP (Portfolio I), and if the
Member or Former Member is not married, no benefit shall be payable under this
Plan, and

 

                (c)  To the extent that a Member’s or Former Member’s Retirement
Income is calculated pursuant to Article XIII of the ERIP (Portfolio II), and if
such Member or Former Member dies prior to his or her Annuity Starting Date, his
or her Beneficiary shall receive the Member’s or Former Member’s Nonqualified
Plan III Benefit attributable to Portfolio II an immediate single lump sum,
determined by converting the monthly Nonqualified Plan III Benefit amount in
Section 4.01 into a present value lump sum using the interest and mortality
factors in Section 4.03(a).  For this purpose, the first day of the calendar
month coincident with or next following the Member’s death shall be treated as
the Annuity Starting Date.

 

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4.05                        BENEFICIARY

 

                (a)           Joint Annuitant.  An Annuity Eligible Member or
Former Member shall be entitled to designate a Beneficiary to receive the
survivor income portion of the Joint and Non-Spouse Beneficiary Annuity, if
selected, on forms furnished by and filed with 3M.

 

                (b)           Total Pension Value.  To the extent that a
Member’s or Former Member’s Retirement Income is calculated pursuant to
Article XIII of the ERIP (Portfolio II), a Member or Former Member shall be
entitled to designate a Beneficiary to receive payment of the remainder of the
Total Pension Value of the Nonqualified Plan III Benefit attributable to
Portfolio II, if any, on forms furnished by and filed with 3M.  Notwithstanding
the foregoing, with respect to any pre-commencement death benefit payable under
Section 4.04(c) above, the Member’s or Former Member’s beneficiary designation
under the ERIP shall apply.  In all events, in the absence of a designation or
if such designation fails, the rules for automatic beneficiaries under the ERIP
shall apply.

 

4.06                        INCAPACITY

 

If a Member, Former Member or Beneficiary is under a legal disability or, by
reason of illness or mental or physical disability, is in the opinion of the
Plan Administrator unable to attend properly to his or her personal financial
matters, this Nonqualified Plan III may pay the benefits payable hereunder in
such of the following ways as the Plan Administrator shall direct:

 

                (a)  Directly to such Member, Former Member or Beneficiary;

 

                (b)  To the legal representative of such Member, Former Member
or Beneficiary; or

 

                (c)  To some relative by blood or marriage, or friend, for the
benefit of such Member, Former Member or Beneficiary.

 

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Any payment made pursuant to this Section shall be in complete discharge of the
obligation therefor under this Nonqualified Plan III.

 

ARTICLE V:  UNFUNDED PLAN

 

5.01                        NO TRUST

 

The benefits payable under this Nonqualified Plan III shall be paid solely from
the general assets of 3M.  3M does not intend to create any trust in connection
with this Nonqualified Plan III.  Neither 3M nor any other employer shall have
any obligation to make contributions or set aside funds in order to pay such
benefits.  3M’s obligation under this Nonqualified Plan III shall be merely that
of an unfunded and unsecured promise to pay money in the future.

 

5.02                        NO CONTRIBUTIONS BY MEMBERS

 

Members and Former Members shall not be required or permitted to make
contributions under this Nonqualified Plan III.

 

5.03                        UNSECURED CREDITOR STATUS

 

No Member, Former Member or Beneficiary shall have any right to receive any
payments from this Nonqualified Plan III except as provided in Article IV
above.  Until such payments are received, the rights of each Member, Former
Member and Beneficiary under this Nonqualified Plan III shall be no greater than
the rights of an unsecured general creditor of 3M.

 

15

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ARTICLE VI:  PLAN ADMINISTRATION

 

6.01                        POWERS AND DUTIES OF THE PLAN ADMINISTRATOR

 

Subject to the powers of the Compensation Committee specified herein, the Plan
Administrator shall administer this Nonqualified Plan III in accordance with its
terms and shall have all powers necessary to carry out the provisions of such
Plan.  The Plan Administrator shall have the power and discretion to interpret
the provisions of this Nonqualified Plan III, and to determine all questions
arising in the administration, interpretation and application of such Plan.  Any
such determination by the Plan Administrator shall be conclusive and binding on
all persons.  The Plan Administrator may adopt such policies and procedures,
correct any defects, supply any information, or reconcile any inconsistency in
such manner and to such extent as he or she deems necessary or desirable to
carry out the purposes of this Nonqualified Plan III; provided, however, that
any policies, procedures, determinations or interpretations shall be done in a
nondiscriminatory manner based upon uniform policies consistently applied to all
persons in similar circumstances.

 

6.02                        RECORDS

 

The regularly kept records of 3M shall be conclusive and binding upon all
persons with respect to a Member’s or Former Member’s Hours of Service, Credited
Service, Covered Compensation, Salaried Pension Earnings and all other matters
contained therein relating to Members and Former Members.

 

6.03                        ADVISERS

 

The Plan Administrator may appoint such legal counsel, accountants, actuaries
and other persons as he or she deems desirable to advise and assist such
Administrator with the administration of this Nonqualified Plan III.  The Plan
Administrator shall be entitled to rely conclusively upon, and shall

 

16

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be fully protected with respect to any action taken by him or her in good faith
in reliance upon, any advice or information furnished by such advisers.

 

6.04                        PAYMENT OF EXPENSES

 

The Plan Administrator shall not be paid for the performance of his or her
duties under this Nonqualified Plan III, but all expenses incurred by 3M or the
Plan Administrator in connection with the administration of such Plan shall be
paid by 3M.

 

6.05                        INDEMNITY OF THE PLAN ADMINISTRATOR

 

3M shall indemnify the Plan Administrator from and against any and all claims,
losses, damages and liabilities arising from any act or failure to act in
connection with the administration of this Nonqualified Plan III, and shall
defend and/or reimburse the Plan Administrator for all expenses (including
reasonable attorneys fees) incurred in connection with any pending or threatened
claim or any action or proceeding arising therefrom, unless and to the extent
that any claim, loss, damage, liability or expense is judicially determined to
have resulted from the Plan Administrator’s bad faith or gross negligence.

 

6.06                        SERVICE OF PROCESS

 

In any legal proceeding involving this Nonqualified Plan III, the Secretary of
3M is designated as the exclusive agent for receipt of service of process
directed to such Plan.

 

17

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ARTICLE VII:  AMENDMENT AND TERMINATION

 

7.01                        RIGHT TO AMEND

 

3M’s Board of Directors, the Compensation Committee or (only for amendments
whose projected costs do not exceed $25,000,000 in any calendar year) any duly
authorized officer of 3M may amend or modify, in whole or in part, this
Nonqualified Plan III at any time without submitting the amendment or
modifications to the shareholders of 3M (except that, to the extent necessary to
comply with applicable corporate or securities law, or applicable rules of the
New York Stock Exchange, 3M’s Board of Directors or the Compensation Committee
shall have the exclusive authority to make amendments with respect to benefits
under this Plan).  However, no amendment or modification shall adversely affect
the rights of any Member, Former Member or Beneficiary acquired under the
provisions of such Plan in effect prior to such action.

 

7.02                        TERMINATION

 

While it expects to continue this Nonqualified Plan III indefinitely, 3M (acting
through its Board of Directors or the Compensation Committee) reserves the right
to terminate such Plan at any time and for any reason.  Termination of this
Nonqualified Plan III shall not affect 3M’s obligation to pay the benefits
already earned under the provisions of such Plan in effect prior to the
termination.

 

18

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ARTICLE VIII:  MISCELLANEOUS

 

8.01                        NO CONTRACT OF EMPLOYMENT

 

This Nonqualified Plan III shall not be deemed to constitute a contract of
employment between 3M and any Member or Former Member.  Nothing in this Plan
shall be deemed to give any Member or Former Member the right to be retained in
the service of 3M or an affiliate or to interfere with the right of 3M or an
affiliate to discipline or discharge any Member or Former Member at any time.

 

8.02                        NO ASSIGNMENT

 

No Member, Former Member or Beneficiary shall have any right to commute, sell,
assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate or convey the benefits, if any, payable under this Nonqualified
Plan III.  All payments and the rights to all payments of benefits under this
Nonqualified Plan III are expressly declared to be nonassignable and
nontransferable.  Neither this Nonqualified Plan III nor any portion of the
benefits payable hereunder shall be liable for, or subject to, the debts,
contracts, liabilities, engagements or torts of any Member, Former Member or
Beneficiary.  No portion of the benefits payable under this Nonqualified Plan
III shall be subject to attachment, garnishment or other legal process by any
creditor of any Member, Former Member or Beneficiary, except to the extent that
3M determines that it will honor the creation, assignment or recognition of any
right to any benefit payable under the Plan with respect to a Member or Former
Member pursuant to a domestic relations order if that domestic relations order
satisfies the requirements of a qualified domestic relations order within the
meaning of section 414(p)(1)(A) of the Code.

 

8.03                        GOVERNING LAW

 

The provisions of this Nonqualified Plan III shall be interpreted and enforced
in accordance with the laws of the State of Minnesota.

 

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8.04                        SEPARABLE PROVISIONS

 

In the event any provision of this Nonqualified Plan III is ruled or declared
illegal or unenforceable for any reason, such illegality or unenforceability
shall not affect the remaining provisions hereof and this Nonqualified Plan III
shall be interpreted and enforced as if such illegal or unenforceable provision
had never been included herein.

 

ARTICLE IX:  CHANGE IN CONTROL

 

9.01                        DISTRIBUTION FOLLOWING CHANGE IN CONTROL

 

Upon the occurrence of a Change in Control of 3M, this Nonqualified Plan III
shall terminate and 3M shall immediately distribute the remaining accrued
retirement benefits hereunder to the respective Members, Former Members and
Beneficiaries in lump sum cash payments in amounts equal to the present values
of such accrued retirement benefits as of the date of the Change in Control. 
The Compensation Committee shall have the discretion to decide whether some or
all of the lump sum amounts will be paid directly to the respective Members,
Former Members and Beneficiaries, or will be applied toward fully paid annuity
contracts issued by an A+ rated insurance company, which provide for the payment
of all the amounts that would otherwise have been paid after the Change in
Control pursuant to this Nonqualified Plan III.

 

9.02                        DEFINITION OF CHANGE IN CONTROL

 

For purposes of this Article IX, a Change in Control of 3M shall be deemed to
have occurred if there is a “change in the ownership of 3M,” “change in
effective control of 3M,” and/or a “change in the ownership of a substantial
portion of 3M’s assets” as defined under Treasury reg. section 1.409A-3(i)(5) or
such other regulation or guidance issued under section 409A of the Code.

 

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9.03                        DETERMINATION OF PRESENT VALUE

 

Except where otherwise expressly provided in this Nonqualified Plan III, the
present value of each Member’s, each Former Member’s and each Beneficiary’s
remaining accrued retirement benefits hereunder shall be determined in
accordance with such actuarial assumptions as the Compensation Committee, in its
discretion, may adopt for such purpose.

 

9.04                        TAX EQUALIZATION

 

In the event that the payments made pursuant to this Article IX are finally
determined to be subject to the excise tax imposed by section 4999 of the Code,
3M shall pay to each Member, Former Member and Beneficiary an additional amount
such that the net amount retained by such Member, Former Member or Beneficiary,
after allowing for the amount of such excise tax and any additional federal,
state and local income taxes paid on the additional amount, shall be equal to
the value of the retirement benefits distributed to such Member, Former Member
or Beneficiary pursuant to this Article IX.  Such tax gross-up payment shall be
made no later than the end of the recipient’s taxable year following the taxable
year in which the recipient remits the related taxes.  If a Member is a
Specified Employee and such gross-up payment is made on account of the Member’s
Separation from Service, payment shall not be made prior to the first day of the
seventh month following the Member’s Separation from Service.

 

9.05                        FEES AND EXPENSES

 

3M shall pay to each Member, Former Member and Beneficiary the amount of all
reasonable legal and accounting fees and expenses incurred by such Member,
Former Member or Beneficiary in seeking to obtain or enforce his or her rights
under this Article IX or in connection with any income tax audit or proceeding
to the extent attributable to the application of section 4999 of the Code to the
payments made pursuant to this Article IX, unless a lawsuit commenced by the
Member, Former Member or Beneficiary for such purposes is dismissed by the court
as being spurious or frivolous. 

 

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3M shall also pay to each Member, Former Member and Beneficiary the amount of
all reasonable tax and financial planning fees and expenses incurred by such
Member, Former Member or Beneficiary in connection with the receipt by such
Member, Former Member or Beneficiary of payments pursuant to this Article IX. 
Such payment or reimbursement shall be made no later than the end of the
recipient’s taxable year following the taxable year in which the recipient
incurs the related expenses.  If a Member is a Specified Employee and such
payment or reimbursement is made on account of the Member’s Separation from
Service, payment or reimbursement shall not be made prior to the first day of
the seventh month following the Member’s Separation from Service.

 

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SCHEDULE I

 

Member:

 

Phil Yates

 

 

 

Commencement Date:

 

October 1, 2011 (scheduled termination date)

 

 

SI-1

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APPENDIX A:  CLASSES OF ELIGIBLE
EMPLOYEES AND ADDITIONAL BENEFITS

 

1)             Class of Employees:  Participants in the 3M Deferred Compensation
Plan.

 

                Additional Benefits Based On:  Planned total compensation (for
Plan Years beginning on or after January 1, 2008) or wages and salaries (for
Plan Years ending on or before December 31, 2007) that are excluded from
Salaried Pension Earnings under the ERIP solely because they are deferred under
the 3M Deferred Compensation Plan (and are not otherwise excludable by reason of
application of section 401(a)(17) of the Code) shall be treated as Salaried
Pension Earnings.

 

2)             Class of Employees:  Participants in the VIP Plus Plan (frozen to
new deferrals as of December 31, 2008).

 

                Additional Benefits Based On:  Planned total compensation (for
the Plan Year beginning on January 1, 2008) or wages and salaries (for Plan
Years ending on or before December 31, 2007) that are excluded from Salaried
Pension Earnings solely because they are deferred under the 3M VIP Plus Plan
(and are not otherwise excludable by reason of application of section 401(a)(17)
of the Code) shall be treated as Salaried Pension Earnings.

 

3)             Class of Employees:  Participants in the 3M 1987 Management Stock
Ownership Program, the 3M 1992 Management Stock Ownership Program and the 3M
1997 Management Stock Ownership Program who receive grants of Restricted Stock

 

                Additional Benefits Based On:  The amount by which the fair
market value (at the time of grant) of such Restricted Stock (determined as if
there were no conditions or restrictions on the ownership or receipt of such
Stock) exceeds the purchase price payable for such Stock being treated as
Salaried Pension Earnings  in the year of grant

 

 

A-1

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4)             Class of Employees:  Pilots in the Aviation Department who retire
on or after January 1, 2006 who are at least 60 years of age

 

                Additional Benefits Based On:  See Appendix B

 

A-2

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APPENDIX B

 

SUPPLEMENTAL PENSION PLAN BENEFITS
FOR 3M PILOTS WHO RETIRE FROM 3M’S RETIREMENT PORTFOLIO I
AT OR AFTER AGE 60

 

Eligibility:

 

Pilots who are enrolled in 3M’s Retirement Portfolio I are automatically
eligible for the supplemental benefits (A) described in this Appendix only if
they are 55 years of age and have at least five years of Credited Service on
January 1, 2006 and retire from 3M at or after age 60.

 

Pilots who are enrolled in 3M’s Retirement Portfolio I are automatically
eligible for the supplemental benefits (B) described in this Appendix only if
they are 40 years of age and less than 55 years of age and have at least five
years of Credited Service on January 1, 2006 and retire from 3M at or after age
60.

 

Supplemental Benefits (A):

 

                Credited Service:

 

Credited Service is used to determine the amount of the pilot’s pension and
eligibility for the 3M Bridge benefit to age 62.

 

Credited Service will include:

 

Pilot’s length of Credited Service earned up to date of retirement, plus

 

An additional amount of Credited Service (five years maximum) for the period of
time, in years and months, between the pilot’s actual age at retirement and age
65.

 

Example:  A pilot retiring at age 60 with 30 years of Credited Service at
retirement will have an additional five years of Credited Service (covering the
period between ages 60 and 65) added to the original 30.  A pilot retiring at
age 60-1/2, would receive an additional

 

4-1/2 years of Credited Service.

 

B-1

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Salaried Average Earnings:

 

 

 

Instead of the pilot’s pension being based on the average of his or her highest
four consecutive years of pension earnings, the pilot’s Salaried Average
Earnings will be based on the following table:

 

 

 

Salaried Average Earnings*

 

 

 

Will Be Based on This Number

 

If Pilot Retires:

 

Of Consecutive Calendar Years:

 

At or after 60 but before 61

 

1

 

At or after 61 but before 62

 

2

 

At or after 62 but before 63

 

3

 

At or after 63

 

4

 

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*Example:  If a pilot retires at age 60 or older but before age 61, his or her
Salaried Average Earnings would be the greater of:

 

His or her highest paid calendar year of Salaried Pension Earnings, or his or
her last 12 months of earned base and profit sharing (or, planned total
compensation for Plan Years beginning on or after January 1, 2008) up to the
pilot’s retirement date, where any profit sharing earned but not yet paid (or,
planned variable pay under the Annual Incentive Plan for Plan Years beginning on
or after January 1, 2008) by the retirement date is included based on the
rolling 4-quarter profit sharing rate in effect at the time.

 

Supplemental Benefits (B):

 

                Credited Service:

 

In addition to the pilot’s actual Credited Service up to the retirement date,
the pilot’s pension will be based on up to two years of additional Credited
Service.  The additional amount will be equal to the years and months between
the pilot’s actual age at retirement and age 62.  This additional amount will
also be used in determining the pilot’s eligibility for the 3M Bridge benefit.

 

Example:

 

A pilot retiring at age 60 with 30 years of Credited Service at retirement will
have an additional two years

 

B-2

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of Credited Service (covering the period between ages 60 and 62) added to the
original 30.  A pilot retiring at age 60-1/2, would receive an additional 1 1/2
years of Credited Service.

 

Salaried Average Earnings:

 

Instead of the pilot’s pension being based on the average of his or her highest
four consecutive years of Salaried Pension Earnings, the pilot’s Salaried
Average Earnings will be based on the following table:

 

 

 

Pilot’s Salaried Average Earnings*

 

 

 

Will Be Based on This Number

 

If Pilot Retires:

 

Of Consecutive Calendar Years:

 

At age 60

 

2

 

At age 60 & 1 month to age 61

 

3

 

At age 61 & 1 month or older

 

4

 

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Examples:

If a pilot retires at age 60, his or her Salaried Average Earnings would be the
greater of:

 

The pilot’s highest paid 2 consecutive calendar year of Salaried Pension
Earnings, or the pilot’s last 24 months of Salaried Pension Earnings up to his
or her retirement date.

 

If the pilot retires at age 61 and 1 month, his or her Salaried Average Earnings
would be the greater of:

 

The pilot’s highest four consecutive paid calendar year of Salaried Pension
Earnings, or the pilot’s last 48 months of Salaried Pension Earnings up to his
or her retirement date.

 

B-3

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