Document:

Exhibit 10.9

 

 

3M NONQUALIFIED PENSION PLAN III

 

(First
Effective January 1, 2009)

 

 

 

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

  

 

 

	
  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

  

 

 

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 

 

 

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 

 

2

 

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.

 

3

 

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.

 

4

 

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

 

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.

 

6

 

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.

 

7

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:

 

8

 

                (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, 

 

9

 

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).

 

10

 

(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).

 

11

 

(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.

 

12

 

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.

 

13

 

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.

 

14

 

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

 

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

 

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

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

 

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.

 

19

 

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.

 

20

 

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.  

 

21

 

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.

 

22

 

SCHEDULE I

 

	
  Member:

  	
   

  	
  Phil
  Yates

  
	
   

  	
   

  	
   

  
	
  Commencement
  Date:

  	
   

  	
  October 1,
  2011 (scheduled termination date)

  

 

 

SI-1

 

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

 

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

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

 

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

  	
   

  

*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

 

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

  	
   

  

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-3Exhibit 10.2

 

THIRTIETH AMENDMENT TO LOAN AND SECURITY
AGREEMENT

 

THIS THIRTIETH AMENDMENT TO LOAN AND SECURITY
AGREEMENT (this “Amendment”) is dated as of August 30,
2008 between BRAD FOOTE GEAR WORKS, INC. f/k/a BFG Acquisition Corp., an
Illinois corporation (“Borrower”) and LASALLE BANK NATIONAL ASSOCIATION f/k/a
LaSalle National Bank f/k/a LaSalle Bank NI (“Lender”).

 

WHEREAS, Borrower
and Lender have entered in that certain Loan and Security Agreement dated as of
January 17, 1997, as amended by those certain letter amendments dated February 28,
1997 and July 23, 1997 and those certain Third, Fourth, Fifth, Sixth,
Seventh, Eighth, Ninth, Eleventh, Twelfth, Thirteenth, Fourteenth, Fifteenth,
Sixteenth, Seventeenth, Eighteenth, Nineteenth, Twentieth, Twenty-First,
Twenty-Second, Twenty-Third, Twenty- Fourth, Twenty-Fifth, Twenty-Sixth,
Twenty-Seventh, Twenty-Eighth and Twenty-Ninth Amendments to Loan and Security
Agreement dated as of March 30, 1998, December 1, 1998, June 1,
1999, December 19, 2000, May 1, 2001, July 1, 2001, April 30,
2002, April 29, 2003, July 3, 2003, April 29, 2004, November 15,
2004, April 29, 2005, June 15, 2005, February 1, 2006, April 29,
2006, November 10, 2006, January 8, 2007, April 29, 2007, June 30,
2007, October 4, 2007, October 18, 2007, November 1, 2007, January 15,
2008, January 31, 2008, April 11, 2008 and June 30, 2008,
respectively, and that certain letter amendment (herein, the “Tenth Amendment”)
dated October 17, 2002 (such agreement, as so amended, the “Loan Agreement”)
with regard to the following loans made by Lender to Borrower: (i) a
$10,000,000.00 revolving line of credit loan (the “Revolving Loan”), (ii) a
consolidated term loan in the original principal sum of $7,899,332.98 (the “Term
Loan”), (iii) an $11,000,000.00 non-revolving equipment line of credit
loan with term conversion feature (the “Equipment Loan”), (iv) a
$9,000,000.00 non-revolving equipment line of credit loan with term conversion
feature (the “Equipment Loan No. 2”) and (v) all other Indebtedness (as
defined in the Loan Agreement); and

 

WHEREAS, Lender has
been asked to extend the maturity date of the Revolving Loan from August 30,
2008 to October 31, 2008 and to make certain modifications to the Loan
Agreement; and

 

WHEREAS, Lender has
agreed to the foregoing loan requests provided, among other conditions, that
Borrower executes and delivers to this Amendment and the note extension
agreement described below;

 

NOW, THEREFORE, for
valuable consideration, the receipt of which is hereby acknowledged, and in
consideration of the foregoing premises, the parties hereto agree as follows:

 

1

 

1.             The capitalized terms used herein
without definition shall have the same meaning herein as such terms have in the
Loan Agreement.

 

2.             The definition of “Termination Date”
in Section 1.1 of the Loan Agreement, is amended in its entirety to read
as follows:

 

“Termination Date” shall mean October 31, 2008, or such earlier date upon which the
Revolving Note becomes due and payable.

 

3.             The first sentence of the first
paragraph in Section 2.3 of the Loan Agreement is amended to read as
follows:

 

“2.3
Revolving Note. The Revolving Loan shall be evidenced by an amended and
restated renewal revolving note, executed by the Borrower, dated January 15,
2008, as modified by Note Extension Agreements dated as of June 30, 2008
and August 30, 2008, payable to the Lender on October 31, 2008, and
in the principal sum of Ten Million and 00/100 ($10,000,000.00) Dollars (the “Revolving
Note”).”

 

Hereafter,
all references in the Loan Agreement and in this Amendment to the term “Revolving
Note” shall be deemed to refer to the aforesaid amended and restated renewal
revolving note dated January 15, 2008 in the principal sum of
$10,000,000.00, executed by Borrower, as modified by Note Extension Agreements
dated as of June 30, 2008 and August 30, 2008, payable to the order
of Lender on October 31, 2008, together with interest payable monthly as
therein described.

 

4.             In Section 14.1 of the Loan Agreement, the
following subsection (g) entitled “Minimum Excess Borrowing
Availability” is hereby deleted without substitution:

 

“(g)         Minimum Excess Borrowing
Availability. Borrower will at all times on and after May 15, 2008,
have a minimum $3,000,000.00 of Excess Borrowing Availability.”

 

5.             All references in the Loan
Agreement to any requirement for J. Cameron Drecoll to maintain a life
insurance policy in place as security for the Revolving Loan are hereby
deleted. The Bank agrees to execute and deliver to Borrower such releases as
shall be required to effect such release.

 

6.             The Borrower acknowledges and
agrees that the Loan Agreement is and as amended hereby shall remain in full
force and effect, and that the Collateral is and shall remain subject to the lien
and security interest granted and provided for by the Loan Agreement as amended
hereby, for the benefit and security of (a) all obligations and
indebtedness heretofore, now or hereafter owed by Borrower to Lender,
including, without limitation, the indebtedness evidenced by the Revolving
Note, the Term Note, the Equipment Note, the Equipment No. 2 and all other

 

2

 

Indebtedness (including, without limitation, the repayment of all sums
when due under the Subsidiary Guaranty).

 

7.             Without limiting
the foregoing, the Borrower hereby agrees that, notwithstanding the execution
and delivery hereof, (i) all rights and remedies of the Lender under the
Loan Agreement, (ii) all obligations and indebtedness of the Borrower
thereunder, and (iii) the lien and security interest granted and provided
for thereby are and as amended hereby shall remain in full force and effect for
the benefit and security of all obligations and indebtedness of the Borrower
thereunder, including, without limitation, the indebtedness evidenced by the
Revolving Note, the Term Note, the Equipment Note, the Equipment Note No. 2
and all other Indebtedness (including, without limitation, the repayment of all
sums when due under the Subsidiary Guaranty), it being specifically understood
and agreed that this Amendment shall constitute and be an acknowledgment and
continuation of the rights, remedies, lien and security interest in favor of
the Lender, and the obligations and indebtedness of the Borrower to the Lender,
which exist under the Loan Agreement as amended hereby, each and all of which
are and shall remain applicable to the Collateral.

 

This Amendment confirms and assures a lien and continuing first
priority security interest in the Collateral heretofore granted in favor of the
Lender under the Loan Agreement, and nothing contained herein shall in any
manner impair the priority of such lien and security interest.

 

8.             In order to induce
Lender to enter into this Amendment, the Borrower hereby represents and
warrants to the Lender that as of the date hereto, each of the representations
and warranties set forth in the Loan Agreement, as amended hereby, are true and
correct and the Borrower is in full compliance with all of the terms and
conditions of the Loan Agreement, as amended hereby, and no Event of Default or
Default has occurred and is continuing.

 

9.             Except as
specifically amended and modified hereby, all of the terms and conditions of
the Loan Agreement shall stand and remain unchanged and in full force and
effect. This instrument shall be construed and governed by and in accordance
with the laws of the State of Illinois (exclusive of choice of law principles).

 

10.           Borrower further
agrees to reimburse the Lender for its reasonable legal fees incurred in
documenting the aforesaid loan extension hereinabove described.

 

[signature page follows]

 

3

 

IN
WITNESS WHEREOF, the parties have entered into this Thirtieth Amendment to Loan
and Security Agreement as of date first above written.

 

	
  Borrower:

  
	
   

  
	
  BRAD
  FOOTE GEAR WORKS, INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ J.
  Cameron Drecoll

  	
   

  
	
   

  	
  J.
  Cameron Drecoll

  
	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  
	
   

  
	
  Lender:

  
	
   

  
	
  LASALLE
  BANK NATIONAL ASSOCIATION

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Katherine M. Novey

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
						

 

4

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