Document:

Exhibit 10.4

 

BEHRINGER
HARVARD HOLDINGS

SERVICE MARK LICENSE AGREEMENT

 

THIS SERVICE MARK LICENSE
AGREEMENT (this “Agreement”) is made and entered
into this 2nd day of September, 2008, (the “Effective Date”), by and between
BEHRINGER HARVARD HOLDINGS, LLC, a Delaware limited liability company (the “Licensor”), and BEHRINGER HARVARD MULTIFAMILY REIT I,
INC., a Maryland corporation (the “Licensee”).

 

RECITALS

 

WHEREAS, Licensor is the owner of valid and subsisting rights
in and to the service marks “BEHRINGER HARVARD” (U.S. Registration No. 2,947,624);
and the “BEHRINGER HARVARD MISCELLANEOUS CIRCULAR DESIGN LOGO” (U.S.
Registration No. 3,200,214) (referred to herein collectively as the “Licensed Mark”) and similar marks in a variety of design and
words-only formats, both in the United States and in various foreign
jursidictions; and

 

WHEREAS, of
even date herewith, Behringer Harvard Multifamily Advisors I LP, a Texas
limited partnership and an affiliate of Licensor (the “Advisor”),
and Licensee have entered into an Advisory Management Agreement, pursuant to
the terms of which Advisor will provide certain management and financial
advisory services to Licensee in accordance with the terms and conditions
thereof (the “Advisory Agreement”); and

 

WHEREAS,
Licensor is a “sponsor” of Licensee, as that term is defined in the charter of
Licensee; and

 

WHEREAS, for so
long as Licensor desires to sponsor Licensee, Licensor desires to permit
Licensee to utilize the Licensed Mark solely in connection with the operation
and promotion of Licensee’s real estate business as intended to be conducted as
of the Effective Date (the “REIT Operations”).

 

NOW, THEREFORE,
in consideration of the mutual covenants and promises contained in this
Agreement, the Advisory Agreement and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged and accepted by
the parties to this Agreement, Licensor and Licensee mutually agree as follows:

 

AGREEMENTS

 

1.              Grant of
License; Territory.

 

a.                                       Upon
the terms and conditions hereinafter set forth, Licensor hereby grants to
Licensee, for the period specified in Section 5 hereof, a non-exclusive,
royalty-free, limited and nontransferable license to use the Licensed Mark
solely for the purpose of identifying and promoting the REIT Operations
worldwide.  In addition, each person or
entity directly or indirectly controlled by Licensee on or after the Effective
Date, either through the ownership of voting securities or otherwise (each such
person or entity a “Licensee Subsidiary”),
shall have all of the rights granted to Licensee in this Section 1(a), but
only during such period that such person or entity is directly or indirectly
controlled by Licensee, either through the ownership of voting securities or
otherwise.  Any reference in this
Agreement to use of the Licensed Mark by or other actions of Licensee shall be
deemed to include use of the Licensed Mark by or other actions of any Licensee
Subsidiary during such period that such Licensee Subsidiary is directly or indirectly
controlled by Licensee, either through the ownership of voting securities or
otherwise.

 

 

b.                                      Licensor
expressly reserves all rights with respect to the Licensed Mark not expressly
granted herein.  Except as provided in Section 1(a) with
respect to a Licensee Subsidiary, Licensee shall have no right to sublicense
the use of the Licensed Mark to any other person or entity without the prior
written consent of Licensor, which may be withheld or granted in Licensor’s
sole and absolute discretion.

 

2.              Acknowledgement
of Ownership.

 

a.                                       Licensee
acknowledges the great value of the goodwill associated with the Licensed Mark
and the ownership of the Licensed Mark by Licensor.  Licensee agrees that nothing in this
Agreement shall give Licensee any right, title, or interest in or to the
Licensed Mark other than the rights granted the Licensee in accordance with
this Agreement.  Licensee further
acknowledges that all goodwill arising from the ownership and use of the Licensed
Mark (as distinguished from any enhancement of value to Licensee’s business
arising from the license granted hereunder) shall inure exclusively to the
benefit of Licensor.  All artwork,
designs, stylized logotypes or other presentation materials whatsoever
including the Licensed Mark or any elements thereof, and all copies and
extracts thereof shall, notwithstanding their invention or use by Licensee, be
and remain the sole property of Licensor. 
Nothing in this Agreement shall be construed to prevent Licensor from
granting any other licenses for the use of the Licensed Mark or from utilizing
the Licensed Mark, or any variation thereof, in any manner whatsoever.

 

b.                                      Licensee
agrees that it shall not attack the title of Licensor to the Licensed Mark, the
validity of the Licensed Mark, or the validity of this Agreement.  Licensee further agrees that it shall not at
any time commence any opposition or cancellation proceeding regarding the
Licensed Mark, or any other mark of Licensor, with the U.S. Patent and Trademark
Office or any other agency that registers trademarks, commence any civil
proceeding for damages or injunctive relief or make any other legal claim that
would, directly or indirectly, hinder the value of or the Licensor’s ownership
or use of the Licensed Mark or prevent the U.S. Patent and Trademark Office or
any other agency that registers trademarks from issuing a trademark
registration to Licensor for the Licensed Mark, or any variations thereof, or
from renewing any trademark registration for the Licensed Mark, or any
variations thereof.

 

c.                                       Licensee
shall not register or attempt to register the Licensed Mark alone or as part of
its own trademark, service mark, Internet domain name, copyright, assumed name
or trade name (except as may be otherwise required by applicable law in connection
with Licensee’s REIT Operations during the term of this Agreement), nor shall
Licensee use in such manner or attempt to register any name or designation
confusingly similar to the Licensed Mark as determined in Licensor’s sole and
absolute discretion.

 

d.                                      Licensee
may not use the Licensed Mark in any manner to disparage Licensor, its products
or services, or in any manner which, in Licensor’s reasonable judgment, may
diminish or otherwise damage Licensor’s goodwill in the Licensed Mark or
Licensor’s business reputation.

 

e.                                       The
provisions of this Section 2 shall survive the expiration or termination
of this Agreement for any reason.

 

3.              Quality
Control.

 

a.                                       Licensee
shall use the Licensed Mark solely as permitted in Section 1(a) above
in a manner that will reasonably protect Licensor’s rights and goodwill
therein, and will comply with all reasonable and customary trademark usage
guidelines delivered to Licensee by Licensor from time to time, including those
regarding the use of notices, legends, or markings that may be required by
Licensor in order to give customary notice of ownership, including those
provided in Section 4 hereof.

 

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b.                                      Licensee
shall, upon Licensor’s reasonable request: (i) permit Licensor to inspect
the manner in which the Licensee exercises the rights granted hereunder to use
the Licensed Mark, and (ii) make available for Licensor’s inspection, at
reasonable times and after reasonable notice from Licensor, all of Licensee’s
materials relating to or displaying the Licensed Mark or any elements thereof.

 

c.                                       Licensee
agrees that the products and/or services offered in connection with the
Licensed Mark shall be sold and/or distributed in accordance with all Federal,
State and local laws.

 

d.                                      If
at any time the Licensee’s promotional materials, documents or signage bearing
the Licensed Mark do not meet the quality standards described in this Section 3,
Licensor shall have the right to require the Licensee to discontinue any and
all such nonconforming uses of the Licensed Mark immediately upon notice
whereupon Licensee agrees to use its best efforts to cease all such
nonconforming uses immediately.

 

4.                                      Protection
of Licensed Mark.

 

a.                                       Each
time the Licensed Mark is used on any product, document, signage, exterior
display or other printed or tangible material or on the Internet, Licensee
shall legibly include either the trademark or service mark notice “TM” or “SM”,
as appropriate, or the Federal registration notice ®, if directed to do so by
Licensor, adjacent to the first prominent use of the Licensed Mark therein or
thereon.

 

b.                                      When
directed by Licensor to do so, Licensee shall include the following notice on
any packaging, product, advertising, or promotional materials incorporating the
Licensed Mark presented in any medium now known or hereafter created:

 

“BEHRINGER HARVARD”
is a service mark of Behringer Harvard Holdings, LLC.

 

c.                                       Licensee
agrees to provide Licensor with such assistance as Licensor may reasonably
require, at Licensor’s expense, in the procurement of any protection of
Licensor’s rights to the Licensed Mark, or any similar mark.

 

d.                                      Licensee
agrees that at all times during the term of this Agreement it will diligently
and continuously cause to be promoted and rendered the REIT Operations as set
forth in Section 1 hereof.  Licensor
shall not be under any obligation whatsoever to utilize the Licensed Mark or
any variation thereof.

 

5.                                      Term.

 

This Agreement shall continue in force and effect from
the Effective Date and shall be coterminous with the Licensor’s sponsorship of
Licensee, unless terminated earlier as provided for herein.  For purposes of the preceding sentence,
Licensor’s sponsorship shall be deemed to continue until such time that no
Affiliate (as that term is defined in the Advisory Agreement) of Licensor
serves as an officer or director of Licensee.

 

6.                                      Termination.

 

a.                                       If
Licensee breaches or otherwise fails to perform any of its obligations
hereunder, Licensor shall have the
right to terminate this Agreement upon thirty (30) days’ prior written notice
to Licensee, but only in the event such failure of performance is not cured to
Licensor’s satisfaction within such thirty (30) day period.  Such termination of this Agreement shall be
without prejudice to any rights 

 

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or remedies that Licensor
may otherwise have against Licensee, which rights and remedies shall survive
any such termination.

 

b.                                      If
at any time during the term of this Agreement Licensee ceases to conduct the
REIT Operations under the Licensed Mark, Licensor, in addition to all other
remedies available to it hereunder, may immediately terminate this Agreement by
giving written notice of termination to Licensee.

 

c.                                       If
Licensee files a petition in bankruptcy or is adjudicated bankrupt or if a
petition in bankruptcy is filed against Licensee or if it becomes insolvent, or
makes an assignment for the benefit of its creditors or an arrangement pursuant
to any bankruptcy law, or if Licensee liquidates or discontinues its business
or if a receiver is appointed for it or its business, the license hereby
granted and this Agreement shall automatically terminate forthwith without any
notice whatsoever being necessary.  In
the event this Agreement is so terminated, Licensee, its receivers,
representatives, trustees, agents, administrators, successors and/or assigns
shall have no right to sublicense, sell, exploit or in any way deal with or in
or use the Licensed Mark or any variation thereof, except with and under the special
consent and instructions of Licensor in writing, which they shall be obligated
to follow.

 

d.                                      Upon
termination of this Agreement for any reason, Licensee agrees:  (i) to, within a reasonable time but not
to exceed ninety (90) days, discontinue all use of the Licensed Mark and any
name confusingly similar thereto; (ii) to, within a reasonable time but
not to exceed ninety (90) days, delete, remove or cover-over all references to
the Licensed Mark, or any confusingly similar variation thereof, in all of Licensee’s
printed materials, signage or other exterior displays, and on the Internet; (iii) to
not thereafter, directly or indirectly, identify itself in any manner as a
licensee of Licensor or publicly identify itself as a former licensee of
Licensor; (iv) to cooperate generally with Licensor to ensure that all
rights in the Licensed Mark and the related goodwill remain the property of
Licensor and to execute any instruments requested by Licensor to accomplish or
confirm the foregoing; (v) that all rights granted to Licensee hereunder
shall forthwith revert to Licensor without consideration other than the mutual
covenants and considerations of this Agreement, and without notice; (vi) to
cease to conduct any business, including, without limitation, the REIT Operations,
under or to otherwise use the names “HARVARD” or “BEHRINGER” or any confusingly
similar terms and to use its best efforts to change the corporate name of
Licensee to a name that does not contain the terms “HARVARD” or “BEHRINGER” or
any confusingly similar terms which may, directly or indirectly in the sole
discretion of Licensor, indicate a continuing relationship between, or
sponsorship of, Licensee by Licensor or any of Licensor’s Affiliates; and (vii) to
deliver to Licensor within fifteen days from the date of termination any and
all artwork, designs, stylized logotypes or other electronic or intangible
presentation materials whatsoever including the Licensed Mark or any elements
thereof prepared by or for Licensee, and all copies and extracts thereof.

 

e.                                       Licensee
acknowledges that its failure to cease the use and display of the Licensed
Mark, or any variation thereof, upon the termination or expiration of this
Agreement will result in immediate and irremediable damage to Licensor and to
the rights of any current or subsequent licensee.  Licensee acknowledges and admits that there
is no adequate remedy at law for such failure to cease such use, and Licensee
agrees that in the event of such failure Licensor shall be entitled to
equitable relief by way of temporary and permanent injunction and temporary
restraining order and such other further relief as any court with jurisdiction
may deem just and proper.  Resort to any
remedies referred to herein shall not be construed as a waiver of any other rights
and remedies to which Licensor is entitled under this Agreement or otherwise.

 

7.                                      Third-Party
Infringement Proceedings.

 

Licensee agrees to promptly notify Licensor of any
unauthorized use of the Licensed Mark or any confusingly similar variation thereof
by third parties of which Licensee becomes aware.  Licensor shall 

 

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have the sole right to
pursue through negotiations, litigation, or other dispute resolution procedure
(“Litigation Rights”) any and all of its
rights in the Licensed Mark against any third party.  Licensor’s exercise of such Litigation Rights
shall be in its sole discretion and shall be at its sole cost.  Licensor shall have no duty to defend
Licensee or itself or pursue any actual infringement arising out of any actions
by a third party.  All recoveries
received by Licensor in pursuing its Litigation Rights, if any, shall be the
sole property of Licensor.

 

8.                                      Representations
and Warranties.

 

a.                                       Licensor represents and warrants that this
Agreement will not violate any prior licenses or rights to use the Licensed
Mark granted by Licensor to any third party.

 

b.                                      Each
party hereto hereby represents and warrants to the other that such party has
the corporate, company or partnership power and authority to execute and
deliver this Agreement and to perform its obligations hereunder, and that the
execution, delivery and performance of this Agreement by it have been duly
authorized by all necessary corporate, company or partnership action.

 

9.                                      Indemnification.

 

                                                Licensee hereby agrees to indemnify and hold
Licensor harmless from and against any and all claims, suits, liabilities,
judgments, and expenses, arising at law or in equity, attributable, in whole or
in part, to: (i) the Licensee’s use of the Licensed Mark in violation of
this Agreement or of any trademark usage guidelines provided to Licensee by
Licensor; or (ii) the marketing, promotion, advertisement, distribution,
or sale by Licensee of any product or service under the Licensed Mark.  Moreover, Licensee hereby further agrees to
tender to Licensor the defense of any and all such claims, actions and lawsuits
that may be brought against Licensor arising out of, or related to, the
wrongful use of the Licensed Marks by the Licensee and the Licensee shall pay
all fees and expenses (including all reasonable attorneys’ and expert witnesses’
fees and costs of suit) incurred in connection with defending all of these
claims, actions and lawsuits; provided that Licensee shall have no obligation
to pay any fees or expenses for claims, actions and lawsuits brought by a third
party against the Licensor claming that the Licensed Mark violates or infringes
upon the rights of the third party. 
Licensor shall control such defense with counsel of its choice, however,
Licensee shall have the right to participate in such defense at its own cost
and expense and Licensee shall provide reasonable cooperation to Licensor and
its counsel with respect thereto; provided that in no event may Licensor settle
any claim, action or lawsuit in which the Licensee or a Licensee Subsidiary is
a named defendant without the consent of the Licensee.  Licensor shall also have the independent
right to take any action it may deem necessary, in its sole discretion, to
protect and defend itself against any threatened action arising out of the
business of Licensee or any actions or activity by Licensee, including Licensee’s
use of the Licensed Mark or any goods or services distributed or sold under the
Licensed Mark.  Notwithstanding the foregoing,
Licensee’s exculpation and indemnification obligations hereunder as well as
Licensee’s obligations with respect to the advancement of expenses, shall be
limited as provided in its charter.

 

10.                               Limitation
of Liability

 

Licensor shall not be liable to Licensee for lost
profits, lost business opportunities, or any other indirect, special, punitive,
incidental or consequential damages arising out of or related to this
Agreement, even if Licensor has been advised of the possibility of such
damages.  The provisions of this Section 10
shall survive the termination of this Agreement for any reason.

 

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11.                               Miscellaneous

 

a.                                       Assignment.  Licensee shall neither assign any of its
rights under this Agreement nor delegate any of its duties hereunder to another
person or legal entity without the prior written consent of Licensor, which may
be withheld in Licensor’s sole discretion. 
Any attempt to assign or delegate this Agreement, or any of the rights,
licenses or duties set forth herein, shall be void ab initio and convey no
rights or interests in the Licensed Mark. 
Licensor shall have the right, in its sole discretion, to assign any of
its rights or duties under this Agreement and all of its right, title, and interest
in the Licensed Mark to another person or legal entity.  Notwithstanding anything to the contrary
herein, this Section 11(a) shall not limit the rights granted in Section 1(a) with
respect to a Licensee Subsidiary.

 

b.                                      Notices.  All
notices or other communications required or permitted to be given by either
party hereto to the other party under this Agreement shall be in writing and
shall be sent by United States Mail, certified or registered, postage prepaid,
return receipt requested or by an internationally recognized overnight
carrier, in each case addressed to the party to be notified as follows:

 

(i) to
Licensee at the address set forth in the Advisory Agreement, as the same may be
modified as provided therein; and

 

	
  (ii) to
  Licensor:

  	
   

  	
  Behringer
  Harvard Holdings, LLC

  
	
   

  	
   

  	
  15601
  Dallas Parkway

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Addison,
  Texas 75001

  
	
   

  	
   

  	
  Attention:
  Gerald J. Reihsen III

  
	
   

  	
   

  	
  Executive
  Vice President Corporate

  
	
   

  	
   

  	
  Development
  and Legal

  
	
   

  	
   

  	
   

  
	
  With
  a copy to (which shall not constitute notice):

  
	
   

  
	
   

  	
   

  	
  Stephen
  L. Sapp, Esq.

  
	
   

  	
   

  	
  Locke
  Lord Bissell & Liddell LLP

  
	
   

  	
   

  	
  2200
  Ross Avenue, Suite 2200

  
	
   

  	
   

  	
  Dallas,
  Texas 75201

  

 

Notice
delivered by mail shall be deemed given on the third Business Day after being
deposited in a post office or other depository under the care or custody of the
United States Postal Service, enclosed in a wrapper with proper postage
affixed.  Notice given by overnight
courier shall be deemed given upon receipt by the recipient of notice.  Licensor may change the address for notice
specified herein by providing written notice to Licensee as set forth herein.

 

c.                                       Independent
Contractors.  The parties acknowledge
and agree that they are dealing with each other hereunder as independent
contractors.  Nothing contained in this
Agreement shall be interpreted as constituting either party the joint venturer
or partner of the other party or as conferring upon either party the power or
authority to bind the other party in any transaction with third parties.

 

d.                                      Attorneys’
Fees.  In the event of any action,
suit, or proceeding brought by either party to enforce the terms of this
Agreement, the prevailing party shall be entitled to receive its costs, expert
witness fees, and reasonable attorneys’ fees and expenses, including costs and
fees on appeal.

 

e.                                       Waivers,
Cumulative Remedies and Amendments. 
This Agreement may be amended, modified, superseded, or canceled, and
the terms and conditions hereof may be waived only by a written 

 

6

 

instrument signed by each
of the parties hereto or, in the case of a waiver, by the party waiving
compliance.  No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any right
hereunder, nor any single or partial exercise of any rights hereunder, preclude
any other or further exercise thereof or the exercise of any other right
hereunder.  Unless expressly set forth
herein to the contrary, either party’s election of any remedies provided for in
this Agreement shall not be exclusive of any other remedies available hereunder
or otherwise and all such remedies shall be deemed to be cumulative.

 

f.                                         Approval.  Any approval given by Licensor to Licensee
under the terms of this Agreement shall not constitute a waiver of any of
Licensor’s rights or Licensee’s duties under any provision of this Agreement,
other than with respect to the provision for which such specific approval was
provided, subject to the other provisions hereof.

 

g.                                      Survival.  Upon the termination of this Agreement for
any reason, those Sections that by their express terms or which by their nature
should be deemed to survive the termination of this Agreement shall survive the
termination of this Agreement.

 

h.                                      Governing
Law and Validity.  The parties agree
that the laws of the State of Texas shall govern the interpretation and
enforcement of this Agreement, without giving effect to choice of law
rules.  If any provision of this
Agreement is held to be void, invalid or inoperative, such event shall not
affect any other provisions herein, which shall continue and remain in full
force and effect as though such void, invalid or inoperative provision had not
been a part hereof.

 

i.                                          Entire
Agreement.  This Agreement
constitutes the entire agreement between the parties hereto with respect to the
Licensed Mark and related subject matter and supersedes all prior agreements
and understandings, oral and written, between the parties hereto with respect
to such matters.

 

[Signature Page Follows]

 

7

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the Effective Date.

 

	
   

  	
  LICENSOR:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER
  HARVARD HOLDINGS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Gerald J. Reihsen , III

  
	
   

  	
   

  	
  Gerald
  J. Reihsen, III

  
	
   

  	
   

  	
  Executive
  Vice President – Corporate Development & 

  Legal

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LICENSEE:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD MULTIFAMILY REIT I, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Gerald J. Reihsen , III

  
	
   

  	
   

  	
  Gerald J.
  Reihsen, III

  
	
   

  	
   

  	
  Executive
  Vice President – Corporate Development &

  Legal

  

 

8Exhibit 10.1

 

3M VIP Excess Plan

 

ARTICLE 1

 

Purpose

 

The purpose of this Plan
is to attract and incent eligible highly compensated employees to remain with
3M by offering them the opportunity to earn additional retirement benefits by
deferring the receipt of a portion of their compensation on a tax-favored
basis, with the belief that such opportunity will permit these employees to
increase their long-term financial security. 
The Plan does this by supplementing the before-tax deferral provisions
of the 3M Voluntary Investment Plan and Employee Stock Ownership Plan (VIP),
which are limited by the requirements of the Internal Revenue Code.

 

ARTICLE 2

 

Definitions

 

For the purposes of this
Plan, the following words and phrases shall have the meanings indicated, unless
the context clearly indicates otherwise:

 

2.1                                 ACCOUNT. 
“Account” or “Accounts” means the record of the amounts credited to a
Participant under the Plan pursuant to Article 6.

 

2.2                                 BENEFICIARY.  “Beneficiary” means the person, persons or
entity designated by the Participant, or as provided in Article 8, to
receive any unpaid balance in such Participant’s Accounts following his or her
death.

 

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

 

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

 

2.5                                 COMPANY. 
“Company” means 3M Company (“3M”), its U.S. affiliates and subsidiaries
and any successor to the business thereof.

 

 

2.6                                 EFFECTIVE DATE.  “Effective Date” means January 1, 2009,
the effective date of this Plan.

 

2.7                                 ELIGIBLE COMPENSATION.  “Eligible Compensation” of a Participant for
any Plan Year means base pay plus any variable pay (including annual incentive
(AIP), sales commissions and management objective, but excluding any portion of
such variable pay that is payable in restricted stock units) earned by the
Participant during such Plan Year that either (i) exceeds the Indexed
Compensation Limit for such Plan Year, or (ii) becomes payable to such
Participant after such Participant’s elective deferrals under the VIP during
such Plan Year have reached the applicable dollar limit on such deferrals
imposed by section 402(g) of the Code (regardless of whether or not the
Participant is eligible to make or is actually making catch-up deferrals as
authorized by section 414(v) of the Code). 
Eligible Compensation does not include incentives, awards, foreign
service premiums and allowances, income arising from stock options, separation
pay, employer contributions to employee benefit plans, reimbursements or
payments in lieu thereof, or lump sum payouts of a Participant’s unused
vacation benefits.

 

2.8                                 EMPLOYEE. 
“Employee” means any person employed by the Company as an active regular
common-law employee who is recognized as such on 3M’s human resources/payroll
systems; including such persons who are United States citizens but on
assignment outside of this country and resident aliens employed in the United
States; but excluding any person covered by a collective bargaining agreement
to which the Company is a party.

 

2.9                                 INDEXED COMPENSATION LIMIT.  “Indexed Compensation Limit” means the annual
amount of compensation that may be recognized by a qualified retirement plan
under section 401(a)(17) of the Code (as adjusted annually for increases in the
cost of living).

 

2.10                           PARTICIPANT.  “Participant” means any Employee who has
elected to make contributions to this Plan after satisfying the eligibility
requirements of Section 4.1.

 

2.11                           PLAN. 
“Plan” means the plan described in this document, as it may be amended
from time to time.  The official name of
the Plan shall be the 3M VIP Excess Plan.

 

2.12                           PLAN ADMINISTRATOR.  “Plan Administrator” means the person to whom
the Committee has delegated the authority and responsibility for administering
the Plan.  Unless and until changed by
the Committee, the Plan Administrator of the Plan shall be 3M’s Vice President,
Compensation and Benefits or his or her successor.

 

 

2.13                           PLAN YEAR.  “Plan Year” means the 12-month period from January 1
through December 31 in respect of which a Participant may contribute to
the Plan.  The first Plan Year shall
begin on January 1, 2009.

 

2.14                           PORTFOLIO III VIP.  “Portfolio III VIP” means the provisions of
the 3M Voluntary Investment Plan and Employee Stock Ownership Plan applicable
to those eligible employees who were hired or rehired by the Company after December 31,
2008.

 

2.15                           RETIRE or RETIREMENT.  “Retire” or “Retirement” means an Employee’s
Separation from Service with the Company after attaining age 55 with at least
five years of employment service or after attaining age 65.

 

2.16                           SEPARATION FROM SERVICE.  “Separation from Service” means a “separation
from service” as defined in Treas. Reg. Section 1.409A-1(h)(1) or
such other regulation or guidance issued under section 409A of the Code.  Whether a Separation from Service has
occurred depends on whether the facts and circumstances indicate that 3M and
the Participant reasonably anticipated that no further services would be
performed after a certain date or that the level of bona fide services the
Participant would perform after such date (whether as an employee or
independent contractor) would permanently decrease to no more than twenty
percent (20%) of the average level of bona fide services performed (whether as
an employee or an independent contractor) over the immediately preceding
thirty-six (36) month period).  A
Separation from Service shall not be deemed to occur while the Participant 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 Participant
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 Participant 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
Participant to be unable to perform the duties of his or her position of
employment.

 

2.17                           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.

 

2.18                           3M. 
“3M” means 3M Company, a Delaware corporation.

 

2.19                           UNFORESEEABLE FINANCIAL EMERGENCY.  “Unforeseeable Financial Emergency” means an “unforeseeable
emergency” (as defined in Treas. Reg. section 1.409A-3(i)(3) or such other
regulation or guidance issued under section 409A of the Code.

 

 

2.20                           VALUATION DATE.  “Valuation Date” shall have the same meaning
as that term is defined for purposes of the VIP.

 

2.21                           VIP. 
“VIP” means the 3M Voluntary Investment Plan and Employee Stock
Ownership Plan, as it may be amended from time to time.

 

ARTICLE 3

 

Effective Date

 

The provisions of the
Plan shall take effect on January 1, 2009. 
This Plan shall continue in operation and effect until 3M terminates it
in accordance with the provisions of Section 10.2.

 

ARTICLE 4

 

Eligibility and Participation

 

4.1                                 ELIGIBILITY.  An Employee shall be eligible to participate
in the Plan by making contributions for a Plan Year if as of the November 1st
immediately preceding such Plan Year:

 

(a)                                  such Employee is employed by the Company;

 

(b)                                 such Employee is eligible to make
contributions under the VIP; and

 

(c)                                  such Employee had estimated annual
planned total cash compensation (base pay plus variable pay, including annual
incentive, sales commissions and management objective) that exceeds the Indexed
Compensation Limit in effect for the calendar year including such November 1st.

 

The eligibility of
Employees to participate in this Plan by making contributions shall be
determined each Plan Year, and no Employee shall have any right to make
contributions in any Plan Year by virtue of having an Account as a result of
making contributions in any prior Plan Year.

 

 

4.2                                 ELECTION TO CONTRIBUTE.  In order to make contributions under the Plan
for any Plan Year, an Employee who meets the eligibility requirements of Section 4.1
must enroll via the Plan’s Internet site. 
To be effective, an Employee’s enrollment must elect the amount of his
or her contributions, authorize the reduction of his or her Eligible
Compensation as needed to make such contributions, select the time and form of
payment of such contributions and the earnings thereon, specify the investment
fund or funds in which such contributions are to be treated as being invested,
and provide such other pertinent information as the Plan Administrator may
require.  The time period during which
enrollments will be accepted each Plan Year will be established by the Plan
Administrator, but in no event will any enrollment be accepted after the
beginning of the Plan Year to which such enrollment relates.

 

4.3                                 DURATION OF CONTRIBUTION ELECTION.  Each eligible Employee’s election to make
contributions to the Plan made in accordance with the requirements of Section 4.2
shall expire as of the end of the Plan Year to which it relates, although it
shall apply to any Eligible Compensation paid after the end of such Plan Year
if such Eligible Compensation was earned during such Plan Year.  Participants may not change or revoke their
contribution elections for a Plan Year after the enrollment period for the Plan
Year has ended.

 

4.4                                 DURATION OF PARTICIPATION.  A Participant’s participation in the Plan
shall continue until all amounts credited to his or her Accounts have been
distributed, or until the Participant’s death, if earlier.

 

ARTICLE 5

 

Contributions

 

5.1                                 PARTICIPANT CONTRIBUTIONS.  A Participant may contribute (defer) from 2
percent to 10 percent (but only a whole percentage) of his or her Eligible
Compensation earned during the Plan Year to which such Participant’s election
relates; provided, however, that the percentage of Eligible Compensation that a
Participant elects to contribute to the Plan for a Plan Year must be the same
as the Participant’s elective deferral percentage under the VIP during such
Plan Year.  The percentage the
Participant elects to contribute (defer) shall be deducted from each payment of
such Participant’s Eligible Compensation earned during such Plan Year, whether
paid during or following such Plan Year.

 

5.2                                 COMPANY MATCHING CONTRIBUTIONS.  As soon as administratively feasible
following each payroll payment from which Participant contributions are
withheld, the Company shall make a matching contribution on behalf of each
Participant who has made 

 

 

contributions to the Plan from such payment equal to
the following percentage of such Participant’s contributions made pursuant to Section 5.1
which does not exceed six percent of such Participant’s Eligible Compensation
for the payroll period corresponding to such payment (“Eligible Matching
Contributions”):

 

(a)                                  Sixty percent of such Eligible Matching
Contributions if the Participant participates under the Portfolio I provisions
of the 3M Employee Retirement Income Plan;

 

(b)                                 Seventy-five percent of such Eligible
Matching Contributions if the Participant participates under the Portfolio II
provisions of the 3M Employee Retirement Income Plan; or

 

(c)                                  One hundred percent of such Eligible
Matching Contributions if the Participant is covered by the Portfolio III VIP.

 

5.3                                 COMPANY NONELECTIVE CONTRIBUTIONS.  Only for those Employees covered by the
Portfolio III VIP, the Company shall make additional contributions to the Plan
on behalf of each Employee eligible to participate in this Plan for a Plan Year
equal to three percent of such Employee’s Eligible Compensation earned during
such Plan Year.  These additional Company
contributions shall be made to the Plan as soon as administratively feasible
following each payroll payment during or following the Plan Year corresponding
to the payroll period during which such Eligible Compensation was earned.

 

ARTICLE 6

 

Accounts

 

6.1                                 CREATION OF ACCOUNTS.  The Plan shall establish a separate Account
or Accounts for each Participant who elects to make contributions
hereunder.  A separate Account shall be
maintained for each Participant for each Plan Year that such Participant makes
contributions to the Plan.  The amount of
a Participant’s contributions hereunder shall be credited to such Participant’s
Account at the same time as or as soon as reasonably possible following the
dates on which the Company paid the Eligible Compensation from which such
contributions were deferred.  Company
matching and nonelective 

 

 

contributions shall be credited to separate Accounts
of those Participants eligible to receive such contributions pursuant to
Sections 5.2 and 5.3 at the same time as or as soon as reasonably possible
following the dates on which the Company makes such contributions to the Plan.

 

6.2                                 EARNINGS ON ACCOUNTS.  Each Participant’s Accounts shall be credited
with investment earnings or losses based on the performance of the investment
funds selected by such Participant.  The
investment funds available to the Participants in this Plan shall be the same
as the investment funds available to the participants in the VIP, excluding the
3M Stock Fund and the VIP’s brokerage window, but shall also include a fund
based on the return of the Growth Factor as defined for purposes of the 3M
Deferred Compensation Plan.  Participants
may allocate the amounts credited to their Accounts among such investment funds
in whole percentages of from one percent to one hundred percent.  The deemed investment earnings or losses on
such VIP funds for purposes of this Plan shall equal the actual rate of return
on such funds in the VIP net of any fees or expenses chargeable thereto,
including but not limited to management fees, trustee fees, recordkeeping fees
and other administrative expenses.  In
the event that a Participant fails to select the investment fund or funds in
which his or her Accounts are deemed to be invested, such Participant will be deemed
to have allocated the entire amount credited to his or her Accounts to the
LifePath Portfolio fund with the target retirement year closest to the year in
which such Participant will attain age 65.

 

6.3                                 CHANGES IN INVESTMENT FUND
ALLOCATIONS.  Participants may change the
investment funds among which their Account balances or future contributions are
allocated at any time, subject to such rules as may be established by the
Plan Administrator.  Allocation changes
may only be made using the Plan’s Internet site or by speaking with a
representative of the Plan’s recordkeeper.

 

6.4                                 VALUATION OF ACCOUNTS.  The Accounts of all Participants shall be
revalued as of each Valuation Date following the Effective Date of this
Plan.  As of each Valuation Date, the value
of a Participant’s Account shall consist of the balance of such Account as of
the immediately preceding Valuation Date, increased by the amount of any
contributions made and credited thereto since the immediately preceding
Valuation Date, increased or decreased (as the case may be) by the amount of
deemed investment earnings or losses credited to the investment funds selected
by the Participant since the immediately preceding Valuation Date, and
decreased by the amount of any distributions made from such Account since the
immediately preceding Valuation Date.

 

6.5                                 VESTING OF ACCOUNTS.  A Participant shall always be 100% vested in
the value of his or her Accounts attributable to the Participant’s own
contributions (including any earnings thereon). 
A Participant shall vest in the value of his or her Accounts
attributable to the contributions made by the Company pursuant to Sections 5.2
and 5.3 (including any earnings thereon) in accordance with the following
schedule:

 

 

	
  Completed
  Years of

  Employment Service

  	
   

  	
  Extent of

  Vested Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less
  than 1 year

  	
   

  	
  0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  1
  year but less than 2 years

  	
   

  	
  40

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2
  years but less than 3 years

  	
   

  	
  70

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  3
  years or more

  	
   

  	
  100

  	
  %

  

 

6.6                                 STATEMENT OF ACCOUNT.  As soon as administratively feasible
following the end of each Plan Year, the Plan shall deliver to each Participant
a statement  of his or her Accounts in
the Plan.

 

ARTICLE 7

 

Distribution of Accounts

 

7.1                                 GENERAL RULES.  Except as provided in Sections 7.5, 10.2 and
12.1, no distribution of a Participant’s Accounts hereunder shall be made prior
to such Participant’s death, retirement or Separation from Service with the
Company.  All distributions of a
Participant’s Accounts shall be made in cash. 
When the Plan makes a distribution of less than the entire balance of a
Participant’s Account, the distribution shall be charged pro rata against each
of the investment funds to which the Account is then allocated.

 

7.2                                 DISTRIBUTION FOLLOWING SEPARATION FROM
SERVICE.  If a Participant incurs a
Separation from Service with the Company for any reason other than death or
Retirement, the entire vested balance of such Participant’s Accounts shall be
paid to the Participant in a single lump sum distribution in the month of July in
the Plan Year following the Plan Year in which such Participant’s Separation
from Service occurred (or in the month of January in the Plan Year
following the Plan Year in which such Participant’s Separation from Service
occurred if such Separation from Service occurred prior to July 1 of such
Plan Year).  Any unvested balance in such
Participant’s Accounts shall be forfeited at the same time that the Plan pays
the vested balance of such Participant’s Accounts to the Participant or, if no
portion of the Participant’s Accounts is vested, immediately following the
Participant’s Separation from Service.

 

7.3                                 DISTRIBUTION FOLLOWING RETIREMENT.  If a Participant Retires from employment with
the Company, the vested balance of such Participant’s Account shall be 

 

 

paid commencing at the time and in one of the
following methods of payment selected by such Participant at the time such
Participant elected to make contributions to the Plan for such Plan Year
pursuant to Section 4.2 (for this purpose, the election made by a Participant
with respect to the distribution of amounts contributed by such Participant for
a Plan Year shall be deemed to apply to the amounts contributed to the Plan by
the Company on behalf of such Participant for such Plan Year):

 

(a)                                  A single lump sum distribution; or

 

(b)                                 Ten or fewer annual installments, with
the amount of each installment payment being determined by multiplying the
balance in the Participant’s Account on the payment date by a fraction having a
numerator of one and a denominator equal to the remaining number of scheduled
installment payments.

 

All
lump sum and installment payments shall be made in the month of January or
July in the Plan Year or Years selected by the Participant; provided,
however, that no payments shall be made before the month of July in the
Plan Year following the Plan Year in which such Participant incurs a Separation
from Service with the Company (or in the month of January in the Plan Year
following the Plan Year in which such Participant’s Separation from Service occurred
if such Separation from Service occurred prior to July 1 of such Plan
Year), and provided further that no method of payment and commencement date
selected by a Participant shall require the Plan to make any payment more than
10 years after the end of the Plan Year in which such Participant Retires.  Upon the Retirement of a Participant on whose
behalf the Company made nonelective contributions pursuant to Section 5.3
for one or more Plan Years for which such Participant has not made an effective
election concerning the time and method of payment of the Account(s) attributable
to such nonelective contributions, the vested balance of such Participant’s
Account(s) attributable to such nonelective contributions shall be paid to
the Participant in a single lump sum distribution in the month of July in
the Plan Year following the Plan Year in which such Participant’s Separation
from Service occurred (or in the month of January in the Plan Year
following the Plan Year in which such Participant’s Separation from Service
occurred if such Separation from Service occurred prior to July 1 of such
Plan Year). Any unvested balance in such Participant’s Accounts shall be
forfeited at the same time that the Plan commences the payment of the vested
balance of such 

 

 

Participant’s
Accounts to the Participant or, if no portion of the Participant’s Accounts is
vested, immediately following the Participant’s Separation from Service.

 

7.4                                 DISTRIBUTION FOLLOWING DEATH.  If a Participant dies before distribution of
one or more of his or her Accounts has begun, the entire balance of such
Accounts (including any unvested balance in such Accounts) shall be paid to the
Participant’s Beneficiary in a single lump sum distribution in the month of July in
the Plan Year following the Plan Year in which such Participant died (or in the
month of January in the Plan Year following the Plan Year in which the
Participant died if the Participant died before July 1 of such Plan
Year).  If a Participant dies after
distribution of one or more of his or her Accounts has begun, the remaining
balance of such Accounts (if any) shall be paid to the Participant’s
Beneficiary in accordance with the method of payment chosen by the Participant.

 

7.5                                 UNFORESEEABLE FINANCIAL EMERGENCY
DISTRIBUTION.  Upon finding that a
Participant has suffered an Unforeseeable Financial Emergency, the Committee
may, in its sole discretion, permit the Participant to withdraw an amount from
his or her Account sufficient to alleviate the emergency.

 

7.6                                 WITHHOLDING; PAYROLL TAXES.  To the extent required by the laws in effect
at the time any payment is made, the Plan shall withhold from any payment made
hereunder any taxes required to be withheld for federal, state or local
government purposes.

 

ARTICLE 8

 

Designation of Beneficiaries

 

8.1                                 BENEFICIARY DESIGNATION.  Each Participant shall have the right at any
time to designate any person, persons, or entity, as Beneficiary or
Beneficiaries to whom payment of the Participant’s Account shall be made in the
event of the Participant’s death.  Any
designation made under the Plan may be revoked or changed by a new designation
made prior to the Participant’s death. 
Any such designation or revocation must be made in accordance with the rules established
by the Plan Administrator, and will not be effective until received by the
Plan.

 

8.2                                 BENEFICIARY PREDECEASES PARTICIPANT.  If a Participant designates more than one
Beneficiary to receive such Participant’s Account and any Beneficiary shall
predecease the Participant, the Plan shall distribute the deceased Beneficiary’s
share to the surviving Beneficiaries proportionately, as the portion designated
by the Participant for each bears to the total portion designated for all
surviving Beneficiaries.

 

 

8.3                                 ABSENCE OF EFFECTIVE DESIGNATION.  If a Participant makes no designation or
revokes a designation previously made without making a new designation, or if
all persons designated shall predecease the Participant, the Plan shall
distribute the balance of the deceased Participant’s Account in the manner
determined in accordance with the Participant’s designation in effect under the
VIP.  In the event such Participant has
no effective designation under the VIP, the Plan shall distribute the balance
of the deceased Participant’s Account to the first of the following survivors:

 

(a)           The Participant’s spouse;

 

(b)                                 Equally to the Participant’s children;

 

(c)                                  Equally to the Participant’s parents;

 

(d)                                 Equally to the Participant’s brothers and
sisters; or

 

(e)                                  The Participant’s estate executors or administrators.

 

8.4                                 DEATH OF BENEFICIARY.  If a Beneficiary to whom payments hereunder
are to be made pursuant to the foregoing provisions of this Article 8
survives the Participant but dies prior to complete distribution to the
Beneficiary of the Beneficiary’s share:

 

(a)                                  unless the Participant has otherwise
specified in his or her designation, the Plan shall distribute the
undistributed portion of such Beneficiary’s share to such person or persons,
including such Beneficiary’s estate, as such Beneficiary shall have designated
in a designation made with the Plan prior to such Beneficiary’s death (which
designation shall be subject to change or revocation by such Beneficiary at any
time); or

 

(b)                                 if the Participant’s designation
specifies that such Beneficiary does not have the power to designate a
successor Beneficiary or if such Beneficiary is granted such power but fails to
designate a successor Beneficiary prior to such Beneficiary’s death, the Plan
shall distribute the undistributed portion of such Beneficiary’s share to such
Beneficiary’s estate.

 

8.5                                 BENEFICIARY DISCLAIMER.  Notwithstanding the foregoing provisions of
this Article 8, in the event a Beneficiary, to whom payments hereunder
would otherwise be made, disclaims all or any portion of that Beneficiary’s
interest in such payments, such disclaimed portion of such Beneficiary’s
interest in such payments shall pass to the person or persons specified by the
Participant to take such disclaimed interest. 
In the event the Participant did not specify a person or persons to take
disclaimed interests, such 

 

 

disclaimed portion of such Beneficiary’s interest in
such payments shall pass to the person or persons who would be entitled thereto
pursuant to the Participant’s designation or the designation made with respect
to the VIP referenced above, whichever is applicable pursuant to the foregoing
provisions of this Article 8, if such Beneficiary had died immediately
preceding the death of the Participant.

 

ARTICLE 9

 

Unfunded Plan

 

9.01                           NO TRUST. 
This Plan is intended to be an “unfunded” plan of deferred compensation
for the Participants.  As such, the
benefits payable under this Plan will be paid solely from the general assets of
the Company.  The Company does not intend
to create any trust in connection with this Plan.  The Company shall not have any obligation to
set aside funds or make investments in the investment funds referred to in Article 6.  The Company’s obligations under this Plan
shall be merely that of an unfunded and unsecured promise to pay money in the
future.

 

9.02                           UNSECURED GENERAL CREDITOR.  No Participant or Beneficiary shall have any
right to receive any benefit payments from this Plan except as provided in
Articles 7 and 8.  Until such payments
are received, the rights of each Participant and Beneficiary under this Plan
shall be no greater than the rights of a general unsecured creditor of the
Company.

 

ARTICLE 10

 

Amendment and Termination of the Plan

 

10.1                           RIGHT TO AMEND.  3M may at any time amend or modify the Plan
in whole or in part; provided, however, that no amendment or modification shall
adversely affect the rights of any Participant or Beneficiary acquired under
the terms of the Plan as in effect prior to such action.  The consent of any Participant, Beneficiary,
employer or other person shall not be a requisite to such amendment or
modification of the Plan.

 

 

10.2                           TERMINATION.  While it expects to continue this Plan
indefinitely, 3M reserves the right to terminate the Plan at any time and for
any reason.  Upon the termination of the
Plan and to the extent permitted by section 409A of the Code, all elections to
contribute to the Plan shall be revoked and the Plan shall immediately
distribute in cash to the respective Participants and Beneficiaries the entire
remaining balances of the Accounts.

 

ARTICLE 11

 

General Provisions

 

11.1                           NONASSIGNABILITY.  Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate or convey in advance of
actual receipt the amounts, if any, payable hereunder.  All payments and the rights to all payments
are expressly declared to be nonassignable and nontransferable.  No part of the amounts payable hereunder
shall, prior to actual payment, be subject to seizure or sequestration for the
payment of any debts, judgments or decrees, or transferred by operation of law
in the event of a Participant’s or any Beneficiary’s bankruptcy or
insolvency.  No part of any Participant’s
Account may be assigned or paid to such Participant’s spouse in the event of
divorce pursuant to a domestic relations order.

 

11.2                           NOT A CONTRACT OF EMPLOYMENT.  The terms and conditions of this Plan shall
not be deemed to constitute a contract of employment between the Company and
any Participant, and the Participants (or their Beneficiaries) shall have no
rights against the Company except as may otherwise be specifically provided
herein.  Moreover, nothing in this Plan
shall be deemed to give any Participant the right to be retained in the
employment of the Company or to interfere with the right of the Company to
discipline or discharge such Participant at any time for any reason whatsoever.

 

11.3                           TERMS. 
Wherever any words are used herein in the singular or in the plural,
they shall be construed as though they were used in the plural or in the
singular, as the case may be, in all cases where they would so apply.

 

11.4                           CAPTIONS. 
The captions of the articles and sections of this Plan are for
convenience only and shall not control or affect the meaning or construction of
any of its provisions.

 

11.5                           GOVERNING LAW.  The provisions of this Plan shall be
construed and interpreted according to the laws of the State of Minnesota.

 

11.6                           VALIDITY. 
In case any provision of this Plan shall be ruled or declared invalid
for any reason, said illegality or invalidity shall not affect the remaining
parts hereof, but this 

 

 

Plan shall be construed and enforced as if such
illegal or invalid provision had never been inserted herein.

 

11.7                           CLAIMS PROCEDURE.  Any Participant or Beneficiary who disagrees
with any decision regarding his or her benefits under this Plan shall submit a
written request for review to the Plan Administrator.  The Plan Administrator shall respond in
writing to such a request within 60 days of his or her receipt of the
request.  The Plan Administrator may,
however, extend the reply period for an additional 60 days for reasonable
cause.  The Plan Administrator’s response
shall be written in a manner calculated to be understood by the Participant or
Beneficiary, and shall set forth:

 

(a)           the specific reason or reasons for
any denial of benefits;

 

(b)           specific references to the provision
or provisions of this Plan on which the denial is based;

 

(c)           a description of any additional information
or material necessary for the Participant or Beneficiary to improve his or her
claim, and an explanation of which such information or material is necessary;
and

 

(d)           an explanation of the Plan’s claims
review procedure and other appropriate information as to the steps to be taken
if the Participant or Beneficiary wishes to appeal the Plan Administrator’s
decision.

 

                If the Participant or Beneficiary disagrees with the
decision of the Plan Administrator, he or she shall file a written appeal with
the Committee within 120 days after receiving the Plan Administrator’s
response. The Committee shall respond in writing to such an appeal within 90
days of its receipt of the appeal.  The
Committee may, however, extend the reply period for an additional 90 days for
reasonable cause.  The Committee’s
response shall be written in a manner calculated to be understood by the
Participant or Beneficiary, and shall both set forth the specific reasons for
its decision and refer to the specific provision or provisions of the Plan on
which its decision is based.

 

11.8                           SUCCESSORS.  The provisions of this Plan shall bind and
inure to the benefit of the Company and its successors and assigns.  The term successors as used herein shall
include any corporation or other business entity which shall, whether by
merger, consolidation, purchase or otherwise, acquire substantially all of the
business and assets of the Company, and successors of any such corporation or
other business entity.

 

11.9                           INCOMPETENT.  In the event that it shall be found upon
evidence satisfactory to the Plan Administrator that any Participant or
Beneficiary to whom a benefit is payable under this Plan is unable to care for
his or her own affairs because of illness or accident, any 

 

 

payment due (unless prior claim therefore shall have
been made by a duly authorized guardian or other legal representative) may be
paid, upon appropriate indemnification of the Plan, to the spouse or other
person deemed by the Plan Administrator to have accepted responsibility for
such Participant or Beneficiary.  Any
such payment made pursuant to this Section 11.10 shall be in complete
discharge of any liability therefore under this Plan.

 

11.10                     INDEMNIFICATION. 
To the extent permitted by law, the Company shall indemnify the Plan
Administrator and the members of the Committee against any and all claims,
losses, damages, expenses and liability arising from their responsibilities or
the performance of their duties in connection with the Plan which is not
covered by insurance paid for by the Company, unless the same is determined to
be due to gross negligence or intentional misconduct.

 

ARTICLE 12

 

Change in Control

 

12.1                           TERMINATION UPON CHANGE IN CONTROL.  This Plan shall terminate and the Plan shall
immediately distribute in cash to the respective Participants the amounts
credited to all Accounts upon the occurrence of a Change in Control of 3M.

 

12.2                           DEFINITION OF CHANGE IN CONTROL.  For purposes of this Article 12, 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 in Treas.
Reg. section 1.409A-3(i)(5) or such other regulation or guidance issued
under section 409A of the Code.

 

12.3                           GROSS UP FOR EXCISE TAX.  In the event that the payments made pursuant
to this Article 12 are finally determined to be subject to the excise tax
imposed by section 4999 of the Code, the Company shall pay to each Participant
an additional amount such that the net amount retained by such Participant,
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 Account balance distributed to such Participant pursuant to this Article 12.  Payment of this additional amount shall be
made as soon as administratively feasible, but no later than two and one-half
months following the end of the Participant’s taxable year in which the Participant
remits the related taxes.  If a
Participant is a Specified Employee and such gross-up payment is made on
account of the Participant’s Separation from Service, payment shall not be made
prior to the first day of the seventh month following the Participant’s
Separation from Service.

 

 

REIMBURSEMENT OF FEES AND
EXPENSES.  The Company shall pay to each
Participant the amount of all reasonable legal and accounting fees and expenses
incurred by such Participant in seeking to obtain or enforce his or her rights
under this Article 12 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 12, unless a lawsuit
commenced by the Participant for such purposes is dismissed by the court as
being spurious or frivolous.  The Company
shall also pay to each Participant the amount of all reasonable tax and
financial planning fees and expenses incurred by such Participant in connection
with such Participant’s receipt of payments pursuant to this Article 12.  Payment of these legal and accounting fees,
as well as these tax and financial planning fees and expenses, shall be made as
soon as administratively feasible, but no later than two and one-half months
following the end of the Participant’s taxable year in which the Participant
incurs these fees and expenses.  If a
Participant is a Specified Employee and such payment is made on account of the
Participant’s Separation from Service, payment shall not be made prior to the
first day of the seventh month following the Participant’s Separation from
Service.

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