Document:

Exhibit
10.2

 

 

3M NONQUALIFIED PENSION PLAN II

 

(Amended and Restated
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 

  	
  2

  
	
   

  	
  2.01

  	
  Annuity Starting Date

  	
  2

  
	
   

  	
  2.02

  	
  Code

  	
  3

  
	
   

  	
  2.03

  	
  Compensation Committee

  	
  3

  
	
   

  	
  2.04

  	
  Discharge for Cause

  	
  3

  
	
   

  	
  2.05

  	
  ERIP

  	
  3

  
	
   

  	
  2.06

  	
  Former Member

  	
  3

  
	
   

  	
  2.07

  	
  Member

  	
  3

  
	
   

  	
  2.08

  	
  Nonqualified Plan I

  	
  3

  
	
   

  	
  2.09

  	
  Nonqualified Plan II

  	
  3

  
	
   

  	
  2.10

  	
  Nonqualified Plan II Benefit

  	
  4

  
	
   

  	
  2.11

  	
  Plan Administrator

  	
  4

  
	
   

  	
  2.12

  	
  Retirement; Retire

  	
  4

  
	
   

  	
  2.13

  	
  Separation from Service

  	
  4

  
	
   

  	
  2.14

  	
  Specified Employee

  	
  5

  
	
   

  	
  2.15

  	
  Supplemental Plan

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III: ELIGIBILITY AND PARTICIPATION

  	
  5

  
	
   

  	
  3.01

  	
  Eligibility

  	
  5

  
	
   

  	
  3.02

  	
  Participation

  	
  5

  
	
   

  	
  3.03

  	
  Forfeiture

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV: AMOUNT AND DISTRIBUTION OF BENEFITS

  	
  6

  
	
   

  	
  4.01

  	
  Additional Monthly Benefit

  	
  6

  
	
   

  	
  4.02

  	
  Time of Payment

  	
  7

  
	
   

  	
  4.03

  	
  Form of Payment

  	
  9

  
	
   

  	
  4.04

  	
  Pre-Commencement Death.

  	
  11

  
	
   

  	
  4.05

  	
  Beneficiary

  	
  12

  
	
   

  	
  4.06

  	
  Incapacity

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V: UNFUNDED PLAN

  	
  13

  
	
   

  	
  5.01

  	
  No Trust

  	
  13

  

 

 

 

	
   

  	
  5.02

  	
  No Contributions by Members

  	
  13

  
	
   

  	
  5.03

  	
  Unsecured Creditor Status

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI: PLAN ADMINISTRATION

  	
  13

  
	
   

  	
  6.01

  	
  Powers and Duties of the Plan Administrator

  	
  13

  
	
   

  	
  6.02

  	
  Records

  	
  14

  
	
   

  	
  6.03

  	
  Advisers

  	
  14

  
	
   

  	
  6.04

  	
  Payment of Expenses

  	
  14

  
	
   

  	
  6.05

  	
  Indemnity of the Plan Administrator

  	
  14

  
	
   

  	
  6.06

  	
  Service of Process

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII: AMENDMENT AND TERMINATION

  	
  15

  
	
   

  	
  7.01

  	
  Right to Amend

  	
  15

  
	
   

  	
  7.02

  	
  Termination

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII: MISCELLANEOUS 

  	
  15

  
	
   

  	
  8.01

  	
  No Contract of Employment

  	
  15

  
	
   

  	
  8.02

  	
  No Assignment

  	
  16

  
	
   

  	
  8.03

  	
  Governing Law

  	
  16

  
	
   

  	
  8.04

  	
  Separable Provisions

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX: CHANGE IN CONTROL

  	
  16

  
	
   

  	
  9.01

  	
  Distribution Following Change in Control

  	
  16

  
	
   

  	
  9.02

  	
  Definition of Change in Control

  	
  17

  
	
   

  	
  9.03

  	
  Determination of Present Value

  	
  17

  
	
   

  	
  9.04

  	
  Tax Equalization

  	
  17

  
	
   

  	
  9.05

  	
  Fees and Expenses

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE
  I

  	
  SI-1

  

 

 

 

3M
NONQUALIFIED PENSION PLAN II

 

ARTICLE
I:  INTRODUCTION

 

1.01        Title

 

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

 

1.02        Purpose

 

The
purpose of this Nonqualified Plan II is to provide retirement benefits to a
select group of participants and their beneficiaries in the 3M Employee
Retirement Income Plan (hereinafter “ERIP”) which such ERIP is unable to
provide solely because of the limitations imposed by section 401(a)(17) of
the Code and section 402(g) of the Code.  This Nonqualified Plan II is not intended to
duplicate the retirement benefits provided under the 3M Nonqualified Pension
Plan I.

 

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 is hereby 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 II is hereby again amended and
restated.  The provisions of this
restatement supersede all prior versions of the Plan.  The purpose of this restatement is
twofold:  (1) to limit the
supplemental retirement benefits hereunder to benefits that are strictly in
excess of the limitations under section 401(a)(17) and section 402(g) of
the Code, and (2) to bring the 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 Plan continued to operate 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
prior to January 1, 2009 will be determined in accordance with the
provisions of the Plan in effect at the time of their benefit commencement and
will not be adjusted or recomputed to reflect this or any subsequent amendment
or restatement of this Nonqualified Plan II.

 

ARTICLE
II:  DEFINITIONS

 

Except
where specifically defined in this Nonqualified Plan II, 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 II, the terms and
conditions of the ERIP shall govern the construction and administration of this
Nonqualified Plan II.

 

2.01        Annuity Starting Date

 

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

 

2

 

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.

 

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 II, 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 II
Benefit under the provisions of this Nonqualified Plan II.

 

2.07        Member

 

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

 

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.

 

3

 

2.10        Nonqualified Plan II Benefit

 

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

 

2.11        Plan Administrator

 

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

 

2.12        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).

 

2.13        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)).

 

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.  

 

4

 

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.

 

2.14        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.

 

2.15        Supplemental Plan

 

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

 

ARTICLE
III:  ELIGIBILITY AND PARTICIPATION

 

3.01        Eligibility

 

Any
employee of 3M or an affiliate who is a Participant in the ERIP and whose
Salaried Pension Earnings are limited (1) by application of section
401(a)(17) of the Code or (2) by reason of the employee’s Participation in
the 3M VIP Excess Plan (as described in Section 4.01 below) shall be
eligible to become a Member in this Nonqualified Plan II.

 

3.02        Participation

 

Participation in this Nonqualified Plan II shall be automatic by
operation of Section 4.01 without any 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 II 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 

 

5

 

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.

 

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 II shall pay an additional
monthly benefit to such Member or Former Member determined in accordance with
this Section 4.01.  Such additional
benefit shall be referred to herein as the “Nonqualified Plan II Benefit”.

 

                (a)           The Nonqualified Plan II Benefit shall equal the amount by
which (i) exceeds (ii), where:

 

                                (i) 
is the monthly Retirement Income that would have been payable to such Member or
Former Member by the ERIP if Salaried Pension Earnings were not limited (1) by
application of section 401(a)(17) of the Code or (2) by reason of the
Member’s or Former Member’s participation in the 3M VIP Excess Plan (as
described in Section 4.01(b) below); and

 

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

 

                (b)           For purposes of this determination, the following rules shall
apply:

 

                                (i)            Planned total compensation (for Plan
Years beginning on or after January 1, 2008) or wages and salaries (for 

 

6

 

Plan
Years ending on or before December 31, 2007) that is not voluntarily
deferred under a 3M nonqualified deferred compensation plan and which is
excluded from Salaried Pension Earnings under the ERIP solely by reason of
application of the section 401(a)(17) limit shall be treated as Salaried
Pension Earnings.

 

                                (ii)           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 is voluntarily
deferred under a 3M nonqualified deferred compensation plan and which, absent
such deferral, would be excluded from Salaried Pension Earnings by reason of
application of the section 401(a)(17) limit shall be treated as Salaried
Pension Earnings.

 

                                (iii)          Planned total compensation (for Plan
Years beginning on or after January 1, 2009) that does not exceed the
section 401(a)(17) limit but which is excluded from Salaried Pension
Earnings under the ERIP because it is deferred under the 3M VIP Excess Plan by
reason of application of the limit on regular (non-catch up) VIP deferrals
under section 402(g) of the Code ($15,500 for 2008, as adjusted from
time to time for cost-of-living increases) shall be treated as Salaried Pension
Earnings.

 

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

 

4.02        Time of Payment

 

Payment of the
Nonqualified Plan II 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:

 

                (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 

 

7

 

elect to receive their
Nonqualified Plan II 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 II 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 II 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 II 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 II 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 II 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 II 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 II Benefit prior to January 1,
2009 shall receive payment of their Nonqualified Plan II 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).

 

8

 

4.03        Form of Payment

 

(a)           Lump
Sum.  Except as otherwise provided in
this Section 4.03, the Nonqualified Plan II 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 II 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 preceeding 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 II 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
II Benefit shall be paid in a single lump sum pursuant to Section 4.03(a).

 

(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 II Benefit shall be the Life Annuity
form, and his or her Nonqualified Plan II 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 II 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 II Benefit shall be paid in the form of a 50% 

 

9

 

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 (collectively, “Annuity
Eligible Former Members”) were permitted to make a one-time irrevocable
election in 2008 to elect to receive their Nonqualified Plan II 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 II 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).

 

(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 II 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 with
respect to the Nonqualified Plan II 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 

 

10

 

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.

 

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 II 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 II
Benefit attributable to Portfolio II an immediate single lump sum, determined
by converting the monthly Nonqualified Plan II Benefit amount in Section 4.01
into a 

 

11

 

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.

 

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 II 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 II 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.

 

Any
payment made pursuant to this Section shall be in complete 

 

12

 

discharge
of the obligation therefor under this Nonqualified Plan II.

 

ARTICLE V:  UNFUNDED
PLAN

 

5.01        No Trust

 

The
benefits payable under this Nonqualified Plan II shall be paid solely from the
general assets of 3M.  3M does not intend
to create any trust in connection with this Nonqualified Plan II.  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 II 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 II.

 

5.03        Unsecured Creditor Status

 

No
Member, Former Member or Beneficiary shall have any right to receive any
payments from this Nonqualified Plan II 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 II shall be no greater than the rights of an unsecured
general creditor of 3M.

 

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 II 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
II, 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 

 

13

 

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 II; 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 II.  The Plan Administrator shall be entitled to
rely conclusively upon, and shall 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 II, 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 II, 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.

 

14

 

6.06        Service of Process

 

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

 

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 II 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 II 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 II
shall not affect 3M’s obligation to pay the benefits already earned under the
provisions of such Plan in effect prior to the termination.

 

ARTICLE
VIII:  MISCELLANEOUS

 

8.01        No Contract of Employment

 

This
Nonqualified Plan II 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.

 

15

 

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 II.  All payments and the rights to
all payments of benefits under this Nonqualified Plan II are expressly declared
to be nonassignable and nontransferable. 
Neither this Nonqualified Plan II 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 II 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 II shall be interpreted and enforced in
accordance with the laws of the State of Minnesota.

 

8.04        Separable Provisions

 

In
the event any provision of this Nonqualified Plan II 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 II
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 II shall terminate and 3M shall immediately distribute the remaining
accrued retirement benefits hereunder to 

 

16

 

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
II.

 

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.

 

9.03        Determination of Present Value

 

Except where otherwise expressly provided in this Nonqualified Plan II,
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 

 

17

 

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.  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.

 

18

 

SCHEDULE I

 

	
  Member:

  	
  Phil Yates

  
	
   

  	
   

  
	
  Commencement Date:

  	
  October 1, 2011
  (scheduled termination date)

  

 

SI-1Exhibit 10.6

 

HORMEL FOODS CORPORATION

NONEMPLOYEE DIRECTOR DEFERRED STOCK PLAN

(Plan Adopted October 4, 1999; Amended and Restated Effective January 1,
2008)

 

1.                                       Introduction.

 

1.1.          Plan History.  The Hormel Foods Corporation Nonemployee
Director Deferred Stock Plan (the “Plan”) was first adopted October 4,
1999 and first restated November 24, 2003 (collectively, the “Prior Plan
Documents”).  The Plan was again amended
and restated September 18, 2006 to comply with Section 409A of the
Internal Revenue Code, but only with respect to deferred compensation credited
under the Plan which relates all or in part to services performed on or after January 1,
2005 (“Non-Grandfathered Deferrals”). 
Deferred compensation credited under the Plan which relates entirely to
services performed on or before December 31, 2004 continues to be governed
by the terms of the Prior Plan Documents (“Grandfathered Deferrals”).  With respect to Non-Grandfathered Deferrals,
the Plan is hereby amended and restated, effective January 1, 2008, to
bring the Plan into compliance with final Treasury regulations issued under Section 409A
of the Internal Revenue Code, and to allow Participants, during a limited
period ending December 31, 2008, an opportunity to change the form of
payment for distribution elections from one form of payment permitted under the
Plan to a different form of payment permitted under the Plan for all amounts
credited to the Plan that are subject to Section 409A of the Code (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).

 

1.2.          Purpose.  The purpose of the Plan is to provide an
opportunity for nonemployee members of the Board of Directors (the “Board”) of
Hormel Foods Corporation (the “Company”) to increase their ownership of the
Common Stock, par value $.0586 per share, of the Company (“Common Stock”), and
thereby align their interest in the long-term success of the Company with that
of the other stockholders of the Company. 
This will be accomplished by allowing each participating director to
elect voluntarily to defer all or a portion of his or her retainer and meeting
fees into the right to receive shares of Common Stock at a later date pursuant
to elections made by such director under this Plan.

 

2.                                       Eligibility.  Individuals who are members of the Board of
the Company (“Directors”) and who are not also officers or other employees of
the Company or its subsidiaries are eligible to participate in this Plan (“Eligible
Directors”).

 

3.                                       Administration.  This Plan will be administered by the
Compensation Committee of the Board (the “Committee”), which is composed solely
of two or more Nonemployee Directors (as defined in Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).  All questions of interpretation of this Plan
will be determined by the Committee, and each determination, interpretation or
other action that the Committee makes or takes pursuant to the provisions of
this Plan will be conclusive and binding for all purposes and on all
persons.  The Committee will not be
liable for any action or determination made in good faith with respect to this
Plan.

 

1

 

4.                                       Election
to Defer Receipt of Retainer and Fees.

 

4.1.          Election to Defer
Cash Compensation.  Each Eligible
Director who decides to participate in this Plan (a “Participating Director”)
may irrevocably elect to defer receipt of cash equal to 25%, 50%, 75% or 100%
of the annual cash retainer (“Retainer”) payable to that Director for services
to be rendered as a Director in the “Plan Year” (as defined below) following
such election and 25%, 50%, 75% or 100% of the meeting fees payable for
attendance at Board meetings or meetings of Committees of the Board (“Meeting
Fees”) otherwise payable to such Director for services performed after the
effective date of the Deferral Election (as defined in Section 4.2).  As of the date of adoption of this amended
and restated Plan, Eligible Directors are customarily paid the Retainer
one-half on February 1 and one-half on August 1 of each year, and
Meeting Fees are paid on the day of the meeting.  As used herein, “Plan Year” means the
12-month period which runs from January 1 through December 31.  The amounts to be deferred will be in the
form of Common Stock units credited to an account for the Participating
Director (a “Deferred Stock Account”). 
No shares of Common Stock will be issued to a Participating Director
until he or she receives a payment under the Plan pursuant to Section 6.

 

4.2.          Manner of Making
Deferral Election.  A Participating
Director may elect to defer payment of Retainer and Meeting Fees pursuant to
this Plan by filing, no later than December 31 of each year (or by such
earlier date as the Committee shall determine), an irrevocable election with
the Committee on a form provided for that purpose (“Deferral Election”).  The Deferral Election shall be effective with
respect to the Retainer and Meeting Fees otherwise payable for services
performed during the following Plan Year unless the Participating Director
shall revoke or change the election in accordance with the procedure set forth
in Section 4.6.  The Deferral
Election form shall specify an amount to be deferred expressed as a percentage
of the Participating Director’s Retainer and Meeting Fees.

 

4.3.          Credits to
Deferred Stock Account for Deferrals. 
On the last business day of each calendar quarter of the Plan Year (the “Credit
Date”), a Participating Director shall receive a credit to his or her Deferred
Stock Account.  The amount credited shall
be in the form of stock units in a number equal to the number of shares of
Common Stock (rounded to the nearest one-hundredth of a share) determined by
dividing (i) the product of an amount equal to the Retainer and Meeting
Fees specified for deferral that would otherwise have been paid to the
Participating Director for the applicable calendar quarter multiplied by 105%
by (ii) the Fair Market Value of one share of Common Stock on the Credit
Date.

 

4.4.          Dividend Credit.  Each time a dividend is paid on the Common
Stock, the Participating Director shall receive a credit of stock units to his
or her Deferred Stock Account equal to either the number of shares (if a stock
dividend is paid) or that number of shares of Common Stock (rounded to the
nearest one-hundredth of a share) having a Fair Market Value on the dividend
payment date (if a cash dividend is paid) equal to the amount of the dividend
that would have been payable on the number of shares of Common Stock equal to
the number of stock units credited to the Participating Director’s Deferred
Stock Account on the dividend record date.

 

2

 

4.5.          Fair Market Value.  For purposes of converting dollar amounts
into shares of Common Stock, the Fair Market Value of each share of Common
Stock shall be equal to the closing price of one share of the Company’s Common
Stock on the New York Stock Exchange-Composite Transactions (or such other
principal stock exchange on which the Common Stock may then be listed) on the
last business day of the applicable calendar quarter of the Plan Year for
credits under Section 4 or the applicable payment date pursuant to Section 6.

 

4.6.          Change in
Election.  Prior to the first day of
the Plan Year for which a Deferral Election is to become effective, each
Participating Director may irrevocably elect in writing to change a Deferral
Election, either to change the percentage of such Director’s Retainer and
Meeting Fees to be deferred or to discontinue making deferrals and currently
receive the entire Retainer and Meeting Fees in cash (an “Amended Election”).  Once a Deferral Election becomes effective as
of the first day of a Plan Year, such election shall be irrevocable, and an
Amended Election may only be made with respect to Retainer and Meeting Fees
paid for services performed on or after the first day of the Plan Year
commencing after the date of receipt of such Amended Election by the Company.

 

4.7.          Termination of Service
as a Director.  If a Participating
Director leaves the Board before the conclusion of any Plan Year calendar
quarter, he or she will be paid the quarterly installment of the Retainer and
Meeting Fees entirely in cash, notwithstanding that a Deferral Election or
Amended Election is on file with the Committee. 
The date of termination of a Participating Director’s service as a
Director of the Company will be deemed to be the date of termination recorded
on the personnel or other records of the Company or the Board.

 

5.                                       Shares
Available for Issuance.

 

5.1.          Maximum Number of
Shares Available.  Subject to
adjustment pursuant to Section 5.2, the maximum number of shares of Common
Stock that shall be available for issuance under this Plan shall be 300,000.  Shares issuable under this Plan may be either
authorized but unissued shares, shares held in the treasury of the Company or
shares acquired on the open market or otherwise.

 

5.2.          Adjustments to
Shares.  In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend, an appropriate adjustment will
be made in the number and/or kind of securities available for issuance under
this Plan to prevent either the dilution or the enlargement of the rights of
the Eligible Directors and Participating Directors.

 

6.                                       Deferral
Payment.

 

6.1.          Deferral Payment
Election.  At the time of making the
Deferral Election, each Participating Director shall also complete a deferral
payment election specifying one of the payment options described in Sections
6.2 and 6.3, and the year following separation from service (as that term is
defined under Section 409A of the Internal Revenue Code) in which amounts
credited to the Participating Director’s Deferred Stock Account shall be paid
in a lump sum pursuant to Section 6.2, or in which installment payments
shall commence pursuant to 

 

3

 

Section 6.3.  The deferral payment election shall be
irrevocable as to all amounts credited to the Participating Director’s Deferred
Stock Account.  The Participating
Director may change the deferral payment election by means of a subsequent
deferral payment election in writing that will take effect for deferrals
credited for Plan Years after the date the Company receives such subsequent
deferral payment election.

 

6.2.          Payment of
Deferred Stock Accounts in a Lump Sum. 
Unless a Participating Director elects to receive payment of his or her
Deferred Stock Account in installments as described in Section 6.3,
credits to a Participating Director’s Deferred Stock Account shall be payable
in full on February 15 of the year following the Participating Director’s
separation from service (or the first business day thereafter) or such other
later date as elected by the Participating Director pursuant to Section 6.1.  All payments shall be made in shares of
Common Stock, with one share of Common Stock issued for each stock unit
credited to the Participating Director’s Deferred Stock Account, plus cash in
lieu of any fractional share.

 

6.3.          Payment of
Deferred Stock Accounts in Installments. 
A Participating Director may elect to have his or her Deferred Stock
Account paid in annual installments commencing the year following separation
from service or commencing in a later year as elected by the Participating
Director pursuant to Section 6.1. 
All payments shall be made in shares of Common Stock, with one share of
Common Stock issued for each stock unit credited to the Participating Directors
Deferred Stock Account, plus cash in lieu of any fractional share.  All installment payments shall be made
annually on February 15 of each year (or the first business day
thereafter).  The amount of each
installment payment shall be computed as the number of shares credited to the
Participating Director’s Deferred Stock Account on the relevant installment
payment date, multiplied by a fraction, the numerator of which is one and the
denominator of which is the total number of installments elected (not to exceed
ten) minus the number of installments previously paid.  Amounts paid prior to the final installment
payment shall be rounded to the nearest whole number of shares; the final
installment payment shall be for the whole number of stock units then credited
to the Participating Director’s Deferred Stock Account, together with cash in
lieu of any fractional share.

 

6.4.          Change of Control.  Notwithstanding the foregoing, in the event
of a Participating Director’s separation from service within six months
following a Change of Control (as defined in Section 11), credits to a
Participating Director’s Deferred Stock Account shall be paid in a lump sum
(notwithstanding any prior election to the contrary) to the Participating
Director or the Participating Director’s beneficiary or estate, as the case may
be, in whole shares of Common Stock (together with cash in lieu of a fractional
share).

 

6.5.          Specified
Employees.  Notwithstanding the
foregoing, if a Participating Director is a “specified employee” (as that term
is defined under Section 409A), the Director’s Deferred Stock Account
following separation from service shall be payable no earlier than six months
after such separation from service.

 

6.6.          Transition
Benefits.  Participants shall be
afforded an opportunity to change the form of payment for distribution
elections from one form of payment permitted under the Plan to a different form
of payment permitted under the Plan for all amounts credited to the Plan that
are subject to Section 409A of the Code (i.e.,
generally, amounts deferred or 

 

4

 

contributed into
the Plan on or after January 1, 2005). 
Such change must be made on or before December 31, 2008 and must
comply in all other respects 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.

 

7.                                       Limitation
on Rights of Eligible and Participating Directors.

 

7.1.          Service as a
Director.  Nothing in this Plan will
interfere with or limit in any way the right of the Company’s Board or its
stockholders to remove an Eligible Director or Participating Director from the
Board.  Neither this Plan nor any action taken
pursuant to it will constitute or be evidence of any agreement or
understanding, express or implied, that the Company’s Board or its stockholders
have retained or will retain an Eligible Director or Participating Director for
any period of time or at any particular rate of compensation.

 

7.2.          Nonexclusivity of
the Plan.  Nothing contained in this
Plan is intended to effect, modify or rescind any of the Company’s existing
compensation plans or programs or to create any limitations on the Board’s
power or authority to modify or adopt compensation arrangements as the Board
may from time to time deem necessary or desirable.

 

8.                                       Plan
Amendment, Modification and Termination. 
The Board may suspend or terminate this Plan at any time.  The Board may amend this Plan from time to
time in such respects as the Board may deem advisable in order that this Plan
will conform to any change in applicable laws or regulations or in any other
respect that the Board may deem to be in the Company’s best interests.  If there is a termination of the Plan with
respect to all Participants, the Board shall have the right, in its sole
discretion, and notwithstanding any elections made by the Participant, to amend
the Plan to immediately pay all benefits in a lump sum following such Plan
termination, to the extent permissible under Section 409A of the Internal
Revenue Code.

 

9.                                       Effective
Date and Duration of the Plan.  This
Plan shall become effective as of the date the Board approves this Plan and
will continue until the earlier to occur of (i) the termination of the
Plan by Board or (ii) the tenth anniversary of the date of approval of
this Plan by the Board.

 

10.                                 Participants
Are General Creditors of the Company. 
The Participating Directors and beneficiaries thereof shall be general,
unsecured creditors of the Company with respect to any payments to be made
pursuant to this Plan and shall not have any preferred interest by way of
trust, escrow, lien or otherwise in any specific assets of the Company.  Although the Company expects to set aside
monies or other assets to meet its obligations hereunder (there being no
obligation to do so), the same shall, nevertheless, be regarded as a part of
the general assets of the Company subject to the claims of its general
creditors, and neither any Participating Director nor any beneficiary thereof
shall have a legal, beneficial or security interest therein.

 

11.                                 Change
of Control.  “Change of Control”
means the occurrence of a “change in the ownership of the Company,” “change in
effective control of the Company,” and/or a “change in the ownership of a
substantial portion of the Company’s assets” as defined under Treasury
Regulation § 1.409A-3(i)(5).

 

5

 

12.                                 Miscellaneous.

 

12.1.        Securities Law and
Other Restrictions.  Notwithstanding
any other provision of  this Plan or
any Deferral Election or Amended Election delivered pursuant to this Plan, the
Company will not be required to issue any shares of Common Stock under this
Plan and a Participating Director may not sell, assign, transfer or otherwise
dispose of shares of Common Stock issued pursuant to this Plan, unless (a) there
is in effect with respect to such shares a registration statement under the
Securities Act of 1933, as amended (the “Securities Act”) and any applicable
state securities laws or an exemption from such registration under the
Securities Act and applicable state securities laws and (b) there has been
obtained any other consent, approval or permit from any other regulatory body
that the Committee, in its sole discretion, deems necessary or advisable.  The Company may condition such issuance, sale
or transfer upon the receipt of any representations or agreements from the
parties involved, and the placement of any legends on certificates representing
shares of Common Stock, as may be deemed necessary or advisable by the Company,
in order to comply with such securities law or other restriction.

 

12.2.        Governing Law.  The validity, construction, interpretation,
administration and effect of this Plan and any rules, regulations and actions
relating to this Plan will be governed by and construed exclusively in
accordance with the internal laws (without regard to conflict of laws
principles) of the State of Delaware.

 

6

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