Form of Deferred Stock Unit Award Agreement for deferred stock units granted on or after January 1, 2019 to Non-Employee Directors under the 3M Company 2016 Long-Term Incentive Plan is

Article I.
Award of DSUs and dividend equivalents; SETTLEMENT

1.1 DSUs and Dividend Equivalents. 

(a) Effective as of the Grant Date specified above, the Company irrevocably grants to Participant an award of the number of DSUs specified above.  Each DSU represents the right to receive one Share on the terms, and subject to the conditions, set forth in this Agreement and the Plan.    

(b) Effective as of the Grant Date, the Company hereby grants to Participant a Dividend Equivalent for each DSU evidenced by this Agreement.  Each Dividend Equivalent represents the right to receive additional DSUs for each ordinary cash dividend paid on the outstanding shares of Common Stock that has a record date after the Grant Date set forth above and prior to the settlement date of the DSU to which such Dividend Equivalent relates.  The aggregate number of additional DSUs issued pursuant to this Agreement on all Dividend Equivalents for any ordinary cash dividend shall equal the product, rounded up to the nearest thousandth of a DSU, of (A) the aggregate number of DSUs evidenced by this Agreement on the record date for such dividend (including additional DSUs issued prior to the relevant record date pursuant to this Section 1.1(b), but excluding DSUs settled prior to the relevant record date), multiplied by (B) the per Share dollar amount of such dividend, divided by (C) the closing sales price (rounded to the nearest whole cent) for a Share, as quoted on the New York Stock Exchange for the last trading day immediately preceding the payment date of such dividend.  All additional DSUs issued pursuant to this Section 1.1(b) shall be subject to the same terms and conditions as the original DSUs to which they relate.  The addition of DSUs pursuant to this Section 1.1(b) shall continue until all of the DSUs evidenced by this Agreement have been settled or otherwise expires.

1.2 Settlement.

(a) All of Participant’s DSUs and any related Dividend Equivalents will be paid in Shares in a single lump sum in the first year following Participant’s Separation from Service (as such term is defined for purposes of the 3M Compensation Plan for Nonemployee Directors).

(b) Notwithstanding anything to the contrary in Section 1.2(a), if Participant completed and timely submitted to the Company an election to defer receipt (the “Payment  Election”) of all or any of the Shares underlying the DSUs in a form acceptable to the Company, then the Shares underlying the DSUs shall be distributable to Participant in accordance with the terms of the Payment Election.

(c) Notwithstanding anything to the contrary in this Agreement or the Plan, no DSUs or Dividend Equivalents shall be distributed to Participant pursuant to this Section 1.2 during the six-month period following Participant’s separation from service if the Company determines that distributing such DSUs and Dividend Equivalents at the time or times indicated in this Agreement would be a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code.  If the distribution of all or any of Participant’s DSUs and Dividend Equivalents is delayed as a result of the previous sentence, then such portion of the DSUs and Dividend Equivalents shall be paid to Participant during the thirty (30)-day period beginning on the first business day following the end of such six-month period (or such earlier date upon which such DSUs and Dividend Equivalents can be distributed under Section 409A without resulting in a prohibited distribution, including as a result of Participant’s death).

(d) Notwithstanding any provisions of this Agreement or the Plan to the contrary, the time of distribution of the DSUs and the Dividend Equivalents under this Agreement may not be changed except as may be permitted by the Administrator in accordance with Section 409A and the applicable Treasury Regulations promulgated thereunder.

Article II.

TAXATION AND TAX WITHHOLDING

2.1 Responsibility for Taxes.

(a) Participant acknowledges that, regardless of any action taken by the Company, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related items

related to Participant's participation in the Plan and legally applicable to Participant or deemed by the Company in its discretion to be an appropriate charge to Participant even if legally applicable to the Company (“Tax-Related Items”) is and remains Participant’s responsibility and may exceed the amount actually withheld by the Company.  Participant further acknowledges that the Company (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the DSUs, including, but not limited to, the grant of the DSUs or any related Dividend Equivalents, the subsequent sale of Shares acquired pursuant to the DSUs or any related Dividend Equivalents, and the receipt of any dividends; and (ii) does not commit to and is under no obligation to structure the terms of the grant or any aspect of the DSUs to reduce or eliminate Participant’s liability for Tax-Related Items or achieve any particular tax result.  Further, if Participant is subject to Tax-Related Items in more than one jurisdiction, Participant acknowledges that the Company may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b) Prior to the relevant taxable or tax withholding event, as applicable, Participant agrees to assist the Company in satisfying any applicable withholding obligations for Tax-Related Items.  In this regard, the Company, or their respective agents, at their discretion, may satisfy, or allow Participant to satisfy, the withholding obligation with regard to all Tax-Related Items by any of the following, or a combination thereof:

(i) By cash, check or wire transfer of immediately available funds; provided that the Company may limit the use of one of the foregoing methods if one or more of the methods below is permitted;

(ii) Delivery (including telephonically to the extent permitted by the Company) of a notice that Participant has placed a market sell order with a broker acceptable to the Company with respect to Shares then issuable upon settlement of the DSUs, and that the broker has been directed to deliver promptly to the Company funds sufficient to satisfy the obligation for Tax-Related Items; provided that such amount is paid to the Company at such time as may be required by the Company;

(iii) To the extent permitted by the Administrator, surrendering Shares then issuable upon settlement of the DSUs valued at their Fair Market Value on such date; or

(iv) By the deduction of such amount from other compensation payable to Participant.

(c) The Company has the right and option, but not the obligation, to treat Participant’s failure to provide timely payment of any Tax-Related Items as Participant's election to satisfy all or any portion of the Tax-Related Items pursuant to Section 2.1(b)(iii) or (iv) above, or a combination of such sections. 

(d) Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which case Participant may receive a refund of any over-withheld amount in cash through the Company’s normal payment processes for members of the Board and will have no entitlement to the Common Stock equivalent.  If the obligation for Tax-Related Items is satisfied by surrendering Shares, solely for tax purposes and not intended to modify or restrict in any way Section 4.2 of the Plan, Participant is deemed to have been issued the full number of Shares subject to the DSU, notwithstanding that a number of Shares are surrendered for the purpose of paying the Tax-Related Items.

(e) Finally, Participant agrees to pay to the Company any amount of Tax-Related Items that the Company may be required to withhold or account for as a result of Participant's participation in the Plan that cannot be satisfied by the means previously described.  The Company may refuse to issue or deliver the Shares or the proceeds from the sale of the Shares if Participant fails to comply with Participant's obligations in connection with the Tax-Related Items.

Article III.

other provisions

3.1 Nature of Grant.  In accepting the DSUs, Participant understands, acknowledges, and agrees that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time in accordance with its terms;

(b) all decisions with respect to future DSU or other grants, if any, will be at the sole discretion of the Administrator;

(c) nothing in the Plan or this Agreement shall in any way be construed or interpreted to adversely affect or otherwise impair the right of the Company or its stockholders to remove Participant from the Board at any time in accordance with the provisions of applicable law;

(d) Participant is voluntarily participating in the Plan;

(e) the future value of the Shares underlying the DSUs is unknown, indeterminable and cannot be predicted with certainty;

(f) unless otherwise provided in the Plan or by the Administrator, the DSUs and the benefits evidenced by this Agreement do not create any entitlement to have the DSUs or any such benefits transferred to, or assumed by, another company, nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Common Stock; and

(g) the following provision shall not apply if Participant resides in the State of California: In consideration of the grant of the DSUs, and to the extent permitted by applicable law, Participant agrees not to institute any claim against the Company or any Subsidiary, to waive Participant's ability, if any, to bring such claim, and release the Company and its Subsidiaries from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim.

3.2 Relationship to Other Plans.  The grant of DSUs and Dividend Equivalents under this Agreement constitutes payment of fees for services as a member of the Board in accordance with the terms of the 3M Compensation Plan for Nonemployee Directors.

3.3 No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making recommendations regarding participation in the Plan, or Participant's acquisition or sale of the underlying Shares.  Participant understands and agrees that Participant should consult with Participant's own personal tax, legal and financial advisors regarding participation in the Plan before taking any action related to his or her Award(s).

3.4 Data Privacy.  Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant's personal data as described in this Agreement and any other grant materials by and among, as applicable, the Company and its other Subsidiaries for the purpose of implementing, administering and managing the Plan.

3.5 Transferability. The DSUs are not transferable, except by will or the laws of descent and distribution or as permitted by the Administrator in accordance with the terms of the Plan.

3.6 Adjustments.  Participant acknowledges that the DSUs, the Shares subject to the DSUs and the Dividend Equivalents are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.

3.7 Defined Terms; Titles.  Capitalized terms not defined in this Agreement have the meanings given to them in the Plan. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

3.8 Conformity to Applicable Laws.  Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all Applicable Laws and, to the extent Applicable Laws permit, will be deemed amended as necessary to conform to Applicable Laws.

3.9 Successors and Assigns.  The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement will inure to the benefit of the successors and assigns of the Company.  Subject to the transfer provisions set forth in the Plan, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

3.10 Entire Agreement and Imposition of Other Terms.  The Plan and this Agreement constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof.  Nonetheless, the Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the DSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.  In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan will control.

3.11 Severability.  In the event that any provision of this Agreement is held illegal or invalid, the provision will be severable from, and the illegality or invalidity of the provision will not be construed to have any effect on, the remaining provisions of this Agreement.

3.12 Waiver.  Participant acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by Participant or any other person.

3.13 Limitation on Participant’s Rights.  Participation in the Plan confers no rights or interests other than as herein provided.  This Agreement creates a contractual arrangement between the Company and Participant only and shall not be construed as creating a trust for the benefit of Participant.  Neither the Plan nor any underlying program, in and of itself, has any assets.  Participant will have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the DSUs and Dividend Equivalents, and rights no greater than the right to receive the Shares as a general unsecured creditor with respect to the DSUs and Dividend Equivalents, as and when settled pursuant to the terms hereof.

3.14 Electronic Delivery and Acceptance.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means.  Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

3.15 Insider Trading Restrictions/Market Abuse Laws. Participant acknowledges that, depending on Participant’s country, or broker’s country, or the country in which the Shares are listed, Participant may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, which may affect Participant’s ability to, directly or indirectly, accept, acquire, sell, or attempt to sell or otherwise dispose of Shares or rights to Shares under the Plan during such times when Participant is considered to have “inside information” regarding the Company (as defined by the laws or regulations in the applicable jurisdictions or Participant’s country).  Local insider trading laws and regulations may prohibit the cancellation or amendment of orders placed by Participant before possessing inside information.  Furthermore, Participant understands that he or she may be prohibited from (i) disclosing the inside information to any third party, including Company employees (other than on a “need to know” basis) and (ii) “tipping” third parties or causing them to otherwise buy or sell securities.  Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable insider trading policy of the Company.  Participant acknowledges that Participant is responsible for ensuring compliance with any applicable restrictions and should consult Participant’s personal legal advisor on these matters.

3.16 Section 409A.   The intent of the parties is that the payments and benefits under this Agreement comply with Section 409A and the regulations and guidance promulgated thereunder and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.  For purposes of Section 409A, each payment that Participant may be eligible to receive under this Agreement shall be treated as a separate and distinct payment.

3.17 Governing Law and Venue. This Agreement and the DSUs and the Dividend Equivalents will be governed by and interpreted in accordance with the laws of the State of Delaware, disregarding the choice-of-law principles of the State of Delaware and any other state requiring the application of a jurisdiction’s laws other than the State of Delaware. For purposes of litigating any dispute concerning the grant of the DSUs, the Dividend Equivalents or this Agreement, Participant consents to the jurisdiction of the State of Minnesota and agrees that such litigation shall be conducted exclusively in the courts of Ramsey County, Minnesota, or the federal courts for the United States for the District of Minnesota, where this grant is made and/or to be performed.