Exhibit 10.(d)

 

As Approved December 12, 2011

 

CUMMINS INC. SUPPLEMENTAL
LIFE INSURANCE AND DEFERRED INCOME PLAN

 

Restated as of January 1, 2009

with amendments through December 12, 2011

 

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TABLE OF CONTENTS

 

ARTICLE I RESTATEMENT AND PURPOSE

1

Section 1.01.

History and Restatement

1

Section 1.02.

Application of Restatement

1

Section 1.03.

Purpose

1

Section 1.04.

Grantor Trust

1

 

 

 

ARTICLE II DEFINITIONS AND INTERPRETATION

1

Section 2.01.

Definitions

1

Section 2.02.

Rules of Interpretation

6

 

 

 

ARTICLE III PARTICIPATION

6

 

 

 

ARTICLE IV INSURANCE POLICIES

7

Section 4.01.

Purchase of Insurance Policies

7

Section 4.02.

Premium Payments

7

 

 

 

ARTICLE V DEATH BENEFITS

7

Section 5.01.

Payment of Death Benefits

7

Section 5.02.

Designating a Beneficiary

7

 

 

 

ARTICLE VI RETIREMENT BENEFITS

8

Section 6.01.

General Provisions

8

Section 6.02.

Normal Retirement Benefit

8

Section 6.03.

Early Retirement

9

Section 6.04.

Deferred Vested Benefit

9

Section 6.05.

Survivor Benefit

9

Section 6.06.

Distribution of Small Benefits

10

Section 6.07.

Delay in Payment for Specified Employees

10

Section 6.08.

Designating a Beneficiary

10

 

 

 

ARTICLE VII VESTED BENEFITS

11

 

 

 

ARTICLE VIII ACCELERATED PAYMENT UPON CHANGE OF CONTROL

11

 

 

 

ARTICLE IX ADMINISTRATION OF PLAN

12

Section 9.01.

Powers and Responsibilities of the Administrator

12

Section 9.02.

Indemnification

12

Section 9.03.

Claims and Claims Review Procedure

12

 

 

 

ARTICLE X APPLICATION OF LIMITS ON PAYMENTS

14

Section 10.01.

Determination of Cap or Payment

14

Section 10.02.

Procedures

14

 

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ARTICLE XI PRESERVATION OF ACCRUED BENEFITS

15

 

 

 

ARTICLE XII AMENDMENT AND TERMINATION

15

 

 

 

ARTICLE XIII MISCELLANEOUS

16

Section 13.01.

Obligations of Employer

16

Section 13.02.

Employment Rights

16

Section 13.03.

Non-Alienation

16

Section 13.04.

Tax Withholding

16

Section 13.05.

Other Plans

16

Section 13.06.

Liability of Affiliated Employers

16

 

 

 

APPENDIX A

 

A-1

 

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ARTICLE I
RESTATEMENT AND PURPOSE

 

Section 1.01.        History and Restatement.  Cummins Inc. (“Company”)
established the predecessor of the Cummins Inc. Supplemental Life Insurance and
Deferred Income Plan, effective January 1, 1986 (“Prior Program”).  Effective
January 1, 1997, the Company restated the Prior Program in its entirety, naming
it the “Cummins Engine Company, Inc. Supplemental Life Insurance and Deferred
Income Plan.”  The Company has amended the Plan on several occasions since that
time.  The Company most recently restated the Plan, effective January 1, 2008,
to comply with the requirements of the final regulations under Code
Section 409A.  The Plan is again amended and restated effective as of January 1,
2009, to incorporate certain changes to the terms of the Plan.

 

Section 1.02.        Application of Restatement.  This restatement shall not
apply to any amount that was accrued and Vested as of December 31, 2004
(“Grandfathered Amount”), and Grandfathered Amounts shall continue to be
governed by the terms and conditions of the Plan as in effect on December 31,
2007; provided, however, the individual entitled to receive benefits following
an Executive’s death that occurs on or after January 1, 2008, shall be
determined pursuant to this restatement.

 

Section 1.03.        Purpose.  The purpose of the Plan is to provide
(i) increased protection and liquidity for a select group of management or
highly compensated employees of the Company and their families and (ii) a
competitive retirement program for such employees that is integrated with the
Pension Plan and the Excess Benefit Retirement Plan.  The Company intends for
the retirement benefits portion of the Plan to qualify as an unfunded
arrangement maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
within the meaning of ERISA Sections 201, 301, and 401.  The Company also
intends for the Plan to satisfy the applicable requirements of Code
Section 409A.

 

Section 1.04.        Grantor Trust.  The Company has established a grantor trust
to hold assets for the provision of certain benefits under the Plan as well as
other Employer benefits.  Assets of the Trust are subject to the claims of the
Employer’s general creditors.

 

ARTICLE II
DEFINITIONS AND INTERPRETATION

 

Section 2.01.        Definitions.  When the first letter of a word or phrase is
capitalized herein, the word or phrase shall have the meaning specified below:

 

(a)           “Administrator” means the Company’s Benefits Policy Committee or
such other person that the Board designates as Administrator.  To the extent
that the Administrator delegates a duty of responsibility to an agent, the term
“Administrator” shall include such agent.

 

(b)           “Affiliated Employer” means (i) a member of a controlled group of
corporations (as defined in Code Section 414(b)) of which the Company is a
member or (ii) an unincorporated trade or business under common control (as
defined in Code Section 414(c)) with the Company.

 

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(c)           “Affirmation of Domestic Partnership” means an Applicable Form for
affirming the relationship between an Executive and his Domestic Partner.

 

(d)           “Alternate Payee” has the meaning set out in ERISA
Section 206(d)(3)(K).

 

(e)           “Annuity Starting Date” means the date as of which a benefit under
the Plan is to commence or be paid (if payable as a lump sum).

 

(f)            “Applicable Form” means a form provided by the Administrator for
making an election or designation under the Plan.  To the extent permitted by
the Administrator, an Applicable Form may be provided and/or an election or
designation made electronically.

 

(g)           “Average Covered Compensation” means as follows: the average
annualized Covered Compensation paid to the Executive during the 60 consecutive
calendar months (of the 120 consecutive calendar months ending with the month in
which the Executive’s Termination of Employment occurs) in which the Covered
Compensation paid to the Executive is highest.  Notwithstanding the preceding
sentence, if the Executive Terminates Employment after a Change of Control, and
his Covered Compensation includes base salary and bonus payments paid to him
pursuant to the Executive Retention Plan following his Termination of
Employment, the 120-month period referred to above shall be the 120 consecutive
month period ending on the last day of the month for which such payments are
payable under the Executive Retention Plan, if the determination of Average
Covered Compensation over such period would provide a greater benefit to the
Executive hereunder.  If the Executive does not receive Covered Compensation for
a period of at least 60 months, his Average Covered Compensation shall be
determined based on the months in which he receives Covered Compensation.

 

(h)           “Beneficiary” means the person or entity entitled to receive an
Executive’s death benefits payable under the policies described in Article IV
and Vested Survivor Benefits, if any, remaining after the Executive’s death.  An
Executive’s Beneficiary shall be determined as provided in Section 5.02 with
respect to benefits payable under the policies described in Article IV and as
provided in Section 6.08 with respect to Vested Survivor Benefits.

 

(i)            “Benefit Claim” means a request or claim for a benefit under the
Plan, including a claim for greater benefits than have been paid.

 

(j)            “Board” or “Board of Directors” means the Company’s Board of
Directors or, where the context so permits, its designee.

 

(k)           “Change of Control” means the occurrence of any of the following:

 

(1)           there shall be consummated (A) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company’s common stock would be converted in
whole or in part into cash or other securities or property, other than a merger
of the Company in which the holders of the Company’s common stock immediately
before the merger have substantially the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (B) any
sale, lease, exchange or transfer (in

 

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one transaction or a series of related transactions) of all or substantially all
of the assets of the Company, or

 

(2)           the liquidation or dissolution of the Company, or

 

(3)           any ‘person’ (as such term is used in Sections 13(d)(3) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (‘the Exchange
Act’)), other than the Company or a subsidiary thereof or any employee benefit
plan sponsored by the Company or a subsidiary thereof or a corporation owned,
directly or indirectly, by the shareholders of the Company in substantially the
same proportions as their ownership of stock of the Company, shall become the
beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company representing 30% or more of the combined voting power
of the Company’s then outstanding securities ordinarily (and apart from rights
accruing in special circumstances) having the right to vote in the election of
directors, as a result of a tender or exchange offer, open market purchases,
privately negotiated purchases, or otherwise, or

 

(4)           at any time during a period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors shall
cease for any reason to constitute at least a majority thereof, unless the
election or the nomination for election by the Company’s stockholders of each
new director during such two-year period was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who were directors at the
beginning of such two-year period, or

 

(5)           any other event shall occur that would be required to be reported
in response to Item 6(e) (or any successor provision) of Schedule 14A or
Regulation 14A promulgated under the Exchange Act.

 

Notwithstanding the preceding provisions, an event or series of events shall not
constitute a Change of Control unless the event or series of events qualifies as
a change in the ownership or effective control of the corporation or in the
ownership of a substantial portion of the assets of the corporation within the
meaning of Code Section 409A(a)(2)(A)(v).

 

(l)            “Code” means the Internal Revenue Code of 1986, as amended from
time to time.

 

(m)          “Company” means Cummins Inc.

 

(n)           “Covered Compensation” means, with respect to an Executive for a
period, as follows: the total of base salary and short-term bonus earnings paid
by the Employer to the Executive during such period; provided, however, if the
Executive Terminates Employment after a Change of Control, his Covered
Compensation shall include the total of all base salary and bonus payments paid
to the Executive pursuant to the Executive Retention Plan following his
Termination of Employment.  For purposes of this Paragraph, “short-term bonus”
means variable incentive compensation based on a performance measurement period
of one year or less, including but not limited to amounts earned under the
Company’s Target Bonus Plan and Senior Executive Bonus Plan.

 

(o)           “Deferred Vested Benefit” means the benefit payable pursuant to
Section 6.04.

 

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(p)           “Denial” or “Denied” means a denial, reduction, termination, or
failure to provide or make payment (in whole or in part) of a Plan benefit.

 

(q)           “Domestic Partner” means a person of the same or opposite sex
(i) with whom the Executive has a single, dedicated relationship and has shared
the same permanent residence for at least six months, (ii) who is not married to
another person or part of another domestic partner relationship and is at least
age 18, (iii) who, with the Executive, is mutually responsible for the other’s
welfare, (iv) who, with the Executive, intends for their relationship to be
permanent, (v) who is not so closely related to the Executive as to preclude
marriage under state law, and (vi) for whom there is an Affirmation of Domestic
Partnership on file with the Administrator.  In determining whether the
requirements of clauses (i) through (v) of the preceding sentence have been
satisfied, the Administrator may rely on the Affirmation of Domestic Partner
filed with the Administrator.

 

(r)            “Domestic Relations Order” has the meaning specified in Code
Section 414(p)(1)(B).

 

(s)           “Employer” means the Company and all of its Affiliated Employers.

 

(t)            “ERISA” means the Employee Retirement Income Act of 1974, as
amended from time to time.

 

(u)           “Excess Benefit Retirement Plan” means the Cummins Inc. Excess
Benefit Retirement Plan, as amended from time to time.

 

(v)           “Executive” means (i) an individual who has been designated by the
Board as an officer of the Company and who is paid through the Company’s United
States payroll or (ii) any other employee of the Company designated by the Board
as an executive eligible to participate in the Plan; provided in each case that
the individual has completed any forms required by the Administrator as a
condition of participation.

 

(w)          “Executive Retention Plan” means the Cummins Inc. Executive
Retention Plan, as amended from time to time, and any successor thereto.

 

(x)            “Grandfathered Amount” has the meaning specified in Section 1.02.

 

(y)           “Non-Grandfathered Amount” means a benefit under the Plan in
excess of the Grandfathered Amount.

 

(z)            “Pension Plan” means the Cummins Inc. and Affiliates Pension Plan
provisions applicable to the Executive, as amended from time to time.

 

(aa)         “Plan” means the Cummins Inc. Supplemental Life Insurance and
Deferred Income Plan, as set out in this document, as amended from time to time.

 

(bb)         “Present Actuarial Value” means the present value of a future
stream of payments, as determined by the Administrator using:

 

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(1)           the mortality table based on the commissioner’s standard table
(described in Code Section 807(d)(5)(A)) used to determine reserves for group
annuity contracts issued on the date as of which present value is determined
(without regard to any other subparagraph of Code Section 807(d)(5)), that is
prescribed by the Commissioner of the Internal Revenue Service in revenue
rulings, notices, or other guidance published in the Internal Revenue Bulletin;
and

 

(2)           the annual interest rate on 30-year U.S. Treasury Bonds as
specified by the Commissioner of the Internal Revenue Service in revenue
rulings, notices, or other guidance published in the Internal Revenue Bulletin
for the fourth month preceding the first day of the calendar quarter in which
the benefit becomes payable.

 

(cc)         “Prior Program” means the predecessor of this Plan for the period
from January 1, 1986, through December 31, 1996.

 

(dd)         “Service” means the total of (i) the Executive’s employment service
with the Employer, plus (ii) if the Executive Terminates Employment after a
Change of Control, the period of months for which Termination Payments (as
defined in the Executive Retention Plan) are paid or payable to the Executive
under the Executive Retention Plan.  For purposes of the Plan, an Executive
shall receive credit for Service for all periods of employment with the
Employer, expressed in full years and months (with credit for 1/12 of a year
(one month) being credited for each month during which the Executive works one
day).

 

(ee)         “Specified Employee” means, with respect to the 12-month period
beginning on the Specified Employee Effective Date, an individual who,
(i) during any part of the 12-month period ending on the Specified Employee
Identification Date, is in salary grade 99 or compensation class 6, or (ii) is a
“specified employee” within the meaning of Code Section 409A(a)(2)(B)(i) and the
guidance thereunder.

 

(ff)           “Specified Employee Effective Date” means, in the case of an
Employee who Terminates Employment before December 31, 2009, the April 1 next
following the Specified Employee Identification Date, and, in the case of an
Employee who Terminates Employment after December 31, 2009, the January 1 next
following the Specified Employee Identification Date.

 

(gg)         “Specified Employee Identification Date” means December 31.

 

(hh)         “Spouse” means, as of the Executive’s Annuity Starting Date,
(i) the person to whom the Executive is married in accordance with applicable
law of the jurisdiction in which the Executive resides, or (ii) in the case of
an Executive not described in clause (i), the Executive’s Domestic Partner.

 

(ii)           “Supplemental Life Annuity” means the benefit payable to an
Executive pursuant to Article VI.

 

(jj)           “Survivor Benefit” means the benefit, if any, payable to an
Executive’s Spouse or other Beneficiary pursuant to Article VI following the
Executive’s death after Termination of Employment with Vested rights to a
Supplemental Life Annuity.

 

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(kk)         “Termination of Employment,” “Terminates Employment,” or any
variation thereof refers to a separation from service within the meaning of Code
Section 409A(a)(2)(A)(i) for a reason other than the Executive’s death.

 

(ll)           “Trust” means the grantor trust established by the Company to
provide a source for the payment of retirement benefits under the Plan and
benefits under certain other Employer programs.

 

(mm)       “Trustee” means the Trustee of the Trust.

 

(nn)         “Vested” means, with respect to an Executive, the portion of the
Executive’s Supplemental Life Annuity in which the Executive has a
non-forfeitable interest, to the extent provided herein.

 

(oo)         “Vesting Service” means, with respect to an Executive, his total
Service; provided, however, in determining the Executive’s total Vesting
Service, he shall be credited with a full year of Vesting Service for any period
of at least five months in addition to his full years of Service.  For example,
an Executive with four years and six months of Service shall be credited with
five years of Vesting Service.

 

Section 2.02.        Rules of Interpretation.

 

(a)           The Plan is intended to comply with (i) Code Section 409A and
(ii) the applicable provisions of ERISA, and it shall be interpreted and
administered in accordance with such intent.  Except as provided in the
preceding sentence or as otherwise expressly provided herein, the Plan shall be
construed, enforced, and administered, and the validity thereof determined, in
accordance with the internal laws of the State of Indiana without regard to
conflict of law principles, and the following provisions of this Section.

 

(b)           Words used herein in the masculine shall be construed to include
the feminine, where appropriate, and vice versa, and words used herein in the
singular or plural shall be construed to include the plural or singular, where
appropriate.

 

(c)           Headings and subheadings are used for convenience of reference
only and shall not affect the interpretation of any provision hereof.

 

(d)           If any provision of the Plan shall be held to violate the Code or
ERISA or be illegal or invalid for any other reason, that provision shall be
deemed null and void, but the invalidation of that provision shall not otherwise
affect the Plan.

 

(e)           Reference to any provision of the Code, ERISA or other law shall
be deemed to include a reference to the successor of such provision.

 

ARTICLE III
PARTICIPATION

 

An Executive shall commence participation in the Plan following his execution of
a form provided by the Company authorizing periodic payroll deductions in
amounts sufficient to pay

 

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the Executive’s share of the premiums on life insurance policies on the
Executive’s life.  From time to time, the Executive shall also complete any
forms required by the Administrator or an insurer and submit to any necessary
physical examinations requested by an insurer.

 

ARTICLE IV
INSURANCE POLICIES

 

Section 4.01.        Purchase of Insurance Policies.  An Executive shall be
covered by one or more insurance policies with an aggregate face value of
approximately three times the Executive’s base salary.  All such policies shall
be owned by the Trustee.  Additional policies shall be purchased as the
Executive’s salary is increased, except that no incremental policy shall be
purchased in a face amount of less than $20,000.  Coverage under all such
policies shall terminate on the Executive’s Termination of Employment.

 

Section 4.02.        Premium Payments.

 

(a)           The annual premium payable with respect to policies on the
Executive’s life shall be paid in part by the Executive, with any remaining
amount paid by the Trustee to the extent not paid by the Employer.  The
Executive shall be required to pay only that portion of the premium equal to the
amount that would be included in the Executive’s income for Federal income tax
purposes, if the entire premium were paid by the Trustee for the Employer.  Such
amount shall be determined annually in accordance with Internal Revenue Service
rules and regulations.

 

(b)           If an Executive becomes “disabled” within the meaning of Code
Section 409A and is entitled to benefits under the Company’s Long Term
Disability Plan, the Trustee shall pay all insurance premiums under the policies
until the earlier of the end of the disability or the Executive’s Termination of
Employment.

 

(c)           Unless paid by the Employer, the Employer’s share of the annual
premium shall be paid by the Trustee from the assets of the Trust, including, in
the discretion of the Trustee, by borrowing against the value of any policies on
the Executive’s life.

 

ARTICLE V
DEATH BENEFITS

 

Section 5.01.        Payment of Death Benefits.  If the Executive dies before
Termination of Employment, the death benefits payable under the policies
described in Article IV shall be paid (i) to the Trustee to the extent and in
the amount of the total premiums paid by the Employer and the Trustee, and not
previously reimbursed, under the policies on the Executive’s life, and (ii) to
the Executive’s Beneficiary, to the extent of the remainder; provided, however,
in no event shall a death benefit payment be made to an Executive’s Beneficiary
in an amount greater than three times the Executive’s annual base salary at the
time of his death.

 

Section 5.02.        Designating a Beneficiary.

 

(a)           The Executive may designate a Beneficiary only by filing a
completed Applicable Form with the Administrator during his lifetime.  The
Executive’s proper filing of a Beneficiary designation shall cancel all prior
Beneficiary designations.  If the Executive does not designate a

 

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Beneficiary, or if all properly designated Beneficiaries die before the
Executive, the Executive’s Beneficiary shall be his Spouse, if living at the
time of the Executives death, or if his Spouse is not then living, the
individual(s), if any, named as the Executive’s beneficiary under his
Employer-provided group life insurance program, who are living at the time of
the Executive’s death or, if no such beneficiaries are then living, the
Executive’s estate.

 

(b)           Except to the extent the Executive’s Beneficiary is the individual
named as the Executive’s beneficiary under his Employer-provided group life
insurance program pursuant to the preceding paragraph and such program otherwise
provides, the following rules shall determine the apportionment of payments due
under the Plan among Beneficiaries in the event of the death of the Executive
prior to Termination of Employment:

 

(1)           If any Beneficiary designated by the Executive as a “Direct
Beneficiary” dies before the Executive, his interest and the interest of his
heirs in any payments under the Plan shall terminate and the percentage share of
the remaining Beneficiaries designated as Direct Beneficiaries shall be
increased on a pro rata basis.  If no such Beneficiary survives the Executive,
the Executive’s entire interest in the Plan shall pass to any Beneficiary
designated as a “Contingent Beneficiary.”

 

(2)           If any Beneficiary designated by the Executive as a “Contingent
Beneficiary” dies before the Executive, his interest and the interest of his
heirs in any payments under the Plan shall terminate and the percentage share of
the remaining Beneficiaries designated as Contingent Beneficiaries shall be
increased on a pro rata basis.

 

(3)           If any Beneficiary dies after the Executive, but before payment is
made to such Beneficiary, then the payment shall be made to the Beneficiary’s
estate.

 

ARTICLE VI
RETIREMENT BENEFITS

 

Section 6.01.        General Provisions.

 

(a)           No benefits shall be payable under this Article with respect to an
Executive for whom death benefits have been paid pursuant to Article V.

 

(b)           Benefits payable pursuant to this Article shall commence or be
paid, if payable in a lump sum, on the Executive’s Annuity Starting Date.

 

Section 6.02.        Normal Retirement Benefit.  Subject to the modifications
specified in Appendix A with respect to certain Executives, an Executive with at
least 10 years of Service who Terminates Employment on or after reaching age 60
shall receive from the Trustee, beginning as of the first day of the month
following his Termination of Employment, in monthly installments, a Supplemental
Life Annuity in an annual amount equal to:

 

(a)           2% of the Executive’s Average Covered Compensation times his years
of Service not exceeding 20 years; plus

 

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(b)           1% of the Executive’s Average Covered Compensation times his years
of Service in excess of 20, up to a maximum of 10 years, and excluding, to the
extent permitted by law, years following the year in which the Executive reaches
age 65; plus

 

(c)           in the case of an Executive who is among the two most highly
compensated Executives of the Company as of December 31, 2011, an additional 10%
of Average Covered Compensation; minus

 

(d)           the Executive’s annual benefit from the Pension Plan and the
Excess Benefit Plan, if applicable, determined as if such annual benefit
(i) commenced on the first day of the month following the Executive’s
Termination of Employment and (ii) were payable in monthly installments in the
form of a single life annuity to the Executive.

 

Section 6.03.        Early Retirement.  If an Executive with at least 10 years
of Service Terminates Employment on or after age 55 but before reaching age 60,
the Executive shall be entitled to receive from the Trustee, beginning as of the
first day of the month following his Termination of Employment, in monthly
installments, a Supplemental Life Annuity in an annual amount equal to the
amount determined in accordance with Section 6.02, reduced as follows:  by 1/3
of 1% for each full month by which the Executive’s Annuity Starting Date
precedes his 60th birthday; provided, however, in the case of an individual who
was an Executive before 2006, no reduction shall be made, if the Executive
(i) Terminates Employment after reaching age 55 and completing 20 years of
Service and his total years of age and Service upon Termination of Employment
are at least 80 or (ii) was a participant in the Prior Plan and has completed at
least 30 years of Service upon Termination of Employment.

 

Section 6.04.        Deferred Vested Benefit.  An Executive who Terminates
Employment before he is eligible for benefits pursuant to Section 6.02 or 6.03
shall be entitled to receive from the Trustee, beginning as of his Annuity
Starting Date, in monthly installments, a Supplemental Life Annuity in an annual
amount equal to his Vested percentage multiplied by the amount determined in
accordance with Section 6.02, and reduced as provided in Section 6.03.  The
Annuity Starting Date for benefits payable pursuant to this Section shall be the
first day of the month next following the later of the Executive’s
(i) Termination of Employment or (ii) 55th birthday.

 

Section 6.05.        Survivor Benefit.  If the Executive dies after Termination
of Employment with a Vested right to a Supplemental Life Annuity, the following
survivor benefits shall be paid:

 

(a)           If the Executive dies on or after his Annuity Starting Date, a
survivor benefit equal to 50% of the monthly amount payable to the Executive
during his life shall be paid to the Executive’s Spouse for the remainder of her
life, beginning with the first day of the month after the Executive’s death;
provided, however, if the Executive had not received Supplemental Life Annuity
payments for at least 15 years before his death, his Spouse shall be entitled to
receive the same monthly benefit that was payable to the Executive for the
remainder of such 15-year period, and the 50% benefit thereafter for the
remainder of her life.  If the Executive and his Spouse, if any, should die
before receiving Supplemental Life Annuity benefits for at least 15 years, a
lump-sum payment equal to the Present Actuarial Value of the remaining benefit
due to be paid over the 15-year period shall be paid to the Executive’s
designated Beneficiary.

 

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(b)           If the Executive dies before his Annuity Starting Date, a survivor
benefit shall be paid pursuant to this Subsection, beginning as of the date that
would have been the Executive’s Annuity Starting Date, if he had Terminated
Employment on the date of his death and lived until distribution of benefits
under the Plan began.  If the Executive is survived by his Spouse, a monthly
survivor benefit shall be paid to his Spouse for the remainder of her life
(i) in an amount equal to 100% of the amount that would have been payable to the
Executive under the preceding provisions of this Article (if he had Terminated
Employment on the date of his death and lived) for the first 15 years in which
such payments were made, and (ii) in an amount equal to 50% of the amount that
would have been payable to the Executive under the preceding provisions of this
Article (if he had Terminated Employment on the date of his death and lived) for
periods after the first 15 years in which such payments.  If the Executive’s
Spouse dies before payments are made for a period of 15 years, a lump-sum
payment equal to the Present Actuarial Value of the remaining benefit due to be
paid over the 15-year period shall be paid to the Executive’s designated
Beneficiary.

 

Section 6.06.        Distribution of Small Benefits.  Notwithstanding the
preceding provisions of this Article, if the Present Actuarial Value of the
benefits payable to the Executive pursuant to this Article when added to the
Present Actuarial Value of the benefits payable pursuant to the Company’s Excess
Benefit Retirement Plan is less than $25,000 (as determined on the date of the
Executive’s Termination of Employment), then the Trustee shall pay the Present
Actuarial Value of such payments as a single lump sum payment within 60 days
following the Executive’s Termination of Employment or death.

 

Section 6.07.        Delay in Payment for Specified Employees.  Notwithstanding
any provision of this Plan to the contrary, to the extent required by Code
Section 409A(a)(2)(B)(i), distribution of the Supplemental Life Annuity to an
Executive who is a Specified Employee on account of his Termination of
Employment for any reason other than death shall be delayed until the earliest
date permitted by such section.  If the Supplemental Life Annuity is payable in
the form of a monthly annuity, the sum of the monthly payments that are required
to be delayed in accordance with this Section shall be paid with the first
permitted monthly payment.  Any delayed payments shall be increased by interest
from the first day of the month following the Executive’s Termination of
Employment to the date on which his benefit payments begin at the applicable
interest rate for retroactive annuity starting dates under the Pension Plan.

 

Section 6.08.        Designating a Beneficiary.

 

(a)           The Executive may designate a Beneficiary only by filing a
completed Applicable Form with the Administrator during his life.  The
Executive’s proper filing of a Beneficiary designation shall cancel all prior
Beneficiary designations.  If the Executive does not designate a Beneficiary, or
if all properly designated Beneficiaries die before the Executive, the
Executive’s Beneficiary shall be his Spouse, if living at the time of the
Executives death, or if his Spouse is not then living, the individual(s), if
any, named as the Executive’s beneficiary under his Employer-provided group life
insurance program, who are living at the time of the Executive’s death or, if no
such beneficiaries are then living, the Executive’s estate.

 

(b)           Except to the extent the Executive’s Beneficiary is the individual
named as the Executive’s beneficiary under his Employer-provided group life
insurance program pursuant to

 

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the preceding paragraph and such program otherwise provides, the following
rules shall determine the apportionment of payments due under the Plan among
Beneficiaries in the event of the death of the Executive and his Spouse:

 

(1)           If any Beneficiary designated by the Executive as a “Direct
Beneficiary” dies before the Executive, his interest and the interest of his
heirs in any payments under the Plan shall terminate and the percentage share of
the remaining Beneficiaries designated as Direct Beneficiaries shall be
increased on a pro rata basis.  If no such Beneficiary survives the Executive,
the Executive’s entire interest in the Plan shall pass to any Beneficiary
designated as a “Contingent Beneficiary.”

 

(2)           If any Beneficiary designated by the Executive as a “Contingent
Beneficiary” dies before the Executive, his interest and the interest of his
heirs in any payments under the Plan shall terminate and the percentage share of
the remaining Beneficiaries designated as Contingent Beneficiaries shall be
increased on a pro rata basis.

 

(3)           If any Beneficiary dies after the Executive, but before payment is
made to such Beneficiary, then the payment shall be made to the Beneficiary’s
estate.

 

ARTICLE VII
VESTED BENEFITS

 

An Executive’s interest in his Supplemental Life Annuity shall become Vested in
accordance with the following Schedule;

 

Years of Vesting Service

 

Vested Percentage

 

 

 

 

 

Fewer than 5

 

0

 

5

 

25

 

6

 

40

 

7

 

55

 

8

 

70

 

9

 

85

 

10 or more

 

100

 

 

ARTICLE VIII
ACCELERATED PAYMENT UPON CHANGE OF CONTROL

 

Upon a Change of Control, an Executive who is entitled to benefits under the
Plan, other than an Executive who has Terminated Employment with a right to a
Deferred Vested Benefit, shall become fully Vested in the Supplemental Life
Annuity and, notwithstanding anything in Article VI to the contrary, shall
receive, in place of future payments under the Plan, a lump sum payment equal to
the Present Actuarial Value of the Supplemental Life Annuity accrued to the date
of the Change of Control and remaining to be paid under the Plan.  The lump sum
Present Actuarial Value of the Supplemental Life Annuity benefit payable shall
be calculated assuming that, solely for the purpose of reducing the benefit for
early commencement, the Executive, other

 

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than one who is entitled to a Deferred Vested Benefit, has already met the
conditions for unreduced benefits described in Section 6.03 at the earliest
possible time, taking into consideration the Executive’s age and Service.

 

ARTICLE IX
ADMINISTRATION OF PLAN

 

Section 9.01.        Powers and Responsibilities of the Administrator.

 

(a)           The Administrator shall have full responsibility and discretionary
authority to control and manage the operation and administration of the Plan. 
The Administrator is authorized to accept service of legal process on behalf of
the Plan.  To the fullest extent permitted by applicable law, any action taken
by the Administrator pursuant to a reasonable interpretation of the Plan shall
be binding and conclusive on all persons claiming benefits under the Plan,
except to the extent that a court of competent jurisdiction determines that such
action was arbitrary or capricious.

 

(b)           The Administrator’s discretionary powers include, but are not
limited to, the following:

 

(1)           to interpret Plan documents, decide all questions of eligibility,
determine whether an Executive has Terminated Employment, determine the amount,
manner, and timing of distributions under the Plan, and resolve any claims for
benefits;

 

(2)           to prescribe procedures to be followed by an Executive,
Beneficiary, or other person applying for benefits;

 

(3)           to appoint or employ persons to assist in the administration of
the Plan and any other agents as it deems advisable;

 

(4)           to adopt such rules as it deems necessary or appropriate; and

 

(5)           to maintain and keep adequate records concerning the Plan,
including sufficient records to determine each Executive’s eligibility to
participate and his interest in the Plan, and its proceedings and acts in such
form and detail as it may decide.

 

Section 9.02.        Indemnification.  The Company shall indemnify and hold
harmless the Administrator, any person serving on a committee that serves as
Administrator, and any officer, employee, or director of an Employer to whom any
duty or power relating to the administration of the Plan has been properly
delegated from and against any cost, expense, or liability arising out of any
act or omission in connection with the Plan, unless arising out of such person’s
own fraud or bad faith.

 

Section 9.03.        Claims and Claims Review Procedure.

 

(a)           All Benefit Claims must be made in accordance with procedures
established by the Administrator from time to time.  If an Executive or his
designated Beneficiary believes he is entitled to a benefit under the Plan that
is not provided, he may file a written claim for payments

 

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under the Plan with the Administrator provided such claim is filed within 90
days of the date payments under the Plan are made or begin to be made, or the
date the Executive or his designated Beneficiary believes payments should have
been made, as applicable.  A Benefit Claim and any appeal thereof may be filed
by the claimant or his authorized representative.

 

(b)           The Administrator shall provide the claimant with written or
electronic notice of its approval or Denial of a properly filed Benefit Claim
within 90 days after receiving the claim, unless special circumstances require
an extension of the decision period.  If special circumstances require an
extension of the time for processing the claim, the initial 90-day period may be
extended for up to an additional 90 days.  If an extension is required, the
Administrator shall provide written notice of the required extension before the
end of the initial 90-day period, which notice shall (i) specify the
circumstances requiring an extension and (ii) the date by which the
Administrator expects to make a decision.

 

(c)           If a Benefit Claim is Denied, the Administrator shall provide the
claimant with written or electronic notice containing (i) the specific reasons
for the Denial, (ii) references to the applicable Plan provisions on which the
Denial is based, (iii) a description of any additional material or information
needed and why such material or information is necessary, and (iv) a description
of the applicable review process and time limits.

 

(d)           A claimant may appeal the Denial of a Benefit Claim by filing a
written appeal with the Administrator within 60 days after receiving notice of
the Denial.  The claimant’s appeal shall be deemed filed on receipt by the
Administrator.  If a claimant does not file a timely appeal, the Administrator’s
decision shall be deemed final, conclusive, and binding on all persons.

 

(e)           The Administrator shall provide the claimant with written or
electronic notice of its decision on appeal within 60 days after receipt of the
claimant’s appeal request, unless special circumstances require an extension of
this time period.  If special circumstances require an extension of the time to
process the appeal, the processing period may be extended for up to an
additional 60 days.  If an extension is required, the Administrator shall
provide written notice of the required extension to the claimant before the end
of the original 60-day period, which shall specify the circumstances requiring
an extension and the date by which the Administrator expects to make a
decision.  If the Benefit Claim is Denied on appeal, the Administrator shall
provide the claimant with written or electronic notice containing a statement
that the claimant is entitled to receive, upon request and free of charge,
reasonable access to and copies of all documents, records, and other information
relevant to the Benefit Claim, as well as the specific reasons for the Denial on
appeal and references to the applicable Plan provisions on which the Denial is
based.  The Administrator’s decision on appeal shall be final, conclusive, and
binding on all persons, subject to the claimant’s right to file a civil action
pursuant to ERISA Section 502(a).

 

(f)            Notwithstanding the foregoing claims and appeals procedures, to
avoid an additional tax on payments that may be payable under the Plan, a
claimant must make a reasonable, good faith effort to collect any payment or
benefit to which the claimant believes he is entitled to hereunder no later than
90 days after the latest date upon which the payment could

 

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have been timely made pursuant to Code Section 409A, and if not paid or
provided, must take further enforcement measures within 180 days after such
latest date.

 

ARTICLE X
APPLICATION OF LIMITS ON PAYMENTS

 

Section 10.01.      Determination of Cap or Payment.  Effective December 12,
2011, notwithstanding any other provision of the Plan to the contrary, if
payment of the lump sum Present Actuarial Value of the Supplemental Life Annuity
pursuant to Article VIII (“Accelerated Payment”) would cause some or all of the
Accelerated Payment or any other payments made to or benefits received by the
Executive in connection with a Change of Control (such payments or benefits,
together with the Accelerated Payment, the “Total Payments”) to be subject to
the tax (“Excise Tax”) imposed by Code Section 4999 but for this Article X, then
the Total Payments shall be delivered either (a) in full or (b) in an amount
such that the value of the aggregate Total Payments that the Executive is
entitled to receive shall be One Dollar ($1.00) less than the maximum amount
that the Executive may receive without being subject to the Excise Tax,
whichever of (a) or (b) results in the receipt by the Executive of the greatest
benefit on an after-tax basis (taking into account applicable federal, state and
local income taxes and the Excise Tax).

 

Section 10.02.      Procedures.

 

(a)           If the Executive or the Company believes that a payment or benefit
due the Executive will result in some or all of the Total Payments being subject
to the Excise Tax, then the Company, at its expense, shall obtain the opinion
(which need not be unqualified) of nationally recognized tax counsel (“National
Tax Counsel”) selected by the Company (which may be regular outside counsel to
the Company), which opinion sets forth (i) the amount of the Base Period Income
(as defined below), (ii) the amount and present value of the Total Payments,
(iii) the amount and present value of any excess parachute payments determined
without regard to any reduction of Total Payments pursuant to Section 10.01(b),
and (iv) the net after-tax proceeds to the Executive, taking into account
applicable federal, state and local income taxes and the Excise Tax if (x) the
Total Payments were delivered in accordance with Section 10.01(a) or (y) the
Total Payments were delivered in accordance with Section 10.01(b).  The opinion
of National Tax Counsel shall be addressed to the Company and the Executive and
shall be binding upon the Company and the Executive. If such National Tax
Counsel opinion determines that Section 10.01(b) applies, then the Accelerated
Payment or any other payment or benefit determined by such counsel to be
includable in the Total Payments shall be reduced or eliminated so that under
the bases of calculations set forth in such opinion there will be no excess
parachute payment. In such event, payments or benefits included in the Total
Payments shall be reduced or eliminated by applying the following principles, in
order: (A) the payment or benefit with the higher ratio of the parachute payment
value to present economic value (determined using reasonable actuarial
assumptions) shall be reduced or eliminated before a payment or benefit with a
lower ratio; (B) the payment or benefit with the later possible payment date
shall be reduced or eliminated before a payment or benefit with an earlier
payment date; and (C) cash payments shall be reduced prior to non-cash benefits;
provided that if the foregoing order of reduction or elimination would violate
Code Section 409A, then the reduction shall be made pro

 

14

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rata among the payments or benefits included in the Total Payments (on the basis
of the relative present value of the parachute payments).

 

(b)           For purposes of this Article X: (i) the terms “excess parachute
payment” and “parachute payments” shall have the meanings given in Code
Section 280G and such “parachute payments” shall be valued as provided therein;
(ii) present value shall be calculated in accordance with Code
Section 280G(d)(4); (iii) the term “Base Period Income” means an amount equal to
the Executive’s “annualized includible compensation for the base period” as
defined in Code Section 280G(d)(1); (iv) for purposes of the opinion of National
Tax Counsel, the value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company’s independent auditors in accordance
with the principles of Code Sections 280G(d)(3) and (4); and (v) the Executive
shall be deemed to pay federal income tax and employment taxes at the highest
marginal rate of federal income and employment taxation, and state and local
income taxes at the highest marginal rate of taxation in the state or locality
of the Executive’s domicile, net of the maximum reduction in federal income
taxes that may be obtained from the deduction of such state and local taxes.

 

(c)           If National Tax Counsel so requests in connection with the opinion
required by this Section 10.02, the Company shall obtain, at the Company’s
expense, and the National Tax Counsel may rely on, the advice of a firm of
recognized executive compensation consultants as to the reasonableness of any
item of compensation to be received by the Executive solely with respect to its
status under Code Section 280G.

 

(d)           The Company agrees to bear all costs associated with, and to
indemnify and hold harmless the National Tax Counsel from, any and all claims,
damages and expenses resulting from or relating to its determinations pursuant
to this Article X, except for claims, damages or expenses resulting from the
gross negligence or willful misconduct of such firm.

 

(e)           This Article X shall be amended to comply with any amendment or
successor provision to Code Section 280G or Code Section 4999. If such
provisions are repealed without successor, then this Article X shall be
cancelled without further effect.

 

ARTICLE XI
PRESERVATION OF ACCRUED BENEFITS

 

Nothing in this restatement shall reduce the Supplemental Life Annuity payable
with respect to an Executive, to the extent accrued as of December 31, 2005,
under the terms of the Plan, as in effect immediately before the January 1, 2009
restatement.

 

ARTICLE XII
AMENDMENT AND TERMINATION

 

The Plan shall continue in force with respect to any Executive until the
completion of any payments due hereunder.  The Company may, however, at any
time, amend the Plan to provide that no additional benefits shall accrue with
respect to any Executive under the Plan; provided, however, that no such
amendment shall (i) deprive any Executive or Beneficiary of any benefit that
accrued under the Plan before the adoption of such amendment; (ii) result in an
acceleration of benefit payments in violation of Code Section 409A and the
guidance thereunder, or (iii) 

 

15

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result in any other violation of Section 409A or the guidance thereunder.  The
Company may also, at any time, amend the Plan retroactively or otherwise, if and
to the extent that it deems such action appropriate in light of government
regulations or other legal requirements.

 

ARTICLE XIII
MISCELLANEOUS

 

Section 13.01.      Obligations of Employer.  The Employer’s only obligation
hereunder shall be a contractual obligation to make payments to Executives,
Spouses, or other Beneficiaries entitled to benefits provided for herein when
due, and only to the extent that such payments are not made from the Trust. 
Nothing herein shall give an Executive, Spouse, Beneficiary, or other person any
right to a specific asset of an Employer or the Trust, other than as a general
creditor of the Employer.

 

Section 13.02.      Employment Rights.  Nothing contain herein shall confer any
right on an Executive to be continued in the employ of any Employer or affect
the Executive’s right to participate in and receive benefits under and in
accordance with any pension, profit-sharing, incentive compensation, or other
benefit plan or program of an Employer.

 

Section 13.03.      Non-Alienation.  Except as otherwise required by a Domestic
Relations Order, no right or interest of an Executive, Spouse, or other
Beneficiary under this Plan shall be subject to voluntary or involuntary
alienation, assignment, or transfer of any kind.  Payments shall be made to an
Alternate Payee to the extent provided in a Domestic Relations Order.  To the
extent permitted by Code Section 409A, payments pursuant to a Domestic Relations
Order may be made in a lump sum and before the Executive’s earliest retirement
age (as defined by ERISA Section 206(d)(3)(E)(ii)).

 

Section 13.04.      Tax Withholding.  The Employer or Trustee may withhold from
any distribution hereunder amounts that the Employer or Trustee deems necessary
to satisfy federal, state, or local tax withholding requirements (or make other
arrangements satisfactory to the Employer or Trustee with regard to such taxes).

 

Section 13.05.      Other Plans.  Amounts and benefits paid under the Plan shall
not be considered compensation to the Executive for purposes of computing any
benefits to which he may be entitled under any other pension or retirement plan
maintained by an Employer.

 

Section 13.06.      Liability of Affiliated Employers.  If any payment to be
made under the Plan is to be made on account of an Executive who is or was
employed by an Affiliated Employer, the cost of such payment shall be borne in
such proportion as the Company and the Affiliated Employer agree.

 

16

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This Restatement of the Cummins Inc. Supplemental Life Insurance and Deferred
Income Plan has been signed by the Company’s duly authorized officer, acting
behalf of the Company, this 12 day of December, 2011.

 

 

CUMMINS INC.

 

 

 

 

 

By:

/s/ Jill E. Cook

 

Title

Vice President, Human Resources

 

17

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APPENDIX A

 

Guidelines for Enhanced SERP
For Executives Joining Cummins Mid-Career

 

General Criteria

 

The Company’s Chief Executive Officer (“CEO”) may designate an enhanced SERP
benefit for an Executive (Officer or Executive Director) joining Cummins
mid-career.  In determining whether an enhanced benefit is appropriate and, if
so, the amount of such benefit, the CEO shall consider:

 

·                                          any existing pension benefits of the
Executive from previous employers;

 

·                                          the recruiting and retention value of
the enhanced benefit;

 

·                                          the amount of time that the Executive
is expected to work before retiring from Cummins (as a rule, at least age 55; as
a target, at least age 58); and

 

·                                          the amount of Service that the
Executive will have upon likely retirement.

 

An enhanced benefit may also be used to assist the transition of other Officers,
if the CEO determines that such a benefit is in the best interests of Cummins.

 

The enhanced retirement benefit formula is to be applied at the discretion of
the CEO, who has the obligation to inform the Administrator of such benefits.

 

The CEO will define the benefit or formula applicable to each case in the
future.  For existing Executives, the following is authorized:

 

·                                          Grow benefit by double-accrual
approach:  4% per year for each of the first 10 years of Service; 2% per year
for next five years of Service, maximum 50% at 15 years of Service.

 

·                                          Replace “rule of 80” with “rule of
70”, which means eligible for unreduced benefits upon achieving at least age 58,
at least 10 years of Service, but the total of the two must be at least 70. 
(This does not mean a full 50% benefit, but merely unreduced accrued benefit.)

 

·                                          Fully vested after five years of
Service.  (Normally vesting begins at five years and is not 100% until ten years
of Service are completed).

 

·                                          A full 50% benefit will be provided
at age 60, even if not achieved by the formula.

 

·                                          Upon a Change of Control, the
designated Executives:

 

·                                         become fully Vested, regardless of
Service (no change from current Plan);

 

A-1

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·                                          will have a Final Average Total Cash
Compensation equal the average for that received during their actual years of
Service, if less than five years of Service;

 

·                                          will be deemed to have met the
requirements for unreduced commencement of benefits (no change from current
Plan); and

 

·                                          will receive a lump sum payment of
the Present Actuarial Value of the benefit accrued to the date of the Change of
Control, using the formula designated for the respective Executive (in the case
of the existing group, the “double-accrual” formula).

 

The foregoing provisions apply to the following officers:

 

R. S. Adu-Gyamfi

J. S. Blackwell

P. F. Carter

A. R. Dohner

S. P. Knaebel

F. J. McDonald

L. O. Moore

B. S. Vedak

S. L. May

 

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