Exhibit
10.a


 


CUMMINS INC.


2003 STOCK INCENTIVE PLAN


(As Amended October 14, 2003, February 20,
2007 and February 9, 2009)


 


1. 
Objectives.    The Cummins Inc. 2003
Stock Incentive Plan (the “Plan”) is designed to retain and motivate executives
and other selected employees, and to link the interests of these employees with
the interests of the Company’s shareholders. It is also intended to be a source
of equity-based annual fees payable to non-employee directors of the Company to
more closely link their financial interests with those of the Company’s
shareholders. These objectives are accomplished by making incentive and other
awards of the Company’s stock under the Plan thereby providing Participants
with a proprietary interest in the growth and performance of the Company.


 


2. 
Definitions.


 


(a) “Award”—The grant of any form of stock
option, stock appreciation right or stock award whether granted singly, in
combination or in tandem, to a Participant pursuant to such terms, conditions
and limitations as the Committee may establish in order to fulfill the
objectives of the Plan.


 


(b) “Award Agreement”—An agreement between the
Company and a Participant that sets forth the terms, conditions and limitations
applicable to an Award.


 


(c) “Board”—The Board of Directors of the
Company.


 


(d) “Change of Control”—The occurrence of any
of the following: (i) 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 Common Stock
would be converted in whole or in part into cash, other securities or other
property, other than a merger of the Company in which the holders of Common
Stock immediately prior to 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 one transaction
or a series of related transactions) of all or substantially all the assets of
the Company; or (ii) the stockholders of the Company shall approve any
plan or proposal for the liquidation or dissolution of the Company; or (iii) 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, shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of securities of
the Company representing 25% 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 (iv) at any time during a
period of two consecutive years, individuals who, at the beginning of such
period constituted the Board, 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 of the directors then still in office
who were directors at the beginning of such two-year period; or (v) 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 of
Regulation 14A promulgated under the Exchange Act.


 


(e) “Common Stock”—Authorized and issued or
unissued Common Stock, par value $2.50 per share, of the Company.


 


(f) “Code”—The Internal Revenue Code of 1986,
as amended from time to time.


 


(g) “Committee”—The Compensation Committee of
the Board, or such other committee of the Board that is designated by the Board
to administer the Plan. The Committee shall be constituted so as to permit the
Plan to comply with Rule 16b-3 promulgated under the Exchange Act or any
successor rule and shall initially consist of not less than three members
of the Board, each of whom is ineligible to receive Awards (other than
automatic fee Awards to Outside Directors described in Section 6 below),
shall have been so ineligible for at least one year prior to serving on the
Committee and shall satisfy the requirements to be a disinterested person
contained in Rule 16-b-3(1)(2)(i).


 


(h) “Company”—Cummins Inc. and its
subsidiaries, including subsidiaries of subsidiaries.


 


(i) “Fair Market Value”—The average of the high
and low prices of the Common Stock as reported on the composite tape for
securities listed on the New York Stock Exchange for the date in question,
provided that if no sales of Common Stock were made on said Exchange on that
date, the average of the high and low prices of Common Stock as reported on
said composite tape for the preceding day on which sales of Common Stock were
made on said Exchange.


 


(j) “Outside
Director”—A non-employee member of the Board.


 


(k) “Participant”—Any employee or Outside
Director of the Company to whom an Award has been made under the Plan.


 


3. 
Eligibility.    Employees of the Company
eligible for an Award under the Plan are those who hold positions of
responsibility and whose performance, in the judgment of the Committee or the
management of the Company, can have a significant effect on the success of the
Company. All Outside Directors are also eligible.


 


4. Stock Available for Awards.    A
total of thirteen million five hundred thousand (13,500,000) shares of the
Company’s Common Stock shall be available for Awards granted wholly or partly
in stock under provisions of the Plan. From time to time, the Board and
appropriate officers of the Company shall take whatever actions are necessary
to file required documents with governmental


 

















 


authorities
and stock exchanges to make shares of Common Stock available for issuance
pursuant to Awards. Common Stock related to Awards under this Plan or the 1992
Stock Incentive Plan that are forfeited, terminated or expired unexercised, or
related to options or stock appreciation rights settled in cash in lieu of
stock, shall again become available for Awards. Any Common Stock that so
becomes available shall be carried forward and be available for Awards.


 


5. Administration.    The
Plan shall be administered by the Committee, which shall have full and
exclusive power to interpret the Plan, to grant waivers of Plan restrictions
(other than restrictions related to automatic fee Awards described in Section 6
below), including waivers of restrictions on exercise of outstanding stock options
and appreciation rights, waivers of vesting requirements and acceleration of
Award payments, and to adopt such rules, regulations and guidelines for
carrying out the Plan as it may deem necessary or proper, all of which powers
shall be executed in the best interests of the Company and in keeping with the
objectives of the Plan. These powers include, but are not limited to, the
adoption of modifications, amendments, procedures, sub-plans and the like as
are necessary to comply with provisions of the laws of other countries in which
the Company may operate in order to assure the viability of Awards granted
under the Plan and to enable Participants employed in such other countries to
receive advantages and benefits under the Plan and such laws.


 


6. Director Automatic Formula
Awards.    Each Outside Director shall automatically
receive, on the date of each annual meeting of Shareholders, in lieu of cash
payment an annual award of Common stock, restricted as to transfer for a period
of six (6) months following the date of the award. The number of shares in
each such annual award shall be equal to one-half (1/2) of his or her Board
retainer fee, divided by the average of closing prices of Common Stock as
reported on the composite tape of the 
New York Stock Exchange for the twenty (20) consecutive trading
days immediately preceding the date of the award.


 


7. Employee Awards.    The
Committee shall determine the type or types of Award(s) to be made to each
employee Participant and shall set forth in the related Award Agreement the
terms, conditions and limitations applicable to each Award. Awards may include
but are not limited to those listed in this Section 7. Awards may be
granted singly, in combination or in tandem. Awards may also be made in
combination or in tandem with, in replacement of or as alternatives to grants
or rights under any other employee plan of the Company, including the plan of
any acquired entity. On such terms and conditions as shall be approved by the
Committee, the Company or any of its subsidiaries may directly or indirectly
lend money to any Participant or other person to accomplish the purposes of the
Plan, including to assist such person to acquire shares of Common Stock
acquired upon the exercise of options,
provided, however, such lending would not violate terms of the
Sarbanes-Oxley Act of 2002. No more than one-half of the total shares
authorized under this plan may be awarded as Stock Awards, as defined in (c) below,
that are subject only to the condition of continuous service with the Company.


 


(a)  Stock Option—A grant of the
right to purchase a specified number of shares of Common Stock at not less than
100% of Fair Market Value on the date of grant during a specified period as
determined by the Committee. A stock option may be in the form of an incentive
stock option (“ISO”) which, in addition to being subject to applicable terms,
conditions and limitations established by the Committee, complies with Section 422
of the Code which, among other limitations, provides that (i) to the extent
that the aggregate Fair Market Value (determined at the time the option is
granted) of Common Stock exercisable for the first time by a Participant during
any calendar year exceeds $100,000 (or such other limit as may be required by
the Code), such option shall not be treated as an ISO and (ii) the option
shall be exercisable for a period of not more than ten years from the date of
grant.


 


(b)   Stock Appreciation Right—A right to
receive a payment, in cash and/or Common Stock, equal to the excess of the Fair
Market Value or other specified valuation of a specified number of shares of
Common Stock on the date the stock appreciation right (“SAR”) is exercised over
the Fair Market Value or other specified valuation on the date of grant of the
SAR as set forth in the applicable Award Agreement, except that where the SAR
is granted in tandem with a stock option, the grant and exercise valuations
must be not less than Fair Market Value.


 


(c)  Stock Award—An Award made
in Common Stock or denominated in units of Common Stock. All or part of any
Common Stock award may be subject to conditions established by the Committee
and set forth in the Award Agreement, which may include, but are not limited
to, continuous service with the Company, achievement of specific business
objectives, increases in specified indices, attaining growth rates and other
comparable measurements of Company performance. Such Awards may be based on
Fair Market Value or other specified valuation.


 


The
minimum restriction period for Performance Shares (shares requiring certain
performance measures to be achieved in order to vest) will be one year from the
Grant Date. The minimum restriction period for Restricted Stock (shares
requiring only continued employment with the Company to vest) will be two years
if vesting occurs in annual increments, and three years if cliff vesting occurs
for the entire grant. The minimum restriction periods for Restricted Stock do
not apply to Restricted Stock that was originally granted as Performance Shares
and is converted to Restricted Stock after being earned by achieving
performance measures. The minimum restriction periods do not apply to any
grants made in lieu of cash compensation, as is the case for Outside Directors.


 


8. 
Payment of Awards.    Award payments made
in the form of Common Stock may include such restrictions, as the Committee
shall determine, including restrictions on transfer and forfeiture provisions.
When transfer of Common Stock is so restricted or subject to forfeiture
provisions it is  referred to as “Restricted
Stock”. Further, with Committee approval, payments may be deferred, either in
the form of installments or a future single payment. The Committee may permit
selected Participants to elect to defer payments of some or all types of Awards
in accordance with procedures established by the Committee to assure that such
deferrals comply with applicable requirements of the Code including, at the
choice of Participants, the capability to make further deferrals for payment
after retirement. Any deferred payment, whether elected by the Participant or
specified by the Award Agreement or by the Committee, may require the payment
be forfeited in accordance with the provisions of Section 11. Dividends or
dividend equivalent rights may be extended to and made part of any Award
denominated in Common Stock or units of Common Stock,


 

















 


subject
to such terms, conditions and restrictions as the Committee may establish. The
Committee may also establish rules and procedures for the crediting of
dividend equivalents for deferred payments denominated in Common Stock or units
of Common Stock. At the discretion of the Committee, a participant may be
offered an election to substitute an Award for another Award or Awards of the
same or different type.


 


9. 
Stock Option Exercise.    The
price at which shares of Common Stock may be purchased under a stock option
shall be paid in full at the time of the exercise in cash or, if permitted by
the Committee, by means of tendering Common Stock or surrendering another
Award, including Restricted Stock, valued at Fair Market Value on the date of
exercise, or any combination thereof. The Committee shall determine acceptable
methods for tendering Common Stock or other Awards and may impose such
conditions on the use of Common Stock or other Awards to exercise a stock
option as it deems appropriate. In the event shares of Restricted Stock are
tendered as consideration for the exercise of a stock option, a number of the
shares issued upon the exercise of the stock option, equal to the number of
shares of Restricted Stock used as consideration therefor, shall be subject to
the same restrictions as the Restricted Stock so submitted plus any additional
restrictions that may be imposed by the Committee.


 


10. 
Tax Withholding.    The Company shall
have the right to deduct applicable taxes from any Award payment and to retain
at the time of delivery or vesting of shares under the Plan, an appropriate
number of shares of Common Stock in value sufficient to cover the payment of
any taxes required by law to be withheld or to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes; provided, however, that a Participant shall have the
option to provide the Company with the funds to enable it to pay such taxes.
Notwithstanding the preceding sentence, if the Participant is subject to Section 16
of the Exchange Act, the Participant must affirmatively elect whether he wishes
to (i) have the Company retain shares of Common Stock, (ii) provide
the Company with other funds or (iii) have the Company deduct an amount
from other compensation due him in order to satisfy the tax withholding
requirements arising under an Award.


 


11. 
Termination of Employment.    If
the employment of a Participant terminates, other than pursuant to
paragraphs (a) through (c) of this Section 11, all
unexercised, deferred and unpaid Awards shall be canceled immediately, unless
the Award Agreement provides otherwise.


 


(a)  Retirement Under a
Company Retirement Plan.    When a Participant’s
employment by the Company terminates as a result of retirement in accordance
with the terms of a Company retirement plan, the Committee may permit Awards to
continue in effect beyond the date of retirement in accordance with the
applicable Award Agreement and the exercisability and vesting of any Award may
be accelerated.


 


(b)  Resignation in the Best
Interests of the Company.    When a Participant
resigns from the Company and, in the judgment of the Committee, the acceleration
and/or continuation of outstanding Awards would be in the best interests of the
Company, the Committee may (i) authorize, where appropriate, the
acceleration and/or continuation of all or any part of Awards granted prior to
such termination and (ii) permit the exercise, vesting and payment of such
Awards for such period as may be set forth in the applicable Award Agreement,
subject to earlier cancellation pursuant to Section 12 or at such time as
the Committee shall deem the continuation of all or any part of the Participant’s
Awards are not in the Company’s best interests.


 


(c)  Death or Disability of a
Participant.


 


(i)  In the event of
a Participant’s death, the Participant’s estate or beneficiaries shall have the
period specified in the Award Agreement within which to receive or exercise any
outstanding Award held by the Participant under such terms as may be specified
in the applicable Award Agreement.


 


(ii)In the event a
Participant is deemed by the Company to be disabled and eligible for benefits pursuant
to the terms of the Company’s Long-Term Disability Plan, any successor plan, or
similar plan of another employer, Awards and rights to any Awards may be paid
to or exercised by the Participant, if legally competent, or a committee or
other legally designated guardian or representative if the Participant is
legally incompetent by virtue of such disability.


 


(iii) After the death
or disability of a Participant, the Committee may in its sole discretion at any
time (1) terminate restrictions in Award Agreements; (2) accelerate
any or all installments and rights; and (3) instruct the Company to pay
the total of any accelerated payments in a single sum to the Participant, the
Participant’s estate, beneficiaries or representative—notwithstanding that, in
the absence of such termination of restrictions or acceleration of payments,
any or all of the payments due under the Awards might ultimately have become
payable to other beneficiaries.


 


Restriction
periods for grants of Restricted Stock and Performance Shares will not be
accelerated except in the event of Retirement, Death, Disability, or Change of
Control of the Corporation.


 


12. 
Cancellation and Rescission of Awards.    Unless
the Award Agreement specifies otherwise, the Committee may cancel any unexpired,
unpaid or deferred Award at any time if the Participant is not in compliance
with all other applicable provisions of the Award Agreement and the Plan and
with the condition that the Participant (whether or not an employee of the
Company at the time) shall not render services for any organization or engage
directly or indirectly in any business which, in the judgment of the Committee,
is or becomes competitive with the Company, or which organization or business,
or the rendering of services to such organization or business, is or becomes
otherwise prejudicial to or in conflict with the interests of the Company.


 


13. 
Transferability.


 


(a)  Except pursuant
to paragraph (c) of Section 11 or paragraph (b) below,
no Award or any other benefit under the Plan shall be


 

















 


assignable
or transferable, or payable to or exercisable by, anyone other than the
Participant to whom it was granted.


 


(b)  The Company may
expressly provide in an Award Agreement (or an amendment to an Award Agreement)
that a Participant may transfer a stock option Award (other than an ISO), in
whole or in part, to a spouse, domestic partner, or lineal descendant (a “Family
Member”), a trust for the exclusive benefit of Family Members, or a partnership
or other entity in which all the beneficial owners are Family Members.
Subsequent transfers of Awards shall be prohibited except in accordance with
this paragraph 13(b). All terms and conditions of the Award, including
provisions relating to the termination of the Participant’s employment or
service with the Company, shall continue to apply following a transfer made in
accordance with this paragraph 13(b).


 


14. 
Adjustments.    In the event of any change
in the Common Stock by reason of a stock split, stock dividend, combination or
reclassification of shares, recapitalization, split-up, spin-off, dividend
other than a regular quarterly cash dividend, separation, reorganization,
liquidation, merger, consolidation or similar event, the Committee may adjust
proportionally (a) the number of shares of Common Stock (i) reserved
under the Plan, and (ii) covered by outstanding Awards; (b) the stock
prices related to outstanding Awards; and (c) the appropriate Fair Market
Value and other price determinations for such Awards. In the event of any other
change affecting the Common Stock or any distribution (other than normal cash
dividends) to holders of Common Stock, such adjustments as may be deemed
equitable by the Committee, including adjustments to avoid fractional shares,
shall be made to give proper effect to such event. In the event of any of the
changes described in the first sentence of this Section 14, the Committee
shall be authorized to issue or assume stock options, whether or not in a
transaction to which Section 424(a) of the Code applies, by means of
substitution of new options for previously issued options or an assumption of
previously issued options.


 


15. 
Change of Control.    In the event of a
Change of Control, any time period relating to the exercisability or
realization of an outstanding Award shall be immediately accelerated so that
any outstanding Award as of the date of the Change of Control may be exercised
or realized in full. In addition, in order to maintain the Participant’s rights
in the event of a Change of Control, the Committee, in its sole discretion,
may, either at the time an Award is made hereunder or at any time prior to, or
coincident with or after the time of, a Change of Control:


 


(a)  make such
adjustment to the Awards then outstanding as the Committee deems appropriate to
reflect such Change of Control; or


 


(b)  cause the Awards
then outstanding to be assumed, or new rights substituted therefor, by the
surviving corporation in such Change of Control.


 


The
Committee may, in its discretion, include such further provisions and
limitations in any agreement documenting such Awards, as it may deem equitable
and in the best interests of the Company with respect to changes in control.


 


16. 
Amendment, Modification, Suspension or Discontinuance of the Plan.    The
Board may amend, modify, suspend or terminate the Plan for the purpose of
meeting or addressing any changes in legal requirements or for any other
purpose permitted by law. Subject to changes in law or other legal
requirements, which would permit otherwise, the Plan may not be amended without
the consent of the holders of a majority of the shares of Commons Stock then
outstanding to (i) increase the maximum number of shares of Common Stock
that may be awarded under the Plan (except for adjustments pursuant to Section 14
of the Plan), (ii) decrease the option price, (iii) materially modify
the requirements as to eligibility for participation in the Plan, (iv) withdraw
administration of the Plan from the Committee or (v) extend the period
during which Awards may be granted.


 


17. 
Governing Law.    The Plan and all
determinations made and actions taken pursuant hereto, to the extent not
otherwise governed by the Code or the securities laws of the United States,
shall be governed by the laws of the State of Indiana and construed accordingly.


 


18. 
Effective and Termination Dates.    The
Plan shall become effective on the date of its adoption by the Board and Awards
may be made immediately thereafter, but no Stock Award may be paid, Restricted
Stock issued (unless containing restrictions requiring cancellation of such
Restricted Stock if stockholder approval is not received) or Stock Option
exercised under the Plan until it is approved by the holders of a majority of
the shares of common Stock then outstanding. The Plan shall terminate on December 31,
2012, subject to earlier termination by the Board pursuant to Section 16.