Document:

Exhibit 10.(c)

 

CUMMINS INC. DEFERRED COMPENSATION PLAN

 

 

Restated as of January 1, 2008

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  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          DEFERRAL AND DISTRIBUTION ELECTIONS

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Deferral of Compensation

  	
  6

  
	
  Section 4.02

  	
  Initial Deferral Election

  	
  7

  
	
  Section 4.03

  	
  Annual Deferral Elections

  	
  7

  
	
  Section 4.04

  	
  Elections to Defer Longer-Term Performance Plan Payouts

  	
  7

  
	
  Section 4.05

  	
  Election of Form and Timing of Payment

  	
  7

  
	
  Section 4.06

  	
  Election Changes

  	
  7

  
	
  Section 4.07

  	
  Special Transition Period Elections

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE V           PARTICIPANT ACCOUNTS

  	
  8

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
  Establishment of Accounts

  	
  8

  
	
  Section 5.02

  	
  Crediting of Deferrals

  	
  8

  
	
  Section 5.03

  	
  Crediting of RSP True Up Matching Credits

  	
  8

  
	
  Section 5.04

  	
  Investment Options

  	
  8

  
	
  Section 5.05

  	
  Crediting of Earnings

  	
  8

  
	
  Section 5.06

  	
  Charge for Distributions

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI          DISTRIBUTION OF ACCOUNTS 

  	
  9 

  
	
   

  	
   

  	
   

  
	
  Section 6.01

  	
  Distribution on Designated Benefit Commencement Date

  	
  9

  
	
  Section 6.02

  	
  Distribution Upon Termination of Employment for Reasons
  other than Retirement

  	
  9

  
	
  Section 6.03

  	
  Distribution Upon Death

  	
  9

  
	
  Section 6.04

  	
  Distribution on Account of Unforeseeable Emergency

  	
  9

  
	
  Section 6.05

  	
  Distribution on Account of Change in Control

  	
  10

  
	
  Section 6.06

  	
  Delay in Payment for Specified Employees

  	
  10

  
	
  Section 6.07

  	
  Designating a Beneficiary

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII        ADMINISTRATION OF PLAN

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 7.01

  	
  Powers and Responsibilities of the Administrator

  	
  10

  

 

i

 

	
  Section 7.02

  	
  Indemnification

  	
  11

  
	
  Section 7.03

  	
  Claims and Claims Review Procedure

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII       AMENDMENT AND TERMINATION

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX         MISCELLANEOUS 

  	
  12 

  
	
   

  	
   

  	
   

  
	
  Section 9.01

  	
  Obligations of Employer

  	
  12

  
	
  Section 9.02

  	
  Employment Rights

  	
  12

  
	
  Section 9.03

  	
  Non-Alienation

  	
  12

  
	
  Section 9.04

  	
  Tax Withholding

  	
  13

  
	
  Section 9.05

  	
  Other Plans

  	
  13

  
	
  Section 9.06

  	
  Liability of Affiliated
  Employers

  	
  13

  

 

ii

 

ARTICLE I

RESTATEMENT AND PURPOSE

 

Section 1.01         History
and Restatement.  Cummins Inc.
established the Cummins Engine Company, Inc. 1994 Deferred Compensation
Plan (“Plan”), effective February 1, 1994, and it has amended and/or
restated the Plan on several occasions since that time.  The Company most recently restated the Plan,
effective January 1, 2005, to comply with the requirements of Code Section 409A
and the guidance thereunder.  By this
restatement, which is generally effective as of January 1, 2008, the
Company amends the Plan to comply with the requirements of the final
regulations under Code Section 409A and changes the name of the Plan to
the Cummins, Inc. Deferred Compensation Plan.

 

Section 1.02         Application
of Restatement.  This
restatement shall apply, effective January 1, 2008, to all amounts
deferred or vested under the Plan after 2004 and any earnings credited with
respect to such amounts.  It does not
apply to any amount deferred and vested as of December 31, 2004, or any
earnings credited under the Plan with respect to such amounts (together, “Grandfathered
Amounts”), and Grandfathered Amounts shall continue to be governed by the terms
and conditions of the Plan without regard to this restatement; provided,
however, the person or persons entitled to receive any remaining portion of a
Participant’s Accounts after his death shall be determined pursuant to this
restatement, provided that the Participant’s death occurs after 2004.

 

Section 1.03         Purpose.  The Plan is intended to constitute an
unfunded plan maintained by the Employer primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees within the meaning of Sections 201, 301, and 401 of ERISA.

 

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 employee benefits. 
Assets of the Trust are subject to the claims of the Employer’s general
creditors, and no Participant shall have any interest in any assets of the
Trust or an Employer other than as a general creditor of the Employer.

 

ARTICLE II

DEFINITIONS AND INTERPRETATION

 

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

 

(a)           “Account” means the bookkeeping
account established to reflect a Participant’s interest under the Plan
attributable to amounts deferred pursuant a specific deferral election and
related RSP true up matching credits under Section 5.03.  The Administrator shall maintain a separate
Account with respect to amounts deferred pursuant to each deferral election and
related RSP True Up Matching Credits. 
Where the context so permits, the term “Account” means the amount
credited to such bookkeeping account.

 

 

(b)           “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 or responsibility to an agent, the term “Administrator”
shall include such agent.

 

(c)           “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.

 

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

 

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

 

(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)           “Beneficiary” means the person or
persons entitled to receive a Participant’s remaining Accounts, if any, after
his death.  A Participant’s Beneficiary
shall be determined as provided in Section 6.07.

 

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

 

(i)            “Benefit Commencement Date” means
the date as of which distribution of an Account begins or is paid, if payable
as a lump sum.

 

(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 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 (‘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 

 

2

 

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

 

(o)           “Designated Benefit Commencement Date”
means, with respect to an Account, the date elected by an Eligible Employee for
distribution (or commencing distribution, if payable in installments) of the
Account.  Except as otherwise provided in
Section 4.06, a Participant’s Designated Benefit Commencement Date must be
either (i) a specified Quarterly Distribution Date occurring at least two
years after the end of the calendar year for which the deferral is made or (ii) a
specified Quarterly Distribution Date occurring in the calendar quarter after
the Participant’s Retirement or one of the next following three calendar
quarters.

 

(p)           “Designated Form” means, with respect
to an Account, the form in which an Eligible Employee has elected for the
Account to be distributed.  The “Designated
Form” must be either (i) a single lump sum payment or (ii) annual
installments beginning on the Designated Benefit Commencement Date and
continuing over the next following anniversaries of such date for a designated
number of years, not to exceed a total of 15 annual installments.  Each installment shall consist of a portion
of the remaining Account, which shall be equal to (i) one divided by (ii) one
plus the number of installments remaining after the installment for which the 

 

3

 

calculation is being
made.  If an Eligible Employee fails to
elect the Designated Form for an Account, the Designated Form for
such Account shall be a single lump sum payment.

 

(q)           “Domestic Partner” means a person of
the same or opposite sex (i) with whom the Participant 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
Participant, is mutually responsible for the other’s welfare, (iv) who,
with the Participant, intends for their relationship to be permanent, (v) who
is not so closely related to the Participant 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)            “Earnings Credit” means, with
respect to an Account, the amount credited to the Account pursuant to Section 5.05.

 

(s)           “Eligible Employee” means a
common-law employee of the Employer who (i) is paid on the Employer’s
United States payroll, (ii) has an annual base salary payable by the
Employer of at least $100,000 or such greater amount specified by the
Administrator before the calendar year in which such greater amount first
applies, (iii) is either (A) a citizen or legal permanent resident of
the United States or (B) holds one of the following types of United States’
visas:  F-1, F-2, H-1B, H-2B, H-3, H-4,
L-1, O-1, O-3, or TN, and (iv) has received written notice from the
Administrator that he is eligible to participate in the Plan.

 

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

 

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

 

(v)           “Fund” means an Investment Fund.

 

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

 

(x)            “Investment Fund” means a fund
selected by the Administrator pursuant to Section 5.04 to determine
Earnings Credits.

 

(y)           “Longer-Term Performance Plan” means
the Cummins Inc. Longer-Term Performance Plan, the Cummins Inc. Senior
Executive Longer-Term Performance Plan, or the successor of either.

 

(z)            “Non-Grandfathered Amount” means an
amount deferred under the Plan that is not a Grandfathered Amount.

 

(aa)         “Participant” means an Eligible
Employee who has elected to make deferrals under the Plan on an Applicable Form and
whose Accounts have not been fully distributed.

 

4

 

(bb)         “Plan” means the “Cummins Inc. Deferred
Compensation Plan” as set out in this document, as amended from time to time.

 

(cc)         “Qualified Domestic Relations Order”
has the meaning specified in ERISA Section 206(d)(3)(B).

 

(dd)         “Quarterly Distribution Date” means March 15,
June 15, September 15, or December 15.

 

(ee)         “Retire” or “Retirement” refers to
Termination of Employment after (i) reaching age 55 and completing at
least five years of employment with the Affiliated Employers or (ii) completing
30 years of employment with the Affiliated Employers.

 

(ff)           “RSP True Up Matching Credit” means
an amount credited to a Participant’s Account pursuant to Section 5.03.

 

(gg)         “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.

 

(hh)         “Specified Employee Effective Date”
means, in the case of an Employee who Terminates Employment before December 1,
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.

 

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

 

(jj)           Spouse” means, as of a Participant’s
Benefit Commencement Date, (i) the person to whom the Participant is
married in accordance with applicable law of the jurisdiction in which the
Participant resides, or (ii) in the case of an Participant not described
in clause (i), the Participant’s Domestic Partner.

 

(kk)         “Terminates Employment,” “Termination
of Employment,” or any variation thereof means a separation from service within
the meaning of Code Section 409A(a)(2)(A)(i).

 

(ll)           “Trust” means the grantor trust
established by the Company to hold assets for the provision of certain benefits
under the Plan as well as other Employer benefits.

 

(mm)       “Unforeseeable Emergency” has the meaning
given to such term by Code Section 409A and the guidance thereunder.  In general, the term means a severe financial
hardship to the Participant resulting from an illness or accident of the
Participant, the Participant’s spouse, or a dependent (as defined in Code Section 152(a))
of the Participant, loss of the Participant’s property due to casualty, or
other similar extraordinary and unforeseeable circumstances arising from events
beyond the control of the Participant.

 

5

 

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

 

The Administrator shall
notify an individual of his eligibility to participate in the Plan as soon as
administratively feasible after it determines that the individual has satisfied
the requirements (other than notification) for eligibility to participate.  An individual shall become an Eligible
Employee upon receipt of the Administrator’s notice.  An Eligible Employee shall become a
Participant only after completing such forms and making such elections as the
Administrator may prescribe.

 

ARTICLE IV

DEFERRAL AND DISTRIBUTION ELECTIONS

 

Section 4.01         Deferral
of Compensation.  An Eligible
Employee may elect pursuant to this Article IV to defer receipt of all or
a portion, as specified in the election, of his base salary, annual bonus,
and/or Longer-Term Performance Plan payments that would otherwise be paid to
him in cash.  All elections pursuant to
this Article IV shall be made by filing an Applicable Form with the
Administrator.  Subject to the provisions
of Section 4.06 and 4.07, elections under this Article IV shall
become irrevocable as on the last day of the applicable election period;
provided, however, if the Administrator grants a Participant’s request for a
distribution on account of an Unforeseeable Emergency, it shall cancel the
Participant’s existing deferral elections. 
Amounts deferred pursuant to a Participant’s election shall be withheld
from his cash compensation and credited to his Account as provided in Section 5.02.  The Participant’s Employer shall withhold
employment and other taxes with respect to the deferred amounts from the
Participant’s other compensation, as required by law.  If the Participant’s other compensation is
insufficient for that 

 

6

 

purpose, the Participant
shall reimburse the Employer for the required withholding not withheld from the
Participant’s other compensation.

 

Section 4.02         Initial
Deferral Election.  An individual
may make a deferral election pursuant to this Section only within the
enrollment period specified by the Administrator, which shall end not later
than 30 days after the individual becomes an Eligible Employee (or, if earlier,
within 30 days after the date on which he becomes eligible to participate in
any other plan of an Affiliated Employer that is required to be aggregated with
this Plan for purposes of Code Section 409A).  Pursuant to such election, an Eligible
Employee may elect to defer (i) part or all of his base salary for services
performed after the date on which his election is filed with the Administrator
and/or (ii) part or all of his annual bonus for services performed in
months after the date on which his election is filed with the
Administrator.  For purposes of clause (ii) of
the preceding sentence, the portion of an Employee’s annual bonus for services
performed in months after the date on which his election is filed with the
Administrator shall be equal to the amount of his annual bonus multiplied by a
fraction, the numerator of which is the number of full months in the calendar
year occurring after the filing of the Employee’s election and the denominator
of which is 12.

 

Section 4.03         Annual
Deferral Elections.  An Eligible
Employee may elect to defer part or all of his base salary and/or annual bonus
for services performed during a calendar year by filing an election during the
enrollment period established by the Administrator, which period shall end not
later than December 31 of the preceding year.

 

Section 4.04         Elections
to Defer Longer-Term Performance Plan Payouts.  An Eligible Employee may elect to defer part
or all of his cash payouts under the Longer-Term Performance Plan, provided
that such election is made during the enrollment period established by the
Administrator, which period shall end not later than 12 months before end of
the performance period, and such election is otherwise permitted by Code Section 409A.  Except as permitted by the preceding
provisions of this Section, an Eligible Employee’s election to defer part or
all of his cash payouts under the Longer-Term Performance Plan must be made
before the beginning of the applicable performance period.

 

Section 4.05         Election
of Form and Timing of Payment.  At the time a Participant makes a deferral
election pursuant to Section 4.02, 4.03 or 4.04, he shall also elect a
Designated Benefit Commencement Date and Designated Form for the Account
to which amounts subject to the deferral are credited.

 

Section 4.06         Election
Changes.  A
Participant may, pursuant to this Section, elect to change the Designated
Distribution Date and/or Designated Form for an Account, provided,
however, that a Participant may make only one election pursuant to this Section with
respect to an Account.  A Participant’s
election change pursuant to this Section shall be not be valid until 12
months after it is filed with the Administrator, and it shall be valid only if (i) it
defers the original Designated Distribution Date for at least five years, and (ii) if
it changes an election for payment at a specified time or pursuant to a
specified schedule, it is made at least 12 months before the prior Designated
Distribution Date.  In addition, if the
prior Designated Distribution Date is based on the Participant’s Retirement
date, the Participant’s new Designated Distribution Date must be precisely five
years after the prior Designated Distribution Date.

 

7

 

Section 4.07         Special
Transition Period Elections.

 

(a)           A Participant may elect during the
election period established by the Administrator (which shall begin no earlier
than September 1, 2007, and end no later than December 31, 2007) to
change his Designated Benefit Commencement Date and/or Designated Form with
respect to an Account, provided that such election does not cause any amounts
otherwise payable in another year to be payable in 2007 or cause any amounts
otherwise payable in 2007 to be paid in a later year.

 

(b)           A Participant may elect during the
election period established by the Administrator (which shall begin and end in
2008) to change his Designated Benefit Commencement Date and/or Designated Form with
respect to an Account, provided that such election does not cause any amounts
otherwise payable in another year to be payable in 2008 or cause any amounts
otherwise payable in 2008 to be paid in a later year.

 

ARTICLE V

PARTICIPANT ACCOUNTS

 

Section 5.01         Establishment
of Accounts.  The
Administrator shall establish a separate Account to reflect each Participant’s
interest under the Plan with respect to amounts deferred pursuant to each of
the Participant’s deferral elections. 
The Administrator shall separately account for Grandfathered Amounts and
Non-Grandfathered Amounts.

 

Section 5.02         Crediting
of Deferrals.  A Participant’s
deferrals shall be credited to his appropriate Account as of the payroll date
on which they are withheld from his pay.

 

Section 5.03         Crediting
of RSP True Up Matching Credits.  As a result of a Participant’s deferrals
under the Plan, he may not receive matching contributions that he would have
received under the Cummins Inc. and Affiliates Retirement and Savings Plans (“RSP”)
in the absence of such election.  In such
a case, to the extent determined by the Company, in its discretion, the
Participant’s Account with respect to such deferrals shall be credited with the
amount of such lost matching contributions as of the last day of the year in
which such deferrals were withheld from the Participant’s pay.

 

Section 5.04         Investment
Options.  The Administrator shall,
from time to time, specify the available Investment Funds, which the
Administrator may prospectively change or close to new investments in its
discretion.  Each Participant shall elect
one or more Funds to which his existing Accounts shall be allocated, in increments
of 1%.  Before 2008, a Participant may
change his investment election once each calendar year.  After 2007, a Participant may change his
investment elections one time per month, and he may make separate investment
elections with respect to his existing Accounts and future deferrals.  The sole purpose of the Funds is to measure
Earnings Credits to the Participant’s Accounts, and there is no requirement
that amounts be invested in the Funds.

 

Section 5.05         Crediting
of Earnings.  As of the end
of each business day, the Administrator shall credit each Participant’s
Accounts with an Earnings Credit (which may be positive or negative) as
provided in this Section.  Except as the
Administrator otherwise determines, the Earnings Credit rate for that portion
of a Participant’s Accounts allocated to a 

 

8

 

fixed income Fund for any
day in a calendar quarter shall be based on the rate under such fixed income
investment on the last day of the preceding calendar quarter.  The Earnings Credit rate for that portion of
a Participant’s Accounts allocated to any Fund other than a fixed income Fund
shall be the rate of investment earnings under such Fund.  Notwithstanding the preceding provisions, no
Earnings Credits shall be allocated with respect to a Payment after the last
business day immediately preceding that Payment (or such earlier date preceding
a Payment as reasonably designated by the Administrator).  In determining the Earnings Credits, the
Administrator may adopt such procedures as it deems appropriate, in its sole
discretion.

 

Section 5.06         Charge
for Distributions.  Upon a
distribution with respect to a Participant, the Participant’s appropriate
Accounts shall be reduced by the amount of the distribution.

 

ARTICLE VI

DISTRIBUTION OF ACCOUNTS

 

Section 6.01         Distribution
on Designated Benefit Commencement Date. 
Except as expressly provided in the following provisions of this
Article, a Participant’s Account subject to a deferral election shall be
distributed in the Designated Form, beginning as of the Participant’s
Designated Benefit Commencement Date. 
Amounts payable as of a date shall be paid on such date or as soon as
administratively feasible (and under no circumstances more than 30 days)
thereafter.  Notwithstanding the
preceding provisions of this Section, if a Participant’s Account on the
Designated Benefit Commencement Date is less than $10,000, the Designated Form shall
be deemed to be a lump sum.

 

Section 6.02         Distribution
Upon Termination of Employment for Reasons other than Retirement.  Notwithstanding Section 6.01,
if a Participant Terminates Employment for a reason other than Retirement, his
remaining Account balances shall be paid to him (or his Beneficiary, if he is
deceased) in a single lump sum payment as of the Quarterly Distribution Date
occurring in the first calendar quarter beginning after his Termination of
Employment; provided, however this sentence shall not result in the deferral of
any amount otherwise payable under the Plan.

 

Section 6.03         Distribution
Upon Death.  Notwithstanding
Section 6.01, if a Participant dies before the distribution of his entire
Account balance, his remaining Account balance shall be distributed to his
Beneficiary in a single lump sum payment as of the Quarterly Distribution Date
occurring in the first calendar quarter beginning after his death; provided,
however, this sentence shall not result in the deferral of any amount otherwise
payable under the Plan.

 

Section 6.04         Distribution
on Account of Unforeseeable Emergency.  Notwithstanding
Section 6.01, if a Participant demonstrates to the satisfaction of the
Administrator that he has incurred an Unforeseeable Emergency, the amount
necessary to alleviate the financial hardship resulting from the Unforeseeable
Emergency, as determined by the Administrator, shall be distributed to him as
soon as administratively feasible after the Administrator’s decision.  If the Administrator grants a request for
withdrawal pursuant to this Section, it shall prospectively cancel the Participant’s
existing deferral elections, and it shall take 

 

9

 

into account the amounts
saved by the cancellation of those elections in determining the amount needed
to satisfy the Participant’s Unforeseeable Emergency.

 

Section 6.05         Distribution
on Account of Change in Control.  Notwithstanding Section 6.01, if a
Change in Control occurs with respect to a Participant, the Participant’s
remaining Accounts shall be distributed to him in a single lump sum payment on the
date of such Change in Control or as soon as administratively feasible (and not
more than 30 days) thereafter; provided, however, this sentence shall not
result in the deferral of any amount otherwise payable under the Plan.

 

Section 6.06         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),
distributions to a Participant 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.  Payments delayed pursuant to the preceding
sentence shall be increased by deemed earnings, as determined pursuant to Section 5.05,
to the date on which such payments are made.

 

Section 6.07         Designating
a Beneficiary.  The
Participant may designate a Beneficiary only by filing a completed Applicable Form with
the Administrator during his life.  The
Participant’s proper filing of a Beneficiary designation shall cancel all prior
Beneficiary designations.  If the
Participant does not designate a Beneficiary, or if all properly designated
Beneficiaries die before the Participant, the Participant’s Beneficiary shall
be his Spouse, if living at the time of the Participants death, or if his
Spouse is not then living, to the individual(s), if any, named as the
Participant’s beneficiary under his Employer-provided group life insurance
program, who are living at the time of the Participant’s death or, if no such
beneficiaries are then living, to the Participant’s estate.

 

ARTICLE VII

ADMINISTRATION OF PLAN

 

Section 7.01         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 a Participant has Terminated Employment,
determine the amount, manner, and timing of distributions under the Plan, and
resolve any claims for benefits;

 

10

 

(2)           to prescribe procedures to be followed by a Participant,
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 Participant’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 7.02         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 7.03         Claims
and Claims Review Procedure.

 

(a)           All Benefit Claims must be made in
accordance with procedures established by the Administrator from time to
time.  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 

 

11

 

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).

 

ARTICLE VIII

AMENDMENT AND TERMINATION

 

The Plan shall continue in
force with respect to any Participant until the completion of any payments due
hereunder and shall be binding upon any successor to substantially all the
assets of the Company.  The Company may,
however, at any time, amend the Plan to provide that no additional benefits
shall accrue with respect to any Participant under the Plan; provided, however,
that no such amendment shall (i) deprive any Participant 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) 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 IX

MISCELLANEOUS

 

Section 9.01         Obligations
of Employer.  The Employer’s
only obligation hereunder shall be a contractual obligation to make payments to
Participants or 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 a Participant,
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 9.02         Employment
Rights.  Nothing contained herein shall
confer any right on an Participant to be continued in the employ of any
Employer or affect the Participant’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 9.03         Non-Alienation.
 Except as otherwise required by
a Qualified Domestic Relations Order, no right or interest of an Participant,
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 Qualified Domestic Relations Order.  To the extent permitted by Code Section 409A,
payments pursuant to a 

 

12

 

Qualified Domestic Relations
Order may be made in a lump sum and before the Participant’s earliest
retirement age (as defined by ERISA Section 206(d)(3)(E)(ii)).

 

Section 9.04         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 9.05         Other
Plans.  Amounts and benefits paid
under the Plan shall not be considered compensation to the Participant for
purposes of computing any benefits to which he may be entitled under any other
pension or retirement plan maintained by an Employer.

 

Section 9.06         Liability
of Affiliated Employers.  If any payment
to be made under the Plan is to be made on account of an Participant 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.

 

This
Restatement of Cummins Inc. Deferred Compensation Plan has been signed by the
Company’s duly authorized officer, acting on behalf of the Company, on this
           day of December,
2008.

 

	
   

  	
  CUMMINS
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

13Exhibit
10.(d)

 

CUMMINS INC. SUPPLEMENTAL 

LIFE INSURANCE AND DEFERRED INCOME PLAN

 

 

Restated
as of January 1, 2008

 

 

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

  	
  7

  
	
   

  	
   

  
	
  ARTICLE III PARTICIPATION

  	
  7

  
	
   

  	
   

  
	
  ARTICLE IV INSURANCE POLICIES

  	
  7

  
	
   

  	
   

  
	
  Section 4.01 Purchase of
  Insurance Policies

  	
  7

  
	
  Section 4.02 Premium
  Payments

  	
  8

  
	
   

  	
   

  
	
  ARTICLE V DEATH BENEFITS

  	
  8

  
	
   

  	
   

  
	
  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

  	
  10

  
	
  Section 6.05 Survivor
  Benefit

  	
  10

  
	
  Section 6.06 Distribution of
  Small Benefits

  	
  10

  
	
  Section 6.07 Delay in
  Payment for Specified Employees

  	
  11

  
	
  Section 6.08 Designating a
  Beneficiary

  	
  11

  
	
   

  	
   

  
	
  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

  	
  13

  
	
   

  	
   

  
	
  ARTICLE X GROSS-UP PAYMENTS

  	
  14

  
	
   

  	
   

  
	
  ARTICLE XI PRESERVATION OF ACCRUED BENEFITS

  	
  15

  

 

 

	
  ARTICLE XII AMENDMENT AND TERMINATION

  	
  15

  
	
   

  	
   

  
	
  ARTICLE XIII MISCELLANEOUS

  	
  15

  
	
   

  	
   

  
	
  Section 13.01 Obligations of
  Employer

  	
  15

  
	
  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

  

 

 

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, 2005, to comply with
the requirements of Code Section 409A and the guidance thereunder.  By this restatement, which is generally
effective as of January 1, 2008, the Company amends the Plan to comply
with the requirements of the final regulations under Code Section 409A.

 

Section 1.02                            Application of Restatement.  This restatement of the Plan is effective as
of January 1, 2008, with respect to any amounts accrued or Vested under
the Plan after 2004.  It does 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 without regard to this restatement; provided,
however, the individual entitled by 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.

 

(c)                                  “Affirmation of
Domestic Partnership” means an Applicable Form for affirming the
relationship between a Participant 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:

 

(1)                                  For benefits
with an Annuity Starting Date after 2005, 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.

 

(2)                                  For benefits
having an Annuity Starting Date in 2005, the meaning specified by the Plan, as
in effect immediately before this restatement.

 

(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
Benefit, if any, remaining after the Executive’s death.  An Executive’s Beneficiary shall be
determined as provided in Section 6.08.

 

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

 

2

 

(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 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).

 

3

 

(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:

 

(1)                                  For benefits
with an Annuity Starting Date after 2005, 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.

 

(2)                                  For benefits
with an Annuity Starting Date in 2005, the meaning specified by the Plan, as in
effect immediately before this restatement.

 

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

 

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

 

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

 

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

 

4

 

(u)                                 “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.

 

(v)                                 “Executive
Retention Plan” means the Cummins Inc. Executive Retention Plan, as amended from
time to time.

 

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

 

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

 

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

 

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

 

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

 

(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.

 

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

 

(cc)                            “Qualified Domestic
Relations Order” has the meaning specified in Code Section 414(p).

 

(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 

 

5

 

(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) 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 1, 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.

 

(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, a Participant with four years
and six months of Service shall be credited with five years of Vesting Service.

 

6

 

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 or her execution of a form provided by
the Company authorizing periodic payroll deductions in amounts sufficient to
pay 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.

 

7

 

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

 

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 or her death.

 

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 (age 65 for benefits with an Annuity Starting Date in
2005) 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

 

8

 

(b)                                 (i) in the
case of a benefit with an Annuity Starting date after 2005, 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, or (ii) in the
case of a benefit with an Annuity Starting Date in 2005, 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 60; plus

 

(c)                                  in the case of
an Executive who is among the two most highly compensated Executives of the
Company at the time of Termination of Employment, 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.

 

Benefits payable pursuant to
this Section shall begin as of the first day of the month following the
Executive’s Termination of Employment.

 

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 (age 65 in the case of benefits with an
Annuity Starting Date in 2005), the Executive 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 the
amount determined in accordance with Section 6.02, reduced as follows:

 

(1)                                  in the case of
benefits with an Annuity Starting Date after 2005, 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;

 

(2)                                  in the case of
benefits with an Annuity Starting Date in 2005, by .5% for each full month by
which the Executive’s Annuity Starting Date precedes his 65th 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.

 

9

 

Benefits
payable pursuant to this Section shall begin as of the first day of the
month following the Executive’s 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.

 

(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 pursuant
to this Article as of the Annuity Starting Date is less than $25,000, the
Trustee shall pay

 

10

 

the
Present Actuarial Value of such payments as a single lump sum payment within 60
days following the Executive’s Termination of Employment.

 

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 a Participant 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.  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, to 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, to the Executive’s estate.

 

ARTICLE VII

VESTED BENEFITS

 

An
Executive’s interest in his or her 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 

 

11

 

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, that the
Executive, other 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 a
Participant 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 a Participant, 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 Participant’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 

 

12

 

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.  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, 

 

13

 

conclusive,
and binding on all persons, subject to the claimant’s right to file a civil
action pursuant to ERISA Section 502(a).

 

ARTICLE X

GROSS-UP PAYMENTS

 

If
payment of the lump sum Present Actuarial Value of the Supplemental Life
Annuity pursuant to Article VIII (“Accelerated Payment”) causes the
Accelerated Payment and any other payments made in connection with a Change of
Control (together with the Accelerated Payment, the “Total Payments”) to be
subject to the tax (“Excise Tax”) imposed by Code Section 4999, the
Company shall pay to the Executive an additional amount (“Gross-Up Payment”)
such that the net amount retained by the Executive, after deduction of any
Excise Tax paid or payable (and not grossed-up under a similar provision of
another plan or program sponsored by the Company) on the lump sum and such
other Total Payments and any federal, state and local income tax and Excise Tax
upon the payment provided for by this Article, shall be equal to the
Accelerated Payment and such other Total Payments.  If any of such other Total Payments are
subject to the Excise Tax without regard to the Accelerated Payment, a Gross-Up
Payment shall be made, but shall be limited to the increase in the Excise Tax
(plus any federal, state, and local income tax and Excise Tax on such Gross-Up
Payment) arising solely as a result of the Accelerated Payment.

 

For
purposes of determining whether any of the payments described above will be
subject to the Excise Tax and the amount of such Excise Tax, (i) any other
payments or benefits received or to be received by the Executive in connection
with a Change of Control, whether payable pursuant to the terms of the Plan or
any other plan, arrangement, or agreement with the Company, its successors, any
person whose actions result in a change in control of the Company or any
corporation affiliated (or which, as a result of the completion of a
transaction causing a change of control, will become affiliated) with the
Company within the meaning of Code Section 1504 shall be treated as “parachute
payments” within the meaning of Code Section 280G(b)(2), and all “excess
parachute payments” within the meaning of Section 280G(b)(1) shall be
treated as subject to the Excise Tax, unless in the opinion of tax counsel
selected by the Company’s independent auditors and acceptable to the Executive,
the payments (in whole or in part) do not constitute parachute payments, or
such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of Code Section 280G(b)(4) either
in their entirety or in excess of the base amount within the meaning of Code Section 280G(b)(3),
or are otherwise not subject to the Excise Tax, (ii) the amount of the
payments that shall be treated as subject to the Excise Tax shall be equal to
the lesser of (A) the total amount of the payments or (B) the amount
of excess parachute payments within the meaning of Section 280G(b)(1) (after
applying clause (i), above), and (iii) the value of any non-cash 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).  In the event that the Excise Tax is
subsequently determined to be less than the amount taken into account hereunder
at the time of payment, the Executive shall repay to the Company at the time
that the amount of such reduction in Excise Tax is finally determined the
portion of the 

 

14

 

Gross-Up
Payment attributable to such reduction (plus the portion of the Gross-Up
Payment attributable to the Excise Tax and federal and state and local income
tax imposed on the Gross-Up Payment being repaid by the Executive if such
repayment results in a reduction in Excise Tax and/or a federal and state and
local income tax deduction) plus interest on the amount of such repayment at
the rate provided in Code Section 1274(d). 
In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time of the Gross-Up Payment (including by
reason of any payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Company shall make an additional
Gross-Up Payment in respect of such excess (plus any interest payable with
respect to such excess) at the time that the amount of such excess is finally
determined.

 

To
the extent that earlier payment is not required by the preceding provisions of
this Section, the Company’s payment pursuant to this Section shall be made
not later than the end of the calendar year next following the calendar year in
which the Participant remits the related taxes.

 

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 this 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 and shall be binding upon any successor to
substantially all the assets of the Company. 
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) 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 a Participant, 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.

 

15

 

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 Qualified 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 Qualified Domestic Relations Order.  To the extent permitted by Code Section 409A,
payments pursuant to a Qualified Domestic Relations Order may be made in a lump
sum and before the Participant’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

 

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      day of December, 2008.

 

	
   

  	
  CUMMINS
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

17

 

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

 

·                  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

 

A-2

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