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EXHIBIT 10.2

CATERPILLAR INC.

1987 STOCK OPTION PLAN

(Amended and Restated as of 12/31/2000)

1. Establishment of Plan

Caterpillar Inc. (hereafter referred to as the
"Company") proposes to grant to selected key employees of the Company
and its subsidiaries restricted stock awards, options to purchase common stock
of the Company and stock appreciation rights in conjunction therewith for the
purposes of (i) furnishing to such employees maximum incentive through ownership
of Company shares to improve operations and increase profits and (ii)
encouraging such persons to accept or continue employment with the Company and
its subsidiaries. Such restricted stock awards, options and stock appreciation
rights will be granted pursuant to the plan herein set forth, which shall be
known as the Caterpillar Inc. 1987 Stock Option Plan (hereafter referred to as
the "Plan").

The Company also proposes to grant to the members of the
Company's Board of Directors who are not officers or employees of the Company at
the time of a grant (hereinafter referred to as "Outside Directors")
options to purchase common stock of the Company pursuant to the Plan. The
Company also proposes to grant to Outside Directors restricted shares of Company
common stock pursuant to the Plan. The purpose of such grants is to
provide incentives for highly qualified individuals to stand for election to the
Board and to continue service on the Board and to encourage increased stock
ownership by Outside Directors in order to promote long-term stockholder value.
Stock appreciation rights, and incentive stock options, as defined in
Section 422A of the Internal Revenue Code, will not be granted to Outside
Directors under the Plan.

2. Stock
Reserved for Options and Restricted Stock Awards

Subject to adjustment as provided in Section 3, the maximum
number of shares of the Company that may be issued upon the granting of
restricted stock awards, performance awards or the exercise of options and Stock
Appreciation Rights under the Plan or any Supplement hereto shall not exceed
7,500,000. The shares so issued may be authorized but unissued shares, Treasury
shares, or previously issued shares purchased for purposes of the Plan. Any
shares subject to options or awards may thereafter be subject to new stock
options or awards under the Plan if there is a forfeiture of any such awards or
lapse, expiration or termination of any such option but not if there is a
surrender of an option or portion thereof pursuant to a stock appreciation right
as provided hereafter in Section 7.

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3. Adjustment Provisions

If there is any change in the outstanding shares of common
stock without any consideration to the Company by stock dividend, stock
split-up, change in par or no par value, or other similar event, the number and
kind of shares then remaining available for issue under the Plan shall be
correspondingly changed, and a similar adjustment shall be made in the
unexercised portion of all options then outstanding without change in the
aggregate purchase price to be paid.

Options and stock appreciation rights may also contain
provisions for the continuation thereof, and for other equitable adjustments,
after other changes in the Company's shares, including changes resulting from
recapitalization, reorganization, sale, merger, consolidation, or other similar
occurrence.

4. Administration of
the Plan

The authority to grant restricted stock awards, options and
stock appreciation rights to officers and employees under the Plan shall be
vested in the Stock Option and Officers' Compensation Committee (hereafter
referred to as the "Committee") consisting of not less than three
members of the Board of Directors appointed from time to time by the Board. No
member of the Board shall serve on the Committee at a time when such member is,
or within one year prior thereto has been, eligible to receive restricted stock
awards, options, or stock appreciation rights under the Plan, or restricted
stock awards, options, or stock appreciation rights under any other stock option
or stock bonus plan of the Company; provided, however, that Outside Directors
who receive options and restricted stock under this Plan may serve on the
Committee. The Committee shall have no authority regarding the granting of
options and restricted stock to Outside Directors.

Subject to the provisions of the Plan, the Committee from
time to time shall determine (except as to options and restricted stock granted
to Outside Directors) the individuals to whom, and the time or times at which,
restricted stock awards, options, or stock appreciation rights shall be granted;
the number of shares to be subject to each restricted stock award, each option,
and each stock appreciation right; the option price per share; the extent to
which stock appreciation rights are exercisable for cash, or stock, or a
combination of cash and stock; whether restricted shares [shares of common stock
issued under restrictions which subject them to a "substantial risk of
forfeiture" (as defined in Section 83 of the Internal Revenue Code of 1986,
as amended) until the restrictions lapse] should be issued on the exercise of an
option or stock appreciation right and, if so, the nature of the restrictions;
the duration of each option; the specific restrictions applicable to restricted
stock awards and the other terms and provisions of each restricted stock award,
option, and stock appreciation right. In the case of officers to whom restricted
stock awards, options, or stock appreciation rights may be granted, the
selection of such officers and all of the foregoing determinations shall be made
directly by the Committee in its sole discretion. In the case of key employees
other than officers, the selection of such employees and all of the foregoing
determinations may be delegated by the Committee to an administrative group of
officers chosen by the Committee. Neither restricted stock awards, options, nor
stock appreciation rights granted to one employee need be identical to those
granted other employees.

Subject
to share ownership requirements, commencing with the 1988 annual meeting of
stockholders, options with a term of ten years and one day shall be granted to
each Outside Director for 1,000 shares of the Company's common stock effective
as of the close of each annual meeting of the stockholders (i) at which such
individual is elected a director or (ii) following which such individual will
continue to serve as a director as a member of a continuing class of directors.
Any option so granted shall be a nonqualified stock option. In the event any
change in the outstanding shares of the Company's common stock occurs and an
adjustment is made in the unexercised portion of options outstanding, as
provided in Section 3 above, a similar adjustment shall be made in the number of
shares to be granted to Outside Directors thereafter under this paragraph.

On April 14, 1995, and each January 1 thereafter, 200 shares
of restricted stock shall be granted to each Outside Director. The stock will be
held in escrow for a period of three years from the award date. Stock issued as
restricted stock shall be forfeited if the director ceases to serve as a
director of the Company for any reason other than death, disability, or
retirement under the Directors' Retirement Plan. In the event any change in the
outstanding shares of the Company's common stock occurs as provided in Section 3
above, a similar adjustment shall be made in the number of restricted shares to
be granted to Outside Directors thereafter under this paragraph.

Subject to the provisions of the Plan specifically governing
options and restricted stock granted or to be granted to Outside
Directors, the Committee may also interpret the Plan; prescribe, amend and
rescind rules and regulations relating to the Plan; and make all other
determinations necessary or advisable for the administration of the Plan. The
determinations of the Committee shall be made in accordance with its judgment as
to the best interests of the Company and its stockholders and in accordance with
the purposes of the Plan. The Committee's determinations shall in all cases be
conclusive.

A majority of the members of the Committee shall constitute a
quorum, and all determinations of the Committee shall be made by a majority of
its members. Any determination of the Committee may be made, without notice or
meeting, by the written consent of a majority of the Committee members.

5. Eligibility

Restricted stock awards, options, and stock appreciation
rights may be granted to officers and other key employees of the Company or of
its present or future subsidiaries. Options and restricted stock will be granted
to Outside Directors as provided in Sections 4 and 14 hereof.

A director of the Company or a subsidiary who is not also an
employee of the Company or a subsidiary shall not be eligible to receive a stock
appreciation right or an alternative stock option. An employee or officer who
has been granted a restricted stock award, option, or stock appreciation right
under this or any other stock option plan may or may not be granted additional
restricted stock awards, options, and stock appreciation rights at the direction
of the Committee.

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Options and Stock Appreciation
Rights

6. Option Price

The per share option price shall not be less than 100% of the
fair market value of the common stock at the time the option is granted. The per
share option price of options granted to Outside Directors shall be 100% of the
market value of the common stock at the time an option is granted.

7. Stock Appreciation
Rights

Stock appreciation rights will permit the holder to elect to
surrender any option or any portion thereof which is then exercisable and
receive in exchange therefor shares of common stock, cash, or a combination
thereof. Such stock, cash, or combination shall have an aggregate value equal to
the excess of the fair market value of one share of common stock over
the purchase price specified in such option multiplied by the number of shares
of common stock covered by such option or portion thereof which is so
surrendered. The fair market value of one share of common stock shall equal (a)
in the case of such a holder who is not a Company officer, the mean of the
highest and lowest quoted selling price of shares of the Company's common stock
on the New York Stock Exchange on the date of surrender and (b) in the case of
such a holder who is a Company officer, but subject to the provisions of the
succeeding sentence, the highest of the means of the highest and lowest quoted
selling price of shares of the Company's common stock on the New York Stock
Exchange determined for each day occurring during the window period during which
such election to surrender the option or portion thereof is made; and the window
period is the applicable period for making such an election (currently ten
business days) prescribed from time to time pursuant to Rule 16b-3 promulgated
under the Securities Exchange Act of 1934. In the case of such a holder who is a
Company officer, the fair market value of one share of common stock with respect
to the surrender of an incentive stock option granted, shall equal the mean of
the highest and lowest quoted selling price of shares of the Company's common
stock on the New York Stock Exchange on the date of surrender unless it is
specifically provided in the option form, or any amendment thereto, that the
valuation described in item (b) above shall apply. In the case of any option
holder who at the time of an election is an officer of the Company, each
election to receive cash alone or in combination with stock shall be subject to
the approval of the Committee in its sole discretion.

Stock appreciation rights may be granted as part of a stock
option or as a separate right to any holder of any option theretofore or then
being granted under this Plan. A stock appreciation right shall be exercisable
upon any additional terms and conditions (including, without limitation, the
issuance of restricted shares and the imposition of restrictions upon the timing
of exercise) which may be determined as provided in Section 4 of the Plan.

In the event of the exercise of a stock appreciation right,
the number of shares reserved for issuance under the Plan shall be reduced by
the number of shares of common stock covered by such option or portion thereof
which is surrendered in connection with such exercise. No fractional shares
shall be issued on the exercise of a stock appreciation right.

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8.
Exercise of Options and Stock Appreciation Rights

Options (other than options granted to Outside Directors)
shall be exercisable in such installments and during such periods as may be
fixed by the Committee at the time of granting. Options granted to Outside
Directors shall become exercisable as follows: one-third at the end of each of
the three successive one-year periods commencing on the date of each option
grant. Notwithstanding any other provision hereof, no option and no stock
appreciation right shall be exercisable after the expiration of ten years and
one day from the date such option or stock appreciation right is granted,
provided that no incentive stock option (or related stock appreciation right)
shall be exercisable after the expiration of ten years from the date such option
is granted.

Payment of the purchase price shall be made upon exercise of
all or a portion of any option. Such payment shall be made pursuant to rules
adopted by the Committee and the Company in cash or by the tendering (through
one transaction or in a series of consecutive transactions) of shares of common
stock of the Company having a fair market value equal to 100% of such purchase
price or by any combination thereof. The fair market value of a share of common
stock so tendered shall be the mean of the highest and lowest quoted selling
price of shares of the Company's common stock on the New York Stock Exchange on
date of exercise. In addition, on the exercise of an option, surrender of a
stock appreciation right, or upon the granting of any restricted stock award or
performance award, any applicable taxes which the Company is required to
withhold shall be paid to the Company and any information which the Company
deems necessary shall be provided to the Company. In fulfilling its withholding
obligation, the Company may withhold a portion of any shares to be issued to
satisfy such withholding obligation in accordance with rules promulgated by the
Committee, in its sole discretion.

9. Termination of Employment

Each option granted to an officer or employee shall, and each
stock appreciation right granted to an officer or employee may, in the
Committee's sole discretion require a period or periods of continued employment
with the Company and/or its subsidiaries before it may be exercised in whole or
in part. No such period shall be less than one year except that the Committee
may permit a shorter period in the event of termination of employment by reason
of retirement or death.

Termination of the employment with the Company and its
subsidiaries of an officer or employee who holds an option shall terminate any
remaining rights under options and stock appreciation rights then held by such
holder except as hereinafter provided.

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Each option and stock appreciation right granted to an
officer or employee may provide that if employment of the holder with the
Company and its subsidiaries terminates after completion of a period of
employment so specified, the option or stock appreciation right may be exercised
(to the extent then exercisable) by the holder (or, in the event of the holder's
death, by whoever shall have received the holder's rights under the option or
stock appreciation right) during a specified period of time after such
termination of employment. Such a specified period of time may not exceed sixty
months where termination of employment is caused by retirement or death and
sixty days where it results from any other cause; provided that if death occurs
after termination of employment but during the period of time so specified, such
period may be extended to not more than sixty-six months after retirement, or
thirty-eight months after termination of employment for any other cause. In the
event that any such option or stock appreciation right granted under the Plan
has a specified period for exercise after retirement or death which is less than
the maximum period permitted under this section, the Committee may modify such
option or right to extend such specified period up to such maximum period.

Such options and stock appreciation rights shall not be
affected by authorized leaves of absence or by any change of employment so long
as the holder continues to be an employee of the Company or a subsidiary.

Nothing in the Plan or in any such option or stock
appreciation right shall interfere with or limit in any way the right of the
Company or of any of its subsidiaries to terminate any employee's employment at
any time, nor confer upon any employee any right to continue in the employ of
the Company or any of its subsidiaries. Notwithstanding the foregoing, the
Committee may change the post-termination period of exercisability of an option
or stock appreciation right provided that no such change shall extend the
original maximum term of the option or stock appreciation right.

9A.
Termination of Outside Directorship

No period of continued service as an Outside Director
following the grant of an option shall be required to render exercisable an
option granted to an Outside Director in the event an Outside Director holding
an option which has not become exercisable or has not been fully exercised shall
cease to be an Outside Director. In such event any such option may be exercised
at any time within sixty months of the date such Director ceased to be a
Director. In the event an Outside Director shall die holding an option which has
not become exercisable or has not been fully exercised, his executors,
administrators, heirs or distributees, as the case may be, may exercise such
option at any time within sixty months of the date of such death provided that
if death occurs after the date an Outside Director ceases to be a Director, such
option shall be exercisable within sixty-six months of such date. In no event,
however, shall an option which has expired by its terms be exercisable.

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10. Incentive Stock
Options

Notwithstanding anything contained herein to the contrary,
there may be granted under the Plan, other than to Outside Directors, incentive
stock options as defined in Section 422A of the Internal Revenue Code as it may
be amended from time to time. The Committee from time to time shall determine
whether any incentive stock options shall be granted. It shall also determine in
its full discretion the individuals to whom, and the time or times at which, any
such grants shall be made. Incentive stock options shall not by their terms be
transferable by the holder other than by will or the laws of descent and
distribution and shall be exercisable during the holder's lifetime only by the
holder. The aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which incentive stock options are
exercisable for the first time by the holder during any calendar year (under all
incentive stock option plans of the Company) shall not exceed $100,000;
provided, however, that all or any portion of an option which cannot be
exercised as an incentive stock option because of such limitation may be
converted by the Committee to an option other than an incentive stock option.
The Board of Directors of the Company may amend the Plan from time to time as
may be necessary (1) to comply with Section 422A of the Internal Revenue Code,
or other sections of the Code or other applicable laws or regulations, and (2)
to permit any options granted as, or converted to, incentive stock options to
have all of the features provided for incentive stock options in the applicable
laws and regulations.

11A.
Transferability of Options and Stock Appreciation Rights

Except as otherwise permitted in Section 11B, options and
stock appreciation rights shall not be transferable otherwise than by will or
the laws of descent and distribution, and shall be exercisable, during the
holder's lifetime, only by the holder except in the case of holder's incapacity
or disability when such options and stock appreciation rights may be exercised
by the holder's duly appointed guardian or representative.

A holder, however, may file with the Company a written
designation of a beneficiary or beneficiaries (subject to such limitations as to
the classes and number of beneficiaries and contingent beneficiaries and such
other limitations as the Committee from time to time may prescribe) to exercise,
in the event of the death of the optionee, an option or stock appreciation
right, subject to the provisions of the Plan. A holder may from time to time
revoke or change any such designation of beneficiary and any designation of
beneficiary under the Plan shall be controlling over any other disposition,
testamentary or otherwise; provided, however, that if the Committee shall be in
doubt as to the right of any such beneficiary to exercise any option or stock
appreciation right, the Committee may determine to recognize only an exercise by
the legal representative of the optionee, in which case the Company, the
Committee and the members thereof shall not be under any further liability to
anyone.

     7

     

11B.
Permissible Transfers of Options

     (a)   Notwithstanding
     the provisions of Section 11A, and in addition to permissible transfers
     under that provision, options granted to persons at the level of Vice
     President and above, as well as directors of this corporation and persons
     retired from those positions, may be transferred to any one or more
     "Permitted Transferees," as long as those options are vested and
     are not incentive stock options as defined above.

     (b)   For purposes of Section 11B(b), the term
     "Permitted Transferees" shall mean the members of the group that
     consists exclusively of the individual to whom the option is granted, the
     spouse of the individual to whom the option is granted, the lineal
     descendants of the individuals to whom the option is granted, the spouses
     of the lineal descendents to whom the option is granted, the lineal
     descendants of any spouse or former spouse of the individual to whom the
     option is granted, the spouses of the lineal descendants of any spouse or
     former spouse of the individual to whom the option is granted, the estate
     (and any trust that serves a distributive function of an estate) of the
     Permitted Transferee, all trusts that an individual who is a Permitted
     Transferee can revoke and all trusts, corporations, partnerships, limited
     liability companies and other entities in which, directly or indirectly,
     but for the exercise of a power of appointment or the death of the survivor
     of the individual who are Permitted Transferees. Each owner of an equitable
     interest is an individual who is a Permitted Transferee.

Restricted Stock Awards
to Company Employees

12. Granting of Awards

The Committee from time to time may determine whether any
restricted stock awards shall be granted to other than an Outside Director
either alone or in combination with the granting of options under the Plan. The
Committee will in so granting establish the time, conditions and restrictions in
connection with the issuance or transfer of a restricted stock award, including
the restriction period which may differ with respect to each grantee.

13. Shares and
Restrictions

Restricted stock awards will be made from shares of Company
common stock otherwise available for stock option grants under the Plan. During
the restriction period the grantee shall have a beneficial interest in the
restricted stock and all rights and privileges of a stockholder with respect
thereto, including the right to vote and receive dividends, subject to the
restrictions imposed by the Committee at the time of grant.

8

The following restrictions will be imposed on shares of
common stock issued as a restricted stock award until the expiration of the
restricted period:

     (a)   The grantee shall not be entitled to
     delivery of the stock certificate which certificate shall be held in escrow
     by the secretary of the Committee;

     (b)   None of the stock issued as a restricted
     stock award may be transferred other than by will or by the laws of descent
     and distribution; and

     (c)   Stock issued as a restricted stock award
     shall be forfeited and the stock certificate shall be returned to the
     Company if the grantee terminates employment with the Company and its
     subsidiaries except for termination due to retirement after a specified
     age, disability, death or other special circumstances approved by the
     Committee.

Shares awarded as a restricted stock award will be issued
subject to a restriction period set by the Committee of no less than two nor
more than ten years. The Committee except for the restrictions specified in the
preceding paragraphs shall have the discretion to remove any or all of the
restrictions on a restricted stock award whenever it may determine that such
action is appropriate. Upon the expiration of the restriction period with
respect to any shares of a restricted stock award, a stock certificate will be
delivered out of escrow, subject to satisfaction by the grantee of the
applicable withholding tax requirements, without charge to the grantee.

Restricted
Stock Awards to Outside Directors

14. Terms of
Grant and Restrictions

On April 14, 1995, and each January 1 thereafter, 200 shares
of restricted stock shall be granted to each Outside Director who following such
date continues to serve as a director. Restricted stock awards will be made from
shares of Company common stock otherwise available for stock option grants under
the Plan.

The stock will be subject to a restriction period of three
years from the date of grant. During that restricted period, subject to the
restrictions set forth in the next paragraph, the grantee shall have a
beneficial interest in the restricted stock and all rights and privileges of a
stockholder with respect thereto, including the right to vote and receive
dividends.

The following restrictions will be imposed on shares of
common stock issued as a restricted stock award until the expiration of the
restricted period:

     (a)   The grantee shall not be entitled to
     delivery of the stock certificate which certificate shall be held in escrow
     by the secretary of the Committee;

9

     (b)   None of the stock issued pursuant to a
     restricted stock award may be transferred other than by will or by the laws
     of descent and distribution; and

     (c)   Stock issued pursuant to a restricted
     stock award shall be forfeited and the stock certificate returned to the
     Company if the grantee ceases to serve as a director of the Company, except
     for termination due to death, disability, or retirement under the
     Directors' Retirement Plan.

Upon expiration of the restricted period with respect to any
shares of a restricted stock award, a stock certificate will be delivered out of
escrow, subject to satisfaction by the grantee of applicable tax withholding
requirements, without charge to the grantee.

General Provisions

15. Amendment
and Termination

The Plan may be terminated at any time by the Board of
Directors except with respect to any restricted stock awards, options, or stock
appreciation rights then outstanding. Also, the Board may, from time to time,
amend the Plan as it may deem proper and in the best interests of the Company or
as may be necessary to comply with any applicable laws or regulations, provided
that no such amendment shall (i) increase the total number of shares which may
be issued under the Plan, (ii) reduce the minimum purchase price or otherwise
materially increase the benefits under the Plan, (iii) change the basis for
valuing stock appreciation rights, (iv) impair any outstanding option, stock
appreciation right or restricted stock award without the consent of the holder,
(v) alter the class of employees eligible to receive options, stock appreciation
rights or restricted stock awards, or (vi) amend any provision of the Plan
insofar as it applies specifically to options and restricted stock granted
or to be granted to Outside Directors, unless, in each case, such amendment is
required in order to assure the Plan's continued compliance with applicable
laws, including Rule 16b-3 under the Securities Exchange Act of 1934.

Plan provisions applicable to Outside Director option and
restricted stock awards shall not be amended more than once every six months
other than to comply with changes in the Internal Revenue Code, Employee
Retirement Income Security Act, or rules thereunder.

16. Regulatory Compliance

Notwithstanding any other provision of the Plan, the issuance
or delivery of any shares of common stock may be postponed for such period as
may be required to comply with any applicable requirements of any national
securities exchange or any requirements under any other law or regulation
applicable to the issuance or delivery of such shares. The Company shall not be
obligated to issue or deliver any shares if such issuance or delivery shall
constitute a violation of any provision of any law or regulation of any
governmental authority or national securities exchange.

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17. Miscellaneous

For purposes of this Plan:

        (i) The term
"subsidiary" means any corporation in which the Company owns, directly
or indirectly, at least 35% of the total combined voting power of all classes of
stock; except that for purposes of any option subject to the provisions of
Section 425 of the Internal Revenue Code, as amended, the term
"subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if, at the time of the granting of an
option, each of the corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

        (ii)
"Retirement" as used herein means retirement under any pension or
retirement plan of the Company or of a subsidiary, or termination of employment
with the Company or a subsidiary, by action of the employing company, because of
disability.

11

CATERPILLAR INC.

LONG TERM INCENTIVE SUPPLEMENT

ARTICLE I - PURPOSE

The provisions of this Long Term Incentive Supplement (the
"Supplement") shall supplement the provisions of the Caterpillar Inc.
1987 Stock Option Plan (the "Plan") and, unless otherwise expressly
qualified by the context of the Supplement, the conditions contained in the Plan
shall be applicable to the Supplement and terms used in the Supplement shall
have the meanings defined in the Plan.

The purposes of the Supplement are to (i) strengthen the
commonality of interest between management and Caterpillar Inc.'s stockholders,
(ii) link effectively executive motivation and compensation with Caterpillar
Inc.'s performance, (iii) provide incentives and rewards for key executives to
accomplish Caterpillar Inc.'s goals and objectives over the long term, (iv)
offer a comprehensive and competitive total compensation program, and (v)
attract and retain executives of high caliber and ability.

ARTICLE II - DEFINITIONS

For purposes of the Supplement:

2.1 "AWARD" shall mean the sum of the cash
amount and/or restricted stock awarded to a Participant following the conclusion
of a Performance Period in which Performance Measures were met or exceeded.

2.2 "DISABILITY" shall mean the total and
permanent disability of a Participant as defined by any Caterpillar Inc.
long-term disability plan in effect for such Participant.

2.3 "PARTICIPANT" shall mean any employee of
Caterpillar Inc. or any subsidiary of Caterpillar Inc. holding a position which
the Committee has determined is eligible to participate in the Supplement.

2.4 "PERFORMANCE MEASURES" shall mean the
criteria established by the Committee at the beginning of each Performance
Period as the basis for making Awards.

2.5 "PERFORMANCE PERIOD" shall mean any period
of time determined by the Committee for which the Performance Measures are
established

ARTICLE III - TERM OF
PLAN

This Supplement shall be effective from the 1st day of
January, 1993, and shall remain in effect until terminated by the Board of
Directors of Caterpillar Inc.

12

ARTICLE
IV - PAYMENT AND AMOUNT OF BENEFITS

4.1 Payment of Awards - Awards shall be paid in cash,
shares of restricted stock, or a combination of cash and restricted stock as
determined by the Committee in its sole discretion. A check for any cash Award
or a certificate for shares of restricted stock awarded shall be delivered to
each Participant not later than 90 days following the end of the relevant
Performance Period. The number of Caterpillar Inc. shares of restricted stock
awarded shall be determined by dividing the portion of the Award payable in
restricted stock by the average of the high and low price of Caterpillar Inc.
shares on the New York Stock Exchange on the last business day of the
Performance Period for which payment is made. The terms of any such restricted
stock shall be determined by the Committee in its sole discretion subject to the
restrictions of Section 13 of the Plan. Federal, state and local taxes will be
withheld as appropriate.

4.2 Amount of Award - Prior to the beginning of any
Performance Period, the Committee in its sole discretion will determine the
target award for each salary grade or position for all Participants. The Award
amount will be calculated by multiplying such target award by the percentage of
the Award payable based on attainment of the applicable Performance Measures.

4.3 Required Employment - An eligible Participant shall
receive an Award under this Supplement for a Performance Period provided he is
actively employed by Caterpillar Inc. on the last day of the Performance Period,
except for a Participant whose employment terminates during a Performance Period
by reason of death, disability, or retirement in which case a prorated Award
shall be paid for the time during the Performance Period that he was actively
employed. Participants who are employed on the last day of the Performance
Period but were not Participants for the entire Performance Period shall receive
an Award prorated for that part of the Performance Period for which they were
Participants

ARTICLE V -
ADMINISTRATION

5.1 Authority - The Supplement shall be administered by
the Committee which shall have full power and authority to administer and
interpret the Supplement within its terms. The Committee's authority shall
include, but not be limited to, (i) selecting participants, (ii) determining the
timing, amounts and composition of Awards, (iii) setting the duration of
Performance Periods, (iv) establishing performance goals for the Performance
Periods, and (v) measuring such performance at the end of each Performance
Period. All decisions made by the Committee shall be final and binding and shall
be given the maximum deference provided by law.

5.2 Adjustments of Company Performance Measures - At any
time during a Performance Period, the Committee may, in its discretion, increase
or decrease previously set Performance Measures for such Performance Period to
reflect changes in tax laws, regulations or rulings; changes in accounting
principles or practices; mergers, acquisitions or divestitures; major technical
innovations; or extraordinary, nonrecurring or unusual items.

13

5.3 Suspension and Termination - The Committee and/or the
Board of Directors of Caterpillar Inc. may suspend or terminate this Supplement
at any time. In such event, all Performance Periods then in effect shall be
deemed to have

ended on the effective date of such suspension or
termination, the applicable Performance Measures shall be appropriately prorated
and modified to apply to the shortened Performance Periods, and Awards shall be
appropriately prorated and based upon results accomplished over the time
intervals from the start of each respective Performance Period through the
effective date of suspension or termination.

5.4 Rules and Regulations - The Committee may adopt from
time to time such rules and regulations as it reasonably deems appropriate to
assist in administration of this Supplement.

ARTICLE VI -
MISCELLANEOUS

6.1 Other Benefit Plans - No Award amount shall be taken
into account under the Retirement Income Plan, the Employees' Investment Plan,
the Insurance Benefits Plan, or any other employee benefit plan or payroll
practice of Caterpillar Inc. or its subsidiaries.

6.2 Beneficiaries - If an Employee is deceased at the
time any benefit is payable to him, the amount of such benefit shall be payable
to the same person or persons and in the same proportionate amount as shall be
payable to the beneficiary or beneficiaries for his basic life insurance under
the applicable insurance plan of Caterpillar Inc. or its subsidiaries, or if no
beneficiary is so designated, to the executor of his estate.

6.3 Employment Rights - Participation in the Supplement
will not give any Participant the right to be retained in the service of
Caterpillar Inc., or its subsidiaries, nor shall such participation provide any
right or claim to any benefit under the Supplement unless such right or claim
has specifically accrued under the terms of the Supplement.

6.4 Gender and Number - Where the context permits, words
in the masculine gender shall include the feminine gender, the plural shall
include the singular, and the singular shall include the plural.

6.5 Governing Law - The Supplement shall be construed in
accordance with and governed by the laws of the State of Illinois.

14

Links:

1.     
Establishment of Plan

2.     
Stock Reserved for Options and Restricted Stock Awards

3.      Adjustment
Provisions

4.     
Administration of the Plan

5.      Eligibility

6.      Option Price

7.      Stock
Appreciation Rights

8.     
Exercise of Options and Stock Appreciation Rights

9.     
Termination of Employment

10.    Incentive Stock
Options

11A.
Transferability of Options and Stock Appreciation Rights

11B.  Permissible
Transfers of Options

Restricted Stock Awards to Company
Employees

12.     Granting of Awards

13.     Shares and
Restrictions

Restricted Stock Awards to
Outside Directors 

14.    Terms of
Grant and Restrictions

General provisions

15.    Amendment and
Termination

16.    Regulatory Compliance

17.    Miscellaneous

LONG TERM INCENTIVE SUPPLEMENT

Article I -    Purpose

Article II -   Definitions

Article III -  Term of Plan

Article IV - 
Payment and Amount of Benefits

Article V -   Administration

Article VI -  MiscellaneousClick here to quickly view Links in this document

Click
here
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__________________________________________________________________________________________________

EXHIBIT 10.4

CATERPILLAR INC.

SUPPLEMENTAL EMPLOYEES'

INVESTMENT PLAN

(Restated as of December 2000)

1. Purpose

The purpose of the Caterpillar Inc. (Company) Supplemental
Employees' Investment Plan (SEIP), as set forth in the succeeding sections of
this document, is to provide additional investment opportunities for those
employees whose participation in the Employees' Investment Plan (EIP) is
restricted because of the limitations imposed by Section 401(a)(17) and
415(c)(1)(A) of the Internal Revenue Code of 1986, as amended, or any successor
statute thereto (hereinafter referred to as the "Limitation"). The
SEIP shall be effective October 14, 1987.

2. Eligibility

An employee shall be eligible for the SEIP if he is
participating in the EIP and his contributions and related employer
contributions to Part 1 after 1987 can reasonably be expected to be restricted
by the Limitation. As used herein, "Part 1" refers to the EIP without
the Special Investment Supplement thereto. In addition, effective
December 1, 1994, an employee shall be eligible for the SEIP if he is
participating in the EIP and contributions to his account in the Special
Investment Supplement ("Part 2") are restricted because of the
Limitation.

3. Participant
Deferrals

An employee must make a valid election (to become a
"Participant") on or before the last Company business day in November
of any year to participate in the SEIP during the following calendar year. Such
election shall defer all or a portion of his compensation that would otherwise
qualify as participant contributions under Part 1, Part 2 or both were it not
for the Limitation. Any such election must be made (on a form provided by the
Company) and delivered to the Director, Compensation and Benefits before the end
of normal office hours on such last Company business day in November and shall
remain in effect until it is revised as provided herein.

If a Participant wants to change or terminate the amount of
compensation deferred, he shall deliver a revised election form to the Director,
Compensation and Benefits; provided, however, that

     (i)     such revised election shall
     become effective (when and so long as the Participant is eligible) for
     each          
     calendar year following the year in which such form is delivered, and shall
     remain effective until such election is further revised as provided herein,
     and

     (ii)     any such election must be
     filed before the end of normal office hours on the last

     Company business day in November.

     1

     

When an employee first becomes eligible to participate in the
SEIP (including those employees who first become eligible on the effective
date), he may elect to defer compensation (or file a revised election) in
accordance with the foregoing, except that any such election with respect to
compensation payable to him during the calendar year in which he becomes
eligible for the SEIP

     (i)     must be filed within a
     30-day period that begins on the date he becomes eligible, and

     (ii)     shall be applicable only to
     compensation paid for months that commence after the date of such election.

4. Employer Amounts

An employee will be credited with the same amount that would
otherwise be contributed to his account as an employer contribution under Part 1
were it not for the Limitation.

5. Status of Accounts

All amounts in the SEIP shall be held in the general funds of
the Company, but the Company will establish an individual bookkeeping account
for each Participant. Amounts of compensation deferred by the Participant and
employer amounts related to such compensation will be credited to the individual
account of the Participant in accordance with his election(s).

Each Participant may elect to have all or a specified
percentage of his deferred compensation allocated to:

     (a) an interest account,

     (b) a stock account and treated as though it were
     invested in Company common stock ("Stock Election"), or

     (c) a mutual fund account or accounts and treated as
     though it were invested in any of the following Preferred Group funds:
     Asset Allocation, Growth, International, Small Cap or Value.

Amounts allocated to the stock account of a Participant who
is an officer of the Company subject to Section 16 of the Securities Exchange
Act of 1934 ("Officer") may not be transferred to another of his
accounts (nor may amounts allocated, respectively, to any such other account be
transferred to his stock account) until at least six months after he ceases to
be subject to such Section.

2

Under such a Stock Election, dividend equivalents will accrue
to the account (when dividends are payable) and will be reinvested and a
Participant's account will in all other respects reflect share ownership for
events such as a stock split but no voting rights will exist. The number of
shares of stock equivalents shall be determined by dividing the amount of
deferred compensation (or dividend equivalents credited) by the closing price of
Company common stock on the New York Stock Exchange on the date of such deferral
or dividend credit (or the next succeeding trading day if there is no trading on
that date). Stock equivalents will be valued based on the closing price of
Company common stock on the New York Stock Exchange as of the effective date of
a transfer into or out of the stock account ("Transfer"), the date on
which the Participant terminates employment, the date of distribution elected by
the Participant hereunder or the date as of which he is considered totally and
permanently disabled under EIP, whichever date applies (or the next succeeding
trading day if there is no trading on that date).

The Company will credit interest accounts on a quarterly
basis. The interest rate will be equal to the base corporate lending rate
(sometimes referred to as the "prime rate") applicable to commercial
lending customers of Citibank, N.A., New York, New York (or any successor
thereto) on the last business day of each calendar quarter. The annual interest
rate will be divided by four and applied effective the last day of each quarter
to the average daily amount in each Participant's account in that quarter. In
any calendar quarter in which a Participant does not have amounts credited to
his account for the entire period of that quarter, interest will be credited pro
rata based on the number of business days that amounts are credited to his
account in that quarter compared to the total number of business days in that
quarter.

Participants who are not Officers may Transfer or make
changes to the investment allocation of future deferred compensation which shall
be effective as of the first day of a calendar quarter, provided that such
Participant shall have filed an appropriate form with the Director, Compensation
and Benefits, by the twentieth (20th) day of the preceding month.

All amounts in the SEIP and the establishment of individual
bookkeeping accounts shall not be deemed to have created a trust, and no
Participant shall have any ownership interest in any such account. A
Participant's rights to any amounts credited to his account shall not be
transferable or assignable. Each Participant will receive an annual report
showing the status of his account at the close of each calendar year.

6. Disbursement

Following his termination of employment with the Company (or
total and permanent disability), the value of the Participant's SEIP account
will be payable to him as soon as practicable in cash, in a lump sum (including
interest up to the date of payment) unless such Participant has elected a later
payment date in writing that is acceptable to and approved by the Director,
Compensation and Benefits; provided, however, that no such election shall be
effective unless it shall have been filed on or before the last Company business
day in November of the calendar year preceding the calendar year of such
termination. A Participant may elect, either before or after termination of
employment, an installment distribution for a period of up to 15 years;
provided, however, that an election of installment distribution shall be
effective only if it shall have been filed with the Director, Compensation and
Benefits, before November 30 of the second year that precedes the year in which
the distribution would otherwise occur.

3

Notwithstanding the foregoing, effective for amounts deferred
after December 31, 1996 (and any earnings thereon):

     
          (a) a Participant may elect one original scheduled
          withdrawal date as of which disbursement of elected amounts (and any
          earnings thereon) shall occur; provided that (i) such original date
          shall be the first day of any calendar quarter that is at least four
          years later than the year in which such an amount is deferred, and
          (ii) the Participant may change such original date to a later date;
          provided, however, that such change shall be effective only if it
          shall have been filed with the Director, Compensation and Benefits,
          before November 30 of the second year that precedes the year that
          includes such original date;

          (b) a Participant may elect unscheduled withdrawals
          of between 5% and 100% of account assets attributable to such amounts
          deferred after December 31, 1996 (and any earnings thereon); provided
          that (i) the amount withdrawn shall be subject to a forfeiture equal
          to 10%, and the Participant shall discontinue participation in the
          plan for the remainder of the year (in which such withdrawal occurs)
          and for the following year and (ii) the minimum withdrawal amount
          (before forfeiture) shall be $10,000; and

          (c) such withdrawals under (a) or (b) shall be
          applied against the assets of the Deferred Employees' Investment Plan
          as well as this plan, and shall be subject to such other rules of
          convenience and administration as shall be determined by the Director,
          Compensation and Benefits.

     

7. Death of a
Participant

Upon the death of a Participant prior to payment of his SEIP
account, the balance in the Participant's account (including interest for the
elapsed portion of the year of death) shall be determined as of the date of
death. Such balance shall be paid as soon as reasonably possible thereafter in a
lump sum payment to (i) the same beneficiary or beneficiaries and in the same
proportionate amount as he shall have designated under the EIP, in the absence
of any designation to the contrary, or (ii) the beneficiary or beneficiaries for
purposes of the SEIP as such Participant shall have designated in writing (in a
form acceptable to, and filed with, the Director, Compensation and Benefits).

Notwithstanding the above, if the Participant has elected on a form that has
been filed with and approved by the Director, Compensation and Benefits, amounts
payable to the beneficiary may be paid at the payment date selected by the
Participant and with an installment distribution for a period to 15 years, or
under the remaining installment schedule in place for the Participant.

4

8. Amendment or
Termination

The Compensation Committee of the Board of Directors or the
Investment Plan Committee (for EIP) may at any time amend, merge, consolidate or
terminate the SEIP, but no amendment, merger, consolidation or termination will
have the effect of reducing the amount that any Participant is entitled to
receive prior to such amendment, merger, consolidation or termination nor of
changing the time of payment of any amount credited to a Participant's account.

9. Administration

Except as otherwise expressly provided herein, the SEIP shall
be administered under the direction of the Director, Compensation and Benefits,
of the Company.

5

Links:

1. Purpose

2. Eligibility

3. Participant Deferrals

4. Employer Amounts

5. Status of Accounts

6. Disbursement

7. Death of a Participant

8. Amendment or Termination

9. Administration

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