Document:

Exhibit 10.(h)

 

CUMMINS INC.

EMPLOYEE STOCK PURCHASE PLAN

 

 

Restated as of January 1, 2009

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I.

  	
  GENERAL PROVISIONS

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
  Restatement

  	
   

  	
  4

  
	
  Section 1.02.

  	
  Purpose

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II.

  	
  DEFINED TERMS AND RULES OF CONSTRUCTION

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
  Definitions

  	
   

  	
  4

  
	
  Section 2.02.

  	
  Rules of Interpretation and Governing Law

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III.

  	
  ELIGIBILITY AND PARTICIPATION

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
  Eligibility

  	
   

  	
  6

  
	
  Section 3.02.

  	
  Participation

  	
   

  	
  6

  
	
  Section 3.03.

  	
  Effective Date of Participation

  	
   

  	
  6

  
	
  Section 3.04.

  	
  End of Participation

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV.

  	
  ACCOUNTS, CONTRIBUTIONS, AND PURCHASES

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
  Accounts

  	
   

  	
  6

  
	
  Section 4.02.

  	
  Payroll Deduction Contributions

  	
   

  	
  6

  
	
  Section 4.03.

  	
  Employer Contributions

  	
   

  	
  6

  
	
  Section 4.04.

  	
  Credits to Accounts

  	
   

  	
  6

  
	
  Section 4.05.

  	
  Application of Cash

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V.

  	
  PURCHASE AND SALE OF PLAN SHARES

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
  Purchase of Plan Shares

  	
   

  	
  7

  
	
  Section 5.02.

  	
  Certificates for Plan Shares

  	
   

  	
  7

  
	
  Section 5.03.

  	
  Sale of Plan Shares

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
  TERMINATION OF PARTICIPATION

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
  Termination of Participation

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  VOTING AND TENDER OF PLAN SHARES

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
  Voting of Plan Shares

  	
   

  	
  9

  
	
  Section 7.02.

  	
  Tender or Exchange Offer

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
  PLAN EXPENSES

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
  Expenses

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX.

  	
  AMENDMENT AND TERMINATION

  	
   

  	
  9

  

 

 

	
  Section 9.01.

  	
  Amendment

  	
   

  	
  9

  
	
  Section 9.02.

  	
  Termination

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X.

  	
  MISCELLANEOUS PROVISIONS

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.01.

  	
  Statements

  	
   

  	
  9

  
	
  Section 10.02.

  	
  Tax Matters

  	
   

  	
  10

  
	
  Section 10.03.

  	
  Limitation on the Employers’ and the Administrator’s
  Liability

  	
   

  	
  10

  
	
  Section 10.04.

  	
  Transfer; Assignment

  	
   

  	
  10

  
	
  Section 10.05.

  	
  Effect of
  Financial Hardship Distribution

  	
   

  	
  10

  

 

 

ARTICLE
I.

GENERAL PROVISIONS

 

Section 1.01.                         Restatement.  Cummins Inc. (“Cummins”)
established the Cummins Inc. Employee Stock Purchase Plan (“Plan”), effective November 1,
1998.  Cummins hereby restates the Plan,
effective January 1, 2009.

 

Section 1.02.                         Purpose.  The purpose of
the Plan is to allow eligible employees of Cummins and its subsidiaries and
affiliates (“Employer”) to purchase shares of Cummins common stock at a
discount.  The Plan is not intended to
qualify as an employee stock purchase plan within the meaning of Section 423
of the Internal Revenue Code.

 

ARTICLE
II.

DEFINED TERMS AND RULES OF CONSTRUCTION

 

Section 2.01.                         Definitions.  For purposes of
the Plan, the following terms, when capitalized, have the meanings set out
below:

 

(a)                                  “Account”
means, with respect to a Participant, the account established by the
Administrator for the Participant pursuant to Section 4.01.

 

(b)                                 “Administrator”
means Solomon Smith Barney or such other administrator as Cummins, in its
discretion, may designate.

 

(c)                                  “Applicable
Form” means the form designated and provided by the Employer or Administrator
for making an election or providing a notice required by the Plan.  To the extent permitted by applicable law,
the Employer or Administrator may prescribe an oral, electronic, or telephonic
form in lieu of or in addition to a paper form.

 

(d)                                 “Base Pay”
means, with respect to a Participant, his base salary or hourly wages,
exclusive of allowances, incentive pay, reimbursed expenses, overtime pay,
fringe benefits, and other similar forms of payment.

 

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

 

(f)                                    “Commission”
means the United States Securities and Exchange Commission.

 

(g)                                 “Employer”
means Cummins and its subsidiaries and affiliates.

 

(h)                                 “Common Stock”
means the common stock of Cummins.

 

(i)                                     “Cummins” means
Cummins Inc.

 

(j)                                     “Eligible
Employee” means an Employee (i) employed by an Employer in the United
States, or (ii) in the case of a citizen or resident of the United States
working outside of the United States, employed by an Employer outside the
United States, provided, in each case, 

 

4

 

that the Employee is, in the judgment of
Cummins, employed at a work location having sufficient payroll system
capabilities to support the Plan.

 

(k)                                  “Employee”
means a common law employee of an Employer, excluding, however, any person paid
through the payroll of an unrelated third party, even if such person is
determined to be a common law employee of an Employer.

 

(l)                                     “Employer”
means Cummins and its subsidiaries and affiliates.

 

(m)                               “Employer
Contribution” means, with respect to a Participant for a month, an amount
sufficient to result in the Participant receiving the specified discount (as
determined pursuant to the next sentence) on the Plan Shares purchased for the
Participant on the Purchase Date occurring in the next following month.  The specified discount shall be 10%;
provided, however, Cummins may, in its sole discretion, change or eliminate the
specified discount by providing at least 30 days written notice of the change
to Participants.

 

(n)                                 “Participant”
means a current or past Eligible Employee who has become a Participant pursuant
to Section 3.03 and who has not ceased to be a Participant pursuant to Section 3.04.

 

(o)                                 “Plan” means
the Cummins Inc. Employee Stock Purchase Plan, as set out herein, as amended
from time to time.

 

(p)                                 “Plan Shares”
means shares of Common Stock.

 

(q)                                 “Purchase Date”
means the fifth day of a month, or if the principal exchange on which Common
Shares are sold is not open on such date, the next preceding date on which such
exchange is open.

 

Section 2.02.                         Rules of Interpretation and Governing Law.  The following rules shall be applied in
interpreting the Plan:

 

(a)                                  The Plan shall
be interpreted, 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 rules.

 

(b)                                 Words used in
the masculine gender shall be construed to include the feminine gender, where
appropriate, and words used in the singular or plural shall be construed as
being in the plural or singular, where appropriate.

 

(c)                                  The headings
and subheadings in the Plan are inserted for convenience of reference only and
are not to be considered in the interpretation of any provision of the Plan.

 

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

 

5

 

ARTICLE
III.

ELIGIBILITY AND PARTICIPATION

 

Section 3.01.                         Eligibility.  Only
Eligible Employees may participate in the Plan.

 

Section 3.02.                         Participation.  To become a
Participant, an Eligible Employee must submit to his Employer or the
Administrator, as directed, all Applicable Forms required for participation,
including one or more forms (i) authorizing his Employer to withhold
payroll deductions to be used for the purchase of Common Stock pursuant to the
Plan and (ii) an investment authorization form authorizing his Employer
and/or the Administrator to act as his agent for the purposes described
therein.

 

Section 3.03.                         Effective Date of Participation.  An Employee
shall become a Participant, effective as of the first payroll date occurring
after the month in which he has satisfied the requirements of Section 3.02.

 

Section 3.04.                         End of Participation.  A Participant
shall cease to be such upon the distribution of all amounts credited to his
Account.

 

ARTICLE
IV.

ACCOUNTS, CONTRIBUTIONS, AND PURCHASES

 

Section 4.01.                         Accounts.  The
Administrator shall establish an Account for each Participant as that
Participant’s agent.

 

Section 4.02.                         Payroll Deduction Contributions.  As a condition
of participation, an Eligible Employee must elect on an Applicable Form to
have a percentage of his Base Pay withheld from his cash compensation to be
used for the purchase of Common Shares pursuant to the Plan.  The minimum payroll deduction contribution
shall be 1% of Base Pay, and the maximum contribution 15% of Base Pay;
provided, however, Cummins may, in its sole discretion, change the minimum
and/or maximum contribution amount at any time. 
A Participant may change his elected payroll deduction contributions at
any time by filing a new Applicable Form with his Employer or the
Administrator, as directed, in which case his new election will become
effective as soon as administratively feasible after it is received.  The Employer shall forward amounts withheld
from a Participant’s cash compensation during a month to the Administrator for
the purchase of Plan Shares on the Purchase Date occurring in the next
following month.

 

Section 4.03.                         Employer Contributions.  The Employer shall forward the required
Employer Contributions for each Participant on account of his payroll deduction
contributions during a month to the Administrator for the purchase of Plan
Shares on the Purchase Date occurring in the next following month.

 

Section 4.04.                         Credits to Accounts.  Contributions
for a Participant shall be credited to a Participant’s Account when received by
the Administrator.  In addition, unless
otherwise elected by the Participant, cash dividends on Plan Shares allocated
to his Account shall be 

 

6

 

credited to his Account at the time such
dividends are paid.  Any stock dividends or shares
received as a result of a stock split on any Plan Shares credited to a
Participant’s Account shall be credited to the Participant’s Account when
received by the Administrator.

 

Section 4.05.                         Application of Cash.  Except as
otherwise expressly provided herein, the Administrator shall apply all cash
credited to a Participant’s Account under Section 4.04 to the purchase of
whole and fractional Plan Shares on the Purchase Date and shall credit such
Plan Shares to the Participant’s Account. 
In making such purchases, the Administrator may commingle the cash
credited to all Participants’ Accounts.

 

ARTICLE
V.

PURCHASE AND SALE OF PLAN SHARES

 

Section 5.01.                         Purchase of Plan Shares.  The Administrator shall purchase Plan Shares
in negotiated transactions or on any securities exchange or other securities
trading facility on which Common Stock is traded.  The purchases shall be on terms as to price,
delivery, and other matters, and shall be executed through those brokers or
dealers, as the Administrator may determine. 
Under certain circumstances, observance of the rules and
regulations of the Commission or applicable securities exchange or other
securities trading facility may require temporary suspension of purchases by
the Administrator or may require that a purchase be spread over a longer period
than indicated in Section 4.05.  In
that event, purchases shall be made or resumed when permitted by the rules and
regulations of the Commission or applicable securities exchange or other
securities trading facility; and the Administrator shall not be accountable for
its inability to make all purchases within the applicable period.  If any Commission, securities exchange, or
other securities trading facility suspension of trading in Common Stock remains
effective for 90 consecutive days, the Administrator shall remit to each
Participant promptly after the end of such period all cash credited to the
Participant’s Account attributable to the Participant’s payroll deductions and
cash dividends paid on Plan Shares credited to the Participant’s Account. 

 

Section 5.02.                         Certificates for Plan Shares.  The
Administrator shall hold the Plan Shares of all Participants in its name or in
the name of its nominee evidenced by as many or as few certificates as the
Administrator determines appropriate.  No
certificate representing Plan Shares purchased for a Participant’s Account
shall be issued to the Participant unless and until his Account is terminated.

 

Section 5.03.                         Sale of Plan Shares.  A Participant may request that the
Administrator sell all or any part of his Plan Shares at any time.  A Participant who wishes to sell any part of
his Plan Shares may do so by provided notice to the Administrator on an
Applicable Form.  Upon receipt of the
notice, the Administrator, as the Participant’s agent, shall sell the number of
Plan Shares specified in the Participant’s notice within five business days
after receiving the Participant’s notice of instruction to sell and shall
deliver to the Participant the proceeds of the sale, less a handling charge,
brokerage commissions, and other costs of sale. 
Whole and fractional shares may be aggregated and sold with those of
other Participants, in which case the proceeds for each Participant shall be
based on the average sales price of all shares aggregated and sold.  Any sale may, but need not, be made by
purchase for other Accounts, in which case the 

 

7

 

price shall be the mean of the high and low
selling price of Common Stock as reported by the principal stock exchange on
which the stock is traded on the date on which the Administrator receives
notice of the Participant’s notice of instruction to sell, or, if the stock is
not traded on such date, the mean on the next prior date on which the Common
Stock was so traded.  Any fractional
shares that are not sold shall be paid for in cash at a price equal to the mean
of the high and low selling prices of Common Stock as reported by the principal
stock exchange on which Common Stock is traded on the date on which the
Administrator receives notice of the Participant’s notice of instruction to
sell or, if the stock is not traded on such date, the mean on the next prior
date on which the Common Stock was so traded. 
If a Participant elects to sell all of his Plan Shares, the
Participant shall be deemed to have terminated participation in the Plan, and
the provisions of Section 6.01 shall apply.

 

ARTICLE
VI.

TERMINATION OF PARTICIPATION

 

Section 6.01.                         Termination of Participation.  A Participant
may terminate his or her participation in the Plan at any time by providing
written notice to his Employer.  The
Employer shall inform the Administrator of a Participant’s election to
terminate participation within ten business days after it receives the
Participant’s notice.  As soon as
practicable (and not more than 20 days) after the Administrator receives notice
from the Employer, unless a Participant makes a contrary election, the
Administrator shall send to the terminating Participant, at a reasonable
charge, a certificate representing the full Plan Shares credited to his Account
and a check for the net proceeds of any fractional share credited to his
Account.  If a Participant elects to
terminate and continues to be an Employee, he may not rejoin the Plan for a
period of six months from the date of the termination.  In any case of termination, the Administrator
shall, if the Participant elects, sell, as the Participant’s agent, all or part
of the Participant’s Plan Shares within five business days after receiving the
Participant’s written instruction to sell his Plan Shares, and shall deliver to
Participant the proceeds of the sale, less a handling charge, brokerage
commissions, and other costs of sale. 
Whole and fractional shares may be aggregated and sold with those of
other Participants, in which case the proceeds for each Participant shall be
based on the average sales price of all shares aggregated and sold.  Any sale may, but need not, be made by
purchase for other Accounts, in which case the price shall be the mean of the
high and low selling price of Common Stock as reported by the principal stock
exchange on which the Common Stock is traded on the date on which the
Administrator receives the notice of termination or, if the Common Stock is not
traded on such date, the mean on the next prior date on which it was so
traded.  On termination, fractional
shares credited to a Participant’s Account that are not aggregated and sold
shall be paid for in cash at a price equal to the mean of the high and low
selling prices of Common Stock as reported by the principal stock exchange or
inter-dealer quotation system on which Common Stock is traded on the date on
which the Administrator receives the notice of termination or, if the Common
Stock is not so traded on such date, the mean on the next prior date on which
is was so traded.

 

8

 

ARTICLE
VII.

VOTING AND TENDER OF PLAN SHARES

 

Section 7.01.                         Voting of Plan Shares.  The Administrator shall vote Plan Shares
credited to a Participant’s Account as instructed by the Participant on an
Applicable Form provided to the Administrator at least five days (or such
shorter period as the law may require) before the meeting at which such Plan
Shares are to be voted.  The
Administrator shall not vote Plan Shares for which no instructions have been
received.

 

Section 7.02.                         Tender or Exchange Offer.  If a tender offer or exchange offer for the
Common Stock is initiated, the Administrator, upon receipt of information with
respect thereto as the holder of record of the Plan Shares, shall either (i) forward,
or provide for forwarding, to each Participant, the information provided by the
offeror to holders of record of Common Stock or (ii) provide to the
offeror the name and mailing address of each Participant, as reflected on the
records of the Administrator, with instructions to mail such material to each
Participant.  The Administrator shall
tender all or part of a Participant’s Plan Shares in response to written
instructions from the Participant in such form as the Administrator may
reasonably require and only if such instructions are received by the
Administrator at least five days (or such shorter period as may be required by
law) before termination of the offer. 
Unless the Administrator has received instructions in accordance with
the previous sentence, it will not tender a Participant’s Plan Shares.  Except to the extent that disclosure is
required to tender Plan Shares pursuant to proper written instructions, the
Administrator shall maintain the confidentiality of a Participant’s election to
tender or not tender Plan Shares.

 

ARTICLE
VIII.

PLAN EXPENSES

 

Section 8.01.                         Expenses.  Cummins
shall pay the service charges, brokerage, costs of mailing and other charges
incurred in connection with the purchase of Plan Shares.  The cost of selling Plan Shares shall be
borne by Participants, as provided herein.

 

ARTICLE
IX.

AMENDMENT AND TERMINATION

 

Section 9.01.                         Amendment.  Cummins may,
in its sole discretion, amend this Plan at any time; provided, however, except
as required by law, no amendment shall be retroactive, nor shall any amendment
deprive any Participant of amounts credited to his Account.

 

Section 9.02.                         Termination.  Cummins may, in
its sole discretion, terminate the Plan at any time.

 

ARTICLE
X.

MISCELLANEOUS PROVISIONS

 

Section 10.01.                  Statements.  The
Administrator shall provide or make available to Participants periodic
statements summarizing the transactions in the Participant’s Account since the
most recent available statement.

 

9

 

Section 10.02.                  Tax Matters.  Each
Participant is responsible for all taxes (whether local, state or federal) due
because of Employer Contributions, the payment of a dividend, or the sale of
Plan Shares credited to his Account.  The
Administrator shall timely prepare and forward to the United States Internal
Revenue Service, the appropriate state and local authorities, and Participants
the information returns required by the Code and applicable state statutes,
presently Forms 1099-Div and 1099-B.  All
Employer Contributions shall constitute taxable income to the Participant to
whose Account they are credited and shall be reported to the United States
Internal Revenue Service on the Participant’s Form W-2 as taxable
earnings.

 

Section 10.03.                  Limitation on the Employers’ and the Administrator’s Liability.  The Employers and the Administrator shall not
be liable for any action that is in compliance with the terms and conditions of
this Plan taken or omitted in good faith, including without limitation, any
claim of liability:

 

(a)                                  Arising out of
failure to terminate a Participant’s Account upon the Participant’s death or
otherwise before the receipt of written notice of the event causing
termination, accompanied by documentation deemed satisfactory by the
Administrator;

 

(b)                                 With respect to
the prices at which Plan Shares are purchased or sold for a Participant’s
Account and the timing and terms on which the purchase or sale is made; or

 

(c)                                  For the market
value, or any fluctuation in the market value, after purchase or sale of Plan
Shares for a Participant’s Account.

 

Section 10.04.                  Transfer; Assignment.  Except as is expressly provided in this Plan,
no Participant may sell, pledge, hypothecate, or otherwise assign or transfer
his Account, any interest in his Account, or any cash or stock credited to his
Account.  Any attempt to sell, pledge,
hypothecate, assign, or transfer his Account, any interest in his Account, or
any cash or stock credited to his Account shall be void.

 

Section 10.05.                  Effect
of Financial Hardship Distribution.  A Participant who receives a financial
hardship distribution from a qualified cash or deferred arrangement described
in Section 401(k) of the Code that is maintained by an Employer may
not contribute to the Plan for a period of six months after receipt of the
financial hardship distribution.  The
Participant must submit a new Applicable Form to recommence contributions
to the Plan after receiving such a financial hardship distribution.

 

10Exhibit 10.(i)

 

CUMMINS INC.

LONGER TERM PERFORMANCE
PLAN

(as amended
2/12/01)

 

1.  Objectives.  The objectives of the Plan are to (i) serve
as a balance against the short-term compensation provided by base salary and
bonus payments of the Company, (ii) emphasize the Longer-term performance
of the Company,  (iii) strengthen
the relationship between Company management and shareholder interests, and (iv) encourage
participants to remain with the Company through important business cycles.

 

The size of grants under
the Plan are intended to reflect the degrees of influence participating
executive officers have in their functional positions on the Longer-term
performance of the Company.  The
calculation of payments from the Plan is intended to reflect the Company’s
performance against certain performance measures designated by the Compensation
Committee.

 

2.  Definitions.

 

(a) “Award
Cycle” means the period upon which a particular year’s payout is
calculated.  A new Award Cycle commences
as designated by the Committee.   Payments, if any, under the Plan to
Participants during a fiscal year are based upon the Company’s performance
during the most recently completed Award Cycle.

 

(b) “Change
of Control” means the occurrence of any of the following:  (i) there shall be consummated (A) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company’s
Common Stock would be converted in whole or in part into cash, other securities
or other property, other than a merger of the Company in which the holders of
the Company’s Common Stock immediately prior to the merger have substantially
the same proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (B) any sale, lease, exchange or transfer
(in one transaction or a series of related transactions) of all or
substantially all the assets of the Company, or (ii) the stockholders of
the Company shall approve any plan or proposal for the liquidation or
dissolution of the Company, or (iii) any “person” (as such term is used in
Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of
1934, as amended 

 

 

(the “Exchange Act”)),
other than the Company or a subsidiary thereof or any employee benefit plan
sponsored by the Company or a subsidiary thereof or a corporation owned,
directly or indirectly, by the stockholders 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 25% or more of the combined
voting power of the Company’s then outstanding securities ordinarily (and apart
from rights accruing in special circumstances) having the right to vote in the
election of directors (“Voting Shares”), as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or otherwise, or (iv) at
any time during a period of two (2) consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the Company
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 (v) any other event shall
occur that would be required to be reported in response to Item 6(e) (or
any successor provision) of Schedule 14A or Regulation 14A promulgated under
the Exchange Act.

 

(c) “Committee”
means the Compensation Committee of the Board of Directors of the Company.

 

(d) “Company”
means Cummins Engine Company, Inc.

 

(e) “Participants”
means the Company’s officers and other key employees designated annually by the
Committee to participate in the Plan for the ensuing Award Cycle.

 

(f) “Payout Factor”
means the percentage determined by the Committee and applied to a Target Award
to determine the amount of an award to be paid as described in section 4 of the
Plan.

 

(g) “Peer Group”
means a group of companies selected by the Committee.

 

 

The Committee may define
Performance Measures for an Award Cycle as Cummins’ performance compared to the
performance of a “Peer Group”.

 

(h) “Performance
Measures” means the Company’s return on equity, return on sales, net income,
sales growth, return on assets, total shareholder return, Free Cash Flow, or
any combination thereof.

 

(i) “Plan” means the
Longer Term Performance Plan described herein.

 

(j) “Target Award”
means the amount of targeted compensation described in section 3 of the Plan.

 

3.  Target Award.  The Committee shall assign each Participant a
Target Award for each Award Cycle, in its discretion, based upon, but not
limited to, the scope and breadth of the Participant’s position, ability to
affect the Company’s Longer-term financial performance, and his or her working
relationships within the Company.  The
Target Award for an Award Cycle shall be expressed in terms of a threshold,
target, and maximum dollar amount.

 

The Target Award for each
Award Cycle shall be assigned and communicated to each Participant as soon as
practicable thereafter, but in no event later than the day representing 25% of
that Award Cycle.  Target Awards may be
changed during the course of an Award Cycle based on the Committee’s
reevaluation of the criteria described in the preceding paragraph; provided,
however, a Target Award shall not be increased following commencement of the
Award Cycle.

 

4.  Payout Schedule.  On or before the day representing 25% of each
Award Cycle, the Committee shall establish the Performance Measures to be used
in determining a Payout Factor applicable to the Award Cycle.  The Committee may determine the Payout Factor
based upon the attainment of one or more different Performance Measures,
provided the measures, when established, are stated as alternatives to one
another.

 

5.  Change in Accounting
Standards.  For purposes of
determining the Payout Factor, the Company’s actual performance under the
Performance Measures will exclude

 

 

extraordinary charges and
credits which result from a change in accounting standards of the Company.

 

6.  Plan Payments.  Any payout under the Plan will be made as soon
as practicable following audits of the Company’s financial statements
applicable to all fiscal years of the Award Cycle and written certification by
the Committee of attainment of the applicable Performance Measures and
corresponding Payout Factor.  Payments
under the Plan may be deferred pursuant to the Company’s Deferred Compensation
Plan.

 

7.  Administration.  The Plan shall be administered by the
Compensation Committee.  No member of the
Committee shall be eligible for a Target Award while serving on the
Committee.  The Committee shall have
authority to interpret the Plan and to establish, amend and rescind rules and
regulations for the administration of the Plan, and all such interpretations, rules and
regulations shall be conclusive and binding on all persons.  Notwithstanding any other provision of the
Plan to the contrary, the Committee may impose such conditions on participation
in, awards under and payments from the Plan as it deems appropriate.

 

8.  Termination of Employment.
 If a Participant’s employment
with the Company terminates during the first year of an Award Cycle, other than
by reason of retirement, death or disability, the Participant will not receive
any payout for that Award Cycle.  If a
Participant’s employment so terminates during subsequent years of an Award
Cycle, the Committee, in its discretion, shall determine whether the
Participant will receive a proportionate payout of any payment with respect to
the Award Cycle based on the period of employment during the cycle.

 

If a Participant retires,
dies or becomes disabled during an Award Cycle, the Participant or such
Participant’s estate, as the case may be, shall receive a proportionate share
of any payment with respect to the Award Cycle based on the period of
employment during the cycle, regardless of the length of time of such
employment.

 

9.  Change of Control.  Notwithstanding any other provision herein to
the contrary, in the event of a Change of Control, an amount shall be
immediately payable from the Plan to each Participant equal to the Targeted
Amount times a fraction, the numerator of which is the year of the  Award

 

 

Cycle in progress and the
denominator of which is the total number of years in the Award Cycle.

 

10. Effective
Date.  The Plan, as amended,
shall be effective for the Award Cycle beginning January 1, 2001, subject
to its approval by the Company’s shareholders.

 

11. Amendment
and Termination.  The Board of
Directors of the Company may at any time amend, modify, alter or terminate this
Plan.

 

12. Governing
Law.  This Plan and all
determinations made and actions taken pursuant hereto, shall be governed by the
laws of the State of Indiana and construed accordingly.

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