EXHIBIT 10.32
NAVISTAR 1998 SUPPLEMENTAL STOCK PLAN
(As amended December 11, 2001, and supplemented by the Restoration Stock Option Program)
SECTION I
PURPOSE OF THE PLAN
The purpose of this Navistar 1998 Supplemental Stock Plan ("Plan") is to provide an additional plan for
the issuance of stock options and restricted stock for shares of the common stock of Navistar International
Corporation to employees of Navistar International Corporation and its subsidiaries ("Corporation") to attract and
retain highly qualified personnel, to provide key employees who hold positions of major responsibility the
opportunity to earn incentive awards commensurate with the quality of individual performance, the achievement of
performance goals and ultimately the increase in shareowner value. This Plan is separate from and intended to
supplement the Navistar 1994 Performance Incentive Plan ("1994 Plan"). The Plan replaces the Navistar
International Corporation 1998 Interim Stock Plan for grants or awards of stock made on and after the date of
adoption of this Plan.
SECTION II
DEFINITIONS
The terms used in this Plan are defined as specified in the 1994 Plan unless the context indicates to the
contrary.
SECTION III
ELIGIBILITY
Management will, from time to time, select and recommend to the Committee on Compensation and Governance of
the Board of Directors of Navistar International Corporation ("Committee") (formerly named the Committee on
Organization) Employees who are to become Participants in the Plan. Employees will be selected from those who, in
the opinion of management, have substantial responsibility in a managerial or professional capacity. Employees
selected for participation in the Plan may also be participants in the 1994 Plan, and participation in this Plan
will not be considered participation in a plan that would affect their participation in the 1994 Plan.
SECTION IV
STOCK OPTIONS
The Committee may grant Nonqualified Stock Options to Participants in the amount and at the time that the
Committee approves. No Incentive Stock Options shall be granted under this Plan. Options shall be granted under
the same terms and conditions as options granted under the 1994 Plan, as amended from time to time, but subject to
the limitation on the number of shares contained in this Plan, and subject to the limitation that only treasury
shares, and not newly issued shares, may be used for any grant.
SECTION V
RESTRICTED SHARES
The Committee may award restricted shares for the purposes and under the same terms and conditions as
specified in Sections VI and VIII, and the other provisions of the 1994 Plan, but subject to the limitations on the
number of shares contained in this Plan, and subject to the limitation that only treasury shares, and not newly
issued shares, may be used for any award to an officer of the Corporation.
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EXHIBIT 10.32 (CONTINUED)
SECTION VI
ADMINISTRATION OF THE PLAN
Full power and authority to construe, interpret and administer the Plan is vested in the Committee.
Decisions of the Committee will be final, conclusive and binding upon all parties, including the Corporation,
shareowners and employees. The foregoing will include, but will not be limited to, all determinations by the
Committee as to (i) the approval of Employees for participation in the Plan, (ii) the amount of the Awards, (iii)
the performance levels at which different percentages of the Awards would be earned and all subsequent adjustments
to such levels and (iv) the determination of all Awards. Any person who accepts any Award hereunder agrees to
accept as final, conclusive and binding all determinations of the Committee. The Committee will have the right, in
the case of employees not employed in the United States, to vary from the provision of the Plan to the extent the
Committee deems appropriate in order to preserve the incentive features of the Plan.
SECTION VII
MODIFICATION, AMENDMENT OR TERMINATION
The Committee may modify without the consent of the Participant (i) the Plan, (ii) the terms of any option
previously granted or (iii) the terms of Restricted Shares previously awarded at any time, provided that, no such
modification will, without the approval of the Board of Directors of the Corporation, increase the number of shares
of Common Stock available hereunder. The Committee may terminate the Plan at any time.
SECTION VIII
RESERVATION OF SHARES
The total number of shares of stock reserved and available for delivery pursuant to this Plan is 2 million
shares of common stock of Navistar International Corporation. The number of shares reserved and available shall be
increased by shares of stock subject to an option or award under this Plan or any other plan that is cancelled,
expired, forfeited, settled in cash or otherwise terminated without a delivery of shares to the participant of the
plan, including shares used to pay the option exercised price of an option issued under the Plan or any other plan
or to pay taxes with respect to such an option. Only treasury shares, and not newly issued shares, may be reserved
and made available for delivery.
Effective December 11, 2001 the number of shares remaining to be issued under the plan is increased by 2.5
million shares.
SECTION IX
TERM OF THE PLAN
The Plan shall be effective on the date of adoption by the Board of Directors and continue through December
16, 2003.
SECTION X
GOVERNING LAW
The Plan will be governed by and interpreted pursuant to the laws of the State of Delaware, the place of
incorporation of the Corporation.
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EXHIBIT 10.32 (CONTINUED)
RESTORATION STOCK OPTION PROGRAM
Restoration options. Restoration stock options are additional options granted to an employee as a result of the
employee exercising another Navistar stock option if the form and manner of the exercise of the other stock option
qualify for the restoration option program.
Qualifying exercises.
o The option being exercised (the original option) can be any employee stock option granted by Navistar,
whether granted before or after the commencement or revision of the restoration option program. Options
that were granted as restoration options are not eligible for restoration option grants if the original
nonrestoration option was granted prior to June 21, 2000. Incentive Stock Options (ISO) are not eligible.
o No restoration option exercise can be made during the six-month period following the revision of this
program unless the restoration exercise is made on a deferred basis as provided for in this program
document.
o The option price payable on exercise of the original option must be paid by transferring to the Corporation
Navistar stock with a current value equal to the option price. The stock must be mature stock, i.e., if
the stock was acquired from the Corporation, it must have been held at least six months.
o The employee must either pay cash for the withholding tax, transfer to the Corporation Navistar stock with
a current value equal to the withholding tax, or request that the amount of stock necessary to cover the
withholding tax be withheld from the stock otherwise payable to the employee. The employee may request
additional withholding at a federal rate of up to 40%, if he presents to the Company mature shares equal in
value to the additional withholding. The stock must be mature stock, i.e., if the stock was acquired from
the Corporation it must have been held at least six months.
o The employee must elect that the exercise be treated as a restoration exercise and sign an agreement for
the restoration option.
Terms of the restoration option grant.
o The number of shares for which the restoration option is granted is the number of shares required to be
paid to the Corporation on exercise of the original option, i.e., the number of shares required to pay the
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option price; and the number of shares with value equal to the tax liability.
o The option price under the restoration option will be the market price of Navistar stock on the date of
exercise of the original option (the date of grant of the restoration option).
o The term of the restoration option shall be for the remaining term of the original option.
o The restoration option will become exercisable six months after the date of grant of the restoration
option, or, if sooner, one month before the end of the term of the original option.
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EXHIBIT 10.32 (CONTINUED)
o The usual terms of Navistar stock options as specified in the plans and Committee and Board action will
apply to the restoration options where specific provisions reflecting the nature of the restoration options
are not applicable. For example, the options will continue to become exercisable after a qualified
retirement and will be exercisable for three years after becoming exercisable; on change in control the
options will become exercisable immediately and be extended for three years; options that are not
exercisable will lapse if an employee quits before retirement.
Restriction on profit shares. The profit shares received on exercise of the original option are subject to
restriction on transfer. The profit shares are the shares that represent the difference in value between the
option price and the value of the stock on the date of exercise of the original option, less any shares withheld to
pay the withholding taxes required on the exercise of the original option.
o The profit shares cannot be transferred for three years following the exercise of the original option.
o The restriction period ends immediately if the holder dies, terminates employment on account of disability,
or terminates employment under a qualified retirement as defined in the stock option plan.
o Profit shares can be used to pay the option price on exercise of another Navistar stock option even though
the shares are subject to the transfer restrictions. The holder is treated as transferring his profit
shares to the Corporation, and getting from the Corporation in the exchange the same shares back from the
Corporation. The transfer restriction continues to apply to the exchanged shares for the balance of the
three-year period that started on the date of exercise of the first original option. The profit shares can
only be used if the option being exercised permits their use. For example, the options prohibit use of
shares that have not been held for longer than six months if the shares were acquired from the Corporation.
Deferral of Profit Shares. Each employee who makes a restoration exercise of an option may elect to have the
Company defer delivery of the profit shares due on the original option for a period of years or an event such as
death, disability or retirement. The profit shares are that number of shares for which the option was exercised
less the number of shares used to pay the option price. An election will be made under procedures established by
the Company that will provide for the following:
o The election must be made six months in advance of exercise of an option, and no options for which the
employee has made an election can be exercised under the restoration program during the six-month period.
However, the six-month restriction period will not apply if the employee makes a deferral election within
30 days of the revision of this program and pursuant to the election exercises an option within 6 months of
the revision. During the deferral period, the employee will have no right to vote the stock, to receive
any dividend declared on the stock, and no other right as a shareholder. The employee will be paid in cash
the equivalent of any dividend payments. If the dividend is an extraordinary dividend, the Company may
give additional units for shares instead of making a cash payment.
o The employee must select the number of years for the deferral period (between 1 and 20) and can select that
the deferral period ends on death, disability, and/or retirement, or a specified time after retirement. A
deferral period can be extended on six-months notice by a current employee or an employee who terminated by
retirement or disability. (The terms retirement and disability are defined in the stock options and plan.)
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EXHIBIT 10.32 (CONTINUED)
o The deferral period will end on change in control of the Company. In the event of a transaction that would
cause an adjustment under the anti-dilution provisions of the stock option, such as a stock split, merger,
spin off, a similar adjustment will be made to the deferred shares to preserve the value of the deferral.
o The Company can terminate the deferral within three months for any employee who terminates employment for a
reason other than death, disability or retirement. The Company can terminate the deferral for all
employees if it determines it is in the best interests of the Company to do so.
o The employee will be granted restoration options on the exercise date to cover future FIT, state, local,
FICA and Medicare tax liabilities for all restorations.
Effect on share ownership requirement. The profit shares delivered to the employee and units for deferred shares
can be counted as fulfilling an employee's stock ownership requirement under the Navistar Stock Ownership Program.
Termination of the program. The program has been established by resolution of the Committee on Compensation and
Governance and the Board that authorized the granting of restoration stock options. The Committee and Board can
terminate the program at any time by resolution terminating the prior authorization.
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Navistar International (NAV)
Filed: 11 Mar 02, 12:00am