CUMMINS ENGINE COMPANY, INC., AND SUBSIDIARIES
EXHIBIT 10(s)
1992 STOCK INCENTIVE PLAN
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1. OBJECTIVES. The Cummins Engine Company, Inc. 1992 Stock Incentive
Plan (the "Plan") is designed to retain and motivate executives and
other selected employees. These objectives are accomplished by
making incentive awards of the Company's stock under the Plan thereby
providing participants with a proprietary interest in the growth and
performance of the Company.
2. DEFINITIONS:
(a) "Award" -- The grant of any form of stock option, stock
appreciation right or stock award whether granted singly, in
combination or in tandem, to a Participant pursuant to such
terms, conditions and limitations as the Committee may
establish in order to fulfill the objectives of the Plan.
(b) "Award Agreement" -- An agreement between the Company and a
Participant that sets forth the terms, conditions and
limitations applicable to an Award.
(c) "Board" -- The Board of Directors of the Company.
(d) "Change of Control" -- The occurrence of any of the following:
(i) there shall be consummated (A) any consolidation or merger
of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of Common
Stock would be converted in whole or in part into cash, other
securities or other property, other than a merger of the
Company in which the holders of Common Stock immediately prior
to the merger have substantially the same proportionate
ownership of common stock of the surviving corporation
immediately after the merger, or (B) any sale, lease, exchange
or transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the
Company; or (ii) the stockholders of the Company shall approve
any plan or proposal for the liquidation or dissolution of the
Company; or (iii) any "person" (as such term is used in
Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), other than the
Company or a subsidiary thereof or any employee benefit plan
sponsored by the Company or a subsidiary thereof, shall become
the beneficial 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, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or
otherwise; or (iv) at any time during a period of two
consecutive years, individuals who, at the beginning of such
period constituted the Board, shall cease for any reason to
constitute at least a majority thereof, unless the election or
the nomination for election by the Company's stockholders of
each new director during such two-year period was approved by a
vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such two-year
period; or (v) any other event shall occur that would be
required to be reported in response to Item 6(e) (or any
successor provision) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act.
(e) "Common Stock" -- Authorized and issued or unissued Common
Stock, par value $2.50 per share, of the Company.
(f) "Code" -- The Internal Revenue Code of 1986, as amended from
time to time.
(g) "Committee" -- The Compensation Committee of the Board, or such
other committee of the Board that is designated by the Board to
administer the Plan. The Committee shall be constituted so as
to permit the Plan to comply with Rule 16b-3 promulgated under
the Exchange Act or any successor rule and shall initially
consist of not less than three members of the Board, each of
whom is ineligible to receive Awards, shall have been so
ineligible for at least one year prior to serving on the
Committee and shall satisfy the requirements to be a
disinterested person contained in Rule 16b-3(1)(2)(i).
(h) "Company" -- Cummins Engine Company, Inc. and its subsidiaries,
including subsidiaries of subsidiaries.
(i) "Fair Market Value" -- The average of the high and low prices
of the Common Stock as reported on the composite tape for
securities listed on the New York Stock Exchange for the date
in question, provided that if no sales of Common Stock were
made on said Exchange on that date, the average of the high and
low prices of Common Stock as reported on said composite tape
for the preceding day on which sales of Common Stock were made
on said Exchange.
(j) "Participant" -- An employee of the Company to whom an Award
has been made under the Plan.
3. ELIGIBILITY. Employees of the Company eligible for an Award under
the Plan are those who hold positions of responsibility and whose
performance, in the judgment of the Committee or the management of
the Company, can have a significant effect on the success of the
Company.
4. STOCK AVAILABLE FOR AWARDS. Up to 1.0% of the outstanding Common
Stock as determined on December 31 of the preceding year shall be
available for Awards granted wholly or partly in stock during each
calendar year in which the Plan is in effect. For purposes of
Awards made during 1992, 17,200,000 shares shall be deemed to have
been outstanding as of December 31, 1991. From time to time, the
Board and appropriate officers of the Company shall take whatever
actions are necessary to file required documents with governmental
authorities and stock exchanges to make shares of Common Stock
available for issuance pursuant to Awards. Common Stock related to
Awards that are forfeited (provided that the participant received no
benefits of ownership such as dividends from the forfeited shares),
terminated or expire unexercised, or related to options or stock
appreciation rights settled in cash in lieu of stock, shall again
become available for Awards. Any Common Stock that so becomes
available, as well as any unused portion of the percentage limit for
any calendar year, shall be carried forward and be available for
Awards in succeeding calendar years.
5. ADMINISTRATION. The Plan shall be administered by the Committee
which shall have full and exclusive power to interpret the Plan, to
grant waivers of Plan restrictions, including waivers of
restrictions on exercise of outstanding stock options and
appreciation rights, waivers of vesting requirements and
acceleration of Award payments, and to adopt such rules, regulations
and guidelines for carrying out the Plan as it may deem necessary or
proper, all of which powers shall be executed in the best interests
of the Company and in keeping with the objectives of the Plan.
These powers include, but are not limited to, the adoption of
modifications, amendments, procedures, subplans and the like as are
necessary to comply with provisions of the laws or other countries
in which the Company may operate in order to assure the viability of
Awards granted under the Plan and to enable Participants employed in
such other countries to receive advantages and benefits under the
Plan and such laws.
6. AWARDS. The Committee shall determine the type or types of Award(s)
to be made to each participant and shall set forth in the related
Award Agreement the terms, conditions and limitations applicable to
each Award. Awards may include but are not limited to those listed
in this Section 6. Awards may be granted singly, in combination or
in tandem. Awards may also be made in combination or in tandem
with, in replacement of or as alternatives to grants or rights under
any other employee plan of the Company, including the plan of any
acquired entity. On such terms and conditions as shall be approved
by the Committee, the Company or any of its subsidiaries may
directly or indirectly lend money to any Participant or other person
to accomplish the purposes of the Plan, including to assist such
persons to acquire shares of Common Stock acquired upon the exercise
of options.
(a) Stock Option -- A grant of a right to purchase a specified
number of shares of Common Stock at not less than 100% of Fair
Market Value on the date of grant during a specified period as
determined by the Committee. A stock option may be in the form
of an incentive stock option ("ISO") which, in addition to
being subject to applicable terms, conditions and limitations
established by the Committee, complies with Section 422 of the
Code which, among other limitations, provides that (i) to the
extent that the aggregate Fair Market Value (determined at the
time the option is granted) of Common Stock exercisable for the
first time by a Participant during any calendar year exceeds
$100,000 (or such other limit as may be required by the Code),
such option shall not be treated as an ISO and (ii) the option
shall be exercisable for a period of not more than ten years
from the date of grant.
(b) Stock Appreciation Right -- A right to receive a payment, in
cash and/or Common Stock, equal to the excess of the Fair
Market Value or other specified valuation of a specified number
of shares of Common Stock on the date the stock appreciation
right ("SAR") is exercised over the Fair Market Value or other
specified valuation on the date of grant of the SAR as set
forth in the applicable Award Agreement, except that where the
SAR is granted in tandem with a stock option, the grant and
exercise valuations must be not less than Fair Market Value.
(c) Stock Award -- An Award made in Common Stock or denominated in
units of Common Stock. All or part of any Common Stock award
may be subject to conditions established by the Committee and
set forth in the Award Agreement, which may include, but are
not limited to, continuous service with the Company,
achievement of specific business objectives, increases in
specified indices, attaining growth rates and other comparable
measurements of Company performance. Such Awards may be based
on Fair Market Value or other specified valuation.
7. PAYMENT OF AWARDS. Award payments made in the form of Common Stock
may include such restrictions as the Committee shall determine,
including restrictions on transfer and forfeiture provisions. When
transfer of Common Stock is so restricted or subject to forfeiture
provisions, it is referred to as "Restricted Stock". Further, with
Committee approval, payments may be deferred, either in the form of
installments or a future single payment. The Committee may permit
selected Participants to elect to defer payments of some or all
types of Awards in accordance with procedures established by the
Committee to assure that such deferrals comply with applicable
requirements of the Code including, at the choice of Participants,
the capability to make further deferrals for payment after
retirement. Any deferred payment, whether elected by the
Participant or specified by the Award Agreement or by the Committee,
may require the payment be forfeited in accordance with the
provisions of Section 12. Dividends or dividend equivalent rights
may be extended to and made part of any Award denominated in Common
Stock or units of Common Stock, subject to such terms, conditions
and restrictions as the Committee may establish. The Committee may
also establish rules and procedures for the crediting of dividend
equivalents for deferred payments denominated in Common Stock or
units of Common Stock. At the discretion of the Committee, a
Participant may be offered an election to substitute an Award for
another Award or Awards of the same or different type.
8. STOCK OPTION EXERCISE. The price at which shares of Common Stock may
be purchased under a stock option shall be paid in full at the time
of the exercise in cash or, if permitted by the Committee, by means
of tendering Common Stock or surrendering another Award, including
Restricted Stock, valued at Fair Market Value on the date of
exercise, or any combination thereof. The Committee shall determine
acceptable methods for tendering Common Stock or other Awards and
may impose such conditions on the use of Common Stock or other
Awards to exercise a stock option as it deems appropriate. In the
event shares of Restricted Stock are tendered as consideration for
the exercise of a stock option, a number of the shares issued upon
the exercise of the stock option, equal to the number of shares of
Restricted Stock used as consideration therefor, shall be subject to
the same restrictions as the Restricted Stock so submitted plus any
additional restrictions that may be imposed by the Committee.
9. TAX WITHHOLDING. The Company shall have the right to deduct
applicable taxes from any Award payment and to retain at the time of
delivery or vesting of shares under the Plan, an appropriate number
of shares of Common Stock in value sufficient to cover the payment
of any taxes required by law to be withheld or to take such other
action as may be necessary in the opinion of the Company to satisfy
all obligations for withholding of such taxes; provided, however,
that a Participant shall have the option to provide the Company with
the funds to enable it to pay such taxes. Notwithstanding the
preceding sentence, if the participant is subject to Section 16 of
the Exchange Act, the Participant must affirmatively elect whether
he wishes to (i) have the Company retain shares of Common Stock,
(ii) provide the Company with other funds or (iii) have the Company
deduct amounts from other compensation due him in order to satisfy
the tax withholding requirements arising under an Award. Such
election shall either (a) be an irrevocable election made after the
date shareholder approval of the Plan is obtained and at least six
months prior to the date on which the amount of the taxes to be
withheld is determined or (b) take effect (or with respect to
elections made prior to September 1, 1993, be made) during the ten-
business day "window period" beginning on the third business day
following the date on which the Company releases for publication its
annual or quarterly financial statements and ending on the twelfth
business day following the date of release thereof. If Common Stock
is used to satisfy tax withholding, such stock shall be valued based
on the Fair Market Value when the amount of the taxes to be withheld
is determined.
10. AMENDMENT, MODIFICATION, SUSPENSION OR DISCONTINUANCE OF THE PLAN.
The Board may amend, modify, suspend or terminate the Plan for the
purpose of meeting or addressing any changes in legal requirements
or for any other purpose permitted by law. Subject to changes in
law or other legal requirements which would permit otherwise, the
Plan may not be amended without the consent of the holders of a
majority of the shares of Common Stock then outstanding to (i)
increase the maximum number of shares of Common Stock that may be
awarded under the Plan in any calendar year, taking into
consideration any carryover of shares from prior years (except for
adjustments pursuant to Section 14 of the Plan), (ii) decrease the
option price, (iii) materially modify the requirements as to
eligibility for participation in the Plan, (iv) withdraw
administration of the Plan from the Committee or (v) extend the
period during which Awards may be granted.
11. TERMINATION OF EMPLOYMENT. If the employment of a Participant
terminates, other than pursuant to paragraphs (a) through (c) of
this Section 11, all unexercised, deferred and unpaid Awards shall
be canceled immediately unless the Award Agreement provides
otherwise.
(a) Retirement Under a Company Retirement Plan. When a
Participant's employment terminates as a result of retirement
in accordance with the terms of a Company retirement plan, the
Committee may permit Awards to continue in effect beyond the
date of retirement in accordance with the applicable Award
Agreement and the exercisability and vesting of any Award may
be accelerated.
(b) Resignation in the Best Interests of the Company. When a
Participant resigns from the Company and, in the judgment of
the Committee, the acceleration and/or continuation of
outstanding Awards would be in the best interests of the
Company, the Committee may (i) authorize, where appropriate,
the acceleration and/or continuation of all or any part of
Awards granted prior to such termination and (ii) permit the
exercise, vesting and payment of such Awards for such period as
may be set forth in the applicable Award Agreement, subject to
earlier cancellation pursuant to Section 12 or at such time as
the Committee shall deem the continuation of all or any part of
the Participant's Awards are not in the Company's best
interests.
(c) Death or Disability of a Participant
(i) In the event of a Participant's death, the participant's
estate or beneficiaries shall have the period specified in
the Award Agreement within which to receive or exercise
any outstanding Award held by the participant under such
terms as may be specified in the applicable Award
Agreement.
(ii) In the event a Participant is deemed by the Company to be
disabled and eligible for benefits pursuant to the terms
of the Company's Long-Term Disability Plan, any successor
plan, or similar plan of another employer, Awards and
rights to any Awards may be paid to or exercised by the
Participant, if legally competent, or a committee or other
legally designated guardian or representative if the
Participant is legally incompetent by virtue of such
disability.
(iii) After the death or disability of a Participant, the
Committee may in its sole discretion at any time (1)
terminate restrictions in Award Agreements; (2) accelerate
any or all installments and rights; and (3) instruct the
Company to pay the total of any accelerated payments in a
single sum to the Participant, the Participant's estate,
beneficiaries or representative -- notwithstanding that,
in the absence of such termination of restrictions or
acceleration of payments, any or all of the payments due
under the Awards might ultimately have become payable to
other beneficiaries.
12. CANCELLATION AND RESCISSION OF AWARDS. Unless the Award Agreement
specifies otherwise, the Committee may cancel any unexpired, unpaid
or deferred Award at any time if the Participant is not in
compliance with all other applicable provisions of the Award
Agreement and the Plan and with the condition that the Participant
(whether or not an employee of the Company at the time) shall not
render services for any organization or engage directly or
indirectly in any business which, in the judgment of the Committee,
is or becomes competitive with the Company, or which organization or
business, or the rendering of services to such organization or
business, is or becomes otherwise prejudicial to or in conflict with
the interests of the Company.
13. NONASSIGNABILITY.
(a) Except pursuant to paragraph (c) of Section 11, no Award or any
other benefit under the Plan shall be assignable or
transferable, or payable to or exercisable by, anyone other
than the Participant to whom it was granted.
14. ADJUSTMENTS. In the event of any change in the Common Stock by
reason of a stock split, stock dividend, combination or
reclassification of shares, recapitalization, split-up, spin-off,
dividend other than a regular quarterly cash dividend, separation,
reorganization, liquidation, merger, consolidation or similar event,
the Committee may adjust proportionally (a) the number of shares of
Common Stock (i) reserved under the Plan, and (ii) covered by
outstanding Awards; (b) the stock prices related to outstanding
Awards; and (c) the appropriate Fair Market Value and other price
determinations for such Awards. In the event of any of the changes
described in the first sentence of this Section 14, the Committee
shall be authorized to issue or assume stock options, whether or not
in a transaction to which Section 424(a) of the Code applies, by
means of substitution of new options for previously issued options
or an assumption of previously issued options.
15. CHANGE OF CONTROL. In order to maintain the Participants' rights in
the event of a Change of Control, the Committee, in its sole
discretion, may, either at the time an Award is made hereunder or at
any time prior to, or coincident with or after the time of, a Change
of Control:
(a) provide for the acceleration of any time periods relating to
the exercise or realization of such Awards so that such awards
may be exercised or realized in full on or before a date fixed
by the Committee;
(b) provide for the purchase by the Company of such Awards, upon
the Participant's request, for an amount of cash equal to the
amount which could have been obtained upon the exercise or
realization of such rights had such Awards been currently
exercisable or payable;
(c) make such adjustment to the Awards then outstanding as the
Committee deems appropriate to reflect such Change of Control;
or
(d) cause the Awards then outstanding to be assumed, or new rights
substituted therefore, by the surviving corporation in such
Change of Control.
The Committee may, in its discretion, include such further
provisions and limitations in any agreement documenting such Awards
as it may deem equitable and in the best interests of the Company
with respect to changes in control.
16. GOVERNING LAW. The Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by the
Code or the securities laws of the United States, shall be governed
by the laws of the State of Indiana and construed accordingly.
17. EFFECTIVE AND TERMINATION DATES. The Plan shall become effective on
the date of its adoption by the Board and Awards may be made
immediately thereafter, but no Stock Award may be paid, Restricted
Stock issued (unless containing restrictions requiring cancellation
of such Restricted Stock if stockholder approval is not received) or
Stock Option exercised under the Plan until it is approved by the
holders of a majority of the shares of Common Stock then
outstanding. The Plan shall terminate on December 31, 2002, subject
to earlier termination by the Board pursuant to Section 10.