CUMMINS ENGINE COMPANY, INC.
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EXHIBIT 10(l)
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RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS
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Effective September 12, 1989
1. Purpose.
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The Retirement Plan for Non-Employee Directors (the "Plan") has
been established to provide term-certain pension payments, as set
forth more fully herein, to eligible non-employee Directors of
Cummins Engine Company, Inc. (the "Company"). The Plan is
intended to enhance the Company's ability to attract and retain
as Directors individuals with the highest caliber of experience,
ability and judgment.
2. Eligibility.
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Each Director of the Company who is not an employee or former
employee of the Company with vested rights under a pension plan
sponsored by the Company, its subsidiaries or affiliates is
eligible to participate in the Plan as set forth below.
3. Participation.
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An eligible Director shall become a Participant in the Plan
commencing with the sixth (6th) year of service as a Director of
the Company.
4. Vesting.
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Each eligible Director shall be fully vested in benefits accrued
under the Plan immediately upon becoming a Participant.
5. Benefit Amount.
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Each Participant shall be entitled to receive an annual benefit,
payable annually, equal to the fees (excluding Committee fees)
paid or payable to such Participant for services rendered as a
Director of the Company during the one-year period immediately
preceding the Participant's ceasing to be a Director.
6. Commencement of Benefits.
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The annual benefit shall be payable on the first business day in
the month of May each year, commencing with the May next
following the later of (i) the date the Participant ceases to be
a Director or (ii) the Participant's 65th birthday.
7. Duration of Benefits.
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Once begun, the annual benefit shall be payable for the lesser of
(i) the number of completed full years the Participant served as
a Director or (ii) twenty (20) years.
8. Payments Upon Death of Participant.
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In the event of death, a Participant's surviving spouse, if any,
shall continue to receive annual benefit payments equal to fifty
percent (50%) of the benefit payable to the Participant. If
death occurs prior to commencement of benefits under paragraph 5,
such spousal benefit payments shall continue for the greater of
(i) ten (10) years or (ii) the number of years the Participant
would have been entitled to payments under paragraph 7. If death
occurs following commencement of benefits under paragraph 6, but
prior to receiving the number of payments described in paragraph
7, such spousal benefits shall continue for the remaining number
of payments.
9. Payments Upon Change of Control.
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Notwithstanding anything contained in paragraphs 6, 7 or 8 to the
contrary, following a Change of Control (as hereinafter defined),
each Participant (or beneficiary, if appropriate) shall be
entitled to receive a lump sum payment of the actuarial
equivalent of benefits accrued and remaining unpaid as of the
date of the Change of Control. The lump sum equivalent shall be
calculated assuming (a) the interest rate used by the Pension
Benefit Guaranty Corporation in determining the value of
immediate benefits as of the immediately preceding January 1 and
(b) the mortality tables incorporated by reference into the
Cummins Engine Company, Inc. and Affiliates Retirement Plan A.
For purposes of this Plan a "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 12 (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 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 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.
10. Funding of Benefits.
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The Company shall set aside funds to satisfy its obligations
hereunder by making deposits to the grantor trust created under
agreement dated February 1, 1988 (the "Trust") by and between the
Company and Wachovia Bank and Trust Company, N.A. (the "Trustee")
or any successor trust thereto. Deposits to the Trust to fund
such obligations shall be calculated on a sound actuarial basis.
Benefit payments will be made from the Trust by the Trustee to
the extent not paid by the Company.
11. Miscellaneous.
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(a) Participation in the Plan shall not confer any rights
concerning nomination for re-election to the Board of
Directors of the Company.
(b) The Board of Directors of the Company shall be responsible
for the administration of the Plan. Any decisions by the
Board of Directors (as reflected in its approved minutes)
shall be final.
(c) The Plan shall continue in force with respect to any
Participant until completion of any payments due hereunder.
The Company may, however, at any time, amend or terminate
the Plan, provided, however, that no such termination or
amendment shall deprive any Participant or surviving spouse
of any benefits accrued under the Plan prior to such
amendment.
(d) No right or interest of a Participant or surviving spouse
under the Plan shall be subject to voluntary or involuntary
alienation, assignment or transfer of any kind.