CUMMINS ENGINE COMPANY, INC.
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EXHIBIT 10(m)
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STOCK UNIT APPRECIATION PLAN
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Effective as of October 9, 1990
1. Purpose.
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The purpose of the Stock Unit Appreciation Plan (the "Plan") is
to provide a means by which Cummins Engine Company, Inc. (the
"Company") and/or its subsidiary corporations shall be able to
attract and retain competent key employees (including officers
and directors who are employees) and provide those personnel with
an opportunity to participate in the increased value of the
Company which their efforts, initiative, and skill have helped
and will continue to help produce. The Plan is effective as of
October 9, 1990.
2. Administration.
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(a) The Plan shall be administered by the Compensation Committee
(the "Committee") of the Board of Directors (the "Board") as
that Committee may be constituted from time to time. The
Committee shall consist of at least three members of the
Board selected by the Board, all of whom shall be
Disinterested Persons. A Disinterested Person for purposes
of the Plan is one who is not at the time he exercises
discretion in administering the Plan or at any time within
one year prior thereto eligible for participation in the
Plan or any other plan of the Company that would entitle him
or her to acquire stock, stock options or stock appreciation
units of the Company.
(b) A majority of the members of the Committee shall constitute
a quorum. All determinations of the Committee shall be made
by a majority of its members. Any decision or determination
reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made by
a majority vote at a meeting duly called and held.
(c) Subject to the express provisions of the Plan, the Committee
also shall have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating
to it, and to make all other determinations necessary or
advisable for the administration of the Plan. The
determinations of the Committee on the matters referred to
in this paragraph 2 shall be conclusive.
3. Participants.
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Participants in the Plan shall be selected by the Committee from
key employees of the Company or any subsidiary of the Company
(the "Participants").
4. Plan Operation and Appreciation of Units.
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(a) Participants shall be awarded stock appreciation units
("Units") for a period of years determined by the Committee,
not to exceed five years from the date of the award (the
"Appreciation Period"). Units may be exercised by a
Participant, to the extent exercisable by their terms, in
whole or from time to time in part at any time prior to the
end of the Appreciation Period, but in no event prior to six
months following the date such Units were awarded to such
Participant, except that this limitation shall not be
applicable in the event of death or disability of the
Participant occurring before the expiration of the six-month
period. When awarded, each Unit shall have a basis equal to
the average of the closing prices of the Common Stock of the
Company (the "Common Stock") on the New York Stock Exchange
(the "NYSE") for the 30 consecutive trading days immediately
preceding the date of the award of such Unit (the "Grant
Base").
(b) At the end of the Appreciation Period or upon the
Participant's earlier exercise of a Unit, the Participant
shall be entitled to receive from the Company a cash payment
(the "Payment") for previously unexercised Units as
determined by this paragraph 4(b). The Payment shall be
equal to (i) in the case of Participant exercise, the
average of the closing prices of the Common Stock of the
NYSE for the 30 consecutive trading days immediately
preceding the date of such exercise or (ii) upon expiration
of the Appreciation Period, the average of the closing
prices of the Common Stock on the NYSE for the 90
consecutive trading days immediately preceding the date of
such expiration, in each case (x) reduced by the Grant Base
and (y) multiplied by the number of Units exercised or
remaining at the end of the Appreciation Periods, as
applicable.
5. Nature of Units.
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The Units shall be used solely as a device for the measurement
and determination of the amount to be paid in cash to
Participants as provided in the Plan. The Units shall not
constitute or be treated as property or as a trust fund of any
kind. All amounts at any time attributable to the Units shall be
and remain the sole property of the Company and all Participants'
rights hereunder are limited to the rights to receive cash as
provided in this Plan.
6. Dilution.
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In the event of a stock split, stock dividend, recapitalization,
reclassification, reorganization, merger, consolidation,
combination or exchange of shares, split-up, split-off, spin-off,
liquidation or similar changes in the capitalization of the
Company, or any distribution to the holders of Common Stock other
than regular quarterly cash dividends, the number of Units of a
Participant and/or the Grant Base shall be adjusted in such
manner as the Committee shall, in its discretion, determine to be
appropriate under the circumstances so that the Participants'
interests in the Units shall be congruent with the interests of
the holders of the Common Stock.
7. Transferability.
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Any rights arising under the Plan shall not be transferable
otherwise than by will or the laws of descent and distribution.
8. Termination of Employment.
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In the event a Participant leaves the employ of the Company, a
subsidiary or an affiliate of the Company, otherwise than by
retirement or due to disability or death, any right arising under
the Plan shall be forfeited. In the event of retirement pursuant
to any retirement plan of the Company, of a subsidiary or of an
affiliate of the Company, the disability, or the death of a
Participant, any unexercised Units may be exercised by the
Participant or by a legatee or legatees of such Participant under
such Participant's last will, or by such Participant's personal
representatives or distributees, at any time (a) in the case of
retirement or disability, within a period of 90 days after his
retirement or disability (or such longer period as the Committee
may in its sole discretion determine) and (b) in the case of
death, within a period of one year after his death, but in all
cases not after expiration of the Appreciation Period with
respect to such Units.
9. Withholding of Tax.
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There shall be deducted from each Payment under the Plan the
amount of any tax required by any governmental authority to be
withheld and paid over by the Company to that governmental
authority for the account of the person entitled to such Payment.
10. Termination and Amendment of Plan.
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The Committee may at any time terminate the Plan, or make such
modification of the Plan as it shall deem advisable. No
termination or amendment of the Plan may, without the consent of
a Participant, adversely affect the rights of such Participant
with respect to Units granted prior thereto.