EXHIBIT 10(j)
Cummins Engine Company, Inc.
Employee Stock Purchase Plan
____________________________
The following terms and provisions constitute The Cummins Engine
Company, Inc. Employee Stock Purchase Plan as approved and in effect
as of November 1, 1998.
1. Definitions.
A. "Account" shall mean an account under the Plan established by
the Administrator for each Participant.
B. "Administrator" shall mean Bank of New York or such other
administrator as Cummins in its discretion may approve from
time to time after the Effective Date.
C. "Base Pay" shall mean the Participant's base salary or hourly
wages, exclusive of allowances, incentive pay, reimbursed
expenses, overtime pay, fringe benefits and other similar
forms of payment.
D. "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
E. "Commission" shall mean the United States Securities and
Exchange Commission.
F. "Company" shall mean Cummins or its U.S. subsidiaries and
affiliates.
G. "Common Stock" shall mean shares of the Common Stock of
Cummins, $2.50 par value per share.
H. "Cummins" shall mean Cummins Engine Company, Inc.
I. "Company Contributions" shall mean amounts contributed to the
Plan by the Company on behalf of a Participant that are
sufficient to result in the Participant receiving the
equivalent of a 10% discount on the Plan shares purchased
pursuant to Sections 4 and 5 of the Plan. Cummins may, upon
30 days prior written notice to Participants, change the
targeted discount level and related amount of Company
Contributions in its sole discretion.
J. "Effective Date" shall mean November 1, 1998.
K. "Employee" shall mean any active U.S. employee of the Company.
L. "Investment Authorization" shall mean an investment
authorization form, which may also include a Withholding
Authorization.
M. "Participant" shall mean an individual who satisfies the
eligibility requirements set forth in Section 2 of the Plan.
N. "Plan" shall mean this Cummins Engine Company, Inc. Employee
Stock Purchase Plan.
O. "Plan Shares" shall mean shares of Common Stock.
P. "Statement" shall mean a statement prepared by the
Administrator and mailed to a Participant summarizing the
transactions in the Participant's Account.
Q. "Withholding Authorization" shall mean an initial enrollment
or subsequent change payroll withholding authorization form,
which may include an Investment Authorization.
2. Eligibility. To participate in the Plan, an individual:
A. Must be an Employee employed at a work location having
sufficient payroll system capabilities to support the Plan;
B. Must submit a Withholding Authorization to the Company on or
before the first day of the month in which the individual
wishes to participate, authorizing the Company to make the
payroll deductions specified by the employee, subject to any
minimum deduction set by Cummins; and
C. Must submit an Investment Authorization to the Company,
authorizing the Company, through the Administrator, to act as
agent for the employee for purposes set forth in the Plan.
3. Sources of Cash. The Administrator will establish an Account as
agent for each Participant and will credit the cash received from
the following sources to the Account for the purchase of Plan
Shares for each Participant's Account:
A. Employee payroll deduction contributions made by the
Participant;
B. Company Contributions made on behalf of the Participant; and
C. Unless otherwise directed by the Participant, cash dividends
received from Cummins on all Plan Shares in a Participant's
Account at the time a dividend is paid.
The minimum and maximum contribution that a Participant may make
to an Account is 1% and 15% of Base Pay per pay period,
respectively, or such other amounts as Cummins in its sole
discretion may determine from time-to-time after the Effective
Date.
4. Application of Cash. The Administrator will apply the cash
credited to the Participant's Account under Section 3 to the
purchase of full and fractional Plan Shares and will credit them
to the Participant's Account. In making these purchases, the
Administrator may commingle the cash credited to all Participants'
Accounts. The Administrator will make reasonable efforts to apply
the cash described in Section 3 that it receives as agent for the
Participant to the purchase of Plan Shares on or promptly after
the first day of the following month after receipt by the
Administrator, except as described in Section 5. Dividends
received on Plan Shares and other amounts of cash credited to the
Account will be aggregated with the employee payroll deductions
and amounts contributed by the Company received during the
calendar month and applied to the purchase of Plan Shares, unless
otherwise directed by the Participant.
5. Purchase of Plan Shares. The Administrator will purchase Plan
Shares in negotiated transactions or on any securities exchange or
other securities trading facility where Common Stock is traded
from time to time. The purchases will be on terms as to price,
delivery and other matters, and will 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. In that
event, purchases will 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 will 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 will remit to each Participant
promptly after the end of the period, all cash in the
Participant's Account attributable to the Participant's payroll
deductions and cash dividends paid to all Cummins shareholders
during such period.
6. Statements. As soon as practicable after the end of each calendar
quarter (but in no event later than 20 calendar days after the end
of each calendar quarter) the Administrator will mail a Statement
to each Participant summarizing the transactions in the
Participant's Account. The Administrator will 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. No certificate representing Plan Shares
purchased for a Participant's Account will be issued to the
Participant unless and until his or her Account is terminated.
7. Expenses. Cummins will pay the service charges, brokerage, costs
of mailing and other charges incurred in connection with the
purchase of Plan Shares.
8. Tax Matters. Each Participant is responsible for all taxes
(whether local, state or federal) due because of the Company
Contribution, because of the payment of a dividend or because of
the sale of Plan Shares credited to him or her. The Administrator
will timely prepare and forward to the United States Internal
Revenue Service, the appropriate state and local authorities and
the Participants the information returns required by the Code and
all state statutes, presently Forms 1099-Div and 1099-B. All
Company Contributions will constitute taxable income to the
Participant to whose Account they are credited and will be
reported to the United States Internal Revenue Service on the
Participant's Form W-2 as taxable earnings.
9. Stock Dividends and Splits. Any stock dividends and any shares
received as a result of a stock split on any Plan Shares
accumulated in a Participant's Account will, when received by the
Administrator, be credited to the Participant's Account.
10. Tender or Exchange Offer. If a tender offer or exchange offer is
commenced for Common Stock, the Administrator, upon receipt of
information with respect thereto as the holder of record of the
Plan Shares, will either (i) forward, or arrange for the
forwarding of, information provided by the offeror to holders of
record of Common Stock to each Participant 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 will
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) prior to the 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 disclosure is
required to tender Plan Shares pursuant to proper written
instructions, the Administrator will maintain the confidentiality
of a Participant's election to tender or not tender Plan Shares.
11. Voting of Plan Shares. The Administrator will vote the
Participant's Plan Shares as instructed by the Participant on a
form to be furnished by and returned 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 will not vote Plan Shares for which no instructions
are received.
12. Sale of Plan Shares. A Participant may request that the
Administrator sell all or any part of his or her Plan Shares at
any time. A Participant who wishes to sell any part of his or her
Plan Shares may do so by giving notice to the Administrator. Upon
receipt of the notice, the Administrator, as the Participant's
agent, will sell the number of Plan Shares specified in the
Participant's notice within five business days of receipt by the
Administrator of instructions to sell the Plan Shares, and will
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 will 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 will 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 of receipt by the Administrator of the notice of the
Participant's desire to sell Plan Shares, or, if the stock is not
traded on the date of receipt, the mean on the next prior date
that it was so traded. Any fractional shares that are not sold
will 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 of receipt by the Administrator of the notice of the
Participant's desire to sell Plan Shares or, if the stock is not
traded on the date of receipt, the mean on the next prior date
that it was traded. If a Participant elects to sell all of his or
her Plan Shares, that Participant will be deemed to have
terminated participation in the Plan, and the provisions of
Section 13 will apply.
13. Termination. Participation in the Plan may be terminated by a
Participant at any time by giving notice to the Company. The
Company will inform the Administrator of any Participant election
to terminate participation within ten business days of the receipt
by the Company of the notice from the Participant. As soon as
practicable following receipt of the notice (but in no event more
than 20 days following receipt of the notice), unless a
Participant makes a contrary election, the Administrator will send
to the terminating Participant, at a reasonable charge, a
certificate representing the full Plan Shares accumulated in his
or her Account and a check for the net proceeds of any fractional
share in his Account. If a Participant elects to terminate and
continues to be an Employee, he or she may not rejoin the Plan for
a period of six months from the date of the termination. In any
case of termination, the Administrator will, if the Participant
elects, sell, as the Participant's agent, all or part of the
Participant's shares within five business days of receipt by the
Administrator of instructions to sell his or her Plan Shares, and
will deliver to him or her 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 will 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 will 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 of receipt by the Administrator of the notice of
termination or, if the stock is not traded on the date of receipt,
the mean on the next prior date that it was so traded. On
termination, fractional shares accumulated in a Participant's
Account which are not aggregated and sold will 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 of receipt by the Administrator of the notice of termination
or, if the stock is not traded on the date of receipt, the mean on
the next prior date that it was traded.
14. Amendments. The Administrator may, with the consent of Cummins,
amend this Plan. Cummins may amend or terminate the Plan by
giving the Administrator 90 days written notice of such amendment
or termination. The Administrator may terminate this Plan by
giving Cummins 90 days written notice of termination. In addition
the Administrator may, with the consent of Cummins, or shall, if
requested to do so by Cummins, appoint a successor to serve as
agent for the Participants under the Plan. In any case, the
Administrator and Cummins will cause a notice of the action to be
mailed to each Participant. No action will have a retroactive
effect that would prejudice the interests of the Participants.
The terms and conditions of this Plan as in effect on the
effective date of the appointment of the successor will be binding
upon the successor.
15. Limitation on the Company's and the Administrator's Liability.
The Company and the Administrator will not be liable for any
action which 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 prior to 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 Plan Shares or Rights are 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 of the Plan Shares or sale of Plan Shares or
Rights for a Participant's Account.
16. 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 will
be void.
17. 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 the Company may not contribute to the Plan
for a period of 12 months after receipt of the financial hardship
distribution. The Participant must submit a new Withholding
Authorization to the Company in order to recommence contributions
to the Plan after he or she has received the financial hardship
distribution.
18. Governing Law. The Withholding Authorization, the Investment
Authorization and this Plan and its operation will be governed by
and construed in accordance with the laws of the State of Indiana.