Exhibit 10.a
CUMMINS INC.
2003 STOCK INCENTIVE
PLAN
(As Amended October 14,
2003, February 20, 2007 and February 9,
2009)
1. Objectives.
The
Cummins Inc. 2003 Stock Incentive Plan (the
“Plan”) is designed to retain and motivate executives
and other selected employees, and to link the interests of these
employees with the interests of the Company’s shareholders.
It is also intended to be a source of equity-based annual fees
payable to non-employee directors of the Company to more closely
link their financial interests with those of the Company’s
shareholders. These objectives are accomplished by making incentive
and other 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 owner
(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 (other than automatic fee Awards to Outside Directors
described in Section 6 below), 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 16-b-3(1)(2)(i).
(h) “ Company
”—Cummins 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) “Outside Director”—A
non-employee member of the Board.
(k) “ Participant ”—Any
employee or Outside Director 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. All
Outside Directors are also eligible.
4. Stock Available for
Awards . A total of thirteen
million five hundred thousand (13,500,000) shares of the
Company’s Common Stock shall be available for Awards granted
wholly or partly in stock under provisions of the Plan. 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 under this Plan or the 1992
Stock Incentive Plan that are forfeited, terminated or expired
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 shall be carried
forward and be available for Awards.
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 (other than restrictions related to automatic fee
Awards described in Section 6 below), 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, sub-plans and
the like as are necessary to comply with provisions of the laws of
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. Director Automatic Formula
Awards . Each Outside Director
shall automatically receive, on the date of each annual meeting of
Shareholders, in lieu of cash payment an annual award of Common
stock, restricted as to transfer for a period of six
(6) months following the date of the award. The number of
shares in each such annual award shall be equal to one-half (1/2)
of his or her Board retainer fee, divided by the average of closing
prices of Common Stock as reported on the composite tape of
the New York Stock Exchange for the twenty
(20) consecutive trading days immediately preceding the date
of the award.
7. Employee Awards
. The
Committee shall determine the type or types of Award(s) to be
made to each employee 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 7. 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 person to acquire shares of Common Stock
acquired upon the exercise of options, provided, however ,
such lending would not violate terms of the Sarbanes-Oxley Act of
2002. No more than one-half of the total shares authorized under
this plan may be awarded as Stock Awards, as defined in
(c) below, that are subject only to the condition of
continuous service with the Company.
(a) Stock Option
—A grant of the 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
