Indiana
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1-4639
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35-0225010
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(State
or Other Jurisdiction of Incorporation)
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(Commission
File Numbers)
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(I.R.S.
Employer Identification Nos.)
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905
West Boulevard North
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Elkhart,
Indiana
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46514
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(Address
of Principal Executive Offices)
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(Zip
Code)
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q
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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q
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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q
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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q
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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·
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Options:
The
right to purchase shares of the Company’s common stock, no par value,
at a specified
price. Options may take the form of incentive stock options or
nonqualified stock options, but incentive stock options may only be
granted to employees under Section 3401(c) of the Internal Revenue
Code.
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·
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Stock
Appreciation Rights (“
SARs”
):
The
right to receive the difference between the fair market value of a share
on the date of exercise and the exercise price, payable in cash or shares.
SARs may not have a term of more than
10 years.
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·
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Restricted
Stock:
An award of shares subject to certain
restrictions and/or the risk of
forfeiture.
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·
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Restricted
Stock Units (“
RSUs”
):
An award of units representing the right to receive one share or an amount
equal to the fair market value of one share, payable in cash or shares,
subject to certain restrictions and/or the risk of
forfeiture.
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·
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Performance
Shares:
An award, denominated in shares, which is earned
during a specified performance period subject to the attainment of
performance criteria.
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·
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Performance
Units:
An award, denominated in currency-valued units,
which is earned during a specified performance period subject to the
attainment of performance criteria.
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·
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Other Stock
Awards:
An award of shares or an award that is based in
whole or in part on the value of a share (such as dividend equivalents),
payable in shares, cash, other securities, or other
property.
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10.1
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CTS Corporation
2009 Omnibus Equity and Performance Incentive
Plan
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10.2
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Form
Restricted Stock Unit Agreement
(Shares)
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10.3
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Form
Restricted Stock Unit Agreement
(Cash)
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10.1
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CTS Corporation
2009 Omnibus Equity and Performance Incentive
Plan
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10.2
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Form
Restricted Stock Unit Agreement
(Shares)
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10.3
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Form
Restricted Stock Unit Agreement
(Cash)
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(a)
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“Affiliate”
shall mean any entity that, directly or indirectly, controls, is
controlled by, or is under common control with, the
Company.
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(b)
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“Award”
shall mean a grant of an Option, SAR, Restricted Stock Award, Performance
Award, or Other Stock Award pursuant to the Plan, which may, as determined
by the Committee, be in lieu of other compensation owed to a
Participant.
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(c)
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“Award
Agreement” shall mean an agreement, either in written or electronic
format, in such form and with such terms and conditions as may be approved
by the Committee, which evidences the terms and conditions of an
Award.
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(d)
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“Board
of Directors” or “Board” shall mean the board of directors of the
Company.
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(e)
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“Code”
shall mean the Internal Revenue Code of 1986, as amended from time to
time, and any references to a particular section of the Code shall be
deemed to include any successor provision
thereto.
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(f)
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“Committee”
shall mean the Compensation Committee or such other committee of the Board
of Directors, which shall consist solely of two or more members of the
Board who are “outside directors” within the meaning of Section 162(m) of
the Code, “non-employee directors” within the meaning of Securities and
Exchange Commission Rule 16b-3 promulgated under Section 16 of the
Securities Exchange Act of 1934, as amended, and independent directors as
defined by any applicable stock exchange rule or any such successor
provision thereto.
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(g)
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“Company”
shall mean CTS Corporation, an Indiana
corporation.
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(h)
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“Consultant”
shall mean any person engaged by the Company or an Affiliate to render
services to such entity as a consultant or
advisor.
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(i)
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“Covered
Employee” shall mean a Participant who is, or is determined by the
Committee to be likely to become, a “covered employee” within the meaning
of Section 162(m) of the Code (or any successor
provision).
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(j)
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“Date
of Grant” shall mean the date specified by the Committee on which a grant
of Options, SARs or Performance Awards, or a grant or sale of Restricted
Stock Awards or Other Stock Awards pursuant to the Plan will become
effective (which date will not be earlier than the date on which the
Committee takes action with respect
thereto).
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(k)
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“Employee”
shall mean an employee of the Company or any
Affiliate.
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(l)
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“Exercise
Price” shall mean an amount, as determined by the Committee, at which an
Option or SAR can be exercised by a Participant, which amount shall not be
less than the Fair Market Value of a Share on the Date of Grant, unless
such Option or SAR is granted pursuant to an assumption or substitution of
another Option in a manner that satisfies the requirements of Section
424(a) of the Code.
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(m)
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“Existing
Plan” shall mean the CTS Corporation 2004 Omnibus Long-Term Incentive
Plan, as amended.
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(n)
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“Fair
Market Value” shall mean, as of a given date, unless otherwise determined
by the Committee, the closing sale price for a Share as reported on a
national securities exchange on such date if the Shares are then being
traded on such an exchange. If no closing sale price was
reported for such date, the closing sale price on the last preceding day
on which such a price was reported shall be used. If there is
no regular public trading market for the Shares, the Fair Market Value for
a Share shall be the fair market value of a Share as determined in good
faith by the Committee. The Committee is authorized to adopt
another fair market value pricing method, provided such method is stated
in the Award Agreement and is in compliance with the fair market value
pricing rules set forth in Section 409A of the
Code.
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(o)
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“Incentive
Stock Option” shall mean an Option which is intended to meet the
requirements set forth in Section 422 of the Code or any successor
provision.
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(p)
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“Nonqualified
Stock Option” shall mean an Option not intended to qualify as an Incentive
Stock Option.
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(q)
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“Option”
shall mean the right to purchase Shares granted pursuant to Section 8,
which may take the form of either an Incentive Stock Option or a
Nonqualified Stock Option and which shall not have a term of more than 10
years.
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(r)
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“Other
Stock Award” shall mean an Award of Shares or Awards that are valued in
whole or in part, or that are otherwise based on, Shares, including but
not limited to dividend equivalents or amounts which are equivalent to any
federal, state, local, domestic, or foreign taxes relating to an Award,
which may be payable in Shares, cash, other securities, or any other form
of property as the Committee shall determine, subject to the terms and
conditions set forth by the Committee and granted pursuant to Section
12.
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(s)
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“Participant”
shall mean an Employee, Consultant, or member of the Board selected by the
Committee to receive Awards under the
Plan.
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(t)
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“Performance
Awards” shall mean Awards of Performance Shares or Performance
Units.
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(u)
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“Performance
Measures” shall mean any of the following performance criteria, either
alone or in any combination, and may be expressed with respect to the
Company or one or more operating units or groups, as the Committee may
determine: free cash flow; free cash flow from operations;
total earnings; earnings per share, diluted or basic; earnings per share
from continuing operations, diluted or basic; earnings before interest and
taxes; earnings before interest, taxes, depreciation, and amortization;
earnings from continuing operations; net asset turnover; inventory
turnover; debt ratios; operating expense; inventory turns; net earnings;
operating earnings; gross operating margin, gross margin percentage;
return on equity; capital expenditures; cost of quality; on-time delivery;
return on net assets; return on total assets; return on capital; return on
investment; return on sales; gross sales, net sales; market share; net
market share; economic value added; expense reduction levels; stock price;
working capital; controllable working capital and total shareholder
return. Performance Measures applicable to any Qualified
Performance-Based Award to a Covered Employee must be based on specified
levels of or growth in one or more of the Performance Measures listed in
the immediately preceding sentence. Performance Measures may be
determined on an absolute basis or relative to internal goals or relative
to levels attained in prior years or related to other companies or indices
or as ratios expressing relationships between two or more Performance
Measures.
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Additionally,
Performance Measures may be defined to exclude certain types or categories
of extraordinary, unusual or non-recurring items; changes in applicable
laws, regulations or accounting principles; currency fluctuations;
discontinued operations; non-cash items, such as amortization,
depreciation or reserves; or any recapitalization, restructuring, asset
impairment, reorganization, merger, acquisition, divestiture,
consolidation, spin-off, split-up, combination, liquidation, dissolution,
sale of assets, gain or loss on asset sales, or other similar corporate
transactions;
provided
,
however
, that
such action shall not be taken in the case of a Qualified
Performance-Based Award where such action would result in the loss of the
otherwise available exemption of the Award under Section 162(m) of the
Code. The Committee shall provide how any Performance Measure
shall be adjusted to the extent necessary to prevent dilution or
enlargement of any Award as a result of extraordinary events or
circumstances, as determined by the Committee, or to exclude the effects
of extraordinary, unusual, or non-recurring items; changes in applicable
laws, regulations, or accounting principles; currency fluctuations;
discontinued operations; non-cash items, such as amortization,
depreciation, or reserves; or any recapitalization, restructuring, asset
impairment, reorganization, merger, acquisition, divestiture,
consolidation, spin-off, split-up, combination, liquidation, dissolution,
sale of assets, gain or loss on asset sales, or other similar corporate
transactions;
provided
,
however
, that
such action shall not be taken in the case of a Qualified
Performance-Based Award where such action would result in the loss of the
otherwise available exemption of the Award under Section 162(m) of the
Code.
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(v)
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“Performance
Share” shall mean an Award denominated in Shares, which is earned during a
Performance Period subject to the terms and conditions as determined by
the Committee and granted pursuant to Section
11.
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(w)
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“Performance
Period” shall mean, in respect of a Performance Award, a period of time
established by the Committee pursuant to Section 7 at the end of which the
achievement of one or more measurable performance objectives established
for a Performance Measure and relating to such Performance Award are to be
evaluated or measured.
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(x)
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“Performance
Unit” shall mean an Award denominated in units having a value in dollars
or such other currency, as determined by the Committee, which is earned
during a Performance Period subject to the terms and conditions as
determined by the Committee and granted pursuant to Section
11.
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(y)
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“Plan”
shall mean the Company’s 2009 Omnibus Equity and Performance Incentive
Plan, as may be amended, or amended and restated, from time to
time.
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(z)
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“Prior
Plans” shall mean the Company’s 1988 Restricted Stock and Cash Bonus Plan,
the Company’s 1996 Stock Option Plan, the Company’s 2001 Stock Option Plan
and the Company’s 2001-2003 Incentive Unit Appreciation Rights Plan, as
each may have been amended from time to
time.
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(aa)
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“Qualified
Performance-Based Award” shall mean any Award or portion of an Award that
is intended to satisfy the requirements for “qualified performance-based
compensation” under Section 162(m) of the
Code.
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(bb)
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“Restricted
Stock” shall mean an Award of Shares, subject to such terms and conditions
as determined by the Committee and granted pursuant to Section 10, as to
which neither the substantial risk of forfeiture nor any prohibition on
transfer has expired.
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(cc)
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“Restricted
Stock Award” shall mean an Award consisting of Restricted Stock or
Restricted Stock Units.
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(dd)
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“Restricted
Stock Unit” shall mean an Award consisting of a bookkeeping entry
representing the right to receive one Share or an amount equivalent to the
Fair Market Value of one Share, payable in cash or Shares, and
representing an unfunded and unsecured obligation of the Company, except
as otherwise provided by the Committee, subject to such terms and
conditions as determined by the Committee and granted pursuant to Section
10.
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(ee)
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“Shares”
shall mean shares of common stock, without a par value, of the
Company.
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(ff)
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“Stock
Appreciation Right” or “SAR” shall mean an Award which represents the
right to receive the difference between the Fair Market Value of a Share
on the date of exercise and an Exercise Price, payable in cash or Shares,
subject to such terms and conditions as determined by the Committee and
granted pursuant to Section 9 and which shall not have a term of more than
10 years.
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(a)
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Subject
to adjustment as provided in Section 5(g), the maximum number of Shares
available for issuance under the Plan shall be
3,400,000.
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(b)
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If
any Shares are subject to an Award that is forfeited, expires, or is
otherwise terminated without the issuance of Shares, such Shares shall
again be available for Awards under the Plan. Notwithstanding
anything to the contrary contained herein: (i) if Shares are
tendered or otherwise used in payment of the Exercise Price of an Option,
the total number of Shares covered by the Option being exercised shall
reduce the maximum number of Shares available under Section 5(a); (ii)
Shares withheld by the Company to satisfy the tax withholding obligation
shall count against the maximum number of Shares available under Section
5(a); and (iii) the number of Shares covered by an SAR, to the extent that
it is exercised and settled in Shares, and whether or not all the Shares
covered by the Award are actually issued to the Participant upon exercise
of the SAR, shall be considered issued or transferred pursuant to the
Plan. In the event that the Company repurchases Shares with
Option proceeds, those Shares will not be added to the maximum number of
Shares available under Section 5(a). If, under the Plan, a
Participant has elected to give up the right to receive compensation in
exchange for Shares based on Fair Market Value, such Shares will not count
against the maximum number of Shares available under Section
5(a).
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(c)
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Unless
otherwise determined by the Committee, Awards that are designed to operate
in tandem with other Awards shall not be counted against the maximum
number of Shares available under Section 5(a) in order to avoid double
counting.
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(d)
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Notwithstanding
the foregoing, the maximum number of Shares that may be issued upon the
exercise of Incentive Stock Options shall equal the aggregate number of
Shares stated in Section 5(a), subject to adjustment as provided in
Section 5(g) to the extent that such adjustment does not affect the
ability to grant or the qualification of Incentive Stock Options under the
Plan.
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(e)
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To
the extent any Award is settled in cash, the number of Shares available
for issuance under the Plan pursuant to Section 5(a) shall be reduced by
an amount equal to the quotient of: (i) the dollar amount of such cash
payment, reduced by any amount tendered by the Participant or retained by
the Company to satisfy tax withholding obligations in connection with the
Award; divided by (ii) the Fair Market Value of a Share on the date of the
cash payment.
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(f)
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Any
Shares issued under the Plan shall consist, in whole or in part, of
authorized and unissued Shares, Shares purchased in the open market or
otherwise, Shares in treasury, or any combination thereof, as the
Committee or, as appropriate, the Board may
determine.
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(g)
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In
the event of any merger, reorganization, consolidation, recapitalization,
stock dividend, stock split, reverse stock split, spin-off, combination,
repurchase or exchange of Shares or other securities of the Company, or
corporate transaction or event having an effect similar to the foregoing,
the Committee shall adjust the number and type of Shares available for
Awards under the Plan, the number and type of Shares subject to
outstanding Awards, and the Exercise Price with respect to any Award as is
equitably required to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the
Plan. In the case of any stock split, including a stock split
effected by means of a stock dividend, and in the case of any other
dividend paid in shares of the Company, such adjustments shall be made
automatically without the necessity of Committee action, on the customary
arithmetical basis. Any fractional Share resulting from an adjustment
pursuant to this Section 5(g) shall be disregarded. Moreover, in the event
of any such transaction or event, the Committee may provide in
substitution for any or all outstanding Awards under this Plan such
alternative consideration as it may determine to be equitable and may in
connection therewith require the surrender of all or part of any Award to
be replaced in a manner that complies with Section 409A of the
Code. In addition, for each Option or SAR with an Exercise
Price greater than the consideration offered in connection with any such
transaction or event, the Committee may in its sole discretion elect to
cancel such Option or SAR without any payment to the person holding such
Option or SAR.
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(h)
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The
number of Shares issued as Restricted Stock, Restricted Stock Units,
Performance Shares and Performance Units and Other Stock Awards (after
taking into account any forfeitures and cancellations) will not during the
life of the Plan in the aggregate exceed 3,400,000
Shares.
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(a)
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This
Section 7 is applicable to any Qualified Performance-Based Award granted
to a Covered Employee. Performance Measures applicable to any
Qualified Performance-Based Award to a Covered Employee must be based on
specified levels of or growth in one or more of the Performance
Measures.
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(b)
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Notwithstanding
any other provision of the Plan other than Section 5(g): (i) no
Participant will be granted Options or SARs, in the aggregate, for more
than 500,000 Shares during any calendar year; (ii) no Participant will be
granted Qualified Performance-Based Awards of Performance Shares for more
than 125,000 Shares during any calendar year;
provided
,
however
, that,
if any other Qualified Performance-Based Awards of Performance Shares are
outstanding for such Participant for a given calendar year, such Share
limitation shall be reduced for each such given calendar year by the
Shares that could be received by the Participant under all such Qualified
Performance-Based Awards, divided, for each such Qualified
Performance-Based Award, by the number of full calendar years of the
Company applicable to each such outstanding Qualified Performance-Based
Award; and (iii) in no event will any Participant in any calendar year
receive a Qualified Performance-Based Award of Performance Units having an
aggregate maximum value as of their respective Dates of Grant in excess of
$2,000,000;
provided
,
however
, that,
if any other Qualified Performance-Based Awards of Performance Units are
outstanding for such Participant for a given calendar year, such dollar
limitation shall be reduced for each such given calendar year by the
amount that could be received by the Participant under all such Qualified
Performance-Based Awards, divided, for each such Qualified
Performance-Based Award, by the number of full calendar years of the
Company applicable to each such outstanding Qualified Performance-Based
Award. The limitations set forth in this Section 7(b) shall be
subject to adjustment under Section 5(g) of the Plan only to the extent
that such adjustment does not affect the status of any Qualified
Performance-Based Award intended satisfy the requirements for “qualified
performance-based compensation” under Section 162(m) of the
Code. If an Option is granted in tandem with a SAR such that
exercise of the Option or SAR with respect to one Share cancels the tandem
Option or SAR, respectively, with respect to such Share, the tandem Option
and SAR with respect to such Share shall be counted as covering only one
Share for purposes of applying the limitation set forth in this Section
7(b).
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(c)
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The
Committee shall have the authority to impose such other restrictions on
Qualified Performance-Based Awards as it may deem necessary or appropriate
to ensure that such Qualified Performance-Based Awards satisfy the
requirements for “qualified performance-based compensation” under Section
162(m) of the Code.
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(a)
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Increase
the maximum number of Shares that may be issued under the Plan, except as
provided in Section 5(g);
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(b)
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Change
the class of eligible Participants;
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(c)
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Permit
the repricing of outstanding Options or SARs, as provided in Section 13;
or
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(a)
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To
the extent applicable, it is intended that this Plan and any grants made
hereunder comply with the provisions of Section 409A of the Code, so that
the income inclusion provisions of Section 409A(a)(1) of the Code do not
apply to the Participants. This Plan and any grants made
hereunder shall be administered in a manner consistent with this
intent. Any reference in this Plan to Section 409A of the Code
will also include any regulations or any other formal guidance promulgated
with respect to such Section by the U.S. Department of the Treasury or the
Internal Revenue Service.
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(b)
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Neither
a Participant nor any of a Participant’s creditors or beneficiaries shall
have the right to subject any deferred compensation (within the meaning of
Section 409A of the Code) payable under this Plan and grants hereunder to
any anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment or garnishment. Except as permitted
under Section 409A of the Code, any deferred compensation (within the
meaning of Section 409A of the Code) payable to a Participant or for a
Participant’s benefit under this Plan and grants hereunder may not be
reduced by, or offset against, any amount owing by a Participant to the
Company or any of its Affiliates.
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(c)
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If,
at the time of a Participant’s separation from service (within the meaning
of Section 409A of the Code), (i) the Participant shall be a specified
employee (within the meaning of Section 409A of the Code and using the
identification methodology selected by the Company from time to time) and
(ii) the Company shall make a good faith determination that an amount
payable hereunder constitutes deferred compensation (within the meaning of
Section 409A of the Code) the payment of which is required to be delayed
pursuant to the six-month delay rule set forth in Section 409A of the Code
in order to avoid taxes or penalties under Section 409A of the Code, then
the Company shall not pay such amount on the otherwise scheduled payment
date but shall instead pay it, without interest, on the first business day
of the seventh month after such six-month
period.
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(d)
|
Notwithstanding
any provision of this Plan and grants hereunder to the contrary, in light
of the uncertainty with respect to the proper application of Section 409A
of the Code, the Company reserves the right to make amendments to this
Plan and grants hereunder as the Company deems necessary or desirable to
avoid the imposition of taxes or penalties under Section 409A of the
Code. In any case, a Participant shall be solely responsible
and liable for the satisfaction of all taxes and penalties that may be
imposed on a Participant or for a Participant’s account in connection with
this Plan and grants hereunder (including any taxes and penalties under
Section 409A of the Code), and neither the Company nor any of its
affiliates shall have any obligation to indemnify or otherwise hold a
Participant harmless from any or all of such taxes or
penalties.
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·
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Installment
One: ____
percent (_____%) on ____________
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·
|
Installment
Two: ____
percent (_____%) on ____________
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·
|
Installment
Three: ____
percent (_____%) on ____________
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