UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
for the Quarterly Period Ended June 29, 1997
CTS CORPORATION
905 West Boulevard North
Elkhart, Indiana 46514
(219)293-7511
Indiana 1-4639 35-0225010
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
The Company (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the period that the Company was required to file such
reports, and (2) has been subject to such filing requirements for
the past 90 days.
The number of shares of the Company's Common Stock outstanding at
August 8, 1997, was 5,248,063.
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CTS CORPORATION FORM 10-Q
INDEX
Page No.
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of
Earnings - For the Three Months and Six
Months ended June 29, 1997, and June 30, 1996 3
Condensed Consolidated Balance Sheets -
As of June 29, 1997, and December 31, 1996 4
Condensed Consolidated Statements of Cash
Flows - For the Six Months Ended June 29,
1997, and June 30, 1996 5
Notes to Condensed Consolidated Financial
Statements 6-8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 8-13
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14-16
SIGNATURES 17
Page 2 of 17
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Part I. -- FINANCIAL INFORMATION
Item 1. Financial Statements
CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS UNAUDITED
(In thousands of dollars, except per share amounts)
Three Months Ended Six Months Ended
June 29, July 30, June 29, June 30,
1997 1996 1997 1996
Net sales $107,482 $83,820 $198,751 $164,006
Costs and expenses:
Cost of goods sold 78,645 61,946 144,623 122,333
Selling, general and
administrative expenses 12,042 11,028 23,866 21,980
Research and development
expenses 3,075 2,628 6,049 4,888
Operating earnings 13,720 8,218 24,213 14,805
Other expenses (income):
Interest expense 410 351 673 787
Other (115) (610) (923) (1,465)
Total other expense (income) 295 (259) (250) (678)
Earnings before income
taxes 13,425 8,477 24,463 15,483
Income taxes 4,967 3,137 9,051 5,729
Net earnings $ 8,458 $ 5,340 $ 15,412 $ 9,754
Net earnings per share $ 1.60 $ 1.03 $ 2.92 $ 1.86
Cash dividends declared
per share $ .18 $ .18 $ .36 $ .33
Average common and common
equivalent shares
outstanding 5,290,345 5,257,468 5,282,201 5,254,122
See notes to condensed consolidated financial statements.
Page 3 of 17
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Part I. -- FINANCIAL INFORMATION
CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
June 29, December 31,
1997 1996*
ASSETS (Unaudited)
Current Assets
Cash $30,656 $ 44,957
Accounts receivable, less allowances
(1997--$692; 1996--$622) 67,555 43,984
Inventories--Note B 33,687 38,761
Other current assets 4,863 3,787
Deferred income taxes 6,712 6,712
Total current assets 143,473 138,201
Property, Plant and Equipment, less accumulated
depreciation (1997--$135,223; 1996--$133,286) 59,028 56,103
Other Assets
Investment in DCA--Note C 68,509
Goodwill, less accumulated amortization
(1997--$8,700; 1996--$8,361) 3,717 4,039
Prepaid pension 53,570 50,152
Other 1,555 877
Total other assets 127,351 55,068
$329,852 $249,372
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term obligations 3,923 2,427
Accounts payable 26,351 17,146
Accrued liabilities 40,287 31,818
Total current liabilities 70,561 51,391
Long-term Obligations--Note D 59,506 11,220
Deferred Income Taxes 16,146 16,146
Postretirement Benefits 4,313 4,383
Shareholders' Equity:
Common stock-authorized 8,000,000 shares
without par value; issued 5,807,031 shares 33,564 33,540
Retained earnings 157,642 144,112
Cumulative translation adjustment 812 1,373
192,018 179,025
Less cost of common stock held in treasury:
1997--576,843 shares; 1996--582,075 shares 12,692 12,793
Total shareholders' equity 179,326 166,232
$329,852 $249,372
*The balance sheet at December 31, 1996, has been derived from the audited
financial statements at that date.
See notes to condensed consolidated financial statements.
Page 4 of 17
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Part I. -- FINANCIAL INFORMATION
CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED
(In thousands of dollars)
Six Months Ended
June 29, June 30,
1997 1996
Cash flows from operating activities:
Net earnings $15,412 $ 9,754
Depreciation and amortization 7,635 6,492
(Increase) decrease in:
Accounts receivable (23,571) (7,734)
Inventories 5,074 1,252
Other current assets (1,076) (1,175)
Prepaid pension asset (3,418) (2,643)
Other 349 (21)
Increase in:
Accounts payable and accrued liabilities 17,674 6,639
Total adjustments 2,667 2,810
Net cash provided by operating activities 18,079 12,564
Cash flows from investing activities:
Proceeds from sale of property, plant and
equipment 134 213
Capital expenditures (10,553) (9,298)
Investment in DCA--Note C (68,509)
Net cash used in investing activities (78,928) (9,085)
Cash flows from financing activities:
Term loan borrowings--Note D 50,000
Credit agreement arrangement fee (937)
Payments of long-term obligations (214) (197)
Decrease in notes payable (6,657)
Dividend payments (1,881) (1,565)
Other (31) 246
Net cash provided by (used in) financing
activities 46,937 (8,173)
Effect of exchange rate changes on cash (389) 170
Net decrease in cash (14,301) (4,524)
Cash at beginning of year 44,957 37,271
Cash at end of period $30,656 $32,747
Supplemental cash flow information
Cash paid during the period for:
Interest $ 558 $ 799
Income Taxes--Net $ 4,201 $ 2,664
See notes to condensed consolidated financial statements.
Page 5 of 17
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Part I. -- FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, in thousands of dollars except per share data)
June 29, 1997
NOTE A--BASIS OF PRESENTATION
The accompanying condensed consolidated interim financial
statements have been prepared by CTS Corporation ("CTS" or
"Company"), without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission (the "SEC"). Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and
regulations. The consolidated interim financial statements should
be read in conjunction with the financial statements, notes thereto
and other information included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996.
The accompanying unaudited consolidated interim financial
statements reflect, in the opinion of management, all adjustments
(consisting of normal recurring items) necessary for a fair
presentation, in all material respects, of the financial position
and results of operations for the periods presented. The
preparation of financial statements in accordance with generally
accepted accounting principles requires management to make
estimates and assumptions. Such estimates and assumptions affect
the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates. The results of operations for the interim periods are
not necessarily indicative of the results for the entire year.
NOTE B--INVENTORIES
The components of inventory consist of the following:
June 29, December 31,
1997 1996
Finished goods $ 6,836 $ 8,504
Work-in-process 14,108 17,138
Raw material 12,743 13,119
$33,687 $38,761
Page 6 of 17
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Part I. -- FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE C-- PROPOSED MERGER
The Company, on May 9, 1997, entered into an Agreement and Plan of
Merger with Dynamics Corporation of America ("DCA") providing for
the acquisition of DCA by the Company pursuant to a merger of DCA
and a subsidiary of the Company (the "Merger") in accordance with
the Merger agreement. In the Merger, each DCA common share not
owned by CTS will, at the election of the shareholders, be
converted into either $58.00 in cash (the "Cash Election") or 0.88
CTS common shares. The Cash Election is limited to 49.9% of DCA's
common shares less the DCA common shares owned by CTS prior to the
Merger. This Merger is subject to the approval of the shareholders
of DCA and of the Company, and other customary conditions.
The Company, on June 13, 1997, pursuant to a tender offer,
purchased 30.3% of the outstanding DCA common shares for $65,439.
Subsequently, the Company purchased additional shares of DCA common
stock for $3,070.
The Company expects to complete the Merger during the third quarter
of 1997. The investment in DCA is being stated at cost until
completion of the Merger. Following the effective time of the
Merger, the total purchase price (including acquisition costs) will
be determined and CTS will be required to allocate the purchase
price to the fair value of DCA's assets, including 2,303,100 CTS
common shares presently owned by DCA, and liabilities. Such
allocation will be based on various factors, including appraisals
of the operating assets and liabilities of DCA, the identification
and valuation of intangible assets (which CTS presently believes
are not material) and the finally determined purchase price for
purposes of accounting for the Merger. Depending upon the
circumstances, CTS may be required to charge the difference between
the purchase price and the value of the CTS common shares
reacquired as a result of the Merger to net earnings currently to
reflect the amount of such difference, net of changes in the other
components of the purchase price allocation described above. Any
such charge will, however, be a non-cash item which CTS does not
believe will have any material adverse effect on its prospective
financial position or results of operations.
On May 9, 1997, 450,000 shares of stock options were granted to
certain key Company officers at $62.50 per share, subject to
shareholder approval and the consummation of the Merger.
Based on recent CTS stock prices, these options will immediately
vest upon shareholder approval and consummation of the Merger
resulting in a one-time, non-cash charge against net earnings.
Assuming a price of $85.00 per share, at the consummation of the
Merger, the charge against net earnings will be $6,075 (net of
income tax benefit of $4,050).
NOTE D-- LONG-TERM OBLIGATIONS
The Company, on June 16, 1997, entered into a Credit Agreement with
a group of banks which provides financing of up to $125,000. This
six-year, unsecured credit facility consists of a $50,000 term loan
commitment and a $75,000 revolving credit facility. On June 16,
1997, the Company borrowed $50,000 under the term loan commitment
to purchase DCA common stock (See Note C--Proposed Merger).
Page 7 of 17
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Part I. -- FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The borrowing rate through March 31, 1998, is LIBOR plus 0.50% with
adjustments thereafter. At June 29, 1997, the rate on the term
loan was 6.03%. The Company paid an arrangement fee of $937 for
this credit facility. There is a commitment fee on the unused
portion of the revolving credit facility of 0.175% per annum. The
term loan matures on a quarterly basis. These maturities, on an
annual basis, are $3,000 in 1998, $5,000 in 1999, $10,000 in 2000,
2001, and 2002, respectively, and $12,000 in 2003.
The Credit Agreement contains customary limitations and restrictive
financial covenants. The covenants include financial maintenance
tests consisting of a leverage ratio, a minimum tangible net worth
test and a fixed charge coverage ratio which is the most
restrictive of these covenants. The term loan has prepayment
provisions if certain events occur.
The Company terminated the previously existing $45,000 unsecured
revolving credit agreement.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Material Changes in Financial Condition: Comparison of June 29,
1997, to December 31, 1996
CTS Corporation ("CTS" or the "Company"), on May 9, 1997, entered
into an Agreement and Plan of Merger with Dynamics Corporation of
America ("DCA") providing for the acquisition of DCA by the Company
pursuant to a merger of DCA and a subsidiary of the Company (the
"Merger") in accordance with the Merger agreement. In the Merger,
each DCA common share not owned by CTS will, at the election of the
shareholders, be converted into either $58.00 in cash (the Cash
Election") or 0.88 CTS common shares. The Cash Election is limited
to 49.9% of DCA's common shares less the DCA common shares owned by
CTS prior to the Merger. This Merger is subject to the approval of
the shareholders of DCA and of the Company, and other customary
conditions.
The Company, on June 13, 1997, pursuant to a tender offer,
purchased 30.3% of the outstanding DCA common shares for $65,439.
Subsequently, the Company purchased additional shares of DCA common
stock for $3,070.
DCA owns 44.0% of the outstanding CTS common stock. DCA operates
in six business units manufacturing electronic components, mobile
vans and transportable shelters for specialized electronic and
medical diagnostic equipment, portable electric housewares and
Page 8 of 17
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Material Changes in Financial Condition: Comparison of June 29,
1997, to December 31, 1996 (Continued)
commercial appliances, air distribution equipment, specialized air-
conditioning equipment and generator sets. Following the merger,
it is anticipated that DCA's frequency control and heat dissipating
businesses will be integrated into complementary CTS operations.
The Company intends to seek to improve the results of operations of
DCA's other business units. It also intends to evaluate and review
DCA's operations and the potential opportunities for synergies with
the Company's operations, and to consider what, if any, changes
would be desirable in light of the results of such evaluations and
reviews. After such review, it is possible that the Company will
seek to dispose of certain businesses or assets of DCA.
Following the effective time of the Merger, the total purchase
price (including acquisition costs) will be determined and CTS will
be required to allocate the purchase price to the fair value of
DCA's assets, including 2,303,100 CTS common shares presently owned
by DCA, and liabilities. Such allocation will be based on various
factors, including appraisals of the operating assets and
liabilities of DCA, the identification and valuation of intangible
assets (which CTS presently believes are not material) and the
finally determined purchase price for purposes of accounting for
the Merger. Depending upon the circumstances, CTS may be required
to charge the difference between the purchase price and the value
of the CTS common shares reacquired as a result of the Merger to
net earnings currently to reflect the amount of such difference,
net of changes in the other components of the purchase price
allocation described above. Any such charge will, however, be a
non-cash item which CTS does not believe will have any material
adverse effect on its prospective financial position or results of
operations.
On May 9, 1997, 450,000 shares of stock options were granted to
certain key Company officers at $62.50 per share, subject to
shareholder approval and the consummation of the Merger.
Based on recent CTS stock prices, these options will immediately
vest upon shareholder approval and consummation of the Merger
resulting in a one-time, non-cash charge against net earnings.
Assuming a price of $85.00 per share, at the consummation of the
Merger, the charge against net earnings will be $6,075 (net of
income tax benefit of $4,050).
To finance this acquisition, the Company entered into a credit
agreement with a group of banks which provides financing of up to
$125,000. The Company, on June 16, 1997, borrowed $50,000 on a
six-year term loan. This credit facility is available for general
business purposes.
Page 9 of 17
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Material Changes in Financial Condition: Comparison of June 29,
1997, to December 31, 1996 (Continued)
The following table highlights significant changes in balance sheet
items and ratios and other information related to liquidity and
capital resources:
(Dollars in thousands)
June 29, December 31, Increase
1997 1996 (Decrease)
Cash $30,656 $ 44,957 (14,301)
Accounts receivable, net 67,555 43,984 23,571
Inventories, net 33,687 38,761 (5,074)
Current assets 143,473 138,201 5,272
Accounts payable 26,351 17,146 9,205
Current liabilities 70,561 51,391 19,170
Working capital 72,912 86,810 (13,898)
Current ratio 2.03 2.69 (.66)
Long-term obligations 63,429 13,647 49,782
Tangible net worth 175,609 162,193 13,416
Ratio of long-term obligations
to tangible net worth .36 .08 .28
Working capital and the current ratio decreased primarily due to a
$14.3 million decrease in cash, as the Company utilized some of its
excess cash combined with its $50,000 term loan to purchase DCA
common stock. Within the working capital accounts, accounts
receivable increased $23.6 million resulting from increased sales.
This was partially offset by a decrease in inventories of $5.1
million and increases in accounts payable of $9.2 million and
accrued liabilities of $8.5 million. These changes are primarily
due to the increase in sales and production levels. Current
maturities of long-term obligations increased $1.5 million,
representing the two initial installment payments on the $50.0
million term loan.
Capital expenditures were $10.6 million during the first six months
of 1997, compared with $9.3 million for the same period a year
earlier. These capital expenditures were primarily for increased
manufacturing capacity, new products and manufacturing improvement
programs.
Page 10 of 17
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Material Changes in Financial Condition: Comparison of June 29,
1997, to December 31, 1996 (Continued)
The Merger, when combined with a stock split in the form of a 1:1
stock dividend expected to be effected in connection therewith, is
expected substantially to increase the liquidity in the market for
CTS shares and to decrease the concentration of ownership of CTS
shares.
The Company believes that cash on hand, cash from operations and
other capital resources available to the Company, including
borrowings under the Credit Agreement, will be sufficient to fund
the Company's capital requirements. The Company may, depending
upon conditions in the capital markets and other factors, consider
other capital transactions further to increase the Company's
financial flexibility, to reduce its overall cost of capital or for
other purposes.
Debt increased due to the $50.0 million term loan borrowing.
Material Changes in Results of Operations: Comparison of Second
Quarter 1997 to Second Quarter 1996
The following table highlights changes in significant components of
the consolidated statements of earnings for the three-month periods
ending June 29, 1997, and June 30, 1996:
(Dollars in thousands)
June 29, June 30, Increase
1997 1996 (Decrease)
Net sales $107,482 $83,820 $23,662
Gross earnings 28,837 21,874 6,963
Gross earnings as a percent
of sales 26.83% 26.10% .73%
Selling, general and
administrative expenses 12,042 11,028 1,014
Selling, general and
administrative expenses as
a percent of sales 11.20% 13.16% (1.96%)
Research and development
expenses 3,075 2,628 447
Operating earnings 13,720 8,218 5,502
Operating earnings as a
percent of sales 12.76% 9.80% 2.96%
Interest expense 410 351 59
Earnings before income taxes 13,425 8,477 4,948
Income taxes 4,967 3,137 1,830
Net earnings 8,458 5,340 3,118
Income tax rate 37.00% 37.00% --
Page 11 of 17
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Material Changes in Results of Operations: Comparison of Second
Quarter 1997 to Second Quarter 1996 (Continued)
Net sales increased by $23.7 million, or 28.2% compared to the
second quarter of 1996. The improvement in sales reflects
increasing demand for electronic components, particularly the
automotive, microelectronics and commercial interconnect products
serving the automotive, computer equipment and communications
equipment markets in North America and Europe.
Gross earnings improved primarily due to the sales and production
volume increases, as well as to continuing efforts to control
manufacturing expenses.
Selling, general and administrative expenses increased $1.0
million, but decreased as a percentage of sales. The increased
expenses are primarily due to increased variable expenses
associated with the higher level of sales.
Research and development expenses increased by $0.4 million,
primarily due to the continuation of new product development
programs, particularly for automotive products.
Material Changes in Results of Operations: Comparison of First
Half of 1997 to First Half of 1996
The following table highlights changes in significant components of
the consolidated statements of earnings for the six-month periods
ending June 29, 1997, and June 30, 1996:
(Dollars in thousands)
June 29, June 30, Increase
1997 1996 (Decrease)
Net sales $198,751 $164,006 $34,745
Gross earnings 54,128 41,673 12,455
Gross earnings as a percent
of sales 27.23% 25.41% 1.82%
Selling, general and
administrative expenses 23,866 21,980 1,886
Selling, general and
administrative expenses as
a percent of sales 12.01% 13.40% (1.39%)
Research and development
expenses 6,049 4,888 1,161
Operating earnings 24,213 14,805 9,408
Operating earnings as a
percent of sales 12.18% 9.03% 3.15%
Interest expense 673 787 (114)
Earnings before income taxes 24,463 15,483 8,980
Income taxes 9,051 5,729 3,322
Net earnings 15,412 9,754 5,658
Income tax rate 37.00% 37.00% --
Page 12 of 17
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Material Changes in Results of Operations: Comparison of First
Half of 1997 to First Half of 1996 (Continued)
For the first half of 1997, net sales increased $34.7 million, a
21.2% increase compared to the first half of 1996. Consistent with
the second quarter of 1997, improvement was realized as a result of
the continuing higher demand for automotive, microelectronic and
commercial interconnect products serving the automotive, computer
equipment and communications equipment markets.
Gross earnings have improved over the first half of 1996, primarily
as a result of the higher sales volume. Sales and production
volume increases have favorably affected operating efficiencies.
Selling, general and administrative expenses have increased $1.9
million, but decreased as a percent of sales. The increased
expenses are primarily due to higher variable expenses associated
with the higher level of sales.
Research and development expenses have increased by $1.2 million,
or 23.8%, during the first half of 1997, primarily due to the new
product development programs, particularly for automotive products.
Page 13 of 17
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Part II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of CTS Corporation was convened
on April 25, 1997, and concluded on June 24, 1997.
Each of the five director-nominees identified below was re-elected
to a one-year term as director of the Corporation with the
following votes reported of the 3,794,041 eligible to vote and
represented at the meeting:
Votes
Votes Cast
Director-Nominee Cast For Against Abstentions
Lawrence J. Ciancia 3,769,678 5,178 19,185
Patrick J. Dorme 3,766,822 8,034 19,185
Gerald H. Frieling, Jr. 3,767,938 6,918 19,185
Andrew Lozyniak 3,766,696 8,160 19,185
Joseph P. Walker 3,769,529 5,327 19,185
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
(3)(a) Articles of Incorporation, as amended April 16, 1973,
(incorporated by reference to Exhibit (3)(a) to the Company's
Annual Report on Form 10-K for 1987.)
(3)(b) Bylaws, effective December 31, 1992, (incorporated by
reference to Exhibit (3)(b) to the Company's
Annual Report on Form 10-K/A for 1992, filed April 8,
1997).
(10)(a) Employment Agreement, dated as of May 9, 1997, between
the Company and Joseph P. Walker (incorporated by
reference to Exhibit (c)(2) to the Schedule 14D-1
filed by the Company on May 16, 1997).
(10)(b) Prototype indemnification agreement, with Lawrence J.
Ciancia, Patrick J. Dorme, Gerald H. Frieling, Jr.,
Andrew Lozyniak, Joseph P. Walker, Philip T. Christ,
Jeannine M. Davis, George T. Newhart and Gary N.
Hoipkemier (incorporated by reference to Exhibit (10)(b) to
the Company's Annual Report on Form 10-K for 1991).
Page 14 of 17
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Part II -- OTHER INFORMATION (Continued)
Item 6. Exhibits and Reports on Form 8-K (Continued)
a. Exhibits (Continued)
(10)(c) CTS Corporation 1982 Stock Option Plan, as amended
February 24, 1989, (incorporated by reference to Exhibit
(10)(d) to the Company's Annual Report on Form 10-K
for 1989).
(10)(d) CTS Corporation 1986 Stock Option Plan, approved by
the shareholders on May 30, 1986, as amended and
restated on May 9, 1997, filed herewith.
(10)(e) CTS Corporation 1988 Restricted Stock and Cash Bonus
Plan approved by the shareholders on April 28, 1989,
as amended and restated on May 9, 1997, filed
herewith.
(10)(f) CTS Corporation 1996 Stock Option Plan, approved by
the shareholders on April 26, 1996, as amended and
restated on May 9, 1997, filed herewith.
(10)(g) Prototype indemnification agreement, with Stanley J.
Aris, James L. Cummins, James N. Hufford and Donald R.
Schroeder (incorporated by reference to Exhibit (10)(g)
to the Company's Annual Report on Form 10-K for 1995).
(10)(h) Amended and Restated Agreement and Plan of Merger,
dated as of May 9, 1997, and amended and restated on
July 17, 1997, among the Company, CTS First
Acquisition Corp., a wholly owned subsidiary of the
Company ("Sub"), and DCA (incorporated by reference
to Exhibit (c)(6) to Amendment No. 3 to the Schedule 13D
filed by the Company in respect of DCA on July 18,
1997, (the "Schedule 13-D").
(10)(i) Shareholders Agreement, dated as of July 17, 1997,
among the Company, Sub, WHX Corporation ("WHX") and SB
Acquisition Corp., a subsidiary of WHX (incorporated
by reference to Exhibit (c)(7) to the Schedule 13-D).
(10)(j) Employment Agreement, dated as of May 9, 1997, between
the Company and Andrew Lozyniak (incorporated by
reference to Exhibit 10.5 of DCA's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997, (the
"DCA 10-Q").
(10)(k) Employment Agreement, dated as of May 9, 1997, between
the Company and Patrick J. Dorme (incorporated by
reference to the DCA 10-Q).
Page 15 of 17
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Part II -- OTHER INFORMATION (Continued)
Item 6. Exhibits and Reports on Form 8-K (Continued)
a. Exhibits (Continued)
(10)(l) Employment Agreement, dated as of May 9, 1996, between
the Company and Henry V. Kensing (incorporated by
reference to the DCA 10-Q).
(10)(m) The Form of Severance Agreement, dated April 11, 1997,
between the Company and certain officers of the
Company (incorporated by reference to Exhibit (a)(99)
of the Company's Quarterly Report on Form 10-Q for the
quarter ended March 30, 1997) and amendment thereto,
dated May 9, 1997, filed herewith.
(21) Subsidiaries as of June 29, 1997, filed herewith.
(27) Financial Data Schedule (filed only electronically
with the SEC).
b. Reports on Forms 8-K
Press release of May 12, 1997, announcing CTS and Dynamics
Corporation of America agreement to merge; filed May 12, 1997.
Public notice that Annual Meeting of Shareholders of April 25,
1997, was adjourned until June 16, 1997; filed April 25, 1997.
Page 16 of 17
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CTS CORPORATION CTS CORPORATION
/s/ Jeannine M. Davis /s/ Stanley J. Aris
Jeannine M. Davis Stanley J. Aris
Vice President, Secretary Vice President Finance
and General Counsel and Chief Financial Officer
Dated: August 12, 1997
Page 17 of 17
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EXHIBIT (10)(d)
CTS CORPORATION 1986 STOCK OPTION PLAN
FIRST: Shares Reserved for Options
Three hundred thousand (300,000) shares of CTS Corporation
Common Stock, without par value, which may be either authorized and
unissued shares or shares held as treasury stock, are reserved for
issuance upon exercise of options granted under the Plan. The
number and kind of shares reserved for issuance may be adjusted as
provided by ITEM FOURTEENTH. Shares subject to an unexercised
installment of any canceled, surrendered or expired installment or
option may be again subject to option under the Plan.
SECOND: Administration
The Plan shall be administered by the CTS Corporation
Compensation Committee appointed by the Board of Directors,
hereinafter the "Committee." Within the provisions of the Plan,
the Committee shall have full power and authority:
(a) to determine and designate the recipients of options, the
dates options are granted, the number of shares subject
to option, option prices, option periods and option
terms, except as limited by ITEM FOURTH, and
(b) to prescribe, amend and rescind rules and procedures for
convenient administration of the Plan.
Action by the Committee shall be authorized or ratified by a
majority of the Committee members and may be without notice or
meeting, by a writing signed by a majority of the Committee
members.
In any dispute or disagreement as to the interpretation of the
Plan, or any rule or procedure of the Committee, or any question,
right or obligation under the Plan, the decision of the Board of
Directors shall be final and binding upon all persons.
THIRD: Eligibility
Key employees, including officers, of CTS shall be eligible to
receive options and shall receive options when, and if, designated
by the Committee. Directors who are not also employees or officers
of CTS shall not be eligible to receive options.
FOURTH: Option Grant
The Committee shall determine and designate (i) the recipients
of options, (ii) the dates options are granted, (iii) the number of
shares subject to option, (iv) the option prices, and (v) the
option periods.
FIFTH: Option Price
The option price shall be not less than the fair market value
of the shares on the date the option is granted. Fair market value
of the shares shall be the reported closing price of the shares on
the New York Stock Exchange on the date the option is granted, or,
if not reported on such date, on the next preceding date for which
such a closing price is reported.
SIXTH: Option Ceiling
The aggregate fair market value (determined as of the time the
option is granted) of the shares of Common Stock for which any
participant may be granted incentive stock options which become
first exercisable in any calendar year, shall not exceed $100,000.
SEVENTH: Option Grant Period
The period during which an option may be granted, shall, in no
case, extend more than ten years after the Plan is adopted, or the
date such Plan is approved by the stockholders, whichever is
earlier.
EIGHTH: Option Exercise Period
The period during which an option may be exercised shall, in
no case, extend more than ten years after the date the option is
granted.
NINTH: Option Terms
The options shall be irrevocable and shall, on the date of
grant, conform in all respects with the Plan and may be non-
qualified or may conform with Section 422A of the Internal Revenue
Code of 1986, as amended, hereinafter the "Code," or with any law
supplemental thereto or substituted therefor. Inconsistencies
between an option and the Plan shall be resolved according to the
terms of the Plan.
TENTH: Exercise of Option
The right to exercise an option shall accrue in such annual
and cumulative installments and at such times as designated by the
Committee, commencing at least one year from the date the option is
granted. Unless otherwise designated by the Committee (i) the
number of installments shall be equal to the total number of years
of the option period minus one; (ii) each installment shall be
equal to the total number of shares under option divided by the
number of installments; and (iii) each installment cumulatively
shall permit the exercise of any previously unexercised
installment.
ELEVENTH: Payment
Payment of the option price shall be made upon exercise of any
installment of an option, and the person exercising such option
shall supply the Committee such pertinent information as the
Committee may deem necessary. Payment may be made in cash or in
previously acquired CTS Common Stock. Except as provided in ITEM
THIRTEENTH, no option may be exercised unless, from the date the
option is granted to the date of exercise, the option holder is an
employee of CTS. An option holder shall have no rights as a
stockholder with respect to shares subject to option until such
shares are issued.
TWELFTH: Nontransferability of Option
Options shall not be assignable or transferable by the option
holder other than by will or by the laws of descent and
distribution.
THIRTEENTH: Effect of Termination of Employment or Change of
Control
Upon the death of an option holder, all unexpired installments
of his options shall be accelerated and shall accrue as of the
date of death, and his estate or the person or persons to whom his
rights under the option shall pass by will or by the laws of
descent and distribution may exercise the options, but only within
one year after his death or, if sooner, until the option period
expires.
Upon total and permanent disability of an option holder,
within the meaning of Section 105(d)(4) of the Code, all unexpired
installments of his options shall be accelerated and shall accrue
as of the date of such disability, and he may exercise the options
but only within one year of the date of such disability or, if
sooner, until the option period expires.
Upon retirement of an option holder, all unexpired
installments of his options shall be accelerated and shall accrue
as of the date of retirement, and he may exercise the options, but
only within three months after retirement or, if sooner, until the
option period expires.
Upon termination of employment of the option holder with CTS
for any reason, other than death, disability, or retirement, he may
exercise his options only to the extent he is entitled by the
option terms on the date of termination, but such exercise may be
only within three months after termination or, if sooner, until the
option period expires.
Upon a Change of Control of CTS Corporation, as defined in
Appendix A to this Plan, all unexpired installments of the option
holders' options shall immediately become exercisable in full, and
such options may be exercised within the three months immediately
following such date or, if sooner, until the option period expires.
FOURTEENTH: Adjustment for Capital Change
The number, kind and price of shares subject to option and the
number and kind of securities or property reserved for issuance,
and to be issued, upon exercise of options shall be proportionately
and appropriately adjusted by the Committee to reflect the effects
of stock splits, stock dividends and any other change in the
capital structure of CTS Corporation or to reflect any merger,
consolidation or exchange or sale of assets or shares of CTS
Corporation.
FIFTEENTH: Amendment and Termination
The Board of Directors may modify or amend the Plan without
stockholder approval at any time for the purpose of conforming to
changes in pertinent law or government regulations or for any
purpose permitted by law. In no event, however, shall any such
action of the Board of Directors (i) increase, except as provided
by ITEM FOURTEENTH, the number of shares of Common Stock which may
be issued hereunder, (ii) decrease the option price, provided by
ITEM FIFTH, (iii) change the class of eligible employees, provided
by ITEM THIRD, (iv) change the option ceiling, provided by ITEM
SIXTH, or (v) impair any option granted prior to such action.
CTS CORPORATION
1986 STOCK OPTION PLAN
APPENDIX A
"Change in Control" means the occurrence of any of the
following events:
1. the attainment by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) (a "Person") of aggregate
beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 25% or
more of the combined voting power of the then
outstanding securities (the "Voting Stock") of CTS
Corporation (the "Company") entitled to vote
generally in the election of directors of the
Company; provided, however, that for purposes of
this Section 1, the following will not be deemed to
result in a Change in Control: (A) any acquisition
directly from the Company that is approved by the
Incumbent Board (as defined below), (B) any
acquisition by the Company and any change in the
percentage ownership of Voting Stock of the Company
that results from such acquisition, (C) any
acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the
Company or any Subsidiary, (D) any acquisition by
any Person pursuant to a Business Combination (as
defined below) that complies with clauses (I), (II)
and (III) of Section 3, (E) the beneficial
ownership by Dynamics Corporation of America
("DCA") of Voting Stock of the Company equal to
less than 25% of the combined voting power of the
then outstanding Voting Stock of the Company
("Exempt DCA Percentage"), or (F) the beneficial
ownership by The Gabelli Group, Inc., GAMCO
Investors, Inc. and Gabelli Funds, Inc.
(collectively, "Gabelli") of Voting Stock of the
Company not equal to or in excess of 25% of the
combined voting power of the then outstanding
Voting Stock of the Company ("Exempt Gabelli
Percentage"); or
2. individuals who, as of the Amendment Date (see
below) constitute the Board of Directors of the
Company (the "Incumbent Board") cease for any
reason to constitute at least two-thirds of the
Board of Directors of the Company; provided,
however, that any individual becoming a Director
subsequent to the Amendment Date whose election, or
nomination for election by the Company's
shareholders, was approved by a vote of at least
two-thirds of the Directors then comprising the
Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in
which such person is named as a nominee for
director, without objection to such nomination)
will be deemed to have been a member of the
Incumbent Board, but excluding, for this purpose,
any such individual becoming a Director as a result
of an actual or threatened election contest (within
the meaning of Rule 14a-11 of the Exchange Act)
with respect to the election or removal of
Directors or other actual or threatened
solicitation of proxies or consents by or on behalf
of a Person other than the Board of Directors of
the Company (collectively, an "Election Contest");
or
3. consummation of (A) a reorganization, merger or
consolidation, (B) a sale or other disposition of
all or substantially all of the assets of the
Company, or (C) a sale or other disposition of all
or substantially all of the assets ("Automotive
Group Assets") of the Company used in its
Automotive Strategic Business Unit (such
reorganization, merger, consolidation or sale each,
a "Business Combination"), unless, in each case,
immediately following such Business Combination,
(I) all or substantially all of the individuals and
entities who were the beneficial owners of Voting
Stock of the Company immediately prior to such
Business Combination beneficially own, directly or
indirectly, more than two-thirds of the then
outstanding shares of common stock and the combined
voting power of the then outstanding Voting Stock
of the Company entitled to vote generally in the
election of Directors of the entity resulting from
such Business Combination (including, without
limitation, an entity which as a result of such
transaction owns the Company, all or substantially
all of the Company's assets either directly or
through one or more subsidiaries or the Automotive
Group Assets) in substantially the same proportions
relative to each other as their ownership,
immediately prior to such Business Combination, of
the Voting Stock of the Company, (II) no
individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act)
(other than the Company, such entity resulting from
such Business Combination, or any employee benefit
plan (or related trust) sponsored or maintained by
the Company, any Subsidiary or such entity
resulting from such Business Combination or DCA or
Gabelli to the extent of the Exempt DCA Percentage
or Exempt Gabelli Percentage, respectively)
beneficially owns, directly or indirectly, 15% or
more of the then outstanding shares of Voting Stock
of the entity resulting from such Business
Combination, and (III) at least two-thirds of the
members of the Board of Directors of the entity
resulting from such Business Combination were
members of the Incumbent Board at the time of the
execution of the initial agreement or of the action
of the Board of Directors of the Company providing
for such Business Combination; or
4. approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company,
except pursuant to a Business Combination that
complies with clauses (I), (II) and (III) of
Section 3; or
5. if and so long as DCA beneficially owns 15% or more
of the combined voting power of the outstanding
Voting Stock of the Company, (A) the attainment by
any Person of beneficial ownership of 20% or more
of the combined voting power of the then
outstanding Voting Stock of DCA ("DCA Voting
Stock") (other than as the result of an acquisition
of DCA Voting Stock by (x) DCA (and any change in
the percentage ownership of DCA Voting Stock that
results from such acquisition), (y) any employee
benefit plan (or related trust) sponsored or
maintained by DCA or any subsidiary of DCA, or (z)
the Company or any Subsidiary that is approved by
the Incumbent Board), or (B) individuals who, as of
the Amendment Date constitute the Board of
Directors of DCA (the "Incumbent DCA Board") cease
for any reason to constitute at least a majority of
the Board of Directors of DCA; provided, however,
that any individual becoming a Director subsequent
to the Amendment Date whose election, or nomination
for election by DCA's shareholders, was approved by
a vote of at least two-thirds of the Directors of
DCA then comprising the Incumbent DCA Board (either
by a specific vote or by approval of the proxy
statement of DCA in which such person is named as a
nominee for director, without objection to such
nomination) will be deemed to have been a member of
the Incumbent DCA Board of Directors, but
excluding, for this purpose, any such individual
whose initial assumption of office occurs as a
result of an actual or threatened Election Contest;
or
6. the occurrence of a "Board Shift". For this
purpose, (I) a "Board Shift" will be deemed to have
occurred if 50% or more of the members of the Board
of the Company, or of any entity resulting from a
Business Combination, are persons who (A) are
employees of any beneficial owner of 20% or more of
the Voting Stock (a "20+% Holder") or (B) were
nominated for election, or voted for, by any such
20+% Holder unless such nomination or vote was
approved by a majority of the Unrelated Directors
and (ii) "Unrelated Directors" means Gerald H.
Frieling, Jr., Lawrence J. Ciancia and Joseph P.
Walker or any successors thereto nominated with the
approval of such of the foregoing (or their
successors nominated as aforesaid) as may remain
members of the Board of the Company, or of any
entity resulting from a Business Combination, at
the time of such nomination.
For purposes of Annex A, the "Amendment Date" is the effective date
of the amendment that includes this Annex A as a part of the Plan.
<PAGE>
EXHIBIT (10)(e)
CTS CORPORATION
1988 RESTRICTED STOCK AND CASH BONUS PLAN
1. Purpose
The purpose of the 1988 Restricted Stock and Cash Bonus Plan (the "Plan")
is to induce outstanding employees to remain in the employ of CTS Corporation
(the "Company") and its present and future subsidiary corporations (each of
which is hereinafter referred to as a "Subsidiary") and to attract new key
employees,
and to encourage such employees to secure or increase their stock ownership in
the Company. The Board of Directors of the Company (the "Board") believes that
the award or sale of shares of the common stock (the "Common Stock"), without
par value, of the Company under the Plan will promote continuity of management
and increased incentive and personal interest in the welfare of the Company by
those who are or may become primarily responsible for shaping and carrying out
the long range plans of the Company and securing its continued growth and
financial success.
2. Effective Date
The Plan became effective on December 16, 1988, by resolution of the Board,
subject to ratification of the Plan by the vote of the holders of a majority of
the shares of the Common Stock present in person or by proxy at the 1989 Annual
Meeting of the Shareholders of the Company.
3. Stock Subject to the Plan
400,000 shares of the Common Stock of the Company ("Shares") are hereby
reserved for award or sale under the Plan, which Shares may be either treasury
shares or authorized but unissued shares. If Shares awarded or sold under the
Plan shall be repurchased by the Company in
accordance with the provisions of the Plan, such Shares shall again be available
for the purposes of the Plan.
4. Administration
The Plan shall be administered by the Compensation Committee of the Board
of Directors (the "Committee"), as described in Section 5 hereof. Subject to
the express provisions of the Plan, the Committee shall have complete authority,
in its discretion, to determine the individuals (the "Participants") to whom,
and the price, if any, at which, and the terms on which, Shares shall be awarded
or sold under the Plan and the number of shares to be awarded or sold to each
Participant. Subject to the express provisions of the Plan, the Committee shall
also have complete authority to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to it, and to make all the determinations
necessary or advisable for the administration of the Plan. The Committee's
determination on matters referred to in this Section 4 shall be conclusive.
5. Committee
The Committee shall consist of all of the members of the Compensation
Committee of the Board of Directors, all of whom shall be nonemployee directors
of the Company. As of any given date, no person shall be eligible to serve on
the Committee who, on such date is, or who, at any time within the period of one
year ending on such date has been, eligible for selection as a person to whom
stock may be awarded or sold under the provisions of the Plan or any similar
plan or as a person to whom options or stock appreciation rights may be granted
under any option or stock appreciation plan maintained by the Company. The
President of the Company (who shall be eligible to be awarded or to purchase
Shares under the Plan) shall also be a member of the Committee, ex officio. The
Committee shall be appointed annually by the Board, which may at any time and
from time to time remove any members of the Committee, with or without cause,
appoint additional members to the Committee and fill vacancies, however caused,
in the Committee. 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
present in person at a meeting fully called and held. Any action which could
have been taken at a meeting may also be taken without the necessity of a
meeting by a written instrument signed by all of the members of the Committee
prior to or after such action shall be taken. The Company shall indemnify each
member of the Committee to the full extent provided under the Indiana Business
Corporation Law.
6. Eligibility
Shares may be awarded or sold under the Plan only to key employees of the
Company or a Subsidiary who are full-time employees. A director of the Company
or a Subsidiary who is not a full-time employee of the Company or a Subsidiary
will not be eligible to be awarded or to purchase Shares under the Plan. In
designating Participants and in determining the number of Shares to be awarded
or sold to any Participant, and, if sold, the price to be paid for any Shares,
the Committee shall take into account the Participant's level of responsibility,
dependability, performance, potential, compensation and such other considera-
tions as the Committee deems appropriate.
7. Awards or Purchase
After the Committee determines that it will award or offer a Participant
the right to purchase Shares under the Plan, it shall so inform the Participant
in writing, stating the number of Shares and the terms on which the Participant
shall be entitled to receive said award or to purchase said Shares, and, if
sold, the price to be paid for any Shares, and that the Participant has fifteen
(15) days from the date of the writing to accept the terms set forth therein in
the manner set forth. (The date of such acceptance shall constitute the
"Closing Date".) The Committee may, in the exercise of its discretion, extend
the period for acceptance. The communication may incorporate by reference the
terms, conditions, restrictions and other provisions set forth in the Plan, and
the Committee shall have the power to add thereto any additional terms and
conditions not inconsistent with the Plan which the Committee may approve. The
Committee shall make no award or sale of Shares or offer of same to a
Participant unless immediately prior to doing so (i) it shall, after reasonable
inquiry, have reasonable grounds to believe the Participant has sufficient
knowledge and experience in financial and business matters so that he or she is
capable of evaluating the merits and risks of investment in the Shares and that
the Participant is able to bear the economic risk of such investment, (ii) the
Participant shall have been furnished the information regarding the Company
required by Rule 506 issued pursuant to the Securities Act of 1933 ("Rule 506")
and (iii) it shall have taken all reasonable steps to assure that all other
requirements of Rule 506 have been and will in the future be satisfied with
respect to such award, sale or offer. Subject to the express provisions of the
Plan, sales, awards, or offers made to different Participants, or to the same
Participant at different times, may be subject to terms, conditions and
restrictions which differ from each other.
8. Restrictions and Cash Bonus
The Award or sale of Shares under the Plan shall include the following
terms, conditions and restrictions:
(a) During the period of five (5) years after the Closing Date,
the Participant shall not sell, exchange, transfer, pledge, hypothecate or
otherwise dispose of the Shares awarded to or purchased by the Participant
with respect to which these restrictions shall not have lapsed pursuant to
paragraph (b) of this Section 8, unless he shall first, by notice in
writing, have offered to the Company for repurchase, at no cost to the
Company if the Shares were awarded or at their original purchase price if
purchased, such Shares.
(b) The restrictions imposed by paragraph (a) of this Section 8
shall lapse as to the number of Shares equal to the following percentages
of the Shares awarded to or purchased by the Participant:
(1) Twenty percent (20%) of such Shares, on or after one (1)
year but prior to the end of two (2) years after the Closing Date;
(2) Forty percent (40%) of such Shares, on or after two (2)
years but prior to the end of three (3) years after the Closing
Date;
(3) Sixty percent (60%) of such Shares, on or after three
(3) years but prior to the end of four (4) years after the Closing
Date;
(4) Eighty percent (80%) of such Shares, on or after four
(4) years but prior to the end of five (5) years after the Closing
Date; and
(5) All such Shares, on or after five (5) years after the
Closing Date.
(c) As soon as practicable after the restrictions under paragraph
(a) of this Section 8 as to any Shares shall have lapsed, the Company
shall pay a cash bonus to the Participant equal to the fair market value
of such Shares as of the date of lapse if such Shares were awarded or
equal to the excess of the fair market value thereof as of the date of
lapse over the original purchase price of such Shares if such Shares were
purchased. Notwithstanding the foregoing, the aggregate of the cash
bonuses paid in connection with Shares as to which such restriction shall
have lapsed shall not be greater than a sum equal to twice the fair market
value of the Shares awarded to, or purchased by, the Participant,
determined as of the Closing Date.
(d) If the employment of the Participant should be terminated,
whether voluntarily or involuntarily, for any reason whatever, including
the Participant's death or disability, at any time prior to the end of
five (5) years from the Closing Date, such termination shall be deemed an
offer to the Company as described in paragraph (a) of this Section 8 at
the price and in respect of the number of Shares which would then be
required to be offered thereunder if the Participant wished to sell all of
the Shares then owned by him; provided, however, that, if a Participant
shall die or become totally disabled during a period within which an offer
for repurchase would be required as to some or all of the Shares, (i) the
Participant, or his estate, shall not be required to offer to the Company
for repurchase that number of shares otherwise required to be offered
equal to the product of twenty percent (20%) of the total number of Shares
awarded or sold and a fraction, the numerator of which shall be the number
of full months of active service by the Participant since the last
anniversary of the Closing Date and prior to his death or disability and
the denominator of which shall be twelve (12), (ii) the restriction
imposed by said paragraph (a) shall lapse as to the Shares which the Part-
icipant, or his estate, is not required to offer for repurchase pursuant
to the foregoing provision and (iii) a cash bonus computed in accordance
with paragraph (c) of this Section 8 shall be paid in respect of such
Shares to the Participant or his estate.
(e) Notwithstanding any other provisions of the Plan, on the death
of a Participant such Shares may be transferred to his legal
representatives or his estate or to the person or persons entitled thereto
by his will or by the laws of descent and distribution; provided, however,
that any Shares so transferred as to which the restrictions imposed by the
Company pursuant to paragraphs (a) and (d) of this Section 8 shall not
have lapsed shall continue to be subject to the restrictions in respect
thereof imposed by said paragraphs (a) and (d).
(f) Notwithstanding any other provisions of this Section 8 or of
the Plan, all restrictions imposed by paragraphs (a) and (d) of this
Section 8 shall lapse in the event of a "Change in Control", and the
Company shall pay a cash bonus in accordance with paragraph (c) of this
Section 8 in respect of all Shares as to which the restrictions shall
lapse pursuant to this subparagraph. (A Change of Control shall be deemed
to occur upon (i) the election of one or more individuals to the Board
which election results in one-third of the directors of the Company
consisting of individuals who have not been directors of the Company for
at least two years, unless such individuals have been elected as
directors, or nominated for election as directors, by three-fourths of the
directors of the Company who have been directors of the Company for at
least two years and who are not Participants, (ii) the sale by the Company
of all or substantially all of its assets to any entity, the consolidation
of the Company with any entity, the merger of the Company with any entity
as a result of which merger the Company is not the surviving entity as a
publicly held corporation, or the sale or transfer of shares of the
Company by the Company and/or any one or more of its shareholders in one
or more transactions, related or unrelated, to one or more entities under
circumstances whereby any entity and its affiliates shall own, after such
sales and transfers, at least one-fourth, but less than one-half, of the
shares of the Company having voting power for the election of directors,
unless, in any such case, such sale, consolidation, merger or transfer has
been approved in advance by three-fourths of the directors of the Company
who have been directors of the Company for at least two years and who are
not Participants, or (iii) the sale or transfer of shares of the Company
by the Company and/or any one or more of its shareholders, in one or more
transactions, related or unrelated, to one or more entities under
circumstances whereby the entity and its affiliates shall own, after such
sales and transfers,
at least one-half of the shares of the Company having voting power for the
election of directors. Nothing contained in this definition shall limit
or restrict the right of any director who is a Participant from
participating in any discussions or voting on any matter referred to in
this definition at any meeting of the Board.)
9. Investment Representation
Each Participant shall execute and deliver to the Company, prior to the
delivery of any shares under the Plan, a written representation that he is
acquiring such Shares for his own account as an investment and not with a view
to, or in connection with, the distribution of any thereof.
10. Delivery of the Shares
Shares shall be registered in the name of the Participant on the stock and
transfer records of the Company and stock certificates delivered as soon as
practicable after an offer has been accepted; provided, however, notwithstanding
any provision of the Plan, the Company may delay registration on its stock and
transfer records and delivery of stock certificates to a Participant until
counsel for the Company shall have given an opinion, which opinion shall not be
unreasonably conditioned or withheld, that the delivery of such Shares to the
Participant is exempt from registration under the Securities Act of 1933 as in
force at the time for delivery thereof (it being understood, however, that the
certificates representing such Shares shall bear such legend limiting the sale
thereof under the Securities Act of 1933 as counsel for the Company shall
determine to be appropriate).
11. Legend and Deposit of Shares in Escrow
In light of the restrictions imposed by the Plan, (i) certificates of stock
representing Shares shall bear a legend to the effect that the Shares
represented thereby may not be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with the terms of the
Plan and the transfer agent for the Common Stock of the Company shall be so
instructed and (ii) the Participant shall deposit such certificates, together
with a stock power or other instrument of transfer, appropriately endorsed in
blank with signature guaranteed, with an escrow agent designed by the Committee
under a deposit agreement requiring the Shares to be held in escrow until an
offer is required to be made or until the restrictions as to such Shares shall
have lapsed, and containing such other terms and conditions as the Committee
shall approve, all expenses of any such escrow to be borne by the Company.
During the period while the Shares are held in escrow, the Participant as the
registered holder of such Shares shall be entitled to receive all dividends
declared thereon and to vote the same upon all matters.
12. Expenses of the Plan
All costs and expenses of the adoption and administration of the Plan shall
be borne by the Company, and none of such expenses shall be charged to any
Participant.
13. No Contractual Right to Participate and No Right to Continued
Employment
Nothing in the Plan shall be deemed to give any executive, director,
officer or employee, or his or her legal representatives or assigns, or any
other person claiming under or through him, any contractual or other right to
participate in the benefits of the Plan. Nothing in the Plan and no award or
sale thereunder shall be construed to constitute or be evidence of any agreement
or understanding, express or implied, on the part of the Company to employ or
retain in its employ any Participant to whom Shares are awarded or sold for any
specific period of time.
14. Dilution and Other Adjustments
In the event of any change in the outstanding shares of Common Stock of the
Company by reason of any stock dividend or split, recapitalization, merger,
consolidation, combination or exchange of shares for other securities, or other
similar corporate change, the Committee shall make appropriate adjustments in
the total number of shares which may be offered for award or purchase under the
Plan and in the price, if any, and any and all such adjustments shall be
conclusive and binding upon all parties concerned.
15. Transferability
Except as otherwise specifically provided in the Plan, no right or interest
under the Plan of any Participant who has accepted an award or purchased Shares
shall be assignable or transferable, in whole or in part, either directly or by
operation of law or otherwise, including, but not by way of limitation,
execution, levy, garnishment, attachment, pledge, bankruptcy or in any other
manner and no such right or interest of any Participant shall be subject to any
obligation or liability of such Participant.
16. Withholding of Income Taxes
The Company shall have the right to deduct from any compensation due a
Participant from the Company any federal, state or local taxes
required by law to be withheld with respect to any event under the Plan which
results in taxable income to the Participant.
17. Information About the Company
The Company has been subject to the reporting requirements of Section 13 of
the Securities Exchange Act of 1934 for more than a year prior to the adoption
of the Plan, has filed all reports and statements required to be filed pursuant
to that Section during that period of time and intends to continue to file all
reports and statements so required. The Company releases for publication on a
regular basis, quarterly and annually, summary statements of sales and earnings.
The Company will furnish to all Participants to whom Shares are delivered under
the Plan copies of all material furnished to its shareholders whether required
by law or furnished voluntarily, and shall make available to any such
Participant upon his written request free of charge a copy of the Company's
annual report on Form 10-K for any year during which any Shares purchased by him
continue to be registered in his name.
18. Amendment and Termination of the Plan
Unless sooner terminated as herein provided, the Plan shall terminate upon
the sale and/or award of all the Shares available for sale under the Plan
(including the Shares which may be repurchased in the future by the Company
pursuant to the provisions of Section 8 hereof). The Board, as it may deem
advisable, may at any time terminate, extend, or amend the Plan, provided,
however, that termination or amendment of the Plan shall not, without the
consent of any person affected thereby, modify or in any way affect any right or
obligation created prior to such termination or amendment, and provided,
further, however, that any amendment of the Plan which increases the number of
Shares reserved for the Plan must be approved by the affirmative vote of a
majority of the shares of Common Stock of the Company present in person or by
proxy at any special or Annual Meeting of Shareholders duly called before it may
take effect.
CTS CORPORATION
1988 RESTRICTED STOCK AND CASH BONUS PLAN
APPENDIX A
"Change in Control" means the occurrence of any of the following events:
1. the attainment by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
(a "Person") of aggregate beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
25% or more of the combined voting power of the then
outstanding securities (the "Voting Stock") of CTS Corporation
(the "Company") entitled to vote generally in the election of
directors of the Company; provided, however, that for purposes
of this Section 1, the following will not be deemed to result
in a Change in Control: (A) any acquisition directly from the
Company that is approved by the Incumbent Board (as defined
below), (B) any acquisition by the Company and any change in
the percentage ownership of Voting Stock of the Company that
results from such acquisition, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary, (D) any
acquisition by any Person pursuant to a Business Combination
(as defined below) that complies with clauses (I), (II) and
(III) of Section 3, (E) the beneficial ownership by Dynamics
Corporation of America ("DCA") of Voting Stock of the Company
equal to less than 25% of the combined voting power of the
then outstanding Voting Stock of the Company ("Exempt DCA
Percentage"), or (F) the beneficial ownership by The Gabelli
Group, Inc., GAMCO Investors, Inc. and Gabelli Funds, Inc.
(collectively, "Gabelli") of Voting Stock of the Company not
equal to or in excess of 25% of the combined voting power of
the then outstanding Voting Stock of the Company ("Exempt
Gabelli Percentage"); or
2. individuals who, as of the Amendment Date (see below)
constitute the Board of Directors of the Company (the
"Incumbent Board") cease for any reason to constitute at least
two-thirds of the Board of Directors of the Company; provided,
however, that any individual becoming a Director subsequent to
the Amendment Date whose election, or nomination for election
by the Company's shareholders, was approved by a vote of at
least two-thirds of the Directors then comprising the
Incumbent Board (either by a specific vote or by approval of
the proxy statement of the Company in which such person is
named as a nominee for director, without objection to such
nomination) will be deemed to have been a member of the
Incumbent Board, but excluding, for this purpose, any such
individual becoming a Director as a result of an actual or
threatened election contest (within the meaning of Rule 14a-11
of the Exchange Act) with respect to the election or removal
of Directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board of Directors of the Company (collectively, an "Election
Contest"); or
3. consummation of (A) a reorganization, merger or consolidation,
(B) a sale or other disposition of all or substantially all of
the assets of the Company, or (C) a sale or other disposition
of all or substantially all of the assets ("Automotive Group
Assets") of the Company used in its Automotive Strategic
Business Unit (such reorganization, merger, consolidation or
sale each, a "Business Combination"), unless, in each case,
immediately following such Business Combination, (I) all or
substantially all of the individuals and entities who were the
beneficial owners of Voting Stock of the Company immediately
prior to such Business Combination beneficially own, directly
or indirectly, more than two-thirds of the then outstanding
shares of common stock and the combined voting power of the
then outstanding Voting Stock of the Company entitled to vote
generally in the election of Directors of the entity resulting
from such Business Combination (including, without limitation,
an entity which as a result of such transaction owns the
Company, all or substantially all of the Company's assets
either directly or through one or more subsidiaries or the
Automotive Group Assets) in substantially the same proportions
relative to each other as their ownership, immediately prior
to such Business Combination, of the Voting Stock of the
Company, (II) no individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
(other than the Company, such entity resulting from such
Business Combination, or any employee benefit plan (or related
trust) sponsored or maintained by the Company, any Subsidiary
or such entity resulting from such Business Combination or DCA
or Gabelli to the extent of the Exempt DCA Percentage or
Exempt Gabelli Percentage, respectively) beneficially owns,
directly or indirectly, 15% or more of the then outstanding
shares of Voting Stock of the entity resulting from such
Business Combination, and (III) at least two-thirds of the
members of the Board of Directors of the entity resulting from
such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement or of
the action of the Board of Directors of the Company providing
for such Business Combination; or
4. approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company, except pursuant to
a Business Combination that complies with clauses (I), (II)
and (III) of Section 3; or
5. if and so long as DCA beneficially owns 15% or more of the
combined voting power of the outstanding Voting Stock of the
Company, (A) the attainment by any Person of beneficial
ownership of 20% or more of the combined voting power of the
then outstanding Voting Stock of DCA ("DCA Voting Stock")
(other than as the result of an acquisition of DCA Voting
Stock by (x) DCA (and any change in the percentage ownership
of DCA Voting Stock that results from such acquisition), (y)
any employee benefit plan (or related trust) sponsored or
maintained by DCA or any subsidiary of DCA, or (z) the Company
or any Subsidiary that is approved by the Incumbent Board), or
(B) individuals who, as of the Amendment Date constitute the
Board of Directors of DCA (the "Incumbent DCA Board") cease
for any reason to constitute at least a majority of the Board
of Directors of DCA; provided, however, that any individual
becoming a Director subsequent to the Amendment Date whose
election, or nomination for election by DCA's shareholders,
was approved by a vote of at least two-thirds of the Directors
of DCA then comprising the Incumbent DCA Board (either by a
specific vote or by approval of the proxy statement of DCA in
which such person is named as a nominee for director, without
objection to such nomination) will be deemed to have been a
member of the Incumbent DCA Board of Directors, but excluding,
for this purpose, any such individual whose initial assumption
of office occurs as a result of an actual or threatened
Election Contest; or
6. the occurrence of a "Board Shift". For this purpose, (I) a
"Board Shift" will be deemed to have occurred if 50% or more
of the members of the Board of the Company, or of any entity
resulting from a Business Combination, are persons who (A) are
employees of any beneficial owner of 20% or more of the Voting
Stock (a "20+% Holder") or (B) were nominated for election, or
voted for, by any such 20+% Holder unless such nomination or
vote was approved by a majority of the Unrelated Directors and
(ii) "Unrelated Directors" means Gerald H. Frieling, Jr.,
Lawrence J. Ciancia and Joseph P. Walker or any successors
thereto nominated with the approval of such of the foregoing
(or their successors nominated as aforesaid) as may remain
members of the Board of the Company, or of any entity
resulting from a Business Combination, at the time of such
nomination.
For purposes of Annex A, the "Amendment Date" is the effective date of the
amendment that includes this Annex A as a part of the Plan.
<PAGE>
EXHIBIT (10)(f)
CTS CORPORATION 1996 STOCK OPTION PLAN
FIRST: Shares Reserved for Options
Two hundred thousand (200,000) shares of CTS Corporation
Common Stock, without par value, which may be either authorized and
unissued shares or shares held as treasury stock, are reserved for
issuance upon exercise of options granted under the Plan. The
number and kind of shares reserved for issuance may be adjusted as
provided by ITEM FOURTEENTH. Shares subject to an unexercised
installment of any canceled, surrendered or expired installment or
option may be again subject to option under the Plan.
SECOND: Administration
The Plan shall be administered by the CTS Corporation
Compensation Committee appointed by the Board of Directors,
hereinafter the "Committee." Within the provisions of the Plan,
the Committee shall have full power and authority:
(a) to determine and designate the recipients of
options, the dates options are granted, the number
of shares subject to option, option prices, option
periods and option terms, except as limited by ITEM
FOURTH, and
(b) to prescribe, amend and rescind rules and
procedures for convenient administration of the
Plan.
Action by the Committee shall be authorized or ratified by a
majority of the Committee members and may be without notice or
meeting, by a writing signed by a majority of the Committee
members.
In any dispute or disagreement as to the interpretation of the
Plan, or any rule or procedure of the Committee, or any question,
right or obligation under the Plan, the decision of the Board of
Directors shall be final and binding upon all persons.
THIRD: Eligibility
Key employees, including officers, of CTS shall be eligible to
receive options and shall receive options when, and if, designated
by the Committee. Directors who are not also employees or officers
of CTS shall not be eligible to receive options.
FOURTH: Option Grant
The Committee shall determine and designate (i) the recipients
of options, (ii) the dates options are granted, (iii) the number of
shares subject to option, (iv) the option prices, and (v) the
option periods.
FIFTH: Option Price
The option price shall be not less than the fair market value
of the shares on the date the option is granted. Fair market value
of the shares shall be the reported closing price of the shares on
the New York Stock Exchange on the date the option is granted, or,
if not reported on such date, on the next preceding date for which
such a closing price is reported.
SIXTH: Option Ceiling
The aggregate fair market value (determined as of the time the
option is granted) of the shares of Common Stock for which any
participant may be granted incentive stock options which become
first exercisable in any calendar year, shall not exceed $100,000.
SEVENTH: Option Grant Period
The period during which an option may be granted, shall, in no
case, extend more than ten years after the Plan is adopted, or the
date such Plan is approved by the stockholders, whichever is
earlier.
EIGHTH: Option Exercise Period
The period during which an option may be exercised shall, in
no case, extend more than ten years after the date the option is
granted.
NINTH: Option Terms
The options shall be irrevocable and shall, on the date of
grant, conform in all respects with the Plan and may be non-
qualified or may conform with Section 422A of the Internal Revenue
Code of 1986, as amended, hereinafter the "Code," or with any law
supplemental thereto or substituted therefor. Inconsistencies
between an option and the Plan shall be resolved according to the
terms of the Plan.
TENTH: Exercise of Option
The right to exercise an option shall accrue in such annual
and cumulative installments and at such times as designated by the
Committee, commencing at least one year from the date the option is
granted. Unless otherwise designated by the Committee (i) the
number of installments shall be equal to the total number of years
of the option period minus one; (ii) each installment shall be
equal to the total number of shares under option divided by the
number of installments; and (iii) each installment cumulatively
shall permit the exercise of any previously unexercised
installment.
ELEVENTH: Payment
Payment of the option price shall be made upon exercise of any
installment of an option, and the person exercising such option
shall supply the Committee such pertinent information as the
Committee may deem necessary. Payment may be made in cash or in
previously acquired CTS Common Stock. Except as provided in ITEM
THIRTEENTH, no option may be exercised unless, from the date the
option is granted to the date of exercise, the option holder is an
employee of CTS. An option holder shall have no rights as a
stockholder with respect to shares subject to option until such
shares are issued.
TWELFTH: Nontransferability of Option
Options shall not be assignable or transferable by the option
holder other than by will or by the laws of descent and
distribution.
THIRTEENTH: Effect of Termination of Employment
Upon the death of an option holder, all unexpired installments
of his options shall be accelerated and shall accrue as of the
date of death, and his estate or the person or persons to whom his
rights under the option shall pass by will or by the laws of
descent and distribution may exercise the options, but only within
one year after his death or, if sooner, until the option period
expires.
Upon total and permanent disability of an option holder,
within the meaning of Section 105(d)(4) of the Code, all unexpired
installments of his options shall be accelerated and shall accrue
as of the date of such disability, and he may exercise the options
but only within one year of the date of such disability or, if
sooner, until the option period expires.
Upon retirement of an option holder, all unexpired
installments of his options shall be accelerated and shall accrue
as of the date of retirement, and he may exercise the options, but
only within three months after retirement or, if sooner, until the
option period expires.
Upon termination of employment of the option holder with CTS
for any reason, other than death, disability, or retirement, he may
exercise his options only to the extent he is entitled by the
option terms on the date of termination, but such exercise may only
be within thirty days after termination or, if sooner, until the
option period expires.
FOURTEENTH: Adjustment for Capital Change
The number, kind and price of shares subject to option and the
number and kind of securities or property reserved for issuance,
and to be issued, upon exercise of options shall be proportionately
and appropriately adjusted by the Committee to reflect the effects
of stock splits, stock dividends and any other change in the
capital structure of CTS Corporation or to reflect any merger,
consolidation or exchange or sale of assets or shares of CTS
Corporation.
FIFTEENTH: Amendment and Termination
The Board of Directors may modify or amend the Plan without
stockholder approval at any time for the purpose of conforming to
changes in pertinent law or government regulations or for any
purpose permitted by law. In no event, however, shall any such
action of the Board of Directors (i) increase, except as provided
by ITEM FOURTEENTH, the number of shares of Common Stock which may
be issued hereunder, (ii) decrease the option price, provided by
ITEM FIFTH, (iii) change the class of eligible employees, provided
by ITEM THIRD, (iv) change the option ceiling, provided by ITEM
SIXTH, or (v) impair any option granted prior to such action.
CTS CORPORATION
1996 STOCK OPTION PLAN
APPENDIX A
"Change in Control" means the occurrence of any of the
following events:
1. the attainment by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) (a "Person") of aggregate
beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 25% or
more of the combined voting power of the then
outstanding securities (the "Voting Stock") of CTS
Corporation (the "Company") entitled to vote
generally in the election of directors of the
Company; provided, however, that for purposes of
this Section 1, the following will not be deemed to
result in a Change in Control: (A) any acquisition
directly from the Company that is approved by the
Incumbent Board (as defined below), (B) any
acquisition by the Company and any change in the
percentage ownership of Voting Stock of the Company
that results from such acquisition, (C) any
acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the
Company or any Subsidiary, (D) any acquisition by
any Person pursuant to a Business Combination (as
defined below) that complies with clauses (I), (II)
and (III) of Section 3, (E) the beneficial
ownership by Dynamics Corporation of America
("DCA") of Voting Stock of the Company equal to
less than 25% of the combined voting power of the
then outstanding Voting Stock of the Company
("Exempt DCA Percentage"), or (F) the beneficial
ownership by The Gabelli Group, Inc., GAMCO
Investors, Inc. and Gabelli Funds, Inc.
(collectively, "Gabelli") of Voting Stock of the
Company not equal to or in excess of 25% of the
combined voting power of the then outstanding
Voting Stock of the Company ("Exempt Gabelli
Percentage"); or
2. individuals who, as of the Amendment Date (see
below) constitute the Board of Directors of the
Company (the "Incumbent Board") cease for any
reason to constitute at least two-thirds of the
Board of Directors of the Company; provided,
however, that any individual becoming a Director
subsequent to the Amendment Date whose election, or
nomination for election by the Company's
shareholders, was approved by a vote of at least
two-thirds of the Directors then comprising the
Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in
which such person is named as a nominee for
director, without objection to such nomination)
will be deemed to have been a member of the
Incumbent Board, but excluding, for this purpose,
any such individual becoming a Director as a result
of an actual or threatened election contest (within
the meaning of Rule 14a-11 of the Exchange Act)
with respect to the election or removal of
Directors or other actual or threatened
solicitation of proxies or consents by or on behalf
of a Person other than the Board of Directors of
the Company (collectively, an "Election Contest");
or
3. consummation of (A) a reorganization, merger or
consolidation, (B) a sale or other disposition of
all or substantially all of the assets of the
Company, or (C) a sale or other disposition of all
or substantially all of the assets ("Automotive
Group Assets") of the Company used in its
Automotive Strategic Business Unit (such
reorganization, merger, consolidation or sale each,
a "Business Combination"), unless, in each case,
immediately following such Business Combination,
(I) all or substantially all of the individuals and
entities who were the beneficial owners of Voting
Stock of the Company immediately prior to such
Business Combination beneficially own, directly or
indirectly, more than two-thirds of the then
outstanding shares of common stock and the combined
voting power of the then outstanding Voting Stock
of the Company entitled to vote generally in the
election of Directors of the entity resulting from
such Business Combination (including, without
limitation, an entity which as a result of such
transaction owns the Company, all or substantially
all of the Company's assets either directly or
through one or more subsidiaries or the Automotive
Group Assets) in substantially the same proportions
relative to each other as their ownership,
immediately prior to such Business Combination, of
the Voting Stock of the Company, (II) no
individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act)
(other than the Company, such entity resulting from
such Business Combination, or any employee benefit
plan (or related trust) sponsored or maintained by
the Company, any Subsidiary or such entity
resulting from such Business Combination or DCA or
Gabelli to the extent of the Exempt DCA Percentage
or Exempt Gabelli Percentage, respectively)
beneficially owns, directly or indirectly, 15% or
more of the then outstanding shares of Voting Stock
of the entity resulting from such Business
Combination, and (III) at least two-thirds of the
members of the Board of Directors of the entity
resulting from such Business Combination were
members of the Incumbent Board at the time of the
execution of the initial agreement or of the action
of the Board of Directors of the Company providing
for such Business Combination; or
4. approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company,
except pursuant to a Business Combination that
complies with clauses (I), (II) and (III) of
Section 3; or
5. if and so long as DCA beneficially owns 15% or more
of the combined voting power of the outstanding
Voting Stock of the Company, (A) the attainment by
any Person of beneficial ownership of 20% or more
of the combined voting power of the then
outstanding Voting Stock of DCA ("DCA Voting
Stock") (other than as the result of an acquisition
of DCA Voting Stock by (x) DCA (and any change in
the percentage ownership of DCA Voting Stock that
results from such acquisition), (y) any employee
benefit plan (or related trust) sponsored or
maintained by DCA or any subsidiary of DCA, or (z)
the Company or any Subsidiary that is approved by
the Incumbent Board), or (B) individuals who, as of
the Amendment Date constitute the Board of
Directors of DCA (the "Incumbent DCA Board") cease
for any reason to constitute at least a majority of
the Board of Directors of DCA; provided, however,
that any individual becoming a Director subsequent
to the Amendment Date whose election, or nomination
for election by DCA's shareholders, was approved by
a vote of at least two-thirds of the Directors of
DCA then comprising the Incumbent DCA Board (either
by a specific vote or by approval of the proxy
statement of DCA in which such person is named as a
nominee for director, without objection to such
nomination) will be deemed to have been a member of
the Incumbent DCA Board of Directors, but
excluding, for this purpose, any such individual
whose initial assumption of office occurs as a
result of an actual or threatened Election Contest;
or
6. the occurrence of a "Board Shift". For this
purpose, (I) a "Board Shift" will be deemed to have
occurred if 50% or more of the members of the Board
of the Company, or of any entity resulting from a
Business Combination, are persons who (A) are
employees of any beneficial owner of 20% or more of
the Voting Stock (a "20+% Holder") or (B) were
nominated for election, or voted for, by any such
20+% Holder unless such nomination or vote was
approved by a majority of the Unrelated Directors
and (ii) "Unrelated Directors" means Gerald H.
Frieling, Jr., Lawrence J. Ciancia and Joseph P.
Walker or any successors thereto nominated with the
approval of such of the foregoing (or their
successors nominated as aforesaid) as may remain
members of the Board of the Company, or of any
entity resulting from a Business Combination, at
the time of such nomination.
For purposes of Annex A, the "Amendment Date" is the effective date
of the amendment that includes this Annex A as a part of the Plan.
<PAGE>
EXHIBIT (10)(m)
CTS CORPORATION
905 West Boulevard North
Elkhart, IN 46514
Phone: (219) 293-7511
Fax: (219) 293-6146
{Date}
{Employee name and address}
Dear :
A question has arisen regarding the operation of the severance and
option agreements (collectively, the "Agreements") between the Company
and you. This letter agreement constitutes a binding interpretation of
and amendment to the Agreements, effective as of the date hereof.
Notwithstanding anything in the Agreements to the contrary, in
addition to any of the other events or circumstances set forth in
Section 1(d), a "Change in Control" will be deemed to have occurred
for all purposes thereof in the event of a Board Shift. For this
purpose, (i) a "Board Shift" will be deemed to have occurred if 50%
or more of the members of the Board of the Company, or of any
entity resulting from a Business Combination, are persons who (A)
are employees of any beneficial owner of 20% or more of the Voting
Stock (a "20+% Holder") or (B) were nominated for election, or voted
for, by any such 20+% Holder unless such nomination or vote was
approved by a majority of the Unrelated Directors and (ii)
"Unrelated Directors" means Gerald H. Frieling, Jr., Lawrence J.
Ciancia and Joseph P. Walker or any successors thereto nominated
with the approval of such of the foregoing (or their successors
nominated as aforesaid) as may remain members of the Board of the
Company, or of any entity resulting from a Business Combination, at
the time of such nomination.
Very truly yours,
CTS CORPORATION
BY:
{Title of officer}
Acknowledged and Agreed to
as of the date first above
written:
{Name of Employee}
<PAGE>
EXHIBIT 21
CTS CORPORATION AND SUBSIDIARIES
CTS Corporation (Registrant), an Indiana corporation
Subsidiaries
CTS Corporation (Delaware), a Delaware corporation
CTS of Panama, Inc., a Republic of Panama corporation
CTS Components Taiwan, Ltd.,1 a Taiwan, Republic of
China corporation
CTS Singapore Pte., Ltd., a Republic of Singapore
corporation
CTS Electro de Matamoros, S.A.,1 a Republic of Mexico
corporation
CTS Export Corporation, a Virgin Islands corporation
CTS Japan, Inc., a Japan corporation
CTS of Canada, Ltd., a Province of Ontario (Canada) corporation
CTS Manufacturing (Thailand) Ltd., 1 a Thailand corporation
CTS Electronics Hong Kong Ltd., 1 a Hong Kong corporation
CTS Corporation U.K. Ltd., a United Kingdom corporation
CTS Printex, Inc., a California corporation
CTS Micro Peripherals, Inc., a California corporation
CTS First Acquisition Corporation, a New York corporation
Corporations whose names are indented are subsidiaries of the
preceding non-indented corporations. Except as indicated, each of
the above subsidiaries is 100% owned by its parent company.
Operations of all subsidiaries and divisions are consolidated in
the financial statements filed.
1 Less than 1% of the outstanding shares of stock is owned
of record by nominee shareholders pursuant to national
laws regarding resident or nominee ownership.
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