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Form 10-Q
Third Quarter 2003 [form10q-3qtr2003.htm]

EXHIBIT (10)(A)

CTS CORPORATION

2003 EXCESS BENEFIT RETIREMENT PLAN
As Adopted Effective July 1, 2003

CTS CORPORATION

2003 EXCESS BENEFIT RETIREMENT PLAN

ARTICLE I

Purpose

        1.01   Purpose.   It is the intention of CTS Corporation (the “Company”)
to maintain appropriate levels of retirement benefits for employees of the
Company or any of its subsidiaries who are entitled to benefits under the CTS
Corporation Pension Plan (the “Pension Plan”). Accordingly, the Company hereby
establishes the CTS Corporation 2003 Excess Benefit Retirement Plan (the
“Plan”). This Plan is intended to provide benefits to eligible persons in order
to maintain the level of total retirement benefits which, but for the
limitations on annual benefits and compensation which may be taken into account
under the Internal Revenue Code of 1986, as amended, (the “Code”) would
otherwise be payable under, or as a consequence of, the provisions of the
Pension Plan and to provide a competitive level of retirement benefits to the
Company’s executives.

        1.02   Effective Date.   This Plan is effective as of July 1, 2003.
However, in calculating the amounts described in Sections 3.01(a) and 3.01(b)
amounts which accrued (or would have accrued) but for the Code limitations
referred to in Section 3.01 prior to the effective date shall be taken into
account.

ARTICLE II

Eligibility

        2.01   Persons Eligible to Receive Benefits.   Every individual who is
listed on Appendix A shall be eligible to receive a “Benefit” as described in
Section 3.01. Each such individual shall be known as a “Member”.

        2.02   Beneficiary.   Every individual who is eligible to receive a
Benefit under the Pension Plan by reason of being the Beneficiary of another
individual who was a Member under this Plan, shall be known as a “Beneficiary”.
The term “Beneficiary” shall include joint pensioners, heirs-at-law, legal
representatives, fiduciaries, and every other person (other than a Member) to
whom Benefits may be distributed, as determined under the Pension Plan. A
Beneficiary’s right to receive Benefits under this Plan shall be subject to the
same conditions which apply to the Beneficiary’s right to receive benefits under
the Pension Plan.

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ARTICLE III

Benefits

        3.01   Amount of Benefit. The amount of the Benefit which a Member (or
Beneficiary, if applicable) is eligible to receive under this Plan shall be
equal to the excess of (a) over (b):

  (a) The amount of benefit which such Member would be entitled to receive under
the Pension Plan, if the percentage of Compensation (as defined in the Pension
Plan) used in determining the Member’s benefit under the applicable provision of
Section 6 of the Pension Plan was, instead of 1.25%:

          1.35% if the date of determination occurs during the Member’s second
year of participation in this Plan;

          1.45% if the date of determination occurs during the Member’s third
year of participation in this Plan;

          1.55% if the date of determination occurs during the Member’s fourth
year of participation in this Plan;

          1.65% if the date of determination occurs during the Member’s fifth
year of participation in this Plan;

          1.75% if the date of determination occurs during any subsequent year
of participation in this Plan;

  and if such benefit were computed without giving effect to the limitations
then currently imposed by Code Section 401(a)(17) and Code Section 415(b) and
regulations thereunder and without regard to the benefit accrual determined
under Section 6.13 of the Pension Plan. For purposes of this Section 3.01, a
Member’s date of participation in this Plan shall be the later of July 1, 2003,
or the effective date that the Member is first eligible to participate in the
Plan in accordance with Article V. A Member’s “years of participation” will
being on the Members’ date of participation and each subsequent anniversary
thereof.

  (b) The amount of benefit which such Member actually receives under the
Pension Plan.

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        3.02   Payment of Benefits.   Payment of benefits shall be accomplished
by means of unfunded payments directly from the Company. Except as provided in
Section 3.03 and Article V, distribution of any such benefits, whether to a
Beneficiary or a Member, shall be made at the same time and in the same manner
and form and subject to the same conditions as the benefit provided by the
Pension Plan.

        3.03   Immediate Cashout.   Notwithstanding the provisions of Section
3.02, if the Plan benefit is immediately payable to a Member or Beneficiary and
the amount of the monthly benefit payable from the Plan to a Member or
Beneficiary does not exceed $50, the actuarial present value of the immediate
Plan benefit shall be paid in an immediate single lump sum cash payment in lieu
of any other form of payment. Actuarial present values shall be determined using
the actuarial assumptions employed under the Pension Plan for lump sum cashouts.

ARTICLE IV

Authority of Committee

        4.01   Committee.   The Plan shall be approved and administered by the
Compensation Committee of the CTS Corporation Board of Directors (the
"Committee");

        4.02   Authority of Committee.   The Committee shall have authority to
control, delegate and manage the operation and administration of the Plan,
including all rights and powers necessary or convenient to the carrying out of
its functions hereunder, whether or not such rights and powers are specifically
enumerated herein.

Without limiting the foregoing, and in addition to the other powers set forth in
this Article IV, the Committee shall have the following express authorities:

  (a) To construe and interpret the Plan and determine the amount, manner and
time of payment of any Benefits hereunder;

  (b) To prescribe procedures to be followed by Members or Beneficiaries filing
any requests or applications in connection with Benefits hereunder;

  (c) To prepare and distribute, in such manner as the Committee determines to
be appropriate, information explaining the Plan;

  (d) To receive from the Company and from Members and Beneficiaries such
information as shall be necessary for the proper administration of the Plan;

  (e) To furnish the Company, upon request, such annual and other reports with
respect to the administration of the Plan as are reasonable and appropriate;

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  (f) To resolve all questions and make all factual determinations relating to
any matter for which it has administrative responsibility; and

  (g) To delegate to the CTS Corporation Employee Benefit Committee such
administrative powers and duties as it deems appropriate.

        4.03   Disqualification of Committee Member.   No member of the
Committee or delegate of the Committee shall vote upon any question or exercise
any discretion under the Plan relating specifically to himself or his
Beneficiaries.

        4.04   Records and Reports.   The Committee shall take all such action
as it deems necessary or appropriate to comply with any laws or regulations now
or hereafter in existence relating to the maintenance of records, notifications
or registrations.

      ARTICLE V

Amendment or Termination

        The Company intends the Plan to be permanent, but reserves the right, at
any time, to modify, amend or terminate the Plan, provided, however, that no
termination, amendment or modification of or to the Plan may, without written
approval of a Member, reduce the total benefit payable under this Plan or the
Pension Plan, assuming the Member retired, died or otherwise terminated
employment as of the date of such termination, amendment or modification. Such
amount shall constitute an irrevocable obligation of the Company. The Committee
hereby delegates to the Chief Executive Officer of the Company the authority to
add, in the Officer’s sole discretion, individuals to Appendix A who become
members of the Company’s senior management after the Effective Date of the Plan,
and to remove those individuals from Appendix A of the CTS Corporation 1996
Excess Benefit Retirement Plan, if they are members of that plan.

        Notwithstanding any other provision of the Plan, if (i) a Member’s
employment with the Company terminates following a Change in Control (as defined
in Appendix B to the Plan) and (ii) as a result of such termination of
employment the Member becomes entitled to change in control severance benefits
under any severance agreement between the Company and the Member, the actuarial
present value of the Member’s benefit under this Plan shall be paid immediately
in a single lump sum cash payment in lieu of any other form of benefit. For
purposes of calculating the lump sum payment, the Member shall be considered to
be fully vested in both his or her benefit under this Plan and his or her
benefit under the Pension Plan. If the Plan benefit would otherwise be payable
immediately to the Member or Beneficiary, the actuarial present value shall be
the present value of the immediate Plan benefit. If the Plan benefit is not
otherwise payable immediately to the Member or Beneficiary, the actuarial
present value shall be the present value of the deferred Plan benefit payable at
the normal retirement benefit commencement date under the Pension Plan.
Actuarial present values shall be determined using the actuarial assumptions
employed under the Pension Plan for lump sum cashouts.

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ARTICLE VI

Miscellaneous

        6.01   No Guarantee of Employment.   Neither the creation of this Plan
nor anything contained herein shall be construed (a) to give any Member the
right to remain in the employ of the Company or any of its subsidiaries, (b) to
give any Member or Beneficiary any benefits not specifically provided by the
Plan, or (c) to modify, in any manner, the right of the Company or any of its
subsidiaries to modify, amend, or terminate any of its employee benefit plans.

        6.02   Rights of Participants and Beneficiaries.   Payment of Benefits
to which any Member or Beneficiary is entitled shall be made only to such Member
or Beneficiary. The expectation of such Benefits shall not be assignable by
Member or Beneficiaries or by operation of law, or be subject to reduction for
the debts or defaults of such Members or Beneficiaries whether to the Company or
to others, or be subject to execution or attachment. The preceding sentence
shall not apply to portions of Benefits applied at the direction of the person
eligible to receive such Benefits to the payment of premiums on life or health
insurance provided under any Company program, or to the withholding of federal
income taxes.

        6.03   Payments in Event of Final Determination.   Notwithstanding any
other provision of the Plan to the contrary, if any amounts accrued under the
Plan by a Member or Beneficiary are found in a final determination to have been
includable in the gross income of the Member or Beneficiary prior to the payment
of such amounts to the Member or Beneficiary, the Company will, as soon as
practicable, pay such amounts to or on behalf of the Member or Beneficiary. For
purposes of the Plan, a “final determination” means (i) an assessment of tax by
the Internal Revenue Service addressed to the Member or Beneficiary which is not
timely appealed to the courts, (ii) a final determination by the United States
Tax Court or any other federal court, the time for an appeal thereof having
expired or been waived, or (iii) an opinion of counsel to the Company with
respect to a change in any applicable law, regulation or ruling, in each case to
the effect that amounts accrued under the Plan are subject to federal income tax
to the Member or Beneficiary prior to payment. No final determination will be
deemed to have occurred until the Committee has actually received a copy of the
assessment, court order or opinion which forms the basis thereof and such other
documents as it may reasonably request.

      6.04   Claims Procedure.

  (a) If a Member or Beneficiary does not receive the benefits which the Member
or Beneficiary believes he or she is entitled to receive under the Plan, the
Member or Beneficiary may file a claim for benefits with the Committee. All
claims must be made in writing and be signed by the claimant. If the claimant
does not furnish sufficient information to enable the Committee to process the
claim, the Committee will indicate to the claimant any additional information
which is required.

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  (b) Each claim will be approved or disapproved by the Committee within 90 days
following the receipt of the information necessary to process the claim, or
within 180 days if the Committee determines that special circumstances require
an extension of the 90-day period and the claimant is notified of the extension
within the original 90-day period. In the event the Committee denies a claim for
benefits in whole or in part, the Committee will notify the claimant in writing
of the adverse determination. Such notice by the Committee will also set forth,
in a manner calculated to be understood by the claimant, the specific reason or
reasons for the adverse determination, reference to the specific Plan provisions
on which the determination is based, a description of any additional material or
information necessary to perfect the claim with an explanation of why such
material or information is necessary and an explanation of the Plan’s claim
review procedure as set forth in Section 6.04(c).

  (c) A claimant may appeal an adverse benefit determination by requesting a
review of the decision by the Committee or a person designated by the Committee.
An appeal must be submitted in writing within 60 days after receiving
notification of the adverse determination and must (i) request a review of the
claim for benefits under the Plan, (ii) set forth all of the grounds upon which
the claimant’s request for review is based and any facts in support thereof, and
(iii) set forth any issues or comments which the claimant deems pertinent to the
appeal. The claimant will be given the opportunity to submit written comments,
documents, records and other information relating to the claim for benefits and
will be provided, upon written request and free of charge, reasonable access to
and copies of all documents, records and other information relevant to the claim
for benefits, provided the Committee finds the requested documents or materials
are relevant to the appeal. The Committee or the person designated by the
Committee will make a full and fair review of each appeal and any materials
submitted by the claimant relating to the claim, without regard to whether the
information was submitted or considered in the initial determination. On the
basis of its review, the Committee or person designated by the Committee will
make an independent determination of the claimant’s eligibility for benefits
under the Plan. The Committee or the person designated by the Committee will act
upon each appeal within 60 days after receipt thereof unless special
circumstances require an extension of the time for processing, in which case the
Committee will notify the claimant within the initial 60-day period of such
special circumstances and will render a decision as soon as possible but not
later than 120 days after the appeal is received. The decision of the Committee
or person designated by the Committee on any claim for benefits will be final
and conclusive upon all parties thereto. In the event the Committee or person
designated by the Committee denies an appeal in whole or in part, it will give
written notice of the determination to the claimant. Such notice will set forth,
in a manner calculated to be understood by the claimant, the specific reason or
reasons for the adverse determination, reference to the specific Plan provisions
on which the determination is based, a statement that the claimant is entitled
to receive, upon request and free of charge, access to and copies of all
documents, records and other information relevant to the claim and a statement
of the claimant’s right to bring an action under section 502(a) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), if applicable.

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        6.05   Expenses and Indemnity.   All expenses and fees incurred in
connection with the administration of the Plan will be paid by the Company. To
the fullest extent permitted by applicable law, the Company will indemnify and
save harmless the Committee, the Board and any delegate of the Committee who is
an employee of the Company and any officers and employees of the Company against
any and all expenses, liabilities and claims, including legal fees to defend
against such liabilities and claims, arising out of their discharge in good
faith of responsibilities under or incident to the Plan, other than expenses and
liabilities arising out of willful misconduct. Without limiting the generality
of the foregoing, the Company will, promptly upon request, advance funds to
persons entitled to indemnification hereunder to the extent necessary to defray
legal and other expenses incurred in the defense of such liabilities and claims,
as and when incurred. This indemnity will not preclude such further indemnities
as may be available under insurance purchased by the Company or provided by the
Company under any bylaw, agreement or otherwise.

        6.06   Withholding.   There will be deducted from each payment made
under the Plan all taxes which are required to be withheld by the Company in
respect to such payment.

        6.07   Receipt or Release.   Any payment to a Member or the Member’s
Beneficiary in accordance with the provisions of the Plan will, to the extent
thereof, be in full satisfaction of all claims against the Committee and the
Company with respect to the amount paid. The Committee may require such Member
or Beneficiary, as a condition precedent to such payment, to execute a receipt
and release to such effect.

        6.08   Payments on Behalf of Persons Under Incapacity.   In the event
that any amount or distribution becomes payable under the Plan to a person who,
in the sole judgment of the Committee, is considered by reason of physical or
mental condition to be unable to give a valid receipt therefor, the Committee
may direct that such distribution or payment be made to any person found by the
Committee, in its sole judgment, to have assumed the care of such person. Any
distribution or payment made pursuant to such determination will, to the extent
thereof, constitute a full release and discharge of the Committee and the
Company with respect to the distribution or amount paid.

        6.09   Successors and Assigns.   The Company may not assign its
obligations under this Plan, whether by contract, merger, operation of law or
otherwise, unless the assignment is to an assignee or successor entity (in
either case, hereafter called a “Successor”) that has stockholders’ equity or
the closest equivalent thereto (as measured by the most recent audited financial
statements of such Successor) equal to or greater than the stockholders’ equity
of the Company (as measured immediately prior to the event that causes such
entity to become a Successor to the Company). The provisions of this Section
6.09 will be binding upon each and every Successor to the Company.

        6.10   No Requirement to Fund.   No provisions in the Plan, either
directly or indirectly, shall be construed to require the Company to reserve, or
otherwise set aside, funds for the payment of benefits hereunder, and Members
and Beneficiaries shall have the status of general unsecured creditors with
respect to the obligation of the Company to make payments under the Plan. The
Plan is intended to provide benefits for “management or highly compensated
employees” within the meaning of ERISA and therefore to be exempt from the
provisions of Parts 2, 3 and 4 of the Title I of ERISA.

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        6.11   Controlling Law.   To the extent not preempted by the laws of the
United States of America, the laws of the State of Indiana shall be the
controlling state law in all matters relating to the Plan and shall apply.

        6.12   Severability.   If any provisions of the Plan shall be held
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts of the Plan; and the Plan shall be construed and
enforced as if said illegal and invalid provisions had never been included
herein.

        6.13   Provisions of Pension Plan Unchanged.   Any benefit payable under
the Pension Plan shall be paid solely in accordance with the terms and
provisions of the Pension Plan; and nothing in the Plan shall operate or be
construed in any way to modify, amend or affect the terms and provisions of the
Pension Plan.

        6.14   Nature of Payments.   Any benefits provided hereunder shall
constitute nonqualified deferred compensation payments to the Member and shall
not be taken into account in computing the amount of salary or compensation of
the Member for the purposes of determining any pension, retirement, death or
other benefits under (a) any pension, retirement, profit-sharing, bonus, life
insurance or other employee benefit plan of the Company or any of its
subsidiaries or (b) any agreement between the Company or any subsidiary and the
Member except as such plan or agreement shall otherwise expressly provide.

        6.15   Gender and Number.   Masculine gender shall include the feminine;
and the singular shall include the plural, unless the context clearly indicated
otherwise.

        IN WITNESS WHEREOF, CTS Corporation has caused the CTS Corporation 2003
Excess Benefit Retirement Plan to be executed by its proper officer duly
authorized by its Board of Directors.

           CTS CORPORATION

By       /s/ James L. Cummins
            ———————————————

Title    Senior Vice President Administration
            ———————————————

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