Document:

ex10_1.htm

    Exhibit
10.1    

      CTS
CORPORATION

      2009
OMNIBUS EQUITY AND PERFORMANCE INCENTIVE PLAN

      

      SECTION
1.  PURPOSE:  The purpose of the CTS Corporation 2009
Omnibus Equity and Performance Incentive Plan is to provide certain employees
and consultants of CTS Corporation and its Affiliates and members of the Board
with the opportunity to receive stock-based and other incentive grants in order
to attract, motivate and retain qualified individuals and to align their
interests with those of shareholders.

      

      SECTION 2.  EFFECTIVE
DATE:   This Plan will become effective as of May 27,
2009, subject to the approval of the shareholders in accordance with the
Company’s Bylaws and the laws of the State of Indiana at the Annual Meeting to
be held on May 27, 2009.  Unless sooner terminated as provided herein,
the Plan shall terminate on May 26, 2019.  After the Plan is
terminated, no future Awards may be granted under the Plan, but Awards
previously granted shall remain outstanding in accordance with their applicable
terms and conditions.  Furthermore, no grants will be made on or after
May 27, 2009 under the Prior Plans.  Subject to shareholder approval
of the Plan at the Annual Meeting to be held on May 27, 2009, no grants will be
made on or after May 27, 2009 under the Existing Plan except (a) for grants
earned under the 2008-2009 Performance Restricted Stock Unit Plan and the
2009-2010 Performance Restricted Stock Unit Plan and (b) that outstanding awards
granted under the Existing Plan will continue unaffected following May 27,
2009.

      

      SECTION
3.  DEFINITIONS:  As used in this Plan, unless the
context otherwise requires, each of the following terms shall have the meaning
set forth below.

      

      
        	
                 
      

              	
                (a)

              	
                “Affiliate”
      shall mean any entity that, directly or indirectly, controls, is
      controlled by, or is under common control with, the
    Company.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                “Award”
      shall mean a grant of an Option, SAR, Restricted Stock Award, Performance
      Award, or Other Stock Award pursuant to the Plan, which may, as determined
      by the Committee, be in lieu of other compensation owed to a
      Participant.

              

      

      

      
        	
                 
      

              	
                (c)

              	
                “Award
      Agreement” shall mean an agreement, either in written or electronic
      format, in such form and with such terms and conditions as may be approved
      by the Committee, which evidences the terms and conditions of an
      Award.

              

      

      

      
        	
                 
      

              	
                (d)

              	
                “Board
      of Directors” or “Board” shall mean the board of directors of the
      Company.

              

      

      

      
        	
                 
      

              	
                (e)

              	
                “Code”
      shall mean the Internal Revenue Code of 1986, as amended from time to
      time, and any references to a particular section of the Code shall be
      deemed to include any successor provision
  thereto.

              

      

      

      
        	
                 
      

              	
                (f)

              	
                “Committee”
      shall mean the Compensation Committee or such other committee of the Board
      of Directors, which shall consist solely of two or more members of the
      Board who are “outside directors” within the meaning of Section 162(m) of
      the Code, “non-employee directors” within the meaning of Securities and
      Exchange Commission Rule 16b-3 promulgated under Section 16 of the
      Securities Exchange Act of 1934, as amended, and independent directors as
      defined by any applicable stock exchange rule or any such successor
      provision thereto.

              

      

      

      
        	
                 
      

              	
                (g)

              	
                “Company”
      shall mean CTS Corporation, an Indiana
  corporation.

              

      

      

      
        	
                 
      

              	
                (h)

              	
                “Consultant”
      shall mean any person engaged by the Company or an Affiliate to render
      services to such entity as a consultant or
  advisor.

              

      

      

      
        	
                 
      

              	
                (i)

              	
                “Covered
      Employee” shall mean a Participant who is, or is determined by the
      Committee to be likely to become, a “covered employee” within the meaning
      of Section 162(m) of the Code (or any successor
  provision).

              

      

      

      
        	
                 
      

              	
                (j)

              	
                “Date
      of Grant” shall mean the date specified by the Committee on which a grant
      of Options, SARs or Performance Awards, or a grant or sale of Restricted
      Stock Awards or Other Stock Awards pursuant to the Plan will become
      effective (which date will not be earlier than the date on which the
      Committee takes action with respect
thereto).

              

      

      

      
        	
                 
      

              	
                (k)

              	
                “Employee”
      shall mean an employee of the Company or any
  Affiliate.

              

      

      

      
        	
                 
      

              	
                (l)

              	
                “Exercise
      Price” shall mean an amount, as determined by the Committee, at which an
      Option or SAR can be exercised by a Participant, which amount shall not be
      less than the Fair Market Value of a Share on the Date of Grant, unless
      such Option or SAR is granted pursuant to an assumption or substitution of
      another Option in a manner that satisfies the requirements of Section
      424(a) of the Code.

              

      

      

      
        	
                 
      

              	
                (m)

              	
                “Existing
      Plan” shall mean the CTS Corporation 2004 Omnibus Long-Term Incentive
      Plan, as amended.

              

      

      

      
        	
                 
      

              	
                (n)

              	
                “Fair
      Market Value” shall mean, as of a given date, unless otherwise determined
      by the Committee, the closing sale price for a Share as reported on a
      national securities exchange on such date if the Shares are then being
      traded on such an exchange.  If no closing sale price was
      reported for such date, the closing sale price on the last preceding day
      on which such a price was reported shall be used.  If there is
      no regular public trading market for the Shares, the Fair Market Value for
      a Share shall be the fair market value of a Share as determined in good
      faith by the Committee.  The Committee is authorized to adopt
      another fair market value pricing method, provided such method is stated
      in the Award Agreement and is in compliance with the fair market value
      pricing rules set forth in Section 409A of the
  Code.

              

      

      

      
        	
                 
      

              	
                (o)

              	
                “Incentive
      Stock Option” shall mean an Option which is intended to meet the
      requirements set forth in Section 422 of the Code or any successor
      provision.

              

      

      

      
        	
                 
      

              	
                (p)

              	
                “Nonqualified
      Stock Option” shall mean an Option not intended to qualify as an Incentive
      Stock Option.

              

      

      

      
        	
                 
      

              	
                (q)

              	
                “Option”
      shall mean the right to purchase Shares granted pursuant to Section 8,
      which may take the form of either an Incentive Stock Option or a
      Nonqualified Stock Option and which shall not have a term of more than 10
      years.

              

      

      

      
        	
                 
      

              	
                (r)

              	
                “Other
      Stock Award” shall mean an Award of Shares or Awards that are valued in
      whole or in part, or that are otherwise based on, Shares, including but
      not limited to dividend equivalents or amounts which are equivalent to any
      federal, state, local, domestic, or foreign taxes relating to an Award,
      which may be payable in Shares, cash, other securities, or any other form
      of property as the Committee shall determine, subject to the terms and
      conditions set forth by the Committee and granted pursuant to Section
      12.

              

      

      

      
        	
                 
      

              	
                (s)

              	
                “Participant”
      shall mean an Employee, Consultant, or member of the Board selected by the
      Committee to receive Awards under the
Plan.

              

      

      

      
        	
                 
      

              	
                (t)

              	
                “Performance
      Awards” shall mean Awards of Performance Shares or Performance
      Units.

              

      

      

      
        	
                 
      

              	
                (u)

              	
                “Performance
      Measures” shall mean any of the following performance criteria, either
      alone or in any combination, and may be expressed with respect to the
      Company or one or more operating units or groups, as the Committee may
      determine:  free cash flow; free cash flow from operations;
      total earnings; earnings per share, diluted or basic; earnings per share
      from continuing operations, diluted or basic; earnings before interest and
      taxes; earnings before interest, taxes, depreciation, and amortization;
      earnings from continuing operations; net asset turnover; inventory
      turnover; debt ratios; operating expense; inventory turns; net earnings;
      operating earnings; gross operating margin, gross margin percentage;
      return on equity; capital expenditures; cost of quality; on-time delivery;
      return on net assets; return on total assets; return on capital; return on
      investment; return on sales; gross sales, net sales; market share; net
      market share; economic value added; expense reduction levels; stock price;
      working capital; controllable working capital and total shareholder
      return.  Performance Measures applicable to any Qualified
      Performance-Based Award to a Covered Employee must be based on specified
      levels of or growth in one or more of the Performance Measures listed in
      the immediately preceding sentence.  Performance Measures may be
      determined on an absolute basis or relative to internal goals or relative
      to levels attained in prior years or related to other companies or indices
      or as ratios expressing relationships between two or more Performance
      Measures.

              

      

      

      
        	
                 
      

              	
                Additionally,
      Performance Measures may be defined to exclude certain types or categories
      of extraordinary, unusual or non-recurring items; changes in applicable
      laws, regulations or accounting principles; currency fluctuations;
      discontinued operations; non-cash items, such as amortization,
      depreciation or reserves; or any recapitalization, restructuring, asset
      impairment, reorganization, merger, acquisition, divestiture,
      consolidation, spin-off, split-up, combination, liquidation, dissolution,
      sale of assets, gain or loss on asset sales, or other similar corporate
      transactions; provided, however, that
      such action shall not be taken in the case of a Qualified
      Performance-Based Award where such action would result in the loss of the
      otherwise available exemption of the Award under Section 162(m) of the
      Code.  The Committee shall provide how any Performance Measure
      shall be adjusted to the extent necessary to prevent dilution or
      enlargement of any Award as a result of extraordinary events or
      circumstances, as determined by the Committee, or to exclude the effects
      of extraordinary, unusual, or non-recurring items; changes in applicable
      laws, regulations, or accounting principles; currency fluctuations;
      discontinued operations; non-cash items, such as amortization,
      depreciation, or reserves; or any recapitalization, restructuring, asset
      impairment, reorganization, merger, acquisition, divestiture,
      consolidation, spin-off, split-up, combination, liquidation, dissolution,
      sale of assets, gain or loss on asset sales, or other similar corporate
      transactions; provided, however, that
      such action shall not be taken in the case of a Qualified
      Performance-Based Award where such action would result in the loss of the
      otherwise available exemption of the Award under Section 162(m) of the
      Code.

              

      

      

      
        	
                 
      

              	
                (v)

              	
                “Performance
      Share” shall mean an Award denominated in Shares, which is earned during a
      Performance Period subject to the terms and conditions as determined by
      the Committee and granted pursuant to Section
  11.

              

      

      

      
        	
                 
      

              	
                (w)

              	
                “Performance
      Period” shall mean, in respect of a Performance Award, a period of time
      established by the Committee pursuant to Section 7 at the end of which the
      achievement of one or more measurable performance objectives established
      for a Performance Measure and relating to such Performance Award are to be
      evaluated or measured.

              

      

      

      
        	
                 
      

              	
                (x)

              	
                “Performance
      Unit” shall mean an Award denominated in units having a value in dollars
      or such other currency, as determined by the Committee, which is earned
      during a Performance Period subject to the terms and conditions as
      determined by the Committee and granted pursuant to Section
      11.

              

      

      

      
        	
                 
      

              	
                (y)

              	
                “Plan”
      shall mean the Company’s 2009 Omnibus Equity and Performance Incentive
      Plan, as may be amended, or amended and restated, from time to
      time.

              

      

      

      
        	
                 
      

              	
                (z)

              	
                “Prior
      Plans” shall mean the Company’s 1988 Restricted Stock and Cash Bonus Plan,
      the Company’s 1996 Stock Option Plan, the Company’s 2001 Stock Option Plan
      and the Company’s 2001-2003 Incentive Unit Appreciation Rights Plan, as
      each may have been amended from time to
time.

              

      

      

      
        	
                 
      

              	
                (aa)

              	
                “Qualified
      Performance-Based Award” shall mean any Award or portion of an Award that
      is intended to satisfy the requirements for “qualified performance-based
      compensation” under Section 162(m) of the
Code.

              

      

      

      
        	
                 
      

              	
                (bb)

              	
                “Restricted
      Stock” shall mean an Award of Shares, subject to such terms and conditions
      as determined by the Committee and granted pursuant to Section 10, as to
      which neither the substantial risk of forfeiture nor any prohibition on
      transfer has expired.

              

      

      

      
        	
                 
      

              	
                (cc)

              	
                “Restricted
      Stock Award” shall mean an Award consisting of Restricted Stock or
      Restricted Stock Units.

              

      

      

      
        	
                 
      

              	
                (dd)

              	
                “Restricted
      Stock Unit” shall mean an Award consisting of a bookkeeping entry
      representing the right to receive one Share or an amount equivalent to the
      Fair Market Value of one Share, payable in cash or Shares, and
      representing an unfunded and unsecured obligation of the Company, except
      as otherwise provided by the Committee, subject to such terms and
      conditions as determined by the Committee and granted pursuant to Section
      10.

              

      

      

      
        	
                 
      

              	
                (ee)

              	
                “Shares”
      shall mean shares of common stock, without a par value, of the
      Company.

              

      

      

      
        	
                 
      

              	
                (ff)

              	
                “Stock
      Appreciation Right” or “SAR” shall mean an Award which represents the
      right to receive the difference between the Fair Market Value of a Share
      on the date of exercise and an Exercise Price, payable in cash or Shares,
      subject to such terms and conditions as determined by the Committee and
      granted pursuant to Section 9 and which shall not have a term of more than
      10 years.

              

      

      

      SECTION
4.   ADMINISTRATION:  Subject to the express
provisions of this Plan, the Committee shall have authority to administer and
interpret the Plan, to interpret any Award Agreement, to prescribe, amend, and
rescind rules and regulations relating to the Plan and any Award Agreement, and
to make all other determinations deemed necessary or advisable for the
administration of the Plan.  Any determination by the Committee
pursuant to any provision of the Plan or of any Award Agreement will be final
and conclusive.  No member of the Committee will be liable for any
such action or determination made in good faith.  In exercising its
discretion, the Committee may use such objective or subjective factors as it
determines to be appropriate in its sole discretion.  To the extent
permitted by law, the Committee may from time to time delegate all or any part
of its authority under this Plan to a subcommittee.  To the extent of
any such delegation, references in this Plan to the Committee will be deemed to
be references to such subcommittee.  The Committee may delegate to one
or more of its members or one or more officers of the Company the authority,
subject to terms and conditions as the Committee shall determine, to (a)
designate Employees to be recipients of Awards under the Plan and (b) determine
the size of any such Awards; provided, however,
that:  (x) the Committee shall not delegate such responsibilities to
any such officer for Awards granted to an employee who is an officer, Director,
or more than 10% beneficial owner of any class of the Company’s equity
securities that is registered pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended, as determined by the Board in accordance with Section
16 of the Securities Exchange Act of 1934, as amended; (y) the resolution
providing for such authorization sets forth the total number of Shares such
officer(s) may grant; and (z) the officer(s) shall report periodically to the
Committee regarding the nature and scope of the Awards granted pursuant to the
authority delegated.

      

      SECTION
5.  SHARES AVAILABLE FOR AWARDS

      

      
        	
                 
      

              	
                (a)

              	
                Subject
      to adjustment as provided in Section 5(g), the maximum number of Shares
      available for issuance under the Plan shall be
  3,400,000.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                If
      any Shares are subject to an Award that is forfeited, expires, or is
      otherwise terminated without the issuance of Shares, such Shares shall
      again be available for Awards under the Plan.  Notwithstanding
      anything to the contrary contained herein:  (i) if Shares are
      tendered or otherwise used in payment of the Exercise Price of an Option,
      the total number of Shares covered by the Option being exercised shall
      reduce the maximum number of Shares available under Section 5(a); (ii)
      Shares withheld by the Company to satisfy the tax withholding obligation
      shall count against the maximum number of Shares available under Section
      5(a); and (iii) the number of Shares covered by an SAR, to the extent that
      it is exercised and settled in Shares, and whether or not all the Shares
      covered by the Award are actually issued to the Participant upon exercise
      of the SAR, shall be considered issued or transferred pursuant to the
      Plan.  In the event that the Company repurchases Shares with
      Option proceeds, those Shares will not be added to the maximum number of
      Shares available under Section 5(a).  If, under the Plan, a
      Participant has elected to give up the right to receive compensation in
      exchange for Shares based on Fair Market Value, such Shares will not count
      against the maximum number of Shares available under Section
      5(a).

              

      

      

      
        	
                 
      

              	
                (c)

              	
                Unless
      otherwise determined by the Committee, Awards that are designed to operate
      in tandem with other Awards shall not be counted against the maximum
      number of Shares available under Section 5(a) in order to avoid double
      counting.

              

      

      

      
        	
                 
      

              	
                (d)

              	
                Notwithstanding
      the foregoing, the maximum number of Shares that may be issued upon the
      exercise of Incentive Stock Options shall equal the aggregate number of
      Shares stated in Section 5(a), subject to adjustment as provided in
      Section 5(g) to the extent that such adjustment does not affect the
      ability to grant or the qualification of Incentive Stock Options under the
      Plan.

              

      

      

      
        	
                 
      

              	
                (e)

              	
                To
      the extent any Award is settled in cash, the number of Shares available
      for issuance under the Plan pursuant to Section 5(a) shall be reduced by
      an amount equal to the quotient of: (i) the dollar amount of such cash
      payment, reduced by any amount tendered by the Participant or retained by
      the Company to satisfy tax withholding obligations in connection with the
      Award; divided by (ii) the Fair Market Value of a Share on the date of the
      cash payment.

              

      

      

      
        	
                 
      

              	
                (f)

              	
                Any
      Shares issued under the Plan shall consist, in whole or in part, of
      authorized and unissued Shares, Shares purchased in the open market or
      otherwise, Shares in treasury, or any combination thereof, as the
      Committee or, as appropriate, the Board may
  determine.

              

      

      

      
        	
                 
      

              	
                (g)

              	
                In
      the event of any merger, reorganization, consolidation, recapitalization,
      stock dividend, stock split, reverse stock split, spin-off, combination,
      repurchase or exchange of Shares or other securities of the Company, or
      corporate transaction or event having an effect similar to the foregoing,
      the Committee shall adjust the number and type of Shares available for
      Awards under the Plan, the number and type of Shares subject to
      outstanding Awards, and the Exercise Price with respect to any Award as is
      equitably required to prevent dilution or enlargement of the benefits or
      potential benefits intended to be made available under the
      Plan.  In the case of any stock split, including a stock split
      effected by means of a stock dividend, and in the case of any other
      dividend paid in shares of the Company, such adjustments shall be made
      automatically without the necessity of Committee action, on the customary
      arithmetical basis. Any fractional Share resulting from an adjustment
      pursuant to this Section 5(g) shall be disregarded. Moreover, in the event
      of any such transaction or event, the Committee may provide in
      substitution for any or all outstanding Awards under this Plan such
      alternative consideration as it may determine to be equitable and may in
      connection therewith require the surrender of all or part of any Award to
      be replaced in a manner that complies with Section 409A of the
      Code.  In addition, for each Option or SAR with an Exercise
      Price greater than the consideration offered in connection with any such
      transaction or event, the Committee may in its sole discretion elect to
      cancel such Option or SAR without any payment to the person holding such
      Option or SAR.

              

      

      

      
        	
                 
      

              	
                (h)

              	
                The
      number of Shares issued as Restricted Stock, Restricted Stock Units,
      Performance Shares and Performance Units and Other Stock Awards (after
      taking into account any forfeitures and cancellations) will not during the
      life of the Plan in the aggregate exceed 3,400,000
  Shares.

              

      

      

      SECTION
6.  ELIGIBILITY:  The Committee from time to time may
designate which Employees, Consultants, and members of the Board shall become
Participants under the Plan.

      

      SECTION
7.  CODE SECTION 162(m) PROVISIONS

      

      
        	
                 
      

              	
                (a)

              	
                This
      Section 7 is applicable to any Qualified Performance-Based Award granted
      to a Covered Employee.  Performance Measures applicable to any
      Qualified Performance-Based Award to a Covered Employee must be based on
      specified levels of or growth in one or more of the Performance
      Measures.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Notwithstanding
      any other provision of the Plan other than Section 5(g):  (i) no
      Participant will be granted Options or SARs, in the aggregate, for more
      than 500,000 Shares during any calendar year; (ii) no Participant will be
      granted Qualified Performance-Based Awards of Performance Shares for more
      than 125,000 Shares during any calendar year; provided, however, that,
      if any other Qualified Performance-Based Awards of Performance Shares are
      outstanding for such Participant for a given calendar year, such Share
      limitation shall be reduced for each such given calendar year by the
      Shares that could be received by the Participant under all such Qualified
      Performance-Based Awards, divided, for each such Qualified
      Performance-Based Award, by the number of full calendar years of the
      Company applicable to each such outstanding Qualified Performance-Based
      Award; and (iii) in no event will any Participant in any calendar year
      receive a Qualified Performance-Based Award of Performance Units having an
      aggregate maximum value as of their respective Dates of Grant in excess of
      $2,000,000; provided, however, that,
      if any other Qualified Performance-Based Awards of Performance Units are
      outstanding for such Participant for a given calendar year, such dollar
      limitation shall be reduced for each such given calendar year by the
      amount that could be received by the Participant under all such Qualified
      Performance-Based Awards, divided, for each such Qualified
      Performance-Based Award, by the number of full calendar years of the
      Company applicable to each such outstanding Qualified Performance-Based
      Award.  The limitations set forth in this Section 7(b) shall be
      subject to adjustment under Section 5(g) of the Plan only to the extent
      that such adjustment does not affect the status of any Qualified
      Performance-Based Award intended satisfy the requirements for “qualified
      performance-based compensation” under Section 162(m) of the
      Code.  If an Option is granted in tandem with a SAR such that
      exercise of the Option or SAR with respect to one Share cancels the tandem
      Option or SAR, respectively, with respect to such Share, the tandem Option
      and SAR with respect to such Share shall be counted as covering only one
      Share for purposes of applying the limitation set forth in this Section
      7(b).

              

      

      

      
        	
                 
      

              	
                (c)

              	
                The
      Committee shall have the authority to impose such other restrictions on
      Qualified Performance-Based Awards as it may deem necessary or appropriate
      to ensure that such Qualified Performance-Based Awards satisfy the
      requirements for “qualified performance-based compensation” under Section
      162(m) of the Code.

              

      

      

      SECTION
8.   OPTIONS:  Subject to the terms and
conditions of the Plan, the Committee may grant Options to Participants on such
terms and conditions as the Committee may prescribe in an Award Agreement,
including, but not limited to, the Exercise Price; vesting schedule; method of
payment of the Exercise Price; treatment upon termination of employment;
treatment upon certain corporate transactions or events; and other terms and
conditions that the Committee may deem appropriate.  Incentive Stock
Options may only be granted to Participants who meet the definition of
“employees” under Section 3401(c) of the Code.

      

      SECTION 9.   STOCK
APPRECIATION RIGHT: Subject to the terms and conditions of the Plan, the
Committee may grant SARs to Participants on such terms and conditions as the
Committee may prescribe in an Award Agreement, including, but not limited to,
the Exercise Price; vesting schedule; form of payment; treatment upon
termination of employment; treatment upon certain corporate transactions or
events; and other terms and conditions that the Committee may deem
appropriate.

      

      SECTION
10.   RESTRICTED STOCK AWARD:  Subject to the
terms and conditions of the Plan, the Committee may grant Restricted Stock
Awards to Participants on such terms and conditions as the Committee may
prescribe in an Award Agreement, including, but not limited to, the vesting
schedule; purchase price, if any; deferrals allowed or required; treatment upon
termination of employment; treatment upon certain corporate transactions or
events; and other terms and conditions that the Committee may deem
appropriate.

      

      SECTION
11.   PERFORMANCE AWARDS:  Subject to the terms
and conditions of the Plan, the Committee may grant Performance Awards to
Participants on such terms and conditions as the Committee may prescribe in an
Award Agreement, including, but not limited to, the performance period;
performance criteria; treatment upon termination of employment; treatment upon
certain corporate transactions or events; and other terms and conditions that
the Committee may deem appropriate.  Notwithstanding anything in this
Plan to the contrary, the Committee shall not adjust the number of Performance
Shares or Performance Units to which a Qualified Performance-Based Award
pertains where such action would result in the loss of the otherwise available
exemption of the Award under Section 162(m) of the Code.

      

      SECTION 12.   OTHER
STOCK AWARDS:  Subject to the terms and conditions of the Plan,
the Committee may grant Other Stock Awards to Participants on such terms and
conditions as the Committee may prescribe in an Award Agreement, including, but
not limited to, the vesting schedule, if any; purchase price, if any; deferrals
allowed or required; treatment upon termination of employment; treatment upon
certain corporate transactions or events; and other terms and conditions that
the Committee may deem appropriate.

      

      SECTION
13.   PROHIBITION ON REPRICING:  Except in
connection with a corporate transaction or event described in Section 5(g) of
the Plan, the terms of outstanding Awards may not be amended to reduce the
Exercise Price of outstanding Options or SARs, or cancel outstanding Options or
SARs in exchange for cash, other Awards or Options or SARs with an Exercise
Price that is less than the Exercise Price of the original Options or SARs
without shareholder approval.

      

      SECTION
14.   WITHHOLDING:  The Committee may make such
provisions and take such steps as it may deem necessary and appropriate for the
withholding of any taxes that the Company is required by law or regulation of
any governmental authority, whether federal, state, local, domestic, or foreign,
to withhold in connection with the grant, exercise, payment, or removal of
restrictions of an Award, including, but not limited to, requiring or permitting
the Participant to remit to the Company an amount sufficient to satisfy such
withholding requirements in cash or Shares or withholding cash or Shares due or
to become due with respect to the Award at issue.  In no event shall
the Fair Market Value of Shares to be withheld pursuant to this Section 14 to
satisfy applicable withholding taxes in connection with the benefit exceed the
minimum amount of taxes required to be withheld.

      

      SECTION
15.   POSTPONEMENT OF ISSUANCE AND
DELIVERY:  The issuance and delivery of any Shares under this
Plan may be postponed by the Company for such period as may be required to
comply with any applicable requirements under any applicable listing requirement
of any national securities exchange or any law or regulation applicable to the
issuance and delivery of Shares, and the Company shall not be obligated to issue
or deliver any Shares if the issuance or delivery of such Shares shall
constitute a violation of any provision of any law or regulation of any
governmental authority or any national securities exchange.

      

      SECTION 16.   NO RIGHT
TO AWARDS:  No Employee, Consultant, or member of the Board
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniform treatment of Employees, Consultants, or members of the
Board under the Plan. The terms and conditions of Awards need not be the same
with respect to different Participants.

      

      SECTION 17.   NO RIGHT
TO EMPLOYMENT OR DIRECTORSHIP:  The grant of an Award shall not
be construed as giving a Participant the right to be retained in the employ or
as a Consultant of the Company or an Affiliate or any right to remain as a
member of the Board, as the case may be. Termination of the services of an
Employee, a Consultant, or a member of the Board shall not give rise to any
liability or any claim under the Plan, unless otherwise provided in the Plan or
an Award Agreement.

      

      SECTION 18.   NO
RIGHTS AS A SHAREHOLDER:  A Participant shall have no rights as
a shareholder with respect to any Shares covered by an Award until the date of
the issuance of such Shares.

      

      SECTION
19.   SEVERABILITY:  If any provision of the
Plan or any Award is, becomes, or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction or would disqualify the Plan or any Award
under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws, or if it cannot be so
construed or deemed amended without, in the determination of the Committee,
materially altering the purpose or intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction or Award, and the remainder
of the Plan or such Award shall remain in full force and effect.

      

      SECTION 20.   NO TRUST
OR FUND CREATED:  Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
person. To the extent any person acquires a right to receive payments from the
Company or an Affiliate pursuant to an Award, such right shall be no greater
than the right of any unsecured general creditor of the Company or any
Affiliate.

      

      SECTION
21.   HEADINGS:  Headings are given to the
Sections of the Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of the Plan or any provisions thereof.

      

      SECTION
22.  NONASSIGNABILITY:  Unless otherwise determined
by the Committee, no Participant or beneficiary may sell, assign, transfer,
discount, or pledge as collateral for a loan, or otherwise anticipate any right
to payment under the Plan other than by will or by the applicable laws of
descent and distribution, and in no event shall any Award granted under the Plan
or such right to payment be transferred for value.

      

      SECTION
23.   INDEMNIFICATION:  In addition to such
other rights of indemnification as members of the Board or the Committee or
officers or employees of the Company or an Affiliate to whom authority to act
for the Board or Committee is delegated may have, such individuals shall be
indemnified by the Company to the maximum extent permitted by law and the
Company’s Bylaws.

      

      SECTION 24.   FOREIGN
JURISDICTIONS:  The Committee may adopt, amend, or terminate
arrangements, not inconsistent with the intent of the Plan, to make available
tax or other benefits under the laws of any foreign jurisdiction to Participants
subject to such laws or to conform with the laws and regulations of any such
foreign jurisdiction.

      

      SECTION
25.   TERMINATION AND AMENDMENT:  Subject to the
approval of the Board where required, the Committee may at any time and from
time to time alter, amend, suspend, or terminate the Plan in whole or in part;
provided, however, that no action shall be taken by the Board or the Committee
without the approval of shareholders that would

      

      
        	
                 
      

              	
                (a)

              	
                Increase
      the maximum number of Shares that may be issued under the Plan, except as
      provided in Section 5(g);

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Change
      the class of eligible Participants;

              

      

      

      
        	
                 
      

              	
                (c)

              	
                Permit
      the repricing of outstanding Options or SARs, as provided in Section 13;
      or

              

      

      

      require
approval of the Company’s shareholders under any applicable law, regulation,
stock exchange listing rule, or other rule.  Notwithstanding the
foregoing, no termination or amendment of the Plan may, without the consent of
the applicable Participant, terminate or adversely affect any right or
obligation under an Award previously granted under the Plan, except as necessary
to comply with changes in law or accounting rules applicable to the
Company.

      

      SECTION
26.   COMPLIANCE WITH SECTION 409A OF THE
CODE

      

      
        	
                 
      

              	
                (a)

              	
                To
      the extent applicable, it is intended that this Plan and any grants made
      hereunder comply with the provisions of Section 409A of the Code, so that
      the income inclusion provisions of Section 409A(a)(1) of the Code do not
      apply to the Participants.  This Plan and any grants made
      hereunder shall be administered in a manner consistent with this
      intent.  Any reference in this Plan to Section 409A of the Code
      will also include any regulations or any other formal guidance promulgated
      with respect to such Section by the U.S. Department of the Treasury or the
      Internal Revenue Service.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Neither
      a Participant nor any of a Participant’s creditors or beneficiaries shall
      have the right to subject any deferred compensation (within the meaning of
      Section 409A of the Code) payable under this Plan and grants hereunder to
      any anticipation, alienation, sale, transfer, assignment, pledge,
      encumbrance, attachment or garnishment.  Except as permitted
      under Section 409A of the Code, any deferred compensation (within the
      meaning of Section 409A of the Code) payable to a Participant or for a
      Participant’s benefit under this Plan and grants hereunder may not be
      reduced by, or offset against, any amount owing by a Participant to the
      Company or any of its Affiliates.

              

      

      

      
        	
                 
      

              	
                (c)

              	
                If,
      at the time of a Participant’s separation from service (within the meaning
      of Section 409A of the Code), (i) the Participant shall be a specified
      employee (within the meaning of Section 409A of the Code and using the
      identification methodology selected by the Company from time to time) and
      (ii) the Company shall make a good faith determination that an amount
      payable hereunder constitutes deferred compensation (within the meaning of
      Section 409A of the Code) the payment of which is required to be delayed
      pursuant to the six-month delay rule set forth in Section 409A of the Code
      in order to avoid taxes or penalties under Section 409A of the Code, then
      the Company shall not pay such amount on the otherwise scheduled payment
      date but shall instead pay it, without interest, on the first business day
      of the seventh month after such six-month
  period.

              

      

      

      
        	
                 
      

              	
                (d)

              	
                Notwithstanding
      any provision of this Plan and grants hereunder to the contrary, in light
      of the uncertainty with respect to the proper application of Section 409A
      of the Code, the Company reserves the right to make amendments to this
      Plan and grants hereunder as the Company deems necessary or desirable to
      avoid the imposition of taxes or penalties under Section 409A of the
      Code.  In any case, a Participant shall be solely responsible
      and liable for the satisfaction of all taxes and penalties that may be
      imposed on a Participant or for a Participant’s account in connection with
      this Plan and grants hereunder (including any taxes and penalties under
      Section 409A of the Code), and neither the Company nor any of its
      affiliates shall have any obligation to indemnify or otherwise hold a
      Participant harmless from any or all of such taxes or
      penalties.

              

      

      

      SECTION
27.   APPLICABLE LAW:  This Plan shall be
governed by and construed in accordance with the laws of the State of Indiana,
without regard to its principles of conflict of laws.

      

      SECTION 28.  RECOUPMENT OF
AWARDS:  If the Board of Directors learns of any intentional
misconduct by a Participant which directly contributes to the Company having to
restate all or a portion of its financial statements, the Board may, in its sole
discretion, require the Participant to reimburse the Company for the difference
between any Awards paid to the Participant based on achievement of financial
results that were subsequently the subject of a restatement and the amount the
Participant would have earned as awards under the Plan based on the financial
results as restated.ex10_2.htm

    Exhibit 10.2    

       CTS
CORPORATION

      RESTRICTED STOCK UNIT
AGREEMENT

      

      

      THIS
AGREEMENT is made as of the ___ day of ____, 20__ (the "Grant Date") between CTS
CORPORATION, an Indiana corporation (the "Company"), and [Officer / GM
Name]  (the "Grantee").

      

          1. 
Grant. Subject to the
terms set forth in this Agreement and in the Company's 2009 Omnibus Equity and
Performance Incentive Plan (the "Plan"), the Company hereby grants to the
Grantee [# of units] Restricted Stock Units (the “Award”).  Except as
expressly provided herein, capitalized terms used herein shall have the meaning
ascribed to such terms under the Plan.

       

      It is
intended that this Agreement and its administration comply with the provisions
of Section 409A of the Code.  Accordingly, notwithstanding any
provision in this Agreement or in the Plan to the contrary, this Agreement and
the Plan will be interpreted, applied and, to the minimum extent necessary to
comply with Section 409A of the Code, amended, so that the Agreement does not
fail to meet, and is operated in accordance with, the requirements of paragraphs
(2), (3) and (4) of Section 409A(a) of the Code.  As used herein,
“Code” means the Internal Revenue Code of 1986 as amended from time to time, and
any interpretations thereof issued by the U.S. Treasury Department on which the
Company is permitted to rely.

       

          2.  Vesting and Settlement of
Restricted Stock Units.   The Award shall vest and become
non-forfeitable in _____ installments beginning one year after the grant
date.  The award shall be calculated by multiplying the specified
percentage on the specified date by the initial number of Restricted Stock Units
specified in Section 1 on this Agreement.

      
        	
                ·  

              	
                Installment
      One:                                           ____
      percent (_____%) on ____________

              

      

      
        	
                ·  

              	
                Installment
      Two:                                          ____
      percent (_____%) on ____________

              

      

      
        	
                ·  

              	
                Installment
      Three:                                        ____
      percent (_____%) on ____________

              

      

       

      Each date
specified above will be a "Vesting Date," provided that the Grantee remains in
the continuous employ of the Company and is an employee of the Company on the
Vesting Date.

      

      Restricted
Stock Units shall be settled on the basis of one Share for each vested
Restricted Stock Unit.  The Company shall distribute to the Grantee
Shares equal to ________ percent (_________%) multiplied by the number of
initial Restricted Stock Units specified in Section 1 above, on _____________,
____________ percent (_____%) multiplied by the number of initial Restricted
Stock Units specified in Section 1 above, on __________, and ___________ percent
(_____%) multiplied by the number of initial Restricted Stock Units specified in
Section 1 above, on _______, or as soon thereafter as practicable, but in no
event later than March 15th of the
year following the year in which the applicable Vesting Date occurs (each such
date of distribution, a "Settlement Date"). The Company’s obligations to the
Grantee with respect to vested Restricted Stock Units will be satisfied in full
upon the distribution of one Share for each Restricted Stock Unit.  On
the Settlement Date(s), the Company may, at its election, either (i) credit the
number of Shares to be distributed to the Grantee as of that Settlement Date to
a book-entry account in the name of the Grantee held by the Company’s transfer
agent; or (ii)  deliver to the Grantee a certificate representing the
number of Shares transferred to the Grantee as of that Settlement Date. In no
event may any Settlement Date be accelerated except in accordance with Section
409A of the Code.

      

      Notwithstanding anything to the
contrary in this Agreement, upon the first to occur of the following events, all
Restricted Stock Units granted hereunder shall vest and become nonforfeitable
and Shares shall be distributed to the Grantee, estate, guardian or designated
beneficiary of the Grantee as the case may be, in the settlement of Restricted
Stock Units as soon as reasonably practicable, but in no event later than 30
days after the occurrence of such event, and such date(s) of distribution shall
be deemed to be the Settlement Date(s):

      

      (a)  Grantee’s
becoming disabled, as defined by Section 409A of the Code;

      

      (b)  Grantee’s
death;

      

      (c)  A
change in ownership or effective control of the Company, or in the ownership of
a substantial portion of the assets of the Company, within the meaning of
Section 409A of the Code; or

      

      (d)  Grantee’s
unforeseeable emergency, as defined and not in excess of the amount permitted by
Section 409A of the Code.

      

      Unless the Committee determines
otherwise in its sole discretion, if the Grantee’s employment with the Company
terminates for any reason not specified above, all Restricted Stock Units
granted hereunder which have not vested as of the date of such termination of
employment shall be permanently forfeited on such termination date.

      

      3.  Tax
Withholding.  The Company shall have the right to deduct from
any compensation due the Grantee from the Company any federal, state, local or
foreign taxes required by law to be withheld in connection with the issuance of
Shares or vesting of any Restricted Stock Unit pursuant to this Agreement
provided that the amount withheld shall not exceed the legally required minimum
withholding.  To the extent that the amounts payable to the Grantee
are insufficient for such withholding, it shall be a condition to the issuance
of Shares or vesting of the Restricted Stock Units, as the case may be, that the
Grantee shall pay such taxes or make provisions that are satisfactory to the
Company for the payment thereof.

      

      The
Company shall retain Shares otherwise deliverable on the Settlement Date in an
amount sufficient to satisfy the amount of tax required to be withheld provided
that such amounts shall not exceed the statutorily required minimum withholding.
The determination of the number of Shares retained for this purpose shall be
based on the Fair Market Value of the Shares on the Settlement Date. In the
event that the retention of Shares to satisfy withholding taxes would
otherwise result in
the delivery of a fractional Share, the Company will round down to the next
whole Share and apply the value of the fractional Share to the recipient's tax
obligations or, in the alternative, the Company may make such other arrangements
to avoid the issuance of a fractional Share as may be permitted by
law.  No Shares shall be transferred to the Grantee hereunder until
such time as all applicable withholding taxes have been
satisfied.  Under the Code, employment tax withholding shall be
calculated based on the Fair Market Value of the Shares on the applicable
Vesting Date and income tax withholding shall be calculated based on the Fair
Market Value of the Shares on the Settlement Date.   The Company
will not retain Shares as described herein unless tax
withholding  applies under the laws of the local
jurisdiction.

      

      4.  Rights Not
Conferred.  The Grantee shall have none of the rights of a
stockholder with respect to the Restricted Stock Units, including the right to
receive dividends or vote stock, until such time, if any, that Shares are
distributed to the Grantee in settlement thereof.  The Grantee is
further advised that until distribution, the Company’s obligation will be merely
that of an unfunded and unsecured promise of the Company to deliver Shares in
the future, and the rights of the Grantee will be no greater than that of an
unsecured general creditor.  No assets of the Company will be held as
collateral security for the obligations of the Company hereunder, and all assets
of the Company will be subject to the claims of the Company’s
creditors.  Nothing contained in the Plan or in this Agreement shall
confer upon the Grantee any right with respect to continued employment by the
Company or any subsidiary thereof or interfere in any way with the right of the
Company to terminate the employment of the Grantee at any time.

      

      5.  Agreement Not
Assignable.  This Agreement and the Restricted Stock Units
awarded hereunder are not transferable or assignable by the Grantee; provided
that no provision herein shall prevent the distribution of shares to the
Grantee’s estate or designated beneficiary, in the event of the Grantee’s
death.

      

      6.  Adjustments.  In
the event of any merger, reorganization, consolidation, recapitalization, stock
dividend, stock split, reverse stock split, spin-off, combination, repurchase or
exchange of Shares or other securities of the Company, or corporate transaction
or event having an effect similar to the foregoing, the Committee shall adjust
the Award, as provided by the Plan.

      

      7.  Governing
Law.  This Agreement shall be construed in accordance with and
governed by the laws of the State of Indiana.

      

      8.  Amendments.  Any
amendment to the Plan shall be deemed to be an amendment to this Agreement to
the extent that the amendment is applicable hereto; provided, however, that no
amendment to the Plan or the Agreement shall adversely affect the value or
number of the Grantee’s Restricted Stock Units without the Grantee’s written
consent, except to the extent necessary to comply with the provisions of Section
409A of the Code.

      

      9.  Administration.  The
Committee shall have the power to interpret the Plan and this Agreement and to
adopt such rules for the administration, interpretation, and application of the
Plan as are consistent therewith and to interpret or revoke any such
rules.  All actions taken and all interpretations and determinations
made by the Committee shall be final and binding upon the Grantee, the Company
and all other interested persons.  No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or this Agreement.

      

      10.   Effect on Other Employee
Benefit Plans.  The value of the Restricted Stock Units granted
pursuant to this Agreement shall not be included as compensation, earnings,
salary or other similar terms used when calculating the Grantee’s benefits under
any employee benefit plan sponsored by the Company or any subsidiary, except as
such plan otherwise expressly provides.  The Company expressly
reserves its rights to amend, modify, or terminate any of the Company’s employee
benefit plans.

      

           11.  Severability.  If
any provision of the Plan or this Agreement is, becomes, or is deemed to be
invalid, illegal or unenforceable in any jurisdiction or would disqualify the
Plan or award hereunder under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws, or
if it cannot be so construed or deemed amended without, in the determination of
the Committee, materially altering the purpose or intent of the Plan or award,
such provision shall be stricken as to such jurisdiction or award, and the
remainder of the Plan or Agreement shall be in full force and
effect.

      

      12.   Construction.  The
Restricted Stock Units granted hereunder are being issued pursuant to Section 10
of the Plan (“Restricted Stock Award”) and are subject to the terms of the
Plan.  A copy of the Plan has been given to the Grantee, and
additional copies of the Plan are available upon request during normal business
hours at the principal executive offices of the Company.  To the
extent that any provision of this Agreement violates or is inconsistent with an
express provision of the Plan, the Plan provision shall govern and any
inconsistent provision in this Agreement shall be of no force or
effect.

      

      13.   Data
Protection.  By signing below, the Grantee expressly consents
to the transfer and use of personal data by the Company and its agents in
connection with the administration of this Award.

      

      14.   Binding
Effect.  This Agreement shall be binding upon the heirs,
executors, administrators and successors of the parties hereto.

      

      IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as
of the day and year first above written.

       

       

      ____________________________________

      Grantee:   «Name»

       

      
 

      CTS
CORPORATION

       

      By:___________________________________

              James L.
Cummins

          Senior Vice President
Administration

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