Document:

Exhibit 10.w

    
      CTS
        Corporation

      Form
        10-K 2005

      
        

        

      

      EXHIBIT
        (10)(w)

      

       

      

      CTS
        CORPORATION

      

      1996
        EXCESS BENEFIT RETIREMENT PLAN

      As
        Adopted Effective July 1, 1996

      and
        Amended and Restated Effective July 1, 2003 and 

      As
        Amended Effective June 1, 2004

      

      CTS
        CORPORATION

      

      1996
        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
                  established the CTS Corporation 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. 

              

      

      

      
        	
                1.02

              	
                Effective
                  Date.
                  This Plan was originally effective as of July 1, 1996 and is hereby
                  amended and restated as of July 1, 2003, and is renamed the CTS
                  Corporation 1996 Excess Benefit Retirement Plan. 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 dates 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.

              

      

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      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 

            

       

      (i) the
        definition of "Pay" used in determining the Member's benefit under the Pension
        Plan included 50% of the Fair Market Value of Shares due to the Member (prior
        to
        withholding) in settlement of Restricted Stock Units which were awarded under
        the CTS Corporation 2004 Omnibus Long-Term Incentive Plan, determined as
        of the
        applicable vesting date of such Restricted Stock Units; and

      

      (ii)  
        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. 

       

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

       

      
        	
                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 the 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.

              

      

      

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      ARTICLE
        IV

      

      Authority
        of Committee

      

      
        	
                4.01

              	
                Committee.
                  The Plan, as approved by the Board of Directors of CTS Corporation
                  (the
                  “Board”), shall be administered by the Compensation Committee of the Board
                  (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; and

            

      

      	(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 upon the exercise of 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.

              

      

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      

      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.

      

      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.

      
 

      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 includible 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.

              

      

      

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      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.

              

      

      

      
        	 	
                (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.

              

      

      

      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.

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      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.

              

      

      

      
        	
                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 1996 CTS Corporation 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
	 	
                
James
                L. Cummins
	 	
                Senior
                  Vice President

                Administration

              

      

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      APPENDIX
        B

      

      

      

      “Change
        in Control” means the occurrence of any of the following events: 

      

      
        	 	
                (i)

              	
                the
                  acquisition by any individual, entity or group (within the meaning
                  of
                  Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
                  1934) (a
                  "Person") of aggregate beneficial ownership (within the meaning
                  of Rule
                  13d-3 promulgated under the Securities Exchange Act) of 25% or
                  more of the
                  combined voting power of the then outstanding securities entitled
                  to vote
                  generally in the election of directors (the “Voting Stock”) of the Company
                  (including, for this purpose, any Voting Stock of the Company acquired
                  prior to July 1, 2003); provided, however, that for purposes of
                  this
                  Section (i), the following will not be deemed to result in a Change
                  in
                  Control: (A) any acquisition of Voting Stock of the Company directly
                  from the Company that is approved by the Incumbent Board (as defined
                  below), (B) any acquisition of Voting Stock of the Company by the
                  Company
                  or any entity in which the Company directly or indirectly beneficially
                  owns 50% or more of the outstanding Voting Stock (a “Subsidiary”) and any
                  change in the percentage ownership of Voting Stock of the Company
                  that
                  results from such acquisition, (C) any acquisition of Voting Stock
                  of the
                  Company by any employee benefit plan (or related trust) sponsored
                  or
                  maintained by the Company or any Subsidiary, or (D) any acquisition
                  of
                  Voting Stock of the Company by any Person pursuant to a Business
                  Combination that complies with clauses (I), (II) and (III) of Section
                  (iii); or 

              

      

      

      (ii)
        individuals
        who are members of the Board of Directors of CTS Corporation (the “Board”
collectively “Directors” and as to an individual “Director”) and who, as of July
        1, 2003, constitute the Board (the "Incumbent Board") cease for any reason
        to
        constitute at least a majority of the Board; provided, however, that any
        individual becoming a Director subsequent to July 1, 2003 whose election,
        or
        nomination for election by the Company's shareholders, was approved by a
        vote of
        at least a majority 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 (as described in Rule 14a-12(c)
        of
        the Securities 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 (collectively, an "Election
        Contest"); or

      

      (iii)
        consummation
        of (A) a reorganization, merger or consolidation of the Company, or
        (B) a sale or other disposition of all or substantially all of the assets
        of the Company, (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 75% 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 or all or substantially
        all of
        the Company's assets either directly or through one or more subsidiaries),
        (II)
        no Person (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) 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 a majority of the members of the
        Board
        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 providing for such Business Combination; or

      

      (iv) 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 (iii).Exhibit 10.aa

    
      CTS
        Corporation

      Form
        10-K 2005

      
        

        

      

      EXHIBIT
        (10)(aa)

      

      

      

      CTS
        CORPORATION

      RESTRICTED
        STOCK UNIT AGREEMENT

       

       

      THIS
        AGREEMENT is made as of the 7th day of December, 2005 (the "Grant Date")
        between
        CTS CORPORATION, an Indiana corporation (the "Company"), and «Director»
        (the
        "Grantee").

      

      

      
        	
                1.

              	
                Grant.
                  Subject to the terms set forth in this Agreement and in the Company's
                  2004
                  Omnibus Long-Term Incentive Plan (the "Plan"), the Company hereby
                  grants
                  to the Grantee 2,500 Restricted Stock Units. This grant is made
                  to the
                  Grantee in consideration for services to be performed by Grantee
                  for the
                  Company as a non-employee director in the 2006 calendar year. In
                  the
                  event, that the Grantee is not a non-employee director of the Company
                  as
                  of January 10, 2006, this grant shall be forfeited in its entirety.
                  Termination of services by the Grantee during the 2006 calendar
                  year shall
                  not affect this grant except as expressly provided herein. 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 and applied 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.

              	
                Settlement
                  of Restricted Stock Units.
                  Each Restricted Stock Unit shall entitle the Grantee to one Share
                  which
                  shall be distributed to the Grantee (or to the estate, guardian
                  or
                  beneficiary of the Grantee, as the case may be) on the Settlement
                  Date(s)
                  as defined herein. The Settlement Date(s) shall be the date(s)
                  specified
                  by the Grantee in the Settlement Date Election Form attached hereto
                  as
                  Exhibit A. In the event that the Grantee does not complete and
                  return a
                  Settlement Date Election Form to the Company on or before December
                  31,
                  2005, January 10, 2006 shall be deemed to be the Settlement Date
                  for all
                  Restricted Stock Units awarded under this Agreement. Notwithstanding
                  anything to the contrary in this Agreement or the Settlement Date
                  Election
                  Form, upon the first to occur of the following events, Shares shall
                  be
                  distributed in the settlement of Restricted Stock Units as soon
                  as
                  reasonably practicable, and such date(s) of distribution shall
                  be deemed
                  to be the Settlement Date(s); 

              

      

      

      
        	 	
                (a)
                  

              	
                Grantee’s
                  separation from service as defined by Section 409A of the Code;
                  provided,
                  however that if Grantee is or becomes a specified employee as defined
                  by
                  Section 409A of the Code, such date shall be delayed by six
                  months;

              

      

      

      
        	 	
                (b)
                  

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

              

      

      

      (c)    
Grantee’s
        death; 

      

      
        	 	
                (d)
                  

              	
                To
                  the extent permitted by Section 409A of the Code, a change in ownership
                  or
                  effective control of the Company; or in the ownership of a substantial
                  portion of the assets of the Company; or

              

      

      

      
        	 	
                (e)

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

              

      

      

      The
        Company’s obligations to the Grantee with respect to the Restricted Stock Units
        will be satisfied in full upon the distribution of Shares corresponding to
        such
        Restricted Stock Units. On the Settlement Date(s), the Company may, at its
        election, either (i) deliver to the Grantee a certificate representing the
        number of Shares to be distributed to the Grantee as of that Settlement Date;
        (ii) 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 (iii) credit the number of Shares to be distributed
        to the Grantee as of that Settlement Date to a brokerage account designated
        by
        the Grantee. In no event may any Settlement Date be accelerated except in
        accordance with Section 409A of the Code. 

      

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      
        	
                3.
                  

              	
                Selection
                  of Settlement Dates.
                  The Grantee’s selection of a Settlement Date may have important tax
                  consequences. The Grantee is advised to consult an independent
                  tax
                  professional before making this selection.

              

      

      

      The
        Grantee may elect to defer a Settlement Date which is a specific calendar
        date
        previously selected by the Grantee (the “Original Settlement Date”) on a form
        provided by the Company and pursuant to procedures established by the Company
        from time to time. Any such election may be made for less than all of the
        Shares
        due to be distributed on a Settlement Date, and different elections may be
        made
        with respect to Shares to be distributed on a Settlement Date. The Grantee’s
        election to defer an Original Settlement Date must be made at least twelve
        (12)
        months in advance of the Original Settlement Date and must defer distribution
        for a period of at least five (5) years after the Original Settlement Date.
        No
        election to defer an Original Settlement Date shall be effective for at least
        twelve (12) months after such election has been made. If the Grantee has
        selected separation from service as a Settlement Date that Settlement Date
        may
        not be deferred. 

      

      
        	
                4.

              	
                Taxes.
                  The Grantee shall be solely responsible for the payment of any
                  taxes,
                  including without limitation, any income or employment taxes, which
                  are
                  due or may become due as a result of this grant or the distribution
                  of
                  Shares. 

              

      

      

      
        	
                5.

              	
                Rights
                  Not Conferred.
                  The Grantee shall have none of the rights of a shareholder 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.

              

      

      

      
        	
                6.

              	
                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 transfer of such Restricted Stock Units
                  or the
                  Shares related thereto by will or by the laws of descent or distribution
                  in the event of the Grantee’s death.

              

      

      

      
        	
                7.

              	
                Adjustments.
                  If and to the extent that the number of Shares shall be increased
                  or
                  reduced 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 similar corporate transaction, the
                  number
                  and kinds of shares subject to the Restricted Stock Units awarded
                  hereunder may be adjusted by the Committee, in its sole discretion.
                  In the
                  event of any such transaction, the Committee may provide in substitution
                  for the Restricted Stock Units granted hereunder such alternative
                  consideration as it may determine to be
                  equitable.

              

      

      

      
        	
                8.

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

              

      

       

      
        	
                9.

              	
                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.
                  

              

      

       

      
        	
                10.

              	
                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.

              

      

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      
        	
                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.

              	
                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.

      

      

      

      

      __________________________________________
        

      «Director» 

      

      

      

      CTS
        CORPORATION

      

      

      
        	 	 	 
	 	CTS
                Corporation
	 
 	 
 	 
 
	 	By:  	/s/ Richard
                G. Cutter III
	 	
                
Richard
                G. Cutter III
	 	Vice
                President, General Counsel and
                Secretary

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      EXHIBIT
        A

      CTS
        CORPORATION

      RESTRICTED
        STOCK UNIT AWARD

      SETTLEMENT
        DATE ELECTION FORM

      

      THIS
        FORM
        MUST BE COMPLETED AND RETURNED TO THE COMPANY NO LATER THAN DECEMBER 31,
        2005.
        IF YOU FAIL TO RETURN THIS FORM TO THE COMPANY BY THAT DATE, YOUR AWARD WILL
        BE
        DISTRIBUTED ON JANUARY 10, 2006. 

      

      

      Name:  «Director» 

      

      Address: «Address»,
        «City»,
        «State» «Zip» 

      

      Date
        of
        Award:  «Date»

      

      

      

      Instructions:

      

      You
        were
        awarded Restricted Stock Units under the CTS Corporation 2004 Omnibus Long-Term
        Incentive Plan (the “Plan”). Each Restricted Stock Unit entitles you to a share
        of CTS Common Stock on the Settlement Date you select,
        subject
        to the terms of the Plan and your Restricted Stock Unit Agreement.
        Your
        Settlement Date may not be earlier than January 10, 2006. Please select one
        of
        the following three alternatives: 

      

      
        	
                1.
                  

              	
                You
                  may elect to receive a distribution of all Restricted Stock Units
                  granted
                  under this award upon your separation from service by initialing
                  the
                  following statement: 

              

      

      

      _____
        I
        hereby elect to receive a distribution of all of the Shares to which I am
        entitled under this award upon my separation from service as defined by Section
        409A of the Code, provided however that if I am or become a specified employee
        as defined by Section 409A of the Code, such date shall be delayed by six
        months
        (the “Settlement Date”). 

      

      Note:
        You
        may not make a subsequent deferral of this Settlement Date. 

      

      
        	
                2.
                  

              	
                You
                  may elect to receive a distribution of all Restricted Stock Units
                  granted
                  under this award on a specific calendar date by initialing and
                  completing
                  the following statement: 

              

      

      

      _____
        I
        hereby elect to receive a distribution of all of the Shares to which I am
        entitled under this award on _______________ ___, 20____ (the “Settlement
        Date”).

      
        
           

          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      
 

      
        	
                3.
                  

              	
                You
                  may elect to receive a distribution of Restricted Stock Units in
                  installments on a fixed schedule of calendar dates by initialing
                  and
                  completing the following statement:

              

      

      

      _____
        I
        hereby elect to have installments of the Shares to which I am entitled under
        this Award distributed to me on the dates specified below: 

      

      No.
        of
        Shares _____  _______________
        ___, 20____ (“Settlement Date”) 

      

      No.
        of
        Shares _____  _______________
        ___, 20____ (“Settlement Date”) 

      

      No.
        of
        Shares _____  _______________
        ___, 20____ (“Settlement Date”) 

      

      No.
        of
        Shares _____  _______________
        ___, 20____ (“Settlement Date”) 

       

      No.
        of
        Shares _____  _______________
        ___, 20____ (“Settlement Date”) 

      

      

      Acknowledgment:

      

      I
        hereby
        acknowledge that, (i) I have been provided copies of the Plan and the Restricted
        Stock Unit Agreement, (ii) this election shall be subject to the terms of
        the
        Plan and the Restricted Stock Unit Agreement, and (iii) I have been advised
        to
        consult an independent tax advisor regarding the effects of this election.
        I
        understand that (i) the Company’s obligation is merely that of an unfunded and
        unsecured promise of the Company to deliver shares of CTS Common Stock in
        the
        future, (ii) no assets of the Company will be held as collateral security
        for
        this obligation, and (iii) my rights will be no greater than those of a general
        unsecured creditor. I acknowledge that I will be responsible for the payment
        of
        any income and employment taxes due on this award. 

      

      

      

      ______________________________  ___________________________

      «Director»      Date

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