EXHIBIT (10)(d)
CTS CORPORATION 1986 STOCK OPTION PLAN
FIRST: Shares Reserved for Options
Three hundred thousand (300,000) shares of CTS Corporation
Common Stock, without par value, which may be either authorized and
unissued shares or shares held as treasury stock, are reserved for
issuance upon exercise of options granted under the Plan. The
number and kind of shares reserved for issuance may be adjusted as
provided by ITEM FOURTEENTH. Shares subject to an unexercised
installment of any canceled, surrendered or expired installment or
option may be again subject to option under the Plan.
SECOND: Administration
The Plan shall be administered by the CTS Corporation
Compensation Committee appointed by the Board of Directors,
hereinafter the "Committee." Within the provisions of the Plan,
the Committee shall have full power and authority:
(a) to determine and designate the recipients of options, the
dates options are granted, the number of shares subject
to option, option prices, option periods and option
terms, except as limited by ITEM FOURTH, and
(b) to prescribe, amend and rescind rules and procedures for
convenient administration of the Plan.
Action by the Committee shall be authorized or ratified by a
majority of the Committee members and may be without notice or
meeting, by a writing signed by a majority of the Committee
members.
In any dispute or disagreement as to the interpretation of the
Plan, or any rule or procedure of the Committee, or any question,
right or obligation under the Plan, the decision of the Board of
Directors shall be final and binding upon all persons.
THIRD: Eligibility
Key employees, including officers, of CTS shall be eligible to
receive options and shall receive options when, and if, designated
by the Committee. Directors who are not also employees or officers
of CTS shall not be eligible to receive options.
FOURTH: Option Grant
The Committee shall determine and designate (i) the recipients
of options, (ii) the dates options are granted, (iii) the number of
shares subject to option, (iv) the option prices, and (v) the
option periods.
FIFTH: Option Price
The option price shall be not less than the fair market value
of the shares on the date the option is granted. Fair market value
of the shares shall be the reported closing price of the shares on
the New York Stock Exchange on the date the option is granted, or,
if not reported on such date, on the next preceding date for which
such a closing price is reported.
SIXTH: Option Ceiling
The aggregate fair market value (determined as of the time the
option is granted) of the shares of Common Stock for which any
participant may be granted incentive stock options which become
first exercisable in any calendar year, shall not exceed $100,000.
SEVENTH: Option Grant Period
The period during which an option may be granted, shall, in no
case, extend more than ten years after the Plan is adopted, or the
date such Plan is approved by the stockholders, whichever is
earlier.
EIGHTH: Option Exercise Period
The period during which an option may be exercised shall, in
no case, extend more than ten years after the date the option is
granted.
NINTH: Option Terms
The options shall be irrevocable and shall, on the date of
grant, conform in all respects with the Plan and may be non-
qualified or may conform with Section 422A of the Internal Revenue
Code of 1986, as amended, hereinafter the "Code," or with any law
supplemental thereto or substituted therefor. Inconsistencies
between an option and the Plan shall be resolved according to the
terms of the Plan.
TENTH: Exercise of Option
The right to exercise an option shall accrue in such annual
and cumulative installments and at such times as designated by the
Committee, commencing at least one year from the date the option is
granted. Unless otherwise designated by the Committee (i) the
number of installments shall be equal to the total number of years
of the option period minus one; (ii) each installment shall be
equal to the total number of shares under option divided by the
number of installments; and (iii) each installment cumulatively
shall permit the exercise of any previously unexercised
installment.
ELEVENTH: Payment
Payment of the option price shall be made upon exercise of any
installment of an option, and the person exercising such option
shall supply the Committee such pertinent information as the
Committee may deem necessary. Payment may be made in cash or in
previously acquired CTS Common Stock. Except as provided in ITEM
THIRTEENTH, no option may be exercised unless, from the date the
option is granted to the date of exercise, the option holder is an
employee of CTS. An option holder shall have no rights as a
stockholder with respect to shares subject to option until such
shares are issued.
TWELFTH: Nontransferability of Option
Options shall not be assignable or transferable by the option
holder other than by will or by the laws of descent and
distribution.
THIRTEENTH: Effect of Termination of Employment or Change of
Control
Upon the death of an option holder, all unexpired installments
of his options shall be accelerated and shall accrue as of the
date of death, and his estate or the person or persons to whom his
rights under the option shall pass by will or by the laws of
descent and distribution may exercise the options, but only within
one year after his death or, if sooner, until the option period
expires.
Upon total and permanent disability of an option holder,
within the meaning of Section 105(d)(4) of the Code, all unexpired
installments of his options shall be accelerated and shall accrue
as of the date of such disability, and he may exercise the options
but only within one year of the date of such disability or, if
sooner, until the option period expires.
Upon retirement of an option holder, all unexpired
installments of his options shall be accelerated and shall accrue
as of the date of retirement, and he may exercise the options, but
only within three months after retirement or, if sooner, until the
option period expires.
Upon termination of employment of the option holder with CTS
for any reason, other than death, disability, or retirement, he may
exercise his options only to the extent he is entitled by the
option terms on the date of termination, but such exercise may be
only within three months after termination or, if sooner, until the
option period expires.
Upon a Change of Control of CTS Corporation, as defined in
Appendix A to this Plan, all unexpired installments of the option
holders' options shall immediately become exercisable in full, and
such options may be exercised within the three months immediately
following such date or, if sooner, until the option period expires.
FOURTEENTH: Adjustment for Capital Change
The number, kind and price of shares subject to option and the
number and kind of securities or property reserved for issuance,
and to be issued, upon exercise of options shall be proportionately
and appropriately adjusted by the Committee to reflect the effects
of stock splits, stock dividends and any other change in the
capital structure of CTS Corporation or to reflect any merger,
consolidation or exchange or sale of assets or shares of CTS
Corporation.
FIFTEENTH: Amendment and Termination
The Board of Directors may modify or amend the Plan without
stockholder approval at any time for the purpose of conforming to
changes in pertinent law or government regulations or for any
purpose permitted by law. In no event, however, shall any such
action of the Board of Directors (i) increase, except as provided
by ITEM FOURTEENTH, the number of shares of Common Stock which may
be issued hereunder, (ii) decrease the option price, provided by
ITEM FIFTH, (iii) change the class of eligible employees, provided
by ITEM THIRD, (iv) change the option ceiling, provided by ITEM
SIXTH, or (v) impair any option granted prior to such action.
CTS CORPORATION
1986 STOCK OPTION PLAN
APPENDIX A
"Change in Control" means the occurrence of any of the
following events:
1. the attainment by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) (a "Person") of aggregate
beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 25% or
more of the combined voting power of the then
outstanding securities (the "Voting Stock") of CTS
Corporation (the "Company") entitled to vote
generally in the election of directors of the
Company; provided, however, that for purposes of
this Section 1, the following will not be deemed to
result in a Change in Control: (A) any acquisition
directly from the Company that is approved by the
Incumbent Board (as defined below), (B) any
acquisition by the Company and any change in the
percentage ownership of Voting Stock of the Company
that results from such acquisition, (C) any
acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the
Company or any Subsidiary, (D) any acquisition by
any Person pursuant to a Business Combination (as
defined below) that complies with clauses (I), (II)
and (III) of Section 3, (E) the beneficial
ownership by Dynamics Corporation of America
("DCA") of Voting Stock of the Company equal to
less than 25% of the combined voting power of the
then outstanding Voting Stock of the Company
("Exempt DCA Percentage"), or (F) the beneficial
ownership by The Gabelli Group, Inc., GAMCO
Investors, Inc. and Gabelli Funds, Inc.
(collectively, "Gabelli") of Voting Stock of the
Company not equal to or in excess of 25% of the
combined voting power of the then outstanding
Voting Stock of the Company ("Exempt Gabelli
Percentage"); or
2. individuals who, as of the Amendment Date (see
below) constitute the Board of Directors of the
Company (the "Incumbent Board") cease for any
reason to constitute at least two-thirds of the
Board of Directors of the Company; provided,
however, that any individual becoming a Director
subsequent to the Amendment Date whose election, or
nomination for election by the Company's
shareholders, was approved by a vote of at least
two-thirds of the Directors then comprising the
Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in
which such person is named as a nominee for
director, without objection to such nomination)
will be deemed to have been a member of the
Incumbent Board, but excluding, for this purpose,
any such individual becoming a Director as a result
of an actual or threatened election contest (within
the meaning of Rule 14a-11 of the Exchange Act)
with respect to the election or removal of
Directors or other actual or threatened
solicitation of proxies or consents by or on behalf
of a Person other than the Board of Directors of
the Company (collectively, an "Election Contest");
or
3. consummation of (A) a reorganization, merger or
consolidation, (B) a sale or other disposition of
all or substantially all of the assets of the
Company, or (C) a sale or other disposition of all
or substantially all of the assets ("Automotive
Group Assets") of the Company used in its
Automotive Strategic Business Unit (such
reorganization, merger, consolidation or sale each,
a "Business Combination"), unless, in each case,
immediately following such Business Combination,
(I) all or substantially all of the individuals and
entities who were the beneficial owners of Voting
Stock of the Company immediately prior to such
Business Combination beneficially own, directly or
indirectly, more than two-thirds of the then
outstanding shares of common stock and the combined
voting power of the then outstanding Voting Stock
of the Company entitled to vote generally in the
election of Directors of the entity resulting from
such Business Combination (including, without
limitation, an entity which as a result of such
transaction owns the Company, all or substantially
all of the Company's assets either directly or
through one or more subsidiaries or the Automotive
Group Assets) in substantially the same proportions
relative to each other as their ownership,
immediately prior to such Business Combination, of
the Voting Stock of the Company, (II) no
individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act)
(other than the Company, such entity resulting from
such Business Combination, or any employee benefit
plan (or related trust) sponsored or maintained by
the Company, any Subsidiary or such entity
resulting from such Business Combination or DCA or
Gabelli to the extent of the Exempt DCA Percentage
or Exempt Gabelli Percentage, respectively)
beneficially owns, directly or indirectly, 15% or
more of the then outstanding shares of Voting Stock
of the entity resulting from such Business
Combination, and (III) at least two-thirds of the
members of the Board of Directors of the entity
resulting from such Business Combination were
members of the Incumbent Board at the time of the
execution of the initial agreement or of the action
of the Board of Directors of the Company providing
for such Business Combination; or
4. approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company,
except pursuant to a Business Combination that
complies with clauses (I), (II) and (III) of
Section 3; or
5. if and so long as DCA beneficially owns 15% or more
of the combined voting power of the outstanding
Voting Stock of the Company, (A) the attainment by
any Person of beneficial ownership of 20% or more
of the combined voting power of the then
outstanding Voting Stock of DCA ("DCA Voting
Stock") (other than as the result of an acquisition
of DCA Voting Stock by (x) DCA (and any change in
the percentage ownership of DCA Voting Stock that
results from such acquisition), (y) any employee
benefit plan (or related trust) sponsored or
maintained by DCA or any subsidiary of DCA, or (z)
the Company or any Subsidiary that is approved by
the Incumbent Board), or (B) individuals who, as of
the Amendment Date constitute the Board of
Directors of DCA (the "Incumbent DCA Board") cease
for any reason to constitute at least a majority of
the Board of Directors of DCA; provided, however,
that any individual becoming a Director subsequent
to the Amendment Date whose election, or nomination
for election by DCA's shareholders, was approved by
a vote of at least two-thirds of the Directors of
DCA then comprising the Incumbent DCA Board (either
by a specific vote or by approval of the proxy
statement of DCA in which such person is named as a
nominee for director, without objection to such
nomination) will be deemed to have been a member of
the Incumbent DCA Board of Directors, but
excluding, for this purpose, any such individual
whose initial assumption of office occurs as a
result of an actual or threatened Election Contest;
or
6. the occurrence of a "Board Shift". For this
purpose, (I) a "Board Shift" will be deemed to have
occurred if 50% or more of the members of the Board
of the Company, or of any entity resulting from a
Business Combination, are persons who (A) are
employees of any beneficial owner of 20% or more of
the Voting Stock (a "20+% Holder") or (B) were
nominated for election, or voted for, by any such
20+% Holder unless such nomination or vote was
approved by a majority of the Unrelated Directors
and (ii) "Unrelated Directors" means Gerald H.
Frieling, Jr., Lawrence J. Ciancia and Joseph P.
Walker or any successors thereto nominated with the
approval of such of the foregoing (or their
successors nominated as aforesaid) as may remain
members of the Board of the Company, or of any
entity resulting from a Business Combination, at
the time of such nomination.
For purposes of Annex A, the "Amendment Date" is the effective date
of the amendment that includes this Annex A as a part of the Plan.