EXHIBIT (10)(e)
CTS CORPORATION
1988 RESTRICTED STOCK AND CASH BONUS PLAN
1. Purpose
The purpose of the 1988 Restricted Stock and Cash Bonus Plan (the "Plan")
is to induce outstanding employees to remain in the employ of CTS Corporation
(the "Company") and its present and future subsidiary corporations (each of
which is hereinafter referred to as a "Subsidiary") and to attract new key
employees,
and to encourage such employees to secure or increase their stock ownership in
the Company. The Board of Directors of the Company (the "Board") believes that
the award or sale of shares of the common stock (the "Common Stock"), without
par value, of the Company under the Plan will promote continuity of management
and increased incentive and personal interest in the welfare of the Company by
those who are or may become primarily responsible for shaping and carrying out
the long range plans of the Company and securing its continued growth and
financial success.
2. Effective Date
The Plan became effective on December 16, 1988, by resolution of the Board,
subject to ratification of the Plan by the vote of the holders of a majority of
the shares of the Common Stock present in person or by proxy at the 1989 Annual
Meeting of the Shareholders of the Company.
3. Stock Subject to the Plan
400,000 shares of the Common Stock of the Company ("Shares") are hereby
reserved for award or sale under the Plan, which Shares may be either treasury
shares or authorized but unissued shares. If Shares awarded or sold under the
Plan shall be repurchased by the Company in
accordance with the provisions of the Plan, such Shares shall again be available
for the purposes of the Plan.
4. Administration
The Plan shall be administered by the Compensation Committee of the Board
of Directors (the "Committee"), as described in Section 5 hereof. Subject to
the express provisions of the Plan, the Committee shall have complete authority,
in its discretion, to determine the individuals (the "Participants") to whom,
and the price, if any, at which, and the terms on which, Shares shall be awarded
or sold under the Plan and the number of shares to be awarded or sold to each
Participant. Subject to the express provisions of the Plan, the Committee shall
also have complete authority to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to it, and to make all the determinations
necessary or advisable for the administration of the Plan. The Committee's
determination on matters referred to in this Section 4 shall be conclusive.
5. Committee
The Committee shall consist of all of the members of the Compensation
Committee of the Board of Directors, all of whom shall be nonemployee directors
of the Company. As of any given date, no person shall be eligible to serve on
the Committee who, on such date is, or who, at any time within the period of one
year ending on such date has been, eligible for selection as a person to whom
stock may be awarded or sold under the provisions of the Plan or any similar
plan or as a person to whom options or stock appreciation rights may be granted
under any option or stock appreciation plan maintained by the Company. The
President of the Company (who shall be eligible to be awarded or to purchase
Shares under the Plan) shall also be a member of the Committee, ex officio. The
Committee shall be appointed annually by the Board, which may at any time and
from time to time remove any members of the Committee, with or without cause,
appoint additional members to the Committee and fill vacancies, however caused,
in the Committee. A majority of the members of the Committee shall constitute a
quorum.
All determinations of the Committee shall be made by a majority of its members
present in person at a meeting fully called and held. Any action which could
have been taken at a meeting may also be taken without the necessity of a
meeting by a written instrument signed by all of the members of the Committee
prior to or after such action shall be taken. The Company shall indemnify each
member of the Committee to the full extent provided under the Indiana Business
Corporation Law.
6. Eligibility
Shares may be awarded or sold under the Plan only to key employees of the
Company or a Subsidiary who are full-time employees. A director of the Company
or a Subsidiary who is not a full-time employee of the Company or a Subsidiary
will not be eligible to be awarded or to purchase Shares under the Plan. In
designating Participants and in determining the number of Shares to be awarded
or sold to any Participant, and, if sold, the price to be paid for any Shares,
the Committee shall take into account the Participant's level of responsibility,
dependability, performance, potential, compensation and such other considera-
tions as the Committee deems appropriate.
7. Awards or Purchase
After the Committee determines that it will award or offer a Participant
the right to purchase Shares under the Plan, it shall so inform the Participant
in writing, stating the number of Shares and the terms on which the Participant
shall be entitled to receive said award or to purchase said Shares, and, if
sold, the price to be paid for any Shares, and that the Participant has fifteen
(15) days from the date of the writing to accept the terms set forth therein in
the manner set forth. (The date of such acceptance shall constitute the
"Closing Date".) The Committee may, in the exercise of its discretion, extend
the period for acceptance. The communication may incorporate by reference the
terms, conditions, restrictions and other provisions set forth in the Plan, and
the Committee shall have the power to add thereto any additional terms and
conditions not inconsistent with the Plan which the Committee may approve. The
Committee shall make no award or sale of Shares or offer of same to a
Participant unless immediately prior to doing so (i) it shall, after reasonable
inquiry, have reasonable grounds to believe the Participant has sufficient
knowledge and experience in financial and business matters so that he or she is
capable of evaluating the merits and risks of investment in the Shares and that
the Participant is able to bear the economic risk of such investment, (ii) the
Participant shall have been furnished the information regarding the Company
required by Rule 506 issued pursuant to the Securities Act of 1933 ("Rule 506")
and (iii) it shall have taken all reasonable steps to assure that all other
requirements of Rule 506 have been and will in the future be satisfied with
respect to such award, sale or offer. Subject to the express provisions of the
Plan, sales, awards, or offers made to different Participants, or to the same
Participant at different times, may be subject to terms, conditions and
restrictions which differ from each other.
8. Restrictions and Cash Bonus
The Award or sale of Shares under the Plan shall include the following
terms, conditions and restrictions:
(a) During the period of five (5) years after the Closing Date,
the Participant shall not sell, exchange, transfer, pledge, hypothecate or
otherwise dispose of the Shares awarded to or purchased by the Participant
with respect to which these restrictions shall not have lapsed pursuant to
paragraph (b) of this Section 8, unless he shall first, by notice in
writing, have offered to the Company for repurchase, at no cost to the
Company if the Shares were awarded or at their original purchase price if
purchased, such Shares.
(b) The restrictions imposed by paragraph (a) of this Section 8
shall lapse as to the number of Shares equal to the following percentages
of the Shares awarded to or purchased by the Participant:
(1) Twenty percent (20%) of such Shares, on or after one (1)
year but prior to the end of two (2) years after the Closing Date;
(2) Forty percent (40%) of such Shares, on or after two (2)
years but prior to the end of three (3) years after the Closing
Date;
(3) Sixty percent (60%) of such Shares, on or after three
(3) years but prior to the end of four (4) years after the Closing
Date;
(4) Eighty percent (80%) of such Shares, on or after four
(4) years but prior to the end of five (5) years after the Closing
Date; and
(5) All such Shares, on or after five (5) years after the
Closing Date.
(c) As soon as practicable after the restrictions under paragraph
(a) of this Section 8 as to any Shares shall have lapsed, the Company
shall pay a cash bonus to the Participant equal to the fair market value
of such Shares as of the date of lapse if such Shares were awarded or
equal to the excess of the fair market value thereof as of the date of
lapse over the original purchase price of such Shares if such Shares were
purchased. Notwithstanding the foregoing, the aggregate of the cash
bonuses paid in connection with Shares as to which such restriction shall
have lapsed shall not be greater than a sum equal to twice the fair market
value of the Shares awarded to, or purchased by, the Participant,
determined as of the Closing Date.
(d) If the employment of the Participant should be terminated,
whether voluntarily or involuntarily, for any reason whatever, including
the Participant's death or disability, at any time prior to the end of
five (5) years from the Closing Date, such termination shall be deemed an
offer to the Company as described in paragraph (a) of this Section 8 at
the price and in respect of the number of Shares which would then be
required to be offered thereunder if the Participant wished to sell all of
the Shares then owned by him; provided, however, that, if a Participant
shall die or become totally disabled during a period within which an offer
for repurchase would be required as to some or all of the Shares, (i) the
Participant, or his estate, shall not be required to offer to the Company
for repurchase that number of shares otherwise required to be offered
equal to the product of twenty percent (20%) of the total number of Shares
awarded or sold and a fraction, the numerator of which shall be the number
of full months of active service by the Participant since the last
anniversary of the Closing Date and prior to his death or disability and
the denominator of which shall be twelve (12), (ii) the restriction
imposed by said paragraph (a) shall lapse as to the Shares which the Part-
icipant, or his estate, is not required to offer for repurchase pursuant
to the foregoing provision and (iii) a cash bonus computed in accordance
with paragraph (c) of this Section 8 shall be paid in respect of such
Shares to the Participant or his estate.
(e) Notwithstanding any other provisions of the Plan, on the death
of a Participant such Shares may be transferred to his legal
representatives or his estate or to the person or persons entitled thereto
by his will or by the laws of descent and distribution; provided, however,
that any Shares so transferred as to which the restrictions imposed by the
Company pursuant to paragraphs (a) and (d) of this Section 8 shall not
have lapsed shall continue to be subject to the restrictions in respect
thereof imposed by said paragraphs (a) and (d).
(f) Notwithstanding any other provisions of this Section 8 or of
the Plan, all restrictions imposed by paragraphs (a) and (d) of this
Section 8 shall lapse in the event of a "Change in Control", and the
Company shall pay a cash bonus in accordance with paragraph (c) of this
Section 8 in respect of all Shares as to which the restrictions shall
lapse pursuant to this subparagraph. (A Change of Control shall be deemed
to occur upon (i) the election of one or more individuals to the Board
which election results in one-third of the directors of the Company
consisting of individuals who have not been directors of the Company for
at least two years, unless such individuals have been elected as
directors, or nominated for election as directors, by three-fourths of the
directors of the Company who have been directors of the Company for at
least two years and who are not Participants, (ii) the sale by the Company
of all or substantially all of its assets to any entity, the consolidation
of the Company with any entity, the merger of the Company with any entity
as a result of which merger the Company is not the surviving entity as a
publicly held corporation, or the sale or transfer of shares of the
Company by the Company and/or any one or more of its shareholders in one
or more transactions, related or unrelated, to one or more entities under
circumstances whereby any entity and its affiliates shall own, after such
sales and transfers, at least one-fourth, but less than one-half, of the
shares of the Company having voting power for the election of directors,
unless, in any such case, such sale, consolidation, merger or transfer has
been approved in advance by three-fourths of the directors of the Company
who have been directors of the Company for at least two years and who are
not Participants, or (iii) the sale or transfer of shares of the Company
by the Company and/or any one or more of its shareholders, in one or more
transactions, related or unrelated, to one or more entities under
circumstances whereby the entity and its affiliates shall own, after such
sales and transfers,
at least one-half of the shares of the Company having voting power for the
election of directors. Nothing contained in this definition shall limit
or restrict the right of any director who is a Participant from
participating in any discussions or voting on any matter referred to in
this definition at any meeting of the Board.)
9. Investment Representation
Each Participant shall execute and deliver to the Company, prior to the
delivery of any shares under the Plan, a written representation that he is
acquiring such Shares for his own account as an investment and not with a view
to, or in connection with, the distribution of any thereof.
10. Delivery of the Shares
Shares shall be registered in the name of the Participant on the stock and
transfer records of the Company and stock certificates delivered as soon as
practicable after an offer has been accepted; provided, however, notwithstanding
any provision of the Plan, the Company may delay registration on its stock and
transfer records and delivery of stock certificates to a Participant until
counsel for the Company shall have given an opinion, which opinion shall not be
unreasonably conditioned or withheld, that the delivery of such Shares to the
Participant is exempt from registration under the Securities Act of 1933 as in
force at the time for delivery thereof (it being understood, however, that the
certificates representing such Shares shall bear such legend limiting the sale
thereof under the Securities Act of 1933 as counsel for the Company shall
determine to be appropriate).
11. Legend and Deposit of Shares in Escrow
In light of the restrictions imposed by the Plan, (i) certificates of stock
representing Shares shall bear a legend to the effect that the Shares
represented thereby may not be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with the terms of the
Plan and the transfer agent for the Common Stock of the Company shall be so
instructed and (ii) the Participant shall deposit such certificates, together
with a stock power or other instrument of transfer, appropriately endorsed in
blank with signature guaranteed, with an escrow agent designed by the Committee
under a deposit agreement requiring the Shares to be held in escrow until an
offer is required to be made or until the restrictions as to such Shares shall
have lapsed, and containing such other terms and conditions as the Committee
shall approve, all expenses of any such escrow to be borne by the Company.
During the period while the Shares are held in escrow, the Participant as the
registered holder of such Shares shall be entitled to receive all dividends
declared thereon and to vote the same upon all matters.
12. Expenses of the Plan
All costs and expenses of the adoption and administration of the Plan shall
be borne by the Company, and none of such expenses shall be charged to any
Participant.
13. No Contractual Right to Participate and No Right to Continued
Employment
Nothing in the Plan shall be deemed to give any executive, director,
officer or employee, or his or her legal representatives or assigns, or any
other person claiming under or through him, any contractual or other right to
participate in the benefits of the Plan. Nothing in the Plan and no award or
sale thereunder shall be construed to constitute or be evidence of any agreement
or understanding, express or implied, on the part of the Company to employ or
retain in its employ any Participant to whom Shares are awarded or sold for any
specific period of time.
14. Dilution and Other Adjustments
In the event of any change in the outstanding shares of Common Stock of the
Company by reason of any stock dividend or split, recapitalization, merger,
consolidation, combination or exchange of shares for other securities, or other
similar corporate change, the Committee shall make appropriate adjustments in
the total number of shares which may be offered for award or purchase under the
Plan and in the price, if any, and any and all such adjustments shall be
conclusive and binding upon all parties concerned.
15. Transferability
Except as otherwise specifically provided in the Plan, no right or interest
under the Plan of any Participant who has accepted an award or purchased Shares
shall be assignable or transferable, in whole or in part, either directly or by
operation of law or otherwise, including, but not by way of limitation,
execution, levy, garnishment, attachment, pledge, bankruptcy or in any other
manner and no such right or interest of any Participant shall be subject to any
obligation or liability of such Participant.
16. Withholding of Income Taxes
The Company shall have the right to deduct from any compensation due a
Participant from the Company any federal, state or local taxes
required by law to be withheld with respect to any event under the Plan which
results in taxable income to the Participant.
17. Information About the Company
The Company has been subject to the reporting requirements of Section 13 of
the Securities Exchange Act of 1934 for more than a year prior to the adoption
of the Plan, has filed all reports and statements required to be filed pursuant
to that Section during that period of time and intends to continue to file all
reports and statements so required. The Company releases for publication on a
regular basis, quarterly and annually, summary statements of sales and earnings.
The Company will furnish to all Participants to whom Shares are delivered under
the Plan copies of all material furnished to its shareholders whether required
by law or furnished voluntarily, and shall make available to any such
Participant upon his written request free of charge a copy of the Company's
annual report on Form 10-K for any year during which any Shares purchased by him
continue to be registered in his name.
18. Amendment and Termination of the Plan
Unless sooner terminated as herein provided, the Plan shall terminate upon
the sale and/or award of all the Shares available for sale under the Plan
(including the Shares which may be repurchased in the future by the Company
pursuant to the provisions of Section 8 hereof). The Board, as it may deem
advisable, may at any time terminate, extend, or amend the Plan, provided,
however, that termination or amendment of the Plan shall not, without the
consent of any person affected thereby, modify or in any way affect any right or
obligation created prior to such termination or amendment, and provided,
further, however, that any amendment of the Plan which increases the number of
Shares reserved for the Plan must be approved by the affirmative vote of a
majority of the shares of Common Stock of the Company present in person or by
proxy at any special or Annual Meeting of Shareholders duly called before it may
take effect.
CTS CORPORATION
1988 RESTRICTED STOCK AND CASH BONUS PLAN
APPENDIX A
"Change in Control" means the occurrence of any of the following events:
1. the attainment by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
(a "Person") of aggregate beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
25% or more of the combined voting power of the then
outstanding securities (the "Voting Stock") of CTS Corporation
(the "Company") entitled to vote generally in the election of
directors of the Company; provided, however, that for purposes
of this Section 1, the following will not be deemed to result
in a Change in Control: (A) any acquisition directly from the
Company that is approved by the Incumbent Board (as defined
below), (B) any acquisition by the Company and any change in
the percentage ownership of Voting Stock of the Company that
results from such acquisition, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary, (D) any
acquisition by any Person pursuant to a Business Combination
(as defined below) that complies with clauses (I), (II) and
(III) of Section 3, (E) the beneficial ownership by Dynamics
Corporation of America ("DCA") of Voting Stock of the Company
equal to less than 25% of the combined voting power of the
then outstanding Voting Stock of the Company ("Exempt DCA
Percentage"), or (F) the beneficial ownership by The Gabelli
Group, Inc., GAMCO Investors, Inc. and Gabelli Funds, Inc.
(collectively, "Gabelli") of Voting Stock of the Company not
equal to or in excess of 25% of the combined voting power of
the then outstanding Voting Stock of the Company ("Exempt
Gabelli Percentage"); or
2. individuals who, as of the Amendment Date (see below)
constitute the Board of Directors of the Company (the
"Incumbent Board") cease for any reason to constitute at least
two-thirds of the Board of Directors of the Company; provided,
however, that any individual becoming a Director subsequent to
the Amendment Date whose election, or nomination for election
by the Company's shareholders, was approved by a vote of at
least two-thirds of the Directors then comprising the
Incumbent Board (either by a specific vote or by approval of
the proxy statement of the Company in which such person is
named as a nominee for director, without objection to such
nomination) will be deemed to have been a member of the
Incumbent Board, but excluding, for this purpose, any such
individual becoming a Director as a result of an actual or
threatened election contest (within the meaning of Rule 14a-11
of the Exchange Act) with respect to the election or removal
of Directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board of Directors of the Company (collectively, an "Election
Contest"); or
3. consummation of (A) a reorganization, merger or consolidation,
(B) a sale or other disposition of all or substantially all of
the assets of the Company, or (C) a sale or other disposition
of all or substantially all of the assets ("Automotive Group
Assets") of the Company used in its Automotive Strategic
Business Unit (such reorganization, merger, consolidation or
sale each, a "Business Combination"), unless, in each case,
immediately following such Business Combination, (I) all or
substantially all of the individuals and entities who were the
beneficial owners of Voting Stock of the Company immediately
prior to such Business Combination beneficially own, directly
or indirectly, more than two-thirds of the then outstanding
shares of common stock and the combined voting power of the
then outstanding Voting Stock of the Company entitled to vote
generally in the election of Directors of the entity resulting
from such Business Combination (including, without limitation,
an entity which as a result of such transaction owns the
Company, all or substantially all of the Company's assets
either directly or through one or more subsidiaries or the
Automotive Group Assets) in substantially the same proportions
relative to each other as their ownership, immediately prior
to such Business Combination, of the Voting Stock of the
Company, (II) no individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
(other than the Company, such entity resulting from such
Business Combination, or any employee benefit plan (or related
trust) sponsored or maintained by the Company, any Subsidiary
or such entity resulting from such Business Combination or DCA
or Gabelli to the extent of the Exempt DCA Percentage or
Exempt Gabelli Percentage, respectively) beneficially owns,
directly or indirectly, 15% or more of the then outstanding
shares of Voting Stock of the entity resulting from such
Business Combination, and (III) at least two-thirds of the
members of the Board of Directors of the entity resulting from
such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement or of
the action of the Board of Directors of the Company providing
for such Business Combination; or
4. approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company, except pursuant to
a Business Combination that complies with clauses (I), (II)
and (III) of Section 3; or
5. if and so long as DCA beneficially owns 15% or more of the
combined voting power of the outstanding Voting Stock of the
Company, (A) the attainment by any Person of beneficial
ownership of 20% or more of the combined voting power of the
then outstanding Voting Stock of DCA ("DCA Voting Stock")
(other than as the result of an acquisition of DCA Voting
Stock by (x) DCA (and any change in the percentage ownership
of DCA Voting Stock that results from such acquisition), (y)
any employee benefit plan (or related trust) sponsored or
maintained by DCA or any subsidiary of DCA, or (z) the Company
or any Subsidiary that is approved by the Incumbent Board), or
(B) individuals who, as of the Amendment Date constitute the
Board of Directors of DCA (the "Incumbent DCA Board") cease
for any reason to constitute at least a majority of the Board
of Directors of DCA; provided, however, that any individual
becoming a Director subsequent to the Amendment Date whose
election, or nomination for election by DCA's shareholders,
was approved by a vote of at least two-thirds of the Directors
of DCA then comprising the Incumbent DCA Board (either by a
specific vote or by approval of the proxy statement of DCA in
which such person is named as a nominee for director, without
objection to such nomination) will be deemed to have been a
member of the Incumbent DCA Board of Directors, but excluding,
for this purpose, any such individual whose initial assumption
of office occurs as a result of an actual or threatened
Election Contest; or
6. the occurrence of a "Board Shift". For this purpose, (I) a
"Board Shift" will be deemed to have occurred if 50% or more
of the members of the Board of the Company, or of any entity
resulting from a Business Combination, are persons who (A) are
employees of any beneficial owner of 20% or more of the Voting
Stock (a "20+% Holder") or (B) were nominated for election, or
voted for, by any such 20+% Holder unless such nomination or
vote was approved by a majority of the Unrelated Directors and
(ii) "Unrelated Directors" means Gerald H. Frieling, Jr.,
Lawrence J. Ciancia and Joseph P. Walker or any successors
thereto nominated with the approval of such of the foregoing
(or their successors nominated as aforesaid) as may remain
members of the Board of the Company, or of any entity
resulting from a Business Combination, at the time of such
nomination.
For purposes of Annex A, the "Amendment Date" is the effective date of the
amendment that includes this Annex A as a part of the Plan.