EMPLOYMENT AGREEMENT
Exhibit
No. 10(a)
This
Employment Agreement (this "Agreement") made and entered into this ____ day
of________, 2007,(the “Effective Date”) by and between CTS Corporation, an
Indiana corporation ("CTS") and Xxxxx X. Xxxxxxxx, residing at 00000 Xxxxxxx
Xxxxx, Xxxxxxx, Xxxxxxx 00000, ("Executive").
WHEREAS,
the parties desire to enter into this Agreement, setting forth the terms and
conditions for the employment relationship of Executive with CTS.
NOW,
THEREFORE, in consideration of the mutual premises and the respective covenants
and agreements of the parties herein contained, the parties hereto agree as
follows:
1. Term;
Duties. CTS agrees to employ Executive, and Executive agrees to be employed
by CTS, on a full-time basis as President and Chief Executive Officer of
CTS. Executive shall have such duties, responsibilities and authority
as are customarily incident to the principal executive office of a publicly
traded corporation, except as otherwise expressly provided by the Board of
Directors. Executive shall report to the Chairman of the Board of
Directors The term of this Agreement shall commence on the Effective
Date and continue for a period of two (2) years, and this period shall be
referred to herein as the Term.
2. Compensation
and Benefits. In consideration of the employment of Executive with CTS, CTS
shall pay to Executive such salary, bonuses and other compensation as shall
be
recommended from time to time by the Compensation Committee of the Board of
Directors of CTS and approved by the Board of Directors; provided, however,
that
Executive's base salary shall not be less than the base salary in effect on
the
date of this Agreement, unless there is a general salary reduction affecting
all
CTS employees. Executive's base salary shall be payable in accordance with
CTS'
general payroll practices as in effect from time to time, subject to applicable
withholdings. Executive shall be eligible to participate in CTS' incentive
compensation plans on a basis no less favorable than that of other senior
executive officers of CTS and to participate in CTS' pension, retirement
savings, health and welfare and other employee benefit plans on a basis
consistent with that offered to other salaried employees of CTS, to the extent
permitted by law. This Agreement is not intended to and shall not be deemed
to
be in lieu of any rights, benefits and privileges to which Executive may be
entitled as an executive officer and as an employee of CTS, it being understood
that Executive shall have the same rights and privileges as other senior
executive officers and other salaried employees of CTS, to the extent permitted
by law.
3. Termination
of this Agreement.
(a) Death.
In the event of Executive’s death, this Agreement shall terminate at the end of
the calendar month during which death occurs. The terms of CTS’ employee benefit
plans and of any other plans in which Executive then is a participant shall
govern any right or entitlement that Executive's heirs or beneficiaries have
or
may have thereunder.
(b) Disability.
In the event of Executive's permanent and total disability during the Term,
this
Agreement shall terminate at the end of the calendar month during which a
determination is made of Executive's permanent and total disability. A
conclusive determination of Executive's permanent and total disability shall
occur when Executive is placed on Permanent Inactive Disability Status under
the
CTS Corporation Pension Plan or a similar plan in which Executive is then a
participant.
(c) Voluntary
Termination by Executive. This Agreement shall terminate at the end of the
calendar month during which Executive voluntarily terminates employment with
CTS.
(d) Termination
by CTS for Cause. This Agreement shall terminate immediately if Executive's
employment with CTS is terminated for Cause by CTS. CTS may terminate
Executive's employment for Cause at any time, without prior notice to
Executive. "Cause" shall mean willful neglect or material breach by
Executive of the duties of Executive, Executive's gross dishonesty, material
violation of CTS policies by Executive, to the substantial detriment of CTS,
or
any other conduct by Executive which materially prejudices the interests of
CTS.
Termination pursuant to this paragraph shall result in Executive's immediate
forfeiture of all rights and privileges under this Agreement, excluding accrued
salary, if any,which shall be immediately due and payable.
(e) Termination
by CTS. If during the Term, CTS terminates Executive’s employment
for any reason other than Cause, as set forth in Section 3(d) above, then CTS
agrees to pay Severance Benefits to Executive, for a period of two (2) years
beginning on the date which is six (6) months following the Executive’s date of
termination of employment (referred to herein as the Severance
Period. Severance Benefits means: (i) the Executive’s base salary in
effect at the time of termination of employment and (ii) annual incentive
compensation in an amount equal to the Executive’s target annual incentive
compensation for the calendar year ending prior to the
date of termination of employment under this subparagraph. All base salary
payments hereunder shall be made at CTS' regular pay intervals applicable to
executive officers during the Severance Period. Incentive compensation will
be
paid on the first regular pay date next following March 1 of each year during
the Severance Period.
(f) Termination
by Executive for Good Reason. If Executive terminates employment with CTS for
Good Reason during the term, then CTS agrees to pay to the Executive the
Severance Benefits in the amount and at the time described in Section 3(e).
Good
Reason shall mean, unless Cause exists, the occurrence, without the written
consent of Executive, of an event constituting a material breach of this
Agreement by CTS that has not been fully cured within ten days after written
notice thereof has been given to CTS.
4. Notice.
Executive agrees that in the event that Executive elects to voluntarily
terminate employment with CTS, he shall provide at least six (6) months notice
prior to his termination date.
5. Non-Competition
and Non-Solicitation. Executive recognizes that his duties hereunder will
entail the receipt of trade secrets and confidential information, which have
been developed at substantial cost to CTS and its affiliates and which
constitute CTS' valuable and unique property. Accordingly, Executive
agrees that it is reasonable and necessary for the protection of CTS' business
interests that Executive not compete with CTS during his term of employment
and
for a reasonable period thereafter. For a period of two years
following the termination of Executive's service with CTS, Executive shall
not,
within the geographic areas Executive directly or indirectly oversaw or obtained
trade secret or confidential information about while at CTS, including those
areas in which CTS' customers are serviced by CTS, (i) perform the same or
similar duties Executive performed for CTS; or(ii) on Executive's own behalf
or
on the behalf of any person, firm or company, directly or indirectly, attempt
to
influence, persuade or induce, or assist any other person in so persuading
or
inducing, any person, firm or company to cease doing business with, reduce
its
business with, or decline to commence a business relationship with, CTS.
Executive further agrees not to disclose any trade secrets or confidential
information Executive was exposed to while at CTS to any
competitor. This provision shall not be deemed to restrict
Executive's passive investment in any business or preclude Executive from
serving as a director of any entity which is not in competition with CTS or
where such competition is not substantial and Executive obtains the approval
of
the Board of Directors, which approval may not be unreasonably
withheld. For purposes of this Section 6, CTS shall include any and
all direct and indirect subsidiaries, parents, affiliated or related companies
of CTS.
Executive
agrees that he shall refrain from soliciting or hiring any present or future
employee of CTS for employment with another company, and further agrees that
this obligation shall survive termination for a period of five (5)
years.
6. Effect
on Other Agreements and Policies. This Agreement shall supersede the
Employment Agreement entered into by Executive and CTS on October 4, 2005 and
as
of the Effective Date that agreement shall be deemed terminated and shall be
of
no further force or effect. This Agreement shall not affect any other
agreements between Executive and CTS pertaining to confidentiality of
information, assignment of patents, equity compensation, retirement benefits
or
indemnification. In general, it is the intent of the parties that Severance
Benefits under this Agreement shall not duplicate corresponding payments under
any other agreement, policy, plan or arrangement. In the event
Executive is eligible to receive Severance Benefits under this Agreement,
Executive shall not be eligible for benefits under CTS' Severance Pay-Exempt
Salaried Employees Policy or any successor policy.
In
the
event that Executive is eligible under the terms of the Severance Agreement
entered into by CTS and the Executive on September 19, 2002 (the
"Change-in-Control Agreement") to receive Severance Compensation, as defined
in
the Change-in-Control Agreement, Executive shall not be eligible to receive
Severance Benefits under this Agreement. The relationship between
eligibility for benefits under this Agreement and eligibility for benefits
under
any successor agreement to the Change-in-Control Agreement shall be determined
by reference to such successor agreement.
7. Successors
and Assigns. This Agreement may be assigned by CTS to its successors and
shall be binding upon its successors. This Agreement may not be assigned by
Executive, but applicable benefits hereunder may inure to Executive's heirs
or
beneficiaries.
8. Waiver.
Failure to insist upon strict compliance with any of the terms, covenants,
or
conditions hereof shall not be deemed a waiver of such term, covenant or
condition, nor shall any waiver or relinquishment of any right or power
hereunder at any one or more times be deemed a waiver or relinquishment of
such
right or power at any other time or times.
9. Modifications.
This Agreement cannot be modified orally. All modifications to this
Agreement must be in a written agreement, signed by the party against whom
enforcement of any waiver, change, extension or discharge is sought. To the
extent applicable, it is intended that the compensation arrangements under
Agreement be in full compliance with Section 409A of the Internal Revenue Code
of 1986, as amended ("Section 409A"). To the extent any provision in
this Agreement is or will be in violation of Section 409A, the Agreement shall
be amended in such manner as the parties may agree such that the Agreement
is or
remains in compliance with Section 409A and the intent of the parties is
maintained to the maximum extent possible. Reference to Section 409A
includes any proposed, temporary or final regulations, or any other guidance
promulgated with respect to such Section by the U.S. Department of the Treasury
of the Internal Revenue Service.
10. Governing
Law; Venue; Attorney’s Fees. This Agreement and all questions arising in
connection herewith shall be governed by the laws of the State of Indiana,
with
venue in any court of competent jurisdiction located in the State of Indiana.
This Agreement shall be enforceable against CTS and its successors, agents
and
assignees by Executive or the personal representative of Executive's estate,
if
Executive is deceased ("the Personal Representative”). If Executive or the
Personal Representative is the prevailing party in any legal proceeding brought
by Executive or the Personal Representative to enforce this Agreement, Executive
or Executive's estate shall be entitled to receive reasonable attorney's fees
and expenses from CTS. Similarly, if CTS prevails in any legal proceeding
brought by either party to enforce this Agreement, CTS shall be entitled to
receive its reasonable attorney's fees and expenses.
CTS
CORPORATION
By:______________________________
Xxxxx
X. Xxxxxxxxxxx
Chairman
of the Board
EXECUTIVE
By:
____________________________________
Xxxxx
X. Xxxxxxxx
