RSU Supplemental Agreement
CTS
Corporation
This
SUPPLEMENTAL AGREEMENT (the “Agreement”) is made and entered into this
15th
day of
December, 2005, by and between ______________________ (the “Grantee”) and CTS
Corporation, an Indiana corporation (the “Company”), pursuant to authorization
by the CTS Corporation Compensation Committee (the “Committee”), as more
specifically set forth below.
WHEREAS,
the Company and the Grantee entered into those certain Restricted Stock Unit
Agreements dated _____________ (the “2004 Grant Agreement”) and dated
_________________ (the “2005 Grant Agreement”), whereby the Company granted to
the Grantee restricted stock units pursuant to the CTS Corporation 2004 Omnibus
Long-term Incentive Plan (the “Omnibus Plan”);
WHEREAS,
the Company has determined that the provisions of the 2004 Grant Agreement
concerning an election to defer distributions should be amended to comply with
Section 409A of the Internal Revenue Code of 1986, as amended;
WHEREAS,
the Company has determined that the provisions of the 2004 and 2005 Grant
Agreements which allow the Grantee to make an election upon vesting to either
pay income and employment taxes in cash or to allow the Company to net shares
for this purpose should be amended to comply with Financial Accounting Standard
123R;
WHEREAS,
Section 10 of the Omnibus Plan authorizes the Committee to determine the terms
and conditions of restricted stock awards granted under the Omnibus
Plan;
WHEREAS,
pursuant to resolutions adopted on November 2, 2005, the Committee has made
the
determinations and designations authorizing the amendments set forth in this
Agreement.
NOW
THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed as follows:
1. Section
2, 3 and 4 of the 2004 Grant Agreement shall be deleted and the following
substituted therefor:
“2.
Section
409A of the Code.
It is
intended that this Agreement and its administration comply with the provisions
of Section 409A of the Code. Accordingly, notwithstanding any provision in
this Agreement or in the Plan to the contrary, this Agreement and the Plan
will
be interpreted applied and, to the minimum extent necessary to comply with
Section 409A of the Code, amended, so that the Agreement does not fail to meet,
and is operated in accordance with, the requirements of paragraphs (2), (3)
and
(4) of Section 409A(a) of the Code. As used herein, “Code” means the Internal
Revenue Code of 1986 as amended from time to time, and any interpretations
thereof issued by the U.S. Treasury Department on which the Company is permitted
to rely.
3.
Vesting
and Settlement of Restricted Stock Units.
The
Award shall vest and become non-forfeitable in installments equal to twenty
percent (20%) multiplied by the initial number of Restricted Stock Units
specified in Section 1 of this Agreement on each of the following dates;
__________________________________________________________, (each such date,
a
"Vesting Date"), provided that the Grantee remains in the continuous employ
of
the Company and is an employee of the Company on the Vesting Date.
Restricted
Stock Units shall be settled on the basis of one Share for each vested
Restricted Stock Unit. The Company shall distribute to the Grantee Shares equal
to twenty percent (20%) multiplied by the number of initial Restricted Stock
Units specified in Section 1 above, on the following dates, or as soon
thereafter as is reasonably practicable;
___________________________________________________________ (each such date
of
distribution, a "Settlement Date"). The Company’s obligations to the Grantee
with respect to vested Restricted Stock Units will be satisfied in full upon
the
distribution of one Share for each Restricted Stock Unit. On the Settlement
Date(s), the Company may, at its election, either (i) credit the number of
Shares to be distributed to the Grantee as of that Settlement Date to a
book-entry account in the name of the Grantee held by the Company’s transfer
agent; or (ii) 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
Notwithstanding
anything to the contrary in this Agreement, upon the first to occur of the
following events, all Restricted Stock Units granted hereunder shall vest and
become nonforfeitable and Shares shall be distributed to the Grantee, estate,
guardian or beneficiary of the Grantee as the case may be, 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 becoming disabled, as defined by Section 409A of the Code;
(b)
Grantee’s death;
(c)
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
(d)
Grantee’s unforeseeable emergency, as defined and not in excess of the amount
permitted by Section 409A of the Code.
Unless
the Committee determines otherwise in its sole discretion, if the Grantee’s
employment with the Company terminates for any reason not specified above,
all
Restricted Stock Units granted hereunder which have not vested as of the date
of
such termination of employment shall be permanently forfeited on such
termination date.
4.
Tax
Withholding.
The
Company shall have the right to deduct from any compensation due the Grantee
from the Company any federal, state, local or foreign taxes required by law
to
be withheld in connection with the issuance of Shares or vesting of any
Restricted Stock Unit pursuant to this Agreement. To the extent that the amounts
payable to the Grantee are insufficient for such withholding, it shall be a
condition to the issuance of Shares or vesting of the Restricted Stock Units,
as
the case may be, that the Grantee shall pay such taxes or make provisions that
are satisfactory to the Company for the payment thereof.
The
Company shall retain Shares otherwise deliverable on the Settlement Date in
an
amount sufficient to satisfy the amount of tax required to be withheld, provided
that such amounts shall not exceed the statutorily required minimum withholding.
The determination of the number of Shares retained for this purpose shall be
based on the Fair Market Value of the Shares on the Settlement Date. In the
event that the retention of Shares to satisfy withholding taxes would
otherwise result
in
the delivery of a fractional Share, the Company will round down to the next
whole Share and apply the value of the fractional Share to the recipient's
tax
obligations or, in the alternative, the Company may make such other arrangements
to avoid the issuance of a fractional Share as may be permitted by law. No
Shares shall be transferred to the Grantee hereunder until such time as all
applicable withholding taxes have been satisfied. Employment tax withholding
shall be calculated based on the Fair Market Value of the Shares on the
applicable Vesting Date and income tax withholding shall be calculated based
on
the Fair Market Value of the Shares on the Settlement Date.”
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2.
|
Section
9 of the 2004 Grant Agreement shall be amended to delete reference
to
Deferral Date(s).
|
| 3. |
The
Restricted Stock Unit Award Deferral Elections forms attached to
the 2004
Grant Agreement shall be deleted in their
entirety.
|
| 4. |
Section
4 of the 2005 Grant Agreement shall be amended in its entirety to
read as
follows:
|
“The
Company shall have the right to deduct from any compensation due the Grantee
from the Company any federal, state, local or foreign taxes required by law
to
be withheld in connection with the issuance of Shares or vesting of any
Restricted Stock Unit pursuant to this Agreement. To the extent that the amounts
payable to the Grantee are insufficient for such withholding, it shall be a
condition to the issuance of Shares or vesting of the Restricted Stock Units,
as
the case may be, that the Grantee shall pay such taxes or make provisions that
are satisfactory to the Company for the payment thereof.
The
Company shall retain Shares otherwise deliverable on the Settlement Date in
an
amount sufficient to satisfy the amount of tax required to be withheld, provided
that such amount shall not exceed the statutorily required minimum withholding.
The determination of the number of Shares retained for this purpose shall be
based on the Fair Market Value of the Shares on the Settlement Date. In the
event that the retention of Shares to satisfy withholding taxes would
otherwise result
in
the delivery of a fractional Share, the Company will round down to the next
whole Share and apply the value of the fractional Share to the recipient's
tax
obligations or, in the alternative, the Company may make such other arrangements
to avoid the issuance of a fractional Share as may be permitted by law. No
Shares shall be transferred to the Grantee hereunder until such time as all
applicable withholding taxes have been satisfied. Employment tax withholding
shall be calculated based on the Fair Market Value of the Shares on the
applicable Vesting Date and income tax withholding shall be calculated based
on
the Fair Market Value of the Shares on the Settlement Date.”
IN
WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date first written above.
| CTS Corporation, an Indiana corporation | ||
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| By: | /s/ Xxxxxxx X. Xxxxxx | |
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Xxxxxxx X. Xxxxxx |
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| Vice President, Secretary and General Counsel | ||
