-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 L4p0LNaE06AnVxKisQv+U0Y3zQ+kQZ8v0PqxF/36jWnrtec95ARwIaZ3pjYQWTRV
 9wtd0/MdkZvX73QRwFx9iA==

<SEC-DOCUMENT>0000950123-10-092956.txt : 20101206
<SEC-HEADER>0000950123-10-092956.hdr.sgml : 20101206
<ACCEPTANCE-DATETIME>20101013145731
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950123-10-092956
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20101013

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CTS CORP
		CENTRAL INDEX KEY:			0000026058
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRONIC COMPONENTS & ACCESSORIES [3670]
		IRS NUMBER:				350225010
		STATE OF INCORPORATION:			IN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		905 WEST BOULEVARD NORTH
		CITY:			ELKHART
		STATE:			IN
		ZIP:			46514
		BUSINESS PHONE:		5742937511

	MAIL ADDRESS:	
		STREET 1:		905 W BLVD NORTH
		CITY:			ELKHART
		STATE:			IN
		ZIP:			46514
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>corresp</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">October&nbsp;13, 2010
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Brian Cascio<BR>
Accounting Branch Chief<BR>
United States Securities and Exchange Commission<BR>
Washington, D.C. 20549

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>Re:</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>CTS Corporation<BR>
Form&nbsp;10-K for the fiscal year ended December&nbsp;31, 2009<BR>
Filed February&nbsp;23, 2010<BR>
Form&nbsp;10-Q for the quarterly periods ended April&nbsp;4, 2010 and July&nbsp;4, 2010<BR>
File No.&nbsp;001-04639</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dear Mr.&nbsp;Cascio:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This letter is in response to your letter of October&nbsp;6, 2010, in which you requested responses to
comments relative to CTS Corporation&#146;s (the &#147;Company&#148; or &#147;CTS&#148;) Form 10-K for the fiscal year ended
December&nbsp;31, 2009 and Form 10-Q for the quarterly periods ended April&nbsp;4, 2010 and July&nbsp;4, 2010:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the responses to your comments, the Company acknowledges that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Company is responsible for the adequacy and accuracy of the disclosure in the
filing;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Listed below are each of your comments, in bold, followed by CTS&#146; response.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Form&nbsp;10-K for the fiscal year ended December&nbsp;31, 2009</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Item&nbsp;15. Exhibits, Financial Statements Schedules</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We note your response to prior comment 4 and will consider your response once we have had a
chance to review the agreement or the agreement is filed as an exhibit. After reviewing the
agreement, we may have additional comments.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>CTS response</B></U>: CTS acknowledges the Staff&#146;s comment. In the interest of expedience,
please find attached to this response a copy of the Toyota Indemnification Agreement. CTS will also attach this agreement as an exhibit to the Company&#146;s forthcoming report on Form 10-Q
for the Company&#146;s 2010 third quarter.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Exhibit&nbsp;13. Management&#146;s Discussion and Analysis of Financial Condition and Results of
Operations</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Critical Accounting Policies &#150; Retirement Plans, page 5</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We refer to your response to prior comment 1. Specifically for the Taiwan pension plan,
please tell us:</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>the materiality of the plan assets/obligations compared to total plan
assets/obligations;</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>why the discount rate and expected return is based on government bonds as
directed by the Central Trust of China; and</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>how your disclosure considers the requirements of FASB ASC 715-30-35-45 and
35-47 to 35-49.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>In your response, please provide any proposed disclosure for future filings.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>CTS response</B></U>: CTS&#146; Taiwan pension plan has plan assets totaling approximately $1,797,000
or 0.7% of total plan assets. CTS&#146; Taiwan pension plan has plan obligations totaling
approximately $3,199,000 or 1.3% of total plan obligations.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Central Trust of China merged with the Bank of Taiwan and it is now the Bank of Taiwan. All
pension plans in Taiwan are required to be established with the Bank of Taiwan, which is a
government-run entity that utilizes conservative investment strategies. The majority of the Bank
of Taiwan&#146;s investments are in government bonds. Therefore, the discount rate and expected return
are based on such bonds as directed by the Bank of Taiwan.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>FASB ASC 715-30-35-45 provides that the discount rate should take into account the timing of
payments to satisfy the plan obligations. Therefore, the discount rate would vary, depending on
the duration of the government bond portfolio. The Taiwan plan&#146;s discount rate is based on the
weighted average yield on government bonds available at the date of valuation and expected to be
available during the period to maturity of the pension benefits.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>FASB ASC 715-30-35-47 provides that the expected long-term rate of return on plan assets shall
reflect the average rate of earnings expected on the funds invested or to be invested to provide
for the benefits included in the projected benefit obligation. In estimating that rate,
appropriate consideration shall be given to the returns being earned by the plan assets in the
fund and the rates of return expected to be available for reinvestment. Since the Taiwan plan&#146;s
assets are invested in government bonds as directed by the Bank of Taiwan, the expected rate of
return on plan assets is determined by such government bond rates.</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>FASB ASC 715-30-35-48 provides that the expected return on plan assets shall take into
consideration the availability of all plan assets for investment throughout the year.
Therefore, the amount and timing of pension plan contributions and benefit payments
expected to be made during the year shall be considered in determining the expected
return on plan assets for that year. The Company&#146;s Taiwan plan takes into account the
availability of plan assets for investment throughout the year. The actuarial consultants to
CTS&#146; Taiwan plan considers the amount and timing of pension plan contributions and
benefit payments expected to be made during the year in determining the expected return
on plan assets for that year.
</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>FASB ASC 715-30-35-49 provides that the expected long-term rate of return on plan assets shall
reflect long-term earnings expectations only on existing plan assets and those contributions expected to be received during the current year. Accordingly, the Taiwan plan&#146;s
expected long-term rate of return on its plan assets reflects such provisions.
</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following is CTS&#146; proposed disclosure for future filings:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;All pension plans in Taiwan are required to be established with the Bank of Taiwan, which is a
government-run entity that utilizes conservative investment strategies. The majority of the Bank
of Taiwan&#146;s investments is in government bonds. Since the Taiwan plan&#146;s assets are invested in
government bonds as directed by the Bank of Taiwan, the expected rate of return on plan assets
is determined by such government bond rates. In determining the expected rate of return on plan assets, the actuarial consultants to the
Company&#146;s Taiwan plan considers the amount and timing of pension plan contributions
and benefit payments expected to be made during the year.
The Taiwan plan&#146;s discount rate is based on the
weighted average yield on government bonds available at the date of valuation and expected to be
available during the period to maturity of the pension benefits.&#148;</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Financial Statements</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Note H &#150; Retirement Plans, page 28</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>We refer to your response to prior comment 7. You indicate the private equity fund manager
uses an </B><B><I>income </I></B><B>approach; however, your description appears to describe the </B><B><I>market </I></B><B>approach.
Please clarify which approach the fund manager uses and indicate whether the similar, or
guideline, companies utilized in the valuation are public or private. In your response,
please provide any proposed disclosure for future filings.</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>CTS response</B></U>: The private fund equity manager uses a market approach. In the Company&#146;s
response that was filed on September&nbsp;30, 2010, CTS had inadvertently stated that the
fund manager uses an income approach.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The similar, or guideline companies utilized in the valuation are private companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">CTS will provide the following disclosure for future filings:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&#147;The private equity fund manager uses a market approach in estimating the fair value of the plan&#146;s
Level 3 asset. The market approach estimates the fair value by first, determining the entity&#146;s
earnings before interest, taxes, depreciation and amortization and then multiplying that value by
an estimated multiple. When establishing an appropriate multiple, the fund manager considers recent
comparable private company transactions and multiples paid. The entity&#146;s net debt is then
subtracted from the calculated amount to arrive at an estimated fair value for the entity. The fund
manager&#146;s goal is to provide a conservative estimate of the fair value of such assets and to
utilize conservative estimates of multiples used in establishing such fair values.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Please contact me at (574)&nbsp;523-3800 if you have any further questions concerning this filing. Thank
you.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Sincerely,
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>

    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>

    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top" align="left">&nbsp;</TD>
</TR><TR>

    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ <I>Donna L. Belusar</I>
&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>

    <TD colspan="3" align="left">Donna L. Belusar&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
</TR><TR>

    <TD colspan="3" align="left">Senior Vice-President and<BR>
Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">February&nbsp;19, 2010
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>CONFIDENTIAL </B></U><BR>
CTS Corporation<BR>
905 West Boulevard North<BR>
Elkhart, Indiana 46514

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="92%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="white-space: nowrap">Attention:</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vinod M. Khilnani</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Chief Executive Officer</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Re: <U>Letter Agreement</U></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dear Mr.&nbsp;Khilnani:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Toyota Motor Sales, U.S.A., Inc., Toyota Canada Inc., and Toyota Motor Engineering &#038;
Manufacturing North America, Inc. (collectively, &#147;Toyota&#148;) and CTS Corporation agree that the
relationship between Toyota and CTS Corporation is a valued relationship, and this Agreement is
made in good faith and in furtherance of that valued relationship. Toyota and CTS Corporation
understand that this Agreement is intended to reflect the general intent of the parties, but that
execution of a more detailed agreement may be necessary to effectuate the full intent of this
Agreement. Nevertheless, Toyota and CTS Corporation further represent that each has relied on and
obtained the advice of independent counsel with respect to this Agreement. Toyota and CTS
Corporation enter into this Agreement with full knowledge of their respective rights, and without
any duress, coercion or pressure of any kind from any person or entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the limitations set forth below, Toyota agrees to indemnify, defend, and hold
harmless CTS Corporation (and its affiliates, subsidiaries, officers, directors and employees)
from, and pay on their behalf, any costs, expenses and liabilities (including reasonable attorneys
fees and litigation costs, potential awards, settlements and judgments, and penalties or fees)
associated with, arising out of or relating to civil litigation or claims, filed or asserted in the
United States or Canada, arising from or relating to alleged incidents of unintended acceleration
of Toyota and Lexus vehicles where CTS is named as a defendant, including litigation or claims
which are currently pending or subsequently may be commenced against any one or all of the Parties
(&#147;Unintended Acceleration Claims&#148;). By way of further clarification and without limitation,
Unintended Acceleration Claims includes claims by third parties of personal injury, property
damage, diminution of value, breach of warranty and violation of consumer protection laws or unfair
business practices because of alleged defects in the accelerator in Toyota and Lexus vehicles.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CTS Corporation agrees to fully cooperate (and will direct its counsel to fully cooperate) in
any investigation by Toyota related in any way to the design and manufacture of the CTS accelerator
assembly that is the subject of the Unintended Acceleration Claims, and further agrees to fully
cooperate (and will direct its counsel to fully cooperate) with Toyota in the defense of all
Unintended Acceleration Claims. This cooperation includes, but is not limited to, providing
Toyota&#146;s counsel reasonable access to non-privileged documents or information, regardless of the
source of the information, as needed to defend these actions, including but not limited to analysis
or inspection reports of returned components related to Unintended Acceleration Claims. The Parties
agree to employ reasonable measures to protect any propriety or confidential information of
third-parties such as other OEMs for whom CTS Corporation manufactures pedals. CTS Corporation
shall provide Toyota with reasonable access to all current employees and agrees to make reasonable
efforts to provide access to former employees who may have information related to the CTS
accelerator assembly that is the subject of Unintended Acceleration Claims. CTS Corporation further
agrees to notify Toyota immediately of the filing of any Unintended Acceleration Claims, whether or
not any Toyota entity is named as a party therein.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->1<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Toyota and CTS Corporation further agree that they have a mutual interest in proceeding
together in a common defense and agree that they will enter into a Joint Defense Agreement to allow
for the sharing of privileged communications (including communications, documents, memoranda and
reports prepared for or in contemplation of litigation) and attorney work product to aid and to
promote adequate legal representation in defense of Unintended Acceleration Claims. Toyota
acknowledges that CTS Corporation desires to be represented by independent counsel in individual or
collective Unintended Acceleration Claims, and the Parties agree that Toyota&#146;s obligation to pay
the defense costs associated with independent counsel for CTS Corporation will be limited to
coverage of those activities that are reasonable and necessary to effectuate the unified defense of
Toyota and CTS Corporation. Toyota and CTS Corporation agree that Toyota&#146;s obligation in this
regard is limited to payment for such independent counsel as is necessary to fulfill Toyota&#146;s duty
to timely inform and consult with CTS Corporation on matters relating to Unintended Acceleration
Claims and to disclose to CTS Corporation all information concerning any action upon request.
Nothing in this section is meant to prevent CTS Corporation from utilizing its independent counsel
in an expanded role consistent with the terms of this Agreement, but such costs will be the
responsibility of CTS Corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the limitations set forth below, Toyota and CTS Corporation agree that Toyota will
have sole authority to settle Unintended Acceleration Claims on its own behalf and on behalf of CTS
Corporation, to the extent such claims are covered by this Agreement. CTS Corporation agrees that
it will not independently negotiate or settle any Unintended Acceleration Claims covered by this
Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The foregoing provisions notwithstanding, if Toyota concludes after good faith investigation
that CTS Corporation acted negligently (a)&nbsp;with regard to those manufacturing processes and
materials selection under CTS Corporation&#146;s sole control or (b)&nbsp;in failing to meet Toyota product
specifications or (c)&nbsp;by making unapproved changes in component design or materials, and such
negligence has caused or contributed to the Unintended Acceleration Claims, Toyota agrees that it
will continue to defend CTS Corporation for the particular negligent act or conduct. CTS
Corporation agrees, however, that it will be responsible for any judgment that may subsequently be
rendered against CTS Corporation individually or any portion of a judgment that may be allocated to
CTS Corporation, to the extent CTS Corporation&#146;s insurance coverage is available. By way of
clarification, to the extent that Toyota had agreed in a writing to the manufacturing processes,
changes and materials selection as referenced above, these are not considered to be under CTS
Corporation&#146;s sole control.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Toyota and CTS Corporation agree that if either Party takes a position at any time in the
litigation contrary to the interests of the other Party, such that the Parties are no longer
proceeding together in a common defense of the Unintended Acceleration Claims, that other Party may
void this Agreement upon reasonable notice. If this occurs, each Party will be obligated to assume
its own defense from that point forward, including but not limited to its payment of all attorneys&#146;
fees, expenses, settlement costs, and judgments. The parties further agree that each will make good
faith efforts to ensure that any public statements they make are consistent with their common
defense. To that end, CTS Corporation agrees, to the extent reasonably practicable and in
accordance with its other legal obligations, to advise Toyota in advance of any statement CTS
Corporation intends to make public relating to this litigation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Parties agree that any claims which may arise between or among the Parties to this
Agreement for indemnity or contribution, including claims related to the CTS Corporation&#146;s
negligence as previously defined (including without limitation, attorneys&#146; fees, other defense
costs, settlement costs or judgments), arising from any Unintended Acceleration Claim will be
addressed within a reasonable period of time following resolution of such Unintended Acceleration
Claim through good faith negotiations. If the Parties are unable to resolve their disputes through
good faith negotiations, they agree to submit the dispute to arbitration before the American
Arbitration Association. If any award is ultimately made to Toyota, Toyota will be limited to
recovering only such damages as are collectible from CTS Corporation&#146;s insurers.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this Agreement becomes void, CTS Corporation agrees that Toyota&#146;s counsel may continue to
defend Toyota without any suggestion of impropriety or conflict of interest in regard to such
continued representation, and Toyota agrees that CTS Corporation&#146;s counsel may continue to defend
CTS Corporation without any suggestion of impropriety or conflict of interest in regard to such
continued representation. In such event, CTS Corporation and Toyota waive their respective right to
contend that conflicts of interest or attorney-client privilege require disqualification of
counsel. CTS Corporation and Toyota are expressly agreeing to waive any potential conflict of
interest that might arise as a result of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement is limited to Unintended Acceleration Claims which seek relief by third parties
for personal injuries, property damage, and/or economic loss and is not intended to address costs
of defense of, or indemnification for costs or liabilities incurred in connection with, criminal
prosecutions, government investigations (including NHTSA investigations), government hearings, and
government recalls.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Toyota and CTS Corporation agree to cooperate in the creation of any future documents deemed
reasonably necessary to effectuate this Agreement.
</DIV>

<TABLE width="0%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="05%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Sincerely,<BR>
<BR>
TOYOTA MOTOR SALES, U.S.A., Inc.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="0" style="border-bottom: 0px solid #000000" align="left">By:&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left"> <I>/s/ G. Webster Burns</I>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">&nbsp;&nbsp;</TD>
    <TD colspan="2" align="left">Name: G. Webster Burns&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">&nbsp;&nbsp;</TD>
    <TD colspan="2" align="left">Title: Assistant General Counsel&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<TABLE width="0%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="0%"></TD>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="35%"></TD>
    <TD width="63%"></TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Accepted and agreed effective as of the<BR>
date first above written:<BR>
<BR>
CTS CORPORATION<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="0" style="border-bottom: 0px solid #000000" align="left">By:&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left"><I>/s/ Vinod M. Khilnani</I></TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">&nbsp;&nbsp;</TD>
    <TD colspan="2" align="left">Name: Vinod M. Khilnani&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">&nbsp;&nbsp;</TD>
    <TD colspan="2" align="left">Title: Chairman, President &#038; CEO&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
</TABLE>

<TABLE width="0%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="05%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">TOYOTA MOTOR ENGINEERING &#038; <BR>
MANUFACTURING NORTH AMERICA, INC.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD align="left">By:&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000"> /s/ Patrick Nepute&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">&nbsp;&nbsp;</TD>
    <TD colspan="2" align="left">Name: Patrick Nepute&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">&nbsp;&nbsp;</TD>
    <TD colspan="2" align="left">Title: VP &#038; General Counsel&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
